Fortis Inc. · TSX:FTS
Fortis — Investor Presentation (March 2024)
46 slides from Fortis's investor presentation, March 2024
Slide 1: Investor Presentation March 2024
INVESTOR PRESENTATION MARCH 2024
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: Fortis at a Glance
FORTIS AT A GLANCE 93% 10 regulated utilities 3.5 million 9,600 transmission & in Canada, the U.S. & electric and gas customers dedicated employees distribution assets Caribbean 99% $38.4 billion ~10% average annual(1) 82% of Fortis utilities regulated utility assets 2024F rate base 10-year total sh
Slide 4: Our Vision & Strategy
OUR VISION & STRATEGY A Premium North American Utility Delivering a Cleaner Energy Future SUSTAINABLE GROWTH • Operational Excellence • Financial Strength • Diversified Regulated Portfolio • Local Business Model • Strong Governance 4
Slide 5: Our Common Ground
OUR COMMON GROUND PROVISION OF SAFE & RELIABLE SERVICE GOOD GOVERNANCE Priority #1 Fortis Ranked #2 out of 219 S&P/TSX companies in The Globe & Mail 2023 Board Games • Health and safety of our employees, customers and contractors • Utilities operate within the parameters of common policies and best
Slide 6: Delivering Safe, Reliable & Affordable Service
DELIVERING SAFE, RELIABLE & AFFORDABLE SERVICE All-Injury Average Electricity Customer Controllable Operating Frequency Rate(1) Outage Duration (Hours) Costs per Customer 1.73 1.62 4.3 3.8 3.8 3.3 2.3 1.8 1.9 2.0 2.0 2019 2020 2021 2022 2023 2019 2020 2021 2022 2023 2018 2019 2020 2021 2022 2023 For
Slide 7: Reducing Carbon Emissions
REDUCING CARBON EMISSIONS 2023 TEP IRP Supports Committed to Targets Exit from Coal • 508 MW of coal retirements since 2017; 2019 coal-free by 2032 Achieved 33% GHG Emissions Reduction Since 2019 • 2,240 MW of renewables and 1,330 MW of energy storage by 2038 • 400 MW of hydrogen-ready natural gas 2
Slide 8: Building Climate Resiliency
BUILDING CLIMATE RESILIENCY 2021 • Committed as a TCFD supporter • Identified risks and opportunities under four climate scenarios at five largest utilities It is no longer enough to design our systems based on historical weather, we 2022 • Inaugural TCFD and Climate Assessment are planning for futu
Slide 9: Climate Report Highlights
CLIMATE REPORT HIGHLIGHTS What’s Included In This Report? Takeaways Fortis business strategy supports multiple climate futures • Climate scenario analysis conducted using low and high emissions scenarios over three-time horizons (present day, Key Physical Risks Key Physical Opportunities 2030 and 20
Slide 10: 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 Regulated Growth Drivers $49.4B • Transmission investments Major Capital • Clean energy capital $25B Projects $37.0B ~20% • System adaptation & resiliency Smaller Projects 2024-2028 • Customer growth & ec
Slide 11: $25B Capital Plan at a Glance
$25B CAPITAL PLAN AT A GLANCE ~20% ~$7.0B 57% Major Capital Cleaner Energy Sustaining Projects Capital(1) Capital(2) (1) Cleaner energy investments defined as capital that supports reductions in air emissions, water usage and/or increases customer energy efficiency. (2) Capital expenditures required
