Fortis Inc.

Welcome to FortisBC. We’re ready to lead B.C. to the future of energy.

Contents 1 2 4 6 16 20 30 32 34

One vision. One voice. One identity.

A 2010 snapshot A message from the President Real solutions for B.C. Inspiring wiser energy habits Rooted in B.C. The future Leadership Team Board of Directors

One vision. One voice.

One identity.

Together, the Fortis energy companies in British Columbia provide electricity,

This Corporate Report looks back at the 2010

natural gas, piped propane and alternative energy solutions. Delivering more

achievements, challenges and progress of the

energy than any other utility in the province — approximately 21 per cent of the

Fortis energy companies in British Columbia.

total energy consumed in B.C. — t he companies employ more than 2,000 people and serve more than 1.1 million customers in 135 communities.

The back story In 2004, Fortis Inc., the largest investor-owned distribution utility in Canada, acquired all the distribution, transmission and generation assets of the West Kootenay Power and Light Company and renamed it FortisBC Inc. In 2007, Fortis Inc. purchased Terasen Inc., which included the Terasen Gas group of companies, from Houston-based Kinder Morgan Inc. In July 2010, Terasen Inc. and FortisBC Inc. started sharing the same leadership team. Then, on March 1, 2011, the Terasen group of companies began operating under the FortisBC brand name. Today, the natural gas and electricity businesses continue to operate as before, as separate legal entities, while sharing the name FortisBC.

Combining the energy of two On the natural gas side, the business delivers natural gas, piped propane and new energy solutions, such as geoexchange and district energy systems, to approximately 940,000 customers in 125 B.C. communities. The electricity business generates, transmits and distributes electricity to approximately 161,000 direct and indirect customers in the southern interior of B.C. Both businesses are regulated utilities and indirect wholly owned subsidiaries of Fortis Inc., which serves approximately 2,100,000 customers and has total assets exceeding $12 billion. This successful Canadian-owned and operated parent company provides the strong direction upon which FortisBC’s commitment to customers is built.

Whether delivering natural gas, electricity or innovative energy solutions, we are dedicated to fulfilling customers’ energy needs and helping the province meet its environmental and energy goals for the future. We do so with one vision, one voice and one identity — as FortisBC.

FortisBC 2010 Corporate Report

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A 2010 snapshot Financial highlights (in millions of dollars)

FortisBC natural gas customers (includes piped propane customers)

FortisBC Holdings Inc.1

2010

2009

Net earnings

$130.3

$117.9

Gross revenues

$1,555.0

$1,668.2

$228.9

$210.9

$253.3

$241.8

FortisBC Inc. (Electricity)

2010

2009

Net earnings

$41.8

$36.2

Gross revenues

$256.9

$244.1

Operating expenses

$37.9

$37.8

Capital programs before CIAC2

$150.23

$117.33

(Natural gas and piped propane)

Operating expenses Capital programs before CIAC

2

1,000,000 950,000 900,000 850,000

Performance FortisBC Holdings Inc. (Natural gas and piped propane)

800,000 750,000 700,000 650,000

2010

2009

600,000

Peak day demand (TJ)

1,421

1,234

Gas volumes (TJ)

193,775

207,229

Customer satisfaction index

80%

80%

FortisBC Inc. (Electricity)

2010

2009

160,000

Generating capacity (MW)

223

223

140,000

Peak demand each year (MW)

707

714

(Unregulated) Walden

36

29

(Regulated)

3,046

3,157

80,000

88%

86%

60,000

Energy sales (GWh)

Customer satisfaction index

2006

2007

2008

2009

2010

FortisBC electricity customers

120,000 100,000

40,000 1

Consolidated results of Terasen Inc., Terasen Gas Inc., Terasen Gas (Vancouver Island) Inc. and Terasen Gas (Whistler) Inc. As of March 1, 2011, the companies changed their names to FortisBC Holdings Inc., FortisBC Energy Inc., FortisBC Energy (Vancouver Island) Inc., and FortisBC Energy (Whistler) Inc. respectively.

2

Contribution in Aid of Construction (CIAC)

3

2010 capital expenditures of $150.2 million less Customer Contribution in Aid of Construction (“CIAC�) of $7.4 million to obtain $142.8 million net capital expenditures. 2009 capital expenditures of $117.3 million less CIAC of $7.1 million to obtain $110.2 million net capital expenditures. Walden is included in both 2010 and 2009 figures in the amount of $0.25 million and $0.1 million respectively.

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FortisBC 2010 Corporate Report

20,000 2006 Direct

2007

2008

2009

Indirect

2010

Area of operations

Natural gas service area* Electricity service area Combined service area *Includes piped propane

What’s in a name?

Today “FortisBC” is the brand identity for several companies, including natural gas, electricity and alternative energy businesses in British Columbia.

Before

As of March 1, 2011

Terasen Inc.

FortisBC Holdings Inc.

Terasen Gas Inc.

FortisBC Energy Inc.

Terasen Gas (Vancouver Island) Inc.

FortisBC Energy (Vancouver Island) Inc.

Terasen Gas (Whistler) Inc.

FortisBC Energy (Whistler) Inc.

Terasen Energy Services Inc.

FortisBC Alternative Energy Services Inc.

FortisBC Inc.

FortisBC Inc.

Fortis Inc.

Fortis Inc.

FortisBC 2010 Corporate Report

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A message from the President Bringing Fortis Inc.’s energy operations in B.C. together under common leadership in 2010, and now under one brand identity, FortisBC, has been a significant undertaking. But it’s well worth it.

Combining our strengths and resources creates new opportunities to better serve our customers and provide integrated energy solutions for communities.

John Walker is President and CEO of

At our core, FortisBC delivers natural gas and

FortisBC Inc., FortisBC

electricity, safely and reliably, to over 1.1 million

Holdings Inc., and

customers in 135 communities. Our commitment to

FortisBC Energy Inc.

ensuring customers have the energy they need for

He’s worked with

their homes and businesses, whether during peak

the Fortis group of

demand periods today or for increased requirements

companies since

in the future, has never been stronger.

