Q1 2022 Spire Inc Earnings Call
Good morning, and welcome to spires 2022 first quarter earnings call.
All participants will be in listen only mode.
You need assistance, please signal conference specialist by personal Starkey followed by zero.
After today's presentation, there will be an opportunity to ask questions to ask a question you remember Star then one on your telephone keypad.
To withdraw your question. Please press Star then two.
Please note this event is being recorded.
I'd now like to turn the conference over to Scott Dudley head of Investor Relations. Please go ahead.
Good morning, and welcome to spire fiscal 2022 first quarter earnings call.
We issued an earnings news release this morning, and you may access it on our website at spire energy Dot com under newsroom.
There's a slide presentation that accompanies our webcast and you may download it from either the webcast site or from our website under investors and then events and presentations.
Before we begin let me cover our safe Harbor statement and use of non-GAAP earnings measures.
Today's call, including responses to your questions may contain forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995.
Although our forward looking statements are based on reasonable assumptions there are various uncertainties and risk factors that may cause future performance or results to be different than those anticipated.
These risks and uncertainties are outlined in our quarterly and annual filings with the SEC.
In her comments, we will be discussing net economic earnings and contribution margin, which are both non-GAAP measures used by management when evaluating our performance and results of operations.
Explanations and reconciliations of these measures to their GAAP counterparts are contained in both our news release and the slide presentation.
On the call today is susanne so they would aspire as president and CEO .
Steve Lindsey Executive Vice President and Chief operating Officer.
And Steve Rasche, Executive Vice President and CFO .
Also in the room today are Scott Carter President of spire, Missouri.
And Adam Woodard, Vice President and Treasurer, and CFO of our gas utilities.
With that I'll turn the call over to Suzanne.
Thank you Scott and good morning, today's participating on the call yeah in the St. Louis region, we're expecting a major winter storm. That's our spire employees are busy that's way keeping people warm and keeping our communities safe with natural gas service and supply.
I like to take a quick moment to express our gratitude for everyone, who is working round the clock to provide reliable and resilient natural gas. That's our number one goal that's exactly what we're here to do.
At spire everything begins and ends with our mission answer every challenge advance every community and enrich every life is the strength of our energy we use that energy to make a positive measurable impact on the world around us.
Our energy team for stepping forward, advancing and innovating and energizing the future.
And we continue in that sphere, regardless of challenges.
As you know we faced a number of challenges over the last year or so including an unprecedented order and our recently completed Missouri rate review and a challenge for the continued operation of spire STL pipeline.
Fiscal 'twenty to 'twenty, two and Paul we continue to work through these this year and.
Including these in for to address the significant shortcomings in the Missouri rate order that went into effect late December .
Specifically, we are already taking steps to prepare a new general rate review to ensure a fair and reasonable regulatory outcome for the future.
At the same time, we're working through the reman process FERC to secure a permanent operating certificate for spire STL pipeline.
Amidst these challenges we have remained steadfast in delivering on our strategic priorities and commitments.
We continue to invest in significant amounts of capital into our utilities for upgrading infrastructure, gaining new businesses by adding customer connection and furthering our innovation through technology.
We're doing this while enhancing all aspects of our operating performance from customer service safety and system reliability, including reductions in methane emissions as we fulfill our commitment to be a carbon neutral company by mid century.
Steve Lindsey will provide more information in his remarks, including regulatory matters in Missouri, the spire STL pipeline and our capital investments today.
No that and everything we do we always strive to provide significant support for our communities and create increased value for our shareholders.
Rajiv will provide details on our first quarter earnings.
As you have probably already seen in our news release, we reported $1 14 per share, which reflected the impact of warmer weather and higher costs.
Now I'll pass the call to Dave Lissy.
Thank you Susanne I want to start by also acknowledging our employees to continue their focus on maintaining safe and reliable gas delivery operations and outstanding service to our customers your efforts and dedication are especially important during the winter heating season.
First I wanted to talk about Missouri rate review in order, which I know you've all been following closely over the last year.
As we discussed on our year end call orders, we received in the case, including an amended order on November 12 deviated from longstanding precedent in Missouri.
Our approach to virtually every aspect of the case from rate base and frequent of cost to capital structure and return on equity was based on what had been established and decided in prior cases.
While we resolved many issues in the case of other parties.
You issues went to the commission for final resolution.
