Q4 2020 NorthWestern Corp Earnings Call

Are recordable incident rate was down from 1.86 and 4019 to only 1.36 in 2020. And I lost time rate went from 0.58 and 19 to 0.39 in 2020 and obviously that translates into uh, more people doing more work but fundamentally attract more people going home safely every day. So we're very proud of that and we had a great year in terms of customer satisfaction to our customers off solid our employees were doing and the community thought the company was doing in the community that was really recognized and appreciated. We've been talking about the competitive solicitation process in Montana for wage. It seems like a very long time. We are reviewing the independent administrators analysis, and we expect to announce the selection of multiple projects during the first quarter and we do anticipate

Paid for that at least one of our projects will be among those selected resulting in own capacity generation investment in Montana, in excess of two hundred million dollars over the next three years assuming we do receive approval from the Montana Public Service Commission will be coming back and talking about some of these in in much more detail. If not, Brian May for your Victory lap. Thanks Bob. I wish it wasn't a covert year for my Victory lap. But with that Bob talked about the financial outcomes in 2020 and net income was down on a gaap basis down 46.9 million approximately 23% You can look to that approximately $47 negative variance all on the gross margin line up at the top of page War. You see gross margins down about $47 million or 5% And when you think Below on the p&l, you know, yep.

did a nice job in terms of managing expenses matter of fact operating expenses or are down and that combined with favorable afudc and the other income line were offset pretty much entirely by increased wage expense and and a lower tax benefit in 2020 so we had a lot to do to overcome a difficult gross margin year and on page five we we speak to that gross margin. Forty-seven million managed about 5% that was pretty consistent down 5% both for electric and gas and as we described to the the bottom of that page you know it was really a whole break it down and really into uh five buckets if you will you know electric and gas certainly impacted by unfavorable weather and then secondly I'd say I am impacted that those two of course were partly offset by customer growth

We also had a poor outcome or a disallowance on our Peak am that's approximately nine million. The first two I talked about were approximately 22 million in total below that I really love together the three things we had a we did have a qf gain in 2020, but it was lower than the prior-year we did have in 2019. We had a decent Supply wage primarily as a result of dealing with the dead band. So on a year-over-year basis that was a negative item and then we had lower transmission revenues this year primarily from units one and two be down this year those three things combined together for approximately nine million, then lastly you did have a big other here and as we've mentioned on previous calls, we had some favorable items in bags in the in nineteen and unfavorable and twenty. These are primarily dealing with closed out trackers, but on a year-over-year basis that was a $9 swing the total of all of those wage.

Things it's approximately 40.

Point five million we did get a million back, I guess in terms of gross. Margin. When you net it out those items that impact gross margins that are offset elsewhere in the p&l for a net decrease in gross margin of forty seven point four million whether on page six was a big driver, we estimate overall unfavorable weather in 2020 resulted in nine point eight thousand dollar pre tax detriment is compared to normal and the 17.1 million detriment is compared to 2019. And when you look at heating degree-days for instance at the top of the page, it would certainly warmer-than-normal then again, the historic average and quite a bit warmer than last year. We did get some help from a cooling degree day primarily in South Dakota, but I think you all know that's a smaller part of our business. And so we didn't do as much bang for our buck. If you will in the third quarter for that and lastly on this page, you know in the first quarter and the fourth quarter. We like to suck.

A lot of blue, unfortunately in twenty-twenty we saw a lot of red or orange color. If you will much much warmer, just to give you a bit of hint for twenty Twenty-One. You're going to see a little quite a bit of orange. I think in January and you're going to see quite a bit of blue in February. So so far in February have been very very cold as Bob pointed out earlier on the call moving forward on page seven terms of operating expenses this company and we talked about the sun earlier calls, whatever we did see in a shortfall in in margin, we would be managing our expenses to make sure that we did hit our revised guidance and did a nice job operating expenses were down 6.8 million or down 1% The biggest driver was a reduction in G&A overtime or down 6.6% and we saw about a still soft four percent increase in property taxes and depreciation and depletion on the ogn a, you know, the biggest driver is employee benefits package.

