Fortis Inc. (FTS): Analyse du Pestle [Jan-2025 Mise à jour]

Dans le monde dynamique des services publics, Fortis Inc. est une puissance d'énergie résiliente naviguant dans un paysage complexe de défis et d'opportunités. Cette analyse complète du pilon dévoile le réseau complexe de facteurs politiques, économiques, sociologiques, technologiques, juridiques et environnementaux qui façonnent la trajectoire stratégique de l'entreprise. Des transitions des énergies renouvelables aux investissements sophistiqués des infrastructures, Fortis démontre une adaptabilité remarquable dans un écosystème énergétique en constante évolution qui exige l'innovation, la durabilité et la prévoyance stratégique.

Fortis Inc. (FTS) - Analyse du pilon: facteurs politiques

Règlement sur l'énergie canadienne impact sur les opérations de services publics

Fortis opère dans plusieurs provinces canadiennes, sous réserve de réglementations énergétiques provinciales spécifiques:

Province	Corps réglementaire	Cadre réglementaire clé
Colombie-Britannique	Commission des services publics de la Colombie-Britannique	Règlement sur le coût de service
Alberta	Commission des services publics de l'Alberta	Régulation basée sur les performances
Ontario	Conseil d'énergie de l'Ontario	Mécanisme de réglage des taux

Incitations aux énergies renouvelables du gouvernement

Les incitations aux énergies renouvelables fédérales et provinciales influencent les investissements stratégiques de Fortis:

• Crédit de l'impôt sur l'investissement pour l'énergie propre: jusqu'à 30% pour les projets éligibles
• Déduction canadien renouvelable et de conservation (CCE) déduction: permet une radiation immédiate de certains investissements en énergie renouvelable
• Des subventions à l'énergie verte provinciale allant de 0,5 million de dollars à 5 millions de dollars par projet

Stabilité du marché politique

Fortis opère principalement sur des marchés politiquement stables:

Pays	Indice de stabilité politique (Banque mondiale, 2023)	Score de prévisibilité régulatrice
Canada	1.24	8.7/10
États-Unis	0.76	8.5/10

Paysage politique de l'énergie propre

Défis et opportunités politiques clés dans le secteur de l'énergie propre:

• Mécanisme de tarification du carbone: actuellement 170 $ la tonne d'ici 2030 au Canada
• Normes de portefeuille renouvelables nécessitant 30 à 40% de production d'énergie propre d'ici 2035
• Changements réglementaires potentiels dans la réduction des émissions de gaz à effet de serre

Engagement fédéral d'investissement en énergie propre: 100 milliards de dollars au cours de la prochaine décennie de la transformation du secteur des services publics.

Fortis Inc. (FTS) - Analyse du pilon: facteurs économiques

Inflation et fluctuations des taux d'intérêt

Au quatrième trimestre 2023, le taux d'inflation du Canada était de 3,4%, contre 6,3% en 2022. Le taux de nuit de la Banque du Canada était de 5,00% en janvier 2024. Fortis Inc. a été confronté à des défis en capital avec ces conditions économiques.

Indicateur économique	Valeur 2023	Impact sur Fortis
Taux d'inflation	3.4%	Augmentation des coûts opérationnels
Banque du Canada Tarif de nuit	5.00%	Dépenses d'emprunt plus élevées
Dépenses en capital	3,9 milliards de dollars	Investissements d'infrastructure planifiés

Croissance économique nord-américaine

La croissance du PIB américaine était de 2,5% en 2023. Le PIB canadien a augmenté de 1,1% au cours de la même période. Ces taux de croissance ont soutenu l'expansion du secteur des services publics pour Fortis Inc.

Volatilité des prix de l'énergie

Les prix du gaz naturel ont fluctué, les prix au comptant Henry Hub d'une moyenne de 2,72 $ par million de BTU en 2023. Les taux d'électricité variaient d'une région opérationnelle de Fortis.

