Full Year 2023 Canadian Utilities Ltd Earnings Call

Operator: Thank you for standing by. This is the conference operator. Welcome to the fourth quarter 2023 results conference call for Canadian Utilities Limited. As a reminder, all participants are in listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. To join the question queue, you may press star, then 1 on your telephone keypad.

Thank you for standing by this is the conference operator welcome to the fourth quarter 2023 results conference call for Canadian Utilities Limited as a reminder, all participants are in listen only mode and the conference is being recorded after the presentation, there will be an opportunity to ask questions.

To join the question queue. You May Press Star then one on your telephone keypad should you need assistance during the conference call you may signal, an operator by pressing star zero.

Operator: Should you need assistance during the conference call, you may signal an operator by pressing star and 0. I would now like to turn the conference over to Mr. Colin Jackson, Senior Vice President, Finance, Treasury, and Sustainability. Please go ahead, Mr. President.

I would now like to turn the conference over to Mr. Colin Jackson Senior Vice President Finance Treasury and sustainability. Please go ahead Mr. Jackson.

Colin R. Jackson: Thank you good morning, everyone.

Colin R. Jackson: Thank you. Good morning, everyone. We're pleased you could join us for Canadian Utilities' fourth quarter 2023 conference call. With me today is Canadian Utilities Executive Vice President and Chief Financial Officer, Brian Shkrobot, as well as ACCO Empower's Chief Operating Officer, Bob Myles, and ACCO Energy Systems' Chief Operating Officer, Wayne Stensby. Before we move into our formal agenda, I would like to take a moment to acknowledge the numerous traditional territories and homelands on which our global facilities are located. Today, we're speaking to you from our ACO Park head office in Calgary, which is located in the Treaty 7 region. This is the ancestral territory of the Blackfoot Confederacy, comprised of the Siksika, the Kainai, and the Pagani Nations, the Tsitsinu Nation, and the Stotinakota Nations, which include the Chikniki, Bears Paw, and Gidstoni First Nations.

Colin R. Jackson: Pleased you could join us for Canadian utilities fourth quarter 2023 conference call.

Colin R. Jackson: With me today is Canadian utilities, Executive Vice President and Chief Financial Officer, Brian Scrubber, as well as Echo empowers Chief operating officer, Bob miles and alcohol energy systems, Chief Operating Officer, Wayne Stephanie <unk>.

Colin R. Jackson: Before I move into our formal agenda I would like to take a moment to acknowledge the numerous additional territories in homeland, which our global facilities are located.

Colin R. Jackson: Today, we're speaking to you from our Alco Park head office in Calgary, which is located in the Treaty seven region.

Colin R. Jackson: This is the ancestral territory of the Blackfoot Confederacy comprised of the just to cut the kind I Nipigon and nations such as senior nation. The studying of coda nations that include that Nicky bears part and good Stony first nations. The city of Calgary is also home to the Macy nation of Alberta region.

Colin R. Jackson: The City of Calgary is also home to the Métis Nation of Alberta, Region 3. We honor and respect the diverse histories, languages, ceremonies, and culture of the Indigenous people who call these areas home. Brian will begin today with some opening comments on our financial results and recent company developments, followed by an update from Wayne and Bob on their respective business segments. Brian, Bob, and Wayne will then take questions from the investment community. Please note that a replay of the conference call, a short supplementary presentation, and a transcript will be available on our website, at CanadianUtilities.com, and can be found in the Investors section under the headings Events and Presentations. I'd like to remind you that our remarks today will include forward-looking statements that are subject to important risks and uncertainties.

Colin R. Jackson: Three we honor and respect the diverse histories languages ceremonies and culture of the indigenous people who call these areas home.

Colin R. Jackson: Brian will begin today with some opening comments on our financial results and recent company developments, followed by an update from Wayne and Bob on their respective business segments.

Speaker Change: Brian Bob and Wayne will then take questions from the investment community.

Speaker Change: Please note that a replay of the conference call sport supplementary presentation, and a transcript will be available on our website.

Speaker Change: Canadian utilities Dot com and can be found in the investors section under the headings events and presentations.

Speaker Change: 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 Canadian utilities with Canadian Securities regulators.

Colin R. Jackson: For more information on these risks and uncertainties, please see the reports filed by Canadian Utilities with the Canadian Securities Regulators. And finally, I'd like to point out that during this presentation, we may refer to certain non-GAAP and other financial measures, such as total of segment measures, adjusted earnings, adjusted earnings per share, and capital investment. These measures do not have any standardized meaning under IFRS.

Speaker Change: And finally I'd like to point out that during this presentation, we may refer to certain non-GAAP and other financial measures such as total segment measures adjusted earnings adjusted earnings per share and capital investment. These measures do not have any standardized meaning under ifr S and as a result, they may not be comparable.

Colin R. Jackson: And as a result, they may not be comparable to similar measures presented by other entities. And now I'll turn the call over to Brian for his opening remarks. Thanks, Colin. And good morning, everyone.

Speaker Change: Similar measures presented in other entities.

Speaker Change: And now I'll turn the call over to Brian for his opening remarks.

Brian P. Shkrobot: Thanks, Colin and good morning, everyone.

Brian P. Shkrobot: Thank you all very much for joining us today for our fourth quarter 2023 conference. 2023 was a great year for Canadian Utilities Limited. We achieved adjusted earnings of $596 million, or $2.21 per share, for 2022.

Brian P. Shkrobot: Thank you all very much for joining us today for our fourth quarter 2023 conference call.

Brian P. Shkrobot: 2023 was a great year for Canadian Utilities limited.

Brian P. Shkrobot: We achieved adjusted earnings of $596 million or $2.21 per share for 2023.

Brian P. Shkrobot: This performance was in line with our expectations for 2023, given the rebasing occurring in our Alberta-based distribution utilities during the year and the receding inflation in our Australia natural gas distribution business. Overall, our ACCO Energy Systems business continues to perform very well, with our transmission utilities providing stable stability and continued strong operating performance to help offset the pressures associated with rebasing at our distribution utilities. On the electric distribution side, we saw rate-based growth, an efficiency carryover mechanism, and operational efficiencies to help to partially offset this rebasing pressure during the period.

Brian P. Shkrobot: This performance was in line with our expectations for 2023, given the re basing occurring in our Alberta based distribution utilities during the year and the receding inflation in our Australia natural gas distribution business.

Brian P. Shkrobot: Overall, our Alco energy systems business continued to perform very well with our transmission utilities, providing stable <unk> and continued strong operating performance to help offset the pressures associated with re basing at our distribution utilities.

Brian P. Shkrobot: On the electric distribution side, we saw rate base growth deficiency carryover mechanism and operational efficiencies to help to partially offset this rebase and pressure in the period.

Brian P. Shkrobot: Similarly, in our Alberta-based natural gas business, rate-based growth, operational efficiencies, and the efficiency carryover mechanism provided similar relief. Moving to our natural gas distribution business in Australia, we continue to see strong growth in key operating metrics, such as new connections, tariff rates, and system volumes throughout the year. Australia's in-country inflation profile, however, continued to be the driving factor of the year-over-year earnings pressure experienced, as we discussed in our conference calls throughout 2023. 2022 saw inflation build rapidly, especially in the second half of the year, with full year inflation reaching almost 8% by year end 2022. As a result of this building profile, our 2022 earnings were exceptionally strong and created a comparable that was difficult to compete with in 2023 as inflation levels began to moderate. This trend resulted in us reporting a year-over-year decline of $20 million for this business during the year.

Brian P. Shkrobot: Similarly in our Alberta based natural gas business rate base growth operational efficiencies and inefficiency carryover mechanism provided similar relief.

Brian P. Shkrobot: Moving to our natural gas distribution business in Australia, we continued to see strong growth in key operating metrics, such as new connections tariff rates and system volume throughout the year.

Brian P. Shkrobot: Australia is in country inflation profile, however continued to be the driving factor of the year over year earnings pressure experience.

Brian P. Shkrobot: As we discussed in our conference calls wrote 2023 'twenty.

Brian P. Shkrobot: 2022 saw inflation build rapidly, especially in the second half of the year with full year inflation, reaching almost 8% by year end 2022.

