Slide 1: Q4 2020 Earnings Conference Call
Q4 2020 EARNINGS CONFERENCE CALL FEBRUARY 12, 2021
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, President and CEO
DAVID HUTCHENS PRESIDENT AND CEO
Slide 4: 2020 Year-in-Review
2020 YEAR-IN-REVIEW Strong Operational and Financial Performance Record Safety Results Navigated Record Capital 8% Rate Base 75% Carbon Concluded Key & Strong Reliability COVID-19 Investments Growth Emissions Reduction Regulatory Performance of $4.2B Target by 2035 Proceedings 4
Slide 5: Delivered Safe and Reliable Service
DELIVERED SAFE AND RELIABLE SERVICE All Injury Frequency Rate(1) Average Electricity Customer Outage Duration(2) 3.9 3.8 3.6 3.5 1.78 1.50 1.67 1.45 1.45 2.2 1.38 2.1 2.1 1.9 1.8 1.09 2016 2017 2018 2019 2020 2016 2017 2018 2019 2020 Fortis USA Bureau of Canadian Electricity Fortis Canadian Electric
Slide 6: Navigating Through COVID-19
NAVIGATING THROUGH COVID-19 ~9,000 3.3M ~$5M Essential Employees Customers Donated Working to Keep the Working with Customers In Support of the Energy Flowing Impacted by Pandemic Communities We Serve 6
Slide 7: Fourth Quarter Sales and Load Trends
FOURTH QUARTER SALES AND LOAD TRENDS SALES UP ~1% AT UTILITIES NOT PROTECTED BY REGULATORY MECHANISMS Regulatory Mechanisms 83% 2020 Revenues Protecting Changes in Sales Q4 2020 vs. Q4 2019 Sales Trends From Residential Sales • Peak load decreased ~10% mainly due to weather and or Protected by ✓ COV
Slide 8: Record Capital Investments
RECORD CAPITAL INVESTMENTS SUPPORTS 8% RATE BASE GROWTH IN 2020 Capital Investments Rate Base $4.2B $30.5B $28.0B $3.8B 2019 2020 2019 2020 Note: US dollar-denominated capital expenditures and rate base converted at USD:CAD foreign exchange rate of $1.33 for 2019 and $1.34 for 2020. Rate base growth
Slide 9: Carbon Emissions Reduction Target of 75% by 2035
CARBON EMISSIONS REDUCTION TARGET OF 75% BY 2035 Reduction in Scope 1 Emissions by 2035 Achievable Target Largely Driven by Plan Improves Already Using a 2019 Base Year TEP’s Integrated Resource Plan Low Environmental Footprint Adding Clean Energy Today 2,400 MW Wind and Solar Only 5% of Assets 1,40
Slide 10: Sustainability Leader
SUSTAINABILITY LEADER Continued focus on Carbon emissions reduction Energy target of 75% by 2035 Delivery using a 2019 base year Industry leader in Industry recognition(1) for Safety Strong Governance and Reliability grounded in local leadership & independence Continued focus on More than Gender Div
Slide 11: Low-Risk Rate Base Growth
LOW-RISK RATE BASE GROWTH SUPPORTED BY HIGHLY EXECUTABLE CAPITAL PLAN 5-Year Capital Plan Rate Base $19.6 Billion $40.3B $4.0B $4.0B $3.8B $3.9B $3.9B $30.5B 2021F 2022F 2023F 2024F 2025F 2020A 2025F Regulated – Independent Electric Transmission Regulated – U.S. Electric & Gas Regulated – Canadian &
Slide 12: 6% Average Annual Dividend Growth Guidance to 2025
6% AVERAGE ANNUAL DIVIDEND GROWTH GUIDANCE TO 2025 47 Years of Consecutive Dividend Increases 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16 18 20 12
