Fortis Inc. · TSX:FTS
Fortis — Investor Day (October 2018)
101 slides from Fortis's investor day presentation, October 2018
Slide 1: Empowering, Sustaining and Executing Investor Day Presentation
Empowering, Sustaining and Executing Investor Day Presentation October 2018 IN OUR REGULATED ENERGY INFRASTRUCTURE SYSTEMS
Slide 2: Empowering growth
Empowering growth Barry Perry Fortis Inc. - President & CEO
Slide 3: Forward-Looking Information
Forward-Looking Information EMPOWERING GROWTH 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 U.S. Private Securities Litigation Reform Act of 1995, collectively re
Slide 4: Investor Day Agenda
WELCOME Investor Day Agenda 1 EMPOWERING GROWTH: Strategic Overview and Capital Plan Barry Perry, Fortis Inc. - President & CEO 2 S U S TA I N I N G G R O W T H : Capital Plan Drivers Roger Dall’Antonia, FortisBC - President & CEO David Hutchens, UNS Energy - President & CEO and Fortis Inc. - EVP, W
Slide 5: Investor Day Highlights
Investor Day Highlights EMPOWERING GROWTH $17.3B 6-7% 6% 5-Year Rate Base Average Annual Capital Plan Growth Dividend Growth Target to 2023 5
Slide 6: Our Strategy
Our Strategy EMPOWERING GROWTH S T R AT E G Y 6% Leverage the operating model, footprint of our utilities, operating expertise, Average Annual Dividend reputation and financial strength to Focus on Growth Target through 2023 develop growth opportunities Organic Growth AREAS OF FOCUS: Utility Capital
Slide 7: Fortis Timeline
Fortis Timeline EMPOWERING GROWTH 1885-2012 2013-2016 2017-Current Focused on Canada U.S. Acquisition Strategy Focused on Organic Growth in North America 7
Slide 8: Average Annualized Total Shareholder Return
Average Annualized Total Shareholder Return EMPOWERING GROWTH 5-Year 10-Year 20-Year Fortis 10.1% 9.8% 12.2% S&P/TSX Composite Index 7.8% 6.3% 8.0% S&P/TSX 7.0% 6.6% 8.4% Capped Utilities Index Note: For the period ending September 30, 2018. 8
Slide 9: High Quality & Diverse Utility Portfolio
High Quality & Diverse Utility Portfolio EMPOWERING GROWTH ~97% REGULATED UTILITY ASSETS 10 UTILITY OPERATIONS Canada, U.S. & Caribbean $ 26.1 BILLION IN MIDYEAR RATE BASE IN 2018 ~60% EARNINGS FROM THE U.S. ~92% TRANSMISSION & DISTRIBUTION 3.3 MILLION UTILITY CUSTOMERS 2.0M Electric & 1.3M Gas Note
Slide 10: Our Unique Business Model
Our Unique Business Model EMPOWERING GROWTH 10 ITC UNS Energy Locally Operated FortisBC Regulated Electric Regulated Gas Utilities FortisAlberta FERC-Regulated Newfoundland Power Electric Transmission = Central Hudson Long-Term Contracted FortisOntario Hydro Generation Strong 1 Caribbean Utilities N
Slide 11: Our People
Our People EMPOWERING GROWTH 8,500+ Dedicated Employees Across North America 11
Slide 12: Committed to safety and reliability for our employees and customers
Committed to safety and reliability for our employees and customers EMPOWERING GROWTH All Injury Frequency Rate (1) Electricity Customer 2.5 Average Outage Duration 4.5 (Hours) 4.0 2.0 1.9 3.5 1.7 3.0 1.5 2.5 2.0 1.0 1.5 Safety Reliability 1.0 0.5 0.5 0.0 0.0 2015 2016 2017 2014 2015 2016 2017 Forti
Slide 13: Key Industry Trends
Key Industry Trends EMPOWERING GROWTH Battery Storage Move to Renewables Grid Modernization Grid Resiliency Evolving Customer Needs Electric Vehicles Cybersecurity ESG 13
Slide 14: Prioritizing Cybersecurity
Prioritizing Cybersecurity EMPOWERING GROWTH • Leadership & Oversight Risk Asset Identity & Threat & Situational Management Management Access Vulnerability Awareness • Cyber Risk Management • Investment Opportunities Information Incident Supply Chain Workforce Cybersecurity Sharing Response Program
Slide 15: Sustainability: Environmental Commitment
Sustainability: EMPOWERING GROWTH Environmental Commitment We delivered 19 times more energy to our customers than we generated in 2017 92% of our assets are electricity poles, wires and natural gas lines Decrease in the carbon intensity 63% of operations since 2015 15
