Canadian Utilities Limited (CU.TO) Rating OUTPERFORM* Price (27 Oct 14, C$) 40.00 INITIATION Target Price (C$) 46.00¹ 52-Week Price Range 41.27 - 35.12 Market Cap

28 October 2014 Americas/Canada Equity Research Multi Utilities

Canadian Utilities Limited (CU.TO) Rating OUTPERFORM* Price (27 Oct 14, C$) 40.00 INITIATION Target price (C$) 46.00¹ 52-week price range 41.27 - 35.12 Market cap. (C$ m) 10,510.64 Core Canadian Growth Supplemented by Enterprise value (C$ m) 17,434.67

*Stock ratings are relative to the coverage universe in each Selected Geographic Expansion analyst's or each team's respective sector. ¹Target price is for 12 months. ■ All About Alberta: We initiate coverage of Canadian Utilities Limited (CU) Research Analysts with an Outperform rating and a C$46 target price. The recent growth in Paul Tan CU's financials is driven largely from its organic utility segment growth owing 416 352 4593 [email protected] primarily to the continued natural resource development in the Province of Andrew M. Kuske Alberta. CU should continue to benefit from the continued growth of this 416 352 4561 natural resource for the foreseeable future. Another positive outcome has [email protected] been the greater proportion of earnings coming from a more stable source. We believe this organic growth will translate into continued earnings and dividend growth. ■ Geographic Diversification: CU wants to duplicate its success in Alberta to other markets in the globe that have similar characteristics as the Canadian province. The company has targeted Australia and Mexico to supplement its Alberta base growth. We believe with CU can benefit from the natural resources growth in Western Australia (iron ore and LNG) and the planned National Infrastructure Program being implemented in Mexico. ■ Investment Thesis: CU is benefitting from the ongoing growth of the Alberta oilsands with large organic growth in its Alberta base regulated utilities segment. We believe the growth in Alberta will be supplemented by organic growth in Australia and Mexico. ■ Valuation: Our C$46 target price is calculated using multiple valuation approaches, largely from a targeted dividend yield of 2.50% (2015e), in-line with the 2.50% Canadian 10-year bond yield forecast and a 17.7x P/E multiple on 2016e.

Share price performance Financial and valuation metrics

Daily Oct 28, 2013 - Oct 27, 2014, 10/28/13 = C$37.99 Year 12/13A 12/14E 12/15E 12/16E 41 EPS (CS adj.) (C$) 2.21 2.13 2.45 2.60 39 Prev. EPS (C$) — — — — 37 P/E (x) 18.1 18.8 16.3 15.4 35 P/E rel. (%) 104.3 124.9 122.9 129.7 33 Revenue (C$ m) 3,381.0 3,772.6 3,969.6 4,205.1 Oct-13 Feb-14 Jun-14 EBITDA (C$ m) 1,544.0 1,713.2 1,883.8 2,039.9 Price Indexed Price Relative OCFPS (C$) 2.73 2.41 2.34 2.09 On 10/27/14 the S&P/TSX Composite closed at 14469. P/OCF (x) 13.1 16.6 17.1 19.2 EV/EBITDA (current) 11.0 9.9 9.0 8.3 Net debt (C$ m) 5,795 6,924 7,630 7,844 ROIC (%) 7.28 7.15 6.94 6.98

Quarterly EPS Q1 Q2 Q3 Q4 Number of shares (m) 262.77 IC (current, C$ m) 11,189.00 2013A 1.40 0.51 0.43 0.57 BV/share (Next Qtr., C$) 15.8 EV/IC (x) 1.4 2014E 0.71 0.32 0.45 0.65 Net debt (Next Qtr., C$ m) 6,743.1 Dividend (current, C$) 1.1

Net debt/tot eq (Next Qtr., %) 123.2 Dividend yield (%) 0.67 2015E 0.76 0.50 0.46 0.73 Source: Company data, Credit Suisse estimates.

DISCLOSURE APPENDIX AT THE BACK OF THIS REPORT CONTAINS IMPORTANT DISCLOSURES, ANALYST CERTIFICATIONS, AND THE STATUS OF NON-US ANALYSTS. US Disclosure: Credit Suisse does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.

CREDIT SUISSE SECURITIES RESEARCH & ANALYTICS BEYOND INFORMATION® Client-Driven Solutions, Insights, and Access

28 October 2014

Canadian Utilities Limited CU.TO Price (27 Oct 14): C$40.00, Rating: OUTPERFORM, Target Price: C$46.00 Income statement (C$ m) 12/13A 12/14E 12/15E 12/16E Per share data 12/13A 12/14E 12/15E 12/16E Revenue (C$ m) 3,381.0 3,772.6 3,969.6 4,205.1 No. of shares (wtd avg) 259 263 266 269 EBITDA 1,544 1,713 1,884 2,040 CS adj. EPS (C$) 2.21 2.13 2.45 2.60 Depr. & amort. (478) (519) (583) (639) Prev. EPS (C$) — — — — EBIT (C$) 1,066 1,194 1,300 1,401 Dividend (C$) 0.97 1.07 1.17 1.28 Net interest exp. (273) (308) (345) (370) Dividend payout ratio 43.97 50.19 47.77 49.31 Associates — — — — Free cash flow per share (5.68) (4.98) (5.77) (4.66) Other adj, — — — — (C$) PBT (C$) 793 886 955 1,031 Key ratios and 12/13A 12/14E 12/15E 12/16E Income taxes (187) (220) (239) (258) valuation Profit after tax 606 666 716 773 Growth(%) Minorities — — — — Sales 7.7 11.6 5.2 5.9 Preferred dividends (64) (65) (65) (74) EBIT 7.4 12.0 8.9 7.7 Associates & other (98) (171) (130) (148) Net profit 10.6 (2.0) 16.2 7.3 Net profit (C$) 572 561 651 699 EPS (45.4) (3.3) 14.9 6.0 Other NPAT adjustments (30) 40 — — Margins (%) Reported net income 542 601 651 699 EBITDA margin 45.7 45.4 47.5 48.5 EBIT margin 31.5 31.6 32.8 33.3 Cash flow (C$) 12/13A 12/14E 12/15E 12/16E Pretax margin 23.5 23.5 24.1 24.5 EBIT 1,066 1,194 1,300 1,401 Net margin 16.9 14.9 16.4 16.6 Net interest 291 318 352 378 Valuation metrics (x) Cash taxes paid 75 89 96 — EV/sales 4.8 4.6 4.6 4.4 Change in working capital 114 (40) — — EV/EBITDA 11.0 9.9 9.0 8.3 Other cash & non-cash items (775) (862) (1,062) (1,143) EV/EBIT 15.3 14.6 13.9 13.1 Cash flow from operations 771 699 687 636 P/E 18.1 18.8 16.3 15.4 CAPEX (2,245) (2,009) (2,222) (1,892) P/B 2.6 2.4 2.2 1.9 Free cash flow to the firm (1,474) (1,310) (1,535) (1,256) Asset turnover 0.22 0.23 0.22 0.21 Acquisitions — — — — ROE analysis (%) Divestments 2 5 — — ROE stated-return on 14.9 14.5 14.1 13.4 Other investment/(outflows) (175) (75) — — equityROIC 7.3 7.1 6.9 7.0 Cash flow from investments (2,418) (2,079) (2,222) (1,892) Interest burden 0.74 0.74 0.73 0.74 Net share issue/(repurchase) 3 59 124 137 Tax rate 23.6 24.8 25.0 25.0 Dividends paid (180) (228) (250) (279) Financial leverage 1.2 1.3 1.2 1.2 Issuance (retirement) of debt 879 955 650 — Credit ratios (%) Other 401 (536) 306 734 Net debt/equity 107.4 123.0 118.9 109.0 Cash flow from financing 1,103 249 829 1,042 Net debt/EBITDA 3.8 4.0 4.1 3.8 activitiesEffect of exchange rates (6) 2 — — Interest coverage ratio 3.9 3.9 3.8 3.8 Changes in Net Cash/Debt (550) (1,129) (706) (214) Net debt at start 5,245 5,795 6,924 7,630 Quarterly data 12/13A 12/14E 12/15E 12/16E Change in net debt 550 1,129 706 214 EPS for Q1 1.40 0.71 0.76 0.82 Net debt at end 5,795 6,924 7,630 7,844 EPS for Q2 0.51 0.32 0.50 0.54 EPS for Q3 0.43 0.45 0.46 0.48 Balance sheet (C$ m) 12/13A 12/14E 12/15E 12/16E EPS for Q4 0.57 0.65 0.73 0.76 Assets Cash and cash equivalents 498 372 316 552 Accounts receivable 485 411 411 411 Source: Company data, Credit Suisse estimates. Inventory 90 94 94 94 Other current assets 32 65 65 65 Total current assets 1,105 942 886 1,122 Total fixed assets 13,224 14,836 16,474 17,727 Daily Oct 28, 2013 - Oct 27, 2014, 10/28/13 = C$37.99 Intangible assets and goodwill 370 394 394 394 Investment securities 190 194 194 194 41 Other assets 162 177 177 177 39 Total assets 15,051 16,543 18,125 19,614 37 Liabilities Accounts payable 777 704 704 704 35 Short-term debt 2 590 590 590 33 Other short term liabilities 245 500 500 500 Oct-13 Feb-14 Jun-14 Total current liabilities 1,024 1,794 1,794 1,794 Price Indexed Price Relative Long-term debt 6,114 6,235 6,885 7,335 Other liabilities 2,519 2,884 3,027 3,285 On 10/21/14 the S&P/TSX Composite closed at 14547.71 Total liabilities 9,657 10,913 11,706 12,414 Shareholders' equity 5,394 5,629 6,419 7,200 Minority interest — — — — Total equity & liabilities 15,051 16,543 18,125 19,614 Net debt (C$ m) 5,795 6,924 7,630 7,844

Canadian Utilities Limited (CU.TO) 2 28 October 2014 Canadian Utilities—Key charts

Exhibit 1: Large utility segment yearly capital Exhibit 2: A long track record of dividend per share expenditures (C$ in millions) growth (C$)

$2,500 $1.40 1.28 2,142 2,178 2,000 2,000 $1.20 1.17 $2,000 1.07

$1.00 0.97 0.885

1,500 0.805

$1,500 0.755

1,316 $0.80 0.705

0.665

0.625

0.575

0.55 0.53

$0.60 0.51

0.49 0.47 $1,000 853 0.45 776 788 $0.40

$500 $0.20

$0.00

2000 2014 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

2008 2009 2010 2011 2012 2013 2014 2015 2016 2001 2015e 2016e Note: 2014-2016 company guidance. Source: Company data. Source: Company data and Credit Suisse estimates.

Exhibit 3: Growing adjusted earnings (C$ in millions) Exhibit 4: Composition of adjusted earnings is skewed towards the utility segment and growing

$700 Utilities Energy ATCO Australia Corporate & Other 120% Utilities Energy ATCO Australia Corporate & Other

$600 100% 38 10% 13% 10% 11% 11% 7% 45 0% 4% 8% $500 56 0% 4% 8% 80% 62 52 43 151 30% 26% $400 43 0 45 19 35% 26% 0 16 45% 136 60% 54% $300 210 130 164 223 40% $200 338 56% 59% 282 50% 55% 242 236 20% 42% $100 195 36% 149 $0 0% 2008 2009 2010 2011 2012 2013 2008 2009 2010 2011 2012 2013

Note: 2010 is the start of the current segmented disclosures. Source: Note: 2010 is the start of the current segmented disclosures. Source: Company data. Company data.

Exhibit 5: Customer growth in CU's various utilities ATCO Electric ATCO Gas ATCO Gas Australia

300,000 1,150,000 690,000

680,000 250,000 1,100,000

1,050,000 670,000 200,000

1,000,000 660,000 150,000 950,000 650,000 100,000 900,000 640,000

50,000 850,000 630,000

- 800,000 620,000 2007 2008 2009 2010 2011 2012 2013 2007 2008 2009 2010 2011 2012 2013 2011 2012 2013 Industrial Commercial Residential Rural, REAs and other Residential Commercial Industrial Other Residential Commercial Industrial Source: Company data.

Canadian Utilities Limited (CU.TO) 3 28 October 2014 Table of Contents

Canadian Utilities Limited CU.TO 2 Canadian Utilities—Key charts 3 Investment Summary 5 Ongoing organic growth 6 All about Alberta 6 Unprecedented utility growth 8 Powerful potential 13 Australian assets 16 Moving into Mexico 19 Financials 24 Valuation 27 Valuation approaches 27 Price/earnings multiple 27 EV/EBITDA multiple 29 Dividend Yield 30 Dividend Yield Spread 32 Dividend Discounted Model 33 A HOLT® perspective 33 Comparable companies 35 Valuation summary 37 Selected Risks 37 Appendices 39 Asset maps 39 Governance 40 Credit Suisse PEERs map 41 Canadian Utilities Board of Directors 42 Canadian Utilities Management 43

Canadian Utilities Limited (CU.TO) 4 28 October 2014 Investment Summary We initiate coverage of Canadian Utilities Limited (CU) with an Outperform rating and a Rating: Outperform C$46 target price. In our view, CU faces multiple growth opportunities within its core Target: C$46.00 energy infrastructure asset base in its main geographical region, the Province of Alberta. CU is well positioned to capitalized in the continued oil sands development. This growth is evident from the capital expenditures at its Utility segment (Exhibit 6). This Utility segment growth will allow Canadian Utilities to continue to grow its dividend (Exhibit 7).

