Full Year 2024 Canadian Utilities Ltd Earnings Call

Operator: Thank you for standing by.

Thank you for studying by this is the conference operator, welcome to the fourth quarter 'twenty 'twenty four results conference call and webcast for Canadian Utilities limited.

Operator: This is the conference operator. Welcome to the fourth quarter 2024 results conference call and webcast 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 then zero.

As a reminder, all participants are in listen only mode and the conference is being recorded.

After the presentation there'll 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 then zero.

Colin Jackson: I would now like to turn the conference over to Mr. Colin Jackson, Senior Vice President, Financial Operations. Please go ahead, Mr. Jackson. Thank you, and good morning, everyone. We are pleased you could join us for the Canadian Utilities fourth quarter 2024 conference call.

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.

Colin Jackson: Thank you and good morning, everyone.

Pleased you could join us for the Canadian utilities fourth quarter 2024 conference call.

Colin Jackson: On the line today we have Katie Patrick, Executive Vice President, Chief Financial and Investment Officer, and Bob Myles, President and Chief Operating Before we move into today's remarks, I would like to take a moment to acknowledge the numerous traditional territories and homelands on which our global facilities are located. Today I am 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, the Pekani, and the Tsutina Nation, and the Stony Nakoda Nations, which include the Chikniki, Bears Paw, and Good Stony First Nations.

Katie Patrick: On the line today, we have Katie Patrick Executive Vice President Chief Financial and investment Officer.

Colin Jackson: And Bob miles, President and Chief operating Officer.

Speaker Change: Before I move into todays remarks, I would like to take a moment to acknowledge the numerous traditional territories and 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.

Speaker Change: The ancestral territory of the Blackfoot Confederacy.

Speaker Change: Apprised of the circa nine.

Speaker Change: Connie.

Speaker Change: So Tina nation, and the Estonian Coordinations, which include the Mckee bears and good Stony first nations.

Colin Jackson: I also want to recognize that the City of Calgary is home to the Métis Nation of Alberta Districts 5 and 6. We honor and respect the diverse history, languages, ceremonies, and culture of the indigenous people who call these areas home.

Speaker Change: I also want to recognize that the city of Calgary is home to the <unk> nation of Alberta districts five and six.

Speaker Change: We honor and respect the diverse history languages ceremonies and culture of the indigenous people who call. These areas Hall.

Colin Jackson: Today you'll hear from Katie who will deliver opening comments on our financial results along with an update for our Australian business.

Speaker Change: Today, you'll hear from Katie who will deliver opening comments on our financial results along with an update for our Australian businesses.

Colin Jackson: and from Bob, who will discuss key recent developments within our ACOE energy systems and ACOE Empower businesses. Following today's remarks, the Canadian Utilities team will take questions from the investment community. 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 CanadianUtilities.com following the call. The materials can be found in the investors section under events and presentations.

Bob Miles: And from Bob.

Bob Miles: We will discuss key recent developments within our Alco energy systems and Echo empower businesses.

Bob Miles: Following today's remarks, the Canadian utilities team, we'll take questions from the investment community. Please note that a replay of the conference call.

Bob Miles: The presentation and todays scrap transcript will be available on our website at Canadian utilities Dot com following the call the.

Bob Miles: The materials can be found in the investors section under events and presentations.

Colin Jackson: Today's remarks will include forward-looking statements that are subject to important risks and uncertainty. For more information on these risks and uncertainties, please refer to our filings with the Canadian Security Regulator. During today's presentation, we may refer to certain non-GAAP and other financial measures, including adjusted earnings, adjusted earnings per share. and Adjusted EBITDA. These measures do not have any standardized meaning under IFRS, and as a result, they may not be comparable to similar measures presented by other entities. Please refer to our filings with the Canadian Securities Regulators for more information.

Bob Miles: Today's remarks will include forward looking statements that are subject to important risks and uncertainties.

Bob Miles: For more information on these risks and uncertainties. Please refer to our filings with the Canadian Securities regulators.

Bob Miles: During today's presentation, we may refer to certain non-GAAP and other financial measures, including adjusted earnings adjusted earnings per share.

Bob Miles: And adjusted EBITDA.

Bob Miles: These measures do not have any standardized meaning under IRS and as a result, they may not be comparable to similar measures presented by other entities. Please refer to our filings with the Canadian securities regulators for more information.

Katie Patrick: And now I'll turn the call over to Katie for her opening. Thanks, Colin. And good morning, everyone. Thank you all for joining us today. 2024 was a great year for Canadian utilities and demonstrated our continued focus on operational excellence. We achieved adjusted earnings of $647 million, up from $596 million in 2020. This translated to adjusted earnings per share of $2.38 for 2024. Actual Energy Systems delivered adjusted earnings of $632 million in 2024, an increase of 11% or $61 million compared to last year. This year over year growth was primarily driven by a few factors, including rate based growth across our utilities.

Katie Patrick: And now I'll turn the call over to Katie for her opening remarks.

Katie Patrick: Thanks, Paul and good morning, everyone. Thank you all for joining us today.

Speaker Change: 24 was a great year for Canadian utilities, and demonstrated our continued focus on operational execution.

Speaker Change: We achieved adjusted earnings of $647 million up from $596 million in 2023.

Speaker Change: This translated to adjusted earnings per share of $2 38 for 2024.

Speaker Change: Auto energy systems delivered adjusted earnings of $632 million in 2024, an increase of 11% or $61 million compared to last year.

Speaker Change: This year over year growth was primarily driven by a few factors including rate base growth across our utilities and.

Katie Patrick: and increase in the allowable ROE from 8.5% in 2023 to 9.8% in 2024. and the benefit of the efficiency carryover mechanism, which provided an additional 50 basis points of ROE in our distribution utilities.

Speaker Change: An increase in the allowable ROA from eight 5% in 2023 to nine 8% in 2024.

Speaker Change: And the benefit of the efficiency carryover mechanism, which provided an additional 50 basis points of ROE in our distribution utilities.

Katie Patrick: As we look to 2025, there are some trends I would like to highlight that we expect will moderate earnings growth for Apple Energy Systems. First, our allowable ROE of 9.28% for 2024 has been reset to 8.97% for 2025 across urban utilities. We expect this decision to have a year-over-year impact to earnings of approximately $15 million. Also, our incremental 50 basis points of ROE that our gas and electric distribution utilities benefited from due to strong efficiency gains under PBR2 concluded at the end of 2024. We expect this decision to have a year-over-year impact earnings of approximately $11 million.

Speaker Change: As we look to 2020 five there are some trends I would like to highlight that we expect will moderate earnings growth for Atco energy systems for.

Speaker Change: First our allowable or are we at 9.28% for 'twenty 'twenty four has been reset to 829, 7% for 2025 across Alberta utilities.

We expect this decision to have a year over year impact to earnings of approximately $15 million.

Speaker Change: Also our Incrementals 50 basis points of ROA that our gas and electric distribution utilities benefited from due to strong efficiency gains under PBR. Two concluded at the end of 2024.

Speaker Change: We expect this decision to have a year over year impact to earnings of approximately $11 million.

Katie Patrick: Despite these headwinds, we expect to have rate-based growth across our utilities and remain committed to pursuing efficiencies throughout our business, which will continue to translate to high-quality earnings for 2025 and beyond.

