NorthWestern (NWE) 13 Feb 202019 Q4 Earnings call transcript

Good day, and welcome to the NorthWestern Corporation's Year-End 2019 Financial Results Conference Call and Webcast.

At this time, I would like to turn the conference over to NorthWestern's Investor Relation Officer, Travis Meyer. Please go ahead, sir.

Thank you, Shelby. Good afternoon, and thank you for joining NorthWestern Corporation's financial results conference call and webcast for the year ending December 31, 2019. released, northwesternenergy.com. release been our available have at website results and is the on NorthWestern's

also our have We released morning. XX-K pre-market this

Joining have room other with are today of the Executive Chief the to in President members Officer; on the team Financial we Chief Bird, Officer; address Bob additionally and us management and Brian us Rowe, call your questions.

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

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

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

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

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

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

to reconciliation the Today's presentation these and refer webcast that non-GAAP definitions in Please contains our are materials. also measures. financial measures of included

will website beginning be today p.m. archived the Company, can replay and found Time the be to Webcast Relations, webcast Presentations into those Our questions. lines link. allow and on The phone to Following we'll today's one-year Eastern teleconference our Investor at for available open under our presentation, X:XX dialed of ask

over our I'll President that, it hand Bob CEO, Rowe. With and to

couple of up and thank last degrees hours, our two where Office, now a calling have we temperatures rocketed joining in afternoon, it's are over Good positive the from for us Fahrenheit. you the Falls Sioux and

EPS income as adjusted for X.X% start I'll Diluted Non-GAAP Net that's million, $XXX.X increase, increase, highlights. year. $X.X or was increase, EPS or X% last March shareholders was $X.XX was a payable a XXXX Board compared last to to compared or dividend year. compared recent that's XXXX. always that's with to per a of a $X.XX, and a X.X% some million $X.XX of and record $X.XX a X.X% of March XX. declared to $X.XX as share, that's quarterly increase XX The

our portfolio year, Late last for electric carbon in vision Montana. we reduction issued a

a a Puget from of or targeting by carbon We XX% December, to starting Sound $X. acquire transaction incremental for XXX Energy reduction XX% are XXXX In an from Colstrip Unit we megawatts intensity announced in XXXX also baseline. our X

proposals to also and month this for flexible commercial in early Colstrip Commission. of be a an for of our rate this In we've the operation February megawatts filed available and approval In competitive peaking solicitation up request for a for month, case to or capacity XXXX. just Montana all-source with XXX the request the Montana order Commission approving electric settlement, issued December, we acquisition final issued

that, I'll with to And results. financial CFO, Brian to walk through over Bird our turn it our

on net into good of talked there ultimately our details, million, Bob Bob. basis. drove summary or than expenses margin Thanks, income increase million year-over-year year-over-year our as X% gross improvement get financial a X.X% improvement but a in that income a improvement of about on shows was X% in The $X.X X generally operating results. basis. increase our that X.X% about results Slide higher about resulting the a takeaway $XXX.X I’ll operating

Slide to Turning X.

$XX.X $XXX.X of margin gross million margin, gross improvement X.X%. of terms million, In a or

Act from liability major with into look XXXX, qualified offset benefit impact things facilities year really better about this That's in talk a XXXX versus amount. and that also I Jobs the would the two adjustment million electric XXXX. $XX.X Cuts there drivers you the If Tax

had taking gas a and one volumes of We to kind on retail those So two offsetting volumes. good side drove the electric another, retail really the extent. great what results

increase, saw cost this some from also year our in an nine-month We benefit period, our a electric $X.X rate million improvement supply for recovery.

items to total that our year rates. transmission was our see net gross $XX.X change a Offsetting stepped during million. that production in we did out in degree, some income on That gas the also margin revenues natural electric reduction those impact and

In total again tax margin. million margin increase through addition $XX.X production $X.X to netted things increase a like gross trackers property flow million to a of netting that gross in and tax in credits

forward weather and in weather to we and to summarize, benefit $X.X X. a favorable did $X estimate as right, Upper Page XXXX overall months the million on compared to normal, compared very pre-tax Moving calendar very, telling. just XXXX. in month a maps million were benefit The reach resulted to weather

February year cold really March drive really gas the favorable in the the our of that for impacted benefit first weather business. favorable the the came of and really results side helped All quarter,

and A certainly do it's enough look unfavorable to weather, if net October at of much pretty we cooling will you matter fourth offset the didn't a quarter though the was period. December. second cold, didn't that then load mild fact, third have When And during quarter, you it at time all.

year. quarter first favorable results drove again, weather the the for net-net, so, And our

Page expenses on up Moving or X, X.X%. to of million as operating $XX.X terms total a million, in Operating $XXX expenses.

