Q3 2023 Avista Corp Earnings Call
Okay.
Good day, and thank you for standing by.
Welcome to the Vista Corporation, Q3, 2023 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 this session you will need to press star one one on your telephone you will.
Then here an automated message if I think that your hands is right.
She was dry your question. Please press star one one again.
Please be advised that today's conference is being recorded.
I would now like to hand, the conference over to your first speaker today.
Stacy one Investor Relations manager. Please go ahead.
Good morning.
Welcome to the third quarter 2023 earnings conference call.
Earnings and our third quarter 10-Q were released pre market. This morning.
Are available on our website.
Joining me this morning.
Alright, Mr Corp, CEO Dennis Vermillion.
N C O Heather rather than trader senior Vice President CFO, Treasurer, and regulatory Affairs Officer, Kevin Christie, and Vice President Controller, and principal accounting Officer, Ryan Crackel.
Today, we will make certain statements that are forward looking these involve assumptions risks and uncertainties, which are subject to change various factors could cause actual results to differ materially from the expectations discussed on today's call. Please refer to our 10-K for 2022.
10-Q for the third quarter of 2023, which are available on our website for a full discussion of these risk factors.
To begin I'll recap the financial results presented in today's press release.
Our consolidated earnings for the third quarter of 2023 were 19 cents per diluted share compared to a loss of eight cents for the third quarter of 2022.
Year to date consolidated earnings were $1.14 per diluted share for 2023 compared to $1.06 last year.
Now I'll turn the call over to Dennis.
Well, thanks, Stacy and good morning, everyone I hope you're enjoying some nice fall weather wherever you're at here in Spokane and the inland northwest. The leaves are showing their brilliant colors and we even experienced our first light snowfall last week first part of the season.
I'd like to begin by welcoming other resin trader to our earnings call. This morning in September in September you May have seen we announced that Heather would be kind of my business 15th President. She is the first female president in our company, it's 134 year history.
You all get a chance to meet Heather at the EI Financial conference coming up in November and a couple of weeks when you meet Heather you'll see that she is a dynamic leader who has built a deep understanding of the utility business over the years. She has established a reputation as a thought leader who has an uncanny.
<unk> ability to strategically anticipate what's next.
I believe we have the right leadership team in place to successfully lead us forward to a rapidly changing energy landscape in the complex challenges, we're facing as a business and as an industry.
As we look to the future I'm confident that will be that we'll continue to tap into a rich history of innovation and ask ourselves how might we do things differently.
Commitment to our strategy and innovation landed as one of only 10 connected communities grants awarded by the Department of Energy. We recently completed the first year of this five year grant that allows us to work with partners to engage customers about their energy usage at a deeper level.
Part of this grant working two excuse me in our grid simulator and Avista energy innovation lab to explore how to make the best use of the existing grid.
And at the same time, we're continuing to ask ourselves how might we possibly expand our owned generation portfolio.
We meet the demand for transmission assets as we move toward our clean energy future.
How might we partner with building owners and operators to active actively manage not only how much energy these buildings use but when they use it.
Ideas like these tap into the built environment to create a battery of storage moving us closer to achieving our clean energy goals that can help make energy more affordable for everyone.
As we explore options rest assured we will be prudent and wise with our decisions.
Turning to regulatory outcomes are our results. So far this year reflect significant progress we've made on the regulatory front.
It includes the benefits from our 2022, Washington rate cases.
Electric and natural gas rate.
Gas rates went into effect in September in Idaho, The first of a new two year rate plan, our Oregon General rate case was approved by the commission last week's and new rates will be effective January 1st we look we look to continue executing our strategy with the next multiyear rate plan to be filed in Washington and early <unk>.
2024, which will allow us the opportunity to earn our allowed return.
With respect to earnings our third quarter results are ahead of our expectations at Avista utilities, we're seeing the benefit of our cost management efforts.
L. M. P is also ahead of our expectations for the year.
Year to date, we've experienced losses in our other businesses, which are driven by valuations of investments there's value that comes from these investments beyond their expected contribution to earnings. These investments can create opportunities for learning economic development within our service area.
And helped propel us towards energy innovation and transformation necessary to meet our clean energy goals.
Now I would like to turn this presentation over to Kevin who will share more about our earnings.
Thanks, Dennis and good morning, everyone I'd also like to extend my welcome to Heather.
