Interim Financial Statements - FortisBC

FortisBC Holdings Inc.
An indirect subsidiary of Fortis Inc.
Interim Consolidated Financial Statements
For the three months ended March 31, 2012 and 2011
(Unaudited)
Prepared in accordance with United States Generally Accepted Accounting Principles

ASSETS
FortisBC Holdings Inc.
Consolidated Balance Sheets (US GAAP) (Unaudited)
As at
(all amounts are in millions of Canadian dollars)
March 31,
2012
December 31,
2011
Current assets
Cash and cash equivalents $ 43 $ 38
Accounts receivable, net 316 280
Inventories 55 114
Prepaid expenses 2 4
Deferred income taxes 23 13
Current portion of rate stabilization accounts 91 105
530 554
Property, plant and equipment, net 3,273 3,275
Intangible assets, net 144 140
Long-term investment 457 461
Goodwill 913 913
Other assets 727 700
$ 6,044 $ 6,043
LIABILITIES AND SHAREHOLDER'S EQUITY
Current liabilities
Short-term notes $ 37 $ 127
Accounts payable and accrued liabilities 334 394
Income and other taxes payable 78 45
Current portion of rate stabilization accounts 47 19
Current portion of long-term debt and capital lease obligations 42 42
Due to parent company 573 571
Other current liabilities and deferred credits 7 -
1,118 1,198
Long-term debt and capital lease obligations 2,340 2,341
Rate stabilization accounts 141 108
Deferred income taxes 328 328
Other long-term liabilities and deferred credits 306 315
4,233 4,290
Shareholder’s equity
Common shares (a) 1,475 1,475
Preferred shares (a) 1,179 1,179
Additional paid-in capital (1,045) (1,045)
Accumulated other comprehensive income (loss) (note 6) (7) (7)
Noncontrolling interests 11 -
Retained Earnings 198 151
1,811 1,753
$ 6,044 $ 6,043
(a) no par value; unlimited authorized shares; 1.2 million preferred and 17.1 million common shares issued
and outstanding at March 31, 2012 and 2011.
The accompanying notes are an integral part of these interim consolidated financial statements.
FortisBC Holdings Inc. Interim Consolidated Financial Statements 1

FortisBC Holdings Inc.
Consolidated Statements of Earnings (US GAAP) (Unaudited)
For the three months ended March 31
(all amounts are in millions of Canadian dollars)
2012 2011
Revenue
Natural gas transmission and distribution $ 548 $ 574
Other income - 3
Other activities (note 13) 7 4
555 581
Expenses
Cost of natural gas 302 344
Operation and maintenance (note 13) 56 60
Depreciation and amortization 36 23
Amortization of intangible assets 5 3
Property and other taxes 15 15
414 445
Operating Income 141 136
Financing costs (notes 8 and 13) 46 43
Equity earnings from CWLP (1) -
Earnings before income taxes 96 93
Income taxes 14 21
Net earnings $ 82 $ 72
The accompanying notes are an integral part of these interim consolidated financial statements.
FortisBC Holdings Inc. Interim Consolidated Financial Statements 2

FortisBC Holdings Inc.
Consolidated Statements of Comprehensive Earnings (US GAAP) (Unaudited)
For the three months ended March 31
(all amounts are in millions of Canadian dollars)
2012 2011
Net earnings $ 82 $ 72
Other comprehensive (loss) earnings:
Defined benefit plans:
Net actuarial loss (note 6) - (1)
Corporate taxes - -
Comprehensive earnings $ 82 $ 71
The accompanying notes are an integral part of these interim consolidated financial statements.
FortisBC Holdings Inc. Interim Consolidated Financial Statements 3

FortisBC Holdings Inc.
Consolidated Statements of Changes in Equity (US GAAP) (Unaudited)
For the three months ended March 31
(all amounts are in millions of Canadian dollars)
Common
Shares
Preferred
Shares
Additional
Paid-in
Capital
Accumulated
Other
Comprehensive
Loss
Noncontrolling
Interest
Retained
Earnings Total Equity
As at December 31, 2010 $ 1,475 $ 1,179 $ (1,045) $ (4) $ - $ 115 $ 1,720
Net earnings - - - - 72 72
Other comprehensive earnings - - - (1) - - (1)
Dividends on common shares - - - - - (35) (35)
As at March 31, 2011 1,475 1,179 (1,045) (5) - 152 1,756
As at December 31, 2011 1,475 1,179 (1,045) (7) - 151 1,753
Net earnings - - - - - 82 82
Noncontrolling interest - - - 11 11
Other comprehensive earnings - - - - -
Dividends on common shares - - - - - (35) (35)
As at March 31, 2012 $ 1,475 $ 1,179 $ (1,045) $ (7) $ 11 $ 198 $ 1,811
The accompanying notes are an integral part of these interim consolidated financial statements.
FortisBC Holdings Inc. Interim Consolidated Financial Statements 4

