Good afternoon, and welcome to WEC Energy Group’s conference call for Fourth Quarter and Year End 2021 results. This call is being recorded for rebroadcast and all participants are in a listen-only mode at this time. Before the conference begins, I’ll remind you that all statements in the presentation, other than historical facts, are forward-looking statements that involve risks and uncertainties that are subject to change at any time. Such statements are based on management’s expectations at the time they are made. In addition to the assumptions and other factors referred to in connection with the statements, factors described in WEC Energy Group’s latest Form 10-K and subsequent reports filed with the Securities and Exchange Commission could cause actual results to differ materially from those contemplated. During the discussions, referenced earnings per share will be based on diluted earnings per share, unless otherwise noted. After the presentation, the conference will be open to analysts for questions and answers. In conjunction with this call, a package of detailed financial information is posted at wecenergygroup.com. A replay will be made available approximately two hours after the call. And now, it is my pleasure to introduce Gale Klappa, Executive Chairman of WEC Energy Group.

Well, good afternoon, everyone. Thank you for joining us today, as we review our results for calendar year 2021. First, I’d like to introduce as always the members of our management team who are here with me today. We have Scott Lauber, who’s now our President and Chief Executive; Xia Liu, our Chief Financial Officer; and Beth Straka, Senior Vice President of Corporate Communications and Investor Relations. As you saw from our news release this morning, we reported full year 2021 earnings of $4.11 a share. This exceeded the upper end of our most recent guidance, which was $4.07 a share. Our positive results were driven by favorable weather, solid economic recovery in our region, and our continued focus on operating efficiency. Our balance sheet and cash flows remain strong. And as we’ve discussed, this allows us to fund a highly executable capital plan without issuing equity. I would also note that the earnings we’re reporting today are quality earnings with no adjustments. Now as you know, we’ve been very active in shaping the future of clean energy. Looking back on 2021, we set some of the most aggressive goals in our industry for reducing carbon emissions. Across our generating fleet, we’re targeting a 60% reduction in carbon emissions by 2025 and an 80% reduction by the end of 2030, all from a 2005 baseline. In fact, by the end of 2030, we expect our use of coal for power generation will be immaterial. And our plan calls for a complete exit from coal by the year 2035. Of course, for the longer term, we remain focused on achieving net zero carbon emissions from power generation by 2050. Now, we all recognize that advances in technology will be needed to decarbonize the economy by 2050 and hydrogen, of course, could…

Thank you, Gale. Looking back, we made significant progress in 2021. I’ll start by covering some developments in Wisconsin. As Gale mentioned, we’re continuing to make progress on the transition of our generation fleet in our ESG progress plan. I am pleased to report that our Badger Hollow 1 Solar project is now providing energy to our customers. You’ll recall that we own 100 megawatts of this project in Southwest Wisconsin. We have also made progress on the construction of Badger Hollow 2. Currently, we expect an in service date in the first quarter of 2023. This factors in a delay of approximately three months, due to ongoing supply chain constraints. We do not expect a material change in the construction costs. In addition, the Public Service Commission has approved our plans to build two liquefied natural gas storage facilities in the southeastern part of the state. Construction has started and we plan to bring the facilities into service in late 2023 and mid-2024. We expect this project to save our customers approximately $200 million over time and help ensure reliability during Wisconsin’s coldest winters. And we recently signed our first contract for renewable natural gas or RNG for our gas distribution business. We’ll be tapping into the output of one of our large local dairy farms. The gas supplied each year will directly replace higher emission methane from natural gas that would have been entered our pipes. This one contract alone represents 25% of our 2030 goal for methane reduction. The Wisconsin-based company US Gain is planning to have RNG flowing to our distribution network of the end of this year. The Commission also approved the development of Red Barn, a wind farm in southwestern part of the state. We expect our Wisconsin public service utility to invest approximately…

