Presentation March 2017 Cautionary Note Certain statements - - PowerPoint PPT Presentation

Investor Presentation

March 2017

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Cautionary Note

Certain statements contained in this presentation may be forward-looking within the meaning of applicable securities laws. Such forward-looking statements reflect the intentions, plans, expectations and opinions of the management of Gaz Métro inc., acting in its capacity as General Partner of Gaz Métro Limited Partnership (“Gaz Métro”), acting as manager of Valener Inc. (“Valener”) (the “Management”) and are based on information currently available to Management and assumptions about future events. Forward- looking statements involve known and unknown risks and uncertainties and other factors beyond Management’s control. A number of factors could cause actual results of Gaz Métro and Valener to differ materially from the current expectations as expressed in the forward-looking statements. Although these forward-looking statements are based upon what Management believes to be reasonable assumptions, Management cannot assure investors that actual results will be consistent with these forward-looking statements. These forward-looking statements are made as of the date of this presentation, and Management assumes no obligation to update or revise them to reflect new events or circumstances, except as required pursuant to applicable securities laws. You are cautioned not to place undue reliance on these forward-looking statements. The complete version of the cautionary note regarding forward-looking statements as well as a description

• f the relevant assumptions and risk factors likely to affect Gaz Métro’s and Valener’s actual results are included in the Management’s

Discussion and Analysis (MD&A) of Valener for the fiscal year ended September 30, 2016 and is available on SEDAR under Valener’s profile at www.sedar.com Non-GAAP Financial Measures In the opinion of Management, certain financial measures provide readers with information considered useful for analyzing Valener's and Gaz Métro’s financial performance. However, certain financial measures are not defined by GAAP and should not be considered in isolation or as substitutes for other financial measures that are in accordance with GAAP. The results obtained might not be comparable with similar measures used by other issuers and should therefore be considered only as complementary information.

Valener - Highlights

Created October 1, 2010 to replace the Gaz Métro Limited partnership public investment vehicle (TSX: GZM.UN-T) Steady, rising dividend Feb 12, 2015: annualized dividend increased from $1.00 to $1.04 per share and dividend growth target of ~4% announced for the next 3 fiscal years Nov 27, 2015: annualized dividend increased from $1.04 to $1.08 per share Nov 24, 2016: annualized dividend increased from $1.08 to $1.12 per share and growth target of ~4% reaffirmed for one more year

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• 38.8 million common shares outstanding (as of February 6, 2017)
• 4.0 million Series A preferred shares outstanding (as of February 6, 2017)
• C$838 million market cap (as of March 13, 2017)
• Strategy: to support Gaz Métro in its growth objectives

VNR dividends paid, per fiscal year

TSX: VNR TSX: VNR.PR.A

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Caisse de dépôt et placement du Québec (“CDPQ”)

• 25.9% indirect ownership in Gaz Métro

Enbridge Inc.

• 27.6% indirect ownership in Gaz Métro

Valener (TSX: VNR)

Publicly-traded company whose main assets consist of a:

• 29.0% direct interest in Gaz Métro,

providing Gaz Métro with potential access to public equity markets as required

• 24.5% interest in the Seigneurie de

Beaupré Wind Farms (340 MW contracted)

* CDPQ is Trencap’s GP and majority unitholder (59.64%)

Corporate Structure

100% 100% 61.11% 100% 38.89% 71% 29% 25.5% 24.5%

TRENCAP NOVERCO GAZ MÉTRO INC. (THE ISSUER) PUBLIC SEIGNEURIE DE BEAUPRÉ WIND FARMS (ELECTRICITY PRODUCTION) ENERGY DISTRIBUTION TRANSPORTATION OF NATURAL GAS ENERGY SERVICES, STORAGE & OTHER * (THE GUARANTOR)

Principal Interest Owners

Ownership Structure

Gaz Métro – Quick Facts

Founded in 1957 Now $7 billion in assets #1 natural gas distributor in Québec Sole natural gas distributor and largest electricity distributor in Vermont Over 520,000 distribution customers Over 2,000 employees

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Overview of main activities in Québec and Vermont

Data as of December 31, 2016

MORE THAN JUST A NATURAL GAS COMPANY

Energy Distribution Natural Gas Transportation Energy Services, Storage and Other Electricity Production

(1) Since December 21, 2016. Previously 50% ownership.

