Q3 2021 Avista Corp Earnings Call
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Yes.
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Good day, and thank you for standing by.
Come to the Avista Corporation Q3, 2021 earnings Conference call.
At this time all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question. During the session you will need to press star one on your telephone.
Please be advised that today's conference is being recorded.
Require any further assistance. Please press star zero I would now like to hand, the conference over to your speaker today, Steve <unk>. Please go ahead.
Okay.
Thank you.
Good morning, everyone and welcome to the third quarter 2021 earnings Conference call.
By way of introduction I've been with the Vista since 2009, working in our accounting group.
I'm very excited to be taking over from John for my first earnings call and I look forward to working with all of you in the coming year.
Our earnings were released pre market. This morning and are available on our website.
Joining me. This morning are Avista Corp, President and CEO, Dennis Vermillion, Executive Vice President Treasurer, and CFO, Mark Thies senior.
Senior Vice President external affairs, and Chief customer Officer, Kevin Christie, and Vice President Controller, and principal accounting Officer, Ryan Crackel.
Okay.
I would like to remind everyone that some of the statements that will be made today are forward looking statements that involve assumptions risks and uncertainties, which are subject to change.
For reference to the various factors, which could cause actual results could differ materially from those discussed in today's call. Please refer to our 10-K for 2020 and 10-Q for the third quarter of 2021, which are available on our website.
To begin this presentation I would like to recap the financial results presented in today's press release.
Our consolidated earnings for the third quarter of 2021 were 20 cents per diluted share compared to seven cents for the third quarter of 2020.
For the year to date consolidated earnings were $1 38 per diluted share for 2021 compared to $1.04 last year.
Now.
I'll turn the discussion over to Dennis.
Well, thank you Stacy and welcome to the IR team. Thanks for heading up the team, Florida as you heard this is Stacy his first call today and we're just so happy to have her in this role and she's going to be what the city yeah.
Two so you'll everybody will have a chance to meet Stacy and get to know Stacy a little bit.
So good morning, everyone I'd like to start our conversation. This morning by acknowledging that it's been more than a year and a half since we started this pandemic journey and unfortunately.
It looks like we still have a ways to go we will no doubt face more challenges as we move forward you know our region and our our nation, we're recovering and rebuilding from this end.
We're ready and ready for the challenge.
I continue to be extremely proud of our employees and I'm, just so grateful for their resolve and resiliency.
They've all demonstrated the flexibility they displayed in and then the commitment and concern they have for our customers and communities.
Just really fantastic and I'm, just so proud of our team.
I'm confident that no matter what the future brings that we have the team and we have what it takes to manage through whatever the future may bring.
Now, let me turn to our earnings results at Avista utilities, our earnings were above expectations, primarily due to the timing of the recognition of income taxes.
And over at AGL and Peter earnings remain on track to meet our full year guidance.
And then our other business we've had a great year, so far and we are pleased with our investments.
Significant gains in 2021 exceeding expectations.
We continue to expect these investments to contribute five to 10 cents per diluted share going forward.
And in regards to regulatory matters during the third quarter, we concluded our Idaho, and Washington General rate cases.
With rates effective in.
September one and October one respectively. We are pleased with both commission support of our ongoing investments in the infrastructure that serves our customers and offers us the opportunity to continue to provide our customers with safe and reliable and affordable energy without immediately impacting customer bills. However.
However, we did get we did not get recovery of certain operating expenses through the Washington General rate cases.
In October we filed our general rate case in Oregon, We have proposed that the increase in base revenues included in the rate case be fully offset for a two year period with tax customer credits of the same amount.
Resulting in no impact to customer bills.
Early in the first quarter of 2022, we expect to file general rate cases in Washington, both electric and gas they will be multi year rate plans as required under the new law and we will seek to include in rates all capital investments and expected operating expenses through the end of the rate plan period Internet.
To earn our allowed return by 2023.
