Brian Roussillon

Brian Roussillon (Jefferies) inquired about Avista's strategy for managing external risks like inflation, interest rates, and power costs under a multi-year rate plan (MYRP) in Washington, specifically asking if modifications would be sought to insulate the company from power cost fluctuations.

Answer

Kevin Christie, Senior Vice President, CFO, Treasurer, and Regulatory Affairs Officer, explained that Avista has the option to refile a shorter two-year plan if conditions deviate significantly. He also stated that the company's objective is to have power supply resets in each subsequent year of a multi-year plan and that they would focus on resetting power supply costs at a more appropriate level rather than modifying the Energy Recovery Mechanism (ERM) itself, pending Puget's success with a similar mechanism. Christie also clarified the quarter lag for mark-to-market investments in other businesses and discussed the expected 50/50 debt-to-equity financing mix for incremental capital expenditures.

Brian Roussillon with Jefferies inquired about Avista's strategy for its upcoming Washington Multi-Year Rate Plan (MYRP) filing, specifically how the company plans to manage external risks like inflation, interest rates, and power costs under a longer-term plan. He also asked about the expected power cost drag in 2026, the mechanics of mark-to-market accounting for other businesses, and the anticipated debt-to-equity mix for potential incremental capital expenditures.

Answer

Kevin Christie, Avista's Senior Vice President, CFO, Treasurer, and Regulatory Affairs Officer, explained that the company has the flexibility to refile a two-year plan if a longer MYRP goes off track. He stated that Avista's objective is to include power supply resets in each subsequent year of the plan. Christie clarified that Avista would likely focus on resetting power supply costs to an appropriate level rather than modifying the Energy Recovery Mechanism (ERM) itself, which could mute its impact. He confirmed an expected power cost drag in 2026 due to the ERM, similar to 2025, and noted that the mark-to-market for some investments has a quarter lag, with Q3 reflecting Q2 values. Christie expressed optimism about the clean energy investment narrative stabilizing. Regarding incremental capital, he indicated a general expectation of a roughly 50/50 debt-to-equity mix beyond the base capital plan.

Brian Roussillon asked about OGE Energy's competitive position to pursue more projects within the upcoming 2025 SPP ITP plan, which is anticipated to be significantly larger than the 2024 plan. He also inquired about the planned large load tariff filing as part of the pre-approval settlement, specifically if it relates to ongoing contract negotiations for the Google Stillwater project. Lastly, he sought clarification on the 2025 load growth outlook of 7.5%, questioning if it represents the lower end of the prior range and its underlying drivers.

Answer

Charles Walworth, CFO, confirmed OGE Energy's close involvement with SPP and acknowledged a robust plan, but noted that firm details are pending SPP board meetings. Sean Trauschke, Chairman, President, and CEO, stated that the large load tariff filing is a settlement requirement and would occur either with the next rate case or earlier if an agreement is finalized. Mr. Walworth explained that the 7.5% load growth outlook is primarily due to the 'chunky' nature of certain loads and timing issues, with one customer's connection delayed by approximately a quarter.