Hydro Ottawa Limited RP-2005-0020 EB-2005-0381 Tab B Filed 2005-08-02 Page 1 of 118 ONTARIO ENERGY BOARD IN THE MATTER OF the Ontario Energy Board Act, 1998, S.O. 1998, c. 15, Sched. B, as amended; AND IN THE MATTER OF an Application by Hydro Ottawa Limited for an Order or Orders approving or fixing just and reasonable rates for distribution service. Hydro Ottawa Limited Manager’s Summary August 2, 2005 2006 EDR Application Hydro Ottawa Limited RP-2005-0020 EB-2005-0381 Tab B Filed 2005-08-02 Page 2 of 118 CHAPTER 1 – INTRODUCTION ...................................................................................................................7 1.0 HISTORICAL PERSPECTIVE....................................................................................................7 CHAPTER 2 – COMPONENTS OF THE APPLICATION AND SCHEDULES .......................................8 2.0 INTRODUCTION ..........................................................................................................................8 2.1 GENERAL INFORMATION 2.1.1 Description of the Distributor 2.1.2 Corporate Structure 2.1.3 Audited Financial Statements 2.1.4 Compliance with Licence 2.1.5 Complete Listing of Rates and Charges 2.1.6 Summary of Application 8 8 10 12 12 12 15 CHAPTER 3 – TEST YEAR AND ADJUSTMENTS ..................................................................................16 3.0 INTRODUCTION ........................................................................................................................16 3.1 HISTORICAL TEST YEAR VERSUS FUTURE TEST YEAR 3.2 TIER 1 ADJUSTMENTS 3.2.1 Tier 1 Adjustments: Distribution Expenses 3.2.2 Tier 1 Adjustments: Rate Base 3.2.3 Non-routine/unusual Tier 1 Adjustments 3.3 TIER 2 ADJUSTMENTS 16 16 16 16 16 16 CHAPTER 4 – RATE BASE ..........................................................................................................................17 4.0 RATE BASE .................................................................................................................................17 4.0.1 Smart Meters 19 4.0.2 New distribution stations put into service in 2002, 2003 and 2004 20 4.0.3 Customer Information System (CIS) 21 4.0.4 Light Rail Transit Line (LRT) 22 4.1 AMORTIZATION RATES 22 4.2 CAPITAL INVESTMENTS 23 4.2.1 Summary 23 4.2.2 Asset Management Strategy 24 4.2.3 Facilities Asset Strategy 26 4.2.4 Capital Programs/Projects 27 4.2.4.1 Residential Subdivision ($6,939,884) ................................................................................29 4.2.4.2 Distribution Transformer Replacement ($6,601,265) ........................................................29 4.2.4.3 Distribution Enhancements ($6,522,466) ..........................................................................30 4.2.4.4 Planned Pole Replacement ($5,879,898) ...........................................................................31 4.2.4.5 New Commercial Development ($4,330,881) ...................................................................33 4.2.4.6 Station Capacity - New Cyrville Substation ($4,061,259) .................................................33 4.2.4.7 Plant Relocation and Upgrades ($2,874,076) ....................................................................35 4.2.4.8 System Expansion ($2,789,377) ........................................................................................35 4.2.4.9 End-of-life Cable Works ($2,128,956) ..............................................................................36 4.2.4.10 Station Transformer Refurbishment ($1,989,510) .............................................................39 2006 EDR Application Hydro Ottawa Limited RP-2005-0020 EB-2005-0381 Tab B Filed 2005-08-02 Page 3 of 118 4.2.4.11 Infill and Upgrades ($1,859,220) .......................................................................................40 4.2.4.12 Station Circuit Breaker Control Refurbishment ($1,695,999) ...........................................41 4.2.4.13 Meter Replacement and Re-verification ($1,301,511) .......................................................41 4.2.4.14 Station Switchgear Replacement ($1,101,796) ..................................................................41 4.2.4.15 Vault Rehab or Removal ($1,006,709) ..............................................................................43 4.2.4.16 Wholesale Meter Upgrade ($930,318) ...............................................................................44 4.2.4.17 Plant Failure Capital ($698,934) ........................................................................................46 4.2.4.18 Damage to Plant ($558,921) ..............................................................................................46 4.2.4.19 Elbow and Insert Replacement ($553,478) ........................................................................46 4.2.4.20 Insulator Replacement ($475,198) .....................................................................................47 4.2.4.21 Distribution Automation ($464,867) ..................................................................................47 4.2.4.22 Station Transformer PCB Removal ($422,920) .................................................................48 4.2.4.23 Station Automation ($385,921) ..........................................................................................48 4.2.4.24 Overhead Equipment - New and Rehabilitation ($278,901) ..............................................49 4.2.4.25 East End Operations Centre ($7,026,078)..........................................................................49 4.2.4.26 GIS and OMS ($4,901,719) ...............................................................................................50 4.2.4.27 SCADA and Control Room Upgrades ($3,019,289)..........................................................52 4.2.4.28 Vehicle Replacements ($2,589,689) ..................................................................................54 4.2.4.29 Bank Street Rehabilitation ($1,981,694) ............................................................................55 4.2.4.30 CIS Software Enhancements ($1,819,600) ........................................................................55 4.2.4.31 Merivale Road Additions ($1,278,083) .............................................................................56 4.2.4.32 Albion Road ($905,245) ....................................................................................................56 4.2.4.33 Carling Operations Centre Storage Building ($615,715) ...................................................56 4.2.4.34 Stations Building Rehabilitation ($572,940)......................................................................56 4.2.4.35 Upgrade to JDE Financial System ($571,651) ...................................................................57 4.2.4.36 Business Continuity Plan ($315,117) .................................................................................57 4.2.4.37 Conservation & Demand Management ($1,420,012) ........................................................57 4.3 INTEREST ON DEFERRAL ACCOUNTS AND CONSTRUCTION WORK IN PROGRESS (CWIP) 57 4.4 CAPITALIZATION POLICY 58 4.5 CONTRIBUTED CAPITAL 58 4.6 TREATMENT OF CAPITAL GAINS AND LOSSES 58 4.6.1 Assets Sold to a Non-Affiliate 58 4.6.2 Assets Sold to an Affiliate 58 CHAPTER 5 – COST OF CAPITAL.............................................................................................................59 5.0 5.1 5.2 5.3 5.4 INTRODUCTION ........................................................................................................................59 MAXIMUM ALLOWED RETURN ON EQUITY DEBT RATE CAPITAL STRUCTURE WORKING CAPITAL ALLOWANCE 59 59 59 60 CHAPTER 6 – DISTRIBUTION EXPENSES ..............................................................................................61 6.0 INTRODUCTION ........................................................................................................................61 6.1 OPERATIONS, MAINTENANCE AND ADMINISTRATION 62 6.1.1 Operations and Maintenance 62 6.1.1.1 Vegetation Management ....................................................................................................63 6.1.1.2 Thermographic (IR) Scanning and CO2 Washing ..............................................................65 2006 EDR Application Hydro Ottawa Limited RP-2005-0020 EB-2005-0381 Tab B Filed 2005-08-02 Page 4 of 118 6.1.1.3 Insulator Washing ..............................................................................................................66 6.1.1.4 Graffiti Abatement .............................................................................................................66 6.1.2 Billing and Collection 66 6.1.3 Administration and General Expense 66 6.1.4 Community Relations 67 6.2 DETAILED REPORT FOR SPECIFIC DISTRIBUTION EXPENSES 67 6.2.1 Insurance Expense 67 6.2.2 Bad Debt Expense 67 6.2.2.1 Billed Accounts ..................................................................................................................68 6.2.2.2 Unbilled Revenue...............................................................................................................68 6.2.2.3 Meter Disputes ...................................................................................................................68 6.2.2.4 Account Write-off Practice ................................................................................................68 6.2.3 Information Technology Expenses 69 6.2.4 Advertising, Political Contributions, Employee Dues, Charitable Donations, Meals/ Travel and Business Entertainment, Research and Development 70 6.2.4.1 Advertising .........................................................................................................................70 6.2.4.2 Political Contributions .......................................................................................................70 6.2.4.3 Employee Dues ..................................................................................................................70 6.2.4.4 Charitable Donations..........................................................................................................70 6.2.4.5 Meals/Travel and Business Entertainment .........................................................................71 6.2.4.6 Research and Development ................................................................................................71 6.2.5 Employee Total Compensation 71 6.2.6 Pensions and Post-retirement Benefits 75 6.2.7 Distribution Expenses Paid to Affiliates 76 CHAPTER 7 – TAXES/PILS ..........................................................................................................................79 7.0 INTRODUCTION ........................................................................................................................79 7.1 GENERAL METHODOLOGY 7.2 PRINCIPLES 7.2.1 Non-recoverable and disallowed expenses 7.2.2 Capital tax exemptions 7.2.3 Loss carry-forwards 7.2.4 Undepreciated capital cost (UCC) and capital cost allowance (CCA) 7.2.5 Regulatory tax treatment of Eligible Capital Expenditures (ECE) 7.2.6 Interest deduction 7.2.7 Interest capitalized for accounting, but deducted for tax purposes 7.2.8 Overlapping year-ends 7.2.9 Estimating taxable capital 7.2.10 Ontario Corporate Minimum Tax 7.2.11 Non-distribution elimination 7.2.12 Tax credits 7.2.13 Impact of CDM expenditure and Smart Meter expenditures 7.2.14 Property Taxes 7.2.15 Capital Leases 7.3 TAX PAYABLE FILINGS 7.3.1 Information to be Provided with 2006 OEB Tax Model Filings 7.3.2 Tax Information Disclosure in Future 7.3.3 Supporting Documentation 2006 EDR Application 79 79 79 79 79 80 82 82 82 82 83 83 83 83 83 83 83 84 84 84 84 Hydro Ottawa Limited RP-2005-0020 EB-2005-0381 Tab B Filed 2005-08-02 Page 5 of 118 CHAPTER 8 – REVENUE REQUIREMENT ..............................................................................................85 8.0 8.1 8.2 8.3 INTRODUCTION ........................................................................................................................85 SERVICE REVENUE REQUIREMENT BASE REVENUE REQUIREMENT CDM, SMART METER AND REGULATORY ASSET RECOVERY 85 85 87 CHAPTER 9 – COST ALLOCATION ..........................................................................................................89 9.0 9.1 9.2 9.3 INTRODUCTION ........................................................................................................................89 CUSTOMER CLASSES 89 APPROPRIATE SHARE OF THE 2006 REVENUE REQUIREMENT FOR EACH CLASS 91 APPROPRIATE SHARE OF THE 2006 CDM, SMART METER AND REGULATORY ASSET REVENUE REQUIREMENTS 94 CHAPTER 10 – RATES AND CHARGES ...................................................................................................95 10.0 INTRODUCTION ........................................................................................................................95 10.0.1 Load Forecast 95 10.0.1.1 Model .................................................................................................................................95 10.0.1.2 Historical Data Set .............................................................................................................95 10.0.1.3 Influencing Factors ............................................................................................................95 10.0.1.4 Results ................................................................................................................................96 10.1 FIXED/VARIABLE SPLITS 97 10.2 UNMETERED SCATTERED LOADS 97 10.3 TIME OF USE DISTRIBUTION RATES 98 10.4 TRANSFORMER OWNERSHIP ALLOWANCE 98 10.5 UPDATE OF LOSS ADJUSTMENT FACTORS 99 10.6 STANDBY CHARGES 100 10.6.1 Rate Structure 100 10.6.2 Customer Classification 100 10.6.3 Contract Backup Demand 100 10.6.4 Determination of Billed Backup Demand 101 10.6.5 Backup Overrun Adjustment 101 10.6.6 Standby Monthly Service Charge 102 10.6.7 Parallel Generation Data Requirements 104 10.7 LOW VOLTAGE (LV) CHARGES 104 10.8 DEMAND DETERMINANTS 104 CHAPTER 11 – SPECIFIC SERVICE CHARGES ...................................................................................105 11.0 11.1 11.2 11.3 11.3.1 11.3.2 11.3.3 11.4 INTRODUCTION ......................................................................................................................105 METHODOLOGY CUSTOMER ADMINISTRATION NON-PAYMENT OF ACCOUNT Late Payment Charge Collection of Account Charge Reconnection of Electricity Service Charge SERVICE CALLS 2006 EDR Application 106 106 106 106 106 106 106 Hydro Ottawa Limited RP-2005-0020 EB-2005-0381 Tab B Filed 2005-08-02 Page 6 of 118 11.5 11.6 11.7 11.8 TEMPORARY ELECTRICITY SERVICE CHARGE SPECIFIC CHARGE FOR ACCESS TO POWER POLES OTHER SERVICES AND CHARGES REVENUE FROM SPECIFIC SERVICE CHARGES 106 106 107 108 CHAPTER 12 – OTHER REGULATED CHARGES................................................................................110 12.0 INTRODUCTION ......................................................................................................................110 12.1 RPP (FORMERLY SSS) ADMINISTRATION CHARGE 12.2 RETAIL SERVICE CHARGES 12.2.1 Establishing Service Agreements 12.2.2 Distributor-Consolidated Billing 12.2.3 Retailer-Consolidated Billing 12.2.4 Service Transaction Requests (STR) 12.2.5 Monitoring and Cost Tracking 12.3 NON-COMPETITIVE ELECTRICITY CHARGES 12.3.1 Wholesale Market Service Rate 12.3.2 Retail Transmission Service Rates 12.3.3 Charges/Taxes Levied by the Government of Ontario 110 110 110 110 110 110 111 111 111 111 111 CHAPTER 13 – MITIGATION ...................................................................................................................112 13.0 13.1 13.2 IMPACT ANALYSIS.................................................................................................................112 MITIGATION METHODOLOGIES RATE HARMONIZATION (AMALGAMATED OR ACQUIRED SERVICE AREAS) 112 112 CHAPTER 14 – COMPARATORS AND COHORTS ...............................................................................113 14.0 COMPARATORS AND COHORTS........................................................................................113 CHAPTER 15 – SERVICE QUALITY REGULATION ...........................................................................114 15.0 INTRODUCTION ......................................................................................................................114 EXHIBIT A.....................................................................................................................................................116 2006 EDR Application Hydro Ottawa Limited RP-2005-0020 EB-2005-0381 Tab B Filed 2005-08-02 Page 7 of 118 Chapter 1 – Introduction 1.0 Historical Perspective Hydro Ottawa Limited (“Hydro Ottawa”) was created as a distributor in conjunction with the restructuring of the former Regional Municipality of Ottawa-Carleton. The following is a description of this process that is intended to provide a historical context for this Manager’s Summary. The City of Ottawa Act, 1999 (the “Ottawa Act”) established the new City of Ottawa that was an amalgamation, in effect, of the following old municipalities on January 1, 2001: Cumberland, Gloucester, Goulbourn, Kanata, Nepean, Osgoode, Ottawa, Rideau, Rockcliffe Park, Vanier, and West Carleton (i.e., all of the municipalities within the former regional municipality). The Ottawa Act provided for the establishment of a “transition board,” prior to the amalgamation, as a corporation without share capital composed of persons appointed by the Minister of Municipal Affairs and Housing. The Ottawa Transition Board was given certain powers of the old municipalities as a means of facilitating the transition from the old municipalities and their local boards, such as their public utility commissions, to the new City of Ottawa. Hydro Ottawa was incorporated on October 3, 2000 pursuant to the Business Corporations Act. The Ottawa Transition Board transferred the electricity distribution and transmission assets, liabilities, and employees of the following old municipalities (and/or their public utility commissions under the following business names) to Hydro Ottawa on November 1, 2000: Gloucester (Gloucestor Hydro), Goulbourn (Goulbourn Hydro), Kanata (Kanata Hydro), Nepean (Nepean Hydro), and Ottawa (Ottawa Hydro). This transfer was effected by a series of transfer by-laws enacted under Part IX of the Electricity Act, 1998 and Ontario Regulation 100/00 made under the Ottawa Act. This transfer is frequently referred to as the “amalgamation” of the five former municipal electricity utilities. Ottawa Hydro was also serving the old municipalities of Rockcliffe Park and Vanier, at the time of amalgamation, and so Hydro Ottawa’s service area comprised the geographic areas of these seven old municipalities after the amalgamation. Hydro One Networks Inc. (“Hydro One”) continued to serve the other four (and mostly rural) old municipalities. Hydro Ottawa acquired the assets of Casselman Hydro Inc. in April 2002. The Ontario Energy Board (the “Board”) approved this transaction and, as a result, amended Hydro Ottawa’s distribution licence to include the Village of Casselman in the description of Hydro Ottawa’s service area. Hydro Ottawa is a wholly-owned subsidiary of Hydro Ottawa Holding Inc. (the “Holding Company”), which provides strategic direction to Hydro Ottawa and its other subsidiaries through its Board of Directors and senior management. Hydro Ottawa, including its predecessor utilities, has been an integral part of the growth and success of the Ottawa area for almost a century. 2006 EDR Application Hydro Ottawa Limited RP-2005-0020 EB-2005-0381 Tab B Filed 2005-08-02 Page 8 of 118 Chapter 2 – Components of the Application and Schedules 2.0 Introduction Hydro Ottawa is filing its Application on the basis of a forward test year. Hydro Ottawa has followed, as and when required, the methodology set out in the Board’s 2006 Electricity Distribution Rate Handbook (the “Handbook”). Hydro Ottawa has also used the Board’s 2006 rates spreadsheet model (the “2006 EDR Model”) as the basis for determining rates; however, the model was adjusted to support a forward test year by substituting the years 2004, 2005 and 2006 for the years 2002, 2003 and 2004 respectively. Hydro Ottawa is also filing those portions of the original 2006 EDR Model that provide relevant schedules for the 2002, 2003 and 2004 data. 2.1 General Information Description of the Distributor In 2004, Hydro Ottawa had annual energy sales exceeded 7.5 billion kilowatt-hours (kWhs) used by a customer base of 274,040 as follows: Residential General Service Large User Street Lights Unmetered Scattered Loads Sentinel Lights 247,760 Customers 26,270 Customers 10 Customers 15 Accounts, 44,932 Connections 218 Accounts, 2,770 Connections 125 Connections Schedule 2-1 provides further details about Hydro Ottawa. Schedule 2-1: Summary description of Hydro Ottawa Name of Distributor: Hydro Ottawa Current Licence Number: ED-2002-0556 Communities Served: City of Ottawa (most consumers) Village of Casselman Adjacent Distributor: Hydro One Characteristics of Service Area: Hydro Ottawa owns and operates 70 distribution substations along with over 3,040 km of overhead and 1,790 km of underground circuits. Hydro Ottawa’s service area, including Casselman, is a mix of urban, suburban and rural customers spread out over some 1,104 sq-km. From east to west the area is over 55 km wide, not including Casselman. 2006 EDR Application Hydro Ottawa Limited RP-2005-0020 EB-2005-0381 Tab B Filed 2005-08-02 Page 9 of 118 Embedded or Host Distributor: Hydro Ottawa is a market participant, but has a number of delivery points embedded within Hydro One’s distribution service territory. Hydro Ottawa is not a host distributor. Mailing Address: 3025 Albion Rd North PO Box 8700 Ottawa, Ontario K1G 3S4 Key Contacts: Hydro Ottawa Lynne Anderson Director, Regulatory Services Telephone: 613-738-5499 x 527 Fax: 613-738-5498 E-mail: lynneanderson@hydroottawa.com Fraser Milner Casgrain LLP Helen Newland and Jerry Farrell Suite 3900 1 First Canadian Place 100 King Street West Toronto, Ontario M5X 1B2 Telephone (for Newland): (416) 863-4471 Telephone (for Farrell): (416) 863-4384 Fax (for both): (416) 863-4592 E-mail (for Newland): helen.newland@fmc-law.com E-mail (for Farrell): jerry.farrell@fmc-law.com 2006 EDR Application Hydro Ottawa Limited RP-2005-0020 EB-2005-0381 Tab B Filed 2005-08-02 Page 10 of 118 Corporate Structure Schedule 2-2: Corporate Structure Corporate Organization Chart City of Ottawa Hydro Ottawa Holding Inc. Hydro Ottawa Limited Energy Ottawa Inc. Telecom Ottawa Holding Inc. 2038455 Ontario Inc. Telecom Ottawa Regional Limited Telecom Ottawa Limited Figure 2.1 – Corporate Structure Affiliated Businesses and Corporate Services Hydro Ottawa is a wholly owned subsidiary of Hydro Ottawa Holding Inc. (the “Holding Company”), which in turn is wholly owned by the City of Ottawa. Hydro Ottawa and the City of Ottawa conduct their transactions on an arm’s length basis. The City purchases electricity and street lighting design services from Hydro Ottawa. The Hydro Ottawa debt to the City of Ottawa was replaced with debt from the Holding Company (as a result of an external bond issue) during 2005; therefore Hydro Ottawa is no longer making interest payments to the City of Ottawa. Hydro Ottawa pays property taxes, permit fees and water and sewer charges as a business operating within the City limits. The principal business of the Holding Company is the oversight of Hydro Ottawa and two other subsidiaries, Energy Ottawa Inc. and Telecom Ottawa Holding Inc., which also provide services to the residents of Ottawa. The role of the Holding Company is to: Assess the strategic value of the business activities of each subsidiary, Evaluate the performance of each subsidiary, Provide strategic direction to the subsidiaries on matters of financing, risk mitigation, taxation, laws and regulations, public affairs, human resources, and business development, 2006 EDR Application Hydro Ottawa Limited RP-2005-0020 EB-2005-0381 Tab B Filed 2005-08-02 Page 11 of 118 Provide financing for subsidiary operations, and Report to the Shareholder and Board of Directors on financial, governance, legal, compensation and internal control matters. The Holding Company charges Hydro Ottawa for corporate services provided by the CEO, CFO, Corporate Counsel and Internal Audit business units. In addition, the Holding Company charges Hydro Ottawa interest for borrowings undertaken under corporate borrowing arrangements as follows: Interest on the first $200 million of long-term borrowings is charged at 5.14%. This includes administrative costs associated with maintaining this debt and the costs of issuing this debt, Interest on the next $32 million of long-term borrowings is charged at 5.9%, For short-term borrowing, Banker’s Acceptances are charged at 0.1% above the rate charged by the bank to cover standby, stamping and other fees associated with maintaining this facility. The Holding Company pays Hydro Ottawa for: Human Resources Services, including administration of pay and benefits, processing of incentive bonuses, production of T-4s, OMERS year-end, reconciliation of employee health tax, implementation of annual government-imposed rates, documentation of new employees and regular maintenance activities, Facilities Management Services, including operations and office services, workspace provisioning, the procurement, maintenance and disposal of fixed assets, emergency preparedness and special facilities projects as required, Information Technology Services, to provide the IT infrastructure systems and services required for the business continuance needs of the Holding Company, including IT Help Desk, Technical Support, Network Management Services, Telecommunications Support Services and Applications Support Services. Energy Ottawa Inc. (“Energy Ottawa”) is a licenced generator that produces EcoLogo certified “green power” from hydroelectric generating stations at Chaudière Falls on the Ottawa River near Parliament Hill. Energy Ottawa charges Hydro Ottawa for power purchased at market prices. These costs are included in the cost of purchased power and therefore are not considered when determining Hydro Ottawa’s distribution costs. Energy Ottawa pays Hydro Ottawa for: Furniture rental and property taxes, Human Resources Services, including administration of pay and benefits, processing of incentive bonuses, production of T-4s, OMERS year end, reconciliation of employee health tax, implementation of annual government-imposed rates, documentation of new employees, and regular maintenance activities, Information Technology Services including IT Help Desk, Technical Support, and Applications Support Services, Meter Data Services including MV90 Translation, Lodestar LPSS and Lodestar I Care, Web Portal Data Services, Data Repository Services and PeopleSoft CIS billing services, 2006 EDR Application Hydro Ottawa Limited RP-2005-0020 EB-2005-0381 Tab B Filed 2005-08-02 Page 12 of 118 Planned maintenance and emergency repair services for Chaudière Generating Stations Units 2 and 4. Telecom Ottawa Holding Inc. (“Telecom Ottawa”) is a specialized telecommunications carrier providing broadband services mainly to public institutions in the City and Internet services in Ottawa and other parts of Eastern Ontario. Telecom Ottawa carries out its activities through three operating subsidiaries: Telecom Ottawa Limited, Telecom Ottawa Regional Limited and 2038455 Ontario Inc. Telecom Ottawa provides Hydro Ottawa with the lease of dark fiber. Telecom Ottawa pays Hydro Ottawa for: Human Resources Services, including benefit enrolment, change requests, inquiries and monthly billing of premiums together with associated maintenance activities and provision of Human Resources advice upon request, Facilities Management Services, including operations and office services, operation costs for utilities, emergency preparedness and special facilities projects as required, Supply Chain Services including Procurement Services; Supplier Relationship Management; Materials Management; Surplus Material and Equipment Sales, Pole and duct rentals, Information technology services including financial services (JDE application), technical support, and applications support services. Work performed by Hydro Ottawa for the affiliated companies is done predominately on the basis of Service Level Agreements (SLAs). Standard work orders, to recover Hydro Ottawa’s actual costs, are used occasionally for minor work not included in SLAs. Details with regard to pricing and dollar value of services provided to Hydro Ottawa by its affiliates and included in its distribution costs are provided in Schedule 6-8: Distribution Expenses Paid to Affiliate(s). Audited Financial Statements Included as Schedule 2-3 in Tab E of the Application Binder are financial statements for Hydro Ottawa for 2002, 2003 and 2004. Compliance with Licence Hydro Ottawa is not exempted from any conditions of its licence and does not have any special conditions in its licence. Complete Listing of Rates and Charges Schedule 2-4 provides a complete listing of all current regulated charges approved by the Board. 