Slide 1: Investor Presentation Q4 2019
INVESTOR PRESENTATION Q4 2019
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: Focused Strategy
FOCUSED STRATEGY STRATEGY Leverage the operating model, 6% footprint of our businesses, operating expertise, reputation Average Annual Dividend and financial strength to execute Focused on Growth Target through 2024 on growth opportunities Growth AREAS OF FOCUS: Capital Customer & Sustainability & S
Slide 4: A Geographically Diverse Energy Delivery Business
A Geographically Diverse Energy Delivery Business 4
Slide 5: High Quality Portfolio
HIGH QUALITY PORTFOLIO 10 OPERATIONS Canada, U.S. & Caribbean 3.3M CUSTOMERS 2.0M Electric & 1.3M Gas ~99% REGULATED UTILITY ASSETS ~93% TRANSMISSION & DISTRIBUTION $28B 2019F RATE BASE ~65% EARNINGS FROM THE U.S. Note: All information as at September 30, 2019, except earnings from the U.S. is as at
Slide 6: Average Annualized Total Shareholder Returns
AVERAGE ANNUALIZED TOTAL SHAREHOLDER RETURNS 1-Year 5-Year 10-Year 20-Year 30.5% 12.2% 12.1% 14.0% 35.3% 9.8% 9.9% 10.2% 13.3% 5.6% 7.3% 6.8% Fortis S&P/TSX Capped Utilities Index S&P/TSX Composite Index Note: As at October 31, 2019 6
Slide 7: Sustainability: Primarily an Energy Delivery Business
SUSTAINABILITY: PRIMARILY AN ENERGY DELIVERY BUSINESS 93% of our assets relate to electricity poles, wires and natural gas lines that enable a cleaner energy future 7
Slide 8: Sustainability: It's How We Do Everything
SUSTAINABILITY: IT’S HOW WE DO EVERYTHING Ranked Top Decile on Focused on Delivering Governance Matters Cleaner Energy • Ranked in top 15 of Globe & Mail Board Games • FortisBC set a goal to reduce GHG emissions for past four years(1) associated with customer‘s energy use • ISS and Glass Lewis suppo
Slide 9: Path to Cleaner Energy
PATH TO CLEANER ENERGY Generation Shifting from Fossil Fuel to Solar and Wind Projects Capital Investment in a Electric Vehicle Penetration Green and Resilient Grid Renewable Gas at Energy Efficiency FortisBC CLEANER ENERGY 9
Slide 10: Path to Cleaner Energy: Delivering Energy as Clean as We Can
PATH TO CLEANER ENERGY: DELIVERING ENERGY AS CLEAN AS WE CAN, AS FAST AS WE CAN Connecting First Nations to Cleaner Energy 20MW Utility-Scale -------------------------------------------------------------------------- Battery Storage Project Financial Close and Notice to Proceed Issued in October 201
Slide 11: Path to Cleaner Energy: FortisBC's Clean Growth Pathway
PATH TO CLEANER ENERGY: FORTISBC’s CLEAN GROWTH PATHWAY Energy Efficiency Renewable LNG Bunkering Zero & Low-Carbon Natural Gas Transportation Positioning BC as a Conservation & Efficiency Currently Operate Domestic & International FortisBC Will Programs Increased to Five RNG Facilities(1) Bunkering
Slide 12: Our Five-Year Plan
OUR FIVE-YEAR PLAN $18.3B ~7% ~6% CAPITAL RATE BASE DIVIDEND PLAN GROWTH GROWTH GUIDANCE 12
Slide 13: 2020-2024 Capital Plan
2020-2024 CAPITAL PLAN 43% 32% $18.3B Capital Plan(1) TRANSMISSION DISTRIBUTION $4.3 $4.0 $3.6 $3.7 $3.7 $3.2 $3.3 $3.0 Billions 18% 7% OTHER(2) GENERATION 2017A 2018A 2019F 2020F 2021F 2022F 2023F 2024F (1) Capital expenditures are translated at a forecast USD/CAD foreign exchange rate of $1.32. (2
Slide 14: The Shift to Cleaner Energy Driving Incremental Investments