Two most significant areas, where the order went against longstanding practices where rate of return and recovery of non operating overhead costs.
Separately, we received the lowest rate of return any utility in the state.
This was due in large part to a lower than normal equity capitalization due to the inclusion of short term debt for the first time in the capital structure.
Recovery of non operating overheads is also problematic it has potentially a much larger negative impact.
Missouri, PSC order capitalization of nonoperating overheads to cease starting with the effective date of the order which was December 23rd.
Capitalization will be pause, while the commission staff completes an audit of the costs. We are currently working on staff on an expedited study of those costs.
I mentioned did provide language to allow deferral of these calls for consideration and a future case. However, the order does not provide sufficient language necessary to defer for financial reporting purposes prudently incurred costs that are not capitalized.
We estimate the annualized net impact to be 20% to $30 million.
Well continue to work through the overheads issue, including gaining clarity on non capitalized overheads at the same time, we have turned the page and we are moving forward with plans to file a new general rate case in Missouri.
As far as Missouri never intended to file another case immediately after the conclusion of this most recent one is essential that rates reflect the full actual cost for our natural gas service. So many missouri's rely upon.
Unfortunately, newly order rates do not reflect the actual cost of service and don't allow for earning a reasonable return on investments made to benefit customers.
The new case will address two issues I, just mentioned, including recovery of overhead amounts expense in the interim.
Importantly, it will also include updates to cost of service return on additional capital investment and the impact of inflation.
Faithful about shortly will focus on returning to more industry standard recognition and recovery of cost and provide an opportunity to earn a fair return for our investments.
Turning to the spire STL pipeline, let me provide a quick recap of where things stand with regard to the operating certificate pipeline, including the FERC remand.
I'll go through the entire history and timeline on the issue the FERC certificate, we havent body to retain operating authority since last summer.
On December 3rd issued a new open ended temporary certificate that provide certainty of gas supply in St. Louis region for this winter.
It also allows the pipeline to continue operating while purchasing land process proceeds.
It's part of the process. The FERC is going to prepare a supplemental environmental impact statement.
<unk> process is underway and will likely continue into 2023.
We continue our capital investment program, which is almost entirely focused on utility natural gas delivery infrastructure replacement and expansion.
For the first quarter, our capex totaled $146 million, including nearly $70 million for pipeline replacement.
Our new business investment was close to $40 million and it was in line with last year's record pace.
I'd note that non utility spend was down as expected.
Our five year capital plan through 2026 remains $3 1 billion.
With more than 95% of your investment focus on our long term pipeline replacement programs.
Good recovery mechanisms, plus new business technology, and innovation, including the continued rollout of ultrasonic meters.
Our utility spend drives rate base growth of 7% to 8% annually and also support system reliability and our commitment to becoming a carbon neutral company by mid century.
With that I'll turn it over to Steve Ritchie for a financial review and update.
<unk>.
Thanks, Steve and good morning, everyone as Suzanne noted by warm weather Nicked us in the first quarter weather has quickly turned as we're in the middle of a good size snow and cold weather event here in the Midwest. This week go figure.
Let's start with a brief review of our results.
For the first quarter, we posted net economic earnings of $63 million trailing last year by $14 million or 28 cents per share, reflecting significantly warmer weather and higher costs.
Looking at the businesses, our gas utilities had earnings of $67 million roughly $9 million below last year as I have mentioned weather. This quarter was warm roughly 26% warmer than normal and while we do have weather mitigation for our residential load our commercial loan and the opera.
<unk> for off system sales were lower this quarter. Additionally.
Additionally, as you'll see on the next slide our cost, especially depreciation were higher than last year.
Gas marketing posted earnings of $5 million down $2 $8 million from last year again, whether it was the limiting factor with lower demand and less favorable market conditions, including much thinner storage spreads compared to last year's unusually widespread.
And finally other corporate costs were higher this quarter due largely to timing.
Looking at a few details here on slide nine.
Gas utility contribution margin was flat as lower demand due to weather was offset by rate increases.
Gas marketing margins were down net of fair value accounting adjustments, reflecting market conditions.
Operation and maintenance costs were up $3 million after considering the reclassification of pension costs and regulatory deferral.
This increase includes $1 million of Missouri utility overhead costs that would've been capitalized before the commission order.
