Emera Inc (EMA) 2011 Q1 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. Jill McDonald. Please go ahead, Ms. MacDonald.

Good afternoon, everyone, and thank you for joining us for our first quarter conference call this afternoon. Joining me 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, Gerry Chasse, President and Chief Operating Officer of Bangor-Hydro, and Bob Hanf, Chief Legal Officer of Emera.

Emera's 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 a corporate update and a high level overview of the financial results for the first quarter of 2011. Nancy will then review these financial results in more detail. We expect the presentation segment to last ten minutes after which we'll be happy to take questions from analysts and investors.

Please note that all amounts are in Canadian dollars with the exception of our Maine utilities 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 assumption 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, Jill, and good afternoon, everyone. I would like to start by saying that we are very pleased with our first quarter results. Consolidated earning for Q1 of 2011 were CAD123.6 million compared to CAD77.8 million in the first quarter of 2010. Earnings per share were CAD1.06 for 2011 compared to CAD0.68 for 2010. Nancy will go into more detail about our results later in her remarks.

The core businesses are running well. Nova Scotia Power had a strong quarter and achieved a number of renewable energy milestones. As an example on April 14, the province had a record amount of wind on the system, accounting for 20% of all energy being used in the province. This characterizes the change we are seeing in electricity production in Nova Scotia, and we are proud of our contribution to this change.

There were a number of regulatory proceedings in the first quarter. The Nova Scotia Utility and Review Board approved project costs associated with the Digby wind project. The UARB also held a public hearing on Nova Scotia Power's annual capital expenditure plan. While approval of capital expenditures is not new, 2011 marks the first time that regulatory stakeholders have played an active role in this process. We welcome the enhanced transparency with customers and stakeholders, and they're seeing this in other regulatory proceedings as well.

Moving now to Maine. We're pleased with how our Maine utilities performed this quarter. Bangor-Hydro had a solid start to the year, and Maine Public Service had its first full quarter in the Emera family. The integration of MPS is going well, and we are making progress on ensuring that the business has both the financial and operational performance that meets our expectations.

We continue to be pleased with how things are advancing in the Caribbean. We now have almost 80% of Light and Power Holdings, the parent Company of Barbados Light and Power. We acquired 38% of LPH in May of 2010 and an additional 41.7% in January as a result of our share offering. We're pleased with our investment in this high quality, regulated utility which serves 120,000 customers on the island of Barbados and recognized as one of the best run utilities in the region. We feel good about our investment in the Caribbean and continue to see many opportunities around them.

Work continues to advance on the Maritime Link project that will bring energy from Lower Churchill Falls to Nova Scotia. We have a team established and plans for the 2011 summer work program have begun. This work program will include the completion of the Cabot Strait marine survey which will allow final routing and landfall for cables along with transmission route design and converter station locations, amongst other project milestones. This is only one of several initiatives where we are seeing increased cooperation on energy issues among utilities and governments in Atlantic Canada.

Another investment we continue to be pleased with is our interest in Algonquin Power. On January 1, 2011, we closed our joint acquisition with Algonquin of Calpeco. This brought Emera's ownership in Algonquin to 8.2%, and we were able to realize an after-tax gain of $12.8 million on this transaction. On Friday, we announced a strategic investment agreement between Emera and Algonquin. As an element of the agreement, Emera will transfer its 50% ownership stake in Calpeco to Algonquin, subject to regulatory approval. As consideration for the transfer, Emera will receive 8.21 million shares in two tranches, and Emera is allowed common equity interest in Algonquin will be increased from 15% to 25% for which Algonquin will seek shareholder approval.

On Saturday, we announced our agreement with Algonquin and First Wind to jointly construct to own and operate wind projects in the Northeast. The investment with First Wind and Algonquin has a 370-megawatt portfolio of wind energy projects in northeastern US. By having a larger Northeast presence, we see many integration opportunities through transmission development and utility services.

In the equity markets, Emera recently completed its offering of more than 6.35 million common shares for gross proceeds of $201.6 million. This was the first time we've been in the common equity market since 2002, and we're pleased with the take-up for Emera shares. We plan to use the net proceeds of the offering for general corporate purposes. All in all, this has been a great quarter. And with that, I'll turn things over to Nancy who will give you a more detailed update on our financial results for the quarter. Nancy?

