NorthWestern’s (NYSE: NWE ) Q2 2015 Results Earnings Conference Call July 23, 2015, 15:00 PM ET Executives Travis Meyer – IR Robert Rowe – President & CEO Brian Bird – VP & CFO Chris Ellinghaus – William Capital Analysts Jonathan Reader – Wells Fargo Daniel Eggers – Credit Suisse Brian Shin – Merrill Lynch Paul Ridzon – Keybanc Brian Russo – Ladenburg Thalmann Operator Good day, and welcome to the NorthWestern Corporation Second Quarter 2015 Financial Results Conference Call. Today’s conference is being recorded. At this time, I would like to turn the conference over to Mr. Travis Meyer. Please go ahead, sir. Travis Meyer Thank you, Janet. Good afternoon and thank you for joining NorthWestern Corporation’s financial results conference call and webcast for the quarter ended June 30, 2015. NorthWestern’s results have been released and the release is available on our website at northwesternenergy.com. We also released our 10-Q pre-market this morning. Presenting today in the call are Bob Rowe, our President and Chief Executive Officer; Brian Bird, Vice President and Chief Financial Officer as well as several other members of the executive team with us today. Before I turn the call over for us to begin, please note that the Company’s press release, this presentation, comments by presenters and responses to your questions may contain forward-looking statements. As such, I’ll remind you of our Safe Harbor language. During the course of this presentation, there will be forward-looking statements within the meaning of the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements often address our expected future business and financial performance and often contain words such as expects, anticipates, intends, plans, believes, seeks or will. The information in this presentation is based upon our current expectations as of this date hereof unless otherwise noted. Our actual future business and financial performance may differ materially and adversely from our expectations expressed in any forward-looking statements. We undertake no obligation to revise or publicly update our forward-looking statements or this presentation for any reason. Although our expectations and beliefs are based on reasonable assumptions, actual results may differ materially. The factors that may affect our results are listed in certain of our press releases and disclosed in the company’s Form 10-K and 10-Q along with other public filings with the SEC. Following our presentation, those who are joining us by teleconference will be able to ask questions. The archived replay of today’s webcast will be available beginning at 6:00 PM Eastern Time today and can be found on our website under the Our Company, Investor Relations, Presentations and Webcasts link. To access the audio replay of the call, please dial 888-203-1112, then access code 6653995. I will now turn it over to our President and CEO, Bob Rowe. Robert Rowe Thank you very much. Thank you all for joining us. We just completed our board meeting in Kearney, Nebraska and Kearney is thriving city in the heart of Nebraska and historically was a key point on the whole Western migration where many of the Western pathways crossed. We always do we had a great reception with community leaders and customers and then a good directors meeting with our Kearney employees. I’ll give you the highlights real on page four of the deck and then turn it over to Brian Bird for the play-by-play. Our net income improved 23.3 million in the second quarter of this year is compared with same period and that’s primarily due to an insurance settlement and then the impact of course of the November 2014 hydro acquisition. Our diluted earnings per share of $0.65, compared to $0.20 for the same period last year and our adjusted non-GAAP diluted EPS $0.48 compares to $0.25 for the same period last year. The insurance settlements agreement was within insurance carrier for the former Montana Power Company and primarily related to previously incurred environmental remediation costs on electric generation assets. And this previously incurred remediation costs and the associated litigation expense to reach the settlement we’re not never been reflected in customer rates. As a result for this settlement, we have recognized a net recovery pre-tax of $20.8 million. We’ve issued $20 million of 10 and 30-year Montana First Mortgage Bonds at a blended coupon of 3.74% to refinance 150 million of Montana First Mortgage Bonds with 6.04% coupon during 2016. We’re reaffirming our full year 2015 adjusted guidance of $3.10 to $3.20 per diluted share. Our Board of Directors approved a $0.48 stock dividend payable on September 30th and we entered into an agreement to acquire the $143 million, the 80-megawatt Beethoven wind project or the benefit of our South Dakota customers. With that, over to Brian. Brian Bird Thanks Bob. First of all, I’m happy to report we had a solid second quarter. In terms of our summary of financial results, you’ll see our net income for the three months ended June 30th was 31 million, were 23.3 million better than the prior year period nearly 300% increase. One thing I point out regarding the results, if you look at the operating income line and there is an improvement of 36 million there on a year-over-year basis early three items drive that generally, first and foremost, if you take all of the results from hydro operations including 38.3 million in gross margin plus the total operating expenses, you get a net benefit of 20.2 million associated with the hydro assets, it’ s on a year-over-year performance improvement there, the addition of 20.8 million insurance recovery as Bob mentioned offset slightly by 4.3 million from the QF adjustment. Those