Fortis Inc. Q1 FY2026 earnings call

• Acknowledge Gary Smith's retirement after 42-year career with Fortis. - Pleased with start in 2026, delivered safe and reliable service, invested $1.4 billion in capital, reported earnings per share of 99 cents, concluded UNS gas rate case. - 25% of capital plan invested in first quarter, well positioned to execute $5.6 billion planned investments in 2026. - Major capital projects progress: ITC completed substation at Big Cedar Industrial Center, transmission upgrade work underway; UNS ACC approved amendment for Springville Generating Station conversion to natural gas. - ITC Midwest network transmission rates expected to be reduced by ~20% by end of decade due to data center load. - TEP's coal to natural gas conversion at Springville Generating Station is economical, 300 megawatts of load growth for data center expected to save typical residential customer ~13 USD per month. - 2026 and five-year capital plans on track, expect average annual rate-based growth of 7% through 2030. - ITC MISO LRTP portfolio of projects advancing, filed joint complaint at FERC against competitive bidding processes in MISO and SPP. - In Arizona, key contractual contingencies for TEP's 300 megawatts advanced, negotiations continue for additional capacity, estimate new generation investment range of one and a half to 2 billion USD if agreements finalized. - Track record supports commitment to deliver 4 to 6% annual dividend growth through 2030.

For the quarter, net earnings were $501 million, or 99 cents per common share. Western Canadian utilities contributed a 4 cent increase in EPS, largely driven by capital investments and timing of operating costs. ITC EPS increased by 2 cents, largely due to continued capital investment and related rate-based growth. U.S. electric and gas utilities EPS decreased by two cents, with lower earnings at UNS Energy due to wholesale market conditions, etc., and higher earnings at Central Hudson moderating. Corporate and other segment reflects higher finance costs and unrealized losses on foreign exchange contracts. Dispositions had a two-cent dilutive impact on first quarter results, expected to be five-cent dilutive for full year. Foreign exchange had a non-favorable three-cent impact for the quarter, and higher-weighted average shares issued under dividend reinvestment plan impacted EPS by one cent.

• Expect average annual rate-based growth of 7% through 2030. - Continue to drive meaningful shareholder value through execution of five-year capital plan and delivery of 4% to 6% annual dividend growth guidance through 2030. - ITC expects 3.3 to 3.8 billion USD of investment beyond 2030 for MISO LRTP portfolio projects not subject to competitive bidding; actively evaluating competitive process projects. - Coalition has asked FERC to issue a ruling by July 16th on their complaint. - TEP has initial 300 megawatts phase underway, negotiations continue for additional capacity with estimated new generation investment range if agreements finalized.

• Competition delays much needed infrastructure development, slowing down AI implementation through regulatory red tape, and increasing costs to customers as per ITC's complaint at FERC. - Uncertainty regarding the outcome of FERC's consideration of the Grid Acceleration Coalition's complaint. - Uncertainty in regulatory proceedings for TEP's general rate application, with hearings commenced and order expected in fall but outcomes uncertain. - Potential challenges in getting data center projects across the line, including uncertainties in customer agreements and timing of electrical equipment delivery.

Q: Maurice Choi with RBC Capital Markets asked about data center sentiment among local stakeholders since Q4 call and ITC's FERC complaint feedback.

A: David and Krista Tanner responded discussing need to prove messaging, ongoing conversations, no counter-complaint seen.

Q: Robert Hope with Scotiabank asked about next steps for TEP's 300 megawatts project and phase two planning.

A: Susan Gray responded on phase one underway, next steps include expanding to 600 megawatts and negotiating second site, need customer certainty for phase two.

Q: Mark Jarvie with CIBC asked about FERC addressing loose ends and executive order on transmission.

A: Dave and Krista responded on hopes for FERC action, no indication yet, unaware of executive order chatter.

Q: Benjamin Pham with BMO asked about BC environmental assessment and data center customer impact.

A: Roger responded on EA not impacted by Middle East, data center impact is broader sector depending on proper implementation.

Q: John Mold with TD Cowan asked about Tucson electric rate case and broader opportunities.

A: Susan Gray responded on rate case ongoing, similar conversations to UNS gas case, and discussed near-term and longer-term opportunities.

Q: Patrick Kenny with National Bank asked about FortisAlberta and data center partnerships.

A: Janine Sullivan responded on data center activity in Alberta and ongoing discussions for timely interconnection