Avista Corp (AVA) 2014 Q2 法說會逐字稿

Welcome to the second quarter 2014 earnings conference call. My name is Jeanette and I will be your operator for today's call. At this time all participants are in a listen-only mode. (Operator Instructions).

I will now turn the call over to Jason Lang. Mr. Lang, you may begin.

Thanks, Jeanette. Good morning, everyone. Welcome to Avista's second quarter 2014 earnings conference call. Our earnings were released premarket this morning and the release is available on our website at www.avistacorp.com. Joining me this morning are our Avista Corp. Chairman of the Board, President and CEO, Scott Morris; Senior Vice President and CFO, Mark Thies; Senior Vice President and President of Avista Utilities, Dennis Vermillion; Vice President, State and Federal Regulation, Kelly Norwood; and the Vice President, Controller and Principal Accounting Officer, Christy Burnmeister-Smith.

I would like to remind everyone that some of the statements that will be made today are forward-looking statements that involve assumptions, risks and uncertainties, which are subject to change. For reference to the various factors which could cause actual results to differ materially from those discussed in today's call, please refer to our Form 10-K for 2013 and Form 10-Q for the first quarter of 2014 which are available on our website.

To begin this presentation I would like to recap the financial results presented in today's press release. Our consolidated earnings were $1.67 per diluted share for the second quarter of 2014 compared to $0.43 for the second quarter of 2013. On a year-to-date basis earnings were $2.48 per diluted share for 2014 compared to $1.13 last year. Now, I will turn the discussion over to Scott.

Well, thank you, Jason. And good morning, everyone. Well, I can say we have certainly had an eventful 2014 thus far. With the celebration of our 125th anniversary, the completion of our sale of Ecova on June 30, and the close of our acquisition of Alaska Energy Resources Company on July 1.

On the sale of Ecova we recognized a net gain of about $68 million and we expect total net proceeds of approximately $133 million. I want to thank all of the employees at Ecova, through their hard work and dedication they've built a truly world-class company and I have every confidence that they will continue to be an industry leader and we wish them well into the future.

We are excited about AERC becoming a part of our Company, their employees are highly skilled and they are going to be a great partner and addition to Avista. We also are looking forward to working closely with the community in Juneau to the future. Looking ahead, AERC allows us to expand our energy customer base as well as look at other market opportunities in Alaska.

At our other businesses, our settlement in the California power markets litigation was approved by the Federal Energy Regulatory Commission and we received settlement proceeds. We contribute a portion of these proceeds to the Avista Foundation to help sustain and support the communities we serve.

With respect to regulatory matters, in July we reached a settlement agreement with all interested parties in Idaho for a one-year extension to our current rate plan which was set to expire at the end of 2014. Under the proposed expansion, based retail rates would remain unchanged through the end of 2015 and we expect an order regarding the settlement before the end of 2014. We are evaluating the need to file a natural gas general rate case in Oregon and our expectation is to file a case in the second half of 2014. Alaska Energy Light and Power is anticipating filing an electric general rate case with the Regulatory Commission of Alaska in the second half of 2014 as well.

Some of you may have heard about the wildfires in Washington state and fortunately for us there has been no damage to our electrical system from these fires. However, we are wrapping up repairs to our system from two significant storms in the last couple of weeks. The first storm hit on July 23 and took some 40,000 customers off-line in Spokane, Northeast Washington, and northern Idaho. We had just finished up the repairs to more than 120 distribution and transmission poles and lines when a second storm blew through six days later and it took out more than 48,000 customers.

Over the two-week period Avista crews from throughout the region along with contract and mutual aid crews from Boise, Bozeman, Moses Lake, Seattle, Tacoma, and Portland worked around-the-clock to restore power to our customersand I want to thank all of are of our Avista employees, all of the contract crews and others who worked so hard to help restore power and provide the great customer service and do the things that we do so well which is be a leader, providing great customer service for our customers. I also want to thank our customers for their patience during this very difficult time. And while we are still adding up the costs associated with these storms are preliminary estimates are that total O&M and capital costs will not be material.

So in summary, we have completed two significant transactions during 2014 and we are anticipating improved earnings at Avista Utilities for 2014.

