the Utilities Commission A 1 c. R as and N
o. APPEARA I. COMPANY H. BACKGROUND III. PERIOD 2 E 3 I. 3 2. 3 3. 4 4. . 5 5. Unaccounted for Gas 5 6 8. 8 9 11. 15 ORDER NO. 1 I II III Income IV Common v Return on al
C JOHN N td. P.D. LLOYD Ltd. K GU N R KUHN H. ALMOND Residential Customer J. RINE Commission N W .HA W.G. AUDIOTRON EN LTD.
N Gas Rate Relief to Amend its Inland Natural Gas Co. of N Gas idence Dr. Robert E. Evans on 1 Inland N Rate Schedule 1 and Various Provisions in Rate Schedule 11 Natural 1 1 re: of Customer N it re: Notice No. its 2 2A for 3 4 5 6 to to Rate Schedule 1 1 3 9 10 11 12
Exhibit No. re: R of 13 of N 14 No. 5 N Co. Annual 1 17 Letter l 18 td. son it to of 20 Natural Gas Co. td.- Recorded Use Per Customer Rates l and 2 1 3 Natural G vs. 11 to 13 (l 22 J.L Randall re: Canada Cement Forecast Letter to of Mines and from R.E. to R Kad 25 toR Kad from J. Mains Extension , October
Pitfield s Advertisi s Inland Natural L 8 N 29 1 -30 3 and 34 37 Volume 2, Tab l+ 1 Ltd. 42
Inland Natural Gas Co. l - Deferred Interest for the Year Inland Natural Gas Co. Ltd.- Plant in the Year 2-44 46 47 of the of for
I. THE COMPANY Inland Nat ural Gas Co. L uti I business is the transmission and in British Columbia in a service area stretchi the the Cariboo and serves approx H3 , 000 accounts. some J emo1ovees and 1ts t1ead office is in Vancouver. subsidiaries of Co Grande ssion Co. Lim and Co. ssion Ltd. In addition, in the Mountain Line II. OUND deals revenue ending June 30, 1 The last Rate Decisions of the British Columbia Utilities Commission ("the a test Application dated June 1983 Inland relief of aoorox y on the that a full m to on , the "Applicant" or the "Company") is a Commission Act. The Company's primary of gas to 54 es from the River area in to the West Kootenays. The include Colum Natural Gas River Transmission Ltd. (N.P.L.), L and 7) 6796 M rement the test year were and e 21, 19&3 . and was i terim 5 or % July 1, 1983 fi no later 1983 to Order No. G-f+6-83.
On !.5, Inland additional relief and of terms and for Applicant's Mains Extension were discussed at the with in this As for seven in Vancouver, on III. both Utilities its costs Inland, the ant has filed for interim relief and The ic ves Applicant, costs material to be 2 in of the as 11 customers and the matter of the and are on 0 and N 1, are based on to is in to recover rates to customers are iust and that in last two within a matter current economtc ctrcumstances are customers and the to only one as well as a al in to in amount of
customers to achieve an of utility IV. THE L Rate Base has reviewed the set '+. With to the of deferred account remains the from the ant and concludes until time as Com customers are to st and to Specifically, is as 3 econom the in cost of for process to rate rates year the purpose of this customers and interest rates. per as of interest is ach in the financial markets. cost terms Applicant, if of its in recovery or "across the same, these costs
The and equitable treatment of into account the Commi has not made any downward A pp lie ant's es ti costs an be in the customers and shareholders no concludes every effort must be made cost of ~, thereof. In this the sa Applicant to rPT\t'\rT 3. For years sales is upon the 10 years. counsel, suggested Applicant was i . .. . a on an annual is reason of the result from a solution, with rates rising or year m response to cone moreover, that a most matter to ne prospe 4 of a public utility must to in the Commission concludes that if the will be the in medium to longer term benefit. ts have been the Commission the A pp1icant to the without the ssion Applicant's the use of where economies in in its cost of an lost duri industrial disputes. The losses over previous River Pulp the by the a solution account would these that it in rates which in any given in the preceedi year. The may not reflect directs to review this or some period more vity.
