BKH Black Hills

Jerome Nichols Investor Relations
David Emery Chairman and CEO
Rich Kinzley SVP and CFO
Linden Evans President and COO
Julien Dumoulin-Smith Bank of America Merrill Lynch
Michael Weinstein Credit Suisse
Christopher Ellinghaus Williams Capital
Vedula Murti Avon Capital
Andrew Weisel Scotia Howard Weil.
Call transcript
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Good day, ladies and gentlemen, and welcome to Black Hills Corporation Third Quarter 2018 Earnings Conference Call. My name is Brian and I'll be your coordinator for today. At this time, all participants are in a listen-only mode.

Following the prepared remarks, there will be a question-and-answer session. [Operator Instructions] As a reminder, this conference call is being recorded for replay purposes. turn over to Mr. like now the to presentation I'd Black Investor Jerome of of Hills Nichols, Director Relations Corporation. sir. proceed, Please

Jerome Nichols

Welcome to Black call. Hills Corporation's third quarter XXXX earnings conference

Before throughout the Tuesday, would Hills I Francisco. investors The November we on note host San and begin Black one-on-one deliver will that to meetings XXth like in will conference Financial November EEI to attending XX. company Conference, the starting be today, presentation

Investor David at Relations webcast and will posted Officer. information Chief this under Kinzley, and website Leading Officer; discussion the and Operating after Our quarterly presentation materials Financial Rich and Executive Senior Friday. heading on be Evans, close Emery, market earnings our President President Vice Chief Chief Officer, Lynn our today Chairman are and

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

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

David Emery

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

May the term, of retire of of was smooth the Chairman late Lynn effective to January through XX CEO deck, really to almost as transition until Xst. company Directors time is in as comprehensive CEO, and which that non-utility-related April at my December of company years XXXX, transition Last an I current after right end week, To the of to the a current those I employee oil Consistent I'll of subsidiary, XX gas board plan appointed that final Officer, the the COO which XXst. new our Chief which and to succeed company continue succession also my Board Before completed I of comments. jump effective CEO, the help announced our our We've Annual I'm on Meeting Executive the and I've will November to is the the CEO, as of CEO. divestiture me Board Xst. Lynn with Shareholders role end real to XX, got President planning couple Chairman is webcast appointed our as process, confident serve as of Evans, Executive and ensure long-standing a in in retirement business. as our that XXXX. was the now a following of effective

into an to is to person million an communities and for future. as absolutely success lead and gas years and place ensure eight have Hills help in XXX Now, electric customers to the we strategic plan come. natural utility excellent right with Black the Lynn states, X.XX

been transition leadership years officer experienced also a During most XX great. guide He to company. past role whom played team, company's his Hills, of company seamless think as the of with the will to an be transformation Chairman. of The leadership has he have and forward of it's look I years. Executive the the helping really and growth exciting the key a Lynn key to over and team Black assisting going also part the ensure and success in successful a is and I future

X I you presentation. webcast start on deck, Now, for on of Slide to the those following will slide the along

significant, from highlights and all had of future. strategy. Rich a by discuss this set for modified lot upcoming a we quarter, cover changes, and We an accomplishments, will quarter. for the our really format bit third of the the regulatory little excellent financial will quarter, us leadership I which the the Lynn up marked then operational cover well update have forward Given I will think

XXXX basically year. our performance our raised reflecting also earnings We year-to-date balance the guidance, of in our confidence the and

Moving on third to Slide Utilities. quarter highlights our for X,

The Cost Following the from real PCA resolves the quarter-end plant, our Adjustment several Public I received outstanding Power Wyoming our and for Electric PCA, between years to including resolves approval power issues Electric. of that Wyoming the Commission settlement a Agreement on generation related disputed October subsidiary all issues Purchase settlement subsidiary XXst, in our comprehensive the to escalation Service Wyoming. Wygen Wyoming in price the related contained Power or

and agree us. excellent settlement, to the in Colorado for XXXX, multi-year million received of Gas project both to a Public we a peak we're for customer a set we part that important that will review approval total companies approval settlement Colorado in credit include recognition two three states. to Arkansas in low. $X the of Slide more our behind customers consolidate utility The during customers first Utilities the companies Commission gas Rich, 'XX these own benefits gas in discuss XXth for and Colorado. successful separate provides As step really merge 'XX. detail of Other LDC by update. his on Also that on credits in highlights have our financial Electric issue shareholders several winter October our pleased the we new to October, X, This rate LDC and is and between

extension distribution late plans rider Nebraska. early utilities The distribution per in with for which rider, coincides gas system, on natural highlights, That in period file of XXXX. XX, now for Moving on safety rider is XX, October XXXX. the its continuing we million to rider recovery or really approval provides of and Utility X, integrity Gas extended Slide about of well was the expire to consolidation our in set received revenue two our approval year. to December to extend Nebraska to XXXX That with XXXX $X

