FEI-FEVI 2010 EEC Report filed March 31, 2011 - FortisBC

#1 - Discount Rate
• The Issue
– High discount rate reduces future benefits
– TRC specifies weighted cost of capital
• FortisBC ~ 7.85%
• Options
– SCT allows the use of a social discount rate
• Intergenerational equity (ie: building shell > 50 years)
• Discussion of 2.5 – 3.5% as appropriate in Canada
• Precedents
– Some US states use Treasury Bill rates (2.5 – 3.5%)
– US Center of Disease Control uses 3%
– UK uses 3.5%