Thank you for standing by. This is the conference operator. Welcome to the TC Energy First Quarter 2021 Results Conference Call. As a reminder, all participants are in listen only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions.
I would now like to turn the conference over to David Moneta, Vice President, Investor Relations. Please go ahead.
Thanks very much and good afternoon everyone. I'd like to welcome you to TC Energy's 2021 Q1 conference call. Joining me today are Francois Poirier, President and Chief Executive Officer Don Marchand, Executive Vice President, Strategy and Corporate, U. S. And Mexico Natural Gas Pipelines Bevan Wurspa, President, Liquids Pipelines Corey Hesson, President, Power and Storage and Glenn Manusz, Vice President and Controller.
Francois and Don will begin With some opening comments on our financial results and certain other company developments. A copy of the slide presentation that will accompany their remarks is available on our website and can be found in the Investors section under the heading Events and Presentations. Following their We will take questions from the investment community. If you are a member of the media, please contact Jamie Harding following this call and she'd be happy to address your questions. In order to provide everyone from the investment community with an equal opportunity to participate, we ask that you limit yourself to 2 questions.
If you have additional questions, please reenter the queue. Before Francois begins, I'd like to remind you that our remarks Today will include forward looking statements that are subject to important risks and uncertainties. For more information, during this presentation, we'll refer to measures such as comparable earnings, Comparable earnings per share, comparable EBITDA and comparable funds generated from operations. These and certain other measures are considered to be non GAAP measures. As a result, they may not be comparable to similar measures presented by other entities.
They are used to provide you with additional information on TC Energy's operating performance, liquidity and its ability to generate funds to finance its operations. With that, I'll turn the call over to Francois.
Good afternoon, everyone, and thank you for joining us this afternoon. As outlined in our Q1 report to shareholders, Our diversified portfolio of high quality long life energy infrastructure assets continued to perform very well in early 2021. Despite energy market volatility, weather events and the ongoing impact of COVID-nineteen, Flows and utilization levels across our network remain strong. For example, our U. S.
Natural gas pipeline network moved nearly 29 Bcf per day in the Q1, an increase of 4% over the same period in 2020, while field receipts on the NGTL system in Alberta were more than 12 Bcf per day. And in our Power and Storage business, Bruce Power continued to produce solid operating results, while in Alberta output from our cogeneration plants nearly doubled due to the return of service To service, sorry, of our Mackay River plant and withdrawals from our natural gas storage facilities increased by 75% over the same period last year. Once again, this highlights the essential role our infrastructure plays in the functioning of the North American economy and the well-being of people across the continent. And we take this responsibility seriously. And as always, we conducted our business in a safe and reliable manner.
Safety is one of our core values and is embedded in the fabric of our organization and evident in our commitment to ongoing pipeline system integrity. We've invested $150,000,000 in pipeline inspection, research and development since 2010 and 1,000,000,000 in pipeline system integrity Using the most sophisticated and advanced data analytics and comparable earnings per share and comparable Funds generated from operations in the Q1 of 2021, all similar to last year's record results. And this was achieved despite one time Sur de Texas fees in the Q1 of 2020, the sale of our Ontario gas fired generation assets last April and the loss of interest during construction on Keystone XL. Now on Keystone, we were very disappointed with decision in January to revoke the presidential permit. As a result of the decision, we subsequently agreed with our partner, The Government of Alberta to formally suspend the project and evaluated our investment for impairment along with certain other projects in development including the Heartland Pipeline, PC Terminals and the Keystone Hardisty Terminal.
This resulted in an after tax Asset impairment charge of $2,200,000,000 which was excluded from comparable earnings. These costs will be shared with our partner, thereby reducing our net financial exposure at March 31 to approximately $1,000,000,000 I'd like to thank our customers, American and Canadian workers, our partners, The Government of Alberta and Natural Law Energy, local communities, the pipeline building trade unions, Industry, the Government of Canada and countless others who supported this project over the past decade And would have shared greatly in its benefits. And while we are all disappointed with the outcome, the experience we gained is not lost. Through the process, we identified meaningful indigenous equity opportunities, collaborated with Union Labor and developed a robust plan to ensure the pipeline achieved net 0 emissions from the moment it would have gone into service in 2023. And you can expect to see us continue to apply this innovative approach to projects in the future.
