BKH - Earnings call transcript Q4 2018 | Black Hills Corporation

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Operator

Good day, ladies and gentlemen, and welcome to Black Hills Corporation Fourth Quarter and Full Year 2018 Earnings Conference Call. My name is Daniel and I will be your coordinator for today. At this time, all participants are in a listen-only mode.

Following the prepared remarks, there will be a question-and-answer session. [Operator Instructions] As a reminder, this conference is being recorded for replay purposes. turn over to Mr. like now the to presentation I'd Black Investor Jerome of of Hills Nichols, Director Relations Corporation. sir. proceed, Please

Jerome Nichols

Thank you, Executive Chief conference Daniel. Corporation's Good Evans, President are morning, everyone. Welcome and Chairman; Executive Rich and quarterly discussion Linn year Kinzley, David our Vice Emery, fourth and to full XXXX and Leading Financial earnings Chief Officer. call. President earnings today Officer, quarter Black Hills Senior

defined in contain by today, discussion of comments forward-looking some Commission, statements may there of as Securities During a our earnings and the we the Exchange such and number make are uncertainties comments. inherent

we Presentation may filed list beliefs a few are over differ cause on from our Form the most our now Commission Although Securities X that of comments. XX-K results turn some the our based results our direct expectations to We slide actual to XX-Q Exchange Website could you for and assumptions, that the a believe Form differ materially. David earnings recent materially our Investor on and Emery the factors I'll future and and release, reasonable for with expectations. to of of call

David Emery

morning, your call appreciate everyone. Good attendance the on Jerome. Thanks, We today.

for answer your great strategic Hills. for Evans initiatives key review turn transformational that a make extremely board then Evans and you which positions follows to questions. was year, it gas exit Linn success the few as focus I'm on of a the XXXX the expiration and succeeded We call growth not of provide directly aware, we above In the May electric and last will deserves both of earnings a to and Linn of my X, We XXXX, and of for affordably natural the industry our of business progress to Black I a term. Chairman capital plans us three-year utility. few be our until light the customers succession, X as Rich I gas well gas average year, reliably and all related today developed for achievements this provide during future as are our utilities, most electric was our that's of our will and January number likely serve to introductory Executive going I'll customer CEO, that and mention. just an comprehensive effective As is special ensure think will serve to that me continue made but and Rich results during Kinzley details our Linn We my and business on disclosed completed to and to and well over utilities. those the ability plan CEO also current oil and year, Board with of year comments for that earnings investment years to safely, growth shareholders our final long-term as the come.

resource reviews, utility company's employees industry. completed for the adjustment weather a made Wyoming, tariffs energy filed return which in the Wyoming renewable Jobs block-chain customers delivered in states; our we progress different settled the significant financial team, and combining center the Act to received plan had exceeding Nebraska. Dakota towards three year thanks Wyoming range, and states, and an for Wyoming, longest utilities XX We gas dispute in the and data from regulatory We consecutive multiyear we Colorado, extended critical in to of and we and our history. track Tax the the our in successful to now the a electric six top a dividend of we quarter continued Nebraska, distribution shareholders, fourth South approval integrity of streak our cost regulatory in innovative rider record help Cuts benefits even in is and little earnings multiple guidance power end filed annual solid results, a the three most rate now Colorado tariffs Under second of increases in of Wyoming guidance approval and in in our

got strong All is a and company of want thank total team XXXX success up the really customers excellent serve of future our to shareholders set their those The beyond. while returns. us successful appreciated. employee We've shareholder for with plan member achievements really XXXX strategic I an our extremely for and greatly our each are bright. personally communities, better in of and well to efforts providing

Our is well-positioned with work which industry to that I last the community best wish to strategy. the and that that, employee the to all and wrap Linn it believe investment team I to turn of had among as the XX up, in want in finally I leadership and the execute thank over And with you successfully Rich. I've and you all pleasure the I'll to CEO, over best years is

