Presentation March 2017 Cautionary Note Certain statements - PowerPoint PPT Presentation

Investor Presentation March 2017

Cautionary Note Certain statements contained in this presentation may be forward-looking within the meaning of applicable securities laws. Such forward-looking statements reflect the intentions, plans, expectations and opinions of the management of Gaz Métro inc., acting in its capacity as General Partner of Gaz Métro Limited Partnership (“ Gaz Métro ”), acting as manager of Valener Inc. (“Valener”) (the “Management”) and are based on information currently available to Management and assumptions about future events. Forward- looking statements involve known and unknown risks and uncertainties and other factors beyond Management’s control. A number of factors could cause actual results of Gaz Métro and Valener to differ materially from the current expectations as expressed in the forward-looking statements. Although these forward-looking statements are based upon what Management believes to be reasonable assumptions, Management cannot assure investors that actual results will be consistent with these forward-looking statements. These forward-looking statements are made as of the date of this presentation, and Management assumes no obligation to update or revise them to reflect new events or circumstances, except as required pursuant to applicable securities laws. You are cautioned not to place undue reliance on these forward-looking statements. The complete version of the cautionary note regarding forward-looking statements as well as a description of the relevant assumptions and risk factors likely to affect Gaz Métro’s and Valener’s actual results are included in the Management’s Discussion and Analysis (MD&A) of Valener for the fiscal year ended September 30, 2016 and is available on SEDAR under Valener’s profile at www.sedar.com Non-GAAP Financial Measures In the opinion of Management, certain financial measures provide readers with information considered useful for analyzing Valener's and Gaz Métro’s financial performance. However, certain financial measures are not defined by GAAP and should not be considered in isolation or as substitutes for other financial measures that are in accordance with GAAP. The results obtained might not be comparable with similar measures used by other issuers and should therefore be considered only as complementary information. 2

Valener - Highlights Created October 1, 2010 to replace the Gaz Métro Limited partnership public investment vehicle (TSX: GZM.UN-T) Steady, rising dividend  Feb 12, 2015: annualized dividend increased from $1.00 to $1.04 per share and dividend growth target of ~4% announced for the next 3 fiscal years  Nov 27, 2015: annualized dividend increased from $1.04 to $1.08 per share TSX: VNR  Nov 24, 2016: annualized dividend increased from $1.08 to $1.12 per share and TSX: VNR.PR.A growth target of ~4% reaffirmed for one more year VNR dividends paid, per fiscal year 38.8 million common shares outstanding (as of February 6, 2017)   4.0 million Series A preferred shares outstanding (as of February 6, 2017)  C$838 million market cap (as of March 13, 2017)  Strategy: to support Gaz Métro in its growth objectives 3

Ownership Structure Corporate Structure Principal Interest Owners Caisse de dépôt et placement du Québec * (“CDPQ”) 100% • 25.9% indirect ownership in Gaz Métro TRENCAP Enbridge Inc. 61.11% 38.89% • 27.6% indirect ownership in Gaz Métro NOVERCO 100% PUBLIC GAZ MÉTRO INC. (THE ISSUER) 100% Valener (TSX: VNR) 71% Publicly-traded company whose main assets consist of a: 29% 29.0% direct interest in Gaz Métro , o providing Gaz Métro with potential access (THE GUARANTOR) 24.5% to public equity markets as required 25.5% SEIGNEURIE DE BEAUPRÉ WIND 24.5% interest in the Seigneurie de o FARMS (ELECTRICITY PRODUCTION) Beaupré Wind Farms (340 MW contracted) ENERGY TRANSPORTATION OF ENERGY SERVICES, DISTRIBUTION NATURAL GAS STORAGE & OTHER * CDPQ is Trencap’s GP and majority unitholder (59.64%) 4

Gaz Métro – Quick Facts Overview of main activities Founded in 1957 in Québec and Vermont Now $7 billion in assets #1 natural gas distributor MORE THAN in Québec JUST A NATURAL GAS COMPANY Sole natural gas distributor and largest electricity distributor in Vermont Over 520,000 distribution customers Over 2,000 employees Data as of December 31, 2016 5

