Q1 2021 NorthWestern Corp Earnings Call
<unk> increased our liquidity doubled it last year.
Due to the uncertainty we're facing.
Stable growth and our annual dividends are very disciplined.
Capital investment program $450 million.
This year to start really focused on investments to serve our customers and are part of the part of the country.
Stable and consistent customer growth, we've seen particularly on the residential side across our service territory and this is where people.
Really do want to be.
You mentioned are.
Supply portfolio and.
And the.
Accomplishments, there, but again the substantial exposure to two.
And to a market, where we really just do not want to be.
And with that Crystal and I'll hand, it off to you.
Thank you, Bob and Bob mentioned my first call.
Its call as CFO at the helm and it's not lost on me, but it's nice to have my first call will be after a solid quarter and also to have important news on our capacity deficit and how we're going to address that the thing I will say is and Brian.
Brian is transitioning into his operating role he seems to be gaining new religion, and how to spend dollars. However, certain things will never go away and I don't think youll be youll find him buying drinks at the bar and that is first of all ways won't go away.
Anytime soon but with that on slide five.
And Youll see the P&L for the quarter and again, a solid quarter from that perspective on a net income basis, Bob mentioned $63 1 million for Q1, 2021 compared to $50 7 million and Q1 2020, that's a $12 4 million dollar improvement or 24, 5% driven by improvement really at the margin line and from lower operating costs.
On a GAAP basis diluted earnings per share of $1 24 versus a dollar and the first quarter of 2020, and then move into slide six to give you a bit more detail on the gross margin breakout.
Really the performance there was driven by colder weather and Q1 2021 as compared with Q1 2020, while that was still a bit warmer than normal we have seen strong residential usage and a quarter. That's $6 9 million of electric natural gas retail volumes, we also saw and and prevent and electric transmission those are partial.
Offset by a Montana electric supply cost being a little bit higher and then you'll also recall in Q1 of 'twenty. We had some other nonrecurring items that were detrimental and that period here in Q1 2021, the absence of those leaps and improvement. So when you take out the items that don't fall to the bottom line that the $10 million improvement from a gross margin.
Active and driving a lot of the performance for the quarter.
As we move into slide seven and you get more of a perspective of what happened in Q1 here January was really warmer across our service territory February where we saw the February cold snap and broadly more cold and then March warmer again, what that resulted and again is how I would break that apart is ultimately colder winter weather and Montana and Nebraska slight.
Warmer and South Dakota, but again colder than last year, which was quite warm and still not compared to normal at the warmer than normal so youll see that and our non-GAAP adjustment here and a bit.
Slide eight gets into our operating expenses.
Really when you look at the operating John.
General and administrative expense line and you remove the things that don't fall to the bottom line. After adjusting those at the $3 $6 million decrease at that line and that's really driven by collecting some of the uncollectible accounts that were written off and prior year and ongoing cost controls the thing that I would mention there is as we look forward. We do expect to have an overall increase in operating expenses for the year.
Here from a property tax perspective, you see that increase of $3 million quarter over quarter again, we collect a piece of that at the revenue line through a tracking mechanism and then depreciation is also up $1 $7 million based on our increase and plant additions compared to prior year.
Slide nine again operating income of $80 9 million for the first quarter compared to $75 $2 million, and 2020, or a $5 7 million or seven 6% increase.
We also saw a decrease in interest expense of $1 8 million or three 3% that was primarily due to lower interest on our revolving credit facility and higher capitalization capitalization of AFDC slightly offset by incrementally slightly higher borrowings.
Our other income line you see a big increase there what I would remind you there are some items in there that don't fall to the bottom line you remove those and what that shows us and improvement of capitalization of <unk> E. D. C. After removing those offsets and that's approximately $1 3 million net after those numbers.
And also from an income tax perspective last year, we had and income tax benefit. This year were flat for the quarter. So that's the $1 $8 million decrease you'll see us and we're moving to slide 10, and that's primarily driven by that.
The increase and net income and improvement and that line from a deductions perspective were right in line with where we would expect to be and Youll see our typical flow through and other deductions as detailed on slide 10.
Slide 11, moving into the balance sheet. The thing I would just draw your attention to there and we've talked about this before a little bit higher a debt to cap ratio and we run and the paths, we are initiating and at the market ATM equity issuance program coming out of this quarter and and currently obviously, we didn't issue equity in 2020 and <unk>.
