Slide 1: Q4 2021 Earnings Conference Call
Q4 2021 EARNINGS CONFERENCE CALL FEBRUARY 11, 2022
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 Private Securities Litigation Reform Act of 1995 (collectively referred to as "forward-looki
Slide 3: David Hutchens, President and CEO
DAVID HUTCHENS PRESIDENT AND CEO
Slide 4: 2021 Year-in-Review
2021 YEAR-IN-REVIEW DELIVERED SAFE & EXECUTED CAPITAL RELIABLE SERVICE PLAN EXPENDITURES Through a second pandemic year $3.6 Billion REDUCED GHG EMISSIONS ADVANCED ESG OBJECTIVES 20% lower since 2019 TCFD supporter, board gender parity, enhanced disclosures DELIVERED EPS GROWTH INCREASED DIVIDEND 6%
Slide 5: Delivering Safe and Reliable Service
DELIVERING SAFE AND RELIABLE SERVICE ALL INJURY AVERAGE ELECTRICITY CUSTOMER FREQUENCY RATE(1) OUTAGE DURATION(2) 3.9 3.8 3.5 1.73 3.3 1.64 1.45 1.45 1.40 1.38 2.3 2.2 2.1 1.09 1.8 1.9 2017 2018 2019 2020 2021 2017 2018 2019 2020 2021 Fortis USA Bureau of Canadian Electricity Fortis Canadian Electri
Slide 6: Superior 20-Year Total Shareholder Return
SUPERIOR 20-YEAR TOTAL SHAREHOLDER RETURN CUMULATIVE 20-YEAR TOTAL SHAREHOLDER RETURN AVERAGE ANNUAL TOTAL SHAREHOLDER RETURNS 975% 1-Year 21.8% 5-Year 12.1% 549% 10-Year 10.2% 373% 20-Year 12.6% 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 FTS S&P/TSX Capped Utilities Index S&P/TSX Compos
Slide 7: Carbon Emissions Reduction Target on Track
CARBON EMISSIONS REDUCTION TARGET ON TRACK 75% REDUCTION IN SCOPE 1 EMISSIONS BY 2035 COMPARED TO 2019 LEVELS Achieved 20% 12 Carbon Emissions 0 2021 CLEAN GENERATION ADDITIONS IN ARIZONA Reduction Since 2019 -0.1 10 ~2.5M tonnes CO2e -0.2 2021 Actual Forecast -0.3 8 -0.4 250 MW 100 MW 99 MW Oso Gra
Slide 8: 2022 Capital Plan on Track
2022 CAPITAL PLAN ON TRACK CAPITAL EXPENDITURES RATE BASE $33.5B $31.1B $29.3B $4.0B $600M $3.6B Cleaner Energy Investments(1) (2) (3) (2) 2021A 2022F 2020A 2021A 2022F Note: Capital Expenditures are a forward-looking Non-U.S. GAAP financial measure calculated in same manner as Capital Expenditures.
Slide 9: Highly Executable Capital Plan Supports Low-Risk Rate Base Growth of ~6%
HIGHLY EXECUTABLE CAPITAL PLAN SUPPORTS LOW-RISK RATE BASE GROWTH OF ~6% CAPITAL PLAN RATE BASE $41.6B 30% $31.1B 7% $20B 2022-2026 6% $3.8B 33% Capital Plan 6% Cleaner Energy Investments(1) 4% 5% 9% Distribution Transmission Transmission supporting cleaner energy RNG/LNG Clean Generation Traditiona
Slide 10: Update on Opportunities to Expand & Extend Growth
UPDATE ON OPPORTUNITIES TO EXPAND & EXTEND GROWTH LONG RANGE TRANSMISSION PLAN LAKE ERIE CONNECTOR • In March 2021, MISO outlined a long-range transmission • In January 2022, the Ontario government issued a letter acknowledging planning roadmap with a focus on system constraints and the project bene
Slide 11: Dividend Guidance Supported by Long-Term Growth Strategy
DIVIDEND GUIDANCE SUPPORTED BY LONG-TERM GROWTH STRATEGY 6% Average Annual Dividend Growth Guidance through 2025 48 YEARS of Consecutive Dividend Increases 73 75 77 79 81 83 85 87 89 91 93 95 97 99 01 03 05 07 09 11 13 15 17 19 21 1111
Slide 12: Jocelyn Perry, Executive Vice President and CFO
JOCELYN PERRY EXECUTIVE VICE PRESIDENT AND CFO
Slide 13: Fourth Quarter Results
