Q1 2025 Black Hills Corp Earnings Call
Operator: Good day and thank you for standing by. Welcome to the Q1 2025 Black Hills Corporation Earnings Conference Call. At this time, all participants are in a listen-only mode. Please be advised that today's conference is being recorded. After the speaker's presentation, there will be a question and answer session. To ask a question, please press star 1 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 1 again.
Okay.
Speaker Change: Good day and thank you for standing by welcome to the Q1 2025 Black Hills Corporation earnings Conference call. At this time all participants are in a listen only mode. Please be advised that today's conference is being recorded after the speaker's presentation. There will be a question and answer session to ask a question. Please press star.
Saudia: One one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one again I would not like to hand, the conference over to your speaker today Saudia is director of Investor Relations.
Sal Diaz: I would now like to hand the conference over to your speaker today, Sal Diaz, Director of Investor Relations. Thank you, operator. Good morning and welcome to Black Hills Corporation's first quarter 2025 earnings conference call. You can find our earnings release and materials for our call this morning on our investor relations website at www.blackhillscorp.com.
Saudia: Thank you operator.
Speaker Change: Good morning, and welcome to Black Hills Corporation's first quarter 2025 earnings Conference call.
Speaker Change: You can find our earnings release and materials for our call. This morning on our Investor Relations website at Www Dot <unk> score Dot com.
Sal Diaz: Leading our quarterly earnings call are Linn Evans, President and Chief Executive Officer, Kimberly Nooney, Senior Vice President and Chief Financial Officer, and Marne Jones, Senior Vice President and Chief Utility Officer. During our earnings discussion today, comments we make may contain forward-looking statements as defined by the Securities and Exchange Commission, and there are a number of uncertainties inherent in such comments. Although we believe that our expectations are based on reasonable assumptions, actual results may differ materially.
Speaker Change: Leading our quarterly earnings call are Linn Evans, President and Chief Executive Officer.
Kimberly Nooney: Kimberly Nooney senior Vice President and Chief Financial Officer.
Mining Jones: And mining Jones, Senior Vice President and Chief Utility Officer.
Mining Jones: During our earnings discussion today comments, we make may contain forward looking statements as defined by the Securities and Exchange Commission and there are a number of uncertainties inherent in such comments.
Mining Jones: Although we believe that our expectations are based on reasonable assumptions actual results may differ materially.
Sal Diaz: We direct you to our earnings release, slide 2 of the investor presentation on our website, and our most recent Form 10-K and Form 10-Q filed with the Securities and Exchange Commission for a list of some of the factors that could cause future results to differ materially from our expectations.
Mining Jones: We direct you to our earnings release slide two of the industrial presentation on our website and our most recent Form 10-K and Form 10-Q filed with the Securities and Exchange Commission for a list of some of the factors that could cause future results to differ materially from our expectations.
Lynn Evans: With that, I will now turn the call over to Lynn Evans. Lynn. Thank you, Sal. Good morning, and thank you all for joining us today. I'll begin my comments with a summary of the quarter and our strategic outlook.
Speaker Change: With that I will now turn the call over to Linn Evans Lynn.
Speaker Change: Thank you Sal good morning, and thank you all for joining us today I'll.
Speaker Change: I'll begin my comments with a summary of the quarter and our strategic outlook, Kimberly will provide our financial update and Marty will discuss our operational performance and strategic progress.
Lynn Evans: Kimberly will provide our financial update and Marnie will discuss our operational performance and strategic progress. Starting on slide three, three of our key objectives for the year include delivering on our 5% year-over-year earnings growth, executing on our regulatory initiatives and our $1 billion capital plan. in providing top quartile reliability to our growing customer base while exceeding industry average safety performance. I'm pleased to report we are making excellent progress toward these objectives. Our full year earnings growth is driven by three key drivers, new base rates, rider recovery mechanisms, and customer growth. We have successfully implemented new rates through five rate reviews since the beginning of 2024.
Speaker Change: Starting on slide three three of our key objectives for the year include delivering on our 5% year over year earnings growth.
Executing on our regulatory initiatives and our $1 billion capital plan.
Speaker Change: Providing top quartile reliability to our growing customer base, while exceeding industry average safety performance.
Speaker Change: I am pleased to report we are making excellent progress toward these objectives.
Speaker Change: Our full year earnings growth is driven by three key drivers new base rates rider recovery mechanisms and customer growth.
Speaker Change: We have successfully implemented new rates through five rate reduced since the beginning of 2024 and we also have two active rate reviews requested to be in effect later this year.
Lynn Evans: And we also have two active rate reviews requested to be in effect later this year. Collectively, regulatory execution by our team on these seven rate reviews reflects the recovery of more than $1.3 billion of new system investment. Additionally, Ryder Mechanisms are providing material investment recovery, including the $40 million first phase of our $350 million Ready Wyoming Transmission Expansion Project, which remains on schedule. And we are serving strong customer growth across our regions. A recent example includes serving two new all-time customer peak loads at Wyoming Electric, driven largely by ongoing data center and blockchain growth. These new record peaks reflect an increase of nearly 10% over our prior all-time peak in January 2024 and mark 19 consecutive years of increasing demand.
Speaker Change: Collectively regulatory execution by our team on the seven rate reviews reflects the recovery of more than one 3 billion.
Speaker Change: That new system investments.
Speaker Change: Additionally, rider mechanisms are providing material investment recovery, including the $40 million first phase of our $350 million ready, Wyoming transmission expansion project, which remains on schedule.
Speaker Change: And we are serving strong customer growth across our regions. A recent example includes serving to new all time customer peak loads at Wyoming electric driven largely by ongoing data center and block chain grows.
Speaker Change: New record peaks reflect an increase of nearly 10% over our prior all time peak in January 2024, and March 19 consecutive years of increasing demand.
Lynn Evans: To cost effectively and reliably serve our customers and position the company for ongoing growth, we are strategically expanding our infrastructure by advancing our electric transmission project and our plans for new generations. We are well positioned to maximize opportunities for future growth as we experience the benefits of reshoring in our service territories due to attractive land prices, favorable business and regulatory climates, and a quality workforce. As we leverage our opportunities, we are also mitigating risk for our business and for our customers. For example, in Wyoming, very positive wildfire legislation was enacted during the quarter, which sets a standard of care and protects us from liability when we adhere to a commission approved wildfire mitigation plan.
Speaker Change: Two cost effectively and reliably serve our customers and position the company for ongoing growth.
Speaker Change: Our strategically expanding our infrastructure by advancing our electric transmission project in our plans for new generation.
Speaker Change: We are well positioned to maximize opportunities for future growth as we experienced the benefits of re shoring and our service territories due to attractive land prices favorable business and regulatory climates, and a quality workforce as.
Speaker Change: As we leverage our opportunities we're also mitigating risk for our business and for our customers. For example in Wyoming very positive wildfire legislation was enacted during the quarter, which sets a standard of care and protects us from liability when we adhere to our commission approved wildfire mitigation plan.
Lynn Evans: Our financial outlook is provided on slide four, which is consistent with our fourth quarter call. We are reaffirming our 2025 earnings guidance range of $4 to $4.26. which is a 5% growth rate at the midpoint over our 2024 EPS. Strong customer demand, our pipeline of growth opportunities, and cost discipline all support our expected 2025 results. As we evaluate trade tariffs and potential amendments to federal legislation, we do not expect material impact to our five-year outlook. The materials for the majority of our 2025 capital projects are already sourced, and our historical spend from foreign sources has been less than three percent.
