Q2 2024 IDACORP Inc Earnings Call

Operator: Welcome to Idacorp's second quarter 2024 earnings conference call. Today's call is being recorded, and our webcast is live. A replay will be available later today and for the next 12 months on the Idacorp website. If you need assistance at any time during the presentation today, please press star zero on your phone. I would now like to turn the call over to Amy Shaw, Vice President of Finance and Compliance. Thank you. Good afternoon, everyone.

Welcome to Ita Corp, second quarter 'twenty 'twenty four earnings conference call. Today's call is being recorded in our webcast is live a replay will be available later today and for the next 12 months on the <unk> corporate website.

If you need assistance at any time during the presentation today. Please press star zero on your phone.

Amy <unk>: I would now like to turn the call over to Amy <unk>, Vice President of finance compliance and risk.

Amy Shaw: We appreciate you joining our call. This morning, we issued and posted to Idacorp's website our second quarter 2024 earnings release and the Form 10-Q. The slides we will reference during today's call are available on Idacorp's website. As noted on slide two, our discussion today includes forward-looking statements, including earnings guidance, spending forecasts, and regulatory plans that reflect our current views on what the future holds, and those are all subject to risks and uncertainties. These risks and uncertainties may cause actual results to differ materially from statements made today, and we caution against placing undue reliance on any forward-looking statements.

Amy <unk>: Thank you good afternoon, everyone. We appreciate you joining our call. This morning, we issued and posted to <unk> website, our second quarter 2024 earnings release and the Form 10-Q. The slides we will reference during today's call are available on <unk> website.

Speaker Change: As noted on slide two our discussion today includes forward looking statements, including earnings guidance spending forecast and regulatory plans that reflect our current views on what the future holds.

Speaker Change: And those are all subject to risks and uncertainties. These risks and uncertainties may cause actual results to differ differ materially from statements made today and we caution against placing undue reliance on any forward looking statements a cautionary note on forward looking statements and various risk factors are included in more detail for your review.

Amy Shaw: Our cautionary note on forward-looking statements and various risk factors are included in more detail for your review in our filings with the Securities and Exchange Commission. As shown on slide three, we have Lisa Grove, Idacorp's President and CEO, and Brian Buckham, Idacorp's Senior Vice President, CFO, and Treasurer, presenting today. We also have other members of our management team available for a Q&A session following our prepared remarks. Slide four shows a summary of our financial results.

Speaker Change: And our filings with the Securities and Exchange Commission as shown on slide three we have Lisa grow adequate as president and CEO and Brian <unk> Senior Vice President CFO and treasurer presenting today. We also have other members of our management team available for Q&A session. Following our prepared remarks slide four shows a summary of our financial results.

Amy Shaw: Idacorp's second quarter 2024 diluted earnings per share were 171 compared with 135 for last year's second quarter. In the second quarter of this year, we recorded 7.5 million of additional tax credit amortization under the Idaho regulatory stipulation, compared to 3.75 million in the second quarter of last year. For the first half of the year, earnings per diluted share were 267 compared with 246 during the first half of last

Speaker Change: <unk> second quarter 2024 diluted earnings per share were $1 71, compared with $1 35 for last year's second quarter in the second quarter of this year, we recorded $7 5 million of additional tax credit amortization under the Idaho regulatory stipulation compared to $3 $75 million in the second quarter of last year.

Speaker Change: The first half of the year earnings per diluted share were $2 67, compared with 246 during the first half of last year. Those results include additional tax credit amortization of $20 million for the first half of 2024 compared to $7 5 million. During the first half of last year today, we updated certain key metrics and guidance for 2020.

Amy Shaw: Those results include additional tax credit amortization of 20 million for the first half of 2024 compared to 7.5 million during the first half of last year. Today, we updated certain key metrics and guidance for 2024. We raised the lower end of our previously reported full year 2024 earnings guidance by 5 cents to the range of 530 to 545 per diluted share. We also improved the top end of our expectation of additional tax credits Idaho Power will use to support earnings at the 9.12% return on equity in the Idaho jurisdiction to a range of 35 to 50 million. Previously, the top end of that range was 60 million.

Speaker Change: We raised the lower end of our previously reported full year 2020 core earnings guidance by <unk>.

Speaker Change: So the range of $5 30 to $5 45 per diluted share. We also improves the top end of our expectation of additional tax credits, Idaho power will use to support earnings at the 91, 2% return on equity in the Idaho jurisdiction to a range of $35 million to $50 million previously the top end of that range of $60 million, we're pleased to see.

Amy Shaw: We're pleased to see our strong operating performance reduce our estimate on tax credit usage. These estimates assume historically normal weather conditions and normal power supply expenses for the remainder of the year. Now, I'll turn the call over to Lisa. Thank you, Amy.

Speaker Change: Our strong operating performance reduce our estimate on tax credit usage. These estimates assume historically normal weather conditions and normal power supply expenses for the remainder of the year now I will turn the call over to Lisa.

Lisa: Thank you Amy and thanks to everyone joining us today.

Lisa Grow: And thanks to everyone joining us today. I'll start off with some highlights. We had strong financial results during the second quarter driven by continued customer growth, higher than expected customer usage, and the revenue benefits of our January 1 rate changes in our Idaho jurisdiction. We've had an exceptionally hot summer so far, especially during the last part of June and most of July, setting us up for a strong third quarter. As Amy mentioned, this allowed us to raise the lower end of our earnings guidance range and improve the top end of our ADITC guidance range for this year.

Lisa: Start off with some highlights we had strong financial results during the second quarter, driven by continued customer growth higher than expected customer usage and the revenue benefits of our January one rate changes in our Idaho jurisdiction.

Lisa: We've had an exceptionally hot summer so far, especially during the last part of June and most of July setting us up for a strong third quarter.

Lisa: Amy mentioned this allowed us to raise the lower end of our earnings guidance range and improved the top end of our 80 ITC guidance range for this year I'm also excited to announce that we hit a record peak load of 3793 megawatts on July 22nd and in fact broke the prior record for three consecutive hours that day.

Lisa Grow: I'm also excited to announce that we hit a record peak load of 3,793 megawatts on July 22nd and, in fact, broke the prior record for three consecutive hours that day. Next, I want to talk about four things.

Lisa: Hey.

Speaker Change: Next I want to talk about four things customer.

Lisa Grow: Customer growth, our regulatory filings, the status of major projects, and how we're serving new record peak loads. We continue to see robust customer growth and economic expansion across Idaho Power's service area. As shown on slide 5, our customer base has grown 2.6% since last year's second quarter and 2.8% for residential customers. Moody's is forecasting robust GDP growth in our area of 4.3% in 2024 and 3.8% in 2025, outperforming national trends.

Speaker Change: Customer growth, our regular regulatory filings the status of major projects and how we're serving new record peak load.

Speaker Change: We continue to see robust customer growth and economic expansion across Idaho power service area.

Speaker Change: On slide five our customer base has grown two 6% since last year's second quarter and two 8% for residential customers.

Speaker Change: Moody's is forecasting robust GDP growth in our area up four 3% in 2024, and three 8% in 2025 outperforming national trends.

Lisa Grow: We see increasing interest from projects evaluating the Idaho Power Service Area. Current and prospective projects are coming from a variety of industries, including manufacturing, food processing, and, of course, data centers, and they are exploring both rural and urban sites. For energy-intensive projects, Idaho Power has its potential customers invest in studies to ensure we can provide an accurate cost estimate and timeline to serve their needs. So we have a couple of those studies in the process now.

Speaker Change: We see increasing interest from projects evaluating Idaho power service area.

Speaker Change: Actual and prospective projects are coming from a variety of industries, including manufacturing food processing and of core data centers and they are exploring both rural and urban sites for.

