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EPCOR Announces Quarterly Results – Part 2


Energy Services' operating income, excluding change in the fair value of contracts-for-differences, decreased by $3 million for the three months ended March 31, 2017, compared with the corresponding period in 2016, primarily due to lower Energy Price Setting Plan margins.

Capital Spending and Investment

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---------------------------------------------------------------------------- ---------------------------------------------------------------------------- (Unaudited, $ millions) Three months ended March 31, 2017 2016 ---------------------------------------------------------------------------- Water Services $ 32 $ 29 Distribution and Transmission 64 57 Energy Services 1 - Corporate 1 2 ---------------------------------------------------------------------------- Total capital spending and investment $98 $88 ---------------------------------------------------------------------------- ----------------------------------------------------------------------------

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Total capital spending and investment was higher for the three months ended March 31, 2017, compared with the corresponding period in 2016, primarily due to increased spending in the Distribution and Transmission segment on the installation of advanced meter infrastructure for customers in Edmonton and ongoing renovations to its major work center. In addition, the Water segment had increased spending on the Gold Bar Hydrovac Sanitary Grit Treatment Facility project continuing from 2016 into 2017 and various projects in the U.S. This was partially offset by decreased spending in the Water Services segment due to the Gold Bar Grit Tanks project being substantially completed and placed into service in 2016.

Consolidated statements of financial position

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---------------------------------------------------------------------------- ---------------------------------------------------------------------------- (Unaudited, $ millions) March 31, December Increase Explanation of 2017 31, 2016 (decrease) material changes ---------------------------------------------------------------------------- Cash and cash $ 143 $ 191 $ (48) Refer to equivalents Consolidated Statements of Cash Flows section. ---------------------------------------------------------------------------- Trade and other 445 325 120 Increase primarily receivables due to reclassification of the current portion of the Capital Power receivable related to the back-to-back debt, partially offset by a decrease in accrued energy revenue. ---------------------------------------------------------------------------- Available-for-sale - 6 (6) Decrease due to sale investment in of the remaining Capital Power Capital Power shares. ---------------------------------------------------------------------------- Inventories 15 14 1 ---------------------------------------------------------------------------- Other financial 103 265 (162) Decrease due to assets reclassification of the current portion of the Capital Power receivable related to the back-to-back debt to trade and other receivables, net of construction financing. ---------------------------------------------------------------------------- Deferred tax assets 84 84 - ---------------------------------------------------------------------------- Property, plant and 5,026 4,983 43 Increase primarily equipment due to capital expenditures, partially offset by unfavorable foreign currency valuation adjustments, depreciation and asset disposals and retirements. ---------------------------------------------------------------------------- Intangible assets 290 293 (3) Decrease primarily and goodwill due to amortization of assets with finite lives and unfavorable foreign currency valuation adjustments, partially offset by capital expenditures. ---------------------------------------------------------------------------- Trade and other 247 299 (52) Decrease primarily payables due to payments and release of holdbacks on the Regina wastewater treatment plant project as well as lower capital accruals, partially offset by an increase in delivery service charges payable. ---------------------------------------------------------------------------- Loans and 1,914 1,920 (6) Decrease primarily borrowings due to repayment of (including current long-term debt and portion) favorable foreign currency valuation adjustments on U.S. dollar denominated debt. ---------------------------------------------------------------------------- Deferred revenue 1,042 1,041 1 Increase primarily (including current due to contributions portion) received from developers, partially offset by revenue recognized and favorable foreign currency valuation adjustments. ---------------------------------------------------------------------------- Provisions 118 111 7 Increase primarily (including current due to employee portion) benefits accruals and net receipts of refundable contributions from customers and developers. ---------------------------------------------------------------------------- Other liabilities 71 72 (1) (including current portion) ---------------------------------------------------------------------------- Deferred tax 46 46 - liabilities ---------------------------------------------------------------------------- Equity attributable 2,668 2,672 (4) Decrease due to to the Owner of dividends paid and the Company other comprehensive loss, partially offset by comprehensive income for the period. ---------------------------------------------------------------------------- ----------------------------------------------------------------------------
Consolidated statements of cash flows ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- (Unaudited, $ millions) Cash inflows (outflows) ---------------------------------------------------------------------------- Three months ended Increase March 31, 2017 2016 (decrease) Explanation ---------------------------------------------------------------------------- Operating $ 82 $ 136 $ (54) Decrease primarily reflects lower funds from operations as a result of reduced income from operations and lower funds from the change in non-cash operating working capital resulting from a lower decrease in trade and other receivables and a higher decrease in trade and other payables. Investing (91) 83 (174) Decrease is primarily due to lower payments related to long-term loans receivable from Capital Power, lower payments from Regina due to receipt of the milestone payment in the first quarter of 2016, lower proceeds from the disposal of assets and higher capital expenditures partially offset by lower advances on construction financing and proceeds from the sale of the remaining shares of Capital Power. Financing (39) (219) 180 Increase is primarily due to lower repayment of long-term debt, including obligations related to Capital Power, and short-term loans and borrowings partially offset by higher payment of dividend to the City. Opening cash and 191 36 155 cash equivalents ---------------------------------------------------------------------------- Closing cash and $ 143 $ 36 $ 107 cash equivalents ---------------------------------------------------------------------------- ----------------------------------------------------------------------------

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Operating Activities and Liquidity

The Company maintains its financial position through rate-regulated utility and contracted operations which generate stable cash flows.

The Company expects to have sufficient liquidity to finance its plans and fund its obligations for the remainder of 2017 with a combination of cash on hand, cash flow from operating activities, interest and principal payments related to long-term loans receivable from Capital Power, the issuance of commercial paper, public or private debt offerings and draws upon existing credit facilities described below under Financing.

Cash flows from operating activities would be impaired by events that cause severe damage to our facilities and would require unplanned cash outlays for system restoration repairs. Under those circumstances, more reliance would be placed on our credit facilities for working capital requirements until a regulatory approved recovery mechanism or insurance proceeds are put in place.



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