ATCO Ltd. | 2015 | Annual Report

CHAPTER TITLE FOR EASY REFERENCE 1 Table of Contents

1 Financial Highlights

2 Return on Investment ATCO STRUCTURES & LOGISTICS 3 Letter to Share Owners ATCO SUSTAINABLE INTERNATIONAL 5 ATCOenergy COMMUNITIES Competing Globally Through 7 Innovative Solutions STRUCTURES & LOGISTICS Structures & Logistics ATCO ELECTRIC 9 Global Business Unit INTERNATIONAL ATCO ATCO PIPELINES 10  Modular Structures POWER ATCO GAS ATCO ENERGY SOLUTIONS 12  Lodging and Support Services ELECTRICITY INTERNATIONAL 13  Logistics and Facility Operations and Maintenance Services PIPELINES GLOBAL & LIQUIDS 14  Sustainable Communities ATCOenergy

Electricity 16 Global Business Unit

17  Electricity Transmission and Distribution 19  Power Generation 20  Distributed Generation 22  Northern Operations 25  International Operations

Ronald D. Southern Pipelines & Liquids C.C., C.B.E., A.O.E., B.Sc., LL.D • 1930 – 2016 26 Global Business Unit On January 21, 2016 the world lost a giant. 27  Natural Gas Distribution With nearly 8,000 employees and assets A man who has touched the lives of so many with his fierce determination and tireless pursuit 31  Natural Gas Transmission of approximately $19 billion, ATCO is a of excellence. A true citizen of the globe and  Hydrocarbon Storage diversified global corporation delivering a brilliant mind. His is a legacy that will be 32 and Industrial Water service excellence and innovative business remembered for generations to come. 34  International Operations solutions in Structures & Logistics (workforce As Founder of ATCO Group, he played a pivotal housing, innovative modular facilities, and visionary role in every major development in 37 Indigenous Partnerships construction, site support services, and the evolution and growth of the company. 41 ATCO in the Community logistics and operations management); 43 Financial Excellence 2015 Electricity (power generation, distributed generation, and electricity distribution, 45  Consolidated Annual Results transmission and infrastructure development); 46  Consolidated Operating Summary Pipelines & Liquids (natural gas transmission, 47 ATCO Ltd. Directors distribution and infrastructure development, 48 ATCO Ltd. Officers hydrocarbon storage, and industrial water solutions); and Retail Energy (electricity and 49 ATCO’s Beautiful Alberta Heritage natural gas retail sales). More information can 50 General Information be found at www.ATCO.com.

2 2015 ATCO ANNUAL REPORT ATCO and Denendeh ATCO’s Global Capabilities Investments Incorporated sign a landmark agreement that will see the First Nations-owned company become a 50 per cent partner in Northland Utilities STRUCTURES ELECTRICITY PIPELINES & LIQUIDS (pg. 38). & LOGISTICS Provides comprehensive solutions Delivers vertically integrated Complete infrastructure solutions for global customers in power solutions in natural gas to customers worldwide including generation, distributed generation transmission, distribution and modular structures, lodging and electricity transmission, infrastructure development, and support services, logistics distribution and infrastructure hydrocarbon storage and and facility operations and development. processing, and industrial water maintenance and a full range of solutions. pre-fabricated, culturally sensitive electric Service Area* Delivers safe, reliable electricity to natural Gas Service Area* building solutions for Indigenous Fort Area and other remote communities. nearly 227,000 farm, business and Provides safe, reliable and McMurray ATCO Structures Enlarged ATCO launches & Logistics wins a residential customers in 245 cost-effective natural gas ATCOenergy – a Manufacturing Facilities communities in Alberta and more delivery to more than 1.1 million $470 million contract to new natural gas design, manufacture, than 28,000 customers in Canada’s customers in nearly 300 Alberta and electricity install and operate a offices and/or Operations retailer in 1,600-person workforce North. communities and approximately Alberta 725,000 customers through housing facility for BC indigenous Community (pg. 5). Hydro’s Site C Clean Projects Major Transmission Projects Western Australia’s largest gas ATCO Gas invests Energy Project (pg. 11). $331 million in Plans, develops, operates distribution network. capital projects – and maintains transmission installing 785 km indigenous Partnerships infrastructure that transports Pipelines of pipeline and Building and sustaining connecting electricity from generating stations Owns and operates key natural Indigenous relationships helps more than to substations. gas transmission facilities 20,000 primary form the foundation for how throughout Alberta transporting service lines to ATCO does business and Fort McMurray West its network in clean, efficient energy from Alberta (pg. 27). is reflected through both its Proposed Routes ATCO Electric producers and other pipelines, to completes the longstanding relationships with utilities, power generators Edmonton $1.8 billion Construction is well underway on Indigenous communities and how Power Plants Eastern Alberta ATCO’s Ramal Tula Gas Pipeline (pg. 36). and major industries. the company engages with these Builds, owns and operates Transmission Project development and design work Line — the longest has also commenced on a cogeneration communities every day. independent power generation Hydrocarbon Storage transmission line power plant project at the Miguel plants providing industry-leading, and Processing and in ATCO’s history Hidalgo Refinery (pg. 25). (pg. 17). reliable, responsible and cost- Industrial Water Solutions atcoenergy Service Area effective solutions to customers Builds, owns and operates Alberta’s Sells low-cost electricity and natural and partners with 13 plants in natural gas, natural gas liquids Canada and 2 plants in Australia. Industrial gas service to residential and and industrial water-related Heartland business customers in Alberta. infrastructure to serve the midstream sector of Western ATCO Pipelines begins Canada’s energy industry, offering construction on the ATCO Energy first three segments solutions in product storage, Solutions Calgary processing and transportation. of the Urban Pipeline completes Replacement Program ATCO has business development offices in its key Delivers energy to residential and Edmonton $50 million in in Calgary (pg. 30). Current ATCO projects to Operations geographic markets that are focused on supporting growth commercial customers in the expand and for ATCO’s global business units in those markets: Town of Inuvik. improve its multi-user industrial atco Australia water system in Alberta’s Perth Industrial atco Mexico Heartland (pg. 34). * ATCO has overlapping service areas for electricity and natural gas distribution in Central Alberta. ATCO Gas Australia supports Construction begins on a 36,000 sq. ft. Multiplex Sports Gas-Powered Air Conditioning Centre for the Piikani Nation — the largest project in technology which can save ATCO Sustainable Communities’ history (pg. 15). 5 2015 ATCO ANNUAL REPORT 7customers 2015 ATCO up toANNUAL 40 per centREPORT in CHAPTER TITLE FOR EASY REFERENCE 7 operating costs (pg. 35). ATCO Ltd. Consolidated Annual Results YEAR ENDED DECEMBER 31 Five-Year Financial Total Return on Highlights (Millions of $ Canadian dollars 100$200 Investment except per share data) 2015 2014 FINANCIAL This data (other than Revenues 4,131 4,554 funds generated by operations) has been Earnings attributable to $150 extracted from financial Class I & Class II shares 154 420 $ statements which 133 $132 have been prepared Adjusted earnings 293 374 in accordance with $ International Financial 112 Total assets 17,689 Reporting Standards 19,055 $100 (IFRS) and the reporting Class I & Class II currency is the 3,356 3,168 Canadian dollar. share owners’ equity

Funds generated by $50 For further information, operations 1,589 1,786 please see the ATCO Ltd. Consolidated Capital expenditures 1,868 2,373 Financial Statements and Management’s Discussion and Analysis - CLASS I NON-VOTING FORWARD-LOOKING 2010 2011 2012 2013 2014 2015 www.sedar.com. & CLASS II VOTING INFORMATION: SHARE DATA Certain statements contained Compound Cumulative growth Rate return in this Annual Report constitute This graph compares the forward-looking information. Class I Non-Voting Earnings per share 1.34 3.66 5.8% $133 cumulative share owner Forward-looking information is (ACO.X) return over the last five years often, but not always, identified of the Class I Non-Voting by the use of words such as and Class II Voting shares Diluted earnings % $ Class II Voting “anticipate”, “plan”, “estimate”, 5.7 132 (ACO.Y) of the Company (assuming per share 1.33 3.64 “expect”, “may”, “will”, “intend”, reinvestment of dividends) “should”, and similar expressions. with the cumulative total S&P/TSX return of the S&P/TSX Forward-looking information 2.3% $112 Dividends paid Composite composite index. involves known and unknown per share 0.99 0.86 risks, uncertainties and other factors that may cause actual results or events to differ Shares outstanding materially from those anticipated (thousands) 115,024 115,141 in such forward-looking ATCO SHARE It is important for prospective owners of ATCO shares to information. The Corporation understand that ATCO is a diversified group of companies believes that the expectations OWNERSHIP Weighted average reflected in the forward-looking principally controlled by Sentgraf, a Southern family holding shares outstanding information are reasonable, but no FOR PRESENT assurance can be given that these company. It is also important for present and prospective (thousands) 114,832 114,848 expectations will prove to be & PROSPECTIVE correct and such forward-looking share owners to understand that the ATCO share registry information should not be unduly OWNERS has both non-voting and voting common shares. relied upon.

1 2015 ATCO ANNUAL REPORT RETURN ON INVESTMENT 2 We also made a fundamental shift nearly 500 km in length, 500 kilovolt We are a leaner, more targeted and in the way we do business as we DC Eastern Alberta Transmission revitalized organization today. One Letter to Dear Share Owners, restructured into three Global Business Line – now leads a newly formed I believe, is an enterprise ready to Share Owners Units (GBUs) – Structures & Logistics, group responsible for establishing compete with anyone, anywhere in the It is with deep sadness and so many • Method of Operating – the interior, Electricity and Pipelines & Liquids – a ‘Shared Services’ model that will world, and we will continue to strive for wonderful memories that I write this filled with people of great heart, that combine all their lines of business deliver exceptional value to our Global excellence in all that we do. letter to you. courage and determination, always in their respective industries into Business Units for their non-core, but Reducing staff was extremely difficult striving for excellence, just like our vertically integrated business units necessary needs such as global supply for me and for your Company. We On January 21, 2016 your Company’s Founder. that are able to more efficiently and chain and procurement, security and remain steadfast in our belief that it is Founder, Ronald D. Southern, passed effectively respond to our customers’ fleet management, for example. away peacefully at home with my mom, Our Company weathered many needs. the people of ATCO Group who are our real competitive advantage and we will Margaret, his wife of 61 years, my challenges and R.D. himself faced As the GBUs focus on their sales Each GBU is approximately the work hard to grow our businesses and sister, Linda, and myself by his side. many adversities over the years, and markets, operational excellence, same size that ATCO Group was a create new opportunities for the next but he, and the people of ATCO – strategy, research and product R.D., as I affectionately called him, was decade ago, prior to this past period generation. and they have been and are terrific development, the Shared Services an extraordinary man of unquestionable people – persevered with honesty, of extraordinary expansion. The new team – now called our internal Under our new structure, we are integrity, fierce determination, a lion’s determination, intelligence and structure gives us the nimbleness “Customer Service” group – is adapting rapidly to a different world courage and immense imagination. common sense. to make decisions in a more rapid and targeted, strategic manner. Each charged with developing a competitive and we are even more capable of While it may not be for me to say, it is Today, as I remember the past, and business unit is further strengthened advantage through streamlined, fending off the headwinds as they arise. rare to meet someone who can truly face the future, I take great confidence by a mandate to pursue sectoral cost-effective services for ATCO’s We are exploring new opportunities and be called great – Ron Southern was in the lessons learned, the granite- opportunities in a more autonomous operations. With a special team of I foresee ATCO as a leader in renewable such a man. His range and depth of like strength of our Company and the way. experts intent on driving down costs energy, in the future, as well as an accomplishments were sterling, but it resiliency of our people. without impacting industry-leading enterprise that is well-equipped to was his warmth, humility, decency and Our Managing Directors: Steve service or quality, our business units provide housing, facilities management unwavering sense of duty and pride for Our world and our economic Lockwood, Structures & Logistics; will concentrate solely on operations and catering around the world, and his city, his province, and his country environment are rapidly changing and Wayne Stensby, Electricity; and George and growing their businesses. the company that customers globally that distinguished him. growing in complexity and uncertainty. Lidgett, Pipelines & Liquids; are tasked seek to build integrated infrastructure Nancy C. Southern with growing their businesses through I am very pleased and enthused about solutions – Always there, anywhere, Chair, President & Chief Executive Officer My meagre words can never do 2015 was a difficult year for our the development of new products the early 2016 launch of our newest anytime. justice to our Founder, but in a note Company, just as it was for many and services and by pursuing new company, ATCOenergy, which is Our history is not just one of tackling of condolence our family received, others who felt the shockingly abrupt opportunities in existing markets and an example of our more innovative adversity but of emerging stronger with we were reminded of the tribute to pull back in oil prices and diminishing new geographies around the world. approach to traditional business that a more prosperous and dynamic future Christopher Wren, the great British growth opportunities. You will find letters regarding their ATCO will now take. The new company respective strategies on pages 9, 16 ahead. As evidenced by our 20-year architect. When a friend of Wren’s is designed to be the premier electricity heard someone lament that there It became increasingly apparent that and 26. total share owner return (left), your and natural gas retailer in Alberta’s were no monuments in recognition in this changing world, we too had to Company continues to outperform the competitive landscape on a virtual of Wren in London, the friend replied change – preemptively and immediately Sett Policicchio, who most recently S&P/TSX Composite by a significant platform that is transferrable and no monument was needed – one only if we were to be at the forefront of led the construction of the province’s margin despite the downward pressure scalable for other jurisdictions. needed to look around at the beautiful creating value-oriented solutions for longest ever transmission project – of the markets this past year. buildings that bear his signature. our customers and future value for our As our Founder used to say “To ATCO, share owners. $2,000 While not in the same league as tomorrow means adventure, meeting Christopher Wren’s St. Paul’s And change we did! We enacted new challenges, visiting new lands, Cathedral, the enterprise known as sweeping change of unparalleled Total Return On $100 Investment exploring new dimensions in living, ATCO Group and the vitality of its magnitude – reducing levels of finding new opportunities, creating $ people are the legacies that bear the bureaucracy built up over time and 1,500 as yet unknown designs and thinking signature of Ron Southern. introducing a culture of flexibility, agility, of unlimited ideas. The world is our imagination and innovation. ATCO thinking cap.” Everywhere you look across our $1,170 One factor that remains constant, I am inspired by the bold course we organization you will find his $1,000 architecture: but has received heightened focus have set, the support of our Directors and awareness is our unwavering and the terrific people of our Company. S&P/TSX • The Balance Sheet – our strong commitment to our customers; I look forward to an exciting 2016. COMPOSITE foundation that is the bedrock from knowing what customers are looking $435 which ATCO grows; for and developing premier integrated $500 Sincerely yours, solutions of the highest quality on-time • Dual Class Shares – the steel that and on-budget. This is the trademark of ensures long-term sustainable value our Company. creation; and N.C. Southern 0 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15

