Thank you for standing by. This is the conference operator. Welcome to the Algonquin Power & Utilities Corp Third Quarter 2017 Conference Call. [Operator Instructions] I would now like to turn the conference over to Christopher Jarratt, Vice President of Algonquin Power & Utilities Corp. Please go ahead, Mr. Jarratt.

Great, thanks. Good morning, everyone and thank you for joining us on our 2017 third quarter earnings conference call. My name is Chris Jarratt and I am the Vice Chair of Algonquin Power & Utilities Corp. Joining me on the call today are Ian Robertson, Chief Executive Officer and David Bronicheski, our Chief Financial Officer. For your reference, additional information on the results is available for download on our website algonquinpowerandutilities.com as well as a webcast presentation to accompany this earnings call. Over the course of this call, we will be providing information that relates to future events and expected financial positions, which should be considered forward-looking and I direct you to review our full disclosure and non-GAAP financial measures, which are available on the website. We will also read a full disclaimer at the end of this call. As usual, kicking off the call this morning will be Ian Robertson with a review of our Q3 2017 strategic achievements, David Bronicheski will then follow-up with some financial highlights and then Ian will conclude with our future outlook and details on our growth plans, but there will be an opportunity for questions at the end of the call and I would ask you to restrict your questions to two to allow others the opportunity to participate. And with that, I will turn things over to Ian Robertson.

Thanks, Chris. I appreciate everybody taking the time to join us this morning for our Q3 2017 results conference call. I guess from the top line I am pleased to report that our diversified utility and our non-regulated generation portfolio has delivered another quarter of solid financial and operational results, but clearly, our focus of today’s call will be to highlight some of the exciting initiatives that we have undertaken since our last call. With the addition of Empire at the start of this year, APUC has been able to deliver another quarter of we use the word record financial and operational results, with close to 120% increase in adjusted EBITDA, 70% increase in our total assets. And while this significant year-over-year growth in enterprise metrics reflects the materiality of the Empire transaction the per share increase of over 70% in adjusted earnings on a per share basis is more meaningful. That reflects the accretion of the Empire transaction along with our continued execution of our growth plans on the non-regulated power development side of our business. In addition to strong financial results, we are very pleased to report several key accomplishments on the acquisition front. Firstly, two weeks ago, we announced the formation of a strategic joint venture with the company called Abengoa, which we refer to as Abengoa Algonquin Global Energy Solutions or AAGES for short. An element of the execution on this strategy involves the purchase of a 25% equity interest in a company called Atlantica Yield, an organization which owns up portfolio of assets similar to those owned by APUC, but with a global footprint. Together, these transactions mark APUC’s inaugural steps to the global energy and water structure development arena. Additionally, our Liberty Utilities Group repeated a busy quarter on the M&A front with the…

Thanks, Ian and good morning, everyone. We are pleased to report another quarter of strong financial results compared to the same period last year. As Ian mentioned earlier, the inclusion of Empire is a key driver supporting our significant year-over-year growth, but we also have to call out and not forget about the continued growth that also exists within our other business units. In particular, we continue to bring online new generating assets compared to this time last year. We also have meaningful growth in our regulated utilities aside from Empire through growth in rate base and new rate cases. The diversity of our overall business continues to be a key component of our ability to deliver strong sustainable financial performance to our shareholders. Turning now to the financial metrics for the quarter, our adjusted EBITDA was up 116% on a year-over-year basis to $197.5 million for the quarter, a total of $118.9 million of the adjusted EBITDA growth with starts from new facilities, including the acquisition of Empire within our Liberty Utilities Group and the commissioning of new renewable energy facilities. Taking a closer look at our individual business units and starting with Liberty Power. Liberty Power’s operating profit decreased slightly compared to the third quarter of last year largely due to effects, but on a full 9 months of this year basis has increased by 16% compared to the same timeframe last year primarily due to the addition of new generating facilities in particular Odell, Deerfield and Bakersfield Solar. On a production basis, Q3 production from our existing fleet of hydro facilities was 15% lower than the previous year and 17% lower than the expected long-term average resource. The shortfall in hydro production was mainly due to lower production from facilities in our Maritime in Western regions. Looking…