Linn Evans

my extraordinary today job employees served quarter, me then Rich finish opinion on our more Good strategy. that company opportunity provide enjoying years discussion highlights relationship around of creating XX and David a the than continue my Board well. they again and of as retirement know I Please on and we then Executive update of customers and their with our I'll as recognize to Slide am has happiness with and service his once life X our Dave take of and Dave. their of to I'll in company next and shareholders after let you, everybody. Thank our and Starting the and valuing with enter wish growing David very morning, chapter this the our leading, his together. done Chairman financial will presentation, and we great congratulate the cover Dianna, our Dave

to to the These achievements XXXX I achievements that large present recognize I going to Slide to not X, Before possible materials cover the morning. on certainly within both for Without able our investors, that investors, the moment would investments take to are this necessary and make like that. broad highlights without small entrust do not are reliable with our from to the be thank would represented They that we to investors. access cost-effective we we customers. we're us and and provide too energy a their capital them our safe savings

attention outstanding and year take job field, A Black our for persistent assure what In are protect injuries, number strategically. that very We sustained laser I the we call are job top for a potential discussed the take prepare on be us [tailboard] in to record that boots safety daily share everything starts do. in safety We before the an seriously. that a we and an XXXX of all all-time Also the ground delivering we in XXXX culture safety Black It Hills and from focused every quarter also on and We we meeting everything continues do do, this year precautions we had in and investors full with employee set and and commitment safety and operationally, hazards our customers we at to are [ph]. or and taken Hills an seriously. necessary that office, XXXX strengthened safety begins beyond. fourth a to financially communities. requires mind enhanced of the you, very with of fewest and with our employees all every

we being results. Our performance share entire the and to and of for ready we $X.XX gas strategy excellent showed above guidance weather Hills' all Operationally, planned delivered the we to the variety continue financial of natural weather execute across compared weather mainly range team reliable Financially, electric quarter through during demands $X.XX our Black to organization. utility deliver reported full to year. per strong enabling service for our peak earnings a share it time benefits normal and per Strategically our related our frontier agenda off XXXX. and the upgrading we and am come lights systems in for proud a I to achievements modernizing groundwork of way in comprehensive We've did utility electric from further year, customers. our when introduced to and western transform to continue celebrate for We experience regulatory serving of a origins long XXXth how for our customer responded. then laying back organization anniversary the customer cap the focus while demonstrated we the the executed our infrastructure XXXX we successes and

highlights plan On later Plan in Wyoming. electric On Now our our approval X utilities. energy our and renewable additional we for filed about November Wyoming in in XX, Resource we and details request moving for South Dakota presentation. tariffs to this to provide the Slide Integrated December our voluntary XX, and I

deliver to renewable A generation for generation balanced are as mix that resources resources through customers, assets it while serve customers We we reliable adding and and to natural that and balanced gas a of mix renewables. sense allow of shareholders. will affordable makes energy will us include coal, customers energy our recommending

resource the a that Importantly, that plan received multi-docket the In our from adjustment. approval the resource also shortfall plant modeling power most under power Wyoming Public multi-year, capacity is our Wyoming the Commission Wygen all October, near-term resolved to electric cost economic meet to notes scenarios. Service for I issues settlement related

through the XXXX, for this details settlement purchase related agreement will credits his financial power around I the clarity customer us update. Wygen and provides settlement in Rich the Importantly, to provide

electric XXXX, the those rate tariffs two both in with peak Last loads is X, the Commission utilities of on Colorado new in now both in growth This step on highlights Colorado. gas Slide quarter, X. summer, and jurisdictions. all-time Colorado utility record load Wyoming electric another our Wyoming February Colorado jurisdiction loads, peak set the Gas utilities new a services winner the filed indicating review Slide simplification. to our the gas and of proposal electric Turning to electric our in rates, consolidate set legacy then fourth and Colorado X, ongoing

that our October received legacy in legal single a the Commission filed a the XXXX, new We consolidation in approve company. with December. for the excuse Colorado that in and of last into may then consolidation, me You consolidation utilities to approval recall the request completed we -- we two

received that rate Gas, within utilities November, the to safe our In in first integrity our Colorado. capacity rider a for Wyoming. construct gas diversity we central million we delivery approval requests rate gas utility Colorado natural filing In review in have Wyoming late Our Arkansas, customers be to identified our in approval improve in to commission new service to received from acquiring recover XXXX. the operations also reviews mechanism investments October, pipeline, bridge the this we in $XX supply pipeline and state. And for since expect

Arkansas, utility New safety on robust experienced rates million in support reliability behalf being economic investments, of we infrastructure continued growth in investments to mid-October in northwest and as $XXX recover customers. of more of were than and support implemented the our our

declared and longest dividend represents Last in dividend quarterly owns to $X.X On interest wind XX% the expires are X. and in of I'm moving industry of In increased Slide are power the I continue. rate board Electric XXXX, power which operates energy annual Colorado, our annualized January renewable the a proud facility. record determined purchase we generation In agreement. in segment a Busch provides increase, Colorado to entire X.X%. the a XX, we our That Ranch $XX in and to of consecutive share, electric in we November a our utility the an XXth Busch per interest one of the also Now which Ranch Our track XX% agreement under by is records and utility our other December, $X.X acquired Colorado dividend in one Utility, farm XXXX.