Slide 12: MISO Long-Range Transmission Plan
MISO LONG-RANGE TRANSMISSION PLAN Tranche 1 • MISO Board approved Tranche 1 projects in July 2022 with total associated transmission investments estimated at ~US$10B • Total estimated investments of US$1.4-1.8B at ITC associated with six Tranche 1 projects through 2030 • ITC’s five-year capital plan
Slide 13: Balanced Approach to Funding Growth
BALANCED APPROACH TO FUNDING GROWTH Equity from DRIP Supplemented 4-6% Annual Dividend Growth by ATM Program Guidance Range Cash From Operations(1) • Annual proceeds from DRIP of ~$400M • Flexibility to fund more capital with internally $25B 55% Net Debt(2) 34% generated funds • $500M ATM program to
Slide 14: Investment-Grade Credit Ratings
INVESTMENT-GRADE CREDIT RATINGS Moody’s CFO/Debt S&P FFO/Debt Current funding plan on track ~12.0% ~12.0% to achieve average annual Credit Metrics 11.6% 11.4% 12.0% cash flow to debt metrics of 11.0% ~12% over the next five years 2023A 2024-2028 Average 2023A 2024-2028 Average Rating agency threshol
Slide 15: Beyond the Plan
BEYOND THE PLAN MISO Long-Range Inflation Climate Adaption & Renewable Fuel Transmission Plan Reduction Act Grid Resiliency Solutions & LNG • Estimated transmission investments of • A catalyst for future transmission • Investing to withstand more severe • RNG & hydrogen to support US$1.4-1.8B throug
Slide 16: Long Capex Runway
LONG CAPEX RUNWAY Responding to stakeholder expectations and capitalizing on opportunities to expand & extend growth Connect more renewable Replace aging assets to generation to the grid maintain reliability Build more renewable Invest in technology to generation ensure security and improve service
Slide 17: Ongoing Regulatory Proceedings
ONGOING REGULATORY PROCEEDINGS Recent Activity Regulatory Outlook Iowa Transmission Right of First Refusal • In December 2023, the Iowa District Court ruled 2024 that the Iowa ROFR legislation is unconstitutional, based on procedural grounds • The District Court granted an injunction enjoining Gener
Slide 18: Three-Year Look Back
THREE -YEAR LOOK BACK Adjusted EPS & Adjusted Dividend Payout Ratio 3.3 $3.09 115% 3.1 2.9 $2.78 105% Strong Rate Base Growth 2.7 $2.57 $2.59 95% 2.5 2.3 85% 6.3% 2023 Rate Base Growth(1) 2.1 75% 79% 78% 75% 6.5% 3-Year Rate Base CAGR(1) 74% 1.9 65% 1.7 1.5 55% 2020 2021 2022 2023 Adjusted EPS Adjus
Slide 19: Dividend Guidance Supported by Long-Term Growth Strategy
DIVIDEND GUIDANCE SUPPORTED BY LONG-TERM GROWTH STRATEGY 4.4% Dividend Increase in Q4 2023 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 23 19
Slide 20: Total Shareholder Returns
TOTAL SHAREHOLDER RETURNS Cumulative 20-Year Total Shareholder Return Average Annual 665% Total Shareholder Returns 1-Year 4.8% 352% 5-Year 7.6% 349% 10-Year 10.1% 20-Year 10.7% 2003 2008 2013 2018 2023 Fortis S&P/TSX Composite Index S&P/TSX Capped Utilities Index Note: Cumulative 20-year tot
Slide 21: 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 22: Appendix
APPENDIX FORTIS...
