Slide 1: Q3 2023 Earnings Conference Call
Q3 2023 EARNINGS CONFERENCE CALL October 27, 2023
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 and Jocelyn Perry
DAVID HUTCHENS President and Chief Executive Officer JOCELYN PERRY EVP and Chief Financial Officer 3
Slide 4: Q3 Business Highlights
Q3 BUSINESS HIGHLIGHTS Safe & Reliable Service Key Regulatory Decisions Received Strong Q3 & YTD EPS Growth Announced New Five-Year Capital Plan Aitken Creek Sale on Track to Close in Q4 2023 4
Slide 5: Key Regulatory Decisions
KEY REGULATORY DECISIONS General Rate Application GCOC Proceeding GCOC & Third PBR Term Proceedings • AUC decisions reached in • ACC issued a decision in August 2023 October 2023 • BCUC issued a decision in September 2023 • Non-fuel revenue increase of • GCOC decision allows for formulaic US$100M al
Slide 6: 2024-2028 $25B Capital Plan Supports Low-Risk Rate Base Growth
2024-2028 $25B CAPITAL PLAN SUPPORTS LOW-RISK RATE BASE GROWTH 2023 Capital Plan 2024-2028 Rate On Track Capital Plan Base • Capital expenditures of $3.0B through YTD Major Capital $49.4B Projects September; 2023 $4.3B capital plan on track 18% $36.8B • Major capital projects continue to advance C
Slide 7: Dividend Guidance Supported by Long-Term Growth Strategy
DIVIDEND GUIDANCE SUPPORTED BY LONG-TERM GROWTH STRATEGY 4.4% Announced Q4 2023 Dividend Increase 4-6% Annual Dividend Growth Guidance Extended through 2028 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 23F 7
Slide 8: Third Quarter Results
THIRD QUARTER RESULTS Reported EPS Adjusted EPS $0.81 $0.84 $0.71 $0.68 Q3 Adjusted EPS $0.13 Key Drivers – Continued investment in regulated rate base, Q3 2022 Q3 2023 Q3 2022 Q3 2023 regulatory outcomes in Arizona and B.C., and warmer weather $2.32 $2.37 $2.01 $2.06 YTD 2022 YTD 2023 YTD 2022 YTD
Slide 9: Third Quarter 2023 Adjusted EPS Drivers
THIRD QUARTER 2023 ADJUSTED EPS DRIVERS $0.02 ($0.01) $0.02 ($0.01) $0.09 $0.01 $0.01 $0.84 $0.71 Q3 2023 Adjusted EPS $0.13 Q3 2022 Western U.S. Electric Other Energy Corporate & Foreign Weighted Q3 2023 Adjusted Canadian & Gas (3) Electric Infrastructure(4) Other Exchange(5) Average Adjusted EPS (
Slide 10: Year-to-Date 2023 Adjusted EPS Drivers
YEAR-TO-DATE 2023 ADJUSTED EPS DRIVERS $0.05 ($0.06) $0.07 ($0.03) $0.03 $0.03 $0.09 $2.37 $0.13 $2.06 YTD 2023 Adjusted EPS $0.31 YTD 2022 Western U.S. Electric & U.S. Other Energy Corporate & Foreign Weighted YTD 2023 (1) (3) (4) (5) Adjusted EPS Canadian Gas Transmission Electric Infrastructure O
Slide 11: Liquidity & Credit Ratings
LIQUIDITY & CREDIT RATINGS Raised YTD $2.0B+ Credit Credit in Long-Term Debt Facilities Ratings • ITC – US$800M notes(1) $4.0B A-(5) • UNS Energy – US$425M notes(2) • FortisAlberta – $200M 30-year 4.86% debentures • Central Hudson – US$90M notes(3) Baa3 • Other Electric - $150M bonds(4) $2.0B A (low
Slide 12: Why Invest in Fortis?
