Spire Inc (SR) Q1 2022 Earnings Call Transcript

Good morning, and welcome to Spire’s 2022 First Quarter Earnings Call. All participants will be in listen-only mode. After today’s presentation, there’ll 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, Head of Investor Relations. Please go ahead.

Good morning and welcome to Spire’s fiscal 2022 first quarter earnings call. We issued an earnings news release this morning, and you may access it on our website at spireenergy.com under the news room. There's a slide presentation that accompanies our webcast and you may download it from either the webcast site or from our website under Investors and then Events and Presentations. 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 and contribution margin, which are both 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 both our news release and the slide presentation. On the call today is Suzanne Sitherwood, Spire's President and CEO; Steve Lindsey, Executive Vice President and Chief Operating Officer; and Steve Rasche, Executive Vice President and CFO. Also in the room today are Scott Carter, President of Spire Missouri and Adam Woodard, Vice President and Treasurer and CFO of our Gas Utilities. With that, I will turn the call over to Suzanne.

Thank you, Scott, and good morning to those participating on the call. Here in the St. Louis region we're expecting a major winter storm, thus our Spire employees are busy this week keeping people warm and keeping our communities safe with natural gas service and supply. I would like to take a quick moment to express our gratitude for everyone who is working round the clock to provide reliable and resilient natural gas; that's our number one goal, and that's exactly what we're here to do. At Spire, everything begins and ends with our mission: After every challenge, advance every community, and enrich every life due to the strength of our energy. We use that energy to make a positive measurable impact on the world around us. Our energy keeps us stepping forward, advancing, innovating, and energizing the future, and we continue in that spirit regardless of challenges. As you know, we faced a number of challenges over the last year or so, including an unprecedented order in our recently completed Missouri rate review and a challenge to the continued operation of the Spire STL Pipeline. As fiscal 2022 unfolds, we continue to work through these issues, including moving forward to address the significant shortcomings in the Missouri rate order that went into effect late December. Specifically, we are already taking steps to repair a new general rate review to ensure a fair and reasonable regulatory outcome for the future. At the same time, we're working through the remand process at FERC to secure a permanent operating certificate for Spire STL Pipeline. Amidst these challenges, we have remained steadfast in delivering on our strategic priorities and commitments. We continue to invest significant amounts of capital into our utilities for upgrading infrastructure, gaining new businesses by adding customer connections, and furthering our innovation through technology. We're doing this while enhancing all aspects of our operating performance from customer service to safety and system reliability, including reductions in methane emissions as we fulfill our commitment to be a carbon-neutral company by mid-century. Steve Lindsey will provide more information in his remarks including regulatory matters in Missouri, the Spire STL Pipeline, and our capital investments today. You know that in everything we do, we always strive to provide significant support for our communities and create increased value for our shareholders. Steve Rasche will provide details on our first quarter earnings. As you have probably already seen on our news release, we reported $1.14 per share which reflected the impact of warmer weather and higher costs. Now I'll pass the call to Steve Lindsey.

