Q2 2021 Idacorp Inc Earnings and Guidance Call
Welcome to Ita Corp, second acquired 2021 earnings conference call today's call is being recorded and a webcast as life a complete replay will be available later today and for the next 12 months on the Ida Corp website, if you need assistance at any time during the presentation. Please.
Star Zero on your phone I will now turn the call over to Justin Forsberg director of Investor Relations and Treasury.
Thank you Paul and good afternoon, everybody. This morning, we issued and posted on <unk> Web site, our second quarter 2021 earnings release and form 10-Q.
Is it price slides that accompany today's call are also available on our website, we will refer to those slides by number throughout the call today is <unk>.
Noted on slide 2 our discussion includes forward looking statements, including earnings guidance and spending forecast, which reflect our current views on what the future holds but are subject to several.
Risks and uncertainties, including those related to any potential further impacts of COVID-19.
This cautionary note is also included in more detail for your review in our filings with the Securities and Exchange Commission.
These risks and uncertainties may cause actual results to differ materially from statements made today and we caution.
And against placing undue reliance on any forward looking statements.
As shown on slide 3 on today's call, we have Lisa grow either Corp's, President and Chief Executive Officer, and Steve keen <unk> senior.
Senior Vice President and Chief Financial Officer.
We also have other company representatives available for a Q&A session. After.
Lisa and Steve provide updates.
Slide 4 shows our quarterly financial results <unk> 2021 second quarter earnings per diluted share were $1.38.
An increase of <unk> 19 per share from last year's second quarter earnings per diluted share over the first 6 months of 2021.
On were $2.27.
Which were 33 above the same period last year.
Both the second quarter and year to date earnings are the highest in the history of the company.
Today, we also increased our full year 2021, <unk> earnings guidance estimate to be in the range of $4.70.
<unk> to $4.90 per diluted share with our expectation that Idaho power will not need to utilize in 2021 any of the additional tax credits that are available to support earnings under its Idaho regulatory settlement stipulation.
These are our estimates as of today and they assume normal weather conditions over the last 6 months.
On a year and assume a continued return to more normal economic conditions over the balance of 2021.
I will now turn the call over to Lisa.
Thank you Justin.
And thanks to everyone for joining us on today's call.
I'd like to begin my remarks by highlighting the continued robust customer growth.
We're experiencing a crossed Idaho power service area.
Youll see on slide 5 the growth remained strong in the second quarter, increasing 2.9% since June 2020.
The influx of businesses and residential customers continues to benefit our company, while we believe the reliable affordable.
We all know Gee, we provide remains 1 of the drivers for attracting new customers to Idaho.
It has been a remark it has been remarkable to see this trend not only sustain but accelerate over the past several years.
We are also seeing a return to normal operations for many of our commercial and industrial customers as our service area.
Bounce from the impacts of the COVID-19 pandemic.
As of the end of June unemployment in our service area was 3.5% compared with 6% in June 2020, and the current mark of 5.9% nationally.
Total employment in our service area has increased 6% over the past 12 months.
Clean on Moody's forecasted GDP calls for very strong economic growth of 7.6% in 2021 and 6.9% in 2022.
As we speak like many employers in our area Idaho power is in the midst of the return to workplace process for many of our office employees.
I'm happy to see more people at our offices and thrilled that safely, bringing our employees back reflects a significant step forward to our new normal that is taking place across our service area.
Idaho Power service area continues to experience significant interest from commercial and industrial projects in food processing manufacturing.
Factoring in distribution.
Multiple developers, both local and national are moving forward with the construction of commercial size spec shelf facilities to better accommodate the speed to market of prospective projects.
Idaho Power is also has also been actively working with <unk> mining.
<unk>, which announced in early July It will proceed with final construction of its Idaho cobalt operations mine in Central Idaho.
And just this past week Lamb, Weston announced a $415 million investment in the planned construction of a new French Fry processing line at its existing facility in American fault with.
Capacity to produce more than 350 million pounds of frozen French fries, and other potato products annually by mid 2023.
This expansion is expected to add approximately 130 jobs.
In addition to serving more customers than ever we've experienced very hot dry weather during.
Expected per quarter with our service area experiencing several very high temperature days in late June and July.
Slide 6 shows the recent outlook of precipitation on whether from the national Oceanic and atmospheric administration.
Current weather projections for August through October shows, 50% to 60% chance of above normal.
During the <unk> and a 33% to 50% chance of below normal precipitation in Idaho power service area.
If the warm and dry weather continues we expect to see continued strong sales during the third quarter, particularly for residential and irrigation customers.
At the same time dry conditions and overall lower reservoir storage.
Temple have decreased our forecasted hydro generation for the remainder of the year, which Steve will address later on but it continues to appear irrigators in most parts of our service area should have enough water to get them through the current growing season.
