Good day, and welcome to the Algonquin Power & Utilities second quarter 2014 analyst and investor call. Today's conference is being recorded. At this time, I would like to turn the conference over to Ms. Kelly Castledine. Please go ahead, miss.

Thank you. Good morning everyone. Thanks for joining us on our 2014 second quarter conference call. With me on the call today are CEO Ian Robertson and David Bronicheski, our CFO. For your reference additional information on our results is available for download from our website at algonquinpower.com. I would like to note that in this call we will provide forward some information that relates to future events and expected financial positions that should be considered forward-looking. I will provide details at the end of call and I direct you to review our full disclosure on forward-looking information and non-GAAP financial measures in our results published yesterday which are available on the quarterly results page of the Investor Centre on our website. This morning Ian will discuss the highlights for the quarter, David will follow with a review of the financial results and then we will open the lines up for questions. I would ask that you restrict your questions to two and then re-queue if you have any additional questions to allow others the opportunity to participate. And now over to Ian.

Thanks Kelly, and good morning, everyone. Thanks for taking the time to listen into our call today. I guess I will start with what I would -- if I had to put a headline on the quarter, it would be continued successful execution of our growth strategy evidenced by strong financial performance and growing dividends. And hopefully that headline puts into context what you been able to read in our MD&A and our results. I think they really do demonstrate the continuing positive impact of the initiatives which we have completed over the past few years and we are optimistic that the work that's being done currently in 2014 in terms of growth initiatives will deliver similar results going forward for the coming years. I think we understand that the growth can be a source, both of enthusiasm and angst for investors, but I am hoping that people now expect to see our lengthening track record of positive results as evidence of the proof of ability on both the APCo and the Liberty Utilities teams to successfully identify, complete, integrate and now operate material growth initiatives. The key takeaways I see from the quarter's results includes $165 million of EBITDA on a year-to-date basis, which represents close to 40% increase over the first six months of last year, and perhaps most importantly for our investors the per share results continue to show the upward trajectory that we have identified and track to. Our first solar project contributed a full quarter of production this year and I guess I am pleased that the results are above our long-term forecasted averages and we are expecting more than $6 million of continuing EBITDA from that facility. And lastly, during the quarter, we entered into settlement agreements in Arizona and Georgia, which will provide…

Thanks, Ian, and good morning, everyone. Overall, our adjusted EBITDA in the second quarter was $66.4 million and that represents an 18% increase over the last reported in the same quarter a year ago and certainly we believe that this is a strong evidence of continued success in executing our ongoing growth strategy. In all, our revenue in the quarter was $189.3 million and that compares to $148 million a year ago. Our adjusted EBITDA in the quarter was a strong $66.4 million as compared to $56.4 million a year ago. So I would just like to get into a little bit more detail about our results in our operating subsidiaries. I will begin first with Algonquin Power Co. During the second quarter in the renewable energy division, overall the division experienced resources sufficient to generate electricity in line with expectations equal to 100% of long-term average projected resources and that compares to 98% in the same period a year ago. We believe that the results demonstrate the value that our well diversified portfolio provides our shareholders with wind, hydro and solar assets basically providing significant diversification. Net revenue which includes net energy sales and revenue from renewable energy credits totaled $39.4 million, and that compares to $36.9 million in the same period a year ago and the increase is primarily due to increased market pricing for renewable energy credits in Illinois and Pennsylvania. The operating profit for the second quarter was $39.9 million and that compares favorably to $37.4 million during the same period a year ago. In our thermal energy division, with respect to the operating results there, they were above expectations for the quarter. The posted a profit of $3.4 million and that was ahead of the $1.9 million that we posted a year ago. Moving on…