Brian P. Shkrobot: As a result of this building profile our 2022 earnings were exceptionally strong and created a comparable that was difficult to compete with in 2023 as inflation levels began to moderate.

Brian P. Shkrobot: This trend resulted in us reporting a year over year decline of $20 million for this business in the year.

Brian P. Shkrobot: Looking ahead to 2024, in-country estimates continue to suggest further modernization and inflation with estimates in the 3 to 3.2% range, and we do expect this to create further pressure on Australia's earnings. We do not, however, expect the same degree of year over year volatility in 2024 comparables, as full year 2023 inflation for Australia declined to 4% by year end. With Wayne joining us for the conference call today, this is likely a great point for me to pass the call over to him to speak a little bit more about the successes that we saw in the Aco Energy Systems business in 2023 and how we're seeing things shape up for 2024. Wayne?

Brian P. Shkrobot: Looking ahead to 2020 for in country estimates changes suggest a further modernization and inflation with estimates in that 3% to 3.2% range and we do expect this to create further pressure on Australia earnings we do not however expect the same degree of year.

Brian P. Shkrobot: Over year volatility in 'twenty 'twenty four comparables as full year 2023 inflation for Australia declined two 4% a year at.

Brian P. Shkrobot: Yeah.

Brian P. Shkrobot: With Wayne joining us for the conference call. Today. This is likely a great point for me to pass the call over to him to speak a little bit more about the successes that we saw in the Coke energy systems business in 2023, and how we're seeing things shape up for 2024.

Wayne K. Stensby: Thank you, Brian, and good morning to all, and thank you for taking the time. As you alluded to in your opening comments, 2023 saw our business face some meaningful challenges and, Cyclianity. Despite this, however, we delivered results that were in line with expectations and consistent with those that were previously communicated. While rebasing pressured earnings in the year, it highlights the degree to which we've been successful at unlocking efficiencies within the business and the benefits that we've been able to share with customers as a result. Since starting our first PBR cycle in 2013 and considering the impacts of inflation, we've unlocked a 29% reduction in O&M costs per kilometer of electric distribution line and a 39% reduction in natural gas distribution costs per customer.

Wayne K. Stensby: Thank you, Brian and good morning to all and thank you for taking the time.

Wayne K. Stensby: As you alluded to in your opening comments 20 twenty-three saw our business faced some meaningful challenges in and simply in a team. Despite this however, we delivered results that were in line with expectations and consistent with those that were previously communicated well rebating.

Wayne K. Stensby: Pressures real while re basing pressure earnings in the year. It highlights the degree to which we've been successful at unlocking efficiencies within the business and the benefits that we've been able to share with customers as a result.

Wayne K. Stensby: Since starting our first PBR cycle in 2013, and considering the impacts of inflation, we've unlocked a 29% reduction in O&M cost per kilometer of electric distribution line.

Wayne K. Stensby: And a 39% reduction in natural gas distribution costs per customer those are very meaningful for our customers here in Alberta.

Wayne K. Stensby: They this meaningful savings and allows us to continue to be a safe reliable and efficient systems operator.

Wayne K. Stensby: These are very meaningful savings for our customers here in Alberta. They allow us to continue to be a safe, reliable, and efficient systems operator as we invest to meet the changing needs of our customers, and that is at the core of our long-term strategy. Well, I know that Brian and I have touched on this during previous conference calls. It's worth reiterating that 2023 saw us receive prospective regulatory decisions for both our generic cost of capital, or GCOC, and our third PBR cycle, which has now kicked off in 2024. As expected, the GCOC decision included the adoption of a formulamatic approach to ROE and the increase of our improved ROE from 8.5% to 9.28% for 2024.

As we invest to meet the changing needs of our customers and that is at the core of our long term strategy.

Wayne K. Stensby: Well I know that Brian and I have touched on this during previous conference calls, it's worth reiterating that 'twenty twenty-three sauce receive perspective regulatory decisions for both our generic cost of capital or a G. C O C and our third P. B R cycle, which has now kicked off in 2024.

Wayne K. Stensby: As expected the G. C. O C decision included the adoption of a formula Matic approach to our O E and the increasing of our improved ROE from eight 5% to 9.28% for 'twenty 'twenty. Four this is a meaningful increase and one that will help support strong performance as we move forward.

Wayne K. Stensby: Well I want to dig into the details of the PBR three decision in this call. It was largely in line with our expectations and we believe it provides a solid foundation for us to continue to deliver strong performance throughout the next PBR term.

Wayne K. Stensby: This is a meaningful increase and one that will help support strong performance as we move forward. While I won't dig into the details of the PBR 3 decision in this call, it was largely in line with our expectations, and we believe it provides a solid foundation for us to continue to deliver strong performance throughout the next PBR term. Most importantly, and as highlighted by both of these decisions, we continue to see prospectivity from our regulators, a clear understanding of and need for fair and reasonable returns on critical utility investments, and the importance of ensuring that the energy system remains reliable as society's energy needs continue to grow and evolve. As we think about 2024 more broadly, we see a very strong economic backdrop in our core Alberta market. We are seeing exceptionally strong population growth, housing starts, industrial activity, and broad economic expansion, and all of these show that the province will see strong growth in the coming years.

Most importantly, and as highlighted by both of these decisions.

Wayne K. Stensby: We continue to see prospectively from our regulators are clear understandings for the and the need for fair and reasonable returns on critical utility investments and the importance of ensuring that the energy system remains reliable as societies energy needs continue to grow and evolve.

Wayne K. Stensby: <unk>.

Wayne K. Stensby: As we think about 'twenty 'twenty four more broadly we see a very strong economic backdrop in our core Alberta market.

Wayne K. Stensby: We are seeing exceptionally strong population growth housing starts industrial activity and broad economic expansion and all of these show that the province will see strong growth in the coming years, along with these core economic drivers, we continue to see a need and a growing need to invest in ours.

Wayne K. Stensby: Systems to ensure the ongoing reliability and safety as we adapt to climate change and to support the broader societal decarbonization objectives. Collectively these factors support an expectation for rate base growth to increase in the coming years.

Wayne K. Stensby: Along with these core economic drivers, we continue to see a need for, and a growing need for, to invest in our systems to ensure ongoing reliability and safety as we adapt to climate change and to support the broader societal decarbonization objective. Collectively, these factors support an expectation for rate-based growth to increase in the coming years, and we see plenty of opportunities for us to invest within our existing footprint. In 2023, we invested $1.2 billion in our core utilities within the ATCO Energy System.

Wayne K. Stensby: And we see plenty of opportunities for us to invest within our existing footprint.

Wayne K. Stensby: In 2023, we invested $1.2 billion in our core utilities within Atco energy systems there.

Wayne K. Stensby: This ongoing utility investment ensures the continued generation of stable earnings and reliable cash flows from our utilities business and drives rate base growth.

Wayne K. Stensby: Given the strong trends that we are seeing in our core operating geographies, we expect to invest 4.1% to $4.8 billion in our regulated utilities over the next three years and for this to drive an annual rate base growth of somewhere between three and 4.4%.

Wayne K. Stensby: This ongoing utility investment ensures the continued generation of stable earnings and reliable cash flows from our utilities business and drives rate-based growth. Given the strong trends that we are seeing in our core operating geographies, we expect to invest $4.1 to $4.8 billion in our regulated utilities over the next three years and for this to drive annual rate-based growth of somewhere between 3 and 4.4 percent. In addition, we expect, over the longer term, to reach the 5% growth level. While the lower end of this range is believed to be readily achievable based on our current regulatory filings, our ability to demonstrate the need for prudent investment to our regulator through additional filings will be required in order to achieve the higher end of these ranges. And with those comments, I'll pass it back to you, Brian.

Wayne K. Stensby: In addition, we expect over the longer term to reach the 5% growth level.

Wayne K. Stensby: While the lower end of this range is believed to be readily achievable based on our current regulatory filings our ability to demonstrate the need for prudent investment to a regulator through additional filings will be required in order to achieve the higher end of these ranges.

Wayne K. Stensby: And with those comments I'll pass it back to you Brian.

Brian P. Shkrobot: Thanks, Wayne and great points.