Speaker Change: For energy intensive projects, Idaho power has a has it as potential customers invest in studies to ensure we can provide an accurate cost estimate and timeline to serve their needs.

Speaker Change: So we have a couple of those studies in process now.

Lisa Grow: Serving that growing load requires infrastructure, and we continue to be ahead of our construction schedules to support two of our largest customer projects, the Meta Data Center in CUNA and the Micron Expansion in Boise. Of note, the first transformer for the new 15-acre chip substation being built for Micron arrived at the end of June.

Speaker Change: Serving that growing load required infrastructure and we continue to be ahead of our construction schedules to support two of our largest customer projects. The mega datacenter in kuna in the micron expansion in Boise.

Speaker Change: Note the first transformer for the new 15 acre chip substation being built for Micron arrived at the end of June. We also recently joined Lamb Weston and celebrating their successful completion of a $415 million expansion at its facility in American fall, which made it one of the largest frozen potato processing facilities in the <unk>.

Lisa Grow: We also recently joined Lamb Weston in celebrating the successful completion of a $415 million expansion at its facility in American Falls, which made it one of the largest frozen potato processing facilities in the world. As noted on slide 6, our regulatory filings in Idaho and Oregon continue to move forward. In our Oregon general rate case, we reached a settlement that, if approved, would result in an overall rate increase of $6.7 million, or around 12%, effective this October.

Speaker Change: World.

As noted on slide six our regulatory filings in Idaho, and Oregon continue to move forward.

Speaker Change: In our Oregon General rate case, we reached a settlement that if approved would result in an overall rate increase of $6 $7 million or around 12% effective this October.

Lisa Grow: The main driver in that case is the significant investment we've made in the grid to serve our customers' growing energy needs since our last Oregon General Rate case in 2011. In Idaho, we've requested an increase of $99 million, or 7.3%, through a limited scope case that focuses on recovering only the infrastructure investments and labor expenses not included in our last general rate case. The limited scope case is in the early stages, and we're awaiting the procedural schedule. We suspect settlement procedures or proceedings could start in late September or early October.

Speaker Change: The main driver in that case is the significant investment we've made in the grid to serve our customers growing energy needs since our last Oregon General rate case in 2011.

In Idaho, we requested an increase of $99 million or seven 3% through a limited scope case that focuses on recovering only the infrastructure investments in labor expenses not included in our last general rate case.

Speaker Change: The limited scope cases in the early stages and we're awaiting the procedural schedule.

Speaker Change: We suspect settlement procedures are proceeding could start in late September or early October.

Lisa Grow: We're working hard to acquire new resources to meet current and future demand. Turning to slide 7, as part of our RFP process, we selected a 200-megawatt battery storage system to be owned by Idaho Power. We're also negotiating for additional resources to come online in summer 2026. For 2027 capacity and energy deficits, we're still working through the shortlist and negotiating with bidders. As we look beyond 2027, we've initiated an all-source RFP for resource needs in 2028 or later. We believe we'll need more dispatchable resources in the future. It continues to be an all-hands-on-deck effort. Transmission remains key to meeting demand, improving reliability, and optimizing the movement of energy in the West.

Speaker Change: We're working hard to acquire new resources to meet current and future demand turning to slide seven as part of our RFP process. We selected a 200 megawatt battery storage system to be owned by Idaho power.

Speaker Change: We're also negotiating for additional resources to come online in summer 2026.

Speaker Change: For 2027 capacity and energy deficits were still working through the short list and negotiating with bidders.

Speaker Change: As we look beyond 2027, we've initiated an all source RFP for resource needs in 2028 were later.

Speaker Change: We believe we will need more dispatch will resources in the future.

Speaker Change: It continues to be an all hands on deck effort.

Speaker Change: Transmission remains key to meeting demand improving reliability and optimizing the movement of energy in the west.

Lisa Grow: As I mentioned during our last call, delays in the final stages of permitting on the Boardman to Hemingway project have likely pushed the in-service date to no earlier than 2027. We're disappointed in the delays, of course, but we're working through the process. On Gateway West, our second major transmission line project, we're continuing to work with our partner Pacificor on the timing and configuration of that line and hope to get started on our segment soon.

As I mentioned during our last call delays in the final stages of permitting on the Boardman to Hemingway project of likely pushed it pushed the in service date to no earlier than 2027.

Speaker Change: We're disappointed in the delays of course, but we're working through the process.

Speaker Change: On Gateway West our second major transmission line project, we're continuing to work with our partner Pacific <unk> on the timing and configuration of that line and hope to get started on our segment soon.

Lisa Grow: We're also in discussions with the developer of the Southwest Intertide Project, a third major transmission line, which would add capacity to the Desert Southwest. In addition to these transmission projects, we plan to convert our remaining coal-fired units to natural gas, which reduces the carbon emissions of those units by about half but maintains their generating capacity. We've already successfully converted two units at the Jim Bridger plant, which have been helping us serve peak load during this summer heat wave.

Speaker Change: Also in discussions with the developer of the southwest Intertype project, a third major transmission line, which would add capacity to the desert southwest.

Speaker Change: In addition to these transmission project, we plan to convert our remaining coal fire units to natural gas, which reduces the carbon emissions of those units by about half, but maintains theyre generating capacity.

Speaker Change: We have already successfully converted two units at the Jim Bridger plant, which have been helping us serve peak load during the summer heat waves.

Lisa Grow: This is a low-cost solution that reduces carbon emissions while keeping dispatchable energy resources available, and we plan to convert our remaining coal-fired units at Bridger and Balmy over the next few years. In June, we signed an agreement with Nevada Energy, NV Energy, to convert the two units at the North Balmy plant to natural gas by the end of 2025.

Speaker Change: This is a low cost solution that reduces carbon emissions, while keeping dispatch will energy resources available and we plan to convert our remaining coal fired units at Bridger and balmy over the next few years in June we signed an agreement with Nevada energy and the energy to convert the two the two units at the North Valley plant to natural gas.

Speaker Change: By the end of 2025.

Lisa Grow: Our hydropower outlook remains strong thanks to a good water supply. We have almost all of our hydro units available because of the multi-year efforts we've made to refurbish our hydro fleet. Another growing piece of our resource portfolio is battery storage. The 100-megawatt Franklin Solar Project in southern Idaho came online in June, accompanied by 60 megawatts of company-owned batteries that came online in July.

Speaker Change: Our hydropower outlook remains strong thanks to a good water supply we have almost all of our hydro units available because of the multi year efforts, we've made to refurbish our hydro fleet.

Speaker Change: Another growing piece of our resource portfolio is battery storage. The 100 megawatt Franklin Solar project in Southern Idaho came online in June accompanied by 60 megawatts of company owned batteries that came online in July.

Lisa Grow: We also have 36 megawatts of batteries at the Hemingway Station that are scheduled to come online in August. These batteries are instrumental in improving the reliability and resilience of our system and meeting increasing load demand. The wildfire season has been very active in the West, including within our own service areas. Fires are not a new phenomenon, and for many years, we've focused on increased investments in system resiliency and mitigation efforts. We've done a lot to harden our system. However, fires can still cause outages and require infrastructure replacement.

Speaker Change: We also have 36 megawatts of batteries at the Hemingway stations that are scheduled to come online in August.

Speaker Change: These batteries are instrumental in improving the reliability and resilience of our system and meeting increasing low demand.

Speaker Change: Wildfire season has been very active in the west including within our own service area.

Speaker Change: Buyers are not a new phenomenon and for many years, we focused on increased investments in system resiliency and mitigation efforts we.

