Q2 2020 Idacorp Inc Earnings Call
Carpet website, if you need assistance at the time during the presentation. Please <unk> zero on your fun I vows, drawing a call over to jazz thing Forsburg's, Iraq, Sir I'll think Bachelor relational vendor out here.
Thank you and good afternoon, everyone.
Before the market's open this morning, we issued and posted that I had a corpse website, our second quarter 2020 earnings released and form 10-Q.
Why is it a company today's call are also available on our website.
Refer to those slides by number throughout the call today.
As noted on slide to our discussion include forward looking statements, including earnings guidance, which reflect our current views on what the future holds but our subject to several risks and uncertainties, including those related to the Cobra 19 public health crisis <unk>.
This cautionary note is also included in more detail for your with you in our filings with the Securities and Exchange Commission.
These risks and uncertainties may cause the actual results to defer materially from statements made today and we cautioned against placing undo reliance on any forward looking statements.
Is shown on side three on today's call. We have Lisa grow I had a corpse, president and Chief Executive Officer, and Steve Teen I had a carpet senior Vice President and Chief Financial Officer.
We also have other company represented is available to help answer any questions. You may have after Steven Lisa provide updates.
[noise] on slide for we present are quarterly financial results I had a corpse 2022nd quarter earnings per diluted sure, where one dollar and 19 cents and increased 14 cents per share from last year second quarter.
Right of course earnings per diluted sure for the first six months of 20, $21.94 and increase the four cents per sure from the same period last year.
Today, we also reaffirmed our four year 2020, I had a corp earnings got guidance estimate to be in the range of $4 and 45 sent to $4.65 per diluted chair with our expectation that Idaho power will not need to utilize any of the tax credits in 2020 that are available to support earnings in Idaho under.
Sure it's regulatory settlement stipulation.
These are estimates as of today as we have seen a relatively modest net financial impact from the coven 19 pandemic today.
However, as you would expect it is difficult to predict the full impact of evolving economic conditions in Idaho powers customers and suppliers and how that could affect the upper end of the earnings guidance range or the use of tax credits, if the pandemic worsens, whereas prolonged.
I will now turn the call over to Steve.
Thank you Justin.
Let's move to slide five where I will discuss our second quarter financial result, as compared to the same quarter last year.
Despite a fairly what June and the impact of the pandemic overall, we had solid results, which we believe position as well as we move forward through the second half of 2020.
On the table of year over year changes, you'll see that continued strong customer girls, a 2.6% added $3.4 million the operating income.
Although although we saw higher <unk> precipitation in June this quarters irrigation sales were closer to normal the last year and helped offset the negative impacts of the pandemic.
Which decreased our commercial and industrial sales volumes the most.
Residential customer usage was 6% higher than last year, mostly related to whether variations. The customers also spent more time at home due to the public health crisis.
The net result was a six 6 million dollar increase an overall usage good customer.
<unk> on the table, you'll see that the increase in residential sales was offset by a $3.1 million decrease in our cost adjustment ribbons.
Moving further down the table a retail revenues per megawatt hour were down $1.5 million, partly due to the timing.
<unk> recovery associated with our power cost adjustment mechanism.
And also Idaho powers open access tariff rates declined by 13% in October of 2019. This right decrease lowered transmission willing related revenues by $1 million [laughter].
Next on the table other operating and maintenance expensive decreased by $3.9 million, primarily due to the temporary deferral of some maintenance projects that Idaho powers jointly owned generation plant.
We expect this maintenance to be completed later in 2024 and 2021.
Is the timing of the maintenance is discretionary.
You'll know later that we continue to expect full your O&M expenses to be in line with 2019 and our prior guidance.
Earlier this month, the Idaho Commission issued an order granting utilities the <unk> the authority to differ unanticipated emergency related expenses.
Due to the Coke with 19 public health crisis net of any cost savings for possible recovery through future right.
As such and the second quarter, Idaho power recorded 8.6 million dollar regulatory asset for its initial estimate of those costs.
Including higher bad that expense net of estimated savings such as vehicle fuel an employee traveling training.
The changes collectively Ned into an increased Idaho powers operating income [noise].
Seven $5 million <unk>.
Overall, Idaho powers, and I had a corpse second quarter net income more seven $7 million and $7.2 million higher than last year, respectively.
And that didn't come for the first half of 2020.
$2.1 million higher than last year, and I had a court.
I didn't corporate Idaho power continue to maintain strong balance sheets, including investment grade credit ratings that sound liquidity, which enable us to fun ongoing capital expenditures and dividend payments.
