TC Energy Corporation

Thank you for standing by. This is the conference operator. Welcome to the TC Energy fourth quarter 2025 results conference call. As a reminder, all participants are in listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. To join the question queue, you may press star then one on your telephone keypad. Should you need assistance during the conference call, you may reach an operator by pressing star then zero. I would now like to turn the conference over to Gavin Wiley, Vice President of Investor Relations. Please go ahead.

Thank you. I'd like to welcome you to TC Energy's fourth quarter 2025 conference call. Joining me are Francois Poirier, President and Chief Executive Officer, Sean O'Donnell, Executive Vice President and Chief Financial Officer, along with other members of our senior leadership team. Francois and Sean will begin today with some comments on our financial results and operational highlights. A copy of the slide presentation is available on our website under the Investors section. Following remarks will take questions from the investment community. Please limit yourself to two questions, and if you're a member of the media, please contact our media team. Today's remarks will include forward-looking statements that are subject to important risks and uncertainties. For more information, please see reports filed by TC Energy with Canadian Securities Regulators and with the U.S. Securities Exchange Commission. Finally, we will refer to certain non-GAAP measures that may not be comparable to similar measures presented by other entities. A reconciliation is contained in the appendix of the presentation. With that, I'll turn the call to Press Wong.

Thanks, Gavin, and good morning, everyone. 2025 was a defining year for TC Energy. We laid out a clear set of strategic priorities, and we delivered. First, I'm exceptionally proud of the team's safety performance. our best in five years. And that is directly enabling our strong operational and financial results reflected in our 9% year-over-year increase in comparable EBITDA. Importantly, in less than 18 months since we spun off our liquids business, we have replaced nearly all of this EBITDA with high-quality natural gas and power projects. On execution, we placed $8.3 billion of projects into service on schedule and over 15% under budget. That same focus is evident at Bruce Power, where Unit 3 remains on track for a return to service this year. As we enter 2026, we're building on our strong base business performance, consistent execution, and disciplined capital allocation that continues to deliver solid growth low risk, and repeatable performance. Driven by LNG exports, rising power generation, and increasing reliability needs for local distribution companies, we expect North American natural gas demand to increase by 45 BCF per day from 2025 to 2035. This is equivalent, for context, to adding the entirety of the European gas market over the next 10 years. and demand is materializing real-time. As the only major energy infrastructure company focused solely on natural gas and power across Canada, the U.S., and Mexico, we have an advantage to capture outsized value from our diversified portfolio. We serve seven LNG facilities representing 30% of North American LNG feed gas across three countries. We serve 170 power plants positioned near high growth markets like PJM and MISO, and we are proximate to 60% of projected US data center growth. We are also the only midstream company to have a stake in the world class nuclear facility, Bruce Power, in a market where electricity demand is expected to grow by 65% through 2050. Our competitive position combined with this compelling backdrop is creating for us a broad set of opportunities across geographies, customers, and each of our strategic growth pillars. In the fourth quarter, we advanced $5 billion of projects at various stages. We placed $2 billion of assets into service on time and under budget, and we expect to place approximately $4 billion into service this year. We continue to optimize our capital plan, shifting half a billion dollars of capital forward into 2026 to capture in-year EBITDA while creating capacity for higher return growth in the outer years. We added $600 million of new projects in the fourth quarter, including additional NGTL expansion facilities and a brownfield U.S. compression expansion project at a five-times build multiple. we continue to advance commercial discussions with customers across a diverse set of high quality opportunities, moving roughly $2 billion of late stage de-risked opportunities into our pending approval bucket. With recent sanctioning and ongoing optimization of our opportunity set, our high conviction pending approval portfolio now sits at about $8 billion. Sean will walk you through how this will impact our capital spend through the end of the decade. Outside pending approval, we see an additional $12 billion of projects in origination, supported in part by our recent non-binding open season on Columbia Gas that was three times oversubscribed. That $12 billion represents a relatively conservative view. It doesn't, for instance, include potential developments like Bruce C., where feasibility and early development work are progressing. Importantly, the projects we're pursuing are consistent with our targeted bill multiple range of five to seven times. Collectively, this progress reinforces our confidence in 2026 to fully allocate our $6 billion annual target in net capital expenditures through 2030, and I believe our opportunity set gives us the optionality to surpass this level of investment sanctioned this year for the latter part of the decade. Widescale electrification, ongoing coal retirements, and the rapidly growing energy needs of AI and data centers are driving a significant and sustained increase in North American electricity demand. Our strategy has been very intentional to capture this growth without increasing our risk exposure. Our primary focus is on brownfield and corridor expansions that leverage our existing footprint to primarily serve investment-grade utility customers, particularly in regions where we hold long-standing incumbent positions. Notably, the majority of the 10 BCF per day of expected growth in power demand is concentrated in markets that directly overlap our footprint. Recent project announcements like TECO Connector, Northwoods, Pulaski, and Maysville are all strong examples of this strategy in practice. Our resilience is anchored by long-term take-or-pay contracts that further benefit from a diverse and durable set of demand drivers. This low-risk strategy positions us well to deliver sustained value for our shareholders, and this same opportunity extends to Bruce Power, which I'll turn to next. Bruce Power's top focus remains delivering the highest level of reliability, availability, and safety performance across all eight units. Alongside the major component replacement program, the team is executing a proactive, targeted initiative to strengthen the reliability of critical equipment. The net benefit of these initiatives is improving plant reliability and availability that has a meaningful financial impact. Every day a unit remains available, it leads to roughly $1 million per day of incremental revenue for TC Energy. And as shown in the chart on the right, Bruce Power's availability has steadily improved, with expected availability in the low 90% range for 2026. As realized power prices also trend higher, we continue to strengthen our financial performance. And with that, I'll turn it over to Sean to walk through the numbers.