Regulated Non-regulated except for Intragaz

100% 100% 100% 100% 100% 100% 100% 58% and 100% 100% (1) 40% to 60% 50% 38.3% 25.5%

Gaz Métro’s Business: Stable and Predictable

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20 yr contracts with Hydro-Québec

Asset Base Diversification since 2006

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2006 2016

Natural gas distribution in Québec Natural gas distribution in Vermont Natural gas transportation Energy services, storage and Other Natural gas distribution in Québec Natural gas and electricity distribution in Vermont Natural gas transportation Electricity production Energy services, storage and Other

Data for fiscal years ended September 30, 2006 and 2016

$7.4 billion in assets Over 520,000 customers $2.8 billion in assets Over 200,000 customers INCREASING EXPOSURE TO U.S. ENERGY DISTRIBUTION

Asset exposure to U.S. energy distribution up from 5% in 2006 to 50% in 2016 Regulated assets increased from 95% in 2006 to 97% in 2016

Gaz Métro adjusted net income attributable to Partners (1) (in millions of CAN$)

Fiscal year

Strong Financial Performance

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(2)

(1) Non GAAP financial measure. Refer to Appendix D for additional information and a reconciliation with GAAP financial measures. (2) Data presented in accordance with U.S. GAAP. As of October 1, 2015, Valener and Gaz Métro retrospectively adopted U.S. GAAP. Data for fiscal 2014 and prior years are presented in Canadian GAAP. Refer to the 2016 annual report for additional information on the impacts of the conversion to U.S. GAAP.

(2)

NEW 2016 RECORD

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Diversification and expansion along the value chain, both upstream and downstream

UPSTREAM: electricity generation CORE: energy distribution DOWNSTREAM: customer-focused

Limited Partnership

Diversification Strategy

(pending)

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An integrated energy company

 Sustaining the core business and strengthening business development  Increasing complementarity between businesses, beyond simple financial logic  Partner of integrated energy solutions to U.S. and Canadian communities and a more sustainable economy

Tomorrow

Logic of value creation through complementary businesses and integrated

• ffers

A diversified operator

 Multi-energy: gas and electricity  Two regions and regulators: Québec and Vermont  Multiple businesses: generation, transportation, distribution and services

Today

Financial logic of rate of return and risk diversification

Yesterday

A gas distributor

 Distribution network  Storage  Gas pipeline Logic of regulated return

QC VT

Envisioned position

Our 4 businesses Generator Distributor Transporter Services provider

Gaz Métro’s Evolution

Acquisition of Standard Solar

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Expands Gaz Métro’s presence and expertise in the rapidly growing U.S. solar energy industry

Commercial, industrial and institutional solar developer, engineering, procurement and construction management, as well as operations and maintenance services provider Current operations in multiple states including California, Connecticut, Maryland, Massachusetts, New Mexico, New York, North Carolina, and Washington D.C. Portfolio of 80 MW of construction-ready projects and a significant development pipeline Seasoned and highly competent management team with a sterling reputation and outstanding track record

US$ 17 million acquisition 100 MW of solar capacity under management services

ANNOUNCED MARCH 7, 2017

Target of 100 MW/year (+/- US$ 200 million/year)

* Closing is subject to a regulatory approval and is expected by the end of April.

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(1) Energy Distribution – Vermont Gas Systems (“VGS”) (2) Energy Distribution – natural gas distribution in Québec (“Gaz Métro-QDA ”) (3) Energy Services, Storage and Other (4) Energy Distribution – Green Mountain Power (“GMP”) (5) Energy Distribution – Gaz Métro-QDA (renewable natural gas to be injected into Gaz Métro-QDA’s network) Note: all dates presented on a calendar basis

= expected commissioning

Project Updates

St-Hyacinthe biomethanation project on track to begin this spring

GASSED UP GASSED UP COMPLETED AUTOMATIC STAY LIFTED

• Two private placements of first mortgage bonds for an aggregate of $225M (Gaz Métro inc.)

 both issuances are secured and rated A and A+ by DBRS and S&P, respectively  proceeds were used to pay down part of Gaz Métro’s debt and for general corporate purposes

• March 31, 2017

 Gaz Métro to issue $100M of equity through a private placement  Valener to subscribe to 29%

(1) Includes interests in entities subject to significant influence and other investments (2) Excludes interests in entities subject to significant influence and other investments (3) Includes 50% of the capital expenditures expected for TQM, reflecting Gaz Métro’s interest in the natural gas transportation company. (4) Represents Gaz Métro’s 58% interest in the project.

