Spire Inc.

Good morning, and welcome to SPIRE's 2022 first quarter earnings call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note this event has been recorded. I would now like to turn the conference over to Scott Dudley, head of investor relations. Please go ahead.

Good morning and welcome to SPIRE's fiscal 2022 first quarter earnings call. We issued an earnings news release this morning and you may access it on our website at spireenergy.com under newsroom. There is a slide presentation that accompanies our webcast and you may download it from either the webcast site or from our website under investors and then events and presentations. Before we begin, let me cover our safe harbor statement and use of non-GAAP earnings measures. Today's call, including responses to questions, may contain forward-looking statements within the meaning of the Private Security Litigation Reform Act of 1995. Although our forward-looking statements are based on reasonable assumptions, there are various uncertainties and risk factors that may cause future performance or results to be different than those anticipated. These risks and uncertainties are outlined in our quarterly and annual filings with the SEC. In our comments, we will be discussing net economic earnings and contribution margin, which are both non-GAAP measures used by management when evaluating our performance and results of operations. Explanations and reconciliations of these measures to their GAAP counterparts are contained in both our news release and the slide presentation. On the call today is Suzanne Sutherwood, SPIRE's President and CEO, Steve Lindsey, Executive Vice President and Chief Operating Officer, and Steve Rasche, Executive Vice President and CFO. Also in the room today are Scott Carter, President of SPIRE Missouri, and Adam Woodard, Vice President and Treasurer and CFO of our gas utilities. With that, I'll turn the call over to Suzanne.

Thank you, Scott, and good morning to those participating on the call. Here in the St. Louis region, we're expecting a major winter storm. Thus, our SPIRE employees are busy this week keeping people warm and keeping our community safe with natural gas service and supply. I'd like to take a quick moment to express our gratitude for everyone who's working around the clock to provide reliable and resilient natural gas. That's our number one goal. That's exactly what we're here to do. At SPIRE, everything begins and ends with our mission. Answer every challenge, advance every community, and enrich every life through the strength of our energy. We use that energy to make a positive, measurable impact on the world around us. Our energy keeps us stepping forward, advancing, and innovating, and energizing the future. And we continue in that spirit regardless of challenges. As you know, we faced a number of challenges over the last year or so. including an unprecedented order in our recently completed Missouri rate review and a challenge to the continued operation of SPIRE SEL pipeline. As fiscal 2022 unfolds, we continue to work through these issues, including moving forward to address the significant shortcomings in the Missouri rate order that went into effect late December. Specifically, we are already taking steps to prepare a new general rate review to ensure a fair and reasonable regulatory outcome for the future. At the same time, we're working through the remand process at Burke to secure a permanent operating certificate for SPIRE STL pipeline. Amid these challenges, we have remained steadfast in delivering on our strategic priorities and commitments. We continue to invest in significant amounts of capital into our utilities for upgrading infrastructure, gaining new businesses by adding customer connections and furthering our innovation through technology. We're doing this while enhancing all aspects of our operating performance, from customer service to safety and system reliability, including reductions in methane emissions as we fulfill our commitment to be a carbon-neutral company by mid-century. Steve Lindsey will provide more information in his remarks, including regulatory matters in Missouri, the SPIRE-STL pipeline, and our capital investments to date. Know that in everything we do, we always strive to provide significant support for our communities and create increased value for our shareholders. Steve Rasche will provide details on our first quarter earnings. As you have probably already seen in our news release, we reported $1.14 per share, which reflected the impact of warmer weather and higher costs. Now, I'll pass the call to Steve Lozzi.