And with that I'm going to turn it over to Mark.

Thank you, Scott. Good morning, everyone. Our utility earnings were $0.44 per diluted share in the second quarter, an increase from $0.41 in the second quarter of last year. And on a year-to-date basis Avista Utilities contributed $1.24 per diluted share up from $1.11 last year. Our earnings for the quarter and year-to-date increased primarily due to the implementation of general rate cases in all of our jurisdictions and we also benefited on a year-to-date basis from colder weather in the first quarter which was partially offset by milder weather in the second quarter.

We also had expected increases in our operating costs, depreciation, amortization and taxes other than income. But we have had lower power supply costs in part due to improved hydroelectric generation this year. We had a very strong hydro year this year to-date. Results for 2013 also included the net benefit from the settlement with Bonneville Power Administration.

For the second quarter of 2014 we recognized a pre-tax benefit of $3.6 million under the Energy Recovery Mechanism in Washington compared to a benefit of $1.1 million last year in the same period. For the six months ended we have recognized a pre-tax benefit of $4.9 million under the ERM compared to $4.1 million for the same period last year. For the full year of 2014 we expect to be in a benefit position under the ERM within the 90% customer, 10% company sharing band.

We are committed to updating and maintaining our utilities system. In the first half of 2014 we spend $136.5 million on Avista Utilities capital expenditures. We expect capital expenditures at Avista Utilities to be about $255 million for 2014, which is a $20 million increase and this increase relates primarily to the replacement of our customer information and work management systems project. We expect to spend approximately $6 million for 2014 and $15 million in 2015 and 2016 related to capital expenditures for Alaska Electric Light and Power.

Moving on to Ecova, their net income was $70.8 million for the first half of the year compared to $2.7 million for the first half of last year. And this increase was primarily attributable -- all attributable to the net gain on the sale of $68.1 million. Excluding that gain, net income from Ecova's regular operations were flat compared to last year. Our other businesses contributed $0.07 per diluted share for the first half, compared to a net loss of $0.03 per share last year. The net income was primarily the result that Scott mentioned of the settlement of the California power markets litigation in which we recognized pre-tax earnings of $15 million partially offset by a contribution of $6.4 million to the Avista Foundation to help the communities we serve.

METALfx had net income of $0.3 million for the first half of the year compared to $0.5 million for the first half of last year. Lastly, we incurred $1.1 million of costs associated with exploring strategic opportunities. We continue to look at opportunities to develop new markets and new ways for customers to use electricity, natural gas, including CNG and LNG.

I'm now going to discuss some of our liquidity and financing plans for the year that have occurred and are expected to occur. During the second quarter of 2014 we received cash proceeds of $205.4 million from the Ecova disposition. And we expect to receive additional proceeds of $13.6 million from the escrow accounts related to the sale. We also received $15 million from the California power markets litigation settlement.

We used the above funds to pay off the outstanding balances on our committed line of credit on July 1 of $151.5 million. We contributed $6.4 million to the Avista Foundation and we initiated a common stock share repurchase program of up to 4 million shares during the second half of 2014. We expect to borrow funds on our committed line of credit later during third quarter and beyond in 2014 because we expect to make tax payments of $85.8 million associated with the sale of Ecova and we will need additional funds to complete our stock repurchase program.

We have a $400 million line of credit with various financial institutions and in April of this year we amended this committed line to extend the expiration to April of 2019. And as of June 30, 2014 there was $151.5 million of borrowings, which I said we paid off on July 1, and there were $21.9 million of letters of credit outstanding, leaving us with strong availability under this line of credit.

We expect to issue approximately $165 million of long-term debt during 2014 including about $90 million related to the Alaska acquisition. In July of 2014 Alaska Light and Electric Power entered a bond purchase agreement for the sale of $75 million in first mortgage bonds to be issued in September of 2014. The first mortgage bonds bear an annual interest of 4.54% and our 30 year bonds maturing in 2044. In addition to the first mortgage bonds we expect to issue $15 million in term loans at AERC during the third quarter of 2014.

