CU: Financial document (cuinc 2026 q3 fs)

FINANCIAL STATEMENTS

(UNAUDITED)

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2026

Page

Consolidated Statements of Earnings........................................................................................................................... 2

Consolidated Statements of Comprehensive Income............................................................................................... 3

Consolidated Balance Sheets ......................................................................................................................................... 4

Consolidated Statements of Changes in Equity.......................................................................................................... 5

Consolidated Statements of Cash Flows...................................................................................................................... 6

Notes to Consolidated Financial Statements

1. The Company and its Operations ...................................................................................................................... 7

2. Basis of Presentation........................................................................................................................................... 7

   Information on Financial Performance

3. Segmented Information ...................................................................................................................................... 9

4. Revenues.............................................................................................................................................................. 14

   Information on Financial Position

5. Property, Plant and Equipment........................................................................................................................... 15

6. Long-Term Debt .................................................................................................................................................. 15

7. Equity Preferred Shares ..................................................................................................................................... 16

8. Class A and Class B Shares................................................................................................................................ 16

   Information on Cash Flow

9. Cash Flow Information ........................................................................................................................................ 16

   Risk

10. Financial Instruments........................................................................................................................................... 17

11. Subsequent Event ............................................................................................................................................... 18

Three Months Ended

September 30

Nine Months Ended September 30

(millions of Canadian Dollars) Note 2026 2025 2026 2025

See accompanying Notes to Unaudited Interim Consolidated Financial Statements.

Three Months Ended

September 30

Nine Months Ended September 30

(millions of Canadian Dollars) 2026 2025 2026 2025

1. Net of income taxes of $(2) million and $(3) million for the three and nine months ended September 30, 2026 (2025 - nil and $(2) million).

2. Net of income taxes of nil and $(2) million for the three and nine months ended September 30, 2026 (2025 - nil).

See accompanying Notes to Unaudited Interim Consolidated Financial Statements.

September 30 December 31

(millions of Canadian Dollars) Note 2026 2025

See accompanying Notes to Unaudited Interim Consolidated Financial Statements, including Note 11, Subsequent Event.

See accompanying Notes to Unaudited Interim Consolidated Financial Statements.

Three Months Ended

September 30

Nine Months Ended September 30

(millions of Canadian Dollars) Note 2026 2025 2026 2025

See accompanying Notes to Unaudited Interim Consolidated Financial Statements.

(UNAUDITED) SEPTEMBER 30, 2026

(Tabular amounts in millions of Canadian Dollars, except as otherwise noted)

1. THE COMPANY AND ITS OPERATIONS‌

   CU Inc. was incorporated under the laws of Canada and its debentures and equity preferred shares are listed on the Toronto Stock Exchange. Its head office and registered office is at 4th Floor, West Building, 5302 Forand Street SW, Calgary, Alberta T3E 8B4. CU Inc. is controlled by Canadian Utilities Limited, which in turn is principally controlled by ATCO Ltd. and its controlling share owner, the Southern family.

   CU Inc. is engaged in the following business activities:

   • Electricity (electricity transmission and distribution); and

   • Natural gas (natural gas transmission and distribution).

     The unaudited interim consolidated financial statements include the accounts of CU Inc., its subsidiaries and its investment in joint venture. In these consolidated financial statements, "the Company" means CU Inc., its subsidiaries and joint venture.

2. BASIS OF PRESENTATION‌ STATEMENT OF COMPLIANCE

   The unaudited interim consolidated financial statements are prepared according to International Accounting Standard (IAS) 34 Interim Financial Reporting using accounting policies consistent with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IFRS Accounting Standards). They do not include all the disclosures required in annual consolidated financial statements and should be read in conjunction with the Company's consolidated financial statements for the year ended December 31, 2025 prepared according to IFRS Accounting Standards.

   The unaudited interim consolidated financial statements are prepared following the same accounting policies used in the Company's most recent annual consolidated financial statements, except for the adoption of amended accounting standards as set out below and income taxes. In interim periods, income taxes are accrued using an estimate of the annualized effective tax rate applied to year-to-date earnings.

   The Board of Directors (Board) authorized these unaudited interim consolidated financial statements for issue on November 5, 2026.

   BASIS OF MEASUREMENT

   The unaudited interim consolidated financial statements are prepared on a historical cost basis, except for retirement benefit obligations and derivative financial instruments which are carried at remeasured amounts or fair value.

