Brookfield Renewable Energy Partners L.P.

Brookfield Renewable Energy Partners L.P.

November 08, 2012 08:10 ET

Brookfield Renewable Announces 2012 Third Quarter Results

HAMILTON, BERMUDA--(Marketwire - Nov. 8, 2012) - Brookfield Renewable Energy Partners L.P. (TSX:BEP.UN) ("Brookfield Renewable") -

Investors, analysts and other interested parties can access Brookfield Renewable's 2012 third quarter results as well as the Letter to Shareholders and Supplemental Results on the web site under the Investor Relations section at
The 2012 third quarter results conference call can be accessed via webcast on November 8, 2012 at 9:00 a.m. ET at or via teleconference at 1-800-319-4610 toll free in North America. For overseas calls please dial 1-604-638-5340, at approximately 8:50 a.m. ET. The teleconference taped rebroadcast can be accessed at 1-800-319-6413 (password: 1557#) until December 8, 2012.

All amounts in U.S. dollars unless stated otherwise

Brookfield Renewable Energy Partners L.P. today announced its results for the three and nine months ended September 30, 2012.

"Almost a year has passed since the launch of Brookfield Renewable Energy Partners and it has been tremendously successful. We have expanded our asset base by more than 600 MW while lowering our funding costs and increasing our distributions to unitholders," said Richard Legault, President and CEO of Brookfield Renewable.

"While our financial results in 2012 have been well below expectations due to unfavourable hydrological conditions, we can confidently say we have accomplished our first year objectives and with the support of our investors, created a company whose portfolio, operating platform and financial strength make it one of the leading renewable businesses worldwide. We remain very well positioned to build on these achievements in 2013."

Financial Results

Three Months Ended
September 30
Nine Months Ended
September 30
US$ millions
(except per unit amounts)
Pro forma Basis Pro forma Basis
2012 2011(1) 2012 2011(1)
Generation (GWh) 2,971 3,614 11,889 12,029
Revenues $ 229 $ 311 $ 992 $ 1,014
Adjusted EBITDA(2) $ 118 $ 223 $ 657 $ 748
Funds from operations (FFO)(2) $ 11 $ 101 $ 273 $ 381
FFO per unit $ 0.04 $ 0.38 $ 1.04 $ 1.45
(1) Pro forma results reflect new contracts and contract amendments, along with tax implications of the combination, as if each had occurred as of January 1, 2011.
(2) Non-IFRS measure. Refer to "Cautionary Statement Regarding Use of Non-IFRS Accounting Measures".

Review of Operations

Generation for the third quarter of 2012 was 2,971 GWh as compared with 3,614 GWh in the same quarter of 2011 and a long-term average of 4,049 GWh. This was primarily due to lower inflows across our hydroelectric portfolio in eastern Canada, New York state and the mid-western United States. The variance in year-over-year results also reflects above average precipitation and record rainfall in 2011 which impacted the mid-western and eastern United States. Despite the shortfall, reservoir levels on a portfolio basis are in line with long-term average levels for this time of year.

Generation from wind facilities increased 208 GWh year-over-year due to the contributions from new wind facilities in California, New England and Ontario. Results were below long-term average for the current period primarily due to lower than expected wind conditions across the U.S. and Canada.

For the third quarter of 2012, funds from operations were $11 million ($0.04 per unit) as compared with $101 million ($0.39 per unit) on a 2011 pro forma basis, reflecting the lower generation levels discussed above. The decrease in generation affected assets in markets where power purchase agreement prices are higher than our average price, which had a disproportionate impact on adjusted EBITDA and funds from operations.

For the first nine months of 2012, generation was 11,889 GWh as compared to 12,029 GWh for the first nine months of 2011 and 13% below the long term average. Funds from operations were $273 million ($1.04 per unit) as compared with $381 million ($1.45 per unit) on a 2011 pro forma basis.

