IN the Utilities Commission Act l 0, c. and IN THE DECISION OF as A TTER OF 1986 and
The December 21, 1984 Application by Pacific Northern Gas Ltd. to amend its filed tariffs, was heard in public in Prince Rupert, B.C. May 13 through 17, 1985 inclusive and continued May 22 through 23 in Vancouver where it concluded with Final Argument on May 27, 1985. The Division of the Commission conducting the public hearing comprised Mrs. Marie Taylor, Chairman; ].D.V. Newlands, Deputy Chairman; and D.B. Kilpatrick, Commissioner.
TABLE OF OF EXHIBITS BACKGROUN II RATE BASE Sales Tax III OF EXCLUDING Test Excess Insurance Proceeds For (Lost) Gas of the 1% Utilltv Tax to Cost of Gas Items IV v VI TAX VII TARIFF MATTERS (a) (b) Mains and (d) VIII DECISION OR NO. No. (i) (ii) 2 2 3 4 '+ ETURN 4 4 l+ 6 7 8 8 9 10 13 15 L5 16 - Policy 17 !8 18
TA SCHEDULES of ments to 1 Base- Year 1985 2 Income and Earned Return for the Test Year 1985 Schedule 3 Income Taxes for the Year December 31, 1 5 q. mon the Year1985 5 Return on APPENDICES A Market and Prices Appendix B Unit Costs
APPEARANC JOHN LUTES CRAIG DONOHUE J.M. PELRINE R.B. WALLACE K. GUSTAFSON J SAMUEL G.E. LYLE K.C. M E R .J. Fletcher W. J. Grant J. J. Y. D. All west Ltd. Pacific Gas Ltd. Columbia Gas Corporation We star Timber Ltd. Eurocan Pulp & Paper Ltd. Aluminum Company of Canada Industries Ltd. Takla Forest Products Ltd. International Brotherhood of Workers Local 213 of Labour - Gas Safety Commission Counsel Staff Officer Court
LIST OF Exhibit No. Pacific Northern Gas Ltd. Interim Application dated 21, 1984 Pacific Northern Gas Application - l, December 21, 1984 2 Pacific Northern Gas Ltd. Application -Volume 2, December 21, 1984, Rate of Return Testimony 3 Pacific Northern Gas Ltd. Application - Volume 3, March 15, 1985, Testimonies of Pacific Northern Gas Ltd. Witnesses 4 Pacific Northern Gas Ltd. Application - Volume March 15, 1985, Income Tax Matters 5 Pacific Northern Gas Ltd. April 15, 1985 Reply to Information Request of April 3, 1985 from R.B. Wallace 6 Pacific Northern Gas Ltd. Application - Volume 5, April 22, 198.5, Response to British Columbia Commission Information Request April 10, 1985 7 Pacific Northern Gas Ltd. Summary of Amendments to December 21, 1984 Application (Volume 1) Showing the Impact on Rate Base and/or Cost of 8 Pacific Northern Gas Ltd. Affidavit Service of Ireland, May 10, 1985 9 May 13, 1985 Letter from Province of British Columbia, Ministry of Labour, Safety Engineering Services Division, G.E. Lyle, Supervisor, Gas Safety Branch to the British Columbia Utilities Commission 10 Pacific Northern Gas Ltd. 198 3 vs. Forecast. Prepared by British Commission Staff, May 8, 1985 11 April 1, 1984 Agreement between Pacific Northern Gas Ltd. and British Columbia Petroleum Corporation and Gas Corporation 2
Gas Ltd. Determination of Annual Saving When Using a Propane-Air Plant to a Demand Cost of Gas of l 0 Revisions to Progress Schedules 8, 9 of Stephen F. Sherwin, Interim Amendments March 1, 1984 to August 1, 1981 Northern Gas by "The Permanent" February, 1985 of L.J. Executive Vice-President Officer, B.C. Westar Pacific Northern Gas Ltd. Deferred Receivable Short-Term Interest Income and of W. R. Waters on Income April, 1985 Direct Testimony W. Johnson on Accounting for Income April, 1 Pacific Northern Gas Ltd. July 17, 1984 J. W. Kruet to L.E. Bennett (iii) No. Shave 4.8 MMcf/D 13 5, Tab 2, !4 10 15 16 Consensus, 17 Investment 18 T. 19 of 1983 20 21 22 of 23 24 from Propane-Air 25
LIST Gas K. McLeod to R.F. Pacific Northern Gas in Firm Gas Sales Pacific Northern Gas Ltd. August 27, 1984 Report J. W. Kruet Solar Turbines Gas Revised Volume 5, Tab l Northern Gas Ltd. May 4, !984 Letter to Utilities Commission between Corporation Pacific Ltd. of Minimum 1983 Application vs. Gas Ltd. Mean Mean Contributions in Aid of Construction, by mission Ltd. Analysis Plan Projects. Utilities mission Staff, May 21, 198.5 for the Year 1983 Ltd. 1983 British Utilities Commission Procedures Northern Gas Ltd. Variance Tab 2, Schedules 7 and 8 and Volume .5, Tab Schedule 2. Prepared by Commission Mav. 1 5 Exhibit No. 1984 Report from Inspection of at Trail. B.C. 26 -Loss 27 28 l to 8 from 29 1984 • Gas 30 31 1983 and British 33 34 35 J, 36 Volume l, I' 37
