And our cost of capital. So in summary and in total, TC Energy's value proposition is to deliver three things: solid growth, low risk, and repeatable performance. So I'd like to take a moment to celebrate what's been a transformational few years for TC Energy and thank all of our dedicated employees for all the hard work that has ensured our continued success. By focusing on a clear set of strategic priorities that emphasize safety, operational excellence, and project execution, we've delivered significant value. So let me start with maximizing the value of our assets. Through safety and operational excellence that ensures the highest level of availability, we've now delivered comparable EBITDA growth at the upper end or above our outlook for three years running. On October 1st, we completed the spinoff of our liquids pipelines business into South Bow Corporation.
This is a pivotal moment in the history of TC Energy, and it solidifies our position as an industry-leading natural gas and power company. We enhanced strategic alignment by integrating our three natural gas businesses under a single leader, and that has opened up new efficiency gains and opportunities to optimize cost and reduce risk while maximizing our EBITDA contribution through initiatives such as the five-year NGTL settlement. Second, and turning to project execution, achieving mechanical completion on Coastal GasLink in 2023 was a milestone for the company, and I would argue for the country as well. And as you've seen this morning, we are pleased to have executed a commercial agreement with LNG Canada that declares pipeline commercial in service, commencing collection of our tolls retroactive to October 1st.
As part of the agreement, TC Energy will also receive a one-time cash payment of $199 million in recognition of the completion of certain work and the settlement of all final costs with LNG Canada. Now, we've incorporated learnings from the project into our capital allocation and project execution and commercial processes, and Southeast Gateway in Mexico was the first major project to be sanctioned under our revised process, and we are realizing tangible benefits. As you saw in our third quarter results, we expect to achieve mechanical completion either by the end of 2024 or very early in 2025, and now expect our capital expenditures to be approximately 11% below our initial estimate. Lastly, to ensure balance sheet strength, we've completed $7 billion of asset divestitures while retaining control of our most strategic assets.
Through strong financial performance and capital discipline, we are realizing approximately $2.5 billion of 2024 to 2027 capital expenditure reductions, and we are on track to bring our leverage down from 5.4 times debt to EBITDA in 2022 to our target of 4.75 times by year-end. So all told, today TC Energy is a much stronger company, and we are better positioned than ever before. Now, let's go to energy fundamentals. And in my decades of working in this industry, I've never seen such strong prospects for North American natural gas and power demand. It's become clear that the world continues to need all forms of energy to meet ever-increasing global demand. It's about energy addition, not just energy transition.
And the outlook for global energy demand continues to trend higher relative to previous forecasts, underpinned by stronger natural gas and electricity demand, which together now account for 75% of the total growth in final energy consumption around the world. And North America and TC Energy have a pivotal role to play. We participate in the theme of global electrification through the delivery of approximately 30% of the feed gas destined for LNG exports. In 2023, North America became the world's largest exporter of LNG, emerging as a critical supplier to Europe and Asia, and export capacity is projected to grow threefold by 2035. Closer to home, our assets continue to enable coal-fired retirements, and we support increasing power demand from data centers and nearshoring. In total, we see North American natural gas demand growth of nearly 40 BCF per day by 2035.
Now, with the spin of our liquids pipeline business, we have now aligned our portfolio across these complementary businesses, natural gas and power, where the most significant growth driver is wide-scale electrification. TC Energy is the only energy infrastructure company with incumbency in all three countries on the continent, the only company that can deliver natural gas to all three critical LNG shorelines, and the only one of our midstream peers with a significant interest in nuclear power generation. This is a competitive advantage that we intend to prosecute. You can see on the map on the right the regionality of natural gas demand growth in Canada, the U.S., and Mexico, and it overlaps with our footprint. Our assets directly feed the lowest-cost supply to many of the strongest-growing markets that creates a sizable opportunity set for us to select the highest quality and the highest-returning projects going forward.
On the left, you see that fundamentals in Ontario continue to underscore the need for safe, reliable, and affordable power, and Bruce Power is a critical part of that equation, and we have investment visibility at Bruce well into the next decade. Now, in several important ways, this slide exemplifies what we mean when we say our portfolio mix is both low risk and aligned to long-term fundamentals: 90% natural gas and 10% power, with 7% of that 10 being in nuclear. Our cash flow quality is among the highest in the sector, with over 97% of our rate-regulated or take-or-pay contracts. This foundation means our cash flows relative to our peers are highly stable with little to no price or volumetric risk, and that's supported our excellent business risk profile, and it's also supported 24 consecutive years of dividend growth.
Now, by leveraging TC Energy's 93,000 km of natural gas pipelines and deep capability in the power market, we've established a sizable backlog of $32 billion in secured capital projects. The majority of the opportunity we see remains in our core natural gas pipeline businesses, and you'll hear Stan discuss this in more detail, but of the forecasted growth of 40 BCF per day in demand to 2035, TC Energy is positioned to compete for and win, by our math, 23 BCF a day of in-corridor potential. Our investment in Bruce Power, a world-class nuclear facility, also provides growth visibility through 2030 and beyond with our MCR program and our uprate initiatives like Project 2030 Stage 3A, and that's a mouthful, that we announced this morning. Annesley will walk you through the significant upside we expect to realize through these investments.
So the opportunities outlined on the right mean that we have more than what fits into our annual net capital spending limit of $6-$7 billion. Make note we are resolute in our capital discipline and our desire to remain within these limits. This is a high-grade problem to have, and I'll walk you through our approach. First, it's crucial that we ensure the safety and availability of our assets, and to achieve this, we invest about $2 billion annually in our maintenance and integrity programs, and given the regulated nature of our assets, we earn a return on and return of approximately 90% of this capital, and this sets us apart from many of our competitors. Next, we're investing about $1 billion per year into Bruce Power to extend the asset life and increase capacity for at least the next 40 years.
That leaves us with $3-$4 billion of discretionary capital to deploy to the highest risk-adjusted returning projects in order to maximize the spread between our earned returns and our cost of capital. And how we invest this capital has always been grounded in energy fundamentals, and we will remain focused on regulated, long-term take-or-pay contracts with investment-grade counterparties. Now, where we've enhanced our capital allocation process is better risk sharing and cost recovery certainty during development. As well, we've developed a more comprehensive assessment of policy alignment, early stakeholder and rights holder engagement to ensure that our business will prosper through changing government administrations and at times differing priorities among the three countries in which we operate. That's the benefit of that diversification. It's these principles that allow TC Energy to deliver low risk, repeatable performance.
When we say TC Energy is utility-like versus our midstream peers, this is what we were referring to. Now, this next slide demonstrates how we've been high-grading projects to optimize returns to maximize value. We've seen an upward trend in the IRRs of our sanctioned capital since 2020, and with the work that we've done around our capital discipline and increasing our balance sheet strength, we expect our cost of capital to continue to improve. In 2024, our sanctioned projects have an average unlevered after-tax IRR of about 11%, and that compares to 8.5% a few years ago. Said slightly differently, our low double-digit IRRs translate to project build multiples in the five-to-seven times range, and you would have seen that more in the six-to-eight times range just a couple of years ago.
As you've seen this morning, we announced over $1.5 billion of new growth projects that are consistent with this trend. These projects exemplify our forward focus on smaller brownfield in-corridor expansions that offer more compelling economics, shorter cycle time to cash flow, and overall lower execution risk. When you combine our $32 billion sanctioned capital program and our utility-like asset base, we have visibility to organically deliver an above-average comparable EBITDA growth rate of 5%-7% through 2027. I expect we will continue to deliver that strong performance beyond 2027. We'll continue to look for ways to high-grade projects to optimize capital expenditures and to deliver projects at or below budget to further enhance this solid low-risk growth profile. What are our priorities for 2025 to achieve this?
As you saw us do in 2023 and 2024, we have a clear set and a very short list of priorities. And I'm proud to say our team is delivering exceptional results. So it's no surprise that our 2025 priorities look very similar. First, safety in every step. Our safety performance is the best it's been in five years at TC Energy. Safety drives operational excellence, meaning our assets are available when needed most and will continue to meet growing demand. Maximizing the value of our assets will also stem from our ability to continue to find opportunities to optimize costs, accelerate our returns on and of capital, leverage technology to increase asset availability, and enhance revenue. Second priority for 2025, we will execute our high-quality portfolio of growth projects, bringing $8.5 billion of assets into service in 2025 on time and on budget.
Specifically, the Southeast Gateway project, which makes up the majority of that $8.5 billion, is scheduled to come into service mid-2025, and this represents a year of material inflection for TC Energy. Third priority, projects will continue to compete for our capital, ensuring that we sanction the highest risk-adjusted return projects and maximize the spread to our cost of capital. By optimizing returns and remaining disciplined, we will continue to manage our leverage to an upper limit of 4.75 times debt to EBITDA on a sustainable basis, and by delivering on these priorities, we expect to continue to achieve those three things: solid growth, low risk, and repeatable performance. Thank you for your attention, and I'll now invite Stan to discuss the opportunities we're seeing in our natural gas footprint.
Thank you, François. Good morning, everybody. Truly appreciate the opportunity to share my thoughts about our gas business today.