2006 EDR Application Hydro Ottawa Limited RP-2005-0020 EB-2005-0381 Tab B Filed 2005-08-02 Page 13 of 118 Schedule 2-4: Complete Listing of Current Rates and Charges Customer Classification Unit Of Measure Rate kWh kWh kWh $0.050 $0.058 $0.0057 kWh kWh kWh per customer / month kWh $0.0050 $0.0062 $0.00694 $5.98 $0.0171 kWh kWh kWh $0.050 $0.058 $0.0052 kWh kWh kWh per customer / month kWh $0.0045 $0.0062 $0.00694 $6.78 $0.0159 kWh kW kW kWh kWh Spot Market $2.1218 $1.7882 $0.0062 $0.00694 per customer / month kW $201.63 $2.39 kWh kW kW kWh Spot Market $2.2535 $1.9603 $0.0062 kWh per customer / month kW $0.00694 $201.63 $2.39 Residential Electricity Charge – Tier 1 – Tier 2 Transmission Network Charge Transmission Connection Charge Wholesale Market Charge Debt Retirement Charge Hydro Ottawa Fixed Charge Hydro Ottawa Variable Charge General Service less than 50 kW Electricity Charge – Tier 1 – Tier 2 Transmission Network Charge Transmission Connection Charge Wholesale Market Charge Debt Retirement Charge Hydro Ottawa Fixed Charge Hydro Ottawa Variable Charge General Service 50 kW-1000 kW non-interval Electricity Charge Transmission Network Charge Transmission Connection Charge Wholesale Market Charge Debt Retirement Charge Hydro Ottawa Fixed Charge Hydro Ottawa Variable Charge General Service 50 kW-1000 kW interval Electricity Charge Transmission Network Charge Transmission Connection Charge Wholesale Market Charge Debt Retirement Charge Hydro Ottawa Fixed Charge Hydro Ottawa Variable Charge 2006 EDR Application Hydro Ottawa Limited RP-2005-0020 EB-2005-0381 Tab B Filed 2005-08-02 Page 14 of 118 Customer Classification Unit Of Measure Rate kWh kW Spot Market $2.2508 kW kWh kWh per customer / month kW $1.9763 $0.0062 $0.00694 $201.63 $2.39 kWh kW kW kWh Spot Market $2.2508 $1.9763 $0.0062 kWh per customer / month kW $0.00694 $3,087.06 $2.04 kWh kW kW kWh kWh per customer / month Spot Market $2.4952 $2.2417 $0.0062 $0.00694 $11,675.71 kW $2.39 kWh kW kW kWh Spot Market $1.6083 $1.4113 $0.0062 kWh per connection/month kW $0.00694 $1.23 $6.65 kWh kW Spot Market $1.6002 kW kWh kWh per connection/month kW $1.3824 $0.0062 $0.00694 $0.26 $2.29 General Service 1000 kW – 1500 kW Electricity Charge Transmission Network Charge Transmission Connection Charge Wholesale Market Charge Debt Retirement Charge Hydro Ottawa Fixed Charge Hydro Ottawa Variable Charge General Service 1500 kW – 5000 kW Electricity Charge Transmission Network Charge Transmission Connection Charge Wholesale Market Charge Debt Retirement Charge Hydro Ottawa Fixed Charge Hydro Ottawa Variable Charge Large Use greater than 5000 kW Electricity Charge Transmission Network Charge Transmission Connection Charge Wholesale Market Charge Debt Retirement Charge Hydro Ottawa Fixed Charge Hydro Ottawa Variable Charge Sentinel Lighting Electricity Charge Transmission Network Charge Transmission Connection Charge Wholesale Market Charge Debt Retirement Charge Hydro Ottawa Fixed Charge Hydro Ottawa Variable Charge Street Lighting Electricity Charge Transmission Network Charge Transmission Connection Charge Wholesale Market Charge Debt Retirement Charge Hydro Ottawa Fixed Charge Hydro Ottawa Variable Charge 2006 EDR Application Hydro Ottawa Limited RP-2005-0020 EB-2005-0381 Tab B Filed 2005-08-02 Page 15 of 118 Customer Classification Unit Of Measure Rate Account Set-up Charge Arrears Certificate Each Each $8.40 $10.00 Dispute Involvement Charge Reconnection – seasonal service Late Payment Returned Cheque Charge Collection of Account Charge Special Meter Reading – successful Each Each Each Each Each Each $5.00 $175.00 1.5% $11.00 $5.00 $20.00 Special Meter Reading – unsuccessful Reconnection during regular working hours Reconnection after regular working hours Temporary Service – Installation and removal Transformer Ownership Credit < 115 kV Transformer Ownership Credit > 115 kV Each Each Each Each kW kW $10.00 $20.00 $50.00 $415.00 $0.45 $1.56 Unmetered Scattered Loads Billed same as GS < 50 kW Miscellaneous Charges Dry Core Transformer Loss Charge See Table A.4 Table 2.1 – Current Rates Summary of Application The following chapters provide a complete summary formatted by the chapters in the Handbook. 2006 EDR Application Hydro Ottawa Limited RP-2005-0020 EB-2005-0381 Tab B Filed 2005-08-02 Page 16 of 118 Chapter 3 – Test Year and Adjustments 3.0 Introduction 3.1 Historical Test Year versus Future Test Year Hydro Ottawa is filing based on Option 4, forward test year. Full documentation is included as supporting schedules. 3.2 Tier 1 Adjustments Since Hydro Ottawa is filing on the basis of a forward test year, no review has been completed of items that would have been Tier 1 adjustments if the historical test year had been adopted. Amounts forecast for 2006 are summarized under Chapters 4 and 6. Hydro Ottawa is not seeking approval for any incremental conservation and demand management (CDM) capital or operating expenditures in 2006 beyond the amount already approved in the RP-2004-0203 proceeding. However, the 2006 capital additions resulting from the previously approved plan have been added to the rate base. Tier 1 Adjustments: Distribution Expenses N/A Tier 1 Adjustments: Rate Base N/A Non-routine/unusual Tier 1 Adjustments N/A 3.3 Tier 2 Adjustments N/A 2006 EDR Application Hydro Ottawa Limited RP-2005-0020 EB-2005-0381 Tab B Filed 2005-08-02 Page 17 of 118 Chapter 4 – Rate Base 4.0 Rate Base Hydro Ottawa has separated its assets into Distribution Assets and Non-Distribution Assets as required by the Board. Non-Distribution Assets include Construction-Work-in-Progress (CWIP), a small amount of property used for other than distribution activity and a small number of Sentinel Lights inherited from its predecessor utilities. Hydro Ottawa does not have an active Sentinel Light program of its own. Assets Distribution Assets Land and Buildings TS Primary Above 50 Distribution Stations Poles, Wires Line Transformers Services and Meters General Plant Equipment IT Assets CDM Expenditures and Recoveries Other Distribution Assets Contributions and Grants Amortization Non-Distribution Assets 2006 Ending Balance $13,853,124 $30,838,797 $45,308,801 $438,179,454 $132,015,054 $118,773,521 $48,381,242 $37,726,381 $68,163,793 $2,616,912 $14,442,910 ($73,142,036) ($441,208,236) $18,815,900 Table 4.1 - 2006 Asset Balances before Smart Meters The amounts listed in Table 4.1 do not include the effects of Smart Meters. Smart Meters are discussed later in this chapter. Hydro Ottawa requests that the Board, in its decision on the Application, deem the stations and associated assets listed below in Table 4.2, which are included in Account 1815 “Transformer Station Equipment-normal primary over 50 kV”, as Distribution Assets. The Board deemed these assets to be Distribution Assets by letter on October 3, 2000 with the exception of Hydro Ottawa’s newest stations, Kanata MTS and Uplands MS (27.6 kV). On September 24, 2003 the Board authorized Hydro Ottawa to record, for transformation services, $1.50/kW in its Retail Settlement Variance Account (“RSVA”), Account 1586, for incremental load delivered through Kanata MTS. Hydro Ottawa is proposing to end this accounting practice coincident with the inclusion of Kanata MTS in Hydro Ottawa’s distribution rate base in 2006. 2006 EDR Application Hydro Ottawa Limited RP-2005-0020 EB-2005-0381 Tab B Filed 2005-08-02 Page 18 of 118 Station Description Epworth DS 115 kV to 8kV Distribution Substation 115 kV to 8kV Distribution Substation Merivale DS 115 kV to 8kV Distribution Substation Manordale DS 115 kV to 8kV Distribution Substation Centerpointe DS 115 kV to 8kV Distribution Substation Uplands MS 8 kV 115 kV to 27.6kV Distribution Substation Uplands MS 27.6 kV 115 kV to 27.6kV Distribution Substation Limebank MS 115 kV to 27.6kV Distribution Substation Moulton MS 115 kV to 27.6kV Distribution Substation Marchwood MS 115 kV to 27.6kV Distribution Substation Bridlewood MS 230 kV to 27.6kV Distribution Substation Kanata MTS Table 4.2 –Stations to be included as Distribution Assets Hydro Ottawa’s net fixed distribution assets for inclusion in the 2006 rate base, prior to the inclusion of Smart Meters, are $415,346,705. The working capital allowance to be included in the rate base is $93,110,929. As a result, Hydro Ottawa’s rate base for 2006 is $508,457,634 without Smart Meters. 2006 Rate Base - without Smart Meters Adjustment 2005 closing net asset balance 2006 capital additions (net of contributed capital) 2006 Amortization Net Additions Rate Base $394,743,692 $75,392,926 ($34,186,901) $41,206,025 2006 closing net asset balance $435,949,717 2006 Average net asset balance $415,346,705 Working Capital Allowance Total 2006 Rate Base Table 4.3 –2006 Rate Base without Smart Meters 2006 EDR Application $93,110,929 $508,457,634 Hydro Ottawa Limited RP-2005-0020 EB-2005-0381 Tab B Filed 2005-08-02 Page 19 of 118 Smart Meters The details of Smart Meter implementation are not final because the Minister of Energy has not yet responded to the Board's report to him entitled "Smart Meter Implementation Plan Report" dated January 26, 2005. Hydro Ottawa has nevertheless used the Board's report, including the implementation plan, as the basis for its forecast of Smart Meter costs for 2006. If the Minister decides on a different implementation plan, however, Hydro Ottawa would need to adjust its forecast accordingly. As part of Hydro Ottawa’s approved CDM Plan, work is underway to deploy 200 residential Smart Meters in the fall of 2005 and 730 commercial Smart Meters, for customers with a peak demand greater than 200kW, by the end of first quarter of 2006. The costs of these specific conversions are not included in Hydro Ottawa’s 2006 revenue requirement as they were previously approved as part of Hydro Ottawa’s CDM plan. The conversion schedule for 2006 to 2010 includes 100% of General Service customers greater than 50 kW and 40% of residential customers by December 31, 2007. The customer data used to arrive at the number of meters to be deployed in each customer class is from Hydro Ottawa’s 2006 customer forecast in Tab D of the Application Binder. The residential and small commercial Smart Meter cost was taken from the Board’s Smart Meter Implementation Plan Report, notes to Appendix C-2, Table 2. The incremental operating cost was also based on the Board’s report, which listed a monthly operating cost of $1.42 per month less $0.39 per month operating benefits, as stated in Appendix C-2, Table 2. The Smart Meter expenditures that are incremental to Hydro Ottawa’s CDM Plan are as follows: Expense Dollars Capital expenditures meters installed: $ 16,316,650 Less depreciation @ 15 years (with half-rate rule) $ 543,888 Net increase in distribution assets: $ 15,772,762 Incremental operating costs: Depreciation expense: Incremental operating expense: $ $ $ 744,895 543,888 1,288,783 Table 4.4 –Smart Meter Costs Table 4.5 summarizes Hydro Ottawa’s final proposed 2006 rate base with Smart Meters included. 2006 EDR Application Hydro Ottawa Limited RP-2005-0020 EB-2005-0381 Tab B Filed 2005-08-02 Page 20 of 118 2006 Rate Base - with Smart Meters Adjustment 2005 closing net asset balance 2006 capital additions (net of contributed capital) 2006 Amortization Rate Base $394,743,692 $91,709,576 ($34,730,789) Net Additions $56,978,787 2006 closing net asset balance $451,722,479 2006 Average net asset balance $423,233,086 Working Capital Allowance Total 2006 Rate Base $93,222,664 $516,455,750 Table 4.5 –2006 Rate Base with Smart Meters New distribution stations put into service in 2002, 2003 and 2004 Included in Hydro Ottawa 2004 closing asset balances are two distribution stations that were built in 2002 through to 2004. Kanata MTS Unprecedented load growth through the 1990’s in the former City of Kanata prompted Kanata Hydro to commission a study of supply facilities to ensure reliable power for the future. The study, completed October 1998, concluded that additional transformation capacity would be required prior to the summer 2002 peak. Kanata Hydro and Ontario Hydro conducted a joint study of supply facilities through the remainder of 1998. The conclusions, endorsed by Hydro One in 1999, confirmed that a Kanata Hydro owned 230kV/27.6 kV municipal transformer station (MTS) was the preferred option. However, a detailed and updated analysis of load growth concluded the in-service date for the station had advanced to summer 2001. Elecsar Engineering was retained for a detailed engineering design in January 2000. The amalgamation in November 2000 and changes in the structure of Ontario Hydro (property management approvals) delayed approval for the station land. Phase one of Kanata MTS was constructed in 2001 – 2002 and phase two, in 2003 – 2004. The present net book value of the new station is $6,317,579. 2006 EDR Application Hydro Ottawa Limited RP-2005-0020 EB-2005-0381 Tab B Filed 2005-08-02 Page 21 of 118 Uplands MS In 1998, supply planning began at Gloucester Hydro for the proposed Ottawa International Airport, and the redevelopment of the Uplands Military base. Key issues included high reliability for the airport, additional capacity for projected redevelopment of the Uplands base, voltage conversion, and the ultimate retirement of the existing 115kV/8 kV station. With amalgamation the added benefits including: The establishment of a reliable 27.6 kV supply to service new commercial customers in the former Ottawa Hydro territory, Future off-loading of some large existing 13 kV customers, and The creation of a tie between the Gloucester Hydro and Nepean Hydro circuits across the Rideau River to support significant load growth in the south. Uplands MS was commissioned in July 2003. The present net book value of the new station is $2,979,925. Customer Information System (CIS) Since its formation on November 2000, Hydro Ottawa has faced and resolved a series of issues related to the provision of customer care services to its customers. In particular, timelines for the opening of the new electricity market forced the implementation of an interim CIS solution in order to meet the “market opening date” and the new Market Rules. Subsequently, Hydro Ottawa deemed it reasonable to select and install a different and more effective CIS in order to offset the instability, performance issues, and operating costs of the interim solution. This has significantly improved customer service and avoided the high operating cost of continuing an unstable customer care environment. Throughout this process, Hydro Ottawa has closely controlled both capital costs and annual operating costs per customer, as shown in Table 4.6. Hydro Ottawa believes these costs are very reasonable given the circumstances in which they were incurred. A full CIS review is included in Tab C of the Application Binder. Item Former (AUS) CIS Implementation New (PeopleSoft) CIS Implementation Total Table 4.6 – CIS Expenditures Capital ($ Millions) Annual Operating Cost/ Customer ($) $7.3 $60.36 $20.8 $54.14 $28.1 Hydro Ottawa has already fully amortized the capital costs of the AUS CIS implementation. Its 2006 rate base therefore does not include any amounts for this system. Hydro Ottawa has included the 2006 EDR Application Hydro Ottawa Limited RP-2005-0020 EB-2005-0381 Tab B Filed 2005-08-02 Page 22 of 118 full capital cost of the PeopleSoft implementation, amounting to $20.8 million, together with accumulated amortization. Hydro Ottawa believes that this treatment of the new CIS is very reasonable under the circumstances. Light Rail Transit Line (LRT) The City of Ottawa is proposing an expansion of its rapid transit network with the construction of a north – south transit line from the downtown core to the south Nepean sector and the MacdonaldCartier Airport, and an east-west transit line from the Kanata sector to Orléans. The environmental assessment for both lines is currently underway. The City has targeted summer 2006 for start of construction on the north-south line, with completion by the Fall of 2009. The environmental assessment for the east-west line is scheduled to be completed by the Fall of 2006, with construction to follow. The City has initiated preliminary discussions with Hydro Ottawa on requirements for the relocation of existing distribution plant. Since the impact on Hydro Ottawa of this project is still being assessed, no capital or operating expenses resulting from the LRT project have been included in the Application. However, the impact of this project on Hydro Ottawa could be extensive, and Hydro Ottawa will evaluate the financial and other implications once project definition is finalized. 4.0 Amortization Rates Hydro Ottawa has adopted the amortization rates as set out in the Appendix B of the Handbook. The rates set out in Appendix B have an asset type for Account 1920 described as Computer Equipment: Hardware, which depreciates over five years. There is no asset type included for Computer Equipment: Software. Since no guidance was provided in the Accounting Procedures Handbook or the 2000 Electricity Distribution Rate Handbook on the amortization of computer software, Hydro Ottawa conducted its own review. For smaller software items, Hydro Ottawa has adopted five years as a reasonable estimate for the life of most software. However, given the September 2004 implementation of a new CIS, Hydro Ottawa felt it prudent to complete a review to determine an appropriate amortization rate consistent with General Accepted Accounting Principles (GAAP) for this specific asset, which is distinct in nature. As a result of this review, Hydro Ottawa is currently amortizing its CIS over 10 years. This approach was reviewed by Hydro Ottawa’s external auditors and was considered appropriate for GAAP in accordance with industry standards. Table 4.7 summarizes the expected capital depreciation expense for assets that are expected to exist at the end of 2006. This amount is made up of actual amounts incurred as at the 2004-year end and capital additions included in the Application. Amortization on 2004 Assets 2006 $28,548,706 Amortization Table 4.7 – Amortization 2006 EDR Application Amortization on 2005 Asset Additions $ 3,503,375 Amortization on 2006 Asset Additions $ 2,134,821 Total $ 34,186,901 Hydro Ottawa Limited RP-2005-0020 EB-2005-0381 Tab B Filed 2005-08-02 Page 23 of 118 4.1 Capital Investments Summary Hydro Ottawa is submitting its Application on the basis of a forward test year. The Hydro Ottawa capital budget is divided into three categories; demand capital, sustainment capital and general plant capital (as per the Board’s definition). The distinction between the first two categories is based on the following definitions: Demand Capital - Activity done to address external requests for connection to, or relocation of, Hydro Ottawa’s distribution system plant, or to repair equipment damaged by external parties. These activities result in a repair, relocation, change or expansion of the Hydro Ottawa distribution system. External parties may be a regulator, a road authority, a developer or individual customers. Hydro Ottawa is required to provide timely service for these activities. Sustainment Capital - Activity done to enhance, strengthen or support, the Hydro Ottawa distribution system so it may continue to function as intended. Activities include installation, reinforcement, betterment, extension, relocation, or replacement of Hydro Ottawa owned electrical distribution plant mainly driven by recurring or imminent system failures, capacity constraints, or general growth. These activities are driven by an internal asset management strategy and not by external parties. The following table summarizes Hydro Ottawa’s actual and planned distribution capital additions for 2004 to 2006. 2004 Land and Buildings TS Primary Above 50 DS Poles, Wires Line Transformers Services and Meters General Plant Equipment IT Assets CDM Expenditures and Recoveries Other Distribution Assets Contributions and Grants Capital Additions Net of Contributed Capital ($5,818) 6,929,865 (291,413) 23,245,014 7,317,881 8,858,886 6,024,280 2,476,729 32,550,202 153,653 (32,693) (7,535,965) 2005 $1,394,251 1,858,539 2,406,403 25,728,063 7,283,222 13,760,814 11,505,521 4,360,784 7,711,868 1,043,247 941,151 (13,084,000) 2006 $1,145,880 2,779,332 5,862,095 25,961,938 9,584,541 9,098,665 5,448,440 4,911,907 11,644,926 1,420,012 4,316,725 (6,781,536) $79,690,620 $64,909,863 $75,392,926 Table 4.8 – Capital Additions Note – negative values in 2004 relate to year over year changes in construction work-in-progress (CWIP) The numbers in Table 4.8 do not include the Smart Meter impact. Smart Meters are discussed separately in section 4.0.1 2006 EDR Application Hydro Ottawa Limited RP-2005-0020 EB-2005-0381 Tab B Filed 2005-08-02 Page 24 of 118 All of Hydro Ottawa’s capital forecasts have been prepared in accordance with the minimum grouping of accounts from Appendix A of the Handbook. However, Hydro Ottawa internally organizes its capital program as shown in the following table. Category Distribution Demand Capital Class Commercial Infill & Upgrade Metering Plant Relocation Residential Stations Embedded Generation System Expansion Distribution Sustainment Distribution Asset Distribution Automation Distribution Enhancement Damage To Plant Station Sustainment Stations Asset Stations Automation Stations Capacity Stations Enhancement General Plant GIS/OMS Project CIS Project Control Room Modernization Buildings - Facilities Fleet Replacement IT Infrastructure Tool Replacement Program PC/Software/Servers SCADA Misc. Table 4.9 – Capital Program Structure Asset Management Strategy The following describes in general the process used to develop the asset plans for each asset class. This single-asset plan is referred to as an intermediate program. The intermediate program for each asset class addresses the following major objectives: Identify a desired level of service and customer costs, Develop a long-term, sustainable plan for asset replacement, 2006 EDR Application Hydro Ottawa Limited RP-2005-0020 EB-2005-0381 Tab B Filed 2005-08-02 Page 25 of 118 Provide inputs to the final asset management optimization process, including a cost-benefit analysis consistent with all other assets. Hydro Ottawa’s asset management process uses relevant information about the asset such as condition, criticality, and cost, along with important drivers from Hydro Ottawa, such as level of service, corporate values, and regulatory requirements, in a quantitative way to develop a program for each asset class. Figure 4.1 below illustrates process. Asset Evaluations Consequence Cost Asset Condition • • Risk Matrix Equipment Class Risk-Cost Asset Demographics Condition/Failure Correlation Consequence Costs Functional Issues H ig h • INCREASING RISK-COST Me d • Lo w G oo d F air Po or C o n d itIndex io n In d ex Health Risk & Economic Evaluation Evaluation of other drivers • • • DRIVERS Corporate Values Economic/Financial Constraints Environmental and Safety Resource Capabilities Regulatory Requirements Superseding Programs Benchmarking Intermediate Program Figure 4.1 – Asset Management Process The existing utility data was maximized by thoroughly considering existing input data, by supplementing the data with engineering estimates where needed, and by benchmarking to industry standards and practices. The application of this asset management process for each asset class will be instrumental for ensuring desired performance at minimum cost over the long term. It is understood that some assets must be addressed each year in order to minimize life-cycle cost and maintain the value and performance of the entire asset class. The asset management process helps to determine the optimum intervention strategy and provides justification for it. Each asset program explicitly considers risk in a quantitative way, based on the condition of the assets in the class and the consequences of their failure. Consequences include not only the costs to Hydro Ottawa for repair, but also estimates of the costs to Hydro Ottawa’s customers in the form of outages and safety and environmental effects. The program is based on a least-cost method of optimizing replacement rate. Inputs related to condition, failure rate, and consequences of failure will continue to be developed. Additional data will produce more precise programs in terms of the optimal intervention strategy as well as the costs of delaying intervention. The process will be significantly enhanced and expanded with the completion of the new Geographic Information System (GIS) scheduled for final completion in 2006. 