Q4 2020 Idacorp Inc Earnings Call
Okay.
Welcome to other Corp's fourth quarter and year end 2020 earnings Conference call today's call is being reported and our webcast is live.
Replay will be available later today and.
12 months on B Corp website, if you need assistance at any time during the presentation. Please press the.
<unk> zero on your phone and.
I will now turn the call over to Justin Forsberg director of Investor Relations and Treasury.
Thank you Jason and good afternoon, everyone. This morning, we issued and posted the other corp's website, our fourth quarter and full year 2020 earnings release and form 10-K for <unk>.
Slides that accompany today's call are also available on our website.
We refer to those slides by number throughout the call today.
As noted on slide two our discussion includes forward looking statements, including earnings guidance and spending spending forecast, which reflect our current views on what the future holds but are subject to several risks and uncertainties, including those related to the COVID-19 pandemic.
This cautionary note is also included in more detail for your review in our filings with the Securities and Exchange Commission the.
These risks and uncertainties may cause actual results to differ materially from statements made today and we caution against placing undue reliance on any forward looking statements.
As shown on slide three on today's call, we have Lisa grow either Corp, 's, President and Chief Executive Officer, and Steve Keen <unk> Senior Vice President and Chief Financial Officer.
We also have other company representatives available for a Q&A session after the lease and Steve provide updates.
Slide four shows our quarterly and full year financial results hydrocarbon 2024th quarter earnings per diluted share were <unk> 74.
The decrease of <unk> 19 per share over the last year's record fourth quarter.
Of the Corp, 's earnings per diluted share for the full year 2020 were $4 69, and increase of <unk> <unk> per diluted share for 2019.
Today, We also issued our full year 2021, other Corp earnings guidance estimate to be and the range of $4 60 to $4 80 per.
Per diluted share with our expectation that Idaho power will not need to utilize and 2021 any of the additional tax credits that are that are available to support earnings in Idaho under its regulatory settlement stipulation.
These of course on our estimates as of today and those estimates assume normal weather conditions over the balance of the year and includes customer usage, returning closer to pre COVID-19 levels as we progress through the year.
However, as you would expect it is difficult to predict the full impact of evolving economic conditions on Idaho, Power's customers and suppliers and how that could affect the upper end of the earnings guidance range or the use of tax credits.
I will now turn the call over to Lisa.
Thanks, Justin and thanks to everyone joining us on today's call.
As we look back on 2020, we acknowledged it has been a challenging year and so many ways.
The COVID-19, pandemic created and Christine difficulties for our customers and our employees.
The economic uncertainty and interruptions to our daily lives and became the norm on.
Nearly 2000 employees were challenged daily as we continued to carry out our mission as an essential service provider.
And yet truly al <unk>, and Idaho power continue to achieve tremendous results.
As noted on slide five 2019 and 2020, we're on to state this years and can be history.
I am so grateful for the continued focus of our employees on safety and despite all of the distractions surrounding their daily routine.
Turning to slide six the <unk>.
Also saw some of our best third party customer satisfaction rating in the top ranking utility among peers in the segment for overall customer satisfaction and fifth highest in the nation for business customer satisfaction and.
And our reliability numbers remained among the best and the industry as we kept the lifetime 90, 996% of the time.
The success, we achieved and the continuation of our operations without significant interruption over the past year service Testament to our great people.
Whether the and we're adapting to remote or hybrid work finding innovative ways to serve our customers meeting company goals or implementing additional measures to keep them balance our customers and our communities safe.
Our dedicated employees rose to the occasion and powered through it together.
I can't thank them enough for their contributions and their perseverance and the support they gave me as I transition into my new role last year.
In addition to outstanding operating results I am happy to report that other core markets 13th consecutive year of growth and earnings per share.
As detailed on slide seven.
We believe this achievement is unparalleled among investor owned utilities in the U S and recent history and it is particularly noteworthy in the year filled with economic headwinds and uncertainties.
<unk> and Idaho power continue to benefit from strong customer growth and effective cost management, allowing us to preserve the full of $45 million of additional accumulated deferred income investment tax credit for future earnings support.
