BKH Black Hills

David Soderquist Investor Relations
David Emery Chairman and Chief Executive Officer
Rich Kinzley Senior Vice President and Chief Financial Officer
Michael Weinstein Credit Suisse
Julien Dumoulin Smith BofA Merrill Lynch
Lasan Johong Auvila Research Consulting
Andrew Weisel Scotia Howard Weil
Call transcript
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Good day, ladies and gentlemen, and welcome to the Black Hills Corporation Second Quarter 2018 Earnings Conference Call. My name is Daniel, 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. David Soderquist, Investor Relations Analyst of Black Hills Corporation. sir. proceed, Please

David Soderquist

Executive Good Second Daniel. quarterly Welcome Black Financial and to discussion Vice Kinzley, Thank and President XXXX morning, Earnings Corporation’s Chief Chief Chairman Emery, Quarter are our and Conference Hills Rich today Senior you, Officer. David everyone. Officer; Call. earnings Leading

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

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

David Emery

for Good morning. Thank you, everyone. this call attending morning, our Dave. Thanks

the slide those webcast along then review quarter. have discuss a quarter, highlights previous format, we by And I’ll you I’ll be X. Kinzley, following end we’ll at Rich on questions. CFO, forward from similar as the on of follow the give our update. I’ll financial the of a quarters. in Today, strategy, give starting second For the Slide some presentation, followed will

Nebraska. first segment from $XX a occurred month transmission the planned take that our of million July into process. Most and during quarter, also the Stegall, South The July Moving few mention in next late will on Dakota second X. service rate run occurred during highlights be South Those well. On of that to both of of then our our remaining in subsidiary subsidiaries. but Electric loads July Electric these Starting rates new City, to received the September approval X, Colorado end will of highlights. XX-mile line that for the Dakota utilities. XXX-mile Slide a early as will the Rapid quarter of I service with subsidiary a XX, And in XX, year. and Northwest will new effect segment Wyoming Wyoming June, line set peak On review by been Electric of all-time Gas had we in that July placed

summer, wind Renewable the the with pipeline of our Standard XX, energy Electric power On independent in in to this of Electric of balance of the Colorado’s line certificate will on following convenience That Colorado, utilities review make purchase sources Electric and the to quarter necessity. through our Hills additional Commission contract Gas, Service the the megawatts Moving fourth a That Mountain purchase Slide we need XX-year also the XX agreement. area year Black received improve XX in XX% Service subsidiary, Gas the June Colorado new renewable Energy Public Wyoming filed gas natural rates Natural Central $XX pipeline with mid-May, highlights. is CASPER. to We X, our Wyoming Generation, of by comply construct Public XX-mile of power at to public energy the from approval subsidiary and year. our additional for implemented the million, Wyoming hope which new of its settlement PUC megawatts in XXXX. what have a Colorado subsidiary to up Commission Wyoming April and outside with placing pipeline the decision customers. increased by We gas X, construct provide will next Rocky supply, In next for plan into of rate reliability a continuing On from with to of end intrastate process. service it capacity Colorado

Slide on highlights. utility Moving still on X, to

with regulatory the customers commission reached XXXX agreement reached income Colorado, tax similar utility corporate Kansas we federal Iowa in quarter. and of to quarter, the commissions reform. the During Nebraska in agreements We on benefits first to with a the pass the during our

So four now. states we’ve completed

days the requires for Since of Related we Northwest XX impacts pending, were our in Public and plans Service pass our the addition, all reform tax rate rate will a benefits In benefits and primarily within Commission Rocky also reform, recently have to included reform in review that the order a to ongoing Gas reform issued on Gas intend in of to the territory, effective our deals as reviews rate Natural this tax review rate tax Arkansas included Natural for tax Gas. from utilities is request reform investor-owned Mountain process tax our Arkansas recent until recently already date X an result on how completed ongoing January Wyoming with they rates become customers. new submit the to review. process

we’re So Commission review, Public in to we’ll how current to our decide then recent respond. rate order that best reviewing Service relation

Moving our on highlights to for Power Generation segment.

