EDMONTON, Nov. 5 /CNW/ - EPCOR Utilities Inc. (EPCOR) today filed its quarterly results for the period ended September 30, 2010.
"In the third quarter, EPCOR continued to execute its growth strategy of strengthening the presence and performance in its core businesses of water and wires. Overall, net income for the quarter and the nine-month period has increased over last year," said President and CEO Don Lowry. "We completed construction of the $32 million Summerside transmission substation in southwest Edmonton - safely, on time and on budget, and there were no significant operational disruptions to our customers."
"EPCOR people are making a concerted effort to improve the way we work and reduce the impact our business has on the environment. Recognition of our results this quarter came on two fronts: our second Corporate Responsibility Report (2009), again earned an A+ rating through the Global Reporting Initiative and EPCOR was selected as one of Western Canada's top 10 Most Admired Work Cultures."
Highlights of EPCOR's financial performance are as follows and readers should note, as more fully described in management's discussion and analysis (MD&A) shown below, that the prior year comparative numbers for the first half of 2009 include the results of the power generation business that was sold in July 2009:
- Net income was $57 million on revenues of $379 million for the three months ended September 30, 2010 compared with net loss of $56 million on revenues of $351 million for the corresponding period in the previous year.
- Net income was $136 million on revenues of $1,080 million for the nine months ended September 30, 2010 compared with $98 million on revenues of $1,982 million for the corresponding period in the previous year.
- Cash flow from operating activities for the three months ended September 30, 2010 was $41 million compared with $65 million for the corresponding period in the previous year.
- Cash flow from operating activities for the nine months ended September 30, 2010 was $109 million compared with $316 million for the corresponding period in the previous year.
- Other comprehensive income was $11 million for the three months ended September 30, 2010 compared with $9 million for the corresponding period in the previous year.
- Other comprehensive income was $5 million for the nine months ended September 30, 2010 compared with $13 million for the corresponding period in the previous year.
- Investment in capital projects for the three months ended September 30, 2010 was $54 million compared with $65 million for the same period in the previous year.
- Investment in capital projects for the nine months ended September 30, 2010 was $135 million compared with $369 million for the same period in the previous year.
Management's discussion and analysis (MD&A) of the quarterly results are shown below. The MD&A and the unaudited interim consolidated financial statements are available on EPCOR's website (www.epcor.ca), and will be available on SEDAR (www.sedar.com).
EPCOR's wholly-owned subsidiaries build, own and operate electrical transmission and distribution networks, water and wastewater treatment facilities and infrastructure in Canada. EPCOR, headquartered in Edmonton, is an Alberta top 50 employer. EPCOR's website is www.epcor.ca.
EPCOR Utilities Inc.
Interim Management's Discussion and Analysis
September 30, 2010
This management's discussion and analysis (MD&A), dated November 5, 2010, should be read in conjunction with the unaudited interim consolidated financial statements of EPCOR Utilities Inc. and its subsidiaries for the three and nine months ended September 30, 2010 and 2009, the audited consolidated financial statements and MD&A for the year ended December 31, 2009 and the cautionary statement regarding forward-looking information on page 19. In this MD&A, any reference to "the Company", "EPCOR", "we", "our" or "us", except where otherwise noted or the context otherwise indicates, means EPCOR Utilities Inc., together with its subsidiaries. In this MD&A, Capital Power refers to Capital Power Corporation and its directly and indirectly owned subsidiaries including Capital Power L.P., except where otherwise noted or the context otherwise requires. Financial information in this MD&A is based on the unaudited interim consolidated financial statements, which were prepared in accordance with Canadian generally accepted accounting principles (GAAP), and is presented in Canadian dollars unless otherwise specified. In accordance with its terms of reference, the Audit Committee of the Company's Board of Directors reviews the contents of the MD&A and recommends its approval by the Board of Directors. The Board of Directors has approved this MD&A.
OVERVIEW
EPCOR is wholly owned by the City of Edmonton (the City). We build, own and operate electrical transmission and distribution networks as well as water and wastewater treatment facilities and infrastructure in Canada. We also provide energy and water services to residential and commercial customers. Our electricity, water and energy services businesses consist primarily of rate-regulated and long-term commercial operations. Our continuous improvement objective is to continue to seek out ways of maximizing the efficiency of our electricity and water operations. The long-term outlook for the North American electricity, water and wastewater treatment businesses remains relatively strong.
EPCOR's operations performed well in the third quarter without any significant issues or disruptions to customers. Results from operations for the quarter were on plan.
EPCOR's core operations continued to deliver good results in the third quarter. EPCOR reported $57 million and $136 million in net income for the three and nine months ended September 30, 2010, respectively, as compared to a $56 million net loss and $98 million in net income for the comparative periods in 2009. Net income from our core operations (water, wastewater and electricity services) was $3 million and $22 million higher for the current quarter and for the nine months, respectively, than the corresponding periods in 2009, as explained in more detail below. In particular, EPCOR continued to benefit from the strong results in commercial water and wastewater plant operations in the Alberta oil sands energy sector.
Progress related to our 2010 capital expenditure plan continued in the third quarter. This plan is aimed towards improving and expanding our infrastructure assets and increasing their capacity to meet the growing demands for electricity and treated water and wastewater. During the third quarter, construction was completed on the Summerside substation in southeast Edmonton with the energized substation going on line in early September 2010. The project was completed on plan and under budget with no lost-time incidents. Work on two significant projects for 2010, the construction of two additional digesters at the Gold Bar wastewater treatment plant and the continued replacement of Edmonton water mains under the Company's long-term Water Main Renewal program to improve the Company's water distribution infrastructure, progressed on schedule.
On September 27, 2010, EPCOR and AltaLink L.P. submitted their joint facilities application to the Alberta Utilities Commission (AUC) to construct and operate the Heartland Transmission Project, which includes a 500-kV double-circuit overhead line from South of Edmonton along the East Transportation Utility Corridor route to Fort Saskatchewan, Alberta. The application also includes a stakeholder-requested option to bury a 20-km portion of the 66-km transmission line. The AUC will make the final decision regarding the project.
On June 7, 2010, EPCOR signed an agreement for the acquisition of all outstanding shares of Chaparral City Water Company (Chaparral). Chaparral, a subsidiary of American States Water Company, is a public utility company engaged principally in the purchase, production, distribution, and sale of water to approximately 13,000 customers in the Town of Fountain Hills, Arizona and a small portion of Scottsdale, Arizona. The US$29 million acquisition, which is subject to regulatory approval by the Arizona Corporation Commission, is expected to close in 2011.
