Good morning, my name is Kree, and I will be your conference operator today. I would like to welcome everyone to the Avista Corporation Q1 2021 Earnings Conference Call. All lines have been muted to avoid background noise. After the speakers' remarks, there will be a question-and-answer session. Please note that today's conference is being recorded. I will now turn the conference over to Mr. John Wilcox. Sir, you may begin.

Thank you. Good morning, everyone. And welcome to Avista's first quarter 2021 earnings conference call. Our earnings were released pre-market this morning and are available on our website. Joining me this morning are Avista Corp. President and CEO, Dennis Vermillion; Executive Vice President, Treasurer and CFO, Mark Thies; Senior Vice President, External Affairs and Chief Customer Officer, Kevin Christie; and Vice President, Controller and Principal Accounting Officer, Ryan Krasselt. I would like to remind everyone that some of the statements that will be made today are forward-looking statements that involve assumptions, risks, and uncertainties, which are subject to change. For reference to the various factors which could cause actual results to differ materially from those discussed in today's call, please refer to our 10-K for 2020 and our 10-Q for the first quarter of 2021, which are available on our website. To begin this presentation, I would like to recap the financial results presented in today's press release. Our consolidated earnings for the first quarter of 2021 were $0.98 per diluted share compared to $0.72 for the first quarter of 2020. Now, I'll turn the discussion over to Dennis.

Well, thanks, John, and good morning, everyone. I'd like to begin my remarks this morning by acknowledging that after managing through the impacts of COVID-19 for more than a year now, we're encouraged to see some light at the end of the tunnel as more people are vaccinated against the virus and the economy shows signs of recovery. Yet we know it could still be a while before we're able to return to the offices or settle into any type of new normal. In the meantime, we'll continue to provide care and compassion for those who are struggling to make ends meet through energy assistance programs, through payment arrangements, and even COVID-19 debt relief grants. I am extremely proud of our employees. Despite these unique times, they have adapted easily and continue to move our business forward on all fronts. The quarterly results we are sharing with you today demonstrate their drive and determination to get the job done. Recently, we've taken steps to move us toward a clean energy future. A few weeks ago, we announced our aspirational goal to reduce our carbon emissions for natural gas by setting a new natural gas goal of being carbon-neutral by 2045, with a near-term goal of reducing greenhouse gas emissions by 30% by 2030. Our strategy to achieve lower emissions includes investing in new technologies like renewable natural gas, renewable hydrogen, or other renewable biofuels. We're evaluating how to best integrate renewable natural gas into our gas supply portfolio and researching hydrogen as another renewable fuel. We will also focus on reducing consumption through conservation and energy efficiency and improving our infrastructure. We realize this is a heavy lift. There are several critical pieces that will need to fall into place in the coming years. Technology costs must come down, new innovations need to occur, and regulatory support will be necessary for us to achieve these goals. As we identify our strategies, keeping costs affordable will be a priority. We're committed to executing on this goal in ways that support affordability and reliability for our customers. Our natural gas goal demonstrates that our vision of a clean energy future consists of both electric and natural gas resources. We are dedicated to reducing greenhouse gases from the energy we deliver to our customers. We're also moving the dial towards achieving our clean electricity goal of providing customers with carbon-neutral electricity by the end of 2027, and carbon-free electricity by 2045. Last month, we entered into a contract with the Chelan County Public Utility District that will add more renewable hydropower to our electric generation portfolio. The contract delivers on the strategies included in the 2021 Electric Integrated Resource Plan that we filed recently and also supports the goals of Washington State's Clean Energy Transformation Act. In regards to our quarterly results, we're off to a good start in 2021, and we are on track to meet our earnings targets for the full year. Avista Utilities' earnings were better than expected while AEL&P's earnings met expectations for the first quarter, and our other businesses exceeded our expectations. In regulatory matters, we're pleased to share just two days ago on Monday afternoon, Washington Governor Jay Inslee signed into law Senate Bill 5295. That new law will help transform the regulation of electric and natural gas companies towards multi-year rate plans and take the first steps towards performance-based rate-making. The benefits we see with the passage of this important legislation is a requirement to file multi-year rate plans of two to four years in length, with the foundation of the rate plan being set using methodologies the commission may use to minimize regulatory lag. Ultimately, it will require current and future commissioners to implement the change, but we feel this is an important first step towards progressing the regulatory model in the State of Washington. Meanwhile, here's an update on our regulatory filings in January. As you know, we filed two-year general rate cases in Idaho, one for electric and one for gas. In 2020, we filed general rate cases in Washington, again, one for electric and gas. We continue to work through the regulatory process in these jurisdictions. In Oregon, we expect to file a rate case in the second half of 2021. We reached a significant milestone in our focus on electric transportation when the Washington Utilities and Transportation Commission approved three tariffs that allow us to proceed with several programs outlined in our transportation-electrification plan. Among other things, the UTC's approval allows us to establish both an optional general service and large commercial electric vehicle rates which will help us enable and accelerate fleet electrification for commercial customers such as the Spokane Transit Authority. Our transportation electrification plan and newly approved tariffs will serve as a valuable model for others. And it's a great example of our industry's role in electric transportation and our clean energy future. Once again, Avista is leading the way. Looking ahead, we remain focused on running the great utility and continue to invest prudent capital to maintain and update our infrastructure and provide reliable energy service to our customers. We are confirming our 2021 through 2023 earnings guidance. And with that, I'll turn this presentation over to Mark.