Exhibit 6: Utility segment capex (C$ in millions) Exhibit 7: Dividend per share growth (C$)

$2,500 $1.40 1.28 2,142 2,178 2,000 2,000 $1.20 1.17 $2,000 1.07

$1.00 0.97 0.885

1,500 0.805

$1,500 0.755

1,316 $0.80 0.705

0.665

0.625

0.575

0.55 0.53

$0.60 0.51

0.49 0.47 $1,000 853 0.45 776 788 $0.40

$500 $0.20

$0.00

2000 2014 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

2008 2009 2010 2011 2012 2013 2014 2015 2016 2001 2015e 2016e Note: 2014-2016 company guidance. Source: Company data. Source: Company data and Credit Suisse estimates. We believe the company will also supplement its Alberta base growth with similar organic CU's growth will also come growth in natural resource base economies of Australia and Mexico. CU's existing asset from Mexico and Australia footprint in Western Australia can benefit from the ongoing iron ore and LNG development in the state. CU entered the Mexican market with recently winning a bid to build a natural gas pipeline to fuel the existing Francisco Pérez Rios power plant, near Tula. The company was also awarded by a subsidiary of Petróleos Mexicanos (PEMEX) to begin the project development and approval process for a US$820m natural gas power plant with partner Grupo Hermes S.A. de C.V. We believe Canadian Utilities will participate in Mexico's National Infrastructure Program. The program seeks investment in the power generation, electric transmission and natural gas pipeline sector by 2018; totaling roughly US$13.6bn, US$1.6bn, and US$13.1bn, respectively. Details on the National Infrastructure Program is in the "Moving into Mexico" section of the report. The bullets below contain a summary of our valuation approaches:

■ Our C$46 target price is derived from a 2.5% dividend yield (2015e) which is in-line with the 2.50% Canadian 10-year forecast;

■ Our target is also based on a dividend discount model and implied a 17.7x P/E on 2016e, which is a premium to the historical mean. Our Canadian Utilities Limited report is divided into three parts: (1) Ongoing organic growth; (2) Financials; and (3) Valuation. Each of these areas is addressed in detail in the following sections.

Canadian Utilities Limited (CU.TO) 5 28 October 2014 Ongoing organic growth One needs to first understand the relationship between Canadian Utilities Limited and ATCO Ltd. Exhibit 8 illustrates Canadian Utilities corporate structure. CU's main shareholder is ATCO Ltd. which owns roughly 53% of CU (39.1% of the Class A non- voting shares and 88.2% of the Class B common shares). ATCO's corporate structure is show on Exhibit 9. ATCO's main asset is its ownership of Canadian Utilities.

Exhibit 8: CU corporate structure Exhibit 9: ATCO Ltd. corporate structure

Note: (1) Descriptions of segment business activities are provided in Note: (1) Descriptions of segment business activities are provided in the Segmented Information section of the MD&A. (2) Regulated the Segmented Information section of the MD&A. (2) Regulated operations include ATCO Gas, ATCO Electric, ATCO Pipelines, operations include ATCO Gas, ATCO Electric, ATCO Pipelines, ATCO Gas Australia and the Battle River unit 5 and Sheerness ATCO Gas Australia and the Battle River unit 5 and Sheerness generating plants of ATCO Power. Source: Company data. generating plants of ATCO Power. Source: Company data. Canadian Utilities Limited has primarily grown through organic development of its asset base. The largest acquisition in the company's history was the A$1.0bn purchase of Western Australia Gas Networks in 2011. This section is divided into three parts:

■ All about Alberta;

■ Australian assets; and,

■ Moving into Mexico. All about Alberta The growth driver in Alberta has been the resource sector, primarily the oil sands. Exhibit Growth in Alberta is due to 10 illustrates the historical and forecasted crude oil production by the Canadian oil sands growth Association of Petroleum Producers (CAPP). The growth in crude oil production is expected to come from the oil sands. Future economic growth in the province continues to be largely dependent on the natural resource sector.

Canadian Utilities Limited (CU.TO) 6 28 October 2014

Exhibit 10: Western Canada Oil Sands & Conventional Production Growing Canadian oil production

Source: Canadian Association of Petroleum Producers (CAPP). The resource growth in Alberta has allowed the province to generate stronger economic growth than the national average and the forecast continues that trend. Exhibit 11 compares the GDP growth rates of Alberta and that of the Canadian and US national averages.

Exhibit 11: Alberta real GDP growth Alberta GDP growth above the national average

Source: Statistics Canada, International Monetary Fund and Alberta Treasury Board and Finance Budget 2014 forecast. The growth in the economy is also evident from the growth in population versus other Canadian provinces (Exhibit 12). The population growth is coming from both net migration from other provinces and other countries into Alberta.

Canadian Utilities Limited (CU.TO) 7 28 October 2014

Exhibit 12: Annual population estimates, July 1, national perspective — Total growth rates (per 1,000) Canada Newfoundland Prince Nova Scotia New Quebec Ontario Manitoba Saskatchewan Alberta British Yukon Northwest Nunavut and Labrador Edward Brunswick Columbia Territories Island 2013/2014 10.92 -2.31 5.33 -0.28 -2.28 7.42 9.39 13.06 17.17 28.17 10.57 4.01 -4.98 31.96 2012/2013 11.51 2.50 1.70 -2.02 -1.56 8.52 10.45 11.85 17.24 30.03 8.79 5.46 4.62 20.10 2011/2012 11.85 3.46 8.43 0.39 1.70 9.58 10.99 13.50 19.49 25.64 9.59 21.35 3.17 15.47 2010/2011 9.88 5.85 16.52 2.54 3.30 9.83 9.73 10.43 14.09 15.32 7.41 23.03 5.14 24.96 2009/2010 11.14 10.10 12.56 4.13 4.11 10.89 10.51 10.16 15.96 14.43 12.45 25.29 2.99 22.83 2008/2009 11.45 10.09 8.22 2.49 4.14 10.51 8.89 8.99 16.99 22.91 13.99 19.28 -4.65 21.96 2007/2008 10.82 4.91 7.54 0.85 1.94 8.90 9.24 7.04 15.15 22.99 13.52 16.18 -0.55 15.71 2006/2007 9.70 -3.03 -1.05 -2.99 -0.27 7.94 8.07 4.92 9.77 26.72 11.55 8.82 4.53 18.74 Note: Total growth is final up to 2010/2011, updated for 2011/2012 and 2012/2013 and preliminary for 2013/2014. Source: Statistics Canada Other economic trends that show Alberta's economic strength versus the rest of Canada consist of historical housing starts in Exhibit 13 and Exhibit 14.

Exhibit 13: Housing starts comparison Exhibit 14: Alberta housing starts and population growth

Note: Housing starts seasonally adjusted at annual rates. Source: Source: Statistics Canada and Alberta Treasury Board and Finance Canada Mortgage and Housing Corporation and Alberta Treasury Budget 2014 forecast. Board and Finance. We further discuss the growth in Alberta in the next two sections: (a) Unprecedented utility growth and (b) Powerful potential. Unprecedented utility growth The largest segment within CU is its Utility segment which comprise of ATCO Gas, ATCO Electric and ATCO Pipelines. This segment's contribution to adjusted earnings was roughly 59% in 2013. Historical segment earnings for CU is shown in Exhibit 15.

Exhibit 15: Segmented earnings Growing utility earnings C$ in millions, unless otherwise stated C$ millions 2008 2009 2010 2011 2012 2013 Utility 149 195 242 236 282 338 Energy 223 210 130 164 136 151 ATCO Australia 16 19 43 45 Corporate & Other 44 61 40 48 52 38 Intersegment Elimination (1) 1 5 4 4 - Total 415 467 433 471 517 572 Note: 2008-2009 (not adjusted); 2010-2013 adjusted earnings. Source: Company data. A graphical representation of the above table appears in Exhibit 16 and Exhibit 17. The growth in the utilities segment is evidence by the growing earnings as well as the percentage of total earnings coming from this segment.

Canadian Utilities Limited (CU.TO) 8 28 October 2014

Exhibit 16: Growing adjusted earnings (C$ in millions) Exhibit 17: Composition of adjusting earnings

$700 Utilities Energy ATCO Australia Corporate & Other 120% Utilities Energy ATCO Australia Corporate & Other

Source: Company data. Source: Company data. Assets within the Utility Segment are located in the Province of Alberta and can be seen in Exhibit 94 and Exhibit 95 in the Appendix Section. The ongoing growth within this segment is highlighted by the customer and usage growth trends within ATCO Electric and ATCO Gas. Exhibit 18 and Exhibit 19 shows ATCO Electric's customer and usage growth, respectively.

Exhibit 18: ATCO Electric customer count Exhibit 19: ATCO Electric usage (GWh) 300,000 12,000

250,000 10,000

200,000 8,000

150,000 6,000

100,000 4,000

50,000 2,000

- - 2007 2008 2009 2010 2011 2012 2013 2007 2008 2009 2010 2011 2012 2013

Industrial Commercial Residential Rural, REAs and other Industrial Commercial Residential Rural, REAs and other

Source: Company data. Source: Company data. ATCO Gas customer and usage figures are seen on Exhibit 20 and Exhibit 21, respectively.

Exhibit 20: ATCO Gas customer count Exhibit 21: ATCO Gas usage (PJ) 1,150,000 300.0

1,100,000 250.0

1,050,000 200.0 1,000,000 150.0 950,000 100.0 900,000

850,000 50.0

800,000 - 2007 2008 2009 2010 2011 2012 2013 2007 2008 2009 2010 2011 2012 2013

Residential Commercial Industrial Other Residential Commercial Industrial Other

Source: Company data. Source: Company data. The growth in the Utilities Segment is also evident in the large capital expenditures compared to CU's other business segments. This comparison can be seen in Exhibit 22 and Exhibit 23.

Canadian Utilities Limited (CU.TO) 9 28 October 2014

Exhibit 22: Utility segment capex Exhibit 23: Segmented capex (excludes utility) C$ in millions, unless otherwise stated C$ in millions, unless otherwise stated $2,500 $160 152 2,178 2,142 $140 $2,000 $120 110

$100 89 $1,500 1,316 $80 74 68 63 $60 49 $1,000 853 42 776 788 $40 33 24 27 19 23 22 $20 13 14 $500 $0 2008 2009 2010 2011 2012 2013 $0 2008 2009 2010 2011 2012 2013 Energy ATCO Australia Corp. & Other

Source: Company data. Note: Australian power plants were in the Energy segment prior to 2010. Source: Company data. The company in their Annual General Meeting presentation, indicated an average of roughly C$1.8bn of utility segment capital expenditures for the years 2014-16 with the majority to be within ATCO Electric. This large capital expenditure project should help drive earnings growth (Exhibit 24).

Exhibit 24: Utility capital expenditure Strong utility capex should C$ in billions, unless otherwise stated drive earnings growth in this $2.5 segment 2.2 2.1 2.0 2.0 $2.0

1.5 $1.5 1.3

$1.0

$0.5

$0.0 2011 2012 2013 2014 2015 2016

Note: Excludes acquistions.2014-2016 company guidance. Source: Company data. Exhibit 25 contains select Utility Segment projects that underpin the large capex.

Canadian Utilities Limited (CU.TO) 10 28 October 2014

Exhibit 25: Select utilities segment projects Total cost Most recent cost Expected Project Name Details ($ mn) incurred Completion Eastern Alberta Transmission Line The 485km 500 kV line will extend from the Gibbons-Redwater area northeast 1,800 1,100 Late 2014 (EATL) of Edmonton to an area near Brooks in southeast Alberta. Northwest Fort McMurray Transmission The project consists of two new substations and approximately 140 km of 370 16 2016 Development Project transmission line. Project consists of a number of transmission line and substation upgrades to Central East Transmission Development enhance the reliability and carrying capacity of the regional system in central 350 201 2015 east Alberta. North East Region Transmission Development in the northeast region of Alberta. 800 53 - Development Urban Pipeline Replacement Replace the high-pressure gas transmission system in Edmonton and Calgary. 700 53 2018 Proceeding (UPR) Source: Company data. In January 2014, the Alberta Electric System Operator (AESO) announced that five companies will be competing for the opportunity to build, finance, own and operate the Fort McMurray West 500 kV Transmission Project (Exhibit 26). Recently, TransCanada and Elecnor decided to withdraw from the process. The project consist of roughly 500km of transmission line and associated facilities from the Wabamum area to the Fort McMurray area. The AESO with the approval of the Alberta Utilities Commission will be selecting the winning bid in December 2014. The target in-service date is 2019 with a capital cost estimated to be C$1.6 billion.

