Approval of negotiated settlement in the second quarter of 2020 delivers more than $80 million in savings to Albertans

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CALGARY, Alberta, Aug. 10, 2020 (GLOBE NEWSWIRE) -- The Alberta Utilities Commission announced its approval of the negotiated settlement portion of AltaLink’s 2019-2021 General Tariff Application (GTA) during the second quarter of 2020, providing for more than $80 million in savings for Alberta electricity ratepayers.

AltaLink’s cost saving initiatives are intended to deliver the agreed to reductions within the negotiated settlement with customers of $22.5 million in operating expenses over the three-year period and $58 million in  net sustaining capital expenditures .

Added to the more than $50 million in savings from AltaLink’s previously negotiated 2017-2018 GTA, agreements between AltaLink and its largest customer groups have delivered a total of more than $130 million in reduced transmission rates.

AltaLink and the customer groups negotiated the agreement for AltaLink’s 2019-2021 GTA, which the company submits every two to three years to cover its regulated operating and capital costs. The agreement was filed with the Alberta Utilities Commission (AUC) on July 10, 2019.

"Since announcing our first proposal to reduce customer costs in 2015, employees at AltaLink have been leaders in proposing innovative solutions to reducing the cost of our service for customers,” said Scott Thon, AltaLink President & CEO. “Our team is committed to supporting Albertans, whether through finding valuable cost reductions or continuing to work 24/7 to keep the lights on throughout the COVID-19 pandemic.”

Since 2015, AltaLink has delivered more than $1 billion in tariff levelization measures, including customer refunds and negotiated settlement agreements, to reduce the immediate cost impact to Alberta’s electricity end-users.

“We are motivated to work closely with our customers to continue to find solutions to reduce the costs of transmission service and overall electricity prices,” said Thon. “More than at any other time in our history, Alberta’s economy needs industry, government and regulators to work together to deliver immediate results that will benefit every Albertan.”

AltaLink announces 2020 second quarter results

AltaLink continues to invest in transmission facilities to ensure the reliability of the electricity grid. During the second quarter of 2020, AltaLink invested $75.4 million in its transmission system.

Today, AltaLink, L.P. announced net and comprehensive income of $83.3 million for the three months ended June 30, 2020, compared to $12.2 million for the same period in 2019. Our net and comprehensive income increased mainly due to the one-time re-measurement of future income tax revenue in the prior year’s second quarter, as a result of the Alberta tax rate reductions which were legislated in June 2019. Net and comprehensive income for the three months ended June 30, 2019 is slightly higher after normalizing for the impact of the tax rate change in June 2019. Lower tax rates will benefit our customers and will be offset by a corresponding decrease in income tax expense for AltaLink’s corporate owners.

Revenue from operations for the three months ended June 30, 2020, was $239.6 million compared to $224.0 million during the same period in 2019, an increase of $15.6 million. In the second quarter of 2020, we had higher recovery of future income tax revenue compared to the same period in 2019 as a result of Alberta tax rate reductions which were legislated in June 2019, higher revenue related to recovery of the salvage costs, and higher operating revenue as a result of adjustments related to the 2019-2021 GTA decision.

As a partnership, AltaLink, L.P. reports its net income before income taxes; therefore its results are not directly comparable with net income reported by corporations that recognize income taxes in their financial statements.

AltaLink’s full financial results and management’s discussion and analysis can be found on AltaLink’s website at www.altalink.ca or on SEDAR at www.sedar.com.

Headquartered in Calgary, with offices in Edmonton, Red Deer and Lethbridge, AltaLink is Alberta’s largest electricity transmission provider. AltaLink is partnering with its customers to provide innovative solutions to meet the province’s demand for reliable and affordable energy. A wholly-owned subsidiary of Berkshire Hathaway Energy, AltaLink is part of a global group of companies delivering energy services to customers worldwide.

Significant highlights during the second quarter of 2020

During the three months ended June 30, 2020:

