Emera Inc (EMA) 2006 Q2 法說會逐字稿

Good afternoon, ladies and gentlemen, welcome to the Emera second quarter results conference call. Please be advised that this is conference is being recorded. I would now like to turn the meeting over to Ms. Judy Steele, Director Investor and External Relations. Please go ahead, Ms. Steele.

Good afternoon, everyone, and thank you for participating in our call today. Joining me from Emera are Chris Huskilson, President and Chief Executive Officer, Nancy Tower, Chief Financial Officer, Ralph Tedesco, President of Nova Scotia Power, and Greg Blunden, General Manager of Finance of Nova Scotia Power. Emera's second quarter earnings release financial statements and managements discussion and analysis were distributed earlier today via News Wire. These documents are also available on our website at www.emera.com. Today we'll have Chris begin with a corporate update. Nancy will then review the second quarter financial results in more detail.

We expect the presentation segment to last about 10 minutes after which we'll be happy to take questions from analysts and investors. Please note that all amounts are in Canadian dollars, with the exception of Bangor-Hydro Electric, where segment results are reported in U.S. dollars. I will take a moment to remind you that this conference call may contain forward-looking information which involves certain assumptions and known and unknown risks and uncertainties that may cause actual results to be materially different from those that are expressed or implied by the comments. Those risks include weather, commodity prices, interest rates, foreign exchange, regulatory requirements and general economic conditions. In addition, please note that the conference is being widely disseminated via live webcast. And with that I'll turn things over to Chris.

Thank you, Judy, and good afternoon, everyone. Emera's consolidated net earnings were $29 million CAD for the second quarter of 2006 compared to $19 million CAD for the same period in 2005. Quarterly basic earnings per share were $0.26 CAD compared to $0.18 CAD in '05. The quarterly earnings reflects a return to a more normal level of earnings at Nova Scotia Power, which was hard hit last year by rising fuel cost that were greater than what was provided for in electricity rates. Ralph and his team remained focused on advancing Nova Scotia Power by ensuring it consistent recovers its cost of service and provides predictable regulated earnings. Nancy will speak in detail about the financial results shortly. And I'll take a moment to talk about some recent developments that will help build our business over the next several years. In May we announced our intention to invest $350 million CAD in the Brunswick Pipeline, which will carry liquified natural gas from the Canaport L&D terminal in St. John to connect with the Maritimes & Northeast system at the U.S. border.

This is a solid investment for Emera, which will provide incremental earnings via AFUDC during construction next year and ultimately provide a positive change in our earnings level once it is up and running toward the end of 2008. Together with our partners, Duke Energy, we are currently focused on gaining National Energy Board approval. The hearing is scheduled for November. In advance of that we have been very actively engaged with stake holders in the area to ensure that we understand their concerns and that everyone understands our commitment to safety and the communities in which we operate, and the benefits that LNG will bring to St. John and to the region. Turning for a moment to our recent investment in Bear Swamp, as most of you are aware the FERC has approved a settlement agreement addressing problem in New England's generation capacity market. A forward capacity market will be implemented by ISO New England. There will be an interim transition mechanism, as well, which together with the forward capacity market will provide generators with the returns they need to enhance stability in that market. Clearly, this adds value to our Bear Swamp investment. With that I'll turn things over to Nancy for our financial update.

Thank you, Chris. And good afternoon, everyone. As Judy mentioned, our second quarter financial results were released earlier today and are on the Emera website. I'll take a few minutes to review them. Emera's consolidated net earnings were $29.2 million CAD in the second quarter of 2006, compared to 19.3 million CAD for the same period in 2005 and 29.8 million CAD for the second quarter of 2004. As Chris noted, our second quarter results reflect an improvement in earnings at Nova Scotia Power after a challenging 2005. NSPI's contribution to quarterly earnings was 24.3 million CAD in Q2 2006 compared to 13.7 million CAD in Q2 2005. This improvement is due to the combined effect of an electricity price increase earlier this year and higher proceeds from the resale of natural gas as the result of the renegotiation of NSPI's natural gas supply contract late in 2005. Sales and production volume decreases associated with the temporary shutdown of a large industrial customer and warmer weather had a minimal effect on electricity margin in the quarter.

