Big White is AWESOME! Fortis...

Sooo... do you know what pisses me off? No? Well I will tell you. Fortis - I set up an account, they said I have to pay a deposit of $550 I say no, they say it is their policy to charge this I say it is my policy not to pay these onerous charges that are nothing more than a way for Fortis to get cheap capital... they say... I say... ad nauseum... Anyway I did not pay it.

But the conversations are always the same. And you know what else? Have you looked at your bills compared to last year? There are two rates one is up by 10.02% the second 8.25% (roughly) in addition, the 'service' charge has gone from $18+ to $33+.

But but but... they are a monopoly, a regulated utility, rates are increased to pay for upgrades etc. But the company also answers to shareholders and ultimately the only true goal of any company is to increase shareholder wealth... everything else is subordinate to this goal. Everything!

Okay a couple of stats for you-

• On March 2nd 2009 the share price for Fortis was $18.32, five years ago almost to the day. Today the share price is $32.45 after peaking at $34.95 a year ago - an increase of 77%.
• In addition the dividends have increased from $.26c per share to $.32c a $.06 increase or a 23.1% increase. Annualized this increase is only 4.4% compounded per annum (1.0424^5 = 23.7% or ((1.237/1)^(1/5)) simple really).

But what do all these gobbledegook numbers mean?

Shareholder Wealth.
If the share price has increased 77% and the market cap value today is $7b five years ago the value would have been $4b. This means Fortis have increase their shareholders wealth by three billion dollars - not bad for a regulated utility. 

Interestingly the book value is only $22.39 - assets less liabilities. The excess really is market confidence. Or the expectation future cash flows will justify todays value... Or... the market expects revenues to increase, profit margins to increase... Or to you and I it means billing rates to increase.

Hmmm... of course it is all above board cos it has been approved by the BCUC... does not mean it is right.

• Fortis report that 75% of homeowners will pay the same or less. This means 25% will pay more, it could also mean that 1% will pay less, 74% will pay the same and 25% will pay more. 
• And Fortis's other argument for increasing rates? They want the homeowner to use less electricity - if our shareholder wealth increases because of this it is not their fault... poor lambs.

So... Fortis piss me off.

Other than that... Big White is AWESOME!