EX-99.2 3 a2022q3exhibit992fs.htm EX-99.2 Document
Exhibit 99.2
Interim Financial Statements











FORTIS INC.

Condensed Consolidated Interim Financial Statements
For the three and nine months ended September 30, 2022 and 2021
(Unaudited)
1
FORTIS INC.SEPTEMBER 30, 2022 QUARTER REPORT
Interim Financial Statements
CONDENSED CONSOLIDATED INTERIM BALANCE SHEETS (Unaudited)
FORTIS INC.
September 30,December 31,
As at (in millions of Canadian dollars)20222021
ASSETS
Current assets
Cash and cash equivalents$395 $131 
Accounts receivable and other current assets (Note 5)1,808 1,511 
Prepaid expenses195 116 
Inventories 690 478 
Regulatory assets (Note 6)739 492 
Total current assets3,827 2,728 
Other assets 1,253 955 
Regulatory assets (Note 6)3,291 3,097 
Property, plant and equipment, net41,549 37,816 
Intangible assets, net 1,477 1,343 
Goodwill 12,687 11,720 
Total assets$64,084 $57,659 
LIABILITIES AND EQUITY
Current liabilities
Short-term borrowings (Note 7)$232 $247 
Accounts payable and other current liabilities 2,832 2,570 
Regulatory liabilities (Note 6)509 357 
Current installments of long-term debt (Note 7)2,570 1,628 
Total current liabilities6,143 4,802 
Regulatory liabilities (Note 6)3,281 2,865 
Deferred income taxes 4,009 3,627 
Long-term debt (Note 7)25,929 23,707 
Finance leases341 333 
Other liabilities 1,430 1,409 
Total liabilities41,133 36,743 
Commitments and contingencies (Note 13)
Equity
Common shares (1)
14,558 14,237 
Preference shares1,623 1,623 
Additional paid-in capital8 10 
Accumulated other comprehensive income (loss)1,300 (40)
Retained earnings3,635 3,458 
Shareholders' equity21,124 19,288 
Non-controlling interests 1,827 1,628 
Total equity22,951 20,916 
Total liabilities and equity$64,084 $57,659 
(1)    No par value. Unlimited authorized shares. 480.3 million and 474.8 million issued and outstanding as at September 30, 2022 and December 31, 2021, respectively.
See accompanying Notes to Condensed Consolidated Interim Financial Statements
2
FORTIS INC.SEPTEMBER 30, 2022 QUARTER REPORT
Interim Financial Statements
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF EARNINGS (Unaudited)
FORTIS INC.
QuarterYear-to-Date
For the periods ended September 30 (in millions of Canadian dollars, except per share amounts)
2022 2021 2022 2021 
Revenue $2,553 $2,196 $7,875 $6,865 
Expenses
Energy supply costs804 624 2,684 2,066 
Operating expenses630 594 1,958 1,855 
Depreciation and amortization422 380 1,246 1,121 
Total expenses1,856 1,598 5,888 5,042 
Operating income697 598 1,987 1,823 
Other income, net (Note 9)19 37 96 129 
Finance charges 280 244 804 751 
Earnings before income tax expense436 391 1,279 1,201 
Income tax expense65 49 185 167 
Net earnings$371 $342 $1,094 $1,034 
Net earnings attributable to:
Non-controlling interests$29 $31 $86 $83 
Preference equity shareholders16 16 48 48 
Common equity shareholders326 295 960 903 
$371 $342 $1,094 $1,034 
Earnings per common share (Note 10)
Basic$0.68 $0.63 $2.01 $1.92 
Diluted$0.68 $0.62 $2.01 $1.92 
See accompanying Notes to Condensed Consolidated Interim Financial Statements

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)
QuarterYear-to-Date
For the periods ended September 30 (in millions of Canadian dollars)
2022 2021 2022 2021 
Net earnings$371 $342 $1,094 $1,034 
Other comprehensive income (loss)
Unrealized foreign currency translation gains (losses) (1)
1,165 337 1,452 (40)
Other (2)
25 (7)49 (3)
1,190 330 1,501 (43)
Comprehensive income$1,561 $672 $2,595 $991 
Comprehensive income attributable to:
Non-controlling interests$154 $64 $247 $76 
Preference equity shareholders16 16 48 48 
Common equity shareholders1,391 592 2,300 867 
$1,561 $672 $2,595 $991 
(1)Net of hedging activities and income tax recovery of $37 million and $40 million for the three and nine months ended September 30, 2022, respectively (three and nine months ended September 30, 2021 - income tax recovery (expense) of $3 million and $(1) million, respectively).
(2)Net of income tax expense of $11 million and $21 million for the three and nine months ended September 30, 2022, respectively (three and nine months ended September 30, 2021 - income tax recovery of $2 million and $1 million, respectively )
See accompanying Notes to Condensed Consolidated Interim Financial Statements
3
FORTIS INC.SEPTEMBER 30, 2022 QUARTER REPORT
Interim Financial Statements
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS (Unaudited)
FORTIS INC.
QuarterYear-to-Date
For the periods ended September 30 (in millions of Canadian dollars)2022 2021 2022 2021 
Operating activities
Net earnings$371 $342 $1,094 $1,034 
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation - property, plant and equipment369 332 1,091 978 
Amortization - intangible assets37 34 108 102 
Amortization - other16 14 47 41 
Deferred income tax expense64 44 119 109 
Equity component, allowance for funds used during construction (Note 9)
(19)(18)(54)(57)
Other66 26 120 93 
Change in long-term regulatory assets and liabilities80 15 94 15 
Change in working capital (Note 11)(351)(78)(414)(125)
Cash from operating activities633 711 2,205 2,190 
Investing activities
Additions to property, plant and equipment(907)(777)(2,600)(2,292)
Additions to intangible assets(44)(41)(151)(120)
Contributions in aid of construction24 21 85 55 
Contributions to equity-accounted investees(100)— (100)— 
Other(46)(48)(141)(146)
Cash used in investing activities(1,073)(845)(2,907)(2,503)
Financing activities
Proceeds from long-term debt, net of issuance costs 936 92 2,581 1,218 
Repayments of long-term debt and finance leases(670)(440)(1,506)(562)
Borrowings under committed credit facilities1,674 1,209 4,660 3,477 
Repayments under committed credit facilities (1,066)(881)(4,218)(3,453)
Net change in short-term borrowings(204)(32)(46)112 
Issue of common shares, net of costs and dividends reinvested6 8 46 52 
Dividends

