Document Id: 0281A Document Name: DECISION - WKPL Operator: S. Werner ;c. Smith Author: Martin/New1ands Comments: May 31, 1983 OPERATION DATE Created 02/18/83 Last Revised 06/02/83 Last Printed 06/02/83 Last Archived 06/01/83 Total Pages: 42 Total Lines: 916 Pages to be printed: 33
DOCUMENT SUMMARY STATISTICS TIME WORKTIME KEYSTROKES 14:04 ยท1:05 7434 09:48 :01 1 7 09:59 16: 15 onto Diskette 0026A Total Worktime: 30:19 Total Keystrokes: 83540
IN THE MATTER OF THE UTILITIES COMMISSION ACT
S.B. C. 1980, c. 60, as amended and IN THE MATTER OF
WEST KOOTENAY POWER AND LIGHT COMPANY, LIMITED APPLICATIONS FOR RATE RELIEF
DECISION MAY 31, 1983
BEFORE: M. Taylor, Chairman; J.D. V. Newlands, Deputy Chairman; and N. Martin, Commissioner
The Application of West Kootenay Power and Light Company, Limited dated November 15, 1 982 to amend its filed tariffs was heard in public hearing in Rossland, British Columbia on January 25, 26, 27 and 28; February 1, 2 and 3; and in Vancouver, British Columbia on February 7, 1983 with final argument.
The Commission comprised M. Taylor, Chairman; J.D.V. Newlands, Deputy Chairman; and N. Martin, Commissioner.
TABLE OF CONTENTS Page No.
APPEARANCES LIST OF EXHIBITS 1. INTRODUCTION 2. THE APPLICATION 3. THE ISSUES 3.1 AFUDC Calculation 3.2 WKPL Contracts Status 3.3 Reliability of Forecasts 3.4 Capital Expenditures 3.5 Service Area Economy 3.6 Billing 3.7 Rate Base (a) Work in Progress Subject to AFUDC (b) Adjustments for Major Additions (c) Plant Purchases 3.8 Normalization Accounts (a) Weather Normalization (b) Interest Normalization (c) Power Purchase (d) Rate of Return 3.9 Quality of Service 3.10 Inter-Company Charges 4. THE RATE DECISION 4.1 Interim Increase 4.2 The 1983 Increase (a) Rate Base (b) Cost of Service (c) Capital Structure 4.3 Deferred Taxes ORDER NO. G-18-83 SCHEDULES
(i) (iii) 3 4 4 5 8 9 10 11 11 12 12 12 13 13 14 14 15 15 16 17 17 18 18 19 21 22
APPEARANCES R. J. Gibbs G.K. Macintosh and J. Wilson K.E. Gustafson N. Smith and B. Price
R.B. Wallace Forest Group: Atco Lumber Ltd. B.C. Timber Ltd. Crown Zellerbach H.J. Huscroft Ltd. Pope & Talbot Ltd. Slocan Forest Products Ltd.
T & H Sawmills Ltd. Weyerhaeuser Canada Ltd.
Municipalities of: City of Kelowna City of Penticton
District of Summerland
J. Woodward, M. Anderson, and J. Fast
R. King Kelowna Growers Co-Operative, Sun-Rype Products Ltd. and Okanagan Federated Shippers Association
E. Bealle Keremeos Irrigation District Fairview Heights Irrigation District
D. Pearce Regional District of Central Kootenay
Rev. H.D. Bayne East Trail United Church (i)
Commission Counsel West Kootenay Power and Light Company, Limited City of Nelson Southern Interior Stockmen's Association and B. C. Cattlemen's Association
Consumers Association of Canada, B.C. Branch
APPEARANCES
M.E. Rodlie R.M. Lauer M. Morris W.R. Harper R.J. Fletcher S.S. Wong All west Reporting Ltd.
kont'd)
Self Self Self Hearing Officer Commission Staff Court Reporters (ii)
LIST OF EXHIBITS Exhibit No.
West Kootenay Power and Light Company, Limited Submission to Revise Certain Rate Schedules "1983 Rate Application" Volume 1, November 15, 1982
List of Errata Pertaining to the 1983 Rate Application, Volume I dated November 15, 1982 IA West Kootenay Power and Light Company, Limited Testimony and Written Evidence of Company Witnesses, Volume 2, December 14, 1982 2 West Kootenay Power and Light Company, Limited Reply to Request for Additional Information Regarding the "1983 Rate Application" Volume 3, Janary 7, 1983 3 Return on Capital for Year Ending December 31, 1982 3A Actual and Forecast Net Earnings and Return for Year Ending December 31, 1982 3B Amendments to 1983 Rate Application, Volume 1, November 15, 1982 4 Affidavit Proof of Service Dated January 21, 1983 5 Affidavit Proof of Notice of Hearing dated January 21, 1983 6 Letter -West Kootenay Power and Light Company, Limited to B.C. Hydro Re: Restraint Guidelines 7 Commission Order No. G-89-82 dated December 20, 1982 8 West Kootenay Power and Light Company, Limited Submission to B.C.U.C. Comprising an Application to Revise Certain Rate Schedules - Brief of Authorities Submitted During Opening dated January 24, 1983 9 Submission- Southern Interior Stockmen's Association dated January 25, 1 983 10 (iii)
LIST OF EXHIBITS
Exhibit No.
Submission- Kelowna Growers Cooperative dated January 1 7, 1983 11 Submission - Keremeos Irrigation District and Fairview Heights Irrigation District 12 Notice of Motion from Jack Woodward for Consumers Association Re: Agreements 13 Letter - West Kootenay Power and Light Company, Limited to B.C.U.C. Making Application to Amend Certain Accounting Policies Under Section 56 of the Utilities
Commission Act 14 West Kootenay Power and Light Company, Limited Statement of Expenditures for 1982 at August 25, 1981 (Forecast) and Expenditures at November 15, 1982 15 West Kootenay Power and Light Company, Limited Adjustments for Major Additions During the Year 1983 Prepared by B.C.U.C. Staff January 20, 1983 16 Letter of Rev. Hugh Bayne to Commission Counsel 17 Letter of Lara Rodlie to Commission Counsel 18 West Kootenay Power and Light Company, Limited J 982 Power Purchases 19 Samples of West Kootenay Billing for Mr. Dan Rodlie September 7-0ctober 29, 1982 and October 29, 1982-January 5, 1983 20 Copy of Reverse Side of Billing Showing Explanation of Abbreviations and Other General Information about the Bill 21 Comparison of Rates of Return Allowed on Common Equity and Long Term Bond Yields (Sources Dr. Sherwin's
Schedules 4 &:. 15) 22 (iv)
(cont'd)
LIST OF EXHIBITS
Exhibit No.
