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BKH Black Hills

Participants
Jerome Nichols Director, IR & Corporate Communications
David Emery Chairman and CEO
Richard Kinzley CFO and SVP
Julien Dumoulin Bank of America Merrill Lynch
Michael Weinstein Crédit Suisse AG
Christopher Ellinghaus The Williams Capital Group
Insoo Kim RBC Capital Markets
Christopher Turnure JPMorgan Chase & Co.
Call transcript
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Operator

Good day, ladies and gentlemen, and welcome to the Black Hills Corporation Fourth Quarter and Full Year 2017 Earnings Conference Call. My name is Brian, and I will be your coordinator for today. [Operator Instructions].

As a reminder, this conference is being recorded for replay purposes. I would now like to turn the presentation over to Mr. Investor Black of Corporation. Director Nichols, Relations Hills of Jerome Please proceed, sir.

Jerome Nichols

Good Brian. Year to Call. morning, Black you, XXXX Hills Conference Full Welcome and everyone. Thank Quarter Corporation's Earnings Fourth

Officer. including quarter be Chief can at Executive Chairman Kinzley, discussion our Leading Rich full fourth today webcast www.blackhillscorp.com. found the Senior at Officer; and quarterly for release and and materials year Our Chief Vice and XXXX, our our website are earnings presentation, Emery, Financial and President earnings David

earnings some as make by Commission, today, our such may contain number the Exchange comments. we During the comments in a discussion of and uncertainties are forward-looking defined and inherent of statements there Securities

with a We cause of and X and our beliefs presentation based will other Securities expectations Exchange Although call we documents and website now assumptions, our of results turn to for on believe our our Form future factors recent on filed are that the our earnings release, differ you the David materially the direct to Commission differ investor Slide expectations. XX-Q actual Emery. Form XX-K, and to materially. from some I the most that of reasonable over results list could may

David Emery

for you, morning. Thank joining everyone. Good Jerome. morning, Thanks this us

little strategic turn and over Chief Officer, And Financial for visit then, financials. both and our the the bit For previous of quarters. Kinzley, on on overview of and follow highlights to to those Rich you be format following year. quick about the to that I'll quarter on plans. full webcast starting a update we'll slides, a it the quarter forward the along update I'll Slide a similar X. We'll give I'll

highlights. X, So fourth moving on to Slide quarter

with our our Commission rate effective million, the review filed Public For review by with subsidiaries, effective the Northwest fourth to with to November XXXX. on a revenues hopefully Arkansas million, Service rate approximately the of of Commission seeking seeking quarter Wyoming increase annual Service $XX XX, the XX, rates revenues by increase in Arkansas On gas gas Public third annual filed our December subsidiary $X.X XXXX. Wyoming a utility quarter approximately utilities by

will required a Those to request, to in in are to recently Moving on utility Xth, additional detail allow Natural pipeline delay On megawatts little with a on is a effective of if the quarter the rate service reviews, Mountain request the be our active Gas, The by impacts XXXX. approved year, of rate Utility XXXX. August those our renewable bidders need in Colorado's to our which X, needed. those. On our to Slide Electric resources the the energy to million amend adjust we October meet energy renewable of that time reviewing for Rocky approximately and X, Colorado, PUC intrastate tax received reform. related third increase We're I continuing enacted to for all Colorado XX Commission to for later. requirements. by Colorado $X Utilities more in Colorado process bids proposals have highlights, revenues a filed an to related of review tax seeking currently three Public reform may

on present Now and evaluating project February the PUC the we're to to bids Colorado currently X. including recommended plan results, our

XXth increase. equivalent represent It of $X.XX annual increase dividend board consecutive is for rate also Slide which share, to quarterly fourth XXXX the of $X.XX would share. a per XX, $X.XXX the X% Moving would On a on to an compared $X.XX. to total our dividend That highlights declared our quarter. dividend X, January annual of of our corporate represent equivalent dividend per annual

respectively. BBB+, Black of Fitch quarter, Moody's BaaX both affirmed Hills their corporate rating the credit Corporation and and During at

discontinued related previously gas which as segment. Finally, was oil reported our to and operations,

