Good day, and welcome to the NorthWestern Corporation's Financial Results Conference Call and Webcast. Today's event is being recorded, and at this time, I would like to turn the conference over to NorthWestern's Investor Relations Officer, Travis Meyer. Please go ahead, sir.

Thank you, Anne. Good afternoon, and thank you for joining NorthWestern Corporation's financial results conference call and webcast for the quarter ending March 31, 2020. NorthWestern's results have been released, and the release is available on our website at northwesternenergy.com. We also released our 10-Q pre-market this morning. Today on the call, we have joining us Bob Rowe, President and Chief Executive Officer; we have Brian Bird, Chief Financial Officer, and other members of the management team on the call with us today to address your questions, if needed. Before I turn the call over, however, for us to begin, please note that the company's press release, this presentation, comments made by presenters and responses to your question may contain forward-looking statements and non-GAAP financial information. As such, I will remind you of our safe harbor language. During the course of this presentation, there will be forward-looking statements within the meaning of the Safe Harbor act provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements often address our expected future business and financial performance and will contains words such as expects, anticipates, intends, plans, believes, seeks or will. The information in this presentation is based upon our current expectations. Our actual future business and financial performance may differ materially and adversely from our expectations expressed in any forward-looking statements. We undertake no obligation to revise or publicly update our forward-looking statements or in this presentation for any reason. Although our expectations and beliefs are based upon reasonable assumptions, actual results may differ materially. The factors that may affect our results are listed in certain of our press releases and disclosed in the company's Form 10-K and 10-Q, along with other public filings with the SEC. Today's presentation also contains non-GAAP financial measures, please refer to the definitions and reconciliations of these measures that are included in our webcast materials. Following our presentation, we'll open the phone lines to allow those who are dialed into the teleconference to ask questions. The archived replay of today's webcast will be available for one year beginning at 6:00 p.m. Eastern Time today and can be found at our website, again northwesternenergy.com under the Our Company, Investor Relations, Presentations and Webcast link. With that, I'll hand it over to Bob Rowe, our CEO.

Thank you, Travis, and thank you all for joining us this afternoon. I'll touch on a few significant events, and just a couple of comments about our COVID response, and then turn it over to Brain to go into detail on financial results. First, net income for the quarter decreased $22.1 million, that's 30% as compared to the same period last year. Diluted EPS decreased $0.44 or 31% compared to the same period. After adjusting for weather, non-GAAP adjusted EPS decreased $0.17 or 14% as compared to last year. The Board declared a quarterly dividend of $0.60 per share payable on June 30 to shareholders of record as of June 15. Due to the anticipated impacts from COVID-19 related disruptions across our territory, combined with the first quarter results below our expectations, we are lowering 2020 EPS guidance, had been $3.45 to $3.60 per share, we are lowering to $3.30 to $3.45. So effectively the old floor becomes the ceiling. Despite the short-term setback, our long-term business prospects remain strong. We were able to promptly address any liquidity concerns as a result of COVID. We are continuing with our capital programs unchanged, and we have no change to our targeted 6% to 9% TSR. Just a few highlights going into a situation like this, it's a real test of the underlying strength of our company. On Page 4, we highlight some of our history. Many of you know, there is three things I would simply speak to are we have maintained an exceptional safety record before and going into the COVID period, we have achieved the highest levels of customer satisfaction and high levels of service quality by our measurements and we will continue to execute on our capital plan for the year. In terms of our COVID-19 response, we…

Thanks, Bob. On Page 6 from the summary financial results perspective, as Bob pointed out, our net income $50.7 million, are down $22.1 million or 30%. For the first quarter, it's certainly a disappointing quarter. At a high level, when you look at gross margin down $24.5 million and compare that income before taxes around $25.5 million. The story for the quarter was very disappointing margin on a year-over-year basis. In fact, improvement in operating expenses were effectively offset by slightly higher other expense, and so net-net, it was margin as a whole. Moving on to margin on Slide 7, again down $24.5 million on a year-over-year basis. And again, $15 million of that associated with electric and $9 million associated with gas. But the actual decrease in gross margin as a whole, associated with volumes, electric down $8.7 million, gas down $8.4 million. I will mention here whether that the change on a year-over-year basis, it was $18 million associated with weather, so obviously that's a big part of those two line items. The other major contributor to the $22.2 million change in gross margin and impacts net income are other miscellaneous non-recurring items, which are primarily items associated with tracker adjustments. We had favorable adjustments in 2019 and unfavorable in 2020 for that particular item. But those three things, electric volumes, gas volumes and the non-recurring items make up the substantial change there. We did see Oasis revenues up, primarily associated with closure Units 1 and 2 at Colstrip, and gas production continues to come down, but that was offset by our rate increase in terms of impact retail rates in Montana. We also have items that impact gross margin that are offset elsewhere in the net income totaling $2.3 million decrease for a total again $24.5 million…

