Q4 2022 Idacorp Inc Earnings Call
You play will be available later today and for the next 12 months on the Auto Corp website, if you need to cause that any time during the presentation. Please press star zero on the phone.
I would not want to turn the call over to Mr. Justin Forsberg director of Investor Relations. Please go ahead Sir.
Thanks, Kelly Anne and good afternoon, everyone. We appreciate you tuning in for our call. This morning, we issued and posted on <unk> website, our fourth quarter and year end 2022 earnings release and the associated Form 10-K.
Slides that accompany today's call are also available on <unk> website, we will refer to those slides by number throughout the call today.
As noted on slide two our discussion today includes forward looking statements, including earnings guidance spending forecast and regulatory plans, which reflect our current views on what the future holds but are subject to several risks and uncertainties, including uncertainties surrounding the impacts of future economic conditions.
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 against placing undue reliance on any forward looking statements.
Yeah.
As shown on slide three on today's call, we have Lisa grow hydrocarbon President and Chief Executive Officer, and Brian <unk>, <unk> Senior Vice President and Chief Financial Officer. In addition to Lisa and Brian We have other members of our management team available for a Q&A session. Following our prepared remarks.
Yeah.
Slide four.
It shows our full year financial results, either Corp's 2022 earnings per diluted share were $5 11.
An increase of more than 5% or <unk> 26 per share from last year, reflecting the impacts of customer growth weather and a midyear regulatory order, partially offset by higher operating costs.
Both 2022 revenues and earnings our <unk> highest in the history of the company and the 2022 earnings results for the 15th consecutive year and growth of earnings per share.
Today, we also initiated our full year 2023, either Corp earnings guidance estimate in the range of $4 95.
To $5 15 per diluted share, which includes our current expectation that Idaho power will utilize approximately $15 million of additional tax credits that are available to support earnings at the nine 4% return on equity level in the Idaho jurisdiction under its Idaho regulatory settlement stipulation.
These estimates assume historically normal weather conditions throughout the year and a return to more normal power supply expenses.
I'll now turn the call over to Lisa.
Thank you Justin and thanks to everyone for joining us on the call today.
I wanted to begin my remarks by underscoring what Justin just mentioned that <unk> completed its 15th consecutive year of growth in earnings per share that you can see on slide five.
We believe this is a remarkable achievement among investor owned utilities and I wanted to thank our hard working team of employees for their contributions to our success.
These financial results have translated into a growing dividend and we are also proud of our high customer satisfaction scores and excellent service reliability throughout 2022.
As noted on slide six customer growth remains strong across the Idaho power service area, our customer great. Our customer base grew two 4% during 2022 and we now serve nearly 620000 customers.
Moody's most recent GDP calculation for our service area forecast strong growth of three 9% in 2003 and four 5% in 2004 as our local economy continues to outperform national trends.
In addition to being a great place to live and do business. We believe the reliable affordable clean energy Idaho power provides is a key driver for growth across our service area.
Now robust residential growth has been a theme for many years and while single family residential building permits has slowed in recent months as interest rates have increased we expect overall economic activity to remain strong.
Unemployment in Idaho power service area during the fourth quarter was two 3% compared to three 5% at the national level.
Employment has increased by five 8% since the fourth quarter of 2021.
We are also seeing a major uptick in Idaho Power's load growth forecast as a result of several large load projects.
And with the new Mega data center coming to Idaho, and Micron's major expansion of its Boise headquarters, including new micro chip fabrication facilities, Idaho power expects retail sales growth of five 5% over the next five years.
This growth is projected to come on top of the year. When we saw the highest retail megawatt hour sales in our history.
As our customer base growth, you'll see on slide seven that we continue to add resources that will allow us to meet our increasing demand while simultaneously moving away from our coal fired resources.
Large transmission projects like Boardman to Hemingway or <unk> for which we expect to break ground. This year will be critical.
We are also working with specific color on segments of the 1000 mile Gateway West transmission line project, which will help both companies meet rising demand and improve reliability.
During the fourth quarter, Idaho power began buying energy from the recently completed 120 megawatt jackpot solar project in southern Idaho.
Meanwhile, we received preliminary approval from our regulators, where our first utility scale energy storage projects that totaled 120 megawatts of company owned battery storage that is under construction with an anticipated in service date of summer of 'twenty three.
