Slide 1: Q2 2022 Earnings Conference Call
Q2 2022 EARNINGS CONFERENCE CALL July 28, 2022 1
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 3
Slide 4: Q2 Business Highlights
Q2 BUSINESS HIGHLIGHTS Focused on System Reliability and Customer Affordability Capital Expenditures of $1.9B YTD June; $4.0B Annual Capital Plan on Track Q2 Adjusted EPS of $0.57 2022 Sustainability Report Issued TEP General Rate Application Filed in June 4
Slide 5: Executing on a Clean Energy Future
EXECUTING ON A CLEAN ENERGY FUTURE 2022 Sustainability Report Highlights: PATHWAY TO 2050 NET-ZERO TARGET 2019 • Over 35 new key performance indicators Achieved 20% GHG Emissions Reduction Since 2019 • Fortis aligned with GRI, TCFD and SASB • Strong board diversity with 54% female 2021 50% GHG Emiss
Slide 6: TEP General Rate Application
TEP GENERAL RATE APPLICATION APPLICATION SUPPORTS TEP’S CLEAN REVENUE REQUIREMENT (US$M) ENERGY TRANSITION AND CONTINUED DELIVERY OF SAFE AND RELIABLE SERVICE Clean Energy Transition Springerville 2019 Rate Case 2022 Rate Case Depreciation San Juan Oso Raptor Retirement Application Decision Applicat
Slide 7: 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 33% Capital Plan 6% $3.8B 6% Cleaner Energy Investments(1) 4% 5% 9% Distribution Transmission Transmission supporting cleaner energy RNG/LNG Clean Generation Traditiona
Slide 8: Update on Opportunities to Expand & Extend Growth
UPDATE ON OPPORTUNITIES TO EXPAND & EXTEND GROWTH MISO LONG-RANGE TRANSMISSION PLAN • In July 2022, the MISO Board approved the first tranche of projects, with total associated transmission investments estimated at ~US$10B • ITC estimates transmission investments of US$1.4-$1.8B through 2030 associa
Slide 9: Dividend Guidance Supported by Long-Term Growth Strategy
DIVIDEND GUIDANCE SUPPORTED BY LONG-TERM GROWTH STRATEGY 6% Average Annual Dividend Growth Guidance through 2025 48 YEARS of Consecutive Dividend Increases 73 75 77 79 81 83 85 87 89 91 93 95 97 99 01 03 05 07 09 11 13 15 17 19 21 9
Slide 10: Jocelyn Perry, Executive Vice President and CFO
JOCELYN PERRY Executive Vice President and CFO 10
Slide 11: Second Quarter Reported Results
SECOND QUARTER REPORTED RESULTS EARNINGS ($M) EPS $284 $0.59 $253 $0.54 Q2 2021 Q2 2022 Q2 2021 Q2 2022 EARNINGS ($M) EPS $634 $1.33 $1.30 $608 YTD 2021 YTD 2022 YTD 2021 YTD 2022 11
Slide 12: Second Quarter Adjusted Results
SECOND QUARTER ADJUSTED RESULTS ADJUSTED EARNINGS ($M) ADJUSTED EPS $272 $0.57 Q2 EPS DRIVERS: $259 $0.55 Q2 2021 Q2 2022 Q2 2021 Q2 2022 • Rate base growth ADJUSTED EPS • Favourable foreign exchange ADJUSTED EARNINGS ($M) • Timing of earnings at UNS Energy and FortisAlberta $641 $1.34 • Losses on r
Slide 13: Second Quarter EPS Drivers
SECOND QUARTER EPS DRIVERS $0.02 ($0.01) ($0.01) $0.01 ($0.01) $0.01 $0.01 $0.57 $0.55 Rate base growth and favourable FX, partially offset by timing of earnings and losses on retirement investments Q2 2021 Western U.S. Energy Foreign U.S. Corporate and Weighted Q2 2022 Adjusted Canadian Transmissio
Slide 14: Year-to-Date June EPS Drivers
YEAR-TO-DATE JUNE EPS DRIVERS $0.02 ($0.03) $0.02 $0.01 ($0.01) $0.03 ($0.02) $1.34 $1.32 Rate base growth and favourable FX partially offset by losses on retirement investments, lower earnings at Central Hudson and timing of earnings YTD June 2021 Western U.S. Other Foreign U.S. Corporate and Weigh
Slide 15: Strong Liquidity
STRONG LIQUIDITY Corporation’s $1.3B revolving-term OVER $1.5B IN DEBT RAISED YTD CREDIT FACILITIES credit facility amended in May 2022 to include sustainability-linked targets • ITC • Board diversity US$150M 30-year 2.93% bonds • GHG Emissions US$75M 30-year 3.05% notes • UNS Energy $3.9B US$
