Q2 2024 Northwest Natural Holding Co Earnings Call
Jaylen: Good morning. Thank you for attending today's Northwest Natural Holdings Company Q2 2024 earnings call. My name is Jaylen. I'll be your moderator for today. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. I would now like to pass the conference over to our host, Nikki Sparley, Director of Investor Relations. Nikki, you may proceed.
Unknown Executive: Good morning. Thank you for attending today's Northwest Natural Holdings Company.
Good morning. Thank you for attending today's northwest Natural holding company Q2, 2024 earnings call. My name is Jamie Lynn I'll be your moderator for today all lines would it be needed during the presentation portion of the call with an opportunity for questions and answers.
Unknown Executive: Due to 2024, our needs call on the machine will now be a moderator for today. All lines will be muted during the presentation portion of the call, with an opportunity for questions and answers if you end.
Nikki Sparley: I would like to best the conference over to our host, Nikki Sparley, Director of Investor Relations.
Viki Barley: I would now like to pass the conference over to our host Viki barley director of Investor Relations. Mickey You May proceed good morning, and welcome to our second quarter 2024 earnings call. As a reminder, some things that will be said. This morning contain forward looking statements, they're based on management's assumptions, which may or may not occur for completely.
Nikki Sparley: Nikki, you may proceed. Good morning and welcome to our second quarter, 2024, earnings call. As a reminder, some things that will be said this morning contain forward-looking statements. They are based on management assumptions, which may or may not occur. For a complete list of our cautionary statements, refer to the language at the end of our press release. We expect to file our 10 queue later today. As mentioned, this teleconference is being recorded and will be available on our website following the call. Please note these calls are designed for the financial community.
Nikki Sparley: Good morning, and welcome to our second quarter 2024 earnings call. As a reminder, some things that will be said this morning contain forward-looking statements. They are based on management's assumptions, which may or may not occur.
Nikki Sparley: For a complete list of our cautionary statements, refer to the language at the end of our press release. We expect to file our 10-Q later today. As mentioned, this teleconference is being recorded and will be available on our website following the call. Please note that these calls are designed for the financial community. If you are an investor and have additional questions after the call, please contact me directly at 503-721-2530. Media may contact David Roy at 503-610-7157.
Speaker Change: Our cautionary statements refer to the language at the end of our press release, we expect to file our 10-Q later today.
Speaker Change: As mentioned this teleconference is being recorded and will be available on our website following the call.
Speaker Change: Please note. These calls are designed for the financial community. If you are an investor and have additional questions. After the call. Please contact me directly at 503 seven to 125 30 News media May contact David Roy at 503, 610 70 157.
Nikki Sparley: If you are an investor and have additional questions after the call, please contact me directly at 503-721-2530.
Nikki Sparley: News media may contact David Roy at 503-610-7157.
Nikki Sparley: Speaking this morning are David Anderson, Chief Executive Officer, and Brody Wilson, CFO, Vice President, Treasurer, and Chief Accounting Officer. David and Brody have prepared remarks and then will be available, along with other members of our executive team, to answer your questions. With that, I'll turn it over to David.
Nikki Sparley: Speaking this morning, our David Anderson, Chief Executive Officer, and Brody Wilson, CFO, Vice President, Treasurer, and Chief Accounting Officer. David and Brody have prepared remarks and then be available, along with other members of our Executive Team, to answer your questions.
Speaker Change: Became this morning are David Anderson, Chief Executive Officer, and Brody Wilson, CFO, Vice President Treasurer, and Chief Accounting Officer, David and Brody have prepared remarks, and then will be available along with other members of our executive team to answer your questions with that I'll turn it over to David.
Unknown Executive: With that, I'll turn it over today.
David Anderson: Thanks, Nikki, and good morning and welcome. Our financial results are on track for the year and in line with our full year guidance issued in February. Brody, we'll go through the detailed results here in a moment.
David Anderson: Thanks, Nikki, and good morning and welcome. Our financial results are on track for the year and in line with our full-year guidance issued in February. Brody will go through the detailed results here in a moment.
David Anderson: Thanks, Nikki and good morning, and welcome our financial results are on track for the year and in line with our full year guidance issued in February.
Brody Wilson: Brody will go through the detailed results here in a moment.
David Anderson: This morning, I'll walk you through a few economic indicators and provide an update on our Oregon gas utility rate case. I'll wrap up with an update on our long-term decarbonization and growth initiatives. Now, a few comments on the economy.
David Anderson: This morning, I'll walk you through a few economic indicators and provide an update on our Oregon gas utility rate case.
Speaker Change: This morning, I'll walk you through a few economic indicators and provide an.
Brody: An update on our Oregon gas utility rate case, I'll wrap up with an update on our long term de carbonization and growth initiatives.
David Anderson: I'll wrap up with an update on our long-term decarbonization and growth initiatives. Turning to a few comments on the economy related to our gas utility service territory, Oregon's unemployment rate remains low and on par with a national average at 4.1% in June. Employment growth increase in Oregon to 1.6%. Compared to a drop in U.S. employment growth to 1.5% annualized for June 2024. Single family housing permits were a 8.6% year over year in Oregon and increased 19.1% in the Portland Metro area, signaling favorable conditions for customer growth ahead. For June, unemployment rates in our water service service territories were as low as 3%.
David Anderson: Related to our gas utility service territory, Oregon's unemployment rate remains low and on par with the national average at 4.1% in June. Employment growth increased in Oregon to 1.6% compared to a drop in U.S. employment growth to 1.5% annualized for June 2024. Single-family housing permits were up 8.6% year-over-year in Oregon and increased 19.1% in the Portland metro area, signaling favorable conditions for customer growth ahead.
Speaker Change: Turning to a few comments on the economy.
Speaker Change: Related to our gas utility service territory, Oregon's unemployment rate remains low and on par with the national average at four 1% and Jim employment growth increase in Oregon to one 6% compared to a drop in U S employment growth to one 5% annualized for June 2024.
Speaker Change: Single family housing permits were up eight 6% year over year in Oregon, and increased 19, 1% in the Portland Metro area signaling favorable conditions for customer growth ahead.
David Anderson: For June, unemployment rates in our water service territories were as low as 3%, and six of the nine counties where water utilities serve single-family building permits posted double-digit growth for the 12 months into June 2024 compared to the same period in 2023. Collectively, our gas and water utility customer base grew 1.8% over the last 12 months. Moving to an update on our gas and water rate cases, our utilities have continued to make necessary investments in safety, reliability, and technology at record levels.
Speaker Change: For June unemployment rates in our water services service territories were as low as 3%.
David Anderson: In six of the nine counties, water utility service, single family building permits posted double-digit growth for the 12 months in the June 2024 compared to the same period in 2023. Collectively, our gas and water utility customer base grew 1.8% over the last 12 months.
