Algonquin Power & Utilities Corp (AQN) 2015 Q4 法說會逐字稿

Welcome to the Algonquin Power & Utilities Corp 2015 fourth-quarter and year-end results conference call.

(Operator Instructions)

I would now like to turn the conference over to Ian Robertson, Chief Executive Officer and President of Algonquin Power & Utilities Corp. Please go ahead, Mr. Robertson.

Good morning, everyone. Actually it's not Ian, it's Chris Jarratt, the Vice Chair of Algonquin Power & Utilities. Joining me on the call today will be Ian and Dave Bronicheski, our Chief Financial Officer.

For this earnings call for the first time, we also have supplemental webcast presentation that you can access from our webpage. To access the presentation, please go to our home page, Alqonguinpowerandutilites.com, where you'll find instructions on how to access the presentation. The presentation is also available for download from the website.

As usual, on this call, we will be providing information that relates to future events and expected financial positions, which should be considered forward looking. We will provide additional details at the end of the call, and I direct you to review our full disclosure on forward-looking information and non-GAAP financial measures, which are also available on our website. We will read the full disclaimer at the end of this call, so please stay on the line for that.

This morning, Ian will discuss our 2015 strategic achievements, and David is going to follow with a 2015 financial highlights, and then finally, Ian will wrap up with an outlook for 2016. We will open the line for questions at the end of the earnings presentation, and I would ask that you restrict your questions to two and then re-queue if you have additional questions.

With that, I'd like to turn things over to Ian to present some of our 2016 strategic achievements.

Thanks, Chris. I appreciate everyone taking the time today to join us for our Q4 earnings call.

I think we've -- on the slide you see in front of you, we've distilled down what's been an incredibly busy year for Algonquin Power & Utilities Corp in three key takeaways. The first one, is I'd hope you'd agree that our Q4 financial results demonstrate a strong finish to a somewhat transformative trailing 12 months for this organization.

David's going to go through the details and the specifics, but obviously some highlights, see significant increase in our adjusted EBITDA of close to 30%, a 25% increase in our net earnings. These solid operating profit increases were shown across both our generation and distribution businesses, which I think actually affirms the quality nature of our business portfolio.

The benefits of diversification have been certainly evident. Our generation business saw ups and downs over the course of the year. But with each of generating modality pulling its weight at different times and within the distribution business, I think we proved the value of episodically predictable rate cases in multiple jurisdictions. The performance across the business supported our goal of sustainable dividend growth, with an effective C-dollar denominated increase in our dividend of close to 30%.

The second point is we continued to enhance the diversification of our portfolio. The generation suite expanded with three diversified projects contributing revenue in 2015. Our distribution business continued to expand in scale with the addition of four utilities in three states. We also made headway within our transmission business, since the time of that group's formation back in 2014 with the announcement of an additional natural gas pipeline opportunity.

And the last point, I like to think that 2015 has reaffirmed this organization's ability to continue to expand its growth opportunity set. We're confident, we remain firmly on track in our pursuit of the CAD4 billion in growth investment opportunities we have laid out for you at our Investor Day last December. You can see on the slide there some of those specific initiatives.

Now, let's take a look at some of the 2015 achievements and review the near-term growth opportunities, each which we believe is strongly aligned with the strategic goals and vision that we've established for Algonquin. Looking at the slide, you can see the number of checkmarks there, showing on our opportunity set, which I hope you agree confirms that 2015 was a busy year for this organization.

We have continued to push forward on the opportunities we've previously discussed. You might note that we were able to add to this list in 2015, with the Northeast Supply Pipeline, an additional natural gas pipeline joint venture with Kinder Morgan for our Pennsylvania to Wright, New York supply line.

Specifically, on the generation side of our business, we saw a total of a roughly 70 megawatts of new, renewable power-generating capacity coming from three projects contributing revenue in 2015. These projects operate under 20-year PPAs, which serves to increase our production average PPA duration.

As many of you may know, 2015 was a challenging year from a natural resource perspective, with El Nino affecting many independent power -- project owners. We are pleased that our fleet demonstrated the benefits of broad diversification, with strong results in the face of these naturally occurring fluctuations.

Adding these new projects to the 2016 fleet, and executing on the pipeline of near-term opportunities, we believe will continue to enhance the diversification of our generation portfolio. Greater geographic dispersion, broader modality span with more solar, multiple credit-worthy power off- takers, I think these are all important diversification metrics.