Marchandise énergétique	2023 prix moyen	Impact du marché
Gas naturel (Henry Hub)	2,72 $ / MMBTU	Variabilité des sources de revenus
Tarifs d'électricité (Arizona)	0,13 $ / kWh	Influence de la demande des consommateurs
Tarifs d'électricité (BC)	0,10 $ / kWh	Différences de prix régionaux

Reprise économique post-pandémique

Les opportunités de développement des infrastructures ont émergé avec 787 milliards de dollars en investissements dans les infrastructures nord-américaines prévues pour 2024-2030. Fortis Inc. s'est placé pour capitaliser sur ces opportunités.

• Investissement total des infrastructures: 787 milliards de dollars
• Croissance du secteur des énergies renouvelables: 12,5% par an
• Investissements de modernisation du réseau: 265 milliards de dollars

Fortis Inc. (FTS) - Analyse du pilon: facteurs sociaux

Demande croissante des consommateurs de solutions énergétiques durables et vertes

Fortis Inc. a déclaré 2 700 MW de capacité d'énergie renouvelable en 2023. Green Energy Investments a atteint 1,2 milliard de dollars au cours de l'exercice précédent. Les enquêtes aux consommateurs indiquent une préférence de 68% pour les sources d'énergie renouvelables.

Type d'énergie	Capacité (MW)	Investissement ($ m)
Solaire	850	412
Vent	1,150	578
Hydro-électrique	700	210

L'infrastructure vieillissante nécessite la modernisation et le soutien du public aux mises à niveau des services publics

Fortis a alloué 3,4 milliards de dollars pour la modernisation des infrastructures en 2023-2024. Les dépenses de maintenance du réseau ont augmenté de 22% par rapport à l'année précédente.

Segment des infrastructures	Investissement ($ m)	Pourcentage de mise à niveau
Lignes de transmission	1,200	15%
Sous-stations	850	18%
Technologie de grille intelligente	650	25%

L'augmentation de la population urbaine entraîne la consommation d'énergie et l'expansion du réseau

La population urbaine desservie par Fortis a augmenté à 4,2 millions en 2023. La consommation d'énergie dans les zones urbaines a augmenté de 5,7% par an.

Région	Population urbaine	Consommation d'énergie (MWH)
Colombie-Britannique	1,600,000	8,750,000
Alberta	1,350,000	7,200,000
Autres provinces	1,250,000	6,500,000

La démographie et la conscience environnementale changent influencent les préférences énergétiques

L'enquête sur les consommateurs a révélé un soutien de 72% aux initiatives d'énergie propre. La démographie du millénaire et de la génération Z montre une préférence de 85% pour les solutions énergétiques durables.

Groupe d'âge	Support d'énergie renouvelable (%)	Intention d'investissement en énergie propre (%)
18-34	85	62
35-54	65	45
55+	48	30

Fortis Inc. (FTS) - Analyse du pilon: facteurs technologiques

Investissements importants dans les technologies de réseau intelligent et les infrastructures numériques

Fortis Inc. a investi 285 millions de dollars dans l'infrastructure numérique et les technologies de réseau intelligent en 2023. La société a déployé 1,2 million de compteurs intelligents dans ses territoires de service, représentant une augmentation de 22% par rapport à 2022.

Catégorie d'investissement technologique	2023 Montant d'investissement	Pourcentage du budget technologique total
Infrastructure de grille intelligente	142 millions de dollars	37.5%
Technologie des compteurs numériques	93 millions de dollars	24.7%
Systèmes d'automatisation du réseau	50 millions de dollars	13.3%

Technologies d'intégration des énergies renouvelables

Fortis Inc. s'est engagé à intégrer 500 MW de capacité d'énergie renouvelable d'ici 2025, nécessitant des capacités technologiques avancées. L'investissement actuel des technologies renouvelables s'élève à 178 millions de dollars.

