Exhibit 99.2
Interim Financial Statements











FORTIS INC.

Condensed Consolidated Interim Financial Statements
For the three and six months ended June 30, 2023 and 2022
(Unaudited)
1
FORTIS INC.JUNE 30, 2023 QUARTER REPORT
Interim Financial Statements
CONDENSED CONSOLIDATED INTERIM BALANCE SHEETS (Unaudited)
FORTIS INC.
June 30,December 31,
As at (in millions of Canadian dollars)20232022
ASSETS
Current assets
Cash and cash equivalents$690 $209 
Accounts receivable and other current assets (Note 5)1,580 2,339 
Prepaid expenses162 146 
Inventories 534 661 
Regulatory assets (Note 6)730 914 
Assets held for sale (Note 7)561 — 
Total current assets4,257 4,269 
Other assets 1,146 1,213 
Regulatory assets (Note 6)3,226 3,095 
Property, plant and equipment, net41,777 41,663 
Intangible assets, net 1,492 1,548 
Goodwill 12,183 12,464 
Total assets$64,081 $64,252 
LIABILITIES AND EQUITY
Current liabilities
Short-term borrowings (Note 8)$80 $253 
Accounts payable and other current liabilities 2,432 3,288 
Regulatory liabilities (Note 6)489 595 
Current installments of long-term debt (Note 8)2,284 2,481 
Liabilities associated with assets held for sale (Note 7)129 — 
Total current liabilities5,414 6,617 
Regulatory liabilities (Note 6)3,228 3,320 
Deferred income taxes 4,018 4,060 
Long-term debt (Note 8)26,808 25,931 
Finance leases335 336 
Other liabilities 1,101 1,146 
Total liabilities40,904 41,410 
Commitments and contingencies (Note 14)
Equity
Common shares (1)
14,889 14,656 
Preference shares1,623 1,623 
Additional paid-in capital8 10 
Accumulated other comprehensive income669 1,008 
Retained earnings4,190 3,733 
Shareholders' equity21,379 21,030 
Non-controlling interests 1,798 1,812 
Total equity23,177 22,842 
Total liabilities and equity$64,081 $64,252 
(1)    No par value. Unlimited authorized shares. 486.4 million and 482.2 million issued and outstanding as at June 30, 2023 and December 31, 2022, respectively.
See accompanying Notes to Condensed Consolidated Interim Financial Statements
2
FORTIS INC.JUNE 30, 2023 QUARTER REPORT
Interim Financial Statements
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF EARNINGS (Unaudited)
FORTIS INC.
QuarterYear-to-Date
For the periods ended June 30 (in millions of Canadian dollars, except per share amounts)
2023 2022 2023 2022 
Revenue $2,594 $2,487 $5,913 $5,322 
Expenses
Energy supply costs787 797 2,099 1,880 
Operating expenses713 659 1,454 1,328 
Depreciation and amortization440 417 876 824 
Total expenses1,940 1,873 4,429 4,032 
Operating income654 614 1,484 1,290 
Other income, net (Note 10)64 35 133 77 
Finance charges 323 266 638 524 
Earnings before income tax expense395 383 979 843 
Income tax expense49 53 149 120 
Net earnings$346 $330 $830 $723 
Net earnings attributable to:
Non-controlling interests$35 $30 $66 $57 
Preference equity shareholders17 16 33 32 
Common equity shareholders294 284 731 634 
$346 $330 $830 $723 
Earnings per common share (Note 11)
Basic$0.61 $0.59 $1.51 $1.33 
Diluted$0.61 $0.59 $1.51 $1.33 
See accompanying Notes to Condensed Consolidated Interim Financial Statements

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)
QuarterYear-to-Date
For the periods ended June 30 (in millions of Canadian dollars)
2023 2022 2023 2022 
Net earnings$346 $330 $830 $723 
Other comprehensive (loss) income
Unrealized foreign currency translation (losses) gains (1)
(339)448 (383)287 
Other (2)
5 4 3 24 
(334)452 (380)311 
Comprehensive income$12 $782 $450 $1,034 
Comprehensive income attributable to:
Non-controlling interests$(1)$79 $25 $93 
Preference equity shareholders17 16 33 32 
Common equity shareholders(4)687 392 909 
$12 $782 $450 $1,034 
(1)Net of hedging activities and income tax expense of $6 million for the three and six months ended June 30, 2023 (three and six months ended June 30, 2022 - income tax recovery of $4 million and $3 million, respectively)
(2)Net of income tax expense of $2 million for the three and six months ended June 30, 2023 (three and six months ended June 30, 2022 - income tax expense of $2 million and $10 million, respectively)
See accompanying Notes to Condensed Consolidated Interim Financial Statements
3
FORTIS INC.JUNE 30, 2023 QUARTER REPORT
Interim Financial Statements
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS (Unaudited)
FORTIS INC.
QuarterYear-to-Date
For the periods ended June 30 (in millions of Canadian dollars)2023 2022 2023 2022 
Operating activities
Net earnings$346 $330 $830 $723 
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation - property, plant and equipment381 366 759 722 
Amortization - intangible assets38 36 76 71 
Amortization - other21 15 41 31 
Deferred income tax expense24 32 55 55 
Equity component, allowance for funds used during construction (Note 10)
(23)(18)(46)(35)
Other43 14 49 54 
Change in long-term regulatory assets and liabilities(103)24 (82)14 
Change in working capital (Note 12)217 (40)177 (63)
Cash from operating activities944 759 1,859 1,572 
Investing activities
Additions to property, plant and equipment(938)(827)(1,845)(1,693)
Additions to intangible assets(44)(58)(91)(107)
Contributions in aid of construction20 22 71 61 
Other(51)(55)(89)(95)
Cash used in investing activities(1,013)(918)(1,954)(1,834)
Financing activities
Proceeds from long-term debt, net of issuance costs 1,247 816 1,881 1,645 
Repayments of long-term debt and finance leases(364)(609)(697)(836)
Borrowings under committed credit facilities1,972 1,562 3,875 2,986 
Repayments under committed credit facilities (2,201)(1,552)(3,938)(3,152)
Net change in short-term borrowings(273)82 (165)158 
Issue of common shares, net of costs and dividends reinvested14 18 28 40 
Dividends

