Le 18 septembre 2008
No de dossier : R-3677-2008
Demande de renseignements no 1 d’OC à HQD
Page 1 de 14
DEMANDE DE RENSEIGNEMENTS NO 1 D’OPTION CONSOMMATEURS (OC) À
HYDRO-QUÉBEC DISTRIBUTION (HQD)
DEMANDE RELATIVE À L'ÉTABLISSEMENT DES TARIFS D'ÉLECTRICITÉ POUR
L'ANNÉE TARIFAIRE 2009-2010
R-3677-2008
1.
Reference:
(i)
HQD-1, Document 1, page 5, lines 11-13
Question:
1.1.
2.
Please provide a schedule setting out the derivation of the $13 M savings in interest
charges. Are the savings all for 2009?
Reference:
(i)
HQD-1, Document 1, page 6, .lines 26-28
Questions:
2.1.
Please provide the materials/forecasts that support the estimated annual rate increases of
2% for the period 2009-2011.
2.2.
Does the 2% estimated rate increase for 2011 include the impact on HQD’s financial
reporting of applying the IRFS, which is to be in effect that year?
3.
References:
(i)
(ii)
HQD-7, Document 2, Table 4
HQD-2, Document 1, Table 1
Question:
3.1.
Please reconcile the 2008 and 2009 Special Contract sales volumes reported in the two
references. For example, reference (i) reports a value of 27,121 GWh for 2009, while
reference (ii) reports a value of 28,610 GWh.
Le 18 septembre 2008
No de dossier : R-3677-2008
Demande de renseignements no 1 d’OC à HQD
Page 2 de 14
4.
Reference:
(i)
HQD-4, Document 2, page 9, lines 8-20
Question:
4.1.
5.
Is HQD aware of any other distributors (natural gas or electricity) that have variance
accounts to record the difference between actual revenues and revenues based on
weather-normalized sales? If so, please indicate who they are and how they manage the
outstanding balance in the variance account.
Reference:
(i)
HQD-4, Document 2, page 7, line 22 to page 8, line 2 & page 9,
lines 16-19
Question:
5.1.
6.
Why is HQD proposing to recover all of the variance attributable to the difference in
weather normalization methodologies over 1 year (i.e. 2009) but recover any remaining
balance over a 5-year period?
Reference:
(i)
HQD-4, Document 2, page 9, lines 21-25
Question:
6.1.
7.
Please confirm that the following understanding of HQD’s proposal is correct. If not,
please explain. For 2010/11 rates, HQD will include in the revenue requirement:
ƒ
The $13 M amortization of the December 2008 balance (after removal of weather
normalization differences), and
ƒ
An amortization of the 2008 variance between actual revenues for transmission and
distribution and revenues based on weather normalized 2008 sales using a 5 year
amortization period.
Reference:
(i)
HQD-4, Document 4, page 6, lines 13-15
Question:
7.1.
Please provide a copy of the 2007 Annual Report and page references as to where in the
document the actual use of the provision for operating cost variances is discussed.
Le 18 septembre 2008
No de dossier : R-3677-2008
Demande de renseignements no 1 d’OC à HQD
Page 3 de 14
8.
Reference:
(i)
HQD-4, Document 4, page 8, lines 13-15
Question:
8.1.
9.
Please outline BCHydro’s proposal with respect to recovery of costs posted to this
deferral account.
Reference:
(i)
HQD-4, Document 4, page 10, lines 7-20
Questions:
9.1.
Please confirm whether the reference in footnote #42 is page 49 or 45.
9.2.
What is the current service interruption threshold based on the proposed 2.5,β criteria?
9.3.
Please provide (in graphic form) the daily continuity indexes for each of the past five
years excluding catastrophic events.
9.4.
Apart from the 1998 ice storm, were any other actual events over the past 5 years
excluded from the analysis and, if so, what were they?
9.5.
Please provide the threshold if the 2.5,β criteria was used but all days (including those
with catastrophic events) were included in the analyses.
9.6.
Please explain what definition was used to identify those catastrophic events that would
be excluded from the determination of the threshold.
9.7.
Please explain why catastrophic events were excluded from the determination of the
threshold.
9.8.
The Application states that the proposed threshold was based on observations made by
several companies that have joined the IEEE. Please provide their names and their
“observations”.