Speaker Change: Six of the nine counties are water utilities serve single family building permits posted double digit growth for the 12 months ended June 2024, compared to the same period in 2023.
Speaker Change: Collectively our gas and water utility customer base grew one 8% over the last 12 months.
David Anderson: For our water and wastewater utilities, we continue to find these systems need substantial investments to meet current and increasing quality standards and support customer growth. Like many other companies, we're also contending with inflationary pressures on operating expenses. These are all reasons why we decided to file rate cases for our gas utility in Oregon and a number of our water and wastewater utilities. However, we filed only after very careful consideration and with the utmost attention to the effect on customer bills. We know this is a difficult time for you.
David Anderson: Moving to an update on our gas and water rate cases, our utilities have continued to make necessary investments in safety, reliability, and technology at record levels. For our water and wastewater utilities, we continue to find these systems need substantial investments to be current and increasing quality standards and support customer growth. Like many other companies, we're also contending with inflationary pressures on operating expenses. These are all reasons why we decided to file rate cases for our gas utility in Oregon in a number of our water and wastewater. Utilities. We filed only after very careful consideration and with the utmost attention to the effect on customer bills.
Speaker Change: Moving to an update on our gas and water rate cases are utilities have continued to make necessary investments in safety reliability and technology at record levels for our water and wastewater utilities. We continue to find these systems need substantial investments to meet current and increasing quality standards and support customer growth.
Speaker Change: Like many other companies, we're also contending with inflationary pressures on operating expenses.
Speaker Change: These are all reasons, why we decided to file rate cases for our gas utility in Oregon, and a number of our water and wastewater utilities.
Speaker Change: We filed only after very careful consideration and with the utmost attention to the effect on customer bills.
David Anderson: We know this is a difficult time. Our team has done all they can to reduce cost and operate as efficiently as possible while maintaining safe and reliable systems. I'm happy to report we've worked constructively with stakeholders in these cases, and it made substantial progress. All party settlements have been filed in the majority of the dockets. Concerning the gas utility, organ general rate case in July, Northwest Natural file, then all party settlement resolving a majority of the case. That included a revenue requirement increase of $95 million that consisted of $85.4 million related to investments in the system and expenses, and $9.6 million for increased depreciation.
David Anderson: Our team has done all it can to reduce costs and operate as efficiently as possible while maintaining safe and reliable systems. I'm happy to report we've worked constructively with stakeholders in these cases and have made substantial progress. All-party settlements have been filed in the majority of the docket. In the gas utility Oregon general rate case, in July, Northwest Natural filed an all-party settlement resolving a majority of the case. That included a revenue requirement increase of $95 million that consisted of $85.4 million related to investments in the system and expenses and $9.6 million for increased depreciation.
Speaker Change: We know this is a difficult time, our team has done all they can to reduce cost and operate as efficiently as possible, while maintaining safe and reliable systems.
Speaker Change: I'm happy to report we've worked constructively with stakeholders in these cases and have made substantial progress in all.
Speaker Change: All party settlements have been filed and the majority of the dockets.
Speaker Change: <unk> the gas utility, Oregon General rate case in July Northwest Natural filed an all party settlement resolving a majority of the case that included a revenue requirement increase of $95 million that consisted of $85 $4 million related to investments in the system and expenses and $9 $6 million for <unk>.
Speaker Change: Increased depreciation the settlement also included a 50 50 capital structure in a row.
David Anderson: The settlement also included a 50-50 capital structure and ROE of 9.4% and a cost of capital that approximately 7.1%. In addition, rate base would increase $357 million since the last rate case for a total rate base of $2.11 billion. We expect an order from the Commission on the full rate case this fall with rates effective November 1. This week we filed a preliminary organ annual purchase gas adjustment, which updates rates for the projected gas cost. Gas prices have been dropping, resulting in an expected decrease of 3.4% in customer bills, which will help offset an increase in rates from the rate case.
David Anderson: The settlement also included a 50-50 capital structure, an ROE of 9.4%, and a cost of capital of approximately 7.1%. In addition, the rate base would increase $357 million since the last rate case for a total rate base of $2.11 billion. We expect an order from the Commission on the full rate case this fall, with rates effective November 1. This week, we filed a preliminary Oregon Annual Purchase Gas Adjustment, which updates rates for projected gas costs.
Speaker Change: Nine, 4% and our cost of capital of approximately seven 1%.
Speaker Change: In addition rate base would increase $357 million since the last rate case for a total rate base of $2, one 1 billion.
Speaker Change: We expect an order from the commission on the full rate case this fall with rates effective November one.
Speaker Change: This week, we filed a preliminary Oregon annual purchase gas adjustment, which updates rates for the projected gas cost.
Speaker Change: Gas prices have been dropping resulting in an expected decrease of three 4% in customer bills, which will help offset an increase in rates from the rate case.
David Anderson: Gas prices have been dropping, resulting in an expected decrease of 3.4% in customer bills, which will help offset an increase in rates from the rate case. All in all, we expect customers will pay about 2% more for their natural gas service this coming winter than they did in 2005. On an annual basis, that's about a 0.10% compounded growth rate. We've also settled several water and wastewater utility rate cases. That includes the case for our largest utilities in Arizona, with new rates expected to go into effect on November 1st, 2024.
David Anderson: All in, we expect customers will pay about 2% more for their natural gas services coming winter than they did in 2005. On an annual basis, that's about a 0.10% compounded growth rate.
Speaker Change: All in we expect customers will pay about 2% more for their natural gas services coming winter than they did in 2005.
Speaker Change: On an annual basis, that's about a 0.10% compounded growth.
Speaker Change: <unk> growth rate.
David Anderson: We've also settled several water and wastewater utility rate cases. That includes the case for our largest utilities in Arizona with new rates expected to go into effect November 1, 2024.
Speaker Change: We've also settled several water and wastewater utility rate cases that includes the case for our largest utilities in Arizona with new rates expected to go into effect on November one 2024 with that let me turn it over to Brody. Thank.
Brody Wilson: With that, let me turn it over to Brody.
Brody Wilson: With that, let me turn it over to Broding. Thank you, David, and good morning, everyone. I'll begin by discussing overall earnings drivers for 2024.
Brody Wilson: Thank you, David, and good morning everyone. I'll begin by discussing the overall earnings drivers for 2024, highlights for the second quarter, and year-to-date results, and conclude with guidance for the year. As a reminder, Northwest Natural's earnings are seasonal, with a majority of revenues and earnings generated in the first and fourth quarters during the winter heating months. Also, our segment reporting includes our natural gas distribution or NGD segment and other, which includes our interstate storage services and asset management services, Northwest Natural Water, Northwest Natural Renewables, and holding company expenses. Before I walk through the detailed second quarter results, I wanted to emphasize a couple financial themes for 2024. As you may recall, 2024 is an investment year for us that is setting the stage for future growth.
