Good day, and thank you for standing by. Welcome to the Avista Corporation first quarter 2023 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a Q&A session. To ask a question during the session, you'll need to press star 1 1 on your telephone. You'll then hear an automated message advising your hand is raised. To withdraw your question, please press star 1 1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Stacey Wenz, Investor Relations Manager. Please go ahead. Good morning. Welcome to Avista's first quarter 2023 earnings conference call. Our earnings and our first quarter 10-Q were released pre-market this morning. Both are available on our website. Joining me this morning are Avista Corp. President and CEO, Dennis Vermillion; Executive Vice President, Treasurer, and CFO, Mark Thies; Senior Vice President, External Affairs, and Chief Customer Officer, Kevin Christie; and Vice President, Controller, and Principal Accounting Officer, Ryan Krasselt. Today, we will make certain statements that are forward-looking. These involve assumptions, risks, and uncertainties, which are subject to change. For reference to the various factors which could cause actual results to differ materially from those discussed in today's call, please refer to our 10-K for 2022 and 10-Q for the first quarter of 2023, which are available on our website. I'll begin by recapping the financial results presented in today's press release. Our consolidated earnings for the first quarter of 2023 were $0.73 per diluted share, compared to $0.99 for the first quarter of 2022. I'll turn the call over to Dennis. Well, thanks, Stacey, good morning, everyone. Before we discuss our earnings, I'd like to say congratulations to Mark. You may have seen the press release we issued this morning announcing Mark's upcoming retirement. You know, it's an important decision, we're so happy, Mark, for you and your family. Mark's responsibilities will transition next week on May 11, following our annual meeting. Even though he'll stay on as Executive Vice President until his official retirement on October 1, today will be his last earnings call. I'd like to thank you, Mark, for your 15 years of dedicated service to Avista. You joined the company in 2008 I'm looking at some war wounds here, but, you know, during the Great Recession. You helped us successfully navigate through that global financial crisis and of course, the recent pandemic during your tenure. You know, those are some pretty significant achievements to bookend your time at Avista, and I could go on and on, all the great things in the middle of that, but we will save that for another time. In the interest of time. Throughout the years, you've earned the respect of many in our industry, and I've watched you, Mark, as you've applied all your experience in finance and in the utility sector to build and lead a strong finance team at Avista that will carry on your legacy long after you've retired. Mark is always the voice in the room that's advocating for our investors. Mark, you've built trusted relationships with bankers and investors to ensure that Avista has access to the capital necessary to fund our business and ongoing investments. T he investments that we need to make to maintain and upgrade our utility as we serve our customers. You've also been instrumental in overseeing the financial success of our other businesses, including the sale of our subsidiary, Ecova, and there's so much more in that space as well. Your actions have helped build Avista's financial strength and flexibility to position us for the future as we transition this role. Mark, we are grateful for everything that you've done, and we wish you all the best in your retirement as you begin your next chapter in your life. Mark Thies retiring, you saw that we've named Kevin Christie to become our new CFO, Treasurer, and Senior Vice President of Regulatory Affairs. He'll assume these responsibilities next Thursday at the close of our annual meeting on May 11th. Congratulations, Kevin Christie. Many of you already know Kevin Christie from his participation on these earnings calls. He's been on them for a while, ever since he stepped into his role as Senior Vice President of External Affairs, which included the Regulatory Affairs portion and then also as Chief Customer Officer for the company. Kevin Christie has extensive experience in finance in the energy industry. After earning a Bachelor of Arts degree in accounting from Washington State University, go Cougs, he joined GTN, or Gas Transmission Northwest, as an accountant and then progressed into leadership. Since joining Avista in 2005, Kevin has held numerous leadership roles, including senior director of finance in 2012, vice president in 2015, and senior vice president in 2019. In addition to his finance experience, Kevin brings expertise from across our business. Kevin, in one of your more recent accomplishments while leading our regulatory affairs team, you worked effectively with regulators to secure the approval and implementation of our multi-year rate cases to help provide long-term financial stability and success for the company. Your experience and credibility in the regulatory arena, along with the trusted relationships that you've built with our commissions over the last several years, these are obviously critical assets as you step into the CFO role. As part of this leadership transition, we made some strategic organizational