Canadian Utilities (TSE:CU) reported higher second-quarter adjusted earnings as rate-base growth, inflation indexing in Australia and regulatory decisions supported its utility operations, while management highlighted progress on major Alberta infrastructure projects and a five-year capital plan.
Adjusted earnings totaled C$140 million in the second quarter of 2026, up 16% from C$121 million a year earlier, Chief Financial and Investment Officer Katie Patrick said. The increase was primarily driven by inflation indexing on rate base and higher rates at ATCO Gas Australia, as well as rate-base growth at ATCO Energy Systems.
Business-unit earnings rise
ATCO Energy Systems generated adjusted earnings of C$124 million during the quarter, an increase of C$8 million from the prior-year period. Patrick said the result reflected rate-base growth and year-to-date recognition of final rates following Electric Transmission’s general tariff application decision.
ATCO Australia posted adjusted earnings of C$34 million, rising C$13 million year over year. Inflation indexing on rate base contributed C$9 million to the year-over-year increase, Patrick said. The company’s 2026 Australian inflation-indexing assumption is 4.2%, compared with full-year inflation of 3.4% reflected in 2025. Patrick said that, as a rule of thumb, each additional 10 basis points of inflation benefits earnings by approximately C$1.2 million.
ATCO EnPower recorded adjusted earnings of C$15 million, modestly above the prior year despite continued headwinds in its renewable portfolio. Stronger seasonal spreads in gas storage services and higher output from the Veracruz Hydro facility in Mexico supported the result, according to Patrick.
Yellowhead Pipeline moves toward construction
Chief Executive Officer Bob Myles said the company completed its Central East Transfer-Out, or CETO, project in June ahead of schedule and below expected spending, with no lost-time injuries. The project is intended to reduce congestion and improve electric-transmission efficiency across Alberta’s grid.
Myles also said all major contracts have been awarded for the Yellowhead Pipeline project. The project received facility application approval earlier in July, clearing the final regulatory milestone needed before construction. Canadian Utilities expects construction to begin in August, ahead of schedule, and expects the pipeline to enter service in the fourth quarter of 2027.
The Yellowhead Pipeline is fully contracted with customers, Myles said. The project is a key component of the company’s current five-year plan and is intended to provide natural-gas infrastructure for Alberta.
Canadian Utilities also received approval for ATCO Pipelines’ general rate application, including a capital deferral account for Yellowhead and the placement of 100% of construction work in progress into rate base for 2026 and 2027. Myles said the construction-work-in-progress treatment provides temporary credit relief during construction by increasing project cash flow.
The application also approved depreciation placeholders and information-technology operating costs for ATCO Pipelines and ATCO Electric Transmission. Separately, the Alberta Utilities Commission approved a revised negotiated settlement agreement related to ATCO Electric’s general tariff application.
Capital plan and financing approach
The company continues to advance a C$12 billion capital program over the next five years, focused on projects management characterized as highly certain. The plan supports a five-year compound annual growth rate of 6.9%, driven by regulated utility businesses and the Yellowhead Pipeline.
Myles said the latter portion of the outlook does not include several potential infrastructure opportunities in Alberta, which could provide incremental growth if secured. The forecast also excludes possible investments tied to data-center development and non-regulated opportunities such as natural-gas storage expansion.
Canadian Utilities expects its Alberta Hub and Carbon Storage Hub expansions to begin commercial operations in the third quarter. The projects are expected to increase its storage portfolio to about 130 petajoules and strengthen the financial performance of the gas-storage business.
To fund its growth plans, Patrick said the company expects to issue debentures annually over the five-year period to meet regulated debt needs. It expects to finance regulated equity requirements with internally generated cash, C$700 million raised in late 2025 and about C$850 million of additional capital securities. Based on the current five-year plan, management does not expect to issue common equity to support regulated utility growth.
Non-regulated organic investments are expected to be funded through existing operating cash flow, supplemented by project-level debt, financing and strategic partnerships, Patrick said.
Management sees further energy-infrastructure opportunities
Myles pointed to a potentially more favorable environment for Canadian energy infrastructure, citing pipeline proposals, greater policy clarity around emissions, federal plans for grid expansion and incentives for major infrastructure projects. He said the company’s Atlas Carbon Storage Hub partnership with Shell positions it for future carbon-capture investments.
The federal government has designated the McNeill Alberta-Saskatchewan intertie as one of five high-priority interprovincial power-line projects, Myles said. He added that Canadian Utilities sees transmission-growth opportunities in northwestern Alberta and in areas where oil-sands development occurs within its service territory.
During the question-and-answer session, Myles said the company remains focused on gas-storage expansion but is also evaluating opportunities in the midstream sector as it looks to participate more broadly across the energy value chain. He said the company is also working with British Columbia and Alberta on potential intertie development, although significant work remains before such projects advance.
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.