Expect to do that in 2021 to bring that debt to cap ratio of it back down.
Cash flows on slide 12, and Youll see at the operating cash flow line, a significant decrease there of $92 5 million.
A lot of that was due to the pricing of supply and Q1.
That drove a significant piece of that decrease of $89 million. We also had some refunds <expletive>ociated with our FERC rate case to wholesale customers a $25 million. The thing I would think about there is we certainly expect to get it quite a bit of that back by end of year and on a funds from operations or <unk> basis. When you are.
Just out working capital, that's only and $8 $6 million decline from the prior year first quarter.
Slide 13, our standard non-GAAP adjustments here and the only adjustment we have for the quarter is the unfavorable weather so you'll see and.
And add back of $1 3 million on a pretax basis basis that comparison add back last year Q1. So when I was speaking to the weather piece and saying Ah unfavorable weather, so a warmer than normal but colder than prior year youll see that comparable add back last year was $4 million. So from a GAAP basis of $1 24, adding back <unk>.
To be $1 26 for Q1 2021, that's a 'twenty improvement over our non-GAAP adjusted earnings of $1 six and the first quarter of 2020.
Last year.
Moving to slide 14, we talked about our guidance for the year are being $3 40 to $3 60, we understand that that's a bit higher range and had mentioned that we expect to narrow that and the back half of the year the quarter for US was in line with our expectations.
And there's still a lot of the year to go we continue to evaluate our credit metrics and certainly want to protect our ratings and we believe that we can manage the equity issuances that we play and in line with the dilution that we've indicated on the and the earnings guidance slide here on 2014.
Slide 15, and just the ongoing reminder of our earnings per share and dividend history has been obviously 2020 was a tough year for us from a COVID-19 impacts perspective, and also outcomes at the commission even with that 2020 performance. We ended from a 2013 to 2020 on a E.
<unk> growth of four 3% and remind you that the <unk>.
2021 midpoint of our guidance puts us at a strong growth percentage for 2021 as well from a dividend payout ratio again, a little bit higher than we'd like to see but a strong dividend growth moving into 2021 and with that Bob I would turn it back to you.
Yeah.
Thank you Crystal great job, we did pull up this one slide if youre looking at an older version of the victims from slide 20.
And so we are maintaining our capital forecast $2 1 billion over the next five years and we expect to finance this with a combination of cash from operation first mortgage bonds and equity we do anticipate initiating two.
$200 million ATM and the <unk>.
Second quarter and.
And the equity issuances will be sized and first to maintain and protect our current credit ratings.
As you probably all know I'm extremely excited about this.
Capital plan. This is investing across all aspects of the company across all jurisdictions and really doing the right thing for our customers. This does include about $100 million of incremental investment for South Dakota.
Generation and 'twenty, one through 'twenty, three does not and.
<unk>.
Results of the Montana request for proposals, which we have announced but all in we expect this will result in an annualized rate base growth of four to five per cent.
Very good and then as you saw the Laurel plant will be right around 20%.
$250 million for the plant Robert on the regulatory front, there's always questions about will we.
The filing a general rate case, we do not expect to make any general rate case filings in 2021.
We do have a number of other extremely important and filings either pending or anticipated.
And the 15th we filed a request for further delay implementation of the fixed cost recovery mechanism pilot and Mark.
Antenna for another year.
And this is because.
Ongoing uncertainty and disparate impact.
On load from the COVID-19 pandemic. So the mechanism really doesn't align terribly well with what we've seen and the business over the last year.
And second.
And we've now filed a request and our power cost credit adjustment mechanism.
Proceeding and Montana to increase the.
The <unk> by about $17 million that's.
Salt of change.
Change costs and multiple different elements, but particularly changing to more accurately reflect the cost of.
Procured peak capacity for our customers and.
And then and mid May we will be reported filing and.
Request for approval for the resources for two of the resource to the free resources identified coming out of the RFP.
We've now as Christal mentioned have.
Successfully concluded the farooq.
Transmission rate case, and parallel to the Montana, proceeding and refunded and about $25 million to wholesale customers and we've also submitted a compliance filing with the Montana Commission to adjust the FERC.
And that has been approved on an interim basis.
And awful lot of regulatory focus.
For for this year or next.
February cold weather this played out a little bit differently in each jurisdiction.
One of the most important things was and each state's drew.
Really great work by our people the.
And the systems held and we were able to keep our customers safe warm and and service and.
