Q4 2020 Avista Corp Earnings Call
Ladies and gentlemen, thank you for standing by and welcome to the Atmos talk Communications' fourth quarter 2020 earnings Conference call. At this time all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question during the session you'll need to press star one on your telephone as a reminder, today's program.
And is being recorded I would now like to introduce your host for today's program Mr. John Wilcox Investor Relations manager. Please go ahead Sir.
Good morning, everyone and welcome to Avista is fourth quarter and fiscal year 2020 earnings Conference call our earnings and our 2000 Twenty's and form 10-K were released pre market. This morning and are both available on our website.
Okay.
Joining me. This morning are Avista Corp, President and CEO, Dennis Vermillion, Executive Vice President Treasurer, and CFO, Mark Thies, Senior Vice President External affairs, and Chief customer Officer, Kevin Christie, and Vice President Controller, and principal accounting Officer, Ryan Crackel.
I would like to remind everyone that some of the statements that will be made today are forward looking statements that involve assumptions risks and uncertainties, which are subject to change for reference to the various factors, which could cause actual results to differ materially from those discussed on today's call. Please refer to our 10-K for 2012.
<unk>, which is available on our website.
To begin this presentation I would like to recap the financial results presented in today's press release.
Our consolidated earnings for the fourth quarter of 2020, or <unk> 85 cents per diluted share compared to 76 cents for the fourth quarter of 2019 for.
For the full year consolidated earnings were $1 90 per diluted share for 2020 compared to.
$2.97 last year now.
Now I'll turn the discussion over to Dennis.
Well, thanks, John and good morning, everyone. As we began 2000 22021 continuing to work through the Covid pandemic, we hope you're staying safe and healthy looking back on the last year.
I'm, just so proud of our employees for navigating the challenges presented by the pandemic continuing to provide energy like they always do to our customers.
And progressing our business plans forward I would like to thank all of our employees for their dedication and determination throughout the last year.
We continue to help those who are struggling and most in need and our communities and 2020, Avista and the Avista foundation provided more than $4 million and charitable giving to support the increased need for services the community agencies.
Are still experiencing throughout the areas we serve.
Okay.
Financially our earnings for 2020 were better than expectations and Mark will provide further details here and just a few minutes on.
Operationally, we finished installing nearly all of our smart meters electric smart meters and natural gas modules across Washington.
And one of the largest projects in our history the.
And the deployment of this infrastructure will provide customers with more real time data. So they can better manage their energy use.
Technology enables us to proactively push high energy alerts to notify customers if they could exceed their preset energy budgets, which of course helps eliminate surprises when their bill arrives at the end of the month.
Beyond generating bills, we're using the data from smart meters to run and more reliable and efficient power grid and to deliver a higher level of service for our customers. For example, we we now have more visibility into our system, which allows us to detect and restore power outages more quickly.
We also made strides to meeting our clean energy goals as the Rattlesnake flat wind farm went online last December during its construction and the project created clean energy jobs for our local communities and now that it's completed the projects 20 projects 57 wind turbines excuse me will.
<unk> 50 average megawatts of clean renewable energy for our customers at an affordable price that's enough energy to power 38000 homes for years to come.
As wildfires continue to have an impact on our region and we implemented a new comprehensive tenure wildfire resiliency plan that aims to improve defense strategies and operating practices for a more resilient system.
We expect to invest about $330 million and implementing the components of this plan over the life of the plan, which as I said was 10 years.
We were proud to announce yesterday that Avista has been recognized again as one of the 2021 world's most ethical companies by Ethisphere, a global leader and defining and advancing the standards of ethical business practices. This marks the second year in a row that Avista has achieved this day.
Stinks and we are only one of nine on our reuse recognized and the energy and utilities industry.
Just on their assessment.
And 2021 135 honorees in total were recognized spanning 22 countries and 47 industries.
We are honored to receive this recognition because it acknowledges our belief that integrating corporate responsibility into our business builds trust.
For just lasting relationships strengthens morale reduces risk and deliver enhanced value to our shareholders and ultimately enables us to more effectively deliver on our vision to provide better energy for life.
