Canadian Utilities Limited Class A · TSX:CU
Canadian Utilities Limited Class A — Investor Presentation (January 2024)
45 slides from Canadian Utilities Limited Class A's investor presentation, January 2024
Slide 1: Disclaimer
DISCLAIMER Due to uncertainty surrounding the application of recent amendments to the Competition Act (Canada), the documents incorporated by reference herein are referenced for historical information purposes only and do not constitute active or current representations of Canadian Utilities Limited
Slide 2: Investor Presentation
Investor Presentation Canadian Utilities Limited January 2024
Slide 3: Agenda
INVESTOR PRESENTATION Agenda Executive Committee 3 Financial Overview 4 Canadian Utilities Overview 9 Environment, Sustainability and Governance 13 ATCO Energy Systems 17 ATCO EnPower 25 Appendix 38 Legal Notice 42 Canadian Utilities Investor Presentation 2
Slide 4: Executive Committee
EXECUTIVE COMMITTEE Nancy C. Southern Melanie Bayley M. George Constantinescu John Ivulich Chair & Chief Executive Officer, President, ATCO Electric Executive Vice President Chief Executive Officer & Country Chair, Canadian Utilities Limited & Chief Transformation Officer ATCO Australia Bob J. Myles
Slide 5: Continued Growth
2015 FINANCIAL OVERVIEW GCOC3 decision and global commodity Continued Growth price declines 2013 2016 2020 LONG-TERM TRACK RECORD OF ADJUSTED EARNINGS GROWTH Calgary Floods Alberta wildfires COVID-19 Pandemic THROUGH VARIOUS GLOBAL MACRO-ECONOMIC CYCLES 2008- 2009 $655 MILLION OF ADJUSTED EARNINGS I
Slide 6: Financial Strength: Continued Growth
FINANCIAL STRENGTH Continued Growth LONGEST TRACK RECORD OF ANNUAL DIVIDEND INCREASES OF ANY CANADIAN PUBLICLY TRADED COMPANY 52 YEARS OF ANNUAL DIVIDEND INCREASES1 DIVIDENDS DECLARED OF $1.79 PER SHARE IN 2023 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01
Slide 7: Total 2022 Adjusted Earnings
Earnings Profile $35M Total 2022 Adjusted Earnings1 Our utilities within ATCO Energy Systems, provide strong 2 foundational earnings with our overall business growth $655M trajectory linked to the energy transition and evolving customer demand $714M 1. Adjusted earnings is a total of segments measur
Slide 8: Debt Maturity Profile: 20-Year Outlook
Debt Profile Debt Maturity Profile: 20-Year Outlook WELL-DISTRIBUTED AND EASILY MANAGEABLE DEBT MATURITY PROFILES $600M $500M $500M $220M $200M $200M $185M $160M $150M $120M $125M 2024 … 2028 … 2034 2035 2036 2037 2038 2039 … 2041 2042 2043 CU Inc. 1. As at December 31, 2023. Canadian Utilities Inve
Slide 9: Strong Issuer Credit Ratings
STRONG ISSUER CREDIT RATINGS A (high) A- A A- Canadian ATCOUtilities Ltd. Corporate Investor Presentation 8
Slide 10: Canadian Utilities Limited Overview
Canadian Utilities Limited Overview For recent filings and further details please visit: canadianutilities.com 9
Slide 11: Current Operations and Investments
CANADIAN UTILITIES OVERVIEW Current Operations and Investments1 Utilities, Energy Infrastructure and Retail Energy Utilities & Energy Infrastructure Energy Infrastructure Utilities $22 B in Assets $4 B in Revenues 544,000 m3 Natural Gas Liquids 64,700 Pipelines KM 105,000 Electric KM Storage Capacit
Slide 12: Organizational Structure
CANADIAN UTILITIES OVERVIEW Organizational Structure 100% 100% 100% Corporate Electricity Distribution ATCO Renewables ATCO Energy Electricity Transmission ATCO Next Energy Natural Gas Distribution Natural Gas Transmission 50% Int’l Electricity Operations 100% Int’l Natural Gas Distribution Canadian
Slide 13: Strategy
CANADIAN UTILITIES OVERVIEW Strategy • Build on our core utility businesses and invest in activities aimed at advancing the energy transition and ensuring long-term resiliency. DRIVE CASH FLOW OPTIMIZE NON-REG • Optimize our energy infrastructure assets and add new growth AND EARNINGS ASSETS AND GRO
Slide 14: Canadian Utilities Commitment to Sustainability
OUR COMMITMENT TO ESG OUR STRATEGIC FOCUS Canadian Utilities Commitment ENERGY TRANSITION to Sustainability OPERATIONAL RELIABILITY For Canadian Utilities, sustainability is more than an aspiration; it & RESILIENCE is interwoven into our strategy, our day-to-day operations, the products and services
Slide 15: Strategic 2030 ESG Targets
OUR COMMITMENT TO ESG Strategic 2030 ESG Targets *Above targets established at the ATCO Ltd. level with an expectation that all portfolio companies, including Canadian Utilities Limited, contribute to the Canadian Utilities Investor Presentation 14 achievement of these targets.