Thanks, Francois. Good morning, everybody. In the fourth quarter, TC delivered 13% year-over-year growth in Comparably Bada. It was a solid quarter to end an exceptional year. Our pipeline businesses set new all-time high delivery records, a direct result of our team's outstanding focus on safety and operational excellence. In our power and energy solutions business, Bruce Power achieved 86% availability, which includes the planned outage on Unit 2 and is in line with our expected annual availability in the low 90% range for full year 2025. On the right-hand side, we show our comparable EBITDA bridge for the quarter. You'll see that we generated almost $3 billion in EBITDA. Let me walk you through the components of how each business helped us get there. Starting with Canada Gas, EBITDA increased by $110 million, due to higher incentive earnings and flow-through depreciation on both the NGCL and mainline systems. In the U.S., EBITDA increased by $188 million, primarily from our Columbia gas settlement, as well as additional contract sales and higher realized earnings related to our U.S. natural gas marketing business. In Mexico, EBITDA increased by $163 million, which was a 70% increase relative to last year, due to the completion of Southeast Gateway. The increase from Southeast Gateway was partially offset by currency and tax items, which remain well managed within our overall financial hedging framework. And finally, in our power and energy solutions business, equity income from Bruce Power was lower quarter over quarter. That is primarily from Unit 4 being offline for its MCR program at the same time Unit 3 is offline for its MCR program. We also saw lower availability due to planned maintenance outages, which was partially offset by a higher contract price. In summary, it was a strong quarter due to high availability and EBITDA contributions from the assets our teams helped place into service in 2025. With the $4 billion in projects expected to go into service in 2026, including Bruce Unit 3's return to service, we continue to see strong EBITDA momentum heading into 2026. Shifting to our investment outlook and our capital allocation dashboard, we have a few new features to highlight here in order to bridge you from our last call in November. In November, we shared that by the end of 2026, we expected to have fully allocated our $6 billion annual target through 2030, with project build multiples in the five to seven times range. We have made the progress we expected towards that objective. In the past few months, we've added approximately $2 billion of high-conviction, de-risk projects, which are shown in the gray bars. This brings our late-stage pending approval opportunity set to approximately $8 billion. That increases net of the $600 million of new projects announced earlier today, along with ongoing optimization and high grading of our capital programs. As the pending approval bucket continues to grow, we have been successful in pulling forward capital by one to two years, as shown in the arrows on the top of the page. We are optimizing short-cycle maintenance capital into our 2026 plan, which earns an immediate return on and of our invested capital. To give you a sense for other optimization opportunities that our teams are finding, we have pulled forward the in-service date of our NKY gate enhancement to late 2027. and have several other opportunities under evaluation. This not only adds EBITDA to our 2028 outlook, but also creates investment capacity for growth capital in the later part of the decade. Looking ahead, we will continue to evaluate similar NPV-positive capital optimization opportunities where it makes sense to accelerate EBITDA and optimize balance sheet capacity that we can redeploy in future periods. To wrap up the capital outlook, I'd like to highlight that the increase in our pending approval bucket, together with our $12 billion of additional opportunities in origination, we anticipate capital investment to not only approach our $6 billion target, but as Francois mentioned, to potentially surpass this level toward the latter part of the decade, consistent with our messaging in prior quarters. Turning to our long-term financial outlook on page 13, this chart, as we presented in November, continues to reflect the solid trajectory we see this year and looking towards 2028. We are reaffirming both our 2026 outlook with comparable EBITDA of $11.6 to $11.8 billion, as well as our 2028 outlook, where we are positioned to deliver comparable EBITDA of $12.6 to $13.1 billion. This sustained performance in the fourth quarter and this outlook both underscore the strength and repeatability of our base business. Turning to the right-hand side, I'm pleased to share that our Board of Directors has declared a first quarter 2026 dividend of 87.75 cents per common share, which is equivalent to $3.51 per share on an annualized basis. This results in a 3.2% year-over-year increase, which is within our 3% to 5% range, and represents the 26th consecutive year that TC Energy has delivered dividend growth to our shareholders. We continue to be proud to deliver this growth year after year as part of our total shareholder value proposition. I will wrap up by summarizing why our portfolio is increasingly one of one amongst our peers. TC Energy is delivering strong total shareholder returns while operating one of the largest, most straightforward, and focused capital backlogs in the sector. Perhaps most importantly, we're doing that with lower than average execution risk in the fastest growing energy markets in North America. We have the largest portfolio of natural gas and power investment opportunities relative to our size through the end of the decade. Importantly, our growth projects continue to be underpinned by long-term contracts, regulated frameworks, and strong counterparty quality. We're growing in the deepest growth markets, and we are growing in the right way with respect to our well-established risk preferences. We're deploying capital where we see the highest risk-adjusted returns, extracting more value from the existing infrastructure, and remaining disciplined on project selection and capital allocation. As a result, TC Energy offers a compelling, lower-risk investment proposition, durable growth, execution strength, and attractive risk-adjusted returns. With that update, I'll pass the call back to Francois.

