Idacorp Inc (IDA) 2013 Q1 法說會逐字稿

Good day and welcome everyone to IDACORP's first quarter 2013 conference call. Today's conference is being recorded and webcast live. A complete replay will also be available from the end of the day for a period of 12 months from the Company's website at www.IDACORPInc.com. (Operator Instructions)

At this time I would like to turn the call over to the Director of Investor Relations, Mr. Lawrence Spencer. Please go ahead sir, thank you.

Thank you, Lisa, and good afternoon everyone. Welcome to our first quarter 2013 earnings release conference call.

We issued our earnings release before the markets opened today and that document along with our SEC Form 10-Q is now posted to our website at www.IDACORPInc.com.

We will be using a few slides to supplement today's call and these are also located on our website. We will refer to specific slide numbers as we work our way through today's presentation.

Now moving to slide two, on the call today we have LaMont Keen, IDACORP's President and Chief Executive Officer, Darrel Anderson, Idaho Power's President and Chief Financial Officer, and Steve Keen, Idaho Power's Senior Vice President, Finance and Treasury. We also have other individuals available to help answer your questions during the Q&A period.

Before turning the presentation over to Darrel, I'll cover a few details with you. First, our Safe Harbor Statement is on slide three. Our presentation today contains forward-looking statements. While these forward-looking statements represent our current judgment or opinion of what the future holds, these statements are subject to risks and uncertainties that may cause actual results to differ materially from statements made today. As a result, we caution you against placing undue reliance on these forward-looking statements. A discussion of factors and events that could cause future results to differ materially from those included in forward-looking statements can be found on slide three and in our filings with the Securities and Exchange Commission which we encourage you to review.

On slide four we present the quarterly financial results. As you can see, IDACORP's first quarter 2013 earnings per diluted share were $0.67, an increase of $0.17 per diluted share over last year's first quarter. We are maintaining our 2013 earnings guidance in the range of $3.20 to $3.35 per diluted share.

I'll now turn the presentation over to Darrel to discuss the results in greater detail and to review our 2013 key operating financial metrics.

Thanks Larry and good afternoon everyone. Before I get to the quarter over quarter reconciliation I would like to put our first quarter result into perspective. This quarter's results represent our best first quarter performance in over a decade. The combination of strong energy sales, timely price changes related to the Langley Gulch Power Plant and diligent cost management helped the Company achieve the improved result.

On slide five we present the reconciliation of earnings from first quarter 2012 to the first quarter 2013. The table shows an increase in net income of $8.6 million from $24.9 million in the first quarter of 2012 to $33.5 million in the first quarter of 2013. The full reconciliation table is included in the Form 10-Q we filed this morning.

Operating income increased $19.9 million over the first quarter of last year and was positively impacted by $13.7 million due largely to inclusion of the Langley Gulch Power Plant in rates beginning in July 2012. Higher sales volumes driven primarily by colder winter temperatures and the addition of over 5,000 new customers caused a significant increase in usage when compared to the prior year and increased operating income by $8 million. Heating degree days were up 26% over last year's first quarter and were 14% greater than normal.

Overall, general business energy sales increased 5.3% quarter over quarter with period ended customers increasing 1.2% over the same timeframe, slightly outpacing the rate of growth we experienced in 2012.

The $6 million decrease in allowance for funds used during construction, or AFUDC, was due to Langley Gulch going online in mid-2012, therefore ceasing the accrual of AFUDC for that project. Changes in other non-operating income and expenses are primarily from lower coal prices and volumes at Bridger Coal Company which accounted for the majority of the $2.7 million reduction shown on slide five.

Finally, income tax expense increased $2.2 million due to greater Idaho Power pretax earnings. One thing you'll note in this year's first quarter earnings is that we did not amortize any additional accumulated deferred income tax credits or ADITCs under our Idaho Settlement Agreement as we expect Idaho Power's return on yearend equity in the Idaho jurisdiction to exceed 9.5% for the year.

