Good morning, ladies and gentlemen. And welcome to Emera Q4 2017 Earnings Conference Call and Webcast. After the presentation, we will conduct question-and-answer session. Instructions will be provided at that time. Please note that this call is being recorded today, February 12th, 2018, at 11 A.M. Atlantic Time. I would now like to turn the meeting over to your host for today's call, Ken McOnie, Vice President, Investor Relations and Treasurer for Emera. Please go ahead, Mr. McOnie.

Thank you, Christa. And thank you all for joining us this morning for Emera's Fourth Quarter 2017 Conference Call. Emera's fourth quarter earnings release was distributed Friday afternoon via Newswire, and the financial statements and management's discussion and analysis are available on our Web site at emera.com. Speaking on the call today from Emera is Scott Balfour, Emera's Chief Operating Officer and Greg Blunden, Chief Financial Officer. Chris Huskilson, President and Chief Executive Officer and other members of the management team at Emera will respond to questions. This morning, Scott will discuss the results from operations and our strategic initiatives, and Greg will provide an overview of the financial results. We expect the presentation segment to last about 15 minutes, after which we will be happy to take questions from analysts. I will take this moment to advise you that this conference call will contain forward-looking information and statements with respect to Emera. Forward-looking statements involve significant risks, uncertainties and assumptions. Certain material factors or assumptions have been applied in drawing the conclusions contained in the forward-looking statements. Generally, these factors or assumptions are subject to inherent risks and uncertainties surrounding future expectations. Such risk factors or assumptions include, but are not limited to, regulation, energy prices, general economic conditions, weather, derivatives and hedging, capital resources, loss of service area, licenses and permits, environment, insurance, labor relations, human resources and liquidity risk. A number of factors could cause actual results, performance or achievements, to differ materially from those discussed or implied in the forward-looking statements. And now, I'll turn things over to Scott.

Thank you, Ken and good morning everyone. This morning, I'll be discussing our operations for the quarter and year-to-date along with an update on our strategic initiatives. Greg will follow with financial update and then Chris will join us in responding to your questions. Before speaking to our results, I would like to highlight a few developments during the quarter. On December 12, 2017, the Maritime Link successfully exchanged power between Nova Scotia and New Finland for the first time in history, and on January 15, 2018 the Maritime Link officially entered into commercial operation. This transformative interconnection will significantly improve the way the energy is transmitted in Atlantic Canada. The project was completed on time and under its $1,577 million budget. The revenue requirements for this project have been included in Nova Scotia rates since the beginning of 2017 as part of the three-year rate stability program in place in Nova Scotia. The Maritime Link is a key piece of Emera’s strategy to address the growing demand for more renewable energy in the region. Turning to our fourth quarter results. We delivered adjusted net income of $137 million and earnings per share of $0.64 compared with $104 million and $0.51 per share in the fourth quarter of 2016. These stronger results were largely due to cold weather conditions in the North East and strong contributions from Emera Florida. For the 2017 full year period, adjusted net income and earnings per share were $524 million and $2.46 respectively. Adjusted net income for 2016 was $475 million with earnings per share of $2.77. However, 2016 results included one-time gains and TECO acquisition costs. Excluding these items, our 2016 adjusted earnings were $409 million or $2.39 per share. Excluding the one-time impact in 2016, we saw 28% increase in year-over-year adjusted earnings…

