Slide 1: Investor Relations Presentation Q3 2018: Investing in Our Networks
2018 INVESTOR RELATIONS PRESENTATION Q3 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 202
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 $ 50 BILLION IN TOTAL ASSETS ~60% EARNINGS FROM THE U.S. ~ 92% TRANSMISSION, DISTRIBUTION & OTHER ASSETS 3.3 MILLION UTILITY CUSTO
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: Growth Strategy Driving Quality Results In The First Half of 2018
Growth Strategy Driving Quality Results In The First Half of 2018 Utility leader with strong operating businesses: • YTD June adjusted net earnings of $533 million(1), or $563M $1.26 EPS, aligned with expectations REPORTED YTD(2) NET EARNINGS Highly executable, low-risk capital plan: • $3.2 billion
Slide 7: Strong Track Record of Rate Base and EPS Growth
Strong Track Record of Rate Base and EPS Growth 2012 – 2017 Rate Base(1) ($ billions) Adjusted Earnings Per Share(3) $25.4 $2.53 $24.3 $2.31 10% $7.2 $2.11 $6.9 9% $16.4 $1.72 $1.75 $1.70 $14.0 $6.2 21% $6.1 $5.5 3% $10.2 $4.5 $1.0 -1% $8.7 $10.9 $11.3 $12.0 $8.7 $9.2 $9.5 2012 2013 2014 2015 2016 2
Slide 8: 44 Years of Consecutive Annual Dividend Growth
44 Years of Consecutive Annual Dividend Growth 73% 73% Average annual dividend 70% 66% 66% growth through 2022 64% targeted at ~6% 2012 2013 2014 2015 2016 2017 2018F 2019F 2020F 2021F 2022F Dividend payout ratio(1) (1) Dividend payout ratio adjusted for non-operating items FORTIS INC. Investing in
Slide 9: Supporting the Delivery of Superior Total Shareholder Returns
Supporting the Delivery of Superior Total Shareholder Returns Average annualized total shareholder return over last 5 years(1) Fortis 11.2% S&P/TSX Composite Index 8.3% S&P/TSX Capped Utilities Index 7.8% (1) For the 5-year period ending August 31, 2018. FORTIS INC. Investing in Our Networks 9
Slide 10: Investment-Grade Credit Ratings and Ample Liquidity
Investment-Grade Credit Ratings and Ample Liquidity Consolidated Credit Facilities 6.0 Credit Ratings 5.0 (1) 4.0 A- / BBB+ ($ billions) 3.8 3.0 3.9 BBB (high) 2.0 (2) 1.0 Baa3 1.2 1.1 0.0 June 30/18 Dec 31/17 Utilized Remaining Capacity (1) In March 2018, S&P affirmed the Corporation’s credit ratin
Slide 11: Capital Plan Grows Rate Base to $33 Billion in 2022
Capital Plan Grows Rate Base to $33 Billion in 2022 Rate Base (1) (billions) $30.4 $31.6 $33.0 5-Year Capital Plan of $28.9 $25.4 $26.8 $15.1 Billion Rate Base Growth Supports 6% Dividend Guidance to 2022 2017A 2018F 2019F 2020F 2021F 2022F Regulated - Canadian & Caribbean Electric & Gas(2) Regulate
Slide 12: Highly Executable Capital Plan
Highly Executable Capital Plan Total Forecast ($ millions)(1) Forecast 2018 2019-2022 ITC Multi-Value Regional Transmission Projects(2) 169 194 ITC 34.5 kV to 69 kV Transmission Conversion Project 111 369 UNS Flexible Generation – Reciprocating Natural Gas-Fired 150 45 Significant Projects Engines U
Slide 13: Opportunities Beyond the Base Capital Plan
Opportunities Beyond the Base Capital Plan FortisOntario: Municipal Utility FortisBC: Consolidation Tilbury, LNG & Gas Infrastructure Maritime Electric & Newfoundland Power: Grid Modernization UNS Energy: Renewables, Storage & Electric ITC: Transmission Lake Erie Connector & Grid Modernization ITC:
Slide 14: Regulatory Stability Continues
Regulatory Stability Continues 97% Regulated Utility Assets as at June 30, 2018 TRANSMISSION - ITC Recent Significant Regulatory Outcomes 37% GAS Application/ Decision 16% Outcome Proceeding Timing • General Rate • 3-year rate plan for • June 2018 Application July 2018-June 2021 • ROE of 8.8% NON-RE
Slide 15: 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 202