forward, right direction appeared certainty trend The certainly off, operating step in taxes but off, up certainly two X.X%. as the to a off keeping to benefits XXXX. that, or level level property primary million $X.X good certainly So there is low. in of leveling see those a hope expenses no that We to going see

the primary down the of rate had net result there increased in but on as for basis. the as improvement Also, depletion, our depreciation actually invest $X.X in settlement we've reduction reason a The continue case assets, the the million as $X or rates and down being obviously depreciation we approximately to depreciation million a X%. driver

terms made our progress up T&D primary bit, on will during administrative bit and through year. other year, operating, then to trees we've generation and that our the We first during did are and OG&A. technology And past on expenses expenses. really in expenses, spending We that legal good general a was the the increased both you the did shared in hazard if our and we we year. In note Labor strings be did going throughout benefits opened maintenance business, and increases on the of are more across Board. the a additional

a other there that that. change quarter large items did were in basis, note a break year-to-date may a from associated in see so with we OG&A million. That there out questions net a impacting last more, on You people quite an perspective, that. fourth We could bit those income quarter did the $XX.X have big that

in million. million items comp. deferred the changes and offset a OG&A are category, comp that P&L you'll take net in at directors the see Both pension then of operating $X.X were $XX.X in Those in OG&A deferred certainly in item but of you non-employee $X.X some look are $X.X the and offset in decreased elsewhere pension, OG&A recovered a million a other a increase trackers million for in moment When income. expenses

pension income primarily Operating spoke also netting really to $XX.X item expense, $X.X AFUDC. is $XXX.X But spoke also Page million, comp of due that million. the I in X%. decrease capitalization was offset by and higher main just deferred Other I million, next the borrowings as higher that income, the X. to or up $X.X million the OG&A. On item just partly up a Below interest

of tax a $XXX.X To speak then before The an that million, I following we to basis, of I'll a million $X.X X.X%, spoke improvement. that net higher there on benefit in increase slightly from tax or a $X.X income year-over-year income net moment. did to difference the million income giving that explain have that and earlier

income of million million two year. $X by difference, a improvement pre-tax deferred the incremental Cuts tax difference drivers biggest Act benefit the of impact things like the was is – the result of of XXXX primary the also income of taxes benefit the million, offset income Jobs On of XXXX net in an other $X.X $XX.X in Page in the X, for million. drove tax that slight we tax excess an itself, and unrecognized That benefit $XX.X Tax had release

FFO continue Moving obviously, improvement onto ratio credit ratings. downward of trend our BBB Page make continued to the balance continue to shareholders' sheet but equity, in on always maintain debt to that much metrics XX, up see our to really on see and try say sure to total and our to unsecured we here flat as capitalization a in we keyed credit shore debt

year, method an not that PCAM add basis well, are our right. $XX approximately see did cash the the things as statement a basis to activities monthly with versus a collecting costs, red an did a Page but collecting in really result onto We on now Moving million and supply are five the have year-over-year settlement of under operating supply to We basis, be cash flow provided those now of some identify We of it we but on during on box to the that. annual the higher supply do XXXX. only collection cost that a aspects in in under by falloff as a that drove XX. to

on basis. So cash we a certainly do expect to better see a bit flow, year-over-year

year, the change of three that settlement net interconnections customers had million. year-over-year there. then Cuts in deposits there that the $XX.X the Tax for to people biggest Jobs for refunds million start $XX.X actually The was had are providing terms of in is we until those didn't Act, drivers we Actual generation occurring refund million into the XXXX, $XX.X and XXXX. And the

XXXX earnings on then for the the people the right XX non-GAAP for GAAP is on we this far think left a and XXXX. far and the rest compare work to the from really can numbers far understand forward far the and GAAP adjusted non-GAAP both to toward Moving come the Page I page company And those. you an right to who – for middle follow numbers XXXX, perspective, XXXX, to

of far EPS unrecognized GAAP us year, had with diluted $X.XX favorable on of out we $X.XX this out backed associated we to getting benefit Starting $X.XX the a tax took left, weather two $X.XX. from adjustments we basis, the and

out XXXX, weather, of a On year's of with under – improvement comparison number in have number the GAAP a TCJA associated non-GAAP that associated $X.XX we we adjustment, XXX or liability favorable EPS $X.XX that backed X%. in with $X.XX netting $X.XX three last $X.XX a QF $XXX, items XXXX to basis, just

about margin the of did planned hazard XXXX a We talked have non-GAAP trees. Comparing categories that about to though higher X.X% wanted – through also margin talked improvement increase considering – X%. operating the expense at operating X.X% in on that is actually we and in about other and and have P&L, Even down, some in taxes up amount income though X%, columns gross we spend in spend, about incremental income in depreciation net up a property a gross slightly middle operating expenses ultimately in in more, we basis. depreciate to we OG&A increase net improvement

Page you to time see XXXX. forward and On X% both it share from basis, Diluted non-GAAP a period, this XX. to Moving over earnings XXXX EPS on perspective an a per has over grown average non-GAAP GAAP our perspective. from a

that column. you show in will we tell XXXX do We also

income benefit of outstanding diluted based consolidated million. X% three tax assumptions weather, we pre-tax and we do $XX.X range $X.XX guidance Our really the you note diluted tax per rate increase upon income of shares then X% give here to of normal share, $X.XX a to

