Welcome to IDACORP's Second Quarter 2022 Earnings Conference Call. Today's call is being recorded and a webcast is live. A replay will be available later today and for the next 12 months on the IDACORP website. [Operator Instructions] I will now turn the call over to Justin Forsberg, Director of Investor Relations and Treasury.

Thank you, Julie, and good afternoon, everyone. This morning, we issued and posted to IDACORP's website our second quarter 2022 earnings release and Form 10-Q. The Slides that accompany today's call are also available on IDACORP's website. We will refer to those Slides by number throughout the call today. As noted on Slide 2, our discussion today includes forward-looking statements, including earnings guidance and spending forecasts, which reflect our current views on what the future holds, but are subject to several risks and uncertainties, including uncertainties surrounding the impacts of future economic conditions. This cautionary note is also included in more detail for your review in our filings with the Securities and Exchange Commission. 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 Lisa Grow, IDACORP's President and Chief Executive Officer; and Brian Buckham, IDACORP's Senior Vice President and Chief Financial Officer. In addition to Lisa and Brian, we have other members of our Management team available for a Q&A session after Lisa and Brian provide updates. Slide 4 shows our quarterly financial results. IDACORP's second quarter 2022 earnings per diluted share were $1.27, a decrease of $0.11 per share from last year's second quarter, primarily reflecting the impact of weather and partially offset by the accounting impacts related to a regulatory order. Since we planned for normal weather, a portion of the weather impact compared to last year were expected and it is important to acknowledge that the Jim Bridger regulatory proceeding was also included in our original guidance for the year. Recall that last year's spring was very hot and dry and that did not repeat this year. This spring was cooler and wetter, which impacted irrigation and air-conditioning loads. Year-to-date earnings per diluted share were $2.18, a decrease of $0.09 per share from the first half of last year's weather-assisted record results. Our results over the first six months of 2022, reflect IDACORP's second highest first half in the history of the Company. Today, we also raised the bottom end of our previously issued full-year 2022 IDACORP earnings guidance estimate by $0.10 to the range of $4.95 to $5.05 per diluted share, which would result in the 15th consecutive year of growth in earnings per share. We also affirm that we believe Idaho Power will not need to utilize any of the additional tax credits that are available to support earnings under its Idaho regulatory settlement stipulation. These estimates assume historically normal weather conditions over the balance of the year. I'll now turn the call over to Lisa.

Thanks, Justin. And thanks to everyone joining us on the call today. I hope you are all having a wonderful summer. I'd like to begin with a high level overview of some of the headlines for this quarter, specifically, growth, infrastructure projects, economic conditions and weather in our service area. These factors create both opportunities and challenges for our Company. Growth continues to be a key differentiator for us. As you can see on Slide 5, Idaho Power's growth stayed steady at 2.6% this quarter and remains quite strong. We believe our competitive prices, outstanding reliability and strong customer satisfaction, help make our service area attractive for business and residential customers. We continued to see a robust pipeline of future projects, including speculative industrial development, existing customer expansion and new customers in most of our customer classes. As noted on the bottom of that same Slide, Slide 5, the economy in Idaho Power service area continues to outperform national trends. Moody predicts sustained economic growth for our service area, calling for GDP growth of 3.3% in 2022 and 4.8% in 2023. And note that the 2022 GDP growth figures is a notable increase over Moody's estimate at the time of our first quarter earnings call. Also, unemployment within our service area is at 2.9%, below the 3.6% national average. More importantly, employment in our region has grown 6.7% since Q2 of last year. And perhaps not surprising, with the rapid increase in interest rates, we are seeing an easing in the record pace of building in some areas. But, like Moodys, we remain bullish regarding our continued overall customer growth. Many of you may have seen the Wall Street Journal article last week about the Boise housing market prices cooling off. However, residential building permits remain historically high and requests…

