Darryl J. Seal Consulting
305 Milverton Blvd
Toronto, ON M4J 1V8
May 2006
Original: 2006-05-31
GI-9
Document 2
21 pages
Requête 3587-2005

R
C
AN ESTIMATE OF TOTAL FACTOR PRODUCTIVITY FOR GAZIFÈRE.......... 1
E XECUTIVE S UMMARY ..................................................................................................... 1
TOTAL FACTOR PRODUCTIVITY ESTIMATES FOR GAZIFÈRE..................... 3
B
ACKGROUND
.................................................................................................................. 3
T OTAL F ACTOR P RODUCTIVITY ....................................................................................... 4
E STIMATING TFP FOR G AZIFÈRE ..................................................................................... 4
O
UTPUT
M
EASURES
......................................................................................................... 5
I NPUT M EASURES ............................................................................................................. 7
C REATION OF O UTPUT AND I NPUT I NDICES ...................................................................... 9
S
UMMARY OF
R
ESULTS
.................................................................................................. 10
I
NTERPRETATION OF
G
AZIFÈRE
TFP E
STIMATE
............................................................. 11
DATA APPENDIX.......................................................................................................... 13
i

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Gazifère is proposing the implementation of a mechanism to determine rates for future rate years. Components of the mechanism include consideration for growth in the system, for increases in general price levels (and hence costs) and for future productivity. This report considers estimates of the historical productivity of the company which provides information into the ultimate plan proposed by the Company.
Productivity is generally measured in such plans using Total Factor
Productivity, or TFP. This measure relates changes in the output of company to changes in the inputs used to provide the services. TFP measures of productivity are common in other utility incentive plans in North America and
Europe.
For Gazifère, the historical estimate of TFP involves calculating output and input indices and measuring the changes over time. Output is generally measured either through sales (or in the case of a distribution utility, volumes) or in number of customers. Input variables consider all factors of production which go into the delivery of the firms output. Generally, these are comprised of labour, materials, and capital.
Data on the output and input variables for the period 1987 through 2005 is analyzed for Gazifère. The historical period is relatively recent, so as to be reflective of what might be expected in future years, yet long enough so that year to year variances in the data can be smoothed out. Generally, productivity is a longer term concept as opposed to short term.
The data for Gazifère, depending on the specific data chosen for the output and input components of the estimate, shows a fair degree of variation.
However, when number of customers is the output measure, a fairly consistent estimate of productivity can be established over a reasonable time period.
This estimate ranges from about 0.1% to 2.6%.
Gazifère TFP Estimate 1

It should be noted that the historical estimates of productivity should not be applied directly in any incentive mechanism without some consideration of both the other components of any mechanism, or without regard for the degree of certainty in the values themselves. Evaluating the empirical results in light of the intended use, the expectations for the future, and the overall reasonableness of the incentive mechanism is an extremely important element of any successful incentive plan.
2 Gazifère TFP Estimate

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Gazifère is proposing the implementation of a mechanism to determine revenue requirement for future test years. The chosen mechanism is intended to provide a mechanistic determination of total revenue requirement (adjusted for certain items deemed as being outside the revenue cap mechanism) in place of the more traditional annual cost of service rate filings.
The mechanism is designed to allow for growth in revenue requirement due to general inflationary increases as well as customer growth. It is accepted that both of these drivers impact on the total revenue requirement for the company.
In addition, it is expected that the company will continue to seek productivity improvements which will work to offset some of the increases due to these other factors.
The form of the mechanism therefore takes these three components (inflation, customer growth, and productivity) explicitly into account.
The productivity estimate to be used in the mechanism needs to reflect the overall productivity of the company. The company utilizes both capital and labour in the delivery of its distribution services, and therefore productivity of both of these components need to be reflected in the productivity component of the mechanism.
In Gazifère’s previous O&M mechanism, productivity of labour and materials was reflected in the formula. For the currently proposed mechanism, productivity of capital must be included in the mechanism to account for productivity in this component of the overall revenue requirement.
The remainder of this report details the development of an estimate of Total
Factor Productivity for Gazifère.
Gazifère TFP Estimate 3

The generally accepted methodology of measuring overall productivity is
Total Factor Productivity, more often known by its acronym, TFP. TFP measures the relationship over time between the outputs of a company (or industry, or economy) relative to all of the inputs to production. In the case of
Gazifère, TFP measures the change over time of the relationship between an output measure (either customers or volumes, as discussed in more detail later) and the inputs in providing gas distribution services – namely labour, materials and capital inputs.
Formulaically, TFP can be written as follows:
TFP
= i
+
∆ i x Q j
X j e j where Q is the output measure, X j
are the input measures, and e j
are the input weights. TFP is measured as the change in this index over the period i to i+x.
The preferred approach to measuring outputs and inputs is to measure them in physical units. This avoids the need to account for price inflation when measuring in dollar units
1
.
Total Factor Productivity has been used as a measure of productivity in other utility incentive mechanisms in North America and in Europe. Union Gas employed a TFP estimate in their initial PBR plan (RP-1999-0017) and
Enbridge employed a modified TFP estimate (encompassing only the labour and materials components) in their previous incentive plan. TFP concepts have also been applied in Ontario’s electricity sector, in Canada’s telephone sector, and in the energy sector in Great Britain.
Estimating historical TFP for Gazifère entailed gathering detailed information on outputs and inputs for all factors of production.
1
Measuring in physical units is not without its own problems however. For example labour input as measured by number of employees might not account for the difference in effort required by different employees. However, where possible, physical units are preferred.
4 Gazifère TFP Estimate

