"With the acquisition of CH Energy Group, the Corporation's regulated midyear rate base will increase to approximately $10 billion," says Marshall. "The regulated assets and earnings of Fortis will be further diversified by geographic location and regulatory jurisdiction, thereby helping to reduce business risk," he adds.
Capital expenditures were $1.13 billion for the year. At FortisBC Gas, the Customer Care Enhancement Project came into service at the beginning of 2012. The largest capital project currently underway, the non-regulated $900 million, 335-megawatt Waneta Expansion hydroelectric generating facility ("Waneta Expansion") on the Pend d'Oreille River in British Columbia, continues on time and on budget. Excavation of the intake, powerhouse and power tunnels was completed during the year. Approximately $436 million in total has been spent on the Waneta Expansion since construction began in late 2010, with a further $227 million expected to be spent in 2013. Fortis owns 51% of the Waneta Expansion and will operate and maintain the facility when it comes online, expected spring 2015.
Canadian Regulated Utilities contributed earnings of $345 million, $34 million higher than earnings of $311 million for 2011.
Canadian Regulated Electric Utilities contributed earnings of $207 million, up $33 million from 2011. FortisAlberta's earnings increased $22 million, mainly related to growth in energy infrastructure investment, net transmission revenue of $8.5 million recognized in 2012, and lower-than-expected depreciation expense and finance charges in 2012, partially offset by a $1 million gain on sale of property in 2011. FortisAlberta invested more than $400 million in capital projects in 2012 and is expected to invest a comparable amount in 2013. Newfoundland Power's earnings were $5 million higher year over year, largely due to lower effective income taxes. FortisBC Electric's earnings increased $2 million as a result of growth in energy infrastructure investment, higher pole-attachment revenue, and lower-than-expected finance charges in 2012, partially offset by the discontinuance of the performance-based rate-setting ("PBR") mechanism on December 31, 2011. Improved earnings of $4 million at Other Canadian Regulated Electric Utilities were mainly due to lower effective income taxes at Maritime Electric and cumulative return earned on capital investment in smart meters at FortisOntario.
FortisBC Electric's offer to purchase the City of Kelowna's electrical utility assets for approximately $55 million, which is subject to satisfaction of certain conditions and receipt of applicable approvals, including regulatory approval, is expected to close by the end of the first quarter of 2013. FortisBC Electric has operated and maintained the assets, which currently serve some 15,000 customers, since 2000.
Canadian Regulated Gas Utilities delivered earnings of $138 million, up $1 million from 2011. Growth in energy infrastructure investment, higher gas transportation volumes to industrial customers, lower-than-expected operating expenses in 2012 and lower effective income taxes were partially offset by lower-than-expected customer additions in 2012 and lower capitalized allowance for funds used during construction ("AFUDC").
"The regulatory calendar at our Canadian utilities was very busy in 2012 and remains so for 2013," says Marshall. "We expect continued regulatory stability, notwithstanding the significant proceedings in 2013," he adds.
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