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
($000s)
Net Present Value of Revenue Requirements at 6.0 percent (16,499)
Net Present Value of Revenue Requirements at 8.0 percent (11,678)
Net Present Value of Revenue Requirements at 10.0 percent (8,084)
97.0 Reference: Project Costs and Benefits
Response:
Exhibit B-1, Tab 3.0, p. 19;
Submission Date:
October 5, 2012
Page 232
Exhibit B-3, Excel Document: “FortisBC – AMI Excel NPV Analysis –
17Aug12”
Revenue Requirement
Exhibit B-1, page 19 notes the following as a benefit of the AMI project:
“Approximately $19 million in savings (on a net present value basis) as evaluated over a
20 year period (associated rate reduction of approximately 1 percent).”
Exhibit B-3, Line No. 5 “Total Revenue Requirement for the Project” includes Line No. 1
“Operating Expenses and Theft Reduction (Net)”. The Theft Reduction is calculated in
Tab “Theft Reduction” and includes the following three factors in the calculation of the
total benefit / cost: revenue margin from paying sites, power purchase costs from theft
sites, and recovered revenue from theft identification.
97.1 Please confirm that the one percent “rate reduction” referenced above refers to
the cumulative percentage decrease in the revenue requirement over 20 years,
as opposed to a one percent reduction in rates. If not confirmed, please explain
otherwise.
Confirmed. This means that customer rates will be lower if AMI is implemented than they will be
otherwise.
97.2 Please confirm that “Total Revenue Requirement for the Project” per Line No. 5
of Exhibit B-3 is intended to represent the net increase / decrease in the revenue
requirement over the 20-year life of the project. If not confirmed, please explain
otherwise.