Gaz Métro’s Business: Stable and Predictable Energy Services, Energy Natural Gas Electricity Production Storage and Other Distribution Transportation 100% 100% 50% 25.5% 100% 100% 100% 38.3% 58% and 100% 100% 100% (1) 100% 40% to 60% 20 yr contracts with Non-regulated Regulated Hydro-Québec except for Intragaz (1) Since December 21, 2016. Previously 50% ownership. 6

Asset Base Diversification since 2006 Asset exposure to U.S. energy distribution up from 5% in 2006 to 50% in 2016 INCREASING Regulated assets increased from 95% in 2006 to 97% in 2016 EXPOSURE TO U.S. ENERGY DISTRIBUTION $2.8 billion in assets $7.4 billion in assets 2016 2006 Over 200,000 customers Over 520,000 customers Natural gas distribution in Québec Natural gas distribution in Québec Natural gas and electricity distribution in Vermont Natural gas distribution in Vermont Natural gas transportation Natural gas transportation Electricity production Energy services, storage and Other Energy services, storage and Other Data for fiscal years ended September 30, 2006 and 2016 7

Strong Financial Performance Gaz Métro adjusted net income attributable to Partners (1) (in millions of CAN$) (2) (2) NEW 2016 RECORD Fiscal year (1) Non GAAP financial measure. Refer to Appendix D for additional information and a reconciliation with GAAP financial measures. (2) Data presented in accordance with U.S. GAAP. As of October 1, 2015, Valener and Gaz Métro retrospectively adopted U.S. GAAP. Data for fiscal 2014 and prior years are presented in Canadian GAAP. Refer to the 2016 annual report for additional information on the impacts of the conversion to U.S. GAAP. 8

Diversification Strategy Diversification and expansion along the value chain, both upstream and downstream UPSTREAM: electricity generation CORE: energy distribution DOWNSTREAM: customer-focused Limited Partnership (pending) 9

Gaz Mé tro’s Evolution Tomorrow Envisioned position Our 4 businesses Generator Distributor Today Services Transporter provider Yesterday An integrated energy VT company QC  Sustaining the core business and strengthening business development A diversified operator  Increasing complementarity between businesses,  Multi-energy: gas and beyond simple financial electricity A gas distributor logic  Two regions and regulators:  Distribution network  Partner of integrated energy Québec and Vermont solutions to U.S. and  Storage  Multiple businesses: Canadian communities and  Gas pipeline generation, transportation, a more sustainable distribution and services economy Logic of value creation through complementary Financial logic of rate of return Logic of regulated return businesses and integrated and risk diversification offers 10

Acquisition of Standard Solar ANNOUNCED MARCH 7, 2017 Commercial, industrial and institutional solar developer, engineering, procurement and construction management, as well as operations and maintenance services provider US$ 17 million acquisition Expands Gaz Métro’s presence Target of 100 MW/year (+/- US$ 200 million/year) and expertise in the rapidly growing U.S. solar 100 MW of solar capacity under management services energy industry Current operations in multiple states including California, Connecticut, Maryland, Massachusetts, New Mexico, New York, North Carolina, and Washington D.C. Portfolio of 80 MW of construction-ready projects and a significant development pipeline Seasoned and highly competent management team with a sterling reputation and outstanding track record * Closing is subject to a regulatory approval and is expected by the end of April. 11

Project Updates AUTOMATIC STAY LIFTED St-Hyacinthe GASSED UP biomethanation project on track to begin this spring GASSED UP COMPLETED = expected commissioning (1) Energy Distribution – Vermont Gas Systems (“VGS”) (2) Energy Distribution – natural gas distribution in Québec (“ Gaz Métro- QDA ”) (3) Energy Services, Storage and Other (4) Energy Distribution – Green Mountain Power (“GMP”) (5) Energy Distribution – Gaz Métro-QDA (renewable natural gas to be injected into Gaz Métro- QDA’s network) Note: all dates presented on a calendar basis 12