Q4 2021 Fortis Inc Earnings Call

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Speaker 1: Ladies and gentlemen, thank you for standing by. My name is April and I will be your conference operator today. Welcome to the Fortis, Fourth Quarter, and Annual 2021 Results Conference Call and Webcast. During the call, all participants will be in a listen-only mode.

Ladies and gentlemen, thank you for standing by my name is April and I will be your conference operator today.

I'll come to the fourth quarter and 2000.

'twenty, one results conference call and webcast.

All participants will be in a listen only mode.

There will be a question and answer session. Following the presentation.

At that time, those with questions to press star followed by the number one on their telephone.

If at any time during the conference you need to reach an operator, Please press star zero.

At this time I would like to turn the conference over to Stephanie.

Please go ahead, Mr mine that.

Speaker 2: Thanks, April , and good morning, everyone, and welcome to Fortis' fourth quarter and annual 2021 results conference call. I'm joined by David Hutchins, President and CEO , Jocelyn Perry, Executive VP and CFO , other members of the senior management team, as well as CEOs from certain subsidiaries. Before we begin today's call, I want to remind you that the discussion will include forward-looking information.

Thanks April and good morning, everyone and welcome to afford us as fourth quarter and annual 2021 results Conference call I'm joined by David Hutchens, President and CEO , Jocelyn Perry Executive VP and CFO . Other members of the senior management team as well as Ceos from certain subsidiaries.

I'll begin today's call I want to remind you that the discussion will include forward looking information.

Speaker 2: which is subject to the cautionary statement contained in the supporting slideshow. Actual results can differ materially from the forecast projections included in the forward-looking information presented today. All non-GAAP financial measures referenced in our prepared remarks are reconciled to the related U.S. GAAP financial measures in our annual 2021 MD&A. Also, unless otherwise specified, all financial information referenced is in Canadian dollars. With that, I will turn the call over to David.

Which is subject to the cautionary statement contained in the supporting slide show actual results can differ materially from the forecast projections included in the forward looking information presented today.

All non-GAAP financial measures referenced in our prepared remarks are reconciled to the related U S. GAAP financial measures in our annual 2021 M. DNA also unless otherwise specified all financial information referenced is in Canadian dollars with that I will turn the call over to David.

Speaker 3: Thank you and good morning everyone. In 2021, we delivered steady growth while progressing our cleaner energy goals.

Thank you and good morning, everyone. In 2021, we delivered steady growth, while progressing our cleaner energy goals.

Speaker 3: During the year, we invested $3.6 billion of capital to support the continued delivery of reliable electricity and natural gas to our customers, despite the ongoing challenges of the COVID-19 pandemic.

During the year, we invested $3 $6 billion of capital to support the continued delivery of reliable electricity and natural gas to our customers. Despite the ongoing challenges of the COVID-19 pandemic on.

Speaker 3: On the ESG front, we advanced many of our priorities, including becoming a supporter of the Task Force on Climate-Related Financial Disclosures, improving the diversity of our board, and enhancing our sustainability disclosures, all while continuing to reduce our greenhouse gas emissions.

On the ESG front, we advanced many of our priorities, including becoming a supporter of the task force on climate related financial disclosures, improving the diversity of our board and enhancing our sustainability disclosures all while continuing to reduce our greenhouse gas emissions financially absent foreign exchange difference.

Speaker 3: Financially, absent foreign exchange differences, we grew adjusted earnings per share by approximately 5 percent, supporting our 6 percent dividend growth and strong shareholder returns in 2021.

We grew adjusted earnings per share by approximately 5% supporting our 6% dividend growth and strong shareholder returns in 2021.

Speaker 3: 2021 was another year of extreme weather across North America and a few of our service territories were impacted.

2021 was another year of extreme weather across North America, and a few of our service territories were impacted.

Speaker 3: British Columbia saw fires in record heat in the summer and a devastating flood in the fall, while ITC's system experienced a derecho windstorm for the second year in a row.

British Columbia saw fires and record heat in the summer and a devastating flood in the fall well ITC system experienced the derecho windstorm for the second year in a row.

Speaker 3: With our operating model, our utilities were able to respond to those events and restore service quickly and safely using their local system knowledge and the support of best practices and expertise shared from across the Fortis community.

With our operating model, our utilities were able to respond to those events and restore service quickly and safely using their local system knowledge and the support of best practices and expertise shared from across the Florida group, a strong reliability and safety culture continues to be the foundation of our utility operations as evidenced by another.

Speaker 3: A strong reliability and safety culture continues to be the foundation of our utility operations, as evidenced by another year of outperformance relative to industry averages.

A year of outperformance relative to industry averages.

Speaker 3: I would like to thank all of our employees and our utilities whose dedication day in and day out allows us to provide exemplary service to our customers.

I would like to thank all of our employees and our utilities, whose dedication day in and day out allows us to provide exemplary service to our customers.

Speaker 3: Our long history of achieving strong shareholder returns continued in 2021 with a one-year total shareholder return of 21.8%. Looking back over a 20-year time frame, Fortis has delivered average annual total shareholder returns of approximately 13% or 975% in total. Also shown on slide 6, this far exceeds the returns generated by the benchmark indices.

Our long history of achieving strong shareholder returns continued in 2021 with a one year total shareholder return of 21, 8%.

Looking back over a 20 year time frame Fortis has delivered average annual total shareholder returns of approximately 13% or 975% in total also as shown on slide six this far exceeds the returns generated by the benchmark indices.

Speaker 3: Since 2019, we have reduced scope one emissions by 20%. This demonstrates significant progress towards reaching our target to reduce these emissions 75% by 2035.

Since 2019, we have reduced scope one emissions by 20% this demonstrates significant progress towards reaching our target to reduce these emissions 75% by 2035.

Speaker 3: At UNS, closure of the coal-fired Navajo generating station in late 2019, as well as the recent additions of the 250-megawatt Oso Grande wind project, the 100-megawatt Wilmot solar project, and the 99-megawatt Borderlands wind project have driven our carbon emissions reduction to date.

U S closure of the coal fired Navajo generating station in late 2019 as well as the recent additions of the 250 megawatt also Grande wind project. The 100 megawatt will not solar project and the 99 megawatt Borderlands wind project has driven our carbon emissions reduction to date with a full year of <unk>.

Speaker 3: With a full year of these renewable generation projects and the planned closure of San Juan generating stations scheduled for mid-year, we expect further reductions in carbon emissions in 2022 and remain on track to achieve our 75% reduction target.

Renewable generation projects and the planned closure of San Juan generating station is scheduled for mid year. We expect further reductions in carbon emissions in 2022 and remain on track to achieve our 75% reduction target.

Speaker 3: In 2021, our utilities deployed $3.6 billion of capital focused on resiliency, modernization, and sustainable energy, including $600 million for cleaner energy projects.

In 2021, our utilities deployed $3 $6 billion of capital focused on resiliency modernization and sustainable energy, including 600 million for cleaner energy projects.

Speaker 3: These investments supported rate-based growth of approximately 6% over 2020.

These investments supported rate base growth of approximately 6% over 2020.

Speaker 3: Capital investments for the year were broadly in line with plan. However, a lower U.S. to Canadian dollar exchange rate and pandemic-related timing delays for both the Watanakini app transmission project and planned spending at Caribbean utilities modestly tempered investments during the year. This was partially offset by higher capital spending at ITC, including restoration costs following the December derecho storm.

Capital investments for the year were broadly in line with plan, However, a lower U S to Canadian dollar exchange rate and pandemic related timing delays for both the Watson a kidney app transmission project and planned spending Caribbean.

Caribbean utilities modestly tempered investments during the year. This was partially offset by higher capital spending at ITC, including restoration costs. Following the December Derecho storm.

Speaker 3: While the pandemic has not had a material impact on our overall capital plan to date, we are continuing to monitor the supply chain in order to identify and mitigate issues promptly.

While the pandemic has not had a material impact on our overall capital plan to date, we are continuing to monitor the supply chain in order to identify and mitigate issues promptly for 2022 capital expenditures remain on track and are not expected to be significantly impacted.

Speaker 3: For 2022, capital expenditures remain on track and are not expected to be significantly impacted.

Speaker 3: In the fourth quarter, we rolled out our $20 billion five-year capital plan through 2026, reflecting approximately $4 billion of annual investment in our utilities.

In the fourth quarter, we rolled out our $20 billion five year capital plan through 2026, reflecting approximately $4 billion of annual investment in our utilities.

Speaker 3: The plan consists of virtually all regulated investments and a diverse mix of highly executable, low-risk projects supporting rate-based growth across our utilities.

The plan consists of virtually all regulated investments and a diverse mix of highly executable low risk projects supporting rate based growth across our utilities.

Speaker 3: With investments spanning the entire energy delivery chain, $3.8 billion of the five-year capital plan is allocated to cleaner energy investments aimed at improving our already low carbon footprint.

With the investments spanning the entire energy delivery chain $3 $8 billion of the five year capital plan is allocated to cleaner energy investments aimed at improving our already low carbon footprint.

Speaker 3: The plan is expected to increase rate base by over $10 billion from approximately $31 billion in 2021 to nearly $42 billion in 2026, supporting average annual rate base growth of approximately 6%.

The plant is expected to increase rate base by over $10 billion from approximately 31 31 billion in 2021 to nearly 42 billion in 2026 supporting average annual rate base growth of approximately 6%.

Speaker 3: Above and beyond our base plan, we remain optimistic about incremental opportunities to enhance our growth strategy.

Above and beyond our base plan, we remain optimistic about incremental opportunities to enhance our growth strategy.

Speaker 3: Specifically, as it relates to our transmission business, we continue to see a supportive policy environment.

Specifically as it relates to our transmission business, we continue to see a supportive policy environment at.

Speaker 3: At the state level, the Transmission Infrastructure Planning Act in Michigan was signed into law in December . With this legislation enacted, ITC now has a right of first refusal in Iowa, Michigan, and Minnesota, providing ITC the first right to build and own regional projects located within its service territory.

At the state level the transmission infrastructure Planning Act in Michigan was signed into law in December with this legislation enacted ITC now has a right of first refusal and Iowa, Michigan, and Minnesota, providing ITC, the first right to build and own regional projects located within it.

Service territory.

Speaker 3: At the federal level, the White House released a fact sheet last month outlining various administrative actions it will take in 2022 to implement its clean energy goals and climate agenda, including a new initiative from the Department of Energy, building a better grid.

At the federal level, the White House released the fact sheet last month outlining various administrative actions that we'll take in 2022 to implement its clean energy goals and climate agenda, including a new initiative from the department of energy building a better grid.

