Emera Inc (EMA) 2010 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 of Stakeholder Relations. Please go ahead, Ms. Nicholson.

Thank you, Matt. Good afternoon, everyone, and thank you for joining us for our fourth quarter and year-end conference call this afternoon.Joining from Emera are Chris Huskilson, President and Chief Executive Officer; Nancy Tower, Executive Vice President and Chief Financial Officer; Rob Bennett, President and CEO of Nova Scotia Power; and Gerry Chasse, President and Chief Operating Officer of Bangor-Hydro.Emera's fourth quarter earnings release was distributed earlier in the day via Newswire. And the financial statements and management's discussion and analysis are available on our website at www.Emera.com. This afternoon, Chris will begin with the corporate update and a high level overview of the financial results for the fourth quarter of 2010 and our full year. Nancy will then review these financial results in more detail. We expect the presentation segment to last about 10 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 Electric 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.

Now I will turn things over to Chris.

Thank you, Jane, and good afternoon, everyone. In 2010, we achieved record earnings, had record shareholder returns, and made significant progress on our strategy. We've diversified our earnings, increased our clean generation, and set the stage for future growth. Really, these accomplishments are the outcome of five years of solid progress. I'm proud of the work from the hard work of our employees and I'm optimistic about the many opportunities that we see in front of us.

Consolidated earnings for 2010 were CAD191.1 million compared to CAD175.7 million in 2009. Earnings per share were CAD1.68 for 2010 compared to CAD1.56 for 2009. When you exclude the effect of Bear Swamp mark to market adjustment on earnings, earnings per share were CAD1.76 for 2010 compared to CAD1.55 for 2009. With the mark to market adjustment removed, this represents 13% growth year-over-year. Nancy will go into more detail about our results later in her remarks.

Nova Scotia Power had a strong years, both financially and operationally. Earnings growth is the result of the substantial capital investments made in Nova Scotia, as we transform to a renewable electricity format. Tax benefits associated with our significant renewable investment means that there has been no general rate increase for our Nova Scotian customers in 2011. The strong performance has allowed NSPI to carry over CAD29.3 million, CAD14.5 million of which is subject to a hearing to determine its use against future rates for customers. Unfortunately, fuel prices have increased in global markets, which is, in fact, why we continue to invest in new renewables to provide future stability, as well as in 2011, NSPI will continue to focus on improvements through reliability and customer service.

Operationally, we successfully constructed three wind farms in the province and are proud to say that we're leading the country in wind capacity on a percentage of peak load basis. In 2011, we will have 274-megawatts of wind online and expect to see that double over the next five years.

Bangor-Hydro had another strong year. In December, BHE Holdings, Inc. acquired Maine & Maritimes Corporation, and this company is now a wholly owned Emera subsidiary. This merger is an important next step in Emera's strategy of growth and integration within the northeast market by geographically expanding our service territory in Maine and in New Brunswick. Bangor-Hydro continues to work on transmission development, and currently has approximately $150 million of projects underway. The increase in renewable generation in the region will create opportunities due to the requirement for additional transmission.

The Brunswick pipeline has been in service for more than a year and has certainly met our expectations. The LNG terminal has responded to many market events in New England this winter, and utilization is expected to continue to increase. Our energy services business had a strong year in 2010. And more specifically, we were very pleased that our Bayside power plant had its best year ever. We've been focused on applying our operational and commercial expertise to improve the plant and are happy that we are seeing results from those efforts. This asset is strategically situated in St. John, New Brunswick and we continue to believe that there are many opportunities to optimize it.

Our Caribbean segment has grown, and we're pleased to say that we now have scale in that region. We now own almost 80% of Light and Power Holding, the parent company of Barbados Light and Power. We acquired 38% of LPH in May of 2010 and an additional 41.7% last month, as a result of our share offering. We're pleased with our investment in this high quality regulated utility that serves 120,000 customers on the island of Barbados, and is recognized as one of the best-run utilities in the region. In December, we purchased an additional 55.4% of direct and indirect interest in Grand Bahama Power Company from MaruEnergy Grand Bahama Limited, which is an indirect subsidiary of Maru TAQA Caribbean Limited. This acquisition brings our interest in GBPC to more than 80%. This majority ownership enables us to provide better service to the customers of Grand Bahama and will help to bring the efficiency and reliability of the electricity system on the island up to Emera standards. We feel good about our investments in the Caribbean and continue to see many opportunities around them.

