Forward Looking Information Certain information in this presentation - PowerPoint PPT Presentation

EPCOR Utilities Inc . Investor Presentation June 2013 David Stevens President and Chief Executive Officer Guy Bridgeman Senior Vice President and Chief Financial Officer Sam Myers Treasurer 1

Forward Looking Information Certain information in this presentation and in oral answers to questions may contain forward-looking information statements or forward-looking information together, “forward -looking information” . Forward- looking information is based on current expectations, estimates and projections that involve a number of risks which could cause actual results to vary and in some instances to differ materially from those anticipated by EPCOR. Forward-looking information is based on the estimates and opinions of management at the time the information is presented. Actual results could differ materially from conclusions, forecasts or projections in the forward-looking information, and certain material factors or assumptions were applied in drawing conclusions or making forecasts or projections as reflected in the forward-looking information. Additional information about the material factors and risks that could cause actual results to differ materially from the conclusions, forecasts or projections in the forward-looking information and the material factors or assumptions that were applied in drawing a conclusion or making a forecast or projection as reflected in the forward-looking information is contained in the most recent interim and annual Management Discussion and Analysis filed on SEDAR (www.sedar.com) and EPCOR’s website (www.epcor.com). 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 assumes no obligation to update any forward-looking information, should circumstances or management’s estimates or opinions change, or any other reason. 2

Table of Contents Slides 4-9 EPCOR Overview 10-12 Strategy 13-17 Business Overview 18-25 Financial Overview 26 Summary 3

EPCOR Today  An experienced developer and operator of utility infrastructure. Two main operating divisions: Water Services & Electricity Services  Headquartered in Edmonton. Predecessor company began operating in 1891; 120 year anniversary in 2011. Employ ~2,700 employees  Stand alone corporation as of Jan 1, 1996, sole shareholder is the City of Edmonton (CoE)  Fully independent Board of Directors. EPCOR operates at arms length from the Shareholder and has a mandate to invest and operate on commercial terms  Essentially a narrowly-held private company  Public issuer of debt Stand alone credit is BBB+(S&P) and A (low) (DBRS) – no  credit support from City  Report on SEDAR 4

EPCOR Operations  Builds, owns and operates electrical transmission and distribution networks, water and wastewater treatment facilities and infrastructure in Canada and the United States  Serves over 75 communities in Alberta and British Columbia and serves 14 municipalities in Arizona and New Mexico, through EPCOR Water (USA) 5

Water Services Municipal Water and Wastewater Municipal Water and Wastewater City of Edmonton Alberta/British Columbia/USA Water Treatment & Distribution Alberta  Two large water treatment plants on the North Saskatchewan river –  Operating contracts in Banff, Canmore, Chestermere, Okotoks, Red 680 MLD Deer County, Taber  Approximately 250,000 City water customers – fully metered  Agreement signed October 2012 for the expansion and upgrade of Evan-Thomas water and wastewater facility in Kananaskis Village  Rates regulated by City under a PBR British Columbia  Water also sold to 61 surrounding communities under wholesale rates regulated by the Alberta Utilities Commission  Regulated water utility in White Rock and French Creek  Wastewater Treatment Operating contracts in Port Hardy, Sooke, Whistler Olympic Park  Gold Bar Facility transferred from the city in 2009 Arizona and New Mexico  Enhanced Primary treatment – 1,200 MLD  Regulated water utility – Chaparral City Water Company, EPCOR Water Arizona, EPCOR Water New Mexico  Some treated effluent re-used by Suncor Refinery  Serve approximately 141,000 water customers and 52,000  Rates regulated by City under a PBR wastewater customers in several municipalities Industrial Water and Wastewater Alberta  Own 3 water treatment and 4 wastewater treatment facilities at Suncor’s Fort McMurray Oil Sands operations under long -term contracts  Operate 4 water treatment and 4 wastewater treatment facilities at Suncor and Shell Albian Sands oil sands operations in Fort McMurray British Columbia  Operate the Britannia Mine wastewater treatment facility 6

Electricity Services Electricity Distribution & Transmission  Distribute to approximately 351,000 sites within Edmonton  Regulated by the Alberta Utilities Commission  203km of aerial transmission line and underground transmission cable  Own and operate 36 substations  286 distribution feeders Energy Services  Provide Regulated Rate Option (procurement, billing and customer care) for approximately 600,000 Edmonton and Fortis Alberta Fortis customers, regulated by the Alberta Utilities Commission  Provide billing and customer care for approximately 250,000 EPCOR water customers in Edmonton and City of Edmonton drainage and waste collection services Technologies  Provide operating & maintenance and construction services for street lighting and traffic signals in the City of Edmonton  Provide operating & maintenance and construction services for the electrical infrastructure for Light Rail Transit system in Edmonton  Provide similar services to municipalities across Alberta 7

Management and Governance Strategic Positioning  Annual in-depth planning process  Delivering on stated strategy to sell down interest in Capital Power and invest in regulated and long-term contracted assets Risk Management  Comprehensive financial management policies and enterprise risk management system geared to identifying, understanding and mitigating risk  Disciplined approach to operations, business development and capital placement  Fully staffed Regulatory and Government Relations teams Organizational Effectiveness  Experienced management team with considerable expertise  David Stevens appointed President and CEO, effective March 6, 2013  Guy Bridgeman appointed CFO, effective May 3, 2013 Governance  Independent, experienced Board of Directors 8

Key Risks & Mitigation Risk Mitigation  Positive outlook for Capital Power as economy improves with growing regional power needs Reliance on  Insight into Capital Power via Board positions Capital Power  Continued monetization of EPCOR’s equity interest and reduction of B2B debt reduces reliance  Government and industry standard testing; including 28,000 process control tests, 100,000 internal lab water quality tests and more than 5,000 tests for 220 scientific parameters sent to external laboratories Operational Risk  Technology enabled monitoring and control systems increase security and reliability for electricity and water distribution network  Concentrate development activities that are conducive to 3rd party participation (e.g. Arizona)  Employ staged market penetration approach for industrial water that will facilitate broader Political/ opportunities over time including acquiring potable water and wastewater infrastructure at Regulatory existing facilities  Fully staffed Regulatory and Government Relations teams  For each new business development project, EPCOR seeks to ensure project success by Strategy addressing project risks, including events and external factors, as part of its due diligence Execution Risk process  Internal team solely focused on integration of acquired companies has been implemented Integration Risk  Partially mitigated through insurance Weather 9

Strategic Direction  Continue to de-risk EPCOR by selling down CPC holdings over time  Continue to invest in EPCOR’s core water and wires utility infrastructure businesses  Pursue rate regulated and long term contracted investment opportunities Legend  Continue to build reputation as a Electricity COE & AB trusted developer and operator of Municipal Water COE utility assets Municipal Water AB & BC & SK  Deliver stable cash flow and Municipal Water AZ maximize returns on existing assets Industrial Water COE & AB  Preserve or improve financial strength and corporate ratings: A (low) (DBRS) and BBB+ (S&P) 10