40-F

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_______________________

FORM 40-F

☐ REGISTRATION STATEMENT PURSUANT TO SECTION 12 OF THE SECURITIES EXCHANGE ACT OF 1934

OR

☒ ANNUAL REPORT PURSUANT TO SECTION 13(a) OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2020

Commission file number: 001-37915

_______________________

FORTIS INC.

(Exact name of Registrant as specified in its charter)

Newfoundland and Labrador, Canada	4911	98-0352146
(Province of other jurisdiction of incorporation or organization)	(Primary Standard Industrial Classification Code Number)	(I.R.S. Employer Identification Number)

Fortis Place, Suite 1100

5 Springdale Street

St. John's, Newfoundland and Labrador

Canada A1E 0E4

(709) 737-2800

(Address and telephone number of Registrant's principal executive offices)

_______________________

CT Corporation System

28 Liberty Street

New York, New York 10015

(212) 894-8940

(Name, address (including zip code) and telephone number (including area code) of agent for service in the United States)

Securities registered or to be registered pursuant to Section 12(b) of the Act:

Common Shares, without par value	FTS	New York Stock Exchange
(Title of each class)	(Trading Symbol(s)	(Name of exchange on which registered)

Securities registered or to be registered pursuant to Section 12(g) of the Act:

None

(Title of Class)

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:

None

(Title of Class)

For annual reports, indicate by check mark the information filed with this Form:

☒ Annual information form  ☒ Audited annual financial statements

Indicate the number of outstanding shares of each of the issuer's classes of capital or common stock as of the close of the period covered by the annual report.

466,770,392 Common Shares as of December 31, 2020

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Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files).

Yes ☒ No ☐

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 12b-2 of the Exchange Act.

Emerging growth company ☐

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act.    ☐

† The term "new or revised financial accounting standard" refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.    ☒

EXPLANATORY NOTE

Fortis Inc. (the "Corporation" or "Fortis") is a Canadian issuer eligible to file its annual report pursuant to Section 13 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), on Form 40-F pursuant to the multi-jurisdictional disclosure system of the Exchange Act. The Corporation is a "foreign private issuer" as defined in Rule 405 under the Securities Act of 1933, as amended. Equity securities of the Corporation are accordingly exempt from Sections 14(a), 14(b), 14(c), 14(f) and 16 of the Exchange Act pursuant to Rule 3a12-3.

FORWARD LOOKING INFORMATION

The Corporation includes forward-looking information in this Annual Report on Form 40-F and the exhibits attached hereto (the "Form 40-F") within the meaning of applicable Canadian securities laws and forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 (collectively referred to as "forward-looking information"). Forward-looking information reflects expectations of the Corporation's management regarding future growth, results of operations, performance, business prospects and opportunities. Wherever possible, words such as anticipates, believes, budgets, could, estimates, expects, forecasts, intends, may, might, plans, projects, schedule, should, target, will, would and the negative of these terms and other similar expressions have been used to identify the forward-looking information, which includes, without limitation: forecast capital expenditures for 2021-2025 and expected funding sources; the 2035 carbon emissions reduction target; forecast rate base and rate base growth for 2023 and 2025; the expectation that long-term growth in rate base will support earnings and dividend growth; target average annual dividend growth through 2025; the expectation that future increases in energy supply costs will increase electricity rates that Newfoundland Power charges to its customers; TEP's carbon emissions reduction target and projected asset mix; FortisBC's 2030 greenhouse gas emission target and renewable gas target; the expectation that the COVID-19 Pandemic will not have a material financial impact in 2021 and will not impact the five-year capital plan; the expectation that Fortis will remain at the forefront of the industry and is well positioned to capitalize on evolving industry opportunities; expected timing, outcome and impact of regulatory decisions; expected or potential funding sources for operating expenses, interest costs and capital plans; the expectation that maintaining the targeted capital structure of the regulated operating subsidiaries will not have an impact on its ability to pay dividends in the foreseeable future; expected consolidated fixed-term debt maturities and repayments over the next five years; the expectation that the Corporation and its subsidiaries will continue to have access to long-term capital and will remain compliant with debt covenants in 2021;

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the nature, timing, benefits and expected costs of certain capital projects including the Multi-Value Regional Transmission Projects, Transmission Conversion Project, Vail-to-Tortolita Project, Oso Grande Wind Project, Lower Mainland Intermediate Pressure System Upgrade, Eagle Mountain Woodfibre Gas Line Project; Transmission Integrity Management Capabilities Project, Inland Gas Upgrades Project, Tilbury 1B Project, Tilbury LNG Resiliency Tank, AMI Project, Wataynikaneyap Transmission Power Project and additional opportunities beyond the capital plan, including the Lake Erie Connector Project; and the expectation that the adoption of future accounting pronouncements will not have a material adverse impact.

Certain material factors or assumptions have been applied in drawing the conclusions contained in the forward-looking information, including, without limitation: no material adverse effects from the COVID-19 pandemic; reasonable regulatory decisions and the expectation of regulatory stability; the successful execution of the five-year capital plan; no material capital project or financing cost overrun; sufficient human resources to deliver service and execute the capital plan; the realization of additional opportunities; the Board exercising its discretion to declare dividends, taking into account the financial performance and condition of the Corporation; no significant variability in interest rates; no significant operational disruptions or environmental liability or upset; the continued ability to maintain the performance of the electricity and gas systems; no severe and prolonged economic downturn; sufficient liquidity and capital resources; the ability to hedge exposures to fluctuations in foreign exchange rates, natural gas prices and electricity prices; the continued availability of natural gas, fuel, coal and electricity supply; continuation of power supply and capacity purchase contracts; no significant changes in government energy plans, environmental laws and regulations that could have a material negative impact; maintenance of adequate insurance coverage; the ability to obtain and maintain licences and permits; retention of existing service areas; no significant changes in tax laws and the continued tax deferred treatment of earnings from the Corporation's foreign operations; continued maintenance of information technology infrastructure and no material breach of cybersecurity; continued favourable relations with Indigenous Peoples; and favourable labour relations.

Forward-looking information involves significant risks, uncertainties and assumptions. The Corporation cautions readers that a number of factors could cause actual results, performance or achievements to differ materially from the results discussed or implied in the forward-looking information. These factors should be considered carefully and undue reliance should not be placed on the forward-looking information. For additional information with respect to certain of these risks or factors, reference should be made to the information detailed under the heading "Business Risks" on page 28 of management's discussion and analysis for the year ended December 31, 2020, which is filed as Exhibit 99.3 to this Form 40-F and incorporated by reference herein (the "Annual MD&A"), and to continuous disclosure materials filed from time to time by the Corporation with Canadian securities regulatory authorities and the U.S. Securities and Exchange Commission (the "SEC"). Key risk factors for 2021 include, but are not limited to:

•uncertainty regarding the outcome of regulatory proceedings at the Corporation's utilities;

•risks associated with climate change, physical risks and service disruption;

•the impact of pandemics and public health crises, including the COVID-19 pandemic;

•risks related to environmental laws and regulations;

•risks associated with capital projects and the impact on the Corporation's continued growth; and

•the impact of weather variability and seasonality on heating and cooling loads, gas distribution volumes and hydroelectric generation

All forward-looking information in this Form 40-F is given as of the date of this Form 40-F and the Corporation disclaims any intention or obligation to revise or update any forward-looking information as a result of new information, future events or otherwise.

CURRENCY

The Corporation presents its consolidated financial statements in Canadian dollars unless otherwise specified. All dollar amounts in this Form 40-F are stated in Canadian dollars ("$" or "C$"), except where otherwise indicated. On February 11, 2021, the daily average exchange rate (as reported by the Bank of Canada) of United States dollars ("US$") into Canadian dollars was US$1.00 equals C$1.27.

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CERTIFICATIONS

See Exhibits 99.4, 99.5, 99.6 and 99.7 to this Form 40-F.

DISCLOSURE CONTROLS AND PROCEDURES

Disclosure controls and procedures are designed to provide reasonable assurance that information required to be disclosed in reports filed with, or submitted to, securities regulatory authorities is recorded, processed, summarized and reported within the time periods specified under Canadian and United States securities laws. As of December 31, 2020, an evaluation was carried out under the supervision of, and with the participation of, the Corporation's management, including the President and Chief Executive Officer and the Executive Vice President, Chief Financial Officer, of the effectiveness of the Corporation's disclosure controls and procedures, as defined in the applicable Canadian and United States securities laws. Based on that evaluation, the President and Chief Executive Officer and the Executive Vice President, Chief Financial Officer concluded that such disclosure controls and procedures are effective as of December 31, 2020.

MANAGEMENT'S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

Management of the Corporation is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is designed by, or under the supervision of, the Corporation's President and Chief Executive Officer and the Executive Vice President, Chief Financial Officer and effected by the Corporation's board of directors, management and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. GAAP. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

The Corporation's management, including the Corporation's President and Chief Executive Officer and the Executive Vice President, Chief Financial Officer, assessed the effectiveness of the Corporation's internal control over financial reporting as of December 31, 2020, based on the criteria set forth in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, management concluded that, as of December 31, 2020, the Corporation's internal control over financial reporting was effective.

Deloitte LLP, an independent registered public accounting firm, has audited the Corporation's Audited Consolidated Financial Statements for the fiscal year ended December 31, 2020 filed as Exhibit 99.2 to this Form 40-F (the "Annual Financial Statements"), and has included its attestation report on management’s assessment of the Corporation’s internal control over financial reporting, which is found on page i of the Annual Financial Statements.

ATTESTATION REPORT OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Deloitte LLP's attestation report on management’s assessment of the Corporation's internal control over financial reporting is found on page v of the Annual Financial Statements.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

Management regularly reviews its system of internal control over financial reporting and makes changes to the Corporation's processes and systems to improve controls and increase efficiency, while ensuring that the Corporation maintains an effective internal control environment. Changes may include such activities as implementing new, more efficient systems, consolidating activities, and migrating processes.

During the year ended December 31, 2020, there have been no changes in the Corporation's internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, the Corporation's internal control over financial reporting.

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NOTICES PURSUANT TO REGULATION BTR

The Corporation did not send any notices required by Rule 104 of Regulation BTR during the year ended December 31, 2020 concerning any equity security subject to a blackout period under Rule 101 of Regulation BTR.

IDENTIFICATION OF THE AUDIT COMMITTEE

The Corporation has a separately designated standing Audit Committee established in accordance with section 3(a)(58)(A) of the Exchange Act. The Audit Committee is composed of Tracey C. Ball (Chair), Lawrence T. Borgard, Maura J. Clark, Margarita K. Dilley, Douglas J. Haughey and Jo Mark Zurel, as described under "Audit Committee - Members" on page 32 of the Corporation's annual information form for the year ended December 31, 2020, which is filed as Exhibit 99.1 to this Form 40-F and incorporated by reference herein (the "AIF").

AUDIT COMMITTEE FINANCIAL EXPERT

The Board has determined that the Corporation has at least one "audit committee financial expert" (as defined in paragraph (8) of General Instruction B to Form 40-F) and that Tracey C. Ball, Maura J. Clark, Margarita K. Dilley and Jo Mark Zurel are the Corporation's "audit committee financial experts" serving on the Audit Committee of the Board. Each of the audit committee financial experts is "independent" under applicable listing standards.

CODE OF ETHICS

The Corporation has a "code of ethics" (as defined in paragraph (9)(b) of General Instruction B to Form 40-F) that applies to its Chief Executive Officer, Chief Financial Officer, principal accounting officer, controller and persons performing similar functions. The Corporation's code of ethics is available on the Corporation's website at https://www.fortisinc.com/ or, without charge, upon request from the Corporate Secretary, Fortis Inc., Fortis Place, Suite 1100, 5 Springdale Street, St. John's, Newfoundland and Labrador, Canada A1E 0E4 (telephone (709) 737-2800).

PRINCIPAL ACCOUNTANT FEES AND SERVICES

Deloitte LLP served as the Corporation's independent public accountant for the fiscal years ended December 31, 2020 and 2019. For a description of the total amount billed to the Corporation by Deloitte LLP for services performed in the last two fiscal years by category of service (audit fees, audit-related fees, tax fees and all other fees), see "Audit Committee - External Auditor Service Fees" on page 33 of the AIF.

