Emera Inc (EMA) 2009 Q2 法說會逐字稿

Good afternoon, ladies and gentlemen. Welcome to the Emera conference call. Please be advised this call is being recorded. I would now like to turn the meeting over to Ms. Jennifer Nicholson, Director Investor Relations and Strategic Development.

Thank you Kathryn. Good afternoon. Thank you for joining us for our second quarter conference call this afternoon. Joining me from Emera are Chris Huskilson, President and Chief Executive Officer. Nancy Tower, Chief Financial Officer. Rob Bennett, President and CEO of Nova Scotia Power, and Bob Hanf, President and Chief Operating Officer of Bangor Hydro. Emera's second quarter earnings release was distributed earlier in the day via Newswire. The financial statements and management's discussion and analysis are available on our website at www.emera.com.

Today Chris will begin with a corporate update and a high level overview of the financial results for the second quarter of 2009. Nancy will review the second quarter financial results in more detail. We expect the presentation segment to last about ten minutes, after which we will be happy to take questions from analysts and investors. Please note that all amounts are in Canadian dollars with the exception of Bangor Hydroelectric where segment results are in US 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.

And now, I will turn things over to Chris.

Thank you, Jan, and good afternoon, everyone. Consolidated earnings for Q2 were CAD38.1 million compared to CAD42.9 million for the second quarter of 2008. Earnings were CAD0.34 per share compared to CAD0.39 per share last year. As many of you know, marked to market accounting adjustments sometimes have a significant impact on our reported results. Excluding marked to market adjustments, earnings per share were CAD0.33 versus CAD0.36 last year. Nancy will go into more detail about our results later in her remarks.

Nova Scotia Power had a strong second quarter. New rates and the fuel adjustment mechanism came into effect January 1st, and allowed the Company to focus on service to our customers with a priority on reliability improvements. The FAM reduces the impact of volatile fuel costs on NSPI earnings and results in smaller swings to earnings between quarters including fluctuations in the value of NSPI's gas receivable. We feel comfortable that based on current conditions, we will not require an increase in base electricity rates for 2010. We know that price stability is important to our customers, and providing this information early will help them make plans for next year.

We continue to make progress on the renewables front. We've acquired the development rights for the Nuttby Mountain wind project from Earth First. These rights include all approvals that have already been secured by Earth First, including environmental permits. We will make a capital application to the UARB by the end of the summer to develop this 45-megawatt project, which will power about 15,000 homes. We hope to have this wind farm in service by the end of next year. We continue to work with government and other developers to find solutions to enable all contracted projects to proceed. The open hydro test turbine is currently under construction, and we're making plans to deploy it in the Bay of Fundy. We're very keen to see how this turbine performs in this agressive environment and continue to believe this technology shows great promise.

We had a busy quarter with a number of events that advanced our strategy. Brunswick pipeline is now in service and began delivering gas in mid-July. Cleanup along the route will continue throughout the summer. We have agreed to purchase Bayside Power from Irving Oil. This gas-fired plant is a key supplier of energy to New Brunswick power during the winter and supplies the US northeast during the summer. The generating station compliments our operations in the region. The transaction is expected to close during the third quarter and in keeping with our criteria this transaction will be immediately accretive. We are pleased to have reached this agreement with Irving Oil and believe this will result in additional business between the two companies.

As well, we've made a small investment in Atlantic Hydrogen. This Fredrickson based clean technology company has developed a process that reduces the carbon content of natural gas, and creates a hydrogen enriched natural gas stream. We see this as an exciting opportunity to begin commercial scale testing of this technology, which has the potential to reduce greenhouse gassy mission. Nancy Tower has been elected to serve on their Board of Directors.

We're pleased with the relationship that we developed with Algonquin Power Income Fund. Our joint acquisition of the California assets of the Sierra Pacific Power Company will soon be going through California Public Utility Commission approval process. A decision is expected next year. Our skills are a good match, and we expect that we will collaborate on additional utility infrastructure and renewable generation investments. I was elected to the Board of Trustees on July 27th.