Thank you, Suzanne. I want to start by also acknowledging our employees who continue their focus on maintaining safe and reliable gas delivery operation and outstanding service to our customers. Your efforts and dedication are especially important during the winter heating season. First, I'd like to talk about the Missouri rate review and order, which I know you've all been following closely over the last year. As we discussed on the year-end call, orders were received in the case, including an amended order on November 12th, deviated from long-standing precedents in Missouri. Our approach to virtually every aspect of the case, from rate-based and treatment of cost to capital structure and return on equity, was based on what had been established and decided in prior cases. While we resolved many issues in the case of other parties, a few issues went to the Commission for final resolution. Two most significant areas where the order went against long-standing practices were rate of return and recovery of non-operating overhead costs. We received the lowest rate of return to any utility in the state This is due in large part to a lower-than-normal equity capitalization due to the inclusion of short-term debt for the first time in the capital structure. The recovery of non-operating overheads is also problematic and has potentially a much larger negative impact. Missouri PSC ordered capitalization of non-operating overheads to cease, starting with the effective date of the order, which was December 23rd. Capitalization will be paused while the commission staff completes an audit of the cost. We are currently working with staff on an expedited study of those costs. Commission did provide language to allow deferral of these costs for consideration in a future case. However, the order does not provide sufficient language necessary to defer, for financial reporting purposes, prudently incurred costs that are not capitalized. We estimate the annualized net impact to be $20 to $30 million. We'll continue to work through the overheads issue, including gaining clarity on non-capitalized overheads. At the same time, we have turned the page and we are moving forward with plans to file a new general rate case in Missouri. While Spire Missouri never intended to file another case immediately after the conclusion of this most recent one, it is essential that rates reflect the full actual cost to provide natural gas service that so many Missourians rely upon. Unfortunately, newly ordered rates do not reflect the actual cost of service and don't allow for earning a reasonable return on investments made to benefit customers. The new case will address two issues I just mentioned, including recovery of overhead amounts expense in the interim. Importantly, it will also include updates to cost of service, return on additional capital investment, and the impact of inflation. The case we'll file shortly will focus on returning the more industry standard recognition and recovery of costs, and provide an opportunity to earn a fair return for our investments. Turning to the SPIRE SDL pipeline, let me provide a quick recap of where things stand with regard to the operating certificate for the pipeline, including the FERC remand. I won't go through the entire history and timeline on the issue of the FERC certificate, but we have been fighting to retain operating authority since last summer. On December 3rd, FERC issued a new open-ended temporary certificate that provides certainty of gas supply in the St. Louis region for this winter. It also allows the pipeline to continue operating while FERC's remand process proceeds. Part of the process, the FERC is going to prepare a supplemental environmental impact statement. The remand process is underway and will likely continue into 2023. We continue our capital investment program, which is almost entirely focused on utility natural gas delivery infrastructure replacement and expansion. For the first quarter, our CapEx totaled $146 million, including nearly $70 million for pipeline replacement. Our new business investment was close to $40 million and was in line with last year's record pace. I would note that non-utility spend was down as expected. Our five-year capital plan through 2026 remains $3.1 billion, with more than 95% of the investment focused on our long-term pipeline replacement programs, which have good recovery mechanisms, plus new business, technology, and innovation, including the continued rollout of ultrasonic meters. Our utility spend drives rate-based growth at 7-8% annually and also supports system reliability and our commitment to becoming a carbon-neutral company by mid-century. With that, I'll turn it over to Steve Rasche for a financial review and update. Steve?

