Benjamin Pham

Benjamin Pham questioned whether Brookfield Renewable Partners' battery storage opportunity primarily involves greenfield development, particularly from the Neoen acquisition, or if M&A plays a significant role, and also asked about the expected revenue model for storage (contracted vs. merchant arbitrage). He then inquired about Brookfield's current stance on offshore wind, especially in Europe, and followed up on the potential to opportunistically acquire European offshore wind assets reaching end-of-contract life and becoming merchant-like.

Answer

CEO Conor Teskey stated that Brookfield is in a fortunate position with a large organic development pipeline for batteries, significantly boosted by the Neoen acquisition, but is also actively looking at M&A. He highlighted a positive evolution in the battery revenue model, moving from arbitrage to long-term tolling or take-or-pay capacity contracts, exemplified by Neoen's large project. For offshore wind, he noted that Europe is becoming more constructive, with opportunities being evaluated against other portfolio investments. He confirmed interest in acquiring merchant-like European offshore wind assets if Brookfield's power marketing capabilities could de-risk them with new long-term contracts, though he noted it's not the largest opportunity set.

Benjamin Pham from BMO Capital Markets inquired about nuclear's projected percentage of Brookfield Renewable's business in the next five years, potential for a new business line, and any internal or ESG constraints on nuclear exposure. He also asked about target returns for the Santee opportunity and Westinghouse synergies.

Answer

CEO Connor Teskey stated no internal constraints, with capital allocated based on risk-adjusted returns. Nuclear is currently ~5% of FFO, expected to grow but still far from hydro's ~40%. He confirmed nuclear construction/development would target 'well and meaningfully above' the 12-15% blended return, with Westinghouse's economics assessed separately for its services.

Benjamin Pham asked about nuclear's potential percentage of Brookfield Renewable's business in the next five years, any internal or ESG constraints on its exposure, the target returns for nuclear opportunities like Santee Cooper, and how Westinghouse synergies are considered in total returns.

Answer

CEO Connor Teskey stated there are no constraints on nuclear exposure, with capital allocated based on best risk-adjusted returns. He noted nuclear is currently about 5% of FFO, expected to grow but still far from hydro's 40%+. For construction/development in nuclear, returns would be 'well and meaningfully above' the 12-15% target. He clarified that Westinghouse's economics are separate from BEP's ownership returns, providing competitive advantage and expertise but not blended to justify transactions.

Benjamin Pham from BMO Capital Markets asked about the near-term integration priorities for the Neoen acquisition, the geographic evolution of data center power demand, and the reason for the year-over-year decline in the Sustainable Solutions segment's EBITDA.

Answer

Connor Teskey, an executive, outlined a three-part plan for Neoen: accelerating its development pace by providing capital, integrating it into Brookfield's platform to leverage scale and financing, and initiating an asset rotation program to sell derisked assets. He noted data center demand is still concentrated in North America and Western Europe. An unnamed executive explained the Sustainable Solutions segment's year-over-year decline was due to a one-time gain on a financial asset in India in the prior year's quarter. Teskey also added that Westinghouse is tracking to underwriting with a strong order book.

Benjamin Pham asked about the battery storage opportunity, specifically whether the plan is primarily greenfield development or if M&A opportunities exist, and if the revenue model for storage is expected to be mostly contracted or include merchant arbitrage. He also sought an update on Brookfield Renewable Partners' stance on offshore wind, particularly in Europe, and the potential for opportunistically acquiring merchant-like assets as contracts expire.

Answer

CEO Connor Teskey stated that Brookfield Renewable Partners is in a fortunate position with a very large organic battery development pipeline, significantly expanded by the Neoen acquisition, but is also actively looking at M&A opportunities. He highlighted the evolution of battery revenue models from arbitrage to increasingly long-term tolling or take-or-pay capacity contracts, with new large projects being 100% contracted. Regarding offshore wind, Mr. Teskey noted that Europe is becoming more constructive, and the company is evaluating opportunities there, comparing them to other portfolio investments. He confirmed that opportunistically acquiring merchant-like offshore wind assets, especially if they can be de-risked with new long-term contracts, is something Brookfield would consider, though it's not the largest opportunity set currently.

