SIXTH FLOOR, 900 HOWE STREET, BOX 250 VANCOUVER, B.C. V6Z 2N3 CANADA web site: http://www.bcuc.com IN THE MATTER OF the Utilities Commission Act, R.S.B.C. 1996, Chapter 473 and An Application by FortisBC Inc. for Approval of 2007-2008 Capital Expenditure Plan and Review of 2007 System Development Plan Update BEFORE: L.F. Kelsey, Commissioner L.A. Zaozirny, Commissioner O R D E R WHEREAS: A. On July 26, 2006, FortisBC Inc. (“FortisBC”) filed its 2007-2008 Capital Expenditure Plan (“CEP”) and 2007 System Development Plan Update (“SDP”), (collectively, the “Application”); and B. In the CEP, FortisBC is seeking an order that the CEP satisfies the requirements of Sections 45(6) and 45(6.1) (a) and (c) of the Utilities Commission Act (the “Act”), and that the Capital Projects contained in Tables 2.1, 3.1, 4.1, 5.1, 6.1, and 7.1 of the CEP are in the public interest pursuant to Section 45(6.2) (b); and C. FortisBC is seeking approval of the proposed capital expenditures for a two-year period; and D. The Commission, by Order No. G-97-06, set down a written hearing process and regulatory agenda for the review of the Application; and E. The Commission has considered the Application, evidence, and submissions of Intervenors and the Applicant. BRITISH COL UMBIA UTILITIES COM MISSION ORDER NUMBER G -147-06 TELEPHONE: (604) 660-4700 BC TOLL FREE: 1-800-663-1385 FACSIMILE: (604) 660-1102 November 24, 2006 …/2
BRITISH COLUMBIA UTILITIES COMMISSION ORDER NUMBER G-147-06 2 NOW THEREFORE the Commission orders as follows: 1. The CEP meets the requirements of Sections 45(6) and 45(6.1) (a) and (c) of the Act. 2. The Capital Expenditures, as approved in the Reasons for Decision attached as Appendix A, are in the public interest pursuant to Section 45(6.2) (b) of the Act. 3. FortisBC is directed to file, at a time of its choosing, an application for a Certificate of Public Convenience and Necessity for the Benvoulin Substation Project and the Castlegar Area Capacity Increase (Ootischenia Substation) Project and to comply with all other determinations and instructions set out in the Commission’s Reasons for Decision attached as Appendix A to this Order. 4. FortisBC is directed to provide a progress update in 2007 for the 2007/08 CEP, during the 2007 Annual Review. DATED at the City of Vancouver, in the Province of British Columbia, this 24 th day of November 2006. BY ORDER Original signed by: L.F. Kelsey Commissioner Attachment Orders/G-147-06_FortisBC_2007-2008 Capital Expenditures Reasons
APPENDIX A to Order No.G-147-06 Page 1 of 20 FORTISBC INC. 2007-2008 CAPITAL BUDGET APPLICATION REASONS FOR DECISION 1.0 INTRODUCTION 1.1 Application and Regulatory Process On July 26, 2006, FortisBC Inc. (“FortisBC”) filed its 2007-2008 Capital Expenditure Plan (“CEP”) and 2007 System Development Plan (“SDP”) Update (the “Application”). FortisBC is seeking an order that the CEP satisfies the requirements of Sections 45(6) and 45(6.1) (a) and (c) of the Utilities Commission Act (“UCA”) and that, with the exception of a small number of projects that will be the subject of Certificate of Public Convenience and Necessity (“CPCN”) applications, the Capital Projects contained in the Tables 2.1, 3.1, 4.1, 5.1, 6.1, and 7.1 of the CEP are in the public interest pursuant to Section 45(6.2) (b) of the UCA. The Commission, on September 7, 2005 and by Order No. G-97-06, established a written public hearing process that concluded with the receipt of FortisBC’s written reply to Intervenor comments on October 13, 2006. 