Question-and-Answer Session
Operator
Our first question comes from Greg Gordon - Citigroup.
Greg Gordon - Citigroup
Just to review your comments, you’re seeing meaningful increase in the underlying cost of doing business in the core utility. Therefore, just to translate what you said, you’ve got a very wide range of potential earnings outcomes depending on how successful you are in both executing energy efficiency -- obviously if the accounting is correct -- and the transformation program. But given the creep you’re seeing in overall of the business, all things being equal, you need a higher level of execution to achieve and/or beat your growth aspirations. Is that what you’re trying to tell us?
Christopher Johns
Basically, what we’re reiterating is the 8% growth and that in light of some of the underlying cost increases we’re seeing, we want to temper folks from adding automatically any regulatory order that would allow us increased energy efficiency incentives above and beyond that 8%.
So we’re taking a look at what those cost drivers are and then quite frankly, we’re looking at what is going to be that final order and what level of earnings with that energy efficiency program give us and what will our cost of capital proceeding give us at the end of this year, so that we can give everybody a better update in the first quarter of next year.
Greg Gordon - Citigroup
But there is also a larger question in that. There’s a huge range of potential outcomes on the effectiveness of transformation, which is embedded in the communications you’ve given us in the past, right. And you’ve indicated that, 100% of achieving the high end of those potential outcomes is, in fact, not necessarily baked in to the 8% guidance range.
So, I’m trying to understand, is it the energy efficiency gain, the energy efficiency earnings uplift that would be absorbed by potentially higher costs or the cost increases you’re seeing even more dire than that and also into some of the potential upsides from executing at the high end of your guidance on transformation?
Christopher Johns
I think I understand the question that you’re asking and what I would say is that, our transformation efficiency programs are continuing to move forward. Some of those programs were realizing better than expected benefits and some of them less than expected benefits. As we always do, we’re continuing to evaluate those.
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