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PROVINCE OF BRITISH COLUMBIA BRITISH COLUMBIA UTILITIES COMMISSION IN THE MATTER OF the Utilities Commission Act, S.B.C. 1980, c. 60 IN THE MATTER OF an Application by Northland Utilities {B.C.) Limited BEFORE: J.D.V. Newlands, Division Chairman; and B.M. Sullivan, Commissioner 0 R D E R WHEREAS Northland Utilities {B.C.) Limited ("Northland") applied July 8, 1981 for interim rate relief; and WHEREAS Commission Order No. G-68-81 authorized interim rate relief effective August 1, 1981 with the interim increase subject to refund with interest at the average monthly prime rate of the Applicant's principal bank; and WHEREAS the same Commission Order established October 15, 1981 as the date of commencement for public hearing of the Application and directed Northland to file with the Commission on or before September 8, 1981 any prepared direct testimony and additional supplemental material upon which it proposes to rely; and WHEREAS the Application was subsequently rescheduled and heard in public at Dawson Creek on October 22, 1981 in accordance with arrangements satisfactory to all interested parties; and TWENTY FIRST FLOOR. 1177 WEST HASTINGS STREET. VANCOUVER. 8 C V6E 2L7. CANADA, TELEPHONE (604) aag...1831. TELEX 04~54536 I BRlTISH COLUMBIA I U ' ' I I L'T l ~ li ~ C ' . " · S r .. , ; m :. , J ~ I~ ' d . l! W l ' ). C , ' ): I Q~ h l \ . O RDER . I . I NUMBER G-87-81 I and October 22, 1981 ... /2
2 WHEREAS the Commission has considered the Application as amended October 13, 1981 and October 26, 1981 and evidence adduced thereon, all as set forth in a Decision issued concurrently with this Order. i~UN THEREFORE the Commission hereby orders Northland Utilities (B.C.) Limited as follows: 1. The Rate Base for the 1982 Test Year is $1,347,000. 2. The total Cost of Service for the 1982 Test Year is $3,105,000. 3. The Commission will accept for filing effective with consumption on and after December 1, 1981, subject to timely filing, amended Tariff Rate Schedules which will permit Northland to generate the annual gross revenue requirement of $3,105,000 as set out in Schedule II of the Commission Decision dated December 4, 1981. The amended Tariff Rate Schedules will be designed in accordance with the terms contained in the Commission Decision and a reconciliation schedule must be filed concurrently. 4. Northland is ordered to refund to its customers of record in the period August 1, 1981 to November 30, 1981 the deficiency rider billed plus interest at the average monthly prime rate of Northland's principal bank during the same period. These amounts should be remitted to the customers or credited to their accounts during the month ?f January 1982. 5. If Northland cannot by March 31, 1982 locate a former customer who is entitled to a refund the amount shall be recorded in a liability account for a maximum of one year during which period Northland shall collect evidence supporting a reasonable effort to locate the former customer. After the ex~iry of a year any amounts remaining shall be recorded as miscellaneous utility income. DATED at the City of Vancouver, in the Province of British Columbia, this 4th day of December, 1981. BY ) / / /' #'/ i"si~ir / ' f
NORTHLAND UTILITIES (B.C. ) LIMITED 1982 Test Year Utility Rate Base Per Application Applicant's (Exhibit 1 Adjustments Gas plant in service as at December 31, 1981 $2,347 Additions to gas plant ln service (mean) 193 Gross Plant $2,540 Less: constributions in aid of construction 345 $2,195 Accumulated depreciation (951) Net Plant 244 Working Capital Allowance Cash working capital $ 81 Other working capital items 33 -$ --11 -4 -NET UTILITY RATE BASE INVES'IMENT $1358 SCHEDULE I ($000's) Final Final Commission Adjusted Application Adjustments Balance - 2347 (a) (28) 2319 - 193 - 193 - 2540 (28) 2512 - 345 - 345 2195 (28) 2167 - (951) ( 1) -( 9 -5 -0) -- 1,244 (27) 1217 ( 2 3) 58 (b) 39 97 - 33 - _]] ( 2 3) 91 39 130 (23) 1335 12 1347