THE SHIFT TO CLEANER ENERGY DRIVING INCREMENTAL INVESTMENTS 5-YEAR CAPITAL PLAN(1) +$300M $1.0B $18.3B +$300M $17.3B +$200M 2019-2023 2020-2024 +$200M FOREIGN EXCHANGE(1) Capital Plan Capital Plan (1) Capital expenditures for 2020-2024 are translated at a forecast USD/CAD foreign exchange rate of $1
Slide 15: Low Risk, Highly Executable $18.3B Capital Plan
LOW RISK, HIGHLY EXECUTABLE $18.3B CAPITAL PLAN Regulated 99% Smaller Projects 80% U.S. 54% Canada 41% Non-Regulated 1% Major Projects(1) 20% Caribbean 5% (1) Capital projects with a total project cost of $200 million or greater and excludes ongoing capital maintenance projects. 15
Slide 16: 2020-2024 Rate Base
2020-2024 RATE BASE (1) $38.4 $36.8 $34.5 $30.7 $32.5 Rate base grows over $10B $28.0 to $38.4B during 5-year period 2019F 2020F 2021F 2022F 2023F 2024F Regulated - Canadian & Caribbean Electric & Gas Regulated - U.S. Electric & Gas Regulated - Independent Electric Transmission (ITC) (1) Rate base i
Slide 17: 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 $3.4B CAPITAL PLAN • Generation shift to renewables: • Resiliency: • TEP target of 30% renewables 9 years • Tilbury LNG storage ahead of schedule • Significant renewable capacity and FUTUR
Slide 18: Outperforming Historical Capital Plans
OUTPERFORMING HISTORICAL CAPITAL PLANS 2016 INVESTOR DAY(1) 2017 INVESTOR DAY 2018 INVESTOR DAY $19.3B $18.8B $17.3B $18.2B $14.5B $12.9B 2017-2021 CAPITAL PLAN 2018-2022 CAPITAL PLAN 2019-2023 CAPITAL PLAN ORIGINAL PLAN ACTUAL/CURRENT FORECAST (1) Released in conjunction with Q3 2016 earnings 18
Slide 19: Current Regulatory Outlook
CURRENT REGULATORY OUTLOOK • Final decision pending from FERC on MISO Base ROE • TEP rate case filed with the ACC on April 1, 2019 using a December 31, 2018 test year • Notices of Inquiry issued by FERC in 2019 on incentive policies for transmission investment and • Requested 10.35% ROE & 53% equity
Slide 20: Strengthening Credit Metrics
STRENGTHENING CREDIT METRICS FUNDING PLAN Cash From Operations(1) RECOVERING FROM U.S. TAX REFORM 73% 2018 2019F CFO/Debt(4) ~10.5% ~11% 5-Year Holdco Debt/Total Debt (4) ~39% ~36% Capital Plan of $18.3B Debt(2) 2020-2024 Business Plan 24% Average CFO/Debt(4) ~12% 2024 Holdco Debt/Total Debt(4) ~32%
Slide 21: Dividend Guidance Supported by Growth Strategy
DIVIDEND GUIDANCE SUPPORTED BY GROWTH STRATEGY $2.5 6% 46 YEARS $2.0 AVERAGE ANNUAL OF CONSECUTIVE $1.5 DIVIDEND DIVIDEND INCREASES GROWTH GUIDANCE $1.0 EXTENDED TO 2024 $0.5 7273 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10 12 14 16 18 20F 22F 24F Dividend Payments Forecast Dividend Pay
Slide 22: Why Invest in Fortis?
WHY INVEST IN FORTIS? WELL-RUN HIGHLY FOCUSED ON STRONG VIRTUALLY SUSTAINABILITY 6% INNOVATIVE BUSINESSES DIVERSIFIED ENERGY GROWTH ALL LEADER DIVIDEND DELIVERY PROFILE REGULATED GUIDANCE 22
Slide 23: Appendix
APPENDIX
Slide 24: Table of Contents
TABLE OF CONTENTS UTILITY OVERVIEW OTHER ITC Holdings Corp. 25 – 27 2019-2024 Rate Base by Segment 41 UNS Energy 28 – 31 2020-2024 Capital Plan by Segment 42 Central Hudson 32 – 33 Major Capital Projects 43 FortisBC 34 – 35 Manageable Debt Maturities and Ample Liquidity 44 FortisAlberta 36 – 37 Regu
Slide 25: ITC Holdings Corp.