CONSOLIDATED RESULTS OF OPERATIONS
Note on Comparisons
For the first half of 2009, EPCOR owned or controlled power generation assets and related operations (collectively the power generation business), including Capital Power Income L.P. (formerly EPCOR Power L.P.) (CPILP), which were sold to Capital Power in July 2009. Accordingly, net income, results of operations and variances for the first half of 2009 include power generation net income, results of operations and variances presented on a consolidated basis. After the sale of the power generation business and related operations in July 2009, we no longer controlled those operations. Consequently, the third quarter and nine months results of 2010 and the results going forward no longer present the power generation business on a consolidated basis. The related financial statement line items and variances are, in effect, replaced by EPCOR's interest in Capital Power reported on the equity basis. When making period-over-period comparisons, the results for the third quarter and nine months of 2010 reflect the retained interest in the power generation business in the form of an equity investment in Capital Power while the third quarter in 2009 reflects the retained interest in the power generation business in the form of an equity investment in Capital Power and the nine months of 2009 reflects the power generation business on a consolidated basis until July 2009. In this context, the results of operations are discussed below.
Net income
(Unaudited, $ millions) | Three months |
Nine months |
||||
Net (loss) income for the periods ended September 30, 2009 Loss on sale of power generation business Net income related to the power generation business that was sold effective July 2009 Higher (lower) equity income from Capital Power |
$ |
(56) 115 - (5) |
$ |
98 115 (143) 44 |
||
54 | 114 | |||||
Higher Distribution and Transmission operating income Higher income from commercial water operations Higher changes in the fair value of floating-rate notes Higher Energy Services operating income Higher Gold Bar operating income Higher depreciation expenses, excluding amounts related to the power generation business Lower Edmonton water operating income Other |
|
|
4 2 2 1 - (1) (3) (2) |
|
7 8 3 6 7 (4) (1) (4) |
|
Increase in net income from core operations | 3 | 22 | ||||
Net income for the periods ended September 30, 2010 | $ | 57 | $ | 136 |
Results for the three and nine months ended September 30, 2010 were net income of $57 million and $136 million, respectively, compared with a net loss of $56 million and net income of $98 million for the corresponding periods in 2009. Explanations of the primary period-over-period variances are as follows and should be read in conjunction with the Note on Comparisons above:
- Loss on sale of the power generation business reflects the difference between EPCOR's carrying amount of its investment in the power generation business sold and the consideration received for the business. The transaction resulted in a loss on sale of $80 million and a $35 million income tax charge related to the net future income tax assets that are not realizable by the Company as a result of the sale.
- Net income related to the power generation business for the nine months ended September 30, 2009 reflects the net results of this business until the sale of this business in July 2009. See Segment Results - Energy Services and Segment Results - Generation.
- Distribution and Transmission operating income, before depreciation, was higher in the three and nine months ended September 30, 2010 compared to the corresponding periods in 2009 primarily due to increased revenues relating to approved interim rates for 2010 being higher than approved rates for 2009.
- Income from commercial water operations, before depreciation, for the three and nine months ended September 30, 2010 was higher compared to the corresponding periods in 2009 due to the additional water and wastewater treatment plant operations in the Alberta oil sands energy sector which commenced in the fourth quarter of 2009.
- The fair value of floating-rate notes was higher for the three and nine months ended September 30, 2010 as compared to the corresponding periods in 2009 due to increased short-term interest rates (higher future projected cash flows) and narrower indicative corporate credit spreads, relative to the Government of Canada yield curve (lower discount rate).
- Energy Services operating income, before depreciation, was higher in the three and nine months ended September 30, 2010 compared to corresponding periods in 2009 primarily due to higher revenues resulting from increased rates related to customer care services provided to regulated and non-regulated customers.
- Gold Bar operating income, before depreciation, was higher in the nine months ended September 30, 2010 compared to the corresponding period in 2009 as a result of the transfer of the Gold Bar operation to EPCOR from the City on March 31, 2009.
- Depreciation expense, excluding amounts related to the power generation business, was higher in the three and nine months ended September 30, 2010 compared to the corresponding periods in 2009 primarily due to Gold Bar, rate-regulated water and electricity distribution and transmission asset additions.
- Edmonton water operating income, before depreciation, was lower for the three and nine months ended September 30, 2010 compared to the corresponding periods in 2009 primarily due to lower consumption across all customer groups due to more precipitation compared with the corresponding periods in 2009, partially offset by increased rates which were effective April 2010 and lower distribution costs.
Revenues
(Unaudited, $ millions) | Three Months |
Nine months |
||||
Revenues for the periods ended September 30, 2009 Decreases related to the power generation business that was sold July 2009 |
$ |
351 - |
$ |
1,982 (976) |
||
Higher Distribution and Transmission revenues Higher (lower) regulated rate tariff electricity revenues Higher revenue from commercial water operations Higher (lower) interest revenue Lower water sales Higher (lower) Gold Bar revenues Other |
|
|
351 18 13 5 (3) (3) (1) (1) |
|
1,006 39 (15) 13 27 (3) 13 - |
|
Increase in revenues from core operations | 28 | 74 | ||||
Revenues for the periods ended September 30, 2010 | $ | 379 | $ | 1,080 |
Consolidated revenues were higher for the three month and lower for the nine month periods ended September 30, 2010 compared with the corresponding periods in 2009 primarily due to the net impact of the following and should be read in conjunction with the Note on Comparisons above:
- The most significant factor contributing to the decrease relates to revenues reflected for the nine months ended September 30, 2009 of the power generation business that was sold in July 2009.
- Higher Distribution and Transmission revenues for three months and nine months ended September 30, 2010 compared to the corresponding periods in 2009 were primarily due to increased revenues relating to approved interim rates for 2010 being higher than approved rates for 2009.
- Regulated rate tariff electricity revenues were higher for the three months ended September 30, 2010 compared with the corresponding period in 2009 primarily due to higher distribution and transmission flow-through charges, partially offset by lower electricity prices. The decrease in regulated rate tariff electricity revenues in the nine months ended September 30, 2010 compared with the corresponding period in 2009 was primarily due to lower wholesale electricity prices in the first and third quarters of 2010 compared with the first and third quarters of 2009.
- Commercial water revenues were higher for the three and nine months ended September 30, 2010 compared to the corresponding periods in 2009 primarily due to additional water and wastewater treatment operations in the Alberta oil sands energy sector which commenced in the fourth quarter of 2009.
