Q2 2025 TC Energy Corp Earnings Call
Thank you for standing by. This is the call to the operator.
Welcome to the TC energy. Second quarter, 2025 results conference call.
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To Gavin, Wy, vice president of investor relations.
Please go ahead.
Thanks very much. And good morning would like to welcome you to TC energies 2025 second quarter conference call.
Joining me are Frost, porier president and chief executive officer, Shaun O'Donnell, Executive Vice, President and Chief Financial Officer along with other members of our senior leadership team.
Fran sha will begin today with some comments on our financial results and operational highlights.
The copy of this slide presentation is available on our website under the investor section.
Following opening remarks, we'll take questions from the investment Community. Please let me yourself to 2.0 of the media contact. Our media team.
Today's remarks will include forward-looking statements that are subject to important risks and uncertainties for more information. Please see the reports filed by TC energy with Canadian Securities regulators. And with the US Securities Exchange Commission,
finally, we will refer to certain non-gaap measures, that may not be comparable to similar measures presented by other entities,
Our reconciliation is contained in the appendix of this presentation.
With that, I'll turn the call over to press wall.
Thanks Gavin and good morning everyone.
Through the first half of 2025 TC energies, performance remains strong delivering across all key priorities. We set at the beginning of the year.
First and foremost, our safety record remains exceptional, with incident rates holding at 5 year. Lows. This is a direct reflection of our team's unwavering commitment to Safety in every step.
Safety drives operational excellence, which allows us to maximize the value of our assets and supports our strong financial results.
During the second quarter, we delivered a 12% year-over-year increase in comparable ebita and our increasing our 2025 comparable, ibaa Outlook to 10.811% and approximately 9% increase over 2024.
Contributing to this increase. We have reached a settlement in principle with customers on our Columbia Gas system that is expected to result in an increase relative to pre-filed rates as evidenced by the interim settlement rates that Columbia Gas put in effect, which reflects a 26% increase in pre-filed FTS rates.
This outcome underscores both the demand we see across our assets.
And our ability to collaborate effectively with stakeholders.
State, we've completed or placed into service 5.8 billion of capacity projects, including Southeast Gateway and our East lateral, Express project.
Our results continue to emphasize TC energies, resilient low-risk business model that continues to deliver solid growth.
And repeatable performance.
The fundamentals underpinning, our business have never been stronger. And our assets are strategically located to benefit from incumbent positions. In the markets, we serve,
This strengthens our ability to compete for and capture the next wave of growth.
North American Natural, Gas demand is now forecast to grow by 45 BCF per day by 2035 as opposed to our prior forecast of 40 BCF per day.
And this driven by LNG exports power generation and Industrial demand growth.
This growth is structural and long-term in nature.
And we're seeing this play out across our entire footprint. Electrification, coal, gas conversions, and the rise of AI and data centers are accelerating the need for reliable, low-emission base load power.
In response. Strong customer demand is emerging for incremental service on new and existing projects such as our Pulaski and Mazel projects, which were sanctioned last year and have now been upsized to meet growing needs.
Our origination pipeline also remains robust.
We are currently engaged in commercial conversations with more than 30 counterparties across the data center, value chain. Several of which have indicated the potential to require greater capacity than originally planned.
These developments reinforce our confidence in our Rising, Cadence of project, announcements through the second half of the year and into 2026.
The 2025 is stacking up to be an excellent year for TC energy as we continue to expect.
Roughly 15% below budget.
July of this year. The newly, constituted CNE approved. Our regulated rates required to provide service to potential future interruptible service users. On the Southeast Gateway pipeline, other than the CFE.
In addition we placed approximately million dollars of projects in service and our us natural gas business.
Including the East lateral, Express project.
And expansion on our Columbia Gulf system that enhances connectivity to the US Gulf Coast LNG, export markets.
Looking ahead to the second half of the year, we have multiple projects under construction.
This includes the Virginia and Wisconsin reliability projects.
Anr. Oak Grove.
And the VN BR project in Canada, all of which are tracking below budget or ahead of schedule and on budget.
Across our North American footprint, we're consistently executing on a diverse set of projects, totaling approximately 3 BCF per day of incremental capacity expected to be operational this year.
These results reflect the strength of our disciplined approach.
Excellence in Project execution.
Now, since 2020, we've seen a steady upward Trend in the returns of our sanctioned Capital program.
In 2024 our projects achieved, an average unlevered after tax irr.
Of approximately 11% of meaningfully from 8 and a half percent, just a few years ago.
And looking ahead we expect this upward Trend to continue as we high-grade a growing set of competing opportunities to optimize returns and maximize long-term value.
In fact, the year to date our sanctioned projects have an expected average unlevered after tax irr of approximately 12%.
And for new projects going forward, we continue to expect to deliver EBA build multiples in the 5 to 7 times range. That translates to low to mid teens IRS.
Importantly, and similar to the Northwoods project, we announced earlier this year, these opportunities are predominantly Brownfield and Corridor expansions that leverage our existing footprint and long-standing customer relationships.
Contracts are underpinned by the long term. Take pay agreements with investment-grade counterparties. And in many cases,
Have upside potential.