changes that leverage the relationship and trust Kevin and his regulatory team have established with our commissions and other key external stakeholders. At the same time, it also formalizes the alignment between our internal functions of regulatory affairs, finance and accounting. We're grateful for how effectively these teams already work together because they play a vital role in Avista's ongoing success as we strive to achieve our allowed return. In the coming days and weeks, we'll be reaching out to all of you to introduce you to Kevin. If you plan to attend the AGA Financial Forum in 2 weeks, the American Gas Association Financial Forum, you'll get an opportunity to spend some time with Kevin and all of us. We look forward to that. Congratulations, Kevin. You have our full support. Now moving on. In April, we announced the results of our 2022 All Source RFP, a 30-year agreement for 100 megawatts of wind. When combined with our recent agreements with the Chelan County PUD, that we assigned at the end of 2021 and our 2022 agreement with Columbia Basin Hydro, more than 70% of our peak generating capability will be produced from non-emitting resources in 2026. We also announced 2 renewable natural gas contracts and the extension of our power purchase agreement with the Lancaster Generating Facility. The RNG projects contribute to our aspirational clean energy goals within our natural gas operations, and the extension of the Lancaster deal meets an important need for our cost-effective, reliable generation and ensuring adequate resource supply during a dynamic energy market, which we have been seeing lately. Each of these agreements contribute to achieving our clean energy goals and implementing our Clean Energy Implementation Plan. With rate cases, our strategy to return to earning our allowed return includes filing timely rate cases, and we are executing on that strategy with a multi-year rate plan that's been filed in the Idaho Commission, we did that in February, and a general rate case that we filed in Oregon in March. We continue to work our way through the regulatory processes for both of those proceedings. With respect to earnings, we are off to a solid start in 2023. Our results are slightly ahead of our expectations for the first quarter as we work to manage our costs. you know, we always do a good job of that, and we continue to, especially in the face of continuing inflation and increasing interest rates. We expected commodity prices to remain elevated throughout the winter, and they did. As a result, our net power supply costs were high in the first quarter of the year. We expect lower net power supply costs for the rest of the year, resulting in a net benefit under the ERM for 2023. We are confirming our annual consolidated guidance for 2023 with a range of $2.27 to $2.47 a share. However, on a quarterly basis, our earnings will differ from recent years and, you know, Mark's gonna get into that and share a bit more about what that will look like for us. With that, I'd like to now turn this presentation over to Mark one last time. Mark, take it away. Thanks, Dennis. Thanks for your nice words. Good morning, everyone. Even though this is my last call, I still have to start with a Blackhawks comment. Really, May 11th is when I transition out of my role and Kevin takes over. May 8th is really the key date, which is the drawing for the lottery in the NHL to see if the Blackhawks can pick up Connor Bedard. The hockey playoffs have been interesting as both the Presidents' Trophy and defending champion are out of the hockey playoffs this year. It will be exciting, and I'll continue to watch. Before I talk about earnings. I want to thank everybody, investors and analysts and people that, you know, bankers that have all followed Avista over the years. It's been a long run for me at Avista and then also prior to that at Black Hills, getting to know many of you, and I've really appreciated all that. I do look forward to being away from all of that, I will say, and spend time with my family. We have a new granddaughter, and I'll be very excited to do that. You know, I have to at least thank my wife, Betsy, for putting up with me all these years. It's been terrific throughout my career. I want to make sure that I thank and recognize all the people at Avista that I've had the privilege to work with. It's been an honor. You know, Dennis mentioned the strength of our accounting team, our finance team, our tax team and strategy, and nothing could be more true. They're terrific teams, and it's been my pleasure and honor to work with them for the last 15 years. With that, I'll get into the first quarter. You know, probably to start, I know we missed expectations from what people had, I'll take responsibility for that. I should have thought about that when we came out with guidance. We knew that the way it would play out because of the allocation, how taxes are spread over the year and how our tax credits impact our earnings, that our quarterly differences were going to be there. We just had never given quarterly guidance before. That I will take accountability for. We beat our expectations in this quarter. When we model it out, we decided that we're gonna come out and put quarterly expectations out there. In our guidance, we have those quarterly expectations. I'll get to that a little bit later, but I really wanted to start with that. Also in the first quarter, you