FortisBC Holdings Inc.
Consolidated Statements of Cash Flows (US GAAP) (Unaudited)
For the three months ended March 31
(all amounts in millions of Canadian dollars)
Cash flows provided by (used for)
Operating activities
2012 2011
Net earnings $ 82 $ 72
Adjustments for non-cash items
Depreciation and amortization 41 26
Other 1 (3)
124 95
Changes in non-cash working capital (note 9) 23 57
Investing activities
147 152
Property, plant and equipment (35) (39)
Intangible assets (9) (8)
Long term investment 4 -
Other assets 11 22
Financing activities
(29) (25)
Decrease in short-term notes (90) (107)
Issuance of long-term debt - -
Reduction of long-term debt (1) (1)
Advances from parent company 2 4
Contribution from non-controlling interest 11 -
Dividends on common shares (35) (35)
(113) (139)
Net increase (decrease) in cash and cash equivalents 5 (12)
Cash and cash equivalents at beginning of period 38 43
Cash and cash equivalents at end of period $ 43 $ 31
The accompanying notes are an integral part of these interim consolidated financial statements.
Supplementary Information to Consolidated Statements of Cash Flows (note 9).
FortisBC Holdings Inc. Interim Consolidated Financial Statements 5

FortisBC Holdings Inc.
Notes to the Interim Consolidated Financial Statements (US GAAP) (Unaudited)
For the three months ended March 31, 2012 and 2011
(all tabular amounts are in millions of Canadian dollars, unless otherwise noted)
1. DESCRIPTION OF THE BUSINESS
FortisBC Holdings Inc. (“FortisBC Holdings” or “FHI”) and its subsidiaries (collectively the Corporation)
provide energy transportation and utility asset management services. FortisBC Holdings operates in two
primary business segments which are separately managed to assess operational performance.
a) Natural gas transmission and distribution operations involve the transmission and distribution of
natural gas for residential, commercial, institutional, and industrial customers in British Columbia .
The operations are conducted primarily through FortisBC Energy Inc. (FEI), serving the Lower
Mainland and Interior of British Columbia; FortisBC Energy (Vancouver Island) Inc. (FEVI),
serving Vancouver Island and the Sunshine Coast; and FortisBC Energy (Whistler) Inc. (FEW),
serving Whistler.
b) Other activities include FortisBC Holding’s 30 per cent interest in CustomerWorks LP (CWLP),
FortisBC Alternative Energy Services (FAES) and corporate financing costs and administration
charges.
2. SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
These interim consolidated financial statements have been prepared in accordance with accounting
principles generally accepted in the United States (“US GAAP”) for interim financial statements. As a
result, these interim consolidated financial statements do not include all of the information and
disclosures required in the annual consolidated financial statements and should be read in conjunction
with the Corporation’s 2011 annual audited consolidated financial st atements prepared in accordance
with US GAAP and voluntarily filed on the System for Electronic Document Analysis and Retrieval
(“SEDAR”) on March 16, 2012. In management’s opinion, the interim consolidated financial statements
include all adjustments, consisting solely of normal recurring adjustments, necessary to present fairly
such information.
These interim consolidated financial statements include the accounts of FortisBC Holdings, its
subsidiaries, and its equity share of the accounts of entities where less than a 50 per cent controlling
interest exists. All material intercompany transactions have been eliminated in the consolidated
financial statements except for those inter-company transactions recovered in rates from customers.
An evaluation of subsequent events through May 2, 2012, the date these interim consolidated financial
statements were issued, was completed to determine whether any circumstances warranted recognition
and disclosure of events or transactions in the consolidated financial s tatements as at March 31, 2012.
There were no subsequent events to report.
CHANGES IN ACCOUNTING POLICIES
Presentation of Comprehensive Income
The Corporation retroactively adopted the amendments to Accounting Standards Codification (ASC) Topic 220,
Comprehensive Income. The amended standard requires entities to report components of comprehensive
income in either a continuous statement of comprehensive income or two separate but consecutive
statements.
Testing Goodwill for Impairment
The Corporation has prospectively adopted the amendments to ASC Topic 350, Goodwill. The amended
standard allows entities testing goodwill for impairment to have the option of performing a qualitative
assessment before calculating the fair value of the reporting unit. If the qualitative factors indicate that the
fair value of the reporting unit is more likely than not to be greater than the carrying value, then the two-step
impairment test, including the quantification of the fair value of the reporting unit, would not be required. In
adopting the amendments, the Corporation will perform a qualitative assessment before calculating the fair
value of its reporting units when it performs its annual impairment test.
FortisBC Holdings Inc. Interim Consolidated Financial Statements 6