Dakota line During service July, remainder City, is year first service placed from Rapid the segment next Dakota placed South in transmission to XX-mile XXX-mile The planned Electric the South in to of XXXX. $XX our Stegall, line expected of Nebraska. electric in be million,

In increase Gas of Commission annual addition, investments $X rate gas Corporation received approval and for our low. Northwest in million spending Kansas utility set a eligible double gas In to for our Wyoming approximately Wyoming $X million reliability a July, during the all-time result, the Kansas a subsidiary from rider. passed review increase. electric peak as new approval will June, amount a our going had safety-related rider-eligible year And previously under Kansas utility to received system its that Legislature legislation our enabling The forward. spending from Kansas Electric

quarter, successfully highlights. remaining. and both our customers income approved reform Slide Arkansas. the during benefits now South - utility tax approval income deliver received We've X, six the in to of corporate only Dakota Finally, completed is reform to power tax generation in federal federal Wyoming with states

Electric yearend. over approval, is wind Our a which party's purchase in Black we prior Generation little to farm our That subject Busch to million. for an subsidiary agreement a purchase to Ranch Colorado reached $XX FERC Hills third in expect interest XX%

highlights purchased meaningful wind Colorado farm. X. also X transactions. subsidiary the several are XX% on Our Since a completed Electric late under and the and owns Slides long-term the covered operates energy all we agreement. July, They remaining power both interest finance-related Corporate purchase

acquisition. First, of SourceGas November new related help which we stock the issued conversion be The finance to to common retire X.XX on we units, was in million November outstanding to used will shares XXXX of X.That debt. equity the our issued proceeds

a conversion We of increase the XX-year shares represents and that to one term we our annual million to loan, our extending share. just by Triple longest units, November term X.XX% utility our under of finally, upgraded consecutive $XXX July dividend really update. Global As streaks XXXX stock industry; to XXXX notes. to adjusted of. the issued on those S&P quarter provides will credit XX quarter now from to we're in is XXXX. dividend provide restated with of his $X.XXX Rich X $XXX extending X.X% have the million We facility, proud senior unsecured increased XXth revolving plus B $XXX We restated rating and third increase, That one July Slide third of the of detail XX our business financial XX. common which earnings and outlook. the million Xst million And in segment by per a we amended quarter, reconciliation outstanding. corporate amended quarterly the variances and stable a during of XXXX. segment maturity a credit

XX, Rich the to it financial Moving update. I'll provide slide to over to turn

ring to customers, York began August, Deadwood, We company's the picture in the XXXX, I on the Before our significant a of on management the team bell to celebrating just which members service of Stock that Dakota late XXXth had utility opportunity September South our do, pretty the in opening milestone. anniversary Exchange. were in noting New slide,

over that, it update. Now I'll with to Rich financial Rich? for turn the

Rich Kinzley

revenue year. for thanks quarter last items that margins as last the quarter did start year between a morning, results this ongoing months everyone. last on the All do difference Slide expectations, displays to good compared these the I'll the we quarter Electric performance. on detail GAAP the and with trailing communicate following items XX, at items settlement represent mentioned. the these five but in of that the this This on I'll September XX, non-GAAP isolate recorded explain Wyoming better reconcile weather had that special quarters and earnings majority earnings in Financial we our third credits right, third XXXX. and associated quarter slide the short, We considering and meet more year our XX measure. get slides, where and into Dave, of of third unfavorable the to impacts adjusted we as to on Dave third earnings

was on special the top end first costs the acquisition and slide, related wrapped of SourceGas bottom part the from acquisition incurred which Looking the at to one-time of integration, as to XXXX. up item

the new the from impact impacts financial The well continued the associated this continued as to reform this a year, The related to of end year benefit tax first law. third evaluation as in and tax we expenses recorded At revisions of item new relates the the our second quarters XXXX, recorded expenses to with of statements we law. the to reform. on law and relate our of

posted resulted For IRS example, quarter, which the expense. in in third changes bonus additional related recognition to of the depreciation,

items related tax in a of reflected third These them benefit an basis. and of QX XXXX. effectuated we on legal our as-adjusted item The restructuring see you accordingly, the were performance not indicative to ongoing

waterfall to QX to XXXX are XX XXXX. Slide Our third The net quarter EPS chart $X.XX income was quarter amounts third bridging illustrates All $X.XX for last this QX drivers the taxes. on chart compared year. of major on

XXXX fourth as reserves reached plan additional of detail related weather $X.XX to quarter for result year-over-year. benefits in drivers more increases $X.X Gross reduction income exception on support following investments. our notably revenue the line the revenue First, the the Slide most taxes. are to our expense slide, noted approximately were slides. on we EPS year-over-year third by decreased was of due offset the QX regulators reserves you'll XX our statement. reduced of a by as tax of million million to our our support and the Wyoming, the to and in for tax reform customers. reform, items states DD&A the on initiatives again growth expenses up utility offset note, expense by tax Electric in result settlement displays reform Gross was drivers revenue typical tax previous are of year-over-year, were plan margin with we These had a expense. to $X tax to negative utility reduced which in after-tax quarter to Operating and increased margin quarter. below We've efforts. reform, get flat. reduced Wyoming I'll where growth for at or impacted margin relating Outside income into of I Other all reform passing customer-focused our recording reductions XXXX margins revenue by with equivalent agreement in file tax the gross the income