Exhibit 26: Companies selected to bid on the Fort McMurray West 500 kV Transmission Project Companies Owners Design & Construction Operations / Maintenance Alberta PowerLine Canadian Utilities Ltd. / Quanta Capital Solutions Inc. Valard Construction LP ATCO Electric Ltd. Athabasca Transmission AltaLink LP / AEP Transmission Holding Co. LLC Burns and McDonnell Canada Ltd. / SNC Lavalin T&D AltaLink LP / AEP Transmission Holding Co. LLC NorSpan Partners LP EPCOR Utilities Inc. / LS Power Associates LP Kiewit Energy Canada Corp. / Sargent & Lundy LLC EPCOR Utilities Inc. TAMA Transmission LP MidAmerican Energy Holdings Co. / TransAlta MidAmerican Transmission TAMA Transmission TransCanada/Elecnor TransCanada PipeLines Ltd. / Elecnor S.A. Elecnor TransCanada PipeLines Ltd. Source: Alberta Electric System Operator (AESO). The Fort McMurray West project is the first transmission project in Alberta to use the Competitive Process, which was designed to "maximize efficiency and provide downward pressure on transmission costs to Alberta ratepayers". The timelines of how the Competitive Process was created is show below in Exhibit 27

Exhibit 27: Alberta Competitive Process timeline Fort McMurray West Timeline for Competitive Process process timeline Alberta government mandates AESO to develop Competitive Process October 2010 AESO stakeholder consultation for Competitive Process Application October 2010 - September 2011 AESO files Competitive Process application with AUC September 2011 AUC approves AESO’s Competitive Process application February 2013 REOI Stage for Fort McMurray West 500 kV Transmission Project May 9 - June 19, 2013 RFQ Stage for Fort McMurray West 500 kV Transmission Project Opens July 29, 2013 RFQ submission deadline October 11, 2013 Invitations to participate in RFP Week of December 16, 2013 RFP Stage for Fort McMurray West 500 kV Transmission Project December 2013 – December 2014 Source: Alberta Electric System Operator (AESO). Base on a C$1.6bn capital cost assumption, Exhibit 28 illustrates hypothetical EPS impact to CU for a Fort McMurray West Project win under various equity thickness and ROEs.

Exhibit 28: Hypothetical EPS impact of Fort McMurray West Project Hypothetical EPS impact for ROE 0.26 6.00% 6.50% 7.00% 7.50% 8.00% 8.50% 9.00% 9.50% 10.00% 10.50% 11.00% Fort McMurray West project 25% 0.09 0.10 0.11 0.11 0.12 0.13 0.14 0.14 0.15 0.16 0.17 30% 0.11 0.12 0.13 0.14 0.15 0.16 0.16 0.17 0.18 0.19 0.20 35% 0.13 0.14 0.15 0.16 0.17 0.18 0.19 0.20 0.21 0.22 0.23 40% 0.15 0.16 0.17 0.18 0.19 0.21 0.22 0.23 0.24 0.26 0.27 45% 0.16 0.18 0.19 0.21 0.22 0.23 0.25 0.26 0.27 0.29 0.30 Equity Thickness Equity 50% 0.18 0.20 0.21 0.23 0.24 0.26 0.27 0.29 0.30 0.32 0.33 Source: Company data, Credit Suisse estimates.

Canadian Utilities Limited (CU.TO) 11 28 October 2014

Using the last few years' two-year forward P/E multiple range (Exhibit 69) and some of the hypothetical EPS from a project such as the Fort McMurray West Project (Exhibit 28), the share price impact to CU would be in the range of C$1.25 to C$6.00. (See Exhibit 29.)

Exhibit 29: Illustrative share price impact of a project such as Fort McMurray West Last 2-Years Forward 2-Years P/E Range 14.0x 14.5x 15.0x 15.5x 16.0x 16.5x 17.0x 17.5x 18.0x 0.09 1.28 1.32 1.37 1.42 1.46 1.51 1.55 1.60 1.64 0.12 1.66 1.72 1.78 1.84 1.90 1.96 2.02 2.08 2.14 0.16 2.24 2.32 2.40 2.48 2.56 2.64 2.72 2.80 2.88 0.21 2.90 3.00 3.11 3.21 3.31 3.42 3.52 3.62 3.73

EPS Ranges EPS 0.26 3.64 3.77 3.90 4.03 4.16 4.30 4.43 4.56 4.69 0.33 4.69 4.86 5.02 5.19 5.36 5.53 5.69 5.86 6.03 Source: Company data, Credit Suisse estimates. The AESO is expected to run a Competitive Process for the Fort McMurray East 500 kV Transmission Project in 2015-16. In the most recent AESO Long-term Transmission Plan (2013), Alberta continues to be a potential growth area for transmission as well as power generation development. Canadian Utilities Ltd. electric service area in Exhibit 30 can be compared to the AESO's transmission regions which appears in Exhibit 31. CU's service area looks to include for the most part large areas of the Northeast and Northwest and parts of the central region.

Exhibit 30: ATCO Electric and ATCO Gas Alberta service Exhibit 31: Alberta regional transmission planning territory regions and areas

Source: Company data. Source: Alberta Electric System Operator (AESO)/ The AESO's forecast for winter peak load for each region is seen below (Exhibit 32).

Canadian Utilities Limited (CU.TO) 12 28 October 2014

Exhibit 32: Forecast winter peak load in MWs, unless otherwise stated Region South % Chg Central % Chg Edmonton % Chg Northwest % Chg Northeast % Chg 2012 Actual 2,870 1,547 2,134 1,233 2,747 Near term 3,510 22% 1,836 19% 2,506 17% 1,249 1% 3,933 43% Medium term 3,936 12% 2,039 11% 2,785 11% 1,376 10% 4,685 19% Long term 4,678 19% 2,322 14% 3,252 17% 1,563 14% 5,454 16% Source: Alberta Electric System Operator (AESO). The growth in winter peak load translates into the 2013 Long-term Transmission Plan which consists of 37 transmission projects that were proposed out to 2017, of which C$7.5bn have been approved by the Alberta Utilities Commission (AUC) in which C$4.1bn are at the planning stage. Exhibit 33 shows the growth for each region in Alberta and the main drivers for the growth.

Exhibit 33: Alberta electricity infrastructure growth by region Transmission growth within the recent Long-term Transmission Plan

Note: As of January 31, 2014. Source: Alberta Electric System Operator (AESO) The required growth in most of CU's service territory will help the utility segment growth in the near to medium term. Powerful potential With strong economic growth primarily driven by oilsands development, another area of opportunity to deploy capital for Canadian Utilities is in the power generation segment. Exhibit 32 and Exhibit 33 quantifies future new generation needed for the province. Over 60% of CU's net generation capacity is located in the Province of Alberta. The AESO's electric generation capacity forecast can be seen in Exhibit 34.

Canadian Utilities Limited (CU.TO) 13 28 October 2014

Exhibit 34: Alberta generation capacity mix

Source: Alberta Electric System Operator (AESO). As one of largest owners of electricity generation plants in Alberta, CU is well positioned to benefit from the forecasted generation growth in the province. CU's merchant power exposure is predominantly located in Alberta. Exhibit 35, Exhibit 36, and Exhibit 40 highlight selected statistics for Alberta’s power market. We believe the current lackluster power prices will keep CU focused on utility investments in Alberta rather than power generation in the near term. CU will also focus its efforts in growing its Australian and Mexican businesses, which we discuss in the next two sections.

Exhibit 35: Alberta Q3/2014 power statistics Exhibit 36: Alberta Q3/2013 power statistics

10,000 $180 10,000 $250

9,000 $160 9,000

8,000 $140 8,000 $200 7,000 7,000 $120 6,000 6,000 $150 $100

5,000 5,000 MW

MW $80 C$ per MWh per C$ 4,000 MWh per C$ 4,000 $100 $60 3,000 3,000 2,000 $40 2,000 $50 1,000 $20 1,000 - $0 - $0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24

System demand Weighted Avg. Price System demand Weighted Avg. Price

Source: Alberta Electric System Operator (AESO) and Credit Suisse. Source: Alberta Electric System Operator (AESO) and Credit Suisse. Alberta power prices decreased by roughly 22.5% year over year and demand improved by 3.3% for the same period, as illustrated in tabular form in Exhibit 37.

Canadian Utilities Limited (CU.TO) 14 28 October 2014

Exhibit 37: Quarterly AESO data Time Average Weighted Demand chg. Price chg. Demand chg. Price chg. Frame Demand (MW) Avg. Price ($/MWh) y/y y/y q/q q/q 2014 Q3 8,871 69.42 3.3% -22.5% 3.7% 59.1% 2014 Q2 8,554 43.63 2.8% -65.7% -10.9% -30.3% 2014 Q1 9,602 62.56 4.4% -6.4% 3.6% 25.7% 2013 Q4 9,270 49.77 2.7% -39.1% 8.0% -44.5% 2013 Q3 8,584 89.61 2.0% 8.8% 3.2% -29.5% 2013 Q2 8,319 127.11 2.9% 203.9% -9.5% 90.3% 2013 Q1 9,196 66.81 3.5% 5.6% 1.9% -18.3% 2012 Q4 9,024 81.74 4.6% 3.1% 7.3% -0.8% 2012 Q3 8,414 82.39 1.7% -18.5% 4.0% 97.0% 2012 Q2 8,088 41.83 2.9% -23.4% -9.0% -33.9% 2012 Q1 8,886 63.28 0.4% -22.9% 2.9% -20.2% 2011 Q4 8,632 79.32 0.6% 64.4% 4.3% -21.5% 2011 Q3 8,276 101.08 3.7% 173.6% 5.3% 85.0% 2011 Q2 7,857 54.64 0.9% -34.6% -11.2% -33.4% 2011 Q1 8,850 82.07 5.4% 97.7% 3.2% 70.1% 2010 Q4 8,578 48.23 3.7% 1.1% 7.5% 30.6% 2010 Q3 7,978 36.94 3.1% -29.5% 2.5% -55.8% 2010 Q2 7,785 83.60 2.6% 151.7% -7.3% 101.4% 2010 Q1 8,398 41.50 0.8% -36.2% 1.5% -13.0% 2009 Q4 8,270 47.69 2.3% -51.3% 6.9% -9.0% 2009 Q3 7,738 52.42 -1.5% -37.3% 2.0% 57.8% 2009 Q2 7,587 33.22 -0.3% -70.2% -8.9% -49.0% 2009 Q1 8,329 65.09 0.4% -17.3% 3.0% -33.6% 2008 Q4 8,087 97.96 -1.0% 53.8% 3.0% 17.2% 2008 Q3 7,854 83.60 0.6% -14.4% 3.2% -25.0% 2008 Q2 7,611 111.41 0.1% 114.9% -8.3% 41.6% 2008 Q1 8,299 78.70 0.8% 21.5% 1.6% 23.5% Source: Alberta Electric System Operator (AESO) and Credit Suisse. For certain power market participants, Alberta’s 30-day rolling average pricing is a critical metric to watch. Exhibit 38 highlights the 30-day RAP.

Exhibit 38: Alberta power pricing 30-day RAP Volatility in the 30-day RAP

$250

$200

$150

C$/MWh $100

$50

6/1/09 8/1/09 2/1/10 4/1/10 6/1/10 8/1/10 2/1/11 4/1/11 6/1/11 8/1/11 2/1/12 4/1/12 6/1/12 8/1/12 2/1/13 4/1/13 6/1/13 8/1/13 2/1/14 4/1/14 6/1/14 8/1/14

10/1/11 10/1/09 12/1/09 10/1/10 12/1/10 12/1/11 10/1/12 12/1/12 10/1/13 12/1/13 10/1/14

Source: Alberta Electric System Operator (AESO) and Credit Suisse.

Canadian Utilities Limited (CU.TO) 15 28 October 2014

Australian assets Similar to Alberta in Canada, Western Australia has outperformed the rest of Australia owing to the development in its natural resources. Exhibit 39 compares GDP growth between the State of Western Australia and the country. Exhibit 40 illustrates that the mining sector has historically been the largest contributor of Western Australia's GDP growth.

Exhibit 39: Western Australia / Australia GDP Exhibit 40: WA Industry sectors real value added (% change)

Source: Government of Western Australia, Department of State Source: Government of Western Australia, Department of State Development. Development. Two of the major natural resources in Western Australia consist of iron ore and LNG which have seen growth over the years (see Exhibit 41).

Exhibit 41: Iron ore and LNG sales outlook (volume) Growing natural resource production in Western Australia

Note: Projections and/or forecasts start in 2014-15. Source: Government of Western Australia; Western Australia Department of Mines and Petroleum. The company started operating in Australia through its Structures & Logistics division. CU's history in Australia CU's first energy asset consisted of the 180MW Osborne Cogeneration Facility built by CU and joint venture partner Boral Energy in 1998. The Osborne plant near Adelaide in South Australia was followed by the 33MW Bulwer Island Facility in Queensland in 2001 and the 86MW Karratha Power Station in Western Australia in 2010. The largest investment in Australia was the 2011 acquisition of Western Australia Gas Networks (later renamed

Canadian Utilities Limited (CU.TO) 16 28 October 2014

ATCO Gas Australia) for roughly A$1.0bn. Current asset base in Australia is shown in Exhibit 42.

