Q3 2024 Canadian Utilities Ltd Earnings Call
Thank you for standing by this is the conference operator, welcome to the third quarter 'twenty 'twenty four results conference call and webcast for Canadian Utilities limited.
As a reminder, all participants are in a listen only mode and the conference is being recorded.
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Speaker Change: I would now like to turn the conference over to Mr. Colin Jackson Senior Vice President Financial operations. Please go ahead, Mr. Jackson third quarter.
Colin Jackson: Thank you and good morning, everyone.
Colin Jackson: Pleased you could join us for the Canadian utilities third quarter 2024 conference call.
Colin Jackson: On the line today, we have 80 Patrick.
Colin Jackson: Decorative vice President and Chief Financial Officer of Canadian utilities waste.
Speaker Change: Thanks, Dennis Steen, Chief operating Officer, Atco Energy systems, and Bob <unk>, Chief operating officer.
Speaker Change: Empower.
Speaker Change: Before we move into today's Mark remarks.
Speaker Change: I would like to take a moment to acknowledge the numerous traditional territories homeland, which our global facilities are located.
Speaker Change: Today I am speaking to you from our Alco Park head office in Calgary.
Which is located in the treaty seven region.
This is the ancestral territory the Blackfoot Confederacy comprised of Zika.
Speaker Change: <unk> got a nation, the subpoena nation and a stunning Dakota nations.
Speaker Change: Which includes the syndicate bearish Pas and good Stony first nations.
Speaker Change: I also want to recognize the city of Calgary is home to the main nation of Alberta districts five and six.
Speaker Change: During the quarter employees across Canada participated in the National days, the truth and reconciliation by walking together to honor indigenous communities their experiences.
Speaker Change: And we continue to reflect learn.
Speaker Change: Respect to diverse history languages ceremonies and cultures of indigenous peoples.
Speaker Change: As we move towards understanding.
Speaker Change: Reconciliation.
Speaker Change: Today, you will hear from Katie will deliver opening comments on our financial results recent company developments and an update on our Australian businesses, followed by an update from Wayne and Bob on their respective business segments.
Speaker Change: Following today's remarks, the Canadian utilities team, we'll take questions from the investment community.
Speaker Change: Please note that a replay of the conference call a copy of the presentation and today's transcript will be available on our website at Canadian utilities Dot com.
Speaker Change: The materials can be found in the investors section under events and presentations.
Speaker Change: Today's remarks will include forward looking statements that are subject to important risks and uncertainties.
Speaker Change: For more information on these risks and uncertainties. Please refer to our filings with the Canadian Securities regulators.
Speaker Change: During today's presentation, we may refer to certain non-GAAP and other financial measures, including adjusted earnings adjusted earnings per share and capital investment.
I'd also note that we provide adjusted earnings before interest taxes, depreciation and amortization or adjusted EBITDA for alcohol empower.
Speaker Change: These measures do not have any standardized meaning under IRS and as a result, they may not be comparable to start smaller measures presented by other entities. Please refer to our filings with the Canadian Securities regulators for further information.
Speaker Change: And now I'll turn the call over to Katie for her opening remarks.
Katie: Thanks, Colin and good morning, everyone. Thank you all very much for joining us today.
Katie: This quarter's results highlight growth in our base business and our continued focus on operational execution.
Katie: Canadian utilities delivered another strong quarter with adjusted earnings of $102 million in the third quarter of 'twenty train four up from $87 million in the same period last year.
Katie: This translates to adjusted earnings per share of 38 cents.
Katie: Atco energy systems delivered adjusted earnings of $94 million, an increase of nine 3% compared to Q3 last year.
Katie: Results are reflective of rate base growth a higher allowed Roe.
Katie: And the benefit of the earnings carryover mechanism, which Wayne will dive into Germany energy systems results later on this call.
Katie: Actual empower delivered adjusted earnings of $14 million in the quarter up $5 million in the same period last year.
Katie: Specific to the energy storage side adjusted earnings increased $6 million year over year to $13 million for the quarter.
Katie: The business continues to perform well due to strong seasonal spreads and high demand for natural gas and liquid storage.
Bob will provide additional commentary on the end power results later on today's call.
Katie: In the third quarter of 2020 for Canadian utilities, So that's 100% investment and ethical energy to its parent company agco for $85 million.
Katie: The purchase price represents the estimated fair market value of vascular energy, which was supported by independent fairness opinions.
