EX-99.1 2 d726314dex991.htm EX-99.1

American Gas Association Financial Forum May 2014 Exhibit 99.1

1 Safe Harbor Provision This presentation contains “forward-looking statements” made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements regarding Unitil Corporation’s (“Unitil”) financial condition, results of operations, capital expenditures, business strategy, regulatory strategy, market opportunities, and other plans and objectives. In some cases, forward-looking statements can be identified by terminology such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential” or “continue”, the negative of such terms, or other comparable terminology. These forward-looking statements are neither promises nor guarantees, but involve risks and uncertainties that could cause the actual results to differ materially from those set forth in the forward- looking statements. Those risks and uncertainties include: Unitil’s regulatory environment (including regulations relating to climate change, greenhouse gas emissions and other environmental matters); fluctuations in the supply of, demand for, and the prices of energy commodities and transmission capacity and Unitil’s ability to recover energy commodity costs in its rates; customers’ preferred energy sources; severe storms and Unitil’s ability to recover storm costs in its rates; general economic conditions; variations in weather; long-term global climate change; Unitil’s ability to retain its existing customers and attract new customers; Unitil’s energy brokering customers’ performance and energy used under multi- year energy brokering contracts; increased competition; integrity and security of operational and information systems; publicity and reputational risks; and other risks detailed in Unitil's filings with the Securities and Exchange Commission, including those appearing under the caption "Risk Factors" in Unitil's Annual Report on Form 10-K for the year ended December 31, 2013. Readers should not place undue reliance on any forward looking statements, which speak only as of the date they are made. Unitil undertakes no obligation to update any forward-looking statements to reflect any change in Unitil’s expectations or in events, conditions, or circumstances on which any such statements may be based, or that may affect the likelihood that actual results will differ from those set forth in the forward-looking statements.

2 Unitil Service Areas Natural gas and electric utility serving approximately 180,000 gas and electric customers in Maine, New Hampshire and Massachusetts

The Shale Revolution 3 ~100 Years of Supply

Source: Unitil estimates Natural gas costs 50% less than home heating oil 4 Compelling Price Advantage Current Retail Cost Comparison (Residential Customer) $0 $1,000 $2,000 $3,000 $4,000 Annual Residential Heating Cost ($) Gas Fuel Oil

5 Historically high heating oil use and relatively low penetration of natural gas in our service areas provides favorable conditions for growth • Low Gas Penetration ME Service Area: 49% on-the-main penetration • NH Service Area: 61% on-the-main penetration

6 New Pipeline Capacity New pipeline capacity will improve price competitiveness by increasing the delivery of abundant shale gas to northern New England Source: EIPC Gas Pipelines Serving New England

7 33% Growing Gas Customer Base Gas Customer Additions Targeting 4-6% annual therm sales growth Long-Term Growth Potential

8 New Customer Potential Significant number of communities surrounding existing service areas remain unserved • Up to 40,000 potential new customers along existing mains • Up to an additional 250,000 potential new customers in unserved areas

Rate Case Results 9 (1) Includes Fitchburg Electric requested revenue requirement of $6.7 million (of which $2.1 million is related to storm recovery) and additional storm reserve fund of $2.8 million 2014 Rate Relief (1) ~$60 million in rate relief since 2010 2010-2013 Rate Relief Over 50% increase to sales margin since 2010 $0 $20 $40 $60 $80 2010 - 2014 Total

Generating Financial Results 10 Gas & Electric Sales Margin 12% ($ in millions) Net Income 32% ($ in millions)

11 Historical Dividend Stability • Current quarterly dividend is $0.345 (annual dividend is $1.38 per share) • Current dividend yield of approximately 4.2% (1) • Since incorporation in 1984, Unitil has continuously paid quarterly dividends and has never reduced its dividend rate (1) As of May 14, 2014

12 A Unique Growth Opportunity • Historic growth opportunity via shale gas revolution and increasing demand for natural gas • Potential to significantly expand customer base • Well executed regulatory strategy • Stable dividend • Sustainable long-term growth trajectory

