Fortis Inc. · TSX:FTS
Fortis — National Bank Canadian Clean Energy Infrastructure Conference 2020
33 slides from Fortis's conference presentation, Jun 2, 2020
Slide 1: National Bank Canadian Clean Energy Infrastructure Conference
National Bank Canadian Clean Energy Infrastructure Conference June 2-3, 2020
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: A Geographically Diverse Energy Delivery Business
A Geographically Diverse Energy Delivery Business 3
Slide 4: High Quality Portfolio
High Quality Portfolio Operations 10 Canada, U.S. & Caribbean 3.3M Customers 2.0M Electric & 1.3M Gas Regulated Transmission & ~99% Utility Assets ~93% Distribution 2019 Earnings(1) from $28B Rate Base ~65% the U.S Note: All information as at December 31, 2019. (1) Non-US GAAP measure. 4
Slide 5: Long-Term Strategy
Long-Term Strategy ✓ The safety and health of our employees is the priority ✓ Focused on delivering reliable service to our customers STRATEGY Leverage the operating model, 6% footprint of our businesses, Average Annual operating expertise, reputation Focused on Dividend Growth and financial strengt
Slide 6: Strong Operational Performance
Strong Operational Performance All Injury Frequency Rate(1) 2.0 1.78 1.59 Safety 1.0 0.0 2015 2016 2017 2018 2019 USA Bureau of Labor Statistics Average (2015-2018)(2) Canadian Electricity Association Average (2015-2018)(2) Electricity Customer Average Outage Duration(3) 5.0 (Hours) 4.0 Reliability
Slide 7: Superior 20-Year Total Shareholder Return
Superior 20-Year Total Shareholder Return 1,600 FTS 1,400 1,371% S&P/TSX Capped Utilities Index FTS Total Shareholder 1,200 S&P/TSX Composite Index Returns (Average Annual) 1,000 1-Year 12.7% % 5-Year 10.6% 800 723% 10-Year 10.8% 600 20-Year 14.4% 400 200 164% 0 (200) 2000 2005 2010 2015 2020 Note:
Slide 8: Strategically Positioned to Navigate Through COVID-19
Strategically Positioned to Navigate Through COVID-19 Operationally: ✓ 10 locally operated utilities ✓ Essential workers maintaining and operating electricity grids and natural gas networks ✓ Limited impacts on supply chain ✓ Key operational employees sequestered ✓ Social distancing and good hygiene
Slide 9: ~82% of Revenues Protected by Regulatory Mechanisms or From Residential Sales
~82% of Revenues Protected by Regulatory Mechanisms or From Residential Sales 2019 Revenues EPS Sensitivity 19% Annual EPS Impact ($) UNS Other Electric +/- 1% Residential Sales +/- $0.008 +/- $0.006 18% 63% +/- 1% Commercial and +/- $0.008 +/- $0.004 Industrial Sales (1) Revenues Protected by Regul
Slide 10: Local Economic Overview
Local Economic Overview Regulatory Mechanisms Commentary on Local Economy Protecting Changes in Sales 1st Month into Pandemic Takeaway • Peak load down ~20%; Strict Stay-at-Home Order in Michigan ✓ • Auto manufacturers and suppliers began reopening System Trends: in mid-May • Residential sales incre
Slide 11: Our Five-Year Plan
Our Five-Year Plan $18.8B ~7% ~6% Capital Rate Base Dividend Plan Growth Growth Guidance 11
Slide 12: Five-Year Capital Plan
Five-Year Capital Plan $18.8B Capital Plan(1) $4.3 2020 Capital $3.8 $3.8 $3.7 Plan on Track $3.2 Billions $1.2B Invested in Q1 2020 2020F 2021F 2022F 2023F 2024F Regulated - Canadian & Caribbean Electric & Gas Regulated Electric & Gas - U.S. U.S. Transmission - ITC (1) Capital expenditures are tran
Slide 13: 2020-2024 Rate Base
2020-2024 Rate Base(1) $38.4 $36.8 $34.5 $32.5 $30.7 Rate base grows over $28.0 $10B to $38.4B during 5-year period 2019A 2020F 2021F 2022F 2023F 2024F Regulated - Canadian & Caribbean Electric & Gas Regulated - U.S. Electric & Gas Regulated - Independent Electric Transmission (ITC) (1) Reflects mid
Slide 14: Dividend Guidance Supported by Long-Term Growth Strategy
Dividend Guidance Supported by Long-Term Growth Strategy $2.0 6% 46 Years Average Annual Dividend Of Consecutive $1.5 Growth Guidance to 2024 Dividend Increases $1.0 $0.5 73 75 77 79 81 83 85 87 89 91 93 95 97 99 01 03 05 07 09 11 13 15 17 19 Dividend Payments 14
Slide 15: Growth Expected Beyond 2024
Growth Expected Beyond 2024: Three Largest Utilities Account for 2/3 of Capital Plan Today’s 5-Year $4.9B $3.8B $3.9B Capital Plan • Generation shift to renewables: • Resiliency: • TEP target of 30% renewables 9 ▪ Significant renewable ▪ Tilbury LNG storage years ahead of schedule capacity and batte
Slide 16: Update on Regulatory Proceedings
Update on Regulatory Proceedings • FERC MISO Return on Equity – On May 21, 2020 FERC issued an Order establishing a three-part ROE methodology yielding a new base ROE of 10.02%, resulting in an all-in ROE of 10.77% with incentives compared to the previous all-in ROE of 10.63% • NOIs on ROE and Incen
Slide 17: Strong Liquidity Position
Strong Liquidity Position TOTAL LIQUIDITY ($B) ✓ Fortis well positioned on liquidity given 2019 actions • Waneta Asset Sale ~$1B ($1.4) • Q4 Equity Issuance ~$1.2B $5.8 $0.5 $4.9 ✓ ~$5B consolidated credit available on facilities, $4.3 including $1.8B unutilized Corporate credit facilities Billions