Common shares, net of dividends reinvested(172)(164)(342)(324)

Preference shares(17)(16)(33)(32)

Subsidiary dividends paid to non-controlling interests(17)(11)(40)(31)
Other20 (2)28 7 
Cash from financing activities209 124 597 461 
Effect of exchange rate changes on cash and cash equivalents(7)8 (2)8 
Change in cash and cash equivalents133 (27)500 207 
Change in cash associated with assets held for sale (Note 7)
(19)— (19)— 
Cash and cash equivalents, beginning of period576 365 209 131 
Cash and cash equivalents, end of period$690 $338 $690 $338 
Supplementary Cash Flow Information (Note 12)
See accompanying Notes to Condensed Consolidated Interim Financial Statements

4
FORTIS INC.JUNE 30, 2023 QUARTER REPORT
Interim Financial Statements
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN EQUITY (Unaudited)
FORTIS INC.
For the three months ended June 30
(in millions of Canadian dollars, except share numbers)
Common Shares
(# millions)
Common SharesPreference Shares Additional Paid-In CapitalAccumulated Other Comprehensive Income (Loss)Retained EarningsNon-Controlling InterestsTotal Equity
As at March 31, 2023484.4 $14,773 $1,623 $8 $967 $3,896 $1,816 $23,083 
Net earnings— — — — — 311 35 346 
Other comprehensive loss— — — — (298)— (36)(334)
Common shares issued2.0 116 — (1)— — — 115 
Subsidiary dividends paid to non-controlling interests— — — — — — (17)(17)
Dividends on preference shares— — — — — (17)— (17)
Other— — — 1 — — — 1 
As at June 30, 2023486.4 $14,889 $1,623 $8 $669 $4,190 $1,798 $23,177 
As at March 31, 2022476.9 $14,354 $1,623 $8 $(168)$3,553 $1,624 $20,994 
Net earnings— — — — — 300 30 330 
Other comprehensive income— — — — 403 — 49 452 
Common shares issued1.8 111 — (1)— — — 110 
Subsidiary dividends paid to non-controlling interests— — — — — — (11)(11)
Dividends on preference shares— — — — — (16)— (16)
Other— — — 1 — — — 1 
As at June 30, 2022478.7 $14,465 $1,623 $8 $235 $3,837 $1,692 $21,860 
See accompanying Notes to Condensed Consolidated Interim Financial Statements
5
FORTIS INC.JUNE 30, 2023 QUARTER REPORT
Interim Financial Statements
CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN EQUITY (Unaudited)
FORTIS INC.
For the six months ended June 30
(in millions of Canadian dollars, except share numbers)
Common Shares
(# millions)
Common SharesPreference SharesAdditional Paid-In CapitalAccumulated Other Comprehensive Income (Loss)Retained EarningsNon-Controlling InterestsTotal Equity
As at December 31, 2022
482.2 $14,656 $1,623 $10 $1,008 $3,733 $1,812 $22,842 
Net earnings— — — — — 764 66 830 
Other comprehensive loss— — — — (339)— (41)(380)
Common shares issued4.2 233 — (1)— — — 232 
Subsidiary dividends paid to non-controlling interests— — — — — — (40)(40)
Dividends declared on common shares ($0.565 per share)
— — — — — (274)— (274)
Dividends on preference shares— — — — — (33)— (33)
Other— — — (1)— — 1 — 
As at June 30, 2023486.4 $14,889 $1,623 $8 $669 $4,190 $1,798 $23,177 
As at December 31, 2021
474.8 $14,237 $1,623 $10 $(40)$3,458 $1,628 $20,916 
Net earnings— — — — — 666 57 723 
Other comprehensive income— — — — 275 — 36 311 
Common shares issued3.9 228 — (2)— — — 226 
Subsidiary dividends paid to non-controlling interests— — — — — — (31)(31)
Dividends declared on common shares ($0.535 per share)
— — — — — (255)— (255)
Dividends on preference shares— — — — — (32)— (32)
Other— — — — — — 2 2 
As at June 30, 2022478.7 $14,465 $1,623 $8 $235 $3,837 $1,692 $21,860 
See accompanying Notes to Condensed Consolidated Interim Financial Statements

6
FORTIS INC.JUNE 30, 2023 QUARTER REPORT
Notes to Condensed Consolidated Interim Financial Statements (Unaudited)
For the three and six months ended June 30, 2023 and 2022
1. DESCRIPTION OF BUSINESS

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

Earnings for interim periods may not be indicative of annual results due to: (i) the impact of seasonal weather conditions on customer demand and market pricing; (ii) the impact of market conditions, particularly with respect to long-term wholesale sales and transmission revenue at UNS Energy, as well as margins realized on gas sold at Aitken Creek; (iii) changes in foreign exchange rates; and (iv) the timing and significance of regulatory decisions. Earnings of the gas utilities tend to be highest in the first and fourth quarters due to space-heating requirements. Earnings of the electric distribution utilities in the U.S. tend to be highest in the second and third quarters due to the use of air conditioning and other cooling equipment.

