Algonquin Power & Utilities Q2 2026 Earnings Report

Algonquin Power & Utilities EPS Results

• Actual EPS: $0.04
• Consensus EPS: $0.05
• Beat/Miss: Missed by -$0.01
• One Year Ago EPS: $0.04

Algonquin Power & Utilities Revenue Results

• Actual Revenue: $582.99 million
• Expected Revenue: $582.99 million
• Beat/Miss: Met Expectations
• YoY Revenue Growth: N/A

Algonquin Power & Utilities Announcement Details

• Quarter: Q2 2026
• Date: 8/7/2026
• Time: Before Market Opens
• Conference Call Date: Friday, August 7, 2026
• Conference Call Time: 8:30AM ET

Algonquin Power & Utilities (NYSE:AQN) Corp (NYSE: AQN) is a diversified generation, transmission and distribution utility company headquartered in Oakville, Ontario. Established in 1988, the firm operates through two primary business segments: Regulated Utilities and Renewable Energy. Its Regulated Utilities segment comprises electric, natural gas and water distribution networks serving residential, commercial and industrial customers across North America, while its Renewable Energy portfolio includes hydroelectric, solar, wind and thermal generation facilities.

The company’s renewable energy assets span multiple jurisdictions in Canada and the United States, reflecting its strategy to expand clean power capacity in regions with supportive regulatory frameworks. Algonquin’s water and wastewater utilities operate under long-term franchise agreements, providing municipal and industrial customers with essential water treatment and distribution services. Through strategic acquisitions and organic development, the firm has grown both its net-metered distributed generation and utility networks.

Algonquin is led by President and Chief Executive Officer Ian Robertson, whose tenure has focused on disciplined capital allocation and sustainable growth. The company’s corporate governance framework emphasizes environmental stewardship and community engagement, aligning with global trends toward decarbonization. Algonquin Power & Utilities trades on both the New York Stock Exchange and the Toronto Stock Exchange, underscoring its cross-border presence and commitment to delivering reliable utility services and renewable energy solutions.

Algonquin Power & Utilities Q2 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Regulatory progress continued: Missouri approved approximately $97 million in annualized revenue adjustments, while Kansas approved an $8.8 million settlement and California’s WEMA proceeding authorized $58.1 million of wildfire-cost recovery. Several additional rate cases were filed, although some key decisions remain pending.
• Neutral Sentiment: 2026 earnings guidance was maintained. Second-quarter adjusted EPS was CAD 0.004, flat year over year, while year-to-date adjusted EPS declined to CAD 0.17 from CAD 0.19; management said results would have been slightly higher absent non-recurring favorable items in 2025.
• Positive Sentiment: U.S. re-domiciliation is targeted for completion after a shareholder vote in the first half of 2027. Management expects the move to reduce cross-border tax costs, improve capital-market access, and potentially support U.S. index inclusion, with estimated recurring tax benefits of roughly CAD 0.02–0.03 per share once fully effective. One-time tax and transaction costs remain uncertain.
• Neutral Sentiment: Algonquin said it does not expect to issue equity through 2027 and maintained its investment-grade ratings. However, trailing FFO-to-debt fell to 11.9% from 12.9%, leaving a narrower cushion above S&P’s 11% downgrade threshold.
• Positive Sentiment: The company received approval for CWIP treatment for a planned 250-megawatt Missouri gas-generation project and is preparing a large-load tariff that could facilitate future data-center or other industrial demand. Management described Missouri as an area of interest but disclosed no specific customer pipeline or load commitments.

Presentation

[Operator]

Welcome to Algonquin Power & Utilities Corporation's second quarter 2026 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star one on your telephone keypad. I will now turn the conference over to Mr. Brian Chin, Vice President of Investor Relations. Please go ahead.

[Brian Chin, VP of Investor Relations at Algonquin Power & Utilities Corporation]

Thank you, operator. Good morning, everyone. We appreciate you attending our second quarter 2026 earnings conference call. Joining me on the call today will be Rod West, Chief Executive Officer, and Rob Stefani, Chief Financial Officer, who will share prepared remarks. Following their remarks, they will be available to answer your questions along with other members of the management team during a Q&A session. To accompany today's earnings call, we have a supplemental webcast presentation available on our website, algonquinpower.com. Our financial statements and management discussion and analysis are also available on the website, as well as on SEDAR+ and EDGAR. We would like to remind you that our discussion during the call will include certain forward-looking information and non-GAAP measures. Actual results could differ materially from any forecast or projection contained in such forward-looking information.