In January we published Avista is 2021 corporate responsibility report on our Avista Corp, Dot Com website, and I urge you to check it out when you have some time. This content provides a broad look at our operations and how we are fulfilling our commitments to our people our customers our communities and.
For our shareholders. The website also provides links to Avista is reporting on a series of industry and financial ESG disclosures.
The updated content supports avista has long standing commitment to corporate responsibility and sharing this information with our stakeholders.
Switching gears with respect to regulatory filings in January we filed two year general rate cases and Idaho.
And as you know and 2020, we filed general rate cases, and Washington, and we continue to work through the regulatory processes.
And both of these jurisdictions.
We take our responsibility to provide safe reliable energy at an affordable price very seriously and.
And we work hard to make prudent financial investments and our infrastructure manage our costs and identify ways to best serve our customers that contribute to keeping and energy prices low.
For example, our proposed tax customer credit would completely offset and immediate increase in electric and natural gas bills for our Washington and customers.
And Oregon, New rates went into effect on January 16th of this year and we expect to file another rate case, and the second half of 2021 in Oregon.
Looking ahead, we remain focused on running a great utility and continue to invest prudent capital to maintain and update our infrastructure and provide reliable energy service to our customers.
We are initiating our 2021 2022 and 2023 earnings guidance with consolidated ranges of a dollar and 96 to $2 16 per diluted share for 2021.
$2 18 to $2 38 in 2022 and $2.42 to $2 and 62 per diluted share for 2023. This puts us on track to earning our allowed return by 2023.
Lastly earlier this month the board increased our dividend by four 3% to an annual dividend of $1 69 per share and a different debt increase approved by the board marks the 19th consecutive year. The board has raised the dividend for our shareholders and I believe it demonstrates the board's commitment to maximizing shareholder value.
At this time I'll turn this presentation over to Mark.
Thank you Dennis and good morning, everyone, we had low expectations coming into this year, knowing that the company the Blackhawks.
And the Blackhawks have really started off pretty good after a slow first for games. We've had five rookie score their first goals ever and the NHL. So a pretty exciting times for all of your hockey fans out there.
For the company and the fourth quarter Avista utilities contributed 81 per diluted share compared to 67 last year.
Our earnings increased primarily due to higher utility margin and customer growth.
Also in the fourth quarter, the Oregon, and Washington commissions joined the Idaho Commission to allow for the deferral of certain COVID-19 related expenses for future possible future recovery.
Additionally, avista utilities earnings were better than expectations due to higher utility margin and lower income taxes, which were partially offset by higher operating expenses.
With respect to COVID-19, as I mentioned earlier, we have now received accounting orders and each of our jurisdictions to defer the cost and benefits associated with COVID-19, and those will be addressed and future proceedings with teachers with each of those commissions.
We expect a gradual economic recovery.
That will still have some depressed load and customer growth in 'twenty, one we expect that to start improving and the second half of 'twenty one our economy.
We do have decoupling and other regulatory mechanisms, which mitigate the impacts of changes and load for our residential and certain commercial customers over 90% of our revenue as you recall is covered by regulatory mechanisms.
As Dennis mentioned, we are continued we continue to be committed to investing the necessary capital and our utility infrastructure. We expect our capital expenditures in 2021 to be about $415 million and at <unk>, we expect about $7 million and about $15 million and our other businesses.
With respect to our liquidity as of December 31, we have $270 million of available liquidity under our committed credit lines at Avista utilities and in 2020, we issued about $72 million and stock.
In 2020, and 21, we expect to issue about $75 million of equity or stock and up to $120 million of long term debt.
As Dennis mentioned, we are initiating guidance not only for 'twenty and 'twenty, one, but also for 2022 and 2023.
And as he mentioned those ranges this is to get us back to earning our allowed return.
And by 2023, and our guidance does assume timely and appropriate rate relief and each of our jurisdictions relative to the capital.
And expenses that we have going forward.
We experienced regulatory lag during 'twenty and expect this to continue through the end of 'twenty two.
Due to our continued investment in infrastructure and our delayed filings, we again delayed last year as we've talked about with the pandemic in Washington, and Idaho, Dennis mentioned those earlier.
We expect our cases, and Washington, and our hydro Idaho, along with new rates to provide some some relief in 2021 and begin reducing that regulatory lag.
