Welcome to IDACORP's First Quarter 2019 Earnings Conference Call. Today's call is being recorded and webcast live. A complete replay will be available from the end of the day for a period of 12 months on the company's website at idacorpinc.com. [Operator Instructions] Now I will turn the call over to Justin Forsberg, Director of Investor Relations.

Thank, Daniela. And thanks to everyone for joining us today. Before the markets opened this morning, we issued and posted to IDACORP's website both out first quarter 2019 earnings release and our corresponding Form 10-Q. The slides will be using to supplement today's call are also available on our website. We will refer to those slides during the call. As noted on Slide 2, our presentation today will include forward-looking statements, which represent our current views on what the future holds. These forward-looking statements are subject to risks and uncertainties, some of which are listed on Slide 2. This cautionary note is also laid out in more detail in our filings with the Securities and Exchange Commission, which you should review. These risks and uncertainties may cause actual results to differ materially from statements made today and we caution against placing undue reliance on any forward-looking statements. As shown on Slide 3, on today's call, we have Darrel Anderson, IDACORP's President and Chief Executive Officer; and Steve Keen, Senior Vice President, Chief Financial Officer and Treasurer. We also have other company representatives available to help answer any questions you may have after Steve and Darryl provide updates. On Slide 4, we present our quarterly financial results. IDACORP's 2019 first quarter earnings per diluted share were $0.84, an increase of $0.12 per share over last year's first quarter. Today, we also affirm our full year 2019 earnings guidance estimate in the range of $4.30 and $4.45 per diluted share. I will now turn the call over to Steve.

Thanks, Justin. And welcome, everyone. Customer growth has accelerated in Idaho Power Service area with an annual growth rate of 2.4% over the last 12 months. This growth along with colder winter weather and higher transmission wheeling related revenues combined to open 2019 with a strong first quarter for IDACORP. Turning to Slide 5, a reconciliation of the changes from the first quarter of 2018 to the first quarter this year begin with customer growth, which added $4.1 million to operating income in the quarter. Overall usage per customer increased operating income by an additional $1.9 million. However, this higher per-customer usage was largely related to residential customers as a result of colder temperatures than last year's first quarter. You'll also note an offsetting decrease of $2.3 million in fixed costs adjustment revenues further down the table. Overall, heating degree days during the first 3 months of 2019 were relatively close to normal, though higher than last year. A comparatively colder weather also increased the proportion of residential sales in higher rate categories under Idaho Power's tiered rate structure and was the primary reason for the $3.7 million increase in retail revenues per megawatt hour that is next on the reconciliation table. These revenue items net to a $7.4 million benefit to operating income. Idaho Power also benefited from a $4 million increase from higher transmission wheeling related revenues. This is the fourth quarter in a row that we have seen higher wheeling revenues related to regional wholesale market activity. As you may have heard on other earnings calls, the Enbridge pipeline situation and the resulting efforts to increase maintenance on pipeline infrastructure have impacted market dynamics in a way that we believe contributed to a portion of these higher transmission related revenues. Predicting the duration of that pipeline response…

Thanks, Steve. And thanks again for everyone joining us on today's call. As Steve noted the first quarter was a very successful quarter for IDACORP and Idaho Power. This is the best first quarter financial performance in the history of Idaho Power Company and I believe is primarily attributable to the operations of the core business. In addition, during the quarter, we introduced our 100% clean energy goal that highlights the path we have been traveling for many years to provide safe, reliable, clean energy to our customers at a fair price while focusing on generating long-term competitive returns for our shareholders. I will talk more about that a little later. On Slide 9 and as Steve noted, you'll see that customer growth remains robust and is up 2.4% over the past 12 months. This is the highest number we have seen since before the Great Recession, up from 2.3% last quarter. As new residential and business customers continue to move to our service area and existing customers expand, our company benefits from increased energy sales and further business development opportunities. At the same time, we believe and research from the Milken Institute and others supports that the reliable, affordable, clean energy Idaho Power provides is one of the key contributors for continued economic growth in our region. Several notable large load projects came online this quarter in Idaho Power service area. These include Simplot Grower Solutions, a new fertilizer plant in Eastern Idaho, Capitol Distributing's new distribution center at the Sky Ranch Industrial Park in Southwestern Idaho; and Premier Technology's new welding and fabrication center, also in the eastern part of our service area. We expect additional projects to begin taking service throughout the year, and we continue to receive new large load requests while construction activities of both…

[Operator instructions] The first question comes from Julien Dumoulin-Smith of Bank of America Merrill Lynch.