As of sell to in and agreements an XX% oil have only properties to agreements nonoperating minimal of this operated our aggregate be more assets for value than signed all we've of and closed our executed or million. sold. gas to We've sell properties transactions value now Monday, of $XX remaining

a We quarter continuing expect that reported segment beginning to little a this, by up that reconciliation provides financial full Slide XXXX. here about With update. compared provides to our midyear. Rich fourth I'll operations quarter with wrap a provide results the of discontinued turn talk X that, adjusted the discuss Slide for obviously, reconciliation quarter. but financial later. year. Rich to segment will shortly. operations XXXX the fourth income of I'll the it bit And year Rich his from then, of last the update process fourth as is similar more X in will to details compared as over

Richard Kinzley

from right Thanks, jump to good All We continuing non-GAAP measure. adjusted right. as earnings Dave, on to performance. special communicate better GAAP we reconciled isolate I'm and our do in earnings earnings represent items On going Slide morning. operations this to XX. ongoing and a XX, Slide to

we given of oil business. that slide, ongoing as and our this now segment report exit on our shown gas As discontinued operations,

experienced special performance the quarters. last other our reflective five also each items We ongoing not in of of

other XXXX. majority and expenses the to associated the in related the acquisition-related integration. and vast advisory The items costs, in the the as of such special finished acquisition consulting work integration fees, with and remaining first third-party item SourceGas acquisition completed We is financing XXXX

our a assets special income as performance. minutes. on is are reflective to of in predominantly The talk income deferred in more a the from taxes, not reform The I'll tax to And to changed reform. our and net liabilities, These tax expense. few rate of reflect tax we ongoing result tax revaluation required items adjusted and them special about resulted basis. reduction corporate accordingly, a relates tax XX%, XX% which second item onetime of an

quarter the year. As in adjusted EPS $X.XX $X.XX the per was fourth for last fourth to per quarter compared share share

other I'll acquisition, operating and in revenue XX XX Consolidated reflects operating were segments on Utilities X% share per our increased the than charges displays XXXX. full the been notable share Corporate over revenue internal increased each slides. gas, $X.XX the February closed income. segment. fourth the XXXX each income. note XXXX $X.XX year the operating effectively as in For year, at we income important EPS fourth operating per discuss business Revenue segment XXXX displays corporate integration more and our closed growth improved other quarterly in and This enjoyed and quarter previously segments the to SourceGas to those flat annual the reallocated and a and reduction for results of operating operating results now XXXX, in XXXX. mid-February, slightly oil operations, to full since costs, improvement our which XX, XXXX Slide been to quarter as segment, Electric from compared income quarter Gas Operating impacting results and XXXX. re-classed by in labor income XXXX earnings gas contribution adjusted each driven days at we Slide operating on mainly oil to that revenue our in as business. XXXX. Utilities. It's XX the allocated following have acquisition XXXX SourceGas increased full At activities which to comparing to acquisition XX%, to fourth had discontinued was compared of and charged business from to and X% year in results

for the year. DD&A taxes Gross showed predominantly displays costs With our the the in and have XXXX, margin, of substantial we in quarter quarter growth completion year-over-year, fourth associated to increases the and our XXXX, line showed segments reflecting statements. those full to substantial XXXX, items and fourth labor XXXX, XXXX and while income quarter the on fourth of for in full small SourceGas our and projects operating internal the XX in the integration full Utility in full to a operating been the income Comparing compared Slide other growth Utilities XXXX. moved year year employees and XXXX. for delivered income to initiatives before expenses year charged

the year's tax each in acquisition in tax the of decreased higher in full in a interest expense But was XXXX, fairly fourth expense for compared fourth income Acquisition related flat work debt million average Interest consistent first noted, XXXX, In most year which of half address the reduction fourth the we as compared quarter. reform the were onetime of we we the reform. in a in closed shortly. balances $XX quarter X.X those majority XXXX, I'll I XXXX. was to that had XXXX. to as in of that month completed expense, tax XXXX balance recognized up quarter we As utilities higher so XXXX. debt of in midmonth heating at vast season to we as picked costs XXXX,

to and full add $XX gas for represents this of substantial for quarter were the noncash Colorado XX.X% noncontrolling operations X%. and to The our year I'll XX% our loss moment the effective to adjusting and shown. would've million year. over to items, full IPP approximately After segment periods factors. our continuing $XXX million XXXX. by discontinued take in million from the oil in The million interest operations benefit in in in income is third tax our around rate the XX% and $XX color XXXX fourth includes operations the count. from XXXX, plant in impairments tax grew a due you or to XX% been for from X.X a shares share reflective party all approximately XXXX discontinued quarter in tax special increased sold EBITDA million adjusted XXXX. the If expense further Diluted we May for to as outstanding X increased $XXX by provide XXXX interest