Speaker Change: We've done a lot to harden our system, however, fires can still cause outages and required infrastructure replacement.

Lisa Grow: Working with first responders, we've been able to keep our community safe. I'm so impressed by our employees across our company for their dedication and ability to work through the many challenges that accompany wildfires. They've been quick to safely replace poles and restore service to our customers.

Speaker Change: Working with first responders, we have been able to keep our community safe I'm. So impressed by our employees across our company for their dedication and ability to work through the many challenges that accompany wildfires.

Speaker Change: They have been quick to safely replace poles and restore service to our customers.

Lisa Grow: In addition, I want to thank the firefighters and our public safety partners for the hard work they are doing to contain these fires. We've had a public safety power shutoff plan for several years now. We used it for the first time this year when rare 60 mile per hour winds briefly came across the Boise Front Range and a few other areas. I'll close with another look at the weather, which has been some of the hottest on record for much of Idaho Power's service area. Temperatures in and around Boise have been above 100 degrees for most of July, and they are continuing into August.

Speaker Change: In addition, I want to thank the firefighters and our public safety partners for the hard work they are doing to contain these fires.

Speaker Change: We've had a public safety power shutoff plan for several years now we use it for the first time this year when rare 60 mile per hour winds briefly came across the Boise front range and a few other areas, we proactively de energized our lines in certain areas following public communications and patrol them as quickly as possible after the storm.

Speaker Change: Pass through our protocols worked as planned and most customer comments were supportive of our proactive approach.

Speaker Change: I'll close with another look at the weather, which is then some of the hottest on record for most much of Idaho power service area temperatures in and around Boise have been above 100 degrees for most of July and they are continuing into August.

Brian Buckham: Our system reliability has been strong despite the heat wave and peak loads. And with that, I will turn the time over to Brian. Idacorp's net income increased almost $21 million for the second quarter compared with the second quarter of last year. I'll attribute that increase primarily to three different things. One was higher than expected usage per customer across all of our customer classes. The second one was continued customer growth, and the third was higher revenue from rate changes that went into effect at the start of this year. Typically, the third quarter is a more significant contributor in this area, given the outsized volumes of sales that we usually see in the third quarter.

Speaker Change: Our system reliability has been strong despite the heat wave and peak loads I again want to express how much I appreciate our amazing employees for the work they are doing to safely serve our customers in these challenging conditions and with that I will turn the time over to Brian.

Brian Buckham: But it was also a large contributor to this second quarter's results this year. Next up, Lisa talked about customer growth, and that growth increased operating income by $5.1 million in the second quarter this year. Meanwhile, usage per retail customer increased operating income by $6.2 million in the second quarter.

Brian: Thanks, Lisa and hi, everyone. Thanks for tuning in today, we're glad you're here.

Brian: On slide eight with a reconciliation of the second quarter's results.

Brian: I had a corporate net income increased almost $21 million for the second quarter compared with the second quarter of last year I'll attribute that increase primarily to three different things one was higher than expected usage per customer across all of our customer classes. The second one was continued customer growth and the third was higher revenue from rate changes that went into effect at the start.

Brian: This year.

Brian: The net increase in retail revenues per megawatt hour that you see in the table increased operating income by nearly $20 million in the second quarter of this year now lets due mostly to the increase in base rates from the Idaho General rate case settlement, which was effective at the beginning of this year. It was a notable improvement in this line over what we saw in the first quarter of this year, which makes sense.

Brian: When much of our revenue recoveries from volumetric rates typically the third quarter as the more significant contributor in this area given the outsized volumes of sales that we usually see in the third quarter, but it was also a large contributor in the second quarter's results this year.

Brian: Next up Lisa already talked about customer growth and that growth increased operating income by $5 $1 million in the second quarter. This year.

Lisa: You search for a retail customer increased operating income by $6 $2 million in the second quarter. While there was an increase in usage per customer for all retail customer classes usage for irrigation customer increased most significantly 17% higher year to date than last year as higher temperatures and the timing of precipitation compared with last year's more mom.

Brian Buckham: While there was an increase in usage per customer for all retail customer classes, usage per irrigation customer increased most significantly, 17% higher year-to-date than last year, as higher temperatures and the timing of precipitation compared with last year's more moderate second quarter led our irrigation customers to run irrigation pumps more frequently. In the second quarter, we saw an increase in cooling degree days of about 45% compared to normal. And those same high temperatures and lack of precipitation we saw for much of June continued through almost the entire month of July.

Brian: Second quarter led to our irrigation customers to run irrigation pumps more frequently.

Brian: In the second quarter, we saw an increase in cooling degree days of about 45% compared to normal and those same high temperatures and lack of precipitation. We saw for much of June continues through almost the entire month of July.

Speaker Change: Transmission Wheeling related revenues net of power cost adjustment impacts decreased $2 $5 million on a relative basis. Despite a volume increase we expected. This change a result of the terms of the settlement stipulation from our 2023, Idaho General rate case, we now track revenue from the financial settlement of transmission line losses and the power.

Brian Buckham: We expected this change as a result of the terms of the settlement stipulation from our 2023 Idaho general rate case. We now track revenue from the financial settlement of transmission line losses in the power cost adjustment mechanism, making it subject to sharing with our customers. This resulted in a much smaller overall contribution of transmission revenues to net income compared with the second quarter of last year.

Speaker Change: Cost adjustment mechanism, making it subject to sharing with our customers and this resulted in a much smaller overall contribution of transmission revenues and net income compared with the second quarter of last year.

Brian Buckham: Total other O&M expenses increased $13.8 million in the second quarter this year, which was not a surprise because most of that increase related to the amortization of around $4 million of increased pension-related expenses and $8 million of increased wildfire mitigation program and related insurance expenses. That was all per the Idaho General Rate Case Settlement. Both of these increases in expenses were mostly offset by increases in retail revenues because more costs are now recovered in base rates from the 2023 Idaho General Rate Case Settlement.

Speaker Change: Total other O&M expenses increased $13 $8 million in the second quarter of this year again, not a surprise because most of that increase related to amortization of around $4 million of increased pension related expenses and $8 million of increased wildfire mitigation program and related insurance expenses.

Speaker Change: All per the Idaho general rate case settlement.

Speaker Change: Both of these increases in expenses were mostly offset by increases in retail revenues because more costs are now recovered and base rates from the 2023, Idaho General rate case settlement.

Brian Buckham: Remember that our full-year O&M guidance range is $40 to $50 million higher than last year's actual O&M results, and that includes, as O&M for this year, the pension and welfare mitigation increases we're now recovering in revenue. And as a reminder, the collection of those elements, O and M, is based largely on volumetric rates, but we record the expenses straight-line during the year. In the second quarter, with higher volumes, we offset more of the expense amortization with revenues than we did in the first quarter. Aside from that, inflationary pressures on labor-related costs also contributed to the increase in other O&M expenses. Depreciation expense increased $7.6 million for the quarter.

Speaker Change: Remember that our full year O&M guidance range is $40 million to $50 million higher than last year's actual O&M results and that includes as O&M for this year the pension on wildfire mitigation increases, we're now recovering and revenues.

Speaker Change: And as a reminder, the collection of those elements of O&M is based largely on volumetric rates, but we record the expenses straight line during the year.

Speaker Change: In the second quarter with higher volumes, we offset more of the expense amortization with revenues than we did in the first quarter.

Speaker Change: And aside from that inflationary pressures on labor related costs also contributed to the increase in other O&M expenses.

Speaker Change: Depreciation expense increased $7 6 million for the quarter. This increase was from ongoing system investments, we made last year and into this year to meet our continued customer and load growth.