Slide 13: Jocelyn Perry, Executive Vice President and CFO
JOCELYN PERRY EXECUTIVE VICE PRESIDENT AND CFO
Slide 14: 2020 Adjusted Results
2020 ADJUSTED RESULTS Q4 Q4 Adjusted EPS Impacted by: Adjusted Earnings Adjusted EPS Rate base growth $320M $0.69 Earnings at ITC due to timing of $277M $0.62 ROE adjustments Retail sales in Arizona Hydroelectric production in Belize Q4 2019 Q4 2020 Q4 2019 Q4 2020 Annual Adjusted EPS Impacted by: A
Slide 15: Fourth Quarter EPS Drivers
FOURTH QUARTER EPS DRIVERS $0.02 ($0.01) ($0.01) $0.02 ($0.03) $0.03 $0.05 $0.69 $0.62 Q4 2019 U.S. U.S. Other Energy Western Corporate & Weighted Q4 2020 Adjusted Transmission Electric & Electric Infrastructure Canadian Other Average Adjusted (1) (2) (3) (1) EPS (ITC) Gas Electric & Gas Shares EPS
Slide 16: Annual EPS Drivers
ANNUAL EPS DRIVERS $0.01 $0.01 ($0.15) $0.03 $0.03 $0.03 $0.06 $2.57 $2.55 2019 U.S. U.S. Western Energy Other Foreign Weighted 2020 (2) Adjusted Transmission Electric & Canadian Infrastructure Electric Exchange Average Adjusted (1) (3) (1) EPS (ITC) Gas Electric & Gas Shares EPS (1) Non-US GAAP mea
Slide 17: Funding Plan and Liquidity
FUNDING PLAN AND LIQUIDITY ~$3.5B IN LONG-TERM DEBT ISSUED IN 2020 2021-2025 Funding Plan Credit Facilities ($B) 33% Debt (2) 4.3 4.3 5-Year Capital Plan $19.6B 1.3 1.3 61% 6% (1) Dec. 31, 2020 Dec. 31, 2019 Cash From DRIP(3) Operations Remaining Capacity Utilized (1) Cash from operations after divi
Slide 18: Maintaining Investment-Grade Credit Ratings
MAINTAINING INVESTMENT-GRADE CREDIT RATINGS Credit Ratings Credit Metrics(2) CFO / Debt 12.1% 11.6% 10.4% (1) A- 2018 2019 2020 BBB (high) Holdco Debt / Total Debt 39% Baa3 34% 34% 2018 2019 2020 (1) S&P rating reflects the issuer credit rating. Fortis’ unsecured debt rating is BBB+. (2) Based on Mo
Slide 19: Manageable Exposure to Foreign Exchange
MANAGEABLE EXPOSURE TO FOREIGN EXCHANGE Earnings and Capital Plan • ~66% of operating earnings(1) from U.S. and Caribbean • ~60% of $19.6B five-year capital plan from U.S. and Caribbean • Five-year capital plan translated at forecast USD:CAD FX rate of $1.32 Hedging Activities • US dollar-denominate
Slide 20: Constructive Regulatory Outcome at TEP
CONSTRUCTIVE REGULATORY OUTCOME AT TEP NEW RATES EFFECTIVE JANUARY 1, 2021 2017 Rate Case 2020 Rate Case Newly Approved Trackers Reducing Risk: Settlement Decision Test Year June 30, 2015 December 31, 2018 Tax Expense Adjustor Mechanism Rate Base US$2.0B US$2.7B • Allows for flow through of income t
Slide 21: Ongoing Regulatory Proceedings
ONGOING REGULATORY PROCEEDINGS • Notice of Proposed Rulemaking (NOPR) on Incentives – Transmission Incentive NOPR issued in March 2020; comments filed in July 2020 and awaiting next steps • General Rate Application – Rate case filed in August 2020 with NYPSC requesting an electric rate increase of U
Slide 22: Why Invest in Fortis?
