Fortis Inc. · TSX:FTS
Fortis — Investor Day (April 2015)
107 slides from Fortis's investor day presentation, Apr 1, 2015
Slide 1: U.S. Investor Day
U.S. INVESTOR DAY New York, NY April 1, 2015
Slide 2: Barry Perry, President and CEO
Barry Perry President and CEO
Slide 3: Forward-Looking Statement
Forward-Looking Statement Fortis Inc. (the "Corporation") includes forward-looking information in this presentation within the meaning of applicable securities laws in Canada (“forward-looking information”). The purpose of the forward-looking information is to provide management’s expectations regar
Slide 4: Leader in Electric and Gas Utilities in North America
Leader in Electric and Gas Utilities in North America
Slide 5: Fortis Today
Fortis Today Total Assets $26.6 Billion (as at December 31, 2014) 93% Regulated Assets • Regulated Utilities – 9 utilities – $24.7 billion – 3.1 million customers Electric 67% Gas 26% (1.9M electric, 1.2M gas) • Non-Regulated – Hydroelectric Generation (including 335-MW Waneta Expansion) Generation
Slide 6: Regulated Assets $24.7 Billion
Regulated Assets $24.7 Billion (as at December 31, 2014) Central Hudson 11% FortisBC 32% (New York State) (British Columbia) UNS Energy 30% FortisAlberta 14% (Arizona) (Alberta) Eastern Canadian 9% (Newfoundland, Ontario, Prince Edward Island) Caribbean 4% (Grand Cayman, Turks & Caicos Islands) 6
Slide 7: A Decade of Utility Asset Growth
(1) A Decade of Utility Asset Growth $B UNS Energy 30 US$4.5B $26.6 25 Central Hudson US$1.5B 20 15 FortisBC (Gas) $3.7B 10 5 $3.9 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Assets Major Utility Acquisitions (1) Financial information 2010 through 2014 prepared under US GAAP; prior to 2
Slide 8: A Decade of Strong Shareholder Returns
A Decade of Strong (1) Shareholder Returns Fortis 12.0% S&P 500 Utilities Sector ($US) 9.6% Dow Jones U.S. Utilities Index ($US) 9.6% S&P/TSX Capped Utilities Index 8.4% (1) 10-year average annualized total return (as at December 31, 2014) 8
Slide 9: Dividend Growth
Dividend Growth 42 consecutive years of annual dividend increases Longest record of a public corporation in Canada $ 1.40 $1.36 1.20 1.00 0.80 0.60 0.40 0.20 $0.09 0.00 '72 '77 '82 '87 '92 '97 '02 '07 '12 '15F 9
Slide 10: Strategic Review of Fortis Properties
Strategic Review of Fortis Properties • Announced review in September 2014 • Successful high-performing business • Owns and operates 23 hotels and 2.8 million square feet of commercial real estate • In 2014 revenue was ~$250 million and EBITDA was ~$80 million • Strategic options could include sale
Slide 11: Looking Forward
Looking Forward • Fortis is entering a period of significant organic growth, with a 5-year CAGR in rate base through 2019 estimated at ~6.5%. • Fortis is also pursuing two new projects in British Columbia – further expansion of the Tilbury LNG facility and the Woodfibre gas pipeline expansion. These
Slide 12: Karl Smith, Executive VP, Chief Financial Officer
Karl Smith Executive VP, Chief Financial Officer
Slide 13: Financial Metrics
Financial Metrics 2012A 2013A 2014A 2014 Pro-forma Earnings to Common Shareholders ($M) 327 344 407 482 Basic EPS ($) 1.72 1.70 1.81 1.76 EBITDA ($B) 1.3 1.4 1.8 2.1 FFO ($B) 0.9 0.9 1.2 1.5 Market Cap (Dec 31) ($B) 6.6 6.5 10.8 n/a Enterprise Value (Dec 31) ($B) 14.3 15.8 24.3 n/a EV/EBITDA (x) 11.