For instance, the Strategic upsizing of the Pulaski and Maze projects that we sanctioned last year, has enabled us to further improve, the low 6 times, build multiples, expected on both projects.
Turning to Bruce Power, an asset that continues to deliver long-term value and plays a central role in Ontario's Energy Future.
Our investments through the major component replacement program are enhancing the reliability and availability of our nuclear Fleet.
These are long duration Investments that support, the province's clean energy goals, while delivering strong returns for our shareholders.
As shown on the left hand, side of this slide Bruce Powers availability has steadily improved.
from the mid 80s, percent range in Prior years to an expected average in the low 90s for 2025,
And at the same time, the realized power price, we received continues to Trend higher as the contract price is adjusted annually to reflect Capital Investments inflation and other factors.
Combined with project 2030. These Investments are expected to nearly double our Equity income, from Bruce Power by 2035.
Ontario published its latest electricity demand. Forecast in April, that indicates a 75% increase needed by 2050 with Bruce Power. Playing a key role in meeting that need
the Bruce C project is progressing.
Supported by up to 50 million in federal funding for development and assessment.
We are proud to be part of this essential infrastructure and to continue delivering value through disciplined.
Strategic investment.
With that, I'll turn the call over to Sean.
Thanks for and good morning, everybody.
TC's operations teams delivered exceptional utilization rates across our natural gas and power portfolios during the quarter.
Which coincided with increased customer demand across our North American footprint.
Set in each of our 3 pipeline business units.
On the bottom of the slide in our power and Energy Solutions, business, Bruce achieved 98% availability in an exceptionally strong quarter.
Also, receiving its annual price adjustment as of April 1st.
We continue to expect Bruce's overall availability to be in the low 90% range for full year 20125.
Which include the plan maintenance outage on unit, 2 in the third quarter.
Shifting to the ebit, do bridge on the right hand side.
You'll see that each of our business units increase their IBA contribution.
Comparable quarter last year.
Canada gas, EBA increased due to increased contributions from Coastal Gas link following its in-service date last October and higher flow through regulated costs.
In the US, IBA increased mainly due to the settlement in principle, and the application for higher Transportation rates on Columbia Gas, which became effective on April 1st.
We also saw incremental earnings from new customer contracts, on several, existing pipelines and new projects, placed in the service, in the quarter.
Our Mexico business increased due to higher earnings in tgh primarily related to the completion of the southeast Gateway pipeline.
Partially offset by lower Equity earnings, from started to house as a result of the strengthening peso and higher income tax expense.
Lastly our power and Energy Solutions business had higher contributions from Bruce due to increased generation output and a higher average realized price of $110 per megawatt hour.
Which is up 8 per megawatt hour relative to the second quarter last year.
Our Alberta kogan Fleet continued to deliver strong performance with greater than 90% availability, which maximizes our capacity payments.
That was partially offset by lower Alberta power prices that continue to average approximately $40 per megawatt hour in the second quarter.
Turning to our 2025 Financial Outlook that France while mentioned we now anticipate 2025 comparable ibida to be 10.8 to 11 billion dollars.
For context, the increase in our 2025 Outlook reflects 2 drivers first, the strong operational results and market pricing realized during the first half of the year.
and second, our high degree of confidence in our execution plan for the remainder of the year,
Key to our execution plan is continuing to place our projects into service on schedule and under budget.
That remains a top priority and a Tailwind of capital efficiency and Evita performance.
The combined value drivers of strong acid, performance and capital optimization.
All us the flexibility to most efficiently fund our incremental growth and prioritize. Our leverage metrics.
on the balance sheet, we expect further deleveraging to proximately 4.75 Times by the end of 2026,
Based on the full year contributions of Southeast Gateway and the 7 other projects expected to be placed in the service later this year.
Looking out the 2027, we continue to Target, EBA 11.7 to 11.9 billion, which implies the 5% to 7% through your growth rate. That again, highlights the predictability of our base business
A few reminders like that, we like to offer each quarter on FX.
We systematically hedge. Our US dollar net income to insulate, our comparable earnings from FX volatility.
So, we do not expect a material impact related to FX on our 2025 comparable earnings.
longer term on an unhedged basis at Penny, change in the USD CAD corresponds to roughly a 1 Penny, change in comparable Epps
So, to wrap up our financial overview.
With 97% of our ebit. Da being underpinned, by rate regulated, or long-term taker, pay contracts.
And Management's clear visibility on a lower risk repeatable project backlog.
TC continues to operate a resilient business model with adorable long-term value proposition.
As highlighted by our 25 years of consecutive dividend growth.
Finally, we released our 2025 report on sustainability this morning.
the report provides a comprehensive overview of our sustainability performance and progress including
LTC Energy has reduced absolute methane emissions by 12% over the last 5 years, while increasing throughput by 15% and increasing comparable EBITDA and our natural gas business by 40%.
As measured by 2019 levels.
And finally, how our strong safety performance is the foundation of our operational excellence.
And a key driver behind the financial results we shared with you this morning.
We hope you read more about our team's important sustainability efforts in the report on our website.
With that, I'll pass the call back to Francois.
