Good morning, everyone. Thank you for standing by. My name is Joelle, and I will be your conference operator today. Welcome to Fortis Q3 2024 Earnings Conference Call and Webcast. [Operator Instructions] At this time, I would like to turn the conference over to Stephanie Amaimo. Please go ahead, Ms. Amaimo.

Thanks, Joelle, and good morning, everyone. Welcome to Fortis' Third Quarter 2024 Results Conference Call. I'm joined by David Hutchens, President and CEO; Jocelyn Perry, Executive VP and CFO; and other members of the senior management team as well as CEOs from certain subsidiaries. Before we begin today's call, I want to remind you that the discussion will include forward-looking information, which is subject to the cautionary statement contained in the supporting slide show. Actual results can differ materially from the forecast projections included in the forward-looking information presented today. All non-GAAP financial measures referenced in our prepared remarks are reconciled to the related U.S. GAAP financial measures in our third quarter 2024 MD&A. Also, unless otherwise specified, all financial information referenced is in Canadian dollars. With that, I will turn the call over to David.

Thank you, and good morning, everyone. The third quarter was another solid quarter in the books for Fortis. Operationally, we continue to deliver safe and reliable service to our customers. And financially, our results continue to demonstrate the success of our regulated growth strategy. Through September, we invested $3.6 billion in our energy systems, and we expect capital expenditures of $5.2 billion for the year. During the quarter, we also announced our 2025 to 2029 capital plan of $26 billion, supporting average annual rate base growth of 6.5% through 2029. Additionally, in September, our Board of Directors declared an increase in the fourth quarter dividend of approximately 4% and extended our 4% to 6% annual dividend growth guidance to 2029. And beyond the plan, momentum continues to build on the tranche 2.1 projects associated with the MISO long-range transmission plan as well as other investment opportunities. As mentioned, our annual 2024 capital program is now expected to be $5.2 billion or $400 million higher, driven mainly by timing of expenditures associated with the Eagle Mountain pipeline project in British Columbia. Our new 5-year capital plan of $26 billion is $1 billion higher than the previous 5-year plan, driven primarily by projects associated with the MISO LRTP and resiliency investments at ITC as well as growth at FortisAlberta. The capital plan remains low risk and highly executable with nearly all being regulated investments and only 23% consistent of major capital projects. The 5-year plan supports our transition to cleaner energy resources and includes investments that enhance and strengthen our infrastructure and support customer growth. As we execute our capital plan, we remain keenly focused on investing in the resiliency of our energy systems while maintaining customer affordability. We continue to control operating costs and support programs such as energy efficiency and…

Thank you, David, and good morning, everyone. For the third quarter, reported and adjusted EPS were $0.85, $0.01 higher than adjusted EPS last year. Year-to-date September reported and adjusted EPS were $2.45, $0.08 higher than adjusted EPS last year. Key drivers of growth for the third quarter were rate-based investments across our utilities and strong earnings in Arizona underscored by new customer rates that went into effect in September 2023. EPS growth quarter-over-quarter was impacted by timing of both the favorable cost of capital decision in British Columbia in September 2023 and the disposition of Aitken Creek in November 2023. And finally, unrealized gains on total return swaps, reflecting changes in the corporation's share price year-over-year were largely offset by higher finance costs. The chart on Slide 10 highlights the EPS drivers for the third quarter by segment. Our U.S. electric and gas utilities contributed a $0.05 EPS increase quarter-over-quarter, driven by UNS Energy. The increase at UNS was mainly due to new customer rates, higher production tax credits associated with the Oso Grande wind facility and an increase in the market value of investments that support retirement benefits. These items were moderated by labor-related inflationary increases. At Central Hudson, the EPS contribution was comparable to the third quarter of 2023. The favorable impact of rate base growth and a higher ROE effective July 1 were offset by the timing of operating costs in comparison to the related recovery in new customer rates effective July 1. At ITC, the $0.02 EPS increase reflects rate base growth, partially offset by higher finance costs. The EPS contribution from our Western Canadian Utilities segment was $0.04 lower for the quarter. As you'll recall, we recognized a favorable $0.05 retroactive adjustment in the third quarter of last year related to the cost of capital…

Thank you, Jocelyn. We are very pleased with our operational and financial results so far in 2024 and the advancements made on the regulatory front, particularly at ITC. Looking ahead, we are focused on executing our new 5-year capital plan as well as securing growth opportunities beyond the plan. Delivering reliable and affordable energy is at the heart of what we look to do for our customers, while providing dependable yet strong total returns for our shareholders. That concludes my remarks. I will now turn the call back over to Stephanie.