Slide 14: Market Capitalization
Market Capitalization $B M 12 1.5 10.8 10 8 1.0 6.6 6.5 6.3 5.9 6 4 0.5 2 0 0.0 10 11 12 13 14 Market Capitalization ($B) Avg. Daily Trading Volume All Exchanges (M) 14
Slide 15: Segmented Operating Earnings
Segmented Operating Earnings $M 600 508 500 400 412 400 Other (1) 300 Regulated United States Regulated Gas Canada Regulated Electric Canada 200 100 0 12 13 14 (1) Other includes Regulated Electric Caribbean, Fortis Generation and Non-Utility Earnings 15
Slide 16: Common Dividend Payout Ratio
Common Dividend Payout Ratio 2012 2013 2014 Basic EPS ($) 1.72 1.70 1.81 Dividend ($) 1.20 1.24 1.28 Payout Ratio (%) 70 73 71 16
Slide 17: Capital Structure
Capital Structure % Dec 31/12 Dec 31/13 Dec 31/14 Debt 55 56 57 Preferred 10 9 9 Common 35 35 34 Total 100 100 100 17
Slide 18: 2015 Allowed Returns & Equity
2015 Allowed Returns & Equity Weighted Average (%) Canada U.S. Combined Allowed ROE 8.72 9.87 9.13 Common Equity Thickness 39.9 44.6 41.6 18
Slide 19: 5-Year Capital Expenditures $9.0 Billion
5-Year Capital Expenditures (1) $9.0 Billion $B 2.5 2.2 2.0 1.8 1.8 1.7 Average $1.8 Billion 1.5 1.5 (2) Other Sustaining 1.0 Growth 0.5 0.0 15F 16F 17F (1) US Utilities CAPEX converted at a USD/CAD exchange rate of 1.27 18F 19F (2) Capital expenditures related to facilities, equipment, vehicles, in
Slide 20: Major Capital Projects
Major Capital Projects $M 2015 2016 2017 2018 2019 Total Tilbury Phase 1A 170 158 - - - 328 CUC Generation Expansion 60 32 - - - 92 UNS Pinal Transmission 97 - - - - 97 Waneta Expansion 45 13 2 21 1 82 FortisAlberta Pole Management 41 43 27 20 20 151 UNS Springerville 151 - 48 - - 199 Other Capital
Slide 21: Rate Base Growth Including Waneta Expansion
Rate Base Growth Including Waneta Expansion $B 19.3 20 18.1 18.7 17.1 16.3 15 14.0 Midyear Rate Base 10 5 0 14A 15F 16F 17F 18F 19F 21
Slide 22: 5-Year CAPEX + Tilbury 1B & Woodfibre $10.1 Billion
5-Year CAPEX + Tilbury 1B & Woodfibre $10.1 Billion (1) 3.0 $B 2.5 2.4 2.2 2.1 2.0 Average $2.0 Billion 1.9 1.5 Potential LNG Projects 1.5 Current 5-Year Capital Expenditures Forecast 1.0 0.5 0.0 15F 16F 17F 18F 19F (1) US Utilities CAPEX converted at a USD/CAD exchange rate of 1.27 22
Slide 23: Rate Base Growth Including Waneta + Tilbury 1B & Woodfibre
Rate Base Growth Including Waneta + Tilbury 1B & Woodfibre $B 25 19.3 20.3 20 18.1 17.1 Midyear Rate Base Reflecting 16.3 Potential LNG Projects 14.0 15 Midyear Rate Base Reflecting Current 5-Year Capital Expenditures Forecast 10 5 0 14A 15F 16F 17F 18F 19F 23
Slide 24: Funding Strategy
Funding Strategy • Debt primarily at operating company level • DRIP generates ~$100 million of common equity annually • Target 'A-' credit rating • Non-core asset divestitures • No anticipated common equity issuance 24
Slide 25: Credit Metrics
Credit Metrics (Year ending December 31) 2012A 2013A 2014A 2014 Pro-forma EBITDA to Interest (x) 3.5 3.6 3.7 4.3 FFO to Interest (x) 3.5 3.4 3.5 4.0 FFO to Debt (%) 14 12 11 13 25
Slide 26: Debt Maturities
Debt Maturities (1) $M 2015 2016 2017 2018 2019 Total Canadian Regulated Electric 98 73 25 72 5 273 Canadian Regulated Gas 85 200 - - - 285 U.S. Regulated 297 101 38 151 74 661 Other Segments 25 23 38 26 16 128 Corporate - 350 2 492 106 950 Total 505 747 103 741 201 2,297 (1) Includes long-term comm
Slide 27: Liquidity
Liquidity $B As at December 31, 2014 Total credit facilities 3.9 Credit facilities utilized (1.6) Credit facilities unused 2.3 27
Slide 28: Credit Ratings