West Kootenay Power and Light Company, Limited Analysis of Bank Interest Forecast for 1983 23 West Kootenay Power and Light Company, Limited Proposal Regarding Construction Work In Progress
January 1983 24 West Kootenay Power and Light Company, Limited Proposal for "Weather Normalization Account" dated January 29, 1983 25 Copies of West Kootenay Power and Light Company, Limited Tariff Sheets in Effect on and After July 1, 1 982 and September 1, 1 982 26 Letter from R.M. Lauer Re: Increases In His Power Rates 27 Letter from B.C. Hydro and Copy of Letter Agreement between B.C. Hydro and West Kootenay Power and Light Company, Limited 28 West Kootenay Power and Light Company, Limited Summary of Other Utility Billing Frequency 29 Copies of Forms sent to Customers Titled "We Don't Want You to Be Shocked"- "To Keep Costs Down"-"Answers To Customer Questions Regarding Bi-Monthly Billing" 30 Pamphlet Distributed to Customers Titled "Important Information Regarding Bi-Monthly Billing" 31 Copy of Customer Billing Form (Blank) 32A Copy of Customer Billing Form (Completed) 32B Revisions to a Proposed New Bill Giving More Details for Customer Information 32C (v)
(cont'd)
LIST OF EXHIBITS
Exhibit No.
Letter to Customers with Attached Questionnaire 33 West Kootenay Power and Light Company, Limited Bi-Monthly Billing Advertising 34 Advertising Titled "An Introduction to Bi-Monthly Billing" as Displayed in all Company Offices 35 Two Pages Titled "Analysis of Billings To East Trail United Church" and "Analysis of Billing For Residence of Rev. H.D. Bayne" 36 Analysis of Summer Student Employment Expense 37 Analysis of Distribution Line Expenditures for the Years 1980-1983 38A Distribution Line Investment Per New Customer (Additions Less Disposals) 38B Investment in Distribution Line Extensions Per Customer for the Years 1980-1983 38C Adjustment to Rate Base for Forecast Decrease in Inflation Rate 39 Analysis of Effect of the 25 GWh Load Underrun in January, 1983 40 Analysis of Recovery of 1982 Water Fees 41 Sale of Plants Amending Agreement No.2 as Modified by the Clarification Agreement 42 Letter from West Kootenay Power and Light Company, Limited to B.C.U.C. Re: Attached Submissions Re: Plant Appraisal- Plants and Surplus Agreement Proceedings- Cominco Exemption Agreement- Rate Application Costs - J 980 Plants and Surplus Agreement - Line Losses 43 (vi)
(cont'd)
LIST OF EXHIBITS
Exhibit No.
Sale of Surplus Power Agreement (Amended) Between Co minco Ltd. and West Kootenay Power and Light Company, Limited '+'+ Amended Writ of Summons in the Supreme Court of British Columbia Between B.C. Hydro and Power Authority, Cominco Ltd. and West Kootenay Power and Light Company, Limited 45 Excerpt from National Energy Board "Reasons For Decision" dated November 22, 1982 Appendix 3
Re: Cominco Application Under the N.E.B. Act 46 Capacity Load/Resource Balance 1 983 Using Cominco's Projected Sales to West Kootenay Power and Light Company, Limited for Comparison with Exhibit 3, Page 1 6 '+7 Energy /Load/Resource Balance 1 983 Using Cominco's Projected Sales to West Kootenay Power and Light Company, Limited for Comparison to Exhibit 3,
Page 16 Summary of Current Energy Conservation Programs (West Kootenay Power and Light Company, Limited) Comparison of Actual and Forecast Consumption for Year Ended December 31, 1982 Schedule of Power Purchase from Cominco and B.C. Hydro Rental Value of Company Owned Houses Actual and Forecast Electric Operation and Maintenance Expenses for Years Ending December 31, 1981, I 982 and I 983- Analysis of Increase "Recalculation of Return on Common Share Equity -Year Ending December 31, 1982" Under Assumptions by Commission Counsel
(cont'd)
48 '+9 50 51 52 53 54 (vii)
LIST OF EXHIBITS
Exhibit No.
National Energy Board Licence IIEL-147 Re: Cominco Export of Power 55 Letter - B.C. Hydro to West Kootenay Power and Light Company, Limited Re: Terms and Conditions for Storage of West Kootenay Power and Light Company, Limited Energy in B.C. Hydro's Reservoirs 56 Letter from Thorne Riddell to West Kootenay Power and Light Company, Limited Re: Capital Cost of Depreciable
Property 57 (viii)
(cont'd)
1. INTRODUCTION West Kootenay Power and Light Company, Limited ("WKPL", "the Applicant" or "the utility") is an electrical utility regulated under the provisions of the Utilities Commission Act ("the Act") by the British Columbia Utilities Commission ("the Commission"). WKPL serves residential, commercial, irrigation, street lighting, and industrial customers in an area roughly described as from Princeton in the west to Creston in the east and from the U.S. Boundary north to Kelowna and Kaslo. Within this service area the Company also supplies wholesale power to several municipal utilities and to Princeton Light and Power Company Limited. Since 1916 WKPL has been a wholly-owned subsidiary of Cominco Ltd. ("Comlnco").
The Company was incorporated by an Act of the British Columbia Legislature on May 8, 1897. The Act authorized WKPL to generate, transmit and distribute power within a radius of 50 miles of Rossland, British Columbia. That radius was subsequently expanded to 150 miles in 1929.
WKPL is controlled by Cominco which owns ali of the common shares of WKPL and about 30% of the preferred shares with the balance of the preferred being held by Canadian Pacific Enterprises Ltd., a subsidiary of Canadian Pacific Limited.
As at 1981 the Company had issued and outstanding the following share capital:
5,000 shares of par value $100 each 7% Cumulative Preferred Stock
61,120 shares of par value $100 each Common Stock
2 A further 200,000 common shares with a par value of $100 each common stock were issued to Cominco in 1982 in consideration for the purchase of three power plants, namely Upper Bennington, South Slocan and Cerra Linn.
In addition to these plants, generation is supplied from Lower Bennington with the balance primarily from Cominco and B.C. Hydro. A small purchase was made from Bonneville Power Administration ("BPA") for general system use for the first time in the summer of 1982.
