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Davld Benna FomsBC Ine. wee Presidsnt, Regulatory ~ ~ ~ o o r , 1828 W o n Avenue Affairs & General Counsel Kelowna, BC Vl Y 9x1

(250) 71 7-0853 david.bennettOfofiisbc.m www.fortlsbc.com

Mr. RJ. PeIlakt Commission Secretary BC Utilities Commission Sixth Floor, 900 Hawe Street, Box 250 Vancouver, BC V6Z 2N3

l h r Mr. Pellatt:

Re: A p p l W n for a Rute Design on the Big White Suppkj Project

Introduction

On March 9'. 2006 FortisBC Inc. ("FortisBC" or the ?Companyw) filed an Application for a mcate of PubIic Convenience and Necessity ("CPCK') in support of the Big White Supply Project (the Tmject"). The Application requested approval for construction of a 34 kilometer, 138 kV transmission line, a new substation, and upgraded distribution facilities at Big White at a capital cost of $20.3 million.

Commission Order No. G-44-06 on April 13', 2006 required an oral hearing and set out the regulatory t*hetable for the hearing, the delivery and response of Information Requests as well as a schedule for written argument.

The oral hearing commenced on July 4&, 2006 and concluded on July 5 ~ , 2006.

On September 14', 2006 the BC Utilities Commission (the "Commission") issued its Decision accompanying Order No. G-17-06 regarding the Project. The Commission issued a further Decision related to certain reconsideration applications on December 6, 2006 under Order No. G-154-06 (the "Decisions"). Pursuant to the Decisions the Commission directed the Company to file a rate design application for the Project.

Commission Directives

In its Decision, the Commission Panel addressed the issue of who should fund the Project. The Decision stated that:

'',..FortisBC is directed to ffle, within 90 days of this Decision, an appIication for a rate design for the Project which considers the drcmstrtnm and conditions p e w - to this Project. That applicaiion will be the subject of a separate p m c d h g rtnd a determination by the Commission as how the to& of the Project will be recovered,"

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Big White Rate Design

On December 6*, the Commissions issued Order G-154-06 and the corresponding Decision in which it stated that:

"...Simply put, FordsBC is enhancing its senice to Big Wte in large part by upgrading a distribution semice bo a trammission service, to service a discrete area Chat appears to be d q u e insofar as the e n h a n d service appears to p M y support cor~tinaed development driven by BWSR. Therefore, the directioi'of the Cornhion was intended that Fo&BC, In a first stage of the plm3ess, would make an applicafion to tbe C o d i o n addressing two primary questions:

1. Should some or all castamers of the Big White area, as distinct from all FortisBC ratepayers, be r e q M to Rrnd some or all of the msts of the project?

2. If total funding from all FortisBC ratepayers k not required, then how should the funding from the cusbmen of the Big White area be determined and allocated?

FoFtisBC may wish to consider the cmt of the Project and the degree to which those costs are likely to be recovered from the ratepayers in Big Whik in the f u ~ . FortisBC may also wish to consider the hash on which the project costs for the initial and lor enhanced distdbntlan and/or trammkion services to like areas md fadtities in its territory have been recovered in the pit.''

In response to the Decisions dealing with regulatory issues related to the funding of the Project, EES Consulting ("EES") was retained to develop a Cost of Service ("COS") that would separate the costs and revenues of the Big White area from the rest of the service area, forecast the impact of the project on Big White COS and based on these findmgs, recommend an appropriate Rate Design for funding the Project. The EES report titled "Cost of Service Report Related to Big White Service Area March 2007" is fiIed as Appendix "K '. In response to the first question set out above, after completion of the COS, th~ Company recommends that all customers be required to fund the Project cests. Based on the information contained in the accompanying EES Report, the Company respectfully submits that:

Postage stamp electricity rates should be maintained for all regions within the FortisBC service territory and throughout the province,

The provisions of the current FortisBC extension policies and mi1 tariffs should apply for all Big White area customers and there are no specific provisions in the current FortisBC electrical tariff which would allow for the cbarging of all or a portion of the costs of this transmission Project to some or aU of the customers at Big White,

. Comparable transmission upgrades for other discrete areas exist and have not attracted special ram or funding requirements,

The Big White COS indicates that after the Project has been completed but without the Project costs directly assigned to Big White, Big White area customers have been snd are paying more than their cost of service and will continue to do so iutD the foreseeable future, and

Because capital additions are "lumpy" and are usually built with extra capacity to meet loads that will grow over time, there are continually situations where more is spent on certain customers than on others. The costs to serve a specific customer will fluctuate a p t deal over b e as capital additions occur and loads change. Over time, it is generally accepted that these capital additions will average out.

In addition, the Company has revised the BC Hydro System Extension Test C'SET"') that was originally

filed on a "best effort" basis during the hearing. Based on an updated Big White Ioad forecast and updated utility costs, it appears that for the "all customer scenario" the SET will result in no contribution requirement. The Company will file the revised SET calculation along with reconciliation to its original SET prior to the prehearing conference,

Therefore the Company does not recommend requiring some or all customen of the Big White area, as distinct from all FortisBC ratepay&, be required to fund some or all of the costs of the Project.

The second question asked in Order G-154-06 was, if total funding from d l FortisBC ratepayers is not required, then how should he funding from the customers of the Big White area be determined and allocated? Whiie the Company submits that it would be inappropriate for the Big White area customers to pay anything but the standard FortisBC tariff, if additional funding by customers in Big White is required then it shouId be collected by way of either a line extension charge or a rate surcharge or a zonal rate. The EES report provides some additional methods and calculations to assist the Commission in gauging the retaiI customer impacts if a line extension charge, rate surcharge or zonal rate was applied to the Big White area's retag customers.

MI of the cost recovery methodologies recommend4 in the EES Report raise questiondissues that should be addressed with the Company's ratepayers prior to implementation. Specifically, the EES Report identified certain issues that a line extension charge on Big White customers might raise. These issues are:

While existing customers would benefit from the project, is it appropriate or even possible to charge a line extension charge to customers already in place?

If a line extension fee is charged to existing customers, should they be paying the full mount of the shortfall, which includes extra capacity built to serve future customers?

4 Would it be equitable to charge a line extension fee to new customers and not to existing customers?

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How do you ensure that Big White customers paying a [he extension fee do not dso pay for projects dedicated to other discrete geographical areas, such as Osoyoos, within base rates?

How should the utility define a "new" vs. "old" customer?

The EES Report idenuied certain issues that a rate surcharge charged to Big White customers might raise. These issues are:

If a rate surcharge is added for Big White customers, shouId they be paying a surcharge based on the full amount of the shortfall, which includes extra capacity built to Sewe future customers?

How da you ensure that Big White customers paying a surcharge do not also pay for projects dedicated to other discrete geographic areas, such as Osoyoos, within base rates?

The EES Report identifled certain issues that zonal mks applied to Big White customers might raise. These issues are:

How do you draw the line between zones so that they are sufficiently different from one another, yet sufficiently homogeneous within each zone?

Are there adequate historical accounting, property records and usage records to accuratefy break out costs among the zones?

Are zonaI rates consistent with the current regulatory practice for electric utilities in B .C.?

In addition the EES Report identified certain policy issues that an additional charge to Big White customers might raise. These issues are:

Is such a charge on a ski F a consistent with the Province's economic development and growth policies?

B such a charge on Big White area customers consistent with the Province's Energy Plan?

If such a charge on Big White area customers is ultimately required, should al l other discrete areas in the FortisBC service territory be analyzed for the possible application of st surcharge?

Should all other utilities in the Province be required to determine if they have discrete areas that should attract: an additional charge?

What happens to FortisBC requirement to serve obligation if the Big White area does not pay a proposed additional charge?

FortisBC recognizes these as important and compIex issues that should be addressed before my decision to vary from postage stamp rates is made. The Decision on funding mngements for the Big White Project wilt have far reaching consequences that will impact other FortisBC rate payers and potentially other customers in the Province. As a result the Company proposes that if a change from the established policy of postage stamp rates is considered, the ratepayers must be consulted and that the Company's customers have an opportunity to comment on these issues. After reviewing the ES Report and the rate design application, the Company wiIl make recommendations to the Commission on Project cost recovery methodology based on customer feedback.

FortisBC Amlication for Rate Desim

Ttte Company hereby applies for a rate design application for the Project pursuant to Orders G-17-06 and G-154-06 and requests that a procedural conferehce be convened to address procedural matters and to establish a Regulatory Timetable and, in particular, to address the process for public consuItation necessary prior to the Company making its recommendations m cost recovery methodology and the subsequent disposition of the application.

Respectfully submitted,

k&wCl3ennet& Vice President, Regulatory Affairs & General Counsel

FortisBC

Final Report

COST OF SERVICE REPORT RELATED TO BIG WHITE SERVICE AREA

March 2007

March 5, 2007 Mr. David Bennett FortisBC, Inc. Landmark IV – Fifth Floor 1628 Dickson Avenue Kelowna, BC V1Y 9X1 SUBJECT: Cost of Service Report Related to Big White Service Area Dear Mr. Bennett: Attached please find our Cost of Service (COS) report related to the Big White service area. This report has been performed using standard ratemaking principles and is consistent with the methodology used by FortisBC (formerly West Kootenay Power) in its 1997 rate application. The revenue requirements reflect actual results for FortisBC in 2006 along with the costs of the 138 KV transmission and substation supply project. We appreciate the opportunity to assist FortisBC with this project. Very truly yours,

Gary Saleba President

570 Kirkland Way, Suite 200 Kirkland, Washington 98033 Telephone: 425 889-2700 Facsimile: 425 889-2725 A registered professional engineering corporation with offices in Kirkland, WA; Portland, OR; Indio, CA; and Bellingham, WA

Contents Introduction and Theoretical Background..................................................................................1 COS Method and Results ..............................................................................................................4 Cost Recovery Alternatives.........................................................................................................14 Recommendations ........................................................................................................................18 Technical Appendix Attachment 1: Detailed COSA Assumptions Attachment 2: Detailed COS Tables and Results

FORTISBC—COST OF SERVICE FOR BIG WHITE i

Introduction and Theoretical Background Overview FortisBC is currently dealing with a regulatory matter related to funding the capital project for the Big White area. As a result, EES Consulting was retained to develop a Cost of Service (COS) that separates out the costs and revenues of the Big White area from the rest of the service area. Typically, a COS would include the development of a revenue requirement, an allocation of costs among all customer classes, and the development of rates to recover the allocated cost of service. The revenue requirement for the COS was taken from the 2006 actual financial records for FortisBC and does not represent a test period previously submitted and approved by the British Columbia Utilities Commission (“Commission”). At the same time, there is no proposal to change rates. The COS for the Big White area was completed for the sole purpose of understanding the impacts associated with the 138kV Big White transmission and substation supply project (“project”) and complying with the Commission directives contained in Order #G-154-06. FortisBC completed its last reviewed COS in 1997. The COS was completed by EES Consulting and was the basis for the 1997 rate filing. For the Big White area COS, the 1997 methodology was used in conjunction with the 2006 Revenue Requirement. This 1997 COS methodology was used in large part because the methodology was the most recent one approved by the Commission for the FortisBC service territory and attendant retail customers. Several different scenarios were examined for the Big White area COS to better understand the impact of the costs of the Big White project. Actual revenue requirements and loads for 2006 were used as the baseline case (Case 1). Because the Big White project costs are just beginning, they are treated as deferred costs and do not show up in the 2006 FortisBC revenue requirement. Additionally a scenario (Case 2) was developed that included the costs of the Big White project scheduled to take place between 2006 and 2010. In this scenario, loads for the Big White area were increased to the 2010 projected level to better coincide with the timing of the project. As the Big White project is being constructed to accommodate growing loads, a scenario (Case 3) was also considered where there is full build-out of customers at the Big White area. This build-out is assumed to occur around the year 2026. A summary discussion of the theory behind COS and issues related to Big White is provided below. Following the summary are detailed narratives regarding the method used and results of the Big White area COS, possible alternatives for recovering costs associated with the Big White project, and recommendations related to the recovery of Big White area costs. A full list of key COS assumptions and detailed working papers are included as Attachments 1 and 2 at the end of this narrative.

FORTISBC—COST OF SERVICE FOR BIG WHITE 1

COS Theory Utility rates are traditionally set by first developing the underlying cost of service (COS) for each customer class. Development of this type of COS is typically a required prerequisite for setting retail rates within the utility industry, is required by the Commission, and is the standard practice for FortisBC. Within any COS, there are decisions that must be used in allocating costs among the customer classes. These decisions should reflect regulatory precedents, industry practice, circumstances unique to the utility in question and the higher principles of cost causation. FortisBC is not filing a full COS at this time. A COS generally identifies separate customer classes on the theory that certain customers are sufficiently different in terms of load shape and equipment requirements to substantiate different rates. At the same time, it is assumed that the customers within a rate class are sufficiently homogeneous to warrant placing them together as a group and offering the same rate within the group. Postage stamp pricing, with rates the same regardless of the distance from the generating facilities, are the basis for most electric rates across North America. This principal was further advanced as being appropriate when open access transmission rates were implemented in Canada and the U.S. In reality, every customer may have a slightly different cost to serve based on their location, when they first became a customer, the appliances they have installed, the hours the spend at home or hours of operation of a business, how frequently they call the utility with questions about their bill, etc. It is not practical to develop a cost of service and separate rate schedule for every single customer due to the amount of data that would be required and the fact that most facilities are installed to serve many different customers at the same time. For these reasons, costs are averaged within each customer class. Big White Considerations At issue in this study, and the overarching policy question asked by the Commission in its Order G-154-06, is how to treat the Big White area from a rate setting standpoint. The pertinent technical question is whether or not the revenues and allocated costs from/to the Big White area are significantly different from those revenues and allocated costs collected from/to other areas within the FortisBC service territory to warrant special and unique retail rate treatment for the Big White area. Below is a policy level review of this key overarching policy issue. There are currently no zonal rates in place for either BC Hydro or FortisBC. It would be inappropriate to put zonal rates in place for one specific area, such as Big White, without considering zonal rates for the entire Province. An electric service grid is ever-changing. There are capital additions every year to meet additions to load and to improve aging infrastructure. Some additions benefit the entire service area and others benefit only a certain geographical group of customers. Because capital additions are “lumpy” and are usually built with extra capacity to meet loads that will grow over time, there are continually situations where more is


spent on certain customers than on others. The costs to serve a specific customer will fluctuate a great deal over time as capital additions occur and loads change. Over time, it is generally accepted that these capital additions will average out. Within a COS, costs are allocated to customer groups on the basis on measured loads or loads forecast to occur in the near future. At any given time there may be surplus capacity built into the system to accommodate future growth and to install facilities in a cost-effective manner. Since the costs of facilities are allocated on the basis of current loads, not loads projected far in the future, all customers typically share in the cost of surplus capacity. FortisBC serves approximately 1,800 residential and 60 commercial customers in the Big White area. Those customers currently pay the same residential and commercial rates and should face the same line extensions policies as other customers served by FortisBC. To better compare the Big White area situation to that of areas within the FortisBC service area, this COS analysis was also applied to three other distinct areas in the FortisBC territory, with results discussed later in this report. Because of the averaging of customers within a rate class and the timing of capital investment there will always be groups paying more than their share of costs and other groups paying less.


COS Method and Results Total FortisBC System Cost Data There are many detailed assumptions and data used in developing the Big White area COS. As previously stated, the underlying data was taken from FortisBC 2006 actual financial results. Pro forma adjustments were made for the Big White project and load projections only, with all other costs and loads remaining at the 2006 level. Table 1 includes a summary of the revenue requirements for the entire system.

Table 1 Summary of the Revenue Requirement

(2006 Actual)

($/Million)

Revenues Revenues from Rates $206.5M Other Income 5.1 Total Revenues 211.6 Operating Expenses Power Supply $68.5 Water Fees 8.4 Wheeling 3.8 Net Power Supply Cost 80.7 Operation & Maintenance 32.3 Depreciation and Amortization 27.2 Property Taxes 10.5 Costs Before Return and Taxes 150.7 AFUDC (2.4) Incentive Adjustments 2.4 Income Tax 6.5 Return on Rate Base 52.7 Subtotal Return, Taxes and Adjustments $59.3 Total Expenses $210.0 Net Revenue Requirement (Total Expenses minus Other Income) $204.9

*Numbers may not add up due to rounding.


