Good morning, and welcome to AltaGas's 2021 Investor Day. My name is Jon Morrison, and I'm Senior Vice President of Investor Relations and Corporate Development at AltaGas, and we're incredibly pleased that you've taken the opportunity to be with us here today. Before we begin, we'd like to remind everyone that over the course of today, we will be making forward-looking information statements. This information is subject to certain risks and uncertainties as outlined in the forward-looking information disclosure on this slide. This can also be found on our website and more fully within our public disclosure filings on SEDAR and EDGAR. After a period of large change and transformation, we're pleased to host our first Investor Day in a number of years.
There will be a lot of information that we're gonna wanna cover over the course of the day, but it will largely focus on three main areas. One, revisiting the journey that we've been on over the past few years. Two, sharing our philosophical views about how to run the platform. And three, discussing the road ahead. From a structure of how the day will unfold, we'll start with Pentti Karkkainen, our Chair and an Independent Director, sharing some opening remarks from the board. Then we'll cover the core material over the course of the day in five major sections, including Randy Crawford, our President and CEO, sharing our vision and strategic roadmap, followed by Blue Jenkins, our Utilities President, who will provide an update on our utility strategy.
We'll have Jon , our Midstream President, provide an update on our midstream strategy, followed by Shaheen Amirali, our Chief External Affairs and Sustainability Officer, who will share our ESG strategy. We'll close with James Harbilas, our Chief Financial Officer, who will share our capital and return strategy. We'll conclude the day with a moderated Q&A session where participants can ask questions. This includes a combination of questions through the chat function on the webcast and live questions over the phone. As we move through the material over the day and questions arise, please post those questions on the webcast as they come up so we can try to get through as many of them as possible at the end.
You can ask questions anonymously or include your first and last name and the firm that you represent when you chat, when you put your questions into the chat function. One final piece is we're gonna try to keep the day running as smooth as possible and on schedule to be respectful of your time. As such, we're gonna keep the sessions back-to-back without any breaks. We look forward to the day, and we hope you find it valuable. With that, I'll turn it over to Pentti.
Thank you, Jon. Good morning, everyone. Our governance philosophy and commitment. After very few years as a company and a board, we are excited to be here with you giving an update on the past few years and what the road ahead will look like. Robust governance and strong leadership are core to achieving our strategy and delivering sustained value for our shareholders. This has been a driving force behind many of the transformational changes that have taken place within AltaGas over the last few years, as we carefully balance our need to strengthen the company's organizational capacity, increase the diversity of seasoned perspectives that drive decisions within our organization, and benefit from the strong institutional knowledge that exists within the platform. Together, we believe this will allow us to drive the best outcomes for our stakeholders.
On behalf of AltaGas's Board of Directors, I thank you for taking the time to be with us today and for partnering with us on this journey. Governance and leadership are the foundation upon which all sustainable purpose-built enterprises grow and prosper. Robust governance, the ability to challenge each other and to listen to each other starts with trust and respect for each other. It's from this foundation that the board works with leadership to achieve AltaGas's long-term strategic objectives and deliver growth and sustainable value for all our stakeholders. As the stewards of our company, the Board of Directors provides the necessary foresight, oversight, and insight to guide the organization and ensure the highest ethical standards are maintained at all times. Effective and inclusive decision-making, though, demands the right mix of both business and personal backgrounds.
It means having a board of directors with the experience, expertise, diversity of thought, and curiosity necessary to guide AltaGas's longer-term sustainable ambitions. It's with this objective in mind that we purposely pursued an orderly transition of the board through planned retirements over the last three years and added directors with the skills, diversity, and attributes necessary to guide the evolving needs of the company. We're proud of the team we've put together and the diversity we've achieved. We are committed to maintaining it and ensuring diverse attributes are considered in all director appointments. We would like to begin by acknowledging the indigenous peoples of all the lands that we are on today. We are joining you today from the Grand Theatre in the historic Lougheed Building in downtown Calgary, which is a building that has been part of the city's rich history for more than a century.
It's housed on the traditional land where the Blackfoot of Siksika, Kainai, and Piikani would gather with the Tsuut'ina and Îyârhe Nakoda Nations, Métis Nation of Alberta Region 3, and other communities and peoples that form the Treaty 7 region of Southern Alberta. As a larger community, we are also meeting today on a virtual platform, and I would like to take a moment to acknowledge the importance of the lands which we each call home. We do this to reaffirm our commitment and responsibility to improving our understanding of local indigenous peoples and their cultures. From coast to coast to coast, we acknowledge the ancestral territory of all the indigenous peoples that call this land home. At AltaGas, we recognize that each community in which we operate is unique. This is the foundation from which we engage with our stakeholders.
To meet each community's individual needs, we strive to build long-term collaborative relationships that are based on trust and a willingness to listen, learn, and adapt. We take an inclusive approach to our Indigenous partnerships to ensure we respect traditions, culture, and perspectives as we work to ensure mutually beneficial solutions to generate long-term value for all our stakeholders. Thank you for the continued partnership and building our communities and a broader society that we can be proud of. With that, I will pass it over to Randy, our President and CEO, to share our vision and strategic roadmap.
Good morning, everybody, and thank you for taking the time to be with us today. After a very busy three years, I'm excited to be here as we host our first investor day since I joined the company. The purpose of today's meeting is to elaborate on the opportunity set that we have in front of us as a company and provide a forum for you to interact with the team at AltaGas. They are the ones in charge of delivering all of this work over the next few years, and they've been responsible for pulling off a lot of the success that we've had to date.
As I said when I first joined AltaGas nearly three years ago to the day, I saw a lot of opportunity here, and I believe that we are seeing that play out in the operational and financial results that we have delivered over the past three years. I also believe that the company has a tremendously bright future with market growth opportunities across our utilities and our midstream platforms. Hopefully, you come out of today's session with a similar view of the positive growth trajectory that we see in front of us. Just some general comments before we get started on the slides. The visible near-term growth opportunity for the company and the potential for future growth I see today, it far exceeds any notion that we had thought was possible even a year ago today.
We've been describing our enthusiasm around that growth to you through bits and pieces over the past few quarters. It is my hope today that you will see all of those pieces come together in a cohesive, achievable strategic plan. At a high level, setting aside any execution issues which will inevitably always exist, our business model has evolved to a rather straightforward model, complex to execute, but simple in concept. With that said, the purpose of the meeting is to share the details of our mission to improve the quality of life by safely and reliably connecting customers to affordable sources of energy for today and tomorrow. In doing so, in an operationally efficient and cost-effective manner, I feel certain that we can execute the plan we will present to you today. This slide I would use if I only had one in the presentation.
Call it my elevator pitch slide. With this slide, I could tell you everything you need to know to make what I believe would be a highly rewarding investment in AltaGas. Our focus is twofold. One is to connect our customers to domestic and global markets, and two is to operate both our utility business and our midstream business in an operationally excellent manner. That is to be the low cost provider of services and to create value for our customers and our shareholders. In our midstream business, we have an excellent footprint in an extremely prolific Canadian Montney Basin. Our fundamental assumption underlying our midstream strategy is that the marginal molecule of natural gas and liquids in Canada will most profitably be exported, not to the U.S., but to Asia.
The growing demand for energy in Asia will be the driving force behind our Canadian midstream business and has been. Leveraging our first mover advantage as the first and only company with the capability to export LPG to Asia through very large gas carriers is paramount. At our utility, we will continue to invest to reduce costs and improve the customer experience. We will achieve that by targeting the chronic pipe that is creating the leaks and improving the productivity of the pipeline capital. The success we achieve in executing this initiative will ultimately reduce cost that will be able to be invested in improving the customer experience. Simply put, the objective is to lower our cost and provide value to our customers. As we accomplish this, we look for ways to reduce our environmental footprint as that is our social license to grow this business.
A little bit about who we are. We are driven by our vision and our mission. Since joining AltaGas three years ago, one of my first steps was to illuminate our core values in our leadership competency model. I firmly believe it is our unwavering commitment to our core values, mission, and through it all, doing what is right that has guided us successfully through these unprecedented times. Our approach to governance and how we invest and support our people, customers, communities, and the environment allow us to build sustainable and financially successful future. Our core values also reinforce AltaGas's commitment to integrating strong health and safety, social and governance performance into all aspects of our business.
These efforts support our strategy by allowing us to be more responsive to customer needs, better manage risk, attract and motivate, and retain talent that we need to bring to our communities we serve. Our mission is to improve the quality of life by safely and reliably connecting customers to affordable sources of energy for today and tomorrow. It's the foundational principles of our mission that are focused on the safe, reliable operations, improving the quality of life through the delivery of the energy to our customers and honoring our social and moral commitment, or as I like to say, doing what is right every day. We understand and we firmly believe that access to affordable energy reduces poverty and it improves the quality of life. Through the access of abundant and affordable energy, we can fuel economic expansion, which creates jobs and drives better outcomes.
We remain committed to continuing our history of proven energy innovation and a focus on environmental, social, and governance issues. As Jon mentioned, there are three key themes that will run throughout the day. First, we're gonna revisit the journey that we've been on, sharing our philosophical views, secondly, about running the platform and discussing what we believe matters for long-term value creation. We'll discuss the road ahead and what we can expect from AltaGas in the days ahead. This will also include giving an understanding of our forward growth trajectory, which I believe you'll find will be robust as we have large growth opportunities in both of our platforms that we believe will allow us to create compounding value for our shareholders.
The journey that we've been on, in order for you to understand where we are going and what we wanna be as a company, I thought we'd spend a little bit of time on where we've been and where we are today. When I came to AltaGas three years ago, we were in a tough spot. We took a company that had a significant liquidity and operational challenges, and we turned it around, but we also positioned it with a very bright future. The acquisition of Washington Gas Light, was planned to be transformational, and it would increase the scale in all of our segments. While it still remains transformational, unfortunately, the acquisition took 18 months to gain all the necessary approvals, and during those 18 months, the world changed.
The value of equity declined, and we were unable to raise the money we planned through equity issuances. When I came in December, we had a debt-to-EBITDA of more than 10 times. We'd already decided that we needed to sell more assets, and we sold the remainder of Northwest Hydro. As we looked at the three businesses, it was clear to me that we had opportunities to grow the Canadian midstream by leveraging our unique core competency and our export capability. When I looked at the utilities, I saw an amazing opportunity to improve system through replacement of aging infrastructure and the use of accelerated recovery mechanisms to earn the return faster, more timely. The good news was we had a tremendous opportunity to grow through these two core businesses.
The bad news is we did not have ample funding to be able to take advantage of all these opportunities. What did we say we would do, and what did we do? In late 2018 and early 2019, we shared our plan internally and externally. We said we would reposition the platform and transition to a lower risk, high growth utilities and midstream platform. We focused on operational excellence in our core assets. We would promote high performers and next generation leaders and add external talent where we needed. We would complete non-core asset sales to de-lever the balance sheet. We would avoid equity issuances to protect shareholder upside. We would also upgrade systems and processes and adopt digitalization opportunities centered on improving the core operations.
