MDU's Five-Year Capital Spending Program, In A Word: Conservative --November 16, 2015
From the press release:
The company's utility group expects to grow its rate base
approximately 7 percent annually over the next five years on a compound
basis. This growth projection is on a much larger base, having grown
rate base at a record pace of 10 percent compounded annually over the
past five-year period. Although the company has assumed slower growth in
the Bakken region of North Dakota, the
utility group is spread across eight states where customer growth is
expected to be higher than the national average. This customer growth
along with system upgrades and replacements needed to supply safe and
reliable service will require investments in new electric generation and
transmission and electric and natural gas distribution. In addition,
while the company is among the lowest-priced power providers in the
country, the EPA's recently published Clean Power Plan could require
additional investment that would be incremental to the company's
five-year capital expenditures forecast.
The capital investment program at the pipeline and energy services
business reflects organic growth projects and includes a pipeline
project to serve eastern North Dakota
later in the five-year timeframe. The group is focused on improving
existing operations and accelerating growth in its current markets while
evaluating expansion into other basins. Potential acquisitions would be
incremental to the five-year capital investment program. Capital
expenditures pertaining to a second refinery have been removed from the
forecast as the company focuses on optimizing its current refinery
investment.
At the company's construction businesses, the capital expenditures
forecast is focused primarily on organic expansion opportunities. In
addition, operating leases for equipment upgrades are being utilized and
supplement the capital program. The group continues to evaluate
opportunities for merger and acquisition growth. While acquisition
capital was included in last year's capital forecast, the new forecast
does not include potential acquisitions, but rather any acquisitions
would be in addition to the projected capital investments. The
construction materials business has momentum with improving markets and a
lower cost structure, and adjusted earnings are 80 percent higher
year-to-date from a year ago.
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