Scott. Thanks so much. We’re confident that we can deliver our earnings guidance for 2022. We’re guiding, as you know, in a range of $4.29 a share to $4.33 a share. The midpoint for $4.31 represents growth of 7.5% from the midpoint of our original guidance last year. And you may have seen the announcement that our Board of Directors, at its January meeting raised our quarterly cash dividend by 7.4%. We believe this increase will rank in the top decile of our industry. This also marks the 19th consecutive year that our company will reward shareholders with higher dividends. We continue to target a payout ratio of 65% to 70% of earnings, we are right in the middle of that range now, so I expect our dividend growth will continue to be in line with the growth in our earnings per share. Next up, Xia will provide you with more detail on our financial results and our first quarter guidance. Xia?

Thanks, Gale. Turning now to earnings. Our 2021 result of $4.11 per share increased $0.32 or 8.4% compared to 2020. Our earnings package includes a comparison of 2021 results on page 17. I’ll walk through the significant drivers. Starting with our utility operations, we grew our earnings by $0.10 compared to 2020. First, weather added $0.04, mostly driven by colder winter weather conditions compared to 2020. Second, continued economic recovery drove a $0.09 increase in earnings. This reflected stronger weather normalized electric sales as well as the resumption of late payment and other charges. Let me give you some highlights on our weather-normalized retail sales. Overall, retail delivery of electricity, excluding the iron ore mine were up 2.6% compared to 2020. We saw a continued economic rebound in 2021 in our service territory. Small commercial and industrial electric sales were up 4.4% from 2020 and large commercial and industrial sales, excluding the iron ore mine were up 5.1%. Natural gas deliveries in Wisconsin were relatively flat, excluding gas used for power generation. Lastly, rate relief and additional capital investment contributed $0.14 to earnings and lower day-to-day O&M drove a $0.03 improvement. These favorable factors were partially offset by $0.17 of higher depreciation and amortization expense, and a net $0.03 reduction from fuel costs and other items. Overall, we added $0.10 year-over-year from utility operations. Earnings from our investment in American Transmission Company decrease $0.02 per share year-over-year. The positive impact of additional capital investment was more than offset by two factors, a 2020 full quarter that benefited 2020 earnings and an impairment that we booked in the fourth quarter of 2021 on an investment outside of the ATC service territory. This substantially wrote off all of the goodwill on the project. Earnings at our energy infrastructure segment improved $0.06 in…

Xia, thank you so much. Overall, we’re on track and focused on providing value for our customers and our stockholders. Operator, we’re now ready to open it up for the question-and-answer portion of the call.

[Operator Instructions] Your first question comes from the line of Shar Pourreza of Guggenheim Partners.

Rock’n’roll Shar, how are you doing today?

How are you doing, Gale? All good.

We’re good. We’re good. Yeah.

Excellent. So just, Gale, I know this seems like a perennial topic at this point but any sort of thoughts on the potential end of QIP in Illinois, it seems like efforts to eliminate it are getting traction yet again with obviously piece of legislation. There was a press conference on Monday. It’s scheduled to expire, so what are your thoughts here? I mean, it’s a little bit noisy. Just high level will be great.

Terrific, Shar. Thanks for the question. First of all, this is really nothing new. Each year late in the session for the past five years a bill has been introduced, very similar bills have been introduced each year for the past five years. We don’t expect any significant movement in that piece of legislation just exactly as what happened in the last five years. You are correct under current law, the QIP rider that allows us to put into basically begin earning a return on and off after new piping is put into service, that rider is scheduled by law to expire at the end of 2023, so we got a ways to go. I would say this. We continue to try to educate and I think have had some significant success in helping most people to understand two things. First of all, the QIP rider and the way it works is actually the most cost effective way for customers to basically have us continue with a very needed pipe upgrade program. And secondly, the Illinois Commerce Commission last year, it authorized a study, as they asked us to hire an independent consulting firm called [indiscernible], which did more than a year’s work in looking at what’s needed in Chicago and they concluded that more than two-thirds, almost 80% of the remaining gas distribution pipes under Chicago have a useful life of less than 15 years. So the work has to be done. We’re doing it the most cost effective way possible, not concerned about any near term legislation.