Revenue requirements for use in a COS reflects all costs of the utility, including return, depreciation and taxes, and subtracts out all other income. Nearly 40 percent of revenue requirements are for purchased power, water fees and wheeling. Only about 15 percent of costs are related to O&M. Table 2 shows the FortisBC rate base for 2006 at year end. Since the COS is not used to calculate return, it is generally accepted practice to use year-end rate base for cost allocation purposes. Because the Big White project is not yet complete and expenditures at the end of 2006 were placed in a deferral account and these costs were not allocated to Big White, the 2006 rate base of $708.3 million does not include the impacts of the Big White project. The full cost of the project over the next several years is estimated at $20.3 million. When this amount is added to the rate base, it increases to $728.6 million.

Table 2 Summary of the Rate Case

(2006 Actual)

($/Million) Gross Plant in Service Generation $133.2 Transmission 242.5 Distribution 448.9 General Plant 103.6 Total Gross Plant 928.3 Less Accumulated Depreciation 220.0 Total Net Plant 708.3 Plus Working Capital 2.7 Less Customer Contributions -66.1 Plus CWIP, Plant Acquisition and Deferred Costs 63.4 Total Rate Base (before Expansion) $708.3

As shown in Table 2, nearly half of the FortisBC rate base is for the distribution function, roughly one-quarter is transmission, and the remaining quarter is split between generation and general plant. The addition of the Big White project reflects a 3 percent increase in the rate base. Big White Supply Project Cost The cost of the Big White project is further broken down into separate accounts for use in the COS. The following table summarizes that breakdown.


Table 3 Breakdown of Big White Expansion Cost by Account

2006 – 2010

($/Million) Transmission Accounts Land & Rights - R/W $ 2.1 Land & Rights - Clearing 2.6 Station Equipment 4.1 Poles Towers & Fixtures 3.8 Conductors & Devices 3.5 Roads, Railroads & Bridges 0.3 Total Transmission $16.4 Distribution Accounts Land & Rights - R/W $ 1.0 Station Equipment 2.0 Poles, Towers, & Fixtures 0.6 Conductors & Devices 0.4 Total Distribution $ 3.9 Total Project Cost $20.3 Total Mid-Term Depreciated Value for 2026 $17.1

The construction of the Big White project facilities will take place over the 2006 to 2009 period. It is expected that the first full year of operation will be 2010. Three Cases were developed to reflect the impacts of the addition of the Big White project, as described below:

Case 1 reflects 2006 prior to the addition of the project.

Case 2 adds the cost of the project, with no other rate base changes from 2006 levels. The revenue requirement changed to reflect the added depreciation, return and taxes associated with the increase in plant. Loads are also adjusted to reflect 2010, which is the first full operating year of the project. Note that the changes are considered proforma adjustments and only change isolated items rather than projecting an entire COS for 2010.

For Case 3, the cost of the project is added along with a 20-year build-out of customers by 2026. Given that the facilities will depreciate over the same time that loads will grow, the rate base addition in Case 3 reflects the mid-point between the original cost and a 2026 depreciated value of the Big White project to reflect the average plant in service over the period in question. Depreciation rates were based on FortisBC’s recent depreciation study. This has the impact of changing the net plant associated with the project from $20.3 million to $17.1 million for Case 3.


Load Data Actual sales and load data for 2006 was used as the basis for certain allocation factors used in the COS. Table 4 summarizes the loads for the system as well as for the Big White service area.

Table 4 Summary of Sales and Load Information (2006)

Total System

Big White Service Area

Percent of Total

Average # of Direct Customers 101,277 1,815 1.8%

MWh Requirement (w/losses) 3,503,100 40,529 1.2%

Coincident Peak kW (w/losses) 718,000 11,220 1.6% Non-Coincident Peak kW (w/losses) 718,000 15,380 2.1% Load Factor (Based on CP) 56% 41%

While 2006 actual results were used as the basis for the COS in Case 1, it was necessary to make pro forma adjustments to determine the impacts associated with the Big White project. Case 1 used the 2006 loads. For Case 2, where the costs associated with the project were included in the COS, the load levels projected for the Big White area in 2010 were included. This year reflects the first full year of operation after the project has been completed. Loads are projected on the basis of customer growth, with average energy usage per customer and load shape remaining the same. Because this is a pro forma adjustment rather than a full 2010 COS, only the loads for the Big White area were increased. For Case 3, where all of the costs of the Big White project are included along with a 20-year build-out of customers, the loads for the year 2026 were used. The average energy usage per customer was assumed to be 800 kWh per customer in the months of April to October to reflect a minimum usage consistent with the rest of the FortisBC service area. This also had the impact of slightly increasing summer peaks relative to winter peaks. Table 5 summarizes the load projections for the Big White area in the years 2010 and 2026.

Table 5 Sales and Load Projections for Big White (2010 and 2026)

2010 2026 20-yr Additions

Average Number of Customers 2,486 3,860 2,045 MWh Requirement (w/losses) 55,513 86,200 45,671

Coincident Peak kW (w/losses) 14,798 24,508 13,288 Non-Coincident Peak (w/losses) 20,284 33,595 18,215

Load Factor (Based on CP) 43% 40%


COS Methodology for Base Case The methodology from the 1997 FortisBC (then WKP) COS was used, with a few adjustments made for new cost items and other changes. A discussion of each cost category and other changes follows.

• Generation Rate Base FortisBC has several hydro projects, resulting in $133 million in gross generation plant. The 1997 COS method classifies these costs on the basis of 51 percent summer energy and 49 percent winter energy. This results in a 1.2 percent allocation to the Big White area.

• Transmission Rate Base

The transmission function has $243 million in gross plant prior to the Big White project. This increased to $252 million as a result of the project. The costs are classified as demand-related, with an average of the summer and winter coincident peaks (2CP) allocation used under the 1997 COS method. Consistent with the standard policy of including all higher voltage wires as transmission network costs, no direct assignment of transmission facilities to the Big White area were included in the standard COS model. The 2-CP method allocates a 1.1 percent share to Big White. A scenario where transmission facilities are directly assigned to Big White is discussed later in this section.

• Distribution Rate Base

Distribution plant is the biggest share of plant, with $449 million in gross plant for 2006. While the 1997 COSA method used a minimum system method, which splits costs between demand and customer components, distribution costs for Big White area were developed at a more specific level. Land and conductor accounts were assigned on the basis of the km of conductor specifically used within the Big White area. A common allocation of distribution station equipment was assigned to the Big White area prior to the project, however, once the project was included the common allocation was replaced with the direct assignment to the Big White area of the distribution side of the new substation. Transformers were assigned on the basis of the kVA of transformers installed for the Big White area vs. the kVA installed for the entire FortisBC service area. Poles, towers and fixtures were assigned on the basis of the number of distribution structures. Finally, services, meters and installations were assigned on the basis of relative number of customers as defined by the AM/FM system. For capital costs related to distribution, the existing levels were allocated as discussed, and then additional costs related to the project were directly assigned to the Big White area under Case 2. Another $2.6 million, based on added conductors, transformers and meters for the 20-year build-out of customers, was added for Case 3.


• General Plant

FortisBC has $104 million of gross general plant. The methodology for 1997 used labor ratios to functionalize general plant costs back to generation, transmission and distribution. The general plant costs were then allocated in the same manner as the corresponding three plant accounts. Based upon the results of the 1997 COS, the labor ratios used were 29.5 percent generation, 16.1 percent transmission, and 54.4 percent distribution.

• Other Rate Base Items

Accumulated depreciation and construction work in progress (CWIP) were treated in the same manner as gross plant for each function. Deferred costs were not used for any cost allocations. Working capital was allocated on the basis of all other O&M. Customer contributions were assumed to be distribution-related and follow distribution plant. The resulting rate base for year-end 2006 was $708.3 million prior to the Big White project.

• Generation and Power Supply Expenses

O&M expenses for generation were allocated in the 2006 COS on the basis of generation rate base. Purchased power supply costs were split between demand and energy by month based on actual power supply billing determinants and then allocated on the basis of monthly coincident demand and energy use. Purchased power costs amounted to $67.9 million, or roughly 33 percent of the total FortisBC 2006 revenue requirements. System Control costs are allocated on the basis of 1CP. For Cases 2 and 3, the power purchase expenses were increased to correspond with increases in loads in the Big White area in 2010 and 2026, respectively.

• Transmission and Distribution (T&D) Expenses

T&D expenses generally follow T&D rate base. Transmission O&M accounts all follow total transmission rate base under the 1997 methodology. For distribution, the 1997 methodology has specific O&M accounts follow corresponding plant accounts. T&D costs were not expected to change solely as a result of the Big White project and were forecast to remain the same at 2006 levels for Cases 2 and 3.

• Other Expense Items

Within this updated COS, customer service accounts have been allocated on the basis of customers, and in some case weighted for the specific expense item, (i.e. meter reading is based on customers weighted for accounting/metering.) The weighting factors from the 1997 COS were used. Like general plant, A&G expenses were allocated on the basis of labor ratios.


Depreciation expense by function followed rate base by function. Depreciation was increased in Cases 2 and 3 as a result of cost of the Big White project. Property Taxes, Return and Income Taxes were all allocated on the basis of Net Plant. In Cases 2 and 3, return and income taxes were increased proportionately to the increase in net plant as a result of the Big White project and build-out in the Big White area.

• Other Revenues

There are several different types of revenues used to offset the revenue requirements, and each was allocated differently based on the source of income. Pole rental revenue followed pole expenses. Waneta and Brilliant management revenue followed generation plant. Connection charges followed the number of customers. All other revenues were expected to remain stable for Cases 2 and 3.

While it is appropriate to use the FortisBC 1997 COS methodology for use in this study, we also looked at the impacts of a change to better reflect the proposed BC Hydro methodology. BC Hydro recently filed a proposal that contains a methodology that differs from that in place for FortisBC. The impacts of a change in the methodology were negligible. Detailed assumptions and tables from the Big White areas COS are provided in Attachments 1 and 2 at the end of this report. The results have been summarized in the tables throughout this report. Summary of Base Case COS Results Developing a COS for the Big White area alone helps illustrate the relative position for Big White area customers as compared to the other FortisBC retail customers before and after the supply project is built. Table 6 summarizes the allocated revenues and costs for the Big White areas as compared to the remaining FortisBC retail customers for the three Cases identified. This first table represents the position that the transmission-related portion of the project costs should be allocated among all customers on the system.


Table 6 Summary of Cost of Service Analysis for Big White

Present Rate

Revenues Net Revenue Requirement

Surplus/

(Deficiency) in Present Rates

Revenue to Cost Ratio with

Average Rate Increase

Case 1 Big White $2,784,820 $2,446,538 $338,282 113.8% Remaining Service Area $200,576,881 $200,915,163 ($338,282) 99.8%


Case 3 Big White $5,922,941 $4,831,907 $1,091,035 122.6%

Remaining Service Area $200,058,598 $201,149,632 ($1,091,035) 99.5% In all three Cases, the Big White area is paying more than their cost of service. Given these results, there would be no justification for charging the Big White area’s retail customers anything more than standard FortisBC postage stamp retail rates. Sensitivity COS Analysis, Where Project-Related Transmission Costs are Directly Assigned to the Big White Area When the full amount of the $20.3 million project is directly assigned to the Big White area, the COS results show a shift from an overpayment of costs to an underpayment of costs. The revenue to cost ratios changes from 114 percent in Case 1 to 63 percent in Case 2 and 84 percent in Case 3. A summary of these ratios can be referenced below in Table 7.


Table 7 Summary of Cost of Service Analysis for Big White

with Direct Assignment of All Big White Transmission Costs

Present Rate Revenues

Net Revenue Requirement

Surplus/ (Deficiency) in Present Rates

Revenue to Cost

Ratio with Average Rate

Increase


Case 2 Big White $3,814,436 $6,022,689 ($2,208,253) 63.3% Remaining Service Area $201,884,755 $199,676,502 $2,208,253 101.1%

Case 3 Big White $5,922,941 $7,071,624 ($1,148,683) 83.8% Remaining Service Area $200,058,598 $198,909,915 $1,148,683 100.6%

It is likely that the overpayment of costs before the project can be applied back to the past 10 years when the last COS was completed. Furthermore, as the Big White area is primarily residential, it would be more appropriate to compare the revenue to cost ratio to that resulting for residential customers, which is estimated between 90 percent and 95 percent. While it is not suggested that the overpayment by Big White be used to offset the costs of the project, consideration should be given to the fact that Big White customers have paid more than their cost of service in the past. It may therefore be more appropriate to set a goal of a 90 percent or 95 percent revenue to cost ratio for Big White to better reflect the residential revenue to cost ratio, as well as the uncertainty inherent in any COS study. Similarly, when Case 3 with a full direct assignment of costs is used, the 82 percent revenue to cost ratio should be compared to the 90 percent to 95 percent revenue to cost ratio for the residential class. Over time, Big White customers will be paying only about 10 percent less of their cost than other residential customers, all other things being equal. Other Community COS for Other Towns Within the FortisBC Service Territory With any COS, it is expected than some customers will pay more than their cost of service, and others will pay less, based on many factors. The COS, by necessity and by policy uses postage stamp pricing and averages costs within classes of customers. To demonstrate how the Big White area compares to some other similarly situated towns, the COS was expanded to include the towns of Christina Lake, Osoyoos and Kaslo. Table 8 presents the COS results for those three towns.


Table 8 Summary of Cost of Service Analysis for Other Towns

Present

Rate Revenues

Net Revenue Requirement

Surplus/ (Deficiency) in Present

Rates

Revenue to Cost Ratio with

Average Rate Increase

Christina Lake $1,124,202 $1,369,027 ($244,824) 82.1%

Kaslo $1,884,618 $1,470,835 $413,782 128.1% Osoyoos (with Different Cases) Case 1 - Before Expansion Cost $4,492,265 $3,970,867 $521,398 113.1% Case 2 - Direct Assignment of New Distribution $4,492,265 $4,376,204 $116,061 102.7% Case 3—Direct Assignment of New Transmission and Distribution $4,492,265 $6,289,453 ($1,797,188) 71.4%

The revenue to cost ratio for Christina Lake is 82 percent while that of Kaslo is 128 percent. These both differ from the current revenue to cost ratio of 114 percent for Big White. It is expected that the entire service area of FortisBC would face a similar variability between areas and towns. The town of Osoyoos is facing circumstances similar to that of Big White. A transmission project for to benefit the customers in Osoyoos is underway with a cost of $17.9 million. Osoyoos has sales of 56 million kWh, compared to 36 million for the Big White area. Like the Big White area, the COS for Osoyoos goes from an overpayment of costs to an underpayment of costs when the new project is directly assigned to the customers within the town. The revenue to cost ratio goes from 113 percent without the project costs (Case 1), to 71 percent when the full project cost is directly assigned to the area (Case 3). Table 8 details these ratio calculations. If this town’s high voltage wires were functionalized to network transmission and allocated as a common asset across all FortisBC customers (Case 2), the revenue to cost ratio for the town would be 103%. While the use of a line extension charge has been discussed for Big White, generally accepted ratemaking practices would suggest that other types of circumstances be treated in a consistent fashion. From a COS basis, there is no difference in the results Big White and Osoyoos, and in both Cases the results are consistent with the averaging inherent in postage stamp pricing. One particular concern would be a scenario where Big White customers pay for the cost of the Big White transmission project through a line extension or surcharge, while at the same time they are required to pay a portion of the Osoyoos transmission project in base rates.


Cost Recovery Alternatives While it is recommended herein that it would be inappropriate for the Big White area customers to pay anything but the standard FortisBC tariff, some additional calculations are provided below to assist the Commission in gauging the retail customer impacts if a special rate or charge was applied to the Big White area’s retail customers. If anomalous costs are incurred to serve a specific area within a utility and it is deemed proper to recover these anomalous costs directly from a specific area’s retail customers, some sort of line extension payment, surcharge or zonal rate may be implemented. Each of these options is discussed in more detail below.

Line Extension Charge An upfront line extension payment is a standard approach to recover anomalous costs of facilities dedicated to one customer. FortisBC has a line extension policy in place and has a method for determining how much the charge should be in a typical case. The current FortisBC line extension policy does not apply in the case of the Big White area because:

Under Schedule 74 of the FortisBC filed tariff, the extension policy is applicable to the construction of an addition to, or extension of, the Company’s distribution system.