We're pleased to continue to share the successes of the company with our owners by increasing at of course quarterly common stock dividend again in 2020 from 67 and 71 per share marking our ninth consecutive year with an increase to the dividend.
As noted on slide eight Idaho power service area continues to experience substantial customer growth.
According to U S News and World report and the United States Census Bureau, Idaho was once again, the fastest growing state and the country during 2020.
And Idaho Power's customer base grew two 7%.
And National study by the United Van Lines also ranked Boise is the number of three metropolitan area for inbound moves during 2020.
Idaho power now serves more than 587000 customers and we view the reliable affordable clean energy. Our company provides is an important factor and continuing to attract the business and residential customers to southern Idaho and eastern Oregon.
It does not seem that long ago that we crossed the 500000 customer mark.
Looking ahead of future loads inquiries for large load projects came in at a strong pace during 2020.
On slide nine Youll see the highlighted notable milestones, including and the announcement of the 240000 square foot true West of these facility the.
The opening of Amazon's $2 5 million square foot fulfillment center and the announcement of the 90.050 million square foot expansion.
Two and existing the Lamb Weston potato processing plant.
Amidst the global pandemic the economy within Idaho Power service area continues to outperform national trends.
Moody's predicts the sustained economic growth going forward and.
After experiencing of GDP decrease of one 7% in 2020, the Moody's forecast calls for growth of six 1% in 2021 and six 8% in 2022.
Unemployment within Idaho Power service area is at four 7% and increased over recent years, but still well below the six 7% reported at the national level.
As I mentioned earlier <unk> was pleased to announce a dividend increase of 6% this past fall.
Going forward management expects to recommend to the board of directors future annual increases in the dividend of 5% or more with the intent of keeping the company within our target payout ratio of between 60% and 70% of sustainable core earnings.
As outlined on slide 10.
<unk> continues its strategy into 2021 striving toward our cornerstone goals of growing financial strength.
Improving the core business, enhancing Idaho powers brand and keeping employees safe and engaged as.
And as we execute on these goals, we work to balance the interest of our owners customers employees and other stakeholders.
We are committed to working for sustainable financial results and strong credit ratings by continuing to provide safe reliable affordable service to customers from an already clean and increasingly cleaner reliable mix of generation resources.
Idaho Power's goal to achieve 100% clean energy by 2045 fits well into our overall strategy.
As we expected to lead the new investment and system improvements that will enhance the customer experience you'll.
You'll see highlighted on slide 11, and that the Boardman to Hemingway project or B to H continues to advance.
This project is of key energy pathway that will allow us to buy transport and sell more clean energy across the northwest.
The last July the Oregon Department of Energy issued a proposed order recommending authorization of the transmission line, Idaho power anticipates finalizing the two H permitting in 2022 with the line plan to be and service in 2026 for later.
The discussions are ongoing about the ownership structure of the line with the Idaho power with Idaho power of exploring with the partners both of its planned share of ownership as well as the potential additional investment opportunities.
Our path toward a cleaner tomorrow continued in 2020 and the jointly on Boardman coal fired power plant in Oregon and ceased operations in October.
The power had previously ended its participation in one unit at the North Palm and coal fired plants and Nevada at the end of 2019 and depending on further analysis on economics and system reliability and the remaining <unk> unit could follow with exit plan as early as next year, but no later than 2025.
We also continue to explore options with our partner for the appropriate end of life of the Jim Bridger coal fired plant.
And Wyoming, which.
Which will be our final coal plant and the Idaho Power's energy mix.
Our most recent integrated resource plan calls for a full exit from coal fired generation by 2030.
Receiving a new long term federal license for the <unk> Dam Hells Canyon complex is another top priority to help ensure Idaho powers of clean energy future <unk>.
Significant steps in 2020 include filing of supplement to Idaho Power's final license application with the Federal Energy regulatory Commission for FERC and.
And preparing draft biological assessments and consultation with the U S fish and Wildlife service and the National Marine Fisheries service that were also filed with the FERC the.
FERC issued the license as early as 2022, but as of today, we believe issuance is more likely in 2023 or thereafter.
On the FERC also recently formally initiated the re licensing proceeding for the American balls hydropower facility, which as Idaho Power's largest hydropower facility outside of the Hilton Canyon.