Speaker Change: Despite these headwinds we expect to have rate base growth across our utilities and remain committed to pursuing efficiencies throughout our business, which will continue to translate to high quality earnings for 2025 and beyond.

Katie Patrick: Moving to Act to Empower, we delivered adjusted EBITDA in 2024 of $146 million, up $14 million from last year, and adjusted earnings of $44 million. Within our electricity generation business, we reported adjusted EBITDA of $75 million, an increase of $2 million over last year, and adjusted earnings of $6 million. The year-over-year increase in adjusted EBITDA was a result of increased generation of approximately 12% or 104,000 megawatt hours. and a received settlement related to lost generation in 2023 covered under warranties on our generation assets. Growth was partially offset as Alberta saw a significant decrease in merchant power prices and capture prices for both solar and wind assets, resulting in a lower averaged realized price of $75 per megawatt in 2024 compared to $95 per megawatt in 2023.

Speaker Change: Moving to add to empower we delivered adjusted EBITDA in 2020 for $146 million up $14 million from last year and adjusted earnings of $44 million.

Speaker Change: Within our electricity generation business, we reported adjusted EBITDA of $75 million.

Speaker Change: An increase of $2 million over last year, and adjusted earnings of $6 million.

Speaker Change: The year over year increase in adjusted EBITDA was a result of increased generation of approximately 12% or 104000 megawatt hours.

Speaker Change: And to receive settlement related to lost generation in 2020 three covered under warranties on our generation assets.

Speaker Change: Growth was partially offset as Alberta saw a significant decrease in merchant power prices and capture prices for both solar and wind assets, resulting in a lower average realized price of $75 per megawatt in 2024 compared to $95 per megawatt and 2023.

Katie Patrick: Given our overall contracting strategy, our contracted sales volumes increased from 41% in 2023 to 73% in 2024 to reduce volatilities and stabilize future earnings and cash flow.

Speaker Change: Given our overall contracting strategy, our contracted sales volumes increased from 41% in 'twenty, two 'twenty, 3% to 73% in 2024 to reduce volatility and stabilized future earnings and cash flow.

Katie Patrick: Within our storage and industrial water business, we delivered a strong year with adjusted EBITDA of $71 million and adjusted earnings of $38 million, up $7 million from last year. Earnings growth in this segment was driven by strong seasonal spreads and the high demand for natural gas and liquid storage. As we look to 2025, we expect storage and industrial water to have a similar earnings profile compared to 2024.

Speaker Change: Within our storage and industrial water business, we delivered a strong year with adjusted EBITDA of $71 million and adjusted earnings of $38 million up $7 million last year.

Speaker Change: Earnings growth in this segment was driven by strong seasonal spreads in the high demand for natural gas and liquids storage.

Speaker Change: As we looked at 2025, we expect storage and industrial water to have a similar earnings profile compared to 2024.

Katie Patrick: This is driven by our success in securing several fixed and long-term contracts that provide line-of-sight to earnings next Acco Australia delivered adjusted earnings of $48 million in 2024. This fell by $12 million compared to 2023. As we discussed throughout 2024, lower adjusted earnings are due to the impact of inflation indexing on rate base in aqua gas Australia.

Speaker Change: This is driven by our success in securing several fixed long term contracts that provide line of sight to earnings next year.

Speaker Change: Atco, Australia delivered adjusted earnings of $48 million in 2024.

Speaker Change: It felt like 12 million compared to 2023.

Speaker Change: As we discussed throughout 2024.

Speaker Change: Lower adjusted earnings are due to the impact of inflation indexing on rate base and Apple gas Australia.

Katie Patrick: in 2023. Australian inflation indexing reflected a full year inflation assumption of 4%, while inflation moderated to 2.6% for 2024. As a rule of thumb, a 10 basis points change to inflation has an impact to earnings of approximately $1.2 million. Our positive year-over-year result in our corporate line reflects a strong focus on finding efficiencies within our business and strong returns on our short-term investment. which reduced overall financing costs.

Speaker Change: 2023.

Speaker Change: Australia and inflation indexing reflected a full year inflation assumption of 4%.

Speaker Change: Inflation moderated to two 6% for 2024.

Speaker Change: As a rule of thumb of 10 basis points change to inflation as an impact to earnings of approximately $1 $2 million.

Speaker Change: Yeah.

Speaker Change: Our positive year over year result in a corporate line reflects a strong focus on finding efficiencies within our business.

Speaker Change: And strong returns on our short term investments, which reduced overall financing costs.

Katie Patrick: Looking at Canadian Utilities as a whole. Cash flow from operations was $1.9 billion in 2024, up 8% from the prior year. This growth supported our operations, capital program, and normal course financial commitment.

Speaker Change: Looking at Canadian utilities as a whole.

Speaker Change: Cash flow from operations was $1 $9 billion in 2024 up 8% from the prior year.

Speaker Change: This growth supported our operations capital program and normal normal course financial commitments.

Bob Myles: With that, I will now turn the call over to Bob, who will discuss key recent developments within our ActoEnergy systems and ActoEmpower businesses. Thank you, Katie, and good morning, everyone. As Katie alluded to earlier, we had a strong 2024.

Speaker Change: With that I will now turn the call over to Bob who will discuss key recent developments within our active energy systems and actual empower businesses.

Speaker Change: Thank you Katie and good morning, everyone as Katy alluded to earlier, we had a strong 2024 as I step into my new role with oversight across Canadian utilities key focus area of mine will be driving growth across our businesses in 2024, we invested $1.4 billion.

Bob Myles: As I step into my new role with oversight across Canadian utilities, a key focus area of mine will be driving growth across our businesses. In 2024, we invested $1.4 billion in our utilities within ATCO Energy Systems. This ongoing utility investment ensures the continued generation of stable earnings and reliable cash flows from our utility businesses and drives overall rate-based growth. As we look to 2025 and beyond, we see a macro backdrop in Alberta that continues to be robust and a number of positive trends that we expect will underpin long term growth for ATCO energy systems. In Alberta, we continue to see significant population and related housing growth along with increasing industrial investment.

Speaker Change: And our utilities within auto energy systems. This ongoing utility investment ensures the continued generation of stable earnings and reliable cash flows from our utility businesses and drives overall rate base growth.

Speaker Change: As we look to 2025 and beyond we see a macro backdrop in Alberta, but continues to be robust in a number of positive trends that we expect will underpin long term growth for Atco energy systems.

Speaker Change: Alberta, we continue to see significant population and related housing growth along with increasing industrial investment.

Bob Myles: With this continued growth and economic expansion, a reliable and resilient energy system is critical for our province. Alongside these economic drivers, we continue to see a growing need to invest in our system to ensure ongoing reliability and safety as the system adapts to climate related events and the transitioning of the energy supply mix. Collectively, these factors also support an expectation for rate-based growth to increase in the coming years and for there to be opportunities for us to invest within our existing footprint. Given the strong trends we're seeing in our core Alberta market, we expect to invest $5.8 billion within our Canadian regulated utilities over the next three years, and for this to drive an average annual rate-based growth of 5.4%.

Speaker Change: This continued growth and economic expansion, a reliable and resilient energy system is critical for our province.

Speaker Change: Long side. These economic drivers, we continue to see a growing need to invest in our system to ensure ongoing reliability and safety as the system adapt to climate related events and the transitioning of the energy supply mix.

