Fortis Inc.: A Compelling Case for Long-Term Utility Investment in a Decarbonizing Energy Landscape

In an era where global energy systems are rapidly pivoting toward decarbonization, utility companies are at the forefront of this transformation. For ESG-conscious investors seeking reliable, low-risk exposure to this transition, Fortis Inc. (FTS) emerges as a standout opportunity. With a $26 billion capital plan spanning 2025–2029, robust regulatory momentum, and a decarbonization roadmap aligned with global climate goals, Fortis is uniquely positioned to capitalize on the long-term shift toward clean energy while delivering stable returns.

Strategic Capital Allocation: Fueling the Energy Transition

Fortis's 2025–2029 capital plan is a masterclass in strategic infrastructure investment. A staggering $6.7 billion of the $26 billion total is earmarked for energy transition initiatives, including renewable integration, battery storage, and cleaner fuel alternatives. This represents a 10% allocation to the energy transition, a figure that outpaces many peers in the utility sector. For context, the company plans to deploy 200 MW of battery storage in Arizona by 2027 and convert 800 MW of coal-fired generation at the Springerville plant to natural gas by 2032, directly contributing to its 75% emissions reduction target by 2035.

The plan also emphasizes grid modernization, with half of the total investment directed toward system adaptation and hardening. This is critical for maintaining reliability as renewables like solar and wind become more prevalent. By 2029, Fortis expects its rate base to grow to $53.0 billion (6.5% CAGR), driven by these capital-intensive projects. The funding strategy—leveraging cash from operations, regulated debt, and dividend reinvestment—ensures financial discipline while minimizing equity dilution, a key concern for long-term investors.

Regulatory Momentum: A Tailwind for Earnings Visibility

Fortis's regulated utility model provides a predictable cash flow structure, but its recent regulatory achievements amplify this advantage. In Arizona, the company secured a data center customer agreement to support 300 MW of demand, leveraging existing infrastructure to meet rising energy needs. Regulatory approvals for rate adjustments, such as those recently granted to Tucson Electric Power (TEP), further enhance earnings visibility.

The company's shareholder base also reinforces its regulatory resilience. At its May 2025 annual meeting, all 12 directors were re-elected with over 98% support, and the “Say on Pay” vote passed with 94.19% approval. This strong governance alignment ensures continuity in executing its capital plan and decarbonization strategy. CEO David Hutchens and CFO Jocelyn Perry, both seasoned energy sector veterans, are pivotal in navigating the regulatory landscape and maintaining Fortis's reputation as a low-risk utility.

Decarbonization Roadmap: Aligning with ESG Priorities

Fortis's Clean Growth Pathway to 2050 is a cornerstone of its ESG strategy. The company has already reduced Scope 1 emissions by 34% since 2019—a reduction equivalent to eliminating the annual emissions of 900,000 gasoline vehicles—and aims for net-zero direct emissions by 2050. Key initiatives include:
- Retiring coal generation in Arizona by 2032 and adding 2,200 MW of wind/solar and 1,300 MW of storage by 2038.
- Expanding renewable gas solutions through subsidiaries like FortisBC, which is investing in renewable natural gas and energy conservation programs.
- Grid expansion projects in the U.S., including MISO LRTP transmission upgrades and New York regional investments, to facilitate cleaner energy interconnection.

While Fortis lacks a formal MSCI Sustainalytics ESG rating as of July 2025, its moderate controversy level and absence of involvement in thermal coal or animal testing position it as a mid-tier ESG performer. The company's transparency—detailed sustainability reports and CDP participation—further strengthens its appeal to ESG-conscious investors.

Investment Rationale: Stability Meets Purpose

For investors prioritizing both financial returns and ESG alignment, Fortis offers a compelling case. Its capital plan is not just about growth—it's about future-proofing its infrastructure for a world where clean energy dominates. The regulatory tailwinds, geographic diversification (North America + Caribbean), and hybrid business model (regulated utilities + innovation in renewables) create a robust risk-reward profile.

Critically, Fortis's ESG strategy is actionable. By retiring coal plants, deploying storage, and modernizing grids, the company is directly addressing the twin challenges of climate risk and energy reliability. While third-party ESG certifications may lag, the substance of its initiatives speaks louder than ratings.

Conclusion: A Long-Term Play in the Energy Transition

As the energy sector decarbonizes, utilities like Fortis will be the linchpins of this transformation. With a $26 billion capital plan, regulatory momentum, and a decarbonization roadmap that aligns with global climate goals, Fortis is not just adapting to change—it's leading it. For ESG-conscious investors seeking a stable, purpose-driven utility stock, Fortis Inc. is a clear choice for long-term portfolios.