Ladies and gentlemen, thank you for standing by, and welcome to the Avastar Communications 4th Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session. Session. As a reminder, today's program is being recorded.
I would now like to introduce your host for today's program, Mr. John Wilcox, Investor Relations Manager. Please go ahead, sir.
Good morning, everyone, and welcome to Avista's Q4 fiscal year 2020 earnings conference call. Our earnings and our 2020 Form 10 ks were released pre market this morning and are both available on our website. Joining me this morning are Vista Corp. President and CEO, Dennis Vermillion Executive Vice President, Treasurer and CFO, Mark Theiss Senior Vice President, External Affairs and Chief Customer Officer, Kevin Christie and Vice President, Controller and Principal Accounting Officer, Ryan Krasold. 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 10 ks for 2020,
which is 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 for the Q4 of 2020 were $0.85 per diluted share compared to 0.7 $6 for the Q4 of 2019. For the full year, consolidated earnings were $1.90 per diluted share for 20.20 compared to $2.97 last year. Now I'll turn the discussion over to Dennis.
Well, thanks, John, and good morning, everyone. As we begin 2021 continuing to work through the COVID pandemic, we hope you're staying safe and healthy. Looking back on the last year, I'm just so proud of our employees for navigating the challenges presented by the pandemic, continuing to provide energy like they always do to our customers and progressing our business plans forward. I would like to thank all of our employees for their dedication and determination throughout the last year. We continue to help those who are struggling and most in need in our communities.
In 2020, Avista and the Avista Foundation provided more than $4,000,000 in charitable giving to support the increased need for services that community agencies are still experiencing throughout the areas we serve. Financially, our earnings for 2020 were better than expectations, and Mark will provide further details here in just a few minutes. Operationally, we finished installing nearly all of our smart meters electric smart meters and natural gas modules across Washington in one of the largest projects in our history. The deployment of this infrastructure will provide customers with more real time data so they can better manage their energy use. The technology enables us to proactively push high energy alerts to notify customers if they could exceed their preset energy budgets, which of course helps eliminate surprises when their bill arrives at the end of the month.
Beyond generating bills, we're using the data from smart meters to run a more reliable and efficient power grid and to deliver a higher level of service for our customers. For example, we now have more visibility into our system, which allows us to detect and restore power outages more quickly. We also made strides to meeting our clean energy goals as the Rattlesnake Flat Wind Farm went online last December. During its construction, the project created clean energy jobs for our local communities and now that it's completed, the project's 20 or project's 57 wind turbines excuse me, will provide 50 average megawatts of clean renewable energy for our customers at an affordable price. That's enough energy to power 38,000 homes for years to come.
As wildfires continue to have an impact on our region, we implemented a new comprehensive 10 year wildfire resiliency plan that aims to improve defense strategies and operating practices for a more resilient system. We expect to invest about $330,000,000 implementing the components of this plan over the life of the plan, which as I said was 10 years. We were proud to announce yesterday that Avista has been recognized again as one of the 2021 World's Most Ethical Companies by Ethisphere, a global leader in defining and advancing the standards of ethical business practices. This marks the 2nd year in a row that Avista has achieved this distinction. We are only one of 9 honorees recognized in the energy and utilities industry based on their assessment.
In 2021, 135 recognized spanning 22 countries and 47 industries. We are honored to receive this recognition because it acknowledges our belief that integrating corporate responsibility into our business builds trust, forges lasting relationships, strengthens morale, reduces risk and delivers enhanced value to our shareholders and ultimately enables us to more effectively deliver on our vision to provide better energy for life. In January, we published Avista's 2021 Corporate Responsibility Report on our avistacorp.com website, and I urge you to check it out when you have some time. This content provides a broad look at our operations and how we're fulfilling our commitments to our people, our customers, our communities and our shareholders. The website also provides links to Avista's reporting on a series of industry and financial ESG disclosures.
The updated content supports Avista's long standing commitment to corporate responsibility and sharing this information with our stakeholders. Switching gears with respect to regulatory filings. In January, we filed 2 year general rate cases in Idaho. In both of these jurisdictions. We take our responsibility to provide safe, reliable energy at an affordable price very seriously and we work hard to make prudent financial investments in our infrastructure, manage our costs and identify ways to best serve our customers that contribute to keeping energy prices low.
