Good day and welcome to the Spire First Quarter Earnings Call. All participants will be in listen-only mode. After today’s presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Scott Dudley, Managing Director of Investor Relations. Please go ahead.

Good morning everyone and welcome to our first quarter earnings call. We issued our earnings news release this morning and you may access it on our website at spireenergy.com, under Newsroom. There's also a slide presentation that accompanies our webcast and you may download it either from the webcast site or from our website and that would be under Investors and then Events & Presentations. Presenting on the call today are Suzanne Sitherwood, President and CEO and Steve Rasche, Executive Vice President and CFO. Also in the room with us today is Steve Lindsey, Executive Vice President and Chief Operating Officer. Before we begin, let me cover our Safe Harbor statement and use of non-GAAP earnings measures. Today's call, including responses to questions, may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Although our forward-looking statements are based on reasonable assumptions, there are various uncertainties and risk factors that may cause future performance or results to be different than those anticipated. These risks and uncertainties are outlined in our quarterly and annual filings with the SEC. In our comments, we will be discussing net economic earnings, contribution margin, adjusted EBITDA and adjusted long-term capitalization which are all non-GAAP measures used by management when evaluating our performance and results of operations. Explanations and reconciliations of these measures to their GAAP counterparts are contained in our news release and the slide presentation. With that, I will turn the call over to Suzanne.