[Brian Chin, VP of Investor Relations at Algonquin Power & Utilities Corporation]

Additionally, all net earnings information to be discussed today is for continuing operations and is attributable to the common shareholders of Algonquin. Certain material factors and assumptions were applied in making the forecasts and projections reflected in such forward-looking information. Please note and review the related disclaimers located on slide two of our earnings call presentation at the investor relations section of our website at algonquinpower.com. Please also refer to our most recent MD&A filed on SEDAR+ and EDGAR and available on our website for additional important information on these items. On the call this morning, Rod will provide a business update, and Rob will follow with the details of our financial results. We'll open the line for questions.

[Brian Chin, VP of Investor Relations at Algonquin Power & Utilities Corporation]

We kindly ask that you restrict your questions to two, then follow up with us after the call if you have any additional questions to allow others the opportunity to participate. With that, I'll turn things over to Rod.

[Rod West, CEO at Algonquin Power & Utilities Corporation]

Thanks, Brian. Good morning, everyone. Thank you for joining us. Our second quarter 2026 has been another step forward for Algonquin on our path to premier. As I've stated consistently since I've arrived, a premier pure-play regulated utility earns its standing through consistent execution, a constructive regulatory compact, and disciplined financial and operational management. These attributes aim to position the company to deliver long-term sustainable value to shareholders, customers, the communities we serve, and our employees. As we will discuss in a moment, this quarter's results reflect all of those, build on the measurable progress we've made since last year, and keep us on track to meet our adjusted net earnings per share forecast for 2026 and 2027. In short, we are once again advancing toward our goal of becoming a premier pure-play regulated utility.

[Rod West, CEO at Algonquin Power & Utilities Corporation]

Taking measure of our strategic priorities for the year, I'm pleased with the progress we've made in the second quarter. On the regulatory side, we're pleased to achieve progress on, or conclusions to, several of our rate cases. The Missouri Public Service Commission determined on July 15 that we had satisfied customer service and billing performance metrics required for implementation of the previously approved Empire Electric Missouri settlement. I want to recognize the extensive and professional effort that Commission staff and our employees displayed to reach this outcome, and for the tremendous patience exhibited by our customers and shareholders as we underwent this process.

[Rod West, CEO at Algonquin Power & Utilities Corporation]

Additionally, we received a proposed decision for our California WEMA proceeding, an order approving a settlement for Empire Electric Kansas, a final order for our California water utilities, and new rate case filings at New York Water, Empire Electric Arkansas, EnergyNorth Gas, and two water utilities in Arizona. We continue to await an order on our Arizona Litchfield Park Water and Sewer rate case and continue to work towards completing new filings at Granite State Electric, Empire Electric Oklahoma, and a Missouri large load tariff before year's end. Moreover, we filed a case with FERC requesting conversion for our electric transmission projects to a projected test year versus a historic test year, including CWIP into rate base under a transmission formula rate. This rate request, though small, could set the foundation for regulatory treatment of our SPP transmission line project over the next few years. One additional update.

[Rod West, CEO at Algonquin Power & Utilities Corporation]

In the second quarter, we captured approval from the Department of Energy for the reimbursement of $5 million of expenses related to an AMI grant in California that was reinstated earlier this year. In summary, I'm pleased to see in the second quarter that we've made continued progress on this year's priority list. I do want to take a moment on slide six to address our announcement regarding the intended re-domicile of Algonquin to the United States. At a high level, we see this as an important strategic step for the company, and one that we expect will create meaningful benefits for shareholders over time. Today, over 80% of our operations are located in the United States, with less than 5% in Canada. Redomiciling to the U.S. would better align our corporate structure with our assets and where we expect to grow.

[Rod West, CEO at Algonquin Power & Utilities Corporation]

As we've discussed before, it would also support our efforts to reduce cross-border tax inefficiencies. We've described them as tax friction, and over time, we believe it would strengthen our financial profile, broaden our access to capital, and create a path to inclusion in certain U.S. equity indices and funds. From a structural standpoint, we expect to complete the redomicile to Delaware through a court-approved plan of arrangement under the Canada Business Corporations Act. We expect to establish our headquarters in Chicago, where our senior executive leadership team would be based, while maintaining our significant presence in Oakville, Ontario. I want to emphasize that this does not change how we operate our utilities, serve our customers, or satisfy our regulatory obligations.