Speaker 3: This initiative is expected to support the nationwide development of new and upgraded transmission lines, enhance resiliency, and provide additional access to clean energy.

This initiative is expected to support the nationwide development of new and upgraded transmission lines enhance resiliency and provide additional access to clean energy.

Speaker 3: In addition to these positive policy advancements, ITC's geographic footprint puts them in a strong position to take advantage of the MISO long-range transmission plan. MISO is identifying regional transmission required to support the evolving needs of the system as it transitions to cleaner energy.

In addition to these positive policy advancements itc's geographic footprint puts them in a strong position to take advantage of the MISO long range transmission plan.

MISO is identifying regional transmission required to support the evolving needs of the system as it transitions to cleaner energy.

Speaker 3: Visibility on the initial tranche of projects is expected in the second quarter following the approval of the proposed cost allocation methodology that was filed earlier this month with FERC by MISO and a majority of its transmission owners.

Visibility on the initial tranche of projects is expected in the second quarter. Following the approval of the proposed cost allocation methodology that was filed earlier this month with FERC by MISO in a majority of its transmission owners.

Speaker 3: On the Lake Erie Connector project, the fully permitted, shovel-ready project continues to progress. Last month, the Ontario Minister of Energy issued a letter to the province's Independent Electric System Operator, or ISO, acknowledging the many benefits of the project.

On the Lake Erie Connector project, the fully permitted shovel ready project continues to progress last month, the Ontario Minister of energy issued a letter to the provinces independent electric system, operator, or ISO acknowledging the many benefits of the project.

Speaker 3: In the letter, the Ontario government requested the ISO continue discussions with ITC to advance contract negotiations on a transmission service agreement and requested a report back from ISO in late March. Should ITC reach a finalized agreement with the ISO, construction of the project would take approximately four years.

In the letter the Ontario government requested the ISO continued discussions with ITC to advanced contract negotiations on a transmission service agreement and requested report back from ISO in late March should ITC reach a finalized the agreement with the ISO construction of the project will take approximately four years.

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Speaker 3: Our current five-year plan does not include investments associated with these projects. As these or other opportunities that we've highlighted in the past come to fruition, they would either be additive to our existing plan or extend growth beyond 2026.

Our current five year plan does not include investments associated with these projects as these or other opportunities that we have highlighted in the past come to fruition, they would either be additive to our existing plan or extend growth beyond 2026.

Speaker 3: In 2021, we increased our dividends paid per common share to $2.05, an approximately 6% increase compared to 2020, marking 48 years of dividend increase.

In 2021, we increased our dividends paid per common share to $2.05 on approximately.

<unk>, 6% increase compared to 2020, marking 48 years of dividend increases.

Speaker 3: Looking ahead, we remain committed to building on this record through the execution of our growth strategy and a targeted 6 percent average annual dividend growth through 2025.

Looking ahead, we remain committed to building on this record through the execution of our growth strategy and a targeted 6% average annual dividend growth through 2025.

Speaker 3: Now I will turn the call over to Jocelyn for an update on our fourth quarter and annual financial results.

Now I will turn the call over to Jocelyn for an update on our fourth quarter and annual financial results.

Speaker 4: Thank you, David, and good morning, everyone. Turning to slide 13 and looking first at our fourth quarter results, while we continued to see rate-based growth across our utilities, we successfully concluded the central Hudson rate case and advanced the TEP rate settlement in the fourth quarter. There were a number of key drivers lowering EPS quarter over quarter.

Thank you David and good morning, everyone.

Turning to slide 13, and looking first at our fourth quarter results. While we continued to see rate base growth across our utilities. We successfully concluded the central Hudson rate case.

And advance the TEP rate settlement in the fourth quarter, there were a number of key drivers lowering EPS quarter over quarter.

Speaker 4: Reported earnings per common share was $0.69, $0.02 lower than the fourth quarter of 2020.

Reported earnings per common share was 69, two cents lower than the fourth quarter of 2020 and adjusted earnings per common share was <unk> 63.

Speaker 4: and adjusted earnings per common share with $0.63, $0.06 lower than the

6% lower than the fourth quarter of 2020.

Speaker 4: Unfavorable weather impacts in Arizona and Belize impacted EPS by four cents alone.

Unfavorable weather impacts in Arizona and believes impacted EPS by <unk> alone.

Speaker 4: In Arizona, retail sales were down 6% in the quarter, driven mainly by milder weather. And production in Belize was down 87% because of lower rainfall.

In Arizona retail sales were down 6% in the quarter, driven mainly by milder weather and production and believes was down 87% because of lower rainfall.

Speaker 4: Central Hudson also experienced a number of weather-related service interruptions that contributed to the company not meeting its performance targets.

Central Hudson also experienced a number of weather related service interruptions that contributed to the company not meeting its performance targets.

Speaker 4: And Fortas's share price increased approximately 9% in the quarter, which resulted in higher stock-based compensation expense. And together, this decreased EPS by 10%.

And board as the share price increased approximately 9% in the quarter, which resulted in higher stock based compensation expense and together this decreased EPS by <unk> <unk>.

Speaker 4: UNS also experienced lower gains on its retirement investments during the quarter, and this was the one cent increase.

Unf's also experienced lower gains on its retirement investments during the quarter and this was a one cent impact.

Speaker 4: And as expected, timing of tax deductions at FortisAlberta lowered EPS by $0.02, and a lower foreign exchange and a higher weighted average shares outstanding each decreased EPS by $0.01.

And as expected timing of tax deductions at Fortis, Alberta lowered EPS by <unk>.

And a lower foreign exchange and a higher weighted average shares outstanding each decreased EPS by <unk>.

Speaker 4: Looking at the annual results, reported earnings per common share was $2.61, one cent higher than 2020.

Looking at the annual results, we reported earnings per common share was $2 61, <unk> higher than 2020.

Speaker 4: And adjusted earnings per common share for the year was $2.59, $0.02 higher than $0.20.

And adjusted earnings per common share for the year was $2 59.

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Speaker 4: This increase in EPS year-over-year was achieved despite a lower foreign exchange rate, which decreased EPS by 10%.

This increase in EPS year over year was achieved despite a lower foreign exchange rate, which decreased EPS by <unk> 10 cents.

Speaker 4: excluding foreign exchange impacts, adjusted EPS grew by 12 cents, or approximately 5% in 2020.

Excluding foreign exchange impact adjusted EPS grew by 12 cents or approximately 5% in 2021.

Speaker 4: The waterfront table on slide 15 break down the annual EPS drivers as well as the earnings growth at our regulated utilities excluding the impacts of foreign exchange.

The waterfall table on slide 15 break down the annual EPS drivers as well as the earnings growth at our regulated utilities, excluding the impacts of foreign exchange.

Speaker 4: In 2021, our regulated utilities increased EPS by 18 cents over 2020.

In 2021, our regulated utilities increased EPS by <unk> 18 over 2020.

Speaker 4: Our largest utility, ITC, increased EPS by $0.07, reflecting 9% year-over-year earnings growth at the utility.

Our largest utility ITC increased EPS by <unk> <unk>.

9% year over year earnings growth at the utility.

Speaker 4: Strong rate-based growth coupled with a favorable adjustment related to interest rate swaps was partially upset by higher non-recoverable stock-based compensation.

Rate base growth, coupled with a favorable adjustment related to interest rate swaps was partially offset by higher non recoverable stock based compensation costs.

Speaker 4: UNS Energy increased EPS by 2 cents, growing its earnings by approximately 4%.

Unf's energy increased EPS by two things rolling its earnings by approximately 4% I'll speak to you on that in more detail on the next slide.

Speaker 4: I'll speak to you on this in more detail on the next slide.

Speaker 4: Central Hudson contributed a $0.02 EPS increase, growing its earnings by approximately 7%, reflecting rate-based growth and the conclusion of its rate.

Central Hudson contributed a two cent EPS increase growing its earnings by approximately 7% reflecting rate base growth and the conclusion of its rate case.

Speaker 4: Our Western Canadian utilities contributed a 5 cent EPS increase driven mainly by rate-based growth.

Our western Canadian utilities contributed a 5% EPS increase driven mainly by rate base growth.

Speaker 4: Higher earnings at Fortis Alberta were also driven by favorable weather.

Higher earnings at Fortis, Alberta were also driven by favorable weather.

Speaker 4: In total, earnings in Western Canada grew 6% year over year.

In total earnings in Western Canada grew 6% year over year.

Speaker 4: At our other electric segment, higher sales in the Caribbean due to the continued recovery of the tourism industry and rate-based growth contributed to a two-cent increase in EPS, or 7% segmented earnings growth compared to 2010.

At our other electric segment higher sales in the Caribbean due to the continued recovery of the tourism industry and rate base growth contributed to a two cent increase in EPS or 7% segmented earnings growth compared to 2020.

Speaker 4: At our energy infrastructure segment, EPS decreased 3 cents, mainly driven by lower hydroelectric production in Belize, and realized losses on natural gas contracts at a concrete

At our energy infrastructure segment EPS decreased three mainly driven by lower hydro electric production in Belize and realized losses on natural gas contracts at Aitken Creek.

Speaker 4: With the lower rainfall in Belize, production in 2021 was 147 GWh compared to 229 GWh in 2020. This reflects a 35% decrease year over year.

With the lower rainfall and believes production in 2021 was 147 gigawatt hours compared to 229 gigawatt hours in 2020.

Reflects a 35% decrease year over year.

Speaker 4: And the realized losses at Aitkin Creek, as we discussed in the third quarter, reflect contracts settled in consideration of market conditions and favorable forward

And the realized losses at Aitken Creek as we discussed in the third quarter reflect contracts settled in consideration of market conditions and favorable forward curve.

Speaker 4: As expected with our Dividend Reinvestment Program, EPS decreased 3 cents due to higher weighted average shares outstanding. And lastly, the average U.S. dollar to Canadian dollar exchange rate was 1.25 for 2021 compared to 1.34 for 2020, which lowered EPS by 10%.

As expected with our dividend reinvestment program EPS decreased <unk> due to higher weighted average shares outstanding and lastly, the average U S. Dollar to Canadian dollar exchange rate was 1.25 for 2021 compared to 1.34 for 2020, which lowered EPS by <unk> 10 cents.

Speaker 4: As I mentioned on the previous slide, UNS earnings grew by 4% compared to 2020.

As I mentioned on the previous slide Unf's grew our earnings grew by 4% compared to 2020.

Speaker 4: UNS benefited from higher net margin in 2021, driven largely by new retail rates at TEP, the FERC settlement, and higher hostel margins. This increased EPS by

You would have benefited from higher net margin in 2021 driven largely by new retail rates at T. P. The FERC settlement and higher wholesale margins. This increased EPS by approximately 10%.