And other regulatory filings we were the first utility to file two pilots E clean energy implementation plan with the Washington Commission in October.
Our plan sets the course for an equitable transition to clean energy and provides a roadmap for specific actions to be taken over the next four years to show the progress, we're making towards achieving clean energy goals established by the clean energy transformation actress Cedar.
And.
That plan is available on our website under the clean energy future tab and there's a good executive summary, there if you have interest in checking that out.
Focusing back on earnings we are confirming our consolidated earnings guidance for 2021, and 2023 of $1 96 to $2 16 per diluted share for 2021 and $2.42 to $2 62.
<unk> per diluted share for 2023.
We are lowering our consolidated guidance by 10 cents per diluted share in 2022 to a range of $1 93 to $2 13 per diluted share so with that I'll turn this presentation over to Mark. Thank you Dennis Good morning, everyone and welcome Stacy to the team we look forward to seeing everybody down at <unk>.
As well in there.
Talking about our company, which we're excited about.
So everybody has referenced the blackhawks around a one game winning streak.
I can only say that because it's the only game live one this year, we've had a tough start.
But for us at Avista third quarter, it's been a good quarter for US as you know as we mentioned Avista utilities is up <unk> 13 cents a share compared to eight in the prior years, but this is really primarily due to income taxes and in how we record the timing of such income taxes, and we expect that.
Outperformance to offset in the fourth quarter to back to normal performance for Avista utilities, the earn the energy recovery mechanism in Washington, and we had a pre tax expense of $3 8 million in the third quarter compared to a benefit in the prior year.
And for the year to date, we've recognized an expense of $7 1 million.
Compared to a benefit of $5 9 million, but when we look at it for the year compared quarter over quarter last quarter, we expected for the full year to be a negative hate since we currently expect it to be a negative nine cents. So it's really just a slight move in our expectations over the year within the year and we had a big recognition in the quarter, though.
For Capex capital expenditures, we continue to be committed to investing the necessary capital as Dennis mentioned in our utility infrastructure. We're currently expect avista utilities to spend about $450 million in 2021, and $445 million and 22, and 23 to continue to support customer growth and <unk>.
Maintaining our system to provide safe reliable energy to our customers.
To fund that capital, we expect to issue approximately $140 million of long term debt and $90 million in <unk>.
Equity in 2021 $70 million of the debt has already been issued we issued that and also $61 million of the common stock has been issued through September.
During 2022, we expect to issue $370 million of long term debt, which is really covering a $250 million maturity and then also $90 million of common stock, which will help us fund our capital expenditures and maintain a prudent capital structure.
As Dennis mentioned, we are confirming our 'twenty, one and 'twenty three guidance, but we're lowering 22.
And as we look at it for lowering 22, there are a few factors as you mentioned early we didn't get all the recovery. We believe we had a fair order in our Washington rate case at our Idaho rate case, and we had many big projects that Kevin will be able to answer questions on it.
In the order in Washington, but we didn't so we got our capital we believe in a fair way, but we have some operating expenses that we were not allowed to recover.
We believe that we will be able in our next case, we expect to file our next case in early in the first quarter of 'twenty, two and we expect that case to be completed by the end of 'twenty two with the normal timing works.
And we believe we'll be able as Dennis mentioned to get our capital and our operating expenses for the right period in that rate case.
With respect to our guidance range of this do we expect Avista for 'twenty, one we expect avista utilities to contribute in the range of $1 83 to $1 97 per diluted share and primarily due to the impact of the arm as I mentioned earlier in my comments, where we expect to be down about 96, we expect to be near the bottom of the range at Avista.
Utilities, our current expectation is to be in a surcharge position in the 90% customer 10% company band, which is expected to decrease earnings by <unk> <unk>.
In addition, based on our year to date results, we expect to be above the top end of our range with respect to our other investments we had as Dennis mentioned significant gains we've had strong performance in our investments that we've been investing for the last several years a number of different investments not just won a number of different investments had positive and we expect to be above the top end.
