Despite pandemic pain, Enmax ‘achieved solid financial performance’ in 2020: CEO

ENMAX is putting the finishing touches on a project it bills as "Canada's largest rooftop solar array," which is expected to begin producing electricity in Leduc by July 31, 2016. COURTESY: ENMAX

A strategy to expand its regulated business and streamline operations has paid off for Calgary-owned Enmax, president and CEO Wayne O’Connor said at the company’s annual general meeting on Tuesday.

“As a result of our focus and the addition of Versant, we also achieved solid financial performance and declared a dividend of $58 million to our shareholder, the City of Calgary — a seven per cent increase relative to 2019,” O’Connor said.

The virtual AGM included city councillors, representing the city shareholder, and members of the public.

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O’Connor noted that Enmax had its safest year on record during 2020, but the energy generator and distributor wasn’t immune to the financial impacts of the COVID-19 pandemic.

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Last year, the energy company cut 170 positions in an effort to “right-size” its operations and O’Connor said no further staff reductions will be needed.

Some $259 million was invested in the city’s electricity infrastructure, resulting in Calgary continuing to be ranked by the Canadian Electricity Association in the top quartile for reliability among Canadian utilities, O’Connor said.

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Ward 8 Coun. Evan Woolley, who also chairs the city’s audit committee, brought up the fact that the dividend policy is two decades old and asked how the company has changed over the past 20 years.

Board chair Greg Melchin noted that Enmax has issued dividends greater than the minimum almost since that policy was enacted. Melchin added that the board of directors is open to discussions about refreshing the dividend policy.

Moving towards net-zero targets

The past year included “marked advancement and commitment” to the company’s ESG targets like increasing solar capacity by about 15 per cent and piloting work for the expected increased adoption of electric vehicles by customers.

Enmax also committed to be net zero by 2050.

O’Connor said that commitment would be met through increasing the efficiency of gas-powered generators, increased solar- and wind-powered generation, use of battery tech for things like hybrid turbines and purchase of carbon offset credits.

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“We are working now with a number of organizations on what other things we can do like carbon capture, like sequestration, and it’s early days for those initiatives,” the Enmax CEO said.

“But I have no doubt in the years ahead we’re going to find solutions that will allow us to greatly reduce the emissions from our existing fleet.”

More than 99 per cent of Enmax’s carbon emissions come from that fleet of generators.

O’Connor said Enmax was ready to pull every lever it had in order to reach that net-zero goal.

Credit rating questions

Enmax’s president also said he had been in recent conversations with credit rating agency S&P.

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In March 2020, Enmax purchased Emera Maine, an electricity transmission and distribution utility in the northeastern state, for $1.29 billion and renamed the company to Versant.

Immediately following the transaction, S&P Global Ratings cut the credit ratings for both companies.

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“Although we expect the sale to improve Emera Inc.’s consolidated financial measures in the near term, the transaction does not fully mitigate other factors that weigh on the company’s credit quality, including our expectation that the company’s funds from operation (FFO) to debt will be consistently above 12 per cent,” the rating agency said at the time.

S&P also cut Enmax’s issuer credit rating last year.

Events in the past couple of years like the COVID-19 pandemic and a 41-day shutdown of the Shepard Energy Centre have kept that ratio below 12 per cent, O’Connor said.

“[Enmax’s credit rating] wasn’t a downgrade, it was just on negative watch,” O’Connor said.
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“That has not affected our borrowing costs and the Canadian banks are very supportive of our business, very supportive of our move to more regulated businesses like Versant Power. And there is no impact to our debt costs at this time.”

Melchin said Enmax is still early in the process of integrating Versant and isn’t currently looking at further acquisitions, but did say adding regulated business is a part of the overall strategy.

“We have some debt to pay down,” Melchin said. “Let’s just ensure that we right-size our balance sheets and tend to those issues.”

“But we will always look to — whether it’s through partners or other ways — participate in excellent opportunities that might come forward in the future.”

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