CU Inc. — Interim / Quarterly Report 2025

Nov 7, 2025

INE.

An ATCO Company

CU INC.

INTERIM CONSOLIDATED

FINANCIAL STATEMENTS

(UNAUDITED)

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2025

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TABLE OF CONTENTS

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

General Information

1. The Company and its Operations... 7
2. Basis of Presentation... 7

Information on Financial Performance

1. Segmented Information... 8
2. Revenues... 13

Information on Financial Position

1. Property, Plant and Equipment... 14
2. Long-Term Debt... 15
3. Equity Preferred Shares... 15
4. Class A and Class B Shares... 15

Information on Cash Flow

1. Cash Flow Information... 15

Risk

1. Financial Instruments... 16

CU INC. 2025 UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

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CONSOLIDATED STATEMENTS OF EARNINGS

		Three Months EndedSeptember 30		Nine Months EndedSeptember 30
(millions of Canadian Dollars)	Note	2025	2024	2025	2024
Revenues	4	656	645	2,277	2,221
Costs and expenses
Salaries, wages and benefits	3	(51)	(53)	(163)	(197)
Energy transmission and transportation		(85)	(79)	(257)	(233)
Plant and equipment maintenance		(51)	(44)	(141)	(135)
Fuel costs		(2)	(2)	(9)	(10)
Purchased power		(16)	(12)	(55)	(45)
Depreciation and amortization		(153)	(146)	(454)	(438)
Franchise fees		(52)	(50)	(227)	(217)
Property and other taxes		(19)	(18)	(56)	(54)
Other		(48)	(61)	(172)	(193)
		(477)	(465)	(1,534)	(1,522)
Operating profit		179	180	743	699
Interest income		4	2	15	5
Interest expense		(97)	(101)	(291)	(299)
Net finance costs		(93)	(99)	(276)	(294)
Earnings before income taxes		86	81	467	405
Income tax expense		(19)	(18)	(99)	(93)
Earnings for the period		67	63	368	312

See accompanying Notes to Unaudited Interim Consolidated Financial Statements.

CU INC. 2025 UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

	Three Months Ended September 30		Nine Months Ended September 30
(millions of Canadian Dollars)	2025	2024	2025	2024
Earnings for the period	67	63	368	312
Other comprehensive income (loss), net of income taxes
Items that will not be reclassified to earnings:
Re-measurement of retirement benefits (1)	(1)	(3)	5	-
Comprehensive income for the period	66	60	373	312

(1) Net of income taxes of nil and $2 million for the three and nine months ended September 30, 2025 (2024 - $1 million and nil).
See accompanying Notes to Unaudited Interim Consolidated Financial Statements.

CU INC. 2025 UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

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CONSOLIDATED BALANCE SHEETS

(millions of Canadian Dollars)
	Note	2025
ASSETS
Current assets
Cash and cash equivalents	20	6
Accounts receivable and contract assets	262	576
Trade accounts receivable from parent and affiliate companies	2	4
Inventories	27	23
Prepaid expenses and other current assets	43	47
	354	656
Non-current assets
Property, plant and equipment	5	18,293
Intangibles	899	847
Right-of-use assets	28	19
Investment in joint venture	15	10
Other assets	52	55
Total assets	19,641	19,347
LIABILITIES
Current liabilities
Bank indebtedness	1	11
Short-term advances from parent company	4	158
Accounts payable and accrued liabilities	392	623
Accounts payable to parent and affiliate companies	20	30
Lease liabilities	1	1
Provisions and other current liabilities	2	16
	420	839
Non-current liabilities
Deferred income tax liabilities	1,992	1,900
Retirement benefit obligations	119	127
Customer contributions	2,054	2,008
Lease liabilities	27	19
Other liabilities	70	62
Long-term debt	6	9,435
	9,435	9,013
Total liabilities	14,117	13,968
EQUITY
Equity preferred shares	187	187
Class A and Class B share owner's equity
Class A and Class B shares	1,056	1,056
Retained earnings	4,281	4,136
	5,337	5,192
Total equity	5,524	5,379
Total liabilities and equity	19,641	19,347

See accompanying Notes to Unaudited Interim Consolidated Financial Statements.

