Welcome to the Q3 2019 Earnings Conference Call. My name is Adrian and I will be your operator for today’s call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions] Please note, this conference is being recorded. I will now turn the call over to Mr. John Wilcox, Investor Relations Manager. John Wilcox, you may begin.

Thanks, Adrian, and good morning, everyone, and welcome to Avista's third quarter 2019 earnings conference call. Our earnings were released pre-market this morning, and 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. I would like to remind everyone that some of the statements that will be made today are forward-looking statements that 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 2018 and 10-Q for the third quarter of 2019, which are available on our website. To begin this presentation, I would like to recap the financial results presented in today's press release. Our consolidated earnings for the third quarter of 2019 were $0.08 per diluted share, compared to $0.15 for the third quarter of 2018. For the year-to-date consolidated earnings were $2.21 per diluted share for 2019, compared to $1.37 last year. Now I'll turn the discussion over to Dennis.

Well, thanks John and good morning. I'm very excited to be here today and I am deeply humbled by the honor and privilege to serve as Avista’s Chief Executive. I've been at Avista for 34 years and as Avista’s President for the last 10 years. I've worked closely alongside Scott. He has been a great friend and mentor to me and he has achieved so much for our shareholders, customers, employees and communities we serve and I know everyone at Avista is grateful for his leadership. I want to thank Scott for all that he has achieved throughout his career for our company and we all wish him well in his retirement. We will miss him greatly as he is no longer involved on the day to day operations of the company, but of course we look forward to continuing our work with him on the board of directors. At a time of great change in the energy industry, I am excited to meet the future head on and I am confident that Avista is prepared to meet the challenges ahead including achieving our clean energy goals proactively set. Now turning our attention to quarterly results, our earnings at each of our segments met our expectations for the third quarter and we remain on track to meet our consolidated guidance for the full year. Regarding regulatory matters in October, the Oregon Commission approved our natural gas general rate case settlement and new rates will go into effect January 15, 2020. In Idaho, we were able to reach an all-party agreement where, if approved, new rates would take effect on December 1, 2019. The outcome is in line with our expectations. In Washington, a settlement in principle has been reached in the current general rate cases with all parties and all issues with the exception of decoupling and Energy Recovery Mechanism related issues. The Settlement Stipulation is in drafting stage, and the parties, including the Public Counsel Unit of the Washington Attorney General’s Office and the Sierra Club, are securing the necessary approvals in their respective organizations. The settlement stipulation is anticipated to be filed on or about November 21, 2019 and will require a commission approval. We believe that the terms of the settlement in principle are fair for our customers and shareholders and finally we continue to work through the regulatory process for the 2015 remand cases. And then finally based on our 2019 results to-date for the full year of 2019, we are confirming our earnings guidance with a consolidated range of $2.83 to $3.03 per diluted share, this includes $1.01 per diluted share for the termination fee received from Hydro One in the first quarter, which was partially offset by the payment of related transaction costs. And now I'll turn this presentation over to Mark.

Thank you, Dennis. Good morning everyone with my usual obligatory Blackhawks comment, we stink. We have not started out the season very well and need to turn it around, but fortunately when we go to EEI this weekend, I will not be wearing a Rangers tie because we haven't played them yet. For the third quarter of 2019 the Avista utilities contributed $0.09 per diluted share compared to $0.18 in 2018. The decrease over the prior year is due to an increase in operating cost, increased appreciation and power supply costs mainly related to the earn. On a year-to-date basis Avista utilities contributed $2.11 per diluted share an increase $1.39 last year and again primarily due to the receipt of the termination fee from Hydro One as well as the positive impact from general rate increases and customer growth. These increases were partially offset by transaction costs related to the Hydro One transaction and associated with termination fee. Also increased transmission distribution and O&M costs and increased depreciation and amortization. In addition, in the second quarter we announced a $7 million donation commitment that impacted our results. The Energy Recovery Mechanism in Washington was a pretax expense of $2.4 million in the third quarter compared to the pre-tax expense of $0.2 million last year. And year-to-date we have a benefit of $1.1 million compared to a benefit of $5.6 million last year. We continue to be committed to invest in the necessary capital in our utility infrastructure and we expect Avista Utilities capital expenditures to total about $435 million for 2019. Regarding liquidity, at the end of September we had $179 million available liquidity under our committed line of credit and in September we entered into a bond purchase agreement to issue $80 million of first mortgage bonds in November…

Thanks Mark. We now like to open up this call for questions.

