"In February 2021, EPCOR's natural gas infrastructure in Texas was able to perform uninterrupted, despite record low temperatures caused by winter storm Uri" said Stuart Lee, EPCOR President and CEO. "Though overall EPCOR results were impacted by the delay in recovering extraordinary U.S. natural gas procurement costs related to the winter storm, first quarter net income of $55 million was in line with expectations." continued Mr. Lee.
"Capital program implementation was on target across our geographies. The first quarter saw a significant addition to our U.S. utility footprint, with the integration of the Johnson Utilities water and wastewater operations following the closing of our acquisition in January. EPCOR has moved swiftly to invest in improving service to customers, including initiating construction of the Pecan Water Reclamation Plant – part of a planned US$138 million capital program for customers of newly acquired operations, over the next three years."
Highlights of EPCOR's financial performance are as follows:
- Net income was $55 million for the three months ended March 31, 2021, compared with net income of $50 million for the comparative period in 2020. The increase of $5 million for the three months ended March 31, 2021, was primarily due to favorable fair value adjustments related to financial electricity purchase contracts and higher Adjusted EBITDA, as described below, partially offset by lower transmission system access service charge net collections, lower net collection of U.S. natural gas procurement costs as well as higher depreciation and finance expenses.
- Adjusted EBITDA was $194 million for the three months ended March 31, 2021, compared with $173 million for the comparative period in 2020. The $21 million increase was primarily due to higher water and wastewater customer rates and customer growth, higher electricity distribution and transmission customer rates, higher water consumption in Arizona and New Mexico due to dry weather conditions, Adjusted EBITDA from the operations of the newly acquired Johnson Utility LLC operations and lower provisions for expected credit losses from customers, partially offset by lower water consumption for commercial customers in the city of Edmonton and lower Energy Price Setting Plan margins.
- Investment in capital projects was $271 million for the three months ended March 31, 2021, compared with $143 million for the corresponding period in 2020, and included the acquisition of Johnson Utilities LLC water and wastewater operations with no corresponding first quarter acquisition in 2020, higher capital spending in the Company's Water Services and Distribution and Transmission segments, partially offset by lower spending in the U.S. Operations segment.
Interim management's discussion and analysis and the unaudited condensed consolidated interim financial statements are available on our website and SEDAR.
EPCOR, through its wholly owned subsidiaries, builds, owns and operates electrical, natural gas and water transmission and distribution networks, water and wastewater treatment facilities and sanitary and stormwater systems and infrastructure in Canada and the United States. The Company also provides electricity, natural gas and water products and services to residential and commercial customers. EPCOR, headquartered in Edmonton, is an Alberta Top 75 employer.
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