Q4 2019 Earnings Call

All participants you meeting is ready to begin [noise]. Good afternoon, ladies and gentlemen, welcome to do you see see energy 2019 fourth quarter results Conference call I would now like to turn the meeting over to Mr., David to monetize Vice President Investor Relations. Please go ahead Mr. Moneta.

Thanks very much.

Good afternoon, everyone I'd like to welcome you to do you see Energy's 2019 fourth quarter conference call with me today, our rust Curling, President and Chief Executive Officer, Don Marchand, Executive Vice President strategy, and corporate development and Chief Financial Officer.

Francois <unk>, Chief operating officer, and President power and storage and Mexico, Tracy Robinson, President Canadian natural gas pipelines stand Chapman President U.S. natural gas pipelines, Paul Miller, President of our liquids pipelines business and Glenn The news Vice President controller.

Crescent Dawn will begin today with some are open some opening comments on our financial results and certain other company developments a copy of the slide presentation that will accompany their remarks is available on our website. It can be found in the investor section under the heading events and presentations following their prepared remarks, we will take questions from the investment community.

If you remember the media please contact Jamie Harding following this call and should be happy to address your questions.

In order to provide everyone from the investment community with an equal opportunity to participate we ask that you limit yourself to two questions. If you have additional questions. Please reenter the queue.

Also we ask that your focus your questions on or industry, our corporate strategy recent developments and key elements of our financial performance. If you have detailed questions relating to some of our smaller operations, where your detailed financial models Dwayne and I'd be pleased to discuss them with you following the call.

Before us begins I'd like to remind you that our remarks today will include forward looking statements that are subject to important risks and uncertainties for more information on these risks and uncertainties. Please see the reports filed by cheesy energy with Canadian Securities regulators and with the U.S. Securities Exchange Commission and finally during the presentation will refer to measure.

Such as comparable earnings comparable earnings per share comparable earnings before interest taxes, depreciation and amortization or comparable EBITDA and comparable funds generated from operations. These and certain other comparable measures are considered to be non-GAAP measures. As a result, they may not be comparable to similar measures presented by other entities.

They are used to provide you with additional information on our operating performance liquidity and ability to generate funds to finance our operations with that I'll turn the call over to Russ. Thanks, David Good afternoon, everyone and thank you very much for joining us late in the afternoon.

As highlighted in our fourth quarter news release during June 2019, or 100 billion dollar portfolio of high quality long light energy infrastructure assets continued to profit from strong supply and demand fundamentals and we continue to realize the growth expected from our industry, leading capital expansion program as a result, despite significant asset sales that excel.

All right at the strengthening of our balance sheet, we produced record financial results again in 2019 today, we are advancing $30 billion unsecured capital projects that largely consist of in court or expansions of our existing assets. In addition work continues on more than $20 billion of projects under development, including Keystone XL and the refurbishment.

Five reactors at Bruce power as part of their long term life extension program.

We also made significant progress in funding or secured capital program through various portfolio management activities last year.

Specifically, we completed a partial monetization of our northern Courier pipeline in Alberta, as well as the sale of certain Columbia midstream assets in the Appalachian region.

These initiatives combined with the sale of sale of our Coolidge generating station in Arizona resulted in combined proceeds of approximately $3.4 billion each of those transactions allowed us to surface significant value for relatively mature assets and redeploy the money into our capital program, thereby reducing our need for external funding as a result.

We exited 2019 with debt to EBITDA in high fours as we had planned.

Looking forward, we expect our strong operating and financial performance to continue with 2020 comparable earnings per share expected to be consistent with the record results. We produced in 2019.

We also expect ourselves financial position to be bolstered in the first half of 2020 with the completion of announced portfolio management and project financing activities last July we entered into an agreement to sell or natural gas fired power plants, and Ontario for approximately $2.87 billion subject to closing adjustments that transaction is expected to close by the end of the.

First quarter and in late December we announced an agreement to sell a 65% equity interest in our 6.6 billion dollar coastal Gaslink pipeline project and that is exposed to expected to close in the first half of 2020.

As a result, we think that we're well positioned to fund our $30 billion portfolio secured growth projects without issuing any common equity.

From our dividend reinvestment plan.

Or proud our financial performance and the significant returns we've generated for our shareholders. We do you know that our ongoing success depends on our ability to bounce profitability with safety and environmental and social responsibility. We have 65 year track record of safe and reliable operations, but we recognize there's always room for us to improve that's why in 20.

Hi team, we traded achieve sustainability officer role as executive level of our company and added sustainability to what is known as the health safety and now sustainability sustainability environment Committee of our board of directors.

To keep you better inform we publish ever several investor focus DSG documents informed by the task force on climate related financial disclosure.

Sustainability accounting standards board and the global reporting initiatives those documents describe some of that work we're doing to ensure our business remains resilient in ever evolving energy landscape.

All of that can be found or web site at Tc energy Dot com, so with that as an overview I'll expand on some of the recent developments beginning with a brief overview of our 2019 financial results Don will provide more detail in the fourth quarter results any outlook, if just a few minutes.

So excluding certain specific items comparable earnings were $3.9 billion or $4 in 14 cents per common share for the year ended December 31st 2019, compared to $3.5 billion or $3.86 per share in 2018, which is an increase of about 7% on a per share basis.

Comparable EBITDA of $9.4 billion and comparable funds generated from operations at 7.1 billion, we're both 9% higher than last year.

Each of these amounts represents record results for our company and reflects the strong performance of our legacy assets as well as contributions from $8.7 billion of new long term contracted or rate regulated assets that were placed into service in 2019.

Based on the strengthened our financial performance, our and our promising outlet for the future TC Energy's Board of directors declared a first quarter 2020 dividends of 81 cents per common share, which is equivalent to $3 in 24 cents per share on an annual basis. This represents an 8% increase over the Mt declared in 2019.

I mean and is the twentyth consecutive year that our board has increased the dividend.

Over that same timeframe, we have maintained consistently strong coverage ratios with their dividend.

On average representing a payout of approximately 80% of comparable earnings and 40% of comparable funds generated from operations, leaving us with significant internally generated cash flow to invest in our core businesses.

Next I'll make a few comments on our five operating businesses firstly in our Canadian natural gas pipeline business customer demand customer demand for access to our systems remain strong and we continue to work with industry on options to connect growing western Canadian gas supply to markets across North America.

Evidence of that can be seen in our announcement earlier today, and we'll see us invest another $900 million in our 2023 NGL intra basin system expansion program for incremental delivery capacity to serve oil sands petrochemical demand at power generation demand and the utility sectors in Alberta.

The expansion will add 309 million cubic feet and they have capacity.

Through the system and is underpinned by 15 year contracts with shippers regulatory applications for that expansions are expected to be filed later this year with construction commencing as early as the fourth quarter of 2021 subject to receipt of those regulatory approvals with this announcement, we are now advancing a $9.3 billion expansion program on NGL.

It will add approximately 3.5 billion cubic feet, a day of incremental delivery capacity by the end of 2023.

We also continue to actively work with LNG, Canada on our coastal Gaslink project. That's $6.6 billion project will have an initial capacity of 2.1 billion cubic feet today with potential expansion capacity up to 5 billion cubic today.

Coastal Gaslink will play an important role in delivering Canadian natural gas overseas that will displace coal fired generation in Asia and contribute to the reduction in global greenhouse gas emissions construction activities continued on many locations along the pipeline route during the fourth quarter and into 2020.

Today, we are proceeding on work at over 30 sites, along the 670 kilometer route with over 1000 men and women currently employed.

On February six the Rcmp began enforcing the Supreme Court of British Columbia, Interlocutor, a injunction prohibiting unlawful blockades that preventing access to service roads in the Murray's River area of.

South of Houston DC, we're extremely disappointed enforcement was required to reopen them or Rhys River for service Road.

But we will continue our efforts to attempt to engage with the hereditary chiefs of the wet season and the to Stockton on his search of a peaceful long term resolution that benefits all of the people in that community.

We'll also continue to engage with all indigenous and local communities, including all 20 of the first nations communities along the route who are benefiting from the social and economic development project offers and want to see that project move ahead. Finally, we will continue to work with the 21st nations on an option to acquire a 2010% equity interest in the Progen.

