Attached files
| file | filename |
|---|---|
| 8-K - 8-K - AVISTA CORP | investorpresentation05-31x.htm |
Positioned for performance:
An overview of Q1 2017 and beyond
UBS West Coast Power/Utilities/Solar 1x1 Mini Conference
San Francisco
June 1, 2017
NYSE: AVA www.avistacorp.com
Exhibit 99.1
All forward-looking statements are Avista management’s present expectations of future
events and are subject to a number of factors and uncertainties that could cause actual
results to differ materially from those described in the forward-looking statements.
For more information on such factors and uncertainties, consult Avista’s most recent form
10-K and 10-Q, which are available on our website at www.avistacorp.com
Disclaimer
2
3
Strong and stable utility core
Regulated electric and natural gas operations
Serves customers in Washington, Idaho and Oregon
Contributes about 95% of earnings
Regulated electric operations
Serves customers in City and Borough of Juneau
Avista Utilities
Alaska Electric Light
& Power Company
(AEL&P)
Long history of service, trust,
innovation and collaboration
Photo: Spokane River Upper Falls
4
Steadily building long-term value
Reliably building value for our customers,
investors, communities and employees
Projecting long-term earnings and dividend growth of 4% to 5%
Avista Utilities
AEL&P
Strategic
Investments
5% to 6% rate base growth through utility capital investments
Upgrading infrastructure; grid modernization
Customer growth ~1%
Near-term earnings are challenged due to 2016 Washington rate order
Committed to reducing timing lag and align our earned returns with those
authorized by 2019-2020
Strong near-term rate base growth through investment in generation
Customer and load growth ~1%
Developing platforms for future growth
□ Targeting expanded natural gas services via LNG*
□ Exploring data science and advanced analytics
□ Investing in emerging technologies
*LNG: Liquefied natural gas
Avista Utilities
Investments in utility infrastructure
5
6
Diverse customer base
□ 30,000 square mile service territory
□ Service area population 1.6 million
– 377,000 electric customers
– 340,000 natural gas customers
Strong customer focus
□ 90% percent or better customer satisfaction
ratings every year since 1999
□ Developing key customer initiatives
Invested in our communities
□ More than $2 million per year in charitable
donations and over 48,000 volunteer hours
from our employees
Providing safe and reliable service for 128 years
Solid foundation and continued commitment to innovation
Information as of Dec. 31, 2016
7
A responsible mix of generation
Hydro
49%
Biomass
2% Wind
4.5%
Coal
9.5%
Natural Gas
35%
Avista Utilities Electricity Generation Resource Mix*
Dec. 31, 2016
Strategy is to control a portfolio of resources that responsibly meet our long-term
energy needs
Long resources through 2021; evaluating preferred resource strategy and will file an
electric Integrated Resource Plan in August
Exceeds Washington state’s 15% Renewable Portfolio Standard for the next 20 years
Founded on clean, renewable hydropower
*Based on maximum capacity
Excludes AEL&P Post Falls Dam, Idaho
8
Projected
Investments to upgrade our systems
* Other includes Facilities and Fleet
** Excludes capital expenditures at AEL&P of $16 million in 2016, and projected capital
expenditures of $7 million in 2017, $7 million 2018 and $13 million in 2019
5% to 6% rate base growth
$139 $137
$164 $157
$55 $59
$48 $47
$53 $50
$47 $46
$50 $47
$43
$42
$46
$49
$46 $52
$36 $42 $40
$48
$17 $21 $14
$9
$403 $405 $405 $405
2016 2017 2018 2019
Avista Utilities Capital Expenditures**
($ millions)
Environmental
Other*
Gas
Customer Growth
Enterprise Technology
Generation
T&D
9
Investing in our utility
Little Falls Plant Upgrade
Grid Modernization
Aldyl A Natural Gas
Pipe Replacement
Advanced Metering
Infrastructure (AMI)
Preserving and enhancing service reliability
Electric Vehicle Pilot
Program
10
Washington
May 26, 2017, filed two requests with the Washington Utilities and Transportation Commission.
POWER COST RATE ADJUSTMENT FILING
Designed to increase revenue by $15.0 million or 2.9%.
Effective Sept. 1, 2017.
Adjustment will expire at the conclusion of the general rate case.
GENERAL RATE CASE FILING
Designed to increase annual electric revenues by $61.4 million and annual natural gas revenues by $8.3 million, effective May 1, 2018.
Requests based on a 9.9% return on equity with a 50% common equity ratio.
Three-Year Rate Plan
New rates will take effect May 1, 2018, with annual increases in May 2019 and May 2020.
Power supply costs would be updated each year.
No new general rate cases would be filed with new rates effective
prior to May 1, 2021.
Driving Effective Regulatory Outcomes
Recovery of costs and capital investments
ELECTRIC NATURAL GAS
Proposed Revenue
Increase
Base %
Increase
Proposed Revenue
Increase
Base %
Increase
May 1, 2018 $61.4M 12.5% $8.3M 9.3%
May 1, 2019 $14.0M* 2.5% $4.2M 4.4%
May 1, 2020 $14.4M* 2.5% $4.4M 4.4%
*Excludes power supply adjustment
11
Driving Effective Regulatory Outcomes
Recovery of costs and capital investments
Idaho
Dec. 28, 2016, received approval of all-party settlement agreement designed to increase annual electric base revenues by 2.6% or
$6.3 million, plus continued recovery of $4.1 million of costs related to Palouse Wind Project through the PCA mechanism.
Based on a 9.5% return on equity with a 50.0% common equity ratio.
