FortisBC Inc. (FortisBC) Application for a Certificate of Public ...

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FortisBC Inc. (FortisBC or the Company)
Application for a Certificate of Public Convenience and Necessity
for the Advanced Metering Infrastructure Project
Response to British Columbia Utilities Commission (BCUC or the Commission)
Information Request (IR) No. 1
Submission Date:
October 5, 2012
Page 135
project, with no portion of the proposed system becoming functional. Software systems,
portions of the communications network and some meters will be installed and functional by the
end of 2014, attracting a portion of the new operating costs. By the end of 2015 the entire
system will be functional, attracting the full forecast operating costs.
Response:
58.2 Please recalculate the NPV of the “Net AMI” project assuming the following
individual scenarios:
• New Operating Costs (Line 46) – three percent increase per year,
commencing in 2016.
• New Operating Costs (Line 46) – five percent increase per year,
commencing in 2016.
• New Operating Costs (Line 46) of $875 thousand in 2013 and $1,529
thousand in 2014 and 2015, increasing by five percent per year,
commencing in 2016.
• New Operating Costs (Line 46) of $875 thousand in 2013 and $1,529
thousand in 2014 and 2015, increasing by three percent per year,
commencing in 2016.
For this question, please provide the analysis supporting the NPV estimation,
state all assumptions used, and comment on the likelihood of each event
occurring.
The Company has numbered the scenarios listed above as:
• Scenario 1 New Operating Costs (Line 46) – three percent increase per year,
commencing in 2016;
• Scenario 2 New Operating Costs (Line 46) – five percent increase per year,
commencing in 2016;
• Scenario 3 New Operating Costs (Line 46) of $875 thousand in 2013 and $1,529
thousand in 2014 and 2015, increasing by five percent per year, commencing in
2016;
• Scenario 4 New Operating Costs (Line 46) of $875 thousand in 2013 and $1,529
thousand in 2014 and 2015, increasing by three percent per year, commencing in
2016.