One of the key determinations in developing TFP estimates involves choosing the appropriate time period over which to measure productivity. The time frame needs to be sufficiently long in order to remove year-to-year “noise” in the data (which refers to annual fluctuations inherent in data which may cause productivity estimates in a particular year to be skewed. For example, a large capital project in one year may lead to a decrease in estimated productivity in that one year, but is not reflective of overall productivity trends). However, the time period should not be so long that it incorporates productivity from the distant past. Since the objective is to use the productivity estimate in a forward looking incentive plan, productivity which may have occurred 20 or
30 years ago may not be especially indicative of productivity expected to occur over the life of the incentive plan.
The time period is also dictated to some degree by the availability of data.
More recent records of input data are easier to obtain than more distant information.
In the case of the analysis of Gazifère’s productivity, the period of analysis covers the fiscal years 1987 through 2005. This data provides a sufficiently long, yet relevant, time frame over which to estimate productivity trends.
Sub-periods within this 19 year time frame are also analyzed.
Output can be measured in two ways – volumes or customers.
Gazifère provides distribution services to the residential, commercial and industrial markets. Volumes to these markets are shown in the following tables (both non weather normalized and weather normalized).
Gazifère TFP Estimate 5

6
Table 1
Gazifère Volumes - Not Weather Normalized
Fiscal
Year
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
Residential Commercial
57,984
57,518
62,737
62,964
57,592
47,584
50,771
49,280
65,200
55,579
58,267
54,594
44,709
43,458
45,870
45,723
38,905
42,187
36,853
34,647
27,698
28,616
27,809
26,536
24,884
52,118
50,990
54,565
53,131
46,081
51,399
45,466
44,606
40,046
40,490
38,460
36,828
35,090
Industrial
4,555
5,392
5,089
5,520
12,566
11,599
10,473
14,808
66,611
62,279
47,973
28,302
53,880
143,754
145,575
176,502
163,473
117,048
61,895
T-Service
24,938
31,770
38,138
54,540
42,795
115,316
86,316
96,645
22,448
17,943
5,767
6,829
0
0
0
0
0
0
0
Total
150,214
157,644
166,019
163,223
164,399
230,789
193,616
205,901
189,494
179,076
138,726
128,717
136,199
223,007
213,319
245,608
229,742
180,412
121,869
Annual
Growth
-4.7%
-5.0%
1.7%
-0.7%
-28.8%
19.2%
-6.0%
8.7%
5.8%
29.1%
7.8%
-5.5%
-38.9%
4.5%
-13.1%
6.9%
27.3%
48.0%
-
Table 2
Gazifère Volumes - Weather Normalized
1999
1998
1997
1996
1995
1994
1993
1992
Fiscal
Year
2005
2004
2003
2002
2001
2000
1991
1990
1989
1988
1987
Residential Commercial
56,748 61,386
56,491
53,275
61,939
60,630
51,971
50,493
53,102
60,426
58,019
58,477
48,106
46,538
45,679
43,843
41,132
39,058
35,931
33,702
29,275
27,892
27,184
26,786
26,072
55,946
54,295
54,429
51,125
48,542
47,813
44,558
43,493
41,993
39,570
37,691
37,115
36,513
Industrial
4,522
5,339
4,974
5,625
12,557
11,715
10,661
14,858
66,624
62,219
48,040
28,285
53,864
143,718
145,621
176,493
163,462
117,063
61,948
T-Service
24,938
31,770
38,138
54,540
42,795
115,316
86,316
96,645
22,448
17,943
5,767
6,829
0
0
0
0
0
0
0
Total
147,594
155,539
157,017
172,562
163,864
238,610
201,029
212,336
189,180
175,130
143,481
121,985
134,353
220,913
216,889
243,955
228,337
180,964
124,533
Annual
Growth
-5.1%
-0.9%
-9.0%
5.3%
-31.3%
18.7%
-5.3%
12.2%
8.0%
22.1%
17.6%
-9.2%
-39.2%
1.9%
-11.1%
6.8%
26.2%
45.3%
-
As can be seen, volumetric growth in Gazifère’s distribution franchise has not been constant or stable over the 1987-2005 time frame. Part of the reason for changes in year-over-year growth are attributable to weather as changes in annual degree days from year to year can have significant impacts on heat sensitive demand. The large user classes also contribute to the variances as
Gazifère’s industrial demand has been impacted by variations in industrial output and plant closures.
Gazifère TFP Estimate

The number of customers for Gazifère (by customer class) are shown in the following table.
Table 3
Gazifère Customers
1995
1994
1993
1992
1991
1990
1989
1988
1987
Fiscal
Year
2005
Residential Commercial
26,951 2,731
2004
2003
2002
2001
2000
1999
1998
1997
1996
25,509
23,934
22,633
21,797
20,834
19,748
18,579
17,413
16,453
2,681
2,614
2,562
2,533
2,447
2,359
2,293
2,196
2,100
15,643
14,368
12,918
11,591
10,092
9,507
9,333
9,192
9,080
2,042
1,964
1,862
1,735
1,679
1,621
1,551
1,461
1,366
Industrial
6
6
6
4
7
8
8
8
11
10
10
10
12
12
12
12
14
15
16
T-Service
7
7
8
10
6
6
6
5
1
1
1
1
0
0
0
0
0
0
0
Total
29,695
28,203
26,562
25,209
24,343
23,295
22,121
20,885
19,621
18,564
17,696
16,343
14,792
13,338
11,783
11,140
10,898
10,668
10,462
Annual
Growth
5.3%
6.2%
5.4%
3.6%
4.5%
5.3%
5.9%
6.4%
5.7%
4.9%
8.3%
10.5%
10.9%
13.2%
5.8%
2.2%
2.2%
2.0%
Customer growth has been much more stable (though not constant) than volumetric growth, as is evident comparing annual growth rates with those for non-normalized and normalized volumes. For this reason, and the fact that much of Gazifère’s incremental resources are related to the customer growth
(as opposed to volumetric growth, where incremental volumes do not have as large an impact on resources), customers is the preferred output measure for the TFP analysis.
As described earlier, the inputs into the TFP measure for Gazifère include labour, materials and capital.
Labour data for Gazifère is measured by the number of employees in each year. Employees are separated into supervisory and non-supervisory employees and weighted by labour costs (salaries plus benefits) to determine the labour input index.
Gazifère TFP Estimate 7