Bangor Hydro add good quarter and continues to focus on growing the business through transmission investments. We have over $130 million of new projects under construction and actively working on additional development. As well the FERC approved adoption of a forward-looking rate formula, which became effective June 1st. This formula more closely aligns capital expenditures with recovery of costs, and lag is dramatically reduced.

We continue to explore opportunities in the Caribbean, and to that end have intensified our activity in that region. We are pursuing a number of opportunities actively. As is evident from our financials, Grand Bahama Power Company has been slow to produce results. There have been wishes the performance of these assets, the majority owner Marubeni is addressing these issues. We believe these challenges will be overcome and that there is great potential on this island.

Overall, we're pleased with our results and progress so far this year. We continue to see many opportunities for development in our existing businesses and in new markets. With that, I will turn things over to Nancy for more a detailed look at the financials.

Thank you, Chris, and good afternoon, everyone. As Jen mentioned, our second quarter financial results were released earlier today and are on the Emera website. Emera's consolidated net earnings were CAD38.1 million in the second quarter of 2009, compared to CAD42.9 million for the same period in 2008. Quarterly earnings per share were CAD0.34, compared to CAD0.39 in to 2008. Excluding the effect of marked to market accounting adjustments, quarterly earnings were CAD0.33 in Q2 compared to CAD0.36 in the second quarter of 2008. The marked to market accounting adjustment relates to Bear Swamp's long-term contract with the Long Island Power Authority. Nova Scotia Power earned CAD22.8 million in Q2 2009 compared to CAD31 million in Q2 2008.

Included in Q2 '08 was a temporary increase in the valuation of our natural gas long-term receivable. Excluding the effect of this receivable, earnings were CAD21.5 million in the second quarter of last year. Now that we have the fuel adjustment mechanism in place, any increase in fuel costs flow through our fuel adjustment mechanism and will not have a negative impact on our full-year results. Bangor Hydro contributed $5.3 million to consolidated earnings in Q2 2009, compared to $4.5 million in Q2 2008. This increase relates mainly to the stronger US dollar.

Other operations contributed CAD10 million to consolidated net earnings compared to CAD7.4 million in the second quarter of 2008. Net of the marked to market adjustments at Bear Swamp, our other segment earned CAD9.2 million in the second quarter, compared to CAD4.1 million last year. This increase relates primarily to increased capitalization of financing costs during construction of the Brunswick pipeline, partially offset by increased interest expense on short-term debt.

Emera and NSPI's revolving credit facilities were renewed in June and Brunswick pipeline's bridge facility was increased to CAD300 million. This bridge expires in June 2010 and we will put permanent financing in place before then. NSPI issued CAD200 million of medium-term notes in July. We were pleased with the favorable coupon rate of less than 6% that we were able to secure for this 30-year note, and the high demand that existed for this issue. Proceeds were used to pay down short-term borrowings.

That's all for my financial overview. Thank you. And we'll now be happy to take questions.

Thank you. (Operator Instructions). The first question is from Robert Kwan from RBC Capital Markets.

Good afternoon. First question is just on NSPI. You had a very strong first half, and it looks like you're running well ahead on the FAMs, so I think you should be able to pocket the CAD5 million range in there. Is there anything as you look into the second half that would cause to you think that you wouldn't at least earn in the top half of your range?

Well, Robert, it's Rob here. There's still some moving parts on the FAM related to how the end of the year will look, so we're not sure yet exactly what the incentive might look like. But I can say that we certainly plan to earn within our allowed range.

Again, if you're kind of to that top end you will just use the regulatory amortization to manage back is that fair?

There are still some moving parts, we won't know until we get to the end of the year, but I'm quite confident we'll be within range.

My other question is just with the Brunswick pipeline, did it earn its AFUDC off of a full rate base for the full quarter, and then will it be kind of a seamless return into the third quarter? Is there something else going to happen with respect to the tilted returns that you've talked about in the past?

Robert, it's Chris. We're still under construction, or still spending construction dollars relative to remediation of the right of way and so on. There's still some hold-backs in place. So it's still not quite at its full capital yet. We expect that that will be the case probably by the October kind of November time frame. So until then, it will still be moving up, but certainly there are only a few tens of millions left now.

But will it be kind of still a very kind of seamless number into Q3, Q3 being a little higher than Q2? There's no major step change in either direction between the AFUDC booking and how you book once it goes into service?