   Revenues, earnings and adjusted earnings for any quarter are not necessarily indicative of operations on an annual basis. Quarterly financial results may be affected by the seasonal nature of the Company's operations and the timing of utility rate decisions.

   USE OF JUDGMENTS AND ESTIMATES

   Management makes judgments and estimates that could materially affect how policies are applied, how amounts in the unaudited interim consolidated financial statements are reported, and how contingent assets and liabilities are disclosed. Judgments and estimates are reviewed on an ongoing basis; changes to accounting estimates are recognized prospectively. The judgments in applying the Company's accounting policies and the key sources of estimation uncertainty in the unaudited interim consolidated financial statements were the same as those described in the most recent annual consolidated financial statements.

   ADOPTION OF AMENDED ACCOUNTING STANDARDS Settlement by electronic payments

   The Company has adopted the amendments to IFRS 9, Financial Instruments, that are effective January 1, 2026. The amendments clarify the date of recognition and derecognition of financial assets and liabilities, with a new exception for financial liabilities settled using electronic forms of payment. The adoption of the amendments did not have a significant impact on the Company's unaudited interim consolidated financial statements.

   IFRS ACCOUNTING STANDARDS NOT YET ADOPTED Presentation and disclosure in financial statements

   In April 2024, the International Accounting Standards Board (IASB) issued IFRS 18, Presentation and Disclosure in Financial Statements, which will replace IAS 1, Presentation of Financial Statements. IFRS 18 sets out the requirements for presentation and disclosures in financial statements with a focus on the income statement and reporting of management-defined performance measures (MPM). The new standard is effective for annual periods beginning on or after January 1, 2027 and requires retrospective application to comparative financial information.

   Based on the assessment completed to date, the changes will primarily be related to the presentation and labelling of certain financial statement line items, the aggregation and disaggregation of information within the primary financial statements, and the introduction of the new required subtotals in the Consolidated Statements of Earnings. The primary impact on the Consolidated Statements of Cash Flows includes the use of operating profit as the starting point for the reconciliation of cash flows from operating activities and the reclassification of interest received from operating activities to investing activities. The Company has preliminarily identified adjusted earnings as an MPM.

   To facilitate the transition to IFRS 18, the project team of the Company continues to evaluate the impact on financial reporting systems, accounting processes and disclosures in preparation for adoption on January 1, 2027.

   Regulatory assets and regulatory liabilities

   In May 2026, the IASB issued IFRS 20, Regulatory Assets and Regulatory Liabilities, which establishes requirements for the recognition, measurement, presentation and disclosure of regulatory assets, regulatory liabilities and related income and expense arising from rate-regulated activities. The new standard is effective for annual periods beginning on or after January 1, 2029, with earlier adoption permitted.

   The Company is evaluating the impact of IFRS 20 on its consolidated financial statements. The adoption of the standard is expected to affect the accounting for the Company's rate-regulated activities in the Electricity and Natural Gas segments.

3. SEGMENTED INFORMATION‌

   ‌Results by operating segment for the three months ended September 30 are shown below.

   2026 2025

   Electricity Natural Gas

   Financing &

   Other Elims Total

   Revenues - external

   358

   351

   386

   305

   -

   -

   -

   -

   744

   656

   6 1 - (7) -

Revenues - intersegment

3 1 - (4) -

Revenues

364

354

387

306

-

-

(7)

(4)

744

656

Operating expenses (1) Depreciation and amortization Net finance costs

(119) (209) - 4 (324)

(86) (67) - - (153)

(56) (37) - - (93)

Earnings (loss) before income taxes

59

93

28

(7)

2

-

-

-

89

86

Income tax (expense) recovery

1. 2 - - (19)

   86

   83

   594

   358

   Earnings (loss) for the period

   48

   72

   24

   (5)

   1

   -

   -

   -

   73

   67

   Adjusted earnings

   -

   -

   3

   1

   1

   -

   -

   -

   90

   84

   Capital expenditures (2)

   182

   170

   412

   188

   -

   -

   Elims - Intersegment Eliminations

   1. Includes total costs and expenses, excluding depreciation and amortization expense.

   2. Includes additions to property, plant and equipment, intangibles and $9 million of interest capitalized during construction for the three months ended September 30, 2026 (2025 - $8 million).