I mentioned last quarter that we successfully close the 30 year bond offering that brought approximately $260 million of cash proceeds Idaho power price that are we offer you a 3.42 per cent.
Go seeds of that issuance address long-term liquidity needs that won't be used to retire next week at 100 million dollar bond set to mature later this year.
[noise] in June this quarter.
Shoot a separate $80 million 10 year bond at at 1.9 per cent coupon the proceeds of which will use earlier this week to redeem prior to maturity $75 million and bonds that had been set immature in 2022 at a 2.95 per cent coupon.
This pond redemption included a modest make hold premium that will resolve in a slight tax benefit and the third order this year.
We are pleased with the outcomes of these two issuances and believe both Idaho power and I had a corp. Orange strong liquidity positions. These financing also lowered Idaho powers longterm cost of that right.
I had a corpse operating cashflows, along with our liquidity positions as of the end of the second quarter are included on slides six cash flows from operations Whereabout $37 million lower than the first six months of 2019. The decrease was mostly related to the timing of net collections of regulatory assets and liabilities, especially.
[noise], those resulting from the power <unk> judgment mechanism.
The liquidity available under right of course, I owe powers credit facilities is shown on the middle of slides six.
At this time, we do not anticipate issue any additional equity this year other than the relatively nominal nominal amount under our compensation plants.
You'll note that including the current cash positions and I had a court in Idaho power as of July 29th we have access to liquidity of approximately $200 million and $494 million respectively.
One of our mouths to be used for that retirement and the third quarter.
Oh cash flows I've been minimally effective thus far are combined liquidity.
Along with expected regulatory support from our annual adjustment mechanisms as a substantial backstopped, who are expected capital and operating needs.
[noise] as planned Idaho power contributed $20 million towards pension plan during the for seven months of this year and there's no further required additional contributions during 2020.
We currently planned to contribute an additional $20 million to the plan, but have flexibility depending on market conditions, and cashflows, including any effects health crisis.
Flight seven shows are reaffirmed full year 2020 earnings guidance.
And a key financial and operating metrics estimates.
Well it remains difficult to predict the long term pandemic related impact on economic conditions and that's on our earnings guidance range. We continue to expect either clubs 2020 earnings to be in the range of $4.45 to $4.65 per diluted chair.
[noise] guidance continues to assume they'll use a additional tax credits in normal weather conditions going forward.
Are strong consistent financial results and sustained cosman doing efforts during the past decade are preserved the full $45 million a tax credits available to support our current minimum Idaho jurisdictional return on equity of nine four per cent.
And what about continuing our efforts to preserve them going forward.
Other than the refined expectation of hydro power generation to the range of 657 5 million megawatt hours.
The remaining full year financial and operating method forecast are consistent with what we originally provided back in February and affirmative back in April.
With that I'll turn the called Lisa.
Thank you feed and thanks to everyone for joining us on stage calm.
I won't begin with some comments around the pindaric and I'd like to start my celebrating rebellion firework forces. It seems to be honest that at this crisis, our company them as quickly as human sure. We can continue to safely provide reliable energy to our customers.
Aren't even if it's critical too big Aly nights of our customers and the community of community to be sure and will cause. It 19 has percentage password any challenges I'm still age I really need to continue delivering or not Michigan and remarkable.
Alright aligned stations and power supply teams and other field workers have taken extra precautions to operate safely inefficiently.
Meanwhile, most of our office employees have been working remotely from living for months.
I work force just carried on without any discernible impact on our operations or on our customers.
All our employees have consistently exceeded expectations during my career in Idaho power I am more grateful impounding ever to work with such an amazing group of people.
Work during this crisis isn't caffeine into our company information Soggy Unculture.
Thanks to the effort to buy workforce, we have been able to carry on our generation transmission and distribution operations without major disruption.
We'd made efforts so when the impact on customers, including voluntarily suspending disconnect.
If connections and waving Lacey that'd be onset of Kobe 19th.
I'll be Idaho Commission has a loudish two weekends Disconnections next month, we will continue to proactively communicate with customers into work on payment plans with Dallas you may be struggling financially.
Five eight shows are still get them out data compared to forecast since the health crisis began to impact our service area.
Although it's worth noting that variables outside the pan Danny whether you're in particular also impact these figures.
Overall since the end of March met retail C. O N at two per cent lower than what we had for cascade going into 2020.
Lower commercial and industrial loads driving let's get the decrease.
Well the same customer categories impacting our second quarter results when compared with your prior year the impact of those little that'd be crazy decreases we're more than off my customer ground, how ya residential customer usage and it returned to more normal irrigation usage.