Speaker 4: U.N.S. did, however, report higher planned maintenance costs at TEP's generating facilities, which lowered EPS.

U S did however report higher planned maintenance cost at TEP is generating facilities, which lowered EPS by 3%.

Speaker 4: And lastly, weather impacts in 2021 lowered EPS by 5 cents. As you recall, Tucson experienced its hottest summer on record in 2021.

And lastly weather impacts in 2021 lowered EPS by <unk> as you recall Tucson experienced its hottest summer on record in 2020.

Speaker 4: Looking ahead to 2022, we expect to reasonably manage regulatory lag as we expect lower planned generation maintenance costs coupled with customer growth and formula-based transmission regulations.

Looking ahead to 2022, we expect to reasonably manage regulatory lag as we expect lower planned generation maintenance costs, coupled with customer growth and formula based transmission rates.

Speaker 4: Additionally, while no decision has been made, we are in the process of evaluating the timing of the next rape case filing at TEA.

Additionally, while no decision decision has been made we are in the process.

I'll be valuation the timing of the next rate case filing at TEP.

Speaker 4: As you can see on slide 17, we were active in the debt capital markets again in 2021 with over $1 billion in long-term debt raised at attractive rates, highlighted by ITC's inaugural green note.

As you can see on slide 17, we were active in the debt capital markets again in 2021 with over $1 billion in long term debt raised at attractive rates highlighted by Itc's inaugural Green notes.

Speaker 4: Debt issued at Fortis, Inc. mainly refinanced maturing debt, while our regulated utilities issued debt in support of their capital program.

Debt issued at borders Inc, mainly refinance maturing debt, while our regulated utilities issued debt in support of their capital programs.

Speaker 4: With the backdrop of a rising interest rate environment, several of our utilities accelerated long-term debt issuances in 2021, locking in attractive rates.

With the backdrop of a rising interest rate environment several of our utilities accelerated long term debt issuances in 2021 locking in attractive rates.

Speaker 4: In addition, ITC entered into interest rate swaps to mitigate refinance.

In addition, ITC entered into interest rate swaps to mitigate refinancing wave.

Speaker 4: We continue to monitor the capital markets and any impacts on our future financing requirements.

We continue to monitor the capital markets and any impacts on our future financing requirements.

Speaker 4: With our recent debt issuance, coupled with over $3 billion available on our credit facilities, we continue to maintain a strong liquidity position, supporting our $20 billion loan.

With our recent debt issuance, coupled with over 3 billion available on our credit facilities. We continue to maintain a strong liquidity position supporting our 20 billion five year capital plan.

Speaker 4: Our capital plan is expected to be primarily funded with cash from operations, debt issued at our regulated utilities, and our equity dividend reinvestment.

Our capital plan is expected to be primarily funded with cash from operations debt issued at our regulated utilities and our equity dividend reinvestment plan, while maintaining a relatively steady capital structure through 2026.

Speaker 4: while maintaining a relatively steady capital structure through 2020.

Speaker 4: This funding plan, coupled with Fortis' low business risk profile, provides financial flexibility and positions us comfortably within our existing investment-grade credit

This funding plan, coupled with Fortis is low business risk profile provides financial flexibility and positions us comfortably within our existing investment grade credit rating.

Speaker 4: Turning to recent regulatory updates, first ITC continues to await a final rule from FERC in relation to the supplemental notice of proposed rulemaking and transmission incentives, which proposes to eliminate the 50 basis point RTO return on equity incentive act.

Turning to recent regulatory updates first ITC continues to await a final rule from FERC in relation to the supplemental notice of proposed rule, making on transmission incentives, which promote propose is to eliminate the 50 basis point Artie I'll return on equity incentive adder.

Speaker 4: In November , ITC filed comments in response to the Advanced Notice of Proposed Rulemaking or ANOPR on regional transmission planning, cost allocation, and generator interconnection processes.

In November ITC filed comments in response to the advanced notice of proposed rulemaking or Angleworm I'm regional transmission planning cost allocation and generator interconnection processes.

Speaker 4: In its response, ITC recommended for direct VRTOs to conduct regular holistic transmission planning and highlighted some of the impediments of Order 1000.

In its response ITC recommended FERC direct V. R. A T O to conduct regular holistic transmission planning and highlighted some of the impediments of order 1000 competition.

Speaker 4: While FERC has indicated its plans to move the ANOPA through the regulatory process as fast as possible, it remains unclear whether aspects of the ANOPA will be broken out into multiple phases.

Well first has indicated it plans to move the gain oprah through the regulatory process as fast as possible. It remains unclear whether aspects of being Oprah will be broken out into multiple nowforce.

Speaker 4: At TEP, you may recall, FERC issued an order in 2019 accepting formula transmission rates as filed, subject to refund and settlement.

At TEP you May recall <unk> issued an order in 2019 accepting formula transmission rates, that's filed subject to refund and settlement procedures.

Speaker 4: A settlement, in principle, was filed with FERC in December 2021.

Settlement in principle, what filed with FERC in December 2021. The settlement includes an allowed ROE of 979% and a single rolled in rate design.

Speaker 4: The settlement includes an allowed ROE of 9.79% and a single rolled-in rate.

Speaker 4: The FERC rate design settlement is positive, as over 20% of UNS Energy's five-year capital plan is allocated to transmission investments, which will receive timely recovery investments.

The FERC rate designs settlement is positive as over 20% of U S. Energy's five year capital plan is allocated to transmission investments, which will receive timely recovery in rates.

Speaker 4: In November 2021, Central Hudson received an order from the New York Public Service Commission approving a three-year rate plan retroactive to July 2021. The Commission approved the joint proposal, which includes an ROE of 9% and an equity layer of 50%, declining by 1% annually to 48% in the third rate.

In November 2021 central Hudson received an order from the New York Public Service Commission approving a three year rate plan retroactive to July 2021. The commission approved the joint proposal, which includes an ROE of 9% and an equity layer of 50% declining by 1% annually to 48% in the third.

Great year.

Speaker 4: In British Columbia, the generic cost of capital proceeding is expected to continue into 2022, and the effective date of any change in the cost of capital remains unknown.

In British Columbia, the generic cost of capital proceeding is expected to continue into 2020 two and the effective date of any change in the cost of capital remains unknown.

Speaker 4: Fortis Alberta filed its 2023 cost of service application in November in conjunction with the return to a third performance-based rate-making term beginning in 2023.

Or to sell BARDA filed its 2023 cost of service application in November in conjunction with the return to a third performance based ratemaking term beginning in 2024.

Speaker 4: A decision from the AUC is expected in the third quarter.

A decision from the AUC is expected in the third quarter.

Speaker 4: And lastly, in January 2022, the AUC initiated a generic cost of capital proceeding to continue to consider whether the current cost of capital parameters should be extended for 2023. A decision is expected as early as

And lastly in January 2022, the AUC initiated a generic cost of capital proceeding to continue to consider whether the current.

Cost of capital parameters should be extended for 2023, a decision is expected as early as March. The AUC also confirmed it will begin a separate process for cost of capital for 'twenty 'twenty four and beyond later this year.

Speaker 4: The AUC also confirmed it will begin a separate process for Costa Capital for 2024 and beyond later this year. That concludes my

That concludes my remarks, I'll now turn the call back to David.

Speaker 3: Thank you, Jocelyn. At Fortis, we have the right people, values, and plan to advance our growth strategy and deliver a cleaner energy future. With our local operating model, geographic and regulatory diversity, and operational expertise, our stakeholders stand to benefit from the long term value of Fortis that we will deliver in 2022 and beyond. I will now turn the call back over to Stephanie.

Thank you Jocelyn.

At Fortis, we have the right people values and plan to advance our growth strategy and deliver a cleaner energy future with our local operating model geographic and regulatory diversity and operational expertise our stakeholders stand a benefit from the long term value of afford us that we will deliver in 2022.

<unk> and beyond I will now turn the call back over to Stephanie.

Speaker 2: Thank you, David. This concludes the presentation. At this time, we'd like to open the call to address questions from the investment community.

Thank you David This concludes the presentation at this time, we'd like to open the call to address questions from the investment community.

Speaker 1: Thank you. Ladies and gentlemen, we will now conduct the question and answer period. If you would like to register a question, please press star followed by the number one on your telephone.

Thank you, ladies and gentlemen, we will now conduct the question and answer period. If he would like to register a question. Please press star followed by the number one on your telephone.

Speaker 1: If your question has been answered and you would like to withdraw your registration, please press the pound sign.

If your question has been answered and you would like to withdraw your registration. Please press the pound sign.

Speaker 1: If you are using a speakerphone, please lift your handset before entering your request, and we kindly request you speak loudly and slowly to ensure all participants can hear your questions. One moment, please, for the first question.

If you are using a speaker phone. Please lift your handset before entering your request and we kindly request you speak loudly and slowly to ensure all participants can hear your question. One moment. Please for the first question.

Speaker 1: And your first question is from Linda with TV security.

And your first question is from Linda <unk> with TD Securities.

Speaker 1: Thank you. I'm wondering if you could help us understand a normalized weather year on a consolidated basis, what that might look like in terms of EPS. It was really helpful to get the year-over-year five-cent impact, recognizing that 2020 had record hot weather. But I'm wondering what the sensitivity would be to normal weather if you could provide it in 2021?

Thank you.

I'm wondering if you could help us understand.

Our normalized weather year on a on a consolidated basis, what that might look like in terms of EPS. It was really helpful to get the year over year five cent impact recognizing that 2020 had record hot weather, but I'm wondering what the sensitivity would be to normal weather. If you could provide it in 2021.

Speaker 3: Yeah, that's a good morning, Linda and glad you could make the call that the weather sensitivity is quite a bit of a combination of art and science. And, you know, it is it is very difficult to get kind of some really good thumb rules from a year over year basis.

Yeah, that's a good morning, Linda and glad you can make the call.

The weather sensitivity is quite a bit of a combination of art and science and it.

It is very difficult to get kind of some really good thumb rules from a year over year basis.

Speaker 3: particularly coming out of the pandemic because we saw very different.

Particularly coming out of the pandemic, because we saw very different.

Customer behavior back in 2020 than we did in 2021 with everyone working from home, we saw very different use per customer profile. So that compounded by the fact that we.

We tend to get a little bit warmer every year these days.

Other than 2021, where we saw it kind of slipped back.