1983, where he began his career

With one vision, we raised our voice in local energy policy discussions with business and political leaders

with Newfoundland

amidst some of the most aggressive climate change legislation on the continent. We shared what we are doing

Power Inc. He is a

for British Columbians as an energy solutions leader with collective expertise and history.

member of several boards including

In 2010, through thoughtful decision-making and customer focus, our earnings grew and our strong customer

FortisAlberta Inc.,

satisfaction results were maintained. The announcement of two new customer contact centres in Prince

the Western Energy

George and Burnaby, and the creation of approximately 300 future jobs, will help us maintain and improve

Institute, the

solid customer service in the years to come.

Canadian Electricity Association and

Since 2007, more than $1 billion was invested in B.C. by the companies, bringing our asset base to $6.4 billion.

the Sauder Faculty

With $403.5 million of that in the past 12 months, 2010 was a standout year. Some of our key capital projects

Advisory Board of

included ongoing construction of the Okanagan Transmission Reinforcement project, construction of the

the University of

new Benvoulin substation in Kelowna, ongoing work for the Upgrade and Life Extension program at our

British Columbia.

hydroelectric generation facilities, ongoing replacement of two natural gas pipeline crossings under the Fraser River, and continued progress on the liquefied natural gas storage facility at Vancouver Island’s Mt. Hayes. With a full range of energy resources, including electricity, natural gas and renewable energies such as biomethane, geoexchange and district energy systems, we are truly leading the way.

At a grassroots level, our 21-year-old PowerSense program offers concrete ways to conserve electricity and save money, and has done well to create awareness and educate our electricity customers. We continue to

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FortisBC 2010 Corporate Report

pursue the aggressive goals of our natural gas Energy Efficiency and Conservation initiative,

“We will deliver

aiming to eliminate more than 775,000 tonnes of

the energy

greenhouse gas emissions and save a total of 15.5

British Columbians

million gigajoules of natural gas — enough to fuel

need today and work

approximately 155,000 homes for one year.

on new solutions for

At FortisBC, we’re proud of our contributions to the

we will continue our

economic and social well-being of the communities

unwavering focus on

tomorrow. Above all,

where we live and work. We support a broad range

customer service.”

of non-profit organizations and initiatives — t he

John Walker

causes our employees are most passionate about — t hrough corporate and employee donations, sponsorships and hands-on volunteer work.

We’re also proud of the relationships we have with First Nations. With social, economic and cultural interests top-of-mind, we’re working cooperatively and effectively together on a number of initiatives.

And it’s with much commitment that we continue to build long-lasting relationships with our customers, employees and the communities we serve.

I’m excited about the opportunities that lie ahead of us. Yet we wouldn’t have such a bright future without the dedication of the more than 2,000 hard-working FortisBC employees.

I want to thank our Board of Directors for their insightful governance, in particular to those who stepped down in June 2010: Walter Gray, William Daley, John McCallum and Randy Jespersen. Also, I’d like to recognize Randy and his 14 years of inspiring leadership with Terasen. From expanding natural gas infrastructure in the province, to integrating new energy solutions, Randy created a vision of the future and left a remarkable legacy for us all.

As we strengthen our unique position as a leading energy provider, we will deliver the energy British Columbians need today, and work on new solutions for tomorrow. Above all, we will continue our unwavering focus on customer service. At FortisBC, we have seen the future — a nd we are ready.

John Walker, President and CEO FortisBC

FortisBC 2010 Corporate Report

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We’re rebuilding 11 of our 15 hydroelectric generating stations, including the Corra Linn station, to increase efficiency and improve overall reliability of our service in the Kootenays.

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FortisBC 2010 Corporate Report

Real solutions for B.C. There is much work to be done to ensure British Columbia meets its energy goals in the coming decades. FortisBC is creating real energy solutions for today and tomorrow.

As trusted energy experts, we deliver on-the-ground results that benefit our customers, the communities we serve and ultimately the province as a whole.

We offer a full range of integrated solutions — including traditional energies such as electricity, natural gas and piped propane — and alternative solutions like biomethane, geoexchange and district energy systems.

We are unique in that we are the only Canadian regulated utilities to do so.

FortisBC 2010 Corporate Report

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Sound investment In 2010, the FortisBC companies made substantial progress on key electricity and natural gas infrastructure projects. Such infrastructure will help serve the evolving and ever-growing demand for energy.

A significant expansion British Columbia’s electricity industry is in the midst of considerable change.

In order to meet the future needs of our customers, major investments in infrastructure are needed now.

In 2010, our parent company, Fortis Inc., signed a partnership agreement to construct the Waneta Expansion Hydroelectric project, south of Trail. Fortis Inc. owns 51 per cent, while Columbia Basin Trust and Columbia Power Corporation own the remaining 49 per cent.

The estimated $900-million project will see the construction of a 335-megawatt (MW) powerhouse immediately downstream of the existing Waneta Dam on the Pend d’Oreille River. Once completed, FortisBC will purchase an average 234 MW of the generated capacity. Such an amount will mean significant year-round, dependable capacity for FortisBC and long-term, reliable electricity for customers.

Additionally, a 10-kilometre transmission line will be built alongside the existing high voltage line from Waneta to FortisBC’s Selkirk substation. Excavated rock will be quarried within seven kilometres of the site and will be available for future highway and other infrastructure projects in the area.

A unique opportunity, the Waneta Expansion project will create large amounts of clean hydroelectric energy without building a new dam, supporting a primary goal of the B.C. government’s Energy Plan and Clean Energy Act — to make the province energy self-sufficient.

The new Bentley electricity substation near Oliver is part of the Okanagan Reinforcement project.

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FortisBC 2010 Corporate Report

Experienced and dedicated, FortisBC Journeyman Tradesman Mechanic, Ron Sherbinin (far left) and Powerline Technicians, Stephen Kingsfield and Darren Belanger, work in Oliver B.C.

Energizing upgrades In the past decade, B.C.’s Okanagan has experienced major growth. FortisBC has invested hundreds of millions of dollars upgrading infrastructure to meet increased demands on our electrical system. The largest upgrade to date is the Okanagan Transmission Reinforcement project.

An upgraded line between Vaseux Lake and Penticton was energized in November 2010 to help meet customers’ electricity needs during winter.

Additionally, a 230-kilovolt line was completed along the same route and will be energized this year.

