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Emera faces possible retail choice ballot initiative in Florida

Tampa Electric Co., the Florida utility owned by Canada's Emera Inc., is joining other utilities in the state in a court challenge to a proposed ballot initiative that would enable broader customer choice in suppliers if passed.

Political committee Citizens for Energy Choices has proposed the measure, which, if successful, would be on the 2020 ballot. Emera CEO Scott Balfour said that after a Florida Supreme Court hearing set for Aug. 28 a ruling is expected in October. Utility owners, including Duke Energy Corp. and NextEra Energy Inc., have joined the fight on behalf of their Florida subsidiaries, and state politicians and business groups have also filed briefs opposing the measure. Balfour said Emera is "cautiously optimistic" that the proposal will be defeated.

"There were 40 different parties that made submissions to the Supreme Court that were raising concerns with the language in the initiative that has been proposed," Balfour said on an Aug. 12 conference call to discuss Emera's second-quarter 2019 earnings results. "If the decision from the Supreme Court is against our view to the validity of this proposed language, what would happen in terms of process is that a certain number — a threshold number of signatures — would need to be gathered in order for that language to then make the ballot in 2020."

Citizens for Energy Choices had submitted 325,445 petition signatures to the state as of June 24, according to a report by a Miami-based CBS affiliate. A total of 766,200 signatures is required to make the ballot. The group claims that allowing consumers to choose their electricity provider will result in savings of more than US$5 billion annually. Natural gas customers in the state have been able to choose their own providers since 1996.

"It's not clear to us at this point as to whether the requisite number of signatures would be gathered for that to make the ballot or not," Balfour said. "At this point, I'd say we're cautiously optimistic that this will take care of itself."

Florida has some of the lowest energy costs in the U.S. and a "relatively stable" regulatory profile, Balfour said. He said the measure is seen "by other parties in the state as not being the best thing for people in Florida."

Halifax, Nova Scotia-headquartered Emera has committed 70% of its capital spending to Florida over the next three years, Balfour said, as the company transitions generation in the state from fossil fuels to renewables, including a large solar project. On the call, Balfour said the company will benefit from a "notable" ruling from New Mexico regulators that introduced a weather-normalization mechanism. Emera owns New Mexico Gas Co. Inc., which serves 524,000 customers in the state.

Emera said the US$1.3 billion sale of its Emera Maine subsidiary to city of Calgary-owned ENMAX Corp. is progressing and is expected to close before the end of 2019.

Separately on Aug. 12, Emera reported second-quarter 2019 adjusted net income of C$130 million, or 54 Canadian cents per basic share, improving from C$111 million, or 48 Canadian cents basic per share, in the year-ago quarter. The S&P Global Market Intelligence normalized consensus EPS estimate for the quarter was 52 Canadian cents.