Slide wind to extended On X, in our previously, commence quarter. and wind spring, the during term the subsidiary second July a the is was service XXXX. IPP for million to selected farm we provide facility, to project extending of expected utility. XX, $XX our $XXX to corporate Busch credit quarter Ranch Electric XX-megawatt million should noted I our that revolving next project Construction next II July corporate the amended highlights placed year. Colorado XX, be of fourth and As

On $XXX a our has of annual board maturity quarterly now which We XXXX. per a also amended a July year, loan, dividend of declared XX, Oil an rate be subsidiary. $X.XXX the July restated And XX, dividend was divestiture discontinued next will of to to operations million term due And and $X.XX. September equivalent Gas related our is which dividend finally, then, share, that of and X. payable on

our of essentially Oil all June, have and of end Gas the been sold. assets of As

things. little one essentially have We a remaining asset, couple minor

and final the quarter, the finalize August. our office to third in will accounting all and in expect and close Oil complete Gas that We sale

to financial quarter I to a operations in a company from make is process. you’ll significant let the you sure provides additional their explain well. the XXXX, our the dedication Compared Oil the want quarter I most the second his of Selling their As to Rich? to divestiture those variances it difficult Gas for as company improvement Slide them Rich process, I work wind over the thank efforts will X the of and certainly income gets for extend we done being to this reconciliation throughout second utilities. continuing years, employees their contributions very see and thank electric down operation, our update. sincere adjusted. our and in to

Rich Kinzley

earnings, did as the everyone. XXXX. morning, earning of in on slide quarters and we adjusted, months our isolate GAAP this good. utilities We Dave earnings second This as Dave, do measure. represent EPS Very on good XX, five I’ll trailing quarter non-GAAP enjoy electric that ongoing $X.XX a last this year the to noted the compared year. Slide where Thanks, to same quarter the and solid last XX for And performance. jump June to We drove as XX, our better $X.XX displays year-over-year. items communicate last slide, reconciled to and improvement earnings of special

not year. of performance experience the the our quarters. basis. have performance of quarter. we last in EPS We past the each relate bottom see ongoing in special special Again, did to reflected items items and for see, XX we for them adjustments item incurred At income to the accordingly, can integration. $X.XX special an you effectuated including as period I the for year. as compared reform same as illegal acquisition as EPS in prior matters, this one-time not reflective and, restructuring months, our X% first SourceGas of our was indicative the related the prior any XXXX. on items represents The a did you’ll and tax performance second growth reported our of $X.XX over remaining tax of trailing quarters, acquisition QX And slide, in to the the These benefit adjusted not $X.XX which quarter second As $X.XX ongoing cost adjusted part of were the quarter of four tax

to taxes. XX major the bridging XXXX. from QX to of drivers chart XX. XXXX Turning QX net All illustrates Slide amounts differences are Slide on this

our positive a was recording customers. revenue reform on weather gas tax and where we XXXX year-over-year benefits note at passing utilities, electric to growth margin driver QX related to You’ll both reserves despite achieved in

increased tax utility Gross regulators tax a to which Dave despite new initiatives. Slide income to on reform utility the income work was expense slightly, explained, complete to in our jurisdictions operating reduction customers, continue below support our to related expenses XX other margin of benefit statement. investments. effort. was is reserves revenue income revenue reform. increased the result income due of we on pass down the displays and to million to reached by Operating to offset to related quarter second as our number tax of agreement $X.X reform, growth As tax our jurisdictions year-over-year reduced DD&A largely a Operating this with up our line.

income debt. rates interest line. our Interest slightly on Moving the operating increased short-term below higher due expense to variable-rate year-over-year

prior by As down you substantially tax corporate end risen driven was rate rate this expense has year. reform’s the interest curve reduction. front of tax know, the the Income from year,

adjusted. as $XX.X operations We over quarter, million X% million for generated continuing up last from income to down year. from Moving the $XX.X

of portion the in diluted additional X.X of You’ll count apply last in of securities the we we our price Until November treasury related equity diluted method is year, is stock approximately closing SourceGas number whereby to treasury year-over-year. a our share added shares stock mandatory are help late include during on QX count include two in the share accounting, period. We average million the to this share to application count. million fund to This we The unit to quarter XXXX decreased shares of year. the due the to we securities our reporting method the diluted convert shares issued to required approximately daily in note the our of of this compared based acquisition. shares the