Speaker Change: Our financial outlook is provided on slide four which is consistent with our fourth quarter call.
Speaker Change: We are reaffirming our 2025 earnings guidance range of $4 to $4 20.
Which is a 5% growth rate at the midpoint over our 2024, EPS strong customer demand our pipeline of growth opportunities and cost discipline all support our expected 2025 results.
Speaker Change: As we evaluate trade tariffs and potential amendments to federal legislation, we do not expect material impacts to our five year outlook.
Speaker Change: The materials for the majority of our 2025 capital projects are already sourced and our historical spend from foreign sources has been less than 3%.
Lynn Evans: We think this data point is a consistent indicator of the potential impact of our future capital investment. Additionally, while the future of the Inflation Reduction Act is uncertain, our strategic exposure is minimal. We have less than $20 million in annual production tax credits, with limited reliance on the transferability of those credits. We have strong confidence in our long-term EPS growth target of 4-6%, given our robust balance sheet, capital forecasts, incremental investment potential, and our other growth opportunities highlighted by increasing demand from our data center customers. Our multi-state footprint provides valuable regulatory, weather, and customer diversification, further supporting EPS stability and growth.
Speaker Change: Think this data point is our consistent indicator of the potential impact of our future capital investments.
Speaker Change: Additionally, while the future of the inflation reduction act is uncertain. Our strategic exposure is minimal we have less than $20 million in annual production tax credits with limited reliance on the transferability of those credits.
Speaker Change: We have strong confidence in our long term EPS growth target of 4% to 6% given our robust balance sheet.
Speaker Change: Capital forecast incremental investment potential and our other growth opportunities highlighted by increasing demand from our datacenter customers.
Speaker Change: Our multistate footprint provides valuable regulatory weather and customer diversification further supporting EPS stability and growth.
Lynn Evans: These factors, coupled with our industry-leading dividend track record, offer an attractive value proposition for shareholders, and we believe we are well-positioned to accelerate EPS growth in the upper half of our 4-6% compound annual growth rate starting in 2026.
Speaker Change: These factors coupled with our industry, leading dividend track record offer an attractive value proposition for our shareholders and we believe we are well positioned to accelerate EPS growth in the upper half of our 4% to 6% compound annual growth rate starting in 2026.
Lynn Evans: To quickly summarize our capital plan on the next slide, we expect to invest $4.7 billion over a five-year plan period through 2029. Our plan prioritizes safety and system integrity projects, modernization programs, and infrastructure expansion to support growing demand.
Speaker Change: To quickly summarize our capital plan on the next slide we expect to invest $4 $7 billion over a five year plan period through 2029, our planned prioritize the safety and system integrity projects modernization programs and infrastructure expansion to support growing demand.
Lynn Evans: Moving to slide six. In addition to our capital plan, we are building upon our decade of successfully serving a growing data center demand and continue to be excited about the upside potential. Our current forecast reflects approximately 500 megawatts of data center demand by the end of 2029. We expect EPS contribution from data centers to double to more than 10% of total EPS in 2028, with this contribution continuing into 2029. Over the next decade, we expect a pipeline of more than one gigawatt of demand likely to come from existing customers and a growing and more diverse group of select, quality, and stable customers as we see broader interests in our unique data center offering.
Speaker Change: Moving to slide six.
Speaker Change: In addition to our capital plan, we are building upon our decade of successfully serving our growing data center demand and continue to be excited about the upside potential.
Speaker Change: Our current forecast reflects approximately 500 megawatts of data center demand by the end of 2029.
Speaker Change: We expect EPS contribution from data centers to double to more than 10% of total EPS in 2028 with this contribution continuing into 2029.
Speaker Change: Over the next decade, we expect our pipeline of more than one gigawatt of demand likely to come from existing customers and a growing and more diverse group of select quality and stable customers as we see broader interest in our unique data center offerings.
Lynn Evans: Companies are recognizing the ideal attributes of Cheyenne, Wyoming, as a choice location for their data center operations and future expansion, given our industry-leading reliability, Wyoming's economic incentives, a rich fiber backbone, plentiful renewable generation opportunities, and favorable weather and climate conditions for their significant cooling needs. We are also continuing to evaluate data center and blockchain opportunities in Colorado and South Dakota, and we are working to implement a tariff construct which could add to future growth.
Speaker Change: These are recognizing the ideal attributes of Cheyenne, Wyoming as a.
Speaker Change: Choice location for their data center operations and future expansion, given our industry, leading reliability wyoming's economic incentives are rich fiber backbone plentiful renewable generation opportunities and favorable weather and climate conditions for their significant cooling needs.
Speaker Change: We are also continuing to evaluate datacenter in blockchain opportunities in Colorado, and South Dakota, and we are working to implement a tariff construct which could add to future growth.
Kimberly Nooney: With that update, I'll turn it over to Kimberly for our financial update. Kimberly. Thank you, Lynn, and good morning, everyone. As you heard Lynn mention, we are successfully executing on several of our key growth initiatives and first quarter results met our expectations. We are well positioned and have strong confidence in our ability to deliver on our full-year earnings guidance and long-term financial performance. Slide 8 shows the primary year-over-year earnings drivers for the first quarter. Bridging Q1 2024 to Q1 2025, we delivered 29 cents per share of new margin. These margins are comprised of $0.26 of new race and rider recovery and $0.03 of customer growth and use.
Speaker Change: With that update I'll turn it over to Kimberly for a financial update Kimberly.
Kimberly Nooney: Thank you Lynn and good morning, everyone.
Speaker Change: As you heard Glenn mentioned, we are successfully executing on several of our key growth initiatives and first quarter results met our expectations.
Speaker Change: We are well positioned and have strong confidence in our ability to deliver on our full year earnings guidance and long term financial performance.
Speaker Change: Slide eight shows the primary year over year earnings drivers for the first quarter.
Speaker Change: Bridge in Q1 2024 to Q1 2025, we delivered 29 per share of new margins.
Speaker Change: These margins are comprised of 26 cents of new rates and rider recovery and three our customer growth and usage.
Kimberly Nooney: This positive margin more than offset capital plan execution costs of $0.21 per share, comprised of $0.09 from new share issuance, $0.08 from higher interest expense, and $0.04 of additional depreciation. Comparing last year's very mild winter to this year's colder than normal winter, our year-over-year weather impact was favorable by 11 cents a BPS. When compared to normal, weather drove $0.04 per share of favorability during Q1 2025. Our O&M was hired by 24 cents, primarily driven by increases in employee cost, outside services, and higher insurance costs. As a reminder, throughout last year, we deployed significant expense management efforts to successfully offset the impacts of the mild weather we experienced in 2024, adversely affecting the year-over-year comparison.
Speaker Change: This positive margin more than offset capital plan execution costs 21 cents per share comprised of nine cents from new share issuance.
Speaker Change: From higher interest expense and <unk> of additional depreciation expense.
Speaker Change: Comparing last year very mild winter. So this year's colder than normal winter our year over year weather impact was favorable by 11 cents of EPS.
Speaker Change: When compared to normal weather drove four cents per share of favorability during Q1 2025.
Speaker Change: Our O&M was higher by 24.
