Key Highlights
- Canadian utilities are increasingly exposed to persistent wildfire risks driven by extreme weather patterns.
- Unlike the western US states, Canadian provinces do not have legislative-based wildfire mitigation planning frameworks.
- Nonetheless, Canadian utilities have intensified wildfire mitigation planning and management across provinces.
For Canadian utilities, the principal credit implications are operational, with wildfire risk exposure likely to manifest through higher operating expenditures, increased vegetation management spending, accelerated grid-hardening investments, rising insurance costs, and greater emergency preparedness requirements. Utilities that can efficiently recover resilience-related investments through rates face significantly lower financial risk than those required to manage regulatory delays related to slower cost recovery.
Wildfires represent an increasing threat to Canadian utilities, driving investments into the grid to strengthen and harden assets across all provinces. Wildfire activity across Canada could expose transmission and distribution assets to physical risks and increase the likelihood of service disruptions in impacted areas. Persistent wildfire activity also has direct implications for insurance coverage costs and yearly capital requirements to harden assets and prepare for future wildfires.
The wildfire season in Canada, which typically lasts from April through September, is starting earlier and lasting longer. The 2023 season—the most destructive ever recorded—affected all 13 provinces and territories, as more than 6,000 fires burned some 15 million hectares of land. In 2025, 2,913 separate fires consumed approximately 4.6 million hectares. As of July 13, 2026, 3,993 fires have started, 894 are currently burning, and 3.4 million hectares have been burned. While more individual fires have been recorded thus far in 2026, the cumulative area burned is less than at the same time in 2025. Fire severity and utility exposure may vary by region.
For electric utilities, wildfire management has become a core issue for enterprise risk, operational reliability, and environmental, social, and governance factors in several regions in the Northwest Territories, British Columbia, Alberta, Québec, and Ontario, as well as in parts of the United States. The current Canadian wildfire season is emphasizing the risks utilities and power producers face. Their critical infrastructure is exposed to physical climate risk, with growing implications for asset reliability, operating performance, and expenditures.
In this commentary, we discuss the risks wildfires present to utilities and compare the frameworks in Canada and the US that legislate how utilities are expected to handle wildfire prevention and manage resulting liabilities.
Increased Physical Climate Risk: A Primary Cause of Wildfires in Canada
Many of the current wildfires have been caused by extreme weather events. The record-setting 2023 wildfires were caused by a combination of factors, including extreme heat, drought, early snowmelt, and numerous lightning strikes, highlighting the acute effect of physical climate risks and extreme weather. Early in Québec’s 2023 wildfire season, lightning ignited more than 120 fires in one day. Accidents and human error also contribute to wildfire ignitions. In 2025, approximately 80% of Saskatchewan’s early-season fires were ignited through human error and spread quickly in areas already affected by drought, heat, and dry vegetation.
These examples demonstrate the dominant role weather—including strong winds, lightning, and human activity—plays in driving wildfire occurrence. While failed utility equipment is sometimes implicated in wildfire ignition events, climate and environmental conditions remain the primary determinants of wildfire frequency and severity. As wildfire risk exposure increases, utilities could face increased operational and financial consequences if their infrastructure contributes to wildfire ignition. However, liability frameworks differ significantly between Canada and the US.
Canadian utilities have increasingly incorporated wildfire mitigation and climate resilience investments into their capital and operational plans. For example, British Columbia Hydro and Power Authority (BC Hydro; rated AA with a Stable trend) stated that it had tripled its vegetation management budget to C$150 million between 2015 and 2024. Similarly, many utilities across Western Canada have implemented formal wildfire mitigation programs, including the use of fire-resistant materials to protect utility assets.
Comparing Liability Frameworks in the US and Canada
Like US utilities, Canadian utilities can be held liable if their equipment causes a fire. However, large-scale wildfire litigation remains relatively uncommon in Canada. Many western US states have passed legislation mandating utilities to undertake wildfire mitigation planning. Where WMP has not been codified into law, public utility commissions have been authorized to set the rules for utilities. From state to state, these frameworks are clear about the extent of the law’s liability protection for utilities abiding by WMPs.
In contrast, Canadian provinces do not have utility-specific wildfire liability and mitigation frameworks. Large-scale wildfire litigation against utilities has not emerged in Canada, and it continues to remain an area of low risk. However, provincial governments and utilities are embracing more formal wildfire risk-management requirements that identify utilities’ role in preventing and managing wildfires.
