Thanks, Julianne and good morning, everyone. Thank you for joining us today for the AltaGas first quarter 2020 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. We are also joined here this morning by Randy Toone, Executive Vice President and President Midstream and Blue Jenkins, Executive Vice President & President at Utilities and also Washington Gas.

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 or any detail modeling questions that you might have.

Presentation slides have been made available for today' call, and they can be accessed through our Events & Presentations web page. But, I want to remind everyone that today's prepared remarks will not directly follow the slides that were provided.

A replay of the call will be available later today. And a transcript will be posted to our Web site shortly thereafter.

Before we begin, I’ll also 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.

Thank you, Adam, and good morning everyone. I want to take a moment to extend our deepest sympathies to all of those who have been personally affected by the COVID-19 pandemic.

The world is facing a challenge unlike any modern history, grappling with the tragic global pandemic. And we remain focused on doing our part by continuing to provide our essential services to our customers.

Our team is laser-focused on ensuring delivery of vital clean energy to our businesses and customers can continue to move forward with their daily lives to the greatest extent possible during these challenging time. The foundation of AltaGas core values is built on an unwavering commitment to doing what is right.

During the state of emergency, we have suspended disconnections, and waived late fees to ensure our 1.6 million customers have access to natural gas regardless of their economic circumstances. We fully recognized the strain on the frontline health care workers and the most vulnerable in our community.

And we have committed to provide more than $1 million in donations to help support their efforts and needs. Our hope is that these steps will help our communities through these unsettled times and return from this pandemic stronger than ever.

It is during these difficult time that our core values focused on leadership, innovation, adaptivity, resilience and excellence shine through. I take a great deal of pride in being part of this organization.

At AltaGas, our employees understand the mission and have come together to exhibit these characteristics over the past several weeks. I'd like to take a moment to thank all AltaGas employees for their continued focus, hard work and execution during these challenging times.

They are this company's greatest asset and why I'm confident in our ability to deliver on all of our expectations to our customers, shareholders and other stakeholders. As we focus on execution, the safety of our employees and the community is always our number one priority.

To ensure that our critical operations continue to operate safely and remain available to serve our customers, we implemented several safety measures to protect the health and safety of our people. Thanks to the excellent response of our leadership team and the planning and coordination of our teams across the organization, we were able to mobilize our workforce and protect our people with limited disruptions to our daily business.

Over the past several months AltaGas has continued to execute across the board. Our distribution in midstream systems continue to perform in line with our excellent safety and reliability standards.

The capital investments we made to build a stronger pipeline and technology, infrastructure has allowed us to leverage automation and manage to work remotely minimizing our in person interaction. One of the most important core values is our commitment to operational excellence in all that we do.

Our operations and construction teams continue to perform exceptionally keeping our construction program on schedule and on budget. AltaGas financial performance for the first quarter reflects the strong operating performance across all our businesses.

Let me turn to our strategic focus, which remains unchanged. The stable and predictable cash flows of our utility business, combined with our higher growth midstream assets provides a unique investment proposition.

The quality and diversification of our assets positions us to deliver sustainable, attractive risk adjusted returns over the long run. At our utilities, our focus has been and will continue to be on delivering an excellent value proposition to safe and reliable systems and excellent customer service.

The importance of the capital investments that we have made over the past several years have resulted in significant value during these difficult times. These investments, including the utilization of accelerated pipeline replacement programs, has made our infrastructure stronger and has improved our ability to efficiently deliver affordable, reliable, clean energy to our customers.

While we continue to monitor the COVID-19 situation, our capital investment program remains on track. The investments that we are making today are expected to provide meaningful customer benefits over the coming years.

The flexibility provided by our annual pipeline replacement program mechanism, combined with our operational cost effectiveness has helped position our utility to meet its financial commitments and continue to make long-term investments during this uncertain time. Our commitment to delivering on the objectives that we have previously outlined today has resulted in a $6 million reduction in operating cost year-over-year and a 19% reduction in the incoming leak rates.

We attribute this success to our collaborative and forward thinking relationships with our stakeholders and our regulatory commission. The collaboration and forward thinking of our state Commission has enabled us to improve our delivery system and better prepare us for these unprecedented times.

We continue to expect to generate significant customer shareholder value over the coming years. Our utility strategy is centered on safety and reliability, capital discipline, growing the rate base to accelerated programs and reducing cost.

We continue to drive towards a performance based culture to further enhance our capital efficiency and returns while maintaining affordable rates for our customers. In 2020, we expect over 10% earnings growth in our utilities segment underpinned by approximately 8% to 10% rate base growth.

Higher achieved returns through rate case settlements in 2019, increased utilization of accelerated replacement programs, lower leak remediation and operating costs and improving our customer experience. Similar to the utility, our strategic vision of midstream remains unchanged.

And we believe the market opportunity for exports has never been greater. In times when producers and consumers are dealing with the challenges of economic uncertainty and lower energy prices, we expect to help ease these impacts on customers by providing a much needed market to our RIPET and Ferndale facilities.

