I 7
TABLE i t of INTRODUCT ISSUES IN l 76 APPLICATION OF POWER O~rHER Stat Cost De I i . DEC e I i I e I I t S CONTENTS l HEARING 4 4 . 8 0 1 n e Rate Retur
P.W r J.A. D. G.i s D ..M . Goldie, .C. C.B. R.J. Bauman Norm for P.A. R.B. lace West ian C 1 e Co. Cominco of Ci e C son e ct of Koot a Limited K vision ikin Bros. f st Pr uc s Limi Louisiana-Pacific canaaa r.J Forks Div Division
APPEARANCES CONTINUED R.B. lace . ) Geor B.M.M. e R.M. . G. Larry Wanj f R.J. , Q.C. rt ) K.E. son uc f r . & s. . J. Bl .ler On His Own f On s Own f On H s Own f On His Own Comm s ion Couns
LIST OF Let r, 1 79. G •• Har List Not ce West revise rate _ _ _ to i ion. Mar 22, Test v of Eric N. Wr t. to eauest for ti 0, ication ume I West Koot ti ume II. to for ti 6, Lette , B.C.E.C. to W.K.P. & of Re as letter 1 , 1979. Written ev to Para 6 _ a s e 31, 1978 974, a is Cominco Power a is inco Power Fac ume I I. ibit B.C.E.C. to 2. iti 3. 4. ti , 5. . Mav, 1979. 7 ion, 8 ewr t evid 9. R.B. oren's 0. uant 1. r 12. 1 ties at Tra 1, 13. ties T a , 14.
CONTINUED icat on rate inc Transcri 1976 Hear ng. s Fore t ndus ission on f of the Forks, icton, K owna, of Summerland. s s ion of Larry Wanj e JAD is ion Dis rict ar . f its es & I .. Letter. to West Koo Notice eemen s 2. ect revenue i 1974 evised commercial rate sched Letter. W.K.P. & L. to B.C.E.C. November 16, I ti r s son. , corres ence I tion r S X water Letter, r 19, 979. W.K.P.& L. to B.C.E.C. Statement ecast ear i Letter, Dec , 1979. to r ti r 30, ibit No. e, Oc 1.5. 16 y Inte venor . 17. e District 18. 9. t 1 . 2 . examina on 22. 3, 978. 23. 1. Cominco. 24 25. 979. taxes, P.U.C. 6. ace, r ti censes. 27. 28. & L. to B.C.E.C. ion, 29
, January 2, 1980. .K.P. & L. to ion s at r finance divi ion aci1ities to serve izi justment of $88,200 rent to nco executive per Letter, Information r s e it res. Letter, 19, 979. W.K.P. Inter-comoanv charqes $ ,000. List terns Hearinqs n K Letter, 17, 79. Far i Wi to Lawrence icat f cate Nece i .K.P. & L. 1ette w. . p. & L. to Cominco, January 3, 980. Letter, 13, 7 . canad an to W.K.P. & L. contract with Cominco. Letter, January 8, 1979. W. . P. & L. to 1u1ose i r te Notice motion for icant umentation r son. Letter, r to B.C.E.C. at licenses, statutory cation P.U .. bit No. .C.E.C. cost of ges, customer , $138, 96, costs. 30. e ' 3 . L. to B.C.E.C. 32. 1976 Vancouver. 33. , an, aw. 34 ic Convenience January 3, 1980 35 1 e te 36. ian 97 37. e Commission ion Har t 38. in i water P.C. Stewart, e ass s, 3 •
L OF EXHIBITS CONTINUED ibit No. ission on D str ct of ar , January, 1980. 40. Letters i ary. 41. am from Mowatt, Ci N. Graham, i Dist ict ary. 42. Revis 3 i t is ectrical ate increase to resident customers. 43. Written e G.H. Scruton S in inee ng L i , Januar 4, 1980. 44. is W. & A. iler, June 23, 979. 45. Su ission w. & A. Bleiler, Oc r 3, 1979. 46. s s on W. & A. iler, 2, 1979. 47. t, nco, 197 . 48. Letter, January 7, 1980, from Russ 1 & i att , in r to letter of January 4, from Mr. Gust son. 49. Gr . Exhibit HWR-4 average megawatts Cominco-W.K.P. & L. 50. ison ian . S. ice indexes ectric utili const uction. Housekee ng matte s from tes Brian Morris, January 7, 980. 52. acr tor com1nco facilities on tax notices. 53.
