Fortis (Canada) Business Model Canvas

Fortis relies heavily on construction and engineering firms to execute its substantial infrastructure development plans. These specialized partners are crucial for building, expanding, and maintaining Fortis's extensive electricity generation, transmission, and natural gas distribution networks.

Their expertise is vital for the safe and efficient completion of major projects, directly contributing to the growth of Fortis's rate base. For instance, in 2023, Fortis continued to advance projects like the Waterton Phase 3 expansion in Alberta, a significant undertaking that relies on these skilled partnerships.

Fortis's strategic approach to growth and operations is significantly bolstered by its key partnerships, spanning government, suppliers, construction firms, Indigenous communities, and financial institutions.

These collaborations are critical for regulatory approvals, infrastructure development, community integration, and financial stability, directly supporting Fortis's substantial capital expenditure plans and its commitment to sustainable energy solutions.

For instance, the company's 2024 capital plan of approximately $24.0 billion through 2028 relies heavily on securing financing from banks and bondholders, while its commitment to Indigenous partnerships, like the Wataynikaneyap Power project, underscores a dedication to shared value and social license.

Fortis invests heavily in upgrading and expanding its utility infrastructure, a core activity driving future growth. This includes modernizing its electric transmission and distribution networks across North America, ensuring greater reliability and capacity. For instance, their 2024 capital plan projects approximately $4.0 billion in investments, with a significant portion dedicated to infrastructure enhancements.

A key focus is the development of new generation and energy storage solutions to support the transition to cleaner energy sources. This involves building advanced grid infrastructure and integrating renewable energy projects. Fortis aims to grow its rate base significantly through these strategic capital expenditures, projecting a compound annual growth rate in its rate base of 5-7% through 2028.

Fortis's key activities encompass the generation, transmission, and distribution of electricity and natural gas, ensuring reliable energy delivery to millions of customers. They actively manage a diverse portfolio of regulated and non-regulated utility assets across North America and the Caribbean, a strategy that saw them serve over 3.4 million customers in 2024.

Significant capital investments are a cornerstone of their operations, with a 2024 projected capital plan of approximately $23.6 billion through 2028, focused on infrastructure modernization and expansion. This includes substantial spending on natural gas distribution, with $1.1 billion invested in 2023 alone in this segment.

Navigating complex regulatory environments and managing rate cases are critical activities, enabling cost recovery and supporting their extensive capital expenditure programs. Fortis's focus on operational excellence and customer service, including maintaining top-quartile reliability, further defines their core activities.

Fortis relies on substantial financial capital to support its vast operations and ambitious multi-billion dollar capital expenditure programs. This funding is a mix of internally generated cash flow, which was robust in 2024, and access to diverse debt and equity markets.

The company's ability to secure necessary financing is significantly bolstered by its strong credit ratings, which provide favorable terms on debt issuances. Furthermore, Fortis's track record of consistent dividend growth, a key indicator of financial health, makes it an attractive proposition for equity investors.

Fortis's key resources are its extensive regulated utility infrastructure, its skilled workforce, and its access to financial capital. These elements collectively enable the company to deliver essential energy services reliably and pursue growth opportunities.

The company's substantial regulated asset base, which stood at approximately $47 billion in Q1 2024, is the cornerstone of its operations. This infrastructure, combined with a projected $24.3 billion in capital expenditures through 2028, ensures continued service delivery and expansion.

Fortis's approximately 9,800 employees are vital for operating complex systems and managing capital projects, supported by a strong safety culture and ongoing professional development initiatives.

Financial capital, secured through internally generated cash flow and access to debt and equity markets, is critical for funding operations and growth. Strong credit ratings and a history of dividend growth enhance its financial flexibility.

Fortis delivers value by consistently investing in upgrading its energy infrastructure, ensuring it's modern and robust. This focus on modernization means replacing older equipment and expanding capacity to handle increasing energy needs.

These capital expenditures, which reached approximately $4.1 billion in 2023, directly enhance the reliability and quality of service for Fortis's customers. Investments in grid modernization are crucial for meeting future energy demands and improving operational efficiency.

Furthermore, Fortis prioritizes hardening its infrastructure against the impacts of climate change and extreme weather. By strengthening assets, the company aims to minimize service disruptions and maintain dependable energy delivery, a critical factor for its customer base.

Fortis's value proposition is built on providing reliable, safe, and affordable energy through its regulated utility operations. This stability is crucial for consumers and businesses alike, offering a predictable cost structure that aids financial planning.

The company's commitment to infrastructure upgrades, exemplified by its significant capital expenditures, directly enhances service quality and reliability. These investments ensure Fortis can meet current and future energy demands effectively.

Furthermore, Fortis is dedicated to a sustainable energy future, actively investing in renewable energy sources and setting ambitious greenhouse gas reduction targets. This forward-looking approach appeals to environmentally conscious customers and investors.

Fortis also plays a vital role in community development through its infrastructure investments, which stimulate job creation and support economic growth. By ensuring a dependable energy supply, Fortis empowers existing businesses and attracts new ones, fostering local prosperity.

Fortis actively cultivates community relationships by maintaining a robust local presence through its diverse utility operations. This direct engagement, exemplified by community giving days and sponsorships, reinforces trust and addresses specific local needs.