LIST OF (Cont'd) Pacific Northern Gas Ltd. Test Year Schedules - Pacific Northern Gas Overhead Allocation to Capital 11.\.ddltions, Capital Additions, Overhead Capital Cost 1983 to 1985 Amended. Prepared by British Staff, May 21, 1985 Undertaking by Dr. W.R. at Transcript Regarding Calculation of Common Equity Component of $29 Million Expansion During l Undertaking Provided by Mr. H.W. Johnson to K.C. 17, 1985 Pacific Northern Gas Ltd. Volumes and Values of Unaccounted for Gas Volumes During 1983 and 1984 Pacific Northern Gas Ltd. Capital Expenditures Pacific Northern Gas Ltd. Analysis of No. 37 Pacific Northern Gas Ltd. 1985 Sales Volume Prepared by British Columbia Utilities Commission Staff Pacific Northern Gas Ltd. April 16, 1985 Letter to Brl tlsh Columbia Utilities Commission Regarding Proposed Natural Vehicle Loan Program April 26, 1985 Request for Further Informat Utilities Commission to Pacific Northern Gas Ltd. May 7, 198 5 Response to April 26, 1985 Request for Further Information from British Utllities Commission Pacific Northern Gas Ltd. 1981+ Annual Report May 22, 1985 Letter from the Ministry of Labour, Gas Safety Branch, to British Columbia Utilities Commission Propane-Air Plant, Prince Rupert, B.C. HIBITS Exhibit No. Utilities Commission 38 879 39 40 1+1 of 1983 Forecast 42 on Exhibit 43 44 45 Northern Gas Ltd. 46A 46B 47 48
LIST Northern Gas Ltd. May 24, 1985 Letter to Utilities Commission Regarding 1985 Rate Application Responses to Outstanding Requests for Additional Information HIBITS Exhibit No. 49
BACKGROUND This Decision deals with an Application for interim and permanent rate relief by Pacific Northern Gas Ltd. ("PNG" or the "Applicant") dated December 21, 1984, as on March 1 !985. Commission Order No. dated January 28, 1985 granted an interim rate increase of 1.88 1, 198.5 interim increase subject to refund with interest at the average prime rate of the principal bank with PNG conducts lts business. The Commission, pursuant to that Order set matters of both and permanent rate relief for in oublic at Prince Rupert, British commencing on May 14, 1985. Copies of Applications and were available for inspection at offices of PNG and the office of the Commission, with copies orovlded to of the Applicant and to all in PNG's service area at the time the Applications were made. were from Westar Timber Ltd., Eurocan Pulp and Paper Co. Ltd., Industries L tel., Aluminum Company of Canada Ltd., A teo Forest Products R.B. Wallace), British Columbia Corporation ("BCGC") (represented ] of Workers, Local 2! 3 and Inland All appeared at the exception of Inland Natural Gas Co. Ltd. business is of gas ' in west central the commencing at Summit near Prince and in the water ports of and
2 Since the last appearance of PNG before the Commission in 1983, the number of residential and small commercial customers has increased from approximately 9,800 to l 0,800. The rate base has increased from $89 to $91 million and revenues have increased frorn approximately $76 million to $89 million. The latter two are primarily the result of the construction of and increased sales of to the Ocelot methanol at The Applicant's B common (voting) are held 100% by Westcoast Transmission Company Limited ("Westcoast") with approximately 45% the A non-voting also held by Westcoast. Canada Exploration Inc. holds 19% of the non-voting common shares. the Applicant was by Mr. R.F. O'Shaughnessy, Mr. R.G. Vice Government Regulatory Affairs; Mr. T.W. Weaver, Mr. J.W. Kruet, of Field Operations; and Dr. S. F. Sherwin. intervenors evidence with respect to conditions in the forest industry through Mr. L.J. Smith, Executive Vice-President and Chief Operating Officer, B.C. Resources Investment Corporation and Westar Timber and, with to rate of return, through Dr. W.T. Cannon. II RATE BASE (a) to of and their consideration at the a number of to PNG's proposed 1985 Gas Plant Additions are on the testimony the regional inspector from the ,\-Unistry of Labour, Gas Branch, and an on-site inspection of the propane-air by the mission panel Commission concluded that the plant
