Robert Hobbs Email: [email protected] Phone: (604) 742-1990 … · 2013. 10. 1. · Ms. Erica Hamilton Commission Secretary BC Utilities Commission Sixth Floor, 900 Howe Street, Box

Robert Hobbs

Email: [email protected]

Phone: (604) 742-1990

______________________________________________________________________

October 1, 2013

Via Email

Ms. Erica Hamilton

Commission Secretary

BC Utilities Commission

Sixth Floor, 900 Howe Street, Box 250

Vancouver, BC V6Z 2N3

Dear Ms. Hamilton:

Re: Stage 2 - Generic Cost of Capital Proceeding Order No. G-20-12 (Project No.

3698660)

By Order G-77-13 dated May 13, 2013, the Commission established a regulatory

timetable for this proceeding, including the filing of Intevener Evidence for Group 1& 3.

In accordance with Order G-77-13, the ICG files the attached Intervener Evidence of Dr.

Safir.

Yours truly,

(Original Signed)

Robert Hobbs

cc Registered Participants

C4-22

markhuds

GCOC Stage 2

B.C.U.C. Hearing Order G-77-13Generic Cost of Capital Proceeding, Stage 2

Prepared Evidence of Dr. Andrew Safir

BEFORE THE BRITISH COLUMBIA UTILITIES COMMISSION

PREPARED EVIDENCE OF

DR. ANDREW SAFIR

on Behalf of the

INDUSTRIAL CUSTOMERS GROUP

October 1, 2013

Recon Research CorporationSuite 1604

6380 Wilshire BoulevardLos Angeles, CA 90048



TABLE OF CONTENTS

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . 3

Purpose and Summary of Evidence . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . 4

Determining the Appropriate ROE and Capital Structure for FBC . . . . . . . . . . . . . . . . 5

FBC’s Recommended Capital Structure and ROE . . . . . . . .. . . . . . . . . . . . . . . . . . . 13

Evaluation of FBC’s Business Risk Assessment . . . . . . .. . . . . . . . . . . . . . . . . . . . . . 16

Smaller size/Greater asset concentration . . . . . . . . . . .. . . . . . . . . . . . . . . . . . 16

Diverse Customer Base . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . 18

Competition: Alternative Energy . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . 21

Vertical Integration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . 22

Credit Ratings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . 25

Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . 29

Attachment A: Representative Energy Testimony of Dr. Andrew Safir . . . . . . . . . . . 31

2



INTRODUCTION1

Q1 Please state your name, business address and occupation.2

A1 My name is Dr. Andrew Safir and I am President of Recon Research Corporation. 3

My business address is Suite 1604, 6380 Wilshire Blvd., Los Angeles, CA 90048.4

Q2 What is your educational background and experience?5

A2 I received a Bachelor of Arts degree in economics and psychology from the6

University of Colorado in 1969, a Master of Arts in economics from Tufts7

University in 1970, and a Ph.D. in economics from Tufts University in 1975.8

During the 1970s, I held a variety of positions with the U.S. Government. In 1972,9

I held a staff position on the President's Council of Economic Advisers. In 1973,10

I held a similar position on the White House staff. In 1974, I moved to the11

Department of Justice, where I served as a senior advisor on economic policy12

matters, including those pertaining to energy and finance. In 1975, I was appointed13

as the Assistant Director of the Office of International Energy Policy at the U.S.14

Treasury. I left that position in 1978 to join the Administration of Governor15

Edmund G. Brown, Jr., as Chief Business Economist for the State of California. 16

However, I remained a special advisor to the U.S. General Accounting Office17

specializing in energy, international finance and national security matters18

throughout much of the 1980s. I founded Recon Research Corporation in 1980,19

and have remained the President of this economic and energy consulting firm for20

the past 33 years. 21

3



Between my government and private sector experience, I have been dealing with1

energy issues for more than 35 years. Over this period, I have provided energy2

consulting services and expert testimony throughout the U.S. and Canada, as well3

as in the U.K. and Australia. I have previously testified before the National Energy4

Board ("NEB"), including evidence given in RH-3-2011, RH-001-2011, RH-1-5

2010, RH-1-2008, RH-2-2007, MH-1-2006, GH-1-2004, RH-3-2004, RH-2-2004,6

RH-1-2002, RH-4-2001, RH-1-99, and RH-2-94. I have also testified in a number7

of proceedings before the Alberta Utilities Commission including the Generic Cost8

of Capital review in 2009, Application No. 1578571. In addition, I provided9

evidence before the British Columbia Utility Commission (“BCUC,” or10

“Commission”) in Stage 1 of the Generic Cost of Capital Proceeding.111

PURPOSE AND SUMMARY OF EVIDENCE12

Q3 What is the purpose of your evidence in this proceeding?13

A3 I have been asked by the Industrial Customers Group (“ICG”), customers of14

FortisBC Inc. (“FBC”), the electric utility serving southern British Columbia, to15

recommend a fair and economically reasonable equity ratio and return on equity16

(“ROE”) for FortisBC for 2013, in relation to the benchmark utility under the17

jurisdiction of the BCUC.18

1 See Attachment A for a representative list of my energy testimony.

4



Q4 Please summarize your primary findings and opinions in this proceeding.1

A4. Since 2009, the relative risk between FortisBC and the benchmark utility, FortisBC2

Energy (“FEI”) has decreased slightly. As a result, FBC should be granted an3

equity ratio of 38.5% and a return on equity of 9.05%. This is a slight reduction4

in the risk premium of 40 basis points that it has operated under during the5

previous 13 years.2 In addition, I believe that the claims made by FBC regarding6

its relative risks are ill founded and not warranted. FBC’s approach has been to7

focus on the risk differences between FBC and FEI, rather than analyzing whether8

those risk differences have changed since 2009. Specifically, FBC has asserted9

that FBC faces more risk than FEI, not that FBC is riskier than FEI in 2013 than10

it was in 2009. Moreover, despite the utility’s claims, I believe that the evidence11

indicates that granting a lower equity ratio and/or lower risk premium than the12

utility advocates will not cause irreparable harm to FortisBC, nor violate the fair13

return standard.14

DETERMINING THE APPROPRIATE ROE AND CAPITAL STRUCTURE FOR FBC15

Q5 What is the “fair return” standard?16

A5 The standard for a “fair return” arises from both legal and economic precedents17

and has been discussed in numerous Provincial decisions as well as those by the18

National Energy Board (“NEB”). Typically, this principal involves ensuring a19

regulated utility the opportunity to (a) attract capital on reasonable terms; (b) earn20