Okay, perfect. And then maybe just shifting over to the infrastructure segment, it seems like it’s been a bit of a longer time, since your last acquisition like Sapphire Sky, versus, I guess, your prior cadence. Just curious, is this sort of a symptom of anything in particular is, is there fewer opportunities or just a lot of competition supply chain, returns? Are you seeing projects maybe getting pushed out a little bit ahead of federal policy, clarity? Just maybe some thoughts there would be great.

No, I’m happy to answer that questions, Shar. First of all, as Xia mentioned and Scott, we’re way ahead of plan.

Right. Right.

So Jayhawk came into service a bit early on budget. Sapphire Sky, which we announced late last year is under construction, and I expect Sapphire Sky to begin commercial operation at the end of this year. We don’t have anything particularly in the plan for this year, not because there’s a paucity of projects, as we have a robust pipeline that we’re looking at. I think some of the uncertainty over federal tax credits maybe slowing things down here, but we’re way ahead of plan. We didn’t have anything specific in this year’s plan but we continue to look, we have a robust pipeline of projects and you will see some continuing effort here. We can be, as you know, very selective because we’re so far ahead of plan.

Got it. Got it. And just one real quick modeling question, is the ATC Holdco goodwill impairment that’s in the driver slideshow? Just align me what that is?

Yeah, I’m happy to. It’s an outside of the service area investment that years ago, the joint venture of Duke and ATC made in California, and will let Xia give you the detail.

Yeah, basically, we jointly own a transmission project. We acquired that back in 2013 and we performed the normal goodwill assessment on that project and decided that it’s -- they’re prudent for us to write down the majority of the goodwill. So it’s a non-cash booking trade that we did in the fourth quarter 2021.

Got it. Perfect. Thanks, guys. I appreciate it. And Gale, hopefully the “no adjustments” comment in your prepared remarks was understood well by the audience. Appreciate it. Thanks, guys.

Thank you, Shar.

Bye.

Your next question comes from a line of Julien Dumoulin-Smith of Bank of America.

Good afternoon, Julien.

Hey, hey. Hey, afternoon. Thanks for the time guys. Appreciate it. And just to clarify the last question a little bit on people’s in Illinois here. I mean, when you say like there’s the CapEx spend that you have over ‘22 to ‘26 here, which obviously spans the lapsing of the current program, you’re saying that if that program were to go away here that would -- that number ballpark would stay intact?

Well, what would happen -- I mean, first of all, I think the most direct answer your question is that work is needed for safety and reliability. So we either would continue assuming that the rider was renewed by legislation post the end of 2023 or we would revert to, basically, annual rate cases. And again, if you recall, in Illinois, the Commission there uses forward-looking test periods. So, either way that works got to continue and the investment is in the range, depending upon the year of 280 million to 300 million a year.

Got it. Excellent, thank you. And then just pivoting on the transmission side here, just Cardinal-Hickory, obviously, the developments in the course last week. Just how are you thinking about options given the federal wildlife preserve, just in terms of alternate routes, timing, CapEx recovery, anything you could share there?

Sure, happy to and for those who might not have been following Cardinal-Hickory, there is some activity in the courts with an environmental group challenging the permits that were issued by the US Fish and Wildlife Service, by the Iowa Public Service Commission, by the Wisconsin Public Service Commission. So there have been multiple permits that would allow this more than 100 mile line to be built, coming out of Iowa into Southwestern Wisconsin, and then working its way over to the Madison area. So that’s essentially a little more than 100 mile line. And to show you how long these projects take, that project was first envisioned and first discussed in 2011, so construction has been underway, essentially, in the Iowa portion. The portion in question where the permits are being challenged is in the southwestern part, it’s an environmentally sensitive part of the southwestern section of the state of Wisconsin. It’s called the Driftless Area. American Transmission Company, and again, this is partially owned, this line will be partially owned by ITC, ATC and the Dairyland Power Cooperative. The ATC portion, no one has questioned of the permits for that section of the line. So we’ll see how all of this works out in court. But long story short, the Wisconsin Commission has reiterated the need for the line and reiterated their belief that the approval was appropriate and needed. We’ll see how all this works out in court. At the end of the day, that line is an important part of moving renewable energy across the Midwest and into Wisconsin. So at the end of the day, I’m confident something positive will come out of this, maybe a bit delayed, but we’ll see what happens in the courts. I hope that helps, Julien.

