NorthWestern (NWE) 24 Oct 182018 Q3 Earnings call transcript

Good day, and welcome to the NorthWestern Corporation Third Quarter 2018 Financial Results Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to your Investor Relations Officer, Mr. Travis Meyer. Please go ahead, sir.

Ryan. you, Thank thank conference and September joining Corporation's NorthWestern XXXX. Good and you webcast Results call ending for Financial afternoon, for the XX, quarter NorthWestern's is the at released results our northwesternenergy.com. on website release have been available and

also this released our We premarket morning. XX-Q

us with Bob are Officer; call Chief Chief Financial Rowe, President Bird, Vice the and and Officer. Executive today On President Brian

your We with us room team in also the have several to other questions address members needed. of the management if today

note and please this over this contain for your us that I company's company questions Before the the begin, -- turn call presentation, to comments responses may that press release, statements. by forward-looking presenters to

you such, will remind harbor safe of As language. I our

harbor of During Securities forward-looking there Private within XXXX. provisions Litigation this Reform be Act safe will of presentation, the of the the course statements the meaning of

Forward-looking or expected statements financial plans, current often contain business anticipates, The such is performance upon will. believes, presentation information and and intends, often as this based expects, our words seeks expectations. future address our in

actual materially forward-looking expectations for and performance forward-looking revise adversely may or obligation or our presentation reason. future statements differ publicly statements. to this our in any update expressed financial any from business Our undertake We no and

disclosed public are with beliefs the our along expectations and assumptions, the may may actual company's results materially. XX-Q, on Although and Form with and other The our are in based our SEC. listed releases of press reasonable results differ XX-K affect that factors filings in certain

then access the our Relations, presentation code Bob northwesternenergy.com, webcasts access over the call, again, XXX-XXX-XXXX, to XXXXXXX. an dial website, and presentations and available IR today's be phone ask be today The are into to link. that, dialed open will Following questions. Investor hand With Eastern X of on replay the p.m. found that presentation, of the I'll replay the we lines audio time To at under to CEO, those the our can company, allow will archived Rowe. conference webcast

Montana. Thank you We're thank in and for very Great today joining you, much. all, Good afternoon, us. Falls, dialing from

give north for Central for on mountains to in center of out real service as the a it's estate. feel operating North territory, it Montana, And part so heads Falls sits this you plains. our our of Just of the a huge the the onto division Missouri River Great piece

we In addition, gas system and to transmission gathering, Cut head of of at electric transmission here and our the distribution, gas end have north Bank. storage

conversation here meeting us with legislators, Museum. station to a room we One and the had jampacked of with was mayor, and up of employees, is area and a of discussion team. within five Public comments states He opportunity at team the and and appreciated on our the very the the end gas for were he all transmission really discussion compressor just week, board Great to good the of Bank discussions said community, Montana. community eyesight was of committed the leaders who with members all after really breakfast had That of well. as of Cut touring And at all This division, meeting of spoken system was transmission, how a and the safety, Falls, lot this that much of the linemen is really board course the with of new of of we up Great our of veteran gas have by well. as stood Earlier our neatest in our dams Falls. our That whole and and part breakfast last board the the Glacier hydroelectric really also summed members Falls Park. got week, about from has being were Montana. to Great this city to partnership community, the electric made and up great both there and Great a how from our committed did one operations, been that it he have the distribution doing both the community in part to hydro present members. was the week Falls and our of Commission how discussion great the morning, board providing investments much [indiscernible] History leaders with board the the infrastructure in the the Great Service candidates in And role a here, thing valued right and had

or as the supply for million costs decrease So with to the period XXXX. that, increases increased primarily XX.X% in in And tax recovery to partially turning was same the XXXX $X.XX to interest the highlights. XX.X% same decreased lower expenses. these period or compared reduced energy Diluted in by due decreased were last and and the income offset period compared Montana And EPS unfavorable income quarter to XX.X% as same expense. operating Net $X.X about of to compared non-GAAP when weather, decreased quarter adjusted EPS or $X.XX third and year.