INTRODUCTION icat on of West Koot , L i st au i at on increa e rates te t , was origin K owna, on 26, 97 , n ai on r 7, 1976. is origi s ione gate from the sion n 977. s on ication were unable to cost the icant from it inco) because decision 7, 76, filino, on an inter s i t ion stated case was e matter - generati ilities inco were su r . t etermi d ior to casl:?. the Commi sion dec to e- Power t at January 15, 976, service 12. % on 1974 18 to 20, 1976, n Vancouver i tion was en. Mr. en reti hear igi a conclusion r at ve th ent, Cominco Ltd. te evidence. I on accented for rate scned u.les fee ve January 5, 977. A con e r or not ect to egulation is ion be The did not pr t ication "de novo".
re-near of on Oc 30 con in 1979. conti to January 8, c ss on is . Norman R. Gi D. B. Ki trick, J.D. Ki In is on lowing t __ ication West d histori ication were s r ted nere. a 1974 te t an increase in rates Commiss ant a % ref ef 1s , 197 . Fol i i a ision da ref inc ease was rai in in ti ffect ve January St , 1977. essence ot t on is a two or nter just reasona Pr or to e- i fi. detai st its a is L . to est r uction cost . SUPPOrt Ot tne or gi ication. i on January 3r , ication in son, jour r 2 Vancouver on Januar 3, 198 80. I th s ari • airman Mes F.E. , Comm sion initi i on January 15, 1976, are tner e not January 15, 197 on 12.6%. e nter increas , to ing t niti a ing, 7 , 197 f t 12.6% ied for t nation as to e inc eas tot li 2.6% are Oc 1979 icant ant Gener uct on costs new ese were r err to in esurnPtion icant withdrew
i ormation r at to t ication. Comm ss on i on t sis ig t was incl n orig ts res tina om Comm s i Followi ar was t ication anothe cation ate increase. However aring in son, Cominco it co tic ition, t not be a use Accor i , would in extent i e Vancouver on January 3r , 980. On res ion ication was recei rom We t Koot a Certificate ic Conven ence ed ease i ion our facilities Corninco. Because the lea e feet on 1979 rate ca ion, fer ing certifica icat on. 1976 icat on. 3 s in t 1976 to wit costs and ion ication s ect to m1nor t auer . erence, y 17, 979, i deal w t e 1976 ed 1979 for niti st es an jour t so inas. In cat on d iciencies ate t t evi on tne na res in nos n r e suance Necessi r ina a e cert n aener ti a sian ficant sion to i a deci ion on conti e t th
I issi t 7 s t enti t a on, AND HEARING f II II on e t ev
Some tions emer t r cost of w two ticu1ar - #3 leas Cominco to concl t t cost - Koot must be that associ at not r to ic t enti e tern is over 1 cost Koot in 1974 test is was an ave rate s, water license fee a et rn rate read I i t fi t t t e v i inte not aooear to t e excessive. Because rel ionsh , , nter- ication will receive mor just f i retros vel for In t cas diffi , to at to transmission costs of nco transmit to icant, t gener racterist cs view. It is r t accounts in t r uir i ev 5 f ross-exam na i as to ate to costs assoc at aci iti s #2 cant. on West as e ing the Cominco icant. Cominco to West lls eciation, .lease at ng cost e. ina costs e her ar s. does test ' t ent-s idiary 1979 te xamination t 1974. ti - r i r - 1 t a fr a utili rna ts utili t, sociat
"noti " accounts, .e. f utilitv accountina _ cant nco i iate historic costs. Usi acilities nco, t ir e t tness der ication construct on cost acement costs new, ther costs. 'l'o ic i tion to arrive at "noti a tes. noti ate e deri re to t e various consumers larg si at ng cost , accounti , were on t d concluded that nco r 10 to t rate cost or to ec ts retai Commission couns ication from the stand in nco's ks utili actice i rest duri d eciation at convent der i , on t historic cost 6 accounts r i accoun as rna ntai nation rate e from a is erta a "notion " rate ces to estimat arri at est origin ition factors II eciation so on just lect utili is of enerav rath t i t experts to e icant cant 1976 was i i on e rate eturn to est or ginal e ex ami t cost as i icat just accordance construction, etc. and t i ra • ate s convention utili in