The WKPLfCominco integrated system consists of the following generation plants: Capacity Plant No. Name - I Lower Bennington 2 Upper Bennington 3 South Slocan 4 Cerra Linn 5 Brilliant 6 Waneta
*Source - Canal Plant Subagreement
WKPL operates Brilliant and Waneta for Cominco and receives a fee for its services. Its right to surplus power from these two plants is contained in the 'Sale of Surplus Power Agreement' of November 21, 1980 and subsequent amendments. The terms of operation of the plants are set out in the 'Omnibus Agreement' dated January 1975 and subsequent amendments also between WKPL and Cominco.
B.C. Hydro owns and operates the Canal Plant on the Kootenay River. The building of the Canal Plant by B.C. Hydro optimized the total generating capacity of the Kootenay River system. Consequently, B.C. Hydro by way of the Canal Plant Agreement dated August 1972, gave average peak and average
*Energy Entitlement MW (GWh) Location 41.4 329.3 Kootenay River 59.4 429.6 Kootenay River 53.2 422.9 Kootenay River 5!.2 343.2 Kootenay River 128.9 853.4 Kootenay River 373.9 2,465.4 Pend d'Oreille River
3 energy assurances to Cominco/WKPL to the year 2005. The advantage to ComincofWKPL is that they now have a guaranteed source of base power. This block of power greatly facilitates the planning process and reduces the supply and cost risks associated with purchased power.
The "Sale of Surplus Power Service and Exemption Order" issued by the Minister of Energy, Mines and Petroleum Resources on July 28, 1982 set down certain conditions in exempting Cominco from the Utilities Commission Act. Having received from WKPL and Cominco their intention of compliance with these conditions, the Commission, on December lit, 1982, issued Orders:
1. G-85-82 authorizing the issue of 200,000 common shares by WKPL to Cominco Ltd.
2. G-86-82 approving the Sale of Plants Nos. 2, 3 and lt. 3. C-8-82 issuing a Certificate of Public Convenience and Necessity to WKPL for the operation of Plants
Nos. 2, 3 and lt and related and associated facilities.
As of January 1, 1983, WKPL has regained ownership of Plants Nos. 2, 3 and lt plus an option to expand generating capacity at Brilliant and Waneta.
2. THE APPLICATION On November 15, 1982 WKPL made application to the Commission to amend certain terms and conditions of its electric service and its filed rate schedules. WKPL requested a 9.8% interim and permanent rate increase applicable uniformly to all classes of service to be effective January 1, 1 983. Because of the short period of time between the requested effective date and the hearing date of the application, the Applicant's request for interim relief effective January 1, 1983, was denied and a hearing date of January 25, 1983 was set pursuant to Order G-89-82.
4 On January 20, 1983 WKPL requested that their original rate request be supplemented by additional information and further requested an interim increase of 7.8% applicable to consumption on and after January I, 1983 or 8.7% if effective on February 1, 1983.
3. THE ISSUES The Applicant applied for permanent rate relief based on the forecast test year of 1 983. In addition, the Applicant sought certain accounting changes. This decision considers the above matters as well as treatment of income taxes. A number of other points were raised at the public hearings which were of concern to many participants and warrant consideration here by the Commission.
3.1 AFUDC Calculation The accounting treatment of the cost of money used for construction purposes varies by regulating body. Utilities regulated by the B.C. Utilities Commission are allowed to capitalize an allowance for the funds devoted to construction. In the case of WKPL the allowed cost is based on the amount of funds used times a rate equal to the cost of bank borrowing. In addition there is provision within the Uniform System of Accounts prescribed by the Commission for the
utility to use other than bank debt. Account 307 includes the net cost, for the period of construction, of borrowed funds used for construction purposes and a reasonable rate on other funds when so used(l).
The Applicant in this proceeding is seeking permission of the Commission to incorporate in the cost of funds the average cost of capita!. In addition WKPL
(1) Source- BCUC Uniform System of Accounts, Account 307.
5 is seeking to )1ave the work in progress based on the above calculation included in its rate base thereby earning an additional return thereon.
When comparing the existing and the proposed methods of treating interest on funds used during construction the difference that results is minimal in this test period, due to the relationship between the total return on rate base and the cost of borrowed funds to WKPL. More importantly the Applicant's proposed method results in a more equitable treatment of the cost of funds used during construction. The Commission concurs with the Applicant's proposed method and approves the composite rate put forward by the Applicant. The inclusion of work in progress subject to AFUDC in the rate base is discussed in the rate base section of this decision.
3.2 WKPL Contracts Status During the course of the hearing the Commission became concerned as to the relative position or inter-dependence of WKPL in its relations with Cominco, B.C. Hydro and BPA. Many references were made to the WKPL contracts with B.C. Hydro and Cominco and it became apparent that WKPL was not taking a strong independent position.
From 1981 to 1983, WKPL's power requirements were supplied from the following sources: Fore- Fore-Actual cast cast 1981 -% - 1982 -% - 1983 -% Hydroelectric Plants* I ,509 73 1,504 69 1,509 67 Purchases: Cominco 571 27 611 28 658 30 B.C. Hydro - - 51 2 75 3 BPA and Others - - 28 1 2,080 100 2,194 100 2,242 100 * Plants include Plant Nos. l, 2, 3 and 4. Source- Exhibit 1, Tab 3 pages 10-11; Tab 5, page 10.
6 The Ministerial Order of July 28, 1982 exempted Cominco from the Utilities Commission Act with certain conditions. Aside from the transfer of Upper Bennington, South Slocan and Cerra Linn plants to WKPL, Cominco is required to sell firm power of 75 aamwh (or 657 Gwh) to WKPL from 1983 to 1990 and WKPL has the right of first refusal to other surplus on an interruptible basis. In addition, WKPL could expand generating capacity at Brilliant and Waneta.
WKPL started purchasing energy from B.C. Hydro in the winter of 1981. Letter Agreement between the two parties was approved by the Commission. A renewal Letter Agreement dated October 13, 1982 was filed in WKPL's 1983 Application. Currently WKPL approximately the equivalent of the BPA 9 m/kWh $U.S. rate.
WKPL has purchased small amounts of energy from BPA until 1982 when it bought 28 Gwh at an average price of 2.4 mfkWh (Exhibit 1, Tab 5, page 10 ). BPA has forecast a surplus for the first quarter of 1983, however, WKPL has been able to obtain the equivalent surplus from B.C. Hydro at an equivalent price.