And.
Uh huh.
And Nebraska.
File that we have.
And for a regular we've recorded a regulatory <expletive>et of about $26 million for natural gas considering customer impacts we proposed recovery of our costs there over a two year period.
We had a just a wonderful meeting with the Nebraska Commission in recent weeks three and the five commissioners along the staff talk through operations.
And we're appreciative of the investments, we've made and capacity and Nebraska recently, and we will continue to make.
Talk through customer impacts customer communication and then.
Talk about the customer impact and.
And the $26 million.
So we are hopeful to receive a decision from the commission.
Proposed day.
And two year recovery period.
<unk> received a commission and commissioner and the coming weeks and.
And South Dakota.
We have about $17 $8 million regulatory <expletive>et.
For natural gas supply costs are similar and in South Dakota.
And as I already I Shouldnt order.
Authorizing a one year recovery period.
And Nebraska, we had a great meeting with the entire commission and staff just a few weeks ago talked about lessons learned both at the SPP level southwest power pool and.
And in terms of our local operations and communications. So very very good result, there.
And in Montana.
Things played out differently equally or effective and more positively.
But we did not see the substantial gas price increases.
And Montana, and as you know and Montana, we have gas transmission system with gathering and storage storage at both ends of the system, North and south and it's particularly valuable.
<unk> system gas and we're able to draw gas from the north and the system and overall and both electric and the gas sides.
Systems performed exceptionally well there again, we had a great meeting with the Montana Commission one of several that we've already had this year and.
And we really appreciate their inter.
Wrist and support and how we manage through and February and then as is true every year, we will be filing.
And does he became a natural gas and other purchase power trackers and property tax free.
Acres, and so that will leave you a pretty busy regulatory year next.
Get a share two slides to really setup.
Brian This is a look and what was happening.
And Montana during the February weather event free.
From a Montana supply perspective.
Perspective, and you see to the left that's the capacity we have Mike categories, and we've got an awful lot of wind on our system.
The thermal resources include Colstrip, but also other.
Natural gas and some QF coal that will be rolling off over the coming years and then hydro.
And.
Fundamentally the hydro system performed just as you would hope thermal resources performed.
But we were our resources are substantially below.
The resource adequacy requirement.
And if you really need to aim for let alone.
Below the actual load we were experiencing on the system and then overlaid with that Youll see what was happening to price and the lesson here is that.
As the western power market becomes tighter and tighter.
Who are subjected your customers are subject to substantial price volatility.
They can pretty quickly eat up any savings from low market prices and.
Greatly increased availability risk so lets now look at it from the transmission perspective.
So this is what was happening in our balancing authority. So this includes our retail load.
As well as other.
Resources being brought into Montana over versus over our system. So you see.
850 megawatts of net import during this period and historically and Montana has been and net exporter and we are seeing increasingly at times of high demand and loan production.
From wind and Montana overall.
And is becoming increasingly and net importer. So the challenges that we faced in February or of concern both for our retail customers, but also.
For others in Montana and may be responsible for their own supply.
But I have to bring that supply and over what is and increasingly constrained transmission system, so that as well.
And one very important set of challenges that Brian and our operations leadership.
Addressing as I hand, it over to Brian and I said he is doing a great job crystal pointed out that despite his new role Brian still does not.
Pick up that cash.
For a round of drinks, but now.
Brian Besides from the check comes it's a good idea to go out to the alley to check the electric service.
Drop and inspect the gas meter so Brian after you.
Thanks, Bob I've been known to actually pick up a cheque Nora.
And knowing that but.
Oh I'll take that.
And you guys can provide.
By the way appreciate Bob setting up I think ever been and this call understands and capacity issue. We've been speaking about for years and particularly during 2020 and into 'twenty, one as we kicked off our RFP and Montana.
Early 2020 and receive bids.
Mid year that year, we finally come to the conclusion of that and we're very pleased.
To announce.
A very strong portfolio that will provide great capacity to our customers and effectively help us achieve and Uh huh.
Halfway there if you will at least get to 2025 2006 time period really putting capacity in place to help us with our capacity shortfall that we've been explaining to investors and other stakeholders for years that our portfolio first and foremost we're pleased to announce the loral generation station construction of 175.
And what's a flexible and reciprocating internal combustion engines, you've heard us speak to rice units before those will be located near Laurel, Montana, and we will own those units in fact, if we're able to get proper approval from the Montana Public Service Commission.