ITC HOLDINGS CORP. Type of Utility Transmission Regulator FERC Regulatory Model Independent Transmission Company 2019 Regulatory Compact 11.07-12.16% ROE on 60% equity 2019F Rate Base(1) $8.8B 5-Year Rate Base CAGR(1) 6.4% 2018 Assets % of Total Consolidated 38% Regulated Assets(2) Multi-Value Regio
Slide 26: ITC's 5-Year Capital Plan
ITC’s 5-YEAR CAPITAL PLAN 2020-2024 CAPITAL(1) $3.3B Infrastructure Investments Rebuild, reliability, resiliency, system efficiencies, increased Infrastructure capacity, circuit overloads, pocket load growth Investments $600M Major Capital Projects Multi-Value Regional Transmission Projects & 34.5kV
Slide 27: ITC Building the Grid of the Future
ITC BUILDING THE GRID OF THE FUTURE ~16,000 OPPORTUNITIES BEYOND THE PLAN Miles of Transmission & 560 New 3GW and 7GW of battery storage in MISO Access to MISO multi-value projects at capacity upon completion Substations Technologies Regional and SPP queues Markets ~6,600MW Generation 82GW and 91GW
Slide 28: UNS Energy
UNS ENERGY 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 2019 Regulatory Compact 50% equity 52.8% equity 50.8% equity 2019F Rate Ba
Slide 29: UNS Capital Plan
UNS CAPITAL PLAN 2020-2024 CAPITAL(1) Distribution Infrastructure $1.1B Distribution Infrastructure Generation Customer meter infrastructure, grid resiliency, Diversification modernization $3.4B $700M Generation Diversification Reciprocating engines, 250MW Wind $900M Transmission Infrastructure Dire
Slide 30: Arizona Focused on Renewables
ARIZONA FOCUSED ON RENEWABLES TEP’s RESOURCE TRANSITION % Renewable Energy Renewable Energy Production of 28% by 2021 (1) Projects developed through purchase power agreements 30
Slide 31: TEP Collaborating with Local University to Create New Goals
TEP COLLABORATING WITH LOCAL UNIVERSITY TO CREATE NEW GOALS TEP’s TEP’s Renewable Current Energy Mix Target Developing New Carbon 28% 30% Emission Goals With 13% University of Arizona’s Institute of the Environment 2018 2021 2030 31
Slide 32: Central Hudson
CENTRAL HUDSON Type of Utility Gas and Electricity New York State Public Service Regulator Commission Regulatory Model Cost of service on future test year 2019 Regulatory Compact(1) 8.8% ROE on 49% equity(1) 2019F Rate Base(2) $1.9B 5-Year Rate Base CAGR(2) 8.2% 2018 Assets % of Total Consolidated R
Slide 33: Central Hudson Capital Plan
CENTRAL HUDSON CAPITAL PLAN 2020-2024 CAPITAL(1) Distribution Infrastructure $900M Distribution Infrastructure Distribution Automation and Modernization $250M Transmission Infrastructure $1.6B Replacement of Aging Infrastructure $450M IT, General and Other IT, General and Other Transmission Infrastr
Slide 34: FortisBC
FORTISBC FortisBC Gas FortisBC Electric Type of Utility Gas distribution Electricity Regulator British Columbia Utilities Commission Regulatory Model Cost of service + PBR 2019 Regulatory Compact 8.75% ROE on 38.5% equity 9.15% ROE on 40.0% equity 2019F Rate Base $4.5B $1.3B 5-Year Rate Base CAGR 7.
