AltaLink L.P.

Overview Key strengths Key risks A relatively lower-risk electricity transmission company. Geographic and regulatory diversity limited to Alberta, Canada. Cash flow volatility limited because there are no volumetric, counterparty, or commodity price risk exposures. Limited growth opportunities in Alberta. A mostly supportive regulatory framework in Alberta. Negative discretionary cash flow indicates external funding needs. The Alberta Utilities Commission recently approved the generic cost of capital for 2023, keeping the return on equity (ROE) unchanged at 8.5% with a 37% equity layer. ALP's growth capital spending is authorized by the Alberta Electric System Operator (AESO), which pays ALP?s revenues in equal monthly installments. This provides stable and predictable operating cash flow and cost recovery for ALP, eliminating volumetric risk in electricity

...We expect AltaLink L.P. (ALP) to continue to effectively manage regulatory risk, supporting our assessment of its excellent business risk profile. The Alberta Utilities Commission recently approved the generic cost of capital for 2023, keeping the return on equity (ROE) unchanged at 8.5% with a 37% equity layer. ALP's growth capital spending is authorized by the Alberta Electric System Operator (AESO), which pays ALP's revenues in equal monthly installments. This provides stable and predictable operating cash flow and cost...

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