Canadian Power, Utilities, and Infrastructure

Research evidence excerpt

Canadian Power, Utilities, and Infrastructure

wledged the relatively

elevated stock valuations in this sub-sector (please refer to Exhibits 1 to 4), we do not sense much

urgency or motivation among many investors to take any meaningful stock reallocation actions,

particularly amid the uncertain macro environment today, and limited viable equity alternatives.

Discussions at EPIC that centred on Emera and Fortis' data center-related load growth were broadly

welcomed, particularly their respective choices to take measured steps to support this new industry,

prioritizing customer affordability and their low-risk approaches to growth. We found investors to be

broadly comfortable with the investment thesis of both these stocks, and Canadian Utilities, while they

closely monitor potentially changing propositions at Algonquin and Hydro One.

Alberta Power: Looking forward to the end of this roller coaster ride. Whether it be our discussions

with Capital Power or Pembina at EPIC, all signs suggest that this year, we will finally see electricity

supply agreements signed, and power generation projects sanctioned to support data center-related

load growth in Alberta. We see the recent policy clarity on the industrial carbon tax and Clean Electricity

Regulations in Alberta as being supportive of this theme (please click here), and the AESO's upcoming

June 24 update on its Phase 2A Large Load Integration (BYOG process) should move this sub-sector

further in the right direction. Specifically Phase 2A should detail how developers may proceed to enable

new load in the near-term within reliability guardrails, including whether coal-to-gas converted units

qualify under the AESO's bring-your-own-generation rules. Importantly, forward power prices have