Another investment we're pleased with is our interest in Algonquin Power and Utilities Corp. On January 1, 2011 we closed our joint acquisition with Algonquin of the California-based electricity assets of NV Energy. Emera and Algonquin own and operate these assets through a newly formed utility, California Pacific Electric. As an element of the transaction, Emera has exchanged its original subscription receipts for 8.523 million Algonquin common share. Our goal with this investment is to apply Emera's strategy to this new geographic area as we continue to seek transmission and renewable investment opportunities around the utility. Our ownership interest in Algonquin is now 8.2%. And in late 2010, Emera entered into a transaction to further increase our position. In December, Emera purchased subscription receipts for 12 million Algonquin common shares. The subscription receipts relate to Algonquin's announcement to acquire Granite State Electric and Energy North National Gas from National Grid. On the closing of the transaction, Emera's interest in Algonquin will be approximately 15%. This transaction is accretive to Emera and we are pleased with how our strategy with Algonquin is progressing.

2010 has been a successful year for Emera, and it's a year we are very proud of. We see more opportunities than ever before, both in our regulated utilities and in new businesses. Reduction of emissions, the addition of new renewable energy, development of transition infrastructure required to bring this energy to customers in all of our businesses will result in a significant increase in capital spending over the next decade. 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'll continue to apply discipline to new investment opportunities to ensure we provide the greatest value to our shareholders and our customers.

Before I turn it over to Nancy, I want to publicly congratulate Nancy Tower on her appointment as Executive Vice President of Business Development and Planning for Emera. And I'm pleased to have Nancy overseeing the Emera partnership with Nalcor Energy. Nancy will continue to be focused on her CFO role until we have a replacement. In the meantime, she has a strong team on the Nalcor project led by Rick Janega, former COO of Nova Scotia Power. Nancy, it's been a pleasure to work with you as CFO, and I very much look forward to working with you in your new job.

With that, I'll turn things over and Nancy will take you through 2010 financial results.

Thanks very much, Chris. And good afternoon, everyone. Our fourth quarter financial results were released earlier today and are on the Emera website. As Chris mentioned, Emera's consolidated net earnings were CAD191.1 million in 2010 compared to CAD175.7 million in 2009. Excluding the effect of mark to market accounting adjustments in Bear Swamp, net earnings were CAD199.7 million in 2010 compared to CAD175 million in 2009. Earnings per share were CAD1.68 for 2010 compared to CAD1.56 for 2009. And CAD1.76 in 2010 compared to CAD1.55 in 2009, excluding the mark to market adjustments.

Consolidated net earnings for the three months ended December 31 were CAD39.6 million compared to CAD37.5 million for the fourth quarter of 2009. Quarterly earnings per share were CAD0.35 in the fourth quarter of 2010 and CAD0.33 for the same period in 2009. Nova Scotia Power's earnings increased to CAD121.3 million in 2010, from CAD109.3 million in 2009, due to decreased income taxes associated with renewable investments and an increase in the expected benefit from accelerated tax deduction. Offsetting these tax deductions were increased operating, maintenance, and general expenses due primarily to higher pension and storm costs.

Bangor-Hydro earned CAD31.9 million in 2010 compared to CAD27.5 million for 2009. This increase was mainly due to increased returns from new transmission investments.

Earnings from pipeline increased to CAD35 million in 2010 from CAD24.2 million in 2009. This increase is mainly the result of Brunswick pipeline coming in service in July 2009. Emera's other investments had a strong year in 2010. Net earnings increased to CAD16.1 million in 2010 from CAD14.3 million in 2009. Excluding the mark to market adjustments in Bear Swamp, net earnings increased to CAD24.7 million in 2010 from CAD13.6 million in 2009. A large driver of this increase was due to the strong results in Emera Energy. As Chris mentioned earlier, Bayside had its best year ever, and there were opportunities realized in Emera Energy's gas marketing business.

