Thanks, Cheryl and good morning, everyone. Thank you for joining us today for the AltaGas fourth quarter 2019 financial results conference call.

Speaking on the call this morning will be Randy Crawford, President and Chief Executive Officer; and James Harbilas, Executive Vice President and Chief Financial Officer. As always, today’s prepared remarks will be followed by an analyst question-and-answer period.

And I’ll remind everyone that the Investor Relations team will be available after the call for any follow-up questions that you might have. Presentation slides have been made available for today’s webcast, and they can be accessed through our Events & Presentations web page.

However, today’s prepared remarks will not follow along directly with the slides provided. A replay of the call will be available later today.

And a transcript will be posted to our website shortly thereafter. Before we begin, I’ll remind everyone that we will refer to forward-looking information on today’s call.

This information is subject to certain risks and uncertainties as outlined in the forward-looking information disclosure on Slide 2 of the Presentation, and more fully within our public disclosure filings on both the SEDAR and EDGAR systems. And with that, I’ll now turn the call over to Randy Crawford – sorry, to James Harbilas.

Thank you, Adam and good morning, everyone. It is my pleasure to welcome you to our 2019 fourth quarter and full year results call.

We had a strong year reflecting solid financial and operational performance from both our midstream and utility segments. Normalized EBITDA was $1.3 billion, which is the high end of our full year guidance of $1.2 billion to $1.3 billion and represents a 26% increase over 2018.

This growth was driven primarily by full year contributions from WGL, seven months of operations at RIPET, our industry-leading LPG export facility and strong results from Petrogas. These impacts flow through the normalized funds from operation which was $895 million, compared to $657 million in 2018.

Normalized net income was up over 65% to $324 million in 2019, driven by strong operational performance of our capital investments and previously referenced factors impacting normalized EBITDA, and higher interest expense and depreciation and amortization expense. Also driving the increase was a low normalized effective tax rate, which was impacted by the accretion of regulatory amounts through tax expense and higher non-taxable equity earnings.

We delivered these strong results, while remaining firmly focused on executing our balanced funding plan, a significant component being the disciplined approach to capital deployment and an aggressive approach to our non-core asset sales program, with funds being used to de-lever the balance sheet and fund organic growth. In 2019, we executed on $2.2 billion in asset sales at attractive multiples, exceeding our target of $1.5 billion to $2 billion.

We closed our 2019 with a much stronger balance sheet, decreasing our net debt by approximately $3 billion and improving our debt metrics in line with expectations. In addition, we positioned the company for continued organic growth through our accretive asset sales in 2019, including the sale of ACI, which has been approved by shareholders and is expected to close in the first half of 2020.

This is an all cash transaction for $33.50 per share, generating proceeds of approximately $370 million to AltaGas. In 2019, we executed on the largest capital program in our company’s history spending approximately $1.4 billion, slightly higher than our guidance due to accelerated timing on certain growth capital projects and the timing of close of certain asset sales.

Overall, we delivered on all our financial commitments in 2019. Moving on to our fourth quarter results, we recorded normalized EBITDA of $425 million, up from $394 million in the prior year.

On the surface, that shows an uplift related to the work we have completed on the rate cases in Maryland and Virginia, as well as RIPET, which added $36 million in normalized EBITDA to the quarter. Strong quarter-over-quarter results were also positively impacted by higher equity earnings from Petrogas due to higher export volumes and domestic margins, partially offset by higher operating costs of Washington Gas and the impact of CINGSA’s rate case decision.

As I mentioned earlier, we were very successful in monetizing assets to de-lever the company, which had a corresponding impact on loss normalized EBITDA negatively impacting the quarter by $85 million. Adjusting for this, we would have achieved over 25% growth in normalized EBITDA.

Digging slightly deeper into our segments, the fourth quarter at our utility saw earnings ramp up consistent with historical seasonality expectations. In addition, the increase in normalized EBITDA was largely attributed to the impact of rate cases in Maryland and Virginia, and higher revenue from accelerated pipe replacement program spend, which was offset by the impact of the ACI IPO and higher operating expenses.

As you will recall, in the third quarter, we recorded a one-time adjustment of $30 million related to the Hearing Examiner’s report in Virginia, due to an adjustment to the TCJA liability. In December, the commission in Virginia issued a final order adjusting certain of the Hearing Examiner’s findings, some of which were favorable to Washington Gas, resulting in an $8 million increase to normalized EBITDA on the fourth quarter.

Our midstream segment reported very strong Q4 results with normalized EBITDA up over 80% over the same period in 2018. Our energy export strategy was a significant contributor to the quarter, with strong volumes at both RIPET and at Ferndale from our equity investment in Petrogas which I will get to in a moment.