9.9.
What events over the past 5 years would meet the current threshold value and what was
the continuity of service index for those events?
9.10. If multiple but separate events (i.e., separate causes) occur on the same day must the
continuity of service associated with an individual event meet threshold for it to be
defined as a “major outage” or do all events occurring on that day qualify as “major
outages”?
Le 18 septembre 2008
No de dossier : R-3677-2008
Demande de renseignements no 1 d’OC à HQD
Page 4 de 14
9.11. In those cases where a single event leads to outages for more than one day and for some
days (i.e. towards the end of the restoration activity) the continuity index does not exceed
the threshold, is a “major outage” deemed to have occurred that day?
9.12. Would an event ever be considered major and subject to exceptional treatment if the daily
continuity index was below the threshold but the event lasted for a significant number of
days? If yes, please explain.
10. Reference:
(i)
HQD-4, Document 4, page11, lines 1-5
Questions:
10.1. Is an emergency plan for re-establishment of service triggered only for “major outages”
or in case of any outage on the system?
10.2. If for “major outages” only, does HQD use the same definition for a major outage for
purposes of triggering an emergency plan as described in section 2.2.1? If not, what
definition is used?
10.3. If for all outages, are the two different cost centres (per lines 3-5) created in all such
circumstances and are the costs for all outage tracked accordingly?
10.4. If for all outages, please provide the annual expenses (i.e., OM&A) associated with
outages for each year from 2001-2007.
10.5. What is HQD’s policy with respect to what types of costs are capitalized versus expensed
during restoration from an outage?
11. Reference:
(i)
HQD-4, Document 4, page 15, Table 1 and lines 20-24
Questions:
11.1. Does Table 1 set out the number of major events or the number of days when major
events occurred?
11.2. If the Table sets out the number of major events and any of the associated outages lasted
for more than one day, is it a major outage event if the continuity index is exceeded for
just one day?
11.3. How is an event lasting more than one day assessed to determine if has created a “major
outage”?
Le 18 septembre 2008
No de dossier : R-3677-2008
Demande de renseignements no 1 d’OC à HQD
Page 5 de 14
11.4. If the Table sets out the number of days with major events and the outages associated
with an event last more than one day, is the day only counted if the continuity index for
that day exceeds the threshold? Alternatively, were all days associated with an event
counted as long as there was at least one day where the continuity index exceeded the
threshold?
11.5. Please provide a schedule that sets out (for each year in the table) what the major events
were, the actual days on which each of the major events occurred and what the continuity
index was for each day.
11.6. Are the costs shown in Table 1 the total OM&A costs for all events associated with major
outages? If not, what do the dollars reported represent?
11.7. How would HQD see the provision being established in future years? For example:
ƒ
Would the value for 2010 be set based on the average for 2001 to 2008 (excluding
2004 and 2006)?
ƒ
What would be the criteria for determining whether the value for 2008 should be
included in the “average” as opposed to being deemed “exceptional” and excluded?
11.8. If the provision will change in the future, would the ceiling/threshold for costs to be
included in a separate deferral account also be changed annually?
12. Reference:
(i)
HQD-4, Document 4, page 16
Questions:
12.1. Based on the limited number of years over which the average is determined (i.e., five
when 2004 and 2006 are excluded), why is it reasonable to assume that a provision set at
$8 M would lead to a statistical variation in costs that ranges from 0 to $16 M?
12.2. Put another way, why is it reasonable to assume (as stated on page 17) that if the
threshold is set at $16 M there is a symmetrical risk of overearnings and shortfalls around
$8 M?
12.3. As opposed to the mechanism described in section 4.2, please discuss the pros and cons
of using a Variance Account approach. Under such an approach HQD would include in
each year’s revenue requirement an “annual provision” but then also maintain a variance
account which would track the difference between the provision and actual “major
outage” costs and refund/recover the difference to/from customers in the future.
Le 18 septembre 2008
No de dossier : R-3677-2008
Demande de renseignements no 1 d’OC à HQD
Page 6 de 14
13. Reference:
(i)
HQD-11, Document 1, page 3, lines 5-8
Questions:
13.1. Please confirm that the recovery of the deferral account balances related to weather
normalization is a “new” cost for 2009 for which the cost allocation treatment has not
been dealt with in previous HQD applications.