We also signed agreements for a new 100 megawatt solar project PPA paired with an additional 60 megawatts of company owned battery storage that is scheduled to come online in the summer of 'twenty four.
We anticipate needing additional energy and capacity resources in 'twenty five 'twenty six and we are in bid the bid evaluation process for the projects for 2025, and the RFP stage for the 2026th project to help us meet those future needs.
Our effort to expand and improve Idaho Power's energy grid require significant investment.
And we currently anticipate growth and reliability focused projects will drive more than $3 billion of capital expenditures over the next five years and Brian will discuss more about that in a moment.
We truly are building the future and it is a fascinating dynamic as we experienced the convergence of historic growth emerging technologies and our clean energy goal, all while safely delivering the reliable affordable service our customers expect.
Along with reliability and customer service top of mind is ensuring our investors continue to earn a fair and reasonable return on their investment in our company.
Turning to slide eight you will see that we are in the process of preparing a general rate case in Idaho that we currently plan to file on June 1st requesting that Idaho customer rates change on January one 2024, and then with an Oregon General rate case filing that will likely follow shortly thereafter.
We've invested over $1 billion in the infra.
Infrastructure for the communities and businesses, we serve since Idaho powers last general rate case over a decade ago.
And we have considerable infrastructure investment ongoing during this year that we plan to include in the case.
Much of our investment was in response to rapid growth in our service area as we have seen our customer count increased by nearly 120000 over the past decade, which is an increase of about 23%.
We have also made significant investments in maintaining and improving system reliability from our transmission distribution and generation assets, which benefits everyone who lives in does business in our service area.
Customer growth has consumed the linked we once had in our generation system, which over the past several years has served to lessen the incremental costs associated with growth.
However, as I touched on a moment ago, our planning process has identified several additional energy and capacity needs to serve new record loads that are projected to accelerate going forward.
While the major driver generating the need for a rate case is the investments in property plant and equipment to serve our customers growing energy needs. There will be some inflationary factors contributing to the request in the case.
We have worked hard to keep our O&M low for the past decade, with an average annual rate growth rate through 2022 of only 1%.
Since 2012.
Or an increase of just over $50 million to serve those nearly 120000 new customers.
We expect our upcoming case to be largely about rate base additions to reliably serve our customers and to a lesser extent about recovery of higher expenses.
We believe the June one filing date also allows us to balance our need for timely cost recovery and our goal of affordability for our customers.
While we understand that any level of price increase can be impactful to customers our experience over the years shows that smaller requests over a period of time rather than a single large request are generally more manageable.
That said, we expect more frequent cases in the coming years due to continued infrastructure investment, including Hells Canyon re licensing new energy and capacity resources in high voltage transmission projects.
Balancing the impact on customers continues to be an important component of our efforts to control cost and to make prudent decisions.
We have established a very disciplined culture, resulting in our strong record of managing our expenses.
Our belief that our rate request will exhibit prudent spending and we'll demonstrate that our company made the necessary investments to continue providing safe reliable electric service to our customers and responding to our state's economic development.
Ideally we are targeting a single digit average percentage rate increase in our June filing.
As I mentioned, we've not been in for a general rate case in over a decade.
Our regulators have demonstrated through interim regulatory proceedings and ability and desire to find constructive ways to balance fair returns for Idaho power and its investors with the needs and interests of our customers.
As examples in recent years, the Idaho Commission has found constructive ways to address tax reform, the ITC mechanism and the economic realities associated with exiting coal fired generation.
We're on track with the early stages of preparing for this case and we are confident that the case, we plan to present.
And.
We're confident in the case, where we plan to present and that our constructive regulatory environment in Idaho stands firm.
As a reminder, the Idaho Commission requires Idaho power to give a 60 day notice of its intent to file a general rate case, and we expect the preceding whats been about seven months before new rates would be in effect.
With that I will hand things over to Brian for a financial overview of 2022, and our expectations going forward, Brian Thanks, Lisa and good afternoon, everybody. Thanks for tuning in.
I will start on slide nine where you'll see a summary of our financial results in 2022 compared to our 2021 results. We saw continued strong customer growth, we had higher weather related usage, and we had higher transmission Wheeling revenues.
So the Jim Bridger order from the Idaho Commission last summer, notably impacted our year over year results.