Today, by staying the course with our foundational principles, we have the asset sale process behind us. Our debt-to-EBITDA ratio is at 5x and heading lower, and we are now financially healthy, and we can focus on the growth opportunities in front of us. We have successfully repositioned the business, and now we operate two strong businesses, supported by a common platform. We are focused on building this foundation, leveraging core competencies, and renovating, innovating our approach to business. At our midstream business, we've focused on our unique core competency, as I said, the most valuable capability, our ability to export. We continue to expand this capability, and we're building a growing business around it. Recently, we eclipsed a 100,000 barrels a day threshold, and we have a vision to grow our export capability to 200,000 barrels a day.
At the utility, we continue to focus on an operational excellence approach to the way we do business by replacing aging infrastructure, reducing leaks, improving our cost structure and returns, and focusing on the customer. We continue to believe we can grow our utility rate base organically at 8%-10% per annum and approaching $7 billion in rate base by 2026. We've been building out the leadership team, taking the many steps to set the processes, the framework to define the utility's operational excellence model. Through predictive modeling, we've revamped our capital deployment and our financial discipline. We are building the capability to make better decisions to maximize the value of our capital dollars. We added key executive talent, and you're gonna hear from a few of them today. We promoted high performers, and we've developed the next generation of leaders.
Across the enterprise, we continue to work towards the creation of a culture of innovation. As the introduction of new technology is progressing and is openly welcomed throughout the organization. We instill disciplined capital allocation process with a self-funding model for four years running. As we continue to focus on execution, the safety of our employees and the communities in which we operate is always our number one priority. Our focus remains on ensuring that our critical infrastructure operates safely and reliably and continues to provide affordable energy to our customers when they need it. We were able to accomplish all of this while creating significant shareholder upside by raising no equity and eventually returning to a model where we would grow our dividends. As we announced for the second year in a row, the increase of our dividends.
Since becoming CEO, we have focused the culture on delivering outstanding results for our shareholders, which has become a key element of the AltaGas value proposition. While the past two years have come with some headwinds, our key accomplishments have set this up to withstand these challenges, and we've emerged even stronger. Through the successful execution of our plans, AltaGas continued its third year of delivering value for shareholders, with earnings per share forecasted to be up almost 50% from 2019 and more than 25% even after removing the one-time gains related to the U.S. transportation storage business. We executed bottom-cycle M&A, which is the time you wanna do so. We restructured our business. We have a stronger balance sheet and no one, including shareholders and analysts, is questioning our dividend now or into the future.
In fact, we've increased it by 4% in 2021 and 6% in 2022, and we are well-positioned to continue these increases in the years ahead, further evidencing to the market the confidence in our business plan. Our strategy is working, and it's driving a different forward trajectory. The steps we've taken over the past 3 years have changed that trajectory in our company, and the results can be clearly seen on this slide. We've completed the acquisition of Petrogas, along with the first phase of the integration, structurally reduced capital and operating costs, and positioned us to continue to provide significant customer and shareholder value. We've doubled our market cap. We've decreased our net debt by more than 20%. We've cut leverage ratios in half, and we've increased EBITDA by 50% over this period.
Over the past 3 years, we forecast that we will deliver compounded annual growth and normalized EPS at 12%, which is the highest among Canadian utility and midstream companies who have achieved an average compounded annual growth rate of less than 3% over the same period. Turning to the road ahead, we are very excited about how the coming years will look in terms of the opportunity and growth trajectory. It's because of our commitment to excellence that we were able to deliver above and beyond our goals in 2021, and that's why I remain as confident as ever in our ability to deliver on all of our expectations moving forward. Our strategy incorporates the commitment to continue our history of proven energy innovation and focus on environmental and social and governance issues.
We will be continuing to work to position both the utility and midstream platforms, though, for the emerging alternative energy sources. Both AltaGas and Washington Gas have excelled in bringing new clean energy sources to customers. Of note, WGL has filed the Washington, D.C. Commission our plan to deliver on our commitment to help Washington, D.C. and our world to meet future climate goals. Through collaboration with regulators, we will implement the steps toward decarbonization. We believe those steps will provide us the opportunity to continue to leverage our resilient, vast, and established energy delivery and storage system to reduce emissions while providing affordable and reliable energy. I'll touch just a bit on our corporate strategy, which is to invest in and operate long-life infrastructure assets that provide resilient and durable value for our stakeholders.
We're focused on organic growth that will deliver steady returns that compound value over time. We measure our financial success based on earnings per share and FFO per share. We are focused on continued growth in these two metrics and the durability which underpins them. We remain focused on completing the final steps of our leverage journey, our leverage reduction journey. We believe this strategy will deliver strong long-term returns, fund ongoing and compounded dividend growth, and provide the opportunity for continued capital appreciation. As we look forward and we see the potential these businesses have to continue to grow and participate in the emerging fuels of the future, I truly believe that we have an enviable value proposition, and I'm really excited about this. It seems so clear. It's well within our grasp if we continue to develop and execute on our operational excellence model.
As such, we're taking steps to reduce our carbon footprint in support of the low-carbon economy, and you're going to hear that covered in more detail in Randy and Blue and Shaheen's sections in terms of the initiatives that we're driving across our midstream and utility businesses. Through it all, we'll be focused on building a sustainable future and investing in better outcomes for all of our stakeholders. Both our utility and midstream businesses are well-situated in the transition to a lower carbon world. At the utility, we continue to focus on the elimination of methane leaks through our system betterment and accelerated pipeline investments. These efforts position us to deliver the future energy economy, including RNG and hydrogen. At midstream, we are focused on building scale, increasing the value of our export facilities.
We're also keenly attentive to the reduction of our methane and GHG emissions at our existing processing and fractionation facilities, as well as our export facilities. It's important to note, RIPET was designed and built to minimize its environmental footprint, and we are also beginning to focus on that role that export facilities will play in the emerging fuels of the future. In short, we are focused on reducing our environmental footprint through decarbonization of our energy delivery systems and maximizing the benefits for our customers, communities, and shareholders. I wanna take a moment and talk about the hydrogen opportunity. We firmly believe that natural gas and LPGs will continue to be part of the energy evolution for a long time. We also believe, though, that hydrogen will play a significant role, and we wanna be part of that conversation.
Our businesses are well-positioned to capture the emerging opportunity. It's a great fit for the capability of our assets. Our utilities can blend hydrogen into the system, and in the long run, we have the potential to develop hydrogen pipeline corridors that will create dedicated hydrogen system for industrial applications and data center backup power. In the midstream, our export platform is so well-positioned to export hydrogen and other energy sources, such as ammonia, should these products become valuable across the globe. We're positioned to play a role in hydrogen and potentially the ammonia space. The world's moving quickly in the development of these cleaner burning fuels. In fact, Mitsubishi recently announced plans to build an ammonia plant in Alberta for demand markets in Japan.
It's important to note that ammonia needs to cross the Pacific, and our export capabilities and our scale and platform are positioned to potentially play a role in this project and others as well as other projects of this nature, so I'm excited about that opportunity. A little bit about the utility strategy and our priorities. Priorities for our utilities, I think, are straightforward. We've made a lot of progress in the past three years in closing the return on equity gap at WGL, and our focus today is centered on maintaining that discipline and continuing to demonstrate strong financial performance as we've shown. As you're aware, accelerated pipeline replacement provides us the opportunity to invest in our distribution system and to upgrade our system to maintain safe and reliable systems, replace chronic pipe, reduce leaks, and ultimately reduce our environmental footprint.
As you can see by the chart, our capital investments have reduced non-fuel O&M costs while driving meaningful improvements in emissions and reliability, and we are focused on the same operational excellence going forward. Now turning to Midstream. It's our industry-leading West Coast LPG export capability that will drive growth across this midstream platform and has been to date. It's the underlying competitive advantage of our distinctive export business is the structural shipping advantage that we possess. It is this advantage that gives me great confidence in the future. Our increased ownership and ability to operate Ferndale has provided us additional scale and has positioned us to realize synergies and increased optionality. It is our intention to continue to increase the scale of our export platform. The robust demand in Asia for LPGs and other energy sources, coupled with our structural advantage with optionality at both terminals.
This includes our land position at Ferndale, which provides AltaGas the opportunity to build this additional scale and throughput capacity to achieve significant future growth. We are also continuing to evaluate direct market related opportunities through AltaGas leased ships and demand-side tolling agreements. In the years ahead, we are focused on the continuing leverage of our core competencies, and we remain focused on connecting customers to markets for today and tomorrow, and that will mean continued growth in our global exports platform. Midstream priorities as well are straightforward. In short, in the short term, we're focused on increasing utilization of Ferndale and RIPET. The bulk of the investment has already been made, and therefore, the go-forward returns are robust. We're committed to improving our logistics capabilities to ship incremental supply and reduce costs to both RIPET and Ferndale.
The constant demand of our export facilities create a natural fit for unit trains, which increase supply and lower costs. We must continue to leverage our premium export market to maximize the utilization of our Northeast British Columbia assets, where again, the returns previously invested capital are significant. We will continue to access opportunistic upstream investments to strategically control supply and support export growth and stability. In addition, we need to prepare ourselves for the future. We should understand and position the facility in exporting of renewable energy sources should that demand develop. As you can see in the slide, the road ahead is very similar to our focus over the past years, only with a little stronger focus on adapting and responding to the world around us that is always changing.
I wanna just close on our value proposition, which is centered on continuous focus on compounded value for our stakeholders. We operate a diversified infrastructure company with a robust pipeline of low risk growth opportunities. We have a streamlined platform with track record on delivering. We have shown industry-leading earnings per share and FFO per share growth and stock performance since 2019. We have a distinctive energy platform that is well-positioned for growth. We have strong expected dividend growth, and we're targeting 5%-7% dividend and cumulative annual growth rate through 2026. We've built a strong management team, and we've shown disciplined allocations of capital. We have a very solid base of business and a suite of assets to position us to continue to play a leading role in the evolving energy world, and I couldn't be more excited.
With that, I would like to turn it over to Blue Jenkins, our Executive Vice President and President of our Utilities businesses.
Thank you, Randy, and good morning, everyone. Our regulated utilities provide safe, reliable, and affordable energy. We have a great footprint, serving approximately 1.7 million customers across three major U.S. utilities and operate in five strong economic growth regions in the U.S., including D.C., Virginia, Maryland, Michigan, and Alaska. With over $4.5 billion in rate base, these businesses account for just over 55% of AltaGas's operational earnings and provide our shareholders with visible lower risk earnings and cash flow growth. As a provider of essential services, we're focused on safely, reliably, and affordably providing the much-needed energy to the homes and businesses of our utility customers. We are pleased with the strength and stability that our utilities have exhibited through a global pandemic.