And the whole powered currently expect the FERC to issue of new license for this facility prior to the 2025 exploration.
Last quarter, we stated Idaho power did not plan to file a general rate case, and Idaho, Oregon and in the next 12 months that.
And that remains true today as we look at 2021.
Customer growth constructive regulatory outcome major project completion date and effective cost management all play significant roles as we look at the need and timing of the future general rate case.
As part of our overall regulatory strategy I'll highlight the Idaho power filed an application last month with the Idaho Public Utilities Commission requesting authorization to defer the Idaho portion of O&M expenses, including insurance costs and depreciation expense of certain capital investments.
<unk> expected to be necessary to implement its recently enhance wildfire mitigation plan for WMC.
This WMC outlines actions, Idaho power is taking our plans to implement and the future to reduce wildfire risk and to strengthen the resilience of the resiliency of the transmission and distribution systems to wildfire.
These enhancements.
<unk> are in part of response that the degree of annual destruction from wildfires that the Western U S has experienced in recent years.
We expect to spend approximately $47 million and incremental <unk> and wildfire related O&M expenses and $35 million and incremental capital expenses over the next five years the <unk>.
Cases, now pending at the Idaho Public Utilities Commission.
Next I'd like to highlight our newest board member Dr. Mark Peters, who was appointed last week.
Dr. Peters is currently the executive Vice President for the laboratory operations of the tell Memorial Institute with responsibilities for governance and oversight of U S Department of energy and U S Department of Homeland Security National Laboratories for which the <unk> has a significant lab management role.
Previously he was the director of the Idaho National Laboratory since 2000 and since 2015.
Mark is a highly respected leader and our Idaho community as well as an internationally recognized expert and his fields, including energy and security. We're excited to welcome him to our board of directors.
I will close with the look at weather on slide 12 the.
And the most current projections from the National Oceanic and atmospheric administration suggests normal conditions for March to May.
Our mountain regions have received some good precipitation in recent weeks and we are hopeful the resulting snowpack should provide decent conditions for generating low cost hydropower and to provide irrigation customers with enough water to operate in 2021.
As a reminder, our power cost adjustment mechanisms in Idaho, and Oregon significantly reduced earnings volatility related to changes and our resource mix and associated power supply costs that can fluctuate greatly due to weather.
With that I will hand things over to Steve for an overview of last year's financial performance.
Thank you Lisa.
Let's now move to slide 13, where you'll see our full year 2020 financial result, as compared to the same period and 2019.
Overall, we had solid results during the challenging year, driven by customer growth and our service area and continued successful efforts to control costs.
First up on the table is our strengthening customer growth of two 7%, which added $14 million to operating income.
Higher usage for residential and irrigation customer of 1% and 11% respectively more than offset the negative impacts of the pandemic, which contributed to decreased commercial and industrial sales volumes by a respected for percent of 1% during the year.
Irrigation sales volumes benefited from a return to more normal spring precipitation levels over 2019.
Residential customer usage was partly impacted by weather variations, but many customers also spent more time at home due to the public health crisis.
The net result was a relatively modest $9 million increase and overall usage per customer.
Also on the table you will see that the increase and residential sales was offset by a $1 million decrease and fixed cost adjustment revenues.
Next changes the net power supply of expenses led to a $2 $6 million decrease and retail revenues per megawatt hour largely due to fewer opportunities for off system sales than in the prior year.
Transmission Wheeling related revenue has also decreased $2 2 million, primarily due to a 13% decline and Idaho Power's open access transmission tariff rate and October of 2019.
This decrease was partially offset by an increase and Wheeling volumes. This past summer related to the warmer weather and the southwest U S and California, as well as roughly 10% increase and tariff rate beginning October one of 2020.
Next on the table other operating and maintenance expenses decreased by $3 $7 million.
The portion of this decrease was expected due to the Idaho Power's exit from unit one of the north warming plant last year, but much of the decrease resulted from lower costs related to discretionary maintenance projects at the jointly on coal plants as well as lower performance based variable compensation accruals.
And prior quarters, we mentioned of small deferral of expenses related to COVID-19.
