Canadian Utilities Limited Class A · TSX:CU
Canadian Utilities Limited Class A — Investor Presentation (March 2023)
44 slides from Canadian Utilities Limited Class A's investor presentation, March 2023
Slide 1: Investor Presentation Canadian Utilities Limited
Investor Presentation Canadian Utilities Limited
Slide 2: Agenda
INVESTOR PRESENTATION Agenda Executive Committee 3 Financial Overview 4 Canadian Utilities Overview 9 Environment, Sustainability and Governance 13 Utilities 17 Energy Infrastructure 23 Retail Energy 37 Appendix 38 Legal Notice 42 Canadian Utilities Investor Presentation 2
Slide 3: Executive Committee
EXECUTIVE COMMITTEE Nancy C. Southern Brian P. Shkrobot Melanie L. Bayley M. George Constantinescu Chair & Chief Executive Officer, Executive Vice President President, ATCO Electric Senior Vice President Canadian Utilities Limited & Chief Financial Officer & Chief Transformation Officer Bob J. Myles
Slide 4: Continued Growth
2015 FINANCIAL STRENGTH CGOC3 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 5: Continued Growth: Dividend Increases
FINANCIAL STRENGTH Continued Growth LONGEST TRACK RECORD OF ANNUAL DIVIDEND INCREASES OF ANY CANADIAN PUBLICLY TRADED COMPANY 51 YEARS OF ANNUAL DIVIDEND INCREASES* DIVIDENDS DECLARED OF $1.78 PER SHARE IN 2022 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 6: Total 2022 Adjusted Earnings
Earnings Profile $35M Energy Infrastructure Total 2022 Adjusted Earnings1 Utilities provide strong foundational earnings. 2 $655M $714M Utilities incl. LUMA 1. For additional information about adjusted earnings, please see the “Legal Notice” slide. 2. Total includes $94M in Costs attributable to the
Slide 7: Debt Maturity Profile: 20-Year Outlook
Debt Profile Debt Maturity Profile: 20-Year Outlook WELL-DISTRIBUTED AND EASILY MANAGEABLE DEBT MATURITY PROFILES $500M $500M $220M $200M $200M $185M $160M $150M $120M $125M $100M 2023 2024 … 2028 … 2034 2035 2036 2037 2038 2039 … 2041 2042 CU Inc. 1. As at December 31, 2022. Canadian Utilities Inve
Slide 8: Strong Credit Ratings
STRONG CREDIT RATINGS A (high) A- A- A BBB+ A- Canadian ATCOUtilities Ltd. Corporate Investor Presentation 8
Slide 9: Canadian Utilities Limited Overview
Canadian Utilities Limited Overview For recent filings and further details please visit: canadianutilities.com 9
Slide 10: Canadian Utilities Limited
CANADIAN UTILITIES OVERVIEW Canadian Utilities Limited Canadian Utilities is an ATCO company with approximately 5,000 employees and assets of $22 billion.1 We are publicly traded on the Toronto Stock Exchange under the tickers CU (non-voting) and CU.X (voting). As a diversified global energy infrast
Slide 11: Organizational Structure
CANADIAN UTILITIES OVERVIEW Organizational Structure 100% 100% 100% ENERGY INFRASTRUCTURE UTILITIES BUSINESS UNIT CORPORATE BUSINESS UNIT ELECTRICITY DISTRIBUTION ELECTRICITY GENERATION RETAIL ENERGY ELECTRICITY TRANSMISSION STORAGE & INDUSTRIAL WATER NATURAL GAS DISTRIBUTION CLEAN FUELS NATURAL GAS
Slide 12: Strategy
CANADIAN UTILITIES OVERVIEW Strategy • Build on our core utility business and invest in DRIVE CASH FLOW OPTIMIZE NON-REG activities aimed at advancing the energy AND EARNINGS ASSETS AND GROW transition and ensuring long-term resiliency. • Optimize our energy infrastructure assets and add new growth
Slide 13: 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 14: 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 14
Slide 15: Investing In Our Utilities Future
Solar Installation, Fort Chipewyan, AB CANADIAN UTILITIES OVERVIEW 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 Infra
Slide 16: Energy Transition: Leading The Way
CANADIAN UTILITIES OVERVIEW 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 an
Slide 17: Regulated Utilities
CANADIAN UTILITIES OVERVIEW Regulated Utilities 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 | $1.3B Rate Base Int’l Electricity Operations |
Slide 18: Operational Excellence
REGULATED UTILITIES Operational Excellence SINCE 2015, WE HAVE REDUCED OUR OPERATIONS AND MAINTENANCE COSTS: 11% per KM of Line1 29% per customer1 ELECTRICITY DISTRIBUTION NATURAL GAS DISTRIBUTION OPERATIONAL EXCELLENCE AND LOWER COSTS BENEFIT OUR CUSTOMERS AND SHARE OWNERS 1. Adjusted for inflation
Slide 19: Regulated Utilities: Returns On Equity
CANADIAN UTILITIES OVERVIEW Regulated Utilities: Returns On Equity 10 YEAR AVERAGE (2012-2021) CU INC. IS COMPRISED OF OUR ALBERTA UTILITY COMPANIES AND ACHIEVES TOP-TIER RETURNS ON EQUITY CU Inc.’s average ROE is 2.1% above average AUC approved over last 10 years. 10.6% 8.5% 9.1% AUC Approved Alber
Slide 20: 3-year Capital Investment Plan
REGULATED UTILITIES 3-year Capital Investment Plan EXPECTED MID-YEAR RATE BASE GROWTH (C$ 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 21: 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 22: International: Key Contract Terms & Objectives
UTILITIES International 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-thro
Slide 23: Energy Infrastructure Businesses
CANADIAN UTILITIES OVERVIEW Energy Infrastructure 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 Cana
Slide 24: Electricity Generation
ENERGY INFRASTRUCTURE BUSINESSES Electricity Generation HIGHLY-CONTRACTED PORTFOLIO 83% Long-Term Merchant Contracted 17% 80 MW 400 MW Canadian Utilities Investor Presentation 24 *Portfolio split includes the 232MW of renewable generation operating assets acquired on January 3, 2023.
