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REGULATED ELECTRIC UTILITIES - CANADIAN
FORTISALBERTA
----------------------------------------------------------------------------Financial Highlights (Unaudited) Quarter Ended March 31 2013 2012 Variance--------------------------------------------------------------------------------------------------------------------------------------------------------Energy Deliveries (gigawatt hours ("GWh")) 4,491 4,482 9Revenue ($ millions) 118 108 10Earnings ($ millions) 26 21 5--------------------------------------------------------------------------------------------------------------------------------------------------------Factors Contributing to Energy Deliveries Variance
Favourable
-- Growth in the number of customers, mainly in the residential sector, with the total number of customers increasing by approximately 10,000 year over year as at March 31, 2013, driven by favourable economic conditions-- Higher average consumption by oil field customers, primarily due to higher drilling activity-- Higher average consumption by residential customers, due to cooler temperatures
Unfavourable
-- Lower average consumption by oil and gas customers, mainly due to decreased activity associated with a lower commodity price for natural gas
As a significant portion of FortisAlberta's distribution revenue is derived from fixed or largely fixed billing determinants, changes in quantities of energy delivered are not entirely correlated with changes in revenue. Revenue is a function of numerous variables, many of which are independent of actual energy deliveries.
Factors Contributing to Revenue Variance
Favourable
-- An interim increase in customer electricity distribution rates, effective January 1, 2013, associated with the regulator's interim decision received in March 2013 related to FortisAlberta's PBR Compliance Application-- Growth in the number of customers-- Net transmission revenue of approximately $2 million recognized in the first quarter of 2013, associated with the finalization of 2012 net transmission volume variances. As approved by the regulator in April 2012, FortisAlberta assumed the risk of volume variances related to net transmission costs during 2012. The deferral of transmission volume variances, however, was reinstated by the regulator, effective January 1, 2013.
Factors Contributing to Earnings Variance
Favourable
-- Lower depreciation rates, effective January 1, 2012, as a result of the 2012 distribution revenue requirements decision received in April 2012. The cumulative impact of the overall decrease in depreciation rates was recognized in the second quarter of 2012, when the decision was received, of which approximately $3 million of decreased depreciation expense related to the first quarter of 2012.-- Net transmission revenue of approximately $2 million recognized in the first quarter of 2013, for the reason discussed above
FORTISBC ELECTRIC (1)
----------------------------------------------------------------------------Financial Highlights (Unaudited) Quarter Ended March 31 2013 2012 Variance--------------------------------------------------------------------------------------------------------------------------------------------------------Electricity Sales (GWh) 891 909 (18)Revenue ($ millions) 88 87 1Earnings ($ millions) 18 16 2--------------------------------------------------------------------------------------------------------------------------------------------------------(1) Includes the regulated operations of FortisBC Inc. and operating, maintenance and management services related to the Waneta, Brilliant and Arrow Lakes hydroelectric generating plants. In March 2013 FortisBC Inc. acquired the City of Kelowna's electrical utility assets for approximately $55 million, previous to which time FortisBC Inc. had operated and maintained the assets under contract since 2000. For further information, refer to the "Significant Items" section of this MD&A. Excludes the non-regulated generation operations of FortisBC Inc.'s wholly owned partnership, Walden Power Partnership.