Our priority for 2020 continues to be about execution in our core business. Our midstream team had another terrific quarter, achieving record rail card offloading and vessel loading rates at RIPET.

Despite rail blockades and the global health crisis, we loaded six ships in this quarter, keeping us on track to achieve our export goals 50,000 barrels per day by year end. We continue to see strong and stable demand in Asia for Canadian propane exports with 50,000 barrels per day of supply secured as of April 1, and approximately 33% under long-term pooling agreements, demonstrating that our unique value proposition to deliver on our global export strategy is resilient and sustainable.

We further expanded our integrated strategy in the first quarter with the completion of North Pines and Townsend into the expansion. Both expansions started flowing gas in April and we'll continue to contribute to earnings in the second quarter.

And we added additional capacity for rail terminal at North Pine to handle the additional volumes. We firmly believe our strategy in the long-term fundamentals of the Montney Basin, strong economics of the Montney are positioned to continue to attract capital once the supply and demand stabilize.

And our market diversity and access to higher valuation markets will remain critical to Western Canadian producers. With a significant recent growth in our supply commitments and tolling in volumes, and with our partnership in Petrogas.

We continue to build a business focused on exporting and enhancing our complimentary Northeast BC strategy. Our RIPET terminal and our future ownership in Ferndale has the capability to provide 120,000 barrels of LPG export capacity to cleaner energy to Asia.

We continue to believe in the long-term fundamentals of our structural shipping advantage, which provides us great confidence that our facilities remain highly utilized to connect North American production to the demand in Asia. The recent demand destruction we have witnessed in North America highlights the need for access to global markets.

Our ability to provide producer market alternatives, including significant access to global markets, further distinguishes AltaGas in the Canadian midstream space. While the COVID-19 pandemic has created significant uncertainty throughout the economy and resulted in a significant decline in energy prices, our midstream businesses sell position to continue to deliver on its objectives and its commitments.

We do not currently expect any material financial or operational impacts as a result of the pandemic. Additionally, as a result of the actions that we took last year, our RIPET output is 85% hedged, including firm commitments for 16 cargos and we continue to see strong demand for the remaining spot cargos.

Our midstream business is fully funded. And we see a capital light program going forward that will position us to harvest additional cash flows into the future going forward.

Despite the current economic challenges, the strength and diversity of AltaGas underlying business positions us to deliver on our forecasted financial results and guidance, while at the same time maintaining our investment grade ratings and most importantly, continuing reliable delivery service for our customers. In summary, AltaGas remains well positioned to continue to execute both the near and long-term horizon.

Over the past year we've focused on building a business that is resilient and able to deliver operational and financial stability for our customers and shareholders. We remain laser-focused on extending that track record today and every day.

Even throughout these unprecedented times AltaGas maintains ongoing access to capital, which reflects the strength of our balance sheet, as well as the overall resilience of our underlying business. We were strong diversified energy infrastructure company with strategic assets and ample investment opportunities and our utility in midstream businesses.

We offer tremendous value to our customers, communities and shareholders. And I am confident that we will [Technical Difficulty] this current challenge on solid footing.

With that, I will turn the call over to James to review our financial results.

Thanks, Randy, and good morning everyone. During the first quarter of 2020 AltaGas revises reportable segments to better align with our core focus areas in utilities and midstream.

Our WGL retail marketing business now rolls up on the utilities and all remaining power assets are included in the corporate other segments. Prior period segment information has been restated to conform to the current reportable segments.

As you can see from our financials, we saw strong first quarter results from both the utilities and midstream segments with the utility segment, accounting for approximately 75%. of normalized EBITDA.

Consolidated normalized EBITDA came in at $499 million, approximately 4% higher than Q1 2019, which is right in line with our expectations and gives us a solid start to 2020. Excluding a $34 million reduction in normalized EBITDA associated with the $2.2 million in non-core asset sales that we executed in 2019 to strengthen the balance sheet.

Our first quarter normalized EBITDA would have increased by over 11% compared to 2019. First quarter growth was driven by strong operations at RIPET, inclusive of a one time realized hedging loss of $6 million related to supply volumes, which were not sold until April.

And growth in the utility segment of $34 million from all of the rate case work that was completed in 2019 as well as increased revenue from accelerated pipe replacement programs. Normalized net income was $229 million or $0.79 per share up approximately 3% over Q1 2019.

This increase is due to the previously referenced EBITDA growth along with lower amortization and depreciation as a result of our 2019 asset sales and a $23 million reduction in quarterly interest expense. These were partially offset by higher income tax expense during the quarter.

Strong operating performance in the utilities and midstream business also flowed through normalized funds from operation, which was up approximately 12% year-over-year to $420 million. First quarter FFO also benefited from lower interest expense driven by both lower average debt balances due to repayment of debt and lower average interest rates.

On March 31, 2020, we completed the sale of over 37% interest in ACI for cash proceeds of approximately $369 million. This marks another significant milestone for AltaGas as the proceeds provide us greater flexibility in our ability to delever the company.