Thanks, Sean. As we look ahead. Our Focus remains squarely on those 3 priorities. We continue to drive our success on
First maximizing, the value of our assets through safety and operational excellence.
Second executing on our high-quality Capital efficient growth portfolio, including completing our placing approximately 8 and a half billion dollars of assets into service this year.
And third maintaining Financial strength and Agility to support long-term value creation.
Strong momentum across our operations and capital program. We remain confident in our ability to deliver low-risk repeatable growth through 2025 and Beyond.
Operator. We are now ready to take questions.
We will now begin the question and answer session.
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At this time, we will pause momentarily to assemble the roster.
Our first question will come from praneet. Satish of Wells Fargo. Please go ahead.
Thanks. Good morning and congrats on a on a strong quarter here. Um maybe I'll I'll start with the Columbia, Gas settlement filing. So I think in the filing it mentions the establishment of rates over 3 definitely can you maybe just provide more details on the rates during these periods. Um, what are the conditions to see a step up in rate? What's the magnitude? And I understand it's not conditional on capex investments. So I guess what what are the gating factors there to step the rate higher over uh over the next few years?
Hi, pronates. Uh, this is Tina farakka, I'll take that question. Um, we're really excited about the outcome of the chico or the Columbia Gas rates settlement, um, in principle. Um, we've had a constructive agreement with our customers that resolved all major issues in the case.
As you're probably familiar the settlement and principal, um, established interim rates that put were put into fact that reflects about a 26% increase. To our pre-filed firm Transportation rates. Um, the rates obviously are are, uh, do uh, subject to final settlement, once we have filed and seen approval by ferc.
There were several key issues that were addressed by the settlement and principal including the establishment of rates for 3 to 5 periods.
Also, 3 year moratorium, and a required comeback in 6 years and role in treatment for a couple of our recent, uh, reliability projects.
Related to your question on the uh, step up and rates.
That um, is not uh, detailed in the settlement at this stage and they step up in that detail of race is going to be provided in the final filing. So at this case, we can only communicate. There is uh, 3 defines established and more details, will come in the final filing.
Got it. Okay. Um, and maybe Switching gears. Uh, I mean, I don't think it's a secret that that meta is actively building out its campus in New Albany Ohio, um, including a planned multi gigawatt cluster there. So I know Columbia Gas is is already feeding 1 of the behind the meter projects in that data center Park, but I guess how much available capacity do you have Upstream of that interconnect point, if let's say gas demand, there grows significantly, I guess how much more gas can you push, um, into New Albany off of the Columbia, um, system. And I, I asked that in the context, of meta's earnings last night where they said, they're targeting a 30% increase to capex to over a hundred billion. So, potentially there's a lot of, um, spending coming to that region.
In that region.
Um, we have had some recent Open Seasons, uh, in that area.
That were secured by various entities. Um, we'll continue to see how we can optimize capacity in that region. And in addition, we are certainly positioned to expand if necessary depending on where the supply is uh required from um given our footprint in that region. Also as you know we have several utility connections with some of our major customers there. So if any of these opportunities progress uh within their service territory, we're very well positioned to serve that demand.
Got it. Thank you.
The next question comes from Aaron mcneel of TD Callum. Please go ahead.
Hey morning. All thanks for taking my question.
I guess this 1's, probably for Sean, I know it's unchanged in the disclosures but how should we be thinking about your 2027, Eva dog, guide given the increases in 2025 and positive. You've
Outlined in the prepared remarks, including the Columbia, 8 case increasing gas demand forecast, improving IRS.
you know and improved visibility on growth projects uh, since you outlined the target at the investor day,
Yeah, Aaron it's a good question, a couple of parts to that. Um
The the back half of our guidance, this year is fundamentally underpinned in our confidence to execute on. A lot of these emerging trends that that Tina just talked about. So look it it's still a little bit early. Um, we're we're very confident in that 11 700 to 119 range, we have a handful of rate cases in flight this year uh that I'm sure Tina could talk about and you know, importantly and and what France while mentioned, you know, his slide ate that irr slide. You know what, what you're seeing right now. In terms of 25 Evita performance, this is really the Vintage of projects we're bringing online right now. We're sanctioning 2, and even 3 years ago.
So when you look at that slide and see the projects, we're sanctioning now and kind of the 12 range, it'll take 2 or 3 years for them to come online. So we want to give it just a little bit more time for these projects to season and for the uh for the backlog projects to to kind of get up and running from a
sanction basis.
We'll, we'll have more for you on that in the fall with with the fully detailed, uh, long-term Plan update.
Fair enough. Thanks, Sean. Fran, I saw this one’s probably for you, given the recent Alliance settlements that are top of mind for investors. And that sort of got me thinking about if other Canadian pipeline assets may experience sort of negative toll revisions in the future.
I can appreciate that. You can't directly linked alliance with the Canadian Mainline and I'd like to get your perspective on the differences, but the asset does generate an Roe in excess of stated Roe due to the incentive sharing mechanisms and that's obviously benefited from meaningful volume growth over the settlement period.
With that settlement expiring at the end of 26th. Do you think we'll see a resetting of the sort of Revenue and cost assumptions embedded in that uh, sharing mechanism?
