• Capital Expenditures: $3.6 billion invested through September; expected $5.2 billion for the year.
• Five-Year Capital Plan: $26 billion from 2025 to 2029, supporting 6.5% average annual rate base growth.
• Dividend Increase: 4% increase in the fourth quarter dividend, with 4% to 6% annual growth guidance extended to 2029.
• Reported and Adjusted EPS: $0.85 for Q3, $0.01 higher than last year; $2.45 year-to-date, $0.08 higher than last year.
• Debt Raised: Approximately $2.6 billion through September to fund capital program and repay borrowings.
• Series M Preference Share Rate: Reset to 5.5% annual dividend rate.
• ITC's MISO All-In ROE: 10.73% after FERC order lowering base ROE by 4 basis points.
• Refunds for ITC: Estimated USD26 million to be recognized in Q4.

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Release Date: November 05, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Fortis Inc (NYSE:FTS) reported a solid third quarter with continued safe and reliable service delivery and successful execution of its regulated growth strategy.
• The company invested $3.6 billion in energy systems through September and expects capital expenditures of $5.2 billion for the year.
• Fortis Inc (NYSE:FTS) announced a new five-year capital plan of $26 billion, supporting an average annual rate base growth of 6.5% through 2029.
• The Board of Directors declared a 4.2% increase in the fourth quarter dividend, marking 51 years of consecutive dividend increases.
• Fortis Inc (NYSE:FTS) is making progress on new data center, mining, and manufacturing opportunities, particularly in Arizona, which could drive significant upside to its existing capital plan.

Negative Points

• The company faces higher finance costs, which have offset some of the gains from unrealized gains on derivatives.
• The Western Canadian Utilities segment saw a $0.04 EPS decrease for the quarter due to a retroactive adjustment related to a cost of capital decision.
• Fortis Inc (NYSE:FTS) is dealing with regulatory challenges, including a show cause order from the New York Public Service Commission related to a gas-related explosion.
• The MISO ROE was lowered by 4 basis points to 9.98%, impacting ITC's MISO all-in ROE and resulting in estimated refunds of approximately USD26 million.
• The company is navigating potential regulatory changes in Arizona, which could impact the timing and scope of new retail load increases and related investments.

Q & A Highlights

Q: How does Fortis plan to fund potential capital plan increases, particularly in Arizona and MISO, given the current balance sheet? A: Jocelyn Perry, CFO, explained that funding specifics depend on project timing. Fortis is committed to maintaining its current balance sheet position. The ATM (At-The-Market) program is available for immediate flexibility, but there is no immediate need to use it.

Q: Regarding Arizona's potential demand increases, how does Fortis plan to manage new capacity versus poles and wires investment? A: David Hutchens, CEO, noted limited co-location opportunities in Arizona. Fortis plans to supply from the grid rather than co-location, focusing on portfolio perspectives for generation, including renewables and storage, rather than specific co-location projects.

Q: What are the growth prospects for Fortis' Alberta franchise, and how is rate base growth trending? A: David Hutchens, CEO, stated that FortisAlberta is seeing a 5.2% rate base CAGR, driven by customer growth and distribution system investments. Additional opportunities include AMI projects and wildfire technology investments.

Q: How does Fortis view the potential impact of the recent BC election on its gas distribution growth prospects? A: Roger Dall'Antonia, CEO of FortisBC, indicated no significant changes are expected. The focus remains on electrification opportunities and the PowerBC plan, with ongoing projects like the Tilbury storage facility.

Q: What is the timeline for implementing regulatory changes in Arizona following recent workshops? A: Susan Gray, CEO of UNS Energy, mentioned that the Arizona Corporation Commission is motivated to finalize solutions soon, potentially by late this year or early next year, which would benefit both customers and Fortis by reducing regulatory lag.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.