The remaining costs were up by less than $2 million and slightly higher employee related costs were largely offset by other cost reductions, including lower bad debts.
Depreciation costs were up $6 million, reflecting our rate base growth.
And while these expenses will be recovered in our new rates across Missouri, and Alabama, the timing of recovery in Missouri is more heavily weighted to the remainder of the year and especially our second fiscal quarter, reflecting new res and our most recent filings.
Turning to our outlook, we continue to be confident in our long term growth prospects driven by our $3 1 billion capital spending plan over the next five years our per share earnings growth target remains 5% to 7%. This growth rate is based upon fiscal year 'twenty one results less.
Our estimate of earnings related to winter start mirroring, which as we talked about last quarter was between 65 and <unk> 70 per share.
Our fiscal year 'twenty two earnings target remains unchanged at $3 70 to $4 per share falling below our target growth as we absorbed the debit created by the most recent Missouri rate order.
I'm just trying to think about our current year range.
The top portion of the range fully reflects missouri's lower rate of return that will be addressed in our next rate case, we will file this spring.
Bottom half of the range includes the additional haircut from expensing, a portion of our own capitalized overhead costs and.
And we will continue to absorb this risk until we get more specific recovery language from the Missouri Public Service Commission.
I might add here that gaining certainty over overhead recovery will be our near term goal is part of the completion of the capitalization study and.
And staff on it.
And looking beyond 'twenty, two with continued rate base growth and reasonable, Missouri regulatory treatment our earnings growth rates in 'twenty three 'twenty four should accelerate as we regain our trend line.
Now turning briefly to our financing guidance, our liquidity remains strong and we have ample capacity as we hit our peak in working capital needs.
Our long term financing plan remains largely unchanged and reflects the spire, Missouri bonds issued in December to term out some of our excess cash costs.
We remain committed to a balanced and a strong capital structure and credit metrics. As a reminder, we ended last year above our wrap out to that target, but we do anticipate that to weaken. This year is a direct result of the Missouri rate order.
In summary, we are laser focused on regaining reasonable regulatory treatment of Missouri, while delivering safe and reliable service to our customers and communities.
And investing for the future for the benefit of all stakeholders.
With that let me turn it back over to users.
Thank you Steve.
We are on track with our plan for the year Anthony worked to resolve regulatory matters in Missouri, Yeah, New General rate review, we are confident that we can achieve a fair and reasonable outcome. We are on pace with our capital investment plans for rate base growth and 5% to 7% earnings per share growth over the long term.
We look forward to updating you on our progress as the year unfolds, including the spire STL pipeline and laying down the groundwork for an innovative resilient and sustainable energy future and we look forward to having an opportunity to connect with you in person at the AGM Financial Forum in May. Thank you for your continued interest and investment in spire. We're now.
To take your questions.
We will now begin the question and answer session.
To ask a question you May press Star then one of your telephone keypad if.
If youre using a speakerphone please pick up your handset before pressing the keys.
To withdraw your question. Please first starting to at.
At this time, we will pause momentarily to assemble our roster.
Our first question comes from Shar <unk> with Guggenheim partners.
You May go ahead.
Hey, good morning, guys.
Sure.
Just two quick ones here, if it's okay, just on sort of the G. R O C.
So once you file the rate case in early March do you expect the case to take the statutory 11 months or could it be faster just given you were just didn't embedded a few items and how has sort of that over overhead cost allocation audit and review then going with the staff any takeaways that will factor into.
<unk> will you be filing for the next case.
Good morning, and I'll start that and I think probably Adam will pick up the second half of that question.
Sorry, Scott Carter President spire, Missouri.
The question of the rate case timing, we filed a 60 day notice that means the earliest we could file as early March.
We're going to work through that.
The spring so we havent picked a exact data filing but it'll be it'll be close to that 60 day period, we got to do what we need to make some progress on the overheads all of it and then make sure we put together a case.
Obviously following quality.
As far as the timing goes the commission has a 11 month statutory window.
As we look at it and think through that case.
It came out of the case, so a lot of the updates that are necessary to look back for years. They won't have to be in place because they will have the recency of that most recent preceding so we're setting everything up in a way that gives us the opportunity to.
Expedite resolution of the case.
But we have to understand that the commission can take up to that full 11 month cycle. So we're preparing for the best and making sure. We're in it for the long haul to the best case forward and get the right outcome in a reasonable timeframe.