The stupid, Idaho, and Oregon, heading progressing through various stages the virus respond, although not always been a linear fashion and continuing to adjust pentamidine control.
It would be reasonable to expect continued decrease commercial and industrial alone in the short term compared with last year.
Like customer Grella strong energy stay on sport residential irrigation customers and wise management of operation and maintenance expensive should allow us to continue executing under 2020 strategy and a cheese our business goals.
Despite the current challenges we remain cautiously optimistic about the future economic recovery and grill across our service area.
The topic, that's gross if you looked at like nine you won't know.
<unk>, Idaho power <unk> 2.6 customer per cent increase customer ground during the 12 months ending June 30th.
Which matches cute one grocery and continues to train with me asking for several years.
I don't always picky, if you wanted the fastest growing state and the country going forward.
And Idaho power as well positioned to support that growth with reliable affordable clean energy for new residents as well as incoming and expanding businesses.
Employees and unemployment numbers and our service area have of course being impacted by Kobe 19, and we will continue to monitor chicken honestly.
I've got the end of June unemployment in our service area was six per cent compared with 11, 1% nationally and 3% in our service area in June 20th 20th 19.
Moody's for Cascade GDP now calls for a declining out <unk>, a 3.8 per cent in 2020.
They projected rebound at 4% in 2021, and 8% eight two pretty soon in 2022.
These numbers compare favorably with protections for the U S economy as a whole.
G D P for cat incorporated into most current expected impacts.
I'm Gonna economic development.
<unk> chilled out Giovanni.
Completed a notable expansion in the second corner, adding new line for a new <unk> yogurt products.
The new Amazon fulfillment center in nearby it's also progressing twice completion later this year and it is on schedule keep you wanted the fastest Amazon has ever built from groundbreaking two fulfilling orders.
Despite uncertainty and other challenges cosmic Kobe 19 projects under construction in Idaho Power service area continue to move forward without major delay.
<unk>.
[noise] stream of inquiries from potential customers, particularly in the food processing and manufacturing sector's.
Thanks to affordable pricing my business friendly environment, Our service area remains an attractive location for him pass me and we expect the continued influence a medium project as we move past the Pam damage.
I have a couple of updates to share on her appointment to having way transmission project also nowadays b two age.
First on July 2nd the Beach O H project hidden another significant significant permitting milestone by receiving a proposed order we're deciding process from the Oregon Department of energy.
This milestone can mentioned a contestant case process is expected to end with a final order insight certificate from the state of Oregon, and the second half of 2021.
Second Idaho power co participants alright, exploring several service arrangements aimed at maximizing to value if it'd be two H project to each co participants customers.
One <unk> potential change could include Idaho power acquiring panico power administrations ownership sure and intern providing transmission service to be P. A and it's south east Idaho customers.
Discussions or I'm going, but I'm gonna just scenario, Idaho, calling me one after 45 per cent of the transmission like.
If Idaho power, we're getting a L. D. P. A S portion of the project, we would work to developing arrangement where are investors earn a normal range no no return on capital invested well, our retail customers would not be able to cost of that portion of the project.
We do not anticipate Idaho power filing a general right case in Idaho, Oregon in the next 12 months.
Like giving me on giving the ongoing impact cobin 19 crisis, and it's potential impact on the economy and then communities. We serve we will continue to monitor that situation, possibly.
He customer grilled constructive regulatory outcomes and effective cost me an account I'll play significant wrong as we looked at the need and timing I'm a teacher channel weekdays.
So I turn it shows a recent outlook precipitation and whether a friend who national oceanic and atmospheric administration.
Alright, why they're protections for the remainder this summer and early fall suggest 840% to 68% chance four or five normal temperatures me range of normal 240 per cent chance it below normal precipitation in Idaho power service area.
If this hot dry weather materializes.
We would expect to see salad sales during the third quarter, particularly for residential and irrigation customers.
[noise] too good reservoir storage conditions entering the summer combined with a wet June this year reservoir storage levels remain favorable for generating reliable affordable clean hydro power hit the benefit of all customers during the hottest part of the year.
I'll close my prepared remarks by reiterating my thanks to our employees for their commitment to safety to our company's Michigan and to our customers.
They continue to rise to the occasion, despite the unusual circumstances in 2020.
I also think you are owners for your support and companies and I as we navigate this pandemic.
With that even I and the other time to call are happy to answer your question.
We are now alrighty to begin to class.
<unk>.
