Good morning. Thank you all for coming to our 2018 Annual Meeting. As we get started here, I'm Casey Fielder. I'm a Communications Manager here at Avista. Just want to welcome you and remind everyone to please silence or turn off your cell phones if you haven't already.
And just to let you guys know we have 4 exits here in the room should we need to leave. And with that, I just want to introduce our Chairman and CEO, Scott Morris.
Thank you, Casey. Thanks, Casey. Well, good morning. I kind of feel like, wow, I've got this newfangled kind of deal they're giving me today. I said, am I like on American Isle or something with this new thing?
So, but good morning to this, what I would say, historic annual meeting and thank you for coming today. I am Scott Morris. I'm the Chairman and CEO of Avista and I want to welcome you officially to our 2018 Annual Meeting. And as always, as we begin this meeting, I will caution you that we will be making forward looking statements that involve risks and uncertainties, which are subject to change. I would direct you to Avista's Form 10 ks, which was filed with the SEC on February 20 and is available on our website for reference for the various factors which could cause actual results to differ materially from those contemplated to the extent these factors are not discussed in this meeting.
So before I start the business portion of the meeting, I do want to introduce our outstanding Board of Directors. You'll note in our that all of our Board members and their backgrounds appeared in the proxy statement and I'm going to introduce our board. Their pictures will be here and I'm going to let them stay seated and you can see their pictures. With us today is this outstanding Board is Eric Anderson, Christy Blake, Don Burke, Becky Klein, Scott Ma, Mark Roscoe, Heidi Stanley, John Taylor, Dennis Vermillion and Janet Widman. Can you please join me in thanking them, which I think is one of the outstanding boards in the utility industry, the Avista Board.
Thank you very much. I've been so blessed and honored to work with this Board for so many years and they're just outstanding. I'd also like to acknowledge some retired directors who are with us today. And I would ask like them to introduce them some very good friends and people that have been very dedicated to this company for many, many years. With us today is our retired Director, Dave Clack.
David, thank you for coming today. Former Chairman, President and CEO and the person I always refer to as the boss, Paul Redmond. And our former Chairman, Larry Stanley is with us today. So thank you very much for joining I introduce the executive officers, I do want to acknowledge and thank all of our employees both active and retired for their dedication and support. As you well know, they step up to every challenge.
They show such a sincere commitment to our customers and the communities. And for me, it's been an honor for 37 years to work with such outstanding people at this company. So can you please even though they're not here, there's a few of them, can you please join me in acknowledging the 1700 strong employees of Avista? Thank you very much. Now in the front row here, I would like to introduce our executive officers and you'll notice that the various areas from which they're responsible also appeared in the annual report.
So I'm just going to acknowledge them by name only and I won't make you guys stand up either. So with that, with us this morning is Kevin Christie, Brian Cox, Marion Durkin, Karen Feltes, Jim Kensock, Brian Krasselt, David Meyer, Heather Rosentrader, Ed Schlecht, Jason Paxton, Mark Theiss, Dennis Vermillion and joining us from Alaska, Connie Holford. So can you please join me in this incredible utility team that I get to work with every single day, so our utility executive office. So at this time we will convene the business portion of the meeting and the first matter to be considered at the meeting is the election of directors. 11 directors are standing for election for a 1 year term.
The Board recommends a vote for each director and there are no other nominations. The second matter to be considered at this meeting is the proposal by the Board of Directors and the shareholders to ratify the Board's appointment of the firm Deloitte and Touche as the independent registered public accounting firm for 2018 and the and the Board recommended a vote for this proposal. The 3rd matter to be considered is an advisory non binding vote on the company's executive compensation. The Board recommends a vote for this proposal. So if there are any shareholders who have not voted yet, you may execute a ballot at our Investor Relations table when you leave the meeting today and please indicate on the ballot the number of shares you own and mark and sign your ballot.
Those who are voting this morning can rest assured that your vote will be counted and included in the final results. So as you're aware, a vast majority of our shareholders have voted in advance of the meeting and the preliminary results are as of this morning show that all of those proposals have passed. So that really concludes the business portion of our meeting today. So it seems like just yesterday we got together in November as a special shareholder meeting where you all voted to confirm and approve the merger between Avista and Hydro One. And at that time since then, we've been working very hard to make sure that we can get the proper approvals in the states and at the federal government level done by the end by the second half of this year and we're doing an outstanding job.
But when we got together in November, I reminded you that certainly Avista was not for sale. And if we were going to do anything, it had to be with the absolute right partner. It had to be somebody that shared our values, that really cared deeply about this company and somebody that we could really come together and build a future with to make an outstanding company that has been here for 129 years that can actually be even better for the next 129 years. And we feel like we found that partner in Hydro 1. But there were some things that were absolutely non negotiables for us, for all of our stakeholders.