Thank you, Suzanne. I want to start by also acknowledging our employees who continue their focus on maintaining safe and reliable gas delivery operation and outstanding service to our customers, through efforts and dedication that are especially important during the winter heating season. First, I wanted to talk about the Missouri rate review and order which I know you've all been following closely over the last year. As we discussed on the year-end call, orders we received, including an amended order on November 12th, deviated from longstanding precedents in Missouri. Our approach to virtually every aspect of the case, from rate base and treatment of costs to capital structure and return on equity was based on what has been established and decided in prior cases. We will resolve many issues in the case of other parties, but few of the issues want to be commissioned for final resolution. Two most significant areas where the order went against longstanding practices were the rate of return and recovery of non-operating overhead costs. Especially, we received the lowest rate of return of any utility in the state. This was due in large part to a lower than normal equity capitalization due to the inclusion of short-term debt for the first time in the capital structure. The recovery of non-operating overhead was also problematic and has potentially a much larger negative impact. Missouri PSC order capitalization of non-operating overheads decreased starting with the effective date of the order, which was December 23rd. Capitalization will be paused while the commission staff completes an audit of the costs. We are currently working with staff on an expedited study of those costs. The mission did provide language to allow deferral of these costs for consideration at a future case. However, the order does not provide sufficient language necessary to defer for financial reporting purposes, prudently incurred costs that are not capitalized. We estimate the annualized net impact to be $20 million to $30 million. We will continue to work with the overhead issue, including gaining clarity on non-capitalized overheads. At the same time, we have turned the page and we're moving forward with plans to file a new general rate case in Missouri. Spire Missouri never intended to file another case immediately after the conclusion of this most recent one; it is essential that rates reflect the full actual cost to provide natural gas service that so many Missourians rely upon. Unfortunately, newly ordered rates do not reflect the actual cost of service and do not allow for earning a reasonable return on investments made to benefit customers. The new case will address the two issues I just mentioned, including the recovery of overhead amounts expensed in the interim. Importantly, it will also include updates to the cost of service, return on additional capital investment, and the impact of inflation. The case we will file shortly will focus on returning to more industry-standard recognition and recovery of costs and provide an opportunity to earn a fair return for our investments. Turning to the Spire STL Pipeline, let me provide a quick recap of where they stand with regard to the operating certificate of the pipeline, including the FERC remand. I won't go through the entire history and timeline on the issue of FERC certificate, but we have been fighting to retain operating authorities since last summer. On December 3rd, FERC issued a new open-ended temporary certificate that provides certainty of gas supply in the St. Louis region for this winter. It also allows the pipeline to continue operating while FERC's remand process proceeds. As part of the process, the FERC is going to prepare a supplemental environmental impact statement. The remand process is underway and will likely continue into 2023. We continue our capital investment program, which is almost entirely focused on utility natural gas delivery infrastructure replacement and expansion. For the first quarter, our CAPEX totaled $146 million, including nearly $70 million for pipeline replacement. Our new business investment was close to $40 million and was in line with last year's record pace. I would note that non-utility spending was down as expected. Our five-year capital plan through 2026 remains $3.1 billion, with more than 95% of the investment focused on our long-term pipeline replacement programs, which have good recovery mechanisms, plus new business, technology, and innovation, including the continued rollout of ultrasonic meters. Our utility spend drives rate base growth at 7% to 8% annually and also supports system reliability and our commitment to becoming a carbon-neutral company by mid-century. With that, I'll turn it over to Steve Rasche for a financial review and update. Steve?