Slide 16: Governance and Social Commitment
Governance and Social Commitment EMPOWERING GROWTH $12.5M invested in communities that we serve in 2017 Women on our Board Women NEOs 5 2 1 0 2013 Today 2013 Today 16
Slide 17: Increase in Capital Plan Driven by Proven Growth Strategy
Increase in Capital Plan Driven by Proven Growth Strategy EMPOWERING GROWTH + $0.6B $17.3 + $0.9B $14.5 Billions + $0.6B 2017 Investor Day 2018 Investor Day + $0.6B 17
Slide 18: Capital Plan Grows Rate Base
Capital Plan Grows Rate Base EMPOWERING GROWTH Rate Base(1) $35.5 $32.0 $33.4 $30.1 $27.9 $26.1 Billions Canadian & Caribbean U.S. 2018F 2019F 2020F 2021F 2022F 2023F (1) Rate base converted at a projected USD/CAD foreign exchange rate of $1.28 for 2018 through 2023. 18
Slide 19: Additional Energy Infrastructure Opportunities
Additional Energy Infrastructure Opportunities EMPOWERING GROWTH FortisOntario: FortisBC: Municipal Utility Tilbury, Consolidation LNG & Gas Infrastructure Maritime Electric & Newfoundland Power: Grid Modernization UNS Energy: Renewables, Storage & Electric Transmission ITC: Lake Erie Connector & Gr
Slide 20: 45 Years of Dividend Growth and 6% Guidance Extended to 2023
45 Years of Dividend Growth and 6% Guidance Extended to 2023 EMPOWERING GROWTH 81 6% guidance generates annual dividend payment of $2.27 in 2023 98 15 73 74 75 76 77 78 79 80 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 16 17 23F 18F 19F 20F 21F 22F
Slide 21: Sustaining growth
Sustaining growth Roger Dall’Antonia FortisBC - President & CEO
Slide 22: FortisBC: A Premier Natural Gas & Electric Business
FortisBC: A Premier Natural Gas & Electric Business S U S TA I N I N G G R O W T H Natural Gas Electric Service Area Service Area 1.2M Gas & Electric Customers 56,000km Natural Gas and Electric T&D Lines 731MW 221PJ Peak Electricity Natural Gas Demand Sales Volume Note: All data is as at December 31
Slide 23: FortisBC: Economic Fundamentals Driving Customer Growth
FortisBC: Economic Fundamentals Driving Customer Growth S U S TA I N I N G G R O W T H Gas Customers Electricity Customers Growth ge 1.4% Avera 172,293 ge Growth 168,383 170,050 36,500 1.4% Avera 167,072 36,500 Indirect Customers 164,818 36,500 36,500 36,500 Direct Customers 1.7% 1.7% 1.3% 1.5% 1.3%
Slide 24: FortisBC: Leading Innovation
FortisBC: Leading Innovation S U S TA I N I N G G R O W T H Renewable Natural Gas Choice On Board Truck-To-Ship LNG Testing Hydrogen Injection Into For End-Use Customers Natural Gas System 24
Slide 25: FortisBC: Business Trends Drive Opportunities
FortisBC: Business Trends Drive Opportunities S U S TA I N I N G G R O W T H Sustainment Major Capital & Integrity Customer Projects Growth Sustainability LNG 25
Slide 26: FortisBC's Planned Growth
FortisBC’s Planned Growth System Resiliency Driving Growth S U S TA I N I N G G R O W T H $3.5B $2.9B Billions FortisBC Electric FortisBC Energy 2018-2022 2019-2023 Capital Plan Capital Plan 26
Slide 27: FortisBC's Planned Growth
FortisBC’s Planned Growth S U S TA I N I N G G R O W T H $2.0B Sustainment & Customer Growth 2019-2023 $$ • Ongoing maintenance requires significant capital investment Capital Investments(1) • Includes customer growth and general plant investment Sustainability Sustainment $1.0B Major Integrity Proj
Slide 28: FortisBC: $2.0B Sustainment and Growth Capital in Existing Infrastructure
FortisBC: $2.0B Sustainment and Growth Capital in Existing Infrastructure S U S TA I N I N G G R O W T H 1.2M Gas Capital Electric Capital Customers ($1.5 Billion) ($0.5 Billion) Delivers 7,300km Customer GrowthGrowth Customer Customer GrowthGrowth Customer 21% of BC’s Electric Transmission Transmis
Slide 29: FortisBC: $1.0B Major Integrity Projects