No, absolutely. It’s good color. Well, I’ll leave it there guys. Thank you again, and best of luck and hope to see you guys soon.

Sounds good. Thanks, Julien.

Sure.

Your next question comes from a line of Jeremy Tonet of JP Morgan.

Greetings, Jeremy.

Hi, it’s actually Rich Sunderland on for Jeremy. Can you hear me?

I can. What have you done with Jeremy?

Jeremy is sorry to miss but I’m happy it is time for me today. Just may be starting around the load growth expectation for 2022. You’re curious on the key drivers there and really how you think about realized recovery from the pandemic in 2021, maybe how much conservatism is baked in there for the ‘22 outlook.

We’re going to let Scott handle that for you. He and Xia on top of those details. I will say this, though, we’re coming off of -- just as a reminder, we’re coming off a very strong recovery in 2021 and we see continued growth in 2022. Scott, particularly, at least I was impressed by the numbers related to the small C&I segment.

You’re exactly right, Gale. In fact, when we go back and Xia and I look at our forecasts compared to what happened in 2021, we were right on with residential, it hit exactly on. The positive surprise was in small commercial and large commercial. So, we came in almost -- our original forecast was about 1.3% growth, we came in at 2.5 at a retail less mine. So, very happy with the growth that we saw. And as you look at it, we continue, in 2022, to expect residential as people can start coming back to work and you’re starting to see more and more people return to work, residential will go down a little bit. And then that small commercial to grow continuing to expand in there and then once again, large commercial, we almost have a 2% growth in that large commercial sector. So we’re seeing really, really good growth and you can see, as you look at our longer-term plan, a lot of good economic growth that Gale talked about on the call, so a lot of good economic growth comes in here too.

Thanks, appreciate the color there. And then maybe pivoting to this new pilot program in Michigan, what’s the long-term target for blending and how do you think about this program in the context of your entire fleet?

You’re speaking, I believe, of the hydrogen pilot program that we’re going to undertake in the Upper Peninsula of Michigan at one of our newer RICE units. And just to put all of that in context for everyone, the RICE units, it’s a technology that’s been well proven, fueled by natural gas modular technology, if you will, does not require water permit. I mean, these are really advanced state-of-the-art power generation facilities and the project is really a pilot project. It’s being designed right now. We will actually test burn hydrogen in a mix with natural gas up to 25% hydrogen, 75% natural gas and this project will actually be in the field in the fourth quarter of 2023. We with the Electric Power Research Institute will then analyze the results and, as I mentioned in the prepared remarks, the results will be shared across the industry. We’re optimistic that this pilot program are the first of its kind in the US will demonstrate that hydrogen, with that particular technology, the RICE unit technology could be a major player going forward in decarbonizing the economy.

Great. Thank you for the time today.

You’re welcome.

Your next question comes from the mind of Neil Carlson of Wells Fargo Securities.

Greetings, Neil.

Hi, everybody. Hello.

Neil, are you getting snow or ice? Where you are?

We’re getting a lot of it and I’m watching all my neighbors, and my wife and son shoveling the driveway right now, so I’m feeling pretty good about this. I am wining.

I just got a text from your wife, it said, you dog.

Yeah, bad back. I can’t do things anymore. So anyway, just a question on the solar. So obviously, Badger Hollow, it gets flipped a little bit, understandable given all the other supply chain issues, etc. But you’ve got quite a bit more solar in the plan, as we look out over the next few years. And I’m curious if you’re -- if there’s any – at this point, any reason to be concerned about costs or timing, from what you’re seeing right now, as it relates to the additional, I think, 1300 megawatts that you plan to do over time?