2 FBC Response to ICG Information Request Set No. 2, question 5(a).

5



a return on investment commensurate with that of enterprises of comparable risk;1

and, (c) maintain its financial integrity.3 It is sometimes shortened to “an2

opportunity to earn competitive returns of and on capital,” and is often referred to3

by utilities as “the regulatory compact.” In reality, however, the fair return4

standard is broader than the regulatory compact as the former relates fundamentally5

to the regulatory bargain that exists between utility ratepayers, utilities and the6

regulatory commissions which oversee utility services. 7

Regulation is imposed to acquire the benefits of large scale efficiencies while8

protecting customers of those services from the potential exercise of monopoly9

power. It is designed to emulate competitive outcomes that would otherwise be10

unobtainable. As a result, regulation is imposed over utilities for the benefit of11

customers, not for the benefit of utilities themselves. Consequently, where a range12

of competitive returns is available for evaluation, the outcome of a “fair return”13

should always favor the lower range presented. This helps ensure the avoidance14

of monopolistic returns which are more or less inherent in the structure of utility15

earnings. There is nothing unfair in this approach, in that even the lower range of16

competitive alternatives should still provide a utility with the opportunity to17

compete for investable capital and maintain its existing capital structure.418

3 This was stated most recently by BCUC in the Commission’s August 15, 2012, Decision entitled In theMatter of FortisBC Inc. 2013-2013 Revenue Requirements and Review of 2012 Integrated SystemPlan, p. 30.

4 This is in direct opposition to the position stated by FortisBC Utilities’ witness Ms. Kathleen McShanein the Stage 1 proceeding. See Kathleen C. McShane, Testimony on Cost of Capital for the FortisBCUtilities, August 2012 p.9.

6



Q6 How is the capital structure and ROE of FBC to be determined so that the1

resulting levels are consistent with the fair return standard?2

A6 Typically in British Columbia, a benchmark utility is determined. On the basis of3

the financial condition of that utility, relative to the market, a benchmark capital4

structure and return on equity are established by the BCUC. This was the process5

in Stage 1 of the GCOC hearing. The benchmark levels are, by the very nature of6

the Commission’s determination process, consistent with the fair return standard.7

Next, the ROE and capital structure of the non-benchmark utility in question are8

adjusted from the benchmark levels, consistent with the risk differentials between9

the benchmark and subject utility. In particular, utility specific characteristics10

regarding such factors as customer mix, market conditions, practicability of11

alternative energy options, for example, must be analyzed to determine relative risk12

differentials. It should be noted that, because one of the standards for a fair return13

is that it be commensurate with the return of comparable risk enterprises, this14

determination also results in a fair return for the subject utility.15

Q7 What is the starting point for your assessment of the risk of FBC relative to16

the benchmark, FEI?17

A7 FBC is a smaller integrated electric utility that owns hydroelectric generation18

plants, high voltage transmission lines, and a network of distribution assets, all of19

which are located in the southern interior of British Columbia. Directly and20

indirectly, it serves approximately 163,000 customers.5 In comparison, FEI is a21

5 FortisBC Inc., Annual Information Form for the Year Ended Dec. 31, 2012, p. 8.

7



larger natural gas utility. In fact, it is the largest distributor of natural gas in British1

Columbia, serving approximately 841,000 customers in more than 1002

communities. The major areas served by FEI are Greater Vancouver, the Fraser3

Valley and the Thompson, Okanagan, Kootenay and North Central Interior regions4

of British Columbia.65

Compared to FEI, FBC in 2012 had a little less than one quarter of the revenues,6

and about 15% of the number of customers and little less than one half of the rate7

base assets. Roughly half of FBC’s revenues came from residential customers, one8

quarter from commercial customers, and the rest from wholesale and industrial9

customers. In contrast, about 60% of FEI’s revenues were from residential10

consumers, roughly 30% from commercial consumers, and the rest from11

transportation and other customers.712

Because of its smaller size and concentration in a smaller geographic area, FBC is13

relatively less diversified that FEI, and faces slightly greater business risk due to14

that fact. This has been recognized in past BCUC assessments and is the starting15

points for any differential risk analysis.16

Q8 What is your assessment of the risk of FBC relative to the benchmark?17

A8 Since the last time the Commission confirmed the relative risk differences and18

continued to assign a ROE risk premium to FBC, I believe that there have been19

only minor changes to the differential business risks between the two utilities. In20

6 FortisBC Energy Inc., Annual Information Form for the Year Ended Dec. 31, 2012, p. 6.

7 See Tables 1 and 2 following.

8



particular, while some changes have acted to increase the differential, other1

changes have closed the gap. Overall, I believe the differential risk has narrowed2

such that a lower ROE risk premium is now economically reasonable and3

appropriate. 4

One element of change has been the market for natural gas. Since 2009 there have5

been changes in this market that have increased its supply, lowered its price and6

increased the competitive threat of natural gas to FBC. By itself, this has increased7

FBC’s business risk relative to FEI. However, at the same time that natural gas8

supply has been increasing, the downward trend in prices will be kept in check by9

Provincial plans to facilitate the export of LNG.10

In addition, there have been changes within British Columbia that have solidified11

FBC’s competitive standing and reduced FBC’s risk relative to FEI. In particular,12

FBC has grown relative to FEI and the expansion has reduced its relative risk. 13

Moreover, a recent Commission decision has allowed FBC to expand its scope of14

revenues subject to deferral accounts, also reducing the risk relative to FEI. 15

Overall, the effect has been to put FBC at a slightly lower risk position relative to16

FEI than it previously was.17

Q9 Can you describe in more detail the factors that have increased the relative18

risk of FBC?19

A9 Over the past several years, there have been significant technological advances that20

have allowed the development of shale gas reservoirs in North America. This has21

resulted in a substantial decrease in the price of natural gas across North America. 22

Because of these changes, gas has become a relatively less expensive source of23

9



energy. As a result, gas utility prices to many customers have declined relative to1

electric utility prices.8 This has the effect of increasing the comparative advantage2

of gas utilities, reducing the relative demand for electric utility use, and increasing3

the relative business risk of FBC.4

However, the increase in supply has opened up opportunities to supply foreign5

markets. In particular, there are numerous proposals to construct LNG export6

facilities in British Columbia to take of advantage of the relatively higher price of7

natural gas in places like Asia. The movement towards exporting natural gas will8

mitigate the effect of the increased supply of natural gas. As a result, the increase9

in business risk to FBC due to this factor will be relatively minor.10

Q10 What factors have decreased the relative risk of FBC?11

A10 Since 2009, FBC has expanded at a faster rate than FEI. In particular, FBC12

revenues, the asset rate base and the number of customers have grown more rapidly13

than those of FEI. This has narrowed the differential risk associated with size14

differences. In addition, in 2012, FBC expanded by purchasing one of its15

wholesale customers.9 As a result of this purchase, what was formerly one large16

wholesale customer has now become many individual customers. These changes17

8 FortisBC Inc., Response to BCPSO IR 2.6.1.

9 “Prior to March 31, 2013, FBC indirectly provided electricity to the customers of five municipalelectric utilities through FBC’s wholesale tariff. The City of Penticton, Corporation of the City ofNelson, City of Grand Forks, District of Summerland and City of Kelowna buy wholesale service fromFBC to serve their customers. As of March 31, 2013, FBC acquired the utility assets of the City ofKelowna. The City of Kelowna is no longer a wholesale customer and FBC now serves the formercustomers of the City of Kelowna directly.” Evidence of FortisBC, Appendix A, Business RiskEvidence, p. 5, footnote 2.