The combination of customer growth in hot dry conditions has.
Has created high demand for energy across our region as noted on slide 7.
Idaho power hit a new all time peak load of 3700.51 megawatts on June 30th.
And we have exceeded the previous 2017 peak demand of 30.422 megawatts more than 60 separate hours on 12.
Different day, so far this summer.
I'd like to thank the wonderful employees throughout our company, who are helping us continue to meet this record demand.
The recent heatwave has once again demonstrated the skill and dedication of our employees and the resilience of both our employees and our system.
I'd also like to acknowledge our customers.
Helping us lighten the load during hours of peak usage in the late afternoon and evening. When we also ran demand response programs force to help reduce loads.
While we have been able to maintain reliable power for our customers. During these extreme conditions. We also acknowledged the need for continued planning and preparation to meet the growing.
Fernand.
The jackpot solar 120 megawatt project in Southern Idaho is scheduled to come online by the end of next year and our company also recently issued a request for proposal to add another 80 megawatts of a capacity resource to meet peak energy needs by the by summer 2023.
Separately.
Growing to be early modeling in the 2021 ERP suggest that subject to the timing of coal unit exit additional capacity may be needed in future years.
The recent spike in energy use and prices also emphasizes the importance of the boardman to Hemingway transmission line or B to H.
Which we plan to bring online as soon as 2026.
<unk> will allow Idaho power to import up to 500 megawatts, which to help meet customers' peak summer demand and increased reliability for our system as well as the region.
Record heat waves don't last forever, but we believe periods of higher demand.
Separately in summer months are here to stay.
Of note on <unk>. This month, all co participants entered into an agreement and acknowledged that Bonneville power administration does not intend to participate to participate in the construction of the project or to be a co owner in whole or in part of the project and the BPA intent to.
To sell its interest in the project to either Idaho power or third party.
Idaho power continues to evaluate its options regarding bpa's interest.
I have a couple of notable Idaho regulatory updates to share.
The first is a recent filing Idaho power made to accelerate the recovery of depreciation expenses at the gym.
Mandeville fire plant, which as noted on slide 8.
Our Idaho rates currently reflect our recovery timeline through 2034, but preliminary analysis indicate the potential exit of all 4 units at the plant sooner than the current timeline.
If our filing with the Idaho Commission has approved as filed rates would any.
Richard $38 million in December of this year.
This would result in a near term rate increase for our customers, but our study shows the potential for customer savings and the long term.
Exiting the Jim Bridger plant early also aligns with our goal to provide 100% clean energy by 2045.
Secondly, as seen on slide 9 the Idaho Commission recently approved Idaho, Power's request to defer incremental costs associated with our enhanced wildfire mitigation plan.
This positive regulatory outcome will allow us to defer associated incremental costs to be included in a future rate proceeding.
Increased but he is working hard to strengthen our grid and keep our customers safe during wildfire events.
On our last earnings call I stated, Idaho power did not plan to make.
I do not plan to file a general rate case in Idaho or Oregon in the next 12 months.
That remains true today.
Steady customer.
<unk> growth constructive regulatory outcomes effective cost management and economic condition all play significant role.
As we look at the need and timing of a future general rate case.
I'll close my prepared remarks by reiterating my thanks to our employees for their hard work meeting the increased demand.
Our cover reliable energy as our service area growth, particularly during the heat wave.
I also commend them for their resilience over the past 17 months as we navigate the challenges of the pandemic together.
With that I will turn the call over to Steve for an overview of our financial performance.
Thank you Lisa.
Let's now move to slide 10, where you'll see our second quarter 2021 financial results as compared to the same period in 2020.
Overall, we've experienced a very solid first half of the year with strong customer growth positive impacts from transmission services.
<unk> and higher revenues, resulting from a heat wave that affected much of the western U S. Because of these factors either Corp second quarter net income was substantially higher than last year.
On the table a quarter over quarter changes you will see a continuing customer growth added $3.9 million to operating income.
Also increased usage per customer drove operating income higher by $22.9 million.
Cooling degree days were nearly double last year's second quarter from the hot and dry conditions led to significantly higher usage across all customer classes.
Irrigation and residential per customer usage increase.
<unk> 25, and 10% respectively.
A return to more normal economic conditions combined with the hot weather also drove a respective 12, 8% increase in usage per customer in the commercial and industrial classes.
Continuing down the table the higher usage per residential and small general service customers.
<unk>, partially offset by $5.1 million lower revenues from the PC or the FCA mechanism.
The FCA mechanism has tempered the effect of the higher usage for these customer classes and could do so again in the third quarter if customer usage continues strong.
Next you will see a decrease.