I'd like to start by reinforcing the notion that we truly are unique among our peers, and we're unique in at least three respects. First, we're the only one of our peers that has historic and extensive operations in all three geographies across North America, which provides us with a greater sense of diversity. Second, our best-in-class pipeline network is the leading transport provider out of several critical low-cost supply basins across North America, which play a pivotal role in servicing some of the best demand centers. This includes delivering 30% of LNG exports, 11% of power demand, and direct connects to eight of the 10 largest LDCs across the United States.
Third, as you're going to see over the next few slides, we're unique in that we're the only one of our peers that can offer visibility to over $28 billion of high-quality sanctioned and underway growth maintenance and modernization capital through the end of the decade that includes $8.5 billion of growth capital to be placed in service across our integrated pipeline network during 2025. Buckle your seatbelts and let's get started. Discussions around energy transition are evolving to include discussions on energy addition, as evidenced by the strong fundamentals supporting natural gas. As shown on the chart on the left-hand side, natural gas demand is anticipated to grow by over 40 BCF per day, or 30% between now and 2035.
From a macro perspective, leading this growth on the right-hand table are once-in-a-generation opportunities around LNG exports, which continue to be the industry's biggest growth story, followed by strong growth in power generation. In addition, as supply grows to keep pace with demand, we're seeing the need for more supply egress projects to ensure producers have adequate capacity out of constrained basins. Of the 40 BCF per day of forecasted growth, we're positioned to compete for and win a potential of about 23 BCF a day, which is outlined in the middle column on the chart to the right, and I believe that because we already have 13 BCF per day of those opportunities in development.
As a further proof point that this growth is real and translating into low double-digit returns, today we announced three new projects, two relating to coal conversions and one relating to incremental storage capacity. Lastly, we'll continue to file rate cases more frequently to ensure that we are timely recovering a return on and of our maintenance capital expenditures, which keep our systems running and support the demand we're seeing for our capacity. Let's unpack these opportunities in a little more detail, starting with LNG exports. Given the heightened focus on energy security and reliability across the globe, LNG exports continue to represent the largest growth opportunity. Across North America, we see a tripling of LNG exports from 13 BCF a day today to over 30 BCF a day by 2035, which is anchored by more than a doubling of U.S.
exports from 13-31 BCF a day, and further supported by Canadian exports growing from zero to five BCF and Mexican LNG exports growing from 0.5 BCF a day to three BCF per day. We're the only one of our peers with projects that are directly linked to LNG exports across Canada, U.S., and Mexico, which will allow us not only to grow our market share, but to grow while the overall market is also increasing. and our diversification also serves as a hedge against regulatory policies that may otherwise slow the pace of growth in any one geography.
We see 9 BCF per day of growth potential for us, of which 5 BCF per day is currently in development, as evidenced by projects like our East Lateral XPress , which is destined for 2025 in-service, and our Gillis Access Project, which is currently in service, but has plans for it to be further expanded in 2026 and 2027. These two projects alone account for over 4 BCF of new capacity and have attractive build multiples. Our strong base of projects currently in development has us more than halfway to fulfilling our potential LNG growth opportunity. Despite a decade or two of lackluster growth in total power generation, which saw North American power demand grow by only about 3% from 2010 through 2023, gas-fired generation remained strong over that time, growing by more than 65%.
Going forward, growth primarily associated with the energy demand from data centers and the continued opportunity from coal to gas switching will likely drive growth in overall power demand of over 20% from now through 2035, with natural gas growing proportionately. Bolstering the case for gas's continued growth is its competitive capacity-weighted economics, with the EIA recently reporting that the cost for constructing new gas-fired generation currently averages around $800 per kilowatt, which is 50%-60% less than wind and solar, highlighting both the reliability and the affordability of natural gas. The key for us, however, is that growth in power generation will not be uniform across North America.
As a testament to the strategic location of our assets, of the 12 BCF per day of potential growth, about two-thirds of that is located directly in corridors where our pipelines are located on the NGTL system in Canada, the ANR and Columbia systems in the U.S., and the TGNH system in Mexico. Other geographies where we don't have a heavy presence, such as California and New England, are experiencing lower growth or overall declines in gas-fired power generation. So all in all, this is why our deliveries to power plants are up 36% over the past three years and why the potential for greater growth continues to be in front of us. Now, leading the growth opportunity and the topic du jour across the power sector is data centers.
While the opportunity is significant, we're still in the early stages of seeing exactly how this demand is going to evolve. Initially, it appeared as if the connectivity will take place behind the LDC meter, but for various reasons, we're now seeing a greater interest in data center connections to our mainline or directly with power generators. No matter how this growth plays out, the diversification of our assets positions us to capture this load. Should the load develop behind the LDC meters, we currently have direct connections to eight of the 10 largest LDCs across the United States. Should the load develop as a direct connect with us, we're seeing interest in pockets of capacity that historically went unsold, and we're selling it now in advance of the data center buildout.
We're further optimizing our systems to find additional capacity that can be used to promote expansions, which could include a complementary gas and power offering in conjunction with Annesley and her team. Should the load develop off of a power generator, we directly connect to over 165 power plants across North America. As you can see, by virtue of the footprint that we have, we're generally agnostic to how this demand materializes. In terms of the size of the prize across the United States, which represents the largest opportunity for North America, based on the now more than 350 data centers that are planned to be constructed, we see total demand equating to a gas load of somewhere between 6-8 BCF/d. Now, as shown in the middle chart, 200 of these data centers are located within 50 mi of several of our pipelines.
Based on that, we are currently in various stages of discussions for capacity to serve data centers, hyperscalers, and others for up to 2 BCF per day of gas demand in places like Ohio, Virginia, and Wisconsin. So given the pace of these discussions, I would expect we could have precedent agreements for projects executed in the first half of next year, with in-service dates starting as early as 2026 through the end of the decade. And in Canada, data center opportunities are starting to materialize. In Alberta alone, we now see over five gigawatts of capacity in the queue related to data centers. So while data centers are currently filling today's headlines, I don't want us to lose sight of the opportunity presented for natural gas-fired power generation to grow due to coal plant retirements.
Across the United States, 225 coal plants remain in operation today, accounting for about 180 gigawatts of capacity, but 25% of them are slated to be retired by 2040. 38 of these plants are located within 15 miles of our assets, with nine gigawatts or about one BCF per day of capacity slated for retirement by 2031. From 2025 through 2029, we're investing $2.4 billion of capital related to coal conversions that are either in construction or preparing to go through the FERC approval process. Examples of such include our TVA Project, which is a small $30 million capital project, but has a very attractive 3.5 times build multiple, and our ANR Hartland Project, which is a $900 million capital project with a 6 times build multiple.
Today, we announced two new coal-to-gas conversion projects: our Pulaski project, $400 million of capital investment with a 6.5 times build multiple, and our Maysville project, which is also a $400 million capital investment at a 6.2 times build multiple. Both of these are sized for about 200,000 a day of capacity and have a 2029 in-service date. While we're on the topic of power generation, I thought I'd briefly talk about Mexico. The gas fundamentals across Mexico are equally strong and are being driven by LNG exports, nearshoring opportunities, and the 17 new gas-fired power generation plants that CFE is currently constructing that will increase capacity by about 8 gigawatts, primarily across the Yucatan Peninsula.
Our Southeast Gateway project continues to progress well, and we're tracking towards mechanical completion around year's end and on time mid-year 2025 in service at a reduced capital cost somewhere between $3.9 and $4.1 billion. Our project and the 1.3 BCF per day of new capacity it brings is essential in helping to close the poverty gap between northern and southern Mexico, while at the same time reducing emissions as this new gas load will displace dirtier, high-sulfur fuel oil currently in use across Mexico. And before I leave the topic of power generation, I'd like to remind us all of the key role that natural gas has played in reducing emissions across all the geographies in which we operate.
It has been and will continue to be a key tool to decarbonize the power sector as coal-to-gas switching reduces emissions by about 50% when providing electricity and by 33% when providing heat. So looking across our footprint, there's compelling evidence of this. Of the 9.2 billion tons of CO2 reductions across the U.S. power sector since 2006, 60% of those reductions have come from coal-to-gas switching, while only 40% have come from renewables. In Canada, Alberta's electricity sector achieved nearly a 50% greenhouse gas reductions between 2017 and 2022 by virtually eliminating coal. Today, coal remains the primary global energy source for electricity generation and has accounted for nearly all of the increase in global CO2 emissions since 2019.
This is yet another reminder of the need for additional LNG exports and projects such as our Coastal GasLink and the role it can play in moving away from higher-emitting fuels across the globe, as well as the role our Hartland and TVA projects play in reducing emissions across the United States. Before I leave this page, I'd like to note that in each of the geographies in which we operate, we've been able to leverage technology and innovation to reduce methane emissions by about 15%, while at the same time growing our throughput and growing our EBITDA. Reliability also continues to be at the forefront of our discussions with our LDC customers as they're obligated to contract for and protect peak day needs, which are growing at an unprecedented rate.
