Emera Investor Luncheon - Toronto, ON November 27, 2018
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Emera Investor
Luncheon
Toronto, ON
November 27, 2018
Agenda
10:45 – 11:45 Company Presentations
Scott Balfour, President and CEO, Emera Inc.
Nancy Tower, President and CEO, Tampa Electric
Greg Blunden, CFO, Emera Inc.
11:45 – 12:15 Audience Q&A
12:15 – 1:30 Lunch
2
Forward-Looking Information Forward-Looking Information This document contains “forward-looking information” and statements which reflect the current view with respect to the Company’s expectations regarding future growth, results of operations, performance, business prospects and opportunities and may not be appropriate for other purposes within the meaning of applicable Canadian securities laws. All such information and statements are made pursuant to safe harbour provisions contained in applicable securities legislation. The words “anticipates”, “believes”, “could”, “estimates”, “expects”, “intends”, “may”, “plans”, “projects”, “schedule”, “should”, “budget”, “forecast”, “might”, “will”, “would”, “targets” and similar expressions are often intended to identify forward-looking information, although not all forward-looking information contains these identifying words. The forward-looking information reflects management’s current beliefs and is based on information currently available to Emera’s management and should not be read as guarantees of future events, performance or results, and will not necessarily be accurate indications of whether, or the time at which, such events, performance or results will be achieved. The forward-looking information is based on reasonable assumptions and is subject to risks, uncertainties and other factors that could cause actual results to differ materially from historical results or results anticipated by the forward-looking information. Factors that could cause results or events to differ from current expectations are discussed in the Business Overview and Outlook section of Management’s Discussion and Analysis (“MD&A”) and may also include: regulatory risk; operating and maintenance risks; changes in economic conditions; commodity price and availability risk; capital market and liquidity risk; future dividend growth; timing and costs associated with certain capital projects; the expected impacts on Emera of challenges in the global economy; estimated energy consumption rates; maintenance of adequate insurance coverage; changes in customer energy usage patterns; developments in technology that could reduce demand for electricity; weather; commodity price risk; unanticipated maintenance and other expenditures; system operating and maintenance risk; derivative financial instruments and hedging; interest rate risk; credit risk; commercial relationship risk; disruption of fuel supply; country risks; environmental risks; foreign exchange; regulatory and government decisions, including changes to environmental, financial reporting and tax legislation; risks associated with pension plan performance and funding requirements; loss of service area; risk of failure of information technology infrastructure and cybersecurity risks; market energy sales prices; labour relations; and availability of labour and management resources. Readers are cautioned not to place undue reliance on forward-looking information as actual results could differ materially from the plans, expectations, estimates or intentions and statements expressed in the forward-looking information. All forward-looking information in this document is qualified in its entirety by the above cautionary statements and, except as required by law, Emera undertakes no obligation to revise or update any forward-looking information as a result of new information, future events or otherwise. Nothing in this document should be construed as an offer or sale of securities of Emera or any other person. Non-GAAP Measures Emera uses financial measures that do not have standardized meaning under USGAAP and may not be comparable to similar measures presented by other entities. Emera calculates the non- GAAP measures by adjusting certain GAAP measures for specific items the Company believes are significant, but not reflective of underlying operations in the period. Refer to the Non-GAAP Financial Measures section of our MD&A for further discussion of these items. 3