We've been able to maintain strong operations and deliver the critical energy needed by our customers throughout this unprecedented time. Each of our gas utilities operate under a regulated cost of service rate structure that have very limited variability or sensitivity in annual earnings. This resiliency has been highlighted over the past two years, where we saw only a modest impact on our operations and financial results. In support of our broader strategy, we are committed to building a high-performance culture dedicated to operational excellence at all our utilities, and we are focused on achieving sustainable operational efficiencies and improved financial performance. We must continue to prioritize the health and safety and wellbeing of our employees, customers, and communities.
Our purpose is to provide our 1.7 million residential and commercial customers with safe, reliable, and affordable energy to heat and power their homes and places of work and to fuel their daily lives. When we talk about purpose, we focus on ensuring that we can and will reliably, safely, and affordably deliver the fuels of today and tomorrow. It is for this reason that we are committed to continuous improvement, providing a better customer experience, upgrading our network, and positioning our utilities for the changing world around us. Our strategy is to operate a safety-focused, digitally enabled, and high-growth utility that exceeds our customers' expectations and excels in the changing energy ecosystem. It's driven by an intense focus on operational excellence, which we define as, 1, operating a safe and reliable system. 2, providing exceptional and affordable service to the customers we serve.
Three, reinvesting into our net asset network for the growth and betterment of all our stakeholders. As mentioned earlier, there are three key themes that we'll talk about throughout the session. One, revisiting the journey that we've been on within the utilities platform. Two, sharing our philosophical views about running the platform and discuss what we believe matters for long-term value creation. Three, discussing the road ahead and what you can expect from our utilities in the days and years ahead. When we closed the WGL transaction back in 2018, we already had two strong U.S. utilities in SEMCO Energy and ENSTAR/CINGSA, both of which were exhibiting characteristics of operational excellence as both were earning their allowed returns and both had strong customer service records. WGL needed large improvements. The platform was not earning its allowed returns across its jurisdictions.
Operating costs were quickly rising, and leak rates were increasing. In 2019, we outlined our commitment to operational excellence and the process by which we would enable a performance-based culture at WGL. We are pleased with the significant progress we have made to improve business processes, maintain a disciplined approach to capital investment, and aggressively manage costs to improve the customer experience and returns, all while growing our rate base. Over the past three years, we have embarked on a focused regulatory strategy to update our rates across all jurisdictions, close the ROE gap to be relatively in line with our allowed return, taken a disciplined approach to capital allocation, and have deployed over $700 million in accelerated pipeline spending, improved business processes, thereby reducing our operating costs, and driven down leak rates by double-digit percentages.
Our stakeholders are benefiting from the purposeful actions that we have taken. The full year 2021 expected ROE at WGL increased by approximately 120 basis points year-over-year, driven by ongoing capital, regulatory, and cost discipline. That builds on a 150 basis point improvement that was delivered in 2020. Disciplined cost management practices, which will result in substantially lower operating costs in 2021, down over $20 million to the expected operating budget. Our data-driven advanced analytic tools give us the ability to more effectively deploy capital to drive down our operating costs, reduce leaks, and improve our overall service. We can see the benefits of these in our results as we have successfully reduced the incoming leak rates by another 13% year-over-year and drove down leak repair costs 15% compared to 2020.
This has led to an expected normalized EBITDA growth in our regulated utilities of approximately 17% over the past two years. These focused actions directly support our broader corporate strategy of building a diversified, lower risk business platform that provides strong growth and durable value for our shareholders, both near and long term. As we look ahead, we are heavily focused on the emerging energy ecosystem and the role that AltaGas will play within it. We think it's important to note that we believe natural gas will be one of the transition fuels of the future, and is a very important part of consumer affordability and emission reductions over the past decade in the United States. Ensuring our customers have access to safe, reliable, and affordable energy is a top priority for us.
Natural gas accounts for approximately 70% of household energy demand in the jurisdictions in which we operate, and costs 60% less on a full cycle basis compared to electricity, while emitting 20% less CO2 on a full cycle basis. We have a strong focus on affordability over this energy evolution, and we will continue to advocate for our customers' best interests through this transition, and that means taking a balanced approach to energy choice. Energy choice is an important element to affordability, and we will advocate for our customers in this process to keep total cost of energy lower and ensure they have affordable energy choice to fuel their lives. When we look at the substitution cost of electricity, we do not view it as a palatable substitution in a one-size-fits-all approach to energy.
This is why we are focused on reducing emissions across our operations, promoting energy efficiency, and advancing alternative fuels like RNG and hydrogen as a way to further advance our own emissions goals and leverage the critical infrastructure that exists already in the jurisdictions in which we operate. While we are strongly focused on the energy evolution, we can't lose sight of the fact that natural gas will remain a critical transition fuel. Through the energy evolution, AltaGas will tirelessly advocate for our customers' long-term interests with a focus on safety, reliability, and affordability. AltaGas will continue delivering the positive benefits of natural gas, including the emissions reduction benefits, versatility, low cost, and the economic prosperity that comes with its use. When we look at the road ahead, we get excited on a number of fronts.
Our high-level priorities are consistent and build on what we have done over the past three years. This includes, one, maintaining the strong improvement that has been shown in the operational and financial performance since 2019. Two, continuing to focus on safety and reliability, better customer outcomes, and environmental benefits, which also steadily grow our rate base. Three, positioning our utilities for the future, including providing low-carbon and no-carbon solutions with renewable natural gas and hydrogen. Our accelerated replacement programs increase the safety and reliability of the network, reduce leak rates and environmental impacts, all of which center on better outcomes for our customers. These accelerated programs allow us to upgrade our network by replacing cast iron and bare steel pipe with new corrosion-resistant, high-density polyethylene pipe.
We focus on pipeline replacement to get the most out of our capital investment to reduce incoming leaks and emissions, drive down costs, and allow us to earn immediate returns on our investments. Since taking control of WGL back in 2018, we have invested more than $1.3 billion to upgrade our systems, including $700 million in these accelerated pipeline programs. We currently have accelerated replacement programs in each of our WGL jurisdictions as well as at SEMCO Energy, and we have increased our utilization of these programs in 2021 by 20%, all of which is focused on modernizing our infrastructure and driving better outcomes for all of our stakeholders.
We recently filed the largest accelerated pipeline case in Virginia's history through the SAVE Plan, and have requested approximately $900 million in accelerated capital from the State Corporation Commission to continue modernizing our infrastructure across the Commonwealth during the period between 2023 and 2027. With a strong focus on capital planning and execution, we continue to modernize our system and reduce the environmental impact by upgrading targeted classes and segments of pipes across our jurisdictions. In 2022, approximately 80% of the utility capital plan is immediately recoverable within rates through the accelerated pipeline mechanisms and along with the majority of maintenance capital spending that is structured to match depreciation. This focused approach allows us to continue to invest increased capital in our system, upgrading, and minimizes the lag impact of that capital.
We expect strong, high-single-digit rate base growth through our planning period to 2026, underpinned by the need to invest in and upgrade our aging infrastructure. We have good visibility towards this growth through our secured APR programs that I just discussed, combined with ongoing maintenance and system betterment spending. New customer growth at WGL continues to track ahead of expectations and is in line with the population growth we've seen in the DMV area over the past decade, which has been higher than the national average by nearly 25% since 2010. New meter growth continues to be strong, and we expect that to continue throughout the planning period.
Our utilities capital continues to be weighted to either maintenance or accelerated pipeline spending outside of some new business initiatives, which is really meter growth through new customer connections, which, again, gives us very good visibility for the high rate and low-risk growth through 2026. Our distribution networks enable us to deliver low-carbon natural gas today and provide a foundation for the delivery of lower and no-carbon solutions in the years ahead, including natural gas and hydrogen. We believe that natural gas will be the transition fuel for a very long horizon, and we're doing our part to reduce emissions and drive the best outcomes for our customers and the environment. We are focused on reducing our emissions and assisting our customers to do the same.
We have taken our learnings from the DC Climate Business Plan, which we filed back in March 2020, to implement emissions targets across the utility. The targets have been identified within our 2021 ESG report, which was released today. That includes reducing WGL scope one and scope two emissions by 30% by 2030, and reducing scope three emissions or our customer emissions by reducing the carbon content of our gas. We're aiming for about 10% of our supply to be sourced from low carbon fuels by 2030. We plan to achieve these by continuing to upgrade our system through pipeline replacements to reduce incoming leaks and methane emissions, and preparing our infrastructure for the delivery of emerging alternative fuels of the future.
We are looking at new technologies like advanced leak detection within our utilities business to bring new ways to identify, track, and measure methane with real-time data. We are currently conducting a pilot program that applies advanced satellite technology to identify areas of emissions. We expect the results of this pilot to enhance our ability to identify and then reduce leaks, thereby reducing emissions. We are pleased with the headway we have made in promoting combined heat and power to larger commercial and industrial customers this year, which is advancing our lower carbon focus that is also part of our climate business plan. We will enhance our energy efficiency programs aimed at reducing customer demand, and we will introduce emerging technologies such as gas heat pumps.
Through EmPOWER Maryland, we received approval for our first pilot program in October of this year, and that will consist of identifying, installing, testing, and monitoring the performance of gas heat pump equipment to verify the energy savings across multiple customer segments and end use categories. We will look to decarbonize the gas supply with certified gas and RNG, pursuing RNG investments through local interconnection opportunities. We will evaluate options for fleet vehicles, reducing emissions within the neighborhoods in which we work, and we are applying innovative technology solutions to venting, such as capturing those emissions and re-inject them back into the gas stream. We will advocate for public policy and the support of our regulators to advance these initiatives. We have launched a new program called CleanSteps at WGL Energy, our unregulated retail business, and that will enable customers to offset their out-of-home carbon footprints.
CleanSteps continues the legacy of climate-friendly offerings to our customers. We view AltaGas' role in the energy transition is to focus on reducing emissions across our operations and investing in energy evolution opportunities that leverage our unique asset base and further reduce the environmental footprint of our operations and those around us. We will also continue to advance initiatives around renewable natural gas and hydrogen. Starting with certified gas, we announced earlier this year a supply contract for responsibly sourced gas with a leading U.S. independent producer as part of our utility gas supply. You will see us continue to increase the amount of certified gas as part of our overall gas supply portfolio.
Beginning early 2022, WGL Energy, our unregulated affiliate, will begin supplying all new and renewing residential natural gas customers with independently certified natural gas for 50% of their usage, with the option for consumers to purchase up to 100%. Recently, the Maryland PSC approved our RNG project, a partnership between WGL and Washington Suburban Sanitary Commission, to transform sewage waste into renewable energy. It's a small project, but represents a significant milestone. The project includes the construction of a natural gas pipeline to bring the first RNG into the WGL system from WSSC Water's Bioenergy Facility. This project will be the first of many similar projects and will enable us to refine and learn more about this promising technology, so that we can identify other potential projects to expand the use of RNG in the years ahead.