13.2. Are there any other “new costs” elements for 2009 where the cost allocation treatment
has not been dealt with in previous HQD applications? If so, please identify:
ƒ
What they are,
ƒ
What the 2009 costs are,
ƒ
Where they are include in the cost allocation study (per HQD-11, Document 3) and
ƒ
The rationale for their proposed treatment.
14. Reference:
(i)
HQD-11, Document 1, pages 3-4
Questions:
14.1. Please provide a graph that shows the hourly distribution of post-heritage pool energy
procured over the 2009 calendar year.
14.2. Please provide a graphic that shows the hourly distribution of surplus energy (i.e., not
required for domestic customers) over the 2009 calendar year.
14.3. Please provide a more detailed explanation as to how the revenue from surplus energy
sales are allocated to customer classes.
14.4. If not addressed explicitly in the preceding response please indicate:
ƒ
Are the revenues from the sale of surplus energy allocated initially to the various
hours of the year and, if so, how?
ƒ
If allocated to the various hours of the year, how is each hour’s revenue from the
resale of electricity allocated to customer classes?
Le 18 septembre 2008
No de dossier : R-3677-2008
Demande de renseignements no 1 d’OC à HQD
Page 7 de 14
15. Reference:
(i)
HQD-11, Document 1, pages 5-6
Questions:
15.1. Please provide the detailed calculations underlying the two allocations set out in Table 1
(i.e., Columns (2) and (3)).
15.2. How does HQT determine the portion of the variation in point to point revenues for the
preceding year that is to be allocated to native load (i.e. HQD)? If it is based on an
allocation, does the allocation factor used for native load include all native load
transmission costs or does it exclude the cost of connections?
16. References:
(i)
(ii)
(iii)
HQD-11, Document 1, page 6, Table 2 and lines 9-13
R-3644-2007, HQD-11, Document 1, page 18, Table 2
HQD-12, Document 1, Appendix A, page 171
Questions:
16.1. Please provide a schedule that sets out the changes between the 2008 values in references
(i) and (b) and indicate for each the basis for the change with reference to the Régie’s
decision D-2008-024.
16.2. Please confirm that the results for 2008 have not been adjusted for any cost allocation
methodology changes (in contrast to the adjustments that were made in R-3644-2007 per
reference (ii)).
16.3. Please re-do Table 2 (reference (i)) with the following change – exclude the pass-on
account refund/recovery from the 2008 and 2009 cost of service values.
16.4. Please re-do Appendix A (reference (iii)) using the 2008 and 2009 cost of service values
(and allocation) from the previous question.
17. Reference:
(i)
HQD-12, Document 1, page 15, lines 1-22
Questions:
17.1. Please explain more fully why the application of a criterion based on maximum deviation
assumes that the weight given to the “Cost Increase” in the calculation of differentiated
increases is reduced.
Le 18 septembre 2008
No de dossier : R-3677-2008
Demande de renseignements no 1 d’OC à HQD
Page 8 de 14
17.2. Is HQD aware of any utilities that apply a “maximum customer class increase” criterion
when considering differentiated rates? If so, please describe the criteria used.
17.3. In HQD’s view, should the maximum allowed deviation from the average overall rate
increase vary at all depending upon the level of the overall rate increase (relative to
inflation)? Please provide the rationale for the response.
17.4. In HQD’s view, when setting the maximum deviation is it necessary to also consider the
fact that individual customers in a customer class may experience bill impacts different
from the overall class average? Please provide the rationale for the response.
18. Reference:
(i)
HQD-12, Document 1, page 16, Table 3
Questions:
18.1. Please explain how the customer class increases were determined for those classes other
than residential?
18.2. Please provide the details of the calculation of the individual customer class increases for
the case where the residential increase is 3.1%.
19. References:
(i)
(ii)
HQD-12, Document 1, page 16, Table 3
HQD-12, Document 1, page 118, Table 60
Question:
19.1. For each of the rate increase scenarios set out in reference (i), please provide the
distribution of residential bill impacts comparable to that presented in reference (ii).
