Emera Q3 2026 Earnings Call Transcript

Quartr
Provided by Quartr
November 6, 2026

Key Takeaways

  • Neutral Sentiment: Emera reported third-quarter adjusted EPS of CAD 0.85, down 3% year over year, while year-to-date adjusted EPS reached CAD 2.90. Management said it remains on track to exceed its 5%–7% adjusted EPS growth target in 2026 and maintain its longer-term outlook through 2030.
  • Positive Sentiment: The company introduced a CAD 21.5 billion five-year capital plan, about 5% above last year’s plan, and expects rate base growth of 7.5%–8.5% through 2031. Roughly three-quarters of planned investment is directed to reliability and resiliency, with about 82% allocated to Florida.
  • Positive Sentiment: Large-load opportunities are advancing in Florida: Tampa Electric expects to contract by year-end for an initial 350 MW at the Auburndale Technology Center, with delivery requiring only tens of millions of dollars in tie-in investment. The company says its proposed tariff is designed to make large customers cover their costs and protect existing customers; regulatory approval and final contracts remain pending.
  • Positive Sentiment: Emera said its proposed merger with Canadian Utilities could combine growth opportunities in Florida and Alberta and strengthen the company’s financial and operating capacity. Closing is expected in Q3 or Q4 2027, subject to regulatory and shareholder approvals.
  • Positive Sentiment: Nova Scotia Power is seeking approval to securitize about CAD 1 billion in costs, which Emera estimates could save customers approximately CAD 265 million over 30 years. The savings depend on approval by the Nova Scotia Energy Board.
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Earnings Conference Call
Emera Q3 2026
00:00 / 00:00

Transcript Sections

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Operator

Good morning, ladies and gentlemen, and welcome to the Emera Third Quarter 2026 Earnings Conference Call. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. I would now like to turn the conference call over to Dave Bezanson. Please go ahead.

Dave Bezanson
Dave Bezanson
SVP of Capital Markets at Emera

Thank you, Jenny, and thank you all for joining us this morning for Emera's third quarter 2026 conference call and live webcast. Emera's third quarter earnings release was distributed this morning via Newswire, and the financial statements, management's discussion and analysis, and the presentation being referenced on this call are available on our website at emera.com. Joining me for this morning's call are Scott Balfour, Emera's President and Chief Executive Officer, Jared Green, Emera's Chief Financial Officer, and other members of Emera's management team.

Dave Bezanson
Dave Bezanson
SVP of Capital Markets at Emera

Before we begin, I'd like to advise you that this morning's discussion will include forward-looking information, which is subject to the cautionary statement contained in the supporting slide. Today's discussion and presentation will also include references to non-GAAP financial measures. You should refer to the appendix for reconciliations of historical non-GAAP measures to the closest GAAP financial measure. Unless otherwise specified, all financial information referenced is in Canadian Dollars. I will turn things over to Scott.

Scott Balfour
Scott Balfour
President and CEO at Emera

Thank you, Dave, and good morning, everyone. This morning, we reported third quarter adjusted EPS of CAD 0.85, bringing year-to-date adjusted EPS to CAD 2.90. That is modestly below last year's very strong performance, but importantly, we remain on track to deliver compound adjusted EPS growth above our 5%-7% growth target range in 2026, and we remain committed to our longer-term EPS guidance through 2030. In the quarter, our board of directors approved a 1% dividend increase, marking our 20th consecutive year of annual increases. That track record reflects the strength of our business, but also the discipline and expertise we've built in allocating capital, investing where we see the best opportunities, and recycling capital when that makes sense. That approach has supported consistent earnings and cash flow growth and continues to create value for both customers and shareholders.

Scott Balfour
Scott Balfour
President and CEO at Emera

In addition to our financial results today, we are introducing a five-year, CAD 21.5 billion Capital Plan, approximately CAD 1.1 billion, or 5% higher than the plan we shared last year. This is Emera's standalone capital plan and does not include the proposed merger with Canadian Utilities announced last month. Our CAD 21.5 billion plan reflects the significant opportunities that we continue to see across our regulated utilities and our confidence in our ability to execute. We expect the plan to drive Rate Base growth of 7.5%-8.5% through 2031, up from the 7% to 8% rate base growth in our previous plan. At its core, this is a plan focused on customers. About three-quarters of our investment plan is directed to reliability and resiliency, strengthening and modernizing the systems our customers depend on every day.

Scott Balfour
Scott Balfour
President and CEO at Emera

We are also investing to support customer growth and in renewable generation that can help provide greater predictability in customer costs over the long term. Florida continues to be the largest driver of our capital plan, where approximately 82% of our planned capital will be invested. We continue to see strong fundamentals in the state, including a strong and growing economy and population. Our investments are responding directly to that growth while strengthening and modernizing the grid, hardening the system against storms, and ensuring we continue to deliver safe and reliable service. As we invest, affordability remains front and center. We need to make the investments required to support growth and maintain safe and reliable systems while being thoughtful about what these investments mean for customer bills. That means prioritizing the investments that matter most, pacing them appropriately, and delivering them as efficiently as we can.

