Canadian Utilities Limited Class A · TSX:CU
Canadian Utilities Limited Class A — Investor Presentation (December 2021)
46 slides from Canadian Utilities Limited Class A's investor presentation, December 2021
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 December 2021
INVESTOR PRESENTATION December 2021
Slide 3: Table of Contents
TABLE OF CONTENTS Legal Notice....................................................................................... 3 Financial Executive Leadership Introduction..................................... 4 Financial Overview............................................................................. 5
Slide 4: Legal Notice
LEGAL NOTICE Forward-Looking Information Statements made by representatives for ATCO Ltd. and Canadian Utilities Limited and information provided in this presentation may be considered forward-looking statements. By their nature, such statements are subject to numerous known and unknown risks and un
Slide 5: Introduction of Brian Shkrobot
INTRODUCTION OF BRIAN SHKROBOT Executive Vice President & Chief Financial Officer, Canadian Utilities On October 6, 2021, the Canadian Utilities Boards of Directors announced the appointment of Brian Shkrobot to the role of Executive Vice President & Chief Financial Officer of Canadian Utilities. Mr
Slide 6: Financial Strength
FINANCIAL STRENGTH 2020 COVID-19 Pandemic Long track record of earnings growth through 2016 Alberta wildfires 2015 GCOC decision and various regulatory and macro-economic cycles. global commodity price declines 2013 Calgary floods $535 million in 2020 2008 - 2009 Financial crisis 1980-85 NEP * 80 82
Slide 7: Financial Strength
FINANCIAL STRENGTH Canadian Utilities has an unprecedented track record of dividend growth. 49 years of annual dividend increases* $1.76 per share Longest track record of annual dividend increases of any Canadian publicly traded company 72 76 80 84 88 92 96 0 '04 '08 12 16 21 20 * On January 14, 202
Slide 8: Adjusted Earnings
ADJUSTED EARNINGS Q3 2021 2020 Adjusted Earnings Adjusted Earnings $608 M $88 M Forgone earnings from businesses $87 M sold in 2019 $535 M $76 M $521 M 27% Normalized adjusted earnings 2020 2021 2019 2020 INVESTOR PRESENTATION DECEMBER 2021 7
Slide 9: Debt Maturity Profile – 20 Year Outlook
DEBT MATURITY PROFILE – 20 YEAR OUTLOOK Well distributed and easily manageable debt maturity profiles. $500M $200M $220M $200M $200M $185M $160M $160M $150M $125M $120M $125M $100M …. …. …. 2021 2022 2023 2024 2028 2034 2035 2036 2037 2038 2039 2041 CU Inc. CU INVESTOR PRESENTATION DECEMBER 2021 8
Slide 10: Strong Credit Ratings
STRONG CREDIT RATINGS Canadian Utilities Limited (CU) A Stable CU Inc. A (high) Stable Canadian Utilities Limited A- Negative CU Inc. A- Stable INVESTOR PRESENTATION DECEMBER 2021 9
Slide 11: Canadian Utilities Limited
CANADIAN UTILITIES LIMITED Canadian Utilities is an ATCO company with approximately 4,500 employees and assets of $20 billion. We are publicly traded on the Toronto Stock Exchange under the tickers CU (non-voting) and CU.X (voting). As a diversified global energy infrastructure corporation, Canadian
Slide 12: Canadian Utilities Organizational Structure
CANADIAN UTILITIES ORGANIZATIONAL STRUCTURE Canadian Utilities CU Inc. ~$8 billion (TSX: CU / CU.X) debt capitalization ~$9 billion common equity capitalization INVESTOR PRESENTATION DECEMBER 2021 11
Slide 13: Canadian Utilities 2020 Adjusted Earnings
CANADIAN UTILITIES 2020 ADJUSTED EARNINGS $28 M $(77M) 73% Energy Infrastructure Corporate $12 M LUMA 73% 27% Total 2020 Adjusted 9% Earnings Five Utilities Provide $535M $572 M Strong Foundational Utilities Earnings 14% INVESTOR PRESENTATION DECEMBER 2021 12
