Chris Jarratt - Vice Chairman of the Board Ian Robertson - Chief Executive Officer, Director David Bronicheski - Chief Financial Officer Kelly Castledine - Director, Investor Relations.

Nelson Ng - RBC Capital Markets Rupert Merer - National Bank Financial Sean Steuart - TD Securities.

Good day and welcome to the Algonquin Power & Utilities Corp q3 2014 analyst and investor conference call. Today's conference is being recorded. At this time, I would like to turn the presentation over to Chris Jarratt, Vice Chair. Please go ahead Mr. Jarratt..

Good morning, everyone. Thanks for joining us on our 2014 third quarter conference call. With me on the call today are Ian Robertson, our CEO, David Bronicheski, our CFO and Kelly Castledine our Director of Investor Relations. For your reference, additional information on the results is available for download from our website at algonquinpower.com.

I would like to note that on this call we will provide information that relates to future events and expected financial positions that should be considered forward-looking.

Kelly will provide additional details at the end of the call and I direct you to review our full disclosure on forward-looking information and non-GAAP financial measures in our results published yesterday which are also available on the quarterly results page of our website.

This morning, Ian, as usual, will discuss the highlights for the quarter and David will follow with a review of the financial results and then we will open the lines for questions. We would ask that you restrict your questions to two and then requeue if you have additional questions. With that, I will pass things over to Ian..

Thanks, Chris, and good morning, everyone. Thanks for taking the time to join us today for our Q3 investor call. In recap, I think the third quarter we saw some great progress in our growth story with the announcement of over $0.5 billion of near-term growth initiatives.

From a financial perspective, the third quarter was predictably seasonal, which is reflected in our Q3 results. Well, David will provide greater detail on the financial performance.

In summary, the quarter's minor shortfall in EBITDA expectations reflected below average earnings from our wind generation portfolio, which produced only 85% of forecasted energy and weather impacted lower commodity sales within Liberty Utilities. I am not sure who I complain to regarding the wind and the weather but I am going to find out.

Anyway, during the quarter, we did continue our focus on creating shareholder value through additional growth initiatives announced in both our generation and distribution businesses which will further diversify our asset portfolio.

For Liberty Utilities, we announced late in the quarter, our agreement to acquire the Park Water Company which owns and operates three regulated water utilities in Southern California and Western Montana.

Just to remind everyone, Park Water is a business which is completely aligned with our core strategy of being long-term owners and operators of local utilities.

Currently, we are in the middle of the regulatory approval process and are optimistic that the strong relationship which Liberty enjoys with the California regulator will allow the investment in Park Water to proceed on a expedited basis than originally contemplated.

Speaking earlier of seasonality, I would note that the counter cyclicality of Q3 being Park Water's largest EBITDA quarter will be a contributor to smoothen our annual earnings going forward. We are very enthusiastic about working the communities served by Park Water and look forward to engaging with the local residents and businesses going forward.

On the generation side, our newly announced Odell Wind Project is expected to add 200 megawatts of generating capacity in Minnesota, an additional diversification to our existing generation portfolio. Construction and turbine supply contracts of this project are being finalized with targeted commissioning date late November next year.

Lastly, well, we are very pleased that during the quarter the Board approved 11.3% increase of the dividend to $0.35 per share annually. The move to declaring the dividends in U.S. dollars was a result of growing U.S. based business and resulting U.S. revenue growth.

And finally, before I hand things over to David, I would note that while Q3 was predictably seasonal and slightly below our expectations, total adjusted EBITDA through the end of the third quarter was over to $206 million, an increase of over 30% over the first nine months of last year.

And perhaps more importantly, as we sit halfway through the fourth quarter looking at APCo energy production, which so far is ahead of averages, we remain confident in the organization's capacity to deliver against the consensus expectations of annual EBITDA.

David?.

Thanks, Ian, and good morning, everybody. Our overall adjusted EBITDA in the third quarter came in at $41.4 million compared to $40.2 million a year ago. Our results reflected the normal seasonality in our business for the quarter, but we are about 10% below our expectations.

Year-to-date, though, as Ian said, we are still well-positioned to hit our 2014 earnings targets. There are a few reasons driving results for the quarter.

The lion's share of the shortfall was our wind production, which came in at 85% of long-term averages and because of the relatively cool summer we experienced lowered marketplace for that small portion of our wind production, which is not sold under long-term contracts.

And additional contributing factor was the weather over the summer did affect demand for our natural gas and water sales at some of our utilities, where we have some volumetric exposure. So now a bit more detail about our operating subsidiaries. I will begin first with Algonquin Power.

