Slide 1: Q1 2017 Investor Marketing Presentation
Q1 2017 Investor Marketing Presentation
Slide 2: Forward-Looking Statement
Forward-Looking Statement Fortis Inc. (“Fortis” or, the “Corporation”) includes forward-looking statements in this presentation within the meaning of applicable securities laws including the Private Securities Litigation Reform Act of 1995. Forward-looking statements included in this presentation re
Slide 3: Fortis Today
Fortis Today • Leader in the North American regulated electric and gas utility business • ITC provides strong platform in electric transmission sector • Successful utility acquisition track record • Tremendous economic, geographic and regulatory diversity • Regulatory outcomes provide stability for
Slide 4: A Leader in North American Utility Industry
A Leader in North American Utility Industry • Regulated utilities British Newfoundland Prince • 9 U.S. states Columbia Edward Alberta Island • 5 Canadian provinces Ontario • 3 Caribbean countries • ~8,400 employees Iowa New York State Michigan • 2017F midyear rate base ~$26B Kansas Illinois Missouri
Slide 5: Fortis Delivers Strong Results in 2016
Fortis Delivers Strong Results in 2016 Transformative Acquisition Completed Execution of Growth Strategy Closed the acquisition of ITC in a Invested $2.1 billion in 2016 transaction valued at ~$16 billion Major capital projects progressing on closing Pursuing additional opportunities Liste
Slide 6: Diversified Portfolio of Utilities Continues to Deliver Strong Performance
Diversified Portfolio of Utilities Continues to Deliver Strong Performance Adjusted Earnings Adjusted EPS $2.33 300 750 0.75 2.30 $721 $0.64 $246 250 $2.11 ($ millions) $0.51 200 650 0.50 2.05 ($) $142 $589 150 100 550 0.25 1.80 2015 2016 2015 2016 2015 2016 2015 2016 Q4 YTD Q4 YTD 6
Slide 7: ITC Accretive to EPS with Integration on Track
ITC Accretive to EPS with Integration on Track • ITC Immediately Accretive to EPS in 2016 (1) • Integration On Track • Minimal impact on day-to-day operations at ITC • ITC’s new board of directors formed • Linda Blair appointed President and CEO of ITC during Q4 2016 • Joe Welch to be nominated for
Slide 8: Economic, Geographic and Regulatory Diversification
Economic, Geographic and Regulatory Diversification Fortis Has Become a Leading Transmission & Distribution Business Pro Forma Operating Fortis 2017 Earnings (1) Midyear Rate Base(2) For the Twelve Months ~$26 Billion Ended December 31, 2016 Generation represents ~14% of rate base Other Energy Infra
Slide 9: Our strategic focus delivers results
Our strategic focus delivers results Strategy Leverage the operating model, footprint of our utilities, operating expertise, reputation and financial strength to develop growth opportunities Dividend Growth Target: 6% Average Annual Investment-Grade Growth Through 2021 Credit Ratings Strategic Initi
Slide 10: Sustainable Business Model
Sustainable Business Model SUBSTANTIALLY Local teams empowered to AUTONOMOUS maximize the value of utility Operating Companies operations Small management group able LEAN and EFFICIENT to focus and execute on Corporate Model opportunities quickly From a set of independent operations to leveraging th
Slide 11: Proven Acquisition Track Record
Proven Acquisition Track Record Accelerating growth through strategic utility acquisitions Networks A Fortis Company Canada 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Note: Indicates date of announcement by Fortis that it had entered into an agreement to acquire the r
Slide 12: Reiterating Average Annual Dividend Growth Target of 6% through 2021
Reiterating Average Annual Dividend Growth Target of 6% through 2021 $1.53 $1.40 $1.20 $1.24 $1.28 $1.12 $1.16 $1.00 $1.04 $0.82 $0.67 Average annual dividend growth through 2021 targeted at 6% 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017F 2018F 2019F 2020F 2021F Dividend paid per com
