LETTER NO. L·50·95 SIXTH FLOOR. 900 HOWE STREET. BOX 250 VANCOUVER. B.C. CANADA V6Z 2N3 TELEPHONE: (604) 660-4700 ROBERT J. PELLATT BC TOLL FREE: 1-800-663-1385 COMMISSION SECRETARY FACSIMILE: (604) 660-1102 October 6, 1995 Mr. D.M. Masuhara Vice President Legal and Regulatory Affairs BC Gas Utility Ltd. 1111 West Georgia Street Vancouver, B.c. V6E4M4 Dear Mr. Masuhara: By way of its Decision dated June 10, 1994, the Commission specified a mechanism to automatically adjust the 1994 rate of return on common equity ("ROE") allowed certain of its utilities to reflect forecast changes in long term interest rates for 1995. The Decision also indicated that if the Commission judged the mechanism to have performed favorably, and capital market conditions so warranted, the Commission might choose to extend the automatic adjustment mechanism for additional years after 1995. At this time, the Commission considers that the mechanism has performed favorably, and subject to capital market conditions at the time the mechanism is to be applied, intends to apply the mechanism for 1996. However, through informal feedback, the Commission has become aware that there are two possible sources of confusion with respect to the mechanism. First, the wording of the Decision leaves unclear the effect of a change in the forecast of long-term bond yields of exactly 50 basis points. It is the intention of the Commission to adjust the ROE if the change in the forecast of long-term bond yields is 50 basis points or greater. Second, the wording does not address the base forecast from which the change in long-term Canada bond yields will be calculated in 1996; that is, whether the base will be the forecast as set out in the Decision which is for 1994 (7.75 percent) or the forecast of long-term Canada bond yield for 1995 as calculated by the mechanism and set out in Commission Letter No. L-39-94 (9.118 percent). By way of this letter, the Commission informs all parties that it intends to use the forecast of long-term Canada bond yields for 1995 established in November of 1994 as the base from which the change in long-term bond yields will be calculated. Similarly, should the mechanism be extended for further years, the base will be the forecast long-term Canada bond yields established for the preceding year. Yours truly, Robert J. Pellatt DWE/ssc WKP/CorlROE-BaseForecast
LETTER NO. L·50·95 SIXTH FLOOR, 900 HOWE STREET, BOX 250 VANCOUVER, B.C. CANADA V6Z 2N3 TELEPHONE: (604) 660-4700 ROBERT J. PELLATT BC TOLL FREE: 1-800-663-1385 COMMISSION SECRETARY FACSIMILE: (604) 660-1102 October 6, 1995 Mr. David A. Harrison Senior Vice President, Corporate & Financial Affairs and Chief Financial Officer British Columbia Hydro and Power Authority 18th Floor, 333 Dunsmuir Street Vancouver, B.C. V6B 5R3 Dear Mr. Harrison: By way of its Decision dated June 10, 1994, the Commission specified a mechanism to automatically adjust the 1994 rate of return on common equity ("ROE") allowed certain of its utilities to reflect forecast changes in long term interest rates for 1995. The Decision also indicated that if the Commission judged the mechanism to have performed favorably, and capital market conditions so warranted, the Commission might choose to extend the automatic adjustment mechanism for additional years after 1995. At this time, the Commission considers that the mechanism has performed favorably, and subject to capital market conditions at the time the mechanism is to be applied, intends to apply the mechanism for 1996. However, through informal feedback, the Commission has become aware that there are two possible sources of confusion with respect to the mechanism. First, the wording of the Decision leaves unclear the effect of a change in the forecast of long-term bond yields of exactly 50 basis points. It is the intention of the Commission to adjust the ROE if the change in the forecast of long-term bond yields is 50 basis points or greater. Second, the wording does not address the base forecast from which the change in long-term Canada bond yields will be calculated in 1996; that is, whether the base will be the forecast as set out in the Decision which is for 1994 (7.75 percent) or the forecast of long-term Canada bond yield for 1995 as calculated by the mechanism and set out in Commission Letter No. L-39-94 (9.118 percent). By way of this letter, the Commission informs all parties that it intends to use the forecast of long-term Canada bond yields for 1995 established in November of 1994 as the base from which the change in long-term bond yields will be calculated. Similarly, should the mechanism be extended for further years, the base will be the forecast long-term Canada bond yields established for the preceding year. Yours truly, DWE/ssc WKP/CorlROE-BaseForecast
LETTER NO. L-50-95 SIXTH FLOOR. 900 HOWE STREET. BOX 250 VANCOUVER. B.C. CANADA V6Z 2N3 TELEPHONE: (604) 660-4700 ROBERT J. PELLATT BC TOLL FREE: 1-800-663-1385 COMMISSION SECRETARY FACSIMILE: (604) 660-1102 October 6, 1995 Mr. Marcel Reghelini Manager, Regulatory Affairs and Rates Centra Gas British Columbia Inc. 1675 Douglas Street P.O. Box 3777 Victoria. B.C. V8W3V3 Dear Mr. Reghelini: By way of its Decision dated June 10, 1994, the Commission specified a mechanism to automatically adjust the 1994 rate of return on common equity ("ROE") allowed certain of its utilities to reflect forecast changes in long term interest rates for 1995. The Decision also indicated that if the Commission judged the mechanism to have performed favorably, and capital market conditions so warranted, the Commission might choose to extend the automatic adjustment mechanism for additional years after 1995. At this time, the Commission considers that the mechanism has performed favorably, and subject to capital market conditions at the time the mechanism is to be applied, intends to apply the mechanism for 1996. However, through informal feedback, the Commission has become aware that there are two