Banger Hydro's U.S. dollar Q2 2006 net earnings were 2.4 million US compared to 1.9 million US in Q2 2005. This improvement is largely due to the capitalization of operating costs to the Northeast Reliability Interconnect project now that the construction phase is in full swing. The earnings contribution of Emera's other operations was 2.2 million CAD in Q2, 2006, compared to 3.2 million CAD in Q2, 2005. I will remind you that we recognized a $3 million CAD after tax gain in the second quarter last year associated with the refinement of prior year's foreign exchange estimates. So the quarterly performance in other operations is more favorable than it first appears. During the second quarter, Standard & Poor's credit rating agency lowered the corporate credit ratings of Emera and Nova Scotia Power from triple B plus with a negative outlook to triple B flat with a stable outlook. S&P cited concerns related to the recovery of fuel costs under the current regulatory framework in Nova Scotia and evolving fuel procurement strategy and upcoming challenges related to several proposed capital projects.

We are obviously disappointed by this development in light of the positive progress on fuel procurement and other regulatory developments as acknowledged in the recent rate decision. We remain disciplined in the deployment of capital in our existing business and in the execution of our growth strategy. This is evidenced by recent developments with the proposed air emissions capital spending at Nova Scotia Power. We recognize the significance of securing support from our stake holders before proceeding with the 170 million CAD of capital investment. As a result of this consultative process, we are conducting a further review and analysis of options with our stake holders based on their specific feedback this past quarter. Consolidated net cash provided by operating activities was 71.2 million CAD in Q2, 2006, compared to 65.9 million CAD in Q2, 2005. Emera's continued improvement in operating cash flow clearly highlights the progress and is restoring our financial position. That's it for my financial overview, thank you. And now we will be happy to take your questions.

[OPERATOR INSTRUCTIONS] The first question is from Sam Kanes. Please go ahead.

Good afternoon. Since you mentioned capitalization of a large project, you, of course, are starting down the pathway of the Brunswick Pipeline as well. Could you give some idea of your pathway of expectations on capitalizations, as possible, what you have capitalized to date on the Bangor project, maybe it was all second quarter, maybe it wasn't. And what you continue to expect to capitalize as the rest of the year unfolds.

Sam, it's Nancy. We are following rate-regulated accounting in the Brunswick Pipe.

Okay.

So there is capitalization of costs there, approximately 4 million CAD. And we will be accumulating AFUDC as well on that project.

4 million you are talking to, how much of that would have been regular overhead allocated to that project in the quarter?

Very, very little.

To date so far with Bangor, if the major difference was in fact give or take half a million for capitalization, is that the run rate then, half a million per quarter for the next few quarters?

Yes, probably.

Switching to a broader question, what if the recently sold [Allan Anadargoal NG terminal] gets right back on track again, how will that change, if anything, your plans going forward?

Well, I don't think it changes any of our existing or, it's Chris, Sam, any of our existing or announced plans at this stage. But certainly we're excited about the possibility of that terminal getting on stream. We think that that's very positive for the Canadian part of the pipeline. And we are very interested in making sure that the pipeline can serve that facility. And as we have said in the past, all of those facilities provide more gas for the region. They provide opportunity from those perspectives and we would think that more gas is good for the region in total. Even for the offshore in that it will reduce the cost of transporting gas. So those are all very positive things and we would look to continue to play a part as they go forward.

Any preliminary kind of capital cost expansion type estimates yet or is that simply premature.

Yes, I think it's too early yet. We're not sure what the new partners will be looking to do and how that will go forward. But we do think that it will be positive for the Canadian portion of the pipe.

Thanks, Chris. Nancy.

Thank you. The next question is from Linda Ezergailis, please go ahead.