2.0 2007-2008 CAPITAL PLAN 2.1 Planned Expenditures The following table summarizes FortisBC’s level of planned 2007 and 2008 capital expenditures. Table 1.1 2007/08 Capital Expenditure Plan 2007 Expenditures 2008 Expenditures Future Expenditures ($million) Generation 21,659 19,020 19,548 Transmission and Stations 64,405 59,320 61,476 Distribution 20,006 20,244 5,030 Telecom, SCADA, Protection & Control 4,940 3,088 3,400 Demand Side Management 1,573 1,498 General Plant 16,038 8,437 TOTAL 128,621 111,607 89,454 (Exhibit B-1, p. 7)
The above planned expenditures include projects approved by the Commission in previous years and projects for which a CPCN has been or will be filed. The level of expenditures, which fall into these categories, is summarized in Table 1.4 of Exhibit B-1, which is reproduced below. Table 1.4 2007/08 Capital Expenditure Plan Summary 1. Previously Approved 2. CPCN Submitted 3. CPCN to be Submitted 4. Subtotal 5. Remainder 6. Total (Exhibit B-1, p.12) The actual capital budget expenditures for which FortisBC is seeking approval in the Application total $47.9 million for 2007 and $65.2 million for 2008 (Exhibit B-1, p. 12). Tables 2.1, 2.2, 3.1, 4.1, 5.1, 7.1 and 7.8 of Exhibit B-1 are reproduced in the following sections and describe the specific projects related to those sections which have been previously approved or for which a CPCN will be filed and for projects for which approval is requested in this Application. 2.2 Intervenor Comments Nine individuals or groups registered as Intervenors and two, the BC Old Age Pensioners Organization et. al (“BCOAPO”) and Mr. Alan Wait, participated fully in the hearing process. BCOAPO provided comments and expressed concerns related to certain details of the Application that will be mentioned later in this Decision. In general BCOAPO expressed the view that “Overall, in view of the materials filed, information provided at the workshop, and responses to information requests, it appears that FortisBC’s 2007/08 Capital Expenditures Plan is reasonable” (Exhibit C4-3, p. 2). APPENDIX A to Order No. G-147-06 Page 2 of 20 2007 2008 Total ($millions) 39.3 4.0 43.3 20.9 10.8 31.7 20.5 31.6 52.1 80.7 46.4 127.1 47.9 65.2 113.1 128.6 111.6 240.2
APPENDIX A to Order No. G-147-06 Page 3 of 20 Mr. Wait’s main concern was with the flow regime for the Kootenay River generation plants, and how that impacted the replacement of the Upper Bonnington Units 1-4. FortisBC provided a response to Mr. Wait’s concerns in its reply to Intervenor Comments (Exhibit B-5, p. 5). Ms. Slack’s comments were brief, but were generally supportive of the Application. Other Intervenors who provided comments were concerned with specific issues which were not related to matters that are the proper subject of this Application. 3.0 CAPITAL PROJECTS REQUIRING COMMISSION APPROVAL FOR 2007 AND 2008 3.1 Generation Projects Of the generation projects listed in Tables 2.1 and 2.2 below, the proposed South Slocan Unit 3 Life Extension, Corra Linn Unit 1 Life Extension and the Upper Bonnington Civil/Structural Upgrade and Old Unit Repowering projects account for the majority of expenditures. The total budget for Generation Projects requiring Commission approval is $4.987 million for 2007 and $13.831 million for 2008.
Table 2.1 Generation Projects Previousl Prior Year y Exp. up to Approved Dec 31/06 Growth 1. Sustaining 2. Lower Bonnington Unit 3 ULE √ 7,842 3. South Slocan Unit 1 ULE √ 1,438 4. South Slocan Unit 3 Life Extension 5. Corra Linn Unit 1 Life Extension 6. South Slocan Plant Completion 7. Lower Bonnington Unit 3 √ Headgate Rebuild 8. South Slocan Unit 1 & 3 Headgate Rebuild 9. South Slocan Headgate Hoist, Control, Wire Rope Upgrade 10. South Slocan Pole Yard √ Remediation 11. Generating Plants Area Lighting 12. Upper Bonnington Civil/ Structural Upgrade and Old Unit Repowering (Phase 1) 13. Generating Plants Upgrade Station Service Supply 14. Lower Bonnington Generator and Plant Cooling System Upgrade 15. Subtotal Major Projects 10,452 16. Subtotal Major Projects from Table 2.2 17. Total Generation 10,452 (Exhibit 2.1, p. 19) APPENDIX A to Order No. G-147-06 Page 4 of 20 2007 2008 Future Total Total Total (1) ($000s) 7,377 0 0 15,219 8,747 3,149 0 13,334 0 870 9,322 3,119 13,311 0 0 881 10,954 11,835 0 0 310 1,625 1,935 595 68 0 0 663 0 513 580 78 1,171 0 0 669 0 669 577 325 0 0 902 0 226 177 0 403 2,404 2,266 715 5,385 0 255 473 3,057 3,785 0 46 346 0 392 20,831 18,173 19,548 69,004 0 828 847 0 1,675 21,659 19,020 19,548 70,679
Table 2.2 Generation Small Sustaining Projects 1. South Slocan Office Emergency Power Feed 2. Public Safety and Security System – All Plants 3. Lower Bonnington, Upper Bonnington and Corra Linn Sewage Disposal 4. Lower Bonnington, South Slocan & Corra Linn Tailrace Gate Storage 5. Oil Skimming System Upgrades – All Plants 6. Level Gauge Upgrade for Lower Bonnington Tailrace and Forebay and for Corra Linn Tailrace 7. Fire Protection Assessment & Upgrades – All Plants 8. Seismic Restraint – All Plants 9. Corra Linn Air Wash Pump Modifications 10. Corra Linn Forebay Boom & Anchor Upgrades 11. South Slocan Domestic Water Supply Upgrade 12. Corra Linn Wingdam Security Gates (2) 13. Corra Linn Headworks Handrail Upgrade 14. Corra Linn Battery Room Structural Upgrade 15. Pump Rehabilitation and Replacement – All Plants 16. Super Structure Assessment and Rehabilitation – All Plants 17. South Slocan Tailrace Vent Cover Screens Upgrade 18. Corra Linn Headgate Hoist Life Extension 19. TOTAL (Exhibit 2.2, p. 26) Intervenor Comments Alan Wait indicated that his concern with the 2007/08 Capital Expenditure Plan is with respect to expenditures associated with upgrading or replacing the existing facilities at the Kootenay River generation plants. He sought clarification with respect to any generation capacity addition restrictions placed on FortisBC by the Canal Plant Agreement or its amendments. FortisBC clarified that there are restrictions to adding capacity. In this case, Mr. Wait supports upgrading or replacing the existing facilities at the Kootenay River generation plants as outlined in the Capital Expenditures Plan (Exhibit C10-3, p. 1). BCOAPO did not provide comment specifically on the generation projects. APPENDIX A to Order No. G-147-06 Page 5 of 20 Previously 2007 2008 Approved ($000s) 87 54 281 76 66 26 62 71 20 76 86 5 √ 155 70 8 27 49 25 225 81 29 96 828 847
APPENDIX A to Order No. G-147-06 Page 6 of 20 Commission Determination The Commission Panel notes that the life extension program is a continuation of the program embarked on in 1997, which at that time demonstrated a robust benefit for FortisBC’s ratepayers. The updated business cases (Exhibit B-1, Appendix 1 and Appendix 2) for the South Slocan Unit 3 Life Extension and the Corra Linn Unit 1 Life Extension continue to show a positive benefit for ratepayers and these two projects and related expenditures are therefore approved. The Commission Panel notes that FortisBC is continuing to study the options for Units 1, 2, 3 and 4 at the Upper Bonnington plant, and that in the interim FortisBC is required to meet the civil and structural requirements for these units to meet safety and regulatory criteria. The project business case examines several options (Exhibit B-1, Appendix 3) and clearly demonstrates the need for this project and therefore the Commission Panel approves the Upper Bonnington Civil and Structural Upgrade and Old Unit Repowering (Phase 1) project and related expenditures. The Commission Panel also recognizes the ongoing need to sustain and refurbish other aspects of these aging plants and therefore approves the remaining projects and expenditures as proposed in Tables 2.1 and 2.2. 3.2 Transmission and Stations Table 3.1 from Exhibit B-1 is reproduced below and details FortisBC’s capital budgets for 2007 and 2008 for Transmission and Stations Growth and Sustaining projects. The total budget for Transmission and Stations Growth and Sustaining projects requiring Commission approval is $10.298 million for 2007 and $19.247 million for 2008.
Table 3.1 Transmission and Stations Projects Previousl CPCN y to be Approved filed 1. GROWTH 2. Big White Supply Mar/06 3. Ellison Distribution √ Source 4. Black Mountain Source √ 5. Fault Level Reduction √ 6. Naramata Substation √ (Arawana) 7. Nk’Mip (East Osoyoos) √ Source Kettle Valley Distribution 8. Source and voltage Oct/05 conversion 9. Lambert Substation – √ Transformer Installation 10. Okanagan Transmission √ Reinforcement 11. Benvoulin Substation 12. Duck Lake Substation Regulator Upgrade 13. Glenmore Substation New Feeder 14. Westbench Substation Regulator upgrade 15. Hedley Substation Capacity Increase 16. Castlegar Substation Capacity Increase 17. Coffee Creek and Kaslo capacitors 18. Crawford Bay Substation Capacity Increase 19. 18 Line Circuit Breaker Replacement 20. SUBTOTAL GROWTH (1) Future expenditures for ongoing sustaining programs have not been included in these tables. APPENDIX A to Order No. G-147-06 Page 7 of 20 Prior Year 2007 2008 Future Total Exp. up to Total Total (1) Dec 31/06 ($000s) 2,092 9,969 8,244 20,305 1,840 13,319 3,149 0 15,159 524 497 8,727 9,748 1,112 3,371 4,483 2,584 1,959 4,543 2,700 12,489 218 15,407 5,354 9,491 2,605 17,450 1,501 2,797 4,298 2,996 20,497 51,580 75,073 4,812 6,307 11,119 294 294 392 392 294 294 391 391 6,378 6,378 323 323 1,714 1,714 1,800 1,800 17,707 56,926 53,061 61,476 189,170
Table 3.1 cont’d Transmission and Stations Projects Previousl CPCN y to be Approved filed 21. SUSTAINING 22. Transmission 23. Transmission Line Urgent Repairs 24. Right of Way Enhancements 25. Right of Way Reclamation 26. Transmission Line Condition Assessment 27. Transmission Rehabilitation 28. Switch Additions 29. Stations 30. Station Condition Assessment & Minor Projects 31. Ground Grid Upgrades 32. Station Urgent Repairs 33. Computerized Maintenance √ Management System Transformer Load Tap 34. Changers Oil Filtration Project 35. West Osoyoos Transformer √ Rehabilitation 36. Trout Creek Transformer Replacement Warfield Terminal Station 37. Connector Replacement and Deficiency Correction 38. SUBTOTAL SUSTAINING 39. TOTAL (1) Future expenditures for ongoing sustaining programs have not been included in these tables. (Exhibit 3.1, pp. 33, 34) 3.2.1 Growth Projects Of the growth projects which have not received previous approvals or which FortisBC has stated will be the subject of a CPCN, the Benvoulin Substation and Castlegar Substation Capacity Increase projects account for the largest proposed capital expenditures in 2007/2008. The Benvoulin Substation is intended to address load growth APPENDIX A to Order No. G-147-06 Page 8 of 20 Prior Year 2007 2008 Future Total Exp. up to Total Total (1) Dec 31/06 ($000s) 257 308 565 334 350 684 339 359 698 616 647 1,263 1,763 1,884 3,647 362 190 552 1,145 1,186 2,331 284 299 583 353 401 754 1,101 246 1,347 226 234 460 1,723 343 2,066 342 342 869 399 1,268 2,824 7,479 6,259 0 16,562 20,531 64,405 59,320 61,476 205,732
APPENDIX A to Order No. G-147-06 Page 9 of 20 in the central area of Kelowna and is a change from the 2005 SDP which anticipated transformer additions at the Hollywood and the OK Mission substations. FortisBC states that the construction of a new substation at Benvoulin is a technically and economically superior solution (Exhibit B-1, Appendix 5). The Castlegar Substation Capacity Increase is proposed to increase the distribution capacity for the Castlegar, Blueberry, and Ootischenia areas and provide backup to the Blueberry and Castlegar substations. The project consists of a new substation in the Ootischenia area with a 63 kV transmission line tap and several 13 kV feeders. This project is a change from the 2005 SDP, which contemplated increasing the transformer capacity in the Castlegar substation, which is forecast to be overloaded by 2010. FortisBC is recommending this solution because the Castlegar substation does not have enough room and other options have higher capital costs (Exhibit B-1, Appendix 6). 3.2.2 Sustaining Projects Of the projects listed in Table 3.1 only the Computer Maintenance Management System and the West Osoyoos Transformer Replacement have been previously approved; however, many other projects such as condition assessment and rehabilitation programs are continuing from previous years. A notable exception is the Warfield Terminal Station Connector Replacement and Deficiency Correction Project. This project is required because of the premature failure of compression connectors following the completion of the Kootenay 230 kV Project. Intervenor Comments BCOAPO expressed concern about the public consultation process and whether or not FortisBC should proceed with substation construction without a CPCN application. BCOAPO also expressed concern about “scope changes” and the magnitude of increased costs related to certain projects, factors for FortisBC and the Commission to consider when deciding to proceed with CPCN applications for those projects. Alan Wait did not provide comment. Commission Determination The final options for the Benvoulin substation have not been determined. FortisBC has stated that it does not intend to submit a CPCN for this project as it does not meet the criteria FortisBC suggested in the 2005 Capital Plan applications and which the Commission generally accepted. FortisBC also argued that it would prefer to carry on a full public consultation and obtain agreement with the stakeholders. If controversy is still evident after
APPENDIX A to Order No. G-147-06 Page 10 of 20 the public consultation, FortisBC suggested that it would then apply to the Commission for a CPCN. Although BCOAPO in its argument expressed some concern with a lack of a CPCN for this project, it agreed with FortisBC’s proposed approach (Exhibit C4-3, p. 2). In the FortisBC 2005 Revenue Requirements, 2005-2024 System Development Plan and 2005 Resource Plan Application, FortisBC proposed criteria to be followed when determining whether a filing for a CPCN would be required. That criteria is: 1. the total project cost is $20 million or greater; or 2. the project is likely to generate significant public concerns; or 3. FortisBC believes for any reason that a CPCN application should proceed; or 4. after presentation of a Capital Plan to FortisBC stakeholders, a credible majority of those stakeholders express a desire for a CPCN application. In the Commission Decision accompanying Order No. G 52-05, the Commission Panel stated: “With regard to the CPCN Criteria, the Commission Panel is in general agreement with FortisBC’s assessment of the appropriate criteria to guide the Company and the Commission when applying for CPCNs. However FortisBC has missed an important distinction with respect to the BCTC application. BCTC has acknowledged that the Commission has the authority to designate any projects it deems necessary for a CPCN application, regardless of the criteria. In exercising this prerogative the Commission will be guided by the suggested criteria. However, in practice the Commission intends to review each year’s capital filings and will determine with reasons which projects will require CPCNs” (Decision, p. 60). The Commission continues to be of the view that it will consider this criteria and determine which projects require CPCNs. Given the urban location for the proposed Benvoulin Substation, the Commission Panel is of the view that the project is likely to generate significant public concerns and, therefore, in accordance with the above criteria determines that an application for a CPCN for the Benvoulin Substation Project is required. The Castlegar Area Capacity Increase (Ootischenia Substation) project involves the construction of a new distribution source together with the necessary transmission and distribution feeder facilities to tie the substation into the existing transmission and distribution network. Although the project, in relative terms is of modest cost, it is in a semi-urban area. The Commission Panel is of the view that the project is likely
APPENDIX A to Order No. G-147-06 Page 11 of 20 to generate significant public concerns and, therefore, in accordance with the above criteria determines that an application for a CPCN for the Castlegar Area Capacity Increase (Ootischenia Substation) Project is required. The Commission Panel concurs with FortisBC that a CPCN is required for the Okanagan Reinforcement Project and the Black Mountain Source Project and notes that an application for a CPCN for the Ellison Distribution Source Project has been filed. The Commission Panel approves all other Growth and Sustaining projects and related expenditures as listed in Table 3.1 3.3 Distribution Table 4.1 from Exhibit B-1 is reproduced below and details FortisBC’s capital budgets for 2007 and 2008 for Distribution Growth and Sustaining projects. The total budget for Distribution Growth and Sustaining projects is $19.154 million for 2007 and $19.376 million for 2008.
Table 4.1 Distribution Projects Expenditures 1. GROWTH 2. New Connects – System wide 3. Distribution Growth Projects 4. Glenmore Substation – New Feeder 5. Keremeos Feeder 1 Capacity Upgrade 6. Princeton Feeder 4 Capacity Upgrade 7. OK Falls Feeder 3 Capacity Upgrade 8. Crawford Bay Feeder 2 Capacity Upgrade 9. Feeder Egress Cables 10. McKinley Landing Capacity Upgrade 11. Valhalla Feeder 1 Capacity Upgrade 12. Hollywood Feeder 1 – OK Mission Feeder 1 Tie 13. FA Lee Feeder 2 – Hollywood Feeder 5 Tie 14. Small Growth Projects 15. Unplanned Growth Projects 16. TOTAL GROWTH 17. 18. SUSTAINING 19. Distribution Sustaining Programs and Projects 20. Distribution Line Condition Assessment 21. distribution Line Rehabilitation 22. Distribution ROW Reclamation 23. Distribution Line Rebuilds 24. Small Planned Capital 25. Forced Upgrades and Line Moves 26. Distribution Urgent Repair 27. PCB Program 28. Aesthetic and Environment Upgrades 29. TOTAL SUSTAINING 30. TOTAL (1) Future expenditures for ongoing sustaining programs have not been included in these tables. (Exhibit 4.1, p. 65) APPENDIX A to Order No. G-147-06 Page 12 of 20 Previously 2007 2008 Approved Total Total Future (1) Total ($000) 7,245 7,977 15,222 1,371 1,371 353 200 553 881 1,350 2,231 294 300 594 372 372 244 244 359 359 897 897 349 349 419 419 446 210 656 685 713 1,398 11,892 11,224 1,550 24,666 637 678 1,315 1,606 1,645 3,251 609 593 1,202 1,576 1,945 3,521 339 378 717 1,168 1,400 2,568 1,228 1,414 2,642 √ 852 868 3,480 5,200 98 100 198 8,114 9,020 3,480 20,614 20,006 20,244 5,030 45,280
APPENDIX A to Order No. G-147-06 Page 13 of 20 3.3.1 Growth Projects Intervenor Comments Intervenors did not provide comment on this topic. Commission Determination The Commission Panel notes that these projects are driven by customer demand and load growth and the Commission Panel accepts the load forecasts submitted by FortisBC in Appendix 1 of the 2007 SDP, as noted later in this Decision. The Commission Panel therefore approves the Distribution Growth projects and related expenditures as listed in Table 4.1 3.3.2 Sustaining Projects In its Decision on FortisBC’s 2006 Capital Budget Application, 2006 Capital Expenditures Plan and the 2006 System Development Plan (Order No. G-8-06), the Commission expressed concern with regard to the prioritization of projects in the distribution rebuild and requested FortisBC to include in its next filing more information related to reliability performance. In response, in this Application, FortisBC included Table 8.1 (Exhibit B-1, pp. 125, 126) which ranked all distribution feeders by descending order of SAIFI and highlighted all feeders which are to have sections replaced in the 2007 and 2008 programs. It is apparent from this table that FortisBC has not prioritized its rebuild program solely on the reliability data. FortisBC explained that it based its prioritization of work on an inspection program, which analyses the extent of deterioration, and risk and consequence of failure and is of the view that “the overall distribution system receives more benefit from its current method of assigning priority than it would receive by focusing on the performance of specific feeders” (Exhibit B-1, p. 125). Intervenor Comments Intervenors did not provide comment on this topic.
Commission Determination The Commission Panel accepts that a visual assessment and professional analysis of risk and consequences as described by FortisBC is, in this instance, an acceptable method of prioritizing feeders in need of repair. The Commission Panel approves all Sustaining projects and related expenditures listed in Table 4.1. 3.4 Telecommunications, SCADA, and Protection & Control Table 5.1 from Exhibit B-1 is reproduced below and details FortisBC’s capital budgets for 2007 and 2008 for Telecommunications, SCADA, and Protection and Control. The total budget for Telecommunications, SCADA, and Protection and Control projects is $1.482 million for 2007 and $1.088 million for 2008. Table 5.1 Telecom, SCADA, and Protection and Control Projects Expenditures CPCN Prior Year to be Exp. up to filed Dec 31/06 1. GROWTH Distribution Substation 2. Automation, Metering and √ Communications Trail-Oliver High Capacity Filed 3. Communications Oct/05 4. SUBTOTAL GROWTH 5. 6. SUSTAINING 7. Harmonic Remediation Protection and Fault Locating 8. Upgrades 9. Communication Upgrades 10. SUBSTOTAL SUSTAINING 11. TOTAL (1) Future expenditures for ongoing sustaining programs have not been included in these tables. (Exhibit 5.1, p. 88) APPENDIX A to Order No. G-147-06 Page 14 of 20 2007 2008 Future Total Total Total (1) ($000s) 800 1,999 2,000 1,000 5,799 1,200 1,459 2,400 5,059 2,000 3,458 2,000 3,400 10,858 97 101 198 1,082 877 1,959 304 110 414 1,482 1,088 2,570 2,000 4,940 3,088 3,400 13,428
Intervenor Comments Intervenors did not provide comment on this topic. Commission Determination The Commission Panel notes that the Trail-Oliver High Speed Communications project is linked to the previously approved Kettle Valley Project and the future Okanagan Transmission Reinforcement Project. The Kettle Valley project approvals included a portion of this project. The other growth project listed (the Distribution substation automation project) will be the subject of a CPCN. As these are the only Growth projects listed no approvals are needed at this time. The Commission Panel approves the Sustaining projects and related expenditures listed in Table 5.1 3.5 Demand Side Management Table 6.1 from Exhibit B-1 is reproduced below and details FortisBC’s capital budgets for 2007 and 2008 for Demand Side Management (“DSM”). The total amount in Table 6.1 requires Commission approval. Table 6.1 Demand Side Management Expenditures 1 Cost ($000s) (Exhibit 6.1, p. 94) Intervenor Comments Intervenors did not provide comment on this topic. APPENDIX A to Order No. G-147-06 Page 15 of 20 2007 2008 Total Total Total 1,573 1,498 3,071
Commission Determination The Commission Panel notes that the FortisBC’s DSM projects continue to be cost effective in promoting energy conservation (Exhibit B-2, BCUC IR 29.1). The Commission Panel therefore approves the proposed DSM program and the expenditures identified in Table 6.1. 3.6 General Plant Tables 7.1 and 7.8 from Exhibit B-1 are reproduced below and detail FortisBC’s capital budgets for 2007 and 2008 for General Plant and, in particular, for Information Systems. The total budget for General Plant and Information Systems is $10.411 million for 2007 and $8.099 million for 2008. Table 7.1 General Plant Expenditures General Plant Previously Approved 1. Vehicles Metering Changes to Uninstalled 2. Meter Inventory 3. Information Systems 4. Telecommunications 5. Buildings 6. Benvoulin Property Expansion 7. Furniture and Fixtures 8. Tools and Equipment 9. TOTAL (Exhibit 7.1, p. 98) APPENDIX A to Order No. G-147-06 Page 16 of 20 Prior Year 2007 2008 Total Exp. up to Total Total Dec 31/06 ($000s) 3,400 2,461 5,861 64 136 200 727 6,027 3,516 10,270 175 175 350 1,462 1,312 2,774 √ 150 3,948 4,098 212 187 399 750 650 1,400 877 16,038 8,437 25,352
Table 7.8 Information Systems 1. Infrastructure Upgrade 2. Desktop Infrastructure Upgrade 3. Business Consolidation and Planning 4. Business Warehouse Module 5. Contract Management Module 6. Data Portal Module 7. Service Order Module 8. Dispatch Software Consolidation 9. MVRS Handheld Upgrade 10. IT – Disaster Recovery Phase II 11. CIS+ Web Interface Upgrade 12. Intranet Enhancements 13. Internet Enhancements 14. Accounts Payable Document Imaging 15. CIS+ Integration with SAP Human Resources, Environment, Health and 16. Safety Module Human Resources Training and Events 17. Software Module 18. AM/FM Upgrade 19. SAP Enhancements 20. CIS+ Enhancements 21. Microsoft Office Windows Upgrade 22. Records Management 23. System Control SCADA Upgrade 24. TOTAL (Exhibit 7.8, p. 104) APPENDIX A to Order No. G-147-06 Page 17 of 20 CPCN Prior Year 2007 2008 to be Exp. up to Total Total filed Dec 31/06 ($000s) 239 314 477 400 147 - 278 242 116 - 269 243 126 - 334 77 223 - 444 28 331 - 81 164 81 164 108 - 219 - 331 - 251 - √ 727 1,679 338 - 564 - 338 - 535 108 109 183 - 727 6,027 3,516
APPENDIX A to Order No. G-147-06 Page 18 of 20 Intervenor Comments Intervenors did not provide comment on this topic. Commission Determination The Commission Panel notes that expenditures related to the Vehicle Lease Conversion Project have been addressed in previous decisions and considers that other vehicle expenditures are justified according to their condition and life cycle on the basis of safety and cost. The Commission Panel also notes that other significant expenditures under this category include the Benvoulin Property Expansion and Information Systems for which the most significant project is the Automated Mapping/Facilities Management Geographical Information System (“AM/FM GIS”) Transition Project. These projects have also been the subject of previous decisions or are under review as a CPCN. The Commission Panel notes that the Benvoulin Property Expansion does not relate to the proposed Benvoulin Substation Project. The Commission Panel approves all proposed projects and related expenditures listed in Tables 7.1 and 7.8. 4.0 2007 SYSTEM DEVELOPMENT PLAN UPDATE The 2007 SDP is an update from the 2005 SDP, which outlined FortisBC’s forecasts of its growth and sustaining capital expenditures in the 2005-2011 timeframe. This update forecasts capital expenditures for the 2007 to 2011 timeframe of $377 million compared to the 2005 SDP forecast of $305 million for the same timeframe. FortisBC load forecasts are now expected to increase by 4.8 percent per year in the North Okanagan Area, 2.1 percent per year in the South Okanagan Area, 2.1 percent per year in parts of the Boundary area, and 0.8 percent per year for the Kootenay Area. These load forecasts appear to be based on sound data and thorough analysis. Intervenors did not dispute the load forecasts.
APPENDIX A to Order No. G-147-06 Page 19 of 20 The 2007 SDP notes a number of changes in project timing, including the deferral of the Big White, Recreation, Lambert, Castlegar, Kettle Valley, and Nk’Mip project. A number of projects such as the Ellison project have increased in scope. And a number of new Projects such as the Benvoulin project have been conceived and others like the Hollywood and OK Mission projects have been cancelled. Details of these project changes have been listed in Appendix 2 to the 2007 SDP. The net effect of these changes and an increasing prediction for more rehabilitation projects is to cause an increase in capital spending in the latter years of the SDP. Intervenor Comments BCOAPO expressed concern that projected costs for capital expenditures have risen dramatically since the 2005-2024 SDP was approved less than two years ago. BCOAPO cites project scope changes as a major contributing factor to higher expenditures and states that “[T]he effect on customers rates of large cost increases related to equipment and material costs points to the need for the Company’s Capital Plans to be closely scrutinized, both internally by FortisBC and externally by the BCUC, in order to ensure that the expenditures are prudent. Our apprehension is that without an annual, public review of the plan, expenditures may jump to unsustainable levels” (Exhibit C4-3, p. 3). Commission Determination The Commission Panel accepts the 2007 SDP update for filing and accepts the load forecasts as stated. However, the Commission Panel shares the concern expressed by the BCOAPO related to the continually increasing costs related to capital expenditures, and the consequential impact on rates for customers.
APPENDIX A to Order No. G-147-06 Page 20 of 20 5.0 PROPOSED REGULATORY TREATMENT As noted in FortisBC’s application, FortisBC is proposing a two-year capital filing, which includes 2007 and 2008. Section 45 (6) of the UCA requires a public utility to file at least once each year a statement, in a form prescribed by the Commission, of the extensions to its facilities that it plans to construct. The Commission Panel accepts the proposed two-year filing pursuant to Section 45 (6.1) of the UCA. The Commission Panel also accepts FortisBC’s response to concerns expressed by BCOAPO and its intention to provide an update on the progress of the implementation of the Capital Expenditure Plan during the 2007 Annual Review. In that report, FortisBC is directed to file a progress update and description of any changes that it proposes to make to the approved projects and related expenditures for 2008.
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