You may have noticed that Emera Utility Services has grown enough in size to now be disclosed as part of our other investments in our financial statements and MD&A. EUS provides construction and maintenance services in the areas of transmission, distribution, and communications infrastructure, and is starting to expand into full project management services, primarily for the renewables industry. These were the primary drivers for earnings growth in 2010. EUS is the largest utility services contractor in Atlantic Canada.

With respect to our financing plans, as Chris mentioned earlier, we have a significant capital program planned for this year and each of the next five years. Therefore, we expect to be in the equity and debt markets during the year. Lastly, we continued to be very pleased with our decision to adopt US GAAP in 2011. Activities to transition the Company's financial reporting to US GAAP are on track, and we plan to report our Q1 2011 financial results under this framework.

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

(Operator Instructions)Our first question is from Juan Plessis from Canaccord Genuity. You may go ahead.

Thanks very much. I noticed there was a change in the expected growth rate for Bangor-Hydro and NSPI, now expected to grow 3% to 5% over the next five years. I think it was 2% to 4% previously. But there's no change to the consolidated earnings growth outlook of 4% to 6%. Are you still comfortable with that range, or is it now looking a little low?

Juan, it's Chris. I think we're still pretty comfortable with that range as we look out five years. And I think it will depend on whether we layer in any other investments, but with what we see right now, that's still a pretty good number. But we'll update it if we see the opportunity to do so.

Okay, great. And in regards to the Caribbean, I know you had originally been looking to have a total investment of around CAD250 million to CAD400 million. I think you're in that range now. Just wondering what is your investment in the Caribbean to date, and maybe you can comment on some of the opportunities you see in the area.

Maybe Nancy can do some ciphering while I'm answering this part of the question. I think, first of all, it continues to be the same as we had mentioned in the past. We certainly continue to like the eastern Caribbean and so we ultimately see opportunities to invest a little more there. Obviously one of the things we had said in the past was to increase our positions in existing businesses, and we've done that just in the last part of this year. But as well, we think that there are other parts of the eastern Caribbean that are interesting to us. And then we also like the activity in the Bahamas, as well. And so, we have, in fact, invested more in the Bahamas. We think that that will continue to be an opportunity and we've continued to talk to the Commonwealth of the Bahamas about possible investments in their existing business. That's important to us. And then last, but not least, the opportunity to invest in new infrastructure, whether that be transmission infrastructure, inter island, et cetera, or whether that be transformational from a generation perspective. For example, you'll see us making some investments, at least at this point, in the Bahamas, on the renewable side, some wind. We know St. Lucia is making some wind and solar investments, and certainly Barbados is interested in putting some wind up. Those are all other places where we'll see some investment happening. As I understand it, we're just around CAD320 million right now.

Okay, great. Thank you very much.

Thank you. Your next question is from Matthew Akman from MacQuarie. Please go ahead.

Hi, guys. Congrats on a great year. Wanted to ask a quick couple questions about the FAM recovery. And I saw a note in here somewhere that said you recovered the shortfall over three years, I think, is that correct?

Yes, it is.

Is that what you expected to come of the decision, Nancy?

Maybe I'll let Rob answer that, Matthew.

Sure, Matthew. It was within the realm of possibility in the decision. The original FAM agreement included a mechanism that the regulator could employ to defer some FAM amounts over a period of time. While we had expected in the original filing to have a decision that would give us all of that back in the first year, the regulator did reserve a decision-making process to be able to stretch that out if they saw it necessary. And in this case, they put it in essentially equal amounts over three years.

And what is your forecast for 2011 in terms of over or under recovery of fuel, based on where your rates are now and fuel costs as you see them?

Right now we've just come through the process of resetting base rates for fuel, so that reflects our most accurate forecast of fuel amounts for the year, which means we should be, if everything worked out perfectly, we would come out even. Of course it's early in the year, so we don't know the end result yet. But things are set up now to make us even for the year.

Okay, okay. That's good. I wanted to move on on a couple other areas and just touch on them quickly. One is the Emera Utility Services. My question there is whether Emera Utility Services provides service to Nova Scotia Power.