3 2015 ATCO ANNUAL REPORT LETTER TO SHARE OWNERS 4 ATCOenergy ATCO Blue Flame Kitchen: Alberta through ATCOenergy’s team of Connecting With Customers in-house energy consultants. This team of experts analyzes customer energy for 86 Years use and develops customized plans that meet customer needs and result in ATCO’s restructuring efforts in 2015 speaking opportunities and new real savings. brought together ATCOenergy and programs with partners at the ATCO Blue Flame Kitchen (BFK), a University of Alberta, Alberta Since its launch, Albertans have company that has connected with School Boards, YMCA, Alberta embraced ATCOenergy, proving that customers across Alberta for 86 Food Banks and Alberta Health the time was right and customers were years. Services. ready to welcome a new electricity and natural gas retailer to the province. As a well-established brand in Through these educational Alberta, ATCO BFK will help programs and a combination Albertans can sign-up for some positive introduce Albertans to ATCOenergy. of diverse platforms, including energy at ATCOenergy.com or by media appearances and digital calling 1-844-OUR-ATCO (687-2826). ATCO BFK has a long history of communications, ATCO BFK supporting and engaging with reached more than 458,000 communities and organizations customers primarily in Alberta. throughout the province – an approach that aligns with ATCO BFK continues to be a ATCOenergy’s promise of spreading cherished and trusted brand positive energy. customers look to for reliable ATCO Chair, President & CEO, On February 3, 2016 ATCO launched Customer input led to the creation of a information, including recipes, food Nancy Southern, announces the launch its newest venture – ATCOenergy, a positive energy company that rewards In 2015, ATCO BFK once again safety, stain removal, and other of ATCOenergy at a press conference increased overall community household concerns. held in Edmonton, Alberta. new electricity and natural gas retail its customers for loyalty, offers low company that promises Albertans rates, transparent, no strings attached engagement reaching customers outstanding service and lower costs plans and a positive, hassle-free of all ages through events, classes, for their homes and businesses. With experience. the launch, ATCO has built on its near 100-year history in the province and With a commitment to delivering the invested once again, creating new jobs outstanding service that customers and lowering electricity and natural gas have come to expect from an Customer benefits include: costs when Albertans need it most. ATCO company, ATCOenergy offers • Up to $100 in sign-up incentives innovative and flexible plans spanning (credited to your first bill); The company’s business model was 1, 3, or 5 years, a choice of variable or developed for Albertans, by Albertans. guaranteed prices for electricity and/ • Up to $50 in anniversary credits After completing nearly two years of or natural gas service and the ability to (credited to your bill every year on customer research across the province, purchase green energy from renewable the anniversary of your agreement); the company learned what customers sources. Customers also benefit from • Green electricity options; were looking for in an energy retailer, one of the lowest administration fees determined where existing service in the market, saving 50 per cent • Convenient payment options providers were falling short, and off monthly administration fees by (including credit card payment); identified opportunities for ATCOenergy combining their electricity and natural • A simple sign-up process by phone to provide the level of service gas in an Energy Value Bundle. or online (including live-chat); customers expected. • The lowest administration Large business customers can also fees around; leverage ATCO’s in-depth knowledge of the electricity and gas markets in • Flexible contract options; In 2015, ATCO Blue Flame Kitchen saw more than 9,700 customers of all ages participate in new educational programs and various cooking classes. • No penalty cancellation; and • Outstanding customer service.

5 2015 ATCO ANNUAL REPORT ATCOenergy 6 Competing Globally Through Innovative Solutions

The World and the World of Business customers connected to the electricity shine and the wind doesn’t blow no GLOBAL COMPETITION on developing deep understanding, are changing at an ever-increasing grid or in complete isolation. power is available to flow through the To succeed in the future we must be respect, trust, and mutual long-term pace. We see customers demanding wires and alternate sources must be the best; we must be lean to manage benefits, we will achieve tremendous more innovation not only in products Temporary solutions can bridge the available to maintain the reliability of costs; we must be innovative; and long-term partnering relationships in and services, but also in delivery gap between grid connection and the electrical grid. we must be nimble and even more all parts of the world where we wish channels and the commercial terms permanent generation, for emergency responsive – acting more quickly than to operate. that we offer. Globally, there continues or supplementary onsite power, or to If Alberta is to achieve its targets of we do today. to be growing demand to address offset electricity shortages. 30 per cent renewable electricity by The change that is underway environmental issues and climate 2030, hydro electricity must be a part Around the world, different competitive throughout the developed and change. As well, global competition In addition, ATCO is pursuing a number of the solution. Hydro is the only form models are being explored in many developing world presents ATCO with is intensifying, requiring us to be even of initiatives that are driving down of renewable generation with dispatch jurisdictions – government-subsidized tremendous opportunity. more efficient and effective in order costs and driving up environmental control. This means that it can cost projects, competitive bid initiatives, to be the best in the world, no matter performance for customers. effectively store energy when wind and and private/public partnerships to By combining innovative solutions where we operate. solar are available, and then step into name a few. Regardless of the model, to meet our customers’ needs, The City of Fremantle in Western service when the sun is not shining, ATCO will be active and progressive in with globally competitive costs, It is within the context of these Australia made the decision to reduce or the wind is not blowing. In addition, providing solutions both globally and in strong community and Indigenous global trends, complicated by a very its carbon footprint, as well as its hydro facilities can play an integral our home province of Alberta. partnerships, and working closely with challenging time for resources and operating costs, through the use of role in water management and flood governments to create sound policy Siegfried W. Kiefer resource-based economies, that ATCO technologies, including natural gas control. Water is a critical resource for For example, in December 2014, frameworks, ATCO will be successful President & Chief Operating Officer, has undertaken a reorganization of its cogeneration with ATCO. Installation agriculture, industrial processes and following an intense international in being a growing part of the global Canadian Utilities Limited principal operating subsidiaries into of the cogeneration unit produces sustaining nature. We must manage competition involving the world’s delivery of affordable, reliable, and globally focused, vertically integrated electricity to run the leisure centre this resource more effectively than we foremost companies, we were sustainable energy solutions for business units. and the heat generated during the do today. successful in winning the first generations to come. production of electricity is captured competitively bid transmission The reorganization of our subsidiaries and used to heat the swimming pools, Globally, we are seeking markets infrastructure project in Alberta – and their superior capabilities into three thereby lowering the carbon footprint of that would benefit from our an approximately 500 km, 500 kV integrated Global Business Units opens the centre and its energy running costs. integrated capabilities to advance transmission line and associated facilities up opportunities to take our expertise their environmental improvements. valued at $1.43 billion, running from west to maturing and emerging markets ENVIRONMENTAL An example of how we are already of Edmonton to Fort McMurray. Siegfried Kiefer alike. OPPORTUNITIES implementing this strategy is occurring In Alberta, the province has announced in Mexico where we are building a We submitted a bid that provided the INNOVATION that all coal-fired electricity generation pipeline and working on a cogeneration best possible infrastructure solution A focus of our Global Business Units will be shut down by 2030, with two- power plant as the country pursues at the lowest possible cost – a will be to use our ingenuity and thirds of that generation being replaced increased use of a cleaner and more commitment we make every day to the innovation to bring comprehensive by renewable energy. With more than affordable fuel source. more than one million electricity and solutions to our existing and new 6,250 MW of the installed generating natural gas customers we serve. The customers. We are already hard at work capacity in Alberta being coal-fired, As countries around the world tackle win crystalized the realization that we in this area with planning for several the road ahead is challenging as a climate change by replacing thermal can successfully compete against the projects far advanced. tremendous amount of power will have generation with renewables, we see a world’s best. to be replaced in addition to dealing wealth of opportunity. An example is distributed generation – with the growth in demand. A critical factor in our success will be an innovative, high-potential business our continued efforts at establishing model that provides customers with The greening of the energy sector also and maintaining our commitment to temporary or long-term power solutions requires significant additions and major being a valued corporate citizen in the of various sizes – anytime, anywhere. changes to the transmission grid to communities in which we operate, and These modular power generation accommodate the intermittent nature in our Indigenous relations. We believe facilities can provide power to of renewables. When the sun doesn’t that by focusing our organization

7 2015 ATCO ANNUAL REPORT COMPETING GLOBALLY THROUGH INNOVATIVE SOLUTIONS 8 Structures most product lines and renegotiated The company was also contracted agreements and arrangements with to provide initial design development & Logistics many suppliers. and construction of various highly ATCO’s Structures & Logistics customized buildings for a new Global Business Unit includes To support future growth, ATCO market segment — detention and ATCO Structures & Logistics, ATCO Structures & Logistics expanded processing facilities required by the Frontec and ATCO Sustainable into new and existing geographical Australian Government at Manus Communities. Together, this business markets. In Canada, the company Island and Nauru. Structures included unit offers modular structures, lodging grew its business in the East with the accommodation, processing facilities, STEVE LOCKWOOD kitchen and laundry buildings and a and support services, and facility acquisition of Morris Modular Space President & Chief Operating Officer fully operational hospital, including operations and maintenance solutions in Sudbury, Ontario, increasing the ATCO Structures & Logistics Ltd. operating and dental theatres. worldwide. This includes a full range company’s rental fleet by 10 per cent of pre-fabricated, culturally sensitive in Eastern Canada. In Mexico, ATCO building solutions for Indigenous and Structures & Logistics established a Modular Structures other remote communities. sales presence as part of ATCO’s entry The modular structures business line STRUCTURES into that market, and is identifying includes the design, manufacturing With manufacturing facilities in North opportunities for future business. and installation of workforce housing & LOGISTICS America and Australia, a global facilities. In addition to large-scale GLOBAL BUSINESS UNIT supply chain, and operations on three INNOVATION workforce housing complexes, ATCO continents, the Structures & Logistics In 2015, ATCO Structures & Logistics also provides modular fleet hire and In 2015, the global economy continued its downward slide, Global Business Unit has the expertise successfully developed a number of sales. which resulted in a decrease in profitability for ATCO’s Structures to rapidly deliver a turnkey solution innovative new products in Australia, & Logistics Global Business Unit. However, because of our anywhere it is needed. where there has been a conscious The collapse of oil and commodity diversification in business lines and geography, the impact of this drive for innovative modular product prices in 2015 led to a drastic, global downturn on our business was somewhat mitigated. GROWTH development. reduction in exploration and mining To meet increased expectations for activity which created a challenging Also in 2015, as part of ATCO’s long-term strategy of divesting value and service, ATCO’s Structures A range of blast resistant buildings year for ATCO’s modular construction non-core assets and redeploying capital to its core businesses, & Logistics Global Business Unit were designed and constructed for business. ATCO Emissions Management was sold to TriWest Capital continues to pursue strategies aimed at petrochemical projects. These buildings Partners. delivering customer-focused, value- were designed to withstand blast Despite these market conditions, ATCO driven products and services. This overpressure ranges from 6.2 kPa to As we move into 2016, it will be essential for us to control our won several contracts that showcase included new pricing strategies across 50 kPa. costs, enhance our global sales efforts, enter new markets and the company’s ability to cost-effectively add new products and services to our suite of offerings. We will use this downturn in the global commodity markets to refocus our business and position ourselves for the future.

A key component to this transformation will be refocusing our organization in many areas, including innovation in our products, services, processes and systems. Through innovation and a coordinated and aggressive approach to sales and cost controls, we will position ourselves to further diversify and grow our business.

As we reshape our business, it is our expectation that we will gain a much deeper insight into our global markets and our customers’ needs and expectations. We will use this knowledge to diversify our business outside the energy sector and to improve our offerings to our customers. At the same time, ATCO Structures & Logistics will continue to provide the solutions and services our customers have come to expect over many years.

As the world continues to navigate through this difficult economic Shell’s Carmon Creek Bluesky Lodge was journey, ATCO will continue to work on creating value for current completed in 2015 ahead of schedule and and prospective customers worldwide. ATCO was awarded a further contract to design, manufacture and install an additional 435 modular units with Bechtel without a lost-time incident from the more on the Chevron-operated Wheatstone Project in Western Australia. The units were manufactured at ATCO’s Kwinana than 500,000 hours of work. Manufacturing facility (above).