FortisBC: $1.0B Major Integrity Projects S U S TA I N I N G G R O W T H Inland Gas Upgrades Project - $220M Age of • Key tool to confirm integrity of transmission gas lines Transmission Gas Lines • Improve asset management on 400kms of gas lines 2010-2019 Transmission Integrity Management 32 km 2000
Slide 30: FortisBC: Major Integrity Projects
FortisBC: Major Integrity Projects Transmission Gas Line Integrity Management Tools S U S TA I N I N G G R O W T H Retrofit to In-line Inspection • Retrofits to enable in-line inspections(1) In-line Inspection 1,977 km Gas Line Replacement/ Pressure Reduction Gas Line Replacement/ Pressure Reduction
Slide 31: FortisBC: Major Integrity Projects
FortisBC: Major Integrity Projects Inland Gas Upgrades Project S U S TA I N I N G G R O W T H • Multi-year risk mitigation project for 29 transmission pressure lateral gas lines (400kms) • Gas line modifications and replacements to allow in-line inspection capabilities • Operating pressure reduction
Slide 32: FortisBC: Major Integrity Projects
FortisBC: Major Integrity Projects Transmission Integrity Management Capabilities Project S U S TA I N I N G G R O W T H • Adoption of Electro-Magnetic Acoustic Transducer (EMAT) inspection tools o Established industry method for detection of gas line cracking • Gas line modifications to provide cap
Slide 33: FortisBC: Increased Demand for LNG
FortisBC: Increased Demand for LNG S U S TA I N I N G G R O W T H • Over the past 10 years, North America has shifted from an LNG importer to an exporter • East Asian market demand increasing • New natural gas reserves in North America have put downward pressure on prices • Natural gas seen as logic
Slide 34: FortisBC: LNG Projects
FortisBC: LNG Projects Eagle Mountain Woodfibre Gas Line Project S U S TA I N I N G G R O W T H • 47km gas line to serve Squamish-based Woodfibre LNG (WLNG) for export to Asian markets • ~$350 million rate base (net of customer contribution) • Regulated investment • The Woodfibre facility will expor
Slide 35: FortisBC: LNG Projects
FortisBC: LNG Projects Tilbury Existing Facilities and Expansion Opportunities S U S TA I N I N G G R O W T H • FortisBC owns two of six LNG facilities in Canada • Tilbury • Mt. Hayes • Tilbury site is scalable with access to low-cost gas supply and ocean access • In 2018, the Tilbury site exported
Slide 36: FortisBC: Sustainability Trends
FortisBC: Sustainability Trends S U S TA I N I N G G R O W T H A Low Carbon Energy Future • Demand Side Management Incentive Program • Renewable Natural Gas • Electric Vehicle Charging • Natural Gas for Transportation • First Nation Solar Project Opportunity 36
Slide 37: Sustaining growth
Sustaining growth David Hutchens UNS Energy - President & CEO and Fortis Inc. - EVP, Western Utility Operations
Slide 38: UNS Energy: Powering Arizona
UNS Energy: Powering Arizona S U S TA I N I N G G R O W T H Navajo 3,378MW San Juan Four Corners Service Areas / Customers Flagstaff Tucson Electric Power Service Area UNS Gas Service Area Peak Electricity Demand Kingman Cottonwood UNS Electric Service Area Black Mountain Prescott Show Low UNS Gas &
Slide 39: UNS Energy: A Growing Tucson Economy
UNS Energy: A Growing Tucson Economy S U S TA I N I N G G R O W T H State-wide unemployment Economic < 5% Development Activity lowest since 2000 2017 Arizona job growth of 2.5% exceeded national average of 1.7% Active mining development 39
Slide 40: UNS Energy's Planned Growth
UNS Energy’s Planned Growth Transmission and Renewable Projects Driving Growth S U S T A I N I N G G R O W T H $3.5 $2.9 Billions(1) 2018-2022 2019-2023 Capital Plan Capital Plan (1) Capital expenditures translated at a forecast USD/CAD foreign exchange rate of $1.28. 40
Slide 41: UNS Energy's Planned Growth