- Interest revenue was lower for the three months ended September 30, 2010 compared to the corresponding period in 2009 due to scheduled repayments of long-term receivables due from Capital Power in the second quarter of 2010. Interest revenue was higher in the nine months ended September 30, 2010 compared to corresponding periods in 2009 due to interest earned in relation to the long-term receivables due from Capital Power in connection with the sale of the power generation business in July 2009, partially offset by lower interest revenues in the third quarter of 2010 compared to 2009 due to the scheduled repayments of long-term receivables due from Capital Power in the second quarter of 2010.
- Water sales were lower in the three and nine months ended September 30, 2010 compared to the corresponding periods in 2009 due to lower consumption across all customer groups primarily due to more precipitation compared with the corresponding period in 2009. The decrease in water sales was partially offset by rate increases which were effective April 1, 2010.
- Gold Bar revenues were lower in the three months ended September 30, 2010 compared with the corresponding periods in 2009 primarily due to lower wastewater volumes compared with the corresponding period in 2009. Wastewater revenues are based on customers' water consumption volumes. As a result, the lower water consumption discussed above, also contributed to lower wastewater revenues in the third quarter of 2010 compared to the corresponding period in 2009. Gold Bar revenues were higher in the nine months ended September 30, 2010 compared with the corresponding periods in 2009 primarily due to the transfer of the Gold Bar operation to EPCOR from the City on March 31, 2009, partially offset by lower revenues in the third quarter of 2010 due to lower wastewater volumes compared with the corresponding period in 2009.
Capital Spending and Investment
(Unaudited, $ millions) | Nine months ended September 30 |
||||||||||||||
2010 | 2009 | ||||||||||||||
Distribution and Transmission | $ | 78 | $ | 56 | |||||||||||
Water Services | 54 | 64 | |||||||||||||
Energy Services | - | 7 | |||||||||||||
Corporate | 3 | 14 | |||||||||||||
135 | 141 | ||||||||||||||
Generation | - | 228 | |||||||||||||
$ | 135 | $ | 369 |
Capital expenditures for property, plant and equipment and other assets were lower for the nine months ended September 30, 2010 compared with the corresponding period in 2009 primarily due to the sale of the power generation business in July 2009. Capital spending in our Distribution and Transmission segment was higher primarily due to increased spending on the Summerside substation project and higher power pole and power line upgrade capital expenditures. Lower capital spending in the Water Services segment was primarily due to lower capital expenditures related to our commercial water and wastewater operations in the Alberta oil sands energy sector, partially offset by higher capital spending on construction of new digesters at Gold Bar.
Segment Results
Distribution and Transmission
(Unaudited, $millions) | Three months ended September 30 |
Nine months ended September 30 |
||||
2010 | 2009 | 2010 | 2009 | |||
Distribution and Transmission results (including intersegment transactions) |
||||||
Revenues | $ 78 | $ 61 | $221 | $ 179 | ||
Expenses | 65 | 48 | 186 | 148 | ||
Operating income | $ 13 | $ 13 | $ 35 | $ 31 |
Distribution and Transmission operating income increased $4 million for the nine months ended September 30, 2010 compared to the corresponding period in 2009 primarily due to increased revenues relating to approved interim rates for 2010 being higher than approved rates for 2009, partially offset by increased depreciation expense in 2010 compared with the corresponding period in 2009, which is driven by asset additions.
Energy Services
(Unaudited, $millions) |
Three months ended September 30 |
Nine months ended September 30 |
||||
2010 | 2009 | 2010 | 2009 | |||
Energy Services results (including intersegment transactions) | ||||||
Revenues | $ 226 | $ 213 | $ 638 | $ 1,183 | ||
Expenses | 216 | 204 | 618 | 1,082 | ||
Operating income before sale of energy trading operations | 10 | 9 | 20 | 101 | ||
Operating income in the first six months of 2009 related to energy trading operations sold in July 2009 |
- |
- |
|
- | (88) |
|
Operating income | $ 10 | $ 9 | $ 20 | $ 13 |
Energy Services' operating income increased $1 million and $7 million, after removing the impact of the sale of the energy trading operations sold with the power generation business in July 2009, for the three and nine months ended September 30, 2010, respectively, from the corresponding periods in 2009. These increases were primarily due to higher revenues resulting from increased rates related to customer care services provided to regulated and non-regulated customers.
Water Services
(Unaudited, $millions) | Three months ended September 30 |
Nine months ended September 30 |
||||
2010 | 2009 | 2010 | 2009 | |||
Water Services results (including intersegment transactions) | ||||||
Revenues | $ 99 | $ 94 | $ 280 | $ 253 | ||
Expenses | 76 | 67 | 219 | 200 | ||
Operating income | $ 23 | $ 27 | $ 61 | $ 53 |
Water Services' operating income decreased $4 million and increased $8 million for the three and nine months ended September 30, 2010, respectively, compared with the corresponding periods in 2009.
The decrease for the three months ended September 30, 2010 was primarily due to lower water sales as a result of lower consumption by customers due to more precipitation in 2010 than the corresponding period in 2009, partially offset by additional water and wastewater treatment operations in the Alberta oil sands energy sector which commenced in the fourth quarter of 2009.
The increase for the nine months ended September 30, 2010 was primarily due to the additional water and wastewater treatment operations in the Alberta oil sands energy sector, which commenced in the fourth quarter of 2009, and the Gold Bar operations, which were transferred to EPCOR from the City on March 31, 2009, partially offset by deceased water sales. Water sales were lower due to lower consumption by customers as a result of more precipitation in 2010 than the corresponding periods in 2009.
Generation
(Unaudited, $millions) | Three months ended September 30 |
Nine months ended September 30 |
||||
2010 | 2009 | 2010 | 2009 | |||
Generation results (including intersegment transactions) | ||||||
(Unaudited, $ millions) | ||||||
Revenues | $ - | $ - | $ - | $ 517 | ||
Expenses | - | - | - | 428 | ||
Operating income | $ - | $ - | $ - | $ 89 |
The generation business and related operations were sold in July 2009. As a result, there are no comparative values to last year's three and nine month's results. The discussion regarding this segment should be read in conjunction with the Note on Comparisons above.
