CALGARY, ALBERTA (Business Wire – March 1, 2024) – AltaLink has delivered on its Flat for Five promise to Albertans to keep its costs below 2018 levels for five consecutive years. At the end of 2023, AltaLink completed the fifth year of its commitment and is the only regulated utility in Alberta to have not raised rates above 2018 levels.
As part of its ongoing commitment to managing costs for its customers, AltaLink is also proud to announce it has reached a negotiated settlement with its largest customers for the majority of AltaLink’s 2024-2025 tariff. The settlement includes $38.8 million and $7 million in reductions to applied for capital expenditures and operating expenses, respectively. The Alberta Utilities Commission (AUC) approved the negotiated settlement on February 12, 2024.
“Reaching this settlement delivers significant value to all our customers with more than $45 million in total cost reductions over the two-year period,” said Gary Hart, AltaLink President and Chief Executive Officer. “Together with our customers during this negotiation, we stayed focused on carefully managing costs while ensuring we have the appropriate investment into the transmission system to maintain reliable service.”
Five matters excluded from the negotiated settlement, including the review of components of AltaLink’s wildfire mitigation plan, will be addressed through the normal tariff application process with AUC.
The negotiated settlement with customers was a highlight during a year where AltaLink achieved best-ever customer satisfaction results. AltaLink’s customer satisfaction results were 9.59 out of 10 during 2023.
“Our customers expect us to understand their business and deliver the reliable and affordable electricity they need,” said Mr. Hart. “We take pride in delivering great service to our customers and are looking forward to improving on our best-ever performance in 2024.”
AltaLink announces 2023 full year results
Today, AltaLink, L.P. announced comprehensive income of $297.8 million for the 12 months ended December 31, 2023, compared to $311.2 million for the same period in 2022. Our comprehensive income for the quarter and year ended December 31, 2023 decreased by $8.0 million and $13.4 million, respectively, compared to the same periods in 2022. The changes are primarily due to higher interest rates on short-term debt, higher operating costs mainly as a result of inflation, an actuarial loss compared to an actual gain in 2022, and lower revenue on equity returns on a lower rate base.
For the 12 months ended December 31, 2023, our revenue from operations was $976.5 million, compared to $952.8 million for the same period in 2022. For the quarter and year ended December 31, 2023, our revenue from operations increased by $6.6 million or 2.7% and $23.7 million or 2.5%, respectively, compared to the same periods in 2022. The changes are primarily due to recovery of higher allowable costs of transmission services, partially offset by the returns on a lower rate base.
As a partnership, AltaLink, L.P. reports its net income before income taxes; therefore its results are not directly comparable with net income reported by corporations that recognize income taxes in their financial statements.
AltaLink’s full financial results and management’s discussion and analysis can be found on AltaLink’s website at www.altalink.ca or on SEDAR at www.sedar.com.
Headquartered in Calgary, with offices in Edmonton, Red Deer and Lethbridge, AltaLink is Alberta’s largest electricity transmission provider. AltaLink is partnering with its customers to provide innovative solutions to meet the province’s demand for reliable and affordable energy. A wholly-owned subsidiary of Berkshire Hathaway Energy, AltaLink is part of a global group of companies delivering energy services to customers worldwide.
Significant highlights during 2023
AltaLink’s safe delivery of affordable and reliable electricity for its customers highlights its 2023 results.
- We fully delivered on our commitment to customers and Albertans by keeping our annual revenue requirements representing customer costs from 2019 to 2023 below the 2018 level.
- Our average customer satisfaction score of 9.59 improved compared to 9.57 in 2022. Our 2023 results were our best annual results achieved to date.
- Our employee safety performance as measured by total recordable injury frequency rate was 0.48, representing three injuries, matching our result in 2022. In November 2023, for the seventh consecutive year, we received the Electricity Canada President’s Award for Safety Excellence as the best performing transmission company with 300 to 1,500 full-time employees in 2022.
- Our average customer outage duration of 9.2 minutes increased marginally as compared to 9.1 minutes in 2022, which was our best annual result. In November 2023, we received the Electricity Canada 2023 Reliability and Resiliency Award which recognizes a utility that has showcased dedication in asset management, innovation in reliability, outage communications, and overall reliability and resiliency management as evaluated by an external panel of experts.