Great, David. Thanks and appreciate that. Just before we open the lines up for questions, I think I will provide you a little bit of an update on some of the near-term growth and development initiatives we have underway since growth is a fundamental part of the shareholder return proposition that we are advancing. As I had mentioned earlier, we are going to spend about $0.5 billion this year on growth and it's divided approximately $300 million in APCo and approximately $200 million in Liberty Utilities. Within that APCo growth envelope, we have three projects that are currently under construction right now. In St. Damase, Quebec, we are in the midst of construction of our 24 megawatts wind generating station there. We have all the turbine foundations constructed and erection of the turbines is currently underway. We do expect that to be in commercial operation in the first quarter of next year. We are planning to submit a follow-up proposal for a second 100 megawatt phase of the St. Damase project into the current Hydro-Québec request for proposal and we believe that this first phase that is currently under construction will qualify as Canadian Renewable and Conservation Expenses or CRCE as it's otherwise known. And the project therefore will be entitled to a refundable tax credit of approximately $16.5 million. In the U.S., construction of our second solar generating station in Bakersfield, California is now underway. We did conclude a partnership arrangement with a third party tax investor who will contribute approximately $22 million toward the total $58 million capital cost of the project and in return the tax investor will receive the majority of the tax attributes associated with the project, which is expected to commence operations late this year or early next. And lastly, construction at our 23…

(Operator Instructions). Your first question comes from line Nelson Ng of RBC Capital Markets. Please go ahead.

Great, thanks. Good morning, everyone.

Hi, Nelson.

Good morning, Nelson.

A quick question on the acquisition side. Can you talk any potential U.S. wind acquisition you are involved in and just provide any color you have on that?

Well, when you say wind acquisition, Nelson, are you thinking of development projects or operating projects?

Development projects. I think you have been more involved on the early or late stage development side.

And I think that's totally fair observation, that I think the value for our shareholders is created through our participation in the development of projects rather than acquiring them once they are done. I have mentioned a number of times during presentations that we are actively interested in finding a number of projects to participate in the current 2015 PTC of production tax credit cycle, which at least is currently slated to come to a close, December 31 of next year. We have two projects that we are actively interested in. We haven't got to the stage where we are committed to those projects. They do represent a significant installed capacity, close to 400 megawatts. But as I said, we think that it's a great way for us to add value by stepping in and participating in the development of these projects that are really quite near term, given the sunset on the production tax credit. So, yes, Nelson, we are actively pursuing some. And we are hoping to get something for the stage that we will be announcing in the relatively short order.

Okay, thanks, and then just switching to Canada in terms of some Amherst Island, did you get the REA yet? And if so, is that currently being appealed?

As we have mentioned in the past, the timetable for approval of our renewable energy application by the Ministry of the Environment should have notionally came to a close, based on their own timetables, the MoE's timetable, on July 2. We are not in receipt of the reapplication approval yet. And so by definition, aren't in -- it hasn't been appealed. So I think there is, given the history of these, that's a reasonable expectation. Having said that, we are in continuing contact with the Ministry of Environment. We understand we have answered all their questions and we are hopeful that within the next six weeks, we will have the REA approval in hand.

Okay, thanks. I will get back in the queue.

Thanks, Nelson.

And your next question comes from the line of Rupert Merer of National Bank Financial. Please go ahead.

Good morning, Rupert.

Can you talk a little more about the M&A market for regulated utilities? How do the multiples look on acquisitions today? How they have evolved and are you seeing any discounts from the orphans today?

I think, it's not an unfair observation to say that the M&A market in the U.S. is very robust right now. And I think the valuations reflect that. Having said that, I think it's my perspective, or our perspective collectively, that the cost of capital environment is really what is supporting and driving the valuations as opposed to a natural act on behalf of the acquirer of those assets. So I guess my first comment is that the valuations have not subsided from some of the valuation levels that have been evidenced by Laclede's acquisition of Alagasco and Missouri Gas Energy and TECO's acquisition of New Mexico Gas. So Rupert, the market remains strong. But as I said, I think there is the underlying proposition for paying those kind of prices is really what's supported by the cost of capital in the current market. With respect to the Liberty Utilities' orphan strategy, fortunately or unfortunately, the value of an orphan, if you will, hasn't dropped and I don't think or has continued to rise, if you want to think of it that way. I think we were pleased to be able to build a portfolio of about 0.5 million customers at relatively modest acquisition premium. But you can imagine that any utility who would be considering the sale of an orphan is looking at the prices that are being paid albeit for larger and perhaps fully standalone utilities and saying us, well, gosh, I would really like to get that price. And so while we are continuing our dialogue with the sellers and potential sellers of orphan utilities, as I said, I think its probably fair to say that the prices that we were able to build a portfolio right now in the cycle are probably not achievable going forward.