Consolidated balance sheets
($ millions) | September 30, 2010 |
December 31, 2009 |
Increase (decrease) |
Explanation | ||||
Cash and cash equivalents | $ 23 | $ 11 | $ 12 | Refer to liquidity and capital resources section. | ||||
Accounts receivable (including income taxes recoverable) | 244 | 247 | (3) | |||||
Other current assets | 15 | 13 | 2 | |||||
Property, plant and equipment | 1,851 | 1,778 | 73 | Reflects capital expenditures partly offset by depreciation. | ||||
Contract and customer rights and other intangible assets | 105 | 110 | (5) | Reflects amortization of contract and customer rights. | ||||
Future income tax assets (current and non-current) | 42 | 41 | 1 | |||||
Long-term receivables (including current portion) | 655 | 897 | (242) | Reflects scheduled repayments received during 2010. | ||||
Investment in Capital Power |
1,512 | 1,481 | 31 | Reflects equity income partly offset by the limited partnership distributions received. | ||||
Other assets | 168 | 163 | 5 | |||||
Short-term debt | 83 | - | 83 | Reflects increase in short-term debt primarily to fund working capital requirements and capital expenditures. | ||||
Accounts payable and accrued liabilities | 231 | 241 | (10) | Decrease primarily due to seasonal decrease in electricity volume and lower wholesale prices for energy purchases. | ||||
Income taxes payable | 3 | - | 3 | |||||
Other current liabilities | 35 | 32 | 3 | |||||
Long-term debt (including current portion) | 1,689 | 1,917 | (228) | Reflects the scheduled debt repayments during 2010. | ||||
Other non-current liabilities | 64 | 81 | (17) | Reflects payment of transfer fee installment to the City for the Gold Bar asset transfer. | ||||
Future income tax liabilities | 1 | - | 1 | |||||
Shareholder's equity | 2,509 | 2,470 | 39 | Reflects net income and other comprehensive income, partly offset by common share dividends. |
LIQUIDITY AND CAPITAL RESOURCES
Cash inflows (outflows) | |||||
($ millions) | Three months ended September 30 |
Increase (decrease) |
Explanation | ||
2010 | 2009 | ||||
Operating | $ 41 | $ 65 | $ (24) | Primarily reflects decreases in cash flows from changes in non-cash operating working capital. | |
Investing | (28) | 439 | (467) | Primarily reflects proceeds from the sale of the power generation business in 2009. | |
Financing | (17) | (563) | 546 | Primarily reflects the net repayment of short-term debt in 2009, partially offset by net issuance of short-term debt in 2010. |
Cash inflows (outflows) | |||||||
($ millions) | Nine months ended September 30 |
Increase (decrease) |
Explanation | ||||
2010 | 2009 | ||||||
Operating | $ 109 | $ 316 | $ (207) | Primarily reflects lower cash flows due to the sale of the power generation business in July 2009. | |||
Investing | 150 | 153 | (3) | Reflects proceeds from sales of the Castleton facility and the power generation business in 2009, partially offset by limited partnership distributions from Capital Power in 2010, payments received on long-term notes receivable from Capital Power during 2010 and lower capital spending due primarily to the sale of power generation business. | |||
Financing | (247) | (561) | 314 | Reflects lower short-debt and long-term debt repayments, net of new issuances in 2010, and no distributions to non-controlling interests in 2010 (which were transferred with the sale of the power generation business in 2009). |
The Company's cash flow from operating activities decreased $24 million and $207 million in the three and nine months ended September 30, 2010 compared with the corresponding periods in 2009. Cash flows from operating activities decreased in the third quarter of 2010 compared with the corresponding period in 2009 primarily due to changes in non-cash operating working capital. The decrease in cash flow from operating activities in the nine months ended September 30, 2010 was due primarily to the sale of the power generation business in July 2009. We expect cash flow from operating activities to be lower in 2010 than 2009 for the same reason but to be sufficient for current operations.
At September 30, 2010, the Company had undrawn amounts available of $469 million under three credit facilities including a $500 million syndicated bank credit facility. The syndicated bank credit facility has two tranches of $250 million each committed until 2013. Committed and demand bank lines of credit facilities are also used to provide letters of credit. At September 30, 2010, the Company had letters of credit outstanding of $72 million (December 31, 2009 - $99 million) to meet the credit requirements of energy market participants and conditions of certain service agreements. The committed bank lines also indirectly back the Company's commercial paper program which has an authorized capacity of $500 million and an issuance limit of $225 million, of which $83 million was outstanding at September 30, 2010 (December 31, 2009 - nil).
The Company's working capital requirements and contractual obligations for the balance of 2010 will be funded from operating cash flows, limited partnership distributions from Capital Power, interest received in relation to the long-term receivable from Capital Power, and / or the Company's credit facilities. In addition, the Company may issue medium-term notes or sell down a portion of its interest in Capital Power to fund its long-term obligations.
The Company has a Canadian shelf prospectus which expires in January 2012 under which it may raise up to $1 billion of debt with maturities of not less than one year. At September 30, 2010, the available amount remaining under this shelf prospectus was $1 billion.
Floating-rate Notes
On January 21, 2009, the restructuring of non-bank asset-backed commercial paper (ABCP) was implemented. Under the restructuring, the affected ABCP was exchanged for floating-rate notes, maturing no earlier than the scheduled termination dates of the underlying assets. The exchange was recorded at the estimated fair value of the ABCP on January 21, 2009. Since the original purchase of ABCP in 2007 for $71 million, $2 million in principal repayments have been received. The face value of the notes received in exchange for ABCP was $69 million at September 30, 2010.
As the notes are classified as held-for-trading financial assets, they are subject to ongoing fair value adjustments at each reporting date. At September 30, 2010, the fair value of the notes was estimated at $42 million compared with a fair value of $37 million at December 31, 2009. The $3 million and $5 million increases, respectively, for the three and nine months ended September 30, 2010, were primarily due to narrower indicative corporate credit spreads relative to the Government of Canada yield curve (lower discount rate) and higher short-term interest rates (higher projected future cash flows). In the three and nine months ended September 30, 2009, we recognized a $1 million increase and a $2 million increase, respectively, in the fair values of the notes.
The estimate of fair value of the floating-rate notes is subject to significant risks and uncertainties including the timing and amount of future cash payments, market liquidity, the quality and tenor of the assets and instruments underlying the notes, including the possibility of margin calls, and the future market for the notes. Accordingly, the fair value estimate of the notes may change materially. Financial reform legislation has been introduced in the United States which may alter the operation of the notes but until the actual rules are established, it is not possible to estimate the financial impact, if any, on the notes.