2006 EDR Application Hydro Ottawa Limited RP-2005-0020 EB-2005-0381 Tab B Filed 2005-08-02 Page 26 of 118 Plan Results for Selected Programs The above described process was applied to four of Hydro Ottawa’s major asset classes; namely Wood Poles, Underground Cables, Station Transformers, Station Switchgear. (It was also applied to Vegetation Management; see Chapter 6.) These results are described in detail in subsequent sections. Figure 4.2 below shows the collective optimized 20-year funding needs for these asset classes based on their recommended programs. Optimized Asset Program 45 40 35 Vegetation St. Swgr St. Xfmr Cables Wood Poles $M 30 25 20 15 10 5 20 24 20 22 20 20 20 18 20 16 20 14 20 12 20 10 20 08 20 06 0 Year of Spending Figure 4.2 – Optimized Funding Needs for Selected Asset Programs Conclusions Indications are that a large volume of the Hydro Ottawa distribution assets are nearing end-of-life requiring increasing amounts of capital replacement/refurbishment expenditures over the next twenty years. The Hydro Ottawa Sustainment Budget will contain these capital programs. The proposed spending in these asset classes for 2006 totals approximately $14.0 million. Hydro Ottawa’s proposed capital additions are lower than those supported by the results of the asset management process. Hydro Ottawa has chosen a conservative approach for 2006; however, it will continue to evaluate its asset plans to ensure these asset programs are sufficiently funded to reduce the impact of large expenditures projected. Facilities Asset Strategy Following the amalgamation of the five predecessor utilities in 2000, Hydro Ottawa began to develop a realty plan that would support its new strategic direction and organizational structure. A decision was made within Hydro Ottawa to establish various satellite work centers throughout its service territory. This has improved customer response times and overall workforce productivity by reducing vehicle travel time. This strategy is a direct result of the large size of Hydro Ottawa’s service territory and its diverse urban/rural mix. With over 55 km from east to west, travel time to work sites by field crews from a central facility would have been excessive. 2006 EDR Application Hydro Ottawa Limited RP-2005-0020 EB-2005-0381 Tab B Filed 2005-08-02 Page 27 of 118 This realty strategy included the need for consolidation of supply chain warehousing, emergency control centers, vehicle repair facilities and the construction and renovation of new and existing work centers. Rationalization of these properties was accompanied by reductions in inventory, standardization of materials and improved dispatching of resources. There are five main work centers occupied by Hydro Ottawa, which are located at Albion Road, Merivale Road, Bank Street, Maple Grove Road and Carling Avenue. There have been renovations made to the Merivale Road, Maple Grove Road and Carling Avenue facilities as part of the overall plan to redistribute the workforce throughout Hydro Ottawa’s service territory. This has resulted in a significant reduction of field staff operating from the Albion Road work center. The disposal of this property in favour of a smaller, less costly administrative facility is being considered for 2007. The construction of the east-end operations work center to replicate the Maple Grove Road work center in Ottawa west will begin in 2006. Capital Programs/Projects Schedule 4-1 provides a list of 2006 programs and projects exceeding the materiality threshold. Detailed descriptions of these projects are provided following Schedule 4-1. 2006 EDR Application Hydro Ottawa Limited RP-2005-0020 EB-2005-0381 Tab B Filed 2005-08-02 Page 28 of 118 Schedule 4-1: Capital Expenditures Projects Over Materiality of $300,000 Residential Subdivision Dist. Transformer Replacement Distribution Enhancements Planned Pole Replacement New Commercial Development New Cyrville Substation Plant Relocation & Upgrade System Expansion EOL Cable Works Station TXF Refurbishment Infill & Upgrade Station Circuit Breaker Control Refurbishment Meter Replacement and Re-verification Stations Switchgear Replacement Vault Rehab or Removal Wholesale Meter Upgrade Plant Failure Capital Damage to Plant Elbow and Insert Replacement Insulator Replacement Program Distribution Automation Station Transformer PCB Removal Substation Automation O/H Equipment New and Rehab East End Operation Centre GIS & OMS Systems SCADA & Control Room Upgrades Vehicle Replacements Bank Street Office Rehabilitation CIS Software Enhancements Merivale Road Office Additions Albion Road Office Carling Operations Centre Storage Building Station Building Rehabilitation Upgrade of JDE Financial System Business Continuity Plan Conservation & Demand Management Class Distribution Plant Distribution Plant Distribution Plant Distribution Plant Distribution Plant Distribution Plant Distribution Plant Distribution Plant Distribution Plant Distribution Plant Distribution Plant Distribution Plant Distribution Plant Distribution Plant Distribution Plant Distribution Plant Distribution Plant Distribution Plant Distribution Plant Distribution Plant Distribution Plant Distribution Plant Distribution Plant Distribution Plant General Plant General Plant General Plant General Plant General Plant General Plant General Plant General Plant General Plant General Plant General Plant General Plant CDM Capital 2006 $ In-Service Amount Date $6,939,884 2006 $6,601,265 2006 $6,522,466 2006 $5,879,898 2006 $4,330,881 2006 $4,061,259 2008* $2,874,076 2006 $2,789,377 2006 $2,128,956 2006 $1,989,510 2006 $1,859,220 2006 $1,695,999 2006 $1,301,511 2006 $1,101,796 2006 $1,006,709 2006 $930,318 2006 $698,934 2006 $558,921 2006 $553,478 2006 $475,198 2006 $464,867 2006 $422,920 2006 $385,921 2006 $278,901 2006 $7,026,078 2007* $4,901,719 2006 $3,019,289 2006 $2,589,689 2006 $1,981,694 2006 $1,819,600 2006 $1,278,083 2006 $905,245 2006 $615,715 2006 $572,940 2006 $571,651 2006 $315,117 2006 $1,420,012 2006 Table 4.10 – Capital Projects * In-service dates beyond 2006 indicate cost will be Construction-Work-in-Progress (CWIP) in 2006 (except land). 2006 EDR Application Hydro Ottawa Limited RP-2005-0020 EB-2005-0381 Tab B Filed 2005-08-02 Page 29 of 118 4.1.1.1 Residential Subdivision ($6,939,884) Description Residential developments are new residential subdivisions requested by owners/developers, which Hydro Ottawa is obligated to connect. It does not include secondary “in-fill” type services. The capital expenditures of $6,939,884 are partially funded by developers through contributions in aid of construction, as determined by the requirements of the Distribution System Code. Only the net between the capital expenditures and the contributions are included in Hydro Ottawa’s rate base. Demographics The majority of the residential work is in the west, south and east suburbs of Ottawa. Growth since 2000 has been high. The Strategy Residential development is primarily dependent on the local economy. The City of Ottawa is projecting an average growth rate of 3% over the next year. However, the City’s 2004 actual was 1.6%, 1.4% below projection. Hydro Ottawa is conservatively budgeting for a 1.7% growth rate in 2006, and approximately 3800 new homes. The Plan The expected cost of new residential development is based on historical levels, projected growth rate, 2005 project carry-over, and potential 2006 project inquiries. 4.1.1.2 Distribution Transformer Replacement ($6,601,265) Description Distribution transformers are used to reduce higher distribution voltages to low voltages used in commercial and residential buildings. Distribution transformers that contain PCBs, show visible signs of leaking, or are known to pose a safety risk are scheduled for replacement with newer and safer units. Typically, each distribution transformer services approximately 12 residential customers, fewer if used for commercial applications. Demographics Hydro Ottawa has an estimated 36,000 distribution transformers in both overhead and underground applications. The Strategy The strategy for 2006 is to replace transformers that contain mineral oil with PCBs, have visible signs of oil leakage, or are of a pad-mounted “live-front” design. A distribution transformer survey for levels of PCBs will commence in 2005 and be completed in 2006. It is estimated (based on historical figures) that 6% of the distribution transformers inspected will contain low-level PCBs. As 2006 EDR Application Hydro Ottawa Limited RP-2005-0020 EB-2005-0381 Tab B Filed 2005-08-02 Page 30 of 118 well, some will show visible signs of leakage and hence, pose a safety and/or environmental concern. Overall it is estimated that 540 units per year will require replacement over the next five years. The Plan The plan is to replace the identified transformers on a scheduled program over the next four years (2006-2009) with any remainder being completed in 2010. The replacement of distribution transformers is evaluated in conjunction with other project such as cable replacement to ensure coordination between plans. 4.1.1.3 Distribution Enhancements ($6,522,466) Description Per the Board’s definition, “Distribution Enhancements” represent projects that modify an existing distribution system for the purpose of improving system-operating characteristics such as reliability or power quality or for relieving system capacity constraints that could result from general load growth. Demographics Hydro Ottawa’s service area now comprises approximately 800 overhead and underground feeders emanating from approximately 70 substations. Distribution voltages range from 44kV down to 4kV. The Strategy Projects are identified through two means: Joint reviews with Hydro One regarding bulk supply issues such as station capacity, Internal studies of distribution system supply reliability; future load growth, feeder loading, and station loading. The Plan Distribution Enhancements for 2006 include the following program categories: Cyrville-Orleans overhead trunk tie, Minor line extensions (overhead or underground), Fallowfield-Greenbank 44kV tie, South Urban trunk extension, Circuit load balancing, Kanata Eagleson south 27.6kV trunk tie, Trunk ties between stations or feeders for contingency and load relief, New egress feeders from stations, Vault space easements, Additions or extensions of System Neutral wires, Voltage Conversion, Animal guards on the distribution network. 2006 EDR Application Hydro Ottawa Limited RP-2005-0020 EB-2005-0381 Tab B Filed 2005-08-02 Page 31 of 118 4.1.1.4 Planned Pole Replacement ($5,879,898) Description Wood poles are used by Hydro Ottawa for most of its overhead electrical distribution system. They are used to support the distribution conductors, pole-top transformers, and other equipment related to the distribution system. Demographics Demographic information comes from two sources: a survey from 1996 of the poles within the former City of Ottawa, and a more recent 2004 survey of the poles in the surrounding areas. For each pole, these surveys note the pole’s GPS coordinates, number and type of circuits attached to each pole, condition based on a visual inspection, and the other attachments such as guy wires, communication cables, and transformers. Pole condition is scored from 1 (very good) to 5 (very poor) based on criteria established by Hydro Ottawa. Figure 4.3 below shows the distribution of poles by condition. The results show a very large concentration of poles in the middle (3) condition range, more towards the good end (1) than the poor (5). This reflects that most of Hydro Ottawa’s poles show slight deterioration and are between 20 and 35 years old. Typically these poles would have about 15 to 30 years remaining of their useful lifetime. Wood Poles Summary of Condition 30,000 Number of Poles 25,000 20,000 1996 Survey GIS Survey 15,000 10,000 5,000 0 1 2 3 4 5 Condition Category Figure 4.3 – Wood Poles Condition Distribution The Strategy The strategy for the asset management intermediate program for the wood poles includes the following major objectives: 2006 EDR Application Hydro Ottawa Limited RP-2005-0020 EB-2005-0381 Tab B Filed 2005-08-02 Page 32 of 118 Develop a long-term, sustainable plan for wood pole replacement, Identify the desired level of service and customer costs, Optimize plan on the formal asset management process with a cost-benefit analysis consistent with all other assets. The asset management process is used to determine the optimum rate of replacement for wood poles and provides consistent justification. This program explicitly considers risk in a quantitative way, based on the condition of the asset and the consequences of its failure. Consequences include not only the costs to Hydro Ottawa for repair, but also estimates of the costs to Hydro Ottawa’s customers in the form of outages, safety and environmental impacts. The program is based on a least-cost method of optimizing replacement rate. The Plan The asset management process results in an economically optimized plan for each group of poles in the risk matrix. This optimal schedule is then adjusted to create a cost effective and sustainable replacement program. The program is shown in Figure 4.4 below. Figure 4.4 – Wood Poles Replacement Program The figure shows that the optimal replacement rate in the future, starting in about year 2015, increases significantly. This increase is caused by the concentration of poles in the middle range of the condition distribution shown above. There is some uncertainty around projections of end-of-life this far into the future, but prudence suggests that the levelized program today should take into account the expectation that a large number of poles will require replacement within the planning horizon (20 years). 2006 EDR Application Hydro Ottawa Limited RP-2005-0020 EB-2005-0381 Tab B Filed 2005-08-02 Page 33 of 118 This plan is based on managing risk, rather than on avoiding it. As such, there still exists in this program some residual risk. In general, these risks can be managed in at least two ways: a) by tracking the cost of the program and verifying its benefits over time; and b) by re-evaluating the program periodically with updated information and adjusting it as needed. The rate shown above for 2006, about 450 poles per year, is higher than the historical rate of pole replacement at Hydro Ottawa. The peak replacement needed in 2016 is within the planning horizon, which means that the long-term sustainable plan must take into account the need for very high pole replacement rates in the future. 4.1.1.5 New Commercial Development ($4,330,881) Description Commercial developments are new, or upgraded, primary services. These services are at the request of owners/developers, which Hydro Ottawa is obligated to connect. Demographics The majority of the commercial work is in the west, south and east suburbs of Ottawa. Growth since 2000 has been high. The Strategy Commercial development is primarily dependent on the local economy. The City of Ottawa is projecting an average growth rate of 3% over the next year. However, their 2004 actual was 1.4% below projection. Hydro Ottawa is conservatively budgeting for a 1.7% growth rate in 2006. The Plan The expected expenditures by Hydro Ottawa for new commercial development in 2006 is based on historical levels, projected growth rate, 2005 project carry-over, and potential 2006 project inquiries. 4.1.1.6 Station Capacity - New Cyrville Substation ($4,061,259) Description Station Capacity is the program to install new station facilities, which are required to supply growth in electrical demand. This could involve the installation of an additional transformer at an existing station, the upgrading of existing transformers to larger ones, or the construction of a new substation, complete with one or more new transformers. The options available to increase capacity are subject to several factors, including the available space at existing stations, the proximity of existing stations to the areas of load growth, equipment limitations at existing stations, and the availability of suitable land for installing a new station. Hydro Ottawa does not own all of the substations and related power transformers that supply Hydro Ottawa load. Hydro One owns many of the larger transformer stations and terminal stations in 2006 EDR Application Hydro Ottawa Limited RP-2005-0020 EB-2005-0381 Tab B Filed 2005-08-02 Page 34 of 118 Ottawa. As a result, when load growth occurs in certain parts of the city, Hydro Ottawa must consider the option of having Hydro One upgrade their facilities; sometimes this is the only practical option. If Hydro One is requested to add more transformation to supply a particular area, then it must perform an economic evaluation of future revenues that it will derive from the Transformation Tariff that it collects at each of the stations under its ownership. If the present value of this revenue exceeds the cost of the capacity installation, then Hydro Ottawa is not required to provide a monetary contribution to the project. Demographics Significant growth in demand is possible throughout most of the core, urban and suburban areas of the City of Ottawa. This is a result of two initiatives of the city government. One is to promote new residential development, or redevelopment, within the core area of Ottawa. The second is to encourage commercial and industrial development in the vicinity of the suburban areas. Clear evidence exists that the first of these initiatives is taking hold with the development community. Many new high-rise condominium developments have been undertaken in the last few years, and more are in the planning or construction phase. Infill development also continues in much of the downtown core. In the major suburban communities of Kanata/Stittsville, South Nepean, South Gloucester, and Orleans, single and multi-unit residential development has been strong over the last five years, with an average of about 5,000 such dwellings being built each year. In these suburban areas, commercial development remains strong, however major industrial growth in these areas has generally been slow. A recovery of the high-tech sector could change this situation quickly however. The Strategy The planning staffs of Hydro One and Hydro Ottawa have jointly undertaken a study of the available capacity at the major supply stations, which provide power to our customers. It has shown that there currently are loading concerns in the following areas: Ottawa Core 13 kV Area Ottawa South East 13 kV Area Cyrville-Orleans 28 kV Area The Plan For the Ottawa Core and Ottawa South East areas, a comprehensive expansion plan will be developed by the end of 2005. There is a two to three year lead-time for design and approval for station construction. In 2006 and 2007 Hydro Ottawa plans to build a new 115 kV to 27.6 kV substation in the Cyrville area. The 27.6 kV supply area of Cyrville-Orleans is currently fed from two stations, Bilberry TS, which is owned by Hydro One, and Moulton MTS, which is owned by Hydro Ottawa. Two feeders at Bilberry TS also supply about 30 MW of Hydro One retail load. The load in this area currently exceeds the defined planning criteria. As such an additional source of capacity is required. Several options were examined as part of the joint study. The recommended solution is for a new station to be built in the Cyrville area. Negotiations are presently underway with the City of Ottawa for land to 2006 EDR Application Hydro Ottawa Limited RP-2005-0020 EB-2005-0381 Tab B Filed 2005-08-02 Page 35 of 118 build this facility. The anticipated in-service date for this new station is 2008, with the acquisition of the land forecast in 2006. 4.1.1.7 Plant Relocation and Upgrades ($2,874,076) Description Plant relocation is largely driven by the City of Ottawa road works program. There typically is some capital contribution as per the Public Service Works on Highway Act. It does not include work for others (i.e., where the infrastructure involved is not Hydro Ottawa owned). This work is done at the request of owners/developers. Demographics The work can be all across Hydro Ottawa’s service area depending on the City of Ottawa roadwork plan. The Strategy Plant relocation is primarily dependent on the local economy and on various levels of government funding. The City of Ottawa has established a road works program for 2006. The Plan The expected financial impact on Hydro Ottawa of plant relocation is based on historical levels, projected growth rate, 2005 project carry-over, and potential 2006 project inquiries. 4.1.1.8 System Expansion ($2,789,377) Description Per the Board’s definition, “System Expansion” represents an addition to a distribution system in response to a request for additional customer connections that otherwise could not be made; for example, by increasing the length of the distribution system. Development in areas with no current infrastructure requires expansion to service commercial or residential development. Demographics Activity follows growth and government infrastructure investment patterns. The Strategy These projects are largely unpredictable in timing as they are dependent on needs or requests of external parties. 2006 EDR Application Hydro Ottawa Limited RP-2005-0020 EB-2005-0381 Tab B Filed 2005-08-02 Page 36 of 118 The Plan 2006 projects include expansion for the supply of Valour Drive Business Park, Terminal Lands commercial development, and addressing long-term load transfers. The program proposed is consistent with past annual programs. 4.1.1.9 End-of-life Cable Works ($2,128,956) Description Hydro Ottawa’s underground cable asset class consists of underground cables, splices/joints, elbows, potheads and terminations at voltage levels of 44 kV and below. This asset class includes sections of underground cable running from distribution stations to overhead lines and from overhead lines to transformers and switches. Underground cables are used mainly in residential areas, and in urban areas where it is either impossible or extremely difficult to build overhead lines due to aesthetic, legal, environmental or safety reasons. The configuration of the underground system is mainly loop. Hydro Ottawa currently manages a system of underground cables with a total length of about 3,100 km operating at voltages of 44 kV and lower. The system consists of approximately 72.5% residential distribution plastic cables, 9% trunk plastic cables (XLPE), 18.5% lead cables (PILC) and a very small percentage of butyl rubber cables (EPR). Demographics Demographic information for the underground cables has been collected from various sources included in Hydro Ottawa’s existing condition assessment and maintenance programs. Cable age and length information is shown in Table 4.10 below. Materials Installation Lead (PILC) 1930s – present Trunk Plastic (XLPE) 1970s – present Distribution Plastic 1970s – present Table 4.10 – Underground Cable Demographics Total 735 km 310 km 2,250 km The plastic cable population is composed of older, non-tree-retardant1 plastic cables installed prior to 1989 and tree-retardant cables installed in 1989 and later. The non-tree-retardant cables are considered to have a much lower useful life or about 25 years on average while the tree-retardant cables can be expected to last about 40 years. A summary of the Health Indices for non-treeretardant distribution plastic cables is shown in Figure 4.5. A summary of Health Indices for treeretardant distribution plastic cables is shown in Figure 4.6. The age demographics (based on identified segments of cable installed) of both types of these plastic cables are shown in Figure 4.7. Water molecules and other contaminants can cause “water trees”, electrically weak areas in a cable’s insulation, which can ultimately lead to cable failures. “Tree retardant” refers to cables that resist these water trees. 1 2006 EDR Application Hydro Ottawa Limited RP-2005-0020 EB-2005-0381 Tab B Filed 2005-08-02 Page 37 of 118 Number of Segments Non-Tree-Retardant Plastic Cable - Sample Survey 40 35 30 25 20 15 10 5 0 37 22 Poor 22 Fair Good Condition Figure 4.5 – Plastic Type Underground Cables Condition Distribution (installed before 1989) # of Segments Tree-Retardant Plastic Cable - Sample Survey 20 18 16 14 12 10 8 6 4 2 0 19 1 Poor 2 Fair Good Condition Figure 4.6 – Plastic Type Underground Cables Condition Distribution (installed since 1989) 2006 EDR Application Hydro Ottawa Limited RP-2005-0020 EB-2005-0381 Tab B Filed 2005-08-02 Page 38 of 118 Distribution Plastic Cables 2004 2002 2000 1998 1996 1994 1992 1990 1988 1986 1984 1982 1980 1978 1976 1974 1972 1970 1968 1966 km of Cable 200 180 160 140 120 100 80 60 40 20 0 Year Installed Figure 4.7 – Plastic Type Distribution Underground Cable Demographics The Plan The asset management process results in economically optimal replacement timing for each cable type in the risk matrix. This optimal schedule is then adjusted to create a reasonable and sustainable replacement program. The program for the three cable types is shown in Figure 4.8 below. Plastic cable installed since 1989 does not require replacement within the presently defined planning horizon (20 years). Underground Cable Replacement Program $12,000,000 $10,000,000 Cost $8,000,000 Distribution Plastic (Type C) Trunk Plastic (Type B) $6,000,000 Lead Cable (Type A) $4,000,000 $2,000,000 24 23 22 21 25 20 20 20 20 20 20 20 19 20 18 20 17 20 15 14 16 20 20 20 13 20 12 20 11 20 10 20 08 07 09 20 20 20 20 06 $0 Year Figure 4.8 – Levelized Underground Cables Replacement Program (all non-TR plastic and lead cables) 2006 EDR Application Hydro Ottawa Limited RP-2005-0020 EB-2005-0381 Tab B Filed 2005-08-02 Page 39 of 118 The replacement rates shown in Figure 4.8 are based on optimizing the trade-off between the increasing risk of failure as the cables age and the benefit of delaying expenditures as long as possible. As the cables reach their average end-of-life, the rate of failure increases. The optimum strategy is to replace close to the average end-of-life. This is the strategy for the non-tree-retardant cable. The last of this cable is to be replaced between 2016 and 2020. The PILC cable has a much longer life, and the strategy is generally not to replace until failure (the cost shown for PILC in Figure 4.8 is un-planned replacement). 4.1.1.10 Station Transformer Refurbishment ($1,989,510) Description Station transformers are used for stepping the voltage of incoming electric power down from higher transmission or sub-transmission voltages to lower distribution voltages. The main components of a station transformer are the bushings where the incoming and outgoing conductors are attached, the high and low-voltage coils, and the tank that houses the coils and contains the oil used for insulating and cooling the entire unit. Demographics Demographic information for the station transformers has been collected from various sources included in Hydro Ottawa’s existing condition assessment and maintenance programs. Age and voltage information are shown in Table 4.11 below. High Voltage 13 kV 44 kV 115 kV 230 kV Total % 0-10yrs 1 1 4 2 8 4.5% Age Group 10-20yrs 20-30yrs 30-40yrs 40-50yrs 0 4 107 3 11 11 16 0 10 2 0 4 0 0 0 0 21 11.9% 17 9.7% 123 69.9% 7 4.0% >50yrs 0 0 0 0 0 0.0% Total 115 39 20 2 176 100.0% Table 4.11 – Age and Voltage Demographics Condition demographics were developed as part of the asset management process. A summary of Health Indices for the station transformers is shown in Figure 4.9. 