Slide 25: Acquisition of Renewable Generation Assets
RENEWABLE GENERATION Acquisition of Renewable Generation Assets • In January 2023, Canadian Utilities acquired 2 operating wind assets and a development pipeline of wind and solar projects. • The acquisition includes a majority interest in the 30 MW Adelaide wind facility in Ontario, the new 202 MW
Slide 26: Strategic Rationale of Acquisition
RENEWABLE GENERATION Strategic Rationale of Acquisition 1 2 3 4 Provides Penetration Well-Aligned Accretive to Immediate into Wind with Corporate Cash Flow and Scale and Market, ESG Strategy Earnings Future Growth Underpinned and Targets in 2023 Through by Long-Term Development Contracted Pipeline A
Slide 27: Why Renewable Generation?
RENEWABLE GENERATION 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 ENVIRO
Slide 28: Saa Sè Energy Project
RENEWABLE GENERATION Saa Sè Energy Project (Beaver Creek Solar Project) • In December 2022, ATCO Electric Yukon and Copper Niisüü Limited Partnership (CNLP) announced a landmark Energy Purchase Agreement that will help the White River First Nation (WRFN) reduce their reliance on diesel power. • Desi
Slide 29: Barlow & Deerfoot
RENEWABLE GENERATION Barlow & Deerfoot • 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 (114 Avenue and 52 Street SE) solar
Slide 30: Empress Solar Project
RENEWABLE GENERATION Empress Solar Project • Acquired the development rights for a 39 MW photovoltaic solar facility near Empress, Alberta. • Electricity from the Empress Solar Project may be sold through a Power Purchase Agreement with uncontracted electricity sold into the grid. • Development acti
Slide 31: Hydrogen & Renewable Natural Gas
Clean Energy Innovation Hub - Western Australia Hydrogen Blending – Alberta CLEAN FUELS Hydrogen & Renewable Natural Gas Hydrogen Blending Project - Australia Clean Energy Innovation Park - Western Australia Canadian Utilities Investor Presentation 31
Slide 32: Why Hydrogen?
CLEAN FUELS Why Hydrogen? • We are committed to promoting a more environmentally-sustainable future by providing clean, reliable and affordable energy. • It can play a role in affordably decarbonizing the production of heat, particularly in our cold Canadian climate. • Alberta is already a leader in
Slide 33: Suncor ATCO Heartland Hydrogen Hub
CLEAN FUELS Suncor ATCO Heartland Hydrogen Hub Proposed World-Scale Clean Hydrogen JV Project with Suncor near Fort Saskatchewan, Alberta. • ATCO/Suncor partnership has received welcome support from Government of Canada and Government of Alberta. • Collaboration between governments and businesses ac
Slide 34: Clean Energy Innovation Park
CLEAN FUELS Clean Energy Innovation Park Western Australia • We continue to explore the development of Western Australia’s first commercial scale green hydrogen facility. • This facility is contemplated to include a 10-MW electrolyser and plant capable of producing up to four tonnes of hydrogen per
Slide 35: Two Hills RNG Facility
CLEAN FUELS RNG IS A RENEWABLE FUEL Two Hills RNG Facility PRODUCED BY CAPTURING METHANE EMISSIONS. EMISSIONS REDUCTION ALBERTA HAS • Canadian Utilities Limited, has partnered with Future Fuel COMMITTED $7.9 MILLION THROUGH Ltd. to build and operate the “Two Hills” RNG facility in ITS NATURAL GAS CH
Slide 36: Energy Storage & Industrial Water
ENERGY 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 industrial customers. • The natur
Slide 37: Retail Energy
CANADIAN UTILITIES OVERVIEW 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 offers flexible electricity and nat
Slide 38: Appendix
Appendix 38
Slide 39: 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 Associati
Slide 40: 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 ga
Slide 41: 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 Canadian
Slide 42: 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 tho
Slide 43: Legal Notice: Other Financial Measure Disclosure Advisory
Legal Notice Other Financial Measure Disclosure Advisory This presentation includes references to consolidated adjusted earnings, which is considered to be a “total of segments measure” as that term is defined in National Instrument 52-112 Non- GAAP and Other Financial Measures Disclosure. The most
Slide 44: Investor Relations contact
www.canadianutilities.com Tel: 403.292.7500 Investor Relations [email protected] 5302 Forand Street SW Calgary, Alberta T3E 8B4 Canada 44
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