Appendix

Source: Unitil estimates • On a retail-delivered basis, natural gas is approximately 50% the cost of retail fuel oil • Typical residential customer saves on average ~$1,500 / year with natural gas 14 Natural Gas Price Advantage Current Retail Cost Comparison Natural gas is currently ~50% the cost of retail fuel oil Long-Term Price Forecast Source: EIA Increasing price differential

15 On-the-Main Growth Potential Natural Gas Penetration 84.3% 0.1% Maine New Hampshire • Up to 40,000 potential new customers along existing distribution mains Source: US Census Bureau U.S. Natural Gas Penetration Rate ~48% 67% 5% 4% 7% Heating Oil Natural Gas Electic Heat Propane 47% 20% 8% 14% Heating Oil Natural Gas Electic Heat Propane

16 New Service Areas • Up to 250,000 potential new customers 1 2 3 4 5 Gas Expansion Opportunities Provide Years of Above Industry Average Customer Growth 1. Poland New Service Area – 4.0 miles, 830 residential equivalent 2. Wells Extension – 1.2 miles, 440 residential equivalent 3. Lewiston Extension – 0.2 miles, 360 residential equivalent 4. Brentwood New Service Area – 4.2 miles, 1,350 residential equivalent 5. Dover Extension – 1.5 miles, 180 residential equivalent 6. Hampton Extension – 1.0 mile, 50 residential equivalent 6

17 Q1 2014 Financial Results • First quarter net income of $12.6 million, or $0.91 per share • Improvement of $1.8 million, or 17%, and $0.12 per share, compared to the first quarter of 2013 • Improved financial results driven by colder weather and the positive impact of steady customer growth Three Months Ended March 31, (Millions except shares outstanding and EPS) 2014 2013 (Unaudited) (Unaudited) Net Income to Common $12.6 $10.8 Weighted-Average Shares Outstanding (000's) 13,822 13,750 Earnings Per Share $0.91 $0.79

18 Key Performance Drivers Change 6% 15% 20% Key Performance Drivers Change * Excludes decoupled gas sales Unit Sales Sales Margin Gas Unit Sales and Margin Natural Gas Sales Margin Natural Gas Sales* • Heating degree days increased 12% over prior year • Growth in residential / C&I customers – 3.1% year-over-year increase • Increased customer usage • Distribution base rate increases • Higher sales from colder weather, customer additions and increased usage • Colder weather than prior year positively impacted earnings by an estimated $0.07 per share

19 Key Performance Drivers Change 4% Key Performance Drivers Change * Excludes decoupled electric sales Unit Sales Sales Margin Electric Unit Sales and Margin 5% • Growth in residential / C&I customers • Increased customer usage • Distribution base rate increases • Higher sales from customer additions and increased usage Electric Sales* Electric Sales Margin

Rate Relief 20 • Approximately $37 million of rate relief achieved through end of 2013 • Achieved additional rate relief from gas base rate cases for Northern Maine and New Hampshire divisions of $3.8 million and $4.6 million, respectively • Favorable cost tracker mechanisms will result in ongoing rate relief through annual step adjustments • Fitchburg Electric rate case is pending and will be completed mid-2014 Projected Base Rate Relief (1) Reflects requested revenue requirement of $6.7 million (of which $2.1 million is related to storm recovery) and additional storm reserve fund of $2.8 million (1) ($ in millions) $36.8 $3.8 $4.6 $1.4 $1.5 $1.3 $9.5 $59.5 2010-2013 Total Northern ME Rate Case 1/1/2014 Northern NH Rate Case 5/1/2014 Northern NH Tracker 5/1/2014 Unitil Energy Tracker 5/1/2014 Northern ME Tracker 5/1/2014 Fitchburg Rate Case 6/1/2014 Granite State Tracker 8/1/2014 2010-2014 $0.6 Electric Projected Total