Going forward, we will strive to continue to reduce debt and close to rely on our returns to those authorized by 'twenty three after 'twenty three we expect to grow at 4% to 6%.
Our earnings.
Our 'twenty one guidance reflects unrecovered structural costs estimated to reduce the return on equity by approximately 70 basis points and in addition, our timing lag which is what we're trying to reduce with rate cases is reduced it by about 100 basis points. This results and expected return on equity for <unk>.
Mr Utilities of approximately seven 7% and 2021.
We are for cost forecasting operating cost growth of about 3% and customer growth of about 1% annually, which has slightly improved from prior numbers.
On the customer growth side for 'twenty and 'twenty, one we expect avista utilities to contribute and a range of $1 93 to $2 seven per diluted share and the midpoint of our guidance does not include any expense or benefit under the year.
Our current expectation for the ERM is and a benefit position within the 75% customer 25% company sharing band, which is expected to add <unk> <unk> per diluted share.
For 2021, we expect <unk> to contribute in the range of 8% to 11 cents per diluted share and our <unk>.
Outlook for both Avista utilities, and <unk> assumes among other variables normal precipitation and hydroelectric generation for the year.
We expect a loss between <unk> and <unk> <unk> per diluted share for our other businesses as we continue to develop opportunities for the future, we'll spend a little bit of money and the next couple of years to continue to get those earnings up over the course of the next five years and we are.
And we look forward to those opportunities there both in our service territory and and funds.
Our guidance generally includes only normal operating conditions and does not include any unusual or nonrecurring items until the effects are known and certain.
So I'll now turn the call back to John.
And now we would like to open up this call for questions.
Certainly ladies and gentlemen, if you have a question at this time. Please press Star then one on your Touchtone telephone if for your question has been answered and you'd like to remove yourself from the queue. Please press the pound key our first question comes from the line of Richard <unk> from Bank of America. Your question. Please.
Hey, good morning, Thanks for taking my question good morning, and Regina.
Yeah, just the first one can you speak to the progress and our rate case filings, and Washington, and Idaho, and I guess, what percentage of the revenue requirement and are you assuming to get to the midpoint of your 2021 guidance range.
Hey, Richard and Kevin Christie, how are you.
Oh well thanks.
As far as the rate case progress goes we're really just underway and in both cases and Idaho. The most recently filed case, we have not established or I have not seen the procedural schedule yet that should happen and the next few weeks. The procedural schedule has been established and Washington, and we've been going through the discovery process.
As far we have our first settlement.
Conversation coming up on March 10th.
As far as your latter question goes what we typically see as constructive outcomes from our regulatory get vs ask perspective isn't that $55 to 65% range and again, we think we've spent prudent capital and would expect to share recovery from the regulators as we move forward.
Yeah, and that's a that's very helpful. Thanks for the color there and I guess just in terms of your forward looking outlook for 'twenty, two and 'twenty three your capex was relatively unchanged and.
And obviously you have two rate cases, now that sounds like you're kind of and the early stages. I guess, what gives you the confidence that you'll be able to earn closer to your low allowed Roe and.
Throughout the company and how you plan on executing to kind of get there is that and bad any multiyear rate plans or anything like that within the outlet.
So a couple of things on that.
Does it does we do need to get.
Fair results are reasonable results on our commissions and from our from our filings, but we also believe that we filed appropriate.
And you know cases, we've got prudent capital we spent for our customers and our costs are prudent as we go to serve our customers.
We're catching up on timing lag. So we believe that we will be able to catch up incrementally in the next couple of years not all at once we think that'll take a couple of years, we did file a multi year case and Idaho, we have a two year case and Idaho right now and we would look as we go forward. We'll go through we looked at it for Washington, but felt with with.
Everything going on with.
With the pandemic and certain large projects as Dennis mentioned and the Ami project one of our largest projects and history is going into this case, we didn't feel on multi year and made sense. So we filed the single year, we can file multiyear and the future and that can get us to where we need to be and that's really what our plan is is to put forward and appropriate case reviewed by the staffing.
The parties, but we believe we can get back to earning our allowed return.