Results in our base midstream business remained strong and we are seeing healthy volumes at our plants, specifically a full year of operations at the Aitken Creek North facility and new volumes from the Nig Creek facility, a direct result of the work we have done with respect to our northeast BC and energy export strategies creating an integrated value chain connecting our customers from wellhead to export markets in Asia. RIPET, our cornerstone asset in our Canadian midstream strategy continues to perform well, supported by strong FEI spreads.

During the quarter, RIPET generated approximately $36 million in normalized EBITDA was slightly greater than 3 million barrels versus six ships of propane exported to Asia. Overall, we are pleased with the performance of the facility to-date.

Volumes exported for the quarter were just over 36,000 barrels per day, slightly lower than anticipated due to the CN strike in the fourth quarter. We continue to see strong results from Petrogas recording equity earnings of $31 million, a significant increase from $5 million in Q4 of 2018.

These strong results were driven by higher export volumes and improved export margins like what we are experiencing at RIPET together with improved contributions from Petrogas’s other core business segments and a contract termination payment realized during the quarter. Turning to our capital program and funding plan for 2020, given all the work we have done to improve our financial flexibility, our focus is now able to shift towards executing on organic growth opportunities to drive meaningful contributions in 2020 and beyond.

Our emphasis will be on capital efficient organic growth and executing on the accelerated replacement programs at our utilities to ensure timely recovery of this growth opportunity. As such, the funding plan includes $900 million in projects, primarily within our low risk utilities business that are anticipated to deliver stable and transparent rate base growth and strong risk-adjusted returns.

In 2020, we have allocated approximately 25% more capital to accelerated replacement programs which represents about 45% of the total 2020 utilities capital program. Capital in our midstream segment will be focused on the completion of Townsend and North Pine expansions and associated pipeline systems, maintenance and administrative capital and the completion of MVP Southgate which is the Mountain Valley Pipeline expansion project.

We plan to fund our capital investment plans for our significant embedded growth and existing financial capacity with no expectation for raising common equity in the near-term. We will continue to maintain a disciplined approach to capital allocation.

Our priorities have not changed as we focus on preserving a strong balance sheet, returning capital to shareholders through our dividend and executing on low risk, capital efficient organic growth with a self-funding model, given our decision to spend the DRIP early in 2020. Our investment grade credit rating continues to be fundamental to our strategy.

As you know, it provides us with greater financial flexibility and a lower cost of capital, which in turn supports growth going forward. In December, positive rating action was taken by S&P of BBB minus with the revised outlook to stable, while Fitch and DBRS defer on ratings at BBB and BBB low, respectively.

The S&P result was favorable and in line with our expectation as we have made significant strides in strengthening our balance sheet and refocusing the business. We will continue to work on improving the financial metrics of the company and we’ll continue the dialogue with the credit rating agencies with the goal of improving our credit rating over time.

As we move into 2020, we are positioned to deliver strong earnings growth, which reflect the underlying strength of our business and our ability to capitalize on the ample opportunities within our core business. Growth in our utilities segment is driven by rate based growth and achieving higher returns through rate case settlements, increased utilization of accelerated replacement programs and operating costs and leak remediation reduction initiatives.

Our consolidated utilities rate base is expected to grow at approximately 8% to 10% in 2020. The recent rate case settlement at SEMCO is a strong example of our ability to capture timely returns on invested capital and rate based growth.

We completed the Marquette Connector pipeline safely on time and on budget in the fourth quarter of 2019 and on December 6th, 2019 an order was finalized in respect to the sample rate case with an effective date of January 1st, 2020 several months ahead of previous expectations. The settlement approved included an approximately $20 million rate increase and then allowed return on equity of 9.87%.

Growth in the midstream segment will be driven by the significant upfront investment we made since 2018 and increased utilization at RIPET as well as increased volumes at northeast BC facilities including North Pine, Townsend and Aitken Creek as well as higher expected margins on US midstream storage and transportation. Our distinct ability to handle the molecule through the entire value chain and provide access to premium price global markets is very attractive to Western Canadian producers.

We will leverage our first-mover advantage to drive the continued expansion of our integrated asset base and increase export volumes at RIPET. The facility itself was built to accommodate almost 80,000 barrels per day, which will drive significant long-term earnings growth with minimal additional capital required.

We expect to achieve normalized earnings per share of $1.20 to $1.30 and normalized EBITDA of approximately $1.275 billion to $1.325 billion excluding any contributions from the outcome of the Petrogas put option. We will update the market on contributions from Petrogas once we finalize the valuation and close that transaction.