Okay. Just to reiterate, on Slide 20, you've seen this before, three points I would make. First, we do include the South Dakota generation investment at $80 million. Second, as we've talked about, we are successfully executing against this year's capital plan. We've been managing supply chain and paying attention to things like that. The work is getting done. And third, we do expect in the half year's capital investment at at least this level. As you know, as we work through the planning cycle, we identified the projects that are most important to serve our customers. So we do consider the current level of capital to be sustainable over the coming years. Looking forward, we've talked a little bit about regulatory matters already. We're very pleased with the settlement we were able to reach in the electric rate case in Montana. Decoupling or the infrastructure support mechanism is one of the issues on reconsideration. We do expect a decision from the Montana Commission sometime in the coming weeks. Like other regulatory bodies around the country, they are meeting through alternate means, and that has been something of a challenge for many. As Brian said, decoupling is something we believe very strongly has long-term value. We don't think of it as a very significant tool to address the COVID-related concern this year. Meanwhile, the parallel FERC transmission rate case is moving ahead. As most of you know, that has been in settlement discussions for quite some time. The settlements discussions are now being handled electronically, as well, rather than in person. But they are proceeding. The South Dakota plan, as I've already highlighted, we moved to implementation. We expect the plant to be online by late 2021 in Montana. We have the competitive solicitation for 280 megawatts outstanding. Still believe…

Thank you. [Operator Instructions] And we'll take our first question from Julien Dumoulin-Smith with Bank of America.

Good afternoon, guys. actually Ryan Greenwald on for Julien. Thank you for taking my questions.

So the DH rule is in effect?

So maybe if you can just kick off with your expectations around rate cases, timing, and tax year implications, given the meaningful cost cuts that are being implemented?

We do look at rate cases every spring when look at whether a rate case as appropriate. And this year, we do not anticipate making any filings.

Are you able to help frame kind of expectations for next year, given the cost cuts that are kind of being implemented right now?

Expectations in terms of rate case filings in 2021?

Right.

No, I think it's too early for that.

Fair enough. And then on the decoupling, understand that it's not really designed for the current prices. But in terms of action by the commission there, is July implementation kind of your base case still for expectations?

The most - we're less concerned about a date for implementation and more concerned that the commission does move ahead with decoupling again. It's really designed as an infrastructure support mechanism, and the commission issued a very good order. We hope it stand by that order. Very importantly, as part of that order, the commission recognized that there is no basis for an ROE adjustment when decoupling is adopted. We're concerned about the substance and about a clear order. Much less concerned about a starting date.

Hey, Bob? And just for everybody on the phone, it's difficult because Bob and I used to be a look across the table at each other and say who was going to take answering the question or not. So just one thing on rate case. I agree with everything Bob said. I just want to add something though on South Dakota. We have talked about South Dakota in the past because of the structure of investing capital this year, in investing capital in 2021, the thought process of having 2020 test year, and [indiscernible] measurable capital. So, I think we have shared thoughts around that, so I want to be able to say that again on this call. Those plans have not changed, as we sit here today.

Fair enough. Brian and I have not been in the same room since early March, late February.

Fair enough. And then I guess just looking at the margin assumptions, are you able to give any color on your transmission revenue expectation? And I guess any color you could kind of provide on that $1.2 million headwind in terms of what might have been COVID related there for the quarter?

Yes. I saw some thoughts about transmission impacted by COVID. We're not seeing that. Certainly hadn't seen it in the first quarter. The two things I'd say about the transmission side of our business. The OASIS impact that we've seen on transmission was really driven by the closure of Unit 1 and Unit 2. So that was already in effect pre-COVID. The other impact we did have in the first quarter is we had a large industrial customer of ours, who was having some troubles, and stop production in January. And they are now back up and running, and certainly still running in through COVID time period. Another good thing about industrial for us, and about Montana for sure, and we don't have a ton of industrial here in South Dakota. It's all commercial, but not a ton of industrial. So the nice thing though in the state of Montana, most of our industrial customers are industries deemed important, and to continue in production. So we haven't seen a lot of fall off as of late there.