Much to look forward to working with her in her new role. It's also nice to no longer be the new person in the room.
I would.
To expand on what Dennis was saying about our earnings Avista utilities earnings increased in the third quarter of 2023.
For the third quarter of 2022.
This was largely a result of the beneficial impact of our general rate cases customer growth and lower cost under the arm <unk>.
Compared to the third quarter of last year.
In the third quarter of 2023, the ERM was it pre tax expense of $1 2 million compared to a pre tax expense of $4 5 million in the third quarter of last year.
Year to date, we've recognized a pre tax expense of $7 8 million in the ERM compared to a pre tax expense of $7 3 million in 2022.
We expect to end 2023.
The 90% customer, 10% company sharing band with a decrease to earnings of eight cents per diluted share.
We are committed to investing the necessary capital in our utility infrastructure.
Our planned capital expenditures at Avista utilities of $475 million in 2023.
So that we can continue to support our customer growth and maintain our system to provide safe reliable energy to our customers.
We are increasing avista utilities expected capital expenditures to $500 million in 2024 $525 million in 2025 and $550 million in 2026.
Additionally, we are evaluating opportunities as they come up to explore the expansion of our generation assets as well as potential transmission projects to support the integration of renewables and to propel us toward our clean energy goals.
We expect <unk> capital expenditures to be 17 million in 2023.
And we expect to invest 15 million at our other businesses in 2023.
On the liquidity front as of September 30, we have $275 million of available liquidity under our committed line of credit and $41 million available under our letter of credit facility.
We have issued 88 million of common stock through September 30, and during the fourth quarter of 2023, depending upon market conditions, we plan to issue $32 million of common stock.
In 2024, we expect to issue approximately 80 million of long term debt and $60 million of common stock to fund our capital spending for the year.
We frequently talk about the importance of our cost management efforts and that's certainly been true this year.
We've been successfully managing our costs, but were unable to fully offset the impact of higher resource costs as a result.
The year's poor hydro performance.
Due to these higher resource costs, we are narrowing our 2023 consolidated earnings guidance range to $2 27 to $2 37 per diluted share.
Given current expectations. If it were not for these higher resource costs, we have to end the year in the upper half of the original guidance range.
To recognize the impact of our cost management efforts, we have increased the floor of Avista utilities guidance by <unk> <unk> and now expect.
Back to contribution in the range of $2 18 to $2 24 for the year.
We now expect <unk> to contribute in the range of 10 to 12 cents per diluted share and 23 to reflect the better than expected performance of this segment.
Year to date, we've recognized net losses in our other businesses, primarily due to the valuation adjustments.
Quarterly valuation of certain investments can cause some volatility in our earnings and it increases the transparency of these investments value.
We expect our other businesses to contribute in the range of one set last two onetime gain per diluted share for the year.
We are finalizing our 2024 business plans and expect to provide our 2020 for guidance on our February earnings call.
Now, we'll be happy to answer your questions.
Thank you.
At this time, we will conduct a question and answer session. As a reminder to ask a question you will need to press star one on your telephone and wait for your name to be announced.
To withdraw your question. Please press star one again.
Please standby, while we compile the Q&A roster.
And our first call or excuse me. Our first question today is from Ken of James <unk> with Bank of America Securities. Your line is open.
Hi, good morning.
Hey, good morning, good morning Dana.
Good morning could.
Could you provide a little bit of detail into the incremental capex. What are the specific opportunities you are seeing here and then longer term. What do you expect will go into finance I'm, just kind of kind of how do you look at that year by year going forward.
Yeah.
Well, what I can say about the thanks for the question and what I can say about that.
The incremental capital going forward.
A significant portion of it as a continuation of the type of capital we've been investing in over the last many years and we are seeing some additional opportunities.
And had been upping the investment and our generation assets as we have some major projects coming.
Do and we've had assets those assets in particular for more than 100 years in some cases, and we need to make some investments there to modernize so that's becoming a bit of a bigger proportion, but generally speaking we're looking at similar capital.
As we have been spending in the past.
The second question that Youre asking there Tanner is about our incremental financing plans going forward are financing plans going forward, if I have that correctly.
Well again, we'll be giving guidance next quarter likely.
And at that point in time, if there are any changes to what I've shared here I would share there, but but we typically only do give guidance around our financing plans a year out.
Understood. Thank you.
