Slide 1: Second Quarter 2020 Earnings Conference Call
Second Quarter 2020 Earnings Conference Call July 30, 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: Barry Perry, President and Chief Executive Officer
Barry Perry President and Chief Executive Officer
Slide 4: Second Quarter Business Update
Second Quarter Business Update ✓ Continuing to Navigate Through COVID-19 ✓ Regulatory Proceedings Advanced ✓ TEP files Integrated Resource Plan ✓ 2020 Sustainability Report Issued ✓ $2 Billion Invested through June YTD 4
Slide 5: COVID-19 Q2 Sales and Load Trends
COVID-19 Q2 Sales and Load Trends: Sales Up ~3% at Utilities Not Protected by Regulatory Mechanisms Regulatory Mechanisms Protecting Changes Q2 2020 vs. Q2 2019 in Sales Sales Trends • Peak load increased ~5% including weather impacts ✓ • Sales improved with reopening of auto manufacturers and suppl
Slide 6: TEP Files 2020 Integrated Resource Plan in Arizona
TEP Files 2020 Integrated Resource Plan in Arizona Fortis Expects to Have a Coal-Free Generation Mix by 2032 TEP Sets Target to Reduce 2,457 MW of new wind Springerville units begin and solar power systems Carbon Emissions by TEP’s power will be more than 70% seasonal operations in 2023. renewable b
Slide 7: 2020 Sustainability Report Issued in July
2020 Sustainability Report Issued in July TEP will reduce carbon emissions by Continued Focus on Energy 80% FortisBC’s by 2035. Delivery 30BY30 goal will reduce greenhouse gas emissions associated with customer energy use by 30% by 2030. More than 70% of our 2020 $4.3 billion capital plan is dedicat
Slide 8: 2020 Capital Plan On Track
2020 Capital Plan On Track $4.3B $2.0B $1.7 $0.7 $1.6 $0.8 $0.5 $1.0 (1) (1) Q2 YTD 2020A 2020F Regulated - Canadian & Caribbean Electric & Gas Regulated - U.S. Electric & Gas Regulated - Independent Electric Transmission (ITC) (1) US dollar-denominated capital expenditures for Q2 YTD 2020 based on
Slide 9: 5-Year Capital Plan & Rate Base Growth Outlook
5-Year Capital Plan & Rate Base Growth Outlook MIDYEAR RATE BASE(1) $38.4B $28.0B $18.8B 5-Year Capital Plan 2019A 2024F Regulated - Canadian & Caribbean Electric & Gas Regulated - U.S. Electric & Gas Regulated - Independent Electric Transmission (ITC) 9 (1) US dollar-denominated rate base for 2019
Slide 10: 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 10
Slide 11: Jocelyn Perry, Executive Vice President and Chief Financial Officer
Jocelyn Perry Executive Vice President and Chief Financial Officer
Slide 12: Second Quarter Results
Second Quarter Results REPORTED EPS $2.39 Reported EPS Includes: $1.66 • $484M Net Gain on Waneta Asset Sale in Q2 2019 $1.26 $0.59 • $27M Favourable Impact of May 2020 FERC Order at ITC Q2 2020 Q2 2019 YTD 2020 YTD 2019 ADJUSTED EPS(1) Q2 Adjusted EPS Impacted by: • Rate Base Growth $1.23 $1.28 • W
Slide 13: Second Quarter EPS Drivers
Second Quarter EPS Drivers $0.01 ($0.01) $0.01 ($0.01) $0.02 ($0.04) $0.04 $0.56 $0.54 Q2 2019 U.S. Western U.S. Foreign Other Corporate & Weighted Q2 2020 (2) Adjusted Electric & Canadian Transmission Exchange Electric Other Average Adjusted (3) (1) EPS (1) Gas Electric & (ITC) Shares EPS Gas (1) N
Slide 14: June Year-to-Date EPS Drivers
June Year-to-Date EPS Drivers $0.03 $0.01 ($0.02) $0.04 ($0.01) ($0.01) ($0.09) $1.28 $1.23 Q2 YTD 2019 Western U.S. Foreign U.S. Other Corporate & Weighted Q2 YTD 2020 (1) (2) (1) Adjusted EPS Canadian Transmission Exchange Electric & Electric Other Average Adjusted EPS (3) Electric & (ITC) Gas Sha
Slide 15: Strong Access to Debt Markets & Strong Liquidity
Strong Access to Debt Markets & Strong Liquidity Over $2B issued since March 2020 DEBT ISSUANCES COMPLETED LIQUIDITY ($B) ✓ ITC • US$700M 10-year 2.95% notes $6 • US$180M 31-year 3.13% bonds(1) ✓ UNS • US$350M 30-year 4.00% notes $4 ✓ Central Hudson 5.2 4.7 • US$30M 30-year 3.42% notes • US$30M 40-y
Slide 16: ITC: MISO Base ROE Order Issued in Q2
ITC: MISO Base ROE Order Issued in Q2 In May, FERC issued an order in response to New ROE Previous ROE Under May Under Nov. requests for rehearing of FERC’s November 2020 Order 2019 Order 2019 decision regarding base ROE MISO Base ROE 10.02% 9.88% The new ROE methodology was revised to ITC’s Incenti
Slide 17: Update on Other Regulatory Proceedings
Update on Other Regulatory Proceedings • NOIs on ROE and Incentives – Transmission Incentive NOPR issued in March 2020; comments filed July 1, 2020 • TEP General Rate Application – Hearings completed in June 2020; decision expected in late 2020 • 2020 Rate Increase Delayed – July 1, 2020 rate increa
Slide 18: Why Invest In Fortis?