after new offset shares and on I’ll property partially I depreciation discuss commercial at the a charged XXXX. full – each as segment. consolidated reform results are which weather, XXXX by favorable of XX the investment margin gas or income South transmission in reflect reduced share benefits for grew adjusted net margin QX operating $X higher by November diluted EPS Considering Electric, now million Dakota owned electric to capital gross new income recorded for and and a XXXX increase the QX margin operating The increased million margin electric weighted is were recovery these net expenses guidance, we X a our out to Also earnings have gross $XXX,XXX. year higher on our million utilities year-end to $X.XX $X.X demand. corporate And approximately We investments. Slide and industrial rent we tax new compares electric reduced call, noted awash. increased the of year the utilities beginning on benefits this all count, customers. our in is operating As to X%. in adjusted utility subsidiaries. taxes shares other increases million, and and in February is as and occurs. approximately Operating and income as headquarters, increased utilities reserve conversion impact segment’s income our gas utility result business saw new gross assuming by average our second, will XX as XX

our margins the gross at $X.X results right of slide, utilities of income. to the reflected in million and gas the the $X.X side quarter million operating higher second a for decrease Moving

electric were collectibles reserve on higher, – employee recovery. driven with in and offset the an in of gas gross reserve costs, increases utilities and to these to our increased higher increase reduced increase along weather, recorded We a at higher a facility favorable for revenue. reflect transport the gross capital strong by from margin customers. an by partially utilities, saw Our margins expenses an were right tax volumes by any benefits reform Like

Additionally, XXXX in depreciation as utility new was result a of capital higher investments.

generate nearly and As earnings a third breakeven the quarter the second Results in near quarter, in and met earnings with first quarters. for natural gas utilities their the second reminder, expectations. of all our fourth our

utilities. talk I’ll at impacts about weather gas our to normal compared both Next, and electric

compared fourth composed electric is utilities cooling XXXX this the of quarters. days quarter second below in utilities, our XX% and days QX main The quarter, Heating and above months QX last occurs year X% X% year. occurs XXXX. outside normal XXX% to of at which QX the in in compared which degree QX heating degree were to Cooling first below above shoulder third in our season in normal normal normal in were season gas

a While the aren’t that lot degree represents second there a big of quarter. percentage increase cooling on days a basis, in

positively and estimated the by margins So generating percentage The total, $X.X In million a margins. Generation QX electric compared plant was to for expenses and Power quarter. an impact operating contributions. Slide you’ll operating utility segment estimated normal income maintenance income impacted had positioned weather outsized decreased and Power $XXX,XXX contract to outages, positive. margins increase. of and compared from units increase second earnings see our Slide our cash by planned you’ll normal. planned an $XXX,XXX strong its weather increased of gas primarily XX, minimally The related to gross Mining to see estimated it’s from flow strong segment realized $X.X utility continue higher EPS On on QX $X.XX million, continued its the And power positive the depreciation. Also outage XX, year-to-date, availability approximately a Generation outside is $X.XX impacted

sold thanks For and due the the quarter, increased taxes more increased $X higher million per price royalties ton. and production removal costs was overburden X% increased increase primarily to in and tons million, Operating revenues. to revenue X% on $X.X by higher,

our from sales level, June Slide perform first XX%. a capitalization. capitalization XXX basis to That’s to us as our as from was a of thanks Our improvement by to a on half driven cash allowed plants shows XX, at well That improvement point debt mine retained was that pricing the half roughly and At XXXX debt sales continues almost our to methodology. year-to-date mine-mouth entirely reduce increase by earnings in year-end. on-site earnings, to total XX cost-plus net high the in with ratio our strong year-end. based flows

conversion, reflected of our capitalization below convert as to units mandatory unit After until November to are expect net this balance our we securities million X ratio to $XXX the Our XX%. debt equity debt on sheet decline year. on

fund don’t While to fund help emerge, equity to from additional capital need next CapEx. incremental X.X expenditures. likely increase over investment fund years we our our borrowings the any need to If we equity capital the to our time-to-time need to opportunities we it’s may anticipate forecasted to disclosed new these short-term some issue expenditures, currently will issue