Yeah, great question, Neil. I think the short answer is with what we’re seeing for 2022 and what we have under contract, no significant issues of and perhaps some timing. Down the road, Scott, your thoughts?

Yeah, down the road, I mean, we’re definitely watching, steel prices for the infrastructure and also the solar panels. But, as you look at natural gas prices, also, as those prices go up, the economics are still there. So I’m not -- we expect that some of the costs will rise and we’re monitoring it very closely, as you can imagine, but I don’t think it’s going to change your plan.

Okay, I agree with Scott. And, Neil, one other point, the drive to decarbonize the economy is not abating in any way, shape, or form. So, we continue to see those investments as both needed and expected, as we go down the road.

Perfect. Thank you.

Thank you, Neil.

Your next question comes from the line of Durgesh Chopra of Evercore ISI.

Greetings, Durgesh. How are you doing?

I’m doing… I’m doing well. Thanks for asking. Thank you for taking my question also. Xia, just this is a modeling question, the $0.04, the gain on clean energy fund, can you just elaborate on that? And then what quarter was that gain? And then I’m assuming you’re not sort of modeling anything for 2022? That’s a multi-part question, I’m sorry.

That’s okay. The, I think, on the second quarter call, I mentioned that we booked $0.03 of gain in the second quarter, then we picked up another penny in the fourth quarter, so $0.04 for the whole year. And when we develop the financial plan, we don’t try to build any expectations of anything like similar like investment games like this. But if the market continues to point to the right -- point in the right direction and if we end up having more games, we’ll be happy to book those but we don’t count on those going forward.

Sounds right, we’d be delighted to book more gains. I think this was from a revaluation, if you will, of one particular investment in the fund that is -- these funds, as you know, investing in clean technology, some of them hit, some of them don’t. This one hit very, very well and with the new round of funding and with the valuation, it was perfectly appropriate to revalue our investment.

Awesome, thank you for that color. And then just maybe, your peers on a call today talked about, just want to sort of be interested in your progress and actually your execution and your capital plan for ‘21. Your peers mentioned some supply chain concerns and that to put some of their newer projects out. Just wondering, are you seeing any of those pressures and how do you actually do in 2021 versus your targeted CapEx plan?

Well, I will ask Scott to give you his view as well. The one impact we had was really more from COVID than it was from supply chain. And that was a large solar farm, a large solar field called Badger Hollow 1 and that got delayed. It’s now in service. That got delayed several months and it was a decision that we helped to make. At the point where we were deep in the pandemic and 2021, to continue the construction apace, we would have had to bring in about 150 crew people from outside the state to continue the construction at that point in time. In the middle of the pandemic, we thought that was really not a very good idea. So we agreed to a schedule delay, but Scott, no significant cost delay at all and that’s now behind us.

No, that’s exactly correct. And everything else for 2021, our supply chain worked with our vendors to get everything in line. And we’ve had a practice here for several years that we are ordering some of the long lead time materials a year, year and a half at a time for some of these major projects to make sure we have it, so. And then the only other item was just what we mentioned in our prepared remarks, whereas Badger Hollow 2, we see about a three month delay right now, but no significant cost at this time.

Excellent. Thank you guys. Much appreciate the time.

You’re welcome. Thank you, Durgesh. Take care.

Your next question comes from a line of Michael Sullivan of Wolfe Research.

Michael, how’s your IT department?

Oh, yes. Fantastic.

You might kind of reiterate no change in your rating, right, Michael?

Yeah. Yeah, for sure. He got to go. Yeah the first question maybe just, if you could give us a sense of what the clean O&M savings number was for 2021 and what you’re embedding in ‘22 guidance.

Happy to do and Xia has got it right in front of her. Xia?