We acquired the Alaska companies primarily with Avista Corp. common stock and therefore the proceeds from the borrowings will be used to repay approximately $38 million of existing Alaska Electric Light and Power debt, and the remainder of the proceeds are expected to be dividend as a cash dividend up to Avista Corp. to rebalance the capital structure. In the first half of 2014 we issued $2 million of common stock under the dividend and reinvestment in stock repurchase and employee plans.

As Scott mentioned, on July 1 we issued 4.5 million shares of common stock at a total fair value of $150 million relating to the closing of the Alaska transaction. We do not expect to issue any additional shares other than those -- for the remainder of 2014 other than those under the dividend reinvestment direct stock purchase plan and employee plans.

On July 7 we commenced a stock repurchase program to repurchase up to 4 million shares of our outstanding common stock. The program is set to expire December 31, 2014 and we have the option to terminate the program before that date. Through July 31, 2014 we have repurchased 292,000 shares at a total cost of $9.4 million.

Based on year-to-date -- and now I'm going to talk about guidance. Based on our year-to-date results at Avista Utilities we have increased, as Scott mentioned, increased expectations for Avista Utilities for the remainder of the year and we've had the two significant transactions that have occurred to date. Based on that we are raising our 2014 guidance to include the impact of all of these items. Our consolidated earnings guidance for 2014 is a range of $3.00 to $3.20 per diluted share. We expect to be near the upper end of this range including the impacts of the ERM.

The updated guidance includes the dilutive impact of the 4.5 million shares of common stock on July 1 for the Alaska transaction as well as our current expectation to repurchase approximately 4 million shares of common stock through our repurchase program for the remainder of the year. Our consolidated segment and segment ranges include the uncertainty around the timing of the share repurchases through our stock repurchase program.

With respect to the utility we expect Avista Utilities to contribute in the range of $1.79 to $1.94 per diluted share for 2014. This is an increase from our range of $1.68 to $1.82 per diluted share and is primarily due to lower-than-expected operating costs, higher loads, and the delayed implementation of the replacement of our customer information and work management system. We expect to be near the upper end of this range including the impacts of the ERM. As I mentioned earlier, we expect to be in a benefit position of the ERM in the 90/10 sharing range.

Our range for Avista Utilities encompasses expected variability in power supply cost and the application of the ERM to that power supply cost variability. Our outlook for Avista Utilities assumes, among other variables, normal precipitation, temperatures, and hydroelectric generation for the rest of the year.

We expect AERC to contribute in the range of $0.03 to $0.04 per diluted share for the second half of 2014. Historically, AERC has approximately two-thirds of their earnings during the first half of the year and one-third of their earnings occur during the second half of the year, primarily due to a winter rate schedule that they have from November through May which is unique to their company.

We expect other businesses to contribute between $0.05 and $0.07 per diluted share, and that includes the impacts of the California litigation settlement as well as the contribution to the Avista Foundation.

I will now turn the call back to Jason.

Thanks, Mark. Jeanette, we would now like to open the call up for questions.

Thank you. (Operator Instructions). We have a question from Julian Damoulin-Smith of UBS. Please go ahead.

Hi, guys. It's Mike Weinstein, actually.

Hi, Mike.

A couple of questions. One, what do you expect the balance sheet of the consolidated company to look like at the end of the year after all of your plans are finished? And also for next year what are you targeting?And then as well, I am wondering what kind of accretion you are seeing, you are expecting from AERC next year, as well?

Well, again, we haven't put out 2015 guidance. Historically, we do that on our third quarter call and we would expect that that is when we would look to putting out the 2015 guidance. I don't think we are looking to do that at this point with just closing the two transactions. With respect to the balance sheet, we did issue the 4.5 million shares with respect to the Alaska transaction and then over the course of the remainder of the year we look to repurchase because of the proceeds, primarily because of the proceeds of the Ecova sale, up to 4 million shares. That is included in our expectations for 2014. It really is to get us to maintain a prudent balance sheet. We did get a $68 million gain that goes right to our retained earnings and that helps us as well as the cash proceeds. So we expect to continue to maintain a prudent balance sheet. At the Alaska company we look to have the regulatory capital structure that they have had in the past, which is approximately 54% equity and approximately 46% debt. And we look to have a similar 47% or 48% equity layer for our utilities as we look at Avista Utilities. And we would expect to continue to manage our balance sheet that way.