For example, LDC peak demand can increase by 50 BCF per day or more versus average day loads. And over the past year, nine of our pipelines have set new peak day delivery records. Storage plays a key role in meeting peak day demand as well as in serving the backup to the intermittency of renewables. So given we're one of the largest natural gas storage operators across North America, we're going to leverage this expertise to further increase our storage position. As a proof point to that, and in response to various questions that you all have asked me on prior earnings calls, today we announced our Southeast Virginia Energy Storage Project. The project has a capital cost of about $300 million, a 5.7 times build multiple, and a 2030 in-service date.
And more importantly, it will enhance our strategic Mid-Atlantic footprint and increase reliability on the heels of our Virginia Electrification Project and Virginia Reliability Project. So now that you have a sense of the demand side of the equation, I thought I'd shift over to the supply side. As demand grows by 40 BCF per day through 2035, supply must grow by a like amount, and pipeline constraints to link production centers to demand sinks must be overcome. Our best-in-class footprint ties directly into three of the lowest-cost supply basins, offering long-term production growth at prices of $3 or less.
To ensure egress and intra-basin capacity for producers and gas processors, niche supply projects such as our Bison XPress Project , which is a $400 million capital investment at a 5.5 times build multiple, and the buildout of our multi-year project on the NGTL system, which is a $3.3 billion capital investment, will be critical. Given the 2,300 trillion cubic feet of estimated resource base across the Western Canadian Sedimentary Basin and the Appalachian Basins, there are more than enough molecules in the ground to serve both core demand and strategically located regional supply opportunities. So putting all that together, I hope that you now have a better appreciation both in terms of quantity and quality of the clear visibility to growth we have through the end of the decade.
Across North America, we have a diversified project portfolio including LNG, power gen, energy reliability, and supply opportunities totaling over $28 billion, with an average build multiple between five to seven times across our growth projects in the U.S. and Mexico. And I'll remind you that just two years ago, when we had our 2022 Investor Day, we referenced a six to eight times build multiple and are now demonstrating how we've been able to achieve better execution and higher returns for our projects. In Canada, which is one of our lowest-risk jurisdictions and has some of the most competitive supply in North America, we'll continue to strategically deploy capital under their stable, low-risk, regulated model to support the additional buildout of the basin. And keep in mind that this is not an aspirational list.
It's made up of projects that are currently underway and when placed in service between now and 2030 will generate solid growth, low risk, and repeatable performance. So lastly, as we pursue flawless execution of our plan, we're going to rely on some of the same discipline and straightforward models that have worked for us over the past 18 months or so to ensure our future success. Though we don't often talk about it with this group, it all starts with safety. And 2024 is shaping up to have the best safety metrics we've experienced across our gas business over the past five years. Safety excellence drives operational excellence, which has led us to have some of the best compressor reliability rates we've seen in recent history, which in turn serves as the foundation for the record deliveries we've experienced across our pipelines in all three geographies.
Operational excellence generates trust with our customers and invites new origination and project execution opportunities, which in turn drives physical and financial growth. So all of these things, operating in unison while maintaining our disciplined approach to capital allocation, is what drives extraordinary returns for our shareholders and stakeholders, making us even more unique among our peers. So with that, I'll turn the stage over to Annesley, and I look forward to addressing any questions you may have shortly. Thanks.
Thanks, Dan. Whether it's the increasing demand for natural gas or power generation, the prominent theme that unites our business is global electrification. Fundamentally, our strategy is to develop safe, reliable, and sustainable power and energy solutions that are consistent with TC Energy's value proposition and risk preferences.
With a portfolio of owned and operated generating assets totaling over 4,600 megawatts of capacity, roughly 80% of our comparable EBITDA is underpinned by long-term contracts anchored by our ownership in Bruce Power. Nuclear is the core of our power and energy solutions business and a critical and complementary part of our TC Energy strategy. Our focus on safety and operational excellence centers on ensuring our assets are available to deliver power when it is needed the most. And this extends to the team at Bruce Power, where availability is in the low 90% range, and we continue to improve the output from these units. Pursuing opportunities to maximize the value of our existing cogeneration fleet remains important as the demand for electricity continues to increase, supporting the need for both operating and new gas-fired generation.
In addition to the cogen fleet, the 118 BCF of non-regulated natural gas storage in our portfolio positions us to provide reliable energy supply and contribute to stability in a grid that is increasingly powered by wind and solar. Keeping an eye on the evolving energy mix, we are developing capabilities and expertise in lower carbon solutions that ensure we are well prepared to respond to market shifts and deliver repeatable performance over time. These capabilities are twofold: perpetuate the value of our existing natural gas infrastructure by working to decarbonize our assets and drive value creation through future growth opportunities. As François stated earlier, natural gas and electricity drive over 75% of the growth in final energy consumption through 2035. Our portfolio of baseload nuclear and storage assets provides essential infrastructure and capacity to support that outlook.
According to the Ontario ISO, electricity demand in the province is also anticipated to grow 75% by 2050, even higher than the 60% growth forecast in their planning outlook just earlier this year. Annual electricity consumption is set to rise from 151 terawatt hours in 2025 to 263 terawatt hours in 2050, largely driven by the industrial sector, data center development, and a growing population. Importantly, if Ontario is to meet growing demand as well as its decarbonization commitments, these scenarios show an additional 18 gigawatts of nuclear power will be required. The current generation from the Bruce Power site and additional output from Project 2030 remain key elements in Ontario's energy plans as it provides generation that is both reliable and available in the short term.
Beyond Bruce Power, we remain excited about the Ontario Pumped Storage Project and our continued discussions alongside our partners, the Saugeen Ojibwe Nation, with the Ontario government. The project can provide significant economic benefits to Ontario, and it complements and enhances our position in nuclear. By leveraging long-duration storage in proximity to Bruce Power, we can limit the overall capacity required in the province by effectively storing excess electricity during periods of low demand and bolstering the ability to meet peak requirements. Given our existing investment, regulatory expertise, and stakeholder relationships in Ontario's power market, we are favorably positioned to capitalize on future growth opportunities. On the next few slides, I'll speak to the attributes that make Bruce Power a world-class nuclear generation facility and how our investment contributes to our ability to deliver solid growth, low risk, and repeatable performance.
The value of nuclear power has been increasingly recognized by customers, stakeholders, investors, and governments, driven by its ability to supply safe, reliable, affordable, and non-emitting power generation. Our 48.3% ownership in the largest operating nuclear power plant in the world, with a power purchase agreement to 2064 for all generation from the site, is a distinct strategic advantage in an evolving energy mix. Today, Bruce Power reliably generates about 30% of Ontario's electricity and remains one of Ontario's lowest-cost generation sources. Importantly, the team has delivered solid growth, low risk, repeatable performance over the unit's 47 years of operation, receiving exemplary ratings by international industry groups through an unwavering focus on safety and execution excellence.
To emphasize a key point of differentiation in the low-risk nature of this investment, Bruce Power leases the facilities from Ontario Power Generation, has no spent fuel risk, and will return the facilities to OPG at the end of its operating life. Bruce Power does more than just supply electricity. It's a leader in the production of cancer-treating isotopes as the largest producer of Cobalt-60, used to sterilize roughly 30% of all single-use medical devices globally. Bruce Power is advancing a project to expand isotope production of Lutetium-177 in partnership with the Saugeen Ojibwe Nation at scale that is not seen anywhere else in the world. In support of this project, Bruce Power and the Ontario government announced earlier this month new infrastructure that will be built to complete early-stage processing of these cancer-fighting materials prior to global export.
Next, I will cover our continued annual investment of approximately $1 billion and how we are increasing capacity at the site. Bruce Power's top focus remains delivering the highest level of reliability, availability, and safety performance across all eight units. A significant aspect of this work is the major component replacement, or MCR program, to extend the life of the facility to 2064. Unit 6, the first unit to undergo major component replacement as part of Bruce Power's life extension program, was completed in 2023 on budget, ahead of schedule, and with an industry-leading safety record. Unit 3 continues to advance on plan for both cost and schedule, with Unit 4 to begin in early 2025. As Bruce Power progresses through the MCR program, each refurbishment will add 300,000 effective full power hours, equivalent to 35 years of operation at a 90% capacity factor.
As we're paid for every megawatt of capacity, this also strengthens our financial performance. It is important to highlight the risk-mitigated nature of the contract. The contract price is adjusted annually for inflation and wages and adjusted prior to the asset management period and each MCR program. Through a long-term view, Bruce Power has enabled a robust local supply chain with 90% of spend within Ontario, generating CAD 4 billion of economic activity annually within the province. This local capability not only drives efficiencies today but is highly advantageous to support future site developments. Beyond the ongoing life extension projects and given Ontario's commitment to advancing new nuclear with funds from the provincial and federal governments, Bruce Power has initiated a federal impact assessment for the Bruce C project.
