Canadian Utilities Q3 2025 Earnings Report

Canadian Utilities EPS Results

• Actual EPS: C$0.40
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Canadian Utilities Revenue Results

• Actual Revenue: $792.00 million
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Canadian Utilities Announcement Details

• Quarter: Q3 2025
• Date: 11/7/2025
• Time: Before Market Opens
• Conference Call Date: Friday, November 7, 2025
• Conference Call Time: 11:00AM ET

Canadian Utilities (TSE:CU) Ltd, a subsidiary of holding company Atco, offers gas and electricity services. The company's main divisions include electricity (generation, transmission, and distribution), pipelines & liquid (natural gas and water), and Retail Energy. Headquartered in Calgary, Alberta, the firm mainly operates in Canada and Australia, along with some operations in the United States and Mexico. Canadian Utilities launched a large venture called Atco Energy, which provides low-cost and sustainable energy solutions for Alberta.

Canadian Utilities Q3 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Yellowhead Pipeline is advancing — the AUC needs approval is granted, the facilities application was filed, the project is ~90% contracted, and major equipment contracts (compressor and soon steel pipe) have been awarded to preserve in‑service timing.
• Positive Sentiment: The CETO transmission project (CAD 280 million) is deep into construction and remains on track for completion in H1 next year, intended to relieve congestion and improve grid reliability in central‑east Alberta.
• Positive Sentiment: Q3 results and funding momentum — adjusted earnings were CAD 108 million (CAD 0.40/share), cash from operations rose ~12% YoY, and the company completed heavily oversubscribed financings (CAD 750m hybrids @ 5.45% and CAD 370m debentures @ 4.787%), supporting capital needs.
• Negative Sentiment: Regulatory and project risks persist — a lower approved ROE for Alberta utilities and end of the ECM reduced near‑term earnings headroom, tax efficiencies will be lower in the next quarter, and Yellowhead CapEx is currently a Class 3 estimate of ~CAD 2.9 billion (± ~20%) with supply‑chain and weather execution risks.
• Positive Sentiment: Medium‑term growth runway — plans to expand gas storage from 117 PJ to 130 PJ by late 2026, active optimization/contracting strategies, and strong momentum in ATCO Australia (AA6 access arrangement targeting ~80,000 new connections and higher regulated ROE) position multiple growth engines beyond regulated transmission.

Presentation

[Operator]

Thank you for standing by. This is the conference operator. Welcome to the third quarter 2025 results conference call and webcast for Canadian Utilities Limited. As a reminder, all participants are in listen-only mode, and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. To join the question queue, you may press star then one on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing star then zero. I would now like to turn the conference over to Mr. Colin Jackson, Senior Vice President, Financial Operations. Please go ahead, Mr. Jackson.

[Colin Jackson, SVP of Financial Operations at Canadian Utilities]

Thank you, and good morning, everyone. We are pleased you could join us for Canadian Utilities' third quarter 2025 conference call. On the line today, we have Bob Myles, Chief Executive Officer of Canadian Utilities Limited, and Katie Patrick, Executive Vice President, Chief Financial and Investment Officer. Before we move into today's remarks, I would like to take a moment to acknowledge the numerous traditional territories and homelands on which our global facilities are located. Today, I am speaking to you from our ATCO Park head office in Calgary, which is located in the Treaty 7 region. This is the ancestral territory of the Blackfoot Confederacy, comprised of the Siksika, the Kainai, the Piikani Nations, the Tsuut'ina Nation, and the Stoney-Nakoda Nations, which include the Chiniki, Bearspaw, and Goodstoney First Nations.

[Colin Jackson, SVP of Financial Operations at Canadian Utilities]

I also want to recognize that the city of Calgary is home to the Métis Nation of Alberta, districts five and six. During the quarter, employees across Canada recognized the National Day for Truth and Reconciliation by walking together to honor Indigenous communities and their experiences. May we continue to reflect, learn, and respect the diverse history, languages, ceremonies, and cultures of Indigenous peoples as we move forward towards understanding, healing, and reconciliation. Today's remarks will include forward-looking statements that are subject to important risks and uncertainties. For more information on these risks and uncertainties, please refer to our filings with the Canadian Securities Regulators. During today's presentation, we may refer to certain non-GAAP and other financial measures, including adjusted earnings, adjusted earnings per share, and capital investment.