[Rod West, CEO at Algonquin Power & Utilities Corporation]

In terms of timing, we expect to seek shareholder approval in the first half of 2027, to complete the redomicile following the receipt of the required shareholder and regulatory approvals and satisfaction of customary conditions. Overall, we believe this positions us to more effectively execute on our strategic priorities and enhance long-term shareholder value. Turning to slides seven and eight, focusing a bit more on our regulatory strategy, we continue to prioritize earlier dialogue with stakeholders to identify areas of common ground, as well as advancing more pragmatic filings. We expect this to deliver fair regulatory outcomes that allow us the opportunity to capture both recovery of reasonable costs and returns on our investments for the benefit of our customers. I'm pleased to note that in aggregate, this is playing out in a balanced manner.

[Rod West, CEO at Algonquin Power & Utilities Corporation]

In Missouri, the commission's July 15th order approved implementation of $97 million in annualized revenue adjustments effective on August 3rd. We continue to make regulatory progress in Kansas, where the Corporation Commission approved our settlement agreement for an $8.8 million revenue adjustment and a provision for 50% of wind revenues for year one. The settlement included a black box stipulation for authorized equity ratios and ROE. Out west in California, the California Public Utilities Commission issued a constructive proposed decision in our WEMA proceeding, which authorizes a $58.1 million recovery in wildfire costs, or approximately 75% of our requested recovery. Consistent with standard practices of how other California utility peers have accounted for WEMA and similar proceeding outcomes, we excluded the impact of the final outcome from our adjusted net earnings per share results.

[Rod West, CEO at Algonquin Power & Utilities Corporation]

Also in California, we received an order approving an alternate proposed decision for our Apple Valley and Park Water utility cases. For those utilities, the commission approved a combined revenue reduction of $2.7 million and a retroactive true-up to July 2025, totaling $3.1 million for that revenue reduction. In Arizona, our settlement agreement and a final decision regarding formula rate plans remains pending at Litchfield Park Water and Sewer. The ALJ issued a recommended opinion and order, and we've asked the commission for a final decision this month. For new rate cases, New York Water filed its rate case requesting a $38.1 million revenue adjustment based on a 10% return on equity and a 48% equity ratio for a proposed rate year starting May of next year.

[Rod West, CEO at Algonquin Power & Utilities Corporation]

Empire Electric Arkansas filed its rate case requesting $8.4 million based on a 10% ROE and a 53.4% cap structure with the proposed implementation date of spring of next year. EnergyNorth also recently filed its rate case with a $35.8 million rate request based on a 10.25% ROE with a 52% cap structure, and we expect to have permanent rates implemented in the summer of next year. Turning ahead to slide nine, I'll add a few comments regarding our evolving regulatory and legislative landscape. On the operations front on June 17th, we received our Certificate of Convenience and Necessity, or the CCN, from the Missouri Public Service Commission. This milestone achievement is for one of our most significant capital projects, where we're deploying 250 MW of new gas-fired generation to meet customer demand and Southwest Power Pool requirements.

[Rod West, CEO at Algonquin Power & Utilities Corporation]

This will be the first gas-fired generation project for us under Missouri Senate Bill 4, where we will take advantage of the construction work in progress, or CWIP, regulatory recovery mechanism. In aggregate, the point of these updates, and I recognize that there are many, we continue to make overall progress on rate cases across multiple jurisdictions in a more deliberate and intentional manner. With that, I'll turn it over to Rob to walk through our financial update for the quarter.

[Rob Stefani, CFO at Algonquin Power & Utilities Corporation]

Thanks, Rod. Good morning, everyone. Let's start with slide 11, where you can see our reported second quarter GAAP net earnings of $4.9 million, compared to $14.8 million for the same period in 2025. On an adjusted basis for the period, net earnings were $29.2 million versus $33.6 million for the second quarter of 2025. Overall, the second quarter decline in adjusted net earnings from 2025 to 2026 reflects increased rates at several of our utilities, offset by higher financing costs, slightly higher operating expenses, and several non-recurring favorable items from the second quarter of 2025. In the second quarter, we also reported a $17.2 million write-down of a regulatory asset related to the previously discussed proposed decision in our California WEMA proceeding.

[Rob Stefani, CFO at Algonquin Power & Utilities Corporation]

The impact of the proposed decision, which, as Rod previously mentioned, authorizes 75% recovery of recorded costs stemming from the 2020 Mountain View fire, has been excluded from our adjusted net earnings. Moving to year-to-date results, we reported GAAP net earnings of $88 million compared to $107.6 million for the same period in 2025. Year-to-date adjusted net earnings were $128.8 million versus $142.6 million in the same period the prior year. Taking into account $25.7 million in non-recurring favorable items from 2025, results were higher year-over-year, as I will explain in more detail in a moment. On slide 12, I'll discuss the drivers behind our second quarter 2026 adjusted net earnings per share walk. Second quarter adjusted net EPS to common was $0.04 per share, which was flat year-over-year.