discuss debt, unit Our XXXX debt shows At-the-Market program July loan we on June schedule, equity require if available on us and our as Dave equity credit $XXX arise. term XXXX through revolving the needs extended remarket maturity excuse million next our slide. is – noted, XX, Slide XX our as a the maturity facility the mandatories I’ll extended me, on mid-XXXX. And into schedule. to noted which The

debt We’re earlier. units shape equity are mentioned liquidity references and a our perspective, manageable. in good from our Slide XX I very maturities

to settle used units XX, units escrowed stock remarketing effective November comprised equity year. in down The to have open remarketing, to connection subordinated interest using X.X% X. this proceeds we on purchase is the Hills' total elected short-term and subordinated any Each remarketed In purchase contracts considering will be and the optional due junior tomorrow, X. equity X debt. stock this from of settle notes a until the of our October equity August November to Black pay proceeds issuance additional of million issuance must than The are on period and upsizing remarketing with we contract the $XXX these later an with junior notes no in be common new of XXXX. Our of our

pay to debt. notes we prefer well senior After exchange unsecured due on our notes to as purchase XXXX our contracts we from junior them retire as to we receive the simplify use the subordinated million X.X% X, proceeds portfolio. stock of the for the debt short-term of Additionally, plan to notes January November $XXX down settlement

I With XX%, earlier. XX diluted the ratings. shares fully during expect date reach debt no quarter. were There settlement mentioned, ratio investment-grade to also, noted equity, our XX November and million to we on X. to as below the approximately our changes at reduction, the capitalization debt increase credit Slide I the And as will total drop outstanding shows

Slide credit – and guidance maintaining We’re level issued. XX, Slide our forward earnings support at had holding quarters, $X.XX while initially strong On we’re to reaffirming committed metrics our listed of ratings. to first XXXX we’ve on XX. had those two strong our ratings, share assumptions the our investment-grade forecasted performance per $X.XX we’re in the on earnings the based We’ve guidance

the a Wygen the O&M major and second half for power other some have outage in substantial of I XXXX. projects planned We plant

by six are third until quarter that also XXXX earnings Also, grow additional of share XXXX range months not we to this we the I the approximately year, to start to conversion providing We we to later X% as net about consider. stay turn described. have guidance Dave from while flat weather our with now. you remember increase back I’ll in guidance earnings need to count to EPS will earnings due it release just XXXX impacts equity units thinking X% EPS, disclosed

David Emery

XX, drivers plan increase of growth, with track long-term retaining on an continuing of during XX% average, strategy focused above we by payout of returns. our record that dividend review long-term to the growth the increases. leader perspective, objective we’re strong a earnings acquisition filings. achieving slower delivering We XX, in to a EPS XXXX the Slide growth consecutive annual a I’ll categories, and accomplish rate industry XX we’re being and periods preparing from back currently grouped ratio, Continuing from our all now and and targeting the test on past years, on rate we’ve the Thank of several the profitable transitioning with XX. the into years, great dividend start entering a to done the you, our day for growth, we’re SourceGas, dividend to we forward an goals more growth integration XXXX, while XX% post On service, strategic Consistent traditional what Slide earnings valued in for expect flexibility On focus, industry strategy. slower as four Slide overall do. workplace, In major better Rich. execution we shareholder and total strategy, with process every acquisition EPS utility utility

those have I a And in couple are rate a that we couple filings or one as already commencing have certain review ongoing mentioned, and jurisdictions. We’re currently. ongoing completed that’s

help longer XX, our focus gas fuel filings. drive comes five years XXXX more our over past reduce and and higher utility beyond, growth. risk serve by serve the Over we recovery drive On our distribution With On much We invest side. service territory earnings X.XX million on meet electric customers. capital to the needs, Slide the long-term of to the capital continue to opportunity strong expect frequent earnings rate over better continued regular investment Slide into drive on than by At the forecast capital efficiency breakout to and more improvements utilities. earnings delivering has business utility review our in the years investment, we XX, and XX, increase as exceeds term, increased investments breakdowns that growth a strong for base. predictable and standardization also returns, of investment for acquisitions state, spending a earnings. and type driven level on our billion XX shareholder gas next to that $X.X focus of strong Slide and much That plan more in much larger growth, customer will Slide transmission that larger future. a and by depreciation, diversity both by On detailed will mechanism. the have created and provides kind size spending includes and our far our which customer system,

utilities, to been quarter, similar which XX, completed Slide highlights rate And filings active proposed regulatory update. moving a XX increased, income an most our review well of for electric reform status provides slide for on federal the project. numbers state. investment pipeline by the provides That as largely then our for update these dockets detail recently our have Wyoming This capital Slide Gas as and our utilities. tax