Brody Wilson: Thank you David and good morning, everyone I'll begin by discussing overall earnings drivers for 2024 highlights for the second quarter and year to date results and conclude with guidance for the year.
Brody Wilson: Highlights for the second quarter and year-to-date results and conclude with guidance for the year. As a reminder, North-West Natural earnings are seasonal with a majority of revenues and earnings generated in the first and fourth quarters during the winter heating months. Also, our segment reporting includes our natural gas distribution or NGD segment and other, which includes our interstate storage services and asset management services, North-West Natural Water, North-West Natural Renewables, and holding company expenses. Before I walk through detailed second quarter results, I wanted to emphasize a couple of financial themes for 2024. As you may remember, 2024 is an investment year for us that is setting the stage for future growth.
Brody Wilson: As a reminder, northwest Natural's earnings are seasonal with a majority of revenues and earnings generated in the first and fourth quarters during the winter heating months.
Brody Wilson: Also our segment reporting includes our natural gas distribution or <unk> segment, and other which includes our Interstate storage services and asset management services northwest natural water northwest natural renewables and holding company expenses.
Speaker Change: Before I walk through detailed second quarter results I wanted to emphasize a couple of financial themes for 2024.
Speaker Change: As you May remember 2024 is an investment year for us that is setting the stage for future growth.
Brody Wilson: While we continue to maintain strong credit ratings, a solid balance sheet, and an unchanged long-term earnings growth outlook, our earnings guidance for 2024 reflects a combination of lag related to our capital investments and inflationary pressures that we are experiencing simultaneously. To resolve the regulatory lag, we filed a gas utility organ rate case late last year. As David mentioned, we recently filed an all-party settlement and expect new rates will go into effect in November. First.
Brody Wilson: While we continue to maintain strong credit ratings, a solid balance sheet, and an unchanged long-term earnings growth outlook, our earnings guidance for 2024 reflects a combination of lag related to our capital investments and inflationary pressures that we are experiencing simultaneously. To resolve the regulatory lag, we filed a gas utility rate case late last year. As David mentioned, we recently filed an all-party settlement and expect new rates to go into effect November 1st. Now, moving to the second quarter results.
Speaker Change: While we continue to maintain strong credit ratings are solid balance sheet and an unchanged long term earnings growth outlook. Our earnings guidance for 2024 reflects a combination of lag related to our capital investments and inflationary pressures that we are experiencing simultaneously.
Speaker Change: To resolve the regulatory lag we filed a gas utility Oregon rate case late last year as David mentioned, we recently filed an all party settlement and expect new rates will go into effect November one.
Brody Wilson: Now moving to the second quarter results, we reported a net loss of $2.8 million or $0.7 per share for the second quarter of 2024, compared to net income of $1.2 million or $0.3 per share for the same period in 2023. Lower earnings at our gas utility drove consolidated results as a result of regulatory lag on investments and inflationary pressures we discussed earlier. Utility margin increased to $0.4 million primarily due to customer growth and the amortization of deferrals. Gas utility O&M decreased to $3.5 million, reflecting cost-saving measures. Utility depreciation and general taxes increased to $1.5 million.
Brody Wilson: We reported a net loss of $2.8 million, or $0.07 per share, for the second quarter of 2024 compared to a net income of $1.2 million, or $0.03 per share, for the same period in 2023. Lower earnings at our gas utility drove consolidated results as a result of regulatory lag on investments and inflationary pressures we discussed earlier. Utility margin increased $0.4 million primarily due to customer growth and the amortization of deferrals. Gas Utility O&M decreased three and a half million dollars, reflecting cost saving measures, utility depreciation, and general taxes increased two and a half million dollars.
Speaker Change: Now moving to the second quarter results, we reported a net loss of $2 $8 million or <unk> <unk> per share for the second quarter of 2024 compared to net income of $1 2 million or <unk> <unk> per share for the same period in 2023.
Speaker Change: Lower earnings at our gas utility drove consolidated results as a result of regulatory lag on investments and inflationary pressures we discussed earlier.
Speaker Change: Utility margin increased <unk> $4 million, primarily due to customer growth and the amortization of deferrals.
Speaker Change: Gas utility O&M decreased $3 $5 million, reflecting cost saving measures.
Speaker Change: Utility depreciation and general taxes increased $2 5 million other.
Brody Wilson: Other income declined $4.2 million, mainly driven by higher pension costs. Interest expense increased $4 million from incremental long-term debt financing. Our other businesses provided net income of $200,000, which was a decrease of $1.3 million compared to the same period last year, primarily due to again on settlement in 2023.
Brody Wilson: Other income declined $4.2 million, mainly driven by higher pension costs. However, interest expense increased $0.4 million from incremental long-term debt financing. Our other businesses provided net income of $200,000, which was a decrease of $1.3 million compared to the same period last year, primarily due to a gain on settlement in 2023. For the first six months of 2024, we reported net income of $61 million, or $1.60 per share, compared to net income of $72.9 million, or $2.03 for the same period in 2023.
Speaker Change: Other income declined $4 $2 million, mainly driven by higher pension costs.
Speaker Change: Interest expense increased $4 million from incremental long term debt financing.
Speaker Change: Our other businesses provided net income of $200000, which was a decrease of $1 $3 million compared to the same period last year, primarily due to a gain on settlement in 2023.
Brody Wilson: For the first six months of 2024, we reported net income of $61 million or $1.60 per share compared to net income of $72.9 million or $2.3 for the same period in 2023. Lower earnings at our gas utility drove the consolidated results with similar themes as we noted for the quarter, namely regulatory lag on investments and inflation pressures. A few more details on the gas utility results. Utility margin increased $0.9 million as a result of customer growth and the amortization of deferrals. Partially offset by the effect of warmer weather on customers that opt out of weather normalization and lower gains on gas costs.
Speaker Change: For the first six months of 2024, we reported net income of $61 million or $1 60 per share compared to net income of $72 9 million or $2 <unk> for the same period in 2023.
Brody Wilson: Lower earnings at our gas utility drove the consolidated results with similar themes as we noted for the quarter, namely regulatory lag on investments and inflation pressures. Here are a few more details on the gas utility results. Utility margin increased $0.9 million as a result of customer growth and the amortization of deferrals, partially offset by the effect of warmer weather on customers that opt out of weather normalization and lower gains on gas costs. Gas utility O&M decreased $3.8 million, reflecting lower employee benefit and contractor costs related to cost-saving measures, partially offsetting this with higher payroll and information technology costs.