[Rob Stefani, CFO at Algonquin Power & Utilities Corporation]

Second quarter year-over-year results were driven by higher CalPeco approved rates of $12.1 million and were partially offset by higher wildfire insurance expenses of $5.7 million. Net revenues outside of CalPeco rose at our water utilities in New York, Arizona, and Chile, as well as customer growth in Arizona and favorable weather year-over-year at Empire, totaling $7.5 million. Net revenues were partially offset by a rate reduction at our Apple Valley and Park Water utilities in California, inclusive of an unfavorable retroactive adjustment to July 2025 of $3.1 million. Interest expense grew by $9.3 million related to a new debt issuance at Liberty Utilities Company and higher commercial paper usage, partially offset by higher investment income of $3.1 million.

[Rob Stefani, CFO at Algonquin Power & Utilities Corporation]

Operating expenses were slightly higher due to an additional $3.3 million of higher gas safety and excellence costs. Other gains and losses were slightly unfavorable due to a gain on an asset sale in 2025. On slide 13, we provide our year-to-date 2026 adjusted net EPS walk. Year-to-date adjusted net EPS was $0.17 per share compared to $0.19 per share in the first half of 2025. Although a decline year-over-year, I'd like to highlight that 2025 experienced $25.7 million in favorable items that did not repeat in 2026, including a tax basis step-up recovery of $15.9 million for Hydro, as an example, plus pension adjustments at Empire and depreciation deferrals and rate proceedings in New Hampshire and Arizona. Absent these items, year-over-year net EPS was $0.01 favorable.

[Rob Stefani, CFO at Algonquin Power & Utilities Corporation]

Similar to Q2 results, year-to-date year-over-year benefited from approved rates at CalPeco, net of wildfire insurance expenses of $38.7 million. New rates at New York, Arizona, Chile, and Peach State all contributed to improved net revenues year-over-year of $11 million, less $3.1 million related to the Apple Valley and Park Water retroactive adjustment. Operating expenses increased due to gas safety and excellence costs of $6.3 million and higher labor maintenance and property tax expenses of $14.1 million. We experienced unfavorable weather of $9.9 million year-to-date versus the prior year. Lastly, interest expense was unfavorable, as previously discussed, due to a new financing at Liberty Utilities Company, net of investment income. Briefly touching on slide 14, our balance sheet continues to be in a position of strength. We don't expect to issue equity through 2027.

[Rob Stefani, CFO at Algonquin Power & Utilities Corporation]

During the second quarter, we raised approximately $1.15 billion at Liberty Utilities Company through a private placement offering of senior unsecured notes and used the proceeds from the offering to pay down $1.15 billion aggregate principal amount of notes at Algonquin Power & Utilities Corp. that matured on June 15th. At Algonquin, we continue to be rated BBB by S&P and Fitch, and at Liberty Utilities Company, continue to be rated Baa2 by Moody's and BBB at Fitch and S&P. As Rod indicated at the top of his remarks, our adjusted net EPS forecast is unchanged. We remain on track. With that, I'll turn the call back over to Rod for his closing remarks.

[Rod West, CEO at Algonquin Power & Utilities Corporation]

Thanks, Rob. Before we open the line for questions, I want to take a step back and leave you with a few thoughts on where we are and where we're headed. Halfway through the year, we've made substantial progress, as we expected, but we continue to have work to do. We've concluded rate cases or resettlement agreements that reduce uncertainty for Empire Electric Missouri, Empire Electric Kansas, and our California water utilities. We're pending approvals of key decisions and settlements for WEMA and Litchfield Park. We continue to work diligently on our rate cases at New York Water, Empire, Arkansas, Energy North, and in Arizona. On the operations front, we've continued to improve our customer performance metrics and strengthen our standing with our regulators and customers while obtaining approval for CWIP treatment for our eras generation project in Missouri.

[Rod West, CEO at Algonquin Power & Utilities Corporation]

In short, I'm pleased with our trajectory in the second quarter, extending our momentum from the first quarter and from our efforts of last year. I couldn't be more excited for what's next. I hope you will join us on our path to premier. Thanks for your time this morning. With that, I'll turn it back to the operator for questions.