As of year and the current amount is nominal however, Idaho power plants and continue to monitor these.
And related ongoing costs.
Finally, our higher pre tax earnings led to an increase in income tax expense of $2 $1 million this quarter.
The changes collectively resulted in the increase Idaho Power's net income of $8 8 million.
Other <unk> net income changes were lower primarily because of distributions from the sale of low income housing properties and 2019 did not recur in 2020.
<unk> full year net income for 2020 was a net for $5 million higher for 2019.
I think corporate Idaho power continue to maintain strong balance sheets, including investment grade credit ratings and sound liquidity, which enable us to fund ongoing capital expenditures and distribute dividends to shareowners.
I had a corpse of operating cash flows along with our liquidity positions as of the end of 2020 are included on slide 14.
Cash flows from operations were about $22 million higher than the prior year The Inc.
Increase was mostly related to working capital and deferred tax fluctuations.
The partially by the timing of net collections of regulatory assets and liabilities.
The liquidity available under right of course, and Idaho Power's credit facilities is shown on the middle of the slide 14 at this time, we do not anticipate issuing additional equity and 2000 for 2021 other than nominal amounts under our compensation plans.
And while cash flows have been minimally affected by the pandemic, thus far our combined liquidity along with the expected regulatory support from our annual adjustment mechanisms is of substantial backup backstop to our expected capital and operating needs.
As we did last year, Idaho power could contribute up to $40 million towards pension plan during 2021, which would be above its required contribution.
Slide 15 shows our initiated full year.
2021 earnings guidance, and our key financial and operating metrics estimates.
We currently expect out of Corp's 2021 earnings to be and the range of $4 60 for $4 80 per diluted share.
At or above the midpoint of this guidance range other corporate achieved its 14th consecutive year of growth and earnings per share, which approaches of 5% cumulative average growth over the past five years.
Our guidance assumes Idaho power would use no additional tax credits and assumes normal weather conditions.
Of course, our guidance could also be negatively impacted as the economy for the pandemic worsened significantly and such scenarios could require us to use additional tax credits.
Our strong consistent financial results and sustained cost management efforts during the past decade, and preserve the full $45 million of tax credits available to support our current Idaho jurisdictional return on equity support level of nine 4% under a regulatory stipulation and we plan to.
To continue our efforts to preserve as many of those credits as we can going forward.
Our full year O&M expense guidance is expected to be and the range of the $345 to $355 million. This.
This would be the ninth straight year of nearly flat O&M expense, which represents the sustained commendable effort of our entire team over those years.
It's fair to say this goal is being impacted by the level of growth, we are experiencing and depending on how this year progresses, it could be challenging the meat.
Our capex spending is expected to increase to the range of $320 million to $330 million.
And our expectation of hydropower generation is expected to be and the range of six to 8 million megawatt hours. The upper end of which would be close to our normal annual generation over the past 30 years.
On the subject of Capex, turning to slide 16.
You'll note that the current five year capital plan reflects significant increases relative to our prior five year plan as a portion of the construction cost for some of the larger projects lease of discuss likely to wage of and folded into the outlook along with other anticipated capital improvements.
We now expect our capital expenditures over the next five years to approach $2 billion and.
And it shows roughly at 7% compound average growth over our previous five year plan.
With that Lisa and I and others on the call are happy to answer your questions.
We are now ready to begin the question and answer session.
If you would like to ask a question I'm, assuming you've dialed the Q&A line.
To do so by pressing Star then one touched on we will.
To ensure your mute function is turned on before you ask the question.
We will take as many questions.
<unk>.
Couple of basis once again, the the Star then one on your Touchtone phone to ask a question now.
Your first question comes from the line of Julien Dumoulin Smith from Bank of America. Your line is open.
Hey, good afternoon and team congratulations on the outcomes here.
Thank you Julien.
Pleasure.
And I wanted to follow up on the 'twenty one guidance here, obviously very successful 2020 can you walk through of little bit more of the thought process.
And on the flat outcome, effectively and Youre wrong, and it's not entirely lost on me, but I want to hear and as you guys describe it and the factors here year over year that are keeping you Darren.