AUDIT COMMITTEE PRE‑APPROVAL POLICIES AND PROCEDURES

For a description of the pre-approval policies and procedures of the Corporation's Audit Committee, see "Audit Committee - Pre-Approval Policies and Procedures" on page 33 of the AIF.

No audit-related fees, tax fees or other non-audit fees were approved by the Audit Committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S‑X.

OFF‑BALANCE SHEET ARRANGEMENTS

Except for letters of credit outstanding of $130 million as at December 31, 2020 and certain unrecorded commitments disclosed under the heading "Liquidity and Capital Resources - Contractual Obligations" on page 19 of the Annual MD&A, the Corporation has not entered into any "off-balance sheet arrangements", as defined in General Instruction B(11) to Form 40-F, that have or are reasonably likely to have a current or future effect on the Corporation's financial condition, changes in financial condition, revenues, expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.

TABULAR DISCLOSURE OF CONTRACTUAL OBLIGATIONS

For tabular disclosure of the Corporation's contractual obligations, see page 22 of the Annual MD&A, under the heading "Liquidity and Capital Resources - Contractual Obligations".

5

COMPARISON OF NYSE CORPORATE GOVERNANCE RULES

The Corporation is subject to a variety of corporate governance guidelines and requirements enacted by the Toronto Stock Exchange (the "TSX"), the Canadian securities regulatory authorities, the New York Stock Exchange (the "NYSE") and the SEC. The Corporation is listed on the NYSE and, although the Corporation is not required to comply with most of the NYSE corporate governance requirements to which the Corporation would be subject if it were a U.S. corporation, the Corporation's governance practices differ from those required of U.S. domestic issuers only as described herein. The NYSE rules for U.S. domestic issuers require shareholder approval of all equity compensation plans (as defined in the NYSE rules) regardless of whether new issuances, treasury shares or shares that the Corporation has purchased in the open market are used. The TSX rules require shareholder approval of share compensation arrangements involving new issuances of shares, and of certain amendments to such arrangements, but do not require such approval if the compensation arrangements involve only shares purchased in the open market. The NYSE rules for U.S. domestic issuers also require shareholder approval of certain transactions or series of related transactions that result in the issuance of common shares, or securities convertible into or exercisable for common shares, that have, or will have upon issuance, voting power equal to or in excess of 20% of the voting power outstanding prior to the transaction or if the issuance of common shares, or securities convertible into or exercisable for common shares, are, or will be upon issuance, equal to or in excess of 20% of the number of common shares outstanding prior to the transaction. The TSX rules require shareholder approval of acquisition transactions resulting in dilution in excess of 25%. The TSX also has broad general discretion to require shareholder approval in connection with any issuances of listed securities. The Corporation complies with the TSX rules described in this paragraph.

UNDERTAKING

The Corporation undertakes to make available, in person or by telephone, representatives to respond to inquiries made by the SEC staff, and to furnish promptly, when requested to do so by the SEC staff, information relating to: the securities in relation to which the obligation to file an annual report on Form 40-F arises; or transactions in said securities.

DISCLOSURE PURSUANT TO SECTION 13(r) OF THE EXCHANGE ACT

In accordance with Section 13(r) of the Exchange Act, the Corporation is required to include certain disclosures in its periodic reports if it or any of its affiliates knowingly engaged in certain specified activities during the period covered by the report. Neither the Corporation nor its affiliates have knowingly engaged in any transaction or dealing reportable under Section 13(r) of the Exchange Act during the year ended December 31, 2020.

INCORPORATION BY REFERENCE

Fortis' Annual Report on Form 40-F (other than the section entitled "Credit Ratings" in Exhibit 99.1 to this Form 40-F) is incorporated by reference into Fortis' Registration Statements on Form S-8 (File No. 333-215777), Form S-8 (File No. 333-226663), Form S-8 (File No. 333-236213), Form F-3 (File No. 333-249039), and Form F-10 (File No. 333-250996).

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EXHIBIT INDEX

Exhibit	Description
99.1	Annual Information Form of the Corporation dated February 11, 2021
99.2	Audited Consolidated Financial Statements for the fiscal year ended December 31, 2020
99.3	Management's Discussion and Analysis for the fiscal year ended December 31, 2020
99.4	Chief Executive Officer certification required by Rule 13a-14(a)
99.5	Chief Financial Officer certification required by Rule 13a-14(a)
99.6	Chief Executive Officer certification required by Rule 13a-14(b)
99.7	Chief Financial Officer certification required by Rule 13a-14(b)
99.8	Consent of Deloitte LLP
101.INS	XBRL Instance
101.SCH	XBRL Taxonomy Extension Schema
101.CAL	XBRL Taxonomy Extension Calculation Linkbase
101.DEF	XBRL Taxonomy Extension Definition Linkbase
101.LAB	XBRL Taxonomy Extension Label Linkbase
101.PRE	XBRL Taxonomy Extension Presentation Linkbase

7

SIGNATURES

Pursuant to the requirements of the Exchange Act, the Corporation certifies that it meets all of the requirements for filing on Form 40‑F and has duly caused this annual report to be signed on its behalf by the undersigned, thereto duly authorized.

FORTIS INC.

/s/ Jocelyn H. Perry

Jocelyn H. Perry
Executive Vice President, Chief Financial Officer

Date: February 12, 2021

8

EX-99.1

Exhibit 99.1

ANNUAL INFORMATION FORM

FOR THE YEAR ENDED DECEMBER 31, 2020

February 11, 2021

ANNUAL INFORMATION FORM

For the year ended December 31, 2020

Dated February 11, 2021

TABLE OF CONTENTS
Forward-Looking Information	2	Sustainability	24
Glossary	3	Social and Environmental Policies	25
Corporate Structure	5	Sustainability Regulation and Environmental
Name and Incorporation	5	Contingencies	26
Inter-Corporate Relationships	5	Capital Structure and Dividends	26
General Development of the Business	6	Description of Capital Structure	26
Overview	6	Dividends and Distributions	26
Three-Year History	6	Debt Covenant Restrictions on Dividend
Outlook	7	Distributions	27
Description of the Business	8	Credit Ratings	28
Regulated Utilities	9	Directors and Officers	30
ITC	9	Audit Committee	32
UNS Energy	12	Members	32
Central Hudson	14	Education and Experience	32
FortisBC Energy	15	Pre-Approval Policies and Procedures	33
FortisAlberta	17	External Auditor Service Fees	33
FortisBC Electric	18	Transfer Agent and Registrar	33
Other Electric	19	Interests of Experts	34
Non-Regulated	22	Additional Information	34
Energy Infrastructure	22	Exhibit A: Summary of Terms and Conditions
Corporate and Other	22	of Authorized Securities	35
Human Resources	23	Exhibit B: Market for Securities	38
Legal Proceedings and Regulatory Actions	23	Exhibit C: Audit Committee Mandate	40
Risk Factors	24	Exhibit D: Material Contracts	48

Financial information in this AIF has been prepared in accordance with US GAAP and is presented in Canadian dollars ($) based, as applicable, on the following US-to-Canadian dollar exchange rates: (i) average of 1.34 and 1.33 for the years ended December 31, 2020 and 2019, respectively; (ii) 1.27 and 1.30 as at December 31, 2020 and 2019, respectively; and (iii) 1.32 for all forecast periods.

Except as otherwise expressly noted, the information in this AIF is given as of December 31, 2020.

ANNUAL INFORMATION FORM 1 December 31, 2020

FORWARD-LOOKING INFORMATION

Fortis includes forward-looking information in this AIF within the meaning of applicable Canadian securities laws and forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 (collectively referred to as "forward-looking information"). Forward-looking information reflects expectations of Fortis management regarding future growth, results of operations, performance, business prospects and opportunities. Wherever possible, words such as anticipates, believes, budgets, could, estimates, expects, forecasts, intends, may, might, plans, projects, schedule, should, target, will, would and the negative of these terms and other similar terminology or expressions have been used to identify the forward-looking information, which includes, without limitation: forecast capital expenditures for 2021-2025; the 2035 carbon emissions reduction target; forecast rate base for 2023 and 2025; additional opportunities beyond the capital plan; the expectation that long-term growth in rate base will support earnings and dividend growth; target average annual dividend growth through 2025;the expectation that future increases in energy supply costs will increase electricity rates that Newfoundland Power charges to its customers; TEP's carbon emissions reduction target and projected asset mix; and FortisBC's 2030 GHG emission target and renewable gas target.

Forward‑looking information involves significant risks, uncertainties and assumptions. Certain material factors or assumptions have been applied in drawing the conclusions contained in the forward-looking information, including, without limitation: no material adverse effects from the COVID-19 pandemic; reasonable regulatory decisions and the expectation of regulatory stability; the successful execution of the capital plan; no material capital project or financing cost overrun; sufficient human resources to deliver service and execute the capital plan; no significant variability in interest rates; the Board exercising its discretion to declare dividends, taking into account the business performance and financial conditions of the Corporation; no significant operational disruptions or environmental liability or upset; the continued ability to maintain the performance of the electricity and gas systems; no severe and prolonged economic downturn; sufficient liquidity and capital resources; the ability to hedge exposures to fluctuations in foreign exchange rates, natural gas prices and electricity prices; the continued availability of natural gas, fuel, coal and electricity supply; continuation of power supply and capacity purchase contracts; no significant changes in government energy plans, environmental laws and regulations that could have a material negative impact; maintenance of adequate insurance coverage; the ability to obtain and maintain licences and permits; retention of existing service areas; no significant changes in tax laws and the continued tax deferred treatment of earnings from the Corporation's foreign operations; continued maintenance of information technology infrastructure and no material breach of cybersecurity; continued favourable relations with Indigenous Peoples; and favourable labour relations.

Fortis cautions readers that a number of factors could cause actual results, performance or achievements to differ materially from those discussed or implied in the forward-looking information. These factors should be considered carefully and undue reliance should not be placed on the forward-looking information. Risk factors which could cause results or events to differ from current expectations are detailed in the MD&A under the heading "Business Risks" and in other continuous disclosure materials filed from time to time with Canadian securities regulatory authorities and the Securities and Exchange Commission.

All forward-looking information in this AIF is given as of the date of this AIF. Fortis disclaims any intention or obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise.

ANNUAL INFORMATION FORM 2 December 31, 2020

GLOSSARY

Certain terms used in this 2020 Annual Information Form are defined below:

2020 Annual Information Form or AIF: this annual information form of the Corporation in respect of the year ended December 31, 2020

ACGS: Aitken Creek Gas Storage ULC

Aitken Creek: Aitken Creek natural gas storage facility

Algoma Power: Algoma Power Inc.

APS: Arizona Public Service Company

AUC: Alberta Utilities Commission

BC Hydro: BC Hydro and Power Authority

BCUC: British Columbia Utilities Commission

BECOL: Belize Electric Company Limited

Belize Electricity: Belize Electricity Limited

Board: Board of Directors of the Corporation

Canadian Niagara Power: Canadian Niagara Power Inc.

CUPE: Canadian Union of Public Employees

Caribbean Utilities: Caribbean Utilities Company, Ltd.

CBT: Columbia Basin Trust

Central Hudson: Central Hudson Gas & Electric Corporation

CMS: Consumers Energy Company

Cornwall Electric: Cornwall Street Railway, Light and Power Company, Limited

Corporation: Fortis Inc.

CPA: Canal Plant Agreement

CPC: Columbia Power Corporation

DBRS Morningstar: DBRS Limited

DTE: DTE Electric Company

EDGAR: SEC's system for Electronic Data Gathering, Analysis and Retrieval available at www.sec.gov

Eiffel Investment: Eiffel Investment Pte Ltd.

FERC: Federal Energy Regulatory Commission

FHI: FortisBC Holdings Inc.

Financial Statements: the Corporation's Audited Consolidated Financial Statements in respect of the year ended December 31, 2020

Fitch: Fitch Ratings Inc.

Fortis: Fortis Inc.

FortisAlberta: FortisAlberta Inc.

FortisBC Electric: collectively, the operations of FortisBC Inc. and its parent company, FortisBC Pacific Holdings Inc.