That option was announced in late December when we advanced funding plans for the project by selling 65% interest in the project to KKR and Aimco.

We also expect coastal Gaslink, we'll finalize a secured project financing construction for to construction credit facility with the syndicate of banks to find up to 80% of the projects capital expenditures during construction both of those transactions are expected to close in the first half 2020, and obese and will substantially satisfy our funding requirements through the.

Project.

To completion.

Looking forward, we will continue to be responsible.

We'll continue to be responsible for constructing an operating the pipeline and providing a positive long term legacy for the many local communities in first nations in north in British Columbia.

Finally in the Canadian natural gas pipelines business in December we were pleased to complete negotiations on a six year settlement with our customers on the Canadian mainline.

The settlement, which will run from January 2021 through December 2026 sets a base equity churn of 10.1% on 40% deemed common equity and includes incentives to increase revenues and decreased costs, which will be shared between us and the customers.

Moving now to our U.S. natural gas pipelines, which serve today approximately 25% of us daily demand.

In conjunction with a 2023 NGL system expansion that we announced earlier today, we also announced an expansion of our and our system.

Batching and projects referred to as the Albert Express project will add approximately 160 million cubic feet, a day of capacity and our customers signed agreements which include customary conditions proceedings with an average weighted term of 19 years.

Regulatory applications to construct the facilities will be filed with the FERC in 2020 and subject to regulatory approvals constructions. It is expected to commence as early as the third quarter 2021 within service expected to commence in 2022.

Great Express project in combination with existing capacity and our great Lakes transmission system. The Canadian mainline system will provide western Canadian production with with a seamless path to growing LNG export markets and other markets along the U.S. Gulf Coast.

In addition to Albert Express, we are advancing $1.5 billion use of other capacity projects across our U.S. natural gas pipeline network, which include the Buckeye Express project GTN Express Eastern latter look at lateral Express, Louisiana Express and the Grand Shinier Express project each of those projects are along.

Our existing footprint, highlighting the value or mix of our extensive cost competitive North American network.

Turning to Mexico, where the sort of Texas pipeline began commercial operations in September following the execution of an amending agreement with CFP Sorta, Texas has a capacity to provide up to 2.6 billion you today of low cost clean burning natural gas supply to Mexico.

With the completion of sort of Texas, we now have five operating pipelines in Mexico and another two pipeline projects under development. They include the be at array project, which we expect to phase into service starting the second quarter and have fully operational by the end of the year. Finally in Mexico. The section of the tools pipeline is now available for Interruptible transportation service.

Although construction on the Central segment continues to face delays to is expected to enter service two years. After indigenous consultations are successfully concluded by the Mexican government.

Turning to our liquids business, which generated very strong results in 2019.

Keystone continued to produced solid results in the fourth quarter, although it was impacted by system outage and a pressure D. ray.

On the southern portion of our system or the what we call. The U.S. Gulf Coast segment capacity was increased during 2018 to more than 700000 barrels a day and we maintain strong utilization through the force fourth quarter of 2019.

In addition for much of the year, we benefited from higher contribution from liquids marketing due to improved volumes and margins, although those margins weakened in the fourth quarter as new pipeline capacity was brought into service between the Permian and the us Gulf Coast and finally in liquids business. We continue to advance the Keystone XL project in March the U.S.U.S.

I didn't Trump issued a new permit for the project with superseded at 2017 permit and resulted in the dismissal of litigation related to that will permit in August in Nebraska Supreme Court affirmed the 20 November 2017 decision by them or ask a public service Commission at approved the Keystone XL pipeline route through the state.

Remember the U.S. Department of state issued a final supplementary environmental impact statement for the project.

That.

Report considered the changes in the project since 2014.

And when the 2014 Keystone XL Sci asked was issued including routing in Nebraska as well as updated information and new studies that were required.

And on February 7th we received approval from the West Bureau of land management, allowing for construction of pipeline across federally manage lands. In addition, we have now acquired nearly 100% right away for the pipeline through all States, Montana, South Dakota and Nebraska.

So next out continues to be a very important project for both Canada and the United States. It will create jobs and advanced energy security in both nations in an environmentally sustainable and very responsible way as such it continues to be fully subscribed by customers under long term take or pay contracts moving forward, we will continue to carefully and methodically managed very.

Legal and regulatory matters, Matt matters before we consider advancing this commercially secured projects into construction.

Turning to powered storage business, where work continues on the Bruce life extension project after years of preparation Bruce Power's unit six MCR outage commenced on January 17, when we took that unit offline, we expect to invest approximately $2.4 billion in that program as well as the ongoing asset Matt.

Judgment program through 2023, when do you at six refurbishment is complete and returned to service Bruce Power's contract price increased to approximately $70 per megawatt hour on April 1st 2019 to reflect the capital to the invested under these programs as well as normal annual inflation adjustments.

Also in power as you know we experienced in equipment failure on Napanee in 2019 at failure has now been resolved and final commissioning activities are progressing with commercial operations to it are expected to commence in late in the first quarter. As a result, we expect the sale of the facility along with the Hutton Hills plant.

Our interest in the Portland Energy Center to close by the end of the first quarter. The proceeds of approximately $2.87 billion will be used to help fund our industry leading capital program.

In summary today, we are advancing $30 billion of secured growth projects that are expected to enter service by 2023, we have a fracs. We have invested approximately $8 billion into that program to date with approximately $6 billion of these projects expected to be completed by the end of 2020.

Notably, they're all underpinned by cost to service regulation or long term contracts, giving us visibility to earnings and cash flow that they will generate as they enter service.

Based on the continued strong performance of our base businesses combined with our organic growth programs, we expect to grow our dividend at an average annual rate of 8% to 10% through 2021 in 5% to 7% thereafter.

As always has been our practice the growth in dividends is expected to be supported by sustainable growth in earnings and cash flow per share and strong coverage ratios.

To close I'd leave you with the following key messages today, we are leading North American energy infrastructure company with a very strong track record of delivering long term shareholder value. Our assets are essential to the functioning of the North American of North American Society and to the economy and the demand for us if his services remains strong.

Looking forward, we have five significant platforms for growth Canadian us in Mexico, natural gas pipelines liquids pipelines and power and storage as we advance our $30 billion secured capital program, we expect to build on our long track record of growing earnings cash flow in dividends per share. We also have more than $20 billion approach.

Projects in advanced stages of development and expect numerous other in corridor organic opportunities emanating from our extensive critical asset footprint and finally, our balance sheet is back to its place FISC historical strength and we are well positioned to fund our secured capital program without the need for any additional common equity.

In 2020 and beyond we remain disciplined continuing our focus on safety sustainability and working according to our values and responding quickly to market signals and sign post to ensure we remain industry, leading and resilient as we grow shareholder value and improved societies wellbeing wellbeing for decades to come with that I'll turn the call over to Don.

Provide more details on our fourth quarter results and our future outlook.

Thanks, Ross and good afternoon, everyone.

As outlined in our quarterly results issued earlier today net income attributable to common shares was $1.1 billion or $1.18 per share in the fourth quarter of 2019 compared to $1.1 billion or $1.19 per share for the same period in 2018.

Fourth quarter results included a positive 195 million dollar valuation allowance release, recognizing the previously unrecorded benefit of certain prior years us tax loss carry forwards, partially offset by a 61 million dollar increase and the after tax loss on the Ontario natural gas fired power plants held for sale and the $19 million adjustment to the loss.

On the sale of certain corn, the midstream assets.

In the case of the Ontario natural gas fired power plants, the accrued loss on sale will increase each reporting period up to transaction close to reflect incremental spend and interest capitalized on napanee.

Fourth quarter 2018 results also included several specific items as outlined on the slide and discussed in the fourth quarter 2019 financial highlights release.

All of these specific items as well as unrealized gains and losses from changes in risk management activities are excluded from comparable earnings which reached $970 million in the fourth quarter in 2019 $24 million higher than last year.

After taking into account the dilutive impact of common shares issued under our dividend reinvestment program.

Comparable earnings per share of a dollar three were consistent with last year.