three items add up to 36.7 million or pretty much right in line with the improvement on a year-over-year basis and operating income. I guess the fourth thing I point out is we also experienced normal weather during the quarter that impacted primarily our gas business but the company was well aware expected weather and really did a nice job of managing expenses. So, that helped keep operating income at levels I suggested. Moving forward in terms of gross margin, mentioned 38.3 million associated with hydro operations, we also saw a slight benefit in retail volumes and electric side and some transmission capacity and this well again offset by the QF adjustments. So net-net nice improvement 36.9 million from electric side of our business but our gas business did suffer, we had quite a bit warmer weather on a year-over-year basis that impacted our natural gas retail volumes and we did have a slight gas production deferral as well. Speaking at the segment themselves as I guess both on a quarter and year-to-date basis the electric segment is doing quite well on a year-over-year basis, the gas business segment is struggling versus the prior year gain primarily due to normal weather. And then our other segment is certainly up on a year-over-year basis as a result of the insurance settlement. Moving onto page seven in terms of second quarter weather and you’d expect some good news and we see cooling degree days which such increase. But we really don’t see a lot of cooling benefit in our Montana business particularly in the second quarter of the year. So actual our retail and commercial loans relatively flat on a year-over-year basis, but you do see on the heating degree side certainly in a warmer weather on a year-over-year basis and versus historic certainly hurt our results for the quarter. Moving to operating expenses, our total operating expenses are 129.9 million or 2.9 million less than the prior period last year. I really add some up that difference of 2.9 million really through two items the hydro related expenses. Again not just in operating general administrative but that portion of property early taxes and depreciation and depletion those total operating expenses are 18.1 million associated with hydro offset that with the 20.8 million insurance recovery and that’s 2.7 million pretty much relate and in line with the change in operating expenses so again all other expenses were relatively flat on a year-over-year basis. Moving forward to kind of going from operating income to net income, interest expense is up 3.8 million I think incremental financing associated with the hydro transaction. Other income is down 2 million that is associated with the reduction that we see in the value of deferred shares held in trust for our non-employee directors deferred comp, I think you all know though any detriment you’d see there is a positive we’ve seen operating expenses those two offset one another. And lastly you see a 7 million increase in income tax that all of the result of higher pretax income on a year-over-year basis. Moving to page 10 talking about adjusted earnings I hope you all find this helpful. What we tried to do is take GAAP earnings on both the far left and the far right for the three months ended June 30, 2015 versus the three months ended June 30, 2014 show what those numbers are and by the way diluted EPS through the three months ended June 30 with 65% diluted EPS versus $0.20 for the same period last year. And we did have some adjustments during the year. In ’15 we had unfavorable weather for the quarter about 1.5 million we also renewed the QF adjustment. A portion of that QF adjustment associated with our review of the liability itself 6.1 million and then we do remove the insurance settlement as well. When you take those things in the consideration diluted EPS for the quarter was $0.48 compared to an adjusted $0.25 on a year-over-year basis still a 92% increase on a year-over-year basis so very solid quarter. Moving ahead to year-to-date earnings on Page 11 pretty much the same story, when you back out weather really the difference I guess we recall that we had about 11 million on a year-to-date basis margins and we determined 8.6 million of that’s associated with weather so we show that as an adjustment. So on an adjusted basis non-GAAP six months ended June 30, ’15 versus ’14 seeing a $1.66 versus $1.41 on 18% improvement on a year-over-year basis and obviously we look at both of those two slides you see a vast improvement across operating income and net income and so we feel very-very good about how the quarter and year-to-date things are going. With that, just turning attached quickly to the balance sheet, there are a lot of change since the end of the year. It’s good to see from a total asset perspective company over 5 billion in assets today and shareholders liability over 1.5 billion. On a ratio of debt to total capital, move that downwards, we hope like to see that within the 50% to 55% range and hope that we’ll see that during the coming months in the year. Moving forward to the cash flow statement. On Page 13 from cash flow provided by operating activities nearly 66 million improvement and the six months ’15 versus the six months ’14 190 million of cash was provided by operations primarily driven by the higher net income and a reduction in under collection of supply costs so we’d like to see that improvement and again demonstrated the benefit of the hydro transaction. Moving forward on Page 14 based upon our results thus far through the first six months of the year the company is reaffirming its guidance of $3.10 per share to $3.30 per share and utilizing the same assumptions that we had in the previous