This is a di ult matter to assess. The to until the Commission has had an opportunity to consider the review 4. After caref u1 are necessary for are in interest. it is a m must terms of to reduce to cut ied. 5. For Gas In its App ation has of tot sales to direct a on the 5 continue a evidence ssion has for and of u customers and to achieve of that ieved and from does not that levels are in face of dec to is not for an unacc for more recent indicates a what prove to a
is a would be more experience. of 6. was on matters. that, due to executive with in a senior executive is assistance now been 7. II In to concerns to retain an i Mr. A were 6 to review matter to of actual a rev be at next a cost $30,000 4 with the Under testified ness, of time on of this his and durin£< a can amount from Inland's cost of on undertook on rate to matters was and 7.
As a of and su 11 matters The Comrnission create a revenue short-fali from Commission at this time to recover customers. In addition to proposes that Consumers Glass to stances of its treatment that in his it did and is does not constitute undue A 7 between customers. many of out stand! the customers. The proposes to recover this amount this matter and it is from 11 terms Lim with the priority due if rate He rate for or for Consumers ng for other a treatment " ' 11 terms and between Consumers
One anding issue remains customers is On the of the matter as sh meet with and scussions. In of curtailments even on a ne overrun if 8. Mains ~~~----------~~ to customers lie ant si nee is that this consistent In ti its of broad E test a customer net annual revenue to be cost on 17 of 8 matter of lead time ssion for ment. it does not that the A,. as it the oast as soon as to times and the of these ld Westcoast be customers. The incremental 12 sales. it was the to a is less the extension. matter was also 1
The ssion concurs with the A it has an to the A IJ!JllCd.l endeavours to attract new customers. the it commended. evidence 28 it would appear A ls not to achieve a return from new customers but is $24 year on extent may customer over continues the revenue loss will increase for reduction ve customers. w cons a f indicative of an mi concludes it to its rates or its to to the next and a solution 9. Trans Mountain Line ts Applicant in s $1 miHion of the Mountain. matter in of the 9 that as a public and accordingly most to of an of existing customer. a use several years. If this trend with a of custorners a and its E 28 cannot it is may prove to be more serious Applicant customers and its to direct Applicant to consistent must prior the Applicant. to recover approximately in 6796 Trans a and must in June 1982.
"On ry TM a Mount . 5 of TMA to on ly interest n(l) N the for n Mount provisions to ensure as a result of no adverse consumers or on 6 nothing in Order is to an increase to it customers to a1 to or the or as its In this App rate relief expenses incu in to $1 and cost of over a year year. (1) matter of an June 30, l (2) In the matter an Decision 25, 1983. 10 ntly owned Trans td. two Vancouver an offer in common shares of of the of Com a it was " .... in of u w No. of the of order share there interest of of Commission under as as to of in rate its of Trans Mountain, amounting to this amount to the com in current fiscal Western --Natural Ltd. 3 -
A ant's base and cost of service is that they were of the Com as set forth in its Decision of June 30, 1982 with reg to TMA Western Resources br public of ntervenors unani events were and non-utility are neither Inland's customers and are If the licant had intervenors customers of it, the costs in The circumstances in case are of utH conflict f broader public as set forth in the TMA Western Resources of June sel any takeover are ine h which to ll inc of rate in the the attainment of a that Inland's takeover costs were more in what to be nor in to the such of reasons, the with the td. June 30, was on it is no
Com has that, while there is merit on of intervenors. interest the shareholders The r-tax year licant has that the Commission authorize a return on of . This return is at the low end of R. to in return return % of Kad and Chief that his which he test. In his any risk the Trans Mountain concluded was at this tl me in any event. 12 and so as to it is in the customers rate it to recover it to the cost of over a range of to !6.5% an expert witness increase the 5 to % ve Officer of testified of customers involved a element of three to the Dr. sition,
The industrial intervenors Ia y on Dr. of evidence of for the were i A., avoid the worst economy cone that little had trend in rates of interest and inflation had conti an lower rates of return COFI cited recent decisions other equity in final ~ cited Dr, Evans in of his recommendations on of return, such as were remote and to the stances. an increase in Inland's allowed rate of return to p to economy, ect an increase upon mere increase in cost a result of l 13 return as of what test as to years as to ensure that times in circumstances ~ the In of returns in ran~Z.e of 5 to I on ities. nco that some of the statistics rate lusive with to di ments in the its rate of return that would not revenues, as (ref. Vol.