X% our XXXX. long-term. now one is X% here getting spend mention would million do regarding sustain Look going the I'd total that middle reasonable – thing recovery. shareholder in range should move level return In total Lastly, we to that total forward to see XXXX X% to $XXX to X% again a to our up on assuming capital expect this return I basis. of return able be toward

share $X.XX XXXX of to to right, How there? to range. Starting points $X.XX show we $X.XX some mentioned the non-GAAP the I $X.XX get range. to do to forward, bridge XXXX we at EPS high kind low and that Moving to get

are of Certainly, margin? drivers What the some X% we expect plus the of growth. gross on organic

commercial loads. and We industrial expect higher

we perspective We irrigation a then case. revenues, transmission we expect an to from rate lastly, get year improvement full-year benefit XXXX. the and expect some from And in in had wet a

the on We some revenues see to improvement gross help XXXX. irrigation in in expect should side. margin That

the that up first here expense We're decreases strings across we've expect category between in progress drivers XXXX XXXX, control tightening And in XXXX at that those OG&A looking the in really are after range hazard of decrease. gross I said, releasing on to and again big made certainly trying a the – business And maintain trees of $X.XX, the XXXX. in $X.XX of kind increase margin to spend as Board. in lees some cost in OG&A great improvement to little for two XXXX,

growing Thinking increasing each speak property for expense and tax, on South Dakota expecting company, with Other We're in the spend, year-over-year. basis. depreciation a AFUDC moment. we a income we'll expect year-over-year a a see and those, interest capital to bit increased more generation to

We equity to lastly, see we benefit to $X.XX late a – on likely continue $X.XX from us to to needs to nets to XXXX range repairs associated a And from expected That $X.XX zero and $X.XX possibly tax with of range deductions of focus $X.XX. that. up tax XXXX. dilution net with incremental potential early to

that take and that's the you annualize the compare that's we announced look just dividend you $X.XX $X.XX, you at or consideration, at of $X.XX, When range the that that to provide payout. a XX% when midpoint mid-point today of our $X.XX, about dividend a to if in

this to page, I'll on taxes. Lastly speak

did be through to XXXX. going Some expect and that, in regarding NOLs good news we our

XXXX. taxes. rate credits back that reduce that result And to a to anticipate by XXXX year [indiscernible] cash to AMI we XXXX. credits available reach XXXX into with lastly, be And pushing now of XX% tax as and our PTC used Now approximately effective that's a being

I'll Bob. that pass to with And back

the be the result deregulation about was that's of in divestiture of a XX% And in customers, effectively days. able baseline XXXX, Montana baseline fully Thanks, the is reduction XXXX Brian. X first as compared carbon couple I'll targeted that statement Montana. we that's been after Colstrip our in Unit know going words carbon – you to had by with as power to a dedicated to resource intensity and Montana serve through in of start the our

and in on South As now. right to we you delivered a a are that carbon-free about Montana This statement, that – in XX% it's XX% know, we average basis I although already XX% is over nationwide. specific carbon-free Montana notable Dakota, think compares are

lot on driven this referred we'll a kind renewables statements are really or acquisition after even hydro and and a not as have we a of BS, carbon then we'll on more have the wind an our It's have additional very Then at to continued more wind soon, we Montana system. of have We’ve Colstrip hydro coming Colstrip. to by we qualifications actually no on it. close

resources end demands resources. Energy resources to customers’ as point efficiency at be continues important will come our the online decade. to this very meeting be dispatchable diminish of Montana toward But important. the dispatch in frequency, Thermal the of other in range the

thermal there We will retired. resources are be expect that

that the worth So allow capture really changes public will linked economics, noting like plan, changes resource our same in and updated in this on just glide will assumptions technology, in it's to basis a is in a also plan to this is that policy. path, the this changes regular and modeling be as resource us

customers. things help be have in the them craft I'm customers recognizing will directly to makes own with that that us solutions Montana particularly this of vision communities our all that obligations working to a with about while for and group legal opportunity help is goals, implement work will sustainability One achieve that their great our sense also a them, our programs sustainability of of to excited

Sound or our to to XXX XX% X. we X. ownership in of total acquisition that December would agreement to at Unit ownership Colstrip a acquire then and X. executed XX% announced Unit It's XX% X, Turning XXX megawatts bring Colstrip of the of purchase Unit megawatts Energy's Puget sale On

acquisition, I pension rata have as $X And for ownership for our his responsibility A mentioned, for will well a Puget additional hydro without pockets more importantly into more as and share deep we closing that wind ultimate even costs. on of current pro will both to its as system. resource, retain very the environmental brand pay Sound for liabilities, find and

proposal to In five floor pre-fund a will for indexed Mid will for put closing to which megawatts profits but eventual we And power a from X. costs. Sea Puget on costs to index, back into our to sell we years agreement, into pretty XX purchase tandem, enter an with a under is essentially trust the meaningful down of PPA Unit payment that the

couldn't They its in that's think for We all Commission. assets the first various reason to lives. see which Montana recognizing be the responsible are have far March by year, our schedule sighted for that implement think and reviewed being important and the few and interventions and are transaction the achieving responsible transaction due with days certainly we any start of benefits approved the useful those in in of filed is do being why of the elements the an setting the a don't of proposal approval customers. end we We and parts able