For the three and nine months ended September 30, 2010, EPCOR received nil interest on the notes (2009 - nil). Under the terms of the notes, third party administration costs for managing the notes are deducted before any interest paid on the notes. During the period, the interest earned for the period just covered the administration costs and therefore the interest received was nominal.
Effects of Economic and Market Uncertainty
Canadian and U.S. financial markets have improved over the previous year but there is still some uncertainty regarding a full recovery in light of both positive and negative economic news. The Company secured financing to fund its capital expenditures and working capital requirements at a weighted average interest rate of 0.83% per annum through the issue of commercial paper in the quarter. Short-term borrowing rates have increased in the past quarter as a result of the Bank of Canada increasing its benchmark rate. The Company plans to continue using commercial paper, existing credit facilities or medium-term notes for its financing requirements for the balance of the year. Current and longer term financing requirements could also be funded by a sale of a portion of our investment in Capital Power. Should instability in the credit and economic environments worsen, it may adversely affect the interest rates at which we are able to borrow.
If the economy were to deteriorate in the longer term, particularly in Canada and the U.S., the Company's ability to renew credit facilities, arrange long-term financing for its capital expenditure programs and acquisitions, or refinance outstanding indebtedness when it matures could be adversely impacted. If market conditions worsen, the Company may suffer a credit rating downgrade and be unable to renew its credit facilities or access the public debt markets. We continue to believe that these circumstances have a low probability of occurring. However, we continue to monitor EPCOR's capital programs and operating costs to minimize the risk that the Company becomes short of cash or unable to honour its obligations. If required, we would look to reduce capital expenditures and operating costs and / or sell our exchangeable limited partnership units of Capital Power pursuant to our agreements with Capital Power and as market conditions permit.
CONTRACTUAL OBLIGATIONS
Prior to the sale of its power generation business to Capital Power, the Company issued parental guarantees on behalf of subsidiaries to meet the credit requirements of energy market participants and to meet conditions of certain service agreements. During the second and third quarters of 2010, all but $1 million of the parental guarantees outstanding at December 31, 2009 ($1,295 million) were either transferred to Capital Power or had expired.
During the nine months ended September 30, 2010, there have been no material changes to the Company's purchase obligations, including payments for the next five years and thereafter. For further information on the Company's contractual obligations, refer to the 2009 annual MD&A.
CHANGES IN ACCOUNTING STANDARDS
Future Accounting Changes - Canadian Generally Accepted Accounting Principles
Consolidated Financial Statements and Non-controlling Interests
In January 2009, the Canadian Institute of Chartered Accountants (CICA) issued Handbook Section 1601 - Consolidated Financial Statements and Section 1602 - Non-controlling Interests, which replace Section 1600 - Consolidated Financial Statements. Section 1601 establishes the standards for the preparation of consolidated financial statements while Section 1602 establishes the standards for accounting for a non-controlling interest in a subsidiary in consolidated financial statements subsequent to a business combination. Section 1602 is equivalent to the corresponding provisions of International Accounting Standard 27 - Consolidated and Separate Financial Statements.
Sections 1601 and 1602 will apply to EPCOR's interim and annual consolidated financial statements relating to periods commencing on or after January 1, 2011. Earlier adoption is permitted as of the beginning of a fiscal year provided Section 1582 - Business Combinations is also adopted at the same time.
Business Combinations
In January 2009, the CICA issued Handbook Section 1582 - Business Combinations, which replaces Section 1581 - Business Combinations and provides the Canadian equivalent to IFRS 3 - Business Combinations. The section will apply on a prospective basis to EPCOR's business combinations for which the acquisition date is on or after January 1, 2011. Earlier adoption is permitted as of the beginning of a fiscal year provided Sections 1601 - Consolidated Financial Statements and 1602 - Non-controlling Interests are also adopted at the same time. EPCOR currently does not have any business combinations to which Section 1582 could apply.
Multiple Deliverable Revenue Arrangements
In December 2009, the CICA issued Emerging Issues Abstract EIC-175 - Multiple Deliverable Revenue Arrangements, which addresses certain aspects of the accounting by a vendor for arrangements under which multiple revenue-generating activities are performed. The provisions in this Abstract will apply to revenue arrangements with multiple deliverables entered into or materially modified in the first annual fiscal period beginning on or after January 1, 2011. Earlier adoption is permitted.
The impact of the new standards and the option to adopt them early are being assessed as part of our International Financial Reporting Standards (IFRS) conversion project.
IFRS
In February 2008, the CICA confirmed that Canadian reporting issuers will be required to report under IFRS effective January 1, 2011, including comparative figures for the prior year.
In January 2008, we established a core team to develop a plan which will result in the Company's first interim report for 2011 being in compliance with IFRS.
The diagnostic phase of the project was completed in April 2008. For each international standard, we identified the primary differences from Canadian GAAP and made an initial assessment of the impact of the required changes for the purpose of prioritizing and assigning resources. In making the assessment, the number of businesses impacted, the potential magnitude of the financial statement adjustments, the availability of policy choices, the impacts on systems and the impacts on internal controls were all considered.
Status of Conversion Plan
The information obtained from the diagnostic phase was used to develop a detailed plan for convergence and implementation. The convergence and implementation work has five key sections, the status of which is discussed below: Financial Statements, Systems Updates, Policies and Internal Controls, Training and Significant Policy Changes and Financial Statement Adjustments.
Financial Statements
There are a number of international standards which relate to financial statement presentation. Draft financial statements highlighting the disclosure and presentation requirements were reviewed by and discussed with the EPCOR Audit Committee in the first quarter of 2009 and have evolved throughout the project as the impacts of implementing the various standards were quantified. In early November 2010, we presented to the Audit Committee a full set of financial statements reflecting transition adjustments and all related disclosures.
Systems Updates
Systems must be able to capture 2010 financial information under both the prevailing Canadian GAAP and IFRS to allow comparative reporting in 2011, the first year of reporting under IFRS. We completed our system updates in the third quarter of 2009 to capture both and have implemented operational procedures to capture the applicable accounting data through 2010. In effect, we have created a dual general ledger that captures the Canadian GAAP balances and a second ledger that captures the required financial adjustments to convert the Canadian GAAP balances to IFRS. These ledgers are current to August 31, 2010. As part of the final conversion to IFRS, we plan to adjust the general ledger primary accounts with the IFRS adjustment balances at the conversion date.
Policies and Internal Controls
In the determination of the financial statement adjustments, requirements for changes to the Company's policies and internal controls, including internal controls over financial reporting and disclosure controls and procedures, have been identified and documented. Revised policies were approved on November 5, 2010.
