Emera Inc (EMA) 2006 Q4 法說會逐字稿

Good afternoon, ladies and gentlemen. Welcome to the Emera fourth quarter results conference call. Please be advised, that this 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 and CEO of Nova Scotia Power; Greg Blunden, General Manager of Finance and Treasurer of Nova Scotia Power; Rob Bennett, President and Chief Operating Officer of Bangor Hydro; and [Heather Keeler Hirschman], Amera Controller.

Emera's year end earnings release, financial statements, and management's discussion and analysis were distributed earlier in the day via Newswire. These documents are also available on our website at www.emera.com. Today Chris will begin with a corporate update, Nancy will then review the fourth quarter financial results in more detail as well as provide an overview of the whole year financially. We expect the presentation segment to last about 15 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 this conference is being widely disseminated via live webcast. Now I will turn things over to Chris.

Thank you, Judy, and good afternoon, everyone. 2006 was a solid year for Emera. Consolidated earnings increased 4% to C$126 million compared to C$121 million in 2005. The improvement is actually more dramatic than it first appears, because in 2005 a portion of income and other taxes, which would have otherwise been expensed, were deferred, pending regulatory approval of new rates. Without that deferral, 2005 comparative earnings would have been C$17 million lower, or C$104 million. I'll leave the financial details for the year and for the quarter to Nancy and update you on some other developments.

In January, for the first time in our history, Nova Scotia Power successfully negotiated a settlement of its rate application. The settlement agreement was approved by the Utility and Review Board earlier this month. This is a positive and important development that sees our company working together with our stakeholders. The settlement provides for an average 3.8% increase in electricity prices. This increase is primarily to cover higher oil costs and to recover previously-deferred tax costs that have been paid but not included in rates. The increase is less than we had originally requested, so there will be some pressure on 2007 earnings. New rates are effective April 1, and we will be working hard to manage fuel and other costs to minimize the earnings impact, though, it's too early in the year to predict the outcome. Importantly, the settlement also advanced a key goal of Nova Scotia Power. Specifically, an agreement in implement a fuel adjustment mechanism for the utility.

Much of the time and expense of rate hearings involves debate over differing fuel price forecasts for the test year. In contrast, a fuel adjustment mechanism is a more effective means to ensure that customers pay only the actual price [Inaudible]. It also means the utility will recover its prudently incurred fuel costs. Therefore, it is more transparent and efficient -- a more transparent and efficient form of regulatory oversight. Fuel adjustment mechanisms are common throughout North America and operate today in Prince Edward island and Newfoundland.

With the fuel adjustment mechanism the Utility and Review Board will continue to closely review NSPI's fuel purchases. As a result, NSPI has a powerful incentive to manage costs and purchase fuel consistently with the fuel portfolio strategy endorsed by the regulators and customers in recent years. Hearings to determine the structure of a FAM will begin June 18. Once implemented, we believe a FAN will improve the predictability of Nova Scotia Power's annual earnings and cash flow.

On the growth side, early in 2007 Emera acquired a 19% interest in St. Lucia Electricity Services Limited, or LucElec. Our decision to invest in the Caribbean was strategically driven. The competition for North American assets is extremely intense at the moment with an influx of financial players driving valuations that we believe are excessive. Accordingly, we are looking for other opportunities for Emera to advance its growth agenda in the medium term. The Caribbean market is a reasonable extension for any North American-based business and we believe the opportunity the worth investigating further. The modest investment in LucElec gives us a low-risk vehicle to do that. We've identified key criteria that need to be in place for us to invest additional capital. We will be looking hard at the region and learning more through the assessment process to determine whether we want to play a larger role in that market.

Turning to our two greenfield projects, National Energy Board hearings were held in Q4 with regards to the Brunswick Pipeline. We believe the hearings went well and we are awaiting the NAB's decision, which is expected by midyear. This is a solid investment for Emera that will provide incremental earnings via AFUDC during construction later this year and ultimately provide a positive step change in our earnings level once it is up and running towards the end of 2008. With regard to the second project, construction of the northeast reliability interconnect is in high gear with full completion on target for the end of 2007. With that I will turn things over to Nancy for the detailed financial information.

