31
Investor Presentation June 2020
Investor Presentation
June 2020
2
Forward-Looking Information This document contains “forward-looking information” and statements which reflect the current view with respect to the Company’s expectations regarding future growth, results of operations, performance, business prospects and opportunities and may not be appropriate for other purposes within the meaning of applicable Canadian securities laws. All such information and statements are made pursuant to safe harbour provisions contained in applicable securities legislation. The words “anticipates”, “believes”, “could”, “estimates”, “expects”, “intends”, “may”, “plans”, “projects”, “schedule”, “should”, “budget”, “forecast”, “might”, “will”, “would”, “targets” and similar expressions are often intended to identify forward-looking information, although not all forward-looking information contains these identifying words. The forward-looking information reflects management’s current beliefs and is based on information currently available to Emera’s management and should not be read as guarantees of future events, performance or results, and will not necessarily be accurate indications of whether, or the time at which, such events, performance or results will be achieved.
The forward-looking information is based on reasonable assumptions and is subject to risks, uncertainties and other factors that could cause actual results to differ materially from historical results or results anticipated by the forward-looking information. Factors that could cause results or events to differ from current expectations are discussed in the Business Overview and Outlook section of Management’s Discussion and Analysis (“MD&A”) and may also include: regulatory risk; operating and maintenance risks; changes in economic conditions; commodity price and availability risk; capital market and liquidity risk; future dividend growth; timing and costs associated with certain capital projects; the expected impacts on Emera of challenges in the global economy; estimated energy consumption rates; maintenance of adequate insurance coverage; changes in customer energy usage patterns; developments in technology that could reduce demand for electricity; weather; commodity price risk; unanticipated maintenance and other expenditures; system operating and maintenance risk; derivative financial instruments and hedging; interest rate risk; credit risk; commercial relationship risk; disruption of fuel supply; country risks; environmental risks; foreign exchange; regulatory and government decisions, including changes to environmental, financial reporting and tax legislation; risks associated with pension plan performance and funding requirements; loss of service area; risk of failure of information technology infrastructure and cybersecurity risks; market energy sales prices; labour relations; and availability of labour and management resources.
Readers are cautioned not to place undue reliance on forward-looking information as actual results could differ materially from the plans, expectations, estimates or intentions and statements expressed in the forward-looking information. All forward-looking information in this document is qualified in its entirety by the above cautionary statements and, except as required by law, Emera undertakes no obligation to revise or update any forward-looking information as a result of new information, future events or otherwise.
Nothing in this document should be construed as an offer or sale of securities of Emera or any other person.
Non-GAAP MeasuresEmera uses financial measures that do not have standardized meaning under USGAAP and may not be comparable to similar measures presented by other entities. Emera calculates the non-GAAP measures by adjusting certain GAAP measures for specific items the Company believes are significant, but not reflective of underlying operations in the period. Refer to the Non-GAAP Financial Measures section of our MD&A for further discussion of these items.
