Q4 2021 Fortis Inc Earnings Call

Ladies and gentlemen, thank you for standing by.

Name is April and I will be your.

Operator today.

Welcome to the.

Speaker 1: and Andy Wohl 2021 results conference call and webcast. During the call all participants will be in a listen only mode.

Fourth quarter, and Andy will 2021 results conference call and webcast during the call all participants will be in a listen only mode.

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

Speaker 1: At that time, those with questions should press star followed by the number 1 on their...

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

Speaker 1: If at any time during the conference you need to reach an operator, please press star zero.

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

Speaker 1: At this time, I would like to turn the conference over to Stephanie and Mymo.

At this time I would like to turn the conference over to Stephanie MRI mode. Please go ahead Mr. <unk>.

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 Hudgens, President and CEO , Jocelyn Perry, Executive VP and CFO , other members of the senior management team, as well as CEOs from certain subsidiaries.

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.

Speaker 2: Before we begin today's call, I want to remind you that the discussion will include forward-looking information.

We will 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 US 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...

Which is subject to the cautionary statements 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 N. 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.

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. Financially, absent from the ESG front, we have been able to reduce our sustainability

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

Speaker 3: 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 in.

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. 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 Fortess.

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

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 average.

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 six, this far exceeds the returns generated by the benchmark in 2021.

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 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 <unk> solar project and the 99 megawatts Borderlands wind project has driven our carbon emissions reduction to date.

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.

With a full year of these renewable generation projects and the planned closure of the 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 targets.

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 US to Canadian dollar exchange rate and pandemic-related timing delays for both the Watson-Akini 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 water and a kidney app transmission project and planned spending.

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.

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.

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

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 utility.

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.

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 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%.

<unk> is expected to increase rate base by over $10 billion from approximately 31 $31 billion in 2021 to nearly 42 billion in 2026 supporting an 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 specifically as it relates to our transmission business. We continue to see a supportive policy environment.

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

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 enhanced 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.

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.

Speaker 3: MISO is identifying regional transmission required to support the evolving needs of the system as it transitions to cleaner energy.

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 alone.

The 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 province's 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.

In the letter the Ontario government requested the ISO continued discussions with ITC to advanced contract negotiations on a transmission service agreement and requested a 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.

Speaker 3: Should ITC reach a finalized agreement with the ISO, construction of the project would 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 have highlighted in the past, come to fruition, they would either be additive to our existing plan or extend growth beyond 2021.

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.

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 income.

In 2021, we increased our dividends paid per common share to $2 five on.

And approximately 6% increase compared to 2020 marketing 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% 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.

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 continue to see rate-based growth across our utilities, we successfully...

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.

Speaker 4: and advance the TEP weight settlement in the fourth quarter, there were a number of key drivers lowering EPS quarter over quarter.

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 <unk> 69 to.

<unk> lower than the fourth quarter of 2020 and adjusted earnings per common share was <unk> 63.

Speaker 4: And adjusted earnings per common share was $0.63, $0.06 lower than the...

Six cents 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 Belize 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 Fortis's share price increased approximately 9% in the quarter, which resulted in higher stock-based compensation expense. And together, this decreased EPS by 3%.

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 a one-cent impact.

<unk> also experienced lower gains on its retirement investments during the quarter and this wasn't a one cent impact.

Speaker 4: And as expected, timing of tax deductions at Fortis Alberta 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> <unk>.

And a lower foreign exchange and a higher weighted average shares outstanding each decreased EPS by <unk> 10.

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 and.

Speaker 4: And adjusted earnings per common share for the year was $2.59, $0.02 higher than 2020.

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

<unk> higher than 2020.

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

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

Speaker 4: excluding foreign exchange impacts, adjusted EPS grew by $0.12 or approximately 5% in 2021.

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, and 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 7 cents, reflecting 9% year-over-year earnings growth at the utility.

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

Like 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.

Strong 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 two cents, growing its earnings by approximately four percent. I'll speak to UNS in more detail on the next slide.