In APCo's renewable energy division, during the third quarter, renewable energy division generated electricity equal to 88.2% of long-term projected average resources compared to 94.2% in the same quarter a year ago.

This was primarily due to a decrease in generation, a result of lower wind resources in Illinois and lower hydrology in the Maritime region compared to the third quarter of last year. Total net revenue which includes net energy sales and revenue from renewable energy credits totaled $28.4 million compared to $28.3 million a year ago.

For the third quarter of 2014, operating profits totaled $19.1 million compared to $19.2 million in the same period of 2013. In APCo's thermal energy division, in the third quarter the division reported an operating profit of $4.9 million down slightly from $5.3 million for the same period last year. Moving on to Liberty Utilities.

Third quarter results obviously reflect the expected seasonality from our natural gas distribution utilities. In the third quarter, Liberty Utilities reported an operating profit of $22.9 million compared to $20.2 million in the same quarter a year ago.

The increase in operating profit is primarily related to higher rates for Granite State Electric and Peach State Gas in Georgia. For Liberty Utilities West, during the third quarter water distribution and wastewater treatment revenue was $10.8 million compared $10.3 million in the same period a year ago.

The improved performance was primarily due to an increase in rates as compared to the same period in 2013. Electricity sales and distribution revenue was $17.9 million compared to $17.7 million in Q3 of 2013. Moving into the central division.

In the third quarter, the region's water distribution and wastewater treatment revenue of $5 million was in line with results from the same period a year ago. Also during Q3, Liberty Utilities Central's net revenue from gas and distribution was $5.3 million, a slight increase compared to the $5.1 million in Q3 of 2013.

In Liberty Utilities East, net utility sales, both gas and electric, totaled $32.1 million during the third quarter compared $23.8 million in the same period of last year, with the year-over-year increase coming from higher rates from Granite State Electric and the acquisition of New England Gas. Finally, an update on our financing activities.

Having a strong balance sheet that allows us to quickly capitalize on opportunities and maintain a low cost of capital continues to be a priority for Algonquin. Earlier in the fall, APUC completed a public offering of roughly 19.1 million common shares for a total gross proceeds of approximately $172.6 million.

The proceeds were raised to primarily address previously announced growth opportunities, including development projects reaching COD in 2015.

Concurrently with the September offering, APUC and Emera entered into a subscription receipts agreement pursuant to which Emera agreed to subscribe for an aggregate of 8.7 million subscription receipts of APUC at $8.90 per subscription receipt, for a total subscription price of $77.5 million.

The proceeds are intended to be used to partially finance the Odell Wind Project. In addition to strengthening the balance sheet, when Algonquin raises equity it should also be viewed as a leading indicator of the opportunities that we see before us in the market.

We are now turning our minds to the completion of the acquisition of Park Water and ensuring that we are well positioned for integrating it into our operations and company in 2015. On July 31, 2014 APCo increased the credit available under the senior unsecured credit facility to $350 million from $200 million.

The larger facility firmly positions APCo to deliver on its growth pipeline over the next four years. Now I will hand things back to Ian..

Thanks, David. Just before we open the lines up for questions, I would like to provide a quick update on the status of our 2014 growth and development initiatives.

Within APCo, we have three projects being constructed and are pleased that one is basically complete and progress on the other two is on track for our 24 megawatt Saint-Damase Wind Project, commercial operations are expected to occur within the next few weeks.

More than half the turbines are already online generating power and the balance of through final commissioning. We believe that this first phase of the project will qualify as Canadian renewable and conservation expense and therefore the project will be entitled to refundable tax credit equal to approximately $16.4 million.

In the U.S., construction is well underway at APCo's second solar generating station in Bakersfield, California with over half of solar panels already installed. Interconnection and substation are nearing completion and commercial operation is expected in the first quarter next year.

In August, we concluded that a definitive partnership agreement with a third party tax investor who will contribute $22 million towards the total capital cost of the project of approximately $59 million in return for the tax attributes associated with the project.

In Saskatchewan, we are well into the construction of our 23 megawatt Morse Wind generation station with the balance of plant including all foundations now complete and awaiting erection and commissioning of the turbines which will commence in six weeks or so. Commercial operations are targeted for next quarter. Switching over to Liberty Utilities.

As detailed in our MD&A, of the total of approximately $35 million in outstanding rate cases, we expect orders related to approximately half of these rate cases in the first quarter next year.

Particularly, we are pleased to have reached agreement with the New Hampshire regulator with respect to an interim rate increase for EnergyNorth representing approximately $7 million and we expect finalization of this rate case in Q3 of next year.