Now, turning to some of the 2015 achievements in the distribution utility group, one of the most important economic factors in the ownership of regulated utilities is the ability to manage capital investment, and then secure recovery on such investment through rates. This has been a clear focus for our distribution utility business.

You can see from the slide there that on a full run-rate basis, we achieved $29 million in revenue requirement increases interest across five of our franchise areas within Liberty Utilities. I think on a percentage basis, this represents a respectable 74% of our requested revenue increases or our ask. I think it is important to note that only approximately two-thirds of the impact of these achieved increases was actually felt in the Q4 2015 revenues, and I think that leaves material growth in revenues to arise in the context of our 2016 revenues.

Our efforts in this area, I believe reflect our continuing commitment to ensure that we, as close as possible, earn the authorized return on equity in all of our jurisdictions. We are seeing the benefit of diversification, as I mentioned earlier, in our regulated utility business through the prosecution of rate cases [from a] capital investment, which provides a nice, steady growth in utility revenues. I think this compares favorably to the all eggs in one basket, which would arise if we had a single, large utility in our portfolio.

2015 saw us continue the commitment to expand the scale of our regulated distribution utilities with the addition of New Hampshire Gas and Park Water to the Liberty Utilities Group. These utilities added more than 70,000 connections to our customer roster.

Obviously, our commitment to expanding the efficacy of scale of the regulated business is evident in our agreement to purchase the shares of the Empire District Electric Company announced in February of this year. I'll address that in detail in a few moments.

For those of you had an interest in our Company for a while, you'll be familiar with that march to 1 million utility customers journey, upon which we embarked in 2013. With closed acquisitions growing our customer base by 15% over 2015 numbers, and of course, the expectation of adding Empire to our family, passing this important milestone, I believe, is in sight.

And now that you've had a better sense of what kept us busy in 2015, David, why don't you take it over to discuss our financial results?

Thanks, Ian, and good morning, everybody. We're really pleased today to be reporting what certainly we believe to be spectacular results for Algonquin. On almost any metric, we are up over the previous year, whether it's utility customer count, growth in assets, electricity generation, EBITDA, FFO, net income, and EPS. Furthermore, the growth is impressive, whether one considers the impact of foreign exchange or not, and I'll get into that a little bit later.

Moving on to looking at our adjusted EBITDA, our adjusted EBITDA was up an impressive 30% year over year, with growth coming from strong performance from new facilities within our Generation group, which includes Saint-Damase, Morse Wind, and Bakersfield Solar. These facilities contributed to just over 20% of our EBITDA growth.

On the distribution side, rate cases contributed to about 22% of the year-over-year growth. And even without the effect of FX, our adjusted EBITDA was still up over 10% year over year, and our adjusted FFO was up over 15%.

Looking now at other key financial measures, our annual revenues surpassed CAD1 billion for the first time in our history, and showed an increase of just over 9%. Our Generation Business Group operating profit grew an impressive 21% over the year, and distributions group grew by 30 -- 35%, rather, year over year. And even removing the effects of foreign exchange, the distribution operating profit was up over 11%, and the -- or rather the Generation operating profit was up over 11%, and the distribution business group was up over 16%.

The growth experienced in 2015 was based on solid fundamentals in our underlying businesses, and we see no reason why this will not carry over into 2016. We achieved growth of 24% in our adjusted net earnings per share, which ended the year at CAD0.46, and our adjusted FFO ended the year at CAD1.15 per share.

And of course, as a bricks-and-mortars Company, our growth in operating income flows directly from investments in new and existing assets. Our total assets are up as well, as we continue to make prudent rate case, rate-based investments on the distribution side and build out new generating facilities on the generation side of our business. We ended the your total assets of just under CAD5 billion.

Moving on to our financings activities, while this growth does have to be paid for and in order to grow the business, we do need strong access to both the debt and equity capital markets, I'm pleased by the continued support that Algonquin receives from investors in both the debt and equity capital markets here in Canada and the US. Looking at our completed financings, we have been quite busy, especially in the last few months. We started 2015 with a successful private placement of CAD160 million worth of 30-year bonds in the US private placement market that carried an attractive coupon of 4.13%.

