Earnings Call: Q1 2021

Feb 4, 2021

Good morning, and welcome to the Spire First Quarter Earnings Conference Call. All participants will be in listen only mode. Please note, this event is being recorded. I would now like to turn the conference over to Scott Dudley, Managing Director, Investor Relations. Please go ahead. Good morning, and welcome to Spire's fiscal 2021 Q1 earnings call. We issued an earnings news release this morning and you may access it on our website at spireenergy.com under Newsroom. Is a slide presentation that accompanies our webcast and you may download it from either the webcast site or from our website under Investors and then Events and Presentations. Presenting on the call today are Suzanne Sitherwood, President and CEO Steve Lindsey, Executive Vice President and Chief Operating Officer and Steve Rasche, Executive Vice President and CFO. Before we begin, let me cover our Safe Harbor statement and use of non GAAP earnings measures. Today's call, including responses to questions, may contain forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Although our forward looking statements are based on reasonable assumptions, there are various uncertainties and risk factors that may cause future performance or results to be different than those anticipated. These risks and uncertainties are outlined in our quarterly and annual filings with the SEC. In our comments, we will be discussing net economic earnings and contribution margin, which are both non GAAP measures used by management when evaluating our performance and results of operations. Explanations and reconciliations of these measures to their GAAP counterparts are contained in both our news release and slide presentation. With that, I'll turn the call over to Suzanne. Thank you, Scott, and good morning to everyone joining us today for our Q1 update. On our year end call, we reported that fiscal 2020, we continue to make strides towards our strategic priorities despite the challenges from the coronavirus pandemic. By year end, we delivered growth and solid financial and operating results while advancing our sustainability objectives. As we step forward, I'm pleased to tell you that we're building on last year's momentum and are off to a good start in fiscal 2021. We reported higher first quarter earnings largely driven by our gas utilities, but also thanks to solid results from gas marketing. Steve Rasche will cover our Q1 financial updates in a moment. At the same time, our operating performance is strong with improvements in safety, system integrity, service and environmental sustainability. As we step into the new year, we're committed to executing on our strategic priorities that drive our growth while building on our ESG record. In particular, we remain focused on our commitment to being a carbon neutral company by mid century and achieving our methane emissions reduction goals. As you know, currently the primary driver in emissions reduction is pipeline replacement. We are on track with our plans, including investments in infrastructure upgrades and other programs to identify and reduce leaks. At the same time, we continue to evaluate other ways to meet our environmental commitment because we believe that natural gas has an important role to play in the energy transition to a low carbon future. We're looking at our RNG and carbon offsets in the near term, while setting hydrogen a longer term solution. Keep in mind that these carbon reducing approaches represent investment opportunities that can support earnings growth. That's because natural gas is critical to ensuring Americans have access to energy choices that are clean and affordable. As we announced yesterday, Bayer has joined 1 Future, a natural gas industry coalition focused on improving the management of methane emissions across the entire value chain. Steve Lindsey will have more to say on this, but we are pleased to join several of our LDC peers in combining efforts to reduce methane emissions and collectively report on our achievements. We have also taken an important step in naming one of our Spire executives to lead our environmental efforts. Earlier this week, we named Nick Pokalski as Head of Environmental Commitment. Nick currently leads Spire's business and economic development efforts. He brings expertise in data and analytics to this new role as he works to develop new business processes and guides the company's strategy behind our commitment to being a carbon neutral company by mid century. Although the environment is the focus we're talking about today, it is only one area within our corporate social responsibility, our ESG strategy. And I'm pleased to note that our total ESG efforts are getting noticed. As one example, Fire was ranked by Newsweek as one of America's most responsible companies recognizing for the 2nd year in a row our strong performance as a corporate citizen. Specifically, we are recognized for our commitment to the environment, social issues and corporate governance. For the start of our fiscal year, we've also progressed on several regulatory matters, including completing the annual rate setting for our 2 Alabama utilities, Inspire Mississippi, as well as filing a rate review in Missouri. Steve Lindsey will cover this in more detail. As we build on our momentum from last year, it is important to capture our success and look to the future. In that spirit, last week we launched our story, our online annual review that outlines where we are today and what we're focused on going forward. I encourage you to explore the site at ourstory. Fireenergy.com and see all the ways we are stepping forward, advancing and innovating for a better tomorrow. In the meantime, let me share a few quick highlights. You'll see that we begin our story by highlighting what we're doing to protect our environment. This includes our