Thank you, Scott, and hello to everyone joining us this morning for our first quarter update. On our year-end earnings call last November, we talked for a few minutes about how we advanced our growth strategy in fiscal 2019, creating enhanced value for our shareholders, our customers, and our communities. And at our annual shareholders meeting last week, our Chairman and I had a chance to share more about last year’s successes. The worries about how we served our customers better than ever before. Stories about safety, stories about innovation. We shared how we're pushing boundaries and doing all that we can to advance people, performance, and possibilities. I'm pleased to say that our collection of stories is now available online. I hope you take the time to go to ourstory.spireenergy.com and see all the ways we've used our energy to answer challenges, advance communities, and enrich lives in 2019. Today, we are reporting that we're off to a strong start in the first fiscal 2020. As you know, our strategy for growth is grounded in our mission and focused on three imperatives: growing organically, investing in infrastructure, and advancing through innovation. With this focus, we continued our momentum of growth, delivering improved financial and operating performance in the first quarter. We posted higher first quarter net economic earnings of $1.33 per share, reflecting growth at our gas utilities, continued solid performance by Spire Marketing, and increased earnings from Spire STL pipeline. As Steve Lindsey highlighted on our year-end call, in fiscal 2019, we saw additional gains in our gas utility operating performance metrics, including safety, system integrity, and service. While we're still early in our current fiscal year, I'm pleased to say that our Spire employees are on track to deliver another strong operating performance this year, highlighted by exceptional performance in safety. Turning to our investment and growth, our capital spend was $192 million in the first quarter, reflecting an increase at our gas utilities and a decrease for our mid-stream operations. We increased the investment in our gas utilities by $15 million year-over-year, with a continued focus on upgrading our pipelines in order to increase safety and reliability. A strong quarter considering last fiscal year, our employees delivered record results. Needless to say, these investments also reduce methane emissions and support organic growth to new business initiatives. We invested $29.5 million in Spire STL pipelines to bring it into service, slightly more than we spent a year ago. Our capital spend on storage was $10 million. For the first fiscal year 2020, we increased our capital spend targets to $610 million, including a $20 million increase for our gas utilities. This utility investment will drive rate base growth that we now expect to be between 7% and 8%. Outside our utilities, we plan to invest $70 million, including $50 million on Spire STL pipeline and $20 million on storage and other. In regard to our midstream operations, Steve Lindsey will provide an operational update next quarter, but I'd like to report now that Spire STL pipeline, which went into service last November, is already proving to be a valuable winter asset for the St. Louis region, delivering reliable, low-cost natural gas off the REX lateral. As you know, I announced last November that Scott Smith, an energy industry veteran with 30 years of experience, joined our team as President of Spire Midstream, and I'm happy to say that Scott has hit the ground running. Scott is also fully engaged in further developing the long-term strategy for STL pipeline and storage. Relative to storage, he and the team are providing service to our customers and evaluating his first full winter of operational data and results while assessing the capital plan. So, more to come relative to storage as Scott provides us his perspective and analysis of the business. Beyond our capital investment infrastructure, we continue to grow through several ongoing organic initiatives. From a capital perspective, we're increasing our spend on new business, including for our residential customers, but also commercial and industrial users. Along with new business development, we are more engaged in economic development. We are working closely with key organizations in our communities, bringing our expertise and solutions to help attract and grow businesses in our geographic areas. As you know, growing the number of homes and businesses we serve, and recovering our investment through supportive regulatory outcomes continues to drive higher margins. The third pillar of our growth strategy is advancing through innovation. We're continuing to enhance the quality and efficiency of our service while reducing our costs. Technology core to our business is playing an important role in our innovation efforts, enabling new and better approaches to serving our customers and community. Now, let me turn now to regulatory matters and share an update on recent developments. I'll start with Missouri. First, a new commissioner has joined the Missouri Public Service Commission. State Senator Jason Holtzman was appointed by the Governor and confirmed effective January 16. Mr. Holtzman replaced Daniel Hall, whose term expired. Last quarter, we spent a good bit of time talking about the Missouri Court of Appeals ruling in our ISRS cases for 2016, 2017, and 2018. At the time of the ruling, we said we would pursue all options, regulatory, judicial, and legislative to defend our position and resolve the issue of the Office of Public Counsel's challenge to ISRS. On January 2nd, we filed applications with the Missouri Supreme Court to review the appeals court ruling. We're hopeful that the State Supreme Court will take up the case, and that we will know their decision one way or the other in the months to come. In the meantime, our application states the effectiveness of the appeals court ruling. The Missouri legislature began its 2020 session in early January, and bills have been filed in both the House and Senate to clarify the language in the ISRS statute. Specifically, the bills clarify that the purpose of pipeline replacement is to enhance safety and reliability in line with industry standards, and that such replacement is to be done in the most cost-effective manner possible. Further, the legislation clarifies that ISRS eligibility should not be tied to the age or conditions of the pipes being replaced. On Monday of this week, we filed for an additional $13.4 million in ISRS revenue to recover new investments and pipeline upgrades. We also completed our annual rate setting filing under the ISRS mechanism, and new rates for Alabama utilities were effective December 1. Our new rates for Spire Alabama include an off-system sales and capacity release program. The program is similar to the one we have in Missouri in which 75% of the value creation benefits our customers, and the company retains the remaining 25%. You may also recall that the Alabama commission established an incentive for the accelerated replacement of remaining cast iron and bare steel distribution lines. The Accelerated Infrastructure Modernization rider or AIM provides an opportunity to earn higher equity returns if the target levels of replacement models are met. We exceeded that target in 2019, so our ROE in fiscal 2020 will be 10 basis points higher. Before I turn the call over to Steve, let me say a quick word about our dividends. An important part of how we deliver value to investors over the years has been through increasing dividends. We're proud of our track record, 75 years of uninterrupted dividend payments, including increases for 17 years in a row. This includes a 5.1% increase effective in January of this year to an annualized rate of $2.49 per share. Our board has declared the quarterly dividend of $0.6225 per share payable April 2. The board also declared the quarterly preferred stock dividend which is payable May 15, 2020. With that, let me turn the call over to Steve Rasche to cover our financial performance and outlook.