Yeah. Perhaps, I'll start Aaron and I'll ask Tina to provide some additional detail and I'll just focus on sort of the macro backdrop, um, across our whole Canada, gas Network. Um, you know, uh, we did, uh, a capacity expansion on the main line last year, for the first time in in many, many years. Uh, every time we run an Open Season, uh, either on ngtl or the mainline. Uh, we get very robust.
Um uh subscriptions uh for our service um at at full rates. Uh when you look at our settlement on ngtl as an indication. Um, we got uh you know accelerated depreciation to allow us to get a return of capital more quickly.
But that was in exchange for adding capacity. So um, the fundamentally
Our system being the incumbent system in Canada, to transport wcsb National Gas to all markets.
Uh, needs to expand in order for producers to have access, uh, to, uh, other markets, uh, we are their distribution channel, so it's not really an Apples, to Apples comparison. And, uh, I don't, I don't really see any concern or potential for us to have uh, downward pressure and in return. But over to you Tina. Yeah, thanks France, law.
through our customer and regulator, um, we worked very collaboratively um to get the approval of the 2021 to 2026 Mainline settlements and as part of that settlement, we had incentive sharing mechanisms,
Bolted in lower tolls, for our customers, it's been a real win-win and that has driven commencement returns for the mainline.
Um, so as we look forward to post-2026 settlement discussions, we're going to look to Carrie Ford elements of this approach, with the goal of maximizing return on capital for our business while continuing to provide competitive tolls for our customers.
Great. Thanks, everyone. Turn it back.
The next question comes from Jeremy Tinette of JP Morgan. Please go ahead.
Hi, good morning.
Morning. Jeremy.
Just wanted to pick up a bit on uh, the visibility into a steady Cadence of uh project announcements in the back half of 25 and into 26 here and wanted to dial in a little bit more on Pennsylvania here, given the recent Pennsylvania energy in uh Innovation Summit.
It seems like your pipelines are nicely positioned around some of those assets there. And it was just wondering if you could, uh, elaborate a bit more, I guess on, uh, teepees ability to, to maintain or gain market, share, as far as, uh, you know, Logistics opportunities, uh,
In that area, based off announcements at that Summit.
Thanks, Jeremy. I'll start and and Tina will provide some detail. I'll just focus on the macro picture here. As I mentioned, my prepared remarks. Um, we've seen uh, an increase in our long-term forecast of natural gas demand growth. Uh out to 2035 from 40 BC, f a day to 45.
Um, you know, you see the Pulaski and Maze capacity increases despite the fact that those projects were sanctioned last year. Essentially, what's happening is...
When a uh a utility or a data center developer announces uh energy Supply, it's attracting other demand to that location.
And that dynamic, uh, is going to manifest itself not only in those two projects, but we could potentially see us,
Upsizing, other projects that, uh, We've recently announced over over the coming months. Uh, so just a really good picture in terms of
Uh, our ability to be competitive and as to Pennsylvania and the the Appalachian Basin in general, I'll pass it over to Tina. Thanks, friend.
Our assets fit on top of some of the largest demand centers in North America.
And whether that's data centers power demand or uh the like so that really gives us optionality um across our Footprints. Uh, I won't speak to any specific uh, projects in Pennsylvania, um, but we do have a number of conversations under underway. Those are continue to progress. Well, um, we currently have as we talked about earlier over 30 conversations with uh, data center developers across the the entire value chain. And our primary focus is going to be working collaboratively in the US, with our utility or LDC customers. Where we see, we have the most alignment with the long-term trends. Um, really our job is to take the significant opportunity, set and select high-grade projects that deliver a compelling returns in the 5 to 7 times, build multiple with long-term, contracted cash flows.
and uh, that discipline is really paying off and will continue to see that as we progress more projects, whether it's in Pennsylvania or or other places
got it, that makes sense. Thank you. Um, and then I think PRP has uh shown a good ability to reduce uh Capital Inn in projects coming under budget there. And just wondering if you could talk about the ability to I guess to continue doing that in the future, how you think about that? And really want to hear more of your thoughts on the you know the incremental ability to add projects as this opens up balance sheet capacity and how you think about that.
Jeremy. It's France. Well, I'll take that 1. Uh you know it's uh I think our performance on Project, execution demonstrates. Um,
You know, a huge Focus within the organization on uh on achieving project. Execution excellence.
Uh, that comes with.
Better preparation. Um, deploying more development Capital At Risk prior to sanctioning so that we have um, we're able to uh, deliver outcomes. Um, you know, consistent with board approval and what we've communicated to the marketplace.
Uh and we expect that to continue. I think the thing to to make note of here, is that if you look at our forward pipeline, it is nothing. But
Under budget uh is a good indication of that. We look at the projects that are Midstream for going into service in 26 and Beyond. Um our performance is tracking to uh sort of a a similar outcome
um, part of the reason why we're seeing improved returns,
Uh, you know, in that 12%, on levered after tax range, this year is because there's more competition for our capacity.
Um there you know the industry only has a finite amount of expansion capacity available on a Brownfield basis.