Thank you, Scott and thank you all for joining us this morning. We released our earnings and filed our annual financial statements and MD&A for the fourth quarter and full year 2017 Friday afternoon after the markets closed. In Q4 2017, Emera reported a net loss of $228 million and earnings per share of negative $1.06 compared with net income of $70 million and $0.34 per share in Q4 2016. Our fourth quarter adjusted net income and earnings per share, which excludes mark-to-market adjustments and the revaluation of deferred tax assets was $137 million and $0.64 per share in 2017 compared with $104 million and $0.51 per share last year. We also reported an increase in cash flow of $379 million or 41% to $1.2 billion year-to-date, aided significantly by the addition of Emera Florida and New Mexico operations. For the year-to-date period 2017, we reported net income of $266 million or $1.25 per share compared to $227 million or $1.33 per share in the 2016 year-to-date period. As Scott mentioned, adjusted net income in the 2017 year-to-date period was $524 million or $2.46 per share compared with $475 million or $2.77 per share in the 2016 period. Our 2016 results include one-time gains related to the sale of our investment in Algonquin Power, and gains in our Self-Insurance Fund in Barbados, as well as TECO acquisition costs. Adjusted in the items are 2016 adjusted EPS was $2.39. Fourth quarter net income for Emera Florida and New Mexico operations was $80 million or $37 million net of the permanent financing costs. This net income was $18 million higher than Q4 2016 due to higher base revenues following the addition of Polk Unit 2 in January and lower OM&G costs. On a year-to-date basis, Emera Florida and New Mexico contributed $382…

Thank you, Greg. So as you all know, Chris will officially retire as President and CEO of Emera on March 2019, making this his last investor conference call. Chris has been CEO of Emera from 13 years, which means he has lead more than 50 analyst calls, where he mapped out his plans for Emera and shared a vision for growth. And he has been instrumental in making that vision a reality. During his time as CEO, Emera's asset have grown from about $4 billion to $29 billion. Emera's annual total shareholder return has been about 12% compared to 8% for the TSX utilities index. The share price is 2.5 times what it was when he became CEO and the total shareholder return under his leadership has been about 380%. It would be an understatement to say that Chris has shaped this company. To say he remade it would be a better description. And we certainly would not be in a position we are today without him. All in the way, he assembled and developed a strong leadership team that has been inspired by his vision. We plan to do him proud by continuing the record of success that he has established. On behalf of the entire team at Emera, thank you Chris. Your brilliance, dedication, vision and hardwork have transformed our company. We will miss you, but we are ready and excited to continue your work and to continue to build Emera. With that, we will open the call for questions.

[Operator Instructions] Your first question comes from the line of Linda Ezergailis from TD Securities. Please go ahead. Your line is open.

Before I ask my question maybe I just wanted to wish Chris all the best on his retirement and congratulations on a very successful career.

Thank you, Linda.

And now maybe we can move to one of the dynamic conversations you are probably having right now with your debt rating agencies. Can you comment on how the debt rating agencies are looking at some of the effects of U.S. tax reform on your business and how that might inform your financing plans going forward?

I think we’re seeing certainly from our perspective I think S&P is taking the view that they are waiting to see it unfold and how individual companies are companies are going to react to it because the implications of it will be different by company and quite frankly even within a different by the various utilities that they own. Moody’s on the other hand, I think has formed probably a little bit more a pessimistic view, they changed the outlook I think 23 or 24 companies few weeks ago and obviously changed our look in December in part of the pressure. So we are working through it. We are I think probably a little more optimistic than we might have been maybe a few -- a couple of months ago. But I still think it’s a little bit too early to tell what the long term implications are.

I think the other thing I might add to it Linda -- it's Scott, is that we’ve stated our attention to return our capital structure to our targeted level by the end of the decade. Tax reform has not changed that initiative. So our overall view is to our financing plan and approach to it fundamentally is not different. Of course we’re mindful of credit metrics and achieving certain thresholds that obviously continue to be a focus. But our broad overall approach to where our folks on our balance sheet and therefore our approach to financing over the period between now and the end of the decade is fundamentally not different from where it was before.

Now maybe just as a follow-up. You mentioned that you're exploring alternatives to minimize the effects on earnings and cash flow of this U.S. tax reform. You mentioned the AMT refund next year, the storm recovery this year. Can you maybe comment on what other alternatives there might be at your disposal potentially?

Again, I think Linda it gets into every one of our U.S. utilities is going to go through a normal regulatory process to rebalance rates to reflect the lower income tax expense. And so I think it was last week or the week before Peoples Gas reached an agreement where there adjustment in 2018 will not be effect until February of 6. So that means for the first five six weeks of the year, that will be savings on cash flow going back to customers but it will also provide a little bit of underpinning for the earnings for this current year, which also happens to coincide with their largest four to five weeks of the year. So it’s things like that, it’s being able to utilize maybe some of those savings for some of our other utilities that have distribution rate case basing them to lower with that could otherwise be. So it’s all of those kinds of things, but it is very specific I would suggest with each and every utility.