If you can sort of give the positives and negatives here.
Sure I'll start and then I'll have Dave jump in and so as we thought about debt looked back over the last 13 years and so we really do want to be able to achieve what we say we're going to do and that's been our history that we've done that and many times the exceeded it and it's really been.
And our relentless pursuit of looking for those opportunities to increase our earnings and when you look back over 2020 honestly nobody more surprised and I am debt, we were able to achieve what we achieved good when you look back at all of the scary thing that could have happened with the pandemic and social unrest and and the.
Economic situation and certainly they have turned out better than we thought although I certainly don't want to downplay any of the tragic impact that that have happened because of those and we really feel like we're still facing a great deal of uncertainty as we go into 2021 and this is all of those things are certainly not over so we tried to balance that against.
Our compelling growth story as we've mentioned people are still moving we are still growing and so it was.
We believe that it is up from last year's guidance and so we thought it was it was the good place to.
Initiate our guidance.
Yeah, and Julien and I might just throw in there is a lot of massive number of.
Year over year items to think about but we did talk about last and I'll just.
Quarter, I think we brought it up that we had about a $3 million.
One of them savings last year that was really our partners at the I think Jim Bridger plant the kind of coal plants.
That was an unusual drop that we're not necessarily expecting a boomerang this year, but we do think this year. It goes back to a normal level. So we're not expecting that that particular item there and.
And I think.
Look.
And I look at the at the impacts of Covid and you see our growth jumped it was above where we were thinking initially when we headed into the year.
Not sure whether that holds at that level or if theres. Some other reactions. So I think you put the COVID-19 spin on everything and you start to just have questions.
Not pessimistic, we're just not sure how of how much more optimistic we should be and so we've set the numbers above what we had last year pretty pretty well above our opening plan last year. So it's clearly a step up and performance.
And something we talked about with our board is we're not working off of a reset there.
10 years of.
Of steady up we don't have a bad year this year to jump up from and give you of high growth number off of or we don't have it and the last two or three years. So that does make it hard I would just say we're setting realistic look.
Looks and you know we will aim to do as well as we can if we can lifted we'll let you know about that as we move through the year.
Yes, absolutely understood and.
And then obviously great outcomes on the Capex and rate base frankly.
Can I ask you guys to.
Please if you don't mind.
You have the base rate base growth that you guys talk about for the next five years.
And you talk about that additional $1 two that really jumps of the rate base growth and the timeline I know we've talked about these before and more discretely, but if you think about it when do you find out as best you see right now for health canon and be page to make.
That higher trajectory to materialize that that higher trajectory. If you will I just wanted to put this together in terms of of timeline to finding out about that more elevated rate base.
Well, let me just start with what's in our numbers that we've talked about with the step up there it's a very normal.
Not that it's 100% within our control, but things that really which.
We're driving and are part of our normal plan or what's contributing to the step up youre seeing and the current five years.
It's our portion of the beat the wage line it is.
Probably a small reevaluation of the things that might be coming.
We haven't really.
And then looking at it through the lens of.
And what things.
Should we be adding and there versus the very minimum things, we ought to be doing and this has a look of.
On a recalibrated, there and Thats all contributing the kind of the midpoint of this range. If you look at the a little of the wider bands of things.
Going either not quite as good or better and there are some opportunities we think to lift of that to the upside.
And then you move beyond that is where the items, you're talking about and that's really more.
It's not a lot of different story, and what we had before and and I do think the timing on Hells Canyon could be part of that the timing of when we go into a rate case could impact some of that so I don't know that we have a lot more clarity than what we have discussed.
And our charge will be putting out of that really wasn't related to the the 2020 years. So we didn't overload this chart with that but the.
Those longer plans are still there in terms of what we'd see as opportunity.
It's not like any of those are gone and they are moving closer and closer so I would expect that each year you see the new layer of that rolling and as we put out our five year plan, yes, and thats it.
And just that exactly that we do have we are none of the stuff happens and a step function it sort of ramps up over time, and we're just coming into that window. When we're going to start seeing those expenses.
And whether it's looking towards electrification and decarbonization digital investment and et cetera. So it still is very much the strategy that we've discussed with the before and again.