declared we Bird. will XX electric December know, a over to $X.XX and September that, Service revenues. easy quarterly go general base I to review nasty cold. on XX, turn As X.X% rate per filed The in He's over ask with dividend would record much-anticipated, shareholders we're a of December requesting of XXXX. of increase long-awaited getting Commission And to you everyone Public Board of as $XX.X million Brian a I a on it the Montana Directors with to Brian. share payable or

show The had prior financials and Obviously, earnings per down or Thanks, operating a -- for Bob dilutive year-over-year on gain income Though isn't to lower year. down. million interest In $X.X better you. summary, income a them Bob. the enough helping us $X.XX net year income had the an share, worse wasn't quarter. to that prior help expenses, income worse so taxes, than in million, income expense net in XX.X% operating we've on totals increase we margin the cover than On other a with the is and Page it X, of gross $X.X summary basis. gave

P&L. the perspective, total about the components talked From was we of million, margin the X, Page $XXX.X down quarter. individual for X.X% gross to on or gross margin a million $X.X Moving

in offset in are other and on due As recoveries of electric $X.X and were Tax the offset Below margin were in million, in you you I'll in down all PCCAM the million. and margin an the business, some following in have flow in production trackers, on X: partially we property adjustment see that's can were in impact million net electric Jobs factors, by those income million third of tax $X.X taxes did by did quarter. look volumes that $X.X as and improvement of and expenses, up for Cuts change down those the the credit particularly gross decrease transmission Acts our about a electric really Our some and of retail net have decrease gross basis a impacting a $X.X decreases those a in we deferral see, to margins But a primarily side that, weather talk due to through, net shown so operating but total in margin gross year-over-year moment. the

$X.X same our within degree helped for a quite colder of was but which degree the in certainly fact, quarter. see heating show compared quarter. slightly to cooling pretax the mentioned, third the weather going pretax versus spot. detriment only the Montana, X. in in bit days Montana, detriment ended the in quarter, it versus interesting normal but quarter to Page normal days. degree unfavorable the X% of QX in and gas I our compared in an It's up estimate In business. matter heating degrees QX hurting our our and to business, and $X.X third historic the of we as electric It's resulted as place average, Moving third a have the days XX% only And cooling to weather XXXX. up we really Unfortunately, you're million a year million

size during but our our of Nebraska help offset quarter. a overall the of and Dakota Montana the negative help it for bit Montana business, to for South little because the couldn't tried again, detriment sheer out

so actually net Moving it's we expenses attribute impact that we at continue $X.X or only to increases income, and administrative million Talking increase. decline depreciation we operating, about as up our clearance categories, X, line from those operating, have sizable that and a in taxes, sets or costs, X.X%, I'd but primarily X%, can. we depletion. in One showed general approximately manage best on operating cost expenses, our pretty to up Total million, several $XXX.X did in did costs us were up property OG&A see perspective. costs. $XX.X about million a general, look I really net expenses say you operating to it When those Page thing X%. changes

outside tackle that here trees that's obvious, we basis right to as a in an start of year-over-year on starting hazard of XXXX. way are program We our increase and,

in elsewhere are in an directors that deferred pension and nonemployee were income. are the but offset For benefits increase in those expenses expenses postretirement a by have and other those P&L, change those other offset OG&A up, comp, but

depletion expenses is up operating due some total due to up million plant estimated obviously, million. had operating, and plant and $X.X $X.X taxes, expense general depreciation in increase valuations $X.X higher net-net, million. in primarily also recovered We and Property But trackers. and, to other additions the again additions, property up administrative

nearly that Moving over on nonemployee and million offset interest partially Federal interest lower lower director offset Other to income And due partly the up down year-over-year on as $XX.X primarily favorable its Income refinancing basis. income, I just improvements operating tax by shows to Those short-term were but or of basis $X.X million, offsets portion on did primarily rates before noted income rate. Below down a rising million, worse and income million a AFUDC. that, net a XX% $X.X before, comp tax and, -- borrowings. corporate expense, slightly net year-over-year XX% low pretax Operating our benefit, of or on impact in our capitalization obviously, deferred $XX.X pension that, below due taxes, to by XXXX, XX%. income. that. we

on to Moving the tax Page rates on X.

lower favorable year income are that million was taxes basis. benefit a this slightly both on Again, accrual state offset that had we mentioned, year-over-year prior quarter a have return lower very a tax rate, favorable less million favorable primary if benefit. the adjustments, during You $X.X to we will the of tax driver lower I also and year-over-year you as pretax obviously, on see But at benefit, million there net-net, permanent prior a flow-through tax, basis repairs $X.X the quarter, year-over-year year. the variance the on than by a and $X.X from was did there, million income improvement during were the $X.X bottom Those basis.

