Fortis’ (NYSE:FTS) capital expenditures for 2017 are expected to be about $3bn, Fortis President and CEO Barry Perry said on Feb. 16 during the company’s 4Q16 earnings call.
While the bulk of the projects in the forecast are small in nature and generally represent less than $50m each, Fortis does have a handful of major capital projects in the plan, he said.
In 2016, he said, Fortis invested $1.9bn in capital, excluding ITC Holdings, which Fortis acquired last year. Including ITC, from the date of the acquisition, Fortis invested an additional $200m, which brought the total for the year to $2.1bn, he said.
Planned capital expenditures for 2017 through 2021 are forecast to be about $13bn, consisting of highly executable, low-risk, and diversified projects, Perry said.
“Fortis, like most utilities, has a declining capital budget curve in the outer years of its five-year capital plan,” he said. “This reflects the inherent challenges with projecting capital projects over a five-year horizon and, as a result, we are focused on the three-year capex and rate base growth rates. For 2016, including ITC, consolidated mid-year rate base was $24bn. Consolidated mid-year rate base is projected to approach $26bn in 2017, and $30bn by 2021. Over the three-year period, mid-year rate base is forecasted to increase from $24.3bn in 2016, to $28.3bn in 2019.”
At ITC, the Multi-Value Projects (MVPs) are underway and consist of four regional electric transmission projects that have been identified by the Midcontinent ISO (MISO) to address system capacity needs and reliability in various states, he said.
“In 2017, we plan to spend $354m on these projects, with three of the MVPs scheduled to be completed by the end of 2018, and the fourth MVP scheduled for completion by 2023,” Perry said.
An ITC spokesperson on Feb. 16 told TransmissionHub that those projects are:
- MVP 3, which is located in southwest Minnesota/northwest Iowa, and has a target in-service date of 2018. The project consists of three segments: Lakefield to Huntley, which is a 55-mile, 345/161-kV double circuit line in southern Minnesota; Huntley to Ledyard, which is a 24-mile, 345/161-kV double circuit line in southern Minnesota (17 miles) and northern Iowa (seven miles); and Ledyard to Kossuth, which involves 20 miles of 345-kV line (MidAmerican Energy has an additional segment of line from the Kossuth substation to the west). The project also includes the new Huntley substation and upgrades to the Lakefield substation
- ITC’s portion of MVP 4, which is located in northwest/north central Iowa, and has a target in-service date of 2018. The project consists of four line segments: Ledyard to Colby, which is a 61-mile, 345/161-kV double circuit or 345/69-kV double circuit line in northern Iowa; Colby to Killdeer, which is a 12-mile, 345/161-kV double circuit line in northern Iowa; Killdeer to Hampton Tap, which is a 29-mile 345/161-kV double circuit line in northern Iowa (this line connects to the MidAmerican Energy line near Hampton, Iowa; and ITC’s portion of Blackhawk to Hazleton, which is a 12-mile, 345/161-kV double circuit line in eastern Iowa. The project includes three new ITC substations – Ledyard, Colby and Killdeer
- MVP 7, which is located in south central Iowa (Ottumwa to Iowa/Missouri border), and has a target in-service date of 2018. The project will be a new 40-mile, 345-kV line with segments double circuited with 69-kV line. ITC will own about 13 miles of line, with MidAmerican Energy owning the remaining segment
- MVP 5 (Cardinal to Hickory Creek), which is located in northeast Iowa across the Mississippi River into southwest Wisconsin into south central Wisconsin, and has a target in-service date of 2023. The project consists of a new, approximately 125-mile, 345-kV line; ITC will own 45.5% of the line; American Transmission Company will own 45.5%; and Dairyland Power Cooperative will own 9%. The line’s western terminal is the existing 345/161-kV Hickory Creek substation in eastern Iowa that will be expanded to accommodate the new Hickory Creek to Cardinal transmission line
During the call, Perry noted that work continues on the 1,000-MW, bi-directional, high-voltage direct current, underwater ITC Lake Erie Connector transmission line, which, according to ITC, would provide the first direct link between the markets of the Ontario Independent Electricity System Operator and PJM Interconnection.
Perry said that the “Presidential Permit from the U.S. Department of Energy” that the company recently received, for instance, gives “us increased confidence in the potential of this project.”
As TransmissionHub reported, a report from Canada’s National Energy Board (NEB) recommending issuance of a certificate of public convenience and necessity for the ITC Lake Erie Connector transmission line is before Canada’s Governor in Council for final approval of a certificate, with a decision expected by April 19.
“There are still key milestones to be met, not the least of which is completing long-term contracted transmission service agreements, but we are encouraged by the progress,” Perry said during the call.
He also noted that the Wataynikaneyap transmission line “continues to advance in Ontario,” and that the company recently reached an agreement with Renewable Energy Systems in Ontario to acquire its ownership interest in the partnership.
“The transaction is subject to approval by the [Ontario Energy Board, or] OEB,” he said, adding, “As a result, our ownership interest in the partnership will increase to 49%, with the remaining 51% held by 22 First Nation communities. Our participation in this project highlights our commitment to our collective mandate with First Nations to connect remote communities to the provincial electric transmission grid.”
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 Feb. 16 said that its net earnings attributable to common equity shareholders for 2016 were $585m, or $1.89 per common share, compared to $728m, or $2.61 per common share, for 2015. For 4Q16, net earnings attributable to common equity shareholders were $189m, or 49 cents per common share, compared to $135m, or 48 cents per common share, for the same period in 2015, the company said. Fortis also said that year-over-year results were impacted by its acquisition of ITC, and gains on the sale of non-core assets in 2015.
On an adjusted basis, net earnings attributable to common equity shareholders for 2016 were $721m, or $2.33 per common share, an increase of 22 cents per common share, or 10%, compared to 2015, the company said. On an adjusted basis, for 4Q16, net earnings attributable to common equity shareholders were $246m, or 64 cents per common share, an increase of 13 cents per common share, or 25%, compared to the same period in 2015, Fortis said.