Might have missed it in the press release or presentation or rather it might be implied or you guys are reaffirming the long term EPS CAGR in line with your rate base growth.
Once we get back to earning our authorized return we expect to be in the 4% to 6% long term growth rate.
Great. Thank you very much guys.
You bet thanks for the questions.
Thank you.
Our next question is from Brian Russo with Sidoti Your line is open.
Hi, good morning.
Ryan Good morning, Brian.
Hey generation investments.
That you just referenced for the increase in Capex.
Is this ERP related or are the generation expansion opportunities, you're evaluating kind of longer term.
IRT focused.
Yes, So let me differentiate the two types here.
I was referring to with <unk> question is the proportion of the capital planning.
Dollars that I described earlier, our related some of them are related to generation needs to to improve or modernize existing generation assets hydro assets in particular.
And so that's part of what I've described and then.
Dennis his comments and then some of what I was mentioning is we'll also try to be opportunistic as we think about the clean energy future and what is needed. There is a bit of a theme across the country I'm sure you know, where we all have clean energy goals or many of us have clean energy goals and that we are looking at the need to invest in.
Clean generation as well as transmission on a go forward basis to meet those goals. So it's really two different categories. When you think about generation.
Okay got it and then just on the guidance revision there are a few move.
Moving parts.
What are the regulatory outcomes, what exceeded your expectations, but said it but that's offset with the eight cent.
ERM headwind, which is now included in your guidance, where previously it was excluded.
From the midpoint I'm, just trying to make sure I don't want to I'm, just trying to get a sense of whats.
Going into 2020 for the earn gets reset to zero where.
<unk>.
And any upside in the regulatory outcomes would carry through into 2024 and beyond.
Yes, I can appreciate the question there Brian.
So back to your first point or are the point around guidance and guidance setting and we.
We typically don't.
Guide with their arm included but for 2023, we've had significant headwinds around hydro <unk> hydro.
Condition in the way the water came off and so that led us to hear on.
In the prior quarter to acknowledge an 8% headwind on hydro.
On the actual results or why we're seeing the utility perform a bit better.
When you do exclude the hydro we have continued to manage our costs pretty successfully.
That has that's a big part on why we're showing a bit better we've moved the bottom end of the range up by <unk> for the utility segment.
Okay got it and what's driving the LNP performance up to <unk>.
They've had a bit better weather as well as some cost management as well.
Okay great.
And then I know it's early in terms of the upcoming hydro season, and then border supply levels, but you can you remind us what typically occurs with your resource costs and a lot of anemia.
Uh huh.
Scenario.
Well, that's funny, we're talking about whether here, Brian and that's a dangerous topic I would share that I've seen a lot of data from our power supply team that shows that it can be a real mixed bag with whether you're in a la Nina or El Nino.
And although I think what many would say is we would expect a bit warmer in a bit dryer.
Then normal in the winter, we've seen many instances where that just hasnt been true and we've seen wetter and colder.
Understood. Thank you very much.
Got it.
Mhm.
Very good thank you very much.
Thanks again for the questions.
Thank you very much.
Lasalle.
Okay.
Our next question is from James Ward with Guggenheim Partners. Your line is open.
Hi, good morning.
Ms.
Don't get good morning, Greg.
Yeah.
I understood from your prepared remarks that you will provide 2024 guidance, including segment insights on the fourth quarter call but.
<unk> level in aggregate do you expect growth to be linear into 2024.
Okay.
What I can say there Jason is that we get our next big Boy.
Hump up in earnings so it will be non linear as we think about 2025. So this next case that we'll file in the first quarter of 'twenty four in Washington.
Big impact on our expected earnings in 'twenty, five and so we would see.
A much bigger increase in 25 versus the movement from 'twenty three to 'twenty four.
Gotcha.
Got you and then as we think about the other business segment going forward any insights you can give us there on.
Kind of timing and schedule around.
Yes.
The potential at least for further.
Valuation related adjustments or impacts on earnings, obviously predict where valuations will be in the future, but just trying to get a sense of magnitude. So that we can and I have a sensitivity.
What could occur in the other segment in the future.
Now again, we'll give guidance next quarter for all segments.
Likely give guidance next quarter for all segments. When we got when we have that conversation with you all.
Yeah.
I think one of the things you are alluding to is one of our investments that we're seeing a little bit more volatility.