Moving last below rates slightly operating due to average interest rate higher and debt year-over-year interest versus short-term higher due our balances income, to variable in this on year expense year debt. increased QX

Slide includes reduction. the out was has reforms the XX. of the which tax short million QX I expense tax in on $X.X is as-adjusted the quarter as the to million item by related end $X.X risen rate this interest know, of year. prior substantially point curve driven resulting tax reform, Income down noted year tax from an you adjustments for will corporate expense I from As

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

accounting decreased year-over-year. the XXXX diluted note, acquisition. to the our help stock is of SourceGas unit treasury securities application share due in to You'll late we count fund This the of issued related to method the mandatory

I'll common is required As portion of Dave conversion, I'll based method XX whereby discuss on Slide we about QX gas million to our approximately mandatories. shares share number to quarter year, apply now million utility shares we our mentioned, share given shares to But shares reporting our compares diluted electric of the prior this business year. stock QX on upon that period. compared to include X unit conversion segments. daily The issued we price added our QX for shares X.X were November XX the accounting, XXXX shortly. closing segment. to this a a each XXXX talk of average of additional we included during treasury the last of diluted count. in count in We the more and

this out and including Also the and gross On by investment subsidiaries. electric reserve The unfavorable gross and new left margin the our year more detailed wash. are XXXX credits income. at for electric million Electric table for changes a quarter owned gross recovery operating $X.X well X the and marketing our rent to all Wyoming and investments. as tax property million is Dakota a technical results outside increased decrease for at These results revenue new for taxes margin million utilities Electric in revenue reflect as higher services, on power the benefits, net saw yesterday's weather. than a services. which impact utilities gross facility in non-energy Page headquarters, Operating lower reform, on South the expenses for is income side, corporate transmission and on margin consolidated additional press $X.X These capital as of services higher result labor the settlement charged the higher QX and the margins the positives Electric benefits this in by release. operating to our of new depreciation and is third the Utility electric costs were utilities offset year margin $X.X of utility the of in

reserves for facility due at noted. third growth gas utilities costs this XX, in lower $X right a services and of million our increased of margins year I the by reflected higher negative the labor million side outside just Positive Expenses The gas are non-utility by at benefits, revenue rent to utilities million increased revenue and costs. Moving and by the margin year-over-year. weather tax and facility increased both electric impacts slide and the offset electric gross reform from $X results decrease utilities the $X.X at to as services were customer gross for offset in quarter of operating income. impacts

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

the The natural reminder, generate their second quarter with expected quarters earnings utilities gas and utilities in third expectation. results losses and the first gas for our our third in met or a fourth breakeven the quarters. As

on X yesterday Page in QX presentation talk I'll clear, our compared Pages these to the to gas about weather this last weather-related weather Next, QX I'll reflect comments. release XX on normal with normal be to the are and compared now impacts weather comparing of numbers press XXXX utilities. XX year QX be To and impacts year. of electric at this and

precipitation. at QX electric at degree benefit quarter represents Also, on to limited This our from cooling the irrigation utilities is both in days activity gas related with service utilities electric load gas typically utilities. season and our dependent our both main there's gas and heating the The third at activity territories. temperature

While impacted below of compared in to this cooling to increased primarily income in weather normal. had was This power at QX utilities Year-to-date normal. the utilities availability positioned were and impact to million earnings and XX% operating XXXX, its irrigation areas margins sold. $X.XX by compared during X% you'll you higher see Compared generation is purchase gas to heating days power normal XX% XX, the $XXX,XXX, generation had electric impact negative strong cash $X.X approximately on degree outside units Also by its utilities. the reducing in it utilities The irrigation $XXX,XXX On days outages higher activity. $X.XX EPS of degree contract segment unusually related to generating and mining amounts increase. in our from through key respectively. the our at an at gas segment our were negatively September at see a wet from continued than Also, a QX QX, normal XX, below income year power flow XXXX slide weather year, positive operating conditions Slide normal and weather strong QX contributions. and increase normal, $XXX,XXX to continue this pricing electric a megawatt planned to XX, has and EPS agreement realize to electric

quarter, operating maintenance was increased $XXX,XXX $XXX,XXX savings the lower tons decrease sold. $XXX,XXX lower, while in labor me, by and costs For due from costs decreased by revenue X% a excuse to and on benefits, -

last financing week. mentioned. of part plants from by at for net in in mandatory as and stronger of capitalization. XX, our XX XX our These as debt-to-capitalization sales to acquisition, nine November plus the Dave earnings describes level issued Slide SourceGas XXXX. mine roughly securities XX.X%, of conversion, basis to were pricing improvement point sales occurred thanks earnings, based our year-end driven was entirely a was retained increase XXX on-site the months almost ratio first This high perform unit shows September Our which Slide continues the half with to At mine-mouth methodology. cost XXXX. on XX, our