Common shares, net of dividends reinvested(168)(152)(492)(449)

Preference shares(16)(16)(48)(48)

Subsidiary dividends paid to non-controlling interests(21)(18)(52)(46)
Other— (19)7 (24)
Cash from (used in) financing activities471 (249)932 277 
Effect of exchange rate changes on cash and cash equivalents26 9 34 12 
Change in cash and cash equivalents57 (374)264 (24)
Cash and cash equivalents, beginning of period338 599 131 249 
Cash and cash equivalents, end of period$395 $225 $395 $225 
Supplementary Cash Flow Information (Note 11)
See accompanying Notes to Condensed Consolidated Interim Financial Statements

4
FORTIS INC.SEPTEMBER 30, 2022 QUARTER REPORT
Interim Financial Statements
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN EQUITY (Unaudited)
FORTIS INC.
For the three months ended September 30
(in millions of Canadian dollars, except share numbers)
Common Shares
(# millions)
Common SharesPreference Shares Additional Paid-In CapitalAccumulated Other Comprehensive Income (Loss)Retained EarningsNon-Controlling InterestsTotal Equity
As at June 30, 2022478.7 $14,465 $1,623 $8 $235 $3,837 $1,692 $21,860 
Net earnings— — — — — 342 29 371 
Other comprehensive income— — — — 1,065 — 125 1,190 
Common shares issued1.6 93 — — — — — 93 
Subsidiary dividends paid to non-controlling interests— — — — — — (21)(21)
Dividends declared on common shares ($1.10 per share)
— — — — — (528)— (528)
Dividends on preference shares— — — — — (16)— (16)
Other— — — — — — 2 2 
As at September 30, 2022480.3 $14,558 $1,623 $8 $1,300 $3,635 $1,827 $22,951 
As at June 30, 2021471.2 $14,040 $1,623 $8 $(299)$3,581 $1,569 $20,522 
Net earnings— — — — — 311 31 342 
Other comprehensive income— — — — 297 — 33 330 
Common shares issued1.7 95 — — — — — 95 
Subsidiary dividends paid to non-controlling interests— — — — — — (18)(18)
Dividends declared on common shares ($1.04 per share)
— — — — — (491)— (491)
Dividends on preference shares— — — — — (16)— (16)
Other— — — 1 — — 1 2 
As at September 30, 2021472.9 $14,135 $1,623 $9 $(2)$3,385 $1,616 $20,766 
See accompanying Notes to Condensed Consolidated Interim Financial Statements
5
FORTIS INC.SEPTEMBER 30, 2022 QUARTER REPORT
Interim Financial Statements
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN EQUITY (Unaudited)
FORTIS INC.
For the nine months ended September 30
(in millions of Canadian dollars, except share numbers)
Common Shares
(# millions)
Common SharesPreference SharesAdditional Paid-In CapitalAccumulated Other Comprehensive Income (Loss)Retained EarningsNon-Controlling InterestsTotal Equity
As at December 31, 2021
474.8 $14,237 $1,623 $10 $(40)$3,458 $1,628 $20,916 
Net earnings— — — — — 1,008 86 1,094 
Other comprehensive income— — — — 1,340 — 161 1,501 
Common shares issued5.5 321 — (2)— — — 319 
Subsidiary dividends paid to non-controlling interests— — — — — — (52)(52)
Dividends declared on common shares ($1.635 per share)
— — — — — (783)— (783)
Dividends on preference shares— — — — — (48)— (48)
Other— — — — — — 4 4 
As at September 30, 2022480.3 $14,558 $1,623 $8 $1,300 $3,635 $1,827 $22,951 
As at December 31, 2020
466.8 $13,819 $1,623 $11 $34 $3,210 $1,587 $20,284 
Net earnings— — — — — 951 83 1,034 
Other comprehensive loss— — — — (36)— (7)(43)
Common shares issued6.1 316 — (2)— — — 314 
Subsidiary dividends paid to non-controlling interests— — — — — — (46)(46)
Dividends declared on common shares ($1.545 per share)
— — — — — (728)— (728)
Dividends on preference shares— — — — — (48)— (48)
Other— — — — — — (1)(1)
As at September 30, 2021472.9 $14,135 $1,623 $9 $(2)$3,385 $1,616 $20,766 
See accompanying Notes to Condensed Consolidated Interim Financial Statements

6
FORTIS INC.SEPTEMBER 30, 2022 QUARTER REPORT
Notes to Condensed Consolidated Interim Financial Statements (Unaudited)
For the three and nine months ended September 30, 2022 and 2021
1. DESCRIPTION OF BUSINESS

Nature of Operations
Fortis Inc. ("Fortis" or the "Corporation") is a well-diversified North American regulated electric and gas utility holding company.

Earnings for interim periods may not be indicative of annual results due to the impact of seasonal weather conditions on customer demand and market pricing, changes in foreign exchange rates and the timing and recognition of regulatory decisions. Earnings of the gas utilities tend to be highest in the first and fourth quarters due to space-heating requirements. Earnings of the electric distribution utilities in the U.S. tend to be highest in the second and third quarters due to the use of air conditioning and other cooling equipment.

Entities within the reporting segments that follow operate with substantial autonomy.

Regulated Utilities
ITC: ITC Investment Holdings Inc., ITC Holdings Corp. and the electric transmission operations of its regulated operating subsidiaries, which include International Transmission Company, Michigan Electric Transmission Company, LLC, ITC Midwest LLC ("ITC Midwest") and ITC Great Plains, LLC. Fortis owns 80.1% of ITC and an affiliate of GIC Private Limited owns a 19.9% minority interest.

UNS Energy: UNS Energy Corporation, which primarily includes Tucson Electric Power Company ("TEP"), UNS Electric, Inc. and UNS Gas, Inc.

Central Hudson: CH Energy Group, Inc., which primarily includes Central Hudson Gas & Electric Corporation.

FortisBC Energy: FortisBC Energy Inc.

FortisAlberta: FortisAlberta Inc.

FortisBC Electric: FortisBC Inc.

Other Electric: Eastern Canadian and Caribbean utilities, as follows: Newfoundland Power Inc.; Maritime Electric Company, Limited; FortisOntario Inc.; a 39% equity investment in Wataynikaneyap Power Limited Partnership; an approximate 60% controlling interest in Caribbean Utilities Company, Ltd. ("Caribbean Utilities"); FortisTCI Limited and Turks and Caicos Utilities Limited (collectively "FortisTCI"); and a 33% equity investment in Belize Electricity Limited ("Belize Electricity").

