Orders

ROBERT J. PELLATT COMMISSION SECRETARY Commission.Secretary@bcuc.com web site: http://www.bcuc.com VIA E-MAIL Mr. Scott Thomson Vice President, Finance and Regulatory Affairs Terasen Gas Inc. Terasen Gas (Vancouver Island) Inc. 16705 Fraser Highway Surrey, B.C. V3S 2X7 regulatory.affairs@terasengas.com Mr. C.P. Donohue Director, Regulatory Affairs & Gas Supply Pacific Northern Gas Ltd. 950 - 1185 West Georgia Street Vancouver, B.C. V6E 4E6 cdonohue@png.ca Dear Sirs: Re: Return on Common Equity for a Low-Risk Benchmark Utility for the Year 2007 Pursuant to the Commission’s Decision dated June 10, 1994 regarding Return on Common Equity and Order No. G-35-94, and as amended by Order No. G-80-99, Order No. G-109-01 and Order No. G-14-06, the Commission has determined that the current ROE automatic adjustment mechanism results in an allowed return on common equity of 8.37 percent for a low-risk benchmark utility in 2007. The calculation and other documentation in support of this finding are attached. The appropriate ROE in 2007 for individual utilities will incorporate the risk premium for each utility relative to the low-risk benchmark. RG/cms Attachment MisCor/L-75-06_2007 ROE to Utilities LETTER NO. L-75-06 SIXTH FLOOR, 900 HOWE STREET, BOX 250 VANCOUVER, B.C. CANADA V6Z 2N3 TELEPHONE: (604) 660-4700 BC TOLL FREE: 1-800-663-1385 FACSIMILE: (604) 660-1102 November 23, 2006 Mr. David Bennett General Counsel and Corporate Secretary FortisBC Inc. 5th Floor 1628 Dixon Avenue Kelowna, B.C. V1Y 9X1 david.bennett@fortisbc.com regulatory@fortisbc.com Yours truly, Original signed by: Robert J. Pellatt

2 cc: Mr. R. Brian Wallace Bull, Housser & Tupper rbw@bht.com Ms. Joanna Sofield Chief Regulatory Officer British Columbia Hydro and Power Authority regulatory.group@bchydro.com Mr. Marcel Reghelini Director, Regulatory Affairs British Columbia Transmission Corporation marcel.reghelini@bctc.com bctc.regulatory@bctc.com Mr. Jim Quail Executive Director The British Columbia Public Interest Advocacy Centre support@bcpiac.com LETTER NO. L-75-06 BCUC Regulated Utilities glenn.laufer@corix.com silversmith@netidea.com mvalcourt@bigwhite.com jsereda@calgasinc.com david@portalicegas.com stargas@shaw.ca utilities@sunpeaksresort.com chdl@telus.net Fax to: Yukon Electrical Company Limited 867-668-3965

ATTACHMENT TO LETTER NO. L-75-06 Calculation of Allowed 2007 Rate of Return on Common Equity For A Low-Risk Benchmark Utility (Per Commission Order No. G-35-94, Amended by Order No. G-80-99, Order No. G-109-01 and Order No. G-14-06) A forecast of long-term Canada bonds is developed based on the Consensus Economics forecast of 10-year bonds (step 1) and the observed spread between 10- and 30-year bonds over a defined period (step 2). This establishes a forecast yield for long Canada bonds (step 3). 1. Ten Year Canada Bond Yield – end of February, 2007 4.1% (Consensus Economics, November 2006 Consensus Forecast) Ten Year Canada Bond Yield – end of November, 2007 4.2% (Consensus Economics, November 2006 Consensus Forecast) Average of 3 and 12 Month Forecasts 4.15% 2. Add average yield spread between 10-year and 30-year bonds as 0.069% reported in the Financial Post for all trading days in October, 2006. 3. Equals forecast yield on long-term Canada bonds 4.219% As per Commission Order No. G-14-06, the approved benchmark return on equity (ROE) is 9.145 percent assuming a 30-year long Canada bond yield of 5.25 percent. Where the forecast yield is greater or less than 5.25 percent, a sliding scale adjustment raises or lowers the benchmark ROE by 75 percent of the change in the forecast yield on long-term Canada Bonds (step 4). The unrounded allowed ROE in percentage terms is rounded to the nearest 2 decimal places (step 5). 4. Unrounded allowed ROE based on sliding scale adjustment: 9.145 – (0.75 * (5.25 – 4.219)) 8.372% 5. Allowed ROE 8.37%