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

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

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

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

FortisBC Energy: FortisBC Energy Inc.

FortisAlberta: FortisAlberta Inc.

FortisBC Electric: FortisBC Inc.

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

Non-Regulated
Energy Infrastructure: Long-term contracted generation assets in Belize and the Aitken Creek natural gas storage facility ("Aitken Creek") in British Columbia (Note 7).

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


2. REGULATORY MATTERS

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

ITC
ITC Midwest Capital Structure Complaint: In 2022, FERC issued an order denying the complaint filed by the Iowa Coalition for Affordable Transmission ("ICAT") requesting that ITC Midwest's common equity component of capital structure be reduced from 60% to 53%. In March 2023, FERC confirmed its decision following ICAT's request for rehearing.

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

Transmission Incentives: In 2021, FERC issued a supplemental notice of proposed rulemaking ("NOPR") on transmission incentives modifying the proposal in the initial NOPR released by FERC in 2020. The supplemental NOPR proposes to eliminate the 50-basis point regional transmission organization ("RTO") ROE incentive adder for RTO members that have been members for longer than three years. The timing and outcome of this proceeding is unknown.


7
FORTIS INC.JUNE 30, 2023 QUARTER REPORT
Notes to Condensed Consolidated Interim Financial Statements (Unaudited)
For the three and six months ended June 30, 2023 and 2022
2. REGULATORY MATTERS (cont'd)

Transmission Right of First Refusal ("ROFR"): The State of Iowa has granted incumbent electric transmission owners, including ITC, a ROFR to construct, own and maintain certain electric transmission assets in the state. A challenge against the ROFR statute by certain plaintiffs was initially dismissed by the District Court on the grounds that the plaintiffs lacked standing. In March 2023, the Iowa Supreme Court determined that the plaintiffs have standing to challenge the Iowa ROFR statute, issued a temporary injunction staying enforcement of the ROFR statute, and remanded the matter to the District Court to decide the merits of the claim. Management does not believe that this proceeding will impact projects that have already been approved and under development; however, the timing of this proceeding and any impact on future projects, is unknown.

UNS Energy
TEP General Rate Application: In July 2023, the Administrative Law Judge ("ALJ") issued a recommended opinion and order on TEP's general rate application recommending, among other things, an increase in non-fuel revenue of US$102 million, a 9.4% ROE with a 0.2% return on the fair value increment, and a 54.32% common equity component of capital structure. TEP's existing ROE and common equity component of capital structure is 9.15% and 53%, respectively. While the timing and outcome of this proceeding is unknown, the ALJ recommended that the new rates become effective on or after September 1, 2023.

PPFAC Mechanism: The Purchased Power and Fuel Adjustment Clause ("PPFAC") mechanism allows for the timely recovery or return of purchased power and fuel costs, as compared to that collected in customer rates, at TEP and UNSE. The PPFAC balance has increased in recent years, reflecting higher commodity costs. In May 2023, the ACC approved rate adjustments at TEP and UNSE to collect the PPFAC balances over 12- and 33-month periods, respectively.

Central Hudson
General Rate Application: In July 2023, Central Hudson filed a rate application with the New York Public Service Commission ("PSC") requesting an increase in electric and gas delivery rates effective July 1, 2024. The application includes a request to set Central Hudson's allowed ROE at 9.8% and a 50% common equity component of capital structure. The timing and outcome of this proceeding is unknown.

Customer Information System ("CIS") Implementation: In January 2023, Central Hudson filed a response to the PSC's Order to Commence Proceeding and Show Cause, which had directed Central Hudson to explain why the PSC should not pursue civil or administrative penalties or initiate a proceeding to review the prudence of implementation costs associated with its new CIS. In July 2023, an interim agreement was reached with the PSC, in which Central Hudson agreed to independent third-party verification of recent system improvements related to its billing system, and to accelerate the implementation of its monthly meter reading plan. The timing and outcome of this proceeding remains unknown.

FortisBC Energy and FortisBC Electric
Generic Cost of Capital ("GCOC") Proceeding: In 2021, the British Columbia Utilities Commission ("BCUC") initiated a proceeding including a review of the common equity component of capital structure and the allowed ROE. FortisBC filed a final argument with the BCUC in December 2022 and the proceeding remains ongoing, with a decision expected in the third quarter 2023. The decision could be effective retroactively to January 1, 2023.

FortisAlberta
2024 GCOC Proceeding: In 2022, the Alberta Utilities Commission ("AUC") initiated proceedings to establish the cost of capital parameters for Alberta regulated utilities, including consideration of a formula-based approach to setting the allowed ROE for 2024 and beyond. The proceeding remains ongoing, and a decision from the AUC is expected in the second half of 2023.

Third PBR Term: In 2021, the AUC issued a decision confirming that Alberta distribution utilities will be subject to a third performance-based rate setting ("PBR") term commencing in 2024. The AUC also initiated a new proceeding to consider the design of the third PBR term. The proceeding remains ongoing, and a decision from the AUC is expected in the second half of 2023.

Rural Electrification Association ("REA") Cost Recovery: In 2021, the AUC determined that costs attributable to REAs, approximating $10 million annually, can no longer be recovered from FortisAlberta's rate payers, effective January 1, 2023. In April 2023, the Alberta Court of Appeal dismissed FortisAlberta's appeal which had asserted that the AUC erred in preventing the company from recovering these costs from its own rate payers to the extent that such costs cannot be recovered directly from REAs. FortisAlberta continues to assess other means, including legislative amendments, to recover these costs.