Turning to our business segment results on slide 17 in the fourth quarter comparable EBITDA from our five operating segments was approximately $2.3 billion 830 million hundred $38 million decrease from 2018.

Canadian natural gas pipelines comparable EBITDA of $618 million was 200 million lower than the same period last year, primarily on account of lower flow through depreciation and income taxes as well as lower incentive earnings in the Canadian mainline due to recording the full year impact of the any be 2018 decision in fourth quarter 2018.

I would note that for Canadian natural gas pipelines changes and depreciation financial charges and income taxes impact comparable EBITDA, but they did not have a significant effect on net income as they are almost entirely recovered in revenues on the flow through basis.

Net income for the NGL system increased $20 million compared to fourth quarter 2018, as a result of higher and higher investment higher average investment base from continues system expansions net income for the Canadian mainline decreased $17 million year over year, primarily due to lower incentive earnings as a result of the any be 2018 does.

Vision, partially offset by decreased carrying charges on the 2019 revenue surplus.

You asked natural gas pipelines comparable EBITDA of $648 million us or $855 million Canadian in the quarter rose by $35 million U.S. or $43 million Canadian compared to the same period in 2018.

The increase was mainly due to contributions from Columbia gas and Columbia Gulf growth projects placed in service, partially offset by the sale of certain Columbia midstream assets in August 2019, and lower earning some buys and due to 2018 customer agreements to pay out their future contracted revenues and terminate their contracts.

Mexico natural gas pipelines comparable EBITDA of $125 million us or $165 million. Canadian was 10 million you asked or 13 million Canadian about fourth quarter 2018, due to higher equity earnings from inserted a Texas pipeline, which was placed in service in September 2019 at which time, we began recording equity income from operations.

Yeah.

Priority in service certain Texas equity income primarily reflected a few DC net of our proportionate share of interest expense on Inder affiliate loans. The inter interest expense on the sort of Texas under affiliate loans are fully offset.

Interest income and other.

Lower earnings from other operations are primarily a result changes and the timing of revenue recognition in 2018.

Liquids pipelines comparable EBITDA declined by $66 million to $472 million in fourth quarter 2019, driven by lower volumes on the Keystone pipeline system.

Decreased contribution from liquids marketing activities due to lower margins and reduced earnings as a result of the partial monetization of northern Courier in July 2019.

These decreases were partially offset by a contribution from the white spruce pipeline placed in service in May 2019.

Power and storage comparable EBITDA rose by $43 million year over year to $210 million due to higher Bruce power results, which were elevated by an increased realize power price and higher volumes, resulting from fewer outage days. This was partially offset by decrease Canadian power results largely due to greater outage days at our Alberta coal.

Generation plants, a prior period billing adjustment as well as the sale of the Coolidge generating station in May 2019.

For all our businesses with U.S. dollar denominated income.

Including U.S. natural gas pipelines, Mexico natural gas pipelines and parts of liquids pipelines EBITDA was translated into Canadian dollars using an exchange rate of 132 and fourth quarter 2019, similar to the rate for the same period in 2018, Therefore foreign exchange had little impact on year over year business unit results.

As a reminder of our approach to managing foreign exchange exposure. Our U.S. dollar denominated revenue streams are partially hedged by interest on US dollar denominated debt. We then actively managed the residual exposure on a rolling one year forward basis.

Now turning to the other income statement items on slide 18.

Depreciation and amortization of $625 million decreased $56 million versus fourth quarter 2018, largely due to reporting the full year impact of increased depreciation rates approved and the Canadian mainline any be 2018 decision in fourth quarter 2018.

Partially offset by higher depreciation in the NGL system and use natural gas pipelines, reflecting new projects placed in service.

Interest expense of $586 million for fourth quarter, 2019 was $17 million lower year over year, primarily due to higher capitalized interest related to Keystone XL coastal gaslink and napanee, partially offset by the impact of long term debt and junior subordinated note issuances in 2018 and 2019 net of mature.

Ladies.

Hey, AFUDC decreased $44 million for the three months ended December 31, 2019 compared to the same period in 2018, primarily due to Columbia gas and Columbia Gulf growth projects placed in service, partially offset by continued investment in our NGL system in Mexico projects.

Comparable interest income and other increased by $66 million in the fourth quarter versus 2018, primarily as a result of lower realized losses in 2019 on derivatives used to manage our net exposure to foreign exchange rate fluctuations on U.S. dollar denominated income.

As noted earlier along with US dollar interest expense. These activities served to offset the impact of currency movements in the business units in comparable EBITDA.

Income tax expense included in comp comparable earnings was $211 million in fourth quarter 2019, compared to 268 million for the same period last year.

The $57 million decrease was mainly on account of lower flow through income taxes, and Canadian rate regulated pipelines and decreased comparable earnings before income taxes, partially offset by lower foreign tax rate differentials.

Comparable net income attributable to non controlling interest of $76 million in the fourth quarter decreased by $10 million compared to the same period last year, primarily due to lower earnings and Tc pipelines LP.

And finally preferred share dividends were comparable to fourth quarter 2018.

Now turning to slide 19.

During the fourth quarter, we invested approximately $2.4 billion and our capital program, which was largely funded with comparable funds generated from operations of $1.8 billion.

Along with drip proceeds from the third quarter dividend cash on hand and notes payable.

Over the past several years, we've taken significant steps to return our balance sheet and financial flexibility to their place at historical strength.

That included the partial monetization of northern Courier as well as the sale of certain Columbia midstream assets and the coach generating facility in 2019 for total proceeds of approximately $3.4 billion.

As a result, we exited 2019, having attains targeted debt to EBITDA in the high fours and in a position to fund our $30 billion portfolio of secured growth projects without further issuance of common equity.

As Ross mentioned, the company's strong financial position will be further bolstered by the completion of pending portfolio management and project financing activities expected in the first half of 2020.

More specifically closing the sale ever, Ontario, natural gas fired power plants and the partial monetization of coastal gaslink.

In December we entered into an agreement to sell a 65% equity interest in coastal gaslink under its terms, we will receive upfront proceeds that include reimbursement of the joint venture partners proportionate share of project costs incurred to the data close as well as additional payment streams through construction and operation of the project.

Concurrent with the completion of the sale, we expect coastal Gaslink will enter into a secured project level credit facility to fund up to 80% of costs through construction.

These transactions are expected to close in the first half of 2020 and substantially satisfy our funding requirements through project completion.

The previously announced sale ever, Ontario, natural gas fired power plants for $2.87 billion is also expected to close in the first quarter of 2020.

Now turning to slide 20.

This graphic highlights our forecasted sources and uses of funds from 2020 through 2022.

Starting in the last column the total funding requirement over the next three years is projected to be $30 billion comprised of dividend and non controlling interest distributions of approximately $11 billion and capital expenditures of approximately $19 billion, including maintenance capital.

This also reflects the inclusion of capital spend on coastal gaslink prior to the close of the equity Selldown as well as the additions of the 2023 NGL system expansion program and Alberta Express.

The second call and highlights aggregate sources, including approximately $21.5 billion of internally generated cash flow and $2.8 billion or proceeds from the pending sale of our Ontario natural gas fired power plants.

It also reflects $1.6 billion, which we expect to receive under the coastal Gaslink secured project level construction credit facility for amount spent biased to the date of close.

That leaves a residual requirement of approximately $4.4 billion and far right column.

We expect to fund this through a combination of incremental debt within the constraints of our targeted debt to EBITDA and high fours range and FFO to debt of approximately 15%.

Supplemented by the reimbursement of equity contributions and other payments to be realized from the sale of 65% of a 65% interest and coastal gaslink.

In summary, our external funding request needs our eminently manageable in the context of our significant internally generated cash flow and have also financing levers available to us.

We reiterate we do not foresee a need for common equity to complete our secured $30 billion capital program.

Now turning to slide 21.

Next I'd like to spend a moment on our 2020 comparable earnings outlook. Additional information is contained in our 2019 annual management's discussion and analysis, which is being filed on SEDAR today and available on our website.

Overall comparable earnings in 2020 on a per share basis are expected to be consistent with a record results achieved in 2019.