We are still many years away from a decision to advance a new build, but this early work provides us continued optionality and a strong growth opportunity in nuclear that benefits from Bruce Power's strong management team and capabilities in project execution and operations. Project 2030 was launched in 2019 with the goal of achieving a site peak of 7,000 megawatts in 2030, coincident with the successful completion of the life extension program. In essence, Project 2030 is equivalent to adding a ninth large-scale reactor without building any additional infrastructure, increasing its nameplate capacity by upwards of 700 megawatts. The output from Project 2030 is also directly offsetting emissions in Ontario's electricity system. These offsets have been quantified and sold under Ontario's Clean Energy Credit Program, recognizing the important role that nuclear plays as a clean energy source.
Today, we announce that Bruce Power is progressing with Stage 3A of Project 2030. Stage 3A makes modifications to the existing plant to provide incremental capacity of approximately 90 megawatts. TC's share of the capital required is approximately $175 million and will attract strong returns owing to the existing contractual framework. Investing minimal capital to optimize capacity across our existing infrastructure is one of the ways in which we continuously seek to maximize shareholder value. Over on the right of the slide, you can see the benefits we will derive from both the life extension and uprate projects. TC Energy's equity income will nearly double from approximately $870 million today to over $1.6 billion in the early 2030s. Moving on, there are several ways the energy mix could evolve over the next few decades as the world seeks to meet growing demand.
Over the last few years, the external landscape has evolved quite significantly, and so has our strategy in power and energy solutions. Today, our energy solutions strategy is focused in two areas. First, we will build capabilities that allow us to decarbonize our existing assets, enhancing and preserving the value of our natural gas networks. And second, we will continue to evaluate commercial projects, participating if and when commercial models align with our risk preferences. For example, we are working with Stan's team to build internal capabilities and technologies adjacent to our core natural gas business through piloting activities that will help us decarbonize our existing assets today. Currently, we're evaluating carbon capture solutions that can help to address emissions from our compressor units, which are the largest component of our emissions profile.
We're also advancing a pilot for continuous methane monitoring, and we'll continue to assess opportunities for these solutions as the market evolves. While in the near term, we expect our capital commitments to energy solutions to remain relatively small, the capabilities and learnings we are developing are strategically important to both our existing natural gas transmission business and to ensure we remain aligned with potential future growth opportunities. As I stated earlier, nuclear is the core of our power and energy solutions business and a critical component of TC Energy's strategy. Our investments today through the MCR program and Project 2030 are generating solid returns, and we have visibility to further growth opportunities in nuclear at the Bruce Power site into the next decade.
We'll continue to maximize the value of our natural gas generation and storage assets, which are increasingly valuable in the context of rising demand for reliable and affordable electricity, and by building capabilities in low-carbon technologies to decarbonize our system and create pathways for future growth opportunities, we will continue to deliver solid growth, low risk, and repeatable performance, and I'll now turn it over to Sean.
Thank you, Annesley. Good morning, everybody. Today's my first investor day as TC Energy CFO, and I wanted to start by saying that the four principles that we have on the screen that have made TC successful for decades have not changed. On a personal note related to the long-term fundamentals principle, I've competed with and sought to partner with TC on gas and power deals over my three-decade career.
As it relates to assets aligned with long-term fundamentals, I'll offer a personal note. As I was considering joining the company last year, my own diligence made it clear to me that there would be no company anytime soon that could compete with TC's 93,000 kilometers of integrated pipeline and gas networks across North America or that had a world-class nuclear asset and power business with meaningful near-term growth potential that you just heard from Annesley. So the intersection of our North American footprints and rapidly emerging natural gas and power growth trends are what provide the solid foundational growth for TC's repeatable growth program. As it relates to our second principle on risk, I've been asked how our conservative risk principles get embedded into our strategy. It's a fair question that we challenge ourselves with every day.
We embed our low-risk preferences by investing in our rate-regulated assets and by investing in assets that are driven by customer demand with high-quality, long-term contracts and with balanced cost and risk sharing. Our third principle is to align our disciplined $6-$7 billion a year net CapEx allocation with projects that deliver the highest risk-adjusted returns relative to our cost of capital, and our final principle, ensuring that we have the financial strength to execute upon our long-term plan. Everyone, literally everyone at TC has contributed to the significant financial improvements over the past few years, particularly the effort to reduce our leverage from 5.4 times in 2022 to 4.75 times by the end of this year, and by strictly adhering to these four principles, we have and we will continue to deliver compelling shareholder returns.
Today's an exciting time to be operating and investing in gas, nuclear, and power, and we have the privilege to be doing each of those on behalf of our investors. We'll get into the numbers here to give you a better sense for what our updated plan looks like. As you can see on the left chart, we've delivered a solid 8% annual EBITDA growth over the last three years. Our forward outlook is on the right. We expect to deliver $10.7-$10.9 billion in 2025, which represents another 8% growth rate versus 2024. Looking out over the next three years, we project a 5%-7% annual growth rate with a 2027 EBITDA target of $11.7-$11.9 billion. The next few slides will take us through each of the business units' contribution to this EBITDA outlook.
Starting here in Canada, we expect continued growth of our natural gas systems based on the strong fundamentals and the exceptional customer support for system expansion in Western Canada. As a unique proof point of how supportive our customers are, we reached unanimous agreement in July for the five-year settlement on NGTL. The agreement begins in 2025 and will deliver approximately CAD 150-CAD 200 million per year increase in EBITDA over our pre-settlement levels. In addition, the settlement enables an investment framework to allocate approximately CAD 3.3 billion towards a portfolio of projects with targeted in-service dates between 2027 and 2030. Supporting all of this investment is the low-risk nature of the rate-regulated cost-to-service model where we earn a return on and of every dollar we invest into new projects and system maintenance.
So in summary, Canada Gas will remain a critical part of our portfolio with its growth-oriented customers and its significant utility-like cash flows. Turning to the U.S. natural gas business, we have aligned to a sizable project backlog, as Stan mentioned. From 2024 to 2027, we have about $4 billion worth of projects coming online. We're mainly targeting brownfield and in-market projects where we're seeing build multiples of five to seven times and low double-digit unlevered IRRs, as François showed. Those returns are driving our 4% CAGR through 2027 on this slide. We have been active with six rate cases in the past couple of years, as Stan said, and we do expect that the cadence is likely to increase to make sure that the spread on our new capital going into the U.S. portfolio is maximized.
In Mexico, our assets form part of the backbone of the country's natural gas and import and delivery networks. Our pipelines are backed by 25-plus year U.S. dollar-denominated contracts with the CFE, which is a BBB-rated entity. With the in-service of Southeast Gateway in mid-2025, we expect EBITDA to increase to $1.7-$1.8 billion in 2026 and 2027. SGP's in-service milestone will mark the very successful conclusion of our major greenfield investment cycle in Mexico. By year-end 2026, CFE will account for about 15% of TC's total EBITDA, and as François has mentioned on prior quarterly calls, we already have a plan to manage that customer exposure down over the next few years to approximately 10%. We have a few project milestones and a few strategies that we're working on to achieve that customer portfolio rebalancing. Heading back up north to our power and energy solutions business.
The advancement of the Bruce Power MCR program is the major driver of growth and asset enhancement in our power business. Annesley showed how Bruce Power's capacity will grow from 6.5 gigawatts today to over 7 gigawatts by 2032, when it's expected to provide meaningful contributions to our $1.6-$1.7 billion EBITDA target, as the right column shows on this chart. Looking at 2027 in the middle of the chart, there's two things I'd like to highlight. First, EBITDA is flat from 2024 to 2027 because Bruce is entering a period of two units undergoing MCR upgrades over the next three years. However, partially offsetting the overlapping outages will be the increased capacity from the completed Unit 3 MCR program in early 2026 and the three price increases in the outlook period that Annesley's slides highlighted.
Beyond Bruce, we're increasingly finding ways to optimize our Canadian gas storage assets, leverage our commercial capabilities in the U.S. and Canada, and ensure the continued high availability that you've seen from our Canadian cogeneration fleet. Increased capital efficiency and optimization have been a major focus and long-term win for TC this year. As these charts highlight, we've brought our net CapEx down by approximately 8% in each of 2024 and 2025. That is over $1 billion in near-term reductions. In 2026 and 2027, we've identified approximately another $1.3 billion in reductions, resulting in nearly $2.5 billion of capital savings in this outlook plan, with no material reduction in our three-year EBITDA outlook. So together with our strong EBITDA performance, these savings have created the highest value path towards our deleveraging plan, which we'll cover here in a minute. So we get the question, what's driving these gains?
It's been a combination of several factors working in parallel. First, as François mentioned, the integration and alignment of our three gas businesses has allowed us to capture efficiencies in every phase of project development from engineering design to procurement to field execution. One clear proof point of these gains is the improved cost estimate and delivery of our Southeast Gateway project. Importantly, in parallel with those technical gains, the continuous optimization of our capital allocation process has also had its intended effect. Projects now compete early and often through a rigorous stage gate process for the right to earn an allocation in our net $6-$7 billion annual CapEx budget. The next slide will show you how that allocation process is shaping up for the balance of the decade.