Slide 14: Canadian Utilities Strategy
CANADIAN UTILITIES STRATEGY • Leverage our core utility assets and invest in activities aimed at advancing the energy transition and ensuring long-term resiliency OPTIMIZE • Optimize energy infrastructure assets and add new growth platforms PROTECT NON-REG THE CORE ASSETS • Diversify geographically:
Slide 15: ESG Accomplishments
ESG ACCOMPLISHMENTS E Environmental S Social G Governance • 90% removal of direct GHG emissions from • $71.4M in economic benefit for Indigenous • 33% of ATCO board directors are women. our portfolio since 2019, almost 7.5 million groups in 2020. • 36% of CU board directors are women. tonnes. • $5.5
Slide 16: Sustainability: Our Commitment
SUSTAINABILITY: OUR COMMITMENT Commitment to Sustainability Sustainability is more than an aspiration; it is interwoven into our strategy, our day-to-day operations, the products and services we provide, and the fabric of our people. It manifests across our family of companies in both how we conduct
Slide 17: Sustainability: Canadian Utilities' Commitment
SUSTAINABILITY: CANADIAN UTILITIES’ COMMITMENT Customers seeking more diverse energy solutions Provide options to generate own on-site electricity Shift to lower carbon & lower emitting solutions Provide innovative digital solutions INVESTOR PRESENTATION DECEMBER 2021 16
Slide 18: Investing in Our Utilities Future
INVESTING IN OUR UTILITIES FUTURE We are answering the call for climate accountability while ensuring the sustainability, affordability, safety, and reliability of our energy system. Digitization of the Grid: • Advanced Metering Infrastructure (AMI) for real-time data • Automated Distribution Manage
Slide 19: Energy Transition: Leading the Way
ENERGY TRANSITION: LEADING THE WAY We recognize clean energy as being the future and we’re proud to lead the energy transition. Our Energy Transition strategy is broken down into three key components: RENEWABLE GENERATION CLEAN FUELS ENERGY STORAGE ▪ Investing in Solar Installations ▪ Our hydrogen f
Slide 20: Regulated Utilities
REGULATED UTILITIES ELECTRICITY TRANSMISSION ELECTRICITY DISTRIBUTION $5.1B Rate Base $2.6B Rate Base INTERNATIONAL NATURAL GAS NATURAL GAS DISTRIBUTION NATURAL GAS TRANSMISSION DISTRIBUTION $2.9B Rate Base $2.2B Rate Base $1.2B Rate Base (1) 2020 estimated Mid Year Rate Base included in 2020 Manage
Slide 21: Regulated Utilities - Operational Excellence
REGULATED UTILITIES - OPERATIONAL EXCELLENCE Over the past five years, we have reduced our operations and In 2020 we reduced our maintenance costs per kilometer of line by: Natural Gas Distribution cost per customer compared to 2019 by: 9% per KM of Line 22% per KM of line 4% per Customer Electricit
Slide 22: Regulated Utilities - Returns on Equity
REGULATED UTILITIES - RETURNS ON EQUITY 10.7% 8.5% 9.0% CU INC. IS COMPRISED OF OUR ALBERTA UTILITY COMPANIES AND ACHIEVES TOP TIER RETURNS ON EQUITY - CU Inc.’s average ROE is 2.2 per cent above average AUC approved over last 10 years. 10 Year Average (2011-2020) AUC Approved Alberta Utility Peer A
Slide 23: Regulated Utilities - 3-Year Capital Investment Plan
REGULATED UTILITIES - 3-YEAR CAPITAL INVESTMENT PLAN $3.2 BILLION OF PLANNED CAPITAL INVESTMENT EXPECTED MID-YEAR RATE BASE GROWTH (C$ Billions) INVESTOR PRESENTATION DECEMBER 2021 22
Slide 24: Regulated Utilities - Regulatory Process
REGULATED UTILITIES - REGULATORY PROCESS Electricity Regulatory Transmission Certainty Natural Gas Regulatory Transmission Certainty Electricity and Regulatory Natural Gas Distribution Certainty Generic Cost of Regulatory Capital (GCOC) Certainty Australia Natural Gas Regulatory Distribution Certain