Results by operating segment for the nine months ended September 30 are shown below.

2026 2025

Electricity Natural Gas

Financing &

Other Elims Total

Revenues - external

1,086

1,063

1,328

1,214

-

-

-

-

2,414

2,277

Revenues - intersegment

6 2 - (8) -

Revenues

1,103

1,069

1,332

1,216

-

-

(21)

(8)

2,414

2,277

Operating expenses (1) Depreciation and amortization Net finance costs

(381) (707) - 8 (1,080)

(255) (199) - - (454)

(169) (106) (1) - (276)

Earnings (loss) before income taxes

227

264

259

204

3

(1)

-

-

489

467

Income tax expense

1. (46) - - (99)

   -

   -

   -

   -

   Earnings (loss) for the period

   Total assets (2)

   11,822

   11,575

   8,986

   8,428

   15

   59

   (86)

   (99)

   20,737

   19,963

   178

   211

   201

   158

   2

   (1)

   431

   400

   381

   368

   Adjusted earnings (loss)

   262

   250

   167

   151

   1,270

   1,041

   -

   -

   -

   -

   791

   534

   479

   507

   Capital expenditures (3)

   2

   (1)

   Elims - Intersegment Eliminations

   1. Includes total costs and expenses, excluding depreciation and amortization expense.

   2. 2025 comparatives are at December 31, 2025.

   3. Includes additions to property, plant and equipment, intangibles and $27 million of interest capitalized during construction for the nine months ended September 30, 2026 (2025 - $21 million).

      ‌ADJUSTED EARNINGS

      Adjusted earnings are earnings for the period after adjusting for:

      • the timing of revenues and expenses for rate-regulated activities;

      • dividends on equity preferred shares of the Company;

      • one-time gains and losses;

      • impairments; and

      • items that are not in the normal course of business or a result of day-to-day operations.

Adjusted earnings are a key measure of segment earnings used by the Chief Executive Officer and other members of the Executive Committee (the "Senior Management Team") to assess segment performance and allocate resources. Other accounts in the unaudited interim consolidated financial statements have not been adjusted as they are not used by the Senior Management Team for those purposes.

‌The reconciliation of adjusted earnings and earnings for the three months ended September 30 is shown below.

In May 2025, the Alberta Utilities Commission (AUC) issued its PBR2 re-opener decision, directing ATCO Electric Distribution and ATCO Gas Distribution to refund $35 million and $36 million, respectively, to customers over the six-month period from September 1, 2025 to February 28, 2026. The Company appealed the decision to the Alberta Court of Appeal (ABCA) and refunded the amounts as directed by the AUC while the appeal was pending. These refunds to customers were reflected as adjustments in rate-regulated activities, as they were recognized as reductions of revenue under IFRS Accounting Standards.

In September 2026, the ABCA upheld the AUC's PBR2 re-opener decision, resulting in a reduction of adjusted earnings to reverse the impact of the rate-regulated adjustment related to refunds to customers (see rate-regulated activities section below). However, as the financial impacts of $28 million (after-tax) for ATCO Electric Distribution and $28 million (after-tax) for ATCO Gas Distribution arose from this one-time PBR2 re-opener ABCA decision, these amounts are not indicative of day-to-

day operations and as such, have been excluded from adjusted earnings for the three and nine months ended September 30, 2026.

The Government of Alberta's Health Statutes Amendment Act, 2025 (No. 2) (Bill 11) changes the coordination of benefits between employer-sponsored health plans and certain provincial health programs. As a result, the Company recognized a $33 million ($25 million after-tax) past service cost adjustment related to its other post-employment benefits obligation for the three and nine months ended September 30, 2026. As the impact arises from a one-time legislative change, the amount has been excluded from adjusted earnings.

ATCO Electric Transmission, ATCO Electric Distribution, ATCO Electric Yukon, Naka Power Utilities (NWT), ATCO Gas and ATCO Pipelines are collectively referred to as the Utilities.