9 2015 ATCO ANNUAL REPORT Steve Lockwood STRUCTURES & LOGISTICS 10 deliver large workforce housing projects training area. To further enhance the racquetball and squash courts, a LNG Modular Structures Project Australia. The total value of the work is Lodging and and to provide customers with flexible experience for lodge residents, services running track, separate weight training In the fourth quarter of 2015, ATCO estimated to be AUD$384 million and financing options. such as physiotherapy, massage and areas, a 200-person, open-plan was awarded a contract to design, includes workforce accommodation, Support Services hairdressing will also be provided. office complex and a 1,500-person construct, transport, install and kitchen facilities, lunch rooms, offices As part of its turnkey accommodation Site C Clean Energy Project wastewater treatment plant. rent 591 modular units at a major and site cribs. offering, ATCO Structures & Logistics The biggest contract of 2015 was the The lodge, its operation and related liquefied natural gas (LNG) project provides customized lodge operation award of the BC Hydro Site C Clean services is a great example of how the Construction of the Blue Sky Lodge near Lake Charles, Louisiana. The ATCO continues to grow its business services in support of “closed” or Energy Project, in the Peace River integration of two formerly separate also featured an important safety units will be used to provide sleeping supporting LNG projects in Australia, customer-owned lodges. The range of region of British Columbia. The eight- ATCO businesses - ATCO Structures milestone. The lodge was completed accommodation for 2,300 persons, with this being the fourth major services can include: year contract, valued at approximately and ATCO Frontec - have been with a remarkable 500,000 hours of kitchen and dining facilities, and a contract the company has been work, without a lost-time incident. $470 million, is for the design, combined to bring better value and recreation centre. awarded. • Food services; manufacture, installation and operation solutions to customers. of a 1,600-person workforce housing • Housekeeping and janitorial services; ATCO’s joint-venture partnership with Under the terms of the contract, the State Government Projects facility. the Woodland Cree First Nation for the Shell Carmon Creek Project new workforce housing units will be ATCO was successful in being • Guest intake (front desk and Shell Carmon Creek facility supports In the second quarter of 2015, ATCO leased for a 29-month period which selected as a supplier for two reception); The lodge showcases ATCO’s local Woodland Cree businesses completed the manufacturing and commenced in January 2016 with the government contracts: New South • Recreation programs; capabilities in modular construction, and employment of local First Nation installation phase of the 1,200-person delivery of 104 modular units after Wales Correctional Services, supplying and features an airy, contemporary, members. This includes work related • Retail (convenience stores, vending, workforce housing facility – the Blue completing Phase I of the project. At building and installation work for open-concept central lobby as the to camp management, catering, bars, coffee shops and ATMs); Sky Lodge – at the Shell Carmon Creek the end of the lease term, the units will prison facilities within the state; and centrepiece. The facility features a housekeeping, janitorial services oil sands project. be returned to the company’s fleet, Victoria Education, where ATCO has • Security and pass control; range of modern amenities designed and more. While the Carmon Creek thereby expanding its footprint in the been selected to provide schools and to bring all the comforts of home to the Project was suspended by Shell, ATCO • Administrative support and housing The facility includes 94 modular units in U.S. market. other construction and refurbishment rural location, and to reduce the impact continues to operate the lodge in a staff; combination with a panelized system, activities for all public schools within on the surrounding community. creating a lobby with an open, hotel- reduced capacity for the company, AUSTRALIA Victoria. • Building and utility maintenance; and like feel. The dormitories feature single whose staff and contractors from other projects continue to work in the area. Wheatstone Project • Roads and ground maintenance. The Site C Lodge features a multi-faith occupancy bedrooms with ensuite In 2015, ATCO was awarded additional These opportunities position ATCO centre, a 100-person movie theatre, bathrooms. The lodge also features ATCO continued to grow its lodge scope to design, manufacture and as a direct contractor to two state a licensed lounge, a gymnasium relaxation and recreation rooms, a operations business with a contract install an additional 435 modular governments within Australia. with a running track and a weight stand-alone gymnasium including win in March through Torngait Services units under its current agreement with Inc., a partnership between ATCO and Bechtel on the Chevron-operated the Nunatsiavut Group of Companies. Wheatstone Project in Western

ATCO Structures & Logistics is building a temporary community in the form of a 1,600-person workforce housing facility From food and janitorial services, to building and utility maintenance, ATCO offers a full suite of complementary lodging for the construction of BC Hydro’s Site C Clean Energy Project. and support services for ATCO and customer-owned lodges around the world.

11 2015 ATCO ANNUAL REPORT STRUCTURES & LOGISTICS 12 The contract was awarded by Valard Sustainable Construction LP for the operation of five workforce accommodation lodges Communities in Newfoundland and Labrador. Part of the Structures & Logistics Global Business Unit, ATCO New business was also generated Sustainable Communities provides a with a contract award from Husky in full range of pre-fabricated, culturally November to operate and maintain sensitive building solutions for its Sunrise Lodge and provide food Indigenous and remote communities. services to guests staying at the 1,500- room lodge. The company’s capabilities have evolved to provide Indigenous In 2015, ATCO continued to operate customers with support related to lodges for CNRL, K + S Potash, Shell, commercial development of Urban TransCanada Pipelines and BHP Reserve Lands, land acquisition and ATCO Structures & Logistics was awarded a 10-year contract renewal from the Billiton, and continued to co-own Government of Nunavut to continue operating the 30 million litre fuel storage commercial leasing. and operate Barge Landing Lodge facility in Resolute Bay. and Creeburn Lake Lodge with the COMMITTED TO CUSTOMERS Fort McKay First Nation, north of Fort In 2015, ATCO was awarded a 10-year In the Arctic, ARCTEC, a partnership ATCO Sustainable Communities’ McMurray. contract renewal from the Government between ATCO Structures & Logistics holistic engagement process extends to identifying and welcoming of Nunavut to continue operating the and ASRC Federal Primus, continues community-owned businesses and Logistics and 30 million litre fuel storage facility in to provide operations and maintenance community members to participate Resolute Bay. The new contract begins services to the Alaska Radar System, Facility Operations for the United States Department of throughout the life cycle of the November 2016. and Maintenance the Air Force. The 10-year ARCTEC project. As a result, ATCO is better agreement was renegotiated in 2015, able to understand their specific ATCO also continues to operate Services and services are currently being cultural and physical requirements. The core business of ATCO Frontec is Resolute Bay’s South Camp Inn, provided under a bridge agreement the provision of logistics and facility Airport Hotel and a water treatment with the new contract coming into This approach strengthens ATCO’s operations and maintenance (O&M) plant, and maintains the Resolute Bay effect October 2016. This contract partnership with the community, services in Canada and internationally Observatory in the world’s second- continues ATCO’s 19-year partnership while ensuring the project’s overall to both the private and public sectors. most northern community. to maintain the radar sites which are success. Engagement continues after accessible only by air or seasonal project completion with training and barge. education programs delivered by Helping Fuel Development for ATCO. As a result, qualified resources the Salt River First Nation Pan American Games exist in the community to manage and maintain the new infrastructure On November 2, 2015, the Salt designed for commercial tenants. Last summer when the eyes of the over the long-term. River First Nation officially cut The project was designed and built world turned to southern Ontario the ribbon on its wholly-owned by ATCO Sustainable Communities for the 2015 Pan American and GROWTH and operated Petro-Canada gas and opened just three months Parapan American Games, ATCO 2015 was an important year as the station and convenience store in after the design was approved. was front and centre, providing company continues to diversify Fort Smith, Northwest Territories. This showcased the speed with 200 modular units for a range of and grow the services offered to Canadian Utilities Limited President which the company can provide operations at sports venues during Indigenous communities. An area & Chief Operating Officer, Siegfried infrastructure for Indigenous the Games. of focus has been partnering with Kiefer, was on-hand joining communities. Indigenous communities in the dignitaries from the Salt River First ATCO’s mobile, multi-purpose development of traditional or in some Nation. Now fully operational, the facility buildings were delivered to 35 cases, newly acquired Urban Reserve provides significant economic event sites and used in a variety of Lands. The 3,100 sq. ft. modular facility development, training and ways including ticketing booths, includes a well-appointed gas employment opportunities for the broadcast facilities, offices, medical The successful commercial land station, plus a fully stocked Salt River First Nation. centres, lavatories, showers, as well development of these properties convenience store, and office space as lounges for judges and athletes. provides an unparalleled opportunity for Indigenous communities to

13 2015 ATCO ANNUAL REPORT STRUCTURES & LOGISTICS 14 generate revenue that can be used pg. 14). The 3,100 sq. ft. facility is the centre is being constructed using an to sustain programming and develop second commercial project built by innovative approach that combines community infrastructure. ATCO in Fort Smith, NWT. In 2012, ATCO modular units for the dressing ATCO designed and built the Wood rooms and offices, inside an To assist partners in the timely Buffalo Inn – a modular extended engineered membrane arena. stay motel. development of these lands, WAYNE STENSBY ATCO has created a Commercial Blood Tribe Youth Wellness Centre Attawapiskat Firehall In Standoff, Alberta, construction of Managing Director, Development Group designed Electricity to support communities through Several other projects showcasing the uniquely designed 4,343 sq. ft. every stage of the project from ATCO’s versatility and capabilities Blood Tribe Youth Wellness Centre is land acquisition through to the were completed in 2015, including also underway. The centre will feature development, construction and construction of a fire hall for the eight private bedrooms with ensuites, property management of facilities. Attawapiskat First Nation. a common area and dining room, as well as offices, a boardroom, ELECTRICITY Jeremias Sillitt Community Centre The fire hall features innovative reception and lobby, washrooms and GLOBAL BUSINESS UNIT In Nain, Labrador, ATCO constructed integration of a modular a ceremony room. the Jeremias Sillitt Community administrative building with a pre- Centre. The 15,000 sq. ft. facility engineered steel structure for the The modular units used in In 2015, as an element of ATCO’s transformational change, the Electricity features durable, modular vehicle bays. Modular construction construction are being manufactured Global Business Unit brought together ATCO Electric, ATCO Power and construction which provided the was an excellent solution for the at the Blood Tribe’s own housing ATCO Power Australia, delivering fully integrated solutions in electricity generation, transmission and distribution. perfect, cost-effective solution for the community since its remote location manufacturing facility. remote community – accessible only features a short building season with The merits of integration and a singular focus on delivering value to our customers are already becoming evident. Our House Mountain by boat or plane. difficult access on seasonal winter ATCO worked closely with Blood Gas Conservation Facilities and North Montney Power Supply roads and by barge. Tribe Housing in 2014, to re-open projects (see pg. 21) are making energy easier for customers through The design accommodates a variety the manufacturing facility, and to our distributed generation solutions combined with our transmission and distribution expertise. of community functions and includes Piikani Nation Multiplex provide community members with Sports Centre The successful completion of the Eastern Alberta Transmission Line spaces for Elders to gather, a library, on-the-job training. The results of and commencement of the Fort McMurray West 500 kV Transmission kitchen, gymnasium and fitness The largest project in ATCO this investment were realized for Project demonstrate our capacity to deliver complex, large-scale projects facility. The facility was engineered to Sustainable Communites’ history both partners when ATCO built 24 (see pg. 17). withstand a heavy snow load for at — the Piikani Nation’s 36,000 townhomes using the Blood Tribe Customers, governments and society are expecting more from electricity, least six months of the year. sq. ft. Multiplex Sports Centre in manufacturing facility, and employing and the role of electricity providers is changing rapidly - we see this as our opportunity. The drive for sustainable energy is global, and providing Brocket, Alberta — was initiated in community members for the project. environmentally friendly solutions coupled with ongoing product and Salt River First Nation Gas Station 2015. The new facility will include service innovations is key to our growth. In October, ATCO completed a gas an ice rink, dressing rooms and As outlined in the Government of Alberta’s Climate Leadership Plan, coal- station and convenience store for the concession, along with community fired power generation will be phased out of Alberta by 2030. We embrace Salt River First Nation (see sidebar meeting spaces and offices. The this step forward and share the province’s vision to reduce emissions and improve environmental performance, while remaining mindful of the need to properly balance system reliability, protect jobs, and mitigate costs for consumers. MULTIPLEX SPORTS CENTRE: PIIKANI NATION ATCO is working closely with government and industry to provide solutions that will evolve Alberta’s fuel mix and introduce more renewable sources of generation, including not only wind but also solar, and perhaps most importantly, hydro. Opportunities for renewables exist in our home province but, also in other markets worldwide including Australia where the country has the highest usage of grid-connected rooftop photovoltaic solar systems, and in Canada’s North where our utility companies are pursuing renewable replacements for existing diesel generation. In 2016, our business will renew our focus on innovation, expanding our sales efforts into new markets and geographies, and increasing our customer engagement to better understand their needs and expectations. ATCO’s Electricity Global Business Unit is well-positioned to provide customers with the cost-effective energy solutions they need, while keeping a steadfast commitment to safety, reliability, customer service In 2015, ATCO Electric completed the and innovation. largest project in the company’s history. The 485 km, 500 kilovolt Eastern Alberta Transmission Line will play a key role in When complete, the Piikani Nation’s state-of-the-art 36,000 sq. ft. multiplex sports centre will be the largest project in bringing renewable energy to Albertans ATCO Sustainable Communities’ history. across the province. Wayne Stensby

15 2015 ATCO ANNUAL REPORT ELECTRICITY 16 Electricity PROJECT UPDATES Eastern Alberta Transmission Line Transmission In 2015, ATCO Electric completed and Distribution and placed into service the $1.8 billion Eastern Alberta As part of the Electricity Global Transmission Line (EATL) – the largest Business Unit, ATCO Electric builds, project in its history. Stretching owns, and operates electrical from north of Edmonton to south transmission and distribution of Brooks, EATL is one of the first facilities, delivering safe, reliable High Voltage Direct Current (HVDC) electricity to more than 227,000 farm, lines in Alberta, reinforcing Alberta’s business and residential customers in electrical grid and providing capacity 245 communities in east-central and to handle new sources of renewable northern Alberta. The company also power generation in the province. supplies electricity to large industrial and oilfield customers, supporting Fort McMurray West 500 kV the development of Alberta’s energy- Transmission Project rich industrial sector. Work continues on the Fort McMurray West 500 kV Transmission Project, ATCO’s electrical system includes won by ATCO’s Alberta PowerLine approximately 11,000 km of company through the government’s transmission lines and 69,000 km competitive transmission bid of distribution lines. The company process in 2014. Consultation O VAT I plans, develops, operates and N O with landowners, communities N N I Right-of-Way Project Manager Scott maintains transmission infrastructure and Indigenous peoples occurred Merrifield (right) consults with a landowner I One Small Step for Faster, Safer that transports electricity from N N near Genesee, Alberta. throughout 2015. Alberta PowerLine A O generating stations to substations, submitted its facilities application C T I Power Line Maintenance as well as distribution facilities that to the Alberta Utilities Commission Traditionally, Power Line Technicians The new method provides a number of deliver power from substations, (AUC) in December, requesting have maintained transmission lines by advantages: directly to customers’ homes approval to construct and operate travelling on the ground from tower to and businesses. It also maintains the project. The company anticipates • Improved safety for technicians – tower, climbing to the top to perform approximately 4,000 km of the AUC will render its decision on reduces the time technicians are their work, then climbing back down distribution lines on behalf of proposed routes by late 2016/early exposed to falls by 50 per cent, and to drive to the next tower. While this farmer-owned Rural Electrification 2017. technicians are connected to fall arrest Associations. method works, ATCO Electric saw gear at all times; room for improvement and adapted an GROWTH • Reduced environmental footprint – In addition to its role as a regulated existing helicopter-based maintenance In 2015, ATCO Electric formed its less travel on power line rights-of utility, ATCO Electric, through the method. new customer-focused sales group -way; Electricity Global Business Unit, charged with finding projects in new After several months of testing • More efficient – maintenance tasks pursues non-regulated projects, markets, both within Canada and and training, the Line Maintenance are completed much more quickly and delivering top-quality, cost-effective beyond. electrical infrastructure for industry. department of ATCO Electric’s efficiently; and Transmission Division implemented the INNOVATION • Cost-savings – eliminates the need to new A-Step maintenance method. In 2015, ATCO Electric implemented In 2015, ATCO Electric’s Transmission pay for temporary right-of-way access, strategies to deal with reduced Division successfully created and crossing agreements for pipelines and The A-Step method involves a small set demand for capital project work implemented an ISO 14001 compliant other utility infrastructure. of stairs mounted to a helicopter. Power due to the economic impacts of Environmental Management System Line Technicians move from tower to The A-Step is a significant step forward falling oil prices. The company found (EMS). With this system, the company tower via helicopter, using the A-Step to for power line maintenance and just efficiencies by restructuring to better ensures environmental impacts are quickly and safely transfer themselves one example of how the Electricity foster growth, innovation and good considered and evaluated when and their tools from a hovering Global Business Unit will use innovative customer service, and adapt to making business decisions. changing economic circumstances. helicopter to the top of each tower. new construction and maintenance techniques to improve safety, increase performance, reduce environmental impacts and lower costs.