As a result of this transaction Atco energy will no longer be reported under the corporate and other segment for Canadian utilities as of August 2024.
Katie: Ask Australia delivered adjusted earnings of $15 million in the third quarter of this year.
Katie: This fell by $3 million compared to the same period in 2023.
The slight decrease was mainly due to the impact of inflation indexing on the rate base and natural gas Australia.
Katie: In 2023 Australian installation indexing reflected a full year inflation assumption of 4% to 5%.
Katie: It is expected that inflation for 2024 will be closer to 3%.
Okay.
Katie: As a leading gas distributor in Western Australia, we we deliver gas to over 800000 households, and businesses to our regulated gas network.
Katie: Last week, we received a final decision for the fixed access arrangement notice, a Essex County, economic regulation authority or E. R. A.
Katie: As a reminder, the a six plan sets out a regulated rate of return and it is based on a detailed review of our demand forecast and expenditure plans for the period January 2025 through December 2029.
Katie: As we mentioned in the press release, we do want to commend the E. R E and our team in Australia for what we feel with the constructive and collaborative process to get to this result.
Katie: Yeah. The E. R. A decision set out an ROE of eight 3% for the a a six period up from 5.02% under the previous access arrangement a eight five.
Katie: The E. R. S decision reflects the findings of our own research shows that natural gas continues to be an important and valued source of energy for western Australians.
But the 84000, new customer connections expected to connect to the network over the next five years.
Katie: Finally, we continue to make progress on the South Australian hydrogen jobs plan, we previously announced.
Katie: Atlas failure is actively engaged in discussions with the south Australian government on the genuine all forbid for engineering procurement construction and operation and maintenance contracts associated with the 200 megawatt hydrogen fueled power plant.
Katie: The hydrogen plant, it's a component of the south Australian hydrogen jumped plant project.
Katie: Final decision on the bed is expected in the fourth quarter of this year.
Katie: We are very excited about this opportunity, which would allow us to be part of the first of its kind commercial operation of our hydrogen fueled power plants.
Katie: Okay.
Katie: Looking at Canadian utilities as a whole.
Katie: Cash flow from operations was $419 million in the quarter up 9% from the prior year.
Katie: This supported our operations capital program and normal course financial commitments.
Katie: Currently our portfolio of operating assets generates enough cash flow to fund our development pipeline and we do not anticipate the need for additional equity financing in the near term.
Katie: More specifically, we have closely examine our strategy and the financing plan for actual empower and appropriately scaled our growth in this business to be self funding over the medium term.
Katie: With an overall macro backdrop for Alberta that continues to be robust, we see a number of positive trends that we expect will underpin long term growth for both our actual energy system and actual empower businesses.
Katie: In Alberta, we continue to see significant population and related housing growth along with increased industrial investment.
Katie: With this continued growth and economic expansion of reliable and resilient energy system is critical for Alberta to.
Katie: To achieve this more investment is required in both our electric and natural gas networks and Wayne will discuss later on the call. The projects. His team are working on to build these solutions.
Katie: Similarly, we expect the alkaline power to play a role in enabling Alberta energy transition ambitions.
Katie: With significant industrial investment occurring we are strategically positioned with the assets and capabilities to drive the decarbonization of Alberta energy sector.
Katie: Later in the call Bob will provide additional updates on our development projects, including a clean fuels initiatives in our renewables development portfolio.
Speaker Change: With that let's dive into each segment in more detail I will now turn the call over to Wayne to discuss the actual energy systems results.
Thank you Katie and good morning, everyone.
Wayne: Atco energy systems delivered strong quarterly earnings performance with adjusted earnings of $94 million. This is up $8 million from the same period in 2023.
Wayne: Our third quarter results benefited from the increase in the allowable R. O E from eight 5% in 'twenty, two 'twenty, 3% to 9.28% in 'twenty 'twenty four is.
Wayne: Well as continued rate base growth across all of our utilities.
Wayne: For electric distribution this year over year growth was offset by a favorable tax adjustment recorded over the final two quarters of 2023 as well as the timing of operating expenses.
Wayne: As we look towards 2025, there are some upcoming trends that I would like to highlight.
Wayne: We expect to continue to have a robust level of capital investment.
Wayne: And rate base growth across our utilities, which is going to translate to high quality earnings growth.
However, our allowable ROA of 9.28% for 'twenty 'twenty four will change for 2025.
Wayne: With updated inputs approved last year.