Construction on the new Bentley substation started last year, while three additional substation upgrades are ongoing in the south Okanagan. In December 2010, the $18-million Benvoulin substation project was completed and energized to meet growing demand in central Kelowna. The $13-million upgrade to the Duck Lake substation, which serves BC Hydro customers, was also finished.

These types of incremental revenue sources help offset FortisBC’s electricity customer rates.

FortisBC 2010 Corporate Report

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The Crossing facts Kilograms of force:

41,000

to move each pipe through the Fraser riverbed, similar to 25 tow trucks pulling together

Football fields:

Number of cranes:

the new twin pipes

needed to lift one

can be bent without

pipe off the ground

2 14

kinking across their width No small undertaking, we lifted tonnes of steel pipe while adhering to strict safety standards.

Going to great lengths and depths As part of our ongoing commitment to the safe delivery of energy, we are upgrading our natural gas pipeline crossing underneath the Fraser River between Delta and Richmond. The work is designed to improve pipeline seismic stability,

Kilometres of pipe:

Total weight:

2.7 255

address river erosion concerns and improve the reliability of energy delivery

together will

tonnes of pipe

for more than 220,000 customers in Richmond, North and West Vancouver, and

reach as high as

running beneath

parts of Burnaby.

Mt. Baker from

the Fraser River

base to summit Reflecting our dedication to the environment, we chose a horizontal drilling method — a method with the lowest environmental and property impact.

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FortisBC 2010 Corporate Report

It’s about real customer service

“We are thrilled to

We are customer-driven at FortisBC. Being

benefit of updated customer information and

welcome another

responsive to our customers, striving to improve our

billing systems. These systems will help expand

[FortisBC] facility

service and building upon the relationships we’ve

communication and service offerings to better meet

to our city and look

already established — t hat’s what we consider real

customer expectations.

forward to the many

As for the facilities themselves, we are renovating a

office will bring to the

In 2010, we announced the establishment of two

building in Prince George’s city centre for 100 new

community, including

new B.C.-based contact centres for our natural

employees, while another 200 will work in a leased

job opportunities.”

gas customers — bringing approximately 300 new

space in Burnaby. The contact centres will be fully

Mayor of Burnaby

jobs to B.C. Along with the economic benefits

operational with our employees and natural gas

Derek Corrigan

to communities and employment for British

customers interacting on January 1, 2012.

benefits their new

customer service.

Columbians, the new centres will have the added

Creating sustainable workplaces The new contact centres in Burnaby and Prince George will follow LEED (Leadership in Energy & Environmental Design) guidelines and construction principles that use recycled and recyclable materials, and existing elements such as doors and walls to reduce landfill. Building materials include locally grown wood such as Douglas fir and beetle-killed pine.

The Prince George facility’s $4-million restoration is inspired by the City’s storied role in B.C.’s forest industry, and celebrates the idea of growth and revitalization in the downtown core.

FortisBC’s new contact and billing operations centre in Burnaby, B.C. Photo courtesy Stuart Olson Dominion Construction Ltd., Bob Matheson, photographer.

FortisBC 2010 Corporate Report

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Flexible and future-friendly We develop and design district energy systems — f lexible energy solutions that will help British Columbia adapt and evolve for its future. Communities have the most to gain as these systems can help meet their climate action commitments.

In 2010, the natural gas business and the City of Kelowna agreed in principle to develop two unique district energy systems. The $22- and $16-million FortisBCowned and operated systems are planned to use waste heat and water from the City’s wastewater plant, Sun-Rype Products Ltd. and Tolko Industries Ltd. Before building the systems over the next decade, we will work with Kelowna to negotiate definitive agreements. With successful conclusion of these agreements, and engineering work, we’ll then seek approval from the B.C. Utilities Commission. Together, the district energy systems could potentially save about 16,300 tonnes of CO2 per year — equivalent to removing approximately 3,500 cars from the road annually — according to the City’s 2010 pre-feasibility study.

Driving down emissions, one fleet at a time “Fifty trucks is a significant order for LNG

With more than 11 million natural gas vehicles (NGVs) worldwide, natural gas is

vehicles in Western Canada. It further

a proven low carbon intensity fuel choice for transportation. Compared to diesel,

demonstrates that natural gas is rapidly

natural gas may reduce greenhouse gas (GHG) emissions by 20 to 30 per cent.

becoming a mainstream fuel solution for the trucking industry in Canada.”

Given that approximately 40 per cent of emissions come from B.C.’s

Clark Quintin, President of Westport’s

transportation sector and the provincial government has mandated GHG

Heavy Duty division

reductions, natural gas is a logical fuel choice, particularly for return-to-base fleets like municipal, transit, refuse and heavy-hauling vehicles. Currently, natural gas is also about 40 per cent less expensive than diesel, so costs per kilometre are reduced.

In 2010, we collaborated with Westport Innovations Inc. and Vedder Transport Ltd., with our incentive funding contribution towards Vedder’s purchase of fifty liquefied natural gas (LNG) trucks. Powered by Westport engine technology, the new trucks will be fuelled at a planned FortisBC LNG station in Abbotsford.

The relationships we’re forging today with the transportation industry will serve us well in preserving beautiful B.C. for generations to come.

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FortisBC 2010 Corporate Report

Waste: a new frontier These days, the world of energy is evolving, with new frontiers to explore. Biogas, as a renewable energy source, is one of these new frontiers.

“The landfill biogas project was the result of a creative agreement that will extract both energy and revenue from our locally produced

Biogas is produced from decomposing waste at farms, wastewater facilities and

waste. The conversion will cut down local air

landfills. Once collected, it can be upgraded to pipeline-quality biomethane

pollution and help B.C. reduce its contribution to

and distributed safely and efficiently as a renewable fuel. It can also help in the

global emissions.”

reduction of emissions that come from waste decomposition.

George Abbott, MLA, Shuswap

In 2010, we established agreements for two biogas projects — t he first of their kind in Canada to produce pipeline-quality biomethane for distribution in an existing utility network. The first project, in collaboration with the Columbia Shuswap Regional District, will recover gas from Salmon Arm’s existing landfill.

In Abbotsford, we connected with Catalyst Power Inc. to collect biogas from agricultural waste through on-farm anaerobic digestion. Upgraded biomethane, or “renewable natural gas” as it’s often called, has been flowing through our distribution systems since September 2010.