Forward-Looking Information and Non-GAAP Measures
$32BAssets
$6.1BRevenues
65%
US earnings
7.4K
Employees
Emera at a Glance
Predominately regulated portfolio of electric and natural gas utilities, natural gas pipelines and energy
marketing and trading serving 2.5 million customers across North
America and the Caribbean
▪ EMERA
NEWFOUNDLAND
& LABRADOR
▪ EMERA INC
▪ NOVA SCOTIA POWER
▪ EMERA ENERGY
▪ EMERA NEW
BRUNSWICK
▪ TAMPA ELECTRIC
▪ PEOPLES GAS
▪ NEW MEXICO GAS
▪ GRAND BAHAMA POWER
▪ BARBADOS LIGHT & POWER
▪ DOMINICA ELECTRICITY SERVICES
3 As at December 31, 2019
4
$18.9Baverage rate base
8.2%rate base growth through to 2022
$7.5B2020-2022 capital program to drive rate base
Portfolio of High-Quality Regulated Utilities
45%generation rate base
55%of rate base is inthe state of Florida
55%energy delivery rate base
$0.84 $0.89 $1.16 $1.31 $1.36 $1.41 $1.48 $1.66 $2.00 $2.13 $2.28 $2.38
00 05 10 11 12 13 14 15 16 17 18 19 20F 21F 22F
Note: Denotes annual cash dividends paid
4-5%target through 2022
6% CAGR since 2000
Delivering a Growing and Sustainable Dividend
5
10.9%
10.6%
13.3%
12.4%
4.8%
6.1%
7.0%
10.2%
7.1%
9.0%
10.3%
9.5%
3 year
5 year
10 year
20 year
Emera TSX Utilities Index PHLX Utility Index
Note: Total shareholder return as at March 31, 20206
Superior Long-Term Shareholder Returns
Emera
Strategy
CUSTOMER FOCUS Cleaner, affordable, reliable energy delivered safely
ASSET FOCUS Regulated electricity & gas assets
GEOGRAPHIC FOCUS North American markets with opportunities for growth
FINANCIAL FOCUS
Dividend Growth 4-5% growth target through 2022
Rate Base Growth8% compound annual growth to 2022
Disciplined Capital Allocationbalance the ongoing growth and diversity of the portfolio to achieve our financial targets
Balance Sheetachieve target capital structure, supporting our investment grade ratings
STRATEGIC INITIATIVES
Carbon Reduction investing in renewable and cleaner generation to reduce the carbon intensity of our operations
Operational Excellence & AffordabilityInvesting in, and optimizing our systems for reliability with a focus and on cost control and “Fuels to Assets” and “O&M to Assets” initiatives
Customer Experience and InnovationDelivering on our promise to customers with the best experience and solutions for today and the future
8
Committed to Sustainability
• Our strategic focus has been to safely deliver cleaner, affordable, reliable energy to our customers for well over a decade
• Reducing carbon emissions has always been, and remains, fundamental to our strategy
• Our approach to the Social and Governance aspects of our business define who we are and how we work
• Our 2018 Sustainability Update highlights Emera’s progress on Environment, Social and Governance initiatives1
1 For further details refer to Emera’s 2018 Sustainability Update at emerasustainability.com; all data as at December 31, 2018, unless otherwise noted
24%reduction in GHG
emissions since 2005
832 MWinstalled renewable capacity (19.5% increase from 2017)
13%decrease in OSHA
Injury Rate from 2017
Top 100one of Canada’s Top
100 Employers for 2019
Governance Gavelaward winner in 2019
9
$2.9
$2.3 $2.3
2020F 2021F 2022F
Forecasted Capital Spend 1
1 Forecasted capital and average rate base in billions of Canadian dollars. US dollar denominated capex and rate base is translated at a forecasted average USD/CAD exchange rate of 1.30 in 2020-2022. Only approved and ordinary course capital projects are included. Capital spend and rate base forecast by affiliate can be found in the appendix. Forecast is subject to change in the normal course of business. Excludes Emera Maine.