Thank you, David. This concludes the presentation. At this time, we'd like to open the call to address questions from the investment community.

[Operator Instructions] Your first question comes from Rob Hope with Scotiabank.

I want to talk about the potential upside levers on the capital plan that you highlighted specifically in Arizona. It looks like more in the near term and longer term in MISO. How do you think about funding it, just given where you are on the balance sheet? And so if you do see an uptick in near-term capital requirements, so could that then push more on the ATM? Could you look at asset sales? Or can you maybe broadly think about how you're going to finance it?

Sure, Rob. Let me kick that over to Jocelyn.

Yes, Rob, it's hard to say, right, in terms of how we're specifically going to fund these because it all depends on timing of when these projects come to play. But the one thing we have said for a while now is that we're committed to keeping our balance sheet in the position that it's in today. We've done a lot to bring it to where it is today. So we don't plan to walk that backwards. I think you're right. I mean we do have the ATM available to us. And I guess, I'll say what I always say which is it all goes back on the table. And I hope that, that's the problem that we have in terms of trying to fund incremental capital. But everything goes back on the table, but in proceeds, we do have the ATM available to give us immediate flexibility. But we don't need it right now.

Appreciate that. And then sticking with the theme of upside growth. Dave, you mentioned Arizona a number of large kind of we'll call it, potential demand increases in electrical load. When you think about the data center opportunity or even large users of electricity there, how do you think about adding new capacity versus just the poles and wires and investment? And could you see some of these large users of electricity potentially colocate some of their own generation there? Or would that be something that you'd prefer to be done on the product system?

So I would say generally, knowing in the footprint here in Arizona, there's probably very limited co-location type opportunity. So -- and plus when you think about how condensed our TEP system is down in Southern Arizona, it would probably make more sense to just connected to the grid and supply it from a grid perspective than co-location. The only really remote plants that we have that you can consider co-location or a couple of combined cycles, one in New Mexico and and another one in Arizona that isn't necessarily all that conducive to co-location. And of course, the coal plants that we have already shutdown time frames for. So overall, we're looking at resources in every spot that we currently have resources to replace them like, like-for-like generation maybe and where we have some of the coal renewables, storage, et cetera, that we can add across the entire grid. So we're looking at it more from a portfolio perspective than sort of what you're seeing in these conversations around co-location. Because obviously, the generation has to have the things that we need, which are depending on the type of generation, obviously, land, transmission, interconnection; then if it's natural gas generation, we also need water and gas pipelines. And then, of course, you throw on top of that the fiber access that's needed for data centers and you can kind of define that pot of available sites. But keeping it wide open right now for sure.

Your next question comes from Maurice Choy with RBC Capital Markets.

Good that the data center team and ask for a little bit more elaboration on your prepared remarks at TEP and ITC. So at TEP, I know that there is firm resource capacity of about 3,000 megawatts today. Could you see a situation where this doubles or maybe even triples if data center will arise? And at ITC, how many of these big cedar load expansion projects are there, do you think?

So yes, there's a lot in the queue to speculate as to how much of that is actually going to come down to getting customers to locate here. There's probably a fair bit that have gotten our Q that are in other people's SKUs. There's obviously a bit of an early rush to get data centers in places that have existing capacity. And that, I think, gives you a bit of a leg up for longer-term potential growth. So yes, there is big potential. I wouldn't want to put it in like the multiple of current system peak, but it's pretty darn substantial. So we -- and then, of course, on a smaller system like TEP, a larger data center would have a bigger impact than maybe on a on a broader -- on a much larger system from a percentage perspective. Well, I guess that's just obvious math, sorry about that. But that's -- but it does change the way that we have to operate the system, too, when you get a big load on that. But I also got to emphasize that when we talk about these data center opportunities, well as data centers or other manufacturing opportunities that we see in the Q, these are the potential not just in good investment opportunities, but an overall good story for our -- the rest of our retail customers, right, because this is bringing in a big large facility that take -- that uses a lot of energy to spread those fixed costs that we have in our system across much more megawatt hours. So that allows us to hopefully have a downward impact on our customer rates. So that's what we're shooting for. And as far as ITC, Linda probably have a little bit better view than me on the rest of the potentials like we see it Big Cedar in Iowa. But we have seen that just go from the a little bit of conversation that we had at the beginning of the year around the data center that was -- had 2 phases going from 300 up to 600. And now we're talking about one of these have a 1,600-megawatt type sites. Those are the ones that really can dramatically change the view of some of the smaller utilities and the footprints. Linda, you got any color on additional opportunities up there.

