To all participants, thank you for standing by. The conference is ready to begin. Good day, ladies and gentlemen. Welcome to the TransCanada Corporation 2018 first quarter results conference call. I'll turn the meeting over to Mr. David Mineta, Vice President, Investor Relations. Please go ahead, sir.
Thanks very much. Good afternoon, everyone. I'd like to welcome you to TransCanada's 2018 first quarter conference call. With me today are Russ Girling, President and Chief Executive Officer; Don Marchand, Executive Vice President and Chief Financial Officer; Karl Johannson, President of Canada and Mexico Natural Gas Pipelines and Energy; Stan Chapman, President, U.S. Natural Gas Pipelines; Paul Miller, President of our Liquids Pipelines business; and Glenn Menuz, Vice President and Controller. Russ and Don will begin today 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 at transcanada.com. It can be found in the investor section under the heading Events. Following their prepared remarks, we will take questions from the investment community.
If you are a member of the media, please contact Grady Stevens following this call and he'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 two questions. If you have additional questions, please re-enter the queue. Also, we ask that you focus your questions on our corporate strategy, recent developments, and key elements of our financial performance. If you have detailed questions relating to some of our smaller operations or detailed financial models, Duane and I'd be pleased to discuss them with you following the call. Before Russ 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 on these risks and uncertainties, please see the reports filed by TransCanada with Canadian securities regulators and with the U.S. Securities and Exchange Commission. Finally, I'd also like to point out that during the presentation, we'll refer to measures such as comparable earnings, comparable earnings per share, comparable earnings before interest, taxes, depreciation, and amortization or comparable EBITDA, comparable funds generated from operations, and comparable distributable cash flow. These and certain other comparable measures are considered to be non-GAAP measures. As a result, they may not be comparable to similar measures presented by other entities. With that, I'll now turn the call over to Russ.
Thank you, David, and good afternoon, everyone, and thanks for joining us late here on Friday afternoon. As I highlighted previously and again earlier today at our annual meeting of shareholders, 2017 was a very successful year for our company. In addition to delivering record financial results, we made significant progress on several other fronts that will position us for continued success. We continue to build on those accomplishments here early in 2018. Evidence of that can be seen in our record first quarter financial results, which support our board of directors' decision in February to increase our quarterly common dividend to CAD 0.69 per share. That equates to CAD 2.76 per share on an annual basis and represents a 10.4% increase over the dividend in 2017. During the quarter, we also continued to advance our CAD 21 billion near-term capital program by placing approximately CAD 2.7 billion of assets into service.
Those included the Leach XPress project, the Cameron Access project on our Columbia system, as well as a number of NGTL expansion projects. At the same time, we replenished our growth portfolio by adding another CAD 2.5 billion of NGTL expansions to our inventory of commercially secured projects. We also advanced over CAD 20 billion of medium to long-term projects, including Keystone XL, Coastal GasLink, and the Bruce Power life extension program. Finally, we continued to prudently fund our capital program and strengthen our balance sheet by raising about CAD 650 million of common equity through our dividend reinvestment and at-the-market programs. As a result, our overall financial position remains solid, and we are well-positioned to fund our capital program going forward. I'll touch on each of these developments in the next few slides, beginning with a brief review of our first quarter financial results.
Excluding certain items, comparable earnings were CAD 870 million, or CAD 0.98 per share, an increase of CAD 172 million or CAD 0.17 per share over the first quarter, despite the sale of our Northeast Power solar assets. This equates to a 21% increase on a per-share basis, recognizing the effect of the common shares issued in 2017 and 2018 under our DRIP and ATM programs. Comparable EBITDA increased CAD 94 million to approximately CAD 2.1 billion, while comparable funds generated from operations of CAD 1.6 billion were CAD 111 million higher than the first quarter of 2017. Each of these amounts reflects a strong performance of our legacy assets and approximately CAD 7 billion of growth projects that were completed and placed into service over the last 12 months. Don will provide more detail on our first quarter financial results in just a few minutes.
Before he does, I'd like to offer a few comments on some recent developments in each of our businesses, beginning with natural gas pipelines. First, in our Canadian natural gas pipelines, over the past three months, we continued to advance CAD 7.4 billion of commercially secured projects, largely on the NGTL system. More specifically, we completed the NGTL 2017 Expansion Program, which increased the capacity of the system by approximately 500 million cubic feet a day. Here early in April, the Sundre Crossover Project entered service, adding about 228 million cubic feet a day of capacity at our Alberta-B.C. border export delivery point, enhancing connectivity to the downstream markets in the Pacific Northwest and California. We also filed an application with the National Energy Board for the approval of a negotiated settlement with our customers that covers 2018 and 2019.
That settlement, amongst other things, fixes the return on equity at 10.1%. On 40% deemed common equity, which is consistent with our previous agreement. Looking forward, we'll continue to work with industry on options to connect growing West Montney supply to markets across North America. That could include the potential restoration of dormant capacity on the Canadian Mainline. At the same time, we continue to actively work with LNG Canada on our Coastal GasLink project, which will provide another significant market outlet for Canadian gas. In the United States, we placed Leach XPress and Cameron Access projects into service at a combined cost of approximately CAD 1.9 billion. We also advanced CAD 6.1 billion of additional projects, including Columbia's Mountaineer XPress, WB XPress, and Gulf XPress projects. All three are expected to enter service by the end of 2018 at a combined investment of approximately CAD 4.5 billion.
While the total costs on these projects have increased by approximately 10% due to delays in receiving various regulatory approvals, as well as increased construction costs because of unusually high demand for resources in that region, and modifications to contractor work plans to maintain in-service dates. We continue to expect these projects to generate very attractive returns for our shareholders. Looking forward, we also expect our Columbia system to continue to generate organic growth opportunities as natural gas production in the Marcellus continues to grow. We're also looking at other opportunities across our broader U.S. natural gas pipeline portfolio, including on ANR, GTN, Great Lakes, Northern Border, Iroquois, and the Portland Natural Gas Transmission System. Turning to Mexico for just a moment, where we're advancing construction on three pipelines that will bring our total investment in Mexico to about CAD 5 billion.
The Sur de Texas and Villa de Reyes lines are both expected to enter service in late 2018, while the Tula project is anticipated to be in service in 2019. Before moving to our liquids business, I want to make a few comments on the FERC actions and their implications for TransCanada and to our MLP, TC PipeLines, LP. As you all know, on March 15th, the FERC, amongst other things, issued a revised policy statement addressing the treatment of income taxes for rate-making purposes for MLPs, and a notice of proposed rule making or a NOPR.
On April 16th, we filed a request for clarification, and if necessary, rehearing of the FERC policy statement addressing concerns over the lack of clarity around entities with non-MLP ownership structures, entities with shared ownership between MLP and a corporation, as well as entities owned by the MLP that are in turn only partially owned by corporations. We do not anticipate that the earnings and cash flow from our directly held U.S. natural gas pipelines, including ANR, Columbia Gas, and Columbia Gulf, will be materially impacted if the FERC actions are enacted as proposed, as all those pipelines are held through wholly-owned taxable corporations and a significant portion of their revenues are earned under non-recourse rates.