And operating income of $6.8 million that relates to the change in the per megawatt hour revenue net of power supply cost and power cost adjustment impacts quarter to quarter.
The primary driver of this decrease relates to the amount of net power supply expenses that were not deferred to Idaho Power's power.
Kris adjustment mechanisms.
Call that Idaho customers generally better than 95% of power supply cost fluctuations in.
And those costs were higher as the heat wave impacted wholesale energy prices at a time of increased energy usage by our customers.
The heat waves also effective transmission.
Wheeling related revenues, which increased operating income by $3.9 million.
Wheeling volumes increase as utilities work to serve high demand by moving energy across our system throughout the region during the quarter.
In addition, willing customers paid 10% more for Idaho Power's open access transmission tariff rate.
That increase last October to reflect higher transmission costs.
Next on the table other operating and maintenance expenses increased by $5.3 million.
This was primarily due to last year's temporary deferral of certain maintenance projects at Idaho Power's jointly owned thermal generation plants.
As well as higher accruals of performance based incentives.
We continue to see decreases in employee travel and training costs related to COVID-19, while our allowance for bad debt remains above historic levels and is taking longer to collect.
Our net COVID-19 recovery deferral impacts however continued to.
Remain nominal.
Finally, our higher pre tax earnings led to an increase in income tax expense of $4.2 million this quarter.
The changes collectively resulted in a net increase to Idaho Power's net income of $9.6 million on.
Or <unk> 19 per share.
Either 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.
<unk> operating cash flows along with our liquidity positions as of the end of June 2021 are included on slide 11.
Cash flows from operations were about $39 million higher than the first 6 months of last year.
The increase was mostly related to working capital fluctuations in the timing of net collections of regulatory assets and liabilities.
The liquidity available under either Corpus and Idaho Power's credit facilities is shown on the middle of slide 11.
At this time, we still do not anticipate raising any equity capital in 2021.
Our combined liquidity along with expected regulatory support from our annual adjustment mechanisms is a substantial backstop to our expected capital and operating needs.
Slide 12 shows our raised full year earnings guidance and our current.
Current key financial and operating metrics estimates.
We now expect Ida Corp's 2021 earnings to be in the range of $4.70 to $4.90 per diluted share.
This guidance assumes normal weather and operating conditions for the second half of the year.
And assumes economic impacts from the.
Pandemic will continue to normalize.
Our guidance still assumes Idaho power will use no additional tax credits in 2021.
While we do not currently expect to record sharing of excess revenues with Idaho customers. This year. The upper end of our range of approaches that level and the final jurisdictional allocation can adjust on that through.
Through year end.
Recall that above a 10% return on equity in the Idaho jurisdiction, Idaho customers would receive 80% of any excess earnings.
Our expected full year O&M expense guidance remains in the range of $345 to $355 million.
It's fair to say this goal to keep O&M relatively flat for the ninth straight year is being challenged by the amount of customer on load growth we're experiencing.
We also reaffirm our capex forecast for this year in the range of $320 million to $300 million $330 million excuse me.
Our expectation of hydropower.
Generation has decreased somewhat given the weather conditions Liza presented and is now expected to be in the tightened range of 5 to 6 million megawatt hours.
With that Lisa and I and others on the call will be happy to answer your questions.
Yes.
Now ready to begin the question and answer session.
Power Gen. If you would like to ask a question. Please do so by pressing star 1 on your phone.
On Ut ensuring your mute function is turned off before you ask your question.
We will take as many questions as time permits on the first comp basis. Once again that is star 1 on your phone to ask a question.
<unk>.
Your first question comes from Chris <unk> with Siebert Williams.
Hey, everybody I hope you're well.
Hi, Chris Hi, Chris.
Got a million questions for I guess, a lot of exciting stuff here.
Sure.
First of all.
Sure.
Is it time to get worried at all about next year's reservoir levels considering.
On the outlook for precipitation and the.
The expectation that there might be another line developing for the fall so can.
Sort of give us your thoughts on that and where the reservoir levels are today.
Yes, certainly I can I can start and Chris This is Lisa.
1 of the things I was taught a very early in my career is that no amount of worry actually puts any water in the reservoir. So it's not so.
Can you just that we worry about it but we certainly plan for the worst case scenarios and so we are being careful about how we're using the water on I would remind you we have a and.
We do have some weather modification that we utilize to pull as much.
As we can out of each storm that does come through and I would also remind you that la anemia actually can produce really good snow pack for us as well often its more of the case that it doesn't it doesn't but I'm reminded that last year was also a lot of anemia. So am I I don't know that there's a great trend line up really on that its just that it.
On Wednesday continues to be variable. So we certainly know how to how to operate during those conditions. It does mean that we rely more on the market and we will it's the value of a diverse portfolio that we can access other sources of <unk>.
