Hydropower energy developers Fortis Inc. and Statkraft release 2016 financials

Two international hydropower energy developers today released their 2016 earning statements.

Newfoundland and Labrador, Canada-based Fortis Inc. released its 2016 annual results today saying its net earnings for 2016 were $585 million (US$447.5 million), or $1.89 (US$1.45) per common share, compared to $728 million (US$557 million), or $2.61 (US$2) per common share, for 2015.

For the fourth quarter of 2016, net earnings attributable to common equity shareholders were $189 million (US$144.6 million), or $0.49 (US$0.37) per common share, compared to $135 million (US$103.3 million), or $0.48 (US$0.38) per common share, for the same period in 2015. Year over year results were impacted by the Corporation’s acquisition of electric transmission company ITC Holdings Corp. (ITC) in 2016, and gains on the sale of non-core assets in 2015.

Fortis had another year of transformation in 2016,” said Barry Perry, Fortis president and chief executive officer, in the announcement. “We announced and quickly closed the acquisition of ITC, the largest independent electric transmission company in the United States, and listed on the New York Stock Exchange, allowing Fortis to access the largest pool of capital in the world. We also received constructive regulatory decisions in a number of jurisdictions, which position us well for continued regulatory stability.”

In October 2016, Fortis closed the acquisition of ITC in a transaction valued at US$11.8 billion. Under the terms of the transaction, ITC shareholders received US$22.57 in cash and 0.7520 of a Fortis common share per ITC share, representing total consideration of approximately US$7.0 billion. Details on the financing of the acquisition, including the minority investment by GIC Private Limited, are included in the Corporation’s 2016 Management Discussion and Analysis.

ITC owns and operates high-voltage transmission lines serving a system peak load exceeding 26,000 MW along 25,000 km in Michigan’s lower peninsula and portions of Iowa, Minnesota, Illinois, Missouri, Kansas and Oklahoma that transmit electricity from about 570 generating stations to local distribution facilities connected to ITC’s systems. ITC’s rates are regulated by the U.S. Federal Energy Regulatory Commission.

“Our strong financial performance for 2016 was driven by our low-risk and highly diversified portfolio of utilities. The addition of ITC dramatically increased our North American footprint and provides even greater stability in our business, with its predictable and stable cash flows,” Perry explained. “ITC was immediately accretive to earnings per common share, excluding acquisition-related expenses, and we remain confident that this transaction will be nicely accretive in 2017.”

Statkraft

Norwegian energy developer Statkraft, announced today that it recorded an underlying earnings before interest, tax, depreciation and amortization (EBITDA) of NOK 4947 million (US$597 million) in the fourth quarter of 2016.

The company said this is an increase of NOK 1717 million (US$217 million) compared with the corresponding period in 2015.

The company said its net profit was NOK 748 million (US$90.2 million).

In its announcement, Statkraft said the EBITDA increase was mainly driven by both higher Nordic power prices and Norwegian hydropower production, combined with successful energy management. However, the company said the result for 2016 was negatively influenced by impairments mainly caused by reduced market expectations.

In June, Statkraft announced it was trying to sell the 517-MW Cetin hydropower plant being constructed in Turkey, as concern about fighting between the Turkish government and Kurdish militants continued to grow.

At the beginning of 2016, HydroWorld.com reported the company withdrew its participation in development of the 650-MW Tamakoshi 3 hydroelectric plant. Statkraft entered an agreement with the Nepalese government in 2007 to build the US$1.5 billion plant, and had since completed feasibility studies, and environmental and social impact assessments.

The average Nordic power price in the fourth quarter was 34.5 EUR/MWh (US$38.63), an increase of 57% compared with the modest price experienced in the same period in 2015.

Statkraft’s total production increased by 3.7 TWh from the fourth quarter last year to a total of 19.0 TWh in this quarter.

Statkraft’s production in 2016 reached a record high 66 TWh compared to 56.3 TWh in 2015.

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Gregory B. Poindexter formerly was an associate editor for HydroWorld.com.

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