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.