Brian Buckham: This increase was from ongoing system investments we made last year and into this year to meet our continued customer and load growth, reducing both Idaho Power and our customers' share of those costs. And that also had a cash flow benefit that I'll talk about later today. As I talked about last quarter, there's a regulatory lag in recovery of our interest expense to finance our CapEx and in recovery of our higher depreciation expense on increased plant and service. The increase in income tax expense was mostly the result of higher income before income taxes, partially offset by an increase in additional ADITC amortization.

Speaker Change: Other net changes in operating revenues and expenses increased operating income by $13 9 million that increase was due primarily to the timing of recording and adjusting regulatory accruals and deferrals and for power supply expenses.

Speaker Change: The decrease in net power supply expenses that were not deferred for future recovery in rates through power cost adjustment mechanisms increased operating revenues and expenses and Thats. Good news story more moderate wholesale natural gas and power market prices in the Western U S. Along with increased wholesale energy sales volumes decrease Idaho Power's net power supply expenses.

Speaker Change: Reducing both Idaho powers, and our customer share of those costs.

Speaker Change: We had a cash flow benefit that I'll talk about later today.

Speaker Change: Nonoperating expense on a net basis was relatively flat interest expense on long term debt was higher in the second quarter compared with the second quarter of last year.

Speaker Change: The predictable result of an increase in long term debt year over year. The interest expense increase was partially offset by an increase in AFDC because our average construction work in progress balance was higher due to increased capital spending you can see a notable increase in quip on our balance sheet awaiting conversion into plant and service.

Speaker Change: Also interest income increased due to higher interest rates and higher average cash and cash equivalent balances.

Speaker Change: As I talked about last quarter, there is regulatory lag in recovery on our interest expense to finance, our capex and in recovery of our higher depreciation expense on increased plant in service.

Speaker Change: <unk> results largely from the historic averaging on rate base, and our 2023, Idaho General rate case, we proposed to mitigate that lag in part with our pending limited scope case in Idaho.

Speaker Change: As on year end rate base.

Speaker Change: The increase in income tax expense was mostly the result of higher income before income taxes, partially offset by an increase in additional 80, ITC amortization remember that theres a timing component here, we record our additional investment tax credit amortization ratably per quarter based on our expectation for the full year.

Brian Buckham: Remember that there's a timing component here. We record our additional investment tax credit amortization rateably per quarter based on our expectation for the full year. And based on our current expectations for full year results this year, we reported $7.5 million of additional ADITC amortization for Idaho Power during the second quarter. By contrast, we only recorded $3.75 million of additional ADITC amortization during the second quarter last year.

Speaker Change: And based on our current expectations for full year results. This year, we reported $7 5 million of additional 80, ITC amortization for Idaho power during the second quarter.

Speaker Change: By contrast, we only recorded $3 $75 million of additional ADC amortization during the second quarter last year.

Speaker Change: Year to date, we recorded $20 million of additional 80 Itc's based on our current estimate of $40 million of Avid's usage for the full year versus $7 5 million at the same time last year based on the then current full year estimate of $15 million of additional Adi Tcs for that year.

Brian Buckham: On the capital side, we've seen some of the results from our 2026 to 2027 RFP process. We were hoping to have enough details to provide a refreshed update on our CapEx forecast today, but as Lisa noted, we're still negotiating with bidders on the last few projects on the short list. We're close, but we're not quite there yet.

Speaker Change: On the capital side, we've seen some of the results from our 2026 to 2027 RFP process. We were hoping to have enough details to provide a refreshed update on our capex forecast today, but as Lisa noted, we're still negotiating with bidders on the last few projects on the short list, we're close but we're not quite there yet what I can say.

Brian Buckham: What I can say at this point, just reiterating what I noted last quarter, there's potential for a meaningful increase in our total five-year CapEx figure compared to what we forecasted in February of this year and shared on that call. That, of course, depends on RFP results, it depends on the timing of starting and completing projects, and on regulatory outcomes, and all of those are moving targets. It's potentially a sizable increase on an already large CapEx spend, and we hope to have more details and a better quantification by our next quarterly call, if not earlier, so stay tuned for an update there.

Speaker Change: At this point just reiterating what I noted last quarter, there is potential for a meaningful increase in our total five year capex figure compared to what we forecasted in February of this year on shared on that call that.

Speaker Change: That of course depends on RFP results it depends on the timing of starting and completing projects and on regulatory outcomes in all of those are moving targets.

Speaker Change: It's potentially a sizable increase on an already large capex spend and we hope to have more details on a better quantification by our next quarterly call if not earlier, so stay tuned for an update there.

Brian Buckham: On the financing side, in May, we drew down around $230 million from the equity forward that Idacorp did in November of last year, now leaving over $60 million to be drawn under that transaction before its anniversary. That issuance was to fund our growing CapEx, and part of our goal is maintaining our capital structure and managing dilution while we fund our growth. We're still planning to use a blend of debt and equity to fund our growth, and we want to retain a debt-equity ratio of at least 50-50, or slightly higher on the equity side, if possible.

Speaker Change: On the financing side in May we drew down around $230 million from the equity forward that IV Corp did in November of last year, now, leaving over $60 million to be drawn under that transaction before its anniversary.

Speaker Change: That issuance was to fund our growing capex and part of our goal of maintaining our capital structure and managing dilution, while we fund our growth we're still planning to use a blend of debt and equity to fund our growth and we want to retain a debt equity ratio of at least 50 50 or slightly higher on the equity side potentially in the past we've had a higher equity percentage and right now Idaho power.

Brian Buckham: In the past, we've had a higher equity percentage, and right now, Idaho Power is sitting at 52%. We have a strong balance sheet, and we intend to keep it that way through this cycle. And to fund our equity and debt needs, all options are really on the table to maintain that flexibility. In May, we put an ATM program in place, but we haven't issued any shares to date under the program.

Speaker Change: At 52%.

Speaker Change: A strong balance sheet, and we intend to keep it that way through this cycle.

Speaker Change: And to fund our equity and debt needs. All options are really on the table to maintain that flexibility in may we've put an ATM program in place that we haven't issued any shares to date under the program.

Brian Buckham: We think our load growth and rate-based profile are premised on a conservative view of only signed and committed loads and known projects. Also, a track record of 16 consecutive years of earnings growth and a track record of operating efficiently and keeping rates affordable are some of the factors that make Idacorp an attractive company in the capital markets, and we want to really keep our options open on sources of debt and equity to fund our growth going forward, and our ATM is an important part of that.

Speaker Change: We think our load growth and rate base profile premise on a conservative view of only signed and committed loads and known projects.

Speaker Change: Also a track record of 16 consecutive years of earnings growth and a track record of operating efficiently and keeping rates affordable for some of the factors that May guide corporate attractive company in the capital markets and we wanted to really keep our options open on sources of debt and equity to fund our growth going forward and our ATM as an important part of that.

Brian Buckham: Turning to slide 9, as we expected, cash flow from operations improved substantially from last year. We saw close to a net $250 million comparative increase in operating cash flow in the first half of the year. Our forecast ranges for O&M and CapEx for this year are currently unchanged.

Speaker Change: Turning to slide nine as we expected cash flow from operations improved substantially from last year, we saw close to a net $250 million comparative increase in operating cash flow in the first half of the year.

Speaker Change: The June 2023 power supply cost rate change that was included in customer rates for the first half of the year along with the revenue benefit of the January 2024 rate changes from the Idaho General rate case, and the notable moderation in power supply cost all combined to help in that regard.

Speaker Change: Slide 10 shows our updated full year earnings guidance and key operating metrics. After are generally on plan start to the year in the first quarter. We saw a notable improvement in our results in the second quarter from that as Amy noted, we updated our expectation of either Corp's earnings this year to be in the range of $5 30 to $5 45 per day.

