Ladies and Gentlemen, thank you for standing by. This is the conference call operator. Welcome to the Fortis Inc. Q2 2017 Conference Call and Webcast. During the call, all participants will be in a listen-only mode. There will be a question-and-answer session following the presentation [Operator Instructions]. At this time, I would like to turn the conference over to Janet Craig. Please go ahead, Ms. Craig.

Thanks, Ruth, and good morning everyone. And welcome to Fortis’ 2017 second quarter results conference call. I am joined by Barry Perry, President and CEO, Karl Smith, Executive VP and CFO, other members of the senior management team as well as CEOs from certain subsidiaries. Before we begin today's call, I want to remind you that the discussion will include forward-looking information, which is subject to the cautionary statement contained in the supporting slide show. All non-GAAP financial measures referenced in our prepared remarks are reconciled to the related U.S. GAAP financial measures in our 2017 second quarter MD&A. Also, unless otherwise specified, all financial information referenced is in Canadian dollars. With that, I will turn the call over to Barry.

Thank you, Janet and good morning everyone. Our strong second quarter earnings announced this morning are a result of focusing on serving our customers well, our continued focus on growing our base business, as well as, realizing the benefits of our acquisition of ITC. UNS and ITC were the main drivers of our earnings growth this quarter and overall our business continues to progress as expected this year. Our capital investment plan is on track and we invested $1.4 billion year-to-date across all our utilities. The integration of ITC is also on track and the acquisition remains nicely accretive. During the quarter, we also found an investment opportunity in energy infrastructure within our service territory in British Columbia, with the proposed acquisition of Teck Resources two-thirds interest in the Waneta dam. Opportunities like this do not come up often; this investment is a great example of how the CEOs of our utility operations came be nimble as well as opportunistic. Fortis has a winning strategy for its business. We combine the strengths and predictability of being almost entirely regulated, the benefit of scale and financial capacity to invest prudently across our utility operations and in other energy infrastructure as well as, the agility to capture growth prospects. Our unique business profile makes us probably the most diversified utility in North America, while bouncing risk and optimizing opportunity. This allows us to have the confidence to provide dividend growth guidance. We are committed to delivering on average 6% annual dividend growth through 2021. This combined with earnings growth we believe results in a compelling risk adjusted total return for shareholders. Finding quality assets or investment opportunities within our service territories to grow our business is core to who we are. Our purchase of the Waneta dam hydroelectric facility and related transmission…

Thanks Barry. Good morning everyone. As Barry highlighted, our second quarter 2017 financial results were strong. Adjusted earnings for the quarter were $253 million, nearly double compared to the same quarter last year. Adjusted earnings per share of $0.61 for the quarter was higher by $0.16 or 36%. On a year-to-date basis, adjusted earnings of $540 million was higher by $221 million and adjusted earnings per share was higher by 16% or $0.18 reaching $1.31. Cash flow from operations of $1.2 billion for the first half of 2017 increased approximately 28% over the same period in 2016. The increase was driven by higher earnings mainly at ITC and UNS. There are a couple of things to note this quarter with respect to reporting the results of our Aitken Creek facility, which is included in our non-regulated energy infrastructure segments. We're no longer excluding the mark-to-market of derivatives and the calculation of adjusted net earnings as we now have a full year of comparative information. Also effective in 2017 energy supply costs of Aitken Creek are being netted against revenues. In 2016, revenues and energy supply costs were reported separately. This change in reporting has no effect on earnings. As noted in the previous slide, adjusted earnings per share increased $0.16 compared to the second quarter of 2016. UNS delivered a strong second quarter, improving our adjusted earnings per share quarter-over-quarter by $0.10. Both the establishment of new rates at two of UNS’ business, Tucson Electric Power and UNS Electric, as well as, higher electricity sales due to the hot weather conditions contributed to the earnings growth. While record high temperatures were set in Arizona during the second quarter, weather was relatively less significant on the overall quarter-over-quarter increase as hotter than average temperatures were also experienced last year. ITC continues…