So on a consolidated basis it would more match the Washington, Idaho utilities?

Yes, that would be our expectation.

My last question is about Salix, is that how you pronounce it?

Yes.

Just wondering what kind of progress you're seeing there and what opportunities you might be looking at?

Well, we continue to make a lot of progress. With respect for those that may or may not know, Salix really is where we look to do a lot of our LNG work. And we continue to make good progress working through with a number of parties looking at opportunities in both Alaska and Hawaii and in the Northwest for a number of different opportunities. We have made a small investment in Plum Energy that continues to look for some smaller scale LNG and we continue to think that is an opportunity for long-term growth. There's nothing on a project set that says we're ready to announce a project today but we continue to make good progress working through the evaluation of opportunities to really use clean burning fuel to offset diesel in many locations and that is really what we're driving at. We think that makes a lot of sense. But I don't have a project to announce, Mike.

Okay. Thank you very much.

Thank you.

Are our next question comes from Jim von Riesemann of CRT Capital. Please go ahead.

Hi Scott. Hi, Mark. How are you?

Good morning, Jim.

Good morning, Jim. Good.

Can you just explain how you show year-over-year earnings growth into 2015 based on this revised 2014 EPS guidance that you are providing today?

Well, 2014 is a good year, right? We have strong hydro, we continue to manage our costs well, we have had decent loads. So there is an awful lot of things in this year that are positive. We will have to look to 2015 to see how that goes. You will normalize some for weather, which we always do, and that is going to be some of a challenge, is because in the ERM as we continue to look at this year, we expect to be in the ERM in the 90/10. Well, we don't expect to be in the 90/10 in the ERM all of the time, that is an unusual thing for us. So some of that there may be some items that this year benefits that may not be the same next year, and when we come out in the fall, when we look to give guidance we will address those.

Well, let me ask the question a little bit differently. Why did you guys decide to include the California energy crisis settlement and then the gain on the disposition of Ecova in your ongoing guidance?

Well, I wasn't trying to look at it as ongoing, I was trying to state the guidance. As we look at this and say, what are we going to demonstrate as earnings. We tried to separate those out individually so they could -- I can't do reconciliations and pull them out, I get into non-GAAP disclosures and I have to do a lot of different things. So what we look at is let's identify the gain, that's what it is, you can strip that out then, right? There's a gain there and you can do whatever you want with that. Same thing with identifying the details of the California settlement and the donation, the contribution, to the Foundation. You can look at those and they are separate. We also then gave specific guidance with respect to Avista Utilities.

Right.

And AERC. So that is a very much ongoing. And then if you looked at other and took out the unusual things that could give you ongoing guidance for other. And that is really how we looked at it when we wanted to come out with the guidance.

Okay.

And we have strong guidance at Avista Utilities. Like I said, a lot of things went well this year. That is not always the case.

No, I get it. I get it on that stuff. I was just curious as to the presentation and the thought process behind it. On a totally different topic, now that Ecova is divested what are you thinking about the dividend going forward?You've taken this variable Ecova business out of the equation, you're really a regulated business with a couple of nonregulated potential growth avenues. How do you feel about the dividend?

I can tell you, Jim, that our Board I think really still feels the same as it always has about the dividend. We will continue to pay, I think a good dividend payout ratio in that 60% to 70% range. We have said that we want to continue to grow the Company 4% to 5% and we expect the dividend to kind of follow our growth. So I don't really see a change.

Okay. I was just curious on that. Alaska, you indicated that your thought process is going towards a rate filing in the second half of this year. Can you just talk about maybe some of the broad parameters of what you might think about with the rate filing?Whether it is cap structure, what kind of an ROE request you might think about, or what type of CapEx you might be looking at? We haven't had a lot of visibility into it and obviously you couldn't say much during the pendency period. So any color would be very helpful.