Just to sum up before we go to questions, our proximally $500 million 2014 capital program is just about complete and these attractive additions to our business will provide continued long-term accretion to earnings and cash flows, which underpin further capital appreciation and further dividend growth.

And with that, operator, we would like to open the lines up for questions..

[Operator Instructions]. Your first question today will come from Nelson Ng with RBC Capital Markets. Please go ahead..

Great, thanks. Good morning, everyone..

Hi, Nelson..

Good morning, Nelson..

Quick question on the Quebec wind RFP. So I kind of looked through the list and I didn't see your name on it. I was just wondering, I thought in the past you were looking to bid an expansion on one of your wind projects, like the Saint-Damase or one of the other ones.

Can you just provide a bit of color as to whether you bid on the [indiscernible]?.

No. You didn't miss our name on the list. I think we were disappointed to find out from TransÉnergie, the Hydro-Québec transmission group, that the capacity upgrades needed for our expansion of Saint-Damase would be completed in time to meet the requirements of the current RFP.

And so in some respects the two projects that we had that we were planning to bid and frankly, I guess I would say, still own and still have optimism for them were, if you will, transmission doubt. And so rather than participate with a losing hand, we are obviously just going to hold on to those projects. So, no, you didn't miss us.

We didn't participate in this RFP and I guess from our perspective, as we think about 2015, obviously we have 200 megawatts just announced with Odell, which is obviously sort of good news in keeping the group busy..

I see.

So I guess, from your perspective, you might be able to bid an expansion in the next Quebec wind RFP, if there is one several years down the road? Is that kind of how you think of it?.

Yes. I mean it's not like the project has gone anywhere or the wind is going to go anywhere. So we remain optimistic. Obviously I think it's a great opportunity. It really just timing issue from our point of view which is unfortunate. But it is what it is..

Okay and then just kind of staying on the wind subject. I think in the past, you mentioned that you were looking at one other 200 megawatt wind opportunity other than Odell..

Yes..

I was just wondering where you stand on that project and what your expectations are?.

Well, again, that project still exists and we have certainly talked about it in the past. I think I will -- the Odell project has been pretty consuming to get it to the stage that it's at to be able to meet the December 31, 2015 in service date. And so I guess it's really frankly just been a focus of resources, Nelson.

We still have the other project and now that Odell is away to the races, we are turning our attention perhaps to looking at Courtenay..

Okay and in terms of time constraints, I guess the construction window is getting pretty tight now for Courtenay?.

Yes, you are correct. That's exactly the issue and that's why the focus has been to get the turbine supply and the BOP contracts knocked into shape for Odell. So it's away to the races without any concern of meeting the timeframe. So in some respects, I think it's fair to say it's been an allocation of resources..

Okay, thanks. I will get back in the queue..

Yes. Thanks, Nelson..

Your next question will come from Rupert Merer with National Bank Financial. Please go ahead..

Good morning, everyone..

Good morning, Rupert..

So we did see your name on the list for the Ontario RFPs in 2015.

Can you give us a little more color on what we can expect for your activities in Ontario?.

Well, we certainly have an interest in building contract in wind projects and we wanted to make sure that the organization has the opportunity to bring. It's got an interest in a couple of projects here in the province to the RFP.

So really it's just about positioning ourselves to make sure that we keep our stick on the ice, if you will, for future RFPs..

In Ontario, do you have projects that you think are material or competitive for the upcoming RFP?.

from our point view. Though, I think it's really just really early to tell at this stage..

Okay and then secondly on the Park Water acquisition. It sounds like it's moving along nicely.

What hurdles remain to close in that acquisition and do you have a sense of timing on when you might be able to close it?.

Well, as I mentioned in my prepared remarks, I think we were pleased with the reception that we have received at the California regulators when we went in to introduce ourselves or introduce the transaction and I guess, in some respect our reaction and the reception was tempered by the fact that we have had a great relationship with the electric branch, the electric division through Calpeco.

And so perhaps we were a little pessimistic in terms of the timing that saw this as being a 2016 completion and that there is an opportunity to get this done sooner than that.

Obviously we have given up handicapping in the regulatory approval process, but I think we wanted to comment and observe that perhaps our earlier guidance might have been a little pessimistic in terms of the hurdles that need to be clear before completing acquisition. Obviously we are working on the integration work right now.

We are working our way through the regulatory approval application. Obviously, financing is on David's mind and he is working his way through that. But frankly, it's nothing that we haven't done a number of times in the past, Rupert..

All right, very good. Thanks for the color..

Yes. Thanks much..

Your next question comes from Sean Steuart with TD Securities. Please go ahead..

Thanks. Good morning, everyone..

