UPDATE 1-Fortis Inc results helped by Terasen tax reduction

* Fortis EPS C$0.31 vs C$0.20

* Revenue rises 11.7 pct

* Results include C$7.5 mln tax cut at Terasen

TORONTO, Oct 31 (Reuters) - Fortis Inc (FTS.TO) reported a higher third-quarter profit on Friday helped by a favorable tax reduction at its Terasen Inc gas distribution unit.

The Canadian power producer said it earned C$49 million, or 31 Canadian cents a share, for the quarter ended Sept. 30, up from C$31 million, or 20 Canadian cents a share for the same time last year.

Revenue for the quarter was C$727 million, up 11.7 percent from C$651 million for the same period last year.

The company said the 2008 quarter included a C$7.5 million tax reduction associated with the settlement of historical corporate tax matters at Terasen.

Fortis acquired Terasen, which distributes natural gas to almost a million customers in British Columbia, in May 2007.

Excluding the tax reduction, earnings for the third quarter were C$41.5 million, or 26 Canadian cents a share. ($1=$1.22 Canadian) (Reporting by Scott Anderson, editing by Dave Zimmerman)