Good day, everyone, and welcome to the Black Hills Corporation First Quarter 2020 Earnings Conference Call. My name is Daniel, and I will be your coordinator today. I would now like to turn the presentation over to Mr. Jerome Nichols, Director of Investor Relations of Black Hills Corporation. Please proceed.

Thank you, Daniel. Good morning, everyone. Welcome to Black Hills Corporation's First Quarter 2020 Earnings Conference Call. You can find materials for our call this morning at our website at www.blackhillscorp.com under the Investor Relations heading. Leading our quarterly earnings discussion today are Linn Evans, President and Chief Executive Officer; and Rich Kinzley, Senior Vice President and Chief Financial Officer. During our earnings discussion today, some of the comments we make may contain forward-looking statements as defined by the Securities and Exchange Commission, and there are a number of uncertainties inherent in such comments. Although we believe that our expectations and beliefs are based on reasonable assumptions, actual results may differ materially. We direct you to our earnings release, Slide 2 of the investor presentation on our website, and our most recent Form 10-K and Form 10-Q filed with the Securities and Exchange Commission for a list of some of the factors that could cause future results to differ materially from our expectations. I will now turn the call over to Linn Evans.

Thank you, Jerome. Good morning, everyone. Thank you for joining us this morning. I anticipate we'll spend quite a bit of time this morning addressing our view of COVID-19 and the pandemic and its impact on our business. So let me start, please, by acknowledging that our highest priority is the safety and health of our coworkers, our customers, our business partners, and the communities that we proudly serve. Our most important assets are our unique Black Hills culture and our people. Sadly, this pandemic is affecting scores of people in some really, I guess, I would describe as unimaginable ways. I truly hope that each of you and your families are healthy and safe, and our sympathies go out to all who are impacted either physically, mentally, and financially by this pandemic. Our hearts are certainly with each of you, and I know there will be what we call a post-virus. I especially want to call out the extraordinary dedication and the effort by our first responders and the medical professionals who are on the front lines and caring for those inflicted by this virus. I'm particularly proud of our team's response. We're maintaining safe and reliable delivery of the essential energy our customers depend upon, especially in times like these. Our team quickly implemented a comprehensive set of well-thought-out actions in response to the pandemic, ensuring we are doing everything we can to help mitigate the spread of the virus simultaneously. We are very fortunate to have no confirmed cases among the Black Hills team. We have had a few coworkers who were treated as if they had the virus a few months ago after having traveled earlier in the year, and I'm pleased to say they have recovered. Also, our service territory has generally reported much fewer positive cases of the virus than the more populated urban areas around the country. We remain highly engaged and focused on reducing the spread of the virus, especially amongst our coworkers and our customers. Being true to our values as a company and as individuals, we are assisting customers with financial hardship by suspending disconnections and providing payment assistance, and we have also donated to relief efforts in our communities with a particular focus on helping the hungry. We are closely monitoring the situation, and we are fully engaged with our local authorities, health professionals, and other industry groups to help guide our continuing response and our business operations as we migrate through this virus. We've also implemented or changed various protocols, processes, and programs to help ensure we maintain our ability to deliver safe and reliable energy. For example, we are currently sequestering in place some of our mission-critical coworkers, and we are prepared to sequester additional coworkers should conditions warrant doing so in the future. I thank these folks for representing our values and stepping up. By doing so, they're helping us make sure we provide our customers with the critical energy they need to navigate this pandemic and rebuild our local economies. From a financial perspective, we were well positioned before COVID-19 emerged, and we have strong liquidity to successfully operate our business and fund our capital deployment program. We're also retaining flexibility in our financing