utilitv r ation, was t ) met , to t to t icant in 1976 wo mill The testi s new evidence essen to etermi is evi t iate cost r is n r nions h Mr. Larson Koot nco of Mr. Scruton as an avily locat on f cantly easona essent al al. I is this case, necause ent i C t reement accessibi t rna to i ement , t s relate pr i to energy cons d On stion to i to utili income on ssion uaes 7 th A. E. D. {ave e r i uence r s' conclusion was t t inco e er 5.22 • Larson Scruton ion t Comm ss on e er 5.225 m West ent tnes on i y j t. cost on ferent us ons, ei of a . r e . tion s i B.C. ro t s es ener sur us t t on costs i atner tnan ate ate of ncome tax notion is, t to n
c at ion cost s Cominco's at ons. If other rations ate tax s accounti icant. It wo inci es 0.15 mi . com1nco t on remains generati transmission facilities of to r ation er terms t t matter is ne er essenti cation nor i , i West Koo for a Cert f cate Necessi th respect to leasing cert n generati t ansm ssion acilities from Cominco. s an arr ement, if long-term access to if c capaci , feet It be not r ationsh eration must bt r the level of is not unusu for a su idiary to f 8 t i i e to ements Cominco's , r s no eason n e tne a vi -ication to est tot cost MATTERS re as to ther nco are su ect Ener Act. ution of to e decision in this 1976 icat on ic ience an ion to se , will utili ements of Cominco's gener ting termination is auestion. , in any en s idiary given to cost is iate. ile it e financi tern
its ent, thi i not necessari ent its f is not a util s sts t t e res ti hi nece A or tion t s r i action sho eciation nas ues. It is ous that accountino deorec ation ate freauent f il uce tne cor ect t an s ue is far more correct numeric ication tion to tner ec ation t allocation of original cost or represent as well the anti ioated cost of r ec ating asset. Thi is pa t cularl importan hi i at on, us inad te to v probably more e ion t c uti ities utilities, due to e i It is rtu to ultimate ation cannot easonab.Le d ree accu is e e t esent consumers to some rt t rtu associ d no rnor 9 iate if I this case ev de to the cant may y circumstance . must i at some later hi tori g to e istic net set ove at asset, t t on It t esent acement n period of s c eciat on is t f e i at ion nui an in mos other s niti t costs. recast cons ion tte ns foreseen . An increasi se ous ssue not ir certa n diti costs oener no tran ssion
ac I t . i accoun 7 In s t t ng .r i , i
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<:-\ s r\ col.& It,<$> r,.,q; ., ;..-" - .•\ :. )7 \1'1 , <' ~ <!'. '4 ~ ~ e;,C;) 0 ~' coMW.\ ORDER NUi· .. G-10-80 ~SCR PROVINCE OF BRITISH COI,U.t-1Bil, BRITISH COLUMBIA ENERGY CO~~ISSION IN THE .t-~TTER OF the Energy Act and IN THE .t-~TTER OF Applications dated January 15, 1976 and February 6, 1976 (the "1976 Applications") of West Kootenay Pmver and Light Company, Limited BEFORE: Mr. N.R. Gish, Chairman; Mr. D.B. Kilpatrick, Commissioner; March 7, 1980 Mr. J.D. King, Commissioner; and Mr. F.E. Walden, Commissioner WHEREAS West Kootenay Power and Light Company, Limited ("West Kootenay") applied January 15, 1976 to amend certain of its rate schedules for electric service filed with the