3 was unsafe and required extensive modification and upgrading to render it satisfactory for continued operation. Moreover, the existing plant was the of Prince Rupert and its location undesirable for reasons. Commission further concluded that the location of Prince Rupert at the end of a single pipeline traversing remote and rugged terrain made the provision of an alternative or standby source of fuel to cover Accordingly, by Order No. C-2-85 dated June 1985, the Commission issued a Certificate of Public Convenience and Necessity for the construction, operation and of a new propane-air plant with a daily capacity of lf.8 million cubic at a cost approximately $531,000 (excluding . By letter August 22, 1985 the Applicant advised the mission that completion was by November 15, 1985. The new plant will provide additional support for the utillty as a peak-shaving facility, it to reduce its nomination from Westcoast Transmission. The mission expects to see a saving in demand charges resulting from PNG use of the new The Applicant has a of seven compressors in operation and while scheduled of units can normally be undertaken in the summer months, the PNG no protection in the event of an emergency during the coldest winter period, when all seven compressors are to meet peak loads. alternatives having been explored by the Applicant without success, the Commission by Order No. C-7 -85 dated June 1985 issued a of Public Convenience and Necessity for the purchase of a new turbine and spare rotor at a cost of approximately $983,000 (excluding overhead). spare unit provides emergency securl ty. It can to au£:ment interruptible sales periods, and can be incorporated into as increases.
4 (c) The latest federal budget federal commitments to DSEP projects 1985/86 fiscal year. As a consequence, previously planned project costs to $200,000 were eliminated by PNG from rate base. (d) Refund of Tax the hearing of the Application, PNG received a federal sales tax refund of $800,936 plus on the purchase of compressor made ln 1982. On 13, 198 the utility submitted amendments to its Application this The for an to the Application as and appropriate to this Decision, but concludes the correct treatment is to deduct full amount of the refund from the opening balance of 1985 Plant in and accordingly has made the necessary adjustments. The foregoing adjustments result in a rate base totalling $90,696,000 as in Schedule I to III COST OF SERVICE EXCLUDING RETURN (a) Test Period The Application for interim relief was based upon a forecast test year ending December 31, l Excess Proceeds Arising of an insurance claim for revenues lost as a result of a shutdown of Ocelot methanol operation, the Applicant has its "Insurance proceeds in excess of contract
5 the amount of $586,335 before income taxes. In cross-examination at Applicant acknowledged the utility customers paid the premiums for the insurance coverage, through their rates. The 1983 Commission Decision on rates was based upon an operating forecast contained insurance protection against a major loss of load from the Ocelot a loss occurred and the Applicant successfully that resulted in a "paid for" load the year about 91% (Exhibit 35). The load factor was 80%. The Applicant identified the pre-tax value of the excess to be $586,335. In filing of the Annual Report to the Commission, the Applicant designated this excess as a "non-recurring gain". The result this treatment was that the shareholders the after-tax benefit of this windfall. The unadjusted return on equity 1983 was 17.52% and the return on equity, after excluding both the excess and a "gain on gas account" $554,030 before tax, was 14.99%. Under cross-examination (Transcript pp. 1329-1336) the Applicant's witnesses confirmed that : the utility's customers in rates 100% of the insurance premiums which insured the Applicant from loss of load attributable to force majeure under the HCGC/Ocelot contract. the insurance was intended to protect the shareholders from loss of load not protected by the 80% take-or-pay provision in the BCGC/Ocelot contract. Applicant took the position that "if there had been a shortfall on thls particular event, that would have been borne by the shareholders" (Applicant's testimony, Transcript p. 1331 ).
