Executives at Black Hills Corp. said during an Aug. 6 earnings call that record rainfalls and flooding hammered much of its eight-state service territory in the U.S. West and Midwest, dampening earnings.
It's the second consecutive quarter during which extreme weather affected its 1.25 million electric and natural gas customers, and another example of how utilities are adjusting to the reality of extreme weather brought on by climate change. During the first quarter, in January, extreme cold and wind affected electricity demand across much of Black Hills' operating territory.
"These relatively poor conditions, combined with trade tariffs that impact farmers and ranchers within our territories, dampened overall economic activity in our Midwest service territory," said Linn Evans, president and CEO of Black Hills. "Despite these difficult weather conditions, we managed our businesses to stay on track to meet our full year earnings expectations."
Rich Kinzley, senior vice president and CFO, estimated that the weather reduced second-quarter earnings results by 6 cents per share when compared to the second quarter of 2018, and by 4 cents per share compared to normal weather conditions.
"Beyond this direct weather impact, we believe economy activity and demand for energy in our service territories was reduced for the second quarter due to record precipitation and resulting flooding as reflected by reduced demand across nearly all customer classes," Kinzley said.
Weather notwithstanding, executives said the company continues to execute its five-year, $2.8 billion capital investment plan, as it sees record peak customer electric demand in Colorado and Wyoming. During the quarter, regulators in Wyoming and South Dakota approved voluntary renewable energy tariffs for large customers. Wyoming regulators also approved the $57 million, 40-MW Corriedale Wind Energy Project, which will be in service in 2020.
The company reported adjusted income from continuing operations of $14.6 million, or 24 cents per share, compared with $24.3 million, or 45 cents per share in the second quarter of 2018. The company announced a quarterly dividend of 50.5 cents, payable Sept. 1, which represents an annual rate of $2.02 for 2019, the company's 49th consecutive annual dividend increase, according to executives.