Thank Karl. Two clear goals for us in 2017, we're realizing the economic benefits of the acquisition of ITC, which remains nicely accretive and to curing a reasonable outcome in our first large rate case that UNS Energy, since the announcement of the acquisition in 2013. Achievement of these two goals were key factors in delivering strong second quarter results. Looking ahead, we remained focused on achieving strong operational and financial performance. As we look past 2017 we are seeing upside to our five year base capital plan at our utility businesses. The opportunities we are identifying will enhance our ability to serve our customers and grow our rate base. This in turn supports our 6% average annual dividend growth target, while maintaining a conservative payout ratio. In closing, I am comfortable where Fortis sits today. We are largely a big wires and gas LDC business delivering energy to millions of customers. It is the quality of our employees, the diversity of our portfolio of utilities, our constructive regulatory relationships, our ability to capitalize on opportunities and our focus on regulated or regulated like assets that combine, have created a high quality, low risk business that can deliver superior risk adjusted returns to our shareholders. Now I’ll turn the call back over to Janet.

Thanks Barry. We concluded our prepared remarks, and at this time we would like to open up the call for questions.

[Operator Instructions] Our first question comes from the line of Rob Hope with ScotiaBank. Please go ahead.

Yes, good morning, everyone and congratulations on another good quarter.

Thanks, Rob.

Just wanted to touch base on M&A. In some prior calls, you had noted that you’d looked for large corporate M&A to take a pause in 2017. You didn't really focus on that during this call and instead focused on your organic growth. Should we take this to potentially read that we, I guess, in 2017 and beyond we could see Fortis’ growth shifting more towards its organic growth and its core businesses versus corporate M&A.

Yes you got the correct message.

All right. That's helpful. And then maybe just following up on that corporate are on the organic growth profile there. When we look at some of your larger projects that are in the potential bucket specifically Lake Erie its being good regulatory milestones, north and south of the border. Just want to get a sense of when do you commercial contract should be secured for that and when we could see and that might be for that project, if that is for first of these larger projects that you think will get across the finish line.

We’re very pleased with the progress on Lake Erie Connector. There seems to be momentum building right now, Rob. Obviously, the big next thing is the commercial arrangements and we're very much focused on that. We’re hoping that that we'll be able to make progress before the end of this year and that would lead fairly quickly to sort of announcing a go on the project. So, I hope that we will have more to say at year-end I would say for sure, but there are really positive discussions going on right now.

All right. And then just to confirm, so it looks like Lake Erie is the first one to potentially go over that group?

I wouldn't place my bets there. We’re making great progress on Woodfibre as well. As you know Woodfibre is not in our current forecast, we're continuing to have dialog there and again hopeful that we'll have more to say about that even in our third quarter as we head into our investor days and stuff as well. So I would say all three of the big projects that are working on Woodfibre, Erie Connector and Wataynikaneyap are very much still in sort of real possibility of moving forward. So, we remain very pleased with that frankly. The other thing, Rob, just on your point that about the organic growth. I mentioned in my remarks that we’re really digging into our planning processes and specifically related to those outer years of our five year plan and we are seeing upside potential there and as we finalize our business plan this year we’ll have more to say about that as well.

That's great. Thank you.

Thanks a lot.

Your next question comes from the line of Andrew Kuske with Credit Suisse. Your line is open.

Thank you. Good morning. You've obviously got a pretty wide geography of service territories. If you could just give us maybe some color on fundamental economic changes you're seeing in some of the service territories, maybe with specific focus on just what you have in western Canada, Arizona and then a little bit in ITC to the extent that you can comment on that.

