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The news of the day that sort of wow the market here is Trump is now vowing a two hundred percent tariff on EU wine, escalating trade tensions.
Full disclosure.
I really like champagne, so I just want to, like, I have I have a horse in this race.
Is it a champagne versus prosecco bias or you can go either way.
I totally go either way.
Okay.
I usually go prosecco first because it's a little cheaper.
Okay, but I do love my champagne.
It's really champagne rose that's really high in.
Does any of this surprise you, pame taste? Yes, exactly by discount?
I would good question.
I used to when I drank more, That's for sure.
All right.
Joining us now as Albertina Ursoli, a European Transport and Industrials reporter, walk us through the reaction on the ground when all of this unfolded this morning.
Look, it's been an intense ten days. It's about champagne, it's about wine, it's about retaliatory retaliation measure us EU. I covered the automotive industry, I've covered the drinks, champagne, wine industry, Cognac. You forgot Cognac while you were talking earlier on You know, it's a vicious circle here. Tariffs announced retaliatory measures. I mean, we're still waiting to get a clear sense from France because France here is clearly targeted.
And as soon as the president US president posted on social media about the two hundred percent tariff on EU wines and champagne, you know, you immediately saw a knee jerk reaction in the market. Elvemash the owner of brands such as Vito and You're, but also the group also has a wine and spirits business. The shares declined the same thing for cognac maker Remi Quantroux Compari. I'm sure you're wellware with the name Campari, Dowd Campari, the company,
spirits maker Pernurrica. You know, these are big names. I mean, it's interesting because the spirits industry has been the focus of trade tensions before, they're never spared. What is a bit newer here is uh, the attack I would say on the auto's industry. The healthcare industry is wondering what's going to happen to them, you know, it's it's quite intense. And retailers as well, of course, also wondering what the
implications will be. So it's unlike previous trade tensions I would say linked to tariffs, you know, the previous term of Trump. I think that the scope here is much bigger and really having widespread implications on various businesses and of course on markets.
Well, I don't know about you.
I'm going to when I get home today, I'm going to go over to the wine cellar and stock up on my barberusco before they slap.
Oh right, that's your jam, that's my Jamnews drink.
There's an American alternative to cod rone, the French wine.
It's called goats do Rome.
That's actually awesome, Abertina, And I know you're based in our Paris bureau. I'd love to get your sense of kind of help people on the street are thinking about this. For example, in Canada, people are up in arms about this. You see it all across social media. This has gotten personal. How are the folks in Europe thinking about this brewing trade war here?
Look, I would say that in terms of the drinks, it's a bit early days to know what's happening on the street. But I can tell you that we've been tracking the automobile industry very closely, and it's not only linked to tariffs, but I'm sure that you've seen the same in the US. In California in particular, there's a
lot of angst towards Tesla cars. Tesla you know, sales and registrations have gone down in Europe in Paris and France as well, and there's been attacks on Tesla car is actually you know, put on fire or or destroyed Tesla cars. So there are implications, you know. I don't know if we will see larger impacts against US products.
I think it's a bit early for that. But I can tell you that there's a lot of soul searching going on at c suite level with CEOs who are trying to plan around what, you know, how they can go about exactly doing some planning for these tarrists. How long will these tarifs last and will they really be applied or not, because I think that the main sense, but maybe among the public as well, was that during Trump won there was a lot of talk but not
a lot of a lot of action. And I think that even before Trump took off, as you know, there was a sense that it was just a negotiating strategy to you know, call for tariffs and threaten tariffs and then not apply them. I mean, you know, two nights ago we saw here in Europe the metal and aluminum tariffs taking effect. So it's not only talk this time around.
And I think this still needs to sink in. And of course then there is the observation of how our markets reacting and this will this hold back Trump a bit and his administration. But I think that there's more question marks than answers today.
All right, Abertena, thank you so much. We really appreciate aberteena Torsoli, European transport and industrials reporter for Bloomberg News, reporting in from our Paris studio.
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Speaking of course, of my guests that I had at it's Sarah Week. It's a global SMP Global Energy conference in Houston, Texas, and I talk to a lot of the power players. Now, if you're a data center, that's who you're talking to. Are those power players?
Right?
