HispanicBusiness

A delay in receiving a PSC decision, and/or conditions imposed under such decision, may result in the failure to materialize some, or all, of the expected benefits of the acquisition of CH Energy Group, or such benefits may not occur within the time periods anticipated by the Corporation. The realization of such benefits may also be impacted by other factors beyond the control of Fortis.

Unless extended by agreement of both parties, the agreement and plan of merger between Fortis and CH Energy Group expires August 20, 2013.

A portion of the acquisition purchase price of CH Energy Group is expected to be funded from net proceeds from the $601 million Subscription Receipts offering, issued by the Corporation in June 2012, which proceeds are being held in escrow. The Subscription Receipts Agreement ("Agreement") contains a deadline of June 30, 2013 for the release of the proceeds from the offering. If it is determined that a PSC decision will not be received in time to allow closing of the acquisition of CH Energy Group to occur on or before June 30, 2013, Fortis may seek an extension of the June 30, 2013 deadline by way of amendment of the Agreement. The Agreement may be amended by a special resolution approved by at least two-thirds of the Subscription Receipts Holders ("Receipts Holders") at a meeting, either in person or by proxy, with a quorum for the meeting of at least two Receipts Holders collectively holding 25% of the Subscription Receipts. If conditions precedent to the closing of the transaction are not fulfilled or waived by June 30, 2013, or by the extension date for the Subscription Receipts if approved by Receipts Holders, or if the agreement and plan of merger related to the acquisition is terminated prior to such time, the proceeds from the Subscription Receipts offering, plus pro rata interest earned, are required to be returned to the Receipts Holders. As a result, closing of the transaction subsequent to June 30, 2013, or the extension date for the Subscription Receipts if approved by Receipts Holders, could result in the Corporation having to raise alternative capital to finance the acquisition.

Also, additional acquisition-related expenses in 2013 could be higher than those anticipated. Examples of expenses expected to be incurred include investment banker merger and acquisition advisory fees and consulting and legal fees.

Expropriation of Shares in Belize Electricity: A decision is pending from the Belize Court of Appeal regarding the Corporation's appeal of the Belize Supreme Court's dismissal of the Corporation's claim filed in October 2011 challenging the constitutionality of the expropriation of the Corporation's investment in Belize Electricity.

Fortis believes it has a strong, well-positioned case before the Belize Courts supporting the unconstitutionality of the expropriation. There exists, however, a reasonable possibility that the outcome of the litigation may be unfavourable to the Corporation and the amount of compensation otherwise to be paid to Fortis under the legislation expropriating Belize Electricity could be lower than the book value of the Corporation's expropriated investment in Belize Electricity. The book value of the expropriated investment was $106 million, including foreign exchange impacts, as at March 31, 2013 (December 31, 2012 - $104 million). If the expropriation is held to be unconstitutional, it is not determinable at this time as to the nature of the relief that would be awarded to Fortis, for example: (i) the ordering of the return of the shares to Fortis and/or award of damages; or (ii) the ordering of compensation to be paid to Fortis for the unconstitutional expropriation of the shares. Based on presently available information, the $106 million long-term other asset is not deemed impaired as at March 31, 2013. Fortis will continue to assess for impairment each reporting period based on evaluating the outcomes of court proceedings and/or compensation settlement negotiations. As well as continuing the constitutional challenge of the expropriation, Fortis is also pursuing alternative options for obtaining fair compensation, including compensation under the Belize/United Kingdom Bilateral Investment Treaty.