Slide 25: Regulated Utilities – Acquisition: Pioneer Pipeline
REGULATED UTILITIES – ACQUISITION: PIONEER PIPELINE • In 2020 we announced the purchase of the Pioneer Natural Gas Pipeline from Tidewater Midstream & Infrastructure Ltd. for a purchase price of $255 million. Of this total, ~$55 million will be transferred to NGTL as it relates to assets within thei
Slide 26: Solar Partnerships – Old Crow, Yukon
SOLAR PARTNERSHIPS – OLD CROW, YUKON Sree Vyah (the Old Crow Solar Project) Old Crow, Yukon • Completion of Canada's most northerly off-grid solar project on August 23, 2021. • First-of-its-kind 25-year Electricity Purchase Agreement with ATCO Electric Yukon is a model for effective collaboration in
Slide 27: Utilities – International (LUMA)
UTILITIES – INTERNATIONAL (LUMA) June 22, 2020 June 1, 2021 Puerto Rico Public-Private Partnerships LUMA Energy completes the upfront Authority (P3A) select newly formed joint transition and commences venture LUMA Energy to manage and operations under the terms of the modernize Puerto Rico’s Transmi
Slide 28: Utilities – International
UTILITIES – INTERNATIONAL KEY CONTRACT TERMS & OBJECTIVES Front-End O&M Services Period Transition Period (Once PREPA emerges from bankruptcy) (2020 – 2021) (2021 – 2035) $15 • Preparatory work to enable • LUMA assumes responsibility for all in-scope operational matters to transform full transition
Slide 29: Energy Infrastructure Businesses
ENERGY INFRASTRUCTURE BUSINESSES ELECTRICITY GENERATION ELECTRICITY GENERATION ELECTRICITY GENERATION CANADA AUSTRALIA LATIN AMERICA 24 MW 177 MW 47 MW INDUSTRIAL WATER SERVICES HYDROCARBON STORAGE NATURAL GAS STORAGE CANADA CANADA CANADA 85,200 m3/day 400,000 m3 100 PJ INVESTOR PRESENTATION DECEMBE
Slide 30: Energy Infrastructure Businesses
ENERGY INFRASTRUCTURE BUSINESSES UNREGULATED ELECTRICITY GENERATION Highly Contracted Portfolio Long-Term Contracted 220 MW (89%) Merchant 28 MW (11%) INVESTOR PRESENTATION DECEMBER 2021 29
Slide 31: Renewable Generation – Why Solar?
RENEWABLE GENERATION – WHY SOLAR? We continue to pursue solar opportunities as we grow our renewables portfolio. Solar encapsulates our sustainability commitments and aligns with business strategies. Climate Change & Environment Stewardship Energy Transition & People Remote communities, particularly
Slide 32: Solar Project - Empress
SOLAR PROJECT - EMPRESS Empress Solar Project Empress, Alberta • Acquired the development rights for a 39 MW photovoltaic solar facility near Empress, Alberta (the “Empress Solar Project”). • Electricity from the Empress Solar Project may be sold through a Power Purchase Agreement with uncontracted
Slide 33: Solar Projects – Barlow & Deerfoot
SOLAR PROJECTS – BARLOW & DEERFOOT • ATCO Group, through its investment in Canadian Utilities Limited, acquired the rights to build two solar installations in Calgary, from DP Energy, a privately held energy developer. • Once completed, the Barlow (near Barlow Trail and 114 Avenue SE ) and Deerfoot
Slide 34: Energy Infrastructure Businesses
ENERGY INFRASTRUCTURE BUSINESSES STORAGE & INDUSTRIAL WATER We build, own and operate energy infrastructure assets across Alberta and the Northwest Territories • Integrated water services including pipeline transportation, storage, water treatment, recycling and disposal to a number of our industria
Slide 35: Clean Fuels – Hydrogen
CLEAN FUELS – HYDROGEN Clean Energy Innovation Hub- Western Australia Hydrogen Blending Project - Alberta Hydrogen Blending Project - Australia Clean Energy Innovation Park- Western Australia INVESTOR PRESENTATION DECEMBER 2021 34
Slide 36: Why Hydrogen?