[Colin Jackson, SVP of Financial Operations at Canadian Utilities]

These measures do not have any standardized meaning under IFRS, and as a result, they may not be comparable to similar measures presented by other entities. Please refer to our filings with the Canadian Securities Regulators for further information. I will turn the call over to Bob Myles for his opening remarks.

[Bob Myles, CEO at Canadian Utilities]

Thanks, Colin. Good morning, everyone. I want to begin by highlighting three key pillars of our long-term strategy: growth and prosperity. This includes our robust project pipeline and our policy and regulatory partnerships, operational excellence, which includes modernizing our operating model with safety and reliability at the forefront, and financial leadership, which touches on our funding strategy and financial performance. Moving to our first pillar, growth and prosperity. Foundational to our growth at Canadian Utilities are the economic drivers we are seeing in the province of Alberta. Alberta continues to lead population growth in Canada, and in Q3 2025, Alberta's population reached 5 million people, up 2.5% year-over-year. Canadian Utilities plays an essential role in enabling this population growth.

[Bob Myles, CEO at Canadian Utilities]

In 2025, we are on track to connect over 19,000 customers in ATCO Energy Systems, particularly in our Alberta gas business, in line with the strong growth we delivered in 2024, which saw our highest number of customer connections in almost a decade. When we look at the projects driving our growth and prosperity pillar, I want to begin with our Central East Transfer Out project, or CETO. At a high level, this CAD 280 million project, assigned by the Alberta Electric System Operator, upgrades and strengthens the transmission system in Central East Alberta. Alberta's electric transmission system has experienced ongoing congestion challenges, affecting the reliability of the grid, the market efficiency, and the integration of new energy sources. In response, CETO was developed to directly address these constraints. CETO is a critical energy infrastructure investment representing meaningful progress for Alberta's electric system.

[Bob Myles, CEO at Canadian Utilities]

By enhancing the efficiency of how power flows across the electric grid, CETO makes it easier to deliver energy to where it is needed most, like major demand centers in Calgary, Edmonton, and northern regions. CETO is deep into construction and remains on track to be completed in the first half of next year. The project will have a significant benefit to our customers across the province, modernizing and enhancing the reliability of the transmission system. Beyond CETO, we believe further opportunities exist to improve congestion. An example is the McNeill Converter Station, currently the only intertie point between Alberta and Saskatchewan, as shown on this slide. The McNeill Station recently underwent repairs and is being evaluated for a capacity upgrade. Once complete, this upgrade will enable more generation to flow between Alberta and Saskatchewan, representing the next step in addressing regional congestion.

[Bob Myles, CEO at Canadian Utilities]

Moving to natural gas, our assets are strategically positioned in areas that allow us to capitalize on the spectrum of energy opportunities being delivered. On the map, you can see our three gas storage assets are well-positioned near natural gas production zones, major project infrastructure, as well as locations associated with the planned data center developments and links to LNG development. Our Yellowhead Pipeline Project that I have discussed previously is a required addition to the natural gas network in Alberta, and it will be a key conduit to connecting supply-to-demand growth. Yellowhead creates a new direct corridor from the northwest Alberta supply region to the greater Edmonton area, debottlenecking constrained segments and reducing reliance on longer, more complex flow paths.

[Bob Myles, CEO at Canadian Utilities]

This relieves pressure on the entire Alberta integrated system, improves delivery reliability for all types of customers across the province, and frees up capacity for not only residential demand but industrial power generation and commercial growth, making it a foundational investment in Alberta's energy future. Overall, it is evident that natural gas is needed more than ever in Alberta, and we remain in a very strong position to capitalize on the growth opportunities within the province. There have been positive developments on our Yellowhead Pipeline Project during this past quarter. We are pleased to announce the approval of the needs application from the Alberta Utilities Commission, or AUC. I'm also excited to announce that we filed the facilities application with the AUC earlier this week, which will provide detailed technical, environmental, and consultation data required for construction approval.