Non-Regulated
Energy Infrastructure: Long-term contracted generation assets in Belize and the Aitken Creek natural gas storage facility ("Aitken Creek") in British Columbia.

Corporate and Other: Captures expenses and revenues not specifically related to any reportable segment and those business operations that are below the required threshold for segmented reporting, including net corporate expenses of Fortis and non-regulated holding company expenses.


2. REGULATORY DEVELOPMENTS

Regulation of the Corporation's utilities is generally consistent with that disclosed in Note 2 of the Corporation's annual audited consolidated financial statements ("2021 Annual Financial Statements"). A summary of significant regulatory developments year-to-date 2022 follows.

ITC
ITC Midwest Capital Structure Complaint: In May 2022, the Iowa Coalition for Affordable Transmission filed a complaint with the Federal Energy Regulatory Commission ("FERC") under Section 206 of the Federal Power Act requesting that ITC Midwest's common equity component of capital structure be reduced from 60% to 53%. The complaint alleges that ITC Midwest does not meet FERC's three-part test for authorizing the use of the utility's actual capital structure for rate-making purposes. ITC Midwest filed a response to the complaint in June 2022. As at September 30, 2022, ITC Midwest has not recorded a regulatory liability related to the complaint. The timing and outcome of this proceeding remain unknown.

MISO Base ROE: In August 2022, the U.S. Court of Appeals for the District of Columbia Circuit issued a decision vacating certain FERC orders that had established the methodology for setting the base return on equity (“ROE”) for transmission owners operating in the Midcontinent Independent System Operator, Inc. (“MISO”) region, including ITC. This matter dates back to complaints filed at FERC in 2013 and 2015 challenging the MISO base ROE then in effect. The court has remanded the matter to FERC for further process, the timing and outcome of which is unknown.

7
FORTIS INC.SEPTEMBER 30, 2022 QUARTER REPORT
Notes to Condensed Consolidated Interim Financial Statements (Unaudited)
For the three and nine months ended September 30, 2022 and 2021
2. REGULATORY DEVELOPMENTS (cont'd)

UNS Energy
TEP General Rate Application: In June 2022, TEP filed a general rate application with the Arizona Corporation Commission requesting new rates effective September 1, 2023 using a December 31, 2021 test year. The application reflects a US$136 million net increase in non-fuel and fuel-related revenue, as well as proposals to eliminate certain adjustor mechanisms, and modify an existing adjustor to provide more timely recovery of clean energy investments. The timing and outcome of this proceeding is unknown.

FERC Rate Case: In March 2022, FERC approved the settlement agreement for formula transmission rates at TEP, including an ROE of 9.79%.

FortisBC Energy and FortisBC Electric
Generic Cost of Capital ("GCOC") Proceeding: In 2021, the British Columbia Utilities Commission ("BCUC") initiated a proceeding including a review of the common equity component of capital structure and the allowed ROE. FortisBC filed evidence with the BCUC in the first quarter of 2022 and the proceeding remains ongoing. The timing and outcome of this proceeding, including the effective date of any change in the cost of capital in 2023, remain unknown.

FortisAlberta
2023 GCOC Proceeding: In March 2022, the Alberta Utilities Commission ("AUC") issued a decision extending the existing allowed ROE of 8.5% using a 37% equity component of capital structure through 2023.

2023 Cost of Service ("COS") Application: In July 2022, the AUC issued a decision largely accepting the forecast requested in FortisAlberta's COS application. The AUC directed FortisAlberta to update and refile its 2023 revenue requirement, which was filed in September 2022. A final decision on this filing is expected in the fourth quarter of 2022.


3. ACCOUNTING POLICIES

These condensed consolidated interim financial statements ("Interim Financial Statements") have been prepared and presented in accordance with accounting principles generally accepted in the United States of America for rate-regulated entities and are in Canadian dollars unless otherwise indicated.

The Interim Financial Statements include the accounts of the Corporation and its subsidiaries and reflect the equity method of accounting for entities in which Fortis has significant influence, but not control, and proportionate consolidation for assets that are jointly owned with non-affiliated entities.

Intercompany transactions have been eliminated, except for transactions between non-regulated and regulated entities in accordance with U.S. GAAP for rate-regulated entities.

These Interim Financial Statements do not include all of the disclosures required in the annual financial statements and should be read in conjunction with the Corporation's 2021 Annual Financial Statements. In management's opinion, these Interim Financial Statements include all adjustments that are of a normal recurring nature, necessary for fair presentation.

The preparation of the Interim Financial Statements required management to make estimates and judgments, including those related to regulatory decisions, that affect the reported amounts of, and disclosures related to, assets, liabilities, revenues, expenses, gains, losses and contingencies. Actual results could differ materially from estimates.

The accounting policies applied herein are consistent with those outlined in the Corporation's 2021 Annual Financial Statements.

Future Accounting Pronouncements
The Corporation considers the applicability and impact of all Accounting Standards Updates ("ASUs") issued by the Financial Accounting Standards Board. Any ASUs not included in these Interim Financial Statements were assessed and determined to be either not applicable to the Corporation or are not expected to have a material impact on the Interim Financial Statements.



8
FORTIS INC.SEPTEMBER 30, 2022 QUARTER REPORT
Notes to Condensed Consolidated Interim Financial Statements (Unaudited)
For the three and nine months ended September 30, 2022 and 2021
4. SEGMENTED INFORMATION

Fortis segments its business based on regulatory jurisdiction and service territory, as well as the information used by its President and Chief Executive Officer in deciding how to allocate resources. Segment performance is evaluated principally on net earnings attributable to common equity shareholders.

Related-Party and Inter-Company Transactions
Related-party transactions are in the normal course of operations and are measured at the amount of consideration agreed to by the related parties. There were no material related-party transactions for the three and nine months ended September 30, 2022 and 2021.

The lease of gas storage capacity and gas sales from Aitken Creek to FortisBC Energy of $7 million and $27 million for the three and nine months ended September 30, 2022, respectively (three and nine months ended September 30, 2021 - $6 million and $21 million, respectively) are inter-company transactions between non-regulated and regulated entities, which were not eliminated on consolidation.

