Two New Reports Urge Canadian Regulators to Reconsider Generic Return on Equity Formula as Gas Distributors Increasingly Fall Behind in Competition for Capital

摘要

The now-universal generic return on equity (ROE) formula applied by Canadian regulators is precluding the informed judgment needed to satisfy the Fair Return Standard (FRS) required under Canadian law, say two different papers prepared by two pairs of former government officials and academicians. A wide and unprecedented gap has developed between ROEs awarded to Canadian and U.S. natural gas utilities, and the authors agree that a reappraisal is in order.