FortisBC Holdings Inc.
Notes to the Interim Consolidated Financial Statements (US GAAP) (Unaudited)
For the three months ended March 31, 2012 and 2011
(all tabular amounts are in millions of Canadian dollars, unless otherwise noted)
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
Fair Value Measurement
The Corporation retroactively adopted the amendments to ASC Topic 820, Fair Value Measurements and
Disclosures. The amended standard improves comparability of fair value measurements presented and
disclosed in financial statements prepared in accordance with US GAAP. The amendment does not change
what items are measured at fair value but instead makes various changes to the guidance pertaining to how
fair value is measured.
The above noted changes did not materially impact the Corporation’s interim consolidated financial
statements for the three months ended March 31, 2012 and 2011.
Change in Accounting Policy as a Result of Regulatory Applications
Effective January 1, 2012, as applied for in its 2012/2013 Revenue Requirements and Natural Gas
Rates Application (“2012/2013 RRA”) and subsequently approved in the British Columbia Utilities
Commission’s (“BCUC”) final 2012/2013 RRA decision received on April 12, 2012, FEI, FEVI, and FEW
adopted the following new accounting policy on a prospective basis:
Prior to 2012, actual removal costs were recorded as part of operation and maintenance expense with
variances versus forecast being recorded in a regulatory deferral account for recovery from, or refund
to, customers in future rates starting in 2012. In its 2012/2013 RRA, FEI, FEVI and FEW applied to
collect removal costs as a component of depreciation on an accrual basis. Removal costs are the direct
costs incurred by the Corporation in taking assets out of service, whether through actual removal of the
asset or through disconnection from the transmission or distribution system.
3. REGULATORY MATTERS
Current Regulatory Applications
In late 2011, the BCUC issued preliminary notification to public utilities subject to its regulation,
including the FortisBC Utilities, that it plans to initiate a Generic Cost of Capital Proceeding (“GCOC
Proceeding”) in early 2012. On February 28, 2012 the BCUC established that a GCOC Proceeding will
take place and provided for comment a preliminary scoping document outlining the matters to be
examined by the proceeding. On April 18, 2012 the BCUC issued a final scoping document identifying
the items that will be reviewed as part of the GCOC Proceeding, which includes:
the appropriate cost of capital for a benchmark low-risk utility effective January 1, 2013. Cost of
capital includes capital structure, return on common equity and interest on debt.
the establishment of a benchmark Return on Equity (“ROE”) based on a benchmark low risk utility
effective January 1, 2013 to December 31, 2013 for the initial transition year.
if it is determined through the GCOC Proceeding that a return to a ROE automatic adjustment
mechanism (“AAM”) is warranted it would be implemented January 1, 2014. If not, a future regulatory
process will be set to review the ROE for a benchmark low risk utility beyond December 31, 2013.
a generic methodology on how to establish each utility’s cost of capital in reference to the cost of
capital for a benchmark low-risk utility.
a methodology to establish a deemed capital structure and deemed cost of capital, particularly for
those utilities without third party debt.
for those utilities that require a deemed interest rate, if warranted, a methodology to establish a
deemed interest rate AAM. If not warranted, setting a future regulatory process on how the deemed
interest rate would be adjusted beyond December 31, 2013.
The proceeding is not intended to set each utility’s risk premium. As part of the proceeding, the BCUC will
retain an independent consultant to report on regulatory practices in Canadian jurisdictions. The GCOC
Proceeding will take place during 2012. The result of the GCOC Proceeding could materially impact the
Corporation’s earnings.
FortisBC Holdings Inc. Interim Consolidated Financial Statements 7

FortisBC Holdings Inc.
Notes to the Interim Consolidated Financial Statements (US GAAP) (Unaudited)
For the three months ended March 31, 2012 and 2011
(all tabular amounts are in millions of Canadian dollars, unless otherwise noted)
3. REGULATORY MATTERS (continued)
Current Regulatory Applications (continued)
On March 2, 2012, FEI filed an application for approval of expenditures of approximately $1 million on
facilities required to provide Thermal Energy Services to the Tsawwassen Springs Development. In
addition, the application requests approval of rates and rate design established in an operating and
maintenance agreement between FEI and the strata corporation. A written hearing process has been
established by the BCUC to review the application.
On October 17, 2011, FEI filed an application for approval of expenditures of approximately $5 million
on facilities required to provide the Thermal Energy Services to nineteen buildings in the Delta School
District, located in the Greater Vancouver area and to provide thermal energy upgrades to the buildings
over the next two years. When complete, FEI will own, operate and maintain the new thermal p lants
and charge Delta a single rate for thermal energy consumed. On March 11, 2012, the BCUC issued its
decision granting a Certificate of Public Convenience and Necessity (“CPCN”) on the condition that FEI
assign the agreements to a regulated affiliated company, which FEI subsequently did. Approval of the
rates and rate design as filed were denied, and the Corporation was invited to refile, within 30 days,
with changes identified in the decision if the Delta School District was in agreement. In early April, the
rates and rate design changes were submitted and a decision from the BCUC is pending.
In February 2012, the BCUC approved the Corporation’s amended application for a general tariff for the
provision of compressed natural gas (“CNG”) and liquefied natural gas (“LNG”) for transportation
vehicles. Subsequent to the BCUC approval, also in February 2012, the Corporation filed for a CPCN to
construct and operate a compressed natural gas fueling station infrastructure, to be in service October
2012, along with a long term contract for the supply of CNG with one counterparty, in accordance with
the approved general tariff. A decision is expected in May 2012.
FEI, FEVI and FEW filed an application with the BCUC for amalgamation of the three companies in
November 2011. After consultation with the BCUC, in late 2011, the companies temporarily suspen ded
their application while they provided the BCUC with additional information. In early April, the
companies refiled the application for common rates and amalgamation. An amalgamation would
require the approval of the BCUC and consent of the Government of British Columbia.
On April 12, 2012, the BCUC issued its decision on the FortisBC Energy companies’ 2012/2013 RRA.
The existing interim rates reflect the applied-for rate increase effective January 1, 2012 of 5.6 per cent
for FEI and 5 per cent for FEW. The decision is expected to result in a delivery rate decrease as
compared to FEI’s and FEW’s existing interim rates, in the range of one to two per cent. In its
decision, the BCUC approved FEVI’s 2012 and 2013 rates to remain at the same levels as 20 11. The
approved rates reflect allowed ROE and capital structure unchanged from 2011. The final rate increase
was driven by ongoing investment in energy infrastructure focused on system integrity and reliability,
and forecast increased operating expenses associated with inflation, a heightened focus on safety and
security of the natural gas system, and increasing compliance with codes and regulations. The
difference between interim and final rates will be refunded to customers over the remainder of 2012.
4. SEASONALITY OF OPERATIONS
Due to the seasonal nature of the Corporation’s natural gas transmission and distribution operations
and its impact on, natural gas consumption patterns, the natural gas transmission and distribution
operations of the Corporation normally generate higher earnings in the first and fourth quarters and
lower earnings in the second quarter, which are partially offset by losses in the third quarter. As a
result of the seasonality, interim earnings are not indicative of earn ings on an annual basis.
FortisBC Holdings Inc. Interim Consolidated Financial Statements 8