the Applicant views the level of loss of load insurance settlement o.f this sort as similar to risk in The Commission load factor of 80 , the to the shareholders in instance was potential failure to recover in excess of those in the The customers required to insure The Commission therefore concludes that the excess insurance accrue to the sole benefit of the offset increased insurance costs by establishing a Deferred Revenue Account of $.586,000, to be reflected in the Schedules. Corresponding Tax Account and opening profits of a nature occur, the Commission for an year involved. Unaccounted for In period .I 1984 the fluctuations in unaccounted for 0.546% that resulted was $554,030 chose to recognize this as a credited amount to shareholders was not as an statements for the year the income arose in tne business. involved in a forecast. 1983 rates were on a did not any the insurance should and the Applicant to over years in 1985, as are to be made In the to accounts has In 1983 an year. The 3l+). The gain" for purposes and providing for income taxes. This item on the Applicant's external financial course
During 1984 the Applicant volumes purchased. The (Exhibit 41 ). This loss was and was income taxes. icant the unexpected was $22 Commission or unaccounted in positive and should accrue to the unusual circumstances. The Cornmission the evidence account can continue to "norrnal" for the that, within a that Commission directs account are outside of 0.2% for an accounting order for to closing of accounts for the On June 198 5 the advice, it would be Section 407 sold to the British Gas Corporation $378,245 was included further $188,906 now 7 losses at the of 0.9% of loss was the as for to for a 16.45 Return on 1984 before tax over two years 0.2% of volumes The amount errors, in but the most some the and that this time. The Comm further concludes treatment to charged to customers. in if such in the to 0. 7% loss, Applicant treatment of unusual prior year. by letter on of $378,245 to as the tax Act) not to gas to Ocelot. ln revenue for 1985 and a in error 1984 is
8 Commission has advised that the District of Kitimat will be approaching the Provincial Government to retroactively amend Section 407 (2) to preserve the foregoing source of income for the District. Since it may be some time outcome this tax applicability is known, the Applicant has recommended (supported by BCGC by letter of July 17, 1985) that the $378,245 will be held in an account the issue is resolved. Commission concurs and therefore made no adjustment. Disposition of the $188,906 paid 1984 determined upon resolution of the Applicant's claim for (e) Cost of Gas Pursuant to Applicant's contract with Westcoast Transmission, the Application the cost of interruptible sales based on the energy content the On June 1, 1985 the Application had been filed, Westcoast Transmission switched to energy billing, thereby making unnecessary. Commission has the energy adjustment for the period to June 1 and eliminated from the cost of $40,000 comprising the cost of component on interruptible sales for the period June 1 to December 31,1985. (f) The Application PNG's position that certain items of research and development expenditures, interest income and interest expense were non-utility in nature. mission concludes that the Applicant's in support of by B.C. Council on a new manufacturing process for (THAQ and AQ), are properly designated as non-utility expenditures.