Slide 35: FortisBC Capital Plan
FORTISBC CAPITAL PLAN 2020-2024 CAPITAL $1.9B Sustainment & Customer Growth Sustainment & Ongoing maintenance requires significant capital investment Customer Growth Includes customer growth and general plant investment $1.1B Major Integrity Projects Inland Gas Upgrades Project Transmission Integrit
Slide 36: FortisAlberta
FORTISALBERTA Type of Utility Electricity distribution Regulator Alberta Utilities Commission Regulatory Model PBR 2019 Regulatory Compact 8.5% ROE on 37% equity 2019F Rate Base $3.5B 5-Year Rate Base CAGR 4.1% 2018 Assets % of Total Consolidated 9% Regulated Assets(1) (1) Includes goodwill 36
Slide 37: FortisAlberta Capital Plan
FORTISALBERTA CAPITAL PLAN 2020-2024 CAPITAL Distribution Infrastructure $1.9B Distribution Infrastructure Safety & Reliability of Distribution Assets, Meter $2.2B Upgrades, Pole Management Program, Modernization IT, General $300M IT, General and Other and Other 37
Slide 38: Other Electric Utilities
OTHER ELECTRIC UTILITIES (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 test year Cost of service o
Slide 39: Other Electric Utilities (Continued)
OTHER ELECTRIC UTILITIES (CONTINUED) (1) Type of Utility Electricity Regulator Utility Regulation and Competition Office Government of the Turks and Caicos Islands Regulatory Model Cost of service Cost of service 2018 Achieved ROE 11.62% 8.95% 2019F Rate Base(2) $0.7B $0.4B 5-Year Rate Base CAGR(2)
Slide 40: Other Electric Capital Plan
OTHER ELECTRIC CAPITAL PLAN 2020-2024 CAPITAL Distribution Infrastructure $900M Distribution Infrastructure Newfoundland Power and Caribbean Utilities $600M Generation Diversification IT, General $2.3B Caribbean Utilities Shift to Cleaner Energy and Other $600M Transmission Infrastructure Generation
Slide 41: 2019-2024 Rate Base by Segment
2019-2024 RATE BASE BY SEGMENT (1) Rate Base 3-Year CAGR 5-Year CAGR ($billions) 2019F 2020F 2021F 2022F 2023F 2024F to 2022 to 2024 Regulated - Independent Electric Transmission (2) ITC 8.8 9.5 10.2 10.8 11.4 12.0 7.2% 6.4% Regulated - US Electric & Gas UNS Energy 5.0 5.8 6.1 6.4 6.8 6.9 8.6% 6.5%
Slide 42: 2020-2024 Capital Plan by Segment
2020-2024 CAPITAL PLAN BY SEGMENT Capital Forecast(1) 2020-2024 ($millions) 2020F 2021F 2022F 2023F 2024F TOTAL Regulated - Independent Electric Transmission ITC 976 987 1,043 1,018 922 4,946 Regulated - US Electric & Gas UNS Energy 1,160 677 575 526 441 3,379 Central Hudson 292 309 359 306 292 1,55
Slide 43: Major Capital Projects
MAJOR CAPITAL PROJECTS(1) Expected to be Total 2020- Expected Year of ($Millions) Incurred to the 2024 Plan Completion End of 2019 ITC Multi-Value Regional Transmission Projects 646(2) 276 2023 ITC 34.5 kV to 69 kV Transmission Conversion Project 345(2) 268 Post-2024 UNS Southline Transmission Proje
Slide 44: Manageable Debt Maturities and Ample Liquidity
MANAGEABLE DEBT MATURITIES AND AMPLE LIQUIDITY CONSOLIDATED FIXED-TERM DEBT MATURITIES(1) CONSOLIDATED CREDIT FACILITIES 5-year average ~$1.1B $2.0 $4.3 $1.5 $1.0 Billions Billions $0.5 2020F 2021F 2022F 2023F 2024F $1.1 ($millions) 2020F 2021F 2022F 2023F 2024F Total As at Sept 30, 2019 Canadian an
Slide 45: Regulated Utilities Have Strong Investment-Grade Credit Ratings
REGULATED UTILITIES HAVE STRONG INVESTMENT-GRADE CREDIT RATINGS Company ITC Regulated Subsidiaries A A1 n/a 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 45
Slide 46: Executive Team
EXECUTIVE TEAM Barry Perry President & CEO Jocelyn Perry Jim Reid Nora Duke James Laurito Gary Smith David Hutchens EVP, CFO EVP, CLO & EVP, Sustainability & EVP, Business Development & EVP, Eastern Canadian & EVP, Western Utility Operations, Corporate Secretary CHRO CTO Caribbean Operations Preside