to the of on XX. to on Moving Page the year. say bottom at I'll is the page quickly debt improves of total capitalization All end balance sheet the since the

is that of year the of equity and earnings. but used function of is debt But shareholders' also a that obviously, improved $XXX million half during the equity some $XXX of it pay ratio first million, a seasonal, to thus, being of Some as also raised down we that up we and, our whole.

million a in XX. million funds for flow Moving $XX also of equity. cash To down improving the primary million Those cash improvement had $XX flow, From million help of Win helped I'll and $XX cash us debt quarter. Dot we on but the approximately the say acquire $XX are also drivers raised pay flow. to during We perspective, to Page

quarterly on a of from pretty items Page the simple into the quarter note that page, adjusted we top earnings basis that at very those on our I'll non-GAAP was reversed XX. perspective. Moving non-GAAP

prior middle page, those the page, as as the unfavorable to versus near out $X.XX million EPS, from a diluted earlier, the year. This see, $X.X changes swing, backed at bottom quarter, mentioned you of weather, prior comparison, $X.XX weather with year's the we the a compared favorable I the of

mentioned middle We have PCCAM no the margins point at million. $X.X page, in did So those up about OG&A I X% elsewhere of talked from of approximately mode gross that a in little obviously, impacted P&L quarter, back this irrigation weather out margin is top the at impact as $X.X million. one as From of on and you that the things go of doubt, down an see, the again the the quarter We P&L. of kind perspective, items can offset trackers we well. you deferrals volumes and, you the they typically lower, see a commercial gross having those when some about net well as in some of

year-to-date a quarter year-over-year some That earlier, pretax in down $X.X a of a on We detriment to basis. basis result us dilution, XX%. the on operating expenses, additional less job flows getting again, OG&A a a So income about year-to-date of this net-net, a discussed million, or still million, from getting some to we the on our again, approximately basis, continue amount. $X improvement getting eye did being we to again, basis, We're up A of as OG&A, keeping spending quarter-over-quarter XX%. fact, as see an us incremental taxes, X%. matter good approximately result we're the down down basis, depreciation, actually income we Property that just showed tax, us a to year-over-year On but did million on $XX to operating of a as behind. of net shares, perspective of an in on. $X.XX same do up over investment. about up total And for an net income still income

Moving the reaffirm did guidance. $X.XX for quarter. $X.XX Page to XX. to We on

about, an the a adjustments here, on lastly, did going any in basis assumptions. Montana. at normal PCCAM we business, perspective. As so out are weather the Tax look we or of PCCAM exclude And Act Cuts for equitable Obviously, as for Jobs the we things expecting those we've not non-GAAP our did adjustment and point quarter. consider as talk non-GAAP adjustment any part make quarter that treatment Also, the from forward, those a decision fourth of from major that I'd not ongoing for

year-to-date and our In to XX. actual, nine earnings on get basis, portion non-GAAP slightly weather backing GAAP sit had with months Page year. on a adjusted the at QF let for That's guidance, start $X.XX backing $X.XX, me $X.XX. to essence we our us prior the to gets of gain the on out favorable a a $X.XX, just the -- basis, number we a liability of behind on year-to-date reported where again, from to the Moving out of

year, to More Seeing $X.XX. you had $X.XX to expect would get $X.XX would question hit last this for $X.XX that year's to how importantly, get last amount to to $X.XX, good to only in if to $X.XX $X.XX order need $X.XX be, year. quarter was we to fourth a do our you

within I lower in margin and to seen look margin, OG&A expect that year-over-year within at to two similar see think, to that give questions probability get things first range expect quarter, is back level. higher as us the the the the Having the would a With guidance there's to half $X.XX anticipating said Q&A, to we we the expect range. to basis on fourth we've lower we in I be help and see but a lift fourth in to I'll get an that us the quarter as do of in it that that, $X.XX, quarter, certainly be and Bob. that, higher your full that opportunity helping

as you've side the regulatory Thank all you, matter, been Starting on Brian. following.