Credit Ratings Company S&P DBRS Moody’s Fortis A- A (low) n/a UNS Energy n/a n/a Baa1 UNS Energy (TEP) 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 28
Slide 29: Regulation Overview
Regulation Overview (1) Equity Allowed Company Jurisdiction Rate Methodology Test Year in Capital 2015 ROE Comments (%) (%) No earnings cap, regulator UNS Energy Arizona COS Historic 43.5 – 52.6 9.50 - 10 supportive of 50% equity thickness and TEP expects to reach that level within the next 2-3 year
Slide 30: Supplemental Information
Supplemental Information 1) EBITDA, FFO, market cap, enterprise value and various metrics derived there from are non-GAAP financial measures. They are presented because the Corporation believes that they provide meaningful information about its financial results and that they are commonly used by th
Slide 31: Central Hudson
Central Hudson James Laurito President and CEO
Slide 32: Central Hudson Overview
Central Hudson Overview Customers 377,000 77,000 Gas 300,000 Electric 2014 Rate Base US$1.0 billion US$229M Gas US$802M Electric 32
Slide 33: New York Regulatory Environment: Overview
New York Regulatory Environment: Overview • New York regulatory policies – Competitive market for generation – Retail access – Rate-setting policies supportive of ‘A’ bond ratings • Forward-looking test year • Multi-year rate agreements • Revenue decoupling mechanisms • Full recovery for electricity
Slide 34: New York Public Service Commission
New York Public Service Commission Commission Structure – 1 Chair and 4 Commissioners – Appointed by Governor and confirmed by Senate for 6-year terms Audrey Patricia Gregg Diane Floyd Zibelman (D) Acampora (R) Sayre (D) Burman (R) Flake (D) Chair Commissioner Commissioner Commissioner Nominated Ter
Slide 35: Regulatory Priorities: Rate Case and REV Proceeding
Regulatory Priorities: Rate Case and REV Proceeding Acquisition Rate Joint Expected by case Proposal rate Fortis Inc. filed signed order June 2013 July 2014 Feb 2015 June 2015 Rate case milestones Rate freeze Proposed period rate agreement July 2013 – June 2015 July 2015 – June 2018 2013-2014 2013-2
Slide 36: Regulatory Priorities: Rate Case
Regulatory Priorities: Rate Case • Joint Proposal signed Feb 6, 2015. Signatories include Central Hudson, DPS Staff, Multiple Intervenors, and two environmental groups. – US$55M electric and US$12M natural gas delivery rate increases over 3 years – Modest residential electric and gas bill impacts –
Slide 37: Regulatory Priorities: Reforming the Energy Vision (REV)
Regulatory Priorities: Reforming the Energy Vision (REV) • Generic proceeding to redefine distribution utilities’ role and align utilities’ investments and earnings with achievement of New York State policy goals – Increase penetration of distributed energy resources – Increase system-wide efficienc
Slide 38: Utility Investment: CAPEX
Utility Investment: CAPEX US$M Over US$800 million investment from 2015-2019 200 194 165 167 166 140 Other 100 Sustaining Growth 0 15F 16F 17F 18F 19F 38
Slide 39: Utility Investment: Significant Rate Base Growth
Utility Investment: Significant Rate Base Growth US$B 1.5 1.4 1.3 1.2 1.1 1.1 1.0 1.1 1.0 Midyear Rate Base 1.0 1.3 1.4 1.1 1.1 1.2 0.5 0.0 14A 15F 16F 17F 18F 19F 39
Slide 40: Allowed Versus Achieved ROE
Allowed Versus Achieved ROE % 12 10.46 10.56 10.00 10.00 9.97 10.00 10.00 10.00 9.78 10 8 7.13 6 Allowed Achieved 4 2 0 (2) (1) (2) 10 11 12 13 14 (1) Achieved ROE excludes merger-related costs associated with the 2013 PSC Order authorizing acquisition by Fortis (2) Rate freeze period: July 1, 2013
