|
|
|
|
|
Newfoundland and Labrador, Canada
|
4911
|
98-0352146
|
(Province of other jurisdiction of
incorporation or organization)
|
(Primary Standard Industrial Classification
Code Number)
|
(I.R.S. Employer Identification Number)
|
Common Shares, without par value
|
FTS
|
New York Stock Exchange
|
(Title of each class)
|
(Trading Symbol(s)
|
(Name of exchange on which registered)
|
|
|
|
|
|
•
|
uncertainty regarding the outcome of regulatory proceedings at the Corporation's utilities;
|
•
|
risks associated with climate change, physical risks and service disruption;
|
•
|
the impact of fluctuations in interest rates;
|
•
|
the impact of weather variability and seasonality on heating and cooling loads, gas distribution volumes and hydroelectric generation; and
|
•
|
risks associated with acquisitions and capital projects.
|
•
|
Message from the President and Chief Executive Officer - The code includes an introductory message from the Corporation's President and Chief Executive Officer, which reinforces the key principles of honesty, integrity, and professionalism; encourages speaking up regarding things of concern; and notes the requirement that those subject to the code complete an annual certification.
|
•
|
Being Your Best - The code includes a list of general behaviors expected of all who are subject to the code, as well as the general principles that guide the actions and decisions of leaders in applying the code.
|
•
|
Respect, Inclusion and Diversity - The code contains new and expanded treatment of respect, inclusion and diversity in the workplace, and references the Corporation’s Respectful Workplace Policy and new Inclusion and Diversity Commitment.
|
•
|
Social Responsibility, the Environment and Sustainability - The code includes expanded discussion of the Corporation's commitment to social responsibility and sustainability.
|
•
|
Fitness for Duty - The code addresses an employee's responsibility regarding fitness for duty and refers to the Corporation's Drugs and Alcohol in the Workplace Policy.
|
•
|
Federal Energy Regulatory Commission, or FERC - The code references the Corporation's FERC Compliance Manual, which reinforces the Corporation's expectation that its operating utilities strictly comply with all applicable regulatory obligations.
|
•
|
Anti-Corruption - The code references the Corporation's Anti-Corruption Policy and Anti-Corruption Procedures which were adopted since the previous version of the code.
|
•
|
Political Engagement and Lobbying - The code references the Corporation's revised Political Engagement Policy and related obligations regarding compliance with lobbying regulations in accordance with the Corporation's Anti-Corruption Policy.
|
•
|
Records Management - The code includes a section on records management which references the Corporation's Records Management Policy and Records Retention Schedule.
|
•
|
Where to Go for Help - The code references the new position of "Administrator" under the Corporation's Whistleblower Policy and reinforces the availability of reporting and issue resolution processes that exist under other specific-purpose policies, such as the Corporation's Respectful Workplace Policy.
|
•
|
Other Policies and Related Materials - The code includes a summary list of all other referenced Corporation policies and related materials.
|
Exhibit
|
Description
|
101.INS
|
XBRL Instance
|
101.SCH
|
XBRL Taxonomy Extension Schema
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase
|
FORTIS INC.
|
|
|
|
|
|
/s/ Jocelyn H. Perry
|
|
|
Jocelyn H. Perry
Executive Vice President, Chief Financial Officer
|
|
|
Date: February 13, 2020
|
|
|
ANNUAL INFORMATION FORM
|
1
|
December 31, 2019
|
|
ANNUAL INFORMATION FORM
|
2
|
December 31, 2019
|
|
ANNUAL INFORMATION FORM
|
3
|
December 31, 2019
|
|
GW
|
Gigawatt(s)
|
GWh
|
Gigawatt hour(s)
|
km
|
Kilometre(s)
|
MW
|
Megawatt(s)
|
TJ
|
Terajoule(s)
|
PJ
|
Petajoule(s)
|
ANNUAL INFORMATION FORM
|
4
|
December 31, 2019
|
|
(1)
|
ITC Holdings, a Michigan corporation, owns all of the shares of ITC Great Plains, ITC Interconnection, ITC Midwest, ITCTransmission and METC. ITC Investment Holdings, a Michigan corporation, owns all of the shares of ITC Holdings. FortisUS, a Delaware corporation, owns 80.1% of the voting securities of ITC Investment Holdings. FortisUS Holdings, a Canadian corporation, owns all of the shares of FortisUS. Fortis owns all of the shares of FortisUS Holdings. 19.9% of the voting securities of ITC Investment Holdings are owned by an affiliate of GIC.
|
(2)
|
UNS Energy owns all of the shares of TEP, UNS Electric and UNS Gas. FortisUS owns all of the shares of UNS Energy.
|
(3)
|
CH Energy Group, Inc., a New York corporation, owns all of the shares of Central Hudson. FortisUS owns all of the shares of CH Energy Group, Inc.
|
(4)
|
FHI, a British Columbia corporation, owns all of the shares of FortisBC Energy. Fortis owns all of the shares of FHI.
|
(5)
|
FortisAlberta Holdings Inc., an Alberta corporation, owns all of the shares of FortisAlberta. FortisWest, a Canadian corporation, owns all of the shares of FortisAlberta Holdings Inc. Fortis owns all of the shares of FortisWest.
|
(6)
|
Fortis owns all of the shares of Newfoundland Power.
|
ANNUAL INFORMATION FORM
|
5
|
December 31, 2019
|
|
ANNUAL INFORMATION FORM
|
6
|
December 31, 2019
|
|
ANNUAL INFORMATION FORM
|
7
|
December 31, 2019
|
|
|
Customers
|
Peak
Demand (1)
|
Electric T&D Lines (km) (2)
|
Gas T&D Lines (km)
|
Generating Capacity (MW)
|
Revenue
($ millions)
|
GWh Sales
|
Gas Volumes (PJ)
|
Employees
|
|||||||||||
Regulated Utilities
|
|
|
|
|
||||||||||||||||
ITC
|
—
|
|
22,815
|
|
MW
|
25,500
|
|
—
|
|
—
|
|
1,761
|
|
—
|
|
—
|
|
707
|
|
|
UNS Energy
|
686,000
|
|
3,179
118
|
|
MW
TJ
|
22,500
|
|
5,000
|
|
3,143
|
|
2,212
|
|
18,354
|
|
16
|
|
2,103
|
|
|
Central Hudson
|
380,000
|
|
1,109
148
|
|
MW
TJ
|
15,100
|
|
2,350
|
|
65
|
|
917
|
|
4,963
|
|
22
|
|
1,065
|
|
|
FortisBC Energy
|
1,041,000
|
|
1,352
|
|
TJ
|
—
|
|
49,500
|
|
—
|
|
1,331
|
|
—
|
|
227
|
|
1,873
|
|
|
FortisAlberta
|
568,000
|
|
2,642
|
|
MW
|
90,800
|
|
—
|
|
—
|
|
598
|
|
16,887
|
|
—
|
|
1,111
|
|
|
FortisBC Electric
|
179,000
|
|
696
|
|
MW
|
7,300
|
|
—
|
|
225
|
|
418
|
|
3,326
|
|
—
|
|
538
|
|
|
Other Electric
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Newfoundland Power
|
269,000
|
|
1,458
|
|
MW
|
12,500
|
|
—
|
|
143
|
|
682
|
|
5,847
|
|
—
|
|
641
|
|
|
Maritime Electric
|
82,000
|
|
276
|
|
MW
|
6,200
|
|
—
|
|
140
|
|
211
|
|
1,287
|
|
—
|
|
181
|
|
|
FortisOntario
|
66,000
|
|
255
|
|
MW
|
3,500
|
|
—
|
|
5
|
|
210
|
|
1,313
|
|
—
|
|
211
|
|
|
Caribbean Utilities
|
31,000
|
|
106
|
|
MW
|
800
|
|
—
|
|
161
|
|
274
|
|
668
|
|
—
|
|
248
|
|
|
FortisTCI
|
15,000
|
|
43
|
|
MW
|
650
|
|
—
|
|
91
|
|
90
|
|
251
|
|
—
|
|
172
|
|
Non-Regulated
|
|
|
|
|
||||||||||||||||
Energy Infrastructure (3)
|
—
|
|
—
|
|
|
—
|
|
—
|
|
51
|
|
82
|
|
144
|
|
—
|
|
69
|
|
|
Corporate and Other
|
—
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
51
|
|
|
Total
|
3,317,000
|
|
32,579 1,618
|
|
MW
TJ
|
184,850
|
|
56,850
|
|
4,023
|
|
8,786
|
|
53,040
|
|
265
|
|
8,970
|
|
(1)
|
Electric (MW) or gas (TJ)
|
(2)
|
Circuit km
|
(3)
|
The Corporation sold its 51% controlling ownership interest in the 335-MW Waneta Expansion in 2019.
|
ANNUAL INFORMATION FORM
|
8
|
December 31, 2019
|
|
|
Revenue (%)
|
|
2019
|
2018
|
|
Network revenues
|
63.0
|
66.7
|
Regional cost-sharing revenues
|
27.9
|
28.9
|
Point-to-point
|
1.0
|
1.2
|
Scheduling, control and dispatch
|
1.3
|
1.3
|
Other
|
1.6
|
1.8
|
Recognition of ROE complaint liabilities (1)
|
5.2
|
0.1
|
Total
|
100.0
|
100.0
|
(1)
|
Adjustments have been made to the refund liability recorded related to the complaint proceedings on the MISO base rate of return on equity, which resulted in net increases in operating revenues for the periods presented.
|
ANNUAL INFORMATION FORM
|
9
|
December 31, 2019
|
|
ANNUAL INFORMATION FORM
|
10
|
December 31, 2019
|
|
ANNUAL INFORMATION FORM
|
11
|
December 31, 2019
|
|
|
Revenue (%)
|
GWh Sales (%)
|
PJ Volumes (%)
|
|||||||||
|
2019
|
2018
|
2019
|
2018
|
2019
|
2018
|
||||||
Residential
|
36.5
|
|
37.6
|
|
25.0
|
|
26.9
|
|
57.9
|
|
58.8
|
|
Commercial
|
21.2
|
|
22.1
|
|
15.1
|
|
16.2
|
|
23.4
|
|
24.5
|
|
Industrial
|
13.8
|
|
14.4
|
|
16.6
|
|
17.7
|
|
2.0
|
|
2.0
|
|
Other (1)
|
28.5
|
|
25.9
|
|
43.3
|
|
39.2
|
|
16.7
|
|
14.7
|
|
Total
|
100.0
|
|
100.0
|
|
100.0
|
|
100.0
|
|
100.0
|
|
100.0
|
|
(1)
|
Includes electricity sales and gas volumes to other entities for resale and revenue from sources other than from the sale of electricity and gas
|
Generation Source
|
Unit No.
|
Location
|
Date in
Service |
Total Capacity (MW)
|
|
Operating Agent
|
TEP's Share (%)
|
TEP's Share (MW)
|
|
Coal
|
|
|
|
|
|
|
|
||
Springerville Station
|
1
|
Springerville, AZ
|
1985
|
387
|
|
TEP
|
100.0
|
387
|
|
Springerville Station (1)
|
2
|
Springerville, AZ
|
1990
|
406
|
|
TEP
|
100.0
|
406
|
|
San Juan Station
|
1
|
Farmington, NM
|
1976
|
340
|
|
PNM
|
50.0
|
170
|
|
Four Corners Station
|
4
|
Farmington, NM
|
1969
|
785
|
|
APS
|
7.0
|
55
|
|
Four Corners Station
|
5
|
Farmington, NM
|
1970
|
785
|
|
APS
|
7.0
|
55
|
|
Natural Gas
|
|
|
|
|
|
|
|
||
Gila River Power Station (2)
|
2
|
Gila Bend, AZ
|
2003
|
550
|
|
SRP
|
100.0
|
550
|
|
Gila River Power Station
|
3
|
Gila Bend, AZ
|
2003
|
550
|
|
SRP
|
75.0
|
413
|
|
Luna Generating Station
|
1
|
Deming, NM
|
2006
|
555
|
|
PNM
|
33.3
|
185
|
|
Sundt Station
|
3
|
Tucson, AZ
|
1962
|
104
|
|
TEP
|
100.0
|
104
|
|
Sundt Station
|
4
|
Tucson, AZ
|
1967
|
156
|
|
TEP
|
100.0
|
156
|
|
Sundt Internal Combustion Turbines
|
|
Tucson, AZ
|
1972-1973
|
50
|
|
TEP
|
100.0
|
50
|
|
Sundt Reciprocating Internal Combustion Engine
|
6-10
|
Tucson, AZ
|
2019
|
94
|
|
TEP
|
100.0
|
94
|
|
DeMoss Petrie
|
|
Tucson, AZ
|
2001
|
75
|
|
TEP
|
100.0
|
75
|
|
North Loop
|
|
Tucson, AZ
|
2001
|
94
|
|
TEP
|
100.0
|
94
|
|
Solar
|
|
|
|
|
|
|
|
||
Utility-Scale Renewables
|
|
Various
|
2002-2017
|
47
|
|
TEP
|
100.0
|
47
|
|
Total Capacity (3)
|
|
|
|
|
|
|
2,841
|
|
(1)
|
Springerville Generating Station Unit 2 is owned by San Carlos Resources Inc., a wholly owned subsidiary of TEP.
|
(2)
|
TEP exercised its option to purchase Gila River Unit 2 in December 2019. The purchase option was part of TEP's tolling PPA which had been in effect since 2017.
|
(3)
|
In November 2019, Navajo Generating Station was removed from service. TEP held a 7.5% share in Units 1, 2 and 3 (total nominal capacity of 168 MW). In December 2019, H. Wilson Sundt Generating Station Units 1 and 2 (total nominal capacity of 162 MW) were removed from service.
|
ANNUAL INFORMATION FORM
|
12
|
December 31, 2019
|
|
Generation Source
|
Unit No.
|
Location
|
Date In
Service
|
Resource Type
|
Total Capacity (MW)
|
|
Operating Agent
|
UNSE's Share (%)
|
UNSE's Share (MW)
|
|
|
Black Mountain
|
1
|
Kingman, AZ
|
2011
|
Gas
|
45
|
|
UNSE
|
100.0
|
45
|
|
|
Black Mountain
|
2
|
Kingman, AZ
|
2011
|
Gas
|
45
|
|
UNSE
|
100.0
|
45
|
|
|
Valencia
|
1
|
Nogales, AZ
|
1989
|
Gas/Oil
|
14
|
|
UNSE
|
100.0
|
14
|
|
|
Valencia
|
2
|
Nogales, AZ
|
1989
|
Gas/Oil
|
14
|
|
UNSE
|
100.0
|
14
|
|
|
Valencia
|
3
|
Nogales, AZ
|
1989
|
Gas/Oil
|
14
|
|
UNSE
|
100.0
|
14
|
|
|
Valencia
|
4
|
Nogales, AZ
|
2006
|
Gas/Oil
|
21
|
|
UNSE
|
100.0
|
21
|
|
|
Gila River Power Station
|
3
|
Gila Bend, AZ
|
2003
|
Gas
|
550
|
|
SRP
|
25.0
|
137
|
|
|
Utility-Scale Renewables
|
|
Various
|
2011
-2017
|
Solar
|
11
|
|
UNSE
|
100.0
|
11
|
|
|
Total Capacity
|
|
|
|
|
|
|
|
|
301
|
|
Generation Source
|
Location
|
Date/Projected Date In Service
|
In Service Capacity (MW)
|
|
Developing Capacity (MW)
|
|
Solar
|
|
|
|
|
||
Fort Huachuca Phase I & II (1)
|
Sierra Vista, AZ
|
2014-2017
|
18
|
|
—
|
|
Springerville
|
Springerville, AZ
|
2004-2014
|
14
|
|
—
|
|
UASTP Phase I & II (2)
|
Tucson, AZ
|
2010-2011
|
6
|
|
—
|
|
Sundt Areva Solar Thermal
|
Tucson, AZ
|
2014
|
5
|
|
—
|
|
Solon Prairie Fire (2)
|
Tucson, AZ
|
2012
|
4
|
|
—
|
|
Raptor Ridge
|
Tucson, AZ
|
2021
|
—
|
|
10
|
|
Wind
|
|
|
|
|
||
Oso Grande Wind Project
|
Chaves Country, NM
|
2020
|
—
|
|
250
|
|
Total Capacity
|
|
|
47
|
|
260
|
|
(1)
|
TEP has a 30-year easement agreement to facilitate operations on behalf of the US Department of the Army.
|
(2)
|
The University of Arizona Science and Technology Park I & II and Solon Prairie Fire are located on properties held under land easements and leases.
|
Generation Source
|
Location
|
Date/Projected Date In Service
|
Resource Type
|
In Service Capacity (MW)
|
|
Rio Rico
|
Rio Rico, AZ
|
2014
|
Solar
|
6
|
|
Jacobson
|
Kingman, AZ
|
2017
|
Solar
|
4
|
|
La Senita
|
Kingman, AZ
|
2011
|
Solar
|
1
|
|
Total Owned Solar Capacity
|
|
|
|
11
|
|
ANNUAL INFORMATION FORM
|
13
|
December 31, 2019
|
|
Generation Source
|
Location
|
Date/Projected Date In Service
|
In Service Capacity (MW)
|
Under Development Capacity (MW)
|
||
Solar
|
|
|
|
|
||
Red Horse
|
Willcox, AZ
|
2015
|
41
|
|
—
|
|
Avalon I
|
Sahuarita, AZ
|
2014
|
29
|
|
—
|
|
Avra Valley
|
Marana, AZ
|
2012
|
25
|
|
—
|
|
Picture Rocks
|
Marana, AZ
|
2012
|
20
|
|
—
|
|
Avalon II
|
Sahuarita, AZ
|
2016
|
16
|
|
—
|
|
Valencia
|
Tucson, AZ
|
2013
|
10
|
|
—
|
|
E.On Tech Park
|
Tucson, AZ
|
2012
|
5
|
|
—
|
|
Gato Montes
|
Tucson, AZ
|
2012
|
5
|
|
—
|
|
Small PPAs, Solar (<5MW)
|
Various
|
Various
|
5
|
|
—
|
|
Wilmot Solar
|
Sahuarita, AZ
|
2020
|
—
|
|
100
|
|
Wind
|
|
|
|
|
||
Macho Springs
|
Deming, NM
|
2011
|
50
|
|
—
|
|
Red Horse Wind
|
Willcox, AZ
|
2015
|
30
|
|
—
|
|
Borderlands Wind
|
Catron County, NM
|
2021
|
—
|
|
99
|
|
Total Capacity
|
|
|
236
|
|
199
|
|
Generation Source
|
Location
|
Date/Projected Date In Service
|
Resource Type
|
In Service Capacity (MW)
|
|
GrayHawk Solar
|
Kingman, AZ
|
2018
|
Solar
|
46
|
|
Red Horse Solar
|
Willcox, AZ
|
2016
|
Solar
|
30
|
|
Kingman Wind Farm
|
Kingman, AZ
|
2011
|
Wind
|
10
|
|
Black Mountain Solar
|
Kingman, AZ
|
2012
|
Solar
|
7
|
|
Total PPA Renewable Capacity
|
|
|
|
93
|
|
ANNUAL INFORMATION FORM
|
14
|
December 31, 2019
|
|
Station
|
Natural Gas Transportation Counterparty
|
Contract Expiration Date(s)
|
||
Gila
|
Transwestern Pipeline Co./El Paso Natural Gas Company, LLC
|
2022-2040
|
||
Luna
|
El Paso Natural Gas Company, LLC
|
2022
|
||
Sundt/RICE
|
El Paso Natural Gas Company, LLC
|
2023-2040
|
||
DeMoss Petrie
|
Southwest Gas Corporation
|
Retail Tariff
|
||
North Loop
|
Southwest Gas Corporation
|
Retail Tariff
|
|
Revenue (%)
|
GWh Sales (%)
|
PJ Volumes (%)
|
|||||||||
|
2019
|
2018
|
2019
|
2018
|
2019
|
2018
|
||||||
Residential
|
62.6
|
|
65.4
|
|
41.4
|
|
42.4
|
|
28.8
|
|
26.9
|
|
Commercial
|
27.8
|
|
29.2
|
|
38.9
|
|
38.5
|
|
38.8
|
|
35.6
|
|
Industrial
|
3.9
|
|
3.8
|
|
18.1
|
|
17.9
|
|
16.9
|
|
21.6
|
|
Other
|
4.5
|
|
0.2
|
|
0.5
|
|
0.5
|
|
6.9
|
|
7.2
|
|
Sales for Resale
|
1.2
|
|
1.4
|
|
1.1
|
|
0.7
|
|
8.6
|
|
8.7
|
|
Total
|
100.0
|
|
100.0
|
|
100.0
|
|
100.0
|
|
100.0
|
|
100.0
|
|
ANNUAL INFORMATION FORM
|
15
|
December 31, 2019
|
|
|
Revenue (%)
|
PJ Volumes (%)
|
||||||
|
2019
|
2018
|
2019
|
2018
|
||||
Residential
|
57.7
|
|
57.7
|
|
35.7
|
|
36.3
|
|
Commercial
|
28.6
|
|
27.7
|
|
22.9
|
|
23.1
|
|
Industrial
|
4.3
|
|
3.2
|
|
4.4
|
|
2.8
|
|
Transportation
|
9.4
|
|
11.4
|
|
37.0
|
|
37.8
|
|
Total
|
100.0
|
|
100.0
|
|
100.0
|
|
100.0
|
|
ANNUAL INFORMATION FORM
|
16
|
December 31, 2019
|
|
ANNUAL INFORMATION FORM
|
17
|
December 31, 2019
|
|
|
Revenue (%)
|
GWh Deliveries (%) (1)
|
||
|
2019
|
2018
|
2019
|
2018
|
Residential
|
30.4
|
30.9
|
18.7
|
18.5
|
Large commercial, industrial and oil field
|
21.0
|
21.2
|
58.9
|
59.0
|
Farms
|
12.2
|
12.3
|
8.6
|
8.6
|
Small commercial
|
12.2
|
12.2
|
8.5
|
8.4
|
Small oil field
|
8.1
|
8.4
|
5.0
|
5.2
|
Other (2)
|
16.1
|
15.0
|
0.3
|
0.3
|
Total
|
100.0
|
100.0
|
100.0
|
100.0
|
(1)
|
GWh percentages exclude FortisAlberta's GWh deliveries to "transmission-connected" customers. These deliveries were 6,940 GWh in 2019 and 7,024 GWh in 2018, based on an interim settlement that is expected to be finalized in May 2020, and consisted primarily of energy deliveries to large-scale industrial customers directly connected to the transmission grid.
|
(2)
|
Includes revenue from sources other than the delivery of energy, including revenues resulting from street-lighting services, rate riders, deferrals and adjustments
|
ANNUAL INFORMATION FORM
|
18
|
December 31, 2019
|
|
|
Revenue (%)
|
GWh Sales (%)
|
||
|
2019
|
2018
|
2019
|
2018
|
Residential
|
48.9
|
51.1
|
38.8
|
40.8
|
Commercial
|
27.1
|
27.1
|
29.4
|
30.1
|
Wholesale
|
13.2
|
13.3
|
17.6
|
17.6
|
Industrial
|
10.8
|
8.5
|
14.2
|
11.5
|
Total
|
100.0
|
100.0
|
100.0
|
100.0
|
Plant
|
Capacity
(MW)
|
|
|
Owners
|
Canal Plant
|
580
|
|
|
BC Hydro
|
Waneta Dam
|
493
|
|
|
BC Hydro
|
Waneta Expansion
|
335
|
|
|
Waneta Expansion Power Corporation
|
Kootenay River System
|
225
|
|
|
FortisBC Electric
|
Brilliant Dam
|
149
|
|
|
Brilliant Power Corporation
|
Brilliant Expansion
|
120
|
|
|
Brilliant Expansion Power Corporation
|
Total
|
1,902
|
|
|
|
ANNUAL INFORMATION FORM
|
19
|
December 31, 2019
|
|
ANNUAL INFORMATION FORM
|
20
|
December 31, 2019
|
|
|
Customers
|
|
Peak Demand (MW)
|
T&D Lines (km) (1)
|
|
Generating Capacity (MW)
|
|
Resource Type(s)
|
|
Newfoundland Power
|
269,000
|
|
1,458
|
|
12,500
|
|
143
|
|
Hydroelectric, Gas, Diesel
|
Maritime Electric
|
82,000
|
|
276
|
|
6,200
|
|
140
|
|
Thermal, Diesel
|
FortisOntario (2)
|
66,000
|
|
255
|
|
3,500
|
|
5
|
|
Natural Gas Cogeneration
|
Caribbean Utilities (3)
|
31,000
|
|
106
|
|
800
|
|
161
|
|
Diesel
|
FortisTCI
|
15,000
|
|
43
|
|
650
|
|
91
|
|
Diesel
|
Total
|
463,000
|
|
2,138
|
|
23,650
|
|
540
|
|
|
(1)
|
Circuit km
|
(2)
|
FortisOntario also owns a 10% interest in certain regional electric distribution companies serving approximately 40,000 customers.