Benjamin Pham asked about the potential growth of nuclear as a percentage of Brookfield Renewable's business over the next five years, any internal or ESG constraints on nuclear exposure, the target returns for nuclear opportunities like Santee Cooper, and synergies from Westinghouse.

Answer

CEO Connor Teskey stated there are no internal or ESG constraints on nuclear exposure, with capital allocated based on best risk-adjusted returns. He noted nuclear currently represents about 5% of FFO and is expected to grow, but has a long way to catch up to hydro. For construction and development in nuclear, he confirmed target returns would be 'well and meaningfully above' the 12%-15% blended target. He clarified that Westinghouse's economics are separate from Brookfield Renewable's ownership returns, providing competitive advantages in expertise and fuel/services.

Benjamin Pham asked about nuclear's potential percentage of BEP's business in the next five years, if it could become a new business line, and any internal/ESG constraints. He also inquired about target returns for nuclear opportunities like Santee Cooper and the synergies of Westinghouse.

Answer

Connor Teskey (CEO, BEP) stated there are no constraints on capital allocation, which is driven by risk-adjusted returns. He noted nuclear is currently about 5% of FFO and expects it to grow, but it's far from hydro's 40%+. For construction and development, including nuclear, BEP targets returns 'well and meaningfully above' its 12-15% blended target. He explained Westinghouse provides competitive advantage and expertise, but its economics would not be blended with BEP's required return on capital as an owner/constructor.

Benjamin Pham from BMO Capital Markets asked about the near-term integration priorities for the Neoen acquisition, the geographic evolution of data center power demand, and the reason for the year-over-year performance decline in the Sustainable Solutions segment.

Answer

Executive Connor Teskey detailed a three-part plan for Neoen: accelerate its development pipeline with capital, integrate it into Brookfield's platform for operational synergies, and begin a capital recycling program by selling its derisked assets. He noted data center demand remains concentrated in North America and Western Europe. Executive Patrick Taylor explained the Sustainable Solutions segment's FFO was lower year-over-year due to a one-time gain on an Indian financial asset in the prior-year period. Teskey also confirmed Westinghouse is tracking to underwriting with a strong order book.

Benjamin Pham asked about the integration priorities for the Neoen acquisition, the future of its development backlog, and potential asset sales. He also inquired about the geographic evolution of data center power demand and the performance of the Sustainable Solutions segment and Westinghouse.

Answer

Connor Teskey, an executive, outlined a three-part plan for Neoen: accelerating its development from 1 GW to 2 GW per year, integrating it into Brookfield's platform for financing and procurement benefits, and beginning an asset rotation program for its 8 GW operating portfolio. He noted data center demand is concentrated in North America and Western Europe. Patrick Taylor, an executive, attributed the Sustainable Solutions FFO decline to a one-time gain in the prior-year period. Teskey confirmed Westinghouse is tracking to underwriting with order intake exceeding initial expectations.

Benjamin Pham of BMO Capital Markets requested more detail on how the data center project is materializing differently than envisioned in Q1, the relationship between the MOU and DTS timelines, and the potential for PPAs with other data centers.

Answer

President and CEO John Kousinioris stated the project's evolution is due to gaining clarity from the ISO's June announcement, not a change in counterparties or size. He confirmed the MOU timeline is separate from the mid-September DTS execution. He also noted the current plan is to provide a comprehensive power solution to their singular customer, not to parcel out capacity via separate PPAs.

Benjamin Pham inquired about the potential to scale the Keephills data center project beyond its initial 400 MW phase and sought clarification on the expected timing for a definitive agreement on the Centralia coal-to-gas conversion project.

Answer

CEO John Kousinioris confirmed that while initial talks for the Keephills data center are focused on 400 MW, the project has the potential to scale to 800 MW, a key selling point for partners. Regarding Centralia, Kousinioris and EVP Blain van Melle stated they are targeting a definitive agreement by mid-2025, noting that commercial negotiations on pricing and terms are well-advanced.

Benjamin Pham inquired about the scale of data center power demand versus available supply in Alberta. He also asked for details on the regulatory process beyond the initial grid connection and sought clarification on how TransAlta would achieve Tier 4 reliability for its repurposed units.