In contrast, U.S. natural gas pipelines owned wholly or in part through TC PipeLines, LP are expected to be adversely impacted by the FERC actions if they are enacted as proposed, particularly by the policy change prohibiting the recovery of income tax allowance for pipelines held through MLPs. While approximately half of TC PipeLines' revenues are earned under non-recourse rates, in the absence of some form of mitigation, the remaining revenues under recourse rates are expected to decline as rate adjustments occur. Individual pipelines owned by TC PipeLines do not currently have a requirement to file for new rates until 2022. However, that timing may be accelerated by the NOPR, except where moratoriums exist. As our ownership interest in TC PipeLines is approximately 25%, the impact of the FERC actions related to our MLP is not expected to be significant to our consolidated earnings or cash flow.
Finally, on that front, further drop-downs of assets by TransCanada into TC PipeLines is not considered a viable funding option at this time. While it is uncertain whether its competitiveness as a funding option will be restored in the future, we believe that we have financial capacity to fund our existing capital program through our predictable and growing cash flow from operations, as well as several other funding alternatives, and Don will expand on those options here in just a few moments. Turning now to our liquids business, which produced again strong results here early in 2018. Keystone continued to perform well and is now underpinned by long-haul take-or-pay contracts for 550,000 barrels a day. In addition, Grand Rapids and Northern Courier were both placed into service in the second half of 2017 and are now contributing EBITDA. Finally, a few comments on Keystone XL.
During the first quarter, we advanced the project following the Nebraska Public Service Commission's approval of a viable route through the state of Nebraska here late in 2017. In January, we successfully secured approximately 500,000 barrels per day of firm 20-year contracts, which is consistent with the original level of contracting on Keystone XL prior to the denial of the presidential permit in November of 2015. Those new contracts, combined with existing contracts on the Keystone system that were put in place at the time we built the U.S. Gulf Coast section, that convert to long-haul agreements on Keystone XL, means it will be nearly fully utilized by our contracted shippers after factoring in capacity that we are required by regulators to set aside for spot shippers.
As a result, we expect to earn a return on total capital that is consistent with the returns we earn on several similar projects in our portfolio. Looking forward, we are working collaboratively with landowners to obtain the necessary easements for the approved route. At the same time, we continue to monitor and participate in the various appeals and legal proceedings brought against regulatory bodies and government agencies overseeing the project with the view of getting clarity on these matters by late 2018 or early 2019. Finally, our preparation for construction has commenced and will increase as per the permitting process advances through 2018. This can be undertaken at a relatively low cost, as much of our long lead-time items were purchased previously. Turning now to our energy business.
Following the monetization of our U.S. Northeast power business and the Ontario solar assets in 2017, the remaining 6,100 megawatts of generation in our portfolio are largely underpinned by long-term contracts with very strong counterparties. Construction of the Napanee plant continues and is expected to be placed in service in late 2018. Work also continues on the asset management program at Bruce, with major investments to extend the operating life of the facility to 2064, scheduled to begin in 2020 and continue through 2033. The CAD 6.2 billion investment in, that is 2014 CAD our share, will see us spend approximately CAD 900 million between now and the end of the decade. The remainder will be invested between 2020 and 2033. In summary, we continue to advance our CAD 21 billion near-term commercially secured projects largely on time and on budget.
It includes approximately CAD 19 billion of natural gas pipeline expansions that are driven by growth in North America, natural gas supply in the Marcellus and Utica, as well as the Western Canadian Sedimentary Basin, along with demand growth in places like Mexico. We are also developing an inter-Alberta pipeline system in Alberta that includes the recently completed Grand Rapids project and the Northern Courier projects, as well as the White Spruce that we expect to be in service in 2019. Finally, we are advancing approximately CAD 2 billion of power projects, including the 900-megawatt Napanee gas-fired plant in Ontario, as well as the initial work required at Bruce Power as part of the multi-billion-dollar life extension program. These projects are all underpinned by long-term contracts or rate-regulated business models.
As a result, we have a high degree of visibility to the earnings and cash flow growth that will be generated as they enter service. As you can see on this chart, comparable EBITDA grew from CAD 5.9 billion in 2015 to CAD 6.6 billion in 2016, to CAD 7.4 billion in 2017. That growth is expected to continue with EBITDA of approximately CAD 9.5 billion expected in 2020 as we largely complete our near-term capital program. That equates to a compound average annual growth rate of approximately 10% over the five-year horizon. Also of note, 95% of our cash flow will be derived from regulated or long-term contracted assets. In addition, we are advancing over CAD 20 billion of medium- to longer-term projects currently in the advanced stages of development. Any one of those projects could further enhance our growth profile as well as our strong competitive position.
Based on our confidence in our growth plans, we expect to continue to grow the dividend at an annual average rate at the upper end of 8%-10% through 2020, and another 8%-10% into 2021. As we've said many times, this is supported by expected growth in earnings and cash flow and strong distributable cash flow coverage ratios. In summary, I would leave you with the following key messages. Today, we are a leading North American energy infrastructure company with a strong track record of delivering long-term shareholder value. As we advance our CAD 21 billion portfolio of commercially secured near-term projects, we expect to deliver significant additional growth in earnings and cash flow.
As a result, we expect to grow our common share dividend at the upper end of 8%-10% on an annual basis through 2020 and foresee an additional growth of 8%-10% to 2021. We're also progressing more than CAD 20 billion of projects that are in the advanced stages of development, and we expect numerous other growth opportunities to emanate organically from our existing asset footprint. Success in advancing these initiatives could extend our dividend growth outlook. At the same time, we expect to maintain our strong financial position by prudently funding our capital programs. That concludes my prepared remarks, and I'll turn the call over to Don, who'll provide more details on our first quarter financial results.
Thanks, Russ, good afternoon, everyone. As outlined in our quarterly results issued earlier today, we are pleased to report that net income attributable to common share has increased by CAD 91 million to CAD 734 million, or CAD 0.83 per common share in the first quarter of 2018, compared to CAD 643 million or CAD 0.74 per share for the same period in 2017. First quarter 2017 results included a CAD 24 million after-tax charge for integration-related costs associated with the acquisition of Columbia, a CAD 10 million after-tax charge for costs related to the monetization of our U.S. Northeast power generation business, and a CAD 7 million after-tax charge related to the maintenance of Keystone XL assets, which, along with other related expenditures and interest, are now being capitalized as we advance the project.
These charges were partially offset by a CAD 7 million income tax recovery related to the realized loss in a third-party sale of Keystone XL project assets. 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 first quarter rose by CAD 172 million to CAD 870 million, or CAD 0.98 per share, compared to CAD 698 million or CAD 0.81 per share in 2017, a 21% increase on a per-share basis. Per-share amounts reflect the effect of common shares issued in 2017 and 2018 under our dividend reinvestment plan and at-the-market program. Notwithstanding the sale of our U.S. Northeast power assets, our positive results reflect solid cash generation and strength across all our businesses, particularly liquids pipelines, and include benefits of lower corporate tax rates under U.S. tax reform. Turning to our business segment results on slide 16.