There's a narrative on a couple different fronts. One is that you have the hyperscalers that are very worried about being too long power, that they spend too much money buying power that they eventually don't need.
So there is a narrative that.
They're actually a little skittish on going out and getting these deals.
The other narrative is that no they're not.
They're just getting them from certain companies that have already executed on these kind of power arrangements, but nonetheless like show me the money, like where are the deals, where the checks being signed? How do they work out? Like a Microsoft and Constellation Energy. So to this exact point, I was able to speak with Energy Energy CEO Larry Coben. He's been in this industry for decades and decades and decades.
It's one of the stocks along with Constellation and Vistra that moves like an AI stock because they're the ones that power the environment. And I asked him first if the rising power growth demand that we've seen is actually been driven by this power.
Demand and AI no, I think it's a lot of things.
It's also on shoring of manufacturing. For example, here in Texas, there's a one gig Samsung plant that's going to be opened in a couple of years. It's the Internet of things, it's smart homes, people are just it's electric cars. People are just using more electricity in ways that they never did before. And as a result of that, that's part
of the demand cycle. Obviously, data centers are a big part of it, but data centers aside, all of the people who build data centers also are involved with cloud and a whole slew of other services search that we don't think about because we've had them for so long, but growth for those is increasing every.
Bit as much.
And you guys are one of the largest independent power producers in the United States, right, so you can really take advantage of this. Where is the biggest demand for what kind of power? Give me some insights into the conversations you're having right now.
Sure.
I think, you know, competitive markets, the two biggest ones would be Texas and PJAM in the northeast. Texas is a primary focus for us that we do have a strong PJAM presence. One of the things we like about Texas is it has a friendlier permitting environment and it has one public Utilities Commission.
And one governor.
Urkatt has thirteen states in it plus the District of Columbia. So that's fourteen commissions, fourteen governor like people, and furk which doesn't have any jurisdiction here. So but I think you're going to see data centers in all of these places, and every and in other places where economic growth is going on. It's not going to be limited, but I think Texas is going to be first.
Do you think that the hyperscale or hype about how much they're going to spend on power demand is real fall short?
I think yes. I mean it won't fall It will not fall short. It may even go up.
Okay.
And the reason I think that is, you know, it's interesting after Deep Seek, every was super concerned about that, and then three of the hyperscalers came out and essentially doubled their capital commitments. Now if they actually, after looking at deepseek, decide it's going to be twice as much, then that gives me a great deal of comfort.
The power demand is going to be there.
And you know, I know everybody's talking about Gevins paradox because everyone has now googled it for the first time. I'm actually old enough to remember what it was originally. But you know, I think people will start using this more and more. I already see it. In our business, we were using enormous amounts of AI and customer service and we're only just scratching the surface.
Speaking of you're going to be developing five point four gigawatts by twenty thirty two, right, how much of that is going to be fully contracted and how much of that will be more merchant spot price.
You know, we have.
One point five gigs that is shovel ready that will probably go Most of that will go directly into the Texas market. Okay, anything we build beyond that, I would anticipate would be fully contracted for related either to a data center or another kind.
Of large user along the way.
We are not in the business of taking merchant risks some of the other folks are. We actually like to protect our downside and give ourselves a lot of optionality to the upside so that we don't have to care whether the growth is two percent or ten percent. Both of those are ginormous for us.
So what kind of pricing are we talking about for a gas fire plant, for.
Renewable for other power? Like, what does it look like right now?
I mean gas fired plants. We think there can be done for fifteen hundred to two thousand a kW installed. The ones that are shovel ready beuse we started on them five years ago, will be much less.
But if you're not in the.
Business actively doing it, you're going to have a hard time hitting the top end of the range. Renewable pricing hasn't changed dramatically. It's just that the load curve is changing as people need. There's more twenty four to seven power use coming in. And you know, sun doesn't shine at night, wind doesn't always blow.
But renewable aren't dead.
They're going to be sure, yes, actually I am sure, okay, because there's still a place for them when they're working in conjunction with gas plants, I mean part of our portfolio. Now we actually shut off our fossil fuel plants during the day when there's a lot of salta in win in Texas. We buy from the grid their power and sell it to our customers, generating it ourselves. Those options are still going to be available, at least in competitive markets.
