IDACORP, Inc.

Welcome to IDA Corp's third quarter 2021 earnings conference call. Today's call is being recorded and our webcast is live. A complete replay will be available later today and for the next 12 months on the IDA Corp website. If you need assistance at any time during the presentation, please press star zero on your phone. I will now turn the call over to Justine Forsberg, Director of Investor Relations and Treasury. Sir, please go ahead.

Thank you, and good afternoon, everyone. This morning, we issued and posted to IDACorp's website our third quarter 2021 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 and spending forecasts, which reflect our current views on what the future holds, but are subject to several risks and uncertainties. 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 for a Q&A session after Lisa and Steve provide updates. Slide four shows our quarterly financial results. IDACorp's 2021 third quarter earnings per diluted share were $1.93, a decrease of $0.09 per share from last year's third quarter. Earnings per diluted share over the first nine months of 2021 were $4.20, which were $0.25 above the same period last year. The year-to-date earnings are the highest in the history of the company over the first nine months of the year. Today, we also tightened our full year 2021 IDA Corp earnings guidance estimate upward to be in the range of $4.80 to $4.90 per diluted share, with our expectation that Idaho Power will not need to utilize in 2021 any of the additional tax credits that are available to support earnings under its Idaho Regulatory Settlement Stipulation. These are our estimates as of today, and they assume normal weather conditions and a continued return to more normal economic conditions over the balance of 2021. I will now turn the call over to Lisa.

Thank you, Justin, and thanks to everyone for joining us on today's call. I will begin by addressing the robust economic growth we continue to experience in Idaho's power service area. You'll see on slide five that customer growth has increased 2.9% since September 2020. We believe that quality of life, a business-friendly environment, and reliable, affordable energy from Idaho Power continue to attract a steady influx of business and residential customers to the benefit of both our company and the local economy. And while the impacts of the COVID-19 pandemic linger, we continue to see a return to normal operations for most of our commercial and industrial customers. As of the end of September, unemployment in our service area was 2.6% compared to the current rate of 4.8% nationally. Total employment in our service area has increased 3.3% over the past 12 months. Moody's forecasted GDP now calls for economic growth of 6.1% in 2021 and 4.2% in 2022. We are encouraged by this growth trend and forecast, especially considering the challenges we have all faced over the past 18 months. At the local level, we are grateful to see businesses continue to bounce back from the various impacts of the pandemic. Idaho Power continues to experience a strong volume of potential customers interested in expanding in our service area. Many prospective projects are expressing a need for rapid speed to market and are seeking existing buildings versus greenfield construction. This demand is fueling significant industrial spec development to construct shell buildings ranging from 50,000 to 250,000 square feet. While a number of local developers are building out industrial parks, several nationally recognized developers are making large investments in anticipation of ongoing growth in Idaho's industrial sector. As you may know, Idaho Power serves a large dairy industry, and the state of Idaho ranks as the third largest dairy-producing state in the U.S. We've recently received a number of inquiries for dairy waste-to-energy projects that use electricity as part of the process to produce renewable natural gas that is placed into pipelines. One such project, announced this month by Shell Oil Products US, will construct a waste-to-energy natural gas facility at a large dairy operation in southern Idaho. The plan is for the gas to be shipped by pipeline from Idaho to California. You'll recall that this summer brought extreme high temperatures to our region, which combined with customer growth led to record energy demand. Idaho Power hit a new all-time peak load of 3,751 megawatts on June 30th and exceeded the previous peak load more than 60 separate hours during June and July as the weather remained hot and dry over most of the summer. This led to strong sales across most customer classes. The benefits of those sales were offset somewhat by Idaho Power's portion of the associated higher power supply costs, in part because energy was at a premium across much of the West due to the persistent hot-dry conditions. Once again, I'd like to thank our employees for helping us meet that record energy demand. It was a challenging summer, and we learned some valuable lessons, and I am so pleased to see that both our people and our grid were up to the task. We anticipate sustained growth in the demand for electricity, a challenge that is amplified by constraints in the transmission system impacting our ability to import energy into Idaho Power's system, especially during peak load periods. As a result, we will need new resources to serve customers and maintain system reliability. Last quarter, I mentioned Idaho Power had issued a request for proposal to add 80 megawatts of new resources by summer 2023. and expects to issue an additional RFP in late 21 or early 22 to meet anticipated needs beyond 23. Based on our efforts to address the 2023 projected load deficits, you'll see on slide six that we now could potentially add approximately $100 million in additional capital expenditures related to the 80 megawatt project during the current five-year forecast window. These new resources will be in addition to the 120 megawatt solar project scheduled to come online at the end of next year and the Boardman to Hemingway 500 kV transmission line that will enable an increased import of energy from across the Pacific Northwest as soon as 2026. Our 2021 integrated resource planning efforts are focused on ensuring we continue to deliver reliable, affordable, clean energy for our growing customer base from diverse resources. On the regulatory front, I would like to provide an update on a recent request to accelerate depreciation for the Jim Bridger Coal Fire Power Plant. Last quarter, I mentioned our filing with the Idaho Commission to increase rates $30.8 million in December of this year. In September, Pacificor, our co-owner and operator of the Jim Bridger plant, submitted an IRP to the Idaho Commission that contemplates ceasing coal fire generation in Units 1 and 2 in 2023 and converting those units to natural gas generation by 2024. At a public meeting this week, the Idaho Commission approved a joint motion to suspend the Idaho powers rate request while the parties assess this option and environmental compliance requirements for the plant. We expect to resolve the uncertainties in this case before the end of 2021. I'd also like to share a brief update on the Boardman to Hemingway transmission line project. In July, Idaho Power awarded contracts for detailed design, geotechnical investigation, land surveying, and right-of-way option acquisition for B2H. That work commenced during the third quarter. Given the status of ongoing permitting activities and the construction period, Idaho Power expects the in-service date for the transmission line will be no earlier than 2026. I have also mentioned on previous calls that Idaho Power and our co-participants are exploring several scenarios of ownership, asset, and service arrangements aimed at maximizing the value of the project for each of the co-participants' customers. In July, the co-participants entered into an agreement and acknowledged that BPA does not intend to participate in the construction or become a co-owner of the project. and that BPA intends to sell its interest in the project to either Idaho Power or a third party. Any changes regarding the ownership structure would be addressed through amended or new agreements for future phases of the project. We hope to be able to share more detailed updates in the near term. Given the expected increase in capital spending, along with the current growth projection and other factors, Idaho Power could file a general rate case in Idaho and Oregon within the next couple of years. Steady customer growth, constructive regulatory outcomes, effective cost management, and economic conditions all play significant roles as we refine the need and timing of a future general rate case. Slide 7 shows a recent outlook of precipitation and weather from the National Oceanic and Atmospheric Administration. Current weather projections for November through January show a 33% to 40% chance for both above normal precipitation and above normal temperatures in much of Idaho Power's service area. If these mild and wet conditions materialize, it could provide a needed boost to our regional snowpack as well as our forecast for the clean, low-cost hydro generation that has traditionally been our single largest generation resource. We will be praying for snow, certainly, and with the storms of this week, we are off to a great start. And with that, I will turn the call over to Steve.