In conclusion, the strategy we have outlined is designed to result in reliable, attractive long-term earnings and dividend growth. I believe that the combination of appropriate capital discipline, business optimization and operational excellence will position us to deliver strong performance.

With that, I will turn the call over to Randy.

Thank you, James and good morning, everyone. 2019 was a transformational and extremely successful year for us here at AltaGas.

We exceeded the operational and financial priorities set out in December 2018, which resulted in earnings that were at the top half of our guidance range. This is a direct result of the newly focused strategy and moreover, the hard work and effort of our talented teams across the company.

We transformed the focus and focused the company on our stable, high growth utilities and midstream businesses, where we see the best return opportunities and are now well positioned to deliver long-term value to our customers, business partners and shareholders. Looking back, since I first spoke with you in December 2018, on my fourth day at AltaGas, I am proud of the achievements that we have accomplished.

I laid out an aggressive strategy designed to de-lever the balance sheet, regain our financial strength and flexibility and streamline the business to focus on sustainable growth from our highest returning investment opportunities. We successfully executed our balanced funding plan, de-levering the balance sheet and solidifying our investment grade rating, while funding the largest capital program in the company’s history at almost $1.4 billion.

We did this through responsible execution of major capital projects, like RIPET and the Marquette Connector, which were delivered on time and on budget. In May, we celebrated the official grand opening of Ridley Island Propane Export Terminal, the first LPG export facility on Canada’s West Coast, and a cornerstone asset of our integrated midstream strategy.

Through RIPET, we offer our customers a unique and compelling proposition, providing services across the energy value chain including access to export markets, where demand is strong, and the value proposition remains robust. We expect this integrated value-added capability to provide significant growth in our Midstream business over several years by attracting increasing volumes to our existing facilities with minimal capital investment.

We achieved significant profit growth at our utilities through projects like the Marquette Connector, utilization of accelerated rate initiatives to upgrade and modernize our distribution system, rate cases to update our current cost structure and implementing our operational excellent model to keep future costs in check. We took steps to establish our utility management team, new to the management team to address the current needs of our operating and industry-leading LDC.

We have accomplished significant milestones in a short period due to the exemplary effort and innovative commitment to a new approach of our leadership teams across North America. We are now positioned in 2020 with a significantly stronger financial footing, a sharper focus on our core businesses and ability to capitalize on the significant portfolio of organic growth opportunities in front of us.

We continue to improve our operational excellence model which will position AltaGas to deliver on our long-term strategy of being low risk, high growth utility and midstream business. The near-term growth opportunities I see today exceed my original expectations and are now achievable due to the hard work the teams have delivered over the past year.

Looking ahead, 2020 is all about execution at our core businesses. We have a unique investment proposition that combines higher growth midstream assets, with stable and predictable cash flows of our utility business.

We continue to believe the strategy is the right one, and the quality and diversification of our asset position us to deliver sustainable, attractive risk-adjusted returns over the long-term. Our strategy is straightforward, leverage the unique proposition of our high quality utilities and midstream businesses to utilize our expertise along the energy value chain to connect customers to markets in North America and abroad.

In 2020, we expect approximately 13% year-over-year growth driven by our core businesses, which more than offsets the lost EBITDA associated with the 2019 assets sales. Our midstream strategy is underpinned by the growing demand for energy in Asia and our first-mover advantage at RIPET.

We will continue to leverage our unique structural advantage to export cleaner energy to Asia and expand our footprint in northeast BC. We expect this unique capability to attract more Canadian production to increase producer value proposition, to drive continued expansion of our asset base, increase volume and provide more producers the opportunity to access our value export capacity.

Our northeast BC strategy and the value-added approach to our customers continues to position AltaGas as a midstream provider of choice. The success of RIPET is highlighted through premium pricing received by our tolling customers.

And we see increasing demand for export capacity and tolling agreements at RIPET. By the end of 2020, we expect to increase tolling volumes to approximately 40% of throughput to approximately 20,000 barrels by the end of 2020.

We expect approximately 15% growth with the midstream segment in 2020 after adjusting for the loss of EBITDA from asset sales in 2019, driven by a full year and higher propane export volumes that RIPET and increased volumes at Northeast BC facilities including North Pine, Townsend and Aitken Creek. We also see significant opportunity to further expand our current service offering through the increased ownership of Petrogas, which owns and operates the 50,000 barrels a day Ferndale NGL export terminal in Washington State.

The opportunity for a JV to obtain full ownership of Petrogas upon the closing of SAM Holdings exercise of its put option, and AltaGas acquisition of a greater indirect interest as a result will create the opportunity to provide producers additional market alternatives to access up to 130,000 barrels of industry-leading West Coast energy export strategy. Shifting to the utility segment.