And you supply the at we United our regulation. margin focus meaning requirements deficit and operation, of Western acute even primary XX% Western new because concerns part focus power the know, a reserve in deep focus to about an Pacific Montana and the in of legacy are Northwest peak States now prices market, sharper exposed uniquely as in in again that, in are

peak. this quarter So addressing important I our exposure of in about is mean, to very a customers

Turning Dakota the Montana on to the South electric and plants.

SPP. our and Southwest particularly to Dakota, our our and our straightforward South be process, effectively reliability, of customers participate to behalf of plan we the to First, able in in flexibility on modernizing really on requirements a XXXX, with fleet published as maintain Power Pool fall to efficient it's been focused possible address compliance as

be replaced next identified XX megawatts that of and retired over should the XX years. we So generation existing

a running we're over decade. think I

for resources XX we the in process, of April interest South of flexible lots issued variety Then XX again very process, proposals Dakota by begin robust serving a customers to of end of is for submissions. megawatts capacity good on by the a our XXXX, a XXXX request third-party, administered a

As units natural at combustion a a to own result the internal Brownfield in we gas-fired of competitive reciprocating Huron. construct and RICE do expect engines or site process,

And then environmental execution late then the online investment And of to subject applicable megawatts about this megawatts new construction XXXX million. between election $XX be permits. dependent a at XX capacity and by on of and manufacturer contracts selection, is total construction anticipate and we proposal of should obtaining XX

So that South Dakota, we're forward. very see move to that excited

focus address the Montana developing Montana the dramatically really in was will needs – There energy the reliable resources to in Turning our plan. to a that and customers' affordable on in fashion. the and in changing landscape meet West

loss referenced in just a peak, in ago, are a that of distant market traditional that's I peak providers at shuttering which future. and loan are severely XXX right original exposed needs, moment concerned probability about we resources about we're and megawatts terribly the not now isn't of and short are As in our increasingly planners where market

customers are behalf customer five Right be We forecast just now and modest just considering on will in of for being peak expiring that to set we contracts with customers. at resources a then market XXX skinny is at our be about a short good demand. place market very of at in not very increase and our megawatts our portfolio years,

all-source in issued early month, operation be XXX commercial RFP for to up for megawatts of XXXX. flexible a available peaking competitive capacity this So to we've

for is opened quarter flexible repeat expect that in and by projects the evaluator be to of year. process to resources of run project meet capacity. and administer There we next rinse subsequent our be the successful kind or a provided peak first and indicates, As can and then types will and selected proposals to a evaluate an the of future the needs year, independent should and RFP then to all node they wash,

electric result Turning regulatory commission and the Montana X.XX% of about a $X.X settlement ROE to effective the rate as annual we in revenue increase an to the some And would had order, know, on other capital approving million our case April front, X, based electric XXXX. on the you in that as most final December, structure a proposed. matters, in issued importantly case

supported. Council million decrease a parts Natural that $X.X depreciation infrastructure Montana request Defense Resources the the several the expenses, have decoupling by concerning had mechanism petitions parties filed and a or various we're then by reconsideration in Council been of proposed Consumer And order, particularly of that very for for funding reconsideration strongly

in We – will request for that on first quarter. the reconsideration acted be expect the

and May accepting filing FERC course active. Parallel, appointed and year, interim a to granting filing, settlement and subject Cuts our Tax FERC assets. last in July then Act the negotiations submitted conferences Montana refund, transmission procedures of Jobs for and then judge filing, related settlement June, to rates effective In X, order terminating we and has are of establishing been our settlement an issued

compliance based We eventual case the retail our adjustment upon proposed back with expect to credit of and the a to resolution commission submit FERC Montana filing rates. an with Montana

transmission our infrastructure and on this and continuing addressing We've customers. We're been fulfilling is progress approach That to a system. actually our that, distribution has staged to but I've invest is been not incredibly infrastructure, work comprehensive safety, important in since work those this our visible, about responsibilities NorthWestern. along talking as to been sometimes reliability, really includes at lines modernizing the capacity, continuing our

on work to to our side and learning about there. for works decisions integrity And focus. be hazardous gas then natural what pipeline, good speed verification, We'd system customers. a materials sensible or pipeline and like to of our then that have for are our the modernization value, deployment lot making continues talk On the investments grid and

attaching center just the that been go-live, are most weeks, last this One particularly of to had, Big field several was field, Montana control neat and of create folks of operation in with challenging peak just at the distribution days an communications center things that we the in elements started the distribution process customer the crews in have a top live in went hundred weeks that field the geo wins the on we after had our in then acquiring over extraordinary to of coding in had care spectrum, down outages, loan devices that all did multi-year a miles people in we've and they actually hit actually the the now, couple couple could truly operations had shake Sky it XXX last job.