No, that's right, it will look very similar.

Perfect, thank you very much.

Thank you. The next question is from Sam Kanes from Scotia Capital. Please go ahead.

Thank you. You've obviously had a change of government recently, and a bit of shift in terms of I guess draft energy policy. Directionally, I'm sure you're working behind the scenes with helping shape this. Can you give us kind of an outline of how this policy might unfold? They seem to be greener than the previous government, but you obviously have a huge role to play into it. Can you outline how you see it unfolding going forward?

Sam, it's Chris. Rob might after few things to add. But I think it's very early in this government's mandate. I think they are very much understanding what the books of the province look like. They're understanding what issues are out there, and I think they're working their way through that. So I think it's a bit early. Clearly they did make a statement which was just in line with the policy statement they made during the election, that they wanted to move the green agenda ahead, and so that very much aligns with the way we've been looking at what needs to happen, and very much aligns with the plans that we have for the generation asset overall. So when you look at the goals that have been set for 2020, and the things that are currently be account looked at, I think we're pretty aligned to that.

The second thing is I think they've also done -- taken a very good step that in they brought David Wheeler into do a review, and a bit of a public consultation on the whole issue. I think that will be helpful. That will inform their policymaking, and I think that will be a time when Nova Scotians can speak sort of on the issue that they really want to see involved in that policy. So we're quite looking forward to how that comes together. I don't know, Rob, whether there's anything you want to add?

The targets do seem to align very well with the objectives that we've seen in the past and the problems around carbon reduction target going forward and undoubtedly as federal target reduction carbon reduction targets evolve, it will be important to bring on more renewable energy, and that's what we're seeing here.

Just as a follow-up on that, the biomass plant rejection, at least initial rejection, how would you have handled that differently, if at all, in terms of how you proposed a review or kind of a preliminary acceptance of the principal of using biomass?

Well, the biomass opportunity that was brought forward to us came to us in a bit of a nontraditional format, not in the competitive process that we normally prefer. It was our choice to bring that forward to our regulator and to all of the other stakeholders involved, so that they could be reviewed in a very transparent process, people would have the opportunity to weigh in on the aspects of biomass use that were important to them, and certainly everyone had the opportunity to do that.

So there's still a process ongoing of transparency. Is it part of this broader template of review under Dave Wheeler?

Well, I think, Sam, first of all, the particular project you are talking about was really an opportunity. It was an opportunity that came along at a time, and if the question was where would Nova Scotians come down on that, so I think we got a lot of feedback. All that feedback is very instructive and I think will help inform what's next. And through the public consultation process will help that as well.

Thank you.

Thanks a lot.

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

Thank you. Nancy, I didn't quite catch the interest rate you said you got on that 30-year note. Was that 6.2%?

It's 5.95%. I think I said less than 6%.

Okay. 5.95%. You renegotiated your lines of credit. Can you tell us -- I've been hearing some horror stories about what some of those things have cost. Can you give us some idea what that cost and what the rates were?

Without beg specific, I would say that I don't think we encountered any horror story, Bob. I think that as expected, spreads went up, but I think they went up to what we would consider to be market. So they're in line with market is how I would describe it.

Okay, thank you. And going back to Chris, is there any more information you can give us on the -- sort of the northeast energy link and some of the stuff that's been going on? You've been quoted in the papers quite a bit lately about wanting to build wind in Maine as opposed to New Brunswick. What's going on?

I would first of all say there's a lot going on. I also would ask Bob to chime in here. Maybe if you want to to start, Bob?

Sure, thanks, Chris. Its Bob Hanf here. We're continuing to work with national grid, our partner, and we're quite pleased with our success to date. It's still early on but we're particularly pleased with the reception of the government of Maine when it comes to exploring corridor options, and that work continues.

I think certainly there's a broad review going on in Maine right new about how major energy infrastructure will impact the state and so we're participating in that, and I think that's a good thing. So if you come on this side of the border, obvious we're quite excited now to be moving forward with the Bayside project. We see that as being a facility that can be helpful, as we start looking at the corridor issues. And we'll be working directly with the province of New Brunswick and certainly other proponents in the province of New Brunswick as we move those things along. I think all of that builds towards a maritime and eastern US cooperation that I think will continue to build. So we're quite excited about where things are right now. Both the role that we think we can play and also the assets that we will have going forward to participate in all of that.