The distribution system is any part of the system with a nominal potential of 750 to 35,000

volts measured phase to phase.

It requires that an Applicant will apply for service pursuant to Section 2 of the Terms and Conditions and under the definitions included in Schedule 74, an Applicant includes a corporation, partnership, or person that has applied to the Company for a services connection that requires the construction of an Extension distribution extension.

Therefore, in this case, the Company’s extension policy should not apply to the project because it is not an Extension as defined under the tariff, there is no Applicant applying for the project as defined under the tariff and the project is primarily around a transmission line and substation not a distribution extension. If, however, a line extension fee was to be imposed, a common approach would consider the shortfall in revenues based upon the COS and charge an upfront payment to recover that shortfall over time. For example, assume the shortfall in revenue for an area is $2.2 million. Over time as loads grow, the revenue shortfall becomes just over $600,000 per year. If a net present value over time, assuming a discount rate of 10 percent were used, the result is that an upfront payment of $9.8 million in 2007 dollars is needed for the area as a whole to achieve a 100 percent revenue to cost ratio.


To reflect the fact that residential customers typically pay closer to 90 percent of their cost of service, the same calculations with a goal of 90 percent of full cost recovery was performed. This would result in revenue shortfalls of $1.6 million in 2010 to approximately $0 in 2026. The net present value of this cost stream is equal to $6.1 million. In the case of Big White where the area is made up of 1,800 residential and commercial customers, it may be enlightening to look at the line extension on a per customer basis. When divided by the number of customers in each year, the revenue shortfall per customer ranges from $888 per customer in 2010 to $162 per customer in 2026. If the net present value of $10.2 million is divided by the number of customers expected by the year 2026, that upfront payment would be $2,551 per customer. If the 90 percent goal is used, the annual shortfall ranges from $646 per customer in 2010 to approximately $0 per customer in 2026. The net present value divided by 2026 customers is equal to $1,581. Table 9 summarizes these line extension calculations.

Table 9 Summary of Line Extension Alternatives

100% Cost Recovery Goal 90% Cost Recovery Goal

Total Big White Area 2010 Revenue Shortfall $2,208,253 $1,605,984 2026 Revenue Shortfall $625,443 ($29,395) NPV of Shortfall Stream $9,846,337 $6,101,647

Per Customer Basis 2010 Revenue Shortfall $888 $646 2026 Revenue Shortfall $162 ($8)

NPV per Customer $2,551 $1,581 While it is possible to calculate numbers associated with a line extension charge, applying that charge is a more difficult matter. If Big White was one large industrial customer, one total line extension charge would be possible. Recovering the revenue shortfall from 1,800 individual customers creates greater difficult and inequities. The following are some of the key issues associated with a line extension charge:

While existing customers would benefit from the project, is it appropriate or even possible to charge a line extension charge to customers already in place?

If a line extension fee is charged to existing customers, should they be paying the full amount of the shortfall, which includes extra capacity built to serve future customers?

Would it be equitable to charge a line extension to new customers and not to existing customers?


How do you ensure that Big White customers paying a line extension fee do not also pay for projects dedicated to other geographical areas, such as Osoyoos, within base rates?

How should the utility define a “new” vs. “old” customer?

Rate Surcharge A surcharge on standard tariff levels is another option for recovering costs deemed to be anomalous from the Big White project. In this case, an additional energy charge on a per kWh basis would be applied as a rider to rates for each particular class. If rates were to increase for the entire FortisBC system, then the rider would stay in place and be added to any future rates. To calculate the amount of surcharge needed, the revenue shortfall of $2.2 million in 2010 was divided by the 2010 energy sales of 49.6 million kWh. This results in a surcharge of 4.45 cents per kWh. For the year 2026 the shortfall is roughly $600,000 and energy sales are projected to be 77.1 million kWh. This results in a surcharge of 0.81 cents per kWh. When the goal of 90 percent of cost recovery is used, the surcharge ranges from 3.24 cents per kWh in 2010 to no surcharge by the year 2026. Table 10 summarizes the results.

Table 10 Summary of Rate Surcharge Alternatives

100% Cost Recovery Goal

90% Cost Recovery Goal

2010 Surcharge Required $0.0445 $0.0324 2026 Surcharge Required $0.0081 ($0.0004)

While a rate surcharge approach eliminates the issues surrounding how to recover costs from both existing and future customers, there are still several issues regarding the use of a surcharge.

If a rate surcharge is added for Big White customers, should they be paying a surcharge based on the the full amount of the shortfall, which includes extra capacity built to serve future customers?

How do you ensure that Big White customers paying a surcharge do not also pay for projects dedicated to other geographical areas, such as Osoyoos, within base rates?

Zonal Rates A third approach to recovering costs deemed to be anomalous for the Big White project would be to implement zonal rates within the FortisBC service area. Because Big White is not the only area that has had facilities built to serve only one specific geographic area, this approach could be applied more globally.


In order to determine if zonal rates would be appropriate, a full zonal cost of service study would be required that separated out various zones as well as the customer classes within those zones. Direction would be needed from the BCUC on how best to determine which areas are sufficiently different from one another to create the zones. Issues associated with the implementation of zonal rates include:

How do you draw the line between zones so that are sufficiently different from one another, yet sufficiently homogeneous within each zone?

Are there adequate historical accounting, property records and usage records to accurately break out costs among the zones?

Are zonal rates consistent with the current regulatory practice for electric utilities in B.C.?


Recommendations In examining the appropriateness of a line extension payment or rate surcharge for Big White customers, EES Consulting performed a COS for the Big White area as a separate region. A COS is a tool for looking at the costs incurred by a particular customer, customer class, or any other category of customers. For purposes of the Big White area, several scenarios and Cases were considered when developing the COS results. There is no one definitive way of looking at a COS to provide a precise conclusion. The underlying theories behind COS and ratemaking were considered as a second factor in developing a recommendation. The third piece examined was the practicality of applying a line extension payment or rate surcharge for Big White customers. Finally, while not considered in our recommendations, there may be some legal questions that reflect the manner in which a line extension fee can be applied. With regard to the COS, we believe it is not appropriate to directly assign the transmission portion of the project to Big White in the COS. This is due to the fact that similar projects for other geographical areas, such as Osoyoos, are included in the transmission rate base and all facilities identified as transmission are included in open access transmission tariffs. When the transmission portions of the project are not directly assigned to Big White, the Big White area more than covers its cost of service through the entire period examined. Even when the full costs of the project are directly assigned to Big White customers in the COS, the revenue to cost ratio is over 80 percent once load growth occurs. We believe this is the appropriate period to consider as the existing customers should not be expected to pay the full cost of capacity that is built to serve future customers. Further, this 80 percent should be compared to the revenue to cost levels of 90 to 95 percent that are typically paid by the residential class, as Big White is primarily made up of residential customers. Technically, FortisBC has a postage stamp rate in place for its customers and does not differentiate rates on the basis of location. It is standard practice to average costs out among customer within a class, despite the fact that they differ in regards to cost to serve. Costs differ on the basis of density, age of the facilities nearby, load profiles, terrain, average household size, type of business and many other factors. We see no reason why Big White customers are different as a group than any other geographic group within FortisBC. To the extent the treatment of the Big White area differs from the practice in place for other similar areas, the result is inequity among customers and rate discrimination towards Big White customers. Practically, collecting the cost of a $20.3 million dollar project from 1,800 existing customers appears to be a difficult task. Big White represents many individual customers and not one large industrial customer. Collecting from this many customers may create a nightmare for the


FortisBC billing department. Collecting the full cost from existing customers would not be equitable since a large share of the cost is to accommodate expected load growth. And collecting from only new customers does not reflect the benefit received by existing customers associated with the new expansion project. Based upon the results of the base case COS for the Big White area, it is clear that the Big White area is currently over collecting its allocated costs and will likely over collect them into the future even after the system expansion, This conclusion is predicated on generally accepted COS principles and industry practices. As such, this initial COS indicated that the Big White area’s retail customers should pay no more that the FortisBC postage stamp retail rates. Likewise, three other specific areas within the FortisBC service territory were analyzed to determine their revenue to cost ratios as compared to the other FortisBC customers. While there is an anticipated variance in each area’s ratio, the deviations in ratios at this time are not sufficient to attract a unique rate design or rate level. Finally, there are a myriad of policy issues that a surcharge on Big White might raise. A few of these policy issues are:

Is a surcharge on a ski area consistent with the Province’s economic development and growth policies?

Is a surcharge on Big White consistent with the Province’s Energy Plan?

If a surcharge on Big White is ultimately required, should all other discrete areas in the

FortisBC service territory be analyzed for the possible application of a surcharge?

Would high voltage improvements for FortisBC’s wholesale customers now attract an upfront capital contribution or rate surcharge?

Should all other utilities in the Province be required to determine if they have discrete areas

that should attract a rate surcharge?

What happens to FortisBC’s requirement to serve obligation if the Big White area does not pay a proposed surcharge?

It should be noted that this COS is only a rough approximation of FortisBC’s fully allocated costs. While this study is of an accuracy adequate to respond responsively to Commission Order #G-154-06, Fortis should constantly monitor its system costs and regional characteristics to ensure postage stamp rates continue to be appropriate.


Attachment 1 — Detailed COS Assumptions

Rate Base taken from 2006 year-end FortisBC actual financial results.

Revenue Requirements were taken from 2006 FortisBC actual financial results. Return reflects the earned return for the year.

Revenues for FortisBC and Big White were based on monthly revenues recorded, excluding taxes and including unbilled revenues.

Load and customer data was based on actual 2006 loads for the total system and for Big White. Metered energy was provided for the Big White area and was adjusted for system-wide average losses to develop the energy requirements at input. Both the non-coincident peak and the demand at the time of the FortisBC system peak were available for the Big White area.

Customer, energy and peak load projections for the Big White area were provided by FortisBC and reflect annual additions expected for both residential and customer accounts. Residential usage per customer is projected at 13,723 kWh per customer initially. For the 2026 build out (Case 3), usage per customer was increased to 15,163 kWh per customer to reflect a minimum consumption of 800 kWh per customer in the months of April through October. This change was made to reflect expectations that the Big White area will become more of a year-round destination in future years.

Purchased power supply costs for 2006 were provided on a monthly basis and were broken down between capacity and energy payments. Monthly power costs components were then allocated on the basis of monthly peak demand and energy to arrive at the allocation of purchased power costs.

Purchased power costs for the Big White area in 2010 and 2026 were increased to reflect the projected growth in power requirements associated with load growth.

Costs associated with depreciation, return and income taxes were increased for Cases 2 and 3 to reflect the addition of the Big White project. The increase was set at the same percent increase as the net plant increased.

Allocation of distribution costs for the Big White area, and other towns, were based on actual counts for the region, as shown in the following table:

Big White Allocation Drivers

Company

Wide Big

White Kaslo Osoyoos Christina

Lake Method Direct Customers (as defined by AMFM) Services, Meters, Installation on Cust Premises Conductor (metres) Land Rights - RW, Land Rights - Clearing, Conductors & Devices Distribution Structures (Number) Poles Towers & Fixtures Distribution Transformers (Total KVA) Line Transformers Streetlights (Number) Streetlights Measure

Direct Customers (as defined by AMFM) 84,305

188

465

1,700

81

Conductor (metres) 5,062,944

43,493

21,119

49,449

63,029

Distribution Structures (Number) 77,575

381

428

1,004

1,361

Distribution Transformers (Total KVA) 1,424,264

39,191

7,899

36,375

11,088

Streetlights (Number) 7,351

59

171

544

81

Percent Allocated Direct Customers (as defined by AMFM) 100.0% 0.2% 0.6% 2.2% 0.1% Conductor (metres) 100.0% 0.9% 0.4% 3.5% 4.4% Distribution Structures (Number) 100.0% 0.5% 0.6% 13.7% 18.5% Distribution Transformers (Total KVA) 100.0% 2.8% 0.6% 2.6% 0.8% Streetlights (Number) 100.0% 0.8% 2.3% 7.4% 1.1%

Additions of transformers, conductor and meters were made for Case 3 to reflect added distribution plant resulting from load growth in the Big White area. The addition to plant was provided by FortisBC.

The amount of the 138 kV Big White transmission and substation project placed in individual T&D accounts was completed using standard practice at FortisBC. The total amount included AFUDC of $1.249 million.

The costs associated with the Big White project were depreciated to 2026 for Case 3, with the mid-point between the full value in 2010 and the depreciated value in 2026 placed in the Case 3 rate base. The depreciation rates were taken from the most recent FortisBC depreciation study and are shown in the table below.

Depreciation Rates Useful Life

Transmission Plant Land & Rights - R/W 1.3% 75 Land & Rights - Clearing 1.3% 75 Station Equipment 2.0% 50 Poles Towers & Fixtures 2.2% 45 Conductors & Devices 2.0% 50 Roads, Railroads & Bridges 2.5% 40 Total Transmission Plant Distribution Plant Land & Rights - R/W 1.3% 75 Land & Rights - Clearing 1.3% 75 Station Equipment 2.2% 45 Poles, Towers, & Fixtures 2.5% 40 Conductors & Devices 2.5% 40 Line Transformers 2.2% 45 Services 1.3% 75 Meters 4.0% 25 Installation on Customer Premises 4.0% 25 Street Lights and Signal Systems 2.9% 35

Attachment 2 — Detailed COS Tables and Worksheets

Schedule B-1 Rate Base Classification [Methods

Schedlrle B-l FortisBC (Big White Area Brealtout)

P r c p r c d By EES Conrulting, lnc.

RATE BASE CLASSIFICzATION METHODS

Year

Account - ... . .- II.id~.iltslic Production

330 00 Lund & Rights $120.000 331 00 Bmiciiirer % Impio~ements S10.337.000 332 00 Re$ciioiis. Dams. & \\'arcnvu:~ 517.320 000 333 00 Water \%liccls Tiiibines & Gcnciatoi5 $47 064.000 334 00 Accccsoq Elechic Fquipmcnt $19.731,000 335 00 Mirc Povicr Plant rqliipment $37.624,000 336 00 Roads, RR & Bridges 61 Oi?,000

Total li?drn8lic Prndt~ctinn --- $133.249.00~ Total Production Plant $133.249 000 Transmi~sinn Plant

350 10 Land & Riglits - r\nV $7,079.000 350 10 Land & Rights - Clcviing $4.364,000 353 00 9lntion Tq~~ipn,cnt $116,253.000 355 00 Poles Toxvws 8.. Fl\-Blies S57.001.000

--- 1997 aids C O ~ ~ ~ ~ i c ~ i o d n l o g ~ Big Whife l t totr t ion Allocation

3006 Cost, S

356 00 Condrictors Rr Dexices $57.025.000 359 00 Roads Railroads & Rndgcr %817,000

Total Tranvnission Plant 1242,539,000

Clss~ifirafinn Big White Big White Direct Factor Factor ~~~t~~ Clawifiratinn Mcthod -. Area Factor - Area Method \ , r igrnent Bio\Vhile Main Area

-.- 1

Di~trihtttion Plnnt 360 10 Land & Rights - R.\Y 360 10 Land & Rights - Clcaiing 362 00 Station l:qoipmcnt 361 00 Poles. Toiicrs. % Fi~nirer 365 00 Condi~ctoic & Delicec 368 00 LineTi:mcformcrc 369 00 Seniccs

373 00 (iiccll.igI>ts and S i~na l S!clems $5.545.000 Totill Distr ih~tion Plant $ 4 4 8 9 1 7 0 0 ~ Total T~.ansmis\ion & ni\trihetion_ - $691.456.000 Gener:,l Plant

TCP2 TCP2 TCP2 TCP2 TCPZ TCPZ

NCPP NCPP NCPP

\lKSYSP MWSYSC 41wSYST CUSTM CUSTM CUSTM

D.Al

2 Coincidcnt ThiIiG Pcak Tinnrm>ciinn 2 Coincidcnt TJtiIiQ Pcnh Tiansrnicrion 2 Coincident iltiiih Peak Tinnsmi5sion 2 Coincideni iJhliQ Peak Ti~nsmisinn 2 Coiiicidcnt iJtillT) Peak Tnnsmicqion 2 Coincidcnt 1 ItiliQ Pcnh Tiansniicrion

NonCoincident Pent - P r i m a ~ Non-Coincident Peat - Piimiiq Son-Coincident Pcak - Piimaq 'iliniisilm S:stcm - Poler, Toners & F i ~ n ~ m \ (24% Ciicmmei. 76% Demand) \linimim B!stcm - Condliit (52% CirBonlcr 18V1 Demand) \lininium 9vrtcm - Tronsfomeip (28% Cti\tnmei, 72% Demand) Ciistomcis Vircightcd for hlctcrs atid S C ~ ~ ~ C C F Certomcr? \Vcightcd for hfctcrs and Smicec Ci~stnmcn \%'c>ghtcd foi hlctcr~ and Sei~ices Dircct \~iignment for Sbectliphts - - . ..