the that DOC The several functionality to continue improve we is a and on continue years there, invisible consider just example but of how be next it's on to over turn very more difference. to the be we going as customers, of that to ultimately minutes increase make because an huge – our can of that important, investments to couple investments technology really make a but huge,

the Montana planning reliability, market greater resources, back but will imbalance have that that We'll know, resources more market. XXXX grid the South use Montana in to intermittent power RFP, circling you Power we Southwest customers. benefits allow efficient have out able we're in of to to experience then to our participate based in As on to Energy enter real Dakota produce of Pool, Western April for of some the our be

benefits, us. we've As our We peer property larger companies to labor post in we about most up one the valuations. efficient well most than be of and continue tax on before, consider objectively measures against group talked costs companies monitor to including think and really I ourselves,

could NOLs based total $X.X early know what and bonds, draw first regulatory and now, potential projections period and mortgage to a equity. your is protect actions be XXXX, issuance equity investments attention I'll through predict over We in significant investment is on anticipate with or see additional cash that capital capital. late credit financing XXXX would would negative and not our be this maintain significant aided are from flows The of combination XXXX, current you thing, issuances, five-year necessitate these by Last equity – billion of our any operations ratings. we what size here forecast capital a to

the of couple on and it the excess in million Montana, This the our South those for years. highlight does generation and does of to $XX RFP million Dakota generation an not of next results results investment capacity RFP. a of any based XXXX on in include could over include depending but five investment in for incremental XXXX, the of identified be $XXX South Dakota things Just

we One if thing, say through I as projects any identify we the period more would highlight our just important to are before, heard work customers. us And look five-year at as indeed, that – period, you a would serve in XXXX have bar about that's in through of result XXXX investment than this additional $XXX year, seen generation of million and Dakota. the South million actually you in graph last $XX they're more you've

Also an Montana, billings some to Montana upgrades so transmission funding utilities, work project. transmission SAP important a electric then system many and in hydro investment the HANA additional initiative, substation, the like at Montana AMI, ongoing work SX in gas other the in

that's the being So valuable point you that work the our most again through to be the and as you customers. years, work five identify important continuing to able serve to

for open are questions. we that, With

Credit first Suisse. take [Operator our from question with Weinstein Mike Instructions] We'll

Hi Bob, Brian.

Hey, Mike.

talk about what required I guess decision I be the little extra, time more would why the first quarter guess the in final bit are – what's XXXX, you a the Could that? Hey. RFP, of for

process be thorough evaluation. very probably will there a or be stages pre-qualification to going process through several of It's the

supply in our that's importantly, believe folks, realistic and prudent a So schedule. believe we most

Yes.

an next that by be Our this expectation outcome. is call giving year we'd you

And you. any with there? there time Got process have same the the changes been other Or just it? process, it more seeing to is

the year We outlined in legislation last Montana. in passed are process following

commission several steps for the releasing wouldn't filed otherwise include isn't legislation the in have there before RFP submission. does actually and with it that that the we for place. we But example So –

mind that step come that's taking So effect the in does we'll that statute extra be one under this year.

more is you're or? you saying or from else initiate it's that – you Right. And saying I that not itself coming legislature somebody more the mean you commission need the like the time is guys delay they time, need

the No, delay through. all. I not. word This a I work did reasonable would schedule at to use as

aggressive the independent our the period, time understanding terms working been party but front-end have fully with the on of might We in revised time period.

got Okay, bit energy imbalance wondering could about maybe talk if market. a little was the I you Hey, more it.

you're And built? here? assets on we that investments join think, it next have any planning Bob, you additional need that in what that additional that the about might any mentioned to for talking year, be Is I mean significant there are assets is are you that. required to required? timeline joining are I

Those would RFP. the come out of that be the assets

you before see that so join? can Okay, to you need

actively we're place software, and in and to a in to of department join It's participate all steps undertaking No, be very now. through get the able right significant that's hardware, our to to a going undertaking the transmission people systems, department. market joint our the supply

just Mike, I add…

Yes.

add, meets plan achieve just the outcome we have time up we'll our to order in depending don't the build through end through in XXXX, of EMI needs contracts during until We But capacity that. on to from enter others, obviously into of RFPs. have the the perspective. or an that we're we PPA, XXXX, I to anything EIM Mike that certainly

Got it. Are there upgrades required any or need built to that additional there? any be transmission assets

Not have under specifically this. of for way. a do mentioned, couple we I transmission project

Right. All right. Thank you.

you. Thank

Mike. Thanks

Dumoulin-Smith of We'll from take our next with America. Bank question Julien

Bob? How are Hey, Brian Team. you, and

you? how are Julien,

hear you me? Can

Yes.