The Commission s the rates of return and of cu current ,, convi inflation will not resume an high real rate of mterest on returns, rates return on investors at la ld n rates to set a rate of return uncertai and in the of any e or have been rate of return on Commission finds no compe!li the Accordingly, the Commission concludes that a return of 15.75% is the return on eou1tv s lt to 14 of Inland's customers lower but must uate rate of return on if it is to The Commission rates rate of return on is The Com the are not and ~ on investment capital. If, h i productivity are de return are on will continue. In the "'""'"'"""' of that its presently reason to rate of return up or down. tor ourooses o! determmm2 revenue 1 to 16%, in in the last from 1.5.5 to absence of a f lower of
5 ;_;_;.;.,.;_;.;.,.;_;._ _ ,_ ssion confirms Order o. 46-83 permit A new rates after to customers ll from l' 1 'j(Sj an will customer billi DATE at this 2.5th 1983.
,sr\ co'-u 0 llt<S> q;.; #" ({) H'i" v s ORDER NUMBER G-81-83 PROVINCE OF BRITISH COLUMBIA rN THE MATTER OF the Utilities Commission Act, S.B.C. 1980, c. 60, as amended and IN THE MATTER OF Applications by Inland Natural Gas Co. Ltd. BEFORE: J.D.V. Newlands, Deputy Chairman; D.B. Kilpatrick, November 25, 1983 Commissioner; and R.J. Ludgate, Commissioner 0 R D E R WHEREAS a public hearing pertaining to Inland Natural Gas Co. Ltd. ("Inland") commenced before this Commis-sian at Kelowna, B.C. on Tuesday, October 18, 1983 to hear, inter alia, the following matters: (a) An Application dated June 27, 1983 for interim increases effective with consumption of natural gas on and after July 1, 1983 to its filed Tariff Rate Schedules. (b) An Application dated July 15, 1983 seeking to amend its Rate Schedule 1 and various provisions in Rate Schedule 11. (c) An Application dated September 15, 1983 for permanent increases to its filed Tariff Rate SchQdules; and WHEREAS the Commission issued Order No. G-46-83 elated July 4, 1983 authorizing an interim increase in rates of approximately 1.56% effective July 1, 1983 with the interim increase to be subject to refund with interest; and WHEREAS at the commencement of the hearing Inland applied for further interim rate relief to be effective for gas consumed on and after November l, 1983, in accordance with Exhibit 2A; and ... /2 TWfNfY 1117 CANADA (604\ 680 !8;11 lJ4
ORDER 2 NUMBER WHEREAS the Commission issued Order No. G-77-83 dated November 4, 1983 authorizing a second interim increase in rates of approximately 1.90% effective November 1, 1983 with the interim increase to be subject to refund with interest; and WHEREAS the Commission has considered the Application and supporting material and the evidence adduced at the public hearing. NOW THEREFORE the Commission hereby orders Inland Natural Gas Co. Ltd. as follows: l. The Commission confirms the initial interim increase in rates authorized by Order No. G-46-83; sets aside the second interim increase in rates specified in clause l of Order No. G-77-83 except for the shift of $589,000. from Rate Schedule ll to Rate Schedule l which remains in place; and will accept for filing revised Tariff Rate Schedules which will permit the Applicant to generate the revenue requirement as set forth in the Decision. The new rates will become effective, upon timely filing, with consumption on and after December l, 1983. 2. Inland shall comply with all of the directions of the Commission to Inland contained in the Decision issued concurrently with this Order. DATED at the City of Vancouver, in the Province of British Columbia, this cf(Sii?day of November, 1983. B~~$52