Yes. I would just say, I mean, I think similar theme, I think it's difficult to specifically say what the kind of opportunity set is. However, there is no doubt, right, both whether it's in Iowa or here in Michigan. Obviously, there's a lot of different potential prospective customers that we are working with. We're knocking on -- are knocking on doors. It's one of those things that, obviously, they have multiple options. Some of them are waiting for potential legislation. And so it's premature to specifically say or quantify what those are. But I would say directionally speaking, there is no doubt there are some other significant load potentials that exist. But we're just not at a point that we can specifically identify them or announce that they are confirmed.

Understood. Maybe just to finish up, I'm sure someone's going to ask you about U.S. elections. So I want to turn your attention to the other election that just finished or somewhat finished here in BC. Strength the majority for the NDP, but the green party may have some kind of influence. Any thoughts on -- for BC gas distribution growth prospects under this new political landscape for the next coming 4 years?

Well, Maurice, Roger is sitting right next to me, who's our expert from BC to answer that question. Roger Dall’Antonia: Maurice. Of course, the BC election just as important as one happening today for some of us. I'd say that if there was a minority with the greens having more influence, it might have been a bit of a different answer. But the NDP still maintains a majority, obviously, reduced majority. I think there was a focus on affordability on other issues, less than climate given past election. So I would say that we don't see much change going forward. I think if you look at the power in BC, energy environment plan that was published in July, that would be my best guess as to the near-term road map where they're going to go on energy. There will be still a focus on expansion of electrification opportunities. We launched our own request for energy in our electric service territory following BC Hydro's call for power. I don't see a near-term change to the direction of the gas infrastructure opportunity. We just filed our Tilbury storage facility plan last week and the expectation is that they are going to be focused on promoting their power in BC plan, which they publish in the summer.

Your next question comes from Ben Pham with BMO. .

On your CapEx program, part of that increase was for Alberta. And I'm just wondering if you can provide us an update on how you see -- how have you seen rate base growth trending? And the near-term and long-term outlook on those Alberta franchise?

Yes. We're seeing some good upward growth projections, and the short term here. When you look at our 5-year capital planet for FortisAlberta, we see a 5 -- a little over 5%, 5.2% rate base CAGR, which is stronger than it's been in the past, not as strong as it's been in the very -- say, 10 years ago. But it's always been a good strong growth jurisdiction. So we're seeing customer growth there. We're seeing additional investment opportunities in obviously, in the distribution system to connect those customers. We're hoping to see some knock-on impacts from things like data center growth that will -- while we typically won't have -- we won't serve data centers from a generation or transmission perspective. But depending on what voltage they hook up at and then also some overall growth opportunities that economic growth in that area brings. We'll have some kind of secondary impacts. And then we're also seeing growth opportunities in some of the other kind of bigger projects that we're focused on like our AMI project up there as well as additional investments in wildfire technology from a rate base perspective.

Okay. That's good to hear. And maybe on the ITC is the MISO ROEs, is that pretty much in terms of incrementals going forward, is that pretty much late for us? And then, are you hearing anything on the intent of and timing from the FERC? .

Yes. So it's a bit TBD to see who will throw in for rehearings on that order. I think we're pretty darn happy with it. I think it landed in the right spot. They pulled out the risk premium left everything else intact. It was not a big delta to the ROE for us. So that was definitely a positive. What was the second part of your question? .

That matters.

Yes, that's still -- yes, that's still back burner. We haven't heard anything from FERC on any scheduled discussion on that as well. So we have not seen anything that we would concern us about that.

