Good morning, my name is Kree [ph], and I will be your conference operator today. At this time, I would like to welcome everyone to the Avista Corporation Q1 2021 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions] As a reminder, today's conference is being recorded. I would now like to turn the conference over to Mr. John Wilcox. Sir, you may begin.

Thank you. Good morning, everyone. And welcome to Avista's first quarter 2021 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 2020 and our 10-Q for the first quarter of 2021, 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 first quarter of 2021 were $0.98 per diluted share compared to $0.72 for the first quarter of 2020. Now, I'll turn the discussion over to Dennis.

Well, thanks, John, and good morning, everyone. I'd like to begin my remarks this morning by acknowledging that after managing through the impacts of COVID-19 for more than a year now, we're encouraged to see some light at the end of the tunnel as more people are vaccinated against the virus and the economy shows signs of recovery. Yet we know it could still be a while before we're able to return to the offices or settle into any type of new normal. In the meantime, we'll continue to provide care and compassion for those who are struggling to make ends meet through energy assistance programs, through payment arrangements, and even COVID-19 debt relief grants. I am extremely proud of our employees, despite these unique times, they have adapted easily and continue to move our business forward on all fronts. The quarterly results, we are sharing with you today demonstrate their drive and determination to get the job done. Recently, we've taken steps to move us toward a clean energy future. A few weeks ago, we announced our aspirational goal to reduce our carbon emissions for natural gas by setting new natural gas goal of being carbon-neutral by 2045, with a near-term goal of reducing greenhouse gas emissions by 30% by 2030. Our strategy to achieve lower emissions includes investing in new technologies like renewable gas, RNG, which is RNG hydrogen or other renewable biofuels. We're evaluating how to best integrate RNG into our gas supply portfolio and researching hydrogen as another renewable fuel. We will also focus on reducing consumption through conservation and energy efficiency and improving our infrastructure. We realize this is a heavy lift. There are several critical pieces that will need to fall into place in the coming years. Technology costs must come down, new innovations…

Thanks, Dennis, and good morning, everyone. So last night, my Blackhawks were eliminated from the playoffs. So we have five more games left, but we have no chance for postseason play this year. So that's a sad day for me. But on the happy note, we had a great first quarter, the Avista Utilities contributed $0.92 per diluted share compared to $0.68 last year. And compared to the prior year, our earnings benefited from higher utility margin. And we had general rate increases and customer growth. The first quarter also included an accrual -- the first quarter of the prior year had some negative accruals in it related to the Washington remand case, a 2015 case, and disallowances around Colstrip in an accrual for the Colstrip community fund. That all happened in 2020 that were drags on 2020 earnings. The ERM in Washington with a pre-tax benefit of $4.3 million in the first quarter compared to $5.2 million in the first quarter of 2020. We continue to be committed to investing the necessary capital in our utility infrastructure, and we expect Avista Utilities' capital expenditures to total about $415 million in 2021. With respect to liquidity on April 5 of 2021, we repaid the outstanding balance of our one-year credit agreement that we entered into in April of 2020, and that was to remind you to make sure we had sufficient liquidity at the start of the pandemic. On April 30, we had $182 million of available liquidity under our $400 million line of credit, and we expect to extend that line of credit into a multi-year deal in the second quarter. We expect to issue approximately $120 million of long-term debt in 2021, and $75 million of equity. As Dennis mentioned earlier, we are confirming our 2021, 2022, and…

And now, we would like to open up this call for questions.

[Operator Instructions] Your first question comes from the line of Kody Clark with Bank of America.

Hey. Good morning, everyone. Thank you for taking my question.

Good morning, Kody.

Good morning. So, maybe first on the RNG side. I know it's early, but I'm wondering if you're planning on any unregulated investments and production or otherwise. Are you just thinking about it in terms of integrating it into your distribution system and maybe there is some incremental CapEx on interconnection with the facilities, but just wondering how you're thinking about this?

Yes, Kody, this is Dennis. At this point in time, it's the latter. So we are looking at it as a utility resource that would be integrated into our system to meet our utility loads.

Got it. Okay. And then maybe just higher level, if you could share your thoughts on the puts and takes of potentially exiting Colstrip, removing it from rate base and replacing it with PPAs that earn a WACC return under CETA. I'm kind of wondering how this plays into your post 2023 growth outlook.

Well, with Colstrip, it's clear when you look at our Integrated Resource Plan recently filed. And we've been stating all along that it will need to exit our portfolio at the end of '25. So we recently issued an RFP for new resources in that. As a result of that process, the Chelan County PUD contract that I referenced earlier was selected. We will continue to meet our needs going forward through a competitive process. We need to -- any self-build options we would have, we would have to stack up with an RFP what might be available in the marketplace. And of course, the end obligation and desire here is to get the most cost-effective resources for our customers to serve their needs going forward. Does that help?

Okay, got it. Yes, understood that. That's all I had. Thanks again for your time.

Thanks, Kody.

Your next question comes from Sophie Karp with KeyBanc.

Hi. Good morning, guys. How are you?

Hi, Sophie.

Hey, I was wondering if you could comment may be on the Montana lawsuit related to Colstrip that is being reported sort of any color you can offer on the positions of the parties and what do you think will transpire with respect to the bill that they passed in this proceeding?

Well, this is Dennis. It's hard to know what will transpire at this point. As we've talked before there are six owners in the plant. We've all been working in good faith to try to find a solution that meets the needs of all parties including the parties in Montana, and just a very complex situation. It's unfortunate that the bills in question, Senate Bill 265 and 266 were signed into law. It complicates matters. It adds complication to an already complicated situation. And we were just in a position where we need to protect our rights under the current agreement. So those have been -- those are in process, and it really is, at this point in time, Sophie, impossible to know how those will play out. But we will keep you updated as we go forward.

All right, thank you. That's all I had.

Thanks, Sophie.

At this time there are no questions.

Okay. I guess we will conclude the call. I want to thank everyone for joining us today. We certainly appreciate your interest in our Company. Have a great day.

This concludes today's conference. You may now disconnect.