Safety Moment
Toronto, ON
4
November 27, 2018
Business&Update
Strategy Capital
Allocation
Scott Balfour
President & CEO
5 Emera Inc.
Emera Today
RI
Maritime Link(1)
RI Approved ROE: 8.75-9.25%
Emera New Brunswick Approved equity: 30%
$0.6 billion in assets Rate base: $1.8 billion ~90% regulated portfolio of
Labrador Island Link(1)
RI
Emera Maine Approved ROE: 8.5% predominately vertically-
Approved ROE: 9.85%(3)
Approved equity: 60.4%(3)
Construction complete Q2 2018 integrated electric utilities and
Equity investment: $492 million
Rate base: $0.7 billion Equity ownership: 49.5% gas LDCs across North America
Customers: 158,000
RI
RI Nova Scotia Power
New Mexico Gas Approved ROE: 8.75-9.25%
$30B $6B
Approved ROE: 10% Approved equity: 40%
Approved equity: 50% Rate base: $3.7 billion
Rate base: $0.6 billion Customers: 515,000
Customers: 525,000
Corporate and Other(4)
$0.7 billion in assets Assets Revenues
RI
Tampa Electric
Emera Energy
Approved ROE: 9.25-11.25%
Target US$15-30 million
Approved equity: 54%
earnings annually
2.5M 7.4K
Rate base: $6.0 billion
Customers: 750,000 RI
Emera Caribbean
RI 9.4% approved return on
Peoples Gas
Approved ROE: 9.25-11.75%
rate base(2)
Rate base: $0.6 billion
Customers Employees
Approved equity: 54.7% Customers: 184,000
Rate base: $0.9 billion
Customers: 375,000 RI Regulated Investments
Note: Emera Florida and New Mexico, Emera Maine, and Emera Caribbean dollar amounts are USD, all other CAD; all values as at December 31, 2017
(1) Maritime Link and Labrador Island Link are equity accounted and are in the Corporate and Other segment of the financial statements
(2) Weighted average return on rate base. The weighted average equivalent return on equity is 12.8% with a 63.8% equity thickness.
6 (3) Weighted average of transmission, distribution, and stranded costs
(4) Excluding ENL and Emera New Brunswick
CUSTOMER FOCUS Cleaner, affordable, reliable energy delivered safely
ASSET FOCUS Regulated electricity & gas assets
GEOGRAPHIC FOCUS North American markets with opportunities for growth
Emera Dividend Target EPS Growth Capital Allocation Balance Sheet
Strategy
4-5% CAGR through 6-7% rate base ongoing optimization achieve target capital
2021 CAGR to 2021 of the portfolio to structure, supporting
FINANCIAL FOCUS supports average EPS achieve our financial our investment grade
growth in excess of targets, with a rating
the dividend growth current emphasis on
target organic growth
Carbon Reduction Rate Stability Innovation Sustainability
investing to reduce ensuring cost exploring new executing with
the carbon intensity certainty through solutions to meet the discipline to deliver
STRATEGIC INITIATIVES of our operations “Fuels to Assets” and current and future for our customers,
“O&M to Assets” energy needs of our employees,
projects customers shareholders,
communities and the
environment
7
Executing on Our Strategy
Strong year-to-date earnings and cash flow
growth driven by load growth, solar
investments and favourable market conditions
in key service areas
Advancing accretive, rate base investments
across the portfolio, most notably in Florida
Maritime Link operational and providing cash
earnings and regional electrical stability
Positive regulatory outcomes in Florida,
mitigating the 2018 impact of US tax reform
8
696MW 16% $18.1M
Renewable capacity Reduction in GHG Invested in our
Sustainability installed emissions since 2005 communities
We are executing with
272 Best 50 Strong
discipline to deliver Proactive safety Corporate Citizen in Governance
for our customers, incident reports for
every 100 employees
Canada
(2018, Corporate
2018 Governance Gavel
Award & consistently
employees, across Emera Knights) top 5 in the Globe &
Mail’s Board Games
shareholders,
communities and the
Employer Leadership 83%
environment 31% women on Emera Employee engagement
of Choice Board index based on 2018
Canada's Top 100 and 39% of senior survey
Employers (2019) executive teams
9
MARITIME LINK FLORIDA SOLAR BIG BEND MODERNIZATION
$1.55 billion rate base Investing US$850 million Investing US$850 million
