Emera's CEO Discusses Q1 2013 Results - Earnings Call Transcript

| About: Emera Inc. (EMRAF)

Emera Incorporated (OTCPK:EMRAF) Q1 2013 Earnings Call May 7, 2013 2:00 PM ET

Executives

Jill MacDonald - Manager, IR

Chris Huskilson - President & CEO

Scott Balfour - EVP & CFO

Judy Steele - President & COO, Emera Energy Inc.

Bob Hanf - President & CEO, Nova Scotia Power Inc.

Gerry Chasse -- President & COO, Bangor Hydro Electric Company and Maine Public Service Company

Analysts

Juan Plessis - Canaccord Genuity

Ben Pham - BMO Capital Markets

Paul Lechem - CIBC

Linda Ezergailis - TD Securities

Matthew Akman - Scotia Bank

Robert Kwan - RBC Capital Markets

Andrew Kuske - Credit Suisse

Operator

Good afternoon, ladies and gentlemen. Welcome to the Emera’s First Quarter Conference Call. I would now like to turn the meeting over to Ms. Jill MacDonald, Manager of Investor Relations. Please go ahead, Ms. MacDonald.

Jill MacDonald

Good afternoon everyone, and thank you for joining us for our first quarter conference call this afternoon. Joining me for Emera are Chris Huskilson, President and Chief Executive Officer; Scott Balfour, EVP and Chief Financial Officer; and other members of the management team.

Emera’s first quarter earnings release was distributed earlier today via newswire and the financial statements and management’s discussion and analysis are available on our website at emera.com. This afternoon Chris will begin with a corporate update and then Scott will review the financial results in detail. We expect the presentation segment to last about 10 minutes after which we will be happy to take questions from analysts and investors.

Please note that all amounts are in Canadian dollars with the exception of Emera’s Maine and Caribbean Utilities where segment results are reported in U.S. dollars.

I’ll take a moment to remind you that this conference call may contain forward-looking information which involves certain assumptions and known and unknown risks and uncertainties that may cause actual results to be materially different from those that are expressed or implied by the comments. Those risks conclude but are not limited to weather, commodity prices, interest rate, foreign exchange, regulatory requirements and general economic conditions. In addition, please note that this conference is being widely disseminated via live webcast.

And now, I’ll turn things over to Chris.

Chris Huskilson

Thank you, Jill, and good afternoon everyone. We had a great start to 2013 delivering Q1 consolidated net income of $122.8 million or $0.93 a share, compared to $80.2 million or $0.65 a share in Q1 of 2012. When normalized for mark-to-market adjustments we delivered 33% growth in earnings per share year-over-year. Significant increase in the quarter is primarily due to strong results in our Emera Energy Services business and gains realized on the conversion of Algonquin subscription receipts to common shares. Scott will take you through these details later in his remarks.

Beginning with our largest initiative Maritime Link project continues to proceed on schedule. Regulatory oversight continues to remain an integral part of the overall project. In March, we completed the information request portion of the regulatory process where we replied to more than 2000 questions. Earlier this month interveners filed 1,000 pages of evidence based on our responses to those questions.

We believe the evidence continues to support the merits of a Maritime Link for Nova Scotia both as it relates to being the lowest cost long-term alternative to meet Nova Scotia’s clean energy needs and as the unique and important strategic benefits it provides to Nova Scotia by putting Nova Scotia in the middle of an energy market rather than being at the end of the line as we are today.

Nova Scotians and the regulator will ultimately decide upon the relative merits of the Maritime Link and we remain confident this project will win their support. The URB hearing is scheduled to begin later this month and we expect a regulatory decision by the end of July. The environmental assessment process is near complete and we expect to have that regulatory decision later this quarter. Engineering and design work is progressing as we advance towards final construction ready cost estimates in the fall. We continue to work towards the commencement of construction in 2014 with first power achieved in 2017.