commitment to be in a carbon neutral company to infrastructure upgrades and methane emissions reductions. You'll also see that we're driving future growth and earnings through our investment and upgrading our infrastructure, new businesses and innovation. We're advancing people and performance. This encompasses everything from our operating performance, including safety, system integrity and service to programs that help employees learn, grow and feel included. And last but certainly not least, we take good care of our communities, including providing support during the pandemic. Overall, our story is about being an essential energy provider, including what it means to have the privilege and responsibility of delivering affordable, reliable and clean energy while working to create a sustainable energy future. As I noted last time, achieving our collective success is only possible through the efforts of our 3,600 amazing fire employees. Our employees continue to step up in the face of challenges, whether it's the coronavirus or winter storms, ensuring our customers and communities are well served, supported and kept safe and healthy. With that, I'll turn the call over to Steve Levensink. Steve? Thank you, Suzanne. I also want to acknowledge the continuing efforts of our employees, especially in the midst of the pandemic in caring for, supporting and serving our customers and communities. The work you do every day helps us keep advancing as a company, enabling us to raise the bar on our performance and stay on track with plans and commitments. Thanks to your efforts, we are stepping forward with confidence in our ability to achieve another year of success and growth. As you know, the key drivers of our growth continue to be the investments we make in our infrastructure upgrades and in adding customers through our organic growth efforts. We've had a strong start to fiscal 2021 with our capital expenditures plan. In the Q1, our capital spend totaled $164,000,000 including $150,000,000 for our gas utilities on pace with our spend a year ago. Over half of our utility CapEx went towards pipeline replacement and our new business spend was nearly $38,000,000 which reflects more than 30% growth over what we invested in the Q1 a year ago. You will note that our spend for pipeline, storage and other is down significantly. The biggest driver is lower investment for Spire SCL pipeline, which was completed and placed into service in mid November of 2019. We are on track with our full year planned spend of $590,000,000 95 percent of that, which is earmarked for our gas utilities. Our pipeline storage investment is on track with our plan here as well. Our robust 5 year CapEx plan totaling $3,000,000,000 will drive 7% to 8% utility rate base growth. As Suzanne said, we are building on our momentum from last year and this is certainly true of our performance on the operating side. We're seeing improvements in key areas that impact safety, system integrity, service and sustainability. For example, our OSHA DART rate continues to improve with a lower level of employee injuries. We're also seeing consistent year over year performance in damage rates and average leak response time. And as was the case last year, the lease per 1,000 system miles is down significantly, resulting in enhanced safety and reliability, lower operating costs and reduced methane emissions. To support our efforts in this area, Suzanne noted earlier, Spire has joined 1 Future, a coalition leading companies across the natural gas supply chain focused on an innovative performance and science based approach to management of methane emissions. Spire is one of 37 member companies that include LDCs, producers and midstream operators across the U. S. The goal is to achieve an average rate of methane emissions across the entire natural gas value chain that is 1% or less of the total natural gas production delivery. As a member company, Spire will report to methane intensity for 2020. We're excited to be partnering with like minded companies to develop and implement innovative ways to reduce our industry's environmental footprint and create a more sustainable energy future for generations to come. The aim of 1 Future aligns with our strategic priority to advance through innovation. Now let me turn to a regulatory update, starting with our Missouri rate review that we filed in mid December of last year. This is a normal course filing designed to recover and reflect in base rates, the significant investment that we have made more than $850,000,000 in fact since our last rate reset in 2018. This filing is focused on the benefits created for our customers and communities including making our system safer, more reliable and cleaner, implementing customer service enhancements including online customer portal, technology platform enhancements and advanced metering technology, proposing new programs and options including a voluntary carbon neutral program and RNG, ensuring our customers have equal access to our beneficial programs and services regardless of which side of the state they're on by combining our Missouri utilities. Our request is for a $64,000,000 increase in base rates, which is net of $47,000,000 already being collected through ISRS. For typical residential customer, this represents an increase of about 5.6% on their monthly bill. Our filing reflects a rate base at the end of fiscal 2020 of nearly $2,800,000,000 an equity ratio of 54 point 2 5 percent and return on equity of 9.95%. In terms of the rate review process, we're currently in the midst of discovery, during which we are responding to data requests from the Missouri Public Service Commission staff. Based on discussions with the commission and staff, the procedural schedule includes direct testimony from staff and other interested parties in May, likely update period for the test