$7.5B+ Capital Program Drives Rate Base Growth
$17.2$18.9
$20.6$22.2
$23.6
2018A 2019F 2020F 2021F 2022F
Forecasted Rate Base 1
Additional $200 to $500 million of capital opportunities over the forecast period
Florida Investment Highlights
10
Solar
• Investing US $850M to install 600MW of solar by 2021 (~550MW in-service today)
• Further 600MW (related US $600M included in the 2020-2022 capital forecast)
Big Bend Modernization
• Investing US $850M to repower Unit 1 with natural gas combined cycle technology and retire Unit 2
• Construction began in August 2019 and will be complete in 2023
• Project is on schedule and on budget
Storm Protection
• Legislation passed promoting utility storm-hardening investments
• Tampa Electric filed its storm protection plan with the FPSC in 2020
• 2020-2022 capital forecast includes US ~$300M of related investments
Target Sources of Funding 2020 to 2022
Reinvested Cash Flow
Net Debt Issuances
DRIP, ATM and HybridCapital
~15% to 20% ~50 % to 55%
~25% to 35%
1 Reinvested cash flow is net of expected common and preferred dividend requirements2 Net debt issuances include Opco debt issuances net of Holdco repayments
1
2
• Cash flow from operations provides significant funding
• Regulated capital structures maintained
• Equity requirements to be filled with DRIP and ATM, balanced with hybrid capital
11
12
1. Achieve target capital structure2. Sustained cash flow-to-debt metrics > 12% 3. Sustained holdco debt-to-total debt < 40%
Emera Credit Objectives
Emera Corporate Credit Ratings
Moody’s S&P Fitch
Baa3(Stable)
BBB-1
(Stable)BBB
(Stable)
55%35%
10%
Target Capital Structure
Debt Equity Hybrid Capital
1 Issue rating; issuer rating of BBB (stable)2 Includes preferred shares and hybrid debt
Executing on Credit Objectives
2
59%30%
11%
December 31, 2019
Debt Equity Hybrid Capital
13
1 Equity includes the NCI and excludes AOCI2 Includes preferred shares and hybrid bonds
Strengthening the Balance Sheet
1 2
Target of 55% Debt, 35% Equity and 10% Preferred Equity
65%
25%
10%
December 31, 2016
57%32%
11%
March 31, 2020
Emera’s Resiliency
• Emera is performing well with minimal COVID-19 impact on the financial results
• Customer mix is heavily weighted to the residential customer class with less dependence on industrial and commercial customers
• Emera Maine transaction has provided significant liquidity to manage through the pandemic and beyond
• Bad debt recovery has been strong through other periods of economic stress
• Large capital projects have been prioritized and are advancing with additional health and safety precautions
• Emera’s strategy remains relevant despite uncertainties related to COVID-19
14
Emera’s Liquidity
15
$4,600
$3,150
$3,000
$1,550
RevolvingCredit
Facilities
Borrowing onRevolvers
Cash andCash
Equivalents
TotalLiquidity
Emera’s Liquidity1
2
• Proceeds from the sale of Emera Maine bolstered Emera’s liquidity position
• NSP issued a $300 million, 30-year private placement in April providing additional liquidity
• Emera and its affiliates have no significant long-term debt maturities in 2020
• Pension plans are well funded with no significant short-term funding requirements
1 As at March 31, 2020, in millions of Canadian dollars2 Cash and cash equivalents included Emera Maine proceeds. Proceeds were used to reduce the revolvers in Q2 2020
~$3.2 billion of liquidity
SuperiorShareholder Returns
~11%total shareholder return over the last five years
Consistently outperform the PHLX UtilityIndex and the TSX Capped Utilities Index
Representation in the TSX Composite, TSX Capped Utilities, TSX60 and select MSCI and FTSE World Indices
Regulated, Florida-Focused Portfolio
95%of earnings derived from regulated investments
55%of rate base located in Florida
~65%of earnings from US operations
Visible
Growth Plan
$7.5B+capital investment plan to drive rate base growth through 2022
