TransCanada Corp. Earnings Call Nuggets: Bruce Unit 2, U.S. Power Contracts

On Friday, TransCanada Corp. (NYSE:TRP) reported its first quarter earnings and discussed the following topics in its earnings conference call. Take a look.

Bruce Unit 2

Linda Ezergailis – TD Newcrest: I have a question with respect to your Bruce Unit 2. I guess I was of the understanding that it would be coming into service late Q1 or early Q2. I realize it’s a very complex project and a month or two, is not a huge delay in the grand scheme of things. But maybe you can give us color as to why in these final months, it’s coming on a bit slower than expected and when in the second quarter might you start booking earnings on being in service?

Alexander J. Pourbaix – President, Energy and Oil Pipelines: Sure, Linda, its Alex. I think that mid-2012 date for Unit 2 is actually – that’s a pretty conservative number and both we and Bruce are working hard to try to get the unit on in advance of that. So I think we have a significant opportunity to get it in well – the middle of Q3. We have an opportunity to get it in more in line with the dates you saw earlier.

Linda Ezergailis – TD Newcrest: But the first unit to come into service its coming on a little bit slower than expected?

Alexander J. Pourbaix – President, Energy and Oil Pipelines: Sorry, I thought you were talking about Unit 1.

Linda Ezergailis – TD Newcrest: So what’s the brief delay?

Alexander J. Pourbaix – President, Energy and Oil Pipelines: I think you kind of hit it on the head. We are done all of the construction all of the commissioning. We are going through a series of very – I don’t want to use the term, delicate, but there is a lot of physics tests, chemistry tests that need to get done and it’s just taken a few days longer, a little bit longer than anticipated. Nothing really material.

Russell K. Girling – President and CEO: I think the point to present is we’ve – we are producing steam. We haven’t engaged that steam yet into the steam generators and that’s the next step in the process and that’s going to happen very, very shortly. We’d to go through all the tests, you fill it up basically, you put the steam in it, you raise the temperatures, you checked your valves, you check everything and then you bring it back down and then you ramp it back up to but higher level. And that’s a process we are through. Everything is actually is powered up and we are actually making energy if you will. We are just haven’t engaged the turbines yet and that’s the next step and that will happen very shortly here.

Linda Ezergailis – TD Newcrest: And you are quite confident that unit 1 won’t experience these last minute delays and it will be mid-Q3?

Russell K. Girling – President and CEO: Unit 1 through the whole process, because we’ve had the benefit of the experience on Unit 2 it allows us to better anticipate what challenges we might be seeing with respect to Unit 1. So I think the team is quite confident about that guidance.

Donald R. Marchand – EVP and CFO: I think as you pointed out Linda is we are on top of this right now. We are actually starting these reactors. So maybe we are in the process of doing it and it will be done in the next few weeks that’s what we are doing right now, we are actually starting these facilities and we are at the end of this thing.

Linda Ezergailis – TD Newcrest: So kind of an end of May in service.

Donald R. Marchand – EVP and CFO: We’ll work through the next week, and hopefully we’ll have some positive announcements for you.

U.S. Power Contracts

Juan Plessis – Canaccord Genuity: You stated in the release that you have about 35% of the U.S. power generation contracted for the remainder of 2012. Can you give us some color around the price of these contracts and how much of the U.S. power produced in the first quarter was contracted. Also if you have plans to increase your contracted position for this region going forward.

Russell K. Girling – President and CEO: I think given the very low prices prevailing particularly in the New England New York power markets with this low gas price environment and very, very unseasonable weather, we’ve just taken the position but there is a not a lot of upside Juan in contracting long term forward. We think there is a lot more upside then downside.

Juan Plessis – Canaccord Genuity: And the price of the contracts you have in place.

Russell K. Girling – President and CEO: In terms of average price for the kind of deals we are doing right now.

Juan Plessis – Canaccord Genuity: Secondly, do you have an update for us on the contract arbitration process with the OPA with respect to Oakville and when you might expect a resolution on this?

Russell K. Girling – President and CEO: We are working towards this arbitration process. I think we talked about that before. We’ve executed an arbitration agreement and we are proceeding towards an arbitration. We continue to look at opportunities that maybe available to avoid that, but I would expect that we’ll be in a situation where we would have the arbitration heard probably this summer, later this summer with a decision probably Q3, early Q4.