Attached files
| file | filename |
|---|---|
| 8-K - UIL FORM 8-K DATED MAY 3, 2011 - UIL HOLDINGS CORP | uil_form8kdated05032011.htm |
| EX-99 - UIL EXHIBIT 99 - EARNINGS RELEASE - UIL HOLDINGS CORP | uil_exh99.htm |
1
1Q ’11 Earnings
1Q 2011 Earnings Conference Call
May 4, 2011
Exhibit 99.1
2
1Q ’11 Earnings
James P. Torgerson
President and Chief Executive Officer
Richard J. Nicholas
Executive Vice President and Chief Financial Officer
Safe Harbor Provision
Certain statements contained herein, regarding matters that are not historical facts, are forward-looking statements (as defined in the
Private Securities Litigation Reform Act of 1995). These include statements regarding management’s intentions, plans, beliefs,
expectations or forecasts for the future. Such forward-looking statements are based on UIL Holdings’ expectations and involve risks and
uncertainties; consequently, actual results may differ materially from those expressed or implied in the statements. Such risks and
uncertainties include, but are not limited to, general economic conditions, legislative and regulatory changes, changes in demand for
electricity, gas and other products and services, unanticipated weather conditions, changes in accounting principles, policies or guidelines,
and other economic, competitive, governmental, and technological factors affecting the operations, markets, products and services of UIL
Holdings’ subsidiaries, The United Illuminating Company, The Southern Connecticut Gas Company, Connecticut Natural Gas
Corporation and The Berkshire Gas Company. Such risks and uncertainties with respect to UIL Holdings’ recent acquisition of The
Southern Connecticut Gas Company, Connecticut Natural Gas Corporation and The Berkshire Gas Company include, but are not limited
to, the possibility that the expected benefits will not be realized, or will not be realized within the expected time period. The foregoing and
other factors are discussed and should be reviewed in UIL Holdings’ most recent Annual Report on Form 10-K and other subsequent
periodic filings with the Securities and Exchange Commission. Forward-looking statements included herein speak only as of the date hereof
and UIL Holdings undertakes no obligation to revise or update such statements to reflect events or circumstances after the date hereof or to
reflect the occurrence of unanticipated events or circumstances.
Note to Investors
3
1Q ’11 Earnings
Highlights
Solid 1Q Net Income
Ø Growth in Electric Operations, including GenConn
Ø First full quarter of Gas Operations
Projected savings from the gas acquisitions are identified
Exit from transition services agreement on schedule
Implementing plans for growth in gas conversions
Executing on capital expenditure plan - realizing rate base growth
GenConn Middletown expected to be operational in June 2011
4
1Q ’11 Earnings
Expected $11.6M of Identified Savings
Ø Integration is on schedule
Ø Incurring one-time O&M
implementation costs of $3.5M (pre-tax)
implementation costs of $3.5M (pre-tax)
Ø Approximately $18M IT-related
capital costs associated with
implementation
capital costs associated with
implementation
($M)
Gas Operations
5
1Q ’11 Earnings
Gas Operations
Ø Capitalize on the competitive advantage of natural gas as the economical,
abundant and environmentally friendly fuel of choice for customers
abundant and environmentally friendly fuel of choice for customers
Ø Aggressively pursue new gas heating customers
Ø Generate incremental revenue sufficient to support expanding infrastructure
Ø 2011 multi-media campaign - launched in April
› Cost savings associated with natural gas use compared to other energy sources
Ø Historical customer additions(1) 2009 2010
Heating conversions 5,535 5,728
New construction 901 1,071
Total 6,436 6,799
Ø Targeting 30,000-35,000 additional gas heating customers over the next 3 years
› ’11 - 25% increase over ‘10 levels
› ’12 - 50% increase over ’10 levels
Ø New customers are anticipated to generate approximately $280-$315 dollars of
distribution net operating income per customer
distribution net operating income per customer
(1) Businesses & households
6
1Q ’11 Earnings
American Community Survey’s selected housing characteristics estimates show a large percentage of
households in Connecticut do not use natural gas for heating
households in Connecticut do not use natural gas for heating
Potential for Gas Heating in CT
Litchfield
62%
13%
16%
4%
5%
Fairfield
47%
35%
15%
2%
1%
Connecticut
50%
31%
15%
2%
1%
New Haven
46%
35%
16%
2%
2%
Middlesex
63%
11%
18%
4%
3%
New London
63%
11%
19%
3%
4%
Windham
68%
9%
11%
8%
4%
Tolland
67%
9%
13%
5%
4%
Hartford
41%
42%
13%
1%
2%
Fuel oil, kerosene
Electricity
Utility gas
Bottled, tank or LP gas
Other¹
Source: U.S. Census Bureau; Average data for 2005-2009
1 Other includes coal or coke, wood, solar, no fuel used and other
# Occupied
housing units:
1,327,482
housing units:
1,327,482
73,704
339,516
52,993
42,653
104,468
65,476
322,752
325,920
(0)
(20)
(6)
(13)
(0)
(3)
(11)
(9)
The # in parentheses represents
the number of cities or towns in
that county that are served by a
UIL Gas Company.