|
(3)
|
Includes 24 km of high-voltage submarine cable
|
|
Revenue (%)
|
GWh Sales (%)
|
||
2019
|
2018
|
2019
|
2018
|
|
Residential
|
56.0
|
54.3
|
55.5
|
55.6
|
Commercial and Industrial
|
42.9
|
43.5
|
44.4
|
44.3
|
Other (1)
|
1.1
|
2.2
|
0.1
|
0.1
|
Total
|
100.0
|
100.0
|
100.0
|
100.0
|
ANNUAL INFORMATION FORM
|
21
|
December 31, 2019
|
|
ANNUAL INFORMATION FORM
|
22
|
December 31, 2019
|
|
ANNUAL INFORMATION FORM
|
23
|
December 31, 2019
|
|
|
Employees
|
Participation in a Collective Agreement
|
|
Union(s)
|
|
Collective Agreement(s) Expiry Date(s)
|
|||
Regulated Utilities
|
|||||||||
ITC
|
707
|
|
None
|
|
|
—
|
|
—
|
|
UNS Energy
|
2,103
|
|
51
|
%
|
|
IBEW
|
|
February 2020 – July 2022
|
|
Central Hudson
|
1,065
|
|
57
|
%
|
|
IBEW
|
|
March 2021 – April 2022
|
|
FortisBC Energy (1)
|
1,873
|
|
63
|
%
|
|
IBEW, MoveUP
|
|
March 2019 (2) – June 2023
|
|
FortisAlberta
|
1,111
|
|
79
|
%
|
|
UUWA
|
|
December 2020
|
|
FortisBC Electric
|
538
|
|
69
|
%
|
|
IBEW, MoveUP
|
|
December 2019 (3) – March 2022
|
|
Other Electric (4)
|
1,453
|
|
38
|
%
|
|
IBEW, CUPE, PWU
|
|
January 2022 – December 2023
|
|
Non-Regulated
|
|||||||||
Energy Infrastructure (5)
|
69
|
|
None
|
|
|
—
|
|
—
|
|
Corporate and Other (6)
|
51
|
|
None
|
|
|
—
|
|
—
|
|
Total
|
8,970
|
|
52
|
%
|
|
|
|
|
(1)
|
Includes employees at FHI
|
(2)
|
The collective agreement between FortisBC Energy and IBEW covering 577 FortisBC Energy employees expired on March 31, 2019 and is currently under negotiations.
|
(3)
|
The collective agreement between FortisBC Electric and MoveUP covering 133 FortisBC Electric employees expired on December 31, 2019.
|
(4)
|
Includes employees at Newfoundland Power, Maritime Electric, FortisOntario, Caribbean Utilities and FortisTCI. Excludes Belize Electricity.
|
(5)
|
Includes employees at Aitken Creek (staffed by FortisBC Midstream Inc.), BECOL and FortisBC Alternative Energy Services Inc.
|
(6)
|
Employees at Fortis Inc.
|
ANNUAL INFORMATION FORM
|
24
|
December 31, 2019
|
|
ANNUAL INFORMATION FORM
|
25
|
December 31, 2019
|
|
ANNUAL INFORMATION FORM
|
26
|
December 31, 2019
|
|
ANNUAL INFORMATION FORM
|
27
|
December 31, 2019
|
|
|
2019
|
|
2018
|
|
2017
|
|
Common Shares
|
1.855
|
|
1.750
|
|
1.650
|
|
First Preference Shares, Series F (1)
|
1.2250
|
|
1.2250
|
|
1.2250
|
|
First Preference Shares, Series G (2)
|
1.0983
|
|
1.0345
|
|
0.9708
|
|
First Preference Shares, Series H (3)
|
0.6250
|
|
0.6250
|
|
0.6250
|
|
First Preference Shares, Series I (4)
|
0.7771
|
|
0.7116
|
|
0.5262
|
|
First Preference Shares, Series J (1)
|
1.1875
|
|
1.1875
|
|
1.1875
|
|
First Preference Shares, Series K (5)
|
0.9821
|
|
1.0000
|
|
1.0000
|
|
First Preference Shares, Series M (6)
|
1.0135
|
|
1.0250
|
|
1.0250
|
|
(1)
|
The dividend rate on the First Preference Shares, Series F and First Preference Shares, Series J are fixed and do not reset.
|
(2)
|
The annual fixed dividend per share for the First Preference Shares, Series G was reset from $0.9708 to $1.0983 for the five-year period from September 1, 2018 to but excluding September 1, 2023.
|
(3)
|
The annual fixed dividend per share for the First Preference Shares, Series H was reset from $1.0625 to $0.6250 for the five-year period from June 1, 2015 to but excluding June 1, 2020.
|
(4)
|
The First Preference Shares, Series I are entitled to receive floating rate cumulative dividends, which rate will reset every quarter based on the then current three‑month Government of Canada Treasury Bill rate plus 1.45%.
|
(5)
|
The Fixed Rate Reset First Preference Shares, Series K were issued in July 2013 at $25.00 per share and were entitled to receive cumulative dividends in the amount of $1.0000 per share per annum to but excluding March 1, 2019. The annual fixed dividend per share for the First Preference Shares, Series K was reset to $0.9823 for the five-year period from March 1, 2019 to but excluding March 1, 2024.
|
(6)
|
The Fixed Rate Reset First Preference Shares, Series M were issued in September 2014 at $25.00 per share and were entitled to receive cumulative dividends in the amount of $1.0250 per share per annum for the first five years. The annual fixed dividend per share for the First Preference Shares, Series M was reset to $0.9783 for the five-year period from December 1, 2019 to but excluding December 1, 2024.
|
ANNUAL INFORMATION FORM
|
28
|
December 31, 2019
|
|
Company/Security
|
DBRS Morningstar
|
S&P
|
Moody's
|
|||
Fortis - Unsecured Debt (1)
|
BBB (high), Stable
|
|
BBB+, Negative
|
|
Baa3, Stable
|
|
Caribbean Utilities - Unsecured Debt (2)
|
A (low), Stable
|
|
BBB+, Stable
|
|
—
|
|
Central Hudson - Unsecured Debt (3) (4)
|
—
|
|
A-, Stable
|
|
A3, Stable
|
|
FortisAlberta - Unsecured Debt
|
A (low), Stable
|
|
A-, Negative
|
|
Baa1, Stable
|
|
FortisBC Electric
|
|
|
|
|||
Secured Debt
|
A (low), Stable
|
|
—
|
|
—
|
|
Unsecured Debt
|
A (low), Stable
|
|
—
|
|
Baa1, Stable
|
|
FortisBC Energy
|
|
|
|
|||
Unsecured Debt
|
A, Stable
|
|
—
|
|
A3, Stable
|
|
Commercial Paper
|
R-1 (low), Stable
|
|
—
|
|
—
|
|
ITC Holdings
|
|
|
|
|||
Unsecured Debt (5)
|
—
|
|
BBB+, Negative
|
|
Baa2, Stable
|
|
Commercial Paper
|
—
|
|
A-2, Negative
|
|
Prime-2, Stable
|
|
ITC Great Plains - First Mortgage Bonds
|
—
|
|
A, Negative
|
|
A1, Stable
|
|
ITC Midwest - First Mortgage Bonds
|
—
|
|
A, Negative
|
|
A1, Stable
|
|
ITCTransmission - First Mortgage Bonds
|
—
|
|
A, Negative
|
|
A1, Stable
|
|
Maritime Electric - Secured Debt
|
—
|
|
A, Stable
|
|
—
|
|
METC - Secured Debt
|
—
|
|
A, Negative
|
|
A1, Stable
|
|
Newfoundland Power - First Mortgage Bonds
|
A, Stable
|
|
—
|
|
A2, Stable
|
|
TEP
|
|
|
|
|||
Unsecured Debt
|
—
|
|
A-, Negative
|
|
A3, Stable
|
|
Unsecured Bank Credit Facility
|
|
|
A3, Stable
|
|
||
UNS Electric
|
|
|
|
|||
Unsecured Debt
|
—
|
|
—
|
|
A3, Stable
|
|
Unsecured Bank Credit Facility
|
—
|
|
—
|
|
A3, Stable
|
|
UNS Gas - Unsecured Debt
|
—
|
|
—
|
|
A3, Stable
|
|
UNS Energy - Unsecured Bank Credit Facility
|
—
|
|
—
|
|
Baa1, Stable
|
|
(1)
|
Between March and May 2019, all three rating agencies affirmed the Corporation's credit ratings and outlooks. The negative outlook from S&P reflects a modest temporary weakening of financial measures as a result of U.S. tax reform reducing cash flow at the Corporation's U.S. regulated utilities.
|
(2)
|
In October 2019 S&P downgraded Caribbean Utilities' unsecured debt rating to BBB+ from A- due to climate change risk and revised its outlook to stable from negative due to its predictable cash flows.
|
(3)
|
In July 2019 Moody's downgraded Central Hudson's unsecured debt rating to A3 from A2 and revised its outlook to stable from negative due to higher capital expenditures and the impacts of U.S. tax reform.
|
(4)
|
Central Hudson's senior unsecured debt is also rated by Fitch at 'A-'.
|
ANNUAL INFORMATION FORM
|
29
|
December 31, 2019
|
|
(5)
|
In September 2019 S&P downgraded the senior unsecured debt rating of ITC Holdings to BBB+ from A- due to an expected increase in the ratio of debt at its regulated utilities relative to debt at the holding company and maintained its negative outlook. S&P also affirmed ITC's regulated subsidiaries' secured debt ratings of A.
|
ANNUAL INFORMATION FORM
|
30
|
December 31, 2019
|
|
ANNUAL INFORMATION FORM
|
31
|
December 31, 2019
|
|
Name, Residence, Principal Occupation Within Five Preceding Years
|
Director Since
|
Committees (1)
|
||
AC
|
GN
|
HR
|
||
DOUGLAS J. HAUGHEY (Chair), Alberta, Canada
Corporate Director.
|
2009
|
l
|
l
|
l
|
TRACEY C. BALL, British Columbia, Canada
Corporate Director.
|
2014
|
C
|
l
|
|
PIERRE J. BLOUIN, Quebec, Canada
Corporate Director.
|
2015
|
|
C (2)
|
l
|
PAUL J. BONAVIA, Texas, USA
Corporate Director.
|
2018
|
|
l
|
l
|
LAWRENCE T. BORGARD, Florida, USA
Corporate Director. President and Chief Operating Officer of Integrys Energy Group from 2014 to 2015.
|
2017
|
l
|
|
l
|
MAURA J. CLARK, New York, USA
Corporate Director.
|
2015
|
l
|
l
|
|
MARGARITA K. DILLEY, District of Columbia, USA
Corporate Director.
|
2016
|
l
|
|
l
|
JULIE A. DOBSON, Maryland, USA
Corporate Director.
|
2018
|
l
|
l
|
|
BARRY V. PERRY, Newfoundland and Labrador, Canada
President and Chief Executive Officer of the Corporation.
|
2015
|
(3)
|
||
JOSEPH L. WELCH, Florida, USA
Corporate Director. President and Chief Executive Officer of ITC Holdings from 2003 to 2016.
|
2017
|
(4)
|
||
JO MARK ZUREL, Newfoundland and Labrador, Canada
Corporate Director. President of Stonebridge Capital Inc., a private investment company from 2006 to March 2019.
|
2016
|
l
|
|
C
|
(1)
|
Audit Committee, Governance and Nominating Committee and Human Resources Committee. "C" represents Chair.
|
(2)
|
Mr. Blouin was appointed Chair of the Governance and Nominating Committee effective January 18, 2020.
|
(3)
|
Mr. Perry does not serve on any of the committees because he is the President and Chief Executive Officer of the Corporation.
|
(4)
|
Mr. Welch does not serve on any of the committees. He was not considered independent under Canadian securities laws until November 1, 2019 as he was President and Chief Executive Officer of ITC Holdings until October 31, 2016.
|
ANNUAL INFORMATION FORM
|
32
|
December 31, 2019
|
|
Name, Residence, Principal Occupation During the Five Preceding Years
|
Office
|
BARRY V. PERRY, Newfoundland and Labrador, Canada
President and Chief Executive Officer since January 2015.
|
President and Chief Executive Officer
|
JOCELYN H. PERRY, Newfoundland and Labrador, Canada
Executive Vice President, Chief Financial Officer since June 2018. President and Chief Executive Officer of Newfoundland Power from 2017 to May 2018, Chief Financial Officer and Chief Operating Officer from 2016 to 2017 and Vice President, Finance & Chief Financial Officer from 2007 to 2016.
|
Executive Vice President, Chief Financial Officer
|
NORA M. DUKE, Newfoundland and Labrador, Canada
Executive Vice President, Sustainability and Chief Human Resource Officer since December 2017 and Executive Vice President, Corporate Services and Chief Human Resource Officer from August 2015 to December 2017.
|
Executive Vice President, Sustainability and Chief Human Resource Officer
|
DAVID G. HUTCHENS, Arizona, USA
Chief Operating Officer since January 2020 and Executive Vice President, Western Utility Operations from January 2018 to January 2020. Chief Executive Officer of UNS Energy since January 2020 and President and Chief Executive Officer of UNS Energy from May 2014 to January 2020.
|
Chief Operating Officer
|
JAMES P. LAURITO, Florida, USA
Executive Vice President, Business Development and Chief Technology Officer since May 2019 and Executive Vice President, Business Development since April 2016. President and Chief Executive Officer of Central Hudson from 2010 to April 2016.
|
Executive Vice President, Business Development and Chief Technology Officer
|
JAMES R. REID, Ontario, Canada
Executive Vice President, Chief Legal Officer and Corporate Secretary since March 2018. Partner with Davies Ward Phillips & Vineberg LLP from 2003 to March 2018.
|
Executive Vice President, Chief Legal Officer and Corporate Secretary
|
GARY J. SMITH, Newfoundland and Labrador, Canada
Executive Vice President, Eastern Canadian and Caribbean Operations since June 2017. President and Chief Executive Officer of Newfoundland Power from 2014 to June 2017.
|
Executive Vice President, Eastern Canadian and Caribbean Operations
|
STEPHANIE A. AMAIMO, Michigan, USA
Vice President, Investor Relations since October 2017, Director, Investor Relations from 2016 to October 2017 and Director, Investor Relations of ITC Holdings from 2015 to 2016.
|
Vice President, Investor Relations
|
KAREN J. GOSSE, Newfoundland and Labrador, Canada
Vice President, Treasury and Planning since April 2018. Vice President, Planning and Forecasting from November 2015 to April 2018.
|
Vice President, Treasury and Planning
|
RONALD J. HINSLEY, Michigan, USA
Vice President, Chief Information Officer since May 2019.Vice President, Information Technology and Chief Information Officer of ITC Holdings since 2013.
|
Vice President, Chief Information Officer
|
KAREN M. MCCARTHY, Newfoundland and Labrador, Canada
Vice President, Communications and Corporate Affairs since May 2018 and Director, Communications and Corporate Affairs from 2016 to May 2018. Director, Customer and Corporate Relations of Newfoundland Power from 2014 to 2016.
|
Vice President, Communications and Corporate Affairs
|
REGAN P. O'DEA, Newfoundland and Labrador, Canada
Vice President, General Counsel since May 2017 and Associate General Counsel from 2014 to May 2017.
|
Vice President, General Counsel
|
JAMIE D. ROBERTS, Newfoundland and Labrador, Canada
Vice President, Controller since March 2013.
|
Vice President, Controller
|
ANNUAL INFORMATION FORM
|
33
|
December 31, 2019
|
|
Committee Member
|
Relevant Education and Experience
|
TRACEY C. BALL
(Chair)
|
Ms. Ball retired in September 2014 as Executive Vice President and Chief Financial Officer of Canadian Western Bank Group. Ms. Ball has served on several private and public sector boards, including the Province of Alberta Audit Committee and the Financial Executives Institute of Canada. She graduated from Simon Fraser University with a Bachelor of Arts (Commerce). She is a member of the Chartered Professional Accountants of Alberta and the Chartered Professional Accountants of British Columbia. Ms. Ball was elected as a Fellow of the Chartered Professional Accountants of Alberta in 2007. She holds an ICD.D designation from the Institute of Corporate Directors.
|
LAWRENCE T. BORGARD
|
Mr. Borgard retired from Integrys Energy Group in 2015 where he was President and Chief Operating Officer and the Chief Executive Officer of each of Integrys' six regulated electric and natural gas utilities. Mr. Borgard graduated from Michigan State University with a Bachelor of Science (Electrical Engineering) and the University of Wisconsin-Oshkosh with an MBA. He also attended the Advanced Management Program at Harvard University Business School.
|
MAURA J. CLARK
|
Ms. Clark retired from Direct Energy, a subsidiary of Centrica plc, in March 2014 where she was President of Direct Energy Business, a leading energy retailer in Canada and the US. Previously Ms. Clark was Executive Vice President of North American Strategy and Mergers and Acquisitions for Direct Energy. Ms. Clark's prior experience includes investment banking and serving as Chief Financial Officer of an independent oil refining and marketing company. Ms. Clark graduated from Queen's University with a Bachelor of Arts in Economics. She is a member of the Association of Chartered Professional Accountants of Ontario.
|
MARGARITA K. DILLEY
|
Ms. Dilley retired from ASTROLINK International LLC in 2004, an international wireless broadband telecommunications company, where she was Vice President and Chief Financial Officer. Ms. Dilley's prior experience includes serving as Director, Strategy & Corporate Development as well as Treasurer for Intelsat. Ms. Dilley graduated from Cornell University with a Bachelor of Arts, from Columbia University with a Master of Arts and from Wharton Graduate School, University of Pennsylvania with an MBA.
|
JULIE A. DOBSON
|
Ms. Dobson is Non-Executive Chairman of Telebright, Inc. a private firm established in 1989, where she oversees the development of management software applications and mobile applications for the business to business and business to consumer markets. She was Chief Operating Officer at Telecorp PCS, Inc. and held various senior management positions with Bell Atlantic Corporation during her 18-year career with the company. Ms. Dobson graduated from the College of William and Mary with a Bachelor of Science and from the University of Pittsburgh with an MBA.
|
DOUGLAS J. HAUGHEY
|
Mr. Haughey, from August 2012 through May 2013, was Chief Executive Officer of The Churchill Corporation. Prior to that, he served as President and Chief Executive Officer of Provident Energy Ltd. and held several executive roles with Spectra Energy and predecessor companies. He graduated from the University of Regina with a Bachelor of Business Administration and from the University of Calgary with an MBA. Mr. Haughey holds an ICD.D designation from the Institute of Corporate Directors.
|
JO MARK ZUREL
|
Mr. Zurel was the president of Stonebridge Capital Inc., a private investment company, from 2006 to March 2019. From 1998 to 2006, Mr. Zurel was Senior Vice-President and Chief Financial Officer of CHC Helicopter Corporation. Mr. Zurel graduated from Dalhousie University with a Bachelor of Commerce and is a Fellow of the Association of Chartered Professional Accountants of Newfoundland and Labrador. He holds an ICD.D designation from the Institute of Corporate Directors.
|
ANNUAL INFORMATION FORM
|
34
|
December 31, 2019
|
|
|
|
Deloitte LLP
|
|||
($ thousands)
|
Description of Fee Category
|
2019
|
|
2018
|
|
Audit Fees
|
Core audit services
|
9,745
|
|
9,121
|
|
Audit-Related Fees
|
Assurance and related services that are reasonably related to the audit or review of the Financial Statements and are not included under Audit Fees
|
1,490
|
|
1,462
|
|
Tax Fees
|
Services related to tax compliance, planning and advice
|
669
|
|
636
|
|
Other
|
Services which are not Audit Services, Audit-Related Fees or Tax Fees
|
—
|
|
27
|
|
Total
|
|
11,904
|
|
11,246
|
|
ANNUAL INFORMATION FORM
|
35
|
December 31, 2019
|
|
ANNUAL INFORMATION FORM
|
36
|
December 31, 2019
|
|
ANNUAL INFORMATION FORM
|
37
|
December 31, 2019
|
|
|
Authorized
|
|
Issued and Outstanding
|
|
Initial Yield (%)
|
|
Annual Dividend ($) (1)
|
|
Reset Dividend Yield
(%)
|
|
Earliest Redemption and/or Conversion Option Date (2)
|
Redemption Value ($)
|
|
Right to Convert on a One for One Basis
|
|
Perpetual Fixed Rate
|
|||||||||||||||
Series F
|
5,000,000
|
|
5,000,000
|
|
4.90
|
|
1.2250
|
|
—
|
|
December 1, 2011
|
25.00
|
|
—
|
|
Series J (3)
|
8,000,000
|
|
8,000,000
|
|
4.75
|
|
1.1875
|
|
—
|
|
December 1, 2017
|
25.50
|
|
—
|
|
Fixed Rate Reset (4) (5)
|
|||||||||||||||
Series G
|
9,200,000
|
|
9,200,000
|
|
5.25
|
|
1.0983
|
|
2.13
|
|
September 1, 2013
|
25.00
|
|
—
|
|
Series H
|
10,000,000
|
|
7,024,846
|
|
4.25
|
|
0.6250
|
|
1.45
|
|
June 1, 2015
|
25.00
|
|
Series I
|
|
Series K (6)
|
12,000,000
|
|
10,000,000
|
|
4.00
|
|
0.9823
|
|
2.05
|
|
March 1, 2019
|
25.00
|
|
Series L
|
|
Series M (7)
|
24,000,000
|
|
24,000,000
|
|
4.10
|
|
0.9783
|
|
2.48
|
|
December 1, 2019
|
25.00
|
|
Series N
|
|
Floating Rate Reset (5) (8)
|
|||||||||||||||
Series I (3)
|
10,000,000
|
|
2,975,154
|
|
2.10
|
|
—
|
|
1.45
|
|
June 1, 2015
|
25.50
|
|
Series H
|
|
Series L
|
12,000,000
|
|
—
|
|
—
|
|
—
|
|
2.05
|
|
March 1, 2024
|
—
|
|
Series K
|
|
Series N
|
24,000,000
|
|
—
|
|
—
|
|
—
|
|
2.48
|
|
December 1, 2024
|
—
|
|
Series M
|
|
(1)
|
Holders are entitled to receive a fixed or floating cumulative quarterly cash dividend as and when declared by the Board, payable in equal installments on the first day of each quarter.
|
(2)
|
On or after the specified redemption dates, the Corporation has the option to redeem for cash the outstanding first preference shares, in whole or in part, at the specified per share redemption value plus all accrued and unpaid dividends up to but excluding the dates fixed for redemption, and in the case of the first preference shares that reset, on every fifth anniversary date thereafter.
|
(3)
|
First Preference Shares, Series J were redeemable at $26.00 until December 1, 2018, decreasing by $0.25 each year until December 1, 2021 and redeemable at $25.00 per share thereafter. First Preference Shares, Series I are redeemable at $25.50 per share to but excluding June 1, 2020, and at $25.00 per share on June 1, 2020, and on every fifth anniversary date thereafter.
|
(4)
|
On the redemption and/or conversion option date and each five-year anniversary thereafter, the reset annual dividend per share will be determined by multiplying $25.00 per share by the annual fixed dividend rate, which is the sum of the five-year Government of Canada bond yield on the applicable reset date plus the applicable reset dividend yield.
|
(5)
|
On each conversion option date, the holders have the option, subject to certain conditions, to convert any or all of their shares into an equal number of cumulative redeemable first preference shares of a specified series.
|
(6)
|
The annual dividend per share for the First Preference Shares, Series K was reset from $1.0000 to $0.9823 for the five-year period from March 1, 2019 to but excluding March 1, 2024.
|
(7)
|
The annual dividend per share for the First Preference Shares, Series M was reset from $1.0250 to $0.9783 for the five-year period from December 1, 2019 to but excluding December 1, 2024.
|
ANNUAL INFORMATION FORM
|
38
|
December 31, 2019
|
|
(8)
|
The floating quarterly dividend rate will be reset every quarter based on the then current three-month Government of Canada Treasury Bill rate plus the applicable reset dividend yield.