Canadian natural gas pipelines earnings are expected to be higher than 2019, mainly due to continued growth in the NGL system investment base.

The Canadian mainline largely stable year over year, reflecting consistent incentive earnings and investment base.

US natural gas pipelines earnings are expected to be in line with 2019 due to increased revenues. Following the completion of expansion projects on the Columbia gas and Columbia Gulf systems in 2019.

Offset by the sale of certain Columbia midstream assets at August 29 team.

In Mexico, we expect earnings to be higher year over year, primarily due to a full year of operations for the surface access pipeline, along with an incremental contribution from the ability to raise pipeline, which is anticipated to be fully in service by the end of the year.

In liquids earnings are expected to be significantly lower than 2019 in both Keystone pipeline system and liquids marketing business as result of lower margins and volumes due to changing market conditions, a significant opportunities that existed in 2019 are not anticipated to persist in 2020.

Earnings in 2020 will also be impacted by the partial monetization of northern Courier in July 29 team.

Our purple earnings for the power and storage segment are expected to be lower than 2019, primarily as a result of a decrease contribution from Bruce power due to the unit six MCR outage, which commenced in January 2020.

The sale of our Antero natural gas fired power plants in the first quarter of 2020 as well as the completed sale of the Coolidge generating station in May 2019.

Comparable earnings per share in 2020 will also be impacted by development fees related to certain capital projects offset by higher financial charges. As a result of lower capitalized interest and reduced AFDC after placing new assets and service.

With respect to income taxes.

Excluding Canadian rate regulated pipelines were income taxes, our flow through item on our thus quite variable along with equity AFUDC income in us and Mexico natural gas pipelines.

We expect our 2020 full year effective rate to be lower than 2019, but still in the mid to high teens range subject to the uncertain impact depending finally as tax regulations and recently enacted tax reforms in Mexico.

Finally, as part of the 2020 outlook I would note that our exposure to interest rate foreign exchange and commodity price variability remains quite limited in our diversified portfolio.

In terms of capital spending we expect to invest approximately $8 billion in 2020 on growth projects maintenance capital and contributions to equity investments.

The majority of the capital expenditures.

Our attributable to NGL system expansions Columbia gas modernization projects, the Bruce power life extension program normal course maintenance and.

Coastal gaslink prior to closing the sale of 65% interest in the project.

Subsequent to closing and the contemporaneous establishment of the secured construction credit facility, we expect our investment in coastal Gaslink will be accounted for under the equity method and future capital expenditures will be predominantly funded by project level financing and our equity partners.

Lastly, turning to slide 22.

In closing I'd offer the following comments.

Our solid financial and operational results in the fourth quarter. Once again highlight our diversified low risk business strategy and reflect a robust performance of both our blue chip legacy portfolio, along with the contribution of equally high quality assets from our ongoing capital program.

Today, we are advancing a $30 billion suite of secured projects.

And have five distinct platforms for future growth and Canadian us and Mexico natural gas pipelines liquids pipelines and power in storage.

Our overall financial position remains strong we are well placed to fund our secured capital program to resilient and growing internally generated cash flow.

Yes to that capital markets.

The pending sale of our Altera natural gas fired power plants, along with the partial monetization in project level financing of coastal Gaslink.

Our portfolio of critical energy infrastructure projects is poised to generate high quality long life earnings and cash flow for our shareholders as well as germinate further attractive and executable in court or opportunities.

That is expected to support annual dividend growth of 8% to 10% through 2021, and 5% to 7% organic growth thereafter.

Finally, we will continue to maintain financial strength and flexibility at all points of the economic cycle that will leave us well positioned to capture transformational opportunities that could supplement our organic growth should they arise in the future.

That sand in my prepared remarks, I'll now turn the call back over to David for acuity.

Thanks, Don just a reminder, before I turn it over to the conference coordinator for questions from the investment community. We ask that you limit yourself to two questions. If you have additional questions. Please reenter the queue with that I'll turn it over to the conference coordinator.

Conference coordinator, yes. Thank you, we'll we'll now take questions from the top line.

You have a question and using a speaker phone can you keep your handset before making selection.

If you have a question. Please press star one on telephone keypad.

Anytime you wish to come so your question. Please press the Palestine.

Please press star one at this time, if you have a question.

There will be a brief pause for participants register for questions. Thank you for patients.

And the first question is from Linda is okay lease from TD Securities. Please go ahead.

Thank you.

I appreciate how Youre SG recording continues to evolve.

I'm wondering if you could give us maybe a bit a bit better sense about how.

You might evolve.

The U.S.G. and sustainability principles, Mike Guide your business decisions in terms of.

How you also you look at future scenarios and.

And.

Maybe just provide some context around that.

Hum.

I'll take a first shahadat at Atlanta that debt.

Obviously, there will be the issues related to sustainability and have always been sort of far most in our minds on whether that be.

Like safety environmental stewardship.

Working with the communities that.

The benefit from our projects and.

So I. They I mean, we will continue to do those things as you know we've we've tightened our awareness around safety. For example, we've been implemented zero is real program inside the company. We made real progress we achieved zero in light of pockets of our business. This year and that continues to be very important.

We continue to invest in technology, and it will improve our ability to detect and and act on potential for.

Leaks in our pipeline systems.

And we continue to evolve our processes and investment in the communities in which we we operate offering you will continually greater benefits for for those communities and am I understanding what their concerns are so that they're far most in our mind on what we've been doing from a reporting perspective is correlating that information in providing it.

The investment community in a way and that we hadnt in the past and because that folks are asking for that kind of information based on that feedback is well, we'll continue to evolve that that that reporting.

Around those those kinds of kinds of issues, but what I can tell you is each year in each year that I've been at the company and over the last 25 years, we've continued to make improvements on how we do business.

In all areas, whether that be environmental footprint.

And social responsibility.

And diversity in in our employment in management ranks.

I think you just look at the results and see that we have continues pru improvement in goals on an annual basis to continually improve those things.

Just to inform your capital allocation decisions and how you might think about terminal values and discount rate cetera.

So I think clearly I mean is using our business those are concepts that we've thought about for a long time, if you think about at and.

Life span of assets and depreciation is a is that is a concept that we have worked with with our shippers and our regulators on over the years as we've seen no times in.

In the past, where a supply demand or other fundamentals with point you to a shorter asset life, we accelerated depreciation and increase environment surcharges for example, and and the obviously when we see that go in certain locations.

On the those assets are going to and I'll be around for longer we extend those depreciation conferencing. We continually look at add return on capital and and adjust our investments and and then revenues in a way that.

At best allows us to to capture those for our shareholders when I think about other things like.

And your weather related risks for example, again those aren't issues that are new to us.

We think of the way that we approach.

And.

Putting in river crossings for example, where we used to cut the middle of the river, you'll put the pipe four feet under the river and we've we've changed our practices today you in nature River crossings, we drill underneath those rivers and such that if you have the 100 year flooding kind of scenarios added scouring in those kinds of things doesn't expose our pipeline.

More so we continue to evolve our practices on all of these front. So as I think about the risks inherent and we have and on top of those for some time.

But in addition, this last year, we introduced in its outlined in.

Our reports that we've made public we do look at scenario analysis, and we've looked at different that supply demand scenarios.

It could evolve in the future on including a two degrees reduction scenario that was put together with his bye bye.

By consultants.

And then from that we look at the resilience of our assets in those in those supply demand scenarios and we have.

Yes.

I think what Youll will fall we found is that our portfolio of performed very well and as you know.

One of the benefits of the of the large diverse footprint that we have the goes from your wellhead to to market and.

As well depreciated and those assets become the ones that if people want to use going forward because of their low cost base and ended location and our ability to expand them because of existing relationships with communities and things like that where it's difficult to build in those markets today. So.

These are all concepts that have been on our mind for some time, we collated them and we provided them via those reports and I guess, what I would tell you about our businesses. We believe under almost every scenario that we see going forward, we're part of the solution.

To.

Achieving reductions in greenhouse gas for emission emissions for example single greatest reduction and greenhouse gas emissions in North America has been the displacement of coal fired generation in United States. We played a large role in that I would played a large role in the.

And the reduction in elimination of coal fire generation in Ontario, with the construction of gas fired generation bear.