The tables below summarize generation by segment and region:

Generation (GWh) Variance of Results

For the three months ended September 30
Actual 2012 Actual 2011 LTA 2012 Actual vs. LTA Actual vs. Prior Year
Hydroelectric generation
United States 889 1,503 1,378 (489 ) (614 )
Canada 705 1,030 1,232 (527 ) (325 )
Brazil(1) 868 842 868 - 26
2,462 3,375 3,478 (1,016 ) (913 )
Wind Energy
Canada 151 93 238 (87 ) 58
United States 150 - 236 (86 ) 150
Other 208 146 97 111 62
Total generation(2) 2,971 3,614 4,049 (1,078 ) (643 )
(1) In Brazil, assured generation levels are used as a proxy for long-term average.
(2) Includes 100% of generation from equity-accounted investments.
Generation (GWh) Variance of Results

For the nine months ended September 30
Actual 2012 Actual 2011 LTA 2012 Actual vs. LTA Actual vs. Prior year
Hydroelectric generation
United States 4,466 5,394 5,336 (870 ) (928 )
Canada 2,999 3,300 3,797 (798 ) (301 )
Brazil(1) 2,546 2,428 2,554 (8 ) 118
10,011 11,122 11,687 (1,676 ) (1,111 )
Wind Energy
Canada 765 407 854 (89 ) 358
United States 461 - 646 (185 ) 461
Other 652 500 417 235 152
Total generation(2) 11,889 12,029 13,604 (1,715 ) (140 )
(1) In Brazil, assured generation levels are used as a proxy for long-term average.
(2) Includes 100% of generation from equity-accounted investments.

Growth Initiatives

During the third quarter, we moved forward with a comprehensive plan to integrate a 378 MW hydroelectric generating portfolio consisting of four generating stations located in Tennessee and North Carolina. The acquisition, which was announced in June 2012, has obtained major regulatory approvals and is expected to close by the end of this year.

Construction activities at all three of our hydroelectric development projects are proceeding on scope, schedule and budget. At the 45 MW Kokish River site, clearing and excavation was completed at the intake and powerhouse sites, and the first kilometre of the project's nine kilometre penstock has been installed. The two facilities in Brazil totalling 48 MW are nearing completion and are scheduled to enter commercial operation in the first quarter of 2013.

Financial Position and Liquidity

Total liquidity as at the date of this release is approximately $1.0 billion, consisting of cash and cash equivalents and undrawn amounts from our revolving credit facilities. Liquidity increased from September 30, 2012 due to our recently completed preferred share issuance.

Despite the recent low generation levels, with cash on hand and operating cash flows we have continued to invest in multiple growth initiatives while maintaining unitholder distributions and sustaining capital expenditures. The ability to do so without increasing the amounts drawn on our credit facilities demonstrates the financial resilience of Brookfield Renewable's operations and its ability to mitigate the impact of short-term generation shortfalls on our funds from operations.

Subsequent to quarter-end, Brookfield Renewable completed the issuance of C$250 million of preferred shares, as well as C$175 million in project financing for the Kokish River hydroelectric project.

Distribution Declaration

The Board of Directors has declared a quarterly distribution in the amount of US$0.345 per unit, payable on January 31, 2013 to limited partnership unitholders of record as at the close of business on December 31, 2012. The regular quarterly dividends on the Brookfield Renewable Power Preferred Equity Inc. Series 1 and Series 3 preferred shares have also been declared.

Information on the limited partnership unit distributions and preferred share dividends can be found on Brookfield Renewable's website at under Investor Relations.

Distribution Reinvestment Plan

Brookfield Renewable maintains a Distribution Reinvestment Plan ("DRIP") which allows holders of its limited partnership units who are resident in Canada to acquire additional units by reinvesting all or a portion of their cash distributions without paying commissions. Information on the DRIP, including details on how to enroll, is available on Brookfield Renewable's website at

Additional Information

The Letter to Shareholders and the Supplemental Results for the period ended September 30, 2012 contain further information on Brookfield Renewable's strategy, operations and financial results. Shareholders are encouraged to read these documents, which are available at

Brookfield Renewable Energy Partners (TSX:BEP.UN) operates one of the largest publicly-traded, pure-play renewable power platforms globally. Its portfolio is primarily hydroelectric and totals approximately 5,000 megawatts of installed capacity. Diversified across 68 river systems and 10 power markets in the United States, Canada and Brazil, the portfolio generates enough electricity from renewable resources to power two million homes on average each year. With a virtually fully-contracted portfolio of high-quality assets and strong growth prospects, the business is positioned to generate stable, long-term cash flows supporting regular and growing cash distributions to unitholders. For more information, please visit


