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Emera eyes southern US for future expansion after TECO buy

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Essential Energy Insights - September 17, 2020

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Emera eyes southern US for future expansion after TECO buy

Canadian utility owner EmeraInc. has its eye on growth in the southern U.S., particularly Floridaand New Mexico, as it builds on its soon-to-be-closed acquisition of

Completing the US$6.5 billion TECO acquisition will give the company a base to exploreopportunities away from its traditional U.S. base of New England, CEO Chris Huskilsonsaid on the company's first-quarter 2016 earningsconference call May 10. While New England will remain a core market, the companyplans to look south in the near future, he said.

"With the closing of the transaction with TECO, we are alsogoing to be doing business in New Mexico and Florida," Huskilson said. "Wereally are quite excited about entering those markets and we think there are growthopportunities certainly in both of those states and we think these companies arewell-positioned to be able to grow in those markets. You will see somewhat moreof our effort looking in the southern part in the short term, but we still willcontinue to operate in New England and to be very much mindful of the opportunities."

The Halifax, Nova Scotia-headquartered company cleared importantfederal milestones in its TECO acquisition in the first quarter, including obtainingclearance of the Hart-Scott-Rodino waiting period in February and the completionof a foreign investment review in March. Emera still needs to clear regulatory hurdlesin New Mexico to complete the deal. The state's Public Regulation Commission wantsthe company to expand its natural gas distribution network to underserved communitiesand to increase its use of New Mexico-produced fuel. Huskilson said he believesthe process has gone well as the company awaits the results of hearings into itsapplication.

"Our integration plans are progressing well as we move towardclosing, which we still expect to take place in mid-2016," Huskilson said."We continue to see 5% accretion in 2017 and growing to greater than 10% in2019. We look forward to welcoming 3,700 dedicated new employees and serving 1.6million new customers in Florida and New Mexico."

Back in Canada …

Closer to its Canadian home base, Emera said work is progressingon time and on budget at its Maritime Link power transmission project in Newfoundlandand Labrador. The power source for the project, government-owned 's giant hydroelectric project,has been surrounded in controversy after a consultant's report found that it was running over budget and behind schedule.

"All of the aspects of the [Maritime Link] project are underconstruction and progressing," Huskilson said. "We continue to have confidencethe project will be completed on budget and on schedule for completion in late 2017."

The Maritime Link will carry power from Muskrat Falls from theisland of Newfoundland to Nova Scotia, and from there across Canada's Maritime provinces,with connections to the U.S. power grid in New England. Huskilson said it is unclearwhat effect delays in the startup of the power-generation project will have on itstransmission operations.

"As it relates to timing of the generation, it has not beenclear about what they believe the timing is at this point, and I think what we currentlyknow it is somewhat delayed," Huskilson said. "We are planning aroundthat and if you look at what has been filed in the Nova Scotia rate stability plan,you will see it does show a slight delay in the generation coming available."

Despite the delays, Huskilson said the Muskrat Falls projectwill be beneficial once the project starts operation. Several provinces and utilities,including Emera's Nova Scotia PowerInc. subsidiary, plan to use power from the low-emissions generatorto reduce their reliance on fossil-fuel power generation.

"We are looking forward to getting the Maritime Link inservice and the rest of the transmission," Huskilson said. "That willgive us access to the energy loop which I think will be helpful to the entire Atlanticregion."