Why Invest In Fortis? Well-Run Sustainability Highly Focused on Strong Virtually 6% Innovative Businesses Leader Diversified Energy Growth All Dividend Delivery Profile Regulated Guidance 18
Slide 19: Expected Upcoming Events
Expected Upcoming Events Expected Earnings Release Date Q3 2020 October 30, 2020 19
Slide 20: Second Quarter 2020 Earnings Conference Call
Second Quarter 2020 Earnings Conference Call July 30, 2020
Slide 21: Q2 2020 Results by Segment
Q2 2020 Results by Segment Second Quarter Variance Analysis by Segment Adjusted ($millions, except weighted Adjusted Adjusted Q2 2020 Adjustment (1) Q2 2019 Adjustment (1) Q2 average shares and EPS) Q2 2020 Q2 2019 Variance Regulated – Independent Electric Transmission ITC 138 (27) 111 101 - 101 10
Slide 22: June Year-to-Date 2020 Results by Segment
June Year-to-Date 2020 Results by Segment Second Quarter June Year-to-Date Variance Analysis by Segment Adjusted Adjusted Adjusted ($millions, except weighted June YTD June YTD Adjustment June YTD Adjustment June YTD June YTD average shares and EPS) 2020 (1) 2019 (1) 2020 2019 Variance Regulated – I
Slide 23: Adjusted Earnings Reconciliation
Adjusted Earnings Reconciliation Non-US GAAP Reconciliation June June ($millions, except as indicated) Q2 2020 Q2 2019 Variance YTD YTD Variance 2020 2019 Common Equity Earnings 274 720 (446) 586 1,031 (445) Adjusting Items: May 2020 FERC Order(1) (27) - (27) (27) - (27) (2) Anti-hybrid tax regulati
Slide 24: 2019-2024 Rate Base by Segment
2019-2024 Rate Base by Segment (1) Midyear Rate Base 3-Year 5-Year CAGR to CAGR to ($billions) 2019A 2020F 2021F 2022F 2023F 2024F 2022 2024 Regulated - Independent Electric Transmission ITC(2) 8.8 9.5 10.2 10.8 11.4 12.0 7.2% 6.4% Regulated - US Electric & Gas UNS Energy 5.0 5.8 6.1 6.4 6.8 6.9 8.6
Slide 25: 2020-2024 Capital Plan by Segment
2020-2024 Capital Plan by Segment Capital Forecast(1) 2020-2024 ($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 1,390 828 710 575 371 3,874 Central Hudson 292 309 359 306 292 1,55
Slide 26: Major Capital Projects
Major Capital Projects(1) Incurred Expected 2020-2024 ($Millions) to End of Year of Plan 2019 Completion ITC Multi-Value Regional Transmission Projects 625(2) 276 2023 Smaller Projects 80% ITC 34.5 to 69 kV Transmission Conversion Project 352(2) 268 Post-2024 UNS Southline Transmission Project - 392
Slide 27: Investment-Grade Credit Ratings
Investment-Grade Credit Ratings Company Fortis Inc. A-(1) Baa3 BBB (High) ITC Holdings Corp. A-(1) Baa2 n/a ITC Regulated Subsidiaries A A1 n/a TEP A- A3 n/a Central Hudson A- A3 n/a FortisBC Energy n/a A3 A FortisBC Electric n/a Baa1 A (low) FortisAlberta A- Baa1 A (low) Newfoundland Power n/a A2 A
Slide 28: Manageable Debt Maturities
Manageable Debt Maturities FIXED-TERM DEBT MATURITIES(1) ($B) $2.0 5-Year Average ~$0.9B $1.5 $1.0 $0.5 $0.0 2020F 2021F 2022F 2023F 2024F (1) Debt as at June 30, 2020 and excludes any new debt issuances during the forecast period. Excludes repayments of finance leases along with the current portion
Slide 29: ~82% of Revenues Protected by Regulatory Mechanisms
~82% of Revenues Protected by Regulatory Mechanisms or From Residential Sales 2019 Revenues EPS Sensitivity 19% Annual EPS Impact ($) 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 30: COVID-19: Other Financial Implications
COVID-19: Other Financial Implications Defined Benefit Pension Plan Certain U.S. Retirement Benefits ✓ ~46% of assets invested in fixed income ✓ Certain retirement benefits funded through trusts and are subject to market volatility each quarter ✓ ~88% of $3.2B plan assets funded at December 31, 2019