Regulated businesses represented 96% of Terasen's asset base at December 31, 2004. Accordingly, it is essential that Terasen maintain good relationships with its various regulators and customer representatives.

 

Appropriate, incentivized regulatory arrangements provide Terasen's regulated businesses with an opportunity to manage costs and service quality, resulting in a sharing of benefits between customers and shareholders.

 

Through the regulatory process, the British Columbia Utilities Commission (BCUC) approves the return on equity which Terasen Gas and Terasen Gas (Vancouver Island) Inc. are allowed to earn, in addition to various other aspects of utility operations.

 

Fair regulatory treatment that allows Terasen Gas and Terasen Gas (Vancouver Island) Inc.  to earn a risk adjusted rate of return comparable to that available on alternative, similar investments is essential for ongoing capital attraction and growth.