And what we've shared is that there is a clinical trial that we would expect to have a better understanding of how things are working out for them in the latter part of next year and so there's not much more I can add at this point in time.
Understood. Thank.
Thank you very much and look forward to seeing you guys at EI.
Same here. Thank you. Thank you.
Thank you.
Our next question is from Willard Granger with Mizuho Financial Group. Your line is open.
Hi, Good morning team. Thanks for taking my question.
Good morning.
Just wanted to understand a little bit.
What should we be assuming as the base year for your 4% to 6% EPS CAGR.
Yes, I think it would be fair to say that the base here is it wheels off of when we're earning our authorized return, which we would expect to occur we have a chance to earn our authorized return in 2025, So I would think of it as going from 2025 forward.
Okay got it.
Helpful.
And maybe just one and sorry to beat a dead horse here, but you've raised your capex guidance and when can we expect some of the financing.
<unk> financing guidance around that to come out.
If you could unpack that a little bit for us here. Thank you.
Well there is theres a lot of moving parts and we've shared our incremental needs for 2024, which would help fund the $500 million that we have described to you here on this call.
After that it will be situational based on of course, our cash flows. We've had some tax credits that are rolling off which provides incremental cash.
And we have the arm to continue to manage we've got the earn balance that we filed in our rate case or I'm, sorry in a rate proceeding.
Not too long ago middle of the year, we have that coming back to us over two years and it will really.
Matter, what we see on an earned go forward basis, too and we will have to update you. Once we see all of those pieces come together on a go forward basis from 'twenty six forward.
Got it I'll leave it there thank you very much.
Thank you.
Thank you.
I'm showing no further questions at this time, so I would like to now turn it back to Stacy win.
Thank you all for joining us today and for your interest in Vista.
Forward to seeing many of you here in a couple of weeks.
Have a great day.
Thank you everyone for your participation in today's conference. This does conclude the program you may now disconnect.
Okay.
Okay.
[music].
Okay.
Operator: Good day, and thank you for standing by. Welcome to the Avista Corporation Q3 2023 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. To ask the question during the session, you will need to press 311 on your telephone. You will then hear an automated message advising that your hand is raised. To withdraw your questions, please press star 111 again. Please be advised that today's conference is being recorded.
Operator: I would now like to hand the conference over to your first speaker today.
Stacey Wenz: Stacey Wenz, investor relations manager, please go ahead. Good morning.
Stacey Wenz: Welcome to Avista's third quarter 2023 earnings conference call. Our earnings and our third quarter 10Q were released pre-market this morning. Both are available on our website. Joining me this morning are Avista Corp CEO Dennis Vermillion, president and COO Heather Rosentrater, senior vice president CFO, treasurer, and regulatory affairs officer Kevin Christie, and vice president controller and principal accounting officer Ryan Krasselt. Today, we will make certain statements that are forward-looking. These involve assumptions, risks, and uncertainties, which are subject to change.
Stacey Wenz: Various factors could cause actual results to differ materially from the expectations discussed in today's call. Please refer to our 10K for 2022 and 10Q for the third quarter of 2023, which are available on our website for a full discussion of these risk factors.
Stacey Wenz: To begin, I'll recap the financial results presented in today's press release. Our consolidated earnings for the third quarter of 2023 were 19 cents per diluted share, compared to a loss of 8 cents for the third quarter of 2022. Year to date, consolidated earnings were $1.14 per diluted share for 2023, compared to $1.06 last year.
Dennis Vermillion: Now I'll turn the call over to Dennis. Well, thanks, Stacy, and good morning, everyone. I hope you're enjoying some nice fall weather wherever you're at here in Spokane and the inland Northwest. The leaves are showing their brilliant colors, and we even experienced our first light snowfall last week, first one of the season.
Dennis Vermillion: I'd like to begin by welcoming Heather Rosentrader to our earnings call this morning. In September, you may have seen we announced that Heather would become a VISTA's 15th president. She is the first female president in our company, the 134-year history. You all get a chance to meet Heather at the EEI Financial Conference coming up in November and a couple weeks. When you meet Heather, you'll see that she's a dynamic leader who's built a deep understanding of the utility business.
Dennis Vermillion: Over the years, she's established a reputation as a thought leader who has the uncanny ability to strategically anticipate what's next. I believe we have the right leadership team in place to successfully lead us forward through a rapidly changing energy landscape and the complex challenges we're facing as a business and as an industry. As we look to the future, I'm confident that we'll continue to tap into our rich history of innovation and ask ourselves, how might we do things differently?