Yes, this is Kelly Norwood. We have taken a look at the numbers and the case will be driven by AEL&P and the folks up there. But if you look at the capital additions in the last year and as we look at 2014, they're not significant when compared to depreciation,so there's not a lot of rate pressure driven by capital additions. As we look to the future, or 2015 and 2016 then there's a little more in terms of capital additions. Operating costs, they have done a good job managing those. And as we look at capitalizing that, Mark has talked about staying in that 54% equity range for AEL&P. So what we're seeing right now is probably not a great need for rate relief but there is some and so we're taking a hard look at whether we should file later this year.

How should we think about CapEx relative to depreciation at Alaska? Is it like 1 to 1, is it 1.5 to 1, 2 times to 1?

At this point, Jim, they have looked at that very hard with Tim and Scott and the team up there, they look at their CapEx needs and they have it significantly grown their great ways because they are,% of the impacts to their customer base. So they have been able to manage their system very effectively over the course of time while recognizing their are opportunities for future capital so we do see that that CapEx pumps up in 2015 in 2016.

Okay.

But I don't think they're looking at significant CapEx unless they get an opportunity to build another significant hydro plant, but you really need some load for that and the ability to not have rate shock with a large plant coming in. So we continue to evaluate those opportunities and they do up there as well. And we would expect that evaluation to continue.

And the last question, which is a follow-up to Mike's question on this LNG expectations. Can you just talk about broadly what sort of goals you might have out of it? Is it from a cash flow perspective, an earnings perspective, and maybe even sort of the ultimate capital that you want to commit to the business?

Yes. All three. I don't mean to be facetious about it, Jim. We are looking at it as an opportunity to deploy capital, we would look at this as a longer-term contract. This is not a short-term play for us, it really is a long term view of saying we're going to look at this because plants like this take a while to permit and to get constructed and deliver significant LNG over time to larger scale customers. So that is -- we are looking at it as, that is an opportunity to deploy a significant amount of capital, to have good strong cash flows and good earnings impacts and returns on that to grow to help us achieve that longer term growth of 4% to 5%.

Okay. When you say significant amounts of capital invested, should I presume that that might include some sort of equity issuance to support the LNG project going forward or not?

Again, that depends. I would look if we have a big enough project, yes, we would finance that prudently.

Okay.

And if we needed to raise some equity for it we would. But I don't have a project that I'm saying, you know, is going to go out today or tomorrow. We have to look at that, it is a longer term play. But when that does occur, that could include having to raise some additional capital if we have a significant enough transaction.

Okay. Super. Thanks. I've taken up enough time at this point. I will let somebody ask. Thank you.

And we have a question from Brian Russo of Ladenburg Thalmann. Please go ahead.

Hi, good morning.

Good morning, Brain.

Hi, Brian.

If we wanted to look at your second quarter adjusted ongoing EPS, is the way to do it is take the $1.67 subtract $1.12 for the Ecova sale gain and subtract $0.09 for the litigation settlement gain and so an adjusted ongoing 2Q 2014 EPS would be $0.46?

Yes, again, I have to be careful not to get into non-GAAP, but that is why we gave you those specific numbers was to be able to say here is what the Ecova gain is, you can pull that out. Here is what the settlement is, so that math makes some sense. And really the difference is then looking at -- affectively you could look at Avista Utilities on a recurring basis, have that separated out too. And as we go forward Avista Utilities and the Alaska operations, with Alask Electric Light and Power, those will be the drivers of our ongoing future.

In the past you have disclosed, kind of what an earned ROE would be relative to your earnings guidance range. It seems to be absent from this presentation or updated guidance, I'm just curious if you can comment on that?

It hasn't changed. If we expect to be on the higher end at that time, the higher end of our prior guidance was 9.1% on an ROE basis at Avista Utilities and we're having a strong year so that may be slightly higher this year because of a number of factors that I discussed.

When we think about the increased in the Avista Utilities guidance, can you break that down in terms of what is load? And is that load the impact from weather? And then that AERC contribution, and then the lower than expected operating expenses?

We didn't give specific components of each. AERC is not included in Avista Utilities, that is separate, that is additive. So when you look at it, it is Avista Utilities and then the Alaska operations and those are additive to each other. And we expect the impacts for this year, really we're across all three, the lower operating expenses, the delay, the delay really and the implementation of the project for our computer systems and our work management system,really we delayed appreciation and we have a little bit of AFUDC on that as we go forward but that will, expected to go into our regulatory rate basis in the future when that comes online, which we expect to be in early 2015.