IFRS 20, Regulatory Assets and Regulatory Liabilities (IFRS 20), was issued in May 2026 and is effective for annual periods beginning on or after January 1, 2029. The Company is in the process of evaluating IFRS 20 and given that the Company has not yet adopted this accounting standard, the Utilities continue to be unable to recognize regulatory assets and regulatory liabilities from rate-regulated activities as may be directed by regulatory decisions. Instead, for IFRS purposes the Utilities recognize revenues in earnings when amounts are billed to customers, consistent with the regulator-approved rate design. Operating costs and expenses are recorded when incurred. Costs incurred in constructing an asset that meet the asset recognition criteria are included in the related property, plant and equipment or intangible asset.

Until the Company adopts IFRS 20, the Company considers standards issued by the Financial Accounting Standards Board in the United States as another source of generally accepted accounting principles taking into account a more likely than not recognition threshold in accounting for rate-regulated activities in its internal reporting provided to the Senior Management Team, which believes that earnings presented in this manner are a better representation of the operating results of the Company's rate-regulated activities. Therefore, the Company presents adjusted earnings as part of its segmented disclosures on this basis. Rate-regulated accounting (RRA) standards impact the timing of how certain revenues and expenses are recognized when compared to non-rate-regulated activities, to appropriately reflect the economic impact of a regulator's decisions on revenues.

Rate-regulated accounting differs from IFRS Accounting Standards (pre-adoption of IFRS 20) in the following ways:

IFRS Accounting Standards

Timing Adjustment Items RRA Treatment Treatment (Pre-adoption of IFRS 20)

1. Additional revenues billed in current period

2. Revenues to be billed in future periods

3. Regulatory decisions received

4. Settlement of regulatory decisions and other items

   Future removal and site restoration costs, and impact of colder temperatures.

   Deferred income taxes and impact of warmer temperatures.

   Regulatory decisions received which relate to current and prior periods.

   Settlement of amounts receivable or payable to customers and other items.

   The Company defers the recognition of cash received in advance of future expenditures.

   The Company recognizes revenues associated with recoverable costs in advance of future billings to customers.

   The Company recognizes the earnings impact from a regulatory decision pertaining to current and prior periods when the decision is received.

   The Company recognizes the amount receivable or payable to customers as a reduction in its regulatory assets and liabilities when collected or refunded through future billings.

   The Company recognizes revenues when amounts are billed to customers and costs when they are incurred.

   The Company recognizes costs when they are incurred, but does not recognize their recovery until customer rates are changed and amounts are collected through future billings.

   The Company does not recognize the earnings impact from a regulatory decision when it is received as regulatory assets and liabilities are not recorded under IFRS Accounting Standards.

   The Company recognizes the earnings impact when customer rates are changed and amounts are recovered or refunded to customers through future billings.

   The significant timing adjustments as a result of the differences between rate-regulated accounting and IFRS Accounting Standards (pre-adoption of IFRS 20) are as follows:

   Three Months Ended

   September 30

   Nine Months Ended September 30

   2026 2025 2026 2025

   Additional revenues billed in current period
   Future removal and site restoration costs (1)	22	35	98	100
   Revenues to be billed in future periods
   Deferred income taxes (2)	(38)	(37)	(128)	(106)
   Impact of warmer temperatures (3)	(2)	(6)	(9)	(13)
   Settlement of regulatory decisions and other items
   PBR2 re-opener proceeding refund to customers (4)	-	(7)	(20)	(7)
   PBR2 re-opener appeal decision (5)	56	-	56	-
   Other (6)	25	-	31	14
   	63	(15)	28	(12)

   1. Removal and site restoration costs are billed to customers over the estimated useful life of the related assets based on forecast costs to be incurred in future periods.

   2. Income taxes are billed to customers when paid by the Company.

   3. ATCO Gas Distribution's customer rates are based on a forecast of normal temperatures. Fluctuations in temperatures may result in more or less revenue being recovered from customers than forecast. Revenues above or below the normal temperatures in the current period are refunded to or recovered from customers in future periods.

   4. In connection with the PBR2 re-opener decision rendered by the AUC on May 28, 2025, ATCO Electric Distribution and ATCO Gas Distribution refunded $10 million (after-tax) and $10 million (after-tax), respectively, to customers for the nine months ended September 30, 2026 (2025 - $3 million (after-tax) and $4 million (after-tax)). Combined with the amounts refunded to customers for the year ended December 31, 2025, ATCO Electric Distribution and ATCO Gas Distribution have now refunded the total amount that was directed by the AUC in the PBR2 re-opener decision, which was $28 million (after-tax) ($35 million before tax) for ATCO Electric Distribution and $28 million (after-tax) ($36 million before tax) for ATCO Gas Distribution.