I would now like to spend a few minutes on our 2013 Power Cost Adjustment, or PCA, filing in the Idaho jurisdiction. We filed an application with the Idaho Public Utility Commission, or IPUC, for a $140.4 million increase in Idaho PCA rate for the collection period of June 1, 2013 to May 31, 2014. What makes this filing different from most other PCA filings is that we included a proposal to defer $52.5 million of the PCA rate increase to the 2014-2015 PCA collection period to lessen the impact on Idaho customer bills during the 2013 to 2014 PCA collection period.

The existing PCA mechanism has a 1% carrying charge and that would apply to the $52.5 million deferral should the IPUC adopt the proposal. We expect a final Commission order by the end of May.

Turning now to our general rate case plan, Idaho Power has no plans to file for general rate relief in Idaho or Oregon during 2013. Instead, we will continue our focus on optimizing business operations and processes while monitoring the need for and timing of the next general rate cases in Idaho and Oregon.

On slide six we present our 2013 key operating and financial metrics. Two of the metrics have changed from those presented on our February 21 earnings conference call, the expected use of additional ADITCs and the estimated level of hydroelectric generation. As I previously noted, we do not plan to use additional ADITCs in 2013. Steve will address this further in a moment.

The other change is our expectation for hydroelectric generation in 2013. The range has decreased from our February 21 report to today from 6.0 million to 8.0 million megawatt hours down to a range of 5.0 million to 7.0 million megawatt hours. Recall that the earnings impact of a decrease in hydroelectric generation is largely mitigated by the PCA mechanisms in both Idaho and Oregon with the primary impact being on the timing of cash flows. We expect the cash flow impacts to be less of a concern this year given Idaho Power's current liquidity position which Steve will address.

Turning to slide seven we have included an update on the June to August 2013 weather outlook as provided by the National Oceanic and Atmospheric Administration, or NOAA. You can see from the chart that NOAA is predicting temperatures in our regions that are likely to be above average and precipitation, below average. As we typically have a small amount of precipitation during this period, the key takeaway is that warmer weather could translate into greater than normal loads though of course predicting the weather is inherently difficult.

Before turning the presentation over to Steve, I will briefly update you on our two major transmission projects, Gateway West and Boardman to Hemingway. As to Gateway West, last week the Bureau of Land Management issued the final environmental impact statement, or EIS. This will be available for review and public comment until June 28, 2013 and we will be engaged in a number of public meetings as we evaluate the final EIS. The final EIS includes a proposal, a proposed phased approach to approval of the segments which if used, could allow time for additional public comment but may also increase project costs for additional studies. Our share of those additional costs, if any, would be around 11%. The next major milestone is a Record of Decision which the BLM schedule provides for before the end of 2013.

As to Boardman to Hemingway, we continue to expect that the draft EIS will be issued by the Bureau of Land Management this summer. We still expect an in-service date prior to 2018 to be unlikely. However, we did reach a major milestone by submitting in February of this year our preliminary application for a site certificate in the Oregon Energy Facility Siting Council process which is a prerequisite to obtaining required permits for the project.

I will now turn the presentation over to Steve to discuss our liquidity position, recent bond financings and other important topics.

Thanks Darrel and good afternoon everyone. On slide eight we show IDACORP's quarterly operating cash flow and liquidity position at March 31.

Cash flow from operations for the first quarter of 2013 was $50.6 (sic -- see subsequent correction by Darrel Anderson) million, an increase of $12.9 (sic -- see subsequent correction by Darrel Anderson) million over the first quarter of 2012. The increase is primarily due to Idaho Power not making a contribution to its defined benefit pension plan during the first three months of 2013 while $34 million of cash contributions were made in the first quarter of 2012.

Changes in power cost deferral mechanisms from the first quarter last year to the first quarter this year offset the increase by reducing cash flows by $24 million while changes in working capital balances accounted for the majority of the remainder.