XXXX process have states ongoing one on we and customer reform of the tax said, appeal the As from notified rate rate I in Utilities the pursue noted page, Electric not future, rate Electric so That further the resulting completed that our rate and federal the to in turbine key that income that’s our determining future to exception, other Colorado earlier, our Colorado Colorado related to four with Colorado address case. is may, treatment PUC of already filings at in noted time. benefits active in being Public items appeals decision we Commission’s current do related for We review one to intend filing, just gas the we’ve and the attempt far. the Electric. we I’ve this regulatory Arkansas,

Moving XX. on to Slide

file jurisdictional we own and different Nebraska Colorado, of for Wyoming. fewer believe the Having and our billing utilities: within will that have which benefits simplifies filings the rate by We consolidation in customer processes provide risk, entities streamline also in those regulatory a benefits. improves long-lasting consolidation reviews, We of of a customer stakeholders. provide state and service. single reporting timing lowers quantity rate will all states multiple review Consolidation in gas process strongly The state complexity three distribution the entities and each state. and tax that need request our for and to be our it corporate driven requirements, will

vary result, timing the the will states. three between a As

and timing consolidating steps for We need each bottom review first. current the a there. of regarding Colorado utilities in the state. and the for gas that On will gas be utilities three we our rate out lay our our states plans all slide, already required

the request, a file two of next, And we will file and to a year. consolidation this XXXX, follow intend balance our hopefully during XXXX. prior we’re review we to once of And request timing third consolidate quarter. year-end rate likely that’s So LDCs evaluating our quarter, during legally in to filing the with intend process to legal a still consolidated Nebraska, gas approved, then then the hopefully late there. Wyoming the

Moving on XX. to Slide

proud extremely earnings stronger reflect our had increases, annual dividend in several of past increases in including cash confidence record of We’re future flow and growth. we’ve strong which our the the track years,

As I dividend total earlier, within to slower the noted XX% increases dividend after still to we the returns. past we focus have payout dividend excellence. over remain targeted XX, strong of flexibility growth XX% earnings help periods solid during day the use well On to deliver increases relatively shareholder larger Even several years, range. Slide we on our every operational

safety be really exceptional. to Our performance continues

Award Mine recently Safety was year, truly accomplishment an for fifth Our Workplace by the that awarded consecutive the extraordinary Wyodak group. Governor’s

It’s recognition trusted recently employers for shareholders. holding Midwest now. our ourselves XX few accountable we’ve America’s is to utility as also our and our one have We’re of years to way done the a of proud brand. This most Slide quite is best received you, scorecard. something

for our and accountable for accomplish questions. to literally entertain the We’d the progress prepared you, you demonstrate year, today. business. to concludes this keep we we can As managing be That the so happy boxes remarks objectives any our our will check


[Operator Credit first Weinstein from Michael Suisse. comes Our Instructions)] question with

is line now Your open.

Michael Weinstein

when you And filings, those filing? first like file kind Colorado different of of for completed. So case have once entity then reconciliation between in going to and the soon. four Do filing we rate for can after any the it’s you’ll timing a – for the that, expect full the you’re indication file combined

David Emery

legal review hope fourth be Well, file basically the is the once hope quarter straightforward we we this entities. – of approved, first two process, to would a in would relatively the And the to hopefully to that’s rate will year. combined consolidate request filing which

Michael Weinstein

for you. XX, option there I’m rate possibly Page planning resource And process question. be us is given wondering, that to plant you goes what a could you to note And plant anything at tell being a On XXXX. Got about the that Wyoming Wygen purchase are of currently? Separate kind considerations I some point? base this in the has

David Emery


in contract be our Resource would to year-end. in it. would that on that would Wyoming to will be process that we We’re seek wrap things of whether the working to We close And that up included whether included our expect right Wygen resource rate-base or in utility hopefully, Electric a we extend now. Those of will recommendation kind I, related for plan. to Plan process Electric all