Speaker Change: Collectively these factors also support an expectation for rate base growth to increase in the coming years and further to be opportunities for us to invest within our existing footprint.

Speaker Change: Giving the strong trends, we're seeing in our core Alberta market, we expect to invest $5.8 billion within our Canadian regulated utilities over the next three years and for this to drive an average annual rate base growth of five 4%.

Bob Myles: One of the projects that enables Alberta prosperity and drives our higher rate based growth expectations is our Yellowhead mainline. This project is expected to deliver 1.1 billion cubic feet per day of additional natural gas into the Heartland region, east of Edmonton, and is supporting billions of dollars of investment and many thousands of jobs in low carbon industrial applications, as well as supporting ongoing residential growth. In 2024, we were pleased to announce the filing of our first regulatory application for this project, which included a total project cost estimate of $2.8 billion. Given Yellowhead is located entirely within Alberta, this project is provincially regulated and subject to approvals solely within Alberta.

Speaker Change: One of the projects that enables Alberta prosperity and drives our higher rate base growth expectations as our yellow had mainline.

Speaker Change: This project is expected to deliver 1.1 billion cubic feet per day of additional natural gas into the Heartland region East of Edmonton.

Speaker Change: And is supporting billions of dollars of investment and many thousands of jobs and low carbon industrial applications as well as supporting ongoing residential growth.

Speaker Change: And 'twenty 'twenty four we were pleased to announce the filing of our first regulatory application for this project, which included a total project cost estimate of $2.8 billion given yellow head is located entirely within Alberta. This project is provincially regulated and subject to approvals solely within.

Speaker Change: Alberta.

Bob Myles: This first application known as the needs application was filed in September with the Alberta Utilities Commission. The preceding schedule has not yet been finalized, but we expect to receive an approval for this initial application in Q2 2025, which will enable us to make commitments on long leave orders. The next major regulatory process, known as the facility application, will establish the final route amongst other elements of the project. We expect to be in a position to file that application in Q3 2025 and obtain approvals that enable construction to commence in mid-2026 to deliver a Q4 2027 in-service date.

Speaker Change: This first application known as the needs application was filed in September with the Alberta Utilities Commission.

Speaker Change: The preceding schedule has not yet been finalized, but we expect to receive an approval for this initial application in Q2, 2025, which will enable us to make commitments on long lead orders.

Speaker Change: The next major regulatory process known as the facility application will establish the final route amongst other elements of the project.

Speaker Change: Expect to be in a position to file that application in Q3, 2025 and obtain approvals that enable construction to commence in mid 2026 to deliver our Q4 'twenty twenty-seven in service date.

Bob Myles: In our electric transmission segment, a key project we continue to advance is our Central-East Transfer Out, referred to as CETO project. This approximately $280 million project was assigned by the Alberta Electric System Operator, or ISO, and will bring additional renewable energy from the eastern part of Alberta to the load centres.

Speaker Change: In our electric transmission segment, a key project, we continued to advance as our central East transfer referred.

Speaker Change: Referred to as Sito project. This approximately 280 million dollar project was assigned by the Alberta Electric system, operator, or ISO and will bring additional renewable energy from the eastern part of Alberta to the load centers once in service in mid 2026.

Bob Myles: Once in service in mid-2026, this new 85-kilometre electric transmission line will help strengthen the reliability of the provincial electrical grid. Gas and electric transmission lines like Yellowhead and CETO are crucial initial investments to ensure a reliable and resilient energy system in Alberta. We believe our province will require additional investment in both electric and natural gas transmission infrastructure.

Speaker Change: This new 85 kilometer electric transmission line will help strengthen the reliability of the provincial electrical grid.

Speaker Change: Gas and electric transmission lines like yellow head and sito are crucial and initial investments to ensure a reliable and resilient energy system in Alberta.

Speaker Change: We believe our province will require additional investment in both electric and natural gas transmission infrastructure.

Bob Myles: Regarding this future electric infrastructure, we were pleased to see that the recently released long term plan from the ISO highlighted substantial investment in ATCO's service territory in categories of load and intertie driven projects. We look forward to continuing to work with the ISO, the government and other industry participants to identify, develop and build the best overall solution.

Speaker Change: Regarding this future electric infrastructure, we were pleased to see that the recently released long term plan from the ISO highlighted substantial investment in odd goes service territory and categories of load and inter tie driven projects.

Speaker Change: We look forward to continuing to work with the ISO the government and other industry participants to identify develop and build the best overall solutions.

Bob Myles: Moving to our ATCO and power business, there are a number of key projects and opportunities. We continue to progress.

Speaker Change: Moving to our Agco and power business. There are a number of key projects and opportunities we continue to progress.

Bob Myles: First, I want to touch on our Heartland Hydrogen Hub project and the achievements we made throughout 2024 and our key priorities for 2025. In 2024, we were pleased to announce our partnership with Lindy Canada, who will be both an operator and an equity partner in this project. Our partnership with Lindy provides the quickest path to reach final investment decision as they bring expertise from existing projects around the world, including nearby ATCO site in the Alberta Industrial Heartland, improving the overall process, cost and timing of this project. For the export part of the project, we also added two additional partners in 2024 to advance the development of this project and provide access into the Asian market.

Speaker Change: First I want to touch on our Heartland hydrogen hub project and the achievements, we made throughout 2024 and our key priorities for 2025.

In 2024, we were pleased to announce our partnership with Lindy, Canada, who will be both an operator at an equity partner in this project a partnership with Lindsay provides the quickest path to reach final investment decision as they bring expertise from existing projects around the world including nearby.

Speaker Change: <unk> site in the Alberta, industrial Heartland, improving the overall process cost and timing of this project.

Speaker Change: For the export part of the project. We also added two additional partners in 2020 four to advance the development of this project and provide access into the Asian markets.

Bob Myles: Atko Enpower and Lindy, alongside these two additional parties, will continue to advance the important policy and regulation development in Canada for hydrogen export and identify offtake markets where we believe our hydrogen derivative products can be competitive.

Speaker Change: I'd go empower and Lindy alongside these two additional parties will continue to advance the important policy and regulation development in Canada for hydrogen export and identify offtake markets, where we believe our hydrogen derivative products can be competitive.

Bob Myles: Looking ahead, we continue to work with the federal and provincial governments to establish policy and framework that facilitate investment in the Canadian hydrogen economy for both export and domestic opportunities. greater certainty on the policy and frameworks, risk sharing mechanisms, and funding for the next stage of development is needed before we can make our final investment decision on this project.

Looking ahead, we continue to work with the federal and provincial governments to establish policy and framework that facilitate investment in the Canadian hydrogen economy for both export and domestic opportunities.

Speaker Change: Greater certainty on the policy and frameworks risk sharing mechanisms and funding for the next stage of development is needed before we can make our final investment decision on this project.

Bob Myles: We remain committed to advancing reconciliation and engaging with First Nations early in the development of this project. We continue to advance these discussions and the framework for their investment and participation in the project. As I've stated before, offtake and build out of the value chain remain a crucial part of de-risking the project. And we are continuing the process of securing offtake arrangements, either domestically or in the export market.

Speaker Change: We remain committed to advancing reconciliation and engaging with first nations early in the development of this project. We continue to advance these discussions and the framework for their investment in participation in the project as I've stated before offtake and build out of the value chain remain a crucial part of Derisking the project.