Thanks Suzanne, and good morning, everyone. Before we get started with our results, I have to give a shout out to the Super Bowl Champion Kansas City Chiefs. Let's dwell on this picture for just a second. This picture is the Power & Light District in Downtown Kansas City during the game on Sunday. And I understand that about a million fans from Chiefs Kingdom are gathered Downtown right now for the parade in one big celebration. Have fun. Now back to business. Turning to our results for the quarter. We delivered consolidated net economic earnings of nearly $72 million or $1.33 per share, up from $66 million or about $1.30 per share last year. Our gas utilities posted earnings of $69 million, up 4% from last year, driven by margin growth. Marketing posted solid results as we continue to get traction from our geographic expansion. But the economic earnings were down $2.2 million compared to last year’s strong performance, and other corporate costs including midstream posted a $5.4 million improvement over the prior year. Results for the quarter include the Spire STL pipeline’s contribution, which is up $2.3 million from last year, including real cash earnings this quarter as opposed to AFUDC last year. In addition, we saw a smaller loss from Spire storage and lower corporate interest costs. As reflected here, net economic earnings continue to include all ISRS revenues or saying in another way, continue to exclude the provision we booked for GAAP purposes related to our ISRS rulings. For this quarter, the ISRS rulings and the ISRS revenues that are subject to the rulings were $2.1 million, bringing the cumulative revenue provision to $14.3 million. This quarter, we also booked an additional expense provision of $500,000 representing the potential interest due on cumulative revenues in the event that a refund is required. Now let's look at the business starting with revenues and margins. Total operating revenues of $567 million were down $35 million due to a decline at the gas utilities reflecting lower gas costs and lower usage from the milder weather that we've experienced this quarter compared to last year. Gas marketing revenues grew due to increased volumes that were only partially offset by lower commodity prices. Overall contribution margin was up $5 million or 2%. Gas utility margins were $7 million as lower usage was more than offset by our prior year. Additional net ISRS revenues of $2.2 million saw continued modest customer growth. Gas marketing margins as reported were down $7.5 million, but that variance includes $5.9 million of adverse fair value accounting adjustments. Excluding that, margins declined by $1.6 million due to the higher cost of our expanding transportation portfolio and narrower margin basis differentials in the markets that were largely offset, but not completely offset by higher volumes. Looking at our operating expenses, utility fuel costs were down $37 million due to lower demand and commodity costs. O&M expenses were up $3.5 million due to higher field operations and bad debt expenses. Depreciation and amortization expense was higher, consistent with our higher capital spend profile. And other taxes were down due to lower demand. Gas marketing costs, as reported, were down $1.1 million. However, this variance includes intercompany eliminations of $15.7 million. Excluding those adjustments, marketing’s run rate costs were higher by $14.6 million. Again, not surprising given our expansion. Other income was more than double last year’s results and reflects investment returns this quarter compared to the market collapse of 2018. We call that an easy comp, as well as higher AFUDC from the Spire STL pipeline. Interest expense was up slightly on higher borrowings at the operating companies as holding company debt continues to decline. We continue to grow our cash flow and maintain a strong financial position. First quarter EBITDA was up 4% from last year to $158 million. Our long-term equity capitalization remained fairly balanced, although down from last quarter as we took advantage of very favorable debt market conditions by issuing long-term debt at our operating companies. Those offerings are listed here on the slide and essentially allow us to reduce our overall interest rate risk and average cost of borrowing while matching our long-term investments in utility infrastructure, and the Spire STL pipeline once it came into service with long-term financing. As a result, our short-term liquidity improved this quarter, just as we hit the peak of our seasonal working capital needs. Turning to our guidance, as we've highlighted this morning, we're encouraged by our progress so far this year, both in moving our businesses forward to serve all of our stakeholders and also hitting our milestones as we seek clarity on the ISRS rulings. There's still work to be done on the ISRS front and as a result, we will delay issuing our annual earnings per share guidance for 2020 until the picture becomes clear. We do reaffirm our annual long-term net economic earnings per share growth target range of 4% to 7%. Recognizing that the key question from ISRS remains the qualification for ISRS early recovery, not the prudence of the spend and resulting long-term rate-based growth. Our long-term capital expenditure plans are also unchanged with a target spend of $3 billion for the five years through 2023. This includes more than $0.5 million per year for gas utilities where we’ll continue to focus on upgrades to our infrastructure and new business. And as Suzanne just mentioned, our CapEx forecast for 2020 increased to $610 million, reflecting the benefit of milder weather so far this winter. Included in that target is $10 million in storage investment during their second fiscal quarter. We expect storage to achieve positive EBITDA contribution by the end of the fiscal year. Our financing plan is largely unchanged and includes the first quarter debt capital markets activity I just pointed out on the previous slide. We remain committed to a balanced and strong capital structure to support our growth and investment plans going forward, including long-term targets for both FFO-to-debt and Holding Company debt levels shown here on the slide that support our strong credit ratings. So in summary, we're off to a strong start and we continue to invest for long-term success across our businesses. With that, let me turn it back over to you Suzanne.