Scott Balfour
Scott Balfour
President and CEO at Emera

Tampa Electric is a good example of this approach in action. Since we acquired the business in 2016, we have invested to serve a growing customer base and strengthen the system. At the same time, customer bill increases have remained below the national average. That does not happen by accident. It reflects disciplined investment choices and execution, and a continued focus on finding ways to deliver more value for customers. In fact, the combination of Tampa Electric's recent rate reduction of approximately 12% in August, combined with a further 1.4% reduction in January with benefit of lower-than-expected fuel costs, Tampa Electric's rates are now approximately 25% below the national average. The circumstances are different in Nova Scotia, but our focus on affordability is the same. We need to support growth in the province, strengthen the system against increasingly severe weather, and help advance the province's transition away from coal.

Scott Balfour
Scott Balfour
President and CEO at Emera

As we do that, we continue to look for ways to reduce the cost impact to customers. To that end, we are working to securitize approximately CAD 1 billion of costs, including those associated with certain thermal assets being retired as part of the energy transition. By accessing lower-cost financing, if approved by the Nova Scotia Energy Board, we expect securitization to save customers approximately CAD 265 million over the 30-year repayment period. These are different markets with different needs, but the approach is consistent. Invest where it is needed, manage costs carefully, and find innovative ways to deliver better outcomes for customers. Our updated capital plan gives us strong visibility into growth across the business. This new plan results in 7.5%-8.5% consolidated rate base growth through 2031, with our Florida utility expected to deliver closer to 9%. We have a strong track record of delivering.

Scott Balfour
Scott Balfour
President and CEO at Emera

This year alone, we're on pace to invest approximately CAD 4 billion across the business, the largest annual capital plan in our history. We're excited about the investments we're making for the benefit of our customers across our portfolio of companies. At Tampa Electric, in addition to significant investments to strengthen the grid, the modernization of Big Bend Unit 4 will use existing infrastructure to add approximately 720 MW of highly efficient generation capacity. It's a practical, cost-effective way to add capacity and improve reliability as demand continues to grow. Construction is expected to begin in 2027, with the facility targeted to be fully operational in 2032. At Peoples Gas, we plan to invest approximately CAD 1 billion to support customer growth, building the infrastructure needed to serve expanding residential and commercial opportunities across Florida through 2031.

Scott Balfour
Scott Balfour
President and CEO at Emera

In Nova Scotia, we're making important reliability investments to prepare the grid for the province's clean energy transition. That includes the deployment of grid-stabilizing synchronous condensers at five sites across the province, which will enable and critically support the significant new wind generation in service and planned in the province. None of these projects are, of course, possible without our people. Across Emera, our teams are planning, designing, building, and operating critical infrastructure every day safely and reliably. Their expertise and execution are what gives us the confidence to take on a capital program of this scale. We're also making progress on several important regulatory matters across our business and seeing important economic growth drivers. In Florida, we continue to see significant momentum around data center demand.

Scott Balfour
Scott Balfour
President and CEO at Emera

Tampa Electric filed its proposed large load tariff on September 30th, designed to accommodate up to 1,000 MW of large load demand, along with a second proposed formula rate for demand beyond that initial 1,000 MW. Importantly, the framework is designed to ensure that these new customers pay the costs required to serve them while protecting existing customers. The filing has been very well received by stakeholders to date, and we expect a decision early next year. At the same time, the data center pipeline continues to advance. Tampa Electric has now completed complex system impact studies for approximately 1,300 MW of potential demand, with commercial discussions across these projects at various stages.

Scott Balfour
Scott Balfour
President and CEO at Emera

We're encouraged by that progress, and with a number of other data center discussions underway, Tampa Electric is working towards signing a contract by year-end for the first 350 MW for the Auburndale Technology Center that was announced by Hillwood Corporation earlier this week. To put these opportunities into perspective, each additional 100 MW represents approximately 2% growth in system demand. We're also seeing opportunities emerge in Nova Scotia. The recently announced potential data center development in Nova Scotia is a good example. It's still early, but the interest itself is encouraging and speaks to the potential for new economic growth in the province.

Scott Balfour
Scott Balfour
President and CEO at Emera

While the ultimate impact to customers and to the utility will depend upon how the tariff is developed and approved by the regulator, which certainly will include ensuring these large load customers pay their own way, we believe this growth has the potential for it to deliver meaningful benefit to customers. Just as importantly, large load customers can help support investments in the system and spread costs across a broader customer base. Our focus is on supporting the province in its efforts to grow and attract new investments by investing where necessary to provide the reliable energy projects like this proposed data center will need to succeed in the province. As I mentioned earlier, Nova Scotia Power filed its application on October 9th for a financing order to securitize approximately CAD 1 billion of costs.