FortisBC Energy: FortisBC Energy Inc.

FortisOntario: FortisOntario Inc.

FortisTCI: collectively, FortisTCI Limited and Turks and Caicos Utilities Limited

FortisUS: FortisUS Inc.

FortisUS Holdings: FortisUS Holdings Nova Scotia Limited

FortisWest: FortisWest Inc.

GHG: greenhouse gas

GIC: GIC Private Limited

GSMIP: Gas Supply Mitigation Incentive Plan of FortisBC Energy

IBEW: International Brotherhood of Electrical Workers

IESO: Independent Electricity System Operator of Ontario

IPL: Interstate Power and Light Company

ITC: ITC Holdings together with all of its subsidiaries

ITC Great Plains: ITC Great Plains, LLC

ITC Holdings: ITC Holdings Corp.

ANNUAL INFORMATION FORM 3 December 31, 2020

ITC Interconnection: ITC Interconnection LLC

ITC Investment Holdings: ITC Investment Holdings Inc.

ITC Midwest: ITC Midwest LLC

ITC's MISO Regulated Operating Subsidiaries: collectively ITCTransmission, METC and ITC Midwest

ITC's Regulated Operating Subsidiaries: collectively, ITCTransmission, METC, ITC Midwest, ITC Great Plains and ITC Interconnection

ITCTransmission: International Transmission Company

LNG: liquefied natural gas

Maritime Electric: Maritime Electric Company, Limited

MD&A: the Corporation's Management Discussion and Analysis in respect of the year ended December 31, 2020

METC: Michigan Electric Transmission Company

MISO: Midcontinent Independent System Operator, Inc.

Moody's: Moody's Investors Service, Inc.

MoveUP: Movement of United Professionals

NB Power: New Brunswick Power Corporation

Newfoundland Power: Newfoundland Power Inc.

NL Hydro: Newfoundland and Labrador Hydro Corporation

NYPSC: New York Public Service Commission

NYSE: New York Stock Exchange

PEI: the province of Prince Edward Island, Canada

PNM: Public Service Company of New Mexico

PPA: power purchase agreement

PUB: Newfoundland and Labrador Board of Commissioners of Public Utilities

PWU: Power Workers' Union

ROE: return on common equity

S&P: Standard & Poor's Financial Services LLC

SEC: United States Securities and Exchange Commission

SEDAR: the System for Electronic Document Analysis and Retrieval of the Canadian Securities Administrators available at www.sedar.com

SPP: Southwest Power Pool, Inc.

SRP: Salt River Project Agricultural Improvement and Power District

T&D: transmission and distribution

TC Energy: TC Energy Corporation

TEP: Tucson Electric Power Company

TSX: Toronto Stock Exchange

UNS Electric and UNSE: UNS Electric, Inc.

UNS Energy: UNS Energy Corporation

UNS Gas: UNS Gas, Inc.

US: United States of America

US GAAP: accounting principles general accepted in the US

UUWA: United Utility Workers' Association of Canada

Waneta Expansion: 335-MW Waneta Expansion hydroelectric generating facility

Wataynikaneyap Partnership: Wataynikaneyap Power Limited Partnership

Measurements:

GW    Gigawatt(s)

GWh    Gigawatt hour(s)

km    Kilometre(s)

MW    Megawatt(s)

TJ    Terajoule(s)

PJ    Petajoule(s)

Conversions:

1 litre = 0.22 imperial gallons

1 kilometre = 0.62 miles

Conversion using the above factors on rounded numbers appearing in this AIF may produce small differences from reported amounts as a result.

ANNUAL INFORMATION FORM 4 December 31, 2020

CORPORATE STRUCTURE

Name and Incorporation

Fortis Inc. is a holding company that was incorporated as 81800 Canada Ltd. under the Canada Business Corporations Act on June 28, 1977 and continued under the Corporations Act (Newfoundland and Labrador) on August 28, 1987. The corporate head office and registered office of Fortis is located at Fortis Place, Suite 1100, 5 Springdale Street, P.O. Box 8837, St. John's, Newfoundland and Labrador, Canada, A1B 3T2.

The articles of continuance of the Corporation were amended to: (i) change its name to Fortis on October 13, 1987; (ii) set out the rights, privileges, restrictions and conditions attached to the common shares on October 15, 1987; (iii) designate 2,000,000 First Preference Shares, Series A on September 11, 1990; (iv) replace the class rights, privileges, restrictions and conditions attaching to the First Preference Shares and the Second Preference Shares on July 22, 1991; (v) designate 2,000,000 First Preference Shares, Series B on December 13, 1995; (vi) designate 5,000,000 First Preference Shares, Series C on May 27, 2003; (vii) designate 8,000,000 First Preference Shares, Series D and First Preference Shares, Series E on January 23, 2004; (viii) amend the redemption provisions attaching to the First Preference Shares, Series D on July 15, 2005; (ix) designate 5,000,000 First Preference Shares, Series F on September 22, 2006; (x) designate 9,200,000 First Preference Shares, Series G on May 20, 2008; (xi) designate 10,000,000 First Preference Shares, Series H and 10,000,000 First Preference Shares, Series I on January 20, 2010; (xii) designate 8,000,000 First Preference Shares, Series J on November 8, 2012; (xiii) designate 12,000,000 First Preference Shares, Series K and 12,000,000 First Preference Shares, Series L on July 11, 2013; and; (xiv) designate 24,000,000 First Preference Shares, Series M and 24,000,000 First Preference Shares, Series N on September 16, 2014.

Inter-Corporate Relationships

The following table lists the principal subsidiaries of the Corporation, their jurisdictions of incorporation and the percentage of votes attaching to voting securities held directly or indirectly by the Corporation as at February 11, 2021. The principal subsidiaries together comprise approximately 89% of the Corporation's consolidated assets as at December 31, 2020 and approximately 86% of the Corporation's 2020 consolidated revenue. This table excludes certain subsidiaries, the assets and revenues of which did not individually exceed 10%, or in the aggregate exceed 20%, of the total consolidated assets or total consolidated revenues of the Corporation as at December 31, 2020.

Subsidiary	Jurisdiction of Incorporation	Votes attaching to voting securities beneficially owned, controlled or directed by the Corporation (%)
ITC (1)	Michigan, United States	80.1
UNS Energy (2)	Arizona, United States	100
Central Hudson (3)	New York, United States	100
FortisBC Energy (4)	British Columbia, Canada	100
FortisAlberta (5)	Alberta, Canada	100
Newfoundland Power (6)	Newfoundland and Labrador, Canada	100

(1)ITC Holdings, a Michigan corporation, owns all of the shares of ITC Great Plains, ITC Interconnection, ITC Midwest, ITCTransmission and METC. ITC Investment Holdings, a Michigan corporation, owns all of the shares of ITC Holdings. FortisUS, a Delaware corporation, owns 80.1% of the voting securities of ITC Investment Holdings. FortisUS Holdings, a Canadian corporation, owns all of the shares of FortisUS. Fortis owns all of the shares of FortisUS Holdings. 19.9% of the voting securities of ITC Investment Holdings are owned by an affiliate of GIC.

(2)UNS Energy owns all of the shares of TEP, UNS Electric and UNS Gas. FortisUS owns all of the shares of UNS Energy.

(3)CH Energy Group, Inc., a New York corporation, owns all of the shares of Central Hudson. FortisUS owns all of the shares of CH Energy Group, Inc.

(4)FHI, a British Columbia corporation, owns all of the shares of FortisBC Energy. Fortis owns all of the shares of FHI.

(5)FortisAlberta Holdings Inc., an Alberta corporation, owns all of the shares of FortisAlberta. FortisWest, a Canadian corporation, owns all of the shares of FortisAlberta Holdings Inc. Fortis owns all of the shares of FortisWest.

(6)Fortis owns all of the shares of Newfoundland Power.

ANNUAL INFORMATION FORM 5 December 31, 2020

GENERAL DEVELOPMENT OF THE BUSINESS

Overview

Fortis is a well-diversified leader in the North American regulated electric and gas utility industry, with 2020 revenue of $8.9 billion and total assets of $55 billion as at December 31, 2020.

Regulated utilities account for 99% of the Corporation's assets with the remainder primarily attributable to non-regulated energy infrastructure. The Corporation's 9,000 employees serve 3.3 million utility customers in five Canadian provinces, nine US states and three Caribbean countries. As at December 31, 2020, 66% of the Corporation's assets were located outside Canada and 59% of 2020 revenue was derived from foreign operations.

Three-Year History

Over the past three years, Fortis has experienced significant growth in its business operations. Total assets have increased from $47.8 billion at the start of 2018 to $55.5 billion as at December 31, 2020. The Corporation's shareholders' equity has also grown from $16.7 billion at the start of 2018 to $20.3 billion as at December 31, 2020. Net earnings attributable to common equity shareholders have increased from $1,100 million in 2018 to $1,209 million in 2020.

The growth in business operations reflects the Corporation's organic growth strategy for its principal regulated utilities.

2018

In 2018 the Corporation deployed capital expenditures of $3.2 billion at its utilities and announced an ambitious utility capital plan of $17.3 billion for the period 2019 to 2023, an increase of 20% over the prior year's plan. The increase in annual earnings for 2018 was driven by growth at both the regulated and non-regulated businesses, as well as lower income tax expense primarily related to a one-time expense in 2017 associated with US tax reform, along with the positive tax impacts of electing to file a consolidated state tax return and designating assets as "held for sale" in 2018.

2019

In January 2019 Fortis announced that it entered into a definitive agreement with CBT and CPC to sell its 51% interest in the Waneta Expansion for approximately $1 billion. The transaction closed in April 2019. The sale of the Corporation's interest in the Waneta Expansion completed the asset sale portion of the Corporation's capital funding strategy.

In September 2019 Fortis announced its five-year capital plan of $18.8 billion for the period 2020 to 2024. The Corporation deployed capital expenditures of $3.8 billion at its utilities in 2019.

2020

Fortis performed well as it navigated through the global COVID-19 pandemic throughout 2020. Approximately half of the Corporation's employees transitioned to working from home while field operation employees adapted to work safely to maintain the Corporation's critical infrastructure and continue to deliver essential energy to customers.

In September 2020 the Corporation announced a five-year capital plan of $19.6 billion for the period 2021 to 2025. This plan represents an increase in $800 million from the prior year's plan. The capital plan focuses on a diverse mix of low-risk, highly executable projects needed to maintain and upgrade our existing infrastructure to expand capacity, improve reliability and support a cleaner energy future.

Also in September 2020 the Corporation announced it is building on its low emissions profile by establishing a corporate-wide target to reduce carbon emissions by 75% by 2035 from a 2019 base year. Fortis expects to achieve the target through delivering on planned carbon emissions reductions at TEP as well as clean energy initiatives across the Corporation's other utilities. For details on the Corporation's carbon emissions reduction target, refer to the "Sustainability" section of this AIF.

ANNUAL INFORMATION FORM 6 December 31, 2020

Barry V. Perry, President and Chief Executive Officer of Fortis, retired from Fortis at the end of 2020 after a nearly 35-year career, over 20 of which were with Fortis. David G. Hutchens, formerly Chief Operating Officer of Fortis and Chief Executive Officer of UNS Energy, was appointed as Mr. Perry's successor and a member of the Board effective January 1, 2021.

In addition to the efforts across the Fortis group to control costs during the pandemic, the Corporation's utilities have regulatory mechanisms that help stabilize cash flow and earnings which support the continued delivery of reliable service. Approximately 83% of the Corporation's revenues are either protected by regulatory mechanisms or are derived from residential sales which have generally increased as a result of work-from-home practices.

Excluding the impact of the delay in TEP's general rate application, the COVID-19 pandemic did not have a material impact on the Corporation's capital expenditures, revenue or earnings in 2020. The financial impact to Fortis approximated $0.05 per common share, reflecting reduced sales in the Caribbean and higher net operational expenses, including an increase in credit loss expense, largely at Central Hudson and UNS Energy.

