AQN: Initiating at Equal Weight, $7 PT

Research evidence excerpt

AQN: Initiating at Equal Weight, $7 PT

Algonquin Power & Utilities Corp. Equity Research

bills, estimated bills without reconciliation, and prolonged complaint resolution to regulators. The

Missouri PSC opened a formal investigation docket in February 2025 to address the matter.

Concurrently Empire had filed their rate case in November 2024, which they withdrew and refiled

February 2025 with a $153m revenue increase and 10% ROE ask, respectively. In January 2026,

the MPSC approved a $97m revenue increase as part of a black box settlement in the case, on

the condition that the rate increase cannot take effect until Empire demonstrates improved

operational performance for at least three months. Specifically, Empire must show compliance

with six stipulations for those three months, with staff approval. To date Empire has filed compliance

for January, February and March 2026. Staff has not opined in the interim on those filings, so we

expect to hear over the summer if performance has been sufficient to earn the $97m increase. Also,

within the settlement is a $13m annual performance-based return on the currently disallowed rate

base related to the Customer First SAP system ($149m). After Empire meets the initial performance

criteria to unlock the $97m, monthly satisfaction of a higher customer performance bar (full criteria

still undisclosed, under negotiation) can unlock up to $13m annually (~$1.15m for each satisfactory

month).

Empire also has a filed rate case in Kansas to account for significant underearning with a $15.8m

revenue requirement ask and 10% ROE ask. Empire’s last Kansas rate case before the current filed one

was in 2012. The request reflects the $85m Kansas portion of Empire capex since 2020. As proposed,