And from a shareholder perspective, we had to get full and fair value for the company and we did that with $53 a share. We knew from a customer perspective that scale would matter in this new world with digitization and automation in the utility world and we wanted to make sure that as we scaled particularly areas of information technology and supply chain that we could get the benefits of scale. But from a customer's perspective, our customers still felt that same hometown customer service feel that Avista has been able to deliver for 129 years. Of course, the corporate headquarters had to stay in Spokane. Of course, the jobs had to stay in Spokane.
Of course, the name Avista had to stay intact. And from a leadership perspective, as we go forward, from a Board perspective, we needed to have people from the Pacific Northwest beyond that Board of Directors. And finally, as you know, this company has been absolutely committed to the communities that we serve. And that was a non negotiable. Not only did we need to continue to do the things with donations and the time and the treasure of our employees in our communities, but we needed to increase that.
So they agreed to help us actually increase the amount of donations and community involvement that we have on a going basis. We will continue to be the absolute driving force in our service territory around economic development. And as always, the very special secret sauce gene of this company for 129 years has been its spirit of innovation. And that is an absolute thing that will continue as we move forward together with Hydro One. I mentioned that we've been working really hard to get the deal across the finish line by sometime the end of this summer hopefully.
And we're going to do that. Our regulatory teams have been just outstanding. We've already received all party settlements in the state of Washington, Idaho and Alaska. We have all party settlement in principle in Oregon and we're working extremely hard to have that accomplishment in the state of Montana. We've already received all of the federal requirements we need to get the approval of this merger done except for 1.
When Canadian companies invest in the United States, they have to get special approval from the government and we would expect for us to get that approval sometime in June. So I can tell you that this merger of Hydro 1 and Avista is absolutely on track. We expect it to be done by sometime, I would suggest by the end of the summertime. And I would not I do not see any hurls in our way. Again, a testament to the outstanding job of our teams to be able to get that done.
As I stand before you today at this what I think is a very historic annual meeting for our Board, for our employees, for our customers. And I've reflected, I've been with the company for 37 years. And I can't believe it, It's almost a third of the life of this company I've been a part of. And I can tell you for 129 years, there's been one constant at this company with our employees. And that is 24 hours a day, 7 days a week for generation after generation after generation of employee that they've cared enough to make sure they do everything they can to keep your lights on and your gas flowing 24 hours a day, 7 days a week.
Now I know that our customers don't think of us 24 hours a day, 7 days a week. I wish they did, but they don't. But what's so unique about this place, what has been so special for me is that our employees do think about our customers 24 hours a day, 7 days a week. That's what they do. And Colleen or Colette Bottinelli went out with a film crew, this wonderful person in communication and she captured that in a 24 hour period about what it really means to be a customer of Avista and the care our employees have for those customers.
So with that, Casey, I'd like to run the video. A 24 hour in the day of the life of a customer in Avista. Casey? Jared?
On the eve of our proposed merger with Hydro One, Avista can look back with pride on nearly 130 years of creative, hardworking people dedicated to providing outstanding service. People who are pioneering industry leading approaches to help shape our nation's energy landscape, Contributing to economic vitality and improving supporting nonprofit organizations that help those in need, Providing renewable energy solutions and ensuring the protection of our valuable natural resources. And investing in education to pave the way for the next generation of engineers, entrepreneurs, and visionaries. City design or doing the fundamental work of generating and delivering the energy that hundreds of thousands of people rely on every minute of every day. Our goal, to make a lasting difference in the communities where we live, work, and play.
To provide our customers with safe, reliable energy. We're here today connecting people and strengthening our communities. And we'll be here tomorrow too, energizing the future and embracing a world of possibilities.
Also with us today is the company that did that CK Anderson. I saw CK walk in. So CK, can you stand and say thank you very much for that great job. CK, nice job there. So what you can rest assured with is that for 129 years that's what we've done, another 129 years that's what we'll do.
And with that, I'm more than happy to take any questions that you might have. For me, this morning there are some microphones at each end of the auditorium. So if you'd like to ask me a question, please go and let me know your name and I'd be happy to answer questions. So if there are any?
Hi, good morning. Jim Steer from Hart Capital here in Spokane.
Hi, Jim. How are you? Good to see you.
Yes, thank you. I figured since it's the last likely the last time I have an opportunity to do this, I want to make sure you take advantage. So appreciate it. Thank you. Just two quick ones if I can.
