7 July 2006 Mr. Robert J. Pellatt Commission Secretary British ...

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British Columbia Utilities CommissionInformation Request 1.21.0Dated 19 June 2006British Columbia Transmission CorporationResponse Issued 7 July 2006British Columbia Transmission CorporationTransmission Revenue Requirement Application21.0 Reference: Exhibit B-1 Section 5 pages 45 and 46 BCH Owner’s RevenueRequirement Cost ComponentsRESPONSE:“ii the transfer of approximately $150 million in substation distribution and otherassets in F2005 from Transmission to Distribution within BC Hydro which reducesTransmission depreciation expense by $10 million; and”Please provide the cost reductions in the Approved F2006 TotalTransmission Cost by cost item and the changes in the Total Non-TariffedRevenues and Recoveries by type of Revenue/Recovery in Table 5-1 dueto the transfer of $150 million in substation distribution and other assets inF2005 from Transmission to Distribution.In F2005 and F2006 approximately $150 million in Substation Distribution Assets (SDA)were transferred from Transmission to Distribution within BC Hydro. The other assetsreferenced are of a minor nature and do not materially impact the revenue requirement.These other transfers were Powertech lab assets ($2.9 million net book value) transferredto BC Hydro Corporate and UHF/VHF radio assets ($2.1 million net book value)transferred to Field Services.As a result of the SDA asset transfer certain costs were transferred from Transmission toDistribution. The impact of the transfer of SDAs on the F2006 BCH Owners RevenueRequirement is summarized in Table 1:Table 1 – Impact of SDA Transfer on the BCH Owners Revenue RequirementLineNo.$ millionsF2006Approved(T5-1,col.(d))ImpactSDATransfer toDistributionF2006AdjustedF2007ChangeF2007 SDACharge(a) (b) (c) (d) (e)1 Allowed Return 116.0 (6.6) 109.42 Finance Charges 133.3 (7.6) 125.73 OMA 4.8 - 4.84 Corporate Costs 14.7 14.75 Depreciation and Amortization 134.4 (10.0) 124.46 DSM Amortization 3.6 - 3.67 Grants and Taxes 90.5 - 90.58 497.3 (24.2) 473.19 Less: Non-tariffed revenues and recoveries10 Generation Related Transmission Assets (33.1) - (33.1)11 Substation Distribution Assets (56.5) 26.0 (30.5) 5.2 (25.3)12 Secondary Revenues (3.8) - (3.8)13 Lease Revenues from BCTC and other (0.2) - (0.2)14 (93.6) 26.0 (67.6) 5.2 (25.3)15 BCH Owner's Revenue Requirement 403.7 1.8 405.5 5.2 (25.3)
British Columbia Utilities CommissionInformation Request 1.21.0Dated 19 June 2006British Columbia Transmission CorporationResponse Issued 7 July 2006British Columbia Transmission CorporationTransmission Revenue Requirement ApplicationThe change in the SDA annual charge components is further defined in Table 2:Table 2 – SDA Annual Charge Change by ComponentLineNo.$ millionsF2006SDACharge(Note 1)Change inAllocationMethodology(Note 2)F2006 Est.Impact of SDATransfer(Note 3)F2006 CostAdjMethodologyto Charge forCommonsAssets Only(Note 4)Adjust toF2007 Costs(Note 5)F2007SDAChargeBCH Owner's Cost (a) (b) (c) (d) (e) (f)1 Allowed Return 6.7 7.8 (6.6) (3.2) (0.4) 4.32 Finance Charges 15.2 1.5 (7.6) (3.7) (0.2) 5.23 Corporate Costs 1.7 (0.1) - - (0.1) 1.54Depreciation &Amortization21.7 - (10.0) (4.2) (1.9) 5.65 Grants & Taxes 11.3 - - - (2.6) 8.767 Total 56.5 9.2 (24.2) (11.0) (5.2) 25.3Table 1, L8,Col (b)Table 1, L15, Col (b)$1.8 millionTable 1, L15,Col (d)Note 1:Note 2:Note 3:Note 4:Note 5:Detailed cost components for F2006 SDA charge from BC Hydro Transmissionto BC Hydro Distribution, refer to Table 5-1, line 14, column (d).Revise allocation methodology to be consistent with the BC Hydro’s allocationof Allowed Return, Finance Charges and Corporate costs to Transmission.Estimated impact reflecting the transfer of $150 million net book value for SDA.No change in methodology.F2006 costs, allocation methodology and rate base adjusted to reflectassignment of a portion of forecast expenses relating to common assets toSDA. The transfer of the SDAs impacts the annual charge to Distribution fromTransmission. With the identification and transfer of the SDAs, BCTC and BCHydro also identified those assets that are common to both SDAs andTransmission. Common assets include but are not limited to buswork, land,buildings, fences, gravel and land. The analysis of the substation assets in thecombined transmission and distribution stations indicates a percentage splitof 42.5% for Transmission and 57.5% for Distribution for common stationassets.Detailed cost components for F2007 SDA charge from BC Hydro Transmissionto BC Hydro Distribution, refer to Table 5-1, line 14 column (f). Grants and
Page 1 and 2: Marcel RegheliniDirector, Regulator
Page 3 and 4: British Columbia Utilities Commissi
Page 5: British Columbia Utilities Commissi
Page 13 and 14: 160,0002006 M&P Market Analysis140,

7 July 2006 Mr. Robert J. Pellatt Commission Secretary British ...

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