Thank you, Chris, and good afternoon, everyone. As Judy mentioned, our fourth quarter and annual financial results were released earlier today and are on the Emera website. I'll take a few minutes to review them, beginning with the results for the quarter. Emera's consolidated net earnings were C$33.5 million in the fourth quarter of 2006 compared to C$37.7 million for the same period in 2005. Quarterly earnings per share were C$0.30 compared to C$0.34 in 2005. Earnings were lower quarter over quarter, largely because 2005 amounts included a C$15 million after-tax favorable adjustment to fuel expense. This adjustment resulted from changes in NSPI's natural gas supply pricing, all of which was recorded in the fourth quarter of 2005. This was partially offset by higher revenues in Q4, 2006, due to a price increase earlier in the year.

Excluding the 2005 adjustment I just noted, NSPI's fuel costs were lower quarter over quarter, primarily because of reduced load brought on by warmer weather and temporarily reduced sales to a major customer, enabling the utility to reduce its high marginal cost generation. Natural gas sales margin also increased in the quarter. NSPI's pension, depreciation, and income tax costs increased slightly in Q4 2006 compared to the prior year.

Finally, I'll highlight the Company recorded more than the minimum regulatory amortization in Q4, bringing the total expense for the year to C$8.6 million compared to C$6.2 million in 2005. Bangor Hydro's combination to Q4 2006 net earnings was $5.3 million compared to $4 million in 2005. Lower operating expenses reflecting the capitalization of costs associated with the northeast reliability interconnect transmission project more than offset the affects of a stronger Canadian dollar.

Emera's other operations incurred a loss of C$1.7 million before interest and taxes in Q4 2006 compared to a loss of C$0.3 million in Q4 2005. 2005 amounts include C$5.2 million of foreign exchange gains, which did not recur in 2006. In addition, softer market conditions reduced natural gas marketing opportunities and also decreased electricity margins at Bear Swamp.

As Chris noted, for the whole of 2006, Emera's consolidated earnings were C$125.8 million compared to C$121.2 million for 2005. Nova Scotia Power reestablished its earnings level in 2006 after a weak 2005. The improvement in NSPI's finances was due to the combined affect of the rate increase early in the year, sales and production decreases due to the temporary shutdown of a large industrial customer and warmer weather, and increased proceeds from the sale of natural gas.

Bangor Hydro's contribution to earnings was $16.8 million in 2006 compared to $14.9 million in the prior year. Because as I mentioned earlier in connection with the Q4 results, lower operating expenses due to the capitalization of costs related to the NRI more than offset the affects of the strong Canadian dollar. On a full-year basis, contributions from other operations provided net earnings of C$4.7 million in 2006 compared with C$15.1 million in 2005. Again, as I noted previously, energy market conditions were softer and 2005 amounts include C$5.2 million nonrecurring pretax and after-tax foreign exchange gains. Consolidated net cash provided by operations improved significantly to C$345.6 million for the year ended December 31, 2006, compared to C$164.3 million in 2005, reflecting the improvements in earnings and working capital.

Cash provided by operating activities increased to C$106.7 million in the fourth quarter of 2006 compared to cash used in operating activities of C$36.3 million for the same period in 2005. In January, Emera's Board of Directors decided not to proceed with our customary C$0.01 increase in the annual dividend. Nonetheless, I want to ensure investor that we are committed to our dividend. We know that is a key reason that people entrust their capital to us. Our objective is to grow our earnings so that we can provide a more significant and sustainable annual increase. That's it for my financial review. Thank you and we'll now be happy to take your questions.

Thank you. [OPERATOR INSTRUCTIONS] Our first question is from Sam Caines from Scotia Capital.

I'm curious about this petroleum coke issue, maybe it's a one-time, maybe it isn't, and how that interplayed through Q4, the C$8.9 million. Was it always in the quarter? Was it just like a three week interruption? Can you give us some more color on that?

Sure, Sam. Ralph Tedesco. The moneys are associated with an insurance payment and the event that it was associated with was a hurricane in the Gulf, be the same hurricane that affected New Orleans and took out production of petroleum coke facilities. We were able to recover on our insurance policy.

So that related to a shortfall in the previous year?

That's correct, in '05.

Oh, okay. I guess, just for one follow-up, AFUDC, of course, you're getting a multiple AFUDC buckets, one is reliability interconnect, one is a year, nine months left to go. Curious what your estimate might be for that and what you might be thinking on AFUDC for the Brunswick Pipeline if you get that green light to go ahead for this year to try to get us to guess earnings as close as we can?

Well, Sam, sorry. On Brunswick Pipeline, you're looking for the earnings?

What your best guess is on AFUDC cumulative or capitalized costs, more precisely, I guess, and what you have left to expect to capitalize on Bangor, that of course is rolling through your P&L in the short-term?