This news release contains forward-looking statements and information, within the meaning of Canadian securities laws, concerning the business and operations of Brookfield Renewable. Forward-looking statements may include estimates, plans, expectations, opinions, forecasts, projections, guidance or other statements that are not statements of fact. Forward-looking statements in this news release include statements regarding the quality of Brookfield Renewable's assets and the resiliency of the cash flow they will generate, Brookfield Renewable's anticipated financial performance, future commissioning of assets, the future growth prospects and distribution profile of Brookfield Renewable, the expected completion of acquisitions and Brookfield Renewable's access to capital. Forward-looking statements can be identified by the use of words such as "plans", "expects", "scheduled", "estimates", "intends", "anticipates", "believes", "potentially", "tends", "continue", "attempts", "likely", "primarily", "approximately", "endeavours", "pursues", "strives", "seeks", "targets" or variations of such words and phrases, or statements that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved. Although we believe that our anticipated future results, performance or achievements expressed or implied by the forward-looking statements and information in this news release are based upon reasonable assumptions and expectations, we cannot assure you that such expectations will prove to have been correct. You should not place undue reliance on forward-looking statements and information as such statements and information involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to differ materially from anticipated future results, performance or achievement expressed or implied by such forward-looking statements and information.

Factors that could cause actual results to differ materially from those contemplated or implied by forward-looking statements include, but are not limited to: our limited operating history; the risk that we may be deemed an "investment company" under the Investment Company Act; the fact that we are not subject to the same disclosure requirements as a U.S. domestic issuer; the risk that the effectiveness of our internal controls over financial reporting could have a material effect on our business; changes to hydrology at our hydroelectric stations or in wind conditions at our wind energy facilities; the risk that counterparties to our contracts do not fulfill their obligations, and as our contracts expire, we may not be able to replace them with agreements on similar terms; increases in water rental costs (or similar fees) or changes to the regulation of water supply; volatility in supply and demand in the energy market; our operations being highly regulated and exposed to increased regulation which could result in additional costs; the risk that our concessions and licenses will not be renewed; increases in the cost of operating our plants; our failure to comply with conditions in, or our inability to maintain, governmental permits; equipment failure; dam failures and the costs of repairing such failures; exposure to force majeure events; exposure to uninsurable losses; adverse changes in currency exchange rates; availability and access to interconnection facilities and transmission systems; occupational, health, safety and environmental risks; disputes and litigation; losses resulting from fraud, other illegal acts, inadequate or failed internal processes or systems, or from external events;
general industry risks relating to the North American and Brazilian power market sectors; advances in technology that impair or eliminate the competitive advantage of our projects; newly developed technologies in which we invest not performing as anticipated; labour disruptions and economically unfavourable collective bargaining agreements; our inability to finance our operations due to the status of the capital markets; the operating and financial restrictions imposed on us by our loan, debt and security agreements; changes in our credit ratings; changes to government regulations that provide incentives for renewable energy; our inability to identify and complete sufficient investment opportunities; the growth of our portfolio; our inability to develop existing sites or find new sites suitable for the development of greenfield projects; risks associated with the development of our generating facilities and the various types of arrangements we enter into with communities and joint venture partners; Brookfield Asset Management's election not to source acquisition opportunities for us and our lack of access to all renewable power acquisitions that Brookfield Asset Management identifies; our lack of control over all our operations conducted through joint ventures, partnerships and consortium arrangements; our ability to issue equity or debt for future acquisitions and developments being dependent on capital markets; foreign laws or regulation to which we become subject as a result of future acquisitions in new markets; the departure of some or all of Brookfield's key professionals.

We caution that the foregoing list of important factors that may affect future results is not exhaustive. The forward-looking statements represent our views as of the date of this news release and should not be relied upon as representing our views as of any date subsequent to November 8, 2012, the date of this news release. While we anticipate that subsequent events and developments may cause our views to change, we disclaim any obligation to update the forward-looking statements, other than as required by applicable law. For further information on these known and unknown risks, please see "Risk Factors" included in our Annual Information Form.