Dennis Vermillion: Committee. Commitment to our strategy and innovation landed as one of only ten connected community's grants awarded by the Department of Energy. We recently completed the first year of this five-year grant that allows us to work with partners to engage customers about their energy usage at a deeper level. Part of this grant work includes using our grid simulator in Avista's Energy Innovation Lab to explore how to make the best use of the existing grid.
Dennis Vermillion: And at the same time, we're continuing to ask ourselves, how might we possibly expand our own generation portfolio? How might we meet the demand for transmission assets as we move toward our clean energy future? And how might we partner with building owners and operators to actively manage not only how much energy these buildings use, but when they use it? Ideas like these tap into the built environment to create a battery of sorts, moving us closer to achieving our clean energy goals and can help make energy more affordable for everyone.
Dennis Vermillion: As we explore options rest assured, we will be prudent and wise with our decisions.
Dennis Vermillion: Turning to regulatory outcomes are results so far this year reflect significant progress we've made on the regulatory front. And includes the benefits from our 2022 Washington rate cases. New electric and natural gas rates went into effect in September in Idaho. The first of a new two-year rate plan, Oregon General Rate Case was approved by the commission last week and new rates will be effective January 1st. We look to continue executing our strategy with the next multi-year rate plan to be filed in Washington in early 2024, which will allow us the opportunity to earn our allowed return.
Dennis Vermillion: With respect to earnings, our third quarter results are ahead of our expectations. At a VISTA utilities we're seeing the benefit of our cost management efforts. AEL and P is also ahead of our expectations for the year. Year-to-date we've experienced losses in our other businesses which are driven by valuations of investments. There's value that comes from these investments beyond their expected contribution to earnings. These investments can create opportunities for learning, economic development within our service area, and help propel us towards energy innovation and transformation necessary to meet our clean energy goals.
Kevin Christie: Now I'd like to turn this presentation over to Kevin who will share more about our earnings. Thanks Dennis and good morning everyone. I'd also like to extend my welcome to Heather. I very much look forward to working with her in new role. It's also nice to no longer be the new person in the room.
Kevin Christie: To expand on what Dennis was saying about our earnings, a VISTA utilities earnings increased in the third quarter of 2023. Compared to the third quarter of 2022, this was largely a result of the beneficial impact of our general rate cases, customer growth, and lower costs under the arm compared to the third quarter of last year. In the third quarter of 2023, the arm was a pre-tax expense of $1.2 million compared to a pre-tax expense of $4.5 million in the third quarter of last year.
Kevin Christie: Year to date, we've recognized a pre-tax expense of $7.8 million in the arm compared to a pre-tax expense of $7.3 million in 2022. We expect to end 2023 in the 90% customer, 10% company sharing band, with a decreased earnings of $0.8 per diluted share. We are committed to investing the necessary capital in our utility infrastructure. Our planned capital expenditures at Avista Utilities are $475 million in 2023, so that we can continue to support our customer growth and maintain our system to provide safe, reliable energy to our customers.
Kevin Christie: We are increasing Avista Utilities, expected capital expenditures to $500 million in 2024, $525 million in 2025, and $550 million in 2026. Additionally, we are evaluating opportunities as they come up to explore the expansion of our generation assets as well as potential transmission projects to support the integration of renewables and to propel us toward our clean energy goals. We expect AEL and P's capital expenditures to be $17 million in 2023, and we expect to invest $15 million in our other businesses in 2023.
Kevin Christie: On the liquidity front, as of September 30, we have $275 million of available liquidity under our committed line of credit, and $41 million available under our letter of credit facility. We have issued $88 million of common stock through September 30, and during the fourth quarter of 2023, depending upon market conditions, we plan to issue $32 million of common stock. In 2024, we expect to issue approximately $80 million of long-term debt and $60 million of common stock to fund our capital spending for the year.
Kevin Christie: We frequently talk about the importance of our cost management efforts, and that's certainly been true this year. We've been successfully managing our costs, but we're unable to fully offset the impact of higher resource costs as a result of the year's poor hydroperformance. Due to these higher resource costs, we are narrowing our 2023 consolidated earnings guidance range to $2.27 to $2.37 per diluted share. Given current expectations, if it were not for these higher resource costs, we would end the year in the upper half of the original guidance range.