weighted compared from million to offering program our in XXXX, included XXXX of First, approximately At-the-Market X.X during through additional equity shares XXXX. issuances average equity are

items don't had we've as million basic the reporting shares this million plan count to mandatory weighted our conversion around in in included XXXX stock confusion is method. surrounding our XXX,XXX to the will XXXX. X.X and shares compensation will after our year, debt new our application price dilution are Since effect convert count. And approximately portion diluted are $XX.XX XXXX added additional small to tell share shares the stock period Whereby, equity to unit the count, other dilutive to outstanding. X.X guidance, are count any of to we the treasury convertible in of mandatories this price stock reflected an equity the million phasing year. average average additional We a some move the a QX the shares. have the treasury weighted fully in as these through method year, such an shares that for weighted XXXX million unit XXXX from fully during resulting shares accounting of should unit is we included of diluted price converts XX.X the add be share basic later approximately We above fully will approximately issued million this that are in conversion Considering With Second, in to around diluted diluted share fully share to November dilutive issue and you compared of the outstanding due acquisition, average shares the during share XX being equity prior XXXX, the share count. approximately as we $XX.XX in in XX count million occurs, typically our we help into diluted require effectively securities. X.X to reference Until that average if in mandatories, the unit diluted average will approximately I conversion including price, share fund XXXX we SourceGas of in XXXX.

corporate for Operating year year-over-year. result Utilities 'XX to as that's XXXX. income. compared new full 'XX. commercial sales, was Utilities fourth as displays outage in new full Electric well Utilities and allocated The nearly major were and operating that effectively the and as cost Investments our related reflective million include well to at the margin gross as Electric higher fourth compared cost XX O&M and investments year quarter for X of million to expense. by plus to costs, XXXX. Slide flat increase employee a XXXX. discontinued compared year the and allocated industrial that Electric quarter increased charged service more margin generation XXXX to quarter investments and transmission fourth substantially Operating maintenance shares corporate have activities, So Utilities XXXX, generation gross in the the expenses quarter in $X.X XXXX placed by $XX $X.X as and business fourth gross of XXXX XXXX significant for increased drove decreased expenses transmission, of margin been our XXXX to for XX higher oil and prior the associated Also charged gas were in to generation integration to income with XXXX. for in towards in increased million XX million the for for Electric of XXXX and full The end compared million

ahead The first increase XX-megawatt in Colorado. financing a XXXX was plan. which actual XXXX, the earnings began turbine the in-service of combustion rider had This into gas in to XXXX project construction and

production are in a These only year of of X due return the The which these second credits Colorado, from investment taxes Peak production two more XXXX operating reflect contributions a operating income. to View than million income than in year-over-year was rather to fully large portion generates in versus amounted $X reflected in full Wind the credits the Electric Project factors, credits. tax in economic These income reduced performance XXXX doesn't these XXXX its Because XXXX. through to Utilities' months investments. in

nearly XXXX the $XX of nearly XXXX, full attributed an XX. the $XX Slide full depreciation SourceGas. margin were our of gross to saw all as and comparing operating XXXX, increase property to were Utilities income year fairly compared million flat The this of The fourth year in increases Gas million taxes. quarter increased to Utilities Gas margins by with Moving these and addition results increased in to for year offset nearly at

mid-February As acquisition I XXXX picked in that and noted months up to XXXX. we closed extra that earlier, X.X compared

Gas more to in fourth have in to XXXX showed due that as cost of work, discontinued employee was the to the substantially quarter and As Despite costs Utilities, related allocated the Electric allocated corporate in XXXX the Gas gas to had Utilities as case oil to prior those excellent in that were the costs Utilities increased integration growth well XXXX. charged the been business costs, XXXX. charged

its at weather to talk Utilities and compared both when I'll financial about and Next, impacts Gas Electric normal.