Looking forward, we expect our solid operating and financial performance to continue with 2021 comparable earnings per common share anticipated to be generally consistent with the record results we produced in 2020. We also continue to advance $20,000,000,000 of secured projects that are expected to enter service by 2024 and help power the North American economy for decades to come. A substantial portion of this growth is related to our natural gas pipeline network. This infrastructure is critical to support the transition to a lower carbon world As natural gas will play a key role in both displacing higher emission coal fired power and providing the necessary backstop to the intermittency of renewable power. All of our projects are underpinned by cost of service regulation or long term contracts, giving us visibility to the earnings and cash flow they will generate.
In addition, we are progressing $7,000,000,000 of projects under development, including the refurbishment of another 5 reactors at Bruce Power. The refurbishment program will run through 2,032 and is underpinned by a long term contract with the Ontario ISO that extends to 2,064 providing us with stable and predictable earnings and cash flow and the province with emissionless power. Over the mid to longer term, we expect numerous other opportunities to come to fruition as the world both consumes more energy and the transitions to a lower carbon energy future. Ultimately, our goal is to continue to invest $5,000,000,000 to $6,000,000,000 annually to deliver on our long term growth plans. As you can see on this slide, Our starting point is our $20,000,000,000 secured capital program.
Beyond that, we expect to continue to invest $1,500,000,000 to $2,000,000,000 annually in maintenance and modernization programs across our extensive pipeline network, approximately 85% of which is recoverable through our rate regulated businesses. We're also developing a significant With the ongoing energy transition discussion, it's easy to forget that the world will continue to rely on large quantities of natural gas And oil for the foreseeable future. And with 94,000 kilometers or 58,000 miles of existing natural gas pipelines, We are well positioned to continue to meet growing demand through highly executable in corridor expansions. That said, the energy mix of the future will evolve with renewables, for example, making up a greater portion of the overall fuel mix. Our goal is to build on our long history of success and be agnostic to which form of energy will ultimately lead to a lower carbon energy future.
As a result, you will see our capital allocation shift over time to meet the energy mix of the future. And to me, this is very exciting and represents a tremendous opportunity. Whether it's renewables And the firming resources needed to manage their intermittency, electrifying our fleet or other emerging technologies, Our existing asset base, technical capabilities, innovative approach and financial strength means that we are well positioned to prosper irrespective of the pace or direction energy transition takes. For example, we've been engaging with various stakeholders in Ontario to advance a large pumped storage opportunity. The project is designed to store emission free electricity and provide a backstop to the intermittency associated with the energy provided by renewables.
More recently, through the issuance of a request for information, We've announced that we are seeking to identify potential contract and or investment opportunities in wind energy projects that could generate up to 6 20 megawatts of 0 carbon energy to meet the electricity needs for a portion of our U. S. Pipeline assets. This is an important step in advancing our plans to leverage the Power business as a platform for future growth and diversification, while lowering emissions across our North American footprint. In summary, I believe we will be opportunity rich I can assure you we will not compromise our commitment to being thoughtful, deliberate and disciplined in every investment decision we make.
Based on the continued strong performance of our base business and our organic growth plans, we expect to continue to grow our dividend at an average annual rate of 5% to 7%. As always, the growth in dividends is expected to be supported by sustainable growth in earnings and cash flow per share And strong coverage ratios. I'm confident that the future opportunity set combined with our capabilities We'll continue to deliver superior risk adjusted total shareholder returns well into the future. I'll now pass the call over to Don Marchand, who will provide more details on our Q1 financial results. Don?
Thanks, Francois, and good afternoon, everyone. As outlined in our results issued earlier today, we reported a net loss attributable to common shares for the Q1 of $1,100,000,000 or $1.11 per share as compared to net income of $1,100,000,000 or $1.22 per share for the same period in 2020. As Francois mentioned, the loss primarily stems from an after tax asset impairment charge of $2,200,000,000 related to the formal suspension of the Keystone XL Pipeline project following the January 20, 2021, replication of the U. S. Presidential permit.
The charge is net of expected contractual recoveries and other contractual and legal obligations associated with suspension activities. However, it does not reflect offsetting amounts with respect to the Government of Alberta's investment and guarantees, which are expected to be through the consolidated statement of equity in future periods. As at March 31, those include dollars outstanding on the guaranteed credit facility reported in the current portion of long term debt. After taking these offsets into consideration, Our net financial exposure on Keystone XL is approximately $1,000,000,000 Q1 2020 also included certain specific items outlined slide and discuss further in our Q1 2021 report. These specific items as well as unrealized gains and losses from changes in risk management activities are excluded from comparable earnings.