With to the financing of sold to B.C. Gas none of its other customers are to therefrom. since PNG was BCGC and as a and or related nature. The Com is IV CAPITAL STRUCTURE The .. as is a common nr.non+ of 24 )'\) in the Debt, customer 9 and income from Applicant's for the Ocelot account, PNG to any or burden customers are not entitled to payment .for the gas to the was integral to PNG a utility function, that the should as utilitv in and related to the supply of gas to in V to to an are lj.6.15 21 32.12
10 V RISK AND RATE OF RETURN hearing produced extensive evidence and testimony on the matter of risk and rate of return. The Commission the merits of the and generally technical methodology utilized by the for both the Applicant (Dr. Sherwin) and B.C. Gas Corporation (Dr. Cannon) their determination of risk and appropriate rates of return. In the of however, in the Commission's view of the Ocelot load together with relatively unpredictable econom conditions, business cycle basis of analysis unusually to error. these conditions, the Commission notes that in the absence of convincing supporting Sherwin appears to have relied on personal judgment. to the Applicant's overall level of risk, Dr. Sherwin on the comparable test to arrive at conclusion that the appropriate rate of return on equity for PNG was "no less than 16.5%" (ref. 3, p. 38). Because he concluded that PNG was riskier than his selection companies, Dr. Sherwin included a 1% in that recommended rate of return. Although the a risk the order of I % is appropriate, it does so for reasons any from the earnings test, and is not persuaded the of companies made Dr. Sherwin directly supports his 1% risk premium adjustment. to the load, currently to the methanol plant operations and representing some 55 of PNG's total load, this is supported by a Corn opinion the very of that guarantee renders PNG a special case not to conventional rate of return analysis. key in such analysis is the simulation and reflection of competitive
ll market conditions leading to a reasoned and competitive rate of return linked to competitive market risks. The government guarantee of the dominant portion of PNG's load (Ocelot) effectively eliminates the competitive market factor, thereby invalidating the conventional methodology for rate of return determination. Hence, Dr. Sherwin's to simply equate the level of risk in the Ocelot contract to the residential level, in the Commission's view violates the very logic on his rate of return assessment depends. The Applicant's President, Mr. O'Shaughnessy testified that the operation either plant would be dependent on trouble-free operation of the other and that he viewed the planned fertilizer plant as exposing PNG to significant additional risks (Transcript pp. 1327 -1329). While no evidence was presented regarding the ability of either plant to compete against larger, world-scale plants during the prevailing world surplus in both methanol and fertilizers, the Commission is satisfied that the government guarantee will safeguard interests of the utility's customers and shareholders. With respect to the balance of the Applicant's industrial loads (Alcan, Eurocan and Telkwa) representing some 30% of the utility's total load, the Commission notes that with three out of four of these major customers, PNG is heavily dependent on the outlook for !?>.C.'s forest industries. The Commission further notes there is as yet no evidence that those industries will recover fully, easily or quickly from their continuing difficulties. In both his pre-filed evidence (Exhibit 18) and in cross-examination (Transcript Volume 3, pp. 509-559) Mr. L.]. of Westar testified as to the nature of those difficulties. that evidence the Commission concludes that the necessary capital investments in new technology and plant are unlikely to be made possible until forest industries' balance sheets recover from the last four years of poor
2 The further concludes that in with use of woodwaste and other are to the PNG and any forest are not. !6.5% rate of return to be Dr. Sherwin ~ and has continued in to 1 an 11.7 5 Government of on wl!lCll to build his recomrnended rate of return. On more recent data and that a to 11.25% Dr. Sherwin's rate of return is The Commission therefore while a ... downward of 14.7 5 to 1 5% preserve financial the Applicant's customers. A a return on eaui tv of 1 is investrnents when of natural on the use of ust be viewed as somewhat than to recommended two which render that rate approach to in of last Secondly, his he I 1.0 as the rate on long-term it is Com more and that too a risk of 1% as ments for the foregoing inflation to earn the any undue on ments to revenue to this Decision.
13 VI INCOME TAX TREATMENT By letter dated December 29, 1983 R.J. Hauman, on behalf of client B.C. Timber Ltd. (now Westar Timber Ltd.), made a complaint to the Commission requesting that consideration be as to the appropriate method for calculating income tax for the Applicant. The Commission advised Counsel for B.C. Timber, by letter dated 31, 1984, that in the interest of equity and minimizing hearing costs, the matter would be heard during the next rate proceeding and instructed Applicant to file by December 31, 1984. Through hls witnesses, Messrs. and Waters, Mr. Wallace evidence that "flow-through" was the appropriate method to be adopted for PNG. Applicant did not tender theoretical evidence surrounding the choice of the appropriate rnethod of calculating income tax but prepared its submission, not from the point of view that one method of calculating the income tax component in the cost service is always right but rather, that the particular circumstances of PNG the normalized method a result is just and equitable for both the Applicant and its customers. The Applicant stated that as a utility it characteristics it unique and support its position to on normalized taxes. 11 These characteristics include l. approximately 85% of Pacific Northern's are to four large industrial 2. approximately 77% of Pacific Northern's in service are transmission facilities. The loss of any one or more of its large industrial customers would disproportionately impact on rates charged to its remaining customers: and
