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Net income attributable to common shares increased by $391 million or $0.38 per share for the three months ended March 31, 2017 compared to the same period in 2016. Net income per common share in 2017 included the dilutive effect of issuing 161 million common shares in 2016.
The 2017 results included:
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-- a charge of $24 million after tax for integration-related costs
associated with the acquisition of Columbia -- a charge of $10 million after tax for costs related to the monetization of our U.S. Northeast power business -- a charge of $7 million after tax related to the maintenance of Keystone XL assets which are being expensed pending further advancement of the project -- a $7 million income tax recovery related to the realized loss on a third party sale of Keystone XL project assets. A provision for the expected pre-tax loss on these assets was included in our 2015 impairment charge, but the related income tax recoveries could not be recorded until realized./T/
The 2016 results included:
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-- a $176 million after-tax impairment charge on the carrying value of our
Alberta PPAs as a result of our decision to terminate the PPAs -- a charge of $26 million after tax relating to costs associated with the acquisition of Columbia -- a charge of $6 million after tax related to Keystone XL costs for the maintenance and liquidation of project assets which are being expensed pending further advancement of the project -- an additional $3 million after-tax loss on the sale of TC Offshore which closed on March 31, 2016./T/
Net income in all periods included unrealized gains and losses from changes in risk management activities which we exclude, along with the above-noted items, to arrive at comparable earnings.
Comparable earnings increased by $204 million for the three months ended March 31, 2017 compared to the same period in 2016 as discussed below in the reconciliation of net income to comparable earnings.
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RECONCILIATION OF NET INCOME TO COMPARABLE EARNINGS
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three months ended March 31 ------------------------------ (unaudited - millions of $, except per share amounts) 2017 2016 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Net income attributable to common shares 643 252 Specific items (net of tax): Acquisition related costs - Columbia 24 26 U.S. Northeast power monetization 10 - Keystone XL asset costs 7 6 Keystone XL income tax recoveries (7) - Alberta PPA terminations - 176 TC Offshore loss on sale - 3 Risk management activities(1) 21 31 ---------------------------------------------------------------------------- Comparable earnings 698 494 ---------------------------------------------------------------------------- Net income per common share $0.74 $0.36 Specific items (net of tax): Acquisition related costs - Columbia 0.03 0.04 U.S. Northeast power monetization 0.01 - Keystone XL asset costs 0.01 0.01 Keystone XL income tax recoveries (0.01) - Alberta PPA terminations - 0.25 Risk management activities 0.03 0.04 ---------------------------------------------------------------------------- Comparable earnings per share $0.81 $0.70 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- -------------------------------------------------------------- -------------------------------------------------------------- (1) three months ended Risk management activities March 31 -------------------- (unaudited - millions of $) 2017 2016 -------------------------------------------------------------- -------------------------------------------------------------- Canadian Power 1 (13) U.S. Power (62) (115) Liquids marketing - (2) Natural Gas Storage 5 5 Foreign exchange 15 53 Income tax attributable to risk management activities 20 41 -------------------------------------------------------------- Total unrealized losses from risk management activities (21) (31) -------------------------------------------------------------- --------------------------------------------------------------/T/
Comparable earnings increased by $204 million or $0.11 per share for the three months ended March 31, 2017 compared to the same period in 2016. Comparable earnings per share in 2017 included the dilutive effect of issuing 161 million common shares in 2016.
The year-over-year increase in comparable earnings was primarily the net effect of:
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-- higher contribution from U.S. Natural Gas Pipelines due to incremental
earnings from Columbia following the July 1, 2016 acquisition and higher ANR transportation revenues resulting from a FERC-approved rate settlement effective August 1, 2016 -- higher interest expense as a result of debt assumed in the acquisition of Columbia on July 1, 2016 and long-term debt issuances -- higher contribution from Mexico Natural Gas Pipelines due to earnings from Topolobampo beginning in July 2016 and Mazatlan beginning in December 2016 -- lower interest income and other due to realized losses in 2017 compared to realized gains in 2016 on derivatives used to manage our net exposure to foreign exchange rate fluctuations on U.S. dollar-denominated income -- lower earnings from Bruce Power mainly due to lower gains from contracting activities and higher interest expense, partially offset by higher volumes resulting from fewer outage days -- higher earnings from Western Power mainly due to termination of the Alberta PPAs in 2016 -- higher earnings from Liquids Pipelines due to higher volumes -- higher earnings from Natural Gas Storage due to higher realized natural gas storage price spreads -- higher earnings from U.S. Power due to depreciation no longer being recorded effective November 1, 2016 on the assets classified as held for sale and higher realized power prices, partially offset by lower capacity revenues in New York and higher fuel costs and lower generation volumes at our New York and New England facilities./T/
Capital Program
We are developing quality projects under our capital program. These long-life infrastructure assets are supported by long-term commercial arrangements with creditworthy counterparties or regulated business models and are expected to generate significant growth in earnings and cash flow.
Our capital program consists of approximately $23 billion of near-term projects and approximately $48 billion of medium to longer-term projects. Amounts presented exclude maintenance capital expenditures, capitalized interest and AFUDC.