1, can you talk a little bit about the announcement out of California here this week about residential solar? Just the fact that all new construction is going be required to have solar panels starting in a few years and how that might impact Avista going forward? I know obviously Washington is a very progressive state. You could kind of hypothesize that we may be behind them by 5, 10 years. So maybe talk about sort of long range planning and maybe what it is on that regard?
And then secondly, can you talk a little bit about leading up to the announcement last summer with Hydro One, some of the conversations you had with them in due diligence about our community. Obviously, there's the regulatory things that have to happen and make it financially accretive and everything else. But what were the questions and the topics and where was your time spent about Spokane and Absolutely. I'm happy
to thank you for that question. That's great. In regards to solar panels, that's a great question because we've already seen because of the commitment to renewable energy in California as we speak today is that we see the market in California is fundamentally changing how we operate our power supply in the Pacific Northwest. And we can give you a couple of examples of that often during the day because even the current solar that's happening in California, prices in California during the day actually go negative. So our team led by Jason Faxon are in the marketplace every day looking for opportunities to bring that negative price, California actually paying us to take their energy, we bring it to you as customers here in the Pacific Northwest.
And the vast majority of that goes to lower our customers' bills. Also there's opportunities though because we know that the sun doesn't always shine. So when sun starts to go down or it's a cloudy day or something is that we're ramping our resources to meet their needs. And often, it's at prices that are fairly attractive to us. So that California marketplace in the near term has been something that our team because of our innovation have been taking full advantage of.
To the future, we do recognize that solar panels are going to be a big piece of what we are and what we do. And what we've chosen to do is to meet that challenge head on. And as in the spirit of this company has always done, what we've done is we are actually doing many pilot programs experimenting for that very thing. So as you know with our catalyst project that we're building in downtown Spokane, it isn't just the 1st cross laminated timber building the largest in the Pacific Northwest, which is exciting in itself. It's the design and the construction of an eco district that's going to combine solar panels and storage and heat to power in a block or 2.
And the idea is how do you utilize those distributive energy for the benefits of both your customers and the grid 24 hours a day, 7 days a week? How do you get the most value out of it? And is there ways that by making those investments, it will change the non traditional way that we think about investing in utilities because by doing that we'll be able to avoid building a substation. So maybe some of those by that those investments by avoiding the substation can be a part of our investment into the grid. And we are actually one of the only utility, probably the only utility in the country that's doing that because of our spirit of innovation.
I can brag about that. There is truly nobody else out there doing that but Avista and that will be happening very soon. So we know it's a part of our future, but we also know the grid is going to be a part of our future. You can't buy and sell energy without that grid. So that we know our business model is changing.
But we're what we've chosen to do is to do pilots experiment and unleash our engineers to find out what that new world looks like. And we are going to be poised and positioned to take full advantage of it when it does come. I'm absolutely convinced with that. As far as the deal comes, I've said this many times and it's the absolute truth. I can tell you that we probably spent 5 minutes on price.
Maybe I'm exaggerating a little bit, but as far as full and fair value for our shareholders, we it was we knew what we wanted and we weren't going to negotiate that. And they knew that. And so it was a really easy negotiation. I wish I could tell you I was there pounding the table, but I didn't have to. The vast majority of our time that Mark Theiss and I were in conversations with the Hydro One team were spent on community issues, customer issues and employee issues.
That's where we spent, I would say, most of the time, almost all the time. And what happened in those conversations as we talked about, what a special unique relationship Avista has with its communities, how it's been a part of it, how important Avista is not just from an energy provider perspective, but from a donation perspective and economic development perspective. What we do for education, all the things that you saw in that film is that we simply wouldn't compromise any of those going away. It just was not a part of it. And frankly, as we got into the conversation, they agreed with all of those things.
But as I've said to employees and I will tell it to you, we went and we actually had a final meeting where at that meeting, I wasn't sure we were going to do it because we had a handshake that we felt like we couldn't sell the company on a handshake for those types of things. So it was Mayo Schmidt's idea that we memorialize them, that we put them in a document, that we make sure it's not just part of the governance agreement in the contract for the deal, but we actually make it a part of the regulatory compact as we get it approved in the 5 states. So all of those things that I talked about that are part of this deal are requirements by the Public Utility Commission that Hydro One must operate the company in this manner. So in essence, we have a double protection. We have and I sincerely believe we don't need it, but we have Mayo's word.
I guess we have triple protection. I have Mayo's word. I have it in a contract as part of the merger doc itself. And we actually have it embedded in perpetuity in the Public Utility Commission as we get the deal approved in all 5 states. Long answer, but what the heck?
Thank you.
