Good day, and thank you for standing by. Welcome to the Avista Corporation Q4 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] 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, Investors Relations Manager. Please go ahead.

Good morning. Welcome to Avista's fourth quarter and fiscal year 2022 earnings conference call. Our earnings and our 2022 Form 10-K were released pre-market this morning, both are available on our website. Joining me this morning, our 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. Some of the statements we will make today are forward-looking and involve assumptions, risks and uncertainties, which are subject to change. For reference to the various factors, which could cause results to differ materially from those discussed in today's call, please refer to our 10-K for 2022, which is available on our website. I'll begin by recapping the financial results presented in today's press release. For the full-year, consolidated earnings were $2.12 per diluted share for 2022 compared to $2.10 last year. Our consolidated earnings for the fourth quarter of 2022 were $1.05 per diluted share compared to $0.71 for the fourth quarter of 2021. Now I'll turn the discussion over to Dennis.

Well, thanks, Stacey and good morning, everyone. I hope the new year is off to a great start for you all. Avista ended 2022 with a memorable accomplishment in November. Mark and Kevin and I were among a group of Senior Executives and Board Members who stood on the podium above the New York Stock Exchange to ring the closing bell to celebrate our 70th anniversary of being listed on the NYSE. It was pretty cool. We are among the top 10% of the longest listed members of the NYSE. Very few companies can state claim to such an extraordinary achievement. As Avista's President and CEO, I couldn't be more proud of all the current and former employees who came before us, who helped achieve this major milestone. We certainly could not have done it without them, and it was certainly an honor for me, a very special experience that I'll never forget. If you look back over more than 133 years to when our business was founded, you will see that our employees always demonstrate their diligence and determination to pull us through challenging times. That's certainly true for 2022. We worked hard to manage our costs and run our business amidst the highest inflation in decades. We had extreme volatility in the power and natural gas markets and of course, a rapid rise in interest rates. Despite our efforts, Avista Utilities' earnings were slightly below expectations. On a consolidated basis, our earnings were better than our expectations due to a significant increase in the fair value of certain non-regulated investments. And Mark will have a little bit more on that in a minute. As we begin 2023, I'm counting on the grit and determination of our employees to propel us forward, and I know they will answer the…

Thanks, Dennis. Good morning, everyone, and just to keep the positive energy of this call going. The Blackhawks won their third straight last night, and Tyler Johnson, a local Spokane kid scored the game tie-in goal with less than a minute to go and scored the only goal in the shootout. So the Blackhawks beat the goal, the nice three to two, so a little positivity. We are still in the third place in The Connor Bedard lottery sweepstakes, which were not very good this year. Our consolidated earnings on the other hand were good this year, and they were largely, as Dennis said, primarily due to our other businesses. Our other businesses contributed $0.41 per share in 2022 compared to $0.21 in 2021. The majority of these earnings were really the result of the significant increase in the fair value of an investment in the biotechnology company, a bioscience company. Our original investment in this company was for the development of biofuels, really to tie to our core, but it was later acquired and the focus shifted to biotechnology. Their patented biologic drug platform accelerates the time to market for orally administrative antibody drugs and has advanced through testing stages. As a result, the value of this investment has increased significantly, and they are in various stages of clinical trials right now, and we don't expect results really until the end of 2024. So there's going to be some time before we have significant updates on that as our expectation. For 2022 Avista Utilities contributed to $1.61 per share compared to a $1.79 in 2021. This was, as Dennis mentioned, just slightly below our expectations, and was a result of extreme volatility in the power and natural gas markets across the west, leading to higher power supply costs. In…

Thanks, Mark. You are happy to take your questions.

Thank you. [Operator Instructions] Our first question comes from the line of Brian Russo from Sidoti.

Hi, good morning.

Good morning, Brian.

Good morning, Brian.

Hey. You mentioned a renewable RFP earlier, could you just give some more detail on the size of that and do you expect possibly to submit self-builds and maybe The Inflation Reduction Act makes your self-build projects more competitive than in the past?

Yes, Brian, this is Dennis. The renewable RFP’s that I was referring to in my remarks is related to renewable natural gas. So from that perspective, this is our first RFP for renewable for R&G, basically to supply our customers. On the electric side, we've completed all source RFP, and I mentioned some – we haven't announced anything from that yet, but we are nearing completion on a couple contracts with regard to that. Certainly with the federal money that's available, we have a team of people internal that are exploring opportunities to capture some of that money for a number of potential uses electric, EVs, grid hardening and resiliency, hydro efficiency upgrades. So we are looking and evaluating where we might be able to capture some of that value. That could be applied to a self-build option in the future. But really at this point, we have no detail on what that might look like.

Okay. Thank you for the clarification. And then on the ERM, Mark, I think you said, you're going to be in the $4 million deadband benefit, which would add $0.03 relative to the midpoint. And if so, maybe you could just describe, given all the volatility in power and gas prices in your region, what are the dynamics that allow you to forecast that?

Well, that's just a normal forecasting dynamic. We do this every quarter, every year, every day. So I don't know that it's a change to that dynamic. What we did see in the fourth quarter was significant changes and that really put pressure more on liquidity for physicians as we hedge our positions going into a winter, we have some positions hedged and it caused some significant liquidity constraints, not necessarily. We have some deferrals in our natural gas costs because would also cause higher costs, but those get deferred and recovered in future regulatory proceedings, we'll file future PGAs, in our jurisdictions to the extent we had higher costs there on the gas side, we defer it. On the power side, it goes through the ERM or the PCA, and as I mentioned, the ERM did hit $30 million level and that allows us to file with the Washington Commission to seek recovery of those dollars. So it's really the – it's more on the liquidity side and the cash side. Then the earnings were impacted by that because the ERM did go up. We were in the 90, 10 in 2022, and the PCA, so we took 10% of that. So that did cause our earnings to miss slightly in the fourth quarter. As we forecast forward, we forecast with forward prices compared to our authorized power supply costs for the ERM and the availability of our units and we come up with those calculations and that's where we ended up with the $0.03. That's what we expect currently that can change Brian, as conditions change and we report that every quarter. So that's where we sit today looking at forward prices for 2023.

Okay. Very good. Thank you very much.

Okay. Thanks, Brian.

Thanks, Brian.

Thank you. [Operator Instructions] Our next question comes from the line of [Fanny Three] from Bloomberg. Fanny Three from Bloomberg. Your line is now open. Please check your mute button. Your line is now open. [Operator Instructions] Our next question comes from the line of Fanny Three from Bloomberg. Your line is now open. Fanny Three from Bloomberg. Your line is now open. Please check your mute button. Your line is now open.

We may just need to move to the next question, operator, if that's – if that's all right and she can come back Fanny, if that's okay, have him come back. He or she, I don't know if Fannie is.

Of course, at this time, I'm showing no further questions. I would like to turn the conference back to Stacey Wenz for closing remarks.

Thank you all for your interest in Avista and joining us on our call today. Have a great day.

This concludes today's conference call. Thank you for participating. You may now disconnect.