Thanks, David and we’ll be opening up the lines in a moment to take questions from those on the call. But consistent with our past practice, I’d like to first provide an update on our growth initiatives for the final quarter of 2017 and as we look into 2018. Within the Liberty Utilities Group, our investments and system improvements have continued unabated. We completed 9 rate cases so far in 2017 that will contribute close to $24 million in increased revenue requirement. Another 6 rate cases totaling close to $40 million and requested incremental revenue requirements are currently pending. As I had mentioned earlier, we continue to seek out new M&A opportunities and the acquisitions of St. Lawrence Gas and the City of Perris’ water systems. We see a strong evidence that we are continued to be committed to prudently growing the number of customers we serve within Liberty Utilities. And lastly, our growth plans involve the cross functional work between our Liberty Utilities and Liberty Power Group in furtherance of our greening the fleet strategy, which we have talked about for Missouri, Arkansas, Oklahoma and Kansas. We believe that our utility customers will benefit greatly from transitioning our fleet of coal-dominated power generation to low-cost environmentally-friendly renewable energy alternatives. To support a portion of this new generation on November 1, we submitted our plans to reduce customer rates to the development of 800 megawatt of strategically located wind generation by 2020 in the mid states. This project is in fact actually it’s three or four projects are expected to generate cost savings for customers of over $300 million over the first 20 years following their commissioning. And it seems like a win-win opportunity for both cost savings for our customers, but also conducting our business practices in environmentally responsible…

Certainly. [Operator Instructions] Our first caller comes from David Quezada of Raymond James.

Thanks. Good morning guys.

Yes, morning David.

My first question here just bit of a housekeeping question on the St. Lawrence Gas acquisition, I noticed in the release it’s at late 2018 early 2019 expected closing date. Is that a little bit later than you had initially expected and maybe what the regulatory process is there?

No. I mean I think for, I guess, in general we want to avoid disappointment. You can imagine that the regulatory process, particularly in a state which we haven’t been before as a little bit of an unknown. We have had meetings with the staff and we are actually meeting with the Commission next week. So, we are cautiously comfortable that the Liberty Utilities proposition will be as well received in New York as it’s been elsewhere, but we don’t want to over-promise if you will. It’s a small acquisition and nice thing we want people to be disappointed, I think we are still targeting late next year just given the kind of normal course for these things. So, don’t read anything into it of significance.

Okay, fair enough. Thank you. And then just my only other question here, I believe in the Empire territories, you are going to do an RFP for wins that was slated for I believe September October. Any color you can provide on how that went?

Yes. The RFP was indeed opened as we had outlined and maybe just for a little bit color, David, for the rest of the listeners. That RFP was really to make sure that as Empire looked to getting the most competitive wind project in addition to the project that it has under development for its own – on its own, we want to make sure that perhaps there were third-party developers whose projects would be equally and perhaps even more competitive. And so really this is an augment to Empire’s plans of developing two projects which it currently has in Missouri. So, we are expecting that RFP to close in early December. And initial indications could clearly were obviously in dialogue with all the RFP participants is that it is being robustly pursued. So, we are at this stage – we are sort of cautiously optimistic that we will get opportunities that are equally competitive to the ones that Empire has underway right now upon which to be frank, our submission to the Missouri Commission was premised. So, things were like they only get better from where we are right now in terms of customer savings.

That’s very helpful. Thank you. I will get back in the queue.

Thanks David.

Our next question comes from Rupert Merer of National Bank.

Good morning, everyone. Great quarter.

Hi, Rupert.

So, it sounds like you still see more tuck-in opportunities than regulated utility side in the U.S. with consolidation of that market. How should we look at the scale of the opportunity there versus your international markets and power markets now and do you have potential for international investment outside of Abengoa and Atlantica?