Commission; and WHEREAS West Kootenay applied February 6, 1976 to amend, on an interim basis, certain of its rate schedules for electric service filed with the Coromission and by Order No. G-12-76, dated 13, 1976, the Co~~ission consented to the fil by West Kootenay of the said rate schedules; and WHEP£AS Order No. G-43-76, dated Deceniller 7, 1976, the Commission consented to the fil by West Kootenay, of further amended rate schedules; and WHEREAS West Kootenay May 14, 1979 to amend certain of its terms and conditions for electric service and rate schedules filed with the Co~~ission; and I? .... ! -
( 2 ! iOR::::ER I ; ~UMBER G-10-80 __ :J WHEREAS West Kootenay applied May 16, 1979 to amend, on an interim basis, certain of its rate schedules for electric service filed with the Commission and by Order No. G-12-79, dated June l, 1979, the Commission consented to the fi by West Kootenay of the said rate schedules. NON THEREFORE the Commission hereby orders as follows: 1. The Commission confirms the rates authorized on an interim basis by Orders No. G-12-76, dated February 13, 1976, and G-43-76, dated December 7, 1976 as the only lawful, enforceable and collectable rates until othen~ise ordered; and 2. The direction on page 17 of the Decision dated December 7, 1976, and Paragraph 3 of Order No. G-43-76, dated December 5, 1976, are rescinded; and 3. Notwithstanding Paragraph l hereof the Commission confirms the continuation of Order No. G-12-79, dated June 1, 1979. DATED at the City of Vancouver, in the Province tish Columbia, this 7th day of Harch, 1980. BY Y~,, ~--"'/ ~ /, / , ..-'·>/ . r .·· . / (/A;_' •__... // ~~/~ / ltairman ""'
NOTES TO SCHEDULE II (a) Adjustment to normalize for the difference between the average consumption per customer in 1974 and the usted average consumption per customer in 1975 per item 1, exhibit 39, entered May 26, 1976. Increase in 1974 revenue adjusted with rate increase $ 3 627 Increase in power purchased expense Additional quantity of energy sold Incremental cost of additional purchased power per exhibit 2, tab 4, page 5. 6.67 mills/kwh Line losses at 9% 109% Incremental cost of power sold 7 703 mills/kwh Additional energy sold $23,868 .; 7.2703 mills/kwh 3, 3 MWH (b) Adjustment per item 2, exhibit 39, of May 26, 1976 to reduce the cost of power purchased. (c) Adjustment. required to include gains/losses on the disposal of ut.ili ty plant in the determination of earned return as per i tern G, page 27, exhibit 5, November 1979. Gain on disposal of property $119,758 Amortization period 10 years Gain included in utility revenue for test year purposes $119,758 x l/10 = (d) Increase in income taxes due to net increase in before income tax. (tax rate) x $62,035] 772
\'/EST KOOTENAY POWER & LIGHT COMPANY, LIMITED Depreciated Rat.e Base and Capitalization Base 19 7 4 Test Ye'-a"r'--------Balance Final Application Adjustments pPY Application Commission Adjusted Exhibit #2 by Applicant ----~---- ~-~-~~!}_~~-- Adjustments ~5~J.2~Plant in Service at December 3~221._ $43,133,644 $43,133,644 $43,133,644 Less accumulated depreciation ~120,29() ~120,29()_ 19,120,290 24,013,354 24,013,354 24,013,354 Less credit in unamortized long term debt expense 241,883 241,883 ____ _241 '883 Depreciated value of plant in service at December 31, 1974 23,771,471 23,771' 471 23,771,471 Allo~<?__fo_r:__Work_ing Capita! Investment in operating expenses per lag study 458,068 fa) $ { 2 '576) (b) 10 '957 (c) 2 '553 469,002 (g) s ( l '304) 4G7,69R Buffer cash 162,032 (d) {162 ,032) Inventory 1,220,971 1,220,971 1,220,97] Receivables on custom work and operating agreement __1 24,994 ~--1_7~94 ____l_ 7.!r_<_JJ_i 2,0ln,06S 1111 ,098J 1,864, 967 ( l '3"4) l' Less: security deposits (130,265) {]30,265) (130, - adiustment in stores to charged to construction _ ___l:l.70 '9_2!) (e) -~470, 971 1,414,829 1]9' 873 1, 734,702 ,304) L 733,398 Less rounding adjustment appli _____j __<g_5l} ---~) 25' 185' 471 319' 873 ,505,344 (l'