Scott Balfour
Scott Balfour
President and CEO at Emera

The Nova Scotia Energy Board has 60 days from filing on October 9th to issue its decision. I'd like to take a moment to talk about the proposed merger between Emera and Canadian Utilities that was announced a month ago. At its core, this combination is about positioning us for the growth ahead. Across North America, demand for energy is increasing, and significant investment will be needed to strengthen and modernize infrastructure, improve resilience, and support economic development while keeping affordability front and center for customers. These investments are becoming increasingly large and complex. Together, Emera and Canadian Utilities will be better positioned to meet that opportunity. We're bringing together two best-in-class teams with strong operating capabilities and a track record of investing and executing at scale.

Scott Balfour
Scott Balfour
President and CEO at Emera

We'll be able to learn from each other, bring our combined expertise to a broader set of opportunities, and have greater financial and operating capacity to invest in growth. The combination is also expected to strengthen our financial position and support a stronger credit profile and lower cost of capital. All of that positions the combined company to compete for and deliver more of the infrastructure investment that we see ahead. One of the things that makes this combination so compelling is the strength of our two largest jurisdictions, Florida and Alberta. We've talked for years about what makes Florida such an attractive place to invest: strong population and economic growth, constructive regulation, and significant infrastructure needs. We see many of those same fundamentals in Alberta.

Scott Balfour
Scott Balfour
President and CEO at Emera

It has a constructive regulatory environment, equally strong economic growth, stronger population growth, and significant investment opportunity ahead to support the province's expanding energy and industrial economy. This isn't about trading one growth story for another. It's about bringing two very strong growth platforms together, giving the combined company significant exposure to two of the most attractive utility growth markets in North America. Alberta is central to Canada's economy, and particularly its energy future. Growth in energy production, industrial development, LNG, petrochemicals, large load customers, and broader infrastructure modernization is creating significant demand for the utility infrastructure that supports that growth. When we acquired TECO in 2016, we saw strong fundamentals and significant opportunity for long-term investment. Since then, we've invested alongside Florida's growth, strengthened the business, and created meaningful value for customers and shareholders. We see a similar opportunity in bringing Canadian Utilities and Emera together.

Scott Balfour
Scott Balfour
President and CEO at Emera

Different businesses and different markets, but the same core fundamental opportunity: strong jurisdictions, growing customer needs, and the ability to invest and execute with discipline over the longer term. In terms of next steps, we expect the transaction to close in Q3 or Q4 2027, or earlier, given the strong progress and positive response we've seen since the deal was announced. The application for the most significant regulatory filing with the Alberta Utilities Commission was submitted on October 27th, with a decision requested by the end of April 2027.

Scott Balfour
Scott Balfour
President and CEO at Emera

All additional regulatory requirements have either been filed already or expected to be submitted by the end of 2026. A joint management information circular is expected late this year or in early January, followed by a special meeting of each company's shareholders expected to be held in early 2027. We're very pleased with the progress made to date and excited to see this transformative transaction advance. With that, I'll turn it over to Jared.

Jared Green
Jared Green
CFO at Emera

Thank you, Scott, and thank you to all of you for joining us here. This morning, we reported year-to-date adjusted earnings of CAD 887 million, up CAD 9 million over last year, and as Scott noted, adjusted EPS of CAD 2.90. Third quarter adjusted earnings were CAD 260 million, or CAD 0.85 per share, representing a modest 3% decrease year-over-year. Earnings through the first nine months of the year also contributed to a 7% increase in operating cash flows, excluding working capital, compared to the same period last year. We continue to make meaningful progress in strengthening our credit profile. Moody's recently lowered our downgrade threshold from 12% to 11%, reflecting their view of the better business risk profile post the New Mexico Gas sale, and on a pro forma basis, once we close the Canadian Utilities transaction.

Jared Green
Jared Green
CFO at Emera

We remain on track to achieve a 12% CFO-to-debt metric by the end of the year as a result of the progress we've made growing cash flow, reducing leverage, and strengthening our balance sheet. Fitch has indicated that following the close of the Canadian Utilities transaction, they will revise their leverage threshold from 6.0x to 6.4x, reflecting its view of the combined company's lower business risk. Taken together, these developments reinforce the progress we've made and continue to make on the balance sheet and give us greater financial flexibility as we execute our growth plans. Turning to the highlights of our individual operating companies' third quarter results. At Tampa Electric, earnings were largely in line with the third quarter of last year.

Jared Green
Jared Green
CFO at Emera

Higher revenues from new base rates and customer growth were offset by the impact of the FPSC-approved settlement for changes to depreciation rates at Bayside Power Station, along with the fuel cost recovery reduction. The revised depreciation rates are expected to reduce annual depreciation expense by approximately $20 million. As a part of the settlement agreement, Tampa Electric agreed to reduce 2026 fuel clause recovery by $10 million, which was recognized in Q3 of 2026. Peoples Gas delivered strong results in the third quarter, reflecting new rates that took effect on January 1st, favorable market conditions that drove higher off-system sales. These gains were partially offset by lower earnings at New Mexico Gas, primarily due to higher operating expenses prior to the transaction closing mid-quarter.

