Company records 12th year of record earnings despite expropriation
At its annual general meeting in St. John's Friday, Fortis cited record profits, a deal on the horizon to break new ground in the United States and a developing $900-million hydro project in British Columbia.
Despite all this, when the meeting was turned over to questions from shareholders, the first question was on an entirely different subject - Fortis interests in Belize.
In June 2011, Belize Electricity Ltd. - the primary distributor of electricity in Belize, with a customer base of about 77,000 - was expropriated by the Government of Belize.
Fortis held a 70 per cent ownership stake in the company at the time and is still seeking compensation.
Asked one shareholder, "Are we going to get our money back?"
"Good question," said Stan Marshall, Fortis president and CEO. "Your guess is as good as mine."
Belize Electricity is a power distributor, but does not produce the power, instead purchasing it from several sources. One of those sources is Belize Electric Co. Ltd. - a hydro power company in which Fortis continues to hold stake.
"There have been ongoing difficulties on the regulatory front there," Marshall said, adding Fortis is working to sort through outstanding issues.
Building for the future
Fortis spent $1.2 billion on capital projects in 2011.
About 80 per cent of the company's estimated $1.3 billion in capital spending in the coming year is expected to be in Western Canada, fueled in part by continued work on the $900 million Waneta hydroelectric expansion project.
"It's on time, on budget," Marshall said of the project.
SNC-Lavalin holds the design-build contract for the development.
When completed, under a 40-year agreement, Fortis will operate and maintain the hydro facility and the output will be sold to Columbia Power Corporation and Columbia Basin Trust (with a 32.5 per cent and 16.5 per cent stake in the project respectively).
Staying in the hotel business
One of the shareholders attending the Fortis annual general meeting asked about the company interest in hotels, asking if the company had considered backing off from that work to focus more on utilities.
Fortis maintains 22 hotels in eight provinces and commercial retail and office spaces, mostly in Atlantic Canada.
Marshall said the properties were not a heavy burden for management and were also profitable for the company.
"I don't foresee us disposing of the property company in the near future," he said.
Fortis has marked record earnings for the 12th consecutive year - $318 million in 2011.
The total in 2010 was $285 million. In 2009, it was $262 million.
For shareholders, the continued rise has resulted in a value of $1.75 per common share in 2011, versus $1.65 in 2010 or $1.54 in 2009.
Heading into the rest of the year, Marshall said Fortis will continue to seek out potential utility acquisitions, but the current focus is on closing a deal to acquire CH Energy Group Inc. based in Poughkeepsie, New York.
The deal, first announced Feb. 21 of this year, will come at a purchase price of US$1.5 billion, including the assumption of about US$500 million of debt.
A vote on the deal, by CH Energy Group Inc. shareholders, is expected before the end of June.
Fortis is expecting the deal to close before 2013.
Fortis is parent to Newfoundland Power and Fortis Properties and maintains its head office in St. John's.