So there's about -- we capitalized about $5 million in overheads in Bangor just speaking to the NRI first, in 2005, and it would be about the same in -- sorry, in 2006, and it would be about the same in 2007.

Thank you. And on what's your best guess so far on Brunswick?

Going to get that for you, we'll get the number for Brunswick.

I'll get back in the queue.

Thank you. Our next question is from Bob Hastings from Canaccord. Please go ahead.

Thank you. The return that you actually earned in 2006 at Nova Scotia Power. Looks to me excluding that one item that Sam just referred to about a 9.3% return, would that be right? So the bottom of your range?

Hi, Bob, it's Greg Blunden. Excluding it, yes, and including it would be towards the top end of the range.

Right, okay. And when we look out to this year, you mention two things, one in your write-up that the range is still the same at 9.3 to 9.8, but it sounded like from what you got, you didn't expect to be there. Can you give us some guidance -- or do you expect to be somewhere in that range based on what you know now, or do you have the rates set below that?

I think at this point in the year, it's too early to tell. As Chris mentioned in his opening remarks, there certainly is some pressure. On the other hand, it's also very early in the year and we're going to be managing towards trying to achieve within our range.

Okay. Just to be clear, when you say pressure, are you referring from the base line earnings of including that C$5.5 million after-tax from the insurance or prior to that?

I'm actually just speaking in terms of where our earnings are set for '07.

Okay. And the deferral account, the FAM adjustment, or the FAM account that's going to be set up, I think I heard you it will be starting on June 18?

Well, actually, there's a process that's been established by our regulator, and it's beginning literally next week. There will be in February and March a series of three meetings with our stakeholders leading up to a hearing to establish a FAM on June 18. Following that hearing, then the Board would render a decision.

Does that mean that any changes from expectations between January 1 and that date would be just going -- be to the shareholder's account?

Not following the question, sorry?

I'm sorry. Is the account retroactive? Is the FAM retroactive to the beginning of the year, and if not, any sudden changes in fuel costs would be for the account of the shareholders?

No, it would not be retroactive. I think by -- the regulator has indicated that such retroactivity in a similar sort of event would not apply and we would not expect retroactivity either.

How are the first six weeks shaping up?

Well, the first six weeks, so far, I think we've had a good first six weeks.

Okay. I'll get back in the queue. Thank you very much.

Thank you. Our next question is from Karen Taylor, BMO Capital Markets. Please go ahead.

Thanks. I just want to confirm that the discussion around the FAM is for an effective date of Jan 1, '08. It wouldn't reply in any event to anything relating to 2007; is that correct?

Well, those are some of the details that will be discussed. We'll certainly be working towards that goal. The agreement that we've reached with the parties, it might be helpful to others on the line, is that the close signatories to the settlement agreement have agreed in principal that the regulators should adopt the fuel adjustment mechanism, and further, the parties have requested the UARB to establish a process that commences as soon as possible to put one in place.

I guess what I'm trying to get to is Bob's question about the retroactivity. My understanding from reading the settlement and the press release and everything was that it was going to be implemented for a further test year, et al. It wasn't going to apply to the test year that is now settled, is that fair?

I think that's probably fair.

That's correct, Karen.

Thanks. Before I get to -- just can I ask a couple of real cleanup questions. On Bear Swamp, the EBIT went down for the year by C$2.8 million, can you talk, or split that between how much of it was related to a mark to market and how much was related to margin compression?

Karen, it's Nancy. Approximately C$2 million of it is related to the mark to market that we talked about, and the balance would be related to the margins.

Okay, so about $0.8 million. The C$2.4 million after-tax contribution in other, what is that?

Sorry.

In the other segments, there's a C$2.4, when you're looking at the delta year-over-year performance. I'm assuming that it's C$2.4 million after-tax, if not, you can tell me what it is and what the after-tax would be.

Oh, sorry. Where we explain that the--.

The variance in other.

You're looking at what exactly that is made up of?

Right.

I'll have to get back to you on that one.

Okay. In terms of the NRI, can you just tell me where the final capital cost of that line is sitting? You spent C$62 million in '06, how much is left to spend in '07, and if the capital cost increase, is [Inaudible] for the upper end of the range was 100 to $110 million U.S.

The number is around C$120, $110 U.S.

So that hasn't changed?

It hasn't changed at this point. And how much have you spent to date. I don't recall what the 2005 expenditures were for the line? We've spent C$62 to date.