Speaker Change: Primarily driven by increases in employee costs.
Speaker Change: Outside services.
Speaker Change: And higher insurance costs.
Speaker Change: As a reminder throughout last year, we deployed significant expense management efforts to successfully offset the impacts of the mild weather, we experienced in 2024 adversely affecting the year over year comparison.
Kimberly Nooney: We are managing our full year O&M expense. to an average annual increase of approximately 3.5% off our 2023 base year as disclosed in our Annual Earnings Guidance Assumption. As Lynn mentioned earlier, we are reaffirming our 2025 earnings guidance range of $4 to $4.20. We expect to achieve our guidance by delivering on our key strategic objectives, effectively managing the timing of our capital spend, and continuing O&M management efforts. Further details on year-over-year changes can be found in our earnings release and our 10-Q to be filed with the SEC later today. Slide 9 displays our solid financial position through the lens of credit quality, capital structure, and liquidity.
Speaker Change: We are managing our full year O&M expense.
Speaker Change: On an average annual increase of approximately three 5% off our 2023 base here at <unk>.
Speaker Change: Disclosed in our annual earnings guidance assumptions.
Speaker Change: As Lynn mentioned earlier, we are reaffirming our 2025 earnings guidance range of $4 to $4 20.
Speaker Change: We expect to achieve our guidance by delivering on our key strategic objective effectively managing the timing of our capital spend and continuing O&M management efforts.
Speaker Change: Further details on year over year changes can be found in our earnings release, and our 10-Q to be filed with the SEC later today.
Speaker Change: Slide nine displays our solid financial position through the lens of credit quality capital structure and liquidity.
Kimberly Nooney: balance sheet strength remains a top priority with a focus on sustaining our FFO to debt target of 14 to 15% and net debt to total capitalization target of 55%. Using our rating agency's methodologies, we expect to maintain these credit metric targets throughout our long-range financial plan, providing a healthy cushion above our downgrade threshold. Our liquidity remains strong at quarter end at nearly $700 million of availability under our revolving credit facility and short-term borrowings of approximately $60 million under our commercial paper program. We are evaluating timing and refinancing options for our next debt maturity of $300 million, which is due in early 2026.
Speaker Change: Balance sheet strength remains a top priority with a focus on sustaining our <unk> target of 14% to 15% and net debt to total capitalization target of 55%.
Speaker Change: Using our rating agencies methodologies, we expect to maintain these credit metric targets throughout our long range financial plan, providing a healthy cushion above our downgrade threshold.
Speaker Change: Our liquidity remains strong at quarter end.
Speaker Change: At nearly $700 million of availability under our revolving credit facility and short term borrowings of approximately $60 million under our commercial paper program.
Speaker Change: We are evaluating timing and refinancing options for our next debt maturity of $300 million, which is due in early 2026.
Kimberly Nooney: We are investing $1 billion in capital for the year, and as previously guided, we plan to issue approximately $215 to $235 million of new equity to finance these investments. During the quarter, through our ATM program, we issued approximately $46 million of new equity. Our Ask the Market Equity Program remains a valuable tool and can comfortably help us meet our equity needs for the remainder of the year. Projecting Equity Needs for the Future under our BASE Capital Investment Program. We expect annual equity needs in 2026 and beyond to be lower than 2025. We will continue to fund our accretive growth with the most efficient, cost-effective capital available while maintaining credit quality.
Speaker Change: We are investing $1 billion in capital for the year and as previously guided we plan to issue approximately $215 million to $235 million of new equity to finance these investments.
Speaker Change: During the quarter through our ATM program.
Speaker Change: Issued approximately $46 million of new equity.
Speaker Change: Our at the market equity program remains a valuable tool and can comfortably helped us meet our equity needs for the remainder of the year.
Speaker Change: Projecting equity needs for the future under our base capital investment program.
Speaker Change: We expect annual equity needs in 2026 and beyond.
Speaker Change: It can be lower than 2025.
Speaker Change: We will continue to fund our accretive growth with the most efficient cost effective capital available while maintaining credit quality.
Kimberly Nooney: Slide 10 illustrates our industry-leading dividend track record of 55 consecutive years. We continue to target a 55-65% payout ratio. A dependable and increasing dividend is an important component of our strategy to deliver long-term value for our shareholders.
Speaker Change: Slide 10 illustrates our industry, leading dividend track record of 55 consecutive years.
Speaker Change: We continue to target a 55% to 65% payout ratio.
Speaker Change: A dependable and increasing dividend is an important component of our strategy to deliver long term value for our shareholders.
Marne Jones: I will now turn the call over to Marne for a business update. Thank you, Kimberly, and good morning, everyone. Moving to slide 12. During the quarter, our team made solid progress in executing our strategic priorities, reducing risk, and continuing to deliver safe, reliable, and cost-effective energy to our 1.35 million customers. Over the next few slides, I'll provide details on our progress and further highlight our future opportunities. Slide 13 reflects our success in serving our growing data center load. We have been serving data center needs for over a decade. Our contracted customers, Microsoft and Meta, are marquee names in the technology industry.
Marty: I will now turn the call over to Marty for a business update.
Thank you Kimberly and good morning, everyone.
Speaker Change: Moving to slide 12.
Speaker Change: During the quarter, our team made solid progress in executing our strategic priorities, reducing risk and continuing to deliver safe reliable and cost effective energy to a 135 million customers.
Speaker Change: Over the next few slides I will provide details on our progress and further highlight our future opportunities.
Speaker Change: Slide 13 reflects our success in serving our growing data center load, we have been serving datacenter needs for over a decade, our contracted customers, Microsoft and meta are marquee names in the technology industry.
Marne Jones: We take great pride in our track record of meeting their unique needs through innovative solutions and look forward to meta-taking service starting in 2026. And further on the topic of load growth, we acknowledge recent headlines regarding Microsoft's potential delays in data center expansion. However, given our more than a decade of serving and engaging with Microsoft and listening to their recent Q1 earnings call, we continue to have confidence in our five-year outlook. Looking beyond five years, and given our advantageous service territory, we see broader interest in our unique data center offerings, which gives us confidence in our more than one gigawatt of demand over the next decade.
Speaker Change: Great Pride in our track record of meeting their unique needs through innovative solutions and look forward to meta taking service starting in 2026.
Speaker Change: And further on the topic of low growth, we acknowledge the recent headlines regarding Microsoft potential delays and data center expansion plans.
Speaker Change: However, give.
Speaker Change: Given our more than a decade of serving and engaging with Microsoft and listening to their recent Q1 earnings call. We continue to have confidence in our five year outlook.
Speaker Change: Looking beyond five years and given our advantageous service territory, we see broader interest in our unique data center offerings, which gives us confidence in our more than one gigawatt of demand over the next decade.
Marne Jones: Our distinctive market energy procurement model provides utility-like returns without the need for material capital investment, while protecting and benefiting our other customers. Current market conditions and customer requirements have allowed us to efficiently and reliably serve these growing loads through market energy purchases. This flexible service model prioritizes speed to market while achieving our customers reliability, cost, and sustainability objectives. We believe we can serve approximately 500 megawatts of data center demand by the end of 2029 under our current construct. As we monitor energy market conditions, we are prepared to expand our service model to include a more traditional infrastructure investment construct as needed to serve the critical energy requirements of our customers.