WHY INVEST IN FORTIS? Geographic Focused on Low-Risk Virtually 6% Well-Run ESG Innovative & Regulatory Energy Growth All Dividend Businesses Leader Diversity Delivery Profile Regulated Guidance 22
Slide 23: Upcoming Events
UPCOMING EVENTS Expected Earnings Release Dates Q1 2021 May 5, 2021 Q2 2021 July 29, 2021 23
Slide 24: Q4 2020 Earnings Conference Call
Q4 2020 EARNINGS CONFERENCE CALL FEBRUARY 12, 2021
Slide 25: Q4 2020 Results by Segment
Q4 2020 RESULTS BY SEGMENT Fourth Quarter Variance Analysis by Segment Adjusted Adjusted Adjusted ($millions, except weighted average shares and EPS) Q4 2020 Adjustment (1) Q4 2019 Adjustment (1) Q4 Q4 2020 Q4 2019 Variance Regulated – Independent Electric Transmission ITC 109 - 109 171 (83) 88 21 R
Slide 26: 2020 Results by Segment
2020 RESULTS BY SEGMENT Annual 2020 Variance Analysis by Segment Adjusted Adjusted Adjusted ($millions, except weighted average shares and EPS) 2020 Adjustment (1) 2019 Adjustment (1) Annual 2020 2019 Variance Regulated – Independent Electric Transmission ITC 449 (27) 422 471 (83) 388 34 Regulated –
Slide 27: Adjusted Earnings Reconciliation
ADJUSTED EARNINGS RECONCILIATION Non-US GAAP Reconciliation ($millions, except EPS) Q4 2020 Q4 2019 Variance 2020 2019 Variance Common Equity Earnings 331 346 (15) 1,209 1,655 (446) Adjusting Items: FERC Base ROE decisions(1) - (83) 83 (27) (83) 56 US tax reform(2) - 12 (12) 13 12 1 Unrealized (gain
Slide 28: 2020-2025 Rate Base by Segment
2020-2025 RATE BASE BY SEGMENT (1) Rate Base 5-Year CAGR to ($billions) 2020A 2021F 2022F 2023F 2024F 2025F 2025 Regulated - Independent Electric Transmission ITC(2) 9.5 9.9 10.6 11.3 11.9 12.5 6.0% Regulated - US Electric & Gas UNS Energy 5.7 6.2 6.7 7.0 7.3 7.6 6.2% Central Hudson 2.1 2.3 2.5 2.7
Slide 29: 2021-2025 Capital Plan by Segment
2021-2025 CAPITAL PLAN BY SEGMENT (1) Capital Plan 2021-2025 ($millions) 2021F 2022F 2023F 2024F 2025F TOTAL Regulated - Independent Electric Transmission ITC 1,000 1,007 993 1,107 993 5,100 Regulated - US Electric & Gas UNS Energy 749 781 840 853 547 3,770 Central Hudson 306 416 409 346 310 1,787 T
Slide 30: Major Capital Projects
MAJOR CAPITAL PROJECTS Total Incurred to Expected the End of 2021-2025 Year of ($ Millions) 2020 Plan(1) Completion Major ITC Multi-Value Regional Transmission Projects 642(2) 261 2023 Capital ITC 34.5 kV to 69 kV Transmission Conversion Project 445 148 Post-2025 Projects 15% UNS Vail-to-Tortolita P
Slide 31: Investment-Grade Credit Ratings
INVESTMENT-GRADE CREDIT RATINGS Company Fortis Inc. A-(1) Baa3 BBB (High) ITC Holdings Corp. A-(1) Baa2 n/a ITC Regulated A A1 n/a Subsidiaries TEP A- A3 n/a Central Hudson A- A3 n/a FortisBC Energy n/a A3 A FortisBC Electric n/a Baa1 A (low) FortisAlberta A- Baa1 A (low) Newfoundland Power n/a A2 A
Slide 32: Manageable Debt Maturities
MANAGEABLE DEBT MATURITIES 5-Year Average ~$0.9B 2.0 1.5 $ billions 1.0 0.5 - 2021F 2022F 2023F 2024F 2025F Fortis Fortis Subsidiaries Note: Debt as at December 31, 2020 and excludes any new debt issuances during the forecast period. Excludes repayments of finance leases along with the current porti