year of May 31, 2021 and hearing that will likely start in June and continue through August. While the rate review process in Missouri is 11 months of fully litigated, our history and preference is to reach an agreement sooner than that, such the key elements in the case can be settled and a constructive outcome for all can be achieved. Turning to our Southeast utilities, the annual rate setting process has been completed for our Alabama utilities with new rates effective on December 1, 2020. These rates are based on allowed ROEs established under the RSE mechanism, including 10.5% for Spire Alabama and 10.7% for Spire Gulf. We also completed the annual rate reset for Spire Mississippi with new rates effective January 12 reflecting an ROE of 10% and a 50% equity ratio. In addition to working with regulators on rate matters, we are increasingly engaging with public service commissions on initiatives to expand our natural gas service to rural parts of our service territories, including agricultural areas. We're working to sustain and grow critically important industries and advance rural economic development. We were pleased to receive unanimous support from the Alabama Public Service Commission for a multi phased project to expand natural gas service to poultry farmers in Randburn, Alabama. Shown in the photo on this slide is the groundbreaking ceremony for the project featuring Twinkle Kavanaugh, President of the Alabama Public Service Commission, who is a driving force in working with us to bring this program to reality. Before turning the call over to Steve Rasche, I want to comment on initiatives across the states our utilities operate in to prohibit local natural gas bans. Legislation has been filed or is expected in Missouri, Alabama and Mississippi to address this issue. We're supportive of these legislative efforts because we strongly believe customers should have the right to energy choice and to enjoy the benefit of reliable, affordable and clean natural gas. With that, I'll turn it over to Steve Rasche for a financial review and update. Steve? Thanks Steve and good morning everyone. You know it was 1 year ago in this call that I shared a live picture of the celebration of the Super Bowl champion Kansas City Chiefs. What a difference a year makes in many ways. Except of course the Chiefs are competing again for the championship this Sunday and all of us will be cheering them on. Go Chiefs. Okay, now back to business. Turning to our results for the quarter, we delivered consolidated net economic earnings of nearly $77,000,000 or $1.42 per share, up from $72,000,000 or $1.33 per share last year. Our gas utilities posted earnings of $76,000,000 up $7,000,000 from last year reflecting higher margins and lower operating costs. Gas marketing posted solid results with earnings that were down $2,800,000 compared to last year's strong Q1. And all other businesses and corporate costs improved to $2,800,000 reflecting a full quarter of Spire STL Pipeline's operating contribution as well as earnings from Spire Storage compared to a loss last year. Looking quickly at a few details, total operating revenues of $513,000,000 were down 10% as lower demand due to milder weather combined with lower commodity prices. Contribution margin on the other hand was up $29,000,000 or 10%. Gas utility margin grew $7,600,000 as lower usage was more than offset by higher Missouri interest, new Alabama and Gulf rates, and modest customer growth. Gas marketing's margins excluding fair value adjustments that we removed for net economic earnings purposes was down $3,300,000 from a year ago. This decline reflects both less favorable market conditions and as we discussed last quarter, the net cost associated with our storage positions. We did begin to monetize some of these positions in December as planned and we remain on track to unlock that value in the remainder of the winter heating season. Other business margins were $13,000,000 well above last year and reflecting improved performance at both the STL Pipeline and Spire Storage. Looking at a couple other key variances here on Slide 12, operation and maintenance expenses were down $4,000,000 after considering the reclassification of pension costs and regulatory deferral. Big driver here was lower O and M cost at the gas utilities reflecting both fundamentally lower operations and employee related costs and some favorable timing of expenses. Other income reflects higher investment returns offset by prior year AFUDC for the SGL pipeline. And finally income tax which reflects higher taxable income and a change in our effective tax rate from the mid-seventeen percent range last year to roughly 20% this year consistent with our expectations. We remain in a strong financial position and our long term capitalization remains balanced. During the quarter, took advantage of very favorable market conditions by issuing $150,000,000 of long term debt at Spire Alabama to help fund our infrastructure upgrades. As we hit the peak of our seasonal working capital needs we retain significant capacity and liquidity. We also continue to grow our cash flow with 1st quarter EBITDA up 19% to $188,000,000 Net cash flow funds both our investments and rate base as Steve just talked about as well as our dividends. In fact, our Board just declared quarterly dividend of $0.65 per common share payable on April 2. At Spire, we have a long history of rewarding shareholders with prudent, consistent and growing dividends. In fact, we have paid a dividend each year for the past 76 years and have increased our dividend for the past 18 years running. Turning to our guidance, we reaffirm our long term net economic earnings per share growth target range of 5% to 7%. We also reaffirm our fiscal 'twenty one earnings target range of $4 to $4.20 per share. As Steve mentioned, our long term capital