investment placed into to install 600MW of solar to repower Unit 1 with
service on January 15, in Florida; placed the first natural gas combined
2018; delivered on-time 145MW into service in cycle technology and
and on-budget September 2018 retire Unit 2
102019-2021 Highlights
$6.5+ billion capital 6% - 7% rate base CAGR 4% - 5% dividend
program driving average EPS growth in growth target
focused in regulated utilities excess of dividend growth returning capital to shareholders
11Adapting to the Capital Market Cycle
Emera is
• Rising interest rates well
• U.S. tax reform impacts positioned to
• Investor preference for self-funded growth manage
• Current valuation gap between Canadian through the
capital
and U.S. utilities market cycle
12Redeploying Capital to Enable Growth
• Potential asset sales based on Determine Strategic
valuation and marketability and, in incremental review of
the context of Emera’s cost of capital, funding asset
long-term growth potential and requirements portfolio
impact on credit quality
• Rotating capital investment into our
high value businesses will maximize
shareholder returns Direct Identify and
• Strengthening our balance sheet will proceeds to evaluate
enable Emera to continue to grow high growth possible asset
jurisdictions sales
shareholder value
13Sale of New England Gas Generation
• Gross proceeds of US$590 million (~C$780 million)
• Transaction improves business risk profile and
increases the proportion of regulated earnings in
Emera’s portfolio to approximately 95%,
improvements that are credit positive
• Proceeds to be used to repay holding company
debt and to fund ongoing rate base growth
initiatives
• Expected to be accretive to earnings beginning in
2020, relative to issuing equity
• Expected close Q1 2019
14Asset Sales
• Off to a strong start and expect total 2019-2021 Asset Sales
asset sales to generate C$1.4-$2.0 Total Proceeds
$1.4B - $2.0B
billion of net proceeds
• Expect sales to be complete by the end
of 2019 $0.6B - $1.2B
• Objective is to minimize, and
potentially eliminate, external common
equity needs beyond the DRIP
$0.8B
• Florida and Atlantic Canada utility
assets offer greatest growth potential
and will remain part of portfolio NEGG Additional Asset Sales
15Visible Plan to Invest $6.5B+ in Rate Base
Forecasted Capital Spend (1)
$3.0
$2.5
$2.3
$1.1
$0.2
$2.5
$2.2
$1.8
2019F 2020F 2021F
Baseline Forecast Opportunities Under Development
(1) In
billions of Canadian dollars. U.S. dollar denominated capex is translated at a forecasted average USD/CAD exchange rate of 1.30 in 2019-2021. Details by affiliate
16 can be found in the appendix. Forecast is subject to change in the normal course of business.Investment Focused in Regulated Utilities
2019-2021 Capital by Jurisdiction (1)
• Over 85% of capital being
13% deployed in Florida and Nova
Scotia, both considered
constructive regulatory
Florida
jurisdictions
19%
Nova Scotia • Investment in jurisdictions with
above-average equity
Other
68% thicknesses will result in higher
EPS growth and lower
consolidated leverage
(1) U.S. dollar
denominated capex is translated at a forecasted average USD/CAD exchange rate of 1.30 in 2019-2021. Details by affiliate can be found in the appendix.
17 Forecast is subject to change in the normal course of business.Capital Program Drives Rate Base Growth
Forecasted Rate Base Levels (1)
$21.6 $22.5
$20.7
$18.9
2018F 2019F 2020F 2021F
(1) Averagetotal rate base in billions of Canadian dollars. U.S. dollar denominated rate base is translated at forecasted average USD/CAD exchange rate of 1.30 in
18 2018-2021. Florida utilities’ rate base includes deferred tax liabilities. Forecast includes Maritime Link and implied Labrador Island Link rate base. Only approved and
ordinary course capital projects are included. Details by affiliate can be found in the appendix. Forecast is subject to change in the normal course of business.Solid Long-term Shareholder Returns
5.4%
3 year 6.9%
7.5%
12.8%
5 year 5.2%
6.6%
12.7%
10 year 9.5%
8.1%
11.0%
15 year 7.3%
7.5%