Materials include all non-capital and non-labour costs for Gazifère. They are estimated as the difference between total O&M costs and the labour component. Materials costs are originally provided in nominal dollar terms, and so are converted to real (or constant) dollars using the Quebec CPI index.
The capital input is often the most difficult input variable to construct for TFP estimates. For the purposes of TFP analysis for Gazifère, two different approaches were applied.
The first method using accounting data for each asset class together with accumulated and annual depreciation, price escalation estimates, and cost of capital, to develop a financial measure of capital employed. The second method uses a physical count of assets employed in each year (for example, the total number of meters is one asset category).
Data on asset values for the following categories was employed for the accounting measurement: Land, Right-of-Way, Structures & Improvements,
Services, House Regulators, Mains, Stations, Meters, Leasehold Improvement,
Equipment and Furniture, Transportation Equipment, Heavy Work
Equipment, Tools & Work Equipment, Communication Equipment, Computer
Equipment, and Other Capital.
For each asset category, an opening balance for 1987 was determined from records for net book value. For each subsequent year, assets were increased by additions, decreased for retirements, and adjusted for annual depreciation.
These asset values were converted to real dollars using estimates of price inflation for each category
2
. Each asset class was then weighted by a cost share comprised of data on taxes, depreciation and weighted average cost of capital, to determine the capital input index. The data appendices provide further detail on the data used.
The alternative to using accounting data for the capital measure is using physical plant data. For Gazifère, physical plant data is readily available for
2
Price deflators used were Canadian Gross Domestic Produce Price Index, Industrial Product
Price Indices specific to certain asset categories, and price indices constructed based on the company’s own cost data.
8 Gazifère TFP Estimate

services, mains and meters. These assets account for more than 90% of the total assets employed.
Similar to the accounting estimate of capital, the physical measure uses a base of installed services, mains and meters in 1987 and adjusts annually for additions and retirements. Weighting of these asset classes is based on the costs associated with each class, similar to the financial capital index.
It should be noted that the accounting data for the various asset categories obtained from the company contained some anomalous values (such as negative depreciation values and negative retirement values) which was beyond the scope of this report to review and evaluate in detail. For that reason, the TFP results using the accounting data for the capital input are perhaps less reliable than those obtained using the physical plant data.
The calculation of TFP requires inputs and outputs to be grouped into indices for each.
The output index used for Gazifère’s TFP calculation is either customers (the preferred measure) or volumes. The data for each of the customer classes is weighted by a two year moving average of customers (or volumes) in the class to smooth annual changes. Annual growth is calculated as the difference in natural logs for each year
3
. From this growth, the index is constructed, with the base year, 1987, set at 100.
The calculated output indices using customers is shown in Data Appendix 1.
The calculated output indices using volumes – both non-normalized and weather normalized are shown in Data Appendix 2.
The input index is calculated using the indices for labour, materials and capital. As indicated previously, the labour index is constructed from employment data on full time and part time staff. The employee numbers are weighted by total costs (salaries plus benefits) for each category of employment, summed, and growth rate calculated. Data Appendix 3 shows the labour data calculations.
3
Eg: Annual growth in Output
(t)
= ln(customers
(t)
) – ln(customers
(t-1)
).
Gazifère TFP Estimate 9