Now think Medical but a good portion of that we're certainly lower incentive for the company during 20/20 had lower labor costs about four million think of is just the Bob talked about our biggest Year from a capital investment standpoint, certainly allocating more labor to Capital Hazard tree removal, we did such a great job in nineteen really getting after that. We had less dollars and twenty twenty-five and then as you know just less travel and other costs that you'd expect to see during a covert year. We certainly took advantage of that as well. One area would we did see increased cost was on the uncollectible accounts, even though we did get COVID-19. If you from the South Dakota commission, we did not from the Montana commission and that cost us a $3 increase in that particular item that the change was down. Twenty two point seven million in G&A for those items impact net income. Again, we had some things that impact birth.

Uh, oh gee.

Hey, but are offset elsewhere in the piano those total the one point six million four again a net decrease. No GNA of 21.1 million mentioned wage increases in property taxes and depreciation obviously planned additions of the biggest driver there at on property taxes. It changes in property valuations as well moving forward to slide age. Just operating income down forty point seven million about 15% interest expense slightly up from higher borrowings other income up from higher net net really from higher wage and think of the the build-out and you're seeing in South Dakota from a generation perspective driving that to a great degree that Nats to pre-tax being down about 38 million or nearly 21% and then below that we had a lower tax benefit than the prior-year and I'll speak to that in a minute again as we pointed out earlier in the call Net Income down 46.9 million Jun.

Moving out of taxes on slide nine at the bottom of the page. You see the the income tax benefit in 2020 was eleven million compared to nineteen point nine million benefit in a 2019 so reduction in benefit of 8.9 million that was driven. You can see as you move up the page about half we have to page the biggest driver there was in 2915 the release of unrecognized tax benefit of 22.8 million that was partially offset by really three items think of lower pre-tax income resulting in lower federal income tax the eight million. You see there and Lower State income taxes the 2.7 and then I'd argue just with the increased Capital work. We also had higher Capital that qualify for tax repairs that increase of four point one that helped offset last year's big benefit again a net reduction in benefit of 8.9 million moving on to the balance sheet. I think I'd say I'd really phone number.

On the capitalization rate the really at the bottom of the page, we were definitely up in short-term and long-term debt in 2020. We did delay Equity leads that we had in twenty years and we'll talk about that on kind of twenty Twenty-One moving forward and as a result of that delay really are are death cap did go up for 52% up to 53.5% Yeah, but still certainly within our targeted range of 50 to 55% moving on the cash flow statement on page 11 cash flow from operations or up about $55 billion. That's primarily due to better Supply collections this year. And then also in 2019 you may recall we had tcja refunds. We also had some generation interconnection refunds that bought a big Improvement, but that was over a hundred million those three changes that's reduced by the reduction in that income. We talked about earlier resulting in a net worth.

If you were on cash from operating activities.

He's about 55 million five talked about a big year from cash and investing activities. You can see that approximately a ninety million increase there and just hire investing we expect to be at this higher-level investment and hopefully even higher and we when we speak to generation and in Twenty-One, and then at the bottom of the page cast cash provided by financing activities certainly higher debt, which driver they're moving forward on page twelve. We had a slide in here just on taxes. Just wanted to point out we are using up in a Wells and we do expect those animals to carry over into twenty Twenty-One and but because the ptc's and other tax credits that we have we don't expect to be a cash down here until 2024 and also want to point out as will say elsewhere that we expect effective tax rate to kind of hover around 0% either -2.52 up to 2.5 log.

GTR on pre-tax income and then over time we expect that ETR to to gradually increase and 2 time we get to twenty twenty-five somewhere in life tend to 12% moving forward on adjusted non-gaap earnings and slide 13. First of all, I should point out. What were the the things that were non-gaap doubt if you will be did it back unfavorable weather this year and we did add back the peak am disallowance in nineteen s results. We added we actually removed favorable weather and we removed the unrecognized tax benefit as a result of that in 2020 are $3.06 diluted EPS increased by $0.29 to $3.35 and we compared that to $3.42. That's again adjusting the 2019 gap of $398 for those items I mentioned

To down to 3:40 to the difference between 3:35 and 3:40 to 7 cents or down 2% on a year-over-year basis. Non-gaap wage. Have you look at kind of how we compare those non-gaap items through the p&l itself gross margin at the top of the page, you know down about twenty 1 million and we look at it a non-gaap basis think half of that role being.