the provide of to investors, long-term determining customers to and ensuring the tax reform First, whole. you, we're that treatment kept system benefit the our best final and way are while focused our on

about a the Commission on yet has in Second, issued review memo. come Credit electric commission's our the not did really general discussion, anticipated by a view those. and Power third, and Montana and the final of has order, we back And Montana that Mechanism Adjustment file rate new much the informed is so rate We'll September. voted staff Cost review, then particularly in talk but

to gas: overall, building distribution our Montana substantial year end-to-end of to transition and the electric will as capital Dakota South the on infrastructure commitments forecast and an and five a of and moving Nebraska, with DSIP and really, plan that, transmission. approach Secondary, distribution, capital discuss, success

real side, months supply first lot an transmission in meter the and modernization ADMS, gas management first AMI South of of electric Verification the requirements, focus supply In Integrity and On reserved emphasis part a scheduled advanced a capacity in deployment margin published on deployment area, risk coming including very in and South implementation our is this areas Nebraska grid side, year much on plan and and and, Two Dakota electric Process lowest of focus system, case. needs. in right in of least cost, on the Montana, then the focus PHMSA the distribution electric major ultimately, this Montana the really process September, now. in is as Dakota, then the approach, is was addressing well. as in The intermittent

We've plan input hold public incorporating we'll meetings active taken unusual in We middle of the approach the released committee. on technical we process, public or the input of a as that December. expect as taking of that three have, be by the an advisory end in well to

incorporated in We an of electric haven't detail for controlling docket taxes lane. continues July became And XXXX, way, Labor That's a yet. we is proposal. the again, take House establish deadband, effective that monitor, July commission's we that and supply of and tracker HB for million ad the to work supply proposal the a date very customers established around Commission There's of filed our amount then an a order $X.X period consistent approximately and supply and doing and all XX% session the increase more for we benefits, mechanism was In expenses of beyond deadband to to to a proposal. X, million a a XX-XX tracker. the recovered some would challenge have But between also initial from reduction that includes job in months recorded be It with plus of order a first order minus replaced includes of been In for and mandated 'XX, the XX% in PCCAM, in to fourth by a approximately continue electric getting period give regulatory be implementation on to commission PCCAM discretion to or the the XXXX. a and PCCAM and an tracker would baseline. XXXX held XXXX, approve a $X.X This actually below statutory costs for I reduction million do then September revenues shareholders July three good above to final commission language removed of with the customers difference an and electric costs. the implement the sharing be the cost concerning we're offset short XXXX have PCCAM XXX ratio which in its revenue that the action what us XXXX. through year. similar the back quarter million walk initiated tax. controllable for a June in $X.X seen and that the retroactive for a sharing little XXXX the our property a our on What May Montana think is shareholder's to matters. In issued and Montana, some in the a essentially language be $X.X does expect had what final base We Bill that XXX, We'll memory net the basis. customers. revenue valorem

XXXX, District the replacement September the appealed appeal of of Court. a to recovery Colstrip. arguing In In order to issued July capricious. decision Next, issued have Supreme and of May of District to as you arbitrary know, not disallowing Montana outstrip decided decision of the recovery that costs XXXX, District was -- costs we the order, decision Court commission Court with order the we the Montana outage commission's an an power at upholding XXXX, and an disallowing associated certain in Commission Court,

September, of Nebraska, year as us stable remain Montana, customers' October and this benefit Kearney evaluate consistent basis. the approved occurs a a Dakota. Nebraska planned moratorium, cities Cuts no This financial Jobs future credit. had gas the TCJA-related submitted major reflecting on In with by Nebraska rates implementation two of a calculating And on Next territory use in the to this approved customers filing South the also alternative customer the customers the and savings North in include therefore, does rate March, the Platte, Grand PSC the to to in TCJA natural defer to ensuring rate to And million Tax impact and and X, using an is estimated electric and any we of calculated bill filings, agreement annual Act that In of settlement the settlement to a until between area, a MPSC, XXXX. two our our XXXX. in benefit January impact August, Island, one-time our refund a proposal service resulting of PUC In statements. methods. both $X XX,

reduction on in with First, based method the but tax income. to XXXX, current was calculated expected the no net expense impact

years. hand, in the method revenue by the last other was calculated the the revising On requirements test historic applicable

