Emera Inc (EMA) 2009 Q4 法說會逐字稿

Good afternoon, ladies and gentlemen. Welcome to the Emera conference call. I would now like to turn the meeting over to Ms. Jennifer Nicholson, Senior Director, Stakeholder Relations. Please go ahead, Ms. Nicholson.

Thank you, Mary. Good afternoon everyone and thank you for joining us for our fourth quarter and year end 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 Gerry Chasse, President and Chief Operating Officer of Bangor-Hydro. Chris will introduce Gary in a moment. Emera's fourth quarter earnings release was distributed earlier in the day via NewsWire and the unaudited financial highlights are available on our website at www.Emera.com.

This afternoon Chris will begin with a corporate update and a high level overview of the financial results for the fourth quarter of 2009 and our full year. Nancy will then review these financial results in more detail. We expect the presentation segment to last 10 to 15 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 Hydro, where segment results are reported 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, but are not limited to, 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, Jen and good afternoon, everyone.

Before I begin, I'm pleased to introduce Gerry Chasse, and congratulate him on his appointment as President and Chief Operating Officer of Bangor-Hydro. Jerry most recently served as Executive Vice President of operations at BHE. He joined Bangor-Hydro in 1990 as an electrical engineer and has held numerous positions within the electrical engineering group, operations group and senior management over the past 20 years. Bob Hanff, former COO has been appointed Chief Executive Officer of Bangor-Hydro and will focus on continuing to grow our business in the northeast and helping Jerry with his transition. Congratulations to both Bob and Jerry.

2009 was a very positive year for Emera. We achieved record earnings, hit a record share price, and progressed our strategy. I'm proud of the hard work of our employees and I'm optimistic about the many opportunities that exist for us in the changing energy industry. Consolidated earnings were CAD175.7 million in 2009, compared to CAD144.1 million in 2008. Earnings per share were CAD1.56 for 2009, compared to CAD1.29 for 2008. Nancy will go into more detail about our results later in her remarks. In light of our strategic progress and our strong results, we're pleased that the Board of Directors increased our dividend by CAD0.08 in September, and another CAD0.04 today. Due to the timing of this increase, the higher dividend will commence with our May 17th dividend payment.

Our Board is committed to continuing to increase the dividend as we see earnings grow. We've also made changes to our dividend reinvestment plan or DRIP, to enable shareholders to buy Emera shares through the DRIP at a 5% discount. We believe this is an attractive option for shareholders. Raising equity through this increased participation in our DRIP is also part of our long-term financing strategy. As of this dividend, we are seeing a substantive increase in shareholder participation in the DRIP. Thank you for your confidence.

Nova Scotia Power had a good year. We're pleased with the predictability of its earnings and its growing cash flows. Effective management of fuel costs on behalf of customers enabled the Company to earn the fuel incentives as set out in the fuel adjustment mechanism. This starts the year off on the right foot and has already allowed there to be no general rate changes for 2010. We know that price stability is important for our customers, and we do everything we can to minimize increases while ensuring that our costs are recovered. In 2010, NSPI will continue to focus on improvements to reliability and Customer Service.

The FAM was successfully implemented in 2009. In fact, customers will receive a small decrease in their fuel component of their electricity bill in 2010 based on 2009 fuel management. The FAM increases the certainty with regards to recovery of fuel costs, and reduces the effect of volatile world commodity prices. The reductions of emissions, addition of new renewable energy and transmission of these new renewables to customers has resulted in increased capital spending in 2009, and in the coming years. This is good news for the economy of Nova Scotia, as we are buying goods and services and hiring skilled people in the province. Over the long term, these renewables will displace some of the fuel costs that are currently incurred to run our generation units, and help to stabilize electricity prices. We're very pleased that the Nova Scotia government has extended the renewable energy standard compliance deadline until 2011.