In the first quarter, comparable EBITDA from our five operating businesses was approximately CAD 2.1 billion, CAD 94 million higher year-over-year. As outlined in the quarterly report, Canadian Natural Gas Pipelines comparable EBITDA of CAD 494 million was CAD 10 million higher than for the same period last year. Net income for the NGTL System increased CAD 10 million compared to first quarter 2017 because of a higher average investment base and reflects the last approved ROE of 10.1% on 40% deemed equity. Conversely, due partially to a lower average investment base, net income for the Canadian Mainline decreased CAD 15 million. For the quarter, no incentive earnings have been recorded for either NGTL or the Mainline, pending NEB decisions on the NGTL 2018 and 2019 revenue requirement settlement application and the 2018-2020 Mainline tolls review.
I would note that for Canadian natural gas pipelines, changes in depreciation, financial charges, and income taxes impact comparable EBITDA, but do not have a significant impact on net income, as they are almost entirely recovered in revenues on a flow-through basis. U.S. natural gas pipelines comparable EBITDA of CAD 804 million in the quarter increased by CAD 84 million or $92 million compared to the same period in 2017, mainly due to increased earnings from Columbia Gas and Columbia Gulf growth projects placed in service, additional contract sales on ANR and Great Lakes, favorable commodity prices for midstream, and increased earnings from the amortization of the regulatory liability recognized at December 31, 2017, following U.S. tax reform.
Mexico natural gas pipelines comparable EBITDA of CAD 160 million increased CAD 20 million or $21 million compared to first quarter 2017, driven primarily by higher revenues from operations and higher equity earnings from our investment in the Sur de Texas-Tuxpan pipeline, which records AFUDC during construction, net of interest expense on an inter-affiliate loan from TransCanada. This inter-affiliate loan expense is fully offset in interest income and other in the corporate segment. Liquids pipelines comparable EBITDA rose by CAD 119 million to CAD 431 million, driven by the addition of Grand Rapids and Northern Courier, which began operations in the second half of 2017, higher volumes on the Keystone Pipeline System, and a higher contribution from liquids marketing activities.
Energy comparable EBITDA decreased by CAD 121 million year-over-year to CAD 184 million due to lower contributions from U.S. Power and Eastern Power following the sale of generation assets in 2017, the continued wind-down of our U.S. Power marketing operations, increased outage days at Bruce Power, and narrower natural gas storage price spreads realized by natural gas storage. These reduced results were partially offset by higher realized prices on increased generation volumes for Western Power and income recognized on the sale of our retail contracts in U.S. Power. For all our businesses with U.S. dollar-denominated income, including U.S. natural gas pipelines, Mexico natural gas pipelines, and parts of our liquids pipelines and energy businesses, Canadian dollar-translated EBITDA was negatively impacted versus the first quarter of 2017 by a weaker U.S. dollar.
This was largely offset by lower translated interest expense on U.S. dollar-denominated debt and realized hedging gains reported in comparable interest income and other. Regarding our exposure to foreign exchange rates, our U.S. dollar-denominated assets are predominantly hedged with U.S. dollar-denominated debt and the associated interest expense. We continue to actively manage the residual exposure on a rolling one-year forward basis. Turning to the other income statement items on slide 17. Depreciation and amortization of CAD 535 million increased CAD 25 million versus first quarter 2017, largely because of new facilities entering service along our businesses, partially offset by the sale of power assets in 2017 and a weaker U.S. dollar.
Interest expense of CAD 527 million was CAD 27 million higher year-over-year following new debt issuances net of maturities and lower capitalized interest on liquids pipelines projects placed in service in 2017, partially offset by the repayment of Columbia acquisition bridge facilities and the impact of a weaker U.S. dollar on translating U.S. dollar-denominated interest. AFUDC increased by CAD 4 million for the three months ended March 31, 2018, compared to the same period in 2017. A decline in Canadian dollar-denominated AFUDC was principally due to the October 2017 decision not to proceed with the Energy East pipeline project, while an increase in U.S. dollar-denominated AFUDC was largely driven by additional investment in and higher rates on Columbia Gas and Columbia Gulf growth projects, as well as continued investment in Mexico projects.
Interest income and other included in comparable earnings rose CAD 58 million in the first quarter versus 2017, primarily due to interest income on a new inter-affiliate loan receivable from Sur de Texas-Tuxpan, plus realized hedging gains in 2018 on foreign exchange management compared to realized losses in 2017. As previously noted, the interest income on the inter-affiliate loan is offset by interest expense included in Sur de Texas-Tuxpan equity income. Income tax expense was CAD 173 million in first quarter 2018 compared to CAD 244 million for the same period last year, primarily because of reduced income tax rates under U.S. tax reform and lower flow-through income taxes on Canadian rate-regulated pipelines. This translated into an all-in 12% effective tax rate for the three-month period ending March 31, 2018, compared to 21% for the same period in 2017.
Excluding Canadian rate-regulated pipelines, where income taxes are a flow-through item and thus quite variable, along with equity AFUDC incoming in the U.S. and Mexico natural gas pipelines, we continue to expect our 2018 full-year effective tax rate to be approximately 17%-18%. Net income attributable to non-controlling interests increased by CAD 4 million for the three months ended March 31, 2018, mostly due to higher earnings, partially offset by our acquisition of the remaining outstanding publicly held common units of CPPL in February 2017. Finally, preferred share dividends were comparable to first quarter 2017. Now moving to cash flow and distributable cash flow on slide 18.
Comparable funds generated from operations of approximately CAD 1.6 billion in the first quarter reflect an increase of CAD 111 million year-over-year, driven largely by higher comparable earnings as outlined, which includes the impact of power generation asset sales in second and fourth quarter 2017. As introduced at Investor Day in November, we now provide two measures of comparable distributable cash flow. One includes all maintenance capital, regardless of whether it's recoverable or not. The other reflects only non-recoverable maintenance capital by excluding amounts that are ultimately reflected in tolls on our Canadian and U.S. rate regulated pipelines and on our liquids pipelines. Maintenance capital expenditures recoverable in future tolls, CAD 224 million in first quarter 2018, were CAD 87 million higher than in the same period of 2017. This represented 78% of total maintenance capital in the period.
It includes CAD 119 million related to our Canadian regulated natural gas pipelines, which was CAD 71 million higher than first quarter 2017, and is immediately reflected in the NGTL and Mainline rate basis, positively impacting net income. Maintenance capital of CAD 103 million in our U.S. natural gas pipelines, was CAD 17 million, or USD 16 million higher year-over-year. Almost all of our U.S. natural gas pipelines recover maintenance capital through tolls under current rate settlements. Liquids pipelines maintenance capital was consistent with 2017 at CAD 3 million, while other maintenance capital of CAD 63 million in the first quarter was CAD 14 million higher than for the same period last year. As a result, distributable cash flow in the quarter reflecting all maintenance capital was approximately CAD 1.2 billion, or CAD 1.38 per share, providing a coverage ratio of 2 times.
