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

BASIS OF THE STUDY
Depreciation. The annual depreciation accrual, and cost of removal rates and the
related calculated requirement for accumulated depreciation and cost of removal were
calculated using the straight line method, the remaining life basis and the average service
life (ASL) procedure. The calculation was based on the attained ages and estimated
service life and net salvage characteristics for each depreciable group of assets.
Service Life and Net Salvage Estimates. The method of estimating service life
consisted of compiling the service life history of the plant accounts and subaccounts,
reducing this history to trends through the use of analytical techniques that have been
generally accepted in various regulatory jurisdictions, and forecasting the trend of survivors
for each depreciable group on the basis of interpretations of past trends and consideration
of Company plans for the future. The combination of the historical trend and the estimated
future trend yielded a complete pattern of life characteristics from which the average
service life was derived. The service life estimates used in the depreciation calculation
incorporated historical data compiled through December 31, 2009. Such data included
plant additions, retirements, transfers and other plant activity.
A general understanding of the function of the plant and information with respect to
the reasons for past retirements and the expected future causes of retirement was obtained
through discussions with operating and management personnel in this study, and previous
site tours of the generation, transmission and distribution facilities of the company.
Throughout these interviews and site tours, an analysis of the accounting procedures and
policies was also undertaken by Gannett Fleming in order to determine the reasonableness
of the historic retirement transactions.
Appendix BCUC IR1 69.4