Emera TSX TSX Utilities Index
Notes
19 (1) As at November 23, 2018Growing and Sustainable Dividend
5.7% CAGR since 2000 4%-5%
target through 2021
$0.84 $0.89 $1.16 $1.31 $1.36 $1.41 $1.48 $1.66 $2.00 $2.13 $2.28
00 05 10 11 12 13 14 15 16 17 18 19F 20F 21F
Notes
20 (1) Denotes annual cash dividends paid.Financial Results–
Project Update
Tampa Electric
Nancy Tower
President & CEO
21 Tampa ElectricFlorida Solar Initiative
• Investing approximately US$850
million to install 600 MW of
solar generation by 2021
EXPECTED IN-SERVICE DATES • Investment earns AFUDC during
construction
• Tranche 1 (145 MW) – in service September 2018
• Tranche 2 (260 MW) – January 2019 • Full and immediate cost
• Tranche 3 (145 MW) – Q1 2020 recovery starting on in-service
• Tranche 4 (50 MW) – Q1 2021
date of each tranche
• Annual net earnings of US$50
million in 2021
22Progress to Date
• Tranche 1 – both projects placed into service in September 2018; customer
rates have been increased in accordance with the SoBRA
• Tranche 2 – Florida Public Service Commission (“FPSC”) approved the
SoBRA on October 29, 2018; projects are permitted and under construction
• Tranche 3 and 4 – projects are beginning development and have started
initial permitting and zoning
23SOLAR PHASE 2
• Potential to invest a further US$850 million of
capital to add additional 600 MW of solar
• Post-2020 investment
• Modernized Big Bend will act as a balancing
resource for additional renewable capacity
24BIG BEND MODERNIZATION
• Investing approximately US$850 million
to repower Unit 1 with natural gas
combined-cycle technology and retire
Unit 2
• Expect simple-cycle to be operational in
2021 and full combined-cycle in 2023
• Investment will improve land, water and
air emissions, generate customer
savings of approximately US$750 million
and increase plant operating efficiency
25Next Steps
• The project is progressing well with
procurement of major equipment items well
advanced; no scheduling concerns at this
time
• Site Certification (SCA) and Environmental
permits filed; approval anticipated May 2019
• Four major contracts have been awarded so
far and all have come in under budget
• Consistent with standard practice in Florida,
recovery of capital and costs expected to be
included in the next rate application
26INVESTMENTS IN CUSTOMER TECHNOLOGIES
AMI
• US$230 million investment
• Deploying more than 800,000 3rd
generation meters over the next 3 years
LED
• US$135 million investment
• Converting over 200,000 existing non-LED
lights to smart LEDs over the next 4 years
27Financial Results
Financial Outlook
Greg Blunden
CFO
28 Emera Inc.Strong Adjusted Earnings and EPS Growth
Adjusted Net Income(1) Adjusted Earnings per Share(1)
$191 $504 $0.82 $2.17
$387
$0.55 $1.82
$118
+30% +19%
+62% +49%
2017 2018 2017 2018 2017 2018 2017 2018
Q3 September Year-to-Date Q3 September Year-to-Date
(1) Adjusted net income and adjusted EPS are non-GAAP measures
29Growing Operating Cash Flow
September Year-to-Date Operating
Cash Flow
Pre Working Capital
+ 29%
$1,237
$956
2017 2018
30Redeploying Capital to Fund Rate Base Growth
2019-2021 Funding Plan
Reinvested Cash Flow
Asset Sale Proceeds + Common Equity
~$2.0B (30%) Total Capex
~$2.0B (~30%)
~$0.7B ~$0.3B $6.5B
$0.6B - $1.2B $0B - $0.6B ~5%
~$5.5B ~$2.0B ~10%
8% - 18% 0% - 10%
$0.8B
~$1.5B ~$1.5B 12%
~25%
Op. Cash Dividends Holdco Debt OpCo Debt NEGG Other Select Common DRIP Preferred Total
Flow Repayments Issuances Proceeds Asset Sales Equity Equity
Proceeds from select asset sales are expected to materially reduce or potentially eliminate common
equity requirements
31Sale of NEGG – Strategic Rationale
• Create funding flexibility to position Emera for future growth
• Remove uncertainty associated with forward capacity and energy market
conditions in New England
• Increase proportion of regulated earnings, thereby improving the
stability of Emera’s forward earnings and cash flow and reducing credit
risk
32NEGG Delivered Solid Returns for Shareholders
in millions of USD
Initial
Cash In Investment Investment
$541 delivered an
unlevered return