Starting to move on it.
It's going to take a number of years to get there.
And its final final quick question I apologize.
Given the uptick and capital spending at least on the based on here.
For your designated year that Youre thinking about for this for.
For a subsequent eventual case and just curious on the on the timeline, there and obviously great job of otherwise thus far.
I guess I would just say that I think.
There is a bit of of requirement when health Canyon has done and I think it's highly likely there is the case that you wouldn't you wouldn't want to run.
Long without debt.
Being certified and put into rate base.
The beyond and as you know that number of that data has moved.
Right now we've got a possible 22 more likely 'twenty three and.
We've been saying words like that for.
A decade or decade.
And so I'm not sure on that one the.
And the way, we do well or have done better than maybe what we would have if we had.
Taken the risks of of.
And that our incumbent and any rate case is that the growth has been paying for itself and that one it looks good now if you believe where people were projecting it looks strong and if that continues there is no reason that we wouldn't continue with that it's essentially.
Paying for itself such that we don't have to pass costs on to anybody else. We don't have to go back to the the other customers.
But that can change and.
Zinc.
As we saw this this year there was definitely a bit of the.
The response to what people were experiencing in the states around us debt.
Some just picked up the came they didn't really have a plan and they just showed up and Idaho and said we're here and.
And does that keep going at the same rate.
And no expectation that would drop way down, but it could settle back to where it was last year and the year before we'll just have to keep an eye on that but I think thats still the answer and the near term.
Excellent and congrats guys again talk to you soon thank.
Thank you.
Your next question comes from Chris.
Chris ill now assortment and Subaru.
And hey, everybody Hi, Chris.
Lisa what's the next important date for us to really look for on on B to H.
I would say and getting that the permit finalized in 2022 is probably the next big that the.
The date for that and Adam Richie.
Anything you would add to that no.
I agree the <unk> permitting process is scheduled to be done and the second half of 'twenty 'twenty. Two so that is kind of the big data. It doesn't mean, we're not doing activity and then between now and then but I think as you know Chris the federal permitting is complete and the state permitting and set to be complete at the.
And and part of it kind of second half of 2022, and we feel pretty good about the progress at this point.
Okay great.
Please and as far as your clean energy goal goes absent the Hells Canyon and and other.
Re licensing and the retirements of the two.
Coal plants.
What are your thoughts on other generation and I assume that includes things like.
The new fuels.
And other generation types, but what's in the mix as far as Youre thinking and achieving your goal.
Well, we're right and just getting started actually for our <unk>.
And next iteration of our IOP.
The process and Thats really where we explore all of that I would say just my own personal view.
Wind and solar tend to show up in those portfolios.
Storage is another one.
I'm also very intrigued with and some of the development and hydrogen as well I think thats, a really natural replacement for natural gas as we go forward. We certainly have a lot of infrastructure already built in the in the form of gas plants that we could put to work with the new fuel. So I just think that's interesting.
And I do think the small nuclear reactors were watching that carefully. We currently don't have any investment and those and but we are watching I still think for really going to get to 100% clean as a nation.
More research and development of these kinds of resources is going to be necessary. So I think it was.
The light and administration launches their plan.
We'll see more aware of the R&D dollars go what kind of resources are exploring and you can kind of look at what's happening down in Texas for example, and I think thats going to give everybody pause and should.
And how fast you go.
And what resources you go too, although I'm not suggesting it with the clean resources that are the problem. It was all of the resources that froze up and this circumstance, but we just have to be careful as we as we build those portfolios and the future and that's really why we did a 25 year plan. So we can let some of these resources will be developed and we can make.
For choices.
So that we can do it and a very pragmatic way that doesn't harm reliability or affordability.
Okay.
Can you give us a little more color on what youre seeing and the acceleration in customer growth is it is it exited.
Is it just the good economic climate and what are you seeing qualitatively there.
We're seeing a little bit of everything to be honest.
And we're seeing people just because you can work anywhere there is a lot of people that of has decided to make Idaho their home and some people had the second homes and they just came here and stayed here others are buying up.
The homes here the faster.
And it's Mindboggling, how the how the market is just gone kind of crazy.