Energy when.
We are in drought conditions and Adam is there anything that you would add from that im missing from an operations perspective.
No I think you've covered it it's a little bit too early to tell but we are focused on it and we in fact have some meetings over the next month or so to make sure we keep an eye on it.
Okay.
Lisa Lisa Chris Let me add 1 thing.
It's been a while since we've talked about these issues, but if you go back a few years, we've had multiple times that we've had several years in a row that we had drought like conditions and.
1 good thing is the Brownlee reservoir sort of hits.
A bottom.
Net bottom line move slightly but the level. We're at right. Now I think is is nearing the point it kind of doesn't go below that even in bad years.
Now that doesn't mean, that's an optimum thing because we would much rather have a lot more water, but it doesn't it doesn't go down to zero or at least hasn't been and what we've seen is it.
Stop.
At a certain level on the spring fed another thing so.
Okay.
Lisa can you talk about what you were saying on the commercial industrial recovery.
Where do you feel like you are compared to normal and and.
What what.
This.
Stopped from it looked like versus last year.
From what you can interpret the COVID-19 situation.
Well as I mentioned in the remarks, we really are seeing a return to normal levels and then.
Some of the new businesses is starting to show up as well so.
This quarter there have been some maintenance cycles that have happened during.
During the last year that felt a little bit out of cycle from their normal timing, but I think they might've been taking advantage of of what was going on in the world to do some maintenance.
And in a time that was slightly different than the normal.
So I would say, it's getting really close to 2 a normal levels and as we mentioned lots of planned increases as well. So we're very excited about that return on.
Because also that means people are getting back to work and and where were very.
Optimistic.
Okay.
I just wanted to make sure I'm clear on this.
Times that the revised guidance is assuming normal for the second half of the year. So you haven't included any consideration for what appears to be a pretty hot and dry in July.
So far.
Chris the way I would put it is we.
We don't put those in our baseline or in the what we would say is our mid point, we don't really tell you where that is in our range, but we do factor those in as were looking higher but you always have heard me talk about third quarter and July looks really good but the whole quarter.
July is a massive part of what we get for the year. So.
The thought is in there it's not.
I'd just say, it's a range and we put in the comment there towards the end that we're also starting to approach where where do you start sharing a little bit we don't stop necessarily the sharing but you do slow down.
So.
This is a reasonable range.
We come up with this script.
Midway through July on most of it's getting.
Charted out but as you point out it's been pretty hot and that's continued on.
Okay.
Is the sort of the artificial.
Michelle and irrigation season really hit for you.
It generally is late August September depending on the crops that are planted.
So I would say it's generally in into September early September yes.
That's 1 area, Chris where I think.
We don't know, sometimes if we just got irrigation earlier or how much of it is going to be an absolute up. So that is 1 of the question marks that kind of you wait until you get to end of August that you kind of know what <unk>, what really happened how much of that was all up on how much was just sooner.
Right.
Please see you.
<unk> cobalt mind can you give us some details and you know what.
What kind of load does that look like.
I'm going to have Adam Rich's answer that he's been a direct from more directly involved with that Adam do you want to take that 1.
Hey, Chris.
The things I think you know it gets a little bit patchy with our customers talking about the loan.
<unk> tends to be a bit confidential for them. So.
Can't get into that right now they're focused on a mid 2022.
In service date and.
I'll just tell you I've been up there I've I've looked at the mine and its moving in terms of construction. So.
That's what they've said publicly in terms of.
You can't get into that but we're pretty excited about what it can bring to our service territory.
You'd be able to later talk about load or maybe what the scale of the mine is.
Yeah. It all depends on whether they're willing to go out with that information or not publicly a lot of these folks consider.
The loan you know competitive information.
Others are looking at what their load is and they can determine what how much their mining and some of those types of things. So it really depends on the customer I would love to share more but they have to let us know kind of when it's okay for us to do so.
Okay.
And we see a sort of we're talking about.
Dinner it depending on the coal retirements, and obviously had some new peak loads and whatnot.
Can you give us your general thoughts on new resources.
Obviously.
P detail.
Our somewhat fluid but.
But can you are you sort of talk about what.
What your vision is in and would you.
And participating in any kind of material on the resources.
It's a great question on so.
So as you mentioned.
On the ERP is really are the process.
True to identify them are our future resources, but we do have an RFP out there on the street for 480 megawatts that we didn't have previously in the in the in the plan on.
It really came up from the analysis, we did on looking on weather.
We go on we could take the second unit of bombing out earlier and you know when we refreshed all the variables at it demonstrated that if we were going to need something sooner and something that with a capacity resource not just energy and C.
So so we're looking forward to getting the results back there and then.
Other.