   5. Following the September 3, 2026 ABCA decision upholding the AUC's PBR2 re-opener decision, the $71 million ($56 million after-tax) previously refunded to customers is no longer considered recoverable, resulting in a $56 million (after-tax) reduction in adjusted earnings.

   6. The three and nine months ended September 30, 2026 includes an increase in earnings for the period of $15 million (after-tax) related to the Yellowhead Pipeline deferral, reflecting a future refund to customers. The Yellowhead Pipeline deferral is intended to capture the difference between the actual project spend and the estimated project spend reflected in revenues approved to be recovered from customers.

Consistent with the treatment of the gain on sale in 2014 from the IT services business by CU Inc.'s parent, Canadian Utilities Limited, financial impacts associated with the IT Common Matters decision are excluded from adjusted earnings. The amount excluded from adjusted earnings for the three and nine months ended September 30, 2026 was $1 million (after-tax) and $3 million (after-tax) (2025 - $1 million (after-tax) and $2 million (after-tax)).

For the three and nine months ended September 30, 2025, the Company recognized IT transition costs of $2 million (after-tax) and $13 million (after-tax). The transition costs were primarily related to activities to shift from a single-vendor service provider to a hybrid model of multiple new vendors and internal teams. The transition activities commenced on January 1, 2025 and were substantially complete at December 31, 2025. As these costs were not in the normal course of business, they were excluded from adjusted earnings.

For the three and nine months ended September 30, 2025, the Company recorded restructuring costs of nil and $10 million (after-tax) that were mainly related to staff reductions and associated severance costs. As these costs were not in the normal course of business, they were excluded from adjusted earnings.

1. REVENUES‌

   The Company disaggregates revenues based on the nature of revenue streams. The disaggregation of revenues by each operating segment for the three months ended September 30 is shown below:

   2026
   2025	Electricity (1)	Natural Gas (1)	Total
   Revenue Streams Rendering of Services
   	155	191	346
   Distribution services	149	164	313
   	167	135	302
   Transmission services	167	92	259
   	10	6	16
   Customer contributions	10	5	15
   	11	48	59
   Franchise fees	11	41	52
   	343	380	723
   Total rendering of services	337	302	639
   	15	6	21
   Other (2)	14	3	17
   	358	386	744
   Total	351	305	656

   1. For the three months ended September 30, 2026, Electricity and Natural Gas segments include $104 million of unbilled revenue (2025 - $87 million).

   2. Other revenues include revenues generated from electricity and natural gas infrastructure installation services, and facility charge agreements and maintenance services rendered to certain customers.

   The disaggregation of revenues by each operating segment for the nine months ended September 30 is shown below.

   2026
   2025	Electricity (1)	Natural Gas (1)	Total
   Revenue Streams Rendering of Services
   	477	762	1,239
   Distribution services	462	720	1,182
   	501	322	823
   Transmission services	501	275	776
   	29	18	47
   Customer contributions	27	17	44
   	32	211	243
   Franchise fees	31	196	227
   	1,039	1,313	2,352
   Total rendering of services	1,021	1,208	2,229
   	47	15	62
   Other (2)	42	6	48
   	1,086	1,328	2,414
   Total	1,063	1,214	2,277

   1. For the nine months ended September 30, 2026, Electricity and Natural Gas segments include $104 million of unbilled revenue (2025 - $87 million). At September 30, 2026, $104 million of the unbilled revenue is included in accounts receivable and contract assets (2025 - $87 million).

   2. Other revenues include revenues generated from electricity and natural gas infrastructure installation services, facility charge agreements and maintenance services rendered to certain customers.

2. PROPERTY, PLANT AND EQUIPMENT‌

   A reconciliation of the changes in the carrying amount of property, plant and equipment is as follows:

   Utility Transmission

   Land and

   Construction

   Work-in-

   	& Distribution	Buildings	Progress	Other	Total
   Cost December 31, 2025	23,603	653	742	691	25,689

   Additions Transfers Retirements and disposals	-824 (64)	-36 (2)	1,105 (882) -	-22 (24)	1,105 -(90)
   September 30, 2026	24,363	687	965	689	26,704
   Accumulated depreciation
   December 31, 2025	6,705	200	-	372	7,277

   Depreciation Retirements and disposals	418 (64)	12 (2)	- -	28 (24)	458 (90)
   September 30, 2026	7,059	210	-	376	7,645
   Net book value
   December 31, 2025	16,898	453	742	319	18,412
   September 30, 2026	17,304	477	965	313	19,059

   The additions to property, plant and equipment included $18 million of interest capitalized during construction for the nine months ended September 30, 2026 (2025 - $16 million).