Speaker Change: <unk> share, which is an increase to the lower end of our guidance range. This assumes that Idaho power, Idaho power will use between 35 and $50 million of additional investment tax credit amortization and improvement from our initial estimate of $35 to $60 million.

Speaker Change: Our forecast ranges for O&M and Capex for this year are currently unchanged and then finally in another piece of good news, we have raised the lower end of our hydropower generation forecast, we now expect hydro power generation to be within the range of seven to 8 million megawatt hours for the year, we have solid carryover from the prior year and we had a relatively strong snow pack this year.

Brian Buckham: And then, finally, in another piece of good news, we've raised the lower end of our hydropower generation forecast. We now expect hydropower generation to be within the range of 7 to 8 million megawatt hours for the year. We have solid carryover from the prior year, and we had a relatively strong snowpack this year and the right weather conditions to set us up for a good generation year through our hydro facility. And with that, we're happy to take your questions.

Speaker Change: And the right weather conditions to set us up for a good generation year through our hydro facilities.

Speaker Change: And with that we're happy to take your questions.

Brian Buckham: Thank you, and we are now ready to begin the question and answer session for attendees who have joined on the Q&A line. If you would like to ask a question, please do so by pressing the star followed by the number one on your phone. Please ensure that your mute function is turned off before you ask your question.

Speaker Change: Thank you and we are now ready to begin the question and answer session for attendees, who have joined on the Q&A line.

Speaker Change: If you would like to ask a question. Please do so by pressing star followed by the number one on your phone. Please ensure that your mute function is turned off before you asked your question, we'll take as many questions as time permits on a first come basis.

Operator: We'll take as many questions as time permits on a first-come, first-serve basis. Once again, that is a star followed by the number one on your phone to ask a question, and we'll pause for just a second. Hey guys, good afternoon. Hey guys. Are you talking about the Oregon case, or the Idaho case, or both? Uh, both.

Speaker Change: Once again that is star followed by the number one on your phone to ask a question, we'll pause for just a second.

Speaker Change: Yes.

Speaker Change: Our first question is from the line of sharp <unk> with Guggenheim partners.

Speaker Change: Yes, Hi, guys. Good afternoon, Hey, guys sure.

Speaker Change: Good afternoon.

Speaker Change: Just real quick would sort of the settlement now working through the process I guess, how are you sort of thinking about the timing of the next rate case, and then just concurrently the timing of the capital plan and any guidance around rate base. Thanks.

Speaker Change: Are you talking about the Oregon case, though the Idaho Pacer both both.

Speaker Change: Both please.

Lisa Grow: Okay, so we're hopeful that we will have the approval of the Oregon case soon. We are, again, thinking that it would go into effect in October. And then for the Idaho rape case, I got it.

Speaker Change: So we're hopeful that we.

Speaker Change: We will have the approval of the Oregon Kate.

Speaker Change: Soon.

Speaker Change: We are again thinking that would go into effect in October and then towards the Idaho rate case.

Speaker Change: Thinking of settlements as I've mentioned could start we don't have the procedural calendar, yet, but we're hopeful that we can.

Speaker Change: Bart settlement discussions sometime in September October range.

Speaker Change: And then as far as ongoing rate cases, we've been.

Speaker Change: Pretty clear that with the capital program that we have.

Speaker Change: The regulatory lag, we're going to do as much as we can.

Speaker Change: To.

Speaker Change: To reduce that as we go forward.

Lisa Grow: Sorry, just on the timing of just the capital plan and the guidance around rate base as you guys are getting through the settlement. Oh, that should be around the third quarter. Okay, all right, perfect. That was the question. And then just around the financing the $300 million ATM, I couldn't get a sense that it doesn't foreclose any other options that we have on the equity side. Some of it depends on the magnitude of the equity need that will be out there, which again depends a lot on cash flow and the RFP outcomes.

Speaker Change: Got it and sorry, just on the timing of the capital plan and the guidance around rate base. Since you guys are getting through these settlements.

Speaker Change: Oh.

Speaker Change: Should be around the third quarter.

Speaker Change: Okay, Alright, perfect that that was the question and then just.

Speaker Change: Around the financing the $300 million ATM and kind of get a sense from your prepared but are you planning on tapping it or are you sort of looking at other traditional means like straight equity or junior subordinate forwards et cetera, couldnt get a sense in which way you're leaning.

Speaker Change: Yes sure. This is Brian thanks for the question.

Brian: The equity financing, we did last year was intended to finance 2024, and actually partially into 25 potentially so as we look at the ATM program. We do have it in place as a financing tool. We don't really have an equity need that we see this year.

Speaker Change: Our way through the RFP process look at power supply costs. Some of those things we do see the ATM as a tool that we can use as.

Speaker Change: As we see fluctuations we could also use it as a great tool to match up payment obligations with the timing of that need.

Speaker Change: So the ATM is an important tool for us.

Speaker Change: It doesn't foreclose any other options that we have on the equity side some of it depends on the magnitude of the equity need that will be out there, which again depends a lot on cash flow and the RFP outcome, but for right now the ATM does offer us a great tool to keep our capital ratio, where we need but I would not suggest.

Lisa Grow: But for right now, the ATM does offer us a great tool to keep our capital ratio where we need it, but I would not suggest that it's an exclusive tool. We could be out in the markets doing secondary offerings, block trace, timing, et cetera, which is why I asked. Yeah. Yes, sure, absolutely. Two different ways.

Speaker Change: It's an exclusive tool we could be out in the market is doing.

Speaker Change: Secondary offerings block trades as well.

Speaker Change: Got it and the reason why I ask is the RFP outcomes could be a little bit lumpy right, depending on the timing et cetera, which is why I asked on the Ats Jonathan Yes.

Brian Buckham: One is the magnitude of the CapEx. The other aspect of that is the timing of the payment obligations. Some of the projects could be relatively substantial, and depending on BTAs or self-bills, the timing sometimes matters on when those payment obligations come due, and we'll have to have a financing plan that matches the timing of those payment obligations. Okay, perfect.

Speaker Change: Yes, sure absolutely two different ways. One is the magnitude of the capex. The other aspect of that is the timing of the payment obligations and some of the projects could be relatively substantial depending on ppas or self builds the timing sometimes matters on when those payment obligations come due and we will have to have a financing plan that matches the timing of those payment obligations.

Brian Buckham: And just lastly, for me on the O&M side, no change from the prior guide. I mean, we've seen a little bit of pressure with peers on that O&M side, I guess. What's your ability to sustain that with growth kind of accelerating there? Can you kind of maintain that 1% you guys guide forward? That's certainly our intention. That is something that's really kind of in our DNA.

Speaker Change: Okay Perfect and then just lastly for me on the O&M side no change from the prior guide I mean, we've seen a little bit of pressure with peers on that O&M side, I guess, what's wrong, what's your ability to sustain that.

Speaker Change: With growth kind of accelerating there can you kind of maintain that 1% you guys guide forward.

Lisa Grow: We work really hard at that and have for over a decade; we're really looking for ways to innovate, reduce waste, automate things, deploy technology, replace things that have become very high O&M costs, and really being thoughtful about our workforce. Obviously, the system is growing, so we're going to need more people to help us care for the system, but we're very, very thoughtful about how we spend those dollars. Brian, what would you add?

Speaker Change: That's certainly our intention that is.

Speaker Change: Its something Thats really kind of in our DNA, we worked really hard at that and have for over a decade, where we're really looking for ways to innovate reduce waste.

Speaker Change: To make things deploy technology that.

Speaker Change: Replacing things that I think could become very high and O&M costs and really being thoughtful about our workforce.