Distributable cash flow reflecting only non-recoverable maintenance capital was just over CAD 1.4 billion, or CAD 1.64 per share, resulting in a coverage ratio of 2.4 times. We expect to maintain strong coverage ratios through 2020, as outlined at November's Investor Day. Now turning to slide 19. During the first quarter, we invested approximately CAD 2.1 billion in our capital program and successfully funded it primarily through our strong and growing internally generated cash flow, notes payable, and common equity from our dividend reinvestment plan and at-the-market program. Our dividend reinvestment program, or DRIP, continues to provide incremental subordinated capital in support of our growth and credit metrics. In the first quarter, the participation rate amongst common shareholders was approximately 38%, representing CAD 234 million of dividend reinvestment.
In June of last year, we established an at-the-market, or ATM program, that allows us to issue up to CAD 1 billion in common shares from time to time over a 25-month period at our discretion, at the prevailing market price when sold in Canada or the U.S. The use of ATM funding will be influenced by our spend profile as well as the availability and relative cost of other funding sources. In the first quarter, 5.8 million common shares were issued under the program at an average price of CAD 56.51 per share for gross proceeds of CAD 329 million. An additional 1.6 million shares were issued in early April, bringing the year-to-date gross proceeds to CAD 415 million.
Accounting for shares issued under DRIP and the ATM program, our earnings per share outlook for 2018 has increased compared to what was included in the 2017 annual report, primarily driven by higher volumes on the Keystone Pipeline System and contributions from liquids marketing activities in first quarter 2018. Now turning to slide 20. This slide highlights updates to our funding program through 2020 since our November Investor Day. Our capital requirements will continue to be financed through our predictable and increasing internally generated cash flow, and a combination of other funding options, including senior debt, preferred shares, hybrid securities, asset sales, and common shares issued under our DRIP and ATM program, in a manner that is consistent with achieving targeted credit metrics of 15% FFO to debt and 5 times debt to EBITDA.
Based on recent conversations with S&P, they appear to be holding to their 18% FFO to debt target introduced at the time of the Columbia acquisition in March 2016. In addition, they are now indicating a four times debt-to-EBITDA target for the A-minus rating level. As such, we anticipate a rating move by them from A-minus negative outlook to triple B plus stable is entirely possible in the near term. While disappointed, we do not view this as material, and it does not change our funding plans going forward. I remind everyone that we are working to complete CAD 21 billion of projects and simultaneously delevering, some element of equity and equity equivalent capital remains necessary. We reiterate that we do not foresee a need for discrete equity to complete our near-term capital program.
For 2018, our capital expenditures are now forecast to be approximately CAD 10 billion, up from CAD 9.2 billion previously indicated. The increase is primarily related to incremental spending this year to bring into service approximately CAD 7 billion of projects, as well as capitalized cost to further advance our medium to longer-term projects. Over the next three years, our dividend and non-controlling interest distributions of approximately CAD 10 billion, along with capital expenditures of approximately CAD 20 billion, result in net total requirements of about CAD 30 billion. Approximately 65% or CAD 20 billion will be financed by internally generated cash flow. In addition, in 2018, we expect to raise approximately CAD 1.6 billion through our DRIP and the remaining capacity under our current ATM program. As Russ mentioned, due to recent actions by the FERC, drop-downs into TC PipeLines, LP appear no longer viable.
Where previously a periodic financing lever, we have not been overly dependent on drop-downs, and this recent development is expected to have limited impact on our financial flexibility. That leaves approximately CAD 8.5 billion to be funded in the 2018-2020 timeframe through a combination of capital markets activity and portfolio management that achieves target credit metrics. Our plan includes CAD 4 billion of incremental senior debt, CAD 1 billion of hybrid securities or preferred shares, and CAD 3.5 billion from a blend of asset sales, the potential extension of the DRIP beyond 2018, a new ATM program, and any realized project recoveries. In summary, while our external funding needs are sizable, they remain imminently achievable in the context of multiple financing levers available and the clear creative and credit supportive use of proceeds. In closing, I offer the following comments.
Our positive financial and operational results in the first quarter continue to highlight our diversified low-risk business strategy and reflect the strong performance of our legacy assets, along with continuing additions of high-quality assets from our ongoing capital program. Today, we are advancing a CAD 21 billion suite of near-term projects and have five distinct platforms for future growth: Canadian, U.S., and Mexico natural gas pipelines, liquids pipelines, and energy. Our overall financial position remains strong. We remain well-positioned to fund our near-term capital program through resilient and growing internally generated cash flow and strong access to capital markets on compelling terms. Our portfolio of critical energy infrastructure projects is poised to generate significant growth in high-quality, long-life earnings and cash flow for our shareholders.
That is expected to support annual dividend growth at the upper end of an 8%-10% range through 2020, an additional 8%-10% in 2021. Success in adding to our growth portfolio in the coming years could augment or extend the company's dividend growth outlook further. That's the end of my prepared remarks, and I'll turn the call back over to David for the Q&A.
Okay, great. Thanks, Don. Just a reminder before I turn it over to the conference coordinator for your questions, we ask that you limit yourself to two questions, and if you have any additional questions, please reenter the queue. With that, I'll turn it back to the conference coordinator.
Thank you, sir. If you have a question, please press *1 on your telephone keypad. If you're using a speakerphone, please lift the handset before pressing *1. You may cancel your question by pressing the # sign. Please press *1 if you have a question, there will be a brief pause allowing you to register. First question is from Linda Ezergailis from TD Securities. Please go ahead.
Thank you. I'm just wondering if you could maybe help clarify a little bit on your financing plans. How might we think of what type of assets or partial interests you might choose to sell, whether there be any sort of tax considerations or other rationale?
Sure, Linda. It's Don here. Yeah, I'll just start out. I'd note that the amount of assets readily available that we consider for sale far exceeds the inventory of assets that was available for LP drop-downs, and they're significantly larger than the purple other box at the far right-hand side of our fundings slide. That said, similar to what we did with the solar package last year, don't look for us to pre-announce processes or CAD dollar targets, would rather quietly conduct this in the background. We continuously mark to market the portfolio and evaluate the whole versus sale values, and we do take cash tax incidents into consideration on that. Without identifying specific assets, that's the broad perspective of what we're looking at in the magnitude that's available.
Okay, thank you. Just on a slightly separate note, one of the desires by the investment community these days seems to be a simplified corporate structure. You guys are largely there. I'm just wondering, do you need to see this U.S. MLP FERC tax situation addressed before you would consider consolidating TCP? Or how do you think about the timing and rationale for considering that?
Yeah, I think that's correct, Linda, is it obviously there is likely to be impacts on the cash flow that underlie the TC PipeLines' business. There's a fair amount of water that has to go under the bridge, firstly, on determining if the rules get implemented and what those rules look like, what the mitigations may or may not be at the MLP level, and then seeing what that looks like at the end of the day. That's going to take some time. It'll be some time before we actually even analyze any potential strategic transactions or anything like that. At the current time, we're just focused on helping them work their way through that process with both the FERC, and the other issues that they're dealing with.