Cash and Liquidity

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(in millions of CAN$)

Gaz Métro – 2017E Gaz Métro – 2016

• $530M in cash flows from operating

activities

• $575M invested in capex (1), above the

$480M expected, as a result of:  an additional $39M U.S. dollar investment by GMP in Transco  a stronger U.S. dollar  GMP’s investment in 5 solar parks

2016 – 2017 Financing Activities

Financial Highlights

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GAZ MÉTRO VALENER Adjusted EBITDA1 $754.2 M n/a Adjusted funds from operations1 n/a $61.2 M Net income attributable to Partners $ 224.3 M n/a Net income attributable to common shareholders n/a $ 50.4 M Adjusted net income1 $228.3 M $53.7 M Adjusted EPS1 n/a $1.39 Cash flows related to operating activities $ 549.8 M $58.5 M Normalized operating cash flows1 n/a $54.2 M Normalized operating cash flows per common share1 n/a $1.40 Payout ratio1,2,3 85.1% 77.3% Long-term debt interest coverage ratio/interest coverage ratio1 5.8x 34.0x Total debt $3,707.6 M $90.3 M Debt/total capitalization1 66.0% 10.5% Unused portion of credit facilities $415.1 M $108.7 M S&P corporate credit rating A n/a DBRS corporate credit rating A n/a

1) Non-GAAP financial measures. Refer to Appendix D for additional information and reconciliation with GAAP financial measures. 2) Based on distributions and dividends paid over adjusted net income. 3) Includes value of shares issued under Valener’s dividend reinvestment plan. Note: data presented in accordance with U.S. GAAP

For the twelve months ended December 31, 2016 STRONG CREDIT RATING AMPLE LIQUIDITY

Energy Distribution

1 Projected rate base in the 2017 rate case filed with the Régie de l’énergie. 2 Approved ROE for fiscal 2017.

Distributes ≈ 97%

• f natural gas in

Québec Over 10,000 km

• f pipeline

300 municipalities

served Over 205,000 customers Regulated assets: ≈ $2.0billion

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Authorized ROE: 8.90%

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Natural Gas Distribution in Québec

1 Fiscal year 2016

RESIDENTIAL COMMERCIAL INDUSTRIAL

Customers 140,245 70.0% Customers 52,141 26.1% Customers 7,871 3.9% Volume 19.72 Bcf 9.9% Volume 60.37 Bcf 30.1% Volume 120.06 Bcf 60.0% % of distribution revenues ≈ 19,0% % of distribution revenues ≈ 43,5% % of distribution revenues ≈ 37,5% 17

Natural Gas Distribution: Our Customers 1

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(1)

For the natural gas distribution activity in Québec. Based on prices as at January 1, 2017.

(2)

Using high-efficiency equipment.

MARKET COMPETING ENERGY SAVINGS (1) Industrial

e.g. large companies in petrochemical and metallurgical industries

#6 fuel oil up to 19%

Commercial and institutional

e.g. hospitals, schools, restaurants

Electricity 36% (small business) 52% (large business) #2 fuel oil 37% (small business) 53% (large business)

Residential heating (2)

Electricity 13% to 23% #2 fuel oil 18% to 27%

Natural Gas in Québec – Current Competitive Position

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(1) Based on 2017 rate case as approved by Vermont Public Service Board (VPSB)

Energy Distribution in Vermont

GREEN MOUNTAIN POWER (GMP)

 Acquisition of GMP in 2007  Acquisition of Central Vermont Public Service (CVPS) in 2012  ≈ 70% of electricity distribution market in Vermont  ≈ 265,000 customers  Regulated assets: ≈ US$1.35B(1)  Authorized ROE: 9.02%(1)

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Wholly-owned since 1986 Sole gas distributor in Vermont with over 50,000 customers

1 Based on the MOU entered into with the Vermont Department of Public Service. VGS’s 2017 rate

case is currently under review by the Vermont Public Service Board.