Thank you, Chris, and good afternoon, everyone. Our first quarter financial results were released earlier today and are on the Emera website. As Chris mentioned, Emera's consolidated net earnings were CAD123.6 million in Q1 2011 compared to CAD77.8 million in Q1 2010. Earnings in Q1 2011 include a CAD28 million non-recurring accounting gain on an acquisition. Absent this amount, Q1 2011 net earnings were CAD95.6 million in Q1 2011. Reported earnings per share were CAD1.06 in Q1 2011. CAD0.82 excluding the aforementioned gain and CAD0.68 for Q1 2010.

Nova Scotia Power's net earnings were consistent year-over-year. They had net earnings of CAD63.6 million in Q1 this year compared to CAD65.2 million in Q1 2010. Maine utility operations contributed $9.4 million to consolidated net earnings in Q1 2011 compared to $5.6 million for the same period last year. This increase was mainly due to increased returns from new transmission investments and $2 million of earnings for Maine & Maritimes Corporation which we acquired in December 2010.

Caribbean utility operations contributed CAD29.6 million to consolidated net earnings in Q1 2011 compared to CAD200,000 in Q1 2010. This increase is the result of the $28 million non-recurring accounting gain on the acquisition of Light and Power Holdings in January 2011 as a result of the purchase price allocation as determined under US GAAP.

Pipelines contributed CAD6.8 million to consolidated net earnings in Q1 2011 compared to CAD8.3 million in Q1 2010. This decrease is primarily due to changes in the mark-to-market of currency hedges year-over-year. Services, renewables, and other investments contributed CAD20.6 million to consolidated net earnings in Q1 of this year compared to a loss of CAD600,000 in Q1 2010. Higher net earnings are primarily due to a CAD12.8 million after-tax gain realized on the exchange of Algonquin subscription receipts for Algonquin shares. In addition, stronger energy marketing results and the inclusion of Algonquin and Calpeco equity earnings contributed to the increase.

Emera's corporate segment had a loss of CAD6.4 million in Q1 2011 compared to a loss of CAD900,000 in Q1 2010. Corporate expenses were higher in Q1 2011 due to increased deferred compensation costs, corporate activities associated with business growth, and preferred stock dividends on the preferred shares issued in June of 2010.

Now to our change to US GAAP. You likely saw a few changes in our financial statements that were released earlier today as a result of our conversion to US GAAP. For the most part, you should have seen a lot of small geography and name changes but very few material accounting differences. For instance, with respect to some of the name changes, net earnings is now called net income. Preferred shares are now preferred stock, and so on.

Note 22 to our quarterly statements is our transition note and outlines everything you need to know about the change in our numbers. It provides detail on the income in the quarters and details on the balance sheet. It will appear as is in each of the quarters in 2011.

When looking at the Canadian GAAP to US GAAP reconciliation for 2010 annual earnings, I thought it might be helpful to look at the three largest differences in the schedule in Note 22 of our financial statements. The largest difference between the two accounting frameworks was CAD8.4 million as it relates to business combinations. Going forward under US GAAP, transaction costs related to acquisitions of subsidiaries are expensed, whereas they were previously capitalized under Canadian GAAP. Our transaction costs associated with equity investments will continue to be capitalized.

The next largest difference was CAD6 million, and it relates to a change in the accounting treatment on our foreign exchange hedges. This difference will reverse and be minimal in 2011. Lastly, you would have seen a CAD5 million difference in income taxes. Some of this difference is related to the income tax effect of the other changes on line items on the income statement. We are not expecting this number to be large going forward.

Not related to US GAAP -- to the US GAAP change, we also made some changes to the way we disclosed our investments in the MD&A. Our Carribean investments have grown enough in size and now have their own section, and the remaining investments in the other section are now disclosed in services, renewables, and other investments. Bangor-Hydro and Maine & Maritimes' results are now included under Maine utility operations.

With respect to our financing plans and as Chris mentioned earlier, we were pleased with the take-up on our common equity deal in March. We have a significant capital program planned for each of the next five years, and as a result, we are expected to in both the equity and debt markets regularly over the next five-year period. That's all for my financial review. Thank you, and we'll now be happy to take your questions.

(Operator Instructions) The first question is from Sam Kanes from Scotia Capital. Please go ahead.