In 2020, we funded a study to assess the development of renewable gas in the Greater Washington, D.C. area, and we published a comprehensive report on RNG resources and availability. The study found that there are multiple supply sources of RNG available for WGL. Since then, we have been refining our study findings based on our engineering analysis and direct commercial conversations with some of the largest RNG sources in our territory. We believe there's a significant opportunity to decarbonize our supply with RNG. Over the longer horizon, we expect hydrogen and synthetic methane to become price competitive with RNG. These low carbon fuels will help us further decarbonize our energy supply.
Over the long term, we're targeting a much higher RNG and hydrogen throughput within our network, but we're also focused on doing so in a sustainable manner that makes economic and environmental sense for our customers as we work together to create a cleaner energy future. Going forward, when we think about opportunities within our existing businesses like RNG and hydrogen as being part of our long-term business plan in the utilities network, it's logical to assume we will always look at opportunities to continue to advance some of these initiatives if they're in our fairway. Of course, our number one priority continues to be safety and reliability.
While delivering critical energy to our customers, we will do so with an intense focus on operational excellence, which we define as providing exceptional and affordable service to the customers we serve, reinvesting into our asset network, and growing for the betterment of all our stakeholders. Specifically, we will continue to invest with discipline and focus, relentlessly manage costs throughout our operations, deliver on a focused technology roadmap to drive operational excellence. Explore all available revenue opportunities through effective rate and regulatory execution, enhance and exceed our customer experience while helping the region deliver its climate goals and diversify our supply sources with lower and no carbon fuels. We are excited about the future of the utilities and look forward to what the next few years may hold. Now I'll turn it over to Randy Toone, Executive Vice President and President of our Midstream business.
Thank you, Blue, and good morning, everyone. My name is Randy Toone, EVP and President of Midstream here at AltaGas. As you heard from Randy, we are very excited about the bright future of our distinct Midstream business, and I'm here today to provide more color on that future. We are a leading North American Midstream platform that connects customers and markets. From wellhead to tidewater and beyond, we are focused on providing our customers with safe and reliable service and connectivity to premium markets that provide the best outcomes for our customers. This includes global market access for North American LPGs, which provide North American producers and aggregators with the best netbacks for propane and butane while delivering diversity of supply and stronger energy security in Asia.
This also ensures a high degree of profitability for our Canadian energy industry, which means increased activity levels, higher employment, higher royalties, and ultimately, better social outcomes. AltaGas's Midstream platform is heavily focused on the Montney in Northeast B.C. and centers around global exports, which is where we believe the market is headed over the long term. A couple of other defining characteristics around our platform is nearly 90% of the business comes from investment-grade counterparties, and over 50% is from take-or-pay contracts or fee-for-service contracts. Any commodity or differential exposure, we have an active hedging program to de-risk these cash flows. Our Midstream strategy is to operate a world-class platform that safely connects producers to domestic and global markets and position for the energy evolution.
We're focused on investing in and operating long life infrastructure assets that are positioned for where we believe the market is headed. This includes providing global connectivity, improved customer outcomes, and environmental benefits. Every day, we work with our customers and view them as partners in achieving better outcomes together. Similar to Blue, there are three key themes that we'll focus on throughout the session. Revisiting the journey that we have been on within the Midstream platform, sharing our philosophical views about running the platform and discuss what we believe matters for the long-term value creation, and discussing the road ahead and what we can expect from our Midstream platform. I want to spend some time on the journey that we've been on. If you go back five or six years, AltaGas was a much smaller Canadian Midstream platform.
We had diversified assets across Western Canada with a number of small, less core assets. We were proud of what we had, but we didn't view it as distinctive. What we did have was a highly capable group of people with strong relationships with our local communities, First Nations, customers, and a strong track record, strong safety track record. We also were very good at building builders of projects, and we understood how to get things done. We wanted to build on those core competencies and decided to take some very proactive steps to build a platform focused on where we believe the market was headed over the long term, which we believed was going to be the Montney, mainly in Northeast B.C., and a strong LPG demand in Asia, which supported the need for global exports.
As such, we moved forward with the plans to build gas processing and fractionation capacity in Northeast B.C. and global export capacity through the building of RIPET. Over the last few years, we've reasserted that focus and continued to build a platform focused on where the market is headed. Over the last few years, we have significantly advanced the Midstream and global export strategy. We commissioned RIPET, the first LPG export terminal off the Canadian West Coast. We expanded Midstream and energy export capabilities through the acquisition of Petrogas. We increased LPG export capacity to more than 100,000 barrels per day, which you saw in Q3, and have a path to get to 150,000 barrels per day. Increased throughput at our existing processing facilities and fractionation facilities and drove more than 30% improvement on a return on invested capital.
You can see from this slide, our strategy and strong execution is paying off and creating outsized wins. You can see this is our Midstream and global export volume growth, which has led to increased cash flows and stronger returns. Our focus on optimizing assets and increasing throughput at our facilities has resulted in returns on invested capital improving by a third. These improved returns have also provided us the capacity and resources to continue to invest in better customer outcomes, our people, the communities which we live and serve. These directly support our broader corporate strategy of building a diversified, low-risk business platform that provides growth and durable value for the stakeholders. Our high-level priorities are consistent with our strategy and build on what we've done over the past few years.
These include maximizing facility utilization to improve stronger returns, continuing to push position for where the market is headed by focusing on our customers' needs and anticipating the market trends by thoughtfully building out the footprint and expanding our capabilities within the Montney and our West Coast LPG exports. Positioning the midstream platform for the changing energy ecosystem. Our marketing and logistics capabilities, our export terminals, along with our agent relationships, position us well to be a leader in the energy evolution. Our midstream business will continue to be centered around our global export platform and our structured advantage being on the West Coast of North America, which has a 60% advantage over the U.S. Gulf Coast and a 40%-45% advantage over the Middle East for shipping times.
With those being a balancing market for the Asian LPG imports, we believe that West Coast will have a lasting structural advantage as Ferndale and RIPET both ship LPGs to Asia in approximately 10 days and avoid major shipping channels or canals. That compares to 25 days from the Gulf Coast or 18 days from the Middle East. We really saw the benefit of having a direct route this year when we saw a significant congestion in the Panama Canal, with vessels waiting up to 2 weeks for a transit ticket, bringing average shipping times to 40 days to get to Asia. Right now, around 1/3 of our global export volumes are tolled, and we plan to steadily increase our tolling arrangements with our customers, providing them with market diversification and stronger netbacks for their products.
This slide highlights our two global LPG export facilities, where we exclusively ship using very large gas carriers or VLGCs, which provide the strongest economies of scale and the most efficient, safest, and lowest carbon footprint of transportation across the Pacific Ocean. VLGCs are also the most demanded vessels from a destination perspective in key large markets like Japan and South Korea, which are focused on the same economies of scale. Both ports are deepwater access, ice-free year-round, and facilitate easy access for VLGCs. As such, we have the best option for our North American upstream and midstream customers that are looking to have access to global markets where LPG prices have historically traded at upwards of 50% premium compared to North America. This slide highlights what our downstream markets look like from a global export platform.
Overall, we continue to see robust LPG demand from key Asian markets, with Canada representing an important supply diversification. 90% of our global LPG export volumes are delivered to either Japan or South Korea. Almost all of these transactions are with investment-grade counterparties. RIPET now represents 11% of Japan's total propane imports, and Ferndale represents 11% of the total for South Korea. While there is a number of factors driving the robust demand growth, it is a very strong demand pull market. With the Asian region, LPGs are positive from an environmental perspective and part of their energy transition, as they are a lighter fuel and often displace thermal coal or other more carbon-intensive forms of energy. This slide just re-emphasizes that market balances will continue to support global export growth.
Specifically, that North America remains heavily oversupplied with LPGs, and those imbalances are expected to grow. As such, the marginal molecule needs to be exported, and it makes a lot more sense to export those volumes off the West Coast rather than to export them by rail down to the U.S. Gulf Coast at a heavy discount and then have them exported to Asia from there. Asian demand growth is robust, with ongoing demand increases expected over the next decade. The pandemic has only accelerated these demand increases. As such, market undersupply in Asia continues to grow. Specifically, Asian PDH demand is expected to grow 60% in the next five years over 2022 levels. As a result, Asian prices continue to do the heavy lifting to attract volumes, and we're seeing that play out in the open arb and opportunities for Canadian producers.
On the road ahead, we see many of the same focuses and we have demonstrated over the past three years. We'll continue to fill our existing latent capacity across the network and optimize returns on the large investments that we have made in the Montney. We'll continue to improve our logistics capability through building unit train operations at the supply source and the export terminal versus the current manifest operation, which will improve our cost structure and maximize export capacity. We'll continue to debottleneck export capacity constraints to link more LPGs into global markets. With that lower cost structure and significant LPG demand in Asia, we'll be able to take full advantage of this export capacity. We'll continue to look further downstream, such as time charters for VLGCs, which not only lowers ocean freight, but provides direct market access to Asia.
On Ridley Island, we're focused on working with our service providers and customers to leverage our ability to increase throughput by up to 60%. CN has been making large investments in the Prince George to Prince Rupert corridor, continues to debottleneck logistics in highly utilized regions of their network. Right now, much of the volume that is sent to RIPET is manifest from multiple points and then needs to be aggregated before it's being sent to Ridley Island. We are focused on moving that to a unit train operation, which reduces travel times, reduces rail car usage, and improves the overall cost structure. Additional investments are expected to be in the near term on Ridley Island to provide further operational flexibility to increase throughput and better manage any outages upstream.
Medium to longer-term growth, we are also looking at expanding the throughput capacity on Ridley Island, which could include other products such as butane, and is aligned with our recent application to increase our butane export license. Over the long term, we continue to look at advancing Petrogas' participation in fuels of the future. This includes pursuing conceptual work on other products to export, like ethane or ammonia on Ridley Island, where we have ongoing conversations with our downstream customers in Asia. Now that RIPET and Ferndale have demonstrated they can be a reliable supply source, the demand pull is starting to take effect. On to Ferndale. The roadmap at Ferndale is very similar. We'll focus on working with our service providers and customers and leverage our ability to increase throughput by up to 70%.
We're trying to take a very pragmatic approach to improving logistics through using unit trains that leads to more efficiency, more efficient rail traffic in and out of the facility. It also lowers the overall cost structure, which will open up other supply basins such as the Bakken. Similar to RIPET, additional investments are expected at Ferndale to provide further operational flexibility to increase throughput and better manage any outages. Longer term at Ferndale, we see the Ferndale location has strategic attributes such as proximity to green electricity, access to tidewater, proximity to Asia, and the existing local demand for hydrogen. Over the long term, we are continuing to look at advancing AltaGas' participation in fuels of the future and helping Washington State advance many of its green initiatives.
