FortisBC receives BCUC return on equity and common equity component decision

Aug 10, 2016

SURREY, BC – 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.

 

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