Slide 16: Investing In Our Utilities Future
Solar Installation, Fort Chipewyan, AB CANADIAN UTILITIES OVERVIEW Investing In Our Utilities Future At ATCO Energy Systems, we are delivering essential energy for the evolving world. • INVEST TO SERVE THE GROWING AND EVOLVING NEEDS OF OUR CUSTOMERS • SAFELY DELIVERING RELIABLE AND AFFORDABLE ENERGY
Slide 17: Energy Transition: Leading The Way
CANADIAN UTILITIES OVERVIEW Energy Transition: Leading The Way At ATCO EnPower, we recognize clean energy as being the future and we’re proud to lead the energy transition. ATCO Renewables ATCO Next Energy • Investing in solar and wind infrastructure to build on our • Our proposed world-scale clean
Slide 18: ATCO Energy Systems
CANADIAN UTILITIES OVERVIEW ATCO Energy Systems Electricity Transmission | $5.1B Rate Base Electricity Distribution | $3.0B Rate Base Natural Gas Distribution | $3.0B Rate Base Natural Gas Transmission | $2.5B Rate Base Int’l Natural Gas Distribution | $1.3B Rate Base Int’l Electricity Operations |
Slide 19: Operational Excellence
REGULATED UTILITIES Operational Excellence SINCE 2015, WE HAVE REDUCED OUR OPERATIONS AND MAINTENANCE COSTS: 11% per KM of Line1 29% per customer1 ELECTRICITY DISTRIBUTION NATURAL GAS DISTRIBUTION OPERATIONAL EXCELLENCE AND LOWER COSTS BENEFIT OUR CUSTOMERS AND SHARE OWNERS 1. Adjusted for inflation
Slide 20: Returns On Equity
REGULATED UTILITIES Returns On Equity 10 YEAR AVERAGE (2013-2022) CU INC. IS COMPRISED OF OUR ALBERTA UTILITY COMPANIES AND ACHIEVES TOP-TIER RETURNS ON EQUITY CU Inc.’s average ROE was 2.2% above the average AUC approved ROE over the last 10 years. 10.6% 8.4% 9.1% AUC Approved Alberta Utility Peer
Slide 21: Supportive Regulatory Jurisdictions with Prospective Rates
REGULATED UTILITIES Supportive Regulatory Jurisdictions with Prospective Rates • Decision on the parameters for PBR 3 was received in October 2023. • Key changes vs. PBR 2 include: i. Increase in X Factor to 0.4%. Third Performance-Based ii. Modifications to capital funding provisions. Regulation (P
Slide 22: 3-year Capital Investment Plan
REGULATED UTILITIES 3-year Capital Investment Plan EXPECTED MID-YEAR RATE BASE GROWTH (C$ BILLIONS) $16.0B $14.9B $1.5B $1.3B $2.5B 2% $2.7B Growth per year $3.3B $3.0B $3.0B $3.4B $5.1B $5.1B 2022 2025E Electricity Transmission Electricity Distribution Natural Gas Distribution Natural Gas Transmiss
Slide 23: Alberta Advantage
REGULATED UTILITIES Alberta Advantage ALBERTA RESILIENT STRONG ECONOMIC TAIL HIGHLIGHTS BUSINESS ENVIRONMENT WINDS INTO 2024 #1 province with 4.0% population Alberta leads the country in exports, $8.9 billion investment in Alberta based growth from July 1, 2022 to has 15 free trade agreements and ma
Slide 24: International Electricity Operations – LUMA Energy
UTILITIES International Electricity Operations – LUMA Energy JUNE 22, 2020 JUNE 1, 2021 NOVEMBER 30, 2022 Puerto Rico Public-Private LUMA Energy completes the upfront LUMA Energy announces the Partnerships Authority (P3A) select transition and commences operations extension of it’s Supplemental newl
Slide 25: LUMA Energy Key Contract Terms & Objectives