FortisBC Holdings Inc.
Notes to the Interim Consolidated Financial Statements (US GAAP) (Unaudited)
For the three months ended March 31, 2012 and 2011
(all tabular amounts are in millions of Canadian dollars, unless otherwise noted)
5. SEGMENT DISCLOSURES
Three months ended March 31, 2012
Natural gas
transmission
and
distribution
Other activities
Total
Revenues $ 548 $ 7 $ 555
Other income - - -
548 7 555
Net earnings (loss) 82 - 82
Total assets 5,532 512 6,044
Goodwill 913 - 913
Capital expenditures 44 - 44
Three months ended March 31, 2011
Natural gas
transmission
and distribution
Other
activities
Revenues $ 574 $ 4 $ 578
Other income 3 - 3
577 4 581
Net earnings (loss) 75 (3) 72
Total assets 5,527 516 6,043
Goodwill 913 - 913
Capital expenditures 47 - 47
The other activities include CustomerWorks Limited Partnership and FortisBC Alternative Energy Services Inc.
6. OTHER COMPREHENSIVE LOSS
Comprehensive earnings is a measure of earnings which includes both net earnings and other
comprehensive income or loss (OCI). OCI results from items deferred from recognition on the
statement of earnings.
The components of net benefit cost, on an after-tax basis, recognized in other comprehensive income
for the plans for the three months ended March 31 were as follows:
Defined benefit
pension plans
FortisBC Holdings Inc. Interim Consolidated Financial Statements 9
Total
OPEB plans
2012 2011 2012 2011
Net actuarial losses $ - $ (1) $ - $ -
Amortization of actuarial loss - - - -
$ - $ (1) $ - $ -

FortisBC Holdings Inc.
Notes to the Interim Consolidated Financial Statements (US GAAP) (Unaudited)
For the three months ended March 31, 2012 and 2011
(all tabular amounts are in millions of Canadian dollars, unless otherwise noted)
7. EMPLOYEE BENEFIT PLANS
The Corporation has defined benefit pension plans and defined contribution pension plans for
employees. The Corporation also provides post-employment benefits other than pensions for retired
employees.
The net benefit plan cost for the three months ended March 31 was as follows:
Defined benefit
pension plans
OPEB plans
2012 2011 2012 2011
Current service cost $ 4 $ 3 $ 1 $ -
Interest costs 4 5 1 1
Expected return on plan assets (5) (5) - -
Amortization of actuarial losses 3 2 1 -
Amortization of past service costs / plan
amendments
- - (1) -
Net benefit cost $ 6 $ 5 $ 2 $ 1
8. FINANCING COSTS
2012 2011
Interest expense on long-term debt, capital leases and lease in lease out
arrangements
$ 38 $ 39
Interest on short-term debt 8 6
Interest capitalized - (2)
$ 46 $ 43
As allowed by the BCUC, during the three months ended March 31, 2012, the Corporation capitalized
interest for borrowing requirements for construction of assets that have not been included in rate base
of nil (March 31, 2011 - $2 million).
9. SUPPLEMENTARY INFORMATION TO CONSOLIDATED STATEMENTS OF CASH FLOWS
Changes in non-cash working capital 2012 2011
Accounts receivable $ (36) $ (22)
Inventory 59 82
Prepaid expenses 2 1
Accounts payable and accruals (60) (95)
Income and other taxes payable 33 34
Net regulatory assets and liabilities 42 57
Other (17) -
$ 23 $ 57
FortisBC Holdings Inc. Interim Consolidated Financial Statements 10