Per (Exhibit 2, Tab 2 Gas Plant in Service 9,921,363 Additions to gas in service 5,418,110 Intangible t 987,727 Construction work in progress 759,000 Less-Customer advances on cons tr: uction Gross Plant 176,741,200 Less-Contributions in aid of construction 167,279,326 Accumulated depredation (31,587, 72) ustment to accumulated de pr ecia tion Net Plant 133,871,819 Deferred income tax (10,859,14 Deferred 2,005,700 Work Allowance -Cash working -Other work inq Utili Rate Base Note: Minor cies in these schedules are due to computer rounding. e 30, 1984 tion 1) 69,921,363 ) $( 22,722) 5,395,388 987,727 ) ( 71,000) 688,000 176,647,478 167,185,604 (31,587, 72 133,778,097 ,859,145) (c) (942,982) ,101,172 ) 57,500 ) (19,04 (2,045,156) 882
---- SCHEDULE I (Exh. 2, Tab 3, l) (i) Overhead ized Per ication $3,447,248 Revised (Tr an sed P. 725) (4,800) Mid-year $ ( 2,400) (i ) Vehicle carry forward Per ti.on $ 126,052 Revised (Transcr • 72 (40,644) Mid-year (,~= us tmen t (b) • 2, Tab 3, 4 Per ication $ 759,000 Revised: 3 year average (Transcr P. 1380) $ ( ) = ustment (c) tr ea tmen t di $ Estimated cost 230,000 Amortization Eh $ 115,000 ) De ( Exh • 4 0) Per __ $2,005,700 Revised anscri P. 1248)
Per (Exhibit 2, Tab 15 Sales Volume Gas Sales - present rates $16 ,34 ,04 - interim rates 51 526 t 309 refund Total Purchase of gas 113,085,152 tion & maintenance 15,957,077 ty, franchise and sun taxes 9,459,208 De pre cia tion and a nor ti za tion 4,070,436 Other opera revenue Util income before taxes 24,874,897 Income taxes - 6,372,040 - deferred Total 8 .<-;:.;;::c:::..;:....::..:::::_:: EARNED RETURN UTILITY RATE BASE RATE OF RETURN ON RATE BASE SCHEDULE II tion 1,34 ,041 )$( 92,704) 5,433,605 ) (261,263) ( 353,96 7) 166, (a) ( 7,42 113,077,725 82,360 16,039,437 ( 9,348) 9,449,860 4,070,436 (579,420) 8 (419,552) 24,455,345 (19 1 906) 6,180,134 ~;;;.=-::;.J-;;...8
_..,_...,_ _ SCHEDULE II ) 9) Per ica ion $400,195 Revised (Transcr P. 240) 101 • 1. 0 & .02 ( i) Reduction on 677 (Transcr P. 723) $(25,000) ( i ) Reduction on 721 (Tran scr P. 725) ,200 (iii) Reduction of Overhead on 721 (T:r an scr P. 1336) ( 8,440) Forecast Services provided Mr. Stokes disallowed ( Exh. 6, Tab 6, (30,000) (v) Hear Cost Estimated cost $230,000 to be amortized over 2 yea s 115,000 (vi) Range Planning Allowance ( Exh • 2, Tab 11 , • 1 ) Reduction as result o adiustments $353,967 X 2.641% Ad jus tmen ts per t 's Submission, November 10, 1983
(Exh Earned return Deduct: Interest on debt Add: Non-tax deductible expense (net) Accoun income after tax Deduct: Timing diff. ustmen ts Taxable income afte tax Income tax rate (current tax) 1-current income tax rate Income tax ate ferred tax) Taxable income before income tax $ 7,859,986 Add: Amount required to provide for deferred tax Taxable Income Income tax - current $ 6,372,040 - deferred Total * Debt interest on Ra Base of 25,037,850 X 7.064% = -==~~~= Income Per ication 2, Tab 14 ,464,143 $16,236,497 8,885, 8,831,804)* 7,657,713 7,483,763 52.454% 52.454% 47.546% 47.546% 52.000% 52.000% $ 7,494,129 $ 6,180, 34 5,037,850
Common Share June 30, 1983 Con tr i bu ted Sur ~rune 30, 1983 Balance, ing of yea Forecast corporate net income for the year Trans Mountain related transactions Forecast dividends from Columbia Natural Gas Deduct: Dividends on preference shares Dividends on common shares (3,095,763 @ .10) Amortization of preference share issue cost Total June 30, 1984 as at June 30, 1983 Mid-Year Commn LTD. ted $ 3,095,763 $ 3,095,763 ,804,119 8,804,119 26, $ 7,768,000 $ 7,495,939 ,207,000) (1, 207 ,000) (3,405,339) ( 3, 405, 339)
Return (Exhibit 2, Tab 16, 1) Long Term Debt $53,570,500 Short Term Debt 19,266,456 Preference Shares 16,110,000 Common Eaui ted Balance Long Term Debt $ 53,570,500 Short Term Debt* 19,266,456 Preference Shares Common Eau * No to be financed in the same ratio as the corporate taliza tion. (May 25, 1983 De cis ion Average Embedded Cost % 41.52% 12.389% 5.14% 14.93% 12.800% .91% 12.49% 8.337% 1.04% 31.06% 16.000% 4. 97% 4 .57% 12.389% 5. 50% 4. 95% 12.800% 1.914% ,110,000 12.50% 8.337% 1.042% 9,770 15.75% ra to 13) •
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