Net earnings attributable to common equity shareholders for 2020 were $1,209 million compared to $1,655 million for 2019. The decrease included (i) a $484 million gain on the disposition of the Waneta Expansion in April 2019; and (ii) the $56 million net impact associated with the reversal of prior period liabilities as a result of the November 2019 and May 2020 FERC decisions at ITC.

The Corporation executed its largest capital plan on record in 2020, with consolidated capital expenditures of $4.2 billion. Despite adjustments to work practices and the necessary rescheduling of certain field work due to the COVID-19 pandemic, work remained on track and the Corporation delivered its strongest safety results in its history.

Over the past three years, including 2020, consolidated capital expenditures totalled $11.2 billion. Organic asset growth has been driven by capital expenditures at the Corporation's regulated utilities.

Outlook

The Corporation maintains its positive long-term outlook. Fortis continues to enhance shareholder value through the execution of its capital plan, the balance and strength of its diversified portfolio of utility businesses, and growth opportunities within and proximate to its service territories. While uncertainty exists due to the COVID-19 pandemic, the Corporation does not currently expect it to have a material financial impact in 2021.

The Corporation's $19.6 billion five-year capital plan is expected to increase rate base from $30.5 billion in 2020 to $36.4 billion by 2023 and $40.3 billion by 2025, translating into three- and five-year compound annual growth rates of approximately 6.5% and 6.0%, respectively. Beyond the five-year capital plan, Fortis continues to pursue additional energy infrastructure opportunities, including: further expansion of LNG infrastructure in British Columbia; the fully permitted, cross-border, Lake Erie Connector electric transmission project in Ontario; and the acceleration of cleaner energy infrastructure investments across our jurisdictions.

Fortis expects long-term growth in rate base will support earnings and dividend growth. Fortis is targeting average annual dividend growth of approximately 6% through 2025.

ANNUAL INFORMATION FORM 7 December 31, 2020

DESCRIPTION OF THE BUSINESS

Fortis is principally an energy delivery company, with 93% of its assets related to transmission and distribution. The business is characterized by low-risk, stable and predictable earnings and cash flows. Earnings, earnings per share and total shareholder return are the primary measures of financial performance.

The Corporation's regulated utility businesses are: ITC (electric transmission - Michigan, Iowa, Minnesota, Illinois, Missouri, Kansas and Oklahoma); UNS Energy (integrated electric and natural gas distribution - Arizona); Central Hudson (electric transmission and distribution, and natural gas distribution - New York); FortisBC Energy (natural gas transmission and distribution - British Columbia); FortisAlberta (electric distribution - Alberta); FortisBC Electric (integrated electric - British Columbia); Newfoundland Power (integrated electric - Newfoundland and Labrador); Maritime Electric (integrated electric - Prince Edward Island); FortisOntario (integrated electric - Ontario); Caribbean Utilities (integrated electric - Grand Cayman); and FortisTCI (integrated electric - Turks and Caicos Islands). Fortis also holds equity investments in the Wataynikaneyap Partnership (electric transmission - Ontario) and Belize Electricity (integrated electric - Belize).

Non-regulated energy infrastructure consists of Aitken Creek (natural gas storage facility - British Columbia), BECOL (three hydroelectric generation facilities with a combined capacity of 51 MW - Belize) and the Waneta Expansion up to its disposition in April 2019.

Fortis has a unique operating model with a small head office in St. John's, Newfoundland and Labrador and business units that operate on a substantially autonomous basis. Each utility has its own management team and most have a board of directors with a majority of independent members, which provides effective oversight within the broad parameters of Fortis policies and best practices. Subsidiary autonomy supports constructive relationships with regulators, policy makers, customers and communities. Fortis believes this model enhances accountability, opportunity and performance across the Corporation's businesses, and positions Fortis well for future investment opportunities.

Fortis strives to provide safe, reliable and cost-effective energy service to customers using sustainable practices while delivering long-term profitable growth to shareholders. Management is focused on achieving growth through the execution of its capital plan and the pursuit of investment opportunities within and proximate to its service territories.

Competition

Most of the Corporation's regulated utilities operate as the sole supplier of electricity and/or gas within their respective service territories. Competition in the regulated electric business is primarily from alternative energy sources and on-site generation by industrial customers. The Corporation faces competition in its transmission business which may restrict its ability to grow this business outside of its established service territories.

At the Corporation's regulated gas utilities, natural gas primarily competes with electricity for space and hot water heating load. In addition to other price comparisons, upfront capital cost differences between electric and natural gas equipment for hot water and space heating applications continue to present challenges for the competitiveness of natural gas on a fully costed basis. Government policy could also impact the competitiveness of natural gas in the Corporation's service territories. The British Columbia provincial government has introduced changes to energy policy, including GHG emission reduction targets and a tax on carbon-based fuels which is expected to increase in the future. As all levels of government become more active in the development of policies to address climate change, any resultant changes to energy policy may have a material impact on the competitiveness of natural gas relative to non-carbon based energy sources or other energy sources.

Seasonality

As the Corporation's subsidiaries operate in various jurisdictions throughout North America, seasonality impacts each utility differently. Most of the annual earnings of the Corporation's gas utilities are realized in the first and fourth quarters due to space heating requirements in colder weather. Earnings for electric utilities in the US are generally highest in the second and third quarters due to the use of air conditioning and other cooling equipment in the summer.

ANNUAL INFORMATION FORM 8 December 31, 2020

Summary of Operations

The following table and sections describe the Corporation's operations and reportable segments.

		Customers	Peak Demand(1)		Electric T&D Lines (circuit km)	Gas T&D Lines (km)	Generating Capacity (MW)	Revenue ($ millions)	GWh Sales	Gas Volumes(PJ)	Employees
Regulated Utilities
ITC		—	23,364	MW	25,800	—	—	1,744	—	—	699
UNS Energy		694,000	3,309	MW	22,700	5,100	3,233	2,260	16,763	15	2,057
			107	TJ
Central Hudson		380,000	1,142	MW	15,100	2,400	65	953	4,969	23	1,061
			121	TJ
FortisBC Energy		1,048,000	1,555	TJ	—	49,500	—	1,385	—	219	1,954
FortisAlberta		572,000	2,770	MW	91,000	—	—	596	16,092	—	1,085
FortisBC Electric		182,000	740	MW	7,300	—	225	424	3,291	—	560
Other Electric
	Newfoundland Power	270,000	1,356	MW	12,500	—	143	717	5,729	—	613
	Maritime Electric	84,000	287	MW	6,300	—	130	219	1,293	—	200
	FortisOntario	67,000	258	MW	3,500	—	5	225	1,289	—	213
	Caribbean Utilities	31,000	109	MW	800	—	161	243	644	—	228
	FortisTCI	15,000	40	MW	700	—	91	81	220	—	168
Non-Regulated
Energy Infrastructure		—	—		—	—	51	88	229	—	68
Corporate and Other		—	—		—	—	—	—	—	—	55
Total		3,343,000	33,375	MW	185,700	57,000	4,104	8,935	50,519	257	8,961
			1,783	TJ

(1)Electric (MW) or gas (TJ)

Regulated Utilities

ITC

ITC's business consists mainly of the electric transmission operations. ITC's Regulated Operating Subsidiaries own and operate high-voltage electric transmission systems in Michigan's Lower Peninsula and portions of Iowa, Minnesota, Illinois, Missouri, Kansas and Oklahoma that transmit electricity from generating stations to local distribution facilities connected to ITC's transmission systems. ITC's business strategy is to own, operate, maintain and invest in transmission infrastructure in order to enhance system integrity and reliability, reduce transmission constraints and support new generating resources interconnecting to ITC's transmission system.

ITC's Regulated Operating Subsidiaries earn revenues from the use of their transmission systems by customers, including investor-owned utilities, municipalities, cooperatives, power marketers and alternative energy suppliers. As independent transmission companies, ITC's Regulated Operating Subsidiaries are subject to rate regulation by FERC. The rates charged are established using cost-based formula rates.

ITC's principal transmission service customers are DTE, CMS and IPL. One or more of these customers together have consistently represented a significant percentage of ITC's operating revenue. Nearly all of ITC's revenues are from transmission customers in the US.

Market and Sales

Revenues

Revenue was $1,744 million in 2020 compared to $1,761 million in 2019.

ANNUAL INFORMATION FORM 9 December 31, 2020

ITC derives nearly all of its revenues from transmission, scheduling, control and dispatch services and other related services over ITC's Regulated Operating Subsidiaries' transmission systems to DTE, CMS, IPL and other entities, such as alternative energy suppliers, power marketers and other wholesale customers that provide electricity to end-use customers, as well as from transaction-based capacity reservations on ITC's transmission systems. MISO and SPP are responsible for billing and collecting the majority of transmission service revenues. As the billing agents for ITC's MISO Regulated Operating Subsidiaries and ITC Great Plains, MISO and SPP collect fees for the use of ITC's transmission systems, invoicing DTE, CMS, IPL and other customers on a monthly basis.

The following table compares the composition of ITC's 2020 and 2019 revenue by customer class.

	Revenue (%)
	2020	2019
Network revenues	65.6	63.0
Regional cost-sharing revenues	27.9	27.9
Point-to-point	1.0	1.0
Scheduling, control and dispatch	1.6	1.3
Recognition of ROE complaint liabilities (1)	2.4	5.2
Other	1.5	1.6
Total	100.0	100.0

(1)Adjustments have been made to the refund liability recorded related to the complaint proceedings on the MISO base rate of return on equity, which resulted in increases in operating revenues for the periods presented.

Network revenues are generated from network customers for their use of ITC's electric transmission systems and are based on the actual revenue requirements as a result of ITC's accounting under its cost-based formula rates that contain a true-up mechanism.

Network revenues from ITC Great Plains include the annual revenue requirements specific to projects that are charged exclusively within one pricing zone within SPP or are classified as direct assigned network upgrades under the SPP tariff and contain a true-up mechanism.

Regional cost-sharing revenues are generated from transmission customers for their use of ITC's MISO Regulated Operating Subsidiaries' network upgrade projects that are eligible for regional cost-sharing under provisions of the MISO tariff, including multi-value projects, which have been determined by MISO to have regional value while meeting near-term needs. Additionally, certain projects at ITC Great Plains are eligible for recovery through a region-wide charge under provisions of the SPP tariff. Regional cost sharing revenues are treated as a revenue credit to regional or network customers and is a reduction to gross revenue requirement when calculating net revenue requirement under ITC's cost-based formula rates.

Point-to-point revenues consist of revenues generated from a type of transmission service for which the customer pays for transmission capacity reserved along a specified path between two points on an hourly, daily, weekly or monthly basis. Point-to-point revenues also include other components pursuant to schedules under the MISO and SPP tariffs. Point-to-point revenues are treated as a revenue credit to network or regional customers and are a reduction to gross revenue requirement when calculating net revenue requirement under ITC's cost-based formula rates.

Scheduling, control and dispatch revenues are allocated to ITC's MISO Regulated Operating Subsidiaries by MISO as compensation for the services performed in operating the transmission system. Such services include monitoring of reliability data, current and next-day analysis, implementation of emergency procedures and outage coordination and switching.

Other revenuesconsist of rental revenues, easement revenues, revenues relating to utilization of jointly-owned assets under ITC's transmission ownership and operating agreements and amounts from providing ancillary services to customers. The majority of other revenues are treated as a revenue credit and taken as a reduction to gross revenue requirements when calculating the net revenue requirement under ITC's cost-based formula rates.

ANNUAL INFORMATION FORM 10 December 31, 2020

Contracts

ITCTransmission

DTE operates an electric distribution system that is interconnected with ITCTransmission's transmission system. A set of three operating contracts sets forth the terms and conditions related to DTE's and ITCTransmission's ongoing working relationship. These contracts include:

Master Operating Agreement - governs the primary day-to-day operational responsibilities of ITCTransmission and DTE. It identifies the control area coordination services that ITCTransmission is obligated to provide to DTE and certain generation-based support services that DTE is required to provide to ITCTransmission.

Generator Interconnection and Operation Agreement - established, re-established and maintains the direct electricity interconnection of DTE's electricity generating assets with ITCTransmission's transmission system for the purposes of transmitting electric power from and to the electricity generating facilities.