3. ACCOUNTING POLICIES

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

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

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

8
FORTIS INC.JUNE 30, 2023 QUARTER REPORT
Notes to Condensed Consolidated Interim Financial Statements (Unaudited)
For the three and six months ended June 30, 2023 and 2022
3. ACCOUNTING POLICIES (cont'd)

These Interim Financial Statements do not include all of the disclosures required in the annual financial statements and should be read in conjunction with the Corporation's 2022 Annual Financial Statements. In management's opinion, these Interim Financial Statements include all adjustments that are of a normal recurring nature, necessary for fair presentation.

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

The accounting policies applied herein are consistent with those outlined in the Corporation's 2022 Annual Financial Statements.

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


4. SEGMENTED INFORMATION

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

Related-Party and Inter-Company Transactions
Related-party transactions are in the normal course of operations and are measured at the amount of consideration agreed to by the related parties. There were no material related-party transactions for the three and six months ended June 30, 2023 and 2022.

The lease of gas storage capacity and gas sales from Aitken Creek to FortisBC Energy of $6 million and $15 million for the three and six months ended June 30, 2023, respectively (three and six months ended June 30, 2022 - $7 million and $20 million, respectively) are inter-company transactions between non-regulated and regulated entities, which were not eliminated on consolidation.

As at June 30, 2023, accounts receivable included $4 million due from Belize Electricity (December 31, 2022 - $7 million).

Fortis periodically provides short-term financing to subsidiaries to support capital expenditures and seasonal working capital requirements, the impacts of which are eliminated on consolidation. As at June 30, 2023 and December 31, 2022, there were no inter-segment loans outstanding. Interest charged on inter-segment loans was not material for the three and six months ended June 30, 2023 and 2022.


9
FORTIS INC.JUNE 30, 2023 QUARTER REPORT
Notes to Condensed Consolidated Interim Financial Statements (Unaudited)
For the three and six months ended June 30, 2023 and 2022
4. SEGMENTED INFORMATION (cont'd)

RegulatedNon-Regulated
EnergyInter-
UNSCentralFortisBCFortisFortisBCOtherSubInfra-Corporatesegment
($ millions)ITCEnergyHudsonEnergyAlbertaElectricElectricTotalstructureand OthereliminationsTotal
Quarter ended June 30, 2023
Revenue519 661 317 362 181 116 420 2,576 18 — — 2,594 
Energy supply costs— 262 121 141 — 22 241 787 — — — 787 
Operating expenses125 204 144 91 44 31 56 695 10 8 — 713 
Depreciation and amortization103 88 28 78 67 24 51 439 1 — — 440 
Operating income291 107 24 52 70 39 72 655 7 (8)— 654 
Other income, net19 12 13 9 3 1 5 62 — 2 — 64 
Finance charges105 37 15 43 30 19 21 270 — 53 — 323 
Income tax expense49 12 5 (5)2 3 8 74 1 (26)— 49 
Net earnings156 70 17 23 41 18 48 373 6 (33)— 346 
Non-controlling interests29 — — — — — 6 35 — — — 35 
Preference share dividends— — — — — — — — — 17 — 17 
Net earnings attributable to common equity shareholders127 70 17 23 41 18 42 338 6 (50)— 294 
Additions to property, plant and equipment and intangible assets264 183 78 125 182 35 115 982 — — — 982 
As at June 30, 2023
Goodwill8,127 1,829 597 913 228 235 254 12,183 — — — 12,183 
Total assets23,838 12,303 5,105 8,587 5,718 2,625 4,993 63,169 685 256 (29)64,081 
Quarter ended June 30, 2022
Revenue468 648 281 396 169 108 384 2,454 33 — — 2,487 
Energy supply costs— 272 101 181 — 18 224 796 1 — — 797 
Operating expenses120 167 143 88 42 33 52 645 8 6 — 659 
Depreciation and amortization94 92 26 75 61 17 47 412 4 1 — 417 
Operating income 254 117 11 52 66 40 61 601 20 (7)— 614 
Other income, net10 3 15 5 — 1 1 35 — — — 35 
Finance charges83 30 13 35 28 19 19 227 — 39 — 266 
Income tax expense 41 13 3 5 3 3 6 74 1 (22)— 53 
Net earnings 140 77 10 17 35 19 37 335 19 (24)— 330 
Non-controlling interests26 — — — — — 4 30 — — — 30 
Preference share dividends— — — — — — — — — 16 — 16 
Net earnings attributable to common equity shareholders114 77 10 17 35 19 33 305 19 (40)— 284 
Additions to property, plant and equipment and intangible assets272 159 65 134 119 30 100 879 6 — — 885 
As at June 30, 2022
Goodwill7,900 1,779 581 913 228 235 248 11,884 27 — — 11,911 
Total assets21,993 11,796 4,587 8,272 5,328 2,565 4,487 59,028 776 300 (150)59,954 

10
FORTIS INC.JUNE 30, 2023 QUARTER REPORT
Notes to Condensed Consolidated Interim Financial Statements (Unaudited)
For the three and six months ended June 30, 2023 and 2022
4. SEGMENTED INFORMATION (cont'd)

