IDACORP, Inc.

Welcome to IDACorp's second quarter 2020 earnings conference call. Today's call is being recorded in our webcast slides. A complete replay will be available later today and for the next 12 months on the IDACorp website. If you need assistance at the time during the presentation, please press star zero on your phone. I will now turn the call over to Justin Forsberg, Director of Investor Relations and Treasury.

Thank you, and good afternoon, everyone. Before the markets opened this morning, we issued and posted to IDACorp's website our second quarter 2020 earnings release and Form 10-Q. The slides that accompany today's call are also available on our website. We'll refer to those slides by number throughout the call today. As noted on slide two, our discussion includes forward-looking statements, including earnings guidance, which reflect our current views on what the future holds. but are subject to several risks and uncertainties, including those related to the COVID-19 public health crisis. This cautionary note is also included in more detail for your review in our filings with the Securities and Exchange Commission. These risks and uncertainties may cause actual results to differ materially from statements made today, and we caution against placing undue reliance on any forward-looking statements. As shown on slide three, on today's call we have Lisa Groh, IdaCorp's President and Chief Executive Officer, and Steve Keen, IdaCorp's Senior Vice President and Chief Financial Officer. We also have other company representatives available to help answer any questions you may have after Steve and Lisa provide updates. On slide four, we present our quarterly financial results. IdaCorp's 2020 second quarter earnings per diluted share were $1.19, an increase of 14 cents per share from last year's second quarter. IdaCorp's earnings per diluted share for the first six months of 2020 were $1.94, an increase of 4 cents per share from the same period last year. Today, we also reaffirmed our full year 2020 IdaCorp earnings guidance estimate to be in the range of $4.45 to $4.65 per diluted share with our expectation that Idaho Power will not need to utilize any of the tax credits in 2020 that are available to support earnings in Idaho under its regulatory settlement stipulations. These are our estimates as of today, as we have seen a relatively modest net financial impact from the COVID-19 pandemic to date. However, as you would expect, it is difficult to predict the full impact of evolving economic conditions on Idaho Power's customers and suppliers, and how that could affect the upper end of the earnings guidance range or the use of tax credits if the pandemic worsens or is prolonged. I will now turn the call over to Steve.

Thank you, Justin. Let's move to slide five, where I will discuss our second quarter financial results as compared to the same quarter last year. Despite a fairly wet June and the impacts of the pandemic, overall we had solid results. which we believe positioned as well as we move forward through the second half of 2020. On the table of year-over-year changes, you'll see that continued strong customer growth of 2.6% added $3.4 million to operating income. Also, although we saw higher precipitation in June, this quarter's irrigation sales were closer to normal than last year and helped offset the negative impacts of the pandemic. which decreased our commercial and industrial sales volumes the most. Residential customer usage was 6% higher than last year, mostly related to weather variations, but customers also spent more time at home due to the public health crisis. The net result was a $6.6 million increase in overall usage per customer. Next on the table, you'll see that the increase in residential sales was offset by a $3.1 million decrease in our fixed cost adjustment revenues. Moving further down the table, our retail revenues per megawatt hour were down $1.5 million, partly due to the timing of rate recovery associated with our power cost adjustment mechanism. And also, Idaho Power's open access tariff rates declined by 13% in October of 2019. This rate decreased lower transmission wheeling-related revenues by $1 million. Next on the table, other operating and maintenance expenses decreased by $3.9 million, primarily due to the temporary deferral of some maintenance projects at Idaho Power's jointly-owned generation plant. We expect this maintenance to be completed later in 2020 or in 2021, as the timing of the maintenance is discretionary. You'll note later that we continue to expect full-year O&M expenses to be in line with 2019 and our prior guidance. Earlier this month, the Idaho Commission issued an order granting utilities the authority to defer unanticipated emergency-related expenses due to the COVID-19 public health crisis, net of any cost savings for possible recovery through future rates. As such, in the second quarter, Idaho Power recorded a $0.6 million regulatory asset for its initial estimate of those costs, including higher bad debt expense, net of estimated savings such as vehicle fuel and employee travel and training. The changes collectively netted to an increase to Idaho Power's operating income of $7.5 million. Overall, Idaho Powers and IdaCorp's second quarter net income were $7.7 million and $7.2 million higher than last year, respectively, while net income for the first half of 2020 was $2.1 million higher than last year at IdaCorp. IdaCorp and Idaho Power continue to maintain strong balance sheets, including investment-grade credit ratings and sound liquidity, which enable us to fund ongoing capital expenditures and dividend payments. I mentioned last quarter that we successfully closed a 30-year bond offering that brought approximately $260 million of cash proceeds to Idaho Power, priced at a re-offer yield of 3.42%. Proceeds of that issuance address long-term liquidity needs and will be used to retire next week a $100 million bond set to mature later this year. In June this quarter, we issued a separate $80 million bond 10-year bond at a 1.9% coupon, the proceeds of which were used earlier this week to redeem, prior to maturity, $75 million in bonds that had been set to mature in 2022 at a 2.95% coupon. This bond redemption included a modest make-hold premium that will result in a slight tax benefit in the third quarter this year. We are pleased with the outcomes of these two issuances and believe both Idaho Power and IDA Corp are in strong liquidity positions. These financings also lowered Idaho Power's long-term cost of debt rate. IDA Corp's operating cash flows along with our liquidity positions as of the end of the second quarter are included on slide six. Cash flows from operations were about $37 million lower than the first six months of 2019. The decrease was mostly related to the timing of net collections of regulatory assets and liabilities, especially those resulting from the power cost adjustment mechanism. The liquidity available under IdaCorp's and Idaho Power's credit facilities is shown on the middle of slide six. At this time, we do not anticipate issuing additional equity this year other than the relatively nominal amounts under our compensation plans. You'll note that including the current cash positions at IdaCorp and Idaho Power, As of July 29, we have access to liquidity of approximately $200 million and $494 million, respectively, net of amounts to be used for debt retirements in the third quarter. While cash flows have been minimally affected thus far, our combined liquidity, along with expected regulatory support from our annual adjustment mechanisms, is a substantial backstop to our expected capital and operating needs. As planned, Idaho Power contributed $20 million to its pension plan during the first seven months this year and has no further required additional contributions during 2020. We currently plan to contribute an additional $20 million to the plan but have flexibility depending on market conditions and cash flows, including any effects of the health crisis. Slide 7 shows our reaffirmed full-year 2020 earnings guidance and our key financial and operating metrics estimates. While it remains difficult to predict the long-term pandemic-related impact on economic conditions, and thus on our earnings guidance range, we continue to expect IDACorp's 2020 earnings to be in the range of $4.45 to $4.65 per diluted share. Our guidance continues to assume no use of additional tax credits and normal weather conditions going forward. Our strong, consistent financial results and sustained cost management efforts during the past decade have preserved the full $45 million of tax credits available to support our current minimum Idaho jurisdictional return on equity of 9.4%, and we are continuing our efforts to preserve them going forward. Other than the refined expectation of hydropower generation to the range of 6.5 to 7.5 million megawatt hours, The remaining full-year financial and operating metric forecasts are consistent with what we originally provided back in February and affirmed back in April. With that, I'll turn the call to Lisa.