This includes pursuing conceptual work on fuels like hydrogen and ammonia, which could be used locally in Washington State or exported as ammonia, where we have ongoing conversations with downstream customers in Asia. The recent acquired lands around Ferndale provide lots of opportunity for AltaGas to participate. I think this slide really speaks to the journey that we're on. We are focused on increasing our capability and compounding throughput by 10% per year until 2025 through our two terminals. From wellhead to tidewater and beyond, we plan to continue to connect our customers to premium markets and doing so in multiple ways in the years ahead. As you may have heard, AltaGas entered into arrangements for two new dual-fuel VLGCs that will go into service in late 2023, early 2024.
The contract extends AltaGas' reach directly into the Asian market for its products and further de-risks AltaGas' long-term export strategy. The procurement of the dedicated vessels will reduce shipping costs by approximately 25% compared to the prevailing market rates and reduce pricing volatility. The new vessels also carry 15% more cargo than a standard VLGC. As such, the vessel deployment will drive reduce costs and provide better environmental outcomes. Outside of the export growth, we plan to have similar focuses around optimizing and investing across the value chain. We continue to advance business development, commercial, and our engineering work around longer-term growth opportunities across the midstream market in Northeast B.C. and Alberta.
All of which is focused on leveraging our existing infrastructure assets and network to continue to connect with customers and markets, and some of the, these will be in partnerships with our customers, which we will each lean on each other's strengths, and work on the best collective path forward. We're always a bit cautious to what we share on the development front because it, there's commercial sensitivity, there's partnership considerations, and there's confidentiality that we have a duty to honor. We're very excited about the road ahead. With the Petrogas integration now complete, the combined team, assets, and the unique access to global and domestic markets provide a midstream platform that is an attractive solution to our customers. We have significant pipeline of identified growth opportunities to potentially be sanctioned over the next five years.
These include approximately 30% of the capital dollars being focused on emission reductions or the energy evolution, approximately 15% focused on organic expansions or optimizations of existing assets, and the other approximately 55% focused on large strategic growth. The largest part of capital spend is weighted towards 2024 and onward, and that is aligned with the Montney volume growth associated with LNG Canada coming on stream. As we grow, we need to grow responsibly, which means lowering our emission intensity as we grow. We have been working hard to develop our emission reduction plan, and we're happy to share some of those details with you today. We have completed an extensive modeling and testing to arrive at our emission target of 40% reduction of scope one and two emission intensity by 2030, with initiatives being applied across the entire midstream platform.
We have taken a multi-pronged approach to emission reduction that begins with optimizing our existing assets by maximizing throughput. This is the most economical means of achieving our part of our emission intensity reduction goal. Investing in our existing infrastructure is the second approach. Pursuing opportunities to reduce carbon from our facilities where it makes most economical sense is the first on the list. Some examples of these types of projects include efficiency enhancing projects and phase one of carbon capture development at Harmattan. Other more strategic investments could include a full-scale electrification or full-scale carbon capture at certain facilities. We are looking to pursue opportunities to electrify certain assets in BC, given the significant hydro capacity in that province.
Applications of carbon capture technology across other gas processing facilities is also something we are exploring given the higher emission intensity of those facilities. Our first order of business in achieving our emission intensity goal is by simply optimizing our facilities and increasing the efficiency of the existing asset base. Through this, we can achieve approximately 20% towards our 40% target. This is where our focus is currently. The Harmattan facility is our largest emitting facility by far and is one of the first areas we are addressing to tackle emission intensity reductions. Phase one of this initiative is well underway and upon completion of the project, we anticipate achieving a reduction in absolute emissions of 15% at that facility.
Our next focus will be investing in sustainable low emission growth projects that allow us to participate in the energy transition opportunities that are within our core fairway and meet our investment criteria. In closing, we're excited about the days ahead. We'll be focused on operating a safe and reliable system to connect critical energy to our customers, maximizing the potential of our export platform, leveraging that export platform capability to advance our integrated model, and position the assets for the fuels of the future. I will now turn it over to Shaheen Amirali, our Chief External Affairs and Sustainability Officer, who is gonna share the ESG strategy.
Thank you, Randy. Good morning. I'm pleased to be joining you today to tell you about what ESG means to AltaGas. I'm going to start by discussing the journey we've been on, which includes our progress on ESG integration within our business and our performance highlights. I will conclude my presentation by describing the road ahead, focusing on our ESG goals and how we execute our ESG strategy. Core to our business and ESG strategy is an unwavering commitment to operational excellence. Continuing to lead with strong ESG practices remains part of that priority. We have taken a number of steps to integrate ESG into our processes, including our stakeholder outreach, which has led to the broader topics that encompass ES and G being narrowed to what matters most to us and to our stakeholders.
This brings focus and allows us to allocate our resources in a way that demonstrates the greatest impact in the areas that matter most. With focused ESG priorities centered around safety and reliability, energy affordability, energy evolution, cybersecurity, diversity and inclusion, and community partnerships, we align to what is material to our business and our stakeholders and highlight our areas of opportunity and impact. Through integrated processes within risk management to business strategy to operations, the outputs of which influence our capital allocation, business development, and the processes we put in place to measure and monitor our progress and the transparency and consistency with which we report our outcomes. Our company has a long history of incorporating ESG into decision-making. It's been critical to our success to date in the development of world-class projects.
Where you're seeing that decision-making most prominently displayed today is specifically in how we see the future energy evolution and our position within a lower carbon world. You're seeing this through our ongoing alignment to TCFD in our strategy and in the way we articulate our opportunities, our risk mitigation, governance, our approach to reporting, and our goals. Governance at AltaGas is designed to oversee and support sound decision-making across the enterprise. It is a critical component of our business foundation. Our core values support the way in which we integrate our ESG priorities into every aspect of our business. Together with our code of business ethics, these values form the foundation of our company and set the expectation for how we conduct our business and engage with our stakeholders. We've aligned our policies to apply across the enterprise.
Aligning the organization to one set of umbrella policies streamlines our governance and provides clarity of oversight and accountability. ESG oversight is ultimately a board responsibility. Each of the board's standing committees provide oversight by integrating the elements of ES and G applicable to their mandates and aligned with their areas of expertise. This enables the board to fully integrate its oversight role. Our CEO is ultimately responsible for strategy development and execution, with the presidents of our businesses supporting that function. With performance linked to compensation, we close the loop of the process and drive a performance-based culture focused on meeting and exceeding objectives to create long-term value. For 2021, 25% of our annual short-term incentive plan is linked to advancing ESG initiatives and strategies, including supporting GHG reduction and the lower carbon future.
Linking critical ESG components to compensation through our value drivers is not new for us. As an essential energy provider, safety performance has always been tied to compensation. Part of progressing our ESG integration over the years has included expanding these drivers to capture additional E and S initiatives of importance. Now, ESG integration leads to ESG performance. As we move into our performance, we continue to progress on our areas of strength. With focused ESG priorities, we are connecting our programs with broader reach among our various stakeholder groups. This provides greater impact. I will highlight a few examples with more available within our ESG report that was released today. Safe and reliable access to affordable energy is core to our operations.
When you look to our performance that's demonstrated through continued capital investment and modernization of infrastructure, reduced leaks, exceptional system reliability statistics, which you can see on the slide. It is also reinforced through core foundational utility affordability and energy assistance programs targeted to benefit communities and customers. Providing access to affordable energy through budget programs and gifts of warmth draws the connections between our programs of pipe replacement and access and affordability, closing the loop and staying true to our mission of providing safe and reliable access to affordable energy. On diversity and inclusion, it is important to us that our internal diversity reflects the diversity within the communities we live and work. Our inclusive culture has been key to our success in meeting business objectives. We've taken many steps to broadly expand our diversity at all levels of the organization.
Our success can be attributed to many initiatives, from our recruitment practices, to our development programs, to our engagement strategies. Our achievements are reflected in our current demographics. You can see our current statistics listed here on this slide. You will also see in our ESG report our progression, which is most recently demonstrated through the build-out of our Washington Gas senior leadership team, where we have broadened the mix of experience, background, and varied perspectives to meet the evolving needs of the business with female representation up from 33%-53% and racial ethnic diversity up from 8%-27% from 2019. You will also see progress highlighted here in the makeup of our RIPET workforce, where 25% of our RIPET workforce comes from local Indigenous communities. Broadening diversity and inclusion initiatives goes beyond our workforce.
It's about reaching into our communities through building capacity. Through supplier diversity programs, we've achieved 28% of supplier spend with diverse suppliers and 33% of midstream capital spend with local, indigenous, and affiliate vendors. We are well on our way to meet Washington Gas's Strive 35 initiative by 2028. We will continue to progress on these S initiatives concurrently as we advance our other material ESG priorities. Where you're seeing the most progression from us this year is on the E. You've heard about where we are headed on our GHG emission reduction strategies and our plans to introduce low carbon fuels into Washington Gas's delivery system.
What I would like to also highlight is that each of our businesses have been monitoring and advancing opportunities to reduce GHG emissions for many years, which we have included in our performance highlights here on this slide, and more broadly in our ESG report. The progression you are seeing today is part of our path of continuous improvement. As we look to the road ahead, it starts with our goals, which are the next progression in our journey of continuous improvement. They will track our performance going forward. They provide insights to our stakeholders on our focus and priorities for the future. Our categories of goals include climate, safety, and D&I. These are table stakes. We are only going to grow from here and expand our goals as we progress and gain further insights to stakeholder expectations.
Our approach to goal setting is to strike a balance between achievement and ambition. We have put in place many of the building blocks and initiatives to propel us forward in that journey, creating the momentum and drive within our organization to track and perform. You heard each of Blue and Randy go through their strategies for execution. What I will go through is our approach to setting our climate goals. Our business is diverse. Our growth opportunities are different, and the regions in which we operate have different climate ambitions. That is why we took a situational approach to setting our goals, so that we can build upon our ambition over time as we gain further clarity from legislative policy, our regulators, and our customer preferences. Cooperation amongst us all will be required to achieve the best solutions.
Within our utilities business, focusing on Washington Gas, our largest utility is where the opportunities lie for us. With Washington Gas making up just over 80% of total Scope 1 and 2 emissions for our entire utilities emission profile, it is the most material. It also has the largest pipe modernization programs of our utilities. Our goals highlight our view that our vast distribution network is in the pathways to supporting all future transition solutions. Supporting our focus on modernization and that our pipe network can be repurposed to flow lower carbon solutions. Within our midstream business, our goals highlight our view that reducing absolute emissions as well as intensity is important to us. Our intensity goal reflects the growth we see in our business and recognizes that we can do both, grow our business and reduce emissions, improve operational efficiency, and increase utilization.