IDACORP and Idaho Power currently have in place credit facilities of $125 million and $300 million, respectively. Commercial paper outstanding at IDACORP as of March 31 was $67.2 million compared to $69.2 million at December 31, 2012. Idaho Power had $16.6 million of commercial paper outstanding as of March 31 and none outstanding at December 31, 2012.

We also have $24.2 million of contingent bond purchase obligations at Idaho Power which could potentially utilize available credit. As a result, at March 31, IDACORP and Idaho Power had $57.8 million and $259.2 million, respectively, in available liquidity under the credit facilities.

Also, as of March 31 there were three million IDACORP common shares available for issuance under IDACORP's continuous equity program, no shares issued during the first quarter and none expected to be issued during 2013.

Turning now to funding requirements, on April 8, 2013 Idaho Power issued $75 million of 2.5% first mortgage bonds maturing in April 2023 and $75 million of 4% first mortgage bonds maturing in April of 2043. A portion of these funds will be utilized to retire $70 million in first mortgage bonds that mature on October 1 of this year. The remaining net proceeds will help finance our ongoing capital program and replenish working capital for construction previously funded. This debt issuance fully utilized the remaining amount that had been available under our shelf registration statement that was to expire in May of 2013.

Last month, the Idaho, Oregon and Wyoming public utility commissions authorized Idaho Power to issue up to $500 million in new debt securities and first mortgage bonds subject to conditions specified in those orders. At this point we do not plan to issue additional long term debt or common equity for the remainder of 2013. However, as we have stated before we will continue to monitor the capital markets with an opportunistic approach to managing future financing needs.

On our most recent earnings call in February of this year we had predicted the use of up to $5 million of additional ADITCs in 2013. As described in today's earnings press release we now do not expect to use any additional ADITCs this year. If this is the case we will have $45 million of additional ADITCs available for 2014. A sharing mechanism in Idaho has been available to supplement our yearend earnings since 2009. If no additional ADITCs are used in 2013 it would mark the fifth year in a row that we have not used any of our available ADITC support because in each applicable year our Idaho jurisdiction return on yearend equity will have exceeded 9.5%.

Now I'll turn the discussion over to LaMont who will update you on the state and service area economy along with other important matters.

Thanks Steve and good afternoon everyone. I'm going to start today with an update on a number of improvements in Idaho economic conditions.

One important example is the decline in state unemployment as shown on slide nine. According to preliminary Idaho Department of Labor data the unemployment rate in Idaho Power's service area was 6.0% at the end of March 2013. This decline is particularly striking considering that the figure peaked at 10.0% in early 2011. The agency also pointed out in April that Idaho job growth, primarily in services, was significantly stronger in 2011 and 2012 than initially forecast and had picked up strength in 2012.

I'm also pleased to report that 2012 was the latest in a series of five years of growth in progress, a trend that has continued into 2013. Even with the economy still in a position of recovery, our general business customer count increased by 5,854 from the first quarter of 2012 to the first quarter of 2013 compared with 4,087 and 2,467 in 2012 and 2011, respectively. We view this as a positive trend.

Additionally, the housing market in Idaho Power's service territory has improved when measured by foreclosure rates and the available supply and pricing of housing. Idaho Power continues to predict positive customer growth in its service territory for the foreseeable future.

Our Company has historically received and continues to receive inquiries from potential large load customers seeking information about locating in Idaho Power's service territory. Notwithstanding these inquiries, based on instructions from the Oregon Public Utility Commission, the load forecast for the upcoming 2013 integrated resource plan, or IRP, excludes load growth from new but currently unidentified large load customers. It also uses a 20 year planning horizon for load growth rates. With these assumptions, the IRP includes a 1.1% annual average load growth rate. We plan to file our 2013 IRP in June.