Slide 41: Regional Growth Opportunities: Electric Transmission
Regional Growth Opportunities: Electric Transmission • NY Transco formed in November 2014 – FERC regulated projects – PSC-approved projects await FERC approval (US$500M) – Additional proposed projects (up to US$1.2B) • Central Hudson Electric Transmission (CHET) – 6% stake in NY Transco – Up to US$1
Slide 42: Regional Growth Opportunities: Natural Gas Transmission
Regional Growth Opportunities: Natural Gas Transmission • Central Hudson is strategically positioned • Current lack of infrastructure creates pricing differential • New pipeline from Marcellus would benefit Central Hudson customers 42
Slide 43: Top Priorities
Top Priorities • Rate Order • REV proceeding • Pursuing transmission investment opportunities Positioned for Growth 43
Slide 44: UNS Energy
UNS Energy David Hutchens President & CEO
Slide 45: UNS Energy Overview
UNS Energy Overview Arizona • Vertically integrated electric utility • 415,000 retail customers Gila River • UNS Electric - 93,000 retail customers • UNS Gas - 150,000 retail customers US$3.0 billion 45 2014 Midyear Rate Base 2,000 employees
Slide 46: Arizona Corporation Commission
Arizona Corporation Commission Terms End Jan 2019 Terms Ends Jan 2017 Susan Bitter Tom Forese Doug Little Smith (R) Bob Burns Bob Stump (R) (R) Chairman (R) (R) • Constitutionally created branch • Five Commissioners elected of Arizona government state-wide • Sets retail energy rates • Limited to ser
Slide 47: Regulatory Environment
Regulatory Environment • Authorized ROEs 9.5% – 10.0% • Adjustor mechanisms mitigate risk • No stay-out or rate-freeze provisions • Last two rate cases completed in less than one year • Fortis transaction approved in eight months • New dockets to address rate design, including effects of distributed
Slide 48: Improving Arizona Economy
Improving Arizona Economy Recovery Underway Retail Customer Tucson Economic Forecast and Population Growth Personal Income Customer Growth % Job Growth Arizona Population Growth 6 1.8% 1.8% 5 1.6% 1.4% 4 1.3% 3 1.3% 1.2% 2 1.1% 0.9% 0.8% 1 0 14 15E 16E 17E 18E 14E 15E 16E 17E 18E Sources: University
Slide 49: 5-Year Capital Expenditures
5-Year Capital Expenditures US$1.8 Billion 2015 – 2019 Capital Investments US$M Capital Investments US$1.8 Billion 600 565 US$261M 500 US$157M US$787M 400 US$181M 350 311 300 288 281 US$409M 200 T&D Generation - Existing 100 Renewables Springerville Lease Purchases 0 Other 15F 16F 17F 18F 19F Series
Slide 50: Rate Base Growth
Rate Base Growth (1) US$B 4 3.4 3.5 3.5 3.4 3.2 3.0 3 2 1 0 14A 15F 16F 17F 18F 19F (1) Includes ACC and FERC jurisdictional rate base. Current customer rates reflect ~US$2.4 billion of rate base. 50
Slide 51: UNS Consolidated Return on Equity
UNS Consolidated Return on Equity % 14 12.30 12 11.20 11.20 10.10 10.10 9.90 9.90 9.80 10 8 (1) Allowed 6 Achieved (2) 4 2 0 11 12 13 14 (1) Allowed returns reflect ACC jurisdictional ROEs and exclude fair value increment (2) Excludes merger-related expenses in 2013 and 2014; includes returns on FER
Slide 52: Equity / Capitalization
Equity / Capitalization Steady Improvement & Recent Credit Rating Upgrades Regulated Utilities Credit Ratings Equity / Moody’s Unsecured Rating Capitalization A3 49% 50% Baa1 44% Baa2 Baa3 Ba1 2005 2007 2009 2011 2013 2015 '15F '16F '17F 52
Slide 53: Operational Excellence
Operational Excellence Successful Cost Containment Base Operations and Maintenance Expense US$M 300 281 286 265 271 266 200 100 0 10 11 12 13 14 Note: Excludes merger-related expenses in 2013 and 2014 53