Okay, thanks, and a quick follow-up. On St. Damase, have you negotiated the final ownership structure with your partner on that project yet?

Yes, we have. And when you say, our partner in St. Damase, is actually the town of St. Damase. And the short answer is yes. We have all the partnership agreements signed and in fact held last quarter, our groundbreaking with all the town officials. So it's all steam ahead on that one, Rupert.

Okay. That's a 50-50 partnership. Is it?

It is a 50-50 partnership, except that under the arrangement, to the extent that the town is able to fund their share of the 50-50, we are obviously willing and interested in making sure that we support the capital needs of our partner as well, which would perhaps increase our effective exposure, economic exposure to the project beyond the 50-50. but we are 50-50 partners.

All right. Great. Thank you.

Thanks, Rupert.

Your next question comes from the line of Matthew Akman of Scotiabank. Please go ahead.

Thank you. Good morning.

Hi, Matthew.

Good morning, Matthew.

Hi, guys. Can you please update us on your plans for solar power in the West in two areas? One, the development of utility scale projects following what seems to be good progress at Bakersfield. And two, initiation of some type of retail/commercial business?

Yes. Sure, Matthew. Obviously, those are, in my opinion, two very different undertakings if you want to think of it that way. We are committed to the utility scale of solar sector, as evidenced by Cornwall and Bakersfield and are continuing to hunt similar projects. I think I have mentioned on previous calls that we are extremely bullish notwithstanding the DoJ's duty imposition of all Chinese panels that the economics of solar continue to improve and the cost competitiveness of it increases. And therefore as a generating source going forward, I think it is something that very much speaks to Algonquin to have a significant interest in and in our continuing to find the follow-on to Bakersfield. I think the economics of distributed commercial and industrial solar, it's a really very different proposition. Obviously, it's much more retail, notwithstanding the fact that its C&I, or commercial and industrial, the projects tend to be smaller and while I think the returns tend to be larger, I think what Algonquin is, in the midst of doing is really kind of developing a strategy and how to attack those marketplaces. And I think we look at with enthusiasm at some of the things that are happening for the prices of solar RECs. In markets such as Massachusetts, you are now able to execute a seven-year forward agreements for solar RECs in $0.15 to $0.20 a kilowatt hour basis and that has obviously a material impact on the economics of a C&I solar facility. And so I guess in summary, Matthew, to answer your question, we are committed to the utility scale and still thinking about the distributed solar sector.

Okay. Thanks for that. And also on the development front, there has been a lot of activity in the last quarter from a lot of companies on trying to figure out how to get more energy into the Northeast one way or another. And we were talking on the Emera call, for example about electricity transmission, small power, renewable as well as gas pipeline. Now that you guys have utility out there, do you see yourselves as in the mix on potential development opportunities in the Northeast to assist in ensuring that they take some peaks off some of the commodity prices, especially in extreme weather?

Thanks for that question. Yes, to both your comments. I think I would suggest that with over 130,000 customers in the Northeast, thinking of natural gas that we very much see ourselves as having, arguably, a responsibility to make sure that we are obtaining that commodity at as a reasonable price as possible and are very much interested in seeing, can we facilitate the development of pipeline by bringing some capital to bear and potentially participating in some of those pipelines and so very much interested in that longer-term solution. In the near term solution, we have generally disclosed that we are in active development of a small scale LNG facility. So that liquefaction would be used specifically under long-term contract to the LBCs who populate the Northeast to help them shave the peaks off and so its provides that feel that temporal shift of gas from the lower price and higher availability period in the summer to obviously the tighter period in the winter and see that that would be a great way for us participate in that. So very much, I think our interests are properly aligned with Emera's that we see great opportunity in the Northeast and for us it's primarily focused on participating in the natural gas solution.

Great. Thank you very much. Those were my questions.

Thanks, Matthew.

(Operator Instructions). Your next question comes from the line of Sean Steuart of TD Securities. Please go ahead.

Thanks. Good morning, everyone.

Hi, Sean.