17 2015 ATCO ANNUAL REPORT ELECTRICITY 18 COMMITTED TO CUSTOMERS with the communities it serves, SAFETY replacement for more GHG-intensive Distributed In an effort to help customers better the company purchased the In 2015, ATCO Power successfully ready-mix cement products on the understand their electricity bills, electric distribution assets of two completed facility maintenance at market. Generation ATCO Electric released a series of Rural Electrification Associations three of its major power generation Distributed generation is an educational videos that explain the – Stry, located 150 km northeast facilities. The turnarounds were In 2015, ASHCOR engaged in innovative business model that various components of a bill and of Edmonton, and Warwick, completed with zero recorded several research and development provides customers with temporary reinforce the value of the company’s approximately 100 km east of the incidents despite the increased risk (R&D) initiatives designed to benefit or long-term power solutions of services. The illustrated videos use Alberta capital. In total, ATCO Electric associated with higher numbers its customers and expand the use various sizes – anytime, anywhere. a simple and engaging storytelling added approximately 630 new of staff onsite. The success of the of fly ash beyond the oil and gas ATCO Power develops, installs approach that was well-received customers. turnaround season is a testament and ready-mix concrete industries. and operates these modular among customers and earned the to ATCO’s commitment to premier The team’s primary R&D focus power generation facilities which Keeping the Lights on company a communications award Power Generation health and safety performance. was soil stabilization, completing can provide power to customers from the International Association of several successful soil test sections connected to the electricity grid or in at the Grande Prairie Business Communicators. ATCO Power, part of the Electricity RESEARCH & DEVELOPMENT in feedlots and under new roads complete isolation. Global Business Unit, leverages ASHCOR Technologies, a division of throughout Alberta. The team Regional Hospital decades of experience and industry- During the summer of 2015, ATCO Power, has marketed fly ash, also worked in collaboration with Temporary solutions can be leading expertise developing, ATCO Electric demonstrated its a non-combustible byproduct of the laboratory partners to study the used to bridge the gap between In 2015, ATCO Electric designed building and operating independent commitment to customers when it coal-fired generation process, to extraction of rare earth metals from grid connection and permanent and installed an automatic transfer power generation facilities to provide responded to wildfires in northeast industrial customers for more than fly ash for manufacturing. generation, for emergency or system in the new Grande Prairie customers with cost-effective power and northwest Alberta, including a 18 years. Fly ash is a supplementary supplementary onsite power, or Regional Hospital to ensure power solutions. 10,000 hectare fire on the Cold Lake cementing material and a superior to offset electricity shortages. to the hospital is maintained Air Weapons Range. Local teams even during a severe or extended worked with emergency responders ATCO Power has an ownership outage. In the event of an outage, and were among the first to access position in 13 power generation the newly installed system ensures the site of that fire. plants in Alberta, British Columbia, power is automatically transferred Saskatchewan and Ontario, with a combined capacity of approximately from one feeder to the other via the Within four days, ATCO Electric 3,591 megawatts (MW) and a total automated switching devices. crews had repaired and re-energized ownership interest in 2,286 MW. The 16 fire-damaged, 25 kV power lines – company has expertise in developing, To further protect and maintain the an extremely quick and safe response constructing and operating gas-fired, reliability of the hospital’s power in the wake of considerable damage. supply, ATCO Electric took the cogeneration, combined-cycle, hydro and coal-fired generating stations. installation one step further. Most In a transaction demonstrating the commercially available automatic trust ATCO Electric has established transfer systems encase all of the switches in a single switching cubicle. If that cubicle is badly damaged, the power goes out. To mitigate this risk, ATCO Electric designed a two-cubicle system to keep the power to the hospital flowing even if one cubicle is damaged.

When the Grande Prairie Regional Hospital opens in 2019, reliability will be greatly improved with the adoption of this technology.

A frame from ATCO Electric’s award-winning video educating customers on ATCO Power’s Distributed Generation team successfully delivered a 5 MW temporary power generation solution that reduces their electricity bills. flare gas for Apache Canada Limited. Temporary power solutions can be used to bridge the gap between grid connection and permanent generation for emergency or supplementary onsite power or to offset electricity shortages.

19 2015 ATCO ANNUAL REPORT ELECTRICITY 20 Permanent solutions can assist Apache’s House Mountain Gas Applications to the Alberta Utilities that provides temporary power The Karr facility will utilize ATCO ELECTRIC YUKON customers with reducing operating Conservation Facilities Commission and Alberta Energy to early customer sites requiring highly efficient, natural gas-fired In the Yukon, ATCO Electric Yukon costs and increasing the reliability ATCO Power completed its first Regulator were submitted in electricity before the permanent reciprocating engine generators distributes power and provides of power to operations, by bringing temporary generation installation December 2015 and January 2016, solution is live. to meet the power demands of an emergency response and retail services power closer to site, even in remote at the House Mountain Gas respectively, with an estimated in- adjacent facility in a remote light to customers in most communities locations. Conservation Plant near Swan Hills, service date of May 2016. The successful delivery of this industrial area. The Simonette across the territory. The company Alberta for Apache Canada Limited project will rely on the Electricity facility will use these same engines also generates diesel power in the PROJECT UPDATES and in cooperation with ATCO North Montney Power Supply Project Global Business Unit’s expertise in and locally produced natural gas communities of Old Crow, Beaver ATCO’s distributed generation Electric (see sidebar, below). ATCO’s Electricity Global Business developing cost-effective and reliable to generate electricity that will Creek, Destruction Bay/Burwash business experienced growth in Unit has provided an integrated infrastructure. be delivered to the ATCO Electric Landing, Watson Lake and Swift River. 2015. The company was able to Building upon the success of this package of products and services distribution grid. These facilities effectively demonstrate the reliability important project, ATCO Power to Progress Energy for its northeast The NMPS project is currently are scheduled to be in-service by In addition, the company owns and and cost-effectiveness of these signed a 10-year power contract and British Columbia upstream assets. undergoing regulatory review, and the first and third quarters of 2016, operates the Fish Lake Hydro Plant nimble power solutions with new agreement in September to build, The proposed North Montney Power environmental surveys are being respectively. on the outskirts of Whitehorse. Built partners and clients. own and operate a new permanent Supply (NMPS) project will consist conducted. Once all regulatory in 1950 and refurbished in 2013, the 6 MW distributed generation facility of more than 140 km of high voltage applications are approved, Northern Operations 1.3 MW Fish Lake Hydro Plant remains at House Mountain to replace the transmission and distribution lines construction will begin in 2016 with a steady contributor of power to the In the North, ATCO has delivered safe temporary solution. and a distributed generation solution full operation expected in 2017. Yukon Interconnected System. and reliable electricity service to its Future Projects customers in the Yukon since 1901, Project Updates ATCO Power also entered into public and to customers in the Northwest ATCO Electric Yukon is working with consultation for two additional Territories (NWT) since 1951. Through the Vuntut Gwitchin First Nation and distributed generation projects – Karr its operating companies, ATCO Electric its partner to explore the feasibility (3 MW) and Simonette (15 MW), both Yukon and Northland Utilities, ATCO of displacing diesel generation in located southeast of Grande Prairie, serves more than 17,000 customers the community of Old Crow with up Alberta. in 19 communities in the Yukon, and to 300 kilowatts (kW) of solar power 11,000 customers in nine communities and battery storage. The project aims ATCO in the NWT (see map on pg. 23). permanent to lower the cost and environmental (5 units) project worksite

ATCO completed (4 units) temporary generation

E G R AT T E N D I Bringing Power to Apache’s House Mountain S S O L N Gas Conservation Facilities U T I O In the late spring, ATCO Power This 5 MW onsite generation ATCO Electric in providing a value- completed its first temporary solution provided an alternate use added customer solution. generation installation at Apache for sweet sales gas produced at the Canada Limited’s House Mountain site, that was previously being flared The successful execution of the Gas Conservation Plant, near Swan or trucked away due to a pipeline House Mountain temporary project Hills, Alberta. disruption. demonstrated the incredible value ATCO Power’s distributed generation ATCO Power installed four 1.25 MW From concept to construction and solution can deliver to customers natural gas-fired reciprocating commissioning, the House Mountain – timely, flexible and reliable power engines, housed in sea cans, which project took only four months to generation to fit any need or resolve were transported to the remote complete, despite the challenging any issue, supported by a high-level site on semi-trailer trucks and remote location – a testament to of customer service and support. connected to the local ATCO Electric the effective collaboration and distribution system. focused efforts of ATCO Power and A section of distribution line outside of Haines Junction, overlooking St. Elias Mountain in the Yukon. ATCO serves more than 17,000 customers in the territory.

21 2015 ATCO ANNUAL REPORT ELECTRICITY 22 impacts of local power production Project Updates Alert in this ‘fly-in only’ community, which During the summer of 2015, currently relies solely on diesel-fuelled Northland Utilities (NWT) put forward ATCO Structures ATCO in the North power generation, and have the an innovative, customer-focused Eureka & Logistics Operations Vuntut Gwitchin First Nation invest proposal to negotiate a new franchise Alaska Radar and manage the proposed renewable agreement with the Town of Hay River, System Sites solution. a community where the company is Resolute Bay Uqsuq Site based and has served for more than In the community of Burwash Landing, six decades. The proposal included Inuvik Gas ATCO Electric Yukon, the Kluane First many environmentally progressive Cambridge Nation and the Yukon Government are initiatives designed to reduce electricity Inuvik Bay use, including evaluating residential Anchorage collaborating on a project that aims to Iqaluit displace up to 300 kW of existing diesel and commercial solar generation and power generation with wind generation. battery storage options, and developing The Yukon Government has committed an electricity conservation program for Whitehorse $1 million to the project. ATCO and customers as well as some potential inCharge Conservation Yellowknife the Kluane First Nation are currently community initiatives. Major Program Communities working together to study how and when the community uses electricity, The current franchise agreement does Served by In late 2014, ATCO Electric Yukon ATCO Electric Yukon and to research changes required to not expire until November 30, 2016. and Yukon Energy Corporation the local electrical system before wind Northland continues to work with the 1 Old Crow launched an electricity turbines can be installed. Town of Hay River to negotiate a new 2 Beaver Creek conservation program which franchise agreement and the NWT 3 Stewart Crossing offers Yukon residents rebates Together with the Town of Watson Government to find solutions to lower 4 Keno when they purchase LED lighting Lake and the Liard First Nation, power rates across the territory. and mechanical automotive block 5 Pelly Crossing ATCO Electric Yukon has funded a 1 heater timers. The LED lighting 6 Destruction Bay/ Inuvik pre-feasibility study exploring the Both Northland divisions have also purchase program exceeded Burwash Landing possibility of a hydro-generation facility taken a progressive position on their expectations, with 2,800 rebates 7 Carmacks on the Tootsee River. The facility, if environmental commitment by working redeemed by customers in year 8 Ross River constructed, would generate 2.4 MW together with many of the communities one, exceeding the program target 9 Haines Junction of hydro power or 65 to 80 per cent they serve to replace high pressure by more than 1,000 rebates. 10 Whitehorse/ of the community’s power needs, and sodium streetlights with LEDs, and to Marsh Lake YUKON displace approximately 70 per cent reduce reliance on diesel fuel power 11 Carcross/Tagish of the annual diesel fuel used by the generation. 12 Teslin 4 Watson Lake power plant. 13 Swift River 3 In the thermal communities of Fort 2 20 NORTHLAND UTILITIES Providence, Kakisa/Dory Point, 14 Watson Lake/ 5 Upper Liard NORTHWEST TERRITORIES Northland Utilities is a full service Wekweeti and Trout Lake, streetlight 7 electricity company providing retail, conversions were completed in 2015. 15 Lower Post, BC 6 8 distribution, transmission and In Yellowknife, Northland Utilities and 10 19 generation services through its two the city have partnered on a five-year 9 Whitehorse Yellowknife Major Communities Served operating divisions – Northland Utilities project to replace more than 1,500 high 13 18 (Yellowknife) and Northland Utilities pressure sodium streetlights with more by Northland Utilities 14 11 17 (NWT). efficient LED technology. By the end 16 Trout Lake 12 16 23 21 of the project in 2016, the conversion 17 Dory Point 22 15 At a signing ceremony held in March will have the potential to save 975,000 18 Fort Providence 2015 in Yellowknife, Denendeh kilowatt hours of electricity annually – 19 Yellowknife/N’dilo Investments Incorporated (DII) and enough power to serve 108 homes. 20 Wekweeti ATCO signed a Memorandum of 21 Kakisa Understanding that will see DII’s Also in Fort Providence, Northland is 22 Enterprise ownership in Northland Utilities working with the community to explore 23 Hay River/K’atl’odeeche First Nation increase from 14 to 50 per cent (see the feasibility of two major projects sidebar on pg. 38). that would introduce renewable power generation sources in the community.