Our building of solar facilities, there and as well as as our investments in the Bruce power refurbishment and so as we think about that the resilience of our assets they appear to be very resilient and be very relevant in the marketplace for for a long time that said, we continue to monitor add that via the scenario analysis that.

We do and where we're very comfortable with where today in fact see great opportunity as at the marketplace evolves and looks for.

You are better and better environmental performance from the energy infrastructure. This applies energy to people need.

Okay. Thank you if I can ask your second question just really quickly.

During the process of discussed discussing with your customers the and GTL.

Settlement for 2020 and beyond that even just comment on.

How close you, thank you might be too, including those discussions and.

How the attributes might be similar or change versus what was in place for 22 in 2019.

And it's Tracy share we those dialogue continue I would say.

What I would take has done a very collaborative basis, we all understand the important.

Of the NGL system on.

And that growth at the base has become together with our customers at kind of farms principles around.

Around the solutions that we're looking for I think the dialogue is going very well and I would expect.

That we would have something we could talk about within the next step two to three months.

And the range of outcome.

Yes, those wells of course to be subject can.

Let the guys are talking about at the table. So it'd be an appropriate I think right now to talk about what those are let's let let them get true and into an agreement and then we'd be happy to have a conversation around what that looks like.

Thank you.

Thank you.

And the next question.

Jeremy Tonet from JP Morgan. Please go ahead.

Good afternoon.

Just wanted to see kind of next steps forward here with K XL, given that you've kind of across a lot of the regulatory and legal hurdles.

Seems like you have.

More clear sight, I guess to what could happen then you have at points in the path and just wondering if.

You've seen any kind of acknowledgement from the federal government or from the local government as far as if the project does go forward I imagine that they would.

Very significant benefits and so it seems like the be incentivized to be.

Stakeholders in this project as well to support the development. So I didn't know if you'd hear anything from the Edcs par support there or anything else you could comment on this topic.

Jeremy as Paul hit all.

And I'll, just talk a little bit about.

Progress, we have made and.

Is in front of us yet so we didnt make some good progress in the last few.

Corridors.

I mean, just recently the approval from the Bureau of land management for the.

Access to all the federally managed land and as well as.

Affirmation from the.

Nebraska Supreme Court.

New wrote in Nebraska, as well as the receipt of the final supplemental environmental impact statement from the state Department, which together has allowed us to secure almost.

100% of aligned we need to Canada and us.

To build the pipeline going forward, we still require.

The approval from the Army Corps of engineers for access to waters in the US and there is outstanding litigation in Federal Court in Montana contesting the 2019 presidential permit so those two items, we need to get behind us.

Before we move forward to tune if I'd.

Yeah, Jeremy it's done here.

Okay, but at a fairly high level, but this has a very compelling project with substantial benefits for many parties. If we get this done.

Okay.

The conversation on aligning the risks and rewards of this project amongst those parties has been underway for quite some time and I'd describe it as constructive.

And as Paul mentioned, we're in the final stage gates here of getting through.

Remaining approvals.

Hosting the project work and execution plans, if we can get comfort that the risk reward proposition is attractive to us. We will we will proceed and if we can't write all that up then the project will.

We'll stay where it is right now so its theres theres moving some positive moving parts here, but.

That's kind of a high level is how do we see things.

That's helpful. Thanks, and maybe if I could just go to Mexico from many here and there's been some time since the developments that happened last year. Some of the changes in the market in changes in contracts. There just wondering if you could refresh us on your views for for Mexico, whether thats an area like to expand.

And or or shrink and just as far as some of the.

Blends that came online seem like too there is room for key there just wondering what the scope of those opportunities could be any comments on mix maybe helpful.

As area, it's a francois first of all the and you alluded to negotiations I think negotiations continue with a with the CFC and the government in Mexico and.

We would certainly characterize them as being constructive.

As far as the fundamentals.

There are still favorable and compelling demand for energy in Mexico remains strong and is growing.

Low cost natural gas from the US is available and will lower the cost of electricity and and reduce particulate emissions as it replaces diesel in fuel oil for.

Power generation.

In various parts of the country.

I would say that.

Successful negotiations.

On sort of Texas serve as a good blueprint for how we're discussing.

Advancing negotiations on VDR or view at arrays and Tula.

And I think we would we would see successful conclusion of those negotiations as a.

Demonstrating a willingness.

For further foreign capital investment and that would be a basis upon which we would look at a future opportunities.

Touch and just as far as how big could the key opportunity be there and I guess your appetite for Mexico within the portfolio, if you're at the right size or if this could be bigger or smaller.

I think until we resolve as I alluded to it.

Until we conclude negotiations on the two other contracts I think we're comfortable with our exposure in Mexico and with respect to IP volumes.

I would characterize them as modest.

That is part of.

The solution set as we look to renegotiate.

The the package of pipelines, providing service into central Mexico.

Great. That's it for me thank you.

Thanks, Jeremy.

In the next question is from Robert Preclude you from Citi. Please.

Please go ahead.

Okay. All start just on the interest rate environment. So we're seeing some pretty low rates only on the corporate.

The bond side.

I'm wondering if there's any more opportunities for you to recycle capital or refinance.

In a way where the benefits accrue to shareholders.

Oh, it's done here.

There's a few pockets where that might that opportunity might present itself.

But there are more bespoke rather than than across our whole portfolio portfolio.

Is pretty long term and picks pretty fixed rate its a.

About 23 or average life, including hybrids to final call on average rate is 5.2% 90, 90% area fixed.

A lot of the higher rates stuff is legacy debt that we.

Used to finance rate base expansion in Canada. Many years ago, So is flow through and any refinancing that which we do look at some time to time would accrue to the to the shippers.

We have.

Issued a fair bit a data in the past few years, but it was generally in the low rate environment. So there's nothing that jumps out there is some.

Material compelling opportunity to refinance large pockets of our portfolio that that would accrue to the shareholder.

I assume now that you have the leverage down where you wanted theres no particular incentive just based evaluation to accelerate capital recycling and portfolio management.

Yes, the metrics are where we want them, we believe the high fours on debt to EBITDA, 15% FFO to debt area are the right places for us.

Given our when you look at as a holistic portfolio very quite utility like in terms of our our business position.

And so our balance sheet is where we wanted we pretty much like everything in our portfolio never say never when whenever we have an opportunity that arises that may require share count growth. We will obviously look at our portfolio and scholar that to see if theres something.

There that some more compelling opportunity that increasing share count growth, Okay, and then just.

Finally last question items on the.

On the.

The option for the first nation on.

Hi, guys like is there anything you could tell certain terms of what term that option house.

[music].

Maybe you can speak to their sense of our desire to exercise.

An option.

I'm just trying to get to what you might have as a final interest is there an option for example, if the first nations don't exercise would you consider selling down.

10% to third party. Thank you.

Yeah, its Don again here I won't get into the details of where we are on the on the auction process other than to say that it's our expectation will end up at a 25% ownership stake in coastal gaslink.

Okay. Thank you very much.

Thanks Robin Thank you.

Your next question is from Chinese Santos from Wells Fargo. Please go ahead.

Hi, Thanks, Good afternoon just.

I guess, one to just to start on the on the Canadian mainline just wondering if you could tell us how much capacity is currently available and do you think the new tolling arrangement will help fill up some of that capacity.

Happy to its Tracy here.

We have some capacity available on the mainline the western mainline right now between now and.

And can late 2020 early 2021 app to that much of whats in the line has.

Current operating capacity.

Punch.

I'll be eastern mainline eastern triangle.

Ill.

Largely contracted as well so it is when you get the and GTL 2021 volume.

As noted in the line that we see that asset filling up.

Beyond that we do have.

As you would recall additional capacity, that's not operational right now and the mainline western mainline and that provides us with some options.

Yet more of the basins gas into market as our customers are interested in talking about that.

Thanks, and then just turning to the to the us northeast.

Just wondering just given the low gas price environment are you seeing any of your producer customers come to you asking for total relief and maybe tied to that what ability do you have to resell capacity and if your customers really come and come under financial distress.

Sure. This is stat I can give you some color on that.