Thanks, Steve, and good morning, everyone. As Suzanne noted, while warm weather impacted us in the first quarter, the weather has quickly turned as we're in the middle of a significant snow and cold weather event here in the Midwest this week. Let's start with a brief review of our results. For the first quarter, we posted net economic earnings of $63 million, tripling last year by $14 million or $0.28 per share, reflecting significantly warmer weather and higher costs. Looking at the businesses, our gas utilities had earnings of $67 million, roughly $9 million below last year. As I mentioned, weather this quarter was warm, roughly 26% warmer than normal. And while we do have weather mitigation for our residential load, our commercial load and the opportunity for off-system sales were lower this quarter. Additionally, as you see on the next slide, our costs, especially depreciation, were higher than last year. Gas Marketing posted earnings of $0.5 million, down $2.8 million from last year. Again, weather was the limiting factor with lower demand and less favorable market conditions, including much thinner storage spreads compared to last year's unusually wide spreads. And finally, other corporate costs were higher this quarter due largely to timing. Looking at a few details here on Slide 9, gas utility contribution margin was flat as lower demand due to weather was offset by rate increases. Gas marketing margins are down, net of fair value accounting adjustments reflecting market conditions. Operations and maintenance costs were up $3 million after considering the reclassification of pension costs and regulatory deferral. This increase includes $1 million of Missouri utility overhead costs that would have been capitalized before the commission order. Remaining costs were up by less than $2 million as slightly higher employee-related costs were largely offset by other cost reductions, including lower bad debts. Depreciation costs were up $6 million, reflecting our rate base growth. And while these expenses will be recovered in our new rate structures across Missouri and Alabama, the timing of recovery in Missouri is more heavily weighted to the remainder of the year and especially our second fiscal quarter, reflecting new rates and our most recent ISRS filing. Turning to our outlook, we continue to be confident in our long-term growth prospects, driven by our $3.1 billion capital spending plan over the next five years. Our per share earnings growth target remains 5% to 7%. This growth rate is based upon fiscal year 2021 results, less our estimate of earnings related to Winter Storm URI, which, as we talked about last quarter, was between $0.65 and $0.70 per share. Our fiscal year 2022 earnings target remains unchanged at $3.70 to $4 per share, falling below our target growth as we absorbed the dip created by the most recent Missouri rate order. Here's how to think about our current year range. The top portion of the range fully reflects Missouri's lower rate of return that will be addressed in our next rate case we will file this spring. The bottom half of the range includes the additional haircut from expensing a portion of our uncapitalized overhead costs, and we will continue to absorb this risk until we get more specific recovery language from the Missouri Public Service Commission. I might add here that gaining certainty over overhead recovery will be our near-term goal as part of the completion of the capitalization study and staff audit. And looking beyond 2022, with continued rate base growth and reasonable Missouri regulatory treatment, our earnings growth rates in 2023 and 2024 should accelerate as we regain our trend line. Now turning briefly to our financing guidance. Our liquidity remains strong and we have ample capacity as we hit our peak in working capital needs. Our long-term financing plan remains largely unchanged and reflects the Spire Missouri bonds issued in December to term out some of our excess gas costs. We remain committed to a balanced, strong capital structure and credit metrics. As a reminder, we ended the last year above our FFO target, but we do anticipate that to weaken this year as a direct result of the Missouri rate order. In summary, we are laser-focused on regaining reasonable regulatory treatment in Missouri while delivering safe and reliable service to our customers and communities and investing for the future for the benefit of all stakeholders. With that, let me turn it back over to you, Suzanne.

Thank you, Steve. We are on track with our plan for the year as we work to resolve regulatory matters in Missouri via a new general rate review. We are confident that we can achieve a fair and reasonable outcome. We are on pace with our capital investment plans to support rate base growth and 5% to 7% earnings per share growth over the long term. We look forward to updating you on our progress as the year unfolds, including the Spire STL Pipeline and laying down the groundwork for an innovative, resilient, and sustainable energy future. And we look forward to having an opportunity to connect with you in person at the AGA Financial Forum in May. Thank you for your continued interest and investment in Spire. We're now ready to take your questions.

Our first question comes from Shar Pourreza with Guggenheim Partners. You may go ahead.

Hey, good morning guys.

Good morning, Shar.

Just two quick ones here, if it's okay. Just on sort of the GRC. So once you file the rate case in early March, do you expect the case to take the statutory 11 months, or could it be faster just given you were just embedded on a few items? And how has sort of that overhead cost allocation audit and review been going with the staff? Any takeaways that will factor into, will you be filing for the next case?

Good morning, and I'll start that. I think probably Adam will pick up the second half of that question. Sorry, this is Scott Carter. The question on the rate case timing, we file a 60-day notice. That means the earliest we can file is early March. We're going to work through that. We're seeing the spring, so we haven't picked the exact date for filing. But it will be close to that 60-day period. We've got to feel like we need to make some progress on the overhead audit and then make sure we put together a case that's obviously filing quality. As far as the timing goes, the commission has an 11-month statutory window. As we look at it and think through that case, they just came out of the case, so a lot of the updates that are necessary to look back for a year won't have to be in place because they'll have the reasons to have that most recent proceeding. So we're setting everything up in a way that gives us the opportunity to expedite resolution of the case, but we have to understand that the commission can take up to that full 11-month cycle. So we're preparing for the best and making sure we're in it for the long haul to put the best case forward and get the right outcome in a reasonable time frame.

