Fortis turns Tilbury LNG into a regulated growth engine
BC's Order in Council and Arizona's data center pipeline shift Fortis' 'beyond the plan' opportunities into plan-bound capital.
FTS.TO · Earnings Call · 2026-07-31
A regulated growth step change in British Columbia
Fortis has long been a quiet compounder: a diversified North American utility with a regulated growth strategy. But this quarter, the quiet got a catalyst. The Tilbury 1B LNG expansion moved from aspirational to approved with an Order in Council from the province. Management explicitly sized it at “approximately $2 billion in regulated rate base,” and this project is now being built into the next five-year plan. The approval also brings a first: an equity partnership with the Musqueam Indian band and regulatory mechanisms to smooth early cost recovery. It is a structural ratchet, not just an incremental project.
This is an exciting opportunity, and FortisBC will now proceed to develop and refine project cost estimates, which will be reflected in our next 5-year capital plan expected to be released with our third quarter results.
Tilbury 2 is further out but also moving: the storage tank received BCUC approval, and the environmental assessment decision is expected later this year. The Tilbury 2 liquefaction element remains a larger, later option, but it is now on a clearer regulatory runway. The rate benefit angle is central. CEO David Hutchens noted that sales from the existing Tilbury 1A facility have already provided roughly a 1.5% rate benefit since 2024, and the Eagle Mountain pipeline is expected to add another 1.5%. This is Fortis’s answer to the affordability push: large industrial load underwriting the system.
Data centers: from pipeline to dollars
In Arizona, the data center conversation is no longer just about the first 300 megawatts. TEP is negotiating an incremental 300 megawatts at site one and 500–700 megawatts at a second, with new generation capital of $1.5–2 billion tied to those agreements. Susan Gray, TEP’s CFO, framed the regulatory endgame: “We are expecting a recommended opinion and order from the judge to come out fairly soon.” — Susan Gray, Executive VP and CFO of TEP (subsidiary of Fortis) · 2026-07-31 The rate case includes an ARAM formula rate, which would reduce regulatory lag and make these investments much more accretive. The data center customer pipeline extends to 8–10 gigawatts in the queue, and the company is actively steering customers to locations where existing infrastructure minimizes upgrades. “everybody is on the same page that these data centers have to cover their own costs and then some.” — David Hutchens, President and CEO · 2026-07-31
That cost-coverage framing is what separates Fortis from the regulatory battles plaguing other utilities. It is also a message the market is paying attention to: the global keyword tape has “AI data centers” as one of the strongest advancers over the last 360 days, and Fortis is one of the names riding that theme.
From “wood to chop” to execution
Just nine months ago, management was cautious about converting these opportunities into the base plan. On the November call, David Hutchens said: “there’s a lot of wood to chop between here and there. So we have to get the agreements done with these counterparties.” — David Hutchens, President and Chief Executive Officer · 2025-11-04 That tone has shifted. This quarter, the OIC is signed, the IRP filing framework is set, and the data center negotiations are described as active. Even the language from Susan Gray on the data center sizing has become more specific: “we were just lumping it all into total number for capacity… it will be broken into separate sites.” — Susan M. Gray, Unknown · 2025-08-01 The difference between a plan and a pipeline is now much smaller.
Financially, the quarter was steady: “we reported net earnings of $396 million or $0.78 per common share, an increase of $0.02 compared to the second quarter of last year.” — Jocelyn Perry, Executive VP and CFO · 2026-07-31 The 2026 capital plan of $5.6 billion is on track, and rate base growth guidance remains 7% through 2030. British Columbia is now contributing more than storage—it is a source of regulated growth. The combination of a signed LNG expansion and a deepening data center backlog makes this a real inflection point, even if the market has yet to reprice it.