Black Hills Corporation

Good day, ladies and gentlemen, and welcome to the Black Hills Corporation Second 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 1-1 at any time during the conference. If assistance is needed anytime 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. Good morning, everyone. Welcome to Black Hills Corporation's second quarter 2022 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. Hello, everyone, and thank you for joining us. I'll start on slide four of our investor presentation. During the second quarter, we delivered solid financial results and advanced our strategic initiatives. I especially note our progress with our regulatory initiatives and our electric resource planning, and we reaffirmed our 2022 earnings guidance yesterday. Our success starts with our dedicated team and their commitment to serving our customers with excellence. I'd like to express how proud I am of our team for delivering the high level of operational performance that our customers depend upon every day. Safety and reliability are critical as we journey through the nation's clean energy transition. The July heat wave recently demonstrated once again the critical need for reliable and dispatchable capacity and the importance of a responsible mix of resources. Once again, for the ninth consecutive summer, our Wyoming electric system marked a new all-time demand peak, and our South Dakota electric system also surpassed its all-time peak from last summer, reflecting the ongoing customer growth in our service territories. Our industry-leading generation and system availability made it possible for us to keep homes safe and keep businesses operating without any restrictions or forced outages. Our vertically integrated model with nearly 1,500 megawatts of own generation allows us to serve our customers safely, reliably, and cost-effectively during these volatile energy markets. We were also successful with another innovative customer solution during the quarter. Our team completed its first agreement for service under our blockchain tariff in Wyoming with a well-established crypto miner that is investing in long-term operations in Cheyenne. We anticipate our customer will begin taking delivery of up to 45 megawatts of energy by year end with an option to expand service up to 75 megawatts. The energy for this customer will be sourced through the energy markets and delivered through our reliable infrastructure which will benefit our other Cheyenne utility customers. On slides five and six, we've outlined our progress with our regulatory initiatives. I'm pleased that our Arkansas gas rate review continues to advance on schedule with a hearing before the Arkansas Commission later this month. Our request seeks to implement new rates in the fourth quarter and implement an enhanced system safety, integrity, and reliability rider. On June 1st, we filed a rate review for Wyoming Electric. We're requesting new rates in the first quarter of 2023 to recover the $250 million of investments we have made in the Cheyenne region since our last rate review eight years ago in 2014. We also made progress with our winter storm URI cost recovery during the quarter. Thus far, we've recovered more than one quarter of the incremental costs we incurred to serve customers during storm URI. In June, we received final approval for our recovery plan in Arkansas, and we're waiting for a final decision in Wyoming, where we started collecting interim rates last September. We also filed for approval of our voluntary renewable natural gas and carbon offset programs in Colorado and Kansas. The proposed tariff will allow business and residential customers to opt into the program. Looking forward, we're also preparing to file a rate review later this year for Rocky Mountain Natural Gas. our intrastate natural gas pipeline in Colorado. The last two items to cover on slide five are related to our long-term transmission and electric resource planning for Colorado, South Dakota, and Wyoming. Our theme for 2022 is Powering a Better Future, a recognition to the ongoing clean energy transition. We're optimistic about our generation and transmission opportunities as part of this transition and our plan to expand our energy delivery systems to meet growing customer demand while maintaining resiliency and reliability and developing a smarter grid. We've laid out a clear path forward for our infrastructure across our electric utilities. In total, we plan to add 600 megawatts of renewable resources and battery storage and 260 miles of electric transmission as part of our Ready Wyoming initiative. Slide 7 summarizes our Clean Energy Plan for our electric utility in Colorado. The plan laid out a path to a 90% reduction in greenhouse gas emissions intensity by 2030 from a 2005 baseline. Our proposed plan would achieve this goal through the addition of approximately 400 megawatts of renewable wind and solar resources and 50 megawatts of battery storage between 2025 and 2030. We already closed our only remaining coal plants in Colorado back in 2015. and these new clean energy additions would result in almost 80% of our Colorado customers' electricity coming from carbon-free resources. Importantly, the reliability of our system is supported by the dispatchable Pueblo airport generating station. We expect to initiate the competitive bidding processes by mid-2023 for these new resources, and Colorado legislation provides up to 50% utility ownership of these additions. Slide 8 summarizes our resource plan that we filed last year for our jointly operated electric system in South Dakota and Wyoming. As the slide indicates, our proposed plan includes the addition of 100 megawatts of renewable resources and potentially 20 megawatts of battery storage. We're preparing for the next steps that will likely include a competitive bidding process in which we will participate. And slide 9 summarizes our Ready Wyoming Transmission Project and the benefits we expect it to provide for customers, for the state of Wyoming, and for our shareholders. The project continues to advance through the regulatory process on pace with our expectations. Moving to slide 10, we're excited about the tangible progress we've already delivered on our emissions reduction goals and other ESG goals. To date, we've already reduced our emissions intensity by more than one-third since 2005. Later this month, we will publish our updated sustainability report, which will provide detail on this and many other key ESG factors. We'll also provide key updates for other ESG disclosures, including SASB, the AGAEEI templates, and the Natural Gas Sustainability Initiative. Notably, we will for the first time publish TCFD disclosures. We're excited about our progress for both our electric and gas businesses in delivering a cleaner, more efficient energy future for our customers and our communities. So please review our reports later this month to find out more. Slide 11 summarizes our long-term growth plan. We're focused on growing long-term value for customers and shareholders through our customer-focused capital investment program, developing incremental capital projects such as those that could result from our electric resource planning and executing on other opportunities to grow our earnings streams. Those other opportunities include investing to support and attract new customers, such as our newly announced blockchain customer. We are also improving our effectiveness and efficiency as a team, as I've described previously on our Energy Forward initiative. We're cultivating a mindset to identify and think more holistically about how we can better serve our customers every day. We continue to deliver progress on this plan during the first half of 2022 and look forward to developing these opportunities for the future. That completes my comments, and I'll turn it over to Rich for the financial update. Rich?