|
ANNUAL INFORMATION FORM
|
39
|
December 31, 2019
|
|
2019 Trading Prices and Volumes – Common Shares
|
||||||||||||
|
TSX
|
NYSE
|
||||||||||
Month
|
High ($)
|
|
Low ($)
|
|
Volume
|
|
High (US$)
|
|
Low (US$)
|
|
Volume
|
|
January
|
46.96
|
|
44.00
|
|
24,601,842
|
|
35.74
|
|
32.85
|
|
6,753,713
|
|
February
|
48.10
|
|
46.11
|
|
22,820,085
|
|
36.25
|
|
34.96
|
|
6,703,655
|
|
March
|
50.06
|
|
47.22
|
|
26,985,538
|
|
37.29
|
|
35.50
|
|
7,566,171
|
|
April
|
50.47
|
|
48.88
|
|
21,753,244
|
|
37.75
|
|
36.46
|
|
6,648,254
|
|
May
|
51.35
|
|
49.13
|
|
27,291,236
|
|
38.04
|
|
36.49
|
|
11,148,765
|
|
June
|
52.95
|
|
50.95
|
|
22,571,031
|
|
40.09
|
|
37.78
|
|
7,067,672
|
|
July
|
52.90
|
|
51.44
|
|
15,382,634
|
|
40.47
|
|
39.14
|
|
6,953,052
|
|
August
|
55.31
|
|
51.62
|
|
21,514,936
|
|
41.52
|
|
39.16
|
|
7,826,388
|
|
September
|
56.79
|
|
54.70
|
|
24,174,617
|
|
42.80
|
|
41.12
|
|
10,575,457
|
|
October
|
56.94
|
|
53.24
|
|
24,646,611
|
|
42.75
|
|
40.74
|
|
9,937,864
|
|
November
|
55.36
|
|
51.65
|
|
35,560,577
|
|
41.98
|
|
38.76
|
|
8,425,448
|
|
December
|
54.98
|
|
51.73
|
|
30,187,739
|
|
41.81
|
|
38.91
|
|
10,295,297
|
|
ANNUAL INFORMATION FORM
|
40
|
December 31, 2019
|
|
|
First Preference Shares, Series H
|
First Preference Shares, Series I
|
||||||||||
Month
|
High ($)
|
|
Low ($)
|
|
Volume
|
|
High ($)
|
|
Low ($)
|
|
Volume
|
|
January
|
15.69
|
|
14.21
|
|
201,508
|
|
15.80
|
|
14.47
|
|
12,806
|
|
February
|
15.06
|
|
13.81
|
|
81,589
|
|
14.92
|
|
13.98
|
|
29,655
|
|
March
|
15.13
|
|
14.10
|
|
34,257
|
|
14.48
|
|
14.12
|
|
10,900
|
|
April
|
14.91
|
|
14.16
|
|
25,322
|
|
14.50
|
|
14.20
|
|
122,700
|
|
May
|
14.54
|
|
12.62
|
|
121,532
|
|
14.57
|
|
12.85
|
|
28,638
|
|
June
|
12.95
|
|
12.25
|
|
296,434
|
|
12.85
|
|
11.82
|
|
148,700
|
|
July
|
13.90
|
|
12.81
|
|
31,124
|
|
13.65
|
|
12.51
|
|
90,300
|
|
August
|
13.15
|
|
11.62
|
|
93,398
|
|
13.00
|
|
11.25
|
|
88,225
|
|
September
|
13.32
|
|
12.45
|
|
157,154
|
|
13.12
|
|
12.40
|
|
26,663
|
|
October
|
13.02
|
|
11.85
|
|
200,341
|
|
12.86
|
|
11.92
|
|
40,220
|
|
November
|
13.47
|
|
12.52
|
|
118,876
|
|
13.11
|
|
12.32
|
|
45,441
|
|
December
|
13.49
|
|
12.15
|
|
268,761
|
|
13.02
|
|
12.20
|
|
55,158
|
|
|
First Preference Shares, Series J
|
First Preference Shares, Series K
|
||||||||||
Month
|
High ($)
|
|
Low ($)
|
|
Volume
|
|
High ($)
|
|
Low ($)
|
|
Volume
|
|
January
|
22.08
|
|
21.25
|
|
63,951
|
|
18.96
|
|
16.87
|
|
89,759
|
|
February
|
21.90
|
|
21.27
|
|
116,814
|
|
18.01
|
|
16.63
|
|
120,848
|
|
March
|
22.13
|
|
21.35
|
|
466,001
|
|
18.02
|
|
17.37
|
|
231,559
|
|
April
|
22.00
|
|
21.67
|
|
172,394
|
|
18.31
|
|
17.38
|
|
104,410
|
|
May
|
21.93
|
|
21.33
|
|
126,314
|
|
18.08
|
|
16.20
|
|
127,202
|
|
June
|
21.72
|
|
21.24
|
|
223,502
|
|
16.79
|
|
15.41
|
|
263,218
|
|
July
|
22.20
|
|
21.75
|
|
80,749
|
|
17.70
|
|
16.80
|
|
102,296
|
|
August
|
22.18
|
|
21.44
|
|
116,863
|
|
16.94
|
|
15.00
|
|
140,985
|
|
September
|
22.21
|
|
21.55
|
|
610,780
|
|
16.70
|
|
15.52
|
|
133,391
|
|
October
|
22.58
|
|
22.05
|
|
265,996
|
|
16.25
|
|
15.20
|
|
229,073
|
|
November
|
22.60
|
|
22.19
|
|
117,437
|
|
16.61
|
|
15.70
|
|
179,504
|
|
December
|
22.50
|
|
22.06
|
|
164,666
|
|
16.55
|
|
15.40
|
|
182,757
|
|
|
First Preference Shares, Series M
|
|
||||||||||
Month
|
High ($)
|
|
Low ($)
|
|
Volume
|
|
|
|
|
|||
January
|
20.72
|
|
18.58
|
|
343,059
|
|
|
|
|
|||
February
|
19.49
|
|
17.96
|
|
286,793
|
|
|
|
|
|||
March
|
19.80
|
|
18.67
|
|
284,482
|
|
|
|
|
|||
April
|
19.98
|
|
18.65
|
|
311,866
|
|
|
|
|
|||
May
|
19.27
|
|
17.00
|
|
284,236
|
|
|
|
|
|||
June
|
17.47
|
|
15.77
|
|
259,306
|
|
|
|
|
|||
July
|
18.81
|
|
17.16
|
|
203,862
|
|
|
|
|
|||
August
|
18.87
|
|
15.06
|
|
646,405
|
|
|
|
|
|||
September
|
16.99
|
|
16.02
|
|
631,806
|
|
|
|
|
|||
October
|
17.17
|
|
15.98
|
|
294,566
|
|
|
|
|
|||
November
|
17.59
|
|
16.35
|
|
224,894
|
|
|
|
|
|||
December
|
17.39
|
|
16.34
|
|
828,348
|
|
|
|
|
ANNUAL INFORMATION FORM
|
41
|
December 31, 2019
|
|
1.0
|
PURPOSE AND AUTHORITY
|
(a)
|
the integrity of the Corporation's financial statements, financial disclosures and internal controls over financial reporting;
|
(b)
|
the Corporation's compliance with related legal and regulatory requirements;
|
(c)
|
the qualifications, independence and performance of the Independent Auditor and Internal Auditor;
|
(d)
|
the related policies of the Corporation set out herein; and
|
(e)
|
other matters set out herein or otherwise delegated to the Committee by the Board.
|
2.0
|
DEFINITIONS
|
(c)
|
"Committee" means the audit committee appointed by the Board pursuant to this Mandate;
|
(d)
|
"Core Audit Services" means services necessary to: (i) audit the Corporation's annual consolidated or non-consolidated financial statements; (ii) review the Corporation's interim condensed consolidated financial statements; and (iii) audit internal controls over financial reporting in accordance with the requirements of the Sarbanes Oxley Act of 2002;
|
ANNUAL INFORMATION FORM
|
42
|
December 31, 2019
|
|
(h)
|
"ERM Program" means the Corporation's Enterprise Risk Management Program that incorporates an effective risk management framework and applies a logical and systematic methodology to identify, evaluate, treat, monitor and communicate key corporate risks;
|
(i)
|
"Financial Expert" means an "audit committee financial expert" as defined in Item 407(d)(5) of SEC Regulation S‑K;
|
(j)
|
"Financially Literate" means having the ability to read and understand a set of financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breath and complexity of the issues that can reasonably be expected to be present in the Corporation's financial statements;
|
(k)
|
"Governance and Nominating Committee" means the governance and nominating committee of the Board;
|
(l)
|
"Independent" means, in the context of a Member and in accordance with applicable law and stock exchange requirements, free from any direct or indirect material relationship with the Corporation and its subsidiaries which, in the view of the Board, could reasonably be expected to interfere with the exercise of a Member's independent judgment;
|
(m)
|
"Independent Auditor" means the firm of chartered professional accountants, registered with the CPAB and the PCAOB, and appointed by the Shareholders to act as external auditor;
|
(n)
|
"Internal Auditor" means the person(s) employed or engaged by the Corporation to perform the internal audit function of the Corporation;
|
(q)
|
"MD&A" means the Corporation's management discussion and analysis prepared in accordance with the requirements of National Instrument 51-102F1 and the SEC in respect of the Corporation's annual consolidated and interim condensed consolidated financial statements;
|
(t)
|
"PCAOB" means the Public Company Accounting Oversight Board or its successor;
|
(u)
|
"Related Party Transactions" means those transactions required to be disclosed under Items 404(a) and 404(b) of SEC Regulation S-K and required to be evaluated by an appropriate group within the Corporation pursuant to Section 314.00 of the NYSE Listed Company Manual which, without limiting the foregoing, are transactions between: (i) executive officers, directors, principal shareholders or their immediate family members; and (ii) the Corporation;
|
ANNUAL INFORMATION FORM
|
43
|
December 31, 2019
|
|
4.0
|
COMMITTEE MEETINGS
|
ANNUAL INFORMATION FORM
|
44
|
December 31, 2019
|
|
5.0
|
SPECIFIC RESPONSIBILITIES AND DUTIES OF THE COMMITTEE
|
(a)
|
review and discuss with Management and separately with the Independent Auditor the results of the Corporation's annual Independent Auditor assessment process; and
|
(b)
|
at least annually, obtain and review a report from the Independent Auditor describing the firm's internal quality control process and procedures, including any material issues raised by the most recent internal quality-control review or peer review, or by any inquiry or investigation by governmental or professional authorities (including without limitation the PCAOB and the CPAB) within the preceding five years with respect to independent audits carried out by the Independent Auditor, and any steps taken to deal with such issues.
|
ANNUAL INFORMATION FORM
|
45
|
December 31, 2019
|
|
B.
|
Financial Reporting
|
(a)
|
reports regarding: (i) critical accounting estimates, policies and practices; (ii) goodwill impairment testing; (iii) derivatives and hedges; and (iv) the effect of regulatory and accounting initiatives, as well as off-balance sheet structures, on the Corporation's financial statements;
|
(b)
|
analyses by Management and the Independent Auditor regarding significant financial reporting issues and judgements made in connection with the preparation of the Corporation's consolidated financial statements including: (i) alternative treatments of financial information within generally accepted accounting principles related to material matters that have been discussed with Management, their ramifications and the treatment preferred by the Independent Auditor; (ii) major issues regarding accounting principles and presentations, including significant changes in the selection or application of accounting principles; and (iii) major issues regarding the adequacy of the Corporation's internal controls and any specific audit steps adopted in light of material weaknesses or significant deficiencies in internal controls; and
|
(c)
|
other material written communication between Management and the Independent Auditor.
|
(a)
|
the Corporation's annual audited consolidated and non-consolidated financial statements and interim unaudited condensed consolidated financial statements and the Independent Auditor's related attestation reports as well as any related MD&As;
|
(b)
|
Management's report and the Independent Auditor's audit report on internal controls over financial reporting;
|
(c)
|
significant reports or summaries thereof pertaining to the Corporation's processes for compliance with the requirements of the Sarbanes Oxley Act of 2002 with respect to internal controls over financial reporting;
|
(d)
|
the Independent Auditor's quarterly review reports and annual audit results report summarizing the scope, status, results and recommendations of the quarterly reviews of the Corporation's interim condensed consolidated financial statements and of the audit of the Corporation's annual consolidated financial statements and related audit of internal controls over financial reporting, and also containing at least: (i) the communications with respect thereto between the Independent Auditor and the
|
ANNUAL INFORMATION FORM
|
46
|
December 31, 2019
|
|
(e)
|
the Report to Shareholders contained in the Corporation's annual report; and
|
(f)
|
any other document that the Committee determines should be reviewed and discussed with Management and the Independent Auditor or for which a legal or regulatory requirement in that regard exists.
|
(b)
|
the Annual Information Form and Management Information Circular to be filed by the Corporation;
|
(c)
|
any prospectus or other offering documents and documents related thereto for the issuance of securities by the Corporation; and
|
(d)
|
other financial information and disclosure documents to be released publicly.
|
ANNUAL INFORMATION FORM
|
47
|
December 31, 2019
|
|
E.
|
Policies and Mandate
|
(a)
|
Policy on Reporting Allegations of Suspected Improper Conduct and Wrongdoing (including overseeing procedures for the receipt, retention, and treatment of complaints regarding accounting, internal controls, or auditing matters as well as procedures for confidential, anonymous submissions by employees regarding questionable accounting or auditing matters as required by applicable law);
|
(b)
|
Derivative Instruments and Hedging Policy;
|
(c)
|
Pre-Approval Policy for Independent Auditor Services;
|
(d)
|
Hiring from Independent Auditing Firms Policy;
|
(e)
|
Policy on the Role of the Internal Audit Function;
|
ANNUAL INFORMATION FORM
|
48
|
December 31, 2019
|
|
(f)
|
Disclosure Policy; and
|
(g)
|
other policies that may be established from time-to-time regarding accounting, financial reporting, disclosure controls and procedures, internal controls over financial reporting, oversight of the external audit of the Corporation's financial statements, and oversight of the internal audit function.
|
ANNUAL INFORMATION FORM
|
49
|
December 31, 2019
|
|
ANNUAL INFORMATION FORM
|
50
|
December 31, 2019
|
|
|
|
|
|
|
|
|
|
Management's Report on Internal Control over Financial Reporting
|
|
|
NOTE 11
|
Property, Plant and Equipment
|
||
Report of Independent Registered Public Accounting Firm - Opinion on the
Financial Statements
|
|
NOTE 12
|
Intangible Assets
|
|||
Report of Independent Registered Public Accounting Firm - Opinion on Internal
Control over Financial Reporting
|
|
NOTE 13
|
Goodwill
|
|||
Consolidated Balance Sheets
|
|
NOTE 14
|
Accounts Payable and Other Current Liabilities
|
|||
Consolidated Statements of Earnings
|
|
NOTE 15
|
Long-Term Debt
|
|||
Consolidated Statements of Comprehensive
Income
|
|
|
NOTE 16
|
Leases
|
||
Consolidated Statements of Cash Flows
|
|
NOTE 17
|
Other Liabilities
|
|||
Consolidated Statements of Changes in Equity
|
|
NOTE 18
|
Common Shares
|
|||
Notes to Consolidated Financial Statements
|
|
NOTE 19
|
Earnings Per Common Share
|
|||
NOTE 1
|
Description of Business
|
|
NOTE 20
|
Preference Shares
|
||
NOTE 2
|
Regulation
|
|
NOTE 21
|
Accumulated Other Comprehensive Income
|
||
NOTE 3
|
Summary of Significant Accounting Policies
|
|
NOTE 22
|
Stock-Based Compensation Plans
|
||
NOTE 4
|
Future Accounting Pronouncements
|
|
NOTE 23
|
Disposition
|
||
NOTE 5
|
Segmented Information
|
|
NOTE 24
|
Other Income, Net
|
||
NOTE 6
|
Revenue
|
|
NOTE 25
|
Income Taxes
|
||
NOTE 7
|
Accounts Receivable and Other Current Assets
|
|
NOTE 26
|
Employee Future Benefits
|
||
NOTE 8
|
Inventories
|
|
NOTE 27
|
Supplementary Cash Flow Information
|
||
NOTE 9
|
Regulatory Assets and Liabilities
|
|
NOTE 28
|
Fair Value of Financial Instruments and Risk Management
|
||
NOTE 10
|
Other Assets
|
|
NOTE 29
|
Commitments and Contingencies
|
|
|
|
|
|
|
|
i
|
|
|
|
|
|
ii
|
|
|
|
|
•
|
Evaluating the effectiveness of controls over the estimated fair value of the reporting units, including the review and approval of the growth rate and discount rate selected by management.
|
•
|
Evaluating management’s ability to accurately forecast the growth rate by:
|
•
|
Assessing the methodology used in management’s determination of the growth rate and,
|
•
|
Comparing management’s assumptions to historical data and available market trends.
|
•
|
With the assistance of a fair value specialist, evaluating the reasonableness of the discount rate by:
|
•
|
Testing the source information underlying the determination of the discount rate and,
|
•
|
Developing a range of independent estimates and comparing those to the discount rate selected by management.
|
•
|
Evaluating the effectiveness of controls over the monitoring and evaluation of regulatory developments that may affect the likelihood of recovering costs in future rates or of a future reduction in rates.
|
•
|
Assessing relevant regulatory orders, regulatory statutes and interpretations as well as procedural memorandums, utility and intervener filings, and other publicly available information to evaluate the likelihood of recovery in future rates or of a future reduction in rates and the ability to earn a reasonable ROA or ROE.
|
|
iii
|
|
|
|
|
•
|
For regulatory matters in progress, inspecting the regulated utilities’ filings for any evidence that might contradict management’s assertions. We obtained an analysis from management and letters from internal and external legal counsel, as appropriate, regarding cost recoveries or a future reduction in rates.
|
•
|
Evaluating the Corporation's disclosures related to the impacts of rate regulation, including the balances recorded and regulatory developments.
|
|
iv
|
|
|
|
|
|
v
|
|
FORTIS INC.
|
|||||||
Consolidated Balance Sheets
|
|||||||
As at December 31
|
|||||||
(in millions of Canadian dollars)
|
|||||||
|
2019
|
|
|
2018
|
|
||
|
|
|
|
||||
ASSETS
|
|
|
|
||||
Current assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
370
|
|
|
$
|
332
|
|
Accounts receivable and other current assets (Note 7)
|
1,297
|
|
|
1,357
|
|
||
Prepaid expenses
|
88
|
|
|
84
|
|
||
Inventories (Note 8)
|
394
|
|
|
398
|
|
||
Regulatory assets (Note 9)
|
425
|
|
|
324
|
|
||
Assets held for sale (Note 23)
|
—
|
|
|
766
|
|
||
Total current assets
|
2,574
|
|
|
3,261
|
|
||
Other assets (Note 10)
|
620
|
|
|
552
|
|
||
Regulatory assets (Note 9)
|
2,958
|
|
|
2,751
|
|
||
Property, plant and equipment, net (Note 11)
|
33,988
|
|
|
32,757
|
|
||
Intangible assets, net (Note 12)
|
1,260
|
|
|
1,200
|
|
||
Goodwill (Note 13)
|
12,004
|
|
|
12,530
|
|
||
Total assets
|
$
|
53,404
|
|
|
$
|
53,051
|
|
|
|
|
|
||||
LIABILITIES AND EQUITY
|
|
|
|
||||
Current liabilities
|
|
|
|
||||
Short-term borrowings (Note 15)
|
$
|
512
|
|
|
$
|
60
|
|
Accounts payable and other current liabilities (Note 14)
|
2,378
|
|
|
2,289
|
|
||
Regulatory liabilities (Note 9)
|
572
|
|
|
656
|
|
||
Current installments of long-term debt (Note 15)
|
690
|
|
|
926
|
|
||
Current installments of finance leases (Note 16)
|
24
|
|
|
252
|
|
||
Liabilities associated with assets held for sale (Note 23)
|
—
|
|
|
69
|
|
||
Total current liabilities
|
4,176
|
|
|
4,252
|
|
||
Other liabilities (Note 17)
|
1,446
|
|
|
1,138
|
|
||
Regulatory liabilities (Note 9)
|
2,786
|
|
|
2,970
|
|
||
Deferred income taxes (Note 25)
|
2,969
|
|
|
2,686
|
|
||
Long-term debt (Note 15)
|
21,501
|
|
|
23,159
|
|
||
Finance leases (Note 16)
|
413
|
|
|
390
|
|
||
Total liabilities
|
33,291
|
|
|
34,595
|
|
||
Commitments and contingencies (Note 29)
|
|
|
|
||||
Equity
|
|
|
|
||||
Common shares (Note 18) (1)
|
13,645
|
|
|
11,889
|
|
||
Preference shares (Note 20)
|
1,623
|
|
|
1,623
|
|
||
Additional paid-in capital
|
11
|
|
|
11
|
|
||
Accumulated other comprehensive income (Note 21)
|
336
|
|
|
928
|
|
||
Retained earnings
|
2,916
|
|
|
2,082
|
|
||
Shareholders' equity
|
18,531
|
|
|
16,533
|
|
||
Non-controlling interests
|
1,582
|
|
|
1,923
|
|
||
Total equity
|
20,113
|
|
|
18,456
|
|
||
Total liabilities and equity
|
$
|
53,404
|
|
|
$
|
53,051
|
|
|
|
|
|
||||
(1) No par value. Unlimited authorized shares; 463.3 million and 428.5 million issued and outstanding as at December 31, 2019 and 2018, respectively
|
Approved on Behalf of the Board
|
||||||
|
/s/ Douglas J. Haughey
|
|
/s/ Tracey C. Ball
|
||||
|
|
||||||
|
Douglas J. Haughey,
|
Tracey C. Ball,
|
|||||
|
|||||||
See accompanying Notes to Consolidated Financial Statements
|
Director
|
|
Director
|
FORTIS INC.
Notes to Consolidated Financial Statements
For the years ended December 31, 2019 and 2018
|
|
5
|
|
FORTIS INC.
Notes to Consolidated Financial Statements
For the years ended December 31, 2019 and 2018
|
|
6
|
|
FORTIS INC.
Notes to Consolidated Financial Statements
For the years ended December 31, 2019 and 2018
|
|
7
|
|
FORTIS INC.
Notes to Consolidated Financial Statements
For the years ended December 31, 2019 and 2018
|
|
8
|
|
FORTIS INC.
Notes to Consolidated Financial Statements
For the years ended December 31, 2019 and 2018
|
|
9
|
|
FORTIS INC.
Notes to Consolidated Financial Statements
For the years ended December 31, 2019 and 2018
|
|
10
|
|
FORTIS INC.
Notes to Consolidated Financial Statements
For the years ended December 31, 2019 and 2018
|
|
11
|
|
FORTIS INC.
Notes to Consolidated Financial Statements
For the years ended December 31, 2019 and 2018
|
|
|
2019
|
2018
|
|||
(years)
|
Service Life Ranges
|
Weighted Average Remaining Service Life
|
|
Service Life Ranges
|
Weighted Average Remaining Service Life
|
|
Distribution
|
|
|
|
|
|
|
|
Electric
|
5-80
|
32
|
|
5-80
|
33
|
|
Gas
|
15-95
|
36
|
|
14-95
|
35
|
Transmission
|
|
|
|
|
|
|
|
Electric
|
20-90
|
43
|
|
20-90
|
42
|
|
Gas
|
5-85
|
32
|
|
5-85
|
41
|
Generation
|
1-85
|
25
|
|
1-85
|
24
|
|
Other
|
3-70
|
14
|
|
3-70
|
15
|
|
12
|
|
FORTIS INC.
Notes to Consolidated Financial Statements
For the years ended December 31, 2019 and 2018
|
|
|
2019
|
|
2018
|
||
(years)
|
Service Life Ranges
|
Weighted Average Remaining Service Life
|
|
Service Life Ranges
|
Weighted Average Remaining Service Life
|
|
Computer software
|
3-10
|
4
|
|
3-10
|
4
|
|
Land, transmission and water rights
|
43-90
|
58
|
|
36-90
|
57
|
|
Other
|
10-100
|
12
|
|
10-100
|
13
|
|
13
|
|
FORTIS INC.
Notes to Consolidated Financial Statements
For the years ended December 31, 2019 and 2018
|
|
14
|
|
FORTIS INC.
Notes to Consolidated Financial Statements
For the years ended December 31, 2019 and 2018
|
|
15
|
|
FORTIS INC.
Notes to Consolidated Financial Statements
For the years ended December 31, 2019 and 2018
|
|
16
|
|
FORTIS INC.
Notes to Consolidated Financial Statements
For the years ended December 31, 2019 and 2018
|
|
17
|
|
FORTIS INC.
Notes to Consolidated Financial Statements
For the years ended December 31, 2019 and 2018
|
|
18
|
|
FORTIS INC.