For example, our proposed tax customer credit would completely offset an immediate increase in electric and natural gas bills for our Washington customers. In Oregon, new rates went into effect on January 16 this year and we expect to file another rate case in the second half of twenty twenty one in Oregon. Looking ahead, we remain focused on running a great utility and continue to invest prudent capital to maintain and update our infrastructure and provide reliable energy service to our customers. We are initiating our 2021, 20222023 earnings guidance with consolidated ranges of 1.96 dollars to $2.16 per diluted share for 2021, dollars 2.18 to $2.38 in 2022 and $2.42 to $2.62 per diluted share for 2023. This puts us on track to earning our allowed return by 2023.
Year, earlier this month, the Board increased our dividend by 4.3 percent to an annual dividend of $1.69 per share and the dividend increase approved by the Board marks the 19th consecutive year the Board has raised the dividend for our shareholders and I believe it demonstrates the Board's commitment to maximizing shareholder value. At this time, I'll turn this presentation over to Mark.
Thank you, Dennis, and good morning, everyone. We had low expectations coming into this year. No, not the company, the Blackhawks. And the Blackhawks have really started off pretty good after a slow first four games. We've had 5 rookies score their first goals ever in the NHL.
So pretty exciting times for all you hockey fans out there. For the company in the Q4 Avista Utilities contributed $0.81 per diluted share compared to $0.67 last year. Our earnings increased primarily due to higher utility margin and customer growth. Also in the Q4, the Oregon and Washington Commissions joined the Idaho Commission to allow for the deferral of certain COVID-nineteen related expenses for future possible future recovery. Additionally, Avista Utilities earnings were better than expectations due to higher utility margin and lower income taxes, which were partially offset by higher operating expenses.
With respect to COVID-nineteen, as I mentioned earlier, we have now received accounting orders in each of our jurisdictions to defer the costs and benefits associated with COVID-nineteen and those will be addressed in future proceedings with each of those commissions. We expect a gradual economic recovery that will still have some depressed load and customer growth in 'twenty one. We expect that to start improving in the second half of 'twenty one, our economy. We do have decoupling and other regulatory mechanisms, which mitigate the impacts of changes in load for our residential and certain commercial customers. Over 90% of our revenue, as you recall, is covered by regulatory mechanisms.
As Dennis mentioned, we are continued we continue to be committed to investing the necessary capital in our utility infrastructure. We expect our capital expenditures in 2021 to be about $415,000,000 and at AEL and P, we expect about $7,000,000 and about $15,000,000 in our other businesses. With respect to our liquidity, as of December 30 have $270,000,000 of available liquidity under our committed credit line at Avista Utilities. And in 2020, we issued about $72,000,000 in stock in 2020. In 2021, we expect to issue about $75,000,000 of equity or stock and up to $120,000,000 of long term debt.
As Dennis mentioned, we are initiating guidance not only for 2021 but also for 20222023. And as he mentioned those ranges, this is to get us back to earning our allowed return in by 2023. And our guidance does assume timely and appropriate rate relief in each of our jurisdictions relative to the capital and expenses that we have going forward. We experienced regulatory lag during 'twenty and expect this to continue through the end of 'twenty two, due to our continued investment in infrastructure and our delayed filings. We again delayed last year as we talked about with the pandemic in Washington and Idaho.
Dennis mentioned those earlier. We expect our cases in Washington and Idaho along with new rates to provide some relief in 2021 and begin reducing that regulatory lag. Going forward, we will strive to continue to reduce that and closely align our returns to those authorized by 'twenty three. After 'twenty three, we expect to grow at 4% to 6% our earnings. Our 'twenty one guidance reflects unrecovered structural cost estimated to reduce the return on equity by approximately 70 basis points.
And in addition, our timing lag, which is what we're trying to reduce with rate cases, has reduced it by about 100 basis points. This results in expected return on equity for Avista Utilities of approximately 7.7% in 2021. We are forecasting operating cost growth of about 3% and customer growth of about 1% annually, which is slightly improved from prior numbers on the customer growth side. For 2021, we expect Avista Utilities to contribute in the range of $1.93 to $2.07 per diluted share and the midpoint of our guidance does not include any expense or benefit under the Our current expectation for the is in the benefit position within the 75% customer, 25% company sharing band, which is expected to add $0.05 per diluted share. For 2021, we expect AEL and P to contribute in the range of $0.08 to 0 point 1 $1 per diluted share, and our outlook for both Avista Utilities and AEL and P assumes, among other variables, normal precipitation and hydroelectric generation for the year.