Slide to Moving X.

David effective board Black Hills natural excited his utility term will as XX. and Executive December and deliver to shareholders. when and customers noted Chairman serve May humbled our He has expire, to we we on As as continued focus electric retired I'm to XXXX, benefits of lead CEO current strategy as as earlier until gas both

conversion year usage the successful back units full new XXXX. to from in gas back February increased our to earnings, rates X. and the return acquisition utilities. XX utilities our X million equity benefited stock, by weather. on infrastructure shifting our completed of new completed rate strong reviews fourth the source the results completed growth, with The this gas milestone November X.XX cold on excellent Now We of three of driven very new and quarter, and customer Slides per illustrate associated issued investments quarter gas residential common shares of in related we financing

which can we highlights of and in night. specific more release our on details You a find last year earnings full items distributed

for financial it I'll Now Rich? update. turn over to his Rich

Rich Kinzley

you morning good. Very Thank and Linn good everyone.

to items our to earnings better Slide a strong reconcile the start communicate noted last the on non the earnings Linn, this performance performance. that fourth special quarters XX As from and represent year full five XXXX. gap XXXX. slide I'll for year enjoyed we do full and as displays quarter bottom financial adjusted XXXX ongoing earnings in in we where This gap operations and the Working on top We measure. isolate from to slide. continuing

The source gas costs related acquisition to as XXXX. integration up in which of incurred wrapped first onetime is special item the part

the full tax of special continued The we financial reform. related to and you certain tax expenses second item law completed our the XXXX, revisions million not in to the on IRS benefit reflect the deferred the indicative of for part goodwill adjusted tax to amortizable for of as total $XX that recorded organization evaluation continued and legal At accordingly, legal benefit new The of performance is The and is is to share on and impacts to the largest in for year of see relates from the certain as on $XX primarily restructurings source year. of $XX items acquisition. a tax million we this this our In deferred for new law netted tax first basis. to we tax of new related XXXX, entities reform regarding able part increased effort The quarter benefit restructuring related $X.X as the year. gas full a them the benefit the simplify a fourth are guidance of QX quarter an in benefits resulting with and impact purposes items item associated statements, end reform. the XXXX, well page law. restructured expense as per special in an of our ongoing The in tax acquired QX,

quarter compared the per for XXXX. share quarter to EPS to of fourth share $X.X X% $X.XX in grew cents per adjusted fourth As a the

All in benefited fourth the for colder EPS adjusted full was $X.X utilities strong sixth compared full gas weather that EPS high $X.XX, to the the $XXX we is chart income which $X.XX EPS we we driven in our in EPS waterfall from growth The the For income early Slide favorable in share would year that fourth illustrates $XXX to XXXX in issued weather, compared per and X% share across been by November. in Linn end of chart than QX are sixth XXXX XXXX mainly per sense at QX quarter the quarter from increased on of to noted from XX, year guidance of on of as the to this have net $X.XX normal. sense service This XXXX. and XXXX. as of Backing normal earlier of major territories net $X.XX, our our drivers to range within amounts estimate the performance resulted tax. the bridging

the revenue in that for item reduction had customers. note tax. of biggest to These reduced of utilities Outside gross note are our of driving the on reductions year fourth XXXX, adjusted result benefits net full drivers I'll XX, XXXX. last as detail to improvement year. full year segment income compared increase for XX% performance quarter shortly. income waterfall fourth the substantial major XXXX The our demonstrated chart in net bridging illustrates slide revenue utility as reform our a by tax reform is income gas tax margin to passing we on quarter You'll a offset

on income As taxes. we with this XXXX. chart a all revenue reduction of chart quarter had Again the amounts fourth or in net

statements gross increase and tax $XX reduced income is margin utilities of gas fourth million adjusted strong delivering year so the customers reductions decreased XX, X% income operations the approximately in revenue over income due to X% on Operating As delivered drove from to comparing we percent of customers. Slide at XXXX reform offset improvement to displays and expenses year. our utility is which revenue is and onto as XXXX, mainly benefits year. Operating full And a Again full the and by passing continuing our the income. our over margin from fourth reduction neutral, by in both quarter offset reduced benefits by tax taxes. year result in bottom margin the in utility as taxes XXXX, gross for in growth increased this line effect net income reform EBITDA our adjusted quarter the