Notes to Consolidated Financial Statements
For the years ended December 31, 2019 and 2018
|
(in millions)
|
2019
|
|
2018
|
|
||
Sale of capacity from Waneta Expansion to FortisBC Electric (1)
|
$
|
17
|
|
$
|
47
|
|
Lease of gas storage capacity and gas sales from Aitken Creek to
FortisBC Energy
|
23
|
|
25
|
|
(1)
|
Reflects amounts to the April 16, 2019 disposition of the Waneta Expansion (Note 23)
|
|
19
|
|
|
REGULATED
|
|
NON-REGULATED
|
|
|
|||||||||||||||||||||||||||||||||
Year Ended
|
|
|
Energy
|
|
Inter-
|
|
||||||||||||||||||||||||||||||||
December 31, 2019
|
|
UNS
|
|
Central
|
|
|
FortisBC
|
|
Fortis
|
|
FortisBC
|
|
Other
|
|
Sub
|
|
|
Infra-
|
Corporate
|
|
segment
|
|
||||||||||||||||
(in millions)
|
ITC
|
|
Energy
|
|
Hudson
|
|
|
Energy
|
|
Alberta
|
|
Electric
|
|
Electric
|
|
total
|
|
|
structure
|
|
and Other
|
|
eliminations
|
Total
|
|
|||||||||||||
Revenue
|
$
|
1,761
|
|
$
|
2,212
|
|
$
|
917
|
|
|
$
|
1,331
|
|
$
|
598
|
|
$
|
418
|
|
$
|
1,467
|
|
$
|
8,704
|
|
|
$
|
82
|
|
$
|
—
|
|
$
|
(3
|
)
|
$
|
8,783
|
|
Energy supply costs
|
—
|
|
814
|
|
254
|
|
|
438
|
|
—
|
|
121
|
|
890
|
|
2,517
|
|
|
3
|
|
—
|
|
—
|
|
2,520
|
|
||||||||||||
Operating expenses
|
489
|
|
650
|
|
451
|
|
|
333
|
|
145
|
|
107
|
|
188
|
|
2,363
|
|
|
36
|
|
56
|
|
(3
|
)
|
2,452
|
|
||||||||||||
Depreciation and amortization
|
270
|
|
297
|
|
79
|
|
|
235
|
|
214
|
|
62
|
|
171
|
|
1,328
|
|
|
20
|
|
2
|
|
—
|
|
1,350
|
|
||||||||||||
Gain on disposition
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
577
|
|
—
|
|
577
|
|
||||||||||||
Operating income
|
1,002
|
|
451
|
|
133
|
|
|
325
|
|
239
|
|
128
|
|
218
|
|
2,496
|
|
|
23
|
|
519
|
|
—
|
|
3,038
|
|
||||||||||||
Other income, net
|
37
|
|
28
|
|
17
|
|
|
16
|
|
2
|
|
4
|
|
2
|
|
106
|
|
|
2
|
|
30
|
|
—
|
|
138
|
|
||||||||||||
Finance charges
|
290
|
|
130
|
|
46
|
|
|
136
|
|
104
|
|
72
|
|
77
|
|
855
|
|
|
—
|
|
180
|
|
—
|
|
1,035
|
|
||||||||||||
Income tax expense
|
174
|
|
57
|
|
19
|
|
|
39
|
|
6
|
|
6
|
|
20
|
|
321
|
|
|
(1
|
)
|
(31
|
)
|
—
|
|
289
|
|
||||||||||||
Net earnings
|
575
|
|
292
|
|
85
|
|
|
166
|
|
131
|
|
54
|
|
123
|
|
1,426
|
|
|
26
|
|
400
|
|
—
|
|
1,852
|
|
||||||||||||
Non-controlling interests
|
104
|
|
—
|
|
—
|
|
|
1
|
|
—
|
|
—
|
|
17
|
|
122
|
|
|
8
|
|
—
|
|
—
|
|
130
|
|
||||||||||||
Preference share dividends
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
67
|
|
—
|
|
67
|
|
||||||||||||
Net earnings attributable
to common equity shareholders
|
$
|
471
|
|
$
|
292
|
|
$
|
85
|
|
|
$
|
165
|
|
$
|
131
|
|
$
|
54
|
|
$
|
106
|
|
$
|
1,304
|
|
|
$
|
18
|
|
$
|
333
|
|
$
|
—
|
|
$
|
1,655
|
|
Goodwill
|
$
|
7,970
|
|
$
|
1,794
|
|
$
|
586
|
|
|
$
|
913
|
|
$
|
228
|
|
$
|
235
|
|
$
|
251
|
|
$
|
11,977
|
|
|
$
|
27
|
|
$
|
—
|
|
$
|
—
|
|
$
|
12,004
|
|
Total assets
|
19,799
|
|
10,205
|
|
3,726
|
|
|
7,305
|
|
4,831
|
|
2,328
|
|
4,185
|
|
52,379
|
|
|
711
|
|
641
|
|
(327
|
)
|
53,404
|
|
||||||||||||
Capital expenditures
|
1,148
|
|
915
|
|
317
|
|
|
463
|
|
423
|
|
106
|
|
295
|
|
3,667
|
|
|
28
|
|
25
|
|
—
|
|
3,720
|
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||||||
Year Ended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
December 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
(in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
Revenue
|
$
|
1,504
|
|
$
|
2,202
|
|
$
|
924
|
|
|
$
|
1,187
|
|
$
|
579
|
|
$
|
408
|
|
$
|
1,412
|
|
$
|
8,216
|
|
|
$
|
184
|
|
$
|
—
|
|
$
|
(10
|
)
|
$
|
8,390
|
|
Energy supply costs
|
—
|
|
868
|
|
315
|
|
|
322
|
|
—
|
|
135
|
|
853
|
|
2,493
|
|
|
2
|
|
—
|
|
—
|
|
2,495
|
|
||||||||||||
Operating expenses
|
448
|
|
609
|
|
410
|
|
|
308
|
|
167
|
|
105
|
|
182
|
|
2,229
|
|
|
40
|
|
28
|
|
(10
|
)
|
2,287
|
|
||||||||||||
Depreciation and amortization
|
234
|
|
272
|
|
71
|
|
|
219
|
|
192
|
|
61
|
|
160
|
|
1,209
|
|
|
32
|
|
2
|
|
—
|
|
1,243
|
|
||||||||||||
Operating income
|
822
|
|
453
|
|
128
|
|
|
338
|
|
220
|
|
107
|
|
217
|
|
2,285
|
|
|
110
|
|
(30
|
)
|
—
|
|
2,365
|
|
||||||||||||
Other income, net
|
40
|
|
10
|
|
7
|
|
|
7
|
|
1
|
|
3
|
|
1
|
|
69
|
|
|
1
|
|
(10
|
)
|
—
|
|
60
|
|
||||||||||||
Finance charges
|
285
|
|
104
|
|
41
|
|
|
134
|
|
100
|
|
40
|
|
76
|
|
780
|
|
|
6
|
|
188
|
|
—
|
|
974
|
|
||||||||||||
Income tax expense
|
139
|
|
66
|
|
20
|
|
|
55
|
|
1
|
|
14
|
|
22
|
|
317
|
|
|
6
|
|
(158
|
)
|
—
|
|
165
|
|
||||||||||||
Net earnings
|
438
|
|
293
|
|
74
|
|
|
156
|
|
120
|
|
56
|
|
120
|
|
1,257
|
|
|
99
|
|
(70
|
)
|
—
|
|
1,286
|
|
||||||||||||
Non-controlling interests
|
77
|
|
—
|
|
—
|
|
|
1
|
|
—
|
|
—
|
|
15
|
|
93
|
|
|
27
|
|
—
|
|
—
|
|
120
|
|
||||||||||||
Preference share dividends
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
66
|
|
—
|
|
66
|
|
||||||||||||
Net earnings attributable
to common equity shareholders
|
$
|
361
|
|
$
|
293
|
|
$
|
74
|
|
|
$
|
155
|
|
$
|
120
|
|
$
|
56
|
|
$
|
105
|
|
$
|
1,164
|
|
|
$
|
72
|
|
$
|
(136
|
)
|
$
|
—
|
|
$
|
1,100
|
|
Goodwill
|
$
|
8,369
|
|
$
|
1,884
|
|
$
|
615
|
|
|
$
|
913
|
|
$
|
227
|
|
$
|
235
|
|
$
|
260
|
|
$
|
12,503
|
|
|
$
|
27
|
|
$
|
—
|
|
$
|
—
|
|
$
|
12,530
|
|
Total assets
|
19,798
|
|
10,182
|
|
3,670
|
|
|
6,815
|
|
4,691
|
|
2,244
|
|
4,119
|
|
51,519
|
|
|
1,478
|
|
127
|
|
(73
|
)
|
53,051
|
|
||||||||||||
Capital expenditures
|
998
|
|
599
|
|
245
|
|
|
486
|
|
433
|
|
106
|
|
300
|
|
3,167
|
|
|
44
|
|
7
|
|
—
|
|
3,218
|
|
|
20
|
|
FORTIS INC.
Notes to Consolidated Financial Statements
For the years ended December 31, 2019 and 2018
|
(in millions)
|
2019
|
|
2018
|
|
||
Electric and gas revenue
|
|
|
||||
United States
|
|
|
||||
ITC
|
$
|
1,697
|
|
$
|
1,539
|
|
UNS Energy
|
1,966
|
|
1,993
|
|
||
Central Hudson
|
894
|
|
963
|
|
||
Canada
|
|
|
||||
FortisBC Energy
|
1,289
|
|
1,136
|
|
||
FortisAlberta
|
576
|
|
554
|
|
||
FortisBC Electric
|
362
|
|
354
|
|
||
Newfoundland Power
|
671
|
|
651
|
|
||
Maritime Electric
|
209
|
|
200
|
|
||
FortisOntario
|
206
|
|
197
|
|
||
Caribbean
|
|
|
||||
Caribbean Utilities
|
270
|
|
253
|
|
||
FortisTCI
|
85
|
|
78
|
|
||
Total electric and gas revenue
|
8,225
|
|
7,918
|
|
||
Other services revenue (1)
|
374
|
|
408
|
|
||
Revenue from contracts with customers
|
8,599
|
|
8,326
|
|
||
Alternative revenue (2)
|
116
|
|
16
|
|
||
Other revenue
|
68
|
|
48
|
|
||
Total revenue
|
$
|
8,783
|
|
$
|
8,390
|
|
(1)
|
Includes $273 million and $234 million from regulated operations for 2019 and 2018, respectively
|
(2)
|
Includes a $91 million adjustment associated with the November 2019 FERC Order (Notes 2 and 9)
|
|
21
|
|
FORTIS INC.
Notes to Consolidated Financial Statements
For the years ended December 31, 2019 and 2018
|
(in millions)
|
2019
|
|
2018
|
|
||
Trade accounts receivable
|
$
|
504
|
|
$
|
538
|
|
Unbilled accounts receivable
|
601
|
|
575
|
|
||
Allowance for doubtful accounts
|
(35
|
)
|
(33
|
)
|
||
Total accounts receivable
|
1,070
|
|
1,080
|
|
||
Income tax receivable
|
35
|
|
91
|
|
||
Other (1)
|
192
|
|
186
|
|
||
|
$
|
1,297
|
|
$
|
1,357
|
|
(1)
|
Consists mainly of customer billings for non-core services, gas mitigation costs and collateral deposits for gas purchases at FortisBC Energy, and the fair value of derivative instruments (Note 28)
|
(in millions)
|
2019
|
|
2018
|
|
||
Materials and supplies
|
$
|
294
|
|
$
|
280
|
|
Gas and fuel in storage
|
69
|
|
87
|
|
||
Coal inventory
|
31
|
|
31
|
|
||
|
$
|
394
|
|
$
|
398
|
|
|
22
|
|
FORTIS INC.
Notes to Consolidated Financial Statements
For the years ended December 31, 2019 and 2018
|
(in millions)
|
2019
|
|
2018
|
|
||
Regulatory assets
|
|
|
||||
Deferred income taxes (Notes 3 and 25)
|
$
|
1,556
|
|
$
|
1,532
|
|
Employee future benefits (Notes 3 and 26)
|
530
|
|
485
|
|
||
Deferred energy management costs (i)
|
279
|
|
230
|
|
||
Rate stabilization and related accounts (ii)
|
208
|
|
90
|
|
||
Derivatives (Notes 3 and 28)
|
119
|
|
57
|
|
||
Deferred lease costs (iii)
|
116
|
|
110
|
|
||
Generation early retirement costs (iv)
|
88
|
|
98
|
|
||
Manufactured gas plant site remediation deferral (Note 17)
|
81
|
|
73
|
|
||
Other regulatory assets (v)
|
406
|
|
400
|
|
||
Total regulatory assets
|
3,383
|
|
3,075
|
|
||
Less: Current portion
|
(425
|
)
|
(324
|
)
|
||
Long-term regulatory assets
|
$
|
2,958
|
|
$
|
2,751
|
|
|
|
|
||||
Regulatory liabilities
|
|
|
||||
Deferred income taxes (Notes 3 and 25)
|
$
|
1,440
|
|
$
|
1,574
|
|
Asset removal cost provision (Note 3)
|
1,187
|
|
1,169
|
|
||
Rate stabilization and related accounts (ii)
|
166
|
|
220
|
|
||
Energy efficiency liability (vi)
|
101
|
|
106
|
|
||
Renewable energy surcharge (vii)
|
94
|
|
85
|
|
||
ROE complaints liability (Note 2)
|
91
|
|
206
|
|
||
Electric and gas moderator account (viii)
|
45
|
|
60
|
|
||
Employee future benefits (Notes 3 and 26)
|
45
|
|
37
|
|
||
Other regulatory liabilities (v)
|
189
|
|
169
|
|
||
Total regulatory liabilities
|
3,358
|
|
3,626
|
|
||
Less: Current portion
|
(572
|
)
|
(656
|
)
|
||
Long-term regulatory liabilities
|
$
|
2,786
|
|
$
|
2,970
|
|
(ii)
|
Rate Stabilization and Related Accounts
|
(iii)
|
Deferred Lease Costs
|
|
23
|
|
FORTIS INC.
Notes to Consolidated Financial Statements
For the years ended December 31, 2019 and 2018
|
(iv)
|
Generation Early Retirement Costs
|
(v)
|
Other Regulatory Assets and Liabilities
|
(vi)
|
Energy Efficiency Liability
|
(vii)
|
Renewable Energy Surcharge
|
(viii)
|
Electric and Gas Moderator Account
|
|
24
|
|
FORTIS INC.
Notes to Consolidated Financial Statements
For the years ended December 31, 2019 and 2018
|
(in millions)
|
2019
|
|
2018
|
|
||
Supplemental Executive Retirement Plan
|
$
|
145
|
|
$
|
143
|
|
Renewable Energy Credits (Note 9 (vii))
|
99
|
|
88
|
|
||
Equity investment - Belize Electricity
|
71
|
|
76
|
|
||
Employee future benefits (Note 26)
|
63
|
|
27
|
|
||
Operating leases (Note 16)
|
46
|
|
—
|
|
||
Other investments
|
43
|
|
34
|
|
||
Deferred compensation plan
|
30
|
|
26
|
|
||
Equity Investment - Wataynikaneyap Partnership
|
12
|
|
43
|
|
||
Other (1)
|
111
|
|
115
|
|
||
|
$
|
620
|
|
$
|
552
|
|
(1)
|
Includes the fair value of derivatives (Note 28)
|
(in millions)
|
Cost
|
|
|
Accumulated Depreciation
|
|
|
Net Book Value
|
|
||||
2019
|
|
|
|
|
|
|||||||
Distribution
|
|
|
|
|
|
|||||||
|
Electric (1)
|
$
|
11,396
|
|
|
$
|
(3,125
|
)
|
|
$
|
8,271
|
|
|
Gas
|
5,277
|
|
|
(1,330
|
)
|
|
3,947
|
|
|||
Transmission
|
|
|
|
|
|
|
|
|
||||
|
Electric
|
15,207
|
|
|
(3,293
|
)
|
|
11,914
|
|
|||
|
Gas
|
2,267
|
|
|
(681
|
)
|
|
1,586
|
|
|||
Generation
|
6,380
|
|
|
(2,472
|
)
|
|
3,908
|
|
||||
Other
|
4,042
|
|
|
(1,327
|
)
|
|
2,715
|
|
||||
Assets under construction
|
1,329
|
|
|
—
|
|
|
1,329
|
|
||||
Land
|
318
|
|
|
—
|
|
|
318
|
|
||||
|
|
$
|
46,216
|
|
|
$
|
(12,228
|
)
|
|
$
|
33,988
|
|
|
25
|
|
FORTIS INC.
Notes to Consolidated Financial Statements
For the years ended December 31, 2019 and 2018
|
(in millions)
|
Cost
|
|
|
Accumulated Depreciation
|
|
|
Net Book Value
|
|
||||
2018
|
|
|||||||||||
Distribution
|
|
|
|
|
|
|||||||
|
Electric (1)
|
$
|
11,000
|
|
|
$
|
(3,093
|
)
|
|
$
|
7,907
|
|
|
Gas
|
4,767
|
|
|
(1,244
|
)
|
|
3,523
|
|
|||
Transmission
|
|
|
|
|
|
|
|
|
||||
|
Electric
|
14,665
|
|
|
(3,212
|
)
|
|
11,453
|
|
|||
|
Gas
|
2,214
|
|
|
(639
|
)
|
|
1,575
|
|
|||
Generation
|
6,164
|
|
|
(2,279
|
)
|
|
3,885
|
|
||||
Other
|
3,877
|
|
|
(1,251
|
)
|
|
2,626
|
|
||||
Assets under construction
|
1,478
|
|
|
—
|
|
|
1,478
|
|
||||
Land
|
310
|
|
|
—
|
|
|
310
|
|
||||
|
|
$
|
44,475
|
|
|
$
|
(11,718
|
)
|
|
$
|
32,757
|
|
(1)
|
Includes FortisAlberta's deferred operating overhead costs of $121 million (December 31, 2018 - $103 million), representing costs related to the construction of PPE that are deferred for collection in future customer rates over the lives of the related PPE. These costs were reclassified to PPE from long-term regulatory assets to provide greater comparability between subsidiaries.
|
|
26
|
|
FORTIS INC.
Notes to Consolidated Financial Statements
For the years ended December 31, 2019 and 2018
|
|
Ownership
|
|
Accumulated
|
|
Net Book
|
|
||||
(in millions, except as noted)
|
%
|
Cost
|
|
Depreciation
|
|
Value
|
|
|||
San Juan Unit 1
|
50.0
|
$
|
377
|
|
$
|
(251
|
)
|
$
|
126
|
|
Four Corners Units 4 and 5
|
7.0
|
234
|
|
(100
|
)
|
134
|
|
|||
Luna Energy Facility
|
33.3
|
74
|
|
(1
|
)
|
73
|
|
|||
Gila River Common Facilities
|
50.0
|
105
|
|
(35
|
)
|
70
|
|
|||
Springerville Coal Handling Facilities
|
83.0
|
270
|
|
(117
|
)
|
153
|
|
|||
Transmission Facilities
|
1.0-80.0
|
982
|
|
(384
|
)
|
598
|
|
|||
|
|
$
|
2,042
|
|
$
|
(888
|
)
|
$
|
1,154
|
|
|
|
Accumulated
|
|
Net Book
|
|
||||
(in millions)
|
Cost
|
|
Amortization
|
|
Value
|
|
|||
2019
|
|
|
|
||||||
Computer software
|
$
|
946
|
|
$
|
(576
|
)
|
$
|
370
|
|
Land, transmission and water rights
|
890
|
|
(122
|
)
|
768
|
|
|||
Other
|
115
|
|
(61
|
)
|
54
|
|
|||
Assets under construction
|
68
|
|
—
|
|
68
|
|
|||
|
$
|
2,019
|
|
$
|
(759
|
)
|
$
|
1,260
|
|
|
|
Accumulated
|
|
Net Book
|
|
||||
(in millions)
|
Cost
|
|
Amortization
|
|
Value
|
|
|||
2018
|
|
|
|
||||||
Computer software
|
$
|
860
|
|
$
|
(533
|
)
|
$
|
327
|
|
Land, transmission and water rights
|
855
|
|
(125
|
)
|
730
|
|
|||
Other
|
120
|
|
(58
|
)
|
62
|
|
|||
Assets under construction
|
81
|
|
—
|
|
81
|
|
|||
|
$
|
1,916
|
|
$
|
(716
|
)
|
$
|
1,200
|
|
|
27
|
|
FORTIS INC.
Notes to Consolidated Financial Statements
For the years ended December 31, 2019 and 2018
|
(in millions)
|
2019
|
|
2018
|
|
||
Balance, beginning of year
|
$
|
12,530
|
|
$
|
11,644
|
|
Acquisition of distribution systems by FortisAlberta
|
1
|
|
—
|
|
||
Foreign currency translation impacts (1)
|
(527
|
)
|
886
|
|
||
Balance, end of year
|
$
|
12,004
|
|
$
|
12,530
|
|
(1)
|
Relates to the translation of goodwill associated with the acquisitions of ITC, UNS Energy, Central Hudson, Caribbean Utilities and FortisTCI, whose functional currency is the US dollar
|
(in millions)
|
2019
|
|
2018
|
|
||
Trade accounts payable
|
$
|
754
|
|
$
|
679
|
|
Employee compensation and benefits payable
|
229
|
|
193
|
|
||
Dividends payable
|
228
|
|
199
|
|
||
Customer and other deposits
|
226
|
|
267
|
|
||
Gas and fuel cost payable
|
225
|
|
281
|
|
||
Accrued taxes other than income taxes
|
223
|
|
206
|
|
||
Interest payable
|
212
|
|
230
|
|
||
Fair value of derivatives (Note 28)
|
83
|
|
69
|
|
||
Manufactured gas plant site remediation (Note 17)
|
31
|
|
32
|
|
||
Employee future benefits (Note 26)
|
24
|
|
25
|
|
||
Other
|
143
|
|
108
|
|
||
|
$
|
2,378
|
|
$
|
2,289
|
|
|
28
|
|
FORTIS INC.
Notes to Consolidated Financial Statements
For the years ended December 31, 2019 and 2018
|
(in millions)
|
Maturity Date
|
2019
|
|
2018
|
|
|||
ITC
|
|
|
|
|||||
Secured US First Mortgage Bonds -
|
|
|
|
|||||
|
4.46% weighted average fixed rate (2018 - 4.51%)
|
2020-2055
|
$
|
2,624
|
|
$
|
2,652
|
|
Secured US Senior Notes -
|
|
|
|
|||||
|
4.26% weighted average fixed rate (2018 - 4.19%)
|
2040-2049
|
747
|
|
648
|
|
||
Unsecured US Senior Notes -
|
|
|
|
|||||
|
3.79% weighted average fixed rate (2018 - 3.91%)
|
2020-2043
|
3,312
|
|
3,751
|
|
||
Unsecured US Shareholder Note -
|
|
|
|
|||||
|
6.00% fixed rate (2018 - 6.00%)
|
2028
|
258
|
|
271
|
|
||
Unsecured US Term Loan Credit Agreement -
|
|
|
|
|||||
|
2.35% weighted average fixed rate
|
2021
|
260
|
|
—
|
|
||
UNS Energy
|
|
|
|
|||||
Unsecured US Tax-Exempt Bonds - 4.64% weighted
|
|
|
|
|||||
|
average fixed and variable rate (2018 - 4.66%)
|
2020-2040
|
603
|
|
654
|
|
||
Unsecured US Fixed Rate Notes -
|
|
|
|
|||||
|
4.38% weighted average fixed rate (2018 - 4.38%)
|
2021-2048
|
1,851
|
|
1,943
|
|
||
Central Hudson
|
|
|
|
|||||
Unsecured US Promissory Notes - 4.27% weighted
|
|
|
|
|||||
|
average fixed and variable rate (2018 - 4.43%)
|
2020-2059
|
986
|
|
938
|
|
||
FortisBC Energy
|
|
|
|
|||||
Unsecured Debentures -
|
|
|
|
|||||
|
4.87% weighted average fixed rate (2018 - 5.03%)
|
2026-2049
|
2,795
|
|
2,595
|
|
||
FortisAlberta
|
|
|
|
|||||
Unsecured Debentures -
|
|
|
|
|||||
|
4.64% weighted average fixed rate (2018 - 4.64%)
|
2024-2052
|
2,185
|
|
2,185
|
|
||
FortisBC Electric
|
|
|
|
|||||
Secured Debentures -
|
|
|
|
|||||
|
8.80% fixed rate (2018 - 8.80%)
|
2023
|
25
|
|
25
|
|
||
Unsecured Debentures -
|
|
|
|
|||||
|
5.05% weighted average fixed rate (2018 - 5.05%)
|
2021-2050
|
710
|
|
710
|
|
||
Other Electric
|
|
|
|
|||||
Secured First Mortgage Sinking Fund Bonds -
|
|
|
|
|||||
|
6.14% weighted average fixed rate (2018 - 6.14%)
|
2020-2057
|
571
|
|
578
|
|
||
Secured First Mortgage Bonds -
|
|
|
|
|||||
|
5.66% weighted average fixed rate (2018 - 5.66%)
|
2025-2061
|
220
|
|
220
|
|
||
Unsecured Senior Notes -
|
|
|
|
|||||
|
4.45% weighted average fixed rate (2018 - 4.45%)
|
2041-2048
|
152
|
|
152
|
|
||
Unsecured US Senior Loan Notes and Bonds - 4.53% weighted
|
|
|
|
|||||
|
average fixed and variable rate (2018 - 4.76%)
|
2020-2049
|
645
|
|
584
|
|
||
Corporate
|
|
|
|
|||||
Unsecured US Senior Notes and Promissory Notes -
|
|
|
|
|||||
|
3.80% weighted average fixed rate (2018 - 3.41%)
|
2020-2044
|
2,903
|
|
4,398
|
|
||
Unsecured Debentures -
|
|
|
|
|||||
|
6.50% fixed rate (2018 - 6.50%)
|
2039
|
200
|
|
200
|
|
||
Unsecured Senior Notes - 2.85% fixed rate (2018 - 2.85%)
|
2023
|
500
|
|
500
|
|
|||
Long-term classification of credit facility borrowings
|
640
|
|
1,066
|
|
||||
Fair value adjustment - ITC acquisition
|
|
133
|
|
161
|
|
|||
Total long-term debt (Note 28)
|
|
22,320
|
|
24,231
|
|
|||
Less: Deferred financing costs and debt discounts
|
|
(129
|
)
|
(146
|
)
|
|||
Less: Current installments of long-term debt
|
|
(690
|
)
|
(926
|
)
|
|||
|
|
|
$
|
21,501
|
|
$
|
23,159
|
|
|
29
|
|
FORTIS INC.
Notes to Consolidated Financial Statements
For the years ended December 31, 2019 and 2018
|
(in millions, except %)
|
Month Issued
|
Interest Rate
(%)
|
|
Maturity
|
|
Amount
|
|
Use of Proceeds
|
|
ITC
|
|
|
|
|
|
|
|||
Secured notes
|
January
|
4.55
|
|
2049
|
|
US
|
50
|
|
(1) (2) (3)
|
Unsecured term loan credit agreement (4)
|
June
|
(5)
|
|
2021
|
|
US
|
200
|
|
(6)
|
Secured notes
|
July
|
4.65
|
|
2049
|
|
US
|
50
|
|
(1) (2) (3)
|
First mortgage bonds
|
August
|
3.30
|
|
2049
|
|
US
|
75
|
|
(1) (2) (3)
|
Central Hudson
|
|
|
|
|
|
|
|||
Unsecured notes
|
October
|
3.89
|
|
2049
|
|
US
|
50
|
|
(2) (3) (6)
|
Unsecured notes
|
October
|
3.99
|
|
2059
|
|
US
|
50
|
|
(2) (3) (6)
|
FortisBC Energy
|
|
|
|
|
|
|
|||
Unsecured debentures
|
August
|
2.82
|
|
2049
|
|
200
|
|
(1)
|
|
FortisTCI
|
|
|
|
|
|
|
|||
Unsecured non-revolving term loan
|
February
|
(7
|
)
|
2025
|
|
US
|
5
|
|
(2) (3)
|
Caribbean Utilities
|
|
|
|
|
|
|
|||
Unsecured notes
|
May
|
4.14
|
|
2049
|
|
US
|
40
|
|
(1) (3) (6)
|
Unsecured notes
|
August
|
4.14
|
|
2049
|
|
US
|
20
|
|
(2) (3) (6)
|
Unsecured notes
|
August
|
3.83
|
|
2039
|
|
US
|
20
|
|
(2) (3) (6)
|
(1)
|
Repay credit facility borrowings
|
(2)
|
Finance capital expenditures
|
(3)
|
General corporate purposes
|
(4)
|
Maximum amount of borrowings under this agreement is US$400 million; in January 2020 the remaining US$200 million was drawn to repay outstanding commercial paper balances
|
(5)
|
Floating rate of a one-month LIBOR plus a spread of 0.60%
|
(6)
|
Repay maturing long-term debt
|
(7)
|
Floating rate of a one-month LIBOR plus a spread of 1.75%
|
|
30
|
|
FORTIS INC.
