Toronto Hydro MEDIA STATEMENT: Clarification on Return on Equity
TORONTO, Sept. 27 /CNW/ - Concerns have been raised about the Return on Equity as it relates to hydro bills.
Toronto Hydro is publically-owned by the City of Toronto. Toronto Hydro's primary objective is to serve the electricity requirements of Torontonians - delivering power to approximately 696,000 customers. The City of Toronto's dividend has not increased in 2010 as a result of the Return on Equity.
The Return on Equity plays a key role in enabling Toronto Hydro's reconstruction of the electricity grid in Toronto. Toronto Hydro will spend in excess of $275 million in 2010 alone to address serious reliability issues in neighbourhoods across the city.
There are more than 200 Toronto Hydro infrastructure renewal projects in Toronto this year alone. Over 30 per cent of the electrical assets in Toronto are past their useful life. To put this into context, Toronto Hydro is investing in the power grid at a rate of approximately $200,000 an hour. To fund these critical projects, Toronto Hydro needs to be able to raise money (capital) on the Canadian financial markets from institutional investors.
In 2010, the increase in Return on Equity (over 2009) adds only 89 cents a month to the average Toronto Hydro residential customer's bill. It ensures the financial stability of Toronto Hydro which enables the company to borrow money and to finance its grid reconstruction at competitive interest rates.
The Ontario Energy Board approves a Return on Equity as part of utilities' cost of capital. A market-based cost of capital allows utilities to raise money in the form of interest bearing debt on the Canadian financial markets. It provides utilities with adequate funds to reinvest into the electricity distribution system, and re-invest its own cash into the system.
Toronto Hydro customer research indicates that more than 85 per cent of residents and 90 per cent of businesses support increased investment in the grid to address reliability issues.
For further information:
Tanya Bruckmueller, Toronto Hydro
[email protected]
W: 416.542.2621
C: 416.903.0440
Share this article