Yes. Rocky Kerr from Spokane. I was wondering that business plan is ultimately for cold strip and the carbon footprint associated with that and other long hopefully short term or and or long term plans to divest from that over the future? Yes. Thank you, Rocky.
I appreciate that. Cold strip has been as you know, such an important part of our resource mix since we brought it online in the mid-1980s. And a matter of fact, coal strip has been our 2nd lowest resource cost for our customers besides hydro in that timeframe. And but we also recognize and see that with the continued low cost of natural gas number 1 and also with climate change and with the concern around carbon emissions that we needed to continue to have a conversation about the viability of coal strip long term. And as 6 owners of Colstrip, those kind of decisions will be made by all 6 utility companies.
I think one of the things that's important to realize is we only own 15 percent of units 34 of Colstrip. There are 5 other utilities that own the 4 other combined units there together. So whatever happens at Colstrip, it's got to be all 6 of us arm in arm together making that decision. The things that we will continue to do is around Colstrip and Carbon is what we've always done as a company is that we will be the convener and the collaborator. What we need to do with Colstrip in order to make sure that we make the right decision for all of our communities, for the people concerned about the future of climate change and carbon, which we are passionate about, but also for the men and women who have worked at that mill for their career, for the community of Colstrip, who once that coal plant shuts down, if you can imagine, if you're home, you have a home there and there's no longer a plant, the real estate values are going to probably decline.
You're probably not going to be able to live and work in coal surf like you do today. So we have a special unique responsibility to those families and those people in those communities as we think about and plan about the future of Colstrip. And of course, the taxes that are paid on Colstrip for the most part funds a great deal of the education budget of the state of Montana. So this is a complicated issue. And what I can promise you is that Avista will be the convener to bring all of the stakeholders together to find the right decision at the right time.
But the best, the most important thing that we can do is to have a conversation, to have a process around it, to continue to make sure that we hear all the voices. And by doing that, we will come up with a right solution for all the stakeholders. So that's what we plan on doing and that's what we always do as a company. Any other questions? Yes.
Good morning, Scott. I'm Ed Linsen from Springfield, Virginia.
Hey, Ed. Thanks for coming. You're welcome. Dual purpose, Jeff.
Two questions. Not just see me on our final call, Ed. Two questions. I'm not from here. Is Washington a net metering state?
And the second question is with we own an electric vehicle. Is it in the company's interest to invest in charging station as more cars come on the road because it would appear to me that you can sell electricity through those.
Yes. I was looking at Jason and Kevin. We're kind of sort of net metering state. I don't know how to relate. We're not a pure net metering state in that sense.
So but we do have a limited amount of net metering that we allow customers to do on a proportional basis. I guess they might say it's complicated, but we're not fully net metered, leave it at that. From an electric car perspective, thank you for asking that question because we have one of the most innovative charging station programs in the country and we've been recognized throughout the country for the charging station program that we're currently running that we actually are investing our shareholder dollars in charging stations in homes and businesses across our service territory as part of a pilot that we were able to get approved with our public utility commission in order to do just that so that we can you can buy an electric vehicle, you can charge it at home, we can work with you to do it on peak or off peak and as well as we're building a number of fast charge stations both a lot have been built on I-ninety East West, but not many have been built north south. So we've been building a bunch north south so that we have full coverage in our service territory for fast charging.
So if you do want to travel through here, you can get it in either in all directions and you can get it at home. So we've got a great chart and we see that as absolutely critical.
Just a follow-up on that. I only saw when we pulled in one set of charging stations out in front. Do you have more here?
Well, we've got a bunch in the back. Yes, a whole bunch. And they're all across town and I'm not exactly sure where they all are. We have 200 stations across thank you, Kevin. I've lost track.
Thanks, Ed. Thanks for coming to Spokane. I hope you enjoy your stay. If you're here, go see the falls. Have you been to Huntington Park?
Yes, you better go see those fall. Any other questions? Well, as I close, what could be our final annual meeting again, I want to just say from the bottom of my heart, thank you. But most importantly, I want to say thank you to our employees and our communities because even though that we were going from thousands of shareholders to one shareholder, what I can promise you is that this Avista culture, this culture, this company that's been so critical to Spokane and the Inland Northwest for 129 years. I can't say that it won't change because it has to change.
But the changes that will happen will be for the good of the community for its employees and its customers. We have to continue to innovate. We have to continue to look at the marketplace. And just from the questions that you heard today, it's a changing marketplace. So in order to thrive and be successful, we're going to change.
We're going to change. But we found the right partner to do it with and I'm absolutely convinced. In whatever form a utility is 129 years from today, Avista will still be one of the leaders in whatever that industry looks like with my great grandkids hopefully working here. Thank you very much.