To ask a question assuming you'll have the dialogue they're cute when they liked please do so by pressing star one on your fun, we remind you enjoying sure your immune function turn it off before you lost your question.
Take as many questions for me on the first babies.
Once again, Betty B Star want on your on to ask a question now.
Our first question problems from Greg.
Let's see.
Hey, everybody how are Ya.
Good alright.
The the guidance can you give us a little color on what your thought processes for the fall, particularly going into the fourth quarter.
You know what have you factored into your guidance in terms of what might be fall winter search and Cove, it and and it just what is your general expectation there.
Well Christmas you know third quarters are big quarter their password typically maybe more.
And so what happens in third quarter has.
Usually.
Outside of the effect on the whole year as we were rolling right now it feels like very little change from the start with on the economic frog.
It doesn't seem to have slowed at all no leather how long that goes to the question but.
Certainly in this moment things are our people are as busy as ever.
The state has been through some.
Different phases of opening and quote re clothing a bit.
I I would say that it feels to us that at least this.
Current state we're in his found a way to function with this going on I think balls going to bring some additional challenges with schools and other things coming back but.
That's one of the reasons at this point, we're just leaving the range of little wider than we have at some point, sometimes we've narrowed in seconds. It just didn't feel like you have to do that.
But we have.
Factored in normal weather basically the rest of the year.
We have factored in what we know about how we have responded thus far and I think it's been pretty effective.
As far as a an uptick are down if you know something there. The we don't we're reading everything we see but I don't think we can predict that it's.
Better or worse, I'd say, it's more of a.
In existence, and the state where in today, probably as close as to what's rolling out.
Okay is is that you were lack of.
Significant economic impact due to the nature of the the heavy AG component of your economy.
I think that's part of it and certainly the things going on the for through the summer you know the next two months are gonna be the biggest thing. So that's kind of predates your period that you're talking about in terms of.
Some sort of a resurgence or a different level of impact in the fall.
So that parts likely going to roll on with water <unk> whatever it is as you know temperature can help us if it gets <unk>.
Really hot occasionally we get a rate differential that.
We give back or we we kind of bear the risks if we have customer reviews, an abnormally high amount we.
Or I guess, we better get some benefit out of that if it goes really low it's way below normal then we run the risk of losing some because our our adjustment mechanisms tend to use averages. So when something's way off the average it has a different effect.
Right now, it's really hot and we're hoping that is.
Brings has some good benefits, but we don't plan on that one we step into the quarter.
Okay have you got an estimated impact of what.
Cove at 19 did economically on a gross basis.
Sales.
Well that's the chart, we should do there I mean, we're net Ah.
<unk>, the bulk of it which which grabbed was that number eight shows you. We tried to get that's a very that's actually we're giving you the look at what it did for cats.
What we forecasted what actuals, where and then we've whether it just a bit to show you that there were some weather impacts you can see that it.
There were some periods or where the weather probably drove helped drive it a little bit higher and it comes down a bit with the weather adjustment but.
On these two categories.
This is full rather this is that all those yeah, yeah. So the whole load, it's a little lower than our forecast cause you saw check the financials, it's higher than the prior year.
So this is the best quantification, we can give you and I think it's why we put the whole thing and this time.
The two biggest areas that have been hit are certainly the industrial and and commercial.
But in residential kind of been an offset the other way and that is.
As the move in come there's just so many new things coming that it's hard to get a feel exactly how much is higher use amongst our own customers and.
And the blend because it is they're coming out is pretty fast right now.
Okay.
Can you give us a little bit colors, it's been a little bit of a search and Idaho of late can you give us a little sense of what's going on there.
In terms of instead of virus yeah.
Yeah. So this is Lisa.
Yeah, it's it seemed to sort of begin during memorial weekend. It seemed it escalate after the fourth of July so.
And really it was when the phase with entered where the bars opened again to be quite honest and more large gatherings. We're allowed so [noise].
No it it's a very difficult.
Political.
<unk> issue for many we certainly are there's a lot of <unk>.
County by County entity by entity.
Requirements that are being.
Added just like math wearing for example.
So so right now we're holding in faith for Saturday those large gatherings are not allowed yeah different city has.
Further Ah increase the requirement and so it is kind of a patchwork across Idaho, we're hopeful that last week. It it's sorta handheld our internet tailed off but it it it it flattens and I were seeing it sort of grow again, so we don't have very good <unk>.
<unk> at this point in time, but we I'm seeing some problem myself people starting to take it seriously I I see more people wearing masks I hear more people talking about it so I'm hopeful, but we haven't really seen the data that would suggest it's turning the corner yet.