Coordination and Interconnection Agreement - governs the rights, obligations and responsibilities of ITCTransmission and DTE regarding, among other things, the operation and interconnection of DTE's distribution system and ITCTransmission's transmission system, and the construction of new facilities or modification of existing facilities. Additionally, this agreement allocates costs for operation of supervisory, communications and metering equipment.

METC

CMS operates an electric distribution system that interconnects with METC's transmission system. METC is a party to a number of operating contracts with CMS that govern the operations and maintenance of its transmission system. These contracts include:

Amended and Restated Easement Agreement - CMS provides METC with an easement to the land on which a majority of METC's transmission towers, poles, lines and other transmission facilities, used to transmit electricity for CMS and others, are located. METC pays CMS a nominal annual rent for the easement and also pays for any rentals, property taxes and other fees related to the property covered by the agreement.

Amended and Restated Operating Agreement - METC is responsible for maintaining and operating its transmission system, providing CMS with information and access to its transmission system and related books and records, administering and performing the duties of control area operator (that is, the entity exercising operational control over the transmission system) and, if requested by CMS, building connection facilities necessary to permit interaction with new distribution facilities built by CMS.

Amended and Restated Purchase and Sale Agreement for Ancillary Services - Since METC does not own any generating facilities, it must procure ancillary services from third-party suppliers, such as CMS. Currently, under this agreement, METC pays CMS for providing certain generation-based services necessary to support the reliable operation of the bulk power grid, such as voltage support and generation capability and capacity to balance loads and generation.

Amended and Restated Distribution-Transmission Interconnection Agreement - provides for the interconnection of CMS's distribution system with METC's transmission system and defines the continuing rights, responsibilities and obligations of the parties with respect to the use of certain of their own and the other parties' property, assets and facilities.

Amended and Restated Generator Interconnection Agreement - specifies the terms and conditions under which CMS and METC maintain the interconnection of CMS's generation resources and METC's transmission assets.

ANNUAL INFORMATION FORM 11 December 31, 2020

ITC Midwest

IPL operates an electric distribution system that interconnects with ITC Midwest's transmission system. ITC Midwest is a party to a number of operating contracts with IPL that govern the operations and maintenance of its transmission system. These contracts include:

Distribution-Transmission Interconnection Agreement - governs the rights, responsibilities and obligations of ITC Midwest and IPL, with respect to the use of certain of their own and the other party's property, assets and facilities and the construction of new facilities or modification of existing facilities.

Large Generator Interconnection Agreement - ITC Midwest, IPL and MISO entered into this agreement in order to establish, re-establish and maintain the direct electricity interconnection of IPL's electricity generating assets with ITC Midwest's transmission system for the purposes of transmitting electric power from and to the electricity generating facilities.

UNS Energy

UNS Energy is a vertically integrated utility services holding company, headquartered in Tucson, Arizona. It is engaged through its subsidiaries in the regulated electric generation and energy delivery business, primarily in the State of Arizona, serving approximately 694,000 electricity and gas customers. UNS Energy primarily consists of three wholly owned regulated utilities: TEP, UNS Electric and UNS Gas.

TEP, UNS Energy's largest operating subsidiary, is a vertically integrated regulated electric utility that generates, transmits and distributes electricity. TEP serves approximately 433,000 retail customers in a territory comprising approximately 2,991 square km in southeastern Arizona, including the greater Tucson metropolitan area in Pima County, as well as parts of Cochise County. TEP's service area covers a population of over one million people. TEP also sells wholesale electricity to other entities in the western US.

UNS Electric is a vertically integrated regulated electric utility that generates, transmits and distributes electricity to approximately 98,000 retail customers in Arizona's Mohave and Santa Cruz counties.

TEP and UNS Electric own generation resources with an aggregate capacity of 3,233 MW, including 54 MW of solar capacity. Several of the generating assets in which TEP and UNS Electric have an interest are jointly owned. As at December 31, 2020, approximately 33% of the generating capacity was fuelled by coal.

UNS Gas is a regulated gas distribution utility that serves approximately 163,000 retail customers in Arizona's Mohave, Yavapai, Coconino, Navajo and Santa Cruz counties.

Market and Sales

UNS Energy's electricity sales were 16,763 GWh in 2020, compared to 18,354 GWh in 2019. Gas volumes were 15 PJ in 2020 compared to 16 PJ in 2019. Revenue was $2,260 million in 2020, compared to $2,212 million in 2019.

The following table provides the composition of UNS Energy's 2020 and 2019 revenue, electricity sales, and gas volumes by customer class.

	Revenue (%)		GWh Sales (%)		PJ Volumes (%)
	2020	2019	2020	2019	2020	2019
Residential	40.9	36.5	30.9	25.0	57.3	57.9
Commercial	20.9	21.2	16.1	15.1	22.1	23.4
Industrial	13.8	13.8	18.0	16.6	1.9	2.0
Other (1)	24.4	28.5	35.0	43.3	18.7	16.7
Total	100.0	100.0	100.0	100.0	100.0	100.0

(1)Includes electricity sales and gas volumes to other entities for resale and revenue from sources other than from the sale of electricity and gas

ANNUAL INFORMATION FORM 12 December 31, 2020

Power Supply

TEP meets the electricity supply requirements of its retail and wholesale customers with its owned electrical generating capacity of 2,932 and its T&D system consisting of approximately 16,000 km of line. In 2020 TEP met a peak demand of 2,812 MW, which includes firm sales to wholesale customers. TEP is a member of a regional reserve-sharing organization and has reliability and power sharing relationships with other utilities.

TEP's generating capacity is set forth in the following table.

Generation Source	Unit No.	Location	Date in Service	Total Capacity (MW)	Operating Agent	TEP's Share (%)	TEP's Share (MW)
Coal
Springerville Station	1	Springerville, AZ	1985	387	TEP	100.0	387
Springerville Station (1)	2	Springerville, AZ	1990	406	TEP	100.0	406
San Juan Station	1	Farmington, NM	1976	340	PNM	50.0	170
Four Corners Station	4	Farmington, NM	1969	785	APS	7.0	55
Four Corners Station	5	Farmington, NM	1970	785	APS	7.0	55
Natural Gas
Gila River Power Station	2	Gila Bend, AZ	2003	550	SRP	100.0	550
Gila River Power Station (2)	3	Gila Bend, AZ	2003	550	SRP	75.0	413
Luna Generating Station	1	Deming, NM	2006	555	PNM	33.3	185
Sundt Station	3	Tucson, AZ	1962	104	TEP	100.0	104
Sundt Station	4	Tucson, AZ	1967	156	TEP	100.0	156
Sundt Internal Combustion Turbines		Tucson, AZ	1972-1973	50	TEP	100.0	50
Sundt Reciprocating Internal Combustion Engine (3)	1-10	Tucson, AZ	2019-2020	188	TEP	100.0	188
DeMoss Petrie	N/A	Tucson, AZ	2001	75	TEP	100.0	75
North Loop	N/A	Tucson, AZ	2001	96	TEP	100.0	96
Solar
Utility-Scale Renewables (4)		Various	2002-2017	42	TEP	100.0	42
Total Capacity							2,932

(1)Springerville Generating Station Unit 2 is owned by San Carlos Resources Inc., a wholly owned subsidiary of TEP.

(2)TEP owns 75% of Gila River Unit 3 and UNSE owns 25%.

(3)TEP placed in service five natural gas reciprocating internal combustion engine units in December 2019 and an additional five units in March 2020.

(4)In September 2020, Sundt Areva Solar Thermal, with a nominal capacity of 5 MW, was retired.

UNS Electric meets the electricity supply requirements of its retail customers with its owned electrical generating capacity of 302 MW and purchasing power on the wholesale market, and its T&D system consisting of approximately 7,000 km of line. In 2020 UNS Electric met a peak demand of 497 MW.

ANNUAL INFORMATION FORM 13 December 31, 2020

UNS Electric's generating capacity is set forth in the following table.

Generation Source	Unit No.	Location	Date In Service	Resource Type	Total Capacity (MW)	Operating Agent	UNSE's Share (%)	UNSE's Share (MW)
Black Mountain	1	Kingman, AZ	2011	Gas	45	UNSE	100.0	45
Black Mountain	2	Kingman, AZ	2011	Gas	45	UNSE	100.0	45
Valencia	1	Nogales, AZ	1989	Gas/Oil	14	UNSE	100.0	14
Valencia	2	Nogales, AZ	1989	Gas/Oil	14	UNSE	100.0	14
Valencia	3	Nogales, AZ	1989	Gas/Oil	14	UNSE	100.0	14
Valencia	4	Nogales, AZ	2006	Gas/Oil	21	UNSE	100.0	21
Gila River Power Station	3	Gila Bend, AZ	2003	Gas	550	SRP	25.0	137
Utility-Scale Renewables	N/A	Various	2011 -2017	Solar	12	UNSE	100.0	12
Total Capacity								302

Owned Utility-Scale Renewable Resources

TEP owns 42 MW of photovoltaic solar generation capacity and has 260 MW of renewable resources under development that are expected to be placed into service in 2021. The Oso Grande Wind Project will add approximately 250 MW of wind-powered electric generation and Raptor Ridge will add 10 MW of solar-powered electric generation. UNS Electric owns 12 MW of photovoltaic solar generation capacity.

Renewable Power Purchase Agreements

TEP has renewable PPAs of 156 MW from solar resources and 80 MW from wind resources. The solar PPAs contain options that allow TEP to purchase all or part of the related project at a future date. Wilmot Solar is under development and will add 100 MW from solar resources to TEP's capacity, accompanied by 30 MW of energy storage. Wilmot Solar is expected to be placed into service in 2021. Borderlands Wind is under development and will add 99 MW from wind resources and is expected to be placed into service in 2021. UNS Electric has renewable PPAs of 83 MW from solar resources and 10 MW from wind resources.

Gas Purchases

TEP and UNS Gas directly manage their gas supply and transportation contracts. The price for gas varies based on market conditions, which include weather, supply balance, economic growth rates and other factors. TEP and UNS Gas hedge their gas supply prices by entering into fixed-price forward contracts, collars, and financial swaps from time to time, up to three years in advance, with a view to hedging at least 70-90% of expected monthly energy volumes prior to the beginning of each month.

Central Hudson

Central Hudson is a regulated electric and gas T&D utility serving approximately 300,000 electricity customers and 80,000 natural gas customers in portions of New York State's Mid-Hudson River Valley. Central Hudson serves a territory comprising approximately 6,700 square km in the Hudson Valley. Electric service is available throughout the territory, and natural gas service is provided in and around the cities of Poughkeepsie, Beacon, Newburgh, and Kingston, New York, and in certain outlying and intervening territories.

Central Hudson's electric T&D system consists of approximately 15,100 circuit km of line and met a peak demand of 1,142 MW in 2020.

Central Hudson's natural gas system consists of approximately 2,400 km of T&D pipelines and met a peak day demand of 121 TJ in 2020.

ANNUAL INFORMATION FORM 14 December 31, 2020

Market and Sales

Central Hudson's electricity sales were 4,969 GWh in 2020, compared to 4,963 GWh in 2019. Natural gas sales volumes in 2020 were 23 PJ, compared to 22 PJ in 2019. Revenue was $953 million in 2020, compared to $917 million in 2019.

The following table compares the composition of Central Hudson's 2020 and 2019 revenue, electricity sales and gas volumes by customer class.

	Revenue (%)		GWh Sales (%)		PJ Volumes (%)
	2020	2019	2020	2019	2020	2019
Residential	63.3	62.5	44.6	41.4	25.5	28.8
Commercial	26.9	27.8	35.9	38.9	34.1	38.8
Industrial	4.3	3.9	17.9	18.1	14.2	16.9
Other (1)	5.5	5.8	1.6	1.6	26.2	15.5
Total	100.0	100.0	100.0	100.0	100.0	100.0

(1)Includes sales for resale

Power Supply

Central Hudson relies on purchased capacity and energy from third-party providers, together with its own minimal generating capacity, to meet the demands of its full-service customers.