know, our earnings were down. We had increases in our margin, due to general rate cases that we've, you know, completed last year and this year, then also customer growth. They were offset, as Dennis mentioned, by how higher net power supply costs, which we expected coming into the first quarter. The Energy Recovery Mechanism in Washington was a pre-tax expense of $7.6 million in the first quarter compared to $1.9 million. That's, you know, almost $0.10 difference from the prior year. For the year, as we look forward, we expect the ERM to come back and be a positive within the deadband and about $0.03. While it was a negative in the first quarter, we do expect that to come back later in the year. We've talked about this before. We did file our rate cases in 2021 for Idaho and Washington, that had an impact of our tax customer credits. That is rolling off at the end of this year in the third quarter. That's what really causes the difference in our utility margin and our effective tax rate. When all that moves, we end up spreading more of our income from the first quarter into primarily the fourth quarter. When we look at our guidance, and I'll really just get back to, you know, the guidance. Excluding the ERM, the first quarter was 35% of our earnings, our annual expected earnings at Avista Utilities. I'm excluding AEL&P and other. They're small and pretty ratable over the year. We wanted to come out and say, we expect the distribution of the remaining quarters to be 5% of our earnings in the second quarter, 10% of our earnings in the third quarter, and 50% in the fourth quarter. That's all primarily due to the allocation of income taxes. You know, like I said, we did make our first quarter, and we're happy with that. I know we've never given quarterly guidance before. I think it's important to do that. That's, that's how those amounts will be spread. Moving on to kind of the capital committed, as Dennis mentioned, we continue to fund the, you know, the necessary capital in our utility infrastructure, and we expect Avista Utilities to spend $475 million this year, AEL&P to spend about $19 million, and other businesses about $15 million. From a liquidity perspective, we did close a bond offering in the first quarter, and we have $264 million of available liquidity under our committed lines of credit and $26 million under a separate letter of credit facility. In the second quarter, we do expect to increase the capacity on our line for our credit facility from $400 million to $500 million. With respect to equity, we do expect to issue $120 million, of which we issued $30 million in the first quarter. Now moving on to the earnings guidance. You know, as Dennis previously mentioned, we are confirming our guidance, you know, 2023 guidance of $2.27 to $2.47 a share on a consolidated basis. For Avista Utilities, this is where we have a little bit of a, you know, a little bit of more detail for you. We expect Avista Utilities to contribute $2.15 to $2.31 per share, which is consistent. You know, the midpoint of that range does not include the ERM, which, while negative in the first quarter, we do expect to be $0.03 positive for the year. Our first quarter earnings, I said this earlier, but I wanna repeat it because I think it is important. It's a change for us. Our first quarter earnings represent 35% of our forecasted annual utility earnings, and that excludes the impact of the ERM. You have to add back the -$0.08 in the ERM in the first quarter, and then the math gets you there to 35%. We expect 5% of our earnings in the second quarter, 10% in the third quarter, and 50% in the fourth quarter. Again, all of those exclude the impacts of the ERM in each quarter. As historically we've done, we will continue to report on where we are in the ERM each quarter and where we expect to be for the year. Our guidance also assumes timely and appropriate rate relief in all of our jurisdictions within the utility. We also expect AEL&P consistently to contribute $0.08 to $0.10 and our other businesses to contribute $0.04 to $0.06, which is consistent with our past guidance. Our guidance generally only includes normal operating conditions and doesn't include any unusual or non-recurring items until the effects of those are known. Now I will turn the call back over to Stacey and for questions one last time. Thank you. We welcome your questions. As a reminder to ask a question, please press star 1 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 1 again. Our first question comes from Brian Russo with Sidoti. Hi, good morning. Good morning, Brian. Hey, just, you know, thank you for the quarterly dispersion of our earnings. Very helpful. When we think about the ERM, you know, and the reversal of the expense as we move through the year, you know, when might the bulk of that, you know, occur? Is it gonna be It seems as if, you know, hydro or snowpack is high, and so assuming normal runoff, would you get the biggest benefit or reversal of that expense in the second quarter? I mean, we'll speak to those each quarter. We'll come out with it. What we do expect is some of that reversal in the second and third quarters. We haven't given the specific guidance for the ERM. We will each quarter, as we always have, Brian, come out and say, "Here's what the impact was, and then here's where, you know, we expect it to be for the full year." We'll continue to do that, but we're not giving guidance on this one as