Emera Incorporated

Good day, ladies and gentlemen, and welcome to the AMIRA Q2 2023 Earnings Conference Call. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on August 11, 2023. I would now like to turn the conference over to Dave Bazanzen. Please go ahead.

Thank you, Michelle, and thank you all for joining us this morning for AMIRA's Q2 2023 conference call and live webcast. AMIRA's second quarter earnings release was distributed this morning by Newswire, and the financial statements, management's discussion and analysis, and the presentation being referenced on this call are available on our website at AMIRA.com. Joining me for this morning's call are Scott Belfour, AMIRA's President and Chief Executive Officer, Greg Blunden, AMIRA's Chief Financial Officer, and other members of AMIRA's management team. This morning's discussion will include forward-looking information, which is subject to the cautionary statement contained in the supporting slide. Today's discussion and presentation will also include references to non-GAAP financial measures. Please refer to the Appendix for Definitional Information and Reconciliations of Historical Non-GAAP Measures to the closest GAAP financial measure. And now, I will turn things over to Scott.

Thank you, Dave, and good morning, everyone. I'd like to begin my remarks by taking a moment to acknowledge the two significant natural disasters that impacted our customers, our communities, and our teams here in Nova Scotia in the last few months. In May, thousands of Nova Scotians were evacuated and over 150 families lost their homes to the devastating wildfires that broke out across the province. Thankfully, no lives were lost. However, many people, including our own employees, were impacted. We're incredibly grateful to the hundreds of first responders who kept our community safe and courageously battled these fires. Only weeks later, the province was hit with a record-breaking rainstorm, resulting in severe lightning and flooding that caused significant damage to homes and communities across the province. And tragically, four Nova Scotians lost their lives in the flooding. On behalf of the entire MIR team, we extend our heartfelt condolences to everyone affected by these events. I'd also like to take a moment to recognize the team at Nova Scotia Power. These disasters underscore the essential work we do and the value of a strong and reliable electrical grid. And the response from our team highlights the strength and resiliency of our people, as well as their expertise and unwavering dedication to the communities we serve. This morning, we released our second quarter results, and I'm pleased to share that we continue to deliver steady, predictable earnings and cash flow growth. We reported second quarter adjusted earnings per share of 60 cents, up 2% from the second quarter of 2022, driven by strong performance from our regulated utilities, partially offset by lower earnings from AmeriEnergy and the impact of higher interest costs across the business. And for the year to date, despite higher interest costs, which Greg will discuss shortly, as well as inflationary pressures generally, adjusted earnings per share has increased 7 cents, or 5%, to $1.58 compared to $1.51 last year. Our regulated utilities delivered an 11% increase in adjusted earnings this quarter and 7% year to date, largely driven by an increase in rate-supported capital investments as well as favorable contributions from asset management agreements at New Mexico Gas in the first quarter. We continue to see strong economic and population growth in our key service areas. The economic growth in Florida continues to drive meaningful customer growth, approximately 2% at Tampa Electric and 5% at Peoples Gas. Here in Nova Scotia, we're experiencing the strongest population growth in decades, driving over 1% customer growth at Nova Scotia Power last year. At both Tampa Electric and Nova Scotia Power, this customer growth is contributing to growing customer demand and load, which helps to offset some of the impact of less favorable weather in the first half of the year. As the economies and populations in our service territories grow, so does the level of capital investment required to support that growth and to deliver cleaner and reliable energy for our customers. In the first half of 2023, we deployed over $1.4 billion in capital, a 25% increase over 2022. And we continue to expect to invest almost $3 billion in capital this year. Our deployment in the first half of the year is on track with our three-year capital plan, which remains focused on reliability and decarbonization investments, as well as infrastructure expansion investments in support of customer growth. Last year, we completed the Big Bend modernization at Tampa Electric. I'm proud to say that earlier this month, this project was recognized as the best energy project in 2022 by Engineering News Record. As one of the most efficient natural gas plants in North America, it can produce almost 1,100 megawatts of energy, enough energy to power more than 250,000 homes. This transformative project of a plant that once burned coal not only provides cleaner and more reliable energy for our growing customer base, but also provides the necessary capacity to support the increasing build-out of solar generation. Tampa Electric's investment in solar has continued, with over $120 US million invested in our solar program in the first half of the year. And we're on track to have another 125 megawatts of solar generation in service by the end of 2023, for what will then be total utility scale solar generation capacity of 1,255 megawatts, representing 