[Bob Myles, CEO at Canadian Utilities]

The filing of the facilities application is a key milestone in the regulatory process and demonstrates that we have completed sufficient consultation with communities, environmental studies, and engineering to permit the construction of the project. The Yellowhead Pipeline Project remains 90% contracted and will deliver long-term economic benefits while strengthening the province's natural gas network. In the third quarter, two additional service offerings to the market were undertaken. We expect that some or all of the remaining capacity provided by Yellowhead will be contracted through these offerings. While we wait on final regulatory approvals, we have successfully awarded major equipment contracts for the compressor facility. In the fourth quarter, we will place major contracts for the supply of steel pipe. Ordering these long lead materials is prudent to preserve our in-service date and avoid cost escalations and supply chain delays.

[Bob Myles, CEO at Canadian Utilities]

As you can see on this slide, the Yellowhead Pipeline runs through Treaty 6 territory in Alberta, which is why we continue to pursue partnership arrangements with Indigenous partners, First Nations, and Métis. Early, meaningful, and continuous economic Indigenous participation in infrastructure projects on traditional land is essential for development, reconciliation, and long-term project success, including the Yellowhead Pipeline Project. An integral part of our non-regulated growth at Canadian Utilities is from our natural gas storage operations. We've had a strong year in natural gas storage, with increases in seasonal spreads driving strong customer demand for our facilities. We have successfully optimized our storage facilities by contracting through staggered contract maturities over the coming years. The plans I have previously discussed to expand our existing storage capacity from 117 petajoules today to 130 petajoules in late 2026 positions us for continued growth in financial performance in the years to come.

[Bob Myles, CEO at Canadian Utilities]

As we look at the future of storage and the broader market trends, a number of fundamentals are driving the demands for gas storage. Storage capacity growth across North America has slowed to less than 1% annually since 2016, while gas demand across North America continues to increase, driven by industrial demand, LNG demand, and new power generation accelerated by the build-out of data centers. As a leader in natural gas storage, we have the technology, the infrastructure, customer base, and experience to execute and build out additional storage capacity. Beyond the brownfield expansion that we have already identified, we continue to explore strategic opportunities for additional growth and storage capacity, both within Alberta and the broader North American market.

[Bob Myles, CEO at Canadian Utilities]

Similar to the opportunities ahead of us in Alberta, our ATCO Australia businesses, which is a provider of regulated natural gas distribution services in Western Australia and a developer and owner of gas-fired generation, are also well positioned, given Australia's evolving energy landscape. The developing regulations, government emissions reduction targets, and associated investment incentives present ATCO Australia with opportunities which the business is well positioned to pursue. Our gas utility business in Australia has delivered a strong 2025, and we expect this growth to continue into the years ahead as the Australian government remains focused on enabling the development of new infrastructure to meet increasing population growth. In response to this, we continue to focus on our new customer connections. Under our new access arrangement, AA6, our five-year plan sees us growing by approximately 80,000 new connections as customer sentiment towards gas continues to be positive in Western Australia.

[Bob Myles, CEO at Canadian Utilities]

This amounts to a 27% increase in expected customers compared to our previous access arrangement. For the five-year AA6 period, we're operating under a higher return on equity of 8.23%, driving consistent earnings for Canadian Utilities. Our second pillar, operational excellence, is anchored on safety, reliability, and operational outperformance. Safety is a key element linked to our long-term growth. By continuing to foster a strong safety culture, we ensure that operational efficiency and reliability are achieved without compromise. Safety across Canadian Utilities requires collaboration and a continued focus on our commitments. We must learn from incidents, promote safety initiatives, and champion workplace safety across the business. From an outperformance perspective, our utilities are known for their ability to drive operational efficiencies.

[Bob Myles, CEO at Canadian Utilities]

In 2024, our Australia Utility delivered over 550 basis points of outperformance above the regulated ROE, while our utilities in Canada drove almost 100 basis points of outperformance above the regulated ROE. As we move ahead, we will share our learnings across all businesses at Canadian Utilities, with a focus on driving further efficiencies across IT, supply chain, and administrative costs. I look forward to sharing further updates on this over the upcoming year. Our third pillar is financial leadership. With that, I'll pass the call to Katie to discuss this in further detail.

[Katie Patrick, EVP and Chief Financial and Investment Officer at Canadian Utilities]

Thanks, Bob. Good morning, everyone. Can I say what a great quarter we had? I'll start with our external funding. I want to provide an update on our successful financing we executed in the third quarter.