Thanks, Steve, and good morning, everyone. As Suzanne noted, while warm weather nicked us in the first quarter, weather has quickly turned as we're in the middle of a good-sized snow and cold weather event here in the Midwest this week. Go figure. Let's start with a brief review of our results. For the first quarter, we posted net economic earnings of $63 million, trailing last year by $14 million, or 28 cents per share, reflecting significantly warmer weather and higher costs. Looking at the businesses, our gas utilities had earnings of $67 million, roughly $9 million below last year. As I mentioned, weather this quarter was warm, roughly 26% warmer than normal, And while we do have weather mitigation for our residential load, our commercial load and the opportunity for off-system sales were lower this quarter. Additionally, as you'll see on the next slide, our costs, especially depreciation, were higher than last year. Yes, marketing posted earnings of a half million dollars, down $2.8 million from last year. Again, weather was the limiting factor with lower demand and less favorable market conditions. including much thinner storage spreads compared to last year's unusually wide spreads. And finally, other corporate costs were higher this quarter due to large-rated timing. Looking at a few details here on slide nine, gas utility contribution margin was flat as lower demand due to weather was offset by rate increases. Gas marketing margins are down, net of fair value accounting adjustments reflecting market conditions. Operation and maintenance costs were up $3 million after considering the reclassification of pension costs and regulatory deferral. This increase includes $1 million of Missouri utility overhead costs that would have been capitalized before the Commission order. Remaining costs were up by less than $2 million, as slightly higher employee-related costs were largely offset by other cost reductions, including lower-band debts. Appreciation costs were up $6 million, reflecting our rate-based growth. And while these expenses will be recovered in our new rates across Missouri and Alabama, the timing of recovery in Missouri is more heavily weighted to the remainder of the year, and especially our second fiscal quarter, reflecting new rates and our most recent MISRIS filing. Turning to our outlook, we continue to be confident in our long-term growth prospects driven by our $3.1 billion capital spending plan over the next five years. Our per share earnings growth target remains 5% to 7%. This growth rate is based upon fiscal year 21 results, less our estimate of earnings related to Winter Star-Murray, which, as we talked about last quarter, was between 65 and 70 cents per share. Our fiscal year 22 earnings target remains unchanged at $3.70 to $4 per share, falling below our target growth as we absorb the divot created by the most recent Missouri rate order. Here's how to think about our current year range. The top portion of the range fully reflects Missouri's lower rate of return that will be addressed in our next rate case we will file this spring. The bottom half of the range includes the additional haircut from expensing a portion of our uncapitalized overhead costs. And we will continue to absorb this risk until we get more specific recovery language from the Missouri Public Service Commission. I might add here that gaining certainty over overhead recovery will be our near-term goal as part of the completion of the capitalization study and staff audit. And looking beyond 22, with continued rate-based growth and reasonable Missouri regulatory treatment, our earnings growth rates in 23 and 24 should accelerate as we regain our trend line. Now, turning briefly to our financing guidance, our liquidity remains strong and we have ample capacity as we hit our peak in working capital needs. Our long-term financing plan remains largely unchanged and reflects the SPIRE Missouri bonds issued in December to term out some of our excess gas costs. We remain committed to a balanced and strong capital structure and credit metrics. As a reminder, we ended last year above our FFO to that target, but we do anticipate that to weaken this year as a direct result of the Missouri rate order. In summary, we are laser focused on regaining reasonable regulatory treatment in Missouri while delivering safe and reliable service to our customers and communities, and investing for the future for the benefit of all stakeholders. With that, let me turn it back over to you, Suzanne.

Thank you, Steve. We are on track with our plans for the year as we work to resolve regulatory matters in Missouri via a new general rate review. We are confident that we can achieve a fair and reasonable outcome. We are on pace with our capital investment plans that support rate-based growth and 5% to 7% earnings per share growth over the long term. We look forward to updating you on our progress as the year unfolds, including the SPIRE SEL pipeline and laying down the groundwork for an innovative, resilient, and sustainable energy future. And we look forward to having an opportunity to connect with you in person at the AGA Financial Forum in May. Thank you for your continued interest and investment in SPIRE. We're now ready to take your questions.

We will now begin the question and answer session. To ask a question, you may press star then 1 on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then 2. At this time, we'll pause momentarily to assemble our roster. Our first question comes from Char Perez with Guggenheim Partners. You may go ahead.

Hey, good morning, guys.

Good morning, Char.

Just two quick ones here, if it's okay. Just on sort of the GRC, so once you file the rate case in early March, do you expect the case to take the statutory 11 months, or could it be faster, just given you were just in and vetted a few items, and How has sort of that overhead cost allocation audit and review been going with the staff? Any takeaways that we'll factor into? Will you be filing for the next case?

Good morning, and I'll start then. I think probably Adam will pick up the second half of that question. Sorry, this is Scott Carter, President of Spire Missouri. The question of the rate case timing, we file a 60-day notice. That means the earliest we can file is early March. We're going to work through that. We're saying the spring, so we haven't picked an exact date of filing, but it'll be close to that 60-day period. We've got to feel like we need to make some progress on the overheads audit and then make sure we put together a case that's obviously filing quality. As far as the timing goes, the commission has an 11-month statutory window. As we look at it and think through that case, They just came out of the case, so a lot of the updates that are necessary to look back for a year or so won't have to be in place because they'll have the recency of that most recent proceeding. So we're setting everything up in a way that gives us the opportunity to expedite resolution of the case, but we have to understand that the commission can take up to that full 11-month cycle. So we're preparing for the best and making sure we're in it for the long haul to put the best case forward and get the right outcome in a reasonable time frame.