From a credit risk perspective, our emphasis in the US is on liability risk, including bankruptcy risk, litigation reserves, and potential litigation awards to plaintiffs. In contrast, for Canadian utilities, we focus on increased operational risks, higher insurance costs, and increased capital requirements to harden assets against wildfires.
Utility Wildfire Risk Management
While wildfire liability frameworks in Canada are less prescriptive than those in the US, approaches vary from province to province, as they do from state to state in the US.
Alberta
For utilities in Alberta, wildfire management is governed by a combination of provincial safety legislation, individual utility-led mitigation plans, and regulatory expense reviews that the Alberta Utilities Commission decides on a case-by-case basis. However, the AUC increasingly expects utilities to demonstrate formal wildfire risk management practices, including wildfire mitigation planning, particularly when seeking approval of utility investments and operating costs.
In March 2026, Alberta’s Ministry of Forestry and Parks released the Alberta Wildfire Mitigation Strategy, highlighting the province’s plan to manage wildfires across six core themes by focusing on education, partnerships, policy improvements, innovation, land-use planning, and fuel management. Specifically, the strategy includes the province’s intention to integrate wildfire mitigation into legislation that sets clear guidelines, responsibilities, and processes, and which builds organizational structures that support multi-agency cooperation.
Following the release of the strategy, three Alberta electric utilities that own and operate electric transmission and distribution networks in Alberta’s highest-risk areas—AltaLink (rated “A” with a Stable trend), ATCO Energy Systems ACO.X (a subsidiary of Canadian Utilities Limited, rated “A” with a Stable trend), and FortisAlberta (rated A (low) with a Stable trend)—formed the Alberta Wildfire Utility Coalition. The coalition aims to align efforts to strengthen system resilience by prioritizing prevention, resilience, effective communication, and coordination. In effect, the coalition is a proactive approach taken by these utilities to work collaboratively to achieve the best results without direct regulatory guidance and in the absence of a standardized province-wide framework for wildfire mitigation planning.
British Columbia
The BC Utilities Commission expects utilities to maintain and report on wildfire mitigation planning. Consequently, several utilities, including BC Hydro, have filed wildfire mitigation and emergency response plans yearly since 2020 as part of a request from the BCUC, demonstrating increased regulatory attention to wildfire resilience. BC Hydro’s wildfire mitigation measures include an annual vegetation management program, wildfire-specific operating protocols, and asset hardening initiatives. FortisBC (rated A (low) with a Stable trend) has also implemented vegetation management, infrastructure upgrades, wildfire monitoring, and public safety power shutoff procedures.
Ontario
Unlike the two western provinces, Ontario does not require utilities to create formal WMPs. However, the province has strengthened its broader wildfire management legislation through its Wildland Fire Management Act, which emphasizes fire prevention, emergency response, community protection, and wildfire risk assessment in land-use planning. Regardless of the legislation, WMP at Ontario utilities remains focused on operational resilience, vegetation management, and climate adaptation. For example, in 2025, Ontario’s Hydro One (rated A (high) with a Stable trend) described the following measures as part of its response plan to manage wildfires:
- An enhanced emergency preparedness and response framework
- Adapted operations when wildfire risks are elevated
- The maintenance and upgrade of line assets to ensure equipment failures do not contribute to wildfire risks
- Integration of the Ontario Ministry of Natural Resources online forest fire mapping tool into internal tracking system to track the status of forest fires and their distance to utility assets
Across provinces, we believe proactive measures taken to prepare for and manage wildfire risks support a utility’s credit ratings.
Credit Implications
Wildfire risk in Canada is rapidly transitioning from an environmental concern to a strategic utility risk. In contrast to the US, where wildfire risk is often evaluated through the lens of catastrophic liability exposure, bankruptcy risk, and litigation outcomes, in Canada, the principal credit implications for utilities remain focused on operational risks and financial pressures related to capital outlays. Wildfire risk exposure is likely to manifest through higher operating expenditures, increased vegetation management spending, accelerated grid-hardening investments, rising insurance costs, and greater emergency preparedness requirements.
In turn, this is expected to accelerate the rate base’s growth, and it may further increase customer affordability concerns. The degree to which regulators permit recovery of wildfire mitigation spending and regulatory lags are important credit considerations.