Slide 23: Table of Contents
ITC HOLDINGS CORP. 24-25 UNS ENERGY 26-28 CENTRAL HUDSON 29-30 FORTISBC 31-32 FORTISALBERTA 33-34 OTHER ELECTRIC UTILITIES 35-36 2024-2028 CAPITAL PLAN BY BUSINESS UNIT 37 TABLE OF MAJOR CAPITAL PROJECTS 38 CONTENTS 2023-2028 RATE BASE BY BUSINESS UNIT 39 SENSITIVITY EXPOSURE 40 ONGOING REGULATORY P
Slide 24: ITC Overview
ITC OVERVIEW FERC regulated electric transmission utility 26,100 km $12.0 billion GREATER GRID> GREENER FUTURE Lines of transmission 2024F rate base Assets in 8 U.S. States 22,102 MW Michigan and Iowa key states Peak demand ~750 Fortis owns 80.1% dedicated employees Interest in ITC FERC Rate Regulat
Slide 25: ITC Capital Investment Overview
ITC CAPITAL INVESTMENT OVERVIEW $3.9B Infrastructure Investments Grid Security Rebuild, reliability, resiliency, system efficiencies, increased capacity, circuit overloads, pocket load growth MISO LRTP $1.5B MISO Long-Range Transmission Plan Includes portion of investments for Tranche 1 $7.2B Infras
Slide 26: UNS Energy Overview
UNS ENERGY OVERVIEW BUILDING A SUSTAINABLE & Vertically integrated electric and gas utility RELIABLE ENERGY FUTURE 23,200 km $7.6 billion of electric T&D lines 2024F rate base 5,100 km 3,314 MW of natural gas T&D lines Peak demand 719,000 ACC & FERC Regulated electric and gas customers Cost of servi
Slide 27: UNS Energy Capital Investment Overview
UNS ENERGY CAPITAL INVESTMENT OVERVIEW Generation $2.0B Energy Resources Maintenance Expected energy storage, renewables and other IT, General & investments associated with exit from coal Other $1.4B Distribution Infrastructure Grid resiliency and modernization Transmission Infrastructure $5.2B Ener
Slide 28: 2023 TEP IRP Supports Exit from Coal
2023 TEP IRP SUPPORTS EXIT FROM COAL Exit from Coal On Track Delivering reliable, cleaner energy that is lower risk and affordable for customers 2017-2023 2024-2032 TEP 2023 IRP Highlights(3,970 MW) ✓ 2,240 MW of wind and solar generation 508 MW Coal-free ✓ ✓ 1,330 MW of energy storage 400 MW hydrog
Slide 29: Central Hudson Overview
CENTRAL HUDSON OVERVIEW Electric and gas T&D utility TOGETHER WE 15,200 km of electric T&D lines ~1,200 dedicated employees POWER ENDLESS POSSIBILITIES 2,400 km $3.1 billion of natural gas T&D lines 2024F rate base 315,000 New York Public Service electric customers Commission Regulated Cost of servi
Slide 30: Central Hudson Capital Investment Overview
CENTRAL HUDSON CAPITAL INVESTMENT OVERVIEW Transmission Infrastructure $1.3B Distribution Infrastructure Distribution automation and modernization $2.2B Distribution $600M IT, General & Other Building the Workforce of the Future Capital Plan(1) Infrastructure 2024-2028 $300M Transmission Infrastruct
Slide 31: FortisBC Overview
FORTISBC OVERVIEW Gas LDC and integrated electric utility 51,600 km ~2,700 of natural gas T&D lines dedicated employees 7,300 km $7.6 billion of electric T&D lines 2024F rate base 1.1 million BCUC Regulated natural gas customers Cost of service with incentive mechanisms 191,000 electric customers 9.