Project to extend the distribution network to service Vergennes and Middlebury

• 1st segment, consisting of 17km, was completed

and gassed up in February 2016

• The 2nd segment, consisting of the remaining 49km,

is expected to be completed by April 2017

• Estimated project costs: US$165.6M, of which

US$134M will ultimately be included in VGS’s rate base Regulated assets: ≈ US$202M

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Authorized ROE: 8.50%

1

Energy Distribution in Vermont

VERMONT GAS SYSTEMS (VGS)

Natural Gas Transportation

• Wholly-owned
• Operates two pipelines totalling 98 km that cross the Ontario border and

supply Gaz Métro-QDA’s distribution network in northwest Québec

• Regulated by the NEB(3)
• 38.3% interest in PNGTS
• Operates a 489 km pipeline that starts at the Québec border and

extends into the suburbs of Boston

• Regulated by the FERC(2)
• 50% interest in TQM
• Operates a 575 km gas pipeline in Québec that connects:



upstream with TCPL



downstream with PNGTS and the Gaz Métro-QDA network

• Regulated by the NEB(1)

1 National Energy Board (Canada) 2 Federal Energy Regulatory Commission (United States) 3 With respect to revenue determination, tolls, construction and the operation of its network

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Natural Gas Transportation

Electricity Production

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(1) Including financing costs. Non-recourse financing in place for both wind farms.

A QUÉBEC CONSORTIUM

Gaz Métro (25.5%) / Valener (24.5%) and Boralex Inc. (50%)

• Developed on the Seigneurie de Beaupré’s private

property

• 20-year lease with Séminaire de Québec
• Very good wind regime

Long-term cash flows supported by 20-year PPAs with Hydro-Québec

• 20-year firm price with indexation
• Expected annual distributable cash of $30M to

$35M (100%) May 2016 Refinancing of Wind Farms 2 and 3

• In May 2016: closing of a $617.5M refinancing for Wind Farms 2 and 3
• Special distribution of $80M was paid to the partners
• Gaz Métro and Valener received $20.4M and $19.6M, respectively

INSTALLED CAPACITY NUMBER OF TURBINES INVESTMENT START-UP

Wind Farms 2 & 3 272 MW 126 ≈ $750M(1)

• Dec. 2013

Wind Farm 4 68 MW 28 ≈ $190M(1)

• Dec. 2014

TOTAL 340 MW 154 ≈ $940M

Seigneurie de Beaupré Wind Farms

Energy Services, Storage and Other

• Québec’s leader in alternative fuel, in both an advisory role to

clients and with respect to its deployment of refueling stations

• Now 10 refueling stations on the Blue Road, a natural gas

refueling network for heavy transportation vehicles in Québec and Ontario

• Created to develop the market for natural gas (both compressed

and liquefied) as a fuel in the heavy transport market and as a cleaner alternative to diesel fuel

• Partnership with Government of Quebec through Investissement

Québec (IQ)

• ~$120M investment in which IQ will contribute up to $50M
• Project to triple the liquefaction capacity of Gaz Métro’s LSR(1)

plant located in Eastern Montreal

• February 2017: substantial completion

(1) Gaz Métro’s natural gas liquefaction, storage and re-gasification plant

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• Created to ensure LNG storage, treatment and regasification to

meet the peak energy needs of the TransCanada Energy power plant in Bécancour and similar projects

Liquefied Natural Gas

Supplying LNG to a Stornoway diamond mine over 1,000km from Montreal

• Main activity consists of underground natural gas storage
• 40 to 60% partnership between Gaz Métro and ENGIE (formerly GDF SUEZ)
• Regulated by the Régie de l’Énergie
• Wholly-owned since December 21, 2016
• Previously 50-50 partnership between Gaz Métro and Dalkia
• Owns and operates three distinct steam, hot water and cold water networks used

to heat and cool commercial buildings

• 3km network serving the energy needs of 1.8 million square meters of

commercial space in downtown Montréal

• Leader in supplying energy products and services
• Services include installation, sale, rental, maintenance and repair of natural gas

equipment

• Active in the residential, commercial and institutional markets

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Other Activities

Regulatory Framework

APPENDIX A

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Regulatory Authorities

Natural gas distribution and storage activities in Quebec Régie de l’énergie (Gaz Métro-QDA and Intragaz) Natural gas transportation activities in Canada that cross provincial boundaries National Energy Board (Trans Québec & Maritimes Pipeline and Champion Pipe Line) and activities of Gaz Métro’s primary transportation supplier (TransCanada PipeLines) Natural gas and electricity distribution and transportation activities in the United States Federal Energy Regulatory Commission (Portland Natural Gas Transmission System) Vermont Public Service Board (Vermont Gas Systems and Green Mountain Power) Transportation activities in Ontario of one of Gaz Métro’s suppliers, i.e.; Union Gas Ontario Energy Board