plan to take advantage of market conditions should favorable opportunities arise in the near future. And of course, we continue to closely monitor key financial drivers that might impact our sources and uses of capital, such as customer usage, obviously, cash flows, contractor availability, and lead times for key materials for our projects. Moving to Slide 6, and I'll provide an overview of the first quarter. I'm especially proud of our team and how they acted early and decisively in response to the pandemic and provided solid operational and financial execution. Although COVID-19 affected how we serve our customers, it has minimal impact on our earnings and our capital deployment for the first quarter. Rich is going to discuss our forward expectations shortly. We are in a strong liquidity and financial position. We issued $100 million of equity on February 27 to fulfill our equity needs for the year. And after taking into account the mild weather impacts during the first quarter, we delivered solid quarterly earnings. Our progress continued on both near-term and long-term strategic initiatives. We finalized the consolidation of four natural gas utilities in Wyoming under a new single statewide rate structure effective March 1. That was an outstanding result that reflects positively on our operations and regulatory teams and a constructive Wyoming regulatory environment that we enjoy there. I really appreciate their willingness to work through the short-term pain and complexity of regulatory consolidation to allow us to continue to improve customer service and improve efficiencies for all of our stakeholders. We also continue to advance our renewable energy solutions for customers in all three of our electric utility territories. Moving to Slide 7. It provides more detail on our first quarter. I'll start with the Gas Utilities. We continued efforts to consolidate Natural Gas Utilities within Colorado, Nebraska, and Wyoming, as I mentioned earlier. In Nebraska, we completed the legal consolidation of two utilities on January 1, and we continue to prepare for a rate review filing midyear to consolidate customer rates and recover investments for customers in that state. We are having a constructive dialogue with our Nebraska staff regarding the timing of the filing, and we're considering the ongoing pandemic in that decision. In Colorado, the commission recently held an open meeting on the Colorado gas rate review to consider the administrative law judges' recommended decision and the exceptions that were filed in response to that recommended decision. Unfortunately, the ALJ recommended denial of regulatory consolidation and our requested rider for safety-related investments. The ALJ also adopted adjustments that would result in a rate decrease. The commission accepted nearly all of the ALJ's recommendations, except for return on equity, of which the commission reduced from 9.5% to 9.2%. Of course, we are disappointed in the commission's decision, and we're waiting for the final order. When we receive that, we'll determine what our next steps may be in Colorado. Moving to the Electric Utilities and Power Generation. Last August, our Wyoming electric utility in our Power Generation segment filed a joint application with FERC asking for approval of a new power purchase agreement. On February 21, FERC ordered public hearings for that application, and it also ordered settlement discussions. The hearing is now currently held in advance, pending the outcome of the ongoing settlement discussions among the parties. Construction continues on schedule for our 52.5 megawatt Corriedale Wind Project near Cheyenne. The project is on track to deliver energy under our Renewable Ready Program for subscription customers in both South Dakota and Wyoming by the end of this year. We've been monitoring the supply chain for this project, and of course, for other projects very closely, and we are currently confident in completing the project on time and on budget. We are also working to expand our renewable energy generation mix in Colorado through our Renewable Advantage program. We requested bids for up to 200 megawatts of renewable energy to serve our Colorado electric customers. We are currently evaluating those bids with the help of an independent evaluator, and we're on track to submit those recommendations to the commission next month in June. The final item I'd like to note on this page is that on April 10, while we were well into the pandemic, S&P Global Ratings affirmed our BBB corporate credit rating. Again, I think this affirms our objective of maintaining a solid capital structure in our solid investment-grade ratings. Now I'll turn it over to Rich for our financial update. Rich?

