FortisBC receives BCUC return on equity and common equity component decision
August 10, 2016
FortisBC Energy Inc., an indirect and wholly owned subsidiary of Fortis Inc. (TSX:FTS), announced it has received the British Columbia Utilities Commission (BCUC) decision on its return on equity and common equity component.
The rate of return on equity (ROE) for FortisBC Energy Inc. (FEI) remains unchanged at 8.75 per cent, effective January 1, 2016. Additionally, the common equity component in capital structure for ratemaking purposes remains unchanged at 38.5 per cent, effective January 1, 2016. The ROE and common equity component in capital structure will remain in effect until otherwise determined by the BCUC.
Prior to this decision, FEI had been subject to an automatic adjustment mechanism (AAM) to set the ROE on an annual basis under certain circumstances. As part of this decision, the BCUC has suspended indefinitely the AAM.
The BCUC maintained FEI as the benchmark for calculating the ROE allowed for certain B.C. utilities. FortisBC Inc.'s ROE will reflect the benchmark 8.75 per cent allowed ROE. The current equity risk premium of 40 basis points above the benchmark allowed ROE and the common equity component for FortisBC Inc. was not part of this application, and therefore the current ROE (9.15 per cent) and common equity (40 per cent) remains unchanged for this utility.
The decision and orders are available on the BCUC website at www.BCUC.com.
FortisBC is a regulated utility 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 7,200 kilometres of transmission and distribution power lines, and approximately 47,500 kilometres of natural gas transmission and distribution pipelines. FortisBC Inc. and FortisBC Energy Inc. do business as FortisBC. FortisBC is indirectly, wholly owned by Fortis Inc., a leader in the North American electric and gas utility business. 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.