We are looking at all kinds of resources and again that analysis on that goes into the rfps or excuse me. The IOP is really critical so that's where we can test sort of the technologies against 1 another on their performance and cost so I am very I'm optimistic I.
Then there's a lot of exciting opportunities out there and I'll, let the our ERP run its course, and we will have we'll have more information available.
Available at that point that should be out by the end of this year.
Okay. Thank you so much for the color I appreciate it.
I think the August.
Thank you you too.
Your next question is from Ryan Greenwald with Bank of America.
Good afternoon, everyone. Appreciate the time.
Hi, Ryan.
Maybe first can you guys just.
Lucky Covid about any shift in dynamics submit the latest scarcity concerns when it comes to the planned early acceleration of Jim Bridger.
In terms of any initial conversations with stakeholders.
Any change in mindset there.
Talk to you I'm not sure I mean, we we've been certainly again talking with the I R P and and other stakeholders about what that might look like and certainly we talk with our partner over at Pacific core recall, they're the majority owner operator of that plant. So I don't think there's been anything that I could say.
<unk> is is a change of of how we've been thinking about it in the past so maybe on maybe I'm not fully understanding the question you're asking.
Yeah Ryan.
If you look at the 2 plants that we already have moved through that process.
The fact that the end of life costs on some of those things kind of just set out there from.
You start you start the plant do you think that's kind of just so far you don't think about it as you get near you have to you have to start encompassing the whole the final answer for any of these plans so that bridger decision as Lisa mentioned.
Mentioned, the last day or piece of the best information, we have got in terms of timing, where everybody is working hard on the next 1 but there's there's pieces of that in order of spreading those costs over periods of time are collecting them from the customers that are getting enjoyment of the use of the plant all of those things none of that has really changed or moved in that there's a lot of.
Emphasis behind the filing.
Got it so it sounds like at this point are you guys plan to kind of proceed with the earlier acceleration I'm not too concerned about a slowdown.
Not too much I guess I pointed to that as.
Is this the way that both the Vol me.
Decisions were put out and boardman they both allow us flexibility. So they are kind of a living plan. Once you put them out if you start with a plan. There is plan a and then it adjust and adapt since you reported.
It's got a process that allows the oversight to continue on.
The <unk> process and.
On continual updates so I think the starting with the process is still a good thing and it.
I never really youre going to hit a point when you know perfectly.
The answer for the future. So that we can focus more on a mechanism that could live through those type of things I think it's worth noting too to remind you.
On the.
It's fascinating on the Balmy agreement that the final depreciation day. It was actually passed the date of when we would finish or cease operations. There. So so you know if we did have to change the operation date. It doesn't change the the depreciation schedule. So it's it's.
All through we do have some movement capability there.
Understood and then maybe lastly, with respect to the BPA intention to sell their stake any more color you guys can provide there around timeline on how this could play out in coming months in terms of your potential ownership.
Well, we're still working with our partners on that so there.
There isn't a lot more debt, we can say, but there are active conversations and we continue to work through it.
Got it I'll leave it there. Thank you thank.
Thank you thanks.
Thanks, Brian.
Your next question is from Brian Russo with <unk>.
Dorothy.
Hi, there if I could ask.
Hi, good afternoon.
Hey, so just.
Yes.
Curious.
This.
This might sound silly, but is there a scenario where it can be too hard and too dry.
Sure.
The demand.
<unk> is exceeding your.
Generation capacity.
With low hydro conditions, you need to go out and buy high priced power, which is what led to the margin or negative margin variance.
On the PCA.
No.
Too much might be the not the rest terminology, but certainly.
When you see it gets really high end.
You cover power and it's a balancing process I mean I think we.
We referred to typically is balancing and youre weighing.
Do you run your water now the assay that until later in the year do you.
<unk> is the market, giving us an opportunity to buy the day at a better price. So we can we can keep 1 of our resources for later, that's what the operators do constantly is trying to sort that out but it certainly can drive high cost and if you remember back we've had some years in our past.
We've had really high power costs there.
They were so high we.
Offered to spread them over a couple of years and they ended up going ahead and collecting it.
A single year, but but it does drive the costs up you are somewhat subject to.
The market for parts of it and we.
We do the best we can there and we.
It was 1 that manage that I think the hydro is really nice and that we have a little more choice with at times than others. So we'd like to have more of it but.
But we started this year with a pretty normal amount in the.
As far as carryover, we probably were slightly below normal when we hit summer just because we've used some on the spring, but it was close.
Try to hit it even if you have a pretty good year, there could be days that you go to market.
Adam do you want to add any color because we have a relatively new group of leaders in operations and they were really creative looking out and seeing some of this coming and moving quickly to adapt.
Yeah and.
Thanks for the question, it's a good 1.