Very good. Thanks, Linn, and good morning, everyone. I'll start on Slide 9. As Linn noted, we delivered solid first quarter financial performance that met our expectations. First quarter EPS as adjusted was $1.59 compared to $1.73 in Q1 2019. Weather was the big driver affecting year-over-year results as last year's first quarter was much colder than normal, and this year's first quarter was milder than normal. For Q1 2020, we estimate weather unfavorably impacted EPS by $0.04 compared to normal and by $0.15 compared to Q1 2019. COVID-19 had limited impact on our financial results for Q1. Despite unfavorable weather, our start to 2020 was solid. However, given the combined impact of mild first quarter weather, unanticipated impacts from the pandemic over the remainder of the year, we revised our 2020 earnings guidance range to $3.45 to $3.65 per share on an adjusted basis, a decrease of $0.10 on each end from our prior guidance. I'll discuss our earnings guidance assumptions and anticipated pandemic impacts in more detail on Slide 16 through 18. On Slide 10, we reconcile GAAP earnings to earnings as adjusted, a non-GAAP measure. We do this to isolate special items and communicate earnings that we believe better represent our ongoing performance. This slide displays the last five quarters and demonstrates the seasonality of our earnings. In the first quarter of 2020, we recorded a noncash pretax impairment of $6.9 million or $0.08 per share after tax related to an investment in a privately held oil and gas company. In the third quarter of 2019, we recorded an impairment related to the same investment. These impairments were both triggered by the significant decline in natural gas futures price and a deterioration in earnings performance of the third-party company. Our remaining book value in this investment of $1.5 million is our only direct exposure to the oil and gas industry. The impairments in 2019 and 2020 are not indicative of our ongoing performance, and accordingly, we reflect them on an as-adjusted basis. Slide 11 is a waterfall chart illustrating the primary drivers of our earnings results from Q1 2019 to Q1 2020. All amounts on this chart are net of taxes. I'll add more detail by segment on Slide 12, but at a high level, our Electric Utilities gross margin was flat to the prior year despite unfavorable weather impacts. Gross margin in our Gas Utilities benefited from new rates and customer growth, which was largely offset by unfavorable year-over-year weather. Our nonregulated margin was slightly lower than the prior year driven primarily by lower tons sold at our Mining segment. Total O&M increased by less than 2%, reflecting solid cost management. Depreciation increased as a result of additional plant and service from our customer-focused capital investment program. Interest expense was relatively flat. Other income expense was favorable to the prior year driven by reduced expense for our nonqualified benefit plan due to stock market declines. On Slide 12, segment operating income results for the first quarter are compared to the prior year. I'll make a few comments here, and you can find additional details on Q1 year-over-year changes in gross margin and operating expenses in our earnings release and in our 10-Q that we will file later today. At our Electric Utilities, operating income for Q1 2020 decreased by $5.3 million compared to Q1 2019. Gross margins were flat compared to the prior year, reflecting higher rider margins and mark-to-market gains on wholesale energy contracts, offset by unfavorable weather and lower off-system power marketing sales. Heating degree days at our Electric Utilities were 4% below normal for the quarter and 11% lower than Q1 2019. Operating expenses increased $5.4 million over Q1 last year due to higher employee costs, expenses related to the municipalization efforts in Pueblo, higher generation expenses due to outage timing, and higher depreciation expense. At our Gas Utilities, operating income for Q1 2020 was flat to Q1 2019. Gross margins increased by $1.6 million, benefiting from new rates, customer growth in our service territories, and higher mark-to-market gains on commodity contracts. These benefits were largely offset by unfavorable weather compared to Q1 last year. Heating degree days at our Gas Utilities were 6% below normal for the quarter and 15% lower than Q1 2019. Operating expenses increased by $2 million driven by higher depreciation. On the bottom half of Slide 12, at our Power Generation segment, operating income decreased $700,000 year-over-year. Revenue was higher in 2020 primarily due to increased generation from our new wind generation assets added last year. Operating expenses increased due to higher depreciation and property taxes from the new wind assets. The primary earnings benefit from these new wind projects comes through reduced income tax expense from federal production tax credits we receive on these projects. These tax credits are below the line and not included in the operating income numbers. Slide 13 shows our financial position through the lens of capital structure, credit ratings, and financial flexibility. We are in good shape from a debt maturity and liquidity perspective. Our credit ratings remain at BBB+ at both Fitch and S&P and Baa2 at Moody's with a stable outlook at all three agencies. We are committed to maintaining our strong investment-grade credit ratings. As Linn mentioned, S&P affirmed our BBB+ rating with a stable outlook on April 10. And in February, we issued $100 million of equity to help support our 2020 capital investments and strengthen our balance sheet. While we will monitor cash flows closely during the pandemic, we don't expect to issue any more equity in 2020. We don't have any material debt maturities until late 2023. And on March 31, we had approximately $468 million of liquidity available from cash on hand and capacity on our revolving credit facility. On April 30, our liquidity position remained in excess of $460 million. We may look to issue an index-eligible debt offering later this year if market conditions are favorable. We would do this issuance to term out our short-term debt and support our capital investment program and also further enhance our liquidity