The range. So when you add that together with a L. P matching their expectations, we expect to be near the middle of our range for 2021, including the negative impact of the year.
For 2022.
We are lowering our guidance due to the lower recovery of certain costs and those costs really <unk>.
Included insurance costs increases in labor as we've seen inflationary pressures impacting labor and other costs I T cost and certain colstrip related costs.
Early in 2000 in the first quarter of 'twenty, two we do expect to file our general rate case, and it will as Dennis mentioned would be a multiyear plan as required by our new law and we will seek to include all of our capital and projected operating expenses for the planned period to allow us to have the opportunity to earn our allowed return by 2023.
As always our guidance assumes among other things timely and appropriate rate relief in all of our jurisdictions as well as normal operating conditions and does not include any unusual or nonrecurring items until they are known and certain.
I would like to turn the call back to Stacey them.
Thanks, Mark now we will open the call for questions.
As a reminder to ask a question you will need to press star one on your telephone to withdraw your question press the pound key.
Standby well will come via the Q&A roster.
Your first question comes from the line of.
Bank of America. Your line is open.
Hey, good morning, everyone. Good morning.
So first just wondering what gives you confidence in reiterating your 2023 guidance youre, implying 24% growth year over year, which is a large step up in rates paired with this increasing power supply cost backdrop. So can you provide some color on what sort of.
Rate relief, you're assuming in 'twenty three any specific assumptions there would be helpful. Or are you just kind of assuming you would get to your allowed ROE minus structural lag.
Good morning. This is Kevin Christie. Thanks for the question I'll start by saying we're of course still formulating that case.
It is important to point out that as we formulate the case, we're visiting with the commission and consulting with them as we consider how to best move forward, but we do know we will include all capital in.
In the case.
From 2021 to 2022, which will bring us up to the rate effective date.
And from the rate effective date through the rate period. The two year period, if we do in fact file a two year we have the requirement.
You might recall from the legislation to file a two or three or four year rate plan at our election.
We're still analyzing that.
We will take advantage of the legislation that we worked with the commission and other parties on to formulate the methodology to move from the first year through subsequent years of that rate case.
And we will again absolutely include all the capital that we have spent in 'twenty. One we will spend in 'twenty, two and what we expect to spend within the rate effective period.
And we are also including for the legislation.
An approach.
That will allow us to properly capture our expenses up into the rate effective period in through those rate periods as well. So we are leaning on the legislation. We think it gives us the opportunity and if you look back at this last case the commission.
Offered good support for our capital as Mark highlighted and so we think it's very viable very likely.
I should rephrase that very possible that the commission will come along with us with the plan as we.
Optimize or utilize that legislation.
Okay, but to be clear so.
Assuming.
Some recovery of the operating expenses that were disallowed in this rate case is that what.
It is implied with that step up.
Let me offer let me clear that up a bit the expenses were not just allowed they weren't placed into rates yet we expect to bring the expenses that weren't placed into rates in as well as the items I just described as we look forward.
Okay. Thanks, Kevin and then.
Like what are you can already one thing to add to that just one thing to add to that for a little clarity.
When we file which will be early in 2022 that will give you a sense obviously of size and what we're looking at so we're not going to come out with a number prior to that while as Kevin mentioned, we're working on it but early in 'twenty. Two we expect to file so that you'll have a number there and it'll give you a sense of by the end of 'twenty. Two we expect it if the normal timing of 11.
In Washington.
Should we expect it to by the end of 'twenty. Two we will have an order or a clear adjudication of this case.
Okay got it and then you stated that you expect five to 10 cents of other contribution going forward. I think this is a change from prior commentary I know the game was previously contemplated for 2021 consolidated guidance given the sale of some assets, but to be clear are you embedding. This in 'twenty two.
