Release Date: July 31, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Fortis Inc (FTS, Financial) reported a strong EPS growth of $0.05 quarter over quarter, driven by rate base investments and favorable weather conditions.
- The company invested approximately $2.3 billion in capital focused on system reliability, customer growth, and cleaner energy investments.
- Fortis Inc (FTS) released its 2024 sustainability report, highlighting progress on key sustainability targets and new initiatives in resiliency and biodiversity.
- The 2024 capital plan of $4.8 billion remains on track, with significant projects like the 1800 km Watson at Kenya power transmission project completed.
- Fortis Inc (FTS) continues to execute its 5-year capital plan of $25 billion, with an expected rate base increase of $12 billion by 2028, supporting an average annual rate base growth of 6.3%.
Negative Points
- Central Hudson's EPS decreased by $0.02 quarter over quarter due to a one-time regulatory settlement impact and recognition of a regulatory performance target.
- Higher holding company finance costs tempered EPS growth at ITC and other segments.
- The disposition of Aitken Creek and higher holding company finance costs negatively impacted the corporate and other segment's EPS.
- Regulatory lag in Arizona remains a concern, although efforts are being made to address it through potential changes in rate-making policies.
- The Iowa Supreme Court's stay of the injunction on ITC's Tranche 1 projects introduces uncertainty, although the company remains optimistic about advancing these projects.
Q & A Highlights
Q: Can you provide an updated view of the electric and gas demand outlooks across your utilities? Are there any notable changes in demand outlook versus a year ago?
A: David Hutchens, President and CEO: The only significant change in gas generation is at UNS, where we are adding 600 megawatts of combustion turbines. We are seeing potential for additional load growth related to manufacturing and data centers, particularly in Arizona and Alberta. However, we haven't changed our integrated resource plan yet. ITC is also seeing interest from data centers in Iowa and Michigan.
Q: How are you seeing the progression of policymaking regarding the sharing of transmission costs and other costs related to new load?
A: David Hutchens, President and CEO: We are testing different options, especially in Arizona, where we can offer various rate options for new customers. The principle is that new load must pay for itself and should have a positive impact on customer affordability.
Q: Can the stay of the injunction on ITC's Iowa projects continue indefinitely if the Supreme Court does not review the judge's order?
A: Linda Apsey, CEO of ITC: Yes, the stay can continue indefinitely as the Supreme Court acts at its discretion. There is no requirement for them to act within a specific timeline.
Q: Is there any risk of stranded assets if the original filing position for ITC's Iowa projects is reverted in the future?
A: Linda Apsey, CEO of ITC: We have no concern of stranded asset risk. We are pursuing and investing in these projects according to MISO's tariff, and all associated expenses are under the premise that these projects were awarded to us.
Q: What is the regulatory outlook for Central Hudson, and will the new rates close the gap between the old achieved and allowed ROE?
A: David Hutchens, President and CEO: The new rates should help close the gap. The difference between allowed and earned ROE in the past was due to CIS implementation costs, which are now behind us. We expect a closer correlation between earned and authorized ROE going forward.
Q: What are your thoughts on the continued need for natural gas, especially in light of the recent reversal of the gas ban in Vancouver?
A: David Hutchens, President and CEO: The necessity for both electric and gas energy supply is becoming clearer for affordability and reliability. We believe in the ability to supply clean molecules and have seen positive developments like the approval for RNG in BC.
Q: How does the relief on the Iowa injunction impact your procurement and project timelines?
A: Linda Apsey, CEO of ITC: We are in the early stages of advancing LRTP 1 projects and have not yet received regulatory approval. We have strategic relationships with vendors and do not anticipate any supply constraints. There is no immediate impact on our planned spending.
Q: What are you advocating for in the regulatory lag docket in Arizona?
A: Susan Gray, CEO of UNS: The commission is considering either a forward test year or formulaic rate. We emphasized the formulaic rate in the workshop, but either format can work to reduce regulatory lag.
Q: What is the long-term vision for your ownership of the Watson-Kenya project?
A: David Hutchens, President and CEO: We see it as an anchor for additional transmission development in Ontario. We have no plans to divest and would love to build more transmission in the region.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