So that was just really a timing issue for this year. And then the loads, yes, we have had a somewhat hotter July and August to date and so we have got a little bit, we have got a pick up on loads there largely due to weather and we have continued to have strong hydro through this year. From the year for the rest of the way out we expect normal hydro and normal temperatures. So it is, some of these have occurred and some of them we continue to manage our operating expenses and -- we always try to manage our operating expenses, but I'm not going to break it down by each component, they're pretty similar.

All right so we can just break down the $0.12 increase in the midpoint, just spread it evenly amongst those drivers?

Again, it is across all of those drivers. You're not going to be off much if you do it.

Okay. Now, I've been reading lately in the press a lot of utilities are getting more vocal in the Northwest on the need for gas infrastructure, et cetera, et cetera. Can you, kind of, maybe just add your thoughts on how that ties into your whole search for energy centric type investments in your region?

I would say in the Pacific Northwest I don't think we have the same infrastructure needs as the Northeast. We have got a very robust pipeline system as we do our IRP, Brian, as we look our transmission needs really are in really good shape. As you recall, we have got great basin support from the Rockies, Alberta and British Columbia and have ample pipeline capacity from those three areas. So as we look at opportunities to grow our gas business it is really as Mark said, we're looking at Alaska opportunities from an LNG to really create an LBC in Alaska. And that is really where we see some additional natural gas infrastructure investment for us opportunities for the future.

Great. Thank you.

Thanks, Brian.

Our next question comes from Andy Levi of Avon Capital Advisors. Please go ahead.

Hi. Good morning, guys.

Good morning, Andy.

Just a couple of questions, I'm still a little confused, I guess. That is nothing new if you spoke to my wife.

(multiple speakers)

So, first, just to focus on this year. I guess you have got your $3.00 to $3.20 and then we back out Ecova, which I don't know, we'll call like $1.15 and then like another $0.10 for the California gain, right? Because you gave -- it's not all, some of it you expensed in the second quarter, right, for a donation?So it is about $0.10? Is that kind of the way to look at it?

Yes, the $15 million minus the $6.4 million, we gave you the three tax numbers, you can do the math.

Right, right. Okay. Thank you. So your guidance is basically on a -- again I know you don't want to talk operating, but it is probably pretty close to what it was when you originally gave guidance for the year with just the pieces being different on an operating basis, is that kind of a fair statement?

Well, you had Ecova that was at 12 to 16.

Right.

And that is stripped out, they had the 2 and then we had the gain. So like you said, and then -- but you are only getting a half of year of Alaska.

Right (multiple speakers).

And really you're getting a third of a year --

No, no. I just want to understand. And then the Alaska, there's $0.03 to $0.05 there. Does that include dilution? Or that doesn't include dilution?

All of that includes dilution, even the utility, Avista Utilities, includes the issuance of the 4.5 million shares on July 1 less, and this is where we have a little bit of a range, the timing of the repurchase of up to 4 million shares for the rest of the year.

Right. Okay. But it is $0.03 to $0.05 and then you have dilution that affects the whole corporation but it is $0.03 to $0.05 of earnings with the dilution and that was not contemplated right originally?

Correct.

I think when you gave guidance, right?

When we originally gave guidance we hadn't contemplated selling Ecova and we hadn't contemplated, I mean, we had announced the transaction for Alaska in November,I don't remember the exact date in November, around the time of the press release when we announced earnings but we excluded it from our earnings guidance and now that we have closed the transaction we have included it.

Got it. Okay. So basically it is what is called $1.75 to $1.95 give or take a few cents, just kind of your base for this year also includes $0.10 or something like that for the ERM being as and expected. And then weather wise, because I assume you had a weather benefit in the first quarter versus normal, and then I do remember seeing on the news that you had extreme hot weather in July. August has just started, butI think like 95, 100 degrees something like that. Can you quantify how much weather earnings benefit you have thus far verses normal weather? Not including the ERM obviously.