In 2003, and can you remind us what you're assuming previously for run rate other contribution I seem to remember that it was breakeven to five and increasing over time, but if you could just clear that up that'd be great but.
So I have said I don't remember the exact time I started this statement I said in three to five years, we expect it to be five to 10 cents of earnings.
We're in that period now.
So we expect to be five to 10 cents in earnings we've been making investments in a number of different investments on the other category and it's been between 15 and I'll say between 10 and $20 million over the last several years and those investments are starting to mature and produced earnings. We continue to expect to make similar investments as we go forward and so we do expect.
When we make those investments we do expect to ever so it's 5% or our expectation going forward is five to 10 cents in earnings it's not I don't believe it's a change we're just moving through the cycle of timing and where they're now. This was an outperformance. There is no question. This year that those investments have done significantly better which is a positive but.
That's not always going to be the case. So we wanted to have a reasonable expectation for our return on capital as we continue to deploy capital in those businesses.
Okay. Thank you and last one if I can just.
Sneak it in there can you touch on the increased equity needs in 'twenty. Two what was the driver here is capex kind of stayed the same.
Well, we've been slightly under <unk> overall.
Overall.
Not significantly from our regulatory and where we're expecting to.
File.
A larger case in this next case and a multiyear and we want our our capital structure to be appropriate to whats currently allowed.
Which is in Idaho, and Oregon, 50, 50, and in Washington, It's 48, 5% equity and 51, 5% debt and Alaska as separate but it's not overly material to that so we did we did have to increase slightly our equity to get to that level. So when we have our case and get to a rate effective period.
Our.
Having our cap structure, where we where we are to our currently allowed cap structure.
If the commission now kind of at the higher.
It would raise additional equity to match that and but we're just trying to get to our allowed so it's slightly higher than it has been in the past.
Okay. That's all I had thanks for taking my questions and looking forward to visiting with you all next week.
Thanks Cody.
Again, if you would like to ask a question you will need to press star one on your telephone again that is star one on your telephone keypad.
Your next question comes from the line of Ricci CCR rally.
Sean showed that Phil your line is open.
Yeah.
Hey, good morning, just following up on <unk> question.
Just given the other business, you're expecting that to be five to 10 cents.
Yeah, I guess, what does that imply.
Our utility growth year over year.
So to your guidance this year.
Well, Chris we haven't come out will come out when we file our case, we expect to file our next Washington case.
Early in the first quarter. So in our next call. We've typically given the segment guidance. So we'll follow that history and where.
We expect to come out with our segment guidance.
In the first quarter in our February call. So we haven't we haven't we've given consolidated guidance going forward to give you a sense of how we're trying to get back to earning our allowed return will come out with our segment guidance for 'twenty. Two once we file that case and we'll have more color then.
Okay. Thanks, and then just to be clear are you still expecting to earn your allowed return in 'twenty three.
Yes.
Okay.
I guess, what does that imply in terms of.
That's up in rates from 22 to 23.
Yeah.
Again, we haven't come out with a number in a rate case, when we file our rate case, you'll have a sense of what we're filing for.
We always have some offset the commission doesn't allow everything that we asked for we have some offset but we will need like Kevin said earlier, we will we will need to get the capital in the expenses.
To that rate effective period or the rate plan period, However, we're calling it so.
I'm not going to give you a number the number that you see as a significant increase in our earnings per share.
Over 20% around 25% on an exact number right in front of me, but it is an increase in earnings but we've been underwriting that gets us back absent as Cody said absent structural lag to earning our allowed return.
Okay.
Alright, Thanks, a lot that's all I had thanks.
Thanks Richie.
Again to ask a question you will need to press star one on your telephone keypad again that is star one on your telephone keypad.
Yeah.
So there are no further audio question at this time please continue.
I want to thank everyone for joining us today. We appreciate your interest in our company and we look forward to seeing a number of you have a great day.
This concludes today's conference call. Thank you for participating you may now disconnect.