Slide 54: Generation Portfolio
Generation Portfolio Resource Diversification Strategy TEP Resource Capacity 2014 2020 Forecast Utility Scale Distributed Utility Scale Distributed Renewables Generation Renewables Generation 170 MW and Energy 250 MW and Energy 6% Efficiency 8% Efficiency 70 MW 260 MW 2% 8% Coal Natural Gas 1,028 MW
Slide 55: Resource Diversification Strategy
Resource Diversification Strategy 33% Reduction in Coal Capacity 25% Reduction in C02 Emissions Springerville Unit 1 – Reduced Coal Capacity by 200 MW • TEP currently owns 49.5% or 192 MW • Completed lease purchase in Dec 2014 and Jan 2015 San Juan Unit 2 – Planned Closure of 170 MW of Coal Capacity
Slide 56: EPA's Proposed Clean Power Plan
EPA’s Proposed Clean Power Plan Overview EPA Proposed Nationwide 30% reduction in CO2 Carbon Reduction by State emissions from existing power plants (CO2 lbs / MWh) from 2005 levels by 2030 • 2012 emission rates used as baseline 2012 2020 2030 Reduction year for individual state reductions State Rat
Slide 57: EPA's Proposed Clean Power Plan
EPA’s Proposed Clean Power Plan Arizona’s Proposed Alternative Plan Current (2012) Emissions 1,600 1,453 lb/MWh Alternative 1,400 Plan 1,200 963 lb/MWh 1,000 800 600 EPA Interim Goal EPA 2030 Goal 400 (2020-2029 Average) 702 lb/MWh 735 lb/MWh 200 0 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2
Slide 58: Solar Distributed Generation
Solar Distributed Generation Annual TEP Residential Solar DG Installs and kWh Solar DG Customer Choices – Community Solar Program (2010) # of Installs kWh (cumulative) • Customers can purchase blocks of 2,500 100,000,000 utility-scale solar – Utility-owned Solar DG Program (2015) 2,000 80,000,000 •
Slide 59: Rate Design
Rate Design US$ per MWh 100 90 Energy 80 Savings Energy 70 Demand 60 Savings Energy Costs 50 Fixed Costs incurred Recovered by net Through 40 Volumetric metered Demand Charges customers Charges 30 shifted to other customers 20 Energy 10 Volumetric Fixed Fixed Fixed Charges 0 Standard Design Net Mete
Slide 60: Regulatory Proceedings
Regulatory Proceedings Equitable Rate Design – Arizona Public Service (2014) • Raised fixed customer charge for DG customers – Salt River Project • Three-part rate design approved in February 2015 – Trico Electric Cooperative • Filed application in February 2015 to adjust net metering rates – TEP an
Slide 61: Growth Opportunities
Growth Opportunities • Clean Power Plan – Further resource diversification • Distributed Generation – Utility-Owned Residential Rooftop • Distribution System – Grid Modernization • Renewable Generation – Utility Scale Projects • Transmission – Expand Import Capability 61
Slide 62: Top Priorities
Top Priorities • Operational excellence – Customer Satisfaction – Safety – Reliability – Cost containment • Execute Resource Diversification Strategies – EPA’s Clean Power Plan – Existing coal generation • Execute Regulatory Strategies – Rate Design / Fixed Cost Recovery – Net Metering – TEP and UNS
Slide 63: Strong. Profitable. Growing. 15-minute Break
Strong. Profitable. Growing. 15-minute Break
Slide 64: Gary Smith, President & CEO Newfoundland Power
Gary Smith President & CEO Newfoundland Power
Slide 65: Eastern Canadian & Caribbean Overview
Eastern Canadian & Caribbean Overview • Five regulated electric utilities – 3 Eastern Canada – 2 Caribbean • Mainly traditional cost of service • 1,400 employees • Non-regulated generating assets in Belize 65
Slide 66: Customers & Rate Base