The cost to construct this plan is expected to be approximately $250 million and should be available for commercial operation in late 'twenty three early 'twenty four.
The second.
A component of the portfolio as a power X transaction, a five year power purchase agreement for 100 megawatts of capacity and energy projects and as Bob pointed out earlier originally predominantly from hydroelectric resources.
The third and and Bob let the cat on the bag a bit we did sign contracts today and we're pleased to announce we have signed a 20 year battery energy storage agreement with yes, Volta and Ah.
And 50 megawatt facility to be located and your billings and expect it to be and operation on October one 2023.
We expect to request MPL XI approval of the Loral contract.
And the asphalt to energy storage contract and.
And expect to make that filing in may with the decision and anticipated about approximately nine months after filing.
So that's the great news out of Montana that I know many of you have been waiting on it the good news out of South Dakota.
We continue the construction of the 60 megawatt Rice project and Huron, South Dakota, the BOP Glanzer generating station and that's to be online in late 2021 with a total construction cost of approximately $80 million.
And additional 30 to 40 megawatt of flexible generation and Aberdeen, South Dakota is and its planning stages and expected to be online in 2023 within our App.
Approximate cost of $60 million. So again, we are taking great steps steps and these two jurisdictions, where we provide electric service to our customers to meet our capacity needs for the next slide Slide 22, just from an ESG perspective.
We pointed out here, we've got a new landing page, where you can find our ESG information and we worked really hard and I credit not just the IR group has done a nice job kind of spearheading this effort, but company wide and a renewed focused on and ESG and I think there always has been a focus on the G aspect.
And really almost for the 20 years that Sarbanes Oxley as Ben and <unk>.
Place very very good focus on that and I feel very strongly that this company will take the same pride, we did and the G aspect and focus on the E&S, we have a great story to tell and we just need to over the next year continue to do a good job of.
Capturing and actually disclosing what we're doing from an E&S perspective, we've seen some trajectory already and doing that and grabbing I'd argue the lowest hanging fruit. If you will from an ESG perspective, and we'd seen improvements and MSCI.
Using one report tool from NASDAQ and and we're seeing some of the benefits of being part of NASDAQ and that'll help us capture other ESG related items that we will then feed onto the ESG rating entities and we'll continue to make efforts companywide not only to provide good disclosure, but we.
We believe ultimate and it'd be a leader from an ESG perspective, and this space and with that I'll kick it back to Bob.
And I'll p<expletive> it over to Travis.
Thank you, Bob and Brian and Christophe if you're joining us by computer and today and I'd like to ask a question. Please signal your intent by using the raise hand and button and that's typically found at the bottom of your screen you could also simultaneously press Alton why on a PC or option why on a Mac to raise your hand, please ensure that your micro.
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On Europe.
Travis if they're using the raise hand emoji they should be sure to select the all five finger emoji right.
Thank you for the reminder, Bob.
Yeah.
Well take our first question from Brian Russo Brian Your line should be open.
Hi, good afternoon.
Brian.
And just any more details you can provide on the Laurel generating station is this.
Our new site.
Whereas at brownfield development or Greenfield development and is there kind of additional.
And space for more units, maybe and the next RFP.
Brian and I go back to leave we have specifically disclosed.
Right.
And we Havent, we havent, Brian, but it is a greenfield site.
And we will disclose that here.
Shortly a matter of fact, many of the questions <expletive>ociated with Laurel and yes, both of them will be covered of course, and our filing that we're going to make and mid may.
Okay understood is there any discussion at the commission and the legislature regarding earnings from sort of imputed return on.
Ppas.
And we forward.
Yes, there has been discussion.
Yeah.
And on both sides of the subject commissioners have spoken to it over a number of years.
Favorably it was a point of debate.
And the legislature and the number and legislators spoke up against it as you know it's something that.
A number of electric companies are now requesting and receiving I'm thinking, particularly in Michigan and Hawaii.
Okay, Great and then.
Hypothetically speaking <expletive>uming.
And minutes with Montana Commission approves preapproved.
Filing.
What are the scenarios of.
Cost recovery and the return on <unk>.
On the investment could it be a one off.
And one off filing where its added to abate.
Base rates and reflected in customer rates would you need to file and actual.
General rate case to get that included once it's operational and then just remind me what was the treatment for the hydro transaction and the pre approval.