Experienced in June 1 in 45 year event in our service territory on the Pacific Northwest that was a 1 on 1000 year event and as Steve mentioned, although the conditions of carrier over were decent we had 1 on the dry it springs and memory and we were absolutely.
We were able to work through it the system held up well we have operational folks. This is what they trained for this is what they are ready for <unk>.
We did have to buy more energy on the market, but we also have processes that.
Before these times come to make sure we're being proactive sometimes we hedge some of those purchases as well.
We also actively bought some transmission on the market that maybe we hadn't done in the past. So it's really just in a lot of ways. It's just kind of what we do does it make it more tight on our system absolutely, but so far on system has been performing well and we've been pleased with the results.
Right got it.
$2.8 million of negative.
Net income driver related to power supply costs that implies you are already in the 95.5 share and correct.
The 95.5 is on all power supply cost so everything that a good or bad.
So if we are experiencing lower than normal cost, 95% of the savings goes back to customers.
You get to keep 5 when the costs are higher.
And this is Idaho, primarily that I'm talking about the 95% goes to.
The bears the cost is the customer.
And then we take the other 5%.
If your debt used to be a 90.10 split and then it was adjusted and we're at 95.5 now.
And Thats all based on whatever within the last rate case.
Factors off on that.
You really start with whatever within your last based on your last general rate case.
And then the $95.5 works either direction off of that number.
Okay got it and then the <unk> filing I think he got on an extension to December but I think the target month was in September of 2021 to file it is that still the goal or.
Is it going to be pushed back.
Do you think towards the end of the year on.
Our goal has been around November and right now we're on track to meet that.
Yeah.
Okay and then also the 80 megawatt RFP is is that a purchase power agreement type scenario or is that something.
If you would consider yourself building.
Well, we're looking to do a little of both I mean, obviously, we would love to to build and own.
But we're also wanting to make sure that debt.
People respond to the RFP. So we're looking at we're open to.
A number.
Of of possibilities.
Okay, and then last week.
Line, just what Bpa's percentage stake is the BPH.
I believe it was 24%.
Okay, So 24% of I guess that 1 point.
$1 billion kind of costs do you guys disclose.
Yeah.
Yeah.
Okay, great. Thank you very much.
<unk>.
Thank you Brian your next.
Question is from a sharp on with various.
Your line is open.
Okay there.
Hi, how are you doing.
So I just wanted to I guess, there's a couple of things happening if I may.
Mentioned right towards people are talking about but.
The higher load into.
Warm weather is generally positive for earnings is that fair to assume.
Generally yes.
Okay, because we've had a good July so as our as you were mentioning we still have to wait for August and I guess September somewhat but August is the key month.
If I'm right right, so debt and that is not yet included in your forecast.
But you did mention that if you go over.
I guess the top end of your range for nineties right you would be in the sharing mechanism if I heard it correct.
Yes.
We're not seeing.
The 490 is the number we're just letting people know that it's not a long ways past that.
What are the allocators sits currently it does move around so it can actually shift up and down a few pennies.
But it's beyond that upper range today.
So it's it's beyond okay. So it's not that coordinate.
But it is something above that that is when the sharing will happen.
Correct. We just wanted people to remember that there is a place where it slows down and earnings don't necessarily stop its sharing its just begin to accumulate yeah. Yeah. No I just wanted to I just wanted to I was just doing it off back end it Matt.
Is that at what level do you reach a you know 10 per cent tried that swing chairing start right and my my earnings number calculation were coming debt earnings after go over $5 to reach that level. So when you set for 90 I got a little bit confused so I wanted to.
My math with you whether I was missing something.
Sure you are trying to hit a number that hasnt happened yet. So it is a tough number to hit its going to be a year end calculation, it's going to depend on how many sales happened in Oregon, how many sales happened in Idaho.
Which which class happen.
Check this place.
So it's a very complex allocator that at this point in time, we kind of have some in the ear idea, where it's going to be but it's going to move most likely from what we think it is today.
It's affected by yearend equity understood understood.
With you understood it but it's not at 490 right now that's my main point.
Yes, I just wanted to clarify that right youre correct its above that it's above that okay. That's what I just wanted a clarification on okay. Okay and then.
If I just.
I'll turn it on the realized.
Sensing issue and it's 10 or 2023 went in your eyes.
Well you know that it's an ongoing.
Ongoing process at this point and we believe that that still is possible, but there.
There is debt.
Got line of of things we've got.
I told you to get there, but that's our best guess today.
Okay.
And then.
I'm just trying to you know just for reference purposes.
As you're seeing this high growth.
In the service territory.
On a go and 1 thing which has happened if you look at sure.
On a reported all that as debt on our Oes have gone a little bit down right. We sometimes we earn 969.4 I guess the last year based on your annual report and that I guess you do based on the.