2006 EDR Application Hydro Ottawa Limited RP-2005-0020 EB-2005-0381 Tab B Filed 2005-08-02 Page 40 of 118 The figure shows that nine of the transformers are assessed to be in poor condition and are approaching the end of their useful life. Station Transformer Health Index Number of Units (Transformer and Tapchanger) 120 100 80 60 40 20 0 111 52 0 Very Poor 0-30 9 4 Poor 30-50 Fair 50-70 Good 70-85 Very Good 85-100 Health Index Group Figure 4.9 – Station Transformers Condition Distribution The Plan The asset management process results in an economically optimal timing of intervention for each transformer. The intervention modelled depended on the type of transformer. For high voltage transformers (>50kV), Hydro Ottawa anticipates replacing them when they reach their economic end-of-life. For station transformers (<50kV), Hydro Ottawa plans a major rehabilitation including a rewind rather than full replacement. The optimal schedule of intervention is adjusted to create a cost-efficient and sustainable replacement program. The optimal intervention rate is three transformers per year for the next 10 years. Starting in about year 2017, the number begins to increase. This increase is caused by the concentration of transformers in the 30-40 year age range shown in Table 4.11. 4.1.1.11 Infill and Upgrades ($1,859,220) Infill and upgrades are demand-based activities that include new residential and commercial secondary services not located in new subdivisions or new business parks. This is a demand-based activity. All costs in the category are customer dependant and estimates are based on historical levels. 2006 EDR Application Hydro Ottawa Limited RP-2005-0020 EB-2005-0381 Tab B Filed 2005-08-02 Page 41 of 118 4.1.1.12 Station Circuit Breaker Control Refurbishment ($1,695,999) This program consists of upgrading and refurbishing circuit breaker control circuits typically 35 years of age or over. The program includes the installation of new control components and the upgrading of several features to take advantage of newer more efficient and reliable technology. The key elements of the program consist of enhancements such as remote controlled recloseblocking schemes to allow for the application of work protection. This will result in improvements in efficiency for day-to-day operations. 4.1.1.13 Meter Replacement and Re-verification ($1,301,511) This program covers capital additions for distribution meters for the following: Replacing meters for service upgrades Replacing damaged meters as a result of storms, vandalism or fire Replacing meters during the meter re-verification program. These capital items are based on historical trends. 4.1.1.14 Station Switchgear Replacement ($1,101,796) Description Hydro Ottawa’s Station Switchgear asset class consists of breakers, switches, bus insulation, support structures, protection and control systems, arrestors, control wiring, ventilation and fuses. The base unit of this asset class is a switchgear assembly, which includes buswork, feeder breakers and appurtenances. Demographics Hydro Ottawa currently manages approximately 200 switchgear assemblies containing a total of 889 breakers, 66 reclosers and 1,079 switches. Demographic information for the station switchgear has been collected from various sources included in Hydro Ottawa’s existing condition assessment and maintenance programs. Switchgear assembly information is shown in Figure 4.10 below. The figure shows that about 30% of the devices are over 40 years old, which is generally considered by the industry as the useful length of life for this equipment. 2006 EDR Application Hydro Ottawa Limited RP-2005-0020 EB-2005-0381 Tab B Filed 2005-08-02 Page 42 of 118 Number of Devices Station Switchgear Age Profile 200 180 160 140 120 100 80 60 40 20 0 196 140 125 120 91 53 52 36 5 46-50 41-45 36-40 31-35 26-30 21-25 16-20 11-15 6-10 12 0-5 Age Figure 4.10 – Switchgear Demographics A summary of the Health Indices for station switchgear by assembly is shown in Figure 4.9. This graph shows that less than 10% of the assemblies are in poor or very poor condition. Given the age profile of the equipment it would be expected that more assemblies would be in poor condition, however, positive results are attributable to an effective maintenance and refurbishment program. Switchgear Health Index 100 Number of Assemblies 100 80 60 42 40 28 20 10 2 0 Very Poor 0-30 Poor 30-50 Fair 50-70 Health Index Category Figure 4.11 – Station Switchgear Assembly Health Index 2006 EDR Application Good 70-85 Very Good 85-100 Hydro Ottawa Limited RP-2005-0020 EB-2005-0381 Tab B Filed 2005-08-02 Page 43 of 118 The Plan The asset management process results in economically optimal replacement for the switchgear assemblies. This optimal schedule is then adjusted to create a reasonable and sustainable riskbased replacement program. In addition, there are some assemblies facing short circuit levels higher than their rating, which means the breakers may fail if they are required to open on a fault. These breakers should be replaced with assemblies with higher ratings. Two assemblies will be replaced in 2006. Increased switchgear replacement will be required in future years. 4.1.1.15 Vault Rehab or Removal ($1,006,709) Description A vault is an enclosed space containing essentially (one or more) distribution transformers, switching units, and cable work. It is the point of connection from the high voltage distribution network to the customers’ electrical distribution system. This program involves refurbishment of underground vaults in Hydro Ottawa’s service area due to the age or condition of the assets. Demographics Sidewalk Vaults: There were 30 sidewalk vaults (under the road right-of-way) in the downtown core area (designated area bound by the Ottawa River, Rideau River, Rideau Street, and King Edward Avenue) with a total of 43 submersible transformers in them. The transformers are at their end-oflife and are rusting. Other Vaults: There are approximately 1644 indoor vaults in Hydro Ottawa’s service territory. The vaults may be customer owned, shared, or Hydro Ottawa owned. Approximately 90% of the 8kV and 28kV vaults contain Hydro Ottawa owned equipment. Refurbishment or replacement of vault components may include jack bus, moles, circulating fans, switchgear, or transformers. Vault Type Total # Vaults 13 kV 950 4kV 530 16kV / 8 kV 144 44 kV Customers 20 Total 1644 Table 4.12 – Vault Types 2006 EDR Application Hydro Ottawa Limited RP-2005-0020 EB-2005-0381 Tab B Filed 2005-08-02 Page 44 of 118 The Strategy Public safety, and finding cost effective alternatives or solutions are key drivers. The goal is to improve the reliability, cost and safety to the public who walk over the vaults. The high profile of the Ottawa downtown can be negatively impacted when outages occur. Sidewalk Vaults Retire the sidewalk vaults by moving electrical equipment into customer vaults on a 50 year vault lease agreement, and replace the double-doors on the vault with standard cable chamber collars and lids Refurbish sidewalk vaults with solid dielectric transformers, improved civil work, and other upgrades Find alternative supplies, such as customer vaults, consolidate sidewalk vaults or use a nearby padmount transformer Benefits include increased reliability, reduced environmental liability, equipment standardization and system utilization. Other Vaults: Retire Slater Station supplied 4kV vaults Replace jack bus arrangements Replace open-air wall mounted switchgear The Plan In 2006 the plan is to replace six sidewalk vaults and one underground switching centre. 4.1.1.16 Wholesale Meter Upgrade ($930,318) Description Primary wholesale metering installations at supply points, presently owned by Hydro One, must be replaced with new Independent Electricity System Operator (the “IESO”) approved meters, as per the Market Rules. The cost of these upgrades is the responsibility of the market participant, who is also required to take over ownership. Demographics Presently, there are 27 Hydro Ottawa substations that have been identified as requiring meter registration with the IESO. The Strategy Hydro Ottawa as a Meter Service Provider (“MSP”) will register and commission all existing and new registered wholesale metering (“RWM”) installations complying with all requirements as set forth under the Market Rules. Meter point registration as required in the Market Rules include: 2006 EDR Application Hydro Ottawa Limited RP-2005-0020 EB-2005-0381 Tab B Filed 2005-08-02 Page 45 of 118 Design and construction of the RWM installations, Review of conceptual drawing and the submission of single line diagram to the IESO, Review of the alternative metering installation standard checklist or declaration of compliance of metering installation, Complete required calculations for the registered meter point, Create and submit the required totalization files to the IESO, Create and submit the required files to the IESO, Complete the required IESO forms and documents for IESO system access, Provide a detailed emergency restoration plan. Meter point commissioning as required in the Market Rules includes: Perform the required on-site end to end testing, Confirmation of the engineering units report, Totalization table sign-off. In addition to the registration and commissioning of the wholesale meter points, as MSP, Hydro Ottawa will be responsible for maintenance and conformance monitoring as required in the Market Rules as follows: Monitor and respond to all issued Meter Trouble Reports (MTR) via the IESO workflow, Perform required on-site diagnostic and maintenance of the RWM for an issued MTR from the IESO, Daily MV90 remote interrogation of each RWM, Maintain the Validating, Estimating and Editing (VEE) and MTR relationship required for the IESO meter data, Perform required remote diagnostic and maintenance of the RWM, Notify the IESO of planned and emergency switching, Annual review of documentation and tracking meter seal expiry, Dispute Resolution, Perform required trouble shooting and testing, Assist in IESO audits. The Plan Hydro Ottawa, as a MSP, will register and commission the wholesale meter points as the seals expire on the existing meter installations. Several of the meter installations are past the seal expiry date. Most utilities share a resource limitation with Hydro One in coordinating work within shared and solely owned Hydro One facilities. The IESO has worked closely with the market participants over recent years to achieve satisfactory completion of this registration work. Hydro Ottawa is moving to compliance by furthering its registrations and arranging work with Hydro One on its own installations. This work will also be required on future metered substation installations connected to the IESO controlled grid. 2006 EDR Application Hydro Ottawa Limited RP-2005-0020 EB-2005-0381 Tab B Filed 2005-08-02 Page 46 of 118 4.1.1.17 Plant Failure Capital ($698,934) This program covers the unplanned replacement of failed assets. These failures must be attended to during the same outage response visit. This could include failed insulators, transformers or any other distribution asset. The cost for this program is based on historical levels. 4.1.1.18 Damage to Plant ($558,921) The program covers assets damaged by others (such as poles hit during car accidents or cable failures due to dig-ins), where there is loss of functional use, and the asset must be replaced. An attempt to recover 100% of the cost is made whenever possible. However, in many cases, the persons at fault are unknown, and cost recovery is not possible. The estimated cost of this program is based on historical levels. 4.1.1.19 Elbow and Insert Replacement ($553,478) Description Padmount transformers and switchgear units have conical bushings, called an insert, that accepts an elbow, a form of a plug that is connected to the incoming and outgoing cables. On the 27.6kV system, the elbow design has led to flashes as the field crew separates the elbow from the bushing when energized. This program involves replacement of elbows and inserts that cannot be separated safely under certain conditions while the circuit is energized. The flash is a safety risk to employees and usually causes an outage. This is a safety driven program, with a positive impact on reliability improvement. Demographics It is estimated there are 2,139 single and three-phase transformer units left with elbows and/or inserts to replace. The Strategy The strategy is to replace the insert and/or the elbow. This work will be coordinated with other padmounted transformer work (either maintenance or cable replacement) to optimize costs and reduce outage time. Targeted completion of this program is in 2010. The Plan The plan is to replace all bushing inserts with the vented Elastimold Loadbreak 2000 or re-terminate the cable with the Cooper Posi-Break elbow within the next five years. Some will be replaced when cables or transformers are replaced. The schedule is as follows: 2006 EDR Application Hydro Ottawa Limited RP-2005-0020 EB-2005-0381 Tab B Filed 2005-08-02 Page 47 of 118 4.1.1.20 2006 - 300 in Bridlewood & 200 in Gloucester 2007 - 400 in Gloucester & 100 in Stittsville 2008 - 400 in Gloucester & 100 in Stittsville 2009 - 400 in Gloucester & 100 in Stittsville 2010 - 139 in Gloucester Insulator Replacement ($475,198) Description Overhead insulators are devices that support electric wires and prevent an undesired flow of electricity. They are usually manufactured from glass, porcelain or polymeric material and provide electrical insulation and mechanical support on overhead lines. Certain horizontal post insulators manufactured from porcelain have developed cracks and are a breakage hazard problem. The failure of these insulators could cause overhead conductors to come into contact with each other resulting in damage to equipment and a subsequent outage. Further, they pose a safety risk to staff working on the overhead pole. Demographics Hydro Ottawa has an estimated 240,000 insulators installed on its overhead network, of which approximately 7,000 are porcelain horizontal post insulators. The Strategy Hydro Ottawa has identified the circuits containing suspect insulators that are deemed a critical hazard and outlined the requirements for work on poles containing these insulators. The work procedure states that the insulators must be replaced prior to any work within a 3-meter proximity of any circuit employing the device. The current practice is to, at minimum, change all insulators on the pole the crew is working on (3-9 insulators) as well as the insulators on the poles directly adjacent to the work area. The Plan Hydro Ottawa has selected a polymeric insulator for new installations and for replacement of old units. An insulator replacement program has been introduced to deal with the replacement of insulators on these affected circuits. The ongoing insulator replacement program deals with the replacing of insulators on a circuit. Circuits are selected based on their inherent risk and associated history. 4.1.1.21 Distribution Automation ($464,867) Distribution Automation (DA) is an ongoing capital program to facilitate the quick transfer of circuit open points with the objective of restoring the highest number of customers in the shortest amount of time during an outage. In the past few years a large portion of these capital funds were devoted to the Kanata sector, which was experiencing higher than average system outages. 2006 EDR Application Hydro Ottawa Limited RP-2005-0020 EB-2005-0381 Tab B Filed 2005-08-02 Page 48 of 118 In 2006, the plan is to automate existing pad-mounted gear in the Kanata and the Gloucester sectors. Six remote-operated overhead switches are also planned. These will be remotely operated from Hydro Ottawa’s control room. 4.1.1.22 Station Transformer PCB Removal ($422,920) This program consists of replacing the oil in station transformers that contain PCB mineral oil with new non-PCB oil. The main drivers behind this program are changes to the Canadian Environmental Assessment Act, and are part of Hydro Ottawa's Environmental Management Program. The retrofilling of power transformers has the added advantage of extending the useful life beyond the economic life expectancy. The station transformer PCB removal program will target all station transformers with oil PCB concentrations greater than 500 parts-per-million (ppm) by the end of 2009. 4.1.1.23 Station Automation ($385,921) Description Station Automation (SA) is the program to install new protection and control equipment or data collection equipment. Specifically, installation of new relays for the purpose of enhancing the protection of equipment, and/or the installation of a data highway in the substation for retrieving operational and non-operational data. Demographics Hydro Ottawa has 74 substations in which there are approximately 200 switchgear assemblies, 900 circuit breaker/switchers, 173 power transformers, and 80 battery banks. The technology used in these stations range from basic electro-mechanical devices (1950’s technology) to state of the art microprocessor based devices. The older equipment has been reliable, but is limited in its ability to provide information on activities that occur on the distribution system. Typically replacement/improvements in these assets has been done in conjunction with the switchgear arc-proofing retrofit program. The Strategy The approach is to install new relays during switchgear replacements or in some cases, when the switchgear is retrofitted to meet arc-proof requirements. In all cases, installation of new relays will be done in conjunction with either the Station Assets programs or the Station Enhancements programs. Data collection, separate from the protection and control, will help modernize the collection and analysis of station data. This data will be used to determine asset condition enabling improved investment decisions. 2006 EDR Application Hydro Ottawa Limited RP-2005-0020 EB-2005-0381 Tab B Filed 2005-08-02 Page 49 of 118 The Plan Asset condition needs to be monitored with both dynamic and static information with the information integrated into the data pool in the asset management plan. The objective is to connect modern microprocessor relays via a substation data highway. 4.1.1.24 Overhead Equipment - New and Rehabilitation ($278,901) Description Overhead equipment includes overhead conductors, switches and protective devices such as lightning arrestors and cut-outs. It excludes insulators, potheads, transformers, and distribution automation equipment, which are covered in individual programs. This equipment typically fails due to operating and weather deterioration, flawed design, and/or end-of-life. Some of the switches (e.g. SMD20) may fail upon operation causing both a hazard to the employee, and a circuit outage. Demographics Over half of the distribution system is overhead plant. It is estimated that there are 48,000 lightning arrestors, 47,000 fused and non-fused switches, and approximately 300 km of residential open-bus secondary voltage conductor. SMD20 switches in the 27.6kV system experience problems with porcelain breakage resulting in a safety concern. There are approximately 8,000 single-phase and three-phase units in service. The Strategy The failed or suspect equipment will be replaced to new specifications. To enhance the operability, reliability, or safety of the network some equipment may also be added. For SMD20 switches, the plan is to replace switches that are frequently used (dip poles) with improved units and to develop procedures to reduce the hazard when operating these switches. The Plan Estimated replacement of 800 switches on dip poles has been spread over three years. These assets shall be replaced or added in planned and unplanned instances to ensure the integrity of the distribution network for the safety of both employees and the public. 4.1.1.25 East End Operations Centre ($7,026,078) In 2006, Hydro Ottawa will construct the final work center required to better serve those customers located in the east end of Ottawa. Plans include a 13 bay truck garage and operations office facility to accommodate 30 field staff along with a separate warehouse facility to store underground cable 2006 EDR Application Hydro Ottawa Limited RP-2005-0020 EB-2005-0381 Tab B Filed 2005-08-02 Page 50 of 118 material. This facility will replicate the Maple Grove Road work center located in Ottawa west, which is scheduled to open in late August 2005. The project is dependant on land availability and the in-service date is not scheduled until 2007. The only portion of this project being capitalized in 2006 is the land at $1.1 million. The remainder of the cost will be construction-work-in-progress (CWIP) at the end of 2006. 4.1.1.26 GIS and OMS ($4,901,719) Description The Geographic Information System (GIS) and the Outage Management System (OMS) are parallel projects to install first time technology. Included is data conversion to assist in automation. With their implementation Hydro Ottawa will achieve significant efficiencies associated with mapping, mapping products, and processes that use maps and their background data. OMS is the primary database and tool for tracking /responding to system outages. GIS will be the backbone of Hydro Ottawa’s distribution plant asset records management. Chronology At the amalgamation in November 2000, the operational, distribution system asset, and technical information from each of Hydro Ottawa’s five predecessor utilities was in varying and inconsistent forms. Approximately 85% of the system maps were in paper form with different presentation metrics and information. The smaller utilities in Goulbourn (a predecessor utility) and Casselman (acquired in April 2002) had no system mapping. Some technical information was tracked in separate paper files, databases, and spreadsheets. System operation was slow and uncertain while outage times increased. Formal methods for asset management and subsequent budgeting for the electrical system sustainment programs were difficult and person dependent. Additional formal systems were required to track new regulatory (reliability, response, system efficiency, safety, environmental), operational, and financial information. Demographics Each of Hydro Ottawa’s six predecessor utilities had its own records and mapping systems. Asset management was very person dependent, relying heavily on individual experience and knowledge. Hydro Ottawa’s skilled workforce (knowledge base) is aging. Few people have knowledge of Hydro Ottawa’s entire territory. Staff requires timely direction from Dispatch in outage situations. The OMS is providing this. Also, staff is being moved into unfamiliar neighbourhoods where easy access to updated information for safe efficient system operation is required. The GIS will provide this. The Strategy Starting in 2002, assessment of the technical, operational, and mapping requirements and challenges began. A business case was developed, and a competition was held to select an industry standard off-the-shelf solution. Next steps are to develop common standards, correct and/or gather key system information, and implement over several years. 2006 EDR Application Hydro Ottawa Limited RP-2005-0020 EB-2005-0381 Tab B Filed 2005-08-02 Page 51 of 118 The Plan The initial rollout of the OMS provided basic outage management control in the operational centre without system mapping. Once the OMS was in place, the GIS configuration began. The Hydro Ottawa electrical distribution system maps are overlaid onto base maps provided by provincial and federal agencies. As digital map sections become available, the electrical distribution system is to be transferred into the outage management system to assist operational staff in monitoring, controlling, and restoring the electrical system. Since this project is being implemented over several years, controls to ensure overall project risk mitigation were put into place with routine executive review and external review. System Functionality The initial phase of the OMS has been in live operation since December 2003. Current functionality consists of an automated system to log distribution system events as they occur and a computerized map to display accurately the location of where events are occurring within the system. The mapping permits staff at the utility to have up to date and consistent information on what is happening on the distribution system at any given time. The process involves Call Centre staff inputting customer power outage calls directly into the outage mapping application to notify the System Control office dispatching staff of where problems are happening. The display of the call locations on a map results in faster trouble diagnosis and dispatching of crews and a reduction in internal phone, fax, e-mail, and paper communications. The event data is then communicated from dispatchers to field staff utilizing mobile computer technology where crews receive assignments on a laptop installed in the vehicle. As a result, all dispatch, response, and job completion times are logged in a central database. This information is further used to generate reports regarding Hydro Ottawa response times. To date, reductions in time to receive, diagnose, and respond to outage calls is the primary benefit. Further expansion of the OMS throughout the utility in 2005 and 2006 will include using the tool to capitalize on mobile communications to streamline current fieldwork. Also scheduled for 2006 is the incorporation of the GIS electrical system data with the OMS to facilitate a more efficient process to identify equipment failure and enable faster restoration times. From 2003 until now, the GIS has been undergoing considerable development. Included in these efforts has been the standardization of mapping, creation of facility databases, and adoption of best practices acquired from each of the former utilities. An intranet based GIS mapping application has also been released to enable users who require information on transformers, poles, and streetlights to view and run inquiries on the data. Upon completion of data conversion in 2006, users will have the ability to view information on all distribution equipment within GIS. The GIS data conversion stage of the project is presently at the pilot-testing phase with full production data conversion scheduled to commence during the summer of 2005. 