Notes to Consolidated Financial Statements
For the years ended December 31, 2019 and 2018
|
|
Total
|
|
|
(year)
|
(in millions)
|
|
|
2020
|
$
|
690
|
|
2021
|
872
|
|
|
2022
|
1,146
|
|
|
2023
|
1,553
|
|
|
2024
|
1,106
|
|
|
Thereafter
|
16,953
|
|
|
|
$
|
22,320
|
|
(in millions)
|
Regulated
Utilities |
|
Corporate
and Other |
|
2019
|
|
2018
|
|
||||
Total credit facilities
|
$
|
4,209
|
|
$
|
1,381
|
|
$
|
5,590
|
|
$
|
5,165
|
|
Credit facilities utilized:
|
|
|
|
|
|
|
|
|
||||
Short-term borrowings (1)
|
(512
|
)
|
—
|
|
(512
|
)
|
(60
|
)
|
||||
Long-term debt (including current portion) (2)
|
(640
|
)
|
—
|
|
(640
|
)
|
(1,066
|
)
|
||||
Letters of credit outstanding
|
(64
|
)
|
(50
|
)
|
(114
|
)
|
(119
|
)
|
||||
Credit facilities unutilized
|
$
|
2,993
|
|
$
|
1,331
|
|
$
|
4,324
|
|
$
|
3,920
|
|
(2)
|
The weighted average interest rate was approximately 2.4% (December 31, 2018 - 3.3%). The current portion was $252 million (December 31, 2018 - $735 million).
|
|
31
|
|
FORTIS INC.
Notes to Consolidated Financial Statements
For the years ended December 31, 2019 and 2018
|
(in millions)
|
Amount
|
|
Maturity
|
|
Unsecured committed revolving credit facilities
|
|
|
||
Regulated utilities
|
|
|
||
ITC (1)
|
US
|
900
|
|
October 2022
|
UNS Energy
|
US
|
500
|
|
October 2022
|
Central Hudson
|
US
|
250
|
|
(2)
|
FortisBC Energy
|
700
|
|
August 2024
|
|
FortisAlberta
|
250
|
|
August 2024
|
|
FortisBC Electric
|
150
|
|
April 2024
|
|
Other Electric
|
190
|
|
(3)
|
|
Other Electric (4)
|
US
|
50
|
|
January 2020
|
Corporate and Other
|
1,350
|
|
(5)
|
|
Other facilities
|
|
|
||
UNS Energy - unsecured non-revolving facility
|
US
|
225
|
|
December 2020
|
Central Hudson - uncommitted credit facility
|
US
|
40
|
|
n/a
|
FortisBC Electric - unsecured demand overdraft facility
|
10
|
|
n/a
|
|
Other Electric - unsecured demand facilities
|
20
|
|
n/a
|
|
Other Electric - unsecured demand facility and emergency
standby loan
|
US
|
60
|
|
April 2020
|
Corporate and Other - unsecured non-revolving facility
|
31
|
|
n/a
|
(1)
|
ITC also has a US$400 million commercial paper program, under which US$200 million was outstanding as at December 31, 2019, which is reported in short-term borrowings.
|
(2)
|
US$50 million in July 2020 and US$200 million in October 2020
|
(3)
|
$40 million in June 2021, $50 million in February 2022 and $100 million in August 2024
|
(4)
|
Subsequent to year end, facility was increased to US$70 million and the maturity date extended to January 2025
|
(5)
|
$50 million in April 2022 and $1.3 billion in July 2024 with the option to increase by an amount up to $500 million
|
|
32
|
|
FORTIS INC.
Notes to Consolidated Financial Statements
For the years ended December 31, 2019 and 2018
|
(in millions)
|
2019
|
|
|
Operating leases
|
|
||
Other assets
|
$
|
46
|
|
Accounts payable and other current liabilities
|
(8
|
)
|
|
Other liabilities
|
(38
|
)
|
|
|
|
||
Finance leases (1) (2) (3)
|
|
||
Regulatory assets
|
$
|
116
|
|
PPE, net
|
308
|
|
|
Current installments of finance leases
|
(24
|
)
|
|
Finance leases
|
(413
|
)
|
(1)
|
FortisBC Electric has a finance lease for the BPPA (Note 9 (iii)), which relates to the sale of the output of the Brilliant hydroelectric plant, and for the Brilliant Terminal Station ("BTS"), which relates to the use of the station. Both agreements expire in 2056. In exchange for the specified take-or-pay amounts of power, the BPPA requires semi-annual payments based on a return on capital, which includes the original and ongoing capital cost, and related variable power purchase costs. The BTS requires semi-annual payments based on a charge related to the recovery of the capital cost of the BTS, and related variable operating costs.
|
(2)
|
TEP is party to two Springerville Common Facilities leases with fixed purchase options and initial terms to January 2021. During 2019 TEP exercised its option to purchase a 32.2% undivided interest in the Springerville Common Facilities by January 2021 for $88 million.
|
(3)
|
In December 2019 TEP exercised its option to purchase Gila River Unit 2 for $212 million.
|
The components of lease expense were as follows.
|
|
||
|
|
||
(in millions)
|
2019
|
|
|
Operating lease cost
|
$
|
10
|
|
Finance lease cost:
|
|
||
Amortization
|
17
|
|
|
Interest
|
48
|
|
|
Variable lease cost
|
39
|
|
|
Total lease cost
|
$
|
114
|
|
(in millions)
|
Operating Leases
|
|
Finance
Leases
|
|
Total
|
|
|||
2020
|
$
|
10
|
|
$
|
56
|
|
$
|
66
|
|
2021
|
8
|
|
121
|
|
129
|
|
|||
2022
|
7
|
|
33
|
|
40
|
|
|||
2023
|
6
|
|
33
|
|
39
|
|
|||
2024
|
4
|
|
33
|
|
37
|
|
|||
Thereafter
|
22
|
|
1,083
|
|
1,105
|
|
|||
|
57
|
|
1,359
|
|
1,416
|
|
|||
Less: Imputed interest
|
(11
|
)
|
(922
|
)
|
(933
|
)
|
|||
Total lease obligations
|
46
|
|
437
|
|
483
|
|
|||
Less: Current installments
|
(8
|
)
|
(24
|
)
|
(32
|
)
|
|||
|
$
|
38
|
|
$
|
413
|
|
$
|
451
|
|
|
33
|
|
FORTIS INC.
Notes to Consolidated Financial Statements
For the years ended December 31, 2019 and 2018
|
|
|
|
Total
|
|
|
(year)
|
|
|
(in millions)
|
|
|
2019
|
|
|
$
|
313
|
|
2020
|
|
|
77
|
|
|
2021
|
|
|
80
|
|
|
2022
|
|
|
49
|
|
|
2023
|
|
|
47
|
|
|
Thereafter
|
|
|
1,885
|
|
|
|
|
|
2,451
|
|
|
Less: Imputed interest and executory costs
|
|
|
(1,809
|
)
|
|
Total capital lease and finance obligations
|
|
|
642
|
|
|
Less: Current installments
|
|
|
(252
|
)
|
|
|
|
|
$
|
390
|
|
Supplemental lease information was as follows.
|
|
||
|
|
||
(in millions, except as indicated)
|
2019
|
|
|
Weighted average remaining lease term (years)
|
|
||
Operating leases
|
10
|
|
|
Finance leases
|
27
|
|
|
Weighted average discount rate (%)
|
|
||
Operating leases
|
4.1
|
|
|
Finance leases
|
4.8
|
|
|
Cash payments related to lease liabilities
|
|
||
Operating cash flows used for operating leases
|
$
|
(10
|
)
|
Operating cash flows used for finance leases
|
(47
|
)
|
|
Financing cash flows used for finance leases
|
(16
|
)
|
|
Investing cash flows used for finance leases
|
(212
|
)
|
(in millions)
|
2019
|
|
2018
|
|
|||
Employee future benefits (Note 26)
|
$
|
832
|
|
$
|
741
|
|
|
AROs (Note 3)
|
148
|
|
111
|
|
|||
Stock-based compensation plans (Note 22)
|
83
|
|
56
|
|
|||
Customer and other deposits
|
70
|
|
57
|
|
|||
Fair value of derivatives (Note 28)
|
68
|
|
30
|
|
|||
Manufactured gas plant site remediation (i)
|
48
|
|
32
|
|
|||
Mine reclamation obligations (ii)
|
43
|
|
40
|
|
|||
Operating leases
|
38
|
|
—
|
|
|||
Finance obligations (iii)
|
38
|
|
—
|
|
|||
Deferred compensation plan (Note 10)
|
33
|
|
29
|
|
|||
Other
|
45
|
|
42
|
|
|||
|
$
|
1,446
|
|
$
|
1,138
|
|
|
34
|
|
FORTIS INC.
Notes to Consolidated Financial Statements
For the years ended December 31, 2019 and 2018
|
(i)
|
Environmental regulations require Central Hudson to investigate sites at which the Company or its predecessors once owned and/or operated manufactured gas plants and, if necessary, remediate those sites. Costs are accrued based on the amounts that can be reasonably estimated. As at December 31, 2019, an obligation of $74 million (US$57 million) was recognized, including a current portion of $26 million (US$20 million) recognized in accounts payable and other current liabilities (Note 14). Central Hudson has notified its insurers that it intends to seek reimbursement where insurance coverage exists. Differences between actual costs and the associated rate allowances are deferred as a regulatory asset for future recovery (Note 9).
|
(ii)
|
TEP pays ongoing reclamation costs related to two coal mines that supply generating facilities in which it has an ownership interest but does not operate. Costs are deferred as a regulatory asset and recovered from customers as permitted by the regulator. TEP's share of the reclamation costs is estimated to be $74 million (US$57 million) upon expiry of the coal agreements between 2022 and 2031. The present value of the estimated future liability is shown in the table above.
|
(iii)
|
Between 2000 and 2005 FortisBC Energy entered into arrangements whereby certain natural gas distribution assets were leased to certain municipalities and then leased back by FortisBC Energy. These assets are integral equipment to real estate assets and the transactions have been accounted for as finance transactions, with the proceeds thereof recognized as finance obligations. Lease payments, net of the portion recognized as interest expense, reduce the finance obligations. The finance obligations have implicit interest rates ranging from 6.9% to 7.25% and are being repaid over an initial 35-year period with an early termination option after 17 years. If the Company exercises this option, it would pay the municipality an early termination payment equal to the carrying value of the obligation at termination. In November 2019 and October 2018, FortisBC Energy exercised early termination payment options in the amount of $12 million and $27 million, respectively, on two of these arrangements.
|
|
2019
|
2018
|
||||||||||||||
|
Net Earnings
|
|
Weighted
|
|
|
Net Earnings
|
|
Weighted
|
|
|
||||||
|
to Common
|
|
Average
|
|
|
to Common
|
|
Average
|
|
|
||||||
|
Shareholders
|
|
Shares
|
|
EPS
|
|
Shareholders
|
|
Shares
|
|
EPS
|
|
||||
|
($ millions)
|
|
(# millions)
|
|
($)
|
|
($ millions)
|
|
(# millions)
|
|
($)
|
|
||||
Basic EPS
|
$
|
1,655
|
|
436.8
|
|
$
|
3.79
|
|
$
|
1,100
|
|
424.7
|
|
$
|
2.59
|
|
Potential dilutive effect of
stock options
|
—
|
|
0.7
|
|
—
|
|
—
|
|
0.5
|
|
—
|
|
||||
Diluted EPS
|
$
|
1,655
|
|
437.5
|
|
$
|
3.78
|
|
$
|
1,100
|
|
425.2
|
|
$
|
2.59
|
|
|
35
|
|
FORTIS INC.
Notes to Consolidated Financial Statements
For the years ended December 31, 2019 and 2018
|
Issued and outstanding
|
2019
|
2018
|
||||||||||
First Preference Shares
|
Number
|
|
|
|
Number
|
|
|
|
||||
of Shares
|
|
|
Amount
|
|
of Shares
|
|
|
Amount
|
|
|||
(in thousands)
|
|
|
(in millions)
|
|
(in thousands)
|
|
|
(in millions)
|
|
|||
Series F
|
5,000
|
|
|
$
|
122
|
|
5,000
|
|
|
$
|
122
|
|
Series G
|
9,200
|
|
|
225
|
|
9,200
|
|
|
225
|
|
||
Series H
|
7,025
|
|
|
172
|
|
7,025
|
|
|
172
|
|
||
Series I
|
2,975
|
|
|
73
|
|
2,975
|
|
|
73
|
|
||
Series J
|
8,000
|
|
|
196
|
|
8,000
|
|
|
196
|
|
||
Series K
|
10,000
|
|
|
244
|
|
10,000
|
|
|
244
|
|
||
Series M
|
24,000
|
|
|
591
|
|
24,000
|
|
|
591
|
|
||
|
66,200
|
|
|
$
|
1,623
|
|
66,200
|
|
|
$
|
1,623
|
|
|
|
|
|
Earliest
|
|
|
|||||
|
|
|
Reset
|
|
Redemption
|
|
Right to
|
|
|||
|
Initial
|
|
Annual
|
|
Dividend
|
|
and/or
|
Redemption
|
|
Convert on
|
|
|
Yield
|
|
Dividend
|
|
Yield
|
|
Conversion
|
Value
|
|
a One-For-
|
|
First Preference Shares (1) (2)
|
(%)
|
|
($)
|
|
(%)
|
|
Option Date
|
($)
|
|
One Basis
|
|
Perpetual fixed rate
|
|
|
|
|
|
|
|||||
Series F
|
4.90
|
|
1.2250
|
|
—
|
|
December 1, 2011
|
25.00
|
|
—
|
|
Series J (3)
|
4.75
|
|
1.1875
|
|
—
|
|
December 1, 2017
|
25.50
|
|
—
|
|
Fixed rate reset (4) (5)
|
|
|
|
|
|
|
|||||
Series G
|
5.25
|
|
1.0983
|
|
2.13
|
|
September 1, 2013
|
25.00
|
|
—
|
|
Series H
|
4.25
|
|
0.6250
|
|
1.45
|
|
June 1, 2015
|
25.00
|
|
Series I
|
|
Series K (6)
|
4.00
|
|
0.9823
|
|
2.05
|
|
March 1, 2019
|
25.00
|
|
Series L
|
|
Series M (7)
|
4.10
|
|
0.9783
|
|
2.48
|
|
December 1, 2019
|
25.00
|
|
Series N
|
|
Floating rate reset (5) (8)
|
|
|
|
|
|
|
|||||
Series I (3)
|
2.10
|
|
—
|
|
1.45
|
|
June 1, 2015
|
25.50
|
|
Series H
|
|
Series L
|
—
|
|
—
|
|
2.05
|
|
March 1, 2024
|
—
|
|
Series K
|
|
Series N
|
—
|
|
—
|
|
2.48
|
|
December 1, 2024
|
—
|
|
Series M
|
|
(1)
|
Holders are entitled to receive a fixed or floating cumulative quarterly cash dividend as and when declared by the Board of Directors of the Corporation, payable in equal installments on the first day of each quarter.
|
(2)
|
On or after the specified redemption dates, the Corporation has the option to redeem for cash the outstanding first preference shares, in whole or in part, at the specified per share redemption value plus all accrued and unpaid dividends up to but excluding the dates fixed for redemption, and in the case of the first preference shares that reset, on every fifth anniversary date thereafter.
|
(3)
|
First Preference Shares, Series J were redeemable at $26.00 until December 1, 2018, decreasing by $0.25 each year until December 1, 2021 and redeemable at $25.00 per share thereafter. First Preference Shares, Series I are redeemable at $25.50 per share, up to but excluding June 1, 2020, and at $25.00 per share on June 1, 2020, and on every fifth anniversary date thereafter.
|
(4)
|
On the redemption and/or conversion option date, and each five-year anniversary thereafter, the reset annual dividend per share will be determined by multiplying $25.00 per share by the annual fixed dividend rate, which is the sum of the five-year Government of Canada Bond Yield on the applicable reset date, plus the applicable reset dividend yield.
|
(5)
|
On each conversion option date, the holders have the option, subject to certain conditions, to convert any or all of their shares into an equal number of Cumulative Redeemable first preference shares of a specified series.
|
(6)
|
The annual dividend per share for the First Preference Shares, Series K was reset from $1.0000 to $0.9823 for the five-year period from March 1, 2019 up to but excluding March 1, 2024.
|
(7)
|
The annual dividend per share for the First Preference Shares, Series M was reset from $1.0250 to $0.9783 for the five-year period from December 1, 2019 up to but excluding December 1, 2024.
|
(8)
|
The floating quarterly dividend rate will be reset every quarter based on the then current three‑month Government of Canada Treasury Bill rate plus the applicable reset dividend yield.
|
|
36
|
|
FORTIS INC.
Notes to Consolidated Financial Statements
For the years ended December 31, 2019 and 2018
|
(in millions)
|
Opening Balance
|
|
Net Change
|
|
Ending Balance
|
|
|||
2019
|
|
|
|
||||||
Unrealized foreign currency translation gains (losses)
|
|
|
|
||||||
Net investments in foreign operations
|
$
|
1,470
|
|
$
|
(757
|
)
|
$
|
713
|
|
Hedges of net investments in foreign operations
|
(544
|
)
|
185
|
|
(359
|
)
|
|||
Income tax recovery (expense)
|
10
|
|
(13
|
)
|
(3
|
)
|
|||
|
936
|
|
(585
|
)
|
351
|
|
|||
Other
|
|
|
|
||||||
Cash flow hedges (Note 28)
|
11
|
|
6
|
|
17
|
|
|||
Unrealized employee future benefits losses (Note 26)
|
(20
|
)
|
(18
|
)
|
(38
|
)
|
|||
Income tax recovery
|
1
|
|
5
|
|
6
|
|
|||
|
(8
|
)
|
(7
|
)
|
(15
|
)
|
|||
Accumulated other comprehensive income
|
$
|
928
|
|
$
|
(592
|
)
|
$
|
336
|
|
|
|
|
|
||||||
2018
|
|
|
|
||||||
Unrealized foreign currency translation gains (losses)
|
|
|
|
||||||
Net investments in foreign operations
|
$
|
247
|
|
$
|
1,223
|
|
$
|
1,470
|
|
Hedges of net investments in foreign operations
|
(172
|
)
|
(372
|
)
|
(544
|
)
|
|||
Income tax (expense) recovery
|
(1
|
)
|
11
|
|
10
|
|
|||
|
74
|
|
862
|
|
936
|
|
|||
Other
|
|
|
|
||||||
Cash flow hedges (Note 28)
|
10
|
|
1
|
|
11
|
|
|||
Unrealized employee future benefits (losses) gains (Note 26)
|
(26
|
)
|
6
|
|
(20
|
)
|
|||
Income tax recovery (expense)
|
3
|
|
(2
|
)
|
1
|
|
|||
|
(13
|
)
|
5
|
|
(8
|
)
|
|||
Accumulated other comprehensive income
|
$
|
61
|
|
$
|
867
|
|
$
|
928
|
|
|
37
|
|
FORTIS INC.
Notes to Consolidated Financial Statements
For the years ended December 31, 2019 and 2018
|
|
2019
|
2018
|
||||
|
February
|
|
February
|
|
March
|
|
Options granted (# in thousands)
|
852
|
|
722
|
|
40
|
|
Exercise price ($) (1)
|
47.57
|
|
41.27
|
|
42.00
|
|
Grant date fair value ($)
|
3.70
|
|
3.43
|
|
4.08
|
|
Valuation assumptions:
|
|
|
|
|||
Dividend yield (%) (2)
|
3.8
|
|
3.7
|
|
3.7
|
|
Expected volatility (%) (3)
|
15.2
|
|
15.5
|
|
15.7
|
|
Risk-free interest rate (%) (4)
|
1.8
|
|
2.1
|
|
2.0
|
|
Weighted average expected life (years) (5)
|
5.6
|
|
5.6
|
|
5.6
|
|
(1)
|
Five-day VWAP immediately preceding the grant date
|
(2)
|
Reflects average annual dividend yield up to the grant date and the weighted average expected life of the options
|
(3)
|
Reflects historical experience over a period equal to the weighted average expected life of the options
|
(4)
|
Government of Canada benchmark bond yield at the grant date that covers the weighted average expected life of the options
|
(5)
|
Reflects historical experience
|
|
Total Options
|
|
Non-vested Options (1)
|
||||||||||
(in thousands, except as indicated)
|
Number of Options
|
|
|
Weighted Average
Exercise Price |
|
|
Number of Options
|
|
|
Weighted Average
Grant Date Fair Value |
|
||
Options outstanding, January 1, 2019
|
4,015
|
|
|
$
|
37.73
|
|
|
1,771
|
|
|
$
|
3.10
|
|
Granted
|
852
|
|
|
$
|
47.57
|
|
|
852
|
|
|
$
|
3.70
|
|
Exercised
|
(1,449
|
)
|
|
$
|
35.36
|
|
|
n/a
|
|
|
n/a
|
|
|
Vested
|
n/a
|
|
|
n/a
|
|
|
(713
|
)
|
|
$
|
2.92
|
|
|
Cancelled/Forfeited
|
—
|
|
|
n/a
|
|
|
—
|
|
|
n/a
|
|
||
Options outstanding, December 31, 2019
|
3,418
|
|
|
$
|
41.18
|
|
|
1,910
|
|
|
$
|
3.43
|
|
Options vested, December 31, 2019 (2)
|
1,508
|
|
|
$
|
37.69
|
|
|
|
|
|
(1)
|
As at December 31, 2019, there was $7 million of unrecognized compensation expense related to stock options not yet vested, which is expected to be recognized over a weighted average period of approximately three years.
|
(2)
|
As at December 31, 2019, the weighted average remaining term of vested options was six years with an aggregate intrinsic value of $24 million.
|
(in millions)
|
2019
|
|
2018
|
|
||
Stock option expense recognized
|
$
|
2
|
|
$
|
2
|
|
Stock options exercised:
|
|
|
|
|
||
Cash received for exercise price
|
51
|
|
12
|
|
||
Intrinsic value realized by employees
|
22
|
|
3
|
|
||
Fair value of options that vested
|
2
|
|
2
|
|
|
38
|
|
FORTIS INC.
Notes to Consolidated Financial Statements
For the years ended December 31, 2019 and 2018
|
|
2019
|
|
2018
|
|
||
Number of units (in thousands)
|
|
|
||||
Beginning of year
|
177
|
|
185
|
|
||
Granted
|
29
|
|
32
|
|
||
Notional dividends reinvested
|
6
|
|
8
|
|
||
Paid out
|
(47
|
)
|
(48
|
)
|
||
End of year
|
165
|
|
177
|
|
||
|
|
|
||||
Additional information (in millions)
|
|
|
||||
Compensation expense recognized
|
$
|
3
|
|
$
|
2
|
|
Cash payout (1)
|
2
|
|
2
|
|
||
Accrued liability as at December 31 (2)
|
9
|
|
8
|
|
(1)
|
Reflects a weighted average payout price of $51.76 per DSU (2018 - $43.15)
|
(2)
|
Recognized at the respective December 31st VWAP (Note 3) and included in long-term other liabilities (Note 17)
|
|
39
|
|
FORTIS INC.
Notes to Consolidated Financial Statements
For the years ended December 31, 2019 and 2018
|
|
2019
|
|
2018
|
|
||
Number of units (in thousands)
|
|
|
||||
Beginning of year
|
1,763
|
|
1,351
|
|
||
Granted
|
690
|
|
669
|
|
||
Notional dividends reinvested
|
73
|
|
66
|
|
||
Paid out
|
(357
|
)
|
(281
|
)
|
||
Cancelled/forfeited
|
(51
|
)
|
(42
|
)
|
||
End of year
|
2,118
|
|
1,763
|
|
||
|
|
|
||||
Additional information (in millions)
|
|
|
||||
Compensation expense recognized
|
$
|
74
|
|
$
|
22
|
|
Compensation expense unrecognized (1)
|
35
|
|
27
|
|
||
Cash payout (2)
|
16
|
|
14
|
|
||
Accrued liability as at December 31 (3)
|
106
|
|
50
|
|
||
Aggregate intrinsic value as at December 31 (4)
|
141
|
|
77
|
|
(1)
|
Relates to unvested PSUs and is expected to be recognized over a weighted average period of two years
|
(2)
|
Reflects a weighted average payout price of $45.14 per PSU and a payout percentage of 101% (2018 - $46.01 and 109% respectively)
|
(3)
|
Recognized at the respective December 31st VWAP (Note 3) and included in accounts payable and other current liabilities and in long-term other liabilities (Notes 14 and 17)
|
(4)
|
Relates to outstanding PSUs and reflects a weighted average contractual life of one year
|
|
2019
|
|
2018
|
|
||
Number of units (in thousands)
|
|
|
||||
Beginning of year
|
717
|
|
483
|
|
||
Granted
|
429
|
|
305
|
|
||
Notional dividends reinvested
|
35
|
|
26
|
|
||
Paid out
|
(92
|
)
|
(75
|
)
|
||
Cancelled/forfeited
|
(39
|
)
|
(22
|
)
|
||
End of year
|
1,050
|
|
717
|
|
||
|
|
|
||||
Additional information (in millions)
|
|
|
||||
Compensation expense recognized
|
$
|
24
|
|
$
|
11
|
|
Compensation expense unrecognized (1)
|
17
|
|
15
|
|
||
Cash payout (2)
|
4
|
|
3
|
|
||
Accrued liability as at December 31 (3)
|
39
|
|
19
|
|
||
Aggregate intrinsic value as at December 31 (4)
|
56
|
|
34
|
|
(1)
|
Relates to unvested RSUs and is expected to be recognized over a weighted average period of two years
|
(2)
|
Reflects a weighted average payout price of $45.83 per RSU (2018 - $45.55)
|
(3)
|
Recognized at the respective December 31st VWAP (Note 3) and included in accounts payable and other current liabilities and in long-term other liabilities (Notes 14 and 17)
|
(4)
|
Relates to outstanding RSUs and reflects a weighted average contractual life of one year
|
|
40
|
|
FORTIS INC.