[Operator]

Thank you. If you have a question, please press star one on your telephone keypad. To withdraw your question, simply press star one again. One moment please for the first question. The first question comes from the line of Mark Jarvi from CIBC Capital Markets. Your line is now open. You may now begin.

[Mark Jarvi, Analyst at CIBC Capital Markets]

Thanks, good morning, everyone. Thanks for the update on the U.S. re-domiciling. Can you please walk us through what conversations you've had with the IRS and just overall expected tax implications, maybe effective tax rate, but also cash taxes if you do re-dom in the U.S.?

[Rod West, CEO at Algonquin Power & Utilities Corporation]

Rob, go ahead.

[Rob Stefani, CFO at Algonquin Power & Utilities Corporation]

We began discussions with the IRS earlier this year. We filed that private letter ruling. We'll expect a decision here in the back half of the year. As far as the tax implications, what the re-domicile helps accomplish is elimination of a couple of cash taxes that we pay. Number one is cash on the funds that we send up to Algonquin to pay the dividend from the utilities. We pay about a 5% tax on that. We pay, subject to continued board approval, $200 million of dividends about per year. That's 5% on the $200 million. The other tax that the re-domicile would eliminate was the BEAT tax. That tax is a tax on the cash funds that are sent up to Algonquin to service the debt at the holding company level.

[Rob Stefani, CFO at Algonquin Power & Utilities Corporation]

That's about a 10% tax rate on the funds that we send up to service that debt. As far as the effective tax rate, obviously that'll be determined by a number of factors, but those are two instances of savings that we would point to, that we would expect to realize through the re-domicile to the U.S.

[Mark Jarvi, Analyst at CIBC Capital Markets]

Rob, prior to your call, you talked about maybe clawing back some of the headwinds you announced earlier on the effective tax rate assumption. Do you still feel like that's possible to reverse some of those reductions?

[Rob Stefani, CFO at Algonquin Power & Utilities Corporation]

Yeah. The effective tax rate, it certainly has the BEAT tax and the dividend tax kind of embedded in there. We would expect that effective tax rate moving forward to be lower. Obviously, we are targeting approval to proceed in the first half of 2027. As you think about ramping up to that, you'd need to consider the timing there.

[Mark Jarvi, Analyst at CIBC Capital Markets]

Understood. Second question from me, just in terms of the filings now in New Hampshire, last time around, there were some issues with the data. Just your confidence level that you've resolved those issues going in. Do you feel very confident in terms of the materials you're supporting for that reapplication?

[Rod West, CEO at Algonquin Power & Utilities Corporation]

Well, actually, I got the signal that the improvements we've made in our systems give us far greater confidence that the data issues have been identified. Obviously, it's going to be ongoing in terms of our efforts to improve, but we've spent a fair amount of time and energy addressing our structural deficits and making the case to the regulators that we got the message that the customer outcomes actually matter. My confidence is high, and I think for us, the proof of concept has been the work that we've done to sort of restore the benefit of the doubt from our stakeholders in Missouri that we're making meaningful gains in that arena. We expect to make similar case in New Hampshire.

[Mark Jarvi, Analyst at CIBC Capital Markets]

Is there some dialogue along the way with staff to show them the improvements you've done before you submit the applications?

[Rod West, CEO at Algonquin Power & Utilities Corporation]

Always. It's not what you know, it's what you can prove. If you've had a rough experience, whether it's in California, Missouri, or in New Hampshire. Missouri is the show me state. New Hampshire is taking a similar stance, and I would if I was them. They want us to prove it, and we've put the work in to be able to do just that. We're looking forward to making the case, and it's been ongoing.

[Mark Jarvi, Analyst at CIBC Capital Markets]

Sounds good. Thanks for your time this morning.

[Rod West, CEO at Algonquin Power & Utilities Corporation]

Thanks.

[Operator]

The next question comes from the line of Baltej Sidhu from National Bank of Canada. Your line is now open. You may now begin.

[Baltej Sidhu, Analyst at National Bank of Canada]

Hey, good morning, everyone. Just a question on the re-domiciling and timing. Between now and the targeted shareholder vote in the first half of 2027, are there any key regulatory tax, court, or legal milestones we should be watching for that could influence the timing or ultimate economics of the re-domicile?

[Rob Stefani, CFO at Algonquin Power & Utilities Corporation]

As mentioned in the release, or as mentioned in my prior comment, we'll expect an outcome from the IRS, just the guidance there in the second half of the year here. That filing, we continue to have a dialogue there. We'll update you on timing, but would expect that here in the back half of the year. We also intend to pursue regulatory filings, you can expect to see those across several of our jurisdictions.

