Acquisition of the Electrical Utility Assets from the City of Kelowna: FortisBC Electric acquired the City of Kelowna's (the "City's") electrical utility assets for approximately $55 million in March 2013, which now allows FortisBC Electric to directly serve some 15,000 customers formerly served by the City. FortisBC Electric had provided the City with electricity under a wholesale tariff and had operated and maintained the City's electrical utility assets under contract since 2000.
Receipt of Regulatory Decisions: FortisAlberta received a decision from its regulator in March 2013 approving an interim increase in customer distribution rates, effective January 1, 2013.
In April 2013 Newfoundland Power received a decision on cost of capital. The utility's allowed ROE and common equity component of capital structure have been set for 2013 through 2015 and remain unchanged from 2012.
For a further discussion on the nature of the above regulatory decisions, refer to the "Material Regulatory Decisions and Applications" section of this MD&A.
FINANCIAL HIGHLIGHTS
Fortis has adopted a strategy of profitable growth with earnings per common share as the primary measure of performance. The Corporation's business is segmented by franchise area and, depending on regulatory requirements, by the nature of the assets. Key financial highlights for the first quarters ended March 31, 2013 and March 31, 2012 are provided in the following table.
----------------------------------------------------------------------------Consolidated Financial Highlights (Unaudited) Quarter Ended March 31($ millions, except for common share data) 2013 2012 Variance--------------------------------------------------------------------------------------------------------------------------------------------------------Revenue 1,113 1,149 (36)Energy Supply Costs 505 566 (61)Operating Expenses 221 214 7Depreciation and Amortization 129 119 10Other Income (Expenses), Net 6 (3) 9Finance Charges 89 91 (2)Income Taxes 30 23 7----------------------------------------------------------------------------Earnings Before Extraordinary Item 145 133 12Extraordinary Gain, Net of Tax 22 - 22----------------------------------------------------------------------------Net Earnings 167 133 34--------------------------------------------------------------------------------------------------------------------------------------------------------Net Earnings Attributable to: Non-Controlling Interests 2 1 1 Preference Equity Shareholders 14 11 3 Common Equity Shareholders 151 121 30----------------------------------------------------------------------------Net Earnings 167 133 34--------------------------------------------------------------------------------------------------------------------------------------------------------Earnings per Common Share Before Extraordinary Item Basic ($) 0.67 0.64 0.03 Diluted ($) 0.66 0.62 0.04Earnings per Common Share Basic ($) 0.79 0.64 0.15 Diluted ($) 0.76 0.62 0.14Weighted Average Number of Common Shares Outstanding (# millions) 192.0 189.0 3.0----------------------------------------------------------------------------Cash Flow from Operating Activities 280 328 (48)--------------------------------------------------------------------------------------------------------------------------------------------------------