<unk> energy increased EPS by two things growing its earnings by approximately 4% I'll speak to you on that 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 <unk> <unk> 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 $0.02 increase in EPS, or 7% segmented earnings growth compared to 2020.

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 <unk> increase in EPS or 7% segment to the 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 <unk>, <unk>, mainly driven by lower hydro electric production in Belize and realized losses on natural gas contracts any concrete.

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

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

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 $0.03 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 $0.02.

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 125 for 2021 compared to 134 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 TEP, the FERC settlement and higher wholesale margins. This increased EPS by approximately 10 cents.

Speaker 4: UNS did, however, report higher planned maintenance costs at TEP's generating facilities, which lowered EPS by 10%.

Unf's did however report higher planned maintenance cost at TEP is generating facilities, which lowered EPS by three.

Speaker 4: And lastly, weather impacts in 2021 lowered EPS by 5 cents. As you recall, Tucson experienced its hottest summer on record in 2020.

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 rates.

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

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 TEP.

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

We will be evaluating 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 programs.

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 refinancing.

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 buy-back

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 add-on.

Turning to recent regulatory updates first ITC continues to await a final ruling 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, our T O 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 process.

In November ITC filed comments in response to the advanced notice of proposed rulemaking or <unk> 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 companies.

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 NOPAs.

Well first has indicated plans to move the <unk> through the regulatory process as fast as possible. It remains unclear whether aspects of being over 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 procedures.

At TEP you may recall for 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. The settlement includes an allowed ROE of 9.79% and a single rolled-in rate design.

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

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 design settlement as positive as over 20% of U S. Energy's five year capital plan is allocated to transmission investment, which will receive timely recovery in late.

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 year.

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 2024. A decision from the AUC is expected in the third quarter.

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 2020 for 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 March.

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 to separate posed to us 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 remarks.

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.

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 you 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 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.

You're using a speaker phone please miss your handset before entering your request.

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 Ezergales with TD Security.

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

Speaker 5: 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 a.

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 in.

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.

Speaker 3: customer behavior back in 2020 than we did in 2021. With everyone working from home, we saw a 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.

Compounded by the fact that we.

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

They're then 2021, where we saw it kind of slipped back.

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.

Speaker 3: because most of the other utilities that we have have very limited weather flow through to the bottom line. So it I would say when you look at 2021 versus 2020 obviously 2021 was a much more normal weather year so that 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 are your teams putting thought towards what's the new normal and how much of that shift in customer behavior might be

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.

That would be more of a normal that I would think of it on a on a going forward basis.

That's helpful. Thank you and.

Speaker 5: 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 not science, but maybe just as a follow up and you know.

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

Speaker 5: not permanent, but systemic and continue versus what might revert back to historical patterns potentially going forward.

Not 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, you know, pre-2020 timeframe when you look at it from a use-per-customer perspective, as well as, you know, the more normal, you know, for the most part, residential and commercial 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.

Sure. So in Arizona, we're actually seeing that 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.

Most part residential and commercial load shapes because.

Arizona I think a lot of folks did return to work in 2021.

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.

Speaker 3: you know, when you look at, you know, some of the other, you know, new technologies, DSM, energy efficiency, et cetera, that can be deployed across our utilities. But for the most part, we're kind of

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.

Back to the pre 2020 or pre pandemic behavior.

Speaker 5: 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 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 may be 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 have 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 oh, that's 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 5: 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.

Yes.

Speaker 1: Your next question is from Maurice Choi with RBC Capital Markets.

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

Okay.

Speaker 6: Thank you, and good morning. My first question is on the MISO LRTP. Dave, you mentioned in the prepared remarks that you see supportive policy from pre-MISO 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 permit to federal and state levels as he approached the announcement of the first tranche of projects in Q2.

Should we view your market share if I can call it that way and how does this market share a few change for 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 to in the past about just the, you know, our overall footprint in the Miso region. And that's 23 ish percent, 22, 23% of the Miso footprint. That's our assets.

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 ASP.