to specifically when and how much it comes off, but we do expect it to come off for the most part in the second and third quarters. I'm not gonna go further than that. Can you what are the water supply levels like, you know, in your major areas? Well, for us, you know, we're, you know, around normal on hydro and we, you know, Right now it all comes down to how does it melt off, you know? We're just starting. I mean, really, it's been a long, cold spring. Those are good. Long, cold springs are good. It keeps the snow up in the mountains. We're just starting to hit some heat now, so we're getting some of that hydro. You know, We expect normal hydro at this point, assuming that the, you know, we don't have anything significant with, you know, 2 extended period of high heat. That's always the case, and it looks like we'll be there right now. Okay, got it. Also just, you know, in your effort to improve, your earned ROE or returns in Washington, you know, what is the rate case strategy? I know we got, you know, some time before you'd actually file, but, I mean, are you looking to file for, you know, for new rates to be effective for the full year of 2025? Hey, Brian, this is Kevin Christie. Thanks for the question. Yeah, we'll put together our rate case strategy over the next few months. We're already entering into the test period, and we'll leverage the last case that we put forth to achieve the 2-year rate plan. The idea, I think, is to get it filed as soon as we feel we need rate relief, which will be pretty darn close to that first date after the 2-year period of the last case. Okay, got it. Just in Idaho, can you remind me what was the requested ROE that you filed for, and what was the most recently approved ROE in Idaho? Brian, we filed for a 10.5% ROE in Idaho. In the prior case it was a 9.4%. Okay, great. that's all I had. Mark, you know, good luck in the future. It was a pleasure working with you. Thanks, Brian. You as well. Our next question comes from Sophie Karp with KeyBanc. Hello? Good morning, Sophie. Good morning, Sophie. Hi, good morning. Thank you for taking my question. Mark, you will be missed. I'm sure you have better things to do than to go to all the conferences with us. You may not get as many Blackhawks comments. A couple of questions for me. First, like, are you guys thinking of giving actually quarterly guidance maybe going forward? You've, you know, just trying to read between the lines of your remarks, and it's very helpful to get some breakdown ex ERM, but is that something that you would consider? I think we have to look at it this year because of the allocation of the. This all comes back to those tax customer credits and then how taxes are allocated across the year through the accounting principles. I'd love to have Ryan Krasselt talk to that, but we don't have time for this call to go through all those accounting items. To the extent they are significantly off where we think normal expectations would be, we have to consider it. Like I said, I should have done it. We should have done it, you know, at the start when we came out with our guidance and did not. I take responsibility for that. We probably should have done it. I'm not a fan of quarterly guidance because, you know, things can move around a little bit. It was so significant this year we needed to do it. To the extent next year turns around and it's there, we'll have to consider that. That's a future consideration that I'll defer to Kevin and Dennis and the team to think about that. As a matter of course, I'm not a fan of it, consistently because there's just enough variability that I don't want to have to try to explain quarterly differences when we're still on track for a year, would be my sense. Got it. Got it. Thank you. On the ERM recovery, I have it in my notes that you were supposed to file for it in April. Can you just remind us if, you know, if you haven't did file for that and what the cadence is from here on of kind of like deferred cost, power cost recovery filings and the actual recovery, I guess? Hi, Sophie, it's Kevin. Thanks for the question. We did make the filing as scheduled, and we're in the middle of the process moving towards recovery of the costs related to the, what we call the bucket, the $30+ million that we had. That's in place, and we would expect the commission to move forward and approve it. Is there like a process where, you know, you could propose some sort of a more automatic recovery of that, or is that just still gonna be part of a general rate case? No, it's outside of rate case. It's its own filing. We've made that filing, and we would expect the commission to approve it outside of a rate case, and we would see that filing in the near future for new rates in effect this summer. Okay. Got it. Thank you. That's all for me. Thank you, Sophie. As a reminder, that is star one one to ask a question. Our next question comes from Anthony Crowdell with Mizuho. Hi, good morning. Morning, Anthony. Just on the side of Avista Utilities, the 2023 guidance of $2.15-$2.31 would represent a pretty significant increase from the $1.61 from 2022. Can you provide any caller on where you expect to be within that range, if there's a bias towards the high, middle, and low? Then sort of what are the drivers that are gonna allow you to make up that pretty significant gap? Well, I mean, part of it is 2022 was a significantly down year. We lowered expectations several times over