Thank you, Steve. In closing, I'd like to thank all our Spire employees for their hard work and caring hearts. Thank you for your personal commitment to serving our customers and communities, especially during the winter heating season, when customers count on us to safely and reliably keep their homes and businesses warm. We're off to a fine start this fiscal year keeping pace with our plans to invest in and grow our businesses, and drive increasing value for our shareholders. We very much appreciate your interest and investment in Spire and look forward to updating you on our progress and achievements as we continue to move forward. Now, we're ready to take your questions.

The first question comes from Richard Ciciarelli from Bank of America. Please go ahead.

Hey, good morning, can you hear me?

Yes.

All right, good to hear. Just had a quick question on ISRS. In regards to your earlier comments on the call. Can you just clarify on there you say that you're booking the accruals and net economic earnings currently, and if you don't have to issue a refund, I guess what would that mean to your EPS outlook?

Yes, Richard, this is Steve. Let me address that, and then I’m sure others on the call will contribute as well. We believe strongly that we are doing the right thing for our customers and continuing with the system upgrades we have implemented over the past 15 years. Looking at our actions from a regulatory, legislative, and judicial perspective, we are working to resolve the issue, as this is the correct program familiar to all of your investment considerations. Regarding our net economic earnings, we continue to report as if we are receiving the revenue and earning the margin associated with it, which totals $14.8 million throughout the life of the ISRS rulings. This quarter, we collected around $2 million, possibly slightly more at $2.1 million, on the layer of ISRS that we are still collecting from. These are the revenues that we will keep collecting until there is a final resolution on the ISRS issue, which still has a few steps to go. As for the impact on earnings per share, the reason we haven't provided guidance for this year is that we are unsure about how the ISRS situation will pan out. While we are confident we are acting correctly, if the case doesn’t go our way or if the Supreme Court chooses not to hear it, the appellate court ruling would be sent back to the Public Service Commission. They would then open a new docket to review the appellate court’s ruling and determine if they need more evidence before deciding whether the ISRS was legitimate in full or part, or if an adjustment is necessary, potentially leading to a refund. There are several steps to complete before we could even reach a point where a refund might occur. As a precaution this quarter, we accrued interest on the total amount we believe we are owed, as it is the prudent approach from a GAAP standpoint. This also does not take into account current legislative developments. We are actively pursuing all available avenues, and any changes in legislation would impact how the Public Service Commission and the courts assess ISRS qualification moving forward.

It's interesting that Steve explained it well, and I want to highlight a few points for clarity. This program has been in place for 15 years and has undergone regular reviews by the Commission. The statute was established long ago, and there are 42 other states with similar programs, so it's not unique to Missouri. The issue has been raised primarily by the OPC, despite the Commission approving the replacement. If Steve Lindsey would like to add to this, he's welcome to. We have essentially followed a Distribution Integrity Management plan, which is standard in our industry. This plan spans several years, allowing us to confidently outline our capital budgets over the long term. As Steve mentioned, we are closely monitoring regulatory, legislative, and judicial developments to bring clarity to this situation going forward. I believe our accounting, as Steve described, is appropriate, and we will continue progressing down this path until all three branches are resolved.

Okay, that's very helpful. Just in terms of, I guess, key dates to monitor in the Supreme Court case. Have they given more like a precise date of when they might potentially make a ruling on whether they're still here the case? And then separately on the legislative route? It looks like I guess there's hearing that starts now in the house, I guess what key date should we be monitoring on that front? And does the legislation only address future ISRS spending or is it prior as well?