Exhibit 42: Australian operations Australian asset map

Source: Company data. Growth in Western Australia is evident from customer growth at ATCO Gas Australia which can be seen in Exhibit 43.

Exhibit 43: ATCO Gas Australia customer count Exhibit 44: ATCO Gas Australia usage (PJ) 690,000 30.0

680,000 25.0

670,000 20.0 660,000 15.0 650,000 10.0 640,000

630,000 5.0

620,000 - 2011 2012 2013 July 29 to Dec 31 2011 2,012 2,013

Residential Commercial Industrial Residential Commercial Industrial

Source: Company data. Source: Company data. Western Australia continues to develop its vast natural resources which could provide opportunities for CU in behind the fence power generation. Exhibit 45 shows the various natural resource projects in Western Australia (see Link in Government of Western Australia Web site).

Canadian Utilities Limited (CU.TO) 17 28 October 2014

Exhibit 45: Western Australia major resource projects

Source: Government of Western Australia Department of Mines and Petroleum.

Canadian Utilities Limited (CU.TO) 18 28 October 2014

Canadian Utilities' commitment to growing its presence in Australia was evident with two Two new board members new Board of Directors with direct experience in Australia, Mr. Matthias F. Bischel and Ms. with direct experience in Laura A. Reed. A detailed biography can be found in the Appendix section in Exhibit 99. Australia

Moving into Mexico In the 2014 Annual General Meeting (AGM), the company stated that they would like to Mexico highlighted during grow their geographical presence to areas similar to Alberta, where the company could AGM apply its expertise in other resource driven economies. The first step of geographical expansion took place in Australia, where the company acquired a gas distribution company in 2011. The company highlighted continued growth in Australia as well as its intention to enter Mexico and South Africa (Exhibit 46). The company's geographic expansion started with the structure and logistics business which currently operates in those countries as can be seen in Exhibit 47.

Exhibit 46: Geographical expansion opportunities Exhibit 47: Structure & Logistics business activity

Source: Company data. Source: Company data. On October 9, 2014, the company announced that it has been awarded a contract by the Awarded first project in Comisión Federal de Electricidad (CFE) to design, build, operate, and maintain a natural Mexico – natural gas gas pipeline near the town of Tula in the state of Hidalgo, Mexico. The pipeline runs 16 km pipeline and will transport natural gas to fuel the existing Francisco Pérez Rios power plant, near Tula. The value of the project is roughly US$50m and is expected to be in service 2015. ATCO stated "ATCO's growth in Mexico is modeled after its existing Canadian and Australian operations consisting of diverse yet complementary businesses of power generation, natural gas and electricity transmission and distribution, and workforce accommodation and site services." On October 27, 2014, the company and its partner Grupo Hermes S.A. de C.V. was Power generation project in selected by a subsidiary of Petróleos Mexicanos (PEMEX) to begin the project Mexico development and approval process for a natural gas cogeneration plant at PEMEX's Miguel Hidalgo refinery near the town of Tula. The plant is expected to have a capacity of 638MW; cost roughly US$820m (50% to CU) and be in service the second half of 2017. During the company's AGM it identified power plant opportunities in Mexico as highlighted on Exhibit 48. The target would be green field development of a number of co-generation projects for Petróleos Mexicanos (PEMEX), the Mexican state-owned petroleum company.

Canadian Utilities Limited (CU.TO) 19 28 October 2014

Exhibit 48: Mexico power opportunities

Source: Company data. The company's push into Mexico is evident by the nomination to the Board of Directors Mexican national appointed during the 2014 AGM of Mr. Hector A. Rangel, who is currently the President of BCP to the board Securities Mexico and former CEO of Nacional Finaciera S.N.C. and Banco Nacional de Comercio Exterior and a member of Mexico's cabinet under President Felipe Calderon. A detailed biography can be found in the Appendix section in Exhibit 99. The National Infrastructure Program (NIP) in Mexico is the major source of development Mexico's National opportunity for CU. The program calls for roughly 9,323 MW of new generation by 2018 at Infrastructure Program a roughly US$13.6 billion. Exhibit 49 contains the locations of these proposed power plants. source of growth A more detailed description of each power project is seen below in Exhibit 50.

Exhibit 49: National Infrastructure Program – power Exhibit 50: National Infrastructure Program – power generation project map generation project description

Source: IEnova presentation. Source: IEnova presentation. Renewable generation potential in Mexico is sizeable and only a small portion has been developed.

Canadian Utilities Limited (CU.TO) 20 28 October 2014

Exhibit 51: Mexico renewable resource region Exhibit 52: Mexico renewable generation potential

Source: IEnova presentation, SENER. Source: IEnova presentation, SENER. The National Infrastructure Program will also open up foreign investments in the electric transmission segment with projected capex of roughly US$1.7 billion. CU could potentially participate in this growth segment of the program. The transmission opportunities are shown in Exhibit 53 and Exhibit 54.

Exhibit 53: National Infrastructure Program – power Exhibit 54: National Infrastructure Program – power transmission projects transmission project description

Source: IEnova presentation, SENER. Source: IEnova presentation, SENER. The underlying opportunities within the electric transmission sector is the age of the current infrastructure as can be seen in Exhibit 55 and Exhibit 56 below.

Canadian Utilities Limited (CU.TO) 21 28 October 2014

Exhibit 55: Transmission lines Exhibit 56: Substations

Source: IEnova presentation, SENER. Source: IEnova presentation, SENER. The largest opportunity set in terms of dollar value for CU would be the natural gas transmission projects in Exhibit 57 and Exhibit 58.

Exhibit 57: National Infrastructure Program – natural gas Exhibit 58: National Infrastructure Program – natural gas pipeline projects pipeline project description

Source: IEnova presentation, SENER. Source: IEnova presentation, SENER. Underlying growth in the midstream sector is due to the vast energy resources in Mexico.

Exhibit 59: Mexico shale oil reserves (in billion barrels) Exhibit 60: Mexico shale gas reserves (in Tcf) 80 75 1,200 1,115 70 1,000 58 60 802 800 707 50 665 573 545 40 600 32 437 390 30 27 26 400 285 18 245 20 13 13 9 9 200 10 0 0

Source: IEnova presentation, PEMEX, EIA. Source: IEnova presentation, PEMEX, EIA. A recent Bloomberg article highlighted that the company is looking for partners in Mexico. The company stated, "It's important for us to work with someone who knows the country

Canadian Utilities Limited (CU.TO) 22 28 October 2014 well." The competitive landscape in the Mexican electric generation and natural gas pipeline market are illustrated in Exhibit 61 and Exhibit 62, respectively.

Exhibit 61: Participants in electric generation (MW) Exhibit 62: Participants in natural gas pipelines (mmcf/d)

4%1% 2%2%3% 13% 12% 13% Others Other 5% Intergen GDF Suez 30% IEnova 7% IEnova Gas Natural Fenosa Kinder Morgan AES Pemex 34% Iberdrola Fermaca Mitsubishi TransCanada 27% Mitsui 2% Elecnor 41% 4%

Source: IEnova presentation, “Prospectiva de Gas Natural 2010– Source: IEnova presentation, “Prospectiva de Gas Natural 2010– 2025”; “Prospectiva del Sector Eléctrico 2010–2025”, CFE. 2025”; “Prospectiva del Sector Eléctrico 2010–2025”, CFE. We believe the National Infrastructure Program in Mexico could provide near- term/medium-term regulated/contracted asset base growth for Canadian Utilities.

Canadian Utilities Limited (CU.TO) 23 28 October 2014 Financials Exhibit 63 contains our Canadian Utilities summary income statement.

Exhibit 63: Summary Income Statement in millions, unless otherwise stated Income Statement 2013 2014 2015 2016 Revenues 3,381 3,773 3,970 4,205 Cost of expenses Salaries, wages and benefits (469) (492) (519) (539) Energy transmission and transportation (139) (174) (163) (169) Plant and equipment maintenance (244) (251) (268) (277) Fuel costs (331) (447) (416) (432) Depreciation and amortization (478) (519) (583) (639) Franchise fees (186) (251) (253) (263) Other (485) (480) (507) (526) Total costs (2,332) (2,613) (2,710) (2,846) 1,049 1,160 1,259 1,359 Earnings from ATCO Structures / JVs 17 34 41 42 Operating profit 1,066 1,194 1,300 1,401 Net finance costs (273) (308) (345) (370) Earnings before income taxes 793 886 955 1,031 Income taxes (187) (220) (239) (258) Earnings for the period 606 666 716 773 Preferred share dividend (subsidiary) (19) (14) (10) (10) Earnings for equity owners 587 652 706 763 Preferred share dividend (corp) (45) (51) (55) (64) Earnings for equity owners 542 601 651 699 Adjustments 30 (40) - - Earnings after adjustments 572 561 651 699

EPS (Basic) - after adjustments 2.21 2.14 2.46 2.61 EPS (Diluted) - after adjustments 2.21 2.13 2.45 2.60

Dividend per share 0.97 1.07 1.17 1.28 Source: Company data, Credit Suisse estimates. Selected incomes statement highlights include the following:

■ Forecast earnings per share growth of 18% from 2013 to 2016;

■ Dividend growth rate is forecast to be roughly 32% from 2013 to 2016;

■ An average dividend payout ratio on earnings of roughly 48%; and,

■ An estimated 9.7% compounded annual dividend per share growth from 2013 to 2016.

Canadian Utilities Limited (CU.TO) 24 28 October 2014

Summary cash flow statement is seen in Exhibit 64.

Exhibit 64: Summary Cash Flow Statement in millions, unless otherwise stated Cash Flow Statement 2013 2014 2015 2016 Operating Activities Earnings for the period 606 666 716 773 Adjustments Depreciation & amortization 478 519 583 639 Earnings from ATCO Structures / JV (17) 2 - - Dividends received from ATCO Structures / JV 42 - - - Income taxes 187 220 239 258 Net finance costs 273 308 345 370 Income taxes paid (75) (89) (96) - Other 193 70 - - 1,687 1,696 1,788 2,040 Changes in non-cash working capital 114 (40) - - Cash flow from operations 1,801 1,656 1,788 2,040

Investing Activities Additions of property, plant and equipment (2,245) (2,009) (2,222) (1,892) Acquisition, net of cash acquired - - - - Other (173) (70) - - (2,418) (2,079) (2,222) (1,892)

Financing Activities Issue / Repayment of short-term debt - 585 - - Issue / Repayment of long-term debt 909 385 650 450 Issue / Repayment of non-recourse LT debt (30) (15) - - Issue / Redemption of prefered shares 400 (160) 200 150 Net issue (purchase) Class A shares 3 59 124 137 Dividends paid on preferred shares (45) (51) (55) (64) Dividends paid on preferred shares of subsidiary (19) (14) (10) (10) Dividends paid on Class A and Class B (116) (163) (185) (205) Interest paid (312) (334) (345) (370) Other (20) - - - 770 292 378 88 Foreign currency translation (6) 2 - - Cash position Increase (decrease) 147 (129) (56) 236 Beginning of year 349 496 372 316 End of year 496 367 316 552 Source: Company data, Credit Suisse estimates. Selected highlights of our cash flow forecast include:

■ Average annual capital expenditure of roughly C$2.1 billion during 2013-16.

Canadian Utilities Limited (CU.TO) 25 28 October 2014

Exhibit 65 contains the summary balance sheet for Canadian Utilities.

Exhibit 65: Summary Balance Sheet in millions, unless otherwise stated Balance Sheet 2013 2014 2015 2016 Current Assets Cash and cash equivalents 498 372 316 552 Account receivable 477 389 389 389 Prepaid expenses and other current assets 130 181 181 181 1,105 942 886 1,122 Non-current assets Property, plant and equipment 12,905 14,535 16,173 17,426 Intangibles 370 394 394 394 Investments 288 290 290 290 Other assets 383 382 382 382 Total Assets 15,051 16,543 18,125 19,614

Current liabilities Bank indebtedness 2 5 5 5 Accounts payable and accrued liabilites 777 704 704 704 Asset retirement obligations and other provisions 55 17 17 17 Other current liabilities 13 12 12 12 Short term debt - 585 585 585 Long term debt 138 440 440 440 Non-recourse long term debt 39 31 31 31 Equity preferred shares - - - - 1,024 1,794 1,794 1,794 Non-current liabilities Deferred income tax liabilities 651 753 896 1,154 Asset retirement obligations and other provisions 137 156 156 156 Retirement benefit obligations 275 440 440 440 Deferred revenues 1,386 1,470 1,470 1,470 Long term debt 5,988 6,116 6,766 7,216 Non-recourse long term debt 126 119 119 119 Other liabilites 70 65 65 65 Total liabilties 9,657 10,913 11,706 12,414

Equity Equity preferred shares 1,115 1,115 1,315 1,465 Equity preferred shares of subsidiary corp. 343 187 187 187 Class A and Class B share owners' equity Class A and Class B shares 803 922 1,046 1,182 Contributed surplus 15 14 14 14 Retained earnings 3,157 3,396 3,862 4,356 Accumulated other comprehensive income (39) (5) (5) (5) 3,936 4,327 4,917 5,548 Total Equity 5,394 5,629 6,419 7,200 Total liabilities and equity 15,051 16,543 18,125 19,614 Source: Company data, Credit Suisse estimates. Selected balance sheet highlights include:

■ Average return on equity of 13.3% (2013-16);

■ An average capital structure of 55% debt, 34% equity and 11% preferred shares; and,

■ Total asset growth of 30% from 2013-2016. Based upon our financial forecasts, our attention now turns to valuing CU's shares.