14 3. approximately 88% of Pacific Northern's long-term debt was financed within the last three years at historically high rates. This financing would not have been possible with flow-through tax treatment." (Application Volume 4, Tab l, p. 5) While the Commission finds the evidence of the expert witnesses for industrial intervenors (Messrs • .Johnson and Waters) in favour of the flow-through basis to be persuasive, in the Commission's view it is persuasive in the generic sense rather than in the particular pertaining to PNG. The Commission sees little merit in extensive repetition of issues and arguments considered at length in other previous proceedings, to support its decision in the present case. In the of the Commission the witnesses and counsel for the intervenors collectively failed to seriously weaken Applicant's position. That position, being a claim to aspects of uniqueness or differences from other utilities for which this Commission found flow-through to be appropriate, is based on the fact that PNG is essentially an industrial gas system. It features a high (7796) percentage of total plant investment devoted to transmission, with dependence on only four major customers for 85% of its load and whose individual loads have changed significantly in recent years (e.g. Westar) and appear likely to do so in the foreseeable future, by reason of changing markets and competing sources of fuel. In such circumstances the Commission believes it to be only prudent and in the overall best interest of both the shareholders and the customers of the utility to maintain the "front-end loading" feature of the normalized or deferred tax basis of income tax determination until .it becomes apparent that some of aforementioned uncertainties have been resolved and the Applicant's ability to provide for future income taxes is more secure.
15 Accordingly, the Commission has concluded that just and reasonable rates can best be maintained by requiring that PNG remain on the normalized or tax basis of income tax determination and will so order. If the Applicant's circumstances significantly in the future, the question of tax treatment will be reconsidered by the mission on its own motion. By this Decision the Commission wishes to clear the distinction it believes must be made devotion (for reasons of consistency of treatment of the utilities which it regulates) to accounting principles on which the accounting profession itself is divided, and the priority which must be given to the particular circumstances of utility on their merits. VII TARIFF MATTERS .Arising a review by staff, the following tariff matters were considered at the rate Policy (b) and Service Costs (c) Cost of Mains - Discretionary Policy (d) Security The current Mains Policy has been in existence since the Applicant began operations in 1968. That policy states that the utility will extend the gas main to new customers provided that the gross annual revenues for 2.5 years will exceed the cost of the extension. The Applicant testified during the Hearing that the Mains Extension Test, based on gross revenues, no longer provides an up-to-date basis upon which to rnains to new customers. In 19 68 the cost of gas was stable and the
16 sales prices charged to customers did not change dramatically from year to year. In 198 5 however, the gross revenue received from an extension does not provide an accurate indication of the net return expected by the company from a new extension. It is common practice for utilities to base their Extension policies on the net return to the company and the net revenue received from a customer extension. The Commission concludes Extension Policy of the Applicant should be amended and should be based on net revenue as the appropriate test which to extend service. The Commission accordingly that the Applicant revlew its present policy on mains extensions and provide Commission with proposed modifications for Commission consideration on or before March 31, 1986. This should include supporting data and rationale for the proposed modifications. (b) Mains and Service Line Extension Costs 1. Standard The Applicant's costs to extend and service lines to new and existing customers have not changed for several years. During that time industry and the Applicant extensively switched the use of steel pipe, which is highly labour, and parts intensive, to plastic which is relatively cheap to install. The Commission accordingly directs the Applicant to review the standard costs associated with mains and lines extensions and report their findings and proposals to the Commission with a tariff filing on or before March 31, 1986.
17 2. The Commission has reviewed practice of other regulated utilities with regard to the treatment of certain components calculating customer contributions. Meters and are required components for every utility customer are moveable and can be re-used, and should provided by the at no The ission concludes when determining contributions for or service line which are required for customers for are in excess 21 metres of service line on the customers property, or for contributions concerning capital costs of a mains extension are in excess of the annual revenue of the extension for 2.5 years, costs of meters sets or regulators should not form part of the costs of the (c) Commission the ns Extension - Discretionary Policy of the Applicant (Tariff Section 5 •. 3 (3) and "5.3 (4)) and determined that these sections should not amended or at this time. Commission, however, views as essential for the extension of only in unusual circumstances. Such may be involved, for example, in industrial, or residential subdivisions where an initial customer contracts the supply of but provides insufficient revenues to justify extension of service under the normal Extension policy. Under the current tariff other customers would not be recognized outside of therefore the Applicant to review these sections along with the Extension Policy and formulate an amended extension policy for Commission consideration.