CU INC. 2025 UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

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CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(millions of Canadian Dollars)	Note	Class A and Class B Shares	Equity Preferred Shares	Retained Earnings	Accumulated Other Comprehensive Income	Total Equity
December 31, 2023		1,056	187	3,936	–	5,179
Earnings for the period		–	–	312	–	312
Dividends	7,8	–	–	(235)	–	(235)
Other		–	–	(1)	–	(1)
September 30, 2024		1,056	187	4,012	–	5,255
December 31, 2024		1,056	187	4,136	–	5,379
Earnings for the period		–	–	368	–	368
Other comprehensive income		–	–	–	5	5
Gains on retirement benefits transferred to retained earnings		–	–	5	(5)	–
Dividends	7,8	–	–	(229)	–	(229)
Other		–	–	1	–	1
September 30, 2025		1,056	187	4,281	–	5,524

See accompanying Notes to Unaudited Interim Consolidated Financial Statements.

CU INC. 2025 UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

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CONSOLIDATED STATEMENTS OF CASH FLOWS

	Three Months EndedSeptember 30			Nine Months EndedSeptember 30
(millions of Canadian Dollars)	Note	2025	2024	2025	2024
Operating activities
Earnings for the period		67	63	368	312
Adjustments to reconcile earnings to cash flows from operating activities	9	278	270	857	863
Changes in non-cash working capital		15	(15)	73	7
Cash flows from operating activities		360	318	1,298	1,182
Investing activities
Additions to property, plant and equipment		(315)	(337)	(936)	(852)
Additions to intangibles		(35)	(23)	(84)	(66)
Changes in non-cash working capital		13	36	10	1
Other		6	3	13	28
Cash flows used in investing activities		(331)	(321)	(997)	(889)
Financing activities
Issue of long-term debt	6	405	410	663	410
Repayment of long-term debt		(240)	-	(240)	(120)
Repayment of lease liabilities		(1)	-	(2)	(1)
Dividends paid on equity preferred shares	7	(1)	(1)	(5)	(5)
Dividends paid to Class A and Class B share owner	8	(75)	(58)	(224)	(230)
Interest paid		(109)	(100)	(312)	(301)
Other		(3)	(3)	(3)	(3)
Cash flows (used in) from financing activities		(24)	248	(123)	(250)
Increase in cash position		5	245	178	43
Beginning of period		10	(273)	(163)	(71)
End of period	9	15	(28)	15	(28)

See accompanying Notes to Unaudited Interim Consolidated Financial Statements.

CU INC. 2025 UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

SEPTEMBER 30, 2025

(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. The Company 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 the Company's investment in joint venture. In these 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 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, 2024 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 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 6, 2025.

BASIS OF MEASUREMENT

The unaudited interim consolidated financial statements are prepared on a historic cost basis, except for retirement benefit obligations which are carried at remeasured amounts.

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 on-going 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.

CU INC. 2025 UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

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3. SEGMENTED INFORMATION

The Company's operating segments are reported in a manner consistent with the internal reporting provided to the Chief Executive Officer, and the other members of the Executive Committee ("the senior management team").

The accounting policies applied by the segments are the same as those applied by the Company, except for those used in the calculation of adjusted earnings. Intersegment transactions are measured at the exchange amount, as agreed to by the related parties.

Management has determined that the operating subsidiaries in the reportable segments below share similar economic characteristics, as such, they have been aggregated.