This quarter Moody’s assigned a provisional AAA backed issuer rating to Nalcor’s Muskrat Falls, Labrador Transmission and Labrador-Island Link. This confirms the benefit of the Federal Loan Guarantee in that it provides very important financing cost reductions to these projects and similarly to the Maritime Link for which we’ve secured the same Government of Canada support. Notably, while the review and approval process continues here in Nova Scotia for the Maritime Link project, our partner Nalcor is now underway with construction of their projects. The equipment is on site, contractors have been engaged and the subsea cable has been ordered. And as such, we made our first investment in the Labrador-Island Link in the quarter, the first $67 million of a near $400 million investment for Emera. The Labrador-Island Link will be a regulated investment in Newfoundland and will earn a return on equity equal to that of regulated utilities in Newfoundland.

As I mentioned earlier, our marketing business had a very strong quarter. Emera Energy has been active in the U.S. northeast physical natural gas markets for several years and understands the regional pipeline infrastructure very well. This past quarter, New England gas prices experienced high degrees of volatility for a prolonged period.

Emera Energy used its in depth experience in market knowledge to optimize its pipeline transpiration portfolio, while serving its many clients' need in a way that was not only financially beneficial to the business, but also well inside our risk tolerance. We have worked hard to position ourselves well in this market and we’re pleased with the meaningful contribution for these efforts this quarter.

Algonquin Power also provided strong contributions again this quarter. We exercised $12.56 million Algonquin subscription receipts into common shares bringing our ownership up to 24.5% as of March 31st. We realized after-tax gains totaling $18.1 million on three separate transactions in the quarter.

In the Caribbean, we remained focused on finding lower cost, less volatile energy sources for our Caribbean customers. Our current focus is in the Bahamian market and in particular Grand Bahama Power Company. We believe that natural gas in the form of either CNG or micro-LNG will be a part of the solution for this market. And specifically, believe that we could find a potential solution by moving CNG from Florida to Grand Bahama.

With that, I’ll turn things over to Scott, who will give you a more detailed update on our financial results first quarter. Scott?

Scott Balfour

Thank you, Chris, and good afternoon everyone. Our first quarter results were released earlier today and are now on the Emera website. As Chris mentioned earlier, Emera’s consolidated net income in the first quarter of 2013 was $122.8 million or $0.93 per share compared to $80.2 million or $0.65 per share in the first quarter of last year.

When the results are normalized for $7.4 million of mark-to-market losses, 2012 net income was $115.4 million or $0.88 per share compared to $81.8 million or $0.66 per share last year and that should read -- should have said $115 million for 2013 net income, first quarter of 2013.

We saw higher contributions from each of our operating segments, but the 33% increase in adjusted earnings per share was primarily a very strong performance within our Services, Renewables and Other segment.

Excluding the effect of mark-to-market adjustments, Emera services, renewables and other investments contributed $41.2 million to consolidated net income in the first quarter of 2013 compared to $7.3 million in the first quarter of 2012. The increase was primarily due to the following factors. First, and as Chris mentioned, we realized $18.1 million of after-tax gains on the conversation of Algonquin subscription receipts. There were no similar Algonquin gains in the first quarter last year.

Second the strong quarter in our marketing and trading business that Chris referred to resulted in a $8.5 million year-over-year increase in contributions to Emera Energy’s earnings. And finally, there was a $6.8 million contribution from our interest in northeast wind partners as a result of us settling all of her titlements under various guarantee, warranty and performance obligations from one of its suppliers.

Nova Scotia Power contributed $63.2 million to consolidated net income in Q1 2013 compared to $59.6 million in the first quarter last year. The increase was primarily driven by increased sales, which in turn led to high electric margin, which was partially driven by load growth and the impact of colder weather.

Main utility operations contributed $8.9 million to consolidated net income in the first quarter compared to $8.5 million for the same period in 2012 similar to NSPI results were positively impacted by the colder weather this quarter.

Caribbean Utility operations contributed $4.1 million to consolidated net income in the quarter compared to $3.9 million last year. Pipelines delivered consistent net income year-over-year contributing $7.2 million in the first quarter of 2013 compared to $6.8 million in the first quarter last year.

Our corporate costs were $9.2 million in the first quarter compared to $4.3 million last year. This increase was primarily due to higher business development cost as a result of increased activity in that area.

That’s all from my financial overview. And now, we would be happy to take your questions.

Question-and-Answer Session

Operator

Thank you. We will not take questions from the telephone lines. (Operator Instructions) The first question is from Juan Plessis of Canaccord Genuity. Please go ahead.