the course of the prior years and didn't have time to really get a rate case, you know, in our jurisdictions. In Washington, our largest jurisdiction, to get timely relief until we, you know, we finally at the very end of 2022 got the 2-year rate case that Kevin and his team came up with. That really has, you know, significantly helped 2023 relative to 2022 with the rate cases from that. A second year in Idaho and then an Oregon rate case. Those all three of those helped, and we had higher costs in 2022 that we weren't able to, you know, work through. With those rate cases and some cost management, as Dennis mentioned, we were able to, you know, come out with the stronger guidance. The stronger guidance in 23 versus 22 is also more consistent with historically where we want it to be. We're not quite all the way back yet because inflation kind of kicked in right after we settled Washington. You know, as Kevin mentioned in the strategy, we'll file again in Washington, and we've already filed in Idaho and Oregon. As we go forward, we believe with timely rate relief, which is important, and we need to work with our commissions, that we will be able to get back to earning our allowed return. That's just gonna take some time. That's really the difference. The ERM is, it's negative right now in the first quarter, $0.08, but we do expect it to be for the year back to $0.03. If you're looking at, we generally guide, we give you a range which implies we're guiding to the midpoint. With that, if the ERM ends up in the positive, we would expect to be slightly positive. In the upper half of our range is what our guidance is for Avista Utilities at this time. Okay. Understood. I know you mentioned on the fourth quarter call that you expect about 80 basis points of regulatory lag. As you work through rate cases this year, sort of when do you see that beginning to ease? Is most of that related to Washington, or as you work through cases this year, do you see that easing in 2023, 2024, 2025? You'll start to see a little bit of it because again, if you look and this is just very high, high level, you know, 60% Washington, 30% Idaho, 10% Oregon, just as a very high level. There's a couple of percents off on there, but that's close enough. Washington, we're not you know, we filed that, we got a very good outcome for that. Inflation hit right after that. It's gonna take until that next case that we file that really affects the end of 2024 and into 2025, is where we'll have the opportunity to get back in Washington. We'll continue to manage our costs, we'll continue to run our business efficiently. From a regulatory perspective, that's where we are. Idaho and Oregon, we just filed, right? We just filed in February in Idaho and in March in Oregon. Idaho rates we expect to go into service September 1st, assuming a normal process with the commissions. Oregon would not go into effect until January 1st of 2024. 2023 will get a little bit, and it's included in our expectations from Idaho. 2024 we'll have Idaho and Oregon on a more current rate schedule. Washington will be what we need to pick up, and that will occur in 2025. Okay. Understood. Finally, I know obviously not a large driver of 2023 guidance at this point, but can you touch a little bit on the biotech investment from the end of last year and what led you to report a gain in fair value? Kind of some of the assumptions that led to that fair value calculation, given that it was such a large driver of last year's results and then not a significant driver this year. Well, again, you know, we value that quarterly. It didn't change significantly in the first quarter. It's valued quarterly. As we talked about last year, you know, that investment started as a biofuel investment and turned into the biotech because of what they developed, and they are in different clinical trials and have created value. You know, the results of those clinical trials are gonna be 12 to 18 months. We don't really expect additional, you know, significant additional news on that till really into 2024, kind of mid-2024 and later is when we would expect more news. Some of that is just news-driven. They got the first round, and there was some value created, and we had to report that. We did report that last year, the end of the year. Now we just continue to manage that as we go forward. We will report that every quarter to the extent there's anything that goes on with that, and this quarter was a quiet one. Okay. Understood. That's all for me. Look forward to seeing you at AGA. Thank you. That concludes today's question and answer session. I'd like to turn the call back to Dennis Vermillion for closing remarks. Well, thank you. You know, as we sign off today, I hope you all join me in wishing Mark a happy retirement. Mark, I know you're counting down the days and looking forward to having more time with your family and, you know, with the granddaughter and, you know, doing all the fun things that you like to do most. I know there's probably some fishing in your future. Soon. Blackhawks, you know, you win and lose with them, I know. That'll turn around at some point. It always does. Then, of course, some fine wine. Cheers to you on a wonderful retirement. Thank you. To everyone on the phone today, thank you for joining us. We appreciate your interest in our company, and I wish you all a terrific day and a great week. Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.