Customers & Rate Base Customers 2014 Midyear Rate Base (443,000) ($2.2 Billion) 78,000 gas 3% 11% 6% 15% 20% 58% 44% US 18% 11% $229M gas 14% Newfoundland Power Maritime Electric FortisOntario Caribbean Utilities Fortis Turks and Caicos 66
Slide 67: Regulatory Environment
Regulatory Environment • Newfoundland Power to file General Rate Application by June 2015 • Maritime Electric – Energy Accord • FortisOntario utilities on incentive regulation model – full rebasing every 5 years • Turks and Caicos draft National Energy Policy • CUC and FortisTCI – long-term licenses
Slide 68: 5-Year Capital Expenditures $1.3 Billion
5-Year Capital Expenditures $1.3 Billion $M 300 299 292 274 218 204 200 Other Sustaining Growth 100 0 15F 16F 17F 18F 19F 68
Slide 69: Rate Base Growth
Rate Base Growth $B 3.0 2.9 2.8 2.7 2.5 2.4 2.2 2.0 1.0 0.0 14A 15F 16F 17F 18F 19F 69
Slide 70: Allowed Versus Achieved ROE Newfoundland Power
Allowed Versus Achieved ROE Newfoundland Power % 12 10 9.00 8.98 9.17 9.15 8.80 8.80 8.80 8.38 8 6 Allowed Achieved 4 2 0 11 12 13 14 70
Slide 71: Allowed Versus Achieved ROE FortisOntario
Allowed Versus Achieved ROE FortisOntario (1) % 11.84 12 10.70 9.82 10 9.37 9.40 9.37 8.90 8.91 8 6 Allowed Achieved 4 2 0 11 12 13 14 (1) Weighted average ROE for FortisOntario utilities: Algoma Power, Cornwall Electric and Canadian Niagara Power 71
Slide 72: Allowed Versus Achieved ROE Maritime Electric
Allowed Versus Achieved ROE Maritime Electric % 12 10 9.75 9.75 9.75 9.75 9.75 9.75 9.75 9.75 8 6 Allowed Achieved 4 2 0 11 12 13 14 72
Slide 73: Non-Regulated Generating Assets in Belize
Non-Regulated Generating Assets in Belize • 51 MW hydroelectric generating capacity • 3 plants on the Macal River • Output sold to Belize Electricity under long-term power purchase agreements • Earnings contribution of ~$23 million annually 73
Slide 74: Top Priorities
Top Priorities Eastern Canada – Managing customer rate pressures in NL – Regulatory review of energy supply issues in NL – New cable connection & 50-MW gas turbine at MECL – Growth opportunities in Ontario Caribbean – Managing generation to meet growth – Strengthening the system 74
Slide 75: John Walker, Executive Vice President Western Canadian Operations
John Walker Executive Vice President Western Canadian Operations
Slide 76: Western Canadian Overview
Western Canadian Overview 76
Slide 77: Fortis in Western Canada
Fortis in Western Canada Alberta – Distribution utility – wires only – 120,000 km distribution lines British Columbia Electric – FortisBC Inc. (FBC) – Vertically integrated – 7,200 km T&D lines – 225 MW hydroelectric capacity Gas – FortisBC Energy Inc. (FEI) – Transmission, distribution, LNG storage
Slide 78: Western Canadian Overview
Western Canadian Overview Customers 2014 Midyear Rate Base (1,663,000) $7.3 Billion FortisAlberta FortisAlberta 530,000 $2.5B FortisBC FortisBC Gas Gas 967,000 $3.6B FortisBC FortisBC Electric Electric 166,000 $1.2B 78
Slide 79: Regulatory Environment
Regulatory Environment FortisAlberta – PBR 2013 – 2017 rates set by formula – Capital Tracker mechanism for qualifying capital expenditures FortisBC – Gas and Electric PBR 2014 – 2019 • Annual rate reviews with formula adjustments to revenue requirements • Earnings sharing 79
Slide 80: LNG – FortisBC Strategic Advantage
LNG – FortisBC Strategic Advantage • Existing infrastructure • Brownfield sites • Proximity to Asia/Hawaii • Scalable • Alignment with provincial energy objectives • Constructive First Nations relationships • Low-risk tolling model • No commodity risk • Local and export demand 80
Slide 81: Tilbury LNG – Phase 1A
