Avista Corporation

Hello, and thank you for standing by. Welcome to the VISTA Corporation fourth quarter 2023 earnings conference 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 the question during this session, you will need to press star 11 on your telephone. You would then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. I would now like to hand the conference over to Stacey Wentz. You may begin.

Good morning. I'm pleased to welcome you all to Avista's fourth quarter 2023 earnings conference call. Our earnings and 2023 Form 10-K were released pre-market this morning. You can find both on our website. Joining me this morning are Avista Corp CEO Dennis Vermillion, President and COO Heather Rosentrader, Senior Vice President, CFO, Treasurer, and Regulatory Affairs Officer, Kevin Christie, and Vice President, Controller, and Principal Accounting Officer, Ryan Crosshold. Today, we will make certain statements that are forward-looking. These involve assumptions, risks, and uncertainties which are subject to change. Various factors could cause actual results to differ materially from the expectations we discuss in today's call. Please refer to our 10-K for 2023, which is available on our website, for a full discussion of these risk factors. To begin, I'll recap the financial results presented in today's press release. Our consolidated earnings for the fourth quarter of 2023 were $1.08 per diluted share, compared to $1.05 for the fourth quarter of 2022. For the full year, consolidated earnings were $2.24 per diluted share in 2023, compared to $2.12 last year. Now, I'm happy to turn the call over to Dennis.

Well, thanks, Stacy, and good morning, everyone. I'd like to start by saying how proud I am of what we accomplished in 2023. We really had a great year. Our 2023 earnings at Avista Utilities show significant improvement from 2022, and reflect the benefits of improved cost recovery resulting from our general rate cases, as well as our success in managing our costs through the headwinds of increased interest rates and the impact of higher power supply costs. Our improved earnings demonstrate the team's commitment to delivering results. This teamwork is core to Avista's values, and there are many examples I could point to to touch on one. In November, we faced the largest natural gas outage in our company's history. Nearly 37,000 natural gas customers were impacted when a gas pipeline that transports gas to a VISTA system was damaged by a third-party dig-in. Our people, along with mutual aid workers from eight utilities spanning eight states and contract employees, worked safely to restore service to every impacted customer in less than one week. That we were able to achieve 100% restoration in such a short timeframe is a testament to the determination and drive of our people and the people who came alongside of us to help. I'm thankful for each one and for the resilience and understanding of our customers. We're thankful for the safety of all involved, as well as the regular regulatory support from our commissions. We received approval to defer the costs of the incident for recovery to be addressed in a future regulatory proceeding. And I wouldn't be a utility guy if I didn't take this opportunity to say this. Please call 811 before you dig. Although much of the winter season has been milder than normal, we experienced very cold temperatures in mid-January. At the same time, two operational issues impacted our system and the natural gas system throughout the Pacific Northwest. Mechanical issues at both a third-party transmission pipeline and the natural gas storage facility we partially own reduced the capacity of natural gas in the region. These challenges, combined with the extreme cold, resulted in very high commodity prices. Just as with the gas outage, I'm proud of the resilience of our customers and our operational decisions as we navigated these issues. Although we had to purchase energy during this period of higher commodity prices, these costs will be included under various deferral mechanisms for power and gas costs. We continue to make progress on our clean energy goals on the natural gas front with the four renewable natural gas supply contracts we've executed so far. We expect to purchase 9.7 million therms of natural gas annually from renewable sources. We're also partnering with school districts in our service territory to work toward fleet electrification. And by the end of 2024, we expect to be working with nine school districts on this effort. So whether it's improving the carbon profile of our natural gas operations or assisting our customers with electrification initiatives, we're building on our foundation of clean hydropower to work towards an even cleaner energy future for our region. In December, we published our 2023 Corporate Responsibility Report. The latest report includes progress updates regarding the VISTA's aspirational goals for clean energy and workplace equity inclusion and diversity, including supplier diversity. And I really encourage you to check out the report if you haven't done it already. Great report. You can see recent examples that demonstrate our longstanding commitment to doing the right thing for our environment, our people, our customers, and communities, along with our shareholders. Earlier this month, the Board increased our annual dividend to $1.90 per share. The Board has a longstanding commitment to maximize shareholder value, and we strive to target a competitive dividend for our shareholders. We are committed to providing affordable and reliable energy to our customers, and we make customer-focused investments in our infrastructure to improve reliability and maintain the safety of our operations. Periodically, this requires us to request adjustments to customer rates to reflect the actual costs of providing service. So in January, we filed two-year general rate cases in Washington, electric and gas, We've asked for increases in the first year of our plan of $77.1 million for electric and $17.3 million for natural gas. Coal strips exit from our generation portfolio will occur at the end of 2025 in compliance with the clean energy regulations in the state of Washington and the resulting change in the projected power supply costs when netted with the changes resulting in the elimination of coal strip costs results in a total request of $53.7 million in the second year of our plan for electric. On the natural gas side, we've asked for an increase of $4.6 million in the second year of our plan. Kevin will share more about our Washington filing in a moment, and at this time, I'll hand the call over to Kevin.