Release Date: November 14, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Canadian Utilities Ltd (CDUAF, Financial) reported strong quarterly earnings with adjusted earnings of $102 million, up from $87 million in the same period last year.
- ATCO Energy Systems saw a 9.3% increase in adjusted earnings, reflecting rate base growth and a higher allowed ROE.
- ATCO EnPower's adjusted earnings increased by $5 million year-over-year, driven by strong demand for natural gas and liquid storage.
- The company successfully sold its 100% investment in ATCO Energy for $85 million, aligning with its strategic focus.
- Cash flow from operations increased by 9% to $490 million, supporting operations and capital programs without the need for additional equity financing.
Negative Points
- ATCO Australia's adjusted earnings decreased by $3 million due to inflation indexing impacts on the rate base.
- The allowable ROE for ATCO Energy Systems will decrease from 9.28% in 2024 to 8.97% in 2025, potentially impacting future earnings.
- Electricity generation earnings were lower due to reduced merchant pricing in Alberta, despite increased generation capacity.
- The pace of renewables construction is impacted by uncertainty in Alberta's restructured energy market.
- The company faces challenges in deploying capital for energy transition projects due to regulatory and policy uncertainties.
Q & A Highlights
Q: With the increasing global power demand, is Canadian Utilities considering revisiting natural gas-fired assets in Alberta or other regions?
A: Robert Myles, Chief Operating Officer of ATCO EnPower, confirmed that they are indeed considering all forms of generation, including gas-fired generation, alongside their ongoing pursuits in solar, wind, and hydro.
Q: Regarding the two large hydrogen opportunities in Alberta and Australia, when is capital expected to be deployed, and how are risks being mitigated?
A: Robert Myles stated that significant capital deployment is contingent on securing creditworthy counterparties and offtakers. They aim for a financial investment decision by the end of 2025, with construction expected between 2026 and 2029. Katie Patrick added that in Australia, the South Australian government is the current sole equity proponent, with potential for ATCO's equity participation still under evaluation.
Q: Can Canadian Utilities fund its share of the $4.5 billion to $5 billion project without raising new equity?
A: Katie Patrick confirmed that they have a self-funding plan in place, leveraging cash flow from current operations and project-level financing, avoiding the need for equity raises in the near term.
Q: How does the 8.97% ROE for 2025 align with the need for accelerated CapEx across North America?
A: Wayne Stensby explained that the ROE decision provides forward certainty and ends frequent litigations. He acknowledged the ongoing discussions across North America regarding funding large utility growth profiles, emphasizing Alberta's strong economic underpinnings and substantial rate base growth opportunities.
Q: How does Canadian Utilities view its geographic exposure, particularly in Alberta, compared to other jurisdictions?
A: Katie Patrick expressed confidence in Alberta and Australia due to strong economic growth and business environments. While they continue to explore global diversification, current capital deployment opportunities in existing areas are significant, keeping them focused on these regions for the next few years.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