Net Cash Proceeds on investment of
Cash Out Flow
(1)
from Sale approximately 10%
$240 $590
• Initial investment made at $1.04 exchange rate versus at current rate of $1.32
• Assets sold at $516/kW, comparable to or in excess of recent precedent transactions
33 (1) Total operating cash flow less capital expenditures during Emera’s holding period (November 2013 – February 2019E)Sale of NEGG – Impact on 2019 • Prior to the announced transaction, it was expected that NEGG would contribute 2019 earnings in line with our 2018 estimates (approximately US$40- $50 million) • The transaction is targeted to close at the end of February 34
NEGG Sale – Next Steps
• Transaction close is subject to
regulatory approvals
• Net proceeds, net of tax and
transaction costs, are expected to be
US$580-585 million
• Net proceeds to be used to repay
US$500 million Emera US LP bonds
maturing in June 2019 and to fund
ongoing rate base growth
investments in Florida
• Expect to record a modest gain on
sale in Q1 2019
35Regulatory Update
Rate Base Authorized Allowed Earned
Affiliate Regulator ($ billions) ROE Equity ROE(1) Regulatory Plan
TEC FPSC US$6.0 9.25 – 11.25% 54.0% 11.17% Settlement agreement through 2021
PGS FPSC US$0.9 9.25 – 11.75% 54.7% 11.25% Settlement agreement through 2020
Settlement agreement reached on distribution rate
NMGC NMPRC US$0.6 10.0% n.a. 7.5%
case; resolution expected Q1/19
Rate stabilization agreement through 2019; filing
NSPI UARB CA$3.7 8.75 – 9.25% 40% 9.25%
expected in the first half of 2019
Emera FERC & FERC transmission rates reset annually; new
US$0.7 9.85%(2) 60.4%(2) 8.55%(2)
Maine MPUC distribution rates were effective July 1, 2018
BLP anticipated rate application in 2018 for new
Emera (5)
Multi(3) US$0.6 9.3%(4) n.a. 7.9% rates in 2020; GBPC rate stability agreement
Caribbean
through 2021
NSPI’s rate stabilization agreement through 2019
NSPML UARB CA$1.8 8.75 – 9.25% 30% 9.00% applies to NSPML; NSPML will be seeking recovery
of 2020 rates in 2019 in coordination with NSPI
(1) ReflectsDecember 2017 year-end ROE
(2) Weighted average transmission, distribution and stranded costs
(3) Includes BLP (Fair Trading Commission), GPBC (Grand Bahama Port Authority) and DOMLEC (Independent Regulatory Commission)
36 (4) Weighted average allowed return on rate base (“RORB”)
(5) Domlec’s results were negatively impacted by Hurricane Maria in 2017. Excluding Domlec, the earned RORB in the Caribbean was 9.2% vs. an authorized return of 9.5%.Strengthening the Balance Sheet
• Management goal to improve both ‘left and right’ sides of the balance sheet
• HoldCo debt retirements in combination with decreased exposure to non-regulated cash flows
• Achieving target capital structure and increasing exposure to our highest quality regulated cash
flows improves business risk for all stakeholders
September 30, 2016 September 30, 2018 2020 Target
10.4% 10.9% 10%
25.6% 35%
28.8%
64.0% 60.3% 55%
Debt Equity Preferred equity
Notes:
(1) Preferred equity includes hybrid debt
37 (2) Equity includes the NCI and excludes AOCIFinancial Plan Supports Credit Ratings
• Our financial plan supports our credit ratings, improves our financial
strength and provides increased flexibility going forward
• Specifically, our actions are focused on achieving:
• Improved business risk through the sale of unregulated assets
• Higher sustained CFO/FFO to debt metrics as compared to 2016
and 2017
• Materially reduced holding company debt as a percentage of
total debt
• Lower consolidated leverage
38Financing Strategy
• We have excellent businesses and we are taking the necessary actions to
strengthen our balance sheet and provide financing flexibility in the future
• Over the next twelve months, we will reallocate capital in a disciplined and
prudent manner resulting in a stronger Emera
• Our financing strategy positions us well and supports our long term growth
targets
Over the forecast period, adjusted EPS is expected to grow, on average, at
a rate comparable to rate base growth and is expected to be in line with
current market consensus.