Thank you, Sean. Now, as we begin 2026, our strategic priorities remain consistent with what drove success over the last two years. We will continue to, firstly, maximize the value of our assets through safety and operational excellence. And this year, we're adding we're going to do so while leveraging commercial and technological innovation, including the use of artificial intelligence. Second, we're going to prioritize low-risk, high return growth, including placing projects in service on time and on budget or better. And based on what we're seeing in our project development pipeline, we expect this year to sanction $6 billion of net annual capital expenditures through 2030 and have visibility to increasing that level of investment for the latter part of the decade, and all consistent with targeted bill multiples in the range of five to seven times. With a diverse set of high conviction, late-stage projects, we expect continued durable growth with clear visibility to disciplined capital investment through the early part of the next decade. And thirdly, we will maintain financial strength and agility to support long-term value creation. Building off the momentum from strong operational performance, consistent execution, and disciplined capital allocation, I'm confident in our ability to continue to deliver solid growth, low risk, and repeatable performance. Operator, we're now ready to take questions.

We will now begin the question and answer session. To join the question queue, you may press star then one on your telephone keypad. You will hear a tone acknowledging your request. Please limit your questions to two, and if you wish to ask additional questions, please reenter the queue. If you're using a speaker phone, please pick up your handset before pressing any keys. To withdraw your question, please press star then two. We will pause momentarily as callers join the queue. The first question today comes from Praneesh Satish with Wells Fargo. Please go ahead.

Good morning. Thanks. You know, based on the recent open season announcement, it seems like average project sizes that you're looking at are getting larger. Please correct me if I'm wrong, but the projects now appear to be moving kind of well past the $1 billion mark. So in that context, I wanted to revisit balance sheet capacity, and I know you show capacity out through 2030 on the slide deck, but can you give us an early sense of what 2031 looks like, how much of that year is already committed, how much is pending, waiting for approval, and how much is true white space? Because I imagine most of the projects, these large projects, if you sanction them today, we'll have 2031 in service dates, just trying to get a sense of that long-term balance sheet capacity.

Hi, Praneet. This is Tina. I'll kick off and then turn it over to Francois. We are continuing to see a deep pipeline of opportunities of all scope and scale. And as you look at the projects that we have in origination, primarily focused on power generation opportunities, we've got about almost $12 billion in the pipeline of projects that run the gamut from, say, $200 million to over $1 billion. The open seasons that you mentioned, our focus there is to really try to aggregate as much of the demand as possible so that we're not advancing multiple projects and able to bring larger scale projects into service. And so those open seasons that you mentioned, one, the Columbia open season, where we launched a 500 million day open season with 1.5 BCF of bids that came in. We're going to be working to aggregate that and determine what is the right path forward for that project. On Crossroads, a great example of the value of steel in the ground. We have a pipeline there that capacity is about 250 million cubic feet a day. Looking at expansion there, about a billion and a half. So a lot of great opportunities. We're progressing, but again, a wide range of scope and scale. Those open seasons, our approach to that is getting those across the finish line this year so we can move into execution going forward.