Wayne: And in particular, the long term government of Canada yields the commission recently rendered its decision sitting in a row of $8 97 for 2025.
Wayne: As Katie mentioned in 'twenty, and 'twenty, three and 'twenty 'twenty four we also benefited from the two year efficiency carryover mechanism due to our strong efficiency gains under the prior P. B R. Two framework.
Wayne: That incremental 50 basis points of ROE.
Wayne: In both of our gas and electric distribution utilities does not continue past 2024.
Wayne: We are on track to meet our prior investment guidance for 2024 in Q3, we invested $366 million, bringing our year to date total to $931 million.
Wayne: In the last quarterly call I spoke about the devastating Jasper wildfire and while relatively small perhaps in terms of total dollar value.
Wayne: I think it's helpful to spend a moment on our rapid rebuild all of the infrastructure and Jasper.
Wayne: Our teams have worked closely with parks, Canada, and we have made significant progress on this rebuild effort and have restored both gas and electric service to all of the available businesses and residents.
Notably as the way that we've been rebuilding our infrastructure and particularly on the electric network in order to support long term resiliency and to mitigate the impact of future wildfire or other weather related events. We've carried out the rebuild work was more resilient hardware like composite poles.
Wayne: And in a large amount of underground and having a resilient and reliable power grid has never been more important and the rebuild of Jasper is just one example of the type of work that we are rolling out across our broader network over the next several years.
Wayne: Okay.
Wayne: In Q3, we broke ground on our central East transfer out transmission line project. This is a $280 million project that was direct assigned by the Alberta electric system, operator, or the ISO that.
Wayne: That will bring additional energy from the eastern part of Alberta to load centers.
Wayne: <unk> is expected to be in service in mid 2026.
Wayne: With continued growth and economic expansion in Alberta.
Wayne: The increasing frequency and severity of climate related events and the transitioning of the energy supply mix. There is no question that more investment is required in both of our electric and gas networks.
Wayne: Projects like SEDAR important, but insufficient by themselves in order to enable a reliable and resilient energy system that has the necessary foundation to support ongoing prosperity in the province.
Wayne: Burton will require material additional investment in both electric and natural gas transmission infrastructure and we're working collaboratively with the are you still the government of Alberta and other industry participants in order to identify develop and build these solutions.
Wayne: One of the projects that enables Alberta prosperity is our yellow ahead mainline project. This project is expected to deliver 1.1 Bcf per day of additional natural gas into the Heartland region East of Edmonton and its supporting billions of dollars of investment and many thousands of jobs in low carbon.
Wayne: <unk> applications as well as supporting ongoing residential growth and our problems.
We were pleased to announce in Q3, the filing of the first regulatory application for the project.
Wayne: Which included our project cost estimate of $2.8 billion.
Wayne: This first application known as the needs of application was filed in September with the Alberta Utilities Commission the preceding schedule.
Wayne: It has not yet been finalized, but we expect to receive an approval for this initial application.
Wayne: Some time late Q1, or Q2 of 2025, which will then enable us to make commitments on long lead procurement.
The next major regulatory process, which is known as the facility application will establish the final route amongst other elements of the project and we expect to be in a position to file that in the third quarter of 2025 and obtain approvals that enabled construction to commence mid 2026 in order to deliver a queue.
Wayne: For 2027 in service date.
Speaker Change: And with that I'd like to pass the call over to Bob who will speak to the results of empower.
Thank you Wayne and good morning, everyone as Katie indicated earlier adjusted earnings for Agco in power were up from the same period in 2023.
Speaker Change: Further adjusted EBITDA for the quarter was $39 million up 18% from the $33 million for the same period last year.
Speaker Change: Within our storage and industrial water business, we recorded another strong quarter with adjusted earnings higher by $6 million compared to Q3, 'twenty twenty-three, bringing it up to $13 million for the quarter.
Earnings growth in this segment was driven by increased demand and strong seasonal spreads and natural gas storage in 'twenty 'twenty four we have been successful in securing several fixed and long term contracts, which have provided a line of sight to higher margins and earnings this year and beyond we are.
Speaker Change: We're also assessing various opportunities to increase storage capacities at our facilities in the next 24 months as we believe market conditions, including the commencement of LNG shipments from the West Coast of Canada support this storage growth.
Speaker Change: Within our electricity generation business, we reported adjusted earnings of $1 million, which is $1 million lower compared to the same quarter last year.
