Crowley Files Expert Report on Capital Structure in Ontario Power Generation Rate Case

Categories: Cost of Capital

May 26, 2026 - Nicholas Crowley

CA Energy Consulting expert Mr. Nicholas Crowley filed a report with recommendations for the capital structure of Ontario Power Generation (OPG) in the Crown Corporation’s most recent rate application before the Ontario Energy Board (Docket EB-2025-0297). The report recommended an increase in OPG’s existing equity ratio, drawing on an analysis of credit metrics, a proxy group of similarly-situated electric utilities, and changes to the generation utility’s risk.

In response to OPG’s proposal to increase its deemed equity participation rate from 45% to 52%, the report recommends a more moderated authorized equity thickness of between 47% and 50% for OPG’s 2027–2031 payment amounts period. This recommendation is designed to satisfy the Fair Return Standard, ensuring OPG can attract necessary capital and maintain its financial integrity without placing an unnecessary revenue requirement burden on utility customers.

The report, available here, notes that OPG faces heightened business and operating risks relative to past periods, driven by a $28.0 billion regulated capital expenditure program. This includes $18.1 billion earmarked for the multi-year Pickering Refurbishment Project (PRP) and $4.8 billion for hydroelectric sustaining investments, which collectively push OPG’s asset mix to a projected 66.3% nuclear generation plant by 2031. While nuclear assets carry higher inherent operational and concentration risks than hydroelectric generation, the report emphasizes that these risks are substantially insulated by Ontario’s highly supportive regulatory environment. Examples include, a recent 2026 amendment to Ontario Regulation 53/05 introducing Concurrent Cost Recovery (CCR) to alleviate regulatory lag on construction interest and an extensive suite of variance and deferral accounts that protects the utility against unforeseen costs, weather variations, and capacity fluctuations.

Quantitative analysis indicates that maintaining OPG’s historical 45% equity ratio would likely cause vital liquidity metrics—such as Funds from Operations (FFO) to Debt and Cashflow from Operations (CFO) to Debt—to fall below the minimum thresholds required by rating agencies. However, the analysis demonstrates that a midpoint equity thickness of 48.5% successfully keeps OPG’s credit metrics comfortably above credit-supportive levels.