to good pleasure. Good, hear you. from Absolutely,

specifically this second up equity $XXX following where ago. of Timing upside was a talked million. just about on Mike So taking here, you

kind something when is clarity process about waiting before deciding block on equity slides like XXXX, also the here, definitive some about an And you in or equity about like You definitively also XXXX. of process talk ATM put or Are that? the to here needs? you get a think equity you that that

talk your call, into capital talked million, the a million XXXX last from to we a to talking according about not the still question, the time I But that answers we need, And again, the the specifically about to I walk $XXX full two put slide. agency $XX just and when to that's the first last it on needs need to of incremental from was again perspective, perspective. Bob of half through the size XXXX the debt or case. FFO talked latter $XXX million having rating from debt I

answering first really So that's question. your

that's question, evaluate them, used as past, certainly the options second a we'll Your ATMs we've like other but well. in possibility,

Right.

the dictate so comes to timing be et going this or not current whether as early later that would in in So basically you out whatever of the incremental slides, XXXX Montana cetera? say to that's process XXXX, right, on,

point, fair a Julien. That's

we'll need prior it equity outcome. some I think, to

of if terms in be beyond XXXX early would to successful building end be out fortunate in enough think That of I time anything, certainly the period. certainly we're XXXX Montana.

sometime incremental we're of that's it. that raising amount future be hopefully – at the in So beyond might equity an

it, And And necessary. to then did Brian, excellent. But expect that I then, also TSR base how mean into you middle heard right, clarify extent a you X% it, I to say the or make to range? like heard – to you than that? about don't Sorry, here? Got of like it I read want the I to to is think I year heard you sure just so more X% which can move it anything right the

thing growth I gave X% we're and range. and is investment. Is EPS here rate that thus you to now $XXX If think clarify increase appreciate that I it see to main a of again. you'd able opportunity year, yield in you the of sustain sense? moving more XXXX you'd about at EPS will to every our improve. X% that see The make recovery assuming reasonable dividend me to to us million type an XXXX center we're if Again capital plus million of $XXX

Excellent. Absolutely. important. I it, appreciate that's you. thank No,

about quick the think that Bob When today, detail do and various up little Sorry ownership is your beyond what's this about you how owners, here, Colstrip further contemplated plants last broad-based? in consolidating a question. maybe you think

that dispatchable RFP including Yes, of we Colstrip. resources, looking other complement flexible our would capacity the are through the portion PSC for

that again see something what on on flexibility, emphasis retail an dispatchability, that So beyond think big would that And – with would for then I we'll basis. serving the of intra-hour complementary our be something is particularly just in what's in customers, terms we're a looking RFP. proposed

Is like Colstrip? Okay. you have differently, coal a that need for don't base-load

with comfortable we'll see RFP. acquired management, But comes our beyond that is would and the add. I'm and focus what dispatchability just we've what in risk flexibility, I

you the much Thank very Absolutely. for clarification.

you. Thank

Pourreza Partners. Shar from We'll our with next question Guggenheim take

guys. Hey

Shar, you doing? are how

way, additional of as not decarbonize? are with a good, a as Would especially presented bad. take you question, with too up Puget. in the similar I structure Julien's interest you partners Not on Colstrip follow on in if I guess, different kind just putting received Can you

would… I What

hear you Can me?

then of that, to that as our complementary resources are ability operate like. to on into now read terms well. you focused we're and diversify if And on be to risk the in have manage resources As you we basis intra-hour then flexible, can an if

about of did Okay, you of then sort your you timing and obviously next got Any And it. the the for deal, you the peaking duration as RFP sense issued the generation. of think – you've the needs? Colstrip got composition the additional on RFP

No.

in RFP, comes time, that available. the I other don't of that's the I obviously will technology, implementing the given think conditions this which right have and economics, the But of end on exposure our that at what different based work think now, focus can on see customers wait that, we be long. we'll the size need, through terribly out terms

get is engaged whenever get customers. are process, our thing to through we those first results this – resources serve the The

sort helpful program. remind is just highlighted the on to there issue the expect FCRM deadline, but there PSC statutory decision, decision you Montana, any Got a deadline a – is know a us petitions? of if around it. a – And then you it's lastly, I pilot for the there Is statutory complaint is

bit sort that this for a there fact Brian, and impact basis you a earnings Montana? a you. you under there get Even point do maybe an is is the of the then sort in of in given where little And Is ROE. reduction scenario earn earnings the XX if

Yes.

earlier. to just of First think, spoke I clarify we that all, about

XX where say the we regard. else impact shouldn't moving I most just forward the the and on support again party – hope is only that everywhere MCC without any as comment else, far the associated that's everyone down it's certainly basis will certainly point and parties on FCRM that the but I think come that that in ROE, the reconsideration with commission

confident but pretty see. there, we'll I'm we'll So get

is, to going to earning, if or and deemed under it so fact we're the in course impact think just we're perspective, in I'd regardless ROE think I an not thing I anyway, I it's leave an say would our at earnings it if earning be other that. and of have impact, an

it. Got

our by the seen Montana forward-looking best proposal The proposal, extremely step was I've an commission. anywhere cost the and decoupling fixed I maybe thought was

then I really for the beyond that's argument is of think that part this that at ROE something look subsequent if as think but something of study. an you to evaluated really testimony said, kind that eviscerated any an adjustment, can be

commission the were responsive request from of for other to So interveners hope I good the its guns. And very a number opposing reconsideration. fleeting certainly sticks there

helpful. was Thanks it. That Got guys.