The impact of IFRS on certain agreements, such as debt, shareholder and compensation agreements, has also been included in the plan. Assessments of most agreements have been completed and will continue to be monitored as IFRS differences are quantified. We have not identified nor do we expect there to be any material issues with respect to these agreements arising from the conversion to IFRS.
Training
The Company recognizes that training at all levels is essential to a successful IFRS conversion and integration. Accounting staff have attended three training sessions with more planned to occur over the balance of the conversion process. The Board of Directors and Audit Committee have attended training sessions in 2009 and 2010, and the Audit Committee receives regular updates on the conversion project including accounting policy determination.
Significant Accounting Policy Changes and Financial Statement Adjustments
For each international standard, we will determine the quantitative impacts to the financial statements, system requirements, accounting policy decisions, and changes to internal controls and business policies. The initial accounting policy decisions have been brought forward to the Audit Committee for their information as each standard was addressed. Final accounting policy decisions for all standards in effect at the end of 2009 will be made in the fourth quarter of 2010. We have identified the following areas as having the most impact:
Property, Plant and Equipment (PP&E)
PP&E is primarily impacted by International Accounting Standard (IAS) 16 - Property, Plant and Equipment and IAS 23 - Borrowing Costs.
IFRS are different from Canadian GAAP in that certain costs such as overheads and borrowing costs in excess of the actual entity's cost of debt, may not be capitalized. In addition, IFRS do not have a rate-regulated provision allowing costs not specifically allowed under the standards, but allowed by the rate regulator, such as training costs, to be capitalized.
IFRS are also more specific with respect to the level at which component accounting is required, requiring each component of an asset for which different depreciation methods or rates are appropriate, to be accounted for separately.
Under current accounting for rate-regulated operations, the method used to retire assets results in a deferral of any losses. IFRS do not allow this treatment.
The Company has substantially completed its assessment of the cumulative impact of the above changes and estimates that our current carrying amounts of PP&E include approximately $60 million to $65 million of costs which would not qualify for capital treatment under IFRS. The impact on annual depreciation, holding all other factors constant, would be a decrease of $3 million to $5 million.
Asset Retirement Obligations
The Company does not currently record asset retirement obligations as we do not believe they can be reasonably estimated for electricity distribution and transmission and water and wastewater infrastructure, since such assets have long lives and are maintained continuously. IFRS suggest that it is only in extremely rare cases that an estimate of the obligation cannot be made.
IFRS require provisions for constructive as well as legal obligations. In the third quarter of 2010, we assessed the amount of the obligations and the timing and likelihood of their occurrence. On a discounted cash flow basis the amount was immaterial and therefore, no provision for asset retirement obligations will be recorded upon conversion to IFRS.
Transfers of Assets from Customers
IFRS requires that assets received from customers that are used to connect a customer to the network or to provide ongoing access to a supply of goods or services should be treated as a revenue generating transaction, with the timing of revenue recognition dependent on the service or services provided. Under Canadian GAAP, contributions from customers are recorded as an offset against the cost of the associated asset, and amortized over the life of the asset.
IFRS 1, discussed below, provides transitional relief on implementation of these requirements. The Company does not plan on taking this exemption and plans to retrospectively restate its treatment of these contributions.
The Company has completed its review of contribution arrangements. Upon adoption, approximately $500 million in contributions related to those arrangements which fall under the scope of IFRS are expected to be reclassified to deferred revenue from property, plant and equipment. There will be no impact on net assets. The amortization of these contributions will be reflected in income through revenue rather than through decreased depreciation. Based on current balances, revenue will increase by approximately $13 million a year and depreciation expense will increase by $13 million a year. There will be no net income impact.
Rate-regulated Accounting
On September 10, 2010, the Accounting Standards Board of the CICA issued a revision to Part I of the CICA Handbook permitting entities with qualifying rate-regulated activities to optionally defer adoption of IFRS until 2012. The Company does not plan to defer adoption of IFRS until 2012.
Under IFRS, there are currently no provisions for rate-regulated accounting. In February 2010, the staff of the International Accounting Standards Board (IASB) recommended to the IASB that the project on rate-regulated activities be revisited. The IASB has not set a time for revisiting the project on rate regulated accounting. However, the IASB will provide transitional relief to first time adopters via an exemption which allows rate-regulated entities to use the current GAAP carrying amount on the transition date to be the deemed cost for IFRS. The Company does not plan on taking this election and will record the adjustments described below upon adopting IFRS.
In addition to the changes noted above under PP&E, the absence of any provisions for rate-regulated accounting under IFRS essentially prohibits the recognition of certain regulatory assets and liabilities. Not recognizing these assets and liabilities would likely result in greater volatility in the reported amounts for net income and related financial statement items. For EPCOR, regulatory assets include accounts such as a transmission charge deferral account and regulatory liabilities include accounts such as a property tax deferral account. At December 31, 2009, we recognized $28 million in regulatory assets, currently reported as accounts receivable, and $10 million in regulatory liabilities, currently reported as accounts payable. On adoption of IFRS, we would not recognize these amounts. This change, holding all other factors constant, would result in a $28 million decrease to accounts receivable, a $10 million decrease in accounts payable and an $18 million decrease to the January 1, 2010 opening retained earnings.
Investments in Associates
On the conversion to IFRS, we are required to make any necessary adjustments to the carrying amount of our investments in associates which are accounted for using the equity method. Capital Power L.P. will make a number of IFRS conversion adjustments to its January 1, 2011 consolidated statement of financial position. Accordingly, EPCOR will reflect its proportionate share of some or all of such adjustments on its investment in Capital Power with any offsetting adjustments to retained earnings. We cannot estimate the impact of these adjustments, which could be material, as the IFRS conversion adjustments are not yet available from Capital Power.
IFRS 1 - First Time Adoption of IFRS
IFRS 1 provides first time adopters with a number of elections, exempting them from retrospectively adopting certain IFRS. The following elections are relevant to EPCOR:
- Fair value or revaluation as deemed cost - An entity may choose to use fair value at the date of transition as deemed cost. This election is available on an asset by asset basis. We have initially concluded that we will not employ fair values on conversion and our estimate of the impact of IFRS on PP&E is based on management's current intent to not utilize this exemption.
- Employee benefits - An entity may elect to recognize all cumulative actuarial gains and losses associated with employee benefit plans at the date of transition to IFRS. We plan on taking this exemption and upon transition approximately $1.8 million in previously unrecognized losses will be recognized through a decrease to opening retained earnings.