0 49% 0 86% 2 75% 1 88%) 1 88% 1 88%

. -. . CWIP $2.431.000 - / o n thc Ratic of CWIP ! I 16%--1 $H ;;%

I .

Total Acr~tmalated Depreristinn 1 1 -- .. $219.975.000 Tot:nl NCI Plant

1 - $708.337.000 - -- . -- - .- . . . . ..

1 +--- - .. \l'orliing Capital /On the Basis of Dimibution Rarc Rare 1 1

Dicmhution smichircs @ri~mhci) Condnctor (metres) Diqrribiltion Tiun\fonilcrc (Total LVA) Direct Cuctomcic (As defined b! Z'ifFIl) Direct C~,stomeis (As dcfincd b: AXli7rl) Direct Customerr (4s defined b) hZFZl)

389 00 I and & Right$ $3.519.000 390 00 Smimlici -Frame & Iron $337,000 390 10 Smirhlict - 'ilnronp S20.242,000 391 00 Office fiirninirc Fqilipmmt S4.932.000 391 10 Con~pi~tci Eqiiipiiient $39 715.000 392 00 Tianiponalion Eqvipnient $11 730.000 394 00 Tool and \Voik Fn\lionn,cnt $8,645,000 397 00 Comn>ilnication Bmicniicc % Fqotpmcnt $14,487.000

Total General Plant -- $103 607 000 - Total Plant Brfnrr (;merrl Plant R. Inf?ndhlc $824 705 000 Total Gmss Plant in Senicc - - S928.312.000

\llon:~nce Tor l\'oikine Csnttal $7 509 000 1 Oh1 / o n the Rarii of i l l O&\l 1 I 1 1 I 1 :'U / 09 ~7c>b" 4 ~ . ," ",,~,

Zdjiismieni for Capitol hdditionv -71 $015 000 OM /on tlie Raqi.; of 211 0f~i.w _ - - _ _ I 13% 98 ST'%

I .

1 ~-

Total \Vorkinp fitpitill $2703.0" /-- - I 1 .. LCSE: Net C L I S ~ O ~ ~ C T ~ 0 n t r i h u t i o n ~ - - I I

Less: Arcrrrnrtlatc~l ncpreci.~tinn H?diwlic Prodaciinn Plan? $22.858.000 On the Dasis of Gcncmlii.n Rare Rase Tian~iniscion Plant ~ 4 1 81.1 00n On tl~e Basis of Transmission Rate Rase 105% 98 95% r)istr>hiioon Plant 135% 98 6j%, General Plsnr 1 7 , 09 77%.

LABOR LABOR LABOR LABOR LABOR LABOR LABOR LABOR

- . . .- Piodiiition Plant $8.712 000 Tmiisiiiiqiion Plnnr $23.211.000 Dicriihiirion Plans $440 000 Scnicos Gcncrnl Plont S845.000 Pinnt '\cqiiirition !\djiirhnenl& Dcfcmd $30.155.000

the Rae75 of Gcncration ate Raw On the Rasic of Tiamimicrion Rstc Rzicc Oii she Basis of Dismhution Rate Rare On tho Rasis of Dicmhiiiion Rate Umr

RBGP On the Recic of Gcncrvi Plant Rntc Raw GPLT On the Ra i s of Cross Plnnt (iih Genei;liP??t % Intangible)

On tI,c Re~ i? of 1 nboiRatio$ On tlic R a - i ~ of 1,ahoi Ratios On thc Rnrls of 1.nboiRntios On dxr Basic of 1.uboi Ratios On thc Rari. of 1 ahoi Rstioc On tlie Basis of Labor Ratios On tho Basis of Labor Ratios On t h e s r of 1.sbor Ratios -

Last Updated 3/4/2007 Ccliedrilr B-I Papc 1 of I

-- -- . . . ~ -.

.

125% 125% 125% 1 25% 1 25% 125% 125% 125%

I. ~.

98 75% 98 75% 98 75% 98 75% 98 75% 98 75% 98 75% 98 75%

. ...

. . . ..

Schedule 8-2 Revenue Requirement Classification

Methods

Schctlule B-2 I'ortisBC (Big White Area Brealtont)

Pnepnretl By EES Consnlt~ng, Ine

R E V E N I J E Rl?.QUmEMENl C L A S S I F I C A T I O N M E T l I O D S

I 1997 For/i.s ('OSA Melhod I

Account Operntion & Maintenance Expense

Ilydi~nulic Power Genet.ation 535 00 Op Silpc<vision & Bnginccriog $369,742 536 00 Wafer for Powcr $8,371,000 542 00 Stmclu~cs $653,000 543 00 Darns & Wntcnvays $238,600 544 00 Elccttic Plant $271,900 545 00 Othor Plant $594,700

Othc~. Polver Supply 555 00 Polcliascd Po~vcr - Eticlgp Clinrgas $56,062,582 555 00 Poici~ased Powci- - Deinand Cl,argcs $11,513,418 556 00 Systcvii Colitiol $7 13,000

Total l'orclinscd Poricr 567,576,000 Total Production 578,787,942 Trsasmission

560 10 011 Supcwisioii L Ei~giilcciing $l,i48,600 560 20 Systi-ili Plsi?siing $l,003,700 56 l 00 Loxd Disp;itcliiag $945,200 562 00 'Tinostairsion Stnrion B r p a ~ s c $667,900 563 10 Tiatlsrtiission Lint Maiato~~nncc $88,900 563 20 'Tinnsa~ission TROW Mnintcnat~cc $654,400 565 60 Wlicclicic $3.840.000

Year 2006

Cast, $

567 00 Rcnts 82,502,900 Total Trnnsnlission $10,851,600 Distribution

Allocation Allocntion

Clilssificiltion lisctor linctor

linetot. Clilssificiltion R4ethod Big White Main Aren

583 10 Distlib~ition Litic Mnintcnnc~cc 583 20 Distlibutioa ROW Maintcneocc 586 00 Mctcr Expmscs 592 00 Distiibr~tiotl Ststioll Espcnsc 596 00 Stlcct Lighting

RBG Oli tlic Basis of Gcliclatioli Riltc Bosc RBC 01, tlic Basis of Gcnc~.atio~i Ralc Bnsc IlBG On the Bosis oCGenc~elion Ralc Bnsc RUG On tllc Basis ofGci~cintiot~ Ratc Bnsc RBG On Ihc Basis ol'Gci,cintio~~ Rntc Base RBG On lllc Basis ofGcnciatioii Ratc Basc

PURCllkWIi 0x1 tlic bnsis of po\rat siipjilp ceclgy PURClikW Oii tlw imsis of powc~ aipply dmnnnd

fl'l I Coilicidcnt Utility Peak

On t l~c Basis of Transiiiissioii Rntc Basc

Oa thc Basis of Transl;iissioo Ratc Bnsc On thc Basis of'Tlansiniss~on Ratc Basc On thc Basis ofTraosa~issioti Ratc Basc

As 364 On the Basis of Acct 364 (Polcs, Ihn,cts & i'iutoics) As 364 On tlic Basis of Acct 364 (Polcs, Tonrcis & i'ixtolcs)

On tlic Basis of RBD Mctcis On thc Basis of RBD S ta t io~~ Eqinpnrc~~t

DAl 011 thc Basis of RBD Stcect Lights mid Signal Svstcms . . 598 00 Otlrer Pln~it $194,600 As All Olhcr Distribution Og Espcnsc

'Total I)ist~.ibution $5,846,000 Total Operation & Maintenance $95,485,542 Customer Service. Aecoonts. &Sales

'JOl Oil Supccvision & Ad,,linisl~alioa $826,400 902 00 Metcr Rcndiog $1,701,600 903 00 Custalncr Billitrg $407,900 904 00 Clodit & Collcctiona $1,426,500 910 00 Customcr Assistnncc $1,867,400

Total Customer Service, Accounts & Sales $6,229,800 Tctnl O & M wio Put.rhssed Po\r,es. S u p ~ ~ l y & A&G $33,426,342 Adminis0.ativr '0 Gcncrsl

920 10 Exccutivc L Scniol- M ~ ~ I I ~ ~ C I I I C I I ~ $1,221,536 920 20 1.cgnl $514,582 920 30 Nuinan Rcsoiiircs $522,570 920 40 I:iil;u,ci: & Acccentiitg $560,526 920 60 Ix~fon~intioa Scn~iccs $668,005 '120 70 Matcriais Mosascmorii 499,175

Odicr $613,436 '1311 10 Adsnin & C~,ieral Timsfcrgcd -$5,000 930 20 Special Sowices %3,590,370 93 1 00 fssuraiic; $783,382 '132 00 Mnistcosocc & Gei?e~nl Plant $1,260,127 933 (10 Tn~isponation Equipnicnt Bxpcoscs $778,200

Total Administrative & Cetrernl $10,408,359 Total O & M plus A&G $1 12,123,701 Depreciation

403 30 Gcnc~ation Plant $2,468,000 403 50 Tiat~smission Plant $6,469,000 403 60 Distribution Plant $1 1.375.000

I AS All Otlicr Customcl Setvicc Espclisc

CUST Actrial Custo~licrs As All Othcr Custalnci Sctricc Bspcnsc

I

1,ABOR Oil llic Basis ol'loboi Rntios LABOR Oa llic Bas!s oCLaboi- Rstios LABOR Oa $ 1 , ~ Hnsis oCLsbor Rntios LABOR O n Oli Bans of Lnbni Rat~os 1.ABOR /Oii tlic Basis ol'Lobo8 Rniios LABOR Oil tlic Basis of Laboi Rntios LABOR /On illc Basbs of labor Rnlios LABOR Oli tilc Basis of Lnboi Ratros LABOR Oti t l~c Basis oS Lnhcz Raisos 1,ABOR On tlic Banis of Lnbor Rnitos NBTPLI' Ori lllc Baris ofWe1 Piml LABOR 011 the Basis of Labor Ratios

llBG On thc Basis of Ccncintion Ilalc Bnsc RBT 011 thc Bnsis ufT~nt~srrrission Rntc Base RBD 0 0 thc l ias~s oCDiit~ibution Ratc Bdsc

Taxes I I I

403 70 Gcuctnl Plant And Dcfcrrcd Chargcs $6,434,000 1 GPLT loll thc Basis ofGmss Plant (wlo Gciro~nl Plarrt & Intni,g~blc)

AFUDC -$2.360.000 1 NETFLT loll tlic Basis ofNcll'lnnt / 1 23'% 1 98 77'5 1

Total Depreciation 526,746,000 1 I 1 I 1 23'X,

Last Updated 3/4/2007 Sclicdule 8-2 I1ngc I o r I

98 77X,

Inccnt~vc Adjustments $2,445,000 l~lcoiiic Tax $6,504,000 Rclum on Role Ba-c $52,721,000 Total Return nnrl Income T a r $59,3 L0,000

Revenue 1lcquit.crnent Bcforc Othct. Rcvenoes $208,454,701

llevrnue Req. 13cfol.c Tsxrs ;and Other Reven~les $198,179,701

Other Revcnucs Elccllic Appnlatos Rcntni $1,94 1,000 Ilclitol of I'acilltics 861,000 Lcnsc Rcvcniic $127,000 Waocta Coiilinct Rcwniic $950,000 Biillialit Mnnngenieiit Fees $4 14,000 Fortis Pacific Iloidiags $398,000 Ccniiectiot, Cl,aqes $544.000 NSF flicqoc Clmgcs 5 10.000 Stindty Rovcilcc $257,000 li~vestn,c!it liicos,e $391.000 Total of ire^. Revenues $5,093,000 REVENUE REQUIREMEN'f for COST ALLOCATION $203,361,701

NBTI'1.T NBTPLT NBTPLT

As 364 RBGP RDGI' IlBG RBG

LABOR

On thc Bnsls ol'Nct I'laot On thc Basis of Ncl Plont On tilt llnsis oCNc1 Plant

As Acct 364 011 tbc Basis o fGa~c in l Plant Ralc Base Oii tlic Basis of Gciictal Pisol Ralc Basc Oii tlie Bnsis of Gonelatioil Ralc Bnsc On Ibc Basis ofCciiciotioa Rstc Base

tlic Bssis of labog Rntios

1 23% i 23% 123%

0 49'K 1 25% 125'% I 18'%, I 18%~ 1 25'X3

CUST ,Actiml Ctistomcn CUST /Actoal Costooiers

')8.77'%, '18 77% 98 77%

Y1 5 I'X, 08 75'% 98 75% 98 82% 98 82% 98 751,

I 79% 179% 1 23% 1 23%

GI'LT GPLT

98 2 1 '%, 9821% 98 77% 98 77%

On tllc Basis ofGloss Plait (n lo Cciic#oi Ploiit & liitangible) On tile Basis of Gross Pkn~t O\z/o Gei!cbal Plant (G Intairgiblc)

Schedule B-3 Projected Rate Base

Schedule B-3 FortisBC (Big White Area Brealtout)

Prepared By ICES Consulting, Inc.

PROJECTEDRATEBASE

Total 2006 Plar~t wi 2026 Plant wl 2006 Additions Big White Additions Big White

Cost $ Big White Additiorls Big Wllitc Bi~ildollt

Accoont

- Hvdraulic Production I I I 1 1 330.00 Land & Rights $1 20,000 33 1 00 Str~ictulrs & Iinprovernents $10,337,000 332.00 Reservoirs, Darns, & Wateiways $17,320,000 333.00 Water Wheels, Turbines, & Generators $47,064,000 334 00 Accessory Electric Equipment $19.73 1,000

~ ~

335.00 Misc. Power I'lant Eonioment $37.624.000 1 1 $37.624.000 1

Transmission Plant -7 350.10 Land & Riglits - N W 350.10 1,arid & Rights - Clearing 353.00 Station Bqtiipment 355.00 Poles Towers & Fixt~lres 356.00 Co~tductors & Devices 359.00 Roads, Railroads & Bridges

- Tot;ll Transmissio~~ Plant - Distribution Plant

360.10 Lar~d & Riglits - N W 360.10 I.and & Rights - Clearing 362.00 Station Eqi~ip~iiesit 364.00 Poles, Towers, & Fixtures 365.00 Conductors & Devices 368.00 Line 'Traosfosmers 369 00 Services 370.00 Meters 371.00 Installation on Custo~nel. Premises $938,000 1 1 $938,000 1 1 $938,000 1

- General I'lant 389.00 Lalid & Riglifs 390.00 Strt1ch11.e~ - R-arne Sr Iron 390 10 St~rictures - Masons-y 3 9 1 .OO Office Flrrnitllre & Eqoiprneslt 39 1 10 Cornputer Equipment 392.00 T~anspo~tation C q ~ ~ i p ~ n e t ~ t 394.00 Tool and Work Environrne~rt

373.00 Street Lights and Sigr~al Sysle~ns $5,545,000 - l'otal Distribution Plant $448,917,000 - Total Transmission & Distribution $691,456,000

Less: Acculnulated Depreciation

$3,896,000 $20,288,000

- Hydraulic Production Plant - Tiar~ssnission l'lant - Distribution Plant - Gencral Plant

Co~nmonication Strocturcs & Equipmer~t $14,487,000 Total General Plant $103,607,000 Total Plant Before General Plant & Intangible $824,705,000 Total Gross Plant in Service $928,3 12,000

-

$5,545,000 $452,813,000 $711,744,000

- . Allowance for Working Capital $7,509,000 / / $7,509,000 / 1 $7,509,000 /

$20,288,000 $20,288,000

- A<!ittstmeni for Capital Additiolis -$4,806,000 1 / -$4,806,000 / 1 -$4,806,000 - Total Working Capital $2,703,000 / / $2,703,000 / / $2,703,000 - Less: Net Customer Contributions 1 1 1 I

$3,776,183 $17,100,189

- CWlP $2,434,000

$5,545,000 $452,693,183 $708,556,189

$14,487,000 $103,607,000 $844,993,000 $948,600,000

$2,434,000

$219,975,0001 $728,625,000

- Total Accumulated Depreciation $219,975,000 - Total Net Plant $708,337,000 - Working Canital

- Production l'lant - Transmission Plarlt - 11isb.ib11tion Plant - Services - Ger~eval 1'lant

-

$20,288,000

- Ilistributiosr Plant -$66,132,234 - Total Contributions 466,132,234 - TOTAL RATE IMSE $644,907,766 - CWII'

$17,100,189 $17,100,189

-

$17,100,189

Last Updated 3/4/2007 Schedulc 13-7 I'age 1 of I

$14,487,000 $103,607,000 $841,805,189 $945,412,189

. '

$2,434,000

1 0 $725,437,189

$20,288,000

- Plarit Acquisitio~~ Adji~sttnent & Defeil-ed $30,155,000 - Total CWIP $63,363,000 - TOTAL RATE BASE plus CWlP $708,270,766

-$66,132,234 -$66,132,234 $665,195,766

$20,288,000

$17,10O,L89 I

$30,155,000 $63,363,000

$728,558,766

-$66,132,234 -$66,132,234 $662,007,955

1 $30,155,000 j $63,363,000

$17,100,189 1$725,370,955

Schedule 8-4

S c h e c t u l e B-4 FortisBC (Big White Arca Brealtout)

PROJECTED REVENUE REQUIREMENTS

1'1.cparccl By IIIPS Consulting, Inc.