RegulatedNon-Regulated
EnergyInter-
UNSCentralFortisBCFortisFortisBCOtherSubInfra-Corporatesegment
($ millions)ITCEnergyHudsonEnergyAlbertaElectricElectricTotalstructureand OthereliminationsTotal
Year-to-date June 30, 2023
Revenue1,038 1,401 759 1,117 360 255 927 5,857 56 — — 5,913 
Energy supply costs— 599 328 518 — 69 585 2,099 — — — 2,099 
Operating expenses260 394 306 189 86 61 116 1,412 20 22 — 1,454 
Depreciation and amortization204 175 56 155 131 48 101 870 5 1 — 876 
Operating income574 233 69 255 143 77 125 1,476 31 (23)— 1,484 
Other income, net36 26 27 16 3 2 12 122 — 11 — 133 
Finance charges204 73 33 84 60 39 42 535 — 103 — 638 
Income tax expense96 26 14 40 5 4 14 199 7 (57)— 149 
Net earnings310 160 49 147 81 36 81 864 24 (58)— 830 
Non-controlling interests57 — — — — — 9 66 — — — 66 
Preference share dividends— — — — — — — — — 33 — 33 
Net earnings attributable to common equity shareholders253 160 49 147 81 36 72 798 24 (91)— 731 
Additions to property, plant and equipment and intangible assets600 368 156 239 301 62 208 1,934 2 — — 1,936 
As at June 30, 2023
Goodwill8,127 1,829 597 913 228 235 254 12,183 — — — 12,183 
Total assets23,838 12,303 5,105 8,587 5,718 2,625 4,993 63,169 685 256 (29)64,081 
Year-to-date June 30, 2022
Revenue928 1,186 656 1,090 336 237 843 5,276 46 — — 5,322 
Energy supply costs— 482 263 535 — 61 536 1,877 3 — — 1,880 
Operating expenses243 329 292 171 84 66 105 1,290 20 18 — 1,328 
Depreciation and amortization186 181 51 150 121 34 91 814 8 2 — 824 
Operating income 499 194 50 234 131 76 111 1,295 15 (20)— 1,290 
Other income, net19 6 30 9 1 3 3 71 — 6 — 77 
Finance charges163 61 26 71 54 37 37 449 — 75 — 524 
Income tax expense 82 19 12 36 7 5 11 172 2 (54)— 120 
Net earnings 273 120 42 136 71 37 66 745 13 (35)— 723 
Non-controlling interests50 — — — — — 7 57 — — — 57 
Preference share dividends— — — — — — — — — 32 — 32 
Net earnings attributable to common equity shareholders223 120 42 136 71 37 59 688 13 (67)— 634 
Additions to property, plant and equipment and intangible assets607 321 129 264 230 60 178 1,789 11 — — 1,800 
As at June 30, 2022
Goodwill7,900 1,779 581 913 228 235 248 11,884 27 — — 11,911 
Total assets21,993 11,796 4,587 8,272 5,328 2,565 4,487 59,028 776 300 (150)59,954 

11
FORTIS INC.JUNE 30, 2023 QUARTER REPORT
Notes to Condensed Consolidated Interim Financial Statements (Unaudited)
For the three and six months ended June 30, 2023 and 2022
5. ALLOWANCE FOR CREDIT LOSSES

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

QuarterYear-to-Date
($ millions)2023 2022 2023 2022 
Periods ended June 30
Balance, beginning of period(59)(53)(58)(53)
Credit loss expense(3)(5)(11)(10)
Credit loss deferral(2)— (3)— 
Write-offs, net of recoveries4 6 12 11 
Foreign exchange— (1)— (1)
Balance, end of period(60)(53)(60)(53)

See Note 13 for disclosure on the Corporation's credit risk.


6. REGULATORY ASSETS AND LIABILITIES

Detailed information about the Corporation's regulatory assets and liabilities is provided in Note 8 to the 2022 Annual Financial Statements. A summary follows.
As at
June 30,December 31,
($ millions)
2023 2022 
Regulatory assets
Deferred income taxes 1,897 1,874 
Deferred energy management costs 463 445 
Rate stabilization and related accounts 419 557 
Employee future benefits 191 207 
Deferred lease costs 135 132 
Derivatives118 84 
Deferred restoration costs109 91 
Manufactured gas plant site remediation deferral 87 97 
Generation early retirement costs73 78 
Other regulatory assets 464 444 
Total regulatory assets3,956 4,009 
Less: Current portion(730)(914)
Long-term regulatory assets3,226 3,095 
Regulatory liabilities
Future cost of removal1,353 1,306 
Deferred income taxes1,271 1,364 
Rate stabilization and related accounts288 297 
Employee future benefits254 306 
Renewable energy surcharge122 126 
Energy efficiency liability89 89 
Electric and gas moderator account67 34 
Alberta Electric System Operator charges deferral58 21 
Derivatives54 224 
Other regulatory liabilities161 148 
Total regulatory liabilities3,717 3,915 
Less: Current portion(489)(595)
Long-term regulatory liabilities3,228 3,320 

12
FORTIS INC.JUNE 30, 2023 QUARTER REPORT
Notes to Condensed Consolidated Interim Financial Statements (Unaudited)
For the three and six months ended June 30, 2023 and 2022
7. ASSETS HELD FOR SALE

In May 2023, the Corporation announced that FortisBC Holdings Inc. ("FHI") had entered into a definitive share purchase and sale agreement with a subsidiary of Enbridge Inc. to sell its 93.8% ownership interest in Aitken Creek for approximately $400 million, subject to customary closing conditions and adjustments. The purchase is subject to required approval, principally by the BCUC, and is expected to close by the end of the year with a March 31, 2023 effective date.

As at June 30, 2023, the related assets and liabilities, as included in the Energy Infrastructure segment, were classified as held for sale and are detailed below.
As at ($ millions)June 30, 2023
Cash and cash equivalents19 
Accounts receivable and other current assets30 
Inventories55 
Property, plant and equipment, net430 
Goodwill27 
Total assets held for sale561 
Accounts payable and other current liabilities20 
Deferred income taxes109 
Total liabilities associated with assets held for sale129 

For the three and six months ended June 30, 2023, Aitken Creek had net earnings of $3 million and $18 million, respectively (three and six months ended June 30, 2022 - $14 million and $7 million, respectively).