Matthew, it's Chris. It does. It bids on contracts both on the transmission and distribution side. In fact I think that contract has just opened, as we speak, and so we'll see over the next little while what happens there. As well, it provides communication service to communications providers in Nova Scotia, New Brunswick. It works for NB Power, it works for other utilities in the region. It's also been building wind farms lately. And so it's built a number of wind farms in Nova Scotia, a number in New Brunswick, and also has built some in PEI at this point. One of the things we're doing right now with our acquisition of Maine & Maritime, they actually have a utility service group, as well, so we're looking at whether or not we would do some more business in the state of Maine and possibly in New England. But that business actually operates broadly across the region.

Okay. I'll ask one last question, then get off. Do you make more money there building stuff or maintaining stuff? Like building wind farms or maintaining existing utility wires type assets?

Yes, effectively it doesn't do maintenance. It effectively builds things. There's a small bit of maintenance done, say, on the transmission system. We certainly have a lot of expertise on the transmission side. But the majority of the work that that company does is building new things. Deadline construction and also new project construction.

So with all the wind construction, should continue to do pretty well in that region?

Yes, and obviously we're very focused on the Company being able to supply services as the Nalcor project gets built, as more transmission gets built in New England, as well. So there's lots of opportunities for that business.

Okay, thank you very much. Those are my questions.

Thank you. The next question is from Robert Kwan from RBC Capital Markets. You may go ahead.

Great, thank you. Just looking at the NSPI results, was the CAD121 million you booked for the year what you'll be filing for ROE compliance purposes, or was there something else in there, FAM, bonus or penalty, that type of thing?

No, it's what we will be filing. It includes an amount that was part of the settlement, a small amount that was part of the settlement agreement from 2009, as well.

Robert, there's always a couple of reconciling items, some things that the regulator hasn't allowed in rates. So there's always a few reconciling items, but directionally that's the number.

Just to quantify that amount from the settlement agreement in '09, it was about CAD5 million.

CAD5 million from the settlement of '09 that will not be used for the ROE compliance?

That's right.

Yes, that's correct, Robert.

And sorry, that's CAD5 million, so the core earnings would be about CAD116 million?

That's correct.

And then what's your thoughts on where you earned within the range this year?

I'm sorry, where we're going to be in 2011?

Sorry, what did the CAD116 million, was that the higher end?

Yes, it was.

Okay. Just when you look at NSPI again, the CAD14.5 million that's going to be subject to the hearing, when you're looking at your outlook for 2011, do you need all of that to earn within the range if you don't get that deferral benefit coming back to you?

All of this work has been done in collaboration with stakeholders and with the regulator here in Nova Scotia. And it's been part of our business planning. The intent of these deferral mechanisms have been to defer rate increase for customers, to defer any requirement to make a filing, and everyone is aware of that and we've been working along that basis.

Okay. And then just the last question I've got, there was a mention about a deferral of business development costs. Is that something where you expect a larger number than normal for 2011?

I don't know what the reference is, Robert. We may have said that under US GAAP, we can't capitalize business development costs, and so we're expecting more business development costs by virtue of that. We would have capitalized some to some of the transactions we did in 2010, so that would be a year-over-year difference.

Okay. I think it was something where the corporate costs came down and it was in the corporate section that you talked about a deferral of costs.

Yes. So we did defer some -- or capitalize them, I'll say, not defer, but capitalize them to the transaction. But under US GAAP, those rules will be different.

Okay. So, sorry, you are expecting to expense them then in '11?

Yes. To the extent we have any, they will be expensed, except on equity transactions. If we account for it on an equity basis, we can actually still capitalize it to the transaction.

Okay, but what you capitalized in Q4 isn't going to be re-expensed under US GAAP in, say, Q1?

No, no.

Perfect. Thank you.

Thank you. Your next question is from Michael McGowan from BMO Capital Markets. You may go ahead.

Hi, good afternoon. Just a quick question on Emera Utility Services. The CAD7 million you booked this year, you touched on it a little bit, but is that primarily from affiliated companies, or is it from arms-length transactions?