Speaker Change: Lower earnings at our gas utility drove the consolidated results with similar themes as we noted for the quarter, namely regulatory lag on investments and inflation pressures.
Speaker Change: A few more details on the gas utility results.
Speaker Change: Utility margin increased <unk> $9 million as a result of customer growth and the amortization of deferrals, partially offset by the effect of warmer weather on customers that opt out of weather normalization and lower gains on gas costs.
Brody Wilson: Gas utility O&M decreased $3.8 million, reflecting lower employee benefit and contractor costs related to cost-saving measures. Partially offsetting this was higher payroll and information technology costs. Utility depreciation and general taxes increased $4.5 million due to higher property, plant, and equipment investments. Other income decreased $8 million, mainly from higher pension costs, but also lower interest income and equity at BDC. Interest expense increased $1.9 million from incremental long-term debt financing. Our other businesses reported a decrease of $2.9 million, primarily due to a gain on settlement in 2023. With the overall cost of capital increasing, we have remained disciplined in our approach to deploying capital.
Speaker Change: Gas utility O&M decreased $3 $8 million, reflecting lower employee benefit and contractor costs related to cost saving measures.
Speaker Change: Partially offsetting this was higher payroll.
Speaker Change: Information technology costs.
Brody Wilson: Utility depreciation and general taxes increased $4.5 million due to higher property, plant, and equipment investment. Other income decreased $8 million, mainly from higher pension costs, but also lower interest income and equity AFBDC. Interest expense increased $1.9 million from incremental long-term debt finance.
Speaker Change: Utility depreciation and general taxes increased $4 $5 million due to higher property plant and equipment investments.
Speaker Change: Other income decreased $8 million, mainly from higher pension cost, but also lower interest income and equity AFDC.
Speaker Change: Interest expense increased $1 9 million from incremental long term debt financing.
Brody Wilson: Our other businesses reported a decrease of $2.9 million, primarily due to a gain on settlement in 2023. With the overall cost of capital increasing, we have remained disciplined in our approach to deploying capital. For 2024, cash provided by operating activities was $246 million. We invested $200 million into the business, with the majority of the investments for safety and reliability projects in our regulated gas and water business.
Speaker Change: Our other businesses reported a decrease of $2 9 million.
Speaker Change: Primarily due to a gain on settlement in 2023.
Speaker Change: With the overall cost of capital increasing we have remained disciplined in our approach deploying capital for 2024 cash provided by operating activities was $246 million, we invested $200 million into the business with the majority of the investments for safety and reliability projects in our regulated gas.
Brody Wilson: For 2024, cash provided by operating activities was $246 million. We invested $200 million into the business, with the majority of the investments for safety and reliability projects in our regulated gas and water businesses. These were planned and included in our rate case requests. Our objective remains to keep our balance sheet strong with ample liquidity.
Speaker Change: Gas and water businesses.
Brody Wilson: These were planned and included in our rate case request. Our objective remains to keep our balance sheet strong with ample liquidity. The company reaffirmed 2024 annual earnings guidance today for net income in the range of $2.20 to $2.40 per share. Guidance assumes continued customer growth, average weather conditions, and no significant changes in prevailing regulatory policies, mechanisms, or outcomes, or significant changes in laws, legislation, or regulations. In our earnings release, we have also provided our expectations regarding the quarterly distribution of consolidated earnings. We continue to target a long-term earnings per share growth rate of 4 to 6% compounded annually from 2022 through 2027. With that, I'll turn the call back over to David. Thanks, Brody.
Speaker Change: These were planned and included in our rate case request, our objective remains to keep our balance sheet strong with ample liquidity. The company reaffirmed 2024 annual earnings guidance today for net income in the range of $2 20 to $2 40 per share.
Brody Wilson: The company reaffirmed 2024 annual earnings guidance today for net income in the range of $2.20 to $2.40 per share. Director. Guidance assumes continued customer growth, average weather conditions, and no significant changes in prevailing regulatory policies, mechanisms, or outcomes, or significant changes in laws, legislation, or regulations. In our earnings release, we have also provided our expectations regarding the quarterly distribution of consolidated earnings. We continue to target a long-term earnings per share growth rate of 4% to 6% compounded annually from 2022 through 2027.
Speaker Change: Guidance assumes continued customer growth average weather conditions and no significant changes in prevailing regulatory policies mechanisms or outcomes or significant changes in laws legislation or regulations.
Speaker Change: Our earnings release, we have also provided our expectations regarding the quarterly distribution of consolidated earnings.
Speaker Change: We continue to target a long term earnings per share growth rate of 4% to 6% compounded annually from 2022 through 2027 and with that I'll turn the call back over to David.
David Anderson: With that, I'll turn the call back over to David. Thanks, Brody. Turning to our gas utility, we continue to work on decarbonization initiatives related to renewable natural gas. Our utility RFP closed in May, with very good responses. We're currently evaluating the off-take proposals and expect to begin contracting soon. Work continues on our hydrogen pilots. As you may remember, we partnered with Modern Hydrogen to become the first North American gas utility to deliver turquoise hydrogen, which permanently sequesters carbon in solid form, resulting in cleaved hydrogen blended directly on our system. In May, more than 100 key policymakers and other stakeholders attended our unveiling ceremony to see this technology firsthand.
David: Thanks Brody.
David Anderson: Turning to our gas utility, we continue to work on decarbonization initiatives related to renewable natural gas. Our utility RFP closed in May with very good responses. We're currently evaluating the offtake proposals and expect to begin contracting soon. Work continues on our hydrogen pilots.
David: Turning to our gas utility will continue to work on decarbonization initiatives related to renewable natural gas our utility RFP closed in may with very good responses. We're currently evaluating the offtake proposals and expect to begin contracting soon.
David Anderson: As you may remember, we partnered with Modern Hydrogen to become the first North American gas utility to deliver turquoise hydrogen, which permanently sequesters carbon in solid form, resulting in clean hydrogen blended directly on our system. In May, more than 100 key policymakers and other stakeholders attended our unveiling ceremony to see this technology firsthand. And in fact, just last week, we also hosted a congressional delegation at the site so that they could see it too.
Speaker Change: Work continues on our hydrogen pilots as you may remember, we partnered with modern hydrogen to become the first north American gas utility to deliver turquoise hydrogen which permanently sequesters carbon in solid form resulting in clean hydrogen blended directly on our system.
Speaker Change: In may more than 100 key policymakers and other stakeholders attended our unveiling ceremony to see this technology firsthand and in fact, just last week. We also hosted a congressional delegation at the site so that they could see it too.
David Anderson: And in fact, just last week, we also hosted a congressional delegation at the site so that they could see it too. At the same time, we're also piloting carbon capture technology that would reduce emissions from boilers for our largest customers. We're also examining ground source heat pump systems, coupled with natural gas, backup heating.