Fair enough. And then just lastly, real quick on the rate case stuff. So I understand your commentary around South Dakota. But in terms of Montana, how should we kind of think about the interrelationship between significant O&M cuts and then the tax year for that next rate case?

I'm going to give Bob's statement earlier. On Montana, we're going to have to wait and see where we are in the spring of 2021 to see what we're going to do there.

Fair enough. Appreciate the time, guys.

Thanks, Ryan.

And our next question will come from Shar Pourreza with Guggenheim Partners.

Hey, good morning, guys, or good afternoon, actually. Just a couple of just quick - give you a couple of quick questions here. Your outlook assumes business closures in the second quarter with some sort of a mean reversion for business activity in the fourth quarter. If the outcome is sort of more protracted or the recovery assumptions that you guys have in the slides are lagging by maybe one or two more quarters, do you guys have additional levers above the $0.09 in O&M you found to stay on track? Do you have additional levers, I guess, beyond the $0.09?

I'll grab that one. I would tell you this. What we did, Shar, is we looked at kind of the worst-case scenario. Essentially, said what if, in fact, we were in this situation in the second quarter for a full year? And our guidance would go down another $0.15 associated with that. So that it gives you an idea of the magnitude swing if, in fact, we were locked down for all of 2020. So we don't have enough levers, if you will, to go that far. To give you some thought process on our thinking in terms of how we did lay it out, I think in fairness - and I don't want to downplay the national impacts of COVID right now, but the total number of cases in our two service territories in Montana and South Dakota combined is 468 cases. Matter of fact, Montana is talking about opening up here in early May and a staged approach. So we assume effectively locked down into and through all of the second quarter and in our assumptions. And so, and then recoveries. So I think - and again, things can change, we're certainly well aware of that. If we're not careful they can change. The company is certainly regardless of how quickly things are going to open up in our various states, we're going to continue to do what we have been doing to protect certainly our employees and customers as best as we can. But from our perspective, we feel pretty good about the assumptions and continue to watch this day-to-day.

I think the key to add is just that we monitor the situation truly week-to-week and in some cases, day-to-day and are able to make adjustments. 500 cases or so in our immediate service territory is obviously 500 too many and precautions everyone is taking are appropriate but at this point the projections that Brian ran through are pretty consistent with facts on the ground. That's good change and we'll be prepared to adjust.

Got it. Then just, we're three weeks into the second quarter. How does the load picture look like versus what your assumptions are prospectively on Slide 18? Is April pretty reflective of how you guys are guiding for second, third and fourth quarter and in [indiscernible] deck?

Bob, we probably both can respond to this. I'll take it. What are we seeing thus far? Shar, another way to answer your question. We don't have very information on customer-by-customer basis. We don't have the AMI throughout in Montana. What we do have though is we're responsible for well control balancing in the State of Montana and obviously our largest part of our business. What we're seeing there thus far in April was loads are down about 2% but in fairness, it's been a pretty decent weather month and so the thought process internally is that probably equates to more like a 4% drop in loads as a whole. That's what we have thus far. It's not a perfect match for our business, but relatively, from a volumetric perspective, it's the best we have.

In addition to just loads in the aggregate, obviously we're paying attention to the payment situation. We start with a very low level of late pay, non-pay like other utilities we waived pure termination and collection. We've got a program started just this week to reach out to those customers but from that load base, we are seeing an unusual trend up this year obviously associated with COVID just in payment issue. So we need to work with customers there and we hope that again our regulator as well will support us in doing that.

Just on the CapEx obviously was reiterated but it does decelerate through the trajectory and the message has always generally been that you can backfill. Does COVID related slowdowns impact this conservative band and more importantly, can you speak on the flexibility of the growth capital program assuming that macroeconomic backdrop is a little bit more projected? Is there any spending programs that could become secondary in nature?

Because our capital program is not at this point dependent on a small number of headline projects, it's really driven by what are the needs in the system. So there is some flexibility in bringing programs forward and back but I wouldn't think of it so much as backfilling a hole. It's just doing the work that's appropriate to do in the system and doing that in a sequence that makes sense. This year in distribution there were resources available to really focus on line subsegments using data engineering GAAP analysis to go in and address reliability issues, be proactive in terms of fire management, things like. That's an example of a program that can be moved up depending on available resources. Brian, I know you want to jump in on that too.