The materials index, also described previously, is the total O&M less the labour costs. Data Appendix 4 shows the materials cost index.
The capital index is calculated using both the accounting data and the physical data. Data Appendix 5 shows the calculation using the accounting data, while
Data Appendix 6 shows the calculation using the physical data.
Finally, the input index is constructed by combining the three input indices.
The indices are each weighted by their respective cost contribution. The calculations are shown in Data Appendix 7.
The results of estimating TFP for Gazifère are summarized in the following table. The table shows the annual productivity change and averages for various sub-periods, first using Customers as the output index and also using
Volumes (non-normalized and normalized) as the output index. Additionally, the results are shown using both the accounting data and the physical data for the capital index.
Table 4
1995
1994
1993
1992
1991
1990
1989
1988
1987
2001
2000
1999
1998
1997
1996
Fiscal
Year
2005
2004
2003
2002
Output Index: Customer
Accounting
Capital
151.0
7.2%
Physical
Capital
124.5
140.4
1.8%
137.9
2.2%
134.8
1.6%
124.7
121.9
122.8
132.7 -12.2%
149.9
13.1%
131.6
10.3%
118.7
1.2%
117.3
1.2%
115.8
-0.1%
124.2
123.2
123.1
116.2
116.8
114.2
115.9
4.5%
110.8
0.9%
109.8
3.5%
106.0 -13.2%
121.0
7.3%
112.4
6.3%
105.6
5.5%
99.9
-0.1%
100.0
113.6
108.2
105.7
102.5
98.0
99.9
101.7
98.7
100.0
Averages
2005-2001
2005-1996
2005-1991
2005-1988
0.1%
2.6%
2.0%
2.3%
-0.5%
2.2%
0.6%
4.8%
2.4%
3.0%
-0.1%
2.3%
-0.8%
-1.1%
0.8%
0.0%
5.8%
4.5%
-1.9%
-1.8%
3.0%
-1.3%
10
Output Index: Non-Normalized Volumes
Accounting
Capital
114.9
-2.8%
Physical
Capital
94.8
-10.1%
118.1
129.7
131.3
-9.3%
-1.3%
-2.9%
104.9
114.6
119.6
-8.9%
-4.3%
-5.7%
135.2
-53.2%
230.1
25.5%
178.3
-1.6%
181.3
172.6
4.9%
1.4%
170.2
21.4%
126.6
-40.1%
189.1
12.5%
166.9
177.4
171.8
-6.1%
3.2%
2.4%
167.8
22.0%
137.4
4.3%
131.6
43.7%
85.0
-59.1%
153.4
-21.2%
189.6
-12.4%
214.6
10.8%
192.6
27.6%
146.2
37.9%
100.0
134.6
148.3
185.5
144.3
100.0
4.7%
128.5
45.2%
81.7
-59.6%
-3.4%
153.5
-21.6%
190.6
2.7%
25.1%
36.7%
0.2%
0.9%
1.5%
1.2%
-13.9%
-1.8%
-4.2%
0.8%
Gazifère TFP Estimate
-13.8%
-3.5%
-4.7%
-0.3%
Output Index: NormalizedVolumes
Accounting
Capital
112.9
-3.2%
Physical
Capital
93.1
-10.5%
116.5
-5.1%
122.7
-12.4%
138.9
3.0%
103.5
108.4
126.5
-4.7%
-15.4%
0.2%
134.8
-56.7%
237.5
25.1%
184.9
-1.0%
186.6
172.0
8.2%
3.4%
166.2
15.9%
126.2
-43.6%
195.2
12.1%
173.0
182.6
171.3
-5.4%
6.4%
4.4%
163.9
16.5%
141.8
13.0%
124.5
41.7%
82.0
-59.5%
148.8
-23.8%
188.7
-10.1%
208.7
10.7%
187.5
26.7%
143.5
36.1%
100.0
138.9
13.4%
121.5
43.2%
78.9
143.9
180.5
141.7
100.0
-60.0%
-6.1%
152.8
-19.3%
185.3
2.6%
24.2%
34.9%
-14.9%
-2.3%
-4.1%
0.7%
-14.8%
-4.0%
-4.6%
-0.4%

It is evident from the results that the TFP estimates using volumes as the output index are problematic. As indicated previously, the impact of weather and changes in industrial volumes cause the annual estimates to vary significantly resulting in less robust estimates. Additionally, the averages over most of the time frames suggest a negative productivity factor.
The TFP estimates using customers as the output index are more robust.
Depending on the capital input index used in the calculations, the range of
TFP estimate using customers ranges from a low of 0.1% or 0.2% to a high of
2.6%. As indicated previously, due to the nature of some of the data used for the construction of the accounting estimate of the capital index, the productivity values produced using this method are somewhat less robust than the physical capital methodology.
The TFP estimates provided for Gazifère above are “raw” estimates of productivity of Gazifère over a recent time period. The results, when used in any incentive mechanism, need to be evaluated in the context of that mechanism.
For example, one must remember that these estimates are for historical productivity, whereas incentive mechanisms are forward looking. While the historical performance should provide a good guide for an appropriate estimate to use in any incentive mechanism, they do not necessarily reflect productivity to be expected going forward.
One must also be cautious of placing too high a reliance on the specific numbers. As shown in the Table 4, the estimated productivity can vary significantly from year to year. The values are also highly dependent on input assumptions (such as the appropriate output measure, or the appropriate input measures) as well as on the time frame over which they are evaluated.
Overall, empirical analysis such as this are an important input into the development of a good incentive plan, but are only one of the necessary inputs into its development.
Gazifère TFP Estimate 11

.
.
.
.
.
.
.
List of Data Tables
•
Customer Output Index
•
Volumes Output Index
•
Labour Input Index
•
Materials Input Index
•
Capital Input Index (Accounting Data)
•
Capital Input Index (Physical Data)
•
Combined Input Index
Gazifère TFP Estimate 13

Customer Index
Customers
Fiscal Year
1990 9,507
1989 9,333
1988 9,192
1987 9,080
Res
(#)
1,621
1,551
1,461
1,366
Com
(#)
Ind
(#)
6
6
6
4
7
8
8
8
11
10
10
10
12
12
12
12
14
15
16
T-Service
(#)
7
7
8
10
6
6
6
5
1
1
1
1
0
0
0
0
0
0
0
Weights
1
Res Com
90.6%
90.3%
9.3%
9.7%
90.0% 10.0%
89.7% 10.3%
89.5% 10.5%
89.4% 10.6%
89.1% 10.8%
88.9% 11.1%
88.7% 11.3%
88.5% 11.4%
88.2% 11.8%
87.6% 12.3%
87.1% 12.8%
86.3% 13.6%
85.5% 14.4%
85.5% 14.4%
85.9% 14.0%
86.5% 13.4%
-
Notes:
1. Weights are calculated as moving two year average for each class.
2. Weighted growth is calculated as the log difference of the weighted customers.
Ind T-Service
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.1%
0.1%
0.1%
0.1%
0.1%
0.1%
0.1%
0.1%
0.1%
0.1%
-
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
-
Weighted
Growth
2
5.2%
6.0%
5.1%
3.6%
4.4%
5.2%
5.7%
6.2%
5.5%
4.8%
8.0%
10.0%
10.3%
12.4%
5.6%
2.2%
2.1%
2.0%
Customers
Index
(1987=100)
284.0
269.7
254.0
241.4
232.8
222.8
211.6
199.8
187.7
177.5
169.2
156.3
141.4
127.5
112.6
106.5
104.2
102.0
100.0
Gazifère TFP Estimate 15