We expect a loss between $0.05 $0.02 per diluted share for our other businesses as we continue to develop opportunities for the future. We'll spend a little bit of money in the next couple of years to continue to get those earnings up over the course of the next 5 years and we look forward to those opportunities. They are both in our service territory and in funds. Our guidance generally includes only normal operating conditions and does not include any unusual or non recurring items until the effects are known and certain. So I'll now turn the call back to John.
And now we would like to open up this call for questions.
Our first question comes from the line of Richard Chikarili from Bank of America. Your question please.
Hey, good morning. Thanks for taking my question.
Good morning, Richard. Good morning.
Yes, just the first one, can you speak to the progress in your rate case filings in Washington and Idaho? And I guess what percentage of the revenue requirement ask are you assuming to get to the midpoint of your 2021 guidance range?
Hey, Rich, it's Kevin Christie. How are you?
Doing well. Thanks.
As far as the rate case progress goes, we're really just underway in both cases. In Idaho, the most recently filed case, we have not established or have not seen the procedural schedule yet. That should happen in the next few weeks. The procedural schedule has been established in Washington and we've been going through the discovery process thus far. We have our first settlement conversation coming up on March 10.
As far as your latter question goes, what we typically see as constructive outcomes from a regulatory get versus ask perspective is in that 55% to 65% range. And again, we think we've spent prudent capital and would expect fair recovery from the regulators as we move forward.
Got it. That's very helpful. Thanks for the color there. And I guess, just in terms of your forward looking outlook for 2022 and 2023, your CapEx was relatively unchanged. Obviously, you have 2 rate cases now that sound like you're kind of in the early stages.
I guess, what gives you the confidence that you'll be able to earn closer to your allowed ROEs throughout the company and how you plan on executing to kind of get there? Is that embed any multiyear rate plans or anything like that within the outlook?
Well, so a couple of things on that. It does we do need to get fair results or reasonable results in our commissions and from our filings, but we also believe that we filed appropriate cases. We've got prudent capital we spent for our customers and our costs are prudent as we go to serve our customers. We're catching up on timing lag. So we believe that we'll be able to catch up incrementally in the next couple of years, not all at once.
We think that will take a couple of years. We did file a multiyear case in Idaho. We have a 2 year case in Idaho right now. And we would look as we go forward, we'll go through. We looked at it for Washington, but felt with everything going on with the pandemic and certain large projects, as Dennis mentioned, the AMI project, one of our largest projects in history is going into this case.
We didn't feel a multiyear made sense. So we filed a single year. We can file multiyear in the future and that can get us to where we need to be. And that's really what our plan is, is to put forward an appropriate case reviewed by the staff and the parties, but we believe we can get back to earning our allowed return.
Got it. No, that makes a lot of sense. And then you're talking about still the structural lag there of roughly 70 bps?
That's yes, we expect that. We've had that for a long time and we just point that out. So yes, we expect that to be the case.
Got it. And sorry, go ahead.
Going forward, we're working with the other parties that we typically work with in Washington along with the commission and the other utilities. And there's a piece of legislation that's sitting in the Senate right now that's intended to help guide and actually require multi year rate plans of at least 2 years and up to 4 years. And with that, if that were to move forward, we feel like it's a really constructive piece of legislation that would allow us to have that multiyear rate plan option I'm sorry, requirement and it would help us get the 1st year right and the transitions from year to year right as well. So that would be something we'd look towards the future after this particular case in Washington.
Yes, absolutely. That would be helpful. Okay, cool. And then just the last one I had here was, I think in your press release, you mentioned looking at some strategic opportunities in 2021. Can you just describe what specifically you're looking at?
You mentioned some increased costs there as well. Just curious what's
the It's a nominal increase to cost, Richie.
It's a nominal increase to cost. But we are looking some of that's just in the university district within Spokane. We continue to grow out our 5 smartest blocks in the Ido district. We are spending some dollars there. We're looking at a pilot on some opportunities in some regional communities that we think could have some opportunities for us.
And we're also spending money in a couple of different funds that we have had consistent dollars in. So we expect those.
They are
nominal at this point from a cost perspective, but we think they have opportunities as we go forward and they really go towards the innovative aspect of our company. We have a history of innovation and so we spend those dollars because there are opportunities to help in the market.
Okay. And this is all in the other business, it's not utilities, just to be very Right. Okay. Thanks. And then it's
a little bit within our service territory, but it is outside of the utility business.
All right, great. Thanks for all the time. That's all I had.
Thanks, Richie.
Thank you. Our next question comes from the line of Brian Russell from Sidoti. Your question please.
Hi, good morning.
Good morning, Brian. Good morning.