Yeah, Hey, sorry, it's Adam Adam.
The other study that is ongoing we are working with.
Working with Commission staff, we do expect that to wrap up this quarter.
With.
A recommendation a report from staff to the Commission and then we'll kind of go from there, but we would fully expect that to be digested in the next case and Shar. This is Steve one last point I would make that we mentioned earlier in addition to the two main points that Scott covered.
This will also include our infrastructure investments the impact of inflation in the cost of service. So that it is in its entirety, but as Scott mentioned a lot of what has already been solved if you really think about it in this case shouldn't be much issue other than just kind of updating and really trying to address the two main issues.
Got it perfect and then just last one on STL pipeline I mean, obviously your release says you expect the remand process to continue into 'twenty three.
Do you see the potential for clarity that come before that do you mean like the entire administrative process of issuing the new permit certificate permanent certificate or do you not expect to have any idea until 'twenty. Three so I guess, just a little bit of a clarity on what you mean through 'twenty three.
And so if you think about what we're going through this process with the new Elas, it's a little bit.
More extended than the typical environmental assessment that we went through on the FERC certificate and FERC has indicated that they're looking for that to be probably somewhere in the October timeframe. Then if you also go to typically there is a 90 day period for comments that occurs after that that's how we kind of get into the calendar year of 'twenty three that's not the entire abroad.
<unk> process, such as a piece of it but we're using that as kind of some guidepost for timing right now.
Okay perfect. That's the clarity that I was that was that was seeking thanks guys I appreciate it.
Thanks, Sean.
Okay.
Our next question comes from Richard Sunderland with Jpmorgan you May go ahead.
Hi, good morning, Thanks for taking my questions.
Just wanted to pick it up with upscale pipeline first can you speak a little bit more to the supplemental EIF and potential interest in alternative solutions to the pipeline there.
Sure I'll start this is Steve again, and so as you think about some of the things are being looked at from an alternative we view the pipeline being in place from an environmental perspective is the best alternative some of the options would actually be heavily physically take some of the pipe out of the ground.
And then if you have to reinstate things such as some of the compression in propane. We just think from environmental perspective. This is the best option relative to the outcome.
Understood.
Maybe turning back to the rate case.
A little bit more to the strategy around the handling cost structure at the upcoming rate review and maybe timing around how to manage that also noticed the short term debt ticked up on the quarter. Just curious on drivers there and how that factors into I guess the targeted cap structure for the case.
Hey, rich it's Adam.
Yeah, No I mean, obviously, we're going to win.
We'll wait to fully laid out the case here a little bit later this year, but.
The the reference to short term debt, Missouri short term debt actually declined in the quarter, but I would draw your attention to our current assets in Missouri are actually higher than our current liabilities.
And it's not just about cap structure, but also about our debt.
What we're carrying with with.
With excess short term debt as well so what we'll be vetting through that again.
Putting on a a robust case there.
Richard Scott Carter I'll, just add on to that it really two ways to think about it.
Historically, Missouri has excluded short term assets from rate base, excluding short term debt from the capital structure.
That was the premise that we filed under we financed according with that <unk>.
<unk> with what we have done previously what commission have found previously.
Have recommended that in their report to the commission.
When the commission finally made their decision.
You pulled in the short term that did pull any short term assets into the equation. So obviously there is a mismatch right now that is very out of the mainstream with ratemaking across the country and so there is two ways to solve it in as either included a short term assets or going back to the traditional route of exclusion of short term debt. So we think there is a certainly a path.
Were there that reaches resolution, regardless of which path of attrition picks.
Understood very helpful color there. Thank you.
Thanks Rich.
Our next question comes from Julien Dumoulin Smith with Bank of America.
You May now go ahead.
Hey, good morning team thanks for the time.
Yeah, and the opportunity, perhaps just to pick up where rich was the moment ago can we talk a little bit more about that short term debt dynamic first off I'm just the short term asset side of that if you think about the parity I mean can you elaborate just where you stand with respect to them.
Driving some understanding in the commission on that on that point I know that you've got this rate case filing coming but you know as you talked to various parties.
How do you think about driving consensus back there I know that you mentioned, specifically a number of parties being on board with this earlier, but just we can come back short term asset piece of it.
Okay.
Sure Julien.