Actually we used to include before our last general rate case, we used to include a table that showed the authorized ROE by <expletive>et for <expletive>ets that came in through the approval process.
And so.
Typically.
The approval filings first starts it's subject to.
And after the fact Prudence review just to be sure. We did a good job with what we said we were going to do but it does include and authorized ROE and typically that will be.
And I picked up from whatever the most recent authorized ROE is crystal would you want to add some color to that.
Sure. If you look at how our approval filings of work and the path is what will happen. There is it subject to the commission's approval when that <expletive>et is placed into service I think used and useful it is added to customer rates at that time. It has its own cap structure and and return calculated based off the revenue requirement for that <expletive>et, but it does allow for immediate rates and placed upon.
And used and useful.
And then it's captured in the following rate case, and and and layered into our broader rates, but certainly it allows for.
The adjustment to regulatory lag there of not experiencing a lag between used and useful and and when you do and next rate case.
Okay. Thanks, that's helpful. And then there wasn't much discussion on Colstrip could you just provide us.
And update there I think you gave us a coal supply contract coming due in 2025 around the same time, where some of our.
Hum.
And the co owners are looking to exit just just curious.
And if there's any update there.
Yeah, what I can say there is.
Our existing ownership at Colstrip continues to be extremely important to serve our customers absent that.
The capacity GAAP would be just.
Just that much greater youre right and we certainly have been talking to.
Westmoreland about terms of the.
Coal contract and we're focused on price, but also so your contract that is.
Yeah.
And more accommodating to a resource thats being used for capacity.
Okay. Thank you very much.
Okay.
Thank you, Brian we'll take our next call from the line of Jonathan Reeder, Jonathan Your line should be open.
And you're on mute Jonathan.
We all we all need the T shirts with that slow slogan.
And our motto for Us John.
Youre on mute.
Dara <unk>, Jonathan if that helps.
Yeah.
There can be good work sorry about that.
Sorry.
Maybe I should've raised the middle finger for you Bob and Tony.
Mike.
[laughter].
Thanks for taking my question.
We're just not culture and Medisoft stay there I saw Senate Bill $3 79.
As it relates to potentially acquire more interest and.
And p<expletive>ed the Senate earlier this month I saw those tables and the House Committee.
And yesterday does this mean efforts to potentially acquire more colstrip interest or like definitely dead and kind of thought it was dead last year. After the Puget deal fell through but then you know this kind of somewhat unexpectedly crept up.
Yeah, what I would say there and to be clear.
Our interest.
Colstrip was always tied to.
Our ability to serve our retail customers and.
And not more but.
Certainly as things stand.
As of $1 30 mountain.
Today after.
379 was tables.
We have no interest in owning and additional share at Goldcorp.
Yeah.
Okay, Great I appreciate you clearing that up.
And then could you expand upon your decision not to file and a rate case, this year and South Dakota.
Was it just be mindful of kind of the customer bill impact given the recovery of the higher February gas costs. I think previously you kind of indicated South Dakota was likely in 2021 and.
Parts and incorporate the new gas plant into rates and then kind of following on that and do you expect to be able to get the new gas plant still into rates when it enters service.
True.
Alternative standalone recovery filing or we'll have to wait until the 2020.
2022 rate case filing.
First of all this is your first shot answer the the rate case your question.
Sure I'll take the South Dakota rate case question, but one thing I would point out about 2020 is and certainly I think Jonathan where you went to there's a lot of sensitivity around the country day customer bill impacts and and where you go from there. The other thing I would say is 2020 isn't the greatest test period for a lot of reasons. One is we certainly had cost control.
And the South Dakota jurisdiction and the other thing I would say and South Dakota is quite flexible and a sense of we have a couple of options for how we can come in and seek recovery of the capacity investments, we're making and the state. So while we're not filing based off of 2020 test period, I'm certain that from a regulatory perspective, and with minimal regulatory lag, we can bring those <expletive>ets and when needed.
Okay, I understand that and then.
On the $70 million PK and request is that just a standard like kind of annual update and it goes every year under the way the PK and mechanism and process works or is there some sort of one off requests that you're trying to update the baseline.
Outside of a rate case.
First of all Youre on top of that as well.
And I can take that one and so the became it and we certainly can't update that base and and just as a reminder, how that mechanism works right is you set a base and and Theres a couple of buckets of cost part of that bucket and of course, you share above or below the baseline and a 90 10 per cent basis. So we reset that for the last time and our last general.