Our self funded 2020 capital program remains intact after a strong first quarter. We are well positioned to fund our estimated $900 million capital plan through internally generated cash flow in normal course borrowings and we maintain strong liquidity with approximately $4.1 billion available to us at the end of the quarter.

Now diving into the segments and results and drivers, starting with our utility segment. Normalized EBITDA at our utilities was $369 million for the quarter approximately 10% higher than the same quarter last year.

The largest driver of growth year-over-year was at Washington Gas which was positively impacted by the Maryland and Virginia rate cases, higher revenues associated with ARP spending, lower operating expenses of $6 million that Randy mentioned earlier and a stronger U.S. dollar.

These positive factors were partially offset by warmer weather in DC. We call we have low decoupling in Maryland and Virginia so the results in those jurisdictions were not impacted by the warmer weather.

SEMCO also contributed to higher normalized EBITDA driven by new rate cases that came into effect at the start of this year, partially offset by warmer weather in Michigan. Shifting to our midstream segment, normalized EBITDA was $120 million for the quarter.

Factoring in the last EBITDA of approximately $14 million associated with the 2019 sale of Stonewall and Central Penn, our core midstream business grew at approximately 5% with RIPET being the largest contributor. Results in our base midstream business remain strong and we continue to see healthy volumes at our plants and new volumes from the Nig Creek facility.

Favorable butane spreads provide a strong uplift to our NGL marketing business along with higher AFUDC related to Mountain Valley pipeline. These positive factors were partially offset by lower storage spreads and transportation margins from WGO midstream assets and lower equity earnings from Petrogas.

In the first quarter we exported 35,141 barrels per day to markets in Asia through RIPET, averaging two ships per month despite the impact of rail blockades, which impacted deliveries into RIPET in February. RIPETs reported EBITDA was negatively impacted by $6 million realized hedge loss on supply volumes that are exported in April, excluding the timing impacts of the hedge loss first quarter EBITDA would have been about $33 million or approximately $10 per barrel.

That said the realized hedge loss will have a positive impact on second quarter margins through lower inventory costs. As Randy mentioned earlier, we are achieving record railcar offloading and vessel loading rates and remain on track to hit our 50,000 barrel per day export targets during 2020.

We have secured the full 50,000 barrels of supply as of April 1 with approximately 33% now under long-term tolling agreements. Turning to our capital program and funding plan the work we did last year to reposition the company to delever the balance sheet is paying off.

We are well positioned to navigate through the coming quarters, investing primarily in our low risk utilities business using our self funding model, while maintaining a strong balance sheet and an investment grade credit rating. Our $900 million capital program for 2020 is largely invested in our utilities with approximately 75% to 80% allocated to the segment.

We expect to earn immediate returns on roughly 80% of our utility capital through increased utilization of accelerated replacement programs and managing maintenance spending to align with depreciation. The majority of midstream capital was focused on the Townsend and North Pine expansions, which were recently put into surface.

Volumes from these projects will be ramping up over the next few months and we expect to see earnings contributions in the second quarter. As I mentioned, we maintained significant liquidity to further minimizes our funding and capital market risk well beyond 2020.

At the end of the quarter, we had approximately $4.1 billion of liquidity available to us, $3.8 billion in available capacity on the credit facilities and $335 million of cash on hand. We have debt maturities of approximately $980 million in 2020.

And we're able to refinance approximately $780 million in debt maturities year-to-date. Maintaining an investment grade credit rating is fundamental to our strategy as it provides us with greater financial flexibility at times like this.

We have been proactive in communicating with the rating agencies and have a constructive relationship with them. Our credit ratings remain unchanged.

On April 3, Fitch affirmed their BBB stable rating for AltaGas. And on April 27, S&P affirms that their A minus stable rating for WGO, citing no material persistent impact from the COVID-19 pandemic.

Despite this challenging environment, our priorities have not changed and we continue to focus on maintaining a strong balance sheet, funding organic growth and returning capital to shareholders. Our outlook for 2020 remains unchanged with anticipated normalized EBITDA in the range of $1.275 billion to 1.325 billion and normalized EPS of 1.20 to 1.30 per share, underpinned by increasing contributions from our core businesses and lower interest expense due to lower leverage and interest rates.

As a diversified low risk, high growth utility and midstream company, we have positioned ourselves to deliver stable and reliable results through 2020. We expect the utility segment to contribute approximately 60% of 2020 estimated normalized EBITDA.

Our rate regulated utilities provide stability and growth through their steady and growing residential customer base, protected revenues and limited sensitivity to weather. Approximately 70% of our utilities revenue comes from residential customers and having effectively delivered safe and reliable service through our strongest demand quarter, we feel comfortable entering the spring and summer months, which typically represent only 20% of annual demand.

Approximately 70% of our utility revenue is protected through fixed billing charges decoupling another tracking mechanisms, which help minimize the impact of low variability associated with weather and other demand related pressures such as COVID-19. AltaGas currently has decoupling or demand trackers in Maryland and Virginia and applied for them in the District of Columbia under the current rate case.