Juan Plessis - Canaccord Genuity

Thank you. You mentioned the strong marketing opportunities in the quarter in New England. Do you see continuing opportunities in this market or is that mostly a temporary phenomenon?

Chris Huskilson

Juan, we’ll just ask Judy to answer that for you.

Judy Steele

Hi, Juan. So, it’s really was a function of high demand for natural gas and some supply constraints that are largely around existing pipeline infrastructure. So, I would say there is potential for it to occur again with that level of volatility. But Deep Panuke is scheduled to come on in this summer, which will bring additional supply to the equation, so it’s hard to predict exactly. So, we have to wait and see. But certainly this winter was that would get -- it was - it was largely a supply to the market issue and I think we do believe that will be mitigated through the balance of the year.

Juan Plessis - Canaccord Genuity

Okay. Thanks for that Judy. And you had some improved plant performance at Bayside. Do you think this Bayside performance is an indicative quarter to use going forward?

Judy Steele

Well, Bayside, you recall that Bayside is under PPA for the winter month, and now it’s essentially a merchant facility for the seven summer months. But yes, the improved performance was the result of the capital upgrade that we made to that plant, which improved the peak rate and its output. So that should follow through and be consistent. But again I do remind you that it’s under PPA for five months of the year and a merchant facility for the other seven.

Juan Plessis - Canaccord Genuity

Right. Thanks for that. And just lastly, I heard maybe, Chris, there was some hired business development costs in the quarter. What did those mainly relate to and do you expect the higher BD run rate 2013 versus last year?

Chris Huskilson

So, yeah, I mean, we continue to pursue new development opportunities as we continue to look to driving future earnings growth, and the reality is as we pursue certain projects it can be lumpy in terms of - in terms of that pursuit. So there are periods and quarters like we had in the first quarter, where we’ve got more activity and incurring more costs. I wouldn’t see that run rate continue through the balance of the year, that activity was in fact higher in the first quarter, but those costs can be incurred in a lumpy way and that’s what we experienced in the first quarter.

Operator

Thank you. The next question is from Ben Pham of BMO Capital Markets. Please go ahead.

Ben Pham - BMO Capital Markets

Okay. Thanks very much. Good afternoon everybody. So, just on your note about business development expenses and I think (inaudible) is looking at some acquisitions potentially and you can just provide a quick update on the acquisition outlook in your core areas and just anything that you have been working at over the last few quarters -- over the last quarter?

Chris Huskilson

Ben, thank you for the question. I think we continue to be primarily focused on our overall Greenfield development activities. We would always continue to keep our eyes open on the acquisition side but our primary focus is on the Greenfield activity. And so, it doesn’t matter whether you are in Atlantic Canada, in New England or in the Caribbean, we see lots of opportunity to build new projects, whether that be things like the power plant in Grand Bahama or the Maritime Link that we’re talking about here in Atlantic Canada. So, that’s really, where our focus is. From time to time, there maybe acquisition activity but that’s probably less frequent.

Ben Pham - BMO Capital Markets

Okay. Thanks for clarifying that. And I just wanted to also ask about just on the load outlook at the (inaudible) in your quarters and it's from at the little bit this quarter relative to last year, so just maybe just in general terms of in terms of it's been four months already just your load outlook for the balance of the year in your core areas?

Chris Huskilson

Yeah we certainly have seen the demand for customers increased a little bit and certainly the winter was a better winter. And I have Bob Hanf, maybe he'll be able to talk a little bit about Nova Scotia Power.

Bob Hanf

As Scott mentioned, the winter was favorable to us because of the cold weather and I think the load is solid slight increase but a solid would be my description.

Chris Huskilson

Gerry, any comments?

Gerry Chasse

I would echo what Bob said. In Maine, we had a reasonably cool winter, more of a norm than what we've seen over the last couple of years, as well our load in general has transformed from a number of years ago to what was largely industrial base to something that's more commercial and residential base. So, we don’t have a large fluctuations any longer that come along with some of the challenges that industrial businesses have had in the State of Maine.

