SURREY, BC, March 26, 2014 /CNW/ - The British Columbia Utilities
Commission (BCUC) has issued its decision on the second stage of the
generic cost of capital (GCOC) review for B.C. utilities. The decision
affects FortisBC Inc., FortisBC Energy (Vancouver Island) Inc. (FEVI),
and FortisBC Energy (Whistler) Inc. (FEW). These utilities along with
FortisBC Energy Inc. (FEI) do business collectively as FortisBC and are
all indirect and wholly owned regulated utility subsidiaries of Fortis
Pursuant to the decision on the first stage of the GCOC, which was
received in May 2013, the Return on Equity (ROE) for the B.C. benchmark
utility, FEI, was set at 8.75% and the common equity component in
capital structure for rate-making purposes was set at 38.5% effective
January 1, 2013. As part of the first stage of the GCOC, the BCUC
introduced an Automatic Adjustment Mechanism (AAM) effective
January 2014 to set the ROE on an annual basis for the benchmark
utility. The AAM will take effect when the actual long-term Government
of Canada bond yield exceeds 3.8%. The AAM will be in effect until
December 31, 2015. In January 2014, the BCUC confirmed that the
necessary conditions for the AAM to be triggered for the 2014 ROE had
not been met, therefore the benchmark ROE remains at 8.75% for 2014.
The BCUC has directed FEI to file an application for the review of the
common equity component and the ROE approved in the first stage of the
GCOC by no later than November 30, 2015.
As part of the decision on the second stage of the GCOC, effective
January 1, 2013, the following has been approved:
The ROE for FortisBC Inc. has been set at 9.15%, recognizing a risk
premium over the benchmark utility of 0.40%, and the common equity in
capital structure has been set at 40%, both effective January 1, 2013.
The ROE and common equity component in capital structure will remain in
effect through December 31, 2015.
The ROEs for FEVI and FEW have been set at 9.25% and 9.50%,
respectively, recognizing risk premiums over the benchmark utility of
0.50% and 0.75%, respectively, and the common equity in capital
structure for both companies has been set at 41.5%, all effective
January 1, 2013.
In February 2014, the BCUC approved the amalgamation of FEI, FEVI, FEW
and Terasen Gas Holdings Inc, which is subject to the consent of the
Lieutenant Governor in Council and is expected to be effective on or
about January 1, 2015. Once the amalgamation has been effected, the ROE
and capital structure will be the same for the amalgamated entity as
the benchmark utility, FEI, until December 31, 2015.
The decision and orders are available on the BCUC website at www.BCUC.com
FortisBC Energy Inc., FortisBC Inc., FortisBC Energy (Vancouver Island
Inc.) and FortisBC Energy (Whistler) Inc. do business collectively as
FortisBC and are all indirect and wholly owned regulated utility
subsidiaries of Fortis Inc., the largest investor-owned distribution
utility in Canada. FortisBC is focused on providing safe and reliable
energy, including natural gas, electricity and propane. FortisBC
employs more than 2,200 British Columbians and serves approximately 1.1
million customers in 135 B.C. communities. FortisBC owns and operates
two liquefied natural gas storage facilities and four regulated
hydroelectric generating plants, approximately 7,150 kilometres of
transmission and distribution power lines, and approximately 46,000
kilometres of natural gas transmission and distribution pipelines.
Fortis Inc. shares are listed on the Toronto Stock Exchange and trade
under the symbol FTS. Additional information can be accessed at www.fortisinc.com or www.sedar.com.
For further information:
Joyce Wagenaar, Director of Communications