Your next question comes from Mark Jarvi with CIBC Capital Markets.

Just coming back to the emerging retail load increases in Arizona. At what point would you have clarity in terms of being able to define the scope and timing of that? And then I think, Dave, you said something about require any sort of different tariff structures to protect existing customers. Is this going to be a little bit of a longer process before if you can put this into the backlog in both CapEx until you have that sort of regulatory clarity?

It will take us some time. I think once we get to the stage of getting agreements in principle, that's the first step that you would hear from us on, okay, we've got this customer. We've got an MOU. This is, in essence, what we plan broader -- from a big picture perspective and then start figuring out what the CapEx would be required, and on very high-level basis. And then draw sort of that time line of what we would need to do to bring that deal to kind of a final status ready to start start building. That would require not just the contractual agreements between us and that counterparty. But typically, and I'm expecting that we would have maybe a special tariff for serving them because these -- we don't have a specific data center type service or tariff. So we would want to make sure that we got an agreement that covered the costs. And we've done this for large customers in the past, and we've done it not just in Arizona, but in BC, where we create these sort of one-off tariffs to make sure that we have the protections needed, especially if we're building a large amount of infrastructure for them. So that can be -- that's a regulatory process, but I wouldn't expect it to be a very long one because it feels that Arizona and our regulators are very supportive of this type of growth in our area. And obviously, when it has a positive impact for our customers, we can get stuff done extremely quickly. So I don't expect it to be like a long drawn-out regulatory process. But would be a process nonetheless. But that would also be done in parallel with the development, supply chain and the rest of the things that you would have to do to bring it online.

Is the expectation that you'd be able to sort of put them on the table and provide some clarity at some point in 2025? And then what is the investment in rebased growth within the current 5-year period?

Yes. So yes, I think 2025 is a reasonable period, mostly because that's a pretty broad target there. You're asking me to pick a quarter in 2025, be a bit tougher. But yes, I think this would be something that we would have a fair level of clarity and for sure, that would be our goal.

And then in terms of timelines to put capital to work and its impact to the actual growth in the current 5-year...

Yes. Yes. So we would see probably -- we would see some -- given how fast these data centers want to move. And given, of course, with a caveat of getting the things that we need from a supply chain perspective, this would definitely have some impact in the 5-year period. And I can't swear that it would have -- it would have a complete impact in the 5-year period, but probably a significant impact within -- because that's -- if we have an agreement 1 year from now and then they would be probably looking at a 2- to 3-year type time frame from their construction standpoint. I think they typically put out about a 2-year time frame for them to be able to stand up a data center, so we'd be really rushing to get that done. But again, that has to do with all the rest of the timing related to supply chain, permitting if you and siting if you have to put in a new generation of support, et cetera.

Understood. And then Jocelyn, just a follow-up on Rob's question about funding. Even absent new investments this year, some higher spend pull forward, FX. How are you thinking where you are in terms of balance sheet buffer? And is there something where you have to maybe tap the ATM a little bit sooner just given how timing of CapEx is flowing through the business this year?

No, Mark. We don't see any need to do anything different than what we've outlined with the changes that we're seeing. I mean, the pull forward of the wood fiber project is not changing our funding plan. So right now, it's steady with the plan that we have in place. The ATM is available, but there is no expectation that we need to tap for anything we see today or anything we see today.

[Operator Instructions] Your next question comes from Patrick Kenny with National Bank Financial.

Maybe just to dive a little bit deeper into the Alberta footprint. And as you mentioned, even though you don't have the same vertically integrated model as you do in Arizona, just given the -- some of the big numbers we've seen thrown around in terms of the opportunity set around co-location opportunities, coming into the province. Just how should we be thinking about the rate base upside as you look at connecting some of these behind the meter customers for their redundant power needs?

Yes. Let me take that. I'll kick that over to Janine to add a little color. Obviously, as you know, Alberta has been extremely receptive to the conversation around data centers. They've got their bring your own power kind of policy up there. But as far as the transmission and distribution investments, Janine, do you want to opine on that a little bit?