Julien Hi, this is Adam.
Our observation certainly we carry quite a bit of winter storm costs into the last case, it was kind of average down.
And I would go into this next case, we now have a full third we will have a full 13 months of carry there.
And then.
Like many utilities have have extra deferred costs and gas costs. This this winter as well, which contributes to that balance. So we'll be we'll be putting all of that certainly all of that information into the case.
And having that conversation with with all the intervening parties.
Got it but just to confirm here how are you thinking about the short term debt balance evolving through the course of the year. You said earlier I think in your remarks expecting higher overall.
Leverage through the course of this year I think that specifically, Missouri was lower in the quarter.
How are we thinking about that dynamic here.
Well, we I mean.
It is something miseries short term debt has declined quarter over quarter.
Not sure what what.
As far as what we are referring to as far as an evolution of that throughout the rest of the year.
Youre not expecting those balance increase as well.
Moving to higher leverage here, maybe more driven by so being lowered from the rate case outcome, the necessarily the denominator being higher.
But I just wanted to confirm that you are expecting that that short term debt to remain kind of at a steady lower level here with Missouri.
We reduce it we do believe it will be.
Relatively steady, but youre correct.
The lower rate of return fundamentally lowers the <unk> to debt metric so.
That's what you're referencing.
That does lower cash flow, we don't necessarily believe that we'll pick up short term debt.
Significantly or materially in the near term, yes, and Julien. This is Steve I'd also point out that in December we did term out a lot of that excess gas cost, which for argument's sake is about $300 million associated with only a winter storm here and hopefully we can carve that down by almost two thirds <unk>.
<unk>.
The ongoing dispute with the marketers have is adjudicated.
Adjudicated in front of the Missouri Public Service Commission in April of this year, but we did term that out so we did book.
Some bonds $300 million of floaters in order to fix the carrying cost on that component. So we're just doing the right smart things in order to manage the financing going forward, but we see a clear path to regaining reasonable rate of return, including that about the right cost structure for the utility.
Alright.
Some of the details here just one bigger picture question. How are you thinking about the guidance range for this year, given obviously the weather impacts that started the year and obviously I know, there's a lot of big moving pieces here obviously.
The amount of capitalized overhead to Pearl being a big one.
How would you position yourself on that capitalized question for the year into or just overall within this range.
Yeah, and we spoke to just a bit earlier in the prepared remarks.
As comfortable with a range with a very wide.
As we can be and you're right. It comes down to the question on overheads.
As we mentioned in our prepared remarks, our rate structure, and Missouri has become more variable and that's because in the last rate case, we rolled the gifts risks, which wasn't fixed charged into the variable component of rates going forward. So you will see more variability therefore more recovery in Q2 the quarter. We're in now.
Physically versus Q1, when you look back at the last rate structure. So we're not we deal with whether that's the risk that is a utility we have to manage not only every month and every quarter, but over a longer period of time and we clearly still have some tools in our tool belt to manage to get to.
To where we want to drive expectations full year, knowing that we're going to be another general rate case, Unfortunately, but thats part of the part of the process. We need to go through so I think we're confident in being able to get into the range and as I mentioned the range is structured so that if you think about the top part of the range, that's really where we would be assuming we can do what we do every.
Today, which is to manage the utility and offset any headwinds we might get from.
From whether the bottom end of the range has to do with the expensing or deferral, our recovery on overheads and we hope that we can put a stake in the ground on that sooner rather than later as we talked about earlier.
Alright, guys I'll leave it there thank you.
Thank you Kathy.
Okay.
Our next question comes from Gabe Moreen with Mizuho you May now go ahead.
Good morning, everyone.
The short term desktops from pretty much beaten to death, but I wanted to ask about.
Was there anything else needs to change for the upcoming rate case filing with the forward curve in spot gas prices being so much higher whether it's I guess bad debt or anything like that just how youre thinking about that and then also.
Can you just walk me through again, the weather norm weather no pun intended what you had asked for last time would've helped out actually for this quarter and whether that's going to be a focus for.
For the upcoming JRC.
Yes, Gabe I'll I'll start that.
Anyone else can jump in.
As far as anything else as Stephen mentioned the rate case will be a general rate case and a full update so as you think about increasing cost elements, whether it would be bad debt.
Additional capital deployed or other inflationary pressures that will be reflected in the filing that we'll make.