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Good day, and thank you for standing by.
Welcome to the Avista Corporation Q3, 2021 earnings Conference call at this time, all participants are in a listen only mode.
After the Speakers' presentation, there will be a question and answer session.
Ask a question during the session you will need to press star one on your telephone please.
Please be advised that today's conference is being recorded.
Require any further assistance. Please press star zero I would now like to hand, the conference over to your speaker today Stacy Wang. Please go ahead.
Thank you.
Good morning, everyone and welcome to the Vista.
Third quarter 2021 earnings conference call.
By way of introduction I've been with the Vista since 2009, working in our accounting group I'm very excited to be taking over from John for My first earnings call and I look forward to working with all of you in the coming year.
Our earnings were released pre market. This morning and are available on our website.
Joining me. This morning are Avista Corp, President and CEO, Dennis Vermillion, Executive Vice President Treasurer, and CFO, Mark Thies senior.
Senior Vice President external affairs, and Chief customer Officer, Kevin Christie, and Vice President Controller, and principal accounting Officer, Ryan Crackel.
Okay.
I would like to remind everyone that some of the statements that will be made today are forward looking statements that involve assumptions risks and uncertainties, which are subject to change.
For reference to the various factors, which could cause actual result could differ materially from those discussed in today's call. Please refer to our 10-K for 2020 and 10-Q for the third quarter of 2021, which are available on our website.
To begin this presentation I would like to recap the financial results presented in today's press release.
Our consolidated earnings for the third quarter of 'twenty, 'twenty, one where 20 cents per diluted share compared to seven cents for the third quarter of 2020.
For the year to date consolidated earnings were $1 38 per diluted share for 2021 compared to one dollar enforced.
Yeah now I.
I'll turn the discussion over to Dennis.
Well, thank you Stacy and welcome to the IR team. Thanks for heading up the same for us.
Heard this is Stacy his first call today and we're just so happy to have her in this role and she's going to be what the city too. So you'll everybody will have a chance to meet Stacy and get to know Stacy a little bit.
So good morning, everyone I'd like to start our conversation. This morning by acknowledging that it's been more than a year and a half since we started this pandemic journey and unfortunately.
It looks like we still have a ways to go we.
We will no doubt face more challenges as we move forward.
Our region and our.
Our nation, we're recovering and rebuilding from des and we're.
So we're ready and ready for the challenge.
I continue to be extremely proud of our employees and I'm, just so grateful for their resolve and resiliency.
<unk> all demonstrated on that.
<unk> ability they displayed in and then the commitment and concern they have for our customers.
And communities.
Just really fantastic.
I'm, just so proud of our team.
I am confident that no matter what the future brings that we have the team and we have what it takes to manage through whatever the future may bring.
Now, let me turn to our earnings results.
The utility is our earnings were above expectations, primarily due to the timing of the recognition of income taxes.
And over at AGL and Peter earnings remain on track to meet the full year guidance.
And then our other business we've had a great year, so far and we are pleased with our investments.
Produce significant gains in 2021 exceeding expectations.
We continue to expect these investments to contribute five to 10 cents per diluted share going forward.
And in regards to regulatory matters during the third quarter, we concluded our Idaho, and Washington General rate cases.
With rates effective.
September one and October one respectively. We are pleased with both commission support of our ongoing investments in the infrastructure that serves our customers and offers us the opportunity to continue to provide our customers with safe and reliable and affordable energy without immediately impacting customer bills. However.
However, we did get we did not get recovery of certain operating expenses through the Washington General rate cases.
In October we filed our general rate case in Oregon, We have proposed that the increase in base revenues included in the rate case be fully offset for a two year period with tax customer credits of the same amount.
Resulting in no impact to customer bills.
Early in the first quarter of 2022, we expect to file general rate cases in Washington, both electric and gas they will be multiyear rate plans as required under the new law and we will seek to include in rates all capital investments and expected operating expenses through the end of the rate plan period.