position. But we have the flexibility to push that issuance into 2021 given our liquidity position. I'll also note that at March 31, our net debt-to-capitalization ratio was 57.5%, a 210 basis point improvement from year-end. We continue to target a debt-to-cap total cap ratio in the mid-50s over the long term. Slides 14 and 15 show jobless claims and unemployment rates for the states our Electric and Gas Utilities operate in and how they compare to the national averages over the past few months. The graphs illustrate that trends in most of our states are well below the national average. Thus far, the pandemic has not impacted our rural service territories as severely as more densely populated regions. I'll note that in past major events such as the financial crisis a decade ago, our service territories have typically been more stable and more insulated from major economic swings than the coastlines in major metropolitan areas. We are cautiously optimistic that will be the case with this crisis, and we will continue to closely monitor trends in our territories. With our stable financial position and regional trends in mind, I'll move to Slide 16 to discuss earnings guidance. On this slide, we bridge the EPS impacts from our prior guidance to our revised guidance. Due to the mild first quarter weather, combined with COVID-19 expectations for the remainder of the year, we reduced guidance by $0.10 on each end of the range. The revised guidance range includes the $0.04 of unfavorable weather compared to normal during the first quarter, but it's largely driven by the expected net impact from COVID-19, which we are currently estimating to be between $0.05 to $0.10 per share. Slide 17 provides details about our updated earnings guidance assumptions. Aside from the adverse weather conditions in the first quarter, we anticipate that the impacts of COVID-19 will eliminate any further equity needs for the rest of 2020. These assumptions are in line with our previously issued guidance. Slide 18 illustrates our expected impacts from COVID-19 at a high level, and I will provide a bit more detail. We are closely monitoring our customer usage profiles. At our Electric Utilities through the end of April, we have observed that overall load and usage have remained consistent with previous years on a weather-normalized basis. I want to highlight that during major events in the past, our territories tend to be less affected than coastal metropolitan areas. That said, we have modelled some impact from customer usage for the remainder of the year. Usage at our three electric utilities fluctuated during March and April, but generally, we have seen residential loads increase by 5% to 6% and commercial loads decrease by 5% to 10%, depending on the service territory. Industrial usage has slightly declined in South Dakota and Colorado but has increased in Colorado. We have maintained regular communication with over 200 of our largest customers, covering both electric and gas services. While a few customers expect to reduce their usage in 2020, we do not anticipate a significant overall impact from our electric industrial customers. The net impact we are modelling for the remainder of the year at our Electric Utilities suggests that reduced usage from commercial customers and a few industrials will have a greater earnings impact than the increase we are experiencing on the residential side. At our Gas Utilities, we have completed the heating season and expect the impact to be lower during the off-peak season in the second and third quarters, as most of our natural gas load occurs in the first and fourth quarters. Similar to our Electric Utilities, we have seen customer usage remain steady through March and April compared to previous years, with increases in residential usage and decreases in commercial usage. We have predicted some overall negative impact for the remainder of the year at our Gas Utilities, but it is minimal compared to our Electric Utilities. Additionally, we are incurring extra costs in the short term due to the pandemic. We have isolated mission-critical employees at two of our generation sites and are prepared to do so across our electric utilities if the virus spreads further into our areas. There are additional expenses related to personal protective equipment, cleaning supplies, technology to facilitate remote work, and more. While delinquencies have been limited thus far, we expect them to rise in the coming months. We are taking proactive measures to assist our customers during these challenging times. We are partially offsetting these pandemic-related costs through savings in travel, training, and specific outside services that we had planned for 2020. We have slowed down our hiring process and are closely managing other expenses while utilizing our continuous improvement program for cost savings. We are monitoring COVID-19-related operating and maintenance items and collaborating closely with regulators in our states to determine the appropriate handling of these costs. It is still early in the crisis, and predicting its duration and the impact on local economies and customers in our service territories is challenging. Our assumption is that the combined effect of lost margins and net expenses will affect our 2020 pretax operating income by $4 million to $8 million, which translates to about $0.05 to $0.10 of earnings per share. While we remain hopeful that our territories will experience less impact than other regions, our assumptions regarding the pandemic's effects on our earnings may change, either positively or negatively, as we progress throughout the year. Slide 19 illustrates our dividend track record, evidence of our disciplined management through other historic economic events. We're on track to deliver 50 consecutive years of increasing dividends in 2020, and we've grown the dividend at a strong rate in recent years with $0.12 annual increases in 2018 and 2019, demonstrating our confidence in our future earnings growth potential. While we may go slightly above the 60% payout ratio for 2020, we maintain our long-term dividend payout ratio target of 50% to 60% of EPS, demonstrating our confidence in our long-term earnings growth prospects. With that, I'll turn it back to Linn.

