DBRS Comments on Fortis Inc. and Belize

DBRS notes today that Fortis Inc. (Fortis or the Company, rated A (low) with a Stable trend) has announced that the Government of Belize has passed legislation and issued an order to expropriate the Company’s ownership interest in Belize Electricity Limited (BEL) and dismiss its board of directors.

While uncertainties remain regarding the amount of compensation to be paid to Fortis and possible legal proceedings, any consequences are not expected to affect Fortis’s credit profile or ratings, given BEL’s very modest size (less than 2% of Fortis’s total assets). Furthermore, from a holding company perspective, BEL has not provided dividends to Fortis in a number of years.

In addition, DBRS notes that Fortis also owns Belize Electric Company Limited (BECOL), a non-regulated generation business that operates three hydroelectric generating facilities in Belize and which has fixed contracts in place with BEL. The Government of Belize has not issued an expropriation order with regard to BECOL; however, as BECOL sells power to BEL, the longer-run implications of the current events for BECOL is uncertain. However, these assets represent approximately 1% of Fortis’s assets, and the impact is expected to be minimal.

Notes:
All figures are in Canadian dollars unless otherwise noted.

The applicable methodology is Rating Companies in the North American Energy Utilities (Electric and Natural Gas) Industry, which can be found on our website under Methodologies.