Your next question comes from the line of Bob Hope from Scotiabank. Please go ahead, your line is open.

I guess just keeping on the U.S. tax reform theme, I guess two questions here. First on the ability to properly allocate the U.S. Holdco interest. Is that based on your current reading of the act or do you expect that will be as a result of additional clarity moving forward there?

It's certainly based on our current read on the act, but we're also relying on the engagement and work that as an electric institute is doing. We’ve had financial advisors look at it as well. And I think in general tax -- our tax advisors as well as the industry representatives are feeling pretty confident that that will be allocatable debt and therefore the interest deductibility will be preserved.

And then if we just look on the downside there, if it is not the case you have an estimate of EPS or FFO?

It wouldn’t have any effect on FFO, because it doesn't affect actually our tax position on the short end. Obviously, it would reduce the amount of loss carry-forwards you have on the outside. We do not have an estimate -- I don't have an estimate in front of me in terms of what it would be if it was entirely dislodged.

And then just one last quick one. The expectation of how Maine will treat tax reform and the timeframe?

So I think there's two components to me, one is on their distribution. And I think commission is overall as a general rule, have to make sure that rates are adjusted and reasonable. And just because one cost item that's included in rate changes doesn't necessarily mean that that by itself drives change. So we would expect and we think what is reasonable on the distribution side that that would get addressed in a distribution rate case it’s likely to happen later this year at Emera Maine. The other side of it is how it gets treated before the corporate later transmission, those tariffs get trued up in the June 1st of our year and we don't yet have visibility on whether there'll be any changes -- back changes than historical rates on that first piece.

Your next question comes from the line of Ben Pham from BMO. Please go ahead your line is open.

Continuing on the U.S. tax reform queries, the cash flow impact you've highlighted the range of $50 million to $200 million. Could you provide some context on what would have to happen to get to the $200 million context? And I mean some of it’s probably the storm recovery portion. And then what does that mean in terms of the debt ratios if that were to occur?

So I think obviously the CAD200 million is a booking is how I would describe it. That would have to ultimately be the result of the final codification of the legislation being different than what we would have expected to be and quite frankly probably a pessimistic view on how each and every regulator would treat it. But as we get through every week every month, we're feeling more optimistic I would say related to that. I think $100 million of FFO is like 50 basis points to 60 basis points on our FFO to debt metrics just to give you a rough idea of the magnitude.

I'm also wondering it's great to see disclosure near term cash flow impact. Would you say in your longer term models two years plus that would be these impacts that you’re seeing from corporate tax reform it’s already positive to what you guys thinking about before?

Certainly the refund of the alternative minimum tax payments probably was equated as a parent in mid-December as it is now, which will certainly help us in 2019 and 2020. And then as we look out further one of the new nuances for this is you’ll have a rebalancing of the capital structure in some of our utilities, in particular Tampa Electric, with the reduction of the deferred tax liability and that's going to create a rate base investment opportunity, which of course will come with a return that will be supporting both our earnings growth as well as their dividend growth, and our cash flow. So as we get through the next probably 18 months, we’re starting to see some positives come out as well. And of course on top of all of this, customer rates would be lower than they otherwise would be, which means our product is more affordable than it otherwise would be, which we think is a good thing for the business.

Can I check with you probably some hedges on New England last thing at a presentation and any change or any update to that?

Ben, just as an update for the remainder of this winter just through March, we have about 90% of Bridgeport hedged at $13 around the clock. And in the summer this year, we've got at 40% of Bridgeport hedged at $9. And a little tiny bit already for next winter, there has been some uptick so we're picking up a little bit as we see that happening. We've got about 20% of Bridgeport same place hedged at $15 around the clock and about and then 30% for the seven months for this summer -- I'm just reading a note here and I think I read it twice. So I'm going to repeat it. We've had about 90% of Bridgeport hedged to $13 for the rest of the winter. For the summer, we've got about 40% at $9 around the clock and we've got a little bit for next winter already at $15 around the clock.