Slide 16: 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 17: 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 17
Slide 18: Upcoming Events
UPCOMING EVENTS EXPECTED EARNINGS RELEASE DATES • Q3 2022 – October 28, 2022 • Q4 2022 – February 10, 2023 18
Slide 19: Q2 2022 Earnings Conference Call
Q2 2022 EARNINGS CONFERENCE CALL July 28, 2022 19
Slide 20: Non-U.S. GAAP Reconciliation
NON-U.S. GAAP RECONCILIATION YTD June YTD June ($MILLIONS, EXCEPT EPS) Q2 2022 Q2 2021 VARIANCE VARIANCE 2022 2021 Adjusted Net Earnings Net Earnings 284 253 31 634 608 26 Adjusting Item: Unrealized (gain) loss on mark-to-market of derivatives(1) (12) 6 (18) 7 11 (4) Adjusted Net Earnings 272 259 13
Slide 21: Q2 2022 Results by Business Unit
Q2 2022 RESULTS BY BUSINESS UNIT SECOND QUARTER EARNINGS VARIANCE ANALYSIS BY BUSINESS UNIT ADJUSTED ADJUSTED ($MILLIONS, EXCEPT WEIGHTED AVERAGE SHARES AND EPS) Q2 2022 ADJUSTMENT (1) Q2 2021 ADJUSTMENT (1) VARIANCE Q2 2022 Q2 2021 Regulated – Independent Electric Transmission ITC 114 - 114 103 - 1
Slide 22: YTD June 2022 Results by Business Unit
YTD JUNE 2022 RESULTS BY BUSINESS UNIT YEAR-TO-DATE JUNE EARNINGS VARIANCE ANALYSIS BY BUSINESS UNIT ADJUSTED YTD June YTD June YTD JUNE ($MILLIONS, EXCEPT WEIGHTED AVERAGE SHARES AND EPS) ADJUSTMENT YTD June ADJUSTMENT (1) VARIANCE 2022 (1) 2021 2021 2022 Regulated – Independent Electric Transmissi
Slide 23: 2021-2026 Rate Base by Business Unit
2021-2026 RATE BASE BY BUSINESS UNIT (1) RATE BASE 5-YEAR CAGR to ($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 24: 2022-2026 Capital Plan by Business Unit
2022-2026 CAPITAL PLAN BY BUSINESS UNIT (1) CAPITAL PLAN 2022-2026 ($MILLIONS) 2022F 2023F 2024F 2025F 2026F TOTAL Regulated - Independent Electric Transmission ITC 998 999 1,010 998 1,000 5,005 Regulated – U.S. Electric & Gas UNS Energy 704 810 924 729 725 3,892 Central Hudson 344 335 311 331 349 1
Slide 25: Major Capital Projects
MAJOR CAPITAL PROJECTS TOTAL INCURRED 2022-2026 ESTIMATED TO THE END OF PLAN(1) COMPLETION ($ 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 26: 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 27: Q2 Sales Trends
Q2 SALES TRENDS RETAIL ELECTRIC Q2 2022 vs. Q2 2021 SALES SALES TRENDS N/A • Peak load up 7% mainly due to favourable weather impacts • Decrease primarily due to lower cooling load due to cooler -1%(1) temperatures; Excluding weather impacts, retail sales up 1% • Residential sales up 15% and C&I up
Slide 28: ESG Leadership
ESG LEADERSHIP ENVIRONMENTAL SOCIAL GOVERNANCE • 93% energy delivery assets • Strong safety culture and commitment to • Independent chair; 12 of 13 directors are employee well-being independent • GHG emissions reduction target of 75% by 2035 compared to 2019 levels and net zero by 2050 • More than $
Slide 29: Foreign Exchange Exposure
FOREIGN EXCHANGE EXPOSURE EARNINGS AND CAPITAL PLAN • ~65% of operating earnings(1) in 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 l
Slide 30: Limited Pension Exposure
LIMITED PENSION EXPOSURE DEFINED BENEFIT PENSION PLANS • 95% of $3.9B pension benefit obligation funded at December 31, 2021 • Allocation of plan assets at December 31, 2021 Equities – 48% Fixed income – 45% Other – 7% • ~80% of pension assets subject to regulatory mechanisms UNS pension pla
Slide 31: Debt Maturities
DEBT MATURITIES 10-YEAR AVERAGE: $1.0B $2.5 $2.0 $1.5 billions $1.0 $0.5 $- 2022F 2023F 2024F 2025F 2026F 2027F 2028F 2029F 2030F 2031F (1) Non-Regulated Regulated Note: Debt as at June 30, 2022 and excludes any new debt issuances during the forecast period. Excludes repayments of finance leases alo