Brian P. Shkrobot: While 2023 was on one hand, a transition year for the Alberta distribution utilities as they exited the second PBR cycle. It was also a key foundation building year as they enter their third PBR cycle, and we continue to look for opportunities to drive additional growth across a wider atco energy.

Brian P. Shkrobot: Systems portfolio.

Brian P. Shkrobot: Moving onto our Agco empower business, we delivered adjusted earnings of $50 million in 2023 compared to 35 million in 2022.

Brian P. Shkrobot: Thanks, Wayne, and great point. While 2023 was, on the one hand, a transition year for the Alberta distribution utilities as they exited the second PBR cycle, it was also a key foundation building year as they enter their third PBR cycle, and we continue to look for opportunities to drive additional growth across the wider aqua energy systems portfolio. Moving on to our Accu-Empower business, we delivered adjusted earnings of $50 million in 2023 compared to $35 million in 2022. Supporting this year-over-year growth was our acquisition of the 40 Mile and Adelaide Wind Assets in 2023, along with the energization of our Barlow, Deerfoot, and Empress Solar Assets during the year. Beyond this earnings growth, 2023 also saw us deliver a number of achievements related to our overall strategy. She talks about some of the other achievements that Aqua and Power Business achieved in the year and some of the strategic items that are front and center heading into 2024. I will now turn the call over to Bob. Thank you, Brian. You are correct.

Brian P. Shkrobot: Supporting this year over year growth was our acquisition of the 40 mile in Adelaide wind assets in 2023, along with the <unk> of our Barlow Dear foot and ever solar assets in the year.

Brian P. Shkrobot: Elon beyond this earnings growth 2023 also saw us deliver a number of achievements related to our overall strategy.

Brian P. Shkrobot: To talk about some of the other achievements that aqua empower business achieved in the year and some other strategic items that are front of mind heading into 2024, I will now turn the call over to Bob.

Robert J. Myles: Thank you Brian you are correct 2023 was a big year for Agco in power as we continue to execute our strategy. We signed a number of key long term off take agreements for our developments, including goes with Microsoft and Lafarge.

Robert J. Myles: Australia, we were selected as a preferred partner in the delivery of the South Australian government hydrogen jobs plan.

Robert J. Myles: Plan that will see us work as part of a consortium with bought Lindy to deliver our strategy and development program for the government's 250 megawatt hydrogen production facility, along with a 200 megawatt hydrogen fuel electricity generating facility and related hydrogen storage.

Robert J. Myles: Here in Canada, and also specifically highlight the work we did with its unique Ian good Stony first nations and the project financing, we completed and 40 mile wind backed by our contracted sales volumes.

Robert J. Myles: 2023 was a big year for Atco N Power, as we continue to execute our strategy. We signed a number of key long-term offtake agreements for our developments, including those with Microsoft and Lafarge. In Australia, we were selected as a preferred partner in the delivery of the South Australian government's hydrogen jobs plan, a plan that will see us work as part of a consortium with Boch Lindy to deliver a strategy and development program for the government's 250 megawatt hydrogen production facility along with a 200 megawatt hydrogen-fuelled electricity generating facility and related hydrogen storage. Back here in Canada, I'd also specifically highlight the work we did with the Cheneke and Good Stoney First Nations and the project financing we completed on 40 Mile Wind, backed by our contracted sales volume.

Robert J. Myles: In 2023, we brought that Janine and good Stony first nations into our Dear foot and Barlow solar developments, making them, 51% owners in the projects now.

Robert J. Myles: Not only does this partnership support energy transition and our overall strategy related to renewable generation and indigenous engagement it creates meaningful and long lasting economic returns for these communities.

Robert J. Myles: In power focused our efforts over the last 18 months to contract our Canadian sales volumes into long term virtual power purchase arrangements, which has culminated now with our 2024 Canadian sales volumes under virtual P. P A's totaling 71% of our overall platform.

This approach provided the opportunity for empower to complete a limited recourse project financing 40 mile wind totaling gross proceeds of $292 million.

Robert J. Myles: Partnerships and collaboration contracting a significant portion of future generation through virtual Ppas and project level financing remains the cornerstone of our cornerstone values of our business in areas that will only grow in importance as we continue to pursue our growth objectives for our renewables and our.

Robert J. Myles: In 2023, we brought the Chiniki and Good Stony First Nations into our Deerfoot and Barlow solar developments, making them 51% owners in the projects. Not only does this partnership support the energy transition and our overall strategy related to renewable generation and Indigenous engagement, it creates meaningful and long-lasting economic returns for these communities, and Power focused its efforts over the last 18 months to contract our Canadian sales volumes into long-term virtual power purchase arrangements, which has culminated now with our 2024 Canadian sales volumes under virtual PPAs, totaling 71% of our overall platform. This approach provided the opportunity for NPOWER to complete a limited recourse project financing on 40-mile wind, totaling gross proceeds of $292 million.

Robert J. Myles: Ultimate goal of owning developing and managing more than 1000 megawatts of renewable generation by 2030.

Robert J. Myles: <unk> front, we remain committed to our development project within Alberta is industrial Heartland and to meeting the growing demand for clean hydrogen and the economy more broadly.

This involves the development of both our carbon sequestration hard with shell and our Heartland hydrogen hub project.

Robert J. Myles: Since our last discussion our last update we've continued to advance conversations with project partners and off takers, while also progressing the technical work necessary to support a feed decision in 2024 on our hydrogen hub project and the Heartland and in S. E T.

Robert J. Myles: <unk> on our carbon sequestration project with shell.

Robert J. Myles: As has always been the case and executable business case for these projects will include strong commercial financial and Offtake partners. These partners are key to guarantee and the projects long term success to ensure the right partners are obtained we're currently undergoing alive and competitive process to sell.

Robert J. Myles: Partnerships and collaboration, contracting a significant portion of future generation through virtual PPAs, and project-level financing remain the cornerstone values of our business in areas that will only grow in importance as we continue to pursue our growth objectives for renewable energy and our ultimate goal of owning, developing, and managing more than 1,000 megawatts of renewable generation by 2030. On the hydrogen front, we remain committed to our development project within Alberta's industrial heartland and to meeting the growing demands for clean hydrogen in the economy more broadly. This involves the development of both a carbon sequestration hub with Shell and our Heartland Hydrogen Hub project.

Robert J. Myles: Elect these project partners and expect to have clarity on the outcomes of this process by mid year.

In terms of capital investment within Agco in our 2023 saw us invest $837 million into the business and increase of $597 million from Q from 2022.

Robert J. Myles: This increased investment reinforces our commitment to energy transition and was made up primarily of our renewable electricity asset acquisition that was completed at the beginning of the year. This acquisition source acquire both the operating 40 mile in Adelaide wind assets along with <unk>.

A renewable generation development pipeline.

Robert J. Myles: Also included in our capital investment, where a number of projects that we've already talked about today, including our Barlow Dear foot and Empress solar projects.

Robert J. Myles: Since our last discussion, our last update, we've continued to advance conversations with project partners and offtakers while also progressing the technical work necessary to support a feed decision in 2024 on our hydrogen hub project in the heartland and an FID decision on our carbon sequestration project with Shell. As has always been the case, an executable business case for these projects will include strong commercial, financial, and off-take partners. These partners are key to guaranteeing the project's long-term success. To ensure the right partners are obtained, we are currently undergoing a live and competitive process to select these project partners, and we expect to have clarity on the outcomes of this process by mid-year. In terms of capital investment within Atco and Power, 2023 saw us invest $837 million into the business, an increase of $597 million from 2022. This increased investment reinforces our commitment to energy transition and was made up primarily of our renewable electricity asset acquisition that was completed at the beginning of the year. This acquisition saw us acquire both the operating 40-mile and Adelaide wind assets along with a renewable generation development pipeline.

Robert J. Myles: Looking to the future our hydrogen initiatives and a successful execution of our renewable generating pipeline will all necessitate significant capital investment. We're currently evaluating yesterday's government of Alberta announcements on the renewable moratorium more details as depth.

Robert J. Myles: <unk> required however, I'm not surprised with their position, but we can discuss that further in the Q&A session.

