FortisBC receives cost of capital decision from the BC Utilities Commission

Sep 5, 2023

Surrey, B.C.—September 5, 2023: The British Columbia Utilities Commission (BCUC) has issued its decision on Stage 1 of the generic cost of capital (GCOC) proceeding which determined the allowed return on equity (ROE) and approved capital structure for FortisBC Energy Inc (FEI) and FortisBC Inc. (FBC), a subsidiary of Fortis Inc. (TSX/NYSE: FTS).

Respectively, FEI and FBC are the largest investor-owned natural gas and electricity utilities in British Columbia and their allowed earnings are regulated by the BCUC. In determining the fair return for both utilities, financial and business risks were considered, multiple financial models and analyses were reviewed, and expert testimonies were heard over the course of the proceeding.

Effective January 1, 2023, the following has been approved:

• The allowed ROE for FEI have been set at 9.65% and the common equity in the approved capital structure has been set at 45%.
• The allowed ROE for FBC has been set at 9.65% and the common equity in the approved capital structure has been set at 41%.

The allowed ROE and approved capital structure will remain in effect until otherwise determined by the BCUC.

Current rates for the utilities were approved on an interim basis, pending the outcome of Stage 1 of the GCOC proceeding. With this decision, both utilities will now file for permanent rates.

The GCOC proceeding will now move onto Stage 2, which will determine the cost of capital for other utilities in B.C. Stage 2 begins in November 2023.

The decision and orders are available online.

 

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