Yes, we've been working together a long time, Bob. I would say this, we have - as far as I can recall we've always invested more in the actual year of that fifth year forecast than we actually have shown five years prior if that makes sense. We do tend to fill that in and we're better at forecasting our current year budget from a capital perspective than we are in our fifth year. We tend to fill that in Shar, so I'd say that first. Second, I'd say obviously, we like to be successful in Montana generation. We're able to do that. We will fill it in likely and then some. The hope is to be at $400 million of investment throughout this whole time period and again, that gives us comfort being in the mid-point of our 6% to 9% all shareholder return. I do think we'll fill that in, but until we have identified the projects and have done a significant amount of work in terms of laying them out, we're not going to just roll projects in there to make it add up to $400 million.

Got it. Just one last question if I may. The rate case, just the part that was under reconsideration was the decoupling pilot. That outcome shifted from first quarter and then now you're expecting sometime in the second quarter. Obviously, you highlighted some of that could have been related to COVID. Is there any potential this can go into further slippage? The program, I think is supposed to go into effect in the beginning of July. Just get a little bit of a sense on timing if there is a potential it slips further.

The order I certainly expect in the next few weeks. The commission has figured out how to run its business remotely. In terms of a start date for the program as I mentioned, I'm not as concerned about whether that's this July or next January. What I am eager to see is a strong order from the commission affirming decoupling is important and affirming its original decision.

Terrific guys. Thank you so much.

Robert, I'm not sure, but it may actually be on the work session next week.

Yes, it is. Whether they act next week or decide to take action at some point in the future, but there is a work session scheduled on decoupling so I think we can comfortably say there'll be a final outcome next week or soon thereafter.

Perfect. Thank you, guys.

We'll take our next question from Michael Weinstein with Credit Suisse.

Hi guys, thanks for taking my questions. Brian, on Page 7, you have listed other miscellaneous one-time items affecting those margins. Could you maybe go through some of those miscellaneous items? What are they and why are they one-time?

Well, I think what we've done is, we've had some adjustments to trackers. I think from our perspective, unfortunately, much like margin the adjustment that we had last year from our perspective there's several adjustments in all cases, but they were favorable in 2019 and unfavorable in 2020. The swing on a year-over-year basis is larger than usual so I'll leave at that, Michael; but think trackers where those adjustments are typically felt.

I think the concern is when people start to analyze, they would look at that $4.9 million item and investors been told to ignore that for next year. Is that going forward?

That's fair. I think that's a fair thing. The question being are we going to see is this on a going-forward basis? I can't say for sure. I can tell you this though. Peak, for instance, is a relatively new thing and the structure went through changes. We also have had changes in our property taxes, are handled from a tracker perspective here recently in the past year or so. Obviously get our arms around that. If there are other changes to trackers, for instance, that this could be something that happens again, but I don't foresee anything in the first quarter of 2021 as I sit here today.

Okay, thanks. I'll follow-up offline about that a bit more. On the stimulus bill, have you guys said anything about what kind of maybe AMI credit acceleration you might get or any NOL should we get?

I think some meters we have plus meters impact this year from a tax credit perspective but from a tax repairs we continue to do a lot of work. I hope I'm going down the path you're going, Michael, but I think we're going to be for tax credit perspective something very similar in terms of the level on a year-over-year basis.

Bad debt recovery being considered by the regulators in Montana, what about other expenses? Is there anything else that they might be willing to consider, you think?

I would say, here's the thing about bad debt and talking to other utilities. Bad debt is an easier one to talk about just because of the disconnection and inability to have control over that as much as we used to have as utility perspective and that's an easier one to dealing with the commission. I'd also say if you push too much and other expenses that are going up, if I was a commission, you can ask what about some other expenses that are going down? But bad debt is one that I think everybody can get their arms around pretty well. We are in dialog with other utilities and they have some other ideas and so in the two jurisdictions that we're talking about, we'd all like to come in with a joint filing. Mike, one other thing to your question on credits. The main thing I want to reiterate is just the tax rate itself, the negative 5% to 0% is the thing I want to leave you with.

One last question here. On Colstrip, with Talen taking a piece of it now, if I remember right, you guys you have a contract with Puget that makes us gross margin over five years and you will use that to help signs the decommissioned liabilities. Does that mean if there is more liabilities now to fund, how does that get worked out?