SUSTAINABLE GROWTH Focused on Executing Strong Robust Transmission Transparent Rate Base Growth Investment Pipeline Funding Plan Cleaner 4-6% Annual Investment-Grade Energy Transition Dividend Growth Credit Ratings WHY INVEST IN FORTIS? LOW-RISK Safe, Well-Run Utilities Strong Regulatory & Construct
Slide 13: Upcoming Events
UPCOMING EVENTS Expected Earnings Release Dates Other Investor Events • Q4 2023 – February 9, 2024 • EEI Financial Conference – November 12-14, 2023 • Q1 2024 – May 1, 2024 • Wells Fargo Midstream & Utilities Symposium – December 7, 2023 • CIBC Western Institutional Conference – January 17-19, 2024
Slide 14: Q3 2023 Earnings Conference Call
Q3 2023 EARNINGS CONFERENCE CALL October 27, 2023 14
Slide 15: Non-U.S. GAAP Reconciliation
NON-U.S. GAAP RECONCILIATION YTD YTD September September ($MILLIONS, EXCEPT EPS) Q3 2023 Q3 2022 VARIANCE 2023 2022 VARIANCE Adjusted Net Earnings: Net Earnings 394 326 68 1,125 960 165 Adjusting Items: Unrealized loss (gain) on mark-to-market of derivatives(1) 8 (4) 12 18 3 15 Lake Erie Connector p
Slide 16: Third Quarter Results by Business Unit
THIRD QUARTER RESULTS BY BUSINESS UNIT Third Quarter Earnings Variance Analysis by Business Unit ($MILLIONS, EXCEPT WEIGHTED AVERAGE SHARES ADJUSTED ADJUSTED Q3 2023 ADJUSTMENT (1) Q3 2022 ADJUSTMENT (1) VARIANCE AND EPS) Q3 2023 Q3 2022 Regulated – Independent Electric Transmission ITC 119 9 128 10
Slide 17: YTD Results by Business Unit
YTD RESULTS BY BUSINESS UNIT Year-To-Date Earnings Variance Analysis by Business Unit ADJUSTED ADJUSTED YTD YTD ($MILLIONS, EXCEPT WEIGHTED AVERAGE SHARES YTD YTD SEPTEMBER ADJUSTMENT SEPTEMBER ADJUSTMENT VARIANCE AND EPS) SEPTEMBER SEPTEMBER 2023 (1) 2022 (1) 2023 2022 Regulated – Independent Elect
Slide 18: 2023-2028 Rate Base by Business Unit
2023-2028 RATE BASE BY BUSINESS UNIT Rate Base 5-YEAR CAGR to ($BILLIONS, EXCEPT FOR CAGR) 2023F 2024F 2025F 2026F 2027F 2028F 2028 Regulated – Independent Electric Transmission ITC(1) 11.3 12.0 12.7 13.4 14.4 15.6 7.0% Regulated – U.S. Electric & Gas UNS Energy 7.2 7.6 8.1 8.5 9.0 9.5 6.0% Central
Slide 19: 2024-2028 Capital Plan by Business Unit
2024-2028 CAPITAL PLAN BY BUSINESS UNIT Capital Plan 2024-2028 ($MILLIONS) 2024F 2025F 2026F 2027F 2028F TOTAL Regulated – Independent Electric Transmission ITC 1,252 1,474 1,449 1,477 1,537 7,189 Regulated – U.S. Electric & Gas UNS Energy 1,111 854 912 1,310 973 5,160 Central Hudson 408 421 437 421
Slide 20: Capital Plan Supports Cleaner Energy Future
CAPITAL PLAN SUPPORTS CLEANER ENERGY FUTURE Delivering Renewables to the Grid $3.4B • ITC MISO LRTP and wind / solar interconnections $25B • T&D investments associated with New York’s Climate Leadership and Community Protection Act Capital Plan Renewable Energy $1.8B 2024-2028 • Renewables and energ
Slide 21: Major Capital Projects
MAJOR CAPITAL PROJECTS Major Capital 2024- Estimated Projects 2023F ($ Millions) 2028F Completion Date 18% ITC MISO LRTP(1) 16 1,486 Post-2028 UNS Energy Vail-to-Tortolita Transmission Project 101 273 2026 UNS Energy Renewable Generation(2) UNS Energy Battery Storage(3) 137 - 417 345 2027 2025 $25B
Slide 22: Sensitivity Exposure
SENSITIVITY EXPOSURE Foreign Exchange • Assumed forecast USD:CAD FX rate of 1.30 for 2024-2028 • 65% of operating earnings(1) / 60% of capital plan in USD at U.S. & Caribbean utilities • +/- $0.05 change in USD:CAD – EPS: $0.06 Five-year capital plan: $500M ROE & Equity Ratio ROE Equity +/- 25 bps +
Slide 23: Ongoing Regulatory Proceedings
ONGOING REGULATORY PROCEEDINGS MISO Base ROE – In 2022, the U.S. Court of Appeals for the D.C. Circuit vacated certain FERC orders that established the methodology used to calculate the MISO base ROE; matter dates back to complaints filed at FERC in 2013 and 2015; DC Circuit noted FERC did not adequ
Slide 24: ESG Leadership
ESG LEADERSHIP Environmental Social • Building on our strong record of mutually beneficial partnerships with • 2050 net-zero direct emissions goal, with interim targets to reduce GHG emissions Indigenous peoples 50% by 2030 and 75% by 2035 • FortisBC awarded silver-level designation in Progressive A
Slide 25: Q3 Sales Trends
Q3 SALES TRENDS CHANGE IN Q3 2023 vs. Q3 2022 RETAIL ENERGY SALES TRENDS SALES • Peak load up 1% due to warmer weather and economic N/A conditions • Increase primarily due to higher air conditioning load +7% associated with warmer temperatures; excluding weather (1) impacts, retail sales up 1% -1% •
Slide 26: Debt Maturities & Preference Share Dividends
DEBT MATURITIES & PREFERENCE SHARE DIVIDENDS Debt Maturities Preference Share Dividend Rate Resets 10-Year Debt Maturities 2024 $2.5 Series K - $250M $2.0 March 1, 2024 billions $1.5 Series M - $600M $1.0 December 1, 2024 $0.5 Series H - $192M $- June 1, 2025 2024F 2025F 2026F 2027F 2028F 2029F 2030
Slide 27: Strong Investment-Grade Credit Ratings
STRONG 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 BBB+ Baa1 n/a FortisBC Energy n/a A3 A FortisBC Electric n/a Baa1 A (low) FortisAlberta A- Baa1 A (low) Newfoundland Power
Slide 28: Glossary
GLOSSARY ACC Arizona Corporation Commission GCOC generic cost of capital AFUDC allowance for funds used during construction GHG greenhouse gas Aitken Creek Aitken Creek Gas Storage ULC, a direct 93.8%-owned subsidiary of FortisBC Holdings Inc. IRA Inflation Reduction Act of 2022 AMI Advanced Meterin