In December, we raised CAD150 million through a common share issuance. This equity is being invested in utility rate-based growth and new projects under development here in 2016. And most recently, I'm sure all of you have noticed that in connection with our announced acquisition of the Empire District Electric Company, we raised CAD1.15 billion in convertible unsecured subordinated debentures. These debentures are expected to convert to equity upon closing of the Empire acquisition in early 2017.

As a result of this very successful financing, we have raised all of the common equity requirements for the Empire acquisition. We can now turn our attention to the US private placement market for the debt related to the acquisition. We expect to be into the market in the US private placement market for the debt in late 2016.

So with that, I'll turn things back over to Ian.

Great, David.

And before we open the lines up for questions, I thought I'd provide a few thoughts and comments as to where management's efforts are going to be focused over the course of 2016. And while it may go without saying, I'm actually not going to let it going without saying, which is that first and foremost, we're going to continue to maintain our unwavering commitment conducting all of our operations in a safe and environmentally responsible manner.

With that, you can see on the slide that the broad areas of focus for us in 2016 are going to include delivering on our substantial capital program. We're going to be focused on continue to earn our authorized returns in our regulated distribution businesses. We're going to work closely with our new partners at Empire to facilitate the approval of our acquisition by their shareholders and the state and federal regulators.

And lastly, we're going to keep our boots on the ground through our continued focus on expanding our generating business portfolio through development and the pursuit of accretive, attractive acquisition opportunities. And now I'd like to touch on a couple of these initiatives.

Specifically, with respect to our capital program, I believe that the program laid out at our investor morning held in December last year really shows the breadth of our business and the extent of our capabilities to fund our growth. The investments comprising our 2016 capital program are important components of the CAD4 billion plan we outlined at investor morning. Well, of course, we added CAD3.4 billion acquisition of Empire to that total simply for good measure.

But when we look at the list of uses of capital across our business, you can see that we have significant project investments within our Generation Group, plans to further grow our rate base within our distribution business. All told, we'll look to deploy approximately CAD1 billion in capital over 2016. You can see from the sources of capital pie chart on the right-hand side of the slide that we have a broad set of sources upon which we can draw to support this plan. Well, CAD1 billion is obviously a major capital program. Our relatively low payout ratio provides important cash from operations, our strong access to the debt markets allows accretive use of leverage, our core competency in raising and managing tax equity enhances our tax efficiency, and our CAD150 million common-share offering that we completed last fall are all factors that contribute to a prudent and manageable 2016 capital program.

I'm not going to presume to read you the slide. I think you can see that we have another strong set of rate cases coming forward for review in 2016, the largest of which is in Calpico, our California utility in the Tahoe area.

Much of the revenue requirement increase request for this rate case is related to new renewable generation assets conceived to meet the California renewable portfolio standard in two of our customers. I'll point out that the cost of these assets, or providing a return on the cost of these assets will generally be offset by reduced to power purchases from third parties. And I think this broad rate neutrality provides us confidence as we proceed through the rate case process.

Now, turning our attention to our agreement to acquire the shares of the Empire District Electric Company, which we view as an important step up in scale for Algonquin. As I mentioned, during the year -- the conference call, held to discuss the Empire transaction, we believe that Empire is an ideal fit for Algonquin and Liberty Utilities. It's one that's consistent with the themes we presented to the market at our investor morning.

Empire's diverse, high-quality regulated gas and water opportunities, blending those into Algonquin will result in significant growth in our enterprise value. We're excited about the growth available for both the distribution and generation sides of our business. Regulator-supported CapEx projects will add to our rate base.

We fully intend to leverage our power development capabilities around Empire's current fleet, and also new generation investment opportunities. We have now ramped up our efforts on the regulatory side and expect by the end of this time next week will have the first documentation regarding the acquisition in front of the regulators in each of the four states in which Empire operates, that being Missouri, Arkansas, Kansas, and Oklahoma.

We have also started to define the changes that will take place to our organizational structure within Liberty Utilities, with the formation of our Liberty Central regional business to be headquartered out of Joplin, Missouri. We continue to see strong alignment between our corporate cultures, which is already serving us well.