So for the full year 2021 we ended with 1.6%, down year-over-year compared to 2020. So we guided earlier in the year 2% to 3% and we’re right in that range. And what was – you had a second part of your question.

Yeah. What are assuming in ‘22?

Yeah, for 2022, we guide flat to 1% reduction from 2021.

Okay, great.

And Michael, I’m sorry, I’m sure you recognize this, but in light of the general inflation in the economy, we think that’s really, really strong performance, we’re very pleased about the plan we have in place to deliver what Xia is discussing.

Got it. Okay. And just curious if you could give any latest thoughts on where you think things might go with the pending issue at FERC as it relates to the RTO adder.

My own guess, and this is just a guess, but my own view is the RTO rider is probably history, but to be replaced by something else, perhaps an incentive type mechanism. I’m guessing that RTO rider, as we’ve known, it probably won’t survive. However, very important point, we have not assumed the continuation at all of the RTO rider in our forecast for 2022 earnings.

Okay. That’s great. Thanks and sorry, just one last one. It may be -- it looks like the FFO-to-debt metric ticked down a little bit year-over-year. Should we think about that as kind of stabilizing around that, 15% -- 15.7%, I think, where it came out as a go forward target?

Xia, your view?

Yeah, we target the 15% to 16% measured by Moody’s and S&P, so this is right in that neighborhood and as I said in the prepared remarks, the dip is really driven by year-over-year change of working capital and then that’s largely attributed to higher natural gas prices, so we expect that to recover. And we also made a voluntary pension contribution in 2021. So overall, I think we’re right in the target range for FFO to debt.

Great. Thank you very much.

Thank you, Michael. Take care.

Your next question comes from the line of Andrew Weisel of Scotiabank.

Good afternoon, Andrew.

Hey, thanks for taking my question. Most of them have been answered. I just want to follow up a little bit on the upcoming Wisconsin rate case. Two quick ones. First is do you see any potential for yet another stakeout or agreement to keep rates unchanged. I don’t mean to be greedy, you’ve done a great job managing the customer bills, just wondering strategically if you want to extend the stay out or if you feel it’s time to have a conversation with regulators and intervenors, like you do every so often?

It’s a great question, Andrew and I think unanimously, we believe it’s time to reset, if you will. Number of moving parts that are in our thinking and first of all, as you recall, we’ve announced the retirement of four older coal fired units at our Oak Creek site. These are 1960s vintage units and we’ve announced the retirement of the first two of those four in 2023, and the second two of the four in 2024. So there’ll be retirement there, there’ll be cost savings there and we really have been out of a rate case for so long that it’s really just time to step back and reset. And I think every -- the commission staff, the intervenors, I think we all believe it’s just time to take a thorough review again, and we’re looking forward to that. Scott?

It’s going to be a very straightforward rate case. I mean, when you look at our capital investments that we’ve made, the capital investments, and the majority of them, I think, when you look at what’s already been approved and at commission right now, that’s about 60% or a little over 60% of the rate base. And then you even add in new services and other reliability capital, almost all of this has been approved or great capital additions for reliability or decarbonizing the environment. So, it’s going to be a pretty straightforward rate cases, as you see us pull the final numbers together here in the next couple of months.

Okay. And not to get ahead of that, but are you able to give us any kind of high level guess of what it might do to rates, directionally or qualitatively?

Stay tuned. We’re pulling everything together, the filing is due by May 1, so we’ll certainly have a good conversation with you in advance of that. Yeah.

And I think the other thing to remember is, this is a place where you do two-year forward-looking rate cases. So a lot of our capital projects and you see that capital spending, it’s going to come in over two years, just like Gale mentioned, the retirement of those plants are over two years. So we’ll factor that into, so it will be a multi-year filing we do here.

Very straightforward case, though. We wouldn’t expect of being to have anything as dramatic in terms of it. It is not a case about higher O&M. As Scott said, this is a case about capital, much of which will have already been approved capital needed for reliability and for decarbonization.