Gazifère Volumes Index - Not Weather Normalized
Volumes
Fiscal
Year
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
Residential
(103m3)
57,984
57,518
57,592
47,584
50,771
49,280
44,709
43,458
45,870
45,723
38,905
42,187
36,853
34,647
27,698
28,616
27,809
26,536
24,884
Commercial
(103m3)
62,737
62,964
65,200
55,579
58,267
54,594
52,118
50,990
54,565
53,131
46,081
51,399
45,466
44,606
40,046
40,490
38,460
36,828
35,090
Industrial
(103m3)
4,555
5,392
5,089
5,520
12,566
11,599
10,473
14,808
66,611
62,279
47,973
28,302
53,880
143,754
145,575
176,502
163,473
117,048
61,895
T-Service
(103m3)
24,938
31,770
38,138
54,540
42,795
115,316
86,316
96,645
22,448
17,943
5,767
6,829
0
0
0
0
0
0
0
Total
(103m3)
150,214
157,644
166,019
163,223
164,399
230,789
193,616
205,901
189,494
179,076
138,726
128,717
136,199
223,007
213,319
245,608
229,742
180,412
121,869
Notes:
1. Weights are calculated as moving two year average for each class.
2. Weighted growth is calculated as the log difference of the weighted volumes.
Gazifère Volumes Index - Weather Normalized
Volumes
Fiscal
Year
2000
1999
1998
1997
1996
1995
1994
1993
2005
2004
2003
2002
2001
Residential
(103m3)
56,748
56,491
53,275
51,971
50,493
53,102
48,106
46,538
1992
1991
1990
1989
1988
1987
33,702
29,275
27,892
45,679
43,843
41,132
39,058
35,931
27,184
26,786
26,072
Commercial
(103m3)
61,386
61,939
60,630
60,426
58,019
58,477
55,946
54,295
54,429
51,125
48,542
47,813
44,558
43,493
41,993
39,570
37,691
37,115
36,513
Industrial
(103m3)
4,522
5,339
4,974
5,625
12,557
11,715
10,661
14,858
66,624
62,219
48,040
28,285
53,864
143,718
145,621
176,493
163,462
117,063
61,948
T-Service
(103m3)
24,938
31,770
38,138
54,540
42,795
115,316
86,316
96,645
22,448
17,943
5,767
6,829
0
0
0
0
0
0
0
Total
(103m3)
147,594
155,539
157,017
172,562
163,864
238,610
201,029
212,336
189,180
175,130
143,481
121,985
134,353
220,913
216,889
243,955
228,337
180,964
124,533
Notes:
1. Weights are calculated as moving two year average for each class.
2. Weighted growth is calculated as the log difference of the weighted volumes.
Res
37.5%
35.6%
31.9%
30.0%
25.3%
22.1%
22.1%
22.6%
24.9%
26.6%
30.3%
29.8%
19.9%
14.3%
12.3%
11.9%
13.2%
17.0%
Weights
Com
40.8%
39.6%
36.7%
34.7%
28.6%
25.1%
25.8%
26.7%
29.2%
31.2%
36.4%
36.6%
25.1%
19.4%
17.5%
16.6%
18.4%
23.8%
Ind
3.2%
3.2%
3.2%
5.5%
6.1%
5.2%
6.3%
20.6%
35.0%
34.7%
28.5%
31.0%
55.0%
66.3%
70.2%
71.5%
68.4%
59.2%
T-Service
18.4%
21.6%
28.1%
29.7%
40.0%
47.5%
45.8%
30.1%
11.0%
7.5%
4.7%
2.6%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
Non-
Normalized
Weighted
Volmes Index
Growth
2
(1987=100)
-4.8%
-5.2%
1.6%
216.2
226.9
239.0
-0.9%
-36.6%
17.6%
-6.2%
10.0%
5.7%
235.1
237.3
342.1
286.8
305.1
276.1
26.3%
7.8%
52.9%
-52.3%
4.5%
-14.1%
6.7%
24.3%
40.0%
260.9
200.6
185.5
109.4
184.5
176.5
203.2
190.1
149.1
100.0
Weights
1
Res
37.4%
35.1%
31.9%
30.5%
25.7%
23.0%
22.9%
23.0%
24.6%
26.7%
30.2%
29.3%
19.6%
14.4%
12.4%
11.7%
13.2%
17.3%
-
Com
40.7%
39.2%
36.7%
35.2%
28.9%
26.0%
26.7%
27.1%
29.0%
31.3%
36.3%
36.0%
24.8%
19.5%
17.7%
16.4%
18.3%
24.1%
-
Ind
3.3%
3.3%
3.2%
5.4%
6.0%
5.1%
6.2%
20.3%
35.4%
34.6%
28.8%
32.0%
55.6%
66.1%
69.9%
72.0%
68.5%
58.6%
-
T-Service
18.7%
22.4%
28.1%
28.9%
39.3%
45.9%
44.3%
29.7%
11.1%
7.4%
4.7%
2.7%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
-
7.7%
20.7%
16.5%
50.8%
-52.7%
1.8%
-11.8%
6.6%
23.4%
38.2%
-
Growth
2
Normalized
Weighted
Volmes Index
(1987=100)
-5.3%
-1.0%
212.4
223.9
-9.5%
5.0%
-40.0%
17.2%
-5.5%
13.2%
226.0
248.7
236.6
353.1
297.3
314.1
275.2
254.8
207.1
175.5
105.6
178.9
175.7
197.6
185.0
146.5
100.0
16 Gazifère TFP Estimate