Basis slide fourteen, you know in terms of forecasting load itself, you know, we did all right on the residential side, but we're still seeing commercial and Industrial lag a bit off. It seems like they seem like quite a bit of difference. If you will from a volumetric perspective, I'll grant that to you. But if you move on to the next page page fifteen and focus on the impact of the fourth quarter from a COVID-19 if it was rather flat for us, we we saw a similar detriment and gross margin and we saw on the second and third quarter in the fourth quarter, but the recovery that we did see in an uncollectible accounts. We were able to collect from customers for a period of time before we entered into winter rules and again continued reduction in labor and travel and others and that net that we really just kind of flattened out to really a minimal loss to or affected. I just say zero if you will for the fourth quarter, but for the full year basis we did see at a total dead.

Gross margin total operating expenses were down 2.4. But in that number was again an increase in uncollectible accounts that had we got an accounting order we would have actually reduced that to zero as well. But even with that as a backdrop little bit different interest expense and and better taxes just to calculate what we would have seen in the Gap basis that after tax we saw a loss about I would argue five to seven million or nine to fourteen cents is associated with COVID-19 back to the three million uncollectible accounts. I think we've been saying all along if we didn't get in accounting order from the Montana commission, it would be about $0.05 that 3 million is approximately $0.05 and instead of being in the bottom half of our earnings guidance and a revised guides. We would have been in the top half that we have been able to achieve that last thing I'd say Bob reference this up front. I think when you consider the the log

Concerns about COVID-19 could impact our Capital spend. In fact our supply chain the the company operated extremely. Well Bob mentioned safety, but I deliver on the biggest Capital spend we had and really pull that off this year. It gives us a lot of confidence going to 20 21 with even an increased level of capital spend. So feel good. How about the operations of the company at this point in time moving on to 16 the 2029 Gap to the 2021 EPS Bridge starting with the 3:35 a.m. We arranged it, you know low to high up to 3:40 to 360. I'd acknowledge that that's a pretty wide range and and some of you have picked up, you know, we'd like to tighten that but we want to follow how things are going on COVID-19.

54 cents, I'd really kind of put that in the three different buckets and I'd argue that they're about a third of a third a third and first think organic growth is being that first third, I think second third would be a partial COVID-19 G

We do expect Cove it's going to be with us to the second quarter and expect to see more normalized look in the second half of the year. We have a Consolidated income tax rate. As I said earlier. Mine is 2.52 positive 2.5 and then diluted average shares ranging 51.52 51.88 right focus on that last one for a second. I think there's maybe been some concerns about announcing a $200 three-year ATM program obviously going from our share count where we sit today to this range. We're not planning on issuing two hundred million of equity in 2021. That is a three-year. Look it also remind folks that we did not issue equity in 2020 and and we had discussions of the rating agencies Thursday. We're a price was and we have seen some Rebound in our price. We do expect to be issuing equity in 2021, and some of that snow plow from 20 and and some of course with our needs but dead.

the the I want to reiterate

The $200 million is over a three-year period last thing I just say on equity and I know Bob will see it in the slide here and coming up as well. You know, if in fact we're fortunate up to win in the RP and then make an investment there after a pre-approval we're going to need to raise equity for that as well. Anything associated with that Montana generation is not built into them numbers either our capital or our equity and debt needs at this point in time. So with that I'll go to my last slide slide 17, we have, you know diluted EPS at the top of the page and and even with you know, obviously 20/20. It had a reduction in gaap and non-gaap earnings, even with that, you know, the average growth rate of this time. Was 4.3% It also point out that you know, the midpoint of our 2021 guidance versus our year-end 20. Non-gaap is a former.

million-dollar detrimental

Five-per-cent increase so that's in line. If you will what kind of the average we've seen over this time. It also say at regarding the dividend itself, you know, the I'd say the projected increase for a full year and dividend is a 3.3% increase I I would grant you that that's quite a bit less than the 6.7% You've seen on an average growth rate, but I'd also tell you that it's our expectation that we're going to grow that dividend in line with our earnings growth rate not going forward basis and I guess that would lead me to the red box at the bottom of this page. You know, we do expect to see if a phone number five percent growth and rate base a three to 6% EPS grow, you know over the long term and one thing I'd say about that is we've said before at this higher level of capital spend money that we're currently seeing, you know, we expect to as we get recovery of that investment through rates. We expect to see ourselves in the middle of that range and again if we're so fortunate to see some success in the wage,

Montana RP we'd expect to be in the high end again upon getting recovery or a pre-approval if you will as we make those Investments last thing I'd say on this page is we want to maintain that 60 to 70% dividend payout and I think that's one of the reasons you saw a certain way. It's a huge reason is why you saw a lower increase in the dividend then you have in the past but still a strong dividend up $0.08 a month want to make sure that we stay within that range and it going forward basis and expect that we will as we continue to grow their earnings of the company and with that hand it back over to Bob.