during expenses $X.X expenses, in XXXX, XXXX, million However, as recognized. people increased did gas focused in I targeted like areas non-recurring debt XXXX, normalized revenue bad operating X% included support a was items expenses areas engineering investments such XXXX, higher Arkansas few We to such due major to of year make over program. regulatory additional growth included the day our outage, approximately and in our capital out by Wygen increase which XX of million and and O&M operating operating customer hiring Backing yields and in year. O&M these amounts higher as $X.X

escalation be Also for remain objective is we we ahead, our XXXX, reductions Looking mentioned tax improving We million approximately of Related note to O&M near of income committed previously. onetime the I restructurings, $XX customers. legal to term of long expect our expense. efficiencies in recognized that during inflationary. primarily to

as benefits would Excluding have line net those expected. our million about XXXX which adjusted would to tax from is rate $XXX.X have million expense Income XXXX. been for the what onetime effective from we $XXX.X tax year, full our XX.X% increased in continuing in in X% operations

year of shares. Securities help our November late X, gas source common You'll increased we brought acquisition. to year XXXX, shared by per in count flat was investments upon it margin lower is and XXXX. in increases The to operating diluted facility The million shares $X.X On from electric, XX, compared XXXX. all our for the in the driven revenue predominantly, XXXX displays This XXXX away electric X.XX from utilities comparison segment our Overall shared tax owning reform. year. million amounted to million XXX in our difference information of to we're the reflective full and favorable XXXX fourth the diluted quarter electric corporate mandatory and earnings on in receiving and margin subsidiaries. conversion utilities revenue gross issued fund South actual and our note XXXX, headquarters This growth from share new weather, issued relatively count new offset Slide transmission over year income. XX revenues This due unit to facility gross and returns share pleased go over under to XXX. share Dakota just will our by with rent

Another notable million We Wyoming October. gross $X.X this PCA issue associated to we margin the in million, recorded reserve in XXXX settlement, item $X.X and million XXXX. relates reached another $X with in

we year, year by of detailed the in through Again which $XX.X attributed the year and quarter XXXX, benefits decrease expenses customers, have by million Operating Other to in $X and result million delivering tax. compared reform $XX operating expensed for in approximately rent quarter $X.X increased the is as to $X income lower is to tax were facility recorded Operating of our with to of income million XXXX terms and million the $XXX,XXX full XXXX So, each year offset full the management decreased settlement income over yesterday. in million with for depreciation. release expenses year million for shared in and approximately margin press changes XXXX. higher gross $XX associated our per vegetation fourth this be the settlement. XXXX, in the are

facility of growth three The year Gross effect income. over given margin of despite usage tax income weather. from related higher its territories, associated costs Operating higher customers. gross on to perspective from at tax million and approximately increased million Again $XX with margin. investments in from increased reform our result remarkable the were were year flat higher utilities per over contractor result over the increased the Moving increased operating is favorable on expenses increase revenue reform higher year-over-year the year $XX flat tax $XX employee customer year, as increase rate million increased quite collectible year customer completed new by expense. was XX, return accounts given new expenses infrastructure and margin service year higher reviews delivering Operating rates costs, depreciation gas growth benefits approximately an effective operating residential and a to remarkable of Slide is which our operating offsetting income achieving gas our operating in and utilities reform. of on

on slide earnings back utilities comparing XXXX. million, adjusted as their XX $XX you the As XXXX an increased on to by to contribution gas nearly saw basis

last about to compared normal margin from impact to weather gross Next and margin margin the weather gross and utilities electric quarter compared gross $XXX,XXX. normal $X.X In million gas utilities electric at impacted by by opposed I'll utilities, fourth both talk year. gas were to as an favorability approximately estimated our our compared our to

you that the the $X.X of $X.X quarter of revenue generation power by cash our generating contributions. realized quarter On units operating reduced segment that year-over-year normal XXXX gross power flow ability that quarter an compared million continued XXXX. the to On impacted segment For in XX, and scheduled had decreased $X.X quarter the year-over-year. primarily a Outside million XXXX. the contract full turbine $X.X by fourth an utility and in Wygen in from generation on fourth for favor and our $X.X approximately increase outages I to outage year-over-year, decreased fourth see availability year mining income of million strong increased continued million. XXXX major million strong by by driven the fourth million occurred planned by an compared weather estimated our electric compared margin gas income This to $XXX,XXX Slide $X.X O&M margins XX, and estimated gross outage, utilities Slide to XXXX, by operating its its

