Slide 1: Investor Relations Presentation Q2 2018
Investor Relations Presentation Q2 2018 Investing in Our Networks
Slide 2: Forward-Looking Information
Forward-Looking Information Fortis includes "forward-looking information" in this presentation within the meaning of applicable Canadian securities laws and "forward-looking statements" within the meaning of the U.S. Private Securities Litigation Reform Act of 1995, collectively referred to as "forw
Slide 3: Our Strategy-Simple, Effective, Proven
Our Strategy-Simple, Effective, Proven Strategy Leverage the operating model, footprint of our utilities, operating expertise, reputation and financial strength to develop growth opportunities Dividend6% AVERAGE Growth Target: ANNUAL 6% Average DIVIDEND Annual Growth INVESTMENT- GROWTH Through 2021T
Slide 4: High Quality & Diverse Utility Portfolio
High Quality & Diverse Utility Portfolio Highly Regulated, Predominantly Wires and Gas LDCs ~ 97% REGULATED UTILITY ASSETS 10 UTILITY OPERATIONS Canada, U.S. & Caribbean $ 49 BILLION IN TOTAL ASSETS 64% EARNINGS FROM THE U.S. ~ 92% TRANSMISSION, DISTRIBUTION & OTHER ASSETS 3.3 MILLION UTILITY CUSTOM
Slide 5: One of the Lowest-Risk Utility Businesses in North America
One of the Lowest-Risk Utility Businesses in North America FORTIS INC. Investing in Our Networks 5
Slide 6: First Quarter Reinforces the Strength of Fortis as a North American Utility Leader
First Quarter Reinforces the Strength of Q1 HIGHLIGHTS: Fortis as a North American Utility Leader $323M Capital Investments: REPORTED -Focused on providing safe, reliable, NET affordable, cleaner energy solutions to EARNINGS customers -$3.2 billion capital forecast for 2018 on track 9% OPERATING Dev
Slide 7: Strong Track Record of Rate Base and EPS Growth
Strong Track Record of Rate Base and EPS Growth Historical Rate Base Growth Aligned with EPS Growth Over the Past 5 Years 2012 – 2017 Rate Base(1) ($ billions) Adjusted Earnings Per Share 3-Year 5-Year CAGR CAGR Rate base ~22% ~24% Rate base excluding acquisitions ~8% ~7% of U.S. subsidiaries $2.53
Slide 8: 44 Years of Consecutive Annual Dividend Growth
44 Years of Consecutive Annual Dividend Growth 73% 73% Average annual dividend 70% 66% 66% growth through 2022 64% targeted at ~6% 2012 2013 2014 2015 2016 2017 2018F 2019F 2020F 2021F 2022F Dividend payout ratio(1) (1) Dividend payout ratio adjusted for non-operating items. FORTIS INC. Investing in
Slide 9: Supporting the Delivery of Superior Total Shareholder Returns
Supporting the Delivery of Superior Total Shareholder Returns Average annualized total shareholder return over last 5 years(1) Fortis 8.7% S&P/TSX Composite Index 8.0% S&P/TSX Capped Utilities Index 4.9% (1) For the 5-year period ending May 31, 2018. FORTIS INC. Investing in Our Networks 9
Slide 10: U.S. Tax Reform Updates
U.S. Tax Reform Updates Benefits Customers Immediately and Shareholders Over the Long Term Interest Expense Credit Rating Agency Customer Rate Decrease Deductibility Clarity Updates TEP – Application approved by U.S. Treasury confirmed Held meetings with rating ACC to return savings through applicat
Slide 11: Investment-Grade Credit Ratings and Ample Liquidity
Investment-Grade Credit Ratings and Ample Liquidity Consolidated Credit Facilities 6.0 Credit Ratings 5.0 (1) 4.0 A- / BBB+ ($ billions) 3.0 3.9 3.9 BBB (high) 2.0 (2) 1.0 Baa3 1.1 1.1 0.0 Mar 31/18 Dec 31/17 Utilized Remaining Capacity (1) In March 2018, S&P affirmed the Corporation’s credit rating
Slide 12: Advancing the Wataynikaneyap Power Project