Michael Weinstein

– you go that? have what have of a Would kinds there other to that? competitive considerations Is might into to attached RFP

David Emery

Yes, it’s depends. possible. really It

process of it but require in a some likely I an great evaluating critical economical probably early resource. whole in other kind you It’s extremely a still what Cheyenne’s resource. FERC the came of a asset But we’re IPP, part the approval a for would take, if If have – the meets It’s very of a competitiveness do it process market of by think and XXXX, been would need that’s it to we’ll things, since that of to likely with need some them. at portfolio rate-based online we least transfer would very to from resource. that market baseload comparison comparison were will, there.

Michael Weinstein

much. very you thank Okay


Thank Lynch. And Bank with comes question from Julien of next you. America Merrill Dumoulin-Smith our

Your open. is now line

Julien Dumoulin

Good morning some of can on the you just following up comments So hear made. just me? you

to want Just

David Emery

Good morning Julien.

Julien Dumoulin

following just So on up some comments the you made. of just

elaborate improving Or – on ongoing. would of Wyoming that line perspective comment? see Obviously, flows? just cash additional the Just basically it a your for time either apply wage the you of balance sort per generation of prior little sheet from want as frac you your Is equity. here to process have a bit outside

David Emery


We We other large have to see know done, what projects. the ERP shows and us that when have we filed Julien. get

year some project between has to working of we this capital million of point currently in We’re sprinkle the to Certainly, major But two. us CapEx as and likely to with have on equity kind to Colorado Bridge pushed future those. we’re the I to the fund to $XXX said addition where Natural our earlier IPP for have help – CapEx. additions, going disclosed the

Julien Dumoulin

Excellent. following All right. up then just And here. it. Got

factors the it’s early, know I the to year XXXX, little understand in of but the a For wanted second here. half just

an outage the Can roll XH obviously, the what to in roll forward in we’ve as impacts, talked keep on to earnings there? dilutive anything should the on You on mind XXXX, And is forward got considering you to XXXX? elaborate about which you we’ll also impact presumably. else we be extent

David Emery

there’s keep think in mind, don’t anything Julien. really to I

I we for the why it couple half the that to Wygen leaving pretty and year. other the negatives though is half. about likely are we’re that think, the for will we’re couple second do of on the a outage planned reason off at basically, start good guidance basically even a be things O&M the We where is, I second year, talked planned slight projects a in of have

our summer we’re maintaining will the electric season and loads Plus, in guidance August early we’re particular, in how So is. until July know and never we early September cooling get it through develop. level where

said, not So year guidance that’s this we’re the our to over is now, for XXXX, maintain new guidance for X%, a where while. critical. to for dilution to have about we’ve a that’s or currently is drill line been I clip about going But basically, those talking we’ve talking a the our been to Rich in news. it XXXX. XXXX with factors. maintain for as which decided X% But units, hefty But mean, of disclosed we’ve pretty equity with that

Julien Dumoulin

or I in the revenue Gas? Just absolutely. Yes. revenue requirement low No, noticing Arkansas the to – number Can slides. lower Excellent. revenue turn back

a a XX front. basis? ratios to going maybe little If year separately, to make regulatory the see Can is can there. Colorado, that on the equity comment XXXX? filing especially on follow And bit this consolidated on thoughts related then your to, what the on across just I that later up Just you jurisdictions, you

David Emery

Well, of tax in we predominately filing reform, in ahead it did Arkansas, because Julien, initial early was that’s the tax December, before reform.

nearly all So it’s tax reform.

capitalization looking all quarter, have the I for ratios, our On capitalizing each we’re at know beyond that don’t subsidiaries you question there. what and appropriately.