Hey, Char, it's Adam. Hey, Adam. And on the study, that is ongoing. We're working with commission staff. We do expect that to wrap up this quarter with a recommendation or report from staff to the commission, and then we'll kind of go from there. But we would fully expect that to be digested in the next case.

And, Char, this is Steve. One last point I would make that we mentioned earlier is in addition to the two main points that Scott covered This will also include our infrastructure investments, the impact of inflation, and the cost of service. So it is in its entirety, but as Scott mentioned, a lot of what has already been solved, if you really think about it, in this case, shouldn't be much issue other than just kind of updating and really trying to address the two main issues.

Got it. Perfect. And then just last one on STL pipeline. I mean, obviously, your release says you expect the remand process to continue until 2023. Do you see the potential for clarity to come before that? Do you mean like the entire administrative process of issuing the new permit certificate, or do you not expect to have any idea until 23? So just a little bit of a clarity on what you mean through 23.

Yeah, and so if you think about what we're going through on this process with the new EIS, it's a little bit more extended than the typical environmental assessment that we went through on the first certificate. And FERC has indicated that they're looking for that to be probably somewhere in the October time frame. Then if you also go to, typically there's a 90-day period for comments that occurs after that. That's how we kind of get into the calendar year of 23. That's not the entire remand process. That's just a piece of it. But we're using that as kind of some guideposts for timing right now.

Okay, perfect. That's the clarity that I was seeking. Thanks, guys. Appreciate it.

Thanks, Sean.

Our next question comes from Richard Sunderland with JP Morgan. You may go ahead.

Hi, good morning. Thanks for taking my questions. I just wanted to pick it up with STL pipeline first. Can you speak a little bit more to the supplemental EIS and potential interest in alternative solutions to the pipeline there?

Sure, I'll start. This is Steve again. And so as you think about some of the things that are being looked at from an alternative, we view the pipeline being in place from an environmental perspective is the best alternative. Some of the options would actually be having to physically take some of the pipe out of the ground. And then if you have to reinstate things such as some of the compression and propane, we just think from an environmental perspective, this is the best option relative to the outcome.

Understood.

Maybe turning back to the rate case, can you speak a little bit more to the strategy around handling cap structure, the upcoming rate review, and maybe timing around how to manage that? Also notice the short-term debt picked up on the quarter. Just curious around drivers there and how that factors into, I guess, the target cap structure for the case.

Hey, Rich, it's Adam. Yeah, no, we're, I mean, obviously we're going to, We'll wait to fully lay out the case here a little bit later this year. But the reference to short-term debt, Missouri short-term debt actually declined in the quarter. But I would draw your attention to our current assets in Missouri are actually higher than our current liabilities. And it's not just about cap structure, but also about what we're carrying with excess short-term debt as well. We'll be vetting through that and putting on a robust case there.

Yeah, Richard, this is Scott Carter. I will just add on to that. There are really two ways to think about it. Historically, Missouri has excluded short-term assets from rate base and excluded short-term debt from the capital structure. That was the premise that we filed under. We financed according with that consistently with what we had done previously and what the Commission had found previously. Staff recommended that in their report to the commission. And when the commission finally made their decision, obviously they pulled in the short-term debt, didn't pull any short-term assets into the equation. So obviously there's a mismatch right now. That is very out of the mainstream with rate-making across the country. And so there's two ways to solve it, and it's either inclusion of short-term assets or going back to the traditional route of exclusion of short-term debt. So we think there's certainly a path forward there that – reaches resolution regardless of which path the Commission picks.

Understood. Very helpful caller there. Thank you. Thanks, Richard.

Our next question comes from Julian DeMullion Smith with Bank of America. You may now go ahead.

Hey, good morning, team. Thanks for the time. in the opportunity. Perhaps just to pick up where Rich was a moment ago, can we talk a little bit more about that short-term debt dynamic? First off, just the short-term asset side of that, if you think about the parity, I mean, can you elaborate just where you stand with respect to driving some understanding in the commission on that point? I know that you've got this rate case filing coming, but As you talk to various parties, how do you think about driving consensus back there? I know that you mentioned specifically a number of parties being on board with this earlier, but just we can come back to the short-term asset piece of it.