quarter. And with that I’d also last thing I’d point out like to wish Bob a happy birthday tomorrow and with that back to you Bob. Robert Rowe Thank you very much and we did have quite a memorably birthday party in carny last night. Embarrassing as it could be. I’ll start with a bit of an update on the South Dakota rate filing. You’ve seen part of this presentation before and this has also been very helpful I think in communicating to customers what’s going on and that the real success here from a customer build perspective is our ability to manage customers very-very effectively over a long period of time. The chart at the upper left shows that the our fixed charges until making this filing has essentially been flat now for decades and the only increase in costs our customers have experienced over the years has been in the various track related portions of the bill on the fuel transmission [indiscernible] taxes things like that. If you look at the lower left you see the comparison of the nominal customer bill assuming average of 750 kWh per month. The nominal rate again quite-quite flat and then as those rates have been PPA adjusted that’s what a customer would be paying now bringing or with the 1981 bill compare that to our build actually were that’s in real terms declining costs over that long period of time and that doesn’t happen for the remaining commodities obviously. Over on the right we give you a breakdown of what are in the docket I think notably the overall rate of return that we’re requesting is 7.76% and that I think is very attractive. That’s on a rate base of over $447 million. At the lower right you see a depiction of our investment in South Dakota over that time even as customer bills have remained essentially flat in nominal terms so applying the rate of return and then bringing forward the expenses to the total revenue requirement. This is and this request is driven overwhelmingly by the environmental compliance expenditures and Big Stone and Neal add to that our adjustment in the system particularly have pretty deeper from several years ago and the Yankton substation. I would mention we have been out holding community meetings on our own the Public Utility Commission has held one public hearing as well over the next few months we’ll be seeing — we’re still answering data request at this point. We’ll be seeing testimony from interveners and the commission staff and looking towards a hearing in the middle of this fall and commission I think is doing a thorough and professional job of moving this case forward and expect we’ll be talking some more about that in the Q&A but so far no surprises in the case and we’re moving ahead answering discovery. Page 16 a little bit more on the Beethoven wind acquisition and this is something we’re quite excited about and we’ve executed now an agreement with BayWa just over the last several days to purchase two recently completed qualifying facility wind projects in South Dakota for a total purchase price of $142 million and the energy in the associated renewable energy credits or the RECS for this 80 megawatt project to our currently included in our supply portfolio under QF power purchase agreement and the existing PPA will terminate upon closing and we’re requesting the project be placed in the rate base as part of our pending electric general rate filing and we would file the information formally with the commission as part of the update to our filing which typically occurs in a case that tends for as long as a general rate case does. We expect to close certainly before the end of the year financing will be to issuing up to $70 million in long term debt and up to $60 million in common stock and then funding the remaining amounts with our available cash. From a customer perspective this is an attractive transaction because owning the asset will significantly lower cost to customers over the long term it’s expected to be accretive to earnings but importantly we can’t quantify that until the public utility commission makes a final determination on the general rate case and we anticipate that by the end of 2015. The next couple of slides are new and over the last several years as we focused on our Montana portfolio and our focus in South Dakota has particularly been an environmental compliance expenditures, we have talked as much about our entire fleet, so on the slide 17, we give you snap short of assets that we’ve either built or processed since 2007, on the bottom left you see that in terms of our own South Dakota resources we are 18% renewable with the bit of an acquisition. Montana portfolio is actually pretty remarkable, have a 69% of our Montana portfolio is either renewable or supports renewable and into the Dave Gates generating station and by way of contrast, states such as California have announced targets of getting to for example 50% renewable resource with prices much, much higher the prices are customer space. And then to the right you see our total company renewable portfolio including our both South Dakota and Montana and even there we are 49% renewable or again supporting renewable. So these are owned resources built and purchased since 2007. Page 18 gives you an all in portrait of our portfolio both owned and contracted resources in there, South Dakota [indiscernible] and plus other contracted renewable we are 25% renewable at this point, and very proud to be here and then Montana owned and contracted 67% renewable and that is again really quite remarkable. From a total company perspective then we are 54% renewable and this is including Beethoven. Page 19, I will just give you a quick summary of some other activities, first as a result of the hydro