- Decommissioning liabilities - An entity may use a simplified calculation to calculate and restate the decommissioning liability and related property, plant and equipment and depreciation expense. We plan on taking this exemption.
- Transfer of assets from customers - An entity does not have to reclassify customer contributions received prior to the transition date. As noted above, the Company does not plan to take this exemption.
EPCOR anticipates that it will complete final quantification of the opening adjustments for all standards currently in effect during the fourth quarter of 2010.
As the project progresses, the timing of completion of certain items may change as changes to standards and other external factors such as discussions with certain stakeholders may result in a change in priorities. However, we believe the project has sufficient resources to meet the overall project timeline.
Potential Impact of IFRS on Future Financial Statements, Results and Business Functions
The impacts on transition and the estimated annual impacts of the IFRS sections most relevant to EPCOR are discussed above. In addition to those amounts which can be quantified at this time, the Company anticipates the following impacts arising from adoption of IFRS:
- There will be increased volatility in revenues. As regulatory assets and liabilities cannot be recognized under IFRS, amounts which were previously recognized on the basis that the regulator would ultimately allow the amounts, will only be recognized when approved. Adoption of IFRS introduces timing differences in revenue recognition relative to current GAAP.
- Currently most of the Company's operations are regulated, and impairments are not a significant concern under the current regulatory framework. However, as the Company's commercial operations expand and become material to overall operations of the Company, EPCOR will have to implement processes to assess cash generating units and document the assessment of impairment indicators on an annual basis.
Future Accounting Changes - IFRS
The discussion under Significant Accounting Policy Changes and Financial Statement Adjustments reflects standards expected to be in effect at transition date. The Company has identified certain projects on the IASB work-plan, as follows, which may have a significant impact when adopted:
Consolidation
The objective of the project is to revise the definition of control and to enhance related disclosures. Any changes to the control definition may impact the Company's accounting for its investment in Capital Power.
Leasing
The IASB issued an exposure draft on leasing which proposes recording all leased assets on the balance sheet. EPCOR as a lessee, is party to a number of leases, including a long-term commitment with respect to its head office and as part of its commercial water operations, may enter into arrangements where it is a lessor. These proposals could result in revised asset and liability amounts recorded on the balance sheet and would alter the presentation of revenues and expenses associated with such contracts by moving operating expenses to finance expenses and depreciation and operating revenues to finance income.
CRITICAL ACCOUNTING ESTIMATES
In preparing the consolidated financial statements, management necessarily made estimates in determining transaction amounts and financial statement balances. The following are the items for which significant estimates were made in the interim consolidated financial statements: electricity revenues, costs and unbilled consumption, fair values, allowance for doubtful accounts, useful lives of assets and income taxes. Interim results will fluctuate due to the seasonal demands for electricity and water, changes in energy prices, and the timing and recognition of regulatory decisions. Consequently, interim results are not necessarily indicative of annual results.
For further information on the Company's critical accounting estimates, refer to the 2009 annual MD&A.
RISK MANAGEMENT
This section should be read in conjunction with the Risk Management section of the most recent annual MD&A. EPCOR faces a number of risks including risks related to its investment in Capital Power, operational risks, political, legislative and regulatory risk, financial liquidity risk, weather risk, project risk, availability of people risk, credit risk, health and safety risk, environment risk, conflicts of interest risk, and general economic conditions and business environment risks. The Company employs active programs to manage these risks.
As part of ongoing risk management practices, the Company reviews current and proposed transactions to consider their impact on the risk profile of the Company. There have been no material changes to the risk profile or risk management strategies of EPCOR as described in the annual MD&A for 2009 that have affected the financial statements for September 30, 2010.
OUTLOOK
In December 2009, Energy Services and Distribution and Transmission filed their 2010-2011 General Tariff Applications with the AUC. Hearings related to the Distribution and Transmission application took place during June 2010. Energy Services, on the other hand, requested from the AUC, and received approval, to negotiate its non-energy tariff with the interveners except for matters that are common to the Distribution and Transmission and Energy Services applications. Results of the negotiation are expected to be known by the end of 2010. On October 28, 2010, the AUC issued decisions in respect of Distribution and Transmission's and Energy Services' 2010-2011 General Tariff Applications that covered all substantive matters except allocated corporate costs. The AUC concluded that it was not in a position to determine the proper regulatory treatment for Distribution and Transmission's and Energy Services' allocated corporate costs following the spin-off of Capital Power from the Company. The AUC has directed that a separate module for this proceeding be convened in order to further review the revised corporate costs in a more detailed fashion. After completion of the separate module, the AUC will make a final determination on the matter of corporate costs and those final determinations will then be consolidated into Distribution and Transmission's and Energy Services' revenue requirements (rates). No timelines have been provided for the separate module and the Company expects that it will be completed in 2011. The Company is currently evaluating the results of the decisions and will assess their overall impact on 2010 net income and reflect any required accounting adjustments in the fourth quarter of 2010.
February 26, 2010, the AUC announced a rate regulation initiative proposing a Performance Based Regulation (PBR) type framework under which rates would be adjusted annually by a formula recognizing expected inflation and achievable productivity improvements. A roundtable discussion was held on March 26, 2010, with all the interested or affected parties including EPCOR and a PBR framework document was issued in July 2010. The stated objectives of PBR include promoting efficiency, allowing the opportunity for affected companies to earn a fair return and recover prudently incurred costs, reducing the regulatory burden, recognizing the uniqueness of affected companies and allowing customers to share in the benefits. The first PBR application is scheduled to be submitted in 2011, effective for 2012. As development of the PBR framework is still in the progress, it is not possible to estimate the impact that this regulatory change might have on EPCOR.
FORWARD-LOOKING INFORMATION
Certain information in this MD&A is forward-looking within the meaning of Canadian securities laws as it relates to anticipated financial performance, events or strategies. When used in this context, words such as "will", "anticipate", "believe", "plan", "intend", "target", and "expect" or similar words suggest future outcomes.