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 AR on a forward 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 uh... mvp projects

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, sorry, it's hard to necessarily project any of that on.

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

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: we'll hopefully be able to see and have a really good view on it. Once we see that tranche, we see where our ropers 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 from me.

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.

Do you have any color to add on that.

Speaker 7: Nope, Dave, I think you captured it all, nothing additive from me.

Well, Dave I think you captured it all nothing additives for me.

Yes.

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

Got it and maybe a second question is on Arizona.

Just I may have misheard I apologize if I did.

You mentioned that for US is evaluating its timing of the next rate case filing in for <unk>.

P. P. S. At 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 Thats a full up how do you see the accs recent regulatory decisions relating to peers in the state being factored into your your your view about this rate application.

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 being factored into your view about this rate application?

Yeah.

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 year end 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.

Speaker 4: what I would say suggests that we would highlight to the regulator that we were continuing to invest and we need to uh... revisit what we've invested over the last couple years and get that into rates. TP 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 the rate case every couple of years and so nothing out of the ordinary from TP's perspective. I'll let David speak to what's happening.

But I would say suggests that we would highlight to the regulator that we were continuing to invest and we need to revisit but we've invested over the last couple of years and get that into rates.

He has done a great job is done.

Keep moving forward with it clean energy plans. It is 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, I'll, let 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

Yes.

Youre right on John .

Josh one because it really is three years.

A lot of.

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

Lag for three utility.

Like ours and 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 go down the path

Quite a bit on a going forward basis too.

Speaker 3: of our clean energy transition in Arizona, so we want to make sure that we're, you know, getting 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.

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

Getting in front of our regulators are 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.

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.

The environment in Arizona I know this has been a bit of a hot topic for the past few months, but you know.

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 be a conversation and and the results of in

One is a lot of that conversation in the results.

Speaker 3: in another company's rate case in Arizona don't necessarily reflect on, you know, expectations, don't reflect at all expectations on an outcome for us. I think 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, you know, from my perspective, there's not a, there's definitely not a read through to TEP from that. And frankly, there's been some very good and positive, very recent positive outcomes in Arizona regulatory environment. Just this week, the Arizona Corporation Commission acknowledged the integrated resource plans that we filed for Tucson Electric Power and our smaller electric utility, UNS Electric, which supports that 2020 integrated resource plan that supports our 80% greenhouse gas reduction at TEP that, of course, supports a 75% greenhouse gas reduction that we have for this wide. 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.

And.

Another company's rate case in Arizona don't necessarily reflect an expectation.

Expectations.

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

I think 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 from my perspective, there's there's not a there's definitely not a read through.

To TEP from that and frankly theres been some very good.

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 TEP that of course supports a 75% greenhouse gas reduction that we have for it is wide. So those are all good signals that.

The Commission is.

It's 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.

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 a 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's 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 would be great.

Great and just a quick follow up on.

Could you help us.

Good morning timing of this filing are you talking about next few months.

And this year.

Roughly it would be.

Speaker 3: 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, you know, test year to pick. And so we're still working through all of those bits and pieces. Thank you.

Great.

Well, it's really hard to put a pin in it at this point, but we're looking at it you know there's no.

One of these things that you know 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 bits and pieces.

Thank you.

Youre welcome.

Your next question is from Rob Hope with Scotiabank.

Speaker 8: 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 mid west transmission projects I assume that there's not a ton of capital here.

Listing and capital plan related to the next tranche.

It will be coming out, but when you take a look at just kind of the the interconnection scheduled project timing. When do you think you can start to see capital being layered into the capital plan on a more meaningful basis. That's 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 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 a R.

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 because it's really hard to tell there, there's 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.

Speaker 3: There might be some that are upgrades. There might be some that are maybe a little bit easier, like transmission interconnection. That's a different process that 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 gonna be a big chunk.

Or maybe a little bit easier like transmission interconnection, that's 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.

Already have that.

Expenditure is going to be.

Later 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.

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 your six on.

Speaker 8: 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.