That is why when we gave our revised range for Avista Utilities that is included in that increased loads. The expectation of the warmer weather in the quarter that we have had to date. So that is part of, included in there.

Do you know how much that is?

We didn't give specific numbers to each of those.

Is there a range you can give us or anything like that?

Our range -- (multiple speakers)

I'm just trying to figure out what, so I can help me figure out what my earnings power is for 2015, that is why I'm asking all of these questions.

What I just said to Brian's last comment is it is reasonably close across each of the three things we identified, operating costs, loads, and the deferral of the information management system and the work management system.

Okay. But you can't tell me how much weather benefits in this years number?

That is what is in the loads, so.

I know, but I can't picture that and I don't know if that is $0.05, $0.10, $0.02, whatever. Okay. I will talk to Jason after this maybe we can --

He's not going to tell you anything different.

Okay. Okay. I don't know, most companies kind of can quantify that, usually do. So, anyway, so just to move on, on the stock buyback. Actually before I get to the stock buyback, just on the information systems, how much were you going to include in your earnings for 2014 that is now not as far as the expense on that?

It is the same, Andy, it is the same thing. We had the three, we raised our guidance $0.12 and we had the 3 issues that we identified.

But how much is the information systems?

I didn't state any of them.

Okay.

They're just, across the board there is the three of them.

Okay. I apologize for asking the question. And then on the stock buyback, you plan to buy back all of that stock this year, right? Because there was verbage in the -- I thought there was just like legal mumbo-jumbo, right. But you are planning to buy back all of that stock, right?

Included in our guidance we expect to repurchase the 4 million shares, up to 4 million shares.

Right. Right. Okay.

Some of that, I do have to say, some of that is limited by our trading volumes with our plan. So if our trading volumes aren't there I can't say that we will absolutely get all of it bought back. There are limitations on that. We do expect, and our plan and in our expectation is that we will get that repurchased over the course of the year.

Okay. And when you say trade, are there restrictions on how much you are allowed to buy based on volumes?

Yes, that is an SEC requirement with our plan. I believe it is 25% of the average daily last X number of days volumes, I don't remember the exact number of days, but there are restrictions and that is included in our plan. That is the only reason I say if our volumes are off that could affect the amount of shares that we can repurchase.

That is helpful. I wasn't aware of that. Okay. Thank you very very much.

Thank you, Andy.

And our next question comes from John Barta of KeyBanc. Please go ahead.

John, anybody? Jeanette, if you want to get the next call.

All right. I am showing no further questions at this time.

Is sounded like somebody tried to get back on the line, you may want to, Jennette, see if somebody has a quick question.

Okay.

I think we heard John in there at the end.

John your line is open.

Hello.

John?

Hello.

You are on.

Okay. Sorry, my phone must've been on mute. Just a quick follow-up on the last questions with the repo. Could that possibly be extended into 2015 based on maybe load volumes through year end?

It would have to do -- our plan expires at the end of 2014. You could always do a new plan. I mean, you could always implement a new plan in an open period if you didn't feel you're going to have to do that. But this current plan does expire.

Okay. And then just a little bit on the background of the delay in the IT system? Or the billing system.

Our overall computer system, those things are significantly complex projects and we set out with timelines that we expected to get in kind of the end of this year and we have just decided based on, and doing all of the work and the complexity of it that it is going to take into next year. So those things happen, our capital has moved, it went, we did have initially $80 million, we expect that to be $100 million, that's the $20 million increase we have put in for this year. But that project is still, it is the heart and soul of our system to interact with all of our internal systems and with our customers. So it is a very important system to get done and to get it done right and that is what we're taking the time to do.

Okay. So this is just more of a function of Alaska and kind of integrating that as well?

No, it has nothing to do with that. This is a Avista Utilities system.

Okay.

And it is really a complex system. It is our major system that touches everything.

All right, I appreciate it. Thank you.

Thank you.

And I'm showing no further questions at this time.

I want to thank everyone for joining us today. We certainly appreciate your interest in our Company. Have a great day.

Thank you, ladies and gentlemen. This concludes today's conference. Thank you for participating. You may now disconnect.