In terms of the timeline for the transaction we believe that that achieving all of the conditions precedent necessary for the successful close of Empire will take a significant effort by our respective teams. But I would like to point out that some of the jurisdictions -- while some of the jurisdictions are new and the scale of the transaction is unique, we have a good level of comfort with all the aspects involved in closing Empire. We are active in two of the major states in which Empire already operates, and have pursued regulatory approval applications for acquisitions in both of those states.

You can see from the slides that the next major milestone will be Empire's shareholder vote, which is expected to occur in late 2000 -- late Q2 or early Q3 this year. I'll say that we're in complete alignment with Brad Beecher, who's Empires CEO, and his management team in Joplin on the importance of community, strong relationships, and local support of the business. While we're not underestimating the size of the work in front of us, we are confident that the process for obtaining all approvals will be completed within approximately 12 months, with the final transaction closing expected in Q1 2017.

And finally, I'd like to end with a quick snapshot of the opportunity growth set we have in front of us within the Generation Business Group. You'll notice that we've got a few things to get done here in 2016, including commissioning of our 200 megawatt Odell Wind Project in Minnesota, which we're looking at the end of Q2 of this year and our 150 megawatt Deerfield Wind Project in Michigan, which we're looking for commissioning close to the end of 2016.

You can see from the bottom of the slide we've got over 450 megawatts in construction; the majority of that capacity will reach COD in 2016. These facilities are supported by long-term PPAs, which will continue to satisfy our objective of delivering predictable earnings and cash flows and the continued growth of our dividend, which we appreciate is important to all of our shareholders.

And with that, operator, I'd like to open up for questions.

(Operator Instructions)

Nelson Ng, RBC Capital Markets.

Thanks. Good morning, everyone.

Hey, Nelson.

I have a quick question on the distribution side. Could you remind me whether volume risk was had a negative impact or not. I was just wondering whether the warm Q4 weather had any negative impact on EBITDA. I know a lot of your utilities, it's -- the volume is flow-through, but I wasn't sure whether there are any remaining utilities with the --

Yes. There are utilities that, we'll call it -- it's called volumetric decoupling, is not present in all of our utilities. Specifically, New Hampshire would be the area that would have the greatest volumetric exposure.

Decoupling takes a number of different forms. Obviously, in California, it's absolute and, without question, decoupled. But in places like Missouri, which, while you're technically wearing the volumetric risk, they tend to split the rates between fixed and variable rates, with the variable rates intending to represent your incremental costs of delivering that gas, which obviously helps insulate you from the volatility in revenues.

I think, overall, Nelson, certainly, we suffered. Everyone who was in the business of supplying heating fuel in Q4 2015 suffered. But I'd like to think that this is where you're really seeing the diversification benefits of the portfolio, that we don't have all of our eggs in one volumetric basket, if you will.

And so if you just look at the revenues and the EBITDA, or business group profits across the distribution group, you can see that while it might've been a little bit down, in fact, in some respects we picked it up with the generation group and isn't that how diversification is supposed to work?

So and the last thing I'll point out, Nelson, is that we are actually optimistic that the states in which we don't enjoy volumetric decoupling, there are initiatives underway, both frankly, in New Hampshire and Missouri, to attempt to move to a more decoupled rate-structured regulatory environment. And obviously, we're champions in cheering those initiatives on. I'm not sure we have a lot of stroke there, but certainly something that we're being very supportive of.

I see. Okay. And then just moving onto the generation side, could you comment on the results from the Ontario LRP? I think --

Thanks for bringing that up, Nelson. We lost.

Just rubbing salt on the wound.

No. Actually, it's -- I'm sorry, finish the question and then I'll give you the answer.

Sure. So I was just wondering what you thought were the reasons why you guys weren't successful? Was it price? Was it lack of -- maybe was it lack of First Nation involvement? And like is it too early to say what you'll do differently next time?

Okay. Well, the good news is, I think on price, we were right in the hunt. Our cost of capital is as competitive as anyone's, and I think we formulated our proposals in an effective manner to capitalize on that cost of capital.

We lost, to be frank, because of the points in the ratings system, and you've touched on them. There's Aboriginal, or First Nation's involvement, and there is involvement of municipal support. And for better or for worse, we were unable to garner some of the municipal support. It's a tough environment, but I think -- I think our thought is as we looked across the portfolio, opportunities that we submitted, that it really came down to the point.

I think the opportunity going forward is obviously we'll maintain those sites. We'll continue the outreach program to those, to the constituents on the ground, be it First Nations or municipal entities, with the hope that next time around that those sites will garner the requisite support.

