IN THE MATTER OF
the Utilities Commission Act, R.S.B.C. 1996, Chapter 473
and
An Application by Kyuquot Power Ltd.
for Variance in Debt Financing
BEFORE: L.F. Kelsey, Commissioner
D.M. Morton, Commissioner July 11, 2013
C. van Wermeskerken, Commissioner
O R D E R
WHEREAS:
A. On June 19, 2013, Kyuquot Power Ltd. (KPL) applied for approval to allow KPL to enter a fixed term interest rate for a period of one to three years except that such rate may not exceed 5.00 percent per annum; and an increase to the amount of lending provided by the Canadian Western Bank (CWB) to a total of about $700,000 (KPL Application);
B. Pursuant to Order G-111-12, KPL has an approved debt to equity ratio of 60/40 with a risk premium of 75 basis points above the low-risk benchmark utility. The current amount of loan at $380,000 is below KPL’s notional debt of around $1 million;
C. Order G-111-12 also approved, among other things, the continuation of the amended loan agreement between KPL and CWB. The agreement was amended to a reduction of the loan to $462,948 and a floating interest rate of CWB Prime plus 2 percent but not less than 5.00 percent, with guarantee requirements from KPL’s affiliated companies;
D. CWB has provided KPL with annual fixed interest rates for one to five year terms payable by KPL, for which in all cases except the 5-year, the fixed interest rate is less than the current rate of 5.00 percent;
E. The British Columbia Utilities Commission (Commission) has reviewed the KPL Application along with the supporting materials and finds that approval is warranted.
NOW THEREFORE pursuant to section 50 of the Utilities Commission Act, the Commission orders as follows:
1. The Application from Kyuquot Power Ltd. (KPL) to convert to a fixed term interest rate for a period of one to three years as determined by KPL to be most advantageous with a rate not to exceed 5.00 percent per annum, is approved.
2. KPL must advise the Commission of the actual fixed-term interest rate following the conversion of the outstanding loan.
3. The KPL Application for an increase to the amount of lending provided by the Canadian Western Bank to a total of $700,000 is approved.
DATED at the City of Vancouver, In the Province of British Columbia, this 11th day of July, 2013.
BY ORDER
Original Signed by:
D.M. Morton
Commissioner