Speaker 3: It is pretty tough to get that sensitivity. So I know that is a nonresponsive answer, but we're trying to work on how we can see that really from a – mostly this is impacted by the weather in Arizona because most of the other utilities that we have have very limited weather flow through to the bottom line. So I would say when you look at 2021 versus 2020, obviously 2021 was a much more normal weather year. So that would be more of a normal that I would think of on a going forward basis. That's helpful. Thank you. And in terms of different customer behavior, again, I know it's an art, not a science, but maybe just as a follow-up. And, you know…

It is pretty tough to get that sensitivity.

So.

I know that is a nonresponsive to answer but we're trying to work on how we can see that really from our it mostly this is impacted by the weather in Arizona because most of the other utilities that we have very very limited whether flow through to the bottom line.

I would say when you look at 2021 versus 2020, obviously 2021 was a much more normal weather year.

Speaker 3: more normal weather year so that that would be more of a normal that I would think of on a on a going forward basis that's helpful thank you

So that that would be more of a normal but I would think of that on a going forward basis.

That's helpful. Thank you.

And.

Speaker 1: In terms of different customer behavior, again, I know it's an art, not a science, but maybe just as a follow-up, are your teams putting thought towards what's the new normal and how much of that shift in customer behavior might be?

In terms of different customer behavior again, I know, it's an art in how to sell here, but maybe just as a follow up.

Are your teams putting thought towards what's the new normal and how much of that shift in customer behavior might be.

Speaker 1: not permanent, but systemic and continue versus what might revert back to historical patterns potentially going forward.

Permanent, but systemic and continue versus.

What might revert back to historical patterns potentially going forward.

Speaker 3: Sure, so in Arizona we're actually seeing it kind of revert back to normal, back to the pre-2020 time frame when you look at it from a

Sure. So in Arizona, we're actually seeing it kind of revert back to normal back to the pre 2020 timeframe. When you look at it from a.

Use per customer perspective, as well as the more normal for.

For the most part residential and commercial load shape, because in Arizona I think a lot of folks did return to work in 2021.

Speaker 3: load shapes. Because in Arizona, I think a lot of folks did return to work in 2021. Businesses opened up quite a bit more, obviously, than in 2020. So we have seen in 2021 probably what I would call pretty darn close to the new normal from a load perspective and from a customer usage and demand profile perspective. Not to say that doesn't change on a going forward basis. When you look at some of the other new technologies, DSM energy efficiency, etc., that can be deployed across our utilities. But for the most part, we're kind of back to what the pre-2020 or pre-pandemic behavior. That's helpful. Thank you. And recognizing

Business has opened up quite a bit more obviously than in 2020. So we have sort of as we have seen in 2021, probably what I would call pretty darn close to the to the new normal from a from a load perspective and from a customer usage and demand profile perspective, not to say that doesn't change on a going forward basis. When you look.

At.

Some of the other new technologies, DSM energy efficiency et cetera that can be deployed across our utilities, but for the most part where we're kind of.

Speaker 3: back to what the pre-2020 or pre-pandemic behavior was.

Back to the pre 2020 or pre pandemic behavior.

Speaker 1: That's helpful, thank you. And recognizing that Q1 is only half finished at this point, and a lot can happen still in the quarter, I'm wondering if anyone on the team would be able to provide a sense of what the weather and, believe, water levels have been so far that we've been seeing in Q1, and even any sort of natural gas storage, if I may be so bold.

That's helpful. Thank you and recognizing that Q1 is only half finished at this point.

And a lot can happen still in the quarter I'm wondering if anyone on the team would be able to provide a sense of what the weather and believes water levels have been so far that we've been seeing in Q1, and even any sort of natural gas storage if I, maybe so bold.

Speaker 3: Yeah, I mean, it is just tracking rainfall in Belize and, you know, it's better than Q4. You know, we are starting to see, you know, production tick back up, but it's hard to say where we'll end up at for the quarter. It is, frankly, a pretty variable, you know, based on that rainfall in Belize. That production is obviously directly correlated with that. Q4 was a very, very low quarter for us when you compare it 21 to 20, so we do see it coming back somewhat.

Yeah, I mean, it is just tracking rainfall and believes in it.

It's better than Q4.

We are starting to see production tick tick back up but it's hard to say, where we'll end up at for the quarter. It is frankly, a pretty variable based on that rainfall and believes that production is obviously directly correlated with that.

Q4 was a it was a very very low quarter for us when you compare it 'twenty one to 'twenty.

So we do see it coming back somewhat.

Speaker 1: Thank you. I'll jump back in the queue. Thank you so much.

Thank you I'll jump back in the queue. Thank you so much.

Right.

Speaker 2: Your next question is from Maurice Choi with RBC Capital Markets.

Your next question is from Maurice Choy with RBC capital markets.

Okay.

Speaker 3: Thank you and good morning. My first question is on the MISO LRTP. Dave, you mentioned in your prepared remark that you see supportive policy from pre-minister federal and state levels. As you approach the announcement of the first tranche of projects in Q2, how should we view your market share, if I could call it that way, and how does this market share view change following the Michigan decision in December ?

Thank you and good morning. My first question is on the MISO L. RTP, Dave you mentioned in your prepared remarks that you see supportive policy.

From premise to federal and state levels as he approached the announcements of the first tranche of projects in Q2, how should we view your market share if I can call it that way and how does this market share few change following the Michigan decision in December .

Speaker 3: Yeah, so I don't really have it broken down by jurisdiction, and maybe Linda could provide a little color on this, but we have talked in the past about just the, you know, our overall footprint in the MISO region, and that's 23-ish percent, 22, 23 percent of the MISO footprint. That's our asset.

Yes, so I don't really have it broken down by jurisdiction and maybe Linda could provide a little color on this but we have talked to in the past about just the you know our overall footprint.

In the MISO region, and that's a 23 ish percent in 'twenty, two 'twenty, 3% of the MISO footprint, that's our assets.

Speaker 3: And we also kind of use, and I don't know how indicative it is, and probably not that indicative on a forward-looking basis, because these new long-range transmission projects

And we also kind of use.

I don't know how indicative it is probably not that indicative for.

We're looking basis, because the MISO trends these new long range transmission projects. You know, we don't know exactly where they're going to land, where theyre going to come in in the tranches.

Speaker 3: You know, we don't know exactly where they're going to land, where they're going to come in in the tranches.

Speaker 3: uh... and and frankly you know that uh... this isn't a great indication obviously looking backwards but when we did the mvp project

And frankly, you know.

This isn't a great indication, obviously looking backwards, but when we did the MVP projects well I guess almost a decade ago, we did get about that about that same level of 20% to 23% of the MVP projects came our way it at ITC.

Speaker 3: Well, I guess almost a decade ago, we did get about that same level, 22-23% of the MVP projects.

It's hard to necessarily project any of that on a going forward basis, especially when you can just wait a few months and what will hopefully be able to see and have a really good view on it.

Speaker 3: will hopefully be able to see and have a really good view on it. Then once we see that tranche, we see where our rofers land related to those projects, we'll get a really good view of what we think from a project, which projects are ours on a going forward basis, and then start the fun part, which is figuring out how to plan and build them. Linda, do you have any color to add on that? Nope, Dave. I think you captured it all. Nothing additive for me. Okay. You got it.

And then once we see that tranche.

We see the where our ropers land related to those projects will get a really good view of what we think from from our projects, which projects are ours on a going forward basis, and then start the fun part, which is figuring out how to plan and build them.

Linda do you have any color to add on that.

Speaker 5: Nope, Dave, I think you captured it all, nothing additive from me.

No Dave I think you captured it all nothing additives for me.

Okay.

Speaker 6: Got it. And maybe a second question is on Arizona.

Got it and maybe a second question is on Arizona.

Speaker 6: Justin, I may have misheard, apologies if I did, but I think you mentioned that Fortis is evaluating the timing of the next rate case filing for TEP.

Justin I may have misheard I apologize if I did.

But I think you mentioned that for US is evaluating its timing of the next rate case filing in for.

T P.

Speaker 6: As the current rates were approved just over a year ago, what are the changes to your business that you'd be highlighting to the ACC to justify new rates? And as a follow-up, how do you see the ACC's recent regulatory decisions relating to peers in the state?

If the current rates were approved.

Over a year ago, what are the changes to your business that you'd be highlighting to the ACC to justify new rates and Thats a full up how do you see the acc's recent regulatory decisions relating to Pearson state.

Speaker 6: being factored into your view about this rate application.

Being factored into your view.

About this rate applications.

Speaker 4: Maurice, before I throw it to David, because I'm sure David will talk about the Arizona environment there, but with respect to the rate case, it's not uncommon for TEP to be thinking about a rate case. The last rate case was filed with the year end, December 31st, 2018, so it's been several years since we've last set rates. So we've invested, as you know, we keep investing in Arizona. So we do have...

Murray's before I throw it to David because I'm sure David will talk about the Arizona environment, there, but with respect to the rate case is not uncommon for TEP to be thinking about a rate case. The last rate case was filed with the.

The yearend December 31 2018.

So it's been several years since we've last set right. So we've invested as you know we keep investing in Arizona.

So we do have what I would say suggests that we would highlight to the regulator that we were continuing to invest and we need to revisit.

Speaker 4: what I would say, suggest that we would highlight to the regulator that we're continuing to invest and we need to revisit what we've invested over the last couple of years and get that into rates. TEP has done a great job, right, it's done a, keep moving forward with its clean energy plans, it's managing its costs, it's doing the right things, so this is just very typical for a utility to file a rate case every couple of years and so nothing out of the ordinary from TEP's perspective. I'll let David speak to what...

Revisit but we've invested over the last couple of years and get that into rates.

T. P has done a great job is done and keep moving forward with its clean energy plans. It it's managing its cost its doing the right things. So this is just very typical for a utility to file the rate case every couple of years and so nothing out of the ordinary from Tep's perspective.

David speak to what's happening with the peers there.

Speaker 3: Yeah, I just add that you're right on, Jocelyn, because it really is, you know, three years is a lot of

Yeah.

Just add you're right on.

<unk> because it really is three years as a as a.

A lot of lag.

Speaker 3: lag for a utility like ours in Arizona, and we have obviously not just invested in the past three years, but are looking to invest.

Lag for utility.

Like ours in Arizona, and we have obviously not just invested in the past three years, but are looking to invest.

Speaker 3: uh... quite a bit on a on a going forward basis uh... to you know

Quite a bit on a going forward basis too.

Speaker 3: go down the path of our clean energy transition in Arizona, so we want to make sure that we're getting in front of our regulators, telling that story, looking for mechanisms that we need to make sure that we get adequate and timely cost recovery related to those investments as we go forward.

Go down the path of of our clean energy transition in Arizona, So we want to make sure that we're.

And in front of our regulators telling that story looking for you know mechanisms that we need to make sure that we get adequate and timely cost recovery related to those investments as we go forward.