And, Bernice, on the extension of our our capital program, some of the projects we're pursuing are, as you mentioned, with 2031 and even 2032 in service dates. Some of the projects that we've sanctioned were being asked by customers to move earlier as they're being responsive to their data center customers and other customers. And some of the projects we're looking at are even shorter cycle than that. The beauty of our capital program is that we've got visibility and duration out several years, and it is starting to spill into the early 30s, and that just gives us more confidence in our ability to continue to deliver on that 5% to 7% compound annual growth of EBITDA.

Gotcha. That's helpful. And maybe just, you know, turning to the Crossroads project, I know you're in open season, but maybe if you could just Talk about the strategic rationale there. Is it primarily data centers, coal-to-gas switching? And then, you know, we know of at least one other midstream operator that's targeting similar markets, so just any high-level color on the competitive dynamics. Yeah, just trying to get – and the other question here is, given the scale of it, could this project create a pathway to additional projects over time?

Yeah, Pernice, the crossroads expansion project is driven primarily by power generation requirements or gas for power generation that could take the form of data center demand, coal to gas, or electrification. Several of our large electric utilities are looking for additional capacity to support some of the projects in the Midwest. Other customers are looking for more supply diversity, so looking at Appalachia supply and mid-con supply, et cetera. So it's taking all shapes and forms there. But the interest level has been really picking up in that area. And if you think about our footprint in the Midwest, I think it's really second to none. And you look at the growth in the Midwest, we're excited about capturing those opportunities.

Maybe to add to Tina's comments on that, Pernice, it's a good reminder that we have 13 pipelines across the United States. A lot of our growth has been driven by our Columbia and A&R systems, but we are looking at growth projects across the entire fleet and the entire footprint of our projects in all three countries. Thank you.

The next question comes from Teresa Chen with Barclays. Please go ahead.

Good morning. Also had a question related to one of your recently highly successful open seasons. On Columbia, Tina, your comments on, you know, how this project could evolve going forward, can you just remind us what is the expansion capability on the system at this point, and what are the gating factors to upsizing the original scope?

Thanks, Teresa. We had advertised this open season as a half a BCF opportunity set, but because of the significant demand of one and a half BCF, we're looking at what is the best way to optimize that capacity and try to satisfy as much of the demand as possible. What we want to do is look for that sweet spot where we are still competitive in the market and can address as many of the customer requirements as possible. So early days yet as we're continue on the negotiations with all of the customers. But the plan would be to sanction that project this year.

Thank you. And Francois, when you mentioned the project coming under budget by 15%, can you just talk about what has allowed this to happen and to what extent is that repeatable with your current investments underway? And just as we think about spending and balance sheet capacity on a go-forward basis, we'd love to get your thoughts here.

I appreciate the question, Teresa. We were obviously very prudent with project planning and having high-quality estimates for our projects. Clearly, we had a bit of a tailwind over the last few years as contractor capacity was a bit looser than we had anticipated during the planning process so that we had some tailwinds when we came to actually signing up some of those contracts. So the combination of those things allowed us to deliver really impeccable execution in addition to the fact that we had our own internal initiatives to look for value wherever we can using AI and using best practices to make sure that we're being – as competitive as possible. I expect our execution to continue to be excellent going forward. The double-edged sword of having large contingencies being returned to the mothership, if you will, is that you've lost an opportunity to put in another growth project if the capital was held on to for the three or four years it takes between sanctioning and in service. So you're going to see us maybe challenge ourselves and be a little bit more aggressive and proactive in our estimation going forward. We want to make sure that we're not missing out on opportunity. It is such an opportunity-rich environment. But having said that, we now in our processes invest a lot more capital up front in developing higher quality estimates, making sure that our project planning is far more advanced than we ever have in the past before we sanctioned something. So I fully expect our high-quality execution to continue in the future.

Thank you.

Thanks, Teresa.

The next question comes from Rob Hope with Scotiabank. Please go ahead.