acquisition, we have a Montana a very diverse portfolio of assets, we’ve undertaken a series of studies now pointing towards the ability to optimize that diverse set of assets. So when we looking at are the best ways to integrate our generating fleet as an integrated portfolio and including and determining the most economic means of providing ancillary services, when the study is finalized, we anticipate implementing operational changes how to help us lower the overall cost and meeting our total portfolio requirements. Second, as you are aware [indiscernible] will be transferring to the considered [indiscernible] tribes in September, we expect that transfer to go forward on September 01, and as a result of that been we expect to receive, we will receive proceeds from the conveyance of $30 million, so against more perspective of the hydro assets or operating well when you expect the transfer occur from our perspective to go smoothly. Next, as you know one of our primary areas of focus has been the several our quality projects particularly at Big Stone and that project is near in completion, our 23.4% of the project cost will come down to about $95 to $105 million and including AHFDC, we capitalize 91.8 million through June of this year, we expect to project to be operational later this year, our system investments particularly in Montana in the distribution system, infrastructure project in the parallel activity on the transmission side or going extremely well and these are intended to address aging infrastructure to maintain reliability and to proactively manage safety and building capacity where we needed when we expect our total expenditures, there are 340 million over the next five years. Natural gas reserves we currently had about 25% of our Montana natural gas needs and we do continue to look for attractive opportunities and continue to target owning by 50% of our overall need and estimate we would need with best about $100 million to reach our ownership goal. Dave Gates generating station as you know we are have a request for reconsideration pending, whether of pending at the — again get this quarter, I have to tell you we have no news to report, we have deferred 27.3 million of revenue through June 30th of 2015 and as we’ve noted before, we may appeal to circuit court if necessary depending on what differed action might be. The one slide I would highlight in the appendix is page 31, and in this case you are capital spending forecast and as we explained now when you shown this to you in previous quarters, this includes known specific capital expenditure projects and as we’ve said that’s not include projects, they are not yet well defined because specifically as we share this with you before did not include the Beethoven acquisition. I have said before, our ultimate data and equity needs would be driven by our overall capital requirements and we described our financing approach for Beethoven with that will open it up to any questions. Question-and-Answer Session Operator Thank you. [Operator Instructions]. Our first question comes from Jonathan Reader with Wells Fargo. Jonathan Reader Bob I was just wondering could you at all elaborate on the time frame for the South Dakota rate case in terms of various milestones along the way we should be looking for up until either potential timing of the settlement and or commission final decision? Robert Rowe First of all, we did enter that interim rates on July 1st and intervenient testimony is the next key milestones and certainly do pay attention to that would be September 14th, our bubble testimony October 5th, party exhibit list and witness list October 12, hear is scheduled for October 27 to 30 th . Jonathan Reader Okay. So the hearings are on October 27? Robert Rowe That’s correct. Jonathan Reader I know we haven’t met on long time but do you know typically in South Dakota if a settlement were to be a reach is this something that would occur prior to the hearings, after the hearings is there any specific requirement on those ones? Robert Rowe Based on experience of other companies that have been in recently if a settlement is reached that would be sometime before the hearing date. Jonathan Reader Okay. And then is there a timeframe after the hearing, when the commission I guess has to act a fairly 60-day period or anything? Robert Rowe But we have a deadline in December associated with when we file the case, but that’s not a deadline triggered by when a settlement is reached. Jonathan Reader Okay. And I saw in one of slide you said you actually expect to when acquisition is closed in Q3, so I guess there will be perhaps a small period where you might not have recovery of that asset, I’m assuming that’s deal of financing at that point is that kind of the right way to think about it if there could be I guess a short period of drag between , I guess, the cost and recovery associated with it? Robert Rowe Ok, I think what we said was really close and in the last half of the year, [Audio gap] Jonathan Reader Ok, and then last question I have, do you see any other opportunities either in South Dakota or in Montana in terms of, you know, whether acquiring of the assets or underline some of your TPAs putting them in a rate base of, you know, actually just passing it on through the costs or is this just a kind of one-off type opportunity? Robert Rowe We try to avoid speculations certainly where we interested and an opportunity makes sense for us and for our customers that I would not prefer to discuss any of that now though. Jonathan Reader Ok, and I guess last question on the national gas reserves, any update there, pricing is it still economic on your end, just need to find kind of a willing