As at September 30, 2022, accounts receivable included approximately $14 million due from Belize Electricity (December 31, 2021 - $22 million).

Fortis periodically provides short-term financing to subsidiaries to support capital expenditures and seasonal working capital requirements, the impacts of which are eliminated on consolidation. As at September 30, 2022, inter-segment loans of $35 million were outstanding (December 31, 2021 - $126 million). Interest charged on inter-segment loans was not material for the three and nine months ended September 30, 2022 and 2021.


9
FORTIS INC.SEPTEMBER 30, 2022 QUARTER REPORT
Notes to Condensed Consolidated Interim Financial Statements (Unaudited)
For the three and nine months ended September 30, 2022 and 2021
4. SEGMENTED INFORMATION (cont'd)

RegulatedNon-Regulated
EnergyInter-
UNSCentralFortisBCFortisFortisBCOtherSubInfra-Corporatesegment
($ millions)ITCEnergyHudsonEnergyAlbertaElectricElectricTotalstructureand OthereliminationsTotal
Quarter ended September 30, 2022
Revenue478 856 273 269 175 114 361 2,526 27 — — 2,553 
Energy supply costs— 380 84 104 — 35 200 803 1 — — 804 
Operating expenses120 168 133 88 38 30 52 629 9 (8)— 630 
Depreciation and amortization97 95 26 74 61 17 48 418 4 — — 422 
Operating income261 213 30 3 76 32 61 676 13 8 — 697 
Other income, net11 6 13 7 1 2 2 42 — (23)— 19 
Finance charges90 32 13 37 28 19 18 237 — 43 — 280 
Income tax expense55 24 6 (11)3 2 4 83 3 (21)— 65 
Net earnings127 163 24 (16)46 13 41 398 10 (37)— 371 
Non-controlling interests22 — — 1 — — 6 29 — — — 29 
Preference share dividends— — — — — — — — — 16 — 16 
Net earnings attributable to common equity shareholders105 163 24 (17)46 13 35 369 10 (53)— 326 
Additions to property, plant and equipment and intangible assets313 139 83 150 126 32 98 941 10 — — 951 
As at September 30, 2022
Goodwill8,487 1,911 624 913 228 235 262 12,660 27 — — 12,687 
Total assets23,704 12,892 5,156 8,474 5,464 2,636 4,773 63,099 861 179 (55)64,084 
Quarter ended
September 30, 2021
Revenue429 716 225 220 168 107 331 2,196 — — — 2,196 
Energy supply costs— 289 63 62 — 33 177 624 — — — 624 
Operating expenses115 157 127 80 35 26 49 589 6 (1)— 594 
Depreciation and amortization74 88 22 70 58 17 45 374 5 1 — 380 
Operating income 240 182 13 8 75 31 60 609 (11)— — 598 
Other income, net11 6 9 3 — 1 3 33 — 4 — 37 
Finance charges65 32 11 36 27 18 18 207 — 37 — 244 
Income tax expense 44 25 2 (7)1 2 5 72 — (23)— 49 
Net earnings 142 131 9 (18)47 12 40 363 (11)(10)— 342 
Non-controlling interests25 — — 1 — — 5 31 — — — 31 
Preference share dividends— — — — — — — — — 16 — 16 
Net earnings attributable to common equity shareholders117 131 9 (19)47 12 35 332 (11)(26)— 295 
Additions to property, plant and equipment and intangible assets230 177 76 125 87 34 80 809 9 — — 818 
As at September 30, 2021
Goodwill7,782 1,752 572 913 228 235 246 11,728 27 — — 11,755 
Total assets20,865 11,318 4,125 7,893 5,201 2,506 4,291 56,199 772 217 (51)57,137 
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FORTIS INC.SEPTEMBER 30, 2022 QUARTER REPORT
Notes to Condensed Consolidated Interim Financial Statements (Unaudited)
For the three and nine months ended September 30, 2022 and 2021
4. SEGMENTED INFORMATION (cont'd)

RegulatedNon-Regulated
EnergyInter-
UNSCentralFortisBCFortisFortisBCOtherSubInfra-Corporatesegment
($ millions)ITCEnergyHudsonEnergyAlbertaElectricElectricTotalstructureand OthereliminationsTotal
Year-to-date September 30, 2022
Revenue1,406 2,042 929 1,359 511 351 1,204 7,802 73 — — 7,875 
Energy supply costs— 862 347 639 — 96 736 2,680 4 — — 2,684 
Operating expenses363 497 425 259 122 96 157 1,919 29 10 — 1,958 
Depreciation and amortization283 276 77 224 182 51 139 1,232 12 2 — 1,246 
Operating income760 407 80 237 207 108 172 1,971 28 (12)— 1,987 
Other income, net30 12 43 16 2 5 5 113 — (17)— 96 
Finance charges253 93 39 108 82 56 55 686 — 118 — 804 
Income tax expense137 43 18 25 10 7 15 255 5 (75)— 185 
Net earnings400 283 66 120 117 50 107 1,143 23 (72)— 1,094 
Non-controlling interests72 — — 1 — — 13 86 — — — 86 
Preference share dividends— — — — — — — — — 48 — 48 
Net earnings attributable to common equity shareholders328 283 66 119 117 50 94 1,057 23 (120)— 960 
Additions to property, plant and equipment and intangible assets920 460 212 414 356 92 276 2,730 21 — — 2,751 
As at September 30, 2022
Goodwill8,487 1,911 624 913 228 235 262 12,660 27 — — 12,687 
Total assets23,704 12,892 5,156 8,474 5,464 2,636 4,773 63,099 861 179 (55)64,084 
Year-to-date September 30, 2021
Revenue1,273 1,794 717 1,123 488 335 1,097 6,827 38 — — 6,865 
Energy supply costs— 693 203 424 — 94 650 2,064 2 — — 2,066 
Operating expenses347 487 374 252 113 89 146 1,808 24 23 — 1,855 
Depreciation and amortization216 254 67 211 173 49 135 1,105 13 3 — 1,121 
Operating income 710 360 73 236 202 103 166 1,850 (1)(26)— 1,823 
Other income, net32 33 26 8 1 4 4 108 1 20 — 129 
Finance charges222 91 34 109 80 54 54 644 — 107 — 751 
Income tax expense 126 43 11 27 5 8 16 236 2 (71)— 167 
Net earnings 394 259 54 108 118 45 100 1,078 (2)(42)— 1,034 
Non-controlling interests71 — — 1 — — 11 83 — — — 83 
Preference share dividends— — — — — — — — — 48 — 48 
Net earnings attributable to common equity shareholders323 259 54 107 118 45 89 995 (2)(90)— 903 
Additions to property, plant and equipment and intangible assets776 514 209 317 273 92 218 2,399 13 — — 2,412 
As at September 30, 2021
Goodwill7,782 1,752 572 913 228 235 246 11,728 27 — — 11,755 
Total assets20,865 11,318 4,125 7,893 5,201 2,506 4,291 56,199 772 217 (51)57,137 