NOTES TO SCHEDULE I (a) Reference: Page 83 of the transcript, Lines 18 - 22 The forecast additions to gas plant are likely to be $28,000 less than the amount on page 10 of the Application. (b) Reference: Page 144 of the transcript, Lines l to 5, Page 9 of the Application revised 81/10/13 and Page 9 of the Application revised 81/10/26 The inclusion of excise tax expense in the cash operating costs for purposes of working capital allowance adds $23,000 to rate base. 1982 Excise tax expense $742,000 ll/365 net lag 23,000 Also to be included is an allowance for the wholesale price increase effective August l, 1981. Using test year volumes: 1,218,020 MCF at 42.2¢ per MCF $514,004 ll/365 net lag 16,000 Total Adjustment $ 39,000
NORTHLAND UTILITIES (B.C.) LIMITED Adjusted Utility Income and 1982 Test Year Earned Return Per Application Applicant's (Exhibit 1) Adjustments Gas Sales Volurre (.MCF) 1218020 Gas Sales Revenue Dawson Creek - general rate $2061 - optional rate 726 - special contract 93 Pouce Coupe - general rate 132 - optional rate 33 Rolla - general rate 32 Delayed paym:mt charge 13 Total sales revenue $3090 Expenses Purchase of gas $2045 Operation & maintenance 637 Property, franchise & sundry taxes 61 Depreciation 55 Net Utility income before taxes $2798 iSJet Utility income before taxes $ 292 Deduct: - IncOITE taxes - payable 105 - deferred 14 119 EARNED RETURN $ 173 Utility Rate Base Investment $1358 (23) RATE OF RETURN ON DEPRECIATED RATE BASE 12.75% * See notes to Schedule IV SCHEDULE II $000's Final Adjusted Final Balance per Conmission Adjusted ApPlication Adjustments Balance 1218020 1218020 $2061 10 $2071 726 3 729 93 1 94 132 1 133 33 33 32 32 13 13 $3090 15* $3105 - $2045 - $2045 - 637 637 - 61 - 61 - 55 - 55 $2798 $2798 - $ 292 15 $ 307 --- 105 8 113 - 14 - 14 - 119 -8- -m - $ 173 -7--- $ 180 $1335 12 $1347 12.96% 13.35%
NORI'HLAND UTIIJTIES Calculation of Inco:rre Taxes 1982 Test Year on Utility Income Application Applicant's (Exhibit 1) Adjust:rrents Net utility inco:rre $ 292 Deduct: Interest expense 65 Net Income before timing differences $ 227 Deduct: Timing difference adjustments 25 TPXABLE INCOME $ 202 Incorre tax rate -current 52% -deferred 56% Inco:rre taxes -payable 105 -deferred 14 INCOf'llE TAX EXPENSE $119 SCHEDULE III $000's Final Final Adjusted Conmission Adjusted Balance per Adjust:rrents Palance Application 292 15 * 307 65 65 227 15 242 25 25 202 15 217 52% 52% 56% 56% 105 8 113 14 - 14 119 8 127 *see notes to Schedule IV
NORI'HLAND UTILITIES (B.C.) LIMITED 1982 Test Year RETURN ON CAPITAL Final Adjusted Balance per Corrmission Application Adjustrrents (a) Long-term debt $477 (12) Reserve for inquiries and damages 43 - Deferred taxes 100 - (c) Cornrron Equity 383 3 $1003 (9) SCHEDULE IV ($000's) Final % of Adjusted Canital Embedded Cost Balance Structure Cost Ca:np::ment (b) 465 46.78 14.25% 6.66% 43 4.33 100 10.06 386 38.83 17.25 6.69% -(d) 994 100.00 -13.3 -5% -
TO SCHEDULE IV (a) Assume the reduction in rate base from schedule I is coincident with a reduction in Long-term debt. a) Opening fixed assets lower by $28,000 b) Working Capital for wholesale price pass-through higher by Net decrease in debt (b) Embedded cost of debt: $200,000 at 10.6% = $21,200 ..:__.........:_ 00_0 at 17.0% = ==== 0 = 0 = 0 at 14.25% (c) In order to reflect a return on common equity of 17.25% and provide a return on the increased working capital allowance income must be increased by $7,000 during 1982. This is accomplished by an additional $15,000 of revenue requirement representing a .5% increase in the requested tariff. (d) The adjusted rate base is $353,000 higher than the adjusted capital structure. A reconciliation of rate base, capital structure and the balance sheet reveals that about 50% of the difference is represented by the 1982 mid-year current intercorporate debt. The 17.25% return on Common Equity will be unaffected by a prorata distribution of the $353,000 amongst debt, no cost capital, and common equity. Such a distribution could be considered reasonable.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.