Via email
December 2, 2014
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Ms. Diane Roy Director, Regulatory Services FortisBC 16705 Fraser Highway Surrey, BC V4N 0E8
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Mr. Ian Wigington Director Regulatory Corix Multi-Utility Services Inc. Suite 1160-1188 West Georgia Street Vancouver, BC V6E 4A2
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Ms. Janet P. Kennedy Vice President, Regulatory Affairs & Gas Supply Pacific Northern Gas Ltd. Suite 950-1185 West Georgia Street Vancouver, BC V6E 4E6
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Dear Ms. Roy, Ms. Kennedy and Mr. Wigington:
Re: Return on Common Equity for
the Benchmark Utility for the Year 2015
On November 25, 2014, FortisBC Energy Inc. (FEI) filed the requested data from Consensus Forecast, Bloomberg Series C29530Y and Cansim Series V39055 and Series V39056 for the purposes of determining the implementation of the Automatic Adjustment Mechanism (AAM) Formula pursuant to the Commission’s decision dated May 10, 2013, regarding Return on Common Equity (ROE) for the Benchmark Utility. Subsequent to the above decision, the Commission issued Letter L-53-13 dated September 16, 2013, to set out the input data requirement and implementation process of the AAM Formula.
The Commission confirms that the Long Canada Bond yield had not once met or exceeded 3.8 percent subsequent to October 2013, a necessary condition for the AAM to be triggered for the 2015 ROE. As a result, the Commission determines that the Benchmark ROE for 2015 remains at 8.75 percent. The appropriate ROE in 2015 for individual utilities will incorporate the risk premium for each utility relative to the Benchmark ROE.
The November 25, 2014 FEI letter and the September 8, 2014 Commission letter are attached for information purposes.
Yours truly,
Erica Hamilton
EC/dg
Enclosures
cc: GCOC proceeding Stage 1 and Stage 2
(Registered Interveners)