Rate case, you can file outside of a rate case to reset that base. That's what we're doing here and the thing that I would mention there is I think that's what's seen in February and all across the country capacity is more expensive and.
And having those types of contracts, we're certainly seeing that is as <expletive>ets shut down and the Pacific northwest and particularly in Montana, Montana I think of it as a net exporting data, it's becoming more of and importing generation at peak times when needed we're seeing those cost pressures on our <unk> two as you all know the amount of capacity that we have to go out into the market and purchase.
With that we're filing separately to reset that base and and <expletive>ess what youll see is certainly and under collection and cash flow lag and the amount. That's currently in the day.
Okay, Great. That's very helpful. And then last question I think Brian you again crystal.
And miscellany and miscellaneous.
The beneficial drivers of gross margin on both the revenue and the expense side. During this quarter. It's actually just you and I think I think you said this but just the absence of those miscellaneous headwinds during the same period last year.
Alright, so if you if you recall Jonathan last year. Unfortunately, we had to talk about our other [laughter] and Brian has a very experienced CFO covered it well, but we had some items and last year that were non recurring they were detrimental in the prior periods. So the absence of those and and this year provides a bit of lift.
Great. Thank you. So much appreciate you taking the questions and great John Chrystal.
Jonathan.
We will take our next call from the line of Shar PRASM.
Alright.
Your line should be open.
Star <unk> Shar.
Hey, guys can you hear me, yes, perfect Alright, Travis maybe this way to technological.
Not at all.
And as you can handle it and Bob don't worry about it Brian and Brian usually makes you buy them drinks too. So we're on the same page good good good.
And just.
Just real quick around.
And just with the Montana generation, the $250 million and Capex.
Can you just remind us if you can hit the high end of your growth rate on it and thank you guys seem to have alluded to that on the fourth quarter call and then just maybe how you're thinking about financing the $2 50.
Yes.
Yeah.
Yeah.
Sorry, and Bob where you thought from that one to me that's a totally CFO question absolutely.
Alright. Thank you sure you said two things.
And one where would that put it through them and earnings growth rate perspective, the thing that I would remind you of course would be the in service date would be one 124 and that's the time you would see rates in place and that's a long term growth rate on an average and the other thing I would say, it's certainly there'll be some <unk> during construction there from that perspective of course, that's an important piece to achieving what we've.
<unk> said before is kind of pushing up to the higher past the midpoint of that range and certainly our capacity piece and and moving forward on those investments and I think I've forgotten the back after for your question chart and just how to think and then a financing and should we <expletive>ume from financing balanced yeah, yeah, Yeah, Yeah, certainly where they work and as you've seen we're spending for and.
And a $50 million and Capex this year, where we're launching and aftermarket equity program coming out of.
And Q2 this year and the thing I would think about our ongoing capital needs are certainly investing in our system that at a high rate and from our Laurel perspective subject to approval by the Montana Commission, we certainly would be looking to finance that probably in our normal 50 50 type structure.
Okay, that's perfect and congrats guys on the on the transitioning and Brian Best of luck.
Thanks Art.
Yeah.
Thanks, Shar, we will take our next call.
And I do not have a name here, but it's from the line ending and 5990.
Star six to on mute.
Hi, guys. This is Sophie Karp with Keybanc and you hear me.
Sure Dan Sophie.
Great. Thank you for taking my question.
So maybe a lot of it has been discussed already and maybe if you could just.
And just talk a little bit about our.
Polo and the good news out of this RFP and Montana, where does the <unk> with the addition of these new resources, where does it leave you in terms of resource adequacy and how.
How do you think about the cadence of our.
And you and additional Rfps and additional resources moving forward.
Brian and let's get you back and the discussion.
Yeah, Bob Thanks, Sophie I'd say this that we're not gonna be explicit and exactly what the next RFP is going to be.
And we're continuing to evaluate as we.
We move forward I like to say from around rounding perspective for 50% there with this particular RFP and.
And timing.
As you know as we stated and the 10-Q.
Late this year early next year to release that second RFP with the hopes to have something and as I said earlier and the call outs and the 25 potentially 26 2026 timetable.
And then obviously, even beyond that Sophie as certain contracts roll off over time and and other things get addressed you know we won't be.
And our quest to capture capacity this doesn't and in 'twenty five 'twenty six we believe going certainly and beyond that the 2028 and and the 2030 time period, we'll be looking for more capacity at that time as well.
