Welcome to IDACORP’s Third Quarter 2022 Earnings Conference Call. Today’s call is being recorded, and our 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.

Thanks, Erica and good afternoon everyone. We appreciate you tuning in for our call this afternoon. This morning, we issued and posted IDACORP’s website, our third 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 following our prepared remarks. Slide 4 shows our quarterly financial results. IDACORP’s third quarter 2022 earnings per diluted share were $2.10, an increase of $0.17 per share from last year’s third quarter, reflecting the impacts of customer growth, weather, a midyear regulatory order, all partially offset by higher costs. Year-to-date, earnings per diluted share were $4.28, an increase of $0.08 per share from the first 9 months of last year. Both revenues and earnings through September 2022 reflect IDACORP’s highest first 9 months in the history of the company. Today, we also raised our previously issued full year 2022 IDACORP earnings guidance estimate by $0.10 to the range of $5.05 to $5.15 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 and at this time, do not expect to share any excess earnings with Idaho customers 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 thank you everyone joining us on the call today. I’d like to begin by highlighting another quarter of strong customer growth, which will be a theme through today’s discussion. As you can see on Slide 5, Idaho Power’s year-over-year customer growth was 2.5% for the 12 months ending September 30, and we believe our outstanding power reliability, affordable prices and commitment to customer satisfaction continue to help attract customers to Southern Idaho and Eastern Oregon. As shown on the bottom of Slide 5, the economy in our service area continues to outperform national trends. Moody’s predicts sustained economic growth for Idaho Power Service Area calling for GDP growth of 1.9% in 2022 and 3.4% in 2023. Unemployment within our service area is at 3%, which is below the 3.5% national average, unemployment in our region has grown 3.2% since Q3 of last year, and we are still seeing now hiring signs at businesses around our area. Our pipeline of future large customer projects remains strong, most notably this quarter as seen on Slide 6. Micron announced a $15 billion investment to expand its Boise sites that will bring the manufacturing of semiconductor chips back to the United States. Micron’s press release stated that it is co-locating its new 600,000 square foot clean room space near its R&D center at the company’s headquarters. It’s also worth noting that while the new fab has garnered significant attention, it is equally important that Micron is continuing to invest in its campus, solidifying Boise’s the global corporate headquarters from its humble beginnings in the basement of a local dentist office to becoming a global powerhouse in digital memory. Micron has publicly announced over 6.5 million square feet in new facilities including a large-scale office building, expanded central utility building, a new…

Thanks, Lisa. Good afternoon, everyone. Thanks for joining us. I’ll start on Slide 9, where you’ll see a summary of our financial results. As Justin noted earlier, 2022 has had the highest earnings for the first 9 months of any year in our history. This year, we’ve seen continued strong customer growth and in Q3 we had higher weather-related usage. We also had sustained higher transmission wheeling revenues that resulted in part from the energy market conditions in the West. Also, the rate change in the Jim Bridger order from the Idaho Commission this summer impacted results for the third quarter. On the other hand, offsetting those benefits on a comparative basis were higher operating and maintenance expenses as well as net power supply expenses that were not deferred for future recovery under our power cost adjustment mechanism. The Idaho fixed cost adjustment a decoupling mechanism also had a negative impact on comparative results affected by weather-related usage. In the table of quarter-over-quarter changes, you’ll see that customer growth added $3.6 million to operating income and as Lisa noted, we expect this growth to continue as existing businesses expand their operations and footprint and as people and businesses relocate to our service area. It’s probably no surprise that rising mortgage interest rates have resulted in some signs of recession-like conditions, like decreasing housing prices and property spending a little more time on the market before selling, but we share the optimism in Moody’s current positive GDP outlook for our service area. Frankly, a housing price reset will help with affordability in our service area, which in turn helps with high earnings and continue to promote in migration. However, you define our recession, as I mentioned last quarter I think it’s helpful to remember that Idaho Power service area saw positive…

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

Hi, Paul.

Hi, Paul

Hi, good afternoon. Thank you for the time. Just first to kick it off on the increase in the O&M guidance expectation, it looks like about 5% higher year-over-year. And I know you discussed some of the kind of more one-time non-recurring elements of this, but – could you just give us some insights as we think about calibrating into 2023 kind of a normal level of cost increases as you’ve done a great job. I think it’s below 1% historical. So I’m just trying to calibrate things that way. Thanks.

Yes, Paul, thanks for the question. So we will give our 2023 O&M guidance in February. We’re actually working on 2023 budgeting right now for O&M. What I did mention earlier is we don’t expect the same size of increase in 2023 that we saw in 2022 as of now. So we’d expect a deceleration in the growth rate of O&M. Things that I think we’re focused on going into 2023 is cost management. You’ve seen us do it in the past. It’s a cultural element of the way we operate to be lean and efficient in what we do. And you’ve seen that run for quite some time. 2022 just had a pretty significant inflationary aspect to it, particularly on the wage side, third-party services. We saw pretty significant increases in software, things like that, that really drove prices. But also what you mentioned, the less scheduled plant maintenance next year is an expectation. Labor is a little open, but possibly not as much as we’ve seen in – at least for the run up in 2022 in that with wage inflation. 2023 is also likely to be a capital-intensive year. So you could see labor allocation associated with capital in O&M in 2023. So there is a few things that we’re looking at that could impact 2023 relative to 2022. So we would hope to see some moderation in the increase next year.

Okay. That makes sense. And then just with respect to the 5-year capital plan, I know you’ll roll forward on the fourth quarter call, but I have to ask. So you detailed about $400 million plus of incremental capital needs for resource deficits. And then I know you increased the needs by about 400 megawatts plus. Is it fair to think about you take the 2.8 layer in 400 and then layer in an incremental for that latest deficit or am I doing some more double counting in there?

I don’t think that that’s necessarily the math that I would do on the CapEx forecast we at least put out for 2023 back in February was $690 million to $715 million. But as we work through the RFPs, that’s really going to have an impact on what our capital spending plans are. We’re trying to meet pretty significant customer growth, and we really need to know the outcome of those RFPs before we update too much of our guidance. We’re also still working on the IRP, and that’s going to have an impact on what the resource additions are that are part of that to meet all of the growth that’s showing up. So we will be out in February with updated numbers that will be as close as we can get in February. So I’ll wait until then before doing too much incremental CapEx math.

Okay. The $400 million you called in the Q for like the resource deficit or capacity deficit, the latest IRP update that is incremental to that $400 million?

It will be. So the $400 million number that we gave you was associated with the 2021 IRP. So as we look through the 2023 IRP and the new growth assumptions that are in there, we will update our CapEx forecast based on that new set of generation transmission and other resources that we put in place as a result of that new growth. So incremental.

Okay. Understood. Thank you for the patience. Appreciate it.

Thanks, Paul.

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

Well, thank you all again for joining us this afternoon and for your continued interest in IDACORP and looking out the window, there is a lot of snow out there. So for us [indiscernible], so I hope you make a plan to come visit us here in Idaho. I wish you all a good evening, and we very much look forward to connecting with many of you at the EEI Financial Conference in Florida starting next weekend. Thank you.

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