Yes, for sure. It's certainly an evolving story here in Alberta as the province has been very vocal in terms of wanting to attract them, yet still going through the process of understanding how we're going to support them. So we've been certainly on a bit of an education journey as to the importance of interconnecting these loads to the grid to ensure the reliability of power that a lot of these customers will require. So clearly, there's a balance between supporting a fossil fuel-based economy which this province would still want to do and why it references gas, for example, as backup power supplies for these types of data centers. But also looking at the reliability -- from the liability aspect, the interconnection with the grid is another consideration, and that's where we've focused in terms of understanding how we can best support the customer from a distribution perspective, and understanding what the implications for those behind-the-meter types of generation can mean in terms of accessibility and reliability. So lots of conversations going on. We're certainly front and center with discussions with customers as well as with the government in terms of how policies might be determined around these. And waiting to see how some of these might actually interconnect and what they might bring when they decide to come to Alberta.

Okay. That's great color. And then maybe for Jocelyn, I know you've touched on it already, but with this rate base or capital plan upside, the potential for an even weaker Canadian dollar outlook going forward. Just curious if there's been any change to your thoughts in trying to lock in the longer-term cash flows at a higher FX rate as well? Or is it just status quo on the currency hedging policy for now?

It's never status quo, Patrick. We're always looking at the market. We did extend our hedging program to be 2 years out for our U.S. cash flows a little while ago, and we're still there, but it's something we are looking at. And we're definitely taking you've stepped it up quite significantly in terms of just marking in the current rate. So no, it's an evolving item that we're always evaluating. But right now, we're 2 years out in our U.S. cash flows.

Your next question comes from Michael Sullivan with Wolfe Research.

Couple more questions on Arizona. Just how do we think about the time line for implementation of whatever may come of the remainder of these workshops? Yes, what is the process from here?

Yes, let me turn it over to Susan since we're in Arizona this week for their Board meetings, we've got her right here in person to answer that.

Thanks for the question. So as you probably know, on October 3, we had a recent workshop, brought in a couple of FERC representatives to talk about how the formula rate works for FERC, and -- so the commission may hold another 1 to 2 workshops, but I think they're motivated to get something done fairly soon. I'd say late this year or early next year. So I think we're getting pretty close to a solution. And I think that's going to be good for our customers in terms of more gradual impact on rate increases and obviously good for us in terms of regulatory lag. But I think we're narrowing in on a solution pretty quick here.

Okay. Great. And then I think just in the spirit of elections here, I think there's one in Arizona as well. How do you think about the range of candidates there and just what that could mean for regulation in the state?

Go ahead, Susan.

Yes. So there's three open seats. The Chairman is not rerunning, so that's a Republican open seat. Commissioner Marks Petersen is running for reelection; and then Commissioner Tovar is not running for reelection. So three open seats, three candidates on each party. Your guess is as good as mine on how that's going to turn out today.

Okay. And then just pivoting to Iowa. I think there's been some talks out there of potentially the Duane Arnold Nuclear Plant coming back. Would you all have any involvement with that, if that were to happen?

On the nuclear side, no. And Linda, I don't -- I'm not sure if that would have any impact on the LRTP, like maybe in 2.2 phase because that obviously would be putting a big additional generator back online, which might have to go back into the calculus of what's needed from a transmission perspective. But Linda, have you guys thought about if that's got any impact on you all?

Yes. I mean, obviously, we're tracking and monitoring some of the conversation. Remember, the existing -- there's existing transmission infrastructure that is still there and in place that was there to serve the Duane Arnold facility when it was in operation. But as Dave mentioned, certainly on a going-forward basis, as we continue to invest and build out the regional transmission infrastructure, certainly bringing new generation back online certainly has an impact on system dynamics. And so it's certainly something that we would have to study to determine what impact, if any, it has on the power flows, obviously, delivering load. And so I would say it's TBD, but I would say there is some pretty robust transmission infrastructure that currently serves that location.

Okay. And just to be clear, that's your transmission infrastructure or someone else's?

That is ours, ITC.

As there are no further questions, I would like to turn the call back over to Ms. Amaimo.

Thank you, Joelle. We have nothing further at this time. Thank you for participating in our third quarter 2024 results conference call. Thank you for your time, and have a great day.

Thank you for participating. This concludes today's conference call. You may now disconnect.