Comparable earnings in the Q1 were 1 our business segment results on Slide 11. In the Q1, comparable EBITDA from our 5 operating segments of $2,500,000,000 was essentially in line with 2020. Canadian Gas comparable EBITDA of $686,000,000 was $89,000,000 higher than the same period last year, primarily on account of Taxes on the NGTL system and financial charges on the Canadian Mainline. NGTL system net income increased $17,000,000 compared to Q1 2020 as a result of a higher average investment base and continued system expansions and reflects an ROE of 10.1% on 40% deemed common equity. Net income for the Canadian Mainline increased $12,000,000 year over year, largely due to the elimination of a $20,000,000 after tax Annual TC Energy contribution under the mainline 20 21, 20 26 settlement and higher incentive earnings in 2021.
U. S. Natural gas comparable EBITDA of US833 $1,000,000,000 or CAD1.1 billion in the quarter rose by US67 $1,000,000 or CAD23 million compared to the same period last year. The improvement was due to increased earnings from Columbia Gas following the application for higher transportation rates effective February 1st, Subject to refund upon completion of its rate proceeding, along with incremental earnings resulting in greater capitalized pipeline integrity costs in 2021 compared to 2020 and the contribution from growth projects placed in service, partially offset by higher property taxes associated with new projects. In addition, earnings across our U.
S. Gas Pipeline assets were generally higher due to the cold weather events in Q1 2021, which had an impact on many of the markets we serve. Mexico Gas Pipelines' comparable EBITDA of US142 million dollars or CAD180 million It was US56 $1,000,000 or CAD89 million below Q1 2020, largely due to a US55 million dollars The U. S. Of fees recognized in 2020 associated with the successful completion of the Certain Texas Pipeline.
Liquids Pipelines comparable EBITDA declined by $52,000,000 to $393,000,000 in Q1 2021, primarily due to the net effect of lower volumes on the Keystone Pipeline system and an increased contribution from liquids marketing activities, mainly attributable to higher margins and volumes. Power and storage comparable EBITDA fell by $13,000,000 year over year to $181,000,000 on account of decreased Bruce Power results, mainly attributable to the net effect of lower volumes resulting from greater outage days, partially offset by Q1 2021 gains on funds invested for postretirement benefits. For all our businesses with U. S. Dollar denominated income, including U.
S. Natural gas, Mexico gas pipelines and parts of liquids pipelines, Translation of results into Canadian dollars occurred at an average exchange rate of $1.27 in Q1 'twenty one compared to $1.34 in 2020. While the weakening of the U. S. Dollar had a negative impact on comparable EBITDA year over year, the corresponding effect on comparable earnings Was not significant due to offsetting natural and economic hedges.
To recap our approach to managing foreign exchange exposure, Our U. S. Dollar denominated EBITDA streams are partially hedged by U. S. Dollar denominated interest, depreciation and taxes.
We then actively managed the residual exposure on a rolling 2 year forward basis with realized gains and losses on this program reflected in comparable interest income and other. Now turning to the other income statement items on Slide 12. Depreciation and amortization of 645,000,000 Increased $15,000,000 versus Q1 2020, largely due to new projects placed in service in Canadian and U. S. Natural gas pipelines.
As a reminder, depreciation in Canada Gas regulated pipelines is fully recoverable in tolls on a flow through basis. Interest expense of $570,000,000 for Q1 2021 was $8,000,000 lower year over year due to the net effect of a weaker U. S. Dollar on translation And U. S.
Dollar denominated interest, long term debt issuances net of maturities, lower interest rates on reduced levels of short term borrowings and lower capitalized interest due to the completion of Mapanee in Q1 2020, the change to equity accounting for our Coastal GasLink investment in Q2 2020 and the revocation of the U. S. Presidential permit for the Keystone XL Pipeline in January 2021. AFUDC decreased $32,000,000 compared to the same period in 2020, largely due to NGTL expansion projects placed in service and the suspension of recording AFUDC on Villa de Reyes effective January 1 due to ongoing delays on the project. Comparable interest income and other increased by $44,000,000 in the Q1 versus 20 exposure to U.