Morning, everyone. So it's interesting to see how the shape of the capital expenditures through 2030 has changed since Q3 with a pretty good step up in 2030. So when you think about the kind of, we'll call it white space in 28 and around those years, how do you think about layering on short duration projects or how quickly could you be comfortable in going above that $6 to $7 billion capital range in the other years?

Yeah, thanks for that question, Rob. I'll start and I'll ask Sean to provide some color. Part of the reason, like in 2028, we have more white space than we had a quarter ago is that we took advantage of some optimization that is NPV positive to bring forward some of our maintenance capital on which we earn a return from 27 and 2028 into 2026 where we still had some spare capacity. That does two things. It brings forward EBITDA growth earlier into our growth delivery. But secondly, it creates capacity for additional growth projects in the future. So you're going to see us continually optimizing and smoothing out that portfolio. You know, things are unfolding as we expected with respect to the sanctioning of projects. As we mentioned in prior quarters, the size of projects is increasing, so we had to go and re-optimize some of our projects as part of utility bid processes. The PUCs are providing more clarity around what they expect in terms of routing clarity in order to sanction projects, so the utilities themselves have been very prudently making sure that they can meet those requirements. But we see, for example, two sizable projects we're competing for that we expect to be awarded here over the next few weeks to a couple of months. So things are proceeding as planned.

All right. Hey, Rob, it's Sean. Please go ahead. No, no, go ahead, please. I was just going to tack on a little bit of the balance sheet. I'm sitting here next to Tina and Greg, and yes, there are projects we're talking about kind of by weeks and months. And candidly, you know, at 25, 26, 27, we're given the balance sheet continued time to breathe. And it creates capacity. And like I said, as Francois said, you know, we're maybe a month away from, you know, having better visibility on that 28, but the balance sheet continues to appreciate that time and for that optionality in 28. Sorry, under your .

Sorry. Maybe just in terms of kind of the $12 billion of additional projects in origination, you know, based on the commentary that the Columbia project could be sanctioned this year, how do you think about, you know, the conversion of moving that into the pending approval, and could we see some of these $12 billion even being sanctioned in 26?

I think where we launch open seasons, typically we're having conversation with potential customers before we even launch them. So we have a fair degree of confidence that there's market interest. The purpose of the non-binding open seasons is to confirm that interest and allows us to optimize the size of the project, as Tina mentioned. So when we talk about Ohio, when we talk about crossroads, those are in that $12 billion bucket. They are not in the pending approval bucket, which is restricted to 90-plus percent probability projects. And we still expect projects like that to be sanctioned this year. So that altogether, when you put it all together, is what gives us confidence that not only are we going to fill all of the white space to $6 billion out to 2030, but there's a very good chance we're going to be looking to go above that $6 billion level, you know, starting in 29 or, you know, more than likely 29, but possibly also 28.

Great. That's great. Thank you.

The next question comes from Maurice Choi with RBC Capital Markets. Please go ahead.

Thank you, and good morning, everyone. I just wanted to pick up on your early response on growth rate. You've accelerated $500 million of capital this quarter, and it sounds like there are more options like these to pull forward projects by one or two years. Would these generally lead to a higher growth rate than 5% to 7%, or are these filling up white space and therefore meant to be supportive of your 5% to 7% rate?

Hey, Maurice, it's Sean. Good question. The $500 million that we're pulling forward – They will contribute to EBITDA, but I'll tell you, we're going to be in range. Those are healthy numbers, but not big enough to kind of move our range at this point in time.

But will you just pull forward more than the $500 million in the coming quarters? At least in the end year, would it be upgradable to some extent?

If we're successful in pulling together sizable dollars, then we'll revisit that, of course. But at this point, we are within range on the the 28 and 27 pull-forwards.

Got it. Makes sense. And then just to finish off, I wonder if you could just help us compare and contrast the characteristics of the $8 billion of projects pending approval and the $12 billion that are in origination. And specifically what I'm hoping to understand is, you know, by geography, gas versus nuclear, are the returns quite similar or are some of them green versus brownfield?

Marisa, Sean, I'll maybe kick that one off to make sure we were clear on the characterization of what is pending versus what we have in flight. As Francois said, what we have in plan for pending are what we characterize as 90% or more likely, very advanced, fully documented, typically requiring only management or board-level approvals to sanction. That is the characterization of our pending. As it relates to kind of a heat map of distribution of the pending, maybe I'll turn that over to Tina to give you a sense for where those dollars are coming from.