Through the ownership in WGL, we are uniquely positioned to capitalize on one of the higher annual rate base growth rates in the United States at 8% to 10%, underpinned by the replacement of ageing infrastructure, innovative rate design and growth in our customer base. Our strategy is centered on safety and reliability, capital discipline and growing the rate base through accelerated replacement programs.

We continue to drive towards a performance-based culture to enhance our capital efficiency and returns and maintain affordable rates for our customers. We will optimize every dollar spent on repairing and replacing ageing pipe to improve safety and reliability, improve our customer experience and reduce leak remediation costs.

To 2020, we expect over 10% growth in our utility segment, underpinned by approximately 10% rate base grow, higher achieved returns through rate case settlements, increase utilization of accelerated replacement programs and operating cost reduction initiatives. In January, we filed a rape case in the District of Columbia asking for an increase in rates of approximately $35 million to reflect the growth in rate base and updating our operating costs.

We haven’t filed for new rates in DC since 2016, it is currently the jurisdiction where we see the largest gap between earned versus allowed returns. To this rate case represents a significant step towards closing the gap on achieving our allowed ROEs.

In summary, we have a clear line of sight on a significant portfolio of growth within our utility and midstream segments and a stronger balance sheet, which will allow us to deliver sustainable growth. We have the internal cash flow and incremental debt capacity to fund approximately $1 billion in annual growth capital that will provide us the ability to invest in our profitable growth opportunities.

Finally, our near-term priorities have not changed. We continue to execute on our organic growth opportunities, while preserving capital discipline within our self-funding model.

Maintaining a strong balance sheet and prudent payout ratio that reflects the long-term nature of our asset and balances the need to fund growth and return capital to shareholders. That concludes our prepared remarks.

I will now pass it back to the operator to facilitate the Q&A session.

Good morning, everyone. First question was on the utilities.

In your prepared remarks you mentioned that DC had the large gap between the earned and allowed ROE. Can you kind of walk us through where you actually earned in 2019 or what your actual income on the utility side were to be if we were to kind of back into some of the parts there?

Well, I think the clearly as I said in the prepared remarks, Rob that the DC district is our – currently has a biggest gap between allowed return and current. And we have a slide in our Investor Presentation I think that walks you through essentially the different steps that we go forward.

We filed our Maryland rate case last year and updated our rates as well as Virginia. And so the main focus really is on getting to Washington DC district rates up to current basis.

Okay. And then moving over to REPIT.

Can you just remind us, you know, what percentage of your volumes historically or I guess in the last couple of months have gone to China versus Japan and whether or not you could see a slowdown in exports there just given coronavirus?

Sure. Yeah, Rob I tell you what, you know, I don’t have the exact percentages, but I’ll make comments in terms of the coronavirus has had an impact obviously on propane demand in Asia, some of the factories have been shut down.

But we haven’t seen any direct impact on RIPET operations at this point, and we really don’t anticipate it that it will. Again, we have a structural shipping and pricing advantage from the West Coast to Canada over the supply destination such as the US Gulf Coast.

And so we would not expect to be the first impacted, you know, we continue to see and receive multiple bids for our spot cargos in January, as well as March you know, and with the, you know, the lower demand in Asia for LPG, we have seen FEI pricing come off however, you know, the spreads in North America for propane L20 are still strong. The FEI to Mount Belvieu and $11.55 a barrel.

We have additionally to your point about Japan and Asia, we have firm term commitments with Aistemos that’s 16 cargoes per year. And we have over 22,000 barrels that are of our merchant that are hedged and I mentioned the tolling.

So, you know, we’ve, you know, again, if you look at our history, you know, Aistemos has been probably taking 50% of the load in the prior year and then the spot cargoes tend to go to China and other countries.

Right, that’s great. Thank you.

You’re welcome.

Great. Good morning.

Maybe starting with a higher level strategic question. You know, you have mentioned about being a diversified company.

But I’m just wondering, what are your thoughts as you kind of get both sides of the house in order and then start growing, but what are the thoughts on splitting the business into a WCSB midstream company and a separate US utility company?

Well, Robert, you know right now and as I’ve said in my prepared remarks, I think we currently believe we’ve got a unique that investment proposition combining, you know, our high growth midstream assets with our stable, predictable cash flows and currently that we believe that’s the right approach for AltaGas as we’ve focused the company on the highest quality core businesses and we’ve restructured the company. So, you know, I think right now the diversification in our stable and growing utilities and our higher growth midstream business portfolio enable us to deliver, you know, strong risk-adjusted returns over the long-term.

