CALGARY, Feb. 2 /CNW/ - (TSX:FTS) - FortisAlberta Inc. today announced net earnings for the 12 months ending Dec. 31, 2006, of $41.4 million compared to $31.1 million for the same period last year. The higher earnings in 2006 were primarily related to operational efficiencies, lower income tax expense, and an increase in energy deliveries and customer counts due to a strong Alberta economy.
"FortisAlberta's strong performance in the areas of productivity, reliability, safety and customer service resulted in improved earnings. Productivity improvements were achieved even though we are operating in an inflationary provincial economy. FortisAlberta employees demonstrated excellent performance and delivered results for our customers," said Philip Hughes, President and CEO. "Our record $242 million in capital expenditures in 2006, a 46 per cent increase over 2005, provided the infrastructure to support Alberta's rapid economic growth while ensuring continued safe and reliable electrical service to customers."
New customer connections accounted for close to half of the Company's 2006 capital investments. Driven by the oil and gas sector and a residential housing boom, FortisAlberta invested $116 million in customer growth-related projects. The more than 6,000 projects completed were partially a result of new technologies in the oil and gas industry, such as coalbed methane extraction in the Fort Assiniboine area and new production and pumping facilities in the Christina Lake district. In 2007, FortisAlberta plans to invest approximately $273 million, (which includes $16.9 million for Alberta Electric System Operator contributions), in capital investments required to meet the rapid growth driven by Alberta's economy.
Net earnings for the fourth quarter of 2006 were $8.3 million compared to $4.2 million for the same quarter in 2005. The higher earnings were primarily related to increased revenues from load growth, customer counts, operational efficiencies and decreased income tax expense, partially offset by increasing interest and depreciation costs.
Total revenue for the quarter was $65.8 million compared to $58.7 million for the same period in 2005. The higher revenue was due to an increase in energy deliveries and customer counts to residential, commercial and oil and gas customers as a result of a strong provincial economy, the impact of various revenue deferrals, higher franchise fee revenue due to increased transmission rates and higher miscellaneous revenue due to third party work performed and carrying costs on deferral accounts.
FortisAlberta successfully negotiated a settlement with its customers on 2006/07 Revenue Requirements and Terms and Conditions of Service, which were approved by the Alberta Energy and Utilities Board (EUB) in June. New rates were approved by the EUB in the fall, and became effective on January 1, 2007. "We have been successful at ensuring distribution rates remain stable, as evidenced by the less than one per cent cumulative increase over the period from 2004 to 2007," added Hughes.
To enhance system reliability, the Company invested approximately $73 million, a 35 per cent increase over 2005, in projects such as upgrading 45 kilometres of heavy load conductors and replacing aged poles, switches and voltage regulation equipment. Alternate feeds were also built in high-growth areas, including the Leduc/Nisku area. Notwithstanding the pressures associated with the fast pace of growth in the Company, the average FortisAlberta customer experienced 1.86 hours of outage time in 2006, which is approximately a five per cent improvement over the three-year average, and is about one-half of the Canadian Electrical Association three-year average.
In the fourth quarter of 2006, the Company improved its customer satisfaction rating achieving 78 per cent. These results are a 2.6 per cent improvement over 2005, (76 per cent) and a 6.1 per cent improvement over 2004 (73.5 per cent) when Fortis Inc. purchased the company.
In 2006, the Company's safety performance improved 29 per cent as a result of enhanced work methods, increased training, and investment in new tools and equipment. The purchase of new equipment allowed live-line work without creating outages, improving reliability and increasing customer satisfaction, with record results in the fourth quarter of 2006. "FortisAlberta made significant progress in improving its internal safety record during a year when more than 200 employees were hired or changed roles," said Hughes. "FortisAlberta employees have consistently reduced the number of safety incidents each month in 2006 and this is a testament to our success and to the commitment to safety across the organization."
With significant growth in the construction industry in Alberta, public safety continued to be a challenge with an average of one public contact with FortisAlberta's facilities each day. A Joint Utility Safety Team (JUST), led by FortisAlberta, was formed with participation from other utilities in the province and the Government of Alberta. A province-wide radio and newspaper advertising campaign, and a public service television program, were launched by JUST in the fall.
Aligned with FortisAlberta's commitment to the environment, the Company formed a partnership with the Alberta Birds of Prey Centre. Through a multi-year donation from FortisAlberta, the Centre will continue to rescue and rehabilitate birds, offer education outreach programs, and help FortisAlberta design lines and poles to prevent bird injuries, which will improve system reliability for customers.
In 2006, FortisAlberta's community investment program focused on partnerships with STARS Human Patient Simulator Program, United Way chapters across our service area, Run for the Cure, Northern Alberta Children's Festival and Alberta 4-H. In 2007, in addition to continuing these programs and supporting local community causes, FortisAlberta will contribute to Junior Achievement of Southern Alberta and Careers: The Next Generation Registered Apprenticeship Program.
In May, the Company announced its plans to build a new office and operations facility in the City of Airdrie. This facility will house approximately 300 FortisAlberta employees and is expected to be complete early in 2008. This decision aligns with FortisAlberta's focus on increasing its presence in its service area to be closer to customers.
FortisAlberta is an electric distribution company with approximately 430,000 customers and more than 104,000 kilometres of power lines. It is a wholly owned indirect subsidiary of Fortis Inc. - a diversified, international electric utility holding company with assets of approximately $5 billion and annual revenues of more than $1.4 billion. The Common Shares, First Preference Shares, Series C; First Preference Shares, Series E; and First Preference Shares, Series F of Fortis Inc. are traded on the Toronto Stock Exchange under the symbols FTS, FTS.PR.C, FTS.PR.E and FTS.PR.F, respectively. Fortis Inc. information can be accessed at www.fortisinc.com.
FortisAlberta may include forward-looking statements in this release. By their very nature, forward-looking statements are based on underlying assumptions and are subject to inherent risks and uncertainties surrounding future expectations generally. Such events include, but are not limited to, general economic, market and business conditions, regulatory developments, weather and competition. FortisAlberta cautions readers that should certain events or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary significantly from those expected. For additional information with respect to certain of these risks or factors, reference should be made to FortisAlberta's continuous disclosure materials filed from time to time with Canadian Securities Regulatory Authorities. FortisAlberta disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.