In the near term, we expect capital recycling partnering and our existing sources of capital to provide the necessary funding support to support these growth efforts.

As we continue to words final investment decisions on key developments, including our hydrogen project in the Alberta Heartland, we will constantly evaluate our funding program to ensure that sufficient capital is available to support this growth.

Robert J. Myles: We continue to believe that the demand for clean hydrogen and renewable electricity will only grow as industry and governments seek to reduce carbon intensity, while ensuring a stable and reliable supply of energy with that update Bryan I'll pass things back to you.

Bryan: Thanks, Bob Great to hear about the growth that's happening, but the nacco and power and the ways in which that supports not just earnings but the numerous communities with whom we interact.

Bryan: Overall, our 2023 results were in line with our expectations for the Rebase senior.

Bryan: The earnings pressures, we expected related to Rebating and the Australia and inflation were evident in our results, but the overall impact was softened by the exceptional operating performance of all of our segments.

Bryan: And we and 2023 with a stable base on which to build for 2024.

Bryan: Our eco energy system business has seen favorable growth trends on the horizon and is entering its third performance based regulation cycle with regulatory prospective Eddie and a more favorable RMB in our environment.

Robert J. Myles: Also included in our capital investment were a number of projects that we've already talked about today, including our Barlow, Deerfoot, and Empress solar projects. Looking to the future, our hydrogen initiatives and the successful execution of our renewable generating pipeline will all necessitate significant capital investment. We're currently evaluating yesterday's Government of Alberta announcement on the renewable moratorium. More details are definitely required.

Bryan: Our actual empower business continues to execute on renewable electricity development and laying the groundwork for key decisions are ongoing clean fuels development.

Bryan: Overall Canadian utilities as a group is in a great position heading into 2024 and I'm excited to watch the business grow moving forward.

Bryan: As I conclude my prepared remarks, I want to thank everyone for their investment in the Canadian utilities limited and the support that you've provided our business throughout the years.

Robert J. Myles: However, I'm not surprised by their position, but we can discuss that further in the Q&A session. In the near term, we expect capital recycling, partnering, and our existing sources of capital to provide the necessary funding support to support these growth efforts. As we continue towards final investment decisions on key developments, including our hydrogen project in the Alberta heartland, we will constantly evaluate our funding program to ensure that sufficient capital is available to support this growth. We continue to believe that the demand for clean hydrogen and renewable electricity will only grow as industry and governments seek to reduce carbon intensity while ensuring a stable and reliable supply of energy.

Speaker Change: As many of you have seen our recently announced that I'll be retiring from Canadian utilities limited effective March one.

Speaker Change: And that this will be my last conference call as your Chief Financial Officer.

Speaker Change: It has been an honor to serve as a leader within various segments of your business for the last 24 years and I work and to work with the incredibly talented team that we have shared.

Canadian Utilities has exciting road ahead, and I know without Katie Patrick and the rest of the leadership team here, where steward the business mass really as the story progresses.

Speaker Change: That concludes my prepared remarks, I will now turn the call back to coal.

Katie Patrick: Thank you Brian on behalf of all of US the Canadian utilities I'd like to thank you for your contributions over the last 24 years I know for me, it's been a privilege to work with you and I'm going to Miss you.

Katie Patrick: In the interest of time, we ask that you limit yourself to two questions. If you have any additional questions. You are welcome to rejoin the queue.

Brian P. Shkrobot: With that update, Brian, I'll pass things back to Bob. Great to hear about the growth that's happening within Aqua and Power and the ways in which that supports not just earnings but the numerous communities with whom we interact. Overall, our 2023 results were in line with our expectations for the rebasing year.

Speaker Change: I will now turn it over the conference coordinator for questions.

Speaker Change: Thank you to join the question queue. You May Press Star then one on your telephone keypad, you'll hear tone acknowledging your request.

Speaker Change: Using a speakerphone please pick up your handset before pressing any Keith.

Speaker Change: If Italia question. Please press Star then two.

Speaker Change: The first question comes from Linda <unk> with TD Cowen. Please go ahead.

Linda: Thank you my question, Brian I want to congratulate you on a very successful career and wish you all the best in your retirement.

Brian P. Shkrobot: The earnings pressures we expected related to rebasing and Australian inflation were evident in our results, but the overall impact was softened by the exceptional operating performance of all our segments, and we end 2023 with a stable base on which to build for 2024. Our ACOE energy system business is seeing favorable growth trends on the horizon and is entering its third performance-based regulation cycle with regulatory prospectivity and a more favorable ROE environment. Our Akum power business continues to execute on its renewable electricity development and lay the groundwork for key decisions on our ongoing clean fuels development.

Brian P. Shkrobot: Thanks Linda.

Linda: I don't think first question is just on the news of the day in terms of the Alberta announcements yesterday, how might we think of your evolving appetite to invest in renewables.

Linda: Particularly with some of the I'm unclear.

Speaker Change: Definition of what a pristine escape might be and how different our stakeholders might define that differently can you just talk about how you see your presence in the province of all thing and what you might do to mitigate that uncertainty.

Yeah.

Speaker Change: Hi, Linda Thank you for that Bob here I totally agree I Smile. When you mentioned the words of both pristine because what in my remarks, when I commented around we need more detail that was one of the areas is what does that mean.

Brian P. Shkrobot: Overall, Canadian Utilities is in a great position heading into 2024, and I'm excited to watch the business grow moving forward. As I conclude my prepared remarks, I want to thank everyone for their investment in Canadian Utilities Limited and the support that you've provided our business throughout the years. As many of you have seen, I recently announced that I'll be retiring from Canadian Utilities Limited effective March 1st and that this will be my last conference call as your Chief Financial Officer.

Robert J. Myles: The positive thing in my mind anyway for our assets is many of our.

Robert J. Myles: The development pipeline the assets that we acquired are in the eastern part of the province, and I know in some of the conversations we've had with government. It was more focused around kind of the foothills and the pristine views of the mountains.

Robert J. Myles: Those are my views on on what I think is going to happen, but I mean again, the Devil's in the detail.

Brian P. Shkrobot: It has been an honor to serve as a leader within various segments of your business for the last 24 years and to work with the incredibly talented team that we have here. Canadian Utilities has an exciting road ahead, and I know that Katie Patrick and the rest of the leadership team here will steward the business masterfully as the story progresses. That concludes my prepared remarks. I will now turn the call back to Colin.

Robert J. Myles: I still believe that renewables are a key part of the growth in the province, do I believe that renewables are going to solve electricity requirements. When it gets to minus 30, no idle, but I do think they play a pretty important role through energy transition for ourselves and for the province.

Speaker Change: Thank you and maybe as my follow up question, just switching gears a bit to that in terms of how to achieve that decarbonization and energy transition them. The three year outlook on Capex.

Colin R. Jackson: Thank you, Brian. On behalf of all of us at Canadian Utilities, I'd like to thank you for your contributions over the last 24 years. I know for me, it's been a privilege to work with you, and I'm going to miss you. In the interest of time, we ask that you limit yourself to two questions. If you have any additional questions, you are welcome to rejoin the queue. I will now turn it over to the conference coordinator for questions. Thank you. To join the question queue, you may press star then 1 on your telephone keypad. You will hear a tone acknowledging your request. If you are using a speakerphone, please pick up your handset before pressing any key. To withdraw your question, please press star then 2.

Speaker Change: Is going to probably be influenced heavily.

Speaker Change: By what goes on in terms of natural gas demand in the Heartland industrial area, one why might we see Canadian utilities, making incremental regulatory filings and what are what's your expectation in terms of the actual potential incremental capex.

Speaker Change: That might be asked that would that be more in the outer years of your three year planning process or can you just comment on.

Speaker Change: How are how can help firm up.

Speaker Change: Thanks, Linda It's Wayne that's a great question, then and yeah. When we look over the next three and even five year horizon, we're seeing those ever increasing investment signals or demands fundamentally driven from a couple of areas, we're seeing a lot.

Linda Ezergailis: The first question comes from Linda Ezergailis with TD Cohen. Please go ahead. Thank you. Before I ask my question, Brian, I want to congratulate you on a very successful career and wish you all the best in your retirement. Thanks, Linda.