Thank you, Rich. I'm on Slide 21. Our operational and business strategies, along with our team's thorough planning, prepared us well to respond effectively to the pandemic. Our dedication to our strategy positions us for success both now and in the long term as we navigate these immediate challenges. We believe that our customer-focused approach will create sustainable long-term value growth for both our customers and shareholders. We are investing in our customers' needs for safety, reliability, resilience, growth, and an overall positive experience. We are coordinating our people, processes, technologies, and analytics to better and more safely serve our customers, and given the system demands across our extensive infrastructure, we anticipate achieving long-term earnings growth above the utility average. We also expect to find additional growth opportunities from generation and other major projects along the way. Slide 22 illustrates the strategic diversity of our utility operations and the seasonality of our earnings. Our geographic and fuel diversity provides us with enhanced stability during uncertain times as we address these challenges with all our stakeholders. As Black Hills has expanded, we have created value for our customers and shareholders through efficiencies of scale and a wide geographic area, offering diversification for investment opportunities. Our combination of Electric and Natural Gas businesses provides complementary seasonality and more consistent, predictable cash flows and earnings. The advantages of diversity become particularly clear during tough economic periods, setting us apart from other utilities. While we are not exempt from the effects of this pandemic, our fuel and geographic diversity, along with our system scale, grants us greater stability. Thankfully, while keeping in mind the impacts of COVID-19 on our nation, much of our service area is currently facing a relatively low occurrence of COVID-19 cases. The lower population density in our mostly rural regions enables many businesses to remain open or operate at reduced levels over the past few months. Additionally, our varied mix of residential, commercial, and industrial demand helps mitigate the total business impact caused by events like pandemics. Although short-term business closures affect immediate outcomes, many of our large customers, such as data centers, continue to drive our growing demand levels throughout this pandemic. Slide 23 illustrates, again, our large infrastructure. Our expansive electric and natural gas systems require significant investment to maintain, upgrade, and modernize to serve our customers. In addition, our geographic presence across eight states also delivers a strong base of growth opportunities. Our capital investment plan is illustrated on Slide 24. Over the next five years, our $2.7 billion forecast is focused primarily on projects and initiatives that maintain customer safety and reliability and will foster customer growth. Our forecasted investment far exceeds depreciation, which will result in future earnings growth. In 2020, we are on track to deploy our planned capital projects. After managing through the pandemic now for more than two months, we are not currently experiencing disruptions in the availability of contractors or materials, and lead times for key components and supplies remain largely uninterrupted. We are closely monitoring our supply chains, and we can and will adjust, if necessary, but for now, our capital deployment is remarkably on track. We continue to expect a base of at least $375 million in recurring utility capital, primarily for maintaining safety and integrity across our large utility systems and supporting normal customer growth. As noted in prior quarters, we take a relatively conservative approach to our capital forecast. We include opportunities we are relatively certain to occur as represented in our base recurring capital investment expectation. And then we add capital as we gain more clarity and comfort around incremental projects that will support customer growth. We anticipate that additional capital opportunities are likely over the plan period, especially in the outer years. Moving to Slide 25. This illustrates our capital plan is utility focused with timely recovery on most of these investments. You'll note that 94% of our five-year capital forecast is in our utilities, with 80% of these investments getting timely recovery, which is up from 78% previously. We've continued to improve transparency into our capital forecast this quarter, adding detail with a rider-eligible capital category, which was previously included as part of the minimal lag category. As you can see, rider capital is more than one-third of our total five-year forecast, and this is driven by our programmatic capital approach, which is focused on customer safety, reliability, and system integrity. Moving to Slide 26. We are focused on operational excellence in serving our customers. Our team's safety performance continues to be better than the utility average. On the right side of this slide, we were recently recognized as one of the Easiest Utilities to Do Business With, scoring in the top 20% of utilities under a Customer Effort Index. This achievement recognized that we are meeting or exceeding customer expectations, and the recognition helps confirm our success and our goal to transform the customer experience that we've been working on for the past several years. Slide 27 illustrates results of executing our customer-focused strategy, delivering strong long-term total shareholder returns. And then Slide 28, you'll see our 2020 scorecard. We publish our major initiative scorecard every year to hold ourselves accountable to you, our shareholders, and to our customers. And we group our strategic goals into four major categories: profitable growth, valued service, better every day, and a great workplace. So let me recap by saying, I think we had a very successful quarter operationally, financially, and strategically, except for the mild weather that impacted earnings, especially when we compare the weather we experienced during this quarter to the first quarter of last year. I'm very proud of how our team quickly adapted and responded to the impacts of COVID-19. Our team stepped up, and we ensured we continue to serve our customers both safely and reliably. Importantly, we also maintain our strong financial position and kept our capital investment program on track. Looking forward, we've already seen states and local communities start to reopen their economies, and we'll make sure we have the energy available to support those efforts. That concludes our prepared remarks, and we're happy to entertain questions.