We're continuing to work with independent power producers to help enable their contracted projects to proceed. We continue to make progress on the renewables front. And we're now advancing several wind projects around Nova Scotia. These include the 45-megawatt mountain wind project, the 49% interest in the RAFL farm near Port Hawksberry and the 30-megawatt Bigby wind park. All projects are now under construction and are expected to be online before the end of 2010. NSPI has also recently awarded contracts for almost 19 megawatts of electricity to be supplied from small community-based renewable energy projects throughout Nova Scotia. We are proud to be able to work with these projects to bring more green energy online and to create new economic development opportunities in Nova Scotia.

NSPI and its title energy partner, open hydro, deployed the first commercial scale title turbine in the world in November. We are very keen to see how this turbine performs in this aggressive environment of the Bay of Fundy and we continue to believe that this technology shows great promise. We will study the turbine's performance over the coming months and we'll determine how to proceed at that point. Ideally, the next step will be to deploy several units in and array.

Bangor-Hydro had another good year. They continue to work on transmission development and currently have approximately $150 million of projects under way. The increase in renewable generation in the region will create opportunities due to the requirement for additional transmission. The Brunswick pipeline has now been in service for about seven months and has certainly met our expectations. The pipeline has been delivering gas to market consistently throughout the period on behalf of its customer. We've now owned the Bayside Power plant for almost six months and we are already applying our operational and commercial expertise to improve the plant. This asset is strategically situated in Saint John, New Brunswick, and we believe there are many opportunities to optimize it. We are focused on that outcome.

We continue to explore opportunities in the Caribbean. And to that end, have intensified our activity in that region. We're now pursuing a number of opportunities actively. We have given ourselves 12 to 18 months to build a business of scale in the region and we feel good about our prospects.

This is an exciting time for Emera. As we move into the next five years of our strategy, we see more opportunities than ever before, both in our regulated utilities and in new businesses. We will continue to apply discipline to new investment opportunities, to ensure we provide the greatest value to our shareholders and our customers. With that, I'll now turn things over to Nancy who will give a more detailed update on our financial results for 2009. Nancy?

Thank you, Chris and good afternoon everyone. Our fourth quarter financial results were released earlier today and are on the Emera website.

Emera's consolidated net earnings were CAD37.5 million for the fourth quarter of 2009, compared to CAD25.3 million for the same period in 2008. Quarterly earnings per share were CAD0.33 compared to CAD0.23 in 2008. As Chris mentioned earlier, consolidated earnings for the full year were CAD175.7 million in 2009, compared to CAD144.1 million for 2008. Earnings per share were CAD1.56 for the year, compared to CAD1.29 for 2008. The biggest part of this increase occurred in Brunswick pipeline due to the pipeline coming in service this summer. As well, both NSPI and Bangor-Hydro saw modest earnings growth in the year. Financing charges also decreased primarily in Emera Energy, due to the very low floating interest rates. Finally, there were increased mark-to-market gains in Emera Energy.

Before I go into details about our results, I will draw your attention to some changes we've made in our financial highlights document, which you will also see in our MD&A next week. We have revised our presentation to highlight the effect of Brunswick pipeline on earnings and to group our businesses by type or ownership. This better represents how management views the business and provides some consolidation of our newer strategic investments. For example, we now have a pipeline section which includes Brunswick pipeline and our interest in the maritimes and northeast pipeline. As well, we have grouped Bayside and Bear Swamp with the Emera Energy which is the Emera subsidiary that owns and manages those businesses. We hope readers find this disclosure helpful.

Nova Scotia Power's earnings increased to CAD109.3 million in 2009 from CAD105.6 million in 2008. Due to an increase in electric margin, and a fuel incentive paid to the Company as a result of evidencing testify fuel management on behalf of customers. Most of this increase was realized in the fourth quarter. Bangor-Hydro Electric earned $27.5 million in 2009, compared to $23.1 million for 2008. This increase relates to increased returns from new transmission investments, and a stronger average US dollar.

Earnings from pipelines increased to CAD24.2 million from CAD15.4 million. This increase is mainly the result of the Brunswick pipeline coming in service last July. Earnings from the other category which consists of all Emera activities other than wholly owned regulated utilities and pipelines increased to CAD12.5 million, from CAD1.6 million in 2008. This increase relates primarily to two items. Financing charge savings due to the very low floating interest rate throughout the year, and mark-to-market accounting gains at Bear Swamp and Bayside caused by favorable changes in the commodity price position. Emera Nova Scotia Power were in the market issuing debt throughout the year.