Brian: Obviously as the system is growing so we're going to need more people to help us care for the system, but were very very thoughtful about how we spend those dollars and Brian what would you add yes, sorry, I'll ask a couple of points on that reiterate what leaves us at about the mindset and a cultural approach we have the O&M, but when we set the budget each year.

Brian Buckham: Yeah, sure. I'll add just a couple points to that. I'll reiterate what Lisa said about the mindset and the cultural approach we have to O&M, but when we set the budget each year, there are people around the table, and we actually apply that culture, and there may be some groaning from time to time because we operate with a mindset of efficiency and the idea of looking at things differently each year when we sit down to look at our costs, and some of that is to innovate where we can.

Brian: Look the people around the table and we Havent, we actually apply that culture and there may be some groaning from time to time, because we operate with a mindset of efficiency and the idea of looking at things differently. Each year, when we sit down to look at our costs and some of that is to innovate where we can.

Brian Buckham: I was on a panel a couple weeks ago for an LP investment we have at IdaCorp, where we talked about innovation in the utility space, and one of the things I talked about was this concept of innovation by constraint.

Speaker Change: A couple of weeks ago for an LP investment, we have an idea where we talked about innovation in the utility space and one of the things I talked about was this concept of innovation by constrained right.

Speaker Change: Alright, it's this idea that when the budget is set type people find a way within reasonable limits to do that and some of that takes.

Speaker Change: Innovation, Yes, we do.

Speaker Change: Don't short change things like maintenance and safety those are always get priority and they always get spent and performed but we do look at things like automation just as examples we were an early adopter of Ami meters.

Speaker Change: Dunson AI implementation of the company. We also put a lot of effort into our contract negotiations Rfps, making sure we're getting good pricing from our vendors. We also see O&M benefits from regulatory mechanisms, where we see some escalating costs I think the best example of that is the wildfire mitigation deferral that currently include.

Brian Buckham: We also see O&M benefits from regulatory mechanisms where we see some escalating costs. I think the best example of that is the wildfire mitigation deferral that currently includes vegetation management and insurance costs. We did some averaging on facility maintenance in our last case. I think that helps out from an O&M perspective, taking out some of the volatility. But I know Adam Marcio; he's got a team that's focused on grant opportunities

Speaker Change: <unk> vegetation management and insurance costs, we did some averaging on facility maintenance in our last case I think that helps out from an O&M.

Adam Marcio: <unk> out some of the volatility, but I know Adam Marcio. He's got a team thats focused on grant opportunities and so we've been able to harvest some grant funding and cost sharing opportunities out there.

Lisa Grow: And so we've been able to secure some grant funding. A lot of the pressure is on the labor side at this point. We've got a really great workforce, and we want to retain our people and make sure they're paid. I mentioned we operate efficiently, and that's on the backs of our employees, and the success in that area has been thanks to the efforts of our strong people, so making sure that we keep our labor costs at the right level.

Speaker Change: Now the pressure is on the labor side at this point, we've got a really great workforce and we want to retain our people and make sure. They're paid I mentioned, we operate efficiently and that's on the backs of our employees at the success in that area has been thanks to the efforts of our strong people, so making sure that we keep our labor cost with the right level is important to us.

Speaker Change: This is Adam just to give you. An example, Brian and I were in a meeting earlier today with the capital budgeting meeting.

Lisa Grow: And we get absolutely into the details of everything we're spending in that company, in the company. And I think people get surprised by that sometimes in these meetings, but every dollar matters for our customers and for our shareholders, and so we really do scrutinize every line item of everything that's spent.

Speaker Change: And we get absolutely into the details of everything we're spending in that company in the company and I think people will get surprised by that sometimes in these meetings, but every dollar matters for our customers and for our shareholders and so we really do scrutinize every line item of everything <unk> spent.

Lisa Grow: Sometimes, Brian mentioned it to the chagrin of others in the meeting, but it's really important to us that that continued focus. And the final thing that I'll say, which is probably way more than you wanted to know, Shar, but when you pull the... Adam was talking about capital, Brian was talking about O&M, but it all kind of rolls up to just the reality of affordability as we go through these times of exciting building infrastructure, which we like to do.

Speaker Change: Sometimes Brian mentioned to the chagrin of others in the meeting, but it's really important to us.

<unk> focus.

Speaker Change: Okay and the final thing that I'll say, which is probably way more than you wanted to note sharp, but when you pull that.

Speaker Change: Yes.

Speaker Change: Adam was talking about capital, Brian was talking about O&M, but it all kind of rolls up to just a reality of affordability as we go through these times of exciting.

Lisa Grow: We're an infrastructure company, but we have to really be careful about the impact on our customers in the affordability realm at this point for the generation needs of the system. Got it. Yeah, thanks for that color.

Speaker Change: Building infrastructure, which we like to deal we're an infrastructure company, but we have to really.

Speaker Change: Be careful about the impacts to our customers in that in the affordability will.

Speaker Change: Got it perfect. Thanks, guys I appreciate it and congrats on the execution Thats pretty notable I appreciate it.

Chuck: Thanks Chuck.

Speaker Change: Our next question is from the line of David Arcaro with Morgan Stanley. Your line is alive.

Speaker Change: Hi, David Hi, David Thanks.

David Arcaro: Thanks, So much for taking my question how are you doing.

David Arcaro: Great. Thank you I'm wondering if you could.

David Arcaro: So could you touch on what Youre seeing in terms of the pipeline of load looking to connected to your system.

Speaker Change: Is that trending is that impacting your thinking at this point for the generation needs of the system going forward.

Speaker Change: So I'll start and I'll have Adam fill in some of the details.

Speaker Change: Again, we continue to be.

Adam: Very active in fielding inquiries from all kinds of companies that are looking to cite here as well as expand here.

Adam: We have.

Adam: Planning process, where we really look at how we can serve them somehow specific needs.

Adam: Others are sort of looking for that.

Adam: The best place to site, where they can find any kind of.

Adam: So we do have a very.

Adam: Robust process.

Adam: As we are looking at that Theyre still comment and in some of them are very large.

Adam: The likes of which we've never seen in our company history, and so we're very excited about that and working with them to try and figure out how we can bring them on when we can bring them on but again doing it in a way that doesn't negatively impact the customers that are already here what would you add yeah. We've mentioned this before this is Adam we track what we call.

Adam: <unk> large loading queries that that's everything from a megawatt to frankly, a 1000 megawatts and in 2023, we had a record amount of those inquiries. When you look at 2024. It is still very robust not quite at the level of 2023, but certainly at the same level, we saw in 2021 and 2000.

Adam: <unk> 22, and there is just a variety of different companies that are looking to site in Idaho everything from data centers to to dairy to bio digesters to.

Adam: On food manufacturing and so its been extremely steady.

Speaker Change: The companies that are already here by chronic meta I was in a site visit on both those facilities in April and May.

Speaker Change: We're moving there is a ton of construction work going on at met Ed going vertical.

Speaker Change: Ron I think there is up to 20 cranes now are working on that project. So we're just seeing a lot of growth not only in real time and that we could see in terms of construction, but also in these inquiries that are coming in the door over the last 345 months.

Speaker Change: That's great to hear.

Speaker Change: Got it thanks for that color.

Speaker Change: Let me see I appreciate the comments too on on.

Speaker Change: Wildfire activity in just this season, so far I was just wondering like what how would you.

Speaker Change: Maybe talk about the.

Speaker Change: The status of your system how has it performed so far this year you had a <unk> event.

