Canadian Utilities Limited Class A · TSX:CU
Canadian Utilities Limited Class A — Investor Presentation (June 2024)
43 slides from Canadian Utilities Limited Class A's investor presentation, Jun 1, 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 June 1, 2024
Slide 3: Agenda
Investor Presentation Agenda Executive Committee 3 Financial Overview 4 Canadian Utilities Overview 10 Environment, Sustainability and Governance 14 ATCO Energy Systems 16 ATCO EnPower 23 ATCO Australia 34 Appendix 36 Legal Notice 40 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: Operational Stability
Financial Overview 2015 2023 GCOC3 Rebasing Operational Stability decision and global commodity at Alberta Distribution Utilities price declines 2020 LONG-TERM TRACK RECORD OF STABILITY AND RECURRING EARNINGS COVID-19 Pandemic THROUGH VARIOUS GLOBAL MACRO-ECONOMIC CYCLES 2008- 2009 $596 MILLION OF A
Slide 6: Continued Growth
Financial Overview 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 2023 Adjusted Earnings $596M
Earnings Profile Total 2023 Adjusted Earnings1 $60M3 Adjusted Earnings1 Summary ($M) $46M3 Electricity (Distribution & Transmission)4 $312 Natural Gas (Distribution & Transmission)4 $211 LUMA Energy (International Electricity Operations)4 $48 2 $596M Electricity Generation and Storage & Industrial W
Slide 8: Q1 2024 Adjusted Earnings $225M
Earnings Profile Q1 2024 Adjusted Earnings1 Adjusted Earnings1 Summary ($M) $11M3 Electricity (Distribution & Transmission)4 $87 $8M3 Natural Gas (Distribution & Transmission)4 $121 LUMA Energy (International Electricity Operations)4 $13 2 $225M Electricity Generation4 ($2) Storage & Industrial Wate
Slide 9: 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. *As at December 31, 2023. Canadian Utilities Invest
Slide 10: Strong Credit Ratings and Access to Capital
Credit Ratings Strong Credit Ratings and Access to Capital $207M Cash on Balance Sheet1 A (high) A (high) A- $2.1B Available Credit Capacity1 HIGH A A A- Investor Demand for Recent Debenture Offerings 1. As at December 31, 2023. Canadian Utilities Investor Presentation 9
Slide 11: Canadian Utilities Limited Overview
Canadian Utilities Limited Overview For recent filings and further details please visit: canadianutilities.com 10
Slide 12: Current Operations and Investments
Canadian Utilities Overview Current Operations and Investments1 ATCO Energy Systems, ATCO EnPower and Retail Energy ATCO Australia ATCO EnPower ATCO Energy Systems (LUMA Energy) $23 B in Assets $3.8 B in Revenues 544,000 m3 Natural Gas Liquids 66,000 Pipelines KM 2 105,000 Electric KM Storage Capaci
Slide 13: Organizational Structure
Canadian Utilities Overview Organizational Structure 100% 100% 100% 100% Corporate Alberta Electricity Distribution LUMA Energy Electricity Generation Natural Gas Distribution Retail Energy (50% JV with Quanta Services Inc.) Alberta Electricity Transmission Naka Power Storage & Industrial Water Elec
Slide 14: 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 platforms. AND EARNINGS ASS
Slide 15: 2023 Highlights
Our Commitment to ESG 2023 Highlights *Above 2023 highlights are at the ATCO Ltd. level with contributions from the portfolio companies, including Canadian Utilities Limited. Canadian Utilities Investor Presentation 14
Slide 16: 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 achievement of these targets. Canadian Utilities Investor Presentation 15
Slide 17: ATCO Energy Systems Overview
ATCO Energy Systems ATCO Energy Systems Overview Seven utilities delivering essential energy for an evolving world • Safely delivering reliable and affordable energy • Investing to serve growing and changing customer needs • Responsibly leading an equitable energy transition • A trusted partner comm
Slide 18: Operational Excellence
ATCO Energy Systems Operational Excellence SINCE 2013, WE HAVE REDUCED OUR OPERATIONS AND MAINTENANCE COSTS: 29% per KM of Line1 39% per customer1 ELECTRICITY DISTRIBUTION NATURAL GAS DISTRIBUTION OPERATIONAL EXCELLENCE AND LOWER COSTS BENEFIT OUR CUSTOMERS AND SHARE OWNERS 1. Adjusted for inflation
Slide 19: The Alberta Advantage
ATCO Energy Systems The Alberta Advantage Highest provincial GDP growth in ALBERTA STRONG ECONOMIC TAIL 2023 and highest for GDP per capita Youngest workforce in Canada with HIGHLIGHTS WNDS INTO 2024 most post-secondary-educated Alberta leads the country in exports, workers (65%) and most engineers
Slide 20: Capital Investment (3-year Plan)
ATCO Energy Systems Capital Investment (3-year Plan) $4.3B to $4.7B 2.0 3.5% to $4.3% $2.0B 1.8 3 Year Capital Investment Plan1 3 Year Mid-Year Rate Base CAGR2 $1.7B $1.5B 1.6 $1.4B 1.4 $1.2B $0.3B $0.8B 1.2 $1.1B $0.2B 1.0 $0.2B $0.3B $0.4B 0.8 $0.3B $0.4B 0.6 $0.2B $0.3B $0.3B 0.4 $0.2B 0.2 $0.4B
Slide 21: Supportive Regulatory Jurisdictions with Prospective Rates
ATCO Energy Systems Supportive Regulatory Jurisdictions with Prospective Rates • Decision on the parameters for PBR 3 was received in October 2023. • Key changes vs. PBR 2 include: Alberta Distribution Utilities: i. Increase in X Factor to 0.4%. Third Performance-Based ii. Modifications to capital f