FortisBC Holdings Inc.
Notes to the Interim Consolidated Financial Statements (US GAAP) (Unaudited)
For the three months ended March 31, 2012 and 2011
(all tabular amounts are in millions of Canadian dollars, unless otherwise noted)
10. ACCOUNTING FOR DERIVATIVES AND HEDGING ACTIVITIES
The Corporation hedges its exposure to fluctuations in natural gas prices and foreign exchange rates
through the use of derivative instruments. FEI and FEVI’s price risk management strategy aims to (i)
improve the likelihood that natural gas prices remain competitive, (ii) dampen price volatility on
customer rates and (iii) reduce the risk of regional price disconnects. In July 2010, the BCUC ordered
the suspension of all commodity hedging activity and directed FEI and FEVI to undertake a review of
the primary objectives of the Price Risk Management Plan (PRMP). In January 2011, FEI and FEVI filed
a review report and FEI submitted a revised 2011-2014 PRMP, based on recommendations arising from
the review report. On July 12, 2011, the BCUC issued its decision on the review report and determined
that commodity hedging in the current environment was not a cost effective means to meet the
objectives of competitiveness and rate stability. The BCUC concurrently denied FEI’s 2011-2014 PRMP
with the exception of certain elements to address the risk of regional price disconnects. As a result,
FEI and FEVI have suspended all commodity hedging activity with th e exception of basis swaps for FEI
to reduce the risk of Sumas market price disconnects. The existing hedging contracts continue in effect
through to their maturity and FEI and FEVI’s ability to fully recover the commodity cost of gas in customer
rates remains unchanged.
Volume of Derivative Activity
As at March 31, 2012, the Corporation had the following notional volumes of outstanding foreign
exchange forward contracts and natural gas derivatives, designated for regulatory approval that are
expected to be settled as outlined below:
2012 2013 2014
Foreign Exchange Forward Contracts
Cash exposure $ 1 $ - $ -
Weighted average exchange rate 1.0025 - -
Natural Gas Derivatives
Swaps and options Petajoules (PJ) 26 18 7
Gas purchase contract premiums (PJ) 70 20 9
Presentation of Derivative Instruments in the Financial Statements
In the Corporation’s consolidated balance sheets, derivative instruments are presented on a net basis
by counterparty where the right of offset exists. The net balances include outstanding cash collateral
associated with derivative positions.
At March 31, 2012, the Corporation’s outstanding derivative balances were as follows:
2012
Natural gas commodity derivatives:
Accounts payable and accrued
liabilities
Gross
derivatives
balance 1
Netting 2 Cash collateral
Total
derivatives
balance
$ 132 $ - $ - $ 132
1 See note 11 for a discussion of the valuation techniques used to calculate the fair value of these instruments.
2 Positions, by counterparty, are netted where the intent and legal right to offset exists.
FortisBC Holdings Inc. Interim Consolidated Financial Statements 11

FortisBC Holdings Inc.
Notes to the Interim Consolidated Financial Statements (US GAAP) (Unaudited)
For the three months ended March 31, 2012 and 2011
(all tabular amounts are in millions of Canadian dollars, unless otherwise noted)
10. ACCOUNTING FOR DERIVATIVES AND HEDGING ACTIVITIES (continued)
Presentation of Derivative Instruments in the Financial Statements (continued)
At December 31, 2011, the Corporation’s outstanding derivative balances were as follows:
2011
Natural gas commodity derivatives:
Accounts payable and accrued
liabilities
Gross
derivatives
balance 1
Netting 2 Cash collateral
Total
derivatives
balance
$ 135 $ - $ - $ 135
1 See note 11 for a discussion of the valuation techniques used to calculate the fair value of these instruments.
2 Positions, by counterparty, are netted where the intent and legal right to offset exists.
The following table shows the cumulative losses at March 31 with respect to the derivative instruments:
March 31,
2012
December 31,
2011
Unrealized loss natural gas commodity derivatives – Current portion of
rate stabilization accounts 1,2 $ 132 $ 135
1 Unrealized gains and losses on commodity risk-related derivative instruments are recorded to current rate stabilization
assets or liabilities rather than being recorded to the consolidated statement of earnings or other comprehensive
earnings. These amounts exclude impact of cash collateral postings.
2 These amounts are fully passed through to customers in rates on a realized basis. Accordingly, net income was not
impacted by unrealized amounts on these instruments.
Cash inflows and outflows associated with the settlement of all derivative instruments are included in
operating cash flows on the Corporation’s consolidated statements of cash flows.
11. FAIR VALUE MEASUREMENT
Fair value is the price at which a market participant could sell an asset or transfer a liability to an unrelated
party. A fair value measurement is required to reflect the assumptions that market participants would use in
pricing an asset or liability based on the best available information. These assumptions include the risks
inherent in a particular valuation technique, such as a pricing model, and the risks inherent in the inputs to
the model. A fair value hierarchy exists that prioritizes the inputs used to measure fair value. The
Corporation is required to record all derivative instruments at fair value except for those which would qualify
for the normal purchase and normal sales exceptions.
The three levels of the fair value hierarchy are defined as follows:
Level 1: Fair value determined using unadjusted quoted prices in active markets.
Level 2: Fair value determined using pricing inputs that are observable.
Level 3: Fair value determined using unobservable inputs only when relevant observable inputs
are not available.
FortisBC Holdings Inc. Interim Consolidated Financial Statements 12