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

2025
2024	Electricity	Natural Gas	Financing & Other (9)	Elims	Total
Revenues - external	351	305	–	–	656
	341	304	–	–	645
Revenues - intersegment	3	1	–	(4)	–
	(1)	–	–	1	–
Revenues	354	306	–	(4)	656
	340	304	–	1	645
Operating expenses (2)	(119)	(209)	–	4	(324)
	(110)	(208)	–	(1)	(319)
Depreciation and amortization	(86)	(67)	–	–	(153)
	(83)	(63)	–	–	(146)
Net finance costs	(56)	(37)	–	–	(93)
	(56)	(35)	(8)	–	(99)
Earnings (loss) before income taxes	93	(7)	–	–	86
	91	(2)	(8)	–	81
Income tax (expense) recovery	(21)	2	–	–	(19)
	(22)	2	2	–	(18)
Earnings (loss) for the period	72	(5)	–	–	67
	69	–	(6)	–	63
Adjusted earnings (loss)	83	1	–	–	84
	83	(4)	(6)	–	73
Capital expenditures (3)	170	188	–	–	358
	195	169	–	–	364

Elims - Intersegment Eliminations
(1) Commencing in 2025, Corporate & Other was renamed to Financing & Other to reflect its primary business activities, which include corporate financing, headquarters and support functions.
(2) Includes total costs and expenses, excluding depreciation and amortization expense.
(3) Includes additions to property, plant and equipment, intangibles and $8 million of interest capitalized during construction for the three months ended September 30, 2025 (2024 - $4 million).

CU INC. 2025 UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

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

2025	Electricity	Natural Gas	Financing & Other (3)	Elims	Total
2024
Revenues - external	1,063	1,214	–	–	2,277
	1,036	1,185	–	–	2,221
Revenues - intersegment	6	2	–	(8)	–
	5	1	–	(6)	–
Revenues	1,069	1,216	–	(8)	2,277
	1,041	1,186	–	(6)	2,221
Operating expenses (2)	(381)	(707)	–	8	(1,080)
	(381)	(709)	–	6	(1,084)
Depreciation and amortization	(255)	(199)	–	–	(454)
	(249)	(189)	–	–	(438)
Net finance costs	(169)	(106)	(1)	–	(276)
	(170)	(104)	(20)	–	(294)
Earnings (loss) before income taxes	264	204	(1)	–	467
	241	184	(20)	–	405
Income tax (expense) recovery	(53)	(46)	–	–	(99)
	(57)	(41)	5	–	(93)
Earnings (loss) for the period	211	158	(1)	–	368
	184	143	(15)	–	312
Adjusted earnings (loss)	250	151	(1)	–	400
	247	140	(15)	–	372
Total assets (3)	11,490	8,232	5	(86)	19,641
	11,238	8,116	89	(96)	19,347
Capital expenditures (4)	507	534	–	–	1,041
	492	436	–	–	928

• Elims - Intersegment Eliminations
  (1) Commencing in 2025, Corporate & Other was renamed to Financing & Other to reflect its primary business activities, which include corporate financing, headquarters and support functions.
  (2) Includes total costs and expenses, excluding depreciation and amortization expense.
  (3) 2024 comparatives are at December 31, 2024.
  (4) Includes additions to property, plant and equipment, intangibles and $21 million of interest capitalized during construction for the nine months ended September 30, 2025 (2024 - $10 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 senior management team (SMT) 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 SMT for those purposes.

CU INC. 2025 UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

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

2025	Electricity	Natural Gas	Financing & Other	Total
2024
Adjusted earnings (loss)	83	1	–	84
	83	(4)	(6)	73
Transition of managed IT services	–	(2)	–	(2)
	–	–	–	–
Rate-regulated activities	(11)	(4)	–	(15)
	(12)	6	–	(6)
IT Common Matters decision	(1)	–	–	(1)
	(3)	(2)	–	(5)
Dividends on equity preferred shares of the Company	1	–	–	1
	1	–	–	1
Earnings (loss) for the period	72	(5)	–	67
	69	–	(6)	63