All right, Richie, you threw out several things there. So what I would point out, and it's in the presentation, but it wasn't that we uploaded but it's not part of the presentation we went through is there's a lot more detail on all the ISRS layers and also a timeline that kind of walks through the waterfall of the various decisions. Now we don't have a deadline or particular timeline for the Supreme Court. Our best guess is that they will make a decision whether to accept the appeals from both us and the Missouri Public Service Commission during the next month, a month and a half. So sometime between now and the end of March, but that is not a hard deadline date, they make their decisions when they make them. So that's really the first step in the judicial review process. And, depending on what happens there, I think I chatted about what the various options are on that going forward. In terms of the legislation, and Steve, you want to give everybody an update on the legislature?

Sure, and thanks for the question. And so the legislation just to kind of reframe it is basically just to clarify, in essence, what we've just said program has been in place for over 15 years. But it's reinforced that this will address the material issue that's under question as well, as really the most efficient way to do these replacements, and that would address the plastics issue that we've had ongoing. So, I think this is really not to do anything new, it’s just to clarify and put in place on a go-forward basis what we've been operating under for the past 15 years. And that's been heard in both the House and the sub committees. And then from there, we'll hopefully get a move to the floor. But the status on that and the calendar is still a little influx, much as Steve mentioned, with the Supreme Court opportunity to hear this as well.

Yes. And then Richie, the last part of the question you had was on how do we think about that in terms of the various layers of ISRS that are in question. Clearly a legislative solution would solve any questions going forward? And that's the black and white of the final legislation, I think would also clearly form legislative intent of what the ISRS regulations were. And we have to believe that that's going to help to resolve any open questions on the current layers of ISRS that we're collecting, including those that are before the appellate court that they've already...

Okay, thanks. That's very helpful. I'll step back and let others go ahead.

Thanks, Richard.

Thanks, Richard.

The next question comes from Sarah Akers from Wells Fargo. Please go ahead.

Hey, good morning.

Good morning, Sarah.

Hey, Sarah.

Can you just expand on the increase in the rate base growth to seven to eight from six? Just curious what's driving that as the CapEx plan seems to be intact?

Yes, sir. This is Steve Lindsey. Thanks. Yes, good to hear from you. I think it's a couple of things. It's the way we've been building the CapEx plan really across all of our jurisdictions. And if you think we're fairly well, equally distributed in terms of infrastructure upgrades, we're also continuing to see strong investment in our organic growth and that's the new business capital. And really, we're seeing that in all of our areas. And then to even layer onto that, we're starting to see some opportunities to expand our service territories. And so on the west side of the state, even on previous calls, I think we talked about expanding into some areas where we don't currently serve, to pick up some agriculture and poultry customers. And then in Alabama, we're looking at some opportunities to expand into some rural areas where we don't currently serve as well as some industrial opportunities down in the Gulf area. So, I think when you add all those pieces up, I think we're pretty comfortable that from a rate base growth perspective, we're going to be able to move into that range.

Great. And then on the FFO-to-debt target, the 15% to 16%. Where are you currently on that metric? Are you in that range? Or is that something that is you're targeting a few years from now?

Yes, Sarah, this is Steve. We're targeting that a few years from now. If you look back, and that's an SMP metric. If you look back over the last couple of years, we were at 14.4% in 2018, and that dropped to just about 13%, I think 13.1% last year, and that was really attributed to the delay in Spire, STL pipeline and some investments that we made in storage. We expect as we look at our plan going forward, and the plan that we’re operating against this year that we would get the FFO-to-debt back up to the level it was in 2018 this year, and then clearly start moving forward. Having the Spire STL Pipeline come online helps because FFO-to-debt is about cash earnings not AFUDC. It's great when you can get it, but it's not real cash earnings. So that was the logger. And frankly, that wasn't a surprise to us nor was it a surprise to the rating agencies who we just met with in January. Boy, time flies when you're having fun. And they were very comfortable with where we are, very comfortable with where we're driving the bus, so to speak. And not surprisingly, we're still squarely at the ratings we are with a stable outlook going forward.

Got it. And then lastly, just on the new ISRS filing, are you confident that the PSC is comfortable ruling on new proposals, a lot of legal case outstanding? Or is there a risk that they just freeze everything and wait for clarity?