But we do see on net debt I think they called themselves political refugees, they're sort of getting away from something and coming here and.
And so it's just really of mix and then of course, there's businesses that are inherent as well so.
It's really the quality of life of Idaho that strong people and people that like the outdoors and people that like little less density. Although the irony of that is when all of a bunch of people show up because they.
And what not the population density and then they make the population density little ironic but.
But.
The people that I've talked to there's a whole lot of new license plate from all over and there are stories are all a little bit different.
Okay.
One last thing.
Relative to your slide with the lift of the large new customers.
Can you can you give us any color on what you might have and the backlog for for next year slides.
Well a lot of those are are very confidential and thanks a lot.
All of the time, we don't even know who they are but there is still a lot of interest in data centers.
Food processing and agricultural products continue.
Continue to be strong on manufacturing as well.
It's kind of a nice balance.
And I like seeing of on balance so that it is and any one particular.
The industry that debt.
It could be impacted and and have it.
Significant impact of the economy of Idaho, but I'd say overall share any anyone any of the big sectors I've forgotten no I think it's.
There is a story that I was just thinking might add to this though as you heard us talk about <unk> and when it first came the Idaho and.
And they talked up certainly.
And of huge way how quickly they were able to.
To start the process and and the process it was faster than they ever dreamed of in terms of start to finish they were open and running and that same story is kind of popping out of the Amazon and the facility that it went up really quickly and I think those stories are migrating around the.
People with expansion of ideas like that they like the people.
People, who are going to help and.
Moving along so I think that contributes yes, certainly on the business side and on the housing and residential side.
The prices have risen significantly I think we still look.
Very affordable to a lot of the places that are looking to come in and so on that side of the market.
Okay. Thanks for the details and I appreciate it.
Thank you.
Your next question comes from line of Brian and Russell from Sidoti. Your line is open.
Hi, Brian.
Hi, good afternoon.
Hey, just following up on the.
The guidance question.
And you tightened the guidance and October.
Which I think was the midpoint of $4 60, and you reported actuals for 69, which was above the high end of the.
Of the updated guidance range, so what happened.
And that you were able to exceed and of the range and are those drivers as possible again in 2021, that's not captured in your initial guidance from today.
I think.
That's a good question, Brian and I do think there is some possibility for it to be better, but we were able to really hold the line on a lot of expenses.
As you saw our O&M came in and really good.
And I alluded to just briefly and Miss my.
Words that I've put out earlier that.
Growth is also of pressure and while we are setting a hard targets, we're feeling probably a little different pressure today than maybe we had at the start of last year.
And the pandemic certainly did allow some things to be less.
Maybe that will stay that way the whole year, maybe we won't resume travel maybe one of them.
Have all of the expenses that you typically do on a year, we captured that and and did our very best to make cost as low as we could we will aim at all of that again, we're just not sure how quickly we resumed normal operations versus not.
And I'm not sure of the timing of the expenses right first and revenues fall of later the revenues kick in early and then the expenses come those are just enough variables that.
We've gone up kind of and a cautious way our upper end is higher than it was we're acknowledging what's what we're going to be aiming at is trying to.
Hit our midpoint or higher and we always do and.
And we'll just have to see Brian and I think it's our nature more of that showing up of not wanting to overstate and a year that there is much uncertainty there is certainly more than a normal year.
Got it and then just for.
Follow up on the on the O&M expense line, you mentioned of wildfire capital cost and operating cost deferral of filing are there any wildfire costs embedded in Europe, O&M 2021 guidance assumption.
Not substantially different and I mean, the normal amounts of there, but not a big step up and this O&M side.
For this year okay.
Alright, and then follow up quickly on.
For the trailing 12 months customer growth was two 7% and that was basically during the entire pandemic through 'twenty.
And you mentioned of too.
New big business for <unk>.
It is opening up like Amazon and explorer.
Are you forecasting two 7% customer growth and 2021 and is there a possibility for that to accelerate especially given Moody's GDP.
Forecast of six plus percent growth year over year.
Yes, the R&R.
Look for the year is sort of a.
Starting.
Starting a bit more modest and ending with a little more robust look so it kind of transitions as we go through the year, So thats whats.
