Black Hills Corporation

Good day, ladies and gentlemen, and welcome to the Black Hills Corporation first quarter 2020 earnings conference call. My name is Daniel, and I will be your coordinator for today. At this time, all participants are in a listen-only mode. Following the prepared remarks, there will be a question and answer session. If you would like to participate in this portion of the call, please press star followed by 1 at any time during the conference. If assistance is needed any time during the call, please press star followed by 0 and a coordinator will be happy to assist you. As a reminder, this conference is being recorded for replay purposes. I would now like to turn the presentation over to Mr. Jerome Nichols, Director of Investor Relations of Black Hills Corporation. Please proceed, sir.

Thank you, Daniel. Good morning, everyone. Welcome to Black Hills Corporation's first quarter 2020 earnings conference call. You can find materials for our call this morning at our website at www.blackhillscorp.com under the Investor Relations heading. Leading our quarterly earnings discussion today are Lynn Evans, President and Chief Executive Officer, and Rich Kinsley, Senior Vice President and Chief Financial Officer. During our earnings discussion today, some of the 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 and beliefs are based on reasonable assumptions, actual results may differ materially. We direct you to our earnings release, slide two 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 list of some of the factors that could cause future results to differ materially from our expectations. I will now turn the call over to Lynn Evans.

Thank you, Jerome. Good morning, everyone. Thank you for joining us this morning. I anticipate we'll spend quite a bit of time this morning addressing our view of COVID-19 and the pandemic and and its impact upon our business. So let me start, please, by acknowledging that our highest priority is the safety and health of our coworkers, our customers, our business partners, and the communities that we proudly serve. Our most important assets are our unique Black Hills culture and our people. Sadly, this pandemic is affecting scores of people in some really, I guess I would describe as unimaginable ways. I truly hope that each of you and your families are healthy, and safe and our sympathies go out to all who are impacted either physically, mentally and financially by this pandemic. Our hearts are certainly with each of you and I know there will be what we call a post virus. I especially want to call out the extraordinary dedication and the effort by our first responders and the medical professionals who are on the front lines and caring for those inflicted by this virus. I'm particularly proud of our team's response for maintaining safe and reliable delivery of the essential energy our customers depend upon, especially in times like these. Our team quickly implemented a comprehensive set of well-thought-out actions in response to the pandemic, ensuring we are doing everything we can do to help mitigate the spread of the virus simultaneously. We are very fortunate to have no confirmed cases among the Black Hills team. We have had a few coworkers who were treated as if they had the virus a few months ago after having traveled earlier in the year, and I'm pleased to say they have recovered. Also, our service territory has generally reported much fewer positive cases of the virus than the more populated urban areas around the country. We remain highly engaged and focused on reducing the spread of the virus, especially amongst our coworkers and our customers. Being true to our values as a company and as individuals, we are assisting customers with financial hardship by suspending disconnections and providing payment assistance. and we have also donated to relief efforts in our communities with a particular focus on helping the hungry. We are closely monitoring the situation, and we are fully engaged with our local authorities, health professionals, and other industry groups to help guide our continuing response and our business operations as we migrate through this virus. We've also implemented or changed various protocols or processes and programs to help ensure we maintain our ability to deliver safe and reliable energy. For example, we are currently sequestering in place some of our mission critical coworkers, and we are prepared to sequester additional coworkers should conditions warrant doing so in the future. I thank these folks for representing our values and stepping up. By doing so, they're helping us make sure we provide our customers with the critical energy they need to navigate this pandemic and rebuild our local economies. From a financial perspective, we were well positioned before COVID-19 emerged, and we have strong liquidity to successfully operate our business and fund our capital deployment program. We're also retaining flexibility in our financing plan to take advantage of market conditions and favorable opportunities arise in the near future. And, of course, we continue to closely monitor key financial drivers that might impact our sources and uses of capital, such as customer usage, obviously cash flows, contractor availability, and lead times for key materials for our projects. I'm moving to slide six, and I'll provide an overview of the first quarter. I'm especially proud of our team and how they acted early and decisively in response to the pandemic and provided solid operational and financial execution. Although COVID-19 affected how we serve our customers, it has minimal impact to our earnings, and our capital deployment for the first quarter. Rich is going to discuss our forward expectations shortly. We're in a strong liquidity and financial position. We issued $100 million of equity on February 27th, fulfilling our equity needs for the year. And after taking into account the mild weather impacts during the first quarter, we delivered solid quarterly earnings. Our progress continued on both near-term and long-term strategic initiatives. We finalized the consolidation of four natural gas utilities in Wyoming under a new single statewide rate structure effective March 1st. That was an outstanding result that reflects positively on our operations and regulatory teams and the constructive Wyoming regulatory environment that we enjoyed there. I really appreciate their willingness to work through the short-term pain and complexity of regulatory consolidation to allow us to continue to improve customer service and improve efficiencies for all of our stakeholders. We also continue to advance our renewable energy solutions for customers in all three of our electric utility territories. Moving to slide seven, it provides more detail. In our first quarter, I'll start with the gas utilities. We continued efforts to consolidate natural gas utilities within Colorado, Nebraska, and Wyoming, as I mentioned earlier. In Nebraska, we completed the legal consolidation of two utilities on January 1st, and we continue to prepare for a rate review filing mid-year to consolidate customer rates and recover investments for customers in that state. We are having a constructive dialogue with the Nebraska staff regarding the timing of the filing, and we're considering the ongoing pandemic in that decision. In Colorado, the Commission recently held an open meeting on the Colorado gas rate review to consider the administrative law judge's recommended decision and the exceptions that were filed in response to that recommended decision. Unfortunately, the ALJ recommended denial of regulatory consolidation and our requested rider for safety-related investments. The ALJ also adopted adjustments that would result in a rate decrease. The Commission accepted nearly all of the ALJ's recommendations except for return on equity. which the commission reduced from 9.5% to 9.2%. Of course, we are disappointed in the commission's decision and we're waiting for the final order. When we receive that, then we'll determine what our next steps may be in Colorado. Moving to the electric utilities and power generation. Last August, our Wyoming electric utility in our power generation segment filed a joint application with FERC asking for approval of a new power purchase agreement. On February 21, FERC ordered public hearings for that application, and it also ordered settlement discussions. The hearing is now currently held in abeyance pending the outcome of the ongoing settlement discussions amongst the parties. Construction continues on schedule for our 52.5 megawatt Corydale wind project near Cheyenne. The project is on track to deliver energy under our Renewable Ready program for subscription customers in both South Dakota and Wyoming by the end of this year. We've been monitoring the supply chain for this project and, of course, for other projects very closely, and we are currently confident in completing the project on time and on budget. We are also working to expand our renewable energy generation mix in Colorado through our renewable advantage program. We requested bids for up to 200 megawatts of renewable energy to serve our Colorado electric customers. We are currently evaluating those bids with the help of an independent evaluator, and we're on track to submit those recommendations to the commission next month in June. The final item I'd like to note on this page is that on April 10th, while we were well into the pandemic, S&P Global Ratings affirmed our BBB corporate credit rating. Again, I think this affirms our objective of maintaining a solid capital structure and our solid investment credit grade ratings. Now I'll turn it over to Rich for a financial update. Rich?