3. LONG-TERM DEBT‌ DEBENTURE ISSUANCE

   In September 2025, the Company issued $370 million of 4.787 per cent debentures maturing on September 16, 2055. The proceeds from the issuance were used to finance capital expenditures, to repay existing indebtedness and for other general corporate purposes.

   UNSECURED EXTENDIBLE REVOLVING CREDIT FACILITY ISSUANCE AND REPAYMENT

   In September 2026, the Company borrowed $135 million from its unsecured extendible revolving credit facility. In June 2025 and in September 2025, the Company borrowed $240 million and $35 million, respectively, from its unsecured extendible revolving credit facility.

   In January 2026, the Company repaid $125 million under its unsecured extendible revolving credit facility. In July 2025, the Company repaid $240 million under its unsecured extendible revolving credit facility.

   NON-REVOLVING UNSECURED AMORTIZING CREDIT FACILITY DEBT ISSUANCE

   In September 2026, the Company borrowed $52 million from its $155 million non-revolving unsecured amortizing credit facility to support the construction of the Central East Transfer-Out Project within the Electricity Transmission business (CETO Project Debt).

   The CETO Project Debt was issued at a below-market rate of interest and the difference between the market rate for an equivalent loan and the rate granted, amounting to $19 million, is accounted for as a capital government grant. Proceeds from capital government grants are recorded in other investing activities in the consolidated statements of cash flows and in other long-term liabilities in the consolidated balance sheets.

4. EQUITY PREFERRED SHARES DIVIDENDS

   Cash dividends declared and paid per share are as follows:

   Three Months Ended

   September 30

   Nine Months Ended September 30

   (dollars per share) 2026 2025 2026 2025

   Equity preferred shares
   4.60% Series 1	0.2875	0.2875	0.8625	0.8625
   4.573% Series 4 (1)	0.28581	0.14325	0.5723	0.4298

   (1) Effective June 1, 2026, the annual dividend rate for the Series 4 Preferred Shares was reset at 4.573 per cent for the five-year period from June 1, 2026 to May 31, 2031. Prior to the reset on June 1, 2026, the annual dividend rate was 2.292 per cent.

   The payment of any dividend is at the discretion of the Board and depends on the financial condition of the Company and other factors. On October 8, 2026, the Company declared fourth quarter dividends of $0.2875 per Series 1 Preferred Share and $0.28581 per Series 4 Preferred Share, payable on December 1, 2026 to share owners of record as of November 5, 2026.

5. CLASS A AND CLASS B SHARES‌

   The Company declared and paid cash dividends of $12.95 and $38.84 per Class A non-voting share (Class A share) and Class B common share (Class B share) during the three and nine months ended September 30, 2025. The payment of dividends is at the discretion of the Board and depends on the financial condition of the Company and other factors.

6. CASH FLOW INFORMATION‌ ADJUSTMENTS TO RECONCILE EARNINGS TO CASH FLOWS FROM OPERATING ACTIVITIES

   Adjustments to reconcile earnings to cash flows from operating activities are summarized below.

   Three Months Ended

   September 30

   Nine Months Ended September 30

   2026 2025 2026 2025

   Depreciation and amortization	163	153	485	454
   Income tax expense	16	19	108	99
   Contributions by customers for extensions to plant	41	29	109	90
   Amortization of customer contributions	(16)	(15)	(47)	(44)
   Net finance costs	94	93	280	276
   Income taxes recovered (paid)	-	(3)	3	(16)
   Interest received	5	4	16	13
   Other (1)	32	(2)	33	(15)
   	335	278	987	857

   (1) Includes a $33 million past service cost adjustment related to the Company's other post-employment benefit obligation for the three and nine months ended September 30, 2026.

