Canada-based Fortis Inc. (TSX:FTS) said in a May 5 financial report that it made progress in several areas so far this year, including completion of a hydroelectric project in British Columbia.
On April 1, it completed construction of the C$900 million, 335-MW Waneta Expansion hydro facility ahead of schedule and on budget. Fortis has a 51% controlling ownership interest in the Waneta Expansion, with Columbia Power Corp. and Columbia Basin Trust holding the remaining 49%. Construction of the Waneta Expansion, which is adjacent to the Waneta Dam and powerhouse facilities on the Pend d’Oreille River, south of Trail, British Columbia, commenced late in 2010.
In another development, in March Fortis entered into an agreement to sell its non-regulated generation assets in Upstate New York and Ontario. The sale of these assets is expected to close in the second quarter of 2015 (New York assets) and the second half of 2015 (Ontario). A gain on the sale is expected to be recognized in earnings at the time of closing.
Construction of FortisBC’s Tilbury liquefied natural gas (LNG) facility expansion (called “Tilbury 1A”) in Delta, British Columbia, is ongoing. Key construction activities during the first quarter of this year focused on completion of the LNG tank concrete foundation and commencement of the tank wall and bottom steel plate. Tilbury 1A is estimated to cost approximately C$440 million, including an equity component of allowance for funds used during construction. It will include a second LNG tank and a new liquefier, both expected to be in service by the end of 2016. FortisBC is pursuing additional LNG infrastructure investment opportunities, including a further C$450 million expansion of Tilbury (called “Tilbury 1B”) and a C$600 million pipeline expansion to the proposed LNG facility by Woodfibre LNG in Squamish, British Columbia.
In December 2014, FortisBC got an order from the government of British Columbia effectively exempting these LNG projects from further regulatory approval by the British Columbia Utilities Commission. However, Tilbury 1B approval is conditional upon having long-term energy supply contracts in place for 70% of the additional liquefaction capacity, on average for the first 15 years of operation. FortisBC has a conditional contract with Hawaiian Electric that would meet this requirement, subject to the regulatory approval process in Hawaii. The pipeline expansion is conditional on Woodfibre LNG proceeding with its LNG facility.
In January 2015, upon expiration of the Springerville Unit 1 lease, subsidiary UNS Energy closed the purchase of an additional ownership interest in the Arizona coal unit for US$46 million. UNS Energy’s ownership interests in Springerville Unit 1 now total 49.5%. Additionally, upon expiration of the Springerville Coal Handling Facilities lease in April 2015, UNS Energy purchased the previously leased coal-handling assets for US$73 million.
Fortis is a leader in the North American electric and gas utility business, with total assets of approximately C$28 billion and fiscal 2014 revenue of C$5.4 billion. Its regulated utilities account for approximately 93% of total assets and serve more than 3 million customers across Canada and in the United States and the Caribbean. Fortis owns non-regulated hydroelectric assets in Canada, Belize and Upstate New York. Its non-utility investment is comprised of hotels and commercial real estate in Canada. Year-to-date March 31, 2015, its electricity distribution systems met a combined peak demand of 8,455 MW and its gas distribution system met a peak day demand of 1,198 terajoules.
Following a decade of growth driven mainly by acquisitions, Fortis said that it has now entered a period of significant organic growth. The corporation’s enterprise-wide capital program is expected to surpass C$2 billion in 2015.