Welcome to IDACORP's Third Quarter 2021 Earnings Conference Call. Today's call is being recorded, and our webcast is live. A complete 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. Sir, please go ahead.

Thank you and good afternoon, everyone. This morning, we issued and posted to IDACORP's website our third quarter 2021 earnings release and Form 10-Q. The slides that accompany today's call are also available on our website. We'll refer to those slides by number throughout the call today. As noted on Slide 2, our discussion includes forward-looking statements, including earnings guidance and spending forecast, which reflect our current views on what the future holds, but are subject to several risks and uncertainties. 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 Steve Keen, IDACORP's Senior Vice President and Chief Financial Officer. We also have other company representatives available for a Q&A session after Lisa and Steve provide updates. Slide 4 shows our quarterly financial results. IDACORP's 2021 third quarter earnings per diluted share were $1.93, a decrease of $0.09 per share from last year's third quarter. Earnings per diluted share over the first 9 months of 2021 were $4.20, which were $0.25 above the same period last year. The year-to-date earnings are the highest in the history of the company over the first 9 months of the year. Today, we also tightened our full year 2021 IDACORP earnings guidance estimate upward to be in the range of $4.80 to $4.90 per diluted share, with our expectation that Idaho Power will not need to utilize in 2021 any of the additional tax credits that are available to support earnings under its Idaho regulatory settlement stipulation. These are our estimates as of today, and they assume normal weather conditions and a continued return to more normal economic conditions over the balance of 2021. I will now turn the call over to Lisa.

Thank you, Justin, and thanks to everyone for joining us on today's call. I will begin by addressing the robust economic growth we continue to experience in Idaho Power service area. You'll see on Slide 5 that customer growth has increased 2.9% since September 2020. We believe that quality of life, a business-friendly environment and reliable affordable energy from Idaho Power continue to attract a steady influx of business and residential customers, to the benefit of both our company and the local economy. And while the impacts of the COVID-19 pandemic linger, we continue to see a return to normal operations for most of our commercial and industrial customers. As of the end of September, unemployment in our service area was 2.6% compared to the current rate of 4.8% nationally. Total employment in our service area has increased 3.3% over the past 12 months. Moody's forecasted GDP now calls for economic growth of 6.1% in 2021 and 4.2% in 2022. We are encouraged by this growth trend and forecast, especially considering the challenges we have all faced over the past 18 months. At the local level, we are grateful to see businesses continue to bounce back from the various impacts of the pandemic. Idaho Power continues to experience a strong volume of potential customers interested in expanding in our service area. Many prospective projects are expressing a need for rapid speed to market and are seeking existing buildings versus greenfield construction. This demand is fueling significant industrial spec development to construct shell buildings ranging from 50,000 to 250,000 square feet. While a number of local developers are building out industrial parks, several nationally recognized developers are making large investments in anticipation of ongoing growth in Idaho's industrial sector. As you may know, Idaho Power serves a large dairy industry and…

Thanks, Lisa. Let's now move to Slide 8, where you'll see our third quarter 2021 financial results as compared to the same period in 2020. While this year's third quarter was a bit lower than last year's related to the timing of irrigation sales in both years, IDACORP has achieved the highest first 9 months of earnings ever recorded. We had a very good quarter, and with continued benefits from higher sales to new customers, and higher sale in most customer classes, as well as positive impacts from transmission revenues. We also saw lower sales to irrigation customers after strong irrigation loads in the second quarter, and a return to more typical operating and maintenance expenses compared to the same period last year. On the table of quarter-over-quarter changes, you'll see our continuing customer growth added $5.1 million to operating income. Increased usage per customer drove operating income higher by $22.9 million. Cooling degree days were 14% higher than last year's third quarter, and the hot and dry conditions lead to 3% higher residential per customer usage, while more normal operating conditions lead to a respective 3% and 1% higher usage per commercial and industrial customers. The timing of precipitation, which was higher than last year's dry third quarter, and the early start of the irrigation season that was reflected in our second quarter's results, along with some limitations on water in the third quarter all led to a 4% decline in irrigation per customer usage. You'll note on the table that the combined usage changes lead to a $0.2 million increase to operating income. A higher usage for residential and small general service customers was partially offset by $1.4 million of lower revenues from the FCA mechanism next on the table. Further down, you'll see a decrease in operating…

We are now ready to begin the question-and-answer session. [Operator Instructions] Your first question comes from the line of Chris Ellinghaus from Siebert Williams. Please proceed with your question.

Hi, Chris.

Chris, you may be muted on your end.

We're still not hearing you, Chris, if you're talking.