Your next question comes from the line of Andrew Kuske from Credit Suisse.

I'll ask my obligatory tax question second. But just on the capital deployment plans that you've got, so in 2018 you’re looking at Emera Florida and New Mexico at $1.3 billion and that's a pretty significant step-up from the 717. How do you think about just the sustainable capital deployment in those utilities in the next few years?

So certainly a big part of the uptick of course in 2018 is coming now from the investment in solar with a profile around in service of the first 150 megawatts this year as mentioned earlier and about double that in 2019. So lot of capital is going in that ground in support of that 600 megawatts of solar, which frankly we’re really excited about from the company's prospective but also from customers prospective as it relates to the opportunity to clean that generation base and start down the path of renewable energy in that market.

And may be just on the tax question, how do you think about just the tax changes that came out last year in the U.S. and just some of the match funding principals, as if we’ve got certain assets but you have immediate expensing for qualified assets, some of those assets do have a bit of a duration. How do you balance that immediate expensing or is it just traditional match funding principals and the balance sheet that you're trying to de-lever.

The immediate expensing doesn’t really have much of effect on majority of our business, because of the regulated nature. And the immediate expensing is for tax purposes and because we're existing tax losses that we’re carrying forward, it's really nothing more in our mind other than extension of bonus depreciation. And so it doesn’t change our overall earnings and/or our cash expectations in 2018 and 2019.

Your next question comes from the line of Robert Catellier from CIBC Capital Market. Please go ahead, your line is open.

So another U.S. tax reform question. With the revision out of Moody’s outlook, the funds from operation impact of the U.S. tax reform. Is there a case to be made to apply for added equity thickness or increased ROE's at some of your utilities?

I don’t necessarily think so at this point in time, Robert. If you think back to the Moody's report in December, they’ve reaffirmed the ratings of all the regulated utilities themselves. And our U.S. utilities as a general rule have reasonably healthy capital structures, some of them have higher ROEs than other. But I think for the most part, I don’t think it’s going to open up that much of an opportunity for the utilities that we have.

As an alternative regulatory strategy, do you see additional opportunity to accelerate some CapEx and may be is that an offset, is that the primary regulatory strategy other than the recovery of storm cost?

I mean in some respects, that’s an example of that. But certainly, whether we look at additional solar or Tampa Electric or conversion of our Big Bend plant from coal to natural gas, whenever undertake large capital projects, you’re always sensitive to what the impact is on customer rates and with customer rates may be seeing some downward pressure because of tax reform, all things being equal that should create some headroom for incremental capital investment. But ultimately it’s got to be capital investment that is good for the customer over the long term.

[Operator Instructions] Your next question comes from the line of Robert Kwan from RBC Capital Markets. Please go ahead, your line is open.

You’ve talked about early discussions with the rating agencies. I'm just wondering in terms of your general strategy that was -- are you committed to the ratings that you’ve got and are there plans to add another agency in the mix?

We’re committed to our capital structure, Robert and the ratings we have. And at this point in time, we’re not contemplating adding additional agency to the mix.

I guess just in managing then that those target metrics you were looking at if you’re going to be losing some cash flow as part of the -- and just holding the FFO metric. What types of things would you be looking at then in terms of just -- the arithmetic around debt reduction to continue to hold the metrics faster.

I think Robert we’ve talked about a couple of things already. So we’ve identified what the implication of tax reform will be on cash flow for next year. One of the things we’ve done now is we reached an agreement to collect the storm costs in Tampa Eclectic entirely in 2018 as opposed to between 2018 and 2019. Again, we’ve got the alternative minimum tax refund starting in 2019, we’re going to see some ability to probably reinvest additional equity in Tampa Electric as those deferred tax losses or liabilities get shrunk. So I would say it’s any and all of those things. There is a lot of moving pieces obviously in our business and we’re focused on optimizing each and every lever we have.