I think the majority of the earnings from US are from arms-length transactions. So there would be a balance, but most of them are arms-length transactions.

The reason why I ask is if you do go in for a rate case this year, is that something that the regulator is going to be taking a look at and possibly under more scrutiny?

I would certainly ask Rob to respond to this, but there's been a lot of scrutiny on it already. It is being done under the affiliate code. It's being done under open and transparent contracts. So it's quite clear to stakeholders exactly what's going on, and that will continue to be the case. And we do go through an affiliate audit on a regular basis. I'm not sure it's annual anymore. Rob can answer that. But I certainly know we go through quite rigorous affiliate audits. I think we've suggested that's already under a lot of scrutiny.

I can only add that we operate under the affiliate code and it ensures that any transactions that happen with an affiliate are to the best interest of customers and provide value. And that's been the case all along and the regulator is comfortable with that.

And, Mike, if I could add, the business is not new. The business has been operating around for at least 10 years, I'm saying. It's got a little profile now because it's grown and it's larger, and so it's separate. But the regulator is very familiar with the business and it's been around for quite a long time.

Okay. Just a little surprised by the magnitude of the fourth quarter earnings. Just with respect to your investments in the Caribbean, you're spending CAD115 million, it looks like you're forecasting for 2011. What does that relate to? Is that your most recent investment that closed in January, or is that really capital spending?

That's our most recent investment, primarily. But, in fact, we also would expect likely to see a little more investment there as we begin to invest around the utility. So certainly there will be some generation investments in there, in that market this year.

Okay. And just one last question on the Caribbean. You made CAD1.7 million this quarter. That's down from CAD3.2 million in Q3. Is that due to seasonality, or is something going on there? Are those earnings really consistent with your expectations and what you're looking forward to that segment?

Yes, Nancy might want to answer the detail. But fundamentally, we're still working hard at GBPC and we've had some issues there. I think we've been talking about that for a couple of quarters. And we only actually took control of that company in December, so we're just in the process of really getting that engaged and going. For instance, we're actually putting temporary generation on the ground in Grand Bahama. We've spent a fair bit of time with the regulator there, just talking through and working through a plan that we would see as a recovery plan for the utility. First and foremost, let's make sure that we can actually supply customers to what their needs are, and that hasn't been happening in that utility. So we're going to get temporary generation. That's going to be a big part of that. And as well, we're also looking at training activities for employees and restructuring the company in a fairly major way. Those are all the things we're doing. We're doing that with open disclosure to stakeholders and also to the regulator in that market.

Okay. So then out of the CAD320 million that you have invested, what sort of return would you be looking for on an ongoing basis when all of these initiatives are final?

I think what we've said all along is that in that market, we would expect to see all-in returns in the low double digits.

On a proforma capital structure of 60/40?

Yes, yes.

On a return on regulated equity, on the operation.

Our ROE's in the 15%-plus and IRR's in the low double digits.

But you've largely financed that with debt at this point?

Yes, but first of all, IRR is on capital, not financed. And on a finance basis, you're right, but we always test against the 60/40. So, from our perspective, regardless of whether we've issued equity or not, we look at it as though we have issued equity and it must be accretive and the returns must exist against that.

Okay, thank you.

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

Thank you. Good afternoon. Just an extension off of the last response. Given the fact you've done a number of acquisitions and you've financed them with credit facilities, is there any more clarity as to just timing on putting permanent capital behind that? And really asking in two senses. One, the debt markets are very attractive right now from a spread basis. And then obviously there's a great deal of interest in yield-related securities right now from an equity standpoint.

I think we've been clear with the market, Andrew. We actually see ourselves being in the market this year for all forms of capital, both common equity, probably preferred equity, and also debt. And so we would actually see ourselves very active in the market this year.

Okay, thank you for that. Just on your capital allocation, I know you've been very clear with your capital plans, but do you have any incentives, given the extension of the bonus depreciation in the US, to really skew out the capital allocation into the US market?

