"EPCOR's second quarter net income increased to $86 million, in line with our expectations given weather and market conditions," said Stuart Lee, EPCOR President & CEO. "Revenues and net income reflect strong residential water consumption in the Edmonton metropolitan region, although increased water sales were partly offset by lower electricity margins and higher payments to Alberta's provincial electricity system operator."
"Dry weather and record-setting heat in Western Canada tested the capacity of utility infrastructure," Mr. Lee said. "EPCOR's operations performed well throughout, with minimal service interruptions and short-term outdoor water demand management measures that have since been lifted. These conditions underline the importance of our ongoing investments in infrastructure renewal and resilience, which include $345 million in capital investment completed in the first half of 2021."
Highlights of EPCOR's financial performance are as follows:
- Net income was $86 million and $141 million for the three and six months ended June 30, 2021, respectively, compared with net income of $70 million and $120 million for the comparative periods in 2020, respectively. The increase of $16 million and $21 million for the three and six months ended June 30, 2021, respectively, was primarily due to favorable fair value adjustments related to financial electricity purchase contracts and higher Adjusted EBITDA1, partially offset by lower transmission system access service charge net collections, as well as, higher depreciation and finance expenses. In addition, for the six months ended June 30, 2021, net collections of U.S. natural gas procurement costs were also lower.
- Adjusted EBITDA was $219 million and $413 million for the three and six months ended June 30, 2021, respectively, compared with $185 million and $358 million for the comparative periods in 2020, respectively. The increase of $34 million and $55 million for the three and six months ended June 30, 2021, respectively, was primarily due to higher rates and customer growth, higher water consumption due to hot, dry weather conditions, Adjusted EBITDA from the newly acquired Johnson Utility LLC operations, lower water treatment costs for operations in the city of Edmonton due to better water quality, as well as, lower provisions for expected credit losses from customers. These increases were partially offset by lower Energy Price Setting Plan margins.
- Investment in capital projects was $471 million for the six months ended June 30, 2021, compared with $352 million for the corresponding period in 2020, and included the acquisition of Johnson Utilities LLC water and wastewater operations with no corresponding acquisition during the same period 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
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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