Slide 13: Delivering Superior Shareholder Returns
Delivering Superior Shareholder Returns (1) Average annualized total shareholder return over last 5 years Fortis 9.28% S&P/TSX Composite Index 7.19% S&P/TSX Capped Utilities Index 5.35% (1) For the 5-year period ending February 28, 2017. 13
Slide 14: Continued Regulatory Stability
Continued Regulatory Stability Summary of Recent Regulatory Outcomes Agreement/Decision Regulated Utility Application/Proceeding Outcome Timing Initial MISO Base ROE ‒ 10.32% base ROE with a high-end zone of ITC September 2016 Complaint reasonableness of 11.35% 2016 Application: ROE and ‒ Maintained
Slide 15: Capital Plan Grows Rate Base to $30 Billion in 2021
Capital Plan Grows Rate Base to $30 Billion in 2021 ~$13B Five-Year Capital Program 2016 – 2021 Midyear Rate Base (2) $3.0 $2.9 $28.9 $29.6 $28.3 $27.1 $2.4 $2.4 $25.7 $2.3 $24.3 ($ billions ) (1) ($ billions ) (1) (3) 2017F 2018F 2019F 2020F 2021F 2016A 2017F 2018F 2019F 2020F 2021F Other Energy In
Slide 16: 2017-2021 Five Year Forecast by Segment
2017-2021 Five Year Forecast by Segment 2017 Capital Forecast ($millions) Regulated–Independent Transmission (ITC) 5-Year Capital Forecast Spending ITC 958 Regulated-US Electric & Gas UNS Energy 520 Central Hudson 222 Other 1 12% Regulated-Canadian & Caribbean FortisBC Gas 467 FortisAlberta 419 Cust
Slide 17: Capital Expenditures Exceeding Expectations
Capital Expenditures Exceeding Expectations 2013-2017 Business Plan 2014-2018 Business Plan 2015-2019 Business Plan Capex Capex Capex $ Millions $ Millions $ Millions 3,000 3,000 3,000 2,500 2,500 2,500 2,000 2,000 2,000 1,500 1,500 1,500 1,000 1,000 1,000 500 500 500 0 0 0 2013 2014(1) 2015 (1) 201
Slide 18: Opportunities Beyond Base Plan
Opportunities Beyond Base Plan ITC: Lake Erie Connector Prince Newfoundland Edward Alberta Island British Columbia Prince Edward FortisOntario: Island Wataynikaneyap Project & British Columbia Municipal Utility Consolidation Ontario Minnesota Ontario FortisBC: New York State Tilbury, Woodfibre LNG,
Slide 19: Development Project Update
Development Project Update • Potential pipeline expansion to the Woodfibre LNG export site • Earliest expected in service date is late 2020 Woodfibre LNG • Project estimate of up to $600 million, not currently in forecast • Proposed 1,000 MW, bi-directional, high-voltage direct current transmission
Slide 20: U.S. Tax Reform
U.S. Tax Reform Key Assumptions in Fortis Sensitivity Analysis Corporate Tax Rate Stress tested corporate tax rates at 20% and assumed remeasurement of existing deferred tax liabilities would be offset by a regulatory deferral mechanism 100% Deductibility of Assumes deductibility is required rather
Slide 21: Outlook Remains Strong
Outlook Remains Strong • Highly diversified; regulated utility, focused on wires and gas businesses • Highly executable base capital plan • Regulatory stability • Consistent dividend growth • 43 years of consecutive dividend increases • 6% average annual dividend growth guidance through 2021 • Stron
Slide 22: Appendix
Appendix i FORTIS... aN Ox IN XT £\/\/ LOX KAP SASS SKOAT
Slide 23: Q4 Results by Segment
Q4 Results by Segment Q4 Variance Analysis By Segment Q4 Q4 2016 Q4 Q42015 Q4 (Adjusted) (Millions excluding EPS) 2016 Adjustments Adjusted) 2015 Adjustments Adjusted) Variance |Regulated- Independent Electric Transmission (ITC) ITC Holdings 59 22 81 - - 81 Regulated - US Electric & Gas UNS Energy 2
Slide 24: Full Year Results by Segment
Full Year Results by Segment 24
Slide 25: Liquidity and Credit Ratings
Liquidity and Credit Ratings Credit Ratings (1) Credit Facilities 7.0 6.0 Fortis Inc. 5.0 2.2 3.7 ($ billions) 4.0 S&P A- / BBB+ 3.0 DBRS BBB (high) 2.4 2.0 Moody’s 2.2 Baa3 1.0 1.2 0.0 (2) Dec 31/15 Dec 31/16 Utilized Remaining Capacity (1) In October 2016, following the completion of the acquisiti