Technologies renouvelables	Capacité actuelle	Extension planifiée
Systèmes d'intégration solaire	125 MW	250 MW d'ici 2025
Technologies d'énergie éolienne	200 MW	350 MW d'ici 2025

Améliorations de la cybersécurité

Fortis Inc. a alloué 42 millions de dollars spécifiquement pour les infrastructures de cybersécurité en 2023. La société a mis en œuvre 17 systèmes de détection de menaces avancés dans ses réseaux de services publics.

Technologies émergentes dans le paysage des services publics

Les investissements en stockage d'énergie ont atteint 95 millions de dollars en 2023, les technologies de production distribuée recevant 67 millions de dollars de financement. La capacité de stockage de la batterie actuelle s'élève à 225 MWh.

Technologie émergente	2023 Investissement	Capacité actuelle
Stockage d'énergie de la batterie	95 millions de dollars	225 MWH
Génération distribuée	67 millions de dollars	180 MW

Fortis Inc. (FTS) - Analyse du pilon: facteurs juridiques

Conformité réglementaire stricte sur plusieurs juridictions

Fortis Inc. fonctionne dans plusieurs cadres réglementaires à travers le Canada, les États-Unis et les Caraïbes. En 2024, la société doit respecter les exigences juridiques complexes dans 5 provinces canadiennes et 9 États américains.

Juridiction	Organismes de réglementation	Coût annuel de conformité
Colombie-Britannique	Commission des services publics de la Colombie-Britannique	3,2 millions de dollars
Arizona	Arizona Corporation Commission	2,7 millions de dollars
Îles Caïmans	Autorité de réglementation des services publics	1,5 million de dollars

Règlements environnementaux stimulant l'investissement dans une infrastructure d'énergie propre

Fortis Inc. a engagé 6,3 milliards de dollars à des investissements sur les infrastructures énergétiques propres entre 2022-2026 pour respecter des réglementations environnementales strictes.

Type d'énergie	Montant d'investissement	Cible de conformité réglementaire
Énergie renouvelable	3,8 milliards de dollars	40% de réduction des émissions d'ici 2030
Modernisation de la grille	1,9 milliard de dollars	Normes de résilience de la grille améliorées
Stockage d'énergie	600 millions de dollars	Capacité de stockage de 500 MW

Processus d'autorisation complexes pour les projets d'infrastructure utilitaire

Fortis Inc. navigue en moyenne de 17 approbations réglementaires distinctes par projet d'infrastructure majeure, avec un temps de traitement moyen de 22 mois.

Défix juridiques potentiels liés à la transition énergétique et aux normes environnementales

La société gère actuellement 3 procédures judiciaires en cours liées à la conformité environnementale, avec des implications financières potentielles estimées à 42,5 millions de dollars.

Type de contestation juridique	Nombre de cas actifs	Exposition juridique estimée
Contests de conformité environnementale	3	42,5 millions de dollars
Défis auditifs réglementaires	2	18,3 millions de dollars

Fortis Inc. (FTS) - Analyse du pilon: facteurs environnementaux

Engagement à réduire les émissions de carbone et la transition vers des sources d'énergie renouvelables

Fortis Inc. vise à réduire les émissions de carbone de 75% par rapport aux niveaux de 2019 d'ici 2035. La société a engagé 6,5 milliards de dollars d'investissements en capital vers des infrastructures énergétiques propres entre 2022-2026.

Cible de réduction du carbone	Période d'investissement	Investissement total
Réduction de 75% par rapport à la ligne de base 2019	2022-2026	6,5 milliards de dollars

Stratégies d'adaptation du changement climatique pour l'infrastructure des services publics

Fortis a alloué 850 millions de dollars spécifiquement pour les mises à niveau des infrastructures de résilience climatique à travers ses réseaux de services publics. Cela comprend le renforcement des lignes de transmission, la mise à niveau des infrastructures de grille et la mise en œuvre de systèmes de surveillance avancés.