For to distribution propose direct posed a and and/or risks threat remove customers, -- the and transmission this use system, of forest including posed use benefit fires. of property our customers rights other our we outside to to to as refund to disruption of a And service, electric electric our XX% damage way. trees lines of XX% the to

an within yearly program, substantially beetle increased other we've that given and have element program of of on that concerns hazard begun trees our DSIP and, years, pine addressing significant very way focused other many of Montana we've important vegetation the right We the ahead a the our management focus trees was companies active concern. work in of outside on to and of it and way, this had fact, for include in was bark right

year in again, revenue, a the plus expect end Montana as the held by South would in for equal have expected be law The and decision $XX $XX with of So nearly no also and total current $XX.X MPSC removal by the million million $X that the year income. method of company changes. XX, million in revenue of we $XX for $XX That and September tax The method, hearing million year. be this net in Dakota $X.X current have reduction full deferred offset income is and the matter million. million would tax expense tree August, therefore, in for will the to associated deferred to reduction million impact XXXX of fact we

Montana On result exceed refunds additional the would in expected in of TCJA customer and flow the method pretax in other that the of to therefore would hand, million application approximately earnings $XX an benefit the reduction in historic the cash million. and of $X result

are reform, as to a tax updated liability by anticipated regulatory to Then XX% compares $XXX reduced offset December X% the be result in of assets X% to this year. million So was to NOLs of between And XXXX. of we've tax our XX deferred was fully XXXX our and reduction used to and and prior that effective assumption XXXX TCJA. as liabilities. previously, tax rate in and last that we X%, now

existing So credit an adequate we our maintain currently, and believe important coverage this our are ratings. to ratios is debt we note,

to regulatory and negative lead credit actions could could issuances. additional downgrades further However, necessitate equity

key this I of generation and recall a customers other fleet of and really operational the the that new the Pool, under participants and exciting And Electric that for Power using will to a broadening been customers. creates Engineering, has also started under We've slide, load that rate reliability quite Southwest changed HDR lower and years, to couple multiple we potential then adjusting and our the are natural solution communities. And gas improving losses, see some reserve Dakota modernizing incorporate system, generation plan. be customer NorthWestern meet impacts, company. staged opportunities of our literally, a great system for a to effect adding set relatively our technologies on have restoration, period benefit new supply the implementation and Southwest with and boxes services localized into the to activities improved seven and assess economic scenarios, moderating diversity, various in mobile South and capability. a and Resource all substation Pool's retirement investigated increased South for the through opportunity centers base and as the fleet XX% focus across units, matters. ancillary our approach you'll planning include overall, of replacement mentioned over for actually, Plan Supply some reliability, that improved checks on the Dakota, the And also and Power scenarios Turning the best mobile for exciting would plan us five the number scenario several margin flexibility. combining in filed. actually and that development to South tax opportunities Initially, for of series Dakota is and

see, So as and you can opportunity that local supply an terms of reliability. creates both to address needs in

filed, a interim this rate on annual the a million requesting increase a increase expenses, year billion good property in tax. $XX.X and analysis, specific and Montana reflects I XXXX electric The $X.XXX made X.X% a to time also typical revenues then as equity, in, test and overall We're rates, managing with X. in rate bills. the reflected a of September, asset job, effective in return We've supply cost million base. XX.XX% Montana $XX.X our as significant a debt, that typically, Review. investments transmission on overall requested XX.X% cost distribution on a X.X% of of We we XXXX. based Turning all electric investments Electric Montana the a base. have changed increase that the challenges over a in in been in a in electric case But November residential rate to allocation We Montana, X.XX% equity and last through have X.X% then the filed our and well filings. increase company substantially Montana think, very We've, requested return has We General on since then. efficiently I think, done

notable filing. Additional the in items

residential our Montana a It in capitalizing approve Cost generation Power, new Montana net costs, XXXXs approve would and would generation Two with our establish then proposal, did to and rate private predecessor, management served private the the base class existing for Adjustment include customer is state. current in That grandfathered a Win would would be for First, Power Mechanism. demand-side new something rates that their customers treatment. Credit this metering under Dot baseline customers when and new the

and expect interim we rates does rates be schedule an in new issued, to into placed proposal has our commission a be months new the yet will an effect staff end may estimates due issue MPSC schedule our turning A And by but not X basis. then, of under draft on mid-May. year. finally, comments. procedural contemplated nine by interim and draft the on has procedural not within released for decision filing, November So And are Comments capital order of been if the refundable the a forecast. the hearing the

combination balanced or investments and across XXXX, program, five issues transmission Dakota capital this with This a mentioned, be aided estimated $X.X debt filed Plan as and years funded been see I by not derived does five with and investments, is NOLs filed year point across cumulative that mentioned, platforms, plan. a any Montana issuances. to I through of capital You distribution mid-long-term It and is at really. billion be cash, specific has Plan. to identified But a the of include South the consistent for as jurisdictions this

negative With forward investments regulatory capital are significant projections to issuances. and necessitate could we discussion. the additional not or above further questions in look neither in Importantly, equity that functions that,