Well, speaking of your renewable unit is thirty percent of your annual earnings right and it's twenty percent of the renewable market share here in the US.
How much do you think that can grow for you?
I are renewable. You know, we generally actually contract for renewables rather than own them. It's a strange thing because we own two coal plants. Everyone else gets cheaper renewable capital than we do, even though we're a big company and quite good at this, and as a result, what we generally do is contract for that power from other developers. Right now, we've got two gigs and we're probably going
to have a solicitation for more going forward. So I still see it as an integral part of our strategy, and a lot of them also will be driven by what the customers want. So the end of the day, we are in the customer service business, not the electricity business. So it's our job to sell you the kind of electrons that you want in terms of you know, time, place.
And fuel and fuel generation. So if you.
Want green electrons, decarbonized electrons, we will have them and we will sell them to you.
Thank you.
In terms of in terms of the actual agreements, how many agreements are you talking about? That's like, hey, we're going to sign like yeah, yeah, well we like your electricity, will sign in versus like firm demand.
Here's your paycheck.
You know we do this every day.
We actually supply power already to every one of the hyperscalers. We have the second largest commercial CNI electricity book in the country and the largest natural gas one. So we sign those kinds of arrange when some of them are short terms, some of them are long term. I think the new data center ones will all be at least ten and probably closer to twenty years. ABA is we won't want to dedicate our site to something that's less than that. B. We won't want to build a dedicated
power plant for less than that. And see, if you're going to pay all that money for those chips and to build a data center, which actually costs more than a power plant, you're going to want that kind of stability.
For an extended period of time.
So I think a lot of those are going to be fixed price deals off market with power scale. They will still be in front of the meter because people will want to be connected to the grid, but they will definitely be long term fixed contracts.
How soon are you're signing more of those.
Stay tuned pair question? You know, my next earning is call is may. It will not be then, okay, but you know we're working on these as fast as we possibly can. They're complicated. People, you know, think electricity is just like flicking a switch. It's super complicated. But we are making substantial progress towards some very interesting transactions. Talking both to hyper scalers and to developers were I let.
You go though. What makes it complicated? Is it the pricing? Is it? How to structure the deal?
Like? Is your power going to the grid and then selling back to the hyper scale?
Like?
What makes it so hard?
You need interconnection agreement, you need a construction agreement, you need a turbine agreement. Now you know, we have all of these in place generically, but they all need to be site specific. You need to decide how big a data center you want to put on the site. How fast are you going to grow that data center? So are you going to start at two hundred megs and go up two hundred a year? Do you want to
start at a gig? So what makes it complicated is putting all of those pieces together, and what people forget is actually for this type of data center is new, unlike existing data centers where people have done lots of them. There aren't a lot of AI data centers out there yet. But it's complicated, but so is general power plant developed and all the permitting and those things. So it's nothing that we're worried about. It's something we actually think we're pretty good at.
Buth Sailors are willing to put down that money.
You're showing up knocking on your door. They're there, They're there, Okay, they're there.
We're there, and you know, because of the agreements we announced last week, the turbines and the contractors are there.
That was Larry Coben Energy ce Energy Energy uh CEO. A big part of that though, too, is these guys are going to go through a big CAPEC cycle because of this. Right, So those how those agreements are structured, which I was trying to understand is very complicated but also necessary, so they have the visibility to then spend that CAPEX.
So curious still owed to have what there's a really going to look like.
Yeah, but I mean, just listening to me seems bullish and uh bullish on the state of Texas. Oh yeah, yeah, I just I learned something new that John Tucker and I we know that they have their own grid in Texas. They're not on part of any.
Of the They read the grid, We read the grid.
Yeah, but that exempts him from a lot of furk oversight. Federal Energy, your regulatory commission. That's good for doing business.
Oh yeah, why didn't they all go there?
Yeah, energy Energy, I'm looking at it.
Here's good stock.
Yeah, it's done pretty well.
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Wrapping up all my interviews at Sarah Week again. That is SMP Globals Energy Conference. It's once a year. It's in Houston, Texas. All the energy industry players and CEOs come, they talk, they schmooz, they meet a shareholders, maybe they make deals, they talk behind closed doors. And obviously in the middle of all of this, we're getting tariff headlines right and left. So I was able to sit down and speak with Greg Abel. He is CEO of Enbridge Energy.
