Ms. Joyce Wagenaar reports

FORTISBC UTILITIES RECEIVE BCUC RETURN ON EQUITY AND CAPITAL STRUCTURE DECISION

FortisBC utilities, indirect and wholly owned subsidiaries of Fortis Inc., have received the British Columbia Utilities Commission (BCUC) decision on the first phase of the BCUC's generic cost of capital review for B.C. utilities.

The rate of return on equity (ROE) for FortisBC Energy Inc. has been set at 8.75 per cent, effective Jan. 1, 2013. Additionally, the common equity component in capital structure for rate-making purposes has been set at 38.5 per cent, effective Jan. 1, 2013. The ROE and common equity component in capital structure will remain in effect through Dec. 31, 2015.

Effective January, 2014, the BCUC is also introducing an automatic adjustment mechanism (AAM) to set the ROE on an annual basis for FortisBC Energy Inc. The AAM will take effect when the actual long-term government of Canada bond yield exceeds 3.8 per cent. The formula will be in effect until Dec. 31, 2015.

The BCUC maintained FortisBC Energy Inc. as the benchmark for calculating the ROE allowed for certain B.C. utilities. The ROE for FortisBC Inc., FortisBC Energy (Vancouver Island) Inc. and FortisBC Energy (Whistler) Inc. will be impacted by this decision (these utilities along with FortisBC Energy Inc. are referred to as the FortisBC utilities herein). The allowed ROE for these utilities, as of Jan. 1, 2013, will reflect the benchmark 8.75-per-cent allowed ROE and the risk premiums associated with each of these utilities.

As part of the generic cost of capital review, the BCUC has commenced phase two, in which it will determine an appropriate individual risk premium and capital structure for FortisBC Inc., FortisBC Energy (Vancouver Island) Inc. and FortisBC Energy (Whistler) Inc.

The decision and orders are available on the BCUC website.