Gross consolidated capital expenditures of $1,130 million for 2012 were $161 million lower than $1,291 million forecasted for 2012, as disclosed in the MD&A for the year ended December 31, 2011. Planned capital expenditures are based on detailed forecasts of energy demand, weather, cost of labour and materials, as well as other factors, including economic conditions, which could change and cause actual expenditures to differ from forecasts. Lower-than-forecasted capital spending was mainly due to: (i) a shift in capital expenditures from 2012 to 2013 related to the timing of payments associated with the Waneta Expansion; (ii) a delay in capital spending at FortisBC Electric and the FortisBC Energy companies, due to the timing of receipt of regulatory approvals for their 2012/2013 revenue requirements; and (iii) timing of capital spending associated with the construction of Fortis Properties' office building in St. John's, Newfoundland. The above decreases were partially offset by higher-than-forecasted capital spending at FortisAlberta, due to higher spending associated with customers in the oil and gas sectors and capital expenditures associated with a distribution control centre, partially offset by lower-than-forecasted AESO transmission-related capital expenditures.
An update on larger capital projects for 2012 from that disclosed in the MD&A as at December 31, 2011 is provided below.
FEI's Customer Care Enhancement Project came into service at the beginning of 2012 at a total project cost of approximately $110 million.
During 2012 FortisAlberta continued with the replacement of vintage poles under its Pole-Management Program, which involves approximately 110,000 poles in total, to prevent risk of failure due to age. The total capital cost of the program through 2019 is now expected to be approximately $327 million, compared to $335 million forecasted as at December 31, 2011. Approximately $27 million was spent on this program in 2012.
The Environmental Compliance Project at FortisBC Electric relates to work required to ensure compliance of the utility's substation equipment with the Canadian Environmental Protection Act PCB Regulations by 2014. The project has been approved by the regulator and is estimated to cost approximately $28 million through 2014. Approximately $6 million has been spent on this project to the end of 2012.
Construction progress on the $900 million, 335-MW Waneta Expansion is going well and the project is currently on schedule and on budget. Major construction activities on-site during 2012 included the completion of the excavation of the intake, powerhouse and power tunnels. Approximately $436 million in total has been spent on the Waneta Expansion since construction began in late 2010, with $192 million spent in 2012.
Fortis Properties is constructing a 12-storey office building in downtown St. John's, Newfoundland at an estimated cost of approximately $47 million. Approximately $20 million has been spent on this project to the end of 2012. Construction is expected to be completed by the end of 2013.
Over the five-year period 2013 through 2017, consolidated gross capital expenditures, including expenditures at Central Hudson, are expected to be approximately $6 billion. The approximate breakdown of the capital spending expected to be incurred is as follows: 59% at the Canadian regulated electric utilities, driven by FortisAlberta; 19% at the regulated gas utilities; 11% at Central Hudson; and the remaining 11% at non-regulated operations. Capital expenditures at the regulated utilities are subject to regulatory approval. Over the five-year period, on average annually, the approximate breakdown of the utility capital spending to be incurred is as follows: 38% to meet customer growth; 43% to ensure continued and enhanced performance, reliability and safety of generation and T&D assets, i.e., sustaining capital expenditures; and 19% for facilities, equipment, vehicles, information technology and other assets.
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