Thank you. We'll now begin the question-and-answer session. [Operator Instructions] And our first question comes from Richard Ciciarelli from Bank of America. Your line is open.

Hey, morning. How are you guys doing?

Good morning, Richard.

Good morning.

Hey, just curious if you can provide a little bit more details on the Washington rate case settlement, potentially around the return parameters and if it includes any forward-looking attrition adjustments and what your expectations are for regulatory approval in timeline now?

Hi, this is Kevin Christie. Thanks for the question. We have a settlement in principle and the details are not available until we file our stipulation on 21st of November. So the details that you're looking for would be found there. I can say that we know that Washington on 11 month approval period state, so we would expect to have final approval on the settlement, assuming that they approve it in April.

Got it. Thanks a lot. And then just, I'm curious why the remand case was pushed back, I guess December 6 for the hearing and what has been the receptiveness thus far to the $3 million settlement proposed?

This is Kevin. The date was moved back at the election of the commission. And I don't know exactly why, but my suspicion is that they needed more time to consider the arguments. Can you remind me of the second question you asked there?

Yes, just the receptiveness, the $3 million settlement that was proposed in the case?

No, that was just what we provided in testimony as a potential compromise position with the parties.

Got it. But no commentary thus far on stat…

We wouldn't expect commentary in the process given where it's at. We're moving towards the hearing and litigation.

All right, makes sense. Thanks a lot.

Thanks.

And your next question comes from Phil Covello from ExodusPoint. Your line is open.

Hi guys. Thanks for taking my question.

Good morning.

My prior question was actually just asked, but I just wanted one follow-up on the settlement stipulation. I guess, just how confident are you that the commission would uphold an eventual settlement? Because in the last several rate case, I think there have been a few alterations or ultimately rejections of that settlement. So just trying to get a sense of your expectation there and how we might think about that?

So this is Mark. Typically, in our history when we've had all-party settlements with respect to general rate cases, the commission has been – has historically been favorable and approved those. The ones that you're referring to weren't really J.E.B. cases. Those were the transaction around the Hydro One transaction. And with all of the different things that occurred around the Hydro One transaction, the commission ruled against the all-party settlement. They did that in each of the jurisdictions when we had them, but that was a completely different case. Historically, in general rate cases when we're talking about changing our rates with respect to our capital deployment and our expenses, they have been historically approved. That doesn't mean that in the future they're automatically approved. The commission has to weigh the facts and circumstances of the case, but that's what's historically happened.

Okay, thanks guys.

[Operator Instructions] And our next question comes from David Emami from Verition. Your line is open.

Hey, thank you. Congrats guys on the settlement. I think that was a huge positive. I'm just not sure if you can share any more color, but if it's possible, I'd be interested to hear about settlement kind of came around because reading the intervener testimony, I have to admit, I pleasantly surprised you guys were able to reach an all-party settlement. It seemed like there was a kind of quite a spread in the bid asset there.

Yes. And that happens from time to time. And in the parties always when we have a process like this, the parties always get together and look to see if there's a way that we could compromise and reach a settlement. And sometimes we're able to and sometimes we’re not. In this case, it took a couple of times. This was I think the second time around of having settlement discussions and the parties were able to come together. And the details of that, they just really can't come out until we file them, and so that'll be on or above, like Kevin said, the 21st of November, so a couple of weeks. But we were able to get all the parties together and reach a settlement. So we did because we felt that it made sense for, like we said in our release, our customers and our shareholders. So we believe that's positive.

Okay. Awesome. Thank you. I agree.

Thank you.

[Operator Instructions] And we have no further questions. I'll turn the call back over to the speakers.

I want to thank everyone for joining us today. We certainly appreciate your interest in our company. Have a great day.

Thank you. Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.