On the other hand, offsetting those benefits on a comparative basis were higher operating and maintenance expenses as well as the portion of net power supply expenses that were not deferred for future recovery under our power cost adjustment mechanisms.
Idaho fixed cost adjustment mechanism also had a negative impact on comparative results with the FCA adjusting revenues based on usage from the hotter summer weather.
In the table Youll see customer growth of two 4% added $12 $1 million of operating income on surprisingly because it appears to be a national trend higher mortgage rates and economic uncertainty have impacted single family residential loan sales in our service area.
Looking at Moody's current positive GDP outlook for our service area and.
And the analysis and forecast we developed for the next IRB the trend points to continued strong customer and load growth and despite our expectation for moderation in residential growth in the near term at least relative to the high percentages we've seen in recent years.
<unk> part of our expectations for growth are driven by significant commercial and industrial customers.
We currently project a five year forecasted annual retail sales load growth rates to increase from two 6% in 2021 IRB to five 5% in the 2023 IRB. So it's certainly a notable increase.
We've seen some shifting in the ramp rate for some of those large industrial customers actually in both directions. So our engineers are working hard to meet the upcoming demand to ensure the infrastructure's online when our customers flip the switch.
Back to this year's results extreme temperatures and volatile weather in 2022 drove an overall, 5% increase in usage per residential customer.
2% increase in commercial and industrial or per customer usage, and an overall, 9% decline in usage per irrigation customer.
The irrigation customer decrease was primarily was primarily a result of abnormally high precipitation and cool temperatures during the second quarter at the start of the agricultural growing season.
While last summer we didn't exceed our all time record peak load set in June of 2021, we had all time August and September peaks were.
We also set a new all time winter peak in December reflecting the growth we've seen over the past few years.
The weather conditions combined to cause much of the $8 $8 million net usage per customer increased operating income.
The $12 $7 million cumulative decrease in Idaho powers fixed cost adjustment mechanism revenues that you see next on the table, partially offset the increases in residential and small commercial customer usage.
Further down you will see a $24 $4 million increase in operating income from the change in net per megawatt hour revenue.
Idaho regulatory orders for the Jim Bridger plant.
Which increased retail sales on June 1st last year led to much of that increase.
Another piece relates to the change in customer mix in sales to higher margin customer classes compared with last year, we still expect the Jim Bridger order to provide an after tax net income benefit of $10 million for 2023, when compared with roughly $20 million of after tax benefit for 2022, which included the deferral of certain depreciation expense.
So next on the table continued sustained transmission Wheeling revenues during the year increased operating income by $12 5 million.
Energy price volatility in the Western U S led to price spreads between energy market hubs.
Which increased Wheeling activity aircrafts, Idaho Power's transmission system.
<unk> customers, we had 4% more for transmission Wheeling for much of the year with Idaho Power's transmission tariff rate increasing in October 2021 and again in October 2022, reflecting higher transmission costs.
Higher other O&M expenses led to a $38 $1 million decrease in operating income in 2022, compared with 2021 and this resulted from several things in the largest two were scheduled plant maintenance thats backed up in 2022 at several facilities and our labor costs and variable compensation expense.
And inflationary pressures on professional services were also a large driver of that increase there were some smaller items like vehicle fuel and some transmission and distribution maintenance work that we are smaller individually, but large on accumulative basis.
As we look at 2023, we expect a potential reduction in other O&M compared to 2022 and I'll get to that when I discuss our guidance for this year.
The $5 $4 million decrease in depreciation expenses further down the table.
Flex the deferral of depreciation expenses related to the Bridger order offset by the accelerated depreciation on the coal related assets at the Jim Bridger plant, which began on June 1st last year.
This net bridger related decrease in depreciation expenses, partially offset by higher other plant in service compared with 2021.
The portion of higher net power supply expenses that were not deferred for future recovery in rates through power cost adjustment mechanisms in both Idaho, and Oregon contributed to the sizeable $14 8 million increase in other changes in operating revenues and expenses, which are next on the table.
That's basically our portion of the shared risk and the power cost adjustment mechanism, mostly due to higher gas and wholesale power prices in 2022, and the impacts of a below average generation from Idaho, Power's Hydro fleet due to low water conditions.
Wrapping up the table.
$15 $7 million decrease in non operating expense benefited Idaho Power's net income and a significant portion of that was from higher allowance for funds used during construction from our higher capex.