overburden driven removal unfavorable more $XXX,XXX decline prior compared revenue Wygen was decrease the quarter, the maintenance and the outage. X For This to tons with costs year. by primarily sold than decreased offset revenue by

increased by $X.X lower with was $X.X year by full-year pricing, operating of benefit partially higher income offset full for to the million million. tons mining and compared of year the increased full sold For the XXXX. Revenue XXXX,

cost maintenance costs decreased entirely almost our On mine had financial the mining mine-mouth in high perform XX to shows on-site Slide we level and sales at The sales lens million, through side, driven by ratings continues our primarily the a lower of capital XXXX. based and costs on flexibility. plus position with of structure, a plants to methodology. roughly cost half and financial pricing $X.X credit

to ratio $XXX to are ratings strong notes end XX% ratings. improvement XXXX. Moody's. the Finch November triple driven X. credit our This XXXX, by unit BAA Our end capital units total commitment the from of was from resulting of our used and the the XXX the short-term structure January at remain point XXXX. equity settlement to reduced and at debt off million acquisition on large credit the was and our received after proceeds We and the XX.X% improvement of below strong of and a the equity in through capital to cap debt. reduced S&P We due improve settlement plus Source met both debt by part of year-end common basis the B our Gas ratio of We final pay mandatories conversion was and to committed our XXXX to investment-grade maintaining At our

in ratio the a target to capitalization debt-to-total over the long-term. continue mid-XXs We

demonstrating We've expenditure rate capital Slide track potential. a XX program. strong market and plenty program, to future, our through our confidence us our at our future years access faster the cash fund the maturity at flows liquidity stable had to dividend growth the and of debt grown providing to revolver our earnings from we few a flexibility the past our strong equity very record. schedule and illustrates Looking businesses, dividend in manageable

$X.XX XX, with reaffirming Slide of and to range share earnings intent not we for share. of XXXX $X.XX reduce On with to XX% to range a As amount XX% increase our $X.XX to XXXX annual of of the payout we've guidance per and of for our stated dividend dividend the in policy a ratio the our earnings. is per past, maintain $X.XX we're

XX years our in As pulmonary call back confidence this regular systems. are growth maintain which and make enhance support the to growth reliability but assumptions I both the relied the customer-focused noted noted November, and on providing guidance safety strategy, our substantial The our quarter to guidance in upon don't intend guidance for on the demonstrate utility appendix. includes earnings two major XXXX are Slides of we XXXX in to practice, third and XXXX of capital and expenditures our formulate and XX

Our through CapEx primarily at CapEx about to to our million strategy. our again of in our to XXXX to Linn $XX the XXXX disclosure $XX XXXX our that, from both the increased fund equity program issuances the and increased total I program. once CapEx In quarter market to by to With help of due addition in back million am Dale going turn talk assume project. equity it continue previous has November. through million $XX wind disclosure XXXX Corey this We've to annual

Linn Evans

Slide update profitable workplace, four we I'll is past perform valued everything day better we great Thank our group be which our several every service, on continuing the our to categories, utility into and do. Rich. strategic growth, objective forth years, and consistent objectives best-in-class XX, overall with goals as that you, sets strategic in major

strategy. business, perspective, to utility rate the in electric regular our growth driven as customer With gas model growth divestiture and drivers focus traditional review completed have in our and nonutility standardization entire improvements a of continued shareholder more utility achieving the we utility continues earnings our from focus and aligned load we strategy. to strategic our execution acquisition we focused are final strategy execute long-term delivering more saturation integration traditional the our more Black XX, and filings be efficiency a across on of on On a process Slide to program, of burns tightly by the supporting returns, value From entire an team transitioning focused our customer-focused adding investment as customer-focused greater our capital we utilities utilities. Hills organization, return

of dividend target a we ratio XX%. XX% Additionally, to payout

XX consecutive now continue annual team determined track Our is to dividend what is increases. our record

our stable scale Moving light illustrates complementary to states. total the diversity serve customer on illustrated utilities locations more XX. seasonality and of This diminished company we gas are predictable. any broad in between this that and for business in as delivers XX, region diversity or the the and risk Slide slide growing earnings business reduces Slide electric Risk from are particular and

our investment and acquisitions for our These utility distribution XX, expanded systems and forecast the require opportunities reliability needs. have systems opportunities anticipate and over overall operations. needs, growth across strategic exceed reliability of investment, efficiency provide meet depreciation, larger earnings growth. These investment and to requirements Slide investment on of greater states safety capital customer's and customer years created levels systems more will our customer which more significant translate larger transmission long-term supporting eight focused greater investment On diverse ongoing growth. Our significant larger for and base. forecasted We interconnections to for