Torn1 Rcv Rcq m/ IRc\, llcq n/

2006 Big Whitc 13ig Whitc

Espu~sscs Addttions Billldout

. . 536 00 Watc! for I'oivcl. 542 00 Sttuctt~tcs 543 00 Dams r% Watcmrays 544 00 Elcctric l'laat 545 (10 Olhcr Plant

Hydraxilie Power Generation 535 00 01, Suuervision B Enginecnnr: $369,742 $369,742 $36'i,742

902 00 Mclcl Rcnding 903 00 Ct~stomc~ Billing 904 00 Cicdit B Collcclioiis

Olhe~. Power Supply 555 00 Poi-cliascd l'oiirec - Encgy Cliorgcs $56,062,582 555 00 Pi~icliascd Porscr - Ifeixnild Cliagcs $11.51?.418 556 00 Syrtcm Coiitroi $713,000

Total Purehascd Power $67,576,000 'Fatal P~.oduction $78.787,942 'I'vansmission

560 I0 Op S~rpclvisior & Enginccting $1,148,600 560 20 Systc~n Planning $I,i103,700 561 00 Load Dispalching $945.200 562 00 Ttaiisiiiissioii Slatioii Bxj~ensc $667.9!10 563 10 Tiaiisniissioii Linc Mnisieiini~cl; $88,900 563 20 Tniisiilission TROW Maiiiimmcc 5654,400 565 00 Wliccling 1;3.840,000 567 00 Rcats $2,502,900

Total T~~ansmissioa 5L0,851,600 Distribution

583 Ill Distl-ibution Linc Mnintcnancc $2,253,700 583 20 Distl-ibutioo ROW Maintcnnncc $l,594,500 586 00 Mctcl Expenses $905.600 592 00 Distaibutioii Sldiotl Evpciisc $83 1,')OO 596 00 Stmet Liglltiiic. $65,700

910 00 Ci#stoaici Assista~~cc $1,867,400 'I'atnl Custonrer Service, Accoisnts & Sales $6,229,800 Total O&M wlo Pitrchilsed Power Supply '% A&G $33,426,342 Administ~.ative & Genc~.nl

556,302,850 $56,794,885 $iI,555,810 $11,669,65l

$713,000 $713.000 $67,858,660 $68,464,535 $79,070,602 $70,676,477

$1,148,600 $1,148,6011 $1,003,700 $1,003,700

$945,200 $945,200 $667,9OO $667,900

$88,9011 $88300 3654:400 6654,400

$3,840,000 $3,840,000 $2,502,900 $2,502,900

$10,851,600 $10,85 1,600

$2,253,700 $2,253,700 $1,594,500 $1,594,500

$905,6OO $905,600 $831%00 $83I.'iOO

265,700 $65,700

9211 10 Bxcculivc & See101 Managcmcnt 920 20 Lcgnl 9211 30 Humnii Rcsoi,iccs 920 40 Pinnncc $ Accomtiog 920 60 Infolmation Scrviccs 920 70 Matclinls Maiiagcmcat

Otbm 930 I0 Admk & Geaer;il 'f'nnsfcircd 930 20 Spccinl Sctviccs 931 00 Insu~aacc 932 Oil Maiotconncc & Gencml Plwt 933 00 Tlnnspa~tntion Eqoipmcnt Bxl~cnscs 778,200 1 $778,200 577X.200

Total Administ~.stivc & General $10,408,359 1 $10,408,359 $10,408,359 Total OLeM plus A&G $112,123,701 / $112,406 361 $113,012,236

403 70 Gcoetnl Platit Atid Dcfelrcd Charges $6.434,000 / $6,434.000 $6,434.000 Total Depreeiiltion 526,746,000 / $27,281327 $27,197.062 Taxes I

408 05 I'lopcny $10,275,000 1 $10,499,557 $10,464,273 Total Taxes $10,275,000 1 $10.499,557 $10,464.273 Rchlrn :rind Income T;~xcs AFUDC -$2,360,000 1,iccntiva Adjustniciits 12,445,000 Iocoii,c TZXY $6,50<,000 Retulii on Rate Uxc 852,721,000 Total Retut.n and Income Tax $59,3 10,000

Oihcl. Revenues Elcctic Appemtils Rental Rcntnl of Fncilitics Lansc Rcvcous Waneta Contract Revenue Bliiliac~t Mnnagcmcnt Pecs Fortis PncificHoldings Coaocctian Clraigcs NSP Cbcquc Chntgcs Sondty Rcvcnuc

-$2.360,000 -$2,360 000 52,445,000 $2.445,000 $6,646,143 $6.623 808

553,873.203 553,692,160 $60,604,346 $60,400,968

Revenue Requi~.crnent Before Other Revenues 9208,454,701

lilveslmcnt Incoiac $391,000 I $391,000 $39 l,OOO 'rota1 Other Revenues $5,093,000 / $5,003.000 $5,003,000 IlEVENUlSKIlQUIKEMENT for COST ALLOCATIOE $203,361.701 / $205,6i19,191 $205,981.539

$2lO,792,l9l $211,074,539 -

Last Updatcd 3/4/2007 Scllcdiilc B-4 Pngc 1 of I

R ~ , , ~ , , , , ~ R~ , netore oIhcr $108,179,701 $200,292.634 $200.610,266

Schedule 8-5 & B-6 Case 1 - 2006 Before Big White Addition

I'reparecl By EES Consulting, Inc.

Schedule B-5.1 FortisBC (Big White Area Breakout)

RATE BASE COST ALLOCATION CLASSIFICATION BY CUSTOMER

1997 Fortis COSA Methodology

Case 1 12006 Before Birr White Addition

Accou~it Description Total Rate Rase

Ilydraulic Production Land & Rights $120,000 Struct~~res & Improvements $10,337,000 Reservoirs, Dams, & Waterways $17,320,000 Water Wheels, Turbines, & Generators $47,064,000 Accessory Electric Equipment $19,731,000 Misc. Power Plant Equipment $37,624,000

Roads, Railroads & Bridges $8 17,000 Total Transmission Plant $242,539,000 Distribution Plant

Christina Big White Main Area I ,akc Osoyoos Kaslo

$1,411 $1 18,589 $557 $2,160 $927 $121,571 $10,215,429 $47,966 $186,081 $7933 1 $203,697 $17,116,303 $80,369 $3 1 1,785 $133,760 $553,509 $46,5 10,491 $2 18,387 $847,221 $363,468 $232,052 $19,498,948 $91,556 $355,187 $1 52,379 $442,487 $37,18 1,s 13 $1 74,584 $677,287 $290,564

Roads, RR, & B ~ ~ d g e s $1,053,000 Total Ilydra~ilic I'roduction $133,249,000 rota1 Production Plant $133,249,000 Transmission Plant Land & Rlghts - RIW $7,079,000 I and & Iilghts - C1ear11ig $4,364,000 Stat1011 bqu~pment $1 16,253,000 Polcs Towers & F~xturcs $57,001,000 Conducto~s & Dcv~ccs $57,025,000

1,and & Rights - IUW Idand & Rights - Clcaring Station Equipmeat Poles, Towers, & Fixtures Conductors & Devices 1,inc Trailsformers Services Mctcls 111stallatio11 011 Customer Prernises

$12,384 $1,040,616 $4,886 $1 8,956 $8,132 $1,567,111 $131,681,889 $618,304 82,398,677 $1,029,060 $1,567,1 11 $131,681,889 $618,304 $2,398,677 $1,029,060

$73,994 $7,005,006 $29,496 $1 15,010 $49,127 $45,615 $4,318,385 $18,184 $70,900 $30,286

$1,215,143 $1 15,037,857 $484,798 $1,888,719 $806,779 $595,807 $56,405,193 8237,509 $926,074 $395,578 8596,058 $56,428,942 $237,609 $926,464 $395,745

General Plant 1,and & Rights Structures - Framc & Iron Structures - Masonry Orlice Furniture & IZquipine~it Co~uputer Equipment Transportation Equipinelit Tool and Work Environment

Strcet Lights and Signal Systems $5,545,000 Total Distribution Plant $448,917,000 Total Transmission & Distribution $691.456.000

$5,545,000 $60,995 $410,330 $16,635 $6,047,956 $442,869,044 $4,991,113 $8,426,265 $2,553,228 $8.583.112 $682.872.888 $6.001.7 15 $ 12.366.706 $4.236.413

Last Updated, 3/4/2007

Coiiimuiiicat~oii St~ttctuies & Cquipine~lt $1 4,487,000 Total General Plant $103,607,000 ?'otal Plant Before General Plant & Intangible $824,705,000 rota1 Gross Plant in Service $928,312,000

Schedule B-5.1 page I 01-2

$1 80,816 X 14,306, 184 $ 1 17,170 $262,753 $94,0 14 $1,293,143 $102,313,857 $837,970 $1,879,134 $672,365

$10,150,222 $814,554,778 $6,620,019 $14,765,383 $5,265,473 $11,443,366 $916,868,634 $7,457,989 816,644,517 $5,937,838

l'reparetl By ICES Consulting, Inc.


RATE BASE COST ALLOCATION

CLASSIFICATION BY CUSTOMER 1997 Fortis COSA Methodology

Accou~lt Description Total Rate Basc

La.?: Accunzulnted Depreciafioit Iiydra~ilic Production Plant $22,858,000 7'ransmission PIa~tt $41,814,000 Dist~ibutioll I'lant $ 3 14,185,000 Crclleral Plant $38,684,000 CWII' $2,434,000

Total Accumulated Depreciation $21 9,975,000 Total Net Plant $708,337,000 Worlting Capital Allovvailce for Worlting Capital $7,509,000

Case

Christina Big Whitc Main Alca Lake Osoyoos I<i~slo

1 12006 Before Bin White Addition

Adjustment for Capital Additio~ls -$4,806,000 Total Working Cspitsl $2,703,000 1,ess: Net Customer Contributions

-$54,080 -$4,751,920 -$23,968 -$95,383 -$40,469 $30,416 $2,672,584 $13,480 $53,646 $22,76 1

Dlstnbutio~~ Plant -$66,132,234 Total Contributions 466,132,234 TOTAL RATE BASE $644,907,766 CWIP

Last Updated: 3/4/2007

-$428,008 -$65,704,226 -S735,266 -\I ,241,3 16 -h376,129 -$428 008 -$65,704,226 -5735 266 -81,241,3 16 -$376,129 $8 290,576 $636 617, I90 $4,858,494 $1 1,478,985 $4,200,810

Production I'lant $8,7 12,000 'Transmission Plant $23,211,000 Distributioll Plant $440,000 Scrvices General P l a ~ ~ t $845,000 I'lant Acquisition Adjustlllcnt & Dcfcrred $30,l 55,000 Total CWIP $63,363,000

$102,460 $8,609,540 $40,426 $156,829 $67,28 1 $242,615 $22,968,385 $96,7 15 $377,100 $ 16 1,08 1

$5,928 $434,072 $4,892 $8,259 $2,503

$10,547 $834,453 $6,834 $15,326 $5,484 $371,139 $29,783,861 $242,058 $539,890 $192,530 $732,688 $62,630,312 $390,925 $1,097,404 $428,878

TO'TAL RATE BASE plris CWIP $708;270,766 $9,023,263 $699,247,503 $5,249,419 $12,576,389 $4,629,689

Prepared By EES Consulting, Inc.

Schedule B-6.1 FortisBC (Big White Area Brealtout)

REVENUE REQUIREMENT COST ALLOCATION CLASSIFICATlON BY CUSTOMER


Birr Whitc

Case

Main Area Christina l,al<e Osoyoos

1 12006 Before Big White Addition

Hydraulic Power Generation Op. Supervision & Engineering Water [or Power Slruclures Da~ils & Watcrways Electric Pla~it Othcr Plant Other Power Supply I'urchased Power - E~icrgy Charges Purchased Powcr - Deiiia~ld Charges Systein Control $713,000 1 $11,376 $701,624 $4.535 $17,683 $7.553 Total Purchased I'ower $67,576,000 1 $772,688 %66,803,3 12 $297,892 $1,411,230 $608,220 Cotal Prodoction $78,787,942 1 $907,540 $77,880,402 $35 1,145 $ 1,617,909 $696,854 - I'ransmission I Op Supervisio~l & Engineering System I'lanning 1,oad Dispatch~ng Tra~is~nission Station Expense FI'~.a~~smission Line Maintcna~~ce Ttaiis~liission TROW Maintenaiicc Wlieelilig

Othe~ Pla~it $194,600 1 81,781 $192,819 $2,658 83,358 81,061 'I otaf Distribution '$5,846,000 1 $53,497 $5,792,501 879,839 '$100,867 63 1,874

~;4762r10 R I 895 n77 68n4n37

Rents $2,502,900 l otal 1 ransmission $10,851,600 Distribution D~sti ~butlon L ~ n e Md~~itena~ice $2,253,700 Dlstttbut~on ROW Ma~~itenance $1,594,500 Meter Expenses $905,600 D~str~but~on Stat1011 bxpense $83 1,900 Strcet L~glit~ng $65,700

Total Operation & Maintenance $95,485,542 / $1,074,465 $94,411,077

$26,162 $2,476,738 $10,429 $40,664 $17,370 $1 13,427 $10,738,173 845,216 8176,302 $75,308

$1 1,069 $2,242,631 $40,567 $29,298 $1 1,269 $7,831 $1,586,669 '$28,701 $20,729 '$7,973 $17,049 $888,55 1 $906 $18,112 $906 $ 15,768 $816,132 86,286 $24,509 $10,469

$65,700 $723 $4,862 $197

Custo~ner Service, Acconnts, & Sales Supervision & Administration Meter Rcadiiig Customer Billi~ig Credit & Collcctio~ls

Executive & Senior Matiagcme~it Lcgal IIunlan Resourccs Financc & Accounting I~ilbnnatioll Scrvlces Materials Management

Customer Assistance $1,867,400 Total Customer Service, Accounts & Sales $6,229,800 Total O&M w/o Purchased Power Supply & A&G $33,426,342 Administrative & General

Last Updated: 31412007

$33,167 $1,834,233 $22,619 $77,973 $22,176 $1 10,649 $6,119,15 1 $75,459 $260,125 $73,981 $401,049 $33,025,293 $249,232 $726,290 $262,245

Schedule B-6.1 Page 1 of 2

Prepared By ICES Consnlting, Inc.