Thanks, Dennis, and good morning, everyone. So last night, my Blackhawks were eliminated from the playoffs. So we have five more games left, but we have no chance for postseason play this year. So that's a sad day for me. But on the happy note, we had a great first quarter. Avista Utilities contributed $0.92 per diluted share compared to $0.68 last year. Compared to the prior year, our earnings benefited from higher utility margin, general rate increases, and customer growth. The first quarter also included an accrual; the first quarter of the prior year had some negative accruals related to the Washington remand case, a 2015 case, and disallowances around Colstrip in an accrual for the Colstrip community fund. That all happened in 2020 that were drags on 2020 earnings. The Energy Recovery Mechanism in Washington had a pre-tax benefit of $4.3 million in the first quarter compared to $5.2 million in the first quarter of 2020. We continue to be committed to investing the necessary capital in our utility infrastructure, and we expect Avista Utilities' capital expenditures to total about $415 million in 2021. With respect to liquidity on April 5 of 2021, we repaid the outstanding balance of our one-year credit agreement that we entered into in April of 2020, and that was to ensure we had sufficient liquidity at the start of the pandemic. On April 30, we had $182 million of available liquidity under our $400 million line of credit, and we expect to extend that line of credit into a multi-year deal in the second quarter. We expect to issue approximately $120 million of long-term debt in 2021 and $75 million of equity. As Dennis mentioned earlier, we are confirming our 2021, 2022, and 2023 earnings guidance with consolidated ranges of $1.96 to $2.16 per diluted share in '21, $2.18 to $2.38 in 2022, and $2.42 to $2.62 in 2023. This puts us on track to earning our allowed return by 2023. Our guidance does assume timely and appropriate rate relief in all of our jurisdictions. Our '21 earnings guidance again reflects unrecovered structural costs estimated to reduce our return on equity by approximately 70 basis points. Additionally, our '21 guidance reflects a regulatory timing lag estimated to reduce our return on equity by approximately 100 basis points. This results in a return on equity for Avista Utilities of approximately 7.7% in 2021. We are currently forecasting customer growth of about 1% annually for Avista Utilities. For 2021, Avista Utilities is expected to contribute in the range of $1.93 to $2.07 per diluted share, with the midpoint of our guidance range not including any expense or benefit under the Energy Recovery Mechanism. Our current expectation is to be in the 75% customer, 25% company sharing band, which is expected to add approximately $0.06 per diluted share. For 2021, we expect AEL&P to contribute in the range of $0.08 to $0.11 per diluted share, and our outlook for both Avista Utilities and AEL&P assumes, among other variables, normal precipitation and slightly below normal about 92% for Avista Utilities hydroelectric generation for the year. For 2021, we expect our other businesses to be between a loss of $0.05 to $0.02 per diluted share. Our guidance generally includes only normal operating conditions and does not include any unusual or non-recurring items until the effects of such items are known and measurable. I'll now turn the call back over to John.

And now, we would like to open up this call for questions.

Hey. Good morning, everyone. Thank you for taking my question.

Good morning, Kody.

Good morning. So, maybe first on the RNG side. I know it's early, but I'm wondering if you're planning on any unregulated investments in production or otherwise. Are you just thinking about it in terms of integrating it into your distribution system and maybe there is some incremental CapEx on interconnection with the facilities, but just wondering how you're thinking about this?

Yes, Kody, this is Dennis. At this point in time, it's the latter. So we are looking at it as a utility resource that would be integrated into our system to meet our utility loads.

Got it. Okay. And then maybe just at a higher level, if you could share your thoughts on the puts and takes of potentially exiting Colstrip, removing it from rate base and replacing it with PPAs that earn a WACC return under CETA. I'm kind of wondering how this plays into your post-2023 growth outlook.

Well, with Colstrip, it's clear when you look at our Integrated Resource Plan recently filed. And we've been stating all along that it will need to exit our portfolio at the end of '25. We recently issued an RFP for new resources in that. As a result of that process, the Chelan County PUD contract that I referenced earlier was selected. We will continue to meet our needs going forward through a competitive process. We need to—any self-build options we would have, we would have to stack up with an RFP what might be available in the marketplace. Of course, the end obligation and desire here is to get the most cost-effective resources for our customers to serve their needs going forward. Does that help?

Okay, got it. Yes, understood that. That's all I had. Thanks again for your time.

Thanks, Kody.

Hi. Good morning, guys. How are you?

Hi, Sophie.

Hey, I was wondering if you could comment maybe on the Montana lawsuit related to Colstrip that is being reported, sort of any color you can offer on the positions of the parties, and what do you think will transpire with respect to the bill that they passed in this proceeding?

Well, this is Dennis. It's hard to know what will transpire at this point. As we've talked before, there are six owners in the plant. We've all been working in good faith to try to find a solution that meets the needs of all parties, including the parties in Montana, and it is a very complex situation. It's unfortunate that the bills in question, Senate Bill 265 and 266 were signed into law. It complicates matters. It adds complications to an already complicated situation. And we were just in a position where we need to protect our rights under the current agreement. So those have been in process, and it really is, at this point in time, Sophie, impossible to know how those will play out. But we will keep you updated as we go forward.

All right, thank you. That's all I had.

Thanks, Sophie.

At this time there are no questions.

Okay. I guess we will conclude the call. I want to thank everyone for joining us today. We certainly appreciate your interest in our company. Have a great day.

This concludes today's conference. You may now disconnect.