Hey, you mentioned in upcoming Washington IRP in 2021. Is that second half or fourth quarter?
I believe that's April. We'll have to check on that. We filed in Idaho last year and with a progress report in Washington. But to line up the sequencing with the new Clean Energy Transformation Act in Washington, we that's why we did the progress report. I believe it's we can double check that, but I believe it's here just in a couple of months.
Yes. Okay. I was just curious what can we expect from that pursuit of more PPAs when Colstrip is retired and the Lancaster PPA expires, I believe, in 2025? Or will there be any self build scenarios in any competitive RFP going forward?
Yes. I mean, you're right. Obviously, with Colstrip, we'll be leaving our portfolio in 2025 and then Lancaster a year later. So we will be in acquisition mode. We actually have an RFP for renewables out right now.
And what we would expect to do expect to acquire and this is based on the IRP that we filed in 2020. I don't expect it to be a whole lot different in 2021, but it will be a combination of generation plant upgrades, additional clean energy, renewables and storage, energy efficiency and demand response. So the way we would do this, ultimately, we want to meet our customers' needs within the most cost effective way, on a risk adjusted basis. And reliability will be an essential design element of whatever we choose, but it would be a competitive process. Whether or not we have self build options that make the cut or not, we'll just have to wait and see when we get there.
But ultimately, the objective is lowest cost, risk adjusted basis to our customers.
Okay. And is the wildfire investment 10 year plan, is that included in this rate case or is that a separate docket to be approved?
The wildfire, Kevin, you want to talk about that? Is it included in this case or is it a
separate docket? Yes. Let me go through both states. In Idaho, it was its own docket. It's been filed, approved, and it allows for a deferral mechanism that includes expense, depreciation and capital.
In Washington, we filed it with under a separate docket though with the latest GRC in Washington, and it was consolidated with our GRC. So that will play out over the length of those 11 months, or we would expect that to be the case. And then what that includes is for 2021 deferral of O and M and then going forward post effective rate effective period for the rate case of October 1 that would include both expense and capital.
Okay, great. Brian, we just checked and the IRP, the next IRP in Washington will be filed in April of this year. So I was right on that one.
Okay, great. And it looks like last year you issued $72,000,000 of equity. I think you're planning up approximately $75,000,000 in 2021. Could you just talk about the balance sheet capacity relative to your CapEx? And then the unique structure of this rate proposal with the tax credits that may pressure cash flows in the near term.
Just wondering what your target FFO to debt or debt to cap structure for rating credit rating purposes is?
Again, we have our target is to maintain our current ratings. So we looked at that tax customer credit and looked at the impacts to our FFO and believe that, we should be able to maintain our current credit ratings. It's just a short term it's an interim rate relief. It's not the rate relief is for a year up to 2 years, depending where we end up in each of those cases. But, we then return to normal cash flows after that.
So we don't believe we should have we might have a slight degradation in the current year post effective. So it'd be 2022, it'd be more where that would hit. But we don't believe it should change our ratings because we get right back quickly to having a normal cash flow from that. So we don't expect our ratings to be off and we continue to raise the capital, the equity and the debt that we do to maintain a to fund our capital expenditures, but the result is maintaining a prudent capital structure for regulatory purposes. So that's we believe that we will have that.
Now we'll have to walk the rating agencies through that and go through that process as we normally do. But we've had a look at it and we've had an outside review of that as well and we believe it shouldn't change our ratings.
Okay, got it. And then you mentioned some legislation pending in the Senate and Washington allows for multi year rate cases, etcetera. How does that triangulate with the Clean Energy Transformation Act that authorizes to commission a variety of tools in terms of up to 48 months of used and useful plant, earn a return on PPAs, etcetera. Is that something additional or does that take or does that take the place of SITA? Just want to clarify.
Yes. Good question, Brian. It's in addition to SITA still exists as we know it and all the facts and figures we've shared before apply. This just adds additional clarity to the commission's ability and focus on a multi year. It's efficient too in the fact that many of the utilities are filing rate cases year after year.
And this helps the commission get to a point where utilities are somewhat staggered with their cases because of the multiyear aspect. And it also provides clarity as far as what's included in getting that 1st year right and the transitions from year to year as well in. The utility has the option to file between 2 4 years if this legislation were to move forward. And again, that would give the commission the ability to make a determination based on those filings.
Okay. And I suppose the expectation is for that legislation to be passed or not in this legislative session. When does the legislation session end?