So let's talk a book value of the whole company. So it's a mixture is 9.3 at once.
Was at the low end so from your perspective, what does what does the ideal rate is 939495.
Where should 1 Cai.
Like set once.
The tourism.
In terms of planning for the future with this higher growth end up and I just wanted to get your thoughts on it.
Well, you're saying ideal I mean.
They do move those years that we have better support and stay out of ourselves.
Variety areas, our Oregon property has no mechanism around it the way Idaho does so it has variability and so the reality is there is some years, we don't get as high as others, but the goal is to.
Yeah, Yeah, so we're aiming to maximize.
And I think.
So many times about the.
When the.
Whether you are filing with you're not filing how much of this growth continues to bring in Covid did throw some question marks into that I think we just weren't sure where we're sitting today and within the year. That's happening now it appears that growth is still alive and well on and.
We've talked we're kind of just hanging on.
Keeping up and making sure we serve everything that comes so.
That's some of the use you're looking at there were impacted by.
I think I don't think any of us saw coming I certainly didn't have the pandemic in mind.
5 year window back in.
Yes.
So.
I don't know what to say about that assurance that does move around with outcomes, but I think we're sitting in a good place in the story. We've had is still on track.
I think the growth continues to be our interim answer and.
As Lisa talked about some of our growing needs.
We've put out reports on our shareowner updates on Capex growth.
There is a different story that's building that's kind of our future. So.
We're still on that track.
Okay, and if I can ask the last question.
Right.
So if you look at it on a consolidated base.
Basis right.
The book value is increasing by $2.
And if you apply say roughly I wanted to go to the lower end 9 right.
Auto E on bad debt gives you like $18 million and if it divided by 50 million shares that gives you like annually.
Growth by about at least you know kind of.
Somewhere in the 30 cents range, but we don't achieve debt. So I'm just trying to understand what is the right way to look at the increase in book value because that's a consolidated book value right. It's not a diet corpus where the mechanism is.
So what is a good number for either Corp's increase in book value is it $1.50 on what what is the right number to want to think about.
So the mechanism is in Idaho mechanism.
That looks at the Idaho allocation.
The equity for Idaho power.
So the mechanism is the city United Corp on there.
That's why I was asking what is a good number to look at from that either Cogs perspective for increase in equity every year.
Yes, we haven't put debt out sure I mean, that's why we put the chart that we've been sharing for quite.
On a number of years on the.
We give you the chart of year over year changes.
And with that you can kind of look through and see the years that we've hit.
Sharing in that Thats, good a limiter and you can kind of do your own calculations of where.
Those support mechanism might be which kind of.
Gives you a bottom and then you can figure out where the sharing might be above that.
People have used that to ban their estimates.
Okay. Okay. Okay, I thought I would try it once more to see if I can make my model motor accurate, but I appreciate it thanks, great results and.
And just a reminder, when is your some I've known lost track previously used to come out with your dividend policy in August is that still the case or now it's didn't being delayed into the fall.
Yes.
For the last few years, we've made our dividend changes when we've done it in September.
Number.
And I think we announced that that was.
The plan, we were going to go with normally.
Normally have given some sort of an indication.
What to expect might come in the next year, but then we didnt actually do it and announce it until we're through the September.
Okay. So we shouldn't wait till September.
Yeah, it's actually with a relief.
Yeah.
Well get it out for the third quarter.
Thank you.
Okay.
Your next question is from Vedula Murti with Hudson Bay capital.
Okay.
Yes, I would do it.
That's true.
Thanks.
Yeah.
Your line.
How much of how much of the.
21% already reported in the existing Capex.
<unk> 5 year plan.
Published before.
Some of it is in there.
Uh huh.
I can't remember how much actually gets in terms of construction a lot of it is just the pre construction and the planning and the.
And in licensing teeth.
I'm not sure I heard the question.
Construction period is 2003 and 2006.
And Thats, where the bulk of the funds will be expanded.
Yeah.
So it was.
It wasn't there at all.
So oh.
Awesome.
Yeah.
And that would be the earliest you know from our standpoint.
And what is the status.
Got it in terms of what are the things that actual we'll go with it.
We've been working through.
If any other regulatory approvals environmental and other things.
Is there still some probability that.
Well Pat.
This is Jeff from me I'm happy to answer your answer that go ahead Adam.
Yeah, the federal permitting we've received.
Those permits him in that that's the NEPA process, we arent federal litigation on on those permits but we've received the actual permit state per many should be completed we believe the second half of 2022.
And B to H continues to be our lease costs lease risk resource as we look.
Through the 2019 IOP.
And so yeah. We're moving ahead, we think we're making good progress and.
Our partners in package is also moving ahead and are excited about the projects. So yeah. We think it's a moving forward at a good pace.