And I guess from the Covid perspective, we would be expecting continual improvements as we get through the year and be back to <unk>.
Maybe not 100% normal but closer to normal by the time, we closed the year out.
The categories that got hit and of course.
Commercial and industrial we're just not sure how quickly that translates for all of them because.
It has different reasons that maybe those two had their issues. So it's a question of how quickly they come back up residential and <unk> got a boost from everybody being home all the time.
That could swing the other direction.
But as you say, we've got a lot of people coming in so I think the growth side of the residential is still going to be there in terms of number of people but.
It is a little different equation, and we typically face and that probably is factored into a little bit of that caution of not being overly bolt on the upside.
Okay, Great and then you mentioned.
Part of the 2021 guidance is.
And the peak customer growth should units I should say good.
Paul back to the Covid levels is there any way you could quantify what.
For isolate the impact of COVID-19 was on usage and.
In 2000.
But with the <unk>.
Usage.
AG is a little in terms of particularly the commercial and industrial.
And they show up on.
It takes a few months the.
The site and get them in and construct and all of that.
And really saw it was I think the residential side had the growth impact no question and.
And it's shown up in new housing starts and <unk>.
Lack of inventory and everything.
So I think we did see that some of the that residential uptick is it.
It's a blend of the people that stay at home and the new homes of came online and start using more power, but it's a little harder.
The defined and the other categories I would say.
And the irrigation for instance was pretty much a that improvement with the weather it was more normal it wasn't necessarily.
The banner irrigation year. It was just a more normal irrigation year, where we didn't have a super wet spring.
Debt.
The allowed them to not have to irrigate very much so yes and to add onto that the crops were already committed to prior to the pandemic settling in so the.
And the farmers.
We're already and selling day continued on so that was good and this is a fun fact, Idaho.
The record agricultural net income.
Surprisingly, even though prices really flattened early in the year, then they recovered and they did very very well even.
When you don't consider the federal support so it turned out to get a really interesting year.
Okay and then last question just on on the balance sheet and how it.
Correlates with the increasing.
The capex over the for.
Of your period with the $2 75.
Of cash debt.
And that you have on the debt.
Year end.
And the below 50%.
Debt to cash.
And thank you can.
<unk> answered capex.
And without incremental equity I know you said no equity plan for this year, but maybe you could think about longer term because after the next two years of $300 million of Capex.
Like <unk>.
On.
And five or 23% of 25 on average youre going to be north of $400 million and Capex and thoughts on the balance sheet.
No youre pointing out of really good point, Brian and I think thats an opportunity we have as of the near term Capex and maybe for quite some time, we will go to debt first I don't know that were going to need it.
Our successes as shown up with higher equity amount there and you know we jumped ahead last year our approach.
We got such a good rates with what we actually issued we were looking at.
We had some refinance opportunities that showed up that we could put a little more we just grab the little extra capital with and then we had of planned financing.
That we upsized the little really is going into the pandemic. We just wanted to be sure we didnt get and another capital Crunch like happened and OE and a nine.
But and that really has us ahead of the game coming into 2021, So I think it's.
It's a good place to be and we got such good rates on it and it didn't overburden us in terms of.
That didn't lay of that much more expense on.
And we were able to get rid of a couple of higher cost debt instruments refinance them at low rates as well. So that's really that's what happened last year that setup this year well.
And we will be looking ahead those bigger at those other projects that have been talked about whether it's sales canyon or or beat of wage those will be the things that we'll have to keep our eye on but we will we will try to do that with low cost debt as much as we can as well.
Alright, Thank you very much.
Thank you.
Thanks, Brian.
And this is the final opportunity price.
And then one to signal for a question.
And we'll pause for just a momentum.
The further questions for that concludes the question and answer for <unk> session for today, and then I will turn the conference back over to you.
Thank you all for participating on this call today. We appreciate your continued interest and <unk> and we look forward to seeing and speaking with many of you over the next few weeks as we participate and a few investor conferences I wish you all continued great health and remember keep your maths on keep washing your hands keep socially distant and I wish you.
On my that's had a great evening.
Thank you everybody for joining today that today's conference call now disconnect.
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