Picture of Brian dropping the mic right there Bryan. It's been great working with you as CFO over these last twelve and half years or so and I'm looking for a very much to working with you as CEO. Oh just show you how seriously Brian is taking his new role. He's now driving a large pick up truck appropriate in a new position. And as you get to know Crystal, you'll find out that she's much more in much more inclined towards jeeps and and classic pickup and she is towards those exotic German sports cars that that most cfo's Drive. I think the the last quarter I talked about how how much we're looking forward to 20 21, uh, in terms of the opportunities ahead of us. I would say that speaking for myself, but I think really for the whole month.

either team and the board we

we are more enthusiastic optimistic about our ability to do good work for our customers than has been the case in in quite some time and that is reflected among other things in the amount of capital work that we have planned for this year we told you in our last call that our total capital for about five years is 2.1 billion dollars and as Brian mentioned we expect to finance this with a combination of cash from operations First Mortgage bonds Equity issuance just threw a three-year as Brian said uh a t m program some financing obviously subject to change depending on your Capital expenditures regulatory outcomes internal cash Generating Station and other factors the plan that we depict does include some significant

An important generation projects in South Dakota as we've talked about there. We were really able to move from filing our plan to Consulting with the commission to making the adjustments very efficiently and we have a project underway in Aberdeen and even further along here on the capitol forecast off his really spread across all aspects of our business just as an example. We successfully commenced operations are Ami system in South Dakota this week. We had a great kickoff of the Ami team in Montana that's going to be a substantial investment and operational opportunity over the next 3 and 1/2 or so years.

And getting are looking forward to to moving ahead on that The Five-Year Plan does not include.

Incremental generation in Montana that might come out of the RFP. We do have ongoing investments in the hydro system as we continue to to optimize the that great asset for Montana. So just to press rewind for a minute on the Montana RFP last February going into COVID-19. We did undertake a competitive solicitation for up to 280 megawatts and is I've I've described the

the solicitation was in three tiers long-duration 20 hours intermediate 10 and short 5 a.m. we're submitted on behalf of a wide variety of generating facilities

yeah

Excessive 200 megawatts have you do expect at least one of our projects will be among those selected and that should result in additional own generation capacity in excess have an additional two hundred million dollars. Uh, again that is not included in in the plan that would be uh, an investment over a three-year period assuming that we do receive approval from Montana commission through the through the statutory pre-approval process that's available in Montana. And then again, we've continued on cost-effective upgrades to off the hydro facility including generation generator re wind turbine upgrade and other improvements was impressive that a lot of that work was able to have to go forward during during the COVID-19 has well, I mean tend to enter into the Western Energy imbalance Market this spring, uh, there were challenges certainly wage.

Around recruiting and training during COVID-19. We do expect that we're quite confident that we'll be able to move ahead this year on that project is brinna should say off and there will be advantages in terms of efficient operation and and lower costs. We've talked before about we had a very good experience and seeing Real Life customer benefits moving into spp out of South Dakota. Now, this is not the I am obviously is not a a full market so we don't expect to see benefits of that magnitude month, but we are looking forward to

Missing real benefits there in South Dakota just a little more detail. We do have we're well underway on the sixty megawatt project in in here on and those are the the so-called rice units. We expect those to be online late in 20 21, that's been a very good project and that's about eighty million dollars, uh forty million in 2020 and the rest going forward that that is again reflected in the capital budget that I shared and in addition to that. We're well ahead in planning an additional 30 to 40 megawatts of flexible generation at Aberdeen expect that to be online in 2023. And that's approximately sixty million dollars. Again, South Dakota Investments are identified or underway in are included in, Georgia.

in the capital budget other regulatory items to provide a bit of an update as you recall the Montana commission did not approve a fixed cost recovery mechanism AKA decoupling uh originally to be effective in July of 2020 because of COVID-19 in the office symmetric patterns we were seeing between customer classes we did ask the commission to delay that until July of this year and the commission agreed so we will expect the F CRM to take effect next summer at the same time we were wrapping up our Montana rape case successfully waged file a ferc transmission rate case and real thanks to everyone who worked on on that through Thursday

series of settlement meeting

Most of which had to be conducted online because of COVID-19 did reach a settlement agreement that was filed in November. And as a month of December we did have cumulative deferred revenues of about 31 million and the refunds of mid executed on that. We refunded about 25 million to our wholesale and choice customers in January. And then we expect to submit a compliance filing with the Montana PSC adjusting for credit in our retail rates upon the issue of a final order notable out of the first case. We're moving to call it a modified forward test year and there will be a much better harmonization between a prices in or costs recovered in Montana and recovered at the federal level, which will address a potential Gap that we that we did see them.