UTILITIES LUMA Energy Key Contract Terms & Objectives 2020 2021 NOVEMBER 30, 2022 FRONT END TRANSITION PERIOD SUPPLEMENTAL AGREMENT (18-MONTHS) SUPPLEMENTAL AGREMENT EXTENSION O&M SERVICES AGREEMENT PERIOD* • Preparatory work to enable • LUMA assumes • LUMA continues to • Fixed fee for • Flow-throug
Slide 26: ATCO EnPower Businesses
CANADIAN UTILITIES OVERVIEW ATCO EnPower Businesses Electricity Generation Canada | 256 MW Electricity Generation Australia | 177 MW Electricity Generation Latin America | 47 MW Industrial Water Services Canada | 85,200 m3/day Hydrocarbon Storage Canada | 550,000 m3 Natural Gas Storage Canada | 117
Slide 27: Why Renewable Generation?
ATCO RENEWABLES What renewables bring to Why Renewable the market Generation? BROAD ACCESS TO CLEAN We continue to grow our renewables portfolio ENERGY FROM RENEWABLE as this is critical to both our business strategy SOURCES and our embedded sustainability commitments. CLIMATE CHANGE AND ENVIRONMENT
Slide 28: Barlow & Deerfoot
ATCO RENEWABLES – ALBERTA SOLAR UPDATE Barlow & Deerfoot • In September 2023, the Chiniki and Goodstoney First Nations and Canadian Utilities announced a partnership agreement for the Deerfoot and Barlow solar projects, the largest solar installations in an urban centre in Western Canada. • Under th
Slide 29: Empress
ATCO RENEWABLES – ALBERTA SOLAR UPDATE Empress • Located south of the village of Empress, Alberta, near the Alberta-Saskatchewan border, the Empress solar project covers 270 acres and has a generating capacity of 38.5 MW of energy. • The Empress project reached full commercial operations in the four
Slide 30: ATCO Renewables – Canadian Operating Assets
ATCO RENEWABLES – CANADIAN OPERATING ASSETS Canadian Renewable Operating Assets 9% Total MW Capacity Contract Asset Province Type Total MW1 Ownership Contracted / Share Merchant Length 27% 377 MW Operating Capacity1 64% 150 MW Forty Mile Wind Contracted 15 Years Alberta Wind 202 MW 100% 202 MW Phase
Slide 31: Renewables Development Pipeline Update
ATCO RENEWABLES – DEVELOPMENT PIPELINE UPDATE Development Pipeline (Near-Term & Mid-Stage) 9% Project Province Type Total MW Forty Mile Wind Phase 1 Alberta Wind 23 MW Uprating 27% 1.3 GW Development Forty Mile Solar Alberta Solar 220 MW Capacity1 64% Alberta BESS Projects Alberta Battery 115 MW Cra
Slide 32: Development Pipeline Timeline
ATCO RENEWABLES – DEVELOPMENT PIPELINE TIMELINE COD & Installed Capacities (MW)1 Project 2023 2024 2025 2026 2027 2028 2029 2030 Forty Mile Wind Uprating 23 MW Forty Mile Solar 220 MW Alberta BESS Projects 115 MW Craig Lake Wind 246 MW Hand Hills Wind 180 MW Hand Hills Solar 120 MW Kitscoty Wind 174
Slide 33: Canadian Hydrogen Demand
ATCO NEXT ENERGY - HYDROGEN Canadian Hydrogen Demand Significant and growing demand for hydrogen exists within the domestic Canadian market; supported by corporate and operational decarbonization targets, fuel switching, and policy drivers that are increasing demand for clean hydrogen. 2040 Canadian
Slide 34: ATCO's Hydrogen Strategy and Approach
ATCO NEXT ENERGY - HYDROGEN ATCO’s Hydrogen Strategy and Approach Four demand pillars underpin ATCO’s approach to hydrogen project development: ATCO’s hydrogen strategy: Utility Decarbonization 1) Prioritizes large volume low carbon fuel demand across 3 local demand pillars • Commercial/residential
Slide 35: ATCO's 'Big Blue' Project