Canadian Utilities Limited (CU.TO) 26 28 October 2014 Valuation Our valuation section is divided into two parts:

■ Valuation approaches, and

■ Selected risks. Each of these areas is addressed in more detail below. Valuation approaches As per our typical practice, we have a multi-faceted valuation approach in our coverage universe. Under this section, we utilize multiple approaches to CU and then use a comparable approach for completeness. Those approaches are:

■ Price/earnings multiple;

■ EV/EBITDA multiple;

■ Dividend yield

■ Dividend yield spread

■ Dividend discount model; and,

■ A HOLT® perspective. Each of these areas along with the final comparative table appears below. Price/earnings multiple Exhibit 66 and Exhibit 67 provide a historical view for CU's Forward 1-year and 2-Year P/E multiple over the past 10 years.

Exhibit 66: Historical 1-year forward P/E Exhibit 67: Historical 2-year forward P/E 24x 24x 22x 22x

20x 20x

18x 18x

16x 16x

14x 14x

12x 12x

10x 10x

4/18/2008 4/18/2013 4/18/2005 4/18/2006 4/18/2007 4/18/2009 4/18/2010 4/18/2011 4/18/2012 4/18/2014

4/18/2005 4/18/2006 4/18/2007 4/18/2008 4/18/2009 4/18/2010 4/18/2011 4/18/2012 4/18/2013 4/18/2014

10/18/2007 10/18/2008 10/18/2004 10/18/2005 10/18/2006 10/18/2009 10/18/2010 10/18/2011 10/18/2012 10/18/2013

10/18/2007 10/18/2009 10/18/2005 10/18/2006 10/18/2008 10/18/2010 10/18/2011 10/18/2012 10/18/2013 10/18/2004 Source: Thomson One Source: Thomson One The descriptive statistics for both 1-year and 2-year historical forward P/E multiples for CU is shown below in Exhibit 68.

Canadian Utilities Limited (CU.TO) 27 28 October 2014

Exhibit 68: Historical forward P/E descriptive statistics 1-Yr Forward 2-Yr Forward Mean 16.2x 15.5x Median 16.4x 15.4x Min 11.4x 11.0x Max 22.5x 21.7x Source: Thomson One. Exhibit 69 shows the past few years' forward 2-year P/E.

Exhibit 69: Last 2-years of 2-year forward P/E multiples 18x 18x 17x 17x 16x 16x 15x 15x

14x

7/16/2014 1/16/2013 4/16/2013 7/16/2013 1/16/2014 4/16/2014

10/16/2014 10/16/2013 10/16/2012 Source: Thomson One.

■ Mean: 15.8x

■ Media: 15.6x

■ Range: 14.2x to 17.7x Our C$46 target price implies a 17.7x multiple on our 2016 estimate. A valuation matrix appears in Exhibit 70.

Canadian Utilities Limited (CU.TO) 28 28 October 2014

Exhibit 70: Hypothetical share prices at different EPS and P/E multiples Earnings per Share (EPS) 2.00 2.10 2.20 2.30 2.40 2.50 2.60 2.70 2.80 2.90 3.00 11.0x 22.00 23.10 24.20 25.30 26.40 27.50 28.60 29.70 30.80 31.90 33.00 11.5x 23.00 24.15 25.30 26.45 27.60 28.75 29.90 31.05 32.20 33.35 34.50 12.0x 24.00 25.20 26.40 27.60 28.80 30.00 31.20 32.40 33.60 34.80 36.00 12.5x 25.00 26.25 27.50 28.75 30.00 31.25 32.50 33.75 35.00 36.25 37.50 13.0x 26.00 27.30 28.60 29.90 31.20 32.50 33.80 35.10 36.40 37.70 39.00 13.5x 27.00 28.35 29.70 31.05 32.40 33.75 35.10 36.45 37.80 39.15 40.50 14.0x 28.00 29.40 30.80 32.20 33.60 35.00 36.40 37.80 39.20 40.60 42.00 14.5x 29.00 30.45 31.90 33.35 34.80 36.25 37.70 39.15 40.60 42.05 43.50 15.0x 30.00 31.50 33.00 34.50 36.00 37.50 39.00 40.50 42.00 43.50 45.00 15.5x 31.00 32.55 34.10 35.65 37.20 38.75 40.30 41.85 43.40 44.95 46.50 16.0x 32.00 33.60 35.20 36.80 38.40 40.00 41.60 43.20 44.80 46.40 48.00 16.5x 33.00 34.65 36.30 37.95 39.60 41.25 42.90 44.55 46.20 47.85 49.50

P/E Multiple 17.0x 34.00 35.70 37.40 39.10 40.80 42.50 44.20 45.90 47.60 49.30 51.00 17.5x 35.00 36.75 38.50 40.25 42.00 43.75 45.50 47.25 49.00 50.75 52.50 18.0x 36.00 37.80 39.60 41.40 43.20 45.00 46.80 48.60 50.40 52.20 54.00 18.5x 37.00 38.85 40.70 42.55 44.40 46.25 48.10 49.95 51.80 53.65 55.50 19.0x 38.00 39.90 41.80 43.70 45.60 47.50 49.40 51.30 53.20 55.10 57.00 19.5x 39.00 40.95 42.90 44.85 46.80 48.75 50.70 52.65 54.60 56.55 58.50 20.0x 40.00 42.00 44.00 46.00 48.00 50.00 52.00 54.00 56.00 58.00 60.00 20.5x 41.00 43.05 45.10 47.15 49.20 51.25 53.30 55.35 57.40 59.45 61.50 21.0x 42.00 44.10 46.20 48.30 50.40 52.50 54.60 56.70 58.80 60.90 63.00 Source: Company data, Credit Suisse estimates.

EV/EBITDA multiple Exhibit 71 and Exhibit 72 provide historical perspectives for CU's EV/EBITDA multiple over the last 10 years.

Exhibit 71: Historical 1-year forward EV/EBITDA Exhibit 72: Historical 2-year forward EV/EBITDA 19x 18x 16x 17x 14x 15x 12x

13x 10x 8x 11x 6x 9x 4x 2x 7x

4/18/2005 4/18/2006 4/18/2007 4/18/2008 4/18/2009 4/18/2010 4/18/2011 4/18/2012 4/18/2013 4/18/2014

10/18/2007 10/18/2009 10/18/2005 10/18/2006 10/18/2008 10/18/2010 10/18/2011 10/18/2012 10/18/2013 10/18/2004 Source: Thomson One. Source: Thomson One. We provide descriptive statistics for both 1-year and 2-year historical forward EV/EBITDA multiples for CU in Exhibit 73 for additional perspective.

Exhibit 73: Historical forward EV/EBITDA descriptive statistics 1-Yr Forward 2-Yr Forward Mean 9.0x 8.4x Median 8.1x 7.9x Min 6.7x 6.4x Max 18.4x 17.3x Source: Thomson One. Exhibit 74 provides a valuation matrix for CU given some reasonable assumptions for EBITDA generation, prior to considering any significant change to the capital structure.

Canadian Utilities Limited (CU.TO) 29 28 October 2014

Exhibit 74: Hypothetical share prices at different EBITDA and EBITDA multiples EBITDA 1,300 1,400 1,500 1,600 1,700 1,800 1,900 2,000 2,100 2,200 2,300 6.5x 2.48 4.95 7.42 9.90 12.37 14.85 17.32 19.79 22.27 24.74 27.21 7.0x 4.95 7.62 10.28 12.94 15.61 18.27 20.93 23.60 26.26 28.93 31.59 7.5x 7.42 10.28 13.13 15.99 18.84 21.70 24.55 27.40 30.26 33.11 35.97 8.0x 9.90 12.94 15.99 19.03 22.08 25.12 28.17 31.21 34.25 37.30 40.34 8.5x 12.37 15.61 18.84 22.08 25.31 28.55 31.78 35.02 38.25 41.49 44.72 9.0x 14.85 18.27 21.70 25.12 28.55 31.97 35.40 38.82 42.25 45.67 49.10 9.5x 17.32 20.93 24.55 28.17 31.78 35.40 39.01 42.63 46.24 49.86 53.47 10.0x 19.79 23.60 27.40 31.21 35.02 38.82 42.63 46.43 50.24 54.04 57.85 10.5x 22.27 26.26 30.26 34.25 38.25 42.25 46.24 50.24 54.23 58.23 62.23 11.0x 24.74 28.93 33.11 37.30 41.49 45.67 49.86 54.04 58.23 62.42 66.60

EBITDAMultiple 11.5x 27.21 31.59 35.97 40.34 44.72 49.10 53.47 57.85 62.23 66.60 70.98 12.0x 29.69 34.25 38.82 43.39 47.96 52.52 57.09 61.66 66.22 70.79 75.36 12.5x 32.16 36.92 41.68 46.43 51.19 55.95 60.70 65.46 70.22 74.98 79.73 13.0x 34.64 39.58 44.53 49.48 54.42 59.37 64.32 69.27 74.21 79.16 84.11 13.5x 37.11 42.25 47.38 52.52 57.66 62.80 67.93 73.07 78.21 83.35 88.49 14.0x 39.58 44.91 50.24 55.57 60.89 66.22 71.55 76.88 82.21 87.53 92.86 Source: Company data and Credit Suisse estimates. Based on our analysis, our EV/EBITDA derived target is obtained from the application of a 10.0x multiple to generate a C$46.00 target price on 2016e EBITDA. Dividend Yield According to Bloomberg data, Canadian Utilities has traded at an average dividend yield of 2.97% over the past 10 years and within a range of 2.32-4.13%. (See Exhibit 75 and Exhibit 76.)

Exhibit 75: Historical CU Dividend Yield (%) Exhibit 76: Historical Dividend Yield 4.50% Mean 2.97% Median 2.84% Min 2.32% 4.00% Max 4.13% 3.50%

3.00%

2.50%

2.00%

4/18/2013 4/18/2005 4/18/2006 4/18/2007 4/18/2008 4/18/2009 4/18/2010 4/18/2011 4/18/2012 4/18/2014

10/18/2013 10/18/2005 10/18/2006 10/18/2007 10/18/2008 10/18/2009 10/18/2010 10/18/2011 10/18/2012 10/18/2004 Source: Bloomberg and Credit Suisse. Source: Bloomberg and Credit Suisse. For several reasons, we believe that these metrics should be compared with movements in the Canadian 10-year bond yield. (See Exhibit 77.)

Canadian Utilities Limited (CU.TO) 30 28 October 2014

Exhibit 77: Canadian 10-Year Bond Yield 5.00% 4.50% 4.00% 3.50% 3.00% 2.50% 2.00% 1.50% 1.00% 0.50%

0.00%

4/18/2011 4/18/2013 4/18/2005 4/18/2006 4/18/2007 4/18/2008 4/18/2009 4/18/2010 4/18/2012 4/18/2014

10/18/2011 10/18/2005 10/18/2006 10/18/2007 10/18/2008 10/18/2009 10/18/2010 10/18/2012 10/18/2013 10/18/2004 Source: Bloomberg and Credit Suisse. A comparison of historical Canadian long-term and short-term rates, as well as the interest rate expectations can be seen in Exhibit 78 and Exhibit 79, respectively.

Exhibit 78: Yields Canada—Short and Long Rates Since Exhibit 79: Cumulative Interest Rate Expectations over 2000 Next 12 Months % basis points*

7.0 60

6.0 50

40 5.0 30 4.0 20

3.0 10

2.0 0

1.0 -10

-20 0 Fed ECB BoE SNB BoJ BoC RBA RBNZ Jan 00 Jan 02 Jan 04 Jan 06 Jan 08 Jan 10 Jan 12 Jan 14 *derived from Overnight Interest Swaps 3-month LIBOR CAD 10-year CAD Government Bond 30-year CAD Government Bond Cumulative interest rate expectations over 12 months, current 7 days ago 1 month ago Source: Bloomberg, Credit Suisse/IDC. Source: Bloomberg, Credit Suisse. The sensitivity of dividend yield valuation is clearly evident in Exhibit 80, with various distribution levels at various targeted yields.