WHY HYDROGEN? • We are committed to promoting a more environmentally sustainable future by providing clean, reliable and affordable energy. • Hydrogen can play a role in affordably decarbonizing the production of heat, particularly in our cold Canadian climate. • Alberta is already a leader in hydro
Slide 37: Hydrogen Project – Suncor JV
HYDROGEN PROJECT – SUNCOR JV Proposed World-Scale Clean Hydrogen JV Project with Suncor – in Alberta • ATCO/Suncor partnership has received welcome support from Government of Canada and Government of Alberta. • Collaboration between governments and businesses across sectors is critical to progressin
Slide 38: Hydrogen Project – Clean Energy Innovation Park
HYDROGEN PROJECT – CLEAN ENERGY INNOVATION PARK Clean Energy Innovation Park – Western Australia • Australia’s first commercial scale hydrogen production supply chain. • Approved for $28.7M in funding from the Australian Renewable Energy Agency. • Includes a 10-MW electrolyser and plant capable of p
Slide 39: RNG Project – Two Hills
RNG PROJECT – TWO HILLS • ATCO Group, through its investment in Canadian Utilities Limited, has partnered with Future Fuel Ltd. to build and operate the “Two Hills” RNG facility in Alberta. • ATCO’s first commercial RNG production facility and a strategic investment in the clean fuels leg of our Ene
Slide 40: Retail Energy
RETAIL ENERGY Retail is comprised of three segments: Home Energy Cooking Classes & Programs Home Products Business Energy Events & Catering Repair & Maintenance Services Large Commercial Energy BFK Café Home Management Advice ATCOenergy, the third largest competitive energy retailer in Alberta, offe
Slide 41: Just Launched: Rümi
JUST LAUNCHED: RÜMI Innovative Consumer Brand that offers: • Providing solutions for home and business owners and connecting them with trusted professionals Home Products • Launched June 3rd, 2021 after completing pilot phase Repair and • Cultivates support for the local economy by: and Maintenance
Slide 42: Appendix
CL LI CANADIAN UTILITIES LIMITED Em 3. ATCO Gompany APPENDIX
Slide 43: Electricity Distribution & Transmission
ELECTRICITY DISTRIBUTION & TRANSMISSION We build, own and operate electrical distribution and transmission facilities ▪ 260,000 farm, business and residential customers in 240 Alberta communities ▪ Approximately 11,000 km of transmission lines, in addition to delivering power to, and operating, 3,50
Slide 44: Natural Gas Distribution & Transmission
NATURAL GAS DISTRIBUTION & TRANSMISSION We build, own and operate natural gas distribution facilities in Alberta ▪ Alberta’s largest natural gas distribution company ▪ Serves over 1.2 million customers in nearly 300 Alberta communities ▪ We build, maintain, and operate 41,000 km of natural gas distr
Slide 45: Australia Utility
AUSTRALIA UTILITY We provide safe and reliable natural gas service to the Perth metropolitan area and the wider Western Australian community ▪ Approximately 766,000 customers ▪ 14,000 km of natural gas distribution pipelines INVESTOR PRESENTATION DECEMBER 2021 44
Slide 46: Investor Relations Contact
www.canadianutilities.com Tel: 403.292.7500 Investor Relations InvestorRelations@atco.com 5302 Forand Street SW Calgary, Alberta T3E 8B4 Canada
Canadian Utilities — Investor Presentation (December 2021) on 6ix