S. Dollar denominated income, partially offset by lower unrealized foreign exchange gains on peso denominated deferred income tax liabilities, Net of derivatives used to manage this exposure. Income tax expense included in comparable earnings was $204,000,000 in Q1 2021 Excluding Canadian rate regulated pipelines where income taxes are a flow through item and that's quite variable Along with equity AFUDC income in U. S. Natural Gas Pipelines, we continue to expect our 2021 full year effective tax rate to be in the mid to high teens.
Comparable net income attributable to non controlling interest of $69,000,000 in the Q1 decreased by $27,000,000 relative to the same period last year, primarily due to the March 3, 2021 acquisition of all outstanding public We held common units of TC PipeLines LP, which resulted in it becoming an indirect wholly owned subsidiary of TC Energy. And finally, preferred share dividends were comparable to Q1 2020. Now turning to Slide 13. During the Q1, we invested approximately $1,900,000,000 mainly towards expansion of the NGTL system, Columbia Gas Projects as well as maintenance capital. As previously mentioned, in March, we completed the TC PipeLines LP acquisition in exchange for 38,000,000 TC Energy common shares Valued at approximately $2,100,000,000 As the Pipe LP was previously fully consolidated in our accounts, The transaction was largely recorded within the equity component of our balance sheet.
Additionally, in March, we issued $500,000,000 of junior subordinated notes At a rate of 4.2 percent with the intent to redeem at par all $500,000,000 of issued and outstanding Series 13 preferred shares on May 31. Finally, the fully guaranteed Keystone XL non recourse project level credit facility currently remains in place And is expected to fund the majority of residual costs. Now turning to slide 14. This graphic highlights our forecasted sources and uses of funds for 2021 through 2023. Starting in the left column, the total funding Requirement over the 3 years is projected to be approximately $29,000,000,000 comprised of dividends of $11,000,000,000 capital expenditures Including maintenance capital of $15,500,000,000 $2,000,000,000 attributed to the TC PipeLines LP acquisition completed in March and $500,000,000 related to the pending Series 13 preferred share redemptions.
The second column highlights Expected internally generated cash flow of $21,000,000,000 $2,000,000,000 of common shares issued pursuant to the Pipe LP buy in and the $500,000,000 junior subordinated notes off and completed in March. That leaves a residual need of approximately 5 $5,000,000,000 depicted in the far right column that will be funded predominantly through a combination of incremental debt, commercial paper And Keystone XL project recoveries. The program is consistent with our goal of maintaining debt to EBITDA in the high 4s and FFO to debt of 15%. Now turning to Slide 15. In closing, I offer the following comments.
Our solid financial and operational results In the Q1, we continue to highlight our diversified low risk business strategy and reflect a robust performance of our blue chip legacy portfolio along with the contribution of equally high quality assets from our ongoing capital program. While we were very disappointed by the revocation of the presidential permit for Keystone So in the resulting after tax impairment charge, our irreplaceable footprint, proven organizational capabilities and vast opportunities that position us to continue to grow earnings and cash flow in the years ahead in accordance with our long standing risk preferences. This is expected to support annual dividend growth of 5% to 7% in the future. Our financial position remains strong with the ability to fund our $20,000,000,000 Finally, we will continue to maintain financial strength and flexibility at all points of the economic cycle. That's the end of my prepared remarks.
I'll now turn the call back over to David for the Q and A.
Thanks, Don. Just a reminder before I turn it over to the conference coordinator for questions from the investment community, we ask that you limit yourself to 2 questions. If you have any additional questions, please reenter the queue. With that, I'll turn it back to the conference coordinator.
Thank you. We will now begin the question and answer session. Our first question comes from Linda Ezergailis of TD Securities. Please go ahead.
Thank you. I'm wondering if you can just elaborate a little bit more on your Slide 7 And what looks like your vision for the energy evolution that you'll be participating in? And specifically here it talks about new investments, but it does seem that some of your existing assets might be used differently, including How your pipes might be contracted by your various customers, whether it be LNG exporters, utilities or producers? How might this change the attributes of your cash flows, your risk profile, etcetera, And also potentially create service opportunities, for example, delivering sourcing and delivering renewable natural gas increasingly as
Hi, Linda. It's Francois. That's a great question. I'll get started and I'll ask Dan and then Tracy to offer some color and some proof points on each of Canada and the U. S.