Yeah, hey Shar, it's Adam. On the study that is ongoing, we're working with commission staff. We do expect that to wrap up this quarter with a recommendation or report from staff to the commission, and then we'll kind of go from there. But we would fully expect that to be digested in the next case.

And Shar, this is Steve. One last point I would make that we mentioned earlier, in addition to the two main points that Scott covered, this will also include our infrastructure investments, the impact of inflation, and the cost of service. So it is in its entirety, but as Scott mentioned, a lot of what has already been solved. If you really think about it in this case, shouldn't be much issue other than just kind of updating, really trying to address the two main issues.

Got it, perfect. And then just last one on STL Pipeline. I mean, obviously, your release says you expect the demand process to continue into 2023. Do you see the potential for clarity to come before that? Do you mean, like, the entire administrative process of issuing the new permit certificate or do you not expect to have any idea until 2023? So I guess just a little bit of clarity on what you mean through 2023?

Yes. The process we are experiencing with the new Environmental Impact Statement is taking a bit longer than the usual environmental assessment we conducted for the first certificate. FERC has suggested that we can expect this to occur around October. Additionally, there is usually a 90-day comment period that follows, which leads us into the 2023 calendar year. This is only a portion of the remand process, but we are using it as a reference for our timing.

Okay, perfect. That's the clarity that I was seeking. Thanks, guys. Appreciate it.

Thanks, Shar.

Our next question comes from Richard Sunderland with J.P. Morgan. You may go ahead.

Hi, good morning. Thanks for taking my questions. I just want to pick it up with STL Pipeline first. Can you speak a little bit more to the supplemental EIS and to potential interest in alternative solutions to the pipeline there?

Sure. I'll start. This is Steve again. And so as you think about some of the things that are being looked at from an alternative perspective, we view the pipeline being in place from an environmental perspective as the best alternative. Some of the options would actually be having to physically take some of the pipe out of the ground. And then if you have to reinstate things such as some of the compression and propane, we just think from an environmental perspective, this is the best option relative to the outcome.

Understood. And then maybe turning back to the rate case. Could you go a little bit more into the strategy around handling capital structure, the upcoming rate review, maybe timing around how to manage that? Also, I noticed the short-term debt ticked up in the quarter. Just curious on drivers there and how that factors into, I guess, the target capital structure for the case?

Hey Rich, it's Adam. Yes, we will wait to fully explain our case later this year. The short-term debt in Missouri actually declined during the quarter, but I want to highlight that our current assets in Missouri are greater than our current liabilities. This situation involves not only the capital structure but also the excess short-term debt we're managing. We will be examining this closely and presenting a solid case.

Hey Richard, this is Scott Carter. I will just add on to that. Really two ways to think about it. Historically, Missouri has excluded short-term assets from rate base and excluded short-term debt from the capital structure. That was the premise we filed under. We financed according with that consistently with what we had done previously and what the commission had found previously. Staff recommended that in their report to the commission, and when the commission finally made their decision, obviously, they pulled in the short-term debt but didn’t pull any short-term assets into the equation. So obviously, there's a mismatch right now that is very out of the mainstream with rate-making across the country. And so there's two ways to solve it, it’s either included in short-term assets or going back to the traditional route of exclusion of short-term debt. So we think there's certainly a path forward there that reaches resolution regardless of which path the commission picks.

Understood. Very helpful color there. Thank you.

Our next question comes from Julien Dumoulin-Smith with Bank of America. You may now go ahead.