And there's an increasing number of customers pursuing that, so that places more negotiating leverage in the hands of the pipeline companies and I would say as we look at our forward pipeline, not only the 30 plus billion that's been sanctioned. But the next wave, the, the next 30 billion beyond that, we feel we have the ability to do the vast majority of that with Brownfield expansions and not really looking to any um, you know, large Greenfield projects. So the Dynamics are just very positive for us right now.
Got it. That's uh, great to hear. Thank you for that.
Thanks, Jeremy.
The next question is from Teresa Chen of Barclays. Please go ahead.
Good morning. Um, on the heels of these uh positive uh developments with the significant Milestone of SGP. Now being in service and collecting tolls, even 1 month earlier than previously anticipated, anticipated plus fall of performance across the business in general and financial discipline and organic growth. Can you give us an update on the path forward to get to your forward? Dot 75 to leveraging Target.
Hey Teresa Sean, I'll take that 1. Uh, yeah, top of mind. Um, just a couple of couple of table. Setters. You know, we're bringing 8.5 billion dollars of projects into service this year. This is this is really a peak year for us from a capital in service standpoint. We're going into our 6 to 7 billion dollar range from here forward. So we're at a peak kind of delivery this year at 8.5 billion. We're also at our Peak leverage. I think we've been pretty clear that, that 2025 will be in the 4.9 range in large part due to SGP, right. Kind of the only really getting a half Year's worth of of cash flow out of that. Um, so it's really full year 2026 that that we talked about in our in our, uh, prepared remarks that we are on track for our 4.75 in large part, due to the 10 projects of Francois Highland.
It all coming into service by the end of 2025 and then converting to cash flow and organic deleveraging over the course of 2026. But to be clear our, our 4.75 Leverage is absolutely part of the long-term plan.
In New Mexico seeing that the past 2 administrations have uh prioritized expanded gas supply to the southeast, namely the Yucatan Peninsula, but northern Mexico. Seemingly also has a dire need for additional capacity. Um especially after 2030 when the Legacy domestic production is expected to decline more sharply, you have assets that span multiple regions within Mexico. Um curious to hear what is your outlook for utilization. Um, understanding that the capacity by and large part it's spoken for. But for utilization and growth for the set of infrastructure, as your access service, these unique drivers of regional demand there.
Yeah, Teresa, it's France. Well, I'll take this 1, you know, our Assets in the northern part of Mexico are those that have been in service the longest, you know, 10 plus years, um, Mexico has been very forward-looking in terms of anticipating growth in capacity. Uh, but you're, you're quite correct. The utilization rates on our, our Assets, in the north, uh, have steadily gone up and we are at the stage now where we along with our, uh, very important customer. The CFE need to be thinking about expansions.
um, the good news is
for expansions of those systems, um, they're relatively Capital efficient, uh, really they're just about, um, um, compression increases and so any Capital required to increase throughput. There would be fairly modest in nature. Um, we will however, um, balance that with the need to make sure that, um, the percentage of our ibaa coming from Mexico, uh, is along the lines of our, uh, long-term Direction. So balancing, those 2, there are some growth opportunities for us in the northern half as you said. But I think, um,
We don't think that it'll really stress.
Um, you know, increasing um amounts of uh, of capital allocated in Mexico.
Thank you.
The next question comes from Maurice. Choy of RBC Capital markets. Please go ahead.
Thank you and good morning. Uh I was focusing a little bit on Cadet here.
I just want to your updated macro view of the community and energy policy landscape. Uh Bill C5, that's obviously become law. And
Your views of the passport, for what we need to see across the space, including at pcng fully recognizing that the line and share of your discretionary Capital will still flow through the US.
Thanks Maurice. It's France. Well, I'll take this 1.
Uh, look, Bill C5 is, um, definitely a positive from our perspective. I think uh, it's nice to see a federal government that understands.
Uh, the sense of urgency around.
Uh deploying Capital to help make Canada an energy superpower in our interactions. With the federal government, We Believe very much that, that is a sincere, uh, objective on their part. Um, we will benefit from that. We believe, uh, if LNG Canada sanctions, uh, Phase 2 of
Uh uh the phase 2 expansion of that at that site with um a doubling of throughput capacity on cgl Our obligation. There again is to work with them to provide a Bonafide estimate uh, to factor into their FID process.
You know, we're near nearing the final final throws of doing that and uh, that that will be factored into their assessment, uh, on their own timeline. Um, with respect to other infrastructure around the country. Um, I think there's a much better appreciation for the role that natural gas is going to play, uh, uh, uh, in in terms of, uh, increasing. Um,
the role of Canada can play in reducing the world's emissions. Uh, I've spoken publicly about the fact that I believe there's a huge potential for Canada to be the largest exporter of LNG to Asia. Uh, and that that that could create up to 75 billion dollars. Uh, uh, incremental GDP for the country. Um, the provinces appear to be supportive the policy support now appears to be there, and so its up to Canada.
the provinces indigenous communities and the private sector to get out there and send the message to
International markets. That Canada's open for business again.
I said, let me just finishing off on the US Data Center and you know, project scene I know when you prepared remarks, you mentioned that several customers have indicated potential
Of requiring a greater capacity than originally planned.
Can you elaborate a little bit more on that?
Customers are asking if he has has the request.