Most recently, Emera issued CAD225 million of a 10 year medium term note at the end of November. We were very pleased with the favorable rate of 4.8%. Based on market conditions at the time, we determined that the best option to repay short-term debt incurred during construction of the Brunswick pipeline. We will be in the markets again throughout 2010.

As you may have noticed we have not yet released audited Emera financial statements for 2009. Audited Nova Scotia Power statements are available on our website. Most of the information is on our MD&A. We will release the MD&A in conjunction with our audited financial statements early next week. The Company's auditors, Ernst & Young, were not in a position to render their audit opinion due to a delay in receiving an audit opinion from third party auditors of one of Emera's subsidiaries, Bear Swamp. That opinion is expected to be received early next week at which time Ernst & Young will render their opinion.

That's all for my financial review, and I will now turn it back to Mary. Thanks, and we will be happy to take your questions.

Thank you. (Operator Instructions). There will be a brief pause while participants register. Thank you for your patience. The first question is from Linda Ezergailis from TD Newcrest. You may now proceed.

Thank you. Has management put any thought to what might be possible in terms of earnings for fuel incentives in 2010 and 2011, just to give us a sense of book ends or what's possible in terms of probability?

At this point -- it's Rob here. At this point in our planning we base the business on a neutral fuel incentive position.

Okay. And what's possible?

Well, the possibility is in the regulations, the fuel adjustment mechanism as it's set is up to CAD5 million of incentives. At this point our planning is based on just on even balance.

Okay. So can you provide any sensitivities to commodities or anything, any sort of external events that might allow you to realize that incentive or is it kind of unknowable at this point?

What we saw last year that helped us in that regard was some very good pricing in natural gas during the summer period that we were able to take advantage of.

Okay.

We don't have any way now of knowing whether or not that will repeat itself this year, so it's yet to be seen.

Okay. I was just thinking maybe based on forward pricing or something like that that there could be some sort of optimism. Okay. Moving on to your capital expenditures for Nova Scotia Power, can you give us a breakdown of your 2010 CapEx? And then do you have a preliminary number yet for 2011 that you could share with us?

The 2010 number that we're working with right now is about CAD430 million and that's broken down -- get into the detail, see if I can break this down in an easy way for you. About CAD157 million of base utility investment are normal, ongoing capital programs. CAD37 million of of reliability based investment. CAD92 million of committed multi-year projects that are already under way. Renewables projects of CAD137 million, that includes our mountain project and others. Transmission projects of about CAD15 million.

Okay. Thank you.

And for -- you asked about 2011.

Yes.

Our projection right now is about CAD340 million.

CAD340 million for NSPI alone?

Yes.

And I think, Linda -- this is Chris. Ideally, if things go well, it would be good to have the Bigby project move over to Nova Scotia Power as well. And we forecast that around CAD75 million to CAD80 million.

And that's not in your CAD340 million?

Well, it's a 2010 expenditure so it will either be done by Emera or Nova Scotia Power in 2010.

Oh, okay. That's great. And then is it possible to get a breakdown of Emera Energy into Bear Swamp, Bayside and services, just to give a sense for the quarter and for the year, just to give us a sense of that composition?

Linda, it's Nancy. We are trying to get away from providing that level of detail in particular, because Bayside has been merged right into Emera Energy and so we're not looking at those businesses separately. We really look at Emera Energy as not only on behalf of business in terms of Service Provider for buying electricity and natural gas on behalf of others, but also asset manager and of course the Bayside is one of their assets and we would fully expect there to be more.

And I think, Linda, that's probably the most important point for us is that we're really beginning to grow Emera Energy into an asset based business as well. So yes, it will have the marketing capacity that it does and we do see that as an important part of their business, but in fact we also wanted to over time collect a number of profitable assets. So that's really the way you're going to see that business evolve.