Hey, good morning team. Thanks for the time and the opportunity. Perhaps just to pick up where Rich was a moment ago, can we talk a little bit more about that short-term debt dynamic? First off, just the short-term asset side of that, if you think about the parity. Can you elaborate just where you stand with respect to driving some understanding in the commission on that point? I know that you've got this rate case filing coming, but as you talk to various parties, how do you think about driving consensus back there? I know that you mentioned specifically a number of parties being onboard with this earlier, but just if we can come back to the short-term asset piece of it?

Sure. Our observation is that we incurred significant winter storm costs in the last case, which affected our average. As we move into this next case, we will have a complete 13 months of carry over. Additionally, like many utilities, we have extra deferred costs and gas expenses from this winter that will affect our overall balance. We will include all this information in the case and discuss it with all the involved parties.

Got it. But just to confirm here, how are you thinking about this short-term debt balance evolving through the course of the year? You said earlier, I think, in your remarks, expecting higher overall leverage through the course of this year. I know you said specifically Missouri was lower in the quarter, just how are we thinking about that dynamic here?

Missouri's short-term debt has decreased from quarter to quarter. I'm not sure what you're specifically referring to regarding how that may change throughout the rest of the year.

You're not expecting those balances to increase as well. I know you alluded to higher leverage here, maybe more driven by FFO being lowered from the rate case outcome than necessarily the denominator being higher. But I just wanted to confirm that you're expecting that short-term debt to remain kind of at a steady or lower level here with Missouri?

We do believe it will be relatively steady. But you're correct, the lower rate of return fundamentally lowers the FFO to debt metric. So if that's what you're referencing, that does lower cash flow. We don't necessarily believe that will pick up short-term debt significantly or materially in the near term.

Yes. And Julien, this is Steve. I'd also point out that in December, we did term out a lot of that excess gas cost, which for argument's sake is about $300 million, that's associated only with Winter Storm Uri. And hopefully, we can carve that down by almost two thirds once the ongoing dispute with the marketers is adjudicated in front of the Missouri Public Service Commission in April of this year. But we did term that out. So we did book some bonds, $300 million of floaters in order to fix the carrying cost on that component. So we're just doing the right smart things in order to manage the financing going forward. But we see a clear path to regaining reasonable rate of return, including the right capital structure for the utility.

Alright. Thanks for the details here. Just one bigger picture question: how are you thinking about the guidance range for this year given, obviously, the weather impacts at the start of the year, and obviously, I know there's a lot of big moving pieces here, and the amount of capitalized overhead deferral being a big one, but how would you position yourself on the capitalized question for the year and/or just overall within this range, if you will?

We discussed this earlier in our prepared remarks. We're comfortable with a wide range. The key issue is overheads. In our last rate case in Missouri, we adjusted the ISRS into the variable component of rates, which has increased variability. Consequently, you'll notice more recovery in the second quarter compared to the first quarter under the previous rate structure. We manage the risks associated with weather on a monthly, quarterly, and long-term basis, and we have tools at our disposal to meet our expectations for the full year. Although we will enter another general rate case, which is part of the process, we are optimistic about staying within the range. The upper end of the range assumes we can effectively manage the utility and counteract any adverse weather impacts. The lower end relates to the handling of overhead expenses, and we aim to clarify that soon.

Alright guys. I'll leave it there. Thank you.

Thanks, Julien.

Our next question comes from Gabe Moreen with Mizuho. You may now go ahead.

Good morning everyone. The short-term debt stuff has been pretty much beaten to death, but I wanted to ask about whether anything else needs to change for the upcoming rate case filing with the forward curve and spot gas prices being so much higher, whether it's, I guess, bad debt ask or anything like that, just how you're thinking about that? And then also, can you just walk me through again the weather norm; whether I guess no pun intended what you had asked for last time would have helped out actually for this quarter and whether that's going to be a focus for the upcoming GRC?