Thanks, Sean. As we talked about earlier, given we're in three countries and we have multiple pipelines spanning coast-to-coast, border-to-border, we're seeing opportunities across our entire portfolio, in the U.S. in particular, where we see the bulk of the growth. Those opportunities are really focused primarily in the Midwest, but we are seeing, as we just noted, projects developing along our West Coast systems, our East Coast systems, really all over the map there. In terms of your question on brownfield versus greenfield, our approach has always been to leverage our footprint wherever possible to produce the most economic, efficient builds with minimal disruption. This won't change going forward.

I noticed there's no mention about nuclear in any of these responses, and do these numbers have, you know, remaining MCRs who have improved C in any of them?

So, the MCRs are included. in those numbers, but Bruce C is not. Bruce C is still in early stages of development, and so that would be upside to even the $12 billion of advanced projects and advanced BD.

Understood. Thank you very much.

The next question comes from Zach Van Everen with TPH. Please go ahead.

Hi, all. Thanks for taking my question. Maybe starting on the power and data center side, I know your historical and continued plan has been to focus on the utility customers. I was curious if the more recent political push to keep utility rates flat has changed any of those conversations and maybe pushed you guys more towards supplying gas to the mobile power solutions?

So I'll start at a high level here, Zach, and ask Tina to provide some proof points. As I talked about in my prepared remarks, particularly in the U.S., we really are focusing in front of the meter with our utility customers. To the extent a data center wants to get service directly for gas and is willing to provide a long-term contract that is consistent with what we get from the utility customers, we will, of course, contemplate those. We're not looking at any power project development and ownership behind the meter at this time. But, Tina, any additional color?

Yeah, our strategy is really working. We are continuing to have close collaborations on utilities to develop those solutions that are reliable and cost-effective and, in most instances, serve more than one type of load, not just data center load. You mentioned some of the cost allocation issues, Zach, and there are jurisdictions such as Wisconsin that are tailoring their regulatory framework to better balance system reliability with cost recovery. So we're seeing a lot of utilities figuring it out, to kind of say the phrase there, but there are opportunities with many of those utilities where those cost issues are being reconciled.

Gotcha. That makes sense. And then maybe one on Gulf Coast demand. You know, we continue to see LNG facilities pull more and more from the northeast as much as they can to the Gulf Coast. I was curious if you could remind us of the ability to expand ANR and or Columbia Gulf and what that could look like as far as size and timeline if there was demand to expand those pipes.

We've placed eight LNG projects into service in the last few years, Zach. We've got two more that are under construction, our Gap West project and on the east coast of Canada, our Cedar project. So we've put in about almost 10 BCF per day of LNG opportunities, primarily in the U.S. What we're seeing right now is a lot of the Growth in the Louisiana Gulf Coast has already contracted for much of their pipeline capacity, including on our projects. But to the extent there is an opportunity or a need for additional egress from Appalachian in particular, you know, our pipes are well-suited to do that with our Columbia Gulf and our ANR systems. At this time, we're not seeing that draw, but we sound ready to support that when it does show up.

Perfect. Thank you so much. Appreciate the time.

The next question comes from Ben Sam with BMO. Please go ahead.

Hi, everybody. I was wondering if you could comment on the stickiness of your five to seven times EBITDA build multiple on new projects, and particularly what internal and external factors do you need to see that to be sustained?

So, when we look at, obviously, our pending approval projects, which are, you know, in the 90-plus percent category, even when we look at the advanced BD group of $12 billion, Ben, we're still looking in aggregate at a 5 to 7 times EBITDA bill multiple. So the return profiles that we've been able to sanction projects at in the last couple of years are sticking. And, you know, the general dynamic is that the utility space has continued to be very creative at finding more brownfield expansion capacity. The data centers have learned that being flexible in their location to go where those efficient deliveries are available has helped us do that. And so we fully expect the return profile in aggregate to be in that five to seven times range. And it's got to do with our ability as a company to execute with excellence. We've been able to enter into strategic joint ventures with OEMs and sometimes even with contractors. And what's being reinforced here is the value of pipe in the ground and the value of incumbency has allowed us to continue to earn premium rates of return relative to history.

Okay, got it. And maybe a second question, just going back to some of the questions on the balance sheet capacity. You mentioned the size of your projects increasing, customers look to accelerate projects, but we need to balance the debris in the next couple of years. How are you guys thinking about... the asset recycling equation, just where valuations are right now in the pipe sector, and then maybe also thoughts on JVs, such as the Columbia one.