Kevin Christie: To recognize the impact of our cost management efforts, we have increased the floor of a contribution in the range of $2.18 to $2.24 for the year. We now expect AEMP to contribute in the range of $0.10 to $0.12 per diluted share in 2023 to reflect the better than expected performance of this segment. Year-to-date, we recognize net losses in our other businesses, primarily due to evaluation adjustments. Quarterly evaluation of certain investments can cause some volatility in our earnings, and it increases the transparency of these investments value. We expect our other businesses to contribute in the range of one-fet loss to $1.10 gain per diluted share for the year.
Kevin Christie: We are finalizing our 2024 business plans and expect to provide our 2024 guidance on our February earnings call.
Operator: Now we'll be happy to answer your questions.
Operator: Thank you. At this time, we will conduct the question and answer session. As a reminder to ask a question, you will need to press star-1-1 on your telephone and wait for your name to be announced. To withdraw your questions, please press star-1-1 again. Please stand by.
Operator: Will we compile the Q&A roster?
Tanner James: And our first question today is from Tanner James with Bank of America Security. Your line is open. Hi, good morning. Good morning, Tanner. Good morning.
Dennis Vermillion: Could you provide a little bit of detail into the incremental cat-backs? What are the specific opportunities you're seeing here? And then longer term, what do you expect will go into finding anything? Just kind of how do you look at that year by year going forward?
Dennis Vermillion: Well, what I can say about the, thanks for the question. And what I can say about the incremental capital going forward. A significant portion of it is a continuation of the type of capital we've been investing in over the last many years. And we are seeing some additional opportunities and have been upping the investment in our generation assets as we have some major projects coming due. And we've had assets, those assets in particular, for more than 100 years in some cases. And we need to make some investments there to modernize. So that's becoming a bit of a bigger proportion. But generally speaking, we're looking at similar capital as we have been spending in the past.
Dennis Vermillion: The second question that you're asking there, Tanner, is about our incremental financing plans going forward. If I have that correctly, and we'll, again, we'll be giving guidance next quarter likely. And at that point in time, if there are any changes to what I've shared here, I would share it there. But we typically only do give guidance around our financing plans a year out. Understood.
Dennis Vermillion: Thank you. And I might have missed it in the press release of presentation or rather might be implied. Are you guys reaffirming the long-term EPS Kager in line with your rate-based growth? Once we get back to earning our authorized return, we expect to be in the 4% to 6% long-term growth rate. Great. Thank you very much, guys. You bet. Thanks for the questions. Thank you.
Ryan Russo: Our next question is from Ryan Russo with Sedotti. Your line is open. Hi, good morning. Hi, Ryan. Good morning, Ryan. Hey, the generation investments that you just referenced for the increasing catbacks. Is this IRP related or are the generation expansion opportunities are evaluating kind of longer-term IRP focus? Yeah, so let me differentiate the two types here. What I was referring to with Tanner's question is the proportion of the capital planning dollars that I described earlier are related.
Ryan Russo: Some of them are related to generation needs to improve or modernize existing generation assets, hydro assets in particular. And so that's that's part of what I've described and then Dennis's comments and then some of what I was mentioning is we'll also try to be opportunistic as we think about the clean energy future and what is needed. There's a bit of a theme across the country. I'm sure you know where we all have clean energy goals or many of us have clean energy goals and that we are looking at the need to invest in clean generation as well as transmission on a go forward basis to meet those goals. So it's really two different categories when you think about generation.
Dennis Vermillion: Okay, got it. And then just on the guidance revisions, there are a few moving parts where the regulatory outcomes, what exceeded your expectations, but that is, but that offset with the eight cent arm headwind, which is now including your guidance where previously was excluded from the midpoint. I just want to make sure I want to just trying to get a sense of, you know, what's ongoing into 2024. You know, the earn gets reset to zero where, you know, any any upside in the regulatory outcomes, you know, would carry through into 2024 and beyond.
Dennis Vermillion: Yeah, I can appreciate the question there, Brian. So back to your first point or the point around guidance and guidance setting and the arm, we typically don't guide with the arm included, but for 2023, we've had significant headwinds around hydro or hydro condition and the way the water came off. And so that that led us to here on the and the prior quarter to acknowledge and eight cent headwind on hydro on the actual results or why we're seeing the utility perform a bit better.
