VANCOUVER, British Columbia, Nov. 29, 2024 (GLOBE NEWSWIRE) -- Today, the British Columbia Utilities Commission (BCUC) completed Stage 2 of its Generic Cost of Capital proceeding, which set the allowed return for public utilities regulated by the BCUC.
The BCUC is responsible for ensuring shareholders of public utilities are afforded a reasonable opportunity to earn a fair return on their invested capital. In determining a fair return, the BCUC considered each utility’s business risks compared to the benchmark utility, FortisBC Energy Inc. (FortisBC), and any changes since the last cost of capital review.
The BCUC found that each utility’s overall business risk was higher than the benchmark utility and has changed over time to varying degrees.
Based on these assessments, the BCUC approved the following return on equity and equity components, which together form the basis for each utility’s allowed return:
| Type | Utility | Equity Component | Return on Equity |
| Gas | PNG(NE) Fort St. John/Dawson Creek | 46% | 10.40% |
| PNG-West | 52% | 10.40% | |
| Electric | Boralex | 50% | 10.40% |
| Thermal Energy System (TES) | Creative Energy Mount Pleasant | 49% | 10.40% |
| Creative Energy Core Steam System | 51% | 10.40% | |
| TES Default | 49% | 10.40% |
To determine the equity component, the BCUC examined each utility’s business risk by comparing them to the benchmark utility and any changes since the last assessment. The BCUC adjusted for a size difference between the utilities and the benchmark utility, based on financial modelling and market data, to determine the return on equity. As the benchmark utility, FortisBC’s equity component is 45% and its return on equity is 9.65%, as outlined in the Stage 1 decision.
As part of its decision, the BCUC also established a default allowed return for TES utilities (TES Default), as these utilities continue to face unique and higher business risks compared to the benchmark utility. The TES Default will reduce regulatory burden on small utilities and promote regulatory efficiency.
The approved allowed returns are effective January 1, 2024, and the impact of these changes on rates will be carried out on a utility-by-utility basis.
For more information on the BCUC’s decision or the Stage 2 Generic Cost of Capital proceeding, please visit the proceeding page.
Background
In September 2023, the BCUC completed Stage 1 of the Generic Cost of Capital Proceeding, which determined a new allowed return for FortisBC and FortisBC Inc.