The company also received approval for a new biogas program for residential customers — t he first of its kind in North America. It’s estimated that in the first full year of the program about 210,000 gigajoules of biomethane will be available for purchase, which translates to an estimated greenhouse gas savings of about 11,000 tonnes.

FortisBC 2010 Corporate Report

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Making the grade In B.C.’s K-12 education system, there are 60 school districts and over 1,800 facilities. One way each school district can make a significant contribution towards their carbon-neutral goals is to improve the energy efficiency of their buildings.

In fact, according to the B.C. Ministry of Education’s October 2010 Green Schools report, the largest source of school district greenhouse gas emissions comes from school mechanical systems.

One energy solution, geoexchange, is helping to make the grade. Capturing heat from the earth, water or waste heat sources, geoexchange systems transfer heat to where it’s needed most, and work in both new construction and retrofit projects.

Last year, we signed a deal with School District 23 Central Okanagan to retrofit and operate a $650,000 geoexchange system at Helen Gorman Elementary School in West Kelowna.

“We are excited about this innovative and sustainable energy project and look forward to making significant progress in reducing our carbon footprint,” said

As a Regional Energy Solutions Manager, Brent

Hugh Gloster, Central Okanagan School District Superintendent. “With Helen

Hunt helps shape the future of energy. He offers

Gorman Elementary School as an example, we hope many other schools will be

innovative solutions that help communities and

encouraged to follow our lead to become as energy efficient as possible.”

organizations cut energy costs and emissions.

“At Helen Gorman Elementary in West Kelowna, students will learn about the energy their school will save with the new geoexchange heating system that we helped put in place.”

Brent

At the heart For us at FortisBC, safety is at the heart of everything we do. Committed to the safety of our employees, our customers and the general public, we work with regulators, industry peers, first responders and other partners to promote safety practices and performance.

The Cooperative Safety Program, for example, is a partnership of 12 utilities, municipalities and organizations that share a commitment to public and workplace safety across the southern interior of B.C. Spearheaded by FortisBC since 2005, the goal is to improve public awareness of potential electrical and natural gas hazards.

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FortisBC 2010 Corporate Report

Public Safety Manager Michelle Petrusevich is passionate about safety — especially when it comes to safety awareness and education for children in the communities we serve.

“The real magic happens when we visit elementary schools and there’s a connection with the kids. What they learn benefits them, their families and the community as a whole.”

Michelle

In 2010, we continued to work closely with organizations such as the BC Oil and Gas Commission, WorkSafeBC, BC Fire Services, the BC Safety Authority and BC Common Ground Alliance, as well as BC One Call.

High-angle safety Hanging in a safety harness above the Kootenay River, or wedging into a manhole on a public street is not as uncommon as might be expected. In fact, some FortisBC electricity employees train specifically for these scenarios.

The company’s electricity business has a number of sites that include confined spaces and high, overhead areas where employees use preventive safety practices and regulated fall protection. However, if someone were to fall or get into a tight position, FortisBC’s industrial high-angle rescue team would come to the rescue.

The team has been in place since the late 1990s and specializes in overhead and confined space rescue.

Teaching safety in classrooms

Chad Shkuratoff, Journeyman Tradesman Plumber (electricity), is one member of our high-angle rescue team.

Because safety applies to everyone, we’re proud of a number of safety-oriented initiatives for kids. In our natural gas safety program for children, 31 employees volunteered to be guest speakers in schools located within our service areas.

Between September and December 2010, more than 3,700 children in 29 schools learned about natural gas and how to conserve it, as well as important safety information. Employees also visited fire departments and community fairs to educate children, emergency personnel and the general public on electrical and natural gas safety. From community centres and worksites to our kids’ classrooms, safety is at the heart of everything we do.

FortisBC 2010 Corporate Report

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FortisBC 2010 Corporate Report

Inspiring wiser energy habits Inspiring a culture of energy efficiency and conservation isn’t just a pipe dream, it’s real.

At FortisBC, we help customers think about the energy they use and how they use it. We want to inspire people to use energy wisely. Doing so can make a difference in energy bills for a household, a business, a community and ultimately, the environment.

It may seem unusual for an energy company to encourage customers to use less of its product. But our energy efficiency and conservation efforts do just that.

It’s all part of how we’re helping to shape the future of energy in British Columbia.

FortisBC 2010 Corporate Report

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Homes of learning Many of us have grown up in a world that takes energy and natural resources for granted. We’ve used as much as we want, when we want and how we want.

Energy efficiency and conservation education is key to changing this — not only for customers and various industries, but also for the future of energy in B.C. Taking a leading role, FortisBC worked with the Canadian Home Builders Association Central Okanagan to sponsor a Home for Learning in Kelowna. In seeking to educate builders, developers, realtors and others in the industry, the home was designed as a model of efficiency. As a result of the energy efficient natural gas and electric appliances, energy saving measures, and combination solar and natural gas heating technologies, the home consumes about 50 per cent less energy than the national average for buildings of its size.

Built by students from Okanagan College, in conjunction with Distinctive Developments, the Home for Learning provided students with valuable hands-on training and credit toward their education. The home was eventually sold, with partial proceeds going to Okanagan College bursaries and scholarships.

Scoring with energy conservation Our Energy Efficiency and Conservation group teamed up with hockey fans around the province as proud supporters of BC Hockey League games.

Calling on fans to become “energy champions” they promoted audience participation through interactive activities that encouraged natural gas conservation.

With increased awareness and education in mind, FortisBC hosted a virtual home in Whistler at the annual Union of British Columbia Municipalities (UBCM) convention. The home spanned 900-square feet in the heart of Village Square In 2010, we hosted a virtual home with life-sized rooms in the heart of Whistler’s Village Square. All part of our showcase for the annual UBCM convention, our tent featured energy saving technologies and appliances.

It attracted delegates, visitors and residents alike.

and included life-sized rooms filled with energy efficiency features, including ENERGY STAR® appliances, natural gas heating and hot water — even a natural gas vehicle in the garage. All the while, employees shared our vision for a sound energy future with UBCM delegates, Whistler residents and visitors to the resort area.