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

2025	Electricity	Natural Gas	Financing & Other	Total
2024
Adjusted earnings (loss)	250	151	(1)	400
	247	140	(15)	372
Restructuring	(6)	(4)	–	(10)
	(13)	(19)	–	(32)
Transition of managed IT services	(5)	(8)	–	(13)
	–	–	–	–
Rate-regulated activities	(29)	17	–	(12)
	(36)	27	–	(9)
ATCO Electric settlement	–	–	–	–
	(8)	–	–	(8)
IT Common Matters decision	(2)	–	–	(2)
	(9)	(7)	–	(16)
Dividends on equity preferred shares of the Company	3	2	–	5
	3	2	–	5
Earnings (loss) for the period	211	158	(1)	368
	184	143	(15)	312

Restructuring

In the three and nine months ended September 30, 2025, the Company recorded restructuring costs of nil and $10 million (after-tax) (2024 - nil and $32 million (after-tax)) that were mainly related to staff reductions and associated severance costs. This restructuring is a continuation of the restructuring activities that commenced in 2024. As these costs are not in the normal course of business, they have been excluded from adjusted earnings.

Transition of managed IT services

In 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 are expected to be substantially complete in 2025. As these costs are not in the normal course of business, they have been excluded from adjusted earnings.

Rate-regulated activities

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

CU INC. 2025 UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

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There is currently no specific guidance under IFRS Accounting Standards for rate-regulated entities that the Company is eligible to adopt. In the absence of this guidance, the Utilities do not recognize assets and liabilities from rate-regulated activities as may be directed by regulatory decisions. Instead, 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.

The Company considers standards issued by the Financial Accounting Standards Board (FASB) 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 SMT. The SMT 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 activities - Second Generation Performance Based Regulation (PBR2) Re-openers

In June 2023, the Alberta Utilities Commission (AUC) initiated a proceeding for ATCO Electric Distribution and ATCO Gas as the re-opener clause was triggered by both utilities' earnings in 2022, the final year of PBR2. The PBR2 re-opener thresholds were triggered as a result of both utilities' earnings being either +/- 500 basis points from the approved Return-On-Equity (ROE) in one year or +/- 300 basis points from the approved ROE in two consecutive years.

On May 22, 2024, the AUC issued a decision to re-open the PBR2 plan and advanced to the second phase of the proceeding (Phase I Decision). The AUC claimed that the distribution businesses failed to quantify or attribute all efficiency gains under PBR2 to specific programs or initiatives. An appeal with the Alberta Court of Appeal (ACA) was filed on the Phase I Decision of the proceeding.

On May 28, 2025, the AUC issued a second decision related to the PBR2 re-opener proceeding to refund $35 million to the customers of ATCO Electric Distribution and $36 million to the customers of ATCO Gas over a six-month period, from September 1, 2025 to February 28, 2026 (Phase II Decision). In regard to the Phase II Decision, a review and variance and a permission to appeal (PTA) were filed with the AUC and the ACA, respectively, on June 27, 2025. On September 22, 2025, the PTA of the Phase II Decision was granted by the ACA. The Phase I and Phase II appeals have been combined into a single proceeding before the ACA and will be heard in April 2026. On October 6, 2025, the AUC denied the application to review and vary the Phase II Decision.

ATCO Electric Distribution and ATCO Gas were the only utilities in Alberta to lower rates in 2023 due to efficiencies being passed onto customers. The after-the-fact requirement to track cost efficiencies at a granular level is inconsistent with the Performance Based Regulation principles and past AUC decisions. As ATCO Electric Distribution and ATCO Gas are appealing the Phase I and Phase II Decisions of the PBR2 re-opener proceeding with the ACA, and the Company believes it will more likely than not succeed on appeal, no impact to Adjusted Earnings has been recognized for the three and nine months ended September 30, 2025 related to the PBR2 re-opener decisions.