Instructions]. [Operator

from with come America. Julien will Dumoulin-Smith question Bank of first Our

build? just of you're of and so not I'm right, slide, that the that XX question gets I'm And to are timing if megawatts you of the all interpreting the How of maybe looking to the with megawatts the $X much of that the a Can I'd I you a I'm are projections looking short -- for why metric, in? to relatively exactly the reconcile left can again, relative XX you the clarity. the now little looking I why the sure the just is $XXX if on be here? investment involved just kilowatt about then curious that. per separately, top million on in nature distributed Dakota imagine capacity but CapEx. you curious also one, talked First, And generation bit slide requirements I'm when to that's South focus I'd the understand, put be high

ahead. John Supply President. our Hines, John, go Vice

there. issues opportunity small. fairly significant, embedded two But reliability that here piece study. called the also there That retirement in execute the for One We significant to and SPP the a need that growing we've the is and a about when HDR us. that's relatively there's need. And capacity talked the issue ability is upon. are That's have market in through

trying to Sorry, capacity, delta that, you the excluding retirements let chunk the projected and to incremental of heard you need that the that's to further I Is have in that? sure that short there's a right. that's arrow say me coming the there? from chart make basically as Is try retirements that's

correct. is That

Just to is retirement maybe way to sure that And about XX the timing there? installing on what's backhanded a this need the ask, you relative think what's today? the to of that and -- make it megawatts, cadence as

to means -- test going We're we're the be an approach that, megawatts capacity. But of our years, or to -- and as so to we XX as have that XX at around well taking implementing of megawatts a next the least own. to additional five over market looking we're opportunities expect, replace that at

Got it.

So that years? the of Is million five what there not XX% next that's $XXX the quite over -- effectively you're saying? but would you it's again, say

about far need. to I'm we're dollar not saying amount. megawatts saying just expecting that how that's the much as as I'm

Got it.

If right, Okay. All enough. it. for we -- sorry, fair go

this beyond that mobile Dakota. South morning, right for need board test a and But consult the technical a generation has the we've is received the our customer really South previous discussion the identified that that's the has with do folks next, John in for Dakota to the and, very had good that, underway, market, thing do the described plan, Dakota, need something the our insignificant. Then under instance well ultimately, South investment we've say, customers. with really been five commission years, we or in

to the Julien, and going I I'd to this at we'll think speak add, February more this to time, What plans our be able in investment meeting, would speak at add and point is I declining would XXXX capital Brian. is, each a on line. capital that you here to that be of would when in is itself, the that a The of starting years know it's slide walked say my is, that and the coming -- through Bob expectation slope years. kind past, I thing the for slide we're

upward-sloping generation, see as start layering beyond. start being in to we is we and Our XXXX hope starting that

South know resource focused if the as also, same planning And on given it. Got today, well this. situation reconcile I as projected date? in I do you context we're think can but existing how Dakota here, about regulatory the Montana

we be that That's had meet is XX RFP's range the by of the will actions, cost that in back But were be lease a essentially, everyone under that the optimizing much identified the West to resources know, proposals. to requested, to there. we plan And RFP still long-term aware, filed driven as do at we address. XXXX the some commission's is identify in of we'll expect to any plan, that out we're are fleet. was successful in need. our this reserve. year, need negative that we on, that off extent, The have the very And you resource-agnostic. point, something In again, with We the we call particularly focus symmetry in of to capacity. discussion, some simply the going having year As unique

that's and fleet course, and of availability. Hydro add One $XX less the that of the on to Montana much megawatt compelling spend entire generation at subject some is factor incremental to Hydro hour, a things at exciting the board capacity the that's has meeting we and time this very a than the system great opportunity particularly and, pretty

to to is anything And ongoing. you that John, that want that? again, that's add So something

transaction And the Just upgrades Bob at at also was providing they're in the and numerous services Hydro the which just through not this to well, we're dams values. incremental to noted, cost-effective. And but extremely Hydro time, originally looking allowing point benefit. we're at system so how executed priced, continues energy, be as additional is, capacity ancillary providing provide system,