Notes to Consolidated Financial Statements
For the years ended December 31, 2019 and 2018
|
(in millions)
|
2019
|
|
2018
|
|
||
Equity component of AFUDC
|
$
|
74
|
|
$
|
64
|
|
Derivative gains (losses)
|
17
|
|
(12
|
)
|
||
Interest income
|
16
|
|
15
|
|
||
Gain on repayment of debt (Note 15)
|
11
|
|
—
|
|
||
Other
|
20
|
|
(7
|
)
|
||
|
$
|
138
|
|
$
|
60
|
|
(in millions)
|
2019
|
|
2018
|
|
||
Gross deferred income tax assets
|
|
|
||||
Regulatory liabilities
|
$
|
588
|
|
$
|
635
|
|
Tax loss and credit carryforwards
|
532
|
|
522
|
|
||
Employee future benefits
|
165
|
|
153
|
|
||
Unrealized foreign exchange losses on long-term debt
|
40
|
|
69
|
|
||
Other
|
88
|
|
76
|
|
||
|
1,413
|
|
1,455
|
|
||
Valuation allowance
|
(22
|
)
|
(56
|
)
|
||
Net deferred income tax asset
|
$
|
1,391
|
|
$
|
1,399
|
|
|
|
|
||||
Gross deferred income tax liabilities
|
|
|
||||
PPE
|
$
|
(3,986
|
)
|
$
|
(3,780
|
)
|
Regulatory assets
|
(269
|
)
|
(203
|
)
|
||
Intangible assets
|
(105
|
)
|
(102
|
)
|
||
|
(4,360
|
)
|
(4,085
|
)
|
||
Net deferred income tax liability
|
$
|
(2,969
|
)
|
$
|
(2,686
|
)
|
|
41
|
|
FORTIS INC.
Notes to Consolidated Financial Statements
For the years ended December 31, 2019 and 2018
|
(in millions)
|
2019
|
|
2018
|
|
||
Beginning of year
|
$
|
38
|
|
$
|
28
|
|
Additions related to current year
|
5
|
|
6
|
|
||
Adjustments related to prior years
|
(7
|
)
|
4
|
|
||
End of year
|
$
|
36
|
|
$
|
38
|
|
(in millions)
|
2019
|
|
2018
|
|
||
Canadian
|
|
|
||||
Earnings before income tax expense
|
$
|
901
|
|
$
|
376
|
|
|
|
|
||||
Current income tax
|
49
|
|
51
|
|
||
Deferred income tax
|
42
|
|
(25
|
)
|
||
Total Canadian
|
$
|
91
|
|
$
|
26
|
|
|
|
|
||||
Foreign
|
|
|
||||
Earnings before income tax expense
|
$
|
1,240
|
|
$
|
1,075
|
|
|
|
|
||||
Current income tax
|
(7
|
)
|
(22
|
)
|
||
Deferred income tax
|
205
|
|
161
|
|
||
Total Foreign
|
$
|
198
|
|
$
|
139
|
|
Income tax expense
|
$
|
289
|
|
$
|
165
|
|
|
42
|
|
FORTIS INC.
Notes to Consolidated Financial Statements
For the years ended December 31, 2019 and 2018
|
(in millions, except %)
|
2019
|
|
2018
|
|
||
Earnings before income tax expense
|
$
|
2,141
|
|
$
|
1,451
|
|
Combined Canadian federal and provincial statutory income tax rate
|
28.5
|
%
|
28.5
|
%
|
||
Expected federal and provincial taxes at statutory rate
|
$
|
610
|
|
$
|
414
|
|
Decrease resulting from:
|
|
|
||||
Foreign and other statutory rate differentials
|
(124
|
)
|
(110
|
)
|
||
Difference between gain on sale for accounting and amounts calculated for tax purposes
|
(73
|
)
|
—
|
|
||
Release of Valuation Allowance
|
(33
|
)
|
(16
|
)
|
||
Remeasurement of deferred tax liabilities
|
—
|
|
(44
|
)
|
||
AFUDC
|
(16
|
)
|
(14
|
)
|
||
Effects of rate-regulated accounting:
|
|
|
||||
Difference between depreciation claimed for income tax and accounting purposes
|
(48
|
)
|
(34
|
)
|
||
Items capitalized for accounting purposes but expensed for income tax purposes
|
(17
|
)
|
(21
|
)
|
||
Other
|
(10
|
)
|
(10
|
)
|
||
Income tax expense
|
$
|
289
|
|
$
|
165
|
|
Effective tax rate
|
13.5
|
%
|
11.4
|
%
|
(in millions)
|
Expiring Year
|
2019
|
|
|
Canadian
|
|
|
||
Capital loss
|
n/a
|
$
|
19
|
|
Non-capital loss
|
2028-2039
|
110
|
|
|
Other tax credits
|
2026-2038
|
2
|
|
|
|
|
131
|
|
|
Unrecognized
|
|
(14
|
)
|
|
|
|
117
|
|
|
Foreign
|
|
|
||
Federal and state net operating loss
|
2020-2039
|
2,929
|
|
|
Other tax credits
|
2023-2039
|
74
|
|
|
|
|
3,003
|
|
|
Total income tax carryforwards recognized as at December 31
|
|
$
|
3,120
|
|
|
43
|
|
FORTIS INC.
Notes to Consolidated Financial Statements
For the years ended December 31, 2019 and 2018
|
|
2019 Target Allocation
|
|
|
||
(weighted average %)
|
2019
|
|
2018
|
|
|
Equities
|
46
|
47
|
|
45
|
|
Fixed income
|
47
|
46
|
|
47
|
|
Real estate
|
6
|
6
|
|
7
|
|
Cash and other
|
1
|
1
|
|
1
|
|
|
100
|
100
|
|
100
|
|
(in millions)
|
Level 1 (1)
|
|
Level 2 (1)
|
|
Level 3 (1)
|
|
Total
|
|
||||
2019
|
|
|
|
|
||||||||
Equities
|
$
|
622
|
|
$
|
1,050
|
|
$
|
—
|
|
$
|
1,672
|
|
Fixed income
|
171
|
|
1,445
|
|
—
|
|
1,616
|
|
||||
Real estate
|
—
|
|
16
|
|
207
|
|
223
|
|
||||
Private equities
|
—
|
|
—
|
|
22
|
|
22
|
|
||||
Cash and other
|
8
|
|
10
|
|
—
|
|
18
|
|
||||
|
$
|
801
|
|
$
|
2,521
|
|
$
|
229
|
|
$
|
3,551
|
|
2018
|
|
|
|
|
||||||||
Equities
|
$
|
508
|
|
$
|
885
|
|
$
|
—
|
|
$
|
1,393
|
|
Fixed income
|
144
|
|
1,338
|
|
—
|
|
1,482
|
|
||||
Real estate
|
—
|
|
14
|
|
190
|
|
204
|
|
||||
Private equities
|
—
|
|
—
|
|
25
|
|
25
|
|
||||
Cash and other
|
8
|
|
11
|
|
—
|
|
19
|
|
||||
|
$
|
660
|
|
$
|
2,248
|
|
$
|
215
|
|
$
|
3,123
|
|
(1)
|
Refer to Note 28 for a description of the fair value hierarchy.
|
(in millions)
|
2019
|
|
2018
|
|
||
Balance, beginning of year
|
$
|
215
|
|
$
|
190
|
|
Return on plan assets
|
19
|
|
15
|
|
||
Foreign currency translation
|
(2
|
)
|
3
|
|
||
Purchases, sales and settlements
|
(3
|
)
|
7
|
|
||
Balance, end of year
|
$
|
229
|
|
$
|
215
|
|
|
44
|
|
FORTIS INC.
Notes to Consolidated Financial Statements
For the years ended December 31, 2019 and 2018
|
Funded Status
|
Defined Benefit
Pension Plans |
OPEB Plans
|
||||||||||
(in millions)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
||||
Change in benefit obligation (1)
|
|
|
|
|
||||||||
Balance, beginning of year
|
$
|
3,207
|
|
$
|
3,215
|
|
$
|
655
|
|
$
|
665
|
|
Service costs
|
77
|
|
84
|
|
27
|
|
31
|
|
||||
Employee contributions
|
16
|
|
16
|
|
2
|
|
2
|
|
||||
Interest costs
|
124
|
|
114
|
|
25
|
|
23
|
|
||||
Benefits paid
|
(144
|
)
|
(145
|
)
|
(27
|
)
|
(26
|
)
|
||||
Actuarial losses (gains)
|
439
|
|
(217
|
)
|
46
|
|
(69
|
)
|
||||
Past service costs (credits)/plan
amendments
|
1
|
|
(1
|
)
|
4
|
|
(3
|
)
|
||||
Foreign currency translation
|
(88
|
)
|
141
|
|
(20
|
)
|
32
|
|
||||
Balance, end of year (2) (3)
|
$
|
3,632
|
|
$
|
3,207
|
|
$
|
712
|
|
$
|
655
|
|
|
|
|
|
|
||||||||
Change in value of plan assets
|
|
|
|
|
||||||||
Balance, beginning of year
|
$
|
2,830
|
|
$
|
2,841
|
|
$
|
293
|
|
$
|
277
|
|
Actual return on plan assets
|
523
|
|
(93
|
)
|
62
|
|
(13
|
)
|
||||
Benefits paid
|
(138
|
)
|
(137
|
)
|
(27
|
)
|
(26
|
)
|
||||
Employee contributions
|
18
|
|
16
|
|
2
|
|
2
|
|
||||
Employer contributions
|
53
|
|
79
|
|
28
|
|
29
|
|
||||
Foreign currency translation
|
(78
|
)
|
124
|
|
(15
|
)
|
24
|
|
||||
Balance, end of year (4)
|
$
|
3,208
|
|
$
|
2,830
|
|
$
|
343
|
|
$
|
293
|
|
|
|
|
|
|
||||||||
Funded status
|
$
|
(424
|
)
|
$
|
(377
|
)
|
$
|
(369
|
)
|
$
|
(362
|
)
|
|
|
|
|
|
||||||||
Balance sheet presentation
|
|
|
|
|
||||||||
Long-term assets (Note 10)
|
$
|
46
|
|
$
|
26
|
|
$
|
17
|
|
$
|
1
|
|
Current liabilities (Note 14)
|
(12
|
)
|
(12
|
)
|
(12
|
)
|
(13
|
)
|
||||
Long-term liabilities (Note 17)
|
(458
|
)
|
(391
|
)
|
(374
|
)
|
(350
|
)
|
||||
|
$
|
(424
|
)
|
$
|
(377
|
)
|
$
|
(369
|
)
|
$
|
(362
|
)
|
(1)
|
Amounts reflect projected benefit obligation for defined benefit pension plans and accumulated benefit obligation for OPEB plans.
|
(2)
|
The accumulated benefit obligation, which excludes assumptions about future salary levels, for defined benefit pension plans was $3,352 million (2018 - $2,936 million).
|
(3)
|
The increases in the defined benefit pension and OPEB obligations were driven by the decrease in discount rates due to lower interest rates.
|
(4)
|
The increases in the defined benefit pension and OPEB plan assets were driven by favourable market returns, largely related to the performance of equity investments during the year.
|
|
45
|
|
FORTIS INC.
Notes to Consolidated Financial Statements
For the years ended December 31, 2019 and 2018
|
Net Benefit Cost (1)
|
Defined Benefit
Pension Plans |
OPEB Plans
|
||||||||||
(in millions)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
||||
Service costs
|
$
|
77
|
|
$
|
84
|
|
$
|
27
|
|
$
|
31
|
|
Interest costs
|
124
|
|
114
|
|
25
|
|
23
|
|
||||
Expected return on plan assets
|
(161
|
)
|
(162
|
)
|
(16
|
)
|
(16
|
)
|
||||
Amortization of actuarial losses (gains)
|
24
|
|
48
|
|
(4
|
)
|
—
|
|
||||
Amortization of past service credits/plan
amendments
|
(1
|
)
|
—
|
|
(7
|
)
|
(10
|
)
|
||||
Regulatory adjustments
|
2
|
|
(1
|
)
|
3
|
|
6
|
|
||||
Net benefit cost
|
$
|
65
|
|
$
|
83
|
|
$
|
28
|
|
$
|
34
|
|
(1)
|
The non-service cost components of net periodic benefit cost are included in other income, net on the consolidated statements of earnings.
|
|
Defined Benefit
Pension Plans
|
OPEB Plans
|
||||||||||
(in millions)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
||||
Unamortized net actuarial losses (gains)
|
$
|
32
|
|
$
|
19
|
|
$
|
(2
|
)
|
$
|
(2
|
)
|
Unamortized past service costs
|
1
|
|
1
|
|
7
|
|
2
|
|
||||
Income tax recovery
|
(8
|
)
|
(3
|
)
|
(1
|
)
|
(1
|
)
|
||||
Accumulated other comprehensive income (loss) (Note 21)
|
$
|
25
|
|
$
|
17
|
|
$
|
4
|
|
$
|
(1
|
)
|
|
|
|
|
|
||||||||
Net actuarial losses (gains)
|
$
|
486
|
|
$
|
457
|
|
$
|
(18
|
)
|
$
|
(25
|
)
|
Past service credits
|
(9
|
)
|
(10
|
)
|
(8
|
)
|
(16
|
)
|
||||
Other regulatory deferrals
|
15
|
|
15
|
|
19
|
|
27
|
|
||||
|
$
|
492
|
|
$
|
462
|
|
$
|
(7
|
)
|
$
|
(14
|
)
|
|
|
|
|
|
||||||||
Regulatory assets (Note 9)
|
$
|
492
|
|
$
|
462
|
|
$
|
38
|
|
$
|
23
|
|
Regulatory liabilities (Note 9)
|
—
|
|
—
|
|
(45
|
)
|
(37
|
)
|
||||
Net regulatory assets (liabilities)
|
$
|
492
|
|
$
|
462
|
|
$
|
(7
|
)
|
$
|
(14
|
)
|
|
46
|
|
FORTIS INC.
Notes to Consolidated Financial Statements
For the years ended December 31, 2019 and 2018
|
|
Defined Benefit
Pension Plans
|
OPEB Plans
|
||||||||||
(in millions)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
||||
Current year net actuarial losses (gains)
|
$
|
11
|
|
$
|
(3
|
)
|
$
|
—
|
|
$
|
(2
|
)
|
Past service costs (credits)/plan amendments
|
—
|
|
—
|
|
5
|
|
(1
|
)
|
||||
Amortization of actuarial losses (gains)
|
1
|
|
(1
|
)
|
—
|
|
—
|
|
||||
Foreign currency translation
|
1
|
|
1
|
|
—
|
|
—
|
|
||||
Income tax (recovery) expense
|
(5
|
)
|
2
|
|
—
|
|
—
|
|
||||
Total recognized in comprehensive income
|
$
|
8
|
|
$
|
(1
|
)
|
$
|
5
|
|
$
|
(3
|
)
|
|
|
|
|
|
||||||||
Current year net actuarial losses (gains)
|
$
|
64
|
|
$
|
41
|
|
$
|
3
|
|
$
|
(39
|
)
|
Past service credits/plan amendments
|
—
|
|
—
|
|
—
|
|
(3
|
)
|
||||
Amortization of actuarial (losses) gains
|
(23
|
)
|
(47
|
)
|
4
|
|
—
|
|
||||
Amortization of past service (costs) credits
|
(1
|
)
|
1
|
|
8
|
|
11
|
|
||||
Foreign currency translation
|
(10
|
)
|
21
|
|
—
|
|
(3
|
)
|
||||
Regulatory adjustments
|
—
|
|
4
|
|
(8
|
)
|
(1
|
)
|
||||
Total recognized in regulatory assets
|
$
|
30
|
|
$
|
20
|
|
$
|
7
|
|
$
|
(35
|
)
|
Significant Assumptions
|
Defined Benefit
Pension Plans |
OPEB Plans
|
||||||
(weighted average %)
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
Discount rate during the year (1)
|
4.05
|
|
3.56
|
|
4.10
|
|
3.57
|
|
Discount rate as at December 31
|
3.20
|
|
4.07
|
|
3.25
|
|
4.13
|
|
Expected long-term rate of return on plan assets (2)
|
5.78
|
|
5.80
|
|
5.50
|
|
5.48
|
|
Rate of compensation increase
|
3.33
|
|
3.35
|
|
—
|
|
—
|
|
Health care cost trend increase as at December 31 (3)
|
—
|
|
—
|
|
4.62
|
|
4.61
|
|
(1)
|
ITC and UNS use the split discount rate methodology for determining current service and interest costs. All other subsidiaries use the single discount rate approach.
|
(2)
|
Developed by management using best estimates of expected returns, volatilities and correlations for each class of asset. Best estimates are based on historical performance, future expectations and periodic portfolio rebalancing among the diversified asset classes.
|
(3)
|
The projected 2020 weighted average health care cost trend rate is 6.15% and is assumed to decrease over the next 12 years to the weighted average ultimate health care cost trend rate of 4.62% in 2031 and thereafter.
|
|
Defined Benefit
|
|
OPEB
|
|
||
Expected Benefit Payments
|
Pension Payments
|
|
Payments
|
|
||
(year)
|
(in millions)
|
|
(in millions)
|
|
||
2020
|
$
|
152
|
|
$
|
25
|
|
2021
|
156
|
|
27
|
|
||
2022
|
164
|
|
29
|
|
||
2023
|
168
|
|
30
|
|
||
2024
|
175
|
|
31
|
|
||
2025-2029
|
959
|
|
174
|
|
|
47
|
|
FORTIS INC.
Notes to Consolidated Financial Statements
For the years ended December 31, 2019 and 2018
|
(in millions)
|
2019
|
|
2018
|
|
||
Cash paid (received) for
|
|
|
||||
Interest
|
$
|
1,007
|
|
$
|
969
|
|
Income taxes
|
(37
|
)
|
73
|
|
||
Change in working capital
|
|
|
||||
Accounts receivable and other current assets
|
$
|
1
|
|
$
|
(204
|
)
|
Prepaid expenses
|
(8
|
)
|
1
|
|
||
Inventories
|
(13
|
)
|
(8
|
)
|
||
Regulatory assets - current portion
|
(75
|
)
|
16
|
|
||
Accounts payable and other current liabilities
|
(8
|
)
|
99
|
|
||
Regulatory liabilities - current portion
|
(65
|
)
|
(6
|
)
|
||
|
$
|
(168
|
)
|
$
|
(102
|
)
|
Non-cash investing and financing activities
|
|
|
||||
Accrued capital expenditures
|
$
|
382
|
|
$
|
328
|
|
Common share dividends reinvested
|
299
|
|
272
|
|
||
Finance leases
|
88
|
|
223
|
|
||
Right-of-use assets obtained in exchange for operating lease liabilities
|
55
|
|
—
|
|
||
Contributions in aid of construction
|
15
|
|
14
|
|
||
Exercise of stock options into common shares
|
5
|
|
1
|
|
|
48
|
|
FORTIS INC.
Notes to Consolidated Financial Statements
For the years ended December 31, 2019 and 2018
|
|
49
|
|
FORTIS INC.
Notes to Consolidated Financial Statements
For the years ended December 31, 2019 and 2018
|
($ millions)
|
Level 1 (1)
|
Level 2 (1)
|
|
Level 3 (1)
|
|
Total
|
|
|
As at December 31, 2019
|
|
|
|
|
||||
Assets
|
|
|
|
|
||||
Energy contracts subject to regulatory deferral (2) (3)
|
—
|
|
22
|
|
—
|
|
22
|
|
Energy contracts not subject to regulatory deferral (2)
|
—
|
|
8
|
|
—
|
|
8
|
|
Foreign exchange contracts, interest rate and total return swaps (2)
|
14
|
|
4
|
|
—
|
|
18
|
|
Other investments (4)
|
121
|
|
—
|
|
—
|
|
121
|
|
|
135
|
|
34
|
|
—
|
|
169
|
|
|
|
|
|
|
||||
Liabilities
|
|
|
|
|
||||
Energy contracts subject to regulatory deferral (3) (5)
|
(1
|
)
|
(138
|
)
|
—
|
|
(139
|
)
|
Energy contracts not subject to regulatory deferral (5)
|
—
|
|
(12
|
)
|
—
|
|
(12
|
)
|
|
(1
|
)
|
(150
|
)
|
—
|
|
(151
|
)
|
As at December 31, 2018
|
|
|
|
|
||||
Assets
|
|
|
|
|
||||
Energy contracts subject to regulatory deferral (2) (3)
|
—
|
|
33
|
|
8
|
|
41
|
|
Energy contracts not subject to regulatory deferral (2)
|
—
|
|
13
|
|
3
|
|
16
|
|
Other investments (4)
|
155
|
|
—
|
|
—
|
|
155
|
|
|
155
|
|
46
|
|
11
|
|
212
|
|
|
|
|
|
|
||||
Liabilities
|
|
|
|
|
||||
Energy contracts subject to regulatory deferral (3) (5)
|
—
|
|
(86
|
)
|
(3
|
)
|
(89
|
)
|
Energy contracts not subject to regulatory deferral (5)
|
—
|
|
(1
|
)
|
—
|
|
(1
|
)
|
Foreign exchange contracts, interest rate and total return swaps (5)
|
(8
|
)
|
(1
|
)
|
—
|
|
(9
|
)
|
|
(8
|
)
|
(88
|
)
|
(3
|
)
|
(99
|
)
|
(1)
|
Under the hierarchy, fair value is determined using: (i) level 1 - unadjusted quoted prices in active markets; (ii) level 2 - other pricing inputs directly or indirectly observable in the marketplace; and (iii) level 3 - unobservable inputs, used when observable inputs are not available. Classifications reflect the lowest level of input that is significant to the measurement. At December 31, 2019, all level 3 assets and liabilities transferred to level 2 because observable market data became available.
|
(2)
|
Included in accounts receivable and other current assets or other assets
|
(3)
|
Unrealized gains and losses arising from changes in fair value of these contracts are deferred as a regulatory asset or liability for recovery from, or refund to, customers in future rates as permitted by the regulators.
|
(4)
|
Included in other assets
|
(5)
|
Included in accounts payable and other current liabilities or other liabilities
|
Energy Contracts
($ millions) |
Gross Amount Recognized in Balance Sheet
|
|
Counterparty Netting of Energy Contracts
|
|
Cash Collateral Received/Posted
|
|
Net Amount
|
|
As at December 31, 2019
|
|
|
|
|
||||
Derivative assets
|
30
|
|
22
|
|
10
|
|
(2
|
)
|
Derivative liabilities
|
(151
|
)
|
(22
|
)
|
(2
|
)
|
(127
|
)
|
|
50
|
|
FORTIS INC.
Notes to Consolidated Financial Statements
For the years ended December 31, 2019 and 2018
|
Energy Contracts
($ millions)
|
Gross Amount Recognized in Balance Sheet
|
|
Counterparty
Netting of
Energy
Contracts
|
|
Cash
Collateral
Received/
Posted
|
|
Net
Amount
|
|
As at December 31, 2018
|
|
|
|
|
||||
Derivative assets
|
57
|
|
28
|
|
16
|
|
13
|
|
Derivative liabilities
|
(90
|
)
|
(28
|
)
|
—
|
|
(62
|
)
|
As at December 31
|
2019
|
|
2018
|
|
Energy contracts subject to regulatory deferral (1)
|
|
|
||
Electricity swap contracts (GWh)
|
628
|
|
774
|
|
Electricity power purchase contracts (GWh)
|
3,198
|
|
651
|
|
Gas swap contracts (PJ)
|
168
|
|
203
|
|
Gas supply contract premiums (PJ)
|
241
|
|
266
|
|
Energy contracts not subject to regulatory deferral (1)
|
|
|
||
Wholesale trading contracts (GWh)
|
1,855
|
|
1,440
|
|
Gas swap contracts (PJ)
|
43
|
|
37
|
|
(1)
|
GWh means gigawatt hours and PJ means petajoules.
|
|
51
|
|
FORTIS INC.