Answer

President and CEO John Kousinioris explained that Alberta's current power surplus is an advantage, and TransAlta's 400 MW initial offering is substantial for the market. He identified the critical path for development as the procurement of long-lead equipment like transformers, rather than regulatory permits. To achieve Tier 4 reliability (99.999%), he clarified that the power plant would provide approximately 90% availability, with the remaining reliability backed by the grid.

Benjamin Pham followed up on the definition of 'core' assets, noting non-hydro renewables were excluded and asking how this aligns with the company's decarbonization goals. He also asked if repowering coal-to-gas facilities is contingent on securing an AI data center contract and if those existing units are sufficient for AI load requirements.

Answer

CEO John Kousinioris clarified that the company remains on a path to decarbonization, noting renewables contributed significantly to Q2 EBITDA and the development pipeline is focused on wind, solar, and storage. He explained that for potential AI customers, the primary focus is currently on reliability and speed-to-market, making the existing, well-maintained converted gas units a strong offering. He stated that while the existing capacity is sufficient for current discussions, the sites have ample infrastructure for future enhancement if load requirements grow significantly.

Benjamin Pham asked about any restrictions on asset sales, the company's view on First Nations partnerships, and initial thoughts on structural M&A within the basin.

Answer

President and CEO Bevin Wirzba stated that all of South Bow's assets are considered core. While the company has the capability and would consider First Nations equity partnerships for new projects, there are no current plans. Regarding M&A, Wirzba declined to comment on specific third-party transactions but noted that industry consolidation and growth by key operators reinforce the strong supply fundamentals for South Bow's strategic corridor to the Gulf Coast.

Benjamin Pham of BMO Capital Markets asked about the marketing business, including hedging levels and the trend of moving propane to the West Coast. He also inquired about progress on Alliance/Aux Sable synergies and if other assets face tolling reviews.

Answer

SVP Chris Scherman stated the frac spread business is about 50% hedged for 2025 and that global markets, accessed via the West Coast, are the most resilient long-term destination for Canadian NGLs. CFO Cameron Goldade confirmed they are tracking well against the $40M-$65M synergy target for the Aux Sable acquisition, with most synergies on the commercial side. He also confirmed that no other major assets besides Cochin and Alliance are subject to similar tolling reviews.

Benjamin Pham asked for an update on how Pembina is tracking towards its 4-6% CAGR guidance and whether the guidance will be rolled forward annually. He also sought clarification on what management meant by Alliance re-contracting discussions 'going quite well'.

Answer

SVP & CFO Cameron Goldade stated that Pembina is pleased with its progress toward the 4-6% fee-based dollar per share CAGR but will wait for current opportunities to mature before extending the timeline. Executive Jaret Sprott clarified that 'going well' on Alliance refers to the progressive and routine nature of meetings with the shipper group, with more color expected in May.

Ben Pham asked about the M&A landscape in Western Canada, including the potential for more producer JVs or asset sales by private equity. He also questioned if the Alliance/Aux Sable outperformance could lead to beating the initial 8x acquisition multiple and if synergy timelines have accelerated.

Answer

President and CEO J. Burrows stated there is no large M&A pipeline currently visible and that producer interest in owning infrastructure varies. He noted that while the commodity environment has been favorable for the Alliance/Aux Sable acquisition and full control helps execute on synergies, the company is not yet ready to quantify additional opportunities beyond what was previously communicated, though the deal is performing very well.

Ben Pham asked for the outlook on future project sanctions following the $3 billion sanctioned year-to-date, including where the most activity is and if the pace will accelerate. He also inquired about potential human capital constraints given the large project roster.

Answer

President and CEO Greg Ebel stated that project sanctioning is expected across all business units, with the most immediate activity likely in the liquids segment. He noted the company has a $50 billion opportunity set competing for capital. Regarding human capital, both Greg Ebel and CFO Pat Murray expressed confidence in the company's ability to manage the workload, citing past experience with large capital programs and the use of JV partners to share execution responsibilities.

Benjamin Pham of BMO Capital Markets questioned how Enbridge's renewable asset development strategy compares to the underperforming public renewable equities and asked about the realized vs. allowed ROEs for its gas utilities in 2024.