UIL Gas Company.
Approximately 37% of businesses & households on UIL gas mains are not currently natural gas customers
7
1Q ’11 Earnings
Electric Operations
Ø On course with aggressive $2.1B UI base capital expenditure plan for 2010-2019
› Distribution - $1.4B
› Transmission - $0.6B
› GenConn equity investment - $0.1B
Ø Investing in Connecticut portion of New England East West Solution projects,
with an investment floor of $60M
with an investment floor of $60M
Ø Continue to seek out other Transmission opportunities in our service territory
and beyond
and beyond
8
1Q ’11 Earnings
Devon Facility
Ø Operating
Ø Contractual requirements met on
9/10/10
9/10/10
Middletown Facility
Ø 98% complete as of 4/30/11
Ø Expected to be operational in June 2011
50/50 Joint Venture between UI and NRG
Picture as of 3/31/11
GenConn Energy
9
1Q ’11 Earnings
Ø On 3/24/11, CNG, SCG & the OCC filed a motion with
the DPUC to reopen the CNG & SCG rate cases for the
purposes of reviewing and approving a settlement
agreement
the DPUC to reopen the CNG & SCG rate cases for the
purposes of reviewing and approving a settlement
agreement
Ø On 4/13/11, the DPUC reopened the rate cases
Ø If approved by DPUC, the settlement would, among
other things
other things
› resolve all pending issues related to the rate case
appeals
appeals
› terminate the SCG potential overearnings
investigation
investigation
Ø DPUC schedule as of 4/27/11
› Hearings 5/26/11 & 6/9/11
› Draft decision expected 7/20/11, final 8/3/11
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SCG Potential Overearnings
Generic ROE Proceeding
UI Electric Decoupling
SCG/CNG Rate Case Appeals
DPUC schedule has not been updated
Ø Filed results of decoupling rider for 2010-2011 on 4/5/11
› Resulted in an over-collection of allowed revenues of
$1.3M
$1.3M
› Company requested continuation of decoupling
mechanism until next rate case decision
mechanism until next rate case decision
Ø Potential for UI to file distribution rate case for rates in effect in 2012 to reflect significant investments
in distribution infrastructure
in distribution infrastructure
Regulatory Update
10
1Q ’11 Earnings
Legislative Highlights
Session ends June 8th
Members of the state House and Senate in CT introduced ~ 100 energy- and
technology-related bills
technology-related bills
Ø UIL is actively engaged in legislative process
Proposals include:
Ø New Department that combines Department of Environmental Protection and
Department of Public Utility Control
Department of Public Utility Control
Ø Senate Bill One - reintroduction of legislation from the last legislative session that
has multiple components
has multiple components
11
1Q ’11 Earnings
Economic Update
Non-seasonally adjusted unemployment rate as of 3/11
Ø MA - 8.2%
Ø National - 9.2%
Ø CT - 9.3%
Major cities in service territory trailing national average
Ø Hartford - 9.3%
Ø New Haven - 13.6%
Ø Bridgeport - 14.5%
12
1Q ’11 Earnings
Net Income ($M)
1Q 2011 vs. 1Q 2010 Net Income
13
1Q ’11 Earnings
1Q 2011 Financial - Details
Electric distribution, CTA, GenConn & other
Ø 8% increase in 1Q 2011 net income compared to 1Q 2010
› Favorable variance primarily attributable to income from the investment in GenConn, partially
offset by increased operating expenses and lower CTA rate base
offset by increased operating expenses and lower CTA rate base
› Earnings of $2.1M from UI’s equity investment in GenConn
Ø Average D & CTA ROE as of 3/31/11; 9.62% including sharing
Ø GenConn ROE - 9.75%
Electric transmission
Ø 15% increase in 1Q 2011 net income compared to 1Q 2010
› Increase in AFUDC coupled with higher rate base
Gas distribution
Ø Net income of $37.4M
› Colder than normal winter weather in New England
Ø Preliminary average adjusted ROEs as of 3/31/11; SCG - 9.65%, CNG - 11.63%
Corporate
Ø After tax cost in 1Q 2011 of $3.8M compared to $0.7M in 1Q 2010
› Predominately attributable to interest expense of $3.2M on the $450M public debt issued to partially
fund the gas acquisitions
fund the gas acquisitions
EPS dilution from Sept. 2010 equity issuance - $0.24 per share
14
1Q ’11 Earnings
UI Pollution Control Revenue Bonds
UI Equity Bridge Loan
UIL Debt retired 2/15/11
SCG, CNG & Berkshire
Liquidity Overview (3/31/11)
Near-Term Debt Maturities
($M)
*
* To be remarketed
Amounts may not add due to rounding.