We also saw higher interest income due to higher market interest rates and higher investment income related to life insurance in the Rabbi Trust for our non qualified pension plans.
In addition costs, we recorded in 2021 related to a post retirement medical plan didn't recur last year as we expected and.
These items were partially offset by higher interest on long term debt.
So in total all of those drivers combined led to a five 5% increase in income year over year.
Our capex spending on a cash basis last year increased by about 50% over what we spent during 2021 and that was our expectation the bulk of that additional capex relative to last year and relative to our historic spending levels as for our large battery storage projects and some natural gas plant upgrades to obtain additional out.
Foot and efficiency from those units.
On Slide 10, we've included our updated five year forecast Capex Youll.
Youll see that it reflects an additional 15% increase over last year's already sizeable forecast with more than $3 billion of expected capital projects through the end of 2027.
So that chart includes refreshed cost assumptions for our major capital projects and our expectations for capital spending responsive to at least a portion of industrial and commercial growth.
We believe we're being somewhat conservative in our Capex estimates for the outcome of pending RFP for energy and capacity resources. So there is the potential that our capex could be higher at the back end of the five year forecast period, we will update our forecast over time as the outcome of the Rfps and more specific timing of the build out for commercial and industrial growth has solidified.
Slide 11 is an updated look at our estimated rate base of eligible assets as of the end of each of the next five years. This is a further increased growth rate over last year's estimates now at just over 11%.
And while it'll be our charge to obtain a fair return on this rate base is Lisa outlined we believe the growth in reliability driven projects going forward will demonstrate prudent and thoughtful planning as we continue to respond to customer growth.
As we execute on these plans were focused on ensuring <unk> Corp, and Idaho power continue to maintain strong balance sheets and liquidity.
Our credit ratings remain solidly investment grade and we continue to keep the rating agencies informed of our forecasts and plans.
We generally target a relatively even capital structure. So we currently believe our 2023 capital plans will be financed with debt.
We don't see an equity issuance is imminent, but given the size of our upcoming capital plans. Our financing strategy does include a blend of equity and debt fund future growth.
A point of reference I added Corp, Hasnt issued any meaningful equity 2010, and that was only around $35 million of issuance.
And as usual, we intend to balance all considerations like credit ratings regulatory expectations fixed income market conditions and equity impacts as we finance the next phase of Idaho Power's future.
Turning to slide 12, Youll see either corp's operating cash flows and liquidity position cash flows from operations in 2022 were comparable to 2021, only about $12 million lower.
So we continue to consider thoughtful ways to manage our debt financing throughout 2022, we saw relatively little impact to our income statements related to interest expense pressures there.
The term loan facility, we entered into last spring has proven to be a beneficial move as it ultimately delayed our need to issue bonds during most of 2022.
In December Idaho power issued a series of delayed draw bonds in the private debt markets that will mature in 10, 20, and 30 years, we drew the first $48 million of those bonds in late December and we will draw the remaining $122 million in early March.
All of the bonds from this issuance priced near a roughly 5% coupon rate.
This issuance will increase interest expense in 2023, but the delay draw feature was another useful tool to finance our capital spending plans, particularly our battery storage projects slated for a mid 2023 in service date.
During the rest of this year, we plan to continue our focus on prudently managing interest expense and looking for opportune windows in the debt markets are.
Our next maturity of the $75 million bonds that for April one, which has a two 5% interest rate certainly sad to leave those low rates behind.
Slide 13 shows our 2023 earnings guidance range and key operating metrics assumptions.
We expect <unk> 2023 earnings to be in the range of $4 95 to $5 15 per diluted share with the assumption that Idaho power will need to utilize approximately $15 million as Justin mentioned of additional investment tax credit amortization to realize the nine 4% return on yearend equity in Idaho. This.
Guidance assumes normal weather in 2023, and a return to normal power supply expenses.
We expect full year O&M to be in the range of $385 to $395 million.
While we continue to react to the macro inflationary trends as they occur we are confident in our team's commitment to closely watch our spending.
We're still actively working to manage the supply chain and our breadth of vendors as well as continuing to focus on overall cost.
There are also some comparative factors to consider as we look ahead based on our work plans and plant maintenance schedule. We don't currently expect to see a rate of increase in O&M in 2023 like we saw in 2022 and.