Also, Idaho Power has recently undertaken new economic development initiatives and is working with state and local economic development agencies to attract new large customers to the service territory which could contribute to growth in Idaho Power's loads. In fact, according to the Idaho Department of Commerce, their siting inquiries have increased in fiscal year 2013 to the point where they're on track to beat fiscal year 2010's four year high.

A number of business friendly or positive initiatives were advanced during this year's Idaho state legislative session. Of note, lawmakers balanced the state budget and mitigated in part, an onerous business personal property tax. The session adjourned on April 4 with Idaho in better financial shape than most states, projecting a $60 million surplus and a $2.7 billion general fund budget. These developments contribute to the financial stability of our state and its business community.

Finally, moving to slide ten I have some positive news to share on the issue of sustainability. On March 26, IDACORP and Idaho Power were selected for Target Rock Advisors' 2013 Sustainable Utility Leader Award. The honor credited IDACORP's performance in the categories of environmental stewardship, economic performance and societal contributions. According to Target Rock Advisors, the marketplace shows utilities that best manage these components have significantly outperformed their peers over the past decade as well as the broader market indices.

IDACORP was selected for the honor from among approximately 150 publicly traded energy companies and related companies across the country representing 350 distinct operating subsidiaries. The Company was one of three award recipients in the mid-cap category.

Additionally, please note that we will release our second sustainability report on May 16 in conjunction with the IDACORP annual meeting.

And now I and others of the Management Team will be happy to take your questions.

(Operator Instructions)

Thank you. Ladies and gentlemen, we will begin the question and answer session. The session will be conducted electronically. (Operator Instructions)

Our first question is from the line of Paul Ridzon.

I was just wondering, as we approach the end of your current rate settlement how you're thinking about how you want to proceed after '14 and how you're thinking about the bank of ADITCs that you have.

Paul, this is Darrel. I'll answer that but before I do that I want to correct something that Steve said and just to kind of reaffirm, the cash flow numbers that were on the slides are correct. Steve noted a couple of numbers but we just wanted to reiterate the fact that the numbers on the cash flow statement on the slides is the correct number so that would be cash flow from operations for the first quarter was $54 million, an increase of $16.3 million over the first quarter of 2012 so just wanted to kind of clarify that for folks.

Now back to your question, Paul, regarding what are we looking at as we look forward to the expiration of our current agreement with the Idaho Commission. As I said in my notes, one of the things, we are not planning at this juncture to file any general rate case in 2013. We are continuing to assess the business, where we're at with the business and we will continue to do so through the balance of this year. One of the things we are spending a fair amount of time on is looking at some business optimization opportunities within our own business as we look towards 2015 which is when the deal expired at the end of '14.

As Steve indicated, as we sit here today we anticipate going into 2014 will all $45 million of ADITCs intact and so again, depending on how 2014 shapes up, depending on how successful we are as we move through our business optimization which will then help us decide what we're going to do beyond 2014 so I can't sit here today and tell you where we're going to be but I can tell you we are diligently looking at what is that plan for 2015 and beyond. That is a key area of focus for us as we sit here right now but I can't, I don't have anything specific I can share with you today other than we are looking at that.

Thanks, and then the impact of rates was pretty marked this quarter and we should get another quarter of that and the impact of the straight rate structure, given higher summer rates, we should have another very strong quarter and then we will have lapped Langley in rates. Is that correct?

That's right. Langley went into effect on July 1 so we do have another quarter, when you do a comparability purposes with or without Langley results, that's correct and as we did indicate and I will just tell you as it relates to the weather, as we did indicate the forecast right now is for drier than normal. We don't know how that actually plays out with respect to loads but it does potentially provide an opportunity for additional sales.

How should we think about that in the context of not changing guidance? Is it just too early in the year?