Tilbury LNG – Phase 1A • Existing 570,000 mmBtu storage & 4,700 mmBtu/day liquefaction • Expansion will add 950,000 mmBtu of storage and 34,000 mmBtu/day liquefaction capacity • Expected in service by end of 2016 • Rate base addition of ~$440 million (included in current forecast) 81
Slide 82: Tilbury LNG – Phase 1B
Tilbury LNG – Phase 1B • Would add 133,000 mmBtu /day of liquefaction at an estimated rate base addition of $450 million (not in forecast) • Construction and inclusion in rate base approved conditionally by the Province • Requires firm, long-term supply contracts for 70% of the additional liquefacti
Slide 83: Tilbury LNG Potential Further Expansion
Tilbury LNG Potential Further Expansion • 35-acre site zoned for LNG • Ocean access • Site suitable for further staged expansion • Full build out would add storage and ~300,000 mmBtu/day of liquefaction • Total production increases to 475,000 mmBtu/day 83
Slide 84: Woodfibre LNG Pipeline Expansion
Woodfibre LNG Pipeline Expansion • Pipeline expansion to deliver gas to the proposed Woodfibre LNG site • Final investment decision by Woodfibre expected by end of 2015 • Estimated rate base addition of $600 million (not in forecast) • Investment approved by the Province; Environmental permitting un
Slide 85: 5-Year Capital Expenditures $4.3 Billion
5-Year Capital Expenditures $4.3 Billion 1,500 $M 1,000 927 948 872 865 714 Other Sustaining Growth 500 0 15F 16F 17F 18F 19F 85
Slide 86: 5-Year CAPEX + Tilbury 1B & Woodfibre $5.4 Billion
5-Year CAPEX + Tilbury 1B & Woodfibre $5.4 Billion $M 1,500 1,462 1,127 1,078 977 1,000 Potential LNG Projects 714 Other Sustaining Growth 500 0 15F 16F 17F 18F 19F 86
Slide 87: Rate Base Growth
Rate Base Growth $B 12 10.2 10 9.8 9.4 8.8 8.4 8 7.3 Waneta 6 FortisBC (Electric) FortisAlberta FortisBC (Gas) 4 2 0 14A 15F 16F 17F 18F 19F 87
Slide 88: Rate Base Growth + Tilbury 1B & Woodfibre
Rate Base Growth + Tilbury 1B & Woodfibre $B 12 11.2 10.4 10 9.5 8.8 8.4 8 7.3 Potential LNG Projects Waneta 6 FortisBC (Electric) FortisAlberta 4 FortisBC (Gas) 2 0 14A 15F 16F 17F 18F 19F 88
Slide 89: Allowed Versus Achieved ROE FortisBC Gas
Allowed Versus Achieved ROE FortisBC Gas % 12 10.15 10.12 10 9.50 9.50 9.12 9.13 8.75 8.75 8 6 Allowed Achieved 4 2 0 (1) 11 12 13 14 (1) Achieved ROE for 2014 not yet final, subject to change 89
Slide 90: Allowed Versus Achieved ROE FortisBC Electric
Allowed Versus Achieved ROE FortisBC Electric % 12 10.67 10.52 10.21 9.90 9.90 10 9.15 9.15 9.19 8 6 Allowed Achieved 4 2 0 (1) 11 12 13 14 (1) Achieved ROE for 2014 not yet final, subject to change 90
Slide 91: Allowed Versus Achieved ROE FortisAlberta
Allowed Versus Achieved ROE FortisAlberta % 12 10.50 9.99 10.00 9.73 10 8.75 8.75 8.30 8.30 8 6 Allowed Achieved 4 2 0 (1) (1) 11 12 13 14 (1) Reflects recent Generic Cost of Capital Decision 91
Slide 92: Non-Regulated Waneta Expansion Project
Non-Regulated Waneta Expansion Project 92
Slide 93: Non-Regulated Waneta Expansion Project
Non-Regulated Waneta Expansion Project • 2 Unit 335-MW hydroelectric plant • $900 million (51% FTS) • Non-regulated project • Supported by 40-year PPAs with BC Hydro and FortisBC Electric • Earnings commence Q2/2015 (upon completion) • Upon completion, FortisBC owns, and/or operates ~1,500 MW of gen
Slide 94: Top Priorities
Top Priorities • Regulatory Matters – PBR – Cost of Capital filings • Commission Waneta Expansion • Secure Tilbury Phase 1B and Woodfibre Pipeline Projects 94
Slide 95: Conclusion
Conclusion Barry Perry President and CEO
Slide 96: Why Invest in Fortis?