And then finally in this category each year, of course, we submit a Tracker request for Recovery of purchase power particularly wage power natural gas. And then also property taxes in Montana the commission's review these often they are relatively straightforward filings in Montana off unfortunately and not over the commission, uh, go to disallow nine point four million dollars in purchase power costs over the prior. And we've issued refunds that's associated with that also in January of this year and we have uh, as we've discussed on previous calls. We are extremely concerned about the the implications of of that order and do not agree with it. But it is it is for a past. And we're certainly looking forward to working dead.

With the with the new commission going forward we've been doing a lot of work around ESG Brian off heads our internal ESG committee. And actually everyone on this call is very active contributing to that. We think we've got a great story to tell on all three letters of that that particular alphabet and among the key initiatives. We have a new landing page consolidating all of the existing EST information off of that includes disclosures of nineteen in some cases new in some cases existing policies and standards that are associated with best practices. We've also included a new easy reference sustainability statistics report to disclose the five year trend of operational and financial ESG data in Spain.

Mystic so do encourage you to

Go to the to the link after the web page of the at the bottom of the page you're looking at right now. So we really do continue to make very good progress. Most notably a substantial Improvement. Uh, you'll see in the msci rating from a BB to an a a couple of other notable things here, uh along with the investment in system-wide electric vehicle charging and we've got good projects underway in South Dakota and we're hopeful in Montana as well as also committed to a thoughtful transition in our own states starting in 2021 initially will be targeting about 30% of light duty and bucket trucks and twenty percent of medium and heavy-duty to be electrified. May I by 2030? So again in summary a great year despite the challenges from an operational safety wage?

Customer satisfaction perspective in twenty-twenty and laid the foundation. We believe for a particularly good year or in 2021, and with that we'll take your questions. Thank you Bob. You're joining us by a computer today and would like to ask a question. Please signal your intent by using the raise your hand button. That is Faith. I found within the toolbar at the bottom of your screen. You can almost also simultaneously, press alt and why on a PC or option, why on a Mac to raise your hand, please ensure. Your microphone is unmuted. If you are in the office to ask a question your dialed in my phone. You can press star nine to raise your hand and * 6 to unmute your line to ask a question again that star nine to raise your hand and star six to Cog line. We'll give it a few questions or excuse me. We'll give it a few seconds for our first questions in the queue. If you have not provided your name and zoom ID or a dialed in my phone, please be listening for us to announce your name.

Friday or last four digits of your telephone number to notify you that your line is open and ready for your question again, please be sure that your line is unmuted on your end.

We'll take our first question from Andrew Levy Andrew your line is open. Hey, I did it right said you have Andy I'm doing good. Thank you. So I have a couple things trying to say just want to say it's Friday in the long weekend. It's 4:10. So you guys remind me of the line electrovolt. That's just between what's going on that we don't get Monday off same on us. Okay, but maybe you want to rethink things, but I know it's like around your life as far like if I had nothing to do anyway, but those speeds down so as far as you guys are concerned just a couple things I didn't thinking about just first on the very high level just looking at COVID-19.

your guidance

How much have you kind of put into your 21 guidance as a I don't know if I want to call it a hit but you know kind of negative effects of coding on going to go. But yeah, Brian you're ready for that one. Yeah, I I would just say this Andy is we kind of backed off, you know our our thoughts for the birth half of the Year expected receipt COVID-19 gir to the relief to the first two quarters, you know, the first quarter certainly is a big quarter for a second our latest quarter typically so long and we do expect by the summertime things are going to be in much better spot. So that's our expectation. No, I understand that. But I'm just saying like financially I give you know, how much of that

No, actually that's how we're looking at margin that's how we're looking at expenses

I'm just trying to figure out like if you were in a more normalized.