I will say that while we're obviously disappointed, you never like to lose anything, and me more than anyone, I will say that the organization has in front of it a fantastic portfolio of growth opportunities. And while it would be nice to add some more stuff in our own backyard, we're certainly not wanting for opportunities to accretively grow the business. And so we're going to keep our stick in the ice, to use a Canadian simile here, for the next time around.

Great. Thanks, Ian. I'll get back in the queue.

Thanks, Nelson.

Rupert Merer, National Bank Financial.

Good morning, everyone. Solid quarter.

Good morning, Rupert.

Looking at your regulated utility business, you brought a few positive rate-case decisions recently and more to come, by the sound of it. With that, where do you put your trailing 12-month ROE and where do you think you'll get to in 2016?

Well, clearly, the real challenge for any regulated business is to manage its operations, capital investment, the timing of its rate cases, so that you basically earn the authorized ROE. And our objective is obviously to minimize any gap that we have in achieving that. And there are jurisdictions that are better than others that support us doing that because of the nature of the regulatory environment.

Georgia, as an example, has a very progressive rate environment or regulatory environment that supports the utilities earnings their authorized ROEs. There are other jurisdictions that it's more difficult, jurisdictions that have significant regulatory lag. And that all comes down to managing the timing of the capital, the prosecution of the rate cases.

And I think we've been able to say that in those jurisdictions, and some of them, we could have had 150- to 200-basis-point gap between our, we'll call it achieved ROE at our authorized ROE. We've been able to close that to be sub 100. And so -- and there are other jurisdictions where we're [being long], to be frank. There's probably some jurisdictions where we've been slight over earners.

As a whole, Rupert, I think I'd offer up that our business probably tends to be on average between 50 to 75 basis points below the authorized ROE, because of some of these inherent regulatory environmental issues. Again, I will point out that following Nelson's question, there are initiatives underway to reduce that in Missouri, so very specific initiatives to help deal with regulatory lag. They are -- we've been effective at deploying mechanisms in Arizona and New Hampshire.

So I think it's something that we're focused on and something that we've made great progress over the past few years as we continue to build on our business. I think of this as tuning the engine. We've got the engine of Liberty Utilities firing on all cylinders over the past years and now we're in the process of tuning it, and I think the results are serving us well.

Okay. Great. Very comprehensive. Thanks. And then secondly, following up on Nelson's question about growth in the generation business, so you had some disappointment in Ontario maybe, but you've got quite an active pipeline. And of course we now have the renewal of the ITC and PTC.

And we're hearing that we could see record growth in the US in a number of areas, wind and solar this coming year. Do you expect you'll participate in that growth? Are you very well positioned in the US for growth this year?

Yes. I will say that finding -- as you've obviously followed us for a while, we put Odell on the Board as our 2015 project and we put Deerfield on the Board as our 2016 project. And we have every confidence that our 2017 and 2018 projects will bubble to the surface soon as well in the US.

I will say that we're not done with Canada, that there is activity going on in Saskatchewan. You may be aware that there's an RFU/RFP process that's likely to be unfolded within the next 12 months. We are active in that process. I might say that immodestly, we're one of the largest IPP in the province of Saskatchewan, and I think that's given us an, A, a great heads-up on how the process works and in the province and we've got a couple of really competitive sites.

So we -- our optimism has not been dimmed at all, Rupert, as a result of the Ontario LRP. As I mentioned to Nelson, really that was a points issue. I don't -- I think that we remain highly confident in our ability to be competitive in these jurisdictions so.

Thank you, all. I'll get back in the queue.

Thanks, Rupert.

Paul Lechem, CIBC.

Thanks. Good morning.

Good morning, Paul.

Maybe just following on, on your last comments, Ian. When I look at the business, you're not lacking for opportunities at this point in time. And my question is, is this a point where you actually pull back a little bit on your business development activities to just try and put the power-generation projects into the service, to complete Empire? Just like when do you weigh or how do you weigh-off the -- going after the opportunities rather than just focusing on execution on the existing opportunity set?