Slide 32: FortisBC Capital Investment Overview
FORTISBC CAPITAL INVESTMENT OVERVIEW Renewable Gases Major Integrity $2.3B Reliability & Integrity Investments Projects Ongoing maintenance requires significant capital investment Includes customer growth and general plant investment $4.9B LNG $1.7B LNG Projects Tilbury 1B Reliability Tilbury LNG St
Slide 33: FortisAlberta Overview
FORTISALBERTA Electric distribution utility OVERVIEW 90,500 km $4.4 billion distribution lines 2024F rate base ~85% 592,000 of revenue derived from customers fixed-billing determinants 2,643 MW AUC Regulated Peak demand PBR setting 9.28% 37% ~1,200 dedicated employees Allowed ROE Equity Ratio THE LI
Slide 34: FortisAlberta Capital Investment Overview
FORTISALBERTA CAPITAL INVESTMENT OVERVIEW IT, General $2.5B Distribution Infrastructure & Other Safety and reliability of distribution assets, meter upgrades, pole management program, modernization $3.1B $600M IT, General & Other Capital Plan 2024-2028 Distribution Infrastructure 34
Slide 35: Other Electric Overview
OTHER ELECTRIC OVERVIEW Electric T&D utilities 23,000 km Five of electric T&D lines regulated electric utilities(1) 484,000 customers Equity investments Wataynikaneyap Partnership & DELIVERING A CLEANER ENERGY Belize Electricity FUTURE ~1,550 Three dedicated employees North American countries $3.7 b
Slide 36: Other Electric Capital Investment Overview
OTHER ELECTRIC CAPITAL INVESTMENT OVERVIEW IT, General & Other $900M Distribution Infrastructure Transmission $900M Generation Diversification $2.5B Infrastructure Capital Plan(1) Distribution $400M Transmission Infrastructure Infrastructure 2024-2028 $300M IT, General & Other Generation Diversifica
Slide 37: 2024-2028 Capital Plan by Business Unit
2024-2028 CAPITAL PLAN BY BUSINESS UNIT Capital Plan 2024-2028 ($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 38: Major Capital Projects
MAJOR CAPITAL PROJECTS 2024- Estimated Major Capital ($ Millions) 2028F Completion Date Projects ITC MISO LRTP(1) 1,477 Post-2028 ~20% UNS Roadrunner Reserve Battery Storage Project 345 2025 UNS Vail-to-Tortolita Transmission Project 286 2026 $25B UNS IRP Energy Resources(2) 417 2027 FortisBC Eagle
Slide 39: 2023-2028 Rate Base by Business Unit
2023-2028 RATE BASE BY BUSINESS UNIT Rate Base 5-YEAR CAGR to ($BILLIONS, EXCEPT FOR CAGR) 2023A 2024F 2025F 2026F 2027F 2028F 2028 Regulated – Independent Electric Transmission ITC(1) 11.5 12.0 12.7 13.4 14.4 15.6 7.0% Regulated – U.S. Electric & Gas UNS Energy 7.3 7.6 8.1 8.5 9.0 9.5 6.3% Central
Slide 40: Sensitivity Exposure
SENSITIVITY EXPOSURE Foreign Exchange • Assumed forecast USD:CAD FX rate of 1.30 for 2024-2028 • 65% of regulated 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: $600M ROE & Equity Ratio ROE Equity +/- 25 bps
Slide 41: 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 42: 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 Indigenous peoples emissions 50% by 2030 and 75% by 2035 • FortisBC awarded silver-level designation in Progressive A
Slide 43: Debt Maturities & Preference Share Dividends
DEBT MATURITIES & PREFERENCE SHARE DIVIDENDS Debt Maturities Preference Share Dividend Rate Resets 10-Year Debt Maturities $2.5 2024 $2.0 Series K - $250M March 1, 2024 billions $1.5 $1.0 Series M - $600M December 1, 2024 $0.5 $- Series H - $192M 2024F 2025F 2026F 2027F 2028F 2029F 2030F 2031F 2032F
Slide 44: Strong Investment-Grade Credit Ratings
STRONG INVESTMENT-GRADE CREDIT RATINGS (1) COMPANY Fortis Inc. A-(2) Baa3 A (low) ITC Holdings Corp. A-(2) 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 Po
Slide 45: Strong Leadership Team
STRONG LEADERSHIP TEAM Fortis Inc. Executive David Hutchens Jocelyn Perry Jim Reid Gary Smith Stuart Lochray President & CEO EVP, CFO EVP, Sustainability & CLO EVP, Operations & Innovation Sr. VP Capital Markets & Business Development Utility Linda Apsey Chris Capone Roger Dall’Antonia Ruth Forbes S
Slide 46: Glossary
GLOSSARY ACC Arizona Corporation Commission GCOC generic cost of capital AMI Advanced Metering Infrastructure GHG greenhouse gas ATM At-the-market equity program IRA Inflation Reduction Act of 2022 AUC Alberta Utilities Commission IRP Integrated Resource Plan BCUC British Columbia Utilities Commissi