Okay, great. Thanks for to caller I appreciate it Stacey.
Yeah did you say Chris.
Next question comes traveling.
With me at the Bank of America.
Good afternoon, everyone.
Extra time.
Good afternoon.
Hi, Julie Lazar. Thank you guys. So let me pick it up where where are you left off there just on the Kobe subject just real quickly. If I can just curious last time. We spoke are we talking about the planting season being probably the bigger forward looking indicator as as far as <unk> goes I would imagine that that.
Intact, but I I, just Wanna make sure we're explicit on that and then separately and related I'd be curious on a wedding normalized basis, what were your residential sales as well just just.
Thinking through that one obviously higher margin.
Well, let me back up just a little bit I would say on the.
I remember the first part here on irrigation. It did look I would say that that didn't seem to be drastically different based on anything with the pandemic I think people planted the way they were planning to plant.
Irrigation system does while it runs all the way into some things will be irritating into the fall.
There is a pretty good drop off as you moved from June into <unk> into July and I'm from July and August it kind of steps down, but that's all bowling I would say a fairly normal trajectory.
June which would've been looking backwards.
Do you go through the quarter June would've had the best opportunity I think from a whether standpoint isn't really all categories.
The three months June was the one that was probably the least helpful. Because we had a lot of water and a little cooler temperatures in June April and May have is pretty hopeful [laughter]. They were kind of the other way. It's just bigger use so what we've got set up your going forward as of now things are more in the months, where you get some irrigate.
And.
Do you tend to get higher results out of.
<unk> customers and it feels like temperatures and the precipitation are more on the normal into the dry and hot side. So.
Let's say that gives us some hope we'll have to watch his would go through the quarter, but.
Hopefully it gives you a little bit of color there.
Excellent. Thank you <unk> and then if I can say that here back to some of them more conventional subject.
The bread your process of specific car I think they're they're moving forward on their side with some of the filing.
This fall I'm, just curious I'm, just bridger expectations and process there just.
Sort of a status quo I presume, but would be curious if any updates.
And then I'll throw the other question out there at the same time.
Do you think about the transformation Wheeling revenues I I know you talked about it and and the results here. Just you should you expect any kind of oscillations with that year over year or do you think about the cops and just in light of Cove. It I I know that could drive various impacts.
HM.
Yeah. So.
It's Adam on the call.
Yeah, So Adam.
Did you take the Bridger question.
Yeah, Hey, Joanna Tad you know <unk> are most recent our T V shows bread you spell it 2022 in 2026 for two units and then 2028 2030, so as we sit here today. That's that's still the case. We are as you may know and it was involved filing looking at our our P.
The bottom line is at this time, we'd run into some analysis in appearance of our preferred portfolio more Maine. The preferred portfolio about the short story as in June we discovered a few modifications named punch that we wanted to make we're making ozium pets right now and rerunning the models and so we'll see.
<unk> <unk>, but for purposes, I'm right now and what we're seeing it appears that to confirm portfolio. We put in <unk> P. As as it relates to breed you are still the dates were looking at in the future. Obviously, we need to work with Pacific Corp, and come to agreement with them as well on those dates.
And then I can take the transmission and Adam chime in if if I Miss anything, but you know, it's it's hard to predict transmission certainly last year's results were up because of the enbridge gas pipeline rupture and sorted the den ensuing market shifts that happened.
We're able to take advantage of.
But transmission is cyclicals lots of things can happen.
N N as in sort of more market to open up I think there's opportunities for that could go up but it is very seasonal and it's very whether depend danton sorted out I just had a combination of whatever else is is going on so I don't know that I would say it necessarily has a cyclical nature that we could predict but we want.
[noise] take carefully.
Yeah, and I think that's right and I'll just add you know two one was down a little bit and volumes Q2 was back up we have seen some favorable pricing I think in the mid T market and so we have seen volumes increase in that regard, but at least this point, it's a little bit difficult. This time to predict where it's going the market in general.
Low for about price perspective, so I'd say overall volumes had been relatively flat, but moving up in Q too.
Got it okay, and so that sounds familiar with <unk> you know the reason we had the.
One of the contributors with that high volume in the prior year contributed partly to the the right.
Klein that happened in October so the other thing is that you do have lower volumes, you're likely going to get a little bit of help on the right later in the year or so but it'll it'll depend on what plays out through the rest of the the summer.
Yeah that formula around every October.
Okay.
Got it okay interesting.
Let me put him to just like what do you think.