10



have reduced the expected variability in revenues, as it is now unlikely that all new1

customers (formerly one wholesale customer) would simultaneously leave FBC for2

another provider.3

In addition, there have been regulatory changes approved for FBC that will also4

reduce its relative business risk. In particular, the Commission has approved the5

establishment of deferral accounts for power purchases and revenue variances.10 6

By reducing the uncertainty of its cash flows, the business risk of FBC will decline.7

Q11 Have there been other factors that have changed the relative business risk of8

FBC to FEI since 2009?9

A11 I do not believe that there have been any others. This is consistent with the view10

expressed in 2012 by the BCUC in its Decision regarding FBC’s Application for11

Approval of 2012-2013 Revenue Requirements and Review of 2012 Integrated12

System Plan. In that decision, the Commission stated: “The Commission Panel13

agrees as the FortisBC evidence supports the view that there has not been a14

substantive change in risk.”1115

10 BCUC, In the Matter of FortisBC Inc. 2013-2013 Revenue Requirements and Review of 2012Integrated System Plan Decision, August 15, 2012, pp. 2, 34, 116.

11 P. 29. The full quote concerns FortisBC fears of a reduction in ROE and is as follows:“FortisBC submits that any reduction in ROE would challenge the Company’s credit metrics as well asavailable liquidity which could potentially result in a credit downgrade and cost of debt increase. Inaddition, FortisBC refers to the October 6, 2011 DBRS credit opinion which commented upon challengesrelated to relatively large anticipated capital expenditures and their contribution to large free cash flowdeficits as well as challenges related to the execution of the capital expenditure program. In response toBCUC IR 1.31.1, the Company noted that a credit rating upgrade is not the sole determinant of a businessrisk premium and listed a significant number of other risk factors that it faced. Included among thesewere the relative size of the utility, major businesses served by FortisBC, population and economicgrowth, competition and technological changes which the Company asserts has influence on an entity’s

(continued...)

11



Q12 What is your general assessment of the business risk facing FBC?1

A12 Overall, I view the effects described above as relatively minor. However, I believe2

that the stronger tendency is to reduce business risk. The relative growth of FBC3

is likely to continue and the Commission’s expansion of deferral status for certain4

accounts provide very real reductions in business risk. 5

In comparison, I believe the gas price effect to be relatively weak because of6

mitigating factors. Although lower gas prices are a factor encouraging FBC7

customers to move to alternative suppliers, FBC electric prices are still relatively8

lower than gas in comparison to most other regions.12 More importantly, the9

decision to switch, while motivated by lower gas prices, still involves other10

transition costs which must be overcome by the anticipation of continued lower gas11

prices. This likelihood is dampened by the probability that the lower price effect12

will be largely reversed by anticipated increases in the demand for gas, as13

transmitted by the foreign demand for LNG.14

Q13 What, then, is your conclusion regarding the appropriate return on equity15

and capital structure for FBC?16

11 (...continued)long-term risk profile and collectively do not support a reduction to the Company’s risk premium. TheCommission Panel agrees as the FortisBC evidence supports the view that there has not been asubstantive change in risk. As noted below, none of the parties challenged this evidence.” [Italics added.]

12 Application by Terasen Gas Inc (“TGI”), Terasen Gas (Vancouver Island) Inc. (“TGVI”) and TerasenGas (Whistler) Inc (“TGW”) (Collectively the “Terasen Utilities”) for Return on Equity and CapitalStructure, May 15, 2009. Tab 1, Business Risks, pp. 25-26.

12



A13 In the Stage 1 proceeding, the BCUC determined the fair ROE and capital structure1

for FEI. In particular, the Commission has already indicated that changes in the2

economy have warranted a decrease in the ROE to 8.75% and capital structure to3

38.5% equity. This is the new benchmark. However, prior to the Stage 1 decision,4

the BCUC had determined that a fair rate of return for FBC would entail the same5

capital structure and a 40 basis point premium in the ROE compared to the6

benchmark FEI.13 As I believe the evidence indicates that there has been a slight7

reduction in the relative business risks between FBC and FEI, I would expect that8

a small reduction in the ROE premium would continue to provide a fair rate of9

return to FBC. In particular, I believe a reduction in the ROE premium from 4010

basis points to 30 basis points would be economically reasonable. As a result, I11

believe, consistent with the fair return principle, the appropriate capital structure12

for FBC should be 38.5% equity, while the appropriate return on equity should be13

9.05%.14

FBC’S RECOMMENDED CAPITAL STRUCTURE AND ROE15

Q14 How does your recommendation compare to that of FBC?16

A14 I do agree with FBC, and its expert, Ms. Kathleen McShane, that FBC faces more17

business risk than FEI. However, I disagree with them on the magnitude of the18

difference. In comparison to my recommendations, FBC and Ms. McShane believe19

13 The risk differential was first determined and confirmed by the Commission in 1999 as a result of aNSP. More recently, the 2009 Terasen/Fortis gas utility rate proceeding re-affirmed the differential.