Yes, that's correct. It might come out of the House I'm sorry, the Senate this week and then it would move over to the House and then they would go through the normal process that transpires
question. Is the expectation that you'll file a second Washington rate case to include either what's in SITA or what's in this legislation for new rates to close that regulatory gap beginning in 2023 or with a constructive rate case outcome in the pending case that gets you there?
We'll need to file we'll likely file in the 1st part of next year. And if this legislation moves forward and even if it doesn't, we may still move forward with a multi year. And that would include all the capital that's being spent now that's not yet in the
case. Okay, got it.
We're just trying to Because Idaho is
our filing is a 2 year case.
Yes, correct. Just the multi year guidance and the losses you're incurring in the other businesses this year, is there an expectation for the losses to reverse and start generating positive earnings and or monetizing some of the investments through the multi year guidance period?
Well, in the multi year, we didn't break out our guidance and I'm not going to break out right now between the Avista Utilities AELP and other for 2022 and 2023. We gave consolidated guidance, but we have said in the past and we stand by that, that's why we're making the investments we're making is that we expect we started I think in 2019 to say that in 3 to 5 years we expect to start making earnings out of that $0.05 to $0.10 of earnings And we still believe that we're going to do that. So probably by the 2023, 2024 timeframe, we're looking to have earnings in those other businesses. And when we come out with specific guidance on that, we will put that in there, but we do have that expectation and that's why we continue to invest dollars in those areas.
Right. I get it. So the way to think about it is the $15,000,000 you're investing this year, the expectation is you'll earn some sort of return on that $15,000,000 over the next several years?
Well, some of them are new businesses like as we're investing in the university district, some of those may not make a return for several years, but come in after that and others may make returns sooner than that. It's not you're not buying a bond where you're going to get a return every year on it. These are startup investments and they take some time. Some are quicker than others. And we've seen earnings come out of the fund investments that we've made already and turn around pretty quickly and we've seen others that will be longer term.
So it's a balance there, Brian. It will just take some time. I don't have specifics for you on that. When we come out with our guidance in those forward years, we'll lay out but we do expect as you're looking at it by 'twenty three or 'twenty four to start generating earnings from those businesses.
Okay. And then once again, you're expecting to be in the $75,000,000 to $25,000,000 sharing on the which I think you've been in a benefit for every year for the last 4 or 5 years at least. What's driving that this year relative to last year? Is it just and then that would be a segue into a second question, Tom, what's your current outlook on hydro conditions, given the weather patterns that we've seen in the Pacific Northwest and what's expected over the next couple of weeks or months?
Yes. Brian, it's Dennis. I think the things that have been driving the over the last several years have been a combination of a couple of things. One is just lower gas prices, right, in general from what we've seen before. And then also our team's ability to optimize or manage our resources efficiently.
And so it's a combination of those things continuing that I think put us in a real good position to be in the benefit in the year for this year. Now obviously, future looking, if we saw a dramatic run up in natural gas prices, things might change on that. But as long as gas stays where it is, we're sitting pretty good. And then your second question,
Hydro,
here we are, it's mid, almost the end of February. So we still have a couple months really left of snow build opportunity in the mountains. Right now, we're just expecting on a forward look normal. And then as it sits today, the Northwest River Forecast Center runoff or water supply runoff forecast for April through September is basically average for us or 100 percent, plus or minus just a little bit based on the different basins. But generally speaking, we're expecting normal hydro at this point in time going forward for this year.
And remember, Brian, the importance of temperatures and how quickly it melts. That's always we may have snow in the mountains. If it melts really fast, that's bad. If it's a long cold spring and it melts off slowly, that's really good anywhere in between. Like Dennis said, we expect normal because we have good snowpack, but there is you do have to also see how that comes off.
Right. Of course, you want average temperatures in that April and May.
That's what we assume in our expectations.
And that's what you're seeing today in the marketplace?
Yes. Yes.
Okay. And then just lastly, just curious, interest rates have been rising lately, and there's concerns with inflationary pressures. How does it impact, number 1, maybe the timing of your 2021 financing plans on the debt side and then that 3% O and M expense growth that you mentioned earlier as part of the 2021 assumptions. Just curious what your thoughts are there?
Well, with respect to the O and M growth, we continue to always look at trying to manage our costs. We put a number out there and then can we try to come inside of that? We work to that to the extent we can. But we wanted to put our expectations as where we are because we've seen some higher costs in insurance costs and pension costs and other costs have gone up. And then we need to continue to work to manage those, but that's our assumption and we want to put that out there.