Yes, Gabe, I'll start that and anyone else can jump in. As far as anything else, as Steve had mentioned, the rate case will be a general rate case and a full update. So as you think about increasing cost elements, whether that be bad debt, the additional capital deployed, or other inflationary pressures, that will be reflected in the filing that we'll make. So that will be a full update. Obviously, the focus is on these high-profile areas, but we're filing a full general rate case, so we will include all of those elements. Weather normalization, what we have filed and requested would have expanded that and refined it a bit. So we do believe it would have improved the performance of that, tightened the range if you will. Again, we have pretty good performance around the weather normalization. We certainly want to improve that going forward, and yes, we'll bring that into the next case as well, trying to make sure we get that refined as possible to make sure we don't win in cold events, we don't lose in warm events, or we balance it with customers.

Yes, this is Steve. The weather normalization actually performed quite well. It's the areas on the fringes, specifically the commercial load and off-system sales, that we mainly share back with our customers which we will continue to be exposed to. However, that's alright because over time, especially throughout this entire winter heating season, everything is likely to balance out. I don't want to rush to conclusions; let us get through the winter first. By the next update, we will have a clearer understanding of what the entire winter delivered for us in the latter half of the year.

Great, thank you. And then if I can also just get an update, I guess, on sort of RNG efforts, where things stand at the moment, any new developments this past quarter? Thank you.

I'll take a start at it. Gabe, good to hear from you this morning. So from an RNG perspective, we continue to look for opportunities, for projects particularly in Missouri given that we've just had some legislation passed. We're in the stages now of working towards the rule-making process, which could be extended obviously. But a lot of this is looking at opportunities to include some RNG projects and rate base here in Missouri, so we're continuing to be active, and we think there are opportunities there. But again, with the legislation just being passed and the rule-making started, that's kind of where we are right now.

Great, thank you.

Thanks, Gabe.

Our next question comes from Vedula Murti with Hudson Bay Capital. You may now go ahead.

Good morning. Can you hear me?

Yes.

Yes.

You alluded to the audit that the staff is working on, presenting to the commission on the study of the overheads. One, can you give a sense when to expect this to present to commission? And two, can you remind us perhaps the scope of that, and what the report may or may not address?

Vedula, this is Steve. I'll take a shot at that. Yes, the process, we're just continuing to work through it. I wish I could give you a procedural schedule; there isn't one associated with this. But I can tell you absolutely we are working right next to staff as we work through this because we're both aligned in getting this addressed as soon as possible. As we mentioned a bit earlier, the study, which we're taking on internally, is a classic time study where you look at a sample, which is a fairly large sample of your population, and from that you derive a capitalization percentage. This is a standard approach that is well-trodden and relied upon for FERC capitalization purposes, which is why we're taking it on. We'll get that study done this quarter, likely by the month of March, and we'll work with the staff. At that point, the staff needs to perform whatever procedures they need to do in order to get comfortable on that. That's the time frame that I can't really speak to right now. But let's say, a month or two, and I don't know how long that will take. But that pushes the discussion until early in the next quarter. At that point, the staff will render a decision and if they agree, that's great. If they mingle in the engines, we'll work our way through that. The finality of the process will be a formal recommendation to the Missouri Public Service Commission, and they will issue a formal order that addresses capitalization going forward. And that's the point at which we will then know what amounts are being capitalized and what amounts are not being capitalized. In terms of the scope of the study, that's one of the questions we're working through right now with staff, because it was unclear in our earlier communications how big the pot is that we are looking at. We believe it’s the non-operational overheads. Think about the stuff that isn’t directly related to our teams that are out doing capital work every day. And the study will clarify that and also bring finality to what the bucket is that won't be capitalized going forward. And as we mentioned, that's really the question that we want to answer as part of this process, not only snap the line on capitalization, but then also determine through an AAO or whatever the right approach is how we're going to defer the other prudent costs for consideration in the next rate case. Hopefully, that helps.

Thank you.

I'm sorry, Vedula, you're breaking up. We didn't pick up all that.

I'm wondering whether the staff reporting in commissions will have any impact?