So at this point, you know, I think we’re focused on two strong businesses run under a common platform. And so I think that’s because we see significant growth opportunities at this point we’ll always look at corporate structure.

But at this point, as I said, the combination of two strong businesses is the best path forward at this point.

Got it. If I can turn to Petrogas, just wondering, are you able to quantify how much is the one-time contract booking was and if there’s color on just the nature of that contract?

Sure, I’ll let James answer that.

Yeah. So Robert it’s obviously a contract termination that’s specific to one contract as a result we don’t want to disclose the amount, because it is commercially sensitive information.

But what I can confirm that it wasn’t a material contributor to quarterly performance and the cancellation of that contract doesn’t impact our guidance for 2020 as well it will not negatively impact our 2020 performance.

Got it. If I can just light a quick third one here.

Can you just give an update on MVP specifically as well. Just thoughts on the ACP Supreme Court hearing and read throughs for your project?

Yeah. Sure, Robert I think based on our discussions with our partners EQM’s call, I think we continue to believe that is an excellent project and that is – that will ultimately be in service and they’re targeting the end of this year.

So, clearly focusing on the court’s decision, there’s been some recent comments that appear to be positive, but we’ll see how that turns out. But overall, our view is that excellent project.

They’re 90% complete as we speak. And they’re targeting the end of this year that in service.

Great, thank you.

Okay. Hi, good morning.

I just wondered if you could walk through the provision on Pouce Coupe and just generally discuss your appetite for allocating capital to other gas plants in the current environment?

Yeah Robert it’s James here. So with respect to Pouce Coupe, I mean, it’s an acid gas injection well that’s – that basically we’ve shut in, because we’re in the process of drilling a new well in that area for the purposes of acid gas injection and just felt that it was appropriate provision to take given the fact that we’re replacing it with a new well.

Yeah, Robert –

Go ahead.

I’m Sorry. Well I was just going to comment, this is Randy, on your second question in terms of the base and that we continue to believe that we long-term fundamentals and outlook for gas and NGLs in the Montney, you know, continue to remain strong.

For us, we’re in an enviable position with the fact that the capital spent that we did in 2019 positions us well with respect to RIPET, you know, 80,000 a day of capacity and the completion of our processing facility in Townsend and a doubling of frac capacity at North Pine this year allow us to have a capital-light program and really grow into those capacities going forward. So as the market evolves, but more broadly, you know, the egress issues that are impacting Canadian production to some extent are easing the Trans Canada North Montney Mainline is expected to come on shortly, we’re helping a great deal with our LPG RIPET asset to providing an outlet for the 40,000 barrels a day.

So, excellent basin, well positioned company with assets that are providing producers access to valuable markets. So in the long run, I think we’re well positioned to continue to have growth in this basin.

Okay. And then just adding to that the aspects of BC and training on DRIP recently, and then also, we’ve seen some protests, the rail blockade, how does that factor into your capital allocation decisions?

Yeah. Well, I mean, again, the particular rail issues that we’ve encountered, you know, are really not an overly concerned, we don’t like, you know, interruptions, but the rail is an integral part of our supply chain in Canada.

It’s been that way for over 100 years and while we wouldn’t expect labor strikes and blockades is a common practice in the long run. And so it doesn’t, you know, as we look forward into our investments, you know, we see that rail will be a viable option in the long run so.

Okay. And then the final question for me.

I noticed there’s a sensitivity in there related to the pension discount rate. I don’t think we’ve seen that sensitivity published before.

I’m just curious why now and under what conditions would you – what conditions would trigger or change in the discount rate used in your pension accounting?

Yeah, I mean we’ve included it because obviously, having bought WGL and having a defined benefit plan and post-retirement benefit plan, we felt that it was an appropriate disclosure. You know, obviously returns of the plans themselves could potentially impact the rate and as well as work that the x-rays do.

So we felt that it was an appropriate sensitivity to include just given the impact to EBITDA that a change in that rate could have as based on work that actuaries do every year with respect to the appropriate discount rate from a funding standpoint.

So really it’s a question of what rates the actuaries pick and when they picked them?

Correct. Yeah.

And that’s something we look at annually with respect to those funds.

Thank you.

Thank you. I realize there’s a lot of moving parts to how this year will unfold on a number of fronts.

But I’m wondering if you could give us a sense of how much was already baked into your 2020 EBITDA guidance when you introduced it in December and what do you see as the more significant headwinds entailment wins emerging since then, that were not contemplated when you introduced guidance?

Go ahead.

Sorry, Linda, I didn’t catch the first part of your question. Do you mind just repeating that?