Of what we would call organic growth.

Speaker Change: Across our utilities that has really driven as I mentioned by you know inward population and housing starts.

Robert J. Myles: I think my first question is just the news of the day in terms of the Alberta announcement yesterday. How might we think of your evolving appetite to invest in renewables, specifically with some of the unclear definitions of what a pristine viewscape might be and how different stakeholders might define that differently? Can you just talk about how you see your presence in the province evolving and what you might do to mitigate that uncertainty? Hi Linda.

Speaker Change: I think though and you kind of called it out we shouldn't forget the large number of significant industrial developments and frankly announcements in the Hartland greater Edmonton area.

Speaker Change: And you know there will be more to come in 'twenty 'twenty four as we advance our ability to deliver natural gas to those projects. There are irregular there is a regulatory decision underway and it's sort of flowed out of our pipelines.

Robert J. Myles: Thank you for that. Bob here. I totally agree. I actually smiled when you mentioned the words pristine because in my remarks, when I commented around, we needed more detail.

Speaker Change: Pipelines G R. A to support that and I think you will see US later in the year, making subsequent regulatory applications in order to address other climate adaptation opportunities or needs for our customers.

Robert J. Myles: That was one of the areas that we were looking at. What does that mean? The positive thing, in my mind anyway, for our assets is that many of the development pipeline, the assets that we acquired, are in the eastern part of the province. And I know in some of the conversations we've had with the government, it was more a focus around kind of the foothills and the pristine views of the mountains. Those are my views on what I think is going to happen, but again, the devil's in the detail. I still believe that renewables are a key part of the growth in the province. But do I believe that renewables are going to solve electricity requirements when it gets to minus 30? No, I don't.

Speaker Change: Thank you.

Speaker Change: Yeah.

Speaker Change: The next question comes from Marc Jeremy.

Mark Thomas Jarvi: A b C capital markets. Please go ahead.

Mark Thomas Jarvi: Yeah. Good morning, our first half year return to you, Brian well deserved.

Mark Thomas Jarvi: Just maybe on the range of the rate base growth do you provided what kind of moves you to the upper end of the range and with the base case be at the midpoint right now.

Mark Thomas Jarvi: Yeah.

Brian P. Shkrobot: Thanks markets when the no I would say the base case is actually just the base case, we're confident that we can get there the upper end of the range is going to require.

Wayne K. Stensby: But I do think they play a pretty important role in the energy transition for us all and for the province. Thank you, and maybe as my follow-up question, just switching gears a bit in terms of how to achieve decarbonization and energy transition, the three-year outlook on CapEx is probably going to be influenced heavily by what goes on in terms of natural gas demand in the heartland industrial area. When might we see Canadian utilities making incremental regulatory filings, and what's your expectation in terms of the actual potential incremental CapEx when that might be spent? Would that be more in the outer years of your three-year planning process, or can you just comment on how that might come up? Thanks, Linda. It's Wayne.

Brian P. Shkrobot: We indicated in the in the documents is going to require.

Brian P. Shkrobot: Support and applications.

Brian P. Shkrobot: From the regulator, but we're feeling pretty good about the base case.

Brian P. Shkrobot: So just to follow up on that just with the G. R. A pending on on the gas transmission side of things how does that factor into what you know currently shown as a three year sort of growth on rate base and then how much more of a supplemental application or what the process is to ramp that up to get to the top end of the other growth range for the gas transmission business.

Brian P. Shkrobot: Well on the on the G. R. A.

Speaker Change: Application that is currently there and you know Bryan Bryan I'll add to my comments, but we have reached a negotiated settlement on.

Speaker Change: And that application. There is however, an ongoing piece of work around our sea whip or or the ability to.

Speaker Change: Support some of our larger ongoing projects and we would expect the results of that kind of mid year.

Wayne K. Stensby: That's a great question. And yeah, when we look over the next three and even five-year horizons, we're seeing those ever-increasing investment signals or demands fundamentally driven from a couple of areas. We're seeing a lot of what we would call organic growth across our utilities that is really driven, as I mentioned, by an aging population and housing starts. But I think, though, and you kind of called it out, we shouldn't forget the large number of significant industrial developments and, frankly, announcements in the Heartland and Greater Edmondson area, and you know there will be more to come in 2024 as we advance our ability to deliver natural gas There is a regulatory decision underway that sort of flowed out of our pipelines GRA to support that, and I think you will see us later in the year making subsequent regulatory applications in order to address other climate adaptation opportunities or needs for our customers. The next question comes from Mark Jarvi, and CIBC Capital Markets. Yeah, good morning. First, happy retirement to you, Brian. Well deserved.

Speaker Change: And Mark just to add to further add to Wayne's comments, we anticipated.

Speaker Change: The incremental growth within our transmission business and so we had included a placeholder.

Speaker Change: For a deferral account, which would facilitate a more.

Speedier process to to address the.

Speaker Change: Expected capital increase scenario and also to put in mechanisms that would give us a kind of a cash return.

Speaker Change: As we construct this potential large projects. So those are some of the proactive things that we did and as we alluded to we will follow that with needs applications and further as we go but we wanted to ensure that we had kind of a key a base foundation that our regulatory filings and we'll progress from there.

Speaker Change: Okay, and then last question just to kind of clarify when you talk about pushing to 4% to 5% is that at the upper end of that range you provide in the MD&A, which is four point forward or do you think there's.

Speaker Change: Cancel in sort of a three to five year horizon.

Speaker Change: To push above the 4.4% range closer to five.

Speaker Change: Yeah.

Speaker Change: Yeah, I think I mean.

Speaker Change: Forming my views Mark on on <unk>.

Speaker Change: Really that strong.

Mark Thomas Jarvi: Maybe on the range of the rate base growth that you provided, what kind of moves you to the upper end of the range, and would the base case be at the midpoint right now? Thanks, Mark. It's Wayne.

Speaker Change: Underpinning economic growth in the province and.

Speaker Change: And what we see as requirements and needs for climate adaptation. So.

Speaker Change: We published the numbers, we published in and we're going to stand by those numbers.

Wayne K. Stensby: No, I would say the base case is actually just the base case. We're confident that we can get there. The upper end of the range is going to require, you know, as we indicated in the documents, support and applications from the regulator. But we're feeling pretty good about the base case.

Speaker Change: But honestly as I think about the next 567 years in Alberta, It as a very positive environment and you know, it's it's up to us as the utility where a fundamental driver of a lot of that growth and supporter of a lot of that growth and so you know rest of.

Wayne K. Stensby: So just to follow up on that, just with the GRA pending on the gas transmission side of things, how does that factor into what's currently shown as a three-year sort of growth on rate base and then how much more of a supplemental application or what the process is to ramp that up to get to the top end of the growth range for the gas transmission business? Well, on the GRA application that is currently there, and, you know, Brian will add to my comments, but we have reached a negotiated settlement on that application. There is, however, an ongoing piece of work around. CWIP, or the ability to, support some of our larger ongoing projects, and we would expect the results of that kind of mid-year.

Speaker Change: Sure that our teams are committed to supporting all of our customers through that next five and beyond year horizon.

Speaker Change: Okay, maybe just one quick follow up just.

Speaker Change: You know what customers affordability, just as you went through a negotiated settlement, particularly on the Jerry maybe just the outreach how are you seen except in surround that incremental needed investment and the ability to get that I guess buying from customers for that incremental investment to drive the rate base growth higher.

Speaker Change: Yeah for sure and I you know like you you would've heard in.

Speaker Change: In the prepared remarks.

Speaker Change: Frankly, the phenomenal job that our teams have been able to do in terms of cost savings historically, so you know I.