And in fact, our 2023 guidance assumes a modest overall decline compared with 2022.
A big piece of that is the scheduled plant maintenance for several plants that stacked up last year.
But only one plant is scheduled for 2023.
There are other maintenance projects that hydro plants and in T&D that also should be fewer number of an expense. This year if things generally go according to plan.
Non variable labor related expenses, one that will increase this year with standard weight adjustments, but absent a major macroeconomic shift not at the same rate we saw in 2022.
Our expectation expectation on this year's Capex spending has risen to the range of $650 to $700 million, which.
Which would be a 44% increase at the midpoint over the already elevated actual spending levels. We saw this year.
Our 2023 forecast includes significant increases related to the <unk> transmission line project as well as capacity resource additions Lisa referred to earlier.
Finally, given our most updated forecast of hydro power operating conditions. We currently expect hydro power generation to be within the range of five 5% to seven 5 million megawatt hours for the year.
Although we have seen good snowpack conditions, so far this year and the skiing in Idaho has been great with the drought conditions, we've seen over the last couple of years. The reservoirs are starting at pretty low levels.
Slide 14 shows the recent outlook for precipitation and temperature from NOAA current weather projections for March through May suggest that forecasters see normal precipitation and temperatures as we head into the spring normal conditions would bode well for snow melt and reservoir refill plans as well as for pump irrigation conditions.
And with that Lisa and I and others on the call are happy to answer your questions.
Thank you we're now ready to begin the question and answer session. If you would like to ask question. Please do so by pressing star one on your phone. Please ensure your mute function is turned off before you ask your question, we will take as many questions as time permits on a comp basis. Once again that is star one to ask a question, we'll pause for just a moment.
Okay.
Yes.
We'll hear first today from Brian Russo with Sidoti.
Hi, Bryan Bryan.
Yes, Hello, good afternoon.
Just on the rate case.
And it will be a.
2022 historical test year.
Okay.
Inventory it will be at 23 year.
Okay 2023 to 2023 test year for new rates in 2024.
Correct, Yeah, Brian the way I would look at it is we will take 2022 as somewhat of a financial base here and then what we'll do is proposed some known and measurable adjustments based on 2023 and submit that as our general rate case ask.
Okay got it and do you think youre going to file with a 54% Idaho power equity ratio.
You had at year end 2022 or will that be updated also.
So I think Brian as we look at our financing plans going forward will actually have some debt issuances that would be in advance of our general rate case that will actually bring that debt to equity ratio down. So when we go in we wouldn't expect to have necessarily a 54% equity rate it will be something sub that.
Maybe looking at more of a $51, 52% equity ratio going into the rate case.
Okay, great and even with the 2023 rate base, obviously helps canyon.
Pardon me to Hemingway would be outside of that so what youll just continue to earn.
<unk> balances.
Look too.
Recover that in rates in a.
A future rate case, and or maybe a single issue rate, making proceeding.
Yes, yes, Brian Thats exactly right. We will continue to have AF UDC on that outstanding quest, but wouldn't include them necessarily in a general rate case, we would either include them in a future general rate case.
There is the possibility of going to the commission for single issue rate cases associated with products that are of that magnitude anything of our boardman to hemingway or a health canon magnitude might be appropriate for a one off case, but well just have to see if you look at our capital spending plans. There is a lot of other capex out there that might be folded into rate base at the same time, so that will.
Something we look at when we look at our regulatory strategy is to a general or a one off case.
And Boardman to Hemingway.
Breaking ground in 2023, so are all of the regulatory approvals.
Behind you.
And is the potential increased in ownership.
Our buying BPA stake is that included in the Capex.
Adam why don't you take that one yes, the 45% ownership is included in the Capex.
In terms of next steps, we received our state permit was the unanimous six zero so.
We're just waiting for the Oregon Supreme Court to rule on that in June we do plan to break ground in.
The middle of this year, we have two <unk> filings with both Oregon, and Idaho that we hope to conclude in June so.
So we're making great headway in terms of the negotiate negotiated deal.
BPA is out to the public right now with that deal.
Saar down we've negotiated all of the terms, we hope to hear back from BPA here with their process here in February and then we'll be able to move forward with executing the agreements related to that deal.
Okay, and then to 2025 and 2026.
Rfps how.
How can you benefit from the inflation reduction act to maybe.