Speaker Change: And we are continuing the process of securing offtake arrangements either domestically or in the export market.

Bob Myles: I look forward to sharing further updates throughout 2025 as we progress towards our final investment decision.

Speaker Change: I look forward to sharing further updates throughout 2025, as we progressed towards our final investment decision.

Bob Myles: Moving to our renewable generation, we continue to believe we have an attractive pipeline of wind, solar and battery energy storage opportunities in which we can invest over the long term. In 2024, we focused on optimizing existing operating assets, including successfully increasing the output from our Barlow and Deerfoot solar assets and from our 40-mile wind facility via low-cost upgrades.

Speaker Change: Moving to our renewable generation, we continue to believe we have an attractive pipeline of wind solar and battery energy storage opportunities in which we can invest over the long term in 'twenty 'twenty four we focused on optimizing existing operating assets, including successfully increasing the output.

Speaker Change: Our Barlow endear foot solar assets and from our 40 mile wind facility the low cost upgrades.

Bob Myles: The government of Alberta's market announcement around both the restructured energy market and changes to transmission regulations are forcing us to pause any development opportunities until more certainty is provided around what these changes will entail and what the impact is going to be to the markets, specifically renewables. As we have communicated in the past, our next largest development opportunity is our 220 megawatt 40 mile solar project, which was shovel ready early in 2024, and is seeking an offtake or power purchase arrangement for at least 75% of the project's generation. We believe the uncertainty caused by the contemplated changes by the government of Alberta through the restructured energy market and the transmission regulations is delaying interested parties in offtake and will continue to do so until uncertainty is removed.

Speaker Change: The government of Alberta as market announcement around both the restructured energy market and changes to transmission regulations are forcing us to pause any development opportunities until more certainty has provided around what these changes will entail and what the impact is going to be to the markets specifically renewables.

Speaker Change: As we have communicated in the past our next largest development opportunity is our 220 megawatt 40 miles solar project, which was shovel ready early in 'twenty 'twenty four and is seeking an offtake or power purchase arrangement for at least 75% of the projects.

Speaker Change: We believe the uncertainty caused by the contemplated changes by the government of Alberta through the restructured energy market and the transmission regulations is delaying interested parties and off take and we will continue to do so until uncertainty is removed.

Bob Myles: As we review these impacts on our renewables portfolio and position our business to be able to fully participate in the Alberta market, we may look to other forms of generation, including natural gas powered generation, to round out our portfolio of assets.

Speaker Change: As we review these impacts on our renewables portfolio and position our business to be able to fully participate in the Alberta market. We may look to other forms of generation, including natural gas power generation to round out our portfolio of assets.

Bob Myles: A key theme that has been popular in our discussions across our businesses is data centers. We believe Alberta is well positioned to capture data centers, the data center demand for a number of reasons, including Alberta produces more than half of all natural gas in Canada. We have strong generation capabilities due to some of the best wind and solar resources in Canada, along with expectations that additional gas power generation will come online over the next decade. Alberta is Canada's only deregulated electricity and gas market, allowing for bilateral purchase agreements, and we have significant existing water infrastructure and land that reduces time and costs associated with accessing these resources.

Speaker Change: Key theme that has been popular in our discussions across our businesses as data centers. We believe Alberta is well positioned to capture data centers. The data center demand for a number of reasons, including Alberta produces more than half of all natural gas in Canada, we have strong generation capabilities do.

Speaker Change: Some to the some of the best wind and solar resources in Canada, along with expectations that additional gas power generation will come online over the next decade.

Speaker Change: BARDA is Canada's only deregulated electricity and gas market, allowing for bilateral purchase agreements.

Speaker Change: And we have significant existing water infrastructure and land that reduces time and costs associated with accessing these resources.

Bob Myles: Beyond these advantages for Alberta, we believe the asset base and experience within ATCO positions as well to capture future opportunities within the data center space. As shown on this slide, our asset base spans across the entire data center value chain, and is led by our experience in generation with the capability and access to carbon sequestration, and our ability to solve transmission constraints, both gas and Our teams continue to have discussions with prospective developers and the government of Alberta and how we can be part of the solution, including ways we can support the required increase in gas fire generation with our transmission and distribution system.

Beyond these advantages for Alberta, we believe the asset base and experience within outgo positions us well to capture future opportunities within the data center space as shown on this slide our asset base spans across the entire datacenter value chain and is led by our experience in generation.

Speaker Change: With the capability and access to carbon sequestration and our ability to solve transmission constraints, both gas and electric.

Speaker Change: Our teams continue to have discussions with perspective.

Developers and the government of Alberta, and how we can be part of the solution, including ways. We can support the require increase in gas fired generation with our transmission and distribution systems. Although these solutions will take time to develop we believe we have the resources and capabilities to participate.

Bob Myles: Although these solutions will take time to develop, we believe we have the resources and capabilities to participate in the future build out of data centers in Alberta.

Speaker Change: And the future build out of data centers in Alberta.

Bob Myles: With numerous opportunities ahead of us at Canadian Utilities, we continue to develop our financing strategy to support our growth objectives. We remain focused on creating synergies across our organization, seeking strategic partnerships, pursuing project-level debt financing, recycling capital and also considering equity.

Speaker Change: With numerous numerous opportunities ahead of us of Canadian utilities, we continue to develop our financing strategy to support our growth objectives, we remain focused on creating synergies across our organization seeking strategic partnerships pursuing project level debt financing risk.

Speaker Change: Cycling capital and also considering equity.

Bob Myles: This is an exciting period for our company, and I look forward to sharing further updates on our strategic initiatives throughout 2025.

Speaker Change: This is an exciting period for our company and I look forward to sharing further updates on our strategic initiatives throughout 2025.

Katie Patrick: With that, I'll now pass the call back to Katie to briefly discuss our operational results in Australia. Thanks, Bob. As a leading gas distributor in Western Australia, we deliver gas to approximately 815,000 households and businesses through our regulated gas network. In January of this year, Australian Gas Utility began operating under the sixth access arrangement known as AA6. As a reminder, the AA6 plan sets out a regulated rate of return as an end is based on a detailed review of our demand forecast and expenditure plans for the five year period of January 2025 through December 2029.

Katie Patrick: With that I'll now pass the call back to Katie to briefly discuss our operational results in Australia.

Katie Patrick: Thanks, Bob.

Speaker Change: As a leading gas distributor in western Australia, we deliver gas to approximately 815000 households, and businesses to our regulated gas network.

Katie Patrick: In January of this year.

Katie Patrick: Malian gas utility began operating under the six access arrangement known as a a six.

Katie Patrick: As a reminder, the a six plan sets out a regulated rate of return as an and is based on a detailed review of our demand forecast and expenditure plans for the five year period.

Katie Patrick: January 2025 through December 2029.

Katie Patrick: The decision from the Economic Regulation Authority, ERA. set an ROE of 8.23% for the AA-6 period, up from 5.02% under the previous access arrangement, AA-5. The ERA's decision reflects our own internal view that natural gas continues to be an important and valued source of energy for Western Australians, with total tariff revenues increasing $536 million over our AA5 decision. Our positive regulatory decision in Australia provides us certainty across tariffs and investments through 2029. When incorporating the changes from AA5 to AA6, along with other factors impacting our business, we expect this will increase adjusted earnings at ActoGas Australia by 8% to 10% in 2025.