To earn our allowed return by 2023.
And other regulatory filings we were the first utility to file two pilots E clean energy implementation plan with the Washington Commission in October.
Our plan sets the course for an equitable transition to clean energy and provides a roadmap for specific actions to be taken over the next four years to show the progress, we're making towards achieving clean energy goals established by the clean energy transformation actors Cedar.
And.
That plan is available on our website under the clean energy future tab and there's a good executive summary, there if you have interest in checking that out.
Focusing back on earnings we are confirming our consolidated earnings guidance for 2021 and 2023.
Dollars 96 to $2 16 per diluted share for 2021, and $2 42 to $2.62 per diluted share for 2023.
We are lowering our consolidated guidance by <unk> 10 per diluted share in 2022 to a range of $1 93 to $2 13 per diluted share so with that I'll turn this presentation over to Mark. Thank you Dennis Good morning, everyone and welcome Stacy to the team we look forward to seeing everybody down at <unk>.
As well in <unk>.
And talking about our company, which we're excited about.
Everybody has referenced the blackhawks around a one game winning streak.
I can only say that because it's the only game they've won this year, we've had a tough start.
But for us at Avista third quarter has been a good quarter for us.
As we mentioned in Avista utilities is up <unk> 13 cents, a share compared to $8 from the prior years, but this is really primarily due to income taxes and how we record the timing of such income taxes, and we expect that.
Outperformance to offset in the fourth quarter to back to normal performance for Avista utilities.
<unk> energy recovery mechanism in Washington, and we had a pre tax expense of $3 8 million in the third quarter compared to a benefit in the prior year.
And for the year to date, we've recognized an expensive point or $7 1 million.
Impaired to a benefit of $5 9 million, but when we look at it for the year compared quarter over quarter last quarter, we expected for the full year to be a negative <unk> <unk> and we currently expect it to be a negative <unk>. So it's really just a slight move in our expectations over the year within the year and we had a big recognition in the quarter, though.
For Capex capital expenditures, we continue to be committed to investing the necessary capital as Dennis mentioned in our utility infrastructure.
Currently expect Avista utilities to spend about $450 million in 2021, and $445 million and 22% and 23 to continue to support customer growth and maintain our system to provide safe reliable energy to our customers.
Fund that capital, we expect to issue approximately $140 million of long term debt and $90 million in equity in 2021 $70 million of the debt has already been issued we issued that and also $61 million of the common stock has been issued through September.
During 2022, we expect to issue $370 million of long term debt, which is really covering a $250 million maturity and then also $90 million of common stock, which will help us fund.
Our capital expenditures and maintain a.
Our prudent capital structure.
As Dennis mentioned, we are confirming our 'twenty, one and 'twenty three guidance, but we're lowering 22.
And as we look at it for lowering 'twenty. Two there are few factors as you mentioned earlier, we didn't get all the recovery. We believe we had a fair order in our Washington rate case at our Idaho rate case, and we had many big projects that Kevin will be able to answer questions on it.
In the order in Washington, but we didn't so we got our capital we believe in a fair way, but we had some operating expenses that were not allowed to recover.
We believe that we'll be able in our next case, we expect to file our next case in early in the first quarter of 'twenty, two and we expect that case to be completed by the end of 'twenty two if the normal timing works and we believe we will be able as Dennis mentioned to get our capital and our operating expenses for the right period in that rate case.
Yes.
With respect to our guidance range Avista do we expect Avista for 'twenty, one we expect avista utilities to contribute in the range of $1 83 to $1 97 per diluted share and primarily due to the impact of the <unk> as I mentioned earlier in my comments, where we expect to be down about <unk> <unk>, we expect to be near the bottom of the range.
Vista utilities, our current expectation is to be in a surcharge position in the 90% customer 10% company band, which is expected to decrease earnings by <unk> <unk>.