Very good. And just a quick follow up. Is it too early to talk about performance base rate making in this upcoming case?

Yeah. And I’m glad you asked. For those of you who have not followed it, perhaps quite as closely, the Commission did have an informational hearing about -- just about the concept of performance-based rate making. That hearing came out of more than a year’s worth of work of the Governor’s task force, looking at climate change, looking at decarbonisation, looking at what initiatives the state might put in place. But I think it’s very clear from the informational hearing, that any changes in the process for putting rates in place in Wisconsin is going to be deliberate, it’s going to be thoroughly thought through and I would not expect that to have any impact on our upcoming rate review.

Okay, very helpful. Thank you.

You’re welcome. By the way, before we go to the next caller, I just got a text from one of your brother and he says, given your performance, nobody’s asking the most important question, Will Aaron Rodgers be back in Green Bay next year? The answer to that is I don’t know but [indiscernible] is still with us for the bucks and rock and roll.

Your next question comes from Michael Lapides of Goldman Sachs.

Hey, guys. Thanks for taking my questions and I’ll leave my John Moran props at home for now.

There you go.

Really nice night in New York last night. Real quick, just thinking about gas demand, if I go back over the last several years, kind of three, four years or so. Weather normalized gas to me in Wisconsin was actually pretty elevated, I can even go back five years. And now this year, you’re forecasting about 0.5%. And then if I look at your November slide deck, you’ll kind of forecast I think it’s around point 0.7% to 1% demand growth. Can you just talk to us a little bit about the trajectory, meaning why coming down off that kind of -- yeah, first of all, what led to the abnormal kind of that three percentage plus range from a couple years ago and that lasted for several years? And then down to 0.5% now kind of as we’re coming out of COVID, but then re-ramping back up.

Yeah. And Scott and I will both take a shot at that. Good question, Michael. The easy question and the first piece is, what happened? Why did we not see growth in weather normal gas demand during this past year during 2021? And as we looked at the data, I think the answer it really pops out from the data and that is the effect of the pandemic. If you think about the most dramatically impacted segment of our customer base for the pandemic, it’s small commercial and industrial customers, many of those premises were just closed during huge swaths of the pandemic. And so they weren’t -- think about the restaurants that weren’t cooking, think of the stores that were completely closed and not heated to the normal level. So clearly, the impact of the pandemic tempered the growth in customer demand for natural gas. But we still think we’re going to see a growth trajectory. And Scott, we’re still seeing strong customer growth.

Yeah, that’s exactly right. And when we look at it, we’re looking at strong customer growth, about 0.5%, maybe 0.7%. And you can imagine we’re factoring in that prices stay a little bit higher, conservation will continue and products will continue to become efficient. So looking forward, we’re still assuming that 0.5% in the future will be at 0.7% to 1%. So, good growth. And to Gale’s point, remember, the pandemic started in about March, so last year there’s two months that weren’t reflected in the previous year when the pandemic -- we didn’t have a pandemic, so that’s also why 2021 was a little weaker, because of just the timing of the pandemic.

Yeah, I would just add that, Michael, that we came pretty much on top of our forecast last year. So we guided that way, so we came out exactly what we thought it would happen last year.

Got it. And then just following question, like, if I look at 2020 and 2021, earnings, both years actually would have been a higher number, if I backed out the kind of roughly the $0.08 of debt extinguishment costs that showed up in each year. So, the earnings number, like a lot of companies consider that non-recurring and I respect the fact that you don’t back things in and out when you kind of stick with GAAP. But if I think about it, that is something that probably isn’t going to happen in 2022 or 2023; I may be wrong there. So it implies the base would have actually been higher meaning the ‘21 starting point or the ‘20 starting point, but the growth rate into ‘22 and ‘23 would actually be a little bit lower just because the starting point is higher. Am I just kind of thinking about that, right? Or they’re -- are you looking at the debt tranches at the Holdco and saying, hey, look, I’m going to have other re-financings and I’ll probably incur other similar like costs. Are there other moving parts, I’m not considering?

