ORDER NUMBER
G-27-20
IN THE MATTER OF
the Utilities Commission Act, RSBC 1996, Chapter 473
and
FortisBC Energy Inc.
Application under sections 50(2), 50(3) and 50(7)
of the Utilities Commission Act for a New Letter of Credit Facility
BEFORE:
B. A. Magnan, Commissioner
on February 20, 2020
ORDER
WHEREAS:
A. On January 21, 2020, FortisBC Energy Inc. (FEI) applied to the British Columbia Utilities Commission (BCUC) pursuant to sections 50(2), 50(3) and 50(7) of the Utilities Commission Act (UCA) for approval to issue letters of credit under a senior unsecured uncommitted letter of credit facility between FEI and the Canadian Imperial Bank of Commerce (CIBC) (Letter of Credit Facility) in the principle amount of up to $55 million with an initial term not to exceed two years. Additionally, FEI seeks approval to extend the Letter of Credit Facility, without further BCUC approval, for additional periods not greater than 365 days where there are no other material changes to the Letter of Credit Facility (Application);
B. Pursuant to Order G-96-07 dated August 14, 2007, the BCUC approved the incurrence of indebtedness of up to $500 million by FEI (then Terasen Gas Inc.) under a credit agreement with CIBC for an initial term not to exceed five years (FEI Term Credit Agreement). By Orders G-90-08, G-78-12, G-92-13 and G-77-14, the BCUC approved 365-day extensions to the maturity date of the FEI Term Credit Agreement and was extended to August 24, 2016;
C.
By Order G-109-15 dated June 25, 2015, the BCUC
approved FEI’s application to terminate the $200 million FortisBC Energy
(Vancouver Island) Inc. (FEVI) credit agreement, as a result of the
amalgamation of FEI, FEVI, FortisBC Energy (Whistler) Inc. and Terasen Gas
Holdings Inc. By the same order, the BCUC approved the amendment to increase
the FEI Term Credit Agreement by $200 million, providing for an unsecured
revolving term credit facility for the principal amount of $700 million. By
Orders G-105-16, G-112-17,
G-120-18 and G-178-19, the BCUC approved 365-day extensions to the maturity
date of the FEI Term Credit Agreement;
D. The Letter of Credit Facility will be in addition to the $700 million FEI Term Credit Agreement, bringing the total principle amount available to FEI to $755 million;
E. The letters of credit primarily support future pension benefit obligations and will be transferred from the FEI Term Credit Agreement. Under the proposed terms of the Letter of Credit Facility, issuing letters of credit will be at a lower cost than currently established in the FEI Term Credit Agreement;
F. FEI requests the proposed terms and conditions, which were filed as Appendix A to the Application, be held on a confidential basis that it contains commercially sensitive information;
G. On February 10, 2020, the BCUC issued confidential staff questions to FEI. FEI submitted its responses on February 14, 2020; and
H. The BCUC has reviewed the Application, FEI’s responses to staff questions and finds that approvals are warranted.
NOW THEREFORE pursuant to sections 50(2), 50(3) and 50(7) of the UCA, the BCUC orders as follows:
1. The BCUC approves the issuance of letters of credit in the principle amount of up to $55 million under the Letter of Credit Facility for an initial term not to exceed two years, subject to the Letter of Credit Facility being substantially similar to the terms set forth in the confidential Indicative Term Sheet.
2. The BCUC approves the subsequent extension of the Letter of Credit Facility for additional periods not greater than 365 days without further BCUC approval, where there are no other material changes to the Letter of Credit Facility or FEI’s capital structure. FEI must provide in writing to the BCUC notification of any extensions to the Letter of Credit Facility.
3. FEI must file with the BCUC no later than 30 days from the issuance of this order, the updated term sheet disclosing the final terms and conditions as granted by the lenders.
4. The BCUC will keep confidential the proposed terms and conditions of the term sheet filed in the Application, as it contains commercially sensitive information.
DATED at the City of Vancouver, in the Province of British Columbia, this 20th day of February 2020.
BY ORDER
Original signed by:
B. A. Magnan
Commissioner