Central Hudson is obligated to supply electricity to its retail electric customers. Central Hudson, the staff of the NYPSC and others entered into a settlement agreement in 1998 with respect to the auction of fossil fuel generation plants owned by Central Hudson. Under the settlement agreement, Central Hudson's retail customers may elect to procure electricity from third‑party suppliers or may continue to rely on Central Hudson. As part of its requirement to supply customers who continue to rely on Central Hudson for their energy supply, Central Hudson entered into a 10-year revenue sharing agreement with Constellation Energy Group, Inc. in 2011, pursuant to which Central Hudson shares in a portion of the power sales revenue attributable to Unit No. 2 of the Nine Mile Point Nuclear Generating Station.

Costs of electric and natural gas commodity purchases are recovered from customers, without earning a profit on these costs. Rates are reset monthly based on Central Hudson's actual costs to purchase the electricity and natural gas needed to serve its full-service customers.

FortisBC Energy

FortisBC Energy is the largest distributor of natural gas in British Columbia, serving approximately 1,048,000 customers in more than 135 communities. FortisBC Energy provides T&D services to customers, and obtains natural gas supplies on behalf of most of its residential, commercial and industrial customers. FortisBC Energy owns and operates approximately 49,500 km of natural gas pipelines and met a peak demand of 1,555 TJ in 2020.

Market and Sales

FortisBC Energy's natural gas sales volumes were 219 PJ in 2020, compared to 227 PJ in 2019. Revenue was $1,385 million in 2020 compared to $1,331 million in 2019.

ANNUAL INFORMATION FORM 15 December 31, 2020

The following table compares the composition of FortisBC Energy's 2020 and 2019 revenue and natural gas volumes by customer class.

	Revenue (%)		PJ Volumes (%)
	2020	2019	2020	2019
Residential	57.4	57.7	37.2	35.7
Commercial	28.7	28.6	24.6	22.9
Industrial	6.7	4.3	7.8	4.4
Other (1)	7.2	9.4	30.4	37.0
Total	100.0	100.0	100.0	100.0

(1)Includes revenue and gas volumes from transportation customers

Gas Purchase Agreements

To ensure supply of adequate resources for reliable natural gas deliveries to its customers, FortisBC Energy purchases natural gas supply from counterparties, including producers, aggregators and marketers. FortisBC Energy contracts for approximately 184 PJ of baseload and seasonal supply, of which the majority is sourced in northeast British Columbia and transported on Westcoast Energy Inc.'s T‑South pipeline system. The remainder is sourced in Alberta and transported on TC Energy's pipeline transportation system.

FortisBC Energy procures and delivers natural gas directly to core market customers. Transportation customers are responsible to procure and deliver their own natural gas to the FortisBC Energy system and FortisBC Energy then delivers the gas to the operating premises of these customers. FortisBC Energy contracts for transportation capacity on third-party pipelines, such as the T‑South pipeline and the TC Energy pipeline, to transport gas supply from various market hubs to FortisBC Energy's system. These third-party pipelines are regulated by the Canada Energy Regulator. FortisBC Energy pays both fixed and variable charges for the use of transportation capacity on these pipelines, which are recovered through rates paid by FortisBC Energy's core market customers. FortisBC Energy contracts for firm transportation capacity to ensure it is able to meet its obligation to supply customers within its broad operating region under all reasonable demand scenarios.

Gas Storage and Peak Shaving Arrangements

FortisBC Energy incorporates peak shaving and gas storage facilities into its portfolio to: (i) supplement contracted baseload and seasonal gas supply in the winter months, while injecting excess baseload supply to refill storage in the summer months; (ii) mitigate the risk of supply shortages during cooler weather and peak demand; (iii) manage the cost of gas during the winter months; and (iv) balance daily supply and demand on the distribution system during periods of peak use that occur during the winter months.

FortisBC Energy holds approximately 36 PJs of total storage capacity. FortisBC Energy owns Tilbury and Mount Hayes LNG peak shaving facilities, which provide on-system storage capacity and deliverability. FortisBC Energy also contracts for underground storage capacity and deliverability from parties in northeast British Columbia, Alberta and the Pacific Northwest of the US. On a combined basis, FortisBC Energy's Tilbury and Mount Hayes facilities, the contracted storage facilities, and other peaking arrangements can deliver up to 0.85 PJs per day of supply to FortisBC Energy on the coldest days of the heating season. The heating season typically occurs during the period from December to February.

Mitigation Activities

FortisBC Energy engages in off-system sales activities that allow for the recovery or mitigation of costs of any unutilized supply and/or pipeline and storage capacity that is available once customers' daily load requirements are met.

Under the GSMIP revenue sharing model, which is approved by the BCUC, FortisBC Energy can earn an incentive payment for mitigation activities. Historically, FortisBC Energy has earned approximately $1.8 million annually through GSMIP, while the remaining savings are credited back to customers through reduced rates. Subject to the BCUC's approval, FortisBC Energy earned an incentive payment of approximately $1.5 million for the gas contract year ending October 31, 2020.

ANNUAL INFORMATION FORM 16 December 31, 2020

The current GSMIP program was approved by the BCUC following a comprehensive review in 2011. The BCUC has approved extensions of the program through October 31, 2022.

Price-Risk Management Plan

FortisBC Energy engages in price-risk management activities to mitigate the impact on customer rates of fluctuations in natural gas prices. These activities include: (i) physical gas purchasing and storage strategies; (ii) current quarterly commodity rate-setting and a deferral account mechanism; and (iii) the use of derivative instruments, which were implemented pursuant to a price-risk management plan approved by the BCUC, as discussed below.

In May 2020 FortisBC Energy filed its Winter 2020-2021 Sumas Risk Mitigation Application with the BCUC to implement Sumas hedging strategies for the 2020-2021 winter season to mitigate the impact of price spikes and sustained elevated prices at the Sumas market hub. The BCUC approved the application in July 2020 and the hedging strategies were implemented in July and August 2020.

Unbundling

A Customer Choice program at FortisBC Energy allows eligible commercial and residential customers to buy their natural gas commodity supply from FortisBC Energy or from third-party marketers. FortisBC Energy continues to provide the delivery service of the natural gas to all its customers. For the year ended December 31, 2020, approximately 5% of eligible commercial customers and 3% of eligible residential customers purchased their commodity supply from alternate providers.

FortisAlberta

FortisAlberta is a regulated electricity distribution utility operating in Alberta. Its business is the ownership and operation of electric distribution facilities that distribute electricity, generated by other market participants, from high-voltage transmission substations to end-use customers. FortisAlberta is not involved in the generation, transmission or direct retail sale of electricity. FortisAlberta operates the electricity distribution system in a substantial portion of southern and central Alberta around and between the cities of Edmonton and Calgary, totalling approximately 91,000 circuit km of distribution lines. FortisAlberta's distribution network serves approximately 572,000 customers and met a peak demand of 2,770 MW in 2020.

Market and Sales

FortisAlberta's annual energy deliveries were 16,092 GWh in 2020 compared to 16,887 GWh in 2019. Revenue was $596 million in 2020 compared to $598 million in 2019.

The following table compares the composition of FortisAlberta's 2020 and 2019 revenue and energy deliveries by customer class.

	Revenue (%)		GWh Deliveries (%) (1)
	2020	2019	2020	2019
Residential	43.5	42.6	29.3	27.3
Commercial	24.3	24.7	13.3	13.8
Industrial	20.0	21.2	57.4	58.9
Other (2)	12.2	11.5	—	—
Total	100.0	100.0	100.0	100.0

(1)GWh percentages exclude FortisAlberta's GWh deliveries to "transmission-connected" customers. These deliveries were 6,932 GWh in 2020 and 6,940 GWh in 2019, based on an interim settlement that is expected to be finalized in May 2021, and consisted primarily of energy deliveries to large-scale industrial customers directly connected to the transmission grid.

(2)Includes rate riders, deferrals and adjustments.

ANNUAL INFORMATION FORM 17 December 31, 2020

Franchise Agreements

FortisAlberta serves customers in various municipalities throughout its service area. From time to time, municipal governments in Alberta consider creating their own electric distribution utilities by purchasing the assets of FortisAlberta located within their municipal boundaries. Upon the termination of a franchise agreement, a municipality has the right, subject to AUC approval, to purchase FortisAlberta's assets within its municipal boundaries pursuant to the Municipal Government Act (Alberta), with the price to be determined on the basis of a methodology approved by the AUC. Additionally, under the Hydro and Electric Energy Act (Alberta), if a municipality that owns an electric distribution system expands its boundaries, it can acquire FortisAlberta's assets in the annexed area. In such circumstances, the Hydro and Electric Energy Act (Alberta) provides that the AUC may determine that the municipality should compensate FortisAlberta for any facilities transferred on the basis of replacement cost less depreciation. Given the historical population and economic growth of Alberta and its municipalities, FortisAlberta is affected by transactions of this type from time to time.

FortisAlberta holds franchise agreements with 163 municipalities within its service area. The franchise agreements include 10‑year terms with an option to renew for up to two subsequent five-year terms. Over 99% of FortisAlberta's franchise agreements were entered into in 2012 and subsequent years, pursuant to which the initial terms will not expire until the end of 2022 and beyond, with notices to extend the current agreement to be provided one year in advance of expiry.

FortisBC Electric

FortisBC Electric is an integrated regulated electric utility that owns hydroelectric generating plants, high voltage transmission lines and a large network of distribution assets located in the southern interior of British Columbia. FortisBC Electric serves approximately 182,000 customers and met a peak demand of 740 MW in 2020. FortisBC Electric's T&D assets include approximately 7,300 circuit km of T&D lines.

FortisBC Electric is also responsible for operation, maintenance and management services at the 493‑MW Waneta hydroelectric generating facility owned by BC Hydro and the 335‑MW Waneta Expansion, the 149-MW Brilliant hydroelectric plant, the 120‑MW Brilliant hydroelectric expansion plant and the 185-MW Arrow Lakes generating station, all ultimately owned by CBT and CPC.

Market and Sales

Electricity sales were 3,291 GWh in 2020, compared to 3,326 GWh in 2019. Revenue was $424 million in 2020, compared to $418 million in 2019.

The following table compares the composition of FortisBC Electric's 2020 and 2019 revenue and electricity sales by customer class.

	Revenue (%)		GWh Sales (%)
	2020	2019	2020	2019
Residential	50.5	48.9	40.5	38.8
Commercial	27.1	27.1	29.4	29.4
Industrial	12.6	13.2	17.0	17.6
Other (1)	9.8	10.8	13.1	14.2
Total	100.0	100.0	100.0	100.0

(1)Includes revenue and GWh sales from wholesale customers

Generation and Power Supply

FortisBC Electric meets the electricity supply requirements of its customers through a mix of its own generation and PPAs. FortisBC Electric owns four regulated hydroelectric generating plants on the Kootenay River with an aggregate capacity of 225 MW, which provide approximately 45% of its energy needs and 30% of its peak capacity needs. FortisBC Electric meets the balance of its requirements through a portfolio of long-term and short-term PPAs.

ANNUAL INFORMATION FORM 18 December 31, 2020

FortisBC Electric's four hydroelectric generating facilities are governed by the multi‑party CPA that enables the five separate owners of nine major hydroelectric generating plants, with a combined capacity of approximately 1,900 MW and located in relatively close proximity to each other, to coordinate the operation and dispatch of their generating plants.

The following table lists the plants and their respective capacity and owner.