FOURTH QUARTER RESULTS REPORTED EPS Q4 ADJUSTED EPS DRIVERS • Unfavourable Weather Impacts in Arizona and Belize ($0.04) $0.71 $0.69 • Higher Non-Recoverable Costs ($0.03) • Central Hudson Performance Targets • Stock-Based Compensation, particularly at ITC Q4 2020 Q4 2021 • Lower Gains on Retirement
Slide 14: Annual Results
ANNUAL RESULTS REPORTED EPS $2.60 $2.61 Adjusted EPS $0.02 OVER 2020 Foreign Exchange Lowered EPS 2020 2021 ($0.10) OVER 2020 ADJUSTED EPS $2.57 $2.59 Absent Foreign Exchange Impact ~5% ADJUSTED EPS GROWTH 2020 2021 Note: Adjusted EPS is a Non-U.S. GAAP financial measure. Refer to slide 22 for the N
Slide 15: Annual EPS Drivers
ANNUAL EPS DRIVERS EXCLUDING FX, EPS ~5% OVER 2020 REGULATED UTILITY GROWTH YoY YoY ($MILLIONS) Adjusted EPS Adjusted Earnings $0.18 ($0.03) Growth Growth %(5) ($0.03) ($0.10) ITC $0.07 9% UNS Energy(3) $0.02 4% $2.57 $2.59 Central Hudson $0.02 7% Western Canada(4) $0.05 6% Other Electric $0.02 7% 2
Slide 16: Weather and Higher O&M Temper New Rates in Arizona
WEATHER AND HIGHER O&M TEMPER NEW RATES IN ARIZONA YEAR-OVER-YEAR ANNUAL EPS DRIVERS AT UNS Includes new retail rates at TEP, wholesale Higher Net Margin(1) +$0.10 revenues, and TEP FERC rate settlement v Primarily at Sundt and Springerville Planned Maintenance ($0.03) generating facilities Weather
Slide 17: Liquidity & Credit Ratings
LIQUIDITY & CREDIT RATINGS OVER $1B DEBT RAISED IN 2021 CREDIT FACILITIES CREDIT RATINGS • Fortis ▪ $500M 7-year 2.18% notes • UNS Energy ▪ US$325M 30-year 3.25% notes A-(3) (2) $4.3B • FortisBC Energy $3.2B ▪ $150M 10-year 2.42% debentures • ITC Baa3 ▪ US$75M 30-year 2.90% notes $1.6B $1.3B ▪ US$75
Slide 18: Regulatory Update
REGULATORY UPDATE NOTICE OF PROPOSED RULEMAKING (NOPR) ON INCENTIVES – In April 2021, FERC issued a supplemental NOPR proposing to eliminate the 50 bps regional transmission organization (RTO) adder for transmission owners that have been RTO members for more than three years; stakeholder comments fi
Slide 19: Why Invest in Fortis?
WHY INVEST IN FORTIS? Focused on Geographic & 6% DIVIDEND WELL-RUN ENERGY DELIVERY Regulatory DIVERSITY Growth Guidance Local Utilities LOW-RISK Virtually ESG Growth Profile All REGULATED INNOVATIVE Leader 19
Slide 20: Upcoming Events
UPCOMING EVENTS EXPECTED EARNINGS RELEASE DATES • Q1 2022 – May 4, 2022 • Q2 2022 – July 28, 2022 20
Slide 21: Q4 2021 Earnings Conference Call
Q4 2021 EARNINGS CONFERENCE CALL FEBRUARY 11, 2022
Slide 22: Non-U.S. GAAP Reconciliation
NON-U.S. GAAP RECONCILIATION ($MILLIONS, EXCEPT EPS) Q4 2021 Q4 2020 VARIANCE 2021 2020 VARIANCE Adjusted Net Earnings Net Earnings 328 331 (3) 1,231 1,209 22 Adjusting Items: Unrealized gain on mark-to-market of derivatives(1) (28) (11) (17) (12) - (12) (2) May 2020 FERC decision - - - - (27) 27 (3
Slide 23: Fourth Quarter Results by Business Unit
FOURTH QUARTER RESULTS BY BUSINESS UNIT FOURTH QUARTER EARNINGS VARIANCE ANALYSIS BY BUSINESS UNIT ADJUSTED ADJUSTED ($MILLIONS, EXCEPT WEIGHTED AVERAGE SHARES AND EPS) Q4 2021 ADJUSTMENT (1) Q4 2020 ADJUSTMENT (1) VARIANCE Q4 2021 Q4 2020 Regulated – Independent Electric Transmission ITC 103 - 103
Slide 24: Annual Results by Business Unit
