Fortis Navigates Regulatory Proceedings as Alberta Depreciation Settlement Yields $130 Million True-Up
The Canadian utility holding company disclosed significant rate case developments across its portfolio, including a favourable depreciation settlement and ongoing transmission incentive uncertainties.
Regulatory Landscape Shifts Across Portfolio
Fortis Inc., the $29 billion Canadian utility holding company, outlined a series of material regulatory developments across its North American footprint in its latest financial supplement filing, with proceedings spanning transmission incentives, rate applications, and depreciation methodologies.
The most concrete near-term development came from FortisAlberta, where the Alberta Utilities Commission in May 2026 approved a negotiated settlement agreement regarding the subsidiary's depreciation study (FIN SUPP filing, 2026-07-31). The reduction in FortisAlberta's depreciation rates resulted in a true-up of $130 million, though the company indicated the settlement "will be addressed in a future rate application, with no impact to earnings anticipated as the related updates to revenue and depreciation expense are expected to be neutral" (FIN SUPP filing, 2026-07-31).
Arizona Rate Cases Progress on Different Timelines
At UNS Energy's Tucson Electric Power subsidiary, a general rate application filed in June 2025 requesting new rates effective September 1, 2026 has encountered procedural delays. An Administrative Law Judge in June 2026 extended the schedule such that a final decision will now be issued by November 17, 2026 (FIN SUPP filing, 2026-07-31). The application proposes to "phase-out or eliminate certain adjustor mechanisms" and requests an annual formulaic rate adjustment mechanism consistent with Arizona Corporation Commission policy adopted in 2024.
Meanwhile, UNS Gas achieved regulatory closure in February 2026 when the ACC approved an allowed return on equity of 9.61% with a 56% common equity component, along with an annual formulaic rate adjustment mechanism featuring a range of +/- 50 basis points around the allowed ROE (FIN SUPP filing, 2026-07-31). New rates became effective March 1, 2026.
Legal uncertainty surrounds the formula rate framework itself, however, as the Residential Utility Consumer Office has challenged the ACC's authority to implement such mechanisms through policy statement. The Arizona Court of Appeals in November 2025 ruled the challenge may proceed, with timing and outcome unknown (FIN SUPP filing, 2026-07-31).
Transmission Incentive Uncertainty Persists
At the federal level, ITC's transmission operations face potential headwinds from a 2021 Federal Energy Regulatory Commission supplemental notice of proposed rulemaking that "proposes to eliminate the 50-basis point regional transmission organization return on common equity incentive adder for RTO members that have been members for longer than three years" (FIN SUPP filing, 2026-07-31). The company noted the timing and outcome remain unknown.
Alberta Appeal Decision Awaited
FortisAlberta continues to await a Court of Appeal of Alberta decision on its challenge to the third performance-based rate-setting term for 2024-2028. The company obtained permission to appeal in March 2025, arguing the AUC erred in determining capital funding using 2018-2022 historical investments without considering new capital programs approved for 2023 (FIN SUPP filing, 2026-07-31). The appeal was heard in January 2026, with a decision expected in the third quarter of 2026.
MarginX data shows modest recent insider acquisition activity, with three executives purchasing shares in the public market. The company has a cash dividend of CAD $0.64 scheduled for August 19, 2026.
This article was generated by MarginX from the FIN SUPP filing on 2026-07-31. It is not investment advice.