Avista Corporation

Ladies and gentlemen, thank you for standing by, and welcome to the Avisto Corporation first quarter 2020 earnings call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you'll need to press star 1 on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star 0. I would now like to hand the conference over to your speaker, Mr. John Wilcox, Investor Relations Manager. Please go ahead, sir.

Thank you. Good morning, everyone, and welcome to Avista's first quarter 2020 earnings conference call. Our earnings were released pre-market this morning and are available on our website. Joining me this morning are Avista Corp. President and CEO Dennis Vermillion, Executive Vice President, Treasurer, and CFO Mark Theis, Senior Vice President, External Affairs and Chief Customer Officer, Kevin Christie, and Vice President, Controller, and Principal Accounting Officer, Ryan Crasselt. I would like to remind everyone that some of the statements that will be made today are forward-looking statements that involve 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 2019 and 10Q for the first quarter of 2020, 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 2020 were $0.72 per diluted chair, compared to $1.76 for the first quarter of 2019. Now I'll turn the discussion over to Dennis.

Well, thanks, John, and good morning, everyone. First of all, we want to express our deepest sympathies to everyone who is suffering unprecedented hardships during the COVID-19 pandemic. We know that many people are hurting, businesses are hard hit, and communities are challenged as a result of this pandemic. Like other businesses and utilities, Our primary focus is the safety of our customers and employees while providing reliable energy service during this difficult and uncertain time. And I'm so proud and inspired by the way our company has risen to this challenge with flexibility, humility, courage, and a caring heart. We're doing everything we can to anticipate the needs of our employees, customers, and communities while making sure we can successfully manage through this crisis. We've taken precautions concerning employee and facility hygiene, imposed travel limitations on employees, and directed our employees to work remotely whenever possible. Protocols have been established and implemented to protect employees and the public when work requires public interaction. And we have informed our retail customers and state regulators that disconnections and late fees for nonpayment are temporarily suspended. We also believe it is extremely important to continue to support our communities during this health crisis. So we're honoring all of our financial contributions and commitments to nonprofit organizations and corporate sponsorships, even though many community events have been canceled. Our foundation's charitable giving across our service territory totals more than $1.1 million and includes more than $865,000 toward relief from the impacts of COVID-19. Along with other utilities and businesses across the region and country, we continue to plan for the future and what it might look like and how we can best serve our customers moving forward. We believe that we will continue to be able to conduct our utility operations effectively and provide safe and reliable service to our customers. Even with the challenges we face this quarter, several important regulatory matters in Washington were resolved during March. The Washington Commission issued orders with respect to the remand of our 2015 general rate case, the cost of replacement power related to an unplanned outage at Coal Strip in 2018, and our 2019 general rate cases. We appreciate the Commission's efforts to arrive at results that keep rates affordable for our customers during this challenging time and that are also fair and reasonable for our shareholders. Due to the current environment, we have reevaluated the timing of our plans for general rate case filings in Washington and Idaho, and times certainly have changed versus where we were just a short eight weeks ago. And while the company is mindful of its duty related to prudently managing its business for our investors, we must also realize that the communities we operate in and the customers we serve are hurting. We are carefully balancing all of our constituencies and we are now planning to make those filings in the fourth quarter of 2020. With respect to results, our first quarter consolidated earnings were below expectations due to the impact of the Washington regulatory decisions, as well as increased operating costs due to higher labor, employee benefits, and bad debt expense. We have implemented cost reduction activities to help mitigate higher operating costs. AEL&P's earnings were on track for the first quarter. However, we believe there will be a negative impact on the Juneau economy due to an unexpected decline in tourism during the remainder of the year. Our other business experienced a net loss during the first quarter due to impairment losses, and we are expecting additional losses at non-utility businesses for the remainder of the year due to overall market declines, including impacts of COVID-19. We are lowering our consolidated earnings guidance for the year to reflect regulatory items, expected net impacts from COVID-19, and losses at our non-utility businesses. As a result, our consolidated earnings guidance is a range of $1.75 to $1.95 per diluted share, a decrease from our prior guidance of $1.95 to $2.15 per diluted share. Despite these recent headwinds, I still believe we are well-positioned financially and operationally for success in the future, and that we will ultimately be able to meet our long-term earnings targets of 4% to 6% growth. It just may take a little longer than we planned. And now I will turn this presentation over to Mark.