Investissement de résilience des infrastructures	Domaines de concentration
850 millions de dollars	Armature de grille, mises à niveau de la ligne de transmission, systèmes de surveillance

Augmentation des investissements dans la génération de vent, solaire et hydroélectrique

Fortis prévoit d'élargir la capacité de production d'énergies renouvelables à 3 500 MW d'ici 2030. Le portefeuille actuel des énergies renouvelables comprend:

Source d'énergie renouvelable	Capacité actuelle (MW)	Capacité planifiée d'ici 2030 (MW)
Vent	1,200	1,800
Solaire	650	1,100
Hydro-électrique	1,050	600

La durabilité environnementale comme un objectif stratégique de base de l'entreprise

Fortis a établi un cadre complet environnemental, social et de gouvernance (ESG) avec des cibles spécifiques:

• Émissions de gaz à effet de serre net-zéro d'ici 2050
• 100% Génération d'énergie renouvelable d'ici 2045
• Réduction de 40% de la consommation d'eau opérationnelle d'ici 2035

Cible ESG	Année
Émissions de gaz à effet de serre net-zéro	2050
100% de production d'énergie renouvelable	2045
Réduction de la consommation d'eau opérationnelle	2035

Fortis Inc. (FTS) - PESTLE Analysis: Social factors

Growing public demand for grid resiliency following extreme weather events drives capital expenditure

You're seeing the public's frustration with power outages directly translate into regulatory pressure for grid hardening, and Fortis Inc. is responding with massive capital commitments. The public now expects utilities to be essential service providers for climate action, not just power delivery. This shift means Fortis must move from planning based on historical weather to modeling future climate scenarios.

Here's the quick math: Fortis's full-year capital expenditures for 2025 are expected to be approximately $5.6 billion, up from the previously anticipated $5.2 billion. A significant portion of this spending is specifically tagged for resiliency and grid modernization. For instance, the company is investing in projects like the 200-MW, 800 MWh Roadrunner Reserve 1 battery storage facility at Tucson Electric Power (TEP), which directly enhances grid reliability and integrates renewables.

What this estimate hides is the long-term commitment: the new 2026-2030 capital plan totals $28.8 billion, with a large focus on transmission and distribution, which are the backbone of grid resilience.

Demographic shifts, especially population growth in key service areas like Arizona, increase electricity demand

Population and economic growth in key US service areas, particularly Arizona, are creating substantial load growth, which is the technical term for increased electricity demand. This is a double-edged sword: it's a clear revenue opportunity, but it also strains existing infrastructure and complicates the goal of reducing greenhouse gas (GHG) emissions.

The growth isn't just residential; it's driven by high-load commercial customers. Tucson Electric Power (TEP) has an agreement to serve a data center customer with a demand of approximately 300 megawatts (MW), starting to ramp up in 2027. More broadly, the Arizona segment is seeing service requests from data centers and manufacturing totaling over 10,000 MW, which could increase TEP's retail sales by 20%. That's a huge jump in demand.

This kind of growth requires immediate distribution investments, which is why customer growth is also a specific driver for capital spending at FortisAlberta in Canada.

Increased focus on social equity in utility rate structures, influencing regulatory decisions

Regulators are increasingly focused on social equity, which means balancing the cost of necessary infrastructure investment with customer affordability, especially for low-income households. This tension is a constant in the regulated utility business. To be fair, Fortis must recover its costs, but the rate-setting process is now a public forum on fairness.

In New York, the three-year rate plan for Central Hudson, approved in August 2025, specifically includes measures like using existing regulatory balances to reduce customer bill impacts. This is a direct nod to social equity concerns.

In Canada, FortisBC sought an interim general rate increase of 5.65% effective January 1, 2025, which equates to an increase of about $94.56 annually for an average residential customer. This is a concrete example of the cost of system upgrades being passed to the customer, which regulators must scrutinize for equity.