Canadian Utilities Limited (CU.TO) 31 28 October 2014

Exhibit 80: Share Value Based on Various Dividends at Various Yields Dividend per Share 1.00 1.05 1.10 1.15 1.20 1.25 1.30 1.35 1.40 1.45 1.50 1.00% 100.00 105.00 110.00 115.00 120.00 125.00 130.00 135.00 140.00 145.00 150.00 1.25% 80.00 84.00 88.00 92.00 96.00 100.00 104.00 108.00 112.00 116.00 120.00 1.50% 66.67 70.00 73.33 76.67 80.00 83.33 86.67 90.00 93.33 96.67 100.00 1.75% 57.14 60.00 62.86 65.71 68.57 71.43 74.29 77.14 80.00 82.86 85.71 2.00% 50.00 52.50 55.00 57.50 60.00 62.50 65.00 67.50 70.00 72.50 75.00 2.25% 44.44 46.67 48.89 51.11 53.33 55.56 57.78 60.00 62.22 64.44 66.67 2.50% 40.00 42.00 44.00 46.00 48.00 50.00 52.00 54.00 56.00 58.00 60.00 2.75% 36.36 38.18 40.00 41.82 43.64 45.45 47.27 49.09 50.91 52.73 54.55

Yield 3.00% 33.33 35.00 36.67 38.33 40.00 41.67 43.33 45.00 46.67 48.33 50.00 3.25% 30.77 32.31 33.85 35.38 36.92 38.46 40.00 41.54 43.08 44.62 46.15 3.50% 28.57 30.00 31.43 32.86 34.29 35.71 37.14 38.57 40.00 41.43 42.86 3.75% 26.67 28.00 29.33 30.67 32.00 33.33 34.67 36.00 37.33 38.67 40.00 4.00% 25.00 26.25 27.50 28.75 30.00 31.25 32.50 33.75 35.00 36.25 37.50 4.25% 23.53 24.71 25.88 27.06 28.24 29.41 30.59 31.76 32.94 34.12 35.29 4.50% 22.22 23.33 24.44 25.56 26.67 27.78 28.89 30.00 31.11 32.22 33.33 4.75% 21.05 22.11 23.16 24.21 25.26 26.32 27.37 28.42 29.47 30.53 31.58 Source: Credit Suisse estimates. Our C$46 target price is based upon an approximately 2.3% dividend yield on 2014 and 2.5% on 2015 dividend. Dividend Yield Spread We believe that one should not solely rely upon distribution yield-based metrics. In our view, many yield-based metrics should be considered in the context of comparable nominal interest rates available in the marketplace. For a number of reasons, we have considered Canadian Utilities' historical dividend yield against the Government of Canada 10-year bond yield on a spread basis. Exhibit 81 and Exhibit 82 highlight this relationship.

Exhibit 81: Historical Dividend Yield Spread versus the Canadian Ten Year (Bps) Exhibit 82: Historical Yield Spread 150 Mean -26 Median -9 100 Min -211 50 Max 115 0 -50 -100 -150 -200

-250

4/18/2005 4/18/2006 4/18/2007 4/18/2008 4/18/2009 4/18/2010 4/18/2011 4/18/2012 4/18/2013 4/18/2014

10/18/2006 10/18/2010 10/18/2005 10/18/2007 10/18/2008 10/18/2009 10/18/2011 10/18/2012 10/18/2013 10/18/2004 Source: Bloomberg and Credit Suisse. Source: Bloomberg and Credit Suisse. The yield spread relationship highlights the potential for meaningful sensitivity to interest rate movements. Many fundamental reasons exist for this relationship; however, we must note that interest rate-sensitive investments like Canadian Utilities usually do not exhibit perfect correlations. Some near-term uncertainty has affected the valuation of many interest-rate-sensitive investment vehicles. Yet, in historical terms, the interest rate environment remains accommodative, which underpins valuations for companies like CU. We therefore apply no spread to a moderate outlook on 10-year Canadian bond yield (2.50%) to obtain our C$46 target price.

Canadian Utilities Limited (CU.TO) 32 28 October 2014

Dividend Discounted Model One should also consider the cost of equity and the potential growth in dividend in the future. A dividend discount model would be a useful valuation tool for yield-oriented vehicles such as Canadian Utilities. We used the following assumptions in our dividend discount model:

■ Current annual dividend: C$1.07/share

■ Cost of equity: 8.6% (Bloomberg)

■ Growth rate: 6.28% A dividend discount model would produce share price value of roughly C$46.00. Given different assumptions, we generated the following range of valuations highlighted in Exhibit 83.

Exhibit 83: Share Value Under Different Dividend Discount Model Assumptions Cost of Equity 6.50% 7.00% 7.50% 8.00% 8.50% 9.00% 9.50% 10.00% 10.50% 2.00% 23.78 21.40 19.45 17.83 16.46 15.29 14.27 13.38 12.59 2.50% 26.75 23.78 21.40 19.45 17.83 16.46 15.29 14.27 13.38 3.00% 30.57 26.75 23.78 21.40 19.45 17.83 16.46 15.29 14.27 3.50% 35.67 30.57 26.75 23.78 21.40 19.45 17.83 16.46 15.29 4.00% 42.80 35.67 30.57 26.75 23.78 21.40 19.45 17.83 16.46 4.50% 53.50 42.80 35.67 30.57 26.75 23.78 21.40 19.45 17.83 5.00% 71.33 53.50 42.80 35.67 30.57 26.75 23.78 21.40 19.45 5.50% 107.00 71.33 53.50 42.80 35.67 30.57 26.75 23.78 21.40 6.00% 214.00 107.00 71.33 53.50 42.80 35.67 30.57 26.75 23.78 6.50% ####### 214.00 107.00 71.33 53.50 42.80 35.67 30.57 26.75 7.00% (214.00) ####### 214.00 107.00 71.33 53.50 42.80 35.67 30.57

7.50% (107.00) (214.00) ####### 214.00 107.00 71.33 53.50 42.80 35.67 Dividend Growth Rate Dividend 8.00% (71.33) (107.00) (214.00) ####### 214.00 107.00 71.33 53.50 42.80 8.50% (53.50) (71.33) (107.00) (214.00) ####### 214.00 107.00 71.33 53.50 9.00% (42.80) (53.50) (71.33) (107.00) (214.00) ####### 214.00 107.00 71.33 9.50% (35.67) (42.80) (53.50) (71.33) (107.00) (214.00) ####### 214.00 107.00 10.00% (30.57) (35.67) (42.80) (53.50) (71.33) (107.00) (214.00) ####### 214.00 Source: Company data and Credit Suisse estimates. A HOLT® perspective We believe Credit Suisse's HOLT® valuation framework provides a unique perspective on a broad base of companies globally with a common analytical approach. Accordingly, this section highlights HOLT's valuation perspective in relation to Canadian Utilities. A simple, starting point is HOLT's view of "Warranted Price" at C$22/sh that reflects a discount rate of 6.04% along with sub-5% CFROI® and asset growth. HOLT's valuation summary relative wealth charts appear in Exhibit 84.

Canadian Utilities Limited (CU.TO) 33 28 October 2014

Exhibit 84: HOLT® valuation summary

Valuation Relative Wealth Chart Price CAD 40.16 downside

Warranted Price 22.00 -45% Economic PE Ratio 5 year observed range Current 30.5 Regional Industry 27.8

Low Median High

23.0 Multi-Utilities,30.2 US-Americas32.9 Dividend Yield 2.7%

Risk Probability of Default 0% Average Credit Rating A Accounting Quality NA

Momentum 6m 3m 1m CFROI Revisions -0.31 -0.18 0.00 Price Change % -1.03 0.00 3.40

Source: Credit Suisse HOLT®. Exhibit 85 illustrates CU's historical warranted price vs. actually stock price performance. Given the negative spread on these metrics, HOLT's base warranted price analysis has poorly tracked the actual market price.

Exhibit 85: HOLT's warranted upside/downside

Source: Credit Suisse HOLT. With such a dynamic along with the significant discount rate sensitivity of long-dated utility assets, we believe the flexing of a few variables provides a better sense of the value. The matrix in Exhibit 86 provides a view of the sensitivities with the current HOLT 6.04% discount rate.

Canadian Utilities Limited (CU.TO) 34 28 October 2014

Exhibit 86: HOLT® warranted price at discount rate of 6.04% CFROI T+5

3.0 3.5 4.0 4.5 5.0 5.5 6.0 6.5 7.0 7.5 8.0

3.0 12.99 15.98 19.02 22.12 25.26 28.46 31.71 35.00 38.33 41.70 45.11

3.5 12.77 15.84 18.96 22.15 25.38 28.67 32.00 35.38 38.80 42.27 45.77

4.0 12.55 15.70 18.91 22.18 25.50 28.88 32.30 35.78 39.30 42.85 46.45

4.5 12.32 15.56 18.86 22.22 25.64 29.10 32.62 36.19 39.81 43.46 47.16

AssetGrowth T+5 5.0 12.09 15.42 18.81 22.26 25.77 29.34 32.96 36.62 40.34 44.10 47.90

5.5 11.86 15.28 18.77 22.31 25.92 29.59 33.30 37.07 40.89 44.76 48.66

6.0 11.62 15.14 18.72 22.37 26.08 29.85 33.67 37.54 41.47 45.44 49.46

Source: Credit Suisse HOLT. With modest changes to the discount rate, the valuation matrix provides a closer alignment to the current share price. Specifically, Exhibit 87 below provides the same scenario, but uses a 5.25% discount rate.

Exhibit 87: HOLT® warranted price at discount rate of 5.25% CFROI T+5

3.0 3.5 4.0 4.5 5.0 5.5 6.0 6.5 7.0 7.5 8.0

3.0 21.95 25.25 28.61 32.03 35.51 39.05 42.63 46.26 49.94 53.67 57.43

3.5 21.95 25.35 28.80 32.32 35.90 39.53 43.21 46.95 50.73 54.56 58.43

4.0 21.96 25.45 29.00 32.62 36.30 40.03 43.82 47.66 51.54 55.48 59.46

4.5 21.97 25.56 29.21 32.93 36.71 40.55 44.45 48.39 52.39 56.44 60.53

AssetGrowth T+5 5.0 21.98 25.67 29.43 33.26 37.15 41.09 45.10 49.16 53.27 57.43 61.64

5.5 22.00 25.80 29.67 33.60 37.60 41.66 45.78 49.95 54.18 58.46 62.78

6.0 22.03 25.93 29.91 33.96 38.07 42.24 46.48 50.78 55.12 59.53 63.98

Source: Credit Suisse HOLT. Obviously, we defer to our HOLT® team for a more detailed analysis, the summary valuation shows CU's CFROI® relative stability along with a rather lumpy historical asset growth due the capital intensive nature of the utility industry.

Comparable companies Naturally, there are many differences in the sample of comparable companies highlighted in Exhibit 88 below.

Canadian Utilities Limited (CU.TO) 35 28 October 2014

Exhibit 88: Selected comparable company valuations Price on P/E Div Yield EV/EBITDA Company Ticker Target Price Rating 27-Oct-14 2014 2015 2016 2014 2015 2016 2014 2015 2016 Canadian Utilities Limited CU.TO C $ 40.00 C $ 46.00 OUTPERFORM 18.8x 16.3x 15.4x 2.7% 2.9% 3.2% 10.1x 9.2x 8.4x Emera Inc. EMA.TO C $ 37.38 C $ 40.00 OUTPERFORM 17.4x 18.0x 15.9x 3.9% 4.1% 4.2% 9.8x 9.8x 8.4x Fortis Inc. FTS.TO C $ 35.75 C $ 32.00 NEUTRAL 22.7x 18.6x 17.6x 3.6% 3.7% 3.8% 12.3x 9.7x 8.8x Average 19.6x 17.7x 16.3x 3.4% 3.6% 3.7% 10.7x 9.5x 8.6x

Ameren AEE US $ 41.23 NR NR 17.2x 16.1x 15.2x 3.9% 4.1% 4.3% 8.1x 7.6x 7.3x CMS Energy CMS US $ 32.11 US $ 32.00 OUTPERFORM 18.1x 17.0x 16.0x 3.4% 3.6% 3.8% 9.1x 8.7x 8.4x CenterPoint Energy Inc CNP US $ 24.01 US $ 29.00 OUTPERFORM 20.4x 19.0x 17.9x 4.0% 4.3% 4.7% 9.4x 9.2x 9.2x DTE Energy DTE US $ 80.61 US $ 78.00 OUTPERFORM 18.4x 17.5x 16.3x 3.3% 3.6% 3.8% 9.0x 8.4x 8.2x Con Edison ED US $ 62.69 US $ 63.00 UNDERPERFORM 16.5x 16.1x 15.5x 4.0% 4.1% 4.2% 8.9x 8.5x 8.0x Public Svc Ent PEG US $ 39.46 US $ 40.00 NEUTRAL 14.5x 14.6x 14.4x 3.8% 3.8% 3.9% 7.7x 7.5x 7.3x NiSource Inc. NI US $ 41.58 US $ 50.00 OUTPERFORM 24.4x 21.4x 19.6x 2.5% 2.6% 2.8% 11.5x 10.2x 9.2x Wisconsin Energy Corporation WEC US $ 48.69 NR NR 18.6x 18.0x 17.1x 3.2% 3.5% 3.8% 10.6x 10.3x 9.9x Average 18.5x 17.5x 16.5x 3.5% 3.7% 3.9% 9.3x 8.8x 8.4x Source: Company data, Credit Suisse estimates, Credit Suisse RAVE, IBES. Exhibit 89 shows Canadian Utilities generally trades at a discount to Emera Inc. and Fortis Inc.