39Business Update
Wrap Up
Scott Balfour
President & CEO
40 Emera Inc.Our Growth Story
1999 2000-2005 2005-2015 2015-2016 2016-2021
BEGIN EXPAND BUILD EXPAND BUILD
Emera Inc. launched with Grow geographic footprint Continued growth through Acquire TECO, doubling the Execute on organic growth
an agenda for growth through acquisitions and tuck-in acquisitions and size of Emera and in regulated electric and
new creation of new energy developing opportunities, establishing a platform for gas utilities
companies including the Maritime Link, growth in Florida
created by the demand for
cleaner affordable energy
41Why Invest in Emera
• 5 year annualized total shareholder return of 11.2% compared 7.0% returned
SUPERIOR SHAREHOLDER by S&P/TSX Capped Utilities Index and 7.7% returned by the S&P/TSX
RETURNS Composite Index
• Attractive valuation by historical standards
• ~90% regulated earnings
STRONG EARNINGS • Adjusted earnings per share CAGR of 7.7% over the last 5 years(1)
• Dividend increase of 4% to $2.35 announced August 9, 2018
GROWING DIVIDENDS • 4-5% dividend CAGR target through 2021
• Attractive 5.4% dividend yield
• Strong cash coverage of dividends
GROWING OPERATING CASH
• 11.7% CAGR in pre working capital operating cash flow per share over the last
FLOWS 5 years
• $6.5+ billion 3-year capital program focused on rate base investments in
VISIBLE GROWTH & FUNDING constructive regulatory jurisdictions
PLAN • Funding to be provided primarily by operating cash flow, OpCo debt in support
of rate base investments and proceeds from select asset sales
Note: All figures as at September 30, 2018
42 (1) Adjusted earnings is a US non-GAAP financial measureAppendix
Toronto, ON
November 27, 2018Capital Forecast by Affiliate
Capital Forecast (CAD millions) 2019F 2020F 2021F Total
Tampa Electric $ 1,410 940 910 3,260
Peoples Gas 310 340 310 960
New Mexico Gas Company 100 190 140 430
Nova Scotia Power 340 330 350 1,020
Emera Maine 90 150 110 350
Emera Caribbean 160 70 70 300
Emera Newfoundland - 190 - 190
Other (incl. Seacoast) 80 80 60 220
Less: Asset Sale Program Adjustment - (140) (110) (250)
Subtotal – Baseline Capital Forecast $ 2,490 2,140 1,840 6,480
Add: Opportunities Under Development - 190 1,130 1,320
Total Capital Forecast 2,490 2,340 2,970 7,800
(1) In
millions of Canadian dollars. Forecasted capital includes AFUDC. U.S. dollar denominated capex is translated at a forecasted average USD/CAD exchange
44 rate of 1.30 in 2019-2021.Rate Base Forecast by Affiliate
2017- 2018-
2020 2021
Rate Base (CAD millions)(1) 2017A 2018F 2019F 2020F 2021F CAGR CAGR
Tampa Electric(2) $ 7,850 8,400 9,375 10,150 10,650 8.9% 8.2%
Peoples Gas(2) 1,175 1,250 1,475 1,700 1,900 13.1% 15.0%
New Mexico Gas Company 775 725 750 850 925 3.1% 8.5%
Nova Scotia Power 3,675 3,775 3,950 4,200 4,350 4.6% 4.8%
Emera Maine 950 950 950 1,000 1,075 1.7% 4.2%
Emera Caribbean 750 825 1,050 1,050 1,025 11.9% 7.5%
Maritime Link(3) 1,800 1,800 1,800 1,775 1,725 -0.5% -1.4%
Labrador Island Link(4) 1,100 1,175 1,300 1,875 1,850 19.5% 16.3%
Less: Expected Asset Sales - - - (1,000) (1,000) n.a. n.a.
Total $ 18,075 18,900 20,650 21,600 22,500 6.1% 6.0%
(1) Average total rate base in billions of Canadian dollars. U.S. dollar denominated capex is translated at a forecasted average USD/CAD exchange rate of 1.30 in 2018-2021.
(2) Includes deferred tax liability, a zero cost-of-capital component of the regulated capital structure in Florida
45 (3) Maritime Link begins to depreciate in 2020 when Muskrat Falls is fully operational
(4) Implied rate base based on a 45% equity thickness.Target Long-term HoldCo Debt Retirements
Target Debt Retirements Issuance
(CAD millions) Currency 2019F 2020F 2021F Total
Emera Finance LP USD $ 650 - - 650
Emera Inc. CAD 225 - - 225
NMGI USD 65 - - 65
TECO Finance USD - 390 - 390
Total $ 940 390 - 1,330
(1) In billions of Canadian dollars. U.S. dollar denominated debt is translated at a forecasted average USD/CAD exchange rate of 1.30 in 2019-2021.
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