In addition, based on our year to date results, we expect to be above the top end of our range with respect to our other investments we had as Dennis mentioned significant gains we've had strong performance in our investments that we've been investing for the last several years a number of different investments not just won a number of different investments had positive and we expect to be above the <unk>.
Top end of the range. So when you add that together with a L. P matching their expectations, we expect to be near the middle of our range for 2021, including the negative impact of the Earth.
For 2022.
You know we are lowering our guidance due to the lower recovery of certain costs and those costs really.
Included insurance costs increases in labor as we've seen inflationary pressures impacting labor and other costs.
Costs in certain colstrip related costs.
Early in 2000 in the first quarter of 'twenty, two we do expect to file our general rate case, and it will as Dennis mentioned would be a multiyear plan as required by our new law and we will seek to include all of our capital and projected operating expenses for the planned period to allow us to have the opportunity to earn our allowed return by 2023.
As always our guidance assumes among other things timely and appropriate rate relief in all of our jurisdictions as well as normal operating conditions and does not include any unusual or nonrecurring items until they are known and certain.
I would like to turn the call back to Stacey now.
Thanks, Mac and now we will open the call for questions.
Yeah.
As a reminder to ask a question you will need to press star one on your telephone to withdraw your question press the pound key.
Well, we'll come back for the Q&A roster.
Your first question comes from the line of Cody Clark of Bank of America. Your line is open.
Hey, good morning, everyone. Good morning, good morning, Ryan.
So first just wondering what gives you confidence in reiterating your 2023 guidance youre, implying 24% growth year over year, which is a large step up in rates paired with this increasing power supply cost backdrop. So can you provide some color on what sort of rate relief.
We're assuming in 'twenty three any specific assumptions there would be helpful or are you just kind of assuming you would get to your allowed ROE minus structural lag.
Good morning. This is Kevin Christie. Thanks for the question I'll start by saying we're of course still formulating that case.
But it is important to point out that as we formulate the case, we're visiting with the commission and consulting with them as we consider how to best move forward, but we do know we will include all capital.
In the case.
From 2021 to 2022, which will bring us up to the rate effective date.
And from the rate effective date through the rate period. The two year period. If we do in fact file a two year, we have the requirement as you might recall from the legislation to file a two or three or four year rate plan at our election.
We're still analyzing that.
We will take advantage of the legislation that we worked with the commission and other parties on to formulate the methodology to move from the first year through subsequent years of that rate case.
And we will again absolutely include all the capital that we have spent in 'twenty one we'll spend in 'twenty, two and what we expect to spend within the rate effective periods.
And we are also including for the legislation.
An approach.
That will allow us to properly capture our expenses up into the rate effective period and through those rate periods as well. So we are leaning on the legislation. We think it gives us the opportunity and if you look back at this last case the commission.
Offered good support for our capital as Mark highlighted and so we think it's very viable very likely.
I should rephrase that very possible that the commission will come along with us with the plan as we.
Optimize or utilize that legislation.
Okay, but to be clear so is that assuming.
Some recovery of the operating expenses that were disallowed in this rate case is that what.
It is implied with that step up.
Well, let me offer let me clear that up a bit the expenses were not disallowed they weren't placed into rates yet we expect to bring the expenses that weren't placed into rates in as well as the items I just described as we look forward.
Okay. Thanks, Kevin and then.
According to <unk> 91 thing to add to that just one thing to add to that for a little clarity.
When we file which will be early in 2022 that will give you a sense obviously of size and what we're looking at so we're not going to come out with a number prior to that while as Kevin mentioned, we're working on it but early in 'twenty. Two we expect to file so that you'll have a number there and it'll give you a sense and by the end of 'twenty. Two we expected if the normal timing of 11.
And Washington will go.
Should we expect it to by the end of 'twenty, two we will have an order or a <unk>.
Clear adjudication of this case.
Okay got it.