Thanks, Lisa, and good afternoon everyone. I'll start my portion on Slide 6, where you'll see our second quarter 2022 results compared to Q2 last year. All in, I'd say we had a solid first half of the year, as Justin highlighted on Slide 4 earlier, it's the second highest earnings for the first half of the year in our history, second one in the last year. We've seen continued strong customer growth, along with higher transmission wheeling revenues, that resulted from energy market conditions in the West. Also the Jim Bridger order from the Idaho Commission had a notable impact on results for the quarter. On the other hand, offsetting those benefits were the impacts of weather on sales, irrigation sales in particular, combined with higher O&M expenses compared with Q2 last year. In the table of quarter-over-quarter changes, you'll see that customer growth added $2.7 million to operating income and as Lisa noted, we expect this growth to continue as people and businesses relocate to our service area and as existing businesses expand their operations and footprint. So we share the optimism in Moody's upgraded GDP outlook for our service area, but there's certainly been a lot of commentary nationally about a recession and if that recession currently exists or if it's yet to materialize, I do think it's helpful to remember that Idaho Power service area saw positive customer growth even during the nationwide downturn and the aftermath of the 2008 financial crisis. So with that empirical knowledge, we're optimistic regarding the potential of the cities in our service area to attract businesses and residents, despite some increasing evidence of a recession, like slow down nationally. So, back to this quarter's results, mild temperatures and higher precipitation in the second quarter, drove a 36% reduction in usage…

[Operator Instructions] Your first question comes from Julien Dumoulin from Bank of America. Please go ahead.

Good afternoon to you. Thanks to the time and the opportunity. Hope you guys are well. So I'll just - just at the outset here if I can, just perfunctory AMT just the situation of tax would love to hear you guys read the IRA at the outset here?

You're talking about alternative minimum tax, the 15% tax that's proposed?

Yes, yes, exactly. I just wanted to see like how you - how you guys are reading that. I mean I assume that's not too much of an issue for you guys, right?

So, our understanding of the AMT was, it applied to net income exceeding $1 billion. And while I would love to have that sort of net income, we're not quite there. So at least at this point about the change, we don't think that it applies to IDACORP.

Totally. Alright. I wanted to get that one past me here at the outset here, if I could. And then separately more substantively, if I could, just coming back to the Company. Obviously, you alluded to in the comments here about the rate case and perhaps providing some ongoing updates here, are we to read that of being ahead of planned, accelerating seemingly some of the O&M on the maintenance front, that puts you in a pretty good position vis-a-vis timeline and visibility to perhaps remain out of one?

We look at that every year to see what is the - will give us the best results and certainly that continues and Brian, do you want to add something to that?

Yes, I'll just mention, there is a lot of factors we're looking at Julien. Growth in revenues is one. Growth has kept us out of a rate case for quite a while among some other factors. Those have been beneficial. We look at capital spend. We're looking at the timing of in-service dates for some of our projects and we have the battery storage project out there now, that we expect to be done next year. That's a sizable in-service project by then. Hells Canyon Complex is another one we look at. We've been watching credit ratings, cash collection, interest rates. Those are all factors we've historically looked at. We're also looking at the Bridger order and the impact that that has. So that's a benefit from a rate case perspective. So I'd say there's a lot of moving parts there from a timing perspective. I don't think we would expect a filing this year, perhaps second half of next year is a possibility under some scenarios, but again, we have to look at all of those factors when we decide the timing of a - a case.

Got it. And can you elaborate a bit on the Bridger resolution? I mean how much latitude that provides, that you think about it?

Yes, we look at that in terms of just the dollar impact. One of the things we noted is that the impact next year, our - at least our expected impact of that order is about $10 million. So, the Commission determines that the investments we made in that plant from 2012 were prudent. So adding that into rate base was beneficial. And then we've got a mechanism for cash collection over a period of time for that and then the deferral mechanism for the portion that we don't collect. So we think that's a pretty constructive outcome for both us and our customers. So that financial benefit of that outcome will help in our view of a rate case going forward.

Got it. And then lastly, just can you provide a little bit of an update on crypto here and - and how you're framing those - those potential tailwinds, obviously this is more acting and waiting, just where do things stand, if you will cover for today?

Adam, do you want to take that?

Yes, I'm happy to chat about that. We continue to get inquiries. I will say we haven't had any large movement in that regard. We obviously filed the speculative high density load filing with the Commission. That provides some benefits I think and opportunities potentially for crypto, but we haven't seen any large movements in that regard in terms of actually moving forward with projects, although we do get a fair amount of inquiries on a monthly basis.

Alright. Fair enough, guys. That's all I've got. Thank you.

Thank you, Julien.

Thanks, Julien.

Your next question comes from Brian Russo from Sidoti. Please go ahead.

Good afternoon. Given the obviously strong hydro conditions in your service territory across the Pacific Northwest does your guidance kind of assume kind of a normal year of irrigation sales relative to the abnormally high demand for electricity from that customer class during this time for the last few years?