Speaker Change: Electricity generation results were reflective of lower realized pricing driven by lower merchant pricing pricing in Alberta. This was partially offset by generation, increasing by 20% compared to the prior year quarter with our solar increasing related to.
Speaker Change: Dear foot and Empress assets, which did not commence full operation until Q4 2023.
Speaker Change: We continue to focus on contracting our generation via power purchase agreements with high quality Counterparties compared to Q3 2023, our percentage of generation under Ppas increased from 54% to 67% and comparatively for the.
Speaker Change: Nine month period has increased from 28% to 73%.
Speaker Change: Moving to our development pipeline I want to touch on the Heartland hydrogen hub project and the significant progress we have made in advancing this important opportunity.
Speaker Change: I'm very pleased to announce that we have signed a letter of intent with Lindy, Canada, who will be both our operator and our equity partner in this project.
Speaker Change: Our partnership with Lindy provides the quickest path to reach final investment decision as they bring expertise from existing projects around the world improve in the overall process cost and timing of this project.
Speaker Change: We continue to work with the federal and provincial governments to establish policy and frameworks that will facilitate investment in the Canadian hydrogen economy for both export and domestic opportunities we remain ready to advance this critical opportunity and expect that continued positive dialogue with various levels.
Speaker Change: [noise] of government, which if advanced will allow us to commence front end engineering design by the end of 'twenty 'twenty four.
Speaker Change: We have also continued to progress discussions with interested first nations to participate in our large hydrogen initiative, we're working towards making a project to final investment decision in 2025, and we will continue to provide updates as we progress this opportunity.
Speaker Change: As shown on this slide strategic partnerships across the entire value chain continue to be of significant importance to our overall clean fuel strategy at agco in power.
Speaker Change: Alongside our partner Shell, we continued to advance construction of our Atlas carbon storage hub in Alberta.
Speaker Change: The Atlas hub will offer C O two transportation and sequestration services and is anchored by volumes from Shell's Polaris carbon capture project, we anticipate phase one of Atlas to be operational in 2028 and are currently progressing discussions with shell and other third party emitters to.
Speaker Change: Evaluated opportunities for future phases.
On the transport side, we recently completed the construction of two hydrogen production and refueling stations for C. P. K C. As part of its innovative hydrogen locomotive program. Each of the facilities include a one megawatt electrolyze or compression storage.
In dispensing systems for locomotive refueling.
Speaker Change: This partnership represents significant progress in utilizing hydrogen as a fuel source for commute commercial transportation and reflects our commitment to building a sustainable future. We look forward to continuing to partner with transport leaders, including C. P. K C as a way to provide.
Speaker Change: Innovative energy solutions for customers around the world.
Reflecting on our renewables development portfolio. We continue to believe that we have an attractive pipeline of wind solar and battery opportunities in which to invest through 'twenty 30, our strategy of contracting off take prior to development with power purchase agreements from high quality counterparts.
Speaker Change: Has not changed.
Speaker Change: That has been impacted as our pace of construction due to the uncertainty surrounding the restructured energy market in Alberta, we continue to believe that a realistic design for a restructured energy market is needed where key design elements are tested appropriately to ensure adequate supply.
Speaker Change: Available for the grid, while ensuring affordability for all burdens, we continue to be a key stakeholder in this engagement with the ISO and we expect to be able to discuss further updates on this restructured energy market and our development pipeline early in 2025.
Speaker Change: With that I'll pass things back to Katie.
Speaker Change: Okay.
Thanks, very much Bob and Wayne.
Speaker Change: Canadian utilities delivered another great quarter, and we are on strong footing for the last quarter of the year.
Speaker Change: Tier Canadian utilities team is focused on delivering this new phase of growth we have set for ourselves.
Speaker Change: We're building momentum across our businesses growing earnings all while delivering sustainable shareholder value.
Speaker Change: That concludes our prepared remarks, I will now turn the call back to Colin.
Colin Jackson: Thank you Katie.
Colin Jackson: Yeah.
Speaker Change: Two questions. If you have additional questions Youre welcome to rejoin the queue.
Speaker Change: I will now turn it over to the conference coordinator for questions.
Thank you we will now begin the question and answer session to join the question queue. You May Press Star and then one on your telephone keypad.
Speaker Change: You will hear a tone acknowledging your request.
If you were using a speakerphone please pick up your handset before pressing the keys to withdraw your question. Please press star and then two.