Notes to Consolidated Financial Statements
For the years ended December 31, 2019 and 2018
|
(in millions)
|
Total
|
|
Due within 1 year
|
|
Due in year 2
|
|
Due in year 3
|
|
Due in year 4
|
|
Due in year 5
|
|
Due after
5 years |
|
|
Waneta Expansion capacity agreement (1)
|
$
|
2,628
|
|
51
|
|
52
|
|
53
|
|
54
|
|
55
|
|
2,363
|
|
Gas and fuel purchase obligations (2)
|
2,398
|
|
606
|
|
424
|
|
349
|
|
255
|
|
140
|
|
624
|
|
|
Power purchase obligations (3)
|
1,743
|
|
244
|
|
183
|
|
168
|
|
163
|
|
119
|
|
866
|
|
|
Renewable PPAs (4)
|
1,513
|
|
104
|
|
104
|
|
104
|
|
103
|
|
103
|
|
995
|
|
|
Build-transfer agreement - Oso Grande (5)
|
438
|
|
438
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
ITC easement agreement (6)
|
401
|
|
13
|
|
13
|
|
13
|
|
13
|
|
13
|
|
336
|
|
|
Renewable energy credit purchase agreements (7)
|
124
|
|
26
|
|
18
|
|
17
|
|
10
|
|
10
|
|
43
|
|
|
Debt collection agreement (8)
|
116
|
|
3
|
|
3
|
|
3
|
|
3
|
|
3
|
|
101
|
|
|
Other (9)
|
299
|
|
36
|
|
26
|
|
24
|
|
25
|
|
29
|
|
159
|
|
|
Total
|
$
|
9,660
|
|
1,521
|
|
823
|
|
731
|
|
626
|
|
472
|
|
5,487
|
|
(1)
|
FortisBC Electric entered into an agreement to purchase capacity from Waneta Expansion. In April 2019 the Waneta Expansion ceased to be a related party, resulting in the disclosure of FortisBC Electric's agreement to purchase capacity from the Waneta Expansion over the 40-year agreement that began in April 2015.
|
(2)
|
FortisBC Energy ($1.5 billion): includes contracts for the purchase of gas, gas transportation and storage services, with expiry dates from 2020 to 2062. FortisBC Energy's gas purchase obligations are based on gas commodity indices that vary with market prices and the obligations are based on index prices as at December 31, 2019.
|
|
52
|
|
FORTIS INC.
Notes to Consolidated Financial Statements
For the years ended December 31, 2019 and 2018
|
(3)
|
Maritime Electric ($669 million): includes an agreement entitling Maritime Electric to approximately 4.55% of the output of New Brunswick Power's Point Lepreau nuclear generating station and requiring Maritime Electric to pay its share of the station's capital operating costs for the life of the unit. Maritime Electric also has two take-or-pay contracts for the purchase of either capacity or energy, expiring in February 2024.
|
(4)
|
TEP and UNS Electric are party to renewable PPAs, with expiry dates from 2031 through 2043, that require TEP and UNS Electric to purchase 100% of the output of certain renewable energy generating facilities once commercial operation is achieved. Amounts are the estimated future payments.
|
(5)
|
In March 2019 UNS Energy entered into a build-transfer agreement to develop a wind-powered electric generation facility, the Oso Grande Wind Project, with estimated project cost of US$384 million. Construction commenced in the third quarter of 2019 and is expected to be completed by December 2020. UNS Energy made payments of US$47 million in 2019 and US$226 million in January 2020 under this agreement.
|
(6)
|
ITC is party to an agreement with Consumers Energy, the primary customer of METC, which provides METC with an easement for transmission purposes and rights-of-way, leasehold interests, fee interests and licences associated with the land over which its transmission lines cross. The agreement expires in December 2050, subject to 10 potential 50-year renewals thereafter.
|
(7)
|
UNS Energy and Central Hudson are party to renewable energy credit purchase agreements, mainly for the purchase of environmental attributions from retail customers with solar installations or other renewable generation. Payments are primarily made at contractually agreed-upon intervals based on metered energy production.
|
(8)
|
Maritime Electric is party to a debt collection agreement with PEI Energy Corporation for the initial capital cost of the submarine cables and associated parts of the New Brunswick transmission system interconnection. Payments under the agreement, which expires in February 2056, will be collected from customers in future rates.
|
(9)
|
Includes land easements, asset retirement obligations and joint-use asset and shared service agreements.
|
|
53
|
|
FORTIS INC.
Notes to Consolidated Financial Statements
For the years ended December 31, 2019 and 2018
|
|
54
|
|
|
TABLE OF CONTENTS
|
|||
About Fortis
|
Cash Flow Requirements
|
||
Significant Items
|
Cash Flow Summary
|
||
Performance at a Glance
|
Contractual Obligations
|
||
The Industry
|
Capital Structure and Credit Ratings
|
||
Operating Results
|
Capital Plan
|
||
Business Unit Performance
|
Business Risks
|
||
ITC
|
Accounting Matters
|
||
UNS Energy
|
Financial Instruments
|
||
Central Hudson
|
Long-term Debt and Other
|
||
FortisBC Energy
|
Derivatives
|
||
FortisAlberta
|
Selected Annual Financial Information
|
||
FortisBC Electric
|
Fourth Quarter Results
|
||
Other Electric
|
Summary of Quarterly Results
|
||
Energy Infrastructure
|
Related-Party Transactions
|
||
Corporate and Other
|
Management's Evaluation of Controls and Procedures
|
||
Non-US GAAP Financial Measures
|
Outlook
|
||
Regulatory Highlights
|
Forward-Looking Information
|
||
Financial Position
|
Glossary
|
||
Liquidity and Capital Resources
|
Condensed Consolidated Financial Statements
|
F-1
|
|
|
|
|
|
MANAGEMENT DISCUSSION AND ANALYSIS
|
1
|
December 31, 2019
|
|
MANAGEMENT DISCUSSION AND ANALYSIS
|
2
|
December 31, 2019
|
|
Key Financial Metrics
|
|
|||||
($ millions, except as indicated)
|
2019
|
|
2018
|
|
Variance
|
|
Common Equity Earnings
|
|
|
|
|||
Actual
|
1,655
|
|
1,100
|
|
555
|
|
Adjusted (1)
|
1,115
|
|
1,066
|
|
49
|
|
Basic EPS ($)
|
|
|
|
|||
Actual
|
3.79
|
|
2.59
|
|
1.20
|
|
Adjusted (1)
|
2.55
|
|
2.51
|
|
0.04
|
|
Dividends
|
|
|
|
|||
Paid per Common Share ($)
|
1.8275
|
|
1.7250
|
|
0.1025
|
|
Actual Payout Ratio (%)
|
48.2
|
|
66.6
|
|
(18.4
|
)
|
Adjusted Payout Ratio (1) (%)
|
71.7
|
|
68.7
|
|
3.0
|
|
Weighted Average Number of Common Shares Outstanding (millions)
|
436.8
|
|
424.7
|
|
12.1
|
|
Operating Cash Flow
|
2,663
|
|
2,604
|
|
59
|
|
Capital Expenditures
|
3,818
|
|
3,218
|
|
600
|
|
(1)
|
See "Non-US GAAP Financial Measures" on page 12
|
TSR (1) (%)
|
1-Year
|
|
5-Year
|
|
10-Year
|
|
20-Year
|
|
Fortis
|
22.7
|
%
|
10.8
|
%
|
10.6
|
%
|
14.3
|
%
|
(1)
|
Total annualized shareholder return per Bloomberg, as at December 31, 2019
|
MANAGEMENT DISCUSSION AND ANALYSIS
|
3
|
December 31, 2019
|
|
(1)
|
Includes FortisBC Energy, FortisBC Electric and FortisAlberta. Driven primarily by Rate Base growth and lower operating expenses
|
(2)
|
Driven by Rate Base growth, partially offset by a lower 2019 ROE due to the November 2019 FERC Order
|
(3)
|
Driven by Rate Base growth
|
(4)
|
Average FX of $1.33 for 2019 compared to $1.30 for 2018
|
(5)
|
Driven primarily by reduced hydroelectric production at Belize due to lower rainfall
|
(6)
|
Driven primarily by higher costs associated with Rate Base growth not yet reflected in customer rates and lower retail sales due mainly to unfavourable weather
|
(7)
|
Weighted average shares of 436.8 million in 2019 compared to 424.7 million in 2018, partially offset by favourable foreign exchange contracts and higher income tax recoveries
|
MANAGEMENT DISCUSSION AND ANALYSIS
|
4
|
December 31, 2019
|
|
MANAGEMENT DISCUSSION AND ANALYSIS
|
5
|
December 31, 2019
|
|
MANAGEMENT DISCUSSION AND ANALYSIS
|
6
|
December 31, 2019
|
|
|
|
|
|
Variance
|
|||||
($ millions)
|
2019
|
|
2018
|
|
|
FX
|
|
Other
|
|
Revenue
|
8,783
|
|
8,390
|
|
|
113
|
|
280
|
|
Energy Supply Costs
|
2,520
|
|
2,495
|
|
|
30
|
|
(5
|
)
|
Operating Expenses
|
2,452
|
|
2,287
|
|
|
34
|
|
131
|
|
Depreciation and Amortization
|
1,350
|
|
1,243
|
|
|
14
|
|
93
|
|
Gain on Disposition
|
577
|
|
—
|
|
|
—
|
|
577
|
|
Other Income, Net
|
138
|
|
60
|
|
|
1
|
|
77
|
|
Finance Charges
|
1,035
|
|
974
|
|
|
10
|
|
51
|
|
Income Tax Expense
|
289
|
|
165
|
|
|
4
|
|
120
|
|
Net Earnings
|
1,852
|
|
1,286
|
|
|
22
|
|
544
|
|
Net Earnings Attributable to:
|
|
|
|
|
|
||||
Non-Controlling Interests
|
130
|
|
120
|
|
|
2
|
|
8
|
|
Preference Equity Shareholders
|
67
|
|
66
|
|
|
—
|
|
1
|
|
Common Equity Shareholders
|
1,655
|
|
1,100
|
|
|
20
|
|
535
|
|
Net Earnings
|
1,852
|
|
1,286
|
|
|
22
|
|
544
|
|
MANAGEMENT DISCUSSION AND ANALYSIS
|
7
|
December 31, 2019
|
|
Common Equity Earnings
|
|
|
|
|
|||||
Years Ended December 31
|
|
|
|
Variance
|
|||||
($ millions)
|
2019
|
|
2018
|
|
|
FX (1)
|
|
Other
|
|
Regulated Utilities
|
|
|
|
|
|
||||
ITC
|
471
|
|
361
|
|
|
9
|
|
101
|
|
UNS Energy
|
292
|
|
293
|
|
|
6
|
|
(7
|
)
|
Central Hudson
|
85
|
|
74
|
|
|
2
|
|
9
|
|
FortisBC Energy
|
165
|
|
155
|
|
|
—
|
|
10
|
|
FortisAlberta
|
131
|
|
120
|
|
|
—
|
|
11
|
|
FortisBC Electric
|
54
|
|
56
|
|
|
—
|
|
(2
|
)
|
Other Electric (2)
|
106
|
|
105
|
|
|
1
|
|
—
|
|
|
1,304
|
|
1,164
|
|
|
18
|
|
122
|
|
Non-Regulated
|
|
|
|
|
|
||||
Energy Infrastructure
|
18
|
|
72
|
|
|
1
|
|
(55
|
)
|
Corporate and Other
|
333
|
|
(136
|
)
|
|
1
|
|
468
|
|
Common Equity Earnings
|
1,655
|
|
1,100
|
|
|
20
|
|
535
|
|
(1)
|
The reporting currency of ITC, UNS Energy, Central Hudson, Caribbean Utilities, FortisTCI and BECOL is the US dollar. The reporting currency of Belize Electricity is the Belizean dollar, which is pegged to the US dollar at BZ$2.00=US$1.00. The Corporate and Other segment includes certain transactions denominated in US dollars.
|
(2)
|
Comprised of the utility operations in eastern Canada and the Caribbean: Newfoundland Power; Maritime Electric; FortisOntario; Caribbean Utilities; FortisTCI; and Belize Electricity.
|
ITC
|
|
|
|
Variance
|
|||||
($ millions)
|
2019
|
|
2018
|
|
|
FX
|
|
Other
|
|
Revenue (1)
|
1,761
|
|
1,504
|
|
|
35
|
|
222
|
|
Earnings (1)
|
471
|
|
361
|
|
|
9
|
|
101
|
|
(1)
|
Revenue represents 100% of ITC. Earnings represent the Corporation's 80.1% controlling ownership interest in ITC and reflect consolidated purchase price accounting adjustments.
|
MANAGEMENT DISCUSSION AND ANALYSIS
|
8
|
December 31, 2019
|
|
UNS Energy
|
|
|
|
Variance
|
|||||
|
2019
|
|
2018
|
|
|
FX
|
|
Other
|
|
Retail electricity sales (GWh)
|
10,431
|
|
10,600
|
|
|
—
|
|
(169
|
)
|
Wholesale electricity sales (GWh) (1)
|
7,923
|
|
6,806
|
|
|
—
|
|
1,117
|
|
Gas sales (PJ)
|
16
|
|
13
|
|
|
—
|
|
3
|
|
Revenue ($ millions)
|
2,212
|
|
2,202
|
|
|
46
|
|
(36
|
)
|
Earnings ($ millions)
|
292
|
|
293
|
|
|
6
|
|
(7
|
)
|
(1)
|
Primarily short-term wholesale sales
|
Central Hudson
|
|
|
|
Variance
|
|||||
|
2019
|
|
2018
|
|
|
FX
|
|
Other
|
|
Electricity sales (GWh)
|
4,963
|
|
5,118
|
|
|
—
|
|
(155
|
)
|
Gas sales (PJ)
|
22
|
|
24
|
|
|
—
|
|
(2
|
)
|
Revenue ($ millions)
|
917
|
|
924
|
|
|
24
|
|
(31
|
)
|
Earnings ($ millions)
|
85
|
|
74
|
|
|
2
|
|
9
|
|
MANAGEMENT DISCUSSION AND ANALYSIS
|
9
|
December 31, 2019
|
|
FortisBC Energy
|
2019
|
|
2018
|
|
Variance
|
|
Gas sales (PJ)
|
227
|
|
212
|
|
15
|
|
Revenue ($ millions)
|
1,331
|
|
1,187
|
|
144
|
|
Earnings ($ millions)
|
165
|
|
155
|
|
10
|
|
FortisAlberta
|
2019
|
|
2018
|
|
Variance
|
|
Energy deliveries (GWh)
|
16,887
|
|
17,154
|
|
(267
|
)
|
Revenue ($ millions)
|
598
|
|
579
|
|
19
|
|
Earnings ($ millions)
|
131
|
|
120
|
|
11
|
|
MANAGEMENT DISCUSSION AND ANALYSIS
|
10
|
December 31, 2019
|
|
FortisBC Electric
|
2019
|
|
2018
|
|
Variance
|
|
Electricity sales (GWh)
|
3,326
|
|
3,250
|
|
76
|
|
Revenue ($ millions)
|
418
|
|
408
|
|
10
|
|
Earnings ($ millions)
|
54
|
|
56
|
|
(2
|
)
|
Other Electric
|
|
|
|
Variance
|
|||||
|
2019
|
|
2018
|
|
|
FX
|
|
Other
|
|
Electricity sales (GWh)
|
9,366
|
|
9,314
|
|
|
—
|
|
52
|
|
Revenue ($ millions)
|
1,467
|
|
1,412
|
|
|
7
|
|
48
|
|
Earnings ($ millions)
|
106
|
|
105
|
|
|
1
|
|
—
|
|
Energy Infrastructure
|
|
|
|
Variance
|
|||||
|
2019
|
|
2018
|
|
|
FX
|
|
Other
|
|
Electricity sales (GWh)
|
144
|
|
853
|
|
|
—
|
|
(709
|
)
|
Revenue ($ millions)
|
82
|
|
184
|
|
|
1
|
|
(103
|
)
|
Earnings ($ millions)
|
18
|
|
72
|
|
|
1
|
|
(55
|
)
|
MANAGEMENT DISCUSSION AND ANALYSIS
|
11
|
December 31, 2019
|
|
Corporate and Other
|
|
|
|
Variance
|
|||||
($ millions)
|
2019
|
|
2018
|
|
|
FX
|
|
Other
|
|
Net income (expenses)
|
333
|
|
(136
|
)
|
|
1
|
|
468
|
|
MANAGEMENT DISCUSSION AND ANALYSIS
|
12
|
December 31, 2019
|
|
Non-US GAAP Reconciliation
|
|
|
|
|||
Years Ended December 31
|
|
|
|
|||
($ millions, except as shown)
|
2019
|
|
2018
|
|
Variance
|
|
Common Equity Earnings
|
1,655
|
|
1,100
|
|
555
|
|
Adjusting items:
|
|
|
|
|||
Gain on disposition (1)
|
(484
|
)
|
—
|
|
(484
|
)
|
November 2019 FERC Order (2)
|
(83
|
)
|
—
|
|
(83
|
)
|
US tax reform (3)
|
12
|
|
—
|
|
12
|
|
Unrealized loss on mark-to-market of derivatives (4)
|
15
|
|
10
|
|
5
|
|
Consolidated state income tax election (5)
|
—
|
|
(30
|
)
|
30
|
|
Assets held for sale (5)
|
—
|
|
(14
|
)
|
14
|
|
Adjusted Common Equity Earnings
|
1,115
|
|
1,066
|
|
49
|
|
Adjusted Basic EPS ($)
|
2.55
|
|
2.51
|
|
0.04
|
|
(1)
|
See "Significant Items" on page 3, included in the Corporate and Other segment
|
(2)
|
See "Regulatory Highlights" below, included in the ITC segment
|
(3)
|
The finalization of US tax reform regulations associated with base-erosion and anti-abuse tax, included in the Corporate and Other segment
|
(4)
|
Represents timing differences related to the accounting of natural gas derivatives at Aitken Creek, included in the Energy Infrastructure segment
|
(5)
|
Remeasurement of deferred income tax liabilities, included in the Corporate and Other segment
|
MANAGEMENT DISCUSSION AND ANALYSIS
|
13
|
December 31, 2019
|
|
MANAGEMENT DISCUSSION AND ANALYSIS
|
14
|
December 31, 2019
|
|
Significant Changes between December 31, 2019 and 2018
|
|||
|
Increase (Decrease)
|
|
|
|
FX
|
Other
|
|
Balance Sheet Account
|
($ millions)
|
($ millions)
|
Explanation
|
Assets held for sale
|
—
|
(766)
|
Due to the disposition of the Waneta Expansion.
|
Regulatory assets (including current and long-term)
|
(55)
|
363
|
Due primarily to the operation of rate stabilization accounts and the normal deferral of derivative losses, energy management costs, income tax expense and employee future benefits.
|
Property, plant and equipment, net
|
(974)
|
2,205
|
Due primarily to capital expenditures, partially offset by depreciation.
|
Goodwill
|
(527)
|
1
|
The other increase was not significant.
|
Short-term borrowings
|
(2)
|
454
|
Due primarily to the issuance of commercial paper at ITC and short-term borrowings at UNS Energy.
|
MANAGEMENT DISCUSSION AND ANALYSIS
|
15
|
December 31, 2019
|
|
MANAGEMENT DISCUSSION AND ANALYSIS
|
16
|
December 31, 2019
|
|
Credit Facilities
|
|
|
|
|
||||
As at December 31
|
Regulated
|
|
Corporate
|
|
|
|
||
($ millions)
|
Utilities
|
|
and Other
|
|
2019
|
|
2018
|
|
Total credit facilities (1)
|
4,209
|
|
1,381
|
|
5,590
|
|
5,165
|
|
Credit facilities utilized:
|
|
|
|
|
||||
Short-term borrowings
|
(512
|
)
|
—
|
|
(512
|
)
|
(60
|
)
|
Long-term debt (including current portion)
|
(640
|
)
|
—
|
|
(640
|
)
|
(1,066
|
)
|
Letters of credit outstanding
|
(64
|
)
|
(50
|
)
|
(114
|
)
|
(119
|
)
|
Credit facilities unutilized
|
2,993
|
|
1,331
|
|
4,324
|
|
3,920
|
|
(1)
|
Additional information about these credit facilities is provided in Note 15 in the 2019 Annual Financial Statements.
|
MANAGEMENT DISCUSSION AND ANALYSIS
|
17
|
December 31, 2019
|
|
Summary of Cash Flows
|
|
|
|
|||
Years ended December 31
|
|
|
|
|||
($ millions)
|
2019
|
|
2018
|
|
Variance
|
|
Cash, beginning of year
|
332
|
|
327
|
|
5
|
|
Cash provided by (used in):
|
|
|
|
|||
Operating activities
|
2,663
|
|
2,604
|
|
59
|
|
Investing activities
|
(2,768
|
)
|
(3,252
|
)
|
484
|
|
Financing activities
|
154
|
|
644
|
|
(490
|
)
|
Effect of exchange rate changes on cash and cash equivalents
|
(26
|
)
|
24
|
|
(50
|
)
|
Cash and change in cash associated with assets held for sale
|
15
|
|
(15
|
)
|
30
|
|
Cash, end of year
|
370
|
|
332
|
|
38
|
|
MANAGEMENT DISCUSSION AND ANALYSIS
|
18
|
December 31, 2019
|
|
Long-Term Debt Issuances
|
|
Interest
|
|
|
|
|
|
||
Year ended December 31, 2019
|
Month
|
Rate
|
|
|
|
|
Use of
|
||
($ millions, except %)
|
Issued
|
(%)
|
|
Maturity
|
|
Amount
|
|
Proceeds
|
|
ITC
|
|
|
|
|
|
|
|||
Secured notes
|
January
|
4.55
|
|
2049
|
|
US
|
50
|
|
(1) (2) (3)
|
Unsecured term loan credit agreement (4)
|
June
|
(5)
|
|
2021
|
|
US
|
200
|
|
(6)
|
Secured notes
|
July
|
4.65
|
|
2049
|
|
US
|
50
|
|
(1) (2) (3)
|
First mortgage bonds
|
August
|
3.30
|
|
2049
|
|
US
|
75
|
|
(1) (2) (3)
|
Central Hudson
|
|
|
|
|
|
|
|||
Unsecured notes
|
October
|
3.89
|
|
2049
|
|
US
|
50
|
|
(2) (3) (6)
|
Unsecured notes
|
October
|
3.99
|
|
2059
|
|
US
|
50
|
|
(2) (3) (6)
|
FortisBC Energy
|
|
|
|
|
|
|
|||
Unsecured debentures
|
August
|
2.82
|
|
2049
|
|
200
|
|
(1)
|
|
FortisTCI
|
|
|
|
|
|
|
|||
Unsecured non-revolving term loan
|
February
|
(7
|
)
|
2025
|
|
US
|
5
|
|
(2) (3)
|
Caribbean Utilities
|
|
|
|
|
|
|
|||
Unsecured notes
|
May
|
4.14
|
|
2049
|
|
US
|
40
|
|
(1) (3) (6)
|
Unsecured notes
|
August
|
4.14
|
|
2049
|
|
US
|
20
|
|
(2) (3) (6)
|
Unsecured notes
|
August
|
3.83
|
|
2039
|
|
US
|
20
|
|
(2) (3) (6)
|
(1)
|
Repay credit facility borrowings
|
(2)
|
Finance capital expenditures
|
(3)
|
General corporate purposes
|
(4)
|
Maximum amount of borrowings under this agreement was US$400 million; in January 2020 the remaining US$200 million was drawn to repay outstanding commercial paper balances
|
(5)
|
Floating rate of a one-month LIBOR plus a spread of 0.60%
|
(6)
|
Repay maturing long-term debt
|
(7)
|
Floating rate of a one-month LIBOR plus a spread of 1.75%
|
Common Equity Issuances and Dividends Paid
|
|
|
|
|||
Years Ended December 31
|
|
|
|
|||
($ millions, except as indicated)
|
2019
|
|
2018
|
|
Variance
|
|
Number of common shares issued (1) (# millions)
|
34.8
|
|
7.4
|
|
27.4
|
|
Amount of common shares issued (2)
|
1,756
|
|
307
|
|
1,449
|
|
Non-cash issuances (3)
|
(314
|
)
|
(273
|
)
|
(41
|
)
|
Cash proceeds from common shares issued
|
1,442
|
|
34
|
|
1,408
|
|
|
|
|
|
|||
Dividends paid per common share ($)
|
1.8275
|
|
1.7250
|
|
0.1025
|
|
Total dividends paid
|
793
|
|
731
|
|
62
|
|
Non-cash DRIP
|
(299
|
)
|
(272
|
)
|
(27
|
)
|
Cash dividends paid
|
494
|
|
459
|
|
35
|
|
(1)
|
Mainly related to the Corporation's issuance of shares in the fourth quarter of 2019, DRIP and ATM Program
|
(2)
|
Net of commissions of $26 million (2018 - $nil)
|
(3)
|
Related to DRIP and stock options
|
MANAGEMENT DISCUSSION AND ANALYSIS
|
19
|
December 31, 2019
|
|
Contractual Obligations
|
|
|
|
|
|
|||||||||
As at December 31, 2019
|
|
Due
|
||||||||||||
($ millions)
|
Total
|
Year 1
|
Year 2
|
Year 3
|
Year 4
|
Year 5
|
Thereafter
|
|||||||
Long-term debt:
|
|
|
|
|
|
|
|
|||||||
Principal (1)
|
22,320
|
|
690
|
|
872
|
|
1,146
|
|
1,553
|
|
1,106
|
|
16,953
|
|
Interest
|
15,483
|
|
929
|
|
910
|
|
879
|
|
846
|
|
786
|
|
11,133
|
|
Finance leases (2)
|
1,359
|
|
56
|
|
121
|
|
33
|
|
33
|
|
33
|
|
1,083
|
|
Other obligations
|
450
|
|
134
|
|
120
|
|
94
|
|
20
|
|
19
|
|
63
|
|
Other commitments (3)
|
|
|
|
|
|
|
|
|
||||||
Waneta Expansion capacity agreement
|
2,628
|
|
51
|
|
52
|
|
53
|
|
54
|
|
55
|
|
2,363
|
|
Gas and fuel purchase obligations
|
2,398
|
|
606
|
|
424
|
|
349
|
|
255
|
|
140
|
|
624
|
|
Power purchase obligations
|
1,743
|
|
244
|
|
183
|
|
168
|
|
163
|
|
119
|
|
866
|
|
Renewable PPAs
|
1,513
|
|
104
|
|
104
|
|
104
|
|
103
|
|
103
|
|
995
|
|
Build-transfer agreement - Oso Grande
|
438
|
|
438
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
ITC easement agreement
|
401
|
|
13
|
|
13
|
|
13
|
|
13
|
|
13
|
|
336
|
|
Renewables energy credit purchase agreements
|
124
|
|
26
|
|
18
|
|
17
|
|
10
|
|
10
|
|
43
|
|
Debt collection agreement
|
116
|
|
3
|
|
3
|
|
3
|
|
3
|
|
3
|
|
101
|
|
Other
|
299
|
|
36
|
|
26
|
|
24
|
|
25
|
|
29
|
|
159
|
|
|
49,272
|
|
3,330
|
|
2,846
|
|
2,883
|
|
3,078
|
|
2,416
|
|
34,719
|
|
(1)
|
Total is not reduced by unamortized deferred financing and discount costs of $129 million.