18 (d) After of the the Commission that the of only on the customer is to the best of reliable customers with good and Applicant to amend the security deposits in Gas (Section - Deposit and Commission to a security deposit policy for Gas VIII DECISION ln of its conclusions to matters and ments set out in III v Decision, that 1.88 customer rates Order No. February 1, 1 5 was to $65 5,000 on an including as in No. G-.5-8.5, to its customers of the 198.5 28, 1986. refunds will to for the period February 1986 as or as ,J of amended Tariff Rate a ro.r-r.nr refunds may on customer Year 198.5 are $88,645,000 Schedule and amended Tariff Rate PNG the opportunity to on an annual that Revenue will for I, 1986, to
DATED at the of this 29th day of 1986. 19 in the Province of British Columbia, M. JJ./3. a/t::d-
"'s'r\ col.u,z, BRITISH COLUMBIA ~ ~ UTiliTIES COMMISSIO:J (J:} )7 s. <: ...., ~ ("/ } )-{': 0 ORDER .~,c_, G-5-86 S CONI\~· NUMBER -----PROVINCE OF BRITISH COLUMBIA IN THE MATTER OF the Utilities Commission Act, S.B.C. 1980, c. 60, as amended and IN THE MATTER OF Applications for Rate Relief by Pacific Northern Gas Ltd. BEFORE: M. Taylor, Chairman; J.D.V. Newlands, January 29, 1986 Deputy Chairman; and D.B. Kilpatrick, Commissioner WHEREAS a public hearing pertaining to Pacific Northern Gas Ltd. ("PNG") commenced before this Commission at Prince Rupert, B.C. on Monday, May 13, 1985 to hear, inter-alia, the following matters: (a) An Application dated December 21, 1984 for a 1.88% interim rate increase effective February 1, 1985 to its filed Tariff Rate Schedules, as supplemented on March 15, 1985. WHEREAS the Commission has considered the Applications and the evidence adduced thereon, all as set forth in a Decision issued concurrently with this Order. NOW THEREFORE the Commission hereby orders Pacific Northern Gas Ltd. as follows: 1. The interim rates currently in effect as authorized by Commission Order No. G-5-85 are hereby confirmed as being excessive to the test year Revenue Requirements of PNG. . .. /2 FOUA~''I FLOOR, 800 SM!THE STREEt VANCOUVER, B C V62 2E1, CANADA. 1ELE.PHONC (604) bti0·4700. lELEX 04·54536
BRITISH COLUMBIA UTILITIES COMMISSIO:~ 2 ORDER G.:..S-86 NUMBER ------2. The Rate Base for the Test Year ending December 31, 1985 is approximately $90,696,000. 3. The Total Revenue Requirement for the Test Year ending December 31, 1985 is approximately $88,645,000. 4. The Commission will accept for filing, subject to timely presentation, revised Tariff Rate Schedules conforming to the above-noted Revenue Requirement, effective with consumption on and after March l, 1986. The amended Tariff Rate Schedules will allow PNG an opportunity to earn a rate of return on common share equity of approximately 15.0%, within a range of 14.75% to 15.25%. 5. PNG is to proceed with refunds to its customers of record in the period February l, 1985 through February 28, 1986 as specified in the Commission Decision issued concurrently with this Order. 6. PNG will comply with the directions incorporated in the Commission's Decision. DATED at the City of Vancouver, in the Province of British Columbia, this J'fJP: day of January, 1986. 7i;~ Chairman
PACIFIC NORTHERN GAS LTD. Schedule of Adjustments to the Amended Application Test Year 1985 Decrease (Increase) Revenue Adjustments 1. the opening Rate Base $ 143,000 the amount of the $801 Tax 2. Set up a Revenue Account" 68,000 $586,000 at "no cost as at January l, 1985 offsetting entries to "Retained and "Deferred Income Taxes Payable" Tax" over three (Schedule 4 and Schedule 3. to Adjustment #2, 195,000 the "Deferred Revenue Account" over three years. (Schedule 2) 4. Remove energy adJUStments on June l to December 3 , 1985. 5. to 15.00 • 6. ( 44, hearing costs. (Schedule 2) 7. tax. ( 68,000) Total 2)
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