NOTES TO I (a) Adjustment to reduce the lag study results in order to reconcile with revenues and expenses in the Statement of Earnings, per exhibit 15, filed May 18, 1976. (b) Adjustme.nt required to increase the lag study results by removing interest expense as a component in determining the allowance for the cash working capital requirement per item J(l), page 30, exhibit 5, November 1979. (c) Increase in working capital due to adjustments (a), (b) and (d) on Schedule II following. 3 (d) Adjustment re buffer cash item J(2), page 31, exhibit 5, November 1979. (e) Adjustment. required to include the investment in inventories held for capital construction as a component of working capital per item I, page 29, exhibit 5, November 1979. 71 (f) Adjust.ment re year end work in progress on which in teres t has been charged. Tab 4, page 21A , 39, May 1976. (g) Decrease in cash working capital requirement as a result of adjustments (f), (g) and (h) per Schedule II.
SCHEDULE If ~~-~-~~-WES~r KOOTENAY t:OW_EO!l_~I;_J_GHT COMPANY, LIMITE~ Staterrent of Earnings and Earned Return for the Test Year Ended December 31, 1974 Balance Final Application Adjustments pE":r Applicat.ion Commission Adjusted Exhibit #2 by App12_<:_ant as Amended Adj_llstmen_t:." ~~!_~~es ~-~---- ----·-----~-~-·Energy Sales (Mwh) {a) .3,283 l,_!_2_~! ..1_,_12 4' 161 Ope rat!!:!_g_!3~-~12..£~ Electricity sales s l 4 • 6 j j • 488 {a) $ 63,627 $14 '6q7' 115 $14,697,115 Other operating revenue 182,617 182,617 182,617 14,816,105 _ _£3,627 ~79,732 ~,879,2_12 Ezyenses Power purchased 3,134,952 (a) 23,868 (b) (10' 300) 3,148,520 3,148,520 Generation 1,948,092 1,948,092 1,948,092 Transmission and distribution 2,129,155 2,129,155 2,129,155 GPneral and administrative 1,043,254 1,043,254 (f) 16,040 1,059,294 Property taxes and water fees 1,119,168 L 119,168 1,119,168 Depreciation ~330,4f3_!3 _1,330,488 (h) ( 52,307) 1,278,181 10,705,109 ~5~_13 _1_0..,.2_1_8-'-(~:7_7 - (-.:'lEiJ ~6 7) --10_,_Ei82' 41() Farninqs from operat5ons 4,1l0,996 50,0'i9 4,161,055 4' 197' Interest ,187 ,187 5,187 Rents and sunrlry revenue 28,128 28' 128 28, Amortization of deferred credit ]9,652 l9,fiS2 Gain ~ln di sposa 1 of property (c) ___ 11,976 -- _ __!_1 , 9 7fi ~-ll,97_fi 4,163, 4, on long term __b.064,021 __1_,_()64' 0~ ' 1 . ., , ,244 j] '772 (g) L 1, 1, fi, 6,
(e) Adjustment to remove the interest expense on inventory held for purposes per tab 4, page 11, exhibit 2, November 1979. $47,097 (f) Increase in general and administrative expense to reflect actual hearing costs amortized over three years. 'shearing costs to May 31, 1979. Actual hearing costs amortized over three years ($160,620 ~ 3) $ 53,540 Less estimated hearing costs amortized over two years per exhibit 2, tab 4, page 6. 37,500 Required adjustment (g) Net increase in income taxes and earned return necessary to increase the return on common equity to 15.78%. Increase in earned return $17,692 Increase in income taxes 18 5 36 267 {h) Reduction in depreciation expense and corresponding reduction in revenue rement due to Commission revision of normalized depreciation to 50% of t.he allowance on test year additions rather than 100%.
