Avista Corporation

Welcome to the Q1 2019 earnings conference call. My name is James. I'll be your operator for today's call. At this time, all participants are in a listen-only mode. Later, we will conduct a question and answer session. During the Q&A session, if you have a question, please press star 1 on your phone. And also note this conference is being recorded. I'd now like to turn the call over to John Wilcox, Investor Relations Manager. John, you may begin.

Thanks, James. Good morning everyone and welcome to Avista's first quarter 2019 earnings conference call. As an introduction, I've been with Avista since 2001 and have spent most of my time with the company in SEC reporting and energy resources accounting. I'm a proud University of Washington graduate and I'm excited for my new role. Our earnings were released pre-market this morning and our first quarter 10Q was filed on Wednesday. They're both available on our website. Joining me this morning are Vista Corp Chairman of the Board and CEO Scott Morse, Senior Vice President and CFO Mark Thies, Vice President External Affairs and Chief Customer Officer Kevin Christie, and Vice President and Controller Ryan Crassel. I would like to remind everyone that some of the statements that were made today are forward-looking statements of all the assumptions, risks, and uncertainties which are subject to change. For reference to the various factors which could cause actual results to differ materially from those discussed in today's call, please refer to our 10-K for 2018 and 10-Q for the first quarter of 2019, which are available on our website. To begin this presentation, I would like to recap the financial results presented in today's press release. Our consolidated earnings for the first quarter of 2019 were $1.76 for diluted share, compared to 83 cents for the first quarter of 2018. Now I'll turn the discussion over to Scott.

Thank you, John, and congratulations on your new role as the manager of investor relations. I'm excited that we recently announced a goal to serve our customers with 100% clean electricity by 2045 and to have a carbon-neutral supply of electricity by the end of 2027. This commitment bolsters our longstanding history of providing clean, reliable and affordable energy to the customers and communities that we serve. We announced this 100% clean electricity goal as an important step forward in caring for our environment while continuing to meet the energy needs of our customers and communities today and well into the future. We've already begun working toward our goal because in the last three years We've implemented three renewable energy projects on behalf of our customers, two solar projects and one wind project, all located in Washington State. In addition, last week we announced an agreement with the California Independent System Operator to participate in the Western Energy Imbalance Market, which furthers our commitment to integrate renewable energy into our electric generation resource mix. We expect to begin implementing new processes to enable participation in the EIM in the second half of 2019, and we expect to be full participants in the market by April of 2022. In late April, the Washington State Legislature passed Senate Bill 5116. The bill establishes three standards applicable to us. on or before December 31, 2025, we'll no longer be allowed to use output from coal strip to serve loads in Washington. Second, by January 1, 2030, we must serve no less than 80% of our load with conservation and renewable and non-emitting generation. And three, by January 1, 2045, we must serve our entire load with renewable and non-emitting resources. The legislation also contains provisions that we believe provide the Washington Commission tools for constructive regulatory decisions that may allow us to reduce regulatory lag while providing more future rate certainty for customers. With regards to our quarterly results, our consolidated earnings were below our expectations for the first quarter. However, we remain on track to meet our guidance for the full year. Our first quarter 2019 earnings were positively impacted by the receipt of the termination fee from Hydro One. AEL&P and our other businesses each had a good start to the year. In addition, we're excited to announce that during April, we sold our subsidiary, Metal FX, for the net proceeds of about $17 million, and we expect to recognize a net gain of about $2.4 million during the second quarter of this transaction. We want to thank the entire team at Metal Fx as it has been great to work with them over the past 20 plus years, and we wish them well into the future. Regarding regulatory matters on April 30th, we filed general rate cases in Washington that are two year rate plans. If approved, the electric general rate request is designed to increase annual base revenues by 45.8 million effective April 1st, 2020. and $18.9 million effective April 1, 2021. For natural gas, if approved, the general rate case is designed to increase annual base revenues by $12.9 million effective April 1, 2020, and $6.5 million effective April 1, 2021. The electric and natural gas rate requests are based on a proposed rate of return on rate basis 7.5 2% with a common equity ratio of 50% and a 9.9% return on equity. We also filed general rate cases in Oregon in March, and if approved, the request is designed to increase annual base revenues by $6.7 million. The request is based on our proposed rate of return on rate basis 7.55% with a common equity ratio of 50% and a 9.9% return on equity. We are evaluating filing in Idaho in the second quarter. The purpose of all our general rate cases, our request is to recover the costs associated with our capital investments to replace aging infrastructure and for reliability, resiliency, and technology improvements. So now I'll turn it over to Mark.