Interconnection bet ween utili ties can be a complicated and complex matter. An Operating Agreement between WKPL and Cominco required by the Ministerial Order is currently being negotiated. It would include provision for interconnection between WKPL and Cominco (Transcript 1064). Cominco has interties with B.C. Hydro and BPA. Meanwhile, WKPL has interconnections with B.C. Hydro at several different locations, but no significant direct interconnection with BPA and is reliant upon Cominco in this regard.
Throughout the years WKPL has entered into these contracts with B.C. Hydro, Co minco and BPA involving power supply, storage and interconnection. During the hearing it became apparent that the Applicant's witnesses were not completely familiar with these contracts. The question arose as to why there
A purchases power from B.C. Hydro at
7 is uncertainty in these important contracts. This may be because they are not used at all, little used, seldom up-dated or even that these are long-term contracts irregularly renewed. None of the above reasons would indicate that WKPL has been aggressive in taking full advantage of the terms and conditions of the contracts.
The evidence suggests that the Applicant's effort and ability to maintain these contracts have been less than satisfactory. Examples are:
1. Cominco demand for spillage in determining purchased power costs. 2. Inability to take advantage of a storage agreement with B.C. Hydro (Transcript 1314 and Exhibit 56).
3. Inability to enter into a formal written agreement with Cominco on the procedure of importing power (Transcript 1 063) or become a party in an equi-change agreement between Cominco and BPA (Transcript 1068).
The Commission believes the above creates unnecessary business risks and accordingly the Applicant is expected to administer its contracts in a more prudent business manner.
It was the wholly-owned subsidiary in relations with Cominco and what Cominco would 'like' or 'not like' that was paramount in the thoughts of the Applicant's witnesses. B.C. Hydro was described by them as a large, dominant competitor who could put up with or suppress any WKPL desire in favour of their own. WKPL needs a stronger self-centered image of itself and possibly a direct intertie with BPA would give them more individuality with Cominco, just as a storage position with utilities other than B.C. Hydro might strengthen their position with B.C. Hydro. This thought of being in an inferior position does not enable WKPL to best serve its customers and investors. In the future WKPL should strive to strengthen its own corporate position.
8 3.3 Reliability of Forecasts Throughout WKPL's presentation many of their forecasts were subject to criticism since some numbers were not common (i.e., inflation rates) throughout the projections. Demand and Supply projections, even recently produced, contained weak assumptions. No detailed statistics on housing growth, selected use or conservation impact were shown.
Evidence given in this hearing has caused some doubt about the methodology and reliability of the Applicant's forecasts, particularly the forecast of new customers (Transcript 868-890). In order to support answers on distribution plant investment per new customer, the Applicant had to increase its 1982 forecast number of customers (nine months actual, three months forecast) by 41%, and 1983 forecast by 47% (Exhibit 38). Disregarding the merits of these figures, this type of update reduces the credibility of the Applicant's original forecast method. As the Applicant understands, it is its duty to provide all relevant and timely information to the Commission and would be expected to do so in the future.
In response to an information request by the Commission, WKPL prepared a Load Resource Balance Plan for 1983 to 1990 (Exhibit 3, page 16). The Company's witness indicated that the Cominco power availability was given by Cominco and this amounted to a forecast availability of 658 Gwh in 1983, with the balance being purchased from B.C. Hydro.
The purchase from B.C. Hydro initially contemplated a price of 24 mills, whereas the actual purchase price is in the order of 11 mills resulting from B.C. Hydro meeting the BPA price. The Applicant requested a downward adjustment of $559,000 as a result of the aforementioned purchase.
9 The Applicant forecast inflation in 1983 as 8.5% (Exhibit 1, Tab 5, page 5) which, together with an expected lower wage increase, results in a composite rate of 7.6% (Exhibit 39). However, in its Capital Expenditure Plan WKPL used ll% escalation for 1983 (Exhibit 3, page 7). A revised forecast (Exhibit 39) incorporated the 7.6% adjustment except for distribution extensions. In view of the recent decline in inflation, the Commission believes that an overall 7.6% is a sufficient provision.
The Company spoke of cost restraint in 1982. However, a review of certain operating expenses (Exhibit 1, Tab 5, page4 and Transcript ll98) showed that although there were reductions many cost categories had increased up to 40% from 1981 to 1982. The Commission believes that cost restraint must be a matter of ongoing concern but such containment of costs should not affect the quality of service provided.
3.4 Capital Expenditures The Company presented its 1982-1991 Capital Expenditure Plan on Exhibit 3, page 2. It is noted that WKPL deferred or postponed about 40% of 1982 spending to 1983 and after. Similarly the 1983 capital plan is reduced. A review of the Company's 1981 Annual Report (Exhibit 1, Tab 11, page 15) indicated that net funds spent on plant and equipment ranged from $7.5 million in 1976 to $11.7 million in 1981. The Capital Expenditure Plan indicated 1982 and 1983 are basically in line with the past trend, however 1984 to 1991 started with $33.6 million rising to $207 million annually.
With respect to the 1983 test period, the Commission agrees that the additions are justified except certain expenses relating to Distribution Line Extensions. In determining the merit and prudence of a forecast, the Commission would normally look at past comparisons and forecast methodology; Exhibits 38A, 38B and 38C provide the Applicant an opportunity to reconcile its current forecast with the investment per new customer concept. It is understandable that
the unit cost (crew costs, etc.) would increase per installation as the number of customers decreases due to fixed costs and diseconomies of scale. When costs are broken down between (Exhibit 38C), the Commission finds that 1983 investment per new customer is about $600 in excess of the 1980 to 1982 average, a downward adjustment to plant in service or ($600 x 1,300 x 1.345( assessed. With regard to the upgrading, the Applicant, by letter dated February 16, 1983, reduced the estimated system upgrading costs by $596,000.
3.5 Service Area Economy The Commission was made aware of the general state of the economy throughout WKPL's service area. From major industrial users to small householders, customers of WKPL were concerned enough about the potential increase and its effect on their already weakened profit or loss and income situations to make specific presentations to the rate hearing. Many major users are operating their plants on a reduced basis. The Cattle Growers and Fruit Co-operatives have seen major decreases in the price of their product over the last few years. The City of Nelson does not believe it can pass on to its customers any increase in power rates in excess of the Provincial '6 and 5' Guidelines for Restraint. In addition a number of concerned citizens spoke to the high rate of unemployment and wage cuts, and in general their concerns over their ability to continue to pay increasing electric rates.