UNS Energy’s Planned Growth S U S TA I N I N G G R O W T H C a p i t a l P l a n S p a n n i n g t h e Va l u e C h a i n 2019-2023 Capital Investments(1) $1.3B Distribution Infrastructure IT, General and Other Distribution Customer meter upgrade, Grid resiliency, Modernization $0.4B Infrastructure
Slide 42: UNS Energy: Business Trends
UNS Energy: Business Trends S U S TA I N I N G G R O W T H Delivering Cleaner Energy Transmission Opportunities Grid Modernization Growing Economy Supportive Regulatory & Legislative Policy Capital Plan Spanning the Value Chain 42
Slide 43: UNS Energy: Delivering Cleaner Energy Solutions
UNS Energy: Delivering Cleaner Energy Solutions S U S TA I N I N G G R O W T H Tucson Electric Power’s Portfolio Energy Mix 30% 5% 30% 4% 12% Renewables 79% 23% Renewables Natural Gas By 2030 (1) 4% Market Purchases Coal 43% 2014 2030F (1) Arizona Renewable Portfolio Standard (RPS) is 15% by 2025. 4
Slide 44: UNS Energy: Renewable Investments
UNS Energy: Renewable Investments S U S TA I N I N G G R O W T H New Mexico Wind Project Project Overview: • Wind power generating plant interconnected to the Southline transmission line • Expect 150MW ownership by TEP Project Benefits: • Deliver cleaner energy to customers • Complements TEP’s exist
Slide 45: UNS Energy: Renewable Integration
UNS Energy: Renewable Integration S U S TA I N I N G G R O W T H February 2030 – Typical Day Load & Resource Profile New Operating Paradigm 1,200 1,000 Total Load Obligations 800 600 400 200 - 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Hour Ending Minimum Generation Load Obligati
Slide 46: UNS Energy: Renewable Integration
UNS Energy: Renewable Integration S U S TA I N I N G G R O W T H Short Duration Distribution - Utility-Scale Battery Storage Fast Ramping, Grid-Scale Bulk Flexible Generation Energy Storage 46
Slide 47: UNS Energy: Grid Distribution Modernization & Resiliency
UNS Energy: Grid Distribution Modernization & Resiliency S U S TA I N I N G G R O W T H Planned Grid Upgrades to Integrate Distributed Resource Technologies and Enhance Customer Experience 47
Slide 48: UNS Energy: Transmission Infrastructure
UNS Energy: Transmission Infrastructure S U S TA I N I N G G R O W T H Tr a n s m i s s i o n D C T i e t o M e x i c o Project Overview: • Project enabling the sale of 150MW of energy and transmission services across the border to Mexico • Siting and other infrastructure upgrades approved by the st
Slide 49: UNS Energy: Transmission Infrastructure
UNS Energy: Transmission Infrastructure S U S TA I N I N G G R O W T H S o u t h l i n e Tr a n s m i s s i o n P r o j e c t Project Overview: • 600MW transmission line project across southern New Mexico and southern Arizona • Joint effort between Hunt Power and Western Area Power Administration •
Slide 50: UNS Energy's Regulatory Calendar
UNS Energy’s Regulatory Calendar S U S TA I N I N G G R O W T H 2018 2019 • Election (2 ACC Seats) • TEP Rate Case Filing 1H 2019 • 2018 Test Year • FERC Rate Case Filing 2020 2021 • UNS Gas Rate Filing • UNS Electric Rate Filing • Election (3 ACC Seats) 50
Slide 51: UNS Energy: Evolving Energy Policy
UNS Energy: Evolving Energy Policy S U S TA I N I N G G R O W T H Energy Modernization Plan – Clean Energy Targets Proposed State-Wide Energy Modernization Plan Hydro 80% Energy Pending Arizona Constitutional Efficiency Ballot Measure 50% Nuclear TEP’s Target 30% TEP’s Existing Wind Current Renewabl
Slide 52: Sustaining growth
Sustaining growth Linda Apsey ITC Holdings - President & CEO
Slide 53: ITC: Pure Play Transmission
ITC: Pure Play Transmission S U S TA I N I N G G R O W T H 4 Regulated Companies 16,000 Miles of Transmission & 560 Substations US$7.7B Invested Since Inception FERC Rate Regulated 53
Slide 54: ITC: 15 Years of Capital Investments Dedicated to Grid Modernization & Customer Benefits