Slide 26: Utility Debt Credit Ratings
Utility Debt Credit Ratings Company S&P DBRS Moody’s Tucson Electric Power BBB+ n/a A3 Central Hudson A- n/a A2 FortisBC (Gas) n/a A A3 FortisAlberta A- A (low) n/a FortisBC (Electric) n/a A (low) Baa1 Newfoundland Power n/a A A2 A n/a A1 ITCTransmission Michigan Electric Transmission A n/a A1 Compa
Slide 27: Operational Highlights
Operational Highlights Regulated (as at December 31, 2016) 2016 2017F Customers Total Peak Demand Volumes Sales Operating Midyear Capital Assets Gas Electric Earnings Rate Base Program Electric Gas Employees Gas Electric ($B) (PJ) (GWh) ($M) ($B) ($M) UTILITY (#) (#) (#) (TJ) (MW) ITC(1) N/A - 660 1
Slide 28: ITC Holdings Corp. overview
ITC Holdings Corp. overview Largest US independent transmission company ITC Holdings Corp. Type of utility Transmission Regulator FERC Regulatory model Independent Transmission Company 2017 formula 10.32-11.35% ROE on 60% equity 2016 Assets % of total regulated 39% assets (1) 2016 Pro Forma Earnings
Slide 29: UNS Energy
UNS Energy Tucson UNS UNS Electric Electric Gas Type of utility Electricity Electricity Gas 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 2017 formula 50% equity 52.83% equity 50.8% equity 2016 Assets
Slide 30: Central Hudson
Central Hudson Central Hudson Gas and Electric Type of utility Gas and electricity Regulator NY State Public Service Commission Regulatory model Cost of service on future test year 2017 formula 9% ROE on 48% equity 2016 Assets % of total regulated 7% assets (1) 2016 Earnings ($millions) 70 2016 Pro
Slide 31: FortisBC
FortisBC FortisBC Type of utility Gas distribution Electricity Regulator BC Utilities Commission BC Utilities Commission Regulatory model Cost of service + PBR Cost of service + PBR 2017 formula 8.75% ROE on 38.5% equity 9.15% ROE on 40.0% equity 2016 Assets % of total 13% 5% regulated assets (1) 20
Slide 32: FortisAlberta
FortisAlberta FortisAlberta Type of utility Electricity distribution Regulator Alberta Utilities Commission Regulatory model PBR 2017 formula 8.5% on 37% equity 2016 Assets % of total regulated assets(1) 9% 2016 Earnings ($millions) 121 2016 Pro Forma Earnings % of total 11% regulated operating earn
Slide 33: Eastern Canadian Regulated Electric Utilities
Eastern Canadian Regulated Electric Utilities FortisOntario (1) Maritime Electric Newfoundland Power Type of utility Electricity Electricity Electricity Island Regulatory and Appeals Newfoundland and Labrador Board of Regulator Ontario Energy Board Commission Commissioners of Public Utilities Regula
Slide 34: Caribbean Regulated Electric Utilities
Caribbean Regulated Electric Utilities Caribbean Utilities (1) Fortis Turks & Caicos Type of utility Electricity Electricity Regulator Electricity Regulatory Authority Government of the Turks and Caicos Islands Regulatory model Cost of service with historical test year Cost of service with historica
Slide 35: Predictable returns from highly regulated asset base
Predictable returns from highly regulated asset base PBR through 2019 97% Regulated Assets Allowed 2017 ROE (%): 8.75-9.15 Allowed Equity in Capital (%): 38.5-40 as at Dec 31, 2016 3% Historic Test Year 16% Allowed 2017 ROE (%): 9.50-9.75 Allowed Equity in Capital (%): 50-52.8 43% PBR through 2022 3
Slide 36: Expected Upcoming Events
Expected Upcoming Events Expected Earnings Release Dates Q1 – 2017 May 2, 2017 Q2 – 2017 July 28, 2017 Q3 – 2017 November 3, 2017 Save the Date - 2017 Investor Day Toronto October 16, 2017 New York October 18, 2017 36
Slide 37: Management team
Barry Perry President & CEO Karl Smith Nora Duke Earl Ludlow James Laurito David Bennett EVP, CFO EVP, Corporate EVP, Eastern Canadian EVP, EVP, Services & CHRO & Caribbean Operations Business Development Chief Legal Officer & Corporate Secretary David Hutchens Michael Mosher Linda Blair Michael Mul