The purpose of regulation is to substitute the process of free competition. If a business in a market charges a price more than the customer is willing and able to pay, the recourse by the customer is substitution. In the long run, a utility may price itself out of the market (Transcript 109), and the resource is
(2) 1.345 is the inflation adjustment from 1980-1983 dollars as provided by WKPL.
10 customer additions and upgrading 2 )) = $1,049,100 is therefore
11 hence misallocated or wasted. The utility in a captive market does not have that natural check and balance but rather it is the responsibility of the regulating body to provide a control that artificially restricts excessive demands of the utility. The Commission therefore has to ensure the price the utility charges is close to what the customer would be paying in a free market place. Testimony produced a concern on the part of the Commission for the ability of WKPL customers at this time to not only pay any increased charges but also as to the ability of a number of industrial users to pass on the increase in the price of their product.
3.6 Billing WKPL has recently revised the format of its billing and introduced a new bi-monthly billing plan as well as a bi-monthly payment plan. The combination of these developments has created uncertainty, misunderstanding and anxieties on the part of WKPL customers. The new format produces confusion regarding the amount to be paid with no detail as to the calculation of the amount. The utility indicated that it would cost approximately $60,000 to provide the detailed calculation. The utility has assured the Commission that remedial action is underway and will be completed soon. Thus the Applicant would not require a Commission order requesting action. The Commission believes that it is warranted that a detalled calculation be incorporated in the revised bill as part of the new format. The Commission will be watchful of the corrective action, its timing and most particularly its results.
3. 7 Rate Base The Applicant in this proceeding has used a forecast rate base for the year ending December 31, 1983. The forecast rate base for 1983 is significantly higher than the actual 1982 rate base by virtue of the purchase of Upper Bennington, South Slocan and Cerra Linn plants from Cominco.
12 In addition to the appropriate treatment to be awarded above, consideration must also be given to the Applicant's request to include work in progress subject to AFUDC in the rate base. A further concern with regard to the size of the rate base, is the appropr late treatment to be given to certain major capital additions.
(a) Work in Progress Subject to AFUDC The Commission dismisses the proposal by WKPL that work in progress subject to the AFUDC provision should be included in the rate base, prior to completion of construction. To do otherwise would cause a duplication of credit for the costs incurred.
(b) Adjustments for Major Additions In the past, WKPL made adjustment to the rate base to reflect the impact of major projects capitalized to plant in service. Since these additions were not in service for the entire period, a project added in the first half of the year would have a bigger impact on the rate base than one added in the latter half of the year.
In the 1983 test year, the Applicant has decided to change its method without providing sufficient evidence to support this change. The Commission is of the opinion that WKPL's previous practice should be maintained. A downward adjustment of $1.7 million to rate base is therefore assessed (Exhibit 16).
(c) Plant Purchases The Ministerial Order gave approval to WKPL to purchase the three plants from Cominco at a price of $20 million. This value is higher than the original cost and hence the question arises as to the appropriate
13 treatment for rate base purposes. In approving the Sale of Plants Amending Agreement, the Commission believed that the purchase was in the public interest and concurs with the Applicant's proposal to include the full amount in the rate base. The question of how the full amount should be allocated among different plant accounts does not materially affect this decision. However the allocation of the higher amount does have corporate taxation implications. There was a concern during the hearing whether or not WKPL could claim full capital cost allowance for the plant purchase price. The Commission believes that a tax ruling would be appropriate, and requires the Applicant to file with the Commission their application, any other material submissions and the related decision on the tax ruling.
3.8 Normalization Accounts During volatile and changeable times which we have recently experienced, actual results occur with varying fluctuations from budgeted accounts. The past year, 1982 was a good example of fluctuating amounts with the result that many participants in the public hearing requested a revised treatment of normalizing or 'smoothing out' of a number of WKPL's accounts.
(a) Weather Normalization A Weather Normalization Account was requested by WKPL to apply against revenue as it related to the severity of the weather experienced in the service area. A 'normal' year would be created and the resultant revenue level established. Any 'Over or Shorts' would be counted in a normalization acco~nt for adjustment in future years. WKPL applied for a Weather Normalization Account in Exhibit 25. As the Company pointed out over a 12 year period, the warmest year was 1981 and the coldest year was 1972; it works out that 1981 was 7.7% above and 1972 was 10% below the normal temperature. The 1981 normalization would be $17,080 after
14 tax net earnings. The Commission finds that insufficient evidence has been produced at this time to support the Applicant's request (Exhibit 25). The Commission believes that in conjunction with Phase II further consideration could be given to this request and so instruct WKPL to submit additional information, if any, at that time.
(b) Interest Normalization This proposed normalization account involved interest and the changing short-term interest rates that 'the Applicant has faced during recent years. Volatile interest rates have had an influence on the utility and the rates it charged its customers but the Company has been able to stabilize its long-term interest by refinancing $35 million of its short-term bank loan into long-term debts. The remaining debt balance of $18 million in bank loans is still a significant liability. The Commission appreciates the difficulty of forecasting short-term interest rates in recent years and therefore believes that an interest deferral account is necessary to protect both the shareholders and customers from future interest rate fluctuations. Short-term interest rates above or below 10.9% should be debited or credited to an interest deferral account, the balance of which will be included in the rate base and form part of the Company's next long-term financing.
(c) Power Purchase Since 1981 WKPL has experienced fluctuating prices when it purchased blocks of power from other generating sources. This was a recent phenomenon that has not yet formed a long-term pattern. The ability of management to accurately forecast and. prudently purchase power is paramount to the savings available to WKPL. The Commission believes that this incentive should be maintained and encouraged in order that both shareholders and customers alike can benefit from opportune purchases.
15 In the short run, exceptional savings should be management's prerogative to pur sue and the reward of the shareholders but any longer term savings should be passed on to the customers through reduced rates or postponed rate increases. Therefore a power purchase normalization account is deemed not required at this time.
(d) Rate of Return A final area that was recommended for a stablization account (Mr. Woodward, Transcript 1593) was that of the rate of return for the Company. Traditionally the Commission has believed that the companies that it regulates are given the opportunity to earn an allowed rate of return but that they are not given a guaranteed rate of return. While the difference may seem subtle, it is not. Rather it is the result of the individual company's management that produces the final return for their shareholders. This incentive should remain and therefore the request for a rate of return normalization account is not accepted.