Lisa Grow: How have things operated so far, and what's been, you know, more active fires? You know, we've had some transmission lines go out outside of our system that can cause some issues with imports, but the team's been able to work around that, and it's been really successful in ensuring that our customers, you know, have air conditioning going when it's 105 degrees straight for five days, which is exactly what happened here. Thank you. Yeah, I'll start.

Speaker Change: How things operated so far and what's been more active fire season at this time around.

Speaker Change: Yes.

Speaker Change: It's been one of the most active in our history in terms of July.

Speaker Change: And if you look at a map I think I don't know anyone that does not have the watch duty app on their phone. These days that lives out in the west and it it looks like most of the west is on fire. So.

Speaker Change: We're not alone there, but I would say.

Speaker Change: Especially in the eastern Oregon area, we had just some.

Speaker Change: One point it was the largest buyer in the nation. The jerky fire excuse me you can hear the smoke in my voice.

Speaker Change: That.

Speaker Change: We did burn through.

Speaker Change: Several of our lines, we lost hundreds of structures.

Speaker Change: But it didn't really impact the system as a whole we were able to.

Speaker Change: Adapt.

Speaker Change: And we deploy resources, but our teams got those lines back up as soon as they were able to get into the areas. When it was safe to do so.

Speaker Change: Do have some other fires that are in burning in Idaho, but not really threatening our facilities at this point and so we watch it carefully we have a team that is literally monitoring of $24. Seven it's just really the reality of the world. We live in now and as I had mentioned we have done just a tremendous amount.

Speaker Change: Hardening, whether it is.

Speaker Change: Vegetation management section.

Speaker Change: Sexualizing lines fuses that Don and Nick.

Speaker Change: Sparks et cetera, and so we have spent and we'll spend hundreds of millions of dollars in the next five years to continue to harden our system. So.

Speaker Change: We work carefully with our with our utility partners and learn from one another and are very active at EI. For example, we're active with the state agencies and partners there to really find a way so that we can navigate through these these really critical time to make sure. We're all working to keep our community safe.

Adam Marcio: Adam anything you'd add maybe I'll just add on the fires that are crews did a wonderful job and in the span of about two weeks, we have been able to replace almost 400 structures.

Adam Marcio: <unk> hundred Poles.

Adam Marcio: The systems side of things I got to give our load serving operations a ton of credit and really the folks that look after our generation fleet, it's been pretty smooth from a generation standpoint every year. You Wonder is every facility going to run the way it should and this year it has and thats been a real positive for us so.

Speaker Change: We've had some transmission lines go out outside of our system that can cause some issues with imports, but the team has been able to work around that and it's been really successful in ensuring that our customers have.

Speaker Change: <unk> air conditioning going when it's 105 degrees straight for five days, which is exactly what happened here.

Speaker Change: Yes got it okay. That's good to hear thanks, so much I appreciate it.

Speaker Change: Thank you.

Speaker Change: Our next question is from the line of Alex <unk> with Mizuho Securities. Your line is live.

Alex: Hi, Alex.

Alex: Hey, good afternoon.

Alex: Thank you.

Speaker Change: So Brian you mentioned, the Finalization of the RFP shortlist decisions hopefully in the coming months can you give any color on your expectation for the cadence of that spend throughout the five year plan as it may be more back half skewed just just any additional detail on how things might be shaping up.

Speaker Change: You mean in terms of the magnitude of the spend in any given year are the shaping of the spend.

Alex: Yes.

Speaker Change: So that's a little bit difficult in light of the fact that we're still negotiating the contracts and some of the terms of the contract.

Speaker Change: Haven't lock and what the timing of the spend would be in one of the things I mentioned is if it's a build transfer agreement sometimes those provide for payment of the yen or other types of arrangements that we might negotiate that provide for payment overtime milestone payments. So it makes the shape of the capex a little bit hard to determine at this point and that's one of the reasons why I note.

Speaker Change: In our prepared remarks that we just arent quite ready yet to give them a lot of guidance on our capex either in terms of magnitude are shaping.

Speaker Change: I think as you've seen now the numbers are the numbers are large necessarily want to stack a large capex amount at any one given year. So we do look like we do look to spread that.

Speaker Change: In part from a financing perspective, but in any event whatever that shape looks like these are important reliability projects to serve our customers. So we will go out and procure the financing to do it.

Speaker Change: Understood and then turning to the regulatory side.

Speaker Change: A little over 4% revenue increase this year from settlement last year, another around 7% increase.

Speaker Change: Increase requested for this year.

Speaker Change: Given the significant necessary investment youre anticipating undergoing in the coming years, how do you think about the trajectory of your rate requests going forward keeping in mind, obviously, the robust load growth I would imagine allows for maybe some degree of bill headroom and then understanding that obviously there are some moving target with regards to the capital projects.

Lisa Grow: Yeah, I think Lisa said it well; the only thing I would add is... We're working through our current case, and the outcome of that case will certainly influence the next ask. Affordability, as Lisa mentions, is top of mind. I think with the revenue growth, we may be able to keep things in single digits. Yeah, Julien, great question.

Speaker Change: Yeah I'll start.

Speaker Change: We are.

Speaker Change: We have to get used different mechanisms to help sort of smooth things and you're right. When you have a growing load base you've got a larger denominator that helps we also have a regime that is based on growth team for growth. So that it doesn't have a negative impact on the existing customers.

Speaker Change: And then.

Speaker Change: We.

Speaker Change: We will continue to work with our regulators.

Speaker Change: In helping to navigate through this time. So we can continue to serve our customers safely and reliably but also paying attention to affordability and Tim Tatum is in here.

Tim Tatum: Anything that you would add Tien who is our VP of regulatory.

Speaker Change: Yes, Thanks, Lisa this is Tim.

Tim: I think Lisa said it well.

Tien: I would add is.

Tim: We're working through our current case and the outcome of that case will certainly.

Speaker Change: Influence the next asked.

Speaker Change: Affordability as Lisa mentioned top of mind, I think with the revenue growth, we may be able to keep things in single digit.

Speaker Change: Increases but.

Speaker Change: Time will tell.

Speaker Change: Alex This is Brian I'll take a couple more things on the financial side. One is that the assets that we're putting into service generally have long lives. So they are depreciated over a longer period of time, and therefore, the customer rate impact isn't necessarily as large and then also the O&M sustainability that we've talked about really helps from a customer affordability perspective as.

Speaker Change: Well and then finally, we've actually been fairly successful in the RFP process are coming in at the lowest cost provider of some of these lease cost least risk resources and add benefit ultimately flows down to our customers and finally I had mentioned the tax credits that are generated from the projects those do ultimately belong to our customers and flowed down to them.

Speaker Change: So to the extent those tax credits remain an option they will be helpful to affordability going forward.

Speaker Change: Understood. Thank you very much for your time and congrats on a great quarter.

Doug: Thank you Doug.

Speaker Change: Thank you for your questions, ladies and gentlemen final call. If you do want to ask a question today remember at Star followed by the number one on your telephone.

Speaker Change: We have our next question here from the line of Julien Dumoulin with Jefferies. Your line is live.

Julien Dumoulin: Hi, good afternoon Neil.

Neil: Yeah, Likewise pleasure to chat with you guys.

Speaker Change: You've talked about.

Speaker Change: All hands on deck.

Speaker Change: Hi.

Speaker Change: Feels that way from your from your comments.

Speaker Change: Yeah.

Speaker Change: I just wanted to try to get this straight if I if I can here because you talk about.

Speaker Change: A meaningful increase in capex off of having increased capex several times over the years. So that's not a trivial percent increase especially off of perhaps earlier basically baselines, but I wanted to talk about the the financing piece of this right because what strikes me here is the rating agencies put.

Speaker Change: Puts you in a negative you raise the equity still.