8%+rate base growth through 2022, driven by Florida investments
70%of capital program to be invested in Florida
Growing & Sustainable Dividend
4-5%dividend growth target through 2022
10%growth in dividend per share over the last five years
4.7%dividend yield1
Why Invest in Emera
161 As of March 31, 2020
17
AppendixTable of Contents
Sustainability• Slides 24-27| Carbon Transition at Tampa Electric & NSPI• Slide 28 | Government Targets and Regulations
Capex
Forecast
• Slide 29 | Capital Forecast by Affiliate 2019-2022• Slides 30| 2020-2022 Capex by Type & Geography
Rate Base
Forecast• Slide 31 | Rate Base Forecast by Affiliate 2018-2022
Emera Affiliate
Summaries• Slides 18-23
Tampa Electric
18
Utility Type Vertically integrated electric utility
Regulator Florida Public Service Commission
Regulatory Construct9.25-11.25% Allowed ROE | 10.5% Earned ROE | 54% Allowed Equity | $7.1 billion Rate Base
Regulatory Arrangements Settlement agreement through 2021
Capex $2.9 billion (2020-2022)
Generation84% Natural Gas | 6% Coal & Petcoke | 4% Renewable | 6% Purchases
T&D 2,150 km of transmission | 18,750 km of distribution
Customers 765,000
Note: All data as at December 31, 2019, and in US dollars
19
Gas LDCs
New Mexico Gas Company
Type of Utility Natural gas transmission and distribution system
Regulator New Mexico Public Regulation Commission
Regulatory Construct9.1% Allowed ROE | 52% Allowed Equity | $0.6 billion Rate Base
Regulatory Arrangements
Filed a general rate case in December 2019 for new rates in 2021
Capex $0.3 billion (2020-2022)
T&D 2,600 km of transmission | 17,000 km of distribution
Customers 534,000
Peoples Gas System
Type of Utility Natural gas distribution system
Regulator Florida Public Service Commission
Regulatory Construct9.25-11.75% Allowed ROE | 10% Earned ROE | 54.7% Allowed Equity | $1.1 billion Rate Base
Regulatory Arrangements Settlement agreement through 2020
Capex $0.9 billion (2020-2022)
Gas Lines20,900 km of main lines | 11,900 km of service lines
Customers 406,000
Note: All data as at December 31, 2019, and in US dollars
20
Utility Type Vertically integrated electric utility
Regulator Nova Scotia Utility and Review Board
Regulatory Construct8.75-9.25% Allowed ROE | 9.25% Earned ROE | 40% Allowed Equity | $4.1 billion Rate Base
Regulatory ArrangementsRate stabilization agreement through 2019 and 2020-2022 fuel stability plan in place
Capex $1.1 billion (2020-2022)
Generation12% Natural Gas | 53% Coal & Petcoke | 28% Renewable | 7% Purchases
T&D 5,000 km of transmission | 27,000 km of distribution
Customers 523,000
Nova Scotia Power
Note: All data as at December 31, 2019, and in Canadian dollars
21
Utility CompaniesBarbados Light & Power Company Ltd. Grand Bahama Power Company Ltd. Dominica Electricity Services Ltd.
Utility Types Vertically integrated electric utilities
RegulatorsBLPC: Fair Trade Commission, Barbados GBPC: The Grand Bahama Port Authority Domlec: Independent Regulatory Commission, Dominica
Regulatory Construct2 10.1% Allowed Return on Rate Base (RORB) | $1.0 billion Rate Base
Regulatory Arrangements GBPC rate stability agreement through 2021
Capex $0.4 billion (2020-2022)
Generation 95% Oil-fired | 5% Renewables
T&D 2,150 km of transmission | 18,750 km of distribution
Customers 180,000
Emera Caribbean
1 Note: All data as at December 31, 20192 Represents weighted average return on rate base
22
Maritime Link
Type of Utility Transmission
Regulator Nova Scotia Utility and Review Board
Regulatory Construct8.75-9.25% Allowed ROE | 30% Allowed Equity | $1.8 billion Rate Base
Regulatory Arrangements
In 2019 UARB approved NSPML’s interim assessment for recovery from NSPI of 2020 Maritime Link costs of ~$145 million. The total recovery of $145 million includes approximately $115 million of O&M, debt financing and equity financing costs, and approximately $30 million for depreciation and amortization of financing costs.