2006 EDR Application Hydro Ottawa Limited RP-2005-0020 EB-2005-0381 Tab B Filed 2005-08-02 Page 52 of 118 Financial The majority of the capital project costs have been and will be, incurred between 2003 and 2006. Both the GIS and the OMS systems require computer hardware, application software, data conversion, consultant implementation, in-house staffing resources, and staff training. Overall, the OMS will cost approximately $6.0 million. The GIS will cost approximately $11.0 million of which $4.0 million is directly related to the paper map conversion. The planned spending of $4.9 million in 2006 will complete the program. Key efficiencies supporting the financial business case were: Reduce distribution, operating map and key database updates from the many regularly updated sources into one centrally available repository by 10%, Provide a system to improve expenditure with maintenance and replacement activities and optimize distribution network investments up to 10% in targeted program activities, Provide planning tools for system growth and reinforcement optimization, Enable timely electronic mapping exchange with external entities, New designs and changes prepared online thereby eliminating repetitive manual sketch transactions between internal groups, Provide additional functionality to track new and ongoing regulatory system information such as reliability, response, system efficiency, safety, and environmental, Eliminate the need to pin paper wall maps and provide online switching orders for system operation thus reducing the risk of switching errors that could lead to accidents, All outage information recorded digitally for analysis and follow up, Reduce outage time for system trouble calls by 5%, Analyze outages in the OMS to determine probable cause and identify better equipment isolation solutions for system restoration activities, Provide system mapping in the field for restoration and construction crews, Quickly identify medical and other critical customers with their electrical and geographic information, Immediate online notification of outage events to all inside and outside staff, Dispatching and crew management during system access and problems, Backup recovery system for system operation with IT and facility disasters, Eliminate the requirement to hire additional staff necessary to maintain manual systems. 4.1.1.27 SCADA and Control Room Upgrades ($3,019,289) Description The Supervisory Control and Data Acquisition (SCADA) system is used to monitor and control station and distribution system equipment and is comprised of three main components: Master Station equipment – real time and historical databases, communication servers, Operator interface, Communication equipment – fibre, leased copper land-line, wireless (data radio & cellular), Remote equipment – remote terminal units (RTU’s), intelligent end devices (IED’s – relays, meters, etc.). 2006 EDR Application Hydro Ottawa Limited RP-2005-0020 EB-2005-0381 Tab B Filed 2005-08-02 Page 53 of 118 Demographics We are currently operating three distinct systems: Ottawa ‘Telvent’ Master 1998 vintage – 56 Station & 15 Switch RTU’s, Nepean ‘Quindar’ Master 1996 vintage – 16 Station & 15 Switch RTU’s, Gloucester ‘Quindar – Worldview’ Master 1994 vintage – 8 Station & 42 Switch RTU’s. The oldest RTUs are approximately 15 years old and are from different manufacturers. The Strategy Migrate three SCADA systems to a single Telvent platform to reduce administration costs (licensing, maintenance, upgrades, knowledgebase, etc.). Single platform will allow single source for real-time data like peak system load and single source for historical SCADA data. Develop the SCADA system to monitor the entire distribution system. Currently there is limited or no monitoring at several stations. Known Issues Since amalgamation, all new SCADA development and Bow Networks protocol translation has occurred on the Telvent platform. With the added stations and data, the real-time historical servers and databases are being stressed and system performance is degrading. The existing Quindar systems utilize QUICS IV protocol for Master-RTU communication. This is a proprietary protocol and cannot easily be integrated into the ‘open’ architecture Telvent system. SCADA Communication is currently a mix of fibre, leased Bell lines, and wireless. Planned new distribution automation will require wireless communication. Existing wireless communication in the Gloucester sector has been unreliable. An overall wireless strategy is required to migrate existing switch RTU’s in the Nepean and Gloucester sectors onto the Telvent system. Future Direction The existing Telvent SCADA system cannot accommodate additional SCADA development, migration of existing Quindar systems, and new SCADA requirements (distribution automation, new substations, new RTU’s to monitor entire distribution system). A Master Station upgrade is required. Telvent is no longer developing the system currently in use, but an upgrade path is available with the newer architecture. The majority of the Hydro Ottawa SCADA system is operating off the Telvent system. Upgrade and database conversion will be implemented within the Telvent ‘family’ of SCADA products. The Plan Hydro Ottawa is developing specification and functional requirements for a SCADA system upgrade and request a proposal from our existing provider. Investigation and testing of various wireless SCADA communication solutions has begun. 2006 EDR Application Hydro Ottawa Limited RP-2005-0020 EB-2005-0381 Tab B Filed 2005-08-02 Page 54 of 118 Hydro Ottawa is upgrading a number of RTUs with up-to-date models to improve reliability. These upgrades are inexpensive since a complete RTU replacement is not required and the existing wiring can remain in place. Master Station upgrade (2006). This project includes replacement of the existing Telvent system with the latest generation hardware and software. Upgrade existing Quindar station RTU’s to allow Master-RTU DNP protocol communication. Upgrade/replace existing Quindar switch/recloser RTU’s. RTU refurbishment/replacement. Currently, there are approximately 150 RTU’s on the SCADA system ranging in age from new to 15 years old. An annual expenditure of $50,000 is planned to upgrade/refurbish/replace older RTU’s. Extend SCADA to unmonitored parts of the distribution system. This program involves the installation of new or upgrading existing supervisory equipment at wholesale supply points embedded within Hydro One owned distribution circuits or facilities. SCADA wireless communication. A new wireless data radio infrastructure is planned to accommodate the existing RTU migration as well as any new distribution automation devices proposed for these areas. SCADA fibre communication. This project involves upgrading the existing SCADA fibre communication system. Develop real-time and historical SCADA data reporting tools. SCADA integration of Distribution Automation devices. Approximately $25,000 per device is required for SCADA integration to allow remote operation and monitoring. 4.1.1.28 Vehicle Replacements ($2,589,689) The following guiding principles govern the replacement of fleet vehicles. They define when new acquisitions are required or when replacements are needed. They are based on a multi-year capital plan. Provision of safe, reliable and efficient vehicles & equipment to meet the operational requirement of the corporation, Cost effectiveness (Life Cycle Management), Compliant with accepted industry norms & practices – replacement criteria consider age, accumulated km/hour, general condition and when exceeding one-time repair limits, Standardization of equipment specifications, Alignment of funding with corporate objectives, Environmental consideration – fuel economy, exhaust emissions, Optimization of size of fleet (kept to minimum critical level, elimination of redundancy), Purchasing options: new, used, refurbishment, Tendering and bulk buys, On-going consultation with the user community through the fleet council, Disposal through recognized and reputable commercial vehicle & equipment resellers. The current status of Hydro Ottawa’s fleet is that most vehicles are beyond the normal retirement age based on accepted industry standard lifecycles. Additional investment is required to ensure the fleet meets the needs of the workforce. The plan for 2006 is to replace eight large vehicles (boom 2006 EDR Application Hydro Ottawa Limited RP-2005-0020 EB-2005-0381 Tab B Filed 2005-08-02 Page 55 of 118 trucks and bucket trucks), 14 midsize vehicles (vans and pickup trucks) and three cars. A critical component for quick outage restoration is well-maintained and operational vehicles. The degradation of the fleet may jeopardize outage response capability if it is allowed to continue. Figure 4.12 shows that the actual average age of Hydro Ottawa vehicles in all categories (except for pole trailers) exceeds the target lifecycle average age. The target lifecycle average age is the theoretical average age for vehicles in a category, if accepted industry standard lifecycles are followed. The planned 2006 vehicle replacements bring Hydro Ottawa closer to, but still over, the target lifecycle average age. Fleet Replacem ent Program - Curent Status vs Target Lifecycle Avg Years of Age 20 15 10 5 0 Cars Bucket St ake / Radial Boom Knuckle Compact Full Size Full Size Trucks Flat bed Derricks Boom Trucks Pick-Up Pick-Up Cargo Vans Trucks Trucks Trucks Target Lifecycle Current Status Compact Vans St ep / Cube Vans Tension Trailers - Pole Machines Status After 2006 Figure 4.12 – Fleet Demographics 4.1.1.29 Bank Street Rehabilitation ($1,981,694) This 52,000 square-foot facility was partially renovated in 2004-2005 to accommodate the relocation of the Fleet Vehicle Service Center from the Albion Road facility. This move was made in part due to community safety concerns with the growing amount of urban in-fill around the Albion Road facility and the high volume of large fleet vehicle traffic through the surrounding community. Bank Street offered a more industrial location for our fleet repair facilities while utilizing an existing property more effectively. Renovations in 2006 will include upgrades to the sanitary sewer system, PCB storage facilities, fire suppression system and minor office interior repairs. 4.1.1.30 CIS Software Enhancements ($1,819,600) Changing standards and external requirements in 2005 have lead to changes in CIS requirements. The CIS development is expected to be active in 2006 in response to continued evolving regulatory requirements and increasing emphasis on improving business efficiencies. Although particular items may shift based on evolving business priorities, the following are some items that will be undertaken: Rate changes for Regulated Price Plan (RPP), Completion of RPP Smart Meter price implementation, 2006 EDR Application Hydro Ottawa Limited RP-2005-0020 EB-2005-0381 Tab B Filed 2005-08-02 Page 56 of 118 Refinements to bill presentment to satisfy customer requests and regulatory needs, Streamlining field orders to a non paper-based alternative, Leveraging workflow to automate repetitive actions currently triggered by users, Streamlining of work-list assignment to users, Development of further queries and reports for data intelligence gathering. These will improve customer service, and internal efficiency. 4.1.1.31 Merivale Road Additions ($1,278,083) This 50,000 square-foot property received an extensive upgrade in 2003 to accommodate the relocation of a significant portion of the Operations and Engineering Design groups along with construction of a 10 bay fleet garage and consolidated supply chain warehouse facility. As the final step in the movement of the Operations Department from Albion to Merivale, renovations are underway to relocate the Asset Management group and System Control room functions to Merivale Road. Once completed in late 2006, the Merivale facility will be fully occupied. 4.1.1.32 Albion Road ($905,245) As discussed in the Facilities Strategic Plan overview, the decentralizing of Operations personnel to various satellite work centers throughout the Hydro Ottawa service territory will trigger the potential disposal of Albion Road in favour of a smaller and less costly facility targeted for 2007. The 200,000 square-feet of office space on 21 acres of land is now in the middle of a highly concentrated urban community. As well, the facility has become increasingly inadequate to support the organizational structure or the long-term strategic direction of Hydro Ottawa. The capital expenditures associated with Albion Road for 2006 are specifically directed at those costs solely required to address environmental and legislative requirements in advance of property disposal along with critical maintenance system repairs that must be completed to sustain occupancy through to the end of 2007. 4.1.1.33 Carling Operations Centre Storage Building ($615,715) This 15,000 square-foot facility received extensive upgrading in 2003 to serve as a central Operations work center. Given its ideal geographic location within the City of Ottawa (central and near the free-way), additional Operations construction personnel have been relocated to this site resulting in the need for further investment in inventory and vehicle storage facilities. 4.1.1.34 Stations Building Rehabilitation ($572,940) In concert with the rehabilitation of the electrical side of substations, this program addresses the need to ensure station buildings are able to meet the needs for years to come. Roof, door and window replacements at various stations, as required, are all included in the project. 2006 EDR Application Hydro Ottawa Limited RP-2005-0020 EB-2005-0381 Tab B Filed 2005-08-02 Page 57 of 118 4.1.1.35 Upgrade to JDE Financial System ($571,651) In 2003, Hydro Ottawa adopted JD Edwards as its financial management system. With the necessary business processes and policy and procedures now documented within this system, further upgrades are now necessary to retain vendor-managed warranties and support. Hydro Ottawa had delayed such upgrades to the software system until the Oracle and JD Edwards merger was finalized in early 2005, to ensure the systems would be secure. 4.1.1.36 Business Continuity Plan ($315,117) Hydro Ottawa has an on-going effort to maintain appropriate system security, redundancy and lifecycle management. Capital investment for this program will focus on the increased acquisition of software and hardware related to Internet security, virus protection and network redundancy in 2006. Replacement of network servers, aging desktop computers and enhancements to the telephony system are all part of this overall business continuity plan. 4.1.1.37 Conservation & Demand Management ($1,420,012) This is part of Hydro Ottawa’s CDM plan approved by the Board in December 2004. Hydro Ottawa’s spending for CDM continues as targeted. 4.2 Interest on Deferral Accounts and Construction Work in Progress (CWIP) For 2005 and 2006, based on the Handbook, Hydro Ottawa has used its weighted average cost of capital as the rate for the allowance for funds used during construction (AFUDC). For 2004 and earlier, the rate used for AFUDC was the deemed long-term debt rate. The rates for 2005 and 2006 are calculated as follows: 2005 Deemed Debt rate: 6.9% Deemed Return on Equity: 9.88% Tax Rate: 36.12% Deemed Debt / Equity: 60/40 After-tax weighted average cost of capital = 6.9% x 60% (1-36.12%) + 9.88% x 40% = 6.6% 2006 Average Long-Term Debt rate: 5.25% Deemed Return on Equity: 9.0% Tax Rate: 36.12% Deemed Debt / Equity: 60%/40% After-tax weighted average cost of capital = 5.25% x 60% (1-36.12%) + 9.0% x 40% = 5.6% 2006 EDR Application Hydro Ottawa Limited RP-2005-0020 EB-2005-0381 Tab B Filed 2005-08-02 Page 58 of 118 4.3 Capitalization Policy Included in Tab C of the Application Binder is a copy of Hydro Ottawa’s capitalization policy. This policy is based on capitalization of fully allocated costs. 4.4 Contributed Capital Contributed capital collected prior to January 1, 2000 is included in rate base. From January 1, 2000 onwards, contributed capital has been netted out of net fixed assets and therefore, out of rate base. 4.5 Treatment of Capital Gains and Losses Assets Sold to a Non-Affiliate Hydro Ottawa has no plans to sell non-depreciable assets to a non-affiliate in 2006. Assets Sold to an Affiliate Hydro Ottawa has no plans to sell non-depreciable assets to an affiliate in 2006. 2006 EDR Application Hydro Ottawa Limited RP-2005-0020 EB-2005-0381 Tab B Filed 2005-08-02 Page 59 of 118 Chapter 5 – Cost of Capital 5.0 Introduction 5.1 Maximum Allowed Return on Equity Hydro Ottawa has elected to use the maximum rate of return on equity of 9.00%. 5.2 Debt Rate The weighted average debt rate proposed by Hydro Ottawa is 5.25%. Details of the calculation are provided in Schedule 5-1. Schedule 5-1: Weighted Debt Cost (1) (2) No. Description 1 2 (3) Debt Holder Hydro Ottawa Holding Inc Hydro Promissory Ottawa Note Holding Inc Promissory Note (4) Is Debt Holder Affiliated? (Y/N) (5) (6) Date of Issuance Principal (7) (8) Term Actual (Years) Rate Y July 1, 2005 $200 million > 1 year 5.14% Y July 1, 2005 Total: $32.185 million $232.185 million > 1 year 5.90% (9) Debt rate used for weighted debt rate cost 4.43% 0.82% 5.25% Table 5.1 – Weighted Debt Cost 5.3 Capital Structure Hydro Ottawa’s deemed debt/equity structure is 60/40. The 2004 capital structure for Hydro Ottawa is summarized in Schedule 5-2. The actual debt/equity is well within ten percentage points of the deemed structure. For 2006, Hydro Ottawa continues to set 60/40 as its target debt/equity structure. 2006 EDR Application Hydro Ottawa Limited RP-2005-0020 EB-2005-0381 Tab B Filed 2005-08-02 Page 60 of 118 Schedule 5-2: Actual Capital Structure of the Distributor This Schedule is incorporated into the 2006 EDR Model under Tab 3-3 Capital Structure. Line ($000) (%) Deemed Structure (1) (2) (3) Long Term Debt Unfunded Short Term Debt Total Debt (3) = (1) + (2) 232,185 64,575 296,760 47% 13% 60% 60% (4) (5) (6) Preferred Shares Common Equity Total Equity (6) = (4) + (5) N/A 197,631 197,631 N/A 40% 40% N/A 40% 40% (7) Total 494,391 100% (7) = (3) + (6) Cost Rate 5.25% Variable% N/A 9.0% 9.0% Table 5.2 – Capital Structure 5.4 Working Capital Allowance Hydro Ottawa has complied with the Boards treatment of Working Capital Allowance. The cost of power used to calculate the Working Capital Allowance is $575,112,014 from Hydro Ottawa’s 2006 Load Forecast in Tab D of the Application Binder. The commodity rate was taken from the report entitled “Summer 2005 Ontario Wholesale Power Market Assessment” authored by Navigant Consulting dated May 2005. All other rates used in the cost of power calculation are from 2005 actuals. 2006 EDR Application Hydro Ottawa Limited RP-2005-0020 EB-2005-0381 Tab B Filed 2005-08-02 Page 61 of 118 Chapter 6 – Distribution Expenses 6.0 Introduction Among the most important events in 2004 for Hydro Ottawa was the implementation of a new CIS. This new system enables Hydro Ottawa to meet the needs of its customers and other electricity industry stakeholders. To accommodate this major project some operational activities were scaled back to ensure adequate funding and resources were available for its successful completion. A new collective bargaining agreement was signed in 2004 after Hydro Ottawa experienced its longest work stoppage in more then 10 years (including predecessor utilities). The new collective agreement includes wage increases of 3% each year for the 3-year term of the agreement. Moderate weather in 2004 translated into lower costs for outages and system repairs. This weather impact reduced the amount of power purchases in 2004 compared to other years. A comparison of 2004 to 2006 requires this unusually moderate weather experienced in 2004 to be taken into account. Regulation will continue to be a focus in 2006 because there is stronger hazardous substance legislation and tighter handling restrictions, as well as increased regulation by the Electrical Safety Authority. Hydro Ottawa achieved ISO 14000 certification for environmental stewardship in 2004 and will continue to take a leadership role in this area. The following table summarizes Hydro Ottawa’s distribution expenses based on the Board’s grouped accounts. Operations, Maintenance and Administration (OM & A) Operation Maintenance Billing and Collection Community Relations Community Relations - CDM Administrative and General Expenses Insurance Expense Bad Debt Expense Advertising Expenses Charitable Contributions Other Distribution Expenses Table 6.1 – OM & A Expenses 2006 EDR Application 2003 $19,866,853 5,813,689 8,606,249 2,286,906 0 1,388,432 371,044 4,179,485 17,139 60,589 4,016,619 2004 $12,897,834 5,609,524 8,336,519 3,247,063 0 3,616,767 253,431 1,110,205 38,701 86,130 4,631,169 2005 $13,698,000 5,878,000 8,724,000 3,143,000 0 2,037,000 270,000 1,175,000 0 99,000 3,311,000 2006 $17,796,032 4,031,435 9,257,432 3,595,624 0 6,443,241 210,000 900,000 62,000 100,000 3,331,751 TOTAL $46,607,003 $39,827,343 $38,335,000 $45,727,516 Hydro Ottawa Limited RP-2005-0020 EB-2005-0381 Tab B Filed 2005-08-02 Page 62 of 118 6.1 Operations, Maintenance and Administration Operations and Maintenance Hydro Ottawa’s Operations department continues to balance the needs of customers with the need for fiscal responsibility. This department is the cornerstone of the commitment to deliver safe and reliable service to the City of Ottawa. It is critical to have flexible programs that can adapt in an ever-changing environment. Some of the challenges faced by staff are issues such as regulatory compliance, collective agreements and an aging workforce. Hydro Ottawa’s corporate structure combines the operations and maintenance function into a single unit. Some allocations between these two functions have changed between 2004 and 2006. Therefore, for comparison purposes, operations and maintenance expenses should be considered in their totality. The re-instatement of a trades apprenticeship program will attempt to correct a looming problem of depletion of skilled labour within Hydro Ottawa. Hydro Ottawa expects to hire 20 new apprentices by the end of 2006 at a cost of $1.5 million for labour and training. These apprentices are anticipated to be fully qualified in four years. Figure 6.1 below indicates the staff issue faced by Hydro Ottawa based solely on normal retirements. Hydro Ottawa must start its apprentice program now to ensure adequate staffing levels in the future. This constitutes the first apprentice hires by Hydro Ottawa and its predecessor utilities since the mid 1990’s. It is forecasted to hire 10 apprentices each year for the foreseeable future. Operations and Maintenance Staff Number of Employees 120 100 80 60 40 20 20 05 20 06 20 07 20 08 20 09 20 10 20 11 20 12 20 13 20 14 20 15 20 16 20 17 20 18 20 19 20 20 20 21 20 22 20 23 20 24 0 Year Current Staff Figure 6.1 – Apprentice Program 2006 EDR Application Apprentice Graduates Total Qualified Staff Hydro Ottawa Limited RP-2005-0020 EB-2005-0381 Tab B Filed 2005-08-02 Page 63 of 118 In addition to the apprentice program, compensation expenses will also increase by approximately $2.0 million as a result of the new collective bargaining agreement and positions to be filled in 2006. Hydro Ottawa will increase expenditures to deal with provincial legislation governing hazardous materials, including PCBs and asbestos, and to maintain the historical 3-year vegetation management program. The following provides a more detailed description of some of the programs. 6.1.1.1 Vegetation Management Description Hydro Ottawa’s Vegetation Management involves managing the distribution corridors within its service area. A corridor is defined as the area adjacent to overhead lines. Hydro Ottawa has rights to construct, operate and maintain electric utility distribution lines (i.e., distribution feeders) as a licensed local distribution company (LDC) in the City of Ottawa. Corridors provide the land base for constructing and installing lines at voltage levels of 44 kV and below. These corridors provide a secure means for the safe and reliable distribution of electricity. Demographics Demographic information for corridors has been collected from various sources included in Hydro Ottawa’s existing condition assessment and vegetation management programs. Hydro Ottawa manages about 4,830 km of lines that require tree clearance work. Those lines occupy corridors that must be maintained regularly to ensure the safe and reliable supply of electricity to Hydro Ottawa’s customers. Condition demographics were developed as part of the asset management process. A summary of the condition assessment for corridors is shown in Figure 6.2. This is based on an initial survey of 12 areas scheduled for a full trim this year. The chart below shows that immediately leading up to a trim, corridors are generally in Poor and Very Poor condition. The condition assessment of corridors just prior to a trim indicates, that the trim rate should be no longer than the current 3-year cycle. With increased cutback distances (e.g. greater than 10 feet), the cycle could be extended, however increased trimming is limited by practical reasons such as National Capital Commission (NCC) guidelines, the City of Ottawa, customer expectations and general aesthetics. 2006 EDR Application Hydro Ottawa Limited RP-2005-0020 EB-2005-0381 Tab B Filed 2005-08-02 Page 64 of 118 Vegetation Condition Assessment Before Trimming Fair 8% Poor 58% Very Poor 34% Very Good 0% Good 0% Figure 6.2 – Vegetation Condition Assessment (pre-trim) The Plan The asset management process compares the costs and benefits of a faster tree-trimming program. Figure 6.3 shows the number of tree-related failure events for each year after a full trim. This illustrates the direct correlation between power outages and the elapsed time since trees have been trimmed. Tree-Related Failure Events 120 Number of Failure Events 100 80 60 40 20 0 0 1 Years Since Last Trim Figure 6.3 – Tree Related Failures in Relation to Last Tree-Trim 2006 EDR Application 2 Hydro Ottawa Limited RP-2005-0020 EB-2005-0381 Tab B Filed 2005-08-02 Page 65 of 118 Figure 6.4 shows tree-trimming program costs. The annual cost of trimming (green curve) is based on Hydro Ottawa’s most recent contract amount of $1.7 million per year, to trim one-third of the total system (i.e. the present 3-year trim cycle). Based on this, the annual cost of a one-year or a twoyear trimming cycle was estimated. The Total Cost curve shows there may be an advantage to a faster tree-trimming program. However, for 2006, the historic three-year cycle has been maintained. Total Cost of Trimming Program 250 Cost in Points 200 $10 $8 150 Total Cost Average Annual Cost of Failures 100 $6 Annual Cost of Trimming $4 50 $2 0 Cost of Trimming (millions) $12 $0 1 2 3 Period of Trimming Program Figure 6.4 – Tree Trimming Costs 6.1.1.2 Thermographic (IR) Scanning and CO2 Washing Hydro Ottawa uses infrared (IR) scanning, a heat detection technology, as an early detection preventative maintenance method to find possible plant failure. The program results in an increase in system reliability and safety, and extends the useful life of the assets in the distribution system. The program involves Hydro Ottawa’s entire distribution system consisting of substations, poles, transformers, overhead conductor, underground cable and pad-mounted switchgear. The CO2 wash program is based on the scanning program report for pad-mounted switchgear. The CO2 method has allowed switchgear to be maintained in an efficient and cost effective manner. The process involves cleaning energized switchgear using dry ice. Compared to washing with water, this affords flexibility to schedule switchgear maintenance throughout the year while decreasing maintenance costs, eliminating interruptions, avoiding switching thereby removing the associated safety concerns, and freeing up manpower. 