Good morning, Sean.

A couple of questions. Further to one of the previous questions, just with respect to interest in U.S. utilities. You guys are rumored to be the, I guess, potential or interested bidder in Traverse City Light and Power, which should be, I guess, a small-scale acquisition. To the extent that you are looking for M&A opportunities in the States still on the utility side, can you just speak to the scale of what the opportunities that looks like versus some of the opportunities you have moved on over the last few years?

Sure. I think that Traverse City opportunity and it's really unfortunate when M&A discussions get into the public domain long before there is really anything to speak of. I think we look at something like Traverse City in the same way as we looked at the acquisition of the White Hall water and waste water distribution system. I think it's a great way for us to participate in unlocking capital and value in smaller municipalities, arguably across the U.S. At the same time, given the local and responsive approach that Liberty Utilities brings to managing its relationships with its customers, those utilities aren't, if you will, turning over control and oversight of their aspects to the big bad national utilities So we actually have a fairly optimistic that the proposition will resonate with municipalities other than White Hall and I will say that the pursuit of those opportunities will really look almost as much as organic growth. I think you would probably agree, the acquisition of the White Hall utility at $4.5 million hardly constitute the strategic investment opportunity, but it is a nice way to increase the footprint in a particular state and add efficiencies and economies of scale to existing operations. And so I guess to be responsive to your question about scale, obviously, or maybe not so obviously, our pursuit tends to be focused on the smaller utilities or municipalities who might be more capital constrained, but we do look at that activity as an organic growth activity rather a strategic M&A activity and consequently are okay if you will with the smaller scale of those opportunities. I don't know if that's responsive to your question, Sean.

That helps for the context. Thanks, Ian. And then second question on the power side, can you guys speak to where you stand with respect to the Ontario RFQ for the coming procurement here?

Well, I guess, in short, well it's obviously in our backyard. We are keen on moving projects into that. I don't think we have actually committed to anything right now in terms of Ontario. I think it's not an unfair observation to day that the development under the Ontario paradigm is an expensive proposition, which has significant risk because of the requirement to complete the majority of your design even before you go through the permitting process. And I think Amherst Island, from everybody's perspective, is just evidence of, if you will, the all-in commitment you need to make to a project before you have the certainty that the project is going to go ahead. So while we obviously do want to support and participate our local jurisdiction, I will say that our enthusiasm in Ontario is certainly colored by, I don't think an unfairly tough experience, but having said all that, I wouldn't want you to walk away and say that we should have discounted Ontario, but man, if you look at the pipeline of opportunities we have in front of us right now, it's hard to say that we are starving for places to put capital and grow the business.

Fair point. Thanks, Ian.

Thanks, Sean.

Your next question comes from the line of Ben Pham of BMO Capital Markets. Please go ahead.

Okay. Thank you and good morning, everybody.

Hi, Ben.

Good morning, Ben.

I just want to go back to Sean's question on scale and on acquisition on the utility side. Are you guys finding that scale, that $100 million and below, the pricing is a bit more rational than what you see on some of the larger scale transactions that you have done in the past?

I would say that the pricing for almost any regulated utility asset has definitely increased from over the past three or four years. I think that's a totally fair observation. I think it would be also fair to say though that the larger utilities have attracted a frothier and more robust process than the smaller ones. And consequently the prices are at the upper end of the range. But this is not to say that almost irrespective of size that the utilities aren't going for healthy valuations. I will say though that, and what I was trying to elude to, is that those valuations, and you used the word rational sort of implying that there is irrationality, if you will, to some of the prices they are getting paid. And well, I think you always have to be mindful of value accretion to shareholders. When you look at the proposition today in terms of the capital markets, the way the rating agencies are looking at the capital markets in the regulated utility space, you might look at an acquisition and say, oh my God, that price is irrational. But when you actually parse your way through the economics of it, and the impacts from a credit metrics perspective and earnings per share perspective, you can actually understand the thesis behind it. We obviously haven't to-date participated in those kind of levels. I will say that we are, at our Investor Day we were pleased to roll out $1 billion pipeline over the next three or four years of growth on the utility side, which is not founded on additional acquisitions going forward. And so therefore the general commitments we make to grow our business in and around the 15% assets in EBITDA and the 50% CAGR basis can continue to be met just with the pipeline of growth opportunities we have right now. I think we continue to keep our eyes open. We obviously want to create shareholder value and to the extent that an opportunity exists to do that in an acquisition that at a price that happens to be higher than what we paid in the past, I don't think we would naturally, we would just apriority throw that opportunity out because it happens to be at a higher price. It's really all about creating shareholder value.