Hi, Sean..

Good morning, Sean..

A couple of questions. Any update on Amherst Island and where we are with the REA process? And I saw that the CapEx guidance there is up a little bit.

Is that all FX? Can you speak to any other changes in that project that have impacted the CapEx schedule?.

Sure. It's Chris Jarratt speaking. On the Amherst project, we have submitted the REA sometime ago. It's close to being issued in its final form. We did get some comments back and we have dealt with those.

We have gone back and requested a few technical changes and they are primarily to accommodate some social issues as well as to assess what the costing of the project. So when that comes back to us, it's a little bit hard to tell but we kind of expect it early in first part of 2015. Hopefully Q1, but it could be a little bit after that.

Just on the costing, I think there is a couple of buckets that the cost have gone up in. It's primarily because the approval process has taken us some 42 months. So during that time, there has been some FX movements, as you mentioned. Also as the engineering has progressed, additional details are uncovered and that's also contributed.

So those are probably the two main areas and it's both at the turbines and balance of the plant..

Okay. Thanks, Chris, and the second question is, we saw that Liberty Utilities signed up with Kinder Morgan's Northeast Energy Direct pipeline.

Can you give some additional context there? And I guess, expanding on that, how you guys are thinking about potential direct investments in pipeline infrastructure going forward?.

Well, it's a great philosophic question, Sean. I mean right now, if you think about the utility value chain, Algonquin is, and through Liberty has sort of got us squarely got a foot in the camp at the commodity generation end of it in terms of our generation.

And then in the water business, our water wells and storage, and clearly through the Liberty Utilities distribution business, have a pretty solid foot in the distribution end. And as I see the transmission sector between those two is an area that we have dabbled in. I think we very much like the idea of regulated utility transmission assets.

Electric and natural gas pipelines are things that we think would fit well into the portfolio. Obviously, the challenge is finding the right opportunities. I think the Northeast Direct Pipeline of Kinder Morgan presents an interesting solution to a very capacity constrained geographic area. And it's certainly one.

It's not the only solution that's being contemplated for the area. But from Liberty Utilities and maybe from APUC's point of view, I think it would be an interesting investment opportunity. It might be a good starting point for us.

Obviously it's a little early for us to see what that might look like but I think if your question is, do we see transmission as strategically aligned, the short answer, Sean, is yes..

Okay. Thanks for the detail, Ian..

Yes. Thanks, Sean..

[Operator Instructions].We seem to have no further questions at this time. I will turn the call back over to management for any closing comments..

Great. Thanks, everyone. We appreciate you joining us this morning for the call. Just a quick reminder, we are holding our Investor Morning on November 25 and I would suggest to the extent that you make it here. Obviously the invitation is being extended and reach out to Kelly here at our office and she can give you the details.

Ad as usual, I would ask everyone to stay on the line for Kelly's riveting forward-looking disclaimer. Go ahead, Kelly..

Thank you, Ian. Certain statements included in this call contain forward-looking information within the meaning of certain securities laws.

These statements reflect the views of APUC with respect of future events based upon assumptions relating to, among others, the performance of the APUC's assets and the business, interest and exchange rates, commodity market prices and the financial and regulatory climates in which it operates.

These forward-looking statements include, among others, statements with respect to the expected performance of APUC, its future plans and its dividends to shareholders.

Statements containing expressions such as anticipate, believes, continues, could, expect, estimates, intends, may, outlook, plans, projects, drives, will, and similar expressions generally constitute forward-looking statements.

Since forward looking statements relate to future events and conditions, by their very nature, they require APUC to make assumptions and involve inherent risks and uncertainties.

APUC cautions that although it believes that its assumptions are reasonable in the circumstances, these risks and uncertainties give rise to the possibility that actual results may differ materially from the expectations set in the forward-looking statements.

Material risk factors include the impact of movements in exchange rates and interest rates, the effects of changes in environmental and other laws and regulatory policy applicable to the energy and utility sectors.

Decisions taken by regulators on monetary policy and the state of the Canadian and the United States economies and accompanying business climates. APUC cautions that this list is not exhaustive and other factors could adversely affect results. Given these risks, undue reliance should not be placed on these forward-looking statements.

In addition, such statements are made based on information available and expectations as of the date of this MD&A and such expectations may change after this date. APUC reviews material forward-looking information it has presented not less frequently than on a quarterly basis.

APUC is not obligated to nor does it intend to update or revise any forward-looking statements, whether as a result of new information, future developments or otherwise, except as required by law. Thank you..

Ladies and gentlemen, that does conclude our conference call for today. We thank you for your participation. You may now disconnect your lines and have a great day..