CU INC. 2025 UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

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Rate-regulated activities - Timing Adjustments

Rate-regulated accounting differs from IFRS Accounting Standards in the following ways:

	Timing Adjustment	Items	RRA Treatment	IFRS Accounting Standards Treatment
1.	Additional revenues billed in current period	Future removal and site restoration costs, and impact of colder temperatures.	The Company defers the recognition of cash received in advance of future expenditures.	The Company recognizes revenues when amounts are billed to customers and costs when they are incurred.
2.	Revenues to be billed in future periods	Deferred income taxes and impact of warmer temperatures.	The Company recognizes revenues associated with recoverable costs in advance of future billings to customers.	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.
3.	Regulatory decisions received	Regulatory decisions received which relate to current and prior periods.	The Company recognizes the earnings from a regulatory decision pertaining to current and prior periods when the decision is received.	The Company does not recognize earnings from a regulatory decision when it is received as regulatory assets and liabilities are not recorded under IFRS Accounting Standards.
4.	Settlement of regulatory decisions and other items	Settlement of amounts receivable or payable to customers and other items.	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 earnings 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 are as follows:

	Three Months Ended September 30		Nine Months Ended September 30
	2025	2024	2025	2024
Additional revenues billed in current period
Future removal and site restoration costs (1)	35	31	100	94
Revenues to be billed in future periods
Deferred income taxes (2)	(37)	(31)	(106)	(93)
Impact of warmer temperatures (3)	(6)	(5)	(13)	(1)
Settlement of regulatory decisions and other items
PBR2 re-opener proceeding refund to customers (4)	(7)	-	(7)	-
Other	-	(1)	14	(9)
	(15)	(6)	(12)	(9)

(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 proceeding (Phase II Decision), ATCO Electric Distribution and ATCO Gas Distribution refunded $3 million (after-tax) and $4 million (after-tax), respectively, to customers for the three and nine months ended September 30, 2025.

CU INC. 2025 UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

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ATCO Electric settlement

On June 24, 2024, AUC Enforcement and ATCO Electric filed a joint submission seeking the AUC's approval of a settlement agreement involving two historical matters ATCO Electric had previously identified and self-reported to AUC Enforcement staff. The settlement agreement included an administrative penalty of $3 million, and a refund to customers through a billing adjustment to the Alberta Electric System Operator of $4 million. On September 25, 2024, the AUC approved the settlement agreement as filed.

In the nine months ended September 30, 2024, the Company recognized costs of $8 million (after-tax) related to ATCO Electric's settlement application. These costs were comprised of the administrative penalty, refund to customers and legal and other costs related to the settlement agreement. As these costs are not in the normal course of business, they were excluded from adjusted earnings.

IT Common Matters decision

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 in the three and nine months ended September 30, 2025 was $1 million (after-tax) and $2 million (after-tax) (2024 - $5 million (after-tax) and $16 million (after-tax)).

4. 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.

2025
2024	Electricity (1)	Natural Gas (1)	Total
Revenue Streams
Rendering of Services
Distribution services	149	164	313
	143	169	312
Transmission services	167	92	259
	166	87	253
Customer contributions	10	5	15
	10	5	15
Franchise fees	11	41	52
	10	40	50
Total rendering of services	337	302	639
	329	301	630
Other (2)	14	3	17
	12	3	15
Total	351	305	656
	341	304	645

(1) For the three months ended September 30, 2025, Electricity and Natural Gas segments include $87 million of unbilled revenue (2024 - $94 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.

CU INC. 2025 UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

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

2025
2024	Electricity (1)	Natural Gas (1)	Total
Revenue Streams
Rendering of Services
Distribution services	462	720	1,182
	432	708	1,140
Transmission services	501	275	776
	500	266	766
Customer contributions	27	17	44
	29	16	45
Franchise fees	31	196	227
	30	187	217
Total rendering of services	1,021	1,208	2,229
	991	1,177	2,168
Other (2)	42	6	48
	45	8	53
Total	1,063	1,214	2,277
	1,036	1,185	2,221

(1) For the nine months ended September 30, 2025, Electricity and Natural Gas segments include $87 million of unbilled revenue (2024 -$ 94 million). At September 30, 2025,$ 87 million of the unbilled revenue is included in accounts receivable and contract assets (2024 - $94 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.