Labour Index
Weights
1
Fiscal Year
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
Total
Supervisory
Employees
(FTE's)
15.0
15.0
16.0
16.0
15.5
14.3
14.5
16.0
14.1
13.8
12.9
11.9
14.0
14.0
14.0
13.0
11.0
11.0
11.0
Total Non-
Supervisory
Employees
(FTE's)
19.9
26.9
26.8
27.8
28.2
29.0
25.7
27.1
23.9
23.4
21.8
21.8
19.9
26.1
23.5
23.0
22.0
22.9
23.7
Supervisory
Costs ($)
1311294
1093255
1045569
923217
837504
1020379
1146099
1062026
1097111
997283
969051
883682
928397
795449
722189
664967
526440
491573
485234
Non-
Supervisory
Costs ($)
1725438
1438537
1375791
1214796
1102011
971914
928701
1212563
1182261
1192536
1201000
1210717
1039952
1001732
834970
783575
722512
719414
708504
Supervisory
43.2%
43.2%
43.2%
43.2%
47.3%
53.3%
50.8%
47.4%
46.9%
45.1%
43.4%
44.6%
45.8%
45.2%
46.2%
44.2%
41.4%
40.6%
Non-
Supervisory
56.8%
56.8%
56.8%
56.8%
52.7%
46.7%
49.2%
52.6%
53.1%
54.9%
56.6%
55.4%
54.2%
54.8%
53.8%
55.8%
58.6%
59.4%
Notes:
1. Weights are calculated as moving two year average for each class.
2. Weighted growth is calculated as the log difference of the weighted employees.
Growth
2
Labour
Weighted Index
(1987=100)
12.6%
2.1%
7.0%
3.5%
-2.9%
-3.7%
-14.8%
-2.9%
-1.9%
0.6%
1.9%
6.1%
0.8%
5.7%
4.6%
9.9%
-2.4%
-2.0%
127.3
112.3
109.9
102.5
99.0
101.9
105.7
122.6
126.2
128.7
127.8
125.4
118.0
117.1
110.6
105.6
95.7
98.0
100.0
Gazifère TFP Estimate 17

Materials Index
Fiscal Year
Total Regulated Total Labour
O&M Costs ($) Costs ($)
2005 6,604,117
2004 5,862,944
2003 5,726,563
2002 5,150,624
2001 4,631,494
2000 4,359,265
1999 4,279,951
1998 4,383,845
1997 4,199,598
1996 3,958,925
1995 3,825,572
1994 3,723,477
1993 3,400,625
1992 3,004,889
1991 2,652,169
1990 2,393,690
1989 2,140,681
1988 2,136,466
1987 1,952,049
3,036,732
2,531,791
2,421,360
2,138,013
1,939,515
1,992,293
2,074,800
2,274,589
2,279,372
2,189,819
2,170,051
2,094,399
1,968,349
1,797,181
1,557,159
1,448,542
1,248,952
1,210,987
1,193,738
3,567,385
3,331,153
3,305,203
3,012,611
2,691,979
2,366,972
2,205,151
2,109,256
1,920,226
1,769,106
1,655,521
1,629,078
1,432,276
1,207,708
1,095,010
945,148
891,729
925,479
758,311
Total Materials
Cost ($) Quebec CPI
Total Real
Materials Cost
($1992)
122.8
2,904,445
119.9
2,777,890
118.1
2,799,833
114.6
2,629,762
112.9
2,384,568
109.9
2,153,261
107.4
2,052,417
106.0
1,989,551
104.6
1,835,049
102.9
1,718,830
101.3
1,634,679
100.4
1,622,588
101.1
1,416,459
99.6
1,213,167
96.8
1,131,014
90.4
1,046,000
86.8
1,027,140
83.4
1,109,576
80.3
944,347
Materials
Growth
Index
(1987=100)
6.5%
5.0%
0.7%
13.6%
15.5%
7.0%
7.8%
1.8%
-7.7%
16.1%
4.5%
-0.8%
6.3%
9.8%
10.2%
4.8%
3.1%
8.1%
194.3
182.0
173.1
171.8
150.0
128.5
119.8
110.8
108.8
307.6
294.2
296.5
278.5
252.5
228.0
217.3
210.7
117.5
100.0
18 Gazifère TFP Estimate

