TransCanada Profit Falls on Declining Power Prices

TransCanada Corp., the energy company proposing to build North America’s largest oil pipeline, said third-quarter profit fell as Alberta electricity prices declined.

Net income dropped to C$457 million ($400 million), or 64 cents a share, from C$481 million, or 68 cents, a year earlier, the Calgary-based company said in a statement on Marketwired today. Excluding one-time items, per-share profit beat by 1 cent the average of 10 analysts’ estimates compiled by Bloomberg.

TransCanada is seeking to boost transportation of crude from Alberta’s oil sands with Keystone XL and the proposed C$12 billion Energy East line, which would be the continent’s biggest oil conduit. The company also has about 11,800 megawatts of power plants in operation or under development and it stores and transports natural gas.

“We are most concerned about Alberta power prices,” Robert Kwan, an analyst at RBC Capital Markets in Vancouver, wrote in an Oct. 20 note about Canadian energy infrastructure companies. TransCanada was exposed to lower power prices in both Alberta and Ontario in the quarter, he said.

Alberta power prices fell about 25 percent from a year earlier to average C$64 a megawatt-hour, according to data from the province’s electric system operator .

About 36 percent of TransCanada’s sales last year came from generating electricity, the natural gas pipeline division delivered 51 percent and oil pipelines 13 percent.

The company has been awaiting a U.S. decision since 2008 on its Keystone XL pipeline proposed to carry oil-sands crude to Gulf Coast refineries. A ruling on Keystone XL may come soon, Secretary of State John Kerry said last week. The company said today the cost of the project has increased from $5.4 billion to $8 billion.

TransCanada applied last week with Canadian regulators to build Energy East. That project will stretch from Alberta to Canada’s Atlantic Coast.

TransCanada reported the results before the start of regular trading on North American markets. The stock, which has five buy, seven hold and three sell recommendations from analysts, fell 0.9 percent to C$55.03 yesterday in Toronto.

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