13



that the electric utility faces significantly more business risk, such that it warrants1

a 40% equity share and a ROE of between 9.25% and 9.5%.2

In the 2009 cost of capital proceeding for the Terasen/Fortis gas utilities, the3

Commission confirmed that FEI/TGI would continue as the benchmark utility. The4

Commission left intact its previous ruling that FBC’s equity ratio would remain at5

40% and that the utility would continue to receive a risk premium to its ROE of 406

basis points. This was determined by the Commission to be a fair premium relative7

to the benchmark. 8

However, in the current proceeding, FBC and Ms. McShane are recommending a9

higher equity ratio than the Commission set for the benchmark utility. They are10

also recommending a higher ROE over the benchmark as compared to the last11

proceeding. FBC and Ms. McShane argue that this is warranted because FortisBC12

has more risk than FEI. However, it is my belief that this extra risk was reflected13

in the 40 basis point ROE risk premium that was originally approved in 1999 and14

subsequently left unchanged in the 2009 proceedings. FBC and Ms. McShane do15

not adequately explain what has changed since then to warrant an increase in the16

differential between FBC and the benchmark utility.17

In contrast, I do not agree that the relative risk between the two utilities has18

increased. In fact, I believe that the relative risk has narrowed slightly. As a result,19

I believe that FBC should be granted the same relative equity ratio but a lower20

ROE risk premium than it received in 2009. Specifically, this would be an equity21

ratio that is identical to what the Commission set for FEI in the Stage 1 proceeding22

14



(38.5%) and a ROE that is 30 basis points above what the Commission set for FEI1

in the same proceeding (8.75% + 0.30% = 9.05%).2

Q15 What is the basis for FBC’s recommendation?3

A15 FBC’s methodology for developing its proposed capital structure and ROE is to4

begin with a qualitative assessment of its business risks relative to FEI. In5

particular, FBC looks at the following factors: (a) economic conditions; (b)6

regulatory considerations; (c) the nature of the utility; (d) size and asset7

concentration; (e) diversity of customer and economic base; (f) energy price8

competitiveness; (g) political considerations; (h) power supply; and (i) operating9

risks. For each of these factors, FBC compares itself to FEI.10

FBC describes its business risk as follows:11

“FBC?s overall business risk is best characterized as being higher12

than that of FEI?s. Economic and regulatory considerations are13

similar for both utilities. GHG policy favours electricity over natural14

gas; however, essentially all other differentiating features suggest15

that FBC faces higher risk. Potentially favourable impacts of the16

GHG policies are outweighed by the risk inherent in operating an17

integrated electric utility, in tandem with smaller size, less diversity,18

conservation policies driving higher electricity prices, somewhat19

higher supply risks and higher operational risk.”1420

14 BCUC Generic Cost of Capital Proceeding, Stage 2, Evidence of FBC, p. 4. lines 26-32.

15



Q16 What is your opinion regarding the methodology used by FBC to rate its1

business risk?2

A16 I do not agree with many of its assessments. In particular, I take issue with the3

emphasis on simply comparing the business characteristics of FBC with FEI. I4

believe it is more useful to make use of the fact that these utilities have been5

compared previously, and that this comparison has been the basis of the6

Commission determination of a different ROE for FBC relative to the benchmark7

FEI. What remains relevant for this proceeding is not the overall comparison, but8

instead what has changed in the relative risk comparisons since the Commission9

last decided on the differential ROE between the benchmark and FBC. In addition,10

I also believe that in some instances, FBC has mis-characterized the relative risk11

between FBC and FEI with respect to some of the factors above. I also believe that12

the analysis presented by FBC and Ms. McShane regarding potential credit13

downgrades by the ratings agencies does not give an accurate picture of FBC’s14

business risk and changes in that risk relative to FEI.15

EVALUATION OF FBC’S BUSINESS RISK ASSESSMENT16

Smaller size/Greater asset concentration17

Q17 FBC alleges it has greater business risk than FEI due to its smaller size and18

greater asset concentration. Do you agree?19

A17. Not completely. Although I agree that FBC does have greater business risk than20

FEI due to its smaller size, this risk has not grown relative to FEI since the last cost21

16



of capital ruling in 2009. Rather, as FBC has grown in size relative to FEI since1

then, the relative risk differential has fallen. This can be seen from the information2

provided in Table 1.3

In 2009, FBC’s rate base assets were 36% of FEI’s rate base assets. As of the end4

of 2012, FBC had grown its rate base assets to 41% of FEI’s. According to5

forecasts filed by both companies, FBC will close the gap even further to 42% of6

FEI’s rate base assets in 2013.15 This is a clear indication that FBC’s rate base7

assets are growing at a faster rate than that of FEI.8

FBC has also grown relative to FEI in terms of revenues and number of customers. 9

(See Table 1.) FBC’s revenues went from 17% of FEI’s revenues in 2009 to 23%10

in 2012. The number of FBC customers relative to FEI’s customers increased from11

13% in 2009 to 14% in 2012. By both measures, FBC is growing at faster rate than12

FEI.13

The growth since 2009 in FBC’s size relative to FEI (by several different14

measures) is a factor decreasing FBC’s business risk relative to FEI since the last15

cost of capital ruling. This would imply that the common equity ratio and risk16

premium set in 2009 relative to FEI, i.e., the same common equity ratio and a 4017

basis point markup for the ROE risk premium, would be excessive and more than18

adequate in providing FBC with a fair and reasonable return.19

15 $1,173 million for FBC v. $$2,777 million for FEI. Sources: FortisBC Inc. Annual Information FormFor the Year Ended December 31, 2012, p. 15. FortisBC Energy Inc. Annual Information Form For theYear Ended December 31, 2012, p. 13.

17



Table 11

FBC Growth relative to FEI since 2009 2

(Rate Base Assets, Revenues, and Customers)3 4 Rate Base Assets

($ millions)

Revenues

($ millions)

Customers

(thousands) 5 2009 2012 CAGR 2009 2012 CAGR 2009 2012 CAGR

FortisBC Engergy6(FEI)7

$2,547 $2,725 2.3% $1,435 $1,218 -5.3% 839,291 841,491 0.1%

FortisBC (FBC)8 $908 $1,112 7.0% $239 $283 5.8% 110,853 113,915 0.9%FBC as % of FEI9 36% 41% 17% 23% 13% 14%

Sources: FortisBC Energy Inc., Annual Information Form for the Year Ended Dec. 31, 2012, pp. 7, 13;10Terasen Gas Inc., Annual Information Form for the Year Ended Dec. 31, 2010, p. 8; FortisBC11Inc., Annual Information Form for the Year Ended Dec. 31, 2012, p. 8; FortisBC Inc., Annual12Information Form for the Year Ended Dec. 31, 2010, p. 9.13

Diverse Customer Base14

Q18 FBC and Ms. McShane argues that FBC faces a higher business risk due to15

it having a less diverse customer base. Do you agree?16

A18 Yes. However, although I agree that FBC does have a slightly greater business risk17

than FEI due to its less diverse customer and economic base, this risk has not18

grown relative to FEI since the last cost of capital ruling in 2009. In fact, I believe19

that the evidence shows that the relative risk has declined.20

FBC and Ms. McShane argue that FBC faces risk because four municipal21

wholesale customers make up almost a quarter of FBC’s total sales. They claim22

that these wholesale customers could acquire their power from an alternative23

source. The utility argues that the loss of any one of those four would cause prices24

18



to increase for FBC’s remaining customers. They also note that FBC’s industrial1

customers have the same ability to acquire power from an alternative source. 2

However, just because a customer can switch to an alternative source of power3

does not reflect on how likely it is that the customer will actually switch. Neither4