Thank you, Andrew. Economic activity in British Columbia remained still pretty strong from our perspective. We're adding gas customers, especially. We're also seeing some improvement in construction in the interior in our electric businesses. A lot of folks there selling their homes in Vancouver and moving to the interior and building nice homes in Kelowna. So, that business I think will continue to grow as well. But on the gas side as I mentioned in my call, I really believe that our gas business in BC is benefiting from all the economic activity here and we do have a lot of prospects to expand that business both in sort of larger projects related to Tilbury and just the normal growth in the business and in maintaining this massive pipeline system that we have here. We have a very large network of pipes in British Columbia that will require a pretty substantial asset maintenance over time, so, economy is good in BC. Arizona's economy, Tucson is improving. It’s the best that we've seen it, since we’ve bought the business. There are some fair number of new jobs being created in Tucson. Firms like Raytheon and Caterpillar are adding jobs in that region. Mining is actually stabilized and picking up, so we’re optimistic there. Alberta is stable for us, so we still are investing some substantial capital. The economy is stable now. Customer growth has slowed from historical levels, but we're still adding customers in the market, so we remain very, very pleased with that overall performance of that business. ITC clearly is not as affected by economic matters, its more about reliability, asset integrity. That business continues to perform well in the mid west. Although, I think economy is picking up in those regions. Michigan has been strong for sure and we're getting some residual benefits from that with some new larger facilities requiring transmission services, those kind of things. New York still surprisingly, Central Hudson is still in a slow economy in Hudson Valley. I think it takes a lot to move that economy, but if you get a chance look at their rate case filing today. It’s still a utility that's going to grow at the fastest of any of our businesses over the next few years, largely related to sort of asset maintenance and those kinds of capital investments for that region. Eastern Canada, still pretty slow. New plan is will probably have the worst economy in Canada right now that's a slow area. We do have a great business there, it’s doing well for us, but the economy is definitely slow there and I think that takes care of most of them.

That is very helpful and then with that kind of background and context, especially the growth in some of your larger businesses, how do you think about just the probability of back-selling your capital program in the out years to levels that we’re seeing that you've got now.

I'm very optimistic about that Andrew. Obviously it's going to be a focus of our investor days in New York and Toronto there are going to be happening in October, we’ll be doing a deep dive into our CapEx programs. But we've historically outperformed, right, so it's not like this is new information. Clearly we present the numbers that we build up from our various subsidiaries. They do currently show this declining curve. But if there's one thing that I've been focused on this year as we've been integrating ITC is really trying to sort of get our - all of our CEOs across our group to focus on the five year plan because it's so important that we provide good guidance in that area. I am expecting to see progress. We may not get fully there this year. It takes a little bit of time to turn this big supertanker that we have here at Fortis, but we are making great progress in filling in those outer years.

Yeah, you keep upsizing your vote, but my [indiscernible].

We’re at the VLCC size right now. For not oil people that’s very large crude carriers.

Thank you.

Your next question is from Robert Kwan with RBC Capital Markets. Please go ahead.

Good morning. Just maybe on FX exposure and you've got your earnings translation guidance. I’m actually just wondering when you look at your cash flow and the CapEx mix Canada versus U.S. from a cash generation out at utilities. Does that kind of translation guidance follow on the cash side or is there kind of a more muted impact based on the way you're standing and the way that cash is coming out of the businesses?

Yeah, and Robert good morning. There's a lot of things are going through that calculation and the resulting cash flow as you can appreciate. But there's similarity on in terms of direction and so on. We’re generating significant cash flows, throughout the foreseeable future. Not affected terribly by the FX, change in FX. We are looking at implementing a FX program, hedging program around currency that's tied into our cash flow that flows from the U.S. back into Canada. I guess like everybody, we got to take a little bit [indiscernible] about how quickly the FX rates changed over the last month or so. But in the near future we’ll put a program in place that’s programmed and tied into those quarterly cash flow. So, cash flow generation for us continues to be a positive and probably get stronger as we go forward.

Maybe turning to Aitken Creek, how much capacity is currently being used on a proprietary basis. And do you expect this to change over time as you kind of continue to operate the asset [ph].

Rough numbers, Robert, it’s about 50/50. 50% of the storage capacity in the gas associated with our storage supplies; our gas business here in British Columbia and the remaining half is sold or rented out to others and we trade around that other half from time-to-time in a very low risk, non-speculative basis.

Okay. And I guess just …

Yeah, we don’t anticipate that’s going to change much going forward.

Okay. And just with the derivative though, how locked down is it with respect to like is it a station two contract in the firm transportation. Like is there any other gaps on the commodity [ph]?

No. No gaps.

Okay. Last question is just on Waneta, have you had any direct discussions with hydro particularly post election within hydro leadership?

We've always have continued dialog with hydro almost just because the major operations here in British Columbia on a regular basis, Robert, so that continues. Clearly, they’re in a period of transition to new leadership at this point in time with the new government as well. So, things are just normal at this point on there.

All right, nothing specific that reaches to Waneta at this point?

No, no they are, obviously that's a Teck more of a BC hydro matter, not at a FortisBC hydro matter. So, we're waiting with bated breath like everyone so.

Okay. That's great. Thank you much.

Thank you.

Thanks, Robert.

Your next question is from Linda Ezergailis with TD Securities. Please go ahead.

Thank you, congratulations on a strong quarter.

Thank you, Linda.

But I can't avoid asking some regulatory questions. So, with respect to Central Hudson, can you describe the basis for your request to increase the ROE and equity sickness? Is it rising interest rates, is it increased risk et cetera, et cetera. Are there any other key attributes in your application that have kind of changed with your current framework?

Linda, I have a guy on the phone, Mr. Mike Mosher, he can give you more than enough detail on that. So, I'm going to let Michael, if he is able to speak here to answer that question. Michael are you ready?

Yeah. I think Linda with respect to the ROE; we believe that that is introducing some risks that really are different and new. So, we're asking for an increase of 50 basis points from where we are today. With respect to our increase in equity layer. New York is a bit of an outlier, with respect to capitalization for most of the U.S. utilities and given our strong investment in capital and the desire to detain our strong financial position, we really do think we need a thicker equity layer. I would categorize the main drivers of the filing really as across the board continue modernization of our electric and gas systems. With a lot more distribution investment with respect to modernizing and automating our distribution system. The gas business is driven by the leak from pipe replacement and then a lot more information technology investment.

Thanks, Mike.

And just maybe a more bigger picture question, you've got a few large scale transmission projects in your domestic backyard in Ontario. At what point and in what jurisdictions are you starting to explore other large scale merchant transmission possibilities?

Well, I don't really want any merchant transmission possibilities in a true sense of the word, as you know, we’re looking for these long term contracted assets that if its outside the regulatory time pact they’ll call it. North America is our stopping ground, right, like it's really. With ITC’s expertise, their strategy is to look at. Every bit of transmission in North America. Every opportunity in that area that comes up, ITC would have been around it. So, we're not going to win everything, I mean, we're going to get some of it, but that company will be pushing to review every opportunity that comes up. They’re big thought leader in this area and we're obviously representing in various sort of states with RTOs [ph] of projects, the project that should be done. And so there's – I wouldn’t want to exclude any geographic location in North America and that also includes Mexico, by the way. There will be some transmission built in Mexico and we're going to compete for that as well, so.

Okay. Thank you. And maybe also with your renewable business again, you see stuff in Arizona to a lesser extent in Alberta in your current backyard. Is there any other jurisdictions where you're seeing the potential for emergent opportunities?

Well, Caribbean, frankly is another area, I would say that, over the next few years, I'd like to do more solar generation in the Caribbean especially, that's an area that I think could benefit from that. So, we have a focus there. Clearly, ITC is benefiting from all the win that's going into the Midwest and in terms of transmission, but not participating in the actual generation side of the business given it would lose its independent status and piece of its ROE under that basis. We’ll continue to monitor how that sort of independence process works going forward. But as of now it would be negative to get involved in generation in those regions. In Arizona, clearly we are progressing our move away from coal. Our diversification strategy, we are purchasing solar at Tucson Electric Power from others at very attractive prices. When you think about, we just bought 100 megawatts from NextEra for 20 years at around $0.03 a kilowatt hour, that’s pretty incredible, so. But even there we would like to own some solar over the next few years as well and I think we will have opportunities to do that. So I do want to say that we continue to focus on increasing our renewable power exposure and the Waneta project clearly this purchase from Teck was very much aligned with that strategy. And it's probably one of the best renewable projects we would have in our portfolio if we were successful in getting it closed.

That’s helpful context. Thank you.

Thank you, Linda.

[Operator Instructions] Your next question is from Ben Pham with BMO. Please go ahead.

Thanks, good morning. I wanted to follow-up on the question on M&A versus organic growth sort of things. If you kind of look back at ITC and currencies move 10% in the C dollars favor and sort of couple of quarters of ITC under your belt now and cost of debt is achieved and willing [indiscernible] of border. I’m just curious your thoughts about just perhaps the hesitation you guys have as you think about doing more M&A in the U.S. because you announced something today regulatory approval process and whatnot. You’re not going really see your earnings until closer to 2019?

Ben, we don’t need to do big M&A. Now with our push into United States over the last three years, four years here, we own three great businesses. We’ve created a company of upsize at this point in time. We are now focused on growing that business and we believe we can grow this, this sort of very low risk diversified business that we have. These wires and gas LDCs that we own at a rate that its comparatively to the average for the industry. So, all that organic growth and when you’ve coupled that with a low risk nature of our assets, we think that's a powerful combination and that's where our focus lies right now. Clearly, as you know U.S. utilities have become very expensive. We still have some uncertainty on policy as well in the U.S. So, we’re fortunate in a way that we’ve said from the day we closed ITC that we're going to be on pause for 2017 and we're taking that time now to focus on our organic growth profile for the business and I'm not moving off that at this point in time.

Okay. And just on organic growth that you mentioned upside potentially in your base CapEx plan. We’ll hear more details on Investor Day on that, but just curious, so can you comment on the sources, is that driven by some of the economic drivers you mentioned earlier Barry. Is it more kind of smaller projects that add up to something more meaningful or is it more bigger projects that expect to drive that?

Well, Ben I would go back to the point that we tend to always outperform those outer years when they arrive if you look back at our forecasting, when we are forecasting them at lower levels, when they get here, we are spending more capital. So, it’s a process issue mostly, frankly. We really have to get to identify those projects earlier and that’s where we’re spending the time at this point in time. Sure, the economy helps for sure, but really, it’s really, getting the forecasting right and that’s where our focus is. And we’re seeing that – we’re going to make progress this year. I don’t think we’re going to get all the way there. Like I said, it takes a little while to turn the shift a bit. But stay tuned, all this stuff really, largely relates to some of our bigger utilities, especially in our pipes in British Columbia, our gas pipes here, asset integrity those kind of things. In Arizona, the regulated businesses there, in terms of our, part of our diversification strategy away from coal, natural gas-fired facilities, renewables, those kind of things that you will see show up in the fall. But we’re very optimistic that we have a very strong organic growth story and M&A is not something we need to do grow this business.

Okay. Thanks. And maybe lastly on some of that commentary about Waneta financing. Would it be possible like it’s just looking at some of the comments from Karl, it’s all come into DRIP program and your cash flow generation is here and next. I mean, is that possible, you may not even need to do a discrete equity deal if everything is passed on your favor?

Yeah, I mean, it’s certainly around possibility, Ben, but the wildcard of course and the unknown factor, right now is the participation rate for our U.S. base investors and we’ll have a better sense for that in September. But it will be an indicator, I suspect that it will grow over time. For us, we rather than look at it on a discrete basis, we’re looking at our capital structure holistically. So, when that time comes, so we don’t expect we’re going to close this until, near the end of the year anyway, so we’ll have a much better indication, then and we’ll have an update for Investor Day for sure.

Okay. All right. Thanks everybody.

Thanks, Ben.

There are no further questions at this time. I’m going to turn the call back over to Mr. Barry Perry.

Well, thank you everyone. I think we are complete. Thanks for participation today and have a great rest of your summer.