expenditure plans are also unchanged with a targeted spend of $3,000,000,000 for the 5 years through 2025 and a current year forecast of $598,000,000 This plan ensures that we will continue to deliver safe, reliable and sustainable energy to our customers, continue to reduce our methane emissions and drives rate base growth of between 7% 8%. As a reminder, our capital investment plan is well diversified across our service territories, supported by upgrade programs with long lines and covered by regulatory mechanisms that ensure minimal regulatory lag for most of our spend. Our financing plan is largely unchanged and reflects our commitment to a balanced and strong capital structure to support our growth and investment plans going forward, including our targets for both FFO to debt and holding company debt that support our strong credit ratings. Now in summary, we're off to a solid start to the fiscal year and are investing for the long term success across our businesses. With that, let me turn it back over to you Suzanne. Thank you, Steve, and thank you, Steve. In closing, let me underscore what Spire is a compelling investment. As you've heard, we continue to pursue growth with further investments in upgrading our gas utility infrastructure. We believe a focus on our growing regulated business is the key to what makes fire attractive. Our business mix is over 90% regulated, ensuring earnings stability and value. We have a robust CapEx plan in 2025 totaling $3,000,000,000 with 98% of that spend for our gas utility and timely regulatory recovery. Our capital plan drives 7% to 8% annual rate base growth which supports a long term annual earnings per share growth target of 5% to 7%. We pay a growing dividend that offers an attractive yield in excess of 4% and we have strong ESG performance with a focused effort to further reduce greenhouse gas emissions on the way to achieving carbon neutrality. We look forward to updating you on our progress and success in achieving our goals as 2021 continues to unfold. As always, we appreciate your interest and investment in Spire. Stay safe, stay healthy, and now we're ready to take your questions. Thank you. We will now begin the question and answer session. And the first question will be from Michael Weinstein with Credit Suisse. Please go ahead. Michael, your line is open, perhaps you're muted on your end. Hi, sorry about that. Good morning. Good morning. Could you discuss the prospects for I know you briefly mentioned that you might that rate settlements have been historic target for you guys in Missouri. Could you discuss the prospects from rate settlement in Missouri given resolution of some of the more controversial issues is resolved by legislation, prior rate case focal points surrounding tax reform, capital structure, prepaid interest expense have been resolved as well in the last case. Are things going to be substantially easier this time around? Hey, Michael. This is Suzanne. I'll provide some color and Steve Lindsey may want to add something to it. But as you know, the cadence of rate cases in Missouri are 11 months process. And there's a cadence to us following the case and then interveners following their case. And generally what happens after the interveners follow their case between that period of time and then through the hearing process is when the parties get together and try to land a settlement. If you go back multiple decades, in fact with Missouri, most of the time it results in a settlement or at least the partial settlement and then the commissioners may decide the hanging chairs of the last few items if you will. So that is just by normal course the cadence. So we always believe it's better to get around the table and see if for all parties if we can reach a settlement in whole or part. So that would be our objective this time as well. And Michael, this is Steve Lindsey. I would just kind of always go back to the why. And really the reason we're in there is a couple of pretty big pieces. The capital investment we've made and there's just a natural cadence to that from an ISRS perspective. But really if you go back to what we're trying to do for customers, this is the right time as well. Lots of programs, options, enhancements to customer service, investments in technology to provide customers with more options, even some RNG options. I think if you really kind of go back to the why we're doing this right now, I would anchor back to that. And then as Suzanne said, obviously, we would like to have the process not go the full length of term. And we think we're in a position that makes a lot of sense with some of the resolutions we've got on the recent issues, some of the legislation that got passed. So we think, again, the reason we're in there is for the right reasons and we'll work with all parties to make this as expedited as possible. Got you. We weren't expecting you to monetize those storage purchases in the marketing segment until a little bit later like more like Q2. Can you comment on market conditions that allowed earlier monetization in this quarter? And then also, do you expect similarly strong results in the Q2 or is it did you front load most of those gains? Yes. Michael, this is Steve. I'll take a shot at that. Yes, there was a small amount of storage that we expected to get tugged on in December, which is really the beginning of the heating season for the geographies that we serve. So that wasn't surprising. Overall market conditions were flattish, not particularly supportive through the Q1 and actually even through January as everybody knows on the call because we all watch it. We've now seen a whole lot of snow, in fact most of you all are probably looking at a lot of snow and a lot of cold and the markets have injected more volatility in the commodity prices up. So we lived through the entire heating