First, I'll start with our overall philosophy is that We expect to continue to find plenty of opportunities to allocate our capital either underpinned by Regulation or long term contracts. So our approach with respect to what we're looking for, for commercial sanctioning will It's absolutely accurate that there are Some opportunities to electrify and reduce emissions on our existing fleet, firstly. And then secondly, opportunities to Invest in new technologies like hydrogen CCUS and transportation of renewable natural gas. So with that overarching comment, I'll ask Stan, let's start it and then move to Tracy.
Hey, Linda. This is Stan. And maybe just to give you some potential of the perspective around your question about 25% almost of our compression fleet is made up of slow speed units and they range in age anywhere between 40 to 70 years old. So electrifying these units, for example, would reduce our Scope 1 missions by over 1,000,000 tons and you can think of that as about A 15% reduction of our overall remissions. And then, we're going to work closely with Corey's team obviously to find a green power solution To address the Scope 2 emissions.
With your other question other part of your question around who's likely to make up our Pipeline holders going forward. Today, when we look at our profile, we have about 40% LDC customers, a little less than 40 percent producer customers and about 25% marketers or others. I think that's a pretty well rounded mix and I really don't see that changing that much into the future.
And Linda, I'll come over top of the Canadian systems, a little bit different perspective. We're looking at The concept of the federal carbon tax and that growing over time provides a bit of a framework for how we think about at the first stage, the emissions reductions. We have about just over 10% of our compression right now that's electric. And as we look at the opportunity on that, we have identified The next level of compressors that would be priority candidates based on utilization size, age and proximity power. So the next 30% to 40% of our compression is all good candidates and we've got a subset of that that they're working on most closely.
You think about the emerging carbon tax, it makes it gives us an opportunity to do that in a manner that offsets those taxes and the impact on our customers. So that's kind of first level for that, badness and methane reduction. But beyond that, there's waste heat opportunities, Tiki, Positions us perfectly for the emerging work that's coming in hydrogen and hydrogen blending. And we do see our pipes being Big assets when it comes to thinking about the future of how hydrogen is going to move. I'll leave it there for now.
Thank you. And as a follow-up, recognizing that there's a lot of organic growth and capabilities to capture that in your existing footprint, I'm wondering if there might be an opportunity around the edges to accelerate your energy transition evolution by Considering either acquisitions, divestitures, repurposing, I think you alluded to especially on the hydrogen front, But also potentially some late stage development opportunities, maybe some capabilities to To round out what you already have in house, etcetera, how are you thinking about that as being a lever to accelerate your transformation?
Linda, it's Francois. Perhaps I'll ask Corey to comment as a proof point or an example, the RFI we issued to developers of wind assets For about 6 20 megawatts of load. And then perhaps I'll ask Don to just comment generally on our efforts on the M and A side. So Corey?
Hi, Linda. Yes, we recently went to market with an RFP For an RFI, excuse me, for 6 20 Megawatts of Renewable Wind Energy to Power Pipe system in part of our North American footprint. We will be continuing that process with RFI later on in May for solar energy as well. So we see that as a Very interesting opportunity set to leverage our existing load and bring economic opportunity to the company that aligns with our Risk and return profile. I'll pass it over to Don.
Hi, Linda. On the M and A front, We don't see M and A as necessary to meet our growth targets. But that said, we're always assessing the market and we're looking for Opportunities to fill in gaps in the portfolio, consolidate ownership, improve connectivity and add capabilities, which I think is what you're alluding If we look at where we might want to add capabilities, it would still fall into the more of the Same category in terms of our risk preferences, what we're looking for to contribute to our Return profiles, credit profiles, no fundamental change in geographies, basically long term annuity streams. So we're not looking to move up the risk curve If we do look at new capabilities, we're not particularly interested in highly speculative Technologies and the like on any large scale. So more of the same, but Would help us progress things like the RFI, things that where the puck is going To look at the Gretzky quote in terms of new technologies and new businesses.
Thank you. I'll jump back in the queue.
Our next question comes from Robert Catellier of CIBC Capital Markets. Please go ahead.
Hi. Just a follow-up to that line of questioning. I'm just curious what you think is necessary in terms of policy To support, obviously, the tax credits are something that's being looked at. But in order to really For the industry to get traction both on CCUS type investments, but also separately if you could address that same question with respect to pump storage?
Perhaps I'll get started, Rob, and I'll ask on the pump storage, I'll ask Corey, to backfill. First of all, we feel that the proposed Tax incentives in the recent Canadian budget are a positive step, a step in the right direction to have Government and the private sector collaborate. We need those tax incentives to accelerate the development of CCUS technology and develop it at scale. We also see And develop it at scale. We also see opportunity for direct investment from the government through their accelerator fund as A big positive as well.