You know, Sarah, I won't pretend to know that the view of the Public Service Commission, although as you know, they've been right alongside us the whole way as we've been going through the ISRS rulings issue that that surfaced in November. We felt it was important to continue to file ISRS because we've made significant investments and I would not want to think about how we would be handling this winter or other winters had we not been upgrading the system and making it more resilient. So we're continuing to believe it's the right approach. And the Public Service Commission will take our filing and address it in the appropriate way, which generally involves a bunch of DRs, and then some hearings. So I suspect it will go along the normal course. But obviously, they haven't yet had time to digest the filing and come forward with what their response is because we just filed it on Monday, so we need to give them a little bit of time.

Yes. And we're going through really the exact same process that we go through every six months, which is we provide all the information. And I think Steve mentioned earlier in his comments, this isn't about the prudency of these investments. This is more about the timing of this. So, I think we're going back to the basics of we're doing it for the right reasons, whether it's around safety, reliability, reduce costs going forward, even methane emissions. We're doing this for the right reasons. And we're going to hold firm to that, and I think the Commission has shown over the years to really support the positions that we've taken on that.

Great, thank you.

Thanks, Sarah.

Do we have another question? Operator?

The next question comes from Michael Weinstein from Credit Suisse. Please go ahead.

Hey, guys.

Hey, Michael.

Hey. Just to clarify, there aren't any additional appeals from the OPC regarding the latest ISRS filings beyond what they've already submitted to the district courts, right?

Michael, this is Steve. If you look at page 20 of the presentation, in the appendix, you'll find the details regarding the different layers of ISRS. The appeals court has two additional ISRS layers from January and July that are still in the review process, which will take several months before reaching any conclusion. Currently, with the Supreme Court reviewing the initial rulings, it seems that the appellate court has paused any further examination of those cases. It’s reasonable to expect that without a decision from the Supreme Court or any legislative changes, OPC's stance on ISRS and their appeal will remain ongoing. That summarizes our position, so let me know if that answers your question.

The reserves you are referring to apply only to amounts recorded before January 2019. These reserves are excluded from economic earnings but are still included in GAAP earnings, correct?

That is correct. And, again, if you look on slide 20, the only layer of ISRS that is subject to the rulings and therefore we are providing the provision for is that June 18 layer.

Got it.

We're still collecting, but we're for GAAP purposes, we're setting it off to the side as a regulatory liability.

Right. And you're not doing that for the January and July 2019 filings because the Supreme Court case stayed the prior need to reserve the...

Well, no. There are several reasons. First and foremost, the appellate court ruling was focused on very specific filings, which are the Top 3 mentioned on Slide 20. It did not extend to any other ISRS filings that are much earlier in the review process. Additionally, this is an ongoing discussion with the OPC that has been in progress for years, and the record establishes—without me laughing—worn out or deteriorated cast iron and bare steel. We and the Public Service Commission ensured that the record was strengthened as we proceeded with the later filings. Therefore, each of those filings would need to be evaluated independently in terms of appellate court review, should we reach that stage. However, they were not included in the initial review or in the rulings that were issued in November.

I guess, I guess. So basically, there's no reserves are being taken because they haven't you haven't had a ruling from the court yet?

That's exactly right.

Yes. Okay. And then on the legislation, I think this was asked before, but maybe you just clarify. If once legislation is passed, let's assume it's passed, that doesn't necessarily make the court cases moved. Right, you would still need to maybe get another ruling from the commission, to go back and sit and reaffirm that you're, that those revenues are allowed under prior ISRS rulings?

That, you know, Michael, it's a great question. I think that you're thinking about it right. But we'll have to see how the discussion and the legislation and like your assumptions, we are one with that one for a while. And it clearly solves the legislative intent. And one of the things that the Public Service Commission even highlighted and Daniel Hall was very clear about this before he turned out and left the commission, that the Commission staff and the commissioners are looking to understand the legislative intent. So it's our belief that any legislation will answer that question. And therefore, in many ways arm the Public Service Commission to re-evaluate all of their, their findings and their ISRS approvals, today they will probably find that they were appropriate and should continue.