• Our employee safety performance as measured by total recordable injury frequency rate was zero, representing zero injuries compared to zero injuries for the same period in 2019. Our year-to-date total recordable injury frequency rate was 0.28, representing one injury compared to one injury for the same period in 2019.
• Our reliability of service provided to customers improved compared to the second quarter of 2019. Our customer outage duration was five minutes compared to 12 minutes for the same period in 2019. Our year to date customer outage duration was 14 minutes compared to 12 minutes for the same period in 2019, primarily due to adverse weather in the first quarter of 2020.
• AltaLink continued to ensure the ongoing safety of our employees and to maintain the transmission of essential and reliable electricity for Albertans and our industrial customers while managing the impacts of the COVID-19 pandemic. We also continued additional safety measures which included restricting external visitors to our offices and control centre operations; restricting all business-related travel; enhancing our workplace cleaning practices; conducting teleconference meetings with our customers, stakeholders, and external parties; working from home strategies for employees where possible; and utilizing cell structures (partitioned work teams) for our control centre and field operations. Our integrated emergency response team continues to closely monitor the rapidly changing situation and directions from Alberta Health Services to ensure the safety of our employees and the public and the reliability of our operations.
• On April 16, 2020, the AUC issued Decision 23848-D01-2020 with respect to AltaLink’s 2019-2021 GTA. The AUC approved the negotiated settlement agreement as filed and rendered its decision and directions on the excluded matters. The AUC declined to approve AltaLink’s proposed salvage methodology at that time, but indicated that it would initiate a generic proceeding to review the depreciation and salvage matters on an industry wide basis. Reverting the salvage method back to the traditional pre-collection approach will increase the amount of salvage collected from customers by approximately $82 million, since the AUC in its decision did not accept the proposed method aimed at benefiting customers through lower rates. AltaLink participated in the AUC’s generic proceeding to review salvage and depreciation on an industry wide basis and the generic proceeding was closed by the AUC on July 8, 2020. On July 30, 2020, AltaLink filed an application requesting that the AUC review and vary its decision on AltaLink’s 2019-2021 GTA and approve AltaLink’s proposed salvage methodology. Overall, the 2019-2021 GTA decision results in an increase to AltaLink’s cash transmission tariffs collected for the 2019-2021 period by approximately $77 million. The AUC approved $13 million of AltaLink’s requested additional $20 million of forecast transmission line clearance capital on a placeholder basis and will review the remaining $7 million capital investment in AltaLink’s compliance filing. The AUC will further review prudency of these actual expenditures in the next GTA. Also, $3 million of forecast operating expenses and $4 million of forecast capital investment were approved to reduce the risk of fires, with a further $31 million of capital subject to further review in the compliance filing as well as prudency review in the next GTA. Finally, the AUC approved $6 million of retirements for towers and fixtures. AltaLink filed a compliance filing with the AUC in response to this decision and the AUC approved it on July 21, 2020.
• We earned net and comprehensive income of $83.3 million compared to $12.2 million for the same period in 2019. Our net and comprehensive income increased mainly due to the one-time re-measurement of future income tax revenue in the prior year’s second quarter, as a result of the Alberta tax rate reductions which were legislated in June 2019. Net and comprehensive income for the three months ended June 30, 2019 is slightly higher after normalizing for the $62.4 million impacts of the tax rate change in June 2019. Lower tax rates will benefit our customers and will be offset by a corresponding decrease in income tax expense for AltaLink’s corporate owners.
• We invested $75.4 million in capital assets compared to $69.1 million for the same period in 2019 to ensure continued reliability of the electricity network.
• This quarter, due to the COVID-19 pandemic, we surveyed a smaller number of customers compared to the same period in 2019. Customer satisfaction average score was 9.04, which is a 3% decline compared to 9.35 for the same period in 2019.
• On July 16, 2020, DBRS reaffirmed AltaLink’s Issuer Rating and Medium-Term Notes rating both at “A” with stable trends, along with an “R-1 (low)” rating on our commercial paper.
• On July 17, 2020, AltaLink and the United Utility Workers’ Association reached a renewed collective bargaining agreement which is effective January 1, 2020 to December 31, 2021.

This news release does not constitute an offer to sell or the solicitation of an offer to buy AltaLink’s securities in any jurisdiction, including but not limited to, the United States. AltaLink’s securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”), or any state securities laws and may not be offered or sold in the United States except in certain transactions exempt from the registration requirements of the U.S. Securities Act and applicable state securities laws.

Except for the historical and present factual information contained herein, the matters set forth in this news release, including words such as “expects”, “intends”, “projects”, “plans”, “anticipates”, and similar expressions, are forward looking information that represents management of AltaLink’s internal projections, expectations or beliefs concerning, among other things, future operating results and various components thereof or the economic performance of AltaLink. The projections, estimates and beliefs contained in such forward looking statements necessarily involve known and unknown risks and uncertainties, which may cause AltaLink’s actual performance and financial results in future periods to differ materially from any projections of future performance or results expressed or implied by such forward looking statements. These risks and uncertainties include, among other things, those described in AltaLink’s filings with the Canadian securities authorities. Accordingly, holders of AltaLink securities and potential investors are cautioned that events or circumstances could cause results to differ materially from those predicted. AltaLink disclaims any responsibility to update these forward looking statements.

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