- We reached a Negotiated Settlement Agreement with customer groups on the majority of our 2024-2025 GTA. On February 12, 2024, the AUC approved the negotiated settlement agreement. Under the agreement, AltaLink will reduce its applied-for operating expenses by $7.0 million and sustaining capital expenditures by $38.8 million for the 2024-2025 test period. The agreement does not include AltaLink’s proposed wildfire deferral account, certain investment programs within the wildfire mitigation plan, and actual and forecast salvage expenditures from the 2019-2023 GTA and the 2024-2025 GTA, respectively. These items will be heard in an AUC hearing in March 2024.
- On May 6, 2023, the Province of Alberta declared a province-wide state of emergency due to wildfires. In May and June 2023 wildfires in Alberta burned more than 1.9 million hectares of land, the most in Alberta’s history. AltaLink’s transmission system was impacted by wildfires in the Edson, Drayton Valley, and Brazeau areas of Alberta. None of these fires initiated from AltaLink’s operations. AltaLink restored service to all customers impacted from these wildfires by July 3, 2023, and completed all structure repairs by August 10, 2023, making this AltaLink’s largest restoration efforts to date. AltaLink filed an application for cost recovery regarding the damaged transmission lines on December 20, 2023 with the AUC.
- On October 9, 2023, the AUC issued its decision on the GCOC for 2024 and beyond for Alberta’s regulated electric and gas utilities, approving a set equity ratio and a formula to determine return on equity. The AUC set the deemed equity ratio of 37% and set a notional return on equity of 9.00%, which is subject to formulaic adjustments utilizing 30-year Government of Canada bond yields and Canadian utility spreads. On November 20, 2023, under the approved formula, the AUC issued an order approving 9.28% as the final return on equity for 2024 for Alberta utilities.
- On November 14, 2023, the Alberta Court of Appeal overturned the AUC’s decisions regarding the legality of the current customer contribution regime and the AUC’s ability to deny a utility its return on investment. In its decision, the allocation issue (between transmission facility owners and distribution facility owners, who is entitled to the investment) as well as the fair return issue (no one is allowed to earn a return on the investment) were returned to the AUC for rehearing and reconsideration on the basis that the AUC did not provide adequate notice that it was considering disallowing any utility from earning a fair return on the investment. The Court remitted the fair return issue and the allocation issue back to the AUC so that the appellants are provided an opportunity to present their case fully and fairly.
- We earned comprehensive income of $297.8 million compared to $311.2 million in 2022. Our comprehensive income decreased primarily due to higher interest rates on short-term debt, higher operating costs mainly as a result of inflation, an actuarial loss compared to an actual gain in 2022, and lower revenue on equity returns on a lower rate base.
- We invested $279.0 million in capital assets compared to $230.0 million in 2022 to ensure continued electric system reliability, to replace assets damaged by wildfires, and to connect clean energy generation.
This news release does not constitute an offer to sell or the solicitation of an offer to buy AltaLink’s securities in any jurisdiction, including but not limited to, the United States. AltaLink’s securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”), or any state securities laws and may not be offered or sold in the United States except in certain transactions exempt from the registration requirements of the U.S. Securities Act and applicable state securities laws.
Except for the historical and present factual information contained herein, the matters set forth in this news release, including words such as “expects”, “intends”, “projects”, “plans”, “anticipates” and similar expressions, are forward looking information that represents management of AltaLink’s Internal projections, expectations or beliefs concerning, among other things, future operating results and various components thereof or the economic performance of AltaLink. The projections, estimates and beliefs contained in such forward looking statements necessarily involve known and unknown risks and uncertainties, which may cause AltaLink’s actual performance and financial results in future periods to differ materially from any projections of future performance or results expressed or implied by such forward looking statements. These risks and uncertainties include, among other things, those described in AltaLink’s filings with the Canadian securities authorities. Accordingly, holders of AltaLink securities and potential investors are cautioned that events or circumstances could cause results to differ materially from those predicted. AltaLink disclaims any responsibility to update these forward looking statements.
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For more information please contact:
Investor Relations
Chris Lomore
Vice President, Treasurer
AltaLink Management Ltd.
Phone: 403.267.3446
E-mail: Chris.Lomore@AltaLink.ca
Media Relations
Scott Schreiner
Vice President, External Engagement
AltaLink Management Ltd.
Phone: 403.267.2176
E-mail: Scott.Schreiner@AltaLink.ca