Wayne K. Stensby: And Mark, just to further add to Wayne's comments, we anticipated the incremental growth within our transmission business, and so we included a placeholder for a deferral account, which would facilitate a more speedier process to address the expected capital increase scenario, and also to put in mechanisms that would give us kind of a cash return as we construct this potential large project. So those are some of the proactive things that we did, and as Wayne alluded to, we'll follow that with needs applications and further as we go, but we wanted to ensure that we had kind of a key base foundation in our regulatory filings, and we'll progress from there. Okay, and then last question, just to kind of clarify, when you talk about pushing to four to five percent, is that at the upper end of that range you provide in the MD&A, which is 4.4, or do you think there's potential in sort of a three to five year horizon to push above the 4.4 percent range, closer to five? Yeah, I think, I mean, I'm forming my views, Mark, on on, really that strong underpinning economic growth in the province. And and what we see as requirements and needs for climate adaptation. We published the numbers we published and we're going to stand by those numbers. But honestly, as I think about the next, 5, 6, 7 years in Alberta.

Speaker Change: I don't want to I.

Speaker Change: I don't want to downplay the the need for us to keep one eye on operating efficiencies and continuing to drive O&M costs down I think that is the the path for us in terms of affordability.

Speaker Change: That the flip side of that of course is we continue to see strong customer feedback and demand for increased supply and increase reliability and and I personally believe over the next decade.

Speaker Change: We're going to continue to see an ever increasing desire by customers for an ever increasing level of reliability and so that's how we're thinking about our investments moving forward.

Speaker Change: Understood and once again, Brian Gratulation.

Brian P. Shkrobot: Thanks Mark.

Brian P. Shkrobot: The next question comes from Maurice Choy with RBC capital markets. Please go ahead.

Thank you and good morning, everyone Wayne if I could just pick up on the previous question a little bit and to clarify are you, saying that you're expecting to reach 45% in next five to seven years and that is all largely driven by economic and population growth.

Brian P. Shkrobot: Okay.

Wayne K. Stensby: Yeah, I think what we said is in the longer period.

Wayne K. Stensby: You know beyond beyond the three year view.

Wayne K. Stensby: We are going to we we anticipate being able to see those those ranges.

Speaker Change: We recognize that is five years old Maurice and you know I I'm not suggesting that it's just based on customer growth I think if I go back to our pillars in our strategy is really around supporting our customers as they continue to evolve.

Wayne K. Stensby: It is a very positive environment, and, you know, it's up to us as the utility. We're a fundamental driver of a lot of that growth and supporter of a lot of that growth. And so, you can rest assured that our teams are committed to supporting all of our customers through that next five and beyond year horizon. Okay, maybe just one quick follow-up, just, you know, customers, affordability, just as you went through the negotiated settlement, particularly on the GRA and maybe just the outreach, how are you seeing acceptance around that incremental needed investment and the ability to get that, I guess, buy-in from customers for that incremental investment to drive the rate-based growth higher? Yeah, for sure.

Speaker Change: So we have a very strong kind of line of sight too.

Speaker Change: Both industrial and commercial and residential growth today. The longer term is is our view of climate adaptation investments in our utilities to support de carbonization and those just occurs to us that those trends are.

Speaker Change: You know in some ways universal, but are certainly hard you know well at play and well at hand here in Alberta.

Wayne K. Stensby: And I, you know, I would have heard in the prepared remarks, frankly, the phenomenal job that our teams have been able to do in terms of cost savings historically, so, you know, I don't want to, I don't want to downplay the need for us to keep one eye on operating efficiencies and continuing to drive O&M costs down. I think that is the path for us in terms of affordability, but the flip side of that, of course, is that we continue to see strong customer feedback and demand for increased supply and increased reliability. And, I personally believe that over the next decade, we're going to continue to see an ever increasing desire by customers for an ever increasing level of reliability. And so that's how we're thinking about our investments moving forward. understood. And once again, Brian, congratulations, and Mark Carlson. The next question comes from Maurice Choy with RBC Capital. Please go ahead. Thank you. And good morning, everyone.

Speaker Change: Understood and maybe just keeping on the same theme boat goes here.

Speaker Change: Obviously, the Capex is going to rise due to the law law of large numbers, Brian could you speak to your academia to deliver this rate base growth.

Speaker Change: Up to you whether or not you want to speak to that in the context of the $2 $5 billion to renewables enough almost $5 billion for hydrogen project or not.

Brian P. Shkrobot: Yeah. Thanks Maria.

Brian P. Shkrobot: <unk> and Wayne outlined we do see.

Brian P. Shkrobot: Some considerable growth opportunities over over the long term and as we do that we'll continue to access both the debt and equity markets and over time with that level of growth, you'll see us likely to go to the equity markets and we've been communicating that through the <unk>.

Brian P. Shkrobot: Last year, and so no real surprises on that front end.

Maurice Choy: Wayne, I could just pick up on a previous question a little bit. And to clarify, are you saying that you're expecting to reach four to 5% in the next five to seven years? And that is all largely driven by economics and population. Yeah, I think what we said is in the longer period, you know, beyond beyond the three-year view, we are going to, we anticipate being able to see those, those ranges. We recognize that is five years old, Maurice.

Brian P. Shkrobot: You know on all sides of our business will continue to make sure that we optimize the sources of funding as we go.

Brian P. Shkrobot: And then just to clarify and I think it was about.

Brian P. Shkrobot: I think something that Bob mentioned in his prepared remarks that to support the growth youre expecting to perform some capital recycling alongside partnerships and existing sources of capital can you elaborate a little bit more about what these capital recycling potential opportunities are.

Wayne K. Stensby: And, you know, I'm not suggesting that it's just based on customer growth. I think I go back to our pillars, and our strategy is really around supporting our customers as they continue to evolve. So we have a very strong kind of line of sight to both industrial and commercial and residential growth today; the longer term, our view of climate adaptation, investments in our utilities to support decarbonization, and it just occurs to us that those trends are, you know, in some ways universal, but are certainly hard, you know, well at play and well at hand here in Alberta, understood, and maybe just keeping the same theme about growth here. Obviously, CapEx is going Brian, can you speak?

Brian P. Shkrobot: Yeah, Laurie Thanks, Bob here, So I'd say two key areas, where we're where we referenced recycling one is in the area of renewables, where we're looking at partnerships in the renewables area. So as we develop our projects we'd love to bring partners in.

Robert J. Myles: So we call that kind of recycling from that perspective, and then the other area. I know there are large hydrogen projects, we absolutely will be bringing in partners strategic partners, primarily in that area as well, but we really want to develop the projects ourselves and then bring in partners and at a later date.

Robert J. Myles: The reference to the recycling.

Robert J. Myles: Would you contemplate selling some of the renewables as you deal with them.

Over the course of the years.

Speaker Change: Yeah, I would say, yeah, we would definitely consider that.

Speaker Change: Thank you very much <unk>.

Brian P. Shkrobot: Your academy needs to deliver this rate-based, it's up to you whether or not you want to speak to that in the context of $5 billion for renewables and almost $5 billion for hydrogen projects. Yeah, thanks, Maurice. And as you alluded to, and Wayne outlined, we do see, you know, some considerable growth opportunities over the long term. And as we do that, we'll continue to access, you know, both the debt and equity markets. And over time, with that level of growth, you'll see us go to the equity markets. And we've been communicating that through the past year. And so there is no surprise on that front.

Speaker Change: It's definitely morays, that's definitely not our number one priority.

Speaker Change: To just sell them, but we will consider that for sure.

Speaker Change: That makes sense and I'll share my congratulations to Brian on your retirement Tomorrow and best of luck as well.

Speaker Change: Thanks Bruce.

Speaker Change: Yeah.

Speaker Change: The next question comes from Patrick Kenny with National Bank Financial. Please go ahead.

Yeah. Good morning, everybody I'm, maybe just coming back to the Alberta government's announcement. This week. So they indicated some changes still to come here on you know how electric transmission costs might be allocated or I guess recovered across the system.

Patrick Kenny: Just wanted to get your thoughts on how these changes might impact your overall business risk profile, let's say with the rating agencies.

Brian P. Shkrobot: And you know, on all sides of our business, we'll continue to make sure that we optimize the sources of funding as we go. I think something that Bob mentioned in his prepared remarks that to support the growth, you're expecting to perform some capital recycling, alongside partnerships and existing sources of capital. Can you elaborate a little bit on the second potential opportunity? Yeah, Maurice, thanks, Bob here.

Patrick Kenny: If for example, higher proportion of revenue comes from.

Patrick Kenny: You know a more concentrated group of renewable power developers.