Speaker Change: Our distinctive market energy procurement model provides utility like returns without the need for material capital investment, while protecting and benefiting our other customers.
Speaker Change: Current market conditions and customer requirements have allowed us to efficiently and reliably serve these growing loads to market energy purchases.
Speaker Change: This flexible service model prioritizes speed to market.
Speaker Change: While achieving our customers' reliability cost and sustainability objectives. We believe we can serve approximately 500 megawatts of data center demand by the end of 2029 under our current construct.
Speaker Change: As we monitor energy market conditions, we are prepared to expand our service model to include a more traditional infrastructure investment construct as needed to serve the critical energy requirements of our customers.
Marne Jones: Moving to slide 14, our Ready Wyoming electric transmission expansion, the largest capital project in our company's history, is expected to be completed by year end, just three years since regulatory approval. This $260-mile, $350-million project will reduce dependence on third-party transmission systems and enhance system resiliency through increased market access, including renewable A more interconnected and expanded electric system helps maintain long-term price stability for our customers while also enabling ongoing growth. As you can see on slide 15, we've made significant progress with all regulatory approvals and land rights in place. The majority of our materials are on site or are being domestically produced, limiting our impact from trade tariffs.
Speaker Change: Moving to slide 14 already Wyoming electric transmission expansion the largest capital project in our company's history is expected to be completed by year end, just three years since regulatory approval.
Speaker Change: The 260 mile $350 million project will reduce dependence on third party transmission systems and enhanced system resiliency through increased market access including renewables.
Speaker Change: More interconnected and expanded electric system helps maintain long term price stability for our customers, while also enabling ongoing growth.
Speaker Change: As you can see on slide 15, we've made significant progress with all regulatory approvals and land rates in place.
Speaker Change: Majority of our materials on site or being domestically produced limiting our impact from trade tariffs.
Marne Jones: As remaining phases are placed in service this year, they will be recovered through our constructive Wyoming Transmission Rider starting in 2022.
Speaker Change: As remaining phases are placed in service this year, they will be recovered through a constructive Wyoming transmission rider starting in 2026.
Marne Jones: Our Colorado Clean Energy Plan update is on slide. In 2024, we received approval for 350 megawatts of renewable resources to reduce emissions for Colorado customers 80% by 2030. This includes a utility-owned 100 megawatt solar project, a utility-owned 50 megawatt battery storage project, and a 200 megawatt solar power purchase agreement.
Speaker Change: Our Colorado Clean energy plan update is on slide 16.
Speaker Change: In 2024, we received approval for 350 megawatts of renewable resources to reduce emissions for Colorado customers, 80% by 2030.
Speaker Change: This includes the utility owned 100 megawatt solar project a utility owned 50 megawatt battery storage project and a 200 megawatt solar power purchase agreement.
Marne Jones: The utility-owned investments are included in our capital plan between 2026 and 2028. As final contracts are signed, we may update our capital plan for any material shifts in timing or cost. We recently reached an agreement with a developer on the battery storage project and expect to request a Certificate of Public Convenience and Necessity, or a CPCN, for that project in the second quarter.
Speaker Change: The utility owned investments are included in our capital plan between 2026 and 2028.
Speaker Change: Final contracts are signed we may update our capital plan for any material shifts in timing of costs.
Speaker Change: We recently reached an agreement with the developer on the battery storage project.
Speaker Change: Back to request, a certificate of public convenience and necessity or CCN for that project in the second quarter.
Marne Jones: Slide 17 outlines our South Dakota electric resource Our LANG-2 project, a 99 megawatt utility-owned natural gas fire generation resource located in Rapid City, continues to progress. The new resource will enhance the resiliency of our electric system as we replace aging generation and support an increased reserve market. These modern gas-fired resources are reciprocating internal combustion engines. They're dispatchable and responsive, with the capability to ramp up to full load in as little as five minutes. These engines also provide black start capabilities, strengthening our grid resilience.
Speaker Change: Slide 17 outlines our South Dakota electric resource plan.
Speaker Change: Are linked to project a 99 megawatt utility owned natural gas fired generation resource located in rapid city continues to progress.
Speaker Change: The new resource will enhance the resiliency of our electric system as we replace aging generation and support an increased reserve margin.
Speaker Change: These modern gas fired resources, a reciprocating internal combustion engines their dispatch able and responsive with the capability to ramp up to full load in as little as five minutes. These engines also provide black start capabilities strengthening our grid resiliency with.
Marne Jones: We filed a CPCN for the project with the Wyoming Public Service Commission in March and expect to place the new resource in service in the second half of 2020.
We filed the CPC and for the project with the Wyoming Public Service Commission in March and expect to place the new resource in service in the second half of 2026.
Marne Jones: Slide 18 summarizes our regulatory with new electric rates in effect in Colorado and rate reviews ongoing in Kansas and Nebraska. First, for Colorado Electric, we implemented new rates on March 22nd and began collecting $17 million in new annual revenue. As a result of the reconsideration order received this week, new revenue will be adjusted to $17.5 million. In Kansas, we filed a gas rate review in February for $17.2 million in new annual revenue based on a 10.5% return on equity with a 50% equity layer. We anticipate new rates in the second half of this year. And last week, we filed a gas rate review in Nebraska requesting $34.9 million of new annual revenue based on a similar ROE and capital structure as our Kansas request.
Speaker Change: Slide 18 summarizes our regulatory progress with new electric rates in effect in Colorado and rate reviews ongoing in Kansas and Nebraska.
Speaker Change: First for Colorado Electric we implemented new rates on March 22nd and began collecting $17 million in new annual revenue.
Speaker Change: As a result of the reconsideration order received this week, new revenue will be adjusted to $17 5 million.
Speaker Change: In Kansas, We filed our gas rate review in February for $17 $2 million in new annual revenue based on a 10, 5% return on equity with a 50% equity layer, we anticipate new rates in the second half of this year.
Speaker Change: And last week, we filed a gas rate review in Nebraska, requesting $34 $9 million of new annual revenue based on a similar ROE and capital structure as our Kansas request we.
Marne Jones: We are seeking interim rates effective August 1st of 2025 and final rates by Q1 of 2026.
Speaker Change: We are seeking interim rates effective August one 2025 and final rates by Q1 of 2026.
Marne Jones: As we have noted previously, our rate review cadence is determined by the need to recover our system investments and any inflationary impacts, and we expect to file three to four rate reviews annually.
Speaker Change: As we have noted previously our rate review cadence as determined by the need to recover our system investments and any inflationary impacts and we expect to file three to four rate reviews annually.
Marne Jones: Lastly, we appreciate the Wyoming Commission's constructive approval of our request to track and defer increases in future insurance costs for Wyoming Gas and Wyoming Electric through a Deferred Regulatory Asset.
Speaker Change: Lastly, we appreciate the Wyoming Commission constructive approval of our request to track and defer increases in future insurance costs for awhile and gas and Wyoming electric through a deferred regulatory asset.
Marne Jones: Slide 19 outlines our wildfire risk mitigation and management practice. Our mitigation plan has been successful in reducing operational risk with our multilayered approach to asset programs, integrity programs, and operational response, which is detailed in our wildfire mitigation plan available on our website. We continue to engage stakeholders, including community and local agencies, regulators, legislative bodies, and our industry peers to define, review, and advance our wildfire management and mitigation plans, including our Public Safety Power Shutoff Program, or PSPS. As an industry-wide expectation, having a PSPS available by mid-year serves as a mitigation lever for extreme wildfire risk situations across our electricity grid.