23 2015 ATCO ANNUAL REPORT ELECTRICITY 24 In the short-term, a combined heat and operations and maintenance (O&M) near the town of Tula in the state power biomass facility will warm and services to Horizon Power’s nearby of Hidalgo, Mexico. The main light a local business. Excess power TM2500 gas turbine. In November, focus of project activity centred on generated by the biomass facility would Horizon Power extended the TM2500 project requirements and design, be sold to Northland to help offset the O&M contract for an additional obtaining environmental and amount of diesel power generation 12-month period. regulatory approvals and negotiating GEORGE LIDGETT required to provide electricity to the commercial agreements. Managing Director, remainder of the community. ATCO Power Australia’s joint-venture Pipelines & Liquids cogeneration facility with Origin Energy, Located in an attractive, high- In the medium to longer term, located in Queensland and servicing demand area, this plant is expected Northland is revisiting its business case the BP Bulwer Island Refinery, ceased to have a generating capacity of 450 to construct a 120 km transmission line operation on June 23, 2015. The station MW of electricity, with a provision from Hay River to Fort Providence. The closed as a result of BP’s decision to to expand to 638 MW and produce new transmission line would deliver shut down the Bulwer Island Refinery approximately 1,247 tonnes of steam PIPELINES the excess hydro power that currently by mid-2015. A negotiated termination per hour to support the refinery’s & LIQUIDS exists at the Taltson hydro-generating agreement with BP resulted in the processes. GLOBAL BUSINESS UNIT facility in southern NWT and use it to sale and handover of the facility in deliver cleaner, renewable power to the June, with no further decommissioning Part of the available electricity As part of ATCO’s transformational change, the Pipelines & Liquids approximately 400 customers in Fort obligations. produced will be supplied to off- Global Business Unit has expanded its focus beyond Alberta’s borders Providence, Dory Point and Kakisa. takers and the Mexican National to one that is global in nature, pursuing new markets with innovative, MEXICO Grid, providing low-emission, highly vertically integrated products to grow our business both in Alberta and abroad. International In 2015, ATCO Power continued efficient energy. to work with its Mexican partners Our new organization, which includes ATCO Gas, ATCO Pipelines, ATCO Energy Solutions and ATCO Gas Australia, enables us to leverage Operations to further the development of the the strengths of our component companies in natural gas transmission AUSTRALIA natural gas-fired cogeneration plant and distribution, liquids storage and industrial water solutions—all of at the Miguel Hidalgo Refinery, ATCO Power Australia has ownership which position us to offer fully integrated, cost-effective energy and water solutions to make life easier for our customers. in and operates two power generation facilities in the country – Osborne, a The benefits of vertical integration are already evident through projects such as our Urban Pipeline Replacement Program, which is a proactive 180 MW combined-cycle facility in solution to modernize both our natural gas transmission and distribution South Australia and Karratha Power networks in high-density areas of Calgary and Edmonton improving Station, a 86 MW power generation safety for our customers. facility in the mining-dominated As we enter 2016 with a continued depressed economy, our business Pilbara region of Western Australia. In unit will focus on cost-effectiveness, research and development, and 2015, ATCO Power Australia’s solid operational excellence to successfully compete in a global market. One performance achieved commercial of our greatest strengths as we explore new markets is our operational capabilities, where industry benchmarking ranks us in the first quartile in availability of approximately many areas of operational excellence. Going forward, we will continue 98 per cent. to distinguish ourselves in supplying safe, reliable services to our existing customers and in new markets. Project Updates As we look to expand, we plan to build upon our initial entry to the In July 2015, the Osborne facility Mexico market, as well as pursue opportunities in the U.S., Australia began operating under a new Power and South America. This is coupled with a strong emphasis on Purchase Agreement (PPA) with Origin increasing our sales and marketing capabilities through sales training Energy Electricity Limited, the 100 per programs for everyone in the global business unit. cent off-taker of power produced. The To support ongoing innovation, we’ve established a dedicated research new tolling agreement provides flexible and development team which is focused on developing, purchasing and experimenting with leading and green technologies to drive dispatch of power from the facility. new and creative business opportunities and provide innovative and environmentally friendly solutions for customers. In 2015, Karratha, the most efficient By bringing imaginative solutions to market, we will be well-positioned and environmentally friendly facility in ATCO’s Urban Pipeline Replacement in the Pipelines & Liquids Global Business Unit to manage through the North West Interconnected System, Program replaces and relocates vintage, high these challenging economic times while creating important growth continued its record of operational pressure natural gas pipelines in Calgary and opportunities for the future. excellence under a long-term PPA Edmonton to Transportation/Utility Corridors and adds capacity to meet the growing with Horizon Power. In a separate ATCO’s Karratha Power Station is the most efficient and environmentally friendly demands for safe and reliable natural gas arrangement, ATCO also provides facility in Australia’s North West Interconnected System. service to Alberta’s largest centres.

George Lidgett 25 2015 ATCO ANNUAL REPORT PIPELINES & LIQUIDS 26 Natural Gas allow for the appropriate preventative departments, continued to raise rates in Canada. In 2015, ATCO Gas Through its continual improvement Fuel Efficiency Program measures to be put in place. As part awareness about the dangers of carbon responded to more than 126,000 program, IdeaWorks 2.0, ATCO Gas Distribution of its regular maintenance, ATCO Gas monoxide and how Albertans can customer-initiated service calls and encourages its employees to share ATCO Gas launched a company- ATCO Gas, part of the Pipelines & inspects its water crossings yearly. prevent and detect it. This campaign nearly 3,000 natural gas emergency ideas leading to positive change wide fuel efficiency program in 2015, Liquids Global Business Unit, has has garnered support from the calls. Overall, the company’s call throughout the company. aimed at reducing fuel consumption been heating homes and warming ATCO Gas carried on its commitment Canadian Gas Association and the centre received almost 180,000 calls, by five per cent per year. This initiative saw savings on fuel costs, reduced communities across Alberta for more to public safety through various safety Canadian Fire Chiefs Association and averaging nearly 500 calls per day. One example of these ideas is reducing greenhouse gas emissions, fewer than a century. Today, ATCO Gas initiatives across the province. Through is becoming a national initiative among costs and creating efficiencies when it vehicle repairs, longer vehicle life and provides safe, reliable and cost- its Damage Prevention Program, aimed other Canadian gas companies. The company continued to enhance comes to obtaining compressed natural increased safety for company drivers. effective natural gas delivery to more at achieving yearly reductions in the relationships with its customers and gas (CNG) trailer pressure readings. than 1.1 million customers in nearly frequency of damages to its buried In recognition of its Carbon Monoxide this year brought its Customer Care A remote trailer pressure reading At the end of 2015, ATCO Gas 300 Alberta communities. infrastructure, ATCO Gas focused on Awareness Campaign, ATCO Gas and Billing Services back in-house. This device was developed that attaches educating excavators and customers received a National Safety Leadership enables the company to provide hands- to portable CNG trailers. Employees exceeded its goal with a total fuel consumption reduction of 6.7 per As Alberta’s largest natural gas on safe digging practices around Award in Public Safety from the on customer service, with skilled and can now text the device to obtain natural gas pipelines. In 2015, ATCO Canadian Gas Association and a 2015 knowledgeable employees responding gas pressure readings from the trailer cent over the year. The program also distribution company, ATCO Gas Gas provided more than 300,000 gas Gold Award from the Canadian Public to customer calls and concerns. without having to send a team out to provided significant environmental builds, owns, operates and maintains line locates to support safe digging Relations Society for the Canadian do the task manually, saving both time benefits. Over the past year, ATCO Gas more than 40,000 km of natural gas saved more than 700,000 kg of CO , practices across the province. Issues/Crisis Management Campaign INNOVATION and money. 2 distribution pipelines. ATCO Gas of the Year. ATCO Gas has a strong focus the equivalent of 18,238 seedlings provides 24-hour response to natural The company’s Carbon Monoxide on innovation and research and This device has received approval from planted and grown for 10 years or 142 gas emergencies in its service territory, Awareness Campaign, in COMMITTED TO CUSTOMERS development as it strives to deliver the Canadian Standards Association vehicles off the road for a year. responds quickly and efficiently partnership with the Office of the ATCO Gas customers continue to enjoy more competitive, customer-focused and is being rolled out across the to customer service requests, and Fire Commissioner and local fire one of the lowest natural gas delivery solutions throughout its service company. With a large fleet of vehicles, company adheres to the highest standards to areas. The company’s Innovation drivers were critical to the program’s maintain the reliability of its pipeline and Engineering team is exploring COMBINED HEAT AND POWER success. Training on how to reduce fuel system. technologies to further improve TECHNOLOGY consumption through regular vehicle services for customers, reduce carbon Through its Product Development maintenance and fuel efficient driving INVESTING IN CAPITAL emissions and create operational team, ATCO Gas continued to focus practices was incorporated into ATCO INFRASTRUCTURE efficiencies across the company. on the marketing and sales of natural Gas’s regular driver training program. In 2015, ATCO Gas delivered strong gas-fired and alternative technologies, This information was also shared with capital growth, investing $331 million all employees across the company, in capital projects — installing 785 km giving them the opportunity to of pipeline and connecting more than implement these practices and benefit 20,000 primary service lines to its from reduced fuel consumption in their network. personal vehicles.

With a continued focus on the safety Throughout the year, fuel usage was and reliability of ATCO’s growing tracked monthly by work groups. The pipeline network, the company invested groups most successful in reducing more than $85 million in replacing fuel consumption were recognized for approximately 40 km of steel and 250 their efforts in making the program a km of plastic natural gas pipelines success. with polyethylene pipe as part of its Vehicles off steel and plastic mains replacement the road* program. 142

kg CO2 NATURAL GAS SAFETY 700,000 removed In 2015, ATCO Gas completed underwater inspections of all its existing pipeline crossings in larger rivers to verify and record system *Reducing fuel consumption by 6.7% saved more than 700,000 kg of CO2, the equivalent of 18,238 seedlings planted integrity. The inspections determine and grown for 10 years or 142 vehicles off the road for a year. whether these facilities are at risk ATCO Gas damage prevention coordinators give a safety demonstration during high water events and will during a trade show in Calgary. A Calgary transit bus fuels up with compressed natural gas at ATCO Gas’s newly retrofitted, state-of-the-art natural gas vehicle refuelling station in Calgary.

27 2015 ATCO ANNUAL REPORT PIPELINES & LIQUIDS 28 E G R AT T E N D including combined heat and power customers, ATCO Gas opened a new I Urban Pipeline S (CHP) technology. CHP can increase public NGV refuelling station in Grande S O energy efficiency and reduce energy Prairie and updated one of its NGV L N Replacement Program U T I O ATCO ENERGY costs and greenhouse gas emissions refuelling stations in Calgary with EDUCATION MOBILE in municipal and commercial facilities. all new, state-of-the-art equipment, In 2015, a major focus of the Pipelines & Liquids Global PROJECT UPDATES Business Unit was the continuation of the Urban Pipeline In 2015, ATCO received AUC facilities permits and began ENGAGEMENT The technology uses natural gas as a allowing for faster fill-up times. ATCO primary fuel source to generate both Gas currently operates 12 public NGV Replacement (UPR) Program, which was approved by the construction on the first three segments of the UPR Program heat and electricity simultaneously. refuelling stations across the province. Alberta Utilities Commission (AUC) in early 2014. in Calgary:

200 In 2015, ATCO Gas secured a contract GROWTH The multi-year UPR Program is a proactive solution to 1. Northeast Calgary Connector (NECC) – 16.7 km, 24” COMMUNITIES to install CHP technology at the Despite Alberta’s slowing economy in improve public safety, modernize the natural gas network pipeline from 16th Avenue N.E. to 52nd Street N.E. and add the capacity needed to meet growing demand for VISITED Lakeside Leisure Centre in Brooks. The 2015, ATCO Gas continued to grow 2. East Calgary Connector (ECC) – 8.7 km, 30” pipeline from natural gas in Alberta’s two largest centres – Calgary and company currently operates CHP units its customer base, adding more than 16th Avenue N.E. to Peigan Trail S.E. at the Collicutt Centre recreation facility 24,000 customers, a two per cent Edmonton. 3. Southeast Calgary Connector (SECC) – 13.4 km, 24” 73,000 in Red Deer and the Sierras of Tuscany increase in customer base. pipeline from Peigan Trail S.E. to Highway 22X S.E. PARTICIPANTS condo complex in Calgary, as well as at The program will see existing vintage high pressure pipelines in these centres either removed from service or three of ATCO’s own facilities. The CHP The company also received By the end of the year, construction was finished on NECC recommissioned as low pressure natural gas distribution program is currently partially funded approval from the Alberta Utilities and nearing completion on the ECC and SECC projects. lines, which will be operated and maintained by ATCO by the Climate Change and Emissions Commission on a new gas franchise ATCO Gas also completed several distribution installations Gas. In addition, new, modern high pressure transmission Management Corporation. template agreement it successfully to connect to the ATCO Pipelines system, most notably pipelines will be installed by ATCO Pipelines primarily within negotiated with the Alberta Urban a new gate station and distribution mains adjacent to the the Transportation/Utility Corridors surrounding both cities. NATURAL GAS VEHICLES Municipalities Association. This new communities of Chaparral and Sundance in Calgary. With 155 natural gas vehicles (NGV), template agreement enables ATCO ATCO Gas will also construct several new low pressure lines and gate stations to connect its system to ATCO Pipelines’ representing 14 per cent of ATCO Gas to efficiently renew distribution Public consultation activities were carried out for the new infrastructure. Gas’s fleet, the company operates service rights in communities using a Southwest Edmonton Connector, the West Calgary the largest NGV fleet in Alberta. Using standardized contract. In 2015, ATCO Connector, and two lateral high pressure pipeline projects in Detailed environmental protection plans were developed and NGVs provides a 20 to 25 per cent Gas renewed 25 franchise agreements northeast Calgary in 2015. In addition, a public information horizontal directional drilling is used to minimize impacts to reduction in greenhouse gas emissions with communities across Alberta, of session was held for a new low pressure natural gas pipeline and fuel savings for the company. To which 24 were renewed using the new roadways and environmentally sensitive areas. In 2015, the ATCO Energy Education project in Calgary’s Fish Creek Park. Construction is planned support the growth of NGVs across template. to begin on all of these projects in 2016. The program in its Mobile, an interactive classroom All of these projects involved extensive public engagement to the province and to better serve NGV entirety is expected to be completed in 2018. on wheels, celebrated five years of ensure homeowners and businesses near the pipeline routes educating students and the public were aware of the projects, the facility approval process and about Alberta’s energy resources ATCO’s approach to constructing pipelines. and using energy wisely. Since its launch, the ATCO Energy Education Mobile has visited more than 200 communities and engaged more than 73,000 participants.