Okay, great. Thank you. I'll jump back in the queue.
Thank you. The following question is from Robert Kwan from RBC Capital Markets. Please go ahead.
Good afternoon. Coming back to funding and looking at the box, it looks like asset sales are certainly a big part of that. I'm just wondering, is there a sense that it's going to be a mix of those options, or do you see something playing a bigger role, such as asset sales?
It's Don here again. It would be a mix of the various items in there. I would say versus where we were at Investor Day, asset sales are probably a bigger proportion of that. We've lost the LP drop-down vehicle as an alternative here, and we've shrunk the hybrid box a little bit here. There's a 15% cap at S&P on the hybrids. That goes more into sequencing, where we can time that more as the balance sheet grows. I would watch for more asset sales. We'll probably refile another ATM of similar size here. The extent to which we use that would be determined by how we progress on these other items here. It's an all of the above strategy. What's meant to be highlighted here is there's no fundamental change in any of these boxes since November. We have plenty of levers available.
I'd also remind everyone that when we're looking at hybrids and drop-downs and the like, you're looking at CAD 0.50 equity credit dollars, whereas when you're issuing ATM and DRIP, those are CAD 1.00 equity dollars there. Long-winded way of saying it's an all of the above strategy, Robert.
Actually, Don, you just mentioned on the hybrid slice getting smaller. The S&P constraint, does that matter as much then if you're going to drop down to BBB+? Is it also the cost of the hybrids and the amount of equity credit you get?
Yeah. It's not the cost of the hybrids. That market's still robust, and they are very compelling. We haven't heard definitively from S&P. It's just this is a very strong indication that we're getting there. We'll look at it. I think from S&P's perspective, probably best directive then, too, as well is this was probably being viewed more as a hard 15% limit than a soft one that you can go above and then grow your balance sheet back into. It's a very viable, attractive product for it. Probably goes more to sequencing at this point than anything. That market's still there.
Okay. If I can just finish on Mexico, you've got the negotiations with CFE. I'm just wondering, do you have some timing as to when that may be solidified? You are getting paid. Are you getting paid the full amount? Just where is that showing up on the statements? Is that in AFUDC, and is it actually showing up in the cash flow line as well?
Yeah, Robert, it's Karl. Yeah, we are finalizing our agreements on the force majeure with CFE. In the meantime, contract requires them to pay us when in fact the force majeure and the delay is due to government inaction or some government problem. Yes, we are getting paid for both. Right now, we are getting paid our full contract dollars for both Villa de Reyes and Tuxpan-Tula. They are showing up in our revenue stream, but not under cash flow. They are showing up I guess we are housing the dollars under our asset accounts. Maybe Glenn can explain where they are a little better.
Yeah, Robert, it's Glenn here. As we're receiving the force majeure payments, at this point on those two pipelines, we are not recording revenue right now. Cash receipts are showing up on the balance sheet in whatever the deferred revenue, but they are showing up in operating cash flow.
Okay. The timing for CFE finalization?
For finalization of the agreements? We don't have a set timeframe right now, but we're working on them as we speak, and they are paying the bills. I suspect over the next few months here, we will come to finalized force majeure agreements.
Okay, that's great. Thank you very much.
Thanks, Robert.
Thank you. The next question is from Jeremy Tonet from J.P. Morgan. Please go ahead.
Good afternoon. Just wanted to turn to Mountaineer XPress and WB XPress a bit. It seems like the cost moved up a little bit there. I was just wondering if you could expand a little bit as far as the degree that could be recoverable or what were some of the drivers there. Any additional color you could provide would be helpful.
Jeremy, this is Stan. We have seen some cost increase associated with our projects, primarily associated with regulatory delays in large part due to the lack of FERC quorum from last summer. That has led to some higher costs associated with us having to modify our work plans and work schedules to make sure that we're maintaining our in-service dates to a large degree. We've also seen some increased exposure with respect to rock and some additional mitigation measures on our steep slopes and put back a little bit of contingency that we spent early on in the project. The Mountaineer XPress project does not have any cost sharing left, but the WB XPress project does. At this point in time, we've executed all of our construction contracts.
Construction has commenced on all eight of the spreads, and we're largely focused on just getting these projects in service as quickly as possible and doing so without further cost overruns. With respect to impacts on returns and the like, I guess I would ask you to look at it this way. Any one project can have a cost under collection or over collection, but when you look at the entire portfolio of roughly CAD 7 billion of largely the legacy Columbia projects, we've previously given you guidance that we would build those somewhere at around a five to seven times EBITDA multiple. Even with these current cost overruns, we're still going to come in at the high end of that range, somewhere around seven or maybe just a few ticks above seven with respect to an EBITDA multiple.
You can think of that as translating into an after-tax return in the lower double-digit range, which we think is still pretty strong.
That's very helpful. Thanks for that. Turning to liquids, it seems like the marketing had a good quarter there. Was just wondering if you could expand a bit on the driver and how sustainable and where Keystone is right now from an operating perspective, and how you see that progressing as it returns to normal operations.
Hi, Jeremy. It's Paul here. To your first question on the marketing. The marketing business contributed about CAD 0.03 this quarter, and its performance largely depends on movements in the marketplace, particularly when we see high differentials. If you look back to last August where we saw the Brent WTI spread widen out, we started to see increased contribution from the marketing business. That lasted till probably, let's call it January into February, which gave us time to lock down some January, February business and into March. Since then, we've seen that differential narrow a bit. It's picked up a little bit again here in April.
If you wanted to get an appreciation for predictability, if you wish, of the marketing business, a lot of it does revolve around some of these market spreads we see, primarily Brent WTI and probably to a lesser extent, the Light Louisiana Sweet and the WTI. As far as maybe broadly speaking, when you look in the entire liquids business, about 85% of our EBITDA is contracted under long-term take-or-pay contracts. It's really the spot component on Keystone and Marketlink, as well as the marketing entity, which is going to provide some variability around that. It really does revolve around where those spreads are at. Going forward on the marketing business, we have seen a softening of those differentials. I would anticipate it probably would contribute about CAD 0.01 less here in the second quarter.
As far as Keystone is concerned, we still have a 20% de-rate applied on that section of our pipeline, which was affected by the leak we had late last year. I want to emphasize that that de-rate is limited just to that affected section. It really has not resulted in much of an impact to our throughput, and it certainly does not have a material impact on our operating results. Going forward, we continue to work with the regulators to work a lifting of that de-rate, and I would look to see that de-rate lifted in the next few months.
That's very helpful. Thank you for taking my questions.
Welcome.
Thanks, Jeremy.
Thank you. This question is from Tom Abrams from Morgan Stanley. You can go ahead.
Yeah. First quick question is on just the Bruce Power. I see you're going to have the cost approvals in the fall. Is that a definitive, yes, we're doing that kind of situation, we're just arguing about costs, or is it really technically still need to be approved?
