"Unfavorable weather conditions, lower water demand and delayed regulatory filing approvals impacted EPCOR's financial performance, which tracked slightly below expectations, in the first quarter of 2019. First quarter net income was lower in 2019 compared to 2018 across most of our business lines," said Stuart Lee, EPCOR President & CEO.
"At the same time, EPCOR continued to operate our facilities and infrastructure in a safe and reliable manner, and to grow our business in North America. Notably, EPCOR USA completed an acquisition of Rio Verde Utilities Inc. (Rio Verde), a regulated water and wastewater utility business located in the Greater Phoenix metro area—a region where we have targeted and achieved growth."
Highlights of EPCOR's financial performance are as follows:
Net income was $56 million for the three months ended March 31, 2019, compared to net income of $65 million for the corresponding period in the previous year. The decrease of $9 million in the quarter was primarily due to lower Adjusted EBITDA, higher income tax and depreciation expenses, partially offset by favourable fair value adjustments related to financial electricity purchase contracts and higher transmission and system access service charge net collections.
Adjusted EBITDA was $157 million for the three months ended March 31, 2019, compared to $164 million for the corresponding period in the previous year. The decrease of $7 million in the quarter was primarily due to lower water consumption per customer due to lower temperatures and higher precipitation, higher water treatment costs for operations in the city of Edmonton and lower Energy Price Setting Plan margins, partially offset by higher electricity distribution revenues due to higher customer rates and Encor customer growth.
Investment in capital projects was $140 million for the three months ended March 31, 2019, compared with $101 million for the corresponding period in the previous year. The increase of $39 million was primarily due to the acquisition of Rio Verde in Arizona, with no corresponding acquisition in 2018, higher spending in the Distribution and Transmission segment on a new substation in the Riverview neighborhood in Edmonton as well as higher spending on our new customer billing system.
Management's discussion and analysis and the unaudited condensed consolidated interim financial statements for the quarter are available on EPCOR's financial information page 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, 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 70 employer.
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