And and in Europe, and then that core strength will remain available to you throughout this decade and would that be accurate to say or is it sort of and <unk>.
Incineration and future Rfps.
We are certainly are <expletive>uming and the next RFP that we released that colstrip is gonna be.
Considered during that time period.
Got it and cause so much that's all I have.
Thank you Sophie.
Our next question comes from the line ending and 4404 press Star six at a line on mute your line.
Okay.
Good afternoon, everyone, It's Brian Greenwald.
Hi, Ryan.
How are you I appreciate it Barry.
Sorry, I didn't register my name there.
Okay no problem.
So in terms of a free way Ryan.
I appreciate that and congratulations to you and Crystal and again.
And completing the first quarter here and the new roles.
Thanks, Brian.
In terms of the three to six and the new generation kind of getting you bumped. The midpoint is 2020, the right way to think about the base kind of into the outer years here.
Yeah, we're still 2020 as debate.
And in terms of the decoupling and the efforts there to kind of delay and other year potentially further just kind of curious how you guys are framing the reason for that in terms of.
I mean seemingly relative to most of your peers you guys are one of the more sensitive to load impacts.
And just kind of curious if you can elaborate on the efforts there.
Yeah, Brian.
Go ahead and after.
And after you.
Well the thing Brian I would say is is just that from a coupling perspective. This is something we agreed upon our last rate case and I think as you think about what happened in 2020. We saw certainly a fundamentally different load pattern as we're moving into that initial period and so we had the pilot with us.
Chatto accounting, what we've seen from that initial period is something quite different from how that was designed and so think about tough period loss from under design was agreed to as a reminder, that our CRM handles our residential cl<expletive> and a small slice of our commercial but not all of our commercial and industrial and so with that and what we've seen out of that first period and.
And where we're still seeing fundamentally a different load pattern than we would've seen pre pandemic and we've suggested to the commission that they either continue it and pilot form or extend and pilot purely being which is shadow accounting and or extend the implementation and other ear and again I would say, it's because we're seeing different load patterns.
And what we saw in.
And the test loads that that is based on and of course as you think of any decoupling mechanisms and those are typically comparing back to a load period and with that what we've seen and the initial period of Shadow accounting, we've requested the commission delay impact.
Bob would you add to that and with perfect.
Gotcha, and then in terms of legislative items, So with SB 379, getting tabled and I know there was <unk> 99, and looking to remove free approval earlier and the year, but anything else that's kind of on your radar at this point.
Yeah, we would say again other than a 379, which had not been part of our original agenda. It was a good it was a busy but a good legislative session and Montana, Despite all the challenges with Covid.
One other item and that was certainly important was to eliminate the crop program. The community renewable program and that was <unk>.
Very problematic for us because it was almost impossible for a resource to thread the needle of being low cost.
And community based and there were substantial penalties potentially <expletive>ociated with that as well. So we were.
Were very very hard on compliance and ultimately was and workable. So we're pleased to.
To see that.
And requirement go away with Retroactivity, that's a big big positive.
We will quite separately from anything what the legislature is doing we're moving ahead on our subscription Green program, which we think is a much better.
Broach to achieving.
And similar set of goals in terms of giving customers the opportunity to subscribe to a resource that day that they choose so again and overall good.
And Dizzy session, and Montana, Nebraska, and South Dakota.
Very quiet as is typically the case and also positive.
Great I'll leave it there. Thank you all from China.
Thanks, Brian Smith.
It looks like Brian Russo as raises and one more time and I don't know Brian has another question or not Brian.
No I'm all set thank you.
Thanks, Brian Let me add one other legislative outcome, which was eliminating.
What are essentially speculative carbon adders and.
And the concern we have.
There is effectively our customers could have been put in a position where they have to pay a QF developer.
For a value that is not received so just in terms of computing and avoided cost.
Hum.
Kind of non quantifiable costs.
And they may not be added to the avoided cost we think that's a good outcome for our customers and for us as well.
Thank you Bob with that we've exhausted our question queue. So I'll hand, it back to Bob for any closing remarks, you might have.
Just as always we appreciate your being with US this quarter and this new format and we are very very eager to.
Got to spend some time with you in person in the coming months.
Thanks again for joining us this brings a webcast to a close you may now disconnect.
Yeah.
Yeah.
Yeah.
Okay.