Capital structure Annual rate Weighted rate*

Total debt 54.0% 4.79 % 2.59% Preferred equity 7.5% 5.36% 0.40% Common equity 38.5% 8.90% 3.43% Deemed capital structure 100.0% 6.42%

* Source: 2017 rate case, approved by the Régie de l’énergie on Oct. 14, 2016 (D-2016-156)

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Gaz Métro-QDA’s Deemed Weighted Average Cost of Capital

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Source: 2017 rate case, approved by the Régie de l’énergie on Oct. 14, 2016 (D-2016-156) Note: some differences due to rounding

RATE BASE NON-RATE BASE $2.0 B $432 M 38.5% 38.5%

Deemed common equity (fixed)

8.90% 8.90%

Authorized base ROE Regulated income on common equity

$70.0 M $14.8 M

* * * *

= = Gaz Métro-QDA’s Regulated Income on Common Equity

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Based on 2017 rate case as approved by the Régie de l’énergie on Oct. 14, 2016 (D-2016-156).

Regulated income

• n common

equity

$70.0 M

(rate base)

$14.8 M

(non-rate base) Dividends on deemed preferred equity

$9.1 M

Deemed income taxes

$42.4 M

Base authorized net income

$136.3 M

+ + = Gaz Métro-QDA’s Authorized Net Income

(1) Gaz Métro-QDA’s authorized ROE includes 0.79% in productivity gain (2) VGS’s 2017 rate case is currently under review by the Vermont Public Service Board (VPSB). GMP’s ROE for fiscal 2017 as approved by VPSB in September 2016.

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9.69% 8.90% 8.90% 8.90% 8.90% 8.90% 9.93% 8.84% 9.58% 9.60% 9.44% 9.02% 10.25% 9.75% 10.26% 10.20% 10.09% 8.50%

2012 2013 2014 2015 2016 2017 Gaz Métro-QDA GMP VGS

FISCAL YEAR

(2) (1)

Authorized ROE on Common Equity

Energy Distribution Segment Outlook

(2)

Dividends & Distributions

APPENDIX B

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New Previous New Previous

Distributions & Dividends

Nov 27 2015: increase in Gaz Métro’s distribution announced Nov 24 2016: 3rd increase in Valener’s dividend announced

Quarterly Dividends

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Dividend per share Record date Payable DRIP Discount

Common shares $0.28 March 31, 2017 April 17, 2017 2% on newly issued shares Series A preferred shares $0.271875 April 7, 2017 April 17, 2017 Not applicable

Dividends declared February 8, 2017

New annualized dividend of $1.12 per common share Target of $1.16 per common share per year for 2018

37 Target annualized level: $1.16 Current annualized level: $1.12

Fiscal year

(1)

Based on dividends paid.

Dividend per Common Share

Wind Farms

APPENDIX C

100% (in millions of CAN$, unless otherwise indicated)

Wind Farms 2 and 3 Wind Farm 4

2016 2015 2016 2015 Production (MWh) 809,283 903,431 206,768 180,214 Utilization factor (1) (%) 33.9 37.9 34.6 36.3 Cash flows relating to operating activities 50.1 60.0 23.3 5.4 Total distributions paid 103.0 40.6 5.3 17.6 2016 2015 Revenues from power sales 109.4 116.7 EBITDA (4) 93.7 101.9 EBITDA (4) margin (%) 85,6 87.3

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(1) Utilization factor is calculated as electricity produced divided by installed capacity (in MWh) (2) Includes a $12.9 million payment received from Hydro-Québec related to a note receivable for the reimbursement of certain construction costs. (3) Includes the $80 million return of capital from Beaupré Éole received on May 4, 2016 as a result of the refinancing of Wind Farms 2 and 3. (4) EBITDA is a non-U.S. GAAP financial measure. Valener defines it as income (loss) before interest on long-term debt, income taxes, depreciation and amortization. Management considers EBITDA to be useful for measuring the financial performance of the wind farms, as this measure is commonly used in the industry and focuses on operational performance. (2) (3)

Wind Farms Update

VALENER : 24.5% GAZ MÉTRO : 25.5%

100% (in millions of CAN$, unless otherwise indicated)