Your first question comes from Julien Dumoulin-Smith with Bank of America.

This is actually Ryan Greenwald on for Julien. So maybe if we could start with Colorado. Obviously, a lot going on there. As we're waiting for the written order from the Colorado gas hearing, how are you guys kind of thinking about your options here, whether it be an RRR or to file another rate case? And then can you provide a bit more granularity around the impact of CapEx and your embedded recovery assumptions?

Regarding the rate review, we are currently awaiting the decision. It is crucial for us to read and understand that decision. From my review of the ALJ's decision, which I haven't looked at in a couple of months, it seems there were many issues to resolve simultaneously, including consolidation and the rate review. Thus, it will be important to see the actual written order and whether the commission offers a potential path for us. We will take this into account. We do have several options available to us. One is the RRR process in Colorado, which allows us a chance to ask the commission to reconsider its decision. We could also consider an appeal through the court system. Additionally, as you mentioned, another option might be to file for another rate review, though we would only pursue that after thoroughly examining the commission's order and consulting with the Office of Consumer Counsel, as well as relevant state staff, to decide the best course of action. In terms of capital investment, we are allocating funds that we believe are necessary for ensuring customer safety and reliability. We will monitor this investment closely, but we plan to continue investing in Colorado, which is a growing market for us.

Got it. And then in terms of your recovery assumptions there, are you guys assuming that becomes rider eligible?

This is Rich, Ryan. One of the denials that the ALJ made and that was approved is the rider. So until we get that mechanism in place, it wouldn't move to rider eligible.

It's true.

Fair enough. And then could you just touch on your early expectations in terms of your ability to participate in the renewables? And then as well as any early thoughts on the play blow vote today?