As Randy noted, we have been actively working with regulators in DC, Maryland, Alaska, Michigan and Virginia have all issued orders that will allow us to track and recover any incremental COVID costs including [indiscernible] through the establishment of regulatory assets. In midstream, our unique export strategy is underpinned by strong long-term fundamentals.

The demand for cleaner energy and propane in Asia is growing the long-term supply demand imbalance supports the need for Canadian exports. And the Montney continues to have some of the lowest breakeven prices in North America.

We have limited direct commodity price exposure in our midstream business. About a third of RIPETs 2020 estimated volumes are contracted under long-term take-or-pay agreements with an average remaining term of about seven years.

We have also hedged approximately 80% of RIPETs 2020 volumes at prices similar to 2019, including contracted tolling arrangements, approximately 86% of RIPETs propane export volumes are hedged for 2020. At our other midstream facilities, we have hedges in place for approximately 93% of our 10,000 barrels per day of frac exposed NGL volumes.

In summary, we are confident in our 2020 outlook with 60% of 2020 estimated normalized EBITDA coming from utilities segment and 80% from utilities and investment grade counterparties. We also expect some tailwinds with a stronger average Canadian U.S.

dollar exchange rate with approximately 70% of EBITDA being supported by low risk regulated U.S. assets.

Our strategy was designed to result in reliable, attractive long-term earnings. And the work we have done to-date provides us with financial flexibility.

I believe that the combination of our strategy and strong financial stability provides us with the resilience to work through these unprecedented times. With that, I will turn the call over to the operator to facilitate the Q&A session.

Operator?

Two questions. The first one is just on the visibility and the progress that you've made so far in reducing costs at WGL which then will allow you to improve your ROE.

The $6 million reduction in leak remediation costs that I saw in Q1? Can you just give a sense of how you see the rest of the year playing out?

And wouldn't the $6 million be a significant portion of what the cost is, a significant portion of the cost improvement that you're expecting in 2020?

Yes, Rob. This is Randy.

Look, I think we're making excellent progress in our operational excellence model. And we're just at the beginning.

I think the investments that we're making in our accelerated pipeline replacement program is reducing expenses. And it's reducing leaks, much more than historically.

And there's clearly a correlation between this pipeline investments as shown in this quarter that reduced our operating costs. So we remain on plan for our target this year.

In fact, we're ahead of it. And again, if you pointed out it's a combination of our operational excellence model as well as updating our rates and our jurisdictions that are going to get us to allowed return.

So, a bit ahead of schedule, but we're consistent with the guidance and the plan that we put forward. And we'll continue to update as we move forward through the year.

All right. That's helpful.

And then just pivoting over to RIPET just want to get a sense of how many shifts you did in April as well as you had 50,000 barrels a day supply available to you in April, but you do talk to a 50,000 barrel a day kind of exit rate in terms of RIPET, so it does imply that you could be hitting 50 sooner rather than later.

Yes, I'll let Randy Toone comment here, but I will tell you where we are. We have experienced increasing Canadian demand access this unique capability.

And we got a lot of strong interest from suppliers and clearly strong demand in Asia for the premium prices. The limitation really is on the rail challenges, but the team is working every day to maximize and improve the logistics to reach the maximum capacity.

Randy comment on the ships in April.

Hey, Robert. Randy Toone.

We did two ships in April, which was consistent with plan and our plan is to do three ships in May. As far as 50,000 barrels go, we have contracted 50,000 barrels.

That doesn't show up all at once. So we roughly did about 45,000 barrels through April and our target is still to be 50,000 barrels the rest of the year.

I also wanted to follow up on RIPET too and try to dig into this realized [indiscernible] to $6 million, you basically bring inventory forward in the quarter and you took off some edges you see a benefit in Q2 is that -- what was going on there?

Hey, Ben. It's James.

Yes, that's exactly right. I mean obviously we settled those hedges and when you settle a financial derivative, you basically have to realize the gain or loss associated with it.

The physical delivery of that inventory though was in April so the cost of that inventory that was sitting in the tank at RIPET was lower as a result of that hedge loss being realized in Q1. So the margins in Q2 should be better as a result of that lower inventory.

Okay. And I would assume that that's mostly on the non-tolling portion which I would assume the tolling propane cost is a pass through, is that correct?

Yes.

Okay. And then this inventory, is this something that persists in the second half as well as that's too to be determined?

No. This is a timing issue just related like I said to the settlement of the financial contracts relative to the physical delivery.

If the contract had been rolled, if the financial derivative had been rolled and this would have matched into Q2 deliveries. So, it's a one time timing issue.

Okay. All right.

Can you -- let me switch over to dividend and then maybe talk about dividend sustainability and you talked about the strength and resiliency of your business maybe -- may speak to the dividend payout ratio targets and how do you think about those payout ratios and as you see through COVID-19 impacts?

Ben, I will let James touch on that. But as you know, about a year and a half ago, we had substantial cut in our dividend and from that point we've been executing consistent to the plan in terms of looking forward in our business plan and it's a key part of our business strategy.