Katie Patrick: The decisions on the economic regulation Authority E R. A.

Katie Patrick: Second ROE of 8.23% for the a eight six period up from 5.0% to 2% under the previous access arrangement a a five.

Katie Patrick: E. R. Ace decision reflects our own internal view of natural gas continues to be an important and valued source of energy for western Australians with total tariff revenues, increasing $536 million over or a a five decision.

Katie Patrick: Our positive regulatory decision in Australia provides a certainty across tariffs and investments through 2029.

Katie Patrick: When incorporating the changes from a five to a six along with other factors impacting our business. We expect this will increase adjusted earnings at Atco gas Australia.

Katie Patrick: By 8% to 10% in 2025.

Katie Patrick: Overall, Canadian Utilities delivered a strong 2024, and we remain focused on carrying this momentum into 2025, despite some headwinds we will face at our core utilities in Canada. Throughout 2025, our entire Canadian Utilities team will focus on efficiency while delivering some very exciting large projects that will reshape our company and set us up for a new pace of growth.

Katie Patrick: Overall Canadian utilities delivered a strong 2024, and we remain focused on carrying this momentum into 2025, despite some headwinds we'll face that our core utilities in Canada.

Speaker Change: 2025, iron intake entire Canadian utilities team.

Speaker Change: We will focus on efficiency, while delivering some very exciting large projects that will reshape our company and set us up for a new pace of growth.

Katie Patrick: That concludes our prepared remarks.

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

Colin Jackson: I will now turn the call back to Colin. Thank you, Katie.

Colin Jackson: Thank you Katie.

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

Speaker Change: In the interest of time, we ask that you limit yourself to two questions.

Speaker Change: If you have additional questions you're welcome to rejoin the queue.

Operator: I will now turn it over to the conference coordinator for questions. Thank you.

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

Operator: We'll now begin the question and answer session. To join the question queue, you may press star then one on your telephone keypad. You'll hear a tone acknowledging your request. If you're using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star then two. Again, anyone in the conference call who wishes to ask a question may press star then one at this time.

Speaker Change: Thank you well now begin the question and answer session to join the question queue. You May Press Star then one on your telephone keypad.

Speaker Change: Hear a tone acknowledging your request if youre using a speakerphone. Please pick up your handset before pressing any keys.

To withdraw your question. Please press Star then two.

Speaker Change: It's again anyone in the conference call, who wishes to ask a question May Press Star then one at this time.

Robert Hope: First question is from Robert Hope with Scotiabank. Please go ahead. Good morning, everyone. I appreciate rolling forward the capital outlook to 2027. You know, it does show a relatively sizable uptick in spend in that year.

Robert Hope: First question is from Robert Hope with Scotiabank. Please go ahead.

Robert Hope: And good morning, everyone and appreciate rollover or the capital I've looked at 2027, you know it does show a relatively sizable uptick in spend in that year. When you take a look at kind of where your credit rating agency or where your credit ratings are your financial metrics. You know how are you thinking about.

Robert Hope: When you take a look at kind of where your credit rating agency or where your credit ratings are, your financial metrics, you know, how are you thinking about funding this step up in in CapEx in 2027 and beyond? Yeah, thanks, Robert. Very good question. I think, as we've said in the past, in the medium term, the short to medium term here, we don't foresee the need for external equity to fund some of our growth. As we look out, you know, we have a very strong credit rating, you know, we're above many of our peers in terms of our A- rating at Canadian Utilities.

Funding this step up in Capex in 2027 and beyond.

Robert Hope: Yeah, I think so having a very good question I think and.

Robert Hope: As he said in the past and in the medium term in the short to medium term here, we don't foresee the need for external equity to fund some of our growth as we look out you know we we have a very strong credit rating you know where are above many of our peers in terms of our a minus rating and Canadian utilities. So I think we certainly have.

Robert Hope: So, I think we certainly have some opportunity for some additional funding to come from leverage to fund some of that growth. But certainly beyond that, the magnitude of the spend will require us to consider forms of equity that would make the most sense. And we're going through that process to determine the best form of equity that maximizes shareholder value to fund that remaining portion that we'll need for the spend largely associated with the Yellowhead pipeline. I appreciate that.

Robert Hope: Some opportunity to for some.

Robert Hope: Additional funding to come from from leverage to fund some of that growth, but certainly beyond that the magnitude of the spend will require us to consider.

Robert Hope: One of the equity that would make the most sense and where we're going through that process.

Robert Hope: And then the.

Robert Hope: The best form of equity that maximizes shareholder value to fund that remaining portion that will need for the spend largely associated with.

With the yellow had pipeline.

Robert Hope: Alright, I appreciate that.

Robert Hope: And then in the prepared remarks, you noted that, you know, some regulatory uncertainty related to the power market in Alberta has delayed some of the projects there.

Robert Hope: And then in the prepared remarks, you noted that you know some regulatory uncertainty related to the power market in Alberta has has delayed some some of the projects. There you know when we take a look at the carbon and hydrogen project. So we are seeing quite a bit of political uncertainty on the federal level and even on the provincial level in terms of our carbon abatement.

Robert Hope: You know, when we take a look at the carbon and hydrogen projects, so we are seeing quite a bit of political uncertainty on the federal level, and even on the provincial level in terms of carbon abatement economics. So can you maybe walk us through kind of what the key levers are that you're seeing there are the key challenges to move that those projects forward during this time? All right, great.

Robert Hope: Uh Huh economic so can you maybe walk us through kind of what the key levers are that youre seeing there are the key challenges are to move that those projects forward. During this time.

Bob Miles: Hi, Robert Bob Here, Yeah, we we also share your views around the uncertainty both federally and provincially and all that I think we really need to get some comfort around that before we make any significant decisions as a as I've indicated and so not just in the renewable side, but also in the.

Bob Miles: You know that the hydrogen pneumonia sized space as well and so we really wanted to see where the next six months ago with regards to the political environment.

Bob Miles: Alright, great. Thank you.

Maurice Choy: The next question is from Maurice Choy with RBC Capital Markets. Please go ahead. Thanks, and good morning, everyone. I just wanted to come back to the elevated rate base CAGR of 5.4%. I believe last year, the long term view was for the CAGR to be anywhere around the 4 to 5% range. Can you speak to whether or not that range still applies?

Speaker Change: The next question is from Maurice Choy with RBC capital markets. Please go ahead.

Maurice Choy: Thanks, Dan and good morning, everyone. Just wanted to come back to the elevated rate base CAGR of five 4%.

Speaker Change: I believe last year. The long term view was for the CAGR to be anywhere around 4% to 5% range.

Speaker Change: Can you speak to but not that range still applies or are there any secular trends such as the data centers that you just mentioned.

Maurice Choy: Or are there any secular trends, such as the data centers that you just mentioned, are emerging to cause you to think that this long term rate has risen from 4 to Thanks, Maurice. Yeah, and we, you know, we didn't update, you know, sort of the long term trajectory that we have, we updated the medium term rate base growth to 5.4%. I think there's still a number, as we all know, there's a number of uncertainties that remain. in the world that could impact the long-term investment climate. So as we rolled forward, we provided the 5.4%. We have very strong comfort in the numbers that we provided there.

Our emerging could cause you to think that this long term rate has risen from 45%.