Hey, Ben, it's Sean. I'll take that one. As we talk about asset recycling, I'll just point you to Crossroads as an example, right? Probably a project nobody asked us about two years ago. and just the value of incumbency, the value of optionality, it gets better every quarter, right? So we're in the process of re-underwriting, have been for several months, re-underwriting every asset so that we know where the growth projects are, right? And are we best served to capture them? Or, you know, if over the next kind of couple of years we want to capital rotate, we know exactly where the growth projects are on any asset we might want to rotate. So it's, It's just understanding the new dynamics, the new growth projects on every asset we have. And we've got a couple of years, right, probably before we have to make that FID decision above six towards seven. So we've got time, and we're tuning up our capital rotation inventory. It's quite simple. While we grow cash debt on those assets.

The next question comes from Aaron McNeil with TD Cohen. Please go ahead.

Hey, morning, all. Thanks for taking my question. Maybe just to build on Ben's question or get some additional clarification, you talked about the balance sheet capacity, potential uptick in spend in 2028 or 2029. What's your just higher level evolved thinking about how to finance a potential step up in the spend profile? Like, I guess I'm getting a sense that you may be able to do that organically, or should we still expect, you know, some form of external financing if it's equity or asset recycling?

Thanks for the question, Aaron. It's Francois. I'll take this one. You know, it's very important for us as, you know, heavy deployers of capital to have efficient cost of capital. So we want every tranche of our capital structure to be investment grade. As you know, we're heavy users of hybrid and subordinated capital. So with two notches below senior unsecured capital, we want to continue to maintain our credit rating in that triple D plus or equivalent range. Right now, the long pole in the tent in terms of credit metrics is the 4.75 debt to EBITDA. So that's important to us. But as Sean mentioned, we've got time to get there. And The first way to get there is the dollar you don't spend is the best approach. So we're going to look to outperform and deliver our projects under budget as the first source. The second source is getting more EBITDA out of your existing assets. And we're just at the front end of using technological innovation and AI to allow us to do that. We've got a couple of very promising pilot projects that – have allowed us to monetize capacity in different parts of our system that we weren't even aware we had. There's obviously complex algorithms that allow us to be aware of capacity to sell in the short term when it's really very, very valuable. So there are a number of things we can do through commercial innovation and technological innovation. We're going to do those first because obviously growing cash flow without raising internal or external equity is going to be the most efficient way to do that. And we have a couple of years to pursue those before we have to make any decisions.

Okay. Nope, that makes a ton of sense. Maybe just switching gears to Canada, I can appreciate that it's not a focus of the quarter, but can you give us an update on the Canadian mainline settlement that should happen later this year? And just given... you know, tightening fundamentals for Canadian natural gas egress, you know, even with LNG Canada Phase 1 ramping. You know, is there any appetite to expand capacity on the system as part of that settlement? Is it in the $12 billion bucket? Maybe just any updates there would be helpful.

Yeah, thanks. I'll take that question. The current mainline settlement is in effect until the end of 2026, and this current settlement has really been a win-win situation. as evidenced by, you know, the strong system flows we've had, lower tolls for our customers, and the returns we're seeing on the mainline. We've been in discussions with our customers over the last several months on a post-2026 settlement with more meetings planned over the coming months, but we're very optimistic we're going to see an opportunity to extend that settlement as we continue those discussions. You know, the multiple factors that are taken into effect when we are in those discussions, including, you know, the ability to invest capital. And so as the settlement progresses and moves into actuation there, we'll give you more updates. But right now our plan is to develop another win-win solution to meet the customer's needs.

Makes sense. Thanks, everyone. I'll turn it back.

The next question comes from Manav Gupta of UBS. Please go ahead.

Good morning. I have like one question with some part, but basically I'm trying to understand, can you, right now you obviously have one unit down at Bruce, but going past 2031, we see significant free cash flow inflection from Bruce as all units are up and running and life is extended by multiple decades. So if you can talk about the free cash flow inflection that happens post 2031 with all units of Bruce running, And then the question we sometimes get from investors is if you do decide to move with Bruce C, that would be a significant spend. Would you expect some kind of government support, government bonds? What would be the financing in place for if you do decide to move ahead with Bruce C? Thank you. Sure.