This is Alex Morgan calling in for Julien. Congrats on the results. I was wondering if there's anything that you can provide to help gauge generally what costs of relicensing might look like?

Alex, this is Darrel. One of the things that we will be looking to do is begin enhancing that disclosure in the near term as some things solidify around the relicensing side of things. I think one of the things you probably already know and we talk about it in the 10-Q is that we have over $300 million to date that we have spent so far that we would -- we're receiving some recovery on some of those expenses now, a modest amount, but we would be looking to seek recovery of those expenses as well as then the additional mitigation and compliance costs post license. So we'll talk about those when those are -- when we refresh our estimates for those with you. But they're pretty significant over the -- again, if anything, you have to think about it over the life, which is about another 50 -- about what we're hoping to get is a 50-year license. So you think of -- you have to look at those costs in the context of 50 years.

Alex, this is Steve. I'd just say, I do believe that's a great question because I think as we've talked through these long-life projects, as we get closer to the end and we have positive milestone, that's what brings that additional capital spend closer into the picture, and we had a great step this year with -- improved with the water quality and more to come on that. So I'd say stay tuned, but it is a significant number that we haven't talked about a lot because we've been focused on the relicensing itself -- of getting to the license. But once we get the license, then we will do a lot of things that really will help the river and further many of those capital projects that we'll be glad to talk about here in the near term.

Alex, the other thing I'll just add if you look in our -- the capital requirements of our 10-Q and you look at the estimates that we have in there today, those do not include any of those costs, just as a reminder. So where we show the range is out to 2023, those do not include any estimates for relicensing or, for that matter, also does not include any of the construction costs related to our Boardman to Hemingway Transmission Line where we also continue to see ongoing successes in attaining milestones and just as it relates to Boardman to Hemingway, you didn't ask about that, but we do expect a decision -- or some information coming out of Oregon this year, which we -- everything that we know today should be positive and so that's another piece of information to kind of focus on as you look forward as to what our capital costs will be looking at going forward.

Okay. And I know you mentioned -- just one more quick follow-up. I know that you've mentioned we might see some CapEx updates in sometime the rest of this year. But I was wondering if there's going to be any potential EPS trajectory updates considering the Hells Canyon, relicensee, the Valmy plant agreement, potential resolution around Bridger plant and then also the transmission projects?

Well, we're certainly be looking at updates on our current year EPS and if you think -- you're talking about guidance on -- further on out and that is something we've discussed. I think we need to do a little more, just seeing what is -- what the potential might be to show there, but I do believe there's a trajectory. You guys have heard us talk about our plan that we've -- we feel very fortunate to have the growth that we have. You look at our growth in revenues this year. We actually lowered rates from last year to this year and revenues went up significantly. That's a great thing, but we've always said there's a plan after this as well, and we look every year at the plan that we'd be filing based on growing rate base, and we look at the plan of how much growth is going to come and how will that deliver us. And this has been the best story currently, but we've always had our eye on that future. And I think -- I don't know how growth that is setting records can lead us anywhere except to growing company as well. And we're fortunate that we've had some excess capacity we've been taking advantage of right now, but the long-term picture for that should look a lot like others that you see that have significant CapEx out there, so more to come. And I do think we've heard your request, and I think helping you guys with that trajectory is something we're going to work on this year.

The next question comes from Chris Ellinghaus of Williams Capital.

If I recall correctly last year, we sort of had good conditions as well for irrigation and it looks like -- just looking at your NOAA slide that the conditions might be developing to have similar good irrigation season. Is that sort of what your thought processes is at this point?

Chris, this is Darrel. I think we're geared up for a good irrigation season. We have, I think, good resources available, and I think the good news is the ag community also was, I think, projecting a good water situation, so the emphasis around more water intensive crops wasn't going to be necessary an issue like it may have been in past years. So I think all those things we believe stacks up to be positive, but we don't know until all the crops are in the field and they get on with it. They do and they're in the middle of planting now. So that's the good news and we've got a steady -- again we -- our meteorologists tell me I can't look out more than 7 to 10 days, so I don't try to do that, but when I look at the next 7 to 10 days, weather conditions are very conducive for the ag guys to get in the field and get on to what they're doing. So it's all -- it's dry and it's mid-70s to 80s, so it's a really good weather, so I can give you that 7 to 10 days sort of look.