Yes. I don't have a clear answer regarding the commission determination. The wording and their order could definitely influence our accounting, but we prefer not to make any predictions and will wait to see the outcome.

And one last one in the STL Pipeline, given the EIS timeline you suggested until the EIS is completed and the October comment period, is it basically business as usual thing?

Yes, I'll take a shot. I think the question was, in essence, as we go through this remand process, is it business as usual for the pipeline, and that is the case. And so again, the EIS is targeted to be completed in October. Then you'll have the comment period after that, which pushes into 2023. So clearly, we'll get through this winter and really the remainder of the calendar year. And as Suzanne mentioned at the start of the call, given the weather events that we're having right now, we're very pleased to have this pipeline in service doing what it was intended to do all along, which is serving the customers at the eastern side of Missouri.

Thank you.

Our next question comes from Brian Russo of Sidoti. You may now go ahead.

Yeah, hi, good morning. Hey, just curious the uncertainty with the audit regarding overhead costs; does that create uncertainty regarding the $11 million ISRS filing that you're seeking recovery of?

Yes, Brian, so the ISRS filing, the commission's determination around the overhead issue started with the completion of this final order, December 23rd is the effective date. The capital we filed under the ISRS case all relates to capital deployed prior to that date. So they decided that they would look at that in context of this case, but it really shouldn't affect the capital deployed that is being sought to be recovered in that case. So it's a long way of saying, we don't expect it to, but again, as we look through this and think through the minutia of it, and way parties may play it out, we'll have to see how that plays out. But our expectation is the capital that we're seeking recovery of is deployed under the methodology prior to the commission change. Therefore, it should be fully recoverable in the ISRS filing.

Got it, understood. And I guess if you're going to file a case in March, we shouldn't expect another ISRS filing, right? Because you're not allowed to file an ISRS while you have a rate case ongoing, is that accurate?

Brian, this is Scott again. We can file a case, and we have done so in the past. We chose to defer the last case, the last ISRS under the most recent rate case. That case would have involved a change in the rules under legislation that was recently amended. Therefore, we deferred it to this latest filing. Depending on when the commission makes a decision and how that unfolds, we may decide to call on another ISRS during that timeframe. We reserve that option and will evaluate the timing to determine if it is beneficial or not. If the commission's final determination is three months away, we might opt to include it in the final resolution of the general rate case.

Okay. Are you still expecting normalized marketing margins in fiscal 2022, even considering the light start due to mild weather and lack of spreads?

Yes, Brian, this is Steve. As far as we can see, there's always some level of volatility. The market was not as favorable last quarter, and we've experienced increased volatility and more weather this quarter. That's our expectation. We will provide an update as we approach the halfway point of the year. It's important to remember that last year, we had significant value embedded in our storage positions from the previous summer due to disruptions in the natural gas market caused by COVID. We are currently in a more normalized market, so I wouldn’t put too much emphasis on the year-over-year differences. However, we are well-positioned to capitalize on market opportunities. It’s encouraging to witness some weather changes in the mid-continent, and we noted some volatility last week. These factors contribute to how we create value beyond the typical margins while serving our customers during the winter season.

Okay. And then just lastly, can you quantify what the margin impact was from weather versus normal in this first fiscal quarter?

Yes. We generally don't get down to that level of detail, but I will tell you that although the margins were down year-over-year, they weren't as far off from our expectations as you would imagine by looking at the year-over-year comparison. That gives you maybe qualitatively, gives you a little bit better view.

Okay, alright. Thank you very much.

This concludes our question-and-answer session. I would like to turn the conference back over to Scott Dudley for any closing remarks.

Well, thank you all for joining us this morning. If there are any follow-ups, we'll be around throughout the day. And looking ahead, we are very much looking forward to seeing many of you at the AGA Financial Conference in May, first time in a couple of years. So until then, be well, be safe. Thank you.

Thank you.

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