BC Hydro Annual Report 2001

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• AN INCREASE IN THE VOLUME OF ENERGY PURCHASES REQUIRED TO MEET THE INCREASE IN DEMAND • % 99.99 99.98 99.97 99.96 99.95 99.94 Total sales volumes were 3 per cent, or 2179 GW . h, higher than the prior year, with close to 80 per cent of the increase relating to domestic load growth. The increase in sales volumes was met using generation from the Burrard Thermal Generating Station and energy purchases. This accounted for approximately 10 per cent of the total increase in energy costs. AN INCREASE IN ELECTRICITY TRADE TRANSMISSION COSTS The cost of transmitting energy into the U.S. market increased significantly, largely due to higher California power pool charges and other service costs. A portion of the U.S. transmission charges is based on the market price of energy. Therefore, transmission costs increased as a result of an increase in market prices for energy. AVERAGE SYSTEM AVAILABILITY INDEX (ASAI) 91 92 93 94 95 96 97 98 99 00 01 BC Hydro CEA The ASAI is a measure of system reliability. BC Hydro’s ASAI has remained stable and is consistently better than the Canadian Electricity Association (CEA) composite. In 1998/99, BC Hydro’s Index was lower than the CEA composite because of adverse weather conditions experienced during the year. The winter in 1998/99 was the stormiest November–March period in British Columbia in 27 years. O P E R A T I O N S , M A I N T E N A N C E A N D A D M I N I S T R A T I O N Operations, maintenance and administration expenses (OMA) of $755 million increased $280 million over the prior year. This increase was primarily due to a provision recorded to cover the exposure to uncollectible receivables as a result of the situation with some of our trading partners in California (refer to page 38 for further details). An increase in environmental and maintenance expenditures, together with higher pension costs, also contributed to the increase in OMA expenses. As part of its efforts to be a sustainable energy company, BC Hydro has committed to remove and destroy all PCBs on its properties and equipment situated in sensitive areas within the next several years. As a result, BC Hydro recorded a provision for these estimated expenditures in fiscal 2001. The increase in OMA expenses was also due to costs needed to maintain the company’s aging fleet of assets in order to ensure continued system reliability and to service customer growth. An increase in expenditures was also needed to support the increase in electricity trade activities and to take advantage of market opportunities. Higher pension costs – primarily as a result of a mandatory change in the accounting for employee post-retirement benefits – also resulted in an increase in OMA costs. This change in accounting standards applies to every company that has post-retirement benefit plans, and requires that the cost of these benefits be accounted for on an accrual instead of a cash basis for the years after fiscal 2000. BC Hydro continues to invest in programs and initiatives designed to increase efficiencies and add value for its customers and shareholder.
D E P R E C I A T I O N A N D A M O R T I Z A T I O N Depreciation and amortization was $380 million, compared with $375 million for the previous year. The increase reflects more assets in service due to customer growth and consequent system reinforcement. F I N A N C E C H A R G E S M A N A G E M E N T D I S C U S S I O N A N D A N A L Y S I S | 4 1 2001 2000 CHANGE (MILLIONS OF DOLLARS) $ 559 $ 579 $ 20 Changes: Volume of debt 39 Interest rates (23) Other 6 Foreign exchange (2) Finance charges decreased primarily due to a lower average volume of net debt resulting from the increase in cash flows from electricity trade activities. This decrease was partly offset by the increase in financing costs due to higher short-term interest rates. Canadian interest rates on variable rate debt increased 15 per cent from an average of 4.89 per cent in fiscal 2000 to 5.64 per cent in fiscal 2001. $ 20
Page 1 and 2: B C H Y D R O A N N U A L R E P O R
Page 3 and 4: F I N A N C I A L H I G H L I G H T
Page 5 and 6: M I N I S T E R ' S M E S S A G E G
Page 7 and 8: G R E E N E N E R G Y F O R T H E F
Page 9 and 10: R E T A I N I N G A N D A T T R A C
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Page 17 and 18: A W E A L T H O F W O O D W A S T E
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Page 21 and 22: S H A R I N G O U R W I R E S BC Hy
Page 23 and 24: PHOTO: YELLOW CEDAR DOORS BY ARTIST
Page 25 and 26: O F C O N S E R V A T I O N > P O W
Page 27 and 28: L E A D I N G T H E W A Y M O R E E
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Page 31 and 32: T E A C H I N G C H I L D R E N I T
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Page 35 and 36: P O W E R T E C H L A B S I N C . >
Page 37: F I N A N C I A L S > 35 MANAGEMENT
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Page 58 and 59: N O T E S T O C O N S O L I D A T E
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Page 74 and 75: TOTAL REQUIREMENTS FOR ELECTRICITY
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BC Hydro Annual Report 2001

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