Thanks. Further to Sam's questions on the Brunswick Pipelines. I know it's early days but Chris you mentioned that you had had some preliminary discussions with stake holders. What has been the initial reaction, are you seeing any sort of local opposition and, I guess, stepping back at the big picture, what would you perceive to be the biggest risk to the pipeline proceeding at this point.

I guess as we look at it, it's very important to us that the people in the St. John area understand just how important understanding their concerns are and also important it is to us that they understand just how safely the construction of this pipeline will be done and also how it will be operated. So we're doing a lot of work communicating with community people and with the leadership in the area on those issues. When we look at -- you asked the question of the biggest opposition, really the pipeline routing takes it through one of the parks, a park called Rockwood Park in the city and certainly there are some concerns about that, which we are working hard to address. So I would say that's, at this stage anyway, the largest concern that exists in the area. And as far as moving forward we're in a process with the NEB. As you know, we have signed contracts with Repsol and also with Duke Energy. And we'll let the process with the NEB work and we believe in that process and the hearings will happen in November and we'll see where we go.

Great. While we are on the subject of pipelines, can you just give us a little update on the FERC acceptance of the settlement for the Maritimes and Northeast Pipeline, what sort of returns and earnings can we expect going forward from that pipeline?

This is the settlement on the rate, the recent rate settlement?

Yes.

We had been accounting for that with the anticipation of the rate that they eventually ruled on. So there's really no effect to our business as a result of that. It is exactly what we thought and it is the rate that we were using in our accounting for both in Maritimes and Northeast and in our energy services business.

So what was driving the year-over-year decline in earnings to 1 million CAD from 1.5 million CAD last year, then?

There are a number of different things. One of the issues we have right now is the flows in the pipe coming out of sable have declined a bit, so what is happening is this year a compression project is being put in service. We believe once the compression project is in service then the flows on the pipe hole will go back to more normal levels and that will provide more consistency there. And as well, I think there were a couple of adjustments just in this past period.

Yes, the stronger Canadian dollar obviously played a part in that and I think there was some additional tax expense that we recognized against the partnership income.

Okay. So when this compression project comes into effect later this year is that a Q4 event or earlier?

I think it's going to happen during Q4, so it is really more of a Q1 next year kind of event. And then we would expect the pipeline to go back to more normal kind of earnings levels.

Great, thank you.

Thank you. The next question is from Karen Taylor, please go ahead.

Thanks. If we could come back to the clean air strategy, I just want to make sure I'm looking at the right stuff. It says, at least on your website, that you are going to use cleaner coal. So through coal procurement, at least to meet the initial deadlines set legislatively in the province on unclean air. Can you give me an indication of when you would expect to have -- I know this hearing is supposed to go, or at least the final report filed with the UARB on February 14th. When would you expect a decision from the board about whether or not to go ahead? And then if so, if you go ahead with the project, is that going to be then late 2007, 2008 or beyond that?

Karen, Ralph Tedesco. The board's process, as you point out, should lead to the hearings wrapping up mid-February. It would be our expectation that we would expect to see a decision, say, within roughly a month after that. That would allow, if indeed there were to be a capital investment, that would allow us to go through the procurement cycle such that we could have a machine or the so-called scrubber in place beginning 2011. So that's how we're thinking about that right now.

It was 13, I believe, 13 million CAD in the 2006 capital budget?

Yes.

I believe the approved number was something in the order of 156 million CAD. Should we be deducting that now or has that been spent, I guess? Did that include the 5 million CAD for the loan ox burner or was that in addition to?

I think that 16 CAD represents the loan ox burner plus the FGD. So the loan ox burner component of that is about 5 CAD, the offer goes away.

Right. So the remaining 11 CAD goes away?

That's correct.

Is there any news on Stora and whether or not they intend to reopen anytime soon.

For sure the mill is a large customer. And the UARB has set up a regulatory process with hearings in September.

Right.

And what we're currently expecting is that that will be a constructive discussion and review leading to an outcome that hopefully will satisfy all stake holders. From our perspective, I think the optimal solution is 600 folks go back to work in the straight.