Okay. How would you characterize the reservoir levels? You talked a little bit about snowpack, but what do the reservoirs look like?

So we're going -- we will ask -- Chris, we have Tess Park, who heads up our power supplier. We're going to ask her to kind of comment on the reservoir side.

Chris, this is Tess. On the reservoir levels, the upper Snake reservoirs are nearly full. They're still doing their flood control, but expected to refill, and we're in the process of flood control. At the Brownie reservoir, will be released from flood control the end of April and start our refill trajectory, but we are expected to refill.

One last thing. I guess, this dovetails into what you were saying about CapEx, but would it be fair to say that with the new kind of we're saying clean energy plan and whatever you're going to say about Bridger and IRP. The Boardman to Hemingway Transmission Line, that was your resource plan before. Is -- if Bridger is retired, does the Boardman to Hemingway Line fully provide you with the replacement resource?

Chris, this is Darrel. I'm going to answer a little bit. Then we've got Mitch Colburn, who's here with us today, who has actually helped managing our IRP process. I think it's good for you to hear from him. But I'll just tell you, obviously, it's a fluid process as we look at the IRP right now. We're right in the middle of it. Like we've said, we'll likely publish that in June. And so we've been looking at a series of scenarios around with the Bridger facilities going away, different timing on what the Bridger facilities winding down and so I think that Boardman to Hemingway continues to be an integral part of our resource opportunities. I'm going to let Mitch kind of talk to you a little bit about it because he's the guy on the ground, who is working with that. So I think it would be good for you to hear from Mitch.

Hi Chris, this is Mitch. So given your IRP, as Darrel mentioned, Boardman to Hemingway is a critical element of our future and obviously, a critical element of our clean energy plans. As we see it, we have signed a contract for solar additions in early 2020s. Preliminary analysis shows additional resource additions. You know what we're seeing today potentially natural gas, more solar. There's some battery storage in our preliminary 20-year look. But I'd say, in general, as we look at potential early exits of Bridger units, it will drive additional resource additions.

And Chris, this is Steve. I might just mention that while the -- what we have when we made the clean announcement was reference to a PPA. That asset, in particular, is one that we'll be looking at. Hard to see if it is better structured as an asset we own or as a PPA and those are things that we look at as well. So I do believe what you're looking at is, is it possible that there's other changes to your portfolio besides Boardman to Hemingway, and I think, the answer to that is yes. But also it's going to be dealing with a dynamic change that's ongoing, and we don't know what technology might bring or what growth might bring. So I think it'll be exciting time for us.

Chris, as you can imagine, you take off a baseload resource, you can't necessarily just replace that with intermittent resources, so the combination of some type of storage devices in some form, we believe, is going to also be integral to the future success of this clean energy plans. So one of the things we will continue to watch there is that technology evolution. You've seen some of that -- some of those projects in the northwest already, that -- where folks have entered into those. Those types of storage and intermittent resource combinations. Those will be things that again in this window that we look at will absolutely be evaluated.

And you had this string of strong growth in your transmission system usage. Is there -- are you seeing any reason for additional transmission investment from what you've been seeing in recent behavioral changes?

Chris, I think it's possible. I think that's one of the things as we -- with Boardman to Hemingway, we all targeted kind of pieces that we might take initially, but we'll be looking very closely at that to see if the piece we originally bought is the right size or if it may make more sense. Because it does feel like there's some market dynamics adjustment going on and we kind of fit between a lot of things and maybe we should be taking advantage of that.

Chris, the other piece of that is and we talked a little bit about it in the Q, is that -- our gateway project. We've got a couple of segments there that have permitted and sighted and for us, it's a matter of looking at when the needs for those are to enhance capacity across our system and so those are costs that we would look at. And those costs are not in these costs that you're looking at either as it relates to the out years [ph] from a CapEx perspective. So these are all -- we have given you a baseline CapEx -- but all the -- most of things we've been talking about today are things that would be added to that CapEx plan.

[Operator instructions] That concludes the question and answer session for today. Mr. Anderson, I will turn the conference back to you.

Thank you, Daniela. Thank you again for all of you who participated on our call. We know you guys have had a pretty busy day. We appreciate your continued interest in IDACORP, and we will be holding our Annual Meeting of Shareholders in 2 weeks on May 16 should you have an interest in listening to the call. And I hope you have a great rest of your day. Thanks a lot.

That concludes today's conference. Thank you for your participation.