it. Got

Montana, questions just whether with a on you secondly, equity-finance XQ, you're will. portion then, quick that? Just would here XXXX you thinking incremental South the about, to given any of guidance, point, at presumably, logistical CapEx rate case? that if administrative clarify this or two Dakota would that you And expect to issue

let go to Yes, one. first

itself The in first impacts we the go drivers, give uncertainties, how of rate of one, to end us EEI. expect case and and We typically drivers year, in that don't some expectations the TCJA any at and we as XXXX. other in light things, the terms of

that again, for ask 'XX guidance cost your case 'XX. in second portion terms We'll as healthily, the a that guidance question a with Julien? rate it you obviously some of case, February obviously, whole, of at rate Can whether recovery provide from all In will for evaluate at time.

incremental South this I you was sheet on just a given the would imagine the Dakota balance self-evident. some point you where I curious, at certain portion is extent, expect of to financed? Yes, are generation, for this CapEx, equity But that the

to -- I'll this about later of timing be in the talk that when prepared February. we in CapEx

[Operator from Instructions]. We'll Crédit Suisse. Michael take our next with Weinstein question

-- is by is the something the is on Colstrip the the $X.X that frame, million that most outage, time mostly outage, else? for So on or that PCCAM of XXXX-'XX driven the Colstrip impact

Colstrip during of prices of third outage experienced not say third outage The did, a contributed a the significant high or the as And because would people the that Colstrip that, we it's combination. our been owning to would certainly we many not, very fleet. power have in share regardless own quarter, I but it's quarter. certainly procuring

procure we have have up, when PCCAM procure the with in our those. have And prices go marketplace. we It's risk that today. power the We to to are power

PCCAM is would in cover purchases exclusive in the right? cover outage an there, And does some -- for way, exclusive this nothing at Colstrip, it

correct. That's

Is Colstrip else? Can that... isolation you quantify the from impact of everything the in outage

I can't [indiscernible], Michael.

X. was line. impact know O&M I in said, Got from the you. And the most of O&M higher you $X.X the million And of Slide increase of

some a there's Yes, few thing there's and -- all the to items smaller stood out things favorable but the that as things in there clearance. quite other line was the category, out, also shifted

number? would Okay. choose I large that

tell on OA&G continue we'll good you, we numbers, basis, Agree. year-to-date look And when I to a continue end perspective, year-over-year and -- would an you we basis. on look show a on good

reiteration. guidance our also, -- the I And on you appreciate XXXX our questions anticipating

call, I Michael. was the listening last on

categories Why do you of thinking that range? of cost the fourth are into expect margins And cutting also, you higher in quarter? to get what

I think your first. with I'll question second start

doing our the focused responsible team, all and for best various can on budgets. of manage For the budgets, we executive we're are all us to

X.X% from we margin not me, aspects, we've and area other I'm in quarter. a growth growth fourth on fourth in customer perspective, we to of so saw the speak itself margin in quarter to continuing going excuse terms first more closer Back to into particular And any see question, the a first seen kind quarter, there. your the of

question. year's can to is but Okay, great. that kind there to year, can tax -- any you effective I effective is tax is any And one there right provide The you talk rate mean, guidance likeX now, going this next not of last X%, something know about? you're I give for for number rate?

to we'll But, thought. got that's know, that Michael. EEI. good something see one tell for That's a We've You good you a on probably EEI.

from [Operator KeyBanc. Paul Ridzon question next with Instructions]. our We'll take

to get assuming tactics. What Montana you with as I Just that a fair on assume soon as and reasonable regards question guidance. interim are to with regards treatment you reaffirming And rates?

assumes second guidance. the expected it in discussion thought on on -- as made made on I as our I favorable Yes, method point, terms I my outcome our year outcome in current TCJA of a that on Paul, clear guidance,

the So first and foremost, that's thing. first

are Regarding get XXXX. we a in possibility rates, them two get immediately interim rates, we a wouldn't things. rates. there don't possibility and interim get There's interim there's We

time, of recovery guidance not, include from costs rates. this our at interim does any So

from Fargo. Jonathan have another [Operator Instructions]. that It and is question, we Reeder Wells looks with like

Brian, the a net was that million $X.X so quick just recorded impacting Was QX the in clarity. PCCAM, then?