Thank you. It's to do with the SIA, I guess, and your strategy with AQN and this deal you just announced for 49%. First of all, you were going to become the operator of a 49% interest. Is that correct?

You're talking about the First Wind investment?

Yes.

Is that correct?

Yes.

Yes, that would be right. We're going to work together with Algonquin on that joint venture, and but certainly we have 75% of the joint venture.

[One more that], but you have a 49% overall interest from First Wind. Does that, in effect, disassociate from First Wind completely? Or are you still partners with First Wind as well?

No, no, we're still partners with First Wind as well. In fact, they will operate the assets, and they will also continue to be the developer for the Company. And so we're looking forward to the number of development activities they have on the go. We will, however, get more involved in the marketing side, and that's something that Emera Energy will do. Emera Energy, in fact, will be the Company that holds the investment and will be quite actively involved.

Okay, I was trying to figure out operating/non-operating because from your statement it looked like you were going to operate those assets where in fact you're not. Is that correct?

No, Sam. That's right. We won't be operating the assets on the ground, but we will be heavily involved in the marketing.

Okay. I got that part. Following up with that, just in general now because this is a joint venture to a joint venture. And it's kind of like a hub-spoke concept of your strategy in how you're moving out your footprint or your network, I guess, is a better way of saying it. Is there a limit to this once-removed to twice-removed type of footprint? Or so far, as long as it makes symmetrical sense, especially since it is a better value, i.e., in some EBITDA of some asset or investment you're picking up which in the case of Algonquin it clearly was and may still be. Is that -- just wondering how your top-down thought process is with this type of structure?

Certainly, I understand your question, and I think there are a couple of things going on here. First of all from an overall strategic prospective, we are very focused on supplying clean energy into all the markets that we serve. And so whether that's Nova Scotia, work that we do in New Brunswick, or work we do in Maine or the rest of New England, we're very focused on doing what we can to bring clean energy to those markets.

From that perspective, an investment in First Wind, who is the premiere wind producer in that market and also the premiere wind developer in that market, makes perfect sense in that that helps to continue to give us a portfolio. And we continue to intensify our clean energy investment. And also, it begins to help as we continue to look at developing transmission across the region whether it's the Nalcor project and the transmission it drives or now the First Wind northern New England investments and how they will drive transmission as well. So you put all of those together it's very -- it fits perfectly from our perspective, strategically.

Then, when it comes to Algonquin. What we've said with Algonquin is we want to have Algonquin be our unregulated renewable investment vehicle. In this case, this was such a large investment that Algonquin couldn't deal with it at this time in any way other than the 25%. So, it's a bit of a larger investment. I think not dissimilar to Calpeco as it began, Algonquin felt that they needed a partner on Calpeco and we became that partner. But as well it allowed us to invest with them and now you see that investment is going into Algonquin. And we are working with them, as I said, on non-regulated renewables. On small, under CAD250 million electric utilities, and we're working with them on the gas work that they're doing. So I think that strategically it fits, and I understand that as we operationalize it, it gets a little more complicated. But I think it fits quite well from an overall business perspective.

And so that's the last point. And the last point is that one of the things we're trying to do is broaden our ability to grow, and this particular investment and vehicle for investment allows us to have development happen by experts like First Wind and also to have development -- management shared by people like Algonquin. So you put that all together, it works very well for our business.

Thanks, Chris, for that clarity.

Thank you.

Thank you. The next question is from Juan Plessis from Canaccord Genuity. Please go ahead.

Thank you. And my complements on the improved segmented breakout in the release.

You're welcome, Juan.

My first question is in regard to the statement in the MD&A of targeting 4% to 6% annual growth. From NSPI and Bangor-Hydro alone, you have 3% to 5% growth. You're doing a lot of additional things on the growth front. I was wondering if you see 4% to 6% more as a minimum target? And if something a bit higher than the 4% to 6% might be more reasonable?

Juan, I think what we've said is that over the longer term on an annualized basis, you should expect 4% to 6%. You might see a little bit higher in some years and a little lower bit in others, but we're still committed to that 4% to 6% over the short- to medium-term on an annualized basis.

Okay, thank you for that. And you mentioned that business development costs are not expensed under US GAAP. Just wondering if you can tell us how much the BD costs were in Q1? And maybe if you could give us some idea of what you might see as a reasonable expectation for the full year?