FortisBC Holdings Inc.
Notes to the Interim Consolidated Financial Statements (US GAAP) (Unaudited)
For the three months ended March 31, 2012 and 2011
(all tabular amounts are in millions of Canadian dollars, unless otherwise noted)
11. FAIR VALUE MEASUREMENT (continued)
The fair values of the Corporation’s financial instruments, including derivatives, reflect a point -in-time
estimate based on current and relevant market information about the instruments as at the balance
sheet dates. The estimates cannot be determined with p recision as they involve uncertainties and
matters of judgment and, therefore, may not be relevant in predicting the Corporation’s future
consolidated earnings or cash flows.
The fair values of the foreign exchange forward contracts are calculated using the present value of cash
flows based on a market foreign exchange rate and the foreign exchange forward rate curve. Any
change in the fair values of the foreign exchange forward contracts at FEI and FEVI is deferred as a
regulatory asset or liability in the balance sheet for recovery from, or refund to, customers in future
rates, as permitted by the BCUC.
The natural gas derivatives are used to fix the effective purchase price of natural gas, as the majority
of the natural gas supply contracts at the Corporation have floating, rather than fixed, prices. Any
resulting gains or losses are recorded in regulatory liabilities or assets in the balance sheet. The fair
value of the natural gas derivatives is calculated using the present value of cash flows based on market
prices and forward curves for the commodity cost of natural gas.
The fair values of the foreign exchange forward contracts and the natural gas derivatives are estimates
of the amounts that the Corporation would have to receive or pay to terminate the outstanding
contracts as at the balance sheet date. As at March 31, 2012 and 2011, none of the natural gas
derivatives were designated as hedges of the natural gas supply contracts. However, any changes in
the fair value of the natural gas derivatives are deferred as a regulatory asset or liability for recovery
from, or refund to, customers in future rates, as permitted by the BCUC.
The following table summarizes the fair value measurements of FortisBC Holdings’ long-term debt and
capital lease obligations and, natural gas derivative contracts as of March 31, 2012 and 2011, all of
which were Level 2 of the Corporation’s financial instruments.
Long-term debt and capital
lease obligations
Natural gas commodity swaps
and options and gas
purchase contract premium 1
Carrying
value
March 31, 2012 December 31, 2011
Estimated
fair value
1 Included in accounts payable as at March 31, 2012 and December 31, 2011.
12. FINANCIAL RISK MANAGEMENT
Carrying
value
Estimated
fair value
$ 2,382 $ 2,933 $ 2,383 $ 2,965
(132) (132) (135) (135)
The Corporation is exposed to credit risk, liquidity risk and market risk as a result of holding financial
instruments in the normal course of business.
Credit Risk
Credit risk is the risk that a third party to a financial instrument might fail to meet its obligations u nder
the terms of the financial instrument. For cash and cash equivalents, derivative assets, accounts
receivable, and other receivables due from customers, the Corporation’s credit risk is limited to the
carrying value on the balance sheet. The Corporation generally has a large and diversified customer
base, which minimizes the concentration of credit risk.
FortisBC Holdings Inc. Interim Consolidated Financial Statements 13

FortisBC Holdings Inc.
Notes to the Interim Consolidated Financial Statements (US GAAP) (Unaudited)
For the three months ended March 31, 2012 and 2011
(all tabular amounts are in millions of Canadian dollars, unless otherwise noted)
12. FINANCIAL RISK MANAGEMENT (continued)
Credit Risk (continued)
The Corporation is exposed to credit risk in the event of non-performance by counterparties to
derivative financial instruments, including natural gas commodity swaps and options. Because the
Corporation deals with reasonable credit-quality institutions, in accordance with established
credit-approval practices, the Corporation does not expect any counterparties to fail to meet their
obligations. Counterparty credit exposures are monitored by individual counterparty and by category of
credit rating, and are subject to approved limits. The counterparties with which the Corporation has
significant derivative transactions are A-rated entities or better. The Corporation uses netting
arrangements to reduce credit risk and net settles payments with counterparties where net settlement
provisions exist.
The following table summarizes the Corporation’s net credit risk exposure to its counterparties, as well
as credit risk exposure to counterparties accounting for greater than 10 per cent net credit exposure,
as of March 31, 2012 and 2011:
Gross credit
exposure
before credit
collateral 1
Credit
collateral
Net credit
exposure 2
Number of
counterparties
>10%
Net exposure
to
counterparties
>10%
March 31, 2012 $ 136 $ - $ 136 4 $ 99
December 31, 2011 136 - 136 4 104
1 Gross credit exposure equals mark-to-market value on physically and financially settled contracts, notes receivable, and
net receivables (payables) where netting is contractually allowed. Gross and net credit exposure amounts reported above
do not include adjustments for time value or liquidity.
2 Net credit exposure is the gross credit exposure collateral minus credit collateral (cash deposits and letters of credit). For
purposes of this table, parental guarantees are not included as part of the calculation.
In the case of commercial and industrial customers credit risk is managed by checking a corporation’s
creditworthiness and financial strength both before commencing and during the business relationship.
For residential customers, creditworthiness is normally ascertained before commencing commodity
delivery by an appropriate mix of internal and external information to determine the payment
mechanism required to reduce credit risk to an acceptable level. Certain customers will only be
accepted on a prepayment basis. The Corporation manages its exposure to credit risk associated with
all customers by monitoring an aging of receivables and by monitoring groupings of customers
according to method of payment or profile.
Liquidity Risk
Liquidity risk is the risk that an entity will encounter difficulty in raising funds to meet commitments
associated with financial instruments. The Corporation’s financial position could be adversely affected
if it or its operating subsidiaries fail to arrange sufficient and cost effective financing to fund, among
other things, capital expenditures and the repayment of maturing debt. The ability to arrange
sufficient and cost effective financing is subject to numerous factors, including the results of operations
and financial position of the Corporation, conditions in the capital and bank credit markets, ratings
assigned by rating agencies and general economic conditions.
To mitigate this risk, the Corporation had consolidated credit facilities of $730 million (December 31,
2011 - $730 million) as at March 31, 2012, of which $645 million (December 31, 2011 - $555 million)
was unused. The Corporation targets to have, on average, sufficient liquidity to allow it not to access
the capital markets for a period of 12 months.
FortisBC Holdings Inc. Interim Consolidated Financial Statements 14