Sure. So, in the first instance for your first question, Rupert, I think we are pleased that the Empire acquisition if you will increased the aperture of the size of M&A opportunity that Algonquin could pursue in the U.S. regulated utility markets and so opportunities and business combinations that might have been beyond size wise are now within scope. But I am also pleased that I don’t think we have raised the low end of the bar if you want to think of it that way and maybe that’s where your question is really headed that St. Lawrence Gas in the first instance represents US$70 million of investment potential, but or acquisition potential. But I think as we have outlined is that one of the real wins for St. Lawrence Gas is to capitalize on some infrastructure with Enbridge who currently owns. It has built into the system to bring natural gas to counties that’s heretofore haven’t had natural gas service, so great opportunity for us to continue to invest in the distribution side of the business. And you could quite easily see this topping US$100 million. But I think that the short answer to your question this organization has crafted as a core competency the ability to acquire and ultimately integrate utilities almost of any size. And so we don’t discriminate on the small end of things and the larger ends of things has gotten bigger. So, hopefully that’s responsive to your first question. Your second question is about the scope of international development. I think we are comfortable that it AAGES represents our vehicle for international power project development and it’s certainly noncompetitive to our interest in Canada and the U.S., which is I will say our backyard and we were pretty clear about that on the earnings call. It doesn’t extend and maybe where your question was going if it’s related to your first question with M&A to potential M&A opportunities for regulated utilities. To be frank so far that hasn’t been our focus. I think as we grow increasingly comfortable with some of these international markets in which some of the projects of both Atlantica and maybe the ones that AAGES will undertake are located, maybe that comfort level will increase and we could start to think about it, but that’s not really on our radarscope right now, if that’s where your question was headed, Rupert.

Yes. Yes, that’s good. I guess we frame that as two questions. I better get back in the queue.

Well, you put and conjunctive in there, we will give you one more. So go ahead, Rupert.

Great. Looking at your 2017 CapEx plan, it looks like you are well within your target range from $1.1 billion to $1.3 billion for the year, but more weighted towards Liberty Power by the look of it. Can you talk about the dynamic there of where you are investing and will we expect to see Liberty Utilities organic investment meet your initial expectations for 2017?

Yes. The Liberty Utilities CapEx program is on target. I mean, it is a little skewed towards the back half of the year just given the seasonality of construction. So, I think you should expect that they will use CapEx to meet the guidance that we have provided.

Okay, excellent. Thanks for taking my questions.

Thanks Rupert.

Our next question comes from Ben Pham of BMO.

Hi, good morning. I wanted to go back to the 800 megawatts that you are filing for Missouri and just want to make sure I understand the strategy there. So, is a AQN looking to build 300 megawatts themselves in rate basin and the balance you put here as a cost to keep customary rates flowing in, in the future you buy that back in a few years and at its rate base?

No, perhaps I wasn’t clear. The entire strategy, Ben, it’s completely founded on the investment in rate base of all 800 megawatts. I had mentioned that Empire themselves with support of our power development group are pursuing two development projects they filed for their own interconnection request of 500 megawatts within FPP. But so to meet our total appetite for new wind, we have run an RFP not for projects to be provided to us under PPA, but to be sold to us upon their commissioning. So, the expectation is that Empire will likely build its own projects, but also acquire perhaps 400 megawatts of incremental wind that would have been built by third-party developers, but the expectation is that after acquisition all of those projects will be indistinguishably collected into the rate base of Empire.

Okay, alright. And then does that 800 megawatts translates in that $1.5 billion you have safe harbored? And then I am just curious why is that 800 megawatts little bit not just where that it’s much different than what you said at the ‘16 Investor Day, it’s much higher?

Sure. And two comments there. First of all, our safe harbor turbines at $1.5 billion in some respect, is completely unrelated to the work that Empire will be doing within its service territory. So, two, I will say completely separate initiatives. The expectation is that our non-regulated generation group, Liberty Power will undertake the development and as you might recall sort of about that 600 megawatts or so of new generation which will be occasioned by those safe harbor turbines we acquired. The expectation for Empire in terms of its development is that third-party developers will be providing safe harbor turbines as part of their submission under the RFP is required that those projects be safe harbored. Specifically, with respect to I assume your question was well, why 800 megawatts you told us before it might have been 600 megawatts? Well, the short answer is that the way these processes work as you run a very complicated model to assess what is the optical mix of generation for minimizing customer rates and the model candidly kind of chooses those sources of generation in order to find the optimal mix. And it turns out that wind is so cost competitive that it actually elected for 800 megawatts over the 600 megawatts that we probably – I think you are making reference to that we talked about during our Investor Day. So hopefully that’s provided some clarity, Ben, as to how we sort of think about those two separate initiatives.