8. LONG-TERM DEBT
As at
June 30,December 31,
($ millions)2023 2022 
Long-term debt27,704 26,921 
Credit facility borrowings 1,562 1,657 
Total long-term debt29,266 28,578 
Less: Deferred financing costs and debt discounts(174)(166)
Less: Current installments of long-term debt(2,284)(2,481)
26,808 25,931 

Significant Long-Term Debt IssuancesInterest
Year-to-Date June 30, 2023MonthRateUse of
($ millions, except as noted)
Issued

(%)
MaturityAmountProceeds
ITC
Unsecured senior notesJune5.40 
(1)
2033US500 
(2) (3) (4)
Unsecured senior notesJune4.95 
(5)
2027US300 
(2) (3) (4)
UNS Energy
Unsecured senior notesFebruary5.50 2053US375 
(2) (3)
FortisAlberta
Unsecured senior debenturesMay4.86 2053200 
(3) (4)
Central Hudson
Unsecured senior notesMarch5.68 2033US40 
(3) (4)
Unsecured senior notesMarch5.78 2035US15 
(3) (4)
Unsecured senior notesMarch5.88 2038US35 
(3) (4)
(1)    ITC entered into interest rate locks which reduced the effective interest rate to 5.32%. See Note 13 to the Interim Financial Statements
(2)    Repay maturing long-term debt
(3)    General corporate purposes
(4)     Repay short-term and/or credit facility borrowings
(5)     Represents a second tranche of ITC's existing 4.95% senior notes, originally issued in 2022

13
FORTIS INC.JUNE 30, 2023 QUARTER REPORT
Notes to Condensed Consolidated Interim Financial Statements (Unaudited)
For the three and six months ended June 30, 2023 and 2022
8. LONG-TERM DEBT (cont'd)

In November 2022, Fortis filed a short-form base shelf prospectus with a 25-month life under which it may issue common or preference shares, subscription receipts, or debt securities in an aggregate principal amount of up to $2.0 billion. As at June 30, 2023, $2.0 billion remained available under the short-form base shelf prospectus.
As at
Credit facilitiesRegulatedCorporateJune 30,December 31,
($ millions)Utilitiesand Other2023 2022 
Total credit facilities3,963 2,034 5,997 5,850 
Credit facilities utilized:
Short-term borrowings (1)
(80)— (80)(253)
Long-term debt (including current portion) (2)
(792)(770)(1,562)(1,657)
Letters of credit outstanding(57)(38)(95)(128)
Credit facilities unutilized3,034 1,226 4,260 3,812 
(1)    The weighted average interest rate was 6.7% (December 31, 2022 - 4.9%).
(2)    The weighted average interest rate was 6.0% (December 31, 2022 - 5.1%). The current portion was $1,114 million (December 31, 2022 - $1,376 million).

Credit facilities are syndicated primarily with large banks in Canada and the U.S., with no one bank holding more than approximately 20% of the Corporation's total revolving credit facilities. Approximately $5.7 billion of the total credit facilities are committed with maturities ranging from 2023 through 2028.

See Note 14 in the 2022 Annual Financial Statements for a description of the credit facilities as at December 31, 2022.

In April 2023, ITC increased its total credit facilities available from US$900 million to US$1 billion and extended the maturity to April 2028.

In May 2023, the Corporation amended its $1.3 billion revolving term committed credit facility agreement to extend the maturity to July 2028.

Also in May 2023, the Corporation extended the maturity on its unsecured US$500 million non-revolving term credit facility to May 2024. The facility is repayable at any time without penalty.


9. EMPLOYEE FUTURE BENEFITS

Fortis and each subsidiary maintain one or a combination of defined benefit pension plans and defined contribution pension plans, as well as other post-employment benefit ("OPEB") plans, including health and dental coverage and life insurance benefits, for qualifying members. The net benefit cost is detailed below.
Defined Benefit
Pension Plans
OPEB Plans
($ millions)2023 2022 2023 2022 
Quarter ended June 30
Service costs16 26 6 8 
Interest costs40 28 7 6 
Expected return on plan assets(50)(48)(5)(5)
Amortization of actuarial (gains) losses(3)1 (5)(3)
Amortization of past service credits/plan amendments(1)(1)(1)(1)
Regulatory adjustments2 (3)1 1 
Net benefit cost4 3 3 6 
Year-to-date June 30
Service costs31 52 11 17 
Interest costs80 56 15 11 
Expected return on plan assets(100)(97)(11)(11)
Amortization of actuarial (gains) losses(5)2 (9)(5)
Amortization of past service credits/plan amendments(1)(1)(1)(1)
Regulatory adjustments6 (5)3 2 
Net benefit cost11 7 8 13 

Defined contribution pension plan expense for the three and six months ended June 30, 2023 was $13 million and $29 million, respectively (three and six months ended June 30, 2022 - $12 million and $26 million, respectively).
14
FORTIS INC.JUNE 30, 2023 QUARTER REPORT
Notes to Condensed Consolidated Interim Financial Statements (Unaudited)
For the three and six months ended June 30, 2023 and 2022
10. OTHER INCOME, NET
QuarterYear-to-Date
($ millions)2023 2022 2023 2022 
Periods ended June 30
Equity component, allowance for funds used during construction23 18 46 35 
Interest income (1)
18 2 34 3 
Non-service component of net periodic benefit cost16 25 32 49 
Gain (loss) on derivatives, net3 (2)12 2 
Gain (loss) on retirement investments, net— (9)4 (17)
Other4 1 5 5 
64 35 133 77 
(1)    Includes interest on short-term deposits, as well as interest on regulatory deferrals, including the PPFAC at TEP and UNSE