Patrick Kenny: As opposed to you know your diversified pool of end use customers.

Patrick Kenny: And following on that do you think these changes could call for a higher equity thickness down the road.

Patrick Kenny: Versus the relatively low 37% that's in place right now.

Speaker Change: Thanks, Patrick Great question, and I guess to answer your question no. We don't anticipate any with the changes any impact where our risk as a regulated utility to.

Robert J. Myles: So I'd say there are two key areas where we refer to recycling. One is in the area of renewable energy; we're looking for partnerships in the renewable energy area. So as we develop our projects, we'd love to bring partners in. And so we call that kind of recycling from that perspective.

Speaker Change: You know the regulatory compact allows us to recover prudently incurred costs and provides that opportunity so although the.

Robert J. Myles: And then in the other area, our large hydrogen projects, we absolutely will be bringing in partners, strategic partners primarily in that area as well. But we really want to develop the projects ourselves and then bring partners in at a later date. That's kind of the reference to recycling.

The mix of who pays for electric Trust transmission May change, we don't anticipate any of that impact on our on our business.

Speaker Change: We will continue to push for higher equity thickness I think we did that in the last piece, you'll see some work continued to be done there as we.

Speaker Change: Try to again get our equity thickness, probably more in line with kind of North American peers, but.

Robert J. Myles: Would you contemplate selling some of the renewables as you de-risk them over the course of the years? Yeah, I would say for sure. We would definitely consider that. Thank you very much. It's not our...

Speaker Change: But to answer your question simply no we don't anticipate any any impacts on our credit metrics or no.

Speaker Change: Risk on an electric transmission opportunities.

Speaker Change: Okay, great. Thanks for that.

Robert J. Myles: It's definitely not our number one priority to just sell them, but we will consider that. That makes sense. And I'll share my congratulations to Brian on his retirement tomorrow and best of luck.

Speaker Change: And then maybe just a follow up on your comments around the strong population growth in the province.

Speaker Change: I'm just wondering if you're starting to see any relief from.

Speaker Change: No workforce availability perspective.

Robert J. Myles: Thanks, Bruce. The next question comes from Patrick Kenny with National Bank Financial. Please go ahead. Yeah, good morning, everybody.

Speaker Change: Or if labor shortages are still a concern as you look to.

Speaker Change: Execute on your growth plans here in Alberta over the coming years.

Speaker Change: Yeah, I I can I can address that.

Patrick Kenny: Um, maybe just coming back to the Alberta government's announcement this week. So they indicated some changes still to come here on, you know, how electric transmission costs might be allocated and, guess, recovered across the system. I just wanted to get your thoughts on, you know, how these changes might impact your overall business risk profile, say, with the rating agencies. If, for example, a higher proportion of revenue comes from, you know, a more concentrated group of renewable power developers, opposed to, you know, your diversified pool of end-use customers. And, you know, following on that, do you think these changes could call for higher equity thickness down the road versus the relatively low 37% that's in place right now? Thanks, Patrick. Great question.

Speaker Change: You know I.

Speaker Change: I think one goes hand in hand with the other if if we're if you're being if you're thinking about it the right way people or are coming to Alberta for career opportunities for jobs for you now.

Speaker Change: To participate in the economy and as a result, they bring skills and expertise that then helps elberta grow in and execute.

Speaker Change:

Speaker Change: So I so I think it all kind of leads a little bit hand in glove. There is a very large pipeline of very large projects that are either have been announced or you know we would all expect will be announced over the over the coming months and year.

Speaker Change: Years.

Speaker Change: So yeah, I I think there will no doubt be some challenges around you know trades in and some of those activities we have a.

Brian P. Shkrobot: And I guess to answer your question, no, we don't anticipate any impact on our risk as a regulated utility to, you know, the regulatory compact allows us to recover our poorly incurred costs and provides that opportunity. So although the mix of who pays for electric transmission may change. We don't anticipate any of that impacting our business. We will continue to push for higher equity thickness; I think we did that in the last GCOC, and some work will continue to be done there as we try to, again, get our equity thickness probably more in line with kind of North American peers. But to answer your question simply, no, we don't anticipate any impacts on our credit metrics or, you know, risk on electric transmission opportunities. Okay, great. Thanks for that!

Speaker Change: Long standing strategy of investing in our people and investing in our teams and you know our focus on on development of our workforce and we will continue to do that throughout Alberta and you know these are all features of our growth.

Speaker Change: <unk> and we're very proud and pleased to be part of it.

Speaker Change: Okay, Great I appreciate your comments and all the best Brian.

Brian P. Shkrobot: Thanks, Patrick.

Brian P. Shkrobot: Yeah.

Brian P. Shkrobot: The next question comes from Ben Pham with BMO. Please go ahead.

Benjamin Pham: Alright, Thanks, good morning Andre.

Benjamin Pham: Oh Tetra sanctioning of the Heartland.

Benjamin Pham: Hydrogen Ccs project.

Benjamin Pham: How does that influence if any are.

Benjamin Pham: Their capex numbers or rate base growth figures that you you highlighted the report.

Benjamin Pham: Yeah.

Speaker Change: Thanks Ben.

Wayne K. Stensby: And then maybe just a follow up on your comments around the strong population growth in the province. I'm just wondering if you're starting to see any relief from a, you know, workforce availability perspective, or if labor shortages are still a concern as you look to, you know, execute on your growth plans here in Alberta over the coming years. Yeah, I can, I can address that. You know, I think one goes hand in hand with the other if we're, if you're thinking about it the right way, people are coming to Alberta for career opportunities, for jobs, to participate in the economy, and as a result, they bring skills and expertise that then help Alberta grow and succeed. So I think it all kind of leads a little bit hand in glove.

Speaker Change: The rate base numbers that Wayne went through it it wouldn't be impacted them.

Speaker Change: Particularly for that hydrogen project debt bumps in Bob's business.

Speaker Change: Yes, Ben maybe just to add to that is a project that I was referencing was is on the non utility side. So it would be totally separate.

Speaker Change: <unk> rate base numbers as Brian said.

Benjamin Pham: And even the H two pipe would be nonregulated.

Speaker Change: As of right now.

Benjamin Pham: H two pipeline that is part of our hydrogen Heartland hub project.

Benjamin Pham: As would be separate as well as of right now.

Benjamin Pham: Okay.

Benjamin Pham: And maybe this one is a little bit.

Speaker Change: And my question I was also thinking about more of that.

Speaker Change: Indirect impact too.

Do your rate base figures, just the heartland activity.

Wayne K. Stensby: There is a very large pipeline of very large projects that either have been announced or we would all expect will be announced over the coming months and years. And so, yeah, I think there will no doubt be some challenges around trades and some of those activities, but a long-standing strategy of investing in our people and investing in our teams and, you know, a focus on the development of the workforce, and we will continue to do that throughout Alberta. And, you know, these are all features of a growing economy, and we're very proud and pleased to be part of it. Okay, great. I appreciate your comments and all the best, Brian, budget. The next question comes from Ben Pham with BMO. Please go ahead. Hi, thanks. Good morning.

Speaker Change: And moving Florida project have U S.

Speaker Change: In a sense indirectly flowed through.

Speaker Change: The impact of this project and to the Reg side are you there.

Speaker Change: I guess it would there be an impact there.

Speaker Change: So.

Speaker Change: The.

Speaker Change: The numbers its Wayne.

Speaker Change: Ben the.

Speaker Change: The rate base growth numbers or the.

Speaker Change: We published our on the basis of approved projects that are in the Hartland area.

Amongst others across the province so.

Speaker Change: You know to the degree there is incremental announcements.

Speaker Change: Announcements and in years to come of additional large users in the Hartland area then.

Benjamin Pham: On the potential sanctioning of the Heartland Hydrogen CCS Project. How does that influence, if any, your... Your CapEx numbers are right based growth figures that you've highlighted in the report. Yeah, thanks, Ben. The rate base numbers that Wayne went through wouldn't be impacted, particularly for that hydrogen project that Bob's involved. Yeah, Ben, maybe just the answer to that is...

Speaker Change: That would be one of the.

Speaker Change: One of the ways that those numbers move up.