11
FORTIS INC.SEPTEMBER 30, 2022 QUARTER REPORT
Notes to Condensed Consolidated Interim Financial Statements (Unaudited)
For the three and nine months ended September 30, 2022 and 2021
5. ALLOWANCE FOR CREDIT LOSSES

The allowance for credit losses balance, which is recorded in accounts receivable and other current assets, changed as follows.

QuarterYear-to-Date
($ millions)2022 2021 2022 2021 
Periods ended September 30
Balance, beginning of period(53)(62)(53)(64)
Credit loss expense(6)(1)(16)(9)
Credit loss deferral(4)— (4)— 
Write-offs, net of recoveries10 5 21 13 
Foreign exchange(2)(2)(3)— 
Balance, end of period(55)(60)(55)(60)

See Note 12 for disclosure on the Corporation's credit risk.


6. REGULATORY ASSETS AND LIABILITIES

Detailed information about the Corporation's regulatory assets and liabilities is provided in Note 8 to the 2021 Annual Financial Statements. A summary follows.
As at
September 30,December 31,
($ millions)
2022 2021 
Regulatory assets
Deferred income taxes 1,869 1,806 
Rate stabilization and related accounts 535 339 
Deferred energy management costs 413 384 
Employee future benefits 397 388 
Deferred lease costs 139 127 
Manufactured gas plant site remediation deferral 99 96 
Generation early retirement costs85 48 
Deferred storm costs (1)
67 17 
Derivatives40 20 
Other regulatory assets 386 364 
Total regulatory assets4,030 3,589 
Less: Current portion(739)(492)
Long-term regulatory assets3,291 3,097 
Regulatory liabilities
Deferred income taxes1,399 1,289 
Future cost of removal1,284 1,217 
Derivatives232 52 
Rate stabilization and related accounts220 116 
Employee future benefits208 196 
Renewable energy surcharge126 107 
Energy efficiency liability102 83 
Electric and gas moderator account41 37 
Other regulatory liabilities178 125 
Total regulatory liabilities3,790 3,222 
Less: Current portion(509)(357)
Long-term regulatory liabilities3,281 2,865 
(1)    Includes incremental costs incurred at Central Hudson associated with restoration activities due to significant storm events. Incremental costs incurred in excess of that collected in customer rates are recovered through Central Hudson's rate stabilization account.

12
FORTIS INC.SEPTEMBER 30, 2022 QUARTER REPORT
Notes to Condensed Consolidated Interim Financial Statements (Unaudited)
For the three and nine months ended September 30, 2022 and 2021
7. LONG-TERM DEBT
As at
September 30,December 31,
($ millions)2022 2021 
Long-term debt26,810 24,177 
Credit facility borrowings 1,856 1,305 
Total long-term debt28,666 25,482 
Less: Deferred financing costs and debt discounts(167)(147)
Less: Current installments of long-term debt(2,570)(1,628)
25,929 23,707 

Long-Term Debt IssuancesInterest
Year-to-Date September 30, 2022MonthRateUse of
($ millions, except as noted)
Issued

(%)
MaturityAmountProceeds
ITC
Secured first mortgage bondsJanuary2.93 2052US150 
(1) (2) (3) (4)
Secured senior notesMay3.05 2052US75 
(1) (3) (4)
Unsecured senior notesSeptember 4.95 2027US600 
(1) (4) (5)
UNS Energy
Unsecured senior notesFebruary3.25 2032US325 
(4) (5)
Central Hudson
Unsecured senior notesJanuary2.37 2027US50 
(4) (5)
Unsecured senior notesJanuary2.59 2029US60 
(4) (5)
Unsecured senior notesSeptember5.07 2032US100 
(1) (4)
Unsecured senior notesSeptember5.42 2052US10 
(1) (4)
FortisBC Electric
Unsecured debenturesMarch4.16 2052100 
(1)
Newfoundland Power
First mortgage sinking fund bondsApril4.20 205275 
(1) (4) (5)
FortisAlberta
Senior unsecured debenturesMay4.62 2052125 
(1)
Fortis
Unsecured senior notesMay4.43 
(6)
2029500 
(4) (7)
(1)    Repay short-term and/or credit facility borrowings
(2)    US$20 million to fund or refinance a portfolio of eligible green projects
(3)    Fund capital expenditures
(4)    General corporate purposes
(5)    Repay maturing long-term debt
(6)    The Corporation entered into cross-currency interest rate swaps to effectively convert the debt into US$391 million with an interest rate of 4.34% (Note 12)
(7)    Fund the June 2022 redemption of the Corporations $500 million, 2.85% senior unsecured notes due December 2023

In October 2022, ITC issued 5-year US$75 million and 30-year US$75 million secured first mortgage bonds at 3.87% and 4.53%, respectively. The net proceeds are expected to be used to fund or refinance a portfolio of eligible renewable energy projects.

In December 2020, Fortis filed a short-form base shelf prospectus with a 25-month life under which it may issue common or preference shares, subscription receipts or debt securities in an aggregate principal amount of up to $2.0 billion. As at September 30, 2022, $1.0 billion remained available under the short-form base shelf prospectus.

13
FORTIS INC.SEPTEMBER 30, 2022 QUARTER REPORT
Notes to Condensed Consolidated Interim Financial Statements (Unaudited)
For the three and nine months ended September 30, 2022 and 2021
7. LONG-TERM DEBT (cont'd)
As at
Credit facilitiesRegulatedCorporateSeptember 30,December 31,
($ millions)Utilitiesand Other2022 2021 
Total credit facilities3,748 2,068 5,816 4,846 
Credit facilities utilized:
Short-term borrowings (1)
(232)— (232)(247)
Long-term debt (including current portion) (2)
(1,144)(712)(1,856)(1,305)
Letters of credit outstanding(68)(52)(120)(115)
Credit facilities unutilized2,304 1,304 3,608 3,179 
(1)    The weighted average interest rate was 3.6% (December 31, 2021 - 0.6%).
(2)    The weighted average interest rate was 3.7% (December 31, 2021 - 0.9%). The current portion was $1,451 million (December 31, 2021 - $888 million).