David Anderson: At the same time, we're also piloting carbon capture technology that would reduce emissions from boilers for our largest customers. We're also examining ground source heat pump systems coupled with natural gas backup heating. We believe hybrid solutions are important to the future of energy and are excited to be at the cutting edge. As for Northwest Natural Water, we continue to execute on our growth strategy. In June, we agreed to acquire Putman Infrastructure and ICH, which will add 4,200 customers in Idaho, Oregon, and California, which will ultimately grow to 19,000 as it is built out.
Speaker Change: At the same time, we're also piloting carbon capture technology that would reduce emissions from boilers for our largest customers were also examining ground source heat pump systems, coupled with natural gas backup heating. We believe hybrid solutions are important to the future of energy and are excited to be at the cutting edge.
David Anderson: We believe hybrid solutions are important to the future of energy and are excited to be at the cutting edge.
David Anderson: Turning to Northwest Natural Water, we continue to execute on our gross strategy. In June, we agreed to require Putman infrastructure and ICH, which will add 4,200 customers in Idaho, Oregon, and California, which will ultimately grow to 19,000 as it is built out. Importantly, this acquisition provides an entry into the recycled water business. I'm very happy Tom will be joining our executive team to lead the water business. Tom's a recognized leader in the sustainable infrastructure market with over 25 years of experience investing, developing, and operating innovative water, wastewater, and recycled water systems. Most importantly, Tom shares Northwest Natural Water's core values in our commitment to customers.
David Anderson: Importantly, this acquisition provides an entry into the recycled water business. I'm very happy Tom will be joining our executive team to lead the water business. Tom's a recognized leader in the sustainable infrastructure market with over 25 years of experience investing, developing, and operating innovative water, wastewater, and recycled water systems. Most importantly, Tom shares Northwest Natural Water's core values and our commitment to customers.
Speaker Change: Turning to northwest natural water, we continue to execute on our growth strategy in June we agreed to acquire putman infrastructure and IC, H, which will add 4200 customers in Idaho, Oregon, and California, which will ultimately grow to 19000 as it is built out.
Speaker Change: Accordingly, This acquisition provides an entry into the recycled water business.
Tom: I'm very happy Tom will be joining our executive team to lead the water business. Tom is a recognized leader in the sustainable infrastructure market with over 25 years of experience investing developing and operating innovative water wastewater and recycled water systems. Most importantly, Tom shares northwest natural waters core.
Speaker Change: Values and our commitment to customers we.
David Anderson: We expect this acquisition to close soon.
Speaker Change: We expect this acquisition to close soon.
David Anderson: Moving now to an update on Northwest Natural Renewables. As you know, through that business, we're focused on providing cost-effective solutions to help a variety of sectors decarbonized using existing waste streams and renewable energy sources. Our first project is an investment in two facilities with EDL that is designed to convert landfill waste gases to renewable natural gas. Construction was completed on both facilities in 2023, and the raw gas production continues to be at the forecast levels from the landfills. Our partners have finished installing needed additional equipment, and the plants are ramping up production to be able to process all of the landfill gas.
David Anderson: We expect this acquisition to close soon. Moving now to an update on Northwest Natural Renewables. As you know, through that business, we're focused on providing cost-effective solutions to help a variety of sectors decarbonize using existing waste streams and renewable energy sources. Our first project is an investment in two facilities with EDL that are designed to convert landfill waste gases to renewable natural gas. Construction was completed on both facilities in 2023, and raw gas production continues to be at the forecasted levels from the landfills.
Speaker Change: Moving now to an update on northwest natural renewables.
Speaker Change: As you know through that business, we're focused on providing cost effective solutions to help a variety of sectors decarbonize using existing waste streams and renewable energy sources. Our first project is an investment in two facilities with <unk> that is designed to convert landfill waste gases to renewable natural gas.
David Anderson: Our partners have finished installing the needed additional equipment, and the plants are ramping up production to be able to process all of the landfill gas. I'm very pleased with its progress. EDL now expects both facilities to be online and ready to begin commercial operations later this fall. Our investment of approximately $25 million per facility will only be made at substantial completion or at our election upon reaching a specified production level. Importantly, revenues and cash flows are expected to begin promptly thereafter from long-term, primarily fixed-price offtake agreements that we have contracted with investment trade counterparties. Thanks for joining us this morning. With that, we'll open it up to questions.
Speaker Change: Construction was completed on both facilities in 2023, and the raw gas production continues to be forecasted levels from the landfills are partners have finished installing needed additional equipment and the plants are ramping up production to be able to process all of the landfill gas.
David Anderson: I'm very pleased with this progress. EDL now expects both facilities to be online and ready to begin commercial operations later this fall. Our investment of approximately $25 million per facility will only be made at substantial completion or, at our election, upon reaching specified production levels. Importantly, the revenues and cash flows are expected to begin promptly thereafter from long-term, primarily fixed-price offtake agreements that we have contracted with investment-grade counterparties.
Speaker Change: I am very pleased with its progress <unk> now expects both facilities to be online and ready to begin commercial operations later this fall or.
Speaker Change: Our investment of approximately $25 million per facility will only be made a substantial completion or at our election upon reaching specified production levels importantly, the revenues and cash flows are expected to begin promptly thereafter from long term, primarily fixed price offtake agreements that we have contracted with investment grade counterparties. Thanks for.
Unknown Executive: Thanks for joining us this morning with that. We'll open it up to questions.
Speaker Change: Joining us this morning with that we'll open it up to questions.
Unknown Executive: We will now begin our question and answer session. At the time of people like to ask a question, please press star followed by one on your telephone keypad. If any review, you elect to remove that question, please press star followed by two again to ask a question. It is star one as a reminder. If you're using a speaker phone, please remember to pick up your handset before asking a question. We'll pause briefly here as questions are registered.
Operator: We will now begin our question and answer session. At this time, if you would like to ask a question, please press the star followed by one on your telephone keypad. If for any reason you would like to remove that question, please press star followed by two. Again, to ask a question, it is star one. As a reminder, if you're using a speakerphone, please remember to pick up your handset before asking a question. We'll pause briefly here as questions are registered. Our first question comes from Chris Ellinghaus with the company Siebert William Schenck. Chris, your line is now open. Hey David, how are you?
Speaker Change: We will now begin our question and answer session. At this time, we would like to ask a question. Please press star followed by one on your telephone keypad.
Speaker Change: Any reason you would like to remove that question. Please press star followed by two.
Speaker Change: To ask a question it is star one.
Linda: Linda if you can.
Linda: Speakerphone, please pick up your handset before asking a question.
Speaker Change: Just briefly here to ask questions or registered.
Unknown Executive: Our first question comes from Chris Ellinghaus with a company Seabird William Shank.