One more of that.
But also manage customer rates given year.
Rate base growth.
Yes, Brian Theres still quite a bit outstanding on the inflation reduction act in terms of exactly how thats going to work from.
From both a tax credit perspective, a regulatory perspective, and a GAAP perspective, so all of those three things have to interplay with one another before we can make some decisions. We do think that there are benefits out there in those years from the inflation reduction Act.
Those are all ultimately going to flow through to our customers one way or the other so customers will receive the benefit.
We used to look at complicated structures like tax equity partnerships and things like that we do as we look to the future. We also look at our own tax credit appetite and how we use those tax credits to the benefit of our customers is something we're going to have to look at what the environment is at the time and find the best way for that to work for our both our owners and our customers.
I might add to that in terms of the 25 RFP as it looks at this time it is going to be a mix of kind of potential ownership of Idaho power and third parties, we're still negotiating those deals so we haven't.
We haven't concluded that but it looks like kind of like the last two rfps, we're seeing a mix of potential ownership and ppas.
And I would add.
That we have a team that's really actively working at all of those opportunities from that.
And IRA and so.
Those benefits may go beyond that.
Did those years.
We kind of look at where those opportunities are and as the rules are actually written.
Okay and just.
And lastly.
Obviously, your full year guidance assumes normal weather.
But.
Have you seen incremental transmission revenues in this first quarter based on the extreme weather conditions.
Power price elevated power prices and maybe basis differentials.
North and West of you guys.
Yes, Brian This is Adam we continue to see that and saw that early on the market's been very volatile as you know and when that occurs folks tend to use our transmission line to trading between the two markets. The mid sea market in the Palo Verde, a market and so we can see continue to see kind of a steady increase.
And volumes and revenues in that regard.
Okay, great. Thank you very much.
Thanks, Brian .
And as a reminder to ask a question that is star one we will hear next from Anthony <unk> with Mizuho.
Hi, Anthony Anthony how are you doing good afternoon, hopefully hopefully two quick questions.
One of them I guess.
Slide in the third quarter deck, you guys talked about dividend growth I think of roughly 5% and I apologize if I have that number wrong.
I didn't see that slide in this deck has that changed at all and also payout ratio guidance.
Yes, Anthony so what I'll say on that is we're committed to that target payout ratio that 60% to 70% of sustainable earnings that we've got out there.
Given the Capex spend that's in process and upcoming in both the expenses of growth than the rate base that results from that I wouldn't call the trajectory necessary linear.
But with the growth coming I'd say earnings to grow faster than our stated 5% targeted dividend growth rate, if we execute well on the regulatory side.
We're pretty mindful of our big Capex spend on rating agency considerations and we expect the rate case cycle to help with cash flow. So that can also be a benefit the dividends and certainly something we'll be watching so I'd say, we know that dividend is important to our investors and it's part of their thesis and the board is also aware of that so that's front and center for us.
So if I could just.
You did say that.
Obviously, a lot of moving pieces there but.
Earnings growth.
May exceed dividend growth.
Would you have to execute on some regulatory filings, but you can see earnings growth ahead of the dividend growth.
Yes, again, I don't know its not necessarily the thing that thats, a linear thing, but there is the possibility of that if you look at things like our rate base CAGR, if we execute well on that I think there are opportunities out there over a over the long term.
Great and then when I look at your Capex Slide is there any way you.
If you could quantify in slide 10.
What's the load growth, you're assuming on slide 10.
Capex reflects what assumed load growth.
Yes.
Just over 5%.
Okay that we're using in our latest AARP analysis.
Five 5%.
Okay.
Did that retail sales growth and I apologize I think I saw a slide of the EI Ware.
Yeah.
<unk> to 'twenty to 'twenty three ERP the growth was.
Maybe in the 6% range and I know, it's a very modest move down but is that accurate.
Yes, I believe it that.
That was more timing.
Jeff.
Large load projects.
Great. That's all I had thanks, so much for taking my questions.
Thanks Anthony.
And as a final reminder, that is star one for any other questions at this time.
Okay.
Okay.
Okay.
Yes.
We'll hear next from Chris <unk> House with Siebert.
Hey, everybody how are you.
Hi, Chris for that great.
That's great.
I was looking at.
Page in the 10-K with the load growth forecast.