Yes, I think the real point is that this is intended to clarify, which we really didn't think needed to be clarified, the original legislation. And so, it will be on a go-forward, but I think it will provide some valuable context for the way that things are being looked at that we're currently involved with.

That makes sense. And that 7% rate base growth is, that's really just for 2020. Correct? That sounds of a new long term growth rate?

Yes, we did you know, Michael, we generally plan out for five years. We're actually one year so we got another four years going out. So we believe that our rate base growth has clearly moved to a different level. So I would say it's clearly for 2020. But, the level of spend that we have, if you look at the run rate spend in the utilities has been pretty consistent. We've actually increased it from our initial view of last year and now going into this year. So I think we feel confident that with the support of our, our field employees and our contractors and a little bit of break from weather, which does impact us at various times of the year that we should be able to work in that range.

Yes, I would add that we mentioned the infrastructure, which we clearly have for the next 10 to 15 years depending on the jurisdiction. We have already discussed the new business. Additionally, we have upcoming opportunities related to fixed network metering with AMI. We are also anticipating developments from the recent transmission rule. There are many investment opportunities available for a considerable duration.

Right. And the reason that the earnings growth projection is not changing that, that’s because of equity dilution expected? Or is it ISRS? Recovery lag? What's, what's driving that?

Yes, we clearly have the ISRS issue, which is impacting our ability to provide earnings guidance this year. However, in the long run, we will address it. It may be more evident in rate cases. We are committed to financing our investments and long-term capital in a balanced way, which will lead to equity dilution going forward. This is reflected in our forward financing guidance, indicating that we anticipate issuing a reasonable level of equity each year to maintain strong investment-grade credit ratings.

Got you. And this will be my last question. But I mean, what I'm really trying to get at is if legislation is passed, to fix the ISRS problem, does the earnings growth rate improve to a little bit, because to more match up with the rate base growth profile?

Well, let's take that question and put it in the parking lot, and once we know what the answer is, and ISRS we'll come back to answer the question.

Okay. I'll stay in the park.

The next question comes from Selman Akyol from Stifel. Please go ahead.

Thank you. So just one more, just going back to the legislative front real quick. Did I understand you to say that you're already out of committee and headed to the floor?

No, we've gone, we've had in the subcommittees in both the House and Senate, so ultimately our goal obviously is to get to the floor for those discussions. So no, it's not been unless or something come up even today that I'm aware of. But that would be the next steps is to get it moved.

Understood. I appreciate the clarification. Quickly shifting to the capital side, specifically the non-regulated segment of the business, we are seeing a significant decrease in capital. I assume you have numerous projects in mind and other areas you are considering. Could you share some of these and possibly discuss how we might see capital allocated for a rate increase?

Yes, Selman, this is Steve. You're right, especially if you look at the comparison of the non-utility spend in 2019 versus 2020, it's coming down quite a bit and that is, by far and away, the biggest factor in there as far as STL Pipeline, which we still have some investment. You saw some this quarter and there'll be some other investment as we go through this year to complete that construction, do an interconnect, couple other things that we need to get done that weren't required in order to put the pipe in service but are part of completing the whole project. And then also, there is some investment in storage. And as we go forward, I think we've been very clear that our strategic focus is in the natural gas space. And I think we're good at looking across the strategic landscape to see where opportunities might be. The Spire STL Pipeline is a great example of identifying something that's in our sweet spot that we do that would allow us to drive additional investments and therefore additional return to our equity investors. And we continue to look at those opportunities alike that or are bigger supply investments that might be inside the Utility across our landscape because clearly as we look out into the future, we see growing demand across our jurisdictions, that were just driven as much by commercial and industrial load, and if it is by residential formation. And we want to make sure that we stay ahead of that and that we're going to meet our customers' needs. So that may be one of the biggest areas where we have an investment opportunity.

The daily plan, as I mentioned earlier, relates to how we view the situation. Utilities are regulated by the state with some federal oversight, particularly concerning safety. From a storage and pipeline standpoint, they are also subject to regulation and have a commercial market aspect. Importantly, our marketing efforts are the only part of our business that is unregulated. Most of our business operates under regulatory frameworks, which varies by jurisdiction and involves considerations at both federal and state levels for various reasons, such as rate setting, safety concerns, and infrastructure installation.