I'll let James go ahead and talk about the specifics.

Yes, Ben, I think Randy touched on one of the most salient points. I mean, the tough decision to cut the dividend was taken in 2018.

And it was cut to a level that we consider to be sustainable. If you look at the FFO growth that we've generated year-over-year, and we're reaffirming our guidance with respect to EPS growth at the current level of $0.96, that's about a 70% to 75% payout ratio.

So we consider it sustainable from an FFO standpoint considered sustainable from an EPS payout standpoint and it is underpinned by continued strong growth in the cash flows of our utilities that utility EBITDA generation will continue to represent the majority of our business going forward and we feel that that's a strong underpinning and support.

All right. That's great.

And then, may be one last one to me any sort of timing update on the put option Petrogas is, is there a update to get a respond back?

Yes. Well, as I stated before, we're in the evaluation process period, and I'm not really able to fully discuss our strategy, but I can tell you that taking control of interest in Petrogas will allow us to consolidate EBITDA, provide monthly cash flow versus our equity distributions.

The put process is in the process and at this point, I wouldn't want a speculate or provide details until we have more certainty and really into the timeline. We're working through the process.

Just a follow up on to Ben's didn't question on the Petrogas. What factors need to be in place for you to exercise your conversion of the press there to increase your ownership to 37%?

And might that happen just before you take ownership or what are the puts and takes on that front?

James, why don't you go ahead and take that?

Linda, we do have the ability in the right under our agreements to exercise our press and convert them into common. We haven't crystallized our thinking but right now, the most desirable approach for us is to most likely do that conversion before we close the deal.

Okay. Thank you.

And what were the drivers for the 12 million year-over-year decline in Petrogas, was that your crude oil marketing something else?

Yes. It was predominantly crude oil marketing side of the business and some realized hedge losses at Petrogas in Q1 relative to Q1 of 2019.

Okay. Thank you.

And maybe just bigger picture, your discussions with the rating agencies look stable, clearly your business is very resilient. But I'm just wondering if you could give us a sense of -- if you're still on track to achieve 5.5x debt to EBITDA by the end of 2020.

And keep it and how much further based on your plans might you be able to deleverage in 2021? And is that still an appropriate target or might there be some moving goalposts where you further shift that?

Yes. I mean, if we look at our current outlook for the year that we're reaffirming coming here today, we feel that we can get to the 5.5 as target by the end of this year, just given the stability in the utility business and obviously, the fact that we've hedged a big portion of our midstream cash flow.

So we do feel comfortable that 5.5x is possible looking beyond 2020, obviously, we continue to have at our disposal non-core assets that that we'd like to continue to monetize. And that's going to help us to further strengthen the balance sheet, moving forward, beyond 2020.

So we still feel that those are achievable and with a better macro backdrop, can move forward with some of those asset monetization, but we still have at our disposal on the power side.

That's helpful context. And I realize that you're busy with ensuring everyone's safe and your continued operations during the pandemic.

But as you look beyond that, I'm just wondering from a strategic perspective, if you can comment on what factors might need to be in place to consider potentially deepening your relationship with Idemitsu in your joint venture in the past. There's been musings about further petrochemical investments clearly, there's a valuation disconnect between propane that you're leveraging through RIPET.

And I'm just wondering if there might be any sort of possibility of further investments down the road and what attributes would need to be in place for those to be compelling to AltaGas?

They're an excellent partner and we're very fortunate Idemitsu to have them as an excellent partner. And right now we're staying the course.

We certainly -- we're looking always at being opportunistic, my view more macro on partnerships, is that if you can get one that, is one plus one equals three, then you've got some real value in what you're doing. So we'll continue to look at ways into the future to expand.

But, right now, as you said, we've got our laser-focused on executing the plans that we've put in place, maximizing the utilization of RIPET and ultimately integrating Petrogas. So your points are well taken.

And we'll be opportunistic. But at this point, we're pretty well focused on the task at hand.

Okay. And just I'll jump in the queue.

But just another kind of strategic updated thought from you on, what sort of synergies do you still see between your midstream and utilities businesses, and at what point might there be more benefit in focused separate operations of those two platforms?

I've discussed this before Linda and overall we have two excellent businesses and we are leveraging synergies with around operational excellence, gas control. Our utilities does an excellent job of managing its product each and every day.

And then in logistics associated with moving our people and our product every day and they're operationally excellent in what they do. Similar to our midstream business and we're building a world class midstream business and leveraging a lot of those capabilities and infrastructures that go across both businesses are combined and two businesses running under excellence around engineering and construction.

But as we continue to add scale and grow those businesses, we'll look at into the future and whether it makes sense for those businesses that are large enough to be separate, but at this point, that's way down the road. And we see value right now and these two businesses combine at AltaGas.

You've answered most of my question, but I do want to go back to Petrogas for a minute. Given the extreme volatility in the energy market, it seems quite plausible that there's going to be a divergence of opinion on valuation.

