Canadian Utilities Q3 Earnings Call Highlights

Key Points

• Adjusted third-quarter earnings rose to CAD 117 million from CAD 108 million a year earlier, while operating cash flow increased by CAD 58 million, largely on higher cash earnings and customer contributions.
• The pending Emera merger could improve access to capital and expertise for large transmission and gas-fired generation projects. Canadian Utilities is seeking Alberta approval and says it would require contracts to support any generation investment.
• The company is executing a CAD 12 billion, five-year capital program amid rising Alberta power demand; construction of the CAD 2.9 billion Yellowhead Pipeline is on track for service in Q4 2027, and storage expansions are expected to lift capacity by 10% to about 130 petajoules.

Canadian Utilities TSE: CU reported higher third-quarter adjusted earnings and outlined how its pending merger with Emera could help it pursue large transmission and gas-fired generation projects as energy demand grows in Alberta.

Adjusted earnings rose to CAD 117 million from CAD 108 million a year earlier, Chief Financial and Investment Officer Katie Patrick said on the company’s third-quarter 2026 earnings call. Cash flow from operating activities increased by CAD 58 million year over year, driven largely by higher cash earnings across most business units and higher customer contributions in natural gas transmission, partly offset by working-capital timing.

Chief Executive Officer Bob Myles said the merger would provide greater access to capital and additional expertise. The combined company is expected to have a CAD 45 billion rate base, six million customers across 12 regulated utilities and approximately 95% of earnings from regulated operations, he said.

Merger opportunities and approvals

Myles identified large electric transmission projects and gas-fired generation as areas where Emera’s capabilities could benefit Canadian Utilities. He said Emera has substantial gas-fired generation operations in Florida and is building more capacity there.

Canadian Utilities sees potential for gas-fired generation in Alberta but wants contracts to support any investment, Myles said. Asked whether those contracts would have risk and return profiles similar or close to the company’s regulated business, he said yes.

Patrick said Canadian Utilities and Emera had filed an application with the Alberta Utilities Commission and requested an expedited process. She said the company had not identified a major obstacle in the approval process, which applies a “no harm” test for customers.

Myles said the company also continues to pursue non-regulated midstream and gas-fired generation opportunities, although it needs to move through the merger process before taking action in the shorter term. He said any opportunity must make financial sense.

Alberta spending and pipeline construction

Canadian Utilities is executing a CAD 12 billion, five-year capital program, with CAD 5 billion directed toward safety, resilience and adaptation. Myles said Alberta’s growing electricity demand is creating a need for investment in generation and transmission, with data centers, industrial growth and decarbonization among the anticipated sources of demand.

Construction of the CAD 2.9 billion Yellowhead Pipeline began in August, and the project remains on track to enter service in the fourth quarter of 2027, Myles said. Once operating, it is expected to add more than 1 billion cubic feet per day of natural gas transportation capacity.

The company sees potential projects beyond its current capital plan, including the McNeill Alberta-Saskatchewan Intertie, which Myles said has been designated one of five high-priority interprovincial power line projects. He said federal support for an east-west electric transmission grid was encouraging, but affordability remains a challenge that needs to be addressed with provincial and federal support.

Canadian Utilities plans to update its capital plan forecast when it releases fourth-quarter results. Myles said the current outlook also excludes potential contributions from non-regulated opportunities such as natural gas storage and generation expansion.

Business-unit results and storage expansion

ATCO Energy Systems posted CAD 103 million in adjusted earnings, up CAD 5 million year over year, primarily because of rate-base growth across its utilities. ATCO Australia’s adjusted earnings rose CAD 2 million to CAD 29 million, helped by inflation indexing on its rate base, foreign exchange rates and higher customer rates at ATCO Gas Australia.

ATCO EnPower reported adjusted earnings of CAD 15 million, slightly lower than a year earlier. Patrick attributed the decline mainly to lower realized carbon pricing and lower compensation related to turbine availability guarantees at the Forty Mile wind facility, partly offset by stronger seasonal spreads in natural gas storage.

Myles said Canadian Utilities completed the Carbon storage expansion during the quarter and expects its Alberta Hub expansion to enter commercial service in the fourth quarter. Together, the projects are expected to increase total storage capacity by 10% to approximately 130 petajoules.

About Canadian Utilities (TSE:CU)

Canadian Utilities 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.

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