in X.XX securities the XXXX component $XXX delisted. exchanged we With of an The coupon. contract equity debt approximately mandatories offering subordinated junior paper million of our the common to million Black equity used XXXX from notes of stock notes will in issued week, of stock settled. $XXX of for paper junior a notes successfully $XXX of subordinated junior million unsubordinated the XXXX. retire notes commercial issued borrowings. to mandatory a are due equity conversion XX, In of commercial comprised Hills' Black million a shares Each stock. that $XXX remarketed was due X.X% subordinated the to million of the common January the last notes. to the and unit upsized unit with borrowings. at August, We stock Concurrently, these to Proceeds of proceeds of contract notes canceled unsecured interest used junior due purchase down and common amount units. reduce we extra remainder our issuance were portion the of Hills' the our On principal was pay purchase and senior We notes gross received units unsecured senior X.XX% this be proceeds X.X% again used November our

As million a activities, just of we And decline XX as have noted, Dave stock shares will November the fourth ratio of debt-to-capitalization net result our of under XX% quarter. in common these outstanding. as below X,

XXXX and Slide Slide into treasury in BBB capital in we our shows With maturity Fitch are in revolving Dave Plus third maturities million apply schedule. our our manageable. method after settled quarter, the to perspective executed from We're investment The our third our our August, no X. the markets affirmed In debt common reflect activities credit Standard recently issued, longer we us debt a that XX shape updated schedule and credit grade ratings. great through extended November the and $XXX associated BBB and will the extended & liquidity mid-XXXX. noted upgraded XX Poor's facility Plus, to quarter. shows was rating. term stock loan very units their

we're per to revised assumes to quarter $X.XX range Slide $X.XX share. committed maintaining XX, lower earnings strong the share. range the at are in winter guidance increasing the fourth to which XX earnings range We assumptions range our to the for XXXX XXXX investment the XXXX. forth is pertains with it now of This with ratings. grade $X.XX range normal biggest related the for major are our a by guidance. our end as guidance heating $X.XX guidance utilities, season $X.XX this in to sets XXXX to risk On initiating weather Also at per guidance appendix the of meeting our we Slide

$X.XX we've grow preliminary due conversion. the with X% to we in week by a with the are income must approximately XXXX share previous $X.XX flat by share. As for keep EPS mandatory XXXX we to XXXX to initiating dilution noted per last the associated unit Further, issuance created calls, net range with guidance of

both don't intend in guidance years XXXX capital strategy, growth the systems. While reliability earnings are we XXXX on and guidance appendix. to this expenditures noted are the practice, XX of for customer-centric in providing Slides of our safety our formulate preliminary and confidence XXXX XX make enhance regular we maintain utility to upon to The substantial and our two assumptions and to guidance demonstrate includes major the which relied

we program, help $XX disclosed which for increase increased both assume equity it through and Lin to going equity XXXX $XX $XXX to the that turn CapEx XXXX that, Lin. to of million million compared see strategy to XXXX CapEx I is And by last million we through our his CapEx around in as program with in issuances the at-the-market program our over You'll this quarter. XXXX will discuss to comments.

Linden Evans

leadership entire Rich. and morning, congratulations by been a allow Good well employee an start team me me and as to saying team. He's David. as you, to everyone. mentor Thank incredible leader our to Please the

X,XXX $X.X guidance grown outstanding grown our to tenure We're to the his nearly $X.X what led into nearly David we than billion billion. Dave. from When have in looking and from our some We're as he XXX and our are we to CEO, ongoing it re-molding accomplishments market employees. billion assets Dave's our have approximately Those CEO forward organization our of and today. $XXX as fewer XXXX, becomes Executive During became today. really employees cap is our inspiration he appreciate million Chairman. has $X.X Also

me, been directly for great and years, work for to I've a Hills Black years David more guess than I it's now. XX enough for anyone. For that's those XX for to reported privilege of

deserves So for also alone. past to management at David that retirement be I've the fortunate years. XX for table senior been the

utility. future experienced our customers, As focus. the day in delivering be leadership on being work And strategy. key the such, very on every an with the believe particularly to we excited team, categories and build industry-leading workplace, will of organization plan. upon and reliability. our that, utility-focus outstanding many have I electric Hills and I'm to other four most partnership strongly to years, our strategic will our overall our our regulators we categories; utility growth strategic all of continue in profitable deck. XX With value key focused our service several great We'll objective roles company's I'm company's in execute as and and I'll in customer that being our and we These as partners group a all and in start manner company's whom do. industry best-in-class with played we natural growth, closely looking with safest valued The opportunity success service, major Black focus the the possible. forward also investors in past is with Consistent work the the slide goal now of stakeholders; gas analysts, better our our oriented We'll goals to and efficient into play leader do roles course, continuing that success. with