Labrador Island Link
Type of Utility Transmission
Regulatory Construct 8.50% Allowed ROE | $550 million equity investment
Further Equity Investment $0.3 billion in 2020
Emera Newfoundland and Labrador
Note: All data as at December 31, 2019, and in Canadian dollars
23
Other Investments
PipelinesEmera New Brunswick | Maritimes and Northeast Pipeline
Emera New Brunswick • Regulated by the National Energy Board• 145 km long natural gas pipeline• Firm service agreement with Repsol Energy expiring in
2034
Maritimes and Northeast Pipeline• Regulated by the National Energy Board• 1,100 km long natural gas transmission line• 12.9% equity investment
Emera Energy Emera Energy Services | Bear Swamp
Emera Energy Services • $15-30 million USD annual earnings ($45-70 million
USD of margin)• Earnings dependent on market conditions• Minimal commodity exposure
Bear Swamp • 50% joint venture • 600 MW hydro pumped storage capacity• Attracts ISO – NE capacity revenue
Note: All data as at December 31, 2019
Nova Scotia Power’s Journey from Coal to Clean
2010
2018
✓ Maritime Link placed into service✓ Nova Scotia Power generates 30%
renewable energy and reduces emissions by 35% compared to 2005 levels, equivalent to the shut down of ~450MW coal
• NS block of energy flows from Muskrat Falls
• Nova Scotia Power expected to provide 40% renewable energy
2020
✓ Nova Scotia Power’s first two wind farms began producing power
2010-2018
✓ 612 MW of wind installed across the province by IPPs and Nova Scotia Power
✓ 112 MW of wind installed across the province by IPPs
2007-2010
• Expecting 60% reduction in GHG emissions compared to 2005 levels
• Lingan Unit 2 retired (150MW coal unit)
2012
✓ Maritime Link sanctioned
2021
2040
• All Nova Scotia Power’s coal assets are to be retired (Equivalency Agreement)
Coal to Clean by the Numbers
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2005A 2010A 2015A 2016A 2017A 2018A 2019A
Coal Oil & Petcoke Natural Gas Renewables Purchases GHG Emissions as a % of 2005 Levels
37% reduction in GHG emissions1 and 20% reduction
in coal generation1
1 Compared to 2005 levels
26
Transitioning to Cleaner Energy at Tampa Electric
2004 2018 2023
✓ Big Bend modernization announced; will upgrade Unit 1 from coal to combined-cycle natural gas and retire Unit 2 early
✓ First 45MW of new solar in service
• Additional 150MW of solar in service (555MW cumulative)
2020
2017
✓ Polk 2 expansion completed; NOx emissions reduced by over 75%
✓ Big Bend 25MW solar array placed into service
✓ 600MW of new solar projects announced
2010
• Big Bend modernization operating in combined-cycle
• Expecting 45% reduction in GHG emissions compared to 2005 levels
✓ Additional 260MW of new solar in service (405MW cumulative)
✓ Community solar program launched (17.5MW)
2019
• Final 45MW of new solar in service (600MW cumulative)
• Big Bend modernization operating in simple-cycle
2021
✓ Bayside Power plant converts from coal to combined-cycle natural gas
✓ Emission Control project at Big Bend reduces NOx emissions by 90% from 1998 levels
✓ Natural Gas Optimization projects at Big Bend and Polk Power Station reduce CO2 emissions by 700,000 tonnes
2015
27
Solar and Natural Gas Displacing Coal at Tampa Electric
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
110%
120%
2005A 2010A 2015A 2016A 2017A 2018A 2019F
Coal Oil & Petcoke Natural Gas Renewables Purchases GHG Emissions as a % of 2005 Levels
1 Compared to 2005; 2 Reflects currently committed projects
19% reduction in GHG
emissions and 66%
reduction in coal generation1
Emera acquires
Tampa Electric
on July 1, 2016
2
CANADA
EMERA’S RESPONSE
Nova Scotia Power
• Achieved 35% reduction in GHG emissions compared to 2005 levels in 2018