Right.

And that we have electric rates that work for the mill, for our other customers, and for ourselves.

So this process then is the extra large customer process that we have seen referred to and it's then set up explicitly for Stora?

It's actually-- there are other companies that have this rate, but key, obviously, is Stora. There are other company, Bowater.

Yes.

Mercy Paper and then there's another, a third Company that has a very very minor component of their rate determined by this so-called [deleter] rate.

Okay.

But certainly the attention has been on Stora and it's rates.

And I'm assuming because this is talking about a determined revenue requirement that's already in place, that they are not going to ask the shareholder to help subsidize these rates. Is that right?

That would certainly be our expectation. We are a cost of service business.

Okay.

And I think that thought for sure is being reflected in the information request being submitted by a variety of parties where they are asking, everyone from the consumer advocate to others, are asking what would be the transfer of cost to other customers should the rate be changed unfavorably from our perspective.

Is there anyone suggesting that we should be subsidizing them?

To my eyes and ears, no

And just lastly want to confirm that the proposed federal tax reductions had no material effect on the quarterly result.

That's right, Karen. NSPI is, of course, on the cash taxes methodology. Bangor is a U.S. sub, so not affected. So it was very immaterial.

Okay. It would be then predominantly in the other?

Yes.

And then just lastly, should, I guess just a followup to Sam's question on the Bear Head facility. I'm assuming that when you talk about that being -- the restart of that project would be favorable to the Canadian part of the pipeline and I'm assuming you talking Maritimes and Northeast and not the potential expansion of Brunswick.

Yes, that's correct, Maritimes and Northeast. If you look at the effect of the existing announced terminal, it very much assures the future of the capacity being in the U.S. pipe.

Huh huff.

And this other facility will certainly allow the Canadian pipe to be full for a long time.

And just lastly with respect to the Brunswick facility and it interconnects, of course, with Maritimes Northeast in the US. And then P&GTS had requested, I believe, 150 million CAD a day of facilities in the U.S. Have they sort of fish or cut bait on that capacity and have you adjusted your application?

I don't think that issue is settled yet, Karen. I think it's still ongoing as part of the whole process.

Okay. Thank you very much.

Thank you. The next question is from Matthew Akman, please go ahead.

Thanks. I'm just wondering if you could speak for a minute on the determining factors that will go into your decision whether to file a rate case this year. So we're end of July now and I guess you'll have to make that decision over the next couple of months. Maybe it's for Chris or I'm not sure, but maybe just talk about the factors that go into that decision now.

Matthew, Ralph Tedesco. As the year is evolving we're continuing to assess whether or not we need to file for new rates. Some of the factors we would certainly consider would be how fuel costs are moving, what the effect of foreign exchange might be, as well as other factors such as tax deferrals.

Okay. Does the gas price reduction we have seen relative to last year have a significant effect on that decision as well?

It would be part of what we would evaluate within the context of our fuel costs.

Okay. So with oil prices have gone up and gas prices are down, I don't think either of those are really good for you guys. So on balance, what could offset that that could cause you not to file for a rate case.

A number of things. We would be looking at, for example, whether the mill in Port Hawkesbury operates would be a factor. We would be taking a look at where we think coal prices are going and as well, one of the other things we had the ability to do, which you point out, is the lower cost of natural gas is allowing us to displace oil by using gas where we're capable of fuel switching. So that actually is acting to helps us a little bit.

Just want to move on to one other area, on Bear Swamp, Chris, you mentioned the potential upside there from capacity payments or the transition payments. I wonder if you could just detail that a little bit or quantify that to any extent.

I would say, Matthew, it's a bit early to quantify it, but there is now a schedule of a plan, at least, as to how the capacity will be paid for. And I think what we're saying right now is that until the whole process is totally finished, there is an appeal going on right now, but until the process is totally finished, then quantifying it's a bit early, but you can get a sense from looking at the settlement as to what effect it may have.

I thought you guys were selling some of that into New York, though, instead of just New England. Or is that not happening?