So I'm wondering, in that context, what options do either of the parties have to prefer a potential transaction?

Well, with respect to your latter point, our agreements are pretty clear as we go through a variety of different independent evaluation stages within as I said, we're going to get into the details of that and I'm confident that that will be an accretive transaction. Obviously, strategic in terms of our -- around drawing our export capabilities, so the process will go forward, we will be operating it down the road and but it's a significant amount of time and profit that goes through with independent expert valuations.

More to come.

Okay, thank you. That's helpful.

And maybe one question for Randy. Randy Toone, I'm just curious on the trends we are seeing on the customer behavior in the gathering and processing business, and what type of impact that might have on pay for service volume.

So, yes. Luckily we, like Randy said, we have a capital light program.

So we've built out our processing capacity through 2017 to 2019 and little bit in 2020. And that processing capacity is very valuable because of our integrated midstream offering.

And so, we do see volumes coming into our facilities and we do have fee-for-service behind that, but there's no doubt that there is going to be a pullback given what's going on in the commodity environment, but long-term the Montney is one of the best resources in the world and it will be developed and we think we have great assets in the right spots of the Montney. So...

If I can just -- high level just dig in a little bit to the outlook or the guidance that you've got. In the last quarter, you cited weather as well as WLG midstream is being dragged on COVID-19.

You've got the regulatory protection and seasonality helps. I think the utility should probably be okay unless you have other comments, but a couple of other factors.

Can you comment about the unregulated detailed business can what customer demands on that might look like as well as for Randy, you commented on the midstream volumes, but it sounded a little bit more longer term, can you just talk about real-time what you're seeing in volumes versus say Q1, and if there's any expectation of volumes falling off at the end of the year?

Yes. Well, I'll take your first point on the retail business.

It's a very small part of our overall businesses around our utility and we obviously stress test all of those related to the volume. So, from the gas side of the business, we're into -- just come out of our largest [indiscernible] in the seasonal businesses there so left volumes in the second and third quarter, a little bit of power exposure, but overall, we expect those to be down but not a material impact overall to our guidance going forward.

Your second question was with respect to the volume growth behind our system, right?

Yes.

Yes. So, as we disclosed we just started up our challenge and expansion.

So we've added the deep cut capability to Townsend and that's -- those volumes are going to ramp up over the next few months. Our customers are -- they've had drilled those wells and there's volume behind pipe and they plan on bringing those wells on.

They do see the value of the gas price right now. Some of our customers have shut in their oil wells that have little -- very little gas or associated gas behind them.

So we do still feel confident that that even near-term the volumes will be there. We have seen some shut ins around our Mountain Gas plant but it's not material to the overall midstream business.

And like I say we -- long-term we think the Montney is going to be developed.

And I would say that we fully believe that the export is the future for North America, propane or butane. And we're well positioned for that.

And in that area of our business just continues to grow. And we've experienced that increasing demand for that unique capability.

And while our integrated approach will continue to grow, as Randy had said, it may moderate. But we're in an excellent position as we've not seen a lot of money into these businesses.

And we feel that the growth in RIPET which is generating significant cash and we feel good about the age and demand in the margins in this business. So that structural advantage in the access to global markets is where we're going to continue to grow.

And we've got a lot of interest from large aggregators. So, again, not everything will come through our facilities, but we'll continue to see demand coming in from across the basin.

Maybe if I can just summarize, if I think about or where you were standing in December when you set the guidance, whether in first quarter is a headwind, which also was -- both the utility and review on midstream and then a little bit on the unregulated retail, it doesn't sound like there's a lot happening in midstream volumes and then the tailwind being taller. Are there any other changes that you can envision in December, pushing the numbers within guidance?

Well, James can cover the FX is obviously a tailwind as well, right now.

Yes. That's I mean, that is a material factor.

I mean, if you look at the sensitivities in our MD&A, $0.05 about a $35 million upside from an EBITDA standpoint, so the tailwinds there are significant Robert but I want to go back to your comments on the retail side of the business. That is an extremely small piece of the overall business, so, even if we had -- and I'm throwing this out there as an example, even if we had a 20% pullback in demand there, I don't think that that really moves the needle.

It represents about 3% of our consolidated EBITDA.

Turning to debt leverage, you've got the 5.5x target. I'm just wondering, what are you seeing right now on incremental bad debt expense and any temporary payment deferrals?

So even though you've got the regulatory asset treatment, I'm just wondering, is it material enough to impact your ability?

Yes. It's a good question.

So we have not seen at this point any material spike in or slowdown in collections. I mean, if I -- you saw obviously in Q1, we had a working capital unwind.

That's continued into the entire month of April. So we haven't seen anything material there.

You if we go back to the global financial crisis, I think back in a '08, '09, I think timeframe, they saw about a $10 million spike in bad debt. So I don't think that that puts pressure on, I think from a coverage ratio standpoint, the regulatory asset accounts are going to provide some assistance for us and not take any of that P&L hit on those ratios.