This five year outlook can you sort of breakdown.
That five 5% number into whats from customer customer growth, what's from sort of large new loads.
Are you incorporating.
Growth from electrification in there can you give us any sense of how that five 5% breaks down.
Yes sure. This is this is Adam.
Thanks.
The largest portion of kind of the increase between the two rfps is large load customers.
We just mentioned that between.
The analyst discussions and today, we had a slight decrease from 6% to five five.
That is just the.
Residential look and that has gone down just slightly but the large load in the C&I.
Inquiries and load continues to be pretty significant and thats, what makes up kind of that increase to that five 5%.
Okay got that.
We do and we do include some electrification in there, but I think one thing we've taken a conservative view on residential just in light of the macroeconomic conditions that are out there.
And what we've seen in slowing housing sales right for a mortgage rates and kind of some economic uncertainty that's out there so but that is all built into our forecast. Some of that is further out. So we're not saying that it's five 5% every year that is over that five year period of time with potentially higher growth over the later years in that.
Five year period.
As customers ramp up.
I was going to say that 555 years with a lot of.
C&I loans.
Do you see an extension of this beyond the five years with Sei.
<unk> adoption rates and economic recovery may be goosing. The residential side. So do you see this kind of elevated level being a longer term than the five year horizon as well.
I mean, it certainly could be.
I think the <unk> is going to put a lot of.
Opportunity out there for that but we'll have to wait and see if consumers make the shift.
These programs are intending, but but yes, we do see we do see that there is opportunity for sure just to give you an idea Chris on electrification our year over year growth for electric vehicles increased about 7% in one year.
I anticipate we're going to continue to see that we actually just anecdotally have gotten our first light means for Ford <unk> at Idaho power and I've been piloting it over the last week and I have to say, it's a pretty impressive vehicles. So you start to see these new models come out certainly I think electrification will continue.
And then as Lisa said with these large loads these are pretty big projects from Micron and meta and.
They have indicated that they could continue into the future who knows whether that's going to happen or not but it's something that certainly could happen and increased low growth that.
Okay great.
In the guidance last year was not a super irrigation year. So how are you reflecting irrigation in 'twenty three is there some recovery there or are you assuming.
<unk> results with whats the irrigation outlook, yes, we kind of looked at sort of going back to normal patterns, where again as Brian mentioned it was very wet and cool last spring, which was an anomaly. So we're really kind of going back to normal weather patterns in and.
Forecasting based on that.
Okay great.
Have you got any updated timelines for boardman to Hemingway or gateway west in terms of.
Completions.
This is Adam for Boardman Hemingway were still looking at 2026.
That year in terms of gateway West we're right in the middle of modeling what that looks like in our IRB certainly some of the models have seen that gateway west move forward before the end of the decade.
<unk> show it moved back what we're going to have to look at is what is the most cost effective approach for our customers, but certainly the idea of gateway west moving forward as a possibility.
Chris I'll, just add that in that Capex stack that we have in the materials or that are in the slides. We do have a small incremental amount or some of the early stages of gateway west at the end of that five year period.
Okay. That's helpful.
Brian you talked about sort of.
Increasing expectations for equity, which is no great surprise, given the capex budget.
Do you have a pretty.
The significant increase in 2020 for should we be thinking that that's kind of a horizon for your your first equity need.
Yes, I'd say that its not eminent but we do watch things like market conditions in debt capital markets and things like that and they all influence what our what our financing plans R. R.
Our goal is when we get to that point, where we have an equity need we want to blend debt and equity we do understand the.
The issues associated with.
Equity issuances on dilution and things like that so we've got to watch market conditions, We've got to watch credit ratios those types of things can impact our timing.
I would say less likely in 2023 by 2024 starts to come into the window certainly just based on that large capex that's out there, but again it depends on a number of factors.
Okay, great that makes sense alright, thanks for the color I appreciate it guys.
Thank you.
And that does conclude the question and answer session for today Ms grow I would like to turn things back to you.
Thank you everyone for joining us this afternoon and for your continued interest in <unk> I Hope you all enjoy the wonderful long President's weekend and you get to spend some time with your families and I hope that while you're out recreating or doing whatever youre doing you do it safely. So thank you very much.
Okay.
And that will conclude today's conference again, thank you for joining us and you may now disconnect.
Okay.
Yes.
Okay.