Speaker Change: Okay and then my follow up question that Im just looking at how you've broken out the rate base CAGR is by.

Speaker Change: Utility and I noticed the transmission side, there's there's not a lot.

Speaker Change: I shouldn't say and a lot that the growth rates are lower.

Robert J. Myles: The project that I was referencing is on the non-utility side, so it would be totally separate from Wayne's rate-based numbers, as Brian mentioned, and even the H2 pipe will be non-regulated. As of right now, the H2 pipeline that is part of our Hydrogen Heartland Hub project would be separate, well, as of right now. And maybe this is a little bit of a similar question. I was also thinking about more of the indirect impact on rate-based vendors, just the heartland activity and moving forward a project. Have you, in a sense, indirectly flowed through?

Speaker Change: The lowest of the group.

Speaker Change: Shouldn't that co op.

Speaker Change: At all just with photo renewables stuff, that's happening in our province or will happen or is it just really how well your transmission is located.

Speaker Change:

Speaker Change: I might take your eye back to the size of the transmission rate base to begin with so it is kind of.

Speaker Change: No.

Speaker Change: Quite a quite a bit our foreign beyond the size of the rate basis across the the rest of our portfolio and so even though it is seeing capital investment obviously.

Dollar for dollar requires quite a bit more in order to generate similar percentage growth rates there.

Wayne K. Stensby: impacted this project into the regulatory side? I guess, would there be an impact there? So. The numbers, it's Wayne, and the rate-based growth numbers that we published are on the basis of approved projects that are in the Heartland area, amongst others across the province. So, you know, to the degree there are incremental announcements in the years to come of additional large users in the Heartland area, then that would be one of the ways that those numbers move up. And maybe my follow-up question, I'm just looking at how you've broken up the rate-based CAGRs. Utility. And I noticed on your transmission side, there's, there's not a lot, I shouldn't say not a lot, that the growth rate's the lowest of the group. Shouldn't that go up? at all, just with all the renewables, stuff that's happening in the province, or will happen? Or is it just really where your transmission is located?

Speaker Change: There are some investments in the electric transmission business to support renewables I frankly see more in the future as we think about we serve.

Speaker Change: You kind of pointed out, but we serve the more northern parts of Alberta, and if you you know broadly the oil and gas sector and if you think about those corners of the province gross in that electric transmission business I think is going to be more aligned with climate adaptation and reliability.

Speaker Change: Enhancements.

Speaker Change: Okay. That's helpful. Thank you.

Speaker Change: The next question comes from Jessica well with Scotiabank. Please go ahead.

Jessica: Great. Thanks, so much for taking my question.

Jessica: So just to start.

Jessica: So just looking at your renewable development pipeline.

Wayne K. Stensby: I, you know, I might take your eye back to the size of the transmission rate base to begin with. So it is kind of, you know, quite a bit or far and beyond the size of the rate bases across the rest of our portfolio. And so even though it is seeing capital investment, obviously, dollar for dollar, it requires quite a bit more in order to generate similar percentage growth rates. There are some investments in the electric transmission business to support renewables. I frankly see more in the future as we think about, you know, we serve, you kind of pointed out, but we serve the more northern parts of Alberta and, if you, you know, broadly the oil and gas sector. And if you think about those corners of the province, growth in that electric transmission business is going to be more aligned with climate adaptation and reliability enhancement. Okay, that's helpful.

Jessica: In your latest slide deck, just how are you thinking about progressing the pipeline in the near term and I guess, just what is required to move some of these projects to a positive I D.

Jessica: Yeah, Thanks, Jessica Bob here.

Robert J. Myles: And our pipeline that we acquired we are already advancing one of those projects and the project. We have been advancing was not impacted directly by the moratorium to renewables moratorium with the government. It has already been approved the other projects that are in the pipeline.

Robert J. Myles: We're obviously not approved so we were advancing those maybe a little bit more slowly I can put it that way. So we right now are spending our time trying to understand where the government is before we really start deciding which which is the next project that we advance.

Speaker Change: Okay. Thanks for that.

Speaker Change: Over to the utilities.

Benjamin Pham: Thank you. The next question comes from Jessica Hoyle, and Scotiabank. Please go ahead.

Speaker Change: What kind of initial expectation do you have that performance in 2024 under PV angry and what kind of further efficiencies that can be realized.

Jessica Hoyle: Great, thanks so much for taking my question. So, just to start on the renewable side. So, looking at your renewable development pipeline in your latest slide deck, just how are you thinking about progressing the pipeline in the near term? And I guess just what is required to move some of these projects to a positive FID? Yeah, Jessica. Bob here.

Speaker Change: I mean, as you would know and have seen Jessica.

Speaker Change: The.

Speaker Change: [noise] parameters for PBR three were adjusted.

Speaker Change: A little bit I guess in terms of.

Speaker Change: Now with where the earnings sharing begins and some of those other elements.

Robert J. Myles: In our pipeline that we acquired, we are already advancing one of those projects. The project we have been advancing was not impacted directly by the moratorium on renewable energy projects with the government because it had already been approved.

Speaker Change: I you know I think.

Speaker Change: Thank you can look at our track record and understand that we are pretty focused on finding and continuing to find efficiencies in the business and as we look out over the next five years you know.

Robert J. Myles: The other projects that are in the pipeline were obviously not approved, so we were advancing those maybe a little bit more slowly, if I could put it that way. So right now, we're spending our time trying to understand where the government is at before we really start deciding which is the next project that we should advance. Okay, thanks for that. And just moving over to the utilities, what kind of initial expectations do you have for performance in 2024 under PBR 3? And what kind of further efficiencies can be realized? I mean, as you would know and have seen, Jessica, the parameters for PBR three were adjusted a little bit, I guess, in terms of you know, where the earning sharing begins and some of those other elements.

Speaker Change: If we get those efficiencies through technology through.

Other capital investments that then support operating efficiencies.

Speaker Change: And.

Speaker Change: I can assure you the teams are busy.

Speaker Change: With an eye towards that and that is our view of how we support customer affordability. So.

Speaker Change: It is a five year cycle and and.

Speaker Change: And we're in the first year.

Speaker Change: And you know we were we are continuing to put plans in place to seek in L. A level of out performance.

Wayne K. Stensby: You know, I think you can look at our track record and understand that we are pretty focused on finding and continuing to find efficiencies in the business. And as we look out over the next five years, you know, we get those efficiencies through technology and other capital investments that then support operating efficiencies. And, you know, I can assure you the teams are busy with an eye towards that. And that is our view of how we support customer affordability. So this is a five-year cycle, and we're in the first year.

Speaker Change: I don't want to Miss the opportunity, though to illustrate that you know we are really focused on growth in the next.

Speaker Change: Few years, and so I believe we can achieve both but you will see both come out of our businesses.

Speaker Change: Yeah.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Thanks Jessica.

Speaker Change: This concludes the question and answer session I would like to turn the conference back over to Mr. Colin Jackson for any closing remarks.

Wayne K. Stensby: And, you know, we are continuing to put plans in place to seek out a level of outperformance. But I don't want to miss the opportunity, though, to illustrate that, you know, we are really focused on growth over the next few years. And so I believe we can achieve both, but you will see both come out of our business.

Speaker Change: Okay.

Colin R. Jackson: Thank you. Thank you all for participating today, we appreciate your interest in Canadian utilities, and we look forward to speaking with you again soon.

Speaker Change: This concludes today's conference call you may disconnect. Your lines. Thank you for participating and have a pleasant day.

Wayne K. Stensby: I say thanks for the color and final photoshoot. Thank you, Jessica! This concludes the question and answer session. I would like to turn the conference back over to Mr. Colin Jackson for any closing remarks. Thank you. Thank you all for participating today. We appreciate your interest in Canadian Utilities, and we look forward to speaking with you again soon. This concludes today's conference call; you may disconnect your lines. Thank you for participating and have a pleasant day. "...and this is pretty much it..." Thank you for watching.

Okay.

Speaker Change: Yeah.

Speaker Change: Yeah.

Speaker Change: Okay.

Speaker Change:

Speaker Change: Yeah.

Speaker Change: Yeah.

Speaker Change: Yeah.