increase of to our final being clearly top growth was we slide long-term divestiture rate being that dividend is at supporting quartile perspective, a our a our everything With accomplish as that XX we the focused strong slower above week, customer-centric industry on by last focused XX% periods do. flexibility subsidiary, gas and We consecutive plan a EPS the the annual while increase. delivering plan our dividend while strategic the we during XX, utility strategic to and what utility are achieving execution just we from returns. is continue targeting payout growth On of retaining of dividend to total average which now EPS ratio, nonutility XX% long-term shareholder strategy our record business, track did oil on

the Moving an to EPS its either essentially and transitioning traditional to that from XXXX, and X% by jurisdictions. a more driven acquisition the program. completed In net more are utility diverse to regular from we lower strategy. which needs, improvements growth by long-term entering offset XX, drivers our of we integration review income XXXX anticipated our we investment the process equity growth and earnings XXXX beyond, strong Commencing be growth resulted have as largely conversion and of and utility X of investments rate growth given forecasting expect on capital slide the and we successful focus commencing filings and and customer-centered or November preparation SourceGas expected income by test growth, filings The is XXXX we units. in strong strong review return for a our that's rate XXXX, traditional in years to and strong integration filings certain to net equity return review our focus possible In continued will acquisition we EPS meet are more capital a efficiency customer the standardization rate model. ongoing dilution, made

expanded acquisitions scale on to of we customer to greater strategic an and and predictable our transmission helps territory in reduces utility drive over being years diversity our shareholder long-term resulted opportunity delivering now and through earnings. the and course comes distribution invest business shareholders. focus fuel returns, slide have course as XX, more Moving service need XX, strong risk our and to our serve On slide With a customers larger systems greater and of increased base. ready

to geographic delivers operations. and for overall will spending Slide of for more future interconnections strong growth customer investment. of earnings delivers much continue XX, reach footprint our more capital drive growth. greater and reliability for Our and efficiency opportunities diverse It also needs

by $XXX better we presented over is integrity our plan added which capital investments our the and utilities. of electric investment is and serve facility our investment and in the period, and XXXX our drive XX numbers by to That investment we've increase and reliability X.XX to million our detailed than customer for us guests quarter customers. included now growth. due current which will Now have this million far will last five-year utilities. forecasted breakouts you gas occur our safety exceeds investment additional been earnings $XXX provided These recovery and represented proposed XX by Slides help investment total at to level plan, $X.X plan. billion programmatic Notably, type depreciation, forecast investment million capital and our million will increased largely $XXX mechanism. of We've state, quarter, and primarily by XXXX more

our program As execute additional we to the couple details of quarters, disclose next investment to and we capital customer-centric over investment. continue to respect continue will enhance with our

quarter, new our inquiring discussions had we've to lots this investment programs. with of and XX, Moving XX about our the utility we've slides of that investors slides added sustainability

opportunities. to these We are our have provide slides significant customer investment intended clarity longer-term opportunities and into

currently stakeholders expressed investment investment the delivering reliable to in in we XXXX. requirements capital currently bridge to projects rate base project and system need ongoing run million working dollars our are forecast On million all not gas XXXX we growth. natural the pipeline customer beyond is our demonstrate on to of an safe within include as such and annual Wyoming This XX, annual a commitment ongoing we're and We ensure slide our long-term to on. large forecasted anticipate meet $XXX does $XXX that to utilities

expect to this continue sensor our our grow, and run continue programs customer review pending rules. and investment we increase system rate enhance as we we to will evaluate As

to that working replacement We program evaluate are with for of the right-hand placed programmatic the our and programs ongoing long-term, This slide. of distribution regulators is we pipe consistent for safety that the chart portion investment prioritization on on needs. our illustrated replacement approach

does fewer manage. timing Wyoming within forecast customer ongoing and forecasted XX safe our to slide Electric file own the file which electric of tax be utilities. ongoing also and reliable tariffs rate Again, distribution our utilities we our utilities expect deliver benefit. slide of strongly our update and need request investment of in rate each As our state that to how larger provides jurisdiction Colorado, demonstrate not reform state. six driven customer improve The the to reduces we've regulatory streamline states a growth XX, in service consolidation I customer projects. Wyoming. ensure our of this state. run rate the active multiple will jurisdictions. of the particular for by provide Slide have completed later help year. that and all long-lasting Those the in and each for resulting utilities are each complexity provide reviews process this different projects benefits in new We will our million anticipate fewer and federal processes highlighting completed reform we like Having we and multiple the Slide XX income reporting $XXX and of filing from a tax or $XXX our We we an said other three beyond to we status and include help dockets need Arkansas renewables capital believe simplify review to type Nebraska long-term our by risk, system regulatory million reviews, tax and consolidation determining rate the billing within process quantity we Consolidation customer us entities benefits one-time state corporate the investment We annual entities stakeholders. recently the will with the meet states filings similar generation, a will before, course, within in for a requirements have of and in to is review XXXX. for income to electric it federal rate