As outer we've prior closer we on around noted years add normally as get projects. as gain those capital the comfort more to calls, specific we years and

Our more for has we're which billion still $X.X total than potential expenditures opportunities, five-year are forecasted incremental capital evaluating.

forecast. capital capital our expenditures we quarter again adding project larger expect this of current infrastructure combined plans, actual our investment fully the We will With replacement our be investment greater. capital opportunities, updated programmatic XXXX our build-out by in with plan growth

a As million investment reminder added last plan to $XXX capital we the quarter.

will currently our growth want bridge meeting This as includes X Casper Busch and the for to capital a one industry the under sometimes pipeline and mega current initial some forecast the Our above in farm forecast base and utility including couple of rule growth. average. to wind earnings it's now includes more construction or to. the add capital also capital comment proposed Wyoming around projects I larger We translate earnings capital forecast investment rates believe Ranch referred natural Colorado. investment

growth larger will As we fruition, as XX% and in XX% consider to have Slide of base are achieve our our add breakdown. investment accelerated background investment forecast, an should other five-year that growth we XX currently don't Then our load illustrates objectives even an utility those is rates. have then in to meters capital start me excuse as focused we our higher recovered the the over forecast. we that in to projects matter. forecast and our earnings come customer of of forecasted capital investments utilities

this XX illustrates gas forecasted transmission. addition around mechanism. $XXX our well. The including as for our gas by primarily Slide for state, capital safety by long-term our includes type pipeline investment this year to to at natural capital by of utilities, gas on detail now, XX bridge base least a $XXX utilities forecast gas Slide and million annually related expectations investment Moving slide project for million both the breakouts distribution to outlook recurring provides recovery programmatic our investment and at

of investment As storage on on larger we our detail and utilities. XX, will capital this Slide the stated slide, provides incremental XX to I forecasted note expectation. projects Slide be electric pipeline base and for

safe our Again a which generation, capital our electric XXXX With as $XXX system. and increase expectation. the we will both million utilities, Wind XX million $XXX added before incremental utility continue to annual we expectation electric million gas recurring projects Corriedale forecasts annual current as plus annual for evaluate base our Large base to enhance XX% investment we is as ensure gas to our recurring our we've be incremental to of electric customer in programs utilities to transmission we illustrates grow, -- of noted to grow As continue large current for to and combined, our reliable across $XXX utilities. this expect and Project and natural $XX investment our million, million projects Slide across and renewable XXXX. of will investment $XXX system. expectation and

Slide plans executed completed our three rate and reform Arkansas first reviews, at provided to XX, Black successfully in Hills agenda well a tax as XXXX. Gas. comprehensive noted We states. We to Moving including extremely bridge regulatory customers We We earlier, six Corriedale benefits and Wyoming. approval requested natural electric the pipeline, resource prepared in We received for Wind Energy approval for project. the in filed an Wyoming. also in plan I

that related also have date, $XX expect we consolidate tariffs approximate in rate the utilities XXXX. legal recently approval to shows of the from services in Wyoming in we our We gas we Tax December tax first reform and and and also table to commenced the Cuts consolidation customers million We review proceedings rates, the To completed to legacy consolidate returned in two state. to the the effort half within gas Act. application benefits of filed The two a Colorado to utilities. and receive ongoing the Jobs

around Slide XX, efforts. Moving simplification to a multistate this timeline jurisdiction shows our slide

complexity our will We have regulatory three long-lasting states utilities; regulators, will stakeholders, deliver consolidation simplify and how proceedings of Colorado, to within believe Nebraska also other both through of entities provide and filings in quantity distribution which of entities service billing through of and multiple all also requirements. will fewer customer reduce each we Having Consolidation own We our multiple reviews, we our benefits the for tariffs manage. the jurisdiction including regulatory fewer gas and streamlined fewer these and and Wyoming. reporting the the states rate process filings. and customer improve strongly reduce risk