Speaker Change: Thanks, Brian Yeah, and we you know we didn't update you know sort of the long term trajectory that we have the updated medium term rate base growth of five 4%.

Speaker Change: I think theres still a number as we all know there's a number of uncertainties that remain.

Speaker Change: And in the world that are that could impact our long term investment climate.

Speaker Change: So as we rolled forward, we we provided the five 4% we have very strong comfort in the numbers that we provided there and you know who we.

Maurice Choy: And, you know, we haven't changed the long-term outlook. There's obviously some positive trends that you noted, data centers, etc. But as we all know, there's a number of things that we're mindful of and watching that could be negatives to the long-term overall growth in Canada. And so we're keeping our forecast to the medium term.

Speaker Change: Haven't changed the long term outlook.

Speaker Change: There's obviously some positive trends that you noted data centers et cetera.

Speaker Change: But as we all know there's a number of things that where we're mindful of and watching that could be negatives to the long term overall growth in Canada, and so we're keeping our forecast for the medium term for the moment.

Maurice Choy: And maybe just sticking on that same theme, Bobby mentioned that the company may look, or I guess relook, at natural gas generation. Is this born out of wanting to capture growth related to data centers? And realistically, when do you think you might progress any such project? And just a quick follow up. When you say there's a pause in generation development, is that solely related to Alberta Renewables, not in Alberta Thermal or Australia? Yeah, I think I got your last question, I think, Maurice, but just with regards to gas fire generation is, you know, if you if we had chatted a couple years ago, we were very focused on solely renewables, but we really see the world changing a little bit right now more recept, I guess being more receptive to gas fire.

Speaker Change: Got it.

Bob Miles: Just sticking on that same theme Bob you mentioned that the company May look cool I guess, we look at natural gas generation. Its just borne out of wanting to capture true related to data centers and realistically.

Bob Miles: When do you think you might progress any such project.

Bob Miles: Just a quick follow up when you say that the pause in generation development is that solely related to Alberta, renewables, Northern Alberta thermal Australia.

Maurice Choy: Yeah, I think I got your last question I think Maurice but just with regards to gas fired generation as you know if you. If we had tried a couple of years ago. We were very focused on solely renewables, but we really see the world changing a little bit right now more receptive I guess being more risk.

Maurice Choy: I do agree with you that a lot of the driver is data centers and behind the fence gas fire generation. But I also do think in Alberta, you know, just talking Alberta, there's there is a need for more generation and more 24 seven generation. And we really think that gas, gas fire generation will accomplish that. But we also think there's some opportunities for gas fire generation and other jurisdictions as well. And so we are considering that, for sure.

Maurice Choy: <unk> to gas fired I do agree with you that a lot of the driver is data centers and behind the fence gas fired generation, but I also do think in Alberta.

Maurice Choy: Just talk in Alberta, there is there is a need for more generation and more 24, seven generation and we really think that gas gas fired generation will accomplish that but we also think there's some opportunities for gas fired generation in other jurisdictions as well and so we are considering that for sure.

Maurice Choy: Your second question, I think was around the deferral of some of our renewable projects, I think is what you said. And so for us, that is really coming down to Alberta, and really getting comfort with where the restructured energy market is going to go. And right now, nobody, whether it's ourselves, or whether it's off takers are comfortable making any commitments with all of this uncertainty.

Maurice Choy: To your second question I think was around a deferral of some of our renewable projects. I think is what you said and so for us that is really coming down to Alberta, and really getting comfort with where the restructured energy market is going to go and right now nobody whether it's ourselves.

Maurice Choy: Or whether it's off takers are comfortable making any commitments with all of this uncertainty.

Maurice Choy: What other jurisdictions were you thinking about for gas fire facilities outside of Alberta? We would look at Australia, we you know, depending on how the political environment goes in Mexico, we do things, you know, the fundamentals in Mexico from a power perspective, to make some sense as well. So just the other jurisdictions in which we're operating right now.

Maurice Choy: What are the jurisdictions, where you're thinking about for gas fired facilities outside of Alberta.

Maurice Choy: We would look at Australia.

Maurice Choy: We you know depending on how the political environment goes in Mexico, We do things. So you know the fundamentals in Mexico from a power perspective, some make some sense as well so just the other jurisdictions in which we're operating right now.

Maurice Choy: Thank you very much and congrats on your new job. Yeah, thanks.

Understood. Thank you very much and congrats on your new them up.

Yeah. Thanks, Chris.

Mark Jarvi: The next question is for Mark Jarvi with CIBC Capital Markets. Please go ahead. Thanks, everyone.

Speaker Change: The next question is from Mark Jarvi with CIB.

Speaker Change: CIBC capital markets. Please go ahead.

Mark Jarvi: Congratulations, Bob, on the new role. So the outline of the new capital plans is a minimum of $6.1 billion. Can you just talk a little bit about potential upside to that, maybe quantify what it could be where specifically in your businesses you'd see the upside? Yeah, thanks, Mark. I can I can take that one. Yeah, we did we put that language in there because there is, you know, the capital spend that we have there in that we have highlighted relates to specifically approved capital that we have already under our regulated, our current regulation, as well as Yellowhead, which as we know, is under the process of approval.

Speaker Change: Yeah, Thanks, Ron Congratulations Bob on the new role.

Speaker Change: So the a lot of the new capital plan as a minimum of $6 1 billion can you just talk a little bit about potential upside to that maybe quantify what it could be where specifically in your businesses you'd see the upside.

Speaker Change: Yeah. Thanks, Mark I can I can take that one yeah. We did we put that language in there because there is you know that the capital spend that we have there and that we have highlighted relates to specifically improve capital that we haven't already under a regulated.

Speaker Change: Current regulation as well as Yellowhead, which as we know it is under the process of approval. So what's not reflected it could be upside to that is you know the asa would be the new.

Mark Jarvi: So what's not reflected, it could be upside to that is, you know, the ACO released the new, the new plan, and there could be new investment beyond that, that is not necessarily reflected, as well as some of the potential upsides that we've talked about in terms of data center load, and the impacts to the utilities, and then there's things like that. So there are, there are some things that, you know, obviously we hope come to fruition, but we have not factored into that, that forecast that we have. And you do think those could slide into that sort of 2027 timeframe?

Speaker Change: The new plan and there could be new investments beyond that that is not necessarily reflected as well as some of the potential upside that we've talked about in terms of data center load.

Speaker Change: The impacts to the utilities and other things like that so there are there are some things that you know obviously, we hope come to fruition, but we have not factored into that that forecast that we have.

Speaker Change: And you do you think those could slot into that for 2027 time frame and it would be sort of modest any idea like what that could be in terms of upside.

Mark Jarvi: And they'd be sort of modest? Any idea like what that could be in terms of upside? Yeah, no, we're we're not going to quantify that just yet. But yes, I think where we're thinking that would slot into is 2027 and beyond. In terms of the ability to increase the forecast in those those outer years, it wouldn't be necessarily imminent in the next couple of years.

Speaker Change: Yeah, No. We were we're not going to quantify that just yet, but yes, I think where we're thinking that with slot into the 2027 and beyond.

Speaker Change: In terms of the ability to increase the forecast in those outer years that wouldn't be necessarily imminent in the next couple of years.