Wind Farms 2 and 3 Wind Farm 4

Q1 2017 Q1 2016 Q1 2017 Q1 2016 Production (MWh) 213,312 208,915 55,232 52,141 Utilization factor (1) (%) 35.5 34.8 36.8 34.8 Cash flows relating to operating activities 13.5 15.2 2.3 15.8 Total distributions paid

• 0.7
• Q1 2017

Q1 2016 Revenues from power sales 28.9 28.0 EBITDA (3) 25.8 24.2 EBITDA (3) margin (%) 89.3 86.4

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(1) Utilization factor is calculated as electricity produced divided by installed capacity (in MWh) (2) Includes a $12.9 million payment received from Hydro-Québec related to a note receivable for the reimbursement of certain construction costs. (3) EBITDA is a non-U.S. GAAP financial measure. Valener defines it as income (loss) before interest on long-term debt, income taxes, depreciation and amortization. Management considers EBITDA to be useful for measuring the financial performance of the wind farms, as this measure is commonly used in the industry and focuses on operational performance.

VALENER : 24.5% GAZ MÉTRO : 25.5%

Wind Farms Update

(2)

Reconciliation of non- GAAP measures

APPENDIX D

42 For the fiscal years ended September 30, (in millions of CAN$)

LTM 2016 2015 2014 2013 2012 2011 Net income attributable to Partners 224.3 277.5 181.0 174.7 180.4 143.8 164.0 Impact of recognizing regulatory assets related to employee future benefits

• (79.3)
• Impairment of noncurrent assets recorded for VGS’s

Addison project 16.5 16.5 8.0

• Gain on remeasuring CDH following the acquisition

(12.5)

• Net gain on the disposal of the interest in HydroSolution
• (14.7)
• Costs related to the CVPS acquisition
• 7.8

1.8 Gain on the sale of MTO

• (17.5)

Loss on the sale of Aqua Data

• 0.2

Corporate reorganization expenses

• 0.1

Gain realized by Gaz Métro Éole on the sale of 49% of its interest in the Seigneurie projects

• (1.1)

Adjusted net income attributable to Partners 228.3 214.7 189.0 174.7 165.7 151.6 147.5

Adjusted net income attributable to Partners: is the net income attributable to Partners, net of specific items identified by management as being outside Gaz Métro’s ongoing

• perations. The Partnership uses this measure to assess Gaz Métro’s profitability based on its ongoing operations and to exclude items that could alter analyses of its

performance. (1) LTM refers to last twelve months ended December 31, 2016 (2) Data presented in accordance with U.S. GAAP. As of October 1, 2015, Valener and Gaz Métro retrospectively adopted U.S. GAAP. Data for fiscal 2014 and prior years are presented in Canadian GAAP. * Differences due to rounding

Reconciliation of adjusted net income attributable to Partners

(2) (2)

Gaz Métro

(1,2)

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Reconciliation of adjusted EBITDA

Adjusted EBITDA: is income (loss) before amortization, interest on long-term debt, financial and other expenses, and income taxes, and excludes specific items identified by management as being outside of Gaz Métro’s ongoing operations. (1) LTM refers to last twelve months ended December 31, 2016 (2) Data presented in accordance with U.S. GAAP. As of October 1, 2015, Valener and Gaz Métro retrospectively adopted U.S. GAAP. Data for fiscal 2014 and prior years are presented in Canadian GAAP. * Differences due to rounding

For the fiscal years ended September 30, (in millions of CAN$)

LTM 2016 2015 2014 Net income 226.9 279.8 185.9 173.8 Income taxes 44.0 41.6 45.2 47.9 Interest on long-term debt 130.4 129.6 132.9 155.7 Amortization (includes amortization in direct costs) 340.2 334.7 282.0 247.8 Financial and other expenses (1.3) (0.9) 2.9 (5.6) Impact of recognizing regulatory assets related to employee future benefits

• (79.3)
• Impairment on non-current assets

26.5 26.5 13.5

• Gain on remeasuring CDH following the acquisition

(12.5)

• Adjusted EBITDA

754.2 732.0 662.4 619.6

(2) (2)

Gaz Métro

(1,2)

44 As at September 30, (in millions of CAN$, unless otherwise indicated)

LTM 2016 2015 Adjusted EBITDA 754.2 732.0 662.4 Interest on long-term debt 130.4 129.6 132.9 Long-term debt interest coverage ratio 5.8x 5.6x 5.0x

