Fortis Inc. · TSX:FTS
Fortis — Edison Electric Institute Financial Conference 2016
31 slides from Fortis's conference presentation, November 2016
Slide 1: Edison Electric Institute Financial Conference
Edison Electric Institute Financial Conference November 6th & 7th, 2016
Slide 2: Forward-Looking Statement
Forward-Looking Statement Fortis Inc. (“Fortis” or, the “Corporation”) includes forward-looking statements in this presentation within the meaning of applicable securities laws including the Private Securities Litigation Reform Act of 1995. Forward-looking statements included in this presentation re
Slide 3: Fortis Today
Fortis Today • Leader in the North American regulated electric and gas utility business • ITC provides strong platform in electric transmission sector • Successful utility acquisition track record • Tremendous economic, geographic and regulatory diversity • Regulatory outcomes provide stability for
Slide 4: A Leader in North American Utility Industry
A Leader in North American Utility Industry • Regulated utilities British Newfoundland Prince • 9 U.S. states Columbia Edward Alberta Island • 5 Canadian provinces Ontario • 3 Caribbean countries • 8,000 employees Iowa New York State Michigan • 2017F pro forma midyear rate base ~$26B Kansas Illinois
Slide 5: 43 Consecutive Years of Annual Dividend Increases
43 Consecutive Years of Annual Dividend Increases $1.53 $1.40 $1.20 $1.24 $1.28 $1.12 $1.16 $1.00 $1.04 $0.82 $0.67 Average annual dividend growth through 2021 targeted at 6% 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016F 2017F 2018F 2019F 2020F 2021F Dividend paid per common share Longest
Slide 6: Delivering Superior Shareholder Returns
Delivering Superior Shareholder Returns (1) Average annualized total shareholder return over last 10 years Fortis 9.55% S&P 500 Utility Sector 7.90% S&P/TSX Capped Utilities Index 6.67% S&P/TSX Composite Index 5.29% (1) For the 10-year period ending September 30, 2016 6
Slide 7: Commencing Period of Regulatory Stability
Commencing Period of Regulatory Stability Summary of Recent Regulatory Outcomes Agreement/Decision Regulated Utility Application/Proceeding Outcome Timing - Settlement agreement reached on revenue TEP 2017 General Rate Application (GRA) requirement August 2016 - 9.75% ROE and common equity thickness
Slide 8: Liquidity and Credit Ratings
Liquidity and Credit Ratings Credit Ratings(1) Credit Facilities 6.0 5.0 Fortis Inc. 4.0 2.2 3.2 ($ billions) S&P A- / BBB+ 3.0 2.2 DBRS BBB (high) 2.0 Moody’s Baa3 1.9 1.0 1.6 0.0 Sept 30/16 Pro forma Sept 30/16 Incl. ITC Utilized Remaining Capacity (1) In October 2016, following the completion of
Slide 9: 2017-2021 Five Year Capital Program by Segment
2017-2021 Five Year Capital Program by Segment $millions 2017 2018 2019 2020 2021 Total Regulated – Independent Transmission (ITC) $ 958 $872 $590 $619 $616 $3,655 Regulated – US Electric & Gas 742 693 830 825 671 3,761 Regulated – Canadian & Caribbean 1,225 1,244 970 955 958 5,352 Other Energy Infr
Slide 10: Midyear Rate Base
Midyear Rate Base 2016 – 2021 Midyear Rate Base (1) $28.9 $29.6 $28.3 $27.1 $25.7 $24.2 ($ billions ) (2) 2016F 2017F 2018F 2019F 2020F 2021F Regulated - Independent Transmission (ITC) Regulated - US Electric & Gas (3) Regulated - Canadian & Caribbean (1) Includes the impact of bonus depreciation an
Slide 11: LNG Can Provide Significant Upside
LNG Can Provide Significant Upside • Massive amounts of natural gas discovered in BC • FortisBC owns substantial natural gas infrastructure in BC • FortisBC has constructive First Nations relationships • Tilbury LNG site has ocean access that can be expanded • Favourable alignment with provincial go
Slide 12: Long-Term Rate Base Growth Prospects at ITC
Long-Term Rate Base Growth Prospects at ITC In Infancy of Multi-Decade Transmission Investment Cycle – Projected System Needs Require US$120 - US$160 billion of Transmission Investment per Decade Through 2030(1) Changing Power Market Reliability RPS Mandates & Historical Generation Fleet Dynamics In
Slide 13: Opportunities Beyond Base Plan
Opportunities Beyond Base Plan FortisAlberta: Rural Electrification ITC: Associations Lake Erie Connector Prince Newfoundland Edward Alberta Island British Columbia Prince Edward FortisOntario: Island Wataynikaneyap Project & British Columbia Municipal Utility Consolidation Ontario Minnesota Ontario
Slide 14: Proven Acquisition Track Record
Proven Acquisition Track Record Accelerating growth through strategic utility acquisitions (1) A Fortis Company Networks Canada Fortis $/share $45.00 $40.00 $35.00 $30.00 $25.00 $20.00 $15.00 $10.00 $5.00 $0.00 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 (1) Indicates date
Slide 15: Sustainable Business Model
Sustainable Business Model SUBSTANTIALLY Local teams empowered to AUTONOMOUS maximize the value of utility Operating Companies operations Small management group able LEAN and EFFICIENT to focus and execute on Corporate Model opportunities quickly From a set of independent operations to leveraging th
Slide 16: Acquisitions Have Added Value
Acquisitions Have Added Value $ 1.5B $47B September 30, 2016 Pro Forma Total Assets September 30, 2016 Total Assets $ 1.1B $ 26B 2017 Pro Forma Midyear Rate Base 2016F Midyear Rate Base $ 115M $ 2.9B 2016F CapEx 2017 Pro Forma CapEx 16
Slide 17: What Sets Fortis Apart?