So those types of tax incentives that don't pick winners and losers And create incentive for the private sector to innovate. We view that as one key requirement. The second is that The regulatory construct in our various jurisdictions follows the policy trends And again, provide very clear rules for us to follow to be able to invest In the types of equipment and technologies that reduce emissions, such that we can put them in a rate base and Earn a return on enough capital, of course, to the extent that it's economically favorable for our customers and reduces their costs. So I think those incentives are very helpful. I think regulation still needs to evolve a little bit.
And as to your question around pump storage, I'll pass it over to Corey.
Hi, Rob. I would echo Francois' comments. I think the regulatory and incentive framework an example and have created a marketplace that is robust and competitive and clear and defined about how to participate and the opportunity set for returns. And we are optimistic that the same framework can be put in place for technologies such as pumped hydro. Pumped Hydro is an interesting opportunity as well because the initial capital costs are obviously much higher.
The development risk is much higher. And so having a clear framework, which we can follow and have a clear view of what the outcomes Will be of a priority to us and will be most important to us as we continue our journey and investing in these types of assets.
Okay. Thank you very much.
Our next question comes from Robert Kwan of RBC Capital Markets. Please go ahead.
Great. Good afternoon. Just staying with the energy transition, can you just talk about Your approach from any financial setup perspective, if you think there's any changes you need to manage, both the opportunities and the risks, thinking about leverage and payout, as well as you And payout, as well as you mentioned meaningful indigenous investment opportunities, that's something that came out of the KIT all process. So Do you see like what's the role you see for indigenous investment as part of your energy transition? The thing is that since we're looking at KXL, would
And then for the first part of your question, I'll ask Don to take that one, please.
Sure. I'll lead off, Francois. Yes. In terms of energy transition and how we view it and how that fits in the balance sheet, What we're looking here looking at here is more of the same. So no fundamental change of our risk preferences, long term annuity streams, Credit profile, etcetera and returns.
So We will be quite discerning as to how we progress into that space. So it would be evolution, not revolution, and it would look A lot like from a cash flow perspective what we have today. We engage with the rating agencies frequently and We will test these concepts with them, but we think the way our balance sheet is structured right now with the credit metrics we have And the credit profile that we have is where we want to be. So we want to remain the top credit in the sector. And as we start moving into Somewhat different business lines.
When you actually look at the cash flow streams, they should look very similar to what you've seen for the past several decades here. So no fundamental change there.
And Robert, this is Bevin. I'll speak to indigenous investment with our First Nation and Tribal Nation partners and communities around our systems. We continue to look for opportunities that will benefit There are communities as well as bring them in as an active partner in our developments and potentially, as you say, Associated, I guess, with our base assets in that you may have seen our RFI seeking renewable power proposals for our assets in the United States. Part of our screening criteria for working with developers of those resources will Have a score related to their capabilities around indigenous involvement. So we'll continue to work with Our indigenous contracting strategies across our entire TC Energy business, as well as find ways to Continue to support through training as well as involvement in our base businesses are key partners.
We've learned a lot over the last year with our partnership with Natural Law Energy. And we see it as strategic and we believe that we can create even further strategic relationships Alongside our assets with the indigenous communities that we operate in.
Great. If I can just finish on Keystone Between the Alberta government and shipper reimbursements, I know you've done kind of the accounting entries here, but how much aggregate cash Do you expect to receive over what timeframe? And then are there any ongoing positive tax implications associated from having written off
Yes, Robert, it's Don. It's pretty much straightforward as outlined in the note there. The The cash components here would be shipper recoveries of around $700,000,000 In the fairly near term here, asset monetization proceeds over a measured sale process Of a couple of $100,000,000 And against that, we would see wind down costs On a cash basis, probably in the neighborhood of about $500,000,000 So net positive there. And that would probably be over a 'twenty one and into 'twenty two time frame. On the tax side, we've reflected the tax benefits here as ordinary Come rather than capital.
So far more usable from our perspective and far more valuable. That would be recognized over several years and it depends on which jurisdiction those tax losses are related to. Given the amount of capital spend we have in Canada and all the accelerated tax shelter we have here, Probably a more elongated period to realize Canadian ordinary income tax benefits in the U. S. It would be a shorter time horizon on that.