In 2023, Fortis contributed over $10 million to community initiatives across its service territories, underscoring its commitment to local development and well-being. These efforts span vital areas like safety, education, and environmental stewardship.

Fortis leverages digital self-service portals and dedicated contact centers to manage customer interactions, offering 24/7 access to account information and support for complex issues. The company's commitment to reliability is underscored by its 24/7 emergency services, which handled a significant volume of customer interactions in 2023. Fortis also actively builds community trust through local presence, sponsorships, and substantial community contributions, investing over $10 million in 2023 across various initiatives.

Fortis leverages its website, online customer portals, and mobile applications as key digital channels. These platforms offer customers easy access to account management, billing inquiries, and various self-service options, significantly boosting convenience and operational efficiency. For instance, in 2024, Fortis reported that over 70% of its customer interactions occurred through digital channels, highlighting their importance.

These digital tools are instrumental in enhancing the customer experience by providing 24/7 access to information and support. Furthermore, they serve as a crucial avenue for Fortis to communicate important company updates, service alerts, and its ongoing commitment to sustainability initiatives, fostering transparency and engagement with its stakeholders.

Fortis utilizes its extensive physical infrastructure, including electricity grids and natural gas pipelines, as a primary channel for delivering energy services. These networks are essential for reaching millions of customers, with ongoing investments in 2024 focused on maintenance and upgrades to ensure reliability. The company also operates diverse power generation facilities, including renewables, to meet varying energy demands.

Digital channels, such as the Fortis website, customer portals, and mobile apps, are key for customer interaction and account management. In 2024, over 70% of customer interactions occurred through these digital platforms, highlighting their efficiency and importance for providing 24/7 access to information and support.

Formal regulatory filings and public reports, including annual and quarterly disclosures, serve as critical communication channels for financial performance, operational updates, and strategic outlook. For instance, in 2023, Fortis reported total revenues of CAD 10.9 billion, demonstrating transparency through these official documents.

Community outreach and public relations initiatives are also vital channels for Fortis, reinforcing its commitment to safety, sustainability, and local well-being. These efforts in 2024 focused on community investment and bolstering the company's reputation as a reliable, community-focused utility provider.

Fortis's industrial customers are the backbone of its energy supply, encompassing large-scale facilities like manufacturing plants and resource extraction operations. These clients have significant and often intricate energy needs, demanding a consistent and high-capacity power flow tailored to their specific technical requirements.

In 2024, Fortis continued to focus on serving these vital sectors, recognizing their substantial load growth potential. The company's infrastructure is designed to support the immense power demands of industries such as mining, oil and gas, and heavy manufacturing, which are critical drivers of economic activity.

Fortis serves a diverse customer base, including millions of residential customers who value reliability and affordability. The company also caters to commercial clients, from small businesses to larger complexes, requiring consistent energy supply. Additionally, industrial customers with significant, high-capacity energy demands are a key focus, alongside wholesale clients like other utilities and large institutions. Government and public sector entities also rely on Fortis for essential energy services.

Fuel and purchased power are significant expenses for Fortis, particularly for its electricity generation segment. In 2023, Fortis's total operating expenses were $10.5 billion, with fuel and purchased power making up a substantial portion of this. For instance, at its regulated utilities, these costs are often subject to regulatory review and can be recovered from customers through approved rates, mitigating direct impact on the company's profitability.

Fortis's cost structure is heavily influenced by its capital expenditures, which are essential for maintaining and expanding its utility infrastructure. These investments are substantial, with the company projecting $26 billion in capital expenditures between 2025 and 2029, highlighting the significant upfront investment required for new power generation, transmission lines, and distribution networks.

Operating and maintenance (O&M) costs represent the ongoing expenses for keeping Fortis's vast utility operations running, encompassing labor, repairs, and upkeep of critical assets. In 2023, total operating expenses were $5.4 billion, with O&M being a key component, and the company aims to maintain stable, controllable O&M cost increases.

Fuel and purchased power are significant variable costs, particularly for electricity generation, and these were a substantial part of Fortis's $10.5 billion in total operating expenses in 2023. These costs are often recoverable from customers through regulated rates.

Interest expenses are a material cost due to Fortis's reliance on debt financing for its capital-intensive projects. In 2023, interest expenses were approximately $1.2 billion CAD, a direct consequence of the significant debt required to fund its utility assets.

Fortis generates substantial revenue from transmission and distribution charges, which are separate from the actual cost of electricity and natural gas. These charges essentially act as a toll for using their vast network of pipes and power lines, covering the costs and risks associated with maintaining and operating this critical infrastructure.

The company's extensive investments in its transmission systems, particularly through subsidiaries like ITC, are a key driver of its earnings. These investments increase the company's rate base, which is the value of assets upon which regulators allow Fortis to earn a return, directly boosting profitability.

For instance, in 2023, Fortis reported that its regulated businesses, heavily reliant on transmission and distribution infrastructure, formed the backbone of its stable earnings. This segment continues to be a primary focus for capital deployment, aiming to further expand the rate base and ensure predictable revenue streams.

Fortis's revenue streams are primarily anchored in the regulated sale of electricity and natural gas across its diverse utility operations. These sales are bolstered by transmission and distribution charges, essentially tolls for utilizing its extensive infrastructure network. The company's strategy focuses on expanding its regulated asset base, or rate base, through consistent capital investments, which directly translates into predictable earnings and supports dividend growth.