Capital Index (Accounting Data)
Other Gas
Inst
Land, Right-of-
Way,
Structures &
Improvements Services
House
Regulators Mains
Real Capital Plant (after depreciation)
Fiscal
Year
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
401
15304
19247
23360
27963
31560
36205
39218
43473
47429
52191
57189
62574
67516
72825
78230
85217
92797
102094
111744
Station Ind. Meters
470 473 474 475 477 478
21648 10961116 2012527 13334750 836622 1971248
22286 10874651 2071797 13307623 902442 1961638
22894 10397363 2128399 12829375 971203 1916513
23758 10139750 2208687 12323770 1004602 1840416
23664 10006019 2141063 12339995 1043933 1800622
24293 9946094 2024271 12289593 1040999 1754224
25224
6661
6658
6759
6875
7018
7097
7202
7305
7537
12240
12992
13747
9665843 1781037 11457597 1033249 1724315
9460235 1631851 11446977 1003225 1688809
9118946 1436608 10179635 881310 1596655
8829502 1304772 9904077 850019 1510707
8602949 1196791 8997822 565084 1502955
8332305 1081696 8604466 601787 1456581
7552552
6752249
5948467
5287269
5071578
4969985
4914938
862022
674478
431804
275490
166011
93547
43935
8224886
7681822
7037552
6372725
6176005
5971829
5811787
581519
561295
535516
449851
404561
378671
364022
1315687
1176487
1046396
926037
876149
805082
754954
Leasehold
Imp.
Equipment and Furniture
Transportation
Equip
Heavy Work
Equip
Tools & Work
Equip
Computer &
Communication
Equip
482
16119
18725
4956
8873
11386
1
1699
11437
20472
9506
12714
3613
1594
2911
1
58
3157
12977
23722
483
70321
84942
92908
82006
76023
88677
81996
92475
95599
67899
78287
88362
97846
106919
115802
110707
101379
43710
50250
484
0
11045
24101
35912
49908
64799
80645
102559
67528
10667
17576
24778
31349
40150
48005
4046
8708
13226
17124
485
13538
17632
21275
24631
34598
40545
13068
15478
18278
18830
21588
25033
26738
28185
22603
0
0
0
0
486
33878
42464
40257
40056
53866
56662
60349
37670
37350
41017
48422
45748
30626
12460
15824
28242
13017
13098
14853
488 & 490
229883
194627
238837
285624
325524
369072
382022
410505
435975
190178
188118
200306
118674
89190
96253
104875
81333
67406
62128
1995
1994
1993
1992
1991
1990
1989
1988
1987
2005
2004
2003
2002
2001
2000
Other Gas
Inst
0.002
0.002
0.002
0.003
Land, Rightof-Way,
Structures &
Improvemen ts
Capital Weights
401 470
0.008
0.008
0.008
Services
473
0.345
0.340
0.329
0.003
0.003
0.009
0.008
0.007
0.321
0.321
0.314
House
Regulator s
474
0.029
0.031
0.033
0.034
0.034
0.032
Mains
475
0.499
0.503
0.510
0.514
0.517
0.527
Station
Ind.
477
0.029
0.030
0.031
0.032
0.032
0.032
Meters
478
0.038
0.037
0.041
0.044
0.043
0.044
Leasehold and
Imp.
Equipment
Furniture
Transportatio n Equip
482
0.032
0.028
0.026
0.027
0.023
0.022
483
0.004
0.004
0.004
0.004
0.004
0.004
484
0.003
0.003
0.004
0.004
0.004
0.005
Heavy Work Tools &
Equip Work Equip
485
0.001
0.001
0.001
0.001
0.001
0.001
486
0.000
0.001
0.002
0.002
0.002
0.002
Computer &
Communicati on Equip
488
0.009
0.011
0.008
0.007
0.006
0.006
1999
1998
1997
1996
0.003
0.004
0.004
0.005
0.004
0.003
0.003
0.002
0.308
0.316
0.331
0.350
0.031
0.032
0.034
0.036
0.527
0.518
0.508
0.481
0.032
0.032
0.032
0.030
0.045
0.047
0.054
0.061
0.029
0.030
0.022
0.016
0.005
0.005
0.004
0.004
0.002
0.001
0.002
0.002
0.001
0.001
0.001
0.001
0.002
0.002
0.002
0.003
0.011
0.009
0.003
0.008
0.006
0.007
0.008
0.009
0.010
0.012
0.012
0.013
-
0.002
0.003
0.005
0.007
0.009
0.011
0.012
0.013
-
0.345
0.321
0.321
0.317
0.317
0.332
0.339
0.336
-
0.037
0.035
0.029
0.023
0.016
0.011
0.006
0.003
-
0.467
0.483
0.478
0.478
0.485
0.486
0.484
0.482
-
0.032
0.039
0.037
0.037
0.038
0.032
0.029
0.029
-
0.065
0.069
0.071
0.065
0.062
0.059
0.056
0.062
-
0.015
0.018
0.029
0.038
0.041
0.041
0.042
0.044
-
0.007
0.009
0.009
0.010
0.011
0.008
0.005
0.006
-
0.003
0.003
0.003
0.001
0.000
0.002
0.002
0.003
-
0.000
0.000
0.002
0.001
0.000
0.000
0.001
0.001
-
0.003
0.002
0.000
0.001
0.002
0.002
0.002
0.002
-
0.018
0.013
0.008
0.012
0.009
0.007
0.008
0.008
-
Gazifère TFP Estimate 19
Weighted
Change in
Capital Index
-8.0%
6.2%
0.9%
-0.5%
22.4%
-12.1%
-3.8%
6.5%
5.6%
6.3%
5.1%
8.9%
6.8%
40.9%
-8.0%
-12.5%
-2.4%
-0.5%
Capital
Index
185.48
200.90
188.81
187.03
188.06
150.27
169.57
176.22
165.16
156.11
146.55
139.31
127.39
119.05
79.09
85.72
97.14
99.48
100.00