Based on current plans - expect no need for external equity for at least the next 3 years
($M)
Debt Maturity & Liquidity Profile
15
1Q ’11 Earnings
Assumptions
› Regulated businesses are expected to earn the allowed return
on an aggregate basis
on an aggregate basis
› GenConn expected to be fully operational by 6/11 and earn
$0.12-$0.14 per share
$0.12-$0.14 per share
› CTA earnings are expected to decline by $0.07-$0.09 per share
from 2010 as rate base continues to be amortized
from 2010 as rate base continues to be amortized
› Incorporates full year of gas distribution earnings
› Bonus depreciation is expected to have a net impact of ($0.03)-
($0.05) per share
($0.05) per share
› Includes one-time costs for the transition of the gas
distribution business support services from IUSA, as well as
the on-going integration costs
distribution business support services from IUSA, as well as
the on-going integration costs
,
2011
› Integration of all of the regulated businesses with an emphasis on process integration initiatives and best practices
› Exiting the TSA by year-end for vast majority of services
› Positioned to realize half of IUSA’s ‘09 allocated corporate charges of $23M à expected savings of $11.6M in 2012
› Implementing plans for growth in gas conversions
› Execution of capital expenditure plan at each of our regulated businesses
› Continued focus on management of O&M expenses at each of our regulated businesses
16
1Q ’11 Earnings
Highlights
Solid 1Q Net Income
Ø Growth in Electric Operations, including GenConn
Ø First full quarter of Gas Operations
Projected savings from the gas acquisitions are identified
Exit from transition services agreement on schedule
Implementing plans for growth in gas conversions
Executing on capital expenditure plan - realizing rate base growth
GenConn Middletown expected to be operational in June 2011
17
1Q ’11 Earnings
Q&A
18
1Q ’11 Earnings
Appendix
19
1Q ’11 Earnings
* 2010 Gas distribution capex reflects the full year amount; UIL ownership was for 6 weeks effective with the closing on the acquisition. Does not reflect capital for gas conversions growth
plan.
plan.
** Updated - February 23, 2011
*** Information as of 2010 Fall EEI conference
Amounts may not add due to rounding.
The annual long-term capital spending update will be presented at the Fall EEI conference
UIL CapEx Profile
20
1Q ’11 Earnings
20
Near-Term Average Rate Base Profile
28%
23%
7%
30%
22%
5%
35%
3%
40%
1%
23%
38%
37%
39%
43%
22%
38%
24%
36%
40%
24%
Electric distribution
CTA
Gas distribution*
Electric transmission
UI’s 50% Share ($M): 2010A 2011P 2012P 2013P 2014P 2015P
Avg. GenConn RB Equivalent: $ 51 $ 140 $ 164 $ 156 $ 149 $ 142
Avg. Gen Conn Equity “Rate Base” $ 25 $ 70 $ 82 $ 78 $ 75 $ 71
Rate Base (Excluding GenConn Equity Investments):
GenConn Equity Investments:
Notes: *2010 Gas distribution average rate base reflects the full year; UIL ownership was for 6 weeks effective with the closing on the acquisition. For comparability purposes, Gas distribution excludes the impacts
of 338(h)(10) election.
of 338(h)(10) election.
Amounts may not add due to rounding.
42%
21
1Q ’11 Earnings
* Based on current expectations
** Related to the tax year
Efficient use of cash benefits from
bonus depreciation
bonus depreciation
Ø Expected pension contributions of
approximately $73M to the electric &
gas pension plans in 2011
approximately $73M to the electric &
gas pension plans in 2011
› $52.2M already contributed during
1Q ‘11
1Q ‘11
Ø Reduces pension costs and increases
rate base
rate base
Based on current plans, expect no
need for external equity for at least
the next 3 years
need for external equity for at least
the next 3 years
Expected Impacts of Bonus Depreciation - ‘10 & ‘11
Based on Current Expectations
Based on Current Expectations
22
1Q ’11 Earnings
Final 338(h)(10) Cash Value ($M)