Actually, it would be no, there is not more liability to fund but the profit from PPA doc would be diminished not necessarily one for one, but that is disappointing. We thought we were doing and still are doing something really creative and progressive in identifying a revenue source to pre-fund closing costs. We still intend to do that. Unfortunately, it will be at a lower level. We will be updating our filing here right away to reflect all of that.

I remember - this how I can put it, $25 million profit that you were expecting to get something close to maybe $12 million now?

It depends on obviously what's going on at the Mid-Sea, but it would still be a significant contribution.

I think, Mike, I just want to be clear on that. I'm sorry to interrupt on that one, I just can't be careful the words profit. We are in the news that I would argue the net proceeds as a means to fund future remediation costs on our existing ownership on Unit 4. So hopefully that clarifies that.

Great.

We'll take our next question from Chris Ellinghaus with Siebert Williams.

Hey guys, how are you? The guidance doesn't reflect seemingly a whole lot of impact from any kind of second spike in the fourth quarter. Are you doing that because you just don't know what to think or you want to assume that there is a fall flu season? What's you're thinking there?

It's a good question, Chris. I think as we first looked at this there weren't as much discussions initially about a second wave and obviously, that is coming up at this point in time. But I also think from our assumptions we didn't expect states to start talking about reopening in early May either in light of when we were putting together these assumptions and so taking that into consideration. In fairness things on the ground change. We could be wrong in our assumptions.

I was going to say, it sounds like based on your timetable locally that maybe theoretically your thought process on the second quarter could be a little better than you thought that, you're also not reflecting quite as harsher fourth quarter. So you're comfortable with the year as it is?

I think on a particular quarter we might not nail it. I like it thinking about it over the three quarters that we'll be in pretty good shape.

Okay. The other thing I wanted to touch on is you haven't made any CapEx adjustments, is your thought process at this point that labor in terms of what you plan to spend won't have any productivity effects from COVID-19 or have you made adjustments in how you plan to execute on your spend?

I'd say three things. First, both our workforce and contract workforce are at this point in good shape. The health and safety of our employees is number 1 and the steps we've taken so far are designed to ensure that they continue to be healthy. The second factor I mentioned is supply chain. Our supply chain team is paying a lot of attention to that and there have been some shifts in inventory, but so far, we're able to get parts in reasonably good shape. Third, I talked about before, there is some ability to adjust plans project to project forward and back but the big picture it all seems to come together at this point.

Okay, great thanks.

Bob, I'd add. Sorry, Chris, your second question. The only thing I'd add is, from our perspective there is some customer-facing work that we typically would be doing and we're doing less of that and that's an expense item and so our folks are being able to allocate more of their time than they normally would to capital projects and so that helps in that regard as well.

Okay, great, thanks for the clarity.

We'll take our next question from Brian Russo with Sidoti.

Hi, good afternoon. Thanks so much. A lot of my questions have been asked and answered, but just on the Montana RFP, are we still expecting final bids - initial bids in May and an outcome in the first quarter of 2021 or is there any delays given the environment out there?

We've added two months to the closing date but we have not made any adjustment to the final decision date and our supply team is comfortable that that's going to give them plenty of time to do the work that's necessary.

Okay, so the two months delay in the bids, that's due in May?

Correct. So essentially it is adding two months on to the bid submission period upfront, but no change in the end.

Okay, great. Then you mentioned the total shareholder return is unchanged using the 2019 base year. Should we be using the adjusted EPS, we strip out the favorable weather or is the base now - does the base include favorable weather?

Weather is something we're always going to adjust out, Brian.

Okay, got it. I may have missed this earlier, but the $0.15 net reduction in the guidance, $0.09 - $0.06 was weather-related in the first quarter, but a total of $0.09 impacted the first quarter and the remainder is in 2Q. So we should see year-over-year, probably weak comparisons in the first and second quarters big pick up and increase year-over-year in the remaining two quarters of the year in terms of the margin dispersion or earnings dispersion?

I'm sorry, Brian. I was getting a little confused. I thought for a minute there you were going with $0.09 that was just in the margin that was already adjusted with weather out of it. So, I'm not sure I followed your question, and I apologize.

Well, the $0.15 of reduction to your midpoint, which - the low end of your previous range is now the high end of the new range. Are there additional costs that can be managed to alleviate some of that $0.15? And how much of that $0.15 was already realized in the first quarter?