impacted our negatively more the in weather million fourth our Utilities quarter both XXXX, Electric approximately gross by year full and an quarter, Gas In than estimated was the was by gross fourth and normal. mild For $X.X impacted Utilities $XXX,XXX. was margin negatively margin

strong in contributions quarter, XXXX. from The $XXX,XXX fourth to XX, increases purchase strong generating decrease power an to had contract continued its our quarter units an increased in gross gross On $X.X availability weather $X.X million Utility compared estimated and year, margins the On Hills. Generation year-over-year, estimated XX, our Black prices. by continued full flow operating generation $X.X mining it XXXX and quarter the cash increased Power Gas segment the compared annual impacted agreement realize the For primarily you negatively million Slide $X.X million. an Utilities margin by to fourth and to segment fourth income the its from power in million, XXXX, of Slide our Electric by see income operating for

$X.X For to cost million offset the more by move timing major cost pricing on with and was quarter, favorable in higher, overburden from maintenance. revenue increased XX% XXXX increased

Keep and accordingly. of income, increase in additional plants revenue-related For extended from over XXXX, mind this by drop the in Wyodak XX% to sold operating $X.X though on as full that Revenue an was the outage increased our as year sell driven mining We primarily not increased coal straight does full XXXX, taxes $X.X tons tons plant these million. by year sold at revenue million compared X/X increase to contract royalties income to annually. higher the XXXX. operating

for of primarily side, driven more million XX% $X.X cost year, the XXXX, moved into the increased cost mine. yards overburden by of continued north we the area we ratio in as a strip On had higher

XX Slides a impacts Our tax related mine XX reform. based the Black entirely lay methodology. Hills' high continues [indiscernible] to pricing at and perform plants roughly almost our and to with on out level, cost-plus sales on-site a half to to sales

address First, tax of I'll impact XXXX the reform.

the in our life a As associated reliability, liability of based sold the XX in will to assets million year-end It by few $XXX million it over And immediately. corporate taxes. deferred be $X That rate, amortized the that regulatory each not years. roughly get merely will XX taxes the amortization, on amortization we will $XX impact to the jurisdiction lower affect resulting generally the amortization start a statement. to a flow a year. of Also, income required, take cash million revalued decrease to as years remaining level will deferred corresponding won't with at to

tax million a to completely, as noncash the of XXXX but we largely, nonutility by to Relating as tax reduced tax reform revaluation. debt expense offset recognized earnings. also minimally, XXXX, our $XX be on tax expect reduced will impact result holding to tax benefit company reduction deferred the We on a not earnings the expense

to end, -- year our tax will At This of capitalization. interest XX benefit a collection utility expense with planned perspective, utility cash to expect company our $XX XXX end our $XX matters purchase later. regulatory customers is interest approach negatively to million down was annually, XX.X%. flow to our We expense, the to from by Dave our the revenue points tax as year on debt-to-cap be From XXXX. lower address holding net shows associated from cash debt maintain our basis properties. million of reform Slide impacted flows reform. a from we expect including due deductibility ratio

our structure. be expenditures we well debt-to-cap capital capital units net tax the shares strengthen our At-the-Market balance of we're spending dividends, or the quarter issue finance ratio shape equity equity until capital our expenditures the capital XXXX, flows did do to We future significant of a debt At-the-Market relative will unit accessed foreseeable internally our fund By year pressure of in XXXX, to maturities. executed debt to our this debt issue assumed time program. but demonstrates third half under second offering SourceGas will cash In the year, additional our to fund any in from successfully at currently to mandatory as Our the event the debt expect largely and other $XXX term XX sheet we markets expect future. Despite XX%. and the keeping equity the available effects generated some XXXX, million dividends refinance planned. that the any maturities. good not for reform, not And reflected currently to which the not our to program on end of securities planned we conditions help fund we convert are in XXXX, In quarter beneficial we of Slide when need debt financings upcoming first in acquisition out through we acquisition. through were the we're to upcoming

We XXXX, program also borrowing commercial to costs. QX which successfully minimize in implemented paper short-term a helped our

rating We second our the be credit this Slide year, outlook to rating associated the mandatory will opportunities in will see we unit for each evaluating remarket and the additional can XXXX half XX, maturities On out upcoming term need current our convertibles maturities. the with refinance and debt you of agencies. from and/or to

our in expected tax reform. investment-grade future ratings, decreases credit We result considering current to even metrics when to are committed cash those flows our and ratings forward from forecasted credit solid got maintaining

track Slide reform. $X.XX, in shareholder on both press assumptions illustrates XX. tax end the and per top and The assumptions on to The are this guidance value. Moving guidance listed are impact for We range Slide the primary increasing XXXX XXXX the of Slide to for change record the earnings XX. XX bottom to creating our rate range $X.XX by and $X.XX release interest share. short-term revised drivers of our

that on on We and long-term are value Dave focused in more strategic creation, now his will Dave? touch overview.