Answer

President, Renewable Power Matthew Akman and CEO Greg Ebel highlighted their low-risk model, which focuses on long-term contracts with blue-chip customers, avoiding the speculative risks that have impacted other public companies. EVP, Gas Distribution and Storage Michele Harradence stated that the U.S. utilities performed on budget, while the Ontario utility's realized ROE was impacted by a mild winter, though on a weather-normalized basis, all utilities target a ~10% ROE.

Benjamin Pham asked which business segment offers the best risk-reward for data center investments and about the near-term focus for the newly acquired U.S. gas utilities, including the durability of the projected 8% rate base growth.

Answer

President and CEO Greg Ebel identified Gas Distribution and Storage (GDS) and Gas Transmission as having the most immediate data center opportunities, with capital allocated based on risk-adjusted returns. Michele Harradence, EVP of Gas Distribution and Storage, outlined the near-term focus on integration and confirmed confidence in the 8% rate base growth projection for several years, driven by customer growth in Utah and modernization programs in Ohio, noting data center growth is additive to this.

Benjamin Pham asked about customer affordability as a potential constraint and how cost initiatives align with narrowing the ROE gap. He also sought to clarify the scope of the upcoming June 3 investor update versus a later update.

Answer

CEO Roderick West identified affordability as a key constraint, emphasizing that driving down the cost profile is critical to making a credible case for capital investments to regulators. He confirmed the June 3 update will provide a 2025-2027 outlook, with broader strategic portfolio commentary to follow later in 2025.

Benjamin Pham asked how the current gap between realized and allowed ROE compares to historical levels and questioned incoming CEO Rod West on the best approach to bridge this gap.

Answer

Interim CFO Brian Chin directed the analyst to the segmented footnote in financial statements to calculate historical ROE for comparison against the current mid-5% range. Incoming CEO Roderick West explained that the best approach is a 'self-help' story focused on internal discipline in managing capital and O&M costs, a process he noted is already underway and is fundamental to premium-valued utilities.

Benjamin Pham questioned the potential impact of a Canadian election on transmission projects and inquired about the company's funding strategy, specifically comparing the status quo DRIP program to opportunistic equity offerings.

Answer

President and CEO David Hutchens suggested a new administration's pro-growth message could be positive for infrastructure development. On funding, EVP and CFO Jocelyn Perry affirmed the commitment to maintaining a strong balance sheet, stating that the choice between the DRIP, ATM, or a discrete equity offering will depend on the timing and scale of future growth.

Benjamin Pham of BMO Capital Markets asked if rising load from AI and data centers would materially impact rate base growth, questioned the opportunity in Canada, and sought guidance on the MISO Tranche 2 CapEx opportunity.

Answer

President & CEO David Hutchens noted that AI-driven load growth is primarily a U.S. phenomenon for Fortis, spurred by incentives like the IRA, with less activity in its Canadian territories. He emphasized that it is 'still early days' to quantify the capital impact. Regarding MISO Tranche 2, Hutchens stated it is 'far too early' to provide any CapEx figures as the project portfolios are still in draft form and require final approval.

Benjamin Pham followed up on LPG export expansions, asking about potential constraints like off-site rail capacity and the company's philosophy on sanctioning new projects versus securing contracts. He also sought clarification on whether achieving the 2025 debt-to-EBITDA target is contingent on the sale of the Mountain Valley Pipeline (MVP) stake.

Answer

Vern Yu, President and CEO, stated that customer interest in tolling is strong and not a gating item for expansion. Randy Toone, President of Midstream, confirmed that rail partner CN has capacity to support future growth. D. James Harbilas, EVP and CFO, clarified that achieving the 2025 leverage targets does include the anticipated proceeds from the MVP monetization, for which he noted strong interest continues.

Benjamin Pham from BMO Capital Markets inquired about potential constraints, such as rail capacity, for LPG export expansions beyond REEF Phase 1. He also asked about the company's approach to sanctioning new projects versus securing contracts and whether achieving 2025 leverage targets is contingent on the Mountain Valley Pipeline (MVP) monetization.