[Baltej Sidhu, Analyst at National Bank of Canada]

Great. Thanks, Rob. I know you touched on the dividend and the debt tax implications of flowing the capital through the border to Canada. Could you directionally frame, I know the revision in the MD&A was significant costs and taxes. Could you directionally frame the magnitude of what could be expected, in terms of those two factors?

[Rob Stefani, CFO at Algonquin Power & Utilities Corporation]

I think the expectation, if you do the math on the 5% on the run rate dividend assumption plus the BEAT tax on the current level of debt service, you would be in that kind of two to two and a half, maybe slightly higher sense of impact on a run rate basis. Again, for 2027, you need to think about the timing of our guidance on when we expect to seek shareholder approval, with that run rate impact being what we would expect on a recurring basis.

[Baltej Sidhu, Analyst at National Bank of Canada]

Great. Thank you. I'll exit the line.

[Operator]

The next question comes from the line of Rob Hope from Scotiabank. Your line is now open. You may now begin.

[Rob Hope, Analyst at Scotiabank]

Quick question on tax on the re-dom. Can we dive a little bit deeper into slide 20? You do comment that the re-domicile is expected to be a taxable event in Canada as well as a foreign investment in real property tax toll as well. Rather than the ongoing tax savings, can you speak to the potential one-time exit tax liability, both deferred and current that you could incur?

[Rob Stefani, CFO at Algonquin Power & Utilities Corporation]

Do you want to speak to the actual tariff itself? Do you feel like you want any kind of color on that, or you're just looking for magnitude?

[Rob Hope, Analyst at Scotiabank]

Both would be helpful.

[Rob Stefani, CFO at Algonquin Power & Utilities Corporation]

The way the FIRPTA tax is calculated is effectively, we go back and look at non-U.S. shareholders that held the shares in the prior 10 years prior to the re-domicile. We look at shareholders who were over 5% holders and the tariff is then based on a rate based on those shareholders who sold over that 10-year period that held a greater than 5% position. We've done that math. We're confirming methodology with the Internal Revenue Service, which is the purpose of the private letter ruling. We continue to have discussions with them. Obviously, we and our advisors have worked through those calculations and given the expected value creation opportunity of the tax savings relative to those one-time costs, we believe this is a beneficial move.

[Rob Hope, Analyst at Scotiabank]

Thank you. Do you have an estimate of the one-time cost?

[Rob Stefani, CFO at Algonquin Power & Utilities Corporation]

We have a range. We aren't disclosing that at this point in time, just given the fact that we are confirming that methodology. Again, relative to the range of outcomes, we believe that this is a value-accretive transaction and expect, relative to those one-time transaction costs, that the recurring benefit outweighs that one-time transaction cost.

[Rob Hope, Analyst at Scotiabank]

All right. Thank you. Maybe just going back to the regulatory approvals. Can you just confirm which states you think will need commission approval for the transaction? Do you have an expected timelines or past precedents you can help us with there?

[Rob Stefani, CFO at Algonquin Power & Utilities Corporation]

Okay. We're going to pursue regulatory filings in Arizona, California, Georgia, Iowa, Illinois, New York, and Texas, and then in New Brunswick. These are filings and we would expect the outcomes of the filings to occur and coincide with that timing that we had discussed earlier as far as when we would expect to take this for shareholder vote. Again, these are filings, and there'll be more there in the coming weeks.

[Rob Hope, Analyst at Scotiabank]

All right. Thank you.

[Rob Stefani, CFO at Algonquin Power & Utilities Corporation]

As you see them get filed.

[Operator]

Next question comes from the line of Michael Lonegan from Barclays. Your line is now open. You may now begin.

[Michael Lonegan, Analyst at Barclays]

Hi, good morning. Thanks for taking my questions. Your trailing 12-month FFO to debt was 12.9% as of the first quarter. It went to 11.9% this quarter, versus the downgrade threshold of 11%. You said you had still no equity expected through 2027. I was wondering if you could talk about where you expect to land this year through 2027 and what kind of cushion you're targeting versus your downgrade threshold in general.

[Rob Stefani, CFO at Algonquin Power & Utilities Corporation]

I think you have to also consider rate case timing and implementation. Obviously, we'll begin to get the Missouri rates in in August. We've gotten the California rates in, and those will continue to benefit from those. Then all of the rate implementation associated with some of the updates that Rod made. We expect on an FFO to debt basis to continue to be above our S&P downgrade threshold. We haven't put guidance out for FFO to debt in particular for beyond this year. We continue to expect to, on an S&P FFO to debt basis, to maintain above that threshold.