[Katie Patrick, EVP and Chief Financial and Investment Officer at Canadian Utilities]

On September 8th, Canadian Utilities Limited announced a CAD 750 million transaction of hybrid notes at a fixed rate of 5.45%. On September 11th, CU Inc announced a CAD 370 million transaction of debentures at a rate of 4.787%. I am proud to say that these offerings had significant interest from the investment community and approximately were three times oversubscribed across a strong pool of buyers. This confirms that there is sufficient investor demand to satisfy the funding requirements for the total investment in Yellowhead, which will be funded according to the regulated capital structure of 63% regulated debt and 37% regulated equity. We continue to pursue partnership arrangements with Indigenous partners that may contribute up to 30%.

[Katie Patrick, EVP and Chief Financial and Investment Officer at Canadian Utilities]

The remaining investment of approximately CAD 750 million will be funded through Canadian Utilities, with proceeds coming from diverse capital sources, including the CAD 500 million from the September 2025 fixed-to-fixed-rate subordinated notes, cash from operations, and other future potential issuance of hybrids or preferred shares. I look forward to updating you very shortly on this. As with all our capital decisions, we will review all options and choose what is in the best interest of shareholder value creation. Looking at our third-quarter performance for Canadian Utilities as a whole, we delivered positive earnings growth year over year. We achieved adjusted earnings of CAD 108 million, or CAD 0.40 per share, up from CAD 102 million for the same period in 2024. This was despite headwinds, including a reduction in the approved ROE for our Alberta Utilities and the conclusion of the efficiency carryover mechanism, or ECM.

[Katie Patrick, EVP and Chief Financial and Investment Officer at Canadian Utilities]

Our strong performance was driven by growth across all of our core businesses. ATCO Energy Systems delivered adjusted earnings of CAD 98 million in the quarter, CAD 4 million higher year-over-year, despite CAD 6 million of headwinds from the reset in our approved ROE and the conclusion of the ECM for our distribution utilities. We still delivered growth within Energy Systems. While ATCO Energy Systems has seen an increase to earnings year-over-year, we expect to face headwinds in the upcoming quarter as we will not have the same tax efficiencies that we achieved in Q4 2024. ATCO Power delivered adjusted earnings of CAD 16 million, up CAD 2 million year over year. In the Storage and Industrial Water segment, we continue to deliver growing earnings. As Bob mentioned earlier on the call, we plan to grow the storage business and capitalize on brownfield expansion opportunities.

[Katie Patrick, EVP and Chief Financial and Investment Officer at Canadian Utilities]

In electricity generation, adjusted earnings were up for the quarter, driven by higher compensation related to turbine availability guarantees at our 40 m Wind Facility and higher generation at the Veracruz Hydro Facility in Mexico. ATCO Australia delivered adjusted earnings of CAD 27 million during the quarter. This is CAD 12 million, or 80% higher than the same period last year. As Bob noted earlier, we continue to see momentum within our ATCO Gas Australia business, with earnings growth driven by higher rates and outperformance. This accounted for the majority of the improvement. At ATCO Power Australia, higher earnings were primarily due to the settlement of the South Australian Hydrogen Jobs Plan project. From a cash flow perspective, our cash from operating activities increased 12% compared to the same period last year.

[Katie Patrick, EVP and Chief Financial and Investment Officer at Canadian Utilities]

The cash we generate will be used in combination with the external funding I previously discussed to fund our enhanced capital program that will generate future earnings growth. Overall, we remain in a strong financial position as we round out the last quarter of 2025 and head into 2026. We continue to remain focused on finding efficiencies across the organization, including supply chain improvements, repatriating some IT operations internally, and consolidating senior levels of leadership, all while executing on our strategy to generate long-term value for all stakeholders, including our shareholders. I will now turn the call back to Bob for closing remarks.

[Bob Myles, CEO at Canadian Utilities]

Thanks, Katie. It's evident from this quarter that we've seen strong momentum across our businesses when we work together as one organization. To reiterate, our three pillars guiding our future include growth and prosperity, operational excellence, and financial leadership. It's an exciting time at Canadian Utilities.

[Bob Myles, CEO at Canadian Utilities]

The environments in which we operate continue to have positive tailwinds, including Alberta, where we are positioned to benefit from the province's focus on natural resources and economic growth. Our unique position as an operator of utilities, storage, and generation assets positions us to capitalize on the opportunities ahead of us and to be a key provider for all of our current and future customers. I look forward to leading us through this period of growth and will share our progress on our initiatives throughout 2026. That concludes our prepared remarks. I'll turn the call back to Colin for our question period.