Hi, Tom. It's Karl. Yeah. The way the agreement is written is that we are to finish our engineering and all of our pricing on unit 6, is the particular one we're putting in on October 1st. Then we are to provide a fixed price to the Ontario ISO. If that fixed price is below a certain threshold that we have in our contracts, it is an automatic decision to move forward with the refurbishment. If it is greater than the maximum in that contract, we can still move forward, but the ISO would have to take it back and opine on it and give us a decision. There is a broad understanding of how to refurbish these, and I don't think there'll be much of a technical discussion that we haven't already had a discussion with the ISO on.
It'll be mostly around price. I would say that when we put that price, which we are actually progressing very well on, I fully expect us to put the unit 6 project in front of them October 1st. We will receive the benefits of the capital that we're planning on investing in it starting April of next year. The capital does not start going out until the unit comes down, which is in 2020. We get about a year of delay between when the payments for the capital start coming in, and the capital starts being spent, and the unit gets taken down in 2020.
Great. My other question is on the Coastal GasLink. With Fluor being chosen as one of the contractors, it looks like that thing's really rolling toward a positive FID. You kind of alluded to that in your presentation as well. What could trip that up? I particularly want to know about what's going on from a governmental permitting type issue. As a follow-on to that, assuming it does go through, when do your dollars get spent?
Let me just start with what could trip it up. I'm not comfortable talking about kind of LNG Canada's or Shell's and their partners, kind of the parts of their project that may be tripped up or not. It is very difficult for me to sit here and talk about those contingencies. We are the pipeline supplier to Coastal. I agree with your assessment, we've said this before, it is looking very positive for this project.
It looks like LNG Canada has received some of the concessions they were looking for from the B.C. government. It looks like they've got their contractors in place now. Certainly, from the pipeline supplier, we are in the process right now of keeping up with them. We will be putting the rest of our arrangements in together and waiting for a fall FID or an FID for the end of the year that they have promised us. I guess I'd just leave that as saying that, I really can't opine on what other issues that LNG Canada is working on.
Okay, assuming it goes through, when would you be spending money on it?
Well, the capital, it's probably about a four-year build cycle. There won't be much capital going out this year. We'll start next year, the bulk of the capital will be 2020, 2021, and 2022.
It's Don here, Tom.
Yeah.
From a funding perspective on Coastal, I'd just like to add that, as Karl mentioned, it's spread out over a four-year build cycle. We will look at joint venture partners, and we will look at project financing for this specific project, which could shrink the TransCanada cash contribution quite substantially. This is something that we've been looking at in the background for quite some time, and that is on the table as something that we might consider here.
Thank you.
Thanks, Tom.
Thank you. The next question is from Ben Pham from BMO. Please go ahead.
Okay, thanks. On the S&P, as you digest the potential action change there, I was wondering if you can provide us your thoughts on the recent Moody's rating change and if your funding program solidifies what they're looking for, and maybe your overall thoughts on the A rating and your previously long-term commitment to the A rating.
Yeah, we were surprised by Moody's actions. We didn't have much warning on it. As they noted in their report in mid-March, they actually retroactively changed their methodology on their treatment of AFUDC and EBITDA from assets that were sold. They had outlined they wanted to see us between a 5 and 5.5 times debt to EBITDA in 2017. Using their unrevised methodology, we came in at 5.3 times. Thought we were in compliance with what they were looking for. With their retroactive changes, they moved that to 5.7 times. With that, they said we were offside, short of having a DeLorean to go back in time to change our financing strategy, we drive forward here. That said, our finance plan does have us onside their five times target as we exit 2018 here. That was the state there.
In terms of how we look at this going forward, we'd like to remain an A-rated entity, but we're looking for a reasonable balance here between equity and debt interests. We will not chase moving goal posts at any cost. What we will strive for going forward is to achieve credit metrics of a maximum five times debt to EBITDA and a minimum 15% FFO to debt as our target ratios. Again, we should be onside with those as we exit 2018, as we bring CAD 11 billion of projects into service this year. When we look collectively at four rating agencies, each with their distinct methodologies, expectations, factor weightings, and the like, we think this is the appropriate place to be based on our business position, the simple corporate structure, and considering our access to and cost of capital.
We're not going to chase moving goal posts, but we will target five times 15%.
Okay. Those were my two questions. Thanks. Thanks, Don.
Thanks, Ben.
Thank you. The next question is from Robert Catellier from CIBC. Please go ahead.
You've answered most of my questions. I just wondered if you could provide some context around the CAD 9.5 billion EBITDA target in 2020, in light of the perhaps higher level of asset sales you might be contemplating. I presume the CAD 9.5 in 2020 included your funding plan, has it changed to more asset sales, perhaps? Is there a sensitivity you could provide us around that? Sort of an upper, lower bound?
It's Don here. Without having specifically identified assets and when that might be executed, I would say the CAD 9.5 billion figure won't change materially. That includes contemplated financing and as well as the impacts of FERC actions and tax reforms. The CAD 9.5 billion figure is, in our view, still a good figure. If it moves off that, we're talking about a rounding error at this point.
Okay. That's helpful. Thank you. Just on TCP, given it's not material to your results necessarily, but obviously they have some things to work through there. Is there any sort of thinking about equity injections into that vehicle to help them through this period of uncertainty?
Robert, that's not our plan. At this time, it has to work through its issues, both from a cash flow perspective, distribution perspective, debt covenant perspective, and no cash injections are contemplated from the parent.
Great. Thank you.
Thank you. The next question is from Robert Hope from Scotiabank. Please go ahead.
Good afternoon, everyone. Looking at the Mainline in the NGTL System, no incentive earnings were recorded during Q1. Given the timeline on the total review for the Mainline, is it safe to assume that we won't really see any incentive earnings booked in 2018 and the catch-up thereafter? I guess secondly, give a ballpark gauge of how much you would've been able to generate in incentive earnings in Q1?
Rob, it's Karl Johannson. On the NGTL, for example, we have the settlement in front of the NEB right now. The question or the period where people can make comments on it has closed, and we're just waiting for the NEB's decision on the settlement. If the NEB accepts the settlement, which I don't see why they wouldn't, that will be before the end of the year, you'll see the incentives on NGTL come into income statement at that time. On the Mainline, you have a good point. It looks like the actual hearing won't take place late this fall, which means there's a potential for a decision not to come before the end of the year. I think our policy is right now that we generally do not book that until we have a defined decision.
We will relook at that policy in the fall. It looks like it's very supportive of the incentive program, stuff like that. We might try and put something in on a pro basis before the end of the year. Our general policy is not to do it until the end of the fall. I'll just give you an idea on the Mainline. For every 1% ROE, it's about CAD 15 million. We have been averaging the last couple of years 11.5% ROE. Right now, we're booking it at 9.2. I think that to expect 11.5% ROE with incentives this year and next year is a little aggressive given we had to rebase kind of our revenue stream. I would certainly expect that we'd make some incentives just when we get to the 11.5.
It's probably unlikely at least the first year of the new term.
All right. That is helpful. Just a clarifying question on Mountaineer XPress cost increase. There was a commentary that you've gone through the cap for that 50/50 cost sharing. Was that for all the incremental cost that was announced today, or did you blow through it part of the way through?
