ATCO looks to hike rates after losses in wildfires

CALGARY ATCO Ltd. said Wednesday it would attempt to recover less than $10 million in losses it suffered from the Fort McMurray wildfires through rate increases.

The Calgary company said it responded rapidly to the May wildfires, deploying workers to provide accommodation for first responders and evacuees, and repairing power equipment hit by flames.

ATCO said in its second-quarter earnings report that it was able to recoup some of its repair costs through insurance, but not for damages to wires, poles, towers and small natural gas pipelines.

The book value of the uninsured damaged assets is less than $10 million.

“We will make an application to the regulator to recover those costs,” said Brian Bale, senior vice-president and chief financial officer.

Bale said the cost, spread across its customer base, would be “extremely negligible” on individual bills.

ATCO posted $81 million in earnings for the second quarter, a more than 40 per cent boost over the same period last year.

The company said the jump was largely due to growth in utilities customers, higher demand for its portable worker housing units and cost-cutting across the organization.

The company noted its earnings in the second quarter of 2015 were unusually low due to one-time regulatory costs incurred in Australia, which made its 2016 earnings appear higher.

“We believe that the better-thanexpected earnings are a slight positive for sentiment,” Robert Kwan, analyst at RBC Dominion Securities Inc., said in a note.

ATCO cut its capital spending to $387 million in the second quarter, down by $31 million or roughly seven per cent over the same period in 2015.

The company said the decline in spending was due in part to the completion of a major electricity transmission line from Brooks to Edmonton last year.

“We’re seeing a tapering off of capital expenditure this year, mostly in electricity transmission, compared to what we had in 2015,” Bale said.

ATCO directed most of its capital spending in the quarter toward its utilities and contracted assets, but it also spent funds overseas, including the purchase of 50 per cent interest in a Chilean supplier of workplace housing and space rental units.

“For ATCO, it does not appear that any new major projects have been secured,” Kwan said in his note.