Speaker Change: Slide 19 outlines our wildfire risk mitigation and management practices. Our mitigation plan has been successful in reducing operational risk with our multi layered approach to asset program integrity programs and operational response, which is detailed in our wildfire mitigation plan available on our website.
Speaker Change: We continue to engage stakeholders, including community and local agencies regulators legislative bodies, and our industry peers to define review and advance our wildfire management and mitigation plans, including our public safety power Shutoff program or PSP.
Speaker Change: As an industry wide expectation having of PSTN available by mid year serves as a mitigation lever for extreme wildfire risk situations across our electric footprint.
Marne Jones: And finally, as Lynn mentioned earlier, we made great progress on the legislative side in Wyoming. The wildfire legislation provides material liability protections for utility and compliance with its commission approved wildfire mitigation plan. We will continue to work with stakeholders and seek supportive legislation in Colorado and South Dakota during the next session.
Speaker Change: Finally, as Lynn mentioned earlier, we made great progress on the legislative side in Wyoming. The wildfire legislation provides material liability protections for utility in compliance with its commission approved wildfire mitigation plan, we will continue to work with stakeholders and seek supportive legislation in Colorado and South Dakota during the next.
Lynn Evans: With that, I will now turn the call back over to Thank you, Marnie. As you've heard over the past few minutes, we have strong confidence in achieving our 2025 guidance and our ability to deliver in the upper half of our long-term EPS CAGR starting next year. Through our robust pipeline of strategic opportunities, we are investing in safely and reliably serving our customers. We are successfully and routinely executing on our regulatory plan, and we are innovatively developing customer solutions to enable data center and blockchain.
Lynn: Sessions with that I will now turn the call back over to Lynn.
Lynn: Thank you Marty as you've heard over the past few minutes, we have strong confidence of achieving our 2025 guidance and our ability to deliver in the upper half of our long term EPS CAGR starting next year through.
Lynn: Through our robust pipeline of strategic opportunities, we are investing in safely and reliably serving our customers. We are successfully and routinely executing on our regulatory plan and we are innovative Lee developing customer solutions to enable data center and blockchain load growth.
Operator: This concludes our prepared remarks and we're happy to take your questions. Thank you. As a reminder, to ask a question, please press star 1 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 1 again. One moment for questions.
Lynn: This concludes our prepared remarks, and we're happy to take your questions.
Lynn: Thank you as a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one again, one moment for our questions.
Andrew Weisel: Our first question comes from Andrew Weisel with Scotiabank. You may proceed. Hey, good morning, everybody.
Yes.
Andrew Weisel: Our first question comes from Andrew Weisel with.
Lynn: Scotiabank you May proceed.
Lynn: Hey, good morning, everybody.
Operator: Good morning, Andrew. Hi.
Lynn: Good morning, Andrew.
Andrew Weisel: A couple of questions on Colorado.
Lynn: Hi.
Andrew Weisel: First, on the electric rate case, can you please talk a little more about the request for rehearing, re-argument, and reconsideration? I hope I said that correctly.
Lynn: Couple of questions on Colorado first on the electric rate case can you. Please talk a little more about the request for rehearing re argument and reconsideration hope I said that correctly.
Marne Jones: You mentioned you were granted a slightly higher level of revenues, but can you get more specific on the challenge? I think it was largely related to the capital structure of the utility versus the parent, but how are you feeling about where we stand now?
Lynn: You mentioned you were granted a slightly higher level of revenues, but can you get more specific on the challenge I think it was largely related to the capital structure at the utility versus the parent, but how are you feeling about where we stand now.
Marne Jones: Good morning, Andrew.
Marne Jones: This is Marnie. Thanks for the question. So yes, we did get our response on our RRR decision just earlier this week. So what we found from that is an increase in the new annual revenue of about a half a million. You know, as we look at that from a new base rate perspective, certainly is a workable increase. We're continuing to review the RRR decision. There was not a change in the capital structure. So we'll continue to look at that decision and determine if there are any next steps that are necessary. As you know, we've talked about before, there is the opportunity to appeal.
Lynn: Good morning, Andrew This is Marty thanks for the question. So yes, we did get our response on our Triple our decision just earlier this week so.
Lynn: What we found from that is an increase in the new annual revenue of about a half a million.
Speaker Change: We look at that from a new base rate perspective, certainly is a workable increase we're continuing to review the triple our decision there was not a change in the capital structure.
Speaker Change: So we'll continue to look at that decision and determine if there are any next steps that are necessary as you know and we've talked about before there is the opportunity to appeal.
Marne Jones: We have that decision for the next basically 30 days. So we'll continue to review and scour that decision and determine if there's any future steps needed.
Speaker Change: That decision for the next basically 30 days. So we will continue to review and scour that decision and determine if there's any future steps needed.
Andrew Weisel: Okay, RRR is certainly easier to say.
Speaker Change: Yes.
Speaker Change: Okay Triple are certainly easier to say.
Marne Jones: Next, in Pueblo, I know you've had some challenges historically. It looks like they just voted to keep the franchise agreement. I think that means you'll stick around through 2030, but I think there might be another vote later this year.
Speaker Change: Next.
Speaker Change: <unk> I know you've had some challenges historically it looks like we've just got to keep the franchise agreement I think that means you'll stick around through 2030, but I think there might be another vote. Later. This year can you just talk about potential outcomes and next steps how youre thinking about relationships and also the outlook for rates and affordability for that service territory. Please.
Marne Jones: Can you just talk about potential outcomes and next steps, how you're thinking about relationships, and also the outlook for rates and affordability for that service territory, please? Yeah, Andrew, this is Marnie again. So yes, on, I believe, May 6, we did have our vote. And, you know, through a landslide decision by the citizens of Pueblo, it was determined to keep the franchise in place. The next term for that vote, which you noted, is 2030. So for us, it is continuing to run that business. Affordability is always top of mind for us in Colorado and making sure that we're providing that safe, reliable service that those customers expect.
Speaker Change: Yes, Andrew this is Marty again, so yes on that I believe may 6th we did have our vote and through a Lam Sai decision by the citizens of Pablo is determined to keep the franchise in place.
Speaker Change: The next term for that vote, which you noted is 2030 so for US. It is continuing to run that business affordability is always top of mind for us in Colorado.
Speaker Change: And making sure that we're providing that safe reliable service that those customers expect and obviously relationships and continuing to work with the city of Pueblo County et cetera.
Lynn Evans: And obviously relationships and continuing to work with the city of Pueblo, the county, et cetera, to work on growing that area from an economic development perspective. So that's how we look at Colorado and really pleased with the vote from the citizens there.
Speaker Change: To work on growing that area from an economic development perspective. So that's how we look at Colorado win and really pleased with the vote from the citizens there.
Lynn Evans: And we were very recently, Andrew, sorry, Andrew, this is Lynn, we were very recently highly engaged in working to develop an economic development tariff that is now in place. We believe that will be very helpful to us in terms of how we serve our customers in Pueblo and Southern Colorado. Thank you. Appreciate all that.
Speaker Change: And we were very recently, Andrew Andrew This sorry, Andrew This is Lee and we were very recently highly engaged in working to develop an economic development tariff.