ITC: 15 Years of Capital Investments Dedicated to Grid Modernization & Customer Benefits S U S TA I N I N G G R O W T H Capital Investments Since Inception Outage Decrease Under ITC Ownership ITC Great Plains Average Number of Outages (KS,OK) ITCTransmission (MI) US$0.5B US$2.4B US$7.7B ITC Midwest
Slide 55: ITC: Connecting Cleaner Energy Solutions
ITC: Connecting Cleaner Energy Solutions S U S TA I N I N G G R O W T H 5,700MW Wind Energy Connected Yielding Customer Savings of US$600M (1) (1) Based on independent study by ICF International. Represents savings for 2008 – 2014. 55
Slide 56: ITC: Leading Industry Trends
ITC: Leading Industry Trends S U S TA I N I N G G R O W T H Grid Security Generation Shifts Electric companies are investing INFRASTRUCTURE INVESTMENTS US$100B (1) New in 2018 to make the energy grid Access to Technologies Regional Markets more dynamic, cleaner & more secure (1) Edison Electrical In
Slide 57: ITC: Building the Grid of the Future
ITC: Building the Grid of the Future S U S TA I N I N G G R O W T H Historical Model One Way Flow Emerging Model Bi-Directional & Intermittent Flows 57
Slide 58: ITC's Planned Growth Driven by Infrastructure Investments
ITC’s Planned Growth Driven by Infrastructure Investments S U S TA I N I N G G R O W T H $4.5 $3.6 Billions(1) Increase Driven By: • Infrastructure investments for reliability improvements • Increased capacity needs 2018-2022 2019-2023 • New interconnections for generation and customers Capital Plan
Slide 59: ITC's Planned Growth
ITC’s Planned Growth S U S TA I N I N G G R O W T H 2019-2023 Capital Investments(1) $3.0B Infrastructure Investments Rebuild, reliability, resiliency, system efficiencies, increased Infrastructure capacity, circuit overloads, pocket load growth Investments $3.0B $700M Major Capital Projects Multi-V
Slide 60: ITC's Major Capital Projects: Multi-Value Regional Transmission
ITC’s Major Capital Projects: Multi-Value Regional Transmission S U S TA I N I N G G R O W T H Significant progress on critical regional infrastructure in MISO footprint • ITC Midwest designated to build: Multi-Value Regional Transmission Projects 3, 4, 5 & 7 • ~300 miles of new 345kV lines, four ne
Slide 61: ITC's Major Capital Projects: 34.5kV to 69kV Transmission Conversion
ITC’s Major Capital Projects: 34.5kV to 69kV Transmission Conversion S U S TA I N I N G G R O W T H ~22 year investment program required to rebuild 34.5kV lines to 69kV standards and convert to 69kV operation in the ITC Midwest system • Aged system past its useful life and radial versus networked •
Slide 62: ITC's Regulated Growth Opportunities Outside The Plan
ITC’s Regulated Growth Opportunities Outside The Plan S U S TA I N I N G G R O W T H Grid Security New Generation Access to Technologies Shifts Regional Markets • Hardening of physical • 580MW and 2GW • Stated renewable goals • MISO multi-value assets and IT/telecom of battery storage in Michigan &
Slide 63: ITC: Development Opportunities - Lake Erie Connector Project
ITC: Development Opportunities Lake Erie Connector Project S U S TA I N I N G G R O W T H • 1,000MW HVDC transmission line • 73 miles in Lake Erie • ~US$1B capital opportunity • 3 full years to construct from commencement of construction • All regulatory approvals obtained, currently working to secu
Slide 64: ITC: Development Opportunities - Big Chino Valley Project
ITC: Development Opportunities Big Chino Valley Project S U S TA I N I N G G R O W T H • Long-term opportunity for grid-scale energy storage • Target markets – Arizona & Southern California • 2,100MW closed-loop facility • Supports public policy goals for cleaner resources in the Southwest region •
Slide 65: ITC: Building the Grid of the Future