Speaker 8: 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 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 ISO gave the government.

No.

Speaker 8: 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 has kind of a 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 there, 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.

Yeah.

Broad terms term sheets.

Suppose had been laid out it's now getting into the details and finalizing all.

All of those pieces. So there you know that that.

That was part of the update that our that 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.

In the end of March and so these are all 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 when we get it.

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 the 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 and start construction. So.

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.

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 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.

It says it's a cross border project, that's got to Isos on each end that you got to connect between PJM and the Ontario why so.

Lots of details, but you know that the harder to the projects out of the more fun. They ask when you when you actually get to put them into service and you know what.

Speaker 3: You know, we're looking forward to getting those last couple steps done as quickly as we can.

Looking forward to getting those last couple steps done as quickly as we can.

I appreciate the color. Thank you.

Yep.

Speaker 1: Your next question is from Mark Jarvie with CIBC Capital Mark.

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

Speaker 9: 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 you saw flat or down earnings after that rebasing, maybe some color on both those items.

Thanks, Good morning, everyone.

A couple question on Alberta.

Speaker 9: 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 you saw flat or down earnings after that rebasing, so 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...

One would be around the potential move to a formula if you guys could comment on that in terms of why you'd want to see or the 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.

How could that rebase and coming soon.

Some color on both of those items.

Speaker 3: Sure, I'll talk about the first one and then turn the cost of service rebasing over to Janine to get some...

Sure I'll I'll 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.

Speaker 3: of those things where it all depends, right? It all depends on how the formula is set, whether it takes into account the right risks 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 extending further than that. So we're going to work hard. If it is 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 in the end. So I think we could be supportive of either way as long as it provided 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 in that clean energy transition in Alberta. Janine, I'll turn it over to you to talk about the cost of service.

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.

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 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 its 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.

It provided the right.

Right.

<unk> for us to get the return on the investments that we make in for the growth opportunities that we see in the participation frankly that we wanted to have in that clean energy transition in Alberta.

Speaker 3: uh... in that clean energy transition in alberta

Speaker 3: Janine, I'll turn it over to you to talk about the cost of service rebates.

I will turn it over to you to talk about the cost of service re basing.

Speaker 10: 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 re basing is ongoing we are in the midst of it.

It is an important opportunity for 40 to Alberta in terms of re basing our revenues and cost.

After almost a decade of P. B R based regulation.

Speaker 10: 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 sort of separate is incurring and what we foresee happening into the future and then David if I can.

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, 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 10: 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.

Like in terms of specific mechanism.

Speaker 10: 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 prospects for more perspective 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 10: in Alberta around such matters and so it's very early days with respect to...

Speaker 10: 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 early indications that it likely holds the current parameters, just given that desire for prospectivity.

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

Speaker 10: and a difficulty in terms of re-addressing it in the short term for anything new for 2023, but then really setting the foundation for 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 a conversation around what it should look like in 2024 and beyond and the possibility of a formula but still very very early days.

Speaker 9: 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 it thought that your sort of achievable ROE can be held flat through that process?

And just coming back to the room.

When you look at sort of where you are and what your stance is now your submission.

He's a thought in your sort of achievable ROE can be held flat through that process.

Speaker 2: 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 10: for 2023 in terms of a full realignment of our revenues.

Speaker 10: 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 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 9: Okay, and Jocelyn, a question for you, just in terms of the drip and just any updated thoughts on the discount and sort of the usage of the drip now or a pivot back to the ATM where you have a bit more control on sort of when shares are issued, so any updated thoughts on that?

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

Any thoughts on the desk panel 10.

So the drip now or a pivot back to the ATM or you know a bit more control on our sort of win and share their issue.

Thoughts on that.

Speaker 4: 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...

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 participation.

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.

No.

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 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, it's 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 understood.

Our growth profile should you know with all the opportunities that David's talking about you know change our capital program in 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: You know, with all the opportunities that David's talking about, you know, change our capital program in any meaningful way, we'll revisit.

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

Okay. Thanks.