We are still working to do that and that becomes a part of the issue. But again, all of those things are future issues for us at this point. It's not happening today so it's a future benefit.

Okay. Thanks, that's all I have.

Thank you.

Thank you, the next question is from Bob Hastings. Please go ahead.

Yes, just a couple of clarifications, quickly if I could. The Stora Enso, did not they just call back a lot of people to look to starting up that plant and is that a positive sign that they are, despite what they may be saying publicly, that they might be getting closer to a restart?

Bob, Ralph Tedesco. I really have no way of judging what Stora has in mind, other than what I read in the newspaper. And I think there have been reports that they called back, I think, something between 50 and 70 folks to potentially look at what they need to do, but that's all I know. It's only what I have read in the paper.

Okay, thank you. And on the tax question, you had not much of a benefit from the federal tax rate change, but can you maybe give us an idea the tax rate going forward both at NSPI and the other category.

Bob, about a 30 to 35% tax rate in Nova Scotia Power is what you should be using. Probably in the other category it becomes difficult because we have equity partnership earnings from the pipeline reported after tax, and there's foreign exchange adjustments and so on, so that's a difficult one to pinpoint but it is quite small. But I would say a 30 to 35% in Nova Scotia Power is probably appropriate.

Okay. And the Maritimes and Northeast, some comments were made there about the earnings were low, get better with compression, so should we assume that the second quarter earnings level, equity earnings level should be used for the next two quarters and then we go back to sort of a 6 million annualized rate of earnings?

I think that's the neighborhood, Bob.

Okay, thank you. And then spending on the transmission line to date, do you have that number?

The total spend on the NRI? I can get it for you.

Thank you. And that would be all of my questions.

Thanks, Bob.

So you can get back to me at-- whenever you can find the numbers.

We'll get it or we'll call you back.

Thank you very much.

Thank you. The next question is from Maureen Howell, please go ahead.

Thanks very much. With respect to the fuel cost at NSPI, I can understand why it decreased in aggregate with Stora Enso still being down, but there's quite a drop in the per megawatts cost of fuel and I'm wondering if you can just give us some color there.

Sure, Maureen, there are -- the primary factor is that we're realizing better gas margins on the resale of gas into the New England market.

Okay. And I guess I got the impression just from earlier comments that you were replacing oil with gas, but is that is that part of the improvement as well?

To an extent it is. So for instance when the price of gas makes it favorable against oil, there have generally been two things happening. One we saved because we've switched out gas for oil and two, the oil that we had procured is worth more in the market today. So those also worked to favorably increase or reduce our fuel costs.

And what about your cost of coal on a year-over-year basis. What are you seeing there?

A year-over-year, so '05 versus '06.

Yes and specifically I guess I'm talking about in the quarter, if you can comment on that?

Certainly the price of coal is higher '06 versus '05. I don't have a precise number in front of me.

Okay. You mentioned, or I think maybe it was Nancy mentioned in her opening mark remarks that the margin wasn't really impacted during the quarter by Stora Enso being down, but when we look at the revenue, the revenues, I guess, flat, but there does seem to be quite a margin pickup and, again I guess, this is because of the reduction in the fuel cost?

The short answer is yes. The other thing I would say with regard to the mill being off, is there are two factors at play, one is we have had unfavorable weather as a slightly unfavorable, and then we have a slightly favorable with the mill being off, the net result is a slight pick up.

Pick up in?

Margin.

In margin.

Maureen, I would say the biggest factor is really the resale of natural gas.

Okay.

In the margin.

Okay. Moving on to Bangor, in the remarks in the MBNA it talks about Bangor being hit a bit by warmer weather, I think, to the tune of $600,000 US, but I don't really see it. I guess I do see some reduction in residential and commercial, but there's quite a pick up in industrial revenue. In fact it's about 600,000 US. So I'm wondering what is going on there.

So I think there is some change in sales mix. There's some decrease due to warmer weather. There's some increase due to the overall average megawatt hour revenue has gone up, so I think there's a number of factors at play.