[Colin Jackson, SVP of Financial Operations at Canadian Utilities]

Thank you, Bob and Katie. In the interest of time, we ask you to limit yourself to two questions. If you have additional questions, you are welcome to rejoin the queue. I will now turn it back to the conference coordinator for questions. Thank you.

[Operator]

To join the question queue, you may press star then one on your telephone keypad. You will hear a tone acknowledging your request. If you're using a speakerphone, please pick up your handset before pressing any keys. To withdraw your question, please press star then two. The first question comes from Rob Hope with Scotiabank. Please go ahead.

[Rob Hope, Managing Director of Equity Research at Scotiabank]

Morning, everyone. Hoping we can dive a little bit deeper into ATCO Gas Australia, or even the Australian business in aggregate. Year to date, you're up 42%. And the ATCO Gas under AA6 has been quite strong. So can you maybe help us understand kind of the key drivers of the strong growth with the outlook for Q4 and whether or not you would get back to a more normal kind of growth rate in 2026 and 2027?

[Katie Patrick, EVP and Chief Financial and Investment Officer at Canadian Utilities]

Sure. Hi, Rob. It's Katie. We're really happy with the AA6 parameters that were set out. You can see a lot of our strong earnings growth there. That being said, there were some one-time items that we had this year that we would not repeat next year, including the settlement on the South Australian Hydrogen Jobs Plan, as well as some cleanup of a previous project that we were working on, Central West Pumped Hydro. All that said, we do expect the continued strong growth that we had in the outperformance that you can see specific to ATCO Gas Australia. Those two one-time items that I'm talking about mostly show up in the ATCO Power part of the segment. I think we continue to have headwinds behind us there. We also do benefit from the inflation indexing, and we're watching that closely.

[Katie Patrick, EVP and Chief Financial and Investment Officer at Canadian Utilities]

I think that could help in the future a little bit as well, going forward on some of our earnings there in Australia.

[Bob Myles, CEO at Canadian Utilities]

Rob, if I could just add, I also think there are some great opportunities to look for efficiencies across our operations in Australia as we align across Canadian Utilities. I do think there's some great potential for Australia. All right. Appreciate that. Maybe more broadly looking at the electric transmission opportunities in Alberta, you have a potential for a significant increase in load in the province. However, the system operator is trying to minimize transmission investment. How does that kind of balance for the growth outlook for that business? Yeah. Rob, I really enjoy talking about that topic because we do think there's some great opportunities for electric transmission build in the province.

[Bob Myles, CEO at Canadian Utilities]

We do have to consider that as we look at affordability across this province as it impacts the consumer. In the capital forecast that we have been giving, we do not have capital in there for things like interties. We do think there are some great opportunities with interties. The projects that are in our service territory, we think we are well positioned to capitalize on those. Much of the growth is actually in our service territory. We do see there is some great potential there.

[Rob Hope, Managing Director of Equity Research at Scotiabank]

All right. Thank you.

[Operator]

The next question comes from Maurice Choy with RBC Capital Markets. Please go ahead.

[Maurice Choy, Utilities Research Analyst at RBC Capital Markets]

Thank you. Good morning, everyone. I just want to come back to slide 17 about the funding of the Yellowhead Pipeline. Can I just ask how advanced you are in terms of securing the 30% investment with Indigenous partners?

[Maurice Choy, Utilities Research Analyst at RBC Capital Markets]

If you could help break down that CAD 261 million of remaining funding a little bit more, what drivers are there to determine how much from cash from operations and how much from, I suppose, equity raises?

[Bob Myles, CEO at Canadian Utilities]

Maurice, thanks. I'll comment on the Indigenous kind of status and then let Katie comment on the rest of your question. I personally have had a lot of conversations with the Indigenous communities. I'm very optimistic that we will have that in place. It takes a little bit of time, but we've had really good conversations. We, as an organization, are very committed to making that happen. I know the conversations I've had with those Indigenous communities, we're also getting a lot of support from their side as well. I'm pretty confident in that.