Mark Jarvi: Okay. And then you talked about the funding and having to consider all options. I was just wondering too, like, updated views just on the dividend growth, obviously earnings should be tracking higher as rate base goes higher. Would the view though be to keep the dividend sort of at growth rate the same level just because of the capital investment need or required or any sort of updated view in terms of you think that becomes something you adjust over time? Yeah, I think, as everyone knows, the dividend is a very important thing for us and our investors, and we continue to focus on that.

Speaker Change: And then.

Speaker Change: You talked about the funding and having to consider all options I was wondering too like I'll tell you just on the dividend growth Oxy earnings should be tracking higher as rate base goes higher with the V there'll be to keep the dividend sort of grocery at the same levels just because of the capital investment neither are required or any sort of update your view in terms of do you think that becomes <unk>.

Speaker Change: You adjust over time.

Speaker Change: Yeah, and I think as everyone knows the dividend is a very important thing.

Speaker Change: For us and our investors and we continue to focus on that.

Mark Jarvi: Our payout ratio, as everyone can see, is in a place that's fine. It's not a significant burden, but it also is, you know, we'd like to have a little bit more room for some of the growth we have upcoming. So there is, as we saw in January, we've increased our dividend 1% and slightly below sort of our overall earnings growth. And we can see continuing to try and create a little room between the two, between the dividend and the earnings growth that we have going forward. Okay, makes sense.

Speaker Change: Our payout ratio as everyone can see is in a place. That's that's fine. It's not you know it's not a significant burden, but it also as you know we'd like to have a little bit more room for some of the growth we have that coming. So there is as we saw in January we've increased our dividend, 1% and slightly below sort of our overall earnings growth.

Speaker Change: And we can see continuing to try and create a little room between the two isn't a dividend then the earnings growth that we have going forward.

Mark Jarvi: Thanks, everyone.

Speaker Change: Makes sense thanks, everyone.

Ben Pham: The next question is from Ben Pham with BMO. Please go ahead. Hi, thanks.

Speaker Change: The next question is from Ben Pham with BMO. Please go ahead.

Ben Pham: Hi, Thanks.

Operator: Sorry, Ben, sorry to interrupt the feedback and so we're not able to hear you. There, it looks like it's stopped now. It stopped because I muted his line.

Speaker Change: Hum.

Speaker Change: Uh huh.

Speaker Change: Alright.

Speaker Change: Yes.

Speaker Change: Sorry to interrupt.

Speaker Change: Feedback and so we're not able to hear you are there it looks like it stops now.

Speaker Change: And then it stops because that muted his line Mr found I'd like to ask you to dial back in and rejoin the queue.

Operator: Mr. Pham, I'd like to ask you to dial back in and rejoin. will move on to the next caller. But before I do that, if you have a question, please press star then one.

Speaker Change: Well move on to the next caller, but before I do that.

Speaker Change: If you have a question. Please press Star then one the next caller is Patrick Kenny with.

Patrick Kenny: The next caller is Patrick Kenny with National Bank Financial. Please go ahead. Thank you. Good morning, everybody. Maybe just on the hydrogen project, you know, we saw the B.C. government come out and recently say that they're supportive of fast-tracking. Unknown Speaker 18 infrastructure projects.

Patrick Kenny: National Bank financial please go ahead.

Patrick Kenny: Thank you good morning, everybody, maybe just on the hydrogen project you know we saw the.

Patrick Kenny: The BC government come out and then recently say that they're supportive of fast tracking some 18 infrastructure projects.

Patrick Kenny: But, you know, unless I missed it, didn't see anything specifically related to your Heartland project, as it relates to, you know, fast tracking the de-risking profile of the logistics plan that you've talked about to get ammonia out to the West Coast and off the market. So I'm just curious, you know, why you think your project was excluded from the list? Or, you know, what might be happening behind the scenes to help expedite that approvals process to still meet your previous mid-year FID target? Patrick, you know it's interesting you say that as the conversations we're having with provincial governments has been very supportive.

Patrick Kenny: But you know unless I missed it didn't see anything specifically related to your Heartland project as it relates to you know fast tracking the derisking profile of the logistics plan that you've talked about to get.

Patrick Kenny: Ammonia out to the west coast and off the market. So.

Patrick Kenny: I'm just curious you know why do you think your project was excluded from the list or you know what might be happening behind the scenes.

Patrick Kenny: To help expedite that approval process to still meet your previous mid year F E target.

Patrick Kenny: Uh Huh, Patrick you know it is.

Patrick Kenny: Interesting you say that is the conversations we're having with provincial governments has been very supportive since the new government has come in and to power in British Columbia, There are more supportive than they ever have been on doing some of these larger projects, whether it be LNG or.

Patrick Kenny: Since the new government has come into power in British Columbia they're more supportive than they ever have been on doing some of these larger projects whether it be LNG or even ammonia by rail. So we actually are more encouraged today than we were in the past with regards to British Columbia. The bigger concern for us is what happens you know federally and nobody in Asia is willing to commit to any kind of offtake so the timing on the project is really going to be dictated by getting comfort with where we go on the federal perspective.

Patrick Kenny: Or even ammonia by rail. So so we actually are more encouraged today than we were in the past with regards to British Columbia.

Patrick Kenny: Bigger concern for US is what happens you know federally and nobody and Asia is willing to commit to any kind of offtake. So the timing of the project is really going to be dictated by getting comfort with where are we go under federal perspective.

Patrick Kenny: Yeah.

Patrick Kenny: Okay, that makes sense.

Patrick Kenny: Okay that makes sense.

Patrick Kenny:

Patrick Kenny: And then switching over to NPower.

Patrick Kenny: And then switching over to empower so yeah. It sounds like a pretty big strategic pivot from looking at renewables to now gas fired generation.

Patrick Kenny: So yeah, sounds like a pretty big strategic pivot from, you know, looking at renewables to now gas power generation. You touched on geographically, but can you just walk us through the spectrum of Gas Fired Assets that you'd be interested in whether or not you would need a data center customer contract or otherwise on the back end to justify building or buying a new gas fire plant or are you also considering, you know, whether it's Alberta or elsewhere, you know, pure merchant exposure, just given some of the new rules out there. Patrick, I see gas fire generation in three areas.

Patrick Kenny:

Speaker Change: You touched on geographically, but can you just walk us through the spectrum of <unk>.

Speaker Change: Gas fired assets that you'd be interested in whether or not you would need a data center customer contract or otherwise on the backend to justify building.

Speaker Change: Building or buying a new gas fired plant or are you also considering.

Speaker Change: Whether it's Alberto or elsewhere, you know pure merchant exposure just given some of the new rules out there.

Speaker Change: Yeah.

Speaker Change: Patrick I see gas fired generation in three areas.

Patrick Kenny: One is firming up our existing renewables, and the merchant side of our existing renewables. The second area is in behind the fence data centers. And the third area is we would consider gas fire generation once we have more certainty around how the restructured energy market works, and whether there's an opportunity to build and justify the economics around gas fire generation. We would not want to just right now build at 100% merchant, we just would not feel comfortable doing that. Okay, got it. Thanks.

Speaker Change: One is firming up our existing renewables.

Speaker Change: And the merchant side of our existing renewables. The second area is in behind the fence Datacenters.

Speaker Change: And the third area is we would consider gas fired generation once we have more certainty around how the restructured energy market works and whether there is an opportunity to build and justify the economics around our gas fired generation, we would not want to just right now build at 100% merchant, we just would not feel.