ITC: Building the Grid of the Future S U S TA I N I N G G R O W T H Investments In Existing Regulated Systems Infrastructure, major capital projects, grid security and interconnections Investments Incremental in Existing System Incremental Regulated Opportunities Systems Needs Potential opportunitie
Slide 66: Executing growth
Executing growth Jocelyn Perry Fortis Inc. – EVP, CFO
Slide 67: Clear Financial Objectives
Clear Financial Objectives EXECUTING GROWTH Execute Capital Plan FINANCIAL S T R AT E G Y Maintain Deliver Investment-Grade 6% Average Annual Credit Ratings Dividend Growth 67
Slide 68: Strong Financial Track Record
Strong Financial Track Record EXECUTING GROWTH Adjusted EPS and Dividend Payout Ratio $2.53 $2.31 $2.11 $1.70 $1.75 Adjusted EPS(2) 73% 73% 66% 66% Rate Base 5-Year EPS 5-Year 64% Dividend Payout Ratio(2) Historical CAGR Historical CAGR 7.0%(1) 8.0%(2) 2013 2014 2015 2016 2017 (1) 5-year ending 2017
Slide 69: Focused on Growing Base Business
Focused on Growing Base Business EXECUTING GROWTH 5-Year Capital Plan Rate Base Growth $17.3B 3-Year 7.1% from 5-Year 6.3% $14.5B 6% Average Annual Dividend Increase Extended to 2023 69
Slide 70: $3.5B Average Annual Capital Expenditures
$3.5B Average Annual Capital Expenditures EXECUTING GROWTH (1) $17.3B 5-Year Capital Plan $3.7 $3.5 $3.6 $3.2 $3.3 Billions 2019F 2020F 2021F 2022F 2023F (1) Capital expenditures are translated at a forecast USD/CAD foreign exchange rate of $1.28. 70
Slide 71: Low Risk, Highly Executable Capital Plan
Low Risk, Highly Executable Capital Plan EXECUTING GROWTH Regulated 99% Smaller Projects 77% U.S. 55% Canada 42% Non-Regulated 1% Major Capital Projects 23% Caribbean 3% 71
Slide 72: Strong 5-Year Rate Base Growth
Strong 5-Year Rate Base Growth EXECUTING GROWTH Rate Base Grows 8.4% Central Hudson $9.4B to $35.5B 7.0% ITC 5-Year CAGR 6.3% UNS Increases from Rate Base Growth $8.4 4.5% to 6.3% 5-Year $6.5 6.3% $9.8 6.0% FortisBC Energy $7.7 Growth Mainly Driven $7.7 5.3% Other Canadian & Caribbean by U.S. Utilit
Slide 73: Current Regulatory Framework
Current Regulatory Framework EXECUTING GROWTH Weighted Average Weighted Average Allowed ROE(1) Equity Thickness(1) 10.58% 55.2% 9.93% 48.2% 8.73% 39.0% U.S. Utilities Canadian Utilities Combined (1) Based on 2018 rate base and capital structure for the Canadian and U.S. utilities. 73
Slide 74: Regulatory Outlook
Regulatory Outlook EXECUTING GROWTH MISO Base ROE Complaints Targeted Rate Case Filing in 2019 Targeted PBR Renewal Filing in 2019 74
Slide 75: Effective Funding Plan
Effective Funding Plan EXECUTING GROWTH 1% No Discrete Equity 6% 1% $17.3B 23% Required to Fund 5-Year Capital Plan 69% Asset Sales Expected to Provide $1-$2 Billion in Proceeds Net Non- Assumed Common 2019-2023 ATM Program Unutilized Cash from Net Regulated Proceeds Provides Financial Flexibility (
Slide 76: Manageable Debt Maturities and Ample Liquidity
Manageable Debt Maturities and Ample Liquidity EXECUTING GROWTH Fixed-Term Debt Maturities(1) Consolidated Credit Facilities $3.0 $2.5 $3.8 $3.7 5-Year average fixed-term debt maturities ~$940 million $2.0 Billions Billions $1.5 $1.0 $0.5 $1.3 $1.2 2019 2020 2021 2022 2023 June 30/18 Avg. 2019-2023
Slide 77: Committed to Our Investment-Grade Credit Ratings
Committed to Our Investment-Grade Credit Ratings EXECUTING GROWTH Improved Holdco Debt / Total Debt Credit Rating Agencies Rank 38% Business Risk Profile as Excellent/Strong(1) 33% Funding Plan Supports CFO/Debt > 11% 2018F 2019F 2020F 2021F 2022F 2023F (1) S&P ranks business risk profile as excelle
Slide 78: Achieving Our Financial Objectives
Achieving Our Financial Objectives EXECUTING GROWTH Execute Capital Plan $17.3B 5-Year Capital Plan Maintain Investment-Grade Effective Credit Ratings Financing Plan Deliver 6% Average Annual Dividend Growth 6% Dividend Guidance Extended to 2023 78
Slide 79: Empowering growth
Empowering growth Barry Perry Fortis Inc. - President & CEO
Slide 80: Why Invest In Fortis?