Right. Clearly there's a lot going on, a lot of irons in the fire, and lots of different players as well, and you mentioned Irving Oil and potential other projects or deals could you work with them on. I assume that would also include some of the new energy talks that are going on, new --

Certainly the discussions that we had with Irving oil over the bayside project were very productive, and collectively, as we look into the future, we see some things that we can do together. It's too early to be more specific, but both companies, I would say, are quite excited about that.

Okay. And these things will help feed into your 4% to 6% growth rate you're still targeting?

Yes, as you know, we're still focused on that number. We're also in a bit of a strategic review right now, so we're working with our Board on that, and we're hoping that by the fall, we'll have a renewed strategy, and be able to talk to you the about that. But as of right now, we're focused on the 4% to 6%.

Thank you very much.

Thanks, Bob.

Next question is from Matthew Akman from Macquarie.

My first questions are on Bayside. I know you can't tell us a lot of detail about that, but can you give us some general parameters about how the asset works and the economics of it? I recall from years gone by when it was owned by others that it did have some significant merchant exposure on it. Is that still the case, for example?

Yes, it is. At this point, it actually has a five-month contract with New Brunswick power, and in the wintertime provides energy into the New Brunswick maritime market. Then is in a merchant role in the summertime. So that's the current state of the facility. We think with the changes in the market in New England, with the fact that it has transmission access, also the fact that we have some pipeline access on both sides of the border, all those things will play into how we work over time to secure more and more revenues for that facility. That facility will be no different than the way we approached Bear Swamp. It was a completely market driven facility when we first bought it, and we have been able to move that along and we'd expect to be able to do the same with a plant like Bayside.

If it didn't have the five-month contract on it, then would it be accretive still, based on where market power prices and spark spreads are right now?

Well, it does have the contract, and so as a package, it's an accretive transaction for us. So when we entered into the transaction, we looked at it for all of its attributes, and it has gas contracts, it has transportation contracts, it has some power contracts, and it also has electric transportation contracts. All of those things will be helpful as we continue to move forward.

Who will manage the power plant, Chris, in the organization?

We're actually putting it under Emera Energy. So it will -- in fact, Emera Energy has been dispatching the plant for some time now so it will continue to be responsible for dispatch, and some of our technical people will be responsible for broad management. But the plant comes with a very good team, a strong team already on the site, and so it will be easy for us to integrate.

Thanks. If I could shift to the Grand Bahama utility, was there something there that came up in the short term that surprised you?

I wouldn't quite go so far as to say surprised. I would say they have run into some difficulties on the generation side primarily. There's been a lot of very good work that's been done on the T & D side of that business, and the reliability has really gotten much better. That's been costly, though, and so that's affected the results. On the generation side, they've had some outages, in fact, quite a long outage with one of their newest units, and that's been the biggest single thing that they've faced. And so would you expect a relatively new unit to have that kind of a problem? Probably not. But our review and view would be that all the things are easily repairable, and so a bit of concentration will change the performance of that utility.

Okay. Thanks, Chris, those are my questions.

Thanks, Matthew.

Thank you. The next question is from Andrew Kuske from Credit Suisse. Please go ahead.

Good afternoon. This is Paul Cheng on behalf of Andrew. How do you see your capital allocation in the near and medium term given your expanded geographical footprint, with the (inaudible) transaction and further expansions in the Caribbean, as well as the continuing strength of the Canadian dollar?

I think we've really been focused on allocating dollars into the two regions in which we've been looking. So I guess if I go to the Caribbean what we've said to the market is over the next three to five years, we would want to put between CAD400 million and CAD500 million of new investment there. To date, we've got something in the CAD60 plus million range, and we see the opportunity to put more. So that's about the kind of target we have for that region. In the case of Nova Scotia because of all the transformation that's happening, we will be putting probably more than a billion dollars into Nova Scotia Power over next four or five years, and then in the case of the US, and now potentially around new Brunswick, again, a few hundred million, as much as half a billion as well. So those are the kinds of numbers that we've been looking at, and looking to deploy.

