Black Hills Corporation

Good day, ladies and gentlemen, and welcome to the Black Hills Corporation fourth quarter and full year 2021 earnings conference call. My name is Liz, 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'd like to participate in this portion of the call, please press star followed by one at any time during the conference. If assistance is needed at any time during the call, please press star followed by zero 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 and good morning, everyone. Welcome to Black Hills Corporation's fourth quarter and full year 2021 earnings conference call. You can find our earnings release and 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 a 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, and thank you for joining us this morning as we review our Q4 and our full year 2021 performance. Let me begin by recognizing our engaged and dedicated team. Because of them, we had an outstanding 2021 with strong operational and strategic execution. Moving to our slide deck, I'll start by reviewing slides four and five. Over the past year, our team delivered safe and reliable service to our customers when they needed it most during the year, when they experienced extreme cold and extreme heat brought on by some extraordinary and unique weather conditions. We successfully served new all-time peak loads for both our electric and gas systems last year. And in January of this year, we served new winter electric peak loads in South Dakota and Wyoming. And importantly, we served our customers very reliably throughout the year, with all three of our electric utility systems delivering top quartile reliability. The resiliency of our electric and natural gas systems was showcased by our exceptional performance during the extreme conditions of winter storm Uri. That performance, combined with our top quartile industry-leading reliability, affirms the necessity and the success of our capital investment programs. To maintain our proven track record of delivering strong service reliability, we successfully deployed $680 million of capital investments last year. We also obtained approvals in Colorado, Iowa, and Kansas for new rates and riders after achieving constructive settlements in all three. We value the constructive regulatory environment within our states. Also, as we said we do, we filed a gas rate review in Arkansas in December, which is now progressing through the regulatory process. In addition to our rate review activity last year, we prepared and filed applications for winter storm URI cost recovery. We've received approvals for recovery in four states, and we're waiting for final decisions regarding our two settlement agreements in Colorado, and we're in the final stages in Arkansas and Wyoming, where we have interim rates in place. Our team also works safely, achieving strong safety metrics, including a 44% improvement in our injury incident rate since 2014. and a 37% reduction in motor vehicle incidents as compared to last year. Our team at the Cheyenne Prairie Generating Station achieved OSHA Gold Star Safety status, joining the Pueblo Airport Generating Station as our second generation site to receive this coveted safety designation by OSHA. Looking forward, we will file a rate review for Wyoming Electric by mid-year, and we expect to file a rate review for Rocky Mountain Natural Gas, our midstream subsidiary, in Colorado later this year. As a leader within the energy transition, we're engaged in mapping our best path forward for customers and shareholders. We submitted our resource plan for our South Dakota electric and Wyoming electric systems last June, providing a roadmap for new generation resources to serve customers. The plan also achieves our emission goals by responsibly integrating new renewable resources and battery storage technology. And we will continue to support our local communities by keeping critical generation capacity operating in Wyoming with lower emissions by repowering our Neal Simpson II power plants and natural gas. We also announced the Ready Wyoming Transmission Expansion Project, which will provide our Wyoming customers with long-term cost stability. The project will interconnect our South Dakota, eastern Wyoming, and Cheyenne electric systems. By doing so, we will enhance resiliency and reliability, and will also gain access to new energy markets and renewable energy resources. We plan to file for approval of the project this month with capital costs of approximately $260 million. I'll note these dollars are included in our forward capital forecast. Construction would commence in 2023 following commission approval and would take place in several phases through 2026. We're also finalizing our plan to meet our electric resource needs and emissions goals in Colorado. Our team made progress in 2021, modeling a variety of resource scenarios. We expect to file our clean energy plan with the Colorado Commission by mid-year. And finally, we expanded and published new disclosures for ESG, adopting new reporting through SASB and NGSI. And we're working with a consultant on our path forward relative to TCFD and other reporting opportunities. I am proud of the execution resilience of our Black Hills team and all that we accomplished in 2021. Our team had a truly outstanding year, and importantly, we added to our foundation for continued growth. Our financial outlook is provided on slide six. We are affirming our 2022 guidance range of $3.95 to $4.15 per share. As a reminder, we typically add another year to our capital forecast with our fourth quarter earnings, which now includes 2026. We've also extended our five to seven percent EPS growth target and our annual dividend growth target of at least 5 percent through 2026. Slide 7 summarizes our long-term growth plan. We're focused on growing long-term value through our customer-focused capital investment program, developing incremental projects, and executing on other opportunities to grow our earnings stream and improve our effectiveness and efficiency as a team. We have a robust $600 million annual capital plan to serve the growing needs of customers in 2022 and 2023, and over $650 million of investment each year thereafter. I'll note that our current base capital forecast does not include potential incremental transmission projects beyond Ready Wyoming, nor does it include any renewable generation assets that may develop from our South Dakota and Wyoming resource plan or from our Colorado Clean Energy Plan we will file later this year. We're always evaluating opportunities for our business, such as renewables and transmission, other pipeline and storage projects, and additional programmatic investment. We're also focused on what we call capital light opportunities that can drive earnings with little to no capital investment. We're optimistic about the continued customer growth we're experiencing, which includes population migration, and new and growing business loads such as data centers and the interest expressed by potential new crypto miners and blockchain customers. We're also fostering ongoing sustainable cost savings through innovation and continuous improvement in how we do business as a team across our organization. Our company-wide Energy Forward program is focused on ensuring we have processes that allow us to serve customers as effectively and efficiently as possible. We're confident in our strategy, and we're blessed with thriving and growing communities and states with constructive regulatory environments. And we're further blessed with a growing list of great opportunities to drive a strong future for our stakeholders. Slide 8 illustrates the results we've delivered in recent years by executing our customer-focused strategy. Our engaged team gives me confidence that we can continue to drive long-term value for our customers and shareholders. Slide 9 sets out our emissions and reduction goals for both our electric and natural gas segments. From a 2005 baseline, we've already achieved a 30% reduction in greenhouse gas emissions intensity at our electric utilities and a 33% reduction at our natural gas utilities, and we're well on track to deliver a cleaner energy profile for the future. The initiatives wrapped within the ESG blanket have always been a key focus for us, and we're continuing to critically evaluate our business through that lens. This, of course, includes analyzing ESG risks and opportunities and then weaving them into our strategy and decision-making. Finally, we've engaged independent consultants to assist us in analyzing risks from climate and other similar ESG issues as we integrate them into and consider them part of our strategy. That completes my comments, and now I'll turn it over to Rich for the financial update. Rich?