Well, let me paraphrase your question. When is enough, enough? And -- but I will point out that all of these initiatives are really long-term undertakings. The gestation of a power project is much -- is years in length, and so I think it's one of the things that you have to keep looking for opportunities in the hopper, I think we have to -- and continuing to move things ahead and prosecute them, because I have no idea whether all the things that we have in front of us are going to come to fruition or not. Obviously, we're confident and we work on these things, but things happen. And so, consequently, I think you have to continue to keep the hopper full.

The good news is that through segregation of responsibilities within our organization, it's not like the people who are responsible for executing and building Odell and Deerfield on time and on budget are involved in the prospecting for those next opportunities. And so we're not threatening getting those projects done in a responsible way, by continuing to be on the hunt for our 2018 and 2019 PTC projects. It's a different group of people.

That -- it's -- that thesis is nowhere more evident than in the utility and M&A sector. You know it takes a long time to develop a comfort level with a particular M&A candidate, to confirm that it's strategically aligned, to build those relationships, to -- it -- those are for sure years in length.

And so, obviously, our dance card is pretty full with Empire this year, and obviously, we've committed a lot of our transition team to that initiative. But I will say that this is a core competency at this organization; we've done 10 acquisitions, and we will continue to keep that group busy by having the next opportunity ready for them as they come out the other end of the Empire process.

And then, lastly, obviously, we have the third leg of our stool which is our transmission business. And again, a completely separate business development team, looking at opportunities that are completely separate from where Jeff Norman and the generation group are focused, or Ed Pamatat and the Distribution Group are focused.

And so it's something --it's just an ongoing process, Paul, that it would be imprudent for us to say, we're just not looking for anything anymore. I think the real question will come as efforts -- as opportunities bubble to the surface. How do we feel about the capacity of any of the particular groups at that time that would be called into question, the ability to finance it, the ability to prosecute transition, all those things. So there's my thought and thesis on when is enough, enough, Paul.

Okay. That's helpful, thank you. Just one other question for me. In the US, given the extension of the PTCs, (inaudible) [these are accelerating ITCs]. But also now, the delay or the stay in execution of the clean power plant. What are you seeing in terms of the renewable opportunities in the US? Is it -- are they on hold a little bit? Are you still seeing them go ahead? What's the lay of the land there right now?

Well, it's interesting, I don't want to say the renewal of the PTCs has actually taken some of the fever, fervor out of the market in terms of, I've got to get this project built. I've got to get this project built, which actually I think is constructive because it allows time to assess the opportunities. And so that junior developers, they're obviously an important source of opportunities for us, don't find themselves in a frantic pace for opportunities.

So maybe getting back to your earlier question which is, how do you think of your pace of growth? I think we like the fact that there's been a clear line of sight to the extension of those PTCs. And therefore, people can -- are pursuing things in a more measured way, so I think it's great.

I -- obviously there will be continued opportunities occasionally by the extension of the PTCs. But it's not like, gosh, you've got to get that project done and into construction before the end of 2016 because of the termination of the PTC. So I think it's bringing rationality to the market going forward, which is obviously something that we are supportive of.

Thanks very much.

Thanks, Paul.

Jeremy Rosenfield, Industrial Alliance.

Great. Thanks. Just a few questions.

You only get two, Jeremy. You know the rules.

Okay. I'll make sure that I link them with -- as follow-ons. In terms of the capital program for 2016, I just wanted to make sure that the Park Water number, are you excluding that from the distribution group rate-base investments, which you have listed as CAD270 million?

We're excluding the capital cost obviously, but we are including the first year's CapEx for the whole Park Water. Which in nice round numbers, is significant. As we had outlined when we brought this, one of the thesis is to provide capital for these utilities and it's close to USD30 million. So it's real money going into those.

So that CAD270 million is the Canadian equivalent of about $200 million of capital, which includes about CAD30 million for Park Water. So the balance is about $160 million spread across the balance of the fleet of regulated distribution utilities.

Perfect. That's exactly what I was looking for. And then, if you do talk -- you touched on the transmission opportunity and it looks like if I'm reading correctly that the investment opportunity associated with Kidder Morgan's project has increased since you outlined it initially and since Investor Day in December. Can you just talk about the development of the project and how that's advanced over the last couple of months?

Well, there's two projects, as you may be aware, two separate pipeline opportunities. And just make sure I understand your question. The very first one that we announced is something called Northeast Energy Direct Market pipeline; it's a pipeline that goes from Wright, New York to a place called Dracut, Massachusetts.