Why Invest in Fortis? • Focus on low-risk regulated utility business and long-term contracted energy infrastructure • Geographic and regulatory diversity • Strong organic rate base growth • Proven utility acquisition model • Strong balance sheet and credit ratings • 42 years of consecutive dividend
Slide 97: Leader in Electric and Gas Utilities in North America
Leader in Electric and Gas Utilities in North America
Slide 98: Strong. Profitable. Growing. Q&A
Strong. Profitable. Growing. Q&A
Slide 99: Presenter Biographies
Strong. Profitable. Growing. Presenter Biographies
Slide 100: Barry V. Perry, President and Chief Executive Officer
Barry V. Perry President and Chief Executive Officer Fortis Inc. Barry Perry is President and Chief Executive Officer of Fortis effective December 31, 2014. Prior to his current position at Fortis, Mr. Perry served as Vice President ("VP"), Finance and Chief Financial Officer ("CFO") of the Corporat
Slide 101: Karl W. Smith, Executive Vice President, Chief Financial Officer
Karl W. Smith Executive Vice President, Chief Financial Officer Fortis Inc. Karl Smith is Executive Vice President, Chief Financial Officer of Fortis, effective June 30, 2014. Prior to his current position, Mr. Smith served as President and CEO of FortisAlberta since 2007. Prior to then, he served a
Slide 102: John C. Walker, Executive Vice President, Western Canadian Operations
John C. Walker Executive Vice President, Western Canadian Operations Fortis Inc. John Walker is Executive Vice President, Western Canadian Operations of Fortis, effective August 1, 2014. He has held continuously progressive positions within the Fortis Group since 1983, most recently as President and
Slide 103: Earl A. Ludlow, Executive VP, Eastern Canadian & Caribbean Operations
Earl A. Ludlow Executive VP, Eastern Canadian & Caribbean Operations Fortis Inc. Earl A. Ludlow is Executive Vice President, Eastern Canadian and Caribbean Operations of Fortis, effective August 1, 2014. He is responsible for Newfoundland Power, Maritime Electric, FortisOntario, Fortis Turks and Cai
Slide 104: David G. Hutchens, President and CEO, UNS Energy
David G. Hutchens President and CEO UNS Energy Corporation David Hutchens is President and Chief Executive Officer of UNS Energy Corporation (“UNS Energy”), parent company of Tucson Electric Power (“TEP”) and Unisource Energy Services (“UES”). Mr. Hutchens has been with UNS Energy for nearly 20 year
Slide 105: James Laurito, President and CEO, Central Hudson
James Laurito President and CEO Central Hudson Gas & Electric Corporation James Laurito is President and Chief Executive Officer of Central Hudson. Mr. Laurito joined Central Hudson in 2009. Prior to that, he served as President & CEO of both New York State Electric and Gas Corporation and Rochester
Slide 106: Gary Smith, President and CEO, Newfoundland Power
Gary Smith President and CEO Newfoundland Power Inc. Gary Smith is the President and Chief Executive Officer of Newfoundland Power Inc. Mr. Smith’s career with the Fortis Group spans more than 30 years. From 1984 to 1999, he held progressive technical and management positions with Newfoundland Power
Slide 107: Barry Perry, President and CEO
Barry Perry President and CEO Karl Smith John Walker Earl Ludlow Executive Vice President Executive Vice President Executive Vice President Chief Financial Officer Western Canadian Operations Eastern Canadian & Caribbean Operations David Hutchens James Laurito President and CEO President and CEO UNS