Filed: July 13, 2009
EB-2009-0096
Exhibit F1
Tab 1
Schedule 1
Page 1 of 8
REGULATORY ASSETS
1
2
3
1.0
INTRODUCTION
4
5
The purpose of this evidence is to provide a description of the Distribution Regulatory
6
Assets and a detailed account of their balances.
7
8
All of the Regulatory Assets reported by Hydro One Distribution have been established
9
consistent with the Board’s requirements as set out in the Accounting Procedures
10
Handbook, subsequent Board direction, or per specific requests initiated by Hydro One
11
Distribution.
12
13
The Distribution Regulatory Asset balances are summarized in Table 1 below:
14
15
16
17
18
Table 1
Distribution
Summary of Regulatory Asset Balances for Approval
$ million
19
Description
Dec 31,
2008
Dec 31,
2009
Total Regulatory Assets for Approval
(39.3)
(25.8)
20
21
Hydro One Distribution is forecasting Regulatory Asset values up to December 31, 2009.
22
It is expected that new Distribution rates will be implemented at the start of January 2010.
23
Details on the forecast basis will be described for each account.
24
Filed: July 13, 2009
EB-2009-0096
Exhibit F1
Tab 1
Schedule 1
Page 2 of 8
1
2.0
REGULATORY ASSETS REQUESTED FOR APPROVAL
2
3
The following table provides a summary of the Regulatory Asset requested for approval:
4
Table 2
Distribution
Regulatory Assets Requested for Approval
$ million
5
6
7
8
9
Description
Dec 31,
2008
Dec 31,
2009
Retail Cost Variance Accounts
Smart Meter Minimum Functionality Underrecovery Jan 1 to Dec 31, 2008
Smart Meter Exceeding Min Functionality
Under-recovery Jan 1 to Dec 31, 2008
Retail Settlement Variance Accounts
Regulatory Asset Recovery Phase I
Total Regulatory Assets for Approval
(1.7)
(1.9)
0.9
0.9
1.1
(20.9)
(18.7)
(39.3)
1.1
(2.9)
(23.0)
(25.8)
10
11
Interest is included in the above balances and has been calculated in accordance with the
12
Board’s prescribed rate.
13
14
Disposition of these accounts is discussed in Exhibit F1, Tab 2, Schedule 1.
15
16
2.1
Retail Cost Variance Accounts (“RCVA”)
17
18
Providing retail services to customers arising from the deregulated electricity market
19
gives rise to certain retail service costs, which have to be recovered by the distributor.
20
The rates and charges used in determining these costs are set by the Board, which
21
recognizes that the actual costs may be different in practice. In accordance with Chapter
22
11 of the Distribution Rate Handbook, distributors are required to establish variance
23
accounts to record the differences in costs and revenues for future disposition.
Filed: July 13, 2009
EB-2009-0096
Exhibit F1
Tab 1
Schedule 1
Page 3 of 8
1
2
Hydro One Distribution has established Retail Cost Variance Accounts to capture the
3
differences between the revenues collected by the distributor, based on the Board
4
approved rates, and the actual incremental costs of providing the related services. The
5
methodology for the variance accounts is given in the Accounting Procedures Handbook
6
– Article 490.
7
8
Table 3 provides a summary of RCVA balance for Hydro One Distribution:
Table 3
Distribution
Retail Cost Variance Accounts (RCVA)
$ million
9
10
11
12
13
Description
RCVA Accounts
USofA
Account
Ref
Dec 31,
2008
Dec 31,
2009
1580
(1.7)
(1.9)
14
15
16
2.2
Smart Metering Minimum Functionality Expenditures incurred up to
December 31, 2008
17
18
On May 2, 2007, the Board issued a notice of combined proceeding (EB-2007-0063) to
19
determine the prudence and recovery of costs associated with smart metering activities for
20
13 licensed distributors, including Hydro One Networks.
21
22
The issues considered in the combined proceeding included:
23
24
1. Costs recovery relating to minimum functionality pursuant to Ontario Reg. 426/06.
25
2. Prudence of costs incurred.
26
3. The mechanism for re-setting rates for smart meter costs that are found to be prudent
27
through that proceeding.
28
4. Accounting Procedures.
Filed: July 13, 2009
EB-2009-0096
Exhibit F1
Tab 1
Schedule 1
Page 4 of 8
1
5. Regulatory treatment of stranded meter costs and recovery through rates.
2
6. The mechanisms for re-setting rates for smart meter costs incurred on a go forward
3
4
basis.
7. Mechanism for dealing with costs not part of that proceeding.
5
6
The Board's Decision was released on August 8, 2007. The Board determined that the
7
purchasing decisions of the thirteen utilities involved in the proceeding were implemented
8
with the necessary due diligence and the terms of the contracts were prudent. The Board
9
agreed with the overall costs incurred to May 31, 2007 related to the minimum
10
functionality of all installed meters.
11
12
As part of the EB-2007-0681 Proceeding, the Board reviewed and approved Hydro One
13
Distribution’s actual Smart Meter Minimum Functionality spending up to December 31,
14
2007. The Board directed Hydro One Distribution to track subsequent Smart Meter
15
Minimum Functionality spending and file for approval and recovery in a subsequent
16
application. This application is requesting recovery of those costs to December 31, 2008.
17
18
Table 4 below details the revenue requirement (net of revenue received) related to smart
19
meter minimum functionality up to December 31, 2008 plus interest for 2009. The
20
revenue requirement was calculated based on the approach illustrated in Appendix E of
21
the decision for proceeding EB-2007-0063.
22
Filed: July 13, 2009
EB-2009-0096
Exhibit F1
Tab 1
Schedule 1
Page 5 of 8
Table 4
Distribution
Smart Meter Minimum Functionality Under-Recovery
to December 31, 2008
$ million
1
2
3
4
5
6
Description
Smart Meter Minimum Functionality
Under-recovery up to Dec 31, 2008
Dec 31, 2008
Dec 31, 2009
0.9
0.9
7
8
9
2.3 Smart Metering Expenditures Exceeding Minimum Functionality up to
December 31, 2008
10
11
Smart Metering Expenditures Exceeding Minimum Functionality primarily includes TOU
12
capability and integration as well as some costs for meter outage detection and collector
13
outage
14
15
A review of these costs was done in EB-2007-0681. The Board granted approval to
16
Hydro One Distribution for actual Smart Meter Exceeding Minimum Functionality
17
spending up to December 31, 2007. The Board directed Hydro One Distribution to track
18
subsequent Smart Meter Exceeding Minimum Functionality spending and file for
19
approval and recovery in a subsequent application.
20
recovery of those costs to December 31, 2008.
This application is requesting
21
22
The Hydro One Smart Meter revenue requirements associated with these elements up to
23
December 31, 2008 plus interest for 2009 is summarized in Table 5 below:
24
Filed: July 13, 2009
EB-2009-0096
Exhibit F1
Tab 1
Schedule 1
Page 6 of 8
1
2
3
4
5
Table 5
Distribution
Smart Meter Exceeding Minimum Functionality Under-Recovery
to December 31, 2008
$ million
6
Description
Dec 31, 2008
Dec 31, 2009
1.1
1.1
Smart Meter Exceeding Min Functionality
Under-recovery up to Dec 31, 2008
7
8
2.4 Retail Settlement Variance Accounts (“RSVA”)
9
10
The RSVA accounts have been established pursuant to Article 490 which requires that all
11
distributors establish Retail Settlement Variance Accounts to record the differences
12
between the amount owed to the IESO / host distributors and the amount billed to
13
customers and retailers.
14
15
The RSVA accounts were previously reviewed and approved by the Board in RP-2004-
16
0117/0118, RP-2005-0020 / EB-2005-0378 and EB-2007-0681.
17
RSVA account has been filed with the Board on a quarterly basis per the Electricity
18
Reporting and Record Keeping Requirements.
The balance of the
19
20
The total Retail Settlement Variance Accounts balance is summarized in Table 6 below:
21
22
23
24
25
Table 6
Distribution
Retail Settlement Variance Account (RSVA)
$ million
26
Description
Retail Settlement Variance Account
27
USofA
Account
Ref
Dec 31,
2008
Dec 31,
2009
1580
(20.9)
(2.9)
Filed: July 13, 2009
EB-2009-0096
Exhibit F1
Tab 1
Schedule 1
Page 7 of 8
1
2.5
Regulatory Asset Recovery Account – Phase I
2
3
Ontario’s local electricity distribution companies (LDCs or distributors) incurred costs in
4
preparation for the competitive market which opened in May 2002. In addition to these
5
transition costs, utilities incurred other costs associated with regulatory directives related
6
to market restructuring and the ongoing competitive market.
7
8
On January 10, 2005, the Board issued an Order (RP-2004-0117/0118) granting Hydro
9
One approval for its regulatory asset account balance of $155 million as filed on
10
December 20, 2004. The recovery period ended April 30, 2008. Interim rates were
11
approved by the Board on April 11, 2008 to continue this rate rider until the decision in
12
EB-2007-0681 would be implemented. This was subsequently implemented on February
13
1, 2009.
14
15
The rate rider continued to be collected until February 2009 per the interim decision,
16
simple interest continues to be applied to the monthly opening principal (net of recovery)
17
balance in this account.
18
19
The Recovery of Regulatory Asset Balances – Phase I account (USofA 1590) is
20
monitored and reported on a quarterly basis to the Board per the Electricity Reporting and
21
Record Keeping Requirements.
22
23
Table 7 provides a summary of Regulatory Asset Recovery Phase I Account balance for
24
the Hydro One Distribution business:
25
Filed: July 13, 2009
EB-2009-0096
Exhibit F1
Tab 1
Schedule 1
Page 8 of 8
Table 7
Distribution
Regulatory Asset Recovery Phase I Account Balance
$ million
1
2
3
4
5
Description
USofA
Account
Ref
Dec 31,
2008
Dec 31,
2009
Regulatory Asset Recovery Phase I
1590
(18.7)
(23.0)
6
7
3.0
CURRENTLY APPROVED REGULATORY ASSET ACCOUNTS
8
9
Hydro One continues to use the following Regulatory Asset accounts:
10
11
•
Rural or Remote Electricity Rate Protection (RRRP) account
12
•
Deferred Pension Account
13
•
Regulatory Rate Rider 2 (EB-2005-0378)
14
•
Regulatory Rate Rider 3 (EB-2007-0681)
15
•
Regulatory Rate Rider 4 (EB-2007-0681) Foregone revenue between May 1, 2008
and January 31, 2009
16
17
•
Bill Impact Mitigation (Harmonization Mitigation Credit)
18
19
These accounts are reported to the Board on a quarterly basis per the Electricity Reporting
20
and Record Keeping Requirements and are not being requested for disposition in this
21
application.
Filed: July 13, 2009
EB-2009-0096
Exhibit F1
Tab 1
Schedule 2
Page 1 of 2
REGULATORY ASSET ACCOUNTS REQUESTED
1
2
3
This exhibit requests approval to establish new variance accounts for Hydro One
4
Distribution as follows:
5
6
•
Pension Cost Differential
7
•
OEB Cost Differential
8
•
Impact of Change in IFRS
9
•
Fixed Charge for Micro-Generators
10
•
Bill Impact Mitigation
11
12
The need for these accounts and the accounting and control process is described in further
13
detail in the remainder of this exhibit.
14
15
1.0
PENSION COST DIFFERENTIAL
16
17
Hydro One Distribution proposes to track the difference between the actual pension costs
18
booked using the actuarial assessment provided by Mercer, and the estimated pension
19
costs used in this filing.
20
21
2.0
OEB COST DIFFERENTIAL
22
23
This account will track the difference between the annual OEB Cost Assessments,
24
intervenor cost awards, and costs associated with OEB-initiated studies and the amount
25
for these expenditures approved by the OEB as part of the 2010 and 2011 Distribution
26
Rates until these rates are rebased.
27
Filed: July 13, 2009
EB-2009-0096
Exhibit F1
Tab 1
Schedule 2
Page 2 of 2
1
3.0
IMPACT OF CHANGE IN IFRS
2
3
This account will track the difference between costs in the current revenue requirement
4
and any difference in revenue requirement due to changes in the application of IFRS
5
standards once they are approved.
6
7
4.0
FIXED CHARGE FOR MICRO-GENERATORS
8
9
This account will record revenue collected from the new fixed meter charge that will be
10
applied to micro-generators. This revenue will be tracked in a variance account to be
11
refunded in the future to customers.
12
13
5.0
BILL IMPACT MITIGATION ACCOUNT
14
15
This account will record any revenue forgone and any incremental costs associated with
16
implementing any additional mitigation measures that might be required as a result of
17
completing the harmonization process.
18
19
6.0
ACCOUNTING AND CONTROL PROCESS
20
21
The variance accounts requested above will be managed in the same manner as existing
22
Hydro One Distribution variance accounts.
23
interest applied consistent with the Board approved rate. Balances will be reported to the
24
Board as part of the quarterly reporting process. The outstanding balance whether in a
25
debit or credit position will be submitted for approval by the Board as part of Hydro One
26
Distribution’s next rate filing.
Accounts will be updated monthly and
Filed: July 13, 2009
EB-2009-0096
Exhibit F1
Tab 1
Schedule 3
Page 1 of 17
SMART METER FUNDING ADDER
1
2
3
1.0
INTRODUCTION
4
5
Hydro One Distribution is applying for a Smart Meter Funding Adder for 2010 of $2.17
6
and for 2011 of $4.45 per metered customer per month following the Board’s G-2008-
7
0002 Guideline for Smart Meter Funding and Cost Recovery issued October 22, 2008.
8
This new Smart Meter Funding Adder replaces the Board-approved Smart Meter Rate
9
Adder of $1.65 per metered customer per month. This funding adder is based on the in-
10
service additions of $142.7 million for 2009, $143.0 million for 2010 and $61.9 million
11
for 2011. The capital expenditure for 2010 is $103.1 million and $44.4 million for 2011.
12
Capital and operation, maintenance and administration expenditures are related to the
13
installation of Smart Meters.
14
15
As outlined in Exhibit D1, Tab 1, Schedule 1, at the end of 2008, Hydro One had
16
exceeded 50% penetration of smart meters within its service area. As a result, in keeping
17
with OEB Guideline G-2008-002 Smart Meter Funding and Cost Recovery, in this cost of
18
service application, Hydro One is requesting that costs for all smart meters installed as of
19
December 31, 2008 be included in ongoing operations and placed into rate base on
20
January 1st, 2010. Consequently, $92.0 million of smart meter in-service additions are not
21
included in the calculation of the Smart Meter Funding Adder for 2010 and 2011.
22
23
Hydro One Distribution does not expect to incur costs associated with functions which
24
the SME has exclusive authority to carry out. There are no costs associated with stranded
25
meters in 2010 or 2011. There are no changes to the ancillary systems from what was
26
previously defined as minimum functionality.
27
28
Filed: July 13, 2009
EB-2009-0096
Exhibit F1
Tab 1
Schedule 3
Page 2 of 17
1
2.0
SMART METER PROGRAM
2
3
On June 23, 2004, the Minister of Energy issued a directive to the Ontario Energy Board
4
that established targets for the installation of smart meters for all Ontario customers.
5
Hydro One Distribution’s share, based on its proportionate share of customers in the
6
Province, was 240,000 customers by the end of 2007 and all 1.2 million customers by the
7
end of 2010. The cumulative number of meters that have been installed as of year-end
8
2008 is 706,450 meters. The planned installation for 2009 is an additional 370,000 smart
9
meters. In 2010 we plan to install 115,000 smart meters in locations that are feasible
10
using current technology. This will complete meter installations except for normal growth
11
and service changes.
12
13
Hydro One Distribution is accountable for owning and installing the smart meters,
14
collecting customer metering data over a telecommunications network (“AMRC” and
15
“WAN”) to a computer application (“AMCC”), passing daily hourly consumption data to
16
the data warehouse of the IESO (which has been appointed as the Smart Meter Entity -
17
"MDMR"), and receiving the time-of use data back for customer billing purposes.
18
19
Hydro One Distribution's plan for the deployment of smart meters has been developed to
20
ensure the highest long term value for customers. Our strategy and operating principles
21
seek to protect the investment from early obsolescence, while at the same time
22
recognizing and balancing the inherent risks associated with new technology and large
23
projects.
24
solution that meets the Ministry of Energy’s requirements and is an enabler for other
25
business processes and transformations.
Accordingly, Hydro One Distribution's smart metering plan is to deploy a
26
27
Hydro One Distribution has previously provided to the Board its smart meter plans (EB-
28
2006-0246), where it outlined its assessment of minimum functionality and the required
29
architecture; its procurement process and contracts with vendors; updated plans for smart
Filed: July 13, 2009
EB-2009-0096
Exhibit F1
Tab 1
Schedule 3
Page 3 of 17
1
meter deployment; risk assessment and mitigation plans; and the associated costs.
2
Detailed evidence describing this work was filed in the EB-2007-0063, EB-2007-0681
3
and EB-2008-0187 proceedings.
4
5
3.0
CAPITAL EXPENDITURES
6
7
The Smart Meter Funding Adders for 2010 of $2.17 and for 2011 of $4.45 per metered
8
customer per month are predicated on Hydro One Distribution's capital spending
9
requirement of $103.1 million for 2010 and $44.4 million for 2011 and also reflect
10
activities which are mainly associated with the minimal elements. These activities, which
11
account for $77.0 million of the $103.1 million in 2010 and $19.0 million of the $44.4
12
million in 2011, include the following work:
13
•
technology;
14
15
Installing an additional 115,000 residential smart meters where feasible with current
•
Begin to install smart meters for >50kW customers starting where Measurement
16
Canada field trips are required and then ramping up to 1,875 in 2010 and 3,000 in
17
2011.
18
•
Building and expanding the advanced metering regional collector ("AMRC") and
19
repeaters, and underlying networks to accommodate all meters coming on- stream;
20
and
21
•
Commissioning and placing into service, hardware and software for the advanced
22
metering control computers ("AMCC") to enable them to communicate and transmit
23
quality meter data to and from the meter data management and meter data repository
24
(MDM/R) and the Company’s CIS.
25
26
There is $26.1 million of incremental functionality activities included in the $103.1
27
million capital spend in 2010, and $25.4 million of incremental functionality activities
28
included in the $44.4 million capital spend in 2011. The associated activities include
Filed: July 13, 2009
EB-2009-0096
Exhibit F1
Tab 1
Schedule 3
Page 4 of 17
1
ensuring the effective use of the smart meters to provide time-differentiated billing to
2
customers as well as providing Hydro One Distribution the ability to leverage its AMI
3
system for other business benefits. Specific activities include:
4
5
•
Upgrades to our CIS system to provide for Time of Use billing and related required
6
settlement changes. This aspect of the Smart Meter program is rooted in the
7
government’s desire and directive to create a conservation culture where time of use
8
rates are an integral part;
9
•
Integration of the end to end systems including business process redesign and
10
optimizing the handling of transactions and exceptions. This integration ties the AMI
11
systems with the IESO’s MDMR and Hydro One Distribution’s CIS system to
12
provide ongoing synchronization functionality as well as to enable the collection of
13
time differentiated consumption data required for TOU billing; and
14
•
Integration of super capacitors in meters and batteries in the regional collectors
(AMRC) that enable real time outage reporting after and during power outages.
15
16
17
The full business plan justification for incremental functionality was provided in detail as
18
part of the EB-2007-0681 proceeding in Exhibit D1, Tab 3, Schedule 2, pages 27 to 29.
19
20
Table 1 provides annual Capital dollar expenditures.
21
22
4.0
OPERATION, MAINTENANCE & ADMINISTRATION (OM&A)
23
24
The total operating, maintenance and administration expenditures are $15.4 million in
25
each of 2010 and 2011. These figures include $7.6 million in 2010 and $8.0 million in
26
2011 of costs that meet minimal functionality requirements.
27
expenditures will be focused on:
28
•
Maintaining and operating hardware, software and software licenses;
These OM&A
Filed: July 13, 2009
EB-2009-0096
Exhibit F1
Tab 1
Schedule 3
Page 5 of 17
1
•
Wide Area Network;
2
3
Telecommunication charges associated with operating the Local Area Networks and
•
Maintaining smart meters that have been placed into service since 2009;
4
There are planned OM&A expenditures of $7.8 million in 2010 and $7.4 million in 2011
5
that exceed minimum functionality specifications. These OM&A expenditures will be
6
focused on:
7
•
management (including staff training) and customer communication related work; and
8
9
•
Responding to higher customer inquiries pre- and post-installation of smart meters on
customer premises and the implementation of TOU rates.
10
11
Managing, developing and implementing business process redesign, change
•
Maintaining the changes required to the CIS system (new processes, workflow and
12
tariffs) and the systems and interfaces necessary to integrate to the AMCC and the
13
IESO’s meter data management and repository (MDM/R).
14
15
Table 1 provides monthly OM&A and capital expenditures in 2010. Table 2 provides
16
OM&A and capital expenditures per month, per meter in 2010. Table 3 provides
17
monthly OM&A and capital expenditures in 2011. As all smart meters will be installed
18
by year end 2010, a table cannot be provided showing expenditures per meter in 2011.
19
20
Table 1 – 2010 Number of Meters Installed, Capital Expenditures ($000) and OM&A
21
($000) per month
Jan
22
23
24
Feb
Mar
April
May
June
July
Aug
Sept
#of Meters
Installed
10000 10000 10000 12000 12000 12000 12000 12000 12000
All Meter
Installations
7005
7005
7005
8406
8406
8406
8406
8406
8406
MDM/R
Integration
1471
1471
1471
1765
1765
1765
1765
1765
1765
Customer
Information
System
491
491
491
589
589
589
589
589
589
OM&A
1339
1339
1339
1607
1607
1607
1607
1607
1607
1
$80.6 M= $77.0M (Minimum Functionality) + $3.6 M (exceeding Minimum Functionality).
2
These elements exceeds Minimum Functionality
3
$15.4M = $7.6M (Minimum Functionality) + $7.8M (exceeding Minimum Functionality)
Oct
Nov
Dec
Total
6000
4000
3000
115,000
80,562
1
4203
2802
2102
883
588
441
16,918
295
804
196
536
147
402
5,646
3
15,403
2
2
Filed: July 13, 2009
EB-2009-0096
Exhibit F1
Tab 1
Schedule 3
Page 6 of 17
Table 2 – 2010 Capital Expenditures and OM&A per month per meter ($)
1
All Meter
Installations
MDM/R
Integration
Customer
Information
System
OM&A
Jan
Feb
Mar
April
May
June
July
Aug
Sept
Oct
Nov
Dec
Total
$700.54
$700.54
$700.54
$700.54
$700.54
$700.54
$700.54
$700.54
$700.54
$700.54
$700.54
$700.54
$700.54
$147.11
$147.11
$147.11
$147.11
$147.11
$147.11
$147.11
$147.11
$147.11
$147.11
$147.11
$147.11
$147.11
$49.10
$49.10
$49.10
$49.10
$49.10
$49.10
$49.10
$49.10
$49.10
$49.10
$49.10
$49.10
$49.10
$133.94
$133.94
$133.94
$133.94
$133.94
$133.94
$133.94
$133.94
$133.94
$133.94
$133.94
$133.94
$133.94
2
3
Table 3 – 2011 Number of Meters Installed, Capital Expenditures ($000) and OM&A
4
($000) per month
Jan
Number of
Meters
Installed
All Meter
Installations
AMI
Infrastructure
MDM/R
Integration
WiMax
OM&A
5
6
7
8
9
1
2
Feb
Mar
April
May
June
July
Aug
Sept
0
0
0
0
0
0
0
0
3,158
1,916
1,818
1,942
1,028
1,027
1,637
882
2,490
1,128
1,446
2,251
1,128
1,420
2,462
1,128
1,443
1,396
1,128
1,330
776
1,128
1,265
779
1,128
1,265
476
1,128
1,233
345
1,128
1,219
Oct
Nov
Dec
0
0
0
0
874
1,521
781
1,296
1,506
17,879
2
1,506
319
1,128
1,217
106
1,128
1,194
22
1,128
1,185
18
1,128
1,185
11,440
3
13,540
4
15,402
0
$17.9 M= $17.5M (Minimum Functionality) + $0.4 M (exceeding Minimum Functionality).
This element meets Minimum Functionality.
3
This element exceeds Minimum Functionality
4
$15.4 = $8.0M (Minimum Functionality) + $7.4M (exceeding Minimum Functionality)
10
11
5.0
SMART METER FUNDING ADDER CALCULATION
5.0.1
OVERVIEW
12
13
14
15
The following output sheets from the model applied by Hydro One Distribution to
16
determine the 2010 Smart Meter Funding Adder of $2.17 and the 2011 Smart Meter
17
Funding Adder of $4.45 per metered customer per month are included as Appendices to
18
this Exhibit:
19
Total
1
3
Filed: July 13, 2009
EB-2009-0096
Exhibit F1
Tab 1
Schedule 3
Page 7 of 17
1
Appendix A “Smart Meter Costs” lists the in-service additions and OM&A
2
costs as well as the cost of capital assumptions, the associated interest rates and
3
the tax rates used for the calculations.
4
5
Appendix B “Smart Meter Revenue Requirement Calculation 2010 and
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2011” provides the detailed calculation of such.
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8
Appendix C “PILs Calculation 2010/2011” provides the detailed calculation of
9
such.
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11
Appendix D “Smart Meter Average Net Fixed Assets 2010/2011” provides the
12
detailed calculation of such.
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14
Appendix E “Smart Meters UCC for PILs Calculation” provides the detailed
15
calculation of such.
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17
The model output has also been electronically submitted to the Board under separate
18
cover.
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20
5.0.2
METHODOLOGY AND ASSUMPTIONS FOR CALCULATION OF
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FUNDING ADDER
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23
The methodology applied to determine the 2010 Smart Meter Funding Adder of $2.17
24
and the 2011 Smart Meter Funding Adder of $4.45 per metered customer per month is
25
consistent with that applied to determine the 2009 approved Smart Meter rate adder of
26
$1.65 per metered customer per month, which is currently in effect and will be replaced
27
by the new funding adder when approved.
28
Filed: July 13, 2009
EB-2009-0096
Exhibit F1
Tab 1
Schedule 3
Page 8 of 17
1
The 2010 Smart Meter Funding Adder of $2.17 per metered customer per month recovers
2
the return on in-service Smart Meter program capital in 2009 of $142.7 million and 2010
3
of $143 million and the related 2010 OM&A of $15.4 million. The 2011 Smart Meter
4
Funding adder of $4.45 per metered customer per month recovers the return on the
5
aforementioned in-service capital plus the 2011 amount of $61.7 million and the related
6
2011 OM&A of $15.4 million.
7
8
Note that as outlined in Exhibit D1, Tab 1, Schedule 1, at the end of 2008, Hydro One
9
had exceeded 50% penetration of smart meters within its service area. As a result, in
10
keeping with OEB Guideline G-2008-002 Smart Meter Funding and Cost Recovery, in
11
this cost of service application, Hydro One is requesting that costs for all smart meters
12
installed as of December 31, 2008 be included in ongoing operations and placed into rate
13
base on January 1st, 2010. Consequently, $92.0 million of smart meter in-service
14
additions are not included in the calculation of the Smart Meter Funding Adder for 2010
15
and 2011.
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17
The cost of capital assumptions, the associated interest rates and the tax rates applied to
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determine the smart meter funding adder are consistent with Exhibit B2, Tab 1, Schedule
19
1.
Filed: July 13, 2009
EB-2009-0096
Exhibit F1
Tab 1
Schedule 3
Page 9 of 17
1
2
Appendix A
Filed: July 13, 2009
EB-2009-0096
Exhibit F1
Tab 1
Schedule 3
Page 10 of 17
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2
Appendix B
Filed: July 13, 2009
EB-2009-0096
Exhibit F1
Tab 1
Schedule 3
Page 11 of 17
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2
Appendix B (continued)
Filed: July 13, 2009
EB-2009-0096
Exhibit F1
Tab 1
Schedule 3
Page 12 of 17
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2
Appendix B (continued)
Filed: July 13, 2009
EB-2009-0096
Exhibit F1
Tab 1
Schedule 3
Page 13 of 17
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2
Appendix B (continued)
Filed: July 13, 2009
EB-2009-0096
Exhibit F1
Tab 1
Schedule 3
Page 14 of 17
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2
Appendix C
Filed: July 13, 2009
EB-2009-0096
Exhibit F1
Tab 1
Schedule 3
Page 15 of 17
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2
Appendix D
Filed: July 13, 2009
EB-2009-0096
Exhibit F1
Tab 1
Schedule 3
Page 16 of 17
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2
Appendix D (continued)
Filed: July 13, 2009
EB-2009-0096
Exhibit F1
Tab 1
Schedule 3
Page 17 of 17
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2
Appendix E
Filed: July 13, 2009
EB-2009-0096
Exhibit F1
Tab 2
Schedule 1
Page 1 of 2
PLANNED DISPOSITION OF REGULATORY ASSETS
1
2
3
1.0
INTRODUCTION
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5
The purpose of this evidence is to outline the planned disposition of Regulatory Assets.
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7
2.0
PLANNED DISPOSITION OF REGULATORY ASSETS
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9
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Hydro One Distribution is requesting approval to refund over a two year period the Regulatory
Asset total balance of $(25.8) million, or $(12.9) million per year.
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12
Hydro One Distribution is requesting disposition of Regulatory Asset balances up to
13
December 31, 2009. Balances as of December 31, 2009 are reasonably predictable. For the
14
purposes of this filing, December 31, 2009 was chosen as it is assumed approved Distribution
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rates will be in place at the beginning of January 2010.
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17
Hydro One Distribution's requested refund to customers of $(25.8) million is detailed in
18
Table 1:
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Filed: July 13, 2009
EB-2009-0096
Exhibit F1
Tab 2
Schedule 1
Page 2 of 2
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2
3
Table 1
Distribution
Disposition of Regulatory Asset Balances ($ Millions)
4
Description
Retail Cost Variance Account
Smart Meter Minimum Functionality Under-recovery up
to Dec 31, 2008
Smart Meter Exceeding Minimum Functionality Underrecovery up to Dec 31, 2008
Retail Settlement Variance Accounts
Regulatory Asset Recovery Phase I
Total Requested for Disposition
Balance
Dec 31, 2009
(1.9)
0.9
1.1
(2.9)
(23.0)
(25.8)
5
6
Hydro One Distribution is requesting to refund to customers the amounts detailed in Table 1
7
over a two year period.
8
9
A Regulatory Asset Recovery Account will be established for any difference between the
10
amount of Regulatory Assets approved and the actual value of the Regulatory Assets detailed
11
above as at December 31, 2009. This variance will continue to be tracked and will be interest
12
improved on a monthly basis (using a simple interest calculation) at the OEB approved rate.
13
This account will be reported to the Board on a quarterly basis consistent with the Electricity
14
Reporting and Record Keeping Requirements.