Speaker 3: And then, you know, the regulatory environment in Arizona, I know this has been a bit of a hot topic.

And then the regulatory <unk>.

Environment in Arizona, I know this has been a bit of a hot topic for the past few months, but you know I think one it's a lot of that conversation and the results are in.

Speaker 3: uh... for the past few months but you know i i think you know what what what it did a lot of that could the conversation and and the results of in

In.

Another company's rate case in Arizona don't necessarily reflect on you know.

The expectation.

Collect at all our expectations on a on an outcome for us.

Those are very utility specific we've got a different utility a different relationship with the commission different resource plan all of that stuff is different so from my perspective.

Perspective, there's there's not a there's definitely not a read through to.

To TEP from that and frankly theres been some very.

Good and positive very recent positive outcomes in the Arizona regulatory environment. Just this week, the Arizona Corporation Commission acknowledged.

Integrated resource plans that we filed for Tucson electric power in our smaller electric utility U S electric which supports that 2020.

Integrated resource plan that supports our 80% greenhouse gas reduction of T. P that of course supports a 75% greenhouse gas reduction that we have for it is wide. So those are all good signals that.

Speaker 3: greenhouse gas reduction at TEP that of course supports a 75% greenhouse gas reduction that we have FortisWide. So those are all you know good signals that you know the Commission is moving in the right direction, providing the right signals and allowing us to do what we have to do, which is plan our system, its needs for our customers, for the reliability and affordability through an integrated resource planning process. And they're actually spending you know a good amount of time to get those integrated resource plan rules right so that we can look at a broad array of you know different opportunities from you know a least cost portfolio to the most aggressive renewable portfolio and make sure that we pick the one that our stakeholders and our customers and our regulators all agree on. That's what we did in 2020 so nothing new for us. We're looking forward to getting that next integrated resource plan out, which actually is now not due until August of next year. So a lot of work to be done between now and then. Great and just a quick follow-up. Could you help us focus a little more on timing of this filing? Are we talking about the next few months or by the end of this year roughly? Yeah it's really hard to put a pin in it at this point but you know we're looking at it you know there's you know one of these things that you know you always evaluate is you know capital plan timing and when's the right

The Commission is.

Is moving in the right direction, providing the right signals and allowing us to do what we have to do which is plan.

Our system is needs for our customers for the reliability and affordability through an integrated resource planning process and they're actually spending.

Good amount of time to get those integrated resource plan rules right. So that we can look at a broad array of different opportunities from you know at least cost portfolio. Two the most aggressive renewable portfolio and make sure that we pick the one that our stakeholders and our customers and our regulators all agree on that is what we did in 2020, so it's not.

Speaker 3: so that we can look at a broad array of, you know, different opportunities from, you know, a least cost portfolio to the most aggressive renewable portfolio and make sure that we pick the one that our stakeholders and our customers and our regulators all agree on. That's what we did in 2020. So nothing new for us. We're looking forward to getting that next integrated resource plan out, which actually is now not due until August of next year. So a lot of work to be done between now and then.

New for US we're looking forward to getting that next integrated resource plan, which actually is now not due until August of next year. So a lot of work to be done between now and then.

Speaker 6: Great, and just a quick follow-up. Could you help us focus a little bit more on timing of this filing? Are we talking about the next few months or by the end of this year? Roughly, that'd be great.

Great and just a just a quick follow up.

Could you help us.

Because it's a little bit more.

Timing of this filing are you talking about next few months.

And this year roughly.

Speaker 3: Yeah, it's really hard to put a pin in it at this point, but we're looking at it. One of these things that you always evaluate is capital plan timing and when's the right test year to pick, and so we're still working through all of those bits and pieces. Thank you.

Yeah.

Yeah.

It's really hard to put a pin in it at this point, but we're looking at it.

One of these things that you always evaluate as capital planned timing and when's the right.

Test here to pick and so we're still working through through all of those.

And pieces.

Thank you.

Youre welcome.

Your next question is from Rob Hope with Scotiabank.

Speaker 6: Morning, everyone. Just a follow-up question on the Midwest transmission projects. I assume that there's not a ton of capital in your existing capital plan related to the next tranche that will be coming out, but when you take a look at just kind of the interconnection schedule, the project timing, when do you think you could start to see capital being layered into the capital plan on a more meaningful basis? Is this more of a 2024, 2025 start to put steel on the ground?

Good morning, everyone. Just a follow up question on the Midwest transmission projects I assume that there's not a ton of capital here.

Existing capital plan related to the next charge that will be coming out, but when you take a look at just kind of the the interconnection schedules.

Reject timing when do you think you could start to see capital being layered into the capital plan on a more meaningful basis is this more of a 2020 for 2025 and start to put steel on the ground.

Speaker 3: Yeah, Rob, thanks for that question. Just to clarify, yeah, there there is no money in our existing capital plan related to those

Yeah, Rob Thanks for that question just to clarify yes, there is no money in our existing capital plan related to those those MISO projects, where we don't put something on on top of.

Speaker 3: those MISO projects where we don't put something on top of our current existing plan in there. The question around timing is a good one, because it's really hard to tell. Who knows which projects are going to come out first in this first tranche.

Our current existing plan in there. So it is the question around timing is a good one.

It's really hard to tell there is you know who knows which at which projects are going to come out first in this first tranche there might be some that are upgrades there might be some that are maybe a little bit easier like transmission interconnection thats a different process at FERC is going through but that can fall in the next several years because those are a little.

Bit easier to do than some of the long term transmission projects that are obviously going to be a big chunk of this tranche in the next tranches. So I would say the majority of that.

Speaker 3: is going to be late in this five-year plan to mostly, I would say, past the 2026 time frame that's in our five-year plan. So with a little luck, we get the easy ones on the front end here, and we can lay that in to boost up the current capital plan. But I would say the biggest impact is going to be on the later years of the five-year plan and the extension from year six on. All right. That's helpful. And then just pivoting over to another large transmission project, Lake Erie Connector. It looks like it's getting through some of the gates here in Ontario. Where are you in discussions with the government? Have kind of the key terms been broadly discovered, or can you maybe just give us an update on the process there? Yeah. It's broad terms, term sheet.

<unk> is going to be.

Late in this five year plan to mostly I would say past 2006 2026 timeframe. That's in our five year plan, so with a little luck, we get the easy ones.

Front end here and we can lay that in to boost up the current capital plan, but I would say the biggest impact is going to be on the later years of the five year plan and the extension from Euro six on.

Speaker 6: All right, that's helpful. And then just pivoting over to another large transmission project Lake Erie connector. It looks like it's getting through some of the gates here in Ontario.

Alright, that's helpful. And then just pivoting over to another large transmission project Lake Erie connector. It looks like it's getting through some of the gates here in Ontario.

<unk>.

Speaker 6: where are you in discussions with the government? Have kind of the key terms been, you know, broadly discovered or, you know, can you maybe just give us an update on the process there?

Where are you in discussions with the government have kind of the key term spin.

Broadly discovered or.

Can you maybe just give us an update on the process there.

Speaker 3: Yeah, it's broad terms, term sheets. You know, the principles have been laid out. It's now getting to the details and finalizing all of those pieces. So, you know, that was part of the update that the ISIL gave the government in December . They came back and said this all, you know, looks reasonable now, you know, finish the negotiations and, you know, work towards that TSA and bring us back another update, you know, in the end of March. So these are all, you know, positive step-by-step movements that we're making on getting to a final agreement. And then, of course, you know, once we get to that final agreement, we get it.

Yes, it's a broad terms term sheets.

<unk> had been laid out it's now getting to the details and finalizing all of those pieces. So that's.

That was part of the update that the.

The ISO gave the government in December they came back and said this all looks reasonable now finish the negotiations and work towards that TSA and bring us back another update.

And in the end of March and so these are all positive step by step movements that we're making I'm getting to a final agreement and then of course, you know once we get to that final agreement when we get it you know.

Speaker 3: You know, we agree with the ISO. The ISO brings it to the Ontario government. Everybody signs it.

We agree with the ISO and ISO brings it to the Ontario government everybody signs at and then we start the process or continue the process of designing getting the EPC contractor.

Speaker 3: uh... and then we start the process or continue the process of

Speaker 3: you know, designing, getting the EPC contractor and start construction. So it's feeling obviously the best we've ever felt on this project.

And start construction so.

It's feeling obviously the best we've ever felt on this project and just a just a couple of steps a couple signatures away from really getting this thing move in which is a real testament to the.

The time that our team at ITC is put in on this project to make it a go. This one has been talked about for a while and we know it's a it's difficult as well when it says it's a cross border project its got to.

ISO is on each end that you got to connect between PJM and the Ontario, So lots.

Lots of details but.

Harder to the projects out of the more fun there when you when you actually get to put them into service and we're looking forward to getting those last couple of steps done as quickly as we can.

Speaker 6: I appreciate the color. Thank you.

I appreciate the color. Thank you.

Yes.

Speaker 2: Your next question is from Mark Jarvie with CIBC Capital Mark.

Your next question is from Mark Jarvi with CIBC capital markets.

Speaker 3: Thanks. Good morning, everyone. A couple of questions on Alberta. One would be around potential move to a formula, if you guys could comment on that in terms of what you'd want to see or your openness to that. And then second, on the cost of service rebasing, just expectations in terms of what the parameters are, in terms of maybe like ability to keep earnings flat to up, because I remember last time around, sometimes we saw flat or down earnings after that rebasing, maybe some color on both of those items.

Thanks, Good morning, everyone.

Speaker 3: One would be around potential move to a formula, if you guys could comment on that in terms of what you want to see or your openness to that, and then second on the cost of service rebasing, just expectations in terms of what the parameters are in terms of maybe like ability to keep earnings flat to up because I remember last time around sometimes we saw flat or down earnings after that rebasing, maybe some color on both of those items. Sure. I'll talk about the first one and then turn the cost of service rebasing over to Janine to get some direct insight, Janine Sullivan, who's the CEO of Fortis Alberta. On the potential formula, this is one of those things where it all depends, right? It all depends on how

Couple of question on Alberta.

One would be around the potential move to a formula if you guys could comment on that in terms of what you'd want to see your openness to that and then second one on the cost of service rate basing just expectations in terms of what the parameters are in terms of maybe like ability to keep earnings flat to up because I remember last time around sometimes we saw flat or down earnings.

After that Rebase and maybe some color on both those items.

