Fortis (FTS) Q3 FY25 earnings call: guidance and Q&A

Combining ~USD 1.5B-2B TEP generation and ~$300M Tilbury upside implies ~$2.5B-3B (~100 bps of rate base CAGR) — why might these not come through soon enough to include in base estimates?

David welcomed the optimism but said there is 'a lot of wood to chop': agreements with counterparties, ability to build on the required timeline, siting/queue work, customer credit and rate protections, and regulatory processes must all clear; Tilbury still needs the EA. Fortis does not add projects to the plan until signatures are in hand.

“we don't drop those things into our capital plan until we have signatures on the dotted line.”

asked by Maurice Choy · answered by David Hutchens

When could the USD 1.5B-2B of new Arizona generation be secured and in service given long lead times?

Customers want it 'tomorrow,' but siting, permitting and building generation take time; the mix will include fast-to-build storage and renewables plus capacity resources (combustion turbines or combined cycle). Combustion turbine availability is the critical lead item, but management believes the build is doable within the 2026-2030 window, with the first 300 MW targeted online in 2027.

“depending on availability of, say, combustion turbines, which would probably be the critical lead item on that. We still think that, that's doable to get that done in that next 5-year time period.”

asked by Robert Hope · answered by David Hutchens

How many opportunities make up the 8 GW, and could any be sanctioned in the next 12 months?

David pointed to ITC's largest customers (DTE, CMS, Alliant) and turned it to Linda Blair, who said there is heavy activity and ongoing planning studies but declined to give timing, calling it premature to speculate on which projects or when. The prospective queue continues to grow and management remains optimistic about further announcements.

“it's premature for us to speculate on which projects were or exactly when. But I would say the queue continues to get larger, and we remain optimistic.”

asked by Robert Hope · answered by Linda Blair

Any plans to initiate an EPS CAGR/earnings guidance?

Management remains happy with the rate base, capital, funding and dividend guidance it provides and continues to evaluate earnings guidance. The key gating item is the outcome of the TEP rate case — formula rates would provide a steadier earnings outlook (less Arizona variability) and more visibility, though management stopped short of committing to guidance even if formula rates are obtained.

“Formula rates will provide a much steadier earnings outlook for us... that's one thing that's keeping us from giving it now.”

asked by Benjamin Pham · answered by David Hutchens

Is the main constraint on higher spend just equipment availability and permitting, since affordability and balance sheet don't seem to be?

David reframed affordability positively: large-load customers, if structured correctly in a vertically integrated utility, make 'growth pays for growth' — improving reliability with neutral or downward rate impact for existing customers. Constraints are permitting, siting, community support, and resource choices (Arizona shifting data centers to air cooling to remove the water argument).

“when you have the control over the full value chain like you do in a vertically integrated utility, you can make sure that doesn't happen.”

asked by Mark Jarvi · answered by David Hutchens

What remains to approve the initial 300 MW, and what is needed to reach FID on the next 300 MW?

Susan Gray said the biggest approval on Fortis's side is ACC approval, expected by year-end; the data-center customer mainly needs a state well-dig permit on county land. Anything beyond the first 300 MW requires building new generation and remains under contract negotiation, implying a more extended timeline dependent on the chosen resource mix, which the customer heavily influences and pays the incremental cost for.

“the biggest approval that we need is that Corporation Commission approval, which we expect to get by the end of this year.”

asked by Mark Jarvi · answered by Susan Gray

Does the 5-year funding plan contemplate further hybrid issuances, and roughly how much?

Jocelyn Perry said no further hybrids are included in the plan, but capacity remains; should the above-plan growth materialize, Fortis would likely explore the hybrid market, and may do so regardless depending on pricing relative to other instruments.

“we don't have any further hybrid included, but we do have capacity.”

asked by Mark Jarvi · answered by Jocelyn Perry

Is the 12.4% average cash-flow-to-debt where you want it, and how much dry powder exists to flex capex or absorb CAD weakness?

Perry confirmed the 12.4% five-year average and noted the metric pushes ~100 bps above the 12% threshold in the latter years — her targeted cushion of roughly 75-100 bps. The improvement versus the prior plan came largely from asset dispositions and the DRIP, giving flexibility to finance above-plan projects and absorb FX weakness.

“100 basis points is actually a lot of cushion. So I feel comfortable really having like 75 to 100 bps above the threshold of 12%, and we're getting there.”

asked by Patrick Kenny · answered by Jocelyn Perry