Sure. And, Julian, this is Adam. Our observation, certainly we carry quite a bit of winter storm costs into the last case. kind of average down and I would, you know, going into this next case, we now have a full, we will have a full 13 months of carry there. And then we, like many utilities, have extra deferred costs and gas costs this winter as well, which contributes to that balance. So, we'll be putting all that, certainly all that information into the case and and, you know, having that conversation with all the intervening parties.

Got it. But just to confirm here, how do you think about the short-term debt balance evolving through the course of the year? You said earlier, I think, in your remarks, expecting higher overall leverage through the course of this year. I know you said specifically Missouri was lower in the quarter. Just how are we thinking about that dynamic here?

Well, I mean, it is something. Missouri's short-term debt has declined quarter over quarter. Not sure what, you know, as far as what you're referring to as far as an evolution of that throughout the rest of the year.

You're not expecting those balances to increase as well. I know you alluded to higher leverage here, maybe more driven by FFO being lowered from the rate of case outcome than necessarily the denominator being higher. But I just wanted to confirm that you're expecting that short-term debts remain kind of at a steady or lower level here with Missouri.

We do believe it'll be relatively steady, but you're correct. The lower rate of return fundamentally lowers the FFO to debt metric. So if that's what you're referencing, that does lower cash flow. We don't necessarily believe that will pick up short-term debt significantly or materially in the near term.

Yeah, and Julie, and this is Steve, I'd also point out that in December we did term out a lot of that excess gas cost, which for argument's sake is about $300 million. That's associated only with Winter Storm Uri, and hopefully we can carve that down by almost two-thirds once the ongoing dispute with the marketers is adjudicated in front of the Missouri Public Service Commission in April of this year. But we did term that out, so we did float some bonds, $300 million of floaters, in order to fix the carry cost on that component. So, we're just doing the right, smart things in order to manage the financing going forward, but we see a clear path to regaining reasonable rate of return, including the right cap structure for the utility.

Eric, so to answer the details here, just one bigger picture question. How are you thinking about the guidance range for this year, given, you know, obviously the weather impacts at the start of the year? And obviously, I know there's a lot of big moving pieces here, obviously, and the amount of capitalized overhead deferral being a big one. But how would you position yourself on that capitalized question for the year and or just overall within this range, if you will?

Yeah, and we spoke to it just a bit earlier in the prepared remarks. We're as comfortable with a range with a very wide breadth as we can be, and you're right, it comes down to the question on overheads. As we mentioned in our prepared remarks, our rate structure in Missouri has become more variable, and that's because in the last rate case, we rolled the ISRIS, which was a fixed charge, into the variable component of rates going forward. So you will see more variability, therefore more recovery in Q2, the quarter we're in now physically. versus Q1 when you look back at the last rate structure. So we're not, we deal with weather. That's the risk that as a utility we have to manage not only every month and every quarter, but over a longer period of time. And we clearly still have some tools in our tool belt to manage to get to where we want to drive expectations for the full year, knowing that we're going to be in another general rate case, unfortunately, but that's part of the process we need to go through. So I think we're confident in being able to get into the range. And as I mentioned, the range is structured so that if you think about the top part of the range, that's really where we would be assuming we can do what we do every day, which is to manage the utility and offset any headwinds we might get from weather. The bottom end of the range has to do with the expensing or deferral or recovery on overheads. And we hope that we can put a stake in the ground on that sooner rather than later, as we talked about earlier.

All right, guys, we'll leave it there. Thank you.

Thanks.

Yeah, thanks. Our next question comes from Gabe Maureen with Mizuho. You may now go ahead.

Morning, everyone. The short-term debt stuff has been pretty much beaten to death, but I wanted to ask about... whether anything else needs to change for the upcoming rate case filing with the forward curve and spot gas prices being so much higher, whether it's, I guess, bad debt ask or anything like that, just how you're thinking about that. And then also, can you just walk me through again the weather norm, whether, no pun intended, what you had asked for last time would have helped out actually for this quarter and whether that's going to be a focus for the upcoming GRC?