[Katie Patrick, EVP and Chief Financial and Investment Officer at Canadian Utilities]

Maurice, to your second question related to the CAD 261 million, I would just say stay tuned. Just to be quite clear, we do not anticipate having to access the public equity markets for that amount of money. I think there is a depth in other capital areas, in some of the hybrids, preferred in some of those markets, to be able to fulfill that need shortly.

[Maurice Choy, Utilities Research Analyst at RBC Capital Markets]

Understood. That is great color. If we could just look into your discussion about, I guess, hydrogen. Not a whole lot of mention here, but I suppose if you look at the Canadian budget and you look at the major projects office, how do you feel about your project? Were there any takeaways from the budget or even from the initial list of comments from the NPO that you think would be positive takeaways to facilitate your AH3 ambitions?

[Bob Myles, CEO at Canadian Utilities]

Maurice, we've spent a lot of time, as you know, working with the federal government on our project that we're pursuing, ammonia by rail based on hydrogen development. There are some encouraging things that are in the budget, but we do not have a lot of capital put in our plan for the hydrogen project because we just do not have the full confidence that that is going to develop. We're continuing to do some work on it, but we need to see more definitive signs from the federal government that they'll support the project. Specifically, we need to see more certainty across Canada for the project. We're still having conversations, but it's definitely not one of our key opportunities right now.

[Maurice Choy, Utilities Research Analyst at RBC Capital Markets]

I understand. Thank you very much.

[Operator]

The next question comes from John Miller with TD Cowen. Please go ahead.

[John Miller, Managing Director and Energy Transition Policy Analyst at TD Cowen]

Hi. Thanks for taking my question. Thanks for that Yellowhead financing slide. That really helps lay things out. I guess on the non-regulated side, beyond the storage opportunity that you discussed earlier, where do you feel like you have the best line of sight or best potential on possible regulated investments over the midterm? Excuse me. Possible investments over the midterm outside of the regulated platform.

[Bob Myles, CEO at Canadian Utilities]

John, again, Bob here. First of all, I do not want to dismiss the gas storage because I think there are such great opportunities in gas storage. In addition to that, we do see some opportunities in generation, but primarily in gas-fired generation, not in really going out and building a lot more renewables. We do think there are pockets of electric storage, in other words, batteries that we can pursue. When I say gas-fired generation, I am saying both in Alberta and in Australia.

[Bob Myles, CEO at Canadian Utilities]

We think there's opportunities there in the near term.

[John Miller, Managing Director and Energy Transition Policy Analyst at TD Cowen]

Okay. Thanks for that. Just speaking about generation more broadly in the province of Alberta, can you maybe speak a little bit to your engagement on, and I know it's an ongoing process, but your engagement on the market design reforms there, and also on the transmission side, what you're hoping to see? Sorry, I should say the transmission regulation side as it applies to generation and what you're hoping to see as an owner of generation in the province and as a potential investor in incremental generation in the province, be that gas fired or renewables down the road.

[Bob Myles, CEO at Canadian Utilities]

John, you're correct. There are two different things, the impact on generation versus the impact on electric transmission. As we said earlier, we think there's some great opportunities in the province for electric transmission.

[Bob Myles, CEO at Canadian Utilities]

On the generation side, it is being impacted and it will be impacted by the long-term plan with the restructured energy market, as we've discussed previously. We're also having a lot of conversations with the government as we speak around the zero congestion policy that was tied to the transmission regulation changes over the last couple of years. The conversations with the government are encouraging that they recognize the impacts that changing the zero congestion policy has on generation. We're continuing to work that. I am optimistic that we'll actually get something from the government to give us more confidence on where we're going with generation. As a province and as an investor, we do need to get more confidence in the province as to what's going to happen with the rules on certainty before much more generation is built in this province. Okay.

[John Miller, Managing Director and Energy Transition Policy Analyst at TD Cowen]

I'll get back in with you. Thank you very much for that color.

[Operator]

The next question comes from Ben Pham with BMO. Please go ahead.

[Ben Pham, Managing Director and Pipelines and Utilities Analyst at BMO]

Hi. Thanks. Good morning. I had a couple of questions on the gas storage commentary you had. Maybe to start off in Alberta, isn't it better to leave an open book into a rising contract price in Alberta, given what LNG export demand is playing out?