[Michael Lonegan, Analyst at Barclays]

Great, thank you. I was wondering if you could talk about the discussions you're having with data centers and large load in Missouri. I know you're planning on filing a large load tariff sometime this year. What is your pipeline there, and when could we potentially expect an announcement?

[Rod West, CEO at Algonquin Power & Utilities Corporation]

It's Rod, you know I very much appreciate the question. The only thing I can say, whether it was a data center or any other customer, one, we're planning to file our large load tariff in the coming weeks, if not days. The team constantly updates me on that. I would not and cannot disclose any conversation around any potential or existing pipeline as it relates to a specific customer, unless we were at a point in alignment with that customer to say something public about it. The only thing that I've been able to say publicly, and it's consistent, is that our service territory, and particularly in this instance, Missouri, is in the heat map of interest of the types of load that are consistent with data center interests.

[Rod West, CEO at Algonquin Power & Utilities Corporation]

The large load tariff is an enabling aspect of our ability to further any conversations we might have with potential customers. The moment that we're at a point where we could disclose any type of engagement with a specific customer, we won't hesitate to do that. I cannot get ahead of any process, whether it existed or didn't exist, just as a matter of course. I know that might be frustrating to hear, but there are reasons why we have to be deliberate. We will not disclose anything unless we're at the point where we're aligned. I do appreciate the question, though.

[Michael Lonegan, Analyst at Barclays]

Great, thanks for taking my question.

[Operator]

Again, if you would like to ask a question, please press star then the number one on your telephone keypad. The next question comes from the line of Eli Jossen from JPMorgan. Your line is now open. You may now begin.

[Eli Jossen, Analyst at JPMorgan]

Hey, good morning, everyone. Maybe just sticking with Missouri. I know that you guys have had a lot of activity in the state, you just talked about not being able to provide much clarity on the, or specifics on the large load tariff filing right now. Maybe just kind of the other filings for formula rates and CWIP incentives, any color there, just in terms of potential timeline or quantifying uplift at this time? I know it's an ongoing process, but just broader color would be great.

[Rob Stefani, CFO at Algonquin Power & Utilities Corporation]

Yeah. Definitely excited about a couple aspects. I think just the CWIP project in particular, that project being eligible for CWIP treatment, and helping kind of stem some of the regulatory lag that you would otherwise see in part. On a transmission filing, that will really apply mainly to the kind of future of transmission development in SPP. Obviously that's a large project for us that extends over the next several years. Moving for those assets to a future test year as well as getting CWIP treatment, as well as part of that filing was a cancellation or abandonment provision. All of those are beneficial. That future test period will also help eliminate some of the lag component for us on that future development work.

[Eli Jossen, Analyst at JPMorgan]

Got it. I know there's been a lot of questions on the REDOM, but if we think about the broader index inclusion benefits, you talked about a $0.02 impact. Maybe does that include potential, like how do you frame sort of the broader index inclusion upside, I guess, if you've done any math there? And maybe broadly on the $0.02 impact, from what you've already talked about, what would the timing look like, just in terms of actually flowing through EPS? Would that be kind of phased in through 2027 and 2028, or how would that look?

[Rob Stefani, CFO at Algonquin Power & Utilities Corporation]

Yeah. As far as the tax savings and the expected EPS impact of that kind of $0.02-$0.03. The 2027 impact would be determined based on when in the year we're able to achieve the approval. 2028, assuming that we've been approved, that would be what we would expect to be more run rate. We haven't extended the guidance for the EPS out there. As far as the separate issue of index inclusion, based on the work that we've done with our advisors, the expectation is there would be some positive fund flow associated with inclusion in at least one of the indexes in the U.S. I think one of your peers has also done some work around that. I think that's all we can say at this point.

[Eli Jossen, Analyst at JPMorgan]

All right. Appreciate the call.

[Operator]

The next question comes from the line of Ben Tam from BMO Capital. Your line is now open. You may now begin.

[Ben Tam, Analyst at BMO Capital]

Hi. Thanks. Good morning. You mentioned some of the tax benefits from the re-domicile pushing beyond your guidance. You haven't extended the guidance. I'm just curious, more specific to the guide you had, that three-year through 2027. Should we expect, how should we think about when you do extend your guidance? I'm presuming it's not going to be until you get through on the re-domicile first half. Can you confirm that? Then do you think three-year CAGR through end of decade is reasonable for you given the regulatory timeline, or is this maybe something less or even more than that?

