Delivering strong, sustainable regulatory and long-term contracts with good returns
Returns on investment
Our aim is to meet the base financial returns in our price controls in the UK and our rate plans in the US.
The performance indicator we use to monitor our return on investment is the vanilla return in the UK and the return on equity per rate plan in the US.
In the UK, we measure our return on investment using an operational return metric comparable to the vanilla return measure as defined in our UK price controls. In the US, we measure our return on investment using our defined return on equity under the terms of each rate plan.
Gas Distribution UK achieved a 5.8% vanilla return in 2008/09 exceeding the regulatory allowance. A summary of returns under our US rate plans is provided below.
| Asset base* | Return on equity* | Allowed return |
||||
|---|---|---|---|---|---|---|
| Regulatory entity | 2008 | 2007 | 2008 | 2007 | current | |
| KEDNY | $2,294m | $2,239m | 11.9% | 14.9% | 9.8% | |
| KEDLI | $1,795m | $1,715m | 11.1% | 10.4% | 9.8% | |
| Mass. Gas | $2,425m | $2,137m | 8.3% | 9.2% | 10.6% | |
| Energy North | $191m | $173m | 4.4% | 4.9% | 10.4% | |
| Narragansett | $337m | $341m | 7.6% | 3.2% | 10.5% | |
| Niagara Mo. Gas** | $1,067m | $1,084m | 4.8% | 5.9% | 10.2% | |
- *
- Based on regulatory returns for the 12 months ended either 31 October or 31 December
- **
- Based on settlements filed, awaiting approval
Current returns for our downstate New York and Long Island gas businesses are above our allowed returns. We are in the second year of a five year rate plan. Returns for our gas businesses in Rhode Island, New Hampshire and upstate New York are below our allowed returns. As previously discussed, we have filed rate cases in these jurisdictions. In upstate New York, we are awaiting approval for a two year gas settlement that increases rates by $39.4 million and has a 10.2% return on equity. In our Massachusetts gas businesses, we are operating under long-term rate plans but anticipate filing for rate adjustments in April 2010 to be effective 1 November 2010.