So, Juan, the BD costs when we have equity accounted investments still get capitalized. So it would only be those costs that on consolidated investment. You'll notice if you look deep into that US GAAP transition note, you'll see some BD costs that were capitalized last year, and then we ended up writing them off to retained earnings through 2010. And those were offset by some gains, but in the first quarter, I think, it's maybe CAD1million or something. It was quite minimal in Q1 of 2011.

Okay. Thank you.

You're welcome.

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

Thanks a lot. Wanted to focus a little bit on the Caribbean, and you've invested quite a bit of money there now. The normalized earnings aren't that huge, to say the least, and I'm just wondering if you're seeing results in line with expectations so far? Do they meet your accretion hurdle? And if not, what's the timing for that?

Yes, Matthew, it's Chris. I think for last year we were very happy with the earnings we had from our investments there, especially Barbados did extremely well last year. I think it's a bit of a slow start in Q1, and certainly I'd acknowledged that. But we would expect that those businesses will perform at our hurdle rate for the year. And so we continue to work with the businesses to ensure that happens. Where our expectations continue to be in the same place.

What specifically, Chris, is going on down there that's lagging a little bit? Is it fuel expense?

Well, it's no different than we would see in any of our other businesses. There are differences quarter to quarter, and in fact in this case, we've continued to put facilities on the ground. I think in 2010 there was some equipment damage on the generation side in the Bahamas, and that has slowed things down. That has been something that they've been working on, and so that's been costing the business a bit of money.

We've also put a fair bit of generation on the ground there because the first and foremost that particular business, we need to make sure that the lights stay on and that we begin to move it toward an Emera standard of production and supply to customers. So, those are the things that are happening, but we also -- we continue to believe that business will be productive for us.

So, are you saying that you're expensing some of these items now that are really for system integrity-type of investments?

Well, some of them are getting expensed, and one of the things we've been doing, especially in the Bahamas, is working directly with the regulator to put the right regulatory processes in place. In fact, we've actually just come to the right position with them. We've made an application before that regulator. They made some changes to how cost gets -- flows through the business that allows us to put more generation on the ground. And at the same time to actually reduce costs for customers and also see the costs pass through.

Okay. Okay, thanks. Those are my questions.

Thank you.

Matthew, and maybe further to Juan's question. A couple of things that play in the numbers in the Caribbean this quarter. One is, of course, we only had 80% of BLP for, call it two months of the three, and that was also the place that the net about $1 million of costs got written off.

That helps. Okay. Thanks very much, Nancy.

Thank you. The next question is from Michael McGowan from BMO Capital Markets.

Good afternoon. A couple of quick questions about some of the other earnings. It looks like your contribution from Algonquin and Calpeco on one of the reconciliations was about CAD0.8 million. Was that the total earnings from those two investments during the quarter in terms of recurring earnings?

There was a small offset from another investment, Atlantic Hydrogen, where we equity account, and there was a small loss in there. But primarily, that's what it was.

Okay, when you say small loss, it would be roughly -- can you quantify that?

Less than CAD1 million.

Okay. And then in terms of in Maine & Maritimes, it looks like you earned about $2 million net there during the quarter. Is that -- do you expect a run rate of about $8 million per year? Or are those results expected to be fairly seasonable?

Yes, I think they are seasonable. That's probably a good Q4 number again, and they'll probably be minimum earnings in the two middle quarters I'd say. So that $4 million is the range of earnings we've talked about for that investment for this year.

Okay so it was really just seasonality.

Yes.

Great, thanks a lot. Those are my questions.

You're welcome, Mike.

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

Thank you. First of all, I do want to thank you for the new segmentation. I'm wondering if it's possible to get 2010 full-year and quarter actuals to help us adjust our models? If you have it somewhere?

In this wave -- so what -- maybe we could -- I'm looking at Jill here. What exactly would you be looking for, Linda?

Well, sometimes we don't -- some companies would give us of retroactive re-segmented stuff so we can adjust our models instead of giving it to us in dribs and drabs quarterly going forward. It just helps accelerate the rewiring process on the models.

Yes. The MD&A for the full year?

Well, no, even just an Excel spread sheet with the segmented stuff. It's not possible, that's fine. But if it is, that would be helpful.

We'll take a look at it. The reason I'm hesitating I'm concerned obviously about our disclosure. We would have to release it generally, but let's look to see what we can get it out to everyone.

Or you can just post it on your website.

Yes.

So, as part of your financing plans, just as a broader look at in addition to issuing new capital, would there be any assets or businesses that you would consider to be less core at this point? And are those a consideration in your overall financing plans?

Well, Linda, I think that probably has two parts to that answer, and what I'll do is get Nancy to answer the second part. The first part is that where we are today is we're very comfortable with all of the assets that we own. They are core to our business, and the Calpeco divestiture in our view is really just a moving upstairs. And if you look at the way we applied for that regulatory -- during that regulatory proceeding, we actually talked to the California regulator about doing this from the beginning. We actually asked for a pre-approval. They were a little bit uncomfortable with the idea of pre-approving this type of transaction, but they did acknowledge that it was something that was possible and something that they would consider in the future. That's not something that I would take as a norm. And Nancy, may be you just want to talk about our overall financing?

From a finance prospective, I think we feel pretty comfortable about financing the assets that we purchase on, I'll say on an individual basis. But we certainly, it's the discipline that we have, of course, Linda, as you would know we don't do anything unless it's immediately accretive, and we feel by virtue of that, we're able to go to the markets and look for financing. We're pretty comfortable.

Okay, and maybe this is a follow-on question to Sam's earlier question about the JVs of JVs, et cetera. Can we assume that from a tax planning perspective, there's no additional synergies than that cash flows will flow relatively easily between all these affiliates? Or how might we think about all of these structures in terms of look-through to Emera?

Yes, I think cash will flow fairly easily from these. I think of dividends from Algonquin or cash flow from the wind project, for example. I think we talked a bit the other day on the call that certainly from the First Wind project that after about the first seven to ten years the cash flows from that get very strong because in the first instance there's some tax equity and some debt that needs to be paid. But I think from a cash flow perspective, there's no -- nothing is really restricted.

And Linda, certainly that's exactly the way that the joint ventures are set up so that no cash will get trapped in them. They do have to service their initial requirements, but at the end of the day, no cash will get trapped in those.

Okay, and then other than the tax equity, there's nothing additional that we should be considering in terms of tax planning or anything like that?

No, that's correct. Well, I guess that's not exactly true. There will be a tax advantage structure put in place for these investments just like we've done for others.

Okay. Maybe we can take that off-line then. I'm not -- .

Yes.

Okay, thanks.

It's what we'd call a tower structure which is I think fairly common. We would have set something up like that for Bear Swamp. We've got something similar in Bangor and Maine & Maritimes, and so when we have US investments held by Canadian companies you can set up a tax advantaged tower structure.

Okay, just like all of your US investments. Okay, thank you.

Yes, that's all.

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

Good afternoon. First question was on NSPI and just the tax benefit. I know that you had carrying over from 2010, you'd deferred some of the tax benefits. I just wanted to see the recovery in the quarter, was there anything unusual drawn from that? Or was this just purely the benefit of the renewables in the book?

Nothing unusual down there. The tax benefits profiled quarterly over the year, we took a quarter of it in this quarter.

Can you disclose what the balance then of the benefit that you've carried over?

It was about $14 million that was attributed to Section 21. So we took one quarter of that.

Okay.

Robert, we didn't take any of that tax deferral. The one that was subject of the hearing in January. Nothing was taken in the first quarter on that.

That's perfect. If I can come back to the Caribbean just to make sure I'm understanding the explanation there. It sounds like it's more regulatory lag that you expect to reverse in the rest of this year? Or is it timing of O&M? Or is there something else going on?

I think as Nancy said earlier, there's a piece that is just a one-time cost associated with the transaction. There's the fact that the transaction was not for the full quarter. Those two things are there as well. But beyond that, what we've done in the Bahamas is we've actually installed a tremendous amount of temporary generation. And in the first instance, that wasn't getting recovered properly in that the cost of that generation was getting carried by the shareholder. We actually made an application to the regulator, and the regulator agreed that we could recover that cost because, in fact, it is lower cost for customers through the regulatory mechanism. And that's now in place, and that will make a big difference to how the business looks going forward. We also have a recovery of costs relative to insurance and a few other things that are likely to happen as the year moves on, and I don't know, Nancy, if there's anything else you would like to add.

No, I think that's it.

Is there going to be a single period make up? Or is it something that is going to be recovered over -- resolved over quarters?

It will get recovered over the year.

Okay. Okay and just last question I had is on the utility services side. It was down sequentially quite a bit. Is Q1 -- was there something unusually poor about the quarter? Or is it seasonal relative to the rest of the year?

I think utility services is actually up a bit year-over-year, but that's a very -- it's a very -- I'll say hard to predict, difficult to predict business. It's a construction business, and the earnings are volatile year-over-year based on the work that's in front of them. So-- .

But I think it is traditional that the first quarter is a tough quarter for that business because they continue to balance their labor force against the number of contracts they have. As they get into the spring and the summer and the fall, they end up with a lot more work and a lot more business. And so there is a seasonality to it, Robert.

So being down sequentially from Q4 is not a big deal, and in fact, the fact that you're up year-over-year, the segment's looking quite good then for 2011?

That's exactly the way to interpret that. In fact, they've done a great job at managing this Q1 versus last year at the same time, and that's really what the [comparater] should be.

Sorry, Robert, I thought you said Q1. So yes, Q4 was a very busy quarter for them last year.

That's great, thanks, Chris. Thanks, Nancy.

Thank you. (Operator Instructions) The next question is from Paul [Holden] from CIBC. Please go ahead.

Thank you, good afternoon.

Good afternoon.

Chris, you mentioned a number of times in relation to the First Wind investments how it fits into your overall view of transmission in the region, and I was just wondering how did it either accelerate or change your plans for adding transmission in the region? And can you give us any updates in terms of the Northeast energy link?

I think just a couple of things, Paul. And first of all relative to connection to wind farms, the transmission actually really fits into -- I guess, probably three categories. First, just the connections that really are generator leads, and then what happens with those generator leads. And obviously as a result of this, we're going to do a lot more work as First Wind concentrates on building and has the ability to build these facilities in this region.

The second is reinforcing the regional or the local system, and we'll continue to reinforce the local system. And then there's the regional investment, and so as we've looked at the regional investment, we've continued to look at how do we put the right generation behind this so that NEL and other types of investment like this can happen. Previously in Q4, we actually announced the Nalcor deal. Now we've announced this deal.

All of those things build capacity that will push the requirement for transmission and allow this clean energy to get delivered to customers in the [soap], and so that it continues to advance that activity. And we see this as another step down that road, and also as we are more involved that allows us to be much more knowledgeable of what is going to happen next.

There's no specific updates on the Northeast energy link?

Not at this moment, but we continue to work on it. And it's an important part of our overall plan for the region.

Okay. You mentioned some early work on the Maritime links starting this summer. I was just wondering, given that the project hadn't received final approvals and regulatory approvals and financing and the like, how much work are you prepared to do before it actually gets to final approval stage.

Well, we have -- and Nancy, you may want to chime in as well -- but we have a specific agreement with Nalcor on that subject. And we know we have to spend CAD25 million this year, pre-approval, and possibly as much as another CAD25 million next year pre-approval. That's something that we knew going into the project, and that was required in order to keep the project on schedule. Nancy, I don't know if there was anything else?

No, I think that's it. We do have to -- before we apply for regulatory approval -- we have to have a fair bit of the work done. And we have to be pretty certain around costs, and so that will drive some work. And as Chris said, we knew that going in. That was the time line, and those were the amounts we were going to have spend.

I think the other thing to say, Paul, is that's being shared with Nalcor. So Nalcor is matching dollar for dollar of the activity.

So the CAD25 million? Is that net to you? Or is that the total amount?

No, that's net to us. It's twice that for the entire project.

I got you. All right, thank you very much. Thank you.

Thank you. There are no further questions registered at this time. I would like to return the meeting to Mr. Chris Huskilson.

I would like to thank you all very much for attending today and also to remind you that Emera has its 2010 annual general meeting tomorrow in Halifax at 2.00 PM Atlantic, and we will be broadcasting that meeting broadly across the Web. And so you can attend on the Web as well. So thank you very much for your participation today and your interest in Emera. Have a good day.

Thank you. That concludes today's conference call. Please disconnect your lines at this time, and we thank you for your participation