Speaker Change: Comfortable doing that.

Speaker Change: Okay got it thanks, and then lastly, I'm just down in Puerto Rico, you know I've been trying to follow the headlines here on the bankruptcy process, but any further color on how you know alumina energy.

Patrick Kenny: And then lastly, just down in Puerto Rico, you know, I've been trying to follow the headlines here on the bankruptcy process, but any further color on how, you know, Luma Energy, any protections in terms of any revisions to the long term service agreement or, you know, I know they announced a fairly large investment just recently. So just an overall update on Luma would be great. Yeah, Patrick, and with regards to bankruptcy, PREPA is still in bankruptcy. So that, you know, was supposed to happen a few years ago, has not come out of bankruptcy as of yet.

Speaker Change: Any protections in terms of.

Speaker Change: Any revisions to the long term service agreement or.

Speaker Change: You know I know they announced a fairly large investment I'm. Just recently, so just an overall update on luma would be great.

Speaker Change: Yeah, Patrick and with regards to the bankruptcy PREPA is still and in bankruptcy. So that it always is.

Speaker Change: Close to happen a few years ago has not come out of bankruptcy as of yet so work and we're continuing to operate under the interim agreement.

Patrick Kenny: So we're continuing to operate under the interim agreement. And, you know, with regards to that, you know, there are definitely some challenges. There's a new government that has come into place in Puerto Rico as well as in, as in Washington. So we're trying to work our way through all of that right now. But, you know, as of today, you know, our team is still very committed to being in Puerto Rico. Okay, that's great. Thank you.

Speaker Change: And you know with regards to that you know there are definitely some challenges there's a new government that has come into place in Puerto Rico as well as in is in Washington, So we're trying to work our way through all of that right now but.

Speaker Change: As of today and our team is still very committed to being in Puerto Rico.

Speaker Change: Okay. That's great. Thank you I'll leave it there.

Patrick Kenny: I'll leave it there.

Ben Pham: The next question is from Ben Pham with BMO. Please go ahead. All right, thanks. I hope this is a bit better.

Speaker Change: The next question is from Ben Pham with BMO. Please go ahead.

Ben Pham: Alright, Thanks, I hope this is a bit better.

Ben Pham: Maybe start off on the data center slide you had, and it looks like a very broad initiative right now. How do you see the path ahead? Are you creating a team internally? We characterize ourselves as early stages now. Do you anticipate maybe narrowing the targeted parts of the value chain? Yeah, we definitely have teams working on that, Ben. But you know, when we look across Canadian utilities, we really see ourselves well positioned with regards to our ability to build and operate gas fire generation. As I've said, we have land, we have water, but we also, you know, as you know, we operate electric transmission, gas transmission, and we feel any or all of the above are opportunities for us to participate in the data centers.

Ben Pham: Maybe to start off on the data Center Slide you had and it looks like a very broad.

Ben Pham: Initiative right now.

Ben Pham: How do you see that pop out are you, creating a team internally.

Ben Pham: Okay.

Ben Pham: How would you characterize yourself as early stages now and do you anticipate maybe narrowing.

Ben Pham: The targeted.

The value chain.

Ben Pham: Yeah, we definitely have teams working on that.

Ben Pham: Ben but you know when we look across Canadian utilities, and we really see ourselves well positioned with regards to our ability to build and operate gas fired generation. We as I've said, we have land we have water, but we also as you know we operate electric transmission gas transmission and we feel.

Ben Pham: Any or all of the above are opportunities for us to participate in the data centers, what we really believe strongly and always working with our customers and not just building on spec, we really wanted to build what our customers need. So all of our customers are looking for any one of those things I had.

Ben Pham: What we really believe strongly in, though, is working with our customers, and not just building on spec, we really want to build what our customers need. So if our customers are looking for any one of those things I had mentioned, we are interested in working with them.

Ben Pham: Pension we were interested in and work with them. So we are having a number of conversations still early days. However.

Ben Pham: So we are having a number of conversations, still early days, however. Thanks, Ben.

Ben Pham: Okay got it.

Ben Pham: Now as far as smart part of your business to electric generation and the suncor assets in there.

Ben Pham: Can you comment directly the 6 million earnings for the year, it's quite a bit down year over year.

Ben Pham: And then related to that if you can't.

Ben Pham: If all the renewable pipeline, maybe as quickly as you expected that.

Ben Pham: Suggest that deal might be actually dilutive brushy of your initial expectations.

Ben Pham: Thanks, Ben Yeah, I think on.

Katie Patrick: Yeah, I think on the $6 million Delta, as I said, in my opening remarks, the change in the merchant pricing year over year is largely what contributed to that change. But also, which I mentioned that the contractiveness of our portfolio has increased 2023 versus 2024. So that is a positive, but we are exposed to a smaller degree, about 25% of our portfolio, give or take, to the merchant price in Alberta, which has been quite a bit lower. So that sort of explains the Delta there.

Ben Pham: The $6 million Delta as I said in my opening remarks, the the change in the merchant pricing year over year.

Ben Pham: It is largely contributing to that change.

Ben Pham: But I'll also which I mentioned that the they can attractiveness of our portfolio has increased 2023 versus 2024. So that is a positive but we are exposed to a smaller degree about a 25% of our portfolio give or take to the merchant pricing in Alberta, which has been quite a bit lower so that sort of explains the delta.

Katie Patrick: In relation to the speed of the development pipeline, I don't think overall that our thesis on that investment has changed. We as Bob Smarks alluded to really want certainty in the market here so we can continue to progress and we remain hopeful that the Alberta government will get there soon, but I don't think overall that's changed our position on that investment and our belief in continuing to build it out. And the only thing I'd add to that is in our capital forecast that Katie presented, we have actually staggered and pushed out some of the, you know, the planned development of that pipeline.

Ben Pham: To that in relation to the speed of the development pipeline.

Bob Miles: I don't think overall that our thesis on that investment has changed we as Bob's Mike's alluded to really want certainty.

Bob Miles: In the market here. So we can continue to progress and we remain hopeful that the Alberta government will get there soon.

Bob Miles: But I don't think overall, that's changed our position on that investment and that I believe in continuing to build it out.

Bob Miles: Got it.

Ben Pham: Ben the only thing I'd add to that is in our capital forecast that katie's presented we have actually staggered pushed out some of the you know the plan.

Katie Patrick: So we've already taken that into account in in the capital forecast that Katie indicated.

Ben Pham: Development of that pipeline, so we've already taken that into account and in the capital forecast that acuity indicated.

Katie Patrick: Okay, that's great. Thank you very much.

Speaker Change: Okay. That's great. Thank you very much.

Operator: This concludes the question and answer session.

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

Colin Jackson: I'd like to turn the conference back over to Mr. Colin Jackson for any closing remarks. Thank you very much for Thank you operator and thank you for participating today. We appreciate your interest in Canadian Utilities and we look forward to speaking with you again.

Speaker Change: Okay.

Speaker Change: Thank you very much for.

Speaker Change: Thank you operator, and thank you for participating today. We appreciate your interest in Canadian utilities, and we look forward to speaking with you again soon.

Operator: This concludes today's conference call, you may disconnect your lines. Thank you for participating and have a pleasant day.

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

Speaker Change: Yeah.

Speaker Change: Yeah.

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