With respect to our northeast customers first of all we're holding well over $1 billion of collateral mostly in the form of letters of credit and you can think of that is have bridging about one years worth of coverage for any single customer.

Most importantly, though we're seeing really strong usage on our producer contracts that affect our top producers are flowing load factors anywhere between 80% to 96%, which basically tell me that they're getting proper value for their capacity and we're seeing strong load factors across our entire system as matter of fact that last year.

January of 2019, we set a new peak day send out record across all 13 pipes at 33 Bcf. This winter has been relatively mild in terms of weather standards, but notwithstanding that on January Twentyth, we had our second highest all time send out of 32 Bcf. So again strong demand across the entire system, but.

I think most importantly, with respect to the that producer customers that we have in the Appalachian basin not to get too far into the weeds, but there are three liquid pricing points in Appalachian, Colombia, Dominion and Tetco most of our customers have access to Columbia's pool, which is also known as teco pool and.

Tico pool trades about 10 cents higher than dominion's pool or Tetco. This pool and Furthermore, most of our customers have access to Gulf coast markets via the Columbia Gulf system, and that trades at a 20% premium to tetco or Dominion pool, so lot of value in the proposition relative to some of the other pipes for our custom.

There's I think most importantly out of the Appalachian Basin were finally, starting to see the producers tap the brakes and that production has declined we seem to have hit up a bit of a peak here in November at just over 33 Bcf a day through the first that 10 days or so.

February production is down to about 31.8 Bcf, which is about a 5% decline. So as production continues to stabilize or decline as LNG exports and other Gulf coast markets continue to wrap up I think we'll see producers grow additive with respect to relief.

We havent provided any relief to our customers other than working with them in the normal course of business to may be amend receipt points or delivery points and get them flexibility to get the greatest usage they can't out of their contracts.

Okay, great. Thank you.

Thank you.

And the next question from Robert Kwan from RBC Capital markets. Please go ahead, great. Good afternoon.

Greetings ask.

Questions here around Keystone Slash Keystone XL, I guess just on existing system.

From an update or have you been able to restore flow rates on the system and if you havent just what's the schedule.

The strongest flow rates to full capacity the second just around capital.

Don you talked about kind of the risk reward I'm just wondering.

As you think about managing risk has anything changed in terms of the desire for something more tangible around backstopping, whether that CGM like or maybe.

Equity stake.

Robert It's it's Paul here ill speak to the existing system.

We have not yet restored pressure to Keystone, we don't have a timeline when we will but we are managing that lower pressure through the use of DRA.

As we moved into Q1 here I would anticipate that we would increase our flows as we implemented.

Back to normal operating levels. We saw you do flows in Q4 because of course the outage. We had in the time to took to restart and then it just takes time to catch up and we started to your system.

Yeah, Robert Stone here.

In terms of the risk risk reward on XL.

The conversations as much on.

Cadence and how we would parcel out.

Or mitigate some of the risks that we don't have control over such as last mile and not so that's.

Thats being factored into in terms of a sell down to a CGM, though I would like ownership level, that's that's not where where we see this going.

We see ourselves controlling this project going forward.

But absolutely minded to bringing in partners here and we actually.

I don't see ourselves proceeding on our own them.

Do you have in in your mind, how much let's say capital at least for 2020 that you would be willing to spend of your own ahead of the election.

Hi.

Wouldn't go there at this point, there's there's a lot of scenario planning right now and and we have to get through the final stage gates.

In terms of final permits and legal issues right now so that's part of the conversation underway.

But I can't give you a tangible dollar figure on that now.

So if I can just finished with the topic that that you talked about Investor Day, you mentioned.

And today potential for transformational opportunities.

So just on that you laid out your history at Investor Day.

The types of things you've done typically crown jewel assets to companies that have maybe had some trouble and there's been a lot of stock on gathering processing to gathering processing has never really been youre things. So I guess as you think about maybe some others crown jewel tight.

[music].

Assets is there any kind of further things that have popped up many prospects and then if you can maybe just talk about.

With that really from your perspective, the confined to to pipelines and then what would you be thinking in terms of any new geographies.

Yes, I describe what we're looking at our long term secure annuity streams in businesses that we are comfortable with and that if a generally.

Very blue chip energy infrastructure.

No. We havent nothing is has moved a longer popped up that's caught our attention. We always have our perpetual wish lists at probably unrealistic prices that we would ever transact at but.

At this point in time, our place pretty full with with $30 billion. This stuff on the go and and some potential large scale opportunities that may or may not advance here. So we're we've got the balance sheet to where we want it to be where.

We can actually active we think about these things if they do present themselves, but at this point in time I would say the landscape is pretty Spartan for for anything transformational.

That's great. Thanks.

Thanks Robert.

Thank you.

And the next question is from Ben sang from BMO.

Okay. Thanks, Jonathan.

And to the Q4 report so there was commentary around.

Converting merchant revenues to a long life annuity cash flows and and perhaps you can remind us what what's the sources of to the merchant revenues are Ria business and I'm also curious interpretation wise that does that really just replacing contracts that are rolling off the contractor.

Looking to the bump at 95%, plus which is already pretty pretty high to be inland.

Yes, its Don again here.

Where we do have variability in our portfolio is really in two places volumetrically assets.

Cushing so.

To the Gulf Coast on the Keystone marketing system and in terms of commodity price risk, it's generally restricted to the Alberta power market and some merchant gas storage in Alberta. So.

On that on the the commodity price side.

Generally.

It's quite small we're talking a couple points here on EBITDA in terms of or of the crushing south asset.

If Keystone XL did go ahead that would solve that problem right there.

Bye bye basically turning all that capacity or most of that capacity into 20 year contracts. So.

Yes ill add to that been over the course of 2019 as we increase the capacity on a market link we were able to increase the contracts. So we remain about 80% contracted on market link and when you look at our performance quarter order.

Relative to Q4 18 another.

Our our contribution from market link has higher.

In 2019 than it was in 2018, we had much softer spot, but we had converted some of that capacity to contracted revenue.

Okay sounds sounds that opportunity is for Cushing, which I had thought and then it's really the proper and for you guys it get to pretty much almost close to 100%.

Contract regulated.

And then contract duration and I know, there's a question around terminal value assumptions and.

And risk.

But I guess when I look at some of the projects you've announced last few years, Bruce power and detail cat selling and those are 20.

30 515 year.

Contracture, you're adding.

So is it fair to say that.

Today are going forward your average contract on your assets I know you don't disclose this.

Are they much longer than where they were say 510 years ago.

Yes, I would I would say, it's a fair characterization.

And again I would point.

Investor Day, I showed a slide showing EBITDA through through to 2030.

That so we have fairly high visibility of $10 billion of EBITDA locked in through the decade, and Thats a testament to the contract length in the regulatory structures behind the vast majority of our assets here.

We wouldn't attribute a whole lot of re contracting risk into that profile either so.

Yeah, I think that statement that are our average contract length is duration is quite a bit longer today than it was five years go is correct I think what we found demo Ben over the last few years is as you know your demand has continued to grow at that before and in the gas business primarily for.

LNG export, but as well domestically as well.

Industries petrochemical fertilizer and others have returned to North America.

Looking for long term secured natural gas at low prices.

And and debt, but in for the cheapest way of getting that natural gas to their market and trying to secure that either and existing capacity or brownfield capacity because there is considerably cheaper in greenfield capacity and doesn't have come with the same.

Potential risks of not being able to build the greenfield capacity. So what we've seen as across the system, whether it be in our at Columbia systems, GTN and they're pretty much across the board the mainline refilling up what we're seeing is people wanting to secure that capacity and security for the long term. So you think so something like coastal Gaslink for example.

Your 25 year contract return on capital.

They have the option of extending those contracts further we'll adjust depreciation to allow a longer term to recover return on capital a return on capital stays the same as you pointed out 2064 for for Bruce Power I think about the a the negotiation that we just went through with that.

CF fee for sort of taxes for example, we've actually converted from a at 25 year contract to a 30 year contract. So what we're seeing is the demand for existing capacity is very strong and people want to secure that capacity for a long period of time and as you pointed out we pretty much experienced static across our system I think about it on the oil side.