It's a Canadian midstream oil and gas company. I say Canadian, but it's maybe North America. They have pipelines that range from oil, natural gas, energy transport all across the US and Canada. So he's a really good read on all of this.
I asked him straight up.
I was like, how hard is your life right now?
Well, forty three states, eight provinces, five countries, it's just another day, another day.
You've got to focus on fundamentals. What do we know.
Energy's going to flow, has to flow. It's the lifeblood of everybody's economy. Consumers want cheap prices. That means provide as much supply as economically possible and try to stay out of the way of policy and politicians in the short term and focus on the long term.
And so we're continuing to do that. We've got twenty.
Seven billion dollars projects that we're going to execute through twenty twenty.
Seven, and any of that question marked on hold, put on the sidelines on pause because of the turmoil in the market and because of the headlines on tariffs.
No, and here's why, Well, they're already signed up contracts. People need that energy. It takes multiple years to build that infrastructure. Most of the product that we need for those is are already in and i'll say steal for example, largely domestically produced in the United States. We're in Canada for projects there. So you do need think three or four steps ahead. But when you've been around better part of a century in your long term energy infrastructure.
I'm paid to do that every day, and so are our people.
But does that building and all that cappacks get more expensive if the material gets more expensive?
It could, It could, so we have to be again, you try to lock that in as soon as possible.
One of the benefits of running a large pipeline.
System largely regulated economic regulation beyond just you can pass through some costs if they're reasonably so. Again, big buyer, as you said, largest pipeline operator in North America.
We buy a lot of stuff, and I think we've.
Got a certain amount of power to be able to get the best deals possible, and then from a competitive perspective, if some prices have to be passed through, fine, but generally speaking we lock those ino.
Have you seen any change in oil flows as.
Of yet, No, quite the contrary. So January February flows out of Canada have been.
Close to record highs.
We'll see if that continues, but I think people may be getting ahead of those exports under the Gulf Coast, where the largest exporter of oil out of the United States. That continues to be very robust as allies and customers overseas want to continue to get there. And it was a pretty coold winter, so natural gas was used predominantly to keep people warm and electricity going and industry flying.
So starts of the year has been pretty good.
If we do see continued tariffs on Canadian oil, do you think the price then discounts and then producers responding kind So our.
Pipeline is exactly built for that.
So it's been a long time been a discount in Canada, right, Lots of production trying to get down to lots of demand here in the United States. So the more we can build pipelines, the less they're are discounts, but we'll have to see how the shakes out. It's early days. I keep saying everybody needs to take a breath. Everybody needs to be focused on the long term and recall that our people, our economy, the two countries need each other and they need Amergy.
No, we're media, we want answers now. But what it does seem to highlight though, is Canada's need for other export partners and I'm wondering what the stomach is to build up pipelines to Western Canada.
I'm consciously hopeful, and didn't say optimistic, but hopeful for several reasons. One, it's going to be a change in government in Canada, and one way or the other is going to be a new prime minister here in the next little while.
Maybe two we'll have to see.
I'm not the politician here, and I think Canadians are united that you know, it's a challenge to be so tied to a single economy, even if it is the best economy in the world, And therefore there's opportunities to move off. At least the West coast and maybe the East coast. Canada did have an opportunity ten years ago to be the leader in llenship and tripped over itself not to be able to get there. I think many
Canadians probably regret that. I hope policymakers reget that. But you know, we make a mistake once wille you don't make it, and that will create an opportunity and still will be the largest provider of oil and natural guess United.
States tooken Things floated like maybe the government could tax exports and that would then pay for a pipeline, particularly maybe from east to west that the government could just help pay for these kind of pipelines. Is that, as I said, all from where you are, Yeah, I.
Don't think that's That's not a logical way to go, right.
I mean, the government had to step into a pipeline and one that does go to the West coast ended up being a multiple of what it would have cost in the private sector one and then two, you would really be asking for a real burden to be placed on Western Canada as the largest producer of almost the sole producer of oil out of Canada. I don't think a Canadian politician that's thinking about national unity would want to impose one tariff on one part of the country this to benefit another productice.