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FortisBC 2010 Corporate Report

Helping customers get more with less One of the most cost effective ways to meet our

that included compact fluorescent lights, water-

customers’ future needs is to help them use energy

flow aerators, weatherstripping and window

as efficiently as possible — to achieve more with less.

insulation. PowerSense also worked with five First

We have helped customers manage their energy

Nations communities to provide these kits, as

use, reduce energy costs and lower greenhouse

well as training staff to install the various energy

gas emissions. How did we do it? Through various

saving devices.

energy efficiency initiatives, rebates and incentive programs for businesses and residential customers.

Every day we provide energy solutions to more than one million homes and businesses across

Our natural gas Energy Efficiency and Conservation

B.C. And with each solution we strive to inspire

initiative is designed to eliminate more than

energy-wise habits.

775,000 tonnes of greenhouse gas emissions and save a total of 15.5 million gigajoules of natural gas.

That’s sufficient fuel for approximately 155,000 homes for one year. Celebrating more than 20 years, FortisBC’s PowerSense program has helped customers conserve more than 380 million kilowatt hours of electricity since 1989 — enough to power nearly 30,000 homes each year.

Everyday savings for everyday chores FortisBC’s PowerSense team launched a popular laundry campaign in partnership with our natural gas side. The campaign encouraged electricity customers and employees to practice energyefficient laundry habits and offered free clotheslines and rebates on ENERGY STAR® washer and dryers.

More than 10,000 clotheslines were distributed to households throughout FortisBC’s electricity service area, building on the same campaign that was piloted in 2009.

FortisBC customer Sirena Bird and her son dry their laundry the natural way — with the help of a clothesline from PowerSense. Her family won a new ENERGY STAR washer/dryer as part of our laundry campaign photo contest.

Together, PowerSense and our Energy Efficiency and Conservation group launched a program specifically designed for low-income customers.

Qualified households received energy saving kits

FortisBC 2010 Corporate Report

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FortisBC 2010 Corporate Report

Rooted in B.C. It takes just one person to make a difference for the environment, our communities and our customers. Yet it takes the commitment of many — those with vision and passion — to make sustainable improvements in the quality of life where we live and work.

FortisBC is committed to our province in the most fundamental of ways. As B.C.-based companies delivering energy to British Columbians, our history can be traced back more than 100 years.

Dynamic, innovative and growing, our success contributes to B.C.’s energy, environment and economic prosperity. In essence, we are rooted in B.C.

Nelson, B.C.

FortisBC 2010 Corporate Report

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Respect, protect and preserve As good corporate citizens, our business

Our natural gas and electric infrastructure serves

is founded upon the importance of

B.C. communities, big and small. Traversing

balancing our economic objectives with our

mountains and rivers, crossing agricultural land

environmental responsibilities.

reserves and First Nations’ traditional territories, our systems criss-cross the province. This is why we think creatively, work co-operatively and are results-oriented in our environmental efforts.

protecting a

conduct comprehensive environmental reviews

California bighorn

and consult with the public, stakeholders and First

sheep lambing area

environmental management plans. Still, it’s not so much the plans and practices we’re proud of, but the commitment and strength of our actions.

All creatures great and small In 2010, FortisBC completed the electric transmission line component of the Okanagan Transmission Reinforcement project. We developed the project’s environmental management plan in consultation with Nature Trust, Environment Canada and the Osoyoos and Penticton Indian Bands, to set the course of action for FortisBC and our contractors through all stages of the project.

Our plan took into account the unique needs of the local ecosystem. When we learned that California bighorn sheep historically birth near our right-ofway, we took the right steps to protect them. With expert advice, we first identified their lambing regions, and then created a 500-metre buffer zone between the construction and each birth site. Once birthing season began, we stopped construction activities altogether, including helicopter flight.

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FortisBC 2010 Corporate Report

500

Before beginning new infrastructure projects, we

Nations. All capital projects include customized

In 2010, we donated used utility poles to the Creston Valley Wildlife Management Society to build a bat house.

Looking up are Richard Dalon and Marc-André Beaucher from the Society and James Komar, Powerline Technician, from FortisBC.

Buffer zone in metres:

Serious steps, real reductions Historically, our company has taken serious steps

Protecting the nature of things

to reduce our greenhouse gas emissions and

From cleaning shorelines and repairing bridges, to

has consistently met or exceeded the accepted

powering down and helping fish along the way, we

environmental regulations and standards of the

applaud the efforts of our employees as they help to

time. In 2000 for example, FortisBC Energy Inc.

protect the nature of things in B.C.

committed to a six per cent reduction of its 1990 level greenhouse gas benchmark — a level that’s been sustained for over a decade.

In partnership with Friends of the South Slopes, a not-for-profit Kelowna group dedicated to sustainable park trails, FortisBC volunteers

Kilograms of trash:

75

Our green sense

rebuilt three deteriorated bridge decks.

FortisBC recognizes that sound environmental

Electricity employees also powered down for

practices make good business sense. Yet our

Earth Hour — challenging customers to do the

environmental commitment extends beyond

same — while natural gas employees spent Earth

business. You could say it’s in our roots — a nd those

Day marking storm drains with bright yellow fish-

community-based, environmental organizations

shaped markers, to help protect local waterways.

that are important to employees. From hands-on volunteer efforts, to corporate fiscal support, we

We support and celebrate our employees’ efforts

understand the value of ‘green sense.’ In 2010, some

to help the environment. Leaving fish and wildlife

removed from just

of the organizations we helped included: Pacific

habitats safe and sound is an important part of the

one of the shorelines

Parklands Foundation, Osoyoos Desert Society,

way we do business, every day.

our employees

Creston Valley Wildlife Management, Naramata’s

cleaned up

Community Garden and Pacific Streamkeeper groups throughout B.C.

Chelsea Knowles, Accounts Payable Support Clerk, started volunteering at age 10 and since joining us in 2008, has participated in the Great Canadian Shoreline Cleanup. This year she helped haul 75 kilograms of trash from Quibble Creek in Surrey’s Bear Creek Park.

“I played here as a kid, so I wanted to help make it cleaner for the next generation.”

Chelsea

FortisBC 2010 Corporate Report

23

Jimmy Yip, Data

The tools to give back

Integrity Manager,

A history of giving

believes in teamwork.

We’re proud of our history of service to B.C. communities. We see giving back as an important part

If he’s not pedalling

of our efforts to create a sustainable energy future — by fostering the health and well-being of the

the Big Bike for the

communities where we live and work.