Well.

To the extent that we are able to.

Eke out more capacity from existing Keystone system. For example, we've talked a little bit about how we might be able to do that.

And what we know is that if we had any more capacity on on the Keystone system, we'd be able to sell it multiple times over under under 20 year terms, so existing capacity is becoming youll rare commodity and.

People want to sign up for in and secured for the long term.

All right that's great. Thanks, everybody.

Okay. Thanks, Ben.

Thank you.

And the next question is from Andrew Coskey from Credit Suisse. Please go ahead.

Thank you good afternoon.

There's a few pipelines now being built across North America, what size, which is.

Changed from the past few years.

Are you seeing any signs of labor rate pressures or any supply chain impacts.

Andrew as Paul Hill I'll start.

We.

We see a tighter market in Canada, then you do in the United States.

In camera seen contractors and suppliers and as part of our Preconstruction activities. The Keystone XL, we were satisfied with the quality and quantity of.

Resources, we have in the us.

Canada is a little tighter than than what we've seen in the U.S., but still are still a ample capacity.

Ill add to that.

Andrew said Tracy here I wish I think same thing as well of course, when same market and we've got a fairly substantial program on the NGL system, We've got call for gas and kind of way and of course, because if you had the projects that are going to key today to contract well in early to make sure that you have the capacity from a prime perspective, but also.

Yes.

Thank you.

You move to name.

Certain folks from a labor perspective, because the supervision with some of these on some of these spreads are is critical so we're doing that and dad and we're satisfied so far that we're getting the right folks and we're getting those contracts done we are seeing some pressure from the labor perspective on prices as we go forward and we're doing what we can to mitigate that.

Okay. That's helpful color and then maybe just a follow up somewhat related is just on some of the compressor upgrades that you've announced.

Got extra capacity on some of the lines, but could you maybe give a bit more color on just maybe some of fuel efficiencies lower emissions profiles and just any other benefits that happened for shippers and for yourself.

Yes. This is stat I can give you a real good example of project that we have on our north Baja system, where we're going to.

Were placed three old inefficient compressors with three new state of the arc compressors that in the end is going to reduce our GHG footprint on that by 30%.

That in of itself is a big win for US. Similarly, when you look at Columbia is modernization program, which you are two of which are part two which is going to be completed at the end of this year.

So far to date, we've reduced our emissions profile by about 150000 tons and we've done that by not only mothballing inefficient depression, but by putting that new efficient facilities in place and buyout Remediating a lot of leaks have particularly methane leaks, where we've reduced our footprint by 40% from 2016 to 2018. So this is something that we.

Do just as a matter of course every time, we have a project that we're looking to build we're asking ourselves how we can improve our environmental footprint as well.

Okay. That's great. Thank you.

Thank you.

And then next question is from Rob Hope from Scotia Bank. Please go ahead.

Afternoon, everyone I'm, just going to look at the the capital plan. The annual report has about 8 billion the Investor day out of the 7.2, just wondering if you can get some puts and takes on the on the higher capital plan moving forward.

Thats fairly simple it as our spend on coastal gaslink until.

Expected close of the JV and project financing transaction.

At Investor that was assumed to be around year end, but that will be sometime in Q1, Q2, probably Q2 here.

All right.

That's helpful. And then just when you take a look at.

Your Alberta power exposure.

I would be that it.

Moves down and overall EBITDA percentage at some point does it just makes sense to exit that business and focus on the pipelines.

I think Rob its fronts, while I think.

We see some strategic value in that portfolio, yes.

Contracts are going to be.

Rolling off over the next several years.

We do have a strategic imperative to diversify our fuel mix.

Learning to familiarize yourself with other technologies here in terms of.

Broadening our technology base, we have strong marketing and trading capability in Alberta were.

One of the incumbent traders in this market that affords us.

The opportunity to be active in that market and it's a good market for us to to experiment in Weve underwritten solar PPA ways that we talked about that last year, we're looking at some.

Waste heat opportunities off of our natural gas compressors as well as a combined solar and flow battery project. So.

Yes. It is.

Modest in size relative to the size of the overall company, but strategically we see it as an important.

You know line of business in our tool kit for potential future growth and we want to retain some of those core competencies.

Alright, thank you.

Thanks, Rob.

Thank you.

And the next question is from Alex Kania from Wolfe Research. Please go ahead.

Thanks very much.

Question on the just liquids pipelines volume outlook for next year.

Just I wanted to confirm it sounds like it can get issued as a combination of.

Just the.

Ramp up gradually in volumes as you kind of get the resolution going from the disruption last fall.

Is it also and just to factor of I don't know maybe competitive volumes for the Permian is that's built out and just kind of curious about how.

Hi, Hey look at this kind of beyond just the.

The early 2020.

Scenario.

Alex as Paul here.

Ill start with I'll start with Keystone.

Keystone fall harvest it down to.

Cushing.

Patoka us Gulf Coast.

That pipeline is 94% contracted Hum we saw the lower volumes in Q4 because of the outage.

We continue under a great.

But we are.

Managing the impact of that you made by using DRA. So I see the volumes on Keystone long haul X hardisty to increase back to all over.

590000 barrel a day range here in Q1, and we will continue.

So.

2020, and beyond where we where we will see some variability is in our market leading system self Cushing, we've seen a significant buildup of pipe line capacity in the two to 3 million barrel range over the course of about a two year period and that put.

It's tremendous pressure on the Brent Ti spread which is putting pressure back on the transportation values.

We.

Consciously took what contracts we could during the course of 2018 2019. So that we can maintain high flows on that pipeline. So about 80% contract there where we will see some softness is in the spot component on market links as some fairly intense of pipe on pipe competence.

And we are partially insulated with the contracts, but we will see some.

Soft soft spot volumes I think throughout 2020.

Great. Thanks very much.

Thanks, Tom.

Thank you.

Your next question is from Patrick Kennedy from National Bank. Please go ahead.

Hey, guys.

Just back to the based Keystone system here.

You have an update on timing for the third party analysis of the spill.

Perhaps you could provide us with a base case assumption for when you might be in a position to bring on the the incremental 50000 barrels a day capacity.

Hi, Patrick as Paul here, I don't have a timeline.

For the cause failure analysis that so thats for the third party consultants and.

We don't have anything in hand, yet we've been working with them on information exchange et cetera, but that.

It is something I, just don't have any visibility into.

Until then under the corrective action order that we have with them. So we will stay in this.

The rates situation.

Until until then until the.

Pressures are restored and we can continue on our.

Capacity enhancement program.

We will be operating at that.

Somewhere around 590000 barrels per day range.

If I had to venture a guess I would say, we would look to start increasing our capacity to accommodate the new contracts. We achieved earlier this year in the open season.

But it won't be until late this year and probably early 2021 before we start ramping up those volumes.

Okay, that's great.

And then any comment on how the upcoming regulatory decision here on the frontier project.

Would impact deal look for KCS sell directly or indirectly.

Perhaps you could provide some color on what percentage of keurig sell commercial contracts are earmarked for oil sands projects that have already been fully approved or may still need auto was blessing.

Yes, we we pick up our barrels out of market how about hardisty, we don't have visibility upstream of our hardisty on the on the salsa that crude Keystone XL today is fully contracted is fully contracted with.

The major producers in Alberta, the our credit worthy.

Counterparties, so where we sit today, we have a fully contracted pipe, we're going to pick up our barrels at hardisty, and we look forward to providing the marketplace, but those barrels.

Okay, great if I could just sneak in one last one year on the front and I agree with you Russ you guys have a great story to tell.

And obviously you will always target zero incidents on the safety front, but just curious if you will be unveiling any five or 10 year targets throughout the course of the year as it relates to reducing emissions intensities or any other social or governance metrics.

No I think were youre continuing to work on what is it that our shareholders are looking to see weeds as as you've probably heard from Stan internally, we have our own targets within side of our businesses of what we're trying to achieve from environmental footprint perspective.

And what we have to do sort out what what what d. The marketplace wants to understand we've got lot of lot of data a lot of information and we're working with our shareholders understand what is they want to want to see so we already have targets in internally around what we're trying to achieve on a lot of fronts and.