20% of Tampa Electric's total generation capacity. We've also invested $110 million so far this year in our storm protection plan, representing important investments to strengthen the system against severe weather events. We saw firsthand the value of these investments in the aftermath of Hurricane Ian. with system impacts and outage restoration times both improved. And at People's Gas, we're focused on investments in system reliability and expansion to support the incredible customer growth utilities experience. We expect over 75% of our three-year capital program will be invested in our Florida operations to support the strong population and economic growth that continues in the state. And overall, we continue to expect to deliver 7% to 8% rate-based growth over the forecast period. However, we are focused on how to optimize the pace of capital investment to best manage the cost impacts for customers. As we collectively continue to navigate the current inflationary environment, we are also working to support our customers with energy efficiency programs as well as financial support programs for those who are struggling. Large government tax incentive programs are also helping to reduce the cost of the transition to cleaner energy. In the U.S., the Inflation Reduction Act provides tax credits that are expected to make several of our current and prospective projects more affordable for customers. Similarly, the most recent federal budget in Canada recognized the need to address the significant cost impacts of the clean energy transition with additional funding programs including meaningful investment tax credit support. Within our capital plan, Tampa Electric's almost $1 billion investment in solar generation will attract production tax credits under the Inflation Reduction Act. And looking forward, as we highlighted in our investor day in March, we're excited about the opportunity that federal tax credits have created in support of carbon capture and sequestration, as well as hydrogen. Last year, Tampa Electric was awarded approximately $6 million U.S. of funding from the U.S. Department of Energy to perform preliminary study at the Polk Power Station to evaluate the costs and feasibility of retrofitting carbon capture technology on a combined cycle generation unit. I'm pleased to say we received an additional $5 U.S. million of funding from the Department of Energy this year to continue this important work on this promising project, albeit still in early days. And in Nova Scotia, we continue to support stakeholder discussions with respect to the Atlantic Loop. Our objective since the beginning has been to find a way to phase out coal generation in a way that delivers the best solution to Nova Scotia Power customers. We believe that a strong transmission tie into the province is key to the most optimal path to phase out coal generation in Nova Scotia Power's electric grid while maintaining grid reliability for Nova Scotians. Increasing electric transmission capacity between regions makes sense everywhere, particularly here in Nova Scotia, where our electrical connections to larger markets are currently constrained. New regional transmission capacity would provide Nova Scotia with critical access to dispatchable energy capacity for when intermittent wind and solar generation sources aren't available. And it would also enable Nova Scotia to become an exporter of the incredible wind resources we have here in the province, which would also help support the development of green hydrogen and offshore wind in Nova Scotia. But it's complicated. And as you've heard me say many times, the kind of rapid and transformative transition to cleaner energy that is now underway is extremely costly. And so we're aligned with the provincial government in the view that's significant financial support from the federal government is required to achieve federal clean energy policy goals here in Nova Scotia. It's imperative that we find a solution that is in the best interest of our customers, of Nova Scotians. That is our focus. So while government and other important stakeholders continue to discuss whether the Loop project advances or not, the team at Nova Scotia Power continues to work with the province of Nova Scotia to advance the other important components of the clean energy transition. This includes investments in battery storage, supporting grid connections for new wind procurements, and strengthening the intertie between Nova Scotia and New Brunswick. Last quarter, the team at Peoples Gas filed their petition for new rates effective January 1st, 2024. Since their last rate increase in 2021, People's Gas has deployed more than $1 billion of rate-based investment to serve the growing population of Florida and to ensure their system continues to operate safely and reliably. Hearings are scheduled for later this month, and we expect to have a decision from the regulator in the fourth quarter. And the team in New Mexico is in the process of developing a rate case that it intends to file later this year requesting new rates that would be effective in the fall of 2024. To sum up, the fundamentals of our business and our portfolio of high-quality regulated assets remains strong. We remain focused on strengthening our balance sheet, executing on our well-established strategy of investing to deliver increasingly clean and reliable energy to our customers, while always considering the impact of cost on customers. And by doing that, we're also delivering consistent, reliable growth in earnings and cash flow for our shareholders. And with that, I'll turn it over to Greg to take you through our financial results.