But obviously, working capital would have to, obviously grow a little bit and we'll have to take on a little more leverage. But that's all been discussed with the rating agencies when we reached out into a proactive and we continued to feel comfortable with the most salient metrics that they track, especially S&P.

And that's our FFO to debt metric.

Just wanted to had, this is Randy. As I mentioned we're entering the lower usage month of the utility, right?

We have the six months with the weather and to weather the storm before there's really any, any impact. And so I think we're in an excellent position.

When this gets under control and we get back to normal in the fourth quarter.

That makes sense. And just last, still on the leverage, what do you think is an appropriate level for your company, longer term just given the 5.5x metric and that's kind of your calculation.

It gets closer to 6 from the rating agencies with the press, but you don't see a lot of utilities up at that level. And certainly we see midstream companies up in that level.

So where would you like to be longer term?

Well, we've said consistently and both Randy have said -- Randy and I have said it since joining that we'd like to be under 5x, I mean, if you exclude the press, that's probably somewhere a little higher than if you include the press that's somewhere a little higher than five but, if you look at some of the Canadian utilities they've got -- they've got leverage that that it's in the high fives from a debt to EBITDA standpoint. But I'll go back to what we said last year and we continue to manage towards that we've got enough in the way of a non-core assets still available to us to monetize as things get better.

And we get a better macro backdrop that allow us to get under 5x debt to EBITDA and the medium to long-term.

And we want to be down below that we will be, the environment is a bit clearly with asset sales, but we're not desperate to sell and in the long run we have some excellent remaining non0core assets. And we'll work in the long-term throughout this year to continue to monetize those and be able to meet those metrics going forward.

So perhaps following up on the last part of questions on utilities, can you elaborate a little bit? I mean, obviously you continue to articulate these cost savings targets and obviously, you're entering in the low season of utilization with respect to gas buildings.

But that being said, are you still on track? Do you see any -- we didn't speak about the sales impacts in aggregate through the course -- the cumulative course of the year?

Do you see any pressure relative to your ability or your plan to achieve your earned ROE already articulated. Just want to make sure that you feel good A) Against the sales and B) to the expense which necessary to raise those cost targets to offset and mitigate those concerns.

Confident, we're going to we're going to hit those targets. I'm going to let Blue Jenkins, he will give you a bit more detail because he and the management team that is in place is doing an excellent job and is on track.

So Blue I'll let you comment on Julien's.

Yes, thanks, Randy. Julien, good question.

Now as you recall and you can see it in the presentation. So the ROE process will continue improvement on the return, will continue this year and into 2021.

So we don't see anything both near term as a result of COVID or anything else that would impact that process. As you saw in Q1, we're able to drive our cost down a bit better than budget.

We have a plan to continue to do that through the course of the year. So I think the actions we're taking, I think, given the revenue conversation that we've had earlier in terms of the rate cases and some of the protections that exist, I think we will get there by the end of '21 and it still feels pretty good from where we sit today.

Excellent and welcome. If I can ask a follow-up here.

Going back to the Midstream side of the business and you talked about confidence reaffirmation this year around RIPET, we'll probably talk about the actions you're taking now to derisk the business prospectively beyond the current year to firm up the outlook and especially looking at RIPET more specifically, your confidence level on sustaining cash flows and more importantly, probably scaling the volume still, given the backdrop?

Julien the simple answer is, I feel pretty good about it because we are consistently being approached by large aggregators who want access to our unique capabilities. So from a volume perspective and from a tolling perspective on our targets and derisking of these assets, I feel very good about that.

And that we're in a strong position to continue to meet those objectives. It's a very unique capability.

When you're in a point, as I said in my prepared remarks, when there's reductions in North American demand, access to global markets are absolutely essential and we're seeing strong demand -- strong demand on the supply side and strong demand on the Asian markets. So that gives me a great deal of confidence.

Got it. Your commentary is multi-year there, right?

I'm sorry.

Your commentary applies beyond '21, jobs including '21 onwards right on upscaling?

Yes, it does. My comment is related to 2020 and beyond.

Yes, just thinking about the midstream business here. I guess outside of lower fee for service volumes, curious if you've had or expect to have any further discussions with your non-investment grade customers with respect to restructuring any of the take-or-pay commitments across the portfolio, or perhaps any other form of support for your customers net backs just until commodity prices recover.

Or do you believe that the recent government's support that was announced through the EDC loans will be enough to see them through to the other side of this?

I think it's certainly a challenging time for many that, our decision to create the ability to export propane in Asia through RIPET in a unique value proposition is really helping our customers. And that's the role that we're playing the benefits of creating a new demand for Canadian producers, helping them get better net backs and help them position better to recover from the storm that they're encountering.

So now we will continue to work with them. We don't see any material and first of all, we're talking to all of our customers.

But as I said, we continue to expand our supply mix and customers and increasing with larger and diversified high quality aggregators.

Okay. Just switching gears, you guys touched on [indiscernible] just to clarify, as it relates to pursuing a potential sale of that asset at some point now that the new tolling agreement was approved in the quarter, or is that process simply just not feasible in this environment?