Advancing the Wataynikaneyap Power Project Canada’s Largest First Nation’s-Led Infrastructure Project Partnership with First Nations to connect remote communities in Northern Ontario to the grid via 1,800 km of transmission line In March 2018, a funding framework was reached with Wataynikaneyap Powe
Slide 13: Rate Base Growth Supports Dividend Guidance
Rate Base Growth Supports Dividend Guidance 2018-2022 Capital Expenditure Program of $15.1B Increases Rate Base to $33B by 2022 Capital Expenditures(1) Rate Base(2) (billions) (billions) $15.1B Five-Year Capital Plan $33.0 $3.2 $31.6 $3.0 $3.0 $3.0 $30.4 $2.9 $28.9 $26.8 $25.4 2018F 2019F 2020F 2021
Slide 14: Highly Executable Capital Plan
Highly Executable Capital Plan Significant Projects(1) ($ millions)(2) Forecast Forecast Forecast Total 2018- 2018 2019-2022 2022 ITC Multi-Value Regional Transmission Projects(3) 169 194 363 ITC 34.5 kV to 69 kV Conversion Project 111 369 480 UNS Flexible Generation – Reciprocating Engines 150 45 1
Slide 15: Opportunities Beyond the Base Capital Plan
Opportunities Beyond the Base Capital Plan FortisOntario: Municipal Utility FortisBC: Consolidation Tilbury, LNG & Gas Infrastructure MECL & NP: Grid Modernization UNS Energy: Renewables, Storage & Electric ITC: Transmission Lake Erie Connector & Grid Modernization ITC: Mexico Transmission Projects
Slide 16: Regulatory Stability Continues
Regulatory Stability Continues Remaining Significant Regulatory Decisions 97% Regulated Utility Assets as at December 31, 2017 TRANSMISSION - ITC 37% • MISO Base ROE • General Rate Application – GAS Application/Proceeding Complaints Joint Proposal 16% Filing Date • Not applicable • July 2017 NON-REG
Slide 17: Our Strategy-Simple, Effective, Proven
Our Strategy-Simple, Effective, Proven Strategy Leverage the operating model, footprint of our utilities, operating expertise, reputation and financial strength to develop growth opportunities Dividend6% AVERAGE Growth Target: ANNUAL 6% Average DIVIDEND Annual Growth INVESTMENT- GROWTH Through 2021T
Slide 18: Appendix
Appendix Investing in Our Networks
Slide 19: Appendix Table of Contents
Appendix Table of Contents UTILITIES OVERVIEW OTHER ITC Holdings Corp. 20 2018-2022 Capital Forecast by 30 Segment UNS Energy 21 Central Hudson 22 Utility Debt Credit Ratings 31 FortisBC Gas and FortisBC Electric 23 Focused on Sustainability 32 and Delivering Cleaner Energy FortisAlberta 24 to Custo
Slide 20: ITC Holdings Corp. profile
Type of utility Transmission Regulator FERC Regulatory model Independent Transmission Company 2018 Formula 11.32-12.16% ROE on 60% equity 2018F Midyear Rate Base $7.7B 5-Year CAGR on Midyear Rate 5.6% Base(1) 2017 Assets % of total 38% regulated assets(2) 2017 Earnings(3) $272M 2017 Earnings % of to
Slide 21: UNS Energy profile
Tucson Electric UNS Electric UNS Gas Type of utility Electricity Gas distribution Regulator Arizona Corporation Commission Regulatory model Cost of service/Historical Test Year 9.75% ROE on 9.5% ROE on 9.75% ROE on 2018 Formula 50% equity 52.83% equity 50.8% equity 2018F Midyear Rate Base $4.8B 5-Ye
Slide 22: Central Hudson profile
Type of utility Gas and electricity Regulator NY State Public Service Commission Regulatory model Cost of service on future test year 2018 Formula(1) 9% ROE on 48% equity 2018F Midyear Rate Base $1.7B 5-Year CAGR on Midyear Rate 9.7% Base(2) 2017 Assets % of total 7% regulated assets(3) 2017 Earning
Slide 23: FortisBC Gas and FortisBC Electric profile
FortisBC Gas FortisBC Electric Type of utility Gas distribution Electricity Regulator BC Utilities Commission Regulatory model Cost of service + PBR 8.75% ROE on 38.5% 9.15% ROE on 40.0% 2018 Formula equity equity 2018F Midyear Rate Base $4.3B $1.3B 5-Year CAGR on Midyear 3.8% 2.6% Rate Base(1) 2017
Slide 24: FortisAlberta profile