All projects are subject to cost adjustments due to market conditions, route refinement, permitting conditions, scheduling and timing of regulatory permits.
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Near-term projects
---------------------------------------------------------------------------- ---------------------------------------------------------------------------- at March 31, 2017 Expected Estimated in-service project Carrying (unaudited - billions of $) Segment date cost value ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Canadian Mainline Canadian Natural Gas Pipelines 2017-2018 0.3 0.1 NGTL System - North Montney Canadian Natural Gas Pipelines 2019-2020 1.4 0.3 - Saddle West Canadian Natural Gas Pipelines 2019 0.6 - - 2016/17 Facilities Canadian Natural Gas Pipelines 2017-2020 2.2 0.9 - 2018 Facilities Canadian Natural Gas Pipelines 2018-2020 0.6 - - Other Canadian Natural Gas Pipelines 2017-2020 0.3 - Columbia Gas - Leach XPress U.S. Natural Gas Pipelines 2017 US 1.4 US 0.5 - Modernization I U.S. Natural Gas Pipelines 2017 US 0.2 US 0.1 - WB XPress U.S. Natural Gas Pipelines 2018 US 0.8 US 0.3 - Mountaineer XPress U.S. Natural Gas Pipelines 2018 US 2.0 US 0.2 - Modernization II U.S. Natural Gas Pipelines 2018-2020 US 1.1 - Columbia Gulf - Rayne XPress U.S. Natural Gas Pipelines 2017 US 0.4 US 0.3 - Cameron Access U.S. Natural Gas Pipelines 2018 US 0.3 US 0.2 - Gulf XPress U.S. Natural Gas Pipelines 2018 US 0.6 US 0.1 Midstream - Gibraltar U.S. Natural Gas Pipelines 2017 US 0.3 US 0.2 Tula Mexico Natural Gas Pipelines 2018 US 0.6 US 0.4 Villa de Reyes Mexico Natural Gas Pipelines 2018 US 0.6 US 0.3 Sur de Texas(1) Mexico Natural Gas Pipelines 2018 US 1.3 US 0.2 Grand Rapids(1) Liquids Pipelines 2017 0.9 0.8 Northern Courier Liquids Pipelines 2017 1.0 0.9 White Spruce Liquids Pipelines 2018 0.2 - Napanee Energy 2018 1.1 0.7 Bruce Power - life up to extension(2) Energy 2020+ 1.1 0.1 ---------------------------------------------------------------------------- 19.3 6.6 Foreign exchange impact on near-term projects(3) 3.2 0.9 ---------------------------------------------------------------------------- Total near-term projects (billions of Cdn$) 22.5 7.5 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- (1) Our proportionate share. (2) Amounts reflect our proportionate share of the remaining capital costs that Bruce Power expects to incur on its life extension investment programs in advance of major refurbishment outages which are expected to begin in 2020. (3) Reflects U.S./Canada foreign exchange rate of $1.33 at March 31, 2017./T/
Medium to longer-term projects
The medium to longer-term projects have greater uncertainty with respect to timing and estimated project costs. The expected in-service dates of these projects are post-2020, and costs provided in the schedule below reflect the most recent costs for each project as filed with the various regulatory authorities or otherwise determined. These projects have all been commercially secured or, in the case of Keystone XL, commercial support is expected to be achieved. All these projects are subject to approvals that include sponsor FID and/or complex regulatory processes.
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---------------------------------------------------------------------------- ---------------------------------------------------------------------------- at March 31, 2017 Estimated project Carrying (unaudited - billions of $) Segment cost value ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Heartland and TC Terminals Liquids Pipelines 0.9 0.1 Upland Liquids Pipelines US 0.6 - Grand Rapids Phase 2(1) Liquids Pipelines 0.7 - Bruce Power - life extension(1) Energy 5.3 - Keystone projects Keystone XL(2) Liquids Pipelines US 8.0 US 0.3 Keystone Hardisty Terminal(2) Liquids Pipelines 0.3 0.1 Energy East projects Energy East(3) Liquids Pipelines 15.7 0.8 Eastern Mainline Canadian Natural Gas Pipelines 2.0 0.1 BC west coast LNG-related projects Coastal GasLink Canadian Natural Gas Pipelines 4.8 0.4 Prince Rupert Gas Transmission Canadian Natural Gas Pipelines 5.0 0.5 NGTL System - Merrick Canadian Natural Gas Pipelines 1.9 - ---------------------------------------------------------------------------- 45.2 2.3 Foreign exchange impact on medium to longer-term projects(4) 2.8 0.1 ---------------------------------------------------------------------------- Total medium to longer-term projects (billions of Cdn$) 48.0 2.4 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- (1) Our proportionate share. (2) Carrying value reflects amount remaining after impairment charge recorded in fourth quarter 2015. (3) Excludes transfer of Canadian Mainline natural gas assets. (4) Reflects U.S./Canada foreign exchange rate of $1.33 at March 31, 2017./T/
Outlook
Our overall comparable earnings outlook for 2017 remains consistent with what was previously included in the 2016 Annual Report.
Consolidated acquisition, equity investments and capital spending
Our expected total capital expenditures as outlined in the 2016 Annual Report remain unchanged.
Canadian Natural Gas Pipelines
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