So that will be a full update obviously the focus is on these high profile areas, but.
We're following a full general rate case, we will include all of those elements.
Weather normalization, what we have filed and requested would've expanded that and refunded a bit. So we do believe it would have.
<unk> improved the performance of that tightened the range if you will.
Again, we have pretty good performance around the world.
Weather normalization, we certainly want to improve that going forward and yes, we will bring that into the next case as well trying to make sure we get that.
Refiners as possible make sure we don't win in cold events. So we don't lose in warm events are rebalancing with customers, Yes, Dave This is Steve.
Weather norm actually worked fairly well is the areas around the edges is the commercial loan.
Off system sales, which most of which we share back with customers. Those are the things that we will and no like no doubt will be continue to be exposed to but that's okay, because over time and more likely than not over this entire winter heating season, everything will balance out I don't want to get I don't want to take one data and draw a line give us.
The chance to make it through the winter and once we get to the next update we'll have a much better feel for what the entirety of winter delivered for US and then what's what are we doing going forward during the back half of the year.
Great. Thank you and then if I can also just get an update I guess on sort of R&D efforts, where things stand at the moment any new developments this past quarter. Thank you.
Yes.
Yeah, I'll take a start at <unk>.
Good to hear from this morning, so from an R&D perspective, we continue to look for opportunities for projects, particularly in Missouri, given that we've just had some legislation passed we're in the stages now of working towards the rulemaking process, which could be extended obviously, but a lot of this is looking at opportunities to include some R&D projects and rate base here.
In Missouri.
We're continuing to be active and we think there are opportunities there, but again with the legislation just being passed in the rulemaking started and that's kind of where we are right now.
Great. Thank you.
Okay.
Okay.
Again, if you have a question. Please press Star then one.
Our next question comes from the Doula Morty with Hudson Bay Capital You May now go ahead.
Oh good morning can you hear me.
Yes, yes.
Oh yeah.
TB audit staff is working on.
Or is that too.
Michelle.
The study will be overhead.
One can you give a sense of when they stop okay.
Okay.
She presented to the commission.
And two can you remind us perhaps and scope of that.
Right.
Sure.
What will.
We will aggressively.
Yes.
I presume this is Steve.
I'll take a shot at that yeah.
The process, we're just continuing to work through it I wish I could give you a procedural schedule there isn't one associated with this but I can tell you absolutely. We are working right next to staff as we work through this because we're both aligned in getting this addressed as soon as possible as we mentioned a bit earlier, the study which were taken.
On internally, which is a classic time study.
Look at.
Sample, which is a fairly large sample of your population and then from that you derive a capitalization percentages. This is a standard approach that is well trodden and relied upon for FERC capitalization purposes, which is why we are taking it on we will get that study done this quarter.
Forgive the month of March and we will work with the staff at that point the staff needs to perform whatever procedures they need to do in order to get comfortable on that that's the time frame that I can't really speak to right now, but lets say a month or two.
I can't really answer that question.
Pushes the discussion till early in the next quarter and at that point, the SaaS will render a decision and if they are great thats, great. If they Nicole let me address what kind of work our way through that.
The personality of the process will be a formal recommendation to the Missouri Public Service Commission and they will issue a formal order that addresses capitalization going forward and that's the point at which we will then know what amounts are being capitalized and what amounts are not being capitalized in terms of the scope.
Part of the study that's one of the questions. We're working through right now with staff because it was unclear in our earlier communications how big of a part is that we're looking at we believe it's the non operational overheads think about the stuff that isn't directly related to our teams that are out doing capital work everyday.
The study will clarify that in also.
Finality to what the.
The bucket is that won't be capitalized going forward and as we mentioned that's really the question that we want to answer as part of this process is not only snap the line on capitalization, but then also determined through an L or whatever the right approach is how we're going to defer the other prudent cost for our.
<unk> in the next rate case, hopefully that helps.
So let me say that.
That's my final recommendations.
Michigan.
Yeah.
Thanks, Bob.
Jason listen.
Uh huh.
Discrimination.
Okay.
Hello Hello.
H.
Yeah right.
Question.
Yes.
Yes.
Okay.
Hey, Tony.
A final point.
Yes.
Okay.
I'm, sorry, but youre breaking up we didnt, we didnt pick up all of that.
I'm wondering what there.