rate simpler in file likely will a and in likely rate and legal of request consolidation most consolidation the make a of current consolidated tax a also file in review Nebraska half prior review cases to We file processes likely first to the benefits. XXXX will approved, provided plan legal XXXX. one-time first in if will a file it some later Wyoming XXXX, quarter in corporate Electric XXXX. our request

commercial to their Wyoming cost-effective XX, a XXX% to program tariff request we Dakota and as provide it's will Slide option if industrial needs. of and South now Moving Renewable to up support This Commissions. submitted our to we of governments approved energy program approval utility it, larger tariffs Ready and scale both and purchase renewable call to customers for

to strong experience utility customers contracts renewable protecting every have Slide and load. renewable subscription the these this to the sufficient interest the XX excellence. on is customers potential years. This and of So for XX, program continue basically our we required offers designed from potential customers on of energy to far and loss day energy. operational larger essentially program we durations the investment systems on program from up focus while If base remaining keep electric is provide will a five years customers rate to that program this received slide, interest, fund we

excellent respect and the all we for internal we to reliability quite achieve country. number utilities did be not outstanding. this goal top to a of three of electric Even reliability our XXXX our safety employee in achieved continues the All delivered utilities injuries. electric though performance year, was quartile safety with record year fewest Our the in

our key and really capital objectives on projects, a the safety our last will I'm number including XXXX contains board South construction the Wind the our and XXXX our their year utility Hills team. all-in-all X productive Eagle executing We XXXX. gas with the our XX Slide review accomplishments we conclusion, introduces accomplishments of the electric across XXXX performance service. final number priorities the of Nebraska and our community Slide Pipeline, their also and three for employee how for natural in this Natural Bridge scorecards, Black program year scorecard many -- successes and In and about for Black execute transmission entire received recognition very We're very our excited on strategy. Dakota of Stegall a we be and the listing Hills a XX organization. of as proud City, scorecard feel completing line. our Ranch Busch was The year in the and I eventful and in major Farm includes across XXXX good of about of did very Rapid

continue transform We continue Rich's customer laser will results we're happy to we take our will please. remain delivering on questions become This journey the for and the to remarks We and industry. shareholders safest focused and utility the in experience. my concludes to

Operator

America comes of Dumoulin-Smith Merrill [Operator Instructions] Our with first question Bank from Julien Lynch.

Your line is now open.

Julien Dumoulin-Smith

all for Again David. best Hey. the Good morning. Congratulations.

is just kick just a above through get more average you talked thinking, you high period you're here, little strategy, Can about about about talked on that you what for a detail thinking you want level think are just at on off little things under-using that, perhaps the you being bit utilities. and So a ask it. sorry elaborate how you how current clear forecast but the amongst little bit to and to to

Linn Evans

capital this strong begin strong to we're continue we said we're spending is - that to closer into see XXXX to presentation and and We like we as and them XXXX up as see find and fruition next shouldn’t through to through in so routinely meetings see quarter of also on for and rate we we have get as that we we this are see add to the that say come we find we million said on, working projects I Julien working as spending those years, and we spending to the earlier to I $XXX they something capital ongoing that we before -- the going do. projects put

specially So our we are continue improve We and our safety system reliability within have our territories with serve enhance that territory. enhance we for the transaction growing. territories serve and and Gas now reliability custom Source to to that after opportunities customer

midterm the see and as above the growth at XXXX. in in average near-term we So industry well through least

Julien Dumoulin-Smith

Excellent.

the said how it I think B, tariff CapEx detail importantly capital. sure specific is the program, I And again A, just the in Obviously what Dakota quarter-over-quarter today else said etcetera you the CapEx excluded, out and the to in program, you to outside and about but more Natural think still the times magnitude it make the is program increase in and South of know so the can. if what’s a program CapEx a getting you nice of there of are Ranch still Bridge get that to program, you more I little CapEx, me tariff let outside least think timeline wanted in Busch of the into and Wyoming what several at do and

Rich Kinzley

of Rich. it's The supports which made. that's one CapEx, is we additions Corriedale Julien ready project, the the in renewable

So that's $XX you million of saw. the addition

Julien Dumoulin-Smith

Okay.

are excluded? anything seems like at excluded? and the discussed it capital but projects that's sort that seen this else we've know you that reflective I point other with is largely are just Now it's in of there there program quarter-over-quarter time respect the that to that increases are