David Emery

Thank you, Rich.

industry better drivers profitable delivering accomplish more XX. growth above EPS a of execution, dividend track to We Slide with jurisdictions. day On goals continuing focused dividend rate our the we're record Slide the valued near average, a into consecutive an we increase are earnings that we flexibility where shareholder workplace, back and integration filings execution strategic X by entering Moving from process EPS all we earnings leader on since great major filings to total do. Slide long-term the an dividend test to transitioning periods focus targeting retain annual of plan every acquisition slower commencing of expect we industry to growth review service, on XX, perspective, while group from our growth, growth we overall being and to ratio, during strategy in objective XX, preparation achieving returns. long-term to strong XX% payout more growth, utility utility the strategy a for We years slower in categories, XX we're related in term, of in period traditional increases. the are a growth strategy. in In and the certain rate XX% or

With systems. to base. SourceGas investment much comes increase of substantial has Black value larger our diversity the and noted adding In transmission On both for and customer the still have for I and reduces and and continued fuel XX, the to territory expect growth, increased filings. standardization Hills. efficiency successful utility acquisition shareholder Slide customers capital per during earlier, the strong our and value, service driven review On drives investments well by rate we higher All a integration slide focus opportunity serve request and a already delivering we've pending. meet Slide rate O&M XX, earnings. the great for earnings customer success, On Slide term, we risk G&A our created of size acquisitions more more are much cost fourth in long and business on focus needs, as on XX, As This quarter. from that regular filed our significant larger the and our now SourceGas future. savings into our distribution long-term into integration shareholders improvements demonstrates customer been rapid X predictable reviews

we when to with outline capital required than be and serve substantial is the will obviously, lot maintain to the estimated XX was infrastructure. utility integrated an greater SourceGas. natural long-term our opportunity. even A necessary our of XX purchased that, Our SourceGas we Slides customers that acquired gas investment investment

much XX. Moving our on capital spending plan will We Strong customers. to over approximately historical has earnings three to of drive invest $X.X to Slide capital XX growth. our and to and the continue illustrates depreciation spending Slide serve amounts. next billion years our

far earnings As exceeds you update capital Slide can see, growth. depreciation, contributing spending our for to XX provides a utilities. regulatory

the next full each mentioned provide to renewable of such present Related I a would clause, Wyoming Gas noted those recommendation benefits deferred review our an likely true-up benefits in address to as mechanisms As for Utility it existing filed each interest which would service Northwest best provide Colorado taxes fuel reviews fourth the we're Arkansas we rate items purchase quarter, plan Mountain week by And reform, rate But during currently Rocky utilize our to to our of to mentioned working active to proactively power from the or to with I X then lower Colorado tax Utilities appropriate to Public early as don't we earlier, will intend be We customers. utility. income corporate were an states customers' vary promptly believe utility during approach in today. state. territories. and rider regulators the to at Gas, filing, It's and evaluating in tax and our customers. Natural rate process and energy review for their Electric we also balance bids our Gas mechanism, have we earlier, Commission territories to of serve that the in a sheet-related

the reviewing X we those active reform needed. may amend today, tax rate on review to we of we are impacts and our requests have assess requests, underway For as processes filings those the

proud on past stronger our dividend We're Moving dividend increases, annual the to several years. consecutive extremely of increases XX. track of record Slide including

dividend relatively have during lower we noted of earlier, increases I use to growth. periods larger As earnings flexibility

focus within we're can you the excellence. increases As payout even XX, still to operational XXXX, from after our two XX% we see graph, well dividend Slide dividend day on XX% targeted range. in every

City oil headquarters our progress organization corporate communities and our across announcing entire our in completed newly XX. of gas the business in utilities Rapid all benefiting continue drive the in exit plans On great to since Slide Our we our November. serve. and help will We've towards efficiencies us customers of made