Yeah, Gabe, I'll start that and anyone else can jump in. As far as anything else, as Stephen mentioned, the rate case will be a general rate case and a full update. So as you think about increasing cost elements, whether that be bad debt, additional capital deployed, or other inflationary pressures, that will be reflected in the filing that we'll make. So that will be a full update. Obviously, the focus is on these high-profile areas, but we're filing a full general rate case, so we will include all of those elements. Weather normalization, what we had filed and requested, would have expanded that and refined it a bit. So we do believe it would have improved the performance of that, tightened the range, if you will. Again, we have pretty good performance around the weather normalization. We certainly want to improve that going forward, and yeah, we'll bring that into the next case as well, trying to make sure we get that refined as possible to make sure we don't win in cold events and we don't lose in warm events and we're balancing with customers.

Yeah, and Gabe, this is Steve. The weather norm actually worked fairly well. It's the areas around the edges. It's the commercial load. It's off-system sales, most of which we share back with the customers. Those are the things that we will and no doubt will continue to be exposed to, but that's okay because over time and more likely than not over this entire winter heating season, everything will balance out. I don't want to get I don't want to take one dot and draw a line. You know, give us the chance to make it through the winter. And once we get to the next update, we'll have a much better feel for what the entirety of the winter delivered for us and then what are we doing going forward during the back half of the year.

Great. Thank you. And then if I can also just get an update, I guess, on sort of R&G efforts, where things stand at the moment, any new developments this past quarter. Thank you.

I'll take a start at it, Gabe. Good to hear it from you this morning. So from an RNG perspective, we continue to look for opportunities for projects, particularly in Missouri, given that we've just had some legislation passed. We're in the stages now of working towards the rulemaking process, which could be extended, obviously, but a lot of this is looking at opportunities to include some RNG projects in rate base here in Missouri. So we're continuing to be active, and we think there are opportunities there, but again, With the legislation just being passed and the rulemaking starting, that's kind of where we are right now.

Great. Thank you.

Thank you, Kevin.

Again, if you have a question, please press star then 1. Our next question comes from Vidula Murti with Hudson Bay Capital. You may now go ahead.

Good morning. Can you hear me?

Yes.

You alluded to the audit that the staff is working on and that they would present to the Commission on the study of the overheads. One, can you give a sense when the staff that alluded to present to the Commission? And two, can you remind us perhaps of the scope of that and what the report may or what the report will address and what it may not address?

This is Steve. I'll take a shot at that. Yeah, the process, we're just continuing to work through it. I wish I could give you a procedural schedule. There isn't one associated with this, but I can tell you absolutely we are working right next to staff as we work through this because we're both aligned in getting this addressed as soon as possible. As we mentioned a bit earlier, the study which we're taking on internally, which is a classic time study where you look at a sample, which is a fairly large sample of your population, and from that you derive a capitalization percentage. This is a standard approach that is well trodden and relied upon for FERC capitalization purposes, which is why we're taking it on. We'll get that study done this quarter, figure the month of March, and we'll work with the staff. At that point, the staff needs to perform whatever procedures they need to do in order to get comfortable on that. That's the timeframe that I can't really speak to right now. But let's say a month or two. I can't really answer that question. That pushes the discussion until early in the next quarter. And at that point, the staff will render a decision. And if they agree, that's great. If they niggle on the edges, we'll kind of work our way through that. The finality of the process will be a formal recommendation to the Missouri Public Service Commission, and they will issue a formal order that addresses capitalization going forward. And that's the point at which we will then know what amounts are being capitalized and what amounts are not being capitalized. In terms of the scope of the study, that's one of the questions we're working through right now with staff because it was unclear in our earlier communications how big the pot is. that we're looking at. We believe it's the non-operational overheads. Think about the stuff that isn't directly related to our teams that are out doing capital work every day. And the study will clarify that and also bring finality to what the bucket is that won't be capitalized going forward. And as we mentioned, that's really the question that we want to answer as part of this process, is not only snap the line on capitalization, but then also determine through an AAO or whatever the right approach is, how we're going to defer the other prudent costs for consideration in the next rate case. Hopefully that helps.

So, when you say that the final recommendation to commission early QQ, based on that recommendation and commission determination, well, that meant the rate case is due Well, there's determination on the other end of the question. Will that affect this year's arguments as we're able to potentially change the accounting process going forward here once that report is finalized by the staff and approved by the commission?

I'm sorry, Vidal. You're breaking up. We didn't pick up all that.