Heart and Stroke Foundation, the avid

Children in Cranbrook have a newly renovated

hockey player can

place to play, thanks to the efforts of our employees,

Director of the Comox Valley Transition Society.

“These resources have enabled us to address some of

be found building

members of the Cranbrook Early Childhood

the major maintenance and replacement projects

a Canstruction®

Development Committee and City of Cranbrook

needed at Lilli House. This is a huge gift to the

sculpture with

staff, who joined forces to refurbish the Tot Park at

women and children we serve.”

co-workers to benefit

the local RecPlex.

local food banks.

These efforts were all part of our natural gas side’s The updated playground allows children with

third annual Community Giving Day in which

disabilities — be they physical, developmental or

employees volunteered their time for three projects

sensory — to play side-by-side with their able-bodied

of their choice. Each project also received a $30,000

peers, fostering acceptance and awareness.

corporate donation.

Another project was Lilli House, a Courtenay

Other ways of supporting non-profit organizations

transition home for women and children seeking

are through the companies’ donation matching

a safe place from abuse. With paintbrushes and

and top-up opportunities available to all

shovels in hand, volunteers did light renovations

employees throughout the year. Yearly fundraising

and landscaping for the comfort of residents.

campaigns benefit the United Way and Warm Hearts, a charitable foundation created and

“We are so grateful for the contribution of funding

“When we work

managed by employees of our natural gas business.

and volunteer labour,” said Heather Ney, Executive

together, have fun and do that little extra to help out, we can make it better for many others in our community.”

Jimmy

Elated volunteers help renovate a Cranbrook playground.

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FortisBC 2010 Corporate Report

A home run for community investment Last spring, Bryan Dixon, a FortisBC Journeyman Tradesman Mechanic, faced a welcomed problem as a volunteer coach with the Trail Girls Senior Softball League. Because so many wanted to play, a second team was formed — a team that needed more equipment. But how to pay for it?

Bryan, who coaches his two daughters, applied for funding through FortisBC’s employee donations program, which supports the active involvement of employees as coaches, instructors and other leadership roles.

The much-needed funding helped purchase new helmets, uniforms and backcatching equipment that’s essential for playing safely.

Bryan Dixon, Journeyman Tradesman Mechanic, is a volunteer coach for his daughters’ softball teams. With corporate funding from our employee donations program, Bryan was able to outfit a second team of avid players. Thankful for the funding, Bryan said it was in sync with his experience working with FortisBC. “FortisBC treats employees well, and values time with family. If I want to accomplish something with my teams, they support me in doing that.”

Bryan

All smiles, members of the Trail Girls Senior Softball League are happy about new equipment.

FortisBC 2010 Corporate Report

25

The steel and glass iconic cauldron burned brightly during the Games, fuelled by natural gas. Photo by Matthew Mills.

Leadership and legacies British Columbia proudly hosted the world at the

Gary Bradbury, a System Operations Technician

Vancouver 2010 Olympic and Paralympic Winter

(natural gas), supervised a crew of 22 off-ice officials

Games. And we provided one of its iconic symbols,

at 15 Olympic hockey games. Off-ice officials

the cauldron, which remains in Vancouver as a

included timekeepers, scorekeepers, computer

lasting legacy for generations to come.

operators and spotters, whose job was to make sure fans always knew the right score and stats. Gary also

The 10-metre-high steel and glass cauldron burned

volunteered during the sledge hockey events. When

bright during the Games, and was relit on other

he wasn’t at Canada Hockey Place, he was part of a

occasions including a celebration honouring Jack

larger team that ensured natural gas flowed safely

Gary Bradbury,

Poole, Founding Chairman, VANOC Board of

at other Olympic sites, including the cauldron.

System Operations

Directors, and events remembering Canadian troops

Technician and

and veterans on Remembrance Day.

volunteer, pauses

neighbour in communities throughout

before one of 15

Not only did we help contribute a legacy for the

Olympic hockey

Games, but we brought spirit — t he spirit of FortisBC

games he helped

employees who volunteered in many capacities

supervise at Canada

at the Games. From proud torchbearers to those

Hockey Place.

protecting the flame and tending ice.

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FortisBC 2010 Corporate Report

At FortisBC, we’re always ready to be a good British Columbia.

Exceptional people: creative solutions The FortisBC companies employ more than

“These individuals pursued the program because

2,000 British Columbians, a number that will

they wanted to improve their job prospects as

grow to 2,300 by 2012 with the completion

well as their lives,” said Shelley Cook, Executive

of our two new B.C.-based contact centres in

Director of the John Howard Society for Central and

Prince George and Burnaby.

South Okanagan. “The change we’ve seen in this

More than:

2,000

first group has been truly inspirational — t hey’re

employees are

Part of our strategy to attract, retain and motivate

determined to succeed and they now have the tools

meeting the energy

employees is through skill-building, continuous

to get them to where they want to go in their career.”

challenges of today and rethinking the

learning and leadership development. In 2010, we hosted the Technology Open House and Career Fair

Funded by the FortisBC companies, and BC Hydro,

for students, guests and employees alike. With the

REnEW aims to build on the success of these first

B.C. Institute of Technology and the Association

sessions and expand to other B.C. communities

of Applied Science Technologists and Technicians

where energy efficiency programs already exist.

on hand, employees shared their natural gas

The City of Kelowna acknowledged the innovative

knowledge and experiences with those wanting to

program with a Community Spirit Award.

solutions of tomorrow

learn more about technology careers.

Opening industry doors When a new industry emerges where does the workforce come from? One unique training program provided an answer.

The Residential Energy and Efficiency Works training program, or REnEW, supports the growing energy efficiency and retrofit industry by creating a much-needed pool of skilled workers. Developed and launched in 2010, the program ran concurrently in Kelowna and Vancouver, teaching people who faced barriers to employment the fundamentals of energy efficient technologies and retrofitting.

Selected from at-risk applicants by the John Howard Society and Vancouver ACCESS BladeRunners, graduates gained skills and knowledge about draftproofing, insulation upgrades and other energy conservation techniques, including related topics like construction site work safety.

A REnEW graduate puts new skills to work.