the full QX. Yes, was in amount recorded

The million net impact? full $X.X

Correct.

and issue, just terms you tax as have in Or leaning? at do is then this of the everything, the back you sense the commission of to way any up to hearings point? really it the And is Okay. mayor get which

to hard say. it's Yes,

fair. resonated And of customers was received. we impacts I think in having think we that that We after we And all even that fair, strong thought done the the with a -- of I of terms terms case credit in that, made obviously, giving thought that benefit very only statistics. benefit our commissioners. what's to

certainly, trees the I the think, think they the made resonated really hazard interveners obviously, tell. that's to as points also commission, speaking But, to well had with I to certainly, hard that, commissioners. and

speculate. is point, this early at so embracing, We're to it

move Okay. And timing we're the to December that on is this, exact of supposed it it?

By the there'll end change commission. the of the at be year,

certainly a expect decision we'd So then. by

comment want Okay. to huh? changing And commission, Bob, I'm on don't the of you assuming, the pending

do [indiscernible]. I not

and district, candidates in this, the to we candidates want learn to meet are commission position to understand our critical As is and are like for I providing Commissioner to we that be time role both both both as to our running play, infrastructure the meeting, employees, our essential including informed of of a in come was pleased and contested, to the and the little communities mentioned, view step that understand as Kavulla's the is bit operations really who possible anyone into at candidates meeting this two there more. that the the to took service, I were the two seats and

with Johnson's this any juncture? engagement challenger at Okay. And

him the Johnson to much cases. very informed as there. as the been in as want informational Obviously, And thing well. We same well fully knows We in We've meetings we've contested other company well. Chairman the the really met also do very be with candidate.

race the think, own, go? highly way influence the election Senate stand I Montana? commission, state, the in on going in to Or Do that you they that the historically, their I guess, Yes. mean, is do

what I how, don't have down much ballot of go. appreciation called, races the are

for midterm, like everywhere of higher their lots the will likely be early. ballots are think mailing in turnout I people in country, and

the So there's board. the enthusiasm election of certainly and just interest just for awful lot across an

race. relatively certainly Commission I think candidates communicate Service high And Public their a a would and positions. trying turnout know are into that out translate the hard I So all working for to

Instructions]. [Operator

questions like looks more there at time. this are it no Okay,

all final the Just were and long now. get votes to one and back We subject. to or understand working staff directly. essentially, for I'm on it's of you final X order see commission's have time But the a so us very are recommendation focused pleased We that to PSC's X questions. the and turning off time been for the important earlier to that PCCAM of the back

you over You Montana issues doesn't with been became electric the reversed. you much, commission's made approach. in can to And was trackers the a prudence there any essentially and then a legislature. a a up, formulaic And path. year, kind previously. review gone period commission's much formulaic prudence review. in seem think Once so the predictability prudence more supply path, the and representations that it was less go and to it's more single more down trackers to that didn't lot And logical, success can't process or about of We real felt of path a Logically, that made could the down resolving a intent had election, the I it had go you has down decisions approach. consistent preserve here, a way imagine the stable. came commission and focused the be would items that And we

there. With risk, certainly, allocation one are a has or the the see positive the from So and an we'll of again, that, decision any commission other just But and decisions order. and what order made writing go says and other, that busy made to about have it's staff commission they the the questions? now,

to like we take question, one would It looks final have you like if that.

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come will from with Julien America. of Dumoulin-Smith Our final question Bank

It's Campanella on. Nick

Dakota, Just approvals? $XXX the require Or is you that the through walk one to regulatory process can going The on South the side? million, the just follow-up. quick spend,

very thorough, efficient. is also Dakota but South very they're Typically,

through with active had don't consulting approval the market, something the be We being anticipate as Commission conversations to using will certainly the for for developed get was John? with we'll and commission. Dakota and process, their guidance. the it to South we've implemented. test I be plan the want We So going example. procedures like

pollution what very those say perspective. care We control like I and think essentially from Bob, here with of generation Brian. had as we've you rate case other recovery is through of will be process, pointed did when efficiently. out, This investments, that we took would you

no more time. are questions at There this

many seeing your you discussion. of thanks a Great, forward we just the and for in in to EEI interest weeks, good few look at

This a Thank day. disconnect today's your concludes and wonderful phones you, gentlemen. have teleconference. ladies Please and