[Bob Myles, CEO at Canadian Utilities]

Are you saying, Ben, just keep it all merchant? I'm sorry. I'm trying to understand your question.

[Ben Pham, Managing Director and Pipelines and Utilities Analyst at BMO]

Yeah. I was wondering your philosophy around you've locked in contracts, is what you said, and extensions in a rate that's probably about $1 or so. And why not just wait a while, a year or two, and capitalize on potentially a rising movement in the storage rates?

[Ben Pham, Managing Director and Pipelines and Utilities Analyst at BMO]

I'm not saying keep it all merchant, but just think about your philosophy between weighing those two differences.

[Bob Myles, CEO at Canadian Utilities]

Yeah. Ben, I'm a huge believer in a balanced approach. If you look at our gas storage, we have a balance of contracting out part of our storage to customers so they have access to that storage based upon what they want to do. We also do a lot of seasonal deals with our customers, which is a different type of service. The third service is doing a lot of day-to-day service, which is probably more what you're talking about, looking at more of that merchant market. We actually do some of that, but we do like to lock in our deals. I think we've been very successful on that.

[Bob Myles, CEO at Canadian Utilities]

I do feel like we need to have a balanced approach, not all of just one scenario or the other.

[Ben Pham, Managing Director and Pipelines and Utilities Analyst at BMO]

Okay. Got it. Thanks for that. You also mentioned looking at other regions, maybe acquisitions or developments. Is there a particular region that looks very interesting to you at this point in time? We've seen some announcements in the Gulf Coast today from another company.

[Bob Myles, CEO at Canadian Utilities]

I'm assuming you're still talking about gas storage, Ben?

[Ben Pham, Managing Director and Pipelines and Utilities Analyst at BMO]

Yes, that's right.

[Bob Myles, CEO at Canadian Utilities]

I actually believe across North America, there are opportunities for gas storage. We are evaluating opportunities, again, across the North America gas storage environment. I would agree with you on that.

[Ben Pham, Managing Director and Pipelines and Utilities Analyst at BMO]

Okay. It's a pretty broad lookout right now.

[Bob Myles, CEO at Canadian Utilities]

Yes. Yes.

[Ben Pham, Managing Director and Pipelines and Utilities Analyst at BMO]

Okay. Maybe lastly, I just wanted to check on Yellowhead with the CapEx. You had a couple of details there.

[Ben Pham, Managing Director and Pipelines and Utilities Analyst at BMO]

A couple of years ago, you had an initial figure. You updated it on scope. What stage are you at right now? I do not know if he is using engineering hat on it in terms of really your confidence in that CapEx number or just looking at past projects where they have hit the needs and then you are going to the next phase.

[Bob Myles, CEO at Canadian Utilities]

Yeah. We keep updating our capital forecast on that. We are down to a class three kind of plus or minus 20% estimate currently. As of today, we are looking at CAD 2.9 billion is kind of what we have informed the Alberta Utilities Commission as to the cost of that. As we progress with long lead materials, we can lock in more of the supply chain side of it. In 2026, we will be going to the market for contracting pricing.

[Bob Myles, CEO at Canadian Utilities]

We'll get better confidence as time moves on. Obviously, the risk with building that pipeline, in addition to supply chain and contractors, is always weather. That's something that we have to do the best we can to manage.

[Ben Pham, Managing Director and Pipelines and Utilities Analyst at BMO]

Okay. Got it. Thank you very much.

[Operator]

Once again, if you have a question, please press star, then one. Since there are no more questions, this concludes the question and answer session. I would like to turn the conference back over to Mr. Colin Jackson for any closing remarks. Please go ahead.

[Colin Jackson, SVP of Financial Operations at Canadian Utilities]

Thank you. And thank you all for participating today. We appreciate your interest in Canadian Utilities, and we look forward to speaking with you again soon.

[Operator]

This brings to a close today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.

Participants

Executives

• Bob Myles, CEO
• Colin Jackson, SVP of Financial Operations
• Katie Patrick, EVP and Chief Financial and Investment Officer

Analysts

• Maurice Choy, Utilities Research Analyst at RBC Capital Markets
• Rob Hope, Managing Director of Equity Research at Scotiabank
• John Miller, Managing Director and Energy Transition Policy Analyst at TD Cowen
• Ben Pham, Managing Director and Pipelines and Utilities Analyst at BMO