|
(2)
|
Additional information is provided in Note 16 in the 2019 Annual Financial Statements.
|
(3)
|
Additional information is provided in Note 29 in the 2019 Annual Financial Statements.
|
MANAGEMENT DISCUSSION AND ANALYSIS
|
20
|
December 31, 2019
|
|
Consolidated Capital Structure (1) (%)
|
|
|
||
As at December 31
|
2019
|
|
2018
|
|
Debt (2)
|
53.1
|
|
57.0
|
|
Preference shares
|
3.8
|
|
3.8
|
|
Common shareholders' equity and minority interest (3)
|
43.1
|
|
39.2
|
|
|
100.0
|
|
100.0
|
|
(1)
|
Reflects the repayment of debt using proceeds from the disposition of the Waneta Expansion and the $1.2 billion common equity offering (see "Significant Items" on page 3)
|
(2)
|
Includes long-term debt and finance leases, including current portion, and short-term borrowings, net of cash
|
(3)
|
Includes minority interest of 3.7% as at December 31, 2019 (December 31, 2018 - 4.5%)
|
Credit Ratings
|
|
|
|
|
|
As at December 31, 2019
|
Rating
|
|
Type
|
|
Outlook
|
S&P
|
A-
|
|
Corporate
|
|
Negative
|
|
BBB+
|
|
Unsecured debt
|
|
|
DBRS Morningstar
|
BBB (high)
|
|
Corporate
|
|
Stable
|
|
BBB (high)
|
|
Unsecured debt
|
|
|
Moody's
|
Baa3
|
|
Issuer
|
|
Stable
|
|
Baa3
|
|
Unsecured debt
|
|
|
2019 Capital Expenditures (1)
|
|
||||||||||||||||||||
|
Regulated Utilities
|
|
|
|
|
||||||||||||||||
($ millions, except %)
|
ITC
|
UNS
Energy
|
Central
Hudson
|
FortisBC
Energy
|
Fortis
Alberta
|
FortisBC
Electric
|
Other Electric
|
Total
Regulated
Utilities
|
Non-Regulated (2)
|
Total
|
(%)
|
||||||||||
Generation
|
—
|
|
442
|
|
2
|
|
—
|
|
—
|
|
29
|
|
57
|
|
530
|
|
6
|
|
536
|
|
14
|
Transmission
|
951
|
|
83
|
|
55
|
|
194
|
|
—
|
|
18
|
|
146
|
|
1,447
|
|
—
|
|
1,447
|
|
38
|
Distribution
|
—
|
|
255
|
|
174
|
|
191
|
|
385
|
|
42
|
|
160
|
|
1,207
|
|
—
|
|
1,207
|
|
32
|
Other (3)
|
197
|
|
135
|
|
86
|
|
78
|
|
38
|
|
17
|
|
30
|
|
581
|
|
47
|
|
628
|
|
16
|
Total
|
1,148
|
|
915
|
|
317
|
|
463
|
|
423
|
|
106
|
|
393
|
|
3,765
|
|
53
|
|
3,818
|
|
100
|
(%)
|
31
|
|
24
|
|
8
|
|
12
|
|
11
|
|
3
|
|
10
|
|
99
|
|
1
|
|
100
|
|
|
(1)
|
Reflects cash outlay for property, plant and equipment and intangible assets as shown on the consolidated statements of cash flows in the 2019 Annual Financial Statements, as well as Fortis' share of development costs and capital spending for the Wataynikaneyap Transmission Power Project of $98 million
|
(2)
|
Includes Energy Infrastructure and Corporate and Other segments
|
(3)
|
Includes facilities, equipment, vehicles and information technology assets, as well as AESO transmission-related capital expenditures at FortisAlberta
|
MANAGEMENT DISCUSSION AND ANALYSIS
|
21
|
December 31, 2019
|
|
(1)
|
Excludes the non-cash equity component of AFUDC
|
Five-Year Capital Plan (1)
|
|
|||||||||||
($ billions)
|
2020
|
|
2021
|
|
2022
|
|
2023
|
|
2024
|
|
Total
|
|
|
4.3
|
|
3.8
|
|
3.8
|
|
3.7
|
|
3.2
|
|
18.8
|
|
(1)
|
Excludes the non-cash equity component of AFUDC
|
(1)
|
Relates to the connection of new customers and infrastructure upgrades required to meet load growth, including AESO transmission‑related investment at FortisAlberta
|
(2)
|
Relates to the continued and enhanced performance, reliability and safety of generation, transmission and distribution assets
|
(3)
|
Facilities, equipment, vehicles, information technology and other assets
|
MANAGEMENT DISCUSSION AND ANALYSIS
|
22
|
December 31, 2019
|
|
Midyear Rate Base (1)
|
Actual
|
|
Forecast
|
|
Forecast
|
|
($ billions)
|
2019
|
|
2020
|
|
2024
|
|
ITC
|
8.7
|
|
9.5
|
|
12.0
|
|
UNS Energy
|
5.1
|
|
5.8
|
|
6.9
|
|
Central Hudson
|
1.9
|
|
2.1
|
|
2.8
|
|
FortisBC Energy
|
4.5
|
|
5.0
|
|
6.6
|
|
FortisAlberta
|
3.5
|
|
3.7
|
|
4.3
|
|
FortisBC Electric
|
1.3
|
|
1.4
|
|
1.5
|
|
Other Electric
|
3.0
|
|
3.2
|
|
4.3
|
|
Total
|
28.0
|
|
30.7
|
|
38.4
|
|
(1)
|
Simple average of Rate Base at beginning and end of the year
|
Major Capital Projects (1)
|
|
|
Forecast
|
|
||||||
|
|
Pre-
|
|
Actual
|
|
|
2021-
|
|
Expected
|
|
($ millions)
|
Project
|
2019
|
|
2019
|
|
2020
|
|
2024
|
|
Completion
|
ITC (2)
|
Multi-Value Regional Transmission Projects
|
581
|
|
44
|
|
11
|
|
265
|
|
2023
|
|
34.5 to 69 kV Transmission Conversion Project
|
225
|
|
127
|
|
92
|
|
176
|
|
Post-2024
|
UNS Energy
|
Gila River Unit 2
|
—
|
|
212
|
|
—
|
|
—
|
|
2019
|
|
Southline Transmission Project
|
—
|
|
—
|
|
19
|
|
373
|
|
Post-2024
|
|
Oso Grande Wind Project
|
—
|
|
65
|
|
453
|
|
—
|
|
2020
|
FortisBC Energy
|
Lower Mainland Intermediate Pressure System Upgrade
|
208
|
|
180
|
|
72
|
|
—
|
|
2020
|
|
Eagle Mountain Woodfibre Gas Line Project (3)
|
—
|
|
—
|
|
—
|
|
350
|
|
2023
|
|
Transmission Integrity Management Capabilities Project
|
—
|
|
13
|
|
23
|
|
494
|
|
Post-2024
|
|
Inland Gas Upgrades Project
|
3
|
|
6
|
|
57
|
|
262
|
|
Post-2024
|
|
Tilbury 1B
|
—
|
|
8
|
|
37
|
|
315
|
|
2024
|
Other Electric
|
Wataynikaneyap Transmission Power Project (4)
|
25
|
|
98
|
|
230
|
|
271
|
|
2023
|
Total
|
|
1,042
|
|
753
|
|
994
|
|
2,506
|
|
|
(1)
|
Includes applicable AFUDC
|
(2)
|
Pre-2019 capital expenditures are from the date of the ITC acquisition on October 14, 2016
|
(3)
|
Net of forecast customer contributions
|
(4)
|
Fortis' share of estimated capital spending, including deferred development costs. Under the funding framework, Fortis will be funding its equity component only.
|
MANAGEMENT DISCUSSION AND ANALYSIS
|
23
|
December 31, 2019
|
|
MANAGEMENT DISCUSSION AND ANALYSIS
|
24
|
December 31, 2019
|
|
MANAGEMENT DISCUSSION AND ANALYSIS
|
25
|
December 31, 2019
|
|
MANAGEMENT DISCUSSION AND ANALYSIS
|
26
|
December 31, 2019
|
|
MANAGEMENT DISCUSSION AND ANALYSIS
|
27
|
December 31, 2019
|
|
MANAGEMENT DISCUSSION AND ANALYSIS
|
28
|
December 31, 2019
|
|
MANAGEMENT DISCUSSION AND ANALYSIS
|
29
|
December 31, 2019
|
|
MANAGEMENT DISCUSSION AND ANALYSIS
|
30
|
December 31, 2019
|
|
MANAGEMENT DISCUSSION AND ANALYSIS
|
31
|
December 31, 2019
|
|
MANAGEMENT DISCUSSION AND ANALYSIS
|
32
|
December 31, 2019
|
|
MANAGEMENT DISCUSSION AND ANALYSIS
|
33
|
December 31, 2019
|
|
MANAGEMENT DISCUSSION AND ANALYSIS
|
34
|
December 31, 2019
|
|
Key Estimates and Assumptions
|
Defined Benefit
Pension Plans
|
OPEB Plans
|
||||||
Years Ended December 31
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
Funded status (1) ($ millions)
|
|
|
|
|
||||
Benefit obligation (2)
|
(3,632
|
)
|
(3,207
|
)
|
(712
|
)
|
(655
|
)
|
Plan assets
|
3,208
|
|
2,830
|
|
343
|
|
293
|
|
|
(424
|
)
|
(377
|
)
|
(369
|
)
|
(362
|
)
|
Net benefit cost (2) ($ millions)
|
65
|
|
83
|
|
28
|
|
34
|
|
Key assumptions: (weighted average %)
|
|
|
|
|
||||
Discount rate (3)
|
|
|
|
|
||||
During the year
|
4.05
|
|
3.56
|
|
4.10
|
|
3.57
|
|
As at December 31
|
3.20
|
|
4.07
|
|
3.25
|
|
4.13
|
|
Expected long-term rate of return on plan assets (4)
|
5.78
|
|
5.80
|
|
5.50
|
|
5.48
|
|
Rate of compensation increase
|
3.33
|
|
3.35
|
|
—
|
|
—
|
|
Health care cost trend increase rate (5)
|
—
|
|
—
|
|
4.62
|
|
4.61
|
|
(1)
|
Periodic actuarial valuations determine funding contributions for the pension plans and US OPEB plans, while Canadian OPEB plans are unfunded
|
(2)
|
Actuarially determined using the projected benefits method prorated on service and management's best estimate of expected plan investment performance, salary escalation, average remaining service life of employees, mortality rates and, for OPEB plans, expected health care costs
|
(3)
|
Reflects market interest rates on high‑quality bonds with cash flows that match the timing and amount of expected pension payments
|
(4)
|
Developed using best estimates of expected returns, volatilities and correlations for each class of asset. Estimates are based on historical performance, future expectations and periodic portfolio rebalancing among the diversified asset classes.
|
(5)
|
Actuarially determined, the projected 2020 rate is 6.15% and is assumed to decrease over the next 12 years to the ultimate rate of 4.62% in 2031 and thereafter.
|
Sensitivity Analysis
|
|
|
|
|
Health Care Cost
Trend Rate -
1% change
|
|||||||
|
Rate of Return -
1% change
|
Discount Rate -
1% change
|
Trend Rate -
|
|||||||||
Year ended December 31, 2019
|
1% change
|
1% change
|
1% change
|
|||||||||
($ millions)
|
Increase
|
Decrease
|
Increase
|
Decrease
|
Increase
|
Decrease
|
||||||
Defined benefit pension plans
|
|
|
|
|
|
|
||||||
Net benefit cost
|
(25
|
)
|
23
|
|
(29
|
)
|
55
|
|
n/a
|
|
n/a
|
|
Projected benefit obligation
|
25
|
|
(80
|
)
|
(482
|
)
|
612
|
|
n/a
|
|
n/a
|
|
OPEB plans
|
|
|
|
|
|
|
||||||
Net benefit cost
|
(3
|
)
|
3
|
|
(7
|
)
|
10
|
|
24
|
|
(18
|
)
|
Accumulated benefit obligation
|
n/a
|
|
n/a
|
|
(100
|
)
|
128
|
|
104
|
|
(83
|
)
|
MANAGEMENT DISCUSSION AND ANALYSIS
|
35
|
December 31, 2019
|
|
MANAGEMENT DISCUSSION AND ANALYSIS
|
36
|
December 31, 2019
|
|
MANAGEMENT DISCUSSION AND ANALYSIS
|
37
|
December 31, 2019
|
|
MANAGEMENT DISCUSSION AND ANALYSIS
|
38
|
December 31, 2019
|
|
Derivative Fair Values
|
|
|
|
|
||||
($ millions)
|
Level 1 (1)
|
Level 2 (1)
|
|
Level 3 (1)
|
|
Total
|
|
|
As at December 31, 2019
|
|
|
|
|
||||
Assets (2)
|
|
|
|
|
||||
Energy contracts subject to regulatory deferral
|
—
|
|
22
|
|
—
|
|
22
|
|
Energy contracts not subject to regulatory deferral
|
—
|
|
8
|
|
—
|
|
8
|
|
Foreign exchange contracts, interest rate and total return swaps
|
14
|
|
4
|
|
—
|
|
18
|
|
Other investments
|
121
|
|
—
|
|
—
|
|
121
|
|
|
135
|
|
34
|
|
—
|
|
169
|
|
Liabilities (3)
|
|
|
|
|
||||
Energy contracts subject to regulatory deferral
|
(1
|
)
|
(138
|
)
|
—
|
|
(139
|
)
|
Energy contracts not subject to regulatory deferral
|
—
|
|
(12
|
)
|
—
|
|
(12
|
)
|
|
(1
|
)
|
(150
|
)
|
—
|
|
(151
|
)
|
As at December 31, 2018
|
|
|
|
|
||||
Assets (2)
|
|
|
|
|
||||
Energy contracts subject to regulatory deferral
|
—
|
|
33
|
|
8
|
|
41
|
|
Energy contracts not subject to regulatory deferral
|
—
|
|
13
|
|
3
|
|
16
|
|
Other investments
|
155
|
|
—
|
|
—
|
|
155
|
|
|
155
|
|
46
|
|
11
|
|
212
|
|
Liabilities (3)
|
|
|
|
|
||||
Energy contracts subject to regulatory deferral
|
—
|
|
(86
|
)
|
(3
|
)
|
(89
|
)
|
Energy contracts not subject to regulatory deferral
|
—
|
|
(1
|
)
|
—
|
|
(1
|
)
|
Foreign exchange contracts, interest rate and total return swaps
|
(8
|
)
|
(1
|
)
|
—
|
|
(9
|
)
|
|
(8
|
)
|
(88
|
)
|
(3
|
)
|
(99
|
)
|
(1)
|
Under the hierarchy, fair value is determined using: (i) level 1 - unadjusted quoted prices in active markets; (ii) level 2 - other pricing inputs directly or indirectly observable in the marketplace; and (iii) level 3 - unobservable inputs, used when observable inputs are not available. Classifications reflect the lowest level of input that is significant to the measurement. At December 31, 2019, all level 3 assets and liabilities transferred to level 2 because observable market data became available.
|
(2)
|
Current portion is included in accounts receivable and other current assets, with the remainder included in other assets.
|
(3)
|
Current portion is included in accounts payable and other current liabilities, with the remainder included in other liabilities.
|
Derivative Volumes (1)
|
|
|
||
As at December 31
|
2019
|
|
2018
|
|
Energy contracts subject to regulatory deferral
|
|
|
||
Electricity swap contracts (GWh)
|
628
|
|
774
|
|
Electricity power purchase contracts (GWh)
|
3,198
|
|
651
|
|
Gas swap contracts (PJ)
|
168
|
|
203
|
|
Gas supply contract premiums (PJ)
|
241
|
|
266
|
|
Energy contracts not subject to regulatory deferral
|
|
|
||
Wholesale trading contracts (GWh)
|
1,855
|
|
1,440
|
|
Gas swap contracts (PJ)
|
43
|
|
37
|
|
(1)
|
Energy contracts settle on various dates through 2029.
|
MANAGEMENT DISCUSSION AND ANALYSIS
|
39
|
December 31, 2019
|
|
Years ended December 31
|
|
|
|
|||
($ millions, except as indicated)
|
2019
|
|
2018
|
|
2017
|
|
Revenue
|
8,783
|
|
8,390
|
|
8,301
|
|
Net earnings
|
1,852
|
|
1,286
|
|
1,125
|
|
Common Equity Earnings
|
1,655
|
|
1,100
|
|
963
|
|
EPS: ($)
|
|
|
|
|||
Basic
|
3.79
|
|
2.59
|
|
2.32
|
|
Diluted
|
3.78
|
|
2.59
|
|
2.31
|
|
|
|
|
|
|||
Total assets
|
53,404
|
|
53,051
|
|
47,822
|
|
Long-term debt (excluding current portion)
|
21,501
|
|
23,159
|
|
20,691
|
|
|
|
|
|
|||
Dividends declared: ($)
|
|
|
|
|||
Per common share
|
1.855
|
|
1.750
|
|
1.650
|
|
Per first preference share:
|
|
|
|
|||
Series F
|
1.2250
|
|
1.2250
|
|
1.2250
|
|
Series G (1)
|
1.0983
|
|
1.0345
|
|
0.9708
|
|
Series H
|
0.6250
|
|
0.6250
|
|
0.6250
|
|
Series I (2)
|
0.7771
|
|
0.7116
|
|
0.5262
|
|
Series J
|
1.1875
|
|
1.1875
|
|
1.1875
|
|
Series K (3)
|
0.9821
|
|
1.0000
|
|
1.0000
|
|
Series M (4)
|
1.0135
|
|
1.0250
|
|
1.0250
|
|
(1)
|
The annual dividend per share was reset from $0.9708 to $1.0983 for the five-year period from September 1, 2018 up to but excluding September 1, 2023.
|
(2)
|
Floating quarterly dividend rate is reset every quarter based on the then current three-month Government of Canada Treasury Bill rate plus the applicable reset dividend yield.
|
(3)
|
The annual dividend per share was reset from $1.0000 to $0.9823 for the five-year period from March 1, 2019 up to but excluding March 1, 2024.
|
(4)
|
The annual dividend per share was reset from $1.0250 to $0.9783 for the five-year period from December 1, 2019 up to but excluding December 1, 2024.
|
MANAGEMENT DISCUSSION AND ANALYSIS
|
40
|
December 31, 2019
|
|
Sales
|
|
|
|
|||
Fourth quarters ended December 31
|
2019
|
|
2018
|
|
Variance
|
|
Regulated utilities
|
|
|
|
|||
UNS Energy
|
|
|
|
|||
Retail Electricity (GWh)
|
2,223
|
|
2,225
|
|
(2
|
)
|
Wholesale Electricity (GWh)
|
1,814
|
|
2,526
|
|
(712
|
)
|
Gas (PJ)
|
5
|
|
5
|
|
—
|
|
Central Hudson
|
|
|
|
|
||
Electricity (GWh)
|
1,188
|
|
1,250
|
|
(62
|
)
|
Gas (PJ)
|
6
|
|
7
|
|
(1
|
)
|
FortisBC Energy (PJ)
|
71
|
|
63
|
|
8
|
|
FortisAlberta (GWh)
|
4,279
|
|
4,343
|
|
(64
|
)
|
FortisBC Electric (GWh)
|
888
|
|
839
|
|
49
|
|
Other Electric (GWh)
|
2,427
|
|
2,450
|
|
(23
|
)
|
Non-regulated - Energy Infrastructure (GWh)
|
14
|
|
85
|
|
(71
|
)
|
Revenue and Common Equity Earnings
|
|
|
|
|
|
|
|
||||||
Fourth quarters ended December 31
|
Revenue
|
|
Common Equity Earnings
|
||||||||||
($ millions, except as indicated)
|
2019
|
|
2018
|
|
Variance
|
|
|
2019
|
|
2018
|
|
Variance
|
|
Regulated utilities
|
|
|
|
|
|
|
|
||||||
ITC
|
500
|
|
390
|
|
110
|
|
|
171
|
|
92
|
|
79
|
|
UNS Energy
|
510
|
|
541
|
|
(31
|
)
|
|
38
|
|
27
|
|
11
|
|
Central Hudson
|
226
|
|
234
|
|
(8
|
)
|
|
30
|
|
24
|
|
6
|
|
FortisBC Energy
|
428
|
|
371
|
|
57
|
|
|
77
|
|
72
|
|
5
|
|
FortisAlberta
|
150
|
|
140
|
|
10
|
|
|
33
|
|
22
|
|
11
|
|
FortisBC Electric
|
112
|
|
111
|
|
1
|
|
|
12
|
|
13
|
|
(1
|
)
|
Other Electric
|
381
|
|
372
|
|
9
|
|
|
22
|
|
22
|
|
—
|
|
Non-regulated
|
|
|
|
|
|
|
|
|
|||||
Energy Infrastructure
|
19
|
|
50
|
|
(31
|
)
|
|
6
|
|
22
|
|
(16
|
)
|
Corporate and Other
|
—
|
|
—
|
|
—
|
|
|
(43
|
)
|
(33
|
)
|
(10
|
)
|
Inter-segment eliminations
|
—
|
|
(3
|
)
|
3
|
|
|
—
|
|
—
|
|
—
|
|
Total
|
2,326
|
|
2,206
|
|
120
|
|
|
346
|
|
261
|
|
85
|
|
|
|
|
|
|
|
|
|
||||||
Weighted average number of common shares outstanding (millions)
|
|
|
|
|
447.1
|
|
427.5
|
|
19.6
|
|
|||
Basic EPS ($)
|
|
|
|
|
0.77
|
|
0.61
|
|
0.16
|
|
MANAGEMENT DISCUSSION AND ANALYSIS
|
41
|
December 31, 2019
|
|
Cash Flows
|
|
|
|
|||
Fourth quarters ended December 31
|
|
|
|
|||
($ millions)
|
2019
|
|
2018
|
|
Variance
|
|
Cash, beginning of period
|
228
|
|
195
|
|
33
|
|
Cash provided by (used in):
|
|
|
|
|||
Operating activities
|
634
|
|
537
|
|
97
|
|
Investing activities
|
(1,104
|
)
|
(999
|
)
|
(105
|
)
|
Financing activities
|
627
|
|
598
|
|
29
|
|
Foreign exchange
|
(15
|
)
|
16
|
|
(31
|
)
|
Cash associated with assets held for sale
|
—
|
|
(15
|
)
|
15
|
|
Cash, end of period
|
370
|
|
332
|
|
38
|
|
|
|
Common Equity
|
|
|
||||
|
Revenue
|
|
Earnings
|
|
Basic EPS
|
|
Diluted EPS
|
|
Quarter Ended
|
($ millions)
|
|
($ millions)
|
|
($)
|
|
($)
|
|
December 31, 2019
|
2,326
|
|
346
|
|
0.77
|
|
0.77
|
|
September 30, 2019
|
2,051
|
|
278
|
|
0.64
|
|
0.63
|
|
June 30, 2019
|
1,970
|
|
720
|
|
1.66
|
|
1.66
|
|
March 31, 2019
|
2,436
|
|
311
|
|
0.72
|
|
0.72
|
|
December 31, 2018
|
2,206
|
|
261
|
|
0.61
|
|
0.61
|
|
September 30, 2018
|
2,040
|
|
276
|
|
0.65
|
|
0.65
|
|
June 30, 2018
|
1,947
|
|
240
|
|
0.57
|
|
0.57
|
|
March 31, 2018
|
2,197
|
|
323
|
|
0.77
|
|
0.76
|
|
MANAGEMENT DISCUSSION AND ANALYSIS
|
42
|
December 31, 2019
|
|
MANAGEMENT DISCUSSION AND ANALYSIS
|
43
|
December 31, 2019
|
|
MANAGEMENT DISCUSSION AND ANALYSIS
|
44
|
December 31, 2019
|
|
MANAGEMENT DISCUSSION AND ANALYSIS
|
45
|
December 31, 2019
|
|
MANAGEMENT DISCUSSION AND ANALYSIS
|
46
|
December 31, 2019
|
|
MANAGEMENT DISCUSSION AND ANALYSIS
|
47
|
December 31, 2019
|
1.
|
I have reviewed this annual report on Form 40-F of Fortis Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the issuer as of, and for, the periods presented in this report;
|
4.
|
The issuer’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the issuer and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the issuer’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the issuer’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the issuer’s internal control over financial reporting; and
|
5.
|
The issuer’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the issuer’s auditors and the audit committee of the issuer’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the issuer’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the issuer’s internal control over financial reporting.
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the issuer as of, and for, the periods presented in this report;
|
4.
|
The issuer’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the issuer and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the issuer’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the issuer’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the issuer’s internal control over financial reporting; and
|
5.
|
The issuer’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the issuer’s auditors and the audit committee of the issuer’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the issuer’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the issuer’s internal control over financial reporting.
|
1.
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
1.
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|