seller? Robert Rowe Yes, it certainly is economic and from a long term customer perspective this is a very good time to do what we are, I hate to repeat myself quarter to quarter, but we certainly are actively looking for those kinds of opportunities. Operator Our next question comes from Daniel Eggers with Credit Suisse. Daniel Eggers A very good afternoon guys. Just, if we get into the data a little bit more, can you just walk through the processes as far as you are comfort in meeting commission approvals that this is going to go into rate base before you close on a transaction and then if you look at the rate difference between what it would cost customers when it goes in under your ownership versus you know what the key referred amount which is probably little more lower side of a price. Robert Rowe I don’t want to in any way prejudge a final PUC decision, what I would say is that in South Dakota we are very clear and comfortable with the commissions unit, if there is a benefit shown to customers that they support company ownership, the Beethoven project has been discussed with commission staff. We’ll be included in the updated filing and the customer benefit is a significant net present value savings under our ownership as opposed to a hundred QF formula, and again these are assets that are already essentially included in rates. Daniel Eggers So, they are already made. So would there be a step up or step down or is it, you know, you’re just not going to say right now. Travis Meyer What I would say is this, we obviously have to work with the commission or in essence ultimately get this into a rate base and so it’ s premature to talk about exactly how it’ s going to play out. Daniel Eggers Ok, from a funding perspective, I think you said 60 million of equity, would that be an organized offer and how would you guys think about financing that piece and you know what point of time are you comfortable again on procuring long term financing for this? Travis Meyer As we cleared, that would be upto a 60 million and I think we’re still working through the arrangements of what that offering would look like. Daniel Eggers Ok, when we look at Dave Gates at this point in time, I mean I understand we’re waiting for kind of you know for a long period of time. Is there anything that you guys can do to try and go to court or something to move this along or is to stay wait and see and then pursue litigation at that point. Robert Rowe At present there is not a timeline on when the commission has to act on re-hearing. We have been, as I’ve mentioned, really focusing more on the operational side over the months since we acquired the hydro system and, our use of Dave Gates as part of an integrated system is, you know, one of the, probably one of the data points that at one point we would like to be able to share with differed as well as with the Montana commission. What’s frustrating is that the design of Dave Gates’ – there are three units was with two active and one spares, pretty much have been indicated, we’ve been able to meet our reliability requirements and handle the scheduled outages and repairs so that the design makes good sense. We are providing a service, a valuable service to our jurisdictional customers. And the other side of that is that our fleet looks very different in Montana now than it did when Dave Gates was still open and so we have an opportunity to look at the entire fleet and ask how that fleet can be operated on an integrated basis as efficiently as possible for all our customers. Daniel Eggers Ok, this is on Beethoven, one last question. Is there a possibility or there are other assets similar Beethoven where you guys can move them into rate base in the future or is this the kind of the only one of those size or substance? Robert Rowe Again I really can’t, I would not be in a position to talk about any specific opportunities where there are assets that make sense for us to own, we’re certainly hoping to and interested now. Operator Our next question comes from Brian Shin with Merrill Lynch. Brian Shin Hi, all my questions were asked and answered. Thank you. Robert Rowe Thank you. Are there any other questions. Operator Yes. Our next question comes from Paul Ridzon with Keybanc. Paul Ridzon You kind of asking for 50 more megawatts, kind of, what is the, kind of, what is the drivers of whether that option should be exercised and what’s the need for more renewable and would that be South Dakota jurisdiction as well? Robert Rowe Yes, it would be South Dakota jurisdictional. John Hines, our Vice President for suppliers here. He has any wisdom to empire drill, turn it over to him. John Hines It provides the utility of the opportunity to build out of that location. We do have a large generation interconnection agreement there. Bottom line is that it was part of the overall package which we purchased. Paul Ridzon Is there an ITS [ph] in South Dakota. John Hines There’s not a mandatory one, there’s a voluntary one. Paul Ridzon Ok, and then can you qualify what the consumer net present advantages of buying it. John Hines No, I think there, I think it can be round numbers. I can say it approximately data $13 million. The reason I was uncomfortable, Paul, is obviously we will continue to go through the costs and everything nailed down, that number could move. So I hate throwing out the number at this point in time but approximately $15 million, comfortable to say. Operator [Operator instructions] we will hear next from Brian Russo with Ladenburg Thalmann. Brian Russo In terms of the gas reserves acquisition opportunities, in the current forward gas curve, is it, does it meet that criteria of that prior NCC settlement. Robert Rowe Yes, it