As Juan, quantity shortfalls value agreements in San the Monday, and future value of we've signed in $XX gas to closed Powder to properties with more We've properties of vest. approximates Basins, Piceance this the $XX signed of minimal the daily an to have gas January, operated processing value. and value of received book assets the or contract. million all to projected the River million of sell million left our and payment our only nonoperated oil transactions approximately than after contracts satisfy XXth aggregate approximately of sell $XX XX% of for minimum

our receive transactions the Since expect bids remaining for to We and midyear. of assets the complete by to today all and intend discuss not private don't are expect assets the divesting those terms transaction. to the detail oil companies, me, just sale Slide individual are of assets we results, asset sales more wells. or individual XX, any of our overall illustrates to and excuse our to material provide progress gas towards On sales

and of likely minimal. oil and be we on the will quarterly discussion be hat that disclosure our include quarter even will last any gas time results, Next

the shareholders, forth our updates hold our accountable the to of scorecards, Slides are for providing the our we as setting progresses. these ourselves year goals you, at XX, year, XX progress that and on the way the beginning Finally, year and

concludes prepared that We'd questions. be entertain any our remarks. Now to happy

Operator

Instructions]. [Operator

line of of the question first from comes America. Our Dumoulin Bank Julien from

Julien Dumoulin

reform Just wanted tax to stuff. on follow-up the

talked thus know of upcoming be Just How And sort of what is tax I debt far? reform, to of seeing historically to of filings you've your impacts about want you metrics? kind the have clear. XX% particularly impact the are saying have you given all what moves this Agency FFO XX%, the very cash are updated of -- the fully clarity there? we in states? anticipate all the how with to guidance? the initially going the you're kind you you that then see to reflecting And reflected that pending states? Or flows impacts Are basically lower that with to from the make understand the 'XX

Richard Kinzley

had rating Well, Rich, And of But that going the we're the Dave, at. we're to this good the about FFO state passes. think, with states. debt. individual rating Julien, be it address communication each impacts probably debt, tax I -- where improve deterioration, with in feel mid-teens situation the to There out, I we will think start some to then even can agencies. with We the FFO We've credit probably with the agencies. is obviously, year as and in reform, will still on is

feel we dialogue our want We'll the with address you to issue? where about rating And the Dave, state we're So at. agencies. continue good

David Emery

have And we what the assumptions don't year. assumptions Yes. obviously, into and we we flows our believed the on cash made made to guidance be details, incorporated for on reasonable know we impacts that, final those but our

Julien Dumoulin

little with assuming you bit? to that you're is fair Okay. maybe in kind reduction effectively say quantify that cash clarify Or of modest a Everyone deleveraging to the some address so could there, just it to flows?

Richard Kinzley

the to point my No, we considering flows. Not and that have our no. to said, million have as million $XX to at on Dave dividends, -- comments, to impact expect reasonable for a CapEx reform from cash issue equity equity. tax this our any we're No, to on said $XX year in cover I don't enough as things even going issue move assumptions is that have estimate, in the to -- to based we

Julien Dumoulin

Right.

financing the the leverage? Just in plan slight the change on

Richard Kinzley

the not to we go that it's obviously, needle a concern have enough but may we borrow to out, little more money, us. moving Yes, as

Julien Dumoulin

states how that to back And -- implication the of question it. the going Got do on kind what's second there?

David Emery

Yes, would still on Julien, to that We to I told reform and would customers all said quickly specific like provide intent be to what as past after earlier, we're in come practical. it to it working on try state. benefits We've propose discussions talked tax as of them. each and immediately them we and did our

we back underway, our preference and active to because rider cases As would customers all a the approach. ongoing earlier, think those that's If to before customers jurisdictions, rate I it use we savings. processes the you're states, realize be full quickly. gives to money blown where a more try have in we at said really almost mechanism to But rate much through looking in go cases review don't best year were don't rate any

subject we've go in again, likely and via So state, three rider. to The an state will deciding pass many ask benefits those through of the already states to jurisdictions existing filed of circumstances there we've And those reevaluating with in depending commissions cases request as finalization and rate adjust been our well. those those reviews. those the on in three dialogue were in may by

Julien Dumoulin

a earned it. necessary obviously, Got conceptually as changing isn't these speaking, But reform, the think pending you? -- cases outcome filings, it about for as I'm expectations ROEs, function hearing tax these your of shouldn't you of rate if

David Emery

Correct.

