Morningstar DBRS Confirms Fortis Inc.'s Credit Ratings at A (Low) With Stable Trends

Why It Matters

The stable A rating underscores Fortis' resilient, regulated utility model, reassuring investors as the company embarks on a large capital expansion while maintaining strong liquidity. It also signals that the firm’s diversified North American footprint continues to mitigate jurisdiction‑specific risks.

Key Takeaways

• Fortis' A (low) rating confirmed with stable trend.
• Arizona regulator approved 9.61% ROE, effective March 2026.
• $28.8 billion CAD (≈$21 billion USD) 2026‑30 capital plan announced.
• Funding mix: 59% cash flow, 30% debt, 11% DRIP equity.
• Rate base projected to reach $57.9 billion CAD (≈$42 billion USD) by 2030.

Pulse Analysis

Fortis Inc. remains one of North America’s largest portfolios of regulated utilities, a structure that delivers predictable cash flows insulated from commodity price swings. Morningstar DBRS’s reaffirmation of an A‑low issuer rating, along with stable trends for its unsecured debentures, preferred shares and subordinated notes, reflects the agency’s confidence in the company’s credit fundamentals. The rating methodology places heavy weight on the breadth of jurisdictional exposure, the reliability of cost‑of‑service and performance‑based regulation, and the structural subordination of holding‑company debt, all of which continue to support Fortis’ investment‑grade profile.

The latest regulatory actions in Arizona illustrate how rate‑setting outcomes can sharpen Fortis’ earnings outlook. 61% return on equity and a 56% equity component, with a formulaic adjustment mechanism that will take effect in March 2026, while similar recommendations are pending for Tucson Electric Power. 9 billion CAD (≈$42 billion USD). 9 billion USD) of unused credit capacity.

Analysts view the stable A rating as a green light for investors seeking exposure to regulated utility assets with low volatility. The modest improvement in cash‑flow‑to‑debt ratios, anticipated to hover around 12% through 2030, suggests sufficient headroom to absorb supply‑chain pressures and incremental financing costs. While Fortis’ ESG profile did not materially affect the rating, its ongoing wildfire mitigation and physical‑risk programs help contain event‑related losses. Compared with peers, Fortis’ diversified footprint and robust liquidity position reinforce its standing as a resilient, credit‑worthy utility conglomerate.