And that's about a CAD3 billion plus opportunity, and we have an opportunity to participate up to 10%. So that's about $300 million, if you want to keep maybe a little bit more of investment opportunity.

What we announced at our Investor Day last year in December of 2015 was an opportunity to participate in another Kidder Morgan pipeline that runs from, we'll call it mid-state Pennsylvania to Wright, New York. And so think of it as a, I won't call it a gathering system because it's a FERC-rate-related interstate pipeline. But it's a pipeline who's conceived to move a Utica shale gas to the Wright, New York distribution. And that project's about CAD1.8 billion in size and our opportunity to participate in that is 8%, could be a little bit more depending on a few factors.

But it's -- the growth of the -- that pipeline, that supply pipeline is something new. So I don't know if you're combining the two together to see that they've changed, but neither of the opportunities individual has changed particularly materially since announcement. And so if I've got your question wrong, Jeremy, I'll give you a by. You can restate that one.

No, I was just looking at the cost and I think if I -- I was trying to back out, from what you had outlined at Investor Day, it looked like it was about $470 million of combined potential investment, give or take. And now it looks at it is about $520 million combined, so I just wanted to make sure --

Well, and I don't know, when you say combined -- and I don't have the numbers that you're quoting specifically where you're quoting them from. But in our transmission group, we also have the 625, 650 intrastate electric transmission line in California. As I said, I don't know which exactly what you're looking at.

But let me just, suffice to say that neither -- none of the opportunities in the transmission group have materially changed in scope or scale since their announcement. And so happy to take it off-line, give me a shout and happy to give you -- to work through it with you.

That's good. I appreciate it. And just in terms of the final investment decision, it would still be around late 2016 timing, as I think you had outlined previously. Is that right?

Yes. Yes. Yes. And maybe the last thing just comes to mind, were you quoting Canadian or US dollars, because obviously the exchange rate would factor into that?

No. I was thinking US dollars because of --

Okay. All right.

A little bit higher than 600.

Okay. Give me a shout when you get a chance.

Okay. Thanks. Appreciate it.

Ben Pham, BMO Capital Markets.

Thanks. Good morning.

Hey, Ben.

A couple years ago you guys had a target of this march to 1 million. And you certainly met that ahead of time on the generation side, and it looks like you're on track on a utility side, but not so much. So are you -- can you confirm, are you still have that really in your maybe back pocket, broader strategy? Or is this, the utility mix too much of a bigger component of your business now that perhaps it's maybe slowed down a little bit on the utility side? It was asked a little bit earlier, but just checking again.

No. I think we all have to acknowledge that utility growth is pretty lumpy if you're adding customers. You add them through M&A primarily, obviously there is some organic growth, you add them through M&A.

And I think as we mentioned on the conference call, in respect of Empire, we're obviously, I won't say pleased, I'll make it -- it's an observation that our regulated utility mix is swinging to close to 70% with the addition of Empire.

But I think we still see the value of opportunities and the value of having non-regulated, contracted, long-term contracted generation in our business. I think you just look at the diversification we've been able to achieve over the course of 2015.

So I don't think you should think of our acquisition of Empire, or the snapshot in time impact that it might have on our business mix as somehow fundamentally changing our interest in the non-regulated contracted IPP space. And so we are continuing to focus on that, Ben, and I don't know if that responsive to your question.

That's very helpful. Thank you. And maybe also, and I don't want to have you guys' -- you have obviously done a good job in North America expanding your businesses. I know you talked about international stuff before but not as strongly.

So has any intensification of just looking out the side increased a little bit for you guys the last month or so? Are you thinking about doing that a little bit more, meeting officials or just s it just taking some trips outside? Or is that really something that could be on your radar screen for now?

It would be imprudent for us not to understand what's happening in markets outside of the North American -- outside of North America for us. And so we are obviously looking with interest at what's happening in Mexico. We're following Northlands' progress on their offshore wind. We want to understand those markets, and we understand the risk-adjusted returns that are available in those markets.

Having said -- and so consequently, you will hear anecdotally of us taking trips to these places to understand these markets. Having said that, I will say that we are pleased that the proposition that Algonquin is offering for its investors does not contemplate them having to make a paradigm shift from a risk perspective to start to think about currencies outside of the Canadian and C dollar and country risk and all the things that are inherent with making that step internationally.