Speaker Change: It is now in place we believe that will be very helpful to us in terms of how we serve our customers in Pueblo in southern Colorado.
Andrew Weisel: One more, if I may, just on equity. I think you raised only about less than $50 million in the quarter versus the guidance of $225 million at the midpoint. Obviously, a little behind the ratable pace. Can you talk about that? Is that related to the timing of cash needs, or are you making a call that the stock is undervalued or function of cash inflows? Maybe just talk about the timing. And I think I heard you say you're expecting lower levels of annual equity needs going forward.
Speaker Change: Thank you I appreciate all that one more if I may just on equity I think you raised only about less than $50 million in the quarter versus the guidance of $2 $25 million at the midpoint.
Speaker Change: Obviously, a little bit behind the ratable pace can you talk about that is that related to the timing of cash needs or are you, making a call that the stock is undervalued or function of cash inflows, maybe just talk about the timing and I think I heard you say, you're expecting lower levels of annual equity needs going forward is that the new disclosures that are new.
Kimberly Nooney: Is that a new disclosure? Is that a new comment? And maybe talk about what's driving that.
Speaker Change: Comment and maybe talk about what's driving that.
Kimberly Nooney: Yeah, Andrew, good morning.
Kimberly Nooney: This is Kimberly, you're absolutely right on the timing of equity. You know, we issue equity when we need it. And, you know, just the timing of our capital projects, as well as, you know, maintaining our FFO2 debt, our credit metrics. So for us, that's what our equity is really focused on. We are still targeting at $215 to $235 million for the year. So we feel comfortable that we'll be able to achieve that as we look forward.
Speaker Change: Yeah, Andrew Good morning. This is Kimberly you're absolutely right on the timing of equity.
Speaker Change: Issue equity when we need it and.
Speaker Change: Just the timing of our capital projects as well as maintaining our.
Speaker Change: If I put it that our credit metrics.
Speaker Change: For us it's that's what our equity is really focused on we are still targeting that.
Speaker Change: $215 million to $235 million for the year. So we feel comfortable that we'll be able to achieve that as we look forward when we talked about our annual equity needs going forward.
Kimberly Nooney: When we talked about our annual equity needs going forward, this year is an outsized capital expense year, or capital expenditure year. So when you think about our billion-dollar capital plan, we have a couple big projects that you heard Marnie and Lynn talk about earlier with Ready Wyoming and our Lang II project that will go into service in 2026. The majority of those cash flows will go, investments will go into service in 2026. So as you think about earnings and cash flow being driven from there, that will be a significant uplift starting in 2026. As well as data center growth, you know, meta will be going into service in 2026.
Speaker Change: This year is an outsized capital expense.
Speaker Change: So our capital expenditure year. So when you think about our $1 billion capital plan, we have a couple of big projects that you've heard Marty and Lynn talked about earlier with ready Wyoming and our Lang two project that will go into service in 2026.
Speaker Change: The majority of those cash flows will go.
Speaker Change: Investments will go into service in 2026, so as you think about earnings and cash flow being driven from there.
Speaker Change: Will be a significant uplift starting in 2026.
Speaker Change: As well as data center growth meta will be calling.
Kimberly Nooney: So a lot of good things happening as a result of the efforts that we've been putting in over these past couple years to drive our equity needs lower as we look forward in the future.
Speaker Change: Into service in 2026, so a lot of good things happening as a result of the efforts that we've been putting in over these past couple of years to drive.
Speaker Change: Our.
Speaker Change: Equity needs lower as we look forward in the future.
Andrew Weisel: That all sounds great. Thank you so much. Thanks, Andrew.
Speaker Change: And all sounds great. Thank you so much.
Andrew: Thanks, Andrew vendor.
Ross Fowler: Our next question comes from Ross Fowler with Bank of America. You may proceed.
Speaker Change: Thank you. Our next question comes from Ross <unk> with Bank of America. You May proceed.
Ross Fowler: Morning, Kim. Marne, how are you? Good morning. Just a couple questions for me.
Speaker Change: Good morning, Ken Marty how are you.
Andrew: Good morning.
Andrew: Just a couple of questions from me.
Lynn Evans: First, on wildfire mitigation efforts in Colorado and Wyoming Lake, or Colorado and South Dakota, excuse me. Do you see those getting to a similar endpoint as the Wyoming legislation? Or, you know, how are you, how can you sort of contextualize those conversations at this point and where we might be headed or where the sticking points are as you work through that process?
Andrew: First on wildfire mitigation efforts in Colorado.
Speaker Change: In Wyoming.
Speaker Change: Our Colorado and South Dakota excuse me.
Speaker Change: Can you do you see those getting to a similar end point is the Wyoming legislation or.
Speaker Change: How are you how can you sort of contextualize those conversations at this point and where we might be headed or where the sticking points are.
Speaker Change: Work through that process.
Lynn Evans: Yeah, good morning, Ross. This is Lynn. Thank you for that question. Yes, we anticipate very similar outcomes in the long run with both Colorado and South Dakota. We're waiting for the right time, if you will. We approached South Dakota this past session. The timing wasn't right, and we knew that pretty quickly, so we thought we'd back off. We will approach that next legislative session, and we think we're off to a good start because we are working behind the scenes aggressively with respect to seeking that legislation. We have some peers in Colorado that currently have some litigation ongoing, so that's made it a little bit more challenging with timing in Colorado, but similarly, we believe we can get very similar legislation in Colorado when those decks are clear, if you will, with our peers.
Speaker Change: Yes. Good morning Ross. Thanks. This is Len. Thank you for the question, Yes, we anticipate very similar outcomes in the long run with both Colorado and South Dakota.
Speaker Change: We are waiting for the right time, if you will we approached South Dakota. This this past session. The timing wasn't right. We knew that pretty quickly. So we thought we'd back off we will approach that next legislative session and we think we're off to a good start because we are working behind the scenes aggressively with respect to seeking that legislation.
Speaker Change: We have some peers in Colorado that.
Speaker Change: Currently have some litigation ongoing so that's made it a little bit more challenging with timing in Colorado, but similarly, we believe we can get very similar legislation in Colorado.
Speaker Change: Excuse me when those decks are clear if you will with our peers.
Lynn Evans: That makes sense, Lynn. Thank you.
Speaker Change: They said Selim. Thank you and then back to sort of the data center conversation.
Marne Jones: And then back to sort of the data center conversation, you noted on slide six, and you talked about this a little bit about incremental demand driving investment in Colorado, South Dakota, and Wyoming. Is that, do you see that as more transmission to get sort of the generation capacity you have to where it needs to go as these large low customers come in? Or is there a generation opportunity out there tied to this incremental demand?
Speaker Change: You noted on slide six you talked about this a little bit about <unk>.
Speaker Change: Incremental demand driving investments.
Speaker Change: In Colorado, South Dakota, and Wyoming is that do you see that as more transmission to get sort of a generation capacity you have to where it needs to go with these large customers come in or is there a generation opportunity.
Speaker Change: Out there tied to this incremental demand coming in.
Marne Jones: Good morning, Ross.