Credit facilities are syndicated primarily with large banks in Canada and the U.S., with no one bank holding more than approximately 20% of the Corporation's total revolving credit facilities. Approximately $5.6 billion of the total credit facilities are committed with maturities ranging from 2023 through 2027.

See Note 14 in the 2021 Annual Financial Statements for a description of the credit facilities as at December 31, 2021.

In April 2022, Central Hudson increased its total credit facilities available from US$200 million to US$250 million.

In May 2022, the Corporation amended its unsecured $1.3 billion revolving term committed credit facility agreement to extend the maturity to July 2027, and to establish a sustainability-linked loan structure based on the Corporation’s achievement of targets for diversity on the Board of Directors and Scope 1 greenhouse gas emissions for 2022 through 2025. Maximum potential annual margin pricing adjustments are +/- 5 basis points and +/- 1 basis point for drawn and undrawn funds, respectively.

Also in May 2022, the Corporation entered into an unsecured US$500 million non-revolving term credit facility. The facility has an initial one-year term and is repayable at any time without penalty.


14
FORTIS INC.SEPTEMBER 30, 2022 QUARTER REPORT
Notes to Condensed Consolidated Interim Financial Statements (Unaudited)
For the three and nine months ended September 30, 2022 and 2021
8. EMPLOYEE FUTURE BENEFITS

Fortis and each subsidiary maintain one or a combination of defined benefit pension plans and defined contribution pension plans, as well as other post-employment benefit ("OPEB") plans, including health and dental coverage and life insurance benefits, for qualifying members. The net benefit cost is detailed below.
Defined Benefit
Pension Plans
OPEB Plans
($ millions)2022 2021 2022 2021 
Quarter ended September 30
Service costs27 27 9 8 
Interest costs28 24 5 5 
Expected return on plan assets(50)(45)(6)(5)
Amortization of actuarial losses (gains)— 9 (2)(1)
Amortization of past service credits/plan amendments— — — (1)
Regulatory adjustments(2)(1)1 1 
Net benefit cost3 14 7 7 
Year-to-date September 30
Service costs79 82 26 26 
Interest costs84 73 16 14 
Expected return on plan assets(147)(133)(17)(14)
Amortization of actuarial losses (gains)2 27 (7)(2)
Amortization of past service credits/plan amendments(1)(1)(1)(1)
Regulatory adjustments(7)(2)3 2 
Net benefit cost10 46 20 25 

Defined contribution pension plan expense for the three and nine months ended September 30, 2022 was $11 million and $37 million, respectively (three and nine months ended September 30, 2021 - $11 million and $34 million, respectively).


9. OTHER INCOME, NET

QuarterYear-to-Date
($ millions)2022 2021 2022 2021 
Periods ended September 30
Non-service component of net periodic benefit cost19 14 68 37 
Equity component, allowance for funds used during construction19 18 54 57 
(Loss) gain on retirement investments (1)
(4)(2)(21)4 
(Loss) gain on derivatives, net(27)3 (25)16 
Other12 4 20 15 
19 37 96 129 
(1)    Includes investments that support supplemental retirement benefits at ITC, UNS Energy and Central Hudson

15
FORTIS INC.SEPTEMBER 30, 2022 QUARTER REPORT
Notes to Condensed Consolidated Interim Financial Statements (Unaudited)
For the three and nine months ended September 30, 2022 and 2021
10. EARNINGS PER COMMON SHARE

Diluted earnings per share ("EPS") was calculated using the treasury stock method for stock options.

20222021
Net EarningsWeightedNet EarningsWeighted
to CommonAverageto CommonAverage
ShareholdersSharesEPSShareholdersSharesEPS
($ millions)(# millions)($)($ millions)(# millions)($)
Quarter ended September 30
Basic EPS326 479.4 0.68 295 472.0 0.63 
Potential dilutive effect of stock options— 0.5 — 0.5 
Diluted EPS326 479.9 0.68 295 472.5 0.62 
Year-to-date September 30
Basic EPS960 477.7 2.01 903 470.0 1.92 
Potential dilutive effect of stock options— 0.5 — 0.5 
Diluted EPS960 478.2 2.01 903 470.5 1.92 


11. SUPPLEMENTARY CASH FLOW INFORMATION

QuarterYear-to-Date
($ millions)2022 2021 2022 2021 
Periods ended September 30
Change in working capital
Accounts receivable and other current assets(73)31 (119)73 
Prepaid expenses(91)(80)(69)(57)
Inventories(129)(108)(174)(108)
Regulatory assets - current portion(139)26 (182)(43)
Accounts payable and other current liabilities74 65 91 54 
Regulatory liabilities - current portion7 (12)39 (44)
(351)(78)(414)(125)
Non-cash investing and financing activities
Accrued capital expenditures401 361 401 361 
Common share dividends reinvested88 86 274 262 
Contributions in aid of construction11 — 11 — 


12. FAIR VALUE OF FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

Derivatives
The Corporation generally limits the use of derivatives to those that qualify as accounting, economic or cash flow hedges, or those that are approved for regulatory recovery.

Derivatives are recorded at fair value with certain exceptions including those derivatives that qualify for the normal purchase and normal sale exception. Fair values reflect estimates based on current market information about the derivatives as at the balance sheet dates. The estimates cannot be determined with precision as they involve uncertainties and matters of judgment and, therefore, may not be relevant in predicting the Corporation's future consolidated earnings or cash flow.

Cash flow associated with the settlement of all derivatives is included in operating activities on the condensed consolidated interim statements of cash flows.


16
FORTIS INC.SEPTEMBER 30, 2022 QUARTER REPORT
Notes to Condensed Consolidated Interim Financial Statements (Unaudited)
For the three and nine months ended September 30, 2022 and 2021
12. FAIR VALUE OF FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (cont'd)

Energy Contracts Subject to Regulatory Deferral
UNS Energy holds electricity power purchase contracts, customer supply contracts and gas swap contracts to reduce its exposure to energy price risk. Fair values are measured primarily under the market approach using independent third-party information, where possible. When published prices are not available, adjustments are applied based on historical price curve relationships, transmission costs and line losses.