Our absolute emission reduction goal for Harmattan recognizes that our biggest opportunity to reduce emissions lies within our largest emitting facility. We will focus our attention where we have the biggest impact. Our safety goals are a continuum of our journey to incident-free operations. It all starts with the pursuit of operational excellence, a strong commitment to a culture of safety performance, and setting yearly goals of improvement. It is important to us that our internal diversity reflects the diversity within the communities we live and work. That starts with gender balance, and our D&I goal for management strives to achieve that. It progresses what we have achieved to date with the programs we have put in place. We have also made progress on broadening our overall diversity, and that work is continuing with the same momentum.
We intend to continue our progress, our broader diversity, and we expect to externally release goals in that regard next year. With respect to our board, they have made many advancements to broaden their diversity, as you have seen, and they are committed to advancing their commitment by increasing their overall diversity from 45% to 50%. Now it all comes down to execution. In order for us to execute on our ESG strategy requires focus and prioritizing what is material from an ESG perspective. It requires ESG integrated into our business processes, marking progression with metrics and goals, and clear, consistent, and transparent reporting. We are well on our way on these fronts. It will also require early and frequent outreach with key stakeholders, which will help us meet our objectives and shape our future priorities. We look for many opportunities to engage with our stakeholders.
Early and frequent communication informs our community consultation processes, strategy development, risk management, and ensures we are approaching our work in a responsible way and in a way that advances our strategy. What's important to us is to have a strong understanding of our stakeholders' expectations, to have a willingness to listen, learn, and adapt, and to empower our people to work towards mutually beneficial solutions to generate long-term value. Stakeholder engagement has been a core area of strength for us, and our pathway of continued progress will require the same openness of dialogue and collaboration that we have demonstrated that marks our past successes. That is how we intend to proceed. Now I will turn it over to James Harbilas, our CFO, to discuss our capital and return strategy.
Thank you, Shaheen, and good morning, everyone. I wanted to start with a brief overview of some of the economic factors that will have a bearing on the business heading into 2022 and beyond, as well as how we will position ourselves to benefit from some of these trends. I will also highlight how the organization
As a company and an industry, we take great pride in our role that AltaGas and the broader Canadian energy industry has played in trying to build positive and inclusive relationships in the communities where we live and operate. AltaGas has a long history of operating with social purpose and building sustainable projects. We owe this success to the partnerships we have been fortunate to foster with Indigenous and other local communities over time. The fact that these communities were willing to partner with us to deliver positive outcomes for our society is very meaningful. As a company, we haven't always gotten everything right, but we're focused on the future and learning from our past so that we can deliver continuously better outcomes for all our stakeholders.
We also believe that AltaGas and the First Nations communities in Canada are aligned on the need for continuous improvement and much more pronounced inclusion in the process. If there is one message that we and the entire energy industry needs to remember, it's that working together is essential to push each other for continuous improvement every day. The jobs, the economic opportunity, the energy security, and the better life that comes from the continued development of our world-class industry is immense. It won't transpire if we aren't growing together, working as partners, and looking out for the best interests of all collective parties involved. We need to keep pushing, we need to hold each other to account, and we need to build our nations together.
We're not opposed to any major projects. We always want to work with them, work through it, and we try to find a way to mitigate the issues that are important to Metlakatla First Nation. The environmental assessment process and protection of the environment is number one for Metlakatla First Nation as a priority, and that's the stewardship responsibility. It started with a good relationship. Right from day one, they were very responsive, and they were there whenever we needed them. It's a relationship that we haven't seen before. We've dealt with a lot of companies and there's been a lot of challenges, but they did their homework before they came here. You know, it's kind of a new approach and it's a real partnership. We're happy with that.
In Canada, Indigenous community support for energy projects is essential and achievable. We are proud of the role we have played within the energy industry to encourage early engagement and collaboration with Indigenous partnerships. This has helped to deliver meaningful benefits to communities while delivering the security of energy supply to our global partners. Providing access to training programs and employment are cornerstones to the industry's long-term partnership with the Indigenous communities because these build economic opportunities and greater community capacity.
Partnerships with any company that comes into Metlakatla Traditional Territory is very important to Metlakatla First Nation.
It gives the members very good jobs for a long, long time. Our chief always says this, whenever we're at meetings, Metlakatla First Nation is always open for business.
When energy projects are aligned with Indigenous values, partnerships are forged, projects are built, and families and communities benefit from stable long-term employment.
I was kind of at a crossroads where I wasn't sure what my future was gonna hold. I was kind of looking for an opportunity for where I could have long-term employment, where I knew I was gonna be home.
Our partnerships with the Indigenous communities span the project lifecycle and beyond. They start with the initial project development through to operations and reclamation to ensure our projects undertake and reflect the unique community and environmental considerations of the territories in which we operate. Employment in the energy industry is creating positive change in the lives of Indigenous community members, supporting the industry's long-term sustainability.
I'm very proud of who I am as a First Nations man. I'm all about my people. The opportunity that oil and gas industry has and has happened for many years here is hopefully gets better and better. Well, it was an opportunity, I guess, that I wanted to try because I never, ever did anything like that before. You know, maybe start a new adventure in my life, and it provided for my family to have a better life and my children as well. We're very fortunate, I guess, put it in perspective. There's lots of people out there that are struggling, and personally, I try not to take that for granted. It's a very humbling experience, and I appreciate every bit of it.
Collaborating with Indigenous communities to create local training programs is not only an expression of partnership. It is the most effective means of achieving successful employment outcomes for Indigenous community members, enhancing understanding of and support for energy projects. We need to keep pushing each other and ourselves on the road ahead. We need to hold each other to account and be good neighbors. We need to build our nations collectively, and we look forward to continuing this journey together.
Thank you, everyone. As you can see, we're excited about the road ahead, and we see significant profitable organic growth opportunities and an enviable value proposition. We thank you for joining us. At this point, Jon, I'll turn it over to you, and we'll move forward with the Q&A.
Perfect. Thanks a lot, Randy. Thanks for everyone taking the time. We do have a lot of questions pouring in on the chat function. If you are gonna be trying to ask a question live on the phone line, we just remind you have to press star one to get queued up with the operator. We do have a lot of questions that have come in, so maybe we'll kick it off with the first one around potential non-core asset sales. It seems like yesterday was a good day for a major permit announcement on MVP. Does that make a 2022 sale more likely? Maybe I'll direct that one to you first, Randy.
Sure, Jon, thank you for the question. Yeah, yesterday was good news in terms of Mountain Valley Pipeline and its water permits in Virginia. As I've said consistently throughout, that pipeline is really essential overall and that we're confident that it will move forward over time. In terms of our asset selling, James mentioned, right? We do not have that in our plan. But certainly, as we move forward and there becomes more clarity around the pipelines' in service dates, we'll be looking to take the opportunity to see our availability. As most of the investors know, we have a cost cap for the Mountain Valley Pipeline, and so we'll be patient and we will look for opportunities into the future going forward to monetize that asset.
Perfect. Next one is from Ben Pham at BMO Capital Markets. It's a two-parter. One, are you interested in adding on the electric utility franchise side to support some of your ESG goals and broaden the growth opportunities? The second part would be just how does that 8%-10% rate base CAGR compare to other LDCs across North America? Again, maybe to you, Randy.
Well, thank you, Ben. I appreciate the question. Well, we're always looking at opportunities to enhance our portfolio in terms of our overall strategy going forward. Really everything that we do is around leveraging our existing assets and bringing value going forward. While we'd always look at opportunities, any acquisition that we do would have to be accretive, and we do look forward toward that. Our primary focus right now is around our organic growth opportunities, around our export assets and everything that we talked about going forward. I guess in terms of the rate base growth question, I believe as I've looked at that we're in the top quartile and certainly in the top part of that. Blue, maybe you wanna comment on that as well.
Yeah. That's right, Randy. We're in the top quartile for growth and we think based on all the fundamentals that we talked about in the presentation on just investment opportunities to upgrade the aging infrastructure, we expect it to stay there for a fairly long time.
Perfect. Next one up is from Robert Catellier from CIBC Capital Markets. How do you ultimately go about achieving the long-term 10% ROE target while de-leveraging and investing in the utilities? Is there any plan change in business mix, or how do you think you're gonna get there? Is it a function of growth and optimization? Maybe that one over to you, James.
Yeah. We don't anticipate, given the growth that we're seeing in our rate base and the visibility that we've got from the ARP programs, we feel that the mix is going to stay fairly steady in terms of being weighted towards utilities. Currently, we're about 56%-57% of our EBITDA coming from utilities. Given the growth opportunities we see in front of us, we expect that mix to stay in that range over the next five years. In terms of how we're gonna fund that growth and how we're gonna continue to execute on that growth, I think we've proven over the last three years that we can effectively recycle capital from noncore investments to core investments as our lowest cost of capital and be able to fund that growth and continue our deleveraging journey.
As Rob pointed out, you know, looking forward, there's still non-core assets that we can avail ourselves of in MVP, and we've already touched on that. If we see other opportunities to recycle non-core assets on the midstream side to fund investments going forward, we would consider that as well.
Perfect. Next one is from Robert Hope with Scotiabank. How's the management team thinking about M&A to increase the midstream footprint in Western Canada? Are there pieces you feel are missing, and would you like to increase your presence in Fort Saskatchewan? Randy, maybe I'll turn it over to that one.
Sure.
to you, and
Thanks, Rob. Thanks for the question. Look, I think the team's done an outstanding job, right? Going from zero to 100,000 barrels a day in our export capacity. You know we—RIPET was a twinkle in our eye, right, Jon? When we first started in 2018, 2019, we built that, and Randy and his team said we were gonna expand that, and we did with our Ferndale acquisition. You know, in terms of our positioning for growth, I think everything will focus around is any M&A activity enhance the value of our export capabilities? Does it accelerate our ability to get to our 200,000 barrels? Does it add more control of supply and such, but I believe we have all the tools necessary to accomplish this plan.
I think there's clarity of thought in how we're going to do that. In terms of the expansion at the Fort, we already have a presence in the Fort with our acquisition of Petrogas, and we would look to expand that for unit trains so that we can move more product more efficiently and better going forward. Those are the key drivers, right? And with most of our growth is around the organic, you know, development. You know, overall, that's the criteria, but we're well-positioned to go ahead and move forward on organic growth ex M&A.
Next one is from Dariusz Lozny at Bank of America Merrill Lynch. Can you discuss the drivers that will determine whether utility segment is gonna achieve the lower end of that 8% growth rate or the 10%? Maybe we'll turn that one over to you, Randy, and then see if Blue has any additional comments he wanna make.
Look, I think the team did an excellent job of explaining, you know, the value to our customers and how we're executing on that plan. In terms of the tactical piece, about 8%-10%. Recently, we just filed for our Virginia SAVE program, which is an expansion of the program for the next 5 years. We have significant backlog of projects on the accelerated part. That, you know, I think will push us over to the higher end. In terms of execution and operations, the team's done a great job in terms of, you know, with a longer-range plan to manage our workforce and the contractor crews has been excellent. But Blue, I'll let you comment as well on the question.