And then you stated that you expect five to 10 cents of other contribution going forward and I think this is a change from prior commentary I know the game was previously contemplated for 2021 consolidated guidance given our sale of some assets, but to be clear are you embedding. This in 'twenty, two and 'twenty three and can you remind us.
What you're assuming previously for run rate other contribution I seem to remember that it was breakeven to five and increasing over time, but if you could just clear that up that would be great.
So I have said I don't remember the exact time I started this statement I said in three to five years, we expect it to be five to 10 cents of earnings. We're in that period now. So we expect to be five to 10 cents in earnings we've been making investments in a number of different investments on the other category and it's been between 15 and I'll say it between <unk>.
10, and $20 million over the last several years and those investments are starting to mature and produced earnings. We continue to expect to make similar investments as we go forward and so we do expect you know when we make those investments we do expect to have earnings. So it's 5% or our expectation going forward is five to 10 cents in earnings it's not I don't believe it's a chain.
<unk>, we're just moving through the cycle of timing and where they are now. This was an outperformance. There is no question. This year that those investments have done significantly better which is a positive but that's not always going to be the case. So we wanted to have a reasonable expectation for our return on capital as we continue to deploy capital in those businesses.
Okay. Thank you and last one if I can just.
Sneak it in there can you touch on the increased equity needs in 'twenty. Two what was the driver here is capex kind of stayed the same.
Well we are.
We've been slightly under <unk>.
Overall.
Not significantly from our regulatory.
We're expecting to.
File a larger case in this next case and a multi year and we want our <unk>.
Our capital structure to be appropriate to what's currently allowed.
Which is in Idaho, and Oregon, 50, 50, and in Washington, It's 48, 5% equity and 51, 5% debt and Alaska as separate but it's not overly material to that so we did we did have to increase slightly our equity to get to that level. So when we have our case and get to a rate effective period, we are.
You know we are having our cap structure, where we where we are to our currently allowed cap structure.
If the commission now kind of at a higher.
It would raise additional equity to match that and but we're just trying to get to our allowed so it's slightly higher than it has been in the past.
Okay. That's all I had thanks for taking my questions and looking forward to visiting with you all next week.
Thanks Cody.
Again.
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Your next question comes from the line of Ricci CCR rally.
John showed that Phil your line is open.
Hey, good morning, just following up on <unk> question.
Because given the other business that youre expecting that to be five to 10 cents.
Yeah, I guess, what does that imply.
Our utility growth year over year round.
Relative to your guidance this year.
Well, Chris we haven't come out will come out when we file our case, we expect to file our next Washington case.
Early in the first quarter. So in our next call. We've typically given the segment guidance. So we'll follow that history, and where we expect to come out with our segment guidance in in the first quarter in our February call. So we haven't we haven't we've given consolidated guidance going forward to give you a sense of how we're trying to get back to earning our allowed return will come out with our.
Segment guidance for 'twenty, two once we file that case and we'll have more color then.
Okay. Thanks, and then just to be clear are you still expecting to earn your allowed return in 'twenty three.
Yes.
Okay.
I guess, what does that imply in terms of the.
That's all been rates from 22 to 23.
Well again, we haven't come out with a number in a rate case, when we file our rate case, you'll have a sense of what we're filing for.
We always have some offset the commission doesn't allow everything that we asked for we have some offset but will need like Kevin said earlier will wont need to get the capital in the expenses.
To that rate effective period or the rate plan period, However, we're calling it so.
I'm not going to give you a number the number that you see as a significant increase in our earnings per share.
Over 20% around 25% I don't have the exact number right in front of me, but it is an increase in earnings, but we've been under earning that gets us back absent as Cody said absent structural lag to earning our allowed return.
Okay. That's that's helpful. Alright, Thanks, a lot that's all I had thanks.
Thanks Richie.
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I want to thank everyone for joining us today. We appreciate your interest in our company and we look forward to seeing a number of you on the EI.
Great day.
Okay.
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