Central Hudson holds swap contracts for electricity and natural gas to minimize price volatility by fixing the effective purchase price. Fair values are measured using forward pricing provided by independent third-party information.

FortisBC Energy holds gas supply contracts to fix the effective purchase price of natural gas. Fair values reflect the present value of future cash flows based on published market prices and forward natural gas curves.

Unrealized gains or losses associated with changes in the fair value of these energy contracts are deferred as a regulatory asset or liability for recovery from, or refund to, customers in future rates, as permitted by the regulators. As at September 30, 2022, unrealized losses of $40 million (December 31, 2021 - $20 million) were recognized as regulatory assets and unrealized gains of $232 million (December 31, 2021 - $52 million) were recognized as regulatory liabilities.

Energy Contracts Not Subject to Regulatory Deferral
UNS Energy holds wholesale trading contracts to fix power prices and realize potential margin, of which 10% of any realized gains is shared with customers through rate stabilization accounts. Fair values are measured using a market approach incorporating, where possible, independent third-party information.

Aitken Creek holds gas swap contracts to manage its exposure to changes in natural gas prices, capture natural gas price spreads, and manage the financial risk posed by physical transactions. Fair values are measured using forward pricing from published market sources.

Unrealized gains or losses associated with changes in the fair value of these energy contracts are recognized in revenue. For the three and nine months ended September 30, 2022, unrealized gains of $2 million and $4 million, respectively were recognized in revenue (three and nine months ended September 30, 2021 - unrealized losses of $1 million and $14 million, respectively).

Total Return Swaps
The Corporation holds total return swaps to manage the cash flow risk associated with forecast future cash settlements of certain stock-based compensation obligations. The swaps have a combined notional amount of $114 million and terms of one to three years expiring at varying dates through January 2025. Fair value is measured using an income valuation approach based on forward pricing curves. Unrealized gains and losses associated with changes in fair value are recognized in other income, net. During the three and nine months ended September 30, 2022, unrealized losses of $17 million and $25 million, respectively were recognized in other income, net (three and nine months ended September 30, 2021 - unrealized gains of $3 million and $6 million, respectively).

Foreign Exchange Contracts
The Corporation holds U.S. dollar denominated foreign exchange contracts to help mitigate exposure to foreign exchange rate volatility. The contracts expire at varying dates through February 2024 and have a combined notional amount of $342 million. Fair value was measured using independent third-party information. Unrealized gains and losses associated with changes in fair value are recognized in other income, net. During the three and nine months ended September 30, 2022, unrealized losses recognized in other income, net were $11 million and $13 million, respectively (three and nine months ended September 30, 2021 - unrealized losses of $7 million and $9 million, respectively).

Interest Rate Swaps
ITC entered into forward-starting interest rate swaps to manage the interest rate risk associated with planned borrowings. The swaps, which had a combined notional value of US$450 million, were terminated in September 2022 with the issuance of US$600 million senior notes and realized gains of $52 million (US$39 million) were recognized in other comprehensive income, which will be reclassified to earnings as a component of interest expense over five years.

Cross-Currency Interest Rate Swaps
In May 2022, the Corporation entered into cross-currency interest rate swaps with a 7-year term to effectively convert its $500 million, 4.43% unsecured senior notes to US$391 million, 4.34% debt (Note 7). The Corporation designated this notional U.S. debt as an effective hedge of its foreign net investments and unrealized gains and losses associated with exchange rate fluctuations on the notional U.S. debt are recognized in other comprehensive income, consistent with the translation adjustment related to the net investments. Other changes in the fair value of the swaps are also recognized in other comprehensive income but are excluded from the assessment of hedge effectiveness. Fair value is measured using a discounted cash flow method based on SOFR rates. Unrealized losses of $14 million and $26 million were recorded in other comprehensive income for the three and nine months ended September 30, 2022, respectively.


17
FORTIS INC.SEPTEMBER 30, 2022 QUARTER REPORT
Notes to Condensed Consolidated Interim Financial Statements (Unaudited)
For the three and nine months ended September 30, 2022 and 2021
12. FAIR VALUE OF FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (cont'd)

Other Investments
UNS Energy holds investments in money market accounts, and ITC and Central Hudson hold investments in trust associated with supplemental retirement benefit plans for select employees, which include mutual funds and money market accounts. These investments are recorded at fair value based on quoted market prices in active markets. Gains and losses are recognized in other income, net. During the three and nine months ended September 30, 2022 losses on these funds of $2 million and $11 million, respectively, were recognized in other income, net (three and nine months ended September 30, 2021 - losses of $2 million and gains of $4 million, respectively).

Recurring Fair Value Measures

The following table presents assets and liabilities that are accounted for at fair value on a recurring basis.

($ millions)
Level 1 (1)
Level 2 (1)
Level 3 (1)
Total
As at September 30, 2022
Assets
Energy contracts subject to regulatory deferral (2) (3)
— 250 — 250 
Energy contracts not subject to regulatory deferral (2)
— 27 — 27 
Other investments (4)
241 — — 241 
241 277 — 518 
Liabilities
Energy contracts subject to regulatory deferral (3) (5)
— (59)— (59)
Energy contracts not subject to regulatory deferral (5)
— (14)— (14)
Foreign exchange contracts, total return and cross-currency interest rate swaps (5)
— (41)— (41)
— (114)— (114)
As at December 31, 2021
Assets
Energy contracts subject to regulatory deferral (2) (3)
— 78 — 78 
Energy contracts not subject to regulatory deferral (2)
— 16 — 16 
Foreign exchange contracts, total return, and interest rate swaps (2)
23 2 — 25 
Other investments (4)
137 — — 137 
160 96 — 256 
Liabilities
Energy contracts subject to regulatory deferral (3) (5)
— (46)— (46)
Energy contracts not subject to regulatory deferral (5)
— (3)— (3)
— (49)— (49)
(1)Under the hierarchy, fair value is determined using: (i) level 1 - unadjusted quoted prices in active markets; (ii) level 2 - other pricing inputs directly or indirectly observable in the marketplace; and (iii) level 3 - unobservable inputs, used when observable inputs are not available. Classifications reflect the lowest level of input that is significant to the fair value measurement.
(2)Included in accounts receivable and other current assets or other assets
(3)Unrealized gains and losses arising from changes in fair value of these contracts are deferred as a regulatory asset or liability for recovery from, or refund to, customers in future rates as permitted by the regulators, with the exception of long-term wholesale trading contracts and certain gas swap contracts.
(4)Included in cash and cash equivalents and other assets
(5)Included in accounts payable and other current liabilities or other liabilities
18
FORTIS INC.SEPTEMBER 30, 2022 QUARTER REPORT
Notes to Condensed Consolidated Interim Financial Statements (Unaudited)
For the three and nine months ended September 30, 2022 and 2021
12. FAIR VALUE OF FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (cont'd)

Energy Contracts
The Corporation has elected gross presentation for its derivative contracts under master netting agreements and collateral positions, which apply only to its energy contracts. The following table presents the potential offset of counterparty netting.