Thank you. And secondly, could you provide us any updates on your project with open hydro?

We sure can. Rob, did you want to?

Thanks, Chris. The open hydro project is moving along, as we had planned. The turbine is essential finished now in Ireland and will soon be shipped here to Nova Scotia to be mated with its gravity base that's being constructed here in Halifax, then the whole unit will be taken to the Bay of Fundai and deployed later this fall. A lot of people are excited to see that happen and we look forward to the actual testing happening in the Bay.

Those are my questions, thank you very much.

Thank you.

Thank you. The next question is from Linda Ezergailis from TD Newcrest. Please go ahead.

Thank you. Many of my questions have been answered. I guess the biggest question mark is still this new provincial government in Nova Scotia and how they might develop their energy plans, especially that they've turned down your biomass project. But I guess the other kind of smaller question mark I have around what -- how they're going to implement some of their big plans is related to your energy conservation plan. I guess my understanding is that some of the conservation measures that you have proposed, which will result in lower energy sales, will be absorbed, I guess, by shareholders, not consumers. Now, is that -- I don't know, with Nova Scotia Power plans to potentially defer some of those conservation measures, or maybe you can help me reconcile why shareholders should be paying for demand side management.

I think, Linda, I will let Rob go to the detail of that but I think you're misunderstanding what's been put forward. So Rob can give you the detail. I just wanted to go to the biomass project though for a minute. The proponent for that project was one of the pulp and paper companies here. We were only offering that to customers and stakeholders as an opportunity, and so it's the kind of thing that it was really turned down by stakeholders, not the government, and if stakeholders had supported that project it would have gone forward. If stakeholders don't support the project, then -- and I think a lot of the questions and comments that were raised during the hearing were very instructive to us, relative to where we need to go next. It's extremely important as we develop and transform the generation system here, we do it in a way that Nova Scotians are supportive of. As we get that kind of feedback, it's very helpful to our planning pros and allows us, forms what we will do next, and as I said earlier, I think informs and the whole public consultation prospect informs where the government will go from a policy perspective. On the conserve side, Rob.

In the area of conservation and energy efficiency, first of all we're very happy that the programs have been approved by our regulators, and we think they'll bring great benefit to our customer. We're quite happy with that. That also, the recovery of the cost of those programs will not be bourne by shareholders. They will be recovered in rates as a rate rider that will be applied annually. So it's not a shareholder expense.

I guess I was relying on a media report that there was a -- that there was a $4.2 million in lost revenue that would it not be absorbed by consumers.

The the implementation of the program that cost will be some where in the vicinity of $23 million. That will be recovered through rates.

But the lost revenues --

The revenue impact of conservation programs, like any program, we understand will be to essentially levelize load growth over the longer term, and that's part of our plan to reduce carbon emissions overall.

So Linda, I think what you're referring to is that there was an automatic adjustment mechanism that was requested as part of that filing, and what was turned down was the automatic adjustment. But the Company still is as would it with any revenue requirement, when it sees a revenue requirement need, would it go before the regulator for a generate occasions and that's the way revenues would be recovered, and no matter whether the program is faster or slower, relative to its performance, it just means that rate cases will happen when they're needed, that's all.

So once -- if the were to hit a certain threshold, it would be absorbed by customers over time, in your generate case?

As you know, there are lots of moving parts in a business like Nova Scotia Power, so revenue requirements move around all the time, and from time to time, when it's appropriate, we go before the regulator and put transparent information before our customers.

Okay, I appreciate the clarification. Thank you. Okay.

Thank you. The next question is from Sara Thompson with Beacon Securities.

Good afternoon. Can you provide a little more detail on what Nova Scotia Power is doing in the short term to help meet the 2010 REF target in terms of its potential projects or talks with the government to avoid penalty?