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27

Actions speak As leaders in developing mutually beneficial relationships, FortisBC is proud to work with B.C.’s First Nations and Aboriginal communities. Some of our infrastructure is located on or tied to First Nations and Aboriginal land. We work in partnership and consultation with First Nations — in a manner that respects and helps protect the social, economic and cultural interests of their communities.

A true leader She has a well-established history of working closely with First Nations and Aboriginal communities to create new career and business opportunities. Yet Lee Beran, Recruiting Manager (natural gas), was still surprised to hear her colleagues had nominated her for the Board of Directors of the Industry Council for Aboriginal Business — a post she assumed officially in late 2010.

“Lee took the initiative to learn about and meet the leadership in the Aboriginal training and education sector, and she is widely accepted in the Aboriginal community,” explained Bruce Falstead, Aboriginal Relations Manager (natural gas).

Lee Beran, Recruiting Manager, serves on the Board of Directors for the Industry Council for Aboriginal Business.

“Thanks to efforts like Lee’s, when our company speaks to employment matters, we are seen as credible — not just in British Columbia but across Canada.”

“I feel lucky to have the opportunity to promote industry leadership in Aboriginal corporate

In 2010, we continued to develop innovative partnership opportunities with First

relations. For me, it’s all about building strong

Nations. For instance, our Mt. Hayes natural gas storage project on Vancouver

relationships that support continued growth

Island provided both jobs and economic benefits to the Stz’uminus (Chemainus)

and success.”

First Nations.

Lee

“The natural gas project on Hayes Mountain has been a boon to the Stz’uminus, who were lead contractors for such aspects as roads and forest clearing, and the Nation will be looking to further ties with the company,” said Chief John Elliot, Stz’uminus First Nation.

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FortisBC 2010 Corporate Report

“Terasen Gas [now FortisBC] has been a long-time supporter of the

Steadfast alliances

Aboriginal Tourism Association of B.C., especially during our showcase at

Our approach to building relationships with First

the 2010 Winter Games and we’re delighted that our partnership with them

Nations and Aboriginal communities includes

continues to grow.”

recognizing and respecting the uniqueness and

Keith Henry, Chief Executive Officer, AtBC

diversity of their cultural heritage.

In February 2010, a collaboration between FortisBC’s natural gas business, the Pan Pacific Hotel in Vancouver and the Aboriginal Tourism Association of BC (AtBC) created a stunning 16-day showcase of Aboriginal art, culture and performances, free to residents and visitors during the 2010 Olympic and Paralympic Winter Games.

“Our relationship with AtBC began in a quiet way with an emphasis on building goodwill and a better understanding of each other,” said Doug Stout, Vice President, Energy Solutions and External Relations.

“It has definitely evolved over time to reflect our social and environmental sustainability values, and those of the Fortis family.”

As part of our natural gas side’s Community Giving Day, more than 100 employee volunteers and families built an elders’ shelter and landscape art at Stanley Park’s Klahowya Village in September. The shelter is now available year-round and is part of the showcase of Aboriginal arts and culture that draws visitors from around the world.

FortisBC is committed to preserving and building upon the steadfast alliances we’ve created with First Nations and Aboriginal communities in B.C.

A 16-day showcase of Aboriginal art and culture delighted residents and visitors just before the 2010 Olympic and Paralympic Games in Vancouver. Here, Nisga’a Ts’amiks drummers participate in a welcoming ceremony at the Pan Pacific Hotel.

FortisBC 2010 Corporate Report

29

These young Naramata Elementary School students are excited about their new community garden.

We supported the Naramata Cooperative Garden Society’s project through our community investment program.

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FortisBC 2010 Corporate Report

The future Coming together under one leadership was about combining our strengths and resources.

It made good sense for our customers.

Looking ahead in 2011 and beyond...

We’re ready: - to help the province become energy self-sufficient - to expand our core natural gas and electricity business - to develop new and innovative sources of energy - to continue our unwavering commitment to customers and communities As we develop and implement our integrated energy solutions we will help empower B.C. to meet its environmental and energy goals in the years to come.

With experience, innovation and dedication, we are bringing our vision to life and leading the future of energy in British Columbia.

FortisBC 2010 Corporate Report

31

Leadership Team

Left to right: Douglas Stout, Tom Loski, Scott Thomson, Doyle Sam, Cynthia Des Brisay, John Walker, Michele Leeners, Robert Samels, David Bennett, Michael Mulcahy, Don Debienne, Roger Dall’Antonia, Dwain Bell.

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FortisBC 2010 Corporate Report

Dwain Bell Vice President, Operations (Natural Gas), FortisBC.

Michael Mulcahy Executive Vice President, Customer & Corporate

Dwain became Vice President, Distribution, in 2005. He has more

Services, FortisBC. Michael began his career with the Fortis group of

than 37 years of experience in the natural gas business throughout

companies with Maritime Electric in 1993. Prior to joining FortisBC,

B.C. and Alberta, including senior roles with FortisBC and

Michael was Vice President of Customer and Corporate Services for

its predecessor.

Newfoundland Power.

David Bennett Vice President & General Counsel, FortisBC.

Doyle Sam Vice President, Engineering & Operations (Electricity),

David practiced law in Vancouver until 2001 and then moved to

FortisBC. Doyle has worked in the electrical utility industry since

London, England. He returned to B.C. in 2003 and was in private

1989 and for FortisBC and its predecessors since 2003. He has

practice until joining FortisBC Inc. in 2004.

operated in a variety of engineering, planning, operations and senior management roles throughout his career.

Roger Dall’Antonia Vice President, Finance & CFO (Natural Gas), FortisBC. Roger rejoined the company in 2007, bringing 15 years of

Robert Samels Vice President, Business Planning, FortisBC. Bob has

corporate finance and treasury experience. He has considerable

worked with FortisBC and its predecessor companies since

experience in senior financial roles, primarily in the energy

1991. He spent 12 years in public practice with KPMG and

industry, including positions with Terasen, Westcoast Energy and

PricewaterhouseCoopers prior to holding various senior roles at

Versacold Income Fund.

FortisBC Energy Inc.

Don Debienne Vice President, Resource Planning (Electricity), FortisBC.