New rates took effect Jan. 1, 2017.
Plan to file electric and natural gas general rate case in Q2 2017.
Alaska
Sept. 16, 2016, filed an electric general rate request to increase base revenues by 8.1% or $2.8 million.
An interim rate increase of 3.86% or $1.3 million was effective Nov. 23, 2016.
An additional $2.9 million annually from interruptible service was approved to reduce overall revenue requirement from $5.7 million to $2.8 million.
Request based on a 58% equity ratio and a 13.8% return on equity.
The RCA has approximately 15 months to rule on the permanent rate increase.
The statutory timeline for the AEL&P GRC, with the consent of the parties, has been extended to Feb. 8, 2018.
Oregon
May 16, 2017, filed an all-party settlement agreement designed to increase annual natural gas base revenues by 5.9% or $3.5 million.
Based on 50% equity ratio and 9.4% return on equity.
If the settlement agreement is approved by the Public Utility Commission of Oregon, new rates would take effect on Oct. 1, 2017.
Alaska Electric Light & Power Company
(AEL&P)
Growing the utility core
12
Oldest regulated electric utility in Alaska, founded in 1893
13
Serves 17,000 electric customers in the City and Borough of
Juneau, meeting nearly all of its energy needs with hydropower
One of the lowest-cost electric utilities in the state
Approved capital structure of 53.8% equity and an authorized
return on equity of 12.875%
Diversifying our utility footprint
Juneau, Alaska
14
Strategic Investments
Developing platforms for future growth
Expand natural gas services via LNG
□ Salix (subsidiary)
– Generation – substitution for diesel
– Marine and rail fueling
□ Plum Energy
– Small LNG project investments
Targeted investments
□ Energy Impact Partners
– Private equity fund that invests in emerging technologies,
services, and business models throughout electricity supply
chain with a collaborative, strategic investment approach
□ TROVE
– Leverage AMI, consumer and other data through predictive
analytics to create utility value
□ Spirae
– Microgrid and distributed energy resource management
platform
Creating new growth platforms
15
16
Financial
Performance Metrics
Prudent Balance Sheet and Liquidity
Debt
52.2%
Equity
47.8%
Consolidated Capital Structure
March 31, 2017
17
Additional long-term debt maturities beyond 2027 not shown
*Excludes debt maturities of $15 million at Alaska Energy and Resources Company in 2019
$252.9 million of available liquidity at Avista Corp. as of March 31, 2017
In second half of 2017, expect to issue up to $110.0 million of long-term debt and up to
$70.0 million of common stock in order to fund planned capital expenditures and
maintain an appropriate capital structure
$273
$90
$52
$250
$14
2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027
No significant maturities until 2018
($ millions)
*
$1.85
$3.10
$1.97
$2.15
2013 2014 2015 2016 2017
Guidance *
Continuing Operations Ecova (DiscOp)
$1.80-$2.00
18
Continued long-term earnings growth
Total Earnings per Diluted Share
Attributable to Avista Corporation
Business Segments Q1 2017 Q1 2016
Avista Utilities $0.90 $0.88
AEL&P $0.06 $0.05
Other - $(0.01)
Diluted EPS $0.96 $0.92
* 2017 earnings negatively impacted by Washington order
19
2017 Earnings Guidance
Avista Utilities $1.71 $1.85
AEL&P $0.10 $0.14
Other $(0.01) $0.01
Consolidated $1.80 $2.00
Guidance Assumptions
Our outlook for Avista Utilities assumes, among other variables, normal precipitation and temperatures and
slightly higher than normal hydroelectric generation for the remainder of the year.
Our outlook for AEL&P assumes, among other variables, normal precipitation, temperatures and hydroelectric
generation for the remainder of the year.
Our guidance range for Avista Utilities encompasses expected variability in power supply costs and the
application of the ERM to that power supply cost variability.
The midpoint of our guidance range for Avista Utilities includes $.07 of expense under the ERM; which is within
the 90 percent customers/10 percent shareholders sharing band. Our current expectation for the ERM is an
expense position within the 50 percent customers/50 percent shareholders sharing band, an improvement of
$0.01 to $0.02 per diluted share from our original guidance. Our guidance does not include any amounts related
to our potential power supply update request for 2017.
Confirming 2017 Earnings Guidance
*Current quarterly dividend of $0.3575 annualized
20
Dividend growth expected to keep pace with long-term earnings growth
Attractive and growing dividend
$1.22
$1.27
$1.32
$1.37
$1.43*
2013 2014 2015 2016 2017*
21
An attractive investment
Strong and responsible core utility
□ Investing substantially to modernize infrastructure and
upgrade systems
□ Steady returns and attractive dividend yield
□ One of the greenest utilities in the U.S.*
□ Committed to reducing current regulatory timing lag of
100-120 bps by 2019-2020
Focus on utility growth
□ Selective acquisitions
□ Developing new products and services and supporting
economic development throughout service area
Positioning for the future
□ Strategically investing in ways to extend access to
natural gas via LNG, leverage AMI data through
applied analytics, gain insight into leading-edge
energy solutions
□ Track record of innovation (e.g. Itron, ReliOn, Ecova)
*Source: Benchmarking Air Emissions of the 100 Largest Power Producers in the United States,
NRDC, July 2016
Photo: Cabinet Gorge Dam
Reliably building value for
our customers, investors,
communities and employees
We welcome your questions
Company Contact
Jason Lang, Investor Relations Manager
509-495-2930
Jason.Lang@avistacorp.com
www.avistacorp.com
Photo: Huntington Park, Spokane, Wash.
22