FBC nor Ms. McShane provide evidence that any of FBC’s wholesale or industrial5

customers are likely to switch providers.6

Contrary to what the utility and Ms. McShane argue, the Dominion Bond Rating7

Service (“DBRS”) considers FBC to actually have a diversified and stable8

customer base:9

“The Company has a diverse customer base, which provides a degree10

of stability to earnings. DBRS estimates that in 2012 approximately11

39% of volume sales were sold to stable residential customers, 23%12

to commercial customers and 29% to wholesale customers (which,13

in turn, sell primarily to residential and commercial customers). 14

Only 9% of sales were to low-margin, economically sensitive15

industrial customers. This mitigates the negative impact of an16

economic downturn. In addition, the Company’s franchise area has17

experienced strong rate base asset growth, averaging around 8% per18

year over the last five years.”1619

In addition, FBC and Ms. McShane have not given evidence that the differences20

in customer diversity between FBC and FEI are any different than they were when21

16 DBRS Rating Report, March 25, 2013, p. 2

19



rates were last set. Thus, there is no evidence that the ROE and capital structure1

differentials between the FBC and the benchmark utility should be any larger than2

they are currently. In fact, the gap in customer diversity between FBC and FEI has3

decreased due to FBC’s rate base asset growth. It has also decreased due to the4

fact that FBC recently purchased the utility assets of one of its former municipal5

wholesale customers, the City of Kelowna, and is now serving those customers6

directly.7

FBC and Ms. McShane have argued that the presence of municipal, wholesale8

customers contributes to more business risk because these types of customers are9

able to switch to an alternate electricity provider and there is a large effect if one10

single wholesale customer were to switch. Consistent with their argument, the11

conversion of the 15,000 customers in Kelowna from being part of a single large12

municipal customer to many individual customers should lower FBC’s business13

risk relative to FEI, all else held equal.14

An examination of the percent of revenues that come from each business segment15

for FBC and FEI shows that, while there have been some changes between 200916

and the present, by and large FBC and FEI have changed in the same direction and17

in similar magnitudes. (See Table 2.) This is another indication that the overall18

relative risk between the two has not increased.1719

17 Sources: FortisBC Inc. Annual Information Form For the Year Ended December 31, 2012, p. 15. FortisBC Energy Inc. Annual Information Form For the Year Ended December 31, 2012, p. 13.

20



Table 21

Residential

Customers

Commercial

Customers

All Other

Customers*2009 2012 2009 2012 2009 2012

% Total Revenue2FortisBC Engergy Inc (FEI)3 60% 60% 32% 29% 8% 11%

FortisBC Inc (FBC)4 47% 48% 26% 23% 27% 30%

*All Other Customers = Wholesale, Industrial, Transportation, and "Other" Customers5

Sources: FortisBC Energy Inc. Annual Information Form for the Year Ended Dec. 31,6

2012, p. 7; Terasen Gas Inc. Annual Information Form for the Year Ended Dec. 31,7

2010, p. 8; FortisBC Inc. Annual Information Form for the Year Ended Dec. 31, 2012,8

pp.9; FortisBC Inc. Annual Information Form for the Year Ended Dec. 31, 2010, pp.9.9

Competition: Alternative Energy10

Q19 FBC and Ms. McShane assert that the utility has greater business risk than11

FEI due to competition from alternative forms of energy. Do you agree?12

A19. To some extent, I do agree. The shale gas revolution has had a significant13

downward effect on the price of natural gas, thus increasing the risk of FBC14

customers switching to this alternative form of energy. However, offsetting this15

increase in supply is the activity in British Columbia to develop the LNG export16

market. This will enable foreign demanders to compete with domestic, provincial17

demand, limiting the extent to which price will decline.18

In addition, this is only one aspect of the change in business risk confronting FBC. 19

Another element in the equation, one not considered by FBC and Ms. McShane,20

21



is the cost of switching suppliers in response to lower gas prices. As the1

Commission stated in its 2005 decision, “there are strong constraints on the2

likelihood of municipalities opting for alternative suppliers, and that the industrial3

component of load is not large and also unlikely to opt for alternative suppliers.”184

Ms. McShane also mentions a concern that the demand for electricity will decrease5

as customers seek to find ways to conserve energy use. However, this conservation6

will affect all energy utilities, not just FBC. If anything, one would expect that7

conservation efforts would tend to have less of a risk effect with respect to low8

carbon emissions hydroelectric power. Nevertheless, Ms. McShane provides no9

evidence that FBC will be affected more negatively by consumer conservation10

efforts than the benchmark utility.11

Vertical Integration12

Q20 FBC alleges it has greater business risk than FEI due to the fact that FBC is13

fully integrated. FBC claims higher risk related to maintenance and integrity,14

citing the potential impact on power supply costs should one of its generation15

assets fail. Do you agree that FBC’s integration causes it to have higher16

business risk than FEI?17

A20. No. First, vertical integration has been shown to decrease business risk by a18

number of well-known economic studies.19 A recent report by the Edison Electric19

18 Commission Order No. G-52-05, p. 24.

19 For example, see “Vertical Integration and Risk Reduction,” David J. Teece, Henry Ogden Armourand Garth Saloner, Graduate School of Business, Stanford University, Research Paper No. 563 (Rev. Ed.),July 1981. “Vertical Integration and Risk Reduction,” Constance E. Helfat and David J. Teece, Journal

(continued...)

22



Institute points out that integrated companies may be less risky than non-integrated1

companies because they are less sensitive to variations in purchased power costs. 2

That same report also indicates that, if FBC were to divest its generating assets, its3

business risk would increase due to the reduction in the rate base.204

Second, FBC argues that, because its generation assets are older, there will be risk5

related to maintenance and integrity. It adds that because its transmission and6

distribution systems are above ground, they contribute to higher operating risks7

because they are more susceptible to damage from natural events, collision, and8

theft. However, underground natural gas distribution and transmission assets are9

also susceptible to the ravages of age and natural events, as evidenced by the recent10

PG&E gas pipe explosion in San Bruno, CA. FBC provides no evidence that its11

assets are any more at risk than FEI’s, nor that this risk has changed more than12

FEI’s since 2009.13

Third, FBC further argues that it has higher operating risk because of the potential14

impact on power supply costs due to failure of any of its generation assets. 15

However, a recent DBRS report states that, although, in general, the risk associated16

with regulated electricity generating assets “tends to be higher risk than17

transmission and distribution,” the risks from FBC’s generating assets, specifically,18

are “manageable, given that the hydro facilities are low cost, emission free and19

19 (...continued)of Law, Economics, & Organization, Vol. 3, No. 1 (Spring, 1987), pp. 47-67. Williamson, O.E., Marketsand Hierarchies: Analysis and Antitrust Implications (New York: The Free Press, 1975).