Well, I was just saying when you introduced your EBITDA guidance in December, I think you had certain assumptions baked in there and things are fluid and dynamic and continue to evolve as 2020 continues on. But I’m just wondering, what has changed since then that was not contemplated that’s presenting headwinds and tailwinds that might cause where you land either within guidance or potentially need to revise guidance as the year unfolds?

Well look, I mean, when we actually rolled out our guidance in December of ’18, we knew about the CN rail strike it had more or less come and gone, but obviously blockades in the coronavirus, were not something that were in play at the time with respect to the guidance that we rolled out. That being said, though, I mean, you’ve heard very clearly from Randy that, despite some muted demand in Southeast Asia, we have not seen a drop off in terms of cargos leaving RIPET.

We have not seen a drop off in demand whenever we go to market with a spot cargo. So we wouldn’t anticipate those issues impacting our ability to land within the guidance range that we provided to analysts when we rolled out our numbers in December.

Are you seeing –

And the only thing I will add is obviously the other thing that’s changed since we rolled it out, is the Petrogas put option. So once we close that deal, we will update the markets on the contribution on a pro forma basis of that Petrogas acquisition.

And any sense of timing – bookends of timing of when Petrogas might close?

Yeah, Linda, this is Randy. We think our judgment is that, you know, the end of the second quarter is where we would, you know, see that coming out at this point.

And I would add that, you know, acquiring the third interest in Petrogas, you know, in the integrator interest and operational control of the strategic assets are a nice fit, you know, within our midstream footprint, and as you know, and it’s a great opportunity to take on that operational control. So we would expect to, and we’re hopeful, but you know, through the second quarter that we will work toward closing that transaction.

And can you maybe give us a sense of how you’re seeing potential synergies as you do gain operational control of Petrogas, whether it be revenue or cost synergies or maybe even future capital allocation decisions, how they might shift now that you would have that full control of Petrogas?

You know, I guess I would answer your question this way that we’ve made an investment in Petrogas in 2013. We were bullish on the prospect of exploiting products from North America and we continue to remain bullish.

We currently are moving in, as I said, through the process to determine the value of SAM’s ownership stake. So therefore, you know, at this point, you know, as I think you’d agree, you know, I can’t get into great detail.

But what I can tell you is that, we recently did invest in building our Ridley Island LPG and we continue to move RIPET to a more of a tolling model, right and position the asset for upside. And we will deploy the same strategy for Petrogas and the opportunity to have more access to the Asian markets is exciting for us.

You know, I firmly believe that the valuation of SAM’s interest will be accretive to [RELA] [ph] shareholders that ability to operate Petrogas together with assets will prove valuable to all of our stakeholders.

Okay, thank you. And just a final question on Petrogas.

I realized that the funding plan can shift depending on a number of considerations, but have you started a parallel process to tee up the funds required for that? And can you comment on, I know you can’t comment on asset sales, but would they be partial or full sales of assets there are any contexts you can provide on how the funding plan have started, if at all would be appreciated?

It’s James here, Linda. So what I can say is that obviously are – that we will not need equity to fund Petrogas.

I just want to reiterate that for you and the markets. But what our first option from a financing standpoint is additional – is cash flow and some additional leverage, because we will have incremental EBITDA once we start to consolidate that acquisition and then with respect to asset sales processes, no, we haven’t start any yet, but we do have non-core assets that we can monetize when the time is right to be able to fund that.

I don’t think that we need to close an asset sale at the same time that we close Petrogas, because we’ve got capacity on the line, but we can close it shortly after we close Petrogas on an asset monetization and pay for that.

Thank you.

Hey, good morning team. Thanks so much for the time.

And again, congratulations on some pretty incredible results here. Want to focus here on the utility front.

First, the MRP success in Maryland is pretty incredible. Can you guys talk to whether that was contemplated in the rate base disclosure that you guys provided in December?

And then separately speak to timeline on achieving your ROEs to what extent did you intend or have a thought process about using this again towards your broader achieving of the ROE? And then separately and related on DC and tackling that, I know you’ve talked about a rate case, but is there any ability to file anything more formulaic as we saw in Maryland of late?

Good morning, Julien this is Randy. Good questions.

Look at when we looked at building our guidance, we built in the results of our Maryland and our Michigan rate case, into our forecasts in 2022. So we built those aspects in and I think we’ll look at a variety of innovative approaches in DC we filed the case straight up, but we’re having discussions on a variety of different approaches that can modify the rate approaches and such like that.

So and more to come on it but certainly the team is looking at a variety of ways to have an innovative rate structure that can allow us to have the opportunity to allowed return going forward.