For us it's too early in the year and the other thing I think is important to note, when we gave our original guidance we had provided the guidance around less than $5 million of ADITC so in order for us to really move within our earnings band we have to actually earn that amount, so whatever that ITC estimate we had internally, before we could even start increasing our earnings and so obviously, we believe as we sat here through the end of the first quarter we'll be able to do that. The question is how much beyond that will we be able to do. As we sit here in the first quarter it's really too early to tell. It's a great start to the year we believe but we'll have obviously more updates for you at the end of the second quarter.

How do you handicap the odds of being in a sharing view?

I don't have a handicap on that today. I think we'll have to see how the second and third quarter plays out.

Our next question is from the line of Michael Klein, Sidoti & Company. Please go ahead.

Looking at the tax line, do you expect the increase in flow through tax adjustments to be a good proxy going forward or was this sort of a one quarter event? How should we think about that?

One of the things I guess I would, Michael, in my perspective, on the first quarter if you take a look at all the things and once you have a chance to digest the quarter, arguably one of our most straightforward quarters that we've had in a long time so you don't have any really kind of items in there, like tax adjustments and other things, and so if you look at our effective tax rate as it sits today, that's probably indicative of where we would hope to be through the balance of the year but this is a, what I would call a more normal period. Subject to any changes in rules around additional flow through adjustments that could be positive or negative, I would say that number should stay fairly constant again depending on what happens with tax rules and other things.

Okay that's helpful and I guess to that point, how much visibility do you have into the items that impact the tax line or is it sort of something that you don't have several quarters of visibility into it? Just curious in terms of planning or more or less just modeling.

I think we have a pretty good handle as to what we can expect. I think the uncertainty at times in the past has been around the level and the amount of additional flow through adjustments that we are able to sustain depending on what guidance is provided by the service and depending on what we spend money on and depending on whether it meets certain flow through criteria or not so we have a pretty good handle as to what it is but what we can't necessarily predict very well is to what extent guidelines change, rules change and those kind of things.

As you stated, I think earnings right now are really the culmination of the past five plus years or so. In looking out over the next couple of years, with the Boardman to Hemingway line not expected in service before 2018, how do you think about and how do you see earnings playing out? Is it really just going to be a matter of getting cost recovery on some plain vanilla CapEx while the economy rebounds or how do you view that and think about that?

I think if you take a look at what we've shared with you around what our CapEx spending is projected to be over the next three years and we have what we share in the 10-Q is upwards of $700 million to $800 million over the next three years and if you think about that in the context of what it is we are depreciating and the net rate base adds that are there, that's a pretty good addition to rate base over that three year period so while it may be fairly general based care and feeding of our system and it doesn't necessarily happen to be a Langley Gulch type of add, it is, we would argue, a pretty substantial quality investment into our utility system that is not insignificant.

Michael, this is Steve. I might just add there, the other part that you don't want to lose sight of is I do think a significant change with Langley beyond what it did in terms of our rate base is that we have capacity and Darrel mentioned in his script the things we are seeing going on in our service territory in the way or growth is that if you sell more kilowatts than you have the capacity to do that and it's not causing you to shift your costs dramatically when you pick up those new sales, that can have an improving effect on your bottom line as well so partly it may come through rate base but I think we're hopeful too that our service economy is one that recovers and if you get additional sales, that doesn't totally get picked up in a rate model. In fact, if you're not filing that's really what you get in between rate filings and then as you do file, you get a reset and those become part of your base so I think as we look ahead we're still making a determination as to the best course for us but I think we feel good about the economy and we also look at what we're adding or planning to add to rate base and we think that's significant as well.

Moving on to our next question, it's from the line of Ashar Khan of Visium. Please go ahead, thank you.

Just wanted to say running the business very well, I just feel as a shareholder, if the Board can look at increasing the dividend sooner and higher as we have a pretty stable, nice economic route and you have performed exceptionally well so I hope the Board and the Management can look at the review of the dividend sooner and larger this year.

Thank you, appreciate the comment and we'll certainly factor that into our considerations. At this point we're still on track to review the dividend again in September and as Management has indicted, it's our intention to recommend an increase of at least 10% but at this point we haven't made a determination of what that recommendation will actually be.