20 “Electric Utilities and Risk Competition,”Edison Electric Institute, June 2006.

23



have no exposure to hydrology risk.”21 Thus, the mere fact that FBC owns1

generating assets does not make it more risky than FEI. It certainly has not2

changed the relative risk between FBC and FEI since the last time the Commission3

set the equity ratio and risk premiums for both companies. FBC, itself, admits that4

“FBC’s power supply risk has not materially changed since the 2005 Revenue5

Requirements process.”226

In addition, FortisBC is insulated, at least in part, from operational risk due to7

increases in power replacement costs should one of its generation assets fail. This8

is because, under the Canal Plant Agreement, BC Hydro is contractually obligated9

to deliver a fixed amount of power to FortisBC regardless of its actual output.23 10

The Commission stated in its 2005 Decision regarding FBC:11

“FortisBC obtains low-cost supply from its own generating plants12

and long term contracts, with the remainder of its supply obtained13

through market purchases. Market purchases, while an increased14

share, are still limited, and FortisBC has a power purchase incentive15

mechanism to mitigate its exposure to market price volatility.” 2416

Finally, FBC and Ms. McShane are confusing the risks stemming from vertical17

integration or ownership of assets with the risk of a disaster. Even if FBC did not18

own generating assets, it would still face supply risks from generation plant19

21 DBRS Credit Opinion, Rating Report: FortisBC Inc., March 25, 2013.

22 FortisBC Inc. Evidence, BCUC Generic Cost of Capital Proceeding – Stage 2, Appendix A, p. 4.

23 DBRS Credit Opinion, Rating Report: FortisBC Inc., March 25, 2013, p. 4.

24 BCUC Order No. G-52-05, May 31, 2005, p. 24.

24



failures. Absent vertical integration, if a plant owned by one of its suppliers were1

knocked out of service, FBC would still need to find and purchase alternative2

sources of electricity to supply its downstream facilities. In such a case, FBC3

would have to compete with other downstream electricity sellers for supply. As a4

result, this potential separation of ownership would not necessarily reduce total5

risk.256

CREDIT RATINGS7

Q21 Does FBC consider the effect of its recommended ROE and equity share on8

credit ratings?9

A21 Yes. FBC and Ms. McShane argue that the reduction in the benchmark ROE and10

equity share in the Stage 1 decision poses a threat to FBC’s credit rating. 11

However, they believe that the potential reduction in FBC’s credit rating can be12

avoided by providing FBC with a high enough ROE and equity share. In13

particular, they cite DBRS’ and Moody’s credit reports of March 25, 2013 and14

June 21, 2013, respectively for FBC. 15

As of the report date, DBRS rates the company (and its secured and unsecured16

debentures) as A(low). However, the report recognized the potential for a17

weakening credit profile were there to be any material changes in ROE and/or the18

deemed equity percentage. Moody’s report, which was issued after the Stage 119

25 FBC would not directly bear the cost of fixing or replacing the generating plant in this case, but it woldindirectly bear some of this cost through the payment of higher prices to obtain supply.

25



decision was issued, was harsher in its outlook. The then current Baa1 rating1

received a negative outlook. Moody’s also indicated that a decline in FBC’s ROE2

and deemed equity share, similar to that called for in the Stage 1 decision, could3

lead to a decline in credit metrics and a subsequent decline in FBC’s credit rating.4

Q22 Do you believe that FBC’s analysis with respect to credit ratings in5

appropriate?6

A22 No. I believe that FBC’s analysis suffers from critical flaws. The rationale for7

rewarding FBC with a higher than benchmark ROE and equity share is to avoid a8

decline in the credit rating. A decline in FBC’s credit rating is seen as increasing9

the risk in FBC’s ability to access credit markets.10

However, despite the concern of the two credit rating agencies, there was no11

outright pronouncement that a decline in the rating would actually occur. In fact,12

Moody’s, the harshest critic, indicated that a downgrade would likely result were13

the determination made “that the BCUC has become a less supportive and14

predictable regulatory framework …” However, Moody’s did not view the Stage15

1 benchmark decision as fulfilling this conditions, as it stated in its report: “The16

recent reduction in allowed ROE and the equity component in the capitalization for17

FEI, the benchmark utility, is viewed as the regulator exercising its authority over18

the utility monopoly's profitability, and not as a sign of a more contentiousness19

environment.”20

More importantly, it should be remembered that the goal of the fair return standard21

is to maintain both financial integrity and the ability to attract capital on reasonable22

terms. As a result, the relevant issue is not whether there might be a change in the23

26



bond rating for FBC, but whether any potential change leaves FBC in a position1

where it is no longer able to attract capital on reasonable terms. Although FBC2

is correct that there is threat to its current credit rating, there has been no real3

assessment of the degree of risk involved concerning the utility’s ability to raise4

capital on reasonable terms.5

In contrast, I believe that a ratings downgrade to BBB(high) would still be6

sufficient for FBC to maintain its financial integrity. This is because the evidence7

indicates that FBC would still be able to raise capital on reasonable terms. In8

particular, a decline in FBC’s DBRS credit rating from A(low) to BBB(high)9

would put FBC in a position similar to where it was between 2006 and October10

2010, when it received a rating upgrade from DBRS. As seen from Figure 1, a11

comparison of the yield on two different long term bonds, one issued by FEI and12

the other by FBC, have been remarkably close.26 Between January 2006 and13

September 2010, FBC was rated BBB(high) by DBRS, while FEI had an A rating. 14

On average, the market price for FBC notes was slightly lower than that of FEI,15

resulting in the average monthly yield for FBC exceeding FEI’s yield by 10 basis16

points during this time period.17

26 FortisBC Inc. Response and Attachment to BCUC IR 1.3.2.

27



From October 2010 to July 2013, FBC was the beneficiary of an A(low) rating by1

DBRS, while FEI’s remained at A. During this time period, the average yield2

differential narrowed slightly, so that the yield on the FBC note exceeded the FEI3

note by 6 basis points. Taken together, this is a strong indication that the market4

imposed a very small “penalty” on the lower credit rating that FBC had received. 5

As such, I believe the evidence is consistent with the fact that there is very little6

risk that a reduction in FBC’s allowed ROE and deemed equity share will put the7

utility in the position of being unable to raise capital. 8

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

Yield

Comparison of Long Term Bond Yieds for FEI and FBC

FEI (BCG 06.5000 05/01/34) FBC (FTSB 05.6000 11/09/35)