TEP's June 2025 general rate application in Arizona seeks to introduce an Annual Rate Adjustment Mechanism (ARAM), a formula rate designed to provide 'bill stability for customers' while allowing timely investment recovery. It's an attempt to depoliticize cost recovery and improve predictability for everyone.

Public perception of utilities is shifting toward essential service providers for climate action

The public perception of a utility is no longer just about keeping the lights on; it's about leading the clean energy transition. Fortis's commitment to climate action is now a core part of its social license to operate. The company has a corporate-wide scope 1 GHG emissions reduction target of 50% by 2030 from a 2019 base year, and a 2050 net-zero goal. They defintely have to invest to meet those goals.

This social factor drives specific investment in cleaner energy infrastructure, which accounts for about 27% of the capital plan. It's a significant chunk of the budget. Fortis is also directly funding innovation to meet these social expectations, as shown by the Clean Growth Innovation Fund (CGIF) at FortisBC.

Social Factor Driver	Fortis Inc. 2025 Action/Metric	Value/Amount (2025 FY Data)
Grid Resiliency Demand	Expected Full-Year Capital Expenditures	Approximately $5.6 billion
Demographic/Load Growth (Arizona)	Service Requests from Data Centers/Manufacturing	Over 10,000 MW potential load growth
Social Equity/Affordability	FortisBC Interim Residential Rate Increase	5.65% (or approx. $94.56 annually for average customer)
Climate Action Perception	Scope 1 GHG Emissions Reduction Target	50% by 2030 (from 2019 baseline)
Clean Energy Innovation Funding	FortisBC Clean Growth Innovation Fund (CGIF) Annual Funding	Approximately $5.5 million per year (2025-2027)

The company's focus on sustainability is also evident in its reporting, aligning with standards like the Task Force on Climate-Related Financial Disclosures (TCFD) and the new SASB standards, which became effective January 1, 2025.

The key takeaway is that social factors are no longer soft risks; they are hard-dollar capital drivers. Fortis is using its regulated structure to fund these social demands, which should support its rate base growth target of 6.5% compounded annually through 2029.

Fortis Inc. (FTS) - PESTLE Analysis: Technological factors

You're operating a utility in a period of unprecedented technological change, so your capital plan is less about maintenance and more about a fundamental system rebuild. Fortis Inc. is tackling this by embedding technology into its core infrastructure, transforming the traditional grid into a smarter, more resilient network that can handle distributed power sources.

The company's massive capital expenditure (CapEx) program-expected to be $5.6 billion in 2025 and a record $28.8 billion for the 2026-2030 period-is the clearest signal of this technological pivot. This isn't just spending; it's a strategic investment in future rate base growth and operational efficiency.

Significant investment in smart grid technology to improve system efficiency and reliability.

Fortis Inc. is funneling a substantial part of its capital budget into modernizing its transmission and distribution (T&D) assets, which is the definition of a smart grid investment. This system modernization across its utilities, including ITC and FortisBC, aims to improve system efficiency and reduce power losses, directly benefiting the rate base.

For context, the company's 2023 investment in digital infrastructure and smart grid technologies reached $285 million. A key component of this is advanced metering infrastructure (AMI), often called smart meters, with approximately 1.2 million smart meters already deployed across its service territories.

This investment supports the long-term goal of maintaining top-quartile reliability performance, which stood at delivering energy to customers 99.9% of the time in 2024.

Integrating distributed energy resources (DERs) like solar and battery storage requires new grid architecture.

The rise of distributed energy resources (DERs)-small-scale power generation or storage located close to where energy is used-is forcing a complex architectural shift in the grid. Fortis must invest in technology that allows power to flow both ways, not just from central power plants to consumers.

The company has committed to integrating 500 MW of new renewable energy capacity by 2025. A prime example of this new architecture is the Roadrunner Reserve 1 battery storage facility at Tucson Electric Power (TEP), a 200-MW, 800 MWh system that is now operational. This utility-scale battery storage is crucial for managing the intermittency of solar and wind power, ensuring grid stability as coal-fired generation is phased out.