Our next question is from the line of Brian Russo from Ladenburg Thalmann. Please go ahead.

I realize the mechanics of the PCA mitigate the majority of the hydro, or exposure to below normal hydro conditions, but I was just hoping to kind of drill into that a little further. Is the way to look at the $140 million increase, is that, say 95% of x and then it's 5% of x that the company absorbs or is it the $42 million of the PCA forecast that is what the exposure is -- just trying to get a better feel for the sensitivity in this hydro season.

Brian, this is Darrel. I'll start and them I'm probably going to flip it over to Greg Said but one thing I guess I would have you take a look at if you want to try to ballpark kind of what, I think what you're trying to do is what's the impact of the low water scenario on the Company in light of the PCA that we filed and one way to look at this is is if you take a look at what we generated last year, I think we generated about eight million megawatt hours last year, this year we have given you a range at this point of five million to seven million megawatt hours and if you take the midpoint of that, say around six-ish or so, you end up with around a two million megawatt hour change in the hydro scenario and one way to look at that is say you have to make your own assumption as to what the, whether other market price or replacement resource would take that two million megawatt hours but if you take somewhere around 5% of that number you can kind of get a ballpark estimated impact but again, the assumptions around that are going to be what is the market price for replacing energy or replacing energy that we might already have capacity for and/or what you might have otherwise sold some of the excess energy might have been generated at a certain time and those are some variables obviously that go into play into our calculation of some of our forecasted expenses for the future but in essence that can give you some, at least a ballpark range of what the potential impact is depending on your assumptions but having said all that, what I'll do is I'll ask Greg Said to speak a little bit to the PCA and some of the mechanics around that and how that might impact us.

As you've noted, the $140 million includes $42 million that is associated with the forecast piece so when you're talking about the 95/5 split, that really exists for the entire $140 million so there is a 95/5 component to the historical piece that has occurred already to date and there is also a 95/5 split that gets you to the $42 million forecast so the 95/5 goes throughout the entire PCA determination and at the end of the day, the $140 million represents the 95% that is the customer share.

Okay great, that's very helpful. Can you remind us in a period of dry and above normal temperatures, how does that impact your irrigation customer base for sales?

First and foremost, a lot of it kind of depends on what they were looking at early on in the planting season as to what they saw on the horizon as it relates to what is it they're going to plant because that will then drive whether it's early or late irrigation but I will tell you what we have seen at least at this point is early irrigation loads are starting to come on because of the way the weather is so that's one thing.

And then depending on the types of crops that they're planting will also drive how much irrigation will be required and when they turn it off and so those are the things that when our customer folks are out talking to our irrigation customers, that is some of the information they're trying to discern from them as they have those conversations with them to kind of understand what is going into the fields.

Correct me if I'm wrong but in 2012, irrigation sales spiked I think in the second quarter maybe and was that a function of dry and above normal weather?

We were, I'm trying to recall, I'm trying to look around the room here. I believe we were wet early and then it got dry. We were wet during the spring and so it actually delayed some of the plantings and so therefore, it was a little later irrigation-wise if I recall. I'm just looking around the room to get confirmation of that. Can you check that Warren?

It was hotter later on.

Right, Warren Kl is here. Do you want to comment on that, Warren?

Of course since we remember the summer as stifling hot, we had a real hot spell which also increased the usage in irrigation to supply the need to put the water in the crops.

Okay, so it's possible that a similar dynamic might play out in 2013. I guess we'll just have to wait and see but it's kind of shaping up that way.

As we sit here today, sort of a very wet spring -- again, we hate to try to predict the weather.

Got it, and the $8 million increase in sales volumes, is there any way you could break that down? What part of that was the Langley Gulch contribution and what might have -- or can you break down what part of that margin was related to above normal weather?