Plant	Capacity (MW)	Owners
Canal Plant	580	BC Hydro
Waneta Dam	493	BC Hydro
Waneta Expansion	335	Waneta Expansion Power Corporation
Kootenay River System	225	FortisBC Electric
Brilliant Dam	149	Brilliant Power Corporation
Brilliant Expansion	120	Brilliant Expansion Power Corporation
Total	1,902

Brilliant Power Corporation, Brilliant Expansion Power Corporation, Teck Metals Ltd., Waneta Expansion Power Corporation and FortisBC Electric are collectively defined in the CPA as the entitlement parties. The CPA enables BC Hydro and the entitlement parties to generate more power from their respective generating plants than they could if they operated independently through coordinated use of water flows, subject to the 1961 Columbia River Treaty between Canada and the US, and coordinated operation of storage reservoirs and generating plants. Under the CPA, BC Hydro takes into its system all power actually generated by the plants listed in the table above. In exchange for permitting BC Hydro to determine the output of these facilities, each of the entitlement parties is contractually entitled to a fixed annual entitlement of capacity and energy from BC Hydro, which is based on 50-year historical water flows and the plants' generating capabilities. The entitlement parties receive their defined entitlements irrespective of actual water flows to the entitlement parties' generating plants. BC Hydro enjoys the benefits of the additional power generated through coordinated operation and optimal use of water flows. The entitlement parties benefit by knowing years in advance the amount of power that they will receive from their generating plants and, therefore, do not face hydrology variability in generation supply planning. However, FortisBC Electric retains rights to its original water licences and flows in perpetuity. Should the CPA be terminated, the output of FortisBC Electric's Kootenay River system plants would, with the water and storage authorized under its existing licences and on a long‑term average, be approximately the same power output as FortisBC Electric receives under the CPA. The CPA does not affect FortisBC Electric's ownership of its physical generation assets. The CPA continues in force until terminated by any of the parties by giving no less than five years' notice at any time on or after December 31, 2030.

FortisBC Electric's remaining electricity supply is acquired primarily through long-term PPAs with a number of counterparties, including the Brilliant PPA, the BC Hydro PPA and the Waneta Expansion Capacity Agreement. Additionally, FortisBC Electric purchases capacity and energy from the market to meet its peak energy requirements and optimize its overall power supply portfolio. These market purchases provided approximately 10% of FortisBC Electric's energy supply requirements in 2020. FortisBC Electric's PPAs and market purchases have been accepted by the BCUC and prudently incurred costs thereunder flow through to customers through FortisBC Electric's electricity rates.

Other Electric

Other Electric consists of utilities in eastern Canada and the Caribbean as follows: Newfoundland Power; Maritime Electric; FortisOntario; a 39% equity investment in Wataynikaneyap Partnership; an approximate 60% controlling interest in Caribbean Utilities; FortisTCI; and a 33% equity investment in Belize Electricity.

Newfoundland Power is an integrated regulated electric utility and the principal distributor of electricity on the island portion of Newfoundland and Labrador. Maritime Electric is an integrated regulated electric utility and the principal distributor of electricity on PEI. FortisOntario primarily provides integrated electric utility service through its three regulated operating utilities with its customer base primarily in Fort Erie, Cornwall, Gananoque, Port Colborne and the District of Algoma in Ontario.

ANNUAL INFORMATION FORM 19 December 31, 2020

The Wataynikaneyap Partnership has a mandate of connecting 17 remote First Nations Communities in Northwestern Ontario to the electricity grid. The partnership is equally owned by 24 First Nations communities (51%), in partnership with FortisOntario (39%) and Algonquin Power & Utilities Corp. (10%). FortisOntario is responsible for construction, management and operation of the transmission line. Construction began on the project in 2019 and the first transmission tower was erected and substation ground grid installed in the third quarter of 2020. The project is on track for completion by the end of 2023.

Caribbean Utilities is an integrated regulated electric utility and the sole provider of electricity on Grand Cayman, Cayman Islands. FortisTCI is an integrated regulated electric utility on the Turks and Caicos Islands. Belize Electricity is an integrated electric utility and the principal distributor of electricity in Belize. Belize Electricity is excluded from the discussion of this segment as Fortis holds a 33% minority interest in this entity.

The following table sets out the customers, installed generating capacity, peak demand and kilometers of T&D lines for the segment.

	Customers	Peak Demand (MW)	T&D Lines (circuit km)	Generating Capacity (MW)	Resource Type(s)
Newfoundland Power	270,000	1,356	12,500	143	Hydroelectric, Gas, Diesel
Maritime Electric	84,000	287	6,300	130	Thermal, Diesel
FortisOntario (1)	67,000	258	3,500	5	Natural Gas Cogeneration
Caribbean Utilities (2)	31,000	109	800	161	Diesel
FortisTCI	15,000	40	700	91	Diesel
Total	467,000	2,050	23,800	530

(1)    FortisOntario also owns a 10% interest in certain regional electric distribution companies serving approximately 40,000 customers.

(2)    Includes 24 km of high-voltage submarine cable

Market and Sales

Electricity sales attributable to Other Electric were 9,175 GWh in 2020, compared to 9,366 GWh in 2019. Revenue was $1,485 million in 2020, compared to $1,467 million in 2019.

The following table compares the composition of revenue and electricity sales by customer class for Other Electric in 2020 and 2019.

	Revenue (%)		GWh Sales (%)
	2020	2019	2020	2019
Residential	58.7	56.0	57.3	55.4
Commercial	37.4	40.1	39.1	41.2
Industrial	1.9	1.9	2.7	2.6
Other (1)	2.0	2.0	0.9	0.8
Total	100.0	100.0	100.0	100.0

(1)    Includes revenue from sources other than from the sale of electricity

Power Supply

Newfoundland Power

Approximately 93% of Newfoundland Power's energy requirements are purchased from NL Hydro with the remaining 7% generated by Newfoundland Power generating facilities. The principal terms of the supply arrangements with NL Hydro are regulated by the PUB on a basis similar to that upon which Newfoundland Power's service to its customers is regulated.

ANNUAL INFORMATION FORM 20 December 31, 2020

NL Hydro charges Newfoundland Power for purchased power and includes charges for both demand and energy purchased. The demand charge is based on applying a rate to the peak‑billing demand for the most recent winter season. The energy charge is a two-block charge with a higher second‑block charge set to reflect NL Hydro's marginal cost of generating electricity.

The completion of Nalcor Energy's $13.1 billion Muskrat Falls hydroelectric generation development and associated transmission assets is further delayed and is now expected in September 2021. Energy from the Muskrat Falls project is expected to supply a significant portion of NL Hydro's electricity requirements, and in turn, Newfoundland Power's electricity requirements. Uncertainty remains regarding supply adequacy and reliability of the province of Newfoundland and Labrador's electrical system after commissioning. The amount and timing of any future wholesale electricity rate changes, including those associated with the Muskrat Falls project, are uncertain; however, future increases in supply costs from NL Hydro are expected to increase electricity rates that Newfoundland Power charges to its customers.

Maritime Electric

Maritime Electric is interconnected to the Province of New Brunswick via four provincially owned submarine cables with a total capacity of 560 MW. The company purchases its power supply requirements through various Energy Purchase Agreements from NB Power, a New Brunswick Crown corporation and renewable energy produced on PEI by facilities owned by the PEI Energy Corporation. Company-owned on-Island generation stations totalling 130 MW are used primarily for peaking, submarine-cable loading issues and emergency purposes.

Maritime Electric has the following contracts with NB Power: (i) an energy supply agreement covering the period March 1, 2019 to December 31, 2026; (ii) a transmission capacity contract allowing Maritime Electric to reserve 30 MW of capacity to PEI expiring November 2032; and (iii) an entitlement agreement for approximately 4.55% of the output from NB Power's Point Lepreau Nuclear Generating Station for the life of the unit. The company also has several renewable energy contracts with the PEI Energy Corporation for the purchase of energy for remaining periods ranging from two to 16 years.

As part of Maritime Electric's entitlement agreement for the Point Lepreau Nuclear Generating Station, it is required to pay its share of the capital and operating costs of the unit.

FortisOntario

The power requirements of FortisOntario's service territories are met through various sources. Canadian Niagara Power purchases its power requirements for Fort Erie and Port Colborne from IESO, purchases approximately 75% of energy requirements in the Gananoque region from Hydro One Networks Inc., and the remaining 25% from five hydroelectric generating plants owned by EO Generation LP. Algoma Power purchases its energy requirements primarily from IESO.

Under the Standard Supply Code of the Ontario Energy Board, Canadian Niagara Power and Algoma Power are obligated to provide Standard Service Supply to all its customers who do not choose to contract with an electricity retailer. This energy is provided to customers at either regulated or market prices.

Cornwall Electric purchases substantially all of its power requirements from Hydro-Québec Energy Marketing under a new contract that commenced in January 2020 and expires in December 2030. The new contract provides a minimum of 537 GWh of energy per year and up to 145 MW of capacity at any one time.

Caribbean Utilities

Caribbean Utilities relies upon in-house diesel-powered generation to produce electricity for its customers. Caribbean Utilities is party to primary and secondary fuel supply contracts with two different suppliers from whom it is committed to purchasing 60% and 40%, respectively, of its diesel fuel requirements for its diesel-powered generating plant. Caribbean Utilities executed two 24-month fuel supply contracts in June 2018 with the option to renew for two additional terms of 18 months at the end of each term. In June 2020 Caribbean Utilities exercised its option to renew for 18 months.

ANNUAL INFORMATION FORM 21 December 31, 2020

FortisTCI

FortisTCI relies upon in-house diesel-powered generation to produce electricity for its customers. FortisTCI has installed 1 MW of rooftop solar in partnership with nine commercial customers through its Utility Owned Renewable Energy Program. The company continues to engage with the Government of the Turks and Caicos Islands on the progress of the draft Electricity (Amendment) Bill, designed to enable the development of renewable energy within the country.

FortisTCI has contract with a major supplier for all of its diesel fuel requirements associated with the generation of electricity. The approximate fuel requirements under this contract are 64 million litres per annum.

Non-Regulated

Energy Infrastructure

The Corporation's Energy Infrastructure segment consists of a natural gas storage facility in British Columbia (Aitken Creek) and three hydroelectric generation facilities in Belize with a combined capacity of 51 MW held through the Corporation's subsidiary BECOL. In April 2019 Fortis sold its 51% ownership interest in long-term contracted generation assets in British Columbia, the Waneta Expansion.

Aitken Creek is the only underground natural gas storage facility in British Columbia with a total working gas capacity of 77 billion cubic feet. Fortis holds a 93.8% ownership interest in Aitken Creek through its subsidiary ACGS, acquired in 2016. ACGS contracts with third parties for both lease and park transactions and also holds its own proprietary capacity.

Generation assets in Belize consist of three hydroelectric generating facilities. All of the output of these facilities is sold to Belize Electricity under 50-year PPAs expiring in 2055 and 2060.

Market and Sales

Energy sales were 229 GWh in 2020, compared to 144 GWh in 2019. Revenue was $88 million in 2020, compared to $82 million in 2019.

Corporate and Other

The Corporate and Other segment captures expense and revenue items 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.

ANNUAL INFORMATION FORM 22 December 31, 2020

HUMAN RESOURCES

Fortis and its subsidiaries have 8,961 employees, with 53% in Canada, 42% in the US and 5% in other countries. The following table provides the breakdown of employees by reportable segment.

	Employees	Participation in a Collective Agreement		Union(s)	Collective Agreement(s) Expiry Date(s)
Regulated Utilities
ITC	699	None		—	—
UNS Energy	2,057	50	%	IBEW	June 2021 – February 2025
Central Hudson	1,061	57	%	IBEW	March 2021 – April 2022
FortisBC Energy (1)	1,954	61	%	IBEW, MoveUP	March 2019 (2) – June 2023
FortisAlberta	1,085	79	%	UUWA	December 2020 (3)
FortisBC Electric	560	70	%	IBEW, MoveUP	January 2021 (4) – June 2023
Other Electric (5)	1,422	39	%	CUPE, IBEW, PWU	January 2022 – December 2023
Non-Regulated
Energy Infrastructure (6)	68	None		—	—
Corporate and Other (7)	55	None		—	—
Total	8,961	52	%

(1)Includes employees at FHI

(2)The collective agreement between FortisBC Energy and IBEW covering 565 FortisBC Energy employees expired on March 31, 2019 and is currently under renegotiation. Mediation was initiated in May 2020 and is ongoing. Operations have not been impacted to date.

(3)The collective agreement between FortisAlberta and the UUWA expired on December 31, 2020 and is currently under renegotiation.

(4)The collective agreement between FortisBC Electric and IBEW covering 192 FortisBC Electric employees expired on January 31, 2021 and is currently under renegotiation.

(5)Includes employees at Newfoundland Power, Maritime Electric, FortisOntario, Caribbean Utilities and FortisTCI. Excludes Belize Electricity.

(6)Includes employees at Aitken Creek (staffed by FortisBC Midstream Inc.), BECOL and FortisBC Alternative Energy Services Inc.

(7)Employees at Fortis Inc.

The Corporation's culture is built on safety, diversity and integrity. Fortis employees are driven to make good decisions, work hard and work safely. Fortis and its utilities respect their employees' freedom to associate and strive to maintain positive and constructive relationships with labour associations and unions.

The Corporation's subsidiaries are required to develop and retain skilled workforces for their operations. Many of the employees of the Corporation's utilities possess specialized skills and training and Fortis must compete in the marketplace for these workers. The Corporation's significant capital plan may present challenges to ensure its utilities have the qualified workforce necessary to complete the capital work initiatives.

LEGAL PROCEEDINGS AND REGULATORY ACTIONS

There are no legal proceedings that involve a claim for damages exceeding 10% of the Corporation's current assets in respect of which the Corporation is or was a party, or in respect of which any of the Corporation's property is or was the subject during the year ended December 31, 2020, nor are there any such proceedings known to the Corporation to be contemplated.

Information related to the Corporation's legal proceedings can be found in Note 28 of the Financial Statements, which are incorporated by reference in this AIF and available on SEDAR and EDGAR.

ANNUAL INFORMATION FORM 23 December 31, 2020

The Corporation's utilities operate under a cost of service regulation, in combination with performance-based rate-setting mechanisms in certain jurisdictions, and are regulated by the regulatory body in their respective operating jurisdiction. During the year ended December 31, 2020, there have not been any: (i) penalties or sanctions imposed against the Corporation by a court relating to securities legislation or by a securities regulatory authority; (ii) other penalties or sanctions imposed by a court or regulatory body against the Corporation that would likely be considered important to a reasonable investor in making an investment decision; or (iii) settlement agreements entered into by the Corporation before a court relating to securities legislation or with a securities regulatory authority.

For information with respect to the nature of regulation and material regulatory decisions and applications associated with each of the Corporation's utilities, refer to the "Regulatory Highlights" section of the MD&A and to Notes 2 and 8 of the Financial Statements, each of which are incorporated by reference in this AIF and available on SEDAR and EDGAR.

RISK FACTORS

For information with respect to the Corporation's business risks, refer to the "Business Risks" section of the MD&A, which is incorporated by reference in this AIF and available on SEDAR and EDGAR.

SUSTAINABILITY

Fortis is committed to being a strong energy partner for its communities by operating in an environmentally and socially responsible manner. The Corporation is focused on maintaining infrastructure to deliver energy more efficiently and to facilitate the delivery of cleaner energy. Fortis believes that responsible environmental and sustainability management not only creates business value, but it is also good for the planet and our customers.

To bring focus and accountability to sustainability, oversight has been integrated into each senior level of responsibility at Fortis. The Board is responsible for risk management oversight and ensuring that business is conducted to meet high standards of environmental and social responsibility. The Governance and Sustainability Committee of the Board is responsible for overseeing governance structure and sustainability practices, including reviewing programs designed to promote corporate citizenship and environmental and social responsibility. The Executive Vice President, Sustainability and Chief Human Resource Officer is responsible for enterprise-wide sustainability and stewardship. Local management teams and boards of directors at each of the Corporation's utilities are responsible for operational aspects of sustainability. Sustainability performance impacts how all Fortis executives are compensated.

Fortis is primarily an energy delivery company with 93% of its assets dedicated to this function. This focus on energy delivery presents a unique opportunity to facilitate the delivery of cleaner energy to customers and naturally limits our impact on the environment when compared with energy generation intensive businesses. Although Fortis has limited fossil-fuel generation exposure, the Corporation is committed to reducing carbon emissions and delivering more sustainable energy to our customers.

The Corporation's direct GHG emissions come primarily from its generation assets, including fossil fuel-based generation representing 5% of the Corporation's total assets. In September 2020 the Corporation announced it is building on its low emissions profile by establishing a corporate-wide target to reduce carbon emissions by 75% by 2035 from a 2019 base year. Fortis expects to achieve the target through delivering on TEP's goals to reduce carbon emissions, described below. TEP is the Corporation's primary owner of fossil fuel-based generation. Clean energy initiatives across the Corporation's other utilities will also contribute to achieving this goal.

TEP has set a target to reduce carbon emissions by 80% by 2035. Key elements of the plan include adding approximately 2,400 MW of new wind and solar power systems and 1,400 MW of energy storage systems. TEP also plans to exit coal generation by ramping down and ultimately retiring TEP's two units at the coal-fired Springerville Generating Station in 2027 and 2032. This timeline will allow TEP to reduce the plant's workforce through attrition while providing time for the company to help the local community minimize the impact of the units' retirement.

ANNUAL INFORMATION FORM 24 December 31, 2020

FortisBC Energy and FortisBC Electric have set a combined goal to reduce GHG emissions associated with customers' energy use by 30% by the year 2030. To achieve this objective, the utilities will focus on tripling investment in energy efficiency projects, increasing renewable natural gas supply and focusing on low and zero-carbon vehicles and transportation infrastructure. This overall GHG emission reduction target is supported by FortisBC Energy's aim to have 15% of its gas supply come from renewable sources by 2030.

The Corporation's environmental statement sets out its commitment to comply with all applicable laws and regulations relating to the protection of the environment, regularly conduct monitoring and audits of environmental management systems and seek feasible, cost-effective opportunities to decrease GHG emissions and increase renewable energy sources. The Fortis Sustainability Working Group, comprising key leaders from across the Fortis group of utilities, enables communication and sharing of information among the Corporation's utilities on sustainability performance, issues and opportunities. Each operating subsidiary has extensive environmental compliance programs aligned with the ISO 14001 standard, regularly reviews its environmental management systems and protocols, strives for continual performance improvement and sets and reviews its own environmental objectives, targets and programs. The Fortis Operating Group, a group of senior operational executives from all utilities, meets regularly to share best practices and identify opportunities for collaboration on a range of topics including environment, health and safety.

Social and Environmental Policies

The Corporation and its utilities each have a range of social and environmental policies, programs and practices. Fortis has a Code of Conduct which is guided by the Corporation's purpose and values and sets out standards for the ethical conduct of its business, applicable to all of its directors, officers and employees, and to the extent feasible also to its consultants, contractors and representatives. The core principles of the Fortis Code of Conduct apply universally across the organization, with each operating subsidiary adopting its own substantially similar Code. Fortis and its utilities hold regular Code of Conduct employee training; and all Fortis employees annually certify compliance.

The Code of Conduct is supported by other policies that outline the behaviour expected from management and employees, including the Anti-Corruption Policy and Respectful Workplace Policy. All Fortis operating subsidiaries have policies in place that uphold the Corporation's values as contained in these policies and demonstrate their commitment to ensuring equal opportunity and providing safe, respectful work environments.

Each Fortis operating subsidiary has a Whistleblower Policy to support the reporting of conduct that may breach the subsidiary's Code of Conduct or other workplace policies.

The Corporation's operating subsidiaries are also responsible for implementing policy frameworks that reflect their unique operations and jurisdictions, while addressing certain common priority areas, including: occupational health and safety; environmental stewardship; non-discrimination and equal opportunity in hiring and promotion; and support of local communities.

The Corporation's Board and Executive Diversity Policy describes the principles and objectives for diversity among the Board and executive leadership, including a commitment to maintaining a Board where at least one-third of its independent directors are represented by each gender. Currently, 40% of the Corporation's directors and 42% of its executive leadership team are female. 60% of Fortis utilities have either a female president or female board chair.

Advancing inclusion and diversity is a priority at Fortis. In 2019 the Corporation adopted a formal Inclusion and Diversity Commitment that applies to all employees at Fortis and its operating subsidiaries. The commitment is supported by a framework built upon three pillars - talent, culture and community. Within the framework each utility develops an action plan specific to its inclusion and diversity priorities in addition to an overarching three-year action plan that articulates enterprise initiatives focused on creating equal pathways to leadership, strengthening inclusion and diversity accountability and modelling thought leadership. An Inclusion and Diversity Council with diverse, senior level representation from across the Fortis organization guides the inclusion and diversity strategy and its implementation.

ANNUAL INFORMATION FORM 25 December 31, 2020

Sustainability Regulation and Environmental Contingencies

As part of the regulatory process, operating subsidiaries engage with stakeholders, including community groups, regulators and customers, to consult on the potential environmental impact of their operations. Fortis and its subsidiaries are subject to various federal, provincial, state and municipal laws, regulations and guidelines relating to the protection of the environment. Environmental compliance involves significant operating and capital costs. At the Corporation's regulated utilities, prudently incurred costs associated with environmental protection and compliance are generally eligible for recovery in customer rates.

The following environmental contingencies have been made as of December 31, 2020:

Mine Reclamation at Generation Facilities Not Operated by TEP. TEP pays ongoing reclamation costs related to coal mines that supply generation facilities in which TEP has an ownership interest but does not operate. TEP is permitted to fully recover these costs from customers and, accordingly, these costs are deferred as a regulatory asset.

TEP is liable for a portion of final mine reclamation costs upon closure of the mines servicing San Juan and Four Corners. TEP's estimated share of final mine reclamation costs at both mines is $61 million (US$48 million) upon expiration of the related coal supply agreements, which expire in 2022 and 2031, respectively. An aggregate liability balance related to San Juan and Four Corners final mine reclamation of $51 million (US$40 million) and $47 million (US$36 million) as at December 31, 2020 and 2019, respectively, was recognized on the balance sheet.

Former Manufactured Gas Plant Facilities. Environmental regulations require Central Hudson to investigate sites at which Central Hudson or its predecessors once owned and/or operated manufactured gas plants and, if necessary, remediate these sites. Central Hudson accrues for remediation costs based on the amounts that can be reasonably estimated. As at December 31, 2020, an obligation of $95 million (US$75 million) was recognized. Central Hudson has notified its insurers and intends to seek reimbursement where insurance coverage exists. Further, as authorized by the NYPSC, Central Hudson is currently permitted to defer, for future recovery from customers, differences between actual costs for manufactured gas plant site investigation and remediation and the associated rate allowances.

CAPITAL STRUCTURE AND DIVIDENDS

Description of Capital Structure

The authorized share capital of the Corporation consists of an unlimited number of common shares without nominal or par value, an unlimited number of first preference shares without nominal or par value, and an unlimited number of second preference shares without nominal or par value.

As at February 11, 2021, the Corporation had issued and outstanding 466.8 million common shares; 5.0 million First Preference Shares, Series F; 9.2 million First Preference Shares, Series G; 7.7 million First Preference Shares, Series H; 2.3 million First Preference Shares, Series I; 8.0 million First Preference Shares, Series J; 10.0 million First Preference Shares, Series K; and 24.0 million First Preference Shares, Series M.

For a summary of the terms and conditions of the Corporation's authorized securities, and trading information for the Corporation's publicly listed securities, refer to Exhibit "A" and Exhibit "B" of this AIF.

Dividends and Distributions

The declaration and payment of dividends on the Corporation's common shares and first preference shares are at the discretion of the Board. Dividends on the common shares are typically paid quarterly, on the first day of March, June, September and December of each year. Dividends on the Corporation's First Preference Shares, Series F, G, H, I, J, K and M are typically also paid quarterly.

ANNUAL INFORMATION FORM 26 December 31, 2020

In September 2020 Fortis increased its quarterly dividend per common share 5.8% to $0.505 per share, or $2.02 on an annualized basis. In November 2020 the Board declared a first quarter 2021 dividend on the common shares of $0.505 per share and on the First Preference Shares, Series F, G, H, I, J, K and M in accordance with the applicable prescribed rate. The first quarter dividends on the common shares and the First Preference Shares, Series F, G, H, I, J, K and M are to be paid on March 1, 2020 to holders of record as of February 16, 2021.

The following table summarizes the cash dividends declared per share for each of the Corporation's class of shares for the past three years.

	2020	2019	2018
Common Shares	1.9650	1.8550	1.7500
First Preference Shares, Series F (1)	1.2250	1.2250	1.2250
First Preference Shares, Series G (2)	1.0983	1.0983	1.0345
First Preference Shares, Series H (3)	0.5003	0.6250	0.6250
First Preference Shares, Series I (4)