It all comes down to opportunity as we see it. And all these things actually relate to where we think we can add value for customers and where we can enhance the system so that it actually works in the long term. Those are all factors that go into what's going on. We would have been building a fair bit of transmission capacity that has serviced the new renewable generation that's been built in the state, in the state of Maine at least. That slowed down a little bit, but we still do have a fairly robust program on the go. In fact, we've just finished a project in Chester, the Kenney Road project, and we would see that as enabling a lot more wind to be added, another couple hundred more megawatts of wind to be added in that market, which hopefully we'll get to build the transmission to that.

And I know it's still early days after closing a few acquisitions, but with the expanded footprint that you now have, are you seeing any initial greater set of opportunities arising out of those acquisitions than you previously anticipated, or is everything still pretty much as anticipated?

I think we've always been pretty optimistic about what we'd see as we develop these transactions. So certainly we're seeing at least the opportunities we expected to, and we continue to like the areas where we're investing. We continue to see opportunities around them. And I think, as you've seen in our investor presentations recently, we've started to talk about the ranges of capital we see investing in the Company. And so we are going to be busy over the next five-plus years, both in the Caribbean and in the northeast. And obviously we're very pleased to be expanding our activity into this land in Labrador.

And just one final question, if I may. Do you have an update on the status of the tidal units?

Yes, I think maybe Rob might want to do that.

The tidal unit has been lifted off of the bottom of the Minas Passage. It's now in St. John, New Brunswick, at port there awaiting to return to Halifax after the winter season. It's difficult to move that unit during stormy weather in the winter in icy conditions. We're downloading the data from the unit to do more engineering analysis on understanding the nature of the damage that was done to the blade. And the current plan is to re-engineer the process and hopefully be back in the water in 2012.

And, Andrew, I think it's important for people to understand that we really had three objectives from that particular deployment of the technology. The first was to see whether we could deploy and recover the unit. And that part was very, very successful. The second was to see the effect of the very aggressive environment we have in -- sorry, maybe I'll back up. To see the effect that the machine would have on the environment in the Bay, very important. And we're just finalizing the reports from that environmental assessment now, and so that will be very important information. And then lastly, to see the effect of the Bay on the unit. And that's the one that probably wasn't as precisely successful as we would have liked. But at the end of the day, we learned a lot and we now feel very confident that we'll put the machine back in the water and have even better results. So the whole experience has been a very good one for us.

So is it fair to say, just on a preliminary basis, that the tidal flow is probably stronger than anticipated, which ultimately might yield higher outputs of equipment, but it also obviously needs much more robust equipment?

Yes, I don't know how much more robust. That's the design and engineering work that's going on in Open Hydro, as we speak. But you're absolutely right. The scale of the unit we put in there will produce a lot more energy than we expected it to, so that's a wonderful outcome, although it was a hard way to find out. And I think the other thing about that is that if we can, therefore, get a lot more energy out of that same platform, then that can get our costs down where they need to be in order to be economic. And that's the most exciting part of this. Still some engineering to be done. Still more trial work to be done, but we're quite encouraged by what we've seen in all aspects of this test.

Okay, that's great. Thank you.

Thank you. Our next question is from Linda Ezergailis from TD Newcrest. You may go ahead.

Thank you. Congratulations on a great year. Now, looking forward, as we always do -- we don't dwell too much on the past -- looked like next year -- I'm just looking at Emera Energy. And, obviously, there can be some volatility in there, but can you maybe help us understand how the scope and the scale of activity in that unit might shift in terms of how we might think of a reasonable expected run rate going forward?

Linda, I'll answer. I'll try to help on the specifics, although this early in the year, I'm not sure I want to go to specifics on operation by operation. But you probably should know that if you add back the Bear Swamp mark to market, that Emera Energy line is about CAD20 million annually, and it was about CAD20 million the year before. So, it's a marketing business. We were, as Chris said and I said, we were happy with the Bayside power plant. So I think that's probably as good place as any to think about that business, maybe some small upside we would hope. But I think generally speaking, when we increased the dividend back in late in 2010 and we gave the guidance that that's good guidance in terms of our 70% to 75% payout ratio on the CAD1.30, and I think that, in combination with we would still target a 4% to 6% increase, somewhere in that range is where we would expect to be for 2011.

So the 4% to 6% increase would also apply to Emera Energy, or are you talking consolidated ?