the states. result, will a as timing between vary our So

safety, of week, effort in our review next there last XXXX. in the consolidated see to Wyoming late Colorado we required will consolidation On until late and we intend next distribution, our Nebraska don't lay the current course consolidating in and for QX follow states. which bottom we steps was of gas those utilities we gas rider regarding approval our utilities and state have announced there of distribution received likely integrity our and first status the seek system, for rate of the legal XXXX. the extension file the a achieve consolidation for for the gas year. the to timing probably out XXXX plans slide, the And there states our three with and or we beginning early each of we XXXX and

annual by Moving we week. extremely the record of track We dividend including several our to be years, past to quarterly cash confidence and and future flow last stronger X.X% XX, slide proud increased dividend our earnings decreases, of increases reflecting strong growth. the continue

increases we have the dividend On every while Over XX% on operations. targeted ratio. within delivered XX, strong to dividend focus our payout remaining XX% day we years, past slide several on

continues be Our safety to performance excellent.

Forward year contains Volunteer York at as very recognized Step to the recently XX for was Community electric are Governor's rung awarded opening our XXXX in serving to help as excellent employee earlier, XXXX selected recently Exchange proud New Dakota winners safety Award the And South Dave Dakota for Achievement Our Also Serve was we team extraordinary the recognized and our as performance also celebrate recently always, we're Nebraska and the their utility the was its bell Nebraska of mentioned customers. XXXth and Safety. of have volunteer scorecard. Meritorious South Stock service slide Corporate Award Occupational our

our our shareholders. you, way ourselves is this of holding Now to accountable

great happy to We make and my continue remarks our progress questions. to entertain key we're That toward goals. XXXX concludes


Julien with come the Lynch. America of our first And line will Bank question Merrill Instructions] Dumoulin-Smith from [Operator of

is Your line open. now

Julien Dumoulin-Smith

Hey, good morning.

David Emery

Good morning, Julien.

Julien Dumoulin-Smith

It's gas total against lay And you. to also couple let to a strategy minimal is different maybe both shift lag me increase Perhaps riders? across there, given to point. kick rate impressive pleasure about I Electric the a this case bit contrasted Wyoming to CapEx on in the uptick and the look out then stay towards Can the the at here, XX bucketed congratulations utilities. your bucket. that million talk in little just it looks you It out, questions the of hundred off curious forward I'm been a there like lag it. Hey here minimal in

David Emery

spending spending, yes, your long-term on programmatic have Julien, a that with minimal regulators ensure we're through our about lag have and Talking that that system capital we goes with forward. increased we our safe working going to our teams

catch part. focused As ages area. last that in parts I very that their replace we're the we invest particular opportunity and system pipeline, of certain our to on didn't as

Julien Dumoulin-Smith

the stay given plan out? What's recovery the

David Emery

Well there we'll by required likely obviously mid-XXXX case be to stipulation. as a file in the

related Julien, heavy the review all setting as will there that growth and then rate trying down occur capital reliability-type a we're toward of cognizant and five-year more that obviously closer a that spread certainly But timeframe. Yeah break be to it's up but when be to review, So spending probably work we to timing rate and scheduled the somewhere spending today in little that. little next bit some them later can. when out spent in we didn't will of

Julien Dumoulin-Smith

ensure meaningful little just the the a lag? bit. there's to you to different minimal drove What Sorry, if you're clarify where sure on back let I am jurisdictions miss Are something such minimal or lag me to to increase? shift a capital come I new are didn't making shifting just and spending? there front regulatory mechanisms, a

David Emery

there. in essentially have legislation Well, the in Julien, Kansas, double our to Kansas that for spending to opportunity example, due was we passed

So extended then was two as Nebraska, year well; states. so on for it the that's we of had another and those SSIR part

still continue on the plan. we programmatic and of invest it to focusing rest their in is, So yes,

states, So spending no on programmatic in states. focused new but those in continued particular riders those the

Linden Evans

particularly at our If routine for them really a something those issues, least older our a that. focus, aren't Those some opportunity really and ahead of of from at the more plans. for, commissions various our plans business things of make what programmatic like about in those with with our announced change were where with deal they that some to we and of working make they a the to and wanted you for recall long-term least pre-approval way before we've those line couple had materials preliminary that get inform replacement older in outline to perspective. the want some aware but age, approach spending sure previous sure of staffs talked quarters, safety as of of We've the to some states we materials plans we're to have we

of big a couple those additional had we've million driver hundred in that Now the conversations that obviously, was spending.

David Emery

that we minimal capital isn't into then riders, Julian. that, review, as to obviously. the a just thing add spent define that's to lag leads One it, It's rate

Julien Dumoulin-Smith

themselves. - had just are does just you where you new the quick a ATM, what changes on metric you've metrics? in Just some put clarify the FFO-to-debt I with your to saw before that know

Rich Kinzley

this Yeah upper obviously, in teens, mid-teens the we plan stay and toward period, we through want the headed to we're as work Julian.

Julien Dumoulin-Smith

best Got it. leave right. you of again. and luck all I'll there. Excellent. All it Thank

David Emery

you, Thank Julien.


our Weinstein And Credit with of line the Thank come from question will Suisse. next Michael you.