This CapEx dashboard highlights François's point that we have clear visibility on growth through the end of the decade for each of our business units. Equally important is that we're reducing risk by prioritizing smaller, repeatable, and lower-risk projects. To offer a data point, the right chart highlights that our average project size to the end of the decade is only $450 million and that we're building a growth portfolio with balanced diversification. So while we enjoyed visibility at the end of the decade, we continuously review the lead contenders for inclusion or removal from our pending approval bucket to ensure we're underwriting projects based on their ability to deliver highest possible risk-adjusted returns. So let's turn to the funding plan next. Our plan requires $31 billion of funding over the next three years.
We have $24 billion of cash flow that will fund the majority of that, with the remaining $7 billion expected to come from the capital markets. Given the rate-regulated nature of our businesses like NGTL, Mainline, our 12 FERC-regulated pipes, we do utilize EBITDA growth as incremental debt capacity below our 4.7 times leverage limit to optimize our return on equity given the deemed regulated capital structures that we work within. The key takeaway here is that our reduced CapEx and our dividend programs are funded by cash flow and new regulatory balance sheet capacity, meaning no new equity issuance is required to deliver this plan. This is where our organic deleveraging is coming from and what we believe is TC's optimal funding plan for the next few years.
Continuing with the deleveraging discussion, this is a very important slide that shows how we've met our commitments to improving our balance sheet strength and financial flexibility. Over the past two years, we've executed $7 billion of asset sales, achieved better than expected comparable EBITDA, and lowered our projected capital spend by approximately $2.5 billion over the next few years. 2025 does see a temporary uptick in leverage given the partial year contribution from Southeast Gateway. However, we are putting $8.5 billion of capital projects into service in 2025, which shows up in our 2026 EBITDA. And that's what provides us the ability to maintain our leverage at or below 4.75 times in 2024 and from 2026 and beyond. And as François said, our commitment to balance sheet improvement is ongoing.
We will continue to employ the same three debt reduction levers that have worked so well for us this year: growing EBITDA, delivering capital savings, and opportunistically rotating capital to capture arbitrages between our increasing M&A multiples in the market and our declining build multiples. So I want to spend one more slide on discussing leverage from a peer comparables lens to highlight why we think we have a balance sheet that is both fit for purpose and competitive. Bear with me here. You have to watch the screens. There's some animation. So this is a high-risk maneuver for a CFO. So stay with me here. So for those in Toronto, you'll be able to look at the slides. Where TC sits today: 4.75 times leverage, and my monitor froze, so you can help me on this one: 4.75 times, 97% rate-regulated.
Now we're going to overlay our midstream peers to illustrate the relative differences of TC versus our peer group. On the left chart, TC is one of only two midstream companies with excellent business risk profiles, each with similar leverage levels. The right chart highlights a critical dimension that François covered, mainly that the quality of TC's cash flows are materially better than the peer average, given our limited exposure to commodity volatility or other low-quality merchant earnings. Now, this is where it gets fun. We add the utility peer group for context. On the left chart, we sit evenly between two peer group averages. So we rely on the analysis on the right chart to ask ourselves the question, what does TC's unique business mix imply mathematically about our optimal leverage level between our midstream peers at 3.7 and our utility peers at 5.7?
Rest assured, we're not talking about migrating towards the utility leverage multiple, but the math here suggests that the midstream average is not exactly the right answer for TC either. We believe our business model with 97% utility-like cash flows supports maintaining the upper limit of our 4.75 times leverage rate for at least the next several years. I'm sure we'll have some Q&A. So in closing, I want to reflect on how TC's shares in the South Bow spin have performed for our investors. As of yesterday's close, the combined value per share was about $77.06, which is better than TC's all-time high, which was reached in 2020. That is an incredible testament to both the quality of our assets and their growth potential, as well as the market's confidence in our team's ability to operate these assets safely every day.
So we are grateful for our investor support in what's been a tremendous year, and which also marks the 24th consecutive year of our dividend growth. So I hope that you've all taken away from this morning session that my colleagues and I are each highly optimistic about TC's prospects and our ability to continue building upon our track record of long-term shareholder value creation. So with that, I'll end my segment, and my colleagues will join me back on stage here in just a moment. But first, we have an outstanding video featuring our Southeast Gateway project and some of the team who are leading it. As they cue the video, I cannot overstate our excitement about SGP as it heads towards its in-service date. SGP's success is a testament to the world-class team we have in Mexico that is building this truly nation-building project.
So let's kick off the highlight reel.
[Foreign language] Al terminar este proyecto, vamos a poder tener gas para poder tener plantas de generación de energía y tener más electricidad para todos los pobladores de esta región. Será un detonante social y económico para nuestro país. Me siento muy contenta y muy orgullosa de participar en este proyecto que es Puerta al Sureste. Me siento agradecido con mis compañeros y con mi equipo de trabajo, porque sin ellos y sin su esfuerzo día con día, no podríamos lograr lo que el día de hoy estamos logrando. Gran equipo de trabajo.
We're very proud of you. Well done. So we have some time for questions. And please state your name and ask your question. Thank you.
Hi, good morning. Jeremy Tonet, J.P. Morgan. Thank you for all the details today. Just wanted to follow up, I guess, on the data center conversation.
Obviously, it's very topical at this point. It seems like speed to market is the name of the game with many right here. Just wondering if you could expand a bit more on how TRP's platform differentiates them here, differentiates you here. In particular, I guess, experience with intrastate pipelines versus interstate and how that could be a tool to expedite the process.
Great. Stanley, take that one.
Yeah, thanks for the question, Jeremy. I could give you a little bit of insight there. The intrastate opportunity is advantageous in that all things equal, you don't have to go through the FERC process, and that in and of itself could potentially shave a year or two off of the in-service dates. However, there are some things that are unique about it. What's unique is that you cannot have access to any interstate gas to supply intrastate service.
You have to have the markets obviously located within the states. So to the extent there was, just making up an example, a data center in Louisiana that had a production source in Louisiana and was going to be served in Louisiana, that's a potential course to consider. But to the extent it's going to traverse state lines, then you're an interstate pipeline at that point in time. You have to go through the FERC process. So it really is bespoke and unique to where the data centers are physically located, where the supply source is, and how we could create that connectivity.
Thank you for that. And then maybe just following up, I guess, on the generation side, given TRP's experience here across all parts of the energy value chain, just wondering what advantages that might present to you.
We had talked a little bit last night about us operating at the intersection of electrons and molecules. And that's one of the things that makes us unique amongst our peers in that we have both a gas and a power business. And I would just simply say that as we go through and continue discussions with data centers and various entities, we're going to be very good listeners in terms of what our customers want. And if there's an interest in an opportunity, for example, for our gas business to build a lateral, and then for Annesley's power team to come in and build some on-site generation to provide electricity to the data center, we're open to that discussion. And again, we're open to it because we're the only one of our peers that can provide such a comprehensive service.
Got it. Makes sense. Very helpful.
And last point, FX clarification. Looks like it was a CAD 45 million pickup there. I guess you're at 135 spots at 140. My math would suggest CAD 225 million uplift versus what you put out there, just marking to market FX to spot. Just wanted to see if that was the correct interpretation and if that's the same across every year going forward in the planned period. Thanks.
I'll take that one, Jeremy. Good question. The CAD 45 million will show up in EBITDA, but as you just think about our U.S. business, we wind up paying most of our debt services in the U.S. So the better rule of thumb is the second bullet point on that slide. Every penny of FX is about a penny of earnings.
So our net, the real net from an earnings perspective, is about a penny because a lot of that interest expense winds up getting paid and doesn't all show up in EBITDA or DCF.
Hi, Teresa Chen from Barclays. Thank you for taking my questions. I wanted to go back to slide 18 in the presentation related to the 23 BCF per day of potential opportunities. Within your outlook here, where do you see the lower hanging fruit based on where your assets are situated and your incumbent position? And in the more competitive markets, whether by geography or by end use as outlined in this chart, how are you positioned against some of your peers and competitors as we've seen a number of open seasons and projects under development announced across the competitive landscape?
And maybe tying that to slide 45, the gray bars of potential CapEx to be sanctioned, how much of this opportunity in the 23 BCF per day is represented in the gray CapEx bars?
The strength of our origination opportunities really relies on the diversity of our assets. And I don't have the slide in front of me, so I'm going to do this by memory. But if you look at the 23 BCF or so potential that we've identified, roughly 9 BCF of that is related to LNG exports. 8 BCF of that is related to power gen opportunities, either coal to gas conversions or data center opportunities. And then another 4-5 is tied back to LDC reliability and supply opportunities. So again, when I think about those, we have a competitive advantage in almost every single one of those.
When you go back to coal conversions and the nine gigawatts of retiring capacity that's within 15 miles of our pipe, that's a competitive advantage. When you look at our position in Louisiana, for example, and what we've been able to do and grow our LNG exports and projects like our Gillis Access, that's a competitive advantage going forward. When you look at the data centers and the number of data centers, 200 or so that are within 50 miles of our pipe, that's a competitive advantage. So that's what we're trying to leverage. And I think the point that I want you all to take away is that we're not a one-trick pony, that if there's a slower growth or a slower pace of growth in any one segment for any reason, we have more than enough ample opportunities in the other areas to continue that growth.
