Black Hills Corporation

Good day, ladies and gentlemen, and welcome to the Black Hills Corporation first quarter 2022 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 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, Liz, and good morning, everyone. Welcome to Black Hills Corporation's first quarter 2022 earnings conference call. You can find our earnings release and materials for our call this morning at 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 Len Evans.

Thank you, Jerome. Good morning, everyone, and thank you for joining us. I'll start on slide four of our investor presentation, which summarizes our performance for the first quarter. Our team delivered excellent operational and financial performance during the quarter, providing a great start to the year. Our earnings per share increased 18% year over year, with strong contributions from both our electric and gas utilities. Our earnings growth in the first quarter reflects the execution of our regulatory strategy over the last several quarters, including constructive outcomes for three gas rate reviews and storm URI cost recovery. Our financial results also benefited from ongoing customer growth, driven by population migration into our service territories. and our strong generation fleet availability during the quarter supported profitable off-system energy sales that benefited customers and shareholders. Our generation team operates our fleet at much higher availability than the industry average, which is a testament to their focus on operational excellence and is key to our top quartile reliability and keeps costs lower for our customers. As always, safety is our top priority as we aspire to be the safest utility in the country. As an example of our team's safety focus, our Wyandak mine was recently recognized by achieving core safety certification from the National Mining Association. Wyandak joins only 10 other mines out of more than 500 to meet these strict safety standards. Our capital plan for the year is on track as we proactively manage through inflation and supply chain challenges. We're prioritizing our projects and adapting our project schedules to address these realities. Most of our procurement needs for 2022 are already sourced, and looking ahead, certain equipment items such as meters and distribution transformers are developing longer lead times, and we're collaborating with our supply chain partners to address these challenges. We also continue to advance our growth and resiliency strategies. We have signed a contract with a blockchain customer in Wyoming. The contract includes conditions that must be met by the customer before we provide them energy, and we hope to begin delivering energy later this year. We also continue to evaluate other requests for service under our blockchain interruptible service tariff. Our proposed Ready Wyoming transmission project also continues to move along. I'll discuss this project further in a moment. Our financial outlook is listed on slide five, which is consistent with our prior disclosures. We continue to anticipate earnings in the range of $3.95 to $4.15 per share for the year. We also continue to target EPS growth of 5 to 7% for 2023 through 2026, and annual dividend growth of at least 5% during the same period. Our base capital plan remains at $3.2 billion over the next five years. Slide 6 provides a regulatory update for our current and planned activities. Our only currently active rate review is for Arkansas gas, which we filed last December. We're requesting recovery for more than $220 million of investments and approval for an enhanced safety-focused rider. The regulatory process continues as expected, and we anticipate resolution by year-end. We've nearly completed our regulatory process relative to our recovery of our incremental fuel costs that we experienced during Winter Storm Yori. We continue to expect full recovery of the $546 million of extraordinary fuel costs we incurred during the February 2021 storm. We're currently recovering in all of our states, and we're waiting for final decisions for Arkansas gas and Wyoming gas. Through the first quarter of this year, we've recovered $106 million of the $546 million of incremental costs. In February, we filed for approval of the Ready Wyoming project, a proposed 260-mile electric transmission line in southeast Wyoming, which is expected to stabilize costs for customers, enhance the resiliency of our electric systems, and support the local economic health of the Cheyenne region. The request is moving through the regulatory process, and we expect resolution by year-end. If approved, construction will begin next year. And we view Ready Wyoming as a win-win project for our customers, for Wyoming, and for our shareholders. Looking forward, we're preparing to file two rate reviews this year. We plan to file a rate review for Wyoming Electric by June 1st, as required by a prior settlement agreement. And we also plan to file a rate review later this year for Rocky Mountain Natural Gas, our interstate natural gas pipeline in Colorado. In our natural gas utilities, we plan to file RNG tariffs in three states that would provide customers an option to replace all or a portion of their current natural gas usage with biogas or renewable natural gas. We expect to file in Colorado in May, followed by filings in Kansas and Nebraska before August. The final two items on this slide relate to the resource planning process for our three electric utilities. We submitted a resource plan last year for our jointly operated South Dakota and Wyoming electric system. We're preparing for the next steps to add up to 100 megawatts of renewable resources and 20 megawatts of battery storage as identified in our preferred plan. We're also working to finalize and file our clean energy plan for Colorado in the second quarter. This plan supports an 80% reduction in carbon emissions by 2030, up a 2005 base year, which will require the addition of more renewable energy resources. Slide 7 sets our company-wide emissions reduction goals for 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 in our natural gas utilities, and we're well on track to achieve a cleaner energy profile for the future. Our updated sustainability report, along with our other ESG disclosures, including SASB, the AGA EEI templates, and the Natural Gas Sustainability Initiative, will be published in August. And for the first time, we will also publish TCFD disclosures in August. Moving to slide eight, which focuses on our experience with customer growth in the states and jurisdictions we serve. The gray bars on this chart display the total population growth over the past three years for the states we serve and the national average. The orange bars show the customer growth rate for our Black Hills energy jurisdictions during that same period. I'll note that the customer growth rates within our service territories are well above each state's average, illustrating the overall quality of the jurisdictions we serve, with growth in our Arkansas and Colorado territories remaining particularly strong. Here in Rapid City, we were recently listed as the top growing Midwest community, and we're also ranked as the number one emerging housing market by an index published by the Wall Street Journal and Realtor.com. We've also provided our estimated rate base by jurisdiction on this slide. Slide nine highlights our Energy Forward initiative. We're fostering sustainable cost savings through innovation and continuous improvement. Our company-wide program is focused on ensuring we have processes that allow us to serve customers as effectively and efficiently as possible. Slide 10 summarizes our long-term growth plan. We're confident in our customer-focused strategy and the strategic diversity of our electric and gas utilities across our stable and constructive jurisdictions. And we're excited about our growth opportunities, many of which we've already discussed today. We're focused on growing long-term value for customers and shareholders through our customer-focused capital investment programs. developing incremental projects, executing on other opportunities to grow our earning stream, and improving our effectiveness and efficiency as a team. We remain excited about our growth opportunities and the customer growth in our service territories. Those factors, combined with our Energy Forward initiative, will assist us in tempering inflation impacts and delivering on long-term growth targets. That completes my comments, and now I'll turn it over to Rich for the financial update. Rich?