   ‌CASH POSITION

   Cash position at September 30 is comprised of:

   2026 2025

   Cash and cash equivalents Bank indebtedness (1) Short-term advances from parent company	38 - (4)	20 (1) (4)
   	34	15

   (1) The Company has cash pooling arrangements with certain banks that are used to manage working capital requirements. This allows individual bank accounts participating in these arrangements to be overdrawn from time to time.

7. FINANCIAL INSTRUMENTS‌ FAIR VALUE MEASUREMENT

   Financial instruments are measured at amortized cost or fair value. Fair value represents the estimated amounts at which financial instruments could be exchanged between knowledgeable and willing parties in an arm's length transaction.

   Determining fair value requires management judgment. The valuation methods used to determine the fair value of each financial instrument and its associated level in the fair value hierarchy are described below.

   Financial Instruments Fair Value Method

   Measured at Amortized Cost

   Cash and cash equivalents, accounts receivable and contract assets, trade accounts receivable from affiliate companies, short-term advances from parent company, accounts payable and accrued liabilities, and accounts payable to parent and affiliate companies.

   Assumed to approximate carrying value due to their short-term nature.

   Long-term debt and long-term advances due from joint venture.

   Determined using quoted market prices for the same or similar issues. Where the market prices are not available, fair values are estimated using discounted cash flow analysis based on the Company's current borrowing rate for similar borrowing arrangements (Level 2).

   Measured at Fair Value

   Foreign currency contracts Determined using quoted forward exchange rates at period-end (Level 2).

   ‌FINANCIAL INSTRUMENTS MEASURED AT AMORTIZED COST

   The fair values of the Company's financial instruments measured at amortized cost are as follows:

   September 30, 2026 December 31, 2025

   Recurring Measurements

   Carrying Value

   Fair Value

   Carrying Value

   Fair Value

   Financial Assets
   Long-term advances due from joint venture (1)	33	29	33	31
   Financial Liabilities
   Long-term debt	9,597	8,413	9,555	8,883

   (1) Long-term advances due from joint venture of $33 million (December 31, 2025 - $33 million) are recorded in other assets in the consolidated balance sheets.

   ‌FINANCIAL INSTRUMENTS MEASURED AT FAIR VALUE Derivative financial instruments

   The Company's derivative financial instruments subject to hedge accounting and measured at fair value include foreign currency forward contracts for the purpose of limiting exposure to exchange rate fluctuations.

   As of September 30, 2026, the notional value of the foreign currency forward contracts, all of which are to purchase US dollars, was $100 million with maturities ranging from October 2026 to January 2027 (December 31, 2025 - $115 million with maturities ranging from January 2026 to January 2027). As of September 30, 2026, the fair value of foreign currency forward contracts was a $4 million derivative asset and was recorded in prepaid and other current assets (December 31, 2025 - less than $1 million derivative liability and was recorded in provisions and other current liabilities).

8. SUBSEQUENT EVENT

On October 6, 2026, ATCO Ltd. (ATCO), Canadian Utilities Limited (Canadian Utilities), Emera Incorporated (Emera) and 2856571 Alberta Ltd. (New ATCO) entered into an arrangement agreement (the Arrangement Agreement) providing for, amount other things, the proposed merger of Emera and Canadian Utilities. The Arrangement Agreement requires Emera to acquire: (a) all of the issued and outstanding Class I non-voting shares of ATCO (the ATCO Class I Shares) and Class II voting shares of ATCO (the ATCO Class II Shares); and (b) all of the issued and outstanding Class A non-voting shares of Canadian Utilities (the Canadian Utilities Class A Shares) and Class B common shares of Canadian Utilities (the Canadian Utilities Class B Shares) not held by ATCO, pursuant to a court-approved arrangement (the Arrangement) under section 192 of the Canada Business Corporations Act.

In addition, pursuant to the Arrangement, ATCO will spin out its industrial services businesses focused on housing, defence and other investments, including ports and retail energy, subject to and in accordance with the terms of a separation agreement to be entered into by ATCO and New ATCO on the effective date of the Arrangement.

Until the Arrangement is completed, each company is generally required to operate in the ordinary course of business and take reasonable steps to preserve its business operations and key relationships, subject to specified exceptions. These exceptions include actions required by law or necessary to complete the Arrangement and the spin-out of New ATCO.

The Arrangement is subject to customary closing conditions, including applicable security holder, court, regulatory and stock exchange approvals, and is expected to close in the third or fourth quarter of 2027.