Schedule B-6.1 FortisBC (Big White Area Brealtout)

REVENUE REQUIREMENT COST ALLOCATlON CLASSIFICATION BY CUSTOMER


Expenses

Case 1 12006 Before Big White Addition

2006 Othei- $613,436 Adrnii~ & General Transfcrred -$5,000 Special Services $3,590,370 Insurance $783,182 Mai~ite~laiice & General Plant , . $1,260,127 I ra~tsportatio~i Bquipinei~t Expenses $778,200 'Total Adn~inistrative & General $10,408,359 'Iota1 O&M plus A&G $1 12,123,701 Depreciation Gcneration Plaiit $2,468,000 Transmission Pla~it $6,469,000 Distributio~i Plant $1 1,375,000

13ig White Maill Area Citristina Lalte Osoyoos Kaslo

$7,656 $605,780 $4,96 1 $11,126 53,981 -$62 -$4,938 -$40 -$9 I -$32

$44,812 $3,545,558 $29,039 $65,119 $23,300 $9,775 $773,407 $6,334 $14,205 $5,083 $15,456 $1,244,67 1 $9,927 $22,534 $8,102 $9,713 5768,487 $6,294 $14,114 $5,050

$129,637 $1 0,278,722 $83,9 18 $188,457 $67,470 $1,3 14,751 $1 10,808,950 $635,577 $2,343,659 $945,488

$29,026 $2,438,974 $1 1,452 $44,428 $19,060 $67,618 $6,401,382 $26,955 $105,099 $44,894 $153,248 $1 1,221,752 $126,469 $213.51 1 $64.696

Gene1 a1 Plant And Delel~ed Ch'liges $6,434,000 Total 1)epreciation $26,746,000 Taxes

AlilJDC Incenti\le Adjustments Illcolne 'Tax

$79,188 $6,354,812 $5 1,647 X I 15,193 '$41,079 $329,079 $26,416,92 1 $2 16,522 $478,23 1 $169,728

Property $10,275,000 'Total Taxes $10,275,000 lletnrn and l r ~ c o ~ n e Taxes

$126,029 $10,148,97 1 $80,946 $1 83,740 $ 66,062 $126,029 $10,148,971 $80,946 $183,740 $66,062

Return on Rate Base $52,721,000 Total Return and Income Tax $59,3 10,000

$646,654 $52,074,346 $415,336 $942,770 $338,964 $727,472 $58,582,528 $467,244 $1,060,596 $38 1,327

llevenue liequiretnent Before Other Revenlies $208,454,701

Electric Apparatus Relital Iiclilal oCFacilities l~,case Revenue Wailela Coiltract lievel?ue Brilliallt Mailagemelit Fees Fortis Pacific I-loldings Conncctioi~ Charges NSF Clieque Charges Sundry Reveiiue

$2,497,330 $205,957,37 1 $1,400,290 $4,066,226 $1,562,606

Revenne Req. Before Taxes and Other Revenues $198,179,701

Other Revenues

$2,371,301 $195,808,400 $1,3 19,344 63,882,486 $1,496,544

Investment Income $391,000 Total Other Revenues $5,093,000 REVENUE REQUIREMKNT for COS'I' AS,LOCATION $203,361,701


$4,812 $386,188 $3,139 87,000 $2,496 $50,793 $5,042,207 $57,979 $95,359 $34,8 18

$2,446,538 $200,915,163 $1,342,3 1 1 $3,970,867 $1,527,788

Ilevenues - Present Rate $203,361,70 1

Less Allocdtcd Revenue Requiie~nc~lt $203,361,701

Diffe~e~tce

Revenue To Cost Ratto 100 0%

Schedule B-6 1 Page 2 of 2

$2,784,820 $200,576,881 8 1,124,202 $4,492,265 '$1,884,618

$2,446,538 X200,915, I63 $1,342,3 1 1 $3,970,867 $1,527,788

$338,282 -$338,282 -$218,108 $52 1,398 '$356,830

113 8% 99 8% 83 8% 113 1% 123 4%

Schedule B-5 & B-6





I Christina

Case

Account Description Total Rate Basel Big White Main Area 1,illcc Osoyoos ICaslo

IIydraulic Production

2 12006 After Big White Addition

Land & Rights Structures & Iinproveinents Reservoirs, Dams, & Waterways Water Wheels, Turbines, & Generators Accessory Electric Equipment Misc Powcr Plant lI!quipmeilt

Roads, Railroads & Bridges

Roads, Rli, & Brldgcs $1,053,000 Total IIydraulic Production $133,249,000 rota1 Production Plant $133,249,000 Transmission Plant Land & R~ghts - R/W $9,161,000 Land & R~ghts - Clearing $6,932,000 Station Equlpmeut $120,369,000 Poles Towers & Fixtures $60,765,000 Conductors & Devlces $60,568,000

Total Transmission Plant Distribution Plant

$16,878 $1,036,122 $4,864 81 8,873 $8,095 $2,135,768 $131,113,232 $615,473 $2,388,195 $1,024,378 82,135,768 $131,113,232 $615,473 $2,388,195 $1,024,378

$99,510 $9,061,490 $37,478 $146,132 $62,421 $61,345 $6,870,655 $28,359 $1 10,576 $47,233

$1,634,178 $1 18,734,822 $492,439 Y; 1,920,069 8820,170 $801,268 $59,963,732 $248,594 $969,294 8414,040 $80 1,605 $59,766,395 $247,788 $966,152 $4 12,698

Land & Rights - RIW Idand & Rights - Clearing Station Equipment Poles, Towers, & Fixtures Conductors & Dcviccs Line Transhtmcrs Scrviccs Mcters 111stallation on Customer I'remises Stsect Lights and Signal Systeins $5,545,000 Total Distribution Plant $452,813,000 Total Transmission & Distribution $71 1,744,000 General Plant Land & Rights $3,519,000 Structures - Frarne & Iron $337,000 Strilctures - Masonry $20,242,000 Office Furniture & Equipment $4,932,000 Con~puter Equipment $39,715,000 Transportation Equiplnent $1 1,730,000 Tool and Worlc Environn~eilt $8,645,000

1 x 1 Updated: 3/4/2007

$5,545,000 $60,995 $41 0,330 $16,635 $7,999,194 $444,813,806 $4,998,149 $1 1,09 1,974 $2,528,28 1

$1 1,408,585 $700,335,415 $6,057,455 $ 15,222,3 17 $4,292,583

$57,9 17 $3,461,083 $28,243 $74,536 $22,530 $5,546 $33 1,454 $2,705 $7,138 $2,158

$333,150 $19,908,850 5162,461 $428,747 $129,596 $81,173 $4,850,827 $39,584 $104,465 $3 1,576 $653,644 $39,061,356 $3 18,750 $841,207 $254,268 $193,057 $1 1,536,943 $94,144 $248,454 $75,099 $142,282 $8,502,718 $69,384 $1 83,1 10 $55,348

Conlnlunication Structures & Equipineat $14,487,000 Total General Plant $103,607,000 Total Plant Before General Plant & Intangible $844,993,000 Total Gross Plant in Service $948,600,000

$238,432 $14,248,568 $1 16,272 $306,850 $92,750 $1,705,201 $10 1,901,799 $831,542 $2,194,509 $663,325 $13,544,353 $83 1,448,647 $6,672,928 $17,610,5 12 $5,316,961 $15,249,554 $933,350,446 $7,504,470 $19,805,020 $5,980,286

I'reparecl By EES Consulting, Inc.



1997 Portis COSA Methodology

I Case I 2 12006 After Big White Addition 1

Accouilt Descriptioil Total Rate Basc

Less: Acc~tmuk(tterl Deprecintiorz FIydrauIic Productiott Plant $22,858,000 Transmission Plant $41,814,000 Distributiol~ Plai~t $1 14,185,000 General Plant $38,684,000

Christina Big White Main Area Lake Osoyoos l<aslo

$366,377 $22,491,623 $105,580 $409,670 $ 175,725 $550,572 $41,263,428 $1 71,064 $666,997 $284,9 12

$2,017,142 $1 12,167,858 $1,260,374 $2,797,042 $637,552 $636,675 $38,047,325 $3 10,475 $8 19,369 $247,667

CWIP $2,434,000

Total Acctrmulated Depreciation $2 19,975,000 Total Net I'lant $728,625,000

Working Capital Allowailce Sor Worlting Capital $7,509,000


$36,504 $2,397,496 $14,788 $45,464 $16,239

$3,607,271 $2 16,367,729 $1,862,282 $4,738,55 1 $1,362,095 $1 1,642,284 $716,982,716 $5,642,189 $ 3 5,066,469 $4,618,191

$1 14,399 $7,394,601 $37,143 $ 159,889 $62,466

Productioi~ Plan1 $8,712,000 Transmissio~~ Plant $23,211,000 Distrihutioil IJlailt $440;000 Services General Plant 3845,000 Plant Acquisitioil Adjust~nent & Deferred $30,155,000 'Total CWlP $63,363,000 TOTAL RATE BASE plus CWlP $728,558,766

Schedule B-5.2 I'age 2 o f 2

$139,639 $8,572,361 $40,240 $1 56,143 $66,975 $305,623 $22,905,377 $94,958 $370,25 1 $158,155

$7,773 $432,227 $4,857 $ 10,778 $2,457

$13;907 $83 1,093 $6,782 $17,898 $5,4 10 $483,353 $29,671,647 $238,135 $628;461 $ 189,745 $950,296 $62,412,704 $384,972 $l,l83:53 1 $422,742

$12,205,751 $716,353,015 $5,3 10,563 $14,687,600 $4,694,169



REVENUE REQUIREMENT COST ALLOCATION CLASSIFICATION BY CUSTOMER


Expenses

Case

2006 I Big White Main Arca Cl~ristina Lalcc Osoyoos ICaslo

Ilydraulic Power Generation


Op Supervision & Engineering Water for Power Slructures Daills & Waterways Electric Plant Other Plant Other Power Supply Purchased Power - Energy Charges Ptirchascd Power - Demand Charges

Op Supervision & Engineering System Planning 1,oad Dispatching Transmission Station Expense Ffransmission Line Mainlenancc ?'rai~smissioil TROW Maintenance Wheeling

Systein Control $71 3,000 'Total Purchased Power $67,858,660 Total Production $79,070,602 Transmission

$14,928 $698,072 $4,345 $16,940 $7,236 $1,055,348 $66,803,312 $296,917 $1,402,094 $603,378 $1,238,557 $77,832,045 $349,756 $1,607,204 $691,327

Rents $2,502,900 Total Transmission $10,851,600 Dirtribution Distiibution Line Mai~ttenailce $2,253,700 Dist~ibution ROW Mdintcnancc $1,594,500 Meter bxpcnses $905,600 Distr ibut~on Station kxpensc $831,900 St1 cct I ightmg $65,700

Supervision & Adnlinistration Meter Reading Customer Billing Credit & Collections

'632,956 $2,469,944 $ 10,240 $39,925 $17,054 $ 142,885 $10,708,715 $44,195 $173,100 $73,941

$24,689 $2,229,011 $40,567 $124,837 $1 1,269 $17,468 61,577,032 $28,701 $88,323 $7,973 $17,049 $888,551 $906 $18,112 $906 $15,785 $816,115 '66,O I6 $14,134 $10,020

865,700 8723 $4,862 $197 Other Plaiit $194,600 Total Distribtrtion s5,846,000 Total Operation & Maintenance $95,768,202 Custolner Service, Accounts, & Sales

$2,582 $192,018 $2,648 $8,618 $1,046 $77,572 $5,768,428 $79,560 $258,886 '$3 1,409

$1,459,0 14 $94,309,188 $473,7 1 1 $2,039,190 $796,676

hcintinistrative & General 1

Custoiner Assistance $1,867,400 Total Customer Service, Accounts & Sales $6,229,800 Total O&M wlo Purchased Power Supply & A&G $33,426,342

Executive & Senior Management Legal Muma11 Resources I~inance & Accounting I~lfortiiation Services Matcrials Management

$45,134 $1,822,266 $22,472 $77,464 $22,03 1 $1 50,570 $6,079,230 $74,967 $258,428 $73,498 $539,308 $32,887,034 $247,416 $878,584 $259,560

Last Updated: 3/4/2007 Sclicciule B-6 2

Page 1 of 2


Scl~edule B-6.2 FortisBC (Big White Area Brealtout)



Case

Special Scrvices


2006

Other $613,436 Adinin & General Transferred -$5,000

Big Whitc Main Area Christina Lake Osoyoos I<aslo

$10,096 $603,340 $4,923 $ 12,993 $3,927 -$82 -$4,9 18 4 4 0 -$ l 06 4 3 2

I I ansportatlon Equip~iient Expenses $778,200 Total Administrative & General $10,408,359 Total O&M plus A&G $1 12,406,361 Depreciation

$12,808 9765,392 $6,246 '% 16,483 $4,982 $170,700 $10,237,659 %83,18 1 $2 19,826 $66,557

$1,780,284 $1 10,626,077 $63 1,859 X2,5 17,444 %936,73 1

Gcncration Plailt $2,468,000 'Tra~ismission Plant $6,906,207 Ilistribution l'la~it $1 1,473,720 (;eneral Plant And Dcfcwed Cliarges $6,434,000 Total Depreciation $27,281,927 Taxes

AFUDC 11iccnlive Adjustments flicomc Tax

$39,558 $2,428,442 $1 1,400 $44,233 $18,973 $90,935 $6,815,272 $28,254 $1 10,165 $47,057

$202,690 $ 11,271,030 $126,647 $281,057 $64,063 $103,130 $6,330,870 $50,809 $134,091 $40,485 $436,3 13 $26,845,614 $2 17, I 10 $569,546 $170,579

Property $10,499,557 Total Taxes $10,499,557 Return and Income 'Taxes

$167,766 $10,331,791 $81,304 $217,109 $66,549 $167,766 $10,33 1,791 $8 1,304 $2 17,109 $66,549

Revenue Req. Before Taxes and Other Revenues Otl~er Revenlles Electric Apparatus Rental Rental oCFaciiitics Lease Revenue

Revenue Requirement Before Other Revenues $21 0,792,191

Waneta Contract Reveliue Btllliant Managelllent Fees Fortis Pacilic I-loldings Connection Charges NSI: Cheque Cliarges

$3,352,726 $207,439,465 $1,399,570 $4,557,272 $1,557,983

Sundry Revenue iilvestment Inco~ne $391,000 'Total Otfter Revenues $5,093,000 REVENlJE REQUIREMENT for COST ALLOCATION $205,699,191

$6,267 $384,733 $3,088 $8,149 $2,460 $76,668 %5,0 16,332 $57,785 6 18 1,068 634,615

$3,276,058 $202,423,133 $1,34 1,784 $4,376,204 91,523,368

Revenues - Present Rate $205,699,191

Revenue To Cost Ratio 1000% / 1164% 99 7% 83 8% 1027% 1237%

$3,814,436 $201,884,755 $1,124,202 $4,492,265 $1,884,618

Lcss Allocdted lievcnue Rcqune~nent $205,699,191

D~ffct encc

$3,276,058 $202,423,133 $1,34 1,784 $4,376,204 $1,523,368

$538,378 -%538,378 -$217,582 $1 16,061 $361,250

Schedule B-5 & B-6 Case 3 - 2026 Big White Addition and

Buildout

Prepared By EES Consulting, Inc,




Case 3 12026 Big White Addition & Buildout

Accoulit Dcscnption Total Rate Rase

Ilydraulic Prodnction Idand & Rights $120,000 St1 r~ctiti es & I~npi ovcments $1 0,337,000 Reservoirs, Dams, & Watetways $17,320,000 Wate~ Wheels, Tmbines, & Generators $47,064,000 Accessoi y Electric Equipment '$1 9,73 1,000 Misc Powel Pl'uit Equ~pmeiit $37,624,000

Lalid & Rights - R/W Land & Rights - Clcariilg Station Equipmelit Polcs 'rowcrs & Fixtures Conductors & Devices

Clirist~ila Big Whltc Mali1 Arcd 1 dice Osoyoos Icaslo

$2,930 81 17,070 $550 82,133 691 5 $252,394 51 0,084,606 $47,364 81 83,707 $78,827 $422,895 $16,897,105 $79,360 $307,808 $132,077

$1,149,142 $45,914,858 $21 5,646 $836,414 $358,895 $481,764 $1 9,249,236 $90,407 8350,656 8 150,462 $918,649 %36,705,35 1 $172,392 '$668,647 6286,908

Roads, RII, & Bridgcs $1,053,000 Total I-lydraulic Production $133,249,000 Total Production Plant $133,249,000 Transmission Plant

$25,711 $1,027,289 $4,825 $18,714 $8,030 $3,253,485 $129,995,515 $61 0,543 $2,368,079 $1,016,113 $3,253,485 $129,995,515 $6 10,543 $2,368,079 $1,016,113

Land & Riglits - R/W [,and & Rights - Clearing Station Eq~tipment Poles, Towers, & Fixtures Coliductors & Dcvices Line Transformers Seivices Mcter s Iilstallatio~i 011 Ctistoincr P~eiii~ses

Roads, Railroads & Bridges $1,056,250 Total Transn~ission Plant $255,863,006 Distribution Plant

$19,167 $1,037,083 $4,645 $18,109 $7,736 $5,690,090 $250,172,915 9; 1,125,072 $16,586,770 $1,873,837

Land & Rights Structures - Pra~nc & Iroii Stinclurcs - Maso~lry Office Furniture & Equipii~eat Computer Equipment Transportation Equipmeat Tool and Wotl< Eilvirotllneilt

Street Lights and Signal Systems $5,545,000 Total Distribution Plant $452,693,183 'Total 'rransmission & Distribution $708,556,189 General Plant

$5,545,000 $60,995 $4 10,330 $16,635 $9,893,710 $442,799,473 $5,032,823 $1 1,105,004 $2,586,773

$15,583,800 $692,972,389 $6,157,895 $27,69 1,774 $4,460,6 10

1,ast Updated: 31412007

Coinmuiiicatiol~ Str~iclures & Equipmeilt $14,487,000 Total General Pltrnt $103,607,000 Total Plant Before General Plant & Intangible $841,805,189 Total Gross Plant in Service $945,412,189

Schedule 13-5 3 Pagc I of 2

$328,458 $14,158,542 $1 17,454 $420,480 $94,704 $2,349,038 $1 01,257,962 $839,999 $3,007,157 $677,299

$18,837,285 $822,967,904 $6,768,438 $30,059,853 $5,476,723 $21,186,323 $924,225,866 $7,608,437 $33,067,010 $6,154,022

Prepared By ICES Consolting, Inc.