terms I of think in too, timing. one the thing

to relatively I get pretty going July need program implement hope think that. on we're soon supposed to soon to we're because so that by that, an we outcome hear something on to and X,

Just also one of approving, to is to was referring the footnote what on pricing the our by implementation action more There we're good following commission little stipulation. order. green

some large Schroeppel, small and that are Customer Care develop we're and of customers our to actually President responsive and cities. on green products and both we good hearing from Bobbi Vice for want quite So of our to what very a that's stakeholders think actively customers from working buy group approaches our to

question Jonathan Wells next We'll with take from our Fargo. Reeder

gentlemen. Hey, good afternoon

RFP it some kind RFP? in of clear renewables products is maybe that mean, the on kind green remarks, of following fair? we kind like first might of for based Bob, in to comment that I sounded of this on desire the expect Just your some prepared of there, kind up that

long And resources, think building and think and needs, about what duration. what we in pyramid a the will given the dispatchable in. proposals. our I we other number at as real see parties, diversity as know of a and shorter don't ultimately we will pyramid, out resource then will the are be some expect honestly, about really we resource that's up the base duration, it who expected dispatchable come Very bidding end,

potentially diverse creates is be really but opportunity resources long some foundational So the process, to the to through an resources. duration dispatchable need acquire that going

that's to confirm that's you Brian, debt ratio target Okay then just that helpful. guys to And XX%? the FFO still

We some cushion really in like the target our FFO clearing to I We'd is debt. XX%. think XX%, have to

for that lastly, rate then affordability concerns your spend cadence CapEx rate case the now higher impact And does the in How any potential as that's your T&D Okay. filings, customers? as budget. well of

Jonathan. question, Great

twofold, that million accelerate we think as I little Bob was a It across move that quicker. could would talked spend four spread obviously I say a will this. those $XXX years. That's things that about. things and

in terms there's in we expect to filings. the bit you file in the have we'll you that April of timeline, past any for XXXX, will, if we least than our past let more said know As that and if frequently certainly at in

going period, I about we think other plans. into expect to inflation. long-range any bill that's time We're think particularly is thing time any the during we get this reduce EIM, trying the less at to we customers when In help too increase than headwind. our

is I'd thing of South of of $XXX add The part Montana, that is, the part part one to Dakota, million its it of electric, part its of gas. its

the much on is more any one segment, modest. capital just business that increased So

Yes. guys the it so. well you pretty of like spread No, kind I to would across field

me. much. so all That's for thanks Okay,

Jon. Thanks

next question Capital. our take We'll Vedula from Murti with Avon

Good afternoon.

Good afternoon.

Hi, Vedula.

you past do then do the this were with you to better here in it's is able a rate able be Montana produce or independent in than proposals to difficult to Montana, to the way. compete been be self-owned evaluator. of cross with to in for Dakota, situation the – a new any option the where be likelihood unique actually particular advantages more the it did Yet South been managed that – has in self-owned a there to terms past? a or perhaps site Brownfield In that PSC so the maybe RFP, finish pending you line have able up effectively you that have or that have – work of it's could RFP to been current outcome and with come able the opportunities In

referring you're I'm you of me kind a the to? RFP blank. Could point to

self-owned the haven't you The ones get self-owned validate or in options to the to Montana? past in where and whoever your having been options have able to you your wanted PSC

the noise commission undertook XXXX at truly because I of example. RFP and drew really wonder, it, to you're What out I we of coming unrelated. can't we think plan, an would of referring if an the

when whether owned to a If with up coming anybody the recall, else limited under to out a limited that to us by notion contracts or you to of years, that a symmetry came be XX at but QF period. time, idea XX-year the was ought ought that reasonable commissioner RFP, of also resources be

thinking result a as the ended wonder that proposals. of? withdrawing by up RFP requested what we the separate – of could So we you're I XX-year ultimately commission, be action that because

in Perhaps maybe a – then. ask differently little I Yes. case, this guess maybe just

you have Dakota, to increase advantages the feel or in you that South in at of of in be propose, part terms successful of things process your may like what perhaps solicitation. least of being probability terms able you Given success do in will that this new

dollar to In influence addition, more perhaps able does actually you're going the capacity too Colstrip dollar? all for be the not viewpoint, acquisition per to fine-tune much given at self-owned

I agree that with Certainly, statement.