Mike I am going to ask Xia to answer the question about the Holdco debt. Let me if I can respond, though, a little bit more broadly. Of course, there are a number of moving pieces in any given year. But as you know, some companies in our industry basically adjust their way to a high growth rate, we don’t do that. And, I’m glad you’re asking the question, because I think the quality of our earnings and the fact that we don’t adjust our way to a higher growth rate, I think that’s a differentiator for us. I mean, I really do and it shows up in things like cash flows, it shows up in things like dividend growth. And so what we’re reporting, I mean, we don’t nickel and dime you to death, with little adjustments here and there just to hit a growth rate. What we’re reporting is high quality and real and GAAP. And with that, I’ll get off my soapbox and let Xia respond.

Michael, I wouldn’t just pick out that one item and readjust whatever you’re trying to adjust because to Gale’s point, we’re very much focused on the quality of earnings. If we see favorable weather, we see stronger economic recovery than what we originally forecasted. If we also have some favorable tax resolution happen in 2020, in the year, we will remain opportunistic about debt refinancing and just to take advantage of the development. So I think that’s just the normal course of what we do to manage throughout the year, so I wouldn’t take one item out and adjust it out at all.

Got it. Thank you guys much appreciated.

Take care of Michael.

Your final question comes from the line of Paul Patterson of Glenrock Associates.

Paul, you changed your last name? Did you?

No. That’s called misunderstanding. So a lot of my questions have been asked and answered, but and I don’t want to nickel and dime you guys to death, but just sort of a quick little follow ups here. The $0.06 for the taxes, is that -- how should we think about that going into 2022? Is there any sort of something unusual there or just how should we think about that going into 2022?

Xia, your thoughts?

Yeah. So, no, nothing unusual there. As I said in the prepared remarks that was largely driven by the production tax credit, the additional projects that we brought online. So you know that we expect a couple more projects coming online, one in the middle of the year, the other end of the year, so we expect another $0.08 of pickups from this section and the only thing I would warn you is I wouldn’t do $0.02 per quarter, because depending on the timeline and everything else, it could be skewed to one quarter versus another, but for the year, we expect another $0.08 increase.

Okay. And then just with the goodwill impairment, I know looks tiny to me. I mean, it looks like it’s about a penny or something maybe, but just -- I was just a little bit curious. You guys did a test and it led to a revaluation. But what caused -- what changed in order to have the test? I am just sort of -- you don’t think of the transmission project in California, like I’m just sort of curious as to what made you guys say, hey, the goodwill doesn’t apply anymore. Was there any particular event or anything near that that had that? Again I know, it’s kind of nickel and diming you guys, but I’m just sort of wondering.

No, no problem. It was really basically a FERC ROE case that we got to FERC order and we took another look. Xia?

Yeah, so Gale mentioned one of the drivers for the year-over-year change for ATC. But if you’re just looking at the goodwill impairment, we do that every year. We look at goodwill, we do the evaluation, we look at the assumptions, including forward-looking ROE, capital expenditure opportunities, and all the assumptions around that, it just -- the most recent assessment led us to believe that the goodwill should be written off. Nothing abnormal, it’s just normal course.

Right. But that’s because basically you guys saw a lower -- because the lower ROE had been awarded, it impaired goodwill, is that how we should think about it? Do I understand you guys correctly or is it something else?

No, it is capital expenditure opportunities, it is nothing unusual. So we just look at the net cash flows and terminal value and apply the different assumptions, which led to the conclusion that the goodwill should be written off.

Okay. Okay. Well, thanks so much. I appreciate it.

You’re more than welcome. Happy to have your questions.

All right. Well, I think we’ve worn you out, so thanks so much for participating in our conference call today. We appreciate all your questions and if you have any other questions, feel free to contact Beth Straka, her direct line 414-221-4639. Thanks, everybody. Take care so long for now.

Again, thank you for participating in today’s conference call. You may now disconnect.