Environment, you know, let's say 12 months from now. You know, what what would we be added back?

I would you know, maybe one thing would be helpful and he is you know, we did you have quite a bit of detail. If you will four quarters two through four this year in terms of how it impacted on an l and if there's an expectation we're going to see some of that impact us for the certainly for the first half of this year. That's how I think about it and that obviously if COVID-19 here and think about organic growth on off of that. That's how things should start unwinding if you will out of code it and then on the IRP process, you know, where you talk about, you know in a hotel suite two hundred plus million dollars and you feel very comfortable with so I get that part. Can you just talk about like the part that is kind of unknown at this point and if there is a possibility for more than that

Stated capex. What I would say is that in the in the current month fee. We're actively involved right now and uh in finalizing what will take forward to the commission and we're comfortable that we may have a project as part of that that will take us over the over the two hundred million dollar threshold that takes down a part of our customers exposure to the market, but we didn't include it in this deck that as you recall. We are our customers in Montana over 45% exposed to the regional market. So we expect that there will be a subsequent RFP. We haven't made decisions about timing but yep.

Is real stuff.

This isn't uh, just uh policy debate and say just a little bit about how the system is operating today. Fortunately. We own gas transmission and and storage as well as electric transmission and generation and our folks are doing a fantastic job coordinating with one another but we are on the market and we don't want to be on the market nearly as much as we are. It's it's a price range and it's even a supply risk and this is something that can happen in Montana pretty much any time of the winter, but it also happened in August. So I'm very pleased we're moving ahead with the RFP right now, but we do expect we're going to be going out relatively soon over the next song.

Years with a subsequent RFP to continue to take down our customers exposure to a market that you just really do not want to be in. Okay. I understand see the way I had it was that you know, you're at at least whether it's a project or two projects whatever it may be through the RFP, but if there was still like unknown relative to this month, but you're really talking about future where there could be continued outside like yeah, we we believe there's still have to be upside down in the current. But again, the future are efficient a very important to understand and then then I guess I don't know if I want to say whether this are your future or what do you guys think about far as like solar flash storage as an opportunity and whether that makes sense within your service territory as a way home.

And they some of the shortfall. Yeah, they they have a role and one of the reasons that the RFP was structured is it was five hour 10 hour 20 our was so that resources have different kinds could participate and in fact that has occurred a great place if you want to dig a little bit deeper and how these things behave on our system is a filing our supply planners made with the Montana Commission in December and there's a really robust in a Russian of different kinds of resources and the effective load carrying capacity or elcc, uh, contributions and resources and money. But I I actually it's one of the best things I read last year so there is a place but you've got to be I think practical about what that place is remember birth.

Montana system right now we are

Pushing or not quite there, but we're pushing 70% carbon free. We got about 450 megawatts of wind on our system right now and unfortunately off today when we need it. Most desperately the production is is negligible. So it's a long answer but I think that's the that's the best way to think about it. I really would encourage you to take a look at see that this December or Supply supplement. Hey, Bob Bob. I'd like to just add one thing too. I think obviously we wanted to participate in this RFP for build that's not take place and that the 2022-23 time. They'll be as Bob pointed out earlier in the call. Another RP may be late this year or the next year and month that would be for, you know build and the 2425 time. And we'd like to think we're going to have an opportunity to participate.

And that as well, so just want to make sure that people understand is really going to be two of these coming just one more comment there. If you look at the again at the five-year Capital forecast and think about how Ugg any kind of future project might be layered in there. I think that's uh, that's why positive as well.

Okay, and then just questions provided I should have said the beginning. Congratulations Drive.

Very proud. You're almost there.

You're almost at as far as the financing plan.

It's very straightforward. Okay, so I understand one thing. I just don't really understand is why why you doing at ATM first just issuing, you know, cuz it look, you know, you give us your shares outstanding. So it looks like you need about $75 billion of equity this year give or take right which is like, you know, one point three wage and shares why not like to issue it to us because your stock trades that after two hundred seventy one thousand shares today and you know in general, you know, that was all on the clothes really by like, you know, 3:00 and it was like a hundred and sixty thousand shares. It's going to take you like all year. I'm exaggerating do it off but like, you know, whether it's made or some other people like the, you know, we could easily take down your share and a small discount and then you wanted to have this affecting

the performance of the stock truly, I believe it's it can't because stock unfortunately trade so thinly as do a lot of utilities, you know at the current moment cuz the way the market is