No, I'm just saying generally. I think it's early in the year to start to give guidance on an operation by operation perspective. But I think generally speaking, overall, on a consolidated basis, I think that guidance would still be valid.

And, Linda, I think it's important to recognize that at Emera Energy, they really are retooling that business. It certainly has been solely a marketing business for a very long time, and what they have now been doing is adding assets and adding a lot more asset management. They've primarily focused on transportation optimization on the gas side for most of their activity. Today, they have built out a very strong power desk and are very capable of managing both sides of combined cycle gas units. In fact, they are managing pretty close to 3,000-megawatts today. And at the same time, they see the opportunity to manage units that they own themselves. Bayside was the first example of that, but we are looking to do more of that kind of business. So over the next few years, we would expect that business to retool and become a lot more asset-based, while at the same time, taking advantage of the skills that they have developed on the gas and power side.

That's helpful. And I know that, again, there's a lot of moving parts in terms of an effective tax rate in your other business, but how might we think about what would be appropriate?

In the other section?

Yes.

Probably on earnings, about in the 32%--ish range.

Okay. Thank you.

Thank you. (Operator Instructions)Our next question is from Phil Bassil from Beacon Securities. You may go ahead.

Congratulations on the year. Just actually a couple of questions. You touched on Bayside, and that was one of the areas I wanted to focus a little bit about. You talked about additional opportunity but maybe a little wider question. What do you see the opportunities in New Brunswick for additional assets or even generation or transmission opportunities? And then the second question is along the same lines in the northeast. And you touched on it a little bit, but just a little more color on the opportunities beyond the CAD150 million in projects there.

Thanks, Phil, for those questions. First of all, New Brunswick is an important area for us and it certainly fits into our overall approach to the region. If I just specifically talk about Bayside, we have some opportunities around the Bayside plant to incrementally build that facility out. And so one of the things we're looking very carefully at is making some additional incremental investments to provide more efficiency and more and more output. So that's an early stage thing that we'll see over this year. We'll decide whether or not we're going to make that kind of investment. But that's an opportunity that's right in front of us.

When it comes to the rest of New Brunswick, we actually see a lot of opportunity on the transmission side. We're working directly with NB Power, as we speak. And I think I would also note that we see great opportunities in working with NB Power. We've worked with that company and business for a long, long time, since the late '50s, at least. And in fact, we have a very good working relationship there. We have a joint development agreement in place today where we're working together to try to build some incremental transmission that will help the region. We're working with them relative to the Nalcor project and how that might get into integrated into the larger Atlantic maritime region. And I think that really is the majority of the activity we've got going on right there at this point. We always continue to look for opportunities around the pipeline side, and to see whether or not there are more gas opportunities. And for now, that's a little bit slower than the rest.

When it comes to New England, it's the same thing. If you think about the way we've looked at New England, we continue to see the opportunity to invest in transmission, to collect renewables, to bring that to market. And so that's an important piece of what we're doing. We like the idea that there are some generation assets that can fit. We talked about that relative to energy services. And we've talked about some southern New England transmission that would help to move larger volumes of energy to market. So when we think about the work that we're doing with Newfoundland and Labrador, that's upstream work to feed into downstream transmission that can exist in the maritimes or can exist in New England. And I think that characterizes the way we look at the business and the objectives that we're working towards for the longer term.

Okay, great. And one last one on EUS. As you look at that, you mentioned the assets in Bangor, the resources that might be complementary and the opportunity to do some work through EUS in that region. Would you look at organic growth as well as acquisition for that business specifically?

We've done some small acquisitions in that business over the years, buying up some of the smaller contractors. And we would continue to look at that. But that's not our preferred route because, in fact, I think it is ultimately easier to work on the organic side. So, I wouldn't rule out a few smaller contractors in various regions, but on the other hand, most of the activity and most of the growth we're seeing is organic.

Great. Great year, and good luck.

Thank you. There are no further questions registered. I would now like to turn the meeting back to the presenters.

Okay. Thank you very much for your participation today on the call, and for your interest in Emera. I hope everyone has a wonderful weekend. Thank you all very much.

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