And my guess, you'll stay posted in the coming months as we expand our disclosure around around that front. There what I can tell is there will be more because we have more to tell you.

We have we have lots of data, we're just trying to to put it in a format that it's useful for people and it's what they want to here and what they want to see.

Okay. That's it for me thanks, guys.

Thanks Pat.

Thank you.

The next question is from much Taylor from Tudor Pickering Holt. Please go ahead.

Yes, thanks for taking my question.

On the temporary service protocol and the NGL system, certainly been a positive pricing with monster I'm, just curious any comment on whether you've accomplished the short term goal there and unexpected things back or do you expect this become permanent Selwyn.

It's Tracy here. So you the TSP of course is not in effect right now it's something that will be was in fact for the last section of.

The summer months.

2019, it will go into effect again in April and conclude in October to cover off the summer months lights intended to do.

Two.

Dictate that how we will impact flow when we're in for maintenance. It has an impact flow by restricting risky onto the system, which has the impact of allowing IP delivery side and it's storage that we're going after.

The fact that all storage access has on the basis of love those summer flows to move into storage more effectively.

Yes, the issue in the summer in the basin is that a good chunk of demand disappears as the weather gets better. So you have a lot of supply looking for a market can't find it needs to get to that that storage.

Outlet. So we have been in the past and continue to work with our customers on alternative solution for storage access in the summer month, and actually all year round and we're working very actively right now and that file as to what the agreement is temporary shares protocol will remain in place. After the end of December period.

And it won't be extended.

Great. Thanks for that and then just one last one if I may.

Right.

On this at Investor day, right from some of the views on M&A, especially were seeing.

Hey, Mark.

Okay.

That sounds in global pricing, there any opportunity there or any other interest.

Commenting on.

Yes, its Don again here as I mentioned earlier our.

Our plates pretty full right now with with our secured program and.

Potentially moving projects from our and development program into our secured program we keep the.

Pretty close eye and everything out there or at this point I would say, though the landscape from our perspective hasn't changed.

We're there'd be a very select number of opportunities we'd be interested in.

In probably at prices that would never transact at but.

But no I wouldn't say there's anything.

In our in our scopes at this point in time.

Great. Thanks, Don.

Thanks, Matt.

Thank you.

And the next question is some shneur gershuni from you've yes. Please go ahead.

Hi, good afternoon, everyone.

I wanted to follow up PBM meets question before Stan you would respond to his question about shippers in the northeast specifically around the MPS.

Or producer customers, but you also mentioned in your response production.

Started to decline a little bit how do you feel about the marketing volumes that are on the pipe in terms of those contracts renewing into a fourth does the spreads in the different pools are the different hubs be mill still stay on or is that a risk where they can potentially.

Roll off and not be renewed.

Yes, I think this this is stan and most of our contracts are long term in nature. So if you look across the entire Columbia gas system their contract terms of eight years or more.

And our is about 10 years and more with specific the to the producer contracts. Their initial terms were 15 and 16 year contracts that started two years ago. So we have another 12 or 13 years before we need to worry about contracts rolling off in any material size or scale with respect to our asset.

Okay fair enough.

In may be wondering if we can just sort of pivot to the dividend guidance that was presented today.

You have a dividend guidance.

For both this year and then you've got for 2021 of the to 10%.

Yes. This flat this year, but the dividend is growing so I assume the payout ratio is increasing.

With the growth next year as well should we expect it to payout ratio is rising than the is well worth your growth offset I'm just trying to square with all the efforts you've made to bring your leverage down.

Does this caused leverage to start going back up, especially with with a little bit higher capex or the egcs. Okay with that just wondering if you can sort of comment about the thought process with the board with the targets that were set.

I'd say, it's done here, we take a pretty long term view on this.

We when you look back over a 20 year time horizon, we've we've largely been in the 80% to 90% of comparable earnings payout and that's about 40% of cash flow and.

Given the robust 2019 that we've come off of were probably.

Below those ranges, so we'll grow back into them and our guidance going forward of 8% to 10% through 21, and then 5% to 7% thereafter factors and no change to payout ratios and full compliance with the credit metrics I outlined earlier.

Interesting you said that so when you are seeing that there'll be no change to payout ratio does that mean that we should sort of think that EPS will effectively grown 2021 by 10% effectively thought.

No, we're probably below the 80% to 90% comparable earnings. If you look if you look at a 324 dividend on for 14 of earnings were well below that range right. Now. So you know again, if you if you're working at this more or less like any kg chart more something that's long term linear logarithmic.

It's 80% to 90% of comparable earnings will straightened out of it from time to time, but thats. There's been no change over 20 years here on that thank you Joe If you heard us say at Investor Day, and we said at a number times over the last 20 years or so.

By allocating and we have 40% of our free cash flow to dividends and 60% to.

To growing our businesses and mathematically, if we and invest that 60% cash flow in that 70% kind of return range I, we generate a long term growth rate of.

678% and and over the last 20 years, we've reinvested, but $100 billion anwyl generated growth rate of earnings and cash flow per share about 7% enhancer dividend growth rate of about 7% I think what Don saying is over the long term I don't think about it in annual terms think about it over the next five years, our expectation would be as it will.

Revert back to that mean, we've had some what we would call hyper growth in our world of eight to 10 over the last couple of years, but we've got some tailwinds of interest rate reduction demand for our system buying Columbia. They gave us some tailwinds to get into that 8% to 10% range, but I think what we're saying is a long term you can expect us to grow earnings and cash flow in that kind of range of.

5% to 7% and Andy you got long term track record of is doing that and as we've always said on our dividend and he is based on sustainable increases in earnings and cash flow in those ratios. The Don gave you are the ratios that weve used for the last 20 years, So thats and I think you look at our history and then as we said this.

Here I mean, we had a pretty good 2019, yet to tailwinds at some pretty good commodity markets I on our on our liquid side and some tailwinds in I mean in filling all of our of our businesses.

Things that we we we don't expect to have recurring next year I'd say that were in your into sort of P. hundred range on that 5% of our portfolio. That's that's variable.

And we're going to be it's the only 22020 expectations will be closer to P 50, or less on that variable component on but overall if you look at the growth rate of our earnings cash flow per share and that's our dividends per share you'd see a number of 70% over a 20 year period and the guidance introduced at Investor Day Post 21.

Was 5% to 7% and.

Consistent with a long term.

View, and payouts and credit metrics and the like where we are in that range and that's an organic 5% to 7% it could be bolstered by transformational activity in the future that we never budget for.

But it's the mix of projects the cadence the projects and how we execute on those projects, where we end up in those range. We added another billion three of projects today, we think our asset base will continue to to generate new opportunities in court or here going forward. So Gan long winded answer, but we're comfortable in that.

Range, but don't don't see any change to long term payout metrics here at all.

Alright, perfect well. Thank you very much in appreciate it.

Okay. Thanks generic.

Thank you once again, please press star one on the telephone keypad. If you have a question.

The next question is from Michael lumpy.

From Goldman Sachs. Please go ahead.

Hey, guys I. Appreciate you taking my question I'll be real quick when we think about the Bruce unit six NCR the here.

Safe just from a economic perspective to assume that the biggest impact is simply the lost megawatt hours and if so how long is the is it a full year or is it just a couple of months how should we think about.

What the extent of those lost megawatt hours are during the year.

Michael It's a it's francoise so the MCR a on a unit six.

We opened breaker on January 7th as expected and it's not expected. The the MCR program is not expected to conclude on that unit until 2023.

For the balance of the units the other seven units that remain.

In operation you can expect there roughly mid 80 percents range availability on average over the course of of this year and frankly over the next couple of years as well.

Got it thank you guys much appreciated.

Yes.

Thanks, Michael.

Thank you ladies and gentlemen, this concludes today's question and answer session.

Any further questions. Please contact TC energy Investor Relations I will now turn the call over to Mr. Moneta. Please go ahead Mr. moneta.

Thanks, very much and thanks to all of you for participating. This afternoon, we very much appreciate your interest in TC energy and we look forward to speaking with you again soon.

For now.

Thank you. The conference has now ended please disconnect your lines at this time and thank you for participation.