That’s great. Thanks a lot, guys.

Thanks, Ben.

Our next question comes from Sean Stewart of TD Securities.

Thanks. Good morning, everyone.

Hey, Sean.

Couple of questions. Can you, Ian, just walk us through the applications you filed with respect to the Empire customer savings plan approvals in the four states? Can you just walk us through I guess the timeframe of how those processes unfold and how that interplays with the RFP I understand that’s a separate process, but maybe just to think about hurdles and how that unfolds?

Sure. So, as we had mentioned I will say coincidentally in November we filed the integrated resource plan in Missouri and that is a process, which is currently underway with a technical session, actually there is a technical session being held in Oklahoma and in Missouri this coming week. And so it’s a process that is being debated and where they are obviously reviewing it. So, we had socialized the content of that application or that integrated resource plan long before we had submitted it. Part of the request is from a procedural schedule perspective is that the discussions, the determination concludes by mid next year. So, I’ll call it the end of Q2 2018. So I would say that’s 7 months, it feels like a reasonable time for the deliberations of the commission on the integrated resource plan. This RFP that you make reference to, it’s kind of running in parallel and think of it this way as we have made certain assumptions within the integrated resource plan as to cost and frankly location of where those wind projects are obviously favoring the certainty with respect to our Empire site, but leaving the door open for integration of potentially lower cost opportunities, higher production, higher yield opportunities that may come under the RFP. So, we expect that RFP will be completed in December. We will kind of update our IRP filing with the commission to give them kind of a greater insight into what we actually think the final configuration will be. But in any event, the whole thing concludes by middle of next year. We then kind of proceed in terms of the process. We will have sort of continued dialogue with the commission on the specificity of the projects in terms of getting a prudency docket open, but at the same time continuing the development process permits, so that we are ready to go from a construction period sometime in 2019 as the expectation. You know the deadline in order to qualify for 100% of the PTCs under the current rules is that the projects are commercially operational by the end of 2020. We are clearly aiming not to be part of that rush in 2020 to the extent that we can. You can imagine cranes will be coming in scarce supply etcetera. And so we are aiming for construction period in late 2019 maybe bridging into early 2020. I don’t know, Sean that’s kind of the color you are looking forward to put some broad timing around it.

That’s good detail. Thanks, Ian. Second question maybe for David, following up on Rupert’s question on your 2017 CapEx guidance of $1.1 billion to $1.3 billion, when you build it up segment wise and you addressed this that I guess the Q4 spend is going to be weighted to the rate base. And I am wondering if you can just reconcile for us year-to-date on your cash flow statement you are showing $570 million for property plant and equipment. The balance I know it gets picked up in lots of different accounts across your financials. Can you just connect some of the dots and where the rest is residing in the cash flow statement of the income statement?

Yes. And this is perhaps a question for further follow-up offline, but I believe what you will find is the difference has to do with the fact that for construction projects we generally are building them inside of joint venture projects in order to manage the risk through the development process. And then we buy in the project after, so rather than showing up as fewer CapEx, it actually shows up as an investment. And so I think that is the disconnect between the two and you have to keep in mind that the cash flow statement and so it will actually the cash flows of those things and when the construction is taking place within the JV that’s where the cash flow occurs. And so as we buy in the JV after you don’t actually see the CapEx spend as being a true PP&E addition, but I am happy to walk you through that after.

Yes, that will be useful. I figured it was something along those lines, but I will follow up afterwards, David. Thank you.

Thanks Sean.

Our next question comes from Richard Sunderland of JPMorgan.

Hi, good morning guys.

Good morning.