Douglas Stout Vice President, Energy Solutions & External Relations,

Don has over 30 years of operational experience in the electrical

FortisBC. Doug joined the company in 2001 as Vice President, Gas

utility industry, the last 20 of which have been with FortisBC

Supply and Transmission. He has held senior roles with Belkorp

and its predecessor companies. His prior experience includes 11

Industries Inc. and Husky Energy Inc. and has served as Director for

years with SaskPower in various operational, technical and senior

Sultran Ltd., Pacific Coast Terminals and Hillsborough Resources.

managerial roles.

He is a Director for the Northwest Gas Association.

Cynthia Des Brisay Vice President, Energy Supply & Resource

Scott Thomson Executive Vice President, Finance, Regulatory & Energy

Development, FortisBC. Cynthia has been with the company since

Supply, & CFO, FortisBC. Scott joined the company in 1999 following

1999. She has more than 28 years of experience in the energy

13 years in accounting and management consulting roles with Ernst

industry, including oil, gas and independent power generation

& Young. His last role was as Vice President, Regulatory Affairs &

development in Canada and New Zealand.

CFO for Terasen.

Michele Leeners Vice President, Finance & CFO (Electricity), FortisBC.

John Walker President & CEO, FortisBC. John is President and CEO of

Michele is a chartered accountant with over 21 years of experience

FortisBC Inc., FortisBC Holdings Inc., and FortisBC Energy Inc. and

in finance, treasury and accounting. Prior to joining FortisBC, she

serves on the Board of Directors of FortisAlberta Inc. He has worked

held management roles for the Canadian division of a U.S. oil and

with the Fortis group of companies since 1983, where he began his

gas company.

career with Newfoundland Power Inc. He also serves on the Boards of Directors of the Canadian Electricity Association, Western

Tom Loski Vice President, Customer Service, FortisBC. Tom has over 29

Energy Institute and Sauder Faculty Advisory Board, University of

years of experience with FortisBC Energy Inc. and its predecessor.

British Columbia.

Prior to his current role, Tom was responsible for the development and implementation of corporate regulatory strategy as the Chief Regulatory Officer for Terasen Gas and FortisBC Inc.

FortisBC 2010 Corporate Report

33

Board of Directors H. Stanley Marshall Mr. Marshall is the President and CEO of Fortis Inc., serving in this role since 1995. He serves on the boards of several Fortis companies, is a Director of Toromont Industries Ltd. and is Chair of the FortisBC Inc., FortisBC Holdings Inc. and FortisBC Energy Inc. Boards.

Harold G. Calla Mr. Calla is Chair of the First Nations Financial Management Board. He is a member of the Squamish Nation and has served two terms on its Council. He is on the Boards of Directors of Canada Mortgage and Housing Corporation and Nicola Valley Institute of Technology, and is a past Director of Partnerships BC.

Beth D. Campbell Ms. Campbell currently holds the title of Governor, and is immediate Past Chair for Best Western International Inc. She serves as a Director on the Board and as Vice Chair of the Member Marketing Advisory Committee for Best Western International Inc. She is the past Vice Chair of Tourism British Columbia and is Owner of the Best Western Inn at Penticton.

Brenda Eaton Ms. Eaton is the Chair of BC Housing and is on the Board of Directors of Transelec, Powertech and several not-for-profit organizations. She has previously served as Deputy Minister to the Premier and prior to that as Deputy Minister in Finance and Treasury Board, Energy Mines and Petroleum Resources and Social Services.

Ida J. Goodreau Ms. Goodreau is Adjunct Professor, Sauder School of Business, and Director, Strategy Centre for Healthcare Management, University of British Columbia. Previously, she was President and CEO of LifeLabs Medical Laboratory Services, and President and CEO of the Vancouver Coastal Health Authority. She is on the Board of Directors of Fortis Inc. and is a member of the Boards of the Vancouver Foundation, Genome B.C., Streetohome Foundation and Canada West Foundation.

Roger M. Mayer Mr. Mayer was elected to the Regional District of the Okanagan Similkameen in 1987. He served as Chair of the Regional District of Okanagan Similkameen from 1996 to 2001 and as Chair of the Regional Hospital District from 1996 to 2000 and again from 2002 to 2004. He presently serves as the Chair of the Okanagan Panel of the Provincial Government’s Agricultural Land Commission.

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FortisBC 2010 Corporate Report

Harry McWatters Mr. McWatters is the President of Vintage Consulting Group Inc. and is the founding Chairman of the B.C. Wine Institute, a Director of the B.C. Progress Board, and founding Chairman of the B.C. Hospitality Foundation. He has served on the Board of Directors of FortisBC Inc. since 2005, served as Chairman from 2006 to 2010, and has served on the Fortis Inc. Board since 2007.

Barry V. Perry Mr. Perry is the Vice President, Finance and Chief Financial Officer of Fortis Inc. Prior to his current role at Fortis, he held the position of Vice President, Finance and Chief Financial Officer of Newfoundland Power Inc. He serves on the boards of several Fortis companies.

Linda S. Petch Ms. Petch is Principal of Linda S. Petch Governance Services, which provides governance and accountability framework services to boards. She is also a member of the Board of Governors of RBC Mutual Funds and RBC Private Pools, and the Board of Directors of the Provincial Health Services Authority.

David R. Podmore Mr. Podmore is the Chairman and CEO of Concert Properties Ltd., a national real estate enterprise he co-founded in 1989. He is the Chair of the B.C. Pavilion Corporation and the Chair of the British Columbia Institute of Technology Foundation. He is also a Director of LifeLabs Inc.

Karl W. Smith Mr. Smith joined the Board January 1, 2011. He is President and Chief Executive Office of FortisAlberta Inc., a position he has held since 2007. Prior to this role, he was President and Chief Executive Officer of Newfoundland Power Inc. He also serves on the Board of Directors of Belize Electricity Limited and Caribbean Utilities Company Ltd.

John C. Walker Mr. Walker is President and CEO of FortisBC Inc., Fortis BC Holdings Inc., and FortisBC Energy Inc. and serves on the Board of Directors of FortisAlberta Inc. He has worked with the Fortis group of companies since 1983, where he began his career with Newfoundland Power Inc. He also serves on the Boards of Directors of the Canadian Electricity Association, Western Energy Institute and Sauder Faculty Advisory Board, University of British Columbia.

FortisBC 2010 Corporate Report

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