Chris Huskilson

Yeah, I think the other thing that I would just add to that is that we are seeing a beginning trends and I say it's early early days but and the same people move from oil which essentially is the primary alternative here in these markets moving over to electricity especially on the heat pump side. So, we are beginning to see that happen. It's kind of early days but that's very encouraging for our business and something that our businesses are focused on because at the end of the day it saves customer’s money and also it reduces, its more efficient and reduces the amount of energy production overall. So, it's a great opportunity but its early days.

Operator

Thank you. The next question is from Paul Lechem of CIBC. Please go ahead.

Paul Lechem - CIBC

First question on your investments in Algonquin Power, so you’re now up to 24.5%. Just first on that did you -- I thought you are limited first to 20% ownership by Maine. Did that get altered to allow you to increase that investment?

Chris Huskilson

It did we went for a further application and got approval to go to 25 and in fact we also just recently went before Algonquin shareholders again to allow us to continue to maintain that 25% ownership. So, we’re very close and we’re continuing to look to hold ourselves in that range.

Paul Lechem - CIBC

Okay, so your intention is to keep pro rata share at 25%?

Chris Huskilson

It is, and as you know, Paul, that Algonquin has a great portfolio of investments and also a great pipeline of future investments both in utility type activities and also in contracted clean generation. So, we see that as a great investment opportunity for us for the future as well.

Paul Lechem - CIBC

Fair enough. On your capital spending for 2013 you reduced the plan for NSPI by a chunk. Can you talk about what that's about where you’ve reduced the spending at NSPI or the spending plans?

Bob Hanf

Bob Hanf speaking. So, we reduced our capital spend by approximately $80 million and the concept there was, we took a hard look at our capital expenditures and moved out what we could into future years. And that's very much in accordance with the direction of our regulator and listening to our customers about future rate increases and that reduction allows us I think to be responsive to that. But those, everything that's essential is being done and service levels are being maintained and we’re not compromising in any way and so those projects, we just took a really hard look at that and moved them out into future years.

Paul Lechem - CIBC

Okay and – just trying to also square away the different numbers in terms of CapEx plans that you’ve put out there for this year in your latest invest presentation you have a range of I think it’s $550 million to $625 million for the year. In your year-end 2012 your forecast was $831 million. What kind of range should we be thinking about for total CapEx spend now for 2013, and what does it include? Would that includes your investments in the Labrador-Island Link as well or I am not sure what in that after this?

Scott Balfour

Yeah so it would include, it would include everything. So it certainly include our equity investment in Labrador-Island Link and our capital spend on Maritime Link. I don’t believe there has been any sort of material change to the range of CapEx profile that’s in our – on our website in Investor Relations report. Also I think that’s still a reasonable range to be assuming this time.

Paul Lechem - CIBC

Fair enough. And do next round of investment in the Labrador and then like when is the call for that?

Scott Balfour

It’s likely going to be in early 2014 where we likely won’t it’s possible that we’ll see some we don’t necessarily control the timing on that, but if there is anymore in 2013 it will be modest.

Operator

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

Linda Ezergailis - TD Securities

Thank you. I'm just wondering if you could elaborate on the complaints on the New England transmission ROEs and what the basis of the complaints are, and what sort of ROE is being suggested, and what sort of timing there might be to resolve this?

Gerry Chasse

Sure, Linda, this is Gerry from the Maine Utility. As you know, the low interest environment I think is creating pressures on ROEs across the – for regulated utilities across the United States. And I think the real question is what’s the appropriate risk premium that utility should be earning particularly in an environment where I think there is still strong demand for capital. So, at the end of the day, I think and it’s not only the Maine utilities but it’s the other New England utilities that are the subject to this complaint, but at the end of the day I think we’ve demonstrated a case where the ROE that we have today is in the range of reasonableness for this environment.

I can tell you what has been suggested by the complaint is which is roughly in line with the recommendations by FERC staff is around the 8.9% range. But at the end of the day we don’t know what to expect until the commissioners at FERC actually rule on that.

Linda Ezergailis - TD Securities

And when do you expect a ruling?

Gerry Chasse

By the end of this year.

Chris Huskilson

Yeah. I think it’s important to note as well though that when you look at the range of reasonableness it goes from somewhere in the high 6s all the way to somewhere in the higher 11s. So, the range is very, very wide and all the staff have done at this point is pick the midpoint of that very wide range.

Linda Ezergailis - TD Securities

Okay.