I just wanted to follow-up on some of the quarterly items that you discussed earlier on the call namely the expense lines kind of after you look at adjusting for the impact of foreign exchange. So, kind of your OpEx, your admin expense, your D&A quarter-over-quarter has been on a pretty decent clip. So, could you provide anymore color there?

Well, the increase in admin expenses is clearly the result of the acquisition of Empire even if you were to back out the effect of FX. So, there really is – that’s the primary reason for further growth and clearly through the rest of our enterprise we are continuing to grow and that does require additional support as well.

And Richard, maybe just a clarification when you are speaking of quarter-over-quarter you are speaking of Q3 2016 versus Q3 2017 or Q2 2017 versus Q3 2017?

I am trying to walk from the previous quarters of Q2 ‘17?

Well, from Q2 2017, well a lot of those – the admin I think there is going to be some timing issues that you are going to see there, it’s not all necessarily a straight quarter by quarter spend. So, if your expectation is that it would be the same each quarter that’s not exactly always true. So some of what you see in Q3 could be just a timing related to when expenses got incurred in our Q2 results.

Okay. So just to be clear there it might be some pickup in that regard on fourth quarter?

Possibly. And I assume from your question you are trying to see though the FX on that right or FX also will play into the ups and downs like the FX in one quarter can and has been actually different than others.

Yes. I was looking kind of after these impacts of FX, but I could follow-up that after if there are still questions there.

Sure. Happy to walk you through in more detail, Richard, if you want to give us a shout.

Alright, thank you very much.

Thanks so much.

[Operator Instructions] Our next question comes from Mark Jarvi of CIBC Capital Markets.

Good morning, everyone.

Hi, Mark.

I just wanted to go back to your comments in the prepared remarks about the ED performance and whether or not this quarter, the performance was with expectations, are you talking year-to-date, I know Q1 was a bit late, but it looked like from my perspective pretty strong performance from ED year-over-year. So maybe just to check or tell me how that’s going year-to-date in and what your expectations are for the last quarter of the year?

Yes. So, 30,000 foot, Mark, Empire is meeting our EBITDA and earnings expectations that could be, Frank, we had established at the time of announcements, I think Empire is continuing to deliver big picture on the expectations both from a revenue and expense perspective. No truer words were ever spoken when you said that Q1 of this year was a very warm quarter in terms of heating degree days that negatively impacted Q1 in a fairly significant way like $10 million or $11 million worth of net revenues. I think the Empire guys have done a good job of attempting to recover some of that through expense mitigation expense and expense control. Obviously, you can’t make it all up, but overall and then I think your observation is correct, Q3 was a pretty good quarter in terms of its performance. It was kind of on track and as we kind of stare into the balance of the year we are completely satisfied with the overall performance of Empire take into account that there are then naturally occurring fluctuations in terms of heating degree days and cooling degree days, but within the context of that volatility, the acquisition is performing exactly as expected.

Okay, that’s good to know. And going back to the Empire situation, the application of the IRP I know you said midyear, I think in some filings you talked about an April timeline of making decisions. Given the tax uncertainty, what’s the initial dialogue with the regulators in terms of their ability to move forward given that it seems like a lot of value creation and the value proposition is around the harvesting the PTC value. So, will they be able to make a decision if tax uncertainty continues to linger here?

Well, I mean, you say, I think tax uncertainty, I think clearly even in the context of the House proposal that I am not sure that the investment in Empire’s wind is actually all that impacting. What I mean by that and David had kind of alluded to it in his prepared remarks regarding those production tax credits that within that RFP and we believe there are a number of projects that have been – that are being proposed to us under the RFP that actually even met I will say the change definition of commencement of construction, which really should minimize the impact of the debt of the House’s draft which as you are probably aware as recently as last night they backtracked pretty significantly and as David said kind of converged on the Senate’s draft which is saying no impact on the current rules for phase out of the PTCs. And so I will start by saying is even if things didn’t work out perfectly in terms of what finally comes up Empire is largely insulated by that from the status of a number of the projects the world where it will be bid to us under the RFP. But I would say, Plan B and the more likely plan is that that won’t be needed, because we actually don’t think there will be any change in the legislation in the current phase-out of the PTCs. I guess one of the questions you ask are the commission aware of that? Certainly, I think we have spent lots of time with staffers to educate them on the benefits of tax equity in terms of customer rates. And so I would say they are moving quickly. They understand the urgency. We are not the only people in front of them which is good because these are issues for which they are getting familiar with. So, I guess we are kind of hopeful Mark that in the context of the current round of tax reform, the PTCs are left untouched and we will be able to finish off our conversations early next year with the commission to get approval of the IRP as it’s been offered up to the commission. That’s kind of the plan right now. So, I don’t know if that’s helpful or hurtful in terms of your question.