Long-term debt interest coverage ratio: is obtained by dividing total interest on long-term debt by adjusted EBITDA, as previously defined. (1) LTM refers to last twelve months ended December 31, 2016 Data presented in accordance with U.S. GAAP. As of October 1, 2015, Valener and Gaz Métro retrospectively adopted U.S. GAAP. * Differences due to rounding

Reconciliation of long-term debt interest coverage ratio

Gaz Métro

(1)

45 As at September 30, (in millions of CAN$, unless otherwise indicated)

Q1 2016 2015 2014 Bank loans 66.1 15.8 29.0

• Current portion of long-term debt

10.4 10.1 9.8 27.0 Long-term debt 3,631.1 3,464.4 3,101.4 3,140.8 Total debt 3,707.6 3,490.3 3,140.2 3,167.8 Total equity 1,911.6 1,810.3 1,728.2 1,482.4 Total capitalization 5,619.2 5,300.6 4,868.4 4,650.2 Debt / total capitalization ratio 66.0% 65.8% 64.5% 68.1%

Total debt to capitalization ratio: This ratio consists of total debt divided by total capitalization. Total debt is the sum of bank loans, long-term debt and the current portion of long-term debt. Total capitalization is the sum of total debt and total equity. The Partnership uses this ratio to measure its accessibility to debt financing that enables it to seize future growth opportunities. (1) Q1 refers to data as at December 31, 2016 (2) Data presented in accordance with U.S. GAAP. As of October 1, 2015, Valener and Gaz Métro retrospectively adopted U.S. GAAP. Data for fiscal 2014 and prior years are presented in Canadian GAAP. * Differences due to rounding

Reconciliation of debt to total capitalization ratio

(2) (2)

Gaz Métro

(1,2)

46 For the fiscal years ended September 30, (in millions of CAN$)

LTM 2016 2015 2014 2013 2012 Distributions received from equity-accounted interests 63.3 62.1 64.2 49.1 54.6 47.7 General and administrative expenses (2.1) (2.1) (2.1) (2.5) (2.1) (2.0) Adjusted funds from operations 61.2 60.0 62.1 46.6 52.5 45.7

Adjusted funds from operations: is actual distributions received from equity-accounted interests, net of general and administrative expenses and excluding any distribution received on the preferred shares. (1) LTM refers to last twelve months ended December 31, 2016 (2) Data presented in accordance with U.S. GAAP. As of October 1, 2015, Valener and Gaz Métro retrospectively adopted U.S. GAAP. Data for fiscal 2014 and prior years presented in Canadian GAAP.

Reconciliation of Adjusted funds from operations

(1,2) (2)

Valener

(2)

Adjusted net income attributable to common shareholders: The net income (loss) attributable to common shareholders, net of the specific items identified by the management of the manager as not being part of the ongoing operations of Valener and of Gaz Métro. These adjustments consist of (i) the gains or losses on derivative financial instruments (net of the related income taxes), (ii) the share in the adjustments to the net income of Gaz Métro (net of the related income taxes), and (iii) the deferred income tax expense (benefit) related to the outside-basis temporary difference on the interest in Gaz Métro which is the difference between the carrying value of the interest in Gaz Métro and the tax basis assuming a disposal of the investment on the balance sheet date. The management of the manager believes this assumption is not reflective of Valener’s mission given the permanency of its investment in Gaz Métro. This measure is used by the management of the manager to measure Valenerʼs profitability from ongoing operations and to exclude items that could alter analyses of its business performance. Adjusted net income attributable to common shareholders, per common share: The adjusted net income attributable to common shareholders, divided by the basic and diluted weighted average number of common shares outstanding of Valener. This measure is used by the management of the manager to measure Valenerʼs profitability from ongoing operations and to exclude items that could alter analyses of business performance. (1) LTM refers to last twelve months ended December 31, 2016 (2) Data presented in accordance with U.S. GAAP. As of October 1, 2015, Valener and Gaz Métro retrospectively adopted U.S. GAAP. Data for fiscal 2014 and prior years presented in Canadian GAAP.