2006 EDR Application Hydro Ottawa Limited RP-2005-0020 EB-2005-0381 Tab B Filed 2005-08-02 Page 66 of 118 6.1.1.3 Insulator Washing The insulators in the Hydro Ottawa system become contaminated by road salt, vehicle exhaust, and smoke stack emissions. The City of Ottawa uses more salt during the winter than many other Ontario municipalities. In damp weather, these insulators can flashover, cause pole fires, and jeopardize system’s reliability. To avoid this, Hydro Ottawa has adopted an extensive insulatorwashing program along the major roadways where contamination builds normally; full washing of these critical, 44kV, 27.6kV and 13.2 kV circuits is done in early spring (around mid-February), and selective washing in the fall (around mid-October) each year. The program also involves washing all under-build of 8 kV or more. Washing of polymer insulators on dead-ends and 44 kV switches is also part of this program. 6.1.1.4 Graffiti Abatement The purpose of the graffiti abatement is to remove and/or prevent inappropriate messages and statements, graphical or text, on Hydro Ottawa’s assets (e.g., buildings, pad-mounted transformers or switchgear), from general public visibility. The requirement for this service is established under Hydro Ottawa’s commitment to the Ottawa Utility Coordinating Committee (UCC). Assets to be addressed are identified by the City by-law enforcers, the police and the public at large. The program typically involves provision of standard or anti-graffiti coating on Hydro Ottawa’s padmounted equipment. The standard paint coating is a quick-dry gloss enamel type, while the antigraffiti is an epoxy base or aliphatic clear finish. Normally, Hydro Ottawa’s field representative assesses the type of coating needed. The program also includes the re-instatement of the area around the equipment, and re-labelling of the equipment using the approved materials and label placement specifications. Billing and Collection Hydro Ottawa bills its residential and small commercial customers every two months. Commercial customers above 50 kW are billed monthly. Manual meter reading services are linked to these billing cycles and are out-sourced to an external provider. Hydro Ottawa’s Meter Data Service (MDS) group is responsible for reading interval meters on a daily basis. Details of Hydro Ottawa’s CIS and associated billing costs are discussed in a report in Tab C of the Application Binder. Administration and General Expense The 2006 expenses in the Administration and General Expense category have increased from 2005. As per the Board’s letter dated December 20, 2004, OEB Cost Assessments are recorded in a deferral account (sub-account of Account 1508) for a portion of 2004 and for all of 2005. Furthermore, as per the Board’s February 15, 2005 letter, Hydro Ottawa records its 2005 OMERS pension contributions in a deferral account (sub-account of Account 1508). For 2006, these amounts will no longer be recorded in deferral accounts, and therefore, become administrative expenses. 2006 EDR Application Hydro Ottawa Limited RP-2005-0020 EB-2005-0381 Tab B Filed 2005-08-02 Page 67 of 118 Hydro One will be re-instating its Low Voltage (“LV”) charges in 2006. This amount has been placed in Account 5665 as per the 2006 EDR Model sheet ADJ 5. The estimate for these charges is based on Hydro One’s current rates. If Hydro One receives approval from the Board for different rates, Hydro Ottawa proposes to track the difference in a variance account. Community Relations Included in the cost for Community Relations are Hydro Ottawa’s Call Centre activities (both internal and outsourced). Cost increases are primarily due to the added call volumes received by the outsourced Call Centre. 6.2 Detailed Report for Specific Distribution Expenses Insurance Expense Hydro Ottawa's liability, automobile and property insurance policies are underwritten by MEARIE, the Municipal Electric Association Reciprocal Insurance Exchange, a reciprocal insurance exchange created in 1987 to address the insurance needs of municipal electricity utilities. Crime insurance (Great American Insurance) policies are provided through MEARIE commercial underwriter partners. Hydro Ottawa’s broker, Marsh Canada, provides insurance policies using commercial insurers like Chubb for travel insurance. Comprehensive general liability (CGL) is based on corporate revenue. As revenue increases, so do premiums. Property insurance increased dramatically in 2003 due to the 9/11 attack in New York City. Hydro Ottawa changed its insurance carrier in 2004, which resulted in a property insurance rate reduction of more than 40%. Schedule 6-1: Insurance Expense Type of Insurance CGL Auto Property Crime Travel 2002 $511,767 44,513 125,452 7,560 3,000 $692,292 2003 $536,835 49,056 327,198 9,251 2,836 $925,176 2004 $574,564 58,223 181,920 9,754 2,836 $827,297 2005 $611,515 58,568 199,422 8,720 2,623 $880,848 2006 $658,848 60,925 209,291 7,635 2,570 $939,269 Table 6.2 – Insurance Expense Bad Debt Expense The allowance for doubtful accounts is developed based on an assessment of the following components: Billed accounts receivable - active vs. finalled accounts, 2006 EDR Application Hydro Ottawa Limited RP-2005-0020 EB-2005-0381 Tab B Filed 2005-08-02 Page 68 of 118 Unbilled revenue - active vs. finalled accounts, Meter disputes. The methodology used to estimate the allowance for doubtful accounts in 2006 is consistent with that used in prior years. 6.2.1.1 Billed Accounts Billed accounts include accounts for Standard Supply Service (SSS) customers and retailerenrolled customers. In addition, some SSS customers are on payment plans. In order to remain on the budget billing payment plan option, customers must keep their payments current. Customers unable to do so are taken off the payment plan stream. Balances for payment plan accounts are therefore not provided for. Balances due from retailers are also considered 100% collectible as settlement is occurring in an accurate and timely fashion. The remaining active accounts are provided for at the rate of 10% of balances outstanding over 90 days. Finalled accounts are provided for at the rate of 95% of balances older than 90 days. The approach is consistent with Hydro Ottawa’s collection experience with these accounts. 6.2.1.2 Unbilled Revenue Unbilled items are evaluated on a basis similar to that used for billed accounts except for balances greater than $25,000, which are typically excluded. Accounts with amounts greater than $25,000 are with larger organizations with a good payment history and therefore are expected to be fully recovered. 6.2.1.3 Meter Disputes These items are excluded from the groupings above and a provision is set based on each account’s specific circumstances. 6.2.1.4 Account Write-off Practice The current practice is to write-off all finalled accounts over 120 days after the reminder notices are sent and internal reviews completed. These accounts are written off and sent to one of the three collection agencies, which were selected through a request for proposal (RFP) process. 2006 EDR Application Hydro Ottawa Limited RP-2005-0020 EB-2005-0381 Tab B Filed 2005-08-02 Page 69 of 118 Schedule 6-2: Bad Debt Expense 2002 Residential GS<50 kW GS>50 kW GSTOU (1500 to 5000 kW) Large Use Street Lighting Sentinel Lights $1,470,319 263,903 61,039 0 0 0 0 $1,795,261 2003 $3,255,819 580,948 338,538 4,179 0 0 0 $4,179,485 2004 $751,609 234,253 83,265 41,078 0 0 0 $1,110,205 2005 $795,475 247,925 88,125 43,475 0 0 0 $1,175,000 2006 $609,300 189,900 67,500 33,300 0 0 0 $900,000 Table 6.3 – Bad Debt Expense There were no individual bad debt occurrences in 2004 that surpassed the materiality threshold of 0.2% of Distribution Expense. Information Technology Expenses Hydro Ottawa manages information technology (IT) through a federated IT structure as compared to a centralized or decentralized model. A federated IT structure supports a common business structure, driving financial efficiencies and optimizing processes, while providing agility within individual lines of business within Hydro Ottawa. Core IT infrastructure, corporate applications, voice and data services, are managed and operated by the Information Services and Technology group. The SCADA system, the OMS application and the GIS application (presently in implementation stage), are managed by groups within the Operations department. Hydro Ottawa’s CIS (Customer Information System) transitioned from implementation phase to system start-up in 2004 and is managed by Customer Care’s Business Services component. Through a services management and hosting contract, IBM assists Customer Care with operating and maintaining the CIS application. Hydro Ottawa’s IT governance process provides for alignment of information technology strategy with corporate objectives and goals. Dedicated project teams are formed for large IT projects with oversight and guidance provided through cross-functional Steering Committees. Similar project management principles are applied to smaller projects but management and oversight are provided within each department. As applications and systems evolve and become more integrated, the day-to-day operation and management of these systems is usually transferred from the implementing department to the Information Services and Technology group. 2006 EDR Application Hydro Ottawa Limited RP-2005-0020 EB-2005-0381 Tab B Filed 2005-08-02 Page 70 of 118 Advertising, Political Contributions, Employee Dues, Charitable Donations, Meals/ Travel and Business Entertainment, Research and Development 6.2.1.5 Advertising The advertising budget is spent primarily on educating customers about pending industry changes and upcoming service affecting events such as rate changes, changes to bill layout, outages and many others. It is important that all customers are made aware of these pending changes. Newspaper advertisements are often used to inform customers of planned service outages to repair, install or upgrade equipment. In addition, there is a follow-up with a customer letter to each household. Hydro Ottawa will not have any "branding" or corporate image advertising expenses in 2006. 6.2.1.6 Political Contributions Political contributions are prohibited by Hydro Ottawa’s code of conduct. Consequently none are included for 2006. 6.2.1.7 Employee Dues There were minimal amounts of employee dues for social and recreational activities in 2004, however, they will not be continued in 2006 and are therefore not included in this Application. 6.2.1.8 Charitable Donations Hydro Ottawa is not applying for the recovery of any of its charitable donations. Therefore, it has not provided a comprehensive list. Schedule 6-3: Charitable Donations 2002 Various Donations Ottawa Safe Community United Way Matching Dollars for Doers Table 6.4 – Charitable Donation 2006 EDR Application 2003 2004 2005 2006 0 0 0 0 0 34,736 25,843 0 86,130 0 0 0 8,000 40,000 40,000 10,000 10,000 40,000 40,000 10,000 0 $60,589 $86,130 $98,000 $100,000 Hydro Ottawa Limited RP-2005-0020 EB-2005-0381 Tab B Filed 2005-08-02 Page 71 of 118 6.2.1.9 Meals/Travel and Business Entertainment Hydro Ottawa has included in Tab C its corporate Travel and Entertainment Policy outlining how reimbursements for travel expenses are allowed and providing guidelines for travel expenses. 6.2.1.10 Research and Development Hydro Ottawa has not included any Research and Development expenses in 2006, or in prior years. Employee Total Compensation In 2003, Hydro Ottawa reorganized by moving 100 employees in Corporate Services and Finance from the Holding Company to Hydro Ottawa. There was no overall impact on cost as all employees were dedicated to Hydro Ottawa activity. As well, 30 employees took advantage of the OMERS early retirement incentive prior to December 31, 2003. Hydro Ottawa experienced a work stoppage in 2004 where more then 350 unionized employees were absent for seven weeks, representing almost 75% of its workforce. The effect was to reduce the average base salary and overtime paid to unionized workers. During the same time period Management was paid overtime to ensure adequate coverage for outages and customer support. Hydro Ottawa will be filling a number of positions across the company in both 2005 and 2006, to replace employees that have recently retired or to fill new positions required for functions such as Environment and Emergency Preparedness, changes in regulatory requirements as well as the new apprenticeship program. The largest percentage of new employees, 33 employees, will reside in the Operations department. The apprentice program, described in section 6.0.1, will have 20 new apprentice trades personnel added by the end of 2006. Within System Operations (Control Room and 24/7 response) there are a total of six employees, including additional shift supervisory staff both in the System Office and in the field. This is part of Hydro Ottawa’s plan to introduce management supervision for after-hours response. The balance is made up of additional technical and administrative staff. The Stations group will be filling three positions in 2006. The Construction group will be hiring two supervisors into positions currently staffed with acting supervisors. 2006 EDR Application Hydro Ottawa Limited RP-2005-0020 EB-2005-0381 Tab B Filed 2005-08-02 Page 72 of 118 Schedule 6-4: Employee Compensation Number of Employees (Full-time equivalents (FTEs)): 2002 Executive Management Non-unionized Unionized 2003 2004 2005 2006 3 69 0 387 5 65 31 359 10 78 31 353 10 83 37 361 10 84 39 390 459 443* 472 491 523 Table 6.5 – Number of Employees *Effective January 1, 2004 the actual FTE count was 513. This was a result of transferring 100 FTEs from the Holding Company to Hydro Ottawa and the retirement of 30 FTE’s. The net result is an increase of 70 FTE’s for Hydro Ottawa on January 1, 2004. With the introduction of Hydro Ottawa’s new CIS in September 2004, Customer Care staff levels were reduced, resulting in the lower year-end number for 2004. Compensation – Average Yearly Base Wage ($): 2002 Executive Management Non-unionized Unionized 130,000 71,290 0 50,304 2003 130,405 67,879 49,591 51,352 2004 117,579 71,586 57,825 47,158 2005 119,875 75,459 61,461 56,175 2006 125,280 78,706 67,776 59,459 Table 6.6 – Base Wage Compensation – Average Yearly Overtime ($): 2002 Executive Management Non-unionized Unionized 0 0 0 5,325 2003 0 0 0 4,931 20041 11,666 15,748 9,027 4,331 2005 0 0 0 5,879 2006 0 0 0 4,456 Table 6.7 - Overtime 1 Management and non-union staff typically do not earn overtime. Overtime in 2004 was the result of the 7-week strike by the unionized staff. 2006 EDR Application Hydro Ottawa Limited RP-2005-0020 EB-2005-0381 Tab B Filed 2005-08-02 Page 73 of 118 Compensation – Average Yearly Incentive ($): 2002 Executive Management Non-unionized Unionized 2003 29,943 9,110 0 0 2004 31,452 10,394 4,941 0 2005 42,895 14,723 7,653 0 29,868 12,584 6,146 0 2006 31,058 12,392 6,118 0 Table 6.8 - Incentive Compensation – Average Yearly Benefits ($): 2002 Executive Management Non-unionized Unionized 14,677 3,877 0 3,877 2003 10,430 3,470 2,861 3,228 Table 6.9 – Benefits Included in Benefits are: 2004 Basic Insurance: Dental Single: Dental Family: Health Single: Health Family: Long Term Disability Car Allowances 2005 2006 9,486 9,769 9,018 3,496 4,649 4,698* 3,016 3,911 3,151 4,226 4,799 * This number reflects the average for both management and non-unionized Employer Share Employer Share Employer Share Employer Responsibility Employer Responsibility The numbers in Table 6.9 do not include OMERS Pension and Post-retirement benefits costs, which are shown in Table 6.13 and Table 6.14. 2006 Incentive Plan Hydro Ottawa’s 2006 Incentive Plan is designed to reward the achievement of goals related to organizational efficiency and customer service. It is comprised of two types of goals: Corporate, or company related, and Individual. Corporate goals are divided into two categories: Financial and Customer Service. 2006 EDR Application Hydro Ottawa Limited RP-2005-0020 EB-2005-0381 Tab B Filed 2005-08-02 Page 74 of 118 The Financial goals are as follows: Weight 40% Goal Controllable Costs Targets Reduction of Operating, Maintenance and Administration Costs Benefit Ratepayer 10% General Capital Achieve budgeted spend, or less, per capital project (identified fall 2005) Ratepayer 10% Sustainment Capital Achieve budgeted spend, or less, per reliability enhancing project, and meet project completion dates (identified fall 2005) Table 6.10 - Incentive Program Financial goals Ratepayer Explanation of Benefit Reduces organizational costs Increases efficiency Focuses organization on appropriate goals Ensures appropriate dollars spent on sustaining & improving the business Safeguards long term effectiveness of organization Ensures appropriate spend on equipment and programs directly related to servicing customers The Customer Service goals are to be determined following the roll out of the 2006 business strategy, but will be based on the following: Weight Goal 25% OEB Performance Standards 15% Operational Efficiency Targets Benefit Meeting Board prescribed Ratepayer distribution service quality standards Completion of major Ratepayer endeavours related to improving safety, reliability and quality of service Table 6.11- Incentive Program Customer Service goals Explanation of Benefit Monitors service levels to customers Increase well being of public and staff Increase operational efficiency Individual goals will reflect individual contributions to Corporate goal achievement, and will therefore all be of benefit to the ratepayer. Total value of the 2006 Incentive Plan is estimated to be $1.6 million if all goals are achieved at the target level. Program affordability is safeguarded through the following measures: IF: Hydro Ottawa’s financial performance (OM&A and Capital goals) is between threshold (0.5) and target (1.0): – Individual performance scores are multiplied by the Hydro Ottawa financial score (not total Hydro Ottawa score) for all eligible employees 2006 EDR Application Hydro Ottawa Limited RP-2005-0020 EB-2005-0381 Tab B Filed 2005-08-02 Page 75 of 118 IF: Hydro Ottawa Financial performance is less than threshold: – No Incentive Plan payout for all levels Pensions and Post-retirement Benefits Hydro Ottawa is a member of OMERS. The OMERS premium holiday ended in 2002 with a partial reinstatement in 2003 and full reinstatement in 2004. The 2005 and 2006 amounts of post-retirement benefit expense include amortization of an actuarial loss prepared by an external consultant. 2006 EDR Application Hydro Ottawa Limited RP-2005-0020 EB-2005-0381 Tab B Filed 2005-08-02 Page 76 of 118 Schedule 6-6: OMERS Pension Expense and Post-Retirement Benefits 2002 Pension premiums Adjustments Less: amount capitalized Amount expensed in each year 2003 2004 2005 2006 N/A 657,776 1,964,699 2,385,069 2,743,217 N/A 368,354 1,100,231 1,335,638 1,536,201 $289,422 $864,468 $1,049,431 $1,207,016 Table 6.13 - Pension 2002 Post-Retirement Benefits Cost Adjustment Less: Amount capitalized Amount expensed in each year 2003 2004 2005 2006 300,346 314,947 490,250 582,100 600,000 168,193 176,370 274,540 325,976 336,000 $132,153 $138,577 $215,710 $256,124 $264,000 Table 6.14 - Post-retirement Benefits Expense Distribution Expenses Paid to Affiliates Schedule 6-8: Distribution Expenses Paid to Affiliate(s) 2002 Affiliate Names Activity Interest expense City of Ottawa Holding Company Telecom Ottawa 2006 EDR Application Property Taxes Water and sewer charges, fuel and other miscellaneous city services Administration and Corporate Services expense including interest charged on a temporary loan Broadband data services and dark fibre rental Value $16,021,000 $1,622,000 Basis Pricing Pricing based on deemed rate of 6.9% by the Distribution Rate Handbook upon market opening Market-based pricing as per municipal assessment $257,927 Market-based pricing as per municipal rate calculations $14,795,000 Cost-based pricing of 80% of costs. $1,069,000 Market-based pricing based on same determinants for external customers including length of contract, number of strands,etc Hydro Ottawa Limited RP-2005-0020 EB-2005-0381 Tab B Filed 2005-08-02 Page 77 of 118 2003 Affiliate Names City of Ottawa Holding Company Telecom Ottawa Activity Value Interest expense $16,021,000 Property Taxes $1,597,000 Water and sewer charges, fuel and other miscellaneous city services Administration and Corporate Services expense including interest charged on a temporary loan Basis Pricing Pricing based on deemed rate of 6.9% by the Distribution Rate Handbook upon market opening Market-based pricing as per municipal assessment $294,261 Market-based pricing as per municipal rate calculations $15,071,000 Cost-based pricing of 80% of costs. Broadband data services and dark fibre rental $1,236,000 Market-based pricing based on same determinants for external customers including length of contract, number of strands, etc. Activity Value Basis Pricing 2004 Affiliate Names City of Ottawa Interest expense $16,021,000 Property Taxes $1,644,000 Water and sewer charges, fuel and other miscellaneous city services $221,128 Holding Company Administration and Corporate Services expense including interest charged on a temporary loan $2,483,000* Telecom Ottawa Broadband data services and dark fibre rental $1,574,000 Pricing based on deemed rate of 6.9% by the Distribution Rate Handbook upon market opening Market-based pricing as per municipal assessment Market-based pricing as per municipal rate calculations Cost-based pricing of 80% of costs, excluding some specific shareholder costs absorbed by the Holding Company. Interest on short term borrowing was charged at the bank rate Market-based pricing based on same determinants for external customers including length of contract, number of strands,etc * The Holding Company contained 100 Finance and Corporate Services employees (whose activities were 100% devoted to Hydro Ottawa) in 2002 and 2003. These employees were transferred into Hydro Ottawa on December 31, 2003. 2006 EDR Application Hydro Ottawa Limited RP-2005-0020 EB-2005-0381 Tab B Filed 2005-08-02 Page 78 of 118 2006 - Forecast Affiliate Names Activity Property Taxes City of Ottawa Water and sewer charges, fuel and other miscellaneous city services Value $1,800,000 $288,500 Interest expense (long-term and short-term) $13,623,915 Administration and Corporate Services expense $1,488,000 Broadband data services and dark fibre rental $1,285,200 Holding Company Telecom Ottawa Table 6.15 – Expenses Paid to Affiliates 2006 EDR Application Basis Pricing Market-based pricing as per expected municipal assessment Market-based pricing as per expected municipal rate calculations Market-based pricing based on external debt held by the Holding Company inclusive of debt issuance costs and administration. Interest on short-term borrowing to be charged at the bank rate. Cost-based pricing of 80% of costs, excluding some specific shareholder costs absorbed by the Holding Company Market-based pricing based on same determinants for external customers including length of contract, number of strands,etc Hydro Ottawa Limited RP-2005-0020 EB-2005-0381 Tab B Filed 2005-08-02 Page 79 of 118 Chapter 7 – Taxes/PILS 7.0 Introduction Hydro Ottawa is filing on the basis of a forward test year and will be using the 2006 OEB Tax Model (“Tax Model”). Any assumptions made to accommodate the forward test year information have been documented in Tab I of the Application Binder. The Tax Model requires disclosure of all dividends paid and their tax treatment. In 2002 Hydro Ottawa paid a $2.2 million dividend to the Holding Company. As these companies are associated they flow through with no tax implications. 7.1 General Methodology Hydro Ottawa, while filing on the basis of a forward test year, has followed the principles, methodology, and provided the details as required by the Handbook and the Tax Model. 