Good day, and thank you for standing by. Welcome to the Avista Corporation Q2 2023 Earnings Call. [Operator Instructions] Please be advised today’s conference is being recorded. I would now like to hand the conference over to your speaker today, Stacey Wenz. Please go ahead.

Good morning. Welcome to Avista’s Second Quarter 2023 Earnings Conference Call. Our earnings and our second quarter 10-Q were released premarket this morning. Both are available on our website. Joining me this morning are Avista Corp. President and CEO, Dennis Vermillion; Senior Vice President, CFO, Treasurer and Regulatory Affairs Officer, Kevin Christie; and Vice President, Controller and Principal Accounting Officer, Ryan Krasselt. Today, we will make certain statements that are forward-looking. These involve assumptions, risks and uncertainties, which are subject to change. The information we will share this morning is based on our current expectations of normal precipitation, temperatures and other operating conditions as well as below normal hydroelectric generation as of today’s date. And various factors could cause actual results to differ materially from expectations discussed in today’s call. Please refer to our 10-K for 2022 and our 10-Q for the second quarter of 2023, which are available on our website for a full discussion of these risk factors. I’ll begin by recapping the financial results presented in today’s press release. Our consolidated earnings for the second quarter of 2023 were $0.23 per diluted share compared to $0.16 for the second quarter of 2022. For the year-to-date, consolidated earnings $0.96 per diluted share for 2023 compared to $1.15 last year. I’ll now turn the call over to Dennis.

Well, thanks, Stacey, and good morning, everyone. I hope you’re all enjoying the summer so far. It’s been a hot one for sure. I’d like to begin this morning by congratulating our employees who recently won one of the Chartwell’s Best Practices awards in outage operations for Avista’s weather and incident forecasting tool. This innovative tool leverages our historical database for weather, infrastructure and previous outages to predict future outages. It allows us to proactively plan and prepare for potential weather events, which helps us better utilize our resources. It improves our response times and enhances the overall customer experience. This is just one great example of how Avista’s spirit of innovation informs how we approach what we do every day to deliver safe, reliable energy to our customers. In that spirit, we are continuing to invest capital across our service territory to harden the grid, maintain and upgrade our infrastructure and enhance reliability for customers while at the same time, moving closer to earning our allowed return. Regarding rate cases, we’ve made significant progress on the regulatory front this year. We reached a multiparty settlement agreement in our Idaho rate cases and new electric and natural gas rates will go into effect in September. We also reached a settlement in principle in our Oregon general rate case, which is in line with our expectations. In June, we filed our 2023 Electric Integrated Resource Plan with the Washington and Idaho commissions. And you might remember, every 2 years, we produce an electric IRP, which details projected growth and demand for energy and then the new resources that we’ll need to serve our customers over the next 20 years. Thanks to the resource selections from our recent outsource RFP. We are in a really good position to meet our customers’ needs now and into the future. With respect to earnings, our results are slightly ahead of our expectations for the first half of the year and I’d like to take a minute just to acknowledge our leaders and employees for their ongoing actions to manage our costs to offset the impacts of inflation that we continue to experience including higher interest rates and additional financing costs. Our results show the good work and the benefit of these efforts. We are confirming our annual consolidated guidance for 2023 and with a range of $2.27 to $2.47. However, we expect to be in the lower end of the range due to higher than expected costs under the ERM in Washington resulting from faster than normal snow mount and one of the worst hydro years we’ve seen in many, many years. Now I’d like to turn this presentation over to Kevin, who will share more about our earnings. Kevin?