Why Invest In Fortis? EMPOWERING GROWTH Highly Regulated Diversified Strong Growth Profile 6% Dividend Guidance Opportunities Beyond Capital Plan 80
Slide 81: Appendix
Investor Day Presentation October 2018 Appendix
Slide 82: Table of Contents
Table of Contents APPENDIX Speaker Biographies Other Barry Perry, Fortis Inc. – President & CEO 83 2019-2023 Capital Forecast by Segment 95 Jocelyn Perry, Fortis Inc. – EVP, CFO 84 2018-2023 Rate Base Forecast by Segment 96 Roger Dall’Antonia, FortisBC – President & CEO 85 Major Capital Projects 97
Slide 83: Barry Perry
Barry Perry Fortis Inc. – President & CEO APPENDIX Mr. Perry’s career with the Fortis Group spans nearly 20 years. He was previously Vice President of Finance and Chief Financial Officer of the Corporation. Mr. Perry joined the Fortis Group in 2000 as Vice President of Finance and Chief Financial Of
Slide 84: Jocelyn Perry
Jocelyn Perry Fortis Inc. – EVP, CFO APPENDIX Ms. Perry has an extensive career in the utility business, having worked at Newfoundland Power for the past 13 years in a variety of capacities, including Chief Financial Officer, Chief Operating Officer and for the past year as President and Chief Execu
Slide 85: Roger Dall'Antonia
Roger Dall’Antonia FortisBC - President & CEO APPENDIX Mr. Dall’Antonia is President and CEO of the FortisBC group of companies. Prior to this, he held the position of EVP, Customer Service and Technology at FortisBC. Mr. Dall’Antonia holds over 20 years of experience in the energy industry and join
Slide 86: David Hutchens
David Hutchens UNS Energy – President & CEO and APPENDIX Fortis Inc. – EVP, Western Utility Operations Mr. Hutchens’ career in the energy sector spans more than 20 years having held a variety of positions at our electric and gas utilities in Arizona prior to becoming President and CEO of UNS Energy
Slide 87: Linda Apsey
Linda Apsey ITC Holdings – President & CEO APPENDIX Linda Apsey is President and CEO for ITC Holdings. Previously, Mrs. Apsey served as Executive Vice President and Chief Business Unit Officer. Mrs. Apsey also has served as Executive Vice President and Chief Business Officer, and President of ITC Mi
Slide 88: ITC Holdings
ITC Holdings A Fortis Company APPENDIX Type of Utility Transmission Regulator FERC Regulatory Model Independent Transmission Company 2018 Formula 11.32-12.16% ROE on 60% equity 2018F Midyear Rate Base $7.7B 5-Year CAGR on Midyear Rate Base(1) 7.0% 2017 Assets % of Total Consolidated 38% Regulated As
Slide 89: UNS Energy
UNS Energy A Fortis Company APPENDIX Tucson Electric UNS Electric UNS Gas Type of Utility 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 2018 Formula 50% equity 52.83% equity 50.8% equi
Slide 90: Central Hudson
Central Hudson A Fortis Company APPENDIX Type of Utility Gas and Electricity New York State Public Service Regulator Commission Regulatory Model Cost of service on future test year 2018 Formula 8.8% ROE on 48% equity 2018F Midyear Rate Base $1.6B 5-Year CAGR on Midyear Rate Base(1) 8.4% 2017 Assets
Slide 91: FortisBC
FortisBC A Fortis Company APPENDIX FortisBC Gas FortisBC Electric Type of Utility Gas distribution Electricity Regulator British Columbia Utilities Commission Regulatory Model Cost of service + PBR 2018 Formula 8.75% ROE on 38.5% equity 9.15% ROE on 40.0% equity 2018F Midyear Rate Base $4.4B $1.3B 5
Slide 92: FortisAlberta