Chris Huskilson

So, we really do have to wait and see how the commission actually looks at that. They certainly have promoted traction of capital to the needs in the transmission system in New England. We’ve stepped up to that as have many, many utilities in that marketplace and I don’t think they want to stop that activity because it’s still our need for there as well. So, we’re looking at it in that light and at this point it’s a very wide range.

Linda Ezergailis - TD Securities

Thank you. And what is your Bangor Hydro current transmission rate based on equity thickness?

Scott Balfour

It’s actual thickness which is a little higher than 50% right now but we target roughly 50% equity.

Chris Huskilson

And then rate base is above is it a billion or?

Scott Balfour

The rate base for transmission is closer to 400 million.

Chris Huskilson

Yeah.

Linda Ezergailis - TD Securities

And just a follow-up question, can you just confirm that for Maritime Link you’ll be booking AFUDC to earnings probably by the end of July once the regulator provides a decision?

Scott Balfour

No, in fact, we’re doing that currently. So, we are on the basis of this being an intended regulated investment we are booking AFUDC on the capital investment as we go.

Operator

The next question is from Matthew Akman of Scotia Bank. Please go ahead.

Matthew Akman - Scotia Bank

Hi, just a follow-up on Maine ROEs, was there a change in the ROE at MPS?

Gerry Chasse

Yes, there was a recent change in the ROE at MPS in expectation that it’s the case the recent transmission rate filing at Maine Public Service was litigated. It would be set probably lower than what we actually settled on but it changed from 10.5% down to 9.75%.

Matthew Akman - Scotia Bank

On Grand Bahama, there obviously was a generation investment last year which was starting to pay off and margins have actually expanded but it looks like operating cost in the Caribbean are up. So, I'm just wondering how you guys see the net impact of those things playing out over the next year or two?

Chris Huskilson

Well, we continue to see improvements in the earnings of that business and we are continuing to work in that direction and so we see that gradual improvement occurring. The other thing that we are quite focused on as you know, Matthew, is actually getting some natural gas in there and being able to reduce the overall cost for fuel to the market as well. So, I think that whole thing is going to come together over the next year or so, and we’ll have a good sense where we are going but we are seeing the profitability of that business continue to recover.

Matthew Akman - Scotia Bank

Okay. Thanks very much, and just one last cleanup on Caribbean. I think you guys got it a $58 million of CapEx there for the year. What’s the major one or two items in that bucket?

Chris Huskilson

That’s going to primarily be driven by a generation investment in Barbados Light & Power. That’s the next step to take there. Barbados Light & Power is in a position where they can -- they do have a need for future generation and so we are working our way through that with the regulatory process. They’ve actually done a very good job this past year on an integrated resource plan for the region looking at how renewables might fit in the future and also looking at how natural gas could play a role if we can achieve getting natural gas into that market. And so, all those things are playing into future investment there.

Operator

Thank you. Next question is from Robert Kwan of RBC Capital Markets. Please go ahead.

Robert Kwan - RBC Capital Markets

If I can just come back to the energy services and, Judy, if I understood I think you explanation it sounded like a lot of the process were made based on like as you said pipeline constrains but really it was basis differentials.

Judy Steele

Yeah. So it’s we make our money by connecting people who want to buy gas with people who have gas to sell. And in a constrained market the fact that we’ve been playing there for almost 10 years now and have over a 150 counterparties that we can look to makes us able to help people in a well circumstances.

Robert Kwan - RBC Capital Markets

Okay.

Chris Huskilson

I think Robert the other thing that I would add is that the actual footprint for Emera Energy Services has expanded quite dramatically from the time that we would have seen in the last significant volatility in that marketplace to today so that their position on many, many pipelines now gives them the ability to move gas around the region in a fairly good manner. And so it lets them help customers out as they need to be able to supply especially the electricity side.

Robert Kwan - RBC Capital Markets

And I guess so on that you hold firm transportation rights on various pipelines?

Judy Steele

Yeah. So, we would kind of annually take some positions as we’re able to kind of bid into be successful in terms of bidding for them. And then that puts us in a position to move gas from place to place.

Robert Kwan - RBC Capital Markets

And do those firm transportation rights give you the right to roll that over kind of on a right it first refusal type basis to the next year?