Slide 22: International Electricity Operations – LUMA Energy
ATCO Energy Systems 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 Supplem
Slide 23: LUMA Energy Key Contract Terms & Objectives
ATCO Energy Systems 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 • F
Slide 24: ATCO EnPower Overview
ATCO EnPower ATCO EnPower Overview Canada Natural Gas 117 PJ Storage ATCO EnPower by the Numbers1 NGL Storage 544,000m3 Water 85,200m3d Operated Power 377 MW 117PJ 544,000m3 85,200m3/d Generation Gas Natural Gas Natural Gas Liquids Water Infrastructure Production, 33.3% Processing, & ownership Stora
Slide 25: Renewables – Alberta Solar: Barlow & Deerfoot
ATCO EnPower Renewables – Alberta Solar 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 t
Slide 26: Renewables – Alberta Solar: Empress
ATCO EnPower Renewables – Alberta Solar Empress • Located south of the village of Empress, Alberta, near the Alberta-Saskatchewan border, the Empress solar project covers 280 acres and has a generating capacity of 38.5 MW of energy. • The Empress project reached full commercial operations in the fou
Slide 27: Renewables – Canadian Operating Assets
ATCO EnPower Renewables – Canadian Operating Assets 9% Total MW Total Capacity Contract Asset Province Type Ownership Contracted / MW1 Share Length Merchant 377 MW 27% 150 MW Operating 64% 15 Years Capacity1 Forty Mile Contracted Alberta Wind 202 MW 100% 202 MW (2038 Wind Phase 1 (Microsoft); 52 Exp
Slide 28: Renewables – Development Pipeline
ATCO EnPower Renewables – Development Pipeline 9% Project Province Type Total MW Forty Mile Wind Phase 1 Uprating Alberta Wind 23 MW 27% 1.3 GW Development 64% Capacity1 Forty Mile Solar Alberta Solar 220 MW Alberta BESS Projects Alberta Battery 115 MW Craig Lake Wind Alberta Wind 246 MW Hand Hills
Slide 29: Renewables – Development Pipeline Timeline
ATCO EnPower Renewables – Development Pipeline Timeline Commercial Operations Dates & 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 Hill
Slide 30: Canadian Hydrogen Demand
ATCO EnPower 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 H2 Demand Dist
Slide 31: ATCO's Hydrogen Strategy and Approach
ATCO EnPower 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 local demand and international export pillars • Commercial/resi
Slide 32: ATCO's Heartland Hydrogen Project
ATCO EnPower ATCO’s Heartland Hydrogen Project Heartland ATCO EnPower is developing a world class clean hydrogen Proximity to Market Hydrogen production facility in the Alberta Industrial Heartland. Production Site The project will be fully integrated with hydrogen storage, transportation, and carbo
Slide 33: Heartland Hydrogen Timeline & Key Milestones
ATCO EnPower Heartland Hydrogen 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 progress
Slide 34: Competitiveness and Value Proposition
ATCO EnPower Competitiveness and Value Proposition The Heartland Hydrogen 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 into the
Slide 35: ATCO Australia Overview
ATCO Australia ATCO Australia Overview ATCO Australia Key Stats1 Regulatory Developments Sixth Access Arrangement (AA6) • Draft decision published in April 2024, response from ATCO will be provided in June 2024, and 14,700KM 268MW 803,000 public consultation will close in July 2024. Pipelines Operat
Slide 36: 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 renewable electricity generation, clean fuels, and energy storage provide an opportunity for higher-than-utility growth
Slide 37: Appendix
Appendix 36
Slide 38: Electricity Distribution & Transmission
Appendix Electricity Distribution & Transmission We build, own and operate electrical distribution and transmission facilities. • 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 Associat
Slide 39: Natural Gas Distribution & Transmission
Appendix Natural Gas Distribution & Transmission We build, own, and operate natural gas distribution facilities in Alberta. • Alberta’s largest natural gas distribution company. • Serves approximately 1.3 million customers in over 300 Alberta communities. • We own and operate 41,700 km of natural ga
Slide 40: ATCO Gas Australia
Appendix ATCO Gas Australia We provide safe and reliable natural gas service to the Perth metropolitan area and the wider Western Australian community. • 14,700 km of natural gas distribution pipelines and associated infrastructure. • Serves 18 communities and approximately 803,000 customers. *Portf
Slide 41: 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: the company's debt maturity profile and outlook;
Slide 42: Legal Notice
Legal Notice Other Financial Measure Disclosure Advisory This presentation contains various “total of segments measures” (as such term is defined in NI 52-112), “non-GAAP financial measures” (as such term is defined in NI 52-112), and "non-GAAP ratios" (as such term is defined in NI 52- 112). NI 52-
Slide 43: Investor Relations
www.canadianutilities.com Tel: 403.292.7500 Investor Relations InvestorRelations@atco.com 5302 Forand Street SW Calgary, Alberta T3E 8B4 Canada 42
Canadian Utilities — Investor Presentation (June 2024) on 6ix