So what would incite the private sector to want to do something like that.
Well, new permitting rules, just like here in the United States. In Canada, which is worse? Well, they're both challe I don't know which is worse. I think momentum is towards regulatory simplicity here in the United States, and I hope we get the same in Canada. And I have to make decisions every day. Am I investing in Cana in the United States? So permitting is a big issue. Speed of permitting is a big issue, support for proper taxation regimes, et cetera. Those are all decisions I have to make.
Both capital markets are excellent, but I would say the permitting and regulatory regime is quite problematic in Canada.
The other sort of non related tear of demand driver potentially is AI and data centers.
Right, how do you play in.
That multiple ways?
So we again, being such a large producer or large shipper of natural gas, probably the best way in which those data centers will be fueled is natural gas fire generation. So we are building pipelines now for great companies like Duke Tva, et cetera. Here in the United States, and those will be for new go out plus power plants. Some of those electrons are quite certain will go to meet this demand.
On the air front, we serve.
Ninety percent of the gas fire generations, saying a province like them Ontario, they're trying to track more and more AI.
So we will build the infrastructure.
The storage, the transportation, et cetera to fuel those plants, which will then allow the data centers to be connected. Something like you know, the vast majority of data centers are being within fifty miles of our pipeline. That's a pretty attractive right across North America for us to be able to utilize.
So I'm excited about that.
I mean a lot to see how it all shakes out. Yeah, but you know, steady growth, and we also have a renewable power business, and some of those data centers want to use renewable power. So we've signed up new customers like Amazon and Meta and Toyota and Pepsi.
So you'll see a lot of those players that are looking for power. We're going to need all of that.
What was elected to have those conversations with like Toyota and Amazon, Like what did it contract a long power purchase agreement and what was that like to come to a price?
So the price is largely set by natural gas, even if you're buying renewables. Right, So the price is out there, and then you're trying to create a little bit of an escalator.
They see the.
Need for Stable six nine's reliability power, but they also want to meet some of their sustainability.
Goals right now in a different environment.
Absolutely that means they will get a mix of gas and they will get a mix of renewables as well.
Right, So we need it all.
I think that's probably the message that comes out North America to be fortress America, North America to be energy superiority.
We're going to need it all. We're gonna need all the We're gonna need all the gas.
We need cooperation in any permitting reform, and that first and foremost is going to sue the consumer. Consumers are voters, and I think that wins before I let you go.
There's obviously a lot of concern about recession. It fears among terror fears, et cetera. Are you not seeing any slowdown in demand?
So I am starting to see some impacts VSV housing. You know, what's going to happen with interest rates, with sessions, et cetera. If you're not quite certain about being able to afford a house or your job, et cetera, then you know, as many houses as we might need, they're maybe not getting built.
But that's about it today.
I mean, I think we have to realize there's been a lot of talk of tariffs yet, but we've yet seen a month or two of tariffs. I think when that kicks in, you may see some impacts, which is.
The benefit of our model.
Our model largely irregulated, steady as she goes dividend pair we've increased the dividend for thirty years in a row and then financial guidance for nineteen years in a row. Recessions, no recessions one type of government or another. So yeah, we often see the stuff first, but fortunately the structures we have still a low.
Is to perform.
That was greg able. He is entered Enbridge CEO, joining me from Sarah Week. So clearly all the CEOs are going to say how they're well insulated, they have the right structure for any kind of economic downturn, YadA, YadA. But the point is is that if you move stuff between Canada and the US, and that relationship is fractured, and even if it's not permanent, it feels like the move towards hey, guys, we need to find different export market wouldn't be insane at this point.
No, it wouldn't, you know, he said, just it's amazing how you know how they're where they're located. Forty eight states, ten provinces, five countries, So I mean they are exposed in a big way, especially them with their stock. It's kind of flat year to date, but it's up twenty five percent on a trailing twelve month basis, as are a lot of those midstream stocks all performing pretty well.
Yep.
Because you need it, you got to move it. And at the end of the day, like you can have all the power that you want, all the commodities you want, you can't move. It doesn't matter. And that's where these guys come into play.
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