11. EARNINGS PER COMMON SHARE

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

20232022
Net EarningsWeightedNet EarningsWeighted
to CommonAverageto CommonAverage
ShareholdersSharesEPSShareholdersSharesEPS
($ millions)(# millions)($)($ millions)(# millions)($)
Quarter ended June 30
Basic EPS294 485.4 0.61 284 477.8 0.59 
Potential dilutive effect of stock options— 0.3 — 0.5 
Diluted EPS294 485.7 0.61 284 478.3 0.59 
Year-to-date June 30
Basic EPS731 484.3 1.51 634 476.8 1.33 
Potential dilutive effect of stock options— 0.3 — 0.5 
Diluted EPS731 484.6 1.51 634 477.3 1.33 


12. SUPPLEMENTARY CASH FLOW INFORMATION

QuarterYear-to-Date
($ millions)2023 2022 2023 2022 
Periods ended June 30
Change in working capital
Accounts receivable and other current assets208 49 489 (46)
Prepaid expenses(19)17 (19)22 
Inventories(29)(114)62 (45)
Regulatory assets - current portion164 (31)160 (43)
Accounts payable and other current liabilities(132)9 (537)17 
Regulatory liabilities - current portion25 30 22 32 
217 (40)177 (63)
Non-cash investing and financing activities
Accrued capital expenditures366 380 366 380 
Common share dividends reinvested102 92 205 186 
Contributions in aid of construction10 12 10 12 

15
FORTIS INC.JUNE 30, 2023 QUARTER REPORT
Notes to Condensed Consolidated Interim Financial Statements (Unaudited)
For the three and six months ended June 30, 2023 and 2022
13. FAIR VALUE OF FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

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

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

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

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

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

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

Unrealized gains or losses associated with changes in the fair value of these energy contracts are deferred as a regulatory asset or liability for recovery from, or refund to, customers in future rates, as permitted by the regulators. As at June 30, 2023, unrealized losses of $118 million (December 31, 2022 - $84 million) were recognized as regulatory assets and unrealized gains of $54 million (December 31, 2022 - $224 million) were recognized as regulatory liabilities.

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

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

Unrealized gains or losses associated with changes in the fair value of these energy contracts are recognized in revenue. During the three months ended June 30, 2023, unrealized losses of $8 million and unrealized gains of $6 million, respectively were recognized in revenue (three and six months ended June 30, 2022 - unrealized gains of $19 million and $2 million, respectively).

Total Return Swaps
The Corporation holds total return swaps to manage the cash flow risk associated with forecast future cash settlements of certain stock-based compensation obligations. The swaps have a combined notional amount of $119 million and terms of one to three years expiring at varying dates through January 2026. Fair value is measured using an income valuation approach based on forward pricing curves. Unrealized gains and losses associated with changes in fair value are recognized in other income, net. During the three and six months ended June 30, 2023, unrealized losses of $1 million and unrealized gains of $5 million, respectively were recognized in other income, net (three and six months ended June 30, 2022 - unrealized losses of $2 million and $8 million, respectively).

Foreign Exchange Contracts
The Corporation holds U.S. dollar denominated foreign exchange contracts to help mitigate exposure to foreign exchange rate volatility. The contracts expire at varying dates through February 2025 and have a combined notional amount of $393 million. Fair value was measured using independent third-party information. Unrealized gains and losses associated with changes in fair value are recognized in other income, net. During the three and six months ended June 30, 2023, unrealized gains recognized in other income, net were $5 million and $7 million, respectively (unrealized losses of $2 million for the three and six months ended June 30, 2022, respectively).

Interest Rate Locks
In March 2023, the Corporation entered into an interest rate lock with a total notional value of $100 million to manage the interest rate risk associated with the refinancing of long-term debt maturing in the fall of 2023. The lock has a 10-year term and will be terminated no later than November 1, 2023. Fair value is measured using a discounted cash flow method based on Canadian dollar offered rates. Unrealized gains and losses associated with changes in fair value are recognized in other comprehensive income, and will be reclassified to earnings as a component of interest expense over the life of the debt. Unrealized gains of $4 million were recognized in other comprehensive income for the three and six months ended June 30, 2023.

During the second quarter of 2023, ITC entered into and settled interest rate locks with a combined notional value of US$500 million. The contracts were used to manage interest rate risk associated with the issuance of US$500 million unsecured senior notes in June 2023. Realized gains of US$4 million were recognized in other comprehensive income, which will be reclassified to earnings as a component of interest expense over 10 years.
16
FORTIS INC.JUNE 30, 2023 QUARTER REPORT
Notes to Condensed Consolidated Interim Financial Statements (Unaudited)
For the three and six months ended June 30, 2023 and 2022
13. FAIR VALUE OF FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (cont'd)

Cross-Currency Interest Rate Swaps
In 2022, the Corporation entered into cross-currency interest rate swaps with a 7-year term to effectively convert its $500 million, 4.43% unsecured senior notes to US$391 million, 4.34% debt. The Corporation designated this notional U.S. debt as an effective hedge of its foreign net investments and unrealized gains and losses associated with exchange rate fluctuations on the notional U.S. debt are recognized in other comprehensive income, consistent with the translation adjustment related to the net investments. Other changes in the fair value of the swaps are also recognized in other comprehensive income but are excluded from the assessment of hedge effectiveness. Fair value is measured using a discounted cash flow method based on secured overnight financing rates. Unrealized gains of $9 million and $10 million were recorded in other comprehensive income for the three and six months ended June 30, 2023 (unrealized losses of $12 million for the three and six months ended June 30, 2022).