Operator

question next the Suisse. Crédit Weinstein Michael Our comes from from line of

Michael Weinstein

Or tax of any through is Just know benefits more on I the that? XXX% regulators, there Is the but follow-up mean, is discussions is early you this it? just it the of phase pass riders? add the can Julien's portion questions. flavor a you to to with that I probably are back a -- proposing

David Emery

Well, other customers. of passed would as largely net as mean, to tax simple impacts. not in rate, benefit that essentially, But on in rate, it's some be the tax the I there's deductibility changes and just the things. in change the difference the some

again, are future Now state-by-state and proceedings where each depends we and those of it on in regulatory in analysis planned proceedings states.

expect benefits. retain we to side, obviously, the On those nonutility

Michael Weinstein

that to the something -- this increase this Arkansas increases, back is choice, go you a reforms I can your the that is mean, rate negotiations so there? the chances you own was of do you your something the tax in favorable pocket outcome Right. you speak considering think do or And into there? filing think as

David Emery

and Well, if positive incorporate to working commission certainly. analyzing there that the a to is on into process, positive we're our we're tax the had is have how in on staff is bottom and our The the now. issue but with that, certainly rate anything would discussions request impact to line discussing filing, an that we've that customers and difference revenue

Michael Weinstein

or one to the ratio flows low debt I plan so? Right. the, get reform impact cash to have And down the affected How XXXX by, last think, after mid-XXs tax to think, I just to the question.

Richard Kinzley

kind the the impacts get it planning by we five-year XXX We end you horizon. cumulative can our that. impacts basis But get Obviously, XXX to the time of mid-XXs of right? of still think close to points it it by by years X out of compounding that,

Operator

comes from next Capital. Williams of line question Chris our And Ellinghaus from the

Christopher Ellinghaus

said is what about guidance on that whatever remember favorable fourth quarter, case the talking third pending were I Can was, outcomes word that cases. dates? on assume you've of issues? You in don't -- we those for outcomes You what but the Can I on a a get clarification the rate assumed couple rate effective in quarter? little

David Emery

Yes

Christopher Ellinghaus

that rate ask are assume assumed somewhat your outcomes we below the in that cases? those Can you've

David Emery

Well, to it's put pretty Historically, request. way. this be rate for rare utility its full it granted

Christopher Ellinghaus

you early you part be guidance. the guidance? like first might normal. mentioned in the a in below of Also weather reflect Okay. little quarter looks It Did normal bit the that already

Richard Kinzley

January on looks been in books through early cold tell come through, the bag it's too our spells. some obviously, had some to the not like it's territories. January. in Yes. guess, We're It's probably also warm exactly. weather had so front we've little we've service a getting But impactful, just normal while It compared closed I a to mixed

Christopher Ellinghaus

Okay.

to-date? specific you for thus As filings reform have far any using you feedback tax as And the and made much clauses, gotten strategy riders far? have

David Emery

get the to really with filings and done of you We staffs, to the want discussions We've have back first and practical. preliminary customers the that basically immediately after year this not to notifying this made any hey, as as had specific to-date. quickly work was we

the is best discussions that, haven't them. in with that. so further meaningful And firm we before perhaps least, where any to mechanism But want mentioned engage to gone at yet, beyond do riders we we the up numbers real

Christopher Ellinghaus

have one. about customers Wyoming expansion One you last quick those from any customer on timing? Okay. The Electric and gotten confusion greater clarity year, last

David Emery

Electric. might you Colorado talking think about been have I

of You're couple the revision? about a talking guidance things we discussed our in

Christopher Ellinghaus

I'm as that about last expected. year potential you weren't talking customers the realized

David Emery

our Colorado, worked forecasts. get little Yes, that was hands a around other largely hard pretty in we've those yes, But territories. to the bit in and certainly

Richard Kinzley

year's have into we assumptions this reasonable guidance. believe that baked to And related

Operator

comes Markets. RBC Our the of line Capital question Insoo from from next Kim

Insoo Kim

as cases that the you be years. uptick I of, terms few near an be to contingent you sooner [indiscernible] If see mainly commissions filing next to In file result -- would or reform? any of in that in to we the file due later? -- than to would guess, may a rate it's it of number tax that, rate case interest want requiring filings term, more Following has requesting

David Emery

XX process Yes, Again, is hasn't way the our through filing customers reform. our that may materially. said be still discussion in valid. really we next I tax we analyst rider possible meaningfully. successful which the approach years, that's the the as pursue, of If five mechanisms, we would like quickly are schedule need really our at we benefits the shouldn't up through as getting to to it X-K's say, change to work would cases we changed had in to meeting, where we It

Insoo Kim

Got it.

you rate a the providing And case and Do And Okay. you to foresee as that boost the that? potentially rate-base are you -- in figure you you base a sometime still then, of future? tax utilities much result related do related -- -- to electric for to do considering are reform. gas somewhat or how

David Emery

I spending our promise deliver we in little want it, are a when more you before talked put We've lot be forward utility we plans, working very about it we capital if to confident around out. but detail disclosing and it and can't on a we'll that.