Yeah, it was for all the incremental costs.
All right. Thank you.
Okay. Thanks, Rob.
Thank you. The following question is from Andrew Kuske from Credit Suisse. Please go ahead.
Thank you. Good afternoon. I think the question's for Paul, it really relates to Keystone and the fact you've been pressure restricted now for, I guess, about five months. To what degree, when you go back to normal pressure, do you think you can push more volume through the line just with using DRA and just other initiatives?
Yeah, Andrew, it is Paul. We're always looking to optimize our system, our team did a great job when this gate rate was applied to a portion of our system. Once it's lifted, I think we'll take a look at how we can further enhance our system, I wouldn't look to see us move significant additional volumes through. It really did have a minor impact on our throughput, consequently, I don't anticipate us seeing a tremendous increase in our throughput once it's lifted based on some of the changes we've made already.
Okay, appreciate that. Just shifting gears, a question really for Karl, just on Mexico. How do you think about just the demand growth within the country, comparing that to the pipelines really seeking to push more gas into Mexico and just the balancing act? Obviously it's a little bit of a chicken and egg problem that exists.
Yeah. Most of the new pipelines are really designed to take incremental or to convert power plants from running on fuel oil and/or new power plants that they're building. It was designed to fuel that right now. When I take a look at Mexico, I can't help but get optimistic about the gas position there. A lot of their industry, because gas has been so unreliable in the past, really don't use gas. Companies like TransCanada, for example, and some of our competitors, we're now sitting on marketing to get the incremental sales to convert industrials off of fuel oil and propane, for example, onto natural gas. I think there's going to be a couple phases that we're going to see in Mexico going forward.
Number one is everybody's taking a pause now on finishing the construction of not only the pipelines, but the power plants that are anchoring those pipelines. I think after the pause, you're going to see a big marketing effort as we move into the industrials in the country and start converting them to natural gas. I still think there's some more CFE and electrical-based pipeline construction to be done in the country. The CFE isn't finished the grid that they want to build. They are taking a pause right now while a lot of their pipelines are running late because of various indigenous issues or archeological issues or whatnot. They're taking a pause, but I don't think that pause means it's the end. I think there'll be more additions to this grid coming later.
Okay. Appreciate that. Thank you.
Thank you. The next question is from Ted Durbin from Goldman Sachs. Please go ahead.
Thanks. Just back to the FERC issue, I realize you say it's not material, I wonder if there's any way you can quantify the downside to your earnings as you flow through the lower income tax allowance on the Form 501-G. If you think about pipelines where you might be over-earning on your cost of service rates. Any way to put a number on what that might be? Is it, I don't know, CAD 100 million or CAD 500 million? Just any way to give us a sense of what that might look like based on that filing that's required.
Yes. Ted, this is Stan. A couple things is, one, I would not put a whole lot of faith in the Form 501-G schedules in and of themselves in that they're just a starting point based upon historical data. Two, the impact is likely to be for 2019, much less than any numbers you've just thrown out. Keep in mind that with respect to our wholly owned pipeline, Columbia has already largely complied with its obligation to reduce its rates for the tax change under its modernization settlement. ANR has a rate moratorium in effect through August of 2019. We don't expect there to be any material differences in its results as compared to prior periods. Northern Border and Great Lakes just came out of rate reviews that the commission approved back in January. Any true-up associated with just the tax component there is going to be relatively small.
Most of the balance of our pipes are owned wholly or in part by the LP, we only own 25% of the LP. Then again, just remind you that anything that's going to happen here is going to happen prospectively and likely no earlier than sometime in 2019. At that point in time, roughly 63% of our revenues are covered by either negotiated rate or discounted rate contracts. Again, the impact is going to be relatively small.
That's great. That's helpful. Then just coming back again to Keystone XL. As you think about you're getting closer, it sounds like, to a final route, any update you can provide us on the capital cost there? You've been carrying this CAD 8 billion number for a long time. I realize you have a lot of long lead items already, but steel costs have been moving around on you. Just get a sense on how that's shaping up for you.
Hi, Ted, it's Paul here. You're right, we do have a lot of the long lead items, the material, the pipe, the pumps, the motors. Part of our construction planning here during 2018 while we move through the various legal and regulatory proceedings, is to position ourselves for construction in 2019. Part of that is doing some value engineering, other engineering, other construction planning. Where we sit today, the CAD 8 billion number is still a good number, but we'll continue to look at that as we move through the engineering here through the balance of 2018.
Okay, great. Thank you.
Welcome.
Thanks, Ted.
Thank you. The next question is from Dennis Coleman from Bank of America Merrill Lynch. Please go ahead.
Thanks very much. Just another quick one on KXL, if you would. You talked about the Nebraska Supreme Court taking up the case. That seems like good news in terms of getting to the final arbiter, as you say. Given the timeframe that you put out, I wonder, are there any points along the way or other scheduling points that you might share with us that we can watch for in terms of hearings or other, like I said, key dates?
Sure, Dennis. It's Paul here. The Supreme Court has taken up the Nebraska approval challenge. If I recall correctly, the various oral arguments and submissions are due here in May. The Supreme Court will recess over the summer. I would anticipate that they come back probably after Labor Day to hear oral arguments. At that point, the decision will be theirs. We anticipate that they would reach a decision here before the end of the year.
Okay. That's very helpful. That's all for me. Thanks.
Welcome.
Thanks, Dennis.
Thank you. The next question is from Faisel Khan from Citi. Please go ahead.
Thank you. Just following back on TCP. Previously, you had mentioned that there may have been offsets, including higher spending in terms of just integrity management for some of the systems like GTN that have had significantly higher utilization over the past, say, two to three years. Could you just talk about some of the options available as offsets or if they aren't available anymore, such as integrity spending on some of the pipelines owned by TCP?
Sorry, Nick. If you could just rephrase the question. Are you wondering from a cash flow perspective? Are you looking at operating cash flow?
Sure. Absolutely. In terms of just rate reductions, there's a thought that you could spend a little bit more on the systems and keep the rates where they are or increase rate base. That would be an offset. Are there anything or is there anything that we should be looking at for TCP particularly or Great Lakes, Northern Border in terms of an offset?
Yeah. I would say that each pipeline is unique in and of its own way. There may be some instances where the lower tax allowance could be offset by other elements in our overall cost of service. In other cases, you may have situations where the pipeline is earning a very attractive return where we're just going to have to reduce rates going forward. It's going to be a bit of a mixed bag going forward.
Yeah. It's Karl. I'll just maybe say a couple comments. The LP board
board meeting and conference call is coming up early next week. They'll probably be a little bit more detailed in what the strategic alternatives are and what their options are. I would say, when you go under rate cases, when you go discuss your rate adjustments, you're not only taking into effect the tax rate, you take into effect any other costs that you maybe haven't been collecting on. You also will get into discussion on what corporate form is the entity going to be in the future. There's obviously the option to turn the LP into a C-corp. I think that your best to wait until the conference call of the LP, and then they could talk a little bit more directly as to what options that they are assessing that are on the table right now.