I appreciate your view and I will tell you this we've had great success with ATM in the past. And in fact, we have quite a bit of billed as you know, both from the generation side and South Dakota and our current plan in terms of capital needs I would tell you this at the ATM is like I said served as well. We're bullish on our share price is that it's going to be going up over this time. Is another reason we like what we're doing here, but I also tell you it it's nothing precludes us from doing anything else. If something better comes along and makes sense for us to issue shares. We could possibly do that as well. But that's right. Now the plan is 2/3 year period is to raise two hundred million to meet our current needs just to understand through your ATM. I mean, I guess what you're saying if I wanted to come and take a bit, I guess a better way to put it I don't that's not the right term to take down a block, you know, small block of your stock I guess wage.

That that is that could be part of the ATMs. Well, I I'm just saying we have flexibility to either use the ATM or something else if it's something else better comes along.

Thank you. Thank Sandy just a reminder. If you want to ask a question for most people you can find the raise your hand under the participants button on the bottom of your screen or Thursday. If you're dialed in my phone, press star nine to raise your hand and * 6 to unmute your phone will take the next question from Michael Weinstein at at Credit Suisse. Mike your life open. Hey, guys. Hey, so you to follow up on these questions in terms of what's your thinking about rape cases a month going forward, you know considering 20/20 is a test year. I guess if you were going to do it this year, you know so much money is a funny year, right? So, I don't know if that's really cool. Yeah. I'm just want to put your timing is looking like I know I think normally you provide an update in April right? But yeah, and I can confidently say that we eventually will file a race case Montana wage.

here I think our our Focus will it will be an all-hands-on-deck Focus will be on the pre-approval filing associated with with the supply of an implementation right so that would be the primary focus of this year will be the pre-approval that's going to take most of the year I think realistically there once they determine the final to be sufficient there on basically a a a nine-month shot clock

right

see and then oh, I

Yeah, see about the.

Oh, you know about the the transmission rates. Do you have the ability? Let me see here or not the transmission but the the the the disallowance on on coal strip. Is that final at this point? I mean the nine point four million. I mean, I guess it's been a couple of years in the making it is final. Yes. And is there a reason why Montana just the final analysis just thought that you deserve recovery of of that, you know, I mean, it sounds like the explanation you provided sounded pretty reasonable. Not your fault. We we certainly thought so and Crystal was one of the one of the key Witnesses in that in that proceeding there were basically two questions one had to do with whether the outage associated with

Taking the plant down partially for Environmental Compliance was in some way Improvement. When we went to the market to procure replacement power then secondly the timing of elimination of the Dead band under a statute that was passed. We were very concerned am disappointed and strongly disagreed with what the commission decided and but it is now a past. And we're we're not the feeling we are on the other hand really focused on working with the new Commissioners the new the new chair of the commission back to the continued to improve things. In fact on that subject and you commission a makeup order. It looks like there might be some chance or some room for improvement in terms of regulatory treatment. Yep.

powered you know do you have any comment on what kinds of you know I guess the new priorities might look like going forward you know in the past is always been sort of this legislative focus on making sure call jobs or you know maintain in the state is that you know has has any of that changed going forward do you think what I would first, about the commission we obviously we got a fantastic relationship with the South Dakota commission and translated into being able to invest a sort of our customers their home very efficiently in Montana we want to have the same kind of relationship with the Commissioners with the staff and ultimately of course with the consumer Council as well most of the month commission's decisions that were concerned about are driven by advocacy from the from the consumer Council I'm impressed by Thursday

the new the two new Commissioners very impressed

and believe that they're going to be strong additions to the Commissioners who are returning German brown is a lawyer it's got a graduate degree in tax you spending a lot of time in my impression is on uh really managing the commission and the process and that's something that's extremely important to him at the same time are legal and Regulatory folks are a reciprocating working working with their counterparts at the commission that's all very positive we've had a number of good informational meetings even in in Groveland had a very substantive overview of the company with the new Commissioners going back to December we had in January and I think an excellent presentation by our supply leaders to the to the full Club

And really focusing on the uh, the peak deficit the exposure to the regional market and what we hope to bring out of the RFP. They were very engaged and stay on the concerns. Uh, and our

I think committed to addressing in a couple of weeks. We've got an overview of our financial operations and the two areas where the state Commissioners Office really need to focus to be successful in their jobs. As far as I'm concerned our operations and and finance so understand other decisions affect our ability to do our job. So very encouraged by all of that off the thing I would say on a larger scale in Montana, is that for the first time in many many years. There's a political alignment between the governor and the legislature and the commission, you know, Governor gianforte his office very successful entrepreneur. He founded right now Technologies, ultimately sold that the Oracle Oracle was continued to invest in Montana.