Got it and no that makes sense and then youre talking about still that structural lag there of roughly 70 bps.
Yes, we expect that we've had that for a long time and we just point that out. So yes, we expect that to be the case and Rihanna and Joanne.
Sorry, sorry go ahead going forward.
We're working with the other parties that we typically work with and Washington, and along with the commission and the other utilities and there is a piece of legislation thats sitting in the Senate right now.
Intended to help guide and actually require multiyear rate plans are at least two years and up to for years and with that.
That were to move forward, we feel like it's a really constructive piece of legislation that would allow us to have that multi year rate plan option I'm sorry requirement.
And it would help us get the first you are right and the transitions from year to year right as well so that would be something we'd look towards the.
For the future. After this particular case and Washington.
Yeah, absolutely that would be helpful.
Okay Cool and then just the last one I had here was I.
And I think that and your press release, you mentioned and I'm.
Looking at.
Strategic.
Opportunities in 'twenty and 'twenty, one can you just describe what's.
And typically youre looking at and you mentioned some increased costs there as well just curious you know what it is.
It'll increase the cost Richie it's a nominal increase of costs, but were looking some of Thats just in the University district within Spokane, we continue to grow out on.
Five smartest blocks and the Ido district, we're spending some dollars there we're looking at it.
Pilot on some opportunities and some some regional communities that we think could have some opportunities for us and we're also spending money in.
On a different funds that we've had consistent dollars and so we expect those are nominal at this point from a cost perspective, but we think they have opportunities as we go forward and they really go towards the innovative aspect of our company. We have a history of innovation and so we spend those dollars because there are opportunities to <unk>.
And the market.
Okay. This is all and the other business and not the utility.
Right right.
Okay. Thanks for that.
Within our service territory, but it is outside of the utility business.
Alright, great. Thanks for all the time, that's all that and thanks Richard.
Thank you once again, ladies and gentlemen, if you have any questions. At this time. Please press Star then one our next question comes from the line of Brian Russo from Sidoti Your question. Please.
Hi, good morning good.
And Brian Martin.
Hey, you mentioned and upcoming Washington, ERP and 2021.
Is that second half for fourth quarter.
Yeah.
I believe I.
Believe that April will.
I'll have to check on that we filed.
We filed in Idaho last year, and with a progress report and Washington, but to lineup the sequencing with the new clean energy transformation and Washington, We.
And that's why we did the progress report I believe it's.
We can double check that but I believe it's you're just in a couple of months.
Yeah. Okay. I was just curious you know what.
And what can we expect from that.
Pursuit of more.
Ppas.
And when coal strip has retired and they're Lancaster and.
PPA expires I believe and in 2025.
Or will there be any self build scenarios.
Any competitive.
RFP.
Going forward.
Yeah.
I mean, youre right, obviously with coal strip will be leaving our portfolio and 2025 and then Lancaster.
Sure later, so we will we.
We will be in acquisition mode, we actually have an RFP for renewables out.
Right now and.
And what we would expect to do.
Back to acquire and this is based on the ERP that we filed in 2020 I don't expect it to be a whole lot different.
In 'twenty, one, but it will be a combination of generation plant upgrades.
<unk> clean energy renewables and storage and energy efficiency and demand response, so the way we would do this ultimately we want to meet our customers' needs with and the most cost effective way.
On a risk adjusted basis and reliability will be.
And a central design element of whatever we choose but it would be a competitive process, whether or not we have self build options.
That make the cut or not.
We'll just have to wait and see when we get there, but ultimately the objective is lowest cost risk adjusted basis to our customers.
Okay, and just a wildfire.
And investment 10 year plan is that included and this rate case or is that a separate docket to be approved.
While the wildfire Kevin you want to talk about that is it included in this case, there's a separate docket, yes, let me go through both both states and Idaho.
It was its own docket, it's been filed approved and it allows for a deferral mechanism that includes expense depreciation and capital and Washington, We filed it with under a separate docket, though with the latest JRC and Washington, and it was consolidated with <unk>, So that will play.
Out over the length of those 11 months or we would expect that to be the case and then what that includes is for 2021 deferral of O&M and then going forward post effective rate effective period for the rate case of October one that would include both expense and capital.