Speaker 7: Sure, I'll talk about the first one and then turn the cost of service rebasing over to Janine to get some direct insight. Janine Sullivan, who's the CEO of Fortis Alberta on the potential formula. This is one of those things where it all depends. Right. It all depends on how the formula is set, whether it takes in to account the right risks and that are specific to your utility. If it's flexible enough to adapt to the changing energy environment that we're all going to see over the next few years and obviously in extending further than that. So we're going to we're going to work hard if it is a formula type rate. We want to make sure that it that it works for us. It's like any regulatory mechanism. It all depends on the details in the end. So I think we could be supportive of of either either way as long as, you know, it provided the right, you know, the right ability for us to get the return on the investments that we make and for the growth opportunities that we see and the participation, frankly, that we want to have.

Sure.

I'll talk about the first one and then turn the cost of service rebase over to Janine to get some.

Direct insight Janine Sullivan, who's the CEO of Florida cell burden.

On the potential Formula. This is one of those things were.

It all depends right. It all depends on how the formula set whether it takes in to account the right risks and.

And you know that are specific to your utility if it's flexible enough to adapt to the changing energy environment that we're all going to see over the next few years and obviously in extending further than that so we you know we're going to we're going to work hard if it is a you know a formula type rate, we want to make sure that it works.

For us it's.

Like any regulatory mechanism it all depends on the details and the and so I think we could be supportive of of either either way as long as it.

<unk> the right.

The ability for us to get the.

The return on the investments that we make in further growth opportunities that we see in the participation frankly that we wanted to have.

Speaker 7: uh... in that clean energy transition in alberta

And that clean energy transition in Alberta.

Speaker 7: Janine, I'll turn it over to you to talk about the cost of service rebates.

Jeanine I'll turn it over to you to talk about the cost of service re basing.

Speaker 8: Sure, so the cost of service rebasing is ongoing. We are in the midst of it. It is an important opportunity for Fortis Alberta in terms of rebasing our revenues and costs after almost a decade of PBR-based regulation.

Sure. So the cost of service Rebating is ongoing we are in the midst of it.

It is an important opportunity for Fortis, Alberta in terms of re basing our revenues and costs after almost a decade of PPR based regulation.

Speaker 8: So, we are optimistic that the process will provide visibility of the current costs that Fortis Alberta is incurring and what we foresee happening into the future. And as Dave indicated, some of the newer projects that need to be addressed as part of a clean energy future and having those addressed as part of the revenue requirement.

So we are optimistic that the process will provide visibility of the current costs that towards Alberta is occurring and what we foresee happening into the future and as David.

Indicated some of the newer projects that need to be addressed as part of the clean energy future and having those addressed as part of the revenue requirement, which would then provide a strong starting point for going into a third term of PPR and of course that will be determined over the next 12 months as to what that third term.

Speaker 8: which would then provide a strong starting point for going into a third term of PBR. And of course, that will be determined over the next 12 months as to what that third term will look like in terms of specific mechanisms.

It looked like in terms of specific mechanism.

Speaker 8: With respect to cost of capital, there is a desire to become prospective, or more prospective at least.

With respect to cost of capital there is a desire to become prospective or more prospect of at least in Alberta around such matters and so it's very early days with respect to setting cost of capital for 2024 with Formula. So the focus right now is really on determining what should happen in 2023, there is a.

Speaker 8: in Alberta around such matters and so it's very early days with respect to.

Speaker 8: setting cost of capital for 2024 with the formula. So the focus right now is really on determining what should happen in 2023. There is an early indication that it likely holds the current parameters just given that desire for prospectivity.

Early indications are that it likely hold the current parameters just given that desire for past activity and difficulty in terms of re re addressing it in the short term for for anything new for 2023, but then really setting the foundation for a.

Speaker 8: and a difficulty in terms of readdressing it in the short term for anything new for 2023, but then really setting the foundation for a more deliberate conversation around what it should look like in 2024 beyond the possibility of a formula, but still very, very early days.

More deliberate conversation around what it should look like in 2024 and beyond and the possibility of a formula but still very very early days.

Speaker 3: And just coming back to the rebasing, when you look at sort of where you are and what your stance is now in terms of your submissions, is the thought that your sort of achievable ROE can be held flat through that process?

And just coming back to the re banking when you look at sort of where you are and what your stance is now your submission.

Is the thought that you are sort of achievable ROE can be held flat through that process.

Speaker 8: We are optimistic that this rebasing will provide a solid starting point.

We are optimistic that this re basing I will provide a solid starting point for 2023 in terms of a fully alignment of our revenues and our costs. I mean, there are some concerns in the province around affordability and that dynamic between investing for the future and clean energy programs and how we do.

Speaker 8: for 2023 in terms of a full realignment of our revenues.

Speaker 8: and our costs. I mean, there are some concerns in the province around affordability and that dynamic between, you know, investing for the future and clean energy programs and how we do so in a thoughtful and affordable way is certainly for us to demonstrate, but we believe we have a very good plan going forward that does both and I think that we'll be in a good position starting in 2023.

So in a thoughtful and affordable way.

Certainly for us to demonstrate but we believe we have very a very good plan going forward that does both and I think that will be in a good position starting in 2023.

Speaker 3: Okay, and Jocelyn, a question for you, just in terms of the drip and just any updated thoughts on the discount and sort of usage of the drip now, or maybe a pivot back to the ATM where you have a bit more control on sort of when shares are issued, some updated thoughts on that.

Okay and you also had a question for you just in terms of the other drip.

Any thoughts on the discount in Internet usage of the drip now or a pivot back to the ATM or you have a bit more control on sort of when shares are issued updated thoughts on that.

Speaker 4: Yes, so, Mark, we actually put the drip in a couple of years. We turned it off, and then we put the discount back on, and it's a pretty effective way of.

Yeah, So mark we actually put the drip in a couple of years, we turned it off and then we put the discount back on and it's a pretty effective way of of getting the equity we need and so it does provide us with some flexibility the uptake is back up to over 35% again, so a pretty healthy participants.

Speaker 4: of getting the equity we need and so it does provide us with some flexibility. The uptake is back up to over 35% again, so pretty healthy participation.

The patients.

Speaker 4: that we evaluate it every year. Right now it's working for us. It's given us the equity that we need. We don't need any discrete equity. The ATM program, in my opinion, worked as well. It's just a different way of getting it. But I think that the DRIP is an easy, effective, cost-effective way of getting the equity that we need because we understand our growth profile.

We evaluated every year right now it's working for US is given us the equity that we need we don't need any discrete equity.

The ATM program in my opinion worked as well as just a different way of getting at but I think that the drip is an easy effective cost effective way of getting the equity that we need because we understand our growth profile should you know with all the opportunities that David's talking about you know change our capital program.

Speaker 4: You know, with all the opportunities that Dave is talking about, you know, change our capital program in any meaningful way, we'll revisit.

Any meaningful way, but we'll revisit them you know funding on every level, so but for right now the drip is working for us.

Speaker 4: uh... you know funding on every level so uh... but for right now the group is working for

Okay. Thanks.

Yeah.

Speaker 2: Your next question is from David Quisada with Raymond J.

Your next question is from David Quezada with Raymond James.

Yes.

Speaker 9: Thanks, morning everyone. My first question here just out in BC relates to the Tilbury site and any of the planned expansions there as well. Just curious how you're thinking today about the infrastructure in that region and the floods that we saw over the past year. I understand that the regulator is undergoing some kind of a review process. Just any colour you can provide there.

Thanks, Good morning, everyone.

My first question here just on a B C.

Relates to the.

The Tilbury site in any Oh, the plant expansion there as well just curious how youre thinking today about.

The infrastructure in that region and the floods that we saw over the past year I understand that the the regulators undergoing some kind of a review process just any color you can provide there.

Speaker 7: Yeah, I'll turn it over to Roger here to get all the details, particularly around the tank that we're proposing, because I think that's a real important project for the BCUC to consider, you know, from a resiliency perspective, as we have now seen in the past several years, some hiccups, I'll call them, on Enbridge's system, you know, one back in, I guess it was winter of 2018, and then, of course,

Yeah, I'll turn it over to Roger here to get all the all the details.

Particularly around the tank that we're proposing because I think that's a real important project for the D. C. You see to consider.

From a resiliency perspective, as we have now seen in the past several years, some some hiccups I'll call them on.

And bridges system.

One back in I guess it was 20 winter of 2018, and then of course, you know the one recently with the flood.

Speaker 7: you know, the one recently with the flood, it makes it more important for us to look for resiliency projects down in the lower mainland in the Vancouver area, and one of those projects, as you know, is the big new LNG tank that we have, a big 3BCF tank that we have proposed.

It makes us that makes it more important for us to look for.

Resiliency projects down in the lower mainland in the Vancouver area and one of those projects. As you know is the is the big New LNG tank that we have a big three Bcf tank that we have proposed.

Speaker 7: That's going to be really important to providing that resiliency and that backup. I'll turn it to Roger to tell you where we're at from the application perspective with the BCUC and the EA process.

That's going to be really important to providing that resiliency in that back up.

I'll turn it to Roger to tell you, where we're at from the application perspective, with the BCC and the and the EIA.

Process.

Speaker 10: Thanks, David. Morning, David. So yeah, on the Tilbury Tank, there's two processes underway. One is with the BCUC. We're mid-process on that CPCN, answering information requests from intervenors. That process will continue.

Thanks, David Good morning, David So yeah on the Tilbury tank Theres two processes underway. One is with the BCC, we're mid process on that CP CN.

Entering information requests from intervenor, such SaaS will continue for.

Speaker 10: for the better part of the year before we get to a conclusion. In addition, because of the size of the tank, we have to file and obtain an Environmental Assessment Certificate from both BC and Canada.

For the better part of the year before we get too.

Conclusion.

In addition, because of the size of the tank, we have to file and obtain environmental assessment certificate from both <unk> and <unk>.

Speaker 10: Canada were on track with that process. We filed the detailed project description last year. We received a readiness decision and expect to go to public comment Q1 of this year. The Impact Assessment Agency of Canada did agree to write a substitution so the BCEAO will lead the process and that will continue for the better part of 2022 before we figure out what the next steps are in that environmental assessment.

Canada, we're on track without process, we filed the detailed project description last year, we received already Smith decision and expect to go to public comment.

Q1 of this year.

The impact assessment agency of Canada did agreed to write a substitution. So the BCE will lead the process and that will continue for the better part of 2022 before we figure out what the next steps are in that environmental assessment.

Speaker 9: Okay, great. Thank you for that. And Roger, maybe maybe a follow up for you feels as though

Okay, great. Thank you for that and Roger maybe maybe a follow up for you it feels as though with.

Speaker 9: With news headlines, lately there's been some increased momentum for the use of RNG in marine bunkering and I know you guys have made really good progress on procurement of RNG.

With news headlines lately, there's been some increased momentum for the use of RMG and marine Bunkering and I know you guys have made really good progress on procurement of R&D.