Well, the -- we're obviously doing a lot of work with the developers who proposed projects to comply with the 2010 targets, and we're very encouraged by what we see some of those developers doing. In fact, one or two of those wind farms are underactive construction now. Several others are delayed somewhat, but still moving ahead, so it's encouraging. It's important to note, though, that the target for compliance in 2010 is actually a two-year target for compliance by the vend 2011. So there's a lot of work to be done and time to do that work between now and the end of the compliance period. One of the things that we are doing is moving ahead with the (inaudible) wind farm project that we acquired a short time ago. As Chris said earlier we hope to put in that front of the regulator later this summer for approval. And we're searching out other opportunities to collaborate and help wind projects move ahead as well.

Okay, thank you. In terms of the Atlantic hydrogen investment, is that technology that you could implement in Bayside power in addition to your Nova Scotia facilities?

Yes, Sara, it's Chris. So we're actually quite excited about that technology. It's quite quite a novel approach to condition natural gas and remove some of the carbon. We have a small project that we're working on with them where we would use that technology on a micro turbine, but our overall objective is to get it probably first into some burners, auxiliary burners on some of our existing gas plants, then later to a large turbine, and so absolutely, the turbines here in Nova Scotia are targets, and so is the turbine in St. John.

Great, thank you, that's all for me.

Thanks, Sara.

And the next question is from Michael McGowan from BMO Capital Markets.

I have a follow-up question on the renewable target for 2010. I understand it's a two-year target, but is there any penalty for not meeting those standards?

There are penalties in the regulation, yes, for not meeting the standards. And as you pointed out, it's a two-year compliance period that ends at the end of 2011.

Could you quantify the penalties possibly?

The penalties, as published, CAD500,000 a day for each day that you don't comply.

Okay. And just a question on -- I saw on the -- with the -- an ROE calculation hearing had been filed. Can you talk a little bit about the hearing and the implications for NSPI?

The procedure that you are speaking of arose out of our last rate making process last year, and it's really worked to clarify how ROE is calculated in the business. It's not actually an ROE case.

And I think, Michael, the other thing that's important to note here is that so far, anyway, only Nova Scotia Power has filed evidence. There are a number of intervenors that have registered, but no one else has filed any evidence at this point. So we're sort of more or less waiting to see how that hearing evolves.

In terms of how the hearing, or the genesis of the hearing, how did it start, and really who called it?

It arose as part of a discussion on equity structure in the business in our rate case process, and you the utility and review board has brought it forward in an effort to clarify a broad understanding of how equity works in the utility and how ROE is calculated on that equity.

Do you see any potential changes from your equity thickness or ROE arising out of that hearing?

As Chris said, there's little interest in filing evidence in the process so far. The ROE in the Company is not to be changed under settlement agreement from 2007 until at least January 1st, 2011. And as I said, we're working through this process really in an effort to explain how equity calculations work.

And I think, Michael, the other thing to note is that the most recent equity thickness was agreed by stakeholders in the last settlement process. So, again, there's a fair bit of activity that has happened over time between stakeholders and the Company on this issue, and I think this is seems to be, anyway, primarily an approach to clarify and to absolutely make sure that understanding is clear on how these things get calculated.

Okay, great. Those are my questions.

Thank you.

Thank you. (Operator Instructions). The next question is from Bob Hastings from Canaccord. Please go ahead.

Yes, two things. One is going back to the penalties that you don't meet the green standard. Obviously a very large amount. I know you've had had some concerns and talked to the government, because some of this has been out of your hands. Can you tell us, with the new government, if you've seen any flexibility if it's not met because others are not building when they're contracted to build?

I should point out first that there is due diligence defense also included in the regulations, so that's important to note. There have been no changes in the regulations thus far, but it is encouraging that Dr. Wheeler's process is beginning, and that the province is taking a more global look at ways we can achieve the renewable energy levels in the province that we desire.

Okay, because otherwise it's a heck of an incentive to build an uneconomic project just to avoid a penalty.

Certainly we wouldn't do that, but there's still lots of time, and we are continuing to work with proponents in making sure that as many projects that should be being built are being built, and I think Rob is quite optimistic that there are be a lot of wind on the ground by the time we get through that period.

Okay. The other question I had was, with regards to your alliance with Algonquin Power, and the Sierra Pacific Power acquisition. Cab you give us an update if there's anything going on in that process? I know it's a long process. Secondly, I noticed that you've mentioned that -- or clarified how you're accounting for the Algonquin Power as a held for sale or potential sale. Just wondering if that in any way diminishes the strategic alliance that you had talked about before.