FortisBC Holdings Inc.
Notes to the Interim Consolidated Financial Statements (US GAAP) (Unaudited)
For the three months ended March 31, 2012 and 2011
(all tabular amounts are in millions of Canadian dollars, unless otherwise noted)
12. FINANCIAL RISK MANAGEMENT (continued)
Liquidity Risk (continued)
The following summary outlines the credit facilities of the Corporation by entity.
FortisBC
Holdings
Inc.
FortisBC
Energy Inc.
FortisBC
Energy
(Vancouver
Island) Inc.
Total as at
March 31,
2012
Total as at
December 31,
2011
Total credit facilities
Credit facilities utilized:
$ 30 $ 500 $ 200 $ 730 $ 730
Short-term borrowings
Long-term debt 1
-
(9)
(28)
(37)
(127)
Letters of credit outstanding - (48) - (48) (48)
Credit facilities unused $ 30 $ 443 $ 172 $ 645 $ 555
1 As at March 31, 2012, credit facility borrowings classified as long-term debt included $15 million (December 31, 2011 -
$15 million) that was included in current installments of long-term debt and capital lease obligations on the consolidated
balance sheet.
On April 21, 2011, FortisBC Holdings extended its $30 million operating credit facility to mature on May 3,
2012. The new agreement has substantially similar terms to the facility it replaced. The facility was
unutilized at March 31, 2012 and December 31, 2011.
FEI has a $500 million syndicated credit facility which expires in August 2013. The facility is unsecured
and is used for general corporate purposes.
On November 1, 2011, FEVI entered into a $200 million twenty month credit facility to replace its maturing
$300 million facility. The new agreement has substantially similar terms to the facility it replaced and expires
December 31, 2013.
Furthermore, the Corporation targets a strong investment-grade credit rating to maintain capital
market access at reasonable interest rates. As at March 31, 2012, the Corporation’s credit ratings
remained unchanged from December 31, 2011, and were as follows:
Credit Ratings DBRS Moody’s
FortisBC Holdings Inc.
Unsecured long-term debt BBB (High) Baa2
FortisBC Energy Inc.
Commercial paper R-1 (Low) -
Secured long-term debt A A1
Unsecured long-term debt A A3
13. RELATED PARTY TRANSACTIONS
FortisBC Holdings’ parent company Fortis provided corporate management services totalling
approximately $1 million (2011 – $1 million) for the three months ended March 31, 2012. The
corporate management services fee was included in operation and maintenance expenses on the
consolidated statements of earnings.
FortisBC Holdings was charged interest of approximately $1 million (2011 - nil) during the three
months ended March 31, 2012 by Fortis on the borrowings from the parent company. The amount due
to the parent company was unsecured and due on demand and accrues interest at Fortis’ average cost
of short term borrowing plus twenty five basis points.
FortisBC Holdings Inc. Interim Consolidated Financial Statements 15