Okay, Great and Brian and we just.
Just check and the ERP the next IOP and Washington will be filed in April of this year.
So I was right on that.
Okay, great and.
And it looks like last year, we issued 72, new and of equity I think you're planning on approximately 75.002 million 21 could you just talk about the balance sheet capacity relative to your capex.
And then.
So unique.
Structure of this rate proposal with the tax credits that may pressure cash flows in the near term just wondering what.
And your target <unk> to debt for debt to cap structure for rating credit rating purposes as well.
And again, we have you know our target is to maintain our current ratings. So we looked at that tax customer credit and looked at the impacts to our <unk> and believe that.
We should be able to maintain our current credit ratings. It's just a short term, it's an interim rate relief it's not.
Relief is for.
For a year up to two years.
Depending on where we end up and each of those cases, but we've.
We then returned to normal cash flow is after that so we don't believe we should have we might have a slight degradation and the in the current year post effective. So it would be 'twenty two is more of where that would hit but we don't believe it should change our ratings because we get right back quickly to having a normal cash flow from that so we don't.
We expect our ratings to be off and we continue to raise the capital and equity.
And the debt that we do to maintain.
To fund our capital expenditures, but the result is maintaining a prudent capital structure for regulatory purposes. So that's we believe that we will we will have that and I will have to walk the rating agencies through that and.
And go through that process as we normally do but we've had a look at it and we've had.
And outside review of that as well and we believe it shouldnt change on ratings.
Okay got it and then you mentioned some legislation pending in.
And the Senate and Washington.
Allows for.
Multiyear rate cases et cetera, how does that triangulate with.
With the clean energy transformation.
And <unk> that authorizes to commission a variety of tools in terms of up to 48 months of used and useful.
Plant.
On a return on.
Ppas et cetera is that is that something additional or does that take.
Or does that take the place of Cedar just wanted to clarify.
Yeah. Good question, Brian. It's it's in addition to Sito is still exists as we know it and all the facts and figures we've shared before apply this just adds additional clarity to the commission's ability and focus on a multi year.
Efficient two in the <unk> and the.
Fact that many of the utilities are filing rate cases year after year and this helps the commission and get to a point, where utilities are somewhat staggered where their cases because of the multiyear aspect and it also provides clarity as far as what's included and getting that first you are right and the transitions from year to year as well in the utility is the <unk>.
Option to file between 2% and for years if this legislation.
To move forward and again that would give the commission and the ability to make a determination based on those filings.
Okay, and I suppose the expectation is for that legislation to be passed or not and.
And this legislative session when does the legislation session and.
Yes, that's correct its debt.
It might come out of the house I'm sorry, the Senate. This week and then it would move over to the house and then they would go through the normal process that transpires and Washington, So it should be by the end of the session if not before if it moves through.
Okay, and then just a follow up on it on an earlier question.
Question.
Is the expectation that you'll file a second Washington rate case to include either.
And what's what's insider or whats in this legislation for new rates to close that regulatory GAAP beginning in 2023 with a constructive rate case outcome independent case that gets you there.
The world will need to file we'll likely file in the first part of next year and if this legislation moves forward and even if it doesn't we may still move forward with a multiyear and that would include all the capital. That's been spent now and that's not yet and it is not in the current case.
Okay got it and listen to Ryan because Idaho filing is a two year case.
Yes, correct.
And just the multiyear guidance and.
The losses, you are incurring and the other businesses. This year is there and expectation for the losses to reverse and start generating positive earnings and or monetizing some of the investments through the multiyear guidance period.
Well in the multiyear we didn't break out our guidance and I'm not going to breakout right now between the.
Mr utility as a L P and other for 'twenty, two and 'twenty three we gave consolidated guidance, but we have said in the past and we stand by that that's why we're making the investments we're making is that we expect we started I think and in 2019.
To say that in three to five years, we expect to start making on earnings out of that five to 10 cents of earnings and we still believe that we're going to do that so probably by the 'twenty three 'twenty four time frame, we're looking to have earnings and those other businesses and when we come out with specific guidance on that and we will put that in there but.
We do have that expectation and that's why we continue to invest dollars in those areas.