I'm wondering whether the staff report and the commission's determination will display true numbers in terms of the type of overhead, or if this is just something that .

Yeah, I don't – the commission determination, you know, they're certainly – The wording and their order could certainly affect how we account for things, but we don't want to predict anything, and we'll wait to see how that comes out.

And one last thing. The STL pipeline, given EIS timeline you suggested, until the EIS is completed and the 98 period for comments,

I'll take a shot at it. I think the question was, in essence, as we go through this remand process, is it business as usual for the pipeline? And that is the case. And so, again, the EIS is targeted to be completed in October. Then you'll have the comment period after that, which pushes into 2023. So, clearly, we'll get through this winter and really the remainder of the calendar year and As Suzanne mentioned at the start of the call, given the weather events that we're having right now, we're very pleased to have this pipeline in service doing what it was intended to do all along, which is serve the customers of the eastern side of Missouri. Thank you.

Thanks.

Our next question comes from Brian Russo of Sedoti. You may now go ahead.

Hi, good morning. Mr. Hey, just curious, you know, the uncertainty with the audit regarding overhead costs, does that create uncertainty regarding the 11 million ISRAS filing that you're seeking recovery of?

Mr. Yep, Brian. So, the ISRAS filing, the Commission's determination around the overhead issue started with the completion of his final order, December 23rd, the effective date. The capital we filed under the ISTRA's case all relates to capital deployed prior to that date. So they decided that they would look at that in context of this case, but it really shouldn't affect the capital deployed that is seeked to be recovered in that case. So it's a long way of saying we don't expect it to, but again, as we look through this and think through the minutia of it, And the way parties may play it out, we'll have to see how that plays out. But our expectation is the capital that we're seeking recovery of is deployed under the methodology prior to the commission change. And so, therefore, it should be fully recoverable in that ISRAS filing.

Got it. Understood. And I guess if you're going to file a case in March, we shouldn't expect another ISRAS filing, right? Because... you're not allowed to file an Isteris while you have a rate case ongoing. Is that accurate?

Brian, this is Scott again. We can file a case. So we have filed in the past. We decided to defer the last case, the last Isteris under the last rate case. That case would have been a change in the rule under the legislation, which got changed recently. So we defer that to this most recent filing. Depending on the timing of when a commission decision comes out, and how we see that playing out, we may or may not file another interest in that intervening period. So we reserve that right, and we'll see how the timing works, how to figure out if it's valuable or not, whether the commission, if it's going to be three months before a commission's final determination, we may want to file one. If it's going to be contemporaneously, we may just say we want to include it in that final resolution of the general rate case.

Okay. In terms of, are you still expecting normalized marketing margins in fiscal 2020? 2022, even what appears to be kind of a light start given the mild weather and lack of, you know, spreads.

Yeah, Brian, this is Steve. As best we can tell, yes. You know, there's always volatility, and clearly the market was not as favorable last quarter, but it's clearly we've seen more volatility and a lot more weather this quarter. So that's our expectation. We'll clearly give you an update as we get to the half year. And I have to remind you that when we look at last year, we had embedded significant amounts of value from the storage positions that we had laid in the summer before because of the COVID-related dislocation in the natural gas marketplace. We're in a more normalized market now, so I wouldn't overthink the year-over-year variance, but we are clearly positioned to take advantage of the market when it gives us opportunities. And It's good to see some weather in the mid-continent, and we saw some volatility last week, and those are all the milk and honey of how we create value above and beyond the normal margins that we make by serving our customers during the winter season.

Okay, and then just lastly, can you quantify what the margin impact was from weather versus normal in this first fiscal quarter?

Yeah, we generally don't get down to that level of detail, but I will tell you that although the margins were down year over year, they weren't as far off from our expectations as you would imagine by looking at the year over year comparison. That gives you, maybe qualitatively, gives you a little bit better feel.

Okay. All right. Thank you very much.

This concludes our question and answer session. I would like to turn the conference back over to Scott Dudley for any closing remarks.

Well, thank you all for joining us this morning. If there are any follow-ups, we'll be around throughout the day. And looking ahead, we are very much looking forward to seeing many of you at the AJA Financial Conference in May, first time in a couple years. So until then, be well, be safe. Thank you.

Thank you.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.