III POWER & LIGHT TED Capital Structure and Return on Common Equity 1974 Test Year 1974 Year End Capital % of Embedded Cost Structure per Exhibit #2 Capi tali zati on per Exhibit #2 Cost Base 22 Component Contributions in aid of construction $ 1,205,000 4.60 Deferred income taxes 1,123,000 4.28 5 3/4% First Mortgage Bonds 7,252,000 27.66 5. 75% 1.59% Special Bank Loan 6,200,000 23.65 10.26% 2.43 Preferred Shares 500,000 1.91 7.00% 0.13 Common Equity - 9,938,000 37.90 15.78% 5.98 $26,218,000 100.00% -1 · 0 -. -1 -3 -% -
:'(.,s"' COt..u;z., ~ ., '¢. C:J ~ -~-:.. "9' c N \I'\ " ,. <' ~ ~· .,.. '4 0 '\', ,, ~ ;):>....... <::, '-?y COM~\ I?RDER ~Ut./iSER G-10-80 PROVINCE OF BRITISH COLUMBIA BRITISH COLUMBIA ENERGY COMMISSION IN THE MATTER OF the Energy Act and IN THE r.1ATTER OF Applications dated January 15, 1976 and February 6, 1976 (the "1976 Applications"} of West Kootenay Power and Light Company, Limited BEFORE: Mr. N.R. Gish, ) Chairman; ) Mr. D.B. Kilpatrick, ) Commissioner; ) March 7, 1980 Mr. J.D. King, ) Commissioner; and ) Mr. F.E. Walden, ) Commissioner ) 0 R DE R WHEREAS West Kootenay Power and Light Company, Limited ("West Kootenay") applied January 15, 1976 to amend certain of its rate schedules for electric service filed with the Commission; and WHEREAS West Kootenay applied February 6, 1976 to amend, on an interim basis, certain of its rate schedules for electric service filed with the Coro.mission and by Order No. G-12-76, dated February 13, 1976, the Co~~ission consented to the ling by West Kootenay of the said rate schedules; and WHEREAS by Order No. G-43-76, dated December 7, 1976, the Commission consented to the filing by West Kootenay, of further amended rate schedules; and WHEREAS West Kootenay applied May 14, 1979 to amend certain of its terms and conditions for electric service and rate schedules filed with the Commission; and ... /2
ORDER 2 NUMBER G-10- 80 WHEREAS West Kootenay applied May 16, 1979 to amend, on an interim basis, certain of its rate schedules for electric service filed with the Commission and by Order No. G-12-79, dated June 1, 1979, the Commission consented to the filing by West Kootenay of the said rate schedules. NOW THEREFORE the Commission hereby orders as follows: 1. The Commission confirms the rates authorized on an interim basis by Orders No. G-12-76, dated February 13, 1976, and G-43-76, dated December 7, 1976 as the only lawful, enforceable and collectable rates until otherwise ordered; and 2. The direction on page 17 of the Decision dated December 7, 1976, and Paragraph 3 of Order No. G-43-76, dated December 5, 1976, are rescinded; and 3. Notwithstanding Paragraph 1 hereof the Commission confirms the continuation of Order No. G-12-79, dated June 1, 1979. DATED at the City of Vancouver, in the Province of British Columbia, this 7th day of March, 1980. rman
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