Fortis’ (NYSE:FTS) capital expenditures over the five-year forecast period through 2021, total about $13bn, consisting of highly executable, low-risk, and diversified projects, Fortis President and CEO Barry Perry said on Nov. 4 during the company’s 3Q16 earnings call.
“Our five-year capital program consists of several major capital projects, including regional transmission projects at ITC, and system capacity and pipeline upgrades at FortisBC Energy,” he said. “Capital spending at ITC is expected to be approximately $3.6bn, or 28% of the consolidated five-year capital program.”
Speaking of Fortis’ acquisition of ITC Holdings, Perry said that the transaction “further diversifies our business and positions us for continued growth. The acquisition of ITC is the largest in the history of Fortis, dramatically increasing our North American footprint.”
Noting that Fortis is proud of its acquisition record and the value creation it has brought to shareholders, Perry said: “[Y]ou shouldn’t expect another acquisition any time soon. We need to integrate ITC and have a full year of earnings to illustrate the benefits of the transaction.”
He also noted that through Sept. 30, Fortis has invested $1.4bn in capital projects, and that capital expenditures for full-year 2016 are forecast to be about $2.1bn, an increase of $200m from the original forecast of $1.9bn. The increase is primarily due to expected capital investments at ITC, he said.
Perry also noted that capital expenditures at FortisAlberta for 2016 are expected to be approximately $40m lower than the original forecast of $441m, primarily due to lower Alberta Electric System Operator contributions, and as a result of the current economic downturn in Alberta.
He noted that Fortis is pursuing the ITC Lake Erie Connector project.
As noted on ITC’s website, the ITC Lake Erie Connector is a proposed 1,000 MW, bi-directional, HVDC underwater merchant transmission line that would provide the first direct link between the markets of the Ontario Independent Electricity System Operator and PJM Interconnection.
“We are currently in the process of engaging with potential offtakers to secure transmission service agreements,” Perry said during the call. “We also have other significant opportunities, including our transmission investment opportunities at ITC, investment at New York Transco to address electric transmission constraints in New York, and the Wataynikaneyap transmission line” in Ontario.
According to the website of Wataynikaneyap Power, a transmission company owned by 22 First Nation communities, the first phase – a new 300-kilometer line – of the Wataynikaneyap Transmission Project would reinforce electricity supply into Pickle Lake. The second phase would connect 17 First Nation communities north of Pickle Lake and Red Lake with an estimated 1,500 kilometers of new transmission line, the site noted.
According to the site, Wataynikaneyap Power has partnered with FortisOntario and RES Canada to develop and operate the transmission facilities, and the First Nations would remain majority owners and become 100% owners over time.
Fortis on Nov. 4 said that net earnings attributable to common equity shareholders for 3Q16 were $127m, or 45 cents per common share, compared to $151m, or 54 cents per common share, for 3Q15. On a year-to-date basis, earnings were $396m, or $1.40 per common share, compared to $593m, or $2.13 per common share, for 2015, the company said, adding that results reflect acquisition-related expenses associated with ITC in 2016, and gains on the sale of non-core assets in 2015.
On an adjusted basis, net earnings attributable to common equity shareholders for 3Q16were $154m, or 54 cents per common share, an increase of $9m, or 2 cents per common share, over 3Q15, Fortis said. On a year-to-date basis, adjusted earnings were $475m, or $1.67 per common share, an increase of $28m, or 6 cents per common share, over 2015, the company said.