Michigan culmination.
Well the numbers.
Alright.
Yes.
Okay.
Alright.
Okay.
Yeah I don't.
The commission determination.
There is certainly.
The wording in their order could certainly affect how.
How we account for things, but what.
We don't want to predict anything in wages will wait to see how that comes out right.
And one last thing yet pipeline.
Yeah, Yeah timeline you suggested.
Phil This is completed M D.
Hello, Brian .
Thank you Dave.
Is it basically business as usual.
Thank you Nicole.
Yeah, I'll take a shot at it I think the question was in essence as we go through this <unk> process is it business as usual for the pipeline and that is the case and so again that <unk>.
It is targeted to be completed in October then you'll have the comment period after that which pushes into 2023.
Clearly, we will get through this winter.
The remainder of the calendar year.
Suzanne mentioned at the start of the call given the weather events that we're having right now we're very pleased to have this pipeline in service doing what it was intended to do all along which is serve the customers the eastern side of Missouri.
Thank you.
Thanks.
Yeah.
Our next question comes from Brian Russo with Sidoti You May now go ahead.
Hi, good morning.
Alright.
Just curious see.
The uncertainty with the audit.
Regarding overhead costs.
Does that create uncertainty regarding the $11 million <unk> filing that youre seeking recovery of.
Yeah, Brian So the interest following the commissions determination around the overhead issue started with the <unk>.
Completion of this final order December 23rd the effective date of the capital we filed under the <unk> case, all relates to capital deployed prior to that prior to that date. So they decided that they would look at that in context of this case, but it really shouldn't affect the capital deployed.
That has seemed to be recovered in that case.
So there's a long way of saying, we don't expect it to.
Again, as we look through this and think through the minutia of it.
Wait parties May play it out we'll have to see how that plays out but our expectation is the capital.
That we're seeking recovery of is deployed under the methodology prior to the commission change and so therefore it should be.
Fully recoverable in days or so.
Got it understood and I guess, if youre going to file a case in March we shouldn't expect.
Another <unk> filing right because.
You're not allowed to file opinions first while you have a rate case ongoing is that accurate.
Brian This is Scott again.
We can file a case so we have filed in the past we decided to defer the last case the last estrus under the last rate case, we were having a decade's would've been a change in the rules under the legislation, which got changed recently and so we defer that to this most recent filing depend.
Depending on the timing of when a commission decision comes out and.
And how we see that playing out we may or may not fall and other issues in the intervening period. So we reserve that right and we will see how the timing works out and figure out this valuable or not whether the commission is going to be three months before commission's final determination when they want to buy one if there's going to be contemporaneously with me just say we want to include in that final resolution of the general rate case.
Okay.
Okay in terms of.
Are you still expecting normalized marketing margins in fiscal 2022, even what appears to be kind of a.
<unk> start given the mild weather and lack of.
Spreads.
Yeah, Brian This is Steve.
We can tell yes, there's always volatility and clearly the market was not as favorable last quarter, but it's clearly we've seen more volatility and add a lot more weather this quarter. So.
That's our expectation, we'll clearly give you an update as we get to the half year and I have to remind you that when we look at last year, we had embedded significant amounts of.
Value from the storage positions that we had laid in.
The summer before because of the Covid related dislocation in the natural gas marketplace. We're in a more normalized market now so I wouldn't over think the year over year variance, but we are clearly positioned to take advantage of the market. When it gives us opportunities and it's good to see some weather in the in the mid continent.
We saw some volatility last week and those are all the milking hunting of how we create value above and beyond the.
The normal margins that we make by serving our customers during the winter season.
Okay and then just lastly can you quantify what the margin impact was from weather versus normal in this first fiscal quarter.
Yeah.
We generally don't get down to that level of detail, but I will tell you that although the margins were down year over year, they werent as far off from our expectations as you would imagine might looking at the year over year comparison that gives you maybe qualitatively gives you a little bit better yield.
Okay, Alright, thank you very much.
Yeah.
This.
A question and answer session.
I'd like to turn the conference back over to Scott Dudley for any closing remarks.
Well. Thank you all for joining us this morning.
Any follow ups will be around throughout the day and looking ahead. We are very much looking forward to seeing many of you at the <unk> financial conference in May 1st time in a couple of years. So until then be well be safe. Thank you. Thank.
Thank you.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.