7.2 Principles Non-recoverable and disallowed expenses All disallowed and non-recoverable expenses have been identified and recorded in the regulatory tax calculations. Capital tax exemptions Hydro Ottawa is claiming the full amount of both the Federal Large Corporation Tax Exemption and the Ontario Capital Tax Exemption. Loss carry-forwards Schedule 7-1 shows a loss carry forward as of December 31, 2004 of $14,039,274. This loss carry forward is expected to be fully utilized in 2005; therefore, no loss carry forward is available for 2006. Schedule 7-1: Sharing Loss Carry-Forwards A. Loss carry-forwards as at December 31, 2004: Distribution Non-distribution Total from the 2004 tax return $14,039,274 ________ 0 $14,039,274 B. Estimated loss carry-forwards as at December 31, 2005: Distribution Non-distribution Total 0 ________ 0 ________ 0 2006 EDR Application Hydro Ottawa Limited RP-2005-0020 EB-2005-0381 Tab B Filed 2005-08-02 Page 80 of 118 A – B: Loss carry-forwards available for use in 2005: Distribution Non-distribution Total $14,039,274 ________ 0 $14,039,274 Undepreciated capital cost (UCC) and capital cost allowance (CCA) Hydro Ottawa is taking the full CCA for 2006 and includes in this amount the effects of the 2001 Fair Market Value (FMV) bump. Schedule 7-2: October 2001 FMV Adjustment UCC Beginning $ 2001 Class 1 Class 2 Class 3 Class 8 Class 10 Class 12 Class 42 Totals 2006 EDR Application N/A N/A Rate 4% 6% 5% 20% 30% 100% 12% 68,271,297 N/A 4% 6% 5% 20% 30% 100% 12% 64,743,298 N/A 33,312,666 18,070,916 8,370,709 (3,124) 1,407,600 61,158,768 CCA $ UCC Ending $ 1,445,862 1,227,088 463,751 (976) 861,796 (469,522) 34,700,694 19,224,379 8,811,273 (3,905) 2,010,857 3,527,999 64,743,298 1,388,028 1,153,463 440,564 (781) 603,257 33,312,666 18,070,916 8,370,709 (3,124) 1,407,600 3,584,530 61,158,768 1,332,507 1,084,255 418,535 (625) 422,280 31,980,159 16,986,661 7,952,174 (2,499) 985,320 3,256,952 57,901,815 N/A 34,700,694 19,224,379 8,811,273 (3,905) 2,010,857 2003 Class 1 Class 2 Class 3 Class 8 Class 10 Class 12 Class 42 Totals 1/2 of Additions $ 36,146,556 20,451,467 9,275,024 (4,881) 2,872,653 (469,522) 2002 Class 1 Class 2 Class 3 Class 8 Class 10 Class 12 Class 42 Totals Additions $ N/A 4% 6% 5% 20% 30% 100% 12% Hydro Ottawa Limited RP-2005-0020 EB-2005-0381 Tab B Filed 2005-08-02 Page 81 of 118 UCC Beginning $ 2004 Class 1 Class 2 Class 3 Class 8 Class 10 Class 12 Class 42 Totals N/A N/A Rate 4% 6% 5% 20% 30% 100% 12% 57,901,815 N/A 4% 6% 5% 20% 30% 100% 12% 54,910,704 N/A 29,472,915 15,009,414 7,176,837 (1,599) 482,807 52,140,373 CCA $ UCC Ending $ 1,279,206 1,019,200 397,609 (500) 295,596 30,700,953 15,967,462 7,554,565 (1,999) 689,724 2,991,111 54,910,704 1,228,038 958,048 377,728 (400) 206,917 29,472,915 15,009,414 7,176,837 (1,599) 482,807 2,770,331 52,140,373 1,178,917 900,565 358,842 (320) 144,842 28,293,998 14,108,849 6,817,995 (1,280) 337,965 2,582,845 49,557,527 N/A 30,700,953 15,967,462 7,554,565 (1,999) 689,724 2006 Class 1 Class 2 Class 3 Class 8 Class 10 Class 12 Class 42 Totals 1/2 of Additions $ 31,980,159 16,986,661 7,952,174 (2,499) 985,320 2005 Class 1 Class 2 Class 3 Class 8 Class 10 Class 12 Class 42 Totals Additions $ N/A 4% 6% 5% 20% 30% 100% 12% The FMV amount in tax differs from the accounting value by the full amount as a FMV bump pursuant to Ontario Regulation 162/01 was recorded for tax purposes only. The negative amounts in Schedule 7.2 only pertain to the FMV bump and the overall UCC pools are in a positive position. Please note the following on Schedule 7-2: The FMV bump for Class 2 ($20,451,467) and Class 3 ($9,275,024) have been entered as one line item. The total of these two classes ($29,766,491) has been removed from Class 1 assets in Account 2050. The totals for Class 1 and 8 differ by $491,331 from the amount shown in the Tax Model, Tab 2001 Schedule 7-2 FMV. The FMV bump 2006 EDR Application Hydro Ottawa Limited RP-2005-0020 EB-2005-0381 Tab B Filed 2005-08-02 Page 82 of 118 for Accounts 1970, 1975 and 1980 was included with Class 1 assets on Schedule 8 of the forecast tax filing rather than Class 8 assets as shown in the Tax Model. Regulatory tax treatment of Eligible Capital Expenditures (ECE) Hydro Ottawa is taking the full ECE allowed for 2006. This account does not have any FMV adjustments from the FMV bump and only includes costs for land rights. Interest deduction Hydro Ottawa has deducted the deemed interest in the Tax Model as it is higher than the forecasted actual interest expense. Schedule 7-3 provides the required information. Schedule 7-3: Interest Expense 1) Deemed 2006 interest expense in 2006 EDR Model = $16,253,946 2) 2006 interest expense Plus 2006 capitalized interest 2006 actual interest + = $12,841,451 $__ 782,464 $13,623,915 3) 4) Plus any interest forecast for Tier 1 or 2 adjustments + $____N/A_ Total interest $13,623,915 = Additional Interest Expense for 2006 OEB Tax Model = $2,630,031 Hydro Ottawa intends to elect to capitalize interest incurred on Construction-Work-InProgress (CWIP) for tax purposes in 2006 and has elected to capitalize interest incurred on CWIP for tax purposes for 2004 and prior years. Interest capitalized for accounting, but deducted for tax purposes Hydro Ottawa capitalized interest as per the capitalization policy. The amount in 2006 of $782,464 has been reflected in the Tax Model as well as Schedule 7-3. Overlapping year-ends Hydro Ottawa has assumed the rate year (May 1, 2006 to April 30, 2007) is the same as the tax year (calendar 2006) in its calculations. 2006 EDR Application Hydro Ottawa Limited RP-2005-0020 EB-2005-0381 Tab B Filed 2005-08-02 Page 83 of 118 Estimating taxable capital Hydro Ottawa has chosen to estimate its capital base for Capital Tax calculations. Balance sheet assumptions have been provided to support these numbers. See Tab I of the Application Binder. The balance sheet has been prepared based on the assumption that the accounts have not changed from the 2005 forecast except for the adjustments for capital additions and the additional borrowing requirements. Ontario Corporate Minimum Tax Hydro Ottawa has not included any Ontario Corporate Minimum Tax in its calculations as this will not apply. Non-distribution elimination Hydro Ottawa has excluded all non-distribution costs and revenues. Tax credits Hydro Ottawa has not claimed any tax credits in the Tax Model. Impact of CDM expenditure and Smart Meter expenditures Smart Meters amounts are included in the revenue requirement for 2006 and as such, no special tax treatment is required. Property Taxes The Tax Model only addresses corporate income and capital taxes. Property tax is included in a grouped account for distribution – other expenses. Capital Leases Hydro Ottawa does not have any capital leases now and does not expect to have any in 2006. 2006 EDR Application Hydro Ottawa Limited RP-2005-0020 EB-2005-0381 Tab B Filed 2005-08-02 Page 84 of 118 7.3 Tax Payable Filings Information to be Provided with 2006 OEB Tax Model Filings Hydro Ottawa is providing the requested information in Tab I of the Application Binder. The variance from 2004 to 2006 is fully explained by the utilization of the loss carry forward in 2005 so that no loss carry forward remains for 2006. Tax Information Disclosure in Future Hydro Ottawa acknowledges the future information requirement of this section. Supporting Documentation Hydro Ottawa is providing supporting documentation in Tab I of the Application Binder. 2006 EDR Application Hydro Ottawa Limited RP-2005-0020 EB-2005-0381 Tab B Filed 2005-08-02 Page 85 of 118 Chapter 8 – Revenue Requirement 8.0 Introduction Hydro Ottawa has defined its revenue requirement for 2006 and has forecasted its annual costs and revenues for 2006 in such a way as to avoid double recovery of any cost element in its rates, regulated charges, and other incidental sources of revenue. 8.1 Service Revenue Requirement The 2006 service revenue requirement is based on forecasted costs for 2006, including rate base and distribution expenses, as detailed in previous chapters of this Manager’s Summary. With Smart Meters Service Revenue Requirement = (Rate Base X Cost of Capital) + Distribution Expenses + PILs Rate Base = $516,455,750 as per Chapter 4 Cost of Capital = (Debt ratio) x (Debt rate) + (1- Debt ratio) x Return on Equity Cost of Capital = 60% x 5.25% + 40% x 9% as per Chapter 5 Cost of Capital = 9.75% Distribution Expenses = $81,103,199 as per Chapter 6 PILS = $12,700,788 as per Chapter 7 Service Revenue Requirement = $128,650,340 8.2 Base Revenue Requirement In order to determine the base revenue requirement, the following amounts were removed from the service revenue requirement: The revenue determined in Schedule 11-3, Specific Service Charge Revenue, including Late Payment Charges, and The revenue received by the application of Other Board Approved Charges, (i.e. administration of the RPP (formerly SSS) Administration Charge (Account 4080b), Retail Services Revenue (Account 4082) and Service Transaction Requests (STR) Revenues (Account 4804)). Charges for retail services in Accounts 4082 ($283,953) and 4084 ($780) have been forecasted based on 8 months actuals from October 2004 to May 2005. The amounts have been annualized for 12 months. Details are provided in Schedule 8-1. 2006 EDR Application Hydro Ottawa Limited RP-2005-0020 EB-2005-0381 Tab B Filed 2005-08-02 Page 86 of 118 Schedule 8-1: Derivation of Base Revenue Requirement With Smart Meters Row Revenue Requirement 1 Service Revenue Requirement 2 Less: Revenue from Specific Service Charges and Late Payment Charges 3 Less: Revenue from other Boardapproved charges 4 Less: Revenue from sources other than Board-approved rates and charges 5 Base Revenue Requirement $ Source/Comments $128,650,340 $2,834,012 $938,506 $0 $124,877,822 (Rate Base X Cost of Capital) + Distribution Expenses + PILS Schedule 11-3 Details provided below Row 6 from Schedule 8-2 Row 1 – 2 – 3 - 4 Table 8.1 - Base Revenue Requirement SSS Administration Charge, Account 4080(b): $653,773 Wheeling revenue: N/A 2006 EDR Application Hydro Ottawa Limited RP-2005-0020 EB-2005-0381 Tab B Filed 2005-08-02 Page 87 of 118 Schedule 8-2: Revenue from Sources Other Than Board-Approved Rates and Charges Row Description of Revenue 2006 Revenue Offset Comments 1 Other Operating Revenues $2,834,012 Accounts 4205 – 4245 2 Less: Revenue from Late Payment Charges and Specific Service Charges $2,834,012 Accounts 4225, 4235 3 Net “Other Operating Revenues” $0 Row 1 – Row 2 4 Other Income / Deductions $0 Accounts 4305 – 4398 (not including 4375, 4380 and 4385, as per Notes to EDR 2006 Model version 2.1 issued July 20, 2005) 5 Investment Income $0 Accounts 4405 - 4415 6 Total Revenue Offset # 2 $0 Rows 3 + 4 + 5 Transferred to Row 4 of Schedule 8-1 Table 8.2 – Other Revenue 8.3 CDM, Smart Meter and Regulatory Asset Recovery Hydro Ottawa is not seeking approval for any incremental CDM expenditures in 2006 beyond the amount already approved in the RP-2004-0203 proceeding. Hydro Ottawa is applying for final recovery of regulatory assets under a separate application. Schedule 8-3 provides the proposed rate riders. 2006 EDR Application Hydro Ottawa Limited RP-2005-0020 EB-2005-0381 Tab B Filed 2005-08-02 Page 88 of 118 Schedule 8-3: Regulatory Asset Recovery Class 2005 Rate Rider * $ / kWh Residential General < 50 kW Scattered Load 2006 Rate Rider ** $ / kWh $0.0013 $0.0010 $0.0008 $/kW, or specify if other General Service >50 kW < 1500 kW General Service > 1500 kW < 5000 kW Large User Street Lighting Sentinel Lighting $kW $0.6098 ($0.3146) ($0.4299) ($0.3882) ($0.6224) Table 8.3 Regulatory Asset Recovery * 2005 rate riders are a component of the volumetric distribution rate; no entry is necessary in this column. ** Hydro Ottawa is applying for these rate riders effective May 1, 2006 in a separate application. 2006 EDR Application Hydro Ottawa Limited RP-2005-0020 EB-2005-0381 Tab B Filed 2005-08-02 Page 89 of 118 Chapter 9 – Cost Allocation 9.0 Introduction As directed by the Handbook, Hydro Ottawa is maintaining the respective class distribution revenues at approximately the same proportions as are currently the case. 9.1 Customer Classes Hydro Ottawa is proposing to maintain its existing customer classes and sub-classes as currently approved. Hydro Ottawa is seeking approval to add Standby Charges for embedded generators for the classes shown below. Schedule 9-1: Customer Classification Customer Classification Current Proposed √ √ < 50 kW √ √ > 50 kW non TOU (< 1500 kW) √ √ > 50 kW TOU (>1500kW < 5000 kW) √ √ Large Users √ √ Unmetered Scattered Load √ √ Street Lights √ √ Sentinel Lights √ √ Residential Regular General Service Lighting Back-up/Standby Power > 50 kW non TOU (< 1500 kW) √* > 50 kW TOU (>1500kW < 5000 kW) √* Large Users √* Table 9.1 – Customer Classification * See section 10.6 for a detailed explanation of Standby Charges. 2006 EDR Application Hydro Ottawa Limited RP-2005-0020 EB-2005-0381 Tab B Filed 2005-08-02 Page 90 of 118 Schedule 9-2: Customer Eligibility Criteria Hydro Ottawa has completed the applicable sections of this Schedule to indicate the eligibility criteria that it uses to determine a specific customer's rate classification. Customer Classification Residential Regular: This classification refers to an account taking electricity at 120/240 volts single phase where the electricity is used exclusively in a separately metered living accommodation. Customers shall be residing in single-dwelling units that consist of a detached house or one unit of a semidetached, duplex, triplex or quadruplex house, with a residential zoning. Separately metered dwellings within a town house complex or apartment building also qualify as residential customers. General Service Less than 50 kW: This classification refers to a non residential account taking electricity at 750 volts or less whose monthly average peak demand is less than, or is forecast to be less than, 50 kW. Greater than 50 kW non TOU (< 1500 kW): This classification refers to a non residential account whose monthly average peak demand is greater than, or is forecast to be greater than, 50 kW but less than 1,500 kW. Greater than 50 kW TOU (>1500 kW < 5000 kW): This classification refers to a non residential account whose monthly average peak demand is greater than, or is forecast to be greater than, 1500 kW but less than 5000 kW. Large Use: This classification refers to an account whose monthly average peak demand is greater than, or is forecast to be greater than 5,000 kW. Unmetered Scattered Load: This classification refers to an account taking electricity at 120/240 volts single phase whose monthly average peak demand is less than, or is forecast to be less than, 50 kW and the consumption is unmetered. Such connections include cable TV power packs, bus shelters, telephone booths, traffic lights, railway crossings, etc. The customer will provide detailed manufacturer information/ documentation with regard to electrical demand/consumption of the proposed unmetered load. Qualification for this classification is at the discretion of Hydro Ottawa as defined its Conditions of Service. Back-up/Standby Power: This classification refers to an account using local generation greater than or equal to 500 kW to reduce monthly consumption normally provided by the distribution system. The generation is used for load displacement only. The rate applies when the generation is operational. Please refer to section 10.6 for complete details on the proposed rate structure. 2006 EDR Application Hydro Ottawa Limited RP-2005-0020 EB-2005-0381 Tab B Filed 2005-08-02 Page 91 of 118 Lighting Street Lights: This classification refers to an account for roadway lighting with a Municipality, Regional Municipality, Ministry of Transportation and private roadway lighting operation, controlled by photo cells. Sentinel Lights: This classification refers to an account for privately owned non-roadway lighting controlled by photocells. Hydro Ottawa currently owns a few sentinel lights installed by its predecessor utilities. 9.2 Appropriate Share of the 2006 Revenue Requirement for Each Class Hydro Ottawa has completed Schedule 9-3 to provide the 2002, 2003 and 2004 statistical data for information purposes only. Hydro Ottawa has allocated the revenue requirement to each class based on allocation factors determined by applying current distribution rates to Hydro Ottawa’s 2006 forecast of kilowatts and kilowatt-hours by class. Schedule 9-3: Allocation Factors to Customer Classifications For 2002 Year End Customers Total KWh or kW Per Customer 237,755 2,255,231,727 kWh 9,485 kWh 23,104 677,030,307 kWh 29,304 kWh 3,175,108,855 kWh 883,201 kWh 8,161,952 kW 2,270 kW 642,553,663 kWh 11,682,794 kWh 1,303,349 kW 23,697 kW 664,970,205 kWh 60,451,837 kWh 1,229,882 kW 111,807 kW 17,668,066 kWh 6,488 kWh 37,901,227 kWh 870 kWh 98,838 kW 2.268 kW 93,986 kWh 723 kWh Residential Regular General Service Less than 50 kW 50 – 1500 kW 3595 1500 – 5000 kW TOU 55 Large Users 11 Unmetered Scattered Load 2723 Lighting Street Lights 43,580 Sentinel Lights 130 Back-up/Standby Power N/A 7,470,558,036 kWh Totals 10,794,021 kW 2006 EDR Application Hydro Ottawa Limited RP-2005-0020 EB-2005-0381 Tab B Filed 2005-08-02 Page 92 of 118 For 2003 Year End Customers Total KWh or kW Per Customer 242,369 2,241,354,543 kWh 9,248 kWh 23,844 802,608,939 kWh 33,661 kWh 2,949,993,636 kWh 1,015,488 kWh 6,964,189 kW 2,397 kW 784,559,822 kWh 12,861,636 kWh 1,696,853 kW 27,817 kW 651,227,427 kWh 59,202,493 kWh 1,164,450 kW 105,859 kW 17,320,782 kWh 6,255 kWh 36,129,185 kWh 824 kWh 95,675 kW 2.183 kW 93,986 kWh 723 kWh Residential Regular General Service Less than 50 kW 50 – 1500 kW 2905 1500 – 5000 kW TOU 61 Large Users 11 Unmetered Scattered Load 2769 Lighting Street Lights 43,834 Sentinel Lights 130 Back-up/Standby Power N/A 7,483,288,320 kWh Totals For 2004 Year End 9,921,167 kW Customers KWh or kW Per Customer 247,760 2,266,659,492 kWh 9,147 kWh 23,205 791,471,654 kWh 34,208 kWh 2,989,300,526 kWh 987,546 kWh 6,897,682 kW 2,279 kW 791,670,830 kWh 12,978,210 kWh 1,705,538 kW 27,960 kW 621,338,901 kWh 62,133,890 kWh 1,117,842 kW 111,784 kW 17,067,540 kWh 6,161 kWh Residential Regular General Service Less than 50 kW 50 – 1500 kW 1500 – 5000 kW TOU Large Users Unmetered Scattered Load 2006 EDR Application 3004 61 10 2770 Hydro Ottawa Limited RP-2005-0020 EB-2005-0381 Tab B Filed 2005-08-02 Page 93 of 118 For 2004 Year End Customers KWh or kW Per Customer 37,334,619 kWh 831 kWh 103,732 kW 2.3 kW 90,794 kWh 726 kWh Lighting Street Lights 44,932 Sentinel Lights 125 Back-up/Standby Power N/A Totals 7,514,934,356 kWh 9,824,794 kW Table 9.2 – Class Statistics Average 2002 to 2004 Per Customer Residential Regular 9,293 kWh General Service Less than 50 kW 50 – 1500 kW 1500 – 5000 kW TOU Large Users Unmetered Scattered Load 32,391 kWh 962,078 kWh 2,315 kW 12,507,547 kWh 26,491 kW 60,596,073 kWh 109,817 kW 6,301 kWh Lighting Street Lights Sentinel Lights Back-up/Standby Power Table 9.3 – Class Averages 2006 EDR Application 842 kWh 2.25 kW 724 kWh N/A Hydro Ottawa Limited RP-2005-0020 EB-2005-0381 Tab B Filed 2005-08-02 Page 94 of 118 9.3 Appropriate Share of the 2006 CDM, Smart Meter and Regulatory Asset Revenue Requirements Hydro Ottawa is not seeking approval for any incremental CDM expenditures in 2006 beyond the amount already approved in the RP-2004-0203 proceeding. 2006 EDR Application Hydro Ottawa Limited RP-2005-0020 EB-2005-0381 Tab B Filed 2005-08-02 Page 95 of 118 Chapter 10 – Rates and Charges 10.0 Introduction Load Forecast 10.0.1.1 Model Hydro Ottawa’s forecasting model is based primarily on historical load data. The loading information is comprised of two sets of data; one set prior to the amalgamation in November 2000 and one set after. The kWh and kW demand data is entered into a forecasting model using a Holt-Winters seasonal algorithm to manage data in which there are both trends and seasonal variations of known periods. The algorithm also allows for the linear model to be weighted towards the most recent data set to take into account more recent economic and social trends. 10.0.1.2 Historical Data Set The first data set is comprised of loads from the five predecessor utilities and spans the period of January 1997 to December 2000. Although the kWh total is accurate, the peak kW may or may not be coincidental. The second data set is wholly from Hydro Ottawa and includes coincidental peak demand and total kWh from January 2001 to June 2005. 10.0.1.3 Influencing Factors There are a number of factors that can influence the accuracy of load forecasts. The percentage of residential customers to commercial customers influences the stability of the forecast. Residential loads are easier to forecast then larger loads. If one residential customer does something unexpected, it has virtually no impact. However, a downturn in the economy, or the unexpected closure of a large customer could have a significant impact on future loads. The loss of many high tech companies in 2000 contributed to lower kWh sales during the last few years. The most recent survey by Royal Lepage has the office vacancy in the Kanata sector at 19%, down from an all-time high of 28.8% in 2004. The weather is the single most important factor affecting a forecast. Unfortunately, weather is not easy to predict. By using a reliable data model with a long enough period, weather variations are less likely to skew the results. Individual events, such as the blackout of August 14, 2003 and load reduction appeals, can influence how customers will consume electricity in the future. Air-conditioning loads may decrease as customers heed the warnings about possible brownouts or worse. Most, if not all, new housing starts in Ottawa are heating with natural gas. The impact new housing starts have on the overall load profile is less significant then it would have been years ago. 2006 EDR Application Hydro Ottawa Limited RP-2005-0020 EB-2005-0381 Tab B Filed 2005-08-02 Page 96 of 118 10.0.1.4 Results Figure 10.1 indicates the expected future kWh usage for the period 2006 to 2010. The expected load increase in 2006 is 0.4% with annual increases of 0.9% to 1.0% into 2010. 9,000,000 8,000,000 7,000,000 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 0 Forecast 10 20 09 20 08 20 07 20 06 20 05 20 04 20 03 20 20 20 02 Historical 01 MWh Load Forecast Figure 10.1 – Load Forecast Customer Growth 310000 300000 290000 280000 Actual Forecast 270000 260000 250000 240000 Actual 2002 2003 2004 2005 2006 2007 2008 2009 2010 264520 269191 274040 Forecast Figure 10.2 – Customer Growth 2006 EDR Application 280323 284465 288607 292750 296893 301038 Hydro Ottawa Limited RP-2005-0020 EB-2005-0381 Tab B Filed 2005-08-02 Page 97 of 118 Figure 10.2 shows Hydro Ottawa’s 2006 customer forecast for revenue allocation and rate design purposes. A slightly lower customer count was used for determining projected capital expenditures for residential subdivisions. Overall, Hydro Ottawa is forecasting modest growth over the next 5 years due to the changing aspects of loads including economic trends, customer conservation initiatives and a preference for natural gas in the residential sector. 10.1 Fixed/Variable Splits Hydro Ottawa is not proposing any changes to the Fixed/Variable splits as calculated by the model. 10.2 Unmetered Scattered Loads Hydro Ottawa currently bills its unmetered scattered loads with the same rates as for the General Service < 50 kW class. For 2006, Hydro Ottawa is setting the monthly fixed service charge at 50% of the monthly fixed service charge of the General Service < 50 kW class rate, as directed by the Board. The rates will continue to apply on a per-connection basis. Hydro Ottawa does not propose to reallocate the resultant revenue shortfall because the addition of a Standby Charge substantively offsets any lost revenue. Schedule 10-2: Unmetered Scattered Loads 1) Currently, the monthly service charge for unmetered scattered load customers, having multiple unmetered connection points, is on a per customer and not a per connection point basis and the level of the charge is equal to or less than the General Service <50 kW monthly service charge per customer. Yes ____ No __X__ 2) Currently, there is a unique level of monthly service charge(s) payable by unmetered scattered loads. Yes ____ No __X__ Hydro Ottawa accordingly provides Table 10.1. Connections kWh 2002 Unmetered Scattered Load 2723 17,668,066 2003 Unmetered Scattered Load 2769 17,320,782 2004 Unmetered Scattered Load 2770 17,067,540 2754 17,352,129 Average Unmetered Scattered Load Table 10.1 – Unmetered Scattered Loads 2006 EDR Application Hydro Ottawa Limited RP-2005-0020 EB-2005-0381 Tab B Filed 2005-08-02 Page 98 of 118 10.3 Time of Use Distribution Rates Hydro Ottawa has a sub-class of General Service which is listed on Hydro Ottawa’s current rate schedule (for rates effective April 1, 2005) as General Service > 50 kW Time of Use. For Hydro Ottawa, the General Service > 50 kW (Time of Use) class was defined as “those customers with an average annual demand greater than 1500 kW” when the class was first created in November 2000. This was specified in Hydro Ottawa’s rate application dated August 15, 2000; a copy is provided in Tab E of the Application Binder. Only those customers with demand in excess of 1500 kW fall within the General Service >50 kW (Time of Use) class. All of these customers have interval meters as required by the Distribution System Code and therefore would be considered Time of Use. The definition of this General Service > 50 kW Time of Use sub-class for Hydro Ottawa is different than for most other LDC’s. Hydro Ottawa accordingly proposes that this class be renamed as General Service > 1500 kW < 5000 kW to avoid confusion. 