20. References:
(i)
(ii)
(iii)
HQD-11, Document 3, page 7, Table 1 & page 9, Table 3
HQD-6, Document 1, page 3, Table 1
HQD-7, Document 3, Table 1
Questions:
20.1. Please reconcile the total 2009 cost of service reported in reference (i) {$9,828.5 M} with
the total reported in reference (ii) of $9,930.4 M (i.e., $10,683.5-$753.1).
Le 18 septembre 2008
No de dossier : R-3677-2008
Demande de renseignements no 1 d’OC à HQD
Page 9 de 14
20.2. Please reconcile differences in the following components of the distribution costs
reported in Table 3 of references (i) and Table 1 of reference (iii):
ƒ
Charges de services partagés;
ƒ
Amortissement.
21. Reference:
(i)
HQD-11, Document 4, page 4
Questions:
21.1. Please provide a comparable table based on the currently projected 2009 data.
21.2. During the technical meeting held May 22nd 2008, HQD provided participants with an
example per page 4 of reference (i) with a ‘capacity cost signal’. Please file this example.
22. References:
(i)
(ii)
HQD-12, Document 1, page 13, Table 1
R-3579-2005, HQD-12, Document 3, page 12
Questions:
22.1. Please provide a schedule that sets out how the cross-subsidization indexes were
calculated – a) Before the Increase and b) Following the Increase.
22.2. Please provide a schedule setting out the cross-subsidization ratios by class (based on the
rates and cost approved by the Régie) for the years 2002 through 2008.
23. References:
(i)
(ii)
HQD-12, Document 1, page 14, Table 2 and lines 10-12
HQD-11, Document 1, page 6
Questions:
23.1. Please identify the factors/reasons why the increases for the domestic and small power
classes are higher than average. For example, what trends in their cost of service are
leading to the higher increases?
Le 18 septembre 2008
No de dossier : R-3677-2008
Demande de renseignements no 1 d’OC à HQD
Page 10 de 14
23.2. To what extent are the higher increases for domestic and small power customers
attributable to the fact their loads for 2009 are increasing (over 2008) where as the loads
for the other two classes are decreasing?
23.3. If there was a material recovery of industrial loads in 2010, would the results be
reversed? If not, why not?
24. Reference:
(i)
HQD-12, Document 1, page 16, lines 6-12 and page 18, Table 5
Question:
24.1. Are there any bulk metered apartments or community residences in Table 5? If so, how
many dwelling units are associated with these contracts?
25. Reference:
(i)
HQD-12, Document 1, page 22, Table 9
Questions:
25.1. Please confirm that Table 9 sets out the number of DM contracts (and not the number
dwelling units associated with the contracts).
25.2. Please provide the number of customers assumed for purposes of applying the customer
charge (i.e., sum of contracts x multiplier).
26. References:
(i)
(ii)
HQD-12, Document 1, page 27, Table 14 and page 28, Table 15
HQD-12, Document 1, page 46, lines 5-8
Question:
26.1. Reference (b) states that rate DT is calibrated to be revenue neutral relative to rate D. Is
rate DH similarly calibrated and, if so, is the same customer profile used in both cases? If
not, what profile is used for rate DH?
27. References:
(i)
(ii)
HQD-12, Document 1, page 33, line 19 to page 34, line 4
HQD-12, Document 1, page 34, lines 12-19
Le 18 septembre 2008
No de dossier : R-3677-2008
Demande de renseignements no 1 d’OC à HQD
Page 11 de 14
Question:
27.1. The first reference suggests that departure from cost causality is not sustainable in the
long-term, even if based on the principle of social equity. However, the second reference
suggests that departure from the principle of cost causality is acceptable. Please
reconcile.
28. Reference:
(i)
HQD-12, Document 1, page 36, Table 19
Questions:
28.1. Please indicate what activities are captured by each of the following components of
Customer Service:
ƒ
Collections;
ƒ
Electricity Theft;
ƒ
Remote Communities – Other.
28.2. Do the costs set out in Table 19 include the “cost of bad debt”, i.e., an allowance for
unpaid bills? If yes, in which line is it included and what is the annual provision?
28.3. For purposes of the Alternative Scenario, what aspects or portion of the costs associated
with Collections, Electricity Theft and Telephone Response were excluded?