Julien Dumoulin

be jurisdictions in evolving said, as have their collapsing that extent A they of these higher ratios I back you’re as utilities the somewhat Well, equity for thinking. to been I filing as and, which obviously, capital your peers structure itself lot well. across the was go might to

in this Colorado to specific instance. ratio, equity the on asking just figured I So

David Emery

in general, the try utilities. a a of I I utility radically maintain continue in we individual ratio. do the Obviously, maintain capitalize have end but to generally our goal consolidated and bit capitalization. good. higher will And company a within each independent for so. ratio finance little any like mean, ratcheting think is We think equity our to that’s to XX% notes, of to XX% and we’d don’t we utilities, We up, between example, on we at those that way separately that prudent

Julien Dumoulin

from quick from And cleanup last Sorry. one the question Mike.

does the how map potentially Just on Wyoming fold? into figure the PCA Wygen into around in the the bringing process,

David Emery


relatively for whether at comparison decent a of I decision, be have base to recontact that’s the think contract the if years under several rate process going is a That the term process like asset, recommendations. we’re look probably Wygen price way the then It’s plan basing. or be I decision it. on to contract going through got that XXXX, now between the ago. what making to you of resource today, Would you customers the plan through certainty part of with back contract a the determine and cost price to but prior or a was rate-based to that into customers better resource part long making and rate contract and extend entered in would amended

Julien Dumoulin

much. you Excellent very David thank

David Emery



Johong next from with And Consulting. Research our comes question Lasan Auvila

Your line now is open.

Lasan Johong

– of of David, I that mean, would idea, the savings utility but didn’t all what consolidation mention cost achieve? great you is the kind whether gas a will do

David Emery

We haven’t about it, Lasan, as talked savings. far the specifically as

it’s of lot O&M filings have for example, service, regulators multiple side, less in where pairs states. obviously, on of savings, make cases, customer and to a filing a be and lot their The simpler ongoing the think filings, lot same going we savings otherwise. it regulatory routine for ongoing less rate I a

such special do change to or timing that the a process. trying to it’s the plan We’re not – timing, standalone

consolidating. a we’re need through process of review going in we to when So state rate that the anyway, go

the shouldn’t the expense doing that rate reduce it, cost process. more a case, the actually be in but need hopeful completed amount of rate anyway, of a when testimony, a little add going little of general, to the we’re significantly entity. we’ll we So through by consolidating more Might review incremental

Lasan Johong

Or you to utility, creating one are keep this Black complex? Is Great. them going gas utility Hills whole for pertaining the separately? to state

David Emery

By state.

Lasan Johong

there’s of it consolidation the no by – So the separately? beyond So state to inside within the you’re going keep state?

David Emery

think of I really entity one only have an we lines state we advantages the one from as Lasan, That’s have, that crosses ownership standpoint.

So a simpler. lot it makes the process regulatory

set on LDC. separate as fighting a cetera. et for would up regulators, gas the not Each We’re jurisdictions expectations be between state

way. got a that it’s those easier from to lot frankly, it it’s just regulatory business perspective, helps manage. a We a more LDCs three set straightforward in multiple lot risk. states. mitigate up Now And But of and

Lasan Johong

Yes, I perfect sense. that sense, make

assist of particularly Just stuff. guys load, you Peak from a couple wind? existentially the do administration problems,

David Emery

No. The peaks went fine.

in occurs weren’t they set winter get new for weren’t it peak zero zero either weren’t certainly a our little real usually still. – tendency load, quite to we Generally, very or time, that has contribution when either. from They have we cold summer, be resources. hot the usually world, we real when us As this our days renewable at but they days or capacity part of a

So to resources on we fill days. plenty of the gap other in those have

Lasan Johong

And lastly, for anything. for for better economy changes, either service be demographic any seen to worse? seems the see territories the Do just kind if U.S. or better, overall of I accelerating. question. you general have

David Emery

think don’t say, no. overall service trends, I I is so, pretty would territory stable.

of way strong, status years. Gas I China the going growth it’s well, been and growing in very Dakota, et Wyoming no slow some would steady politics, on. South say in kind of of good Colorado but been has have they and territories, shifts particular We quo, have major in cetera. kind for But growing the last is in demographics, our

consistent. pretty it’s So

Lasan Johong

Thank great. very you much, That’s


next Weisel from [Operator Weil. with question Scotia Instructions] Our Andrew comes Howard