Gross AmountCounterparty
Recognized inNetting ofCash Collateral
($ millions)Balance SheetEnergy ContractsReceived/PostedNet Amount
As at September 30, 2022
Derivative assets277 33 52 192 
Derivative liabilities(73)(33)— (40)
As at December 31, 2021
Derivative assets94 25 7 62 
Derivative liabilities(49)(25)— (24)

Volume of Derivative Activity
As at September 30, 2022, the Corporation had various energy contracts that will settle on various dates through 2029. The volumes related to electricity and natural gas derivatives are outlined below.
As at
September 30,December 31,
2022 2021 
Energy contracts subject to regulatory deferral (1)
Electricity swap contracts (GWh)
663 509 
Electricity power purchase contracts (GWh)
122 731 
Gas swap contracts (PJ)
175 151 
Gas supply contract premiums (PJ)
184 144 
Energy contracts not subject to regulatory deferral (1)
Wholesale trading contracts (GWh)
3,211 1,886 
Gas swap contracts (PJ)
38 29 
(1)GWh means gigawatt hours and PJ means petajoules.

Credit Risk
For cash equivalents, accounts receivable and other current assets, and long-term other receivables, credit risk is generally limited to the carrying value on the consolidated balance sheets. The Corporation's subsidiaries generally have a large and diversified customer base, which minimizes the concentration of credit risk. Policies in place to minimize credit risk include requiring customer deposits, prepayments and/or credit checks for certain customers, performing disconnections and/or using third-party collection agencies for overdue accounts.

ITC has a concentration of credit risk as approximately 70% of its revenue is derived from three customers. The customers have investment-grade credit ratings and credit risk is further managed by MISO by requiring a letter of credit or cash deposit equal to the credit exposure, which is determined by a credit-scoring model and other factors.

FortisAlberta has a concentration of credit risk as distribution service billings are to a relatively small group of retailers. Credit risk is managed by obtaining from the retailers either a cash deposit, letter of credit, an investment-grade credit rating, or a financial guarantee from an entity with an investment-grade credit rating.

UNS Energy, Central Hudson, FortisBC Energy, Aitken Creek and the Corporation may be exposed to credit risk in the event of non-performance by counterparties to derivatives. Credit risk is managed by net settling payments, when possible, and dealing only with counterparties that have investment-grade credit ratings. At UNS Energy and Central Hudson, certain contractual arrangements require counterparties to post collateral.

The value of derivatives in net liability positions under contracts with credit risk-related contingent features that, if triggered, could require the posting of a like amount of collateral was $63 million as at September 30, 2022 (December 31, 2021 - $59 million).


19
FORTIS INC.SEPTEMBER 30, 2022 QUARTER REPORT
Notes to Condensed Consolidated Interim Financial Statements (Unaudited)
For the three and nine months ended September 30, 2022 and 2021
12. FAIR VALUE OF FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (cont'd)

Hedge of Foreign Net Investments
The reporting currency of ITC, UNS Energy, Central Hudson, Caribbean Utilities, FortisTCI, Fortis Belize Limited (formerly Belize Electric Company Limited), and Belize Electricity is, or is pegged to, the U.S. dollar. The earnings and cash flow from, and net investments in, these entities are exposed to fluctuations in the U.S. dollar-to-Canadian dollar exchange rate. The Corporation has limited this exposure through hedging.

As at September 30, 2022, US$2.9 billion (December 31, 2021 - US$2.2 billion) of corporately issued U.S. dollar-denominated long-term debt has been designated as an effective hedge of net investments, leaving approximately US$10.6 billion (December 31, 2021 - US$10.8 billion) unhedged. Exchange rate fluctuations associated with the hedged net investment in foreign subsidiaries and the debt serving as the hedge are recognized in accumulated other comprehensive income.

Financial Instruments Not Carried at Fair Value
Excluding long-term debt, the consolidated carrying value of the Corporation's remaining financial instruments approximates fair value, reflecting their short-term maturity, normal trade credit terms and/or nature.

As at September 30, 2022, the carrying value of long-term debt, including current portion, was $28.7 billion (December 31, 2021 - $25.5 billion) compared to an estimated fair value of $25.8 billion (December 31, 2021 - $28.8 billion).


13. COMMITMENTS AND CONTINGENCIES

Commitments
There were no material changes in commitments from that disclosed in the Corporation's 2021 Annual Financial Statements except that in 2022, FortisBC Energy signed new long-term biomethane purchase agreements to acquire renewable natural gas. The 20-year agreements allow FortisBC Energy to purchase a maximum annual volume of 9.3 PJs of renewable natural gas and has increased gas purchase obligations from those disclosed as at December 31, 2021 as follows.

As at September 30, 2022
($ millions)
TotalYear 1Year 2Year 3Year 4Year 5Thereafter
Gas purchase obligations2,723 18 58 106 151 151 2,239 

Contingencies
In April 2013, FortisBC Holdings Inc. ("FHI") and Fortis were named as defendants in an action in the British Columbia Supreme Court by the Coldwater Indian Band ("Band") regarding interests in a pipeline right-of-way on reserve lands. The pipeline was transferred by FHI (then Terasen Inc.) to Kinder Morgan Inc. in 2007. The Band seeks cancellation of the right-of-way and damages for wrongful interference with the Band's use and enjoyment of reserve lands. In 2016, the Federal Court dismissed the Band's application for judicial review of the ministerial consent. In 2017, the Federal Court of Appeal set aside the minister's consent and returned the matter to the minister for redetermination. No amount has been accrued in the Interim Financial Statements as the outcome cannot yet be reasonably determined.

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FORTIS INC.SEPTEMBER 30, 2022 QUARTER REPORT