47

For the fiscal years ended September 30, (in millions of CAN$, except per share amounts)

LTM 2016 2015 2014 2013 2012 Net income 50.4 66.5 49.1 41.0 41.5 29.6 Loss on derivative financial instrument 3.9 4.6 4.0

• Income taxes related to the loss on derivative financial instruments

(1.0) (1.2) (1.1)

• Share in the adjustments to the net income of Gaz Métro

1.2 (18.2) 2.3

• (4.3)

2.3 Deferred income taxes related to the outside-basis temporary difference on the interest in Gaz Métro 2.8 2.5 (4.8)

• Income taxes related to the adjustments in the net income of Gaz Métro

0.7

• 1.1

(0.1) Cumulative dividends on Series A preferred shared (4.3) (4.3) (4.3) (4.3) (4.3) (1.6) Adjusted net income attributable to common shareholders 53.7 49.9 45.2 36.7 34.0 30.2 Basic and diluted weighted average number of common shares outstanding (in millions) 38.6 38.5 38.2 37.9 37.7 37.5 Adjusted net income attributable to common shareholders, per common share $1.39 $1.30 $1.18 $0.97 $0.90 $0.81

Reconciliation of adjusted net income attributable to common shareholders

(2) (2)

Valener

(1,2)

Normalized operating cash flows: Normalized operating cash flows corresponds to cash flows related to operating activities less cumulative dividends paid to preferred

• shareholders. This measure is used by the management of the manager to evaluate the Company’s financial performance and ability to pay dividends to common

shareholders. Normalized operating cash flows per common share: Normalized operating cash flows per common share corresponds to normalized operating cash flows divided by the weighted average number of common shares outstanding of Valener. This measure is used by the management of the manager to evaluate the Company’s financial performance and ability to pay dividends to common shareholders. (1) LTM refers to last twelve months ended December 31, 2016 (2) Data presented in accordance with U.S. GAAP. As of October 1, 2015, Valener and Gaz Métro retrospectively adopted U.S. GAAP. Data for fiscal 2014 and prior years presented in Canadian GAAP.

For the fiscal years ended September 30, (in millions of CAN$, except per share amounts)

LTM 2016 2015 2014 2013 2012 Cash flows related to operating activities 58.5 56.7 62.9 43.1 45.2 23.8 Dividends to preferred shareholders (4.3) (4.3) (4.3) (4.3) (4.8)

• Normalized operating cash flows

54.2 52.4 58.6 38.8 40.4 23.8 Weighted average number of common shares outstanding (in millions) 38.6 38.5 38.2 37.9 37.7 37.5 Normalized operating cash flows per common share $1.40 $1.36 $1.53 $1.02 $1.07 $0.63

Reconciliation of normalized operating cash flows per common share

(2) (2)

48

Valener

(1,2)

49

Interest coverage ratio: is obtained by dividing total interest on long-term debt by adjusted funds from operations. (1) LTM refers to last twelve months ended December 31, 2016 Data presented in accordance with U.S. GAAP. As of October 1, 2015, Valener and Gaz Métro retrospectively adopted U.S. GAAP.

Reconciliation of interest coverage ratio

As at September 30, (in millions of CAN$, unless otherwise indicated)

LTM 2016 2015 Distributions received from equity-accounted interests 63.3 62.1 64.2 General and administrative expenses (2.1) (2.1) (2.1) Adjusted funds from operations 61.2 60.0 62.1 Interest on long-term debt 1.8 1.9 1.6 Interest coverage ratio 34.0x 31.6x 38.8x

Valener

(1)

50

Debt / total capitalization ratio: is the total amount of long-term debt, divided by total capitalization. Total capitalization is equal to the total amount of long-term debt and total equity. The management of the manager uses this ratio to measure Valener’s accessibility to debt financing that enables it to participate in Gaz Métro’s development and seize future growth opportunities. (1) Q1 refers to data as at December 31, 2016 (2) Data presented in accordance with U.S. GAAP. As of October 1, 2015, Valener and Gaz Métro retrospectively adopted U.S. GAAP. Data for fiscal 2014 and prior years presented in Canadian GAAP.

Reconciliation of debt / total capitalization ratio

As at September 30, (in millions of CAN$, unless otherwise indicated)

Q1 2016 2015 2014 Long-term debt 90.3 85.2 121.0 66.8 Total equity 770.5 744.2 718.5 713.5 Total capitalization 860.8 829.4 839.5 780.3 Debt / total capitalization ratio 10.5% 10.3% 14.4% 8.6%

(2) (2)

Valener

(1,2)