Right and get it to so that's the way to think about it is for 15 million are investing this year. The expectation is you'll earn some sort of return on that $15 million over the next several years.
Some of them are.
Our new businesses like and as we're investing in the.
The University district, and some of those may not make a return on for several years, but come in after that and others may make returns sooner than that.
It's not it's not you're not buying a bond where youre going to get a return every year on it. These are these are startup investments and they take some time some are quicker than others and we've seen earnings come out of the fund investments that we've made.
Already and turnaround pretty quickly and we've seen others that will be longer term. So it's a balance there Brian.
Brian and it'll just take some time I don't have specifics for you on that when we come out with our guidance and those forward years will lay out that we do.
We expect as Youre looking at it by 'twenty three 'twenty for to start generating earnings from those businesses.
Okay, and then once again youre expecting to be and the $75 25.
Sharon on.
On the arm, which I think you've been.
And a benefit for every year for us for for the last for five years at least what's driving that this year relative to last year is this just and then that would be a segue into our second question's on whats your current outlook on.
On hydro convinced given the weather patterns that we've seen in the Pacific northwest and what's <unk>.
Expected you know over the next couple of weeks or months.
Yeah, Brian This is Dennis.
I think the things that have been driving their arm over the last.
Several years have been a combination of a couple of things one is just lower gas prices right and general from what we've seen before and then also our team's ability to.
Optimize or manage our resources efficiently.
And so it's a combination of those things continuing that I think put us in a real good position to.
And the benefit and the Arab for for this year obviously.
Future looking if we saw dramatic run up and natural gas prices things might change on that but as long as gas stays where it is.
We're sitting pretty good.
And.
And then your second.
Good question.
Hydro hydro.
Here, we are mid almost the end of February. So we still have a couple of months really left of snow build opportunity in the mountains.
Right now we're just expecting on.
On a forward look normal.
And then as it sits today.
The Northwest River forecast center runoff for water supply runoff forecast for April through September and basically average for us for a 100%.
Rough plus or minus just a little bit based on the different basins, but generally speaking we're expecting normal normal hydro at this point and time going forward for this year and remember, Brian and the importance of temperatures and how quickly. It melts. That's always we may have snow on the mountains, if it melts really fast and that's bad if.
It's a long cold spring and it melts off slowly thats really good anywhere in between like Dennis said, we expect normal because we have good snowpack, but there is you do have to also see how that comes off.
Right of course, you want average temperatures and that April.
And April and that's what we assume and our expectations.
And Thats, what youre seeing today and the marketplace.
Yes, yes, yes.
Okay and then just lastly, just you know curious interest rates have been rising lately and.
And there's concerns with inflationary pressures.
How does it impact number one you know maybe the timing of your 2021 financing plans on you know on the debt side, and then that 3% O&M expense growth that you mentioned earlier as part of the 2021 assumption just curious what your thoughts are there.
Well with respect to the O&M growth, we continue to always look at trying to manage our costs. We put a number out there and then can we try to come in and inside of that we work to that to the extent, we can but we.
We wanted to put our expectations and that's where we are because we've seen some higher costs and insurance costs and pension costs and other costs have gone up and then the.
We need debt, we need to continue to work to manage those but that's that's our assumption and we want to put that out there with respect to interest rates.
Yes, they have come up some but not they haven't changed significantly and.
We're looking at doing 30 year debt.
And we've hedged some of that I don't we're not trying to time the market till the last.
On the Alaska amount that the fed chairs just testified in front of Congress yesterday and today and.
We expect him to continue to say that we expect to keep rates low so I'm not.
We're not moving we're continuing to monitor that and if it makes sense.
We'll we'll look at due on our debt a little bit earlier, but right now we don't think that makes sense and we you know we were.
Expect to come out like we always have and do it and the second half of the year.
Okay, great. Thank you very much thanks, Brian.
Thank you. Our next question comes from the line of Chris and Haas from Siebert Williams for your question. Please.
Christopher and you have your phone on mute sorry, my bad.
How are you good morning.
And video, Chris We Couldnt tell you you're on mute.
Yeah well.
I'll make a lot of mistakes.