I think to the extent that we've got, as you know, now over CAD7 billion worth of growth in front of us, it certainly is not a need to have, from our perspective, as we think about our growth pipeline. But we're definitely going to keep our eyes open, Ben. We are not myopic in terms of keeping just a focus on North America.

Okay. Thanks for your time.

Thanks, Ben.

(Operator Instructions)

John Mould, TD Securities.

Thanks. Good morning, guys.

Hey, John.

Good morning, John.

Most of my questions have been answered. So just one on Alberta. On your Q3 call, you mentioned you were taking a closer look at the province. Could you provide a bit of your update on your activities there?

Well, as you know, we have a small hydro facility in Alberta, so we are active in the market. I think it is a market under transition, is probably a fair way to characterize it. Having said that, we fundamentally believe in the inherent value of renewables in any mix going forward.

Our understanding is that one of the things that might be under consideration is an RFP for the renewable aspects of generation. Obviously, there's lots of thought and pressure being put on the government to consider whether they should be doing a PPA for the energy part of a power project. And that's creating, obviously lots of consternation.

So I think we're keeping our eyes open in the marketplace. We're right next door in Saskatchewan in a serious way, and so it definitely behooves us to understand what's going on. And to the extent that we want to make some missionary investments in that province, in terms of identifying sites that certainly something that's underway from our perspective.

But, man, there's lots of noise that needs to be sorted out and how this is going to work in Alberta for us to put it seriously on the list to say that's an area of focus.

Understood, okay. Thanks very much for the context. That's it for me.

Thanks, John.

This concludes the question-and-answer session. I would like to turn the conference back over to Mr. Robertson for any closing remarks.

Appreciate that. Just to wrap up, appreciate the continued support of our shareholders and stakeholders here, and thank everyone for joining our fourth-quarter call. And we are obviously going to keep everybody up to date and up to speed on the progress that we're making on our 2016 initiatives. And as always, please stay on the line for the riveting disclaimer from Amanda. Amanda, thanks.

Thanks, Ian. Certain written and oral statements contained in this call are forward-looking within the meaning of certain securities laws, and reflect the view of Algonquin Power & Utilities Corp with respect to future events, based upon assumptions relating to, among others, the performance of the Company's assets and the business, financial, and regulatory climate in which it operates. These forward-looking statements include, among others, statements with respect to the expected performance of the Company, its future plans, and its dividends to shareholders.

Since forward-looking statements relate to future events and conditions, by their very nature, they require us to make assumptions and involve inherent risks and uncertainty. We caution that although we believe our assumptions are reasonable in the circumstances, these risks and uncertainties give rise to the possibility of that our actual results may differ materially from the expectation set out in the forward-looking statements. Material risk factors include those presented in the Company's most recent annual financial results, its annual information form, and most recent quarterly management's discussion and analysis.

Given these risks, undue reliance should not be placed on these forward-looking statements. In addition, such statements are made based on information available and expectations as of the date of this call, and such expectations may change after this date. Algonquin reviews material forward-looking information it has presented not less frequently than on a quarterly basis. Algonquin is not obligated to, nor does it intend to update or revise any forward-looking statements, whether as a result of new information, future developments, or otherwise, except as required by law.

With respect to non-GAAP financial measures, the terms adjusted net earnings; adjusted earnings before interest, taxes, depreciation and amortization; adjusted EBITDA; adjusted funds from operations; per share cash provided by adjusted funds from operations; per care -- cash provided by operating activities; net energy sales; and net utility sales, collectively, the financial measures are used on this call and throughout the Company's financial disclosures. The financial measures are not recognized measures under generally accepted accounting principles, or GAAP.

There is no standardized measure of these financial measures. Consequently, Algonquin's method of calculating these measures may differ from methods used by other companies, and therefore, may not be comparable to similar measures presented by other companies. A calculation and analysis of the financial measures and a description of the use of non-GAAP financial measures can be found in the most recently published management discussion and analysis available on the Company's website and SEDAR.com.

Per-share cash provided by operating activities is not a substitute measure of performance for earning-per share. Amounts presented by per-share cash provided by operating activities do not represent amounts available for distribution to shareholders and should be considered in light of various charges and claims against Algonquin. Thank you for your time today.

This concludes today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.