Exhibit 89: Historical P/E multiples of publicly traded Canadian utilities CU trades at discount to 10-Yr Avg. 2-Yr Avg. EMA and FTS 1-Yr Forward 2-Yr Forward 1-Yr Forward 2-Yr Forward Canadian Utilities 16.2x 15.5x 17.3x 15.8x Emera Inc. 17.7x 16.8x 18.3x 17.6x Fortis Inc. 18.5x 17.2x 19.2x 17.4x Source: Thomson Reuters. Exhibit 90 and Exhibit 91 shows 1-year forward P/Es for CU, EMA, and FTS over the past 10 years and 2 years, respectively.

Exhibit 90: 1-Yr forward P/E (last 10-years) Exhibit 91: 1-Yr forward P/E (last 2-years)

24x CU EMA FTS 23x CU EMA FTS 22x 22x 21x 20x 20x 18x 19x 16x 18x 17x 14x 16x 12x 15x

10x 14x

1/22/2014 4/22/2014 5/22/2014 4/22/2005 4/22/2006 4/22/2007 4/22/2008 4/22/2009 4/22/2010 4/22/2011 4/22/2012 4/22/2013 4/22/2014 1/22/2013 2/22/2013 3/22/2013 4/22/2013 5/22/2013 6/22/2013 7/22/2013 8/22/2013 9/22/2013 2/22/2014 3/22/2014 6/22/2014 7/22/2014 8/22/2014 9/22/2014

10/22/2012 10/22/2005 10/22/2006 10/22/2007 10/22/2008 10/22/2009 10/22/2010 10/22/2011 10/22/2012 10/22/2013 11/22/2012 12/22/2012 10/22/2013 11/22/2013 12/22/2013 10/22/2004 Source: Thomson Reuters. Source: Thomson Reuters. Exhibit 92 and Exhibit 93 shows 2-year forward P/Es for CU, EMA and FTS over the past 10 years and 2 years, respectively.

Canadian Utilities Limited (CU.TO) 36 28 October 2014

Exhibit 92: 2-Yr forward P/E (last 10-years) Exhibit 93: 2-Yr forward P/E (last 2-years)

24x CU EMA FTS 21x CU EMA FTS 22x 20x

20x 19x

18x 18x

16x 17x

14x 16x

12x 15x

10x 14x

1/22/2013 4/22/2013 5/22/2013 2/22/2014 8/22/2014 4/22/2005 4/22/2006 4/22/2007 4/22/2008 4/22/2009 4/22/2010 4/22/2011 4/22/2012 4/22/2013 4/22/2014 2/22/2013 3/22/2013 6/22/2013 7/22/2013 8/22/2013 9/22/2013 1/22/2014 3/22/2014 4/22/2014 5/22/2014 6/22/2014 7/22/2014 9/22/2014

10/22/2010 10/22/2005 10/22/2006 10/22/2007 10/22/2008 10/22/2009 10/22/2011 10/22/2012 10/22/2013 10/22/2012 11/22/2012 12/22/2012 10/22/2013 11/22/2013 12/22/2013 10/22/2004 Source: Thomson Reuters. Source: Thomson Reuters. Valuation summary In summary, we initiate coverage of Canadian Utilities with an Outperform rating and a C$46 target price. That target price is obtained from multiple valuation approaches, including: P/E multiple of 17.7x on 2016e; a dividend yield/yield spread of 2.5%/0 bps over a 2.50% Canadian 10-year forecast, respectively. Selected Risks We believe that Canadian Utilities Ltd. faces a number of business and financial risks, including the following:

■ Regulation: Canadian Utilities Ltd.’s assets and operations are subject to many different forms of regulation. Therefore, investors should not underestimate the potential impact of changes to the regulatory environment.

■ Southern Family Control: Canadian Utilities is majority controlled by ATCO Ltd., which in turn is controlled by the Southern family.

■ Execution/Development: The company is expanding its asset base in Alberta, Australia, and Mexico. There is risk around completing projects on time and on budget.

■ Energy Market Dynamics: CU faces a multitude of factors related to broader energy markets that it cannot control, including energy commodity prices, electricity prices, weather, oil & gas production, and wind availability. These factors, among others, may ultimately affect our investment thesis.

■ Commodity Prices: CU has some direct and indirect commodity exposure that could meaningfully affect our investment thesis. All three geographic jurisdictions where CU currently operates and plan to operate in have a large exposure to commodities, particularly energy (oil and gas). Commodity prices may affect the pace of development of energy projects in those regions.

■ Interest Rate Movements: A number of sources of interest rate risk exist, including refinancing, regulatory earnings streams, and relative investment value.

■ Environmental Legislation: Emissions regimes are still in development in Canada, and certain forms of regulation may meaningfully affect the company’s generation platform.

■ Access to Capital Markets: Given the company’s future growth, which is likely to include large-scale development projects, we believe that access to capital markets on reasonable terms is critical.

Canadian Utilities Limited (CU.TO) 37 28 October 2014

■ Competition: There are various competitors within each of Canadian Utilities Ltd.'s asset base.

Canadian Utilities Limited (CU.TO) 38 28 October 2014 Appendices Our appendices focus on three areas:

■ Asset maps;

■ Governance;

■ Credit Suisse PEERs map;

■ CU's Board of Directors; and,

■ CU's management. Asset maps ATCO Gas and ATCO Electric asset map is shown in Exhibit 94. Exhibit 95 shows ATCO Pipelines asset base.

Exhibit 94: Utilities segment (excludes ATCO Pipelines) Exhibit 95: ATCO Pipelines

Source: Company data. Source: Company data. Energy segment power generation asset map and ATCO Australia asset map is shown in Exhibit 96 and Exhibit 97, respectively.

Canadian Utilities Limited (CU.TO) 39 28 October 2014

Exhibit 96: Power plant asset map Exhibit 97: ATCO Australia asset map

Source: Company data Source: Company data

Governance For a broader discussion of CU's governance, we suggest an examination of securities filings by the company. Below are selected excerpts from the company's guidelines:

■ "Canadian Utilities Limited (CU) is a diversified group of companies principally controlled by ATCO Ltd., which in turn is principally controlled by Sentgraf, a Southern Family holding company."

■ "CU share registry has both non-voting (CU) and voting common (CU.X) shares." Details on the share class descriptions can be seen in the in the Annual Information Form: o "Class A and Class B share owners are entitled to share equally, on a share for share basis, in all dividends the Company declares on either of such classes of shares as well as in the Company’s remaining property on dissolution. Class B share owners are entitled to vote and to exchange at any time each share held for one Class A share." o "If a take-over bid is made for the Class B shares and if it would result in the offeror owning more than 50% of the outstanding Class B shares (excluding any Class B shares acquired upon conversion of Class A shares), the Class A share owners are entitled, for the duration of the take-over bid, to exchange their Class A shares for Class B shares and to tender the newly exchanged for Class B shares to the take-over bid. Such right of exchange and tender is conditional on completion of the applicable take-over bid."

Canadian Utilities Limited (CU.TO) 40 28 October 2014

o "In addition, Class A share owners are entitled to exchange their shares for Class B shares if ATCO Ltd., the company’s controlling share owner, ceases to own or control, directly or indirectly, more than 10,000,000 of the issued and outstanding Class B shares. In either case, each Class A share is exchangeable for one Class B share, subject to changes in the exchange ratio for certain events such as a stock split or rights offering." Credit Suisse PEERs map PEERs is a global database that captures unique information about companies within the Credit Suisse coverage universe based on their relationships with other companies—their customers, suppliers, and competitors. The database is built from our research analysts' insight regarding these relationships. Credit Suisse covers over 3,000 companies globally. These companies form the core of the PEERs database, but it also includes relationships on stocks that are not under coverage.

Exhibit 98: PEERs map for Canadian Utilities

Source: Credit Suisse PEERs.

Canadian Utilities Limited (CU.TO) 41 28 October 2014

Canadian Utilities Board of Directors Exhibit 99 contains quotes from Canadian Utilities securities filing regarding members of the board of directors.

Exhibit 99: Canadian Utilities board of directors Director Comments Since "Since July 1, 2009, Dr. Bichsel has been a member of the Executive Committee of Royal Dutch Shell plc and Projects and Technology Director, with country responsibilities for Australia, Matthias F. New Zealand, Oceania, India and Pakistan. Dr. Bichsel is accountable for the delivery of capital projects; exploration and development drilling; contracting and procurement activities; and 2014 Bichsel upstream and downstream technology development and deployment. In addition, he is responsible for Shell’s safety, environmental and social performance. Prior to that Dr. Bichsel held various senior management roles with Royal Dutch Shell plc." Loraine M. "Ms. Charlton is the Vice President of Lintus Resources Limited, an oil and gas exploration and production company. From 1996 to 2005 she was Vice President, Chief Operating Officer of 2006 Charlton Investors Petroleum Consultants Ltd." "Dr. Dodge is a Senior Advisor to Bennett Jones LLP. He has had a distinguished career in the federal public service. He was Governor of the Bank of Canada from 2001 to 2008, and as David A. Governor, was also Chairman of the Board of Directors of the Bank. He has held senior positions in the Central Mortgage and Housing Corporation, the Anti-Inflation Board, the 2008 Dodge Department of Employment and Immigration and the Department of Finance. He is currently Chancellor of Queen’s University. Dr. Dodge also serves as Chair of the Board of Directors of the Canadian Institute for Advanced Research, and is Co-Chair of the Global Market Monitoring Group of the International Institute of Finance." "Mr. Francis is President and Founder of Agriteam Canada Consulting Ltd. and Salasan Inc. These companies specialize in designing and managing large-scale international Robert B. development projects. The sectors in which they work include government reform, rule of law, judicial reform, health, environment, natural resource management, rural development, 2012 Francis agriculture and corporate social responsibility. The companies together currently employ over 450 people in 26 countries. Mr. Francis is on the Alberta Government’s Board of the Asia Advisory Council and is a director of the Alberta Livestock Meat Agency." "Ms. Heathcott is President & Chief Executive Officer of Spruce Meadows Ltd., an internationally recognized equestrian facility. A former professional equestrian rider, Ms. Heathcott was a Linda A. member of the Canadian Equestrian Team for nine years and competed in the 1996 Olympic Summer Games in Atlanta, Georgia. She is the Board Chair of AKITA Drilling Ltd. and serves 2000 Heathcott on the Board of Sentgraf Enterprises Ltd." "Mr. Normand is Chair of the Workers Compensation Board of Alberta, the agency which administers workplace insurance for the workers and employers of the Province of Alberta. He Robert J. retired from the position of President and Chief Executive Officer of Alberta Treasury Branches (ATB) in 2008. Prior to joining ATB as Executive Vice-President Sales in 1996, he was 2008 Normand employed by the Bank of Montreal for 26 years and held line and credit executive positions in Quebec, Ontario and Alberta. Mr. Normand is a director of ATCO Structures & Logistics Ltd."