And I made the point he would not have been able to create so much wealth in value in Montana. If that company had been subject to the kind of a challenge is that we've been subject to at time he is committed to investment in the states essential infrastructure. He certainly is committed to maintaining the viability of coal strip as a key asset for its useful life in the legislature. The Republican majority has actually increased they work very closely with the governor. And then at the commission would talked about I think the very strong additions that the two new commissioners office will be to the commission's important to work.

yeah, I guess it's just

Speaking to me that the you know the right off, you know, you have to write off purchase power costs for an outage of coal strip that you know this that would be a perfect illustration of why Reliance on you know, the Western market for for purchases is is a problem. You know, it's it's sort of inconsistent. I guess what their view I guess the prevailing view that has been in a state about home ownership of generation at the utility and you know, just wondering if that is if that's changing going forward, you know, I would say that if anything there is a greater appreciation of the value of own generation as part of a portfolio and we don't for perspective we own

Less of Our Generation than do many companies particularly in the non organized market and we've talked about how vastly more exposed we are to the regional market at Peak then any of our peers and again, I'm looking out the window. It's beautiful but it is snowing and it is below zero am I would be much more comfortable if we had control of more of our own resources to serve our customers.

Since congratulations Ryan and Crystal and think so leave it there are thanks Mike. Thanks Mike. We'll take our next call Jonathan Reeder at Wells Fargo Jonathan. Your line should be open.

Can you hear me now? Yep. Sure. Can Jonathan. All right. Okay, so good to know. Thank you God. Yeah now we're all learning the new system today, right? So appreciate all the colors so far on the call. You were kind of almost getting into I thought with the last caller there Bob. But what are your thoughts on some of the bills that have been introduced in Montana this year? I think there's one, you know that would get rid of the pre-approval process while another would you know expedite the time that the mpsc has to authorize pre-approval? What do you think those had this year? And you know, how does that impact, uh, you know the current RFP and and the future our plans very directly. I think that off the bills up by quite honestly the bill sponsored by the majority are much more likely to go forward than the bill is sponsored by the minority and the

Bill clarifying the current pre-approval process is much more likely to go forward my I believe actually the whole bill.

Eliminating pre-approval either has been or assumed will be tabled which is appropriate and phone number other bills. We're we're paying attention to our or ones. For example that were passed in previous legislation previous legislative. And then unfortunately, we're vetoed in fact the the uh, pre-approval Bill the pre-approval repeal bill has already been tabled and we feel very good wage dad. So it's it's I think there's an opportunity to do some things in this legislative session that will allow us to better serve our customers and that's that's very important.

net metering a fair and sustainable program something that we can we can support and and in fact make available to our customers without harming other customers the second bill that was approved in previous session and vetoed was the community renewable energy portfolio Sanford and that we we had found to be really unworkable that the challenge is projects to qualify as Crepes has to be both below serving size and um

Not and and meet the cost threshold to serve our customers. It's pretty very very difficult to meet both threshold so long. It's been a big distraction for us. We have managed to get most of the way to our our crept requirement, but we certainly believe that modifying a requirement would be a substantial step forward.

And then the only other question I had was on the Montana decoupling pilot that goes into effect in mid Twenty-One remind us when we see the true up to you know normal flow through the p&l in a second half of 2021 or does it not occur until the 12-month. I'm going to put Crystal lail on the spot long to answer the the first question in her new role. She was she was close to that.

Throwing one Highway. Yeah, the CRM we expect at this point still to implement that pilot beginning in July and we will record that you'll see it in our earnings really basis.

Okay, great. All right. Thanks. That's all. I appreciate you taking my questions. Thanks Jonathan. We will take our next call from the line of Ryan Greenwald at Bank of America. Go ahead Ryan.

Good afternoon, guys, can you hear me?

Congratulations to you both Brian and Crystal. Thank you, sir.

So assuming you guys are successful with some of the generation projects in Montana and you guys get the pre-approval.