Slide 18: Strong Access to Debt Markets & Manageable Maturities
Strong Access to Debt Markets & Manageable Maturities DEBT ISSUANCES COMPLETED IN Q2 2020 FIXED-TERM DEBT MATURITIES(1) ($B) $2.0 5-Year Average ~$1.1B Thousands ✓ ITC • US$700M 10-year 2.95% notes ✓ UNS $1.5 • US$350M 30-year 4.00% notes ✓ Central Hudson $1.0 • US$30M 30-year 3.42% notes ✓ FortisBC
Slide 19: Investment-Grade Credit Ratings and Funding Plan Intact
Investment-Grade Credit Ratings and Funding Plan Intact CREDIT RATINGS A-(1) ✓ S&P and DBRS Morningstar Affirmed Ratings in 2020 BBB (high)(2) ✓ Improved Credit Metrics in 2019 ✓ Strong Liquidity Baa3 (1) S&P rating reflects the issuer credit rating. Fortis’ unsecured debt rating is BBB+. Ratings we
Slide 20: Sustainability Overview
FORTIS.. Sustainability Overview
Slide 21: Sustainability: It's How We Do Everything
Sustainability: It’s How We Do Everything 93% of our assets are dedicated to energy transmission and distribution, limiting our impact on the environment Focused on Delivering Strong Performance Industry Recognition (1) Cleaner Energy MSCI ESG Rating Upgrade to ‘AA’ Outperformed Industry Averages AA
Slide 22: Primarily an Energy Delivery Business
Primarily an Energy Delivery Business Asset Composition Energy ~185,000 kms Delivery Electricity Transmission 93% & Distribution Lines ~57,000 kms Natural Gas T&D Lines Fossil-Fuel Renewables Based Generation Generation 2% 5% Note: All information as at December 31, 2019. 22
Slide 23: Our Environmental Performance
Our Environmental Performance Renewable Electricity GHG Intensity Generated Biofuel, Solar and Hydroelectric Combined Energy Delivery to Customers (GWh) (ktonnes of CO2 equivalent per PJ) Drivers of Improvement: • Increase in energy delivery with ITC acquisition 3,063 26 • Additional renewables Driv
Slide 24: Path to Cleaner Energy
Path to Cleaner Energy Generation Shifting from Innovation and Fossil Fuel to Solar, Wind Enabling Technologies and Storage Capital Investment in a Electric Vehicle Green and Resilient Penetration Grid Renewable Gas at FortisBC Energy Efficiency Cleaner Energy 24
Slide 25: ITC Building the Grid of the Future
ITC Building the Grid of the Future ~16,000 Opportunities Beyond the Plan Miles of Transmission & 565 New 3 GW and 7 GW of battery storage in Access to Regional MISO multi-value projects at capacity upon completion Technologies Substations MISO and SPP queues Markets ~6,800 MW Generation 89 GW and 8
Slide 26: Arizona Focused on Renewables
Arizona Focused on Renewables TEP’s Resource Transition % Renewable Energy Renewable Energy Production of 28% in 2021 (1) Projects developed through purchase power agreements 26
Slide 27: Developing New Carbon Emission Goals
TEP Collaborating with Local University to Create New Goals TEP’s TEP’s Renewable Energy Mix Current Target Developing New Carbon Emission Goals 28% 30% • Advisory Committee of Key Community Stakeholders 13% • Collaboration with University of Arizona’s Institute of the Environment • To be filed with
Slide 28: FortisBC's Clean Growth Pathway
FortisBC’s Clean Growth Pathway: 30% GHG Reduction by 2030 Energy Renewable Global Zero & Low-Carbon Efficiency Natural Gas LNG Transportation Conservation & Currently Utilizing Positioning BC FortisBC Efficiency Programs Renewable Natural as a Domestic & Owns and Operates Increased to ~$370M Gas(1)
Slide 29: Our Social Commitment
Our Social Commitment Safety a Top Priority Active in the Stable Workforce Focus on Diversity Communities We Serve 29
Slide 30: Collaborating on Innovation
Collaborating on Innovation A Fund Energy Impact Partners Cleantech By Utilities, For Utilities Energy 14 utility partners 63M households Fund $250B+ market cap Investing in the Intelligent Customer Future of Operations Engagement Distributed Energy Resources Energy Mobility & Smart Cities Cybersecu
Slide 31: Board of Directors
Board of Directors 40% Female Board Members Douglas J. Haughey Barry Perry* Tracey C. Ball Pierre J. Blouin Jo Mark Zurel 50%/50% President & CEO, Chair of the Audit Committee Chair of the Governance and Chair of the Human Chair of the Board Fortis Nominating Committee Resources Committee U.S./Canad
Slide 32: Corporate Governance Approach
Corporate Governance Approach Governance Human Responsibility Matrix Board & Resources Audit Committed to High Nominating Committee Committee Committee Governance Strategy Standards Executive Succession Planning Major Subsidiary Boards Executive Compensation Comprised of Majority of Board Assessment
Slide 33: Why Invest In Fortis?
Why Invest In Fortis? Well-Run Sustainability Highly Focused on Strong Virtually 6% Innovative Businesses Leader Diversified Energy Growth All Dividend Delivery Profile Regulated Guidance 33
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