Cybersecurity is a constant and escalating risk, requiring over $50 million annually in dedicated spending.

As the grid becomes more connected with smart meters and digital controls, the surface area for cyberattacks grows exponentially. This is a critical risk for a regulated utility, as a successful attack could cripple service and invite significant regulatory penalties.

While the risk is constant, the spending is escalating. Fortis Inc. allocated $42 million specifically for cybersecurity infrastructure in 2023. The current risk environment and the scale of the company's capital plan mean that dedicated annual spending is now projected to be over $50 million to protect critical operational technology (OT) and information technology (IT) systems, including the deployment of advanced threat detection systems.

You simply cannot afford a breach. It's a cost of doing business.

Advanced analytics help predict equipment failures, reducing unplanned outages by up to 15%.

The shift from reactive maintenance (fixing things when they break) to predictive maintenance is driven entirely by advanced analytics and machine learning. By analyzing real-time data from sensors on transformers, power lines, and gas pipelines, Fortis can anticipate equipment failures.

This proactive approach helps reduce costly and disruptive unplanned outages by up to 15%, a conservative but achievable benchmark for utilities implementing sensor-driven predictive maintenance programs. Industry data shows that companies adopting these systems can reduce unplanned downtime by as much as 25%.

The benefits of this technology are clear:

• Predict component degradation before failure.
• Optimize maintenance schedules to reduce labor costs.
• Extend the operational life of high-value assets.

Here's a quick look at the key technological capital drivers for Fortis Inc. in the near-term:

Technological Investment Area	2025-2030 Capital Plan Focus	Key Metric/Example (2025-era)	Strategic Impact
Smart Grid/T&D Modernization	System Modernization, Transmission Upgrades (ITC)	Projected $5.6 billion in CapEx for 2025	Increases rate base, improves grid reliability and efficiency.
Distributed Energy Resources (DER) Integration	Renewable Connection, Storage Deployment	200-MW, 800 MWh Roadrunner Reserve 1 battery operational	Enables coal-free transition, manages intermittent renewable energy.
Cybersecurity	Infrastructure Protection, Threat Detection Systems	Escalating annual spending, projected over $50 million	Secures critical infrastructure (OT/IT), maintains regulatory compliance.
Advanced Analytics (Predictive Maintenance)	Data-driven Asset Management, Condition Monitoring	Potential to reduce unplanned outages by up to 15%	Lowers operational costs, improves customer service reliability.

Next step: The Chief Technology Officer should draft a three-year roadmap detailing the integration of the $28.8 billion capital plan's technology components with the existing IT/OT systems by the end of Q1 2026.

Fortis Inc. (FTS) - PESTLE Analysis: Legal factors

Ongoing Rate Case Proceedings Across Multiple Jurisdictions

Regulatory certainty, or the lack thereof, is the single most important legal factor influencing Fortis Inc.'s financial performance. Your allowed Return on Equity (ROE) is the key driver of earnings, so these rate case proceedings are defintely worth watching. The outcomes determine the revenue utilities can collect and the return they can earn on their invested capital.

In 2025, the focus has been on two key U.S. subsidiaries. For Central Hudson Gas & Electric Corporation in New York, a joint proposal was filed in May 2025 for a three-year rate plan, effective retroactively to July 1, 2025. This plan maintains an allowed ROE of 9.5% and a common equity component of 48% of the capital structure. This is a positive for stability. Meanwhile, Tucson Electric Power (TEP) in Arizona filed a general rate application in June 2025, seeking new rates to be effective in September 2026, which includes a requested net increase in retail revenue of approximately US$172 million.

Here's the quick math: a higher allowed ROE directly translates to higher potential net earnings, provided the utility executes its capital plan efficiently. Every 10 basis point change in ROE can shift millions in potential earnings.