Yeah. Thanks, Randy. You certainly hit the highlights, and that was, it's gonna be a function of our rate-based growth through those accelerated programs. As Randy mentioned, we filed to extend the Virginia program. We will do that in Maryland and D.C. as those programs come up for renewal. Of course, we're seeing strong meter growth, and so that component, as well as the, in many cases, the additional pipelines required to reach that growth. That whole factor through the regulatory process on rate cases and, of course, the accelerated programs will determine whether we're at 8% or 10%, but it looks pretty good from where we sit here today.
Perfect. Next one up is from Patrick Kenny at National Bank Financial, and he's directing this one to you, James. Can you define long-term with respect to the 4.5x leverage target? Do you expect to see a path to get to 4.5x by 2026 or earlier? Without a successful sale of MV-MVP, are there other levers you think you can pull to get there?
I mean, when I got here 3 years ago and we had a number of monetization processes on the go, we said pretty clearly that we wanted to be able to get to around 5x leverage in the medium term, which we defined as 3 years, and we're pretty much at that number right now without having monetized MVP. You know, once we get some clarity around MVP, then I think that's another lever that we can pull to be able to get below the 5x. I think that getting to 4.5x by 2026 is very achievable given the fact that we've still got MVP as an asset that we can monetize.
You know, we've always identified that there could be other assets as we continue to grow on the retail side of the business or if people start to realize the intrinsic value embedded within the Blythe asset, which has been performing extremely well in the California power market. We feel that continues to get much more valuable with every passing year given its importance in the power stack there. I think that we've got enough levers to pull from a non-core asset sales standpoint, but we've also got organic growth in the business, and as we invest capital, incrementally, the DRIP will help us to naturally de-lever as well over that period of time.
Next one is anonymous, which relates to gas prices. Obviously, they've been rising recently. Do you believe that this potentially challenges the ability to grow the utility at the rates that we've put out? Maybe I'll turn that one over to you, Randy.
Look, I think that, you know, we've talked a lot about the fact gas prices have actually come down recently, which is, you know, with the warmer fall as we move into the winter. I think we have plentiful supply both in Canada and the U.S. If we can get the policies correct, I think we'll have prices continue to be stable or lower, and that's a good thing. In terms of our overall strategy, right? We're managing our cost structure. We continue to drive efficiencies. Overall, I don't think that, you know, those are gonna have an impact as we execute our operational excellence model. Blue, go ahead and comment as well, please.
Yeah. Thanks, Randy. I think the only thing I would add to what you said as a reminder, you know, across our jurisdiction, so gas is a pass-through. One of the things that we do have that help protect our customers is about 50% of our flow, flowing supply on an average winter comes out of storage. Of course, that storage, WACOG is much, much lower, certainly than the strip was at the high point, and even where it is today. That's an added benefit that helps protect our customers. To Randy's point, we're very thoughtful on our cost management, which is also a component of that. We're trying to balance all those things.
Perfect. We've got a follow-up from Rob Catellier at CIBC. What is it about the ammonia market that you find attractive and fits with AltaGas' strategy, assets, and expertise? I'll start with you, Randy.
Good question. I'd love to expand on that. I mean, what our team is and what Randy has done is talking about the fact that we've added more products over the last few years, right? With Ferndale, we've gone from propane to butane. So what the attractiveness of ammonia is that our customers, going into Japan, are looking for reliable, secure supplies, and our ports are invaluable to do that. We look at ammonia as the opportunity to move that and other products as well, to optimize and to really fill up what's an extremely valuable asset for us. From that standpoint, we're looking out into the future and we're seeing, you know, the opportunity.
You know, in our Ferndale facilities with the acquisition of our land, as well, that as we look into the long-term, right? The possibility of actually, you know, generating with, you know, green hydrogen and others as well, that might give an opportunity and to ship that, from that port. But the overall premise is to be able to add additional more products and complete, and really optimize the utilization of these valuable ports. You'll see us over the years, propane and butane, and there'll be other products as we continue to move, forward into the energy evolution, ammonia being one of those.
Next one is, anonymous, and it's probably, best for you, James. Do you see any scenario in which you go away from the self-funding model, in the years ahead if you reach the leverage targets that you'd ultimately like?
Well, I mean, I think Randy touched on it. We've got a very strong organic growth pipeline. We feel that we can fund that organic growth pipeline the way we have over the last three years. That's through cash flows and where necessary, if the CapEx programs are large enough, recycling capital from non-core investments into core investments. You know, ultimately, if we look at something that's strategic and makes us operationally better or helps to advance our export strategy and it's large enough, we would consider equity, but only if it's accretive to EPS under that scenario. That's the only time we would do strategic M&A.
That being said, I think that when you look at the organic growth profile that we have in front of us right now in both utilities and midstream, that we're gonna be focused on executing on that. It's second to none in terms of the growth rate that it'll generate for us. That's where we'll be focused, and we feel that we can self-fund that from an equity standpoint.
Perfect. Anything you'd add on that side, Randy?
No, I think James, you know, covered it well. I mean, I think he and his team have done a great job in terms of financing our growth, recycling capital, always reducing and driving our cost of capital down. I think that, again, when you're looking at a business like ours that went from 0-100,000 barrels a day with a vision of 200,000 and a clear path for growth of 10%, that is exciting. It's differentiating, and it is extremely exciting. We're entirely focused there, going forward, and I think that's an enviable position for our company.
We're probably gonna do one more, and then we'll turn it over to the phone line. Next one is from Robert Kwan from RBC Capital Markets. For the road ahead, you highlighted cycling capital, linking non-core asset sales to improving your balance sheet. If you ultimately achieve your long-term target of 4.5x, does this strategy become less prominent? Or do you see cycling capital as an ongoing opportunity to create shareholder value, and make sure that you maintain a self-funding model? Maybe Randy, I'll turn that one over to you.
Well, I'll let James comment as well, but you know, our focus has been on, I think James articulated it well, in the self-funding model. As we look at our funding of this tremendous organic growth that we have going forward, we're looking at our capital stack, and we're always looking to fund that with the lowest cost of capital. I think recycling capital going forward, we have a lot of dry powder with our assets, is job one in going forward. I think that's really, you know, position us quite well. That'll be always an ongoing capital discipline, recycling of capital, continuing to invest with the growth company that we are, I think will be just part of our overall process. I'll let you comment, James.
I mean, the only thing I would add is that ultimately once we sell the remaining non-core assets, then the only time we would consider other capital recycling opportunities is if we're looking to monetize maybe smaller assets within our existing footprint to invest in those two core segments in terms of larger projects. That's the only time I guess we would continue to. After we've completely sold some of the non-core assets that are remaining on the power side or the non-operated interest in MVP. That's just another avenue that we could pursue.
Because I think it always is a management team, and we think we've demonstrated this, that as we look at our assets and look at our portfolios, right? Those assets that have the commensurate amount of growth, where we're investing and growing. It'll always be as things change, if there's assets that are in better hands than someone out there can fund, we'll look at those types of recycling opportunities. I think those will always be out there.
Perfect. Operator, maybe we'll turn it over to the lines and just introduce anyone that happens to be present with a question on the lines.
Thank you. You have a question. First question is from Andrew Kuske with Credit Suisse. Please go ahead.
Thanks. Good morning. I guess in the category of imitation and sincere form of flattery, when you think about just the export dynamics on the West Coast. How much capital could you put into that business? You clearly have got some expansion plans into the future, but how do you think about the value chain that you could participate in? You're really from well head all the way through the shipping facilities to even receipt facilities. How do you think about that, and how big could those numbers be?
Andrew, thank you for the question. Nice to hear from you. Look, I think you nailed it in terms of our business model, right? Exports is the center. By having access to markets, very premium markets and the best markets for the product is going to allow us the opportunity to handle the product even further upstream. You see Randy and his team have leveraged that through our Northeast B.C. expansion, and we continue to look at those opportunities. I think the main driver for capital in the short run is going to be the building out of our unit train capability, which is quite distinctive, 'cause you can't do that unless you have the capability to have a consistent and a high valued market, which we do.
I think you'll see us continue to do that. There's significant opportunities in the long run, right, as producers look to move forward. Randy, I'll just let you comment in general about what you're seeing in the marketplace.
Yeah. I think you saw it from our plan is that we're gonna invest in our, like, low capital dollars to optimize our export capacity to open that up for when the supply is available. Also logistics. We know that if we get our costs down and we have the capacity on the coast, that's where the incremental barrel's gonna go. That's gonna be our near-term focus. You know, development in the Montney as LNG Canada comes on will provide other opportunities to invest in fractionators or gas plants, and we'll look at those opportunities as they come.
Mm-hmm.
Could you perhaps quantify the cost advantage that you'll have from where you are now to where you think you'll be once you optimize the logistics side of it? That's just on your own basis, and then versus what you think others are doing and the costs that they have, because, you know, clearly you have the greatest volume capability right now.
Yeah. Andrew, it is. It's about scale and it's about logistics, right? We're an, you know, an energy exporter and logistics company, and Randy, you know, pointed that out. I mean, when you look at our ability to put unit trains together, and I'll let Randy speak to the specifics as rail costs are significant, and the majority of our competition moves through a manifest train, very inefficient, largely. That's primarily because they don't have access to a consistent premium market. The strategy here is to build out the rail capabilities, to put those unit trains at both our Northeast BC as well as our presence in the port, and that will drive costs down significantly, but also drive increased volume.
Maybe you've got some of the stats what that could do in terms of the handling.
Yeah, I think we had it in our slide where we predict we'll get about a $0.01 per gallon saving on rail if we go to unit train capability. That is less rail cars, less demurrage cost both on rail and on shipping. But even with the time charter that we just put an agreement together, we're gonna save us potentially $0.01 there too. You know, our goal is to get to a couple cents per gallon savings and when you're moving the 100,000 barrels a day plus, you can do the math on the savings there.
Mm-hmm. I think that that's in the short run. I do believe that as we look at, you know, working with our partners and get the logistics network out, I mean, the rail cost and beyond on the logistics networks. I think, to give you and Andrew a perspective, is, you know, this is over the long run, right? That we could probably take 20%+ out of our cost structure, and those are significant. What you're gonna see, right, is that, you know, we've right now moved. You know, we're oversupplied. We'll continue to see that in the basin, and that's where the incremental molecule is going.
At the end of the day, as certain contracts come off, and our costs continue to decline, it's gonna be clear that anyone that has access will want to be going to the West Coast with their LPGs. We're already at a cost advantage, and we'll continue to increase margins. Quite frankly, as a strategic perspective, from a strategic perspective, that is what we control, right? We control our own cost, our cost from the basin to the ships, and even further downstream. The optimization with scale is going to be, I think, something we're gonna be focused on, for the next few years and adding a tremendous amount of value to our customers in the future.
That's very helpful. Thank you.
Any other questions, on the line, operator?
No further questions, sir.