Speaker Change: And your first question today will come from Rob Hope with Scotiabank. Please go ahead.
Rob Hope: Good morning, everyone. First question is on the power business going.
Rob Hope: Going back a number of years ago, you did have a a fleet of natural gas fired assets as power demand inflect higher across the globe is this an asset class that you could revisit.
Speaker Change: In Alberta, which could need some additional capacity longer term or in other geographies.
Rob Hope: Hi, Rob Bob here.
Rob Bob: We we absolutely are looking at all forms of generation I mean, obviously, we had been pursuing solar wind hydro for the last number of years here, but we are also interested in pursuing gas fired generation as well. So we we would entertain that in Alberta and in other jurisdictions.
Rob Hope: <unk> as well.
Rob Bob: Yes.
Rob Bob: And then maybe just going over to kind of your your two large hydrogen opportunities one in Australia and one in Alberta, you know when you think about kind of the development timeline.
Rob Bob: When do you think capital it could really start to be put to work there and then how do you mitigate the risks associated with a first of kind of development.
Rob Bob: Okay.
Sure I'll touch on on Alberta, and Katie May want to comment a little bit on Australia, but for US we're not at all interested in expanding and you know spending a significant amount of capital without solid credit worthy counterparties and off takers. So that's our objective is in.
Rob Bob: Sure you know we have the off takers to protect our investments and also to justify the projects with regards to the timing where if if we can make a financial investment decision in 2025 towards the end of 2025, we see you know starting to get into construction into 'twenty six.
Rob Bob: 29 timelines. So that's when we would see the you know the larger investment capital investments during that period.
Katie do you want to comment on Australia.
Speaker Change: Yeah. Thanks, Bob.
Speaker Change: In Australia. The you know the big thing there is that right now the genuine phase that I discussed is really around the EPC and O&M components of that that large project at the South Australian government.
Speaker Change: As planned, but just to be crazy the south Australian government is the current so equity a proponent of that project.
Speaker Change: There is the.
The opportunity and we'll continue to evaluate it for equity participation by Atco, but the details of that are are a ways out yet until we know exactly how that would be structured.
Speaker Change: The amount of capital, we could potentially put into that.
Speaker Change: Thank you.
Speaker Change: And your next question today will come from Maurice Choy with RBC. Please go ahead.
Maurice Choy: Thanks, and good morning, everyone to come back to one of the prepared remarks comment that you made kt and referencing that financing plan for Atco and power. You mentioned you scaled your growth to ensure you are self funded over the medium term does that mean.
Maurice Choy: That a you're not anticipating a separation of atco empower or from your business any more but more importantly b.
Maurice Choy: Can you fund your share of the four and a half to $5 billion project without raising new equity.
Speaker Change: Hi, Mary that thanks for thanks for that and I'll pick up on that one yeah I think.
Speaker Change: Indeed, we have looked at our ambitions are and what we have in front of us and I think you know as we've always spoke about that our path for them within empower is related to key partnerships such as the Lindy wasn't that Bob spoke about.
Speaker Change: So we have set up a self funding plan you know theres significant amount of cash flow that come off of our current base operating assets in the storage business.
Speaker Change: That will continue to fund that business in the medium term and including our expected proportion of the hydrogen.
Project of course, there will be.
Speaker Change: Different amounts of project level financing required debt financing a bit.
Speaker Change: For the time being we do have a plan that would allow us to avoid any equity raises associated with that plan.
Speaker Change: Got it. Thank you very much for the clarity and maybe as a quick follow up when you mentioned you scaled your growth.
Speaker Change: To get more clarity on what this means do you mean optimizing your growth capex, such as reducing the renewables construction that Bob mentioned.
Speaker Change: Yeah, It's a combination of looking at our growth plan, we haven't reduced any of the projects. We're looking at them, but just looking at potential increase.
Speaker Change: Increased partner level or project level certain partnerships and some of those assets.
Speaker Change: We continue to have a robust pipeline that will we will manage that pipeline in terms of the timing of how we deploy capital to.
Speaker Change: To remain within that self funding guidelines that I set out.
Speaker Change: Understood and if I could just finish off with a question about.
Speaker Change: I think there was a common earlier about mature investments in.
Speaker Change: Electricity transmission Blixen des T&D.
Speaker Change: There's obviously a lot of talk about data centers in Alberta are you seeing you know given that your position is that T. N D owner and operator are you seeing any tangible evidence of this higher demand.
