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#Well, good morning, and thank you, <UNK>.
Our performance during 2017 was strong.
Our earnings benefited from lower resource costs, which improved our earnings by approximately $0.12 per diluted share from our original estimates.
The lower resource costs were primarily from higher to normal hydroelectric generation and lower natural gas prices.
2017 was a great hydro year, as annual precipitation in Spokane was our second highest ever recorded.
Also, our precipitation around the Clark Fork area had annual amounts that were well over 100% of historical average.
Along with great Hydro, natural gas prices declined about 30% from our expectations during 2017.
We also had customer growth and lower-than-expected operating expenses during 2017, which improved earnings by about $0.10 per diluted share from our original estimates.
Our operating expenses were lower than anticipated during 2017 due to lower pension and medical expenses.
We also saw lower labor costs in 2017, because more of our workforce was utilized for capital projects versus operating expense.
And lastly, we had lower-than-expected depreciation expense and net financing expenses, primarily due to the timing of capital projects.
These increases in earnings were fully offset by the impact of federal income tax law changes and costs associated with the proposed acquisition by Hydro One.
In December, the new federal tax laws were enacted.
As a result, we recorded a $442 million liability that will be returned to customers through the rate-making process.
We expect that customers could see a benefit going forward of approximately $50 million to $60 million annually.
The impact to 2017 from the tax law change resulted in a reduction to earnings of approximately $0.16 per diluted share.
And while the tax income law change will be beneficial to customers, we anticipate an annual reduction to net earnings going forward of approximately $0.05 to $0.06 per diluted share.
Moving to Alaska operations.
I'm pleased with AEL&P's performance during 2017, as our earnings were at the top end of our expectations.
This was due to colder weather, customer growth and management of their operating costs.
With regards to the Hydro One transaction, I'm excited about the progress being made on this transaction.
We continue to work through the approval processes, and thus far, we've received approval from our shareholders and from FERC.
We're still awaiting approval from our state commissions and various other regulatory agencies.
Recently, the Oregon Commission staff and other interested parties issued their initial recommendations to deny the proposed acquisition as originally filed.
However, they did provide guidance on how the acquisition can move forward successfully, and they won't make a final decision until receiving and reviewing additional testimony from both us and Hydro One.
This transaction remains a top priority for the company, and we believe we will be able to work with the commissions, their staff and other parties to try and receive the required approvals.
We continue to anticipate the transaction closing during the second half of 2018.
During 2017, we had acquisition costs associated with this transaction, which reduced earnings by about $0.19 per diluted share.
In other regulatory matters, recently, new rates from our general rate case filings went into effect on October 1 and November 1 for Oregon, November 15 for Alaska and January 1 for Idaho.
We're still working through the rate case process in Washington and expect resolution by the end of April.
So at this time, I'm going to turn it over to <UNK>.
Thanks, <UNK>.
Good morning, everyone, and like <UNK> said, we had a great year in 2017.
You know who's not having a great year.
The Black Hawks.
I always have to my comment about them and they stink this year.
Sorry about that, Black Hawks.
<UNK> already covered our earnings and other operating results in his remarks, I'm going to really focus on capital expenditures, liquidity and our guidance.
We continue to be committed to investing the necessary capital in our utility infrastructure, and we expect Avista Utilities' capital expenditures to be about $405 million in 2018 and AEL&P is to be about $7 million in 2018.
As of December 31, we have $261 million of available liquidity under our committed line of credit.
And to fund our capital expenditures in 2017, we issued 1.3 million shares of common stock for net proceeds of about $56 million, and we have 1.1 million shares remaining to be issued under our sales agency agreements.
In 2017, in December, we also issued and sold $90 million of first mortgage bonds due in 2047, and we received income tax refunds of approximately $42 million.
For 2018, we expect to issue approximately $375 million of long-term debt and up to $85 million in equity in order to refinance maturing long-term debt, fund our planned capital expenditures and fund the impacts of the federal income tax law changes and maintain an appropriate capital structure.
The $85 million of equity may come through either the sales agency agreement or an equity contribution from Hydro One upon completion of our transaction or a combination of both of those sources.
For 2018 and beyond, due to the federal income tax law changes, we expect our operating cash flows to be negatively impacted, primarily due to the laws of bonus depreciation and the timing of the return of excess deferred taxes to customers.
As a result, we may need to raise additional capital.
With respect to 2018 earnings guidance, we expect a decision in our Washington general rate cases by the end of April 2018, and we would expect to provide our 2018 earnings guidance after that in our first quarter 2018 earnings report.
I'll now turn the call back over to <UNK>.
Sure, Chris.
There's a number of things that go into that, but the $85 million, we believe, includes impacts with respect to the rating agencies.
For '18, it's the additional capital maybe in future years.
Bonus depreciation was '18 and '19, was the impact, so we expect that, that could impact what we would need in 2019.
And the other thing around the rating agencies we did ---+ we were 1 of 25 utilities that were included in an outlook change from stable to negative for us.
And a lot of that is going to depend on ---+ as we work through tax reform and the impacts of that, also, the regulatory treatment we get with respect to that.
So assuming if we got a fair order with the treatment out of our commissions for how we handle the impacts of tax reform, we believe it shouldn't have a significant impact on our ratings.
So the staff in Oregon went through and they wrote a significant ---+ they had ---+ it was approximately 800 pages of their views, and they took exception to a number of views and would like clarification from both us and Hydro One.
And in the end though, they did say that if they get additional information and clarification, they believe and we believe working with the Hydro One that we will be able to satisfy the concerns to be able to get this transaction approved.
But they did ---+ they did in their initial view, deny it.
They're looking for strengthening on the ring-fencing type impacts as well as the net ---+ making sure there's a demonstratable net benefit to Oregon customers.
And we believe that we will be able to work with the parties and come up with reasonable solutions to that.
Our responses for what, Chris.
Well, we'll work through.
We have a workshop next week that we will sit down with the Oregon staff, and we will talk through the issues.
And then, we'll continue to follow the schedule that they have that's out there.
Yes.
This is <UNK>.
And as <UNK> mentioned, we had a great year last year, we'd love to repeat that obviously, when it comes to Hydro.
As we sit today, we're actually looking pretty good on the 2 rivers that ---+ where we have our projects.
The Northwest River Forecast Center shows the April through September water supply for the Clark Fork drainage at 137% of normal.
And this is as of yesterday.
And for the Spokane River, it's at 117% of normal.
So we're getting off of a pretty good start, but I have to put my normal disclaimer in there that it is still early and a lot of it depends on weather this spring on how quickly that water melts up there and runs off through our system.
We'd prefer a nice a gradual slow warming so that we can extend that runoff into the summer months.
That's ideal.
But if we get a really warm spring, then that can change and we lose hydro generation in that scenario, because we spill a lot.
But as of today, we look really good.