Speaker 1: Your next question is from David Quisada with Raymond J.

Your next question is from David Quezada with Raymond James.

Speaker 3: Thanks, good morning everyone. My first question here just out in B.C. relates to the Tilbury site and any of the plant 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 regulators are undergoing some kind of a review process. Just any color you can provide there.

Thanks, Good morning, everyone.

My first question here just on D C.

Relates to the.

<unk> site in any of our 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 3: 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 from a resiliency perspective. As we have now seen in the past several years, some hiccups, I'll call them, on Enbridge's system. One back in, I guess it was winter 2018, and then of course

Yeah.

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

Enbridge system won back in I guess, it was 20 winter of 2018, and then of course.

Speaker 3: 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.

You know the one recently with the flood.

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 3: 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 piece do you see in the EIA.

Process.

Speaker 8: 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 request from intervenor set.

First we will continue for.

Speaker 8: 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 8: Canada, we're 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.

Canada, we're on track with that process, we filed the detailed project description last year, we received already sniffs decision and expect to go to public comment.

Q1 of this year.

The impact assessment agency of Canada did agreed.

Speaker 8: did agree to write a substitution so the BCEAO will lead the process.

I agreed to rate of 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 8: and that will continue for the better part of 2022 before we figure out what the next steps are in that environmental assessment.

Speaker 11: 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 wouldn't.

Speaker 11: uh... with news headlines lately there's been some increased momentum uh... for the use of rng in marine bunkering uh... and i know you guys have made really good progress on 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 RMG.

Speaker 11: in the B.C., at Fortis B.C., just curious if you think you could ultimately, depending on the extent of R&G for usage in the marine end market, could you potentially get to more than a 15% mix in B.C. on the R&G side?

In the B C.

Fortis BC I'm just curious if you think you could ultimately.

Depending on.

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

In D C on the R&D side.

Speaker 8: Yeah, I think there are two distinct questions there.

Yes, I think guy there too.

Distinct questions there.

Speaker 8: The marine market, I think R&G eventually will end up there. We did have that pilot project with C-SPAN where we ran.

The marine market I think R&D eventually will will end up there we did have that a pilot project with Seaspan when we ran.

Speaker 8: low-carbon or zero-carbon LNG for their barge ferries. I think there's a similar pilot 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'll be an added benefit. So we see that.

Our low carbon carbon.

Excuse me.

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

In Florida last year as well so I think the marine 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 our marine fuels like diesel so I think that'll be an added benefits we see that.

Speaker 8: as an additive support for increasing LNG in the marine market. I think generally our RNG development, we received approval from the B.C. government last year to go to 15% of our resource or gas supply coming from RNG.

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

Development.

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

Speaker 8: hydrogen. We just recently signed an 8-petajoule deal. It 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%. We believe we can go beyond that for sure over time. That doesn't include the adoption of hydrogen. We see a growing amount of renewable gases in our system going forward.

We just recently signed a pet a dual 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.

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.

Excellent really.

The color Roger that's it for me.

Speaker 1: Your next question is from Matthew Weeks with IA Capital Markets.

Your next question is from Matthew Weekes with I E capital market.

Yeah.

Speaker 12: 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.

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 and end.

Rate cases in terms of rate cases that are ongoing right now or.

Speaker 12: In terms of rate cases that are ongoing right now or

Speaker 12: that you're planning on doing in the near future. How do you expect the outlook for rising?

That's you're planning on doing in the near future how would you expect.

Outlook for rising interest rates.

Speaker 12: 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?

Impact are.

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

Speaker 3: Yeah, Matthew, a great question because the rising rates can help or hurt.

Yeah, Matthew a great question, because the the rising rates can can help or hurt obviously from an inflation perspective and cost of doing business.

Speaker 3: 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...

Is 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.

Speaker 3: pass-through mechanisms to customers like ITC and now TEP's transmission down in Arizona has that same pass-through mechanism.

Pass through mechanisms to customers like ITC and now.

