Fortis Hits Capex High with Arizona T&D, Canadian Pipeline Plans

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Researched by Industrial Info Resources (Sugar Land, Texas)--Fortis Incorporated (NYSE:FTS) (St. Johns, Newfoundland) is beefing up its capital-investment program for the next five years, as it adds gas-fired and renewable generation across the U.S. and Canada, while keeping pace with increasingly necessary transmission and distribution (T&D) improvements. This includes growth in Arizona, where the company expects to see some of its heaviest investments. Industrial Info is tracking US$9.8 billion worth of active projects from Fortis, about US$5.7 billion of which is attributed to Power Industry projects.

Click on the image at right for a graph detailing Fortis' active projects, by industry sector.

Fortis plans to invest C$22.3 billion (US$16.72 billion) in capital projects from 2023 through 2027, the largest five-year capital expenditure (capex) plan in the company's history. This includes C$5.9 billion (US$4.42 billion) in cleaner energy projects, such as a waste-to-energy unit at a power plant in Charlottetown, Prince Edward Island. Maritime Electric Company Limited, a subsidiary of Fortis, is seeking permits to add a steam turbine and associates facilities across the street from the Charlottetown Thermal Generating Station, a natural diesel oil power station that has been operational for decades.

According to Maritime Electric, the Charlottetown Thermal Generating Station "is at the end of its useful life and the company will be removing it from service through a decommissioning project," which started in 2022 and is expected to run throughout 2023. The waste-to-energy unit would utilize 46,000 tons of municipal solid waste per year, from wood chips, scrap wood and other harvesting operations. Subscribers to Industrial Info's Global Market Intelligence (GMI) Power Project Database can learn more from a detailed project report.

In the U.S., much of Fortis' investments in the near term are geared toward Tucson Electric Power (TEP), an Arizona-based subsidiary, including projects to improve T&D capacity and connect renewable-energy sources to the power grid. Executives at Fortis say the Inflation Reduction Act, signed into law in 2022, has significantly bolstered these efforts. These include its involvement in the Southline Transmission Project, a 280-mile, high-voltage transmission line that will allow more wind and solar resources to reach key markets, while improving the grid reliability.

The full Southline Transmission Project runs from El Paso, Texas, to Tucson, Arizona, and is owned by Grid United (Houston, Texas) and Black Forest Partners LP (The Woodlands, Texas). Its major components within Arizona include:

• the replacement of 26.5 miles of outdated line and supporting structures from Red Rock to Tucson, Arizona; see project report
• the replacement of 37.7 miles of outdated line and supporting structures within the Tucson area; see project report
• the rebuild of 16 miles of outdated line and supporting structures within the Tucson area; see project report

"The Inflation Reduction Act is expected to support TEP's clean-energy transition by reducing the cost of new renewables and providing funding to aid the communities impacted by the exit from fossil fuels," said David Hutchens, the chief executive officer of Fortis, in a quarterly earnings-related conference call. "In total, we estimate incremental investments of approximately US$2 billion to US$4 billion through 2035 will be required to implement TEP's current integrated resource plan. TEP expects to file an updated plan later this year."

Fortis' net earnings for 2022 totaled C$1.3 billion (US$975 million), compared with $1.2 billion (US$900 million) for 2021. The increase was primarily driven by rate base growth and higher electricity sales and T&D revenue in Arizona.

Fortis also is developing the Eagle Mountain-Woodfibre Gas Pipeline Project, which would carry natural gas about 30 miles from an area north of Vancouver to Pacific Oil & Gas Limited's (Singapore) Woodfibre LNG Facility near Squamish, British Columbia. Fortis' pipeline would have an initial transmission capacity of 150 million to 200 million standard cubic feet per day, to feed the 2.1 million-metric-ton-per-year LNG complex. Subscribers can read detailed reports on the pipeline and LNG complex, and Fortis' related compressor-station projects in Coquitlam, Squamish and Port Mellon.

Subscribers to Industrial Info's GMI Project Database can click here for a full list of detailed reports for projects mentioned in this article, and click here for a full list of related plant profiles.

Subscribers can click here for a full list of reports for active projects from Fortis.

Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) platform helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking more than 200,000 current and future projects worth $17.8 trillion (USD).