Speaker Change: Our first question comes from Chris Lewis with the Companys Siebert Williams, Inc. Chris Your line is now open.
Chris Ellinghaus: Chris, your line is not open. Hey David, how are you?
Christopher Ellinghaus: Hey David, how are you? [inaudible] The recycled water aspect of the recent announcement, can you just talk about where you see that market going?
Speaker Change: Hey, David how are you.
Speaker Change: Okay.
David Anderson: The recycled water aspect of the recent announcement, can you just talk about where you see that market? Let me just kind of take that one if you don't mind.
Chris Lewis: The recycled water aspect of the recent announcements can you just talk about where you see that market.
David Anderson: Yeah, let me kind of take that one, if you don't mind.
Speaker Change: Well, let me, let just in kind of take that one if you don't mind.
David Anderson: Good morning, Chris. The recycled water technology, it's really think about it as waste water treatment plants that are installed and able to reuse the treated effluent, typically for irrigation purposes. What that does is it really reduces the overall water required to serve a community. That's obviously important in water-scarce areas such as California, Arizona, areas of Idaho, Central Oregon, actually a lot of the areas that our water company currently has customers and provides service. We see it as a really interesting technology and application that will help support growth and create new opportunities for us going forward.
Justin Palfreyman: Good morning, Chris. The recycled water technology, you can really think about it as wastewater treatment plants that are installed and able to reuse the treated effluent, typically for irrigation purposes. And what that does is it really reduces the overall water required to serve a community. That's obviously important in water-scarce areas such as California, Arizona, areas of Idaho, Central Oregon, actually a lot of the areas that our water company currently has customers and provides service. So we see it as a really interesting technology and application that will help support growth and create new opportunities for us going forward.
Chris: Yes, good morning, Chris.
Speaker Change: The recycled water technology, it's really think about it as wastewater treatment plants that are installed and able to reuse the treated effluent typically for irrigation purposes, and what that does is it really reduces the overall water required to serve our community. That's obviously.
Speaker Change: Important in water scarce areas, such as California, Arizona areas of Idaho, Central Oregon actually a lot of the areas that are water company currently has customers and provide service. So we see it as a really interesting technology and application that that.
Speaker Change: We will help support growth and create new opportunities for us going forward.
Christopher Ellinghaus: Do you have any other industries, like, say, geothermal, that could utilize your recycled water?
David Anderson: Do you have any other industries like, say, geothermal, that could utilize your recycled water? There are some commercial and industrial customers that put in infrastructure serves in a similar format.
Speaker Change: Do you have any other industries like say geothermal that can utilize your recycled water.
Justin Palfreyman: There are some commercial and industrial customers that Putman Infrastructure serves in a similar format. Geothermal, I don't know that we have any specific applications there, but that's something that we could look into in the future.
Speaker Change: There are some commercial and industrial customers that putting in infrastructure serves.
Speaker Change: Similar format.
David Anderson: Geothermal, I don't know if we have any specific applications there, but that's something that we could look into in the future.
Speaker Change: Thermal I don't and I don't know that we have any specific applications there, but that's something that we could look into in the future.
Christopher Ellinghaus: Okay, well, I have you. What are your thoughts on the current environment for water M&A, and do you see any opportunities to accelerate, sort of, the tenor of your growth there?
Speaker Change: Okay.
Speaker Change: While I have you.
David Anderson: What are your thoughts on the current environment for water M&A, and do you see any opportunities to accelerate the tenor of your growth there? Yeah, so the current M&A market, I would say it slowed down a little bit, and that's probably a function of the cost of capital and just the bid-asked spread, if you will, out in the market today. So we're seeing a little bit of the slowdown, but we still have a robust pipeline of acquisition opportunities. Many of them are tuck-in acquisitions around our existing service territories, but we're always looking at opportunities to do something more substantial, and we'll take that on an opportunistic basis.
Chris: Yes.
Speaker Change: Or your thoughts on the current environment for water M&A do you see any opportunities to accelerate sort of the tenor of your.
Chris: The growth there.
Justin Palfreyman: Yeah, so the current M&A market has slowed down a little bit, and that's probably a function of the cost of capital. And just the bid-ask spread, if you will, out in the market today. So we're seeing a little bit of a slowdown. But we still have a robust pipeline of acquisition opportunities, and many of them are tuck-in acquisitions around our existing service territories. But we're always looking at opportunities to do something more substantial, and we'll take that on an opportunistic basis.
Speaker Change: Yes, so the current M&A market I would say it slowed down a little bit and Thats a function of the cost of capital.
Chris: <unk>.
Chris: Just the bid ask spread if you will out in the market today, So we're seeing a little bit of a slowdown.
Chris: Still have a robust pipeline of acquisition opportunities.
Chris: Many of them are tuck in acquisitions around our existing service territories, but we're always looking at opportunities to do something.
Chris: More substantial and we'll take that on an opportunistic basis.
Christopher Ellinghaus: Okay, and maybe this is for Brody, but vis-a-vis the water business, and you guys have talked about how you see reporting that segment in the future, but is there an opportunity for you guys in terms of expediting your water reporting in so far as you know valuation for water utilities is materially higher? So there could be a, you know, a material benefit to the stock when that reporting takes place. So have you guys thought about that aspect?
Brody Wilson: Okay. And maybe this is for Brody, but these are the, you know, the water business. And you guys have talked about how you see, you know, reporting that segment in the future. But is there an opportunity for you guys in terms of expediting your water reporting in so far as, you know, valuations for water utilities? This is materially higher, so there could be a, you know, a material benefit to the stock of when that reporting takes place. So if you guys thought about that aspect. Yeah, thanks for a question, Chris. I think we're always considering all of our disclosures and what's valuable for our investors.
Chris: Okay, and maybe this is for Brody, but.
Speaker Change: The water business and you guys talked about.
Brody Wilson: How you see.
Brody Wilson: Reporting that segment in the future.
Speaker Change: Is there an opportunity for you guys in terms of expediting.
Val: Water reporting and so far as Val.
Chris: Evaluation for water utilities.
Chris: Materially higher so it could be.
Chris: A material benefit to the stock of when that reporting takes place. So have you guys thought about that aspect.
Brody Wilson: Yeah, thanks for the question, Chris. I think we're always considering all of our disclosures and what's valuable for our investors. And so we'll look at that both from a compliance requirement with the SEC but also on what we feel is best for our investors to receive. So I would say, you know, yes, we're always looking at that. And, you know, as this business grows, and as you know, for us on the water side, this is also an investment year, we've got a number of great cases ongoing, and we've actually reached settlements on a number of those rate cases, setting us up for future growth in the water business. So, very pleased there. And we are always looking at these disclosures and what we plan to do in the future. Yeah, we hear you, Chris.