What sort of a base run rate might we want to use then from a modeling perspective versus unusually good trading profits or something?

I could try to guide you a bit, but I think overall I think if you're looking for direction in terms of 2010, I think the dividend, the fact that the Board decided to increase the dividend, I think is trying to send a message that this level of earnings over all in our business is sustainable. So if you're looking at -- if you're looking at that other segment with the Caribbean and Emera Energy, I would say that it's - next year we would be projecting it's about 12 this year, net and I would say slightly higher next year, a few million dollars.

Okay.

Yes, overall.

That's very helpful. Thank you.

Yes.

Thank you. The next question is from Bob Hastings from Canaccord. You may now proceed.

Thank you very much. Just to get a little clarification here. I didn't quite catch that last answer about 12%.

Sorry, Bob. In terms of what we expect the other to be, I was saying it's about 12.5 this year, a few million dollars higher in that other net earnings segment.

Okay. Thank you very much. And I think I may have missed this too, but your DRIP participation indicated that it was rising. Could you give us the level to where we're at now, in the latest dividend?

We don't know the final numbers yet, I don't think, Bob, but suffice it to say it's gone from something in the order of 4, 5, 6 million shares to something in the 20s at this point. So we're quite pleased about that. And we think that it actually probably will move again. So it's becoming a very good source of equity for us.

20% of the dividends paid are actually taking stock instead of cash?

It's in that neighborhood, yes.

Excellent. That's pretty good.

We're very pleased. With think at this point with the status of the equity markets this is a very low cost way to do this.

Now, the optimization of Bayside that you said you were looking at, could you give us any kind of examples what you're looking at and whether capital is required to do any of that?

Sure. And I think it sort of steps into a few stages. First of all, the unit has the ability to fire the auxiliary boiler or the heat recovery boiler with burners and at this point that has not been well-utilized by the facility over the years, so there's quite a bit of capacity there. And so we're working to make that a lot more automatic and a lot more part of the routine of how it goes. So that's the simplest first piece.

The second piece is the reliability of the station has been somewhat compromised at important times and we've really focused on making sure it's a very reliable unit for New Brunswick Power and that is obviously causing them to rely on it more and as that happens, then we'll get more out of it. The next stage is as we start to look at the way the unit is performing, there are two options. One is that we can begin simply to put a water injection system on the unit, which we would have on our normal gas turbines, which could by itself increase 5, 6, 7, 8% output on the turbine itself, the CP itself, and as well, it can put us in a position of a lot more levelized output from the unit and so that's a relatively low cost option.

And then lastly, since it is a GT24, it has been derated from its original design and there is an upgrade package available for the unit that could also increase its output. So there are several different things, some relatively low cost, some sort of moderate cost and some a little higher cost that could do various things here. So all of those pieces are being evaluated and we expect to get a lot more out of that unit over the next two years.

Can you give us any kind of idea as to the range of those -- the price tag of some of those options?

Some are just a bit of labor and a bit of time and effort. The spray projects are probably in a few million dollars and the full upgrade is something in excess of CAD20 million.

Okay. Great. Thank you. And just one general question. On the US northeast power market in the current environment, do you have any comments on that and how that might impact some of your plans going forward, I mean, power prices are obviously not at the peaks at this point but what do you see going forward?

Well, I think to Rob's point from earlier, the power prices last summer actually helped us earn that incentive on the fuel side. We would have bought a fair bit of gas-based energy and so on the Nova Scotia Power side, it's positive there. In the case of Bayside, we've actually contracted the facility and are in the processes of contracting the facility for longer periods, and so we're somewhat insulated from those lower prices at this point and that's really how we're focused on the unit. The other thing is the unit has not traditionally been in the capacity market so we continue to have opportunity as we look at putting it in the capacity market.

Sorry. I was thinking of sort of new investment opportunities, whether it be wind or transmission.

Well, again, we would say that the renewables mandates that exist in New England are going to continue to drive more and more activity on that side. As an example, the state of Maine has an objective to put 2,000 megawatts of wind in place over the next five to 10 years, so we would say that these mandated requirements will continue to cause a substantial amount to be built and we'll continue to be very happy to build transmission out to those projects.