Jan 06- Sep 10: DBRS Ratings

FEI: A Avg Mo Yield: 5.72%

FBC: BBB(high) Avg Mo Yield: 5.82%

Avg Mo Premium for FBC: 10 bps

Oct 10- Jul 13, DBRS Ratings:

FEI: A Avg Mo Yield: 4.29%

FBC: A(low) Avg Mo Yield: 4.35%

Avg Mo Premium for FBC: 6 bps

28



It should also be recognized that, while an ROE and capital structure along the1

lines recommended by FBC and Ms. McShane would undoubtedly aid in securing2

a higher credit rating, it would come at the expense of an increase in rates to FBC3

customers. Alternatively, an allowed ROE and capital structure consistent with my4

recommendation would have the effect of raising rates to FBC customers, only to5

the extent that debt costs increased. As the previous analysis shows, there appears6

to be only a mild differential effect on FBC’s borrowing costs were its credit rating7

to fall a notch.8

CONCLUSIONS9

Q23 Do you agree with FBC and Ms. McShane that a 50 to 75 basis point10

adjustment is necessary for FBC?11

A23 No. In 2009, the Commission left intact its previous decision that FBC required12

only a 40 basis point adjustment from the benchmark in order for FBC to earn a13

fair and reasonable return on equity. There have been only minor changes in the14

relative risk between FBC and the benchmark utility since then. Moreover, my15

analysis indicates that these minor changes have resulted in a narrowing of the risk16

differential between FBC and FEI. Although FBC is smaller, FBC was smaller17

than FEI in 2009, as well. More importantly, FBC’s size relative to FEI has only18

increased since 2009. Recent regulatory decisions have increased the scope of19

deferral accounts for FBC, reducing uncertainty and risk for the utility. Increased20

North American gas supplies, while providing a movement toward lower prices,21

will be offset by the development of infrastructure that will enable foreign demand22

29



for LNG to be realized. As a result of this relatively minor reduction in FBC’s risk1

relative to FEI, a reduction to 30 basis points in the ROE premium would provide2

a fair and reasonable return on equity for FBC.3

Q24 Do you agree with FBC and Ms. McShane that their proposed common equity4

ratio of 40% for FBC is within a reasonable range based on equity ratio of5

other Canadian utilities?6

A24 No. I do not agree that comparing FBC to Canadian utilities other than FEI is7

relevant to this proceeding. Since 2010, the Commission has accepted that setting8

FBC’s common equity share equal to that of FEI, in combination with an ROE9

premium of 40 basis points, provided FBC with a fair and reasonable return. There10

have been only minor changes in the relative riskiness of FBC as compared to FEI11

in the time since, and I believe that my recommended ROE risk premium will12

account for those differences. Consequently, there is no reason to change the13

relative common equity ratios. As a result, a common equity ratio of 38.5% will14

provide FBC with a fair and reasonable return.15

Q25 Does this conclude your prepared evidence?16

A25 Yes it does.17

30



ATTACHMENT A: REPRESENTATIVE ENERGY TESTIMONY OF DR. ANDREW SAFIR

Testimony before Regulatory Bodies:

Oral Testimony of Dr. Andrew Safir on Behalf of the Industrial Customers Group beforethe British Columbia Utility Commission, Generic Cost of Capital Proceeding, B.C.U.C.Hearing Order G-72-12, December 19, 2012.

Prepared Evidence of Dr. Andrew Safir on Behalf of the Industrial Customers Groupbefore the British Columbia Utility Commission, Generic Cost of Capital Proceeding,B.C.U.C. Hearing Order G-72-12, November 5, 2012.

Oral Testimony of Dr. Andrew Safir on Behalf of the Association of Power Producers ofOntario before the National Energy Board in the Matter of an Application for Approvalof Restructuring and Mainline Final Tolls for 2012 and 2013, September, October 2012(RH-003-2011).

Updated Reply Evidence of Dr. Andrew Safir on Behalf of the Association of PowerProducers of Ontario before the National Energy Board in the Matter of an Applicationfor Approval of Restructuring and Mainline Final Tolls for 2012 and 2013, August 31,2012 (RH-003-2011).

Written Reply Evidence of Dr. Andrew Safir on Behalf of the Association of PowerProducers of Ontario before the National Energy Board in the Matter of an Applicationfor Approval of Restructuring and Mainline Final Tolls for 2012 and 2013, May 11, 2012(RH-003-2011).

Written Evidence of Dr. Andrew Safir on Behalf of the Association of Power Producersof Ontario before the National Energy Board in the Matter of an Application for Approvalof Restructuring and Mainline Final Tolls for 2012 and 2013, March 9, 2012 (RH-003-2011).

Oral Testimony of Dr. Andrew Safir on Behalf of Indicated Shippers, before the FERCregarding a rate proceeding for Enbridge Pipelines (Southern Lights) LLC, January 11,2012, (IS10-399-000 and IS11-146-000).

Oral Testimony of Dr. Andrew Safir on Behalf of Imperial Oil before the National EnergyBoard in the Matter of an Application by Enbridge Pipelines Inc., November 2011 (RH-1-2011).

31



Prepared Cross-Answering Testimony of Dr. Andrew Safir on Behalf of IndicatedShippers, before the FERC regarding a rate proceeding for Enbridge Pipelines (SouthernLights) LLC, September 27, 2011, (IS10-399-000 and IS11-146-000).

Prepared Answering Testimony of Dr. Andrew Safir on Behalf of Indicated Shippers,before the FERC regarding a rate proceeding for Enbridge Pipelines (Southern Lights)LLC, August 16, 2011, (IS10-399-000 and IS11-146-000).

Written Evidence of Dr. Andrew Safir on Behalf of Imperial Oil before the NationalEnergy Board in the Matter of an Application by Enbridge Pipelines Inc., July 2011 (RH-1-2011).

Affidavit of Dr. Andrew Safir On Behalf of the Indicated Shippers (Imperial Oil andExxonMobil Oil Corporation), before the FERC regarding a complaint against EnbridgePipelines (Southern Lights) L.L.C., May 11, 2011, (IS10-399-000, OR11-____).

Written Evidence of Dr. Andrew Safir on Behalf of Imperial Oil before the NationalEnergy Board in the Matter of an Application by Enbridge Pipelines Inc., June 2010 (RH-1-2010).

Oral Testimony on behalf of the Canadian Association of Petroleum Producers regardingbusiness risks faced by Alberta utilities in the Generic Cost of Capital hearing before theAlberta Utilities Commission, Application No. 1578571, Proceeding ID. 85, June, 2009.

Written Evidence on behalf of the Canadian Association of Petroleum Producers regardingbusiness risks faced by Alberta utilities in the Generic Cost of Capital hearing before theAlberta Utilities Commission, Application No. 1578571, Proceeding ID. 85, March, 2009.