• Renewing existing Equivalency Agreement between the Province and the Federal Government and establishing a framework for the next renewal period and beyond
• Participating in provincial cap and trade program
• On track to meet 40% renewable electricity by 2020
• Through CEA, negotiating a delay in the application of the Clean Fuel Standard to the electricity sector
• Nova Scotia Power continues to work with the provincial government on its carbon reduction goals
FEDERAL
Pan-Canadian Framework on Clean Growth and Climate Change
1. Federal Reduction of CO2 from Coal-fired Generation of Electricity Regulations
2. Federal GHG Natural Gas Regulations
3. Federal Carbon Tax
4. Clean Fuel Standard
NOVA SCOTIA
1. Greenhouse Gas Emission Regulations
2. Cap and Trade Program Regulations
3. Renewable Electricity Regulations (40% by 2020)
4. Bill 213, “The Sustainable Development Goals Act” sets a goal of net-zero GHG emissions by 2050
UNITED STATES
Responding to Government Targets and Regulations
EMERA’S RESPONSE
• ACE Rule: Tampa Electric has engaged with regulators on State plan
• New Mexico: NMGC is supportive of state goals; has proposed CNG stations and converting its fleet to CNG, enhanced pipeline leak repair program, installing solar on Company buildings, constructing a pipeline from the Permian Basin to ease flaring or venting of natural gas, enhanced energy efficiency programs
FEDERAL
Affordable Clean Energy (ACE) Rule
STATE
FLORIDA: State plan, in response to ACE Rule, is currently under development
NEW MEXICO: Reduce GHG emission by at least 45% by 2030 relative to 2005
28
BARBADOS
FEDERAL
Energy policy statement targeting 100% renewable energy by 2030
EMERA’S RESPONSE
• BLP is supportive of Barbados’ goal and is working closely with government, the regulator and stakeholders on implementation of a national energy policy
• To date, BLP has commissioned 10MW of solar and 5MW of battery storage and purchases 24MW of customer-owned renewable energy
Capital Forecast by Affiliate
Capital Forecast (CAD millions)1 2020F 2021F 2022F Total
Tampa Electric $ 1,300 1,300 1,170 3,770
Peoples Gas 470 340 390 1,200
New Mexico Gas Company 200 120 110 430
Seacoast 100 50 80 230
Nova Scotia Power 380 380 360 1,120
Emera Caribbean 120 130 130 380
Emera Newfoundland 260 - - 260
Other 70 20 20 110
Baseline Capital Forecast $ 2,900 2,340 2,260 7,500
1 US dollar denominated capex is translated at a forecasted average USD/CAD exchange rate of 1.30 in 2020 - 2022
Additional $200-$500 million of capital opportunities over the forecast period
30 1 Atlantic Canada includes Nova Scotia Power, NSP Maritime Link and the Labrador Island Link
2020-2022 Capital Program
Investing in our Regulated Utilities
1
Rate Base Forecast by Affiliate
Rate Base (CAD millions)1 2018A 2019A 2020F 2021F 2022F2018-2022
CAGR
Tampa Electric2 $ 8,300 9,225 10,275 11,050 11,825 9.3%
Peoples Gas2 1,250 1,450 1,825 2,075 2,475 18.6%
New Mexico Gas Company 725 775 850 990 1,000 8.4%
Nova Scotia Power 3,775 4,100 4,200 4,400 4,575 4.9%
Emera Caribbean 800 950 975 1,050 1,100 8.3%
Maritime Link 1,800 1,825 1,825 1,800 1,775 -0.3%
Labrador Island Link3 525 550 650 850 825 12.0%
Total $ 17,175 18,875 20,600 22,215 23,575 8.2%
1 Average rate base; US dollar denominated rate base is translated at a forecasted average USD/CAD exchange rate of 1.30 in 2019-20222 Capital structures that support the rate base include deferred tax liabilities (DTL), a zero cost-of-capital component of the capital structure in Florida; 2019 capital
structures included DTLs of $1,200 million at Tampa Electric and $200 million at Peoples Gas3 Reflects Emera’s equity investment in the project