And then the 3% to 5% negative impact on EPS and then combined out the cash flow side of things puts pressure on the payout ratio. How are you thinking about them with respect to your dividend growth rate?

So our view is we’ve talked about our target dividend growth rate of 8% through to 2020 that we remain committed to that target. We know that is one of the reasons of transitioning from an EPS growth target to a dividend growth target is that EPS growth can be lumpy. And so with the dividend growth target of 8%, it doesn’t mean our payout ratio will move around a little bit through the period. And there have been times where our dividend payout ratio has been lower than our target and in times like it is now, where it is a little bit higher than our target and our view is to continue to grow the dividend at level that we feel is sustainable and achievable based on the growth opportunities that we have in front of us and a view that dividend payout ratio will balance out in or around our target overtime and that continues to be our view today.

If I can just finish then with Atlantic Link. Could you receive any feedback as to where you finished in the RFP and just with some of the issues at northern pass just having, are there any thoughts or discussions as to how you might be positioned if they came back in terms of the process?

So the process doesn't -- hasn't provided any color or detailed feedback, and that it wasn’t unusual or unexpected given the status of that procurement and reward. We believe the words that I spoke earlier, that we think our project adds value for not just State of Massachusetts but frankly for the region. That view hasn’t changed as a result of the outcome of this RFP. We know the whole thing has taken on an interesting dynamics now with the news out of New Hampshire, but we'll continue to assess the market and the news around the procurement and the specific RFP as it becomes more clear. But in the meantime, we'll continue to proceed with our application and seeking of presidential permits and continue to assess what the timing and impact for our project is. But as we stand right now, we still see this as a project to value and we expect to continue to proceed with our permitting process.

Your next question comes from the line of Jeremy Rosenfield from Industrial Alliance. Please go ahead, your line is open.

Just one follow-up on the Atlantic Link question. I am just wondering if that project has any potential for future RPF not Massachusetts but just more broadly other RFPs that are being contemplated in New England and also as a second opportunity for Atlantic Link or maybe a similar project if you’ve considered large scale transmission associated with some of the potential offshore wind projects that have been proposed for the eastern seaboard?

I think with the words that I used in saying that we think this project has value not just for the State of Massachusetts but for the region as a whole, I think you're picking up on the right theme, that there will be other opportunities to enhance survivability of this project, it's not singularly dependent upon this RFP. The region as a whole is seeking more clean energy. And we think the Atlantic Link provides an economic path to bring that energy to market whether it's for this particular project or for another over time.

And Jeremy, I think the only other thing I would add is that you have to look at where this project is positioned relative to the strength of the transmission system in both locations. And this project is extremely well positioned for New England. And so there's clean energy behind this project. There's a system opportunity to reinforce the system in a place where a nuclear plant is going out of service. And so I think that this project will find the home at the right time.

Maybe just one other question, I think it was back in Investor Day, there was a mention about the potential to convert the Big Bend power plants in Tampa, or outside of Tampa rather. Just wondering if there has been any advancements on that side. And whether that is a project that maybe had accelerated with some of the headroom that we've talked about or you guys have talked about just early on the account terms that you've been created from the tax reform?

Yes, so we are not looking as that project as specifically linked to the tax reform, but certainly we see that as a project that has potentially tremendous benefits for customers. And so we're pursuing that with vigor. There is lots of work still to do, it's early days, but it's a project that as I say, we think is in the best interest for customers.

There are no further questions in the queue at this time.

Well, thank you very much it's pretty awesome. Just a few final comments from me. As factored earlier, it is my last Analyst call before retirement. And so it certainly has been I think a very positive transition between myself and Scott. And so I want to congratulate him and wish Scott and the team all the success in the future, which I know that they will have. I also want to express my thanks to the analyst and investors who are on the call today. You've all been very supportive of the business over the past 13 plus years and I very much thank you for that. It's been an honor and a privilege to work with you and with my team to serve our customers over this period. So thank you very much and we appreciate your interest in Emera.

This does conclude today's conference call. Thank you for your participation and you may now disconnect.