20
Capital Index (Physical Data)
Capital Cost Weights
1
Fiscal Year Services (#)
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
2005
2004
2003
2002
2001
2000
1999
1998
1997
Mains
(meters)
28,398 718,788
26,933 700,393
25,141 667,822
23,701 632,686
22,600 615,171
21,669 600,339
20,424 551,951
19,411 543,358
18,232 485,640
17,090 474,821
16,223 448,210
15,274 433,002
13,942 416,676
12,580 394,364
11,087 369,568
9,979 342,148
9,622 340,166
9,381 334,886
9,164 331,086
Meters (#)
18,452
18,125
17,523
16,049
14,388
12,720
11,642
11,202
11,010
10,766
26,075
25,498
24,708
23,691
22,880
22,150
21,549
20,843
19,729
Services ($) Mains ($) Meters ($)
3,792,305 5,389,090 408,022
3,640,082 5,357,844 401,437
3,471,644 5,174,345 381,233
3,318,122 5,360,911 472,716
3,076,607 4,883,720 405,872
2,952,477 4,836,592 406,227
2,655,134 4,560,454 387,295
2,585,309 4,389,287 382,284
2,615,284 4,129,373 396,401
2,230,934 3,310,040 386,867
2,034,860 2,556,751 352,389
1,415,264 2,109,025 295,521
1,222,759 1,861,801 268,275
1,311,633 1,915,606 291,174
962,107 1,512,086 176,566
956,817 1,428,723 197,906
966,196 1,387,407 143,048
992,552 1,410,540 182,034
861,499 1,248,775 158,695
Services
39.2%
39.4%
36.8%
36.9%
36.9%
36.7%
37.9%
38.5%
38.2%
-
39.1%
38.6%
37.3%
36.5%
36.4%
35.5%
35.0%
35.9%
37.1%
Mains
54.0%
53.2%
55.4%
55.0%
55.6%
56.2%
55.4%
55.1%
54.8%
-
56.6%
57.2%
58.0%
58.5%
58.7%
59.5%
59.8%
58.8%
56.9%
Meters
6.8%
7.4%
7.9%
8.1%
7.6%
7.2%
6.7%
6.4%
7.0%
-
4.3%
4.2%
4.7%
5.0%
4.9%
5.0%
5.1%
5.4%
6.0%
Weighted
Growth
2
5.3%
4.5%
6.2%
7.7%
9.2%
8.8%
2.0%
1.9%
1.7%
3.6%
5.5%
5.5%
3.6%
3.1%
7.2%
2.9%
9.1%
4.1%
Capital
Index
(1987=100)
160.4
152.1
145.5
136.8
126.6
115.5
105.7
103.7
101.7
100.0
250.8
241.8
228.8
216.5
209.0
202.5
188.4
183.0
167.0
Notes:
1. Weights are calculated as moving two year average for each cost category.
2. Weighted growth is calculated as the log difference of the weighted capital costs.
Gazifère TFP Estimate

Combined Input Index
Input Indices
Fiscal
Year
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
2005
2004
2003
2002
2001
2000
1999
1998
Labour
126.2
128.7
127.8
125.4
118.0
117.1
110.6
105.6
95.7
98.0
100.0
127.3
112.3
109.9
102.5
99.0
101.9
105.7
122.6
Materials
194.3
182.0
173.1
171.8
150.0
128.5
119.8
110.8
108.8
117.5
100.0
307.6
294.2
296.5
278.5
252.5
228.0
217.3
210.7
Capital (Accounting
Data)
165.2
156.1
146.5
139.3
127.4
119.1
79.1
85.7
97.1
99.5
100.0
185.5
200.9
188.8
187.0
188.1
150.3
169.6
176.2
Capital (Physical
Data)
167.0
160.4
152.1
145.5
136.8
126.6
115.5
105.7
103.7
101.7
100.0
250.8
241.8
228.8
216.5
209.0
202.5
188.4
183.0
Input Weights
Labour
0.20
0.22
0.24
0.26
0.26
0.26
0.27
0.26
0.24
0.25
0.16
0.15
0.14
0.14
0.14
0.15
0.17
0.18
Materials
0.16
0.17
0.19
0.20
0.18
0.18
0.18
0.18
0.18
0.18
0.20
0.20
0.20
0.19
0.18
0.17
0.17
0.16
Capital
0.64
0.61
0.57
0.54
0.55
0.56
0.55
0.56
0.57
0.57
0.63
0.64
0.65
0.67
0.68
0.67
0.66
0.66
Weighted Input Index
(Capital Accounting Data)
Weighted Input
Growth
Weighted
Input Index
4.3%
4.9%
3.5%
9.1%
6.8%
25.6%
-1.7%
-4.1%
-3.3%
2.0%
-2.1%
4.2%
2.9%
2.0%
16.6%
-7.9%
-4.5%
5.0%
160.0
153.3
146.0
141.0
128.7
120.3
93.1
94.7
98.7
102.0
100.0
188.1
192.1
184.3
179.0
175.5
148.6
160.8
168.3
Weighted Input Index
(Capital Physical Data)
Weighted Input
Growth
Weighted Input
Index
3.3%
4.2%
3.1%
7.6%
7.3%
7.9%
7.5%
4.0%
-0.8%
3.3%
5.3%
3.7%
5.9%
4.7%
3.6%
5.1%
-0.1%
6.8%
160.7
155.5
149.0
144.4
133.8
124.4
114.9
106.6
102.5
103.3
100.0
228.1
216.4
208.5
196.6
187.5
180.9
171.8
172.0
Gazifère TFP Estimate 21