Okay, all right. Fair enough.

We’ll just stay tuned here on what those innovative approaches might be.

I don't want to get ahead of –

No, no, no very much appreciate the regulatory process here. If I can pivot back here quickly, why do you think there has been more of a pricing impact on propane?

And I hear what you’re saying about volumes and the demand for volume, but, you know, the pricing commentary about that being sustained has been I suppose. I dare I say surprising.

But I’d be curious on any further thoughts there and then if you can squeezing just the last one, any financial metrics you can disclose as you think about this Petrogas pro forma? I’ll leave that there.

Yeah. Well we have seen with the impact on demand, a decline in FEI pricing, but the real driver is at the end of the day that the spread between the alternative the Belvieu market and FEI and that does remain strong.

And I think that’s the key driver for us. And as I said, with the shipping advantage of the West Coast of Canada provides a very cost effective solution to the market.

So well you might see some declining you’ll see the overall spread have remained strong on a going forward basis for us. Your second question was about more financial guidance with respect to Petrogas.

I let James answer on that –

Hey, Julien I would say that until we finalize the valuation, there isn’t very much in the way of pro forma or the impact that we can provide what I can point you to those that note 14, I believe in our MD&A that discloses what the after tax equity pickup of Petrogas has been in 2019 and 2018 as well as historically but so obviously, once we close that process, though, we would be consolidating that acquisition and not doing an equity pickup.

Fair enough. Okay guys, best of luck.

Thank you.

Yeah, good morning. Just starting with the 8% to 10% rate base CAGR outlook for utilities through 2024.

Can you remind us what level of annual CapEx is required to achieve that growth rate? And perhaps comment on, you know, how much of that annual CapEx would be exposed to preapproval from the regulators versus, you know, ongoing maintenance and replacement capital?

Right. So, we have, again, we get these US and Canadian conversions we have, you know, when I look at this a 10% rate base gross number, our rate base is about US$4.5 billion, right.

Yeah.

About that. So you’re talking about a $400 million CapEx program for growth capital and beyond that, but specifically to the strategy of getting current recovery on those, as I mentioned in the past, the accelerated rate recovery and all of our jurisdictions has been pre approved over a five-year plan.

A DC is a bit shorter, and we’re working through that process. But our strategy is to all investments above depreciation and maintenance will be recovered through our accelerated rate recovery mechanisms that will give your current recovery to those investments.

Okay, perfect. And then moving over to RIPET.

Just curious at, you know, what point in 2020 you might be able to achieve the 50,000 barrels a day of throughput? I assume it depends on, you know, being able to secure the incremental volumes through tolling agreements this spring, but just curious if you might be able to achieve 50,000 barrels a day, you know, well before the end of 2020 if all goes well on the contracting front.

Sure. We would expect the capacity to grow in material income that’s commencing in April of 2020 that aligns to the LPG contract year.

So we feel very good about our forecast and our supply aggregation. And so I think you would see that starting up in the April on a going forward basis.

Okay, perfect. And then circling back to, you know, funding the Petrogas option here with additional non-core sales.

How do you think about timing, the cash payment, they’re assuming it is the end of the second quarter with maximizing value for something like your stake in MVP? You know, do you need to see that project in service before you look to sell it?

Or is that a process that could be undertaking well before year end?

Well, you know, I’ll comment on the asset sales and as James has said, we’ve got, you know, a good bit of asset sale liquidity with MVP with our power assets that we have and we can be selective as to how we move forward with that. I think James referenced the fact that we could close this transaction without those assets sales comfortably.

So we’ll be, you know, again, when we look at MVP, we believe that’s an excellent asset. And we’d like to derisk that and see that a little bit more clarity before we do any transactions there.

But we would expect that clarity to come later this year.

Okay. And last one for me guys, if I could, just on your recent sustainability report.

You know, obviously propane displacing higher carbon fuels in Asia is a good news story. Just wondering how this ESG momentum might be playing into some of the commercial contracting discussions you’re having with customers right now, you know, both producers and offtakers, are you seeing any financial tailwinds from this rising demand from industry towards decarbonization?

Well, you know, I think that the overall macro market and Asian demand for propane is strong. And that’s driving some of the pricing, you know, as we get through the coronavirus and we look long-term.

And so I think but clearly, the ability to displace higher carbon intensive fuel is good for the world. And it’s good for Canada.

And so I think it’s a very important part of reducing carbon emissions and we’re excited to be part of it. And well, I think that we expect that to continue to grow on a going forward basis?

Got it. I’ll leave it there.

Thanks guys.

Okay, thanks. I want to go back to the main topics of RIPET, Petrogas and many more broader year appetite for I guess, commodity exposure.