Uh, materially changed from your last conference call uh, fully recognized. If not changed your
messaging on a timing of new projects but just curious how the customers are
Customer discussions are going.
Hi Maurice, this is Tina. Um I'll elaborate elaborate on that a bit as we talked about with our Pulaski and Mabel project uh that we sanctioned last year as we're starting to develop those projects. There's continued growth on the power generation sector. That is driving some of our customers to want to plan for greater capacity.
Um, as they continue to see that power generation requirement grow. So those are great examples of how we're in process. Um, and then have been asked to quote unquote, upsize the facilities for additional projects that they're seeing behind. Um, their service territories. Um, other examples, you may remember. Um, last year, we had, uh, earlier this year, we were looking at a project in Wisconsin, that was a bit delayed. And, um, that project was in the process of looking at increased capacity as well. And then, as we're looking down the road related to power generation. Um, you know, we see this robust pipeline of about 5.5 BCF per day and 8 billion dollars of opportunities, which include cold gas, conversions, or data 7 data center driven demand.
And that demand continues to grow. So as we're developing the projects, um, we continue to see increased needs that are causing us to in some cases add additional facilities before we're able to sanction those projects.
Thank you very much.
The next question.
Hope of Scotia Bank, please go ahead.
Uh morning everyone, um maybe continuing on the data center theme. So it doesn't appear that we're seeing the size of the data center campuses getting larger. How is that getting reflected in the project pipeline? Are we seeing some consolidation of projects or in aggregate? Are we just seeing larger projects overall with the same number and I guess could this also, you know, result in, you know, project sizes, above the average of 450 that you just mentioned.
Thank you rob. I'll take
You know, we're seeing, you know, several demand drivers in addition to just data centers when you think about power generation and in the US in particular, um, you'll recall that our strategy is to primarily work with our utility companies to uh support the power gen behind uh their their systems.
So as we look at um those opportunities, they may include cold of gas, they may include a general electrification, they may include data centers.
So a lot of our utility customers are looking at this in a much more aggregated, fashion related to how much power they need to serve these loads. Um, that's working really well for us, because then we're able to put sizable projects together that are not just
Specific to an individual data center, it's more for general power generation demand and um, we are going to continue to continue to see a Cadence of those type of opportunities. Um, you know, in the second half of 25 and 26.
And Rob, it's France. So I just to add to that, uh, sort of the second part of your question. Yes.
Uh, we definitely could see, uh, projects getting larger, um, uh, than otherwise, or originally planned. But in many instances, what that means is you you go from a 30-inch pipe to a 36 inch pipe. The complexity of the project doesn't really uh increase dramatically and um, you know, a um,
For instance, a 25% increase in uh capacity throughput does not necessarily imply. A 25% increase in the capital cost if it's just a larger diameter pipeline. So uh while the projects
You know, are trending to get a little bit larger. Uh it does not mean that the complexity is also increasing
Appreciate that. Uh, and then maybe on a longer term theme here in Ontario. We're seeing I would say continued or increasing support for nuclear, you know, when we think about Bruce C and I know it's a number of years out, but you know, what, are kind of some of the key milestones we should be looking forward, uh, over the next couple years on that project.
Yeah, thanks Rob. It's uh Greg Grant here.
I maybe just to start with um, you know, 1 of the things that we're very excited about. Certainly whether it's Bruce or opiates,
We do have the recent publication from the Ontario government on the integrated energy plan.
And I just wanted to highlight that you when you look through that document, it talks about affordability security.
Reliability, reliability and clean energy.
And I, and I happen to know, 2 projects that do that with Bruce, C and opiates.
so we're we're very happy with the progress of both of those projects having both the Ontario and federal government support their
Uh, with Bruce C, in particular, we continue to progress with the federal dollars that that were given to us in the 50 million dollars. We're looking at various environmental uh
Uh reviews are archaeological and and really it goes towards site preparation. Um and continuing on uh some of the engineering work.
So we're going to continue to progress progress that work. I just just would add that it still is fairly early like when you when you think about the work that goes into building
Bruce C, it's going to continue on until the end of the decade and and you shouldn't expect uh, an FID on that until early 2030.
But you will see also in the early 2030s uh Franco mentioned in the remarks almost a doubling of Evita just from the existing work that we're doing. So, some great work from the team and and looking forward to progress Brucie.
Thank you.
The next question comes from Ben. Sam of BMO. Please go ahead.
Can you update us on the status, uh, or success of of Shoring up that 6 to 7 billion?
Through uh, the 23 time frame and make it specifically the the 2026 wedge and and also any any comments on on both those elevated years. Uh, 2 years beyond that.
Yeah. Ben it's France. Well, I'll uh I'll start and invite Sean to add some comments.
You know, we as we talked about last year, um, looking at the 2030 in terms of unallocated Capital, we had about 8 billion dollars.
Uh, of room remaining. Um, we've done a good job, um, actually starting to fill that 8 billion. And, uh, when we look at our forward pipeline, we certainly expect that we'll be able to, um, to fill that up by the end of 2026, uh, for all of the Thematic reasons that we've, um, expanded upon
Um, on this call. But uh, Sean. Anything you want to add there?