ATCO NEXT ENERGY - HYDROGEN ATCO’s ‘Big Blue’ Project ATCO EnPower is developing a world class clean hydrogen Proximity to Market production facility in the Alberta Industrial Heartland. Big Blue The project will be fully integrated with hydrogen storage, Hydrogen Production Site transportation, and
Slide 36: Big Blue Timeline & Key Milestones
ATCO NEXT ENERGY - HYDROGEN Big Blue Timeline & Key Milestones Key Milestone 2024 2025 …… 2029 FEED Sanctioning – Mid 2024 • Secure FEED EPC contracts – in progress • Finalize project partnership, strategic and/or financial – in progress (live & competitive process) • Secure FEED financing – in prog
Slide 37: Big Blue Competitiveness and Value Proposition
ATCO NEXT ENERGY - HYDROGEN Big Blue Competitiveness and Value Proposition The project will offer low cost, low carbon intensity clean hydrogen by early 2029 supported by vertically integrated and secured carbon sequestration. ESG Considerations • Ensuring a focus on sustainability is interwoven int
Slide 38: Why Invest?
WHY INVEST? Regulated Utilities create a stable base of recurring cash flow and dividends and are critical to successful energy transition globally. Non-regulated opportunities in clean fuels, renewable electricity generation and energy storage provide an opportunity for higher-than-utility growth a
Slide 39: Appendix
Appendix 38
Slide 40: Electricity Distribution & Transmission
Utilities Electricity Distribution & Transmission We build, own and operate electrical distribution and transmission facilities. o Approximately 11,000 km of transmission lines, in addition to delivering power to, and operating 3,500- km’s of distribution lines owned by Rural Electrification Associa
Slide 41: Natural Gas Distribution & Transmission
Utilities Natural Gas Distribution & Transmission We build, own, and operate natural gas distribution facilities in Alberta. o Alberta’s largest natural gas distribution company. o Serves approximately 1.3 million customers in nearly 300 Alberta communities. o We own and operate 41,500 km of natural
Slide 42: Australia Utility
Utilities Australia Utility We provide safe and reliable natural gas service to the Perth metropolitan area and the wider Western Australian community. o 14,000 km of natural gas distribution pipelines and associated infrastructure. o Serves 18 communities and approximately 792,000 customers. *Portf
Slide 43: Legal Notice
Legal Notice Forward-Looking Information Advisory Statements made by company representatives and information provided in this presentation may be considered forward-looking information. Such information includes, but is not limited to, references to: strategic plans, goals and targets, including the
Slide 44: Legal Notice: Other Financial Measure Disclosure Advisory
Legal Notice Other Financial Measure Disclosure Advisory This presentation includes references to adjusted earnings, which is a total of segments measure, as that term is defined in NI 52-112. Adjusted earnings are earnings attributable to equity owners of the company after adjusting for the timing
Slide 45: Investor Relations
www.canadianutilities.com Tel: 403.292.7500 Investor Relations InvestorRelations@atco.com 5302 Forand Street SW Calgary, Alberta T3E 8B4 Canada 44
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