Since ranch and I'm going to frame. It. This way when you think of the factors to get you to the mid to high end of that range and anything that you would flagged awesome.
I I know, there's a number of different factors moving rabbit and concluding here just curious if they said.
That you would be looking towards her ways that you would sensitized to take care of <unk>.
Well specifically in regard to transmission I would say we were pretty cautious with.
The higher volumes, we got out of the Enbridge side with new though.
Wasn't likely to repeat at that level. So we've used the more normalised level of.
Expectation.
We did use the lower rates that will put in.
Less that we knew we're going to be in effect in October so that side I would say we've.
Pretty cautious so as things going as they've gone this far keep us on track if it lives a little bit that will be helpful. Whether I think.
Has a chance to help certainly if we have a harder than normal and the drawing or the normal month or two that's likely to give us a little bit of help and that would be a little.
We're going to keep our eye on you noticed the we had a maintenance the pearl that came up this quarter to that.
Helped but for the year, we don't know if it'll hit 20th 20th 2021 that one has potential at the slides clearer 21, we would.
Get some help out of that as well things like that are probably what we'd look too.
We've got our heads down I'm trying to just make sure we control the cost that we we can control.
This year, we've had we've had success there we've had as you saw the bond transactions were helpful.
They've kind of help though cover some of the things that we didn't count on like the the cost of dealing with the pandemic.
P P and all those things so.
It's been a little bit of a push me pull you. Thus far we're hoping we're moving into a phase when we can just get some good and hang onto it.
But that's why we left guidance basically where it was I think we feel like we're in a good place we have hopes for the rest of the years I've pointed out to Chris to that three quarters are big quarter.
We can get that one right usually helps the whole here.
Yeah, I hear Ya sorry, just quit clarification from what you were saying I was looking at my notes here I'm I'm Bridget timeline for coming back on that I I I know that these process iterative just come back maybe that's in Adam question here.
Well I think we've talked about it all it's just there's some maintenance that was going on there and some of the bigger items. This won't happen to be in a few million dollars arrange that.
Yeah, they're managing kovar, there too and the impacts of <unk>.
Contractors in N out and it became obvious here second quarter that they were moving some things that would've let started then.
And it looks like that.
For now is in deferral mode. We don't know if it could come back by the end of the year, if it could slip into 2021.
That would be one that.
What I'm, telling you is for our plant sticking with our original guidance. So we haven't grabbed it and said that's an absolute when we think it's too early to commit to that will keep watching it hopefully by the end of third quarter, we know more whether that one has potential to help.
No more too if there's more cost I'd have to be.
Instead of gift so.
We'll combine those.
Julian This is Justin are you also asking about the timeline of the earlier closure of some of the bedroom units too.
I'm, sorry, yes, indeed, I I know it's yeah.
And those are all yeah, no problem, yeah, I didn't I I'm happy to answer that it's yeah. It's that the unit exits and this is all of course preliminary and based on I R. P. Bryan, but it's 2022 in 2026 or within our kind of action planning window, and then 2028 and 2030 are also Ah exit dates and the preferred port.
Folio, but again, we just mentioned that I have to mention that we have partners there and we'll be working through that with them to determine that kind of what date works for both both companies and also insuring that the preferred portfolio remains the preferred portfolios, we we'd like an additional run to die or P.
Okay, you guys very generous with your time, thank you very much.
Thank you Julia.
Our next question.
<unk>.
Christine.
Hi.
Hello, Hi, Brian.
He just.
To understand.
<unk>.
No usage of the a D I T C. So.
The the ability at this point to preserve or 45 million.
Tax credits.
That's.
That is completely separate from the 3.9 million of O&M.
Plant maintenance that's being.
Delayed correct.
Correct, we were already.
Yeah, Brian and even first quarter, we were saying we weren't gonna use.
[noise] tax credits, we felt like we could control our O&M and.
If you look at our current your guidance compared to last year, you can see it's pretty control.
So yeah that separate.
Okay. So so you you knew in the first quarter that just plant maintenance was gonna be delayed. So you know I guess, what I'm, saying, we knew that we didn't that we weren't gonna be in tax credits or we expected we weren't going to be in tax credits, even before we knew that so that's additional news and what we're saying.
Right now as we don't know whether that's gonna be back before the end of the year or if it moves into the prior year. So our guidance as if it's there next year. So our guidance as it fits today is really pretty much where we started the year and we'll we'll wait a little bit longer will watch through third quarter with no more probably that's over whether that's coming into this year moving lawn.
Well, it's a potential that could help we just don't know what else might show up between now and then.
Or if it happens.