The $75 million kind of run rate and <unk> been out on equity can we assume that thats, what <unk> got built and through this sort of guidance period.
We had a history of issuing at that level and we're not changing our capex. The only changes will be cash flow. So kind of you know we.
We don't give guidance forward with that but that's been our that's been our historical expectations for issuing.
You didn't say anything about the dividend payout.
Can you just address that.
Well the debit payout has been the same since week.
And started the.
Having some lag we've said we're going to continue our dividend and we will get to our stated guidance is to get to $65 to 75%, but we won't get there until we're back to earn our allowed return. So we'll run it we'll run a little high right now and we'll have our earnings growth as you see the guidance ranges of growth is greater than the dividend increase which was four to five per.
On the dividend as Dennis mentioned for three I think it was.
And so the earnings growth is greater than that which will get us back in line with our.
Stated, 65% to 75% payout ratio as we get to earning our allowed return share.
Sure.
What was the what was the increase in bad debt expense last year.
I wanted to say six or $7 million.
Okay.
And you.
You did mention that Youre expecting.
The pandemic to continue to be a drag through the first half for the year can you give us any color on.
And what you think that looks like for this year.
I'll just say the color is it's included in our forecast.
And its really youre going to see some some load expectations as we've seen it but we're decoupled largely as I mentioned in my earlier comments.
There is the under coupled load has an impact and then to the extent that.
Net bad debts are there, but we have deferral mechanisms as we mentioned and each of our jurisdictions to be able to defer that and then go after recovery through our future proceeding now if that proceeding comes up differently, we will have to address it but we our expectation is those are costs that we should recover through those future proceedings.
So with the deferrals and with the decoupling, you're basically not expecting it to be terribly big.
That's our expectation and Thats included in our guidance.
One last thing Dennis can you give us your thoughts on.
And the electrification Bill and Washington.
Yeah.
Yes, good question Chris.
First of all I guess, what I would say as you know.
We support reducing emissions.
And obviously with what we're doing on the electric side of things.
We're doing that.
And making good progress, but we need to do and in a manner that.
Minimizes the cost burdens on our customers and.
And avoids.
And.
And our protects I guess I would say the reliability of the regional energy systems.
And you know and.
And just I think we need to be doing it on a whole holistic fashion and minimize the unintended consequences. So having said all of that.
The Bill doesn't really fully considered always brought impacts and I am happy to say that we have been.
Working with our fellow utilities, and the northwest or in Washington State and other stay.
Stakeholders, and and really trying to educate.
Legislators as to the serious concerns that we have with the bill.
And the serious impacts that we believe the bill would have on our customers and the and the energy system. So.
And I'm pleased to report that our efforts have led to defeat of the Bill.
And the early and the legislative session. So that's good.
So it's it's basically done for this year however.
Obviously, we could expect debt.
Some components of it or that the bill will.
Come back at some point and time in the future.
And we just need to continue to.
To educate legislators as to what our point of view is and that is again, we believe strongly that natural gas plays.
Important role as we Decarbonize our energy system.
And and and I'm, not saying that to give natural gas a pass we have.
And we're working on plans for renewable natural gas we're experimenting.
With other technologies, we're investigating other technologies and energy efficiency is an important component to that as well. So we're going to do our part on the gas side as well.
But we just are really concerned with the effects of electrification and not only what it would do on the <unk>.
For our customers from an affordability perspective, but what the implications are on our electric system. Our studies have shown that it would require a doubling of electric infrastructure and <unk>.
<unk> and generation two.
And to meet the increased needs for them and a full electrification and our system and Theres, obviously reliability and cost impacts associated with that debt are concerning so.
And that's kind of where we sit on this right now.
And I.
And what we're going to do is spend the next well will continue to work on educating stakeholders as to why gas makes sense going forward.
Does that help yes. That's helpful. Thanks, I appreciate the color that you say.
Thank you once again and if you have a question. Please press Star then one.
And this does conclude the question and answer session of today's program I'd like to hand, the program back to Jon Wilcox for any further remarks.
I want to thank everyone for joining us today, we certainly appreciate your interest and our company have a great day.
Thank you, ladies and gentlemen for your participation and that today's conference. This does conclude the program you may now disconnect good day.
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