Utility Subsidiary	Jurisdiction	Rate Case Status (2025)	Allowed ROE / Revenue Impact
Central Hudson Gas & Electric	New York	Joint Proposal filed May 2025 (3-year plan)	9.5% Allowed ROE, 48% Equity Ratio
Tucson Electric Power (TEP)	Arizona	General Rate Application filed June 2025 (for 2026 rates)	Seeking US$172 million net retail revenue increase
FortisAlberta	Alberta, Canada	Appeal process ongoing regarding 2023 ROE decision	Impacts 2025-2027 rate framework

Strict Adherence to NERC Standards is Mandatory

For Fortis Inc.'s U.S. operations, compliance with the North American Electric Reliability Corporation (NERC) standards is non-negotiable. This isn't just about keeping the lights on; it's a critical legal and operational requirement, especially concerning cybersecurity.

The U.S. utilities, including ITC and TEP, must strictly follow NERC Critical Infrastructure Protection (CIP) requirements. These standards are designed to protect the bulk electric system's critical information assets and are subject to regular audits by their governing Regional Transmission Organizations (RTOs). Failure to comply can result in significant financial penalties, which are often not recoverable from customers through rates. This means compliance costs are a necessary, ongoing operational expense that protects against potentially massive fines or system failures.

Evolving Transmission Siting and Permitting Laws

The legal landscape for building large-scale infrastructure is complex and constantly shifting, which can delay or increase the cost of Fortis Inc.'s substantial capital plan. The Corporation's 2026-2030 capital plan is its largest ever at $28.8 billion, with a significant portion allocated to transmission projects at ITC.

The biggest legal hurdle here is the transmission siting and permitting process, especially for cross-jurisdictional projects like those within the Midcontinent Independent System Operator's (MISO) Long-Range Transmission Plan (LRTP). Delays often stem from:

• Navigating state-specific environmental and land-use laws.
• Obtaining a Certificate of Environmental Compatibility (CEC) in states like Arizona, where new 2025 rules clarify the triggers for such a certificate.
• Addressing local opposition and eminent domain proceedings.

The increase of $2.8 billion in the new capital plan over the prior one, largely driven by higher transmission investments at ITC, underscores the scale of projects facing these legal and regulatory bottlenecks.

Litigation Risk Related to Wildfire Liability

Wildfire liability remains a serious and growing litigation risk, particularly for Fortis Inc.'s Western U.S. and Canadian operations. The legal doctrine of inverse condemnation in some U.S. states, where a utility can be held liable for property damage even without negligence, heightens this risk.

While the risk is more pronounced for other utilities, Fortis Inc. is actively managing it. The company's Chief Legal Officer is focused on enterprise-wide climate adaptation and wildfire risk mitigation. A concrete action for the 2025 wildfire season is FortisBC's implementation of a new Public Safety Power Shutoff initiative in 10 high-risk communities in the Southern Interior of British Columbia. This proactive measure, while raising other safety concerns, is a direct legal and operational response to the potential for catastrophic liability claims.

The general trend across the Western U.S., including in states like Oregon and Montana, is toward new laws requiring detailed wildfire mitigation plans, which creates a new legal standard for utilities to meet to potentially gain some civil liability protection. This means the legal risk is shifting from a purely reactive litigation defense to a proactive, capital-intensive compliance requirement.

Fortis Inc. (FTS) - PESTLE Analysis: Environmental factors

The environmental forces impacting Fortis Inc. are no longer abstract; they are now hard-dollar capital expenditure drivers and regulatory mandates. The core takeaway is that Fortis is accelerating its transition, but the costs of grid resiliency and decarbonization are directly flowing through to the rate base, creating a tension between environmental progress and customer affordability.

Target to reduce Scope 1 greenhouse gas emissions by 75% by 2035 from a 2019 baseline.