Okay. I guess my second question is really regarding the open season on Marketlink. If you could provide us any update or color on that would be great.
Sure, Faisel, it's Paul here. Are you alluding to the one we just launched here, I guess, last week?
Yep.
We're offering kind of a short-term service between one to three months. We do think that there's additional desire for contracted capacity on Marketlink. We've offered up one-to-three month terms. It's a bit of a bid process where we've established a floor, the ceiling is effectively our recourse rate. I think it runs for about a month. It's a bit of an evergreening-type program. We launched it, we announced it here. Depending on the take-up, we can lock down those contracts. If it's not at a rate that we're satisfied, we don't have to accept any of those contracts. It's the type of evergreening type open season that when we see differentials move up and we want to lock down some of this revenue, we can go back into the market fairly quickly.
Got it. Thank you.
You're welcome.
Thank you. The next question is from Matthew Taylor from Tudor, Pickering, Holt. Please go ahead.
Yeah. Hey, guys. Thanks for taking my questions here. Just over to North Montney, can you give me a sense of timing on that? Is April 2019 still achievable, or just where do we stand on that?
Oh, for the decision? Yeah, we're expecting it any time in the next couple of weeks. We haven't heard that it's going to be materially delayed or anything. Yeah, hopefully I doubt we'll get it for the end of April now, but I'm kind of expecting it in the next couple of weeks, maybe the middle of May.
Construction's still April 2019. Are you still targeting that?
Yeah. I would have to take a look at it and just see if there's anything materially happened to our schedule. That's kind of where we are right now, give or take. We do have parts that we can work on in the summer. It's not fully in the muskeg, so we can work in the summer. We're kind of sitting there, but subject to sitting back once we get the permit and doing a full evaluation of the timing.
Okay. That's great. Thanks, Karl. Then just one more, if I may. Looks like recontracting has been pretty strong on the Canadian Mainline through 2018, sticking around 3 Bcf a day. How do you see that playing out the rest of the year? In order to expand the system, will you need to backstop a majority of that capacity with contracts before expanding?
Yeah. Yes, I'll agree with you. The contracting has been very robust. We're very pleased. Just on the entire system, just when I talk about the firm contracts on there, I right now have three and a half Bcf a day of long haul, and I have almost nine, let's say 8.7 Bcf a day of total contracts on the Canadian Mainline, including the Eastern Triangle and all the short hauls. We've got a very robust billing determinant that's in that line right now. Specifically on the long haul, my expectation given the surplus of gas coming out of NGTL and the need for egress out of NGTL, my expectation is we're going to be able to sell more products going through the Canadian Mainline. The Canadian Mainline is, I think, the cheapest incremental capacity coming out of the WCSB right now.
We're going to continue putting packages together that'll bring more volumes off of NGTL onto Canadian Mainline. To give you an example, right now we've held two open seasons over the last half dozen months. We've got about 1.3 billion cubic feet a day of new delivery capacity to Empress coming out of NGTL, which I intend on putting some products through the Canadian Mainline on right now, to take that away. Then I can even get some more capacity on the Canadian Mainline. Bringing more capacity on from our maximum right now is just below 4 Bcf a day. To bring more capacity on, which we think is about a Bcf and a half of extra capacity, is not all that expensive, and it is not all that time-consuming. It's basically maintenance.
As we get new contracts, I think we can bring it up in a reasonable cost and a reasonable timetable, if people need it and they want to sign some contracts for it.
Yeah. Thanks, Karl. Just to clarify, would those Empress, the extra 1.3, does that backstop the existing capacity, or could you use that capacity then to expand the system?
Well, yes, on both things. Really, I wouldn't call it an expansion of the system. The capacity's already there. We just have to put some maintenance into it to get it active again.
A little bit of that capacity will be used actually to take care of the existing 1.3. The existing 1.3, there's probably enough capacity on the system if you assume normal non-renewals of capacity. There's probably enough capacity to manage most of it, although some of it may come out of the latent capacity that's there. The rest of it, again, I'd just be cautious. It's probably not expansion. I think we're just doing the maintenance and getting more capacity out of it. We'll use a little bit for the 1.3 that we have there. We'll go find some new products to develop and bring some extra gas over and above the 1.3 to utilize the rest.
That's great. Thanks, Karl.
Thanks.
Thank you. The next question is from Linda Ezergailis from TD Securities. Please go ahead.
Thank you. Just a follow-up question on your financing possibilities in the future. Very helpful to get a reminder of how you are thinking of potentially financing Coastal GasLink. I am wondering if Keystone XL goes to a positive FID, how might you think of the incremental financing required for that, realizing that spend probably ramps up as some of your Columbia projects have already been completed?
Yeah, Linda, it is Don. It does dovetail nicely into CAD 11 billion plus of assets being completed this year, and much of that CAD 20 billion build program behind us and seeing the cash flow from that, especially factoring into that much of the long lead time items are in-house already. It is a 2019, 2020 concentration right now. We are looking at it at this point in time in the event that we do hit the go button at the end of this year or early 2019, whenever we get to that final decision point. It will be all of the above. Everything you see in the boxes right now. It does bring balance sheet growth, which brings hybrid capacity. Again, we have identified quite a few assets we would consider selling as we compare it to other costs of capital.
We could look at extending the ATM and the DRIP programs and the like. We will put a package of financing together, and we will engage all four of our rating agencies in advance as we did with Columbia under their rating advisory or rating assessment services, to get a sense as to how it is viewed and what the impact would that be. Again, another all-of-the-above strategy here, and we are looking at it but still early days at this point as we refine the cost estimates as well.
Thank you.
Thanks, Linda.
Thank you. The next question is from Jeremy Tonet from J.P. Morgan. Please go ahead.
Hi, thanks. Just a quick follow-up, and just wanted to explore a thought, and maybe I'm off in left field here. As far as kind of funding for TRP, if I look at TCP and there's no resolution with the FERC or no positive resolution, would it make sense for TRP to take out TCP in an equity type of deal where TRP shares for TCP units, TRP gets an equity offering? Would it make sense just for TCP to kind of go its own way and internally de-lever itself? Any thoughts on those topics?
I think as I said earlier, TCP's got a lot of issues it's got to sort itself out first, and I think your first comment was in the absence of clarity at the FERC. I think the first thing that we need is clarity at the FERC. What is the impact of these policies? What are the mitigation actions that can be taking place at that level? What is the remaining cash flows? What are the other sort of pluses and minuses before any thoughts or discussions can take place on any other sort of strategic alternatives. I would say that's well down the future for us and something that we don't have on our radar screen at this point in time.
That's helpful. That's it for me. Thanks.
Okay. Thanks, Jeremy.
Thank you. There are no further questions registered. I'll turn the meeting back over to Mr. Mineta. Please go ahead.
Thanks very much. Thanks to all of you for participating this afternoon, late on a Friday afternoon. We very much appreciate your interest in the company. We look forward to talking to you again soon. Bye for now.
Thank you. The conference has now ended. Please disconnect your line at this time. We thank you for your participation.