Well, I'll start the answer and hand it off to Adam. So, we don't have great water conditions in Idaho. We really are seeing our second year of drought and while it's been cold and wet in May and June, it just wasn't enough to really move the dial on the drought conditions that we - we had the driest first quarter that the - I think on record. So we're still struggling through that and then recall that June is when we saw last year pretty high irrigation loads because it was dry. Where we didn't see that this year. So I think it remains to be seen what happens in the - from this point forward, when the season ends, which is usually towards the end of this month depending on the crops, can go a little bit into September. Anything that you would add?

No, I think you might be referring to the mid-Columbia, which has had a pretty good water year, that just didn't reach out to us. The one thing that that had benefited for us is the fact that the power prices have been somewhat reasonable this year despite the natural gas commodity prices that are obviously quite high. So, I think you are probably thinking about the mid-C, which has really helped the PPA system, but yes, we're still in drought conditions here.

And Brian one thing I'd add to that is, last year we had some conversations with water conditions about possible curtailments and there were some small scale curtailments throughout Idaho. As we look at the water forecast for this year, there is still some small prospect for curtailments, but we don't think there would be curtailments on a large-scale basis for the irrigators this year.

Yes, there has been one so far, 50,000 acres, very small, so no real impact to our irrigators at this point.

And we're seeing some of them come off their crops, it's ripened and so some of the water has come up already.

Okay, got it. I see. That's all built into the 5 to 6.5 million megawatt hours of hydro generation, right, below the previous level. Got it. But given the weather patterns that we are seeing in the regions West of you, are you seeing incremental transmission wheeling revenues and any benefit of that in this third quarter?

We would anticipate that. I mean that has been something that has come to be a trend, just given the different - the pricing differential between the markets. Of course looking prospectively, I try not to forecast too much, because I'm generally wrong, but that is a trend we've seen certainly.

Yes, what we've seen so far is the mid-sea prices have been reasonable and the liquidity has been quite good. And how their day the prices have been higher. And so when you see that spread, you typically see folks using our transmission system and over the last three years because of that, we've seen pretty significant increases in volumes each of those years. And again, we're seeing it so far this year as well.

Okay, great. And despite the $10 million increase in O&M, the guidance still assumes no usage of the ADITCs? I'm just curious, are you - are you comfortably within your ROE band range and just the $5 and is it the top end of your range, does that capture the 9.4%? Or is that the high end of the range?

Yes, Brian, I would say that the bottom end of our guidance is quite a ways above that 9.4% figure for the ADITC usage.

Understood. Thank you.

Thank you, Brian.

Your next question comes from Anthony Crowdell from Mizuho. Please go ahead.

Hi, good afternoon. Hopefully, one quick question. In the prepared remarks you talked about you're evaluating the filing of a rate case, if you could talk about I guess what are the decisions that you're going through and when will we know if that - when that evaluation is finished?

Brian can kind of recap what her said earlier. But we - we are required to give a 60-day notice to the PUC before we file. But we've been trying to be pretty transparent as we go along. It's just right now, there are just a lot of moving parts and - and as Brian mentioned earlier in this call, that we don't see it at the end of this year, filing this year, but you want to recap what you said before?

Yes, I'd just say one of the primary factors that we're going to be looking at is the in-service date of some of the assets that we have. So for example, the battery storage projects are, it's a 120 megawatts, very sizable and so as that that's going to service, we have to finance those with debt for example, have additional depreciation expense associated with that. So interest expense to cover as well. So as we look at some of the additional incremental cost that come with just the growth that we're seeing and our capital plan going forward, that's probably going to be the items that most likely trigger the rate case. So we're actually doing some scenario planning now on what the best dates might be for bringing some of those cases. We'll have more visibility on that moving forward. But at this point, we haven't chosen the date far enough out that we haven't decided exactly when that's going to be. And again, it's those factors that I mentioned earlier that are really going to be part of the decision. So a lot of different variables that we have in mind as we look towards the general rate case filing.

Great. Thanks so much.

Thank you, Anthony.

Thank you.

[Operator Instructions] That concludes the question-and-answer session for today. Miss Grow, I will turn the conference back to you.

Thank you all again for joining us this afternoon and for your continued interest in IDACORP. I wish you all a good evening and a safe and happy rest of your summer. Thank you.

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