Given the state of the markets, you would be looking to sign long-term PPAs if you were to do anything there?

Yes, I mean, there's certainly, as we said before, it's important for us to figure out whether or not we can participate in those markets and -- so one of the things we're working to do is to find a project or two that we could move forward and then see how it best fits into both the regulatory regime and the contracted potential market. Right now, the rec market is quite strong and that's looking to be very good potential.

Okay. Thank you very much.

Thanks, Bob.

Thank you. The following question is from Matthew Ackerman from Macquarie. Please go ahead.

Thank you. First question on Nova Scotia Power, Nancy. You've guided in previous quarters that Nova Scotia Power would earn within its regulated return range. Is the final reported number today slightly above that range or is it still within that range?

It's within the range.

Okay. My second question relates to capital investment and then following on that, your financing requirements. So when you look at capital expenditures for 2010 for the Company overall, I guess the way to read this from page 28 is there's at least CAD500 million to be spent in Nova Scotia Power and Bangor-Hydro and then from what Chris was saying, probably another 75 anyway on Bigby in Emera Energy, that might be Nova Scotia Power, either way, I guess that's 575 at least and then we've got the acquisition of Telpico and Algonquin. So you're pushing I guess CAD700 million in total spend or something like that. And you put on some debt also this past year and the year before. I'm just wondering how do you look at your equity requirements going forward? How should we look at that from a balance sheet ratio perspective or cash flow ratios? How are you measuring your need for equity at some point to finance some of this growth?

Matthew, we really look at it from a balance sheet perspective and we look at it from a debt to equity ratio as would be required for a rating as it relates to the bond rating agencies. And so I think -- I know that we've said this several times, but we've done a lot of financing of projects up to this point on our balance sheet and we've continued to say the next big thing that we do we will require some equity. So I think it's safe to say that in the -- with the capital program that you've outlined, we will at some point in the near term be in the equity market. Because if you look at our balance sheet, we are pushing up against it to some extent and certainly we've Telegraphed that in terms of our capital expenditure plan.

Matthew, I would just remind you though that the way that we look at our expenditures is that we don't do anything unless it's going to be accretive to our balance sheet. When we look at anything that we're doing, we're going to be able to finance it with both debt and equity as we should, and it will be accretive.

Okay. Thanks for that, guys. Thanks and congrats on a good year.

Okay. Well, thank you.

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

Thank you. Good afternoon. Just wondering, with the wind additions that you're going to be see in Nova Scotia, to what degree to you anticipate a lot more investments for transmission, greater transmission to build up the backbone a little bit more. Just given the variability of wind generation over the course of a day, do you anticipate actually getting higher generation utilization out of some of your units?

Andrew, it's Rob here. You're exactly right that all of these generation additions require a transmission interconnection and refurbishment of the backbone transmission system. There's been studies done in collaboration with the Department of Energy here in Nova Scotia through Hatch Engineering that have looked at the requirements on the system. Currently we're working on about 250 megawatts of capacity of wind right now and we anticipate another 250 megawatts coming on in the future, in future compliance periods, and that will take us to what we perceive to be the limit on the system today which is total of 500 megawatts of installed wind capacity.

As we go through that phase, there will be transmission investments required but not extensive transmission investments. Beyond that phase, we have yet to fully determine what will be required. It depends a lot on where the wind locates. One thing we do know for sure is that a stronger interconnection with New Brunswick is instrumental in enabling all of the renewable energy infrastructure in the region, so we've been focused on achieving that for a number of years now and we'll continue to have that on our horizon.

I guess just while we're on the topic of the interconnect with New Brunswick, what are your thoughts when you look at the revised deal between New Brunswick Power and Hydro Quebec versus the first iteration of that deal?

I think our -- this is Chris, Andrew. I don't think our thoughts have changed much. We've always said that from our perspective it's business as usual. Clearly, New Brunswick power is going to continue to run the system as they have in the past. The New Brunswick system operator's going to be there so from our perspective it's just business as usual.