Uh, very little bit been been, you know, the we monitor the white space, you know, we've worked off probably a third of that just in the last 6 months relative to investor day and it's it's really this dual track process 6 billion for at least the next 2 years. So that the balance sheet and the pipeline, both, get to kind of work in the way that that that they both need to. So we're capturing the growth on these 12% projects while still respecting and preserving the 4.75. So we're going to go slow with this. It's kind of a 6 to 7 billion dollar range and another
At least 2 solid years of kind of execution. Before we before we, you know, really consider doing anything different
And this uh this increased Cadence uh the data center projects or LNG recognizing it. It's it's small scale. It it's it sounds like you you sanction, those those projects. You'll still be more at the 6 billion.
Dollar level and just just trying to get your comfort level in that the 67 billion dollar range.
Yeah. Look, uh it uh, as you know, Ben it takes 2 or 3 years to get regulatory approval.
Um, before you put shovels in the ground, you're making Financial commitments from the time you sanction a project but in terms of cash going out the door and being deployed, um, for construction which is where most of the capital goes, that only start starts happening when you put shovels in the ground. And so it's getting harder and harder to contemplate having, um, projects with meaningful. Spend even in 2027, that's given the fact that we're in July of, uh, of 2025 already. So, uh, as I've said before,
You know, some of the lessons that we've learned in the from our past that have driven our project execution Excellence are a respect for human and financial capacity.
and first and foremost, as we look at executing,
A larger backlog of projects in the future. The focus will be first on human capacity. Do we have the bench?
Uh, the breadth of bench and do we have the management attention to govern over a larger? Um uh Capital program. So we're going to do that very carefully and very judiciously uh and continue to focus on a large number of smaller projects that are Brownfield and in Corridor. Um, but that sort of points you to
Um, it being challenging for us to consider a larger program, really, um, until 2028 or Beyond.
Okay, got it. Thanks for update.
The next question.
Teller of CIBC please, go ahead.
Good morning. Um question. Maybe for Tina, I just wanted to follow up on the data center theme here. Uh, it sounds like from your comments that, uh, you're really focusing on, um, serving the LDC customers. Um, and sticking to a Brownfield and pipeline expansions, but what's your view on, uh, pursuing behind the meter power?
Hi Rob. I'll I'll start and then I'm going to turn it over to to Greg Grant. But as we've stated in, in the past our strategy in the US,
Is to work with our utility customers to serve data center load, given that there's additional load typically from a portfolio perspective that they're trying to serve with with power Jen. Um, and then, you know, we have an attractiveness and depth of our portfolio by doing this.
Um, it provides us, a low risk compelling return approach to capturing data center growth.
Most limited. But again that would need to be in the 5 to 7 times range uh with low risk.
From a behind the meter perspective. Uh, there are opportunities that we would be considering in Canada, um, given the different construct, their I'll turn it over to Greg to walk through that.
Sure, uh, happy to comment on that Tina. Uh just that we are open uh to Opportunities. And and having many conversations where we can Leverage
Uh, our experience and capabilities in that complementary solution. We talked about it in a couple of quarters ago, on on, both the gas and the electron side. And I think, in Alberta, we do have that strategic footprint. We do have the gas storage, we have power assets. We have renewable, we have, uh, on the kogan side. So we have a, a great footprint to work from. I I just add, we will be, you know, very thoughtful and selective in that approach. Uh, we do know these, we'll have to compete for Capital.
And uh, we're we're working with our customers here on some win-win solutions that you can actually bring some capacity on quite quickly but obviously they have to compete and and and we think with that footprint, we can get competitive risk, adjusted returns, uh, to compete with some of the great projects that Tina has been bringing forward.
Okay. Um, thanks for that. And then just uh, I wondered if maybe a question for Sean here, what are the practical impacts of the, um, budget reconciliation bill?
1, big beautiful act in the US on your project um pipeline as well as cash taxes.
Yeah, Rob, the the short answer is not much.
Um, we're we're regulated service provider, right? We don't get the benefit of bonus depreciation, but on the flip side, we're all. We also don't get the limit the interest limitations that that unregulated folks do in the US. So it's pretty good for our customers, right? Who are bringing new unregulated capacity online and what you've heard ten in France Squad and Greg talked about today is is I think only going to get better, you know, from the big beautiful bills where indirect beneficiary of it
1 point, I'd like to add Rob. It's Francois is
Um, our EPA dog, guidance, long term our, the execution of our growth plan is not reliant on any prospective reform permitting reform, or, you know, concessions or stimulus in the the, the, the bill you referenced, it's based on the status quo. So any improvements that come prospectively will simply either improve timelines uh, or improve returns from what's stated in our in our guidance.
Okay great. That's the uh perspective I was looking for. Thank you.
Goldman Sachs, please go ahead.
Hey, good morning, thank you for taking your questions. I wanted to start on the multi-year growth plan on ngtl specifically that today's announcement brings total commitments under the plan to roughly 700 million within the plans 3.3 billion framework. Could you share how we should think about the Cadence of project announcements um from here in order to add 1 BCF a day of capacity by 2030. And secondly how do you think about allocating Capital towards ngtl under this framework versus pursuing? Let's say, incremental, us gas projects with potentially higher returns.