We received strong bids in the Renewable Advantage RFP, and I would describe them as fairly low. As a result, we anticipate opportunities to save customers money. At this time, we do not expect our company to participate in adding those renewables, but we have not yet seen the final report.

Got it. And then in terms of play blow, any early thoughts that are things that you're hearing today?

Yes, early thoughts. Well, today is the day of the final vote. We have heard that lots of strong turnout. It's a mail-in ballot, so ballots have been mailed in. We understand very strong interest in it. We are hopeful for a decision that allows us to continue to serve those customers as we have for the past 12 years into the foreseeable future. So in the next 24 hours, perhaps, maybe 48, we'll have an answer to that question. So much more to come there.

Got it. And then just lastly, in terms of Wygen timing for resolution here. I know settlement discussions have been going on for a while here. So just in terms of timing, and then your latest spots-on options if you're not able to reach a constructive resolution.

Yes. Thank you for that question. We are in negotiations now. So I think I should be very cautious in what we say. We want those negotiations to continue to go well and to proceed. So we are involved in those. And with all the parties, including a judge assigned by FERC, who is overseeing the settlement discussions, we're in active participation in that. So I think that's probably all I should say, except the fact that we're watching that very closely, and we have options on the other side that we may need to pursue if we aren't able to reach a settlement beyond that. I probably shouldn't speak much more to that question.

Our next question comes from Andres Sheppard with Crédit Suisse.

Actually, this is Mike Weinstein speaking. Could you discuss the Nebraska rate filing? What will be the main focus this summer?

The upcoming rate filing will primarily aim to recover the investments we've made over the past several years. It has been a significant amount of time since our last filing in Nebraska, during which we have invested considerable capital to support customer growth. This filing will also focus on merging the two utilities into one. The tariffs and rates will be similar to what we have implemented in Wyoming and are attempting to achieve in Colorado. As we mentioned over the past few quarters, we plan to file the case around mid-year. We are still in discussions with the staff in Nebraska, and those talks have been productive. However, we have yet to make a final decision on the timing of the filing. I can say that as a company and as a team, the filing is largely prepared; it is just a matter of timing, taking into account what's best for our customers in Nebraska and what benefits the business overall.

Got it. Understood. And maybe you could talk a little bit about the guidance. Right now, guidance assumes that electric and gas usage will recover after the second quarter throughout the year. What happens if the impact on the second quarter does not improve, and we continue to have more of an extended period of pandemic response throughout the year-end? How much more would your guidance be affected?

Good question, Mike. Let me address this from a high-level perspective, and I'll ask Rich to provide more details about our scenario planning. As Rich mentioned, we've engaged in extensive scenario planning, speaking with over 200 of our largest customers in various industries to understand their feelings and responses to the pandemic and its effects, such as low oil prices. While we don't serve the oil and gas industry directly, we do work with ethanol plants and similar entities. We've conducted significant scenario planning, and on the electric side of our business, we are nearly 100% AMI, allowing us to receive daily reports on our operations. Additionally, we're attentive to our utility peers across different territories, monitoring their experiences. Early in the pandemic, our team focused on preparing for various operating scenarios. We recognize we're not epidemiologists and have not attempted to predict specifics like a rebound. Instead, we're closely monitoring the loads and anticipate a 5% to 10% decline in load moving forward. We don't expect a quick rebound and believe that we'll remain relatively low through the second and third quarters, with a potential recovery beginning in the fourth quarter. I like to think of our approach to scenario planning as staying in the middle of the fairway. Rich, could you share some additional details on this?

Yes. I think Linn gave a very good overview there. One thing, just to clarify, he said 5% to 10% reduction. That's on the commercial load. We do expect residential load to at least partially, if not fully completely offset that on the upside. That's really what we've seen in March and April on the more optimistic side is that overall load really has been pretty flat to prior years on a weather-normalized basis. Now our scenario planning, we looked at a variety of different scenarios. I think Linn's analogy of middle of the road is probably the best one. We do expect some impact as we continue through the second quarter. Certainly continuing well into the third quarter and then a slow rebound as we get through the year. That's kind of how we've framed it up.