3.9 Quality of Service During the course of the hearing, very few complaints were heard about the service being provided by WKPL. The one area in which the Applicant was most severely criticized was its new billing form and payment procedures. This is being corrected. In addition, the Commission did receive a detailed report from a Rossland resident who complained of premature light bulb and electric element burnout which the resident claimed was a result of electric service from WKPL. This seemed to surprise the utility representatives and they assured the Commission that they would endeavour to track down the source of the complaint. A subsequent report confirmed that the fault did not seem to be in the WKPL system. While there were complaints there was also praise for the Applicant. In the Commission's opinion, the quality of WKPL service is not a problem at this time.
16 3.10 Inter-Company Charges The relationship between a parent corporation and its wholly-owned subsidiary is always subject to concern and scrutiny from all sides but when they are dependent businesses and only one is regulated it is even more important that a detailed review is necessary especially in the area of inter-corporate charges.
For the first 11 months in 1982, WKPL was charged $16 million by Cominco. The bulk of the charges by Cominco was for power purchase - $6 million; plant lease - $3 million; taxes and water fees - $5 million; and the balance inter-company service charges. During this same period of time WKPL billed Cominco approximately $3 million. In 1983 the Cominco charges are forecast to reduce primarily because of the purchase of Plant Nos. 2, 3 and 4, previous! y leased.
From the outset it is assumed that both parties are operating at arms-length and dealing with each other in a prudent business manner but some concern must be raised in view of the fo!lowing transactions:
the inclusion of Cominco's spillage in the calculation of surplus power price (Transcript 1237).
charges for carrying costs (Transcript 1161 to 1173) of tools and equipment by WKPL to Cominco are arbitrarily adjusted from time to time. The formula determining these changes seems to vary each year for no valid reason.
WKPL has been agent for Cominco not only in management of the plants but also in export of power, and the preparation and participation in N.E.B. hearings. There has not been a detailed formula to compensate WKPL for actual time and effort expended.
17 In the future the Commission requires WKPL to apply for Commission approval before any material inter-company contractual changes or new agreements are introduced.
4. THE RATE DECISION While the previous items are important and related to the WKPL application primarily the Application was for a rate increase. The Commission Order No. G-89-82 set down the date of the public hearing and denied the interim increase request "subject to further consideration by the Commission during the forthcoming public hearing scheduled approximately three weeks thereafter." During the hearing, an interim increase was not awarded to the Applicant but consideration was given to provision of an interim award before the final decision was made available. In the alternative, the Commission established firm rates on March 4, 1983.
4.1 Interim Increase The Commission endeavoured to expeditiously set hearing dates, hold the hearing and arrive at the decision without jeopardizing the quality of the results. An interim increase is utilized most often when the time between the application and the decision is unduly long and onerous on the regulated utility. In this instance the time period was relatively short. In addition to the short time period, the initial presentation and the submissions made during the hearings were modified by numerous adjustments that in the main, reduced the dollar amount needed and the resultant rate of increase required.
On March 4, 1983 the Commission issued Order No. G-18-83 which authorized a 4.5% firm increase with the reasons for the decision to follow. This Order recognized the importance of issuing an increase as well as the timely importance of not waiting for the written copy of the decision.
18 4.2 The 1983 Increase The Commission through Order No. G-18-83 has awarded a uniform increase in rates of 4.5%. However, there may be an adjustment as a result of the Rate Design, which the Company plans to submit later this year. In arriving at the decision the following adjustments were made to the Rate Base and the Cost of Service:
(a) Rate Base (i) Distribution Line Extensions Weak and inconsistent forecast methodology, controversial customer addition updates and excessive investment cost for new customers resulted in downward adjustments to the Plant Additions Account which totalled $1,049,100. In addition the Applicant revised distribution upgrading down by $596,000.
(ii) Escalation The Plant in Service escalation rate was reduced from 10.8% to 7.6%. This 3.2% reduction carried a $356,600 reduction in the account.
(iii) AFUDC As discussed earlier in the decision, the Commission accepts the Applicant's treatment for determining the allowance for AFUDC.
19 (iv) Hearing Costs The adjustment of the Applicant's submission to reflect the Commission's recent decision on hearing costs would reduce the deferred hearing cost amount by approximately $302,000 in 1982 and approximately $142,000 in 1983.
(v) Major Additions Adjustment The normal practice of the Company in the past has been to adjust the rate base as major projects have come along. The practice should be maintained with the result that a downward rate base adjustment of $1.69 million is required.
(vi) Work in Progress Subject to AFUDC As discussed in 3.7(a), work in progress of $1.7 million is removed from the rate base.
(b) Cost of Service (i) Rate Hearing Costs The August 25, 1982 Decison of the Commission did not allow the full WKPL costs of the hearings to be included in the Cost of Service. Thus approximately $91,500 amortization expense is not allowed in this Application.
The actual costs of $148,000 for this current hearing will be amortized over two years commencing in 1983. The Cost of Service Study costs were not included in the 1983 year by
20 the Commission because "this was to be a part of the Rate Design Hearing (the application has not yet been filed). The 1983 adjustments totalled $139,501.
The Commission has considered the requests for payment of costs by intervenors. contributions applications participation has been received by their principals through a reduction in the amount of increase awarded to WKPL.
(ii) Power Purchase In 1982 WKPL paid Cominco $715,000 more than forecast due in large part to including spillage in the calculation of the price paid by WKPL. The relationship between Cominco and WKPL is that of vendor and purchaser of power respective! y. Neither in the Canal Plant Agreement nor in the Sale of Surplus Power Agreement nor its predecessors are there provisions that the purchaser's price is to vary depending upon whether or not the vendor uses, sells or spills power not taken by the purchaser. The cost of spillage incurred because the power is not needed by Cominco or cannot be sold by Cominco cannot be passed on to WKPL in the form of an adjustment in the purchase price. Therefore, an amount of $411,000 was disallowed from the Cost of Service.
The Commission appropriate steps to recover the funds from Cominco and ensure that this does not occur again in the future.