Thanks, Manav. It's Greg Grant here. So just as it pertains to Bruce C, I'll start there. We are continuing the work. with some of our pre-feed studies, includes technology selection, pre-construction work, and we do have funding in place for that. So that's actually has been provided by the federal government and we're currently working on our next tranche of funding from the ISO in Ontario. So that'll kind of take our funding to the end of the decade, but to self-perform funding through that mechanism. Great point, as you talk about cashflow near the end of the decade, we had a great slide on the last quarter material that talked about that inversion point where, you know, we've been investing about a billion dollars a year into Bruce. By the end of the decade, you'll see about half a billion dollars starting to come back. And then that's upwards of over $2 billion once the MCR program is complete. So when you look at a nuclear construction project, that's going to take 10 to 15 years as you think about the next phase of Bruce C and the units we'd be adding. So at $2 billion plus of cash flow and in a long construction period, you're actually going to be able to not only self-fund should we choose to and finance it within Bruce, but also pay distributions. So we think we're well positioned within Bruce to handle the financing and deal with the expansion, but also just a great management team and really excited about the opportunity as we see the support for nuclear in the province.

Thank you so much.

The next question comes from John McKay with Goldman Sachs. Please go ahead.

Hey, team. Thank you for the time. I want to go to the six to seven billion kind of annual um range you guys are talking about is that you know particularly in the context of looking at 2030 which is already pretty full and some of these bigger projects you might be fiding soon that could have some capital kind of hitting in 2030 should we think of that six to seven as a kind of average over several years but you'd be willing to go above it in a single year if you're not able to move some of the timing around Maybe just talk through some of those dynamics with, again, how much of 2030 specifically looks relatively full at this point.

Appreciate the question, John. As you've heard me say many times in prior quarters, the first filter we run this through is our human capital and our ability to execute our projects on time and on budget. I can tell you that that work is more or less complete. We just concluded board meetings over the last few days where we presented our human capital plan and execution plan and readiness to upsize our capital program with the board. And I can tell you we stand ready for a ramp-up in the size of our capital program going forward. At this point, in terms of the individual bars in each year that are in the pending approval bucket, We haven't, you know, we don't really go through the optimization and smoothing out of our capital until it's been approved. So I wouldn't be too fussed by a peak in an individual year. We can smooth things out. We can move some capital forward, some capital back. And we still have room, in my view, to add capital in the 2030 year if required. As our cash flow grows and as our readiness and our human capital also grows, you're going to see the program steadily grow. And so starting in that 29 year likely and then in 30 and 31, you'll see us sustainably be above six. And, you know, I won't put any limitations on where it's going to go at this point. The opportunity set is there and we're going to pursue what are generationally the highest returns I've seen in my 35 years in the business.

I appreciate that. So I'll leave it there. Thank you for the time. Thanks, John.

The next question comes from Keith Stanley with Wolf Research. Please go ahead.

Hi. Good morning. Wanted to ask on the crossroads pipeline. So you referenced it's 250 million cubic feet a day today. How would you expand that by one and a half BCF a day? Is that a lot of new build construction and looping? And then on the demand side of the project, is it primarily targeting Indiana demand in northern Indiana? Or are you trying to get to the Chicago hub or somewhere else with it mainly?

Thanks, Keith. On the first question, you know, what we would do is leverage our existing corridor to increase the capacity of that system. Again, we like our brownfield in corridor approach. So, primarily, depending on the volume that we put under contract would be likely looping and or compression along the existing corridor. That, again, will be dependent on the volume. As far as the location, it's all of the above. We're seeing demand across that entire corridor, but also outside of that corridor. So Crossroads can facilitate, you know, volumes into ANR or from ANR, facilitate volumes from northern border or to northern border. So it's a unique pipeline that will allow us to basically, you know, wheel capacity between multiple pipelines and not just focus on the market along that pipeline.

Got it. Thanks for that. Second one, just sorry if I missed this, but the gray bar pending approval capital buckets, how much of that relates to negotiated rate pipeline projects versus more regulated investments like NGTL?

The most prevalent deals we are working on in that bucket are in the U.S., and for the most part, those will be negotiated rate contracts. given the size and the demand components of those. So the majority of that would be negotiated rate contracts.

Thank you.

Ladies and gentlemen, this concludes the question and answer session. If there are any further questions, please contact Investor Relations at TC Energy. I will now turn the call over to Gavin Wiley for any closing remarks.

Thanks, everybody, for participating this morning. As the operator mentioned, if there were any questions that we were unable to get to for the call, please do contact myself or the investor relations team. We'd be happy to walk through. We thank you very much and appreciate your interest in TC Energy and look forward to our next update with our first quarter results. Thank you.

This brings us close to today's conference call. You may disconnect your line. Thank you for participating and have a pleasant day.