What I'll point you to, Brian, I guess is -- the best thing I would point you to is the overall change in revenues overall. We kind of lay that out in the 10-Q. We talk about what's the rate impact? What's the usage impact and what is the amount driven towards just customers and so what we talked about for the quarter, we estimate about $9.4 million of our increase is because of usage. Most of that usage is attributable to weather and then we have about $2.6 million attributable to new customers, the over 5,000 new customers that we added in the first quarter so that's probably one way to look at it as it relates to our total revenue change and then we had almost $26 million associated with just the rate change component and then that's offset by an adjustment related to Hoku from last year so that kind of gives you some sense of how we, the overall $35 million change in revenues in total. That's detailed on about page 42 of our 10-Q.

Our next question is from the line of Sarah Akers of Wells Fargo. Please go ahead.

I think you mentioned that the 13 IRP load growth forecast won't include some of the new customers that you might be getting and I know the preliminary IRP didn't suggest the need for new generation capacity but in addition to these new customers providing sales growth, might there be a need for additional generation resources in the next three to five years or is that probably still not the case with the supply/demand balance?

I don't want to get in front of the IRP filing which is coming up in June and so what I'm probably going to do is defer that until we file our IRP in June but I will say that LaMont's comments around -- there are two things at play here. There is what is happening in, I call it the eye test. The other one is what we see through the quantitative side of things. When we start the IRP process we start that back in 2012, late 2012, that's when we start making certain assumptions and so that is what is baked into the IRP as it relates to the load. Now, as things evolve there are some things that might happen in the near term that might be plusses or minuses away from what we're doing in the IRP and what we're saying now is what we see from an eye test perspective is there is a lot of activity within our service territory.

As I told a group of economic development folks the other day is in my 17 years here this is the first time I look out my office, I see two cranes on our skyline which is a big deal for us here in Boise and then I'm told there might be a third one popping up pretty soon so those are some of the anecdotal things that are going on versus kind of what's happening with our long term 20 year load forecast so it's kind of the near term versus the 20 year look and so that's why I think LaMont's comments there about what is happening in our region, there is a lot of positive things but as we look long term, that does average out over time which is why the numbers that we have in the IRP which is the 1.1% long term growth rate is what we're using and I think it's 1.4% on peak so again, we modify that every two years and those are the assumptions we're using today. Two years from now that might look different.

And so as we think about getting that IRP I guess pretty soon here, this summer, might that plan incorporate some of the things that you're seeing in the last three to six months in terms of that activity or will this plan incorporate the old forecast and then two years from now, that's when these new customers will be incorporated or how does that work? How quickly can --?

The plan that is being worked on that is to be published in June will rely primarily on the data that is going to be a little bit older than what we see happening today just because of the way the process works and so we will look at that and as we assess what the recommendations are we will look at those but then we'll restart that process up in about 12 months from now and we'll start all over again.

Perfect, thank you and then should we think about the 1.2% customer growth rate, if I heard it correctly, as a good proxy for whether normalized sales growth in the quarter or did usage, changes in usage push that up or down in terms of --

I would say the, on a more normalized basis, that number would be less than the 1.2%.

(Operator Instructions)

We have a question from the line of Paul Ridzon of KeyBanc. Please go ahead.

Just a kind of bullish comment on growth, how are we thinking about the potential to adopt a sister next to Langley at this point?

Sorry Paul, I didn't catch all that. Can you --

Your pretty positive commentary around growth that you're seeing, when do you think you might be thinking about adding another generation resource?

That will be a consideration as we continue to evaluate our IRPs and again, I don't want to comment in front of the filing of our June IRP at this point but I think that will continue to be an option.

That concludes the question and answer session for today. Mr. Anderson, I'll turn the conference back to you, thank you.

We would like to thank everybody for participating on our call this afternoon and your continued interest in our Company and have a great afternoon.

That concludes today's conference. Thanks for your participation. Have a good day.