very definitely meets it. Brian Russo Ok, great and you know the 27% of the overall portfolio that’s contracted, are there any larger TPAs within that that are rolling off in the next few years. Robert Rowe You’re talking about the QFs? Brian Russo Or any PPAs, meaning if a PPA rolls off that might give you an opportunity to replace it with still on the ground. Robert Rowe Yes, we have some key [indiscernible] that are rolling up but they are kind of rolling up in the near term, thinking in the 2020 time period of the odd. Brian Russo The opportunity is potentially a particularly yelp which are thermal by products and again to a degree there’s a desire to add more greener renewable resources that would [indiscernible] you that opportunity. John Hines I think its also important to point out Brian that we have talked in the past about ultimately needing peaking, potentially in both South Dakota and Montana. Brian Russo Ok, and that’s a good segway into my next question can you just discuss high level be the upcoming IRT and will David Gates be a generation source in that IRT. Robert Rowe I think we can turn it over to John for a little bit more of the Montana resource plan is well under development. This will be the first plan in which we do have a complete portfolio of resources as we talked before once Cur is not part of that portfolio, we essentially will have our light load obligations met. And our load in Montana has some unique characteristics since we for the most part are not the supply provider to the industrial customers which often provide some real stability in the system, so our focus will be really optimization of the fleet and we talked about the study work that has been done in our supply area and then second planning to meet peak, also during the period the plan was developed we may see final ETA roles and lots of factor and how to deal with those. John? John Hines We probably will not have the plans finished until mid December. That said, you’ve probably noted that we definitely peaking and super peaking needs in the portfolio. Dave Gates will be a part of the portfolio its likely to provide multiple different processes as opposed to just providing regulation at this point in time. But, fine details still to be determined. Brian Russo Ok, so we should expect an IRP falling in mid-December? Robert Rowe That’s correct. In South Dakota, the Beethoven acquisition is merely a transfer of a TPA to a known facility and because it does not impact our need for additional peaking capability in our reserved marging capability which we’ve previously identified. Brian Russo Ok. Can you quantify the number of megawatts of peaking capacity you need in both jurisdictions. Robert Rowe In South Dakota, we’re looking at somewhere around 50 megawatts and in Montana, its probably premature. Brian Russo Ok, and then lastly, Brian can you remind us what the BNOL [ph] balance is currently and how long will those last? Brian Shin We talked into a 2016. Actually, into 2017. And I’m looking up the balance as we speak. Brian Russo Ok, that’s all that I had, thank you very much. Robert Rowe The balance is about 350 million. John, just to stay with Brian’s previous question, why don’t you say a little bit more about the reserve requirements in South Dakota particularly? Brian Shin There is a requirement of [indiscernible] where we’ll be having to have additional capacity available in excess of what our peak demand is. That is growing over the next 3 to 5 years and we anticipate, as I said, around 50 megawatts of additional peaking capability to meet that reserve requirement over the next 5 years. Brian Russo Why don’t you say what is the reserve requirement in Montana and how do we meet that. Brian Shin At this point, there is no requirement in our data right now but [indiscernible] and we do not think that sufficiently meets reliability issue. Operator [Operator Instructions] we will hear next by Paul Ridzon with Keybanc. Paul Ridzon Just real quickly, how is group performing against the requirement for repairs? Robert Rowe We are positive. Paul Ridzon Okay. Thank you very much. Operator There are no further question in the que at this time. Mr. Meyer, I will turn the call back to you. Travis Meyer Before we do that, I am going to add just a note about how the hydro-system is performing this year and I think there is a interest Brian described the weather in the west from temperature but another key factor is we have had a fairly significant drought. Despite the drought, our hydro production but at this point in the air we expect is going to meet our forecast at the start of factoring in production curve by half of our requirements in Montana were met – or met with the hydrosystem but we think that showed one of the things was the diversity benefit within the Montana hydrosystem of owning of generators not just one location but in multiple drainages and other benefits as well but we have been very tough hydro year, we have been extremely pleased with the performance, like going on from there in a typical year and also a lot of water is still and that it was not used to generate. So at some point, if it were cost effective, there are no reason do so there, here is additional generation to produced out of that system and that’s not something we are doing at this point but it’s a most people would say that hydrosystem is ultimately the very best renewable resource and that’s been our experience this year. With that thank you very much for joining us. We look forward to seeing quite a few, probably over the coming months and talk to all of you in the next quarter. Operator This does conclude today’s conference. Thank you for our participation.