In December 2015, ATCO Pipelines opened its new 19,000 sq. ft. South Operations Centre in Airdrie. It features 12,000 sq. ft. of office space, room for material and Through the UPR Program, ATCO Pipelines is building new, high pressure pipelines in Transportation/Utility Corridors in equipment storage, and two drive-through vehicle bays and a storage bay. Calgary and Edmonton.

29 2015 ATCO ANNUAL REPORT PIPELINES & LIQUIDS 30 Natural Gas technologically advanced devices are • Specialized annual surveys operating and protecting the pipelines Comprehensive training programs are a full suite of infrastructure options for equipped with highly tuned sensors conducted to monitor the condition as intended; in place to ensure everyone at ATCO the NGL processing, petroleum refining Transmission Pipelines, including contractors, have and petrochemical markets, including that can gauge the thickness of the of all pipeline watercourse crossings • External coating direct assessments the knowledge and resources to work industrial water transportation and pre- ATCO Pipelines plays an integral role pipes they are travelling through, and and pipeline right-of-way conditions; on specific pipelines to assess safely and achieve Target Zero. Only treatment, salt cavern storage, as well in delivering natural gas in the Alberta detect cracks, fissures, erosion and coating conditions, anomalies • Geological surveys and frost stability those who share these safety values as future transportation, processing marketplace serving producers, as well other problems that may affect the and cathodic protection system monitoring; are selected to work on ATCO Pipelines and terminalling services. as distribution companies and major integrity of the pipeline. performance; and projects. industrial customers. • Cathodic protection surveys and Additional integrity management • Pipeline dig programs as a follow- The ATCO Heartland Industrial Water monitoring conducted throughout activities include: up if surveys suggest there may be System, a multi-user water system With peak delivery of 3.8 billion cubic the pipeline systems to ensure that Hydrocarbon Storage issues. connected to the North Saskatchewan feet per day, ATCO Pipelines owns cathodic protection systems are and Industrial Water River, facilitates the provision of reliable and operates approximately 8,500 SAFETY integrated water and related services km of transmission pipeline serving In September, ATCO Pipelines marked ATCO Energy Solutions’ role in the Pipelines & Liquids Global Business including pipeline transportation, water customers through almost 4,000 13 years without a lost-time incident, Unit is to build, own and operate treatment, recycling and disposal, to receipt and delivery points. a milestone achieved by continuously industrial customers. focusing on building and maintaining natural gas, natural gas liquids (NGL) and industrial water-related ALBERTA SYSTEM safe work practices, both in the field infrastructure to serve the midstream Although traditionally ATCO Energy INTEGRATION and in the office. sector of Western Canada’s energy Solutions has been a company The Alberta System Integration industry. The company offers tailored focused primarily on midstream involves ATCO Pipelines and Nova Gas ATCO Pipelines’ strong safety culture solutions for product storage, service offerings, such as natural gas Transmission Limited (NGTL) combining permeates throughout the organization. processing and transportation that gathering, processing and storage, as The company’s safety program – Target physical assets under a single rates provide customers with exceptional well as natural gas liquids extraction, Zero – aims to keep all employees and services structure, as well as a business value. 2015 saw a shift in focus to reflect injury, incident and collision-free single commercial customer interface, ATCO’s overall strategy of divesting by reminding each individual of the as approved by the Alberta Utilities non-core assets and redeploying importance of personal safety. Through the company’s service base, Commission and National Energy the ATCO Heartland Energy Centre capital to new areas of strength and Board. located in Alberta’s Industrial Heartland, growth, specifically hydrocarbon ATCO Energy Solutions is developing storage and industrial water solutions. The exchange of assets is the final stage required to complete the integration. The exchange of pipelines and facilities within defined geographic ATCO Energy Solutions in the Heartland areas will help streamline operations and will be completed in four phases in INDUSTRIAL WATER 2016. River water intake and pump station PIPELINE INTEGRITY Sturgeon pipeline ATCO Pipelines has a comprehensive, Heartland pipeline r

e

v multi-faceted pipeline integrity program Scotford pipeline i

R

that includes regular pipeline integrity Customer delivery points n a inspections, leak detection surveys and w e h c proactive maintenance. t a HYDROCARBON STORAGE k s a Salt cavern storage facility S In 2015, Smart Pigs, or In-Line h rt ALBERTA Inspection Tools (ILI), were again used No to inspect approximately 500 km of pipe ranging in size from 219 mm to Industrial customers Edmonton 762 mm (8” to 30”), including a major loop in Jasper National Park. ATCO Heartland Energy Centre

The ILI tools provide data on the condition of a pipeline which helps to This brand new, state-of-the-art Electro-Magnetic Acoustic Transducer in-line inspection tool was used to conduct testing on a 95 km segment of 24” pipeline gauge its health and integrity. These from Rimbey to Edmonton, Alberta.

31 2015 ATCO ANNUAL REPORT PIPELINES & LIQUIDS 32 HYDROCARBON STORAGE brine pond, pump station and product In 2015, ATCO Energy Solutions In 2015, the company completed The expanded intake connected to International In 2015, ATCO Energy Solutions handling facility. invested in upgrading and optimizing several projects, representing the new pump station is a sustainable continued to advance its development the facility through the installation an investment of approximately solution that reduces the need for Operations of NGL storage capacity through its In 2015, ATCO secured long-term of a new central dehydration facility $50 million, to expand and improve additional intakes along the river and salt cavern storage project at the ATCO agreements for all four of its initial salt and replacement of the facility control its multi-user water system. By protects fish by preventing them from AUSTRALIA Heartland Energy Centre located in caverns. In response, the company system. This resulted in a 13 per cent continuing to invest and develop a entering the water system. ATCO Gas Australia owns and operates Alberta’s Industrial Heartland. announced it had acquired an increase of working gas capacity. common system shared by multiple the largest regulated gas distribution additional 160 acres of land and 400 The company remains focused on customers, ATCO is able to ensure This year ATCO Energy Solutions network in Western Australia. It also The initial salt cavern facility will consist acres of salt mineral rights, providing increasing long-term contracts, product customers receive the water they need entered into a long-term commercial operates two separate non-regulated of four salt caverns with the capacity to ATCO with the potential to develop an offerings, as well as diversifying its for their industrial processes, while also agreement with Air Products Canada gas distribution networks, one serving store 400,000 cubic metres of propane, additional 40 salt caverns based on customer base. producing a number of environmental Ltd. to provide water pre-treatment, in the mining centre of Kalgoorlie and butane and ethylene and will be market demand. benefits such as minimizing disruption addition to previously commercialized the second, a liquefied petroleum gas connected to partner Petrogas Energy INDUSTRIAL WATER to the river valley, and creating water transportation services for the distribution network serving Albany, Corporation’s Fort Saskatchewan Outside of Alberta’s Industrial Heartland With more than three decades opportunities to recycle and reuse company’s hydrogen facility near Fort the largest centre in the great southern hydrocarbon truck and rail terminal region, the company also owns a of owning and operating water water within the system. Saskatchewan. region of the state. that currently receives and distributes commercial natural gas storage facility, infrastructure in Alberta’s Industrial Growth multiple products in the marketplace. which it has more than 45 years of Heartland, ATCO Energy Solutions Highlights of the company’s Customers receiving pre-treated Increases in new subdivision experience operating. Located near continues to focus on delivering investments include a new pump water benefit from substantially expansions and the construction of Throughout the year, the development Carbon, Alberta, the facility features innovative and sustainable industrial station facility with an expanded water improved industrial water quality, in residential homes resulted in ATCO of the initial facility reached several 23 storage wells with a working gas water solutions in Canada’s largest intake on the North Saskatchewan addition to freeing up land at their Gas Australia’s strongest performance milestones, including the completion capacity of 52 petajoules and is hydrocarbon processing region. River. The new pump station is a key operations previously dedicated to since acquiring the gas distribution of initial drilling of all four caverns, the strategically connected to multiple piece of strategic infrastructure that not water treatment. With the addition of network in 2011. In 2015, the company start of mining at the first two caverns, transmission pipelines in the area. only allows ATCO to provide customers this service, ATCO Energy Solutions connected nearly 26,000 customers to and the start of construction on the with a reliable source of water, but also continues to grow the company’s suite its gas service. supplies water to the ATCO Heartland of water and wastewater services Energy Centre nearby where it is used provided to industrial customers to help build the company’s salt cavern throughout Alberta’s Industrial storage facilities. Heartland.

ATCO Energy Solutions’ new industrial water pump station, strategically located on the North Saskatchewan Nick Smith and Aden Bourke, Gas Distribution Officers, commissioning a new gas main pipeline to Kings Square in the Perth river in Alberta’s Industrial Heartland. city centre, part of one of Australia’s most significant urban renewal developments.

33 2015 ATCO ANNUAL REPORT PIPELINES & LIQUIDS 34 The Town of Mandurah and its Environment gas boiler for peak loads, installed to Prior to beginning construction of the O VAT N I O N N surrounding area continues to be one In 2015, ATCO Gas Australia reduce operating costs and carbon project, the company undertook a I Reducing Costs for Customers with of the highest growth areas in Australia. implemented an education program to footprint. thorough environmental study in the

I N N Gas-Powered Air Conditioning During the past decade, ATCO Gas reduce engine run-times on operational communities along the pipeline route. O A C T I Australia has seen its customer base vehicles and operate secondary MEXICO Construction is now well underway in this area increase by approximately equipment electrically, which has Ramal Tula Gas Pipeline and has involved significant work in ATCO Gas Australia is helping Gas Australia is offering customers a 70 per cent to more than 87,000 resulted in reduced carbon emissions In 2015, ATCO continued to position negotiating with communities and commercial and light industrial special rebate for the installation of customers. To service the growing from operations. Work has also begun itself for new opportunities in the collaborating with project partners ICA customers dramatically reduce their multiple units to reduce the up-front needs of the region, in 2015 a new to modify compatible vehicles within Mexican market while gaining valuable Fluor, Arendal and the CFE. electricity costs through the use cost and better compete with electric operations base was purchased to the ATCO Gas Australia fleet to allow learnings from its experiences during of Gas-Powered Air Conditioning air conditioning options. Community Involvement meet future expansion requirements. Compressed Natural Gas dual fuel the construction of the Ramal Tula Gas (GPAC). GPAC is a proven capabilities, with refuelling onsite at the In the communities where ATCO is In August 2015, ATCO Gas Australia Pipeline project. ATCO’s first project in technology that, when coupled with Investing In Capital Infrastructure Jandakot Operations Centre which will building the pipeline, a Social Action issued its first GPAC rebate to Morris the country, awarded by the Comisión the reliability of ATCO’s gas network, 2015 saw the company complete an lead to further emissions reductions. Plan has been implemented to create Fresh IGA, an independent grocery Federal de Electricidad (CFE), is part provides a practical alternative unprecedented gas mains upgrade positive long-term relationships. store in the northern suburbs of of Mexico’s undertaking to develop to electric air conditioning units. program to improve more than ATCO Gas Australia also provided Multiple community outreach meetings Perth. The supermarket suffered from new pipeline infrastructure to enable Through solutions provided by 37 km of mains and 2,500 domestic its expertise to the City of Fremantle, have been held to discuss the pipeline electrical grid capacity constraints, the country to move towards a self- ATCO Gas Australia, customers and commercial connections. Western Australia’s first carbon neutral project and answer questions. a significant issue across the Perth sustaining, cleaner energy future. have reduced operating costs by These upgrades removed cast iron, Council. A review by the Council of ATCO also believes in investing in metropolitan area. When complete, the 16 km pipeline up to 40 per cent. communities where it has the privilege unprotected metallic mains, odd-sized its leisure centre pool heating system will transport natural gas to the CFE’s steel and aging polyvinyl chloride pipe identified it as a significant source to operate, and has invested in The company installed four, 85 kW Store owners identified GPAC as Francisco Pérez Ríos thermoelectric (PVC) from the gas distribution system, of emissions. An energy audit was repairing roads and schools and in reverse cycle units at its Jandakot their preferred option to meet their power plant, enabling the production of to improve network integrity and conducted, resulting in a new mix of completing community centre upgrades Operations Centre to efficiently heating and cooling needs, given cleaner energy at considerably reduced reinforce the security of supply. technologies, including a 75 kW natural that will benefit current residents and cool and heat the facility and now the availability of safe, reliable and costs. gas cogeneration unit and natural future generations. offers educational seminars at the cost-effective natural gas supply The PVC replacement program is centre to showcase the technology from ATCO Gas Australia’s network, another first for the network, providing and its benefits. ATCO’s Business as well as environmental advantages critical learnings for the development Development team is also working and reduced operational costs of of maintenance and replacement closely with leading Heating the GPAC system. With growing plans going forward. The mains Ventilation and Air Conditioning understanding and recognition of upgrade program has opened areas consultants to inform this influential the benefits of GPAC, it’s a solution of the network to increased operating group about the technology and its ATCO Gas Australia looks forward to pressure, thereby providing additional many benefits. Additionally, ATCO assisting more customers install in the future. capacity for new domestic and commercial customers.

To support ATCO Gas Australia’s capital infrastructure growth, the company launched targeted marketing designed to educate and incentivize the commercial and industrial sector. The program focuses on natural gas technologies, including Gas-Powered Air Conditioning (GPAC), as well as embedded cogeneration and trigeneration with incentives to reduce the upfront capital costs and drive demand for this new technology (see sidebar, left).

Nathan Lude, Manager, Business Development (left), presenting Sanjay Malde with a rebate for the GPAC units recently installed at IGA Morris Fresh, which Construction on ATCO’s Ramal Tula Gas Pipeline is well underway. The pipeline will transport natural gas to the Comisión has reduced its heating and cooling costs by 40 per cent. Federal de Electricidad’s Francisco Pérez Ríos thermoelectric power plant.