possible sources of confusion with respect to the mechanism. First, the wording of the Decision leaves unclear the effect of a change in the forecast of long-term bond yields of exactly 50 basis points. It is the intention of the Commission to adjust the ROE if the change in the forecast of long-term bond yields is 50 basis points or greater. Second, the wording does not address the base forecast from which the change in long-term Canada bond yields will be calculated in 1996; that is, whether the base will be the forecast as set out in the Decision which is for 1994 (7.75 percent) or the forecast of long-term Canada bond yield for 1995 as calculated by the mechanism and set out in Commission Letter No. L-39-94 (9.118 percent). By way of this letter, the Commission informs all parties that it intends to use the forecast of long-term Canada bond yields for 1995 established in November of 1994 as the base from which the change in long-term bond yields will be calculated. Similarly, should the mechanism be extended for further years, the base will be the forecast long-term Canada bond yields established for the preceding year. Yours truly, Robert J. Pellatt DWEIssc WKP/CorlROE-BaseForecast
LETTER NO. L·50·95 SIXTH FLOOR, 900 HOWE STREET, BOX 250 VANCOUVER, B.C. CANADA V6Z 2N3 TELEPHONE: (604) 660-4700 ROBERT J. PElLATI BC TOLL FREE: 1-800-663-1385 COMMISSION SECRETARY FACSIMILE: (604) 660-1102 October 6, 1995 Mr. c.P. Donohue Manager of Regulatory Affairs Pacific Northern Gas Ltd. 1400 - 1185 West Georgia Street Vancouver, B.C. V6E4E6 Dear Mr. Donohue: By way of its Decision dated June 10, 1994, the Commission specified a mechanism to automatically adjust the 1994 rate of return on common equity ("ROE") allowed certain of its utilities to reflect forecast changes in long term interest rates for 1995. The Decision also indicated that if the Commission judged the mechanism to have performed favorably, and capital market conditions so warranted, the Commission might choose to extend the automatic adjustment mechanism for additional years after 1995. At this time, the Commission considers that the mechanism has performed favorably, and subject to capital market conditions at the time the mechanism is to be applied, intends to apply the mechanism for 1996. However, through informal feedback, the Commission has become aware that there are two possible sources of confusion with respect to the mechanism. First, the wording of the Decision leaves unclear the effect of a change in the forecast of long-term bond yields of exactly 50 basis points. It is the intention of the Commission to adjust the ROE if the change in the forecast of long-term bond yields is 50 basis points or greater. Second, the wording does not address the base forecast from which the change in long-term Canada bond yields will be calculated in 1996; that is, whether the base will be the forecast as set out in the Decision which is for 1994 (7.75 percent) or the forecast of long-term Canada bond yield for 1995 as calculated by the mechanism and set out in Commission Letter No. L-39-94 (9.118 percent). By way of this letter, the Commission informs all parties that it intends to use the forecast of long-term Canada bond yields for 1995 established in November of 1994 as the base from which the change in long-term bond yields will be calculated. Similarly, should the mechanism be extended for further years, the base will be the forecast long-term Canada bond yields established for the preceding year. Yours truly, Robert J. Pellatt DWE/ssc WKP/CorlROE-BaseForecast
LETTER NO. L-50-95 SIXTH FLOOR, 900 HOWE STREET, BOX 250 VANCOUVER, B.C. CANADA V6Z 2N3 TELEPHONE: (604) 660-4700 ROBERT J. PELLATT BC TOLL FREE: 1-800-663-1385 COMMISSION SECRETARY FACSIMILE: (604) 660-1102 October 6, 1995 Mr. R.H. Hobbs Manager, Customer and Corporate Services West Kootenay Power Ltd. 1290 Esplanade P.O. Box 130 Trail, B.C. VlR4L4 Dear Mr. Hobbs: By way of its Decision dated June 10, 1994, the Commission specified a mechanism to automatically adjust the 1994 rate of return on common equity ("ROE") allowed certain of its utilities to reflect forecast changes in long term interest rates for 1995. The Decision also indicated that if the Commission judged the mechanism to have performed favorably, and capital market conditions so warranted, the Commission might choose to extend the automatic adjustment mechanism for additional years after 1995. At this time, the Commission considers that the mechanism has performed favorably, and subject to capital market conditions at the time the mechanism is to be applied, intends to apply the mechanism for 1996. However, through informal feedback, the Commission has become aware that there are two possible sources of confusion with respect to the mechanism. First, the wording of the Decision leaves unclear the effect of a change in the forecast of long-term bond yields of exactly 50 basis points. It is the intention of the Commission to adjust the ROE if the change in the forecast of long-term bond yields is 50 basis points or greater. Second, the wording does not address the base forecast from which the change in long-term Canada bond yields will be calculated in 1996; that is, whether the base will be the forecast as set out in the Decision which is for 1994 (7.75 percent) or the forecast of long-term Canada bond yield for 1995 as calculated by the mechanism and set out in Commission Letter No. L-39-94 (9.118 percent). By way of this letter, the Commission informs all parties that it intends to use the forecast of long-term Canada bond yields for 1995 established in November of 1994 as the base from which the change in long-term bond yields will be calculated. Similarly, should the mechanism be extended for further years, the base will be the forecast long-term Canada bond yields established for the preceding year. Yours truly, Robert J. Pellatt DWEIssc WKP/CorlROE-BaseForecast
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