Answer

President of Midstream, Randy Toone, confirmed that CN has capacity for future expansions and is aligned with AltaGas's growth plans. President and CEO Vern Yu stated that customer interest is strong and the gating items are internal capital cost discipline and regulatory approvals. EVP and CFO James Harbilas confirmed that achieving the 2025 leverage targets includes the anticipated proceeds from the MVP monetization, with a transaction expected in the first half of 2025.

Benjamin Pham from BMO Capital Markets followed up on LPG export expansions beyond REEF Phase 1, asking about potential constraints like external rail capacity and the company's sanctioning strategy relative to its contracting levels. He also sought clarification on whether achieving the 2025 debt-to-EBITDA targets is contingent on the sale of the Mountain Valley Pipeline (MVP) asset.

Answer

President and CEO Vern Yu confirmed strong customer interest for tolling contracts and identified regulatory pathways and design certainty as the primary gating items for expansion. Randy Toone, President of Midstream, added that rail partner CN has confirmed capacity for future growth. EVP and CFO D. James Harbilas affirmed that the leverage targets include the anticipated proceeds from the MVP monetization, with a transaction announcement still expected in the first half of 2025.

Benjamin Pham from BMO Capital Markets asked about potential constraints for LPG export expansions beyond REEF Phase 1, particularly regarding rail capacity, and sought clarification on whether achieving the 2025 debt-to-EBITDA target is contingent on the sale of the Mountain Valley Pipeline (MVP).

Answer

President and CEO Vern Yu confirmed strong customer interest for tolling, stating the main gating items are regulatory processes and design finalization. Randy Toone, President of Midstream, added that rail partner CN has confirmed capacity for future expansions. EVP and CFO James Harbilas affirmed that the 2025 leverage targets include the anticipated monetization of MVP, with a transaction announcement expected in the first half of 2025.

Benjamin Pham from BMO Capital Markets asked about potential constraints for LPG export expansions beyond REEF Phase 1, specifically off-site rail capacity, and the company's strategy regarding sanctioning projects versus securing contracts. He also sought clarification on whether achieving the 2025 debt-to-EBITDA target is contingent on the sale of the Mountain Valley Pipeline (MVP) stake.

Answer

President and CEO Vern Yu stated that customer interest and tolling contracts are not gating items for expansion. He identified the primary hurdles as finalizing the regulatory path and ensuring capital cost discipline. Randy Toone, President of Midstream, added that rail partner CN has confirmed it has capacity to support future growth. On the balance sheet, EVP and CFO James Harbilas confirmed that achieving leverage targets does include the anticipated proceeds from the MVP monetization, for which a transaction announcement is still expected in the first half of 2025.

Benjamin Pham questioned the company's balance sheet capacity, asking if the $1.4 billion CapEx for 2025 could be increased without requiring equity or impacting credit ratings. He also asked about the future capital allocation split between Midstream and Utilities and the potential for utility rate base growth to return to 8% or more. Lastly, he sought clarification on the MVP sale timeline and necessary approvals.

Answer

President & CEO Vern Yu stated that the $1.4 billion annual spend aligns with target credit metrics and that investment capacity will grow as new projects come online, but for now, more cash flow growth is needed before allocating more capital. He highlighted strong growth opportunities in both segments create healthy competition for capital. EVP & CFO James Harbilas confirmed the guidance assumes an MVP sale closes in H1 2025, inclusive of what he anticipates will be quick FERC approvals.

Benjamin Pham asked how the expected utility ROE gap compares to peers, the timeline for the MVP monetization, and for clarification on the potential for future minority interest sales.

Answer

EVP and CFO D. James Harbilas stated the sub-100 basis point ROE gap is in line with peers in similar jurisdictions and confirmed they are actively pursuing a full sale of their MVP stake. President and CEO Dai-Chung Yu clarified that a minority interest sale, potentially involving First Nations, is a secondary lever to be considered after the MVP sale to meet 2025 rating agency targets if necessary.

Benjamin Pham asked about the sequencing and key gating items for REEF phases beyond the first one. He also sought clarification on the Virginia data center opportunity, confirming if the plan involved building on-site gas plants.

Answer

President and CEO Vern Yu and EVP & President of Midstream Randy Toone explained that future REEF phases are more capital-efficient and will be driven by market fundamentals, with their rail agreement able to handle future volumes. EVP & President of Utilities Blue Jenkins clarified AltaGas would build the rate-based gas infrastructure to the sites, not the generation itself.