Speaker Change: And now we're talking about another meaningful increase admittedly not necessarily in the near term, but I'm just thinking through the options that you have it at hand, given what you've seen some of your other shall we say broadly defined regional peers. Some are looking at all sorts of things here to try to.

Speaker Change: Address as we say this.

Speaker Change: That function higher in capital capital needs for the low growth that you at least can tangibly point to today forget. The fact that there is some further low growth ahead.

Speaker Change: Revisions ahead.

Speaker Change: So bottom line Capex and how does that fit with your equity financing plans in the longer term and the rating agencies.

Speaker Change: Considering that they still have that negative one.

Brian Buckham: You know, when we do our financing plans, we pay a lot of attention to what the credit ratings look like. And I think if you've seen our metrics, you know, in recent years, Moody's, Got it. But the core of the fact that they have, you know, a negative here is that you're saying, look, our metrics are where we want them to be, they'll catch up one day in terms of, you know, our view of keeping the company, and there's no intention to further improve the metrics from that call it 14 to 15%. You know, Julien, over time, yes, we do.

Speaker Change: Yes, Julian Great question, when we do our financing plans, we pay a lot of attention to what the credit ratings look like kind of think of you.

Speaker Change: <unk> seen our metrics in recent years Moody's.

Speaker Change: 2023 metrics around 14%, we actually think this year those could improve at either core banded Idaho power bowls, we target 15%.

Speaker Change: CFO pre working capital to debt at Moody's.

Speaker Change: At S&P 2023s number I think FF OTA that was around $14 five this year it could be a little lower with the Capex as you mentioned, but we expect that to recover over a diamond part through rate cases, and eliminating some of that regulatory lag that was out there and then hopefully moderation in some of our power supply cost will also help on the credit rating side.

Speaker Change: At S&P, we target, 15% as well could be a little bit lower than that in the near term, but over time, improving with the rate cases that we've been filing and then there are a lot of different options out there. We've looked at all of these financing transactions that have come out, but we don't have any oil go debt.

Speaker Change: We've seen hybrids and convertibles, we've seen combinations of hybrids and convertibles or is a lot of instruments out there, but when we go out for medium term note offerings. For example standard secured debt at the Opco, we generally get a really good reception and in our equity financing, we got a really good reception as well on <unk> common stock we really do.

Speaker Change: Do like the forward feature we like having an ATM in place because of the ability to match the timing of costs with when we actually issue equity and eliminating some of the earlier dilution that would otherwise result for our.

Speaker Change: Shareholders, but we're going to see here in the third quarter, what that RFP, what the RFP results really look like and how to finance that but at the end of the day going to be a blend of debt and equity it will likely be larger amount of debt and equity certainly, but we do have lots of options on the table.

Speaker Change: Our balance sheet is strong we don't have anything exotic on our balance sheet don't intend to necessarily.

Speaker Change: But we think traditional financing model is something that would work really well for us.

Speaker Change: To see what our cash flow does cause cash flow will be one of the ways. We finance this capex and we will be looking for that and then growth equity to finance the part that we need going forward.

Speaker Change: By the third quarter, we will have some more information we can share on what that specific financing plan for that drove capital would look like.

Speaker Change: Got it but the core of the fact that they have negative here you are saying look our metrics are where we want them to be they'll catch up one day in terms of our view on keeping the company and there is no intention to further improve the metrics from that call it 14% to 15% range.

Speaker Change: Julian over time, yes, we do but when we're in this capex intensive period, we want to maintain our credit ratings, where they are.

Brian Buckham: But when we're in this capex-intensive period, we want to maintain our credit ratings where they are, but the improvement in the credit ratings will come later on in this capital cycle when the cash flow catches up with our regulatory cycle. Yeah, I mean, it's true.

Julian: But the improvement in the credit ratings will be later on in this capital cycle when the cash flow catches up from a regulatory cycle.

Speaker Change: Got it and then related to your if I can just push.

Speaker Change: Rate case cycle, you've got a big quick balance standing here already over $1 billion.

Speaker Change: And I say this.

Speaker Change: With something in hand already 24 on our rate case front, but how do you think about the next big round on the rate case front, considering the equipped considering the need for cash recovery.

Speaker Change: And then related you've got a lot of spending ahead. So it's likely there is going to be some some degree of pressure from the earlier days.

Lisa Grow: We're going to be going in for more frequent rate cases than we have. Certainly, it's not going to be another 10 years or more. And so, we're just being very thoughtful about how we are spending, how we're financing, and how often we are going in for rate cases. Again, we are very, very aware of the possibility of sort of rate fatigue among our customers and regulators. So, we do not take that for granted, and we make sure that we're communicating along the way so they know what's happening. And we're, And Julien, this is Brian.

Speaker Change: Yes.

Speaker Change: It is true.

Speaker Change: We're going to be going in for more frequent rate cases than we have certainly not going to be another.

Speaker Change: 10 years or more and so we're just being very thoughtful about how our how we are spending how we're financing and how often we are going in for rate cases in and again, we are very very aware of.

Speaker Change: It's a possibility.

Speaker Change: Sort of rate fatigue, with our customers and regulators. So we did not take that for granted and we make sure that we are.

Speaker Change: Communicating along the way so they know what's happening.

Speaker Change: And we were.

Brian: Our best and Julian This is Brian what I would add is you have to recognize the quip did increase pretty dramatically on the balance sheet, but note that a lot of that quip is actually part of the rate case that we have in Idaho filed now the limited scope rate case, because we're looking at a period end plant in service. So some of that are projects that are nearing completion of that.

Brian Buckham: What I would add is you have to recognize the quip did increase pretty dramatically on the balance sheet, but note that a lot of that quip is actually part of the rate case that we have in Idaho Files now, the limited scope rate case, because we're looking at a period end plant and service. So some of that are projects that are nearing completion that just haven't yet been closed to plant. And that will decrease our QIPP balance fairly significantly as we move ahead.

Speaker Change: You haven't yet been close to plan and that will decrease our quit balance fairly sizable.

Brian Buckham: Now there are still some large projects in QIPP. Think about Health Canyon and Boardman Hemingway. Those are a couple of big ones there, but that number will be declining as we make plans. Thank you, and ladies and gentlemen, that will conclude today's conference. Thank you for your participation. Have a great evening.

Speaker Change: As we move ahead now there are still some large projects and where do you think about health, Canada Boardman to Hemingway those are a couple of big ones, there, but that number will be declining as we put plants in service.

Speaker Change: Got it okay excellent. Thanks for clarifying that last bit that's certainly what caught my attention there good to hear coming down a little bit alright, guys. Thank you I will see you soon alright.

Speaker Change: Alright, Thanks, Julian Thanks Joanne.

Ms grow: Thank you for your question and we have no further questions. At this time. So this school that will conclude the question and answer session for today Ms grow I will turn the conference back over to you.

Ms grow: Great. Thank you thanks to everyone for joining us and for your continued interest in <unk> and I Hope you all have a great evening. Thank you.

Speaker Change: Thank you and ladies and gentlemen that will conclude today's conference. Thank you for your participation have a great evening.

Speaker Change: Please wait the conference will begin shortly.

Ms grow: Okay.

Brian Buckham: Yes.

Ms grow: Yes.

Speaker Change: Okay.

Brian Buckham: Okay.

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Speaker Change: No.

Brian Buckham: Thank you.

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Speaker Change: [music].

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Speaker Change: Yes.

Brian Buckham: Okay.

Brian Buckham: Yeah.

Brian Buckham: Yes.

Brian Buckham: Yes.

Brian Buckham: Okay.

Brian Buckham: [music].

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Brian Buckham: Sure.

Brian Buckham: Yes.

Brian Buckham: Yes.