HispanicBusiness

Factors Contributing to Revenue Variance

Unfavourable

--  Lower commodity cost of natural gas charged to customers--  Lower average gas consumption by residential and commercial customers,    due to warmer temperatures--  Decreased non-regulated hydroelectric production in Belize, due to lower    rainfall--  Decreased electricity sales at FortisBC Electric, due to warmer    temperatures

Favourable

--  An increase in gas delivery rates and the base component of electricity    rates at most of the regulated utilities, consistent with rate    decisions, reflecting ongoing investment in energy infrastructure and    forecasted certain higher expenses recoverable from customers--  Higher average gas transportation volumes to industrial customers--  Growth in the number of customers, driven by FortisAlberta--  Increased electricity sales at Newfoundland Power, Maritime Electric and    Fortis Turks and Caicos--  Net transmission revenue of approximately $2 million recognized at    FortisAlberta in the first quarter of 2013, associated with the    finalization of 2012 net transmission volume variances

Factors Contributing to Energy Supply Costs Variance

Favourable

--  Lower commodity cost of natural gas--  Lower average gas consumption by residential and commercial customers,    which reduced natural gas purchases

Unfavourable

--  Increased electricity sales at Newfoundland Power, Maritime Electric and    Fortis Turks and Caicos, which increased fuel and power purchases--  Increased costs at Maritime Electric associated with energy supply costs    being expensed in the first quarter of 2013 related to the New Brunswick    Power Point Lepreau nuclear generating station ("Point Lepreau"), which    returned to service in the fourth quarter of 2012

Factors Contributing to Operating Expenses Variance

Unfavourable

--  General inflationary and employee-related cost increases at most of the    Corporation's regulated utilities--  Higher operating expenses at Newfoundland Power, mainly due to costs    incurred in the first quarter of 2013 associated with restoration    efforts following the loss of energy supply from Newfoundland and    Labrador Hydro ("Newfoundland Hydro") in January 2013, increased costs    associated with customer energy conservation programs, and the impact of    regulator-approved cost recovery deferrals in 2012, which reduced    operating expenses in the first quarter of last year--  Higher contracting and information technology support costs at the    FortisBC Energy companies

Favourable

--  Timing of expenditures at FortisBC Electric

Factors Contributing to Depreciation and Amortization Expense Variance

Unfavourable

--  Continued investment in energy infrastructure

Favourable

--  Lower depreciation rates at FortisAlberta, effective January 1, 2012, as    a result of the 2012 distribution revenue requirements decision received    in April 2012. The cumulative impact of the overall decrease in    depreciation rates was recognized in the second quarter of 2012, when    the decision was received, of which approximately $3 million of    decreased depreciation expense related to the first quarter of 2012.

Factors Contributing to Other Income (Expenses), Net Variance

Favourable

--  Approximately $0.5 million of costs incurred during the first quarter of    2013, compared to $4 million of costs incurred during the first quarter    of 2012, related to the pending acquisition of CH Energy Group--  A foreign exchange gain of approximately $2 million recognized in the    first quarter of 2013, compared to a foreign exchange loss of $1.5    million recognized in the first quarter of 2012, associated with the    translation of the US dollar-denominated long-term other asset    representing the book value of the Corporation's expropriated investment    in Belize Electricity