season and I think we see some opportunities going forward. So I wouldn't read anything into the early withdrawal. It was planned. Clearly, we look at daily markets and we see an opportunity to optimize the position a little bit earlier, a little bit late, we use that flexibility in order to maximize the value. So from that standpoint, I'm not particularly concerned. The most important point is we're on track to unlock that value that we essentially locked in last summer when we laid in the positions. In terms of seasonality or our focus, most of that realization is going to happen in the quarter we're physically in right now. So I would expect to see good strong numbers coming out of Spire Marketing when we chat with you all 3 months from now. Got you. Hey, one last question on OneFuture. How much of the plan, I guess, it seems like it's focused mostly on methane and leak reduction. But could you talk about plans to maybe blend the renewable natural gas into the system as part of the methane emissions, global methane emissions reduction strategy? And is this a way to achieve carbon negative results for gas utilities, if you are actually helping to flare essentially flare gas coming off landfills and dairy farms kind of thing? I'll start with that and then pass it again to Steve to provide more color that he'd like to provide. I'll start with there's many organizations and ONE Gas is one of them, but there's also the American Gas Association and many others that are looking at from wellhead to burner tip, what we can do to eliminate emissions. And the beauty about 1 gas, it is from wellhead to burner tip. As far as us, Bayer as an example, we're working with our commissions in terms of what we can introduce natural gas, as you know, is abundant and expensive. And natural gas, as you know, is abundant and expensive. We want consumer choices as we navigate through this process. But these associations that bring us together, again, be it American Gas Association and ONE Gas, we have layout plans for carbon neutrality by a time certain, is very important for us to be involved and included and that's one of the reasons for One Gas, One Future. And I clearly think there's some strong alignment for us with 1 future because what I like about the organization is it's not just for example a segment in the natural gas value chain, for example like LDCs or storage, it's literally from wellhead to burner tip. And I think that's the way we ought to approach this as an industry is we need to address it on the entirety of that value chain. And secondly, other things that come from that, for example, are the technical committees that are a part of OneFuture are going to allow us to potentially have access to better leak detection technology to things that help us that predict artificial intelligence around damage prevention, all the pieces that if we had to do this independently as companies may take a longer agriculture landfill to do some things with RNG. That's why we're proposing agricultural landfill to do some things with RNG. That's why we're proposing some programs with the commission. We think we're in a good spot to be able to do that and obviously there's gas quality and all the things that we would have to address. But we really feel this is a piece of the puzzle. I don't think there's any one big thing that's going to get anybody there. I think there's a lot of pieces and this is helping us solve a few of those pieces early. The next question will be from Richard Ciccarelli with Bank of America. Please go ahead. Hi, good morning. Thanks for taking my question. Good morning, everyone. Hey, just back on the Missouri rate case. I know there are a couple of peers that one's in the midst of one right now, one just recently went through one. Just curious if you can draw any comparisons to those outcomes and what's I know you discussed settlements, but any early indication from the commission thus far on how things are progressing? Hey, Richie, this is Steve. I'll take a shot and the team will jump in as we need to. Yes, of course we're watching not only what's going on in Missouri, but we're watching everything that's going on in our space across North America and I think we're pretty optimistic about getting to a reasonable outcome. Yes, the rate proceeding that you referenced did have every company has their own unusual items that they have to deal with, with the staff and the commission and that one in particular had a bunch of issues around cap structure, especially around cap structure at the holding company versus the operating company, which are things that we've addressed a long time ago. I think we got to the right spot from a customer perspective and from a business operating perspective at the last rate case and I think we're in a pretty good spot to be there. And you do see those complications do reflect themselves in not only the cap structure, where they choose the cap structure in the ROE. But I think we're in a good strong position. And frankly, we've been operating as we said we would leaving the last rate case, which is operating Spire Missouri for the benefit of the customers in Missouri ring fencing and then doing all the right things so that the commission, the staff and our customers can be confident in our ability to lead going forward. Rich, thanks for the question. This is Steve Lindsey. The one piece that I would add that's a little different about this one than maybe some of our prior cases is one of the things we're looking to do is to combine the 2 utilities, Missouri East and Missouri West under 1 tariff. We think obviously that provides consistency across the state for our 1,200,000 customers. We think there's efficiency opportunities. And so that's something that's a little different about this one. But for the most part, again, we're in there for a lot of the