Because we've been talking about those plants, we have partners and they operate the plant we.
I have input into how that goes but.
We're not the driver of that so it'll be.
That'll be worked out and we'll know more later on it's just too soon right now to absolutely say that.
To the following year.
Okay. So if I could say it differently if the if if you did not.
Delay 3.9 million of maintenance spending.
[noise] would still not need to use any a D. I T C S as of.
Today.
Correct and our guidance okay.
For all of them yeah.
Right, Okay got it.
And what else what jointly owned plants are you referring to.
Just just a bridge or plant or are there others.
You know all three of our steam plants.
Boardman now.
Moving on Yep, but all three we we're partners.
With another company and now the to the the lab phone me and Bridger.
Again, we're partners in there the operating partner and what are the.
Involvement we have 50 50 ownership that they run the plan. So it's just it's different it isn't that we can just control those things and make our own choices Uh-huh it'll have you guys.
And then just to follow up on on the guidance. If you know when I look back.
Over the last 10 years and you always have a slide in your presentation, you've always exceeded the midpoint of your original guidance.
And that that translated into it.
A little over 5%.
P S K.
Alright.
Awesome 19.
<unk> Street guidance and each.
Second quarter of those three years.
Correct me, if I'm wrong, but or are you just being conservative.
Right now.
Given the.
[noise] Covid situation and you know the uncertainty maybe around the service territory that you're leaving your guidance steady as of as of this quarter.
Brian I think a couple of those years, we had a known event that we.
Basically have the ability to book by the second quarter that gave us more confidence.
I would say this year, we've had some good things happen they they haven't been.
Big enough to.
Kind of when the day and I do think cobin plays into it a bit we've seen that it can.
Add some costs already but we know we don't know when it or how it resolved I think that are known as a tough one we.
We certainly I'll have thought.
It might be going to a different way by now so that it might be there might be seeing.
More of the upsides coming of getting back and things recovering instead, we're sitting here kind of wondering when and how it does resolved. So there's a there's an element of that too.
But.
You know I think that.
We also as you recall or are we is nine four this year versus the 95 I think that's at a little bit of a new thing for us.
And.
No. That's the bar goes up every year so [laughter].
We set a pretty high bar with the end of last year, because we step into this year moving up for me, it's a challenge in.
Again, we feel good about it we're holding where we're at.
And.
Third quarter being such a big part of it I think this as a year or to the.
The other order goes before we get any additional 30.
Got it and when I look at it looks like if if the weather forecast for.
A hot dry summer.
Versus last year's third quarter, which was <unk>.
<unk>, which was the exact opposite smiled and rainy.
It seems like you're gonna have a pretty easy three Q 23, Q 19.
Comparison.
One way to look at it.
I didn't get this that would've been a fun shirt to have if I had it but an internal joke is <unk>.
<unk> had every one of these wet periods, where we've been disappointed has charged instead, we were gonna be hot and dry.
Going into those periods <unk>.
Including the spring so.
That would probably some caution there too because we have been fooled by these charts once or twice.
And.
Been right on the cusp you know, it's like you go north a little ways yourself, a little ways the weather's different so <unk>.
Yeah, I all of that factors into us kind of thing. This is a year. We're just we're happy to be where we're at <unk> Park too good quarters.
About everything we could've done to make us ready to deal with the next two quarters is there old things replace though.
Let's go another quarter [laughter] I'll, let you know how it.
<unk>.
Yeah, No I I can appreciate Ya.
The weather.
Just you know it looks like your interest expansion crease close to a million dollars in the second quarter versus a year ago I would imagine it's the pro kuchta.
Opportunistic capital raising ahead of win.
You need it and you mentioned.
Cost cost a capital or I should say your your cost of borrowing decrease.
How much does that will decrease with the second quarter.
That raises and then you know the subsequent third quarter.
<unk> of that.
Sure are all in I think I.
They said the.
But I had written down at the rate is actually lower.
We borrowed a little bit more as well that wasn't in the start of the year plan with our first bond issuance.
And I think they net out to us narrow wash it I don't think it's a big down it's.
Because that was in our plan originally I mean, we've been in this mode of trying to be ahead of our needs.
And.
Operate in a fairly.
[noise] with our credit ratings and it seemed to be a positive there. So we just stuck with that motive trying to borrow a little bit ahead.
You know Catholics is roller for us as you saw it was a little bit. This year are longer numbers went up just a little bit and we don't really see that.
Ending I mean, EBIT, we thought it might slow with the pandemic.
I'm not sure it hasn't spit up the people trying to get into Idaho. So it's.