Speaker 9: in the BC, at FortisBC. I'm just curious if you think you could ultimately, depending on the extent of RNG for usage in the marine end market, could you potentially get to more than a 15% mix in BC on the RNG side?

And the BC.

<unk> I'm just curious if you think you could ultimately.

Depending on.

The extent of R&D for usage in the marine end market could you potentially get to more than a 15% mix in.

NBC on the R&D side.

Speaker 10: Yeah, I think there are two distinct questions there.

Yes, I think guy there too.

Distinct questions there.

The marine market I think R&D event, you will end up there we did have that pilot project with Seaspan, where we ran.

A low carb mers for carbon Alex.

Louisiana.

Are there barge varies I think there was a similar pilot.

Speaker 10: down in Florida last year as well, so I think the marine market is looking at LNG and if it can come from renewable gases, all the better. It's already got a significant advantage over marine fuels like diesel, so I think that will be an added benefit.

Down in Florida last year as well, so I think the <unk>.

Green market is looking at LNG and if it can come from a renewable gases all the better it's already got a significant advantage over marine fuels like diesel. So I think that'll be an added benefits we see that as.

That was an additive support for increasing LNG in the marine market I think generally our R&D.

Speaker 10: development, we received approval from the B.C. government last year to go to 15% of our resource, our gas supply coming from R&G, including hydrogen. We just recently signed an 8-petajoule deal, still needs regulatory approval, but we expect to get that this year. We're at about 18 petajoules, which is just over halfway to our 2030 target of 15%, so we believe we can go beyond that.

Development, we received approval from the BC government last year to go to 15% of our resource our gas supply coming from R&D, including hydrogen.

We just recently signed a purge of deal still needs regulatory approval, but we expect to get that this year. We're at about 18, <unk>, which is.

Just over halfway to our 2030 target of 15%. So we believe we can go beyond that.

Speaker 10: for sure over time, and that doesn't include the adoption of hydrogen. So we see a growing amount of renewable gases in our system going forward.

For sure over time and that doesn't include the adoption of hydrogen and so we see.

A growing amount of renewable gases.

In our system going forward.

Speaker 9: Excellent. I really appreciate the call, Roger. That's it for me.

Excellent I really appreciate the color Roger that's it for me.

Speaker 2: Your next question is from Matthew Weeks with IA Capital Markets.

Your next question is from Matthew Weekes with <unk> capital markets.

Speaker 3: Good morning, thanks for taking my questions. I think they've mostly been answered at this point, but I think I'll just ask on the macro and rate cases in terms of rate cases that are ongoing right now, or.

Good morning, Thanks for taking my question, but I think they've mostly been answered at this point, but I think I'll just ask on the macro in rate cases in terms of rate cases that are ongoing right now or that.

Speaker 3: that you're planning on doing in the near future. How do you expect the outlook for rising?

That you are planning on doing in the near future.

Do you expect.

Speaker 3: interest rates to impact those proceedings and are you pursuing any creative measures to maybe address the rising rates over the couple years or anything like that?

Outlook for rising interest rates to impact.

Those proceedings and are you pursuing any any creative measures can maybe address the rising rates over over the couple years or anything like that.

Speaker 7: Yeah, Matthew, a great question because the rising rates can help or hurt.

Yes, Matthew a great question, because the the rising rates can can help or hurt.

Speaker 7: Obviously, from an inflation perspective and cost to doing business, that's going to put some upward pressure on the cost that we incur. And depending on which jurisdiction we're talking about across our footprint, some of those have very direct...

Obviously from an inflation perspective and cost of doing business.

It's going to put some upward pressure on the cost that we incur and depending on.

Which jurisdiction, we're talking about across our footprint some of those have very direct.

Pass through mechanisms to customers like ITC and now.

Tep's transmission down in Arizona has that same pass through mechanism.

So there isn't really an impact because it's a it's on a forward basis, and then and then true it up as well other jurisdictions like Alberta, and BC have inflation and part of their calculations for cost escalation.

Speaker 7: And then the one bigger jurisdiction that doesn't have it is TEP's non-FERC assets or their retail rates, which would be subject to some regulatory lag between, you know, obviously when you see that inflation and when you actually get those costs and that inflation reflected in rates. So it's a bit of a mishmash across the utility, but no huge impact from a company perspective. Now, of course, this all has impacts to our customers raising their costs across the board, whether it's things from normal inflation in products and services to natural gas prices, et cetera. So we are very laser focused on making sure that we are doing everything we can from a cost perspective throughout the rest of the year.

And then the one bigger jurisdiction that doesn't have it as tep's non for assets or their retail rates, which would be subject to some regulatory lag between.

You see when you see that inflation and when you actually get those costs in that inflation.

Collected in rates so.

It's a bit of a mishmash across the utility, but nothing no huge impact from a company perspective now of course. This all has impacts to our customers raising their costs across the board, whether it's you know things in from normal inflation in products and services to natural gas prices et cetera.

Speaker 7: company perspective. Now, of course, this all has impacts to our customers.

Speaker 7: raising their costs across the board, whether it's things from normal inflation in products and services to natural gas prices, etc. So we are very laser-focused on making sure that we are doing everything we can from a cost perspective throughout the rest of the...

So we are very laser focused on making sure that we are doing everything we can from a from a cost perspective throughout the rest of the.

Speaker 7: utility to reduce the impact on our customers. Now on the other side of things, ROEs obviously track that rising rate.

Utility to reduce the impact on our customers now on the on the other side of things Roe's are obviously, you can track that rising rate.

Right and it's obviously not a direct correlation sometimes it lags down sometimes it lags up but the general.

Speaker 7: and uh... it's you know it's obviously not a direct correlation sometimes it lags down sometimes it lags up uh... but gen the general uh... you know

Speaker 7: hypothesis here is in a rising rate environment ROEs rise and so we would expect to see that over time increase the return that we would get on our equity and of course that's why you know these proceedings on generic cost of capital etc. and rate cases are important to get that reset and reflect.

Hypothesis here is in a rising rate environment are always rise and so we would expect to see that over time.

Increase the return that we would get on our equity and of course, that's why.

Receding John .

Generic cost of capital et cetera, and rate cases are important to get that reset and reflected.

Speaker 3: Okay, thank you. Appreciate the answer on that. That's everything for me. I'll turn it back. All right. Thanks, Matthew.

Okay. Thank you I appreciate the answer on that.

For me I'll turn it back.

Alright, Thanks Matthew.

Your next question is from Patrick Kenny with National Bank.

Speaker 11: Yeah, good morning, just to follow up on your 100% RNG initiative in BC, and I was just curious if you see any opportunities to implement this new build renewable energy source offering across some of your electric utility platforms and know how that might be able to accelerate your overall 75% reduction target by 2035.

Yeah. Good morning, just to follow up on your 100% <unk> and it should have NBC and I was just curious.

If you see any opportunities to implement this new build renewable energy source offering across some of your electric utility platforms.

How that might be able to accelerate your overall, 75% reduction target by 2035.

Speaker 7: Yeah, first off, what a great program that FortisBC, that team came up with, you know, it's making, it's getting everyone to recognize the role that natural gas companies and their infrastructure can play in delivering a cleaner energy future. You know, we talk about it a lot on how you can, you know, green up electrons on the transmission and distribution side, but we need to be talking more about how you can green up.

Yeah first off on what a great program that Florida species that team came up with.

It's making it's getting everyone to recognize the role that natural gas companies in their infrastructure can play and delivering a cleaner energy future.

Talk about a lot on how you can you know.

Green up green up electrons on the transmission and distribution side, but we need to be talking more about how you can green up then.

And then clean up to the <unk>.

All accused that you send through your pipe, whether its through renewable natural gas and gas hydrogen whatever it is that's that that shows that we're part of that solution. So that's that's a great solution for.

For Florida P C. It could be in our other we have smart small gas companies and in Arizona and in New York that could also look at look at programs like that and you know utilities like.

Speaker 7: And, you know, utilities like Arizona, where we have a vertically integrated utility, we do offer green power programs for our customers already. So those things can. And, of course, you've got to be looking at more and more opportunities to do that, to create the customer's option to, you know, go a little bit faster than perhaps we are going from a portfolio-wide perspective. Of course, our goal is to, if you could, if we execute on our integrated resource plan in Arizona, our customers, you know, by 2035, 70%, actually right around 2032, about 70% of the energy that we provide will be renewable energy. So, you know, people forget how much we're really doing behind the scenes and increasing that volume. But still, there's customers who will want to have, like me, myself, at my home in Arizona, have 100% renewable energy tariff, where my energy comes 100% from renewables, and we have that, obviously, for customers across the board in Arizona.

Arizona, where we have a vertically integrated utility we do offer.

<unk> powered programs for our customers already.

So those things can and of course, you got to be looking at more and more opportunities to do that to create.

Create the customer's option.

To go a little bit faster than perhaps we are going from a from a portfolio wide perspective of course, our goal is to if you. If we if we if we if we execute on our integrated resource plan in Arizona.

Our customers buy in $2035, 70% actually about right around 2030 to about 70% of the energy that we provide will be renewable energy. So that people forget how much we're really doing behind the scenes and increase in that volume, but still there's customers who will want to have like me myself at my home.

Speaker 7: So people forget how much we're really doing behind the scenes and increasing that volume. But still, there's customers who will want to have, like me, myself, at my home in Arizona, have 100% renewable energy tariff, where my energy comes 100% from renewables. And we have that, obviously, for customers across the board in Arizona.

In Arizona have 100% renewable energy tariff, where my my energy comes out of the 100 per cent from from renewables and we have that obviously for for customers across the board in Arizona.

Speaker 11: Excellent. Thanks for that. And then maybe just a high-level question, David, on the portfolio in general in light of the rising rate environment and the potential here to add some additional larger scale growth within your

Excellent thanks for that and then maybe just.

At a high level question David on.

The portfolio in general and later the rising rate environment.

Central here to add some additional larger scale growth within Europe .

Speaker 11: your larger core utilities. I know you've always seen the benefits of diversification, but is now the time to weigh the option of perhaps divesting of one or two of your smaller utilities simply to beef up liquidity ahead of some of these larger scale projects?

Your larger core utilities, I know you've always seen the benefits of diversification, but is now the time to weigh the option of perhaps divesting of one or two of your smaller utilities simply too.

This helps liquidity ahead of.

Some of these larger scale projects.

Speaker 7: Yeah, not not really a priority for us. I mean, I think the utilities that we have, you know, we don't we're not blind to, you know, market drivers and, you know, value and, you know, opportunities, etc. But, you know, I think that

Yeah, that's not really a priority for us I mean, I think the utilities that we have.