Benjamin Pham inquired if there were potential benefits for TC Energy's Canadian business from the recent election beyond policy reform, and if growth opportunities exist outside of Western Canada. He also asked about the company's insulation from any direct or indirect impacts related to PEMEX's situation in Mexico.

Answer

CEO Francois Poirier noted that beyond policy, greater collaboration between government, industry, and Indigenous leaders is needed to attract capital. He acknowledged growth opportunities in Eastern Canada driven by increased energy demand. CFO Sean O'Donnell stated unequivocally that TC Energy is insulated from PEMEX issues, as all its contracts in Mexico are 100% with the investment-grade utility CFE, with no commercial arrangements with PEMEX.

Benjamin Pham inquired about the status of the Columbia rate case, including customer feedback, and sought clarification on whether the 'non-regulated' strategy for Alberta data centers referred to power plants or pipelines.

Answer

Tina Faraca, EVP & COO of Natural Gas Pipelines, stated that for the Columbia rate case, the company is awaiting 'top sheets' from FERC, which will precede earnest settlement discussions expected in Q3 or Q4 of the year. President and CEO Francois Poirier clarified that the non-regulated approach in Alberta refers to pipelines regulated by the Alberta Energy Regulator, not the NGTL system, and is not a reference to power generation.

Benjamin Pham of BMO Capital Markets questioned TC Energy's next focus for rate filings, the potential for accelerated depreciation on other assets, and asked to quantify the CapEx opportunity related to data centers.

Answer

Executive Stanley Chapman identified upcoming rate filings for the Columbia and ANR systems and noted that accelerated depreciation opportunities are mostly limited to Canada. Regarding data centers, he provided a rule-of-thumb cost of $5-$10 million per mile, suggesting individual projects would likely be well under half a billion dollars.

Asked for details on the go-forward corporate tax benefit, the rationale for winding down the BlockEnergy business, and whether the New Mexico Gas sale is the primary catalyst for remaining credit rating outlook upgrades.

Answer

Greg Blunden (executive) confirmed a recurring quarterly tax benefit of $2-4 million going forward. Scott Balfour (executive) explained the BlockEnergy wind-down was a strategic decision due to a challenging external market, and its removal will eliminate a drag on EPS. Greg Blunden confirmed the New Mexico Gas sale is the largest remaining gating item for outlook upgrades from the other two rating agencies.

Benjamin Pham from BMO Capital Markets questioned if recent CapEx and EPS guidance increases suggest a potential upside to the 6% rate base CAGR beyond 2027. He also asked about the long-term opportunity in broadband and potential CapEx from recent nuclear power announcements.

Answer

CFO Henry Taylor indicated that while not providing future guidance, the company expects acceleration due to tailwinds from new transmission lines, not broadband. President and CEO David Lebeter added that while the Pickering nuclear refurbishment is not a major CapEx driver, potential new builds at Bruce and Wesleyville would require significant transmission investment in the 2035-2040 timeframe.

Benjamin Pham asked for an update on the pace of electrification and power demand in Ontario, including from data centers. He also sought clarification on the structure of First Nations partnerships, particularly regarding financial participation caps and loan guarantees.

Answer

President and CEO David Lebeter noted that while EV adoption has slowed, overall electrification interest remains strong, with data center connection requests in the queue increasing from 4,000 to 6,000 megawatts. He clarified that First Nations partnerships are structured as 50% equity ownership on the transmission line component with no absolute dollar cap. CFO Harry Taylor added that Hydro One supports but does not provide financial guarantees for the First Nations' portion of the debt.

Benjamin Pham of BMO Capital Markets inquired about the timing for the revised $300 million to $700 million broadband investment and whether the refreshed corporate strategy alters the company's approach to non-regulated opportunities.

Answer

President and CEO David Lebeter clarified that while the province's overall broadband scope is unchanged, the pace and methods have shifted, leading to the revised forecast. CFO Chris Lopez added that all related work will be in service by the end of 2027. David Lebeter also confirmed that the strategy for non-regulated assets, including the 10% cap, remains unchanged.