Judy Steele

No, not generally. They are generally we bid.

Chris Huskilson

And I think there is a combination of two different kinds there are some that are quite short-term which is what Judy is referring to right now, but there are also some that are quite long-term and as a result of relationships we are developing in the Marcellus -- with Marcellus gas producers, and so we are able to move that gas over pipe over fairly long period.

Robert Kwan - RBC Capital Markets

So, it sounds like it’s was more of a tactical call by the team rather than some underlying option that you are going to have on firm transportation from year-over-year?

Judy Steele

Right, yeah.

Robert Kwan - RBC Capital Markets

Okay. Okay I guess just last question on that you mentioned you had $8.5 million increase year-over-year I’m just wondering. Can you give us what the absolute market that business produced in the quarter?

Judy Steele

I don't think we generally disclose that.

Robert Kwan - RBC Capital Markets

Okay.

Scott Balfour

So we having it but it is a very material increase year-over-year. So.

Robert Kwan - RBC Capital Markets

Okay. So maybe it was coming off of a relatively small base.

Scott Balfour

Correct.

Robert Kwan - RBC Capital Markets

Okay. Just a last question I’ve got, can you just comment where you are on the Northeast energy link project and as part of that if you have any comments on the Northern Pass project as well?

Chris Huskilson

So Gerry if you want to just give us a bit of an update on where you are with.

Gerry Chasse

Yeah. I think we’ve seen the number of positive developments on the North East Energy link. I think the increasing demand for contracted renewables in Massachusetts as a result of new legislation there changing. The Green Community Act has driven a significant amount of demand for a long-term contracted renewals. And you know relationship with First Wind has given us some opportunity to develop as much as the 1000 megawatts of renewables on sort of the supply end of this line to sort of to fill the pipe. And then, I think third the most positive development has been with sighting in the State of Maine where the State of Maine has created a corridor and allowed projects like this to sight within that corridor, and so we’re going through a sighting process right now with the State of Maine that would allow us to basically sight about 80% of this line and deal with only one landowner over that. So, all in all, I think there have been some positive developments that are seeing us, giving us a view towards a project that we can actually develop here.

Chris Huskilson

So, fundamentally, we see ourselves as getting this project ready and watching two things develop, one being the actual demand side develop as the states are deciding how they want to go forward and what role they see both winds and hydro playing in that, and so from a hydro perspective we think of certainly about what’s going on in Nalcor as well.

And then, on the other side -- and so specifically to that we’re actually seeing some very interesting developments right now in Connecticut they certainly are in the process of debating some changes in their legislature as to how they want to acquire clean energy and how that comes together in that so we see as very positive to this type of activity.

And then, lastly, pulling together the supply side whether that would be First Wind or whether that would be the Nalcor or whether that would be other regional suppliers. So those are the kinds of things we’re working on and it continues to advance in that light and developments or positive developments are happening in the market.

Robert Kwan - RBC Capital Markets

And any commentary as to how that your project relates or competes against Northern Pass?

Chris Huskilson

Well we don’t see them as being in competition. They actually are a quite different in the way they’re approaching the market and the points that which they deliver energy. So, we’re quite comfortable with what we can provide to the marketplace and that’s really where we’re going.

Robert Kwan - RBC Capital Markets

And see if all those room for both to go ahead and roughly the same timeframe?

Chris Huskilson

Well, they are different. They are different and so I think what we’re offering the market is firm, clean energy delivered essentially into the Boston area. Duxbury, Massachusetts is one of the only locations in southern part of New England that can actually take 1200 megawatts right into the load pocket. So, we’re actually seeing that as a feature unto itself.

Gerry Chasse

I think to put a particular point on it. The increasing renewable objectives collectively for the New England state to creates a gap of about 5,000 megawatts by 2020, and if you add the two projects up and in fact if Northern Pass was delivering renewable energy which is most cases is not qualified as renewable it still only have about 2,000 megawatts worth of supply. So, there is a pretty strong demand.

Operator

Thank you. (Operator Instructions) The next question is from Andrew Kuske of Credit Suisse. Please go ahead.

Andrew Kuske - Credit Suisse

Just a question on your balance sheet I guess it was directed to Scott, just how do you see the balance sheet positioned in light of the recent shelf filings, where do you see the positioning of your balance sheet from a debt, equity and then also a pref composition?