That’s helpful. Thanks. Appreciate it.

Thanks Mark.

Our next question comes from Jeremy Rosenfield of Industrial Alliance Securities.

Yes, thanks. I just wanted to follow-up very briefly on that Empire and the Missouri Regulatory Commission correct me if I am wrong, but there have been some other utilities that have proposed using tax equity to finance the wind projects within Missouri. Is that accurate – I am not sure if they have been approved or not maybe you can just clarify?

No, they haven’t been approved, but it is a structure which is being adopted not just in Missouri to be frank across the U.S. I like to think we kind of pioneered this Jeremy with our structure for the education of our Luning Solar in California. It was always a very difficult nut to crack and it gets quite technical, but their tax normalization rules which if you just kind of stare as a problem, regulated utilities are kind of denied the opportunity of bringing tax equity to bear in terms of customer rates. We were able to construct a structure, which was adopted and approved by the California Public Utilities Commission in respect of our Luning projects a couple of years ago. I think it’s kind of serving as a paradigm for a number of those applications, which not just Ameren, but Xcel and other regulated utilities are prosecuting I will say across the Midwest. Obviously, it’s applicable across the country, but the Midwest has obviously the best wind resources and therefore the lowest levelized cost of energy. So, no, we are not the only people pursuing this right now, Jeremy. We have got lots of company, but pretty much everybody is articulating the same message to their regulators, which is guys we can reduce cost for customers by taking advantage of the current fact patterns, please let’s do it. That’s kind of the theme that’s being articulated by everybody.

Right, okay. That’s what I thought. Okay, that’s it from me. That’s all. Thanks.

Thanks, Jeremy. Appreciate it.

This concludes the question-and-answer session. I would like to turn the conference back over to the presenters for any closing remarks.

Appreciate it, operator. And again, it’s thanks for everybody taking the time out of their day to listen to our call and we appreciate all the enthusiasm and support that the organization has got over the past few weeks as we kind of embark on this exciting new venture from our perspective. So with that, I am going to turn things over for the riveting disclaimer from Allison. Allison?

During the course of this conference call, we may have made statements relating to the future performance of Algonquin that contains forward-looking information, including statements with respect to the expected performance of the company, its future plans and its dividends to shareholders. While these forward-looking statements represent our current judgments based on certain material factors or assumptions, actual results could differ materially from such forward-looking statements made today. Additional information about the material factors that could cause actual results to differ materially from such forward-looking information and the material factors or assumptions that were applied in making any forward-looking statements as well as risk factors that may affect the future performance and results of Algonquin are contained in the press release and Algonquin’s public disclosure documents filed by the company on SEDAR at www.sedar.com and EDGAR at www.sec.gov. We undertake no obligation to update these forward-looking statements unless required by law. Furthermore, during the course of this conference call, we have referred to certain non-GAAP financial measures including but not limited to adjusted net earnings, adjusted EBITDA, adjusted funds from operations, per share cash provided by adjusted funds from operations and per share cash provided by operating activities. These non-GAAP measures do not have any standardized meaning under GAAP and may not be comparable with other GAAP or non-GAAP or non-IFRS financial measures presented by other companies. We refer you to our MD&A for more information about these non-GAAP measures, including a reconciliation of the non-GAAP measures to the corresponding GAAP measures where a comparable GAAP measure exists.

This concludes today’s conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.