This news release contains references to Adjusted EBITDA, funds from operations and net asset value which are not generally accepted accounting measures in accordance with IFRS and therefore may differ from definitions of Adjusted EBITDA, funds from operations and net asset value used by other entities. We believe that Adjusted EBITDA, funds from operations and net asset value are useful supplemental measures that may assist investors in assessing the financial performance and the cash anticipated to be generated by our operating portfolio. None of Adjusted EBITDA, funds from operations and net asset value should be considered as the sole measure of our performance and should not be considered in isolation from, or as a substitute for, analysis of our financial statements prepared in accordance with IFRS. As a result of the Combination, we have presented these measurements on a pro forma basis.

A reconciliation of Adjusted EBITDA and funds from operations to net income is presented in our Management's Discussion and Analysis related to our interim consolidated financial statements.

References to Brookfield Renewable are to Brookfield Renewable Energy Partners L.P. together with its subsidiary and operating entities unless the context reflects otherwise.
1 The unaudited pro forma financial results have been prepared based on currently available information and assumptions deemed appropriate by management. They are provided for information purposes only and may not be indicative of the results that would have occurred had the combination been effected on the date indicated.
2 Adjusted EBITDA means 100% of revenues less direct costs (including energy marketing costs), plus our share of cash earnings from equity-accounted investments, before interest, current income taxes, depreciation, amortization and management service costs. Funds from operations is defined as Adjusted EBITDA less interest, current income taxes and management service costs, which is then adjusted for non-controlling interests. A reconciliation of net income to funds from operations is available in Brookfield Renewable's Supplemental Results for the third quarter of 2012 at
3 Average number of units outstanding on a fully diluted weighted average basis for the three and nine months ended September 30, 2012 was approximately 262.5 million (2011 - 262.5 million).
EBITDA and Funds from Operations
Three Months Ended September 30 Nine Months Ended September 30
forma Basis
forma Basis
(MILLIONS, EXCEPT AS NOTED) 2012 2011 2012 2011
Generation (GWh) 2,971 3,614 11,889 12,029
Revenues $ 229 $ 311 $ 992 $ 1,014
Other income 2 7 12 17
Share of cash earnings from equity-accounted investments 3 7 11 19
Direct operating costs (116 ) (102 ) (358 ) (302 )
Adjusted EBITDA(2) 118 223 657 748
Interest expense - borrowings (99 ) (104 ) (313 ) (304 )
Management service costs (10 ) (4 ) (25 ) (15 )
Current income taxes 1 (1 ) (12 ) (7 )
Cash portion of non-controlling interests 1 (13 ) (34 ) (41 )
Funds from operations(2) $ 11 $ 101 $ 273 $ 381
(1) Pro forma results reflect new contracts and contract amendments, along with the tax implications of the Combination, as if each had occurred as of January 1, 2011.
(2) Non-IFRS measure. Refer to "Cautionary Statement Regarding Use of Non-IFRS Accounting Measures".
Net Asset Value
Total Per Share
Sept. 30 Dec. 31 Sept. 30 Dec. 31
(MILLIONS, EXCEPT AS NOTED) 2012 2011 2012 2011
Property, plant and equipment, at fair value
Hydroelectric(1) $ 12,392 $ 12,463 $ 47.20 $ 47.47
Wind energy 2,303 1,480 8.77 5.64
Other 89 86 0.34 0.33
14,784 14,029 56.31 53.44
Development assets 445 378 1.69 1.44
Working capital and other, net (13 ) 380 (0.05 ) 1.45
Long-term debt and credit facilities (5,850 ) (5,519 ) (22.28 ) (21.02 )
Participating non-controlling interests (728 ) (629 ) (2.77 ) (2.40 )
Preferred equity (250 ) (241 ) (0.95 ) (0.92 )
Net asset value(2) $ 8,388 $ 8,398 $ 31.95 $ 31.99
(1) Includes $307 million of equity-accounted investments (2011: $405 million) and $49 million of intangible assets (2011: $57 million).
(2) Non-IFRS measure. See "Cautionary Statement Regarding Use of Non-IFRS Accounting Measures".

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