Slide 16: Appendix
APPENDIX Investing in Our Networks
Slide 17: Appendix Table of Contents
Appendix Table of Contents UTILITIES OVERVIEW OTHER ITC 18 2018-2022 Capital Forecast by 29 Segment UNS Energy 19 Central Hudson 20 Utility Debt Credit Ratings 30 FortisBC Gas and FortisBC Electric 21 Focused on Sustainability 31 and Delivering Cleaner Energy FortisAlberta 22 to Customers Other Elec
Slide 18: ITC: Transmission Utility 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% Consolidated Regulated Assets(2) 2017 Earnings(3) $272M 2017 Ear
Slide 19: UNS Energy: Tucson Electric, UNS Electric, UNS Gas
Tucson UNS Electric UNS Gas Electric Gas Type of Utility Electricity 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 20: Central Hudson Utility Profile
Type of Utility Gas and electricity New York State Public Service Regulator Commission Regulatory Model Cost of service on future test year 2018 Formula 8.8% ROE on 48% equity 2018F Midyear Rate Base $1.7B 5-Year CAGR on Midyear Rate 9.7% Base(1) 2017 Assets % of Total 7% Consolidated Regulated Asse
Slide 21: FortisBC Gas and FortisBC Electric
FortisBC Gas FortisBC Electric Type of Utility Gas distribution Electricity Regulator British Colombia 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 Rate 3.8% 2.6
Slide 22: FortisAlberta Utility Profile
Type of Utility Electricity distribution Regulator Alberta Utilities Commission Regulatory Model PBR 2018 Formula 8.5% ROE on 37% equity 2018F Midyear Rate Base $3.4B 5-Year CAGR on Midyear Rate 5.7% Base(1) 2017 Assets % of Total 10% Consolidated Regulated Assets(2) 2017 Earnings $120M 2017 Earning
Slide 23: 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 24: 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 2018 Formula 7.0-9.0% Return on Rate Base 15-17.50% Return on Assets 2018F Midyear Rate Base $0.6B $0.4
Slide 25: Fortis Delivers Q2 2018 Results Aligned With Expectations
Fortis Delivers Q2 2018 Results Aligned With Expectations (1) Adjusted EPS 0.75 $0.61 $0.57 Key Drivers: ($) 0.50 Growth in Base Business 0.25 2017 2018 Q2 Mark-to-Market 1.50 (Aitken Creek) $1.31 $1.26 1.25 U.S. Tax ($) 1.00 Reform 0.75 2017 2018 June Year-to-Date (1) Non-US GAAP measure. FORTIS IN
Slide 26: Q2 2018 Results by Segment
Q2 2018 Results by Segment Second Quarter Variance Analysis by Segment Q2 ($ in millions, Q2 Q2 2018 Q2 Q2 2017 Adjustment (1) Adjustment (1) (Adjusted) excluding EPS) 2018 (Adjusted) 2017 (Adjusted) Variance Regulated – Independent Electric Transmission ITC 86 - 86 93 - 93 (7) Regulated – US Electr
Slide 27: June YTD 2018 Results by Segment
June YTD 2018 Results by Segment June Year-to-Date Variance Analysis by Segment June June YTD June June YTD June YTD ($ in millions, YTD Adjustment 2018 YTD Adjustment 2017 (Adjusted) excluding EPS) (1) (1) 2018 (Adjusted) 2017 (Adjusted) Variance Regulated – Independent Electric Transmission ITC 17
Slide 28: 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 29: 2018-2022 Capital Forecast by Segment
2018-2022 Capital Forecast by Segment 2018 Capital Forecast(1) ($ millions) 2018F Rate Base(1) Regulated – Independent Electric Transmission ITC 863 ~$26.8 Billion Regulated – U.S. Electric & Gas UNS Energy 686 Central Hudson 275 Regulated- Regulated – Canadian & Caribbean Electric & Gas Independent
Slide 30: 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(2) FortisBC Gas n/a A A3 FortisBC Electric
Slide 31: 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 32: Expected Upcoming Events
Expected Upcoming Events Expected Upcoming Earnings Release Dates 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 32
Slide 33: 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