We don't we're not blind to it.

Market.

Drivers and value and opportunities et cetera.

But I think that we run to every single one of our utilities within our model the best they can be run.

Speaker 7: run every single one of our utilities within our model, the best they can be run. And we will continue to improve each one of those utilities on a going forward basis and improve the growth of each.

And we will continue to improve on each each one of those utilities on a going forward basis and you know.

Improve the growth of each.

So I don't.

Speaker 7: someone would have to see some weird outsized value because to create value in one of our subsidiaries or one of our pieces of our portfolio above and beyond what we can, I think it's a high hurdle. But we'll pay attention, but definitely not something that we're looking at in the near term.

Someone would have to see some weird outsize value because to create value in one of our subsidiaries.

Or one of our pieces of our portfolio are.

Above and beyond what we can.

You know I think that's a it's a high hurdle, but you know we.

We will pay attention, but definitely not something that we're looking at on the in the near term.

Yeah.

Alright, that's great. Thank you very much.

Thanks, Patrick.

Speaker 2: And again, if you would like to ask a question, please press star, then the number one on your telephone keypad. Your next question is from Darius.

And again, if you would like to ask a question. Please press Star then the number one on your telephone keypad.

Our next question is from Darius Wozny with Bank of America.

Speaker 3: Hi, good morning, and thank you for taking my question. Just wanted to hopefully get a quick update on the Cardinal Hickory Creek project. I realize it's not a.

Hi, Good morning, and thank you for taking my question.

Just wanted to hopefully get a quick update on the Cardinal Hickory Creek project I realize it's not a.

Speaker 3: a significant part of your long-term CAPEX plan, but there have been some hurdles there. And I was just curious if you could provide an update and potential time frame for next steps. And the Part B of that question would be, given the experience of bringing that project along thus far, does that inform your approach at all to potentially, further down the line, additional projects in the MISO footprint?

Significant part of your long term Capex plan, but there have been some hurdles there and I was just curious if you could provide an update and potential timeframe for next steps in the part for you that question would be given the experience of that.

Bringing that project along thus far does that inform your approach at all to potentially further down the line additional project and in the MISO footprint.

Speaker 7: Yeah, thanks, Darius, for that question. You get full points for getting into the details, because that's in the details. And I'm going to pass that. That's so far in the details. I'm going to pass it to, obviously, our expert on this, Linda Apsley from ITC.

Yes, Thanks, Darius for that question that you get full points for getting into the details because that's that's and as in the details and I'm going to pass that that's so far in the detailed them and pass it to obviously our expert on this Linda Apsey from ITC.

Speaker 5: Great. Thanks, Dave. And thanks, Darius, for the question. Yeah, I think to keep in mind, I mean, no doubt, certainly there's multiple legal proceedings around Cardinal Hickory Creek. But I think just to kind of put it in perspective, you know, the litigation all revolves around essentially what is a mile and a half, basically 150 mile project.

Great. Thanks, Dave and thanks, Gary for the question, Yeah, I think to keep in mind I mean, no doubt certainly theres multiple legal proceedings around Cardinal Hickory Creek, but I think just to kind of put it in perspective. The litigation all revolves around essentially what is a mile and a half basically a 150 mile project.

Speaker 5: and that litigation so far has not ceased construction on the project. We continue to construct the project both in Iowa and in Wisconsin with our partners on the project. We're about a 45 percent owner of that project and so it's a partnership project with both American Transmission Company and Daryl and Power. So

And that litigation.

So far has not.

Construction on the projects, we continue to construct the projects both in Iowa, and Wisconsin with our partners on the projects, we're about a 45% owner.

That project and so it's a partnership projects with both American transmission company and voluntary on power. So.

Speaker 5: Despite, I would say some headlines complexity of sort of the litigation and multiple lawsuits. It really is a minimal portion of the project that's in question and we continue to pursue our construction activity.

Despite I would say some headlines that complexity of sort of the the litigation and multiple lawsuits.

Really is a minimal portion of the project. That's in question and we continue to.

Pursue our construction activity and quite frankly, I think we feel pretty confident that that will continue to realize that project given the needs part of the project.

Speaker 5: And quite frankly, I think we feel pretty confident that we'll continue to realize that project, given the needs for the project. This is a project that was identified over 10 years ago as an MVP project through MISO, and certainly the needs, the benefits for customers just have continued to grow. So, I think we feel pretty confident that the project will be realized and it has not stopped our construction activities at all. For more information, visit www.fema.gov

This is a project that was identified over 10 years ago as an MVP projects in MISO.

And certainly the need the benefits for customers just have continued to grow. So I think we feel pretty confident that the project will be realized and it has not stopped our construction activities at all.

Okay great.

Speaker 5: Yeah, I think, sorry, I know you had the second question just in terms of does it alter how we think about the future, you know, LRTP projects?

Yeah, I think Dave sorry, I know you.

The second question just in terms of does it.

Or how do we think about the future LRT project No look I mean, I think generally I think just from a broad perspective.

Speaker 5: No, look, I mean, I think generally, I think just from a broad perspective.

Speaker 5: certainly litigation.

Certainly litigation.

Speaker 5: you know, environmental opposition to energy projects in general is certainly growing. But I think when we step back, when you look at the primary drivers, you know, of all of these LRTP or regional transmission projects.

The environmental opposition to two energy projects in general is certainly growing.

But I think when we step back when you look at the primary drivers of all of these LRT P of regional transmission projects. The primary driver is to interconnect and deliver green energy to customers.

Speaker 5: The primary driver is to interconnect and deliver green energy to customers.

Speaker 5: And ultimately, when you, I think you layer on the additional benefits of any transmission project, economic, economic benefits, reliability benefits.

And ultimately when do you I think you layer on the additional benefits of any transmission project economics economic benefits reliability benefits.

Speaker 5: When you look at the analysis and study process that the RTO goes through when they assess these projects, you know, there is no doubt, I mean, all of these projects have to pass cost-benefit calculations.

When you look at the analysis the study process that the RTL does through when they assess these projects.

There is no doubt I mean, all of these projects have to pass cost benefit calculation.

Speaker 5: And there is, you know, an immense amount of detail around the benefits of any of these projects. So, I think we feel pretty comfortable and confident that ultimately, when you have a need-based project.

And there is an immense amount of detail around the benefits of any of these projects. So I think we feel pretty comfortable and confident.

That ultimately when you have a need based project.

Speaker 5: Typically, the projects prevail, but certainly, depending on the location of a project, maybe the sensitivity of certain geographies, you know, all of those things need to be considered, particularly considered, and how we think about the timing of construction, approval, and obviously, putting those projects into operation, but I don't think we see this as any type of problem. I don't think we see it as a problem. I think it's a problem. It's a problem. It's a problem. It's a problem.

Typically the projects prevail, but certainly depending on the location of our project maybe the sensitivity of uncertainty.

Geographies all of those things need to be considered.

Particularly considered and how we think about the timing of construction approval and obviously, putting those projects into operation, but I don't think we see.

See this as any type of.

Speaker 5: sign of the future, you know, that's different than what we've been dealing with. I think at ICC, we have a great track record of citing transmission projects. And, you know, we work very, very closely with all of our local communities, our states, our landowners. We take all of those things into consideration on the front end. And so I think we feel pretty confident in our ability to continue to realize transmission projects that come out of the LRTP effort.

Sign of the future.

That's different than what we've been dealing with I think at ITC.

We have a great track record.

Fighting transmission projects and.

We work very very closely.

With all of our local communities our state our landowners, we take all of those things into consideration on the front end and so I think we feel pretty confident in our ability to continue to realize transmission projects that come out of the <unk> effort.

Speaker 3: Excellent. Thank you very much. I appreciate the detail in that response. If I could just ask one more quickly. This is pivoting over to the Q4 adjusted drivers. I noticed as part of the central Hudson 3-cent drag related to non-recoverable costs, it referenced performance targets. Is there any way you could elaborate on that just in brief, what those targets were, and perhaps was this isolated to Q4 or something you see maybe potentially being ongoing?

Excellent. Thank you very much and I appreciate the detail in that response, if I could just ask one more quickly pivoting over to the Q4 adjusted drivers I noticed.

As part of the Central Hudson <unk> drag related to the non recoverable costs. We've made referenced performance targets is there any way you could elaborate on that just in brief what those targets were and perhaps some of it is isolated to Q4 or something new.

Maybe.

That's essentially being ongoing.

Speaker 7: Yeah, let me send that over to Charlie. He's got the color on that. Charlie Franny, who's the CEO of Central Hudson.

Yes, let me send that over to Charlie He's got the color on that Charlie <unk>, who is the CEO of central Hudson.

Speaker 9: Thanks Dave, so we have within.

Thanks, Dave So we have within.

Speaker 9: all of our rate agreements performance metrics, which we need to meet and those performance metrics if they aren't met do result in

All of our rate agreements performance metrics, which we need to meet.

And those performance metrics, if they arent met.

To result in.

Speaker 9: Penalties associated with missing those and so the two targets that Were related to reliability that we missed were frequency of outages and duration of outages and those are all outages That are non storm related outages

Penalties associated with missing those and so the two.

Targets that were related to reliability that we missed or frequency of outages and duration of outages and those are all outages.

That are non storm related outages.

Speaker 9: So it's kind of on a day-to-day basis. I mean, those provisions have been in our rate cases for many years and they are, you know, continue to be part of our rate structure going forward. You know, I certainly believe that last year was an unusual year and I wouldn't expect that we would exceed those targets going forward.

So it's kind of on a day to day basis, I mean, those provisions have been in our <unk>.

Our rate cases for many years and they are continue to be part of a REIT structure going forward.

I certainly believe that.

Last year was an unusual year and I wouldn't expect that we would exceed those targets going forward.

Okay, great. Thank you very much I'll pass it along here.

Thanks Darius.

Speaker 2: Thank you. As there are no further questions, I would like to turn the call back to Ms. Amima.

Thank you as there are no further questions I would like to turn the call back to Ms. Amy Ma'am.

Speaker 12: Thank you, April . We have nothing further at this time. Thank you, everyone, for participating in our fourth quarter and annual 2021 results conference call. Please contact Investor Relations should you need anything further. Thank you for your time and have a great day.

Thank you April we have nothing further at this time. Thank you everyone for participating in our fourth quarter and annual 2021 results Conference call. Please contact Investor Relations should you need anything further thank you for your time and have a great day.

Speaker 2: Thank you for participating, ladies and gentlemen. This concludes today's conference call. You may now disconnect.

Thank you for participating ladies and gentlemen. This concludes today's conference call you may now disconnect.

Yeah.