Speaker Change: Coming through what does this mean for your own long term for the 5% rate base CAGR outlook.
Speaker Change:
Speaker Change: For sure we are seeing.
Speaker Change: As you said more tangible evidence.
Speaker Change: There's a lot of interest as there is undoubtedly in a lot of jurisdictions, but yes, we are seeing inbound interest as.
Visa the interconnections with the transmission and in some cases the distribution networks.
Speaker Change: You know a lot of these data centers are.
Speaker Change: Eventually I mean, it's going to be a function of how quickly.
Speaker Change: I believe they can they can get all of the approvals and move into construction.
Construction and I think that's going to be a you know with a backdrop of Alberta, the restructured energy market.
Speaker Change: Evaluations that are underway and you know some of the other policy pieces that are underway with with the ISO and with the government of Alberta, I think there's going to continue to be a bit of attention back and forth on how do we support this level of economic growth.
Speaker Change: As we're as we're working through these.
Speaker Change: These policy matters, but yes, we are seeing tangible evidence.
Speaker Change: And what this means for your long term rate base CAGR. This.
Speaker Change: Pending it or do you think there's upside to it.
Speaker Change: Oh I would say.
And it's not really just the data centers I would say if we if we consider the you know the elements that kt touched on kind of at the very beginning we continue to see.
Speaker Change: More and more opportunities in both the gas and the electricity markets.
Speaker Change: Certainly underpin and wood would push up potential future rate base opportunities.
Speaker Change: Understood. Thank you.
Speaker Change: And your next question today will come from Mark Jarvi with CIBC capital markets. Please go ahead.
Mark Jarvi: Hey, good morning, everyone, Kenny I wanted to come back to the comments you made about empower and sizing it properly to manage our equity need and being self funded.
Speaker Change: That sounds kind of scaled back how much equity you would put in whether it's debt or partner capital does that change at all the earnings power than you see from that business going forward because at one time. It was comment was he had to raise equity that would yes, it would be accretive and to drive higher earnings I'm trying to understand how this sort of changes trajectory of earnings out of Penn power.
Speaker Change: Well, obviously the more you know the more capital that we deploy we can we can drive higher earnings you know theres a number of.
Speaker Change: External market.
Speaker Change: Situations as well right now you know related to the renewables.
Speaker Change: Situation in Alberta.
Speaker Change: I have a sort of delaying some of the projects that we have there so that combination of sort of a delay of those continuing to find the partnerships.
Speaker Change: And looking at our risk profile for how much capital we want to put into some of these things led to the self funding plan that I spoke about.
Speaker Change: I think as we move forward, if we see a very value accretive opportunity to deploy capital we will look for it.
Speaker Change: Just based on the capital allocation of capital needs, we see across both of the businesses.
Speaker Change: I think we've we set up a plan right now.
Yeah.
Speaker Change: [noise] appropriate balance between the two businesses and a risk reward risk return appetite.
Speaker Change: Understood and then just a follow up on the energy systems side, though with the growth, including Yale had you could still see equity needs on that side of.
Speaker Change: The business.
Speaker Change: Yeah as I said you know over the next couple of years, we don't anticipate.
Speaker Change: They need to access the equity capital markets for any of our businesses on the Canadian utility side, and then as we look to get into the heavy spend associated with yellow head. We will consider all of our options for the best shareowner value to the to raise the necessary capital for that project.
Speaker Change: And then last question for me just on on the agreement in Australia, How do you see that impacting earnings.
25 mm for the gas distribution can tell you there.
Speaker Change: Relative to maybe this year.
Speaker Change: Or as the ethics arrangement, yeah exactly yeah yeah.
Speaker Change: I think we're pretty positive.
Speaker Change: Positive on the the that outlook we haven't.
Speaker Change: We don't provide specific guidance for our businesses.
Speaker Change: I think we are pretty generally positive and we can actually be digestion and run that through.
Speaker Change: Start to you know provide some outlook on what that might mean.
Speaker Change: Next five years.
Speaker Change: Can you clarify what rate base growth would be now given you've got that clarity.
Speaker Change: And I think we and again I think we can follow up next week.
Speaker Change: Run that through our through our machine here and we can provide some of that.
At the year end when we normally do update all of her Rick Thanks for all of our maturities.
Speaker Change: Okay, alright, thanks for your time today.