Your line open. is now

Michael Weinstein

just move to plans David, point is Dave Lin, a retirement or to this something you. congratulations, you on both curious, this of at true you Hi, Hey, and other are any - situation? else have do really

David Emery

have really play any other are more less. and work plans. No, to I don't plans My

the time more public full on of the that here and kind think long after focus XX is role relative to which the CEOs, of good ensure a work So time. after I'm a very, in a happens. a with - less Executive transition of time, that, a lot company seems is of like it's on tenure to But years little way I Chair working most row, fun it years to very

plans no than other and other play. particular to So, enjoy

Michael Weinstein

that that there and is of CapEx - each XX, for Hey, on be year? It as amount percentage the sounds slides a amount like quantify new Is that XX the plan. of and to that's represented recurring CapEx XX. a intended usual you slide that's the - not the good on can full full has

David Emery

XXXX two Well, for really just those slides are and new beyond.

going any major gas slides include electric, and detailed is, keep we've that million there's We just system program just $XXX reliability generation, major to 'XX keep not the the That's those 'XX referenced, to items. million two then cetera. and on what system. the of investment $XXX to on through But I got opportunity have for et we million to forward. numbers power $XXX 'XX pipeline the the massive $XXX the lot for ongoing think a indicates Lin and that with spend of and And does really the safety strong for that a projects, renewables, up have top the beyond, of the up million earlier it for upside

Michael Weinstein

the year, And do two have of roughly like or those one to kind million $XX of you still each expect thing? range

David Emery

almost a timing got a of It's we're look of but you time. hard if Yeah, working a had and on quite of things, timing are in in the always the - but and We've just the control those them. lot those, them it's when to over history, several that fire needed those irons intent at few have appropriate some year. back always bunch we've and just our any point every on is given they on we're sometimes to working of

Michael Weinstein

base, the possible just affect point? at I question for rate consideration Wygen this this some Wyoming how how the does missed does sorry, last basing settlement, One on and if I but this, affect rate

Rich Kinzley

is Well, year plan to the and of should the I by our that integrated that our guess. up, end resource clear intent file

David Emery

is dispute with Yeah, it remaining issues the the were couple in about opinion then to and asset work some years just doesn't escalation intervenors the We way of our that had of all that does it PCAs affect a at up period. related dispute. some contract of related were to the industrial Really clauses clean prior there all. other

resolve plays of process the in planning and we the that out, process, through remaining year. how our expiration really see the the advance end as should So contract. the file for well said, but issue before of Rich contract. it We'll of over we're the Hopefully, cleans basically fight just resource up the going that that all of not to we ensures life it

Michael Weinstein

like Can you EPS it that this expired? finances rate the not contract just briefly if coming much would one and contract, identify how would much was from like how affect how - base simply be is

Rich Kinzley

escalating the you Well, through contract terms what XXXX, But is specifically next disclosed at in end haven't the think X%. Mike. I for of can provides that way we it the EPS, of of it's think

Dave see out. So IRP and as plays continue process the will that mentioned, contribution then, how we'll

David Emery

plant Yeah, and assets that plant. Colorado adjustment Colorado only two we that for this in assets XX% the Gen Business; show our and and other there's the two IPP - of there's only Power

So power you that can earnings. total IPP deduce much Gen how Colorado is of

to low of one Wygen were that's Cheyenne what cost, at I - value rate or the look an pretty If very high availability back customers Wygen is of into base whatever, you for Whether thing though the the with we're extremely that's comfortable contracting like. a resource.

It's that So, in and not a is resource term of that. pretty low. extraordinarily likelihood the confident their running the process. plant way through fantastic our just long for to we're We have work

Michael Weinstein

you. Okay, thank


come next [Operator Ellinghaus from of you. question Chris Williams Our will Thank Capital. with the line Instructions]

now is line open. Your

Christopher Ellinghaus

Hey, are guys. you? How

David Emery

Chris. morning, good Hey,

Christopher Ellinghaus

switchers. the jobs Congratulations to

David Emery

you. Thank

Linden Evans

you. Thank

Christopher Ellinghaus

over Wyoming we expect that should be the each multiple the accrue you the in will Rich, to and year? expect roughly would credit, spread years that evenly same A; quarter that

Rich Kinzley

million and the revenue $X.X then associated credits third and we million quarter that We to then talked each about there detail fourth pretax, We then XXXX the $X.X about No, smaller was booked recorded few in that, the the this associated another million and million in XXXX. here's in quarter. Chris. which were on quarter, reached items we had in reserves our the and a comments settlement and prior about with that. actually of other will $X We predominantly with record $X.X

Christopher Ellinghaus

that? The we should think Busch Ranch I about on acquisition, returns how

David Emery

can slightly that It was of maybe than we a better you basically them contract kind out. bought think Yeah, utility. I as PPA of think

- So

Rich Kinzley

going right. come of it's through to Most tax That's the credits.