It's just that we're being careful and cautious there and making sure that we are physician well capitalized with the pandemic hit. We also wanted to have enough to get through the summer. So we did do it probably earlier than we would have done otherwise.
But I think it's all it's all really good we're not way beyond what are normal plan was anyway, we're really kind of on the plan. Just we're ahead of the game and they got some really good rates with it.
So I think it's a good place to be.
Okay got it and then you know when I looked into cash balance of 460 million and the second quote of 20. It seems like you have quite a bit of excess liquidity and even with the refinancing of that.
And the third quarter. This year, you still gonna be left with.
Quite a bit of cash at the end of 2020, which seems to be kind of.
That is consistent scene with you guys over the last several years I'm just wondering what your thoughts on.
That excess liquidity and how that ties into.
Coming board decision.
Guarding the dividend, which typically occurs in September of each year.
Right.
The dividend is.
We made some statements last year of what we expected to do and we haven't.
We haven't faltered on that we have the same expectations today.
Again that are all let's be getting ahead, we decided we borrow this year, that's really curious through next year.
I think that'll be would've done it later in the year, most likely have not had the pandemic but.
We didn't an interest rates also got really favorable which is an early.
But we've tried to do that about every other year, we've not only handles our refinancings that were required we've tried to borrow a little bit extra so that we could stay.
Little bit ahead of our capital needs that were coming in the in the following year and that's what we've done again.
Number goes down.
Back to my third quarter commented how big it is to spend is really big as we move into these quarters as well most of our construction.
The big items are rolling out right now and we'll see the impacts of that show up over the next quarter as well good news.
Hopefully have positive revenue students about with us.
It is a safe safer spot I would say, but we will.
It's not way different than what we had plan.
Right. Okay. So remind reminds us <unk> what is your target that to cap is at 50%, even though you've been so 40% for many years now.
Yeah, we've always just set around 50 per cent and you know we got several big projects in the works that we're not spending on but that are coming.
And I think that we're a little bit.
Rich against that today is more we know that's coming in when we get those opportunities.
We're going to be able to do that with <unk>.
We think really low.
That financing I think will not.
Probably need to push additional equity through the early phases as those kick in and we start to spend so I I, it's actually a really in my opinion, that's a really defensive place to be.
And we'll have minimal impacts when we do get that figured capex and.
We didn't talk to a ton about them on this call, but people are pushing ahead on board with him anyway.
We're pushing ahead on.
Health Canyon, and they're gonna be things coming at us that are going to add we've shown you guys some of our.
Are increased Capex story, it's just not here this minute.
But we don't wait until we get there to think about it. So we're we're really ahead of that a bit in the good news is will fix that was that when we get there.
That's the cheapest way to do it.
Yeah for sure.
Place.
To be.
Just curious also you know obviously everybody's so the week GDP numbers today and you quoted some of the Moody's statistics as it relates to your service territory.
What were the mood you should just statistics for.
Alright, <unk> I had a power service territory last quarter is it consistent where they are today or have they been revised slower.
Hi, Brian a suggestion I've got the data in front of me. So I'll just answered the question last quarter, Moody's was suggesting just barely positive DDP grilled for 2027%.
But going into 2020, Moody's was suggesting closer to 5% DDP grilled for 2020. So the swing is still significant obviously not a lot.
Not as wide as the national swings that we've seen but but certainly going from close to 5% at the beginning of the year two a negative three eight now is a big difference.
Rabbit in 2021, 22, you choose to obviously very very solid and positive.
Alright.
Okay and then also just lastly on.
Borough of the Cobra related expenses 6 billion, it's really.
Not that that much but how do you recover that can you do kind of a one off.
You know filing or do you have to wait for a right case to eventually recover any any deferrals.
Maybe let Tim Tim.
For you on to that.
Sure Yeah. This is Tim.
I think we're just gonna have to see how it plays out and see what the ultimate balances and see what else we have going on.
The future. So there's no specific prescribed way to go about that we'll just have to assess at the time that.
Feel like we've we've accumulated the the balances it would be accumulated and assessed the best approach for.
[noise] at that point.
Okay, great. Thank you very much.
Thanks, Brian Yes. Thank you.
I know opportunity.
Brass start wine.
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That concludes the classroom didn't answer session for today.
Grow Ozzy alternative corporates back to you.
Thank you everyone for participating on our call today. We appreciate your continued interest in <unk> and I wish you all.
Stay safe and I wish you, good health and remember to where you're masks and mustard hands. So thank you and have a great weekend Oh, great evening.
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