Marne Jones: This is Marnie. So as far as the data centers, you know, our construct today is really capital light from our need to invest from a generation and transmission perspective. But certainly, as we go forward and see opportunities, I think there's to your point, there's opportunities on both the generation and the transmission side, as we look to expand our systems, and really focusing in on that, the obviously the reliability needs for those customers as well. So probably twofold in opportunity. Perfect. Thanks, Marnie. Thank you, and as a reminder, to ask a question, please press star 1 1 on your telephone.
Speaker Change: Good morning, Ross This is marnie so as far as the data centers you know our construct today is really capital light from our need to invest from a generation and transmission perspective, but certainly as we go forward and see opportunities I think to your point there is opportunities on both the generation and the trans.
Speaker Change: Mission side, as we look to expand our systems and really focusing in on that.
Speaker Change: Obviously, the reliability needs for those customers as well, so probably two fold in opportunity.
Speaker Change: Perfect. Thanks Marni.
Okay.
Speaker Change: Thank you and as a reminder to ask a question. Please press star one one on your telephone.
Brian Russo: And our next question comes from Julian DeMoulin-Smith with Jeffrey's, he may proceed. Oh hi, it's Brian Russo on for Julian. Good morning, Brian.
Speaker Change: And our next question comes from Julien Dumoulin Smith with Jefferies. You May proceed.
Speaker Change: Hi, it's Brian Russo on for Julien.
Speaker Change: Okay.
Speaker Change: Good morning, Brian Brian Ryan.
Brian Russo: Hey, just a quick follow up on the Capital Light strategy, particularly in South Dakota. Are you are you seeing interest there yet? And I suppose at some point you would file for an ESA tariff there. Would that be more customized to what you're you currently have in Wyoming? Or was that would that be more unique to any sort of South Dakota construct?
Speaker Change: Just a quick follow up on the capital light strategy, particularly in South Dakota.
Speaker Change: Are you seeing interest there yet and I suppose at some point you would file.
Speaker Change: For yes.
Speaker Change: A tariff there.
Speaker Change: Would that be more customized.
Speaker Change: Sure.
Speaker Change: You currently have in Wyoming or was that would that be more unique to any sort of south Dakota construct.
Marne Jones: Hi, Brian, this is Marnie as well. So as we look at, you know, the capital like that we've done in Wyoming, when we created that, gosh, just over 10 years ago, really focused on meeting the customer needs. And so we worked very, very closely with them. So as we look to expand in both Colorado, and to your point, South Dakota, initially, we're going to focus on what is what's most important to the customer. And the tariff could be very similar, the tariff could look different, it's going to be really determined on that customer's needs. And as far as you know, pipeline of growth, we are continuing to get a lot of calls from large customers looking to locate both in Colorado and South Dakota, as well as Wyoming.
Speaker Change: Hey, Brian This is Marty as well so as we look at the Capsulate that we've done in Wyoming. When we created that gosh, just over 10 years ago really focused on meeting the customer needs.
Speaker Change: And so we worked very very closely with them. So as we look to expand in both Colorado and to your point stop Dakota.
Speaker Change: Actually we're going to focus on what is what's most important to the customer.
Speaker Change: And the tariff could be very similar to the tariff could look different it's going to be really determined on that customer's needs and as far as pipeline of growth. We are continuing to get a lot of calls from large customers looking to locate both in Colorado, and South Dakota, as well as Wyoming, So continuing to work.
Marne Jones: So continuing to work that log, lots of interest in in growth in each one of those service territories. Really gives us confidence, Brian, in our 500 megawatts by 2029 and that one gigawatt that we think will serve by the end of the decade. Okay, and there seems to be a kind of a unique dynamic throughout MISO where there are pockets of kind of excess capacity due to transmission constraints. Is that an observation in your service territory as well, which allows you to do more of the CAPEX-like strategy? Just curious there.
Speaker Change: Outlawed.
Speaker Change: Lots of interest in and growth in each one of those service territories.
Speaker Change: It gives us confidence, Brian and our 500 megawatts by 2029 and that one gigawatt that we think will serve by the end of the decade.
Speaker Change: Okay, and there seems to be.
Speaker Change: And have a unique dynamic throughout MISO, where there are pockets of.
Speaker Change: Kind of excess capacity to the transmission constraints is that.
Speaker Change: And our.
Speaker Change: Your service territory, as well, which allows you to do more of the Capex light strategy just curious there.
Marne Jones: Yeah, Brian, so we we are vertically integrated and not part of an RTO in the West here. And so as we look at transmission, obviously, there are certain areas that are constrained, and there are certain areas where we have capacity, it's going to be very much focused on specific locations. And that certainly has led to our ability to have some capital light strategy. Okay, understood.
Speaker Change: Yes, Brian So we are vertically integrated and not part of an <unk> in the west here and so as we look at transmission obviously.
Speaker Change: There are certain areas that are constrained and there are certain areas, where we have capacity is going to be very much focused on specific locations.
Speaker Change: And that certainly has led to our ability to have some capital light strategy.
Brian Russo: Oh, and just curious on insurance costs. You seem to be making progress in certain jurisdictions. Are you, have you filed for deferral of insurance costs in Colorado? Or does that kind of get rolled up into your rate cases?
Speaker Change: Okay understood I was just curious on insurance costs.
Speaker Change: You seem to be making progress in certain jurisdictions are you have you filed for deferral of insurance costs in Colorado or is that kind of get rolled up into your rate cases.
Marne Jones: For Colorado specifically, that is going to get rolled up into our rate reviews. You know, as I mentioned earlier, we did seek and did receive approval in Wyoming for that insurance recovery. To date, we are looking at rolling that through rate reviews as we go through those.
Speaker Change: For Colorado, specifically that is going to get rolled up into our rate reviews.
Speaker Change: I mentioned earlier.
Speaker Change: Did seek and receive approval in Wyoming for that insurance recovery.
Speaker Change: To date, we are looking at rolling that through rate reviews, as we go through those.
Brian Russo: Okay, great.
Brian Russo: Thank you very much. Thanks, Brian.
Speaker Change: Okay, great. Thank you very much.
Brian Russo: Thanks, Brian.
Speaker Change: Thank you.
Anthony Crowdell: Our next question comes from Anthony Crowdell with Mizuho, you may proceed. Hey, good morning, Kim. Just a couple quick questions. One, O&M, you talked about that was maybe more of a response to the mild weather you had last year. If you could just talk about maybe the timing or shaping of that as we go through the rest of the year. Should we, you know, there's most of the the pain hit first quarter and then we should start seeing maybe a slight decrease or we're going to continue to see something like that through the rest of the year.
Speaker Change: Our next question comes from Anthony <unk> with Mizuho you May proceed.
Speaker Change: Hey, good morning, just a couple quick questions one.
Speaker Change: O&M you talked about that was maybe more of a response to the mild weather you had last year.
Speaker Change: Just talk about maybe the timing of shaping of that as we go through the rest of the year should we just most of the.
Speaker Change: The pain hit first quarter, and then we should start seeing maybe.
Speaker Change: That's why the decrease or we're going to continue to see something like that through the rest of the year.
Kimberly Nooney: Yeah, Anthony, this is Kimberly. Thanks so much for that question. Yeah, in Q1, it was outsized when you think about the comparative to the rest of the quarter throughout the year. We had some timing differences, just timing of some projects. We had a few items that none of them by themselves were material. So, you know, things like, you know, we invested in some marketing efforts to defend the franchise that Marnie talked about earlier. You know, when you compare Q1 of this year to Q1 of last year, a little bit of higher insurance costs because that increase in insurance costs didn't really start until Q3.