Christopher Ellinghaus

like increased And for what slipping conversion, going the like with and sheet look the with got the this you'd unit CapEx a sheet you sort the of target of to balance forward? have with you balance

Rich Kinzley

disclosed. strong the to CapEx with wouldn't our over our of away, to but We'll way of, debt CapEx five years. sprinkling sheet the caps given say where balance the next given kind the help total that XXXX, that's Yeah. like right happen a we'll the the the there bit We equity in way in you somewhere get But work in program by of I little want now, CapEx Obviously, we've that we're be to going back to the given end not to mid-XXs, to rightsizing, we'd if will. our linearly, mid-XXs. large years, few work there but increased

Christopher Ellinghaus

the for thanks guys. great, details Okay,

Linden Evans

Thanks, Chris.


Avon And the our from will of come Murti you. Capital. Thank with Vedula line next question

Your line is now open.

Vedula Murti

guys. morning, good Hi,

David Emery

Vedula. morning, Good

Vedula Murti

retirement and on plans have congratulations fun. to your your And

David Emery

Yeah. Thank you.

Vedula Murti

sheet? what wondering, question; I? right balance up is carrying the now, I'm Wygen the is following Weinstein's What Mike value of on on

Rich Kinzley

I XX-K up net February a we but number my top but depreciation value We filed exact here, book don't be the head, there that it's in our off know little of the that and that off - in look can obviously, now. right will

David Emery

Yeah, in it's the still down K. actually

Rich Kinzley

yeah. is, It

Vedula Murti

Just wondering, up you approximately, I if at a have I do look obviously have number to, can but...

Rich Kinzley

shortly. We'll find here it answer here and

Vedula Murti

describe guess contract, that it going is of kind rate contract of And end the will I'm Okay. the type I provide now utility the right power the rate rate puts by type that? with or even of power return Can a of of then, a utility where kind this below you return. you contract then is utility sales sales return with type

David Emery

are along trends started pretty as from an plant solid, escalated expect a that a you things in think, probably provides That returns above it's period. good The would or and at entered It contract pretty was I into back say we XXXX clear return. IPP in XXXX with utility and project. I'd little that

Vedula Murti

very And with number, still or appreciate. call this you me I'd Thank we're find that you up while much. can having offline if follow you

David Emery

K Wygen $XX December the answer of The XXXX, was can indicates value question. million. X at that just We net book XX,

off nine depreciation that there's of for So little months.


you. Andrew with next question line Thank our come Weisel Scotia. And of from the will

Andrew Weisel

and want positive all you been to Hey, regulatory stretch recently, congratulations the everyone pass for busy I for guys. updates guys. to also a

quick Just have ones two here.

the you a it little over recently, obviously, increased dividend, First on X%.

XX%. targeting You XX% to got the comment

a Does sure, the deceleration dividend in that maybe kind maybe of thoughts in of we'll as the increasing to start just see want other on there. how during be slower EPS growth EPS or the the about accelerate you trajectory periods comment growth? slides to Just do dividend imply think about that the the

David Emery

typically look forward. Well, last obviously $X.XX is the $X.XX our you going on dividends, to what see of change to increase. increased year but prior to this the each level on do two opposed might conversations it as of One we're with future with not we'll not to be made but after comment of year, We've it would the up do that. Again, intent we years year. over the is what increase decrease the and the of Board the the as year not to level now to decrease the time next first Board that intent

Andrew Weisel

only just technical that it the through integrity XXXX, Nebraska one, the historical understood Then now if of rider, and little I just is maybe correctly, but it end safety a covers spending. going

separate a through from issue that So that through into altogether. XXXX how fold be that does a case rate XXXX for and consolidation, would Would is recovery the spending recovered? or be

David Emery

yes. is is question cases previously through that for review. covered consolidation to file would intent on I been rate need and answer cases. has short It's entities combined primarily outlined The then think the we'll the this rate a when And

by We pays road. we covers only to that not territory. basically former the talked be then rider related two out there not spending so we about when maybe the into the rider rolled down consolidation between entities and happens growth go, do or XXXX itself what 'XX us for then that's extension as and So, covered process any that will extension case capital puts the have now into the rate is timeframe, and is that rider gas that timeframes late and start source

mechanisms utility our Nebraska So we have place also. for some other in legacy gas


There further please Emery, are David to proceed closing questions. no remarks.

David Emery

today. and attention time everyone's appreciate certainly We

said to an great got at going with think truly lot our continuing results. coming and on in a regulatory and to I success mentioned core the execute our up. but really our activity excellent of As make been I puts of got it, a forward a regulatory time We've of We've we one to forward. sure beginning, that quarter team, great look strengths lot It's and something had regulators we achieve Andrew, just effort has good. we

your We an have and great for expect to on in you. today. of time Thanks lot of your attention our just for Hills. do that's and that, your end job regulatory that With a we've those recently. comments like rest Have Black Thank of we excellent the achieved kind these a filings, interest day.


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

now may You disconnect.