And then finally, if I may, just a big picture question. We saw some utility M&A yesterday with First Energy and Allegheny and a proposed merger. What are your thoughts on the landscape as far as M&A on a go-forward basis?

I don't think they've changed tremendously. It's always challenging when utilities think about merging because of the fact that you have lots of different stakeholders involved, including regulators, and also returns of premiums are very difficult. So that's always a challenging thing. We continue to be focused on finding opportunities where it works for us and we certainly haven't stopped focusing in that area. But we, as I think as we've been clear about, we're seeing lots of opportunity in and around our existing businesses. We're focused on the Caribbean and what we can do there, and so we're excite quite excited about what our next five years look like.

Thank you. The following question is from Robert Kwan from RBC Capital Markets. Please go ahead.

Good afternoon. Nancy, you mentioned that NSPI earned within the range. Is it fair to say that because you took the regulatory amortization that you basically earned the 9.6%?

Yes. So -- I mean, the numbers that you see, the net income that you see is within the allowed range after that amortization.

Right. So -- but is the number that we see, essentially 9.6% on 40% equity?

Robert, I might be able to help with that. The fuel adjustment mechanism and the incentive, the CAD5 million incentive that goes with that, in the final agreement on fuel adjustments, that incentive level is not included in the calculation of the return on equity. So that's CAD5 million that's not included in that ROE number.

Okay. And so when you kind of net that away from the CAD109 million, would you still be at the top end of that range?

No.

No, within the range.

Okay.

Yes.

Okay.

I think, Robert, you have to understand, there's a fair bit of equity in the business. I think it was sitting at somewhere in the pretty close to 42% equity for this year. That all together, as Nancy said earlier, it's in the range.

Okay. And I guess as a -- with that comment, you talked about with respect to the settlement that you would have or carry maximum equity 40%, is that kind of where you would like to be for 2010?

I think based on the fact that our spending is quite high, we're going to be below that, we would say.

Okay. Then just the last question I've got, you had the good sized dividend increase last fall and then you've had the one that was announced today. Can you give a sense as to what has changed or was there something that the Board wanted to see with the Q4 results before putting through that extra CAD0.04?

No. I think that when we look at our business, it just looks a bit stronger than we thought as we were going through the year and so as we -- I think we're very -- we're careful about managing our business and the Board is careful about ensuring that they're comfortable with the dividend that we have. Just as we looked out over the year and looked at how our business was performing, we had a little more confidence. We told the market that we will have our dividend in and around the 70 to 75% range and so we're living up to that commitment.

Okay. And you mentioned just some parts that were looking a little bit stronger. Can you point to what you see as being stronger than, say, what you saw last fall? I mean, first and foremost, the pipeline itself is producing different level of earnings than it was originally, that we originally thought that it would, and I think as well, NSP because of its investment is going to be stronger. And Nancy, I don't know if you want to add anything else.

No. I think one thing that you might have noticed is that the -- you know, it's a -- the accounting for the lease is a direct financing lease, it's a capital lease which gives a little stronger earnings in the front end and I'll say stronger than we would have expected and a little weaker on the very back end of the lease and then if we were accounting for it simply as the total revenue, so I think that made a slight difference this year than we would have expected and it will make a bit bigger difference next year.

Okay. Perfect.

Just in general, we're seeing growth from most of the aspects of our business.

Thank you very much.

Thank you.

Thank you. The following question is from Michael McGowan from BMO Capital Markets. Please go ahead.

Hello. Good afternoon. Just following up on the questions regarding the dividend increase, you've had two now in less than six months. What is I guess the timing of future dividend increases? Are you looking to do that in the September quarter or basically at year-end from now on?

Yes, so our focus is on increasing our dividend in the fourth quarter. That's where we think is the best timing for us. And we have a very strong, very large retail base of shareholders and so we think that that's a good time to move our dividend in general. It just so happens that as we looked at the year-end, as we looked at things, we felt that it was important to recommend to the Board that we move it again.

So when you say fourth quarter, is that fourth quarter earnings release or fourth quarter calendar?