Other Investments
UNS Energy holds investments in money market accounts, and ITC and Central Hudson hold investments in trust associated with supplemental retirement benefit plans for select employees, which include mutual funds and money market accounts. These investments are recorded at fair value based on quoted market prices in active markets. Gains and losses are recognized in other income, net. During the three and six months ended June 30, 2023, gains of $1 million and $3 million, respectively was recognized in other income, net (three and six months ended June 30, 2022 - losses of $4 million and $9 million, respectively).

Recurring Fair Value Measures

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

($ millions)
Level 1 (1)
Level 2 (1)
Level 3 (1)
Total
As at June 30, 2023
Assets
Energy contracts subject to regulatory deferral (2) (3)
— 82 — 82 
Energy contracts not subject to regulatory deferral (2)
— 49 — 49 
Foreign exchange contracts, total return swaps and interest rate lock (2)
— 7 — 7 
Other investments (4)
144 — — 144 
144 138 — 282 
Liabilities
Energy contracts subject to regulatory deferral (3) (5)
— (146)— (146)
Energy contracts not subject to regulatory deferral (5)
— (7)— (7)
Cross-currency interest rate swaps (5)
— (8)— (8)
— (161)— (161)
As at December 31, 2022
Assets
Energy contracts subject to regulatory deferral (2) (3)
— 304 — 304 
Energy contracts not subject to regulatory deferral (2)
— 49 — 49 
Other investments (4)
150 — — 150 
150 353 — 503 
Liabilities
Energy contracts subject to regulatory deferral (3) (5)
— (164)— (164)
Energy contracts not subject to regulatory deferral (5)
— (8)— (8)
Foreign exchange contracts, total return and cross-currency interest rate swaps (5)
— (26)— (26)
— (198)— (198)
(1)Under the hierarchy, fair value is determined using: (i) level 1 - unadjusted quoted prices in active markets; (ii) level 2 - other pricing inputs directly or indirectly observable in the marketplace; and (iii) level 3 - unobservable inputs, used when observable inputs are not available. Classifications reflect the lowest level of input that is significant to the fair value measurement.
(2)Included in accounts receivable and other current assets or other assets
(3)Unrealized gains and losses arising from changes in fair value of these contracts are deferred as a regulatory asset or liability for recovery from, or refund to, customers in future rates as permitted by the regulators, with the exception of long-term wholesale trading contracts and certain gas swap contracts.
(4)Included in cash and cash equivalents and other assets
(5)Included in accounts payable and other current liabilities or other liabilities


17
FORTIS INC.JUNE 30, 2023 QUARTER REPORT
Notes to Condensed Consolidated Interim Financial Statements (Unaudited)
For the three and six months ended June 30, 2023 and 2022
13. FAIR VALUE OF FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (cont'd)

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

Gross AmountCounterparty
Recognized inNetting ofCash Collateral
($ millions)Balance SheetEnergy ContractsReceived/PostedNet Amount
As at June 30, 2023
Derivative assets131 (34)28 125 
Derivative liabilities(153)34 — (119)
As at December 31, 2022
Derivative assets353 (54)(63)236 
Derivative liabilities(172)54 — (118)

Volume of Derivative Activity
As at June 30, 2023, the Corporation had various energy contracts that will settle on various dates through 2029. The volumes related to electricity and natural gas derivatives are outlined below.
As at
June 30,December 31,
2023 2022 
Energy contracts subject to regulatory deferral (1)
Electricity swap contracts (GWh)
447 586 
Electricity power purchase contracts (GWh)
440 224 
Gas swap contracts (PJ)
173 185 
Gas supply contract premiums (PJ)
134 148 
Energy contracts not subject to regulatory deferral (1)
Wholesale trading contracts (GWh)
3,960 1,886 
Gas swap contracts (PJ)
26 34 
(1)GWh means gigawatt hours and PJ means petajoules.

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

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

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

Central Hudson has seen an increase in accounts receivable due to the suspension of collection efforts in response to the COVID-19 pandemic, as well as higher commodity prices. Central Hudson continues to proactively contact customers regarding past-due balances to advise them of financial assistance available through federal and state programs, and collection efforts are expected to expand in 2023. Under its regulatory framework, Central Hudson can defer uncollectible write-offs that exceed 10 basis points above the amounts collected in customer rates for future recovery.

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


18
FORTIS INC.JUNE 30, 2023 QUARTER REPORT
Notes to Condensed Consolidated Interim Financial Statements (Unaudited)
For the three and six months ended June 30, 2023 and 2022
13. FAIR VALUE OF FINANCIAL INSTRUMENTS AND RISK MANAGEMENT (cont'd)

The value of derivatives in net liability positions under contracts with credit risk-related contingent features that, if triggered, could require the posting of a like amount of collateral was $52 million as at June 30, 2023 (December 31, 2022 - $178 million).

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

As at June 30, 2023, US$2.9 billion (December 31, 2022 - US$2.9 billion) of corporately issued U.S. dollar-denominated long-term debt has been designated as an effective hedge of net investments, leaving approximately US$10.9 billion (December 31, 2022 - US$10.6 billion) unhedged. Exchange rate fluctuations associated with the net investment in foreign subsidiaries and the debt serving as the hedge are recognized in accumulated other comprehensive income.

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

As at June 30, 2023, the carrying value of long-term debt, including current portion, was $29.3 billion (December 31, 2022 - $28.6 billion) compared to an estimated fair value of $26.9 billion (December 31, 2022 - $25.8 billion).


14. COMMITMENTS AND CONTINGENCIES

Commitments
There were no material changes in commitments from that disclosed in the Corporation's 2022 Annual Financial Statements.

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

19
FORTIS INC.JUNE 30, 2023 QUARTER REPORT