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

Speaker 3: So there isn't really an impact because it's on a forward basis and then trued up as well. Other jurisdictions like Alberta and B.C. have inflation in part of their calculations for cost escalation. And then the one bigger jurisdiction that doesn't have it is TEP's non-FERC assets or their retail.

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.

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

Speaker 3: rates which would be subject to some regulatory lag between 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

Collected in rates, so it's a bit of a mishmash across the utility, but nothing no huge impact from a company perspective and of course. This all has impacts to our customers raising their costs across the board, whether it's you know things and you know from normal inflation in products and services to Nash.

Speaker 3: company perspective. Now, of course, this all has impacts to our customers.

Speaker 3: their costs, you know, across the board, whether it's, you know, things in, you know, from normal inflation and products and services to, you know, 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...

So gas prices et cetera. 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 3: utility to reduce the impact.

Utility to reduce the impact on our customers now on the on the other side of things, obviously track that rising.

Speaker 3: uh... on our customers now on the on the other side of things uh... are always obviously track uh... that rising

Speaker 3: uh... rate 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...

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

Speaker 3: 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.

Potthast. This 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 on our equity and of course, that's why.

Proceedings on.

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

Speaker 12: 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.

Anything for me I'll turn it back.

Alright, Thanks Matthew.

Your next question is from Patrick Kenny with National Bank.

Speaker 13: 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 how that might be able to accelerate your overall 75% reduction target by 2035.

Yeah. Good morning, just a follow up on your 100% Orangey initiative NBC and I was just curious.

If you see any opportunities to implement this newbuild.

Global 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 3: Yeah, first off, what a great program that FortisBC, that team came up with, it's getting everyone to recognize the role that natural gas companies and their infrastructure can play in delivering a cleaner energy future. We talk about it a lot on how you can 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, SBC 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.

We 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 and cleanup the molecules 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 salute.

<unk>, so that's a great solution for.

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

Speaker 3: 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 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 green.

<unk> powered programs for our customers already.

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

Great that 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 in $2035, 70% actually about right around 2030 to about 70% of the energy that we provide will be renewable energy. So.

Speaker 3: 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.

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 my energy comes out of a 100% from from renewables and we have that obviously for.

For our customers across the board in Arizona.

Speaker 13: Excellent. Thanks for that. And then maybe just a high-level question, David, on...

Excellent thanks for that and then maybe just.

At a high level question David.

Speaker 13: portfolio in general in light of the rising rate environment and you know the potential here to add some additional larger scale growth within Europe .

The portfolio in general and later, the rising rate environment and the potential here to add some additional larger scale growth within Europe .

Speaker 13: 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?

The 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.

If up liquidity ahead of some.

Some of these larger scale projects.

Speaker 3: Yeah, not not really a priority for us. I mean, I think that 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 that the utilities that we have.

We don't we're not blind to.

Market.

Drivers and value and opportunities et cetera.

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

Speaker 3: run every single one of our utilities within our model uh... the best they can they can be run uh... and we will continue to improve on each each one of those utilities on a going forward basis and you know improve the the growth of each uh... so i i don't i'd

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

Improve the growth of each so I don't I.

Speaker 3: 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.

Above and beyond what we can I think that's a it's a high hurdle, but you know what.

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

Alright, thats great. Thank you very much thanks.

Thanks, Patrick.

Speaker 1: 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...

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

Next question is from Darius Rodney with Bank of America.

Speaker 12: 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 12: 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 that, 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.

That inform your approach at all to potentially further down the line additional project and in the MISO footprint.

Speaker 3: 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 Apsey from IT.

Yes, thanks, Darius to that question.

The full points for getting into the details because that's that's in that's in the details and I'm going to pass that that so far in the detailed them in the past is to obviously our expert on this Linda Apsey from ITC.

Speaker 7: 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, Terence 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 revolved around essentially what is a mile and a half basically a 150 mile project.

Speaker 7: 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 Dairyland Power. So

And that litigation.

So far has not construction on the project we continue to construct the projects both in Iowa, and Wisconsin with our partners on the project, we're about a 45% owner.