ANNUAL RESULTS BY BUSINESS UNIT ANNUAL EARNINGS VARIANCE ANALYSIS BY BUSINESS UNIT ADJUSTED ADJUSTED ($MILLIONS, EXCEPT WEIGHTED AVERAGE SHARES AND EPS) 2021 ADJUSTMENT (1) 2020 ADJUSTMENT (1) VARIANCE 2021 2020 Regulated – Independent Electric Transmission ITC 426 - 426 449 (27) 422 4 Regulated – U
Slide 25: 2021-2026 Rate Base by Business Unit
2021-2026 RATE BASE BY BUSINESS UNIT (1) RATE BASE 5-YEAR CAGR to ($BILLIONS, EXCEPT FOR CAGR) 2021A 2022F 2023F 2024F 2025F 2026F 2026 Regulated - Independent Electric Transmission ITC(2) 9.5 10.1 11.0 11.6 12.1 12.6 5.9% Regulated – U.S. Electric & Gas UNS Energy 5.8 6.5 6.7 6.9 7.4 8.0 6.4% Centr
Slide 26: 2022-2026 Capital Plan by Business Unit
2022-2026 CAPITAL PLAN BY BUSINESS UNIT (1) CAPITAL PLAN 2022-2026 ($MILLIONS) 2022F 2023F 2024F 2025F 2026F TOTAL Regulated - Independent Electric Transmission ITC 998 999 1,010 998 1,000 5,005 Regulated – U.S. Electric & Gas UNS Energy 704 810 924 729 725 3,892 Central Hudson 344 335 311 331 349 1
Slide 27: ESG Leadership
ESG LEADERSHIP Carbon emissions reduction Industry leader in target of 75% BY 2035 SAFETY AND RELIABILITY Continued focus on ENERGY DELIVERY using a 2019 base year(1) Focused on DIVERSITY, EQUITY AND INCLUSION Industry recognition for More than $10 MILLION Women represent 50% of the Fortis Board; ST
Slide 28: Major Capital Projects
MAJOR CAPITAL PROJECTS TOTAL INCURRED ESTIMATED 2022-2026 TO THE END OF COMPLETION PLAN(1) ($ MILLIONS) 2021 DATE ITC Multi-Value Regional Transmission Projects 710(2) 154 2023 ITC 34.5 to 69kV Transmission Conversion Project 482 145 Post-2026 Major UNS Vail-to-Tortolita Project 21 240 2025 Capital
Slide 29: Investment-Grade Credit Ratings
INVESTMENT-GRADE CREDIT RATINGS COMPANY Fortis Inc. A-(1) Baa3 A (low) ITC Holdings Corp. A-(1) Baa2 n/a ITC Regulated Subsidiaries A A1 n/a TEP A- A3 n/a Central Hudson A- Baa1 n/a FortisBC Energy n/a A3 A FortisBC Electric n/a Baa1 A (low) FortisAlberta A- Baa1 A (low) Newfoundland Power n/a A2 A
Slide 30: Q4 Sales Trends
Q4 SALES TRENDS RETAIL ELECTRIC Q4 2021 vs. Q4 2020 SALES(1) SALES TRENDS N/A • Peak load up 7% mainly due to weather • Overall decrease due to milder weather and reduced -6% heating load; Excluding weather, retail sales down 2% • Overall retail sales flat; Residential sales down 4%; - C&I up 4% • G
Slide 31: 2021 Sales Trends
2021 SALES TRENDS RETAIL ELECTRIC 2021 vs. 2020 SALES(1) SALES TRENDS • Peak load up 2% mainly due to weather and temporary N/A closure of auto manufacturers and suppliers in Q2 2020 • Overall decrease due to milder weather and reduced -3% heating load; Excluding weather, retail sales down 1% +1% •
Slide 32: Foreign Exchange Exposure
FOREIGN EXCHANGE EXPOSURE EARNINGS AND CAPITAL PLAN • ~65% of operating earnings(1) from U.S. and Caribbean • ~55% of $20.0B five-year capital plan from U.S. and Caribbean • Five-year plan translated at a forecast USD:CAD FX rate of 1.25 HEDGING ACTIVITIES • U.S. dollar-denominated debt at corporate
Slide 33: Manageable Debt Maturities
MANAGEABLE DEBT MATURITIES 10-YEAR AVERAGE: $1.0B $3.0 $2.5 $2.0 billions $1.5 $1.0 $0.5 $- 2022F 2023F 2024F 2025F 2026F 2027F 2028F 2029F 2030F 2031F Note: Debt as at December 31, 2021 and excludes any new debt issuances during the forecast period. Excludes repayments of finance leases along with