Kimberly Nooney: Yeah. Anthony this is kimberly thanks, so much for that question, yes. In Q1. It was outsized when you think about the comparative to the rest of the quarters throughout the year. We had some timing differences just timing of some projects we had.
Kimberly Nooney: A few items that none of them by themselves of our materials, so things like.
Kimberly Nooney: We invested in some marketing efforts to defend the franchise that Marty talked about earlier.
Kimberly Nooney: When you compare Q1 of this year to Q1 of last year, a little bit of higher insurance costs, because that increase in insurance cost didn't really start until Q3. So those are some of the things that would exist in this quarter.
Kimberly Nooney: So those are some of the things that would exist in this quarter that, you know, we've been addressing and, you know, will not be recurring as we look forward.
Kimberly Nooney: We've been addressing and we'll.
Kimberly Nooney: Not be recurring as we look forward.
Anthony Crowdell: Great.
Anthony Crowdell: And then if I could pivot to the Colorado electric decision, the equity ratio, I think you're asking for 52.4 and you got 48 or the commission awarded 48%. I mean, it's a sizable amount, sizable amount of differential. Just is, is, do you need to have some offsets to maintain the guidance range? Are you planning offsets or you're contemplating a lower equity ratio in your 25 guidance? Yeah, when we think about the Colorado decision, we really think about that decision holistically. There are always puts and takes in any decision that we get from a regulatory perspective.
Kimberly Nooney: Great and then if I could pivot to the Colorado.
Kimberly Nooney: Electric decision the equity ratio I think you were asking for $52 four and you've got 48 or the commission on what at 48%.
Kimberly Nooney: A.
Kimberly Nooney: Sizable amount sizable amount of differential just is is do you need to have some offsets.
Kimberly Nooney: We maintain the guidance range are you planning offsets or you're contemplating a lower equity ratio and your 25 guidance.
Kimberly Nooney: Yeah, when we think about the Colorado decision, we really think about that decision holistically. There are always puts and takes in any decision that we get from a regulatory perspective. So.
Kimberly Nooney: So, you know, the decision, although, you know, you know, there are always items that, you know, you wish you would have, you know, had a better result from. Overall, the result, you know, met our expectations. Yes, we had some items that we wanted to talk about with the commission, which we did through the triple R process. So overall, you know, the decision was incorporated into our plan and is part of, you know, the framework that we've laid out of achieving our 5% year over year growth rate and our long term 4 to 6% growth that we've, you know, reaffirmed.
Kimberly Nooney: The decision although.
Kimberly Nooney: There are always items that you wish you would have had a better results from overall results met our expectations. Yes, we had some items that we wanted to talk about what the commission, which we did through the triple our process. So overall.
Kimberly Nooney: The decision was incorporated into our plan and as part of.
Kimberly Nooney: The framework that we've laid out of achieving our 5% year over year growth rate in our long term, 4% to 6% growth that we have.
Anthony Crowdell: Great.
Kimberly Nooney: Reaffirmed.
Anthony Crowdell: If I could just squeeze one last one in, and it's, I think, the sell side's 41st or 42nd call for the quarterly cycle, so maybe just be bad eyes. But on page 4, where you announced the long-term EPS growth rate, you used the word targeting 4% to 6% growth. And then on the fourth quarter call, you actually used the word affirm 4% to 6% growth. Is it just, I'm just beaten down and tired and thinking there's something different, or is there something different in the language versus affirm and targeting? Yeah, our apologies, Frank. And you can say we're tired.
Kimberly Nooney: Great if I could just squeeze one last one and then.
Kimberly Nooney: Thank you.
Speaker Change: The sell side 41 to 42nd call for the quarterly cycle. So maybe just be bad eyes, but on page four we announced a long term EPS growth rate you used the word targeting 4% to 6% growth and then on the fourth quarter call you actually use the word a firm 4% to 6% growth is it just.
Kimberly Nooney: I am just beaten down and tired.
Speaker Change: And thinking there is something different or is there something different in the language versus affirm and targeting.
Kimberly Nooney: Yeah.
Kimberly Nooney: Our apologies for you and you can take retired you could say tired.
Kimberly Nooney: You could say tired. I'm fine. No, not at all, Anthony. You know, we'll be, you know, provide clarity here just for confirmation. We are reaffirming our four to 6% growth. We're very confident in it, as you've heard all of us talk about. And, you know, maybe the one additional color I'd give on this topic is, you know, we started this journey in 2023, setting our guidance to four to 6%. And back then we talked about our growth rate being slower on the front end and, you know, higher on the back end. Well, the back end is now here as we look to that 2026, 2027 range of higher growth.
Anthony: No not at all Anthony.
Kimberly Nooney: That will be.
Speaker Change: Provide clarity here just for confirmation, we are reaffirming our 4% to 6% growth. We're very confident in it as you've heard all of US talk about and maybe the one additional color I'd give on this topic is we started this journey in 2023, setting our guidance to 4% to 6% and back then we talked about our growth rate being slower on the front end.
Speaker Change: And higher on the backend well the backend is now here as we look to that 2026 2027 range of higher.
Kimberly Nooney: You know, we just talked about a lot of our projects that we're working on that will be coming to fruition that we've been working on for the past couple years. So that really gives us confidence in being able to, you know, operate in that upper end of that four to 6% guidance that we've set. So targeting was the target of four to six, but we are reaffirming and providing confidence that, you know, we're going to be operating in the upper end of that guidance.
Speaker Change: Growth, we just talked about a lot of our projects that we're working on that will be coming to fruition that we've been working on for the past couple of years, So that really gives us confidence and being able to operate in that upper end of that 4% to 6% guidance that we've set so targeting was the target of 4% to six but we are reaffirming and providing confidence that we're going to be operating.
Speaker Change: In the upper end of that guidance.
Anthony Crowdell: Thanks so much. Thanks for taking my questions. Thanks, Anthony.
Speaker Change: Thanks, so much thanks for taking my questions.
Speaker Change: Thanks, Anthony Thanks Anthony.
Operator: Thank you.
Lynn Evans: I would now like to turn the call back over to Lynn Evans for any closing remarks. Well, thank you all for joining us today. We really appreciate your interest in Black Hills Energy and Black Hills Corporation. We value our relationship. We'll look forward to seeing many of you over the next several weeks. We'll be at the AGA Financial Forum, see several of you there, and we have other forums and investor conferences we'll be attending throughout the next month. So thank you for that, your interest, and we look forward to having a Black Hills Energy safe day.
Speaker Change: Thank you I would now like to turn the call back over to Linn Evans for any closing remarks.
Linn Evans: Well. Thank you all for joining US today, we really appreciate your black your interest in Black Hills Energy and Black Hills Corporation, we value our relationship will look forward to seeing many of you over the next several weeks will be at the AGM financial Forum. Several of you there and we have other forms and investor conferences will be attending throughout the next months. So thank you for your interest.
Speaker Change: And we look forward to having a black hills energy safe day take care.
Lynn Evans: Take care.
Operator: Thank you.
Operator: This concludes the conference. Thank you for your participation. You may now disconnect.
Linn Evans: Okay.
Linn Evans: Thank you. This concludes the conference. Thank you for your participation you may now disconnect.
Linn Evans: Okay.
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