same reasons that you typically are in Missouri around capital recovery. But in this case, enhanced customer programs and combining the 2 utilities. So I think that's a little bit of the difference, but otherwise we're very comfortable that the positions that we have are benefiting for the customers. And really from the commission's perspective, we think it will help them from an efficiency perspective going forward as well. And I was going to raise actually the point that Steve Lindsey, 2 Steve's here, raised and so I'm glad you brought that up. The only other point I would add to it, the commission and the commission staff is fully aware since that acquisition, it was our plan to do that at the right time and in the right way for our customers. So that's there's nothing really new about that. Got it. That's very helpful. And just switching gears a little bit to the STL pipeline. I know there's some challenges there about some environmental group, 1 at FERC and I guess other in Missouri on the PGA filing. Just curious how those are progressing and what's your kind of comfort level with the potential outcome there? Hey, Rich, this is Steve. I'll start. Yes, and basically the process right now is it was brought forward by the Environmental Defense Fund and it's really addressing the FERC process. It's not the STL pipeline per se, but it was their process in approving that. So that pipeline has been operating since November of 2019. So we're well over a year, it's been operating very efficiently. We're accessing supply from parts of the country for our customers here that we didn't have before. And the one thing that I will say is with some of the interconnects that we've recently made and some of the other operational benefits that are coming, The benefits from the pipeline are even better and larger than we thought originally. And so that even to me makes the case even stronger. From a timing perspective right now, I believe oral arguments are due to be in March relative to the case right now. And then we'll just have to go from there. But we feel very confident in the rationale behind the original certificate that was received. And in the event that we have to go through that process, we think if anything, additional benefits have been added to the original case. All right. Got it. That was very helpful. That's all I had. Thanks again. Thank you. The next question will be from Richard Sunderland with JPMorgan. Please go ahead. Hi, good morning. Thanks for taking my questions. Good morning, Vijay. Maybe starting off with the utility results on the quarter, just curious if you could speak to the O and M timing, particularly how you see that coming in throughout the balance of the year and maybe any other considerations specific to this quarter in particular with COVID related savings and whatnot? Well, hey, Rich, let me take a shot at that. There was clearly some timing in O and M and part of that gets back to the weather and again we did comment that the demand because of milder weather was a little bit down and that does actually allow us to do a better job and be more effective and efficient in our capital program than we would normally expect had we had normal weather. So that clearly is something that may or may not come back and how we calibrate the capital spend plan for the rest of the year and again we tend to think of life in 12 month increments. So we do adjust the cadence of spend accordingly. So from that perspective, that clearly was a timing benefit. And then it is not unusual in our history here to start the year a little bit better on the O and M side than we had expect because some of those expenses usually start ramping up when we get into the season after the heating season and we take a good hard look at what we want to get done during the summer time period. We have as we've talked about in past calls done a good job of working with our team internally to keep a lid on cost and as with most companies we're still in COVID phase with limited or no travel and meetings and all that stuff. And with our team members across the U. S. But that isn't going to happen until the second half of this calendar year, the rate things are going and we'll have to see how the vaccine rollout and everything else progresses. In terms of absolute impact on COVID, as we mentioned last quarter, it really isn't impacting us that much. We're not seeing we're seeing some benefit on the O and M side where our residential or largely residential first part of the heating season in COVID because remember, we enter the first part of the heating season in COVID because remember last year we weren't really dealing with this until March of 2020. Yes, and the one part that I would add that Steve talked about, he kind of ended with it was we are now in a new part of operating in this environment that we didn't have before. We started in March of last year. So we've gone through the light up season. We're now into the more extreme parts of winter. And really even going back 3, 4, 5 years, we have done I think a very good job of being able to balance what weather gives us. Some of it is positive, some of it isn't. How we manage our construction process versus our O and M and we balance things really for the year, not for the quarter. And so I think we've done a good job of really having historical ability to manage that. And so I wouldn't look at things by the quarter per se. I really think we try to take a longer term perspective on that. And even with the environment we're in right now, we're doing a very good job. If you go back to our operational metrics that we discussed earlier, we're exactly where we need to be right now as we're in the middle of winter. Great. Thank you. Appreciate the color. And maybe one final one for me just circling back to the break casing. We've gone through the kind of