It seems Chris' line has been disconnected. Let's proceed with the next question. The next question comes from the line of Ryan Greenwald from Bank of America. Please proceed with your question.

Good afternoon, everyone. Can you hear me?

Yes, hello.

Thanks for taking our questions. Maybe first, as you guys work through initial modeling for the upcoming IRP here, any initial thoughts around quantifying the magnitude of further potential generation opportunities?

Adam, do you want to…?

Yeah. Yeah, absolutely. Yeah, we're still in kind of the modeling stages as you mentioned. That should be done here in November and December. Lisa mentioned the 80 megawatts that we're seeing in 2023. It's preliminary, but we're seeing several 100 megawatts potentially in 2024 and 2025 as well. And then, a decent amount of resource is needed throughout the next couple of decades actually. So it's all early-stage modeling. We're going to be refining that, and again, it should be completed near November/December. But, yeah, the early indication is there is going to be some infrastructure needs moving forward.

Got it. And it seems like you guys have been doing a pretty decent job of navigating the supply chain challenges here. But any concerns around that shifting the dynamic here in terms of the opportunities?

Certainly. I mean, all of us are concerned about it. But I will say that our team has done a really good job at trying to anticipate and get ahead of what we can see coming. So we're hopeful that the supply chain issues will work itself out over time. But we are being very proactive. Adam, I don't know if there's…

Yeah, no, I agree. We're monitoring the market. We're increasing our inventory levels. We're purchasing larger quantities. We're using new vendors. So we're trying to get ahead of it. And so far, so good.

Great. And then, maybe just lastly, in terms of the new transmission, long-term contracts, how should we kind of think about the step-up into next year?

Which contract are you talking about?

The one Steve was referring to.

I think those wheeling contracts, Lisa.

Do you want to take that?

Yeah, I'm happy to take that too. I think Lisa mentioned it. And then, part of the good news is we have seen increases in the rates. They're both in 2021 and 2022, will be in 2022 4%. The wheeling rates have been great. The volumes have been great this year. 6 out of the 9 months so far has been our highest 6 months ever. And so, we continue to be bullish on transmission, and it continues to be used, as people - and as entities move, clean energy throughout our system and through other systems.

Great, I'll leave it there. Looking forward to seeing you guys at EEI.

Yes, looking forward to it.

Thank you. The next question comes from the line of Brian Russo from Sidoti. Your line is open.

Hi, Brian.

Hi, good afternoon. Hey, just on Boardman-to-Hemingway, which I assume will be a preferred, part of the preferred plan in the upcoming IRP. The most recent estimate is $1.1 billion. But when was that estimate and projection set? And I suppose that in this upcoming IRP, it will reflect updated estimates on the costs, given the engineering environment that we're currently in.

Yeah, well, they get refreshed on a fairly regular basis. And, Adam, I'll have you or Mitch add some other color.

Yeah, the $1 billion to $1.2 billion has existed for a while. At least, every year or every year-and-a-half we refresh that. Obviously, when we go out to bids, which we'll plan to do here in the future, what we'll be able to refine those. But we've really tried to keep a hand on those costs. And we're checking them periodically to make sure it's still in that range and it is.

Okay. And when can we see outcome of the 80 megawatt RFP?

We're looking to - this is Adam, again. We're looking to get into the negotiations over the next month or so. So, we're cautiously optimistic that it'll be by the end of the year.

Okay. And just to clarify, the $100 million of incremental CapEx, is that kind of earmarked if you were to win the 80 megawatt RFP? Or is that incremental or separate?

Yeah, it kind of depends on how it's structured. But right now we're looking at a build-to-transfer model. And so, yeah, that would be capital costs that we would expend.

Okay, got it. And, obviously, you guys have done a great job of controlling O&M over the last 10 years. Maybe can you talk about the base O&M, I mean, break it down maybe between labor and other type of expenses, and where you're seeing the most inflationary pressures that we should look at when we look forward to 2022?

Well, I'll start. We're seeing them sort of all across the board. Certainly, we talked about supply chain and the cost increases on just materials and that drives cost of service, purchase services as well. And then, labor, we're seeing that across the board. In all industries, there is significant, that's sort of the battle for talent and the cost of living increases. That we're watching carefully. So I would say, we're seeing pressures just about every place in O&M.

Okay, got it. Okay, that's it for me. Thank you very much.

Thanks.

Thank you, Brian.

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

Thank you all for your continued interest in IDACORP. We look forward to seeing many of you in person at the EEI Financial Conference in a couple of weeks. And I continue to wish you all good health and I hope you have a wonderful evening. Thank you.

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