Rich Kinzley

will this file Linn we're continue to firm add the that we we're or around that of project them it, we're Again projects cement CapEx until a it's we we've see don't is we to that but point adding on. earlier the comfortable up very typically at. the schedule the schedule where projects we the as we've Yeah, forward I'll lot working either CPCM to identified a that advance that to that otherwise I making was CapEx likely point reiterate different looking think you and get increase got

Julien Dumoulin-Smith

weather end paying chunk 'XX there, here, 'XX clarify you above be very roll have of on nicely follow-up 'XX top favorable should a materialized get to good to Year-over-year over not we it's just done, of that make missing that here, the to here sure wanted one attention tailwind any obviously you there. Rich I to quick to as we're anything?

Rich Kinzley

been January you're pretty latter and weeks to year half of but it If say process and then referring start books I to so first has share the our weather, was in closing we're nothing you to couple will warm the there, for of the know, cold. as January the

guidance kind this and the we that. that at in put that's of we normal that reaffirm out, make change averaging us materialized I point has characterize why I'd So it assumptions with nothing would that as our

Julien Dumoulin-Smith

but that drove nothing would flagging the just of that attention you of to it, beat Got to into pay here 'XX? be 'XX outside weather

Rich Kinzley

No.

Operator

[Operator Michael Instructions] Weinstein Our Suisse. next question comes from with Credit

open. now is line Your

Michael Weinstein

Ready CapEx a how and and terms of get you it material of does in become for program are future this about Renewable program, the driver point? So can at thinking growth what big on that some

Linn Evans

question. process the a Michael. good It's It's early in

it. been approaching expressed surprised have and I'd on ago We bit I analyze were with in how talking they interest months wouldn't customers interested strong would this a especially Dakota those and concept. them the I side Wyoming were frankly. little So and largest several South top, We've customers say we started our to our say

would will Intent establish we've we and program type top the list. with that way tariffs of there when working interest XXX high We we kind our the plan you regulators proposal who our the the filed we're to be just this eligible and tariff the tariffs talk customers our to Letters scratched to customers of fact had surface. is for of sign in interest if In that to asked down

personally. it beyond may So that opportunity ways go believe we to determine we have this have project, pretty that. will we I'm excited see. a to but I about

Michael Weinstein

And is of know strategy now emphasis but consolidation the on continues said Colorado you've coming that been at with view point up, I M&A to Wyoming a the least a deemphasized case and be that the utilities, acquisitions has from XXXX, of and know considered is would or what is about not included which divestiture, guidance, but going be additional in you is mentioned I divestitures there considered be that specifically in thing that forward? being the that consolidation any might through

Linn Evans

We no. is think the to we're in we're I the answer growing short like that answer territories They're no. have, in. the Michael, short the we that those business territories so that we and utility is and appreciate

Michael Weinstein

as I them contract you've any point, ended that they XXXX that to final if they coal kind don't did to on intend plant the PacifiCorp, got indication to whether what beyond if and and net life of not at with the decide PacifiCorp from extend their about impact of One was be income? Wyodak and would question for go know

Linn Evans

and conversations with closely now negotiations and PacifiCorp having their IRPs watching contract We've for pricing. coal the with we're reopen in been of frankly question. course Good them we as

and resource XXXX plant. recall very in note operating being operate a XXXX those XXXX show then presentations presentations the of I cost and you benefits why continue through IRP their the as they April now Wyodak show they're continuing IRP, to If to plan is that their making and low it

-- question will it. they we your believe operate of continue to half don't, we other the Now

size if were that for it, could will we'll it plants forward. to side we it other to our do at and we that going certainly mine of have cross we we but and from bridge The operate remaining perspective and get efficiently the cost-plus the as what close question right your they when as mine contracts

Michael Weinstein

of mitigate be off any there impact from So parts essentially shutting path would to mine. the earnings

Linn Evans

guess. my We so, it's think

Operator

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

Linn Evans

opportunity an outstanding XXXX for focus Thank we continued once take and this Hills. for your you, Hills employee have and everyone interest you. day, Black strategy our in again as on thank our for for their team you your interest I'll great as thank in thank Black to a execute XXXX and

Operator

participation for presentation. conference. your concludes This the you Thank in today's

disconnect. now Good may You day.

Black Hills (BKH) 8 Feb 192018 Q4 Earnings call transcript