What Sets Fortis Apart? • Highly diversified; virtually all regulated electric and gas assets • Highly executable base capital plan • Focus on transmission & distribution • Regulatory stability • Consistent dividend growth • 43 years of consecutive dividend increases • 6% average annual dividend gro
Slide 18: Appendix
Appendix
Slide 19: 2017-2021 Forecast Highlights
2017-2021 Forecast Highlights Capital - ~$13B base capital program Expenditures - Highly executable, low-risk, capital projects - Woodfibre – Potential ~$600 million LNG opportunity Opportunities - ITC Lake Erie Connector – 1,000 MW, bi-directional, HDVC line connecting PJM and IESO Beyond Base Plan
Slide 20: Utility Credit Ratings
Utility Credit Ratings Company S&P DBRS Moody’s Tucson Electric Power BBB+ n/a A3 Central Hudson A- n/a A2 FortisBC (Gas) n/a A A3 FortisAlberta A- A (low) n/a FortisBC (Electric) n/a A (low) Baa1 Newfoundland Power n/a A A2 A n/a A1 ITCTransmission Michigan Electric Transmission A n/a A1 Company (M
Slide 21: Operational Highlights
Operational Highlights Regulated (as at September 30, 2016) 2015 2016F Customers Total Peak Demand Volumes Sales Operating Midyear Capital Assets Gas Electric Earnings Rate Base Program Electric Gas Employees Gas Electric ($B) (PJ) (GWh) ($M) ($B) ($M) UTILITY (#) (#) (#) (TJ) (MW) UNS Energy 514,42
Slide 22: ITC Holdings Corp.
ITC Holdings Corp. • ITC’s business model creates a unique, structurally advantaged infrastructure portfolio • Rate construct supports efficient capitalization of needed investment and timely return of capital • Forward-looking rates • Supportive rate structure • Actively developing electrical infra
Slide 23: UNS Energy
UNS Energy Tucson UNS UNS Electric Electric Gas Type of utility Electricity Electricity Gas distribution Regulator Arizona Corporation Commission Regulatory model Cost of service/Historical Test Year 10% ROE on 9.5% ROE on 9.75% ROE on 2016 formula 43.5% equity 52.8% equity 50.8% equity 2015 Assets
Slide 24: Central Hudson
Central Hudson Central Hudson Gas and Electric Type of utility Gas and electricity Regulator NY State Public Service Commission Regulatory model Cost of service on future test year 2016 formula 9% ROE on 48% equity 2015 Assets % of total regulated 12% assets(1) 2015 Earnings ($millions) 58 2015 Earn
Slide 25: FortisBC
FortisBC FortisBC Type of utility Gas distribution Electricity Regulator BC Utilities Commission BC Utilities Commission Regulatory model Cost of service + PBR Cost of service + PBR 2016 formula 8.75% ROE on 38.5% equity 9.15% ROE on 40.0% equity 2015 Assets % of total 22% 8% regulated assets(1) 201
Slide 26: FortisAlberta
FortisAlberta FortisAlberta Type of utility Electricity distribution Regulator Alberta Utilities Commission Regulatory model PBR 2016 formula 8.3% on 37% equity 2015 Assets % of total regulated assets(1) 14% 2015 Earnings ($millions) 138 2015 Earnings % of total regulated 20% operating earnings (1)
Slide 27: Eastern Canadian Regulated Electric Utilities
Eastern Canadian Regulated Electric Utilities FortisOntario (1) Maritime Electric Newfoundland Power Type of utility Electricity Electricity Electricity Island Regulatory and Appeals Newfoundland and Labrador Board of Regulator Ontario Energy Board Commission Commissioners of Public Utilities Regula
Slide 28: Caribbean Regulated Electric Utilities
Caribbean Regulated Electric Utilities Caribbean Utilities (1) Fortis Turks & Caicos Type of utility Electricity Electricity Regulator Electricity Regulatory Authority Government of the Turks and Caicos Islands Regulatory model Cost of service with historical test year Cost of service with historica
Slide 29: Presenter Biographies
FORTIS.. Presenter \ Biographies | 5 2
Slide 30: Barry V. Perry, President and CEO, Fortis
Barry V. Perry, President and CEO, Fortis. Prior to his current position, Mr. Perry served as VP, Finance and CFO of the Corporation since 2004. He joined the Fortis organization in 2000 as VP, Finance and CFO of Newfoundland Power. Previously, Mr. Perry held the position of VP, Treasurer with a glo
Slide 31: Barry Perry President & CEO Karl Smith
Barry Perry President & CEO Karl Smith Nora Duke Earl Ludlow James Laurito David Bennett EVP, CFO EVP, Corporate EVP, Eastern Canadian EVP, EVP, Services & CHRO & Caribbean Operations Business Development Chief Legal Officer & Corporate Secretary David Hutchens Michael Mosher Linda Blair Michael Mul
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