I think that’s you know, not the right word, but maybe just more that the non-regulated thought of that. And is there – I guess my question is, is there a certain level of commodity exposure just that Far East Index exposure that you guys start to get a little bit more uncomfortable when you look at your total enterprise?

Look, I think that, you know, our strategy is a low risk, high growth utility in midstream business, we continue to move toward more of a tolling arrangement as I mentioned at RIPET and with respect to the merchant, we hedge those volumes as soon as we enter into one side of the transaction, if that’s the supply side with the FEI. So, you know, we continue to focus on annuity long-term earnings.

And with respect to Petrogas, as I mentioned previously, you know, we continue to move RIPET more forward with a tolling model and we would expect to operate similarly as we do with Petrogas. We are not a producer, you know, we connect producers to valued markets, and the commodity risk should rest with those that are bearing that commodity risk, and we provide the upside for those producers to access that market.

So that’s our strategy and we’ll continue to execute on that.

Ben, if I can just add to that, I mean, if you look at 2019, once you – if you look at our hedged positions, and then you layer in tolling, you know, RIPET was anywhere between 75% to 80% hedged for us during the year, right. So I want to stress that we’re not out there taking commodity exposure to Randy’s point we’d lock it in.

Yeah, I appreciate that. But I guess I’m just thinking I mean, the hedges don’t – you’re not walking in like a 10 year hedge, right.

Are you and then? I mean, I don’t think you’re expecting the tolling arrangements to be 100% right, it means more 40%, 50%.

Yeah, well, what I think – what I’ve said in the past is that, we’ll continue to derisk the asset we had to see this business right so that we could show the Canadian producers the advantage of getting to the Far East market and to get FEI pricing and we’ve done that, and I believe strongly that as we continue to move forward, the percentage of tolling will just continue to increase on a going forward basis. So yeah strategy was to see this business to clearly demonstrate the value of getting to the Far East market and our producer community is seeing that clearly.

And we’ll work on the demand pull side of this too, for long-term annuity type contracts as well to reach all the way back. So that’s a philosophical approach and I think we’re making excellent progress in that way.

Okay and thanks for that. And there’s a question on corporate restructuring.

Before that and I might want to tie it into my first question around my exposure. I mean, are you in a sense, you know, as you guys take some of this RIPET Far East exposure that maybe makes it a little bit harder to do restructure business later on?

No, I don’t think that I think these two businesses run under a common platform that are both annuity-based, long-term sustainable businesses with annuity cash flows fit together quite well. And I don’t think it precludes any other, you know, corporate restructuring down the road.

If it’s that’s a direction that’s in the best interest of our shareholders.

And I’m not sure to disclose on a [indiscernible], but are you – you know, can you quantify the Mountain Valley AFUDC that you’re booking?

I’ll turn that to James, if we have that.

So the AFUDC I think that we’re booking is about $35 million a year, $35 million to $40 million a year.

Okay. Perfect.

Thanks a lot guys.

Thank you.

Good morning, Randy, great to talk again.

Hi, Jeremy. How are you?

Very good, thank you. I just want to start off, if I could for RIPET, I didn’t know if there was any sense you can provide for the level of contribution to EBITDA last year just trying to get a feel for how big that was or maybe just kind of looking forward, I guess on the mainstream side, how do you see the business evolving between kind of liquids handling, processing, fractionation like the size of those, you know, those different contributors to midstream EBITDA going forward just kind of directionally speaking, if you could?

Yeah, you know, with respect to last year’s contracts, we had seven months of RIPET and it was approximately $85 million of EBITDA contribution. And then we have a full year built into 2020.

You know, I said in the past, Jeremy that we, you know, we want to be able to touch the molecule throughout, you know, from the wellhead, through our processing fractionation facilities and ultimately through RIPET to the West Coast. We’re doubling the size of our fractionators at North Pine moving from 10,000 barrels to 20,000 barrels this year, and that’ll be completed in April.

We’re adding an additional 200,000 a day of processing capacity at Townsend, all backed by firm contracts out with shippers. So we want to – we’ll continue to see growth in the business in those areas.

So, while we don’t touch every molecule, our overall goal is to be able to provide an integrated business model to our producers and attach them to attractive markets.

That’s helpful. I’ll stop there.

Thanks.

Thank you, Jeremy.

Thanks, Cheryl. And thank you everyone once again for joining our call this morning and for your interest in AltaGas.

As a reminder, the Investor Relations team will be available after the call for any follow-up questions that you might have. That concludes our call today.

I hope you enjoy the rest of your day and you may now disconnect your phone line.