Financial Information Act Return - BC Hydro

Notes to Consolidated Financial Statements
For the Years Ended March 31, 2003 and 2002
amortization method used in the prior year was over the weighted average term to maturity of the related
debt portfolio.
Depreciation
Capital assets in service are depreciated on an individual or a pooled basis over the expected useful lives
of the assets, generally using the straight-line method.
The expected useful lives, in years, of BC Hydro’s main classes of capital assets are:
Generation
Hydraulic 50 – 100
Thermal 10 – 50
Distribution 30 – 50
Transmission lines 35 – 100
Substations 20 – 50
Buildings 45 – 50
Equipment 3 – 20
Service vehicles 7 – 20
Sundry 20 – 45
Finance Charges Capitalized
Finance charges are capitalized on construction in progress at rates equivalent to BC Hydro’s average annual
cost of borrowing (2003 – 5.59 per cent; 2002 – 5.82 per cent). The rate takes into consideration annual
interest costs plus amortization of foreign exchange translation adjustments and amortization of
premiums, discounts and issue costs.
Capital Assets
Capital assets in service are recorded at cost which includes materials, direct and indirect labour, an
appropriate allocation of administration overhead and finance charges capitalized during construction.
Capital assets in service include the cost of plant financed by contributions in aid of construction and
contributions arising from the Columbia River Treaty. Upon retirement or disposal, any gain or loss is
charged to income for assets depreciated on an individual basis, or to accumulated depreciation for assets
depreciated on a pooled basis.
Unfinished construction consists of construction in progress and the unamortized balance of studies and
abandoned or indefinitely deferred projects. Costs of construction in progress are transferred to capital
assets in service when the asset is substantially complete and capable of operation at a significant level of
capacity.
Costs of studies and abandoned or indefinitely deferred projects are deferred and amortized on a straightline
basis over five years where it is expected that the costs will be recovered through future rates. If the
costs of an abandoned or indefinitely deferred project will not be recovered through continuing operations,
the costs related to the project, including overhead and interest during construction, are expensed.
Temporary Investments
Temporary investments consist of cash and units of a short-term unitized bond fund that are valued at the
lower of cost or market.
Materials and Supplies
Materials and supplies are valued at average cost less provisions for decline in value to net realizable value.