Dennis Vermillion: When you do exclude the hydro, we have continued to manage our costs pretty successfully and that has, that's a big part on on why we're showing a bit better. We move the bottom end of the range up by three cents for the utility segment. Okay, got it. And what's driving the AEL and P performance up to cents? They've had a bit better weather as well as some cost management as well. Okay, great.
Dennis Vermillion: And then, you know, I know it's early in terms of the upcoming hydro season and what are supply levels could, but you can you remind us what typically occurs, you know, with your resource costs and a law, Nina type, you know, scenario. Well, you know, that's funny. We're talking about weather here, Brian and that's a dangerous topic. I would share that I've seen a lot of data from our power supply team that shows that it can be a real mixed bag with whether you're in a La Nina or El Nino.
Dennis Vermillion: And although I think what many would say is we'd expect a bit warmer and a bit drier than normal in the winter, we see many instances where that just hasn't been true and we've seen wetter and colder.
Dennis Vermillion: Thank you very much. I got it. Very good. Thank you very much. Thanks again for the questions. Thank you very much. One moment.
Jamieson Ward: Our next question is from Jamieson Ward with Guggenheim Partners. Your line is open. Hi, good morning. How are you guys doing good? Good morning. Good. Understood from your prepared remarks. You'll provide 2024 guidance, including segment insights on the fourth quarter call, but higher level in aggregate. Do you expect growth to be linear into 2024?
Dennis Vermillion: What I can say there, Jamieson, is that we get our next big bump up in earnings, so it will be nonlinear as we think about 2025. This next case, it will file in the first quarter of 24 in Washington is a big impact on our expected earnings in 25. So we see a much bigger increase in 25 versus the movement from 23 to 24. Gotcha.
Dennis Vermillion: And then as we think about the other business segment going forward, any insights you can give us there on kind of timing and schedule around, you know, the potential at least for further evaluation related adjustments or impacts. We have a lot of impacts on earnings. Obviously, I predict, you know, evaluations will be in the future, but just trying to get a sense of magnitude so that we can kind of have a sensitivity of what could occur in the other segment in the future.
Dennis Vermillion: Now, again, we'll give guidance next quarter for all segments, likely give guidance next quarter for all segments when we have that conversation with you all. And I think one of the things you're alluding to is one of our investments. We're seeing a little bit more volatility. And what we've shared is that there's a clinical trial that we'd expect to have a better understanding of how things are working out for them in the latter part of next year. And so there's not much more I can add at this point in time. Understood.
Jamieson Ward: Thank you very much and look forward to seeing you guys at E.I. Same here. Thank you.
Willard Granger: Our next question is from Willard Granger with Mizzouho Financial Group. Your line is open. Hi, good morning, team. Thanks for taking my question. Morning. Just want to understand a little bit. What should we be assuming is the base year for your four to six percent EPS Gager? Yeah, I think it'd be fair to say that the base year is wheels off of when we're earning our authorized return, which we would expect to occur. We have a chance of earning our authorized return in 2025. So I would think of it as going from 2025 forward.
Willard Granger: Okay, got it. That's helpful.
Willard Granger: And maybe just one, and sorry to beat a dead horse here, but you've raised your cat-backed guidance. And when can we expect some of the financing guidance around that to come out? If you could unpack that a little bit for us here. Thanks. Thank you. Well, there's a lot of moving parts and we've shared our incremental needs for 2024, which would help fund the 500 million that we have described to you here on this call.
Willard Granger: After that, it will be situational based on, of course, our cash flows. We've had some tax credits that are rolling off, which provides incremental cash. And we've had the urge to continue to manage. We've got the earned balance that we filed in a rate case, or I'm sorry, in a rate proceeding not too long ago, middle of the year. We have that coming back to us over two years, and it will really matter what we see on an earned go-forward basis, too. And we'll have to update you once we see all of those pieces come together on a go-forward basis from 26th forward. Got it.
Willard Granger: I'll leave it there. Thank you very much. Thank you.
Stacey Wenz: I'm showing no further questions at this time, so I would like to now turn it back to Stacey Wenz. Thank you all for joining us today and for your interest in Avista. We look forward to seeing many of you here in a couple weeks at EEI.
Operator: Have a great day. Thank you, everyone, for your participation in today's conference.
Operator: This does conclude the program.
Operator: You may now disconnect.