And your next question today will come from Patrick Kenny with National Bank Financial. Please go ahead.
Patrick Kenny: Thank you good morning, everyone.
Speaker Change: On the 8.97% ROE here for 2020 five.
Speaker Change: I'm wondering if you can comment on how that squares up with the broader theme across North America for you know basically all utilities.
Speaker Change: Needing to accelerate Capex to.
Speaker Change: To bring form you know all forms of energy to market, whether it's gas renewable storage you name it.
Speaker Change: Just how that squares up with your outlook for accelerating your own capex profile.
Well I think its Wayne Patrick.
Speaker Change: One point, we should make is the.
Speaker Change: The decision that was.
Speaker Change: You know we issued by the AUC on allowable ROA in the Formula Magic Formula approach.
Speaker Change: As we move into 2025 that will be the second year, I guess of that that decision and recall that.
Speaker Change:
Speaker Change: That decision is in place to.
Speaker Change: You know in some ways provides some some forward certainty around ROE and also to kind of you.
Speaker Change: You know bring a bit of an end to what was an ongoing every few year kind of fully litigated process. So.
Speaker Change: So we're you know we're moving into the second year of that.
Speaker Change: I think your you know your broader question is how.
Speaker Change: How competitive maybe is 897% across the broad suite of utilities, you know very high growth utility marketplace and I think that is an ongoing.
Speaker Change: Discussion that I would say every utility company is presently having across North America.
Speaker Change:
Speaker Change: You know as we think about funding all of that utility capital. So.
I think there's there's a few years in front of US frankly, as we think about these very very large utility growth profiles.
Speaker Change: And the and the funding of those growth profiles.
Speaker Change: But you know what we're very positive on here in Alberta is the strong underpinning elements of of the Alberta economy and and the.
Speaker Change: <unk> that we do have four substantial rate base growth.
Speaker Change: Yeah, and I guess.
Speaker Change: Where I'm going with that is notwithstanding the tail wins.
Speaker Change: And here in Alberta from a rate base growth perspective.
Speaker Change: Just as you think about your portfolio geographically.
Speaker Change: Obviously, a change in administration coming down Soc.
Speaker Change: We'll see you.
Speaker Change: So what that translates to in terms of the I R a but.
Speaker Change: And also you know political dynamics shifting in South America as well as here in your own backyard. So.
Maybe just a high level update on how you view, Alberta on a relative basis versus some of the other jurisdictions that you plan and how you see your geographic exposure.
Speaker Change: Potentially shifting over the next five years.
Speaker Change: Yes.
Speaker Change: Katy I don't I don't know if you want to tackle that question from a capital allocation perspective.
Speaker Change: Yeah happy to I I mean, I think as you know then we have our two utilities in Australia and in Alberta, and we we continue to be very very bullish.
Speaker Change: Bullish on those two jurisdictions and their phone to the fundamentals behind.
Speaker Change: The long term as we alluded to and I alluded to in my opening remarks, the economic growth.
Speaker Change: The strong still.
Speaker Change: Strong general business environment that we have in Alberta, et cetera, et cetera. The continued support forgot natural gas both of the jurisdictions that we operate and what we're really happy with continuing to invest in those are in those jurisdictions provided that we can get.
Yeah, there's a few regulatory slash government policy items that we really need.
Speaker Change: To work with the government to deploy the capital and specifically around the renewables market.
And some of the final pieces of some of the energy transition elements.
Speaker Change: But you know I think sort of the question around the global broader diversification strategy.
Speaker Change: We will continue to look at that opportunity, but you know as we as you can tell we have.
Speaker Change: Pretty significant capital.
Speaker Change: Deployment opportunities in our existing.
Speaker Change: Areas that we operate right now so I think we have our hands full for that the next couple of years at least.
And trying to fulfill that demand.
Speaker Change: Okay. That's great I appreciate it thank you.
Speaker Change: This concludes our question and answer session I would like to turn the conference back over to Mr. Colin Jackson for any closing remarks.
Colin Jackson: Thank you Nick and thank you all for participating today. We appreciate your interest in Canadian utilities, and we look forward to speaking with you again soon thank.
Speaker Change: Thank you.
Speaker Change: This brings to a close today's conference call. You may now disconnect. Your lines. Thank you for participating and have a pleasant day.
Speaker Change: Yeah.
Speaker Change: [music].
Speaker Change: Hum.
Speaker Change: Yeah.
Speaker Change: [music].