Forward-looking information in this MD&A includes: (i) the AUC will make the final decision on the Heartland project; (ii) the Company expects to close its acquisition of Chaparral in 2011, subject to regulatory approval; (iii) 2010 cash flow from operating activities will be lower than in 2009 due to the sale of the power generation business; (iv) the Company will fund its 2010 working capital requirements and contractual obligations from operating cash flows, limited partnership distributions from Capital Power, interest received in relation to the long-term receivable from Capital Power, the Company's credit facilities, and potential sale of a portion of its interest in Capital Power; (v) expectations regarding the impact on the Company of the capital and credit market instability and expected risk mitigation plans; (vi) the timing of decisions related to and expected impacts of the transition to IFRS; (vii) results of the negotiation of the Energy Services non-energy tariff are expected by the end of 2010; (viii) the Company expects the AUC's separate module on corporate costs to be completed in 2011; (ix) the Company will evaluate the impact of decisions from the AUC on Energy Services' and Distribution and Transmission's General Tariff Applications in the fourth quarter of 2010 ; and * the Company expects to file its first PBR applications with the AUC in 2011.
These statements are based on certain assumptions and analyses made by the Company in light of its experience and perception of historical trends, current conditions and expected future developments and other factors it believes are appropriate. The material factors and assumptions underlying this forward-looking information include, but are not limited to: (i) the operation of the Company's facilities; (ii) the Company's assessment of the markets and regulatory environments in which it operates; (iii) weather; (iv) availability and cost of labour and management resources; (v) performance of contractors and suppliers; (vi) availability and cost of financing; (vii) foreign exchange rates; (viii) management's analysis of applicable tax legislation; (ix) the currently applicable and proposed tax laws will not change and will be implemented; * counterparties will perform their obligations; (xi) expected interest rates, related credit spreads and mortality rates for floating-rate notes; (xii) ability to implement strategic initiatives which will yield the expected benefits; (xiii) the Company's assessment of capital markets; and (xiv) factors and assumptions in addition to the above related to the Company's 72.2% equity interest in Capital Power.
Whether actual results, performance or achievements will conform to the Company's expectations and predictions is subject to a number of known and unknown risks and uncertainties which could cause actual results and experience to differ materially from EPCOR's expectations. The primary risks and uncertainties relate to: (i) operation of the Company's facilities; (ii) unanticipated maintenance and other expenditures; (iii) electricity load settlement; (iv) regulatory and government decisions including changes to environmental, financial reporting and tax legislation; (v) weather and economic conditions; (vi) competitive pressures; (vii) construction; (viii) availability and cost of financing; (ix) foreign exchange; * availability of labour and management resources; (xi) performance of counterparties, partners, contractors and suppliers in fulfilling their obligations to the Company; and (xii) risks in addition to the above related to the Company's 72.2% equity interest in Capital Power, including power plant availability and performance.
Readers are cautioned not to place undue reliance on forward-looking statements as actual results could differ materially from the plans, expectations, estimates or intentions expressed in the forward-looking statements. Except as required by law, EPCOR disclaims any intention and assumes no obligation to update any forward-looking statement even if new information becomes available, as a result of future events or for any other reason.
QUARTERLY RESULTS
Quarter ended | Revenues | Net income (loss) |
|||||||||||||||
(Unaudited, $ millions) | |||||||||||||||||
September 30, 2010 | $ 379 | $ 57 | |||||||||||||||
June 30, 2010 | 363 | (8) | |||||||||||||||
March 31, 2010 | 338 | 87 | |||||||||||||||
December 31, 2009 | 374 | 27 | |||||||||||||||
September 30, 2009 | 351 | (56) | |||||||||||||||
June 30, 2009 | 735 | 50 | |||||||||||||||
March 31, 2009 | 896 | 104 | |||||||||||||||
December 31, 2008 | 820 | 15 |
Events for 2010, 2009 and 2008 quarters that have significantly impacted net income and the comparability between quarters are:
- September 30, 2010 third quarter results included positive operating income as a result of the transfer of Gold Bar on March 31, 2009 and the acquisition of Alberta oil sands related water and wastewater treatment operations in the fourth quarter of 2009, equity income from Capital Power, lower revenues due to the sale of the power generation business in 2009, and interest revenue on the long-term loans receivable from Capital Power.
- June 30, 2010 second quarter results included equity loss from Capital Power, lower revenues due to the sale of the power generation business in 2009, interest revenue on the long-term loans receivable from Capital Power, positive operating income as a result of the transfer of Gold Bar on March 31, 2009 and the acquisition of Alberta oil sands related water and wastewater treatment operations in the fourth quarter of 2009.
- March 31, 2010 first quarter results included equity income from Capital Power, lower revenues due to the sale of the power generation business in 2009, interest revenue on the long-term loans receivable from Capital Power, positive operating income as a result of the transfer of Gold Bar on March 31, 2009 and the acquisition of Alberta oil sands related water and wastewater treatment operations in the fourth quarter of 2009.
- December 31, 2009 fourth quarter results included adjustments to the loss on sale of the power generation business, interest revenue on the long-term loans receivable from Capital Power and positive operating income as a result of the transfer of Gold Bar on March 31, 2009.
- September 30, 2009 third quarter results included a loss on the sale of the power generation business and the write-off of syndicated credit facility issue costs related to the sale of the power generation business partly offset by equity income from Capital Power, interest revenue on the long-term loans receivable from Capital Power and positive operating income as a result of the transfer of Gold Bar on March 31, 2009.
- June 30, 2009 second quarter results included unrealized fair value gains resulting from the impact of low Alberta power prices on derivative electricity contracts that were not designated as hedges for accounting purposes, unrealized fair value gains on CPILP's forward foreign exchange contracts used to economically hedge U.S. cash flows and positive operating income as a result of the transfer of Gold Bar on March 31, 2009.
- March 31, 2009 first quarter results included a $26 million gain on the sale of a 10% interest in the Battle River Power Syndicate Agreement, and unrealized fair value gains resulting from the impact of low Alberta power prices on derivative electricity contracts that were not designated as hedges for accounting purposes. These gains were partly offset by unrealized fair value losses on CPILP's natural gas supply contracts, and forward foreign exchange contracts used to economically hedge U.S. cash flows.
- December 31, 2008 fourth quarter results reflected impairment charges on the goodwill associated with the investment in CPILP and on CPILP's investment in Primary Energy Recycling Holdings. CPILP also recognized unrealized fair value losses on its forward foreign exchange contracts used to economically hedge U.S. cash flows and on its natural gas supply contracts.
Additional information
Additional information relating to EPCOR, including EPCOR's annual information form, is available on SEDAR at www.sedar.com.
For further information: For further information:
Media Relations:
Tim le Riche (780) 969-8238
[email protected]
Corporate Relations:
Claudio Pucci (780) 969-8245 or toll free (877) 969-8280
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