And then, Selman, the last piece of that would be storage. And we continue to give you all a forward view for the next quarter as we continue to evaluate what our long-term development plan is, and if we move forward that, which we would expect to, then that would be additional capital spend, and once we understand what that is and the return dynamics associated with that, that would be another area that we’ll be able to speak more to.

Okay, thank you.

The next question is from Brian Russo from Sidoti. Please go ahead.

Hi, good morning.

Good morning, Brian.

The O&M expense increase that you reported in fiscal first quarter 2020, what trend should we see in the remaining three quarters. If it's my recollection, you guys were kind of guiding or looking to keep O&M flat year-over-year.

Yes. Brian, this is Steve. I think that we still stand by our view O&M and how we're going to trend it over time. Quarter-to-quarter, you're going to see variations and clearly, you saw a little bit of a bump this quarter, which is field operations and that will tend to move a little bit quarter-to-quarter depending upon weather, because we do, to the extent that our field operations team is not doing construction and we do a lot of training during the cold winter months, then a lot more of that falls into expense, but it tends to even out over the year as does bad debt expense, really the two big drivers that we saw this quarter.

Understood. And the lower usage due to warmer weather, is there any margin impact there or is that captured in any weather normalization mechanisms you have?

We do have weather normalization across all of our utilities, which generally covers the residential side of our business. So, we do, as most utilities do, have some exposure on the commercial and industrial side. We found out our weather mitigation mechanisms across both Alabama and Missouri functioned really well for the first quarter of this year, but we did see a little bit of gravity on the commercial and industrial side because we do run that. We're at risk of the weather there, but again that generally over time has trended to our benefit rather than to our detriment.

Okay. And then on Storage, are you still expecting to breakeven beginning in mid-fiscal 2020?

Actually, our guidance is that we will be EBITDA contributors by the end of the fiscal year.

It appears we experienced a small loss, but we should see ongoing improvement as we progress through the year.

Yes. I think that's a fair assessment.

All right. And then just lastly, the Alabama off-system sales agreement. I mean, how meaningful is that with the 75:25 sharing? If you just kind of put it in context that would be great.

Yes. I'll take a shot at it. First of all, we're very pleased to be able to have that in place down there. I think what we've shown over the years really on both sides of the state here in Missouri is that it truly does benefit customers and it is a 75:25 sharing, I think as we've articulated. I don't know that I would say it's meaningful, at least early on. I think we're going to learn the system, but we're going to go into with the open perspective of this is an opportunity for us to do the right thing for our customers. And then to the degree that we have success there, obviously, look at other opportunities, perhaps even in Gulf. But I don't think I would look at it as a meaningful opportunity. But again, I think it's an attribute to the commission that they are looking for opportunities for the Company to do something to benefit customers and be open to those types of mechanisms as you've seen in some of the other things that are part of the RSE.

Okay, great. And then STL, the remaining 50 MMcf a day that's uncontracted right now of capacity. Any movement there that you could discuss?

Yes. That's one of the items I was lightly referencing, I would say, earlier. But in terms of Scott, the new Midstream President, and now we've activated the pipeline and it's performing very well by the way, as I mentioned. As they get more comfortable with the operations, everything for pressure to measurement to delivery and so forth, yes certainly, they're going to be considering other markets and we have had some expressions of interest. But right now, we are highly focused on the winter months and deliverability into the St. Louis region. And again, if you stand in gas control where I have with those guys and they're looking at the flows and what they're giving from in terms of pressure and delivery, they're very pleased with how it's performing and they're glad they're using it. And as we move forward, we'll think about other market opportunities.

Okay, thanks. My ISRS questions were asked and answered. Thank you very much.

Yes, thanks. Appreciate it, Brian.

Thanks, Brian.

There are no more questions in the queue. This concludes our question and answer session. I would like to turn the conference back over to Scott Dudley for any closing remarks.

Okay. Thank you all for joining us. We will be around throughout the day for any follow-ups. Look forward to catching up then. Bye-bye.

The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.