Jared Green
Jared Green
CFO at Emera

In the Canadian Electric segment, Nova Scotia Power delivered higher earnings, reflecting new base rates that went into effect earlier this year, as well as higher residential sales volumes and lower interest expenses. This was partially offset by higher operating costs. From a financing perspective, Q3 was a quieter quarter, with much of our financing needs wrapped up in the first half of the year. The focus for the rest of 2026 will be on the securitization process in Nova Scotia Power and a financing at Tampa Electric to support their ongoing capital plan investment needs. As Scott mentioned, we are still on track for a solid year and to achieve our compound annual EPS growth of 5%-7% through 2030. We will be rolling forward our EPS guidance when we release our annual results on the Q4 call in February.

Jared Green
Jared Green
CFO at Emera

As Scott mentioned earlier, our updated five-year capital plan includes more than CAD 1 billion of incremental investment compared to the plan we shared last year. Importantly, despite the increase in capital, our funding strategy remains largely unchanged. Cash flow from operations will continue to be our largest source of funding, and we expect it to fund 45%-50% of our capital requirements over the planning period. Our operating companies will continue to access debt markets consistent with their approved regulatory capital structures, representing approximately 30%-35% of our total funding requirements. Equity will continue to play a small role in our funding plan. We expect our DRIP and ATM programs to fund 10%-15% of capital requirements, averaging approximately CAD 600 million annually, with issuances weighted towards the 2027 through 2029 period as capital investment increases.

Jared Green
Jared Green
CFO at Emera

We are no longer forecasting proceeds from asset sales in this plan, as once the securitization process is complete by the end of 2026, we will have completed this component of our funding strategy. We also continue to see value in hybrid capital as part of our balanced funding strategy. Following successful hybrid issuances in 2025 and 2026, we expect hybrids to fund 5%-7% of our requirements, reflecting their efficient 50/50 debt-equity treatment from the rating agencies. Overall, we have a balanced and diversified funding plan that supports our increased capital investment while maintaining our focus on balance sheet strength and credit quality. With that, I'll turn the call back over to Scott for closing remarks.

Scott Balfour
Scott Balfour
President and CEO at Emera

Thank you, Jared. Before closing, I want to take a moment to thank Vivek Sood for his leadership of NSP, Nova Scotia Power, over the past year, and to recognize Chris Smith, who officially stepped into the role of President and CEO of Nova Scotia Power earlier this week. Chris knows the business extremely well, having been part of the Nova Scotia Power leadership team since 2017, and he brings deep utility and energy experience to the role. I have a great deal of confidence in Chris and the broader leadership team as they continue the important work underway to strengthen reliability, manage costs for customers, and position the business for the future. As we look ahead, we're in a strong position. We're delivering strong results, executing a CAD 21.5 billion capital plan with clear visibility to long-term growth, and continuing to invest in the needs of customers.

Scott Balfour
Scott Balfour
President and CEO at Emera

We believe the combination with Canadian Utilities positions us even better for that opportunity ahead. It brings together two strong businesses anchored in Florida and Alberta with the scale, expertise, and financial strength to invest and grow over the long term. Most importantly, we have experienced teams with a proven ability to execute. That gives us confidence in our ability to continue delivering for customers and creating long-term value for our shareholders. Thank you, and we'll now open the call for questions.

Operator

Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. Should you have a question, please press star followed by the one on your touchtone phone. Should you wish to cancel your request, please press the star followed by the two. If you are using a speakerphone, please lift the handset before pressing any keys. Once again, that is star one should you wish to ask a question. Your first question is from Maurice Choy from RBC Capital Markets. Your line is now open.

Maurice Choy
Maurice Choy
Analyst at RBC Capital Markets

Thank you, and good morning, everyone. Scott, I appreciate your comments and sharing the similar elements in Alberta and Florida. Obviously, the market's well-versed in terms of the attractiveness of Florida. I wonder if you could just dive a little bit deeper into this and share where you think there are elements where Alberta may perhaps be superior to Florida.

Scott Balfour
Scott Balfour
President and CEO at Emera

Yeah, thanks for the question, Maurice, and it's interesting, and we thought it was important to share that sort of side-by-side contrast of the two jurisdictions. You're right, there is a lot of similarities. Of course, I think the unique advantage in Alberta, and you heard me say it in my comments, but it really is the driver in many ways of the economy in Canada, particularly today with an energy-focused agenda that is obviously important to the national agenda, but certainly to the provincial one. We're just seeing a significant amount of industrial-driven growth in that, of course, connected to the oil and gas economy there. But that growth and the infrastructure that is needed to support it, some of which falls directly into the line of sight and opportunity for Canadian Utilities with its important gas and electric businesses there.

Scott Balfour
Scott Balfour
President and CEO at Emera

Because of that growth, we're also seeing, as you saw, a very strong population growth, which is also driving and expected to continue to drive strong growth from a residential perspective for those utilities. We really are quite excited about this and the opportunity for Canadian Utilities to be very additive to the strong growth profile that we've enjoyed and continue to demonstrate and look forward to continue to supporting and investing in the growth in Florida. But now, as said in the remarks, now we can add to that with a growth opportunity, a significant growth opportunity with the business in this strong economy of Alberta.