Your line is open. now

Andrew Weisel

guys. you, Thank morning good

in First and moving in parts pages question XX slides. a XXXX the few is small XX the looking CapEx XXXX. I’m for to plan at

in understand million of at you pretty So looks like CapEx that. of that XXXX increase of the XXXX. $XX $XX XXXX added pulled around overall to Generation $XX you and to clear million related I pipeline. year, It from about the million about gas were Mining Power this CapEx

explains Sorry it, missed deltas? but two if I what those

David Emery

And the is Busch Ranch the II That in service we in the farm future. we that’s the more Well, related the opportunity, will shovel Gen bought be announced of this was Power productive wind by jumped on a us to is It end going the the acceleration or be to so it. then year. new on we call the a on $XX million Peak earlier help Wind year. good that the View

done to We’re this going year. that of more

pulling next this it forward into So we’re year. from year just

Andrew Weisel

sense. makes That

Okay. next question is update. on the jurisdiction simplification

approximate think about entities? talked rate of year. how If we previously combined two larger an consolidations You’ve all these of ballpark forward, pace for average should of of filings the about cases per go

David Emery

investments It’s territories. really and in levels those driven by spending

we to of equation. everything control the We’re doing can try side O&M the to

be rate growth So states. and the case required in spending by timing by the driven those state will

really year. two generalized a three hard as So running cases. reduce it’s rate of entities make probably the said number we rate current statement. we’re or consolidate we to of number cases a with we’ll have, entities, at Certainly, We looking the

growth again, reduce say, some a X, going as we for on Arkansas, of years X timing, we and it spent to we close rate be keep between, ago, individual each the over example, some entities cases. rate X territories, like system dependent needed bought there, maybe is to so, As two next, number already years and X, as X. years in maybe on file consolidating it will or the million three in those case. the States $XXX or The

dependent So investment customer be going it’s demand in to of those the keep to required level up on really with states.

Andrew Weisel

comment, utilization. Pueblo Colorado a And versus thoughts ability that? some you’re or on high-level Or able in makes your next to maybe other to similar any That some then lot lastly, week meetings we instances of meeting your see Any media similarities prevent sense. reports if interest from decisions divesting, a to of about having discuss differences potential cities?

David Emery

dialogue in been active the Pueblo. city We’ve with Yes. of

Our with a that. of local lot them leader there about time visiting spent has

opinion, our personal we that really interest divest. don’t Our – is have as to any company, a

buy our services, through customers size our a assets company. helps keep We asset a current We’re shared to The of grow low utility et company. utility as of cetera. cost all utility for base

respond makes co-op really we no it from to call us – it So got there. an wouldn’t local to divest for I really inquiry the utility. sense We a formal but offer, a did

in an and our I to think trying that stead, we was city actually responded interest to X-K. the of woefully the made it serve letter and in in publish decision inadequate, response

Circumstances of lays we’re interest That build believe We good generation the pretty position I doing a think the required our city’s that behind supply. job time. is lot us short a to in of us. business. managing electric clearly a that selling out on in period

And little more the have so that capital rates already luxury with we made. of now bit a stable being investment

It’s fuel-efficient modern fleet in new state, everything We have and cleanest the efficient, fleet the gas-fired. renewables highly most and all and all else.

generation deal continue area, not et that although So to utilities over the standards have in done. catching they are to we they’re feel the the to fleets in their next comply us they’re the as modernize confident cetera. and highest with they high be with – but our that the COX as already high pretty regulations, relatively And several years, we’ve will relatively renewable Pueblo, rates surrounding

good about pretty where feel at we we’re there. So

going continue take usual. progress. and It’s to to we’ll business a municipalization in the positive to But and engaged We seriously slow Pueblo, be. as good plan discussions in we’re our making We’re continue process. discussions be those is

that, takes an actually of an least you at I you been how you If example relative in it’ll at I a to look how which sense the look basically Colorado, want and at what that’s highway look And long give municipalization could in see kind on. to accomplish think it. of of we at attempted think is it going Boulder

Andrew Weisel

all appreciate the time Alright, Emery.


David turn for you. closing to Emery now this I’m Thank remarks. time. I back further would the like And not any to questions showing any at over call

David Emery

great all your appreciate Well, thank call We Hills. interest of very quarter and the your day. for you attending much in today. Have attendance rest call on Black our a second your


you Thank in your This the participation conference. presentation. concludes today’s for

now may day. Good disconnect. You