FortisBC Holdings Inc.
Notes to the Interim Consolidated Financial Statements (US GAAP) (Unaudited)
For the three months ended March 31, 2012 and 2011
(all tabular amounts are in millions of Canadian dollars, unless otherwise noted)
13. RELATED PARTY TRANSACTIONS (continued)
On December 31, 2010, FortisBC Holdings entered into a $200 million promissory note at a prescribed
interest rate of 5.00 per cent with Fortis. FortisBC Holdings was charged interest of $3 million (2011 -
$3 million) for the three months ended March 31, 2012, by Fortis on the promissory note. The
promissory note is due on December 31, 2020 and is unsecured.
FortisBC Holdings received dividends from its $150 million investment in FortisWest Inc. (FortisWest) of
$3 million (2011 - $3 million) during the three months ended March 31, 2012, on the Series C Preferred
Shares owned by FortisBC Holdings. For the three months ended March 31, 2012, the Corporation paid
interest of $2 million (2011 - $2 million) to Fortis on the demand loan. The dividend income was
included in other activities revenue, and interest expense is recorded in financing costs on the
consolidated statements of earnings.
On March 3, 2011, FortisBC Holdings borrowed $300 million from its parent company, Fortis. The
proceeds were used to purchase 12,000,000 Series F Preferred Shares (the Shares) of FortisWest, a
subsidiary of Fortis. The Shares entitle FortisBC Holdings to a fixed preferential cumulative cash
dividend at a rate of 5.25 per cent annually with dividends paid quarterly. The interest was also paid
quarterly and the loan is due on demand and secured by a pledge of the Shares. For the three months
ended March 31, 2012, FortisBC Holdings paid interest of $5 million to Fortis on the demand loan, and
FortisBC Holdings received dividends from FortisWest of $5 million respectively on the Shares. The
dividend income was included in other activities revenue, and interest expense was recorded in
financing costs on the consolidated statements of earnings.
Fortis grants stock options to certain employees of FHI under its stock option plans. For the period
ended March 31, 2012, the Corporation was charged and recorded an expense of an insignificant
amount for the fair value of the stock compensation granted by Fortis. The stock option expense was
included in operation and maintenance expenses on the consolidated statements of earnings.
For the three months ended March 31, 2012, the Corporation was charged $1 million (2011 - nil) by
FortisBC Inc. (a subsidiary of Fortis) for electricity purchases and corporate management services.
These charges were included in operation and maintenance expenses on the consolidated statements of
earnings and comprehensive earnings.
The Corporation was charged $4 million (2011 - nil) for the three months ended March 31, 2012 by
FEVI for storing gas at the Mt. Hayes LNG storage facility which became operational in April 2011.
These charges are included in rate stabilization accounts on the consolidated balance sheets.
Related party transactions were recorded at the exchange amount.
14. COMMITMENTS
The Corporation has entered into operating leases for certain building space and natural gas
transmission and distribution assets. In addition, FEI and FEVI have entered into gas purchase
contracts that represent future purchase obligations.
The following table sets forth the Corporation’s operating leases, gas purchase obligations and
employee benefit plan contributions due in the years indicated:
Operating leases Purchase obligations
Employee benefit plans Total
2012/2013 $ 17 $ 130 $ 15 $ 162
2013/2014 16 59 10 85
2014/2015 16 28 - 44
2015/2016 15 - - 15
2016/2017 15 - - 15
Thereafter 56 - - 56
$ 135 $ 217 $ 25 $ 377
FortisBC Holdings Inc. Interim Consolidated Financial Statements 16

FortisBC Holdings Inc.
Notes to the Interim Consolidated Financial Statements (US GAAP) (Unaudited)
For the three months ended March 31, 2012 and 2011
(all tabular amounts are in millions of Canadian dollars, unless otherwise noted)
14. COMMITMENTS (continued)
Gas purchase contract commitments are based on gas commodity indices that vary with market prices.
The amounts disclosed reflect index prices that were in effect at March 31, 2012. The employee benefit
plan contributions have been estimated up to the date of the next actuarial valuation for each plan
unless the valuation falls in the next twelve months then the Corporation has provided for an estimate
of the contributions. Employee benefit plan contributions beyond the date of the next actuarial
valuation cannot be accurately estimated.
In prior years, FEVI received non-interest bearing, repayable loans from the federal and provincial
governments of $50 million and $25 million respectively, in connection with the construction and
operation of the Vancouver Island natural gas pipeline. As approved by the BCUC, these loans have
been recorded as government grants and have reduced the amounts reported for utility capital assets.
The loans are repayable in any fiscal year after 2002 and prior to 2012 under certain circumstances,
including the recovery of the RDDA, and subject to the ability of FEVI to obtain non-government
subordinated debt financing on reasonable commercial terms. In 2006, all of the repayment criteria
were met when FEVI obtained additional financing through a new credit agreement (note 12(g)). In
2010 FEVI made a repayment on the loans of $4 million. As at December 31, 2010, the RDDA was fully
recovered so the next repayment on the loans will be due in 2012 .
As the loans are repaid and replaced with non-governmental loans, utility capital assets, long-term debt
and equity requirements will increase in accordance with FEVI’s approved capital structure.
On January 3, 2012, two unrelated parties purchased an equity interest of 15 per cent in a subsidiary of
FEVI. These non-controlling interest owners hold a put option which, if exercised, would obligate FEVI to
purchase the non-controlling interest owners’ 15 per cent share in the subsidiary for cash. For rate-making
purposes, this non-controlling interest is considered equity and if FEVI was required to purchase this noncontrolling
interest, FEVI would fund this transaction with an equity issuance. Accordingly, FEVI has
presented this redeemable non-controlling interest as equity.
15. CONTINGENT LIABILITIES
The Corporation and its subsidiaries are subject to various legal proceedings and claims associated with
the ordinary course of business operations. Management believes that the amount of liability, if any,
from these actions would not have a material effect on the Corporation’s consolidated financial position
or results of operations.
The following describes the nature of the Corporation’s contingent liabilities.
During 2007 and 2008 a non-regulated subsidiary of FortisBC Holdings received Notices of Assessment
from Canada Revenue Agency for additional taxes related to its 1999 through 2003 taxation years.
FortisBC Holdings has fully provided for the exposure in the financial statements. FortisBC Holding has
begun the appeal process on these assessments.
In 2009, FortisBC Holdings was named, along with other defendants, in an action related to damages to
property and chattels, including contamination to sewer lines and costs associated with remediation
related to the rupture in July 2007 of an oil pipeline owned and operated by Kinder Morgan. FortisBC
Holdings filed a statement of defense but the claim is in its early stages. During the second quarter,
FortisBC Holdings was added as a third party in all of the related actions and all claims are expected to
be tried at the same time. The amount and outcome are indeterminable at this time and, accordingly,
no amount has been accrued in the financial statements.
FortisBC Holdings Inc. Interim Consolidated Financial Statements 17