Okay. So you are more comfortable paying a bit of a higher premium to rate base than you have in the past because already your cost of capital has also improved over the last three or four years?

I don't think that's an unfair statement.

Okay, great, and then my second question is on the rate case front. Is there anything that we should be keeping an eye on beyond EnergyNorth as we head into 2015 over the next 12 months?

We have a table in the MD&A, which sets out the forecast for these rate cases going forward. But having said that, I think that EnergyNorth rate case and the Pine Bluff Water rate case, that's pretty significant. We are talking, I would say, close to $20 million and I think given our success in Granite State and our recent success in concluding a rate cases in Arizona, I am hoping that the investment community get increasingly comfortable with the organization's ability to deliver on its results from a rate perspective and that the proposition we are advancing for, as I said, this kind of local and responsive utility relationships with regulators is actually paying dividends. And so, as we continue to move forward on all of the investments in all of our utilities, obviously rate case is just a natural part of that band. But I am hoping, as I said, people see it as having a core competency, if you will, in being able to achieve reasonable outcomes in those processes.

Okay, great. That's a lot, Ian. That's it for me.

Thanks, Ben.

There are no further any questions at this time. I would like to hand the call back over to Mr. Ian Robertson for closing remarks.

Great. Thanks, everyone. I do appreciate you taking the time today and we look forward to speaking to you next quarter. And so I would ask everybody to stay on the line for Kelly's always riveting disclaimer with respect to forward-looking information. Kelly, take it away.

Thanks, Ian. Certain written and oral statements contained in this call are forward-looking in the meaning of certain securities laws and reflect the views of Algonquin Utilities Corp. with respect of future events based upon assumptions relating to among others, the performance of the company's assets and the business, financial and regulatory climates in which it operates. These forward-looking statements include, among others, statements with respect to the expected performance of the company, its future plans and its dividends to shareholders. Since forward looking statements relate to future events and conditions, by their very nature they require us to make assumptions and involve inherent risks and uncertainties. We caution that although we believe our assumptions are reasonable in the circumstances, these risks and uncertainties give rise to the possibility that our actual results may differ materially from the expectations set out in the forward-looking statements. Material risk factors include those presented in the company's most recent annual financial results, the annual information form and most recent quarterly management's discussion and analysis. Given these risks, undue reliance should not be placed on these forward-looking statements. In addition, such statements are made based on information available and expectations as of the date of this call and such expectations may change after this date. APUC reviews material forward-looking information that is presented not less frequently than a quarterly basis. APUC is not obligated to nor does it intend to update or revise any forward-looking statements, whether as a result of new information, future developments or otherwise, except as required by law. With respect to non-GAAP financial measures, the terms adjusted net earnings, adjusted earnings before interest, taxes, depreciation and amortization or adjusted EBITDA, adjusted funds from operations, per share cash provided by adjusted funds from operations, per share cash provided by operating activities, net energy sales and net utility sales, collectively the financial measures are used on this call and throughout the company's financial disclosures. The financial measures are not recognized measures under generally accepted accounting principles or GAAP. There is no standardized measure of these financial measures. Consequently, APUC's method of calculating these measures may differ from the methods used other companies and therefore may not be comparable to similar measures presented by other companies. The calculation and analysis of the financial measures and a description of these non-GAAP financial measures can be found in the most recently published management's discussion and analysis available on our website and on sedar.com. Per share cash provided by operating activities is not a substitute measure of performance for earnings per share. Amounts represented by per share cash provided by operating activities do not represent amounts available for distribution to shareholders and should be considered in light of various charges and claims against APUC. Thank you.

Ladies and gentlemen, this concludes the conference call for today. We thank you for your participation. You may now disconnect your lines and have a great day.