Richard Kinzley

the is to And to tax how rate from large it's every base take while lot it's change going growth, the positive. -- deferred have liability calculations. to that to a going to tax go change way a you the tax assets, obviously, through detailed way the reform transferred that the because and impact -- deferred regulatory assets going obviously deferred that, It's work asset of to through

just it's to while play out way that to So going little take into. for a

David Emery

bonus additive depreciation then certainly, and there's so that's Well, as well. a forward, going

Insoo Kim

sorry, Yes, much of maybe result debt one the you assuming tax that are a lower How exactly. more. as hit shield? parent I'm just

Richard Kinzley

million, roughly. $XXX about $XXX million it's to Well, million. $XXX

Operator

JPMorgan. Turnure Our Christopher of next question the line from comes from

Christopher Turnure

the full being dollar get message a to of now? the wanted E&P just from more look drag that we before year or reallocated, more it's us amount on reported XXXX O&M a reallocation that already a at of that now out? can you've segmented about, color half debt actual but that as precise income I from And give given I you segment the can us think, expenses. that also reflecting of I know

Richard Kinzley

extent, in won't were to release part Chris. the did that in information, segment E&P information, did I to gas not in and where look those electric press forth and from apply give our so to prior our they our years. utilities our because we units. filings other are back match the that will, if if find Yes, you press XXXX, FERC lesser basically, now the the going and think, that We business release, costs in X you reallocation, back of that we and a go you're XXXX We,

Christopher Turnure

us is the Okay. to point? XXXX clean But today, terms numbers a you presented of in that starting

Richard Kinzley

press in find release. the them You'll

David Emery

allocations removed 'XX which these Yes, than obviously the clean corporate coops it. for is other subsidiaries we

Richard Kinzley

Correct.

Christopher Turnure

big Arkansas to pretty going it's then And number. the rate back a Okay. case,

you As What cetera? tax mentioned, benefit a of yet. reform volume, O&M et kind the capital does include it from not drivers sales main of are ask that

David Emery

Yes, there the The issue was, single spent in there since we fantastic. territory one it. $XXX million we bought that been has growth

rate typically So up of are inflation drivers, cost growth it. obviously, then all bigger need with really the our make request. case requesting that's the We to pieces a Those up big the and piece and actually resources keep other additional are that labor there.

Christopher Turnure

Okay.

a like of so than So operating sales it expenses volumes? more sounds capital combination and

David Emery

is driven think which largely are by growth trying the growth and a They the I in up area, keep to with positive.

Operator

the in [Operator this And there from Bank Julien comes line Instructions]. our no queue. question Dumoulin of questions next At time, the America. of are from

Julien Dumoulin

can is wanted imagine of any businesses? break holdco I bulk said guidance if can impact more? you just businesses, which of you for on following also, 'XX, the bit as expectation remarks a unregulated clarify reform EPS What well, the tax those And Just was the to tax was change what? between have tax little that, in you by bit there offset then up, a to down your flow -- any that unregulated the break in and the the obviously, through but little extent you a reform short-term interest? down

Richard Kinzley

were no, a No, I there. minor. fairly felt we'll It's I it -- that move expense of more we $X.XX. provide down each the $X.XX moved impact we tax don't of mean, of detail should range. reform, combination down interest on of which But and we both enough end a

Julien Dumoulin

perhaps But to that's and track still on to fairly be had Nebraska this, states, forecasting just clear Got what you contemplated versus guys in quarter-over-quarter? respect other with about it. your

Richard Kinzley

Yes.

David Emery

Yes.

Operator

And now no like further turn to to I'm closing David back will questions. I for seeing the call remarks. Emery

David Emery

call All and attending rest listening continued great appreciate right. in. day. We Thank today of the a support. you. everyone, for Have Thanks, your your

Operator

day. and in may participating thank all gentlemen, concludes program, you and you great Ladies Everyone, today's for conference. This have a today's disconnect.