One thing we're not going to have a problem with is filling up the $6-$7 billion of discretionary capital every single year. Can't tell you exactly which projects right now or which buckets are going to be in there, but we're going to fill up the $6-$7 billion every single year.
Just to add to that, and then Sean, I'd like you to maybe touch on the sanctioned and yet to be sanctioned versus our growth pipeline because we're going to work very hard to fill the gap between those gray bars and that $6 billion line. But one of the assets we have that doesn't show up on our balance sheet is the brownfield expansion capability of our systems. We are not contemplating the need for any brand new greenfield pipeline to prosecute and win that 23 BCF per day of growth.
That brownfield expansion capacity is actually one of the scarcest resources that's available in the industry. We have sufficient brownfield expansion capacity to actually execute our growth plan to the end of the decade.
Yeah, I think the only thing I'd tack on to that CapEx dashboard, two things. Even that pending bucket, there's a pretty high commercial and technical standard that our teams have to meet to even be included in that bucket. So what appears as white space between that pending and $6 billion, we have colleagues competing all day, all night for that kind of capital and plenty of pipeline to fill that. It's just a question of high grading, which is exactly the second point. You see a little bit of roll-off on that capital curve by 2027, 2028. That's intentional, right?
We're in this phase of scrutinize every project and wait as long as you can before you actually commit to make sure you have got the absolute next best project to fit into the stack. So that roll-off is intentional, and it's going to be kind of a two-year kind of filling towards the end of the decade. But we're well past 2030 in terms of the types of projects that our teams are actually out there developing right now.
Thank you. And good morning, Maurice Choy from RBC Capital Markets. Maybe sticking with the theme about higher gas demand, and I want to touch on the durability of the 40 BCF a day estimate here.
When you look at the drivers for this increase, is there a risk that if North America as a government, all the governments, or as a whole energy sector, if they don't get their act together, some of this demand actually goes elsewhere globally? And can you speak to the landscape that enables or deters you from delivering this growth to meet this 40 BCF a day?
Yeah, thanks, Maurice. I'll start at the policy level, and I'll ask Stan to supplement. The beauty of having a very focused portfolio where we have only two swim lanes, natural gas and power, is that we intentionally are focusing on businesses where there are differences in policy support from different political parties in each of the three jurisdictions, but largely speaking, nuclear and gas have bipartisan support on both sides of the aisle in each of the three countries.
Processes to get projects approved take longer or are speedier in different jurisdictions. But we have never had ever a natural gas pipeline permit application turned down. It takes longer than it used to because the diligence obligations around environmental impacts are more fulsome than they used to be. It costs more money to obtain a permit, but we factor all that into our planning processes. And so the benefit of being in those swim lanes and being diversified across the three jurisdictions is wherever that demand comes from, we're going to be able to fill that gap. And in terms of power generation, I'll remind everyone that while we currently only own gas and nuclear, we have historically owned and operated or dispatched literally every single fuel type there is. So we have a long runway of natural gas growth ahead of us.
We think it will speak for most of the capital out to the end of the decade. But to the extent policy around electrification starts to pivot, we will gradually over time migrate our capital allocation more towards electrification. And that's why we're confident in our ability to meet that growth.
And maybe I would just speak to the second part of your question in terms of what do I worry about or what could go wrong here. And one thing I think we continue to push for is permitting reform. And permitting reform in several respects. One is judicial challenges that really don't effectuate any well-being in terms of us being able to build the critically needed energy infrastructure that we need.
Permitting reform in the context of, I'd like to see FERC have more authority as a lead agency to help corral all the other dozens of agencies that are required in going through an approval process, and permitting reform in the context of something to recognize the disconnect and correct the disconnect between FERC issuing an order that says a project is in the public convenience and necessity, only to have the states then hold up a key water permit. That process seems to need to be revamped such that the states will have input during FERC's NEPA review. FERC will then make a decision, and then you go get your water permits thereafter.
Maybe just finishing off on a question on capital allocation here. You're clearly not short on growth opportunities, and you mentioned that you're keeping within the $6-$7 billion of a limit.
I assume you're not forgoing any of these opportunities, and I believe you've made it clear that you're not issuing new common equity in the near term at least. So capital rotation, perhaps Mexico and/or Canada, is a key lever you'll consider. Can you speak to the range of potential equity partners that you speak to these days versus, say, the range that you had, say, three to five years ago?
So we talked about, and Sean referenced in his prepared remarks, our desire to manage our exposure in Mexico. We'll be at 15% of consolidated EBITDA coming from Mexico after Southeast Gateway goes into service. There's still plenty of growth opportunities for us in Mexico. But what we need to be doing in sequence before we're allocating more capital in Mexico is we want to reduce our exposure down to that 10%-ish level over time.
We've had conversations with many interested parties throughout 2024. It's very clear that we have the best perspective and view on completion risk of Southeast Gateway that wasn't going to be reflected in offers that we had received for joining us as partners. Every one of our jurisdictions, we have incumbency. To maintain that competitive position of a leading market position, you have to continue to invest capital. So, for example, on Columbia, if we did not have GIP as a partner, we would still be investing $6-$7 billion a year in capital across the entire company. The benefit of having GIP as a partner is that we can stay within our net capital limit but continue to invest in the system so that it maintains its premier leadership position. That would be the benefit of having a partner in Mexico.
We're going to wait until the gas is flowing on all of our pipelines, the cash is flowing on all of our pipelines, and probably in that late 2025 or 2026 timeframe be looking to work down our exposure, and then Mexico will be growing at a rate that's commensurate with the balance of our portfolio in that 10%-ish range. We have the benefit of the diversification in all three countries. I see Mexico potentially surpassing Canada as an exporter of LNG to the world in the next decade or so, and we're excited about wherever the LNG export growth is going to come from, and as Stan mentioned, LNG exports continue to be the largest source of natural gas demand growth going forward. Through geopolitical tensions, there's been a rebalancing of affordability, reliability, and sustainability in terms of balancing those priorities.
I feel certain that the governments in North America want to contribute to global energy security. Energy security is geopolitical security. So there is a strong focus at all three levels of government to ensure that the free and democratic world has access to affordable and reliable energy. We're confident that North America is going to continue to play a leadership position in supplying the world with that natural gas.
Great. Praneeth, Wells Fargo, recognizing that you have $2 billion of spending per year of maintenance, $1 billion at Bruce. For the remaining $3-$4 billion of discretionary CapEx, can we say explicitly now that the hurdle rate is five to seven times EBITDA build multiple that you're seeing in the US?
Because I know you talk about risk-adjusted returns, but in the U.S., you've got counterparties that are offering 20-year take-or-pay contracts, which is basically a utility-like return. So in my mind, that seems like by far the best place to allocate capital. So I guess, is that true? And then in the context of that, how do you think about other projects like pumped hydro and things, and just how do you allocate capital in general?
Yeah, great question. I'll start, and I'll offer my colleagues an opportunity to supplement. Praneeth, you're very close on the capital allocation. The one modification I would make is that in Canada, for example, in our regulated business, we do have an obligation to serve.
So there is a minimum amount of capital that we have to allocate to ensure that we are growing receipt capacity as well as delivery capacity on the system to meet demand. So having said that, and that's what the multi-year growth program is intended to satisfy over the five-year period. Once that baseline of minimum requirement of capital has been satisfied, then the discretionary capital will be allocated to the highest possible returns. And it stands to reason over the course of the next few years that any unallocated capital is most likely to be directed to the U.S. market where the risk-adjusted returns are highest. Now, on things like pumped hydro, we have not yet had the conversation around what returns will be required to clear in our capital process. And we will make clear what those hurdle rates are that are necessary in order to receive capital.
Annesley, is there anything else you want to add to that?
No, I think that's exactly right. I think as we look at the opportunities in the power and energy solutions team, they compete directly with any of the projects that Stan's team is bringing forward. And Sean talked about this a bit in his earlier remarks. The visibility we have now to the pipeline at a very, very early stage allows all of the teams to understand what those hurdle rates will be. So whether it is down the road a Bruce C, whether it's the Ontario Pumped Storage Project, whether it might be gas fired generation in support of the gas transmission business, any of those projects would have to compete to get some of that incremental capital allocation.
And if I might add, Praneeth, it's such an interesting question.
What you all don't see, what this leadership team and our other ELT colleagues that are in the room have focused on is people, process, and culture, so our teams know exactly what they need to chase. They know who they're competing with. We have one scorecard for the entire company, so if a BD person in natural gas doesn't get an allocation because somebody else has a more competitive project somewhere else, everyone benefits, and so there's just a very strong focus around delivering the highest adjusted returns. And as you saw, the returns on the sanctioned projects have gone up every year since 2020. I would argue that as of where we are in 2024, our cost of capital is going in the opposite direction, so we really see the spreads between our earned return and our cost of capital widening over the next several years.
That's helpful.
Maybe just switching gears, when the South Bow spin was announced, you talked about a program to shave CAD 750 million of CapEx. I guess the first question is, how are you progressing on that? And how should we think about that CAD 750 million in the context of the CAD 2.5 billion that you announced today? I'm just trying to square those two initiatives.
Yeah, thanks for the question, Praneeth. What you're referring to is what we call our focus initiative. It's about fundamentally changing the way we do our work around safety, productivity, and cost. And when we first announced the program, we challenged ourselves to come up with CAD 750 million in value creation by 2025. And good news is we're at CAD 750 million of value creation by the end of 2024.
And you could quite simply think of that as roughly 40% or so is coming from capital savings, 35% or so is coming from revenue enhancements, and the balance is coming from O&M cost savings. So we're not going to stop there. We're going to continue to go forward. And our team is evaluating right now what our goal is going to be for 2025 and beyond. But it's been encouraging and enlightening to see the team really take hold of this and make sure that we're focused on cash and our cash spend. And while a disproportionate amount of these savings are going to be ultimately flowed back to customers as we file rate cases and have toll adjustments, it makes us more efficient. It makes us more competitive in the end. And that's a good thing for us.
Hi, good morning. Robert Catellier, CIBC Capital Markets.
Thanks for the presentation today and congratulations on the Coastal GasLink news.
Thank you.
I just wanted to check in on the status of the indigenous groups and their 10% equity option. And now that it's been declared in service, what's the process for that to play out and conclude whether or not they'll take that 10% option?
Thank you for that question, Robert. And as we mentioned on our third quarter earnings call, we are working very hard with all 72 communities with respect to developing a structure that increases that alignment, that economic alignment between us. Out of respect for that process, we are going to refrain from any additional comments until we have something that we can jointly announce to the marketplace.
When we announced that in mid-July or late July, we already saw the progress we were making on the capital side and the EBITDA improvements such that that transaction was no longer required for us to achieve our deleveraging commitments. But it was still extremely important for us to strengthen that economic alignment as part of our company's reconciliation with indigenous communities. That does not have to come in the form of a divestiture. It could come in many forms, whether they're relationship agreements or otherwise. So we're back to the drawing board and working very hard with the communities to come up with a solution. But it may come in a form that's different from an outright equity ownership interest.
I think you were addressing a NGTL. I was actually asking about Coastal GasLink. I believe that's still that 10% equity option. Is that true?
Yes, absolutely.
Forgive me for that. Stan, do you want to give an update there?
Yeah, the 10% equity option is still in play. We have to wait for the terminal to get in service. And then we have to go through a certain due diligence process. So that is yet to play out in the future.
Okay, thanks for that. And then I did want to just clarify the leverage situation. I just want to be crystal clear here. So I have a two-part question. As you've shown on slide 47, the 25 leverage is at 4.9 times, but 4.7 pro forma a full year of SGP. So the first part of the question is, despite the pro forma number, are you still trying to reduce the actual realized number in 25 down to that 4.75 level?
Yes.
That's what I figured.
And then you obviously have the levers on the right-hand side of the chart here, which includes the self-help, EBITDA, capital spending. But you also still have, and I imagine you will always have the capital rotation in your slide deck. But just with the amount of capital you've taken out with today's press release, the SGP, I'm curious if you can get all the way to your deleveraging goal without actually making an asset sale at all in 2025. Because my sense is your sell down in Mexico probably happens when that's fully de-risked. So that might be a 2026 item. So is it realistic to achieve the 4.75 in 2025 without any asset sales?
Yeah, good question. Good three or four questions in there, Rob. So the rule of thumb that you all see in the deck, it's roughly a $200 million EBITDA target.
It gives you about a tenth of a turn. So this is really what we're playing with, right? With $4.9-$4.75, it's $300 million of EBITDA, right? To just kind of put that in some kind of perspective, and we're going to be around $11 billion, right? We've done a pretty good job the last few years of kind of establishing a relatively conservative target and performing well against it. Rest assured, we're not happy or done at $4.9. We just have to own the data, right? That's what we're seeing without putting in a ton of optionality and with zero asset sales. We do not budget for the arbitrage that we capture every now and then. That's a long way of saying EBITDA and capital savings will be our path in 2025, not asset sales.
Because the ingredients for the right asset sales, we will be patient to get the right kind of setup for asset sales, and look, it may be Mexico in late 2025. It may be 2026 because we will not rush asset sales just for the purpose of a 0.05 for a leverage multiple. So, anyway,
just an additional point there, Robert, and thank you for the question. We announced a $199 million payment coming from the joint venture partners at LNGC. That will show up in comparable EBITDA over time, amortized over a 25-year period, but the cash is coming in the door no later than mid-December of next year, so that cash is also another source of deleveraging. The best source of deleveraging is to not spend a dollar in the first place, which is why you've seen that $2.5 billion of capital reductions be so powerful.
And so, to the extent we can outperform plan in 2025, that'll be another source. And then the other observation I would make in terms of the value of our assets. Think what the natural gas and power dynamics have demonstrated yet again are the nine lives of pipeline assets and steel in the ground. And the value and the market value of pipelines is increasing and has increased significantly over the last six months. But interest rates haven't quite yet fallen off to catch up with that. So the intrinsic value of our assets to us at the moment is far higher than what we think is executable in the marketplace. And we think that monetizing assets in the current environment, it'd be value destructive, not something we expect you all as our shareholders want us to be undertaking.
So we're laser-focused on improving our EBITDA and reducing our capital spend and looking for other sources of efficiencies to avoid any additional asset sales to achieve that number in 2025.
Yeah, that's very helpful. Thank you.
Hi, Rob Hope, Scotiabank. You reiterated the $6-$7 billion capital plan for the next couple of years with a bias towards the $6 billion. It seems like you're in an opportunity-rich environment. What do you need to see to move up towards that $7 billion range? Is it well below that $4.75 debt to EBITDA? So this could be more of a, we'll call it 2026, 2027 target.
Yeah, great question, Rob. That's exactly it. We want to build some cushion below that $4.75. Pipelines take three or four years to get from sanctioning to cash flowing.
You'll see a debt to EBITDA sort of float up and down based on the amount of time between the deployment of capital and putting your assets in the ground and then starting to cash flow. For us to creep up to the upper end of that six to seven range, we want to build a little bit of a cushion below that $4.75 before we're pushing the limit there. Again, I know some of you had this question last evening at our reception. The $6-$7 billion capital program is not just a function of the financial math and financial capital. It's also our human capital.
When we did a good hard look in the mirror a couple of years ago at our performance and project execution, when we looked back over the last 10 or 20 years, when our capital program annually was six to eight or below, we performed very well on our capital projects. Above 10 is where you saw more variability in the outcomes. And so human capital is also an important consideration. And we will not undertake a larger capital program if we feel that it may compromise the quality of our execution because that's, I think, the fundamental pillar of us being able to create value.
Thanks for that.
Then maybe switching over to the US natural gas pipelines, the 4% EBITDA CAGR out to 2027, how do you think that evolves towards the end of the decade as an increasing proportion of capital gets spent to the natural gas business there, as well as seeing the higher returns? Is that 4% kind of the base with potential upside?
So I'll start, and I'll ask Stan to offer some comments. The CAGRs you have in the presentation today are based on the capital that has been sanctioned and unsanctioned, but we're pursuing in the gray boxes. To the extent we can fill that space between the white space where we have sanctioned to the $6 billion, it's going to accelerate that growth. But in terms of the market dynamics, over to you.
Maybe two things worth noting for your consideration is, one, the unprecedented demand that we're seeing for our capacity. All things equal means that we should be able to see higher prices than we're realizing when we're selling our capacity up to a cap, recognizing that we are a regulated entity and we do have a cost cap at the end of the day. So that, and in conjunction with the fact that we're starting to become really, really good at project execution over the long term, right? Really good project execution is not about just taking advantage of any one opportunity. It's about what we've done with respect to aggregating our gas businesses under one leader, changing our governance procedures, and going out and hiring a world-class expert to lead our project team going forward, all things which we've done.
I think the combination of the strong demand, creating higher upward pressure on prices, and really, really good project execution is what we expect to maybe take us up a notch with respect to the CAGR targets going forward.
Hi, Keith Stanley from Wolfe Research. First question, just the Canadian gas pipeline segment looks pretty strong. You have $300-$400 million of EBITDA growth. And I think the rate base and net income is flatter. Can you just talk about what's driving that much growth in EBITDA in Canada?
Again, it's the strong demand that we're seeing for our capacity across all the jurisdictions. When you go back and you look at the NGTL System, for example, over the past three or four years, we put in two BCF a day capacity. Immediately, it was filled up.
We announced our multi-year gas plan that we're going to add another BCF capacity over the next five years. Expect that that's going to be immediately filled up. Coastal GasLink, when we go in service with the terminal, you're going to see another two BCF a day of demand, so strong fundamentals for the demand, strong power loads, record receipts. It's just a proof point to the fact that the Western Canadian Sedimentary Basin is one of the strongest basins out there from a pricing perspective and that there's plenty of gas between it and the Appalachian Basin to fund the growth that we have going forward across all of our geographies.
And I would add to that the settlement. When we focused on the multi-year settlement with our customers on NGTL, we focused on cash flow and return of capital.
So we have accelerated depreciation in the five-year rate settlement because return of capital and velocity of capital is actually important when we have so many opportunities across all our jurisdictions. So even though the rate base stays relatively stable and net income has modest growth, we've seen a growth in EBITDA because of the increased depreciation. And that allows us to redeploy that capital more quickly into the highest returning opportunity.
Thanks. Second question, just the AFFO growth of 4%-5% versus the EBITDA growth of 5%-7%. Can you just talk to some of the nuances that cause the AFFO to be a little lower on growth?
Yeah, happy to. Whether it's AFFO or DCF, they'll generally track kind of EBITDA minus kind of 100 basis points or so. And you have leverage fundamentally, right? And some partnership deductions, that's generally the discount.
But we've got a great appendix for you for anybody else who wants that to kind of take you through all the way down to AFFO and DCF. But I'd lose the room if I went any further than that right now.
Hey, good morning. Olivia Halferty, Goldman Sachs. Ahead of the $6-$7 billion CapEx limit starting next year, another initiative you have discussed is pursuing fewer large projects at a time, even limiting to one large project to manage execution risk. Today, it seems like TC Energy's backlog is filling with more medium-sized projects. So I'm wondering if you can talk about the broader strategy in pursuing those medium-sized projects more broadly. Then second question, if there's room in your backlog to pursue some of those larger projects, what seems most interesting?
Thank you for the question, Olivia.
So as Sean mentioned in his prepared remarks, the average size of our projects right now in terms of what's sanctioned is $450 million. We went there with intent. And the intent is a recognition of the lower risk that's inherent in brownfield projects in an existing jurisdiction. Our track record, going back to that 20-year lookback we did on our execution performance, is that when we're dealing in corridor with communities that are familiar with us on terrain that we know because we're the existing operator, with project sizes that are in that small to medium-sized range, our execution track record is impeccable. So when you look at larger projects, what would have to screen for us to be willing to sanction that? It would be impact on portfolio composition. So OPS would be on the larger end, would, I think, fit in that criteria that you mentioned.
It has to deliver returns that are competitive. We have to be comfortable with the risk. And for us to pursue something like OPS, we will bring in partners. Our intent on something like OPS would be to own as large or larger an interest as other partners, but not necessarily the majority of that asset going forward. And then we would also adopt different contracting strategies. Typically, we have not in the past for large projects adopted sort of a fixed-price turnkey contract. For large projects going forward, we will be adopting those kind of contracting strategies. Secondly, and this is something we learned from CGL, we're going to focus very clearly on the allocation of risk among partners in terms of for us not owning the cost and schedule risk on a project of that size. We don't need to adopt projects of a very large scale anymore.
We have not only in the sanctioned projects that are in the presentation, but Sean alluded to the fact that we've got a whole backlog of development projects we're pursuing. Other than OPS, none of them are in that above 1 billion to 3 billion plus range. We can deliver on our growth without actually going down that path. We're going to stick to that to every extent possible.
Manav Gupta, UBS, slide 39. Looking at 2027, that's a very narrow range of an EBITDA for something that far out. Just trying to understand, is that like a hard guidance or more like a target at this point? What are the buffers built in there which could actually move you towards the top end of that 11.9 and maybe over 12?
Good question. It is a target.
But as you've seen, we have such crisp visibility on the projects. 2027 is not that far away, actually. And what you saw on our capital program and the projects that both Stan and Annesley, we're confident in that range, which is why it is that narrow. There's not a lot of variability on what we do between now and 2027, except for you, Rob, on how we're managing 2025. So we feel pretty good about that. The same levers that have worked so well in 2024 are in play every year for as long as we're in business, right? It is beating the budget on both EBITDA and the continued kind of just extraction of that CAD 2.5 billion out of the capital program. Those are the upsides, if any, that I think about as 2027, plus capital rotation and arbitrage, but we don't model that.
Yeah, and maybe just to double-click on that a little bit further. I think of it in the context of what can provide further upside for us. It's the demand that we're seeing across all of our assets in the context of that demand means that we're doing less discounting across our systems and we're getting more max rate transactions. That demand means that we're having less spoilage or less unsold capacity. So we're selling more capacity going forward. And then back to Praneeth's question, our focus initiatives, to the extent that we continue to take cost out of the organization in subsequent years, that's going to give us a little more upward momentum too. So now it's up to us to execute on those types of strategies.
So I think we have time for maybe two more questions.
Hi, it's Ben Pham, BMO Capital Markets.
Thanks for providing ample time for questions.
Welcome.
First question on your guidance, François, you have EBITDA, AFFO through 2027, and you've shifted towards AFFO. Is that signaling that as a primary KPI figure for you long term? How do you think about EPS?
Absolutely. So if you go back to our self-reflection and how to create more capital discipline in the organization, four or five years ago and earlier, in our long-term incentive program for our executives, we had cumulative EPS as the target. Given that as a regulated entity, we can use regulated accounting principles in our GAAP accounting, we created an incentive to maximize AFUDC, which runs counter to capital discipline. So we made a decision starting about two years ago to focus more on cash per share rather than earnings.
Whether you use AFFO or DCF per share, I know there's a lot of variability in how people define DCF. The reality is both earnings and cash flow matter in this company. We have an EPS target in our annual scorecard. We have a DCF per share cumulative target in our long-term incentive program. Where the two compete, we will always choose cash. That's why in the multi-year settlement on NGTL, we focused on accelerating depreciation and return of cash flow because that enhances EBITDA, which enhances our creditworthiness and actually allows us to allocate capital to higher growth opportunities. We do have partners, GIP in the case of Columbia, and we want to make sure that our cash flow per share generation, because we always think in per share terms, is visible to our investors and to analysts.
So we think that AFFO, given that we consolidate 100% of EBITDA where we have minority interest, AFFO nets out NCI, pardon me, which is a more accurate reflection of our cash flow per share growth, and we always think in terms of cash flow per share growth must always be higher than dividend growth, and that'll be the driver to maintain creditworthiness, maintain a stable payout ratio of dividends, and provides the best visibility to our ability to grow the dividend over time,
and can I follow up on Bruce Power, power business broadly? Do you think that's an underappreciated part of your business? And is there any sort of, you think where my question's going, a sort of spinout opportunity for that,
so I was going to pass this one over to Annesley, but when you talk about the spin, I think that's probably mine.
Look, there are three things that create value in a nuclear business. First and foremost, it's excellence in management. We have the best management team, in my opinion, in the entire nuclear world managing our MCR program. Second is you have a locational advantage. We have an operating license already. The community is comfortable with having a large nuclear facility in its area. And the third is that we have a supply chain and we have a labor force that has surrounded Bruce in order to pursue the expansion program. That means that we have a very high degree of confidence in delivering our projects on time and on budget. In the same way as Mexico, where we've been in conversation with potential partners and they have been valuing the construction risk, we think inappropriately, given our level of comfort, we are extremely comfortable with the execution risk at Bruce.
Over the course of the next two to four years, we're going to be bringing a significant amount of those units online, adding 40 years of useful life to each of the units that we put back into service. We think that hanging on and being the owner and investor and continuing forward with the progress of the MCR program is creating a lot of value for our shareholders. Down the road, once we get closer to the end of the program and if the expansion of Bruce C looks like a viable option, those are very large capital dollars. At that time, would we contemplate bringing in a partner to share in what would be an even larger program going forward and crystallize some of the value of that investment? Absolutely.
But for the time being, we are very comfortable with the risk we are owning in exchange for essentially doubling the profit before tax that we're getting from Bruce Power between now and 2032. Pat Kenny, National Bank.
Just a question on the cash flow quality profile, given it is akin to your utility peers. I'm just wondering if you're seeing more and more opportunities to invest alongside your LDC customers and perhaps if you see strategic value in extending your value chain more downstream.
Do you want to take the first part of that, Stan?
Yeah. Again, there are opportunities that abound out there and there are a lot of synergies between us and some of our LDC customers that we would love to explore when the time is right to do so. Yeah.
In terms of downstream integration, Pat, I don't see the need for it right now. As a company, we are long natural gas demand growth. We are very adept at managing our existing business. We have more growth opportunities than we can prosecute. I don't see us feeling the need to integrate downstream in either the LNG in the liquefaction space or in the LDC space. And to the extent the opportunities shift over time, maybe we would contemplate that, but it's not in the cards right now.
Any other questions or we can wrap up there and head out to the lobby here to continue the conversation with our senior leadership team? Any other questions?
So I want to thank all of you for attending our session today.
We do have breakout sessions in the lobby behind us in each of our different business units to the extent you all have additional and more detailed questions to ask of any of our leaders. I want to thank our investor relations team. You all know that this is a very heavy lift putting this type of session together. I want to thank the folks at Lumi for hosting us in this facility. We are going to be following up with you over the course of the next few weeks. We are contemplating migrating to an investor day every two years going forward. And then the offsetting year, perhaps having an interesting site visit. And what we're thinking about potentially for 2025 would be bringing a group of shareholders down to Mexico since that's becoming an important part of our business.
We'll be looking for your feedback on how you would feel about that approach. We are good listeners. We're a learning organization and we'll factor in that feedback into our plan. Thank you very much for your time this morning and have a great day. Bye-bye.