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

een modified to the Iowa curve 50-R3 for this account which provides a reasonable
interpretation of the historical retirement experience and recognizes the expectation that
future retirements will occur in a similar pattern as the historic retirement activity.
All other accounts, which individually represent less than 2% of the depreciable plant
studied were analyzed using similar methods and considered similar factors.
ESTIMATION OF NET SALVAGE
The estimates of net salvage were based, in part on historical data for the years
1995 through 2009 and in part on the professional judgment of Gannett Fleming. Gross
salvage and cost of removal as recorded to the depreciation reserve account and related to
experienced retirements were used. Percentages of the cost of plant retired were
calculated for each component of net salvage on both annual and five-year moving average
bases. Additionally, the historic trends of the net salvage percentages were compared to
other electric utilities, and were modified based on the judgment and experience of Gannett
Fleming.
Appendix BCUC IR1 69.4
When a utility retires plant, the plant may be: sold to a third party; reused by the
utility for additional service; abandoned in place; or physically removed. In the
circumstances where the plant is sold or re-used a salvage proceed (or positive salvage
amount) is normally recognized. In circumstances where the plant is abandoned in place or
physically removed, a cost of removal expenditure (or negative salvage) is incurred. The
net of these estimated gross salvage proceeds and the estimated costs of removal are
expressed as a percentage of the accounts original cost to determine a net salvage
percentage. In the circumstances where the salvage proceeds exceed the costs of
retirement a net positive salvage percentage exists. In the circumstances where the costs