Quanta Services (NYSE:PWR) President and CEO Duke Austin said during the company’s 4Q16 earnings call on Feb. 21 that the company expects to start full-scale construction in the second half of the year on the Fort McMurray West 500-kV transmission project in Canada.
As noted in a Feb. 10 decision by the Alberta Utilities Commission, in which the commission approved the project, Alberta PowerLine General Partner Ltd., filed an application in December 2015 for approval to build and operate the project, which consists of:
- 400 kilometers of single-circuit transmission line (12L41) from the Sunnybrook 510S substation to a new 500-kV substation to be built adjacent to the existing 240-kV Livock 939S substation
- About 100 kilometers of new single-circuit 500-kV transmission line (12L44) from the 500-kV Livock 939S substation to a new 500-kV substation that will connect to a new substation designated as the Thickwood Hills 951S substation
As noted on Alberta PowerLine’s website, Alberta PowerLine is a partnership between ATCO and Quanta Services; Alberta PowerLine is 80% owned by Canadian Utilities Limited (an ATCO company) and 20% owned by Quanta Services. The Alberta Electric System Operator (AESO) in December 2014 awarded Alberta PowerLine the contract to design, build, own and operate the project, which is the first project awarded under the AESO’s recently instituted Competitive Process, the website said.
The project requires modifications to two existing substations along the route and the construction of the new Thickwood Hills 951S substation, the commission said in its decision, adding that ATCO Electric Ltd., in December 2015 applied to alter the Livock 939S substation, and AltaLink Management Ltd., filed a request to build 100 meters of 500-kV line to be joined to transmission line 12L41, as well as to alter the Sunnybrook 510S substation.
The commission further noted that ATCO Electric in December 2015 applied to build the Thickwood Hills 951S substation, which included the construction of two new 20-kilometer, single-circuit 240-kV transmission lines connecting the Thickwood Hills 951S substation to the existing transmission line 9L01. The company also applied to build two new single-circuit 240-kV transmission lines, about three kilometers each, to connect the Thickwood Hills 951S substation to the existing transmission line 9L07.
The commission said that it finds that approval of the project’s substations, transmission line 12L41 on the south common route and west route option, and transmission line 12L44 on the north common route and common route variation 1 are in the public interest, having regard to the social, economic, and other effects of the transmission facilities, including their effect on the environment.
The south common segment of the transmission line begins at the Sunnybrook 510S substation near the Genesee generating station and proceeds north, the commission said, adding that the route crosses the North Saskatchewan River and passes Duffield, as well as the village of Alberta Beach on the east side. North of the village of Alberta Beach, the line crosses Highway 43 and continues further north before splitting into the west route option and the east route option.
The commission added that once the south common route splits, the west route option heads west until it reaches transmission line 913L, where it begins to parallel transmission line 913L north and continues to do so for much of its length. The transmission line continues north passing Barrhead and then crosses the Athabasca River and traverses through the Fort Assiniboine Sandhills Wildland Provincial Park, the commission said. At that point, transmission line 913L becomes 9L913 and the route continues to parallel it, the commission said, adding that the west route option then continues north passing Slave Lake and Wabasca before turning east and connecting to the Livock 939S substation.
The north common section of the route departs at the Livock 939S substation as transmission line 12L44 and parallels transmission line 9L57 until it is level with the Thickwood Hills 951S substation. At that point, the commission added, the north common section embarks in an eastwardly direction and connects to the Thickwood Hills 951S substation.
The common route variation 1 is a small deflection in the northern portion of the common route located in the northeast quarter of Section 30 and the southeast quarter of Section 31, Township 89, Range 13, west of the Fourth Meridian, the commission said.
“The commission finds that overall, the south common route and the west route option for transmission line 12L41, and the north common route with the common route variation 1 option for transmission line 12L44 will result in lower social, economic and environmental impacts,” the commission said.
The commission also said that it finds that the west route option has fewer potential impacts than the east route option with respect to property and residential impacts because the west route option parallels more existing linear disturbances, such as transmission lines, and potentially affects fewer residences.
The commission further noted that it finds that the west route option is a better route option than the east route option and east route option variation in terms of agricultural impacts, as the east route option affects more agricultural lands. With the proposed mitigation measures, the commission said that it finds that Alberta PowerLine has taken reasonable steps to mitigate agricultural impacts to an acceptable degree.
In addition, while the east route option is less costly because it is shorter, that cost advantage is not sufficient in light of the additional residential and environmental impacts, the commission said.
The commission also noted that its decision to approve the project is subject to certain conditions, including that throughout project construction, Alberta PowerLine is to engage in ongoing discussions with Alberta Environment and Parks about the impacts of the project on woodland caribou, and incorporate any additional mitigation measures recommended by Alberta Environment and Parks into a caribou protection plan.
According to Alberta PowerLine’s website, construction on private land is anticipated to begin in late 2017, and the transmission line is scheduled to be operational by June 2019.
During the earnings call, Austin said that electric power segment revenues for 4Q16 were comparable to 4Q15, but operating income and margins for the segment show solid improvement.
“We continue to have a positive long-term outlook for our electric power segment and believe we are entering an upward multi-year cycle,” he said.
The market drivers that continue to spur demand for Quanta’s electric power infrastructure services include a need to maintain and replace aging infrastructure, the generation mix shifting to more renewables and natural gas, as well as regulation aimed at improving grid reliability, he said.
Quanta on Feb. 21 said that revenues in 4Q16 were $2.10bn, compared to revenues of $1.90bn in 4Q15, and net income from continuing operations attributable to common stock was $88.5m, or 57 cents per diluted share, compared to net loss from continuing operations attributable to common stock of $2.6m, or a loss of 2 cents per diluted share, in 4Q15. The company also said that certain items favorably impacted diluted earnings per share from continuing operations for 4Q16 by 6 cents per share.
Among other things, Quanta said that revenues for the year ended Dec. 31, 2016, were $7.65bn compared to revenues of $7.57bn for the year ended Dec. 31, 2015. Net income from continuing operations attributable to common stock was $198.7m, or $1.26 per diluted share, for the year ended Dec. 31, 2016, compared to $120.3m, or 62 cents per diluted share, for the year ended Dec. 31, 2015, the company said.
Quanta said that included in its operating results for the year ended Dec. 31, 2016, were losses of about $54.8m ($33.4m net of tax), or 21 cents per diluted share, on a power plant construction project in Alaska that resulted from engineering and production issues. Included in Quanta’s operating results for the year ended Dec. 31, 2015, were losses of about $44.9m ($27.4m net of tax), or 14 cents per diluted share, related to the same project, the company said.