Scott Balfour

Yeah, so we Andrew continued to work towards that to the target capital structure in a range of 55% debt, 35% common equity and 10% preferred share equity. And so, the filing of the shelf, the base shelf perspectives allow us to do pref share and medium-term note financings as just really a replacement of shelf program we had in place before that we’ll continue to access both those forms of capital and common equity over time as we continue to invest our capital in projects like Maritime Link and Little. And it looked all three forms of capital toward that target structure as we finance those investments.

Andrew Kuske - Credit Suisse

Do you have a bias towards say preferred shares at this point in time especially with the big capital needs on Maritime and all the related transmission projects associated with that and ever just be of less dilutive at the front end and financing cost are relatively attractive?

Scott Balfour

Yeah, a bias, I’m not sure, I would say that. I mean, we have a bias within the degree to which that’s an important part of our capital structure and so we’ll use them. And there is no doubt that the market today is providing an opportunity to look at pref shares with some pretty competitive and attractive term. So, we’ll look at those and continue to balance that capital structure. I think you can also look at our capital structure today and relative to that target capital structure that I spoke to we maybe a little overweight on debt and little underweight on pref as we said today. So, that might be a message in terms of how we’re looking at our near term financing requirements as well.

Andrew Kuske - Credit Suisse

Okay, that’s very helpful. And then completely different - different question for a second. Just on the biomass facility in Nova Scotia, how is the completion of that project coming along and when we‘ll see first fire?

Chris Huskilson

I’ll ask Bob to respond to that.

Bob Hanf

Thanks, Chris. Thank you for the question, Andrew. It’s coming along quite well and the budget was $208 million and it would come in within the $208 million. We’ll expect supply to the grid by July of this year.

Chris Huskilson

Yeah, Andrew, the machine is spinning as we speak. So, we’ve done the boiler blow-downs where the machine has been brought to speed and it’s actually been run through some high speed run. So, we’re just about ready to synchronizing -- it could actually be synchronized today I don’t - I haven’t checked lately but --

Bob Hanf

And today we’re very close.

Chris Huskilson

Very, very close to producing electricity.

Andrew Kuske - Credit Suisse

Okay, that’s very helpful. And I guess, just a brief follow-up on that question. Now, obviously the situation with that large load is unique of Nova Scotia and you are the dominant utility, you are the only utility in Nova Scotia but would you expect any other possibilities to do biomass elsewhere in the Northeast within your target footprint?

Chris Huskilson

I mean, we thought about that over the years. I would say that if you watch the evolution that’s going on right now with the Southern, New England states, they are actually starting to discount biomass as being a part of their future. So, we’re actually seeing that active change. So, that would be the hesitation towards making that step. I’ve always thought that some of the coal-fired facilities could at least be put to that use but it hasn’t really become a popular thing in New England. So, in that light, we’ll probably stay focused here for the time being.

But it is a good option for Nova Scotia and I think over time as people decide -- to step back for a second, the Acadian forest is a great opportunity I think as a resource. It is in transition and I think whether it’s Nova Scotia, New Brunswick or the State of Maine, there is a lot of work going on today to figure out what Acadian forest what use its going to be put to over time.

We hear people talking about the highest and best use and we’re very supportive of that approach. But at the end of the day part of that will include energy production we believe. And so, we’re going to stay very close to that issue and to see where how it evolves over time. But for now it’s probably more of a watching brief than it is direct activity at this moment.

Operator

Thank you. There are no further questions registered. I would like to return the meeting over to Mr. Huskilson.

Chris Huskilson

Okay. Thank you very much. We are speaking to you today from the Emera Centre Northside in North Sydney, where tomorrow, we are very proud to be holding our first annual meeting outside of Halifax and right here in Cape Breton, where both it is the location where the Maritime Link will ultimately come assured and its also the location of many of our operations at least on the Nova Scotia front. So, we are proud to be here and we hope that all of you will be able to participate in our webcast tomorrow of our annual meeting. We look forward to hearing from you and thank you very much for this afternoon.

Operator

Thank you. The conference is now ended. Please disconnect your lines at this time and we thank you for your participation.

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