"Mr. Rangel is the President of BCP Securities Mexico, a joint venture with BCP Securities LLC, a US investment bank specializing in emerging markets . Prior to Mr. Rangel’s appointment to BCP Securities, he was the Chief Executive Officer of Nacional Financiera S.N.C. and Banco Nacional de Comercio Exterior and a member of Mexico’s cabinet under President Felipe Hector A. Calderon. Mr. Rangel has extensive corporate and investment banking expertise having held various executive positions with the Grupo Financiero Bancomer from 1991 until 2008, 2014 Rangel including Chairman of the Board from 2004 to 2008. Mr. Rangel was also President of the Mexican Bankers Association from 2000 to 2002 and President of the Mexican Business Council from 2002 to 2004." "Ms. Reed was the Chief Executive Officer/Managing Director of Spark Infrastructure (ASX: SKI) from 2008 until May 2012. Spark Infrastructure owned 49% of three electricity distribution businesses in Australia. Before joining Spark Infrastructure, she spent nine years at Enverstra Limited (ASX: ENV), a gas distribution company, in a number of senior financial roles Laura A. including Chief Financial Officer. Ms. Reed is a director and member of the Audit and Nominations Committee of three electricity distribution businesses in Australia, Ausgrid, Endeavor 2014 Reed Energy and Essential Energy. Ms. Reed is also a director and Audit Committee Chair of Epic Energy, which owns the Moomba to Adelaide gas transmission pipeline in South Australia as well as a director of ATCO Australia Pty Ltd." "Mr. Sembo recently retired from his role as Vice Chairman at RBC Capital Markets LLC. With over 40 years of industry experience, Mr. Sembo has spent the majority of his career in energy investment banking. He has expertise in investment banking, corporate credit and mergers and acquisitions. Prior to joining RBC in 1986, Mr. Sembo held corporate finance and financial William G. planning positions with Toronto Dominion Bank and Asamera Inc., respectively. He has extensive capital markets expertise having served as a director for both private and public boards 2014 Sembo as well as numerous not-for-profit organizations. Mr. Sembo currently serves as a director for ARC Resources Ltd. as well as two privately owned enterprises, OMERS Energy Services LP and CEDA International Corporation." "Mr. Simpson is Lead Director for the Board of Canadian Utilities and a director of ATCO Structures & Logistics Ltd. Mr. Simpson, former President of Chevron Canada Resources, retired James W. after a career with Chevron Corporation that spanned 30 years. He is former Chairman of the Canadian Association of Petroleum Producers and has been active in the World Petroleum 2004 Simpson Congress." "Ms. Southern was appointed Chair of Canadian Utilities and ATCO effective December 1, 2012, and continues as President & Chief Executive Officer. She was Deputy Chair of Canadian Utilities and ATCO from 2008 until 2012 and has been President & Chief Executive Officer of Canadian Utilities and ATCO since January 1, 2003. Previously, she was Co-Chairman and Nancy C. Co-Chief Executive Officer from 2000 until 2003, Deputy Chief Executive Officer from 1998 until 2000, and Deputy Chairman from 1996 until 2000. Ms. Southern has full responsibility for 1990 Southern strategic direction and the operations of Canadian Utilities, reporting to the Board of Directors. She is also a director of Sentgraf Enterprises Ltd. and an Honorary Director of the Bank of Montreal. Ms. Southern is a member of The U.S. Business Council; a member of the American Society of Corporate Executives; and a Canadian member of The Trilateral Commission. She is a member of the Canadian Council of Chief Executives and the Canadian Economic Advisory Council." "Mr. Southern is Chairman Emeritus & Founder, ATCO Group. He was Chairman of the Board until December 1, 2012, and continues to be a director of both Canadian Utilities and ATCO. Together with his late father, S.D. Southern, Mr. Southern founded ATCO Group in 1947 and served as ATCO’s President for 48 years. He is credited with transforming Canadian Utilities to Ronald D. what it is today – a corporation with assets of approximately $15 billion and employing more than 7,400 people. Mr. Southern is a director of ATCO Structures & Logistics Ltd., Deputy 1977 Southern Chairman of AKITA Drilling Ltd. and serves as Chairman of Sentgraf Enterprises Ltd. Mr. Southern is also a Canadian member of The Trilateral Commission. Some of Mr. Southern’s many distinctions include: Commander of the Order of the British Empire, 1995; Officer of the Order of Orange-Nassau, 2006; Companion of the Order of Canada, 2007; Queen Elizabeth II Diamond Jubilee Medal, 2012; and Alberta Order of Excellence, 2012." "Dr. Urwin is the Chair of ATCO Australia Pty Ltd. He has worked in gas, electric and telecom utilities throughout his career. He retired at the end of 2006 as Group Chief Executive of National Grid plc. He played a key role in establishing that company’s international strategy and its successful expansion into the U .S., creating one of the largest investor-owned utility Roger J. companies in the world. Dr. Urwin was the Managing Director and Chief Executive of London Electricity from 1990 to 1995. He is also non-executive Chairman of Utilico Investments 2007 Urwin Limited and a special advisor to Global Infrastructure Partners, an international infrastructure investment fund. He was Chair of Alfred McAlpine plc from 2006 to 2008. Dr. Urwin is a Commander of the Order of the British Empire." Karen M. "In December 2009, Ms. Watson retired as Senior Vice President & Chief Financial Officer of Canadian Utilities, ATCO, and CU Inc., and as a director of CU Inc., after 33 years of service 2012 Watson with ATCO Group. Following her retirement, Ms. Watson was appointed General Manager of Sentgraf Enterprises Ltd., from which she retired in December 2011." "Mr. Wilson is Lead Director for the Boards of ATCO and ATCO Structures & Logistics Ltd. and is on the Boards of ATCO Australia Pty Ltd. and Sentgraf Enterprises Ltd. He was the Charles W. President and Chief Executive Officer of Shell Canada from 1993 to 1999, and Executive Vice President U.S. Downstream Oil and Chemical of Shell Oil Company from 1988 to 1993. Prior 2000 Wilson to 1988 he was Vice President U.S. Refining and Marketing of Shell Oil Company and held various positions in the domestic and international natural resource operations of Shell."

Source: Company data.

Canadian Utilities Limited (CU.TO) 42 28 October 2014

Canadian Utilities Management Exhibit 100 contains CUs filings regarding the management team.

Exhibit 100: Canadian Utilities management Management Title Nancy C. Southern Chair, President & Chief Executive Officer Siegfried W. Kiefer Chief Operating Officer, Power & Utilities Brian R. Bale Senior Vice President & Chief Financial Officer Erhard M. Kiefer Senior Vice President & Chief Administration Officer Steven J. Landry Senior Vice President & Chief Development Officer Pamela G. Moellmann Group Vice President, Special Projects Carson J. Ackroyd Vice President, Marketing & Communications Derek Cook Vice President, Controller Alfred S. Han Vice President, Finance & Treasury Lillian Hvatum-Brewster Vice President, Community Relations & Development Kevin P. Hunt Vice President, Internal Audit & Risk Management Brian G. Milne Vice President, Risk Management Robert C. (Rob) Neumann Vice President, Internal Audit Alan M. Skiffington Vice President & Chief Information Officer Richard D. Stone Vice President, Legal & Corporate Secretarial Tracey L. Wallace Vice President, Human Resources Clinton G. Warkentin Vice President & Treasurer Carol Gear Corporate Secretary Source: Company data.

Canadian Utilities Limited (CU.TO) 43 28 October 2014

Companies Mentioned (Price as of 27-Oct-2014) AES Corporation (AES.N, $13.42) Ameren (AEE.N, $41.23) CMS Energy (CMS.N, $32.11) Canadian Utilities Limited (CU.TO, C$40.0, OUTPERFORM, TP C$46.0) CenterPoint Energy Inc (CNP.N, $24.01) Con Edison (ED.N, $62.69) DTE Energy (DTE.N, $80.61) Elecnor (ENOR.MC, €8.97) Emera Inc. (EMA.TO, C$37.38) Fortis Inc. (FTS.TO, C$35.75) IENOVA (IENOVA.MX, $81.46) Iberdrola (IBE.MC, €5.469) Kinder Morgan, Inc. (KMI.N, $38.93) NiSource Inc. (NI.N, $41.58) Public Svc Ent (PEG.N, $39.46) TransCanada Corp. (TRP.TO, C$54.33) Wisconsin Energy Corporation (WEC.N, $48.69)

Disclosure Appendix

Important Global Disclosures Paul Tan and Andrew M. Kuske, each certify, with respect to the companies or securities that the individual analyzes, that (1) the views expressed in this report accurately reflect his or her personal views about all of the subject companies and securities and (2) no part of his or her compensation was, is or will be directly or indirectly related to the specific recommendations or views expressed in this report. The analyst(s) responsible for preparing this research report received Compensation that is based upon various factors including Credit Suisse's total revenues, a portion of which are generated by Credit Suisse's investment banking activities As of December 10, 2012 Analysts’ stock rating are defined as follows: Outperform (O) : The stock’s total return is expected to outperform the relevant benchmark*over the next 12 months. Neutral (N) : The stock’s total return is expected to be in line with the relevant benchmark* over the next 12 months. Underperform (U) : The stock’s total return is expected to underperform the relevant benchmark* over the next 12 months. *Relevant benchmark by region: As of 10th December 2012, Japanese ratings are based on a stock’s total return relative to the analyst's coverage universe which consists of all companies covered by the analyst within the relevant sector, with Outperforms representing the most attractiv e, Neutrals the less attractive, and Underperforms the least attractive investment opportunities. As of 2nd October 2012, U.S. and Canadian as well as European ratings are based on a stock ’s total return relative to the analyst's coverage universe which consists of all companies covered by the analyst within the relev ant sector, with Outperforms representing the most attractive, Neutrals the less attractive, and Underperforms the least attractive investment opportunities. For Latin Ame rican and non-Japan Asia stocks, ratings are based on a stock’s total return relative to the average total return of the relevant country or regional benchmark; prior to 2nd October 2012 U.S. and Canadian ratings were based on (1) a stock’s absolute total return potential to its current share price and (2) the relative attractiv eness of a stock’s total return potential within an analyst’s coverage universe. For Australian and New Zealand stocks, 12-month rolling yield is incorporated in the absolute total return calculation and a 15% and a 7.5% threshold replace the 10-15% level in the Outperform and Underperform stock rating definitions, respectively. The 15% and 7.5% thresholds replace the +10 - 15% and -10-15% levels in the Neutral stock rating definition, respectively. Prior to 10th December 2012, Japanese ratings were based on a stock’s total return relative to the average total return of the relevant country or regional benchmark. Restricted (R) : In certain circumstances, Credit Suisse policy and/or applicable law and regulations preclude certain types of communications, including an investment recommendation, during the course of Credit Suisse's engagement in an investment banking transaction and in certain other circumstances.

Volatility Indicator [V] : A stock is defined as volatile if the stock price has moved up or down by 20% or more in a month in at least 8 of the past 24 months or the analyst expects significant volatility going forward.

Analysts’ sector weightings are distinct from analysts’ stock ratings and are based on the analyst’s expectations for the fundamentals and/or valuation of the sector* relative to the group’s historic fundamentals and/or valuation: Overweight : The analyst’s expectation for the sector’s fundamentals and/or valuation is favorable over the next 12 months. Market Weight : The analyst’s expectation for the sector’s fundamentals and/or valuation is neutral over the next 12 months. Underweight : The analyst’s expectation for the sector’s fundamentals and/or valuation is cautious over the next 12 months. *An analyst’s coverage sector consists of all companies covered by the analyst within the relevant sector. An analyst may cover multiple sectors.

Canadian Utilities Limited (CU.TO) 44 28 October 2014

Credit Suisse's distribution of stock ratings (and banking clients) is:

Global Ratings Distribution Rating Versus universe (%) Of which banking clients (%) Outperform/Buy* 45% (53% banking clients) Neutral/Hold* 39% (51% banking clients) Underperform/Sell* 13% (44% banking clients) Restricted 3% *For purposes of the NYSE and NASD ratings distribution disclosure requirements, our stock ratings of Outperform, N eutral, and Underperform most closely correspond to Buy, Hold, and Sell, respectively; however, the meanings are not the same, as our stock ratings are determined on a relative basis. (Please refer to definitions above.) An investor's decision to buy or sell a security should be based on investment objectives, current holdings, and other individual factors.

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Price Target: (12 months) for Canadian Utilities Limited (CU.TO) Method: We obtain our C$46 target price for Canadian Utilities Ltd. by using multiple valuation methodologies, but primarily relies upon a dividend yield and yield spread methodology. The implied dividend yield to our target is 2.5% on 2015e and a roughly 0 bps yield spread on a 2.50% Canadian 10-year baseline forecast assumption. Risk: There are a number of risks to Canadian Utilities achievement of our C$46.00 target price: commodity prices; weather; environmental; regulatory; access to capital markets; and, interest rates. Moreover, one should never underestimate the power of the regulator in any regulated business.

Please refer to the firm's disclosure website at https://rave.credit-suisse.com/disclosures for the definitions of abbreviations typically used in the target price method and risk sections.

See the Companies Mentioned section for full company names The subject company (CU.TO) currently is, or was during the 12-month period preceding the date of distribution of this report, a client of Credit Suisse. Credit Suisse provided investment banking services to the subject company (CU.TO) within the past 12 months. Credit Suisse has received investment banking related compensation from the subject company (CU.TO) within the past 12 months Credit Suisse expects to receive or intends to seek investment banking related compensation from the subject company (CU.TO) within the next 3 months. Important Regional Disclosures Singapore recipients should contact Credit Suisse AG, Singapore Branch for any matters arising from this research report. The analyst(s) involved in the preparation of this report have not visited the material operations of the subject company (CU.TO) within the past 12 months Restrictions on certain Canadian securities are indicated by the following abbreviations: NVS--Non-Voting shares; RVS--Restricted Voting Shares; SVS--Subordinate Voting Shares. Individuals receiving this report from a Canadian investment dealer that is not affiliated with Credit Suisse should be advised that this report may not contain regulatory disclosures the non-affiliated Canadian investment dealer would be required to make if this were its own report. For Credit Suisse Securities (Canada), Inc.'s policies and procedures regarding the dissemination of equity research, please visit http://www.csfb.com/legal_terms/canada_research_policy.shtml. As of the date of this report, Credit Suisse acts as a market maker or liquidity provider in the equities securities that are the subject of this report. Principal is not guaranteed in the case of equities because equity prices are variable. Commission is the commission rate or the amount agreed with a customer when setting up an account or at any time after that. To the extent this is a report authored in whole or in part by a non-U.S. analyst and is made available in the U.S., the following are important disclosures regarding any non-U.S. analyst contributors: The non-U.S. research analysts listed below (if any) are not registered/qualified as research

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CU Initiation FINAL.doc Canadian Utilities Limited (CU.TO) 47