Maurice Choy
Maurice Choy
Analyst at RBC Capital Markets

That's great. Great response. Thank you very much for that. My second question is a two-prong question, which thematically is meant to surround a theme about de-risking. In your CapEx plan, CapEx obviously goes up by about 5%, I think. But the percentage in terms of the funding from DRIP and ATM has gone to CAD 600 million a year versus CAD 400 million in the past plan. Just curious what is driving that, and another element of de-risking here is the PBR framework that's being proposed in Nova Scotia. Your thoughts on whether or not that helps de-risk you? What do you think is driving that suggestion from the government?

Scott Balfour
Scott Balfour
President and CEO at Emera

Sure. Let me start with the second question, and then Jared can get back to your first one. I think PBR is being looked at by the province as an opportunity to connect performance of the utility to its financial performance, to connect operating performance to financial performance. There's many PBR jurisdictions that work just fine, including, frankly, in Alberta and other places. The regulator is now going to go through and review this. That doesn't mean that the province is committed to putting this into place, but they're committed to understanding it better and seeing what it would look like.

Scott Balfour
Scott Balfour
President and CEO at Emera

Importantly, within the legislation that the regulator is now responding to, it recognizes, and to anchor this point, it really is important, it recognizes the importance of the utility earning a fair return and the financial health of the utility, which, of course, is fundamental within regulatory compacts, including the one in Nova Scotia. That latter aspect has admittedly been a little more challenging for Nova Scotia Power over the last few years.

Scott Balfour
Scott Balfour
President and CEO at Emera

We are looking forward to working with the regulator and the interveners to explore PBR to see as to whether that does create a better framework moving forward to manage the cost aspects of energy for its customers, which, of course, is a challenge in Nova Scotia as much as anywhere, but also one that provides the opportunity for the utility to maintain its financial health and earn a fair return on its capital. Jared, do you want to address the first question?

Jared Green
Jared Green
CFO at Emera

Sounds good, Scott. For the first question, Maurice, probably the most direct largest piece of that would be, this plan doesn't have any asset sales in it. While the percentage for equity being slightly higher, we are not having kind of almost equity anyways from the asset sales going out. As you did note, the increase in the dollar amount of the equity is funding a portion of this incremental growth, but then with the plan, we do not require asset sales as we are going forward. The last part I would say for here is, like always, we do have great respect for our investment-grade ratings, and the strength of the ratios and the maintenance of those ratios is also a very core fundamental to the strategy as we look at it.

Maurice Choy
Maurice Choy
Analyst at RBC Capital Markets

Understood. Thank you very much for that.

Operator

Thank you. Your next question is from John Mould from TD Cowen. Your line is now open.

John Mould
John Mould
Analyst at TD Cowen

Hi. Morning, everybody. Maybe I'd like to start with the updated rate base growth, 7.5%-8.5% under the new capital plan from 7%-8% under last year's. What would need to happen for you to get to the high end of that new rate base growth range? I appreciate we're not updating EPS guidance today. We can wait till Q4 for that. But how should we think philosophically about the conversion of incremental rate base growth into EPS growth?

Scott Balfour
Scott Balfour
President and CEO at Emera

Jared.

Jared Green
Jared Green
CFO at Emera

Thank you, Scott. As we look within that range, and obviously we're rolling this range out for the upcoming five-year period. To be into the higher end of that range is a lot around the execution of the projects as well and being able to design, deliver them on time and on budget, which is a track record that Emera is very good at and has a very long path towards that. The second part of being able to transition the rate base growth into EPS growth, that is also something that we put a lot of care and attention into. The pace of how we execute and grow our programs is an important thing of rolling your growth into EPS.

Jared Green
Jared Green
CFO at Emera

The key on this is your regulatory strategies and your success in front of the regulator, so your ability to show the value to customers, your ability to reduce the potential regulatory lags that can come from these investments as you're putting them forward to your regulators. I'd say again on this, John, we have very good track records of our teams being able to work with our regulators and with our customers to be able to kind of have as close of a band between your rate base growth and your EPS growth. I think that's something that we've been very proud of through time as well of our ability to keep a pretty tight band on that. As we kind of the wrap on there, a lot of it is on execution to be able to move into the higher ends and transition that into earnings.

John Mould
John Mould
Analyst at TD Cowen

Okay, thanks for that.

Scott Balfour
Scott Balfour
President and CEO at Emera

I think I'd—

John Mould
John Mould
Analyst at TD Cowen

Oh, go ahead, Scott. Sorry.

Scott Balfour
Scott Balfour
President and CEO at Emera

I think I could add to that, John, sorry, is, we're in an environment right now. I mean, obviously we're not increasing our growth guidance or rate base growth guidance lightly, but we're in an environment where there's a need to invest more. Really what we're doing is trying to make sure that we're managing the pace of that investment in a way that isn't challenging affordability. Frankly, if anything, the investment opportunities are outpacing that kind of growth, at least in the short term. That decision to guide our rate base growth up a little bit is reflecting, trying to find that balance between addressing the significant investment opportunity with navigating the rate impacts for customers.

John Mould
John Mould
Analyst at TD Cowen

Thanks for that. That's a good dovetail. I'm going to try a two-part question here on large loads. Firstly, how much, if any, incremental investment associated with potential large loads have you got in that plan today, and how should we think about what the range of incremental investment could be if you do secure some load that's, and I know this is a bit nebulous, but consistent with what the opportunity set you're seeing right now? Secondly, on the 350 MW Auburndale data center, or initial 300 MW, I should say, any more insights you could provide on how large that opportunity could potentially be and how the timing of a contract there potentially dovetails with the large load process that you've got going in Florida?

Scott Balfour
Scott Balfour
President and CEO at Emera

Yeah, so maybe, John, for that, maybe, Jared, why don't you start with the first part of that question, and then Archie can round that out and answer the second part of the question. Jared?

Jared Green
Jared Green
CFO at Emera

There we go. Helps to turn the microphone on. I apologize. For the announcement for the 350 MW that came out earlier this week, there's actually a fairly minimal incremental capital investment required to be able to deliver to that load level. This is, we're looking at, it's in the tens of millions of dollars for the infrastructure tie-ins for it. So that's one that can be delivered kind of very smoothly and efficiently. For loads above 350 MW, it would really depend on the circumstances of the customer and the timing for what those load requirements would be. But as those do come to a little bit more clarity, then we could look at those in a little more detail.

Scott Balfour
Scott Balfour
President and CEO at Emera

Archie, you want to add to that and answer the second part of John's question?

Archie Collins
President and CEO at Tampa Electric

Yeah, sure. I can do that. Good morning, John. To the first half of the question, looking just exclusively at Tampa Electric's five-year capital plan, embedded within our capital plan was the contemplation that we would be serving 350 MW of large load. We simply, that's all that's reflected in the five-year capital plan because that's sort of what's right in front of us at this time and what was announced this week. It's not to say there isn't more in the hopper, but we just don't want to count our chickens before they hatch. I think the second half of your question was, what's the timing of the contract? First of all, this project that the Hillwood Corporation announced publicly on Wednesday, this is actually a project that we've been quietly working on in Polk County for about 10 months now.

Archie Collins
President and CEO at Tampa Electric

It's not as though this is just a concept. The buildings are built. We've already made all of the distribution upgrades, substation upgrades, and we're working on the transmission interconnection now. We're well along on this project. All of the earthworks are happening around that site as well. The contract with Hillwood for that first 350 MW to serve is expected to be executed before the end of the year. I think the other part of your question, John, was, at that Auburndale Technology Center, what is the full capability of what could be delivered there?

Archie Collins
President and CEO at Tampa Electric

We're very confident that we could deliver up to 700 MW. We're in discussions as to whether or not it could go to 1,000 MW, but that's a bit premature at this point. This is an area that is zoned industrial. It is a technology and innovation hub. It's adjacent to the Polytech Technology School, so it's an engineering school. So far, the message has landed really well with the community. We haven't seen any pushback yet on Hillwood's announcement, which is positive.

John Mould
John Mould
Analyst at TD Cowen

Okay. Thanks very much for all that detail. I'll get back in the queue.

Operator

Thank you. Your next question is from Hannah Velasquez from JPMorgan Chase. Your line is now open.

Hannah Velásquez
Hannah Velásquez
Analyst at JPMorgan Chase

Hey, good morning. Thanks for the update. I just wanted to double-tap back onto the equity component of your revised capital plan. I understand a good portion of that is replacing the asset sales that no longer will need or use the form of proceeds. Just when we think about the composition of that, the CAD 600 million-CAD 1 billion of incremental compared to the CAD 1.1 billion increase in CapEx, it just is meaningfully higher than your regulated structure and everyone else in your comp set. How do you think about that? Then I have a second question on the impact to your EPS CAGR, but I will save that.

Jared Green
Jared Green
CFO at Emera

Hannah, for the mix on those, with the incremental CAD 1.1 billion to the capital plan as we go forward, we do not color code any individual financing with any increase. I am looking at the overall financing plan for the entirety of the CAD 21.5 billion capital program. When we do incorporate those two pieces together, and as we noted for here, we do not have any asset sales, so the combination of the DRIP and the ATM are the equity funding component for that incremental CAD 21.5 billion program.

Jared Green
Jared Green
CFO at Emera

We do also have that built to be able to look to, as I noted before, have strength within our credit metrics. We have talked about wanting to have our CFO-to-debt ratio for Moody's in the 12s and having some cushion room and strength within that for flexibility of the business as we move forward. That is one of the key tenets, and we look at the balance of the mix of the overall capital plan. I look at it from the entirety of the plan and that the CAD 600 million average, so it is CAD 600 million average a year for the five-year period is what we have for the program.

Hannah Velásquez
Hannah Velásquez
Analyst at JPMorgan Chase

Okay, got it. Thank you. Just as a follow-up there on the impact to your EPS CAGR, I don't want to front-load the update in 4Q, but on my quick back-of-the-envelope math, it would suggest that you would land towards the lower end of the 5%-7% CAGR. Is that the right way to think about it? I don't know if I'm being too punitive, but just how do we think about the impact from equity dilution despite the rate base CAGR increase?

Jared Green
Jared Green
CFO at Emera

Hannah, for that one, I'd say it'd be too early for us to be speaking to the earnings forecast that's coming through this plan. As I noted, that's one that we will be updating the forecast as we do come out of Q4, again, with an appropriate starting point and the earnings going forward. We'll have that update for you at our next quarterly call.

Hannah Velásquez
Hannah Velásquez
Analyst at JPMorgan Chase

Okay. Thank you so much.

Operator

Thank you. Your next question is from Michael Lonegan from Barclays. Your line is now open.

Michael Lonegan
Michael Lonegan
Analyst at Barclays

Hi. Good morning. Thanks for taking my question. Since we are waiting on the Nova Scotia Energy Board's decision on securitization, just wondering, are you in the meantime keeping the thermal assets in your updated rate base growth forecast today until that is approved? If so, can you say what is assumed in 2031? Just trying to get a sense of the rate base CAGR, if those assets were not.

Jared Green
Jared Green
CFO at Emera

Michael, the forecast that we have in the rate base growth, that assumes that we have completed the securitization. That would have the thermal assets excluded from the rate base. We are feeling very good about that process in calendar 2026.

Michael Lonegan
Michael Lonegan
Analyst at Barclays

Great. Thank you. Assuming the merger is approved, Moody's would lower your downgrade threshold. You would have some more cushion and capacity to pay higher dividends. Just wondering if you would consider accelerating your dividend growth outlook.

Jared Green
Jared Green
CFO at Emera

Yeah, Michael, on that one, actually. Oh, sorry, Scott. Michael, first off, I would say for Moody's, we actually are already moved to the 11% downgrade threshold for Moody's. Wanted to have that as the opening. Scott, I will pass over to you for the second part.

Scott Balfour
Scott Balfour
President and CEO at Emera

Yeah, and you would have been fine to answer too, of course, Jared. Jared and I are in different rooms, so that's why the mix there. Yeah, I think, Michael, thank you for your question. I think for the time being, we continue to be comfortable with the dividend growth rate that we've got. Of course, we've done that for a reason, to bring the dividend payout ratio down. We've made some great progress on that. It's too soon to be thinking about changing the dividend growth rate. We remain comfortable with that current range, as evidenced, of course, by the decision and announcement last month to increase the dividend again this year within that range.

Michael Lonegan
Michael Lonegan
Analyst at Barclays

Great. Thank you for taking my questions.

Operator

Thank you. Your next question is from Patrick Kenny from National Bank Capital Markets. Your line is now open.

Patrick Kenny
Analyst at National Bank Capital Markets

Thank you. Good morning, everyone. Just back on the Canadian Utilities platform, I know first things first in terms of closing the deal, but I just wanted to touch on some of the political developments since you announced the transaction. So we have a change in government in B.C., U.S. midterms, the results there perhaps putting the data center spotlight on Alberta. Just curious, Scott, to get your thoughts on how this perhaps accelerated industrial activity up in northern B.C. or within intra-Alberta, whether it be expanding interties or bringing forward new gas supply. Which opportunities in Western Canada might have moved, in your mind, from more of the longer-term bucket to perhaps now thinking more of a near-term opportunity set?

Scott Balfour
Scott Balfour
President and CEO at Emera

Yeah, it is really good framing, Patrick, and while it is too soon to have a clear view at a project level as to what we might see, I think your premise is exactly right, is that what we have seen since announcement is only reinforcing the opportunity that we see. The political outcomes north and south of the border, I think, overall, have actually been quite encouraging for our portfolio and our growth opportunities ahead. That certainly includes the future that we think is really exciting in Alberta.

Patrick Kenny
Analyst at National Bank Capital Markets

I guess if those core T&D opportunities are brought forward a little bit, maybe back to Jared's comments on asset sales. Scott, you can jump in here too, but just wondering if you spent any more time thinking about some of the non-regulated assets within Canadian Utilities, either the power or the energy infrastructure assets. If you still view these as core to the pro forma platform, or if there has been any change there in your thinking?

Scott Balfour
Scott Balfour
President and CEO at Emera

Yeah, fair question. No, I do not think there has been any change. Of course, those are assets that we are familiar with as a class of assets. But it is too soon to be sort of thinking about the portfolio from the perspective of where we will sort of look to put foot on the accelerator and where our key focus will be. But the underlying nature of the asset strategy that Bob has been leading and driving for growth in Alberta, we are completely comfortable with that, of course, because of the transaction announcement that we have made.

Scott Balfour
Scott Balfour
President and CEO at Emera

We will have opportunities to, once we get to closing and beyond, to think about some of those things. They have an unregulated portion of their portfolio. Of course, we have Emera Energy as well, and there is skills and experience and market positioning and relationships in both of those business.NWe will look to see how we can optimize that, how we can continue to support growth through both of those businesses. So, I think that would be more the perspective we are looking at the moment.

Patrick Kenny
Analyst at National Bank Capital Markets

Got it. Okay, thanks for that. Last one from me, if I could, and I know we'll get more detail down in Tampa in a couple weeks, but just given the general narrative or the stigma, I guess, that's out there regarding data centers and their impact on customer affordability, just wondering if you could unpack your comments a little bit more with respect to Tampa Electric's ability to absorb the load, integrate any incremental generation required, and create that win-win opportunity for both data center and residential customers.

Scott Balfour
Scott Balfour
President and CEO at Emera

Yes, maybe I'll start, and then Archie can add on. I think what's really important, and maybe there's times we're coming late to a party, for lack of a better word, in terms of there's a lack of We haven't really been engaged in sort of the data center activity before the timeline that Archie laid out. Of course, these have been things that have been on the radar and in motion for a number of utilities across the country for a long time. But I think there's the opportunity for Hillwood certainly has been demonstrating this, and Archie and the team at Tampa Electric also have been made very clear that existing customers come first. If there's going to be data center-type large load that is part of the customer base in Tampa, they have to pay their own way.

Scott Balfour
Scott Balfour
President and CEO at Emera

They also have to deal with the other issues that are important to communities around minimizing any impact to water, ensuring that there's no noise levels that are above certain levels. If we get it all right, it is actually a rate profile that actually helps contribute to the system. It helps to reduce the rate pressure for the balance of customers, and certainly not the opposite. I think that's reflective in the filing that Tampa Electric made that Archie and I mentioned, that all those things as it relates to existing customers first, all the capital and cost of serving a new large load customer has to be paid for by that new large load customer, and a tariff design that hopefully allows for a contribution to the broader system cost that helps to reduce rate pressure for customers.

Scott Balfour
Scott Balfour
President and CEO at Emera

I think if you get all those things right, plus those other things around water and noise that are equally important, like Hillwood seems to have done, and like Archie and the team at Tampa Electric have ensured is within their large load filing, then I think you create the conditions that this is a win-win for the new customer and for existing customers. But Archie, happy to let you add on to that and round anything out.

Archie Collins
President and CEO at Tampa Electric

Well, so I would just say, so you used the word stigma. I think that so much of the stigma, if I use that word as well, has just simply been rooted in the fact that we've been in an election cycle here in the U.S. And so, a narrative was propagated, and it was difficult in the midst of the midterm elections for a counter-narrative to ever take root. I think now that we're through the election cycle, we have some certainty. And certainly here in Florida, where the Governor-elect campaigned on a platform of pro-growth, pro-infrastructure investment, done right. And in fact, as it relates to data centers, Governor-elect Byron Donalds repeatedly would have said, "As it relates to data centers, there's a right way and there's a wrong way to invest in these important foundational investments.

Archie Collins
President and CEO at Tampa Electric

And in Florida, we're only going to do them the right way." When we designed our large load tariff, which, as was shared earlier, we filed with the FPSC on the 30th of September, we designed that in a manner which certainly was consistent with what the law requires in Florida, but it was rooted in affordability. We were very intentional to try to strike that balance between supporting economic development, but protecting our existing group of customers. And in fact, trying to design it in a manner that as we grow data center revenue, it's putting downward pressure on electricity rates for the balance of our customers.

Archie Collins
President and CEO at Tampa Electric

So, I agree with you, there has been a stigma, but I think that now that we're through the election cycle, I think you're going to start to see that narrative change a bit. And I am very confident in the approach that we've taken at Tampa Electric, that this is data centers done right. And I think it's part of the reason why the large load tariff that we filed on the 30th of September has been so well received by the consumer parties, by the media, by elected officials, because they can see how intentionally we designed that to find that balance.

Patrick Kenny
Analyst at National Bank Capital Markets

Okay. Thanks, guys. Great comments, and look forward to seeing you in a couple weeks.

Operator

Thank you. There are no further questions at this time. Please proceed with the closing remarks.

Dave Bezanson
Dave Bezanson
SVP of Capital Markets at Emera

Thank you all. That concludes the call. Appreciate the interest. If you have any questions, please follow up within the investor relations team. Have a great weekend.

Operator

Thank you. Ladies and gentlemen, the conference has now ended. Thank you all for joining. You may now disconnect your lines.

Executives
    • Dave Bezanson
      Dave Bezanson
      SVP of Capital Markets
    • Scott Balfour
      Scott Balfour
      President and CEO
    • Jared Green
      Jared Green
      CFO
Analysts
    • Maurice Choy
      Analyst at RBC Capital Markets
    • John Mould
      Analyst at TD Cowen
    • Archie Collins
      President and CEO at Tampa Electric
    • Hannah Velásquez
      Analyst at JPMorgan Chase
    • Michael Lonegan
      Analyst at Barclays
    • Patrick Kenny
      Analyst at National Bank Capital Markets
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