35 2015 ATCO ANNUAL REPORT PIPELINES & LIQUIDS 36 EMPLOYMENT AND TRAINING Indigenous PROGRAMS ATCO makes a priority of supporting Partnerships initiatives that provide education and experience to help youth enter the workplace. ATCO’s joint-venture partnerships often include work placement opportunities and on-the- job training. For example, in 2015 ATCO Sustainable Communities supported the Blood Tribe in re-opening its housing manufacturing plant, providing youth with on-the- job training and support. ATCO also provides workforce training through its partnerships with the Woodland Cree and the Haisla First Nations in British Columbia.

In 2015, ATCO Electric introduced the Youth Engagement Mentorship Pilot Program, a one-year agreement with Siksika First Nation which integrated qualified youth into ATCO’s in-house construction crew. Following the Nancy Southern, ATCO’s Chair, President & Chief Executive Officer, with training and mentorship program, Darrell Beaulieu, CEO, Denendeh Investments Incorporated, at a signing two very strong candidates became ceremony in Yellowknife, NWT. Ceremonial drummers open Building and sustaining positive will see DII’s ownership in Northland permanent ATCO Electric employees. an event in Yellowknife, relationships with Indigenous Utilities increase from 14 to 50 per cent NWT, to celebrate the communities is core to how ATCO (see sidebar on pg. 38). Near 30-Year Partnership Takes Logical Next Step signing of a Memorandum Supporting Indigenous youth in the of Understanding that will does business. The company has long pursuit of post-secondary education see Denendeh Investments adopted an approach that involves Also in 2015, ATCO’s partnership with On March 18, 2015 ATCO and Northland Utilities is a full-service Incorporated become is a priority for ATCO. The company trust, respect and understanding with the Nunatsiavut Inuit of Labrador under Denendeh Investments Incorporated electrical company that provides equal owners with ATCO in recognizes students from Indigenous Northland Utilities. the overarching goal of developing Torngait Services Inc. was awarded a (DII) signed a historic Memorandum retail, distribution, transmission and communities who demonstrate lasting partnerships that contribute new contract by Valard Construction of Understanding (MOU) that will see generation services to more than leadership capabilities through several to sustainable economic and social to provide catering, operations and DII’s ownership stake in Northland 11,000 customers in nine NWT scholarship programs, offering financial development in the communities it maintenance services for five workforce Utilities increase from 14 to 50 per communities. Approximately 25 per assistance to Indigenous students who serves. lodges in Newfoundland and Labrador. cent. This action represents the logical cent of Northland Utilities employees demonstrate exceptional leadership next step in a mutually beneficial are Indigenous. The company has a qualities, a commitment to education ATCO has more than 40 joint-venture Other recent partnerships include ATCO business partnership that has grown number of programs in place to build and community involvement. ATCO partnerships, services agreements and Energy Solutions’ agreement with the since 1987. capacity with Indigenous people, such also provides two annual scholarships other relationships with Indigenous Simpcw First Nation in British Columbia as job shadowing and apprenticeship for Treaty Seven First Nations students communities, many of which have been to pursue opportunities in the energy DII is a First Nations-owned company training. at the University of Lethbridge and five in place for decades (see map on pg. infrastructure development sector; that was created to invest in programs annual scholarships at Aurora College 39). ATCO Power’s joint-venture agreement and business ventures to help build ATCO’s near 30-year relationship with in the NWT. with the Sahtu Dene Council to develop sustainable communities for its DII is the longest enduring Indigenous NEW BUSINESS INITIATIVES renewable energy projects in the NWT; people. More than 75 per cent of the partnership in ATCO’s history. ATCO ATCO companies also support March 18, 2015 was an important day and ATCO Structures & Logistics’ Indigenous population in the NWT is has since developed more than unique cadet programs in several in the history of one of ATCO’s longest recent joint-venture partnerships with represented by DII. 40 partnerships with Indigenous Alberta communities to offer standing partnerships. Denendeh Alexander First Nation in Alberta and communities across Canada. education, mentorship and skills Investments Incorporated (DII), the Naha Dehe (Nahanni Butte Dene The landmark MOU represents the training to Indigenous youth. Through representing more than 75 per cent Band) in the NWT. true partnership that exists – one sponsorships of the Bold Eagle Cadet of the Indigenous population in the of mutual respect and trust, and of Program – a unique partnership Northwest Territories (NWT), signed a creating value through enterprise. between the Aboriginal Veterans Memorandum of Understanding that Society of Alberta and the Canadian

37 2015 ATCO ANNUAL REPORT INDIGENOUS PARTNERSHIPS 38 Armed Forces – ATCO helps provide Ski Fit North complements ATCO’s Indspire Soaring Career Conference summer employment opportunities that longstanding sponsorship of athletic In February 2015, ATCO sponsored ATCO’s Indigenous Partnerships combine Indigenous cultural teaching events including the Circumpolar Indspire Soaring, a career conference with military training. The company’s Northern Games, the North American for Indigenous youth held in Calgary continued support of the Siksika Indigenous Games and the Arctic that attracted more than 700 Nation Community Cadet Corps and Winter Games. ATCO has also students. Indspire celebrates the the Eden Valley Community Cadet sponsored the Alberta Winter and accomplishments of high achievers Corps provides at-risk youth with Summer Games since 1988. and introduces them to a wide opportunities to engage community array of career options. ATCO leaders and receive mentorship during Alberta Future Leaders Program employees hosted five workshops a critical time in their lives by teaching The Alberta Future Leaders (AFL) at the conference, outlining possible new skills and showing the importance program also uses sport and recreation, career paths with the company and of community service. arts and leadership activities to support highlighting ATCO scholarships at-risk youth in becoming community available to Indigenous students. COMMUNITY INVOLVEMENT leaders and positive role models. In ATCO is committed to investing in 2015, ATCO announced a three-year Aboriginal Awareness Initiatives programs designed to promote youth sponsorship of AFL with the Sucker ATCO is committed to celebrating leadership in Indigenous communities. Creek First Nation, where it’s hoped the rich cultural legacy and history of In 2015, ATCO began new partnerships, that graduates of the program will learn Indigenous peoples in Canada and while continuing to support valuable the skills required to lead and continue Australia. Each year, ATCO supports programs across Alberta. these programs. and participates in Canada’s National Aboriginal Awareness Day celebrations, Ski Fit North Alberta ATCO has supported AFL for 16 and Australia’s National Aboriginal and Ski Fit North Alberta, led by two- years, sponsoring Edmonton’s Boyle Islander Week. For the second straight time Olympic medallist Beckie Scott, Street Community Services program, year, in 2015 ATCO was pleased to promotes healthy, active living to aimed at providing positive options sponsor Australia’s National Aboriginal Indigenous youth across Alberta and leadership training to Edmonton’s and Islander Day Observance The significant number through cross-country skiing. The inner-city Indigenous youth. The Committee (NAIDOC) events in the City of partnerships ATCO program travels to many Indigenous company has also previously of Kwinana and region. The week-long has developed with NORTHWEST Indigenous communities and remote communities in Alberta that sponsored partnerships in East Prairie events promote the history, culture and TERRITORIES is a reflection of ATCO has the privilege to serve. ATCO Métis Settlement, and the Aseniwuche achievements of Aboriginal and Torres the respectful and is the title sponsor of the program and Winewak Nation. Strait Islander peoples. transparent way ATCO Yellowknife does business. has engaged the ATCO Blue Flame Kitchen to help educate participants on Indigenous the importance of healthy nutrition. Partnerships

BRITISH COLUMBIA ALBERTA SASKATCHEWAN

Edmonton

Calgary

Vancouver

Two-time Olympic medallist Beckie Scott (right) teaches students from Tsuu T’ina Nation High School the benefits of active living and healthy nutrition in the Ski Fit North Alberta program. In 2015, ATCO began sponsoring the program which engages Indigenous youth across the province in the sport of cross-country skiing.

39 2015 ATCO ANNUAL REPORT INDIGENOUS PARTNERSHIPS 40 enterprise, understand business The “Company Program” offers ATCO remains highly engaged in Ag and economics, and develop students a unique learning experience for Life’s Farm Safety Days, focused ATCO in the entrepreneurial, financial literacy and to better understand the risks and on bringing much-needed safety Community leadership skills. rewards of starting a business, and how education to young Albertans who to build positive relationships with the live on, work at, or visit farms. This Fifty-six years ago, ATCO Founder R.D. community. By the end, students have educational program is an effective way Southern, along with his father S.D. the real-world skills and experience to reach young Albertans and to extend Southern, and fellow entrepreneurs needed to achieve their dreams of ATCO’s important safety messaging David E. Mitchell and J.R. McCaig, becoming entrepreneurs. “Economics from ATCO Electric’s “Where’s the united to bring this program to Alberta. for Success” teaches students the Line?” and ATCO Gas’s “Click Before The group formed JA Southern benefits of staying in school, as well You Dig” safety programs targeted at Alberta’s first board, and under their as learning budgeting skills and what agricultural customers operating large leadership, became a model for the potential jobs are available to them. equipment or digging in areas in which program across the country. it operates. AG FOR LIFE PARTNERSHIP Today, ATCO remains committed In 2011, ATCO became a Founding Through a continued commitment to to the JA program, and its belief in Member of Ag for Life, a not-for- educating customers and communities the boundless potential of young profit organization dedicated to about the importance of safety, and Canadians. Every year, ATCO sponsors building a greater understanding and effective partnerships like Ag for Life, the “Economics for Success Program” appreciation of agriculture and farm ATCO hopes to reduce injuries and and the “Company Program” in both safety by offering hands-on educational eliminate fatalities on farms across Calgary and Edmonton, which teach programs to youth and adults across Alberta. thousands of students from Grades Alberta. 9 to 12 about the role of business in society.

ATCO employees deliver ATCO and its people are committed to 2015 Campaign Highlights safety messaging to creating healthy, vibrant communities While many charitable organizations elementary school aged children during an Ag for by developing meaningful partnerships have seen donations decrease as a ATCO Blue Flame Kitchen Life Farm Safety Day in and providing time, expertise and result of the economic downturn, ATCO Schools Program in Australia Rimbey, Alberta. financial support to the organizations employees’ community spirit is alive that help communities thrive. and well. Over the course of the 2015 ATCO Gas Australia brings the professional instruction and campaign, ATCO employees pledged quality programming of the ATCO Blue Flame Kitchen to ATCO EPIC to more than 500 charities near and children in Australia through its engaging and interactive Launched in 2006 as a way of unifying dear to their hearts. schools program designed for students aged 10 to 12. The all ATCO companies’ fundraising efforts program teaches students about the journey of natural gas in and magnifying its positive impact, the During the 14-week campaign, ATCO Western Australia, how to use gas safely around the home, ATCO EPIC (Employees Participating employees enthusiastically participated how to use gas appliances in the kitchen to cook nutritious in Communities) program has raised in approximately 150 fundraising and meals and what actions to take if they smell gas. more than more than $31 million volunteering events across Alberta, the for charitable organizations across Yukon, the Northwest Territories, and Away from the traditional classroom environment, students Canada. Australia, raising more than $3.6 million participate in hands-on activities and receive experience with for charities around the world. natural gas appliances in the company’s new kitchen facility. Each year, ATCO’s signature, Students also have the opportunity to learn about healthy employee-led program combines JUNIOR ACHIEVEMENT eating while spending time in the alfresco edible garden. This fundraising events, ‘Days of Caring’ The Junior Achievement (JA) program well-maintained seasonal kitchen garden enables school volunteer activities, auctions, friendly is designed to provide high school groups to harvest fresh herbs, vegetables and fruit to use in team competitions and pledges that students with practical business their cooking classes and aligns with ATCO’s philosophy of raise funds to support charitable experience under the hands-on resourcefulness and sustainability. organizations across the country. guidance of volunteers from the local Employees can donate to the charities business community. The program In Alberta, ATCO Blue Flame Kitchen continues to offer of their choice and ATCO matches seeks to inspire and educate young educational programs and a diverse range of cooking classes donations to all human health and Albertans to succeed in the global for all ages and in 2015, saw more than 9,700 customers wellness organizations to double the economy by providing them with participate. support the charity receives. opportunities to experience free