Chris: Yes. Thanks for the question, Chris I think we're always considering all of our disclosures and what's valuable for our investors and so we'll look at that both from.
Brody Wilson: And so what we'll look at that both from a compliance requirement with the SEC, but then also on what we feel like is best for our investors to receive. So I would say, you know, yes, we're always looking at that. And, you know, as this business grows. And, as you know, for us on the water side, this is also an investment year. We've got a number of rate cases ongoing. And we've actually reached settlements on a number of those rate cases, setting us up for feature growth in the water business. So very pleased there. And we are always looking at that disclosures and what we plan to do in the future.
Chris: Compliance requirement with the SEC, but then also on what we feel like.
Chris: First for our investors to receive so I would say, yes, we're always looking at that.
Chris: This business grows and as you know for us on the water side. This is also an investment year. We've got a number of rate cases ongoing and we've actually reached settlement on a number of those rate cases, setting us up for future growth in the water business. So very pleased there and we are always looking at that disclosure.
Chris: And what we plan to do in the future, Yes, we hear you Chris that will drive us.
Brody Wilson: Yeah, we hear you, Chris, and that will drive us to make a decision. We absolutely understand the valuation impacts.
David Anderson: Chris, and that will drive us to make a decision. We absolutely understand the evaluation impacts.
Chris Lewis: To make a decision we absolutely understand the valuation impacts.
Christopher Ellinghaus: Okay, one last question, given that this is a lag year. It's a difficult year. When you get a final order in Oregon, have you thought about maybe giving some guidance at that point, maybe what your interpretation of the earnings power of that case is or just some 2025 guidance on the earlier side.
Unknown Executive: Okay.
Chris Lewis: Okay. One last question.
David Anderson: One last question. You know, given that this is a, you know, this is a lag here, it's a difficult year. When you get a final order in Oregon, have you thought about, you know, maybe given some guidance at that point. Maybe what your interpretation of the earnings power of that case is or just in 2025 guidance on the earlier side. We will think about that. We first thing to do is get through the case, right? I mean, the good news is we've got a settlement, but it still needs to be approved. So I don't want to get out too far ahead of us, but we will consider that, Chris.
Speaker Change: Given that this is.
Speaker Change: Yes. This is a lag here, it's a difficult year when you get a final order.
Oregon: And Oregon have you thought about.
Chris: Maybe given some guidance at that point, maybe what youre.
Speaker Change: Interpretation of the earnings power of that cases, or just 2025 guidance on the earlier side.
David Anderson: We will think about that. The first thing to do is get through the case, right? I mean, the good news is we've got a settlement, but it still needs to be approved. So I don't want to get too far ahead of us, but we will consider that, Chris. Okay, thanks for the details.
Speaker Change: We will think about that.
Chris Lewis: First thing to do is get through the case right I mean, the good news is we've got we've got a settlement, but it still needs to be approved so I don't want to get too far ahead of us, but we will we will consider that Chris.
Christopher Ellinghaus: Ok, thanks for the details guys; I appreciate it.
Unknown Executive: Okay.
Unknown Executive: Thanks for the details, guys.
Chris Lewis: Okay. Thanks for the details guys I appreciate it.
Unknown Executive: Appreciate it.
Unknown Executive: Next question comes from Selman, echo with a company, see full cylinder.
Operator: My next question comes from Selman Akyol of the company C4. Selman, your line is now open.
Speaker Change: Our next question comes from Selman <unk> with a company Stifel. Finland. Your line is now open.
Unknown Executive: The line is not open. Okay.
Tyler Rakers: Hi guys, this is Tyler Rakers on behalf of Selman. On the Putman water acquisition, you alluded to these growth opportunities, and I'm just sort of wondering what sort of CapEx looks like it's going into that. And then whether it's more looking at growing the geographic footprint, whether it be California, or if it's more just entering more into the wastewater stuff. About to get your thoughts.
Tyler Rakers: This is Tyler Rakers on for Selman. On the Putman water acquisition, you alluded to these growth opportunities that I'm just sort of wondering what sort of capex looks like it's going into that. And then whether it's more looking at growing the geographic footprint, whether it be California or if it's more just entering more into the wastewater stuff, but to get your thoughts. Yeah, good questions, Tyler. So there are a few different aspects of that. In terms of the capex, there's certainly a long-term capital investment opportunity to support growth, but we are acquiring existing assets that serve an existing customer base.
Chris Lewis: Hi, guys. This is Tyler <unk> on for Selman.
Speaker Change: The <unk> water acquisition.
Tyler: You alluded to these growth opportunities and I'm, just sort of wondering what sort of capex looks like it's going into that and then whether it's more looking at growing the geographic footprint, whether it be California, or if it's more just entering more into the wastewater stuff.
Speaker Change: Would love to get your thoughts.
Unknown Executive: Yeah, good questions, Tyler. So there are a few different aspects to that. In terms of the CapEx, there's certainly a long-term capital investment opportunity to support growth, but we are acquiring existing assets that serve an existing customer base. So there are a number of different communities, individual utilities that Department of Infrastructure owns, and some of those many of those communities are only partly built out. So picture the treatment plant and the underground pipe infrastructure that's in the ground ready to serve future homes that are in rapidly growing areas, you know, outside of Boise, Idaho, for example, and down in the San Diego market.
Chris: Yes. Good question Tyler So there are a.
Speaker Change: A few different aspects of that.
Speaker Change: In terms of the Capex. There is certainly a long term capital investment opportunity to support growth, but we are acquiring existing assets that serve an existing customer base. So.
David Anderson: So there's a number of different communities, individual utilities that pump an infrastructure owns. And some of those, many of those communities are only partly built out, so picture the treatment plant and the underground pipe infrastructure that's in the ground ready to serve future homes that are rapidly growing areas, you know, outside of Boise, Idaho, for example, and down in the San Diego market. And so there's long-term growth potential there and capital that already has been invested, but there's also future opportunities, and we see future opportunities in the existing service territories that they serve, but also opportunities to expand beyond that.
Speaker Change: There is a number of different communities individual utilities that public infrastructure owns.
Speaker Change: And.
Tyler: Some of those many of those communities are only partly built out so picture that the treatment plant and the underground pipe infrastructure.
Unknown Executive: And so there's long-term growth potential there and capital that has already been invested, but there are also future opportunities. And we see future opportunities in the existing service territories that they serve, but also opportunities to expand beyond that.
Tyler: <unk>.
Tyler: In the ground ready to serve future homes that are.
Tyler: Rapidly growing areas outside of Boise, Idaho for example, down in the San Diego market and so.
Speaker Change: There is long term growth potential there and capital that already has been invested but theres also future opportunities and we see future opportunities in the existing.