Although there were valuable received the Commission disallows for cost. The main benefit of their
therefore directs WKPL take the
21 (c) Capital Structure (i) Rate of Return The rate of return on common equity for WKPL was established at 17.5% during a previous hearing. During the interim a variety of changes have occurred in the economic and financial sector of the economy. A great many businesses would like to earn a profit let alone be allowed to earn the rate of return requested by WKPL. Dr. Sherwin gave expert testimony on the needs of a utility to sustain and maintain earnings in order to attract funds in the future. The Commission concurs in this regard. However, he did admit that not only is the allowed rate slightly high at present but also that no single number is the only answer to the rate of return question and that there could be a band or range of numbers that would be acceptable. This range was suggested as being between 16.25% and 16.50%. This the Commission believes is too high in the light of the current economic realities and that a range of 15.0% to 16.0% is more appropriate. The Commission believes strongly that the utility must maintain its financial integrity and continue to have an opportunity to earn a reasonable return during a 12-month period that would ensure financial stability in the future. Thus the rate of return on common equity is set at 15% to 16% and the rate of return for the test period is calculated to be 15.4 %.
(ii) Cost of Debt The estimated cost of debt used in the 1983 cost projections was agreed to be at 12.10% as proposed by the Applicant in its most recent estimate after completion of the new
long-term financing. long-term rates as well as an estimate of the rate on WKPL's bank debt.
(iii) Notional Debt In the last decision the Commission allowed WKPL to balance its rate base with its capital structure by using notional debt. The Commission has considered the evidence and the arguments and accordingly has deleted notional debt.
All of these adjustments are shown in the Schedules of this Decision. The rate base is reduced from $99.2 million to $96.2 million and the revenue deficiency would be $2.3 million and would require 4.5% increase in rates on a 12-month basis.
4-.3 Deferred Taxes The complexity of the matter of the treatment of taxes, either on a 'flow through' or a 'deferred' basis, warrants a separate review. The earliest the review could be conducted would be in conjunction with the proposed rate design hearing due this summer. The Commission instructs WKPL to file their evidence in this regard, simultaneously with the rate design filing.
DATED at the City of Vancouver, in the Province of British Columbia, this tR ('f:t day of May, 1983.
N. Mr~rtin_ rnmrnie":. ........ ~~
22 This is a combination of the new
c;,\-\ COt..(Jitt. "~" " 1 ' ~~ ~> ' ......, ~#1._~ s (ยฃ~/';"::',:-::"--.,~. ~.>~' "'~, -(-"_...)-=~ /;:scot-/~"'' PROVINCE OF BRITISH COLU~~IA BRITISH COLUMBIA UTILITIES CO~~ISSION
IN THE MATTER OF the Utilities Commission Act, S.B.C. 1980, c. 60, as amended
and IN THE MATTER OF an Application by West Kootenay Power and Light Company, Limited
BEFORE: M. Taylor, Chairman; J.D.V. Newlands, March 4, 1983 Deputy Chairman; and N. Martin, Commissioner
0 R D E R WHEREAS West Kootenay Power and Light Company, Limited ("WKPL") applied November 15, 1982 pursuant to the applicable provision of Section 67 of the Act, to amend with the consent of the Commission certain of the terms and conditions and rate schedules of its electric tariff filed with the Commission; and WHEREAS in initial request from WKPL sought an interim increase of 9.8% effective January 1, 1983, and a second request from WKPL sought a modified interim increase of 8.7% effective February 1, 1983; and WHEREAS a public hearing of the Application commenced at Rossland, B.C. on January 25, 1983 and con-eluded in Vancouver, B.C. on February 7, 1983; and WHEREAS the Commission has considered the Application and supporting material and the evidence adduced at the public hearing.
TWENTY FlR$1 FLOOR 1177 WEST I-lASTlNG$ STREEl \'ANCOUI!ER 8 C V6E 2l7 CANA.OA TยฃLEPM0NE 1ยฃ)04) 66S...163l TElE..x 04ยท~!136
HRITISH COLUMBIA )<,1~<.: ~. UTILITIES COMMISSION -~ 0 < ' ยท"''? " ORDER NUMBER G-18-83
. .. /2
BRITISH COLUMBIA UTILITIES COMMISSION
ORDER NUMBER G-18-83 2 NOW THEREFORE the Commission hereby orders West Kootenay Power and Light Company, Limited as follows: 1. A permanent increase of 4.5% applicable to all classes of service contained in the Application is authorized effective with consumption on and after March 1, 1983. 2. The Commission will accept for filing, subject to timely filing thereof Tariff Rate Schedules appropriately amended to reflect the increment authorized. 3. The award of the permanent increase as above-noted is subject to the Directions of the Commission as contained in the Reasons for Decision. DATED at the City of Vancouver, in the Province of British Columbia, this ~Ji day of March, 1983.
BY ORDER J~c:rkJ Chairman
SCHEDULE I WEST KOOTENAY POWER AND LIGHT COMPANY, LIMITED Forecast Rate Base for 1983
Per Application Forecast 1983 Plant in Service for Rate Base Purposes $146,461,479 -Plant held for future use 102,573 -Deferred rate application expenses ยท- 352,509 146,916,561 Less-Accumulated Depreciation 34,906,696 -Credit in unamortized gain on purchase 122,310 -Deferred Credit on sale of Head Office 203,062 -Contributions in aid of construction ~Ot433t914 45,6651982 DeRreciated Rate Base 101,250,597* Depreciated rate base for previous year 88,981,838 Mean Depreciated Rate Base 95,116,218 Add-Allowance for working capital 4,050,000 Less-Adjustment for major additions Depreciated Rate Base For Regulatory Purposes 99,166t218 Work in Progress subject to AFUDC 1,720,500 Total Rate Base $100,886,718 * Adding error per Application