To date. And the remainder will be in '07, then?

Yes, yes.

The top side of that is $121 million U.S.

Yes. Lastly, very quickly on the mark to market, the C$8.8 million that it shows in the notes is going through earnings. Is that pretax?

That would be pretax.

Do you have an after-tax amount, or should I just use an effective tax rate of 35%.

About 35%.

35%?

Yes.

And can you just -- I think it's on page 33 of the MD&A. Can you just break that down, I'm assuming the fuel cost issues went through NSTI?

Yes, I think for the most part, that is right.

And the other revenue of mark to market loss of 2.1, does that come out of the other segments in energy services?

There's a bit NSPI in Bear Swamp and Energy Services.

Great. Thanks very much.

Yes.

Thank you. Our next question is from Matthew Ackerman from CIBC World Markets.

Thanks. My questions are on the other segments and your outlook calls for earnings to be marginally higher, I guess, in 2007. There's a lot of pretty good stuff happening in there on Bear Swamp and Maritimes and Northeast. So is there a significant reduction then in Emera Energy Services, and that's why the increase is only marginally higher?

Yes, we're expecting things to be a little bit -- things not to be so strong for Emera Energy Services next year, Matthew. Mainly because of the stable gas situation and the fact that we're going to see much more continuous flows of stable gas and less opportunity for them to manage those variations and flows.

Matthew, the sable partners have just put a new compression project on, and that's going to provide a lot more steady flow of gas, and so less volatility in that market is what we're forecasting for next year -- for this year, sorry.

And on an ongoing basis, do you have some assessment of what that will do to that business?

After 2007, you mean?

Yes.

As you go past 2007, we're going to start to see more volatility again, because the compression, we will start to see declines in the field, and so it's a relatively a short-term affect, we think.

Okay. Can I turn to Bangor Hydro. What do you expect Bangor Hydro, excluding the transmission, to be doing? We know you've said in the outlook that including the transmission line, earnings should be up, but if you are excluding that, how would you see Bangor Hydro?

Are you talking, Matthew, on an ongoing basis, because once -- we get the AFUDC during the construction period and then increased earnings from the transmission line on a go-forward basis.

No, I know. But excluding all the investment in the transmission line, how would you see the rest of Bangor Hydro?

Well, Bangor Hydro is a shrinking business. It's made up of about 40% of its overall asset is a stranded cost, and that stranded cost is declining at quite a high rate. So fundamentally, without reinvestment in the transmission side, Bangor is a shrinking business, and that was the nature of it when we bought it.

So would you see significant increase overall, then, including the transmission, or is it going to be modest?

Well, the net affect of what we're seeing with the transmission investment we're making is that we're seeing a nice, modest increase in the overall earnings for Bangor over the next few years.

Okay. Okay, thanks. Those are my questions.

Thank you. [OPERATOR INSTRUCTIONS] Our next question is from Robert Kwan, RBC Capital Markets. Please go ahead.

Great, thank you. Just -- first question just on the expansion strategy. Obviously you'll look at whatever comes up, but with the comments Christian made on focusing away from North America on the high prices, is really the main focus now on the Caribbean, or you also mentioned other areas or other geographies that you're looking at?

Well, certainly, we're looking hard at the Caribbean right now, because we're now on the ground in that market, and so that's an area that will cause some of our attention for the next little while. The other thing is, we continue to look at greenfield projects and we continue to look around some of the investments we're making. I think we've said in the past we see more transmission investment opportunity in the northeast, especially in the Bangor territory. And as far as when it comes to acquisitions in other markets, there are a couple of North American markets we're continuing to watch. As you know, though, acquisition prices are very high. So it's something that we're staying on top of, but I'm not predicting a large acquisition at this moment.

In the Caribbean, is your preference for partnerships, or would you prefer to step into something wholly-owned?

It is very much partnerships. I think we're taking a cautious approach to that market. We need to learn as we go. We believe we bring skills to the market. We bring some of the skills we have in running our business and so on, but we do think we have some things to learn about doing business in that area. So doing business with partners helps.

Just my last question, maybe just a little extra color on the dividend policy going forward, you mentioned we've seen a pick up on at least normalized earnings this year. What was kind of the key driver given the outlook for the businesses? Was it just the heavier capital plan that factored into the decision not to increase the dividend?

Well, we have an approach to our dividend that says we really have a target that we want to be at a payout ratio between 70 and 75%. Right now we're a little bit above that. So we feel that we have to grow into dividend increases, but we do have some nice earnings growth out in our future, so we'll see dividends growing as a result of that earnings growth. But we have to see the earnings growth first.