Scl~edule B-5.3 FortisBC (Big White Area Breakout)

RATE BASE COST ALLOCATlON C1,ASSIFICATION BY CUSTOMER


Accoulll Description Total Ratc Dasc

Less: Accumulnted Del~recintion

Case

1 Iydraulic Productioil Plant Trailsmissioii Plaiir Dis t~ibut io~~ Plant General Plant CWIP

3 12026 Big White Addition & Buildotlt

Christina Big Whilc Maiii Arca Lake Osoyoos l<aslo

. .

Adjusti~iciit for Capital Additioiis -$4,806,000 / -9'1 13,177 44,692,823 $24,397 -$I 19,154 -$36,133 Total Working Capital $2,703,000 1 $63,653 $2,639,347 $1 3;722 $67;015 $20,322

rota1 Acct~rn~rlated Depreciation $219,975,000 Tots1 Net Plant $725,437,189 Working Capital Allowan~c foi Wo~lci~lg Capital $7,509,000

Less: Net Customer Contributions 1

$4,915,619 $215,059,361 % 1,886,903 $7,147,222 $1,402,822 $16,270,684 8709,166,505 $5,721,535 $25,9 19,788 $4,751,200

$176,831 $7,332,169 $38, I 19 $186,169 $56,456

Distributioli Plailt -$66,3 32,234 Total Contributions -$66,132,234 TOTAL RATE BASE $662,007,955 CWIP Productio~i l'lanl $8,712,000 Trai~smission Plant $23,211,000 Distributiort Plant $440,000 Services General I'lant $845,000

1,ast Updated: 3/4/2007

-$428,008 -$65,704,226 -$735,226 -$1,622,288 -$377,892 -$428,008 465,704,226 -$735,226 -$1,622,288 -$377,892

$1 5,906,330 $646,101,625 $5,000,030 $24,364,5 15 $4,393,630

$212,717 $8,499,283 $39,918 $1 54,828 $66,435 $516,185 $22,694,815 $102,063 $1,504,694 $169,988

$9,616 $430,384 $4,892 510,794 52,s 14

$19,158 $825,842 $6,851 $24,526 $5,524 Plant Acquisitioi~ Adjust~llcnt & Deferred $30,155,000 Total CWIP $63,363,000 TOTAL RATI; BASE plus CWIP $725,370,955

$674,786 $29,480,214 $242,458 $1,076,799 $196,186 $1,432,463 $61,930,537 $396,18 1 $2,77 1,640 $440,647 $17,338,793 $708,032,162 $5,396,211 $27,136,155 $4,834,277


Schedule B-6.3

FortisBC (Big White Area Brealiout)



Expenses

Case

2006 I Big White Maill Area Christina 1,altc Osoyoos ICaslo

Ilydraulic Power Generation

3 12026 Big White Addition & Buildout

0 1 7 Supcrvision & Engineering Watcr for Power Strttctures $653,000 Dams &Waterways $238,600 Electric Plant $271,900 Other Plant $594,700 Other Power Supply Purchased Power - Energy Charges $56,794,885 Purchased I'owcr - Demaiid Charges $1 1,669,65 1 System Coiitrol $71 3,000 Total Purchased I'ower $68,464,535 Total I'roduction $79,676.477 Transmission Op Supervisio~l& Engineering $1,148,600 Systcm Plali~ii~lg $1,003,700 Load Dispatchilig $945,200 TI a~lsinission Station Expense $667,900 'Trans~nission Line Mainteiia~~ce $88,900 Tra~~sinissio~i TROW Maitltelia~tce $654,400 Wheeling $3,840,000 Rents $2,502,900 Total Transmission $10,851,600 Distribution Distributio~i Linc Mai~ite~la~lce Distributioli ROW Maintcnatice Metc~ I?xpenses Distlibution Statioii Expense Street Lighting

Supervisio~~ & Adiiiinistration Meter Reading C~lsto~lier Billing Credit & Collcctioiis

Ot1ier Plant $194,600 Total Distribution $5,846,000 Total Operation & Maintenance $96,374,077 Customer Service, Accounts, & Sales

$2,871 $1 91,729 $2,659 $8,628 $1,063 $86,24 1 $5,759,759 $79,868 $259,203 $3 1,922

$2,269,528 $94,104,549 $489,237 $2,389,385 $724,579

Last Updatcd: 31412007

Custoiiier Assistaiice $1,867,400 rota1 Customer Service, Accounts & Sales $6,229,800 Total O&M wlo Purchased Power Supl~ly & A&G $33,426,342 Administrative & General Lxccutivc & Selllor Mallage~lie~it $1,221,536 Legdl $5 14,582 1 luman Resoui ces $522,570 I'riiance & Account~ng $560,526 Ii~formatio~i Services $668,005 Matcr~als Manageme~it -$99,175

$69,158 $1,798,242 $22,175 $76,443 $21,741 $230,718 $5,999,082 $73,979 $255,020 $72,529 $814,634 $32,611,708 $249,669 $1,404,283 $263,986

$27,695 $1,191,841 '$9,904 $35,455 $7,985 $1 1,667 $502,915 $4,172 $ 14,936 $3,364 81 1,848 $510,722 $4,237 815,167 $3,416 $12,709 $547,817 $4,544 816,269 $3,664 $1 5,145 $652,860 $5,416 $19,389 $4,367 -$2.249 -$96,926 -%a04 -$2,879 -$648


Schedule B-6.3

FortisBC (Big White Area Brealtout)

REVENUE REQIJIREMENT COST ALLOCATION CLASSIFICATION BY CUSTOMER


2006 Other $613,436 Adtnin & Gcneral Transferred -$5,000 Special Services $3,590,370 Insurance $783,182 Mairltenance & General Plant $1,260,127

Case

Big White Main Arca Christina l,altc Osoyoos Icaslo

$13,908 $599,528 $4,973 $1 7,805 $4,0 10 -$I13 -54,887 -$4 1 -$I45 3 3 3

$8 1,403 $3,508,967 $29,109 $104,209 $23,47 1 $17,757 $765,425 $6,350 $22,732 $5,120 $28,263 $1.23 1.864 $9,939 $45.024 $8.253


Gctleration Plant Trallsrnission Plant Distribution Pla~lt

T~afisportation Equip~xent Expenses $778,200 Total Administrative & General $10,408,359 Total O&M plus A&G $ 113,012,236 Depreciation

$1 7,644 $760,556 $6,309 $22,587 $5,087 $235,677 $10,172,682 $84,108 $3 10,548 $68,057

$2,735,923 $1 10,276,3 13 $647,324 $2,954,954 $865,165

Ge~lelal Plant And D e f c ~ ~ e d Charges $6,434,000 Total Depreciation $27,197,062 Tsxes

AFUDC lllce~ltive Adjustme~lts Income 'I'ax

$1 43,975 $6,290,025 $5 1,732 $229,750 $41,859 $606,696 $26,590,366 $220,574 $997,401 $176 204

Property $1 0,464,273 Total Taxes $10,464,273 Return and Income Taxes

$234,70 1 $10,229,572 $82,532 $373,887 $68,535 $234,701 $10,229,572 $82,532 $373,887 $68,535

Return on Rate Rase $53,692,160 Total Return and Lnco~ne Tax $60,400,968

Revenue Req. Before Taxes and Otller Revennes $200,6 10,266

Other Revenues Electric Apparatus Rental $ 1,94 1,000 Rental of Facilities $61,000 Lease Rcvelluc $ 127,000 Waneta Contract Revenue $950,000 Brilliant Management Fees $414,000 Fortis Pacific I-loldings $398,000

$1,204,25 1 $52,487,909 $423,471 $1,9 18.4 15 $35 1,653 $1,354,72 1 $59,046,247 $476,383 $2,158,120 $395,592

Revenue Requirement Before Other Revenues $21 1,074,539

Connection Chargcs NSF Cheque Charges Sundry Revenue

$4,932,04 1 $206,142,498 $ 1,426,8 13 $6,484,362 $1,505,495

Invcstrnc~lt Inco~lle $391,000 Total Other IZevenues $5,093,000 REVENUE REQUIREMENT for COST AL,LOCATIOk $205,981,539


$8,750 $382,250 $3,144 $13,962 $2,544 $1 00,134 $4,992,866 $57,786 $1 94,909 $34,660

$4,83 1,907 $201,149,632 $1,369,027 $6,289,453 $1,470,835


Less Allocated Reveriue Rcqu~rcmcnt $205,981,539

D~ffel ence

Revctlue 1 o Cost Ratlo 100 0%

Schedule B-6 3 I'agc 2 of 2

$5,922,941 $200,058,598 $1,124,202 $4,492,265 $1,884,618

$4,831,907 $201,149,632 '6 1,369,027 $6,289,453 'b1 470,835

$1,091,035 -$1,091,035 -$244,824 -$1,797,188 $413,782

122 6% 99 5% 82 I'XO 714% 1281%

Schedule B-5 & B-6 Case 2 - Sensitivitv

Prepared By EES Consnlting, Inc.

Sclledule B-5.2 (Sensitivity) FortisBC (Big White Area Breakout)


1997 Fortis COSA Methodology Includes Full Assignment of Big White I'roject

Case

Roads, IZli, & Bridges $1,053,000 1 $16,878 $1,036,122 $4,864 $18,873 $8,095 Total Hydraulic Production $133.249.000 1 $2.135.768 $131 1 1 3 232 $61 5 473 R? 388 l o < el nqM7Q


Accou~lt Description Total Rate Base

'Iydraolic Productiotl Laild & Rights $120,000 Strtictures & Improve~~~c~ i t s $10,337,000 Reservoirs, Dams, & Waterways $17,320,000 Water Wheels, T~rrbines, & Gellerators $47,064,000 Accessory Electric Equip~ne~lt $19,731,000 Misc. Power Plant Equipment $37,624,000

_ , - , , rO I , "L - , , J ,O

Total Production Plant $133,249,000 1 $2,135,768 $13 1,113,232 $615,473 $2,388,195 $1,024,378 Transinission Plant

Christina Big White Main Arca Lake Osoyoos Kaslo

$1,923 $1 18,077 $554 $2,151 $923 $165,686 $10,171,314 $47,746 $185,268 $79,468 $277,612 $17,042,388 $80,000 $3 10,423 $133,151 $754,361 $46,309,639 $217,387 $843,5 18 $361,8 14 $316,256 $19,414,744 $91,137 $353,635 $15 1,686 $603,053 $37,020,947 $173,784 $674,327 $289,242

Land & Rights - RiW Land & Rights - Clcari~ig Station Equipinent Poles Towcrs & Fixtures Conductors & Devices

Land & Rights - R/W Land & Rights - Clcaring Station Equipment Polcs, Towers, & Pixturcs Co~lductors & Devices 1,irle Transformers Services Meters Iitstallatio~i 011 Ctistomer Preliiises

Roads, Railroads & Bridges $1,136,000 Total Transmission Plant $258.93 1,000 Distribution Plant

Street Lights and Signal Systems $5.545.000 Total Distribution Plant $452,813,000 Total Transmission & 1)istribution ~7 I 1 744 nnn

$330,485 $805,515 $4,647 $18,121 $7,740 $19,801,391 $239,129,609 $1,059,306 $4,130,343 $1,764,303

General Plant 1,and & Rights Structures - Fraine & Iron Structures - Masonry Officc Furniture & Cquipine~tt Cornputcr Equipnietlt 'fiansportation Cquipn~ellt Tool aiid Work Enviro~iment

Last llpdated: 3/4/2007

Co~nlnuiiicatioii Structures & Equip~neilt $14,487,000 Total General Plant $103,607,000 Total Plant Before General Plant & Intangible $844,993,000 Total Gross Plant in Service $948,600,000

Schedule 13-5 2 (Sensitivity) Page I o f2

$386,089 $14,100,9 1 1 $1 16,272 $306,850 $92,750 $2,761,198 $100,845,802 $83 1,542 $2,194,509 $663,325 $29,936,353 $81 5,056,647 $6,672,928 $ 17,610,5 12 $5,3 16,961 $32,697,552 $9 15,902,448 $7,504,470 $ 19,805,020 $5,980,286

I'repared By EES Consulting, Inc.

Scl~edule 8-5.2 (Sensitivity)

FortisBC (Big White Area Breakout)



lnclndes Fnll Assignment of Big \'Vhite Project

Case 2 /2006 After Biz White Addition 1

A c c o u ~ ~ t Description Total Rate Bas

Less: Accurnulnted De]~recintiorz IIydraulic Productiol~ Plant $22,858,000 Transmission Plant $41 ,8 14,000 Distl.ibution Plant $1 14,185,000 Gcncral Plant $38,684,000 CWlP $2,434,000

'Total Accumulated Ilenrcciation $219.975.000 Total Net Plant $728,625,000

Worliing Capital Allowai~ce for Working Capital $7,509,000

Christina Big White Main Area 1,altc Osoyoos Uaslo

Adjustrrte~it for Capital Additions -J4,806,000 Total Worliing Capital $2,703,000 Less: Net Customer Contributions

Production Plant T~.artsmission I'lant Distributiort Plailt Services Ge~lcral Plant

-$107,694 -$4,698,306 -%23,773 -Y102,334 -%39,980 $60,569 $2,642,43 1 $13,370 $57,555 $22,486

Dlsti I ~ L I ~ I O I I Plant -$66,132,234 I otal Contributions -F66,132,234

TOTAL RATE BASE $665,195,766 CWIP

Last lipdatcd. 3/4/2007

-%428,008 -%65,704,226 -$729,968 -F 1,6 19,956 -$169,249 -%428,008 -$65,704,226 -$729,968 -$I,(, 19,956 -'$169,249

$25,602,2 19 $639,593,547 $4,925,59 1 % 13,504,068 $4,27 1,427

Prepared By EES Consulting, Iuc.