that. real customer I will benefits resources, the we think and think think participate in we and to RFP. us operating Obviously, building are there do we good are at we having

parties from the on going we're neutral a but process. evaluated blind third-party, be So a to proposals will participate, all basis by through really a

where costs progressive that be policy decision thinking and about also we to the disposition the we about the relationship effective public relationship, was a did of of would is closing exposure through creating a very economics Unit either of in think about to based Montana, at eventual customers. and not coast. X right a to that the that quarter that I in And We defer on least was on transaction. of for unit cost terms at that see Colstrip on customers the pretty going move or terms do somewhere In ultimate our a decision situation either think thing is our

else? I anything the see Brian, a don't relationship RFP. Colstrip and you say really between that do Beyond

received that compete. I portfolio past on put approval I'd resources in into we add, we ask the No, territory we our obviously, and operate think, we all in know resources built and for service to That's and pre-approval guess plan have Bob. the I and

we're given $XXX but earnings imply sure I that question that a – a as of, a at the to would X% sustain X.X% talking probably – this $XXX the $XXX X% is the to that running the in X%. and of thing were million million you're you're if And when about I one sure inference yield, rate, asked want level, make a CAGR make capital clarify as about to Is run when the million that of I $XXX million the midpoint X%, terms CapEx that Julien your part as Okay. at X% understand expenditure to you fair?

South us to pleased and in higher in said service use historically electric we of both customers investing range. within $XX that but X% being that X% benefit, level to million certainly That is past, the throughout that the that and flat terms allow receiving, in of we if up to invest territories, sharing the of including the reason we're end lower – and you yield, of range the been had that able Bob we investment we that in is math, think growth projects in the have expect approximate investment of dividend gas outcomes lower to our some the that certainly And pointed that capital, be move for correct. our it Dakota, X% I out, light to we're in

process type figuring feel time there in also early And reason the you clarify of RFP timing laid do what whether the is? outcome the find XXXX, outcome outcome if simply to any it'd question, to be whatever have is out like toward that you that also of to perpetuate out an have you equity agencies, wait which you given the also with to an of in that ATM terms Is and the what and thing up the is program sizing not with the maybe idea of lines Montana. out or

Yes.

– it's think I a fair question.

if that raise, of wanted Vedula. over think, certainly could make and to size impression about. outcome of ATM first fact one obviously, equity – something timing say, to that the weighted you certainly certain the an and so people and around just an about, you think of you knew the the it's into something benefits We size utilize from let's to you program that think I gave that that time, quarter sure an you in we could

just in at And running $XXX CapEx Okay. program. million terms, if we're a

flow capital that to structure. million structure? we capital maintain something would keep to maintain Given is kind the required Should at thinking that order profile be what of in to time your in be in cash balanced point million a – $XXX $XXX the area

have really miles debt various for you this and people think provide to I I to do we're their trying that We're we not a in that your modeling probably point what from all get to perspective in to size us. calculation run equity. think going is you That's believe Vedula, in their for what is FFO at models on perspective you time. they to

All you. right. Thank

We'll question take Instructions] our from next Brian Sidoti. [Operator with Russo

afternoon. good Hi,

Hey, Brian.

Hey.

XX, process on base rate thought authorized the Just Slide here. returns, us and your just remind

will need You're Is you billion billion. that in years the currently earning kind $X.X that roughly actual recovered it your base, be rate test historical of $X.X will on way rate – – was be to rate the outside up million $XXX to So that cases? future base, of delta but if estimated look is true at?

earning the case future the rate we on $X.X million, would That's $X.X all a be a earning on is million currently date perspective. today. million, million correct. If happened $X.X it The particular $X.X on today,

April? be of quarter timing maybe like determined the you upcoming is rate your and and call – so to first these Okay, cases in said, after

give That's XXXX. you we plan what an indication, do to when in we

the And case of mechanism? you rate for general for to are in file the a tracking pursue Dakota route? South peaker going plant, recovery Or

of get a and that think to We're Yes. known timing going I can pursue the whether we will determine the adjustments. case, measurable Brian, rate that

So making have a in case, have we that and conversation investment would we're have the an timing said, that regardless, require time and we us we some the with of don't commission to period. I that certainly also rate during will while – AFUDC

Okay.

plus, authorized So million the for this December of $XXX.X $XX $XX peaker? and case million you of or difference like seek the that... which Is million, would $XXX.X be was a rate million would in one-off the back recovery between

generation it on on electric It think, potentially where you the all all in. it can primarily, we you're units have was and I side. And would if see primarily from be the obviously need it's electric the the be at side, as in. that would schedule, looking

we So in Dakota going electric to for the It's of just million South have $XX case South to we're if a investment electric not be the business. all of going from a plants. perspective, do Dakota rate our

it remind just Huron, then South us generation has existing And peaker access to at that Dakota it. industrial built to clarify, just Got the Or facility? Dakota. plant transmission? site in easier is being some South that of Is sort an in that

our is That site.

your It's site.

Got it. Okay.

Correct.

Thank you very much.

Brian. you, Thank

We at queue have in the questions more time. this no

you Okay, care. two few Thank support. We'll for your very over great. of and with months, much hopefully you a you the all April. quite next all see and visiting of interest be Take in

Thank This participation. you concludes today's your call. for

now may disconnect. You