With respect to interest rates, yes, they have come up some, but not they haven't changed significantly. And we're looking at doing 30 year debt, and we've hedged some of that. I don't we're not trying to time the market till the last amount. The Fed Chair is just testifying in front of Congress yesterday and today, and we expect him to continue to say that we expect to keep rates low. So I'm not we're not moving, we're continuing to monitor that.
And if it makes sense, we'll look at doing our debt a little bit earlier. But right now, we don't think that makes sense. And we would expect to come out like we always have and do it in the second half of the year.
Okay, great. Thank you very much.
Thanks, Brian.
Thank you. Our next question comes from the line of Chris Ellinghaus from Seabrook Williams. Your question, please. Chris, you might have your phone on mute.
Sorry, my bad. How are you? Good morning.
Wasn't even video, Chris. We couldn't tell you you're on mute.
Yes. Well, I make a lot of mistakes. The $75,000,000 kind of run rate you've been at on equity, can we assume that that's what you've got built in through this sort of guidance period?
We've had a history of issuing at that level and we're not changing our CapEx. The only changes will be cash flow. Okay. So we don't give guidance forward with that, but that's been our historical expectations for issuing. Okay.
You didn't say anything about the dividend payout. Can you just address that? Well, dividend payout
has been the same since we started having some lag. We've said we're going to continue our dividend and we will get to our stated guidance is to get to 65% to 75%, but we won't get there till we're back to earning our allowed return. So we'll run a little high right now and we'll have our earnings growth. As you see the guidance ranges of growth is greater than the dividend increase which was 4% to 5% on the dividend. As Dennis mentioned, 4.3%, I think it was.
And so the earnings growth is greater than that, which will get us back in line with our stated 65% to 75% payout ratio as we get to earning our allowed return.
Sure.
What was the increase in bad debt expense last year?
I want to say $6,000,000 or $7,000,000
Okay. And you did mention that you're expecting the pandemic to continue to be a drag through the first half of the year. Can you give us any color on what you think that looks like for this year?
I'll just say the color is it's included in our forecast. I mean it's really you're going to see some load expectations as we've seen it, but we're decoupled largely as I mentioned in my earlier comments. So there's the undecoupled load is an impact and then to the extent that bad debts are there, but we have deferral mechanisms as we mentioned in each of our jurisdictions to be able to defer that and then go after recovery through a future proceeding. Now if that proceeding comes up differently, we'll have to address it. But we our expectation is those are costs that we should recover through those future proceedings.
So with the deferrals and with the decoupling, you're basically not expecting it to be terribly big?
That's our expectation. And it's included in our guidance.
All right. One last thing. Dennis, can you give us your thoughts on the electrification bill in Washington?
Yes. Good question, Chris. First of all, I guess what I would say is we support reducing emissions. And obviously, with what we're doing on the electric side of things, we're doing that and making good progress. But we need to do it in a manner that minimizes the cost burdens on our customers and avoids or protects, I guess, I would say, the reliability of the regional energy systems.
And just I think we need to be doing it in a holistic fashion to minimize the unintended consequences. So having said all that, the bill doesn't really fully consider all these broad impacts. Now I am happy to say that we have been working with our fellow utilities in the Northwest or in Washington State and other stakeholders and really trying to educate legislators as to the serious concerns that we have with the bill and the serious impacts that we believe the bill would have on our customers and the energy system. So, I'm pleased to report that our efforts have led to defeat of the bill in the early in the legislative session. So that's good.
So it's basically done for this year. However, obviously, we could expect that some components of it or the bill will come back at some point in time in the future. And we just need to continue to educate legislators as to what our point of view is. And that is, again, we believe strongly that natural gas plays an important role as we decarbonize our energy system. And I'm not saying that to give natural gas a pass.
We have we're working on plans for renewable natural gas. We're experimenting with other technologies or we're investigating other technologies and energy efficiency is an important component to that as well. So we're going to do our part on the gas side as well, but we just are really concerned with the effects of electrification, not only what it would do on the for our customers from an affordability perspective, but what the implications are on our electric system. Our studies have shown that it would require a doubling of electric infrastructure, including generation to meet the increased needs from a full electrification in our system. And there's obviously reliability and cost impacts associated with that, that are concerning.
So that's kind of where we sit on this right now. And what we're going to do is spend the next we'll continue to work on educating stakeholders as to why gas makes sense going forward.
Does that help? Yes, that's helpful. Thanks. I appreciate the color.
And this does conclude the question and answer session of today's program. I'd like to hand the program back to John Wilcox for any further remarks.
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, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.