So Bob it's Nancy. So in terms of where we are, there were a number of agreements coming out of the initial purchase and sale agreement that had to be finalized, and those have substantially been finalized now, just as of the past week or so, and the -- we are in the process of putting -- finalizing, I would say, the application before the Public Utilities Board of Nevada and California. So those filings are imminent. So things have been moving along quite well, and we continue to feel optimistic about time line being next year for approval of that.

I think, Nancy, just to add to that, the NV Energy has just -- is just in the process of finalize ago rate case on the assets, and so that will be helpful to that have rate case settled prior to our filing of the application, and so that looks like that's going to happen a little bit faster than we might have thought as well.

In terms of the accounting, the accounting that has taken place so far, Bob, is just on the subscription receipts, so we have not actually -- the accounting will likely change a little bit when we actually do the transaction, but at this point, it's just an accounting for subscription receipt. So you know, I mean, we follow GAAP. I would say that I don't think it changes how we view Algonquin or our strategic alliance, how we account for the acquisition.

Yes, and, Bob, as I said in my remarks, we're actively working to put together some projects with Algonquin. We think that they are good partners to work with and we think that there are opportunities for that to happen. So, you know, obviously time will tell, but we're actively working in that area.

Great, thank you. I was just trying to clarify the wording. Thank you very much.

Appreciate your question.

Thank you. The next question is from Matthew [Collossy] from RBC Capital Markets. Please go ahead.

My questions to have do with your debt financing strategy. I guess, first of all, with your Brunswick pipeline, you said in the past you are going to use -- likely use project financing. Is that still the case or would you consider issuing debt in Emera's name to finance that?

I think in these capital marks everything is on the table. Our preference is certainly to put debt at the Brunswick pipe level, but it will be a matter of what the cost is for de. So we're assessing all of our options. Nothing is off the table.

The big thing is that the pipeline is now in service, so with gas flowing through the pipes, we're now in a process of getting that financing going. We wanted to make sure that the risks around the pipe were all settled, it was both under construction and generating revenue before we actually went into the financing market.

Okay. And even for Emera's credit facilities, if you go ahead and debt finance the pipeline, I know after you CAD400 million shelf outstanding for Emera. Emera is never issued in its own name. That something that you're looking to do more seriously now?

I would say my remarks remain the sale in terms of how we finance that. I think that everything's on the table as we look at financing the project, and it will simply be a matter of -- well, it won't simply be a matter, but one of the considerations will be the cost of the financing, and if we choose to do it at Emera, we have the prospectus in place. If we clues to do it at Brunswick pipe, we'll do a project financing. So we have options open to us.

Great, thanks.

Thank you.

Thank you. The next question is from Matthew Akman from Macquarie. Please go ahead.

Thanks very much. You didn't talk about Bangor. I just wonder if there was an intentional omission or not to not have an outlook section for it where you do have outlook sections for the other segments.

Matthew, nothing has changed since year end in terms of that, and I would say from an outlook perspective, we would expect the second half to be perhaps a little bit better than the first half of the year, just based on the fact, as Chris mentioned in his remarks, we've put in place a forward looking transmission tariff, which could add a little bit to the second half, and so be a little bit better than the first half, I would say.

And going into next year, pretty stable?

Yes, I would say probably pretty stable.

Few remembering, Matthew, that we are growing the transmission investment, that's constantly appreciating, so that will be modest during its growth from that business for the next little while. The other thing I would say about this year, I believe that OMG might have been a little bit front end loaded this year, so I think that will come down a bit over the year.

Thanks. I didn't want the folks at Bangor to feel excluded.

Bob is sitting here smiling. He's very happy.

Thank you, Matthew, appreciate it.

Even on a Friday afternoon.

Thanks a lot.

Thank you. (Operator Instructions). We have no more questions at this time. I would like to return the meeting over to Mr. Huskilson.

Thank you all for your interest and your questions today. We certainly look forward to the second half of the year and also hope you all have a great weekend. Thanks a lot.

Thank you. The conference has now ended. Please disconnect your lines at this time, and we thank you for your participation.