Okay, great. Thank you.

Thank you. Our next question comes from Linda Ezergailis, TD Newcrest. Please go ahead.

Thank you. There's been some chatter recently about Maine is considering leaving the ISO New England and perhaps even joining in some sort of cross border power pool with the province of New Brunswick. Have you -- I know it's very early days, but what would be the implications for rate recovery for your NRI or what other possible scenarios would unfold as it would relate to Bangor more broadly?

Linda, I'm going to get Rob to comment on this as well, but I thought I would start. Recently, New Brunswick and Maine have signed a memorandum of understanding to work together to develop energy resources. We think this is very positive for us and for the project we've put in place, because we think Canada can continue to be a source of energy for New England, and so we would think that that's going to cause more transmission investment to be put in place and more utilization of those assets. Rob can talk a little more in detail how things are going.

Sure, thanks, Chris. Maine is really responding to the price signals that have been sent by the forward capacity market changes in New England. One of the options that needs to be considered by Maine is a review of alternative power pool arrangements that might result in lower costs for customers there. Whatever the ultimate outcome is, though, our transmission business would still continue to be regulated by FERC in the U.S.

So how would the costs be recovered for the northeast reliability interconnect? Would it be just spread over Maine, then or--?

I think the best way to say it, Linda, is that the purpose of any of this discussion is to get more energy into New England. So if more energy goes into New England, it's going to have to use a conduit of the NRI as a great conduit for that. The existing northern transmission will be utilized and we would like to think that that would cause more transmission to be built.

Okay. But it would still be TBD, how the cost of service would be recovered for this transmission line? Because if Bangor and Maine were to separate from the ISO New England, then presumably the rates would not be recovered from New England customers, it would be coming out of Maine customers?

Again, I think the only reason that that might be an outcome is if there is a significant amount of energy coming out of Canada, and so the way that the tariffs would be recovered is on those kilowatts that are flowing. It's going to be based on kilowatts flowing and we see a great potential for that.

Okay, thank you.

Thank you. Our next question is from Bob Hastings from Canaccord. Please go ahead, sir.

Yes. Going back to Nova Scotia Power for a moment. A couple of things, I guess, is there's a little bit of a missions furor in the local media in the last little bit. You asked to file what emissions would like out to 2030 if you continued with coal and I guess that caused some issues. Can you give us a little bit more color on what's going on there, and what you're actually looking for expansions? Down the road I know you put in for 130 megawatts of alternative energy proposals and wondering if you would even be looking at supplying any of that yourself?

I'll start with the first part of your question. There was a clarification made in today's newspaper about that, but to back up a little bit. As part of something called an integrated resource planning process that our regulator has put in place, we look at a wide variety of scenarios for the future. This one particular scenario that I think generated the headline is -- and I want to emphasize this -- not our plan. What it was is a scenario that says if we don't do anything, this is where we will go. Obviously, over the last several years, we've been reducing our emissions, so we've reduced sulfur dioxide 25%. We've reduced -- we're in the process right now of reducing nitrogen oxides and to the second half of your question, as we look further downstream we know we need to start dealing with greenhouse gas emissions, hence our interest in renewables as well as our interest in title power.

Okay. And you say put out a proposal looking for -- or looking for proposals, I should say. When you look forward, do you see that you might build any of this new capacity? You're looking for 130 megawatts now?

Well, recently, there's a legislation pending in the province that would preclude the Company from building the first traunch of capacity for these renewable targets that are being set. On the other hand, as we look downstream, yes, we would absolutely consider adding renewable capacity.

Okay. When the Company's precluded, I assume that's Nova Scotia Power and maybe not necessarily a subsidiary of Emera, though; or is that not right?

I think that's a fair statement. Whether we'd foresee it that way, I don't know. But I think that's a fair statement.

Okay. Thank you. Different topic. You have a Union contract coming up later this year. Is there any issues brought forth by the Union, just so we can look forward to something here?

No, nothing that -- nothing out of the ordinary. We would be undertaking negotiations over the next little while leading up to the contract expires at the end of July.

Thank you. The last question, over on Bear Swamp, you were hedging, I guess, to try to get more consistent earnings and I guess that didn't work out given that you had a bit of a negative this year -- or, sorry, in 2006, and you expect to recover that full amount and the offsetting amount in 2007?