I think we -- I would say it's not feasible where we've got processes, and we were looking toward that. But as I mentioned, that we're -- we are not going to sell assets for less than the market value and we're in a strong position, we don't have to do that.

So you can imagine this environment that transactions around asset sales are a bit challenged. But that's a short run, I think in the medium to long-term, we'll be able to execute and get their value.

Okay, fair enough. And then last one here, maybe for James, you touched on the credit ratings just wanted to confirm that your corporate IG rating and stable outlook has been recently reaffirmed by the rating agencies or was that just for WGL?

And also, you mentioned the funding that's been executed year-to-date. Also wanted to confirm that, do you see the need to be in the debt market?

So over the remainder of 2020, I believe there's a small $200 million note that's due in June, or is the plan to wait until the economy reopens?

Yes, I know, that's good. So the first part of your question perhaps on the rating agencies, Fitch came out and affirmed the rating of AltaGas and the entire group of companies that that they rate, so that was inclusive of the utilities and WGL Holdings as well.

S&P put out a specific report on WGL and had no issues with ALA, so they left the rating where it is for ALA so BBB minus stable outlook. And in our conversations with BBRs, they didn't take any rating actions either.

So they left the ratings as they were when we -- they all came out in December as part of our annual review. On the refinancing and the $980 million in maturity $780 million of that was at the WGL Holdings and SEMCO level and those deals were closed at the end of April.

The $200 million maturity that we have coming up at ALA, we have enough capacity on the line to be able to repay that on maturity. And if we see credit spreads tighten and we see a window in the market, then we will access it at favorable pricing.

We have seen people access the markets and especially utilities and infrastructure companies with stable cash flows. And we feel that we've got those characteristics.

So we're just going to monitor things and decide when the right time is to do that refinancing longer term.

Obviously, it was a volatile quarter. But could you maybe give us some context on just how your risk management systems performed amidst the volatility and then any tweaks you made to your systems, in light of what happened?

James, I will let you go ahead.

Randy, you want me to take that? Yes.

Look, I mean, I just before I talk about some of the specific risk management practices and I just want to take the chance to reiterate that when you look at our trailing 12-month revenue, we're at 70% to 75% investment grade at the midstream business, right, and if you layer in utilities were well north of 80%. But in terms of risk management practices and things we do short-term with some of the counterparties that we have that are below investment grade.

I mean, we've always been marketing NGLs and gas for some of these entities. And as a result, we sell our tools first.

And if there's any AR balances remaining at a month end or quarter end, we typically have letters of credit, the backstop those exposures to our customers. And obviously, from a medium to longer term standpoint, we still feel confident that the assets that we have are positioned in a very prolific basin and as a result of that, it's a desirable basin when consolidation happens and some of the stronger producers can consolidate those positions, we feel that we're well positioned for those volumes to flow to our plants.

So that's, we've always been very active on the risk management front. And those are some of the examples of things that we do through this period.

And then any substantial changes to the policies are really steady as she goes. And everything held up really well, with the volatility that we saw.

Well, I think we've always had appropriate policies to deal with a credit risk assessment of our customers. So I mean, if your question is, have we become more aggressive on LCs, we've always been I think we've always been aggressive when it comes to dealing with sub-investment grade counterparties based on market demands for them to post their fees, I mean, even on cargos that we shipped to Asia if their sub investment grade and then we demand LCS, the backstop those exposures to us.

I just thought we have a very robust process from the mid to front office and the backup, we have our risk committee and policies and it's a this is a low risk, higher growth utility in Midstream Company, so it's a key part of how we manage this business every day. This is just a testament to when you stress the system as it was for many companies, how well we've held up and the quality of our risk management tool.

Yes, I guess that's the gist of it is, you had a Six Sigma event and everything held up really well.

Just one quick question. Probably directed to one or two of the Randy's -- I believe Randy in your opening remark you said 120,000 barrels a day of combined propane and butane export capability off the West Coast.

And I guess I recall, RIPET having a maximum capacity of 80 and the Ferndale facility is 30. So is there some optimization that you can see?

Yes. Look the optimization really is around logistics, right?

In the rail and the optimization these facilities can do those capabilities. But the limiting factor is really logistics around getting the number of ships out and being able to get the supply there.

So what I was referencing was that -- was underlying capability and the amount of ships that could be there. But the key driver is going to be about the rail and logistics to get the product to maximize.

And then, as I said, the team is working on that each and every day to work toward the logistics of maximizing supply and export point. Randy, I don't know, if you could add any?

It's Randy Toone. RIPET is capable of 80,000 barrels a day and Ferndale is actually capable of the 40,000 barrels a day not 30.

So that's where we get to 120.

Thanks, Julianne, and thank you everyone once again for joining our call this morning and for your interest in AltaGas. Just as a reminder, the Investor Relations team will be available after the call if you've got any follow up questions.

And that concludes our call this morning. I hope you enjoy the rest of your day and you may now disconnect your phone lines.