the settlement prospects a lot, but just curious on the kind of jurisdictional consolidation in particular, how you see that impacting the settlement process versus prior experiences? And if there are any kind of sticky issues or particular items around kind of that aspect in particular that could impact the rate case? I'll start sort of pass along. I said at the beginning that from day 1 it's been our expectation and we've been transparent with the commission as we've navigated different rate cases along the way that the goal would be to combine the 2. On a statewide basis, they have one utility serving customers at the same rates and the same structure and the same service levels and continuing to improve year over year is beneficial to the state. And we don't see customers as just one big group. When it gets down to the work that Steve Lindsey and his team does day in and day out, we really do see those customers as individuals. What are the residential customers experiencing? What are the residential customers that are lower on the socioeconomic level versus higher on the socioeconomic level? What about small commercial businesses, restaurants? What about light industry? And so, we do through technology and our people, we're able to look into our customers and how they're taking their experiences with us, not just on a cost basis, but on a service basis. And to the extent that we are customer centric in this way and doing it the same way across our great state of Missouri as well as Alabama for that matter. We grow off those platforms and we're able to provide better service for our customers and that's important. It's also important from an economic development perspective. If you're the governor and the economic development team, energy is vital to how you attract industry and businesses. And when your utilities are strong in terms of the services they provide and the cost structures and the ability to use technology to help them do what they need to do every day, that is high value. And so, again, it was this path was charted at the beginning. We are Spire and Spire has the gap the preponderance of the gap services in the state. So I see this as a strategic move for the state as well as for our customers. Yes. And the only thing I would add to really Suzanne's comments were, if you think about it, multiple companies operate within a state, there's an inherent inefficiency in doing that. And when you combine those companies, for example, you get opportunities for improved service efficiency. I think that's really the case with us as well. We're the same owner per se, but we're having to operate a little bit differently right now just because of tariffs. And I think again the consolidation of that just makes a lot of sense. Got it. Thank you. The next question will come from Selman Akyol with Stifel. Please go ahead. Thank you. Good morning all. So just going back to 1 Future real quick, a couple of quick questions there. First of all, you said you talked about it from the wellhead all the way through, will you guys have any input then say on who the producers are who actually provide your natural gas? Well, I don't know that I would anchor that back to one future. I think that's more of our business model and the way we're looking at it from that perspective. But I think what it does is it provides some transparency with again people all along the value chain. And I think that's what we're really looking at as an industry is we want to get better collectively, not as single companies. And so the way the structure works there is we collectively report. And so if you think about all the different pieces on the value chain, we'll be reporting on our LDCs which would be the distribution side and even midstream with the pipeline and storage. There's other pieces that will be reported. We don't in essence have access to that specific information about companies. It's the aggregation of the companies. What we will see is kind of where we land amongst the group amongst the 37, but we won't have any insider information if you will relative to those companies. But again, I think if we're all signing up and committing to make that outcome that the goal for One Futures put out there, I think what that says to me is those are the kind of companies that you would want to align with. And the other piece and Steve has been more active in this, so you may want to add on is the goal as Steve described in the value chain, there's a desire to set targets and keep moving those targets so that there's a clearer message in terms of again from production area to burner to in terms of what those carbon reductions are. So, that is one of the benefits of this organization as well, more transparency in the reductions and what those targets are. Understood. And then just along those lines, I think you said you'll say where you were for 2020, I guess, at the end of that. I guess my question is, are you going to provide also where you started out, I guess, for 2019? Yes. And so, again, we will use the definitions that OneFuture is looking relative to methane intensity and report for that. But if you kind of go back to what we have been reporting, we went back to 2,005. And from that point, we have seen a 39% reduction in our methane emissions. This is on our distribution system. We're projecting that number to go up to 53% by 2025. So we've been reporting really in the methane challenge, the methane challenge. So all that information is out there. We'll continue to report that. The additional information that we'll provide to 1 future will be based on the calculation relative to methane intensity. So everything that we have, to be quite honest is going to be transparent, it's going to be public. This is part of a coalition that we think goes above and beyond just what Spire does and really reflects the efforts