That's right, Bob. It's Chris. What we were doing was beginning to put some supply in place for the facility because we're moving it into a contracted position. And so establishing supply so that we can have certainty on the cost of the power as we move into 2007 was what we were doing. I think the nature of that business is that over time, that will stabilize as a result of the two things coming together.

What was the impact to that?

It was C$2 million in 2006.

So we'll get that C$2 million back in 2007. Also, aren't we seeing some regulatory changes in the market that should add to that?

That's correct. As the capacity values continue to increase. For 2007 we had sold forward our capacity value. Early in 2006 we saw the opportunity to do that. So we'll begin to participate in the open market, or the actual market that ISO New England is administrative as we get into '08.

Okay. So it's just a C$2 million swing, which year over year is C$4 million, for 2007?

Yes. You'll see the C$2 million come back into income in 2007, Bob.

Yes, so that's a C$4 million swing because we had C$2 million negative in '06.

Yes, that's correct.

So we get a nice swing there and Maritimes and Northeast pipeline should see some improvements there. I guess I'm getting really to the earlier question of about how could the things be so bad in Emera, because it looks like there's some pretty positive swings year over year in everything but the services side.

Again, on Maritime, this past year, Bob, we were spending money on the development and that was getting expensed. The development, actually, was just approved by FERC today or yesterday, anyway, very recently. And so that -- those expenses will be recapitalized. It's really just the way the accounting works in the U.S. pipeline.

Right, sorry. I meant Bear Swamp, we're getting a C$4 million swing, Maritimes and Northeast pipeline we'll be getting a positive swing, because of what you just talked about and when I look at Emera Energy Services, it seems like we're talking about a major negative in order to offset that kind of a very strong positive and that kind of surprises me that it could be that large, the negative.

I would say there would be a small reduction there in Energy Services. The other thing -- just to answer Sam's question earlier as well, we'll see a couple of million dollars in AFUDC related to the Brunswick pipe as well. So if you look at it, Bear Swamp should be a little bit higher than the 2005. Certainly Maritimes and Northeast should be back to about 2005 levels and then Bear -- or Energy Services will be down a bit. We're also saying that there's going to be a slight increase as well in corporate and other costs as a result of some dividend income that we received in 2006 that won't recur in 2007, and some small increase in business development activity.

What's the dividend income?

We hold some small investments, and it was -- there was C$1 million or so in dividend income.

Okay. Just to be clear on the AFUDC, what is the equity rate you'll be charging on the various projects now? So for Brunswick Pipeline, what would it be?

Sorry, Bob, the equity rate?

Yes.

Oh, calculation on the AFUDC. I'm not sure, I'll have to get that.

And was there an adjustment for NRI on the equity component of AFUDC because of the improvement in the allowed rates of return of equity on the transmission side? Now you can be up over 12.

Yes. If there was any change, it was fairly small. It came in around where we were expecting it to.

Okay. So there was no retroactive adjustment with that that got picked up in the quarter or anything?

No.

That's right, Bob. The answer is no.

Okay. Thank you very much.

Thank you. [OPERATOR INSTRUCTIONS] Our next question is from Karen Taylor, BMO Capital Markets. Please go ahead.

Sorry, I just have a quick follow-on to Bob's. Can you just tell me how much expenses that you took this year relating to the Phase IV of Maritimes and Northeast that will be reversed now, I assume, in '07?

We'll have to get that as well, Karen.

Okay, thanks. That's it.

I do have the answer to your other question, though.

Okay.

C$2.4 million, it's a mixture of items. There was some miscellaneous corporate items net of tax. There was a change in interest excluding the one-time FX gain. So some of the change in interest was in there, and there was some change in taxes relating to the other and corporate costs. So probably the Maritimes and Northeast, which is tax. That was just a mixture of stuff in there.

Okay. Okay. That's it, thanks.

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

Thank you very much. In closing I want to say that I'm very encouraged by the progress of our company in 2006. My team and I are working hard to build momentum for 2007. As we go forward, investors can count on Emera for a dependable income stream supported by our portfolio of assets that provide essential energy services. We'll build our company by investing in businesses where our operational expertise gives us an advantage, in markets that are growing. We'll be disciplined with our capital, seeking out niche opportunities to acquire assets at attractive prices or where we can deliver new value. Where appropriate, we'll work with partners to enhance our financial capacity, share risk, and extend our reach. Our success will grow Emera and at the same time diversify our market risk and support our low-risk investment profile. Thank you very much for your interest and have a great weekend.

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