Type of utility Electricity distribution Regulator Alberta Utilities Commission Regulatory model PBR 2018 Formula(1) 8.5% ROE on 37% equity 2018F Midyear Rate Base $3.4B 5-Year CAGR on Midyear Rate 5.7% Base(2) 2017 Assets % of total 10% regulated assets(3) 2017 Earnings $120M 2017 Earnings % of tot
Slide 25: Other Electric Utilities
Eastern Canadian Regulated Electric Utilities Other Electric Utilities ( 1 (1) ) Type of utility Electricity Island Regulatory and Appeals Newfoundland and Labrador Board Regulator Ontario Energy Board Commission of Commissioners of Public Utilities Regulatory model Cost of service with incentives C
Slide 26: Other Electric Utilities (Continued)
Other Electric Utilities (Continued) (1) Type of utility Electricity Regulator Utility Regulation and Competition Office Government of the Turks and Caicos Islands Regulatory model Cost of service with historical test year 2018 Formula 7.0-9.0% Return on Rate Base 15-17.50% Return on Assets 2018F Mi
Slide 27: Fortis Delivers Q1 2018 Results Aligned With Expectations
Fortis Delivers Q1 2018 Results Aligned With Expectations Adjusted Earnings Adjusted EPS 0.75 300 $293 $0.71 0.70 $0.69 290 $287 ($ millions) 280 0.65 ($) 270 0.60 260 0.55 250 0.50 2017 2018 2017 2018 Q1 Q1 FORTIS INC. Investing in Our Networks 27
Slide 28: Q1 2018 Results by Segment
Q1 2018 Results by Segment First Quarter Variance Analysis by Segment ($ in millions, Q1 Q1 2018 Q1 Q1 2017 Q1 (Adjusted) Adjustment Adjustment excluding EPS) 2018 (Adjusted) 2017 (Adjusted) Variance Regulated – Independent Electric Transmission ITC 86 - 86 91 - 91 (5) Regulated – US Electric & Gas
Slide 29: Manageable Fixed-Term Debt Maturities
Manageable Fixed-Term Debt Maturities(1) Average Annual Fixed-Term Debt Maturities 3,000 2,500 2,000 ($ millions) 1,500 1,000 500 - '18 '19 '20 '21 '22 '23 '24 '25 '26 '27 '28 '29 '30 '31 '32 '33 '34 '35 '36 '37 '38 '39 '40 '41 '42 '43 '44 '45 '46 '47 >'47 Subsidiary Corporate Average annual fixed-t
Slide 30: 2018-2022 Capital Forecast by Segment
2018-2022 Capital Forecast by Segment 2018 Capital Forecast(1) ($millions) Fortis 2018F Rate Base(1) REGULATED-INDEPENDENT ELECTRIC TRANSMISSION ~$26.8 Billion ITC 863 Regulated- Independent REGULATED-U.S. ELECTRIC & GAS Electric Transmission (ITC) UNS Energy 686 Regulated- Canadian & Caribbean (Ele
Slide 31: Utility Debt Credit Ratings
Utility Debt Credit Ratings Company ITCTransmission A n/a A1 Michigan Electric Transmission Company (METC) A n/a A1 ITC Midwest A n/a A1 ITC Great Plains A n/a A1 ITC Holdings Corp. A-(1) n/a Baa2 Tucson Electric Power A-(1) n/a A3 Central Hudson A- n/a A2 FortisBC Gas n/a A A3 FortisBC Electric n/a
Slide 32: Focused on Sustainability and Delivering Cleaner Energy to Customers
Focused on Sustainability and Delivering Cleaner Energy 92% to Customers T&D ASSETS • Focused on providing safe, reliable and affordable energy to customers • Focused on transmission and distribution with a shift to lower carbon and more renewables • Sustainability EVP appointed to focus on enterpri
Slide 33: Expected Upcoming Events
Expected Upcoming Events Expected Upcoming Earnings Release Dates Q2 – 2018 July 31, 2018 Q3 – 2018 November 2, 2018 Q4 – 2018 February 14, 2019 Save the Date – 2018 Investor Days Toronto October 15, 2018 New York October 16, 2018 FORTIS INC. Investing in Our Networks 33
Slide 34: Executive Team
Barry Perry President and CEO Jocelyn Perry Jim Reid Phonse Delaney Nora Duke James Laurito Gary Smith David Hutchens EVP, CFO EVP, Chief Legal EVP, Chief EVP, Sustainability EVP, Business EVP, Eastern Canadian EVP, Western Utility Officer & Corporate Information Officer & CHRO Development & Caribbe