That project and so it's a partnership projects with both American transmission company and that theory on power. So despite I would say some headlines that complexity is sort of the the litigation of multiple lawsuits. It really is a minimal portion of the project now that's in question and we continue to Ah.

Speaker 2: 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 activities.

Most of our construction activity.

Speaker 7: 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

And quite frankly, I think we feel pretty confident that that will continue to realize that project given the need for the project.

If a project has identified over 10 years ago with MVP projects in it myself.

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

Our construction activities at all.

Yeah.

And that is great in that regard.

Speaker 2: Yeah, I think they've, sorry, I know you had the second question just in terms of, does it...

Yeah, I think sorry, I know you.

The second question just in terms of does it.

Speaker 7: alter how we think about the future LRTP project? No, look, I mean, I think generally, I think just from a broad perspective, certainly litigation,

Alter how do we think about the future you know L. R. T P project.

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

Certainly litigation.

Speaker 7: know, environmental opposition to energy projects in general is certainly growing.

The environmental opposition to two energy projects in general is certainly a growing up and I think when we step back when you look at the primary drivers.

Speaker 7: 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 primary driver is to interconnect and deliver green energy to customers.

All of these L. RTP of regional transmission projects. The primary driver is to interconnect and deliver green energy to customers.

Speaker 7: And ultimately, when I think you layer on the additional benefits of any transmission project, economic benefits, reliability benefits, when you look at the analysis and study process that the RTO goes through when they assess these projects, there is no doubt all of these projects have to pass cost-benefit calculations.

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

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

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

Speaker 7: 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 projects.

Speaker 7: Typically, the projects prevail, but certainly, depending on the location of a project, maybe the sensitivity of certain geographies, all of those things need to be considered, particularly considered in 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.

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

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 the any type of a.

Speaker 7: sign of the future, you know, that's different than what we've been dealing with. I think at ITC, 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. Thank you.

Sign up the future.

And what we've been dealing with I think at ITC.

We have a great track record.

Fighting transmission project, and where we worked very very closely with all of our local communities. Our state. Our landowners are 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 LR tiki effort.

Speaker 12: Excellent. Thank you very much. I appreciate the detail in that response. If I could just fast forward 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 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 that you'd referenced performance target is there any way you could elaborate on that just in brief what those targets were and perhaps it's isolated to Q4 something you.

Maybe.

It's essentially being ongoing.

Speaker 3: Yeah, let me send that over to Charlie. He's got the color on that Charlie Franny, who's the CEO of Central

Yes, let me send that over to Charlie He's got the color on that Charlie friendly who's the CEO of Central Hudson.

Speaker 3: Thanks, Dave. So we have within.

Thanks, Dave So we have.

Within.

Speaker 3: all of our rate agreements, performance metrics, which we need to meet, and those performance metrics, if they aren't met, do result in 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.

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

And those performance metrics, if they arent met.

Do result in.

Penalties associated with the missing those and so the two.

<unk> targets that were related to liability that we missed what frequency of outages and duration of outages and those are all outages that are non storm related.

Speaker 3: that are non-storm-related outages, 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.

Outages.

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 continuing 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 1: Thank you. As there are no further questions, I would like to turn the call back to Ms. Amin.

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

Speaker 10: 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 for that thank you for your time and have a great day.

Speaker 1: 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.

Yeah.

Yeah.

Yeah.

Yeah.

Yeah.

Yeah.

Yeah.

Yeah.

Yeah.

Yeah.

Yeah.

Yeah.

Yeah.

Yeah.

Yes.

Yeah.

Yeah.

Yeah.

Yeah.

Yeah.

[noise].

Yeah.

Okay.

[noise].

Okay.

Yeah.

Yeah.

Yeah.

Yeah.

Yeah.

Yeah.

Okay.

Yeah.

Yeah.

Yeah.

Yeah.

[noise].

Yeah.

Yeah.

Yeah.

Yeah.

Hum.

[noise] [noise].