Commission Adjustments Adjusted Balance (a)$(1,645,100) $144,417,779 (b) ( 356,600) (c) ( 42' 000) 102,573 (d) ( 142,373) 210,136 144,]30,488 34,906,696 122,310 203,062 10!433,914 45,665,982 99,064,506 (d) ( 301,874) 88,67~,964 93,872,235 4,050,000 (e) (1,691,350) (11691,350) 96,230,885 ( f) (l ' 720 '500) $ 96,230,885
NOTES TO SCHEDULE I (a) Distribution Line Extensions (Exnibit 1, Tab 6, Page 8, Exhibit 38 a, b and c) Adjustment to reflect excessive investment of $600 per customer (1980 $) $600 X 1,300 X 1.345 = $(1,049,100) Reduced upgrading (letter of Feb. 16/83) ( 596 000) $(1~645:100) (b) Escalation Factor [Exhibit 3, Page 7, Exhibit 39) Adjusted Capital Addition: $(13,993,000 - 1,645,100 (a)) = $12,347,900 Escalation adjustment reduced from 10.8% to 7.6% $12,347,900- [(12,347,900 I 1.108) x 1.076] = $( 356,600) (c) Over~rov~sion of AFUDC (Transcript Page 1316) Note: No adjustment is made to account for ~ns1gni ficant difference due to revised calculation by use of cost of capital at 12.29% vs. Applicant's original forecast at 13%. $( 42,000) (d) Hearing Cost (Exhibit 1, Tab 5, Page 18, and Tab 6, Page 2) Per Application $352,509 Per allowed balance: 210!136 Disallowance $ 042,373) Adjustment to Depreciated Rate Base for Previous Year Per allowed balance $170,170 1982 per Application (Exhibit 1, Tab 6, Page 2) 472!044 $ (301.874)
NOTES TO SCHEDULE I (cont'd) (e) Adjustment for Major Additions (Exhibit 16) Per Application Per Commission Adjustment $1,741,650 Less: Escalation Factor Per (b): $1,741,650- [(1,741,650 I 1.108) X 1.076] 50!300 $( l. 691. 350) (f) Removal of Work in Progress Subject to AFUDC from Rate Base (Exhibit 1, Tab 6, Page 1) $ ( l. 720 , 500)
WEST KOOTENAY J'OWER AND LIGHT COMPANY, LIMITED ~orecas~ Net Earnings and Return for 1983 Forecast 1983 Applicant's Per Application Amendment Consumption (Mwh) 2,241!900 Operating Revenue $ 52,093,590 $( Revenue Deficiency 5,040,300 (1,062,563) Operating Expenses 38,4_7_7 !193 ( 408,010) ~,0691183 Earnings from Operations 18,656,697 Other Income 989,071 ( 54,000) 19,645,768 Income Taxes 6 158_5,482 EARI\ED RETURN ~ 13.060,286 RETURN ON RATE BASE Utility Rate Base $ 99,166,218 Average Work-in--Progress Subject to AFUDC . l 1 12p,so.o $100,886,718 Return on Rate Base 12.95% *Increase required: 2 ,)26.t_343 = 4.5% 51,431,000
SCHEDULE II Forecast 1983 Commission Adjusted Amended Adjustments Balance 2,2~11900 2,241!900 7,700) $ 52,085,890 $ $52' 085 '890 3,977,737 (1,651,394) 2,326,343 (a)( 139,501) (b)( 411 ,000) 37 ~18_,_682 17,994,444 16,893,551 935,071 - 935,071 18,929,515 17,828,622 6,585,482 . 6!.001,846 $ 12.344,033 $11.826,776 $ 99,166,218 $96,230,885 - 1 '7.~0 '500 ~100,886,718 $96,230,885 12.24% 12.29%
NOTES TO SCHEDULE II (a) Removal of Disallowed Hearing Costs (Exhibit 1, Tab 5, Page 18) $( 49,065 + 20,996 + 21,440) = $91,501 1983 Cost of Service 1983 Application amortized over 2 years* *Forecast Actual $148,000 amortized over 2 years Difference (b) Power Purchase (Exhibit 1, Tab 11, Page 6, Exhibit 19, Transcript Pg. 1,282) Surplus power price to exclude effect of spillage (10.965 - 10.340*) X 658 Gwh * Total Cominco Operating Costs (Exhibit 3, page 8) 1983 Forecast Entitlement Use (1980, 1981 and forecast 1982 per Exhibit 4 of 1982 hearing) Cost, mills per Kwh Rate based on 1979 cost 1979 Purchase Rate 1983 Rate
30,000 1.8 2000 $( 139 .501) $92,000 411 2 ooo $( 411,000) $19,882,004 32288 Gwh 6.047 (1.934) 4.113 6.227 10.340
~EST .~OOTENAY POWER AND LIGHT COMPANY Calculation of Income Tax on Utilit~ Income
Forecast 1983 Applicant's Per A~lication Amendment Net Utility Income $ 19,645,768 $ (716,253) Amortization of Deferred Credits (205, 731) Interest on Debt Taxable Income $ 12,448,928 Income Tax @ 52.9% $ 6,585,482 * Total Rate Base $ 96,230,885 Return on debt portion (see Schedule V) = 53.91% X $96,230,885 X 12.10% $ 6,277,246
SCHEDULE II I 1.~IMITED
Forecast 1983 Commission Final Amended Adjustments Balance $ 18,929,515 $(1,100,893) $17,828,622 . (205, 731) (205 '731) 716 t.?.5~ $ 12,448,928 $(1,103,283) $11,345,645 $ 6.585,482 $ (583,636) $ 6.001.846
SCHEDULE IV WEST KOOTENAY POWER AND LIGHT COMPANY, LIMITED Common Equi~ as at December 31, 1983
Common Share Equity at Dec. 31, 1982 Add: Forecast Net Income for 1983 Less: Forecast Dividend Payments - Common - Preferred Balance Forecast at December 31, 1983 Mid-Year Common Equity * 15.4% X $36,833,000
$35,514,000 5,672,000* (3,000,000) (35,000) $38 1 151. 000 $36.833.000
WEST KOOTENAY POWER AND LIGHT COMPANY, LIMITED C~italizat~on for Regulatory Pur~oses fo~ the Year EndinQ December 31 2 WITH RATE INCREASE Per Applic. Applicant's Forecast 1983 Commission 1983 Mean Amendment Amended Deferred Income Taxes $ 8,322,000 $ 8,322,000 DEBT Long and Short Term Debt 54,981,044 $(1,763,878) 53,217,166 Notional Debt 35,085 1,763,878 1,798,963 EQUITY Preferred Shares 500,000 500 , 000 Common Shares 37,048,589 37,048.589 Total Capitalization $100.886.718 ~100.886,718 NOTES: a) Difference per revision by WKPL, letter of February 16, 1983. b) Removal of notional debt, page 22 of this decison. c) Difference due to return of 16.28% per Application and 15.40% approved. d) No adjustment is made to account for insignificant changes in timing differences and deferred taxes.
SCHEDULE V 1983 Adjusted Component Average -~qjustments Balance % Rate % Cost % d)$ 8,322,000 8.40 a)$ 174,429 53,391,595 53.91 12.10 6.52 b) (1,798,963) 500 '000 .50 7.00 .04 c) ( 215,589) 36,833 1 000 37.19 15.40 5.73 $99,046.595 100.00 12.29