FortisAlberta A Fortis Company APPENDIX Type of Utility Electricity distribution Regulator Alberta Utilities Commission Regulatory Model PBR 2018 Formula 8.5% ROE on 37% equity 2018F Midyear Rate Base $3.4B 5-Year CAGR on Midyear Rate Base(1) 5.1% 2017 Assets % of Total Consolidated 10% Regulated As
Slide 93: Other Electric Utilities
Other Electric Utilities Fortis Companies APPENDIX (1) Type of Utility Electricity Island Regulatory and Appeals Newfoundland and Labrador Board of Regulator Ontario Energy Board Commission Commissioners of Public Utilities Regulatory Model Cost of service with incentives Cost of service on future t
Slide 94: Other Electric Utilities (Continued)
Other Electric Utilities (Continued) Fortis Companies APPENDIX (1) Type of Utility Electricity Regulator Utility Regulation and Competition Office Government of the Turks and Caicos Islands Regulatory Model Cost of service 2017 Achieved ROE 10.6% 6.1% 2018F Midyear Rate Base $0.6B $0.4B 5-Year CAGR
Slide 95: 2019-2023 Capital Forecast by Segment
2019-2023 Capital Forecast by Segment APPENDIX Capital Forecast ($millions)(1) 2019-2023 2019 2020 2021 2022 2023 Total Regulated- Independent Electric Transmission ITC 865 878 951 943 861 4,498 Regulated- US Electric & Gas UNS Energy 1,076 875 624 476 476 3,527 Central Hudson 280 268 276 291 274 1,
Slide 96: 2018-2023 Rate Base Forecast by Segment
2018-2023 Rate Base Forecast by Segment APPENDIX (1) Rate Base Forecast ($millions) 3-Year CAGR 5-Year CAGR 2018 2019 2020 2021 2022 2023 to 2021 to 2023 Regulated- Independent Electric Transmission ITC 7,706 8,463 9,148 9,745 10,305 10,824 8.1% 7.0% Regulated- US Electric & Gas UNS Energy 4,850 5,3
Slide 97: Major Capital Projects
Major Capital Projects APPENDIX Capital Plan Total 2019- Expected Year of Significant Capital Projects ($millions) 2018 Forecast 2023 Plan Completion By Project Type ITC Multi-Value Regional Transmission Projects 140 332 Post-2023 Major Capital Projects 23% ITC 34.5 kV to 69 kV Transmission Conversi
Slide 98: Opportunities and Risks
Opportunities and Risks APPENDIX Opportunities • Additional Capital Opportunities Sensitivities • Improving Economic Growth 2019 EPS • Rising Interest Rates – Higher ROE Impact • Low Natural Gas Prices 50 Basis Point Change in $0.05 • Renewable Energy Allowed ROE at ITC • New Technology CAD/USD down
Slide 99: Investment-Grade Credit Ratings
Investment-Grade Credit Ratings APPENDIX Credit Ratings 2019-2023 Plan Supports (1) Baa3 CFO/Debt > 11% (2) A- / BBB+ Improved Holdco Debt / Total Debt BBB (high) Commitment to Investment-Grade Credit Ratings (1) In April 2018, Moody’s issued a credit opinion with no change to the Corporation’s cred
Slide 100: Utility Debt Credit Ratings
Utility Debt Credit Ratings APPENDIX Company ITCTransmission A n/a A1 Michigan Electric Transmission Company (METC) A n/a A1 ITC Midwest A n/a A1 ITC Great Plains A n/a A1 ITC Holdings A-(1) n/a Baa2 Tucson Electric Power A-(1) n/a A3 Central Hudson A- n/a A2(2) FortisBC Energy n/a A A3 FortisBC Ele
Slide 101: Executive Team
Executive Team Jocelyn Perry Jim Reid Phonse Delaney Nora Duke James Laurito Gary Smith David Hutchens EVP, CFO EVP, Chief Legal EVP, Chief Information EVP, Sustainability EVP, Business EVP, Eastern Canadian EVP, Western Utility Officer & Corporate Officer & CHRO Development & Caribbean Operations O