Schedule B-6.2 (Sensitivity) FortisBC (Big White Area Brealtout)


1997 Fortis COSA Methodology Includes Full Assignment of Big White Project

1 Case 2 12006 After Big White Addition

Expenses

2006

Ilydranlic Power Generation Op Supervision & Etlgineeritlg $369,742 Water for Power $8,371,000 Str~ict~tres $653,000 Dams & Waterways $238,600 Electric Plant $271,900 Other Plant $594,700 Other Power Supply Purchased l'ower - Energy Charges $56,302,850 I'urchased Powcr - Delnand Charges $11,555,810

Rie White Main Area Christina Lakc Osoyoos

Sy sten1 Control $713,000 Total Purchased Power $67,858,660 Total Production $79,070,602 Transmission Op. Supervision & Engineering $1,148,600 System Plailning 6 1,003,700 Load Dispatciting $945,200 Trans~nission Station Expense $667,900 'Transmission Line Maintenance $88,900 Transmission 'TROW Maintena~lce $654,400 Wheeling $3,840,000

$14,928 $698,072 $4,345 $16,940 $7,236 $1,055,348 $66,803,312 $296,917 $1,402,094 $603,378 $1,238,557 $77,832,045 $349,756 $1,607,204 $691,327

$87,838 $ 1,060,762 $4,699 $1 8,322 $7,826 $76,757 $926,943 $4,106 $16,011 $6,839 $72,283 $872,9 17 $3,867 $15,077 $6,440 $51,077 $616,823 $2,732 $10,654 $435 1 $6,799 $82,101 $364 $1,418 $606

$50,044 $604,356 $2,677 $10,439 $4,459 $293,659 $3,546,34 1 $15,7 10 $61,254 $26,165

ICellts $2,502,900 Total 7 ransmission $1 0,85 1,600 Distribution Dlst l~but lo~~ Line Mamlena~~ce $2,253,700 Dlstl~butlon ROW Marntenattce $1,594,500 Metet Expenses $905 600 Dtstt tbut~on Stat1011 Expense $831,900 St~eet Llglttrng $65,700

$191,406 $2,311,494 $1 0,240 $39,925 $17,054 $829,861 $10,021,739 $44,395 $173,100 873,941

$24,689 $2,229,011 $40,567 $124,837 81 1,269 $1 7,468 $1,577,032 $28,701 $88,323 $7,973 $17,049 $888,55 1 $906 $18,112 $906 $15,785 $816,115 $6,016 $14,134 $10,020

$65,700 $723 $4.862 $197 Otl~er Plant $194 600 Total Distrihi~tion $5,846,000 Total Operation & Maintenance $95,768,202 Costomer Service, Accounts, & Sales Supervls1011 & A d r n ~ n ~ s t r ~ ~ t ~ o ~ l $826,400 Meter Readmg $1,701,600 Custolller Blllrng $407,900 Cledlt & Collect~ons $1,426,500

Executive & Senior Management Legal t luma11 Resourccs Finance & Accounting I~ l fo r~ua t io~~ Services Materials Mallagc~uc~~t

$2,582 '$192,018 $2,648 $8,618 91,046 $77,572 $5,768,428 $79,560 '$258,886 $31,409

$2,145,99 1 $93,622,2 l 1 $473,7 1 1 $2,039,190 $796,676

$19,973 $806,427 $9,945 $34,28 1 89,750 $40,876 f 1,660,724 $20,352 $70,158 $19,953 $9,799 $398,101 $4,879 8 16,8 1 8 $4,783 $34,787 $1,391,713 $17,320 $59,707 $16,98 1

Custoll~er Assistallce $1,867,400 lo ta l Custonter Service, Accoui~ts & Sales $6,229,800 Total O&M wlo Purchased Power Supply & A&G $33,426,342 Administrative & General


$45,134 $1,822,266 $22,472 $77,464 $22,03 1 $150,570 $6,079,230 $74,967 $258,428 $73,498

$1,226,284 $32,200,058 $247,416 $878,584 $259,560

Scllcdulc B-6 2 (Sensitivity) Pagc I of 2

I'repared By EES Consulting, Inc.

Schedule B-6.2 (Sensitivity) FortisBC (Big White Area Brealtout)



Expenses

Case 2 12006 After Big White Addition

2006 Other $613,436 Ad~niii & Gcncral Transferred -$5,000 Special Services $3,590,370 I~isurailcc $783,182 Maillte~la~lce & General I'lant $1,260,127 Trallsportatioll Equipme~it Expenses $778,200 Total Ad~ninistrative & General $10,408,359 Total O&M plus A&G $1 12,406,361 Depreciation (ieneration Plarit $2,468,000 'Transmission Plant $6,906,207 Distribution Plant $1 1,473,720 General Plant And Dcfcrred Charges $6,434,000 Total Depreciation , . $27,281,927 1 axes

Al:1IDC Iricci~tive Adjustments I~lcoinc Tax

Big Wliite Maiii Arca Christina Laltc Osoyoos Kaslo

$1 6,348 $597,088 $4,923 $12,993 $3,927 -$I33 -$4,867 -$40 -$I06 -$32

$95,686 $3,494,684 $28,83 6 $76,048 $22,987 $20,872 $762,3 10 $6,286 $ 16,589 $5,0 14 $44,913 $1,215,214 $9,758 $26,057 $7,987 $20,740 $757,460 $6,246 6 16,483 $4,982

$288,720 $10,119,639 $83, l81 $219,826 $66,557 $2,585,281 $109,821,080 $63 1,859 $2,517,444 $936,731

$39,558 $2,428,442 $1 1,400 $44,233 $18,973 $528,143 $6,378,065 $28,254 $1 10,165 $47,057 $202,690 $1 1,271,030 $ 126,647 $28 1,057 $64,063 $227,943 $6,206,057 $50,809 $134,09 1 $40,485 $998,334 $26,283,593 $21 7,1 10 $569,546 $1 70,579

Properly $ 10,499,557 Total Taxes $10,499,557 Return and 1ncor11e Taxes

$374,225 $10,125,332 $81,304 $2 17,109 $66,549 $374,225 $10,125,332 $8 1,304 $2 17,109 $66,549

Electric Apparatus Rental Rental of Facilities Lease Revenue Wailcta Colltract Revenue Brilliarit Management Fees Pollis I'acific IIoldi~lgs Co~t~iectiotl Charges NSF Cheque Charges Sundry Revenue

I<evenue Requirement Before Other Revenues $210,792,191

Revenue Req. Before 'Taxes and Other Revenues $200,292,634

Other Revenires

$6,117,900 $204,674,291 $1,399,570 $4,557,272 '$1,557,983

$5,743,675 $194,548,959 $1,3 18,265 $4,340,163 $ 1,491,434

Invcatmcnt 111coii1e $391,000 Total Other Revenues $5,093,000 REVENIlE REQUIREMENT for COST ALLOCATION $205,699,191


$13,852 $377,148 $3,088 $8,149 $2,460 $95,211 $4,997,789 $57,785 $18 1,068 $34,615

86,022,689 $199,676,502 $1,341,784 $4,376,204 $1,523,368


Less Allocated Revenue Requ~ieineiit $205,699,19 1

Ditfercnce

Revenue To Cost Rdt~o 100 0%

Scliedulc B-6 2 (Sciisitivity) Page 2 01'2

$3,814,436 $201,884,755 $1,124,202 64,492,265 $1,884,618

$6,022,689 $1 99,676,502 $1,34 1,784 $4,376,204 $1,523,368

-$2,208,253 $2,208,253 4217,582 $1 16,06 I $36 1,250

63 3% 101 1% 83 8% 1027% 1237%

Schedule B-5 & B-6 Case 3 - Sensitivity

Prepared 13y EES Consolting, Inc.

Schedule B-5.3 (Sensitivity)

FortisBC (Big Whi te Area Brealtout)



Includes FnII Assignment of Big Wl~ite Project

Case 3 12026 Big White Addition & Buildout

Accourit Description Total Rate Base

Hydraulic Production Land & Rights $120,000 Structures & Irnprovcrnei~ts $1 0,337,000 Reservoirs, Dams, & Waterways $17,320,000 Water Wheels, Turbines, & Generators $47,064,000 Accessory Elcctric Equipment $19,73 1,000 Misc. Power Plant Equipment $37,624,000

Christina 13ig Wllite Main Area Lalcc Osoyoos I<aslo

$2,930 $1 17,070 $550 $2,133 $915 $252,394 $10,084,606 $47,364 $183,707 $78,827 $422,895 $1 6,897,105 $79,360 $307,808 $132,077

$1,149,142 $45,914,858 $2 15,646 $836,414 $358,895 $481,764 $19,249,236 $90,407 $350,656 $150,462 $91 8,649 $36,705,35 1 $1 72,392 $668,647 $286,908

Roads, RR, & Bridges $1,053,000 Total Hydraulic Prodnction $133,249,000 Total Production Plant $133,249,000 Transmission Plant

Land & Rights - RIW Land & Rights - Clcari~ig Station Equip~ncilt Boles, Towers, & Fixtures Conductors & Devices Line l'ransfom~ers Services Mctcrs Installation on Custoiucr Prclnises

$25,711 $1,027,289 $4,825 $18,714 $8,030 $3,253,485 $129,995,515 $6 10,543 $2,368,079 $1,016,113 $3,253,485 $129,995,5 15 $610,543 $2,368,079 '$1,016,113

Land & Rights - R/W $8,883,400 Land & Rights - Clearing $6,589,600 Station Equipment $1 19,545,800 Polcs Towers & Fixtures $59,928,556 Col~ductors & Dcvices $59,859,400 Roads, Railroads & Bridges $1,056,250 Total Trans~nission Plant $255,863,006 Distribution Plant

$1,970,477 $6,912,923 $39,062 $152,306 $65,058 $2,327,982 $4,26 1,618 $28,976 $1 12,979 $48,260 $6,020,155 $1 13,525,645 $525,663 $5,639,612 $875,505 $4,264,828 $55,663,727 $263,516 $9,637,475 $438,893 $4,172,236 $55,687,164 $263,212 $1,026,289 $438,386 $258,4 17 $797,833 $4,645 $18,109 $7,736

$19,014,096 $236,848,910 $1,125,072 $16,586,770 $1,873,837

1,aild & Rights Structures - Frame & Iron Strt~ctures - Masonry Office Furi~iture & Equipmei~t Computer Equipment Tlansportatioll Equipment 7'001 and Worlc E~iviron~ne~lt

St~eet L1g11ts and S~g~ra l Syste~lls $5,545,000 Total Distribution Plant $452,693,183 fatal Transmission & Distribution $708,556,189 General Plant

$5,545,000 $60,995 $410,330 $16,635 $9,893,710 $442,799,473 $5,032,823 $1 1,105,004 $2,586,773 E28,907,806 $679,648,383 $6,157,895 '$27,69 1,774 $4,460,610


Coma~unicatiort Structures & Equipment $14,487,000 Total General Plant $103,607,000 Total Plant Before General Plant & Intangible $841,805,189 Total Gross Plant in Service $945,412,189

Schedule 13-5 3 (Scnsitivity) Page 1 012

$449,917 $14,037,083 $1 17,454 $420,480 $94,704 $3,217,683 $100,389,317 $839,999 $3,007,157 $677,299 $32,161,290 $809,643,898 $6,768,438 $30,059,853 $5,476,723 $35,378,973 $910,033,215 $7,608,437 $33,067,010 $6,154,022


Schedule B-5.3 (Sensitivity) FortisBC (Big White Area Brealiout)



I Case I 3 12026 Big White Addition & Buildout I

Account Descriptio~i Total Rate Basc

Less: Accunzulnterl Depreciation I-lydri~ulic Production Plant $22,858,000 Transi~iission Pla~il $41,814,000 Distribution I'laiit $1 14,185,000 Ge~leral Plant $38,684,000 CWIP $2,434,000

Adjustrne~~t for Capital Additions -$4,806,000 1 -$141,357 -$4,664,643 424,397 -$I 19,154 $36,133 Total Working Capital $2,703,000 1 $79,503 $2,623,497 $13,722 $67,015 $20,322

Christina Big While Main Arca Laltc Osoyoos Kaslo

$558,1 14 $22,299,886 $104,735 $406,229 $ 174,308 $3,107,348 $38,706,652 $183;863 $2,7 10,666 $306,229 $2,495,539 $1 1 1,689,461 $1,269,454 S2,80 1,069 $652,474 $1,201,394 $37,482,606 $3 73,633 $1,122,790 $252,885 $120,063 $2,3 13,937 $15,219 $106,469 $16,927

Total Accumulated Depreciation $219,975,000 Total Net I'lant $725,437,189

Worlting Capital Allowailce foi Woilclng Capital $7,509 000

I,ess: Net Customer Contributions I

$7,482,458 $212,492,542 $1,886,903 $7,147,222 $1,402,822 $27,896,515 $697,540,674 $5,721,535 $25,919,788 $4,75 1,200

$220,860 $7,288,140 $38,1 19 R 186,169 %56,456

CWIP I'roductioti I'lant $8,712,000 Transmission Plant $23,211,000 Distributio~i Plant $440,000 Services Gciicral Plant $845,000 Plant Acouisitio~i Adiustment &i Deferred $30.155.000

Distribution I'la11t -$66,132,234 Total Contributions -$66,132,234 TOTAL RATE BASE $662,007,955

Total CWIP $63,363,000 TOTAL RATE BASE olus CWIP $725.370.955

-$428,008 665,704,226 -$735,226 -$1,622,288 -$377,892 -$428,008 465,704,226 -$735,226 -$1,622,288 -$377,892

$27,548,0 10 $634,459,945 $5,000,030 $24,364,5 15 $4,393,630

Last Updated: 3/4/2007 Schcdulc B-5 3 (Sensitiv~ty) Page 2 of 2


Schedule B-6.3 (Sensitivity) FortisBC (Big White Area Breakout)

Expenses

REVEIVUE REQUIREMENT COST ALLOCATION CLASSIFICATION BY CUSTOMER


Case

Op Supervision & Engineering Water for Power Structures Dams & Waterways Electric Plant Otl~cr Plant Other Power Supply Purcliased Power - Energy Charges Pui chased Power - Demand Charges


2006 I-lydraulic Power Generation

Big White Main Area Christina Lake Osoyoos Kasio

Op Supervision & Engineering System Planning Load Dispatching 'I'ransniissio~~ Station Expensc Transmission Line Maintenance Trails~uission TROW Maintcnancc Wheeling

System Control $713,000 Total Pl~rchased Power $68,464,535 Total Production $79,676,477 Transmission

$24.389 $688,611 $4,571 $17,823 $7,613 $1,661,223 $66,803,312 $308.975 $1,222,299 $525,509 $1,941,961 $77,7343 17 $361,652 $1,426,708 $613,184

Distribution Line Maintenance Distribution ROW Maintenance Meter Expcnscs Distribotio~t Station Expense Street 1,ighting

Rents $2,502,900 Total Transmissio~~ $l0,85 1,600 Distribution

$1 85,999 $2,3 16,901 $11,006 $162,255 $ 18,330 $806,421 $10,045,179 $47,7 16 $703,474 $79,473

Supervision & Ad~iiinistration Meter Reading Custorner Billing Credit & Collections

Other Plant $194,600 Total Distribution $5,846,000 Total Operation & Maintenance $96,374,077 Customer Service, Accounts, & Sales

$2,871 $191,729 $2,659 $8,628 $1,063 $86,241 $5,759,759 $79,868 $259,203 $3 1,922

$2,834,623 $93,539,455 $489,237 $2,389,385 $724,579

i td~ni~~istrative & General 1

Customer Assistance $1,867,400 Total Customer Service, Accor~nts & Sales $6,229,800 Total O&M w/o I'urchased Power Supply & A&G $33,426,342

Executive & Senior Mai~ageinent Legal Human Resources Finance & Accounting Itiforillation Services Materials Manageinent

$69,158 $1,798,242 $22,175 $76,443 $21,741 $230,718 $5,999,082 $73,979 $255,020 $72,529

$1,379,728 $32,046,614 $249,669 $1,404,283 $263,986

Last Updated: 31412007 Schcdulc B d 3 (Sensitivity)

Page I o f 2

Prepared By EES Consiilting, Inc.

Schedule B-6.3 (Sensitivity) FortisBC (Big White Area Breakout)

REVENUE REQUIREMENT COST ALLOCATION

Expenses

CLASSIFICATION BY CUSTOMER 1997 Fortis COSA Metl~odology

Includes Full Assignment of Big White Project

2006 Otlier $613,436 Adniin & General Transferred -$5,000 Special Selv~ces $3,590,370 Insul ante $783,182 Maintenance & General Plant $1,260,127

Case

Big White Maill Area Christina Lalic Osoyoos ICaslo

$19,05 1 $594,385 $4,973 $17,805 $4,010 -$I55 -$4,845 -$4 1 -$I45 4 3 3

$1 1 1,505 $3,478,865 $29,109 $104,209 $23,47 1 $24,323 $758,859 $6,350 $22,732 $5,120 $48,458 $1,211,669 $9,939 $45,024 $8.253


Generation I