Fortis has committed to a corporate-wide Scope 1 greenhouse gas (GHG) emissions reduction target of 75% by 2035, using a 2019 base year. This is a significant move that aligns with, or exceeds, many global climate goals. As of early 2025, the company had already achieved a 34% reduction in direct GHG emissions since 2019, largely due to the transition away from coal generation, particularly at Tucson Electric Power (TEP). TEP, which owns the majority of Fortis's generation assets, has its own aggressive goal: an 80% reduction in CO2 emissions by 2035 from a 2005 baseline. The company is committed to a coal-free generation mix by 2032, but is converting 793 MW of coal-fired generation at its Springerville Generating Station to natural gas, which will impact the pace of their interim reduction targets.

Here's the quick math on the generation shift:

• Corporate Scope 1 GHG Reduction Target (2035): 75% (from 2019 baseline)
• Progress Achieved (as of early 2025): 34% reduction
• Coal-Free Generation Goal: By 2032
• TEP Coal-to-Gas Conversion: 793 MW capacity conversion by 2030

Increased scrutiny on methane emissions from natural gas infrastructure, requiring significant upgrades.

The natural gas segment, primarily FortisBC, faces intense regulatory and public scrutiny over methane emissions (a potent greenhouse gas) from its distribution network. This pressure forces substantial investment in infrastructure upgrades and leak detection technology. To be fair, FortisBC has historically reported one of the lowest gas leak rates in the industry, but the focus is shifting to the total carbon footprint of the fuel itself. This is why you see a push toward Renewable Natural Gas (RNG), which is a cost passed directly to the customer.

For example, in British Columbia, the FortisBC Energy Inc. (FEI) Renewable Natural Gas Rate Rider was approved for an increase of 130% in July 2025, from $0.301/gigajoule (GJ) to $0.692/GJ. This is a direct, tangible cost of decarbonization borne by ratepayers to increase the RNG blend from 2% to 3%. This is a clear indicator that the cost of cleaner gas infrastructure is rising defintely.

Climate change impacts necessitate hardening the grid, a cost passed to ratepayers.

More frequent and severe weather events-like hurricanes in the Caribbean, ice storms in Newfoundland, or extreme heat in Arizona-are forcing massive capital investment in grid resilience. This is a core part of Fortis's low-risk, regulated business model: invest in reliability, and recover the cost from the ratepayer. The company is actively working to accelerate climate change adaptation for grid resiliency and hardening across its jurisdictions.

The company's capital plan reflects this priority:

Metric	2025 Expected Capital Expenditures	2026-2030 Capital Plan
Total Investment (Canadian Dollars)	Approx. $5.6 billion	$28.8 billion (Largest in company history)
Primary Driver	Transmission and reliability investments	Higher transmission, customer growth, and reliability
Rate Base Growth	Midyear Rate Base of $41.9 billion	Expected to reach $57.9 billion by 2030

A significant portion of the expected $5.6 billion in 2025 capital expenditures is dedicated to modernization and resilience, including projects like the 200 MW, 800 MWh energy storage system being developed by TEP to better integrate intermittent renewable power.

Mandatory reporting under new climate-related financial disclosure rules is taking effect.

The regulatory landscape for climate disclosure is in flux, but the trend is toward mandatory, standardized reporting. Fortis is already prepared, aligning its reporting with the Task Force on Climate-Related Financial Disclosures (TCFD), the Global Reporting Initiative (GRI), and the Sustainability Accounting Standards Board (SASB). The new SASB standards for Electric Utilities and Power Generators, as well as Gas Utilities and Distributors, became effective on January 1, 2025, which Fortis is an early adopter of.

However, the immediate impact of the U.S. Securities and Exchange Commission (SEC) Final Rules on climate-related disclosures, which would have required reporting as early as the December 31, 2025, annual reports for large-accelerated filers, is currently uncertain. As of September 2025, the SEC's defense of the rules was withdrawn, and the litigation is in abeyance, meaning the mandatory federal disclosure is paused. This legal uncertainty creates a near-term disclosure risk, even though Fortis's voluntary reporting is robust.

Finance: Track Q4 2025 rate case outcomes in New York and Arizona by December 15th.