29. References:
(i)
(ii)
HQD-12, Document 1, page 45, lines 1-12
HQD-14, Document 1, Annexe D, page 57
Questions:
29.1. Please clarify whether the $40/winter-kW is in 2008$ (per reference (ii)) or 2009$ (per
reference (i)).
29.2. Please clarify what is meant by the term “annuité croissante, $2009” (per reference (i)).
Is this meant to be the same as “annuité croissante a l’inflation” (per reference (ii))?
Le 18 septembre 2008
No de dossier : R-3677-2008
Demande de renseignements no 1 d’OC à HQD
Page 12 de 14
30. Reference:
(i)
HQD-12, Document 1, page 48, lines 4-10
Questions:
30.1. Please provide a schedule setting out the derivation of the $1.27/litre.
30.2. What is the estimated cost of crude oil associated with heating fuel oil priced at
$1.27/litre and $1.42/litre?
30.3. Given the comment in footnote #21 why isn’t the break-even point in Table 26 $1.42/litre
as opposed to $1.27/litre?
31. Reference:
(i)
(ii)
HQD-12, Document 1, page 49, lines 15-24
HQD-12, Document 1, page 46, Table 25
Questions:
31.1. What is the additional cost associated with a dual register meter? Please provide the
estimate in terms of both a) installed 2009 cost and b) annualized 2009 cost based on
estimated service life.
31.2. Why was the additional cost of the dual register meter not included in the analysis
presented in Table 25? What would be the impact of including this cost?
32. References:
(i)
(ii)
HQD-12, Document 1, page 54, lines 7-13
HQD-14, Document 1, Annexe D, page 54, Table D-2.7
Questions:
32.1. Why does HQD just use the marginal cost of supply (i.e., fourniture et transport) instead
of full marginal cost when benchmarking the price for the second energy block of the
residential rate?
32.2. Does the 10.97 cents/kWh represent a constant annuity in real or nominal terms? If in
nominal terms (i.e., fixed at 10.97 cents/kWh for 10 years) please restate in “real” terms
(i.e., annuity is escalated each year at inflation).
32.3. Is the 13.80 cents/kWh value for 2018 expressed in 2009$ or 2018$?
Le 18 septembre 2008
No de dossier : R-3677-2008
Demande de renseignements no 1 d’OC à HQD
Page 13 de 14
33. Reference:
(i)
HQD-12, Document 1, page 56
Questions:
33.1. What is the current status of the BCHydro proposal?
33.2. Please update Table 27 as necessary based on the preceding response.
33.3. Please confirm that if HQD were to adopt the BCHydro (proposed) approach to setting
the energy rates for the two blocks, then the energy price differential between the two
blocks would not change materially from year to year (assuming overall rate increases of
roughly 2%/annum).
34. References:
(i)
(ii)
HQD-12, Document 1, page 46, Table 25 and page 57, lines 1-16
R-3644-2007, HQD-12, Document 3, page 55
Preamble:
Last year part of HQD’s rationale for extending the residential demand charge to the summer
months was that there was not a material difference between the avoided costs in the summer
versus the winter (i.e., $10/kW). However, HQD is now utilizing an avoided winter capacity
cost of $40.80/kW.
Question:
34.1. Please comment on whether, with this fourfold increase in seasonal cost difference, it is
still appropriate to extend the demand charge to the summer months. If so, please explain
why.
35. Reference:
(i)
HQD-12, Document 1, page 59, line 12 to page 60, line 7
Question:
35.1. Please confirm that HQD’s current proposals with respect to capacity invoices for DM
customers are exactly the same as those presented to the Régie in R-3644-2007. If not,
please outline and provide the rationale for any changes.
Le 18 septembre 2008
No de dossier : R-3677-2008
Demande de renseignements no 1 d’OC à HQD
Page 14 de 14
36. Reference:
(i)
HQD-12, Document 1, page 118, Table 60
Question:
36.1. Please provide a schedule that sets out the number (not percentage) of Tariff D customers
in each impact range. In doing so, please break the 6% plus row down into 6-7; 7-8; 8-9
and 9-10%.
37. Reference:
(i)
R-3644-2007, HQD-15, Document 8, Question #74 (pages 86-91)
Question:
37.1. Please update the above response for the most recent (2007/2008) billing data.