In our territories, the authorities got ahead of, if you will, the curve on the pandemic as we all try to flatten the curve. And so largely, in our territories, not discounting anyone who has been ill, certainly not at all. But we've had relatively low positive cases for the virus, except for, you could argue, Arkansas and some in Colorado. But other states are relatively unimpacted. So it's been more of an economic impact as we have intentionally closed our economies. And because of the rural nature, a lot of our businesses have been able to continue just at a slower pace, if you will. And now with the official reopening, it's going to be very interesting over the next week or two to see what happens within our territories, Mike. So hopefully, that helps you.

All right. Is it fair to say, though, that your guidance doesn't include any reduction in gas load, right, because that would be a fourth-quarter issue, and you're kind of assuming mostly a recovery by that.

Yes, I think that's fair.

We do anticipate some minor impact on the gas side in the second and third quarter and probably a little bit in the fourth quarter, but I think the way you said it is fair. It's that we're coming back by the fourth quarter and by year-end.

What is your internal timeline for reaching the midpoint of the 50% to 60% dividend payout ratio? How many years do you expect that to take?

We haven't disclosed that. I think a better way to think about that. Obviously, we haven't disclosed anything beyond 2020 yet in terms of earnings guidance. So I won't answer that directly. I'll just reiterate what I said in my script, our long-term earnings growth prospects support that payout ratio.

Our next question comes from Brian Russo with Sidoti.

A lot of my questions have been asked and answered. But just curious, the $14 million to $15 million of PTCs in your guidance, how much of that was used in the first quarter?

The recognition of those credits comes from the actual production of the megawatt hours generated throughout the year. However, due to FIN 18 tax accounting, we need to allocate those credits in proportion to our pretax income in each quarter. In the first quarter, we recognized about 44% of those credits, which corresponds to 44% of the total expected production tax credits for the year.

Okay, great. And then the $0.05 to $0.10 of COVID-related headwinds, could you break that down at all between what's sales related versus what might be net expenses?

We have deliberately chosen not to provide that information. While we do have internal models that support our understanding, we are intentionally withholding that data because we are making estimates regarding various factors like loads and bad debts. We have reviewed calls from other utilities, and in our view, the detailed disclosures are merely educated guesses at this point. It is still too early in the pandemic for us to provide concrete information, so we've decided to present our insights in a more generalized manner.

Got it. Understood. The net debt to capital has decreased a bit, likely due to the $100 million equity offering completed in February. Looking ahead over the next couple of years, how long do you think it will take to reach that mid- or low 50% to 60% range?

Yes, we aim to reach the mid-50s, which we expect will take a couple more years. The $100 million equity issuance in the first quarter has certainly helped, and our first quarter is typically our largest earnings quarter, contributing to retained earnings after the dividend payments. This has led to a 210 basis point reduction. In response to your question, it will take us two or three more years to achieve our target.

Got it. Regarding the Mining segment, there was a 10% decline in first quarter volumes compared to last year. I understand the planned downtime and outages, but what about the Wyodak plant? Is that solely due to a decrease in demand for electricity? I’m trying to gauge if we should anticipate similar volume reductions for the rest of the year.

The reductions are mainly due to the significant amount of wind energy that has been generated in Wyoming, which gets prioritized in dispatch. Consequently, the limitations in transmission can often hinder the Wyodak plant from operating at its full capacity. Moving forward, we will have to monitor the situation. The decrease in output reflects more on the rise of renewable energy sources in Wyoming rather than on the demand for electricity.

With no further questions, I will return the call back to Linn Evans for closing remarks. Go ahead, sir.

Thank you, Daniel. Again, thank you to everyone for joining us today on our call. Please continue to stay safe and be well, and we'll look forward to actually seeing everyone face-to-face as soon as we can. So thanks so much for joining us today.

Thank you for your participation in today's conference. This concludes the presentation. You may now disconnect. Good day.