Okay. So the rate has gone up, Nancy, or is it the mix? Again I'm looking Q2 over Q2.

Q2 over Q2, the mix has changed.

Okay.

For sure, and so there's a decrease and of course a decrease caused by the weather and then the mix has changed.

And Maureen there's certainly not a lot of margin on those industrial sales, that's for sure.

Okay. Okay. Let's see, just coming back with respect to the Bear Swamp and the transition payments. I must have missed it, Chris, when are those supposed to start?

The very first transition starts in December of '06.

Okay.

And then it moves on to a pattern of changing every June after that. So there's a ramp-up to the normalized value through that period up to 2010.

Okay. And one just last clarification with respect to the Maritimes and Northeast and you talked about this compression, I know Bob went over it, by then I got confused. I thought you would be up to a normal run rate in Q1 2007. Is that what you are saying?

Yes, that's correct.

Okay. Thanks very much.

Thank you. The next question is from Res Silman, please go ahead.

Thanks very much. I just wanted to followup with respect to a question on the downgrade by S&P. You mentioned in the quarterly that there could be some implications. I know that you are still investment grade, but I was wondering if you had suffered any of those implication to date?.

We certainly, to the extent that we are doing business with others and others are giving us credit on that side, we have had some decrease in that. So that has impacted us on the energy services side. On the long-term-- we have had some request for posted margins and those sorts of things. It hasn't been significant. Certainly over the longer term, though, when we begin to refinance our long-term debt, we're looking at new fuel contacts, et cetera, we are expecting to see some effect of the downgrade in those.

Okay.

It could be on the long-term debt side, it could be terms as well as rate.

And, Res, from the Nova Scotia Power perspective, we're seeing some margin calls, if you will, it's been suggested on the fuel side as well.

When you say margin calls, could you just clarify.

Counter parties are looking for posted margins.

I got you, okay.

Yes.

Just looking at the timing of the press release, though, it was very close to the announcement of the investment in the Brunswick pipeline. Was S&P at the time aware of that investment and what were their thoughts on that? I would have thought that they are [INAUDIBLE] the revenue plays from Emera away from, say, Nova Scotia Power, it may have been a positive, in the view of S&P.

So I can't speak for S&P and I think others can read what they have said, but certainly they were aware of the investment in the Brunswick Pipe and I could characterize their initial reaction when we told them as positive.

Okay, fair enough. Along the same lines as that thought process, I guess, with diversifying the revenue base, [INAUDIBLE] Consolidated has announced that they are going to be income trusting, I guess, their Ontario hydro assets and the rumor seems to be that Brookfield Asset Management is a contender for possibly bidding for these assets. And I thought given your history, working together on Bangor, if you were to be approached by Brookfield you might consider making an investment alongside them in some hydro assets in Ontario.

I guess what I would say is that we're always looking for new opportunities and we have been working very well with Brookfield over the past year or so, and so that's something that would always be open, but I can't go any further than that.

Thank you very much.

Thank you, the next question is from Andrew Kuske, please go ahead.

First question, if you could just update your fuel hedging program at NSPI for the next few years.

Sure, Andrew. For 2007 we're currently about 73% hedged. For 2008, about 42%. For 2009, about 33%.

33% for 2009?

That's correct.

Could you give a breakdown by fuel category? Is that possible?

I think I can. For '07, we would be about 72% hedged in solid fuel. And I'll solid fuel for '08 would be 41% and solid fuel for '09, 28%. For fuel oil, '07 we're about 54%. For '08 about 15%, for '09 we're open right now. And in terms of our natural gas for '07, about 97%, and about 33% in '08, about 33% in '09. And then some miscellaneous stuff like transportation costs and those kinds of things.

That's great. What are you seeing just in the pet coke market? What kind of firmness of prices are you seeing at this point in time?

I think pet coke right now I would describe as up slightly, and some of that may be nervousness around hurricane season.

Okay. And then just a couple of bigger broader questions. If we assume that Stora ramps up their operations and then makes a commitment to actually operate for a number of years, do you see that as potentially sparking some new generation build within your rate base for NSPI?