Thanks, Dennis, and good morning, everyone. I’m excited to be here this morning in my first earnings call as CFO. It was a pleasure to meet or get acquainted with many of you at AGA this past May, and I’m looking forward to working more closely with our investor community in the future. I’d like to thank the finance, accounting and regulatory leadership and their amazing teams here at Avista. They’re a great group who have made the CFO transition go quite smoothly. As we turn to earnings, Avista Utilities earnings increased in the second quarter of 2023 compared to the second quarter of ‘22. We’ve seen increased margin as a result of our general rate cases, customer growth and lower costs under the ERM compared to the second quarter of last year. In the second quarter of this year, the ERM was a pretax benefit of $1 million compared to a pretax expense of $4.8 million in the second quarter of last year. Year-to-date, we’ve recognized a pretax expense of $6.5 million in the ERM compared to a pretax expense of $2.8 million last year. For the full year, we now expect higher costs under the ERM and expect to be to end the year in the 90% customer, 10% company sharing band with a decreased earnings of $0.08 per diluted share. Recognizing the volatility in the ERM, we are examining whether the ERM is the most appropriate cost-sharing mechanism for Washington going forward. We continue to be committed to investing the necessary capital in our utility infrastructure. We expect Avista utilities capital expenditures to total $475 million in ‘23, and we’re well on our way as our capital expenditures were $220 million in the first half of the year. We expect AEL&P’s capital expenditures to be $19 million…

Thanks, Kevin. We welcome your questions.

[Operator Instructions] Our first question comes from Will Grainger [ph] with Mizuho.

Good morning. On the Q1 call, you mentioned that you are anticipating some positive uplift from the ERM. Now in your prepared remarks, you mentioned that you’re experiencing higher than expected costs. Can you talk a little bit about what you’re seeing here and how that impacts your 2023 guidance?

Yes. Yes, happy to -- on the Q1 call, we were sitting really with pretty decent snowpack and hydro forecast for not only for our company, but for the region. And if you’ll recall, up until May, the spring time for us was really a very cold -- colder than normal. So the snow mount was less than it would be in a normal year. And so when you’re in that situation, you look, well, we’ve got good snow mount if we have a nice slow melt like we normally would hope to have, then you would have really good hydro the rest of the year as that snow comes off. And what ended up happening is May was very warm, not only for our service area, but the entire region and all the snow really came down in one month. So the May hydro numbers were pretty good, but a lot of that water then is just wasted because there’s too much, but you can’t generate. So what that ended up doing to us is with the cold spring, we were a little bit below normal up until that point. Hope -- expecting to make that up because the snow would come ratably down the mountains, and it didn’t work that way. And a lot of it just was flushed out of the system and was unusable. Certainly not at the time of the year when you want it also. So that change just in weather and in May, really impacted the hydro forecast, not only for us, but it’s a region-wide thing. And that is really what swung the ERM around based on what we were projecting at that point in time in May.

Yes. Let me build on that, Dennis. We were at $0.03 positive when we met last quarter. And now as you’ve heard here, we’re expecting to be at $0.08 on the other side. here. So that’s a pretty significant swing, and that goes to the weather that Dennis described. And that’s why we’re indicating that if it weren’t for the ERM, we would have pretty strong results here, bear and balanced results, but that does bring us down towards the bottom end of our range, as we said earlier.

Understood. If I could just follow up, maybe switching gears here. On the balance for the second half of 2023, what are the puts and takes to hitting your guidance in Q4 of last year, specifically, you had about $0.25 of a positive mark-to-market from a biotech investment. Should we expect something similar in the back half of the year? How should we be thinking about that?

I don’t think there’s a set shape to the investment profile and you’re referring to our non-reg investment portfolio overall. I don’t think there’s a set shape. But as we indicated earlier in the call, we expect overall to be in the $0.04 to $0.06 range on our non-reg investments. We’re down for the year thus far and compared to prior periods, and we would expect some turnaround there to get to that $0.04 to $0.06 range.

And I’m not showing any further questions at this time. I’d like to turn the call back over to Stacey.

Thank you very much. Thank you for joining us today and for your interest in Avista. Have a great day.

Ladies and gentlemen, this does conclude today’s presentation. You may now disconnect, and have a wonderful day.