Speaker Change: Yes.
Tyler: Service territories that they serve but also opportunities to expand beyond that.
Unknown Executive: Great. Thank you for that.
Tyler Rakers: Great, thank you for that. And then on hydrogen, you I know you mentioned in the opening remarks about modern Just with the turquoise hydrogen, are you seeing that as sort of the path forward with that side of the business? Are you still looking at other forms of hydrogen, whether it be blue or green or whatever it may be. Yeah.
Speaker Change: Great. Thank you for that and then on the on the hydrogen I know you.
David Anderson: And then on the hydrogen, I know you mentioned in the opening remarks about modern, just with the turquoise hydrogen. Are you seeing that as sort of the path forward with that side of the business, or are you still looking at other forms of? Yeah, just hydrogen, whether it be blue or green or whatever it may be. Yeah, if this is David, we would look at all of them. And what we were just trying to point out, what's really unique about this opportunity is that these units can go directly on the distribution system in various places.
Speaker Change: Mentioned in the opening remarks about modern.
Speaker Change: Just with the turquoise hydrogen or are you seeing that is sort of the path forward with that side of the business or are you still looking at other forms of.
Speaker Change: Yeah, just hydrogen whether it be blue or green or whatever it may be.
David Anderson: Yeah, this is David. We would look at all of them. What we were just trying to point out, what's really unique about this opportunity, is that these units can go directly on the distribution system in various places. And so you don't have to have a large hydrogen hub to make the hydrogen. So we are for all of the above on hydrogen, and I think this just shows you one more example of how R&D dollars in technology are coming to the gas business to help it decarbonize.
Speaker Change: Yeah. This is David we would look at all of them. What we were just trying to point out that what's really unique about this opportunity is that these units can go directly on the distribution system in various places and so you don't have to have a large hydrogen hub.
David Anderson: And so you don't have to have a large hydrogen hub to make the hydrogen. So we are for all of the above on hydrogen. And I think this just shows you one more example of how R&D dollars and technology is coming to the gas business to help it decarbonize.
Speaker Change: To make the hydrogen so we are for all of the above on hydrogen and I think this just shows you one more example of how.
Speaker Change: R&D dollars in technology has come into the gas business to help it decarbonize.
Speaker Change: Okay.
Unknown Executive: Got it.
Tyler Rakers: Got it. And then on the warmer weather you guys have mentioned, your guidance expects more normal weather. I'm just wondering, in terms of uh, sort of sensitivity to warmer weather, how that affects future
Speaker Change: Got it and then on the regarding the warmer weather you guys had mentioned.
David Anderson: And then on the regarding the warmer weather, you guys have mentioned, pull your guidance expects more normal weather. I'm just wondering, in terms of sort of sensitivity to warmer weather, how that affects future earnings. Yeah, thanks for the question. When we referenced the warmer weather, we did experience warmer than normal weather in the first quarter. Generally for us, the eating quarters, first and fourth quarters, are the largest impacted quarters by weather. So I think for the remainder of the year, we are forecasting and assuming normal weather. That's what we would always do. And we've worked really hard on earnings year to date, given the regulatory lag and inflation pressures to help offset the revenues with some own savings.
Speaker Change: Full year guidance expected.
Speaker Change: More normal weather I'm, just wondering in terms of.
Speaker Change: Sort of sensitivity to warmer weather, how that effects future earnings.
Brody Wilson: Yeah, thanks for the question. When we referenced the warmer weather, we did experience warmer than normal weather in the first quarter. Generally, for us, the heating quarters, the first and fourth quarters, are the largest impacted quarters by weather. So I think for the remainder of the year, we are forecasting and assuming normal weather. That's what we would, and we would always do. And we've worked really hard on earnings year to date, given the regulatory lag and inflation pressures to help offset those with some O&M savings.
Speaker Change: Yes. Thanks for the question when we referenced the warmer weather, we did experienced warmer than normal weather in the first quarter generally for us the heating quarters first and fourth quarters are the largest impacted quarters by weather.
Speaker Change: I think for the remainder of the year, we are forecasting and assuming normal weather. That's what we would we would always do and we've worked really hard on earnings year to date, given the regulatory lag and deflation pressures to help offset those with some O&M savings.
Brody Wilson: And then, you know, for the rest of the year, again, we're just assuming normal weather for the remainder of the year. And Tyler, just a reminder about weather normalization. Most of our load is weather normalized in Oregon, and some customers have an option to opt out, so then our Washington load doesn't have it, but well over 80% of our load is covered by weather normalization. So whether it can have some impact, it's more of a minor side effect overall.
David Anderson: And then, you know, for the rest of the year, again, we're just we're assuming a normal weather for the remainder of the year. And Tyler, just a reminder on weather normalization; most of our load is weather normalized in Oregon. And some customers have an option to opt out, and then our Washington load doesn't have it, but well over 80% of our load is covered by weather normalization. So weather can have some impact. It's more of a minor side of the impact overall.
Tyler Rakers: Got it. Thank you, guys.
Speaker Change: And then for the rest of the year again, we're just we're assuming normal weather for the remainder of the year and Tyler just a reminder, on weather normalization most of our load as weather normalized in Oregon.
Tyler: Some customers have an option to opt out and then our Washington load doesn't have it but well over 80% of our load is covered by weather normalization. So.
Tyler: Whether it can have some impact it's more of a minor side of the impact overall.
Unknown Executive: Got it. Thank you, guys. Thank you.
Tyler: Got it thank you guys.
Speaker Change: Thank you.
Unknown Executive: At this time, there are no other questions registered in Q.
Operator: At this time, there are no other questions registered in queue, so I'd like to pass the conference back over to David Anderson for closing remarks.
Speaker Change: At this time there are no. Other questions you might have said in queue. So I'd like to pass the conference back over to David Anderson for closing remarks.
David Anderson: So I'd like to pass the conference back over to David Anderson for close remarks. Well, thank you, everybody, for joining us. If you have any questions, please get a hold of Nicky, and we'll be happy to follow up in any way we can to help you up.
David Anderson: Well, thank you everybody for joining us. If you have any questions, please get in touch with Nikki, and we'll be happy to follow up in any way we can to help you out. Everybody have a great weekend. Thank you.
David Anderson: Well. Thank you everybody for joining us if you have any questions. Please get a hold of Nicky and we'll be happy to follow up in any way. We can to help you up everybody have a great weekend. Thank you.
Unknown Executive: Everybody have a great weekend. Thank you.
Unknown Executive: That concludes today's conference call. Thank you for your participation. And enjoy the rest of your day.
Operator: That concludes today's conference call. Thank you for your participation, and enjoy the rest of your day.
Speaker Change: That concludes today's conference call. Thank you for your participation and enjoy the rest of your day.