I'm sorry, if you could try that one more time.

If we assume that Stora comes back and they operate at full capacity, and then they make a commitment to essentially do that for a number of years, would it be possible to envision some new generation capacity, in particular coal fired or pet/coke fired capacity so it's on the lower portion of the cost curve, being built within rate base from NSPI's perspective?

As we look at the planning horizon, with the assumption that you've just provided, with the mill coming back on at full level, we think we have got adequate capacity until about a 2012, 2014 timeframe. And as far as if we should find ourselves having to add capacity in that timeframe, just remind that the process for adding generation in the province is competitive and what folks would bid there would not be clear. We would likely seriously consider bidding as well.

Okay. The root of my question is essentially if we look in the last couple of quarters where Stora was off, you really see the drop in cost because you are not really resorting on the oil fire generation primarily so you have much lower cost generation. So do you see any sort of argument with the regulator in the future that you can wind up with much lower cost generation for everybody within Nova Scotia if you are to build a new regulated coal plant?

Of course for that sort of capacity would require a very significant capital investment and ultimately that capital investment, coupled with the fuel costs, would be the trade off.

One final, bigger, broader question, you are essentially a smaller regional utility and we're seeing some consolidation happening in a number of market areas. We did see [GasMet] really step into Vermont again. How do you see yourselves fitting in within the landscape as the M&A pace picks up?

Certainly that's something that we're looking very carefully at. We have recently been looking very carefully at many markets across North America and we are seeing opportunities. But at the end of the day the prices have to make sense. It has to be that we can make investments that will be accretive to our business, and right now a lot of assets that are transacting are transacting at very very high prices. We're going to be very disciplined about the way we look at things and we are going to make sure that we can make a reliable earnings and make it accretive for our shareholders.

Chris, when you say accretive to your business in what sense should we looking at accretion, accretion on earnings, accretion on returns, a combination of both?

If you add cash flow to that, then I would say all of those things.

Great. Thank you very much.

Thank you.

Thank you. [OPERATOR INSTRUCTIONS] The next question is from Bob Hastings. Please go ahead.

Hi, just one final one here. In your guidance you said you relooked at Nova Scotia Power's outlook and with Stora in there and revised it, but you still think you will earn the ROE range that you are allowed. Was there any other offsetting factors that have arisen other than Stora?

I think the factors really are Stora, warmer weather, increased gas margin, all of those things and all of that together, we're still confident we can earn our allowed rate of return and of course the new rates.

Yes and is that the same as saying that there's no change in your expectation? Or did you move down within the range?

No, I would say it is the same as -- yes, we weren't meaning to signal anything different, our expectation has not changed.

Okay, thank you very much.

Bob, I also have the answer to your question. The year-to-date spending on NRI is about 10 million CAD, I think it was 9.6 million U.S. year-to-date. Is that what you were looking for.

Yes. Thank you very much.

Thank you, the next question is from Maureen Howell, please go ahead.

Hi, my question is related to Bob's I guess. Can you give us a sense if Stora comes back on immediately, how that might change your view for the balance of the year. I understand that the margins are tight from Stora, tightest I guess during Q1 and Q4, so do you have sort of a Stora back Stora not back outlook.

The outlook that we have provided reflects Stora coming back on on August 1st.

So if Stora doesn't come back on, is it fair to say that there would be an improved outlook?

I think it is fair to say that, but again within our allowed earnings range.

That's great. Thank you so much.

Thank you. The next question from Karen Taylor, please go ahead.

Maureen just asked my question, so I have no more.

Okay. Thank you, Karen.

You are very welcome.

Thank you. There are no further questions registered at this time. I would now like to turn the meeting back over to Mr. Huskilson.

Thank you very much. And before I sign off I just want to thank everyone for your participation today and for your interest in Emera. Thank you very much and have a great weekend.

The conference has now ended. Please disconnect your lines at this time. Thank you for your participation and have a great day.