of the entire industry. Understood. And then last question here, anything on the ATM this quarter? No. Some of this is Steve, but the ATM wasn't active. All right. Thank you. Yes. Thanks. The next question is from Brian Russo with Sidoti. Please go ahead. Hi, good morning. Good morning, Brian. Hey, you mentioned some customer growth opportunities in some rural parts of Alabama and also possibly on the ag side with poultry type customers. Could you just elaborate on that? And what's the size of the opportunity? And can that kind of be synergistic to some of the RNG M and G opportunities that's ongoing? Sure. And the expansions that we're referencing and that we even had a picture about in the presentation are in the southern parts of Alabama and it's to primarily poultry and agricultural areas. And for the most part, those will result in conversions. And typically, those are conversions from propane, things like that. These are customers that have been raising their hand and wanting natural gas available to them for a period of time. And so we went in and put some programs together, worked with the commission. And as you can see, President Kavanaugh was obviously part of that. I think that is viewed as economic development. It's rural expansion. There's a lot of different ways you can talk about it, but it's providing gas to parts of the state that didn't have it. Even down if you go all the way to the coast in our Gulf operating area, there's some opportunity down there with expansion of industry and things like that coming to the state. And then if come back here to Missouri on the western side of the state, we're doing a lot of that expansion as well and that's through a process in Missouri known as CCNs, which are certificate of convenience of necessity. Previously, we had to kind of do those 1 at a time customer by customer. We've recently had a good success in actually getting a CCN for entire county which makes it much more efficient. So I think I don't want to put a number out there because we really don't know because the opportunities will come as we get out and canvass the areas. But it's clearly something customers want and I think what we're seeing in both of our jurisdictions is it's being supported by those commissions which I think is a win win for both the company, the customers and really the state from an economic development perspective. Okay. Thank you for that. And you mentioned to not issue much equity in this fiscal Q1 under the ATM and you alluded to earlier that the financing needs remain unchanged. Should we just assume or should we just assume what was not issued in the first quarter just extrapolated that over the rest of the year? How should we just view any incremental equity and increase in average share count? Yes, Brian, this is Steve. Matt, you're spot on. We've used the ATM in that way over since its life since we introduced it 2 years ago as I recall and I think you can think about it that way. Clearly we also look at the tape and make sure that we're trading at fair value. I think hopefully we would all agree, I think most of you all do on the call that we and many of our peers are trading below fair value. So it felt appropriate to hang tight right now and wait for the market to settle out a little bit. Again, we're delivering good Q1 earnings, so that hopefully will be another impetus for most we look at the value for us and for a few of our peers. And were there any COVID related deferrals made in this fiscal Q1? I think you had a little over $3,000,000 as of September. Just curious. Hi, Brian. I don't have the number off the top of my head, which would answer the question. I think it was small, a couple of $100,000 tweak. It was $100,000 now that I found the answer. So now we had largely assessed our position at the end of the year. Remember since we're a ninethirty year end, we were assessing up until mid November. So, we were well into the quarter we're reporting on now and had good visibility. So, I'm not surprised that the number hasn't moved very much. And any update on filling the excess capacity at the STL pipeline? Yes. So the team is always working on what those opportunities might be. Nothing that we've announced. Like Steve Lindsey said earlier, we're highly satisfied with the operation of that pipeline. I'm an old operator, believe it or not, and I know what it's like to be in gas control and operate pipelines and the pressure volumes that we're bringing in, the design in terms of into our system and around different parts where we have difficulty holding pressures and so forth like Steve Lindsay said, that pipeline has outperformed our expectations and are more than delighted to have that pipeline as part of our system and serving our customers. It also, like I mentioned earlier, because of the volumes and pressure it brings into the St. Louis region in terms of economic and development growth, we're able to now be able to invite those industries in because we do have those volumes of gas and the pressure needed to support those kinds of industries. Great. And just one last The rate adjustment in Alabama of $1,300,000 what was that attributable to? We reset rates in Alabama both in both of the utilities in Alabama on an annual basis and those rates go into effect on or about December 1 of each year based upon the budget that we're operating in. So that's kind of the normal cadence, Brian, of how rates are adjusted. Okay. Thank you. Yes. Thank you. Ladies and gentlemen, this concludes our question and answer session. I would like to turn the conference back over to Scott Dudley for any closing remarks. Thank you everyone for joining us today. We will be around the rest of the day for any follow ups and we look forward to catching up with you in the future. Have a great day. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.