ARCHIVED - Telecom Order CRTC 98-305
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Telecom Order |
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Ottawa, 31 March 1998
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Telecom Order CRTC 98-305
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On 19 February 1998, Telesat Canada (Telesat) filed an application for a change to the rate applicable in 1998 for the purpose of determining its allowance for funds used during construction (AFC).
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File No.: 8636-T3-02/98
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1. In Inquiry into Telecommunications Carriers' Costing and Accounting Procedures - Phase I: Accounting and Financial Matters, Telecom Decision CRTC 78-1, 13 January 1978, Directive 22 provides that the Commission may set an AFC rate other than the rate of return earned by the carrier during the preceding fiscal year.
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2. Telesat proposed an AFC rate of 10.1% for its 1998 fiscal year, which is equal to the its current weighted average cost of debt.
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3. As previously stated by the Commission, most recently in Telecom Order CRTC 97-676, an AFC rate lower than the cost of debt would result in an erosion of the company's equity because the cost of borrowing would exceed the capitalized AFC to be recovered from future subscribers.
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4. In light of the foregoing, the Commission approves an AFC rate of 10.1% for Telesat's 1998 fiscal year.
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Laura M. Talbot-Allan
Secretary General |
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This document is available in alternative format upon request.
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