41 2015 ATCO ANNUAL REPORT ATCO IN THE COMMUNITY 42 CAPITAL INVESTMENT PLANS This three-year plan includes FINANCIAL STRENGTH ATCO invested $1,919 million in $4.1 billion of planned capital Financial strength is fundamental to Financial 2015 in long-term growth initiatives. investment in the regulated utilities. ATCO’s current and future success. It Excellence 2015 Investment in the regulated utilities The Company also intends to invest ensures we have the financial capacity and on long-term contracted capital a further $1.2 billion in long-term to fund our existing and future capital assets accounted for $1,754 million or contracted capital from 2016 to investments through a combination of 92 per cent of capital spending. These 2018. Of this $1.2 billion, $1.1 billion predictable cash flow from operations, is planned capital investment in the earnings attributable to Class I and C Clean Energy Project in northeast investments either earn a return under cash balances on-hand, committed a regulatory business model or are Alberta Powerline’s Fort McMurray credit facilities and access to the Class II Shares in 2015, largely due to British Columbia and by business-wide 500 kV Project and approximately staff reductions and the associated cost-reduction initiatives. commercially secured under long- capital markets. Financial strength term contracts. The remaining eight $100 million is planned capital enables ATCO to sustain our operations severance costs and impairments of Decreased adjusted earnings in per cent of expenditures were mainly investment in contracted hydrocarbon and to grow through economic cycles, certain underperforming assets across 2015 were also due to lower Alberta maintenance capital spread across the storage and distributed generation in thereby providing long-term financial our organization. Earnings in 2015 Power Pool prices and the adverse Company. Alberta and a natural gas pipeline in benefits and value creation to you, also included $28 million of gains on earnings impact of several regulatory Mexico. our investors. ATCO is committed to the sales of some operations and the decisions received from the Alberta Regulated & Contracted Capital maintaining strong investment grade positive revaluation of a joint-venture Utilities Commission and the Australian Investment 2015 ATCO also continues to pursue various credit ratings which allow us access to investment. The cash proceeds from Economic Regulation Authority in 2015. business development opportunities capital markets at competitive rates. these sales were redeployed to finance 14% with long-term potential, such as the Company’s growth initiatives. In March 2015, the Alberta Utilities the Tula cogeneration power plant in 78% 8% We financed our asset expansion Commission released decisions Mexico, which are not included in these through a number of sources in 2015. The long-term success of ATCO is on the Generic Cost of Capital and capital growth investment estimates. Our most significant source of capital dependent upon our ability to grow Performance Based Regulation Capital was funds generated by operations the business by expanding into new Tracker proceedings that covered the DIVIDENDS which totalled $1.6 billion in 2015. We markets and into new business lines. period from the beginning of 2013 to The Board of Directors increased the also issued $650 million in debt and To achieve this, we are expanding our the end of 2015. In July 2015, ATCO Regulated utility capital quarterly dividends paid per Class I $375 million in preferred shares, all at sales and customer focus in all our Gas Australia received the Access and Class II Share for the four quarters very competitive rates. activities. At the same time, we are Long-term contracted capital Brian R. Bale Arrangement decision, covering the of 2015 from 21.50 cents per share to pursuing cost-savings and efficiencies Senior Vice President & Chief Financial Officer period from July 2014 to December Other 24.75 cents per share, an increase of The Company has a long track record in every part of our organization 2019. The 2013 to 2015 earnings 15 per cent over 2014. of generating reliable and growing to ensure that we deliver the most impact that resulted from these earnings and dividends over time. ATCO has achieved significant growth In the 2016 to 2018 period, ATCO competitive solutions to our customers. decisions was recorded in 2015. If the In January 2016, the Board of Directors There is no doubt we face some over the past decade, driven by a expects to invest an additional But I want to make it clear that while prior period impact of these retroactive declared a first-quarter dividend of challenging conditions with low buoyant natural resource sector in $5.3 billion in regulated utility and we have restructured our business decisions had been recorded in 2013 28.50 cents per share. That amount commodity prices and reduced activity both North America and Australia. commercially secured capital growth to become more customer-focused, represents a 15 per cent increase over levels in some of our markets. However, However, since late 2014, the world has and 2014, adjusted earnings in 2015 projects. This capital investment is our financial tenets remain the same: the quarterly dividends per share paid we will tackle these challenges, as we been faced with declining mineral and would have been $27 million higher expected to contribute significant we are focused on making prudent in 2015. always have, with fiscal prudence and a oil prices in addition to a continuing than the same period last year due earnings and cash flow and create decisions, maintaining our strong long-term focus on creating low natural gas price environment in to the ongoing investment to meet long-term value for share owners. financial position and creating long- share owner value. Western Canada. The challenges that the needs of Alberta’s and Australia’s The Board of Directors has approved term investor value. Future Regulated & are impacting many of our customers utility customers. When these an increase in ATCO’s common share Contracted Capital Investments $ also had an impact on ATCO in 2015. retroactive decisions are recorded in dividends each year since 1993; a track 1.14/share ATCO’s adjusted earnings, which $ 2.0B record we are very proud of. ATCO’s earnings attributable to Class I exclude the one-time gains from their correct year, the regulated utility and Class II shares were lower in 2015 2015 normalized adjusted earnings are $ the sales of operations, impairment 1.8B Long-term compared to 2014. charges and the other items that were $252 million compared to $225 million contracted not in the normal course of business $ capital In late 2015, ATCO undertook a in 2014. 1.5B were $293 million in 2015, compared 23-year track record of increasing transformational change that shifted ATCO Gas to $374 million in 2014. Lower adjusted common share dividends our global business strategy to address Regulated Utility Normalized Australia earnings in 2015 were in part due these challenges. The Company Adjusted Earnings to lower business activity in the ATCO Pipelines has restructured into three Global Structures & Logistics business unit $252M Business Units - Structures & Logistics, $ ATCO Gas related to weakened capital spending 27M higher Electricity and Pipelines & Liquids - that in various natural resource sectors in are vertically integrated and better able ATCO Electric North America and Australia. These Distribution to efficiently and effectively respond $225M decreases were partially offset by to our customers’ needs. However, additional work at the Wheatstone this transformative restructuring came ATCO Electric Project in Western Australia, the Transmission with some costs. The net impact commencement of work at the Site was a reduction of $139 million to 2014 2015 2016 2017 2018 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16

Capital investment is defined as cash used for capital expenditures. It includes additions to property, plant and equipment, intangibles and the company’s proportional share of capital expenditures in joint ventures, as well as interest capitalized during construction. 43 2015 ATCO ANNUAL REPORT FINANCIAL EXCELLENCE 2015 44 Consolidated Annual Results (1) Consolidated Operating Summary

(Millions of Canadian dollars, except as indicated) 2015 2014 2013 2012 2011 (Millions of Canadian dollars, except as indicated) 2015 2014 2013 2012 2010 EARNINGS STATEMENT Structures & Logistics Revenues 4,131 4,554 4,359 4,012 3,991 Capital expenditures (1) 61 91 116 199 132 Earnings attributable to Class I and Class II shares 154 420 418 370 327 Workforce housing lease fleet (units in thousands) 3 3 3 3 3 Adjusted earnings (2) Workforce housing lease fleet utilization (%) 51 77 83 86 87 - Structures & Logistics 27 67 96 114 89 Space rental lease fleet (units in thousands) 13 13 13 13 19 - Electricity 171 195 206 167 157 Space rental lease fleet utilization (%) 68 75 77 81 80 - Pipelines & Liquids 101 106 83 83 72 Electricity - Corporate & Other and eliminations (6) 6 5 6 12 electricity distribution and transmission operations Adjusted earnings (2) 293 374 390 370 330 Capital expenditures (1) 850 1,602 1,763 1,732 916 BALANCE SHEET Power lines (thousands of kilometres) 83 81 81 76 74 Cash (3) 799 590 741 470 755 Electricity distributed (millions of kilowatt hours) 11,832 11,600 11,283 10,974 10,596 Total assets 19,055 17,689 16,010 14,055 12,453 Average annual use per residential customer (kWh) 7,476 7,815 7,743 7,604 7,747 Capitalization Customers at year-end (thousands) 256 252 248 244 240 - Bank indebtedness 1 5 2 - - electricity generation operations - Long-term debt 7,943 7,256 6,230 5,352 4,389 Capital expenditures (1) 85 20 47 35 23 - Non-recourse long-term debt 112 127 165 186 378 Generating capacity (megawatts) 3,857 3,890 4,890 4,889 4,889 - Non-controlling interests 3,537 3,112 3,153 2,551 2,500 Generating capacity owned (megawatts) 2,462 2,479 2,734 2,743 2,743 - Share owners’ equity 3,356 3,168 2,860 2,370 2,163 Availability (%) 93 95 94 90 91 Capitalization 14,949 13,668 12,410 10,459 9,430 Pipelines & Liquids CASH FLOW STATEMENT Natural gas distribution operations (2) Funds generated by operations (4) 1,589 1,786 1,854 1,636 1,514 Capital expenditures (1) 411 371 353 392 307 Capital expenditures (5) Pipelines (thousands of kilometres) 54 54 54 52 51 - Structures & Logistics 61 91 116 199 132 Maximum daily demand (terajoules) 2,216 2,269 2,182 2,253 2,175 - Electricity 935 1,622 1,810 1,767 939 Natural gas distributed (petajoules) 264 289 275 275 259 - Pipelines & Liquids 824 620 521 488 431 Average annual use per residential customer 117 117 117 121 121 - Corporate & Other & eliminations 48 40 71 33 26 (gigajoules) for ATCO Gas Capital expenditures 1,868 2,373 2,518 2,487 1,528 Average annual use per residential customer (gigajoules) for ATCO Gas Australia 14 14 15 15 15 PER SHARE DATA Customers at year-end (thousands) 1,893 1,846 1,802 1,763 1,727 3.66 3.64 3.21 2.83 Earnings per share ($) 1.34 natural gas transmission operations Dividends paid per share ($) 0.99 0.86 0.75 0.66 0.57 Capital expenditures (1) 363 194 147 87 112 Equity per share ($) 29.18 27.51 24.84 20.61 18.74 Pipelines (thousands of kilometres) 9 9 9 9 9 Class I Non-Voting closing share price ($) 35.70 47.66 46.66 40.36 30.12 Class II Voting closing share price ($) 35.50 47.75 46.35 40.25 29.66 Natural gas liquids storage and processing operations, and industrial water solutions Capital expenditures (1) 50 55 21 9 12 Full disclosure of all financial information is available on the SEDAR website - www.sedar.com. Natural gas processed (mmcf/day) 187 337 376 398 393 (1) Financial results have been prepared in and items that are not in the normal course of changes in non-cash working capital. This - Natural gas liquids extraction (mmcf/day) 178 316 340 350 342 accordance with International Financial business or a result of day-to-day operations. measure is not defined by IFRS and may not Reporting Standards (IFRS). Descriptions of the adjustments are provided be comparable to similar measures used by - Natural gas gathering and processing (mmcf/day) 9 21 36 48 51 in the Segmented Information note of the other companies. (2) Adjusted earnings are earnings attributable Natural gas gathering lines (kilometres) 645 1,016 1,122 1,097 1,171 Financial Statements. to Class I and Class II Shares after adjusting (5) Includes purchases of property, plant for the timing of revenues and expenses (3) Cash is defined as cash and cash equivalents and equipment and intangibles, including associated with rate-regulated activities. less current bank indebtedness. capitalized interest. Adjusted earnings also exclude one-time (4) Funds generated by operations is defined (1) Includes purchases of property, plant and equipment and intangibles, (2) Includes ATCO Gas Australia, which was acquired on July 29, 2011; 2011 gains and losses, significant impairments as cash generated from operations before including capitalized interest. amounts are for the 5 months of operations.

45 2015 ATCO ANNUAL REPORT CONSOLIDATED OPERATING SUMMARY 46 ATCO’s Global Leadership Directors ATCO’s Global Leadership ATCO Officers

Executive Committee

Nancy C. Southern Siegfried W. Kiefer Brian R. Bale Chair, President & President & Chief Operating Officer, Senior Vice President & Chief Executive Officer Canadian Utilities Limited Chief Financial Officer

Erhard M. Kiefer Stephen H. Lockwood Settimio F. Policicchio Senior Vice President & President & Chief Operating Officer, Managing Director, Shared Services Chief Administration Officer ATCO Structures & Logistics Ltd.

Robert T. Booth, Q.C. Denis M. Ellard C. Anthony Fountain Linda A. Heathcott Partner, Bennett Jones LLP Corporate Director Chairman of Sellafield Ltd. President & Chief Executive Officer, Spruce Meadows Ltd. Corporate Office

Carson J. Ackroyd Carole M.D. Field Carol Gear Vice President, Marketing Vice President, Pension and Benefits & Corporate Secretary & Communications Human Resources Information Systems

Anthony L. Maher Robert C. Neumann Alan M. Skiffington Vice President, Controller Vice President, Internal Audit Vice President & Chief Information Officer Clinton G. Warkentin Vice President, Finance & Risk

Michael R.P. Rayfield Robert J. Routs, PhD Nancy C. Southern Roger J. Urwin, PhD, C.B.E. Corporate Director Corporate Director Chair, President & Corporate Director Chief Executive Officer Managing Directors, Presidents and Senior Executives of Operating Subsidiaries

Roberta L. Lambright George J. Lidgett Wayne K. Stensby Managing Director & Chief Operating Managing Director, Pipelines & Liquids Managing Director, Electricity Officer, ATCO Australia

J.D. Patrick Creaghan Paul G. Goguen Barry L. Goy President, ATCO Energy Solutions Senior Vice President & General Senior Vice President & General Manager, ATCO Electric Transmission Manager, ATCO Electric Distribution

George Opocensky Boris I. Rassin D. Jason Sharpe President, ATCO Power President, Senior Vice President & General ATCO Sustainable Communities Manager, ATCO Pipelines Susan R. Werth Charles W. Wlson Corporate Director Lead Director

47 2015 ATCO ANNUAL REPORT OFFICERS 48 ATCO’s Beautiful General Alberta Heritage Information

In recognition of its beautiful Alberta Northern lights over the Elbow River, west INCORPORATION REGISTRAR & TRANSFER AGENT heritage, ATCO has featured scenes of of Calgary, Alberta. Alberta in annual reports since 1990. ATCO Ltd. was incorporated under the Class I Non-Voting and laws of the Province of Alberta on Class II Voting Shares August 31, 1962. CST Trust Company Calgary/Montreal/Toronto/Vancouver ANNUAL MEETING The Annual Meeting of Share Owners Telephone: will be held at 10:00 a.m. on Wednesday, 8:30 a.m. to 6:30 p.m. ET May 11, 2016, at The Fairmont Palliser Monday - Friday Hotel, 133 - 9 Avenue S.W., Toll-Free in North America: 2014 2013 2012 2011 2010 Calgary, AB. 1-800-387-0825 Outside of North America: AUDITORS 1-416-682-3860 PricewaterhouseCoopers LLP Fax in North America: Calgary, AB 1-888-249-6189 Fax Outside of North America: 2009 2008 2007 2006 2005 1-514-985-8846 LEGAL COUNSEL www.canstockta.com Bennett Jones LLP Calgary, AB Mailing Address: CST Trust Company STOCK EXCHANGE LISTINGS P.O. Box 700 Class I Non-Voting Shares 2004 2003 2002 2001 2000 Station B Symbol ACO.X Montreal, QC Class II Voting Shares Canada H3B 3K3 Symbol ACO.Y Listing: The Toronto Stock Exchange

INVESTOR RELATIONS 1999 1998 1997 1996 1995 ​Email: [email protected] Telephone: 403-292-7500 Fax: 403-292-7532 Mailing Address: c/o ATCO Group Investor Relations 1500, 909 - 11 Avenue S.W. Calgary, AB 1994 1993 1992 1991 1990 FSC TO COME Canada T2R 1N6 AT PRESS TIME

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49 2015 ATCO ANNUAL REPORT GENERAL INFORMATION 50 700, 909 - 11 Avenue S.W., Calgary, Alberta T2R 1N6 Telephone 403-292-7500 Fax 403-292-7623

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51 2015 ATCO ANNUAL REPORT