[Rob Stefani, CFO at Algonquin Power & Utilities Corporation]

Yeah, I think we've talked a little bit about this. I think that moving forward when we do move to, and that's typically done at the 4Q results, end of year results call. We would look to be more consistent with our peers providing prompt year guidance and then the long-term growth rate. Wouldn't say right now how far out we'll go. I think your rationale is broadly consistent of a longer-term EPS growth rate would likely be subject to board approval of that guidance, that mechanic would put us on par with our peer group. As far as what we bake in-

[Ben Tam, Analyst at BMO Capital]

Okay. Thank you.

[Rob Stefani, CFO at Algonquin Power & Utilities Corporation]

Yeah, as far as what we bake into those projections, we'll address at that point in time.

[Ben Tam, Analyst at BMO Capital]

Okay. Could you also provide, just on the OpEx kind of things, you had a guidance around OpEx trending lower as a % of a growing revenue base. Could you perhaps update on progress on that, where you are right now? Have you surfaced the easy pickings? Has there been some challenges along the way on some of these areas, and how should we look at the trends this year, next year?

[Rob Stefani, CFO at Algonquin Power & Utilities Corporation]

We're continuing to target that mid thirties O&M to gross revenue. We continue to make progress on our cost savings efforts. I wouldn't get into specifics here, but that continues to progress.

[Ben Tam, Analyst at BMO Capital]

Okay. All right. Thank you very much.

[Rob Stefani, CFO at Algonquin Power & Utilities Corporation]

Thanks.

[Operator]

Thank you so much. The next question comes from the line of John Mould from TD Cowen. Your line is now open. You may now begin.

[John Mould, Analyst at TD Cowen]

Hi. Morning, everybody. I'd like to go back to the large load opportunity in Missouri. Not focusing on any specific customer discussions. More just about the ability in your system as it stands right now to handle incremental loads. I'm just wondering if you can give us a sense of the scale that might be available in your system right now. Like what kind of room you've got.

[Rod West, CEO at Algonquin Power & Utilities Corporation]

Yeah. Go ahead. You had a second part to your question? Go ahead.

[John Mould, Analyst at TD Cowen]

Oh, thanks, Rod. I was just going to add, the pace at which you think you might be able to add supply in the state if you did see that as an incremental demand driver.

[Rod West, CEO at Algonquin Power & Utilities Corporation]

Yeah. Again, we've been around in conversations before, we're not seeking to obfuscate, I think, the question. The answer to that question would be premature because disclosing it would then signal the size, the scale of any potential customer. I commit and we commit to you the moment we're in a position, remember that we have multiple stakeholders who are part of this conversation, including the state of Missouri, the commission, as well as any potential customers in shaping an integrated resource plan. It's premature for us to signal a size before we're in a position to actually match that integrated resource plan with expected loads. All of those things are to be determined.

[Rod West, CEO at Algonquin Power & Utilities Corporation]

What we're framing up with the large load tariff is enabling a range of outcomes that would allow us to get further along analytically around just what scale of generation and transmission, either at or beyond our existing plans, we'd be able to go public with. It's just a little early. I will signal this. We are internally putting more resources to work in anticipation, one, of our large load tariff filings and in furtherance of our efforts to bring economic development to our service territory. I guess I'm comfortable signaling internally that we're putting more resources to bear in anticipation of us having a greater impact in the areas that we're seeking to file a large load tariff. I'll leave it at that. That's all I can communicate.

[John Mould, Analyst at TD Cowen]

Okay. No, I appreciate that incremental insight on the thought process. I'll leave it there. Thank you.

[Operator]

Thank you so much. There are no further question at this time. I will now turn the call to Mr. Rod West. Please go ahead.

[Rod West, CEO at Algonquin Power & Utilities Corporation]

Well, if there are no more questions, I will simply say thank you for your continued interest, support, and feedback. With that, we will end the call.

[Operator]

Ladies and gentlemen, this concludes today's conference call. You may now disconnect.

Participants

Executives

• Brian Chin, VP of Investor Relations
• Rod West, CEO
• Rob Stefani, CFO

Analysts

• Mark Jarvi, Analyst at CIBC Capital Markets
• Baltej Sidhu, Analyst at National Bank of Canada
• Rob Hope, Analyst at Scotiabank
• Michael Lonegan, Analyst at Barclays
• Eli Jossen, Analyst at JPMorgan
• Ben Tam, Analyst at BMO Capital
• John Mould, Analyst at TD Cowen