Thank you, Olivia. I'll take the the question and then I'll pass it over to Francois for any additional comments. Um, the, uh, multi-year growth program. Um, obviously he was was completed as part of a multi-year settlement we have on on ngtl and, um, as we are evaluating the need for egress, we'll continue to have a Cadence of how those projects will uh, be supported. Uh, we we have um, recently announced the program 1
And program, 2 and we'll continue um, on a Cadence through the through the next several years. Um, nothing really prescriptive about that, but the opportunity will be there to continue to provide egress from that. Um we were able to to procure that opportunity set through that settlement that gives us.
Opportunity to earn earn more than um, than we would otherwise. And so we criticality for us is to continue to be able to provide egress from the Basin and we have a solution for that with this program.
And to add to that Olivia. Uh, and by the way, the capital spend, um, for the multi-year growth program is back in loaded in the 5-year period. Um, the first 2 waves that we've sanctioned our fairly modest in size as you referenced.
We are going to honor our commitments, obviously to our customers in Canada very important customers.
Um, part of the settlement was uh, for a commitment on our part subject to board, sanctioning of each individual project is to increase. Uh, meaningfully increase egress from the basin
Beyond that. However,
Canada, gas has to compete for Capital with the other business units in the company. And currently, the risk adjusted returns in the US are meaningful higher than, uh, than in Canada. So, uh, for our discretionary Capital, uh, you can expect that we are going to be allocating Capital predominantly in the US. Um,
as, and until
Competitive projects.
In other jurisdictions, we encounter factors that compel us to allocate capital elsewhere.
Got it, that's clear appreciate the color there. Uh, maybe second question from me. I wanted to touch on the willingness to lean into Partnerships on future projects as we discussed last quarter, which could allow TC to capitalize on the numerous project opportunities across the footprint while managing Capital requirements. Could you frame up first your willingness to pursue projects with Partners versus pursuing projects independently. And second, we're partnership opportunities are most interesting across your current footprint and then maybe last zooming out how might partnership
Opportunities, compare and contrast in the different business segments like US versus Canada, gas, or power.
Hey Olivia it's Sean. Let me um let me take that question generally and maybe maybe I'll pass it over to Greg to talk about some of the past Partnerships.
Look as as France while mentioned our, our average project size is 4 to 500 million and its Brownfield on our current systems. We we we do not need
Partners uh, for for, for projects of that type.
That being said, right? As part of our Capital efficiency Capital rotation partnership, always looking for partners. That can either add value through capabilities,
Through cost of capital. Um, but by and large on our Brownfield strategy, um, we're perfectly, well, suited and capitalized to to prosecute, most of that, uh, if not all of that.
I would tell you on on maybe some of the, the larger projects, maybe Greg, particularly in Pez. If you want to talk about how we think about, you know, some of the JV opportunities there.
Sure. No. Happy to. I think that there there's plenty of opportunities strategically to bring in in partners. And I think there's a strategic and the capabilities perspective and financial. Obviously, when you look at, um, and opiates. We're we're working quite closely with, uh, the saw and the Soggy and the chipoo nation.
Uh, as Equity Partners. Uh, we have numerous Partners when you think about cgl, uh, we're Partners, uh, with Elmer's on Bruce. And so, I think there there's plenty of opportunities where we will look strategically for Partnerships and JVS. And, and uh, we've been quite successful in in, uh,
Persecution and execution of those.
Great. That's clear. Thank you for the time.
The next question comes from Burke and zero of wolf research. Please go ahead.
Hi, good morning.
if you've met with S&P since you've received payment on Southeast Gateway, just any thoughts on what you think, they might deal with a very long, 29 months, negative outlook,
Hey Burke, it's Sean. I I'm happy to take that 1, um, but let me just say we're in constant contact every quarter, every agency and they and they kind of move through their their review Cycles. Uh, you know, obviously independent of 1 another. So
without speaking specifically about any recent conversation, you know, that report it it has been a 29 month as you say,
S&P was pretty clear in that February report as to what they were looking for this year. Um,
SCP obviously coming online on time and under budget was an important 1 and the second element of the conversation, with the uh with the S&P team and candidly, all of the agencies was maintaining the capital discipline and the project delivery kind of 5 to 7 times.
We've done everything that we said we were going to do. We've completed everything that the agencies kind of had on their watch list.
so you know as it relates to e agencies review, period, you know, from here towards probably the fall, I
I'm not at Liberty to say it, don't know. So we'll, uh, we stay in constant contact.
Ladies and gentlemen, this concludes the question and answer session. If there are any further questions, please contact investor relations at TC energy.
I will now turn the call over to Gavin Wy.
Thank you. And thanks everybody for, uh, participating this morning as the operator mentioned. If we didn't get to your question today. Uh, please do contact the investor relations team. We're always happy to help. Um, and, and, of course, as always we appreciate your interest in TC energy and look forward to our next update. That's likely going to be early November, uh, enjoy the rest of your summer. We'll see. You see you soon?
This spring to a close today's conference call, you may disconnect your lines, thank you for participating and have a pleasant day.