Yeah, what we're doing is doing that review as we do our budgeting which is normally in September and so for our October time frame, that's when we would be focused on it.

Okay. And then around the Q3 release, maybe a little before?

Yes.

Okay. And I noticed that plant availability at NSPI went down a fair bit in 2009 as opposed to 2008. Is there anything really that caused the decrease in availability to 82 from 88% and do you expect higher maintenance costs going forward in 2010?

Part of the change in utilization was just related to load and the availability I think was related mostly to additional work that was being done on the plant through the balance of the year. We had some significant refurbishments in some of our plants, particularly at our facility.

Okay. And with respect to your maintenance spending in 2010, do you expect the higher level to carry through this year? Are we going to expect a decline?

It's likely to be the same as it was. We're continuing to do work on those plants.

Just a final question, on the California acquisition. Guidance in the Earnings Release suggested that you plan to close that in 2010 and before you had guided by the end of Q2. Are you still looking at the same time frame or has that been pushed out a little bit?

We'll probably -- you know, I think the back half of the year is probably a good timing for that. This is a -- it's a fairly long process, despite the fact that it's a relatively small utility. It still has to go through the same process and so it's hard to predict how many interveners you'll have and that sort of thing. I think it probably has taken a little bit longer but back half of the year is probably good estimate.

I think, Michael, it's still a bit uncertain because we're looking at the possibility of settlement and clearly if we go to settlement then that will be in and around the middle part of the year. If in fact we go to full hearing, then we'll be into Q3, maybe early Q4. So it just depends on how it proceeds. So far, it's been proceeding well. We're quite pleased with the engagement we've had of stakeholders and of the utilities commission, but we'll just have to see how that goes.

So is there any specific issue that's pushing back the approval?

No, no. You can either settle it or you can actually go to full hearing and it simply will be whether or not the stakeholders and we collectively see the opportunity to settle. And that's just not clear yet. So the normal time frame would be in the Q3, I think at this stage.

Okay. Thank you. Those are my questions.

Thank you.

Thank you. As a reminder, please press star one at this time if you have a question. The following question is from Sarah Chiasson from Beacon Securities. You may now proceed.

Thank you. Can you please provide some detail on how Nova Scotia Power expect to meet the renewable requirements for 2011? What projects are you counting towards the target at this time? I didn't think Nutby or Bigby could count towards 2011 right now.

Both Nutby and Bigby under our current planning model aren't required for 2011 compliance. The projects that are up and running now in the province along with the project are enough to meet the compliance target for 2011.

So it is looking like sheer wind is going to come in on time.

This is what they announced at their shareholder meeting earlier this week and what they updated us with in terms of the most recent information we've received. Bigby and Nutby Mountain will remain in reserve as contingency planning around compliance with that target.

If need be, could you sell a majority interest in those projects?

That is what we would need to do if it's required for compliance.

And in regards to new transmission and upgrades in the east, can you comment on whether you would be looking to -- for a partner on these projects?

Within Nova Scotia Power, as I said, there isn't a lot to do on transmission immediately and we would do that work under the regulated utility as is the normal practice here, maybe beyond the region.

I think, Sarah, I'm not sure I understand your question, but I'll -- inside our service territories, we would do business as normal. The regulated franchises would do whatever investments were required. Outside of our service territories, in between entities or something like that, then absolutely we would partner, just as we have in southern New England with National Grid. So it depends or where exactly you're talking about, whether that kind of partnership would work.

I guess more in eastern Canada, could you see yourself working with Fort Reliance on their transmission project?

Well, I think it's a bit early to assess that. I think it depends on what projects are being put forward, but certainly if what we're talking about are projects that would interconnect areas of the system, then certainly we would be looking for partners and as I said, we already have at least one partner today.

Okay. Great. Thank you.

Thank you. This concludes today's question-and-answer session. I would now like to turn the meeting back over to Mr. Chris Huskilson.

Thank you very much and just like to thank everyone for their participation today, your interest in Emera and overall. So thank you very much and have a great weekend.

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