Thank you. Next one we'll go comes from Gaurav Rungta from Picton Mahoney. What's the difference in assumptions that bookend the CAD 1.80-CAD 1.95 guidance, and what needs to happen to get to the top end of that range? Randy, I don't know if you have any early comments, and then
Well, I think, James, it's just that, right? I mean, it's really about the.
Yeah.
The guidance. Why don't you talk about it?
Yeah. Okay. Thank you.
I mean, obviously the midpoint of our EBITDA guidance range is about CAD 1.525 billion. If you look at where that lands in terms of earnings per share, we're at about CAD 1.83-CAD 1.84. To be able to get to the top end of the range, we do have every year we avail ourselves of certain R&D tax credits that could probably add CAD 0.04-CAD 0.05 to that. If we get to the top end of our guidance range of CAD 1.55 billion, we're probably closer to CAD 1.90 in EPS. There are levers that we can pull on the commodity side.
The commodity tailwinds happen and we can get to the top end of the EPS range through some of these R&D tax credit initiatives that we typically undertake every year. Then we've always proven in the past and have said openly that we'll always look at driving down our cost of capital. We've got a couple of series of pref shares that are set to be reset in 2022. To the extent that we can replace that with other hybrid capital that's more cost effective, that could potentially add CAD 0.03-CAD 0.04 a share in terms of earnings per share to the bottom line as well. We do have some levers that we can pull to be able to get to the top end of that range.
Simply put, move more volumes, right? More logistics, more volume, all of those things that you know, and we clearly have some, you know, extremely valuable assets. The team's demonstrated, you know, great potential to really maximize the value of these assets day in and day out. All of the things that James mentioned, coupled with just, you know, continued execution in our operational excellence model, and that's lower cost moving throughput, I think is a driver for us. We, we'll do everything we can to maximize and get to that.
Next one comes from Jeremy Tonet with JPMorgan. Maybe it's best to start with Randy Toone. Can you just talk about the customer conversations in terms of terming out LPG exports? What sort of durations do you believe is possible, and how do you think about trading off rate versus term for any of the longer-term tolling?
Yeah. Like a lot of the consolidation in the basin has made our, you know, the customers, you know, more financially sound and, you know, going through COVID, they slowed down any drilling plans, but I think they've started picking up, and you can see that in 2021 and 2022 as people are gonna start developing again. That's when they're more comfortable signing a long-term export deal. You know, those conversations are very positive. Our goal is, you know, come 2021, we'll see an uptick of tolling then. Then, you know, as we go, we'll see that increase over time. We need the stronger counterparties to really do that.
You know, right now, I would say that they're, you know, ten-year deals for tolling.
Perfect. Jon, if I can just comment. I think that, you know, when you look at our overall strategy in working with these larger producers and as Jeremy asked you, it's about term and price. So certainly the longer the term, right, that we would be, you know, inclined to take that into account in terms of rates, so longer term. I think the producers are looking to that. I wanna make a strategic point I did in my presentation, and that is, and I think it's important to understand what our company has done, and that is that we've legitimized the ability to export these LPGs off the West Coast of North America. We've clearly done that, and we're getting a lot of attention to that in terms of the market, right?
We've taken a direct market access with our ships that we're going to have in a couple of years. I think that Jeremy will recall this, but that as the Marcellus built out, it was primarily a pro-producer push. As the basin was more legitimized, there was a market pull that came with that. While the Montney Basin is unquestionably one of the best resources in the world, the ability to demonstrate that you can export this product consistently day in and day out, and what Randy and his team have done has legitimized that ability. The dialogue with the market is really picking up, and I think that's going to be another value add for us in the long run on tolling. Thanks, James.
Perfect. Next one is a follow-up from Robert Kwan at RBC. Whether it be items like utility O&M performance to achieve allowed ROEs or increase in tolling at RIPET, what do you see as the 3 or 4 lowest hanging pieces of fruit that could ultimately improve your financial performance? And can you give any sense of timeline?
Well, you know, look, if you talk about the export volumes, I think Randy gave that we're targeting a 10% growth per year in the. We'll look to enhance that to do better. We've got a pretty clear plan. I think that is very achievable and I'm confident on that, and we could accelerate that more as we work with our customers in building out these unit trains. I think we've got a clear pathway there. With the utility, you know, Blue and his team have done an excellent job in managing our overall cost structures.
I think that overall, you know, and I'll let Blue comment on specific, you know, actions, but our view is to continue to keep corporately our costs constant as we grow revenues and to challenge ourselves that we'll continue to be focused on the innovation and the way to do things more efficiently and effectively. While I think that overall, you'll, you know, there's just tremendous opportunity in the long run to actually lower those costs and drive our O&M for customers into the top quartile. Across that, the overall objective is to continue to, you know, to keep our costs constant across the organization and as revenue increases, which is gonna create tremendous value for our shareholders. Blue?
Blue, anything you'd add to that?
Yeah. I would just add, Randy's absolutely right. We continue to be focused on looking at every process that we execute across the utility. Where can we do it more efficiently? Where can we cut costs? Where can we deploy technology? You heard me talk about that a little bit in my presentation. From a timeline perspective, you know, we stretch ourselves every year to deliver, you know, better O&M performance. That's gonna continue over this five-year horizon we're talking about, certainly.
I would expect to see continual progress and improvement over that entire time horizon as we continue to deploy more technology to drive some of those down, whether that's, you know, the satellite technology I talked about in terms of how we do our leak surveys, whether it's the way we roll our trucks, all of those type of things will continue to drive that. That's gonna be a journey.
Yep.
I wouldn't mind weighing in here a little bit, too. I think the one thing that has really contributed to ROEs improving significantly over the last three years has been increased throughput through our existing infrastructure and filling up that latent capacity that exists in the midstream platform. I think that's low-hanging fruit as well over the next few years. We've seen drilling pick up, especially in the Montney, where we've got some very critical assets on the gas processing and fractionation side. We feel that bodes well for us to be able to continue that journey of filling up that latent capacity, which we feel will meaningfully continue to move ROEs higher from where they are today.
Next one is on the ESG side of things and just asking about at a high level, how do we ultimately think about setting goals? And the midstream target of 40% emission intensity seems very aggressive and perhaps above some of the peers. Do you have a high level of confidence of being able to get there?
Yeah.
Maybe, Shaheen, you can talk a little about some of the goals.
I can see we always exceed our peers. I'm not surprised by that. Go ahead.
Absolutely. I guess what I'd say, and I go back to my remarks, we look for a plan that's gonna be achievable and ambitious, and that's what we did when we worked through it with the midstream team, is to look at the pathway for how we would get there and make sure there is enough ambition in there for us to be able to push ourselves. What we are looking to do is set that pathway. Looking at it from an intensity perspective is also taking into account the growth that we see in our midstream portfolio and recognizing the fact that we can grow and reduce our emissions at the same time.
Perfect. We've got time for probably a couple more questions, and there's a couple more in the queue. Maybe we'll start with one from Robert Catellier as a follow-up. You alluded to the opportunity of expanding midstream capital depending on certain project advancements. What has to happen for that ultimately to happen? Specifically, there seems to be some delays with the Blueberry River First Nations decision. Do you think that alters kind of the path forward? Maybe I'll turn it over to you.
Look, I'm excited about the opportunities in the Montney. I think we're starting with the consolidation with the larger players and the balance sheets and their commitment to long-term, you know, steady growth is gonna be key to that. I know Randy and his team are having a lot of discussions with them overall. I think that you know is something that you know excites us, and it's gonna you know provide even more value. Because at the end of the day, we're increasing the netback for producers, right? We're adding more value over time, and I think that's going to allow them to continue to expand.
Certainly, you know, working with the First Nations is gonna be critical for them to make those sound decisions as to what their growth profile is working on. We're optimistic about that, Randy.
Yeah. With the Blueberry or the Treaty 8, that's definitely had a near-term impact, like, for 2021. You know, when we talk to Treaty 8 members, we have a very open and strong communication with them and a good relationship with them. You know, they are not saying they don't want development. They support development. They just want to make sure there's a good balance between environment and economics. You know, that's what we've always done as AltaGas. If you look at how we built North Pine and Townsend in Northeast BC, we definitely had that balance. When you look at RIPET and what we did there, we showed that we can work with the First Nations on development.
We also know that the BC government and those Treaty 8 members are having positive discussions on a new process. You know, we hope, you know, hopefully in 2022, there'll be a new interim process for development. But that hasn't slowed down everything, as we know a lot of our customers already have permits in place. You know, their growth plans are steady, and we're having active conversations with those players.
Perfect. Next one is on the RNG side, which is an industry that has been around for a while but still in its infancy to some degree. Just wanting to get a little more color on where we'd see our role playing, and maybe this one's best for you, Blue. Ultimately, do you see us as just an offtaker of blending RNG into our system, or would we get more involved than perhaps just being an offtaker over the long term?
Yeah. Thanks, Jon. Good question. The short answer is, obviously, we're working through the process now to bring RNG onto our system, as I talked about our first project, and we've got several more conversations in the works. Those conversations really involve multiple dimensions. One, of course, is procuring the RNG. We think that's an important part of the process. The other one is where do we participate in the process? Which facilities might we invest in and build? We're focused around our footprints today. That doesn't mean, you know, we need to understand that. We need to make sure we've captured the opportunity set inside our footprint. We certainly are looking to deploy some capital in that process and believe that opportunity will exist as we work our way through it.
Yeah. I think we continue to learn. I like what Blue's strategy in the utilities is that we're focused around our infrastructure and our system because that's the best economic for our customers to be able to capture the opportunities around the system. I think that, you know, we'll continue to learn and I think that's gonna be quite exciting into the future. There's gonna be many investment opportunities in my judgment over the, you know, coming years around the RNG going forward.
Last one is just on energy evolution. Obviously, you guys have put forward a more concrete plan of where you would play in the market. Ultimately, when you think about investing in emission reduction or energy evolution, do you believe it's gonna change your return thresholds, and ultimately you'd be willing to take a lower rate of return to advance those initiatives?
I think this is an opportunity for our company, right? Our ports are so well positioned to move the fuels of the future, and I see that as just upside overall. Now on reducing our overall emissions, right, you know, we have constructive regulatory relations and as we move forward, I think those will be incorporated in all of the investments that we're making on behalf of our customers. Because we do that, focused entirely on what our customers need and their wants for reliable energy. I think we should not expect an erosion in returns as a result of that.
Perfect. With that, I think we've officially exhausted the question list. We really appreciate everyone taking the time to be with us here. Obviously, it's been a number of years that we've gone through this process, and it's been a period of large transformation and change, and hopefully that came through in the presentations in the Q&A today. Maybe I'll just turn it over to you, Randy, if you had any final closing comments that you wanna say.
No, I wanna thank everybody for joining us. We really appreciate it. We believe we've got some tremendous opportunities and a bright future. Again, thank you for joining us, and thank you, Jon, and your team. Appreciate it. Thank you all. Have a nice holiday.