So I guess at this.
But when do you think you'd be looking to be able to tell us that this is bill.
We have everything in hand.
Project in Austin.
Cost and time line and that's what we're doing.
Well right now on a schedule shows as I mentioned.
No.
23.
<unk> kind of construction window to 2020.
6.
That's the earliest it would occur we would obviously need to get our permits before that some of that depends on what occurs with the litigation in the federal permitting.
Again, you know right now our partners are moving forward with it and we feel.
Real good about the progress.
And is there anything.
Is there anything formalized processes E.
P a.
We're languishing their scare and if you were too far away.
Was there anything ever in terms of.
Formula under which you would do.
We've always known debt.
You might pay BPA for per share or is this just a flat.
Flat out.
Negotiation.
It's a net this is Adam again, it's in the middle of negotiations, we're exploring different asset service and ownership arrangements frankly with BPA.
Scenario, though would include Idaho power acquiring.
P as ownership share and then we went on the back end provide BPA long term transmission service in lieu of ownership for them and in that scenario. We would have instead of the 21% interest we have now it would it would increase up to 45%, but again.
Once discussions are.
Preliminary and in confidential in nature at the end of the day you know our intent is to maximize the value of the project for all parties and so we're in the middle of those discussions and we'll we'll advise when we can.
Okay different topics the Jim Bridger.
These days.
Okay.
On Commission.
Hmm.
Or you can simply choose that number and if they chose not to use and simply not.
Not to go forward with itself.
It's simply a matter of whatever mission.
Okay.
Agreeing upon you'll be able to that book to choose something they chose to do something different that you would do that.
Requests they gave something different.
Well, it's like if I'm following you.
What we're saying is we've got our best information filed.
That's what's going in right now with the the case it was put before the commission knowing that a lot of the pieces and parts of that.
Could move or change and so.
It's going to allow for those dynamics to move an adjusted.
I think that's anticipated that there would be updates to.
Well it isn't.
It's very difficult to set all of that would be perfect. At this point. So encompassed in that is sort of a dynamic response element to the way that the rate mechanism works.
What's the timeline that they reported.
On the side.
Lots of things.
So on that.
Okay.
December.
So if we're looking at it yeah I think it was their requests.
Yes that was it.
Request, you certainly the commission COVID-19.
You know take other actions, but that's what it would be under a normal course.
To that end.
On the other thing I think people Apis are very curious about.
You mentioned the.
Pizza or otherwise.
And also highlighting.
This is a very strong growth from correctly.
Oh Wow.
Are you expecting any update on day.
<unk> capital program, because it would seem like you'd have a minimum base capex just hum.
Maintenance.
Net.
You know on the surface there from what happened to be going up given new customers et cetera. So when should we be expecting a.
We're basically on the capital program.
I think we get frequent updates on what are some of them.
It's been it's been going up each of the last couple of years.
I.
I don't have a number to give you for next year, but youre right there is growth.
Maybe outfits, what you were expecting it often means youre going to have to spend a little more money.
On a year, but.
That's usually a year end process for us, where we update those numbers and so you'll see.
Your next update from us with.
On a just an annual basis would be with our year end.
Earnings release, but we do occasionally put out you know will take it out to all shareowners.
On the phone.
We've updated our book lots of times and so you might keep an eye on that if you haven't there's some out there I don't know when the last time, the capex forecast changed but the Capex forecast that we currently have out is.
If you haven't looked for a while may surprise you what it.
It shows that are expecting.
Through a series of growth have gone up quite a bit.
No I was taking a look at your best her book Yeah.
It wasn't clear to me whether those are things that are prospective that are possible.
So on things happen.
Our debt on possible to occur for debt.
On formally in Europe.
Okay sure.
That's right.
It's probably a mix because.
Parts of it are building off of what our normal Capex program has been.
But.
They change and they do go up at times and then there's other pieces that are maybe.
B plant or hopeful that timing could shift year to year or amounts change. So it's a blend.
Okay, Alright, thank you very much.
Thank you.
Yeah.
And our final opportunity press star 1 to signal for a question.
And well pause for just a moment.
That concludes the question and answer session for today, Mr. <unk> I will turn the conference back to you.
Thank you again to all of you for your continued interest in <unk>.
Question, we certainly look forward to the possibility of meeting with you in person later this year and I continue to wish you all good health and have a great evening. Thank you very much.
That concludes today's conference. Thank you for your participation.
Okay.
Hum.
[music].
Yeah.
Okay.
Got it.
[music].
Uh huh.
Your line.
Okay.
Yeah.
Yeah.
Uh huh.
Okay.
Uh huh.
Uh huh.
Yes.
Yeah.
Yes.
Okay.
Hum.
[music].