Oral Testimony on behalf of the Canadian Association of Petroleum Producers regardingbusiness risks faced by Trans-Québec Maritimes Pipeline before the National EnergyBoard of Canada, October, 2008 (RH-1-2008).

Oral Testimony before the Alberta Utilities Board on behalf of Imperial Oil Resources andExxon/Mobil Canada Energy, before the Alberta Energy and Utilities Board in the Matterof an Inquiry into Natural Gas Liquids Extraction, Application No. 1513726, June, 2008.

Written Evidence on behalf of the Canadian Association of Petroleum Producers regardingbusiness risks faced by Trans-Québec Maritimes Pipeline before the National EnergyBoard of Canada, April, 2008 (RH-1-2008).

32



Written Rebuttal Submission on behalf of Imperial Oil Resources and Exxon/MobilCanada Energy, before the Alberta Energy and Utilities Board in the Matter of an Inquiryinto Natural Gas Liquids Extraction, Application No. 1513726, November 6, 2007.

The Impact of Comprehensive Component Metering and Competitive Extraction on theAlberta Natural Gas Liquids Market, on behalf of Imperial Oil Resources andExxon/Mobil Canada Energy, before the Alberta Energy and Utilities Board in the Matterof an Inquiry into Natural Gas Liquids Extraction, Application No. 1513726, August 28,2007.

Written Evidence of Dr. Andrew Safir on Behalf of Imperial Oil before the NationalEnergy Board in the Matter of an Application by Enbridge Pipelines Inc., July 2007 (RH-2-2007).

Testimony of Dr. Andrew Safir on Behalf of the Mackenzie Valley Pipeline before theNational Energy Board regarding the Application for a Certificate of Public Convenienceand Necessity for the Mackenzie Gas Pipeline, July and November 2006, (GH-1-2004).

Testimony of Dr. Andrew Safir on Behalf of the Industry Group before the NationalEnergy Board regarding TransCanada Pipelines Limited and TransCanada KeystonePipeline GP Ltd. Application for Leave to Transfer Pipeline Facilities, October 2006,(MH-1-2006).

Written Evidence of Dr. Andrew Safir on Behalf of the Industry Group before the NationalEnergy Board regarding TransCanada Pipelines Limited and TransCanada KeystonePipeline GP Ltd. Application for Leave to Transfer Pipeline Facilities, September 2006,(MH-1-2006).

Reply Evidence of Dr. Andrew Safir on Behalf of the Mackenzie Valley Pipeline before theNational Energy Board regarding the Application for a Certificate of Public Convenienceand Necessity for the Mackenzie Gas Pipeline, July 2005, (GH-1-2004).

Prepared Cross Answering Testimony of Dr. Andrew Safir On Behalf of The Firm ShipperGroup, before the FERC regarding a rate proceeding for Maritimes & Northeast Pipeline,L.L.C., March 2005, (RP04-360-000).

Prepared Direct and Answering Testimony of Dr. Andrew Safir On Behalf of The FirmShipper Group, before the FERC regarding a rate proceeding for Maritimes & NortheastPipeline, February 2005, L.L.C. (RP04-360-000).

33



Additional Written Evidence of Dr. Andrew Safir on Behalf of the Mackenzie ValleyPipeline before the National Energy Board regarding the Application for a Certificate ofPublic Convenience and Necessity for the Mackenzie Gas Pipeline, January 2005, (GH-1-2004).

Written Evidence of Dr. Andrew Safir on Behalf of the Canadian Association of PetroleumProducers before the National Energy Board regarding TransCanada PipeLines LimitedMainline 2004 Tolls Application (Phase 2, Cost of Capital), October 2004, (RH-2-2004).

Response Evidence of Dr. Andrew Safir on Behalf of the Canadian Association ofPetroleum Producers before the National Energy Board regarding TransCanada PipeLinesLimited Application for the North Bay Junction, July 2004, (NBJ RH-3-2004).

Written Evidence of Dr. Andrew Safir on Behalf of the Canadian Association of PetroleumProducers before the National Energy Board regarding TransCanada PipeLines Limited2003 Tolls and Tariff Application, April 2003, (RH-1-2002).

Prepared Rebuttal Testimony of And Exhibits of Dr. Andrew Safir On Behalf of CoralPower L.L.C., November 2002, before the FERC regarding the request by the CaliforniaPublic Utilities Commission and California Electricity Oversight Board to have long termpower contracts abrogated as unjust and unreasonable, (EL02-60-003 and EL02-62-003).

Written Evidence of Dr. Andrew Safir on Behalf of the Canadian Association of PetroleumProducers before the National Energy Board regarding TransCanada PipeLines Limited2001 and 2002 Fair Return Application, January 2002, (RH-4-2001).

Testimony of Dr. Andrew Safir on Behalf of the Canadian Association of PetroleumProducers before the National Energy Board regarding TCPL'S application fordiscretionary rate authority, January 2000, (RH-1-99).

Prepared Direct Testimony of Andrew Safir on Behalf of Northern Natural Gas Company,June 1998, regarding storage and secondary transportation services markets, FERC rateproceeding for Northern Natural Gas, (RP98-203-000).

Oral Testimony of Dr. Andrew Safir on Behalf of El Paso Refinery, Refinery HoldingCompany and Chevron Products Co. USA, May 6, 1996, FERC rate proceeding for SantaFe Pacific Pipeline (OR92-8-000, et al).

34



Prepared Sur-Surrebuttal Testimony of Dr. Andrew Safir on Behalf of El Paso Refinery,Refinery Holding Company and Chevron Products Co. USA, January 10, 1996, FERC rateproceeding for Santa Fe Pacific Pipeline (OR92-8-000, et al).

Prepared Rebuttal Testimony of Dr. Andrew Safir on Behalf of El Paso Refinery, RefineryHolding Company and Chevron Products Co. USA, August 27, 1995, FERC rateproceeding for Santa Fe Pacific Pipeline (OR92-8-000, et al).

Prepared Direct Testimony of Dr. Andrew Safir on Behalf of Canadian Association ofPetroleum Producers, November 17, 1994. FERC rate proceeding for Pacific GasTransmission Company, dealing with the issue of rolled-in rate design and its applicabilityto the PGT expansion (RP94-149-000).

Prepared Direct Testimony of Dr. Andrew Safir, September 26, 1994, National EnergyBoard Pipeline Cost of Capital Proceeding (RH-2-94).

35

Documents

Robert Hobbs Email: [email protected] Phone: (604) 742-1990 … · 2013. 10. 1. · Ms. Erica Hamilton Commission Secretary BC Utilities Commission Sixth Floor, 900 Howe Street, Box