21 Q1 2014 Return on Equity Subsidiary Q1 2014 Return on Equity Long-Term Rate Plans Northern Utilities (New Hampshire) • Estimated rate adjustment of ~$1.4 million effective May 1, 2014 Northern Utilities (Maine) • Estimated rate adjustment of ~$1.3 million effective May 1, 2014 Unitil Energy (New Hampshire) • Estimated rate adjustment of ~$1.5 million effective May 1, 2014 Fitchburg (Electric) • Requested annual revenue adjustment mechanism to complement revenue decoupling Granite State (FERC Pipeline) • Estimated rate adjustment of ~$0.6 million effective August 1, 2014 Authorized ROE Range of 9.20%-9.75% Company 03/14 Common Equity 03/14 LTM ROE (1) Unitil Energy $69.7 9.2% Northern Utilities (New Hampshire) Northern Utilities (Maine) $126.0 8.8% Granite State $11.0 Fitchburg (Electric) $65.9 5.4% Fitchburg (Gas) 9.4% (1) ROE calculated by dividing last twelve months GAAP Net Income to Common by Common Equity as of March 2014

• Northern Utilities Maine • Permanent increase in annual revenue of $3.8 million went into effect January 1, 2014 • Includes a capital cost recovery tracking mechanism to recover the future costs associated with cast iron and bare steel replacement programs with a term of four years • Capital structure reflects ~52% equity ratio and an implied ROE of 9.75% • Northern Utilities New Hampshire • Permanent increase in annual revenue of $4.6 million effective May 1, 2014 reconciled back to July 1, 2013 • Includes multi-year step adjustments to recover capital spending on gas mains extensions and infrastructure replacement projects • Capital structure reflects ~52% equity ratio and an authorized ROE of 9.5% Northern Utilities Rate Cases 22 Maine Projected Rate Relief New Hampshire Projected Rate Relief ($ in millions) ($ in millions) $4.6 $7.4 $1.4 $1.4 5/2014 Revenue Requirement 5/2014 Tracker 5/2015 Tracker Total Rate Relief $3.8 $1.3 $1.0 $1.0 $1.0 $8.1 1/2014 Revenue Requirement 5/2014 Tracker 5/2015 Tracker 5/2016 Tracker 5/2017 Tracker Total Rate Relief

Q1 2013 Gas Margin • Base rate design was adjusted in rate cases for Northern Utilities Maine and New Hampshire divisions • Rate design in both jurisdictions reflects higher fixed charges (i.e. customer charge) to smooth customer bills throughout the year • Higher fixed charge causes gas margin to be less affected by the seasonal nature of the gas business • Less sensitivity to variable weather conditions Q1 2014 Gas Margin 23 Fixed Charge Increase

24 • Fitchburg Electric (Massachusetts) base rate case filed in July of 2013 • 2012 year end revenue deficiency of $6.7 million which includes $2.1 million of deferred storm cost recovery • Additional $2.8 million requested for a major storm cost reserve fund to address costs of future major storms • Capital structure reflects 48% equity ratio and a 10.25% requested ROE • Filing includes a multi-year rate plan for recovery of future rate base additions • Transition charge expected to decrease ~$13 million annually by end of 2014 which will offset the requested rate increases on customer bills • Expect rate case decision and permanent rates in the second quarter of 2014 Massachusetts Rate Case Update

• Total capital budget of $91 million in 2014 • Expect to double gas distribution rate base • Plan to grow gas rate base to approximately $360 million by 2016, doubling the size of the gas business since 2008 Capital Budget and Rate Base 25 ($ in millions) ($ in millions) Electric Rate Base 2014 Capital Budget $91 million Gas Rate Base 3% 10% ($ in millions) Information Technology $7

26 Balanced Capital Structure 3/31/14 Liquidity 3/31/14 Capitalization • Balanced capital structure • 49% equity capitalization • Significant liquidity to fund growth ($ in millions) Credit Facility Limit 120.0 $ Less: Current Balance 59.2 Liquidity 60.8 $ Long Term Debt 51% Common Equity 49% Preferred Stock <0.1%