10.4 Transformer Ownership Allowance Hydro Ottawa is proposing to drop its Transformer Ownership Allowance for services greater than 115 kV since any customers connected at greater than 115 kV became market participants in May 2002 and are no longer Hydro Ottawa customers. The Transformer Ownership Allowance for services less than 115 kV will remain unchanged for 2006. Schedule 10-4: Transformer Ownership Allowance 2002 kW $ General Service > 50 kW non TOU (<1500 kW) 631,571 $ 284,206.95 General Service > 50 kW TOU (>1500 kW) 912,947 $ 410,826.15 Large Users 909,500 $ 409,274.90 Total 2,454,018 $ 1,104,308.10 2003 kW $ General Service > 50 kW non TOU (<1500 kW) 612,102 $ 275,445.90 General Service > 50 kW TOU (>1500 kW) 883,042 $ 397,368.90 Large Users 908,761 $ 408,942.45 Total 2006 EDR Application 2,403,905 $ 1,081,757.25 Hydro Ottawa Limited RP-2005-0020 EB-2005-0381 Tab B Filed 2005-08-02 Page 99 of 118 2004 kW $ General Service > 50 kW non TOU (<1500 kW) 633,860 $ 285,237.00 General Service > 50 kW TOU (>1500 kW) 886,223 $ 398,800.35 Large Users 959,518 $ 431,783.10 Total 2,479,601 $ 1,115,820.45 Table 10.2 – Transformer Ownership Allowance 10.5 Update of Loss Adjustment Factors Hydro Ottawa’s current loss adjustment factor is 1.0364. The calculation in Table 10.3 represents a reduction of 0.19%. The resultant loss adjustment factor is acceptable to Hydro Ottawa and is below the 5% threshold. Hydro Ottawa is not proposing any changes to the loss adjustment factor for the Large Use customer class. Schedule 10-5: Determination of Loss Adjustment Factors 2002 2003 2004 7,751,077,843 7,755,187,001 7,702,017,686 676,274,698 662,298,293 631,901,662 A “Wholesale” kWh (IMO) B “Wholesale” kWh for Large Use Customer(s) (IMO) C Net “Wholesale” kWh (A) –(B) 7,074,803,144 7,092,888,708 7,070,116,024 D “Retail” kWh (Distributor) 7,470,558,035 7,483,288,326 7,514,934,346 E “Retail” kWh for Large Use Customer(s) (1% loss) 664,970,205 651,227,427 621,338,901 F Net “Retail” kWh (D)-(E) 6,805,587,830 6,832,060,899 6,893,595,445 G Loss Factor [(C)/(F)] 1.0396 1.0382 1.0256 H I Secondary Distribution Loss Adjustment Factor (3 year average) Primary Distribution Loss Adjustment Factor (SDLA Factor x 0.99) Table 10.3 – Loss Adjustment Factor 2006 EDR Application 1.0344 1.0240 Hydro Ottawa Limited RP-2005-0020 EB-2005-0381 Tab B Filed 2005-08-02 Page 100 of 118 10.6 Standby Charges Hydro Ottawa is proposing to introduce a Standby Charge as part of its Application. The Standby Charge will apply to all customers with load displacement generators with a total combined nameplate rating greater than or equal to 500 kVA. The purpose of the Standby Charge is to recover the cost of providing reserved capacity to these customers and to eliminate crosssubsidization by other customers. Hydro Ottawa’s distribution rates are designed based on the principle of continuous use. When customers displace load with generation, the expected revenue to recover capital, operating, maintenance and administration costs are not realized and the burden falls on other customers to subsidize those revenue shortfalls. Due to the nature of Hydro Ottawa’s distribution system and its embedded generators, site-specific Standby Charges are not practical. Generators are installed in very dense urban environments and determining what specific assets are related to each site is simply too difficult to assess. Hydro Ottawa is proposing to use class-specific charges instead. Rate Structure The Standby Charge is composed of a standby monthly service charge for administration and a standby distribution volumetric rate based on the Contract Backup Demand as determined by the methodology outlined in section 10.6.4. Standby Monthly Service Charge – A monthly fixed charge applied to cover the incremental cost of monitoring, billing and administration related to providing standby facilities. Standby Distribution Volumetric Rate – A rate per kW (or kVA; see section 10.8) of Billed Backup Demand. The Billed Backup Demand quantity will be equal to or less than the Contract Backup Demand depending on whether the reserved capacity was required during the billing period. The standby distribution volumetric rate would be equal to the class-specific distribution volumetric rate. Customer Classification The rate classification of customers with load displacement generators will be net of the connected generation. The 12-month average demand used to determine customer classifications will be the demand based on meter readings. Contract Backup Demand The Contract Backup Demand can be determined by using the full nameplate value of the generating plant or a lesser amount as agreed to by the customer and Hydro Ottawa. The customer can elect to contract for a lesser amount if it intends to shed load when the generation is not available. This will reduce the customer’s monthly cost but may expose them to the Backup Overrun Adjustment if the contracted amount is exceeded. If a customer determines that no backup capacity is required, it must still sign a Standby Facilities Contract indicating that it has elected not to contract for backup capacity. Backup Overrun Adjustments will be applied if the customer is 2006 EDR Application Hydro Ottawa Limited RP-2005-0020 EB-2005-0381 Tab B Filed 2005-08-02 Page 101 of 118 forced to use standby capacity for which it has not contracted. Hydro Ottawa reserves the right to impose a Contract Backup Demand if a customer fails to meet its obligations. Determination of Billed Backup Demand The Contract Backup Demand establishes a ceiling for Billed Backup Demand (excluding Backup Overrun Adjustments). The following three examples illustrate how the volumetric component of the Standby Charge is determined. The examples that follow assume that the regular distribution volumetric charges apply to the metered peak demand. The Standby Charge is intended to supplement demand shortfalls introduced by the generation. Example 1 – Generation ON for entire period In this case the Billed Backup Demand would be equal to the Contract Backup Demand. The Contract Backup Demand replaces demand that would have been captured by Hydro Ottawa’s interval metering had the generation been off. Example 2 – Generation OFF for entire period In this case the Billed Backup Demand would be zero. The customer is billed based on the peak demand registered on Hydro Ottawa’s interval meters. Example 3 – Generation ON and OFF during period (No Backup Overruns) In this example the Billed Backup Demand is: Contract Demand – (Metered Peak generator OFF – Metered Peak generator ON) This assumes that the difference between the generator OFF peak and the generator ON peak is less then the contracted amount; if not, the customer is subject to a Backup Overrun Adjustment. Backup Overrun Adjustment The Backup Overrun Adjustment is to ensure customers contract for the appropriate amount of standby capacity. Customers must meet contract requirements by shedding load if they have contracted for an amount less then the nameplate rating. The Backup Overrun Adjustment is calculated as follows: (Generator OFF Peak – Generator ON Peak) – Contract Backup Demand If the Contract Backup Demand is less than the difference between the two peaks, a charge will apply. Backup Overrun Adjustments are determined by reviewing interval data prior to and immediately after a generator change-of-status. The instantaneous demand difference with the generator on and off is determinative of the standby capacity used and any overrun used. The Backup Overrun Adjustments never exceed the nameplate rating of the generating plant; consequently, the Backup 2006 EDR Application Hydro Ottawa Limited RP-2005-0020 EB-2005-0381 Tab B Filed 2005-08-02 Page 102 of 118 Overrun Adjustment only applies to customers that have contracted for Backup Demand less then the generator nameplate rating. Contract Backup Demand is reviewed on a quarterly basis. If a customer has exceeded the Contract Backup Demand (Backup Overrun Adjustment) in any of the three preceding billing periods, the Contract Backup Demand will be increased to the highest monthly level of utilization that occurred in those three months. The Backup Overrun Adjustment is assessed at the same rate as the Billed Backup Demand. Standby Monthly Service Charge The Standby Monthly Service Charge is intended to cover the cost to determine, bill and monitor Billed Backup Demands and Backup Overrun Adjustments. The charge is based on time and material as shown on the following schedule. 2006 EDR Application Hydro Ottawa Limited RP-2005-0020 EB-2005-00381 Tab B Filed 2005-08-02 Page 103 of 118 Specific Service Charges: Embedded Generation –Standby Monthly Service Charge Specific Service Charge Description: $95 Standby Monthly Service Charge Used For: Standby Monthly Service Charge L A B O U R Direct Labour (inside staff) Straight Time Direct Labour (inside staff) Overtime Direct Labour (field staff) Straight Time Direct Labour (field staff) Overtime Other Labour (Specify) Payroll Burden % Total Labour Cost O Small Vehicle Time T Large Vehicle Time H Other: Material E Contract R Other Total Other Total Cost Specific Service Charge Value Requested - Round to nearest $5 Reading Generator Meter Data and analyzing peaks Producing Shadow report Producing Annual Statistical report Table 10.4 – Standby Monthly Service Charge 2006 EDR Application Rate/Amount 95.00 Hours/Units 1.0 O/T Factor Calculated Cost $95.00 Included $95.00 $95.00 $95.00 Hydro Ottawa Limited RP-2005-0020 EB-2005-00381 Tab B Filed 2005-08-02 Page 104 of 118 Parallel Generation Data Requirements Customers will be required to provide generator operating and load information pertaining to parallel generation with nameplate ratings greater than or equal to 500 kVA. All new generators will be metered to allow comparison to Hydro Ottawa’s supply point load profile for determining billing demands. For existing generators, the Billed Backup Demand will be determined from the customer’s generator load data and operating logs. 10.7 Low Voltage (LV) Charges Hydro Ottawa does not provide LV and related services to any embedded distributors and does not expect to do so in 2006. Hydro Ottawa has included in its 2006 expenses an estimate for Hydro One’s LV charges based on current rates (as published on Hydro One’s web site). The estimate is based on historical data and forecasted loads for 2005 and 2006. Location 2002 Total 2003 2004 Shared DS in kW 235,227 228,541 224,693 Shared Lines in km 223 223 223 3-year Average 229,487 223 Forecasted 2005 2006 235,148 191 2006 Expense Rate 239,400 96 Total Expense 1.87 $ 465 $ 447,677.56 44,528.40 $ 492,205.96 Table 10.5 – Low Voltage Charges It is Hydro Ottawa’s understanding that the difference between Hydro One’s LV charges calculated with current rates and Hydro One’s actual LV charges will be tracked in a variance account for future disposition. 10.8 Demand Determinants Hydro Ottawa bills demand customers based on 100% of the kilowatts (kW) or 90% of the kilovoltamps (kVA). This practice will continue in 2006. 2006 EDR Application Hydro Ottawa Limited RP-2005-0020 EB-2005-0381 Tab B Filed 2005-08-02 Page 105 of 118 Chapter 11 – Specific Service Charges 11.0 Introduction Hydro Ottawa intends to use the Board’s standard amounts as indicated in Schedule 11-1. Schedule 11-1: Specific Service Charges: Standard Amounts Rate Code Standard Name Calculation Method – Check Box Std Amt Standard Formula Rate 1 Arrears Certificate $15.00 2 3 Statement of Account Pulling post dated checks $15.00 $15.00 4 Duplicate invoice for previous billing $15.00 5 Request for other billing information $15.00 6 7 8 9 Easement letter Income tax letter Notification charge Account history Credit reference/credit check (plus credit agency cost) $15.00 $15.00 $15.00 $15.00 11 Returned cheque charge (plus bank charges) $15.00 12 13 $15.00 $15.00 15 Charge to certify cheque Legal letter charge Account set up charge/change of occupancy charge (plus credit agency cost if applicable) Special meter reads 16 Collection of account charge – no disconnection $30.00 10 14 17 18 19 Collection of account charge – no disconnection – after regular hours Disconnect/Reconnect at meter – during regular hours Install/Remove load control device – during regular hours $15.00 $30.00 $30.00 $65.00 $65.00 Disconnect/Reconnect at meter – after regular hours $185.00 21 Install/Remove load control device – after regular hours $185.00 22 Disconnect/Reconnect at pole – during regular hours $185.00 23 Disconnect/Reconnect at pole – after regular hours $415.00 Meter dispute charge plus Measurement Canada fees (if meter found correct) 25 Service call – customer-owned equipment 26 Service call – after regular hours Temporary service install & remove – overhead – no 27 transformer Temporary service install & remove – underground – 28 no transformer Temporary service install & remove – overhead – 29 with transformer Specific Charge for Access to the Power Poles 30 $/pole/year Additional Charges – Please be Specific – NONE $165.00 20 24 Other Formula $30.00 $30.00 $165.00 $500.00 $300.00 $1000.00 $22.35 Regular Hours of Operation: Weekdays (excluding statutory holidays) from 8:00 am to 4:00 pm Table 11.1 - Specific Service Charges - Summary 2006 EDR Application Time & Materials Hydro Ottawa Limited RP-2005-0020 EB-2005-0381 Tab B Filed 2005-08-02 Page 106 of 118 11.1 Methodology Hydro Ottawa is proposing to use the Board’s standard amounts for activities that are over and above its standard level of service. 11.2 Customer Administration Hydro Ottawa understands and will comply with this section. 11.3 Non-Payment of Account Late Payment Charge Hydro Ottawa proposes to continue charging 1.5% per month (19.56% per annum) for late payments. Collection of Account Charge Hydro Ottawa understands and will comply with this section. Reconnection of Electricity Service Charge Hydro Ottawa understands and will comply with this section. 11.4 Service Calls Hydro Ottawa understands and will comply with this section. 11.5 Temporary Electricity Service Charge Hydro Ottawa is proposing to use the Board’s basic Temporary Service Installation Charge for all temporary services not requiring transformers or pole replacement. The service must be installed during regular working hours. All other temporary services will be provided on a cost recovery basis. 11.6 Specific Charge for Access to Power Poles Hydro Ottawa is proposing to use the Board’s pole attachment charge of $22.35 per pole, per attacher, per year when applicable in 2006. Hydro Ottawa may in the future decide to apply for a revised rate. 2006 EDR Application Hydro Ottawa Limited RP-2005-0020 EB-2005-0381 Tab B Filed 2005-08-02 Page 107 of 118 11.7 Other Services and Charges Hydro Ottawa currently has Board approval for the recovery of losses from the installation of customer owned dry core transformers. Dry core transformers are installed up-stream from Hydro Ottawa’s revenue meters and therefore any lost energy and demand is not charged. The dry core transformer charge is intended to recover this lost energy and demand. The proposed dry core transformer charges are based on specific transformer sizes that are common in Hydro Ottawa’s service territory and have now been separated into cost-ofpower (commodity, wholesale market and transmission) and distribution charges. The distribution portion has been included as other revenue to reduce the base revenue requirement. The cost-of-power portion will be part of Hydro Ottawa’s retail settlement variance accounts (RSVA). 2006 EDR Application Hydro Ottawa Limited RP-2005-0020 EB-2005-0381 Tab B Filed 2005-08-02 Page 108 of 118 11.8 Revenue from Specific Service Charges Hydro Ottawa has completed Schedule 11-3 and has included revenue from Specific Service Charges in its Application. Schedule 11-3: Specific Service Charges: Revenue Rate Code Description Hydro Ottawa – Historical Std Amt Hydro Ottawa - Forecast 2002 2003 2004 3-Year 2005 2006 Amount Volume Volume Volume Average Volume Volume 1 Arrears Certificate $15.00 2937 2180 2000 2372.33 2100 2400 $ 32,000 2 Statement of Account $15.00 3 Pulling post dated checks $15.00 4 Duplicate invoice for previous billing $15.00 4000 4000 4000 $ 40,000 5 Request for other billing information $15.00 3000 3000 3000 $ 30,000 6 Easement letter $15.00 7 Income tax letter $15.00 8 Notification charge $15.00 9 Account history $15.00 10 Credit reference/credit check (plus credit agency cost) $15.00 11 Returned cheque charge (plus bank charges) $15.00 12 Charge to certify cheque $15.00 13 Legal letter charge $15.00 14 Account set up charge/change of occupancy charge (plus credit agency cost if applicable) $30.00 15 Special meter reads $30.00 16 Collection of account charge – no disconnection $30.00 17 Collection of account charge – no disconnection – after regular hours $165.00 18 Disconnect/Reconnect at meter – during regular hours $65.00 19 Install/Remove load control device – during regular hours $65.00 20 Disconnect/Reconnect at meter – after regular hours $185.00 21 Install/Remove load control device – after regular hours $185.00 2006 EDR Application Revenue 1200 1200 $ 18,000 3853 3574 3404 3610.33 4000 4000 $ 54,667 49523 44281 56485 50096.33 53200 54000 $ 1,231,200 $ - 2019 1141 1103 1421.00 1400 1400 $ 30,333 1891 2893 2878 2554.00 1400 1400 $ 70,000 130 $ 18,200 Hydro Ottawa Limited RP-2005-0020 EB-2005-0381 Tab B Filed 2005-08-02 Page 109 of 118 Rate Code Description Hydro Ottawa – Historical Std Amt Amount Hydro Ottawa - Forecast 2002 2003 2004 3-Year 2005 2006 Volume Volume Volume Average Volume Volume Revenue 22 Disconnect/Reconnect at pole – during regular hours $185.00 10 $ 2,016 23 Disconnect/Reconnect at pole – after regular hours $415.00 2 $ 710 24 Meter dispute charge plus Measurement Canada fees (if meter found correct) $30.00 25 Service call – customer-owned equipment $30.00 26 Service call – after regular hours $165.00 27 Temporary service install & remove – overhead – no transformer $500.00 2 $ 1,000 28 Temporary service install & remove – underground – no transformer $300.00 29 Temporary service install & remove – overhead – with transformer 30 Specific Charge for Access to the Power Poles $/pole/year $1,000.00 $22.35 20435 20435 20435 Rate Schedule 5397 kW 5397 kW 5397 kW $ 491,802 Additional Charges – Please be Specific 31 Drycore Transformer Distribution Charge $ 14,084 32 33 34 Note: 2006 Revenue is pro-rated for 8 months at new rate 4 months at old rate Total SSC Revenue Revenue From Late Payment Charges Total Revenue Table 11.2 - Specific Service Charges - Detail 2006 EDR Application $2,034,012 $800,000 $2,834,012 Hydro Ottawa Limited RP-2005-0020 EB-2005-0381 Tab B Filed 2005-08-02 Page 110 of 118 Chapter 12 – Other Regulated Charges 12.0 Introduction Hydro Ottawa currently applies the Board-approved charges for the administration of the retail market. The revenue is included in Other Regulated Charges for 2006. 12.1 RPP (formerly SSS) Administration Charge Hydro Ottawa currently uses the Board-approved $0.25 per month administration charge to each RPP customer. This charge will remain unchanged for 2006. 12.2 Retail Service Charges Establishing Service Agreements Hydro Ottawa currently uses the Board-approved charges for all retailer service agreements as follows: $100 one-time charge per agreement per retailer $20 per month per retailer to recover the cost of contract administration and monitoring of prudential requirements $0.50 per month per customer to recover the cost of general accounting, administration services and other customer care services. All of these charges will remain unchanged for 2006. Distributor-Consolidated Billing Hydro Ottawa currently charges the Board-approved charge of $0.30 per month per customer to recover costs associated with producing distributor-consolidated bill-ready services. This charge will remain unchanged for 2006. Retailer-Consolidated Billing Hydro Ottawa currently credits retailers providing billing services an avoided cost of $0.30 per month per customer. This credit will remain unchanged for 2006. Service Transaction Requests (STR) Hydro Ottawa currently charges the Board-approved fees for the processing of STR requests as follows: 2006 EDR Application Hydro Ottawa Limited RP-2005-0020 EB-2005-0381 Tab B Filed 2005-08-02 Page 111 of 118 $0.25 for initial STR screening, $0.50 for STR processing, $2.00 for STR exceeding two per year. All of these fees will remain unchanged for 2006. Monitoring and Cost Tracking Hydro Ottawa has established and maintains the appropriate Retail Services Costs Variance Accounts (RCVA). This practice will continue in 2006. 12.3 Non-Competitive Electricity Charges Wholesale Market Service Rate Hydro Ottawa currently uses the Board-approved rate of $0.0052/kWh. This rate will remain the same for 2006. Hydro Ottawa combines this rate with the Rural and Remote Protection charge of $0.001/kWh when billing its customers. This practice will continue in 2006. Retail Transmission Service Rates Hydro Ottawa is applying separately for an adjustment to its Retail Transmission Service (RTS) rates. The Board authorized such an application in its letter dated July 5, 2005. The RTS connection rates would decrease while the RTS network rates would be revenue neutral if the Board approves the proposed RTS rates. Charges/Taxes Levied by the Government of Ontario Hydro Ottawa will continue to use its current RRRP and Debt Retirement Charges in 2006 unless authorized by the provincial government to make a change. 2006 EDR Application Hydro Ottawa Limited RP-2005-0020 EB-2005-0381 Tab B Filed 2005-08-02 Page 112 of 118 Chapter 13 – Mitigation 13.0 Impact Analysis Hydro Ottawa has identified a number of inconsistencies with the calculation of rate impacts in the 2006 EDR Rate Model. These calculations have been modified to ensure accurate impact calculations. The calculations are provided in Tab H of the Application Binder. Hydro Ottawa is choosing to mitigate the rate impact of its Standby Charge by reducing the volumetric rate by 50%, until such time as a cost allocation study is completed and the rates can be reviewed. Although the rate affects only a few customers, Hydro Ottawa is aware that the added charges are significant and customers must be allowed time to factor these cost into their operating expenses. Although the rate increase for Sentinel Lights was not above the 10% threshold set by the Board, Hydro Ottawa has chosen to cap the increase to mirror the average residential customer increase of 4%, since these lights are predominately rural residential. Since the number of lights is very small, Hydro Ottawa is not proposing to reallocate the lost revenue. 13.1 Mitigation Methodologies Other than the mitigation of the Standby Charge and Sentinel Lights, Hydro Ottawa has maintained rate increases below the prescribed threshold. No mitigation plan is required. 13.2 Rate Harmonization (Amalgamated or Acquired Service Areas) Hydro Ottawa’s distribution rates are fully harmonized. 2006 EDR Application Hydro Ottawa Limited RP-2005-0020 EB-2005-0381 Tab B Filed 2005-08-02 Page 113 of 118 Chapter 14 – Comparators and Cohorts 14.0 Comparators and Cohorts Hydro Ottawa is awaiting the release of the Board’s Comparators and Cohorts analysis later this summer and will respond as required. 2006 EDR Application Hydro Ottawa Limited RP-2005-0020 EB-2005-0381 Tab B Filed 2005-08-02 Page 114 of 118 Chapter 15 – Service Quality Regulation 15.0 Introduction Hydro Ottawa provides its Service Quality Indicator results in Schedule 15-1. Please note that the 2003 results are exclusive of the August 14th blackout. Schedule 15-1: Service Quality and Reliability Performance 2002 to 2004 Service Quality Indicators 1a Connection of New Services – Low Voltage Standard: 90% or better 2002 96.36% 1b 2003 2004 100% 100% 2003 2004 92.61% 90.70% Appointments Met Standard: 90% or better 2002 98.15% 4 90.70% Underground Cable Locates Standard: 90% or better 2002 92.68% 3 2004 95.08% Connection of New Services – High Voltage Standard: 90% or better 2002 100% 2 2003 2003 2004 99.91% 98.30% Telephone Accessibility (Telephone Service Factor) Standard: 65% or better 2002 76.00% 2006 EDR Application 2003 2004 70.14% 72.20% Hydro Ottawa Limited RP-2005-0020 EB-2005-0381 Tab B Filed 2005-08-02 Page 115 of 118 5 Written Responses to Enquiries Standard: 80% or better 2002 91.36% 6a 2004 95.14% 90.70% Emergency Response - Urban Standard: 80% or better 2002 98.9% 6b 2003 2003 2004 99.09% 98.10% Emergency Response - Rural Standard: 80% or better 2002 2003 100%* * In 2003, all areas are considered urban 2004 N/A N/A Reliability Indicators 7 SAIDI (System Average Interruption Duration Index) Standard: Within the range of performance over the previous 3 years 2002 2003 2004 1.321 1.440 0.7611 8 SAIFI (System Average Interruption Frequency Index) 9 Standard: Within the range of performance over the previous 3 years 2002 2003 2004 1.390 1.460 0.6616 CAIDI (Customer Average Interruption Duration Index) Standard: Within the range of performance over the previous 3 years 2002 2003 2004 0.951 0.980 1.1504 Table 15.1 – Performance Indicators 2006 EDR Application Hydro Ottawa Limited RP-2005-0020 EB-2005-0381 Tab B Filed 2005-08-02 Page 116 of 118 Exhibit A Proposed Schedule of Distribution Rates and Charges Effective May 1, 2006 APPLICATION Application of rates and charges shall be in accordance with the Electricity Distribution Rate handbook and amendments thereto or any other Codes or Guidelines, including the Standard Application of Rates as approved by the former Ontario Hydro, which may be applicable to the administration of this rate schedule as approved by the Board. MONTHLY RATES AND CHARGES RESIDENTIAL SERVICE: Monthly Service Charge Variable Distribution Charge (per customer) (per kWh) $7.78 $0.0189 (per customer) (per kWh) $8.86 $0.0186 (per customer) (per kW) $256.49 $2.6357 Standby Monthly Service Charge (per customer) Standby Distribution Volumetric Rate (per kW) $95.00 $1.3179 GENERAL SERVICE < 50 kW: Monthly Service Charge Distribution Volumetric Rate GENERAL SERVICE > 50 kW < 1500 kW: Monthly Service Charge Distribution Volumetric Rate GENERAL SERVICE > 1500 kW < 5000 kW: Monthly Service Charge Distribution Volumetric Rate (per customer) (per kW) Standby Monthly Service Charge (per customer) Standby Distribution Volumetric Rate (per kW) $4,124.11 $2.4172 $95.00 $1.2086 LARGE USE: Monthly Service Charge Distribution Volumetric Rate (per customer) (per kW) Standby Monthly Service Charge (per customer) Standby Distribution Volumetric Rate (per kW) 2006 EDR Application $14,978.28 $2.6822 $95.00 $1.3411 Hydro Ottawa Limited RP-2005-0020 EB-2005-0381 Tab B Filed 2005-08-02 Page 117 of 118 SENTINEL LIGHTING Monthly Service Charge Distribution Volumetric Rate (per connection) (per kW) $1.74 $6.3700 (per connection) (per kW) $0.34 $2.5529 (per customer) (per kWh) $4.43 $0.0198 STREET LIGHTING Monthly Service Charge Distribution Volumetric Rate UN-METERED SCATTERED LOADS Monthly Service Charge Distribution Volumetric Rate Specific Service Charges Amount Arrears Certificate Duplicate Invoice Request for Other Billing Information Credit Reference/Credit Check $15.00 $15.00 $15.00 $15.00 Return Cheque Charge (plus bank charges) Account Setup Charge/Change of Occupancy Collection of Account Charge Disconnect/Reconnect at Meter – Regular Hours Disconnect/Reconnect at Meter – After Hours Disconnect/Reconnect at Pole – Regular Hours $15.00 $30.00 $30.00 $65.00 $185.00 $185.00 Disconnect/Reconnect at Pole – After Hours Temporary Service Install/Remove – No Transformer Pole Attachments - $/pole/attacher/year $415.00 $500.00 $22.35 Table A.1 – Specific Services Charges New Other Service Charges Late Payment – per month Late Payment – per annum Dry core Transformer Losses Amount 1.5% 19.56% As per Schedule Table A.2 – Other Services Charges New Service Allowances Transformer Ownership < 115 kW – per kW of Billed Demand Table A.3 – Service Allowance New 2006 EDR Application Amount $0.45 Hydro Ottawa Limited RP-2005-0020 EB-2005-0381 Tab B Filed 2005-08-02 Page 118 of 118 Dry Core Transformer Losses Transformers No Load Loss (W) Load Loss (W) Rates 25 KVA 1 PH 37.5 KVA 1 PH 50 KVA 1 PH 75 KVA 1 PH 100 KVA 1 PH 150 KVA 1 PH 167 KVA 1 PH 200 KVA 1 PH 225 KVA 1 PH 250 KVA 1 PH 150 200 250 350 400 525 650 696 748 800 900 1200 1600 1900 2600 3500 4400 4700 5050 5400 0.113 0.150 0.188 0.263 0.300 0.394 0.488 0.522 0.561 0.600 82 110 137 192 219 287 356 381 410 438 0.480 0.064 0.086 0.102 0.139 0.187 0.236 0.252 0.270 0.289 9 12 16 18 25 34 43 46 49 53 0.161 0.214 0.273 0.364 0.439 0.581 0.723 0.774 0.831 0.889 91 121 152 210 244 321 399 427 459 491 $2.60 $0.42 $0.56 $0.71 $0.95 $1.15 $1.52 $1.89 $2.02 $2.17 $2.32 Cost of Energy and Wholesale Market per kWh $.0642 $5.84 $7.77 $9.76 $13.48 $15.66 $20.61 $25.62 $27.41 $29.47 $31.52 *15 KVA 3 PH 125 *45 KVA 3 PH 300 400 *75 KVA 3 PH *112.5 KVA 3 PH 600 *150 KVA 3 PH 700 900 *225 KVA 3 PH *300 KVA 3 PH 1100 *500 KVA 3 PH 1500 2100 *750 KVA 3 PH 650 1800 2400 3400 4500 5300 6300 9700 12000 0.094 0.225 0.300 0.450 0.525 0.675 0.825 1.125 1.575 68 164 219 329 383 493 602 821 1150 0.035 0.096 0.129 0.182 0.241 0.284 0.337 0.519 0.643 6 8 23 33 44 52 61 94 117 0.129 0.321 0.429 0.632 0.766 0.959 1.162 1.644 2.218 75 182 242 362 427 544 664 916 1267 $0.34 $0.84 $1.12 $1.65 $2.00 $2.50 $3.03 $4.29 $5.79 $4.82 $11.68 $15.54 $23.24 $27.41 $34.92 $42.63 $58.81 $81.34 Monthly Monthly No No Load Load Loss Loss (kW) (kWH) Monthly Monthly Monthly No Load No Load Total Loss Loss Loss (kW) (kWH) (kW) Monthly Total Loss (kWH) Cost of Transmission per kW No Load and load losses from CSA standard C802-94: Maximum losses for distribution, power and dry-type transformers commercial use Average load factor = 0.46 average loss factor = 0.2489 *For non-preferred KVA ratings no load and load losses are interpolated as per CSA standard Table A.4 – Dry Core Transformer Charges 2006 EDR Application Total Monthly cost of power Cost of Distribution per kW na $6.26 $8.33 $10.47 $14.43 $16.81 $22.12 $27.50 $29.43 $31.64 $33.84 $2.61 $0.42 $0.56 $0.71 $0.95 $1.15 $1.52 $1.89 $2.02 $2.17 $2.32 $5.15 $12.52 $16.66 $24.89 $29.41 $37.43 $45.66 $63.10 $87.13 $0.34 $0.84 $1.12 $1.65 $2.00 $2.50 $3.03 $4.29 $5.79