Okay. I see what you're saying. I think from our perspective - again, I just want to be clear. Pre-COVID, post-COVID and what we're all going under is we're always trying to just out whether, just to make sure that's clear. The $0.15 change - we already have substantially added incremental cost controls above and beyond what we had in our initial guidance, which had cost control benefits in it. So from our perspective, we think half of that variance really is associated with the results from the first quarter. We think there's some timing there, certainly know some timing on taxes, believe there's timing on margin, and we'll get some of that back. So I think half of that for the first quarter. And in the second half, we're going to have COVID impacts. No doubt, and you can see the substantial on margin reduction. But we're going to offset that to a good portion with both cost controls and the timing associated with taxes. And I'm hoping that answers your question. That it is kind of the other half, if you will, of the $0.15. So I think we've taken in consideration that the cost control savings to get already to the $0.15 change that we're talking about.

Okay. So there's no bias towards the upper end of the revised guidance. The best case is the midpoint.

Yes, I think that's fair.

Okay, got it. And then did the $115 million of debt that was accelerated - does that satisfy your debt needs through 2021, or just through 2020? Assuming you do have equity needs maybe in the early part of 2021, you're already at the low end of the debt to cap.

Yes, we accelerated what we did this year. We always typically have some first mortgage bonds, depending, and hopefully we're doing something large enough in the future we can do an even larger debt offering. But we typically are doing things from a debt perspective once a year. And so, this year, we accelerate - we're going to do - I think in 2021, we'll do something similar. The sizing of that will depend on the capital that we deploy in 2021.

Got it. And then lastly, the $0.05 of bad debt assumption, is that in the midpoint of your guidance, or is that - and are you expensing that and then hopefully you get commission approval to then defer it? How should we look at that?

Well, I think, in fairness, you have to assume there's parts moving. And as I mentioned already, that my amount is in the midpoint of that range, and I have to move $0.05 because I didn't get recovery from the jurisdictions, I would be in the lower end of my guidance, if that makes sense. [Technical Difficulty] from jurisdiction.

Okay, great. Thanks for all the additional information. That's all. Thanks.

Thanks, Brian.

And we'll take our next question from Paul Patterson with Glenrock Associates.

Hey, can you hear me? I'm sorry. Good afternoon.

Good afternoon.

So I wanted to touch base just - most of my questions have been answered, but I wanted to touch base with really what the - I'm not completely clear on COVID impact that you guys are forecasting is, other than you're expecting some sort of lead down in the third and fourth quarter, I guess. And what I'm wondering is, I mean when we're talking about this, are you guys expecting really - what are you expecting in terms of the economic impact associated with COVID in terms of your 2020 guidance in the long-term growth rate that you guys have?

Yes. I think, in fairness, we didn't look at the industries in our business and take a guess how this particular industry is going to be impacted. We have an idea of our customer base, of course. But we didn't do a - we're not forecasting the GDP change in our various states. We essentially said, based on what we know today, what's our expectations from a load perspective. We do understand that in Montana, for instance, there's a lot of commercial customers who relies on the travel industry. We expected quite a bit of impact there. But again, I think we've effectively focused on how will the economy respond in terms of the health aspects of this. In essence, what would - will be in shelter in place during that point in time? Will we be opening up - our assumption was we would be opening up in the third quarter, and that's moving a little bit quicker. I think the fair point was raised earlier in the call. There could be impacts going into later in the year. We still feel good about that. But we have not sit down and done an analysis, if you will, by our customers themselves and essentially said each one of them, what do we expect to change in load. This is at a higher level.

Brian did mentioned earlier, we have some visibility into particularly our largest customers. Obviously, if you're a university, you've effectively closed your campus. You're hoping to reopen for fall semester. Not necessarily now, but you're hoping to. On the other hand, some of our largest customers are in the health sector, or natural resources, refineries, and they have continued to be very active.

One other thing to add too is one thing you have to keep in mind, I think people are always looking at the downward side here. Our most profitable customers, at least on a megawatt hour basis, dekatherm basis, are our residential customers, and we're anticipating an uptick in load there. And those are more volumetric customers, and they're C&I customers as well. So that's something to keep in mind, as well.

Okay. So if I understand this correctly, you're sort of basically talking about sort of the short-term impact associated with stay in place and what have you, the sort of public policy and human reaction to the pandemic. But if I understand you correctly, you guys are not really, at least for the forecast purposes, not making any change in your expectation for economic growth. For instance, you don't have a recession or anything like that planned into your - that outlook is not involved in the six to nine or - am I correct? In other words, when you're looking at this, you're looking at sort of the steady state economically, and we're just sort of looking at how load might be impacted by just what I talked about, the direct COVID response reaction kind of thing, as opposed to the potential for a substantial economic slowdown.