5. PROPERTY, PLANT AND EQUIPMENT

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

	Utility Transmission & Distribution	Land and Buildings	Construction Work-in-Progress	Other	Total
Cost
December 31, 2024	22,625	655	587	695	24,562
Additions	-	-	964	-	964
Transfers	699	8	(727)	20	-
Retirements and disposals	(68)	(14)	-	(37)	(119)
September 30, 2025	23,256	649	824	678	25,407
Accumulated depreciation
December 31, 2024	6,231	203	-	368	6,802
Depreciation	387	11	-	33	431
Retirements and disposals	(68)	(15)	-	(36)	(119)
September 30, 2025	6,550	199	-	365	7,114
Net book value
December 31, 2024	16,394	452	587	327	17,760
September 30, 2025	16,706	450	824	313	18,293

The additions to property, plant and equipment included $16 million of interest capitalized during construction for the nine months ended September 30, 2025 (2024 -$ 9 million).

CU INC. 2025 UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

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6. LONG-TERM DEBT

In September 2025, the Company issued $370 million of 4.787 per cent debentures maturing on September 16, 2024 - In September 2024, the Company issued $410 million of 4.664 per cent debentures maturing September 11, 2024.

In March 2025, the Company initially borrowed $18 million from its $155 million non-revolving unsecured amortizing credit facility with a bank lender to support the construction of the Central East Transfer-Out (CETO) Project within the Electricity Transmission business of the Electricity operating segment (CETO Project Debt). Quarterly repayments on the credit facility commence once the CETO Project reaches commercial operations and continue until June 30, 2026. The CETO Project Debt bears a fixed interest rate of 2.17 per cent. Additional draws from the facility are expected in the fourth quarter of 2025 and in 2026 as construction progresses.

In March 2024, the Company repaid $120 million of 6.215 per cent unsecured debentures.

7. 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)	2025	2024	2025	2024
Equity preferred shares
4.60% Series 1	0.2875	0.2875	0.8625	0.8625
2.292% Series 4	0.1433	0.1433	0.4298	0.4298

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 9, 2025, the Company declared fourth quarter dividends of $0.28750 per Series 1 Preferred Share and $0.14325 per Series 4 Preferred Share, payable on December 1, 2025 to share owners of record as of November 6, 2025.

8. 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 (2024 - $10.04 and $39.93). The payment of dividends is at the discretion of the Board and depends on the financial condition of the Company and other factors.

On October 9, 2025, the Company declared a fourth quarter dividend of $6.13 per Class A share and Class B share, payable on December 1, 2025 to share owners of record as of November 6, 2025.

9. 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
	2025	2024	2025	2024
Depreciation and amortization	153	146	454	438
Income tax expense	19	18	99	93
Contributions by customers for extensions to plant	29	18	90	77
Amortization of customer contributions	(15)	(15)	(44)	(45)
Net finance costs	93	99	276	294
Income taxes (paid) received	(3)	6	(16)	4
Interest received	4	–	13	3
Other	(2)	(2)	(15)	(1)
	278	270	857	863

CU INC. 2025 UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

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CASH POSITION

Cash position at September 30 is comprised of:

	2025	2024
Cash and cash equivalents	20	20
Bank indebtedness (1)	(1)	(2)
Short-term advances from parent company	(4)	(46)
	15	(28)

(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.

10. FINANCIAL INSTRUMENTS

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 is described below.

Financial Instruments	Fair Value Method
Measured at Amortized Cost
Cash and cash equivalents, accounts receivable and contract assets, trade accounts receivable from parent and affiliate companies, bank indebtedness, 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).

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

	September 30, 2025		December 31, 2024
Recurring Measurements	Carrying Value	Fair Value	Carrying Value	Fair Value
Financial Assets
Long-term advances due from joint venture (1)	33	31	35	33
Financial Liabilities
Long-term debt	9,435	8,835	9,013	8,588

(1) Long-term advances due from joint venture of $33 million (December 31, 2024 - $35 million) are recorded in other assets in the consolidated balance sheets.

CU INC. 2025 UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS