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
69.0 Reference: Project Costs and Benefits
Response:
Exhibit No. B-1, Tab 5.0, Section 5.2.3, p. 75
Submission Date:
October 5, 2012
Page 155
69.1 Explain why the Smart Meter depreciation rate of five percent was based on a
20-year life when Toronto Hydro was based on a straight-line depreciation basis
using a 15-year life and the economic useful life would be similar.
The Company’s estimate of the economic useful life of the smart meters was based on the
manufacturer’s recommendations. CENTRON OpenWay meters are designed to have a service
life of 20 years. Accelerated life testing of CENTRON OpenWay meters suggests that the great
majority of those meters will last to or beyond the 20-year design life. Included as Attachment
BCUC IR1 69.1, is a document from Itron provide more detail regarding accelerated life testing.
The Company also noted that BC Hydro used a 20-year life in their Smart Metering &
Infrastructure Program Business Case and that FortisAlberta is using a 25 year life for their
meters.
Toronto Hydro used a 15 year life as directed by the Ontario Energy Board in their “Accounting
Procedures Handbook Frequently Asked Questions” of December 2010. The complete quote is
below and it notes that the 15 year useful life will apply until “the distributor presents an
independent depreciation study and the Board accepts a different useful life as more
appropriate.” As such it appears that even in the eyes of the Ontario Energy Board the question
of useful life is not certain.
The useful life of smart meters used for regulatory purposes in the rate setting process is
15 years. For regulatory accounting purposes, 15 years useful life on a straight-line
basis is used to calculate and record depreciation of in-service smart meters recorded in
Account 1555, and for the smart meters recorded in Account 1860, Meters, which were
transferred from Account 1555 on disposition of the account balance. This applies until
such time as the distributor presents an independent depreciation study and the Board
accepts a different useful life as more appropriate.
Please also refer to the response to BCUC IR1 Q89.5.