In fairness, on that point, I want to be clear, too. We talk about a recovery in the third quarter and nearly back to normal in fourth quarter. So we are still showing detriment in the third quarter and detriment in the fourth quarter. But sort of not back to our plan in either in this quarter's by any means. So I just want to be clear on that. I think to your point, in fairness, thinking about 2021, we focused on 2020, and I think it's difficult to say the impacts of this on a going-forward basis economically. We could be entering into a recession, of course, and that could have impact on our business for remainder of '20 and into future years. We have not gone through that analysis.

Okay, fair enough. And then just the transmission issue, the question that came up. If I understood your answer correctly, the impact on the transmission revenues, et cetera, is pretty much what you guys had forecasted, and really had to do with the closure of the units and industrial customers, really nothing with COVID. Is that correct?

Thus far, that's correct.

Okay. Okay, thanks so much, guys. Hang in there.

Thank you. Appreciate it.

And we'll take our next question is from Jonathan Reeder with Wells Fargo.

This has been a long call, so I'll try to keep it quick.

Thanks, Jonathan.

Are you anticipating a block issuance then, or like a dribble, like you did last time? I mean, it sounds more like you're leaning towards the block and pushing that into Q1.

Wow! The fact that I pushed it into Q1 has even given me more time to think about it, Jonathan. And so, I've been really thinking about Q2, Q3, and Q4, and we do like ATMs. Always have, but we'll evaluate that as we get closer to when we feel we need to. We're in dialogues with the rating agencies, by the way, and that's an important aspect to our timing associated with that too. And I feel good about the discussions there. So we'll hopefully have more to report on that on a future call, Jon.

Okay, sounds good. And then Bob, how does Talen taking half of the COVID or CU4 deal - too much COVID on my mind, right? How does Talen taking half of that deal impact your ability to control the destiny, with respect to when CU4 might eventually close?

Well, we will still have a pretty significant say in that. And to the degree that Talen and our interests are better aligned, that's positive. Obviously, they decided that there was value in being in for it, but we'll much more ability to control that. And in addition to that, the state of Montana will have much more ability to control it. And fundamentally, I think decisions about the destiny of Unit 4 will be driven by the economics of the unit. Does it meet our customers' needs in the best way possible? And then by state policy decisions in Montana.

Okay. So that it doesn't sound like you're overly concerned that they're taking - the increased ownership impacts your ability to kind of keep it running through - what is it - the 2040, 2030, per kind of the long-range plan that you've laid out previously. If that's what is [Technical Difficulty].

We make our - our supply plans are based on a 20-year forecast, but they're adjusted every few years, depending on facts at that time. So there's flexibility inherent in the planning process, ability to make modifications. I'm primarily concerned about - in terms of Talen coming into the transaction, no one party can dictate a closing date. That has to be a decision by the owners. So my real concern with Talen coming into the transaction is value that otherwise would have gone to customers and now will not.

Okay, that makes sense. All right, stay safe. That's all I have.

Thanks, Jonathan.

And we'll take our next question from Eric Peterson with Millennium.

Hi, Brian. Thank you for taking my question. I'll keep it quick.

Thanks.

I think you said 10% of commercial customers will be decoupled. So what percent of residential and commercial load do you expect to be decoupled? And then when do you assume that the decoupling starts in the guidance?

What we did is we expected in our analysis that this would start in July. And the - I do not have at my fingertips the impact of decoupling on residential and commercial loads for both Q3 and Q4, the decoupling aspect of it. It wasn't material enough because of the substantial recovery, from my perspective, of what I recall. I'm not sure the percentage of margin load that comes into effect, if you will, from the 10% of - less than 10% of customers who are commercial. I should know that. I apologize; I don't. I would reiterate though that 100% residential customers in the Montana electric side and residential side are impacted. So I know it's a 100% of load there.

Okay, perfect. Thank you, guys.

We currently have no questions in the queue at this time.

Okay. With that, thank you all very much. Normally, we're looking forward to seeing you at one of other [ph] conference, and that won't be the case, at least for the next few months. But we do appreciate your interest, good questions, and support for the company.

That does conclude today's conference. Thank you for your participation. You may now disconnect.