I can't give you a specific number of years, but certainly not within 2 years, but not as long as 10 years in the States.
Thank you.
Our next question comes from Praneeth Satish of Wells Fargo, please go ahead.
Good afternoon. With respect to the RFI that you announced Seeking 620 Megawatts of Wind Power, recognize it might be early, but can you comment just so far on how the bidding process has gone? And based on what you see so far, do you think there'll be an opportunity for TRP to invest meaningful amount of CapEx in this build out? Or do you think it'll be Mostly handled by 3rd party renewable companies.
Hi, this is Corey. It is early days, so I'm going to be measured in my response. I will tell you that to date we sent out over 100 NDAs for folks to participate in the process, and we've had Well over 50% response. So we feel really good about the number of respondents thus far. And we specifically asked for an RFI because our approach to this process will not be limited to simply Price, it will be a combination of very specific qualifications that align with Our customers' needs with the investment criteria for TC Energy And also for the local communities that we serve.
So there will be much more to come on this. The actual process closes, The RFI closes on May 10th, on Monday. So I'm going to be a bit measured and leave that maybe to come back to you on our next earnings call.
Okay. Got it. And then just switching gears a bit, I wanted to ask about Northern Border and the plan to Potentially capped the heat content on the pipeline. I guess first if you could review the rationale for that? And then second, Where does that stand today in the regulatory process and when could the BTU limit take effect?
Yes. This is Stan. We filed Second half of last year to impose a safe harbor for a certain BTU limit. And the driver there is really an operational requirement. Once you get too high of a You factor it to do damage to the downstream LDC facility.
So this is all about safety and the operational integrity of our assets. Where we're at is the problem somewhat solved itself at least for the short term. Flows on the northern border system Quarter over quarter are down about 10%. And what we've seen is that capacity on the border system was backfilled With gas of a lower BTU quality that came in from Canada. So for the past several months, at least for the There's not a BTU issue to deal with at the moment.
Now to the extent that the situation Changes over time and we see the VQ content creep up. We're going to have to circle back with our customers on the producer side as well as the LDC side because again Now the issue here is we're trying to establish a safe harbor limit that says if you go above a certain level, then we would have the right to cut back production into the pipe Given those safety and operational integrity issues.
Great. Thank you.
Our next question comes from Jeremy Tonet of JPMorgan. Please go ahead.
Hi, good afternoon. Jeremy? Just want to make sure you're coming through. Okay, great. I wanted to touch on Bruce Power a bit here.
Given the ambitious carbon reduction goals of the Northeastern U. S. States as well as proposed transmission to bring Canadian power supply into the U. S, do Do you see the potential to incorporate Bruce refurbishments into creating power supply to feed into the Northeast U. S?
And could there be a transmission opportunity for TRP here? And then separately, is there a green hydrogen opportunity with Bruce Power? We've heard about cost savings using steam in the production process.
Jeremy, as far as The transmission opportunity, I don't know that we're in any position to comment on the viability of that at this stage. I'm not really aware of what steps need to be taken. I do know though on your second question that Bruce Power is a partner in the Nuclear Innovation Institute, which is Actively evaluating, along with the partners in the institute, items such as producing hydrogen, along with evaluating small modular reactors as a function of Their business going forward. So I think there is more to come. The site is using a systematic approach to really evaluate What options are available and then how they can participate in the market.
Got it. And just to be clear on the first part, don't see any opportunity for Bruce
Maybe I'll take that one, Jeremy. It's Francois. And just say that when we look at the integrated resource plan for Ontario, they're calling for a net need for additional power, Particularly as the Bruce and Darlington units are going through their life extension programs And even beyond then, our view is, at least for the time being, that there'll be a home for that Load or for that supply in Ontario. And so that's our base case assumption right now.
Got it. That makes sense. And then shifting to Mexico, just wondering if you might be able to provide some updated thoughts as far as Organic growth overall potential down in Mexico and I guess the what do you think of the right size of your Mexican And presence within your kind of portfolio overall?
Yes, this is Stan. I think In the context of the question and growth out of Mexico, the first thing we're going to focus on is getting Villareas built in service here by the end of the year consistent with our prior guidance. At the same point in time, we're still hopeful that along that same timeline, we'll have a revised right of way path to start construction again on the of Mexico into the Yucatan Peninsula and we are somewhat uniquely situated to potentially serve that via an extension of our Ser de Tejas pipeline As well as on the West Coast, the potential for West Coast Mexican LNG exports probably on a little bit longer timeline, however. So When I look at the investment opportunity, fits and starts, bite sizes, another couple of $100,000,000 a year over the next several years doesn't seem out of line.
Got it. That's helpful. Thanks.
Our next question comes from Michael Lapides of Goldman Sachs. Please go ahead.
Hey, guys. Thank you for taking my question. Actually, I have a couple of them. First, can you is there a way to quantify for Coastal GasLink and maybe for the MCR at Unit 6 at Bruce, What the potential cost inflation may be, whether it was due to permitting issues and other at Coastal GasLink or whether it was due to COVID at Bruce 6, Just kind of how material dollar wise are these?
I can start that on Coastal GasLink. Tracy here. We're just worried as you know, we are coming out of in the process of coming out of construction shutdown largely due to Spring break up and previous to that, the Northern Health in order in for the Northern Health order coming out of British Columbia That really reduced the workforce that was in the northern the major capital projects up there for a period of time, January kind of through to March, April. So that's all had us put us in a position. It's important to us that we can start construction.
It's important to us We do that in a safe manner. So we've implemented some very strict protocols for COVID in conjunction with Northern Health and we've now got clearance We're in the midst of doing that with LNG Canada to make sure that we meet all of their requirements on schedule and we mitigate whatever costs we can falling from that. So it's early to say on where that will all fall out, but we are in the midst of it now, Mike.
Got it. And on Bruce-six.
Hi, Michael, it's Corey. Bruce-six is on schedule and on budget.
Got it. And then can you all remind me your differential, can you just remind me how contracted is Keystone, how contracted is Market Link and are those take or pay contracts or throughput dependent?
Yes. Thank you, Michael. This is Bevan. Our systems are under strong, strong utilization, particularly ex Hardisty on our base Keystone asset out of Western Canada. It's been fully utilized, and we actually had our Highest utilization through Q1 that we've had in its history and in terms of its operational performance as well.
With respect to and of all those volumes, so we're required to leave certain percentage for spot volumes, but otherwise we're fully contracted take or pay on the Keystone base system. When it comes to our Market Link asset, that was created as a pre build for Keystone XL. And we contracted that again under a take or pay nature with a number of parties. But that contract profile, we struck contracts on a much shorter tenure in order to ensure that they would kind of wind off By the time we would get to an in service date of the XL asset, given that we're not advancing ExCel, we're looking to recontract and reuse that spare capacity that we do have on Market Link. Currently, we're on our market linked asset where it was about 45% contracted.
That's lower compared to last when we would have been in that 62%, but that reduction is reflected of some contracts rolling off. With that Gulf Coast and Market Link system, they fundamentally are driven by the differential Between Cushing and the Gulf Coast and as a result of the pandemic and reduced demand and increased supplies, Revenue utilizing our marketing affiliate by moving more barrels through that system, albeit at a lower margin than what our historical Totals would have been, but we've been able to optimize that asset effectively utilizing our marketing affiliate.
Got it. And the remaining 45% of market linked that's contracted, when did those contracts roll off?
Well, they're staggered, Michael.
I'm not going
to roll out. They're all on a confidential basis with those customers. But you could appreciate that those would trend. Our in service date was intended to be in 2023, so you can anticipate that the vast majority of those contracts, legacy contracts would be Rolling off at that period of time, but we're well in hand on backfilling and finding Recontracting opportunities in this environment now that our path forward is clear.
Got it. Thank you guys. Much appreciated. You all have a good weekend.
There are currently no further questions in the queue. We do have time for more questions should you have any. Ladies and gentlemen, this concludes the call. Please go ahead.
Thanks very much and thanks for all of you who joined us this afternoon. I know this is a busy day with a number of companies in your coverage universe announcing results. So appreciate your interest. And in closing, I'd like to leave you with the following key messages. Looking forward, I expect our assets will continue to provide As we advance our $20,000,000,000 secured program and various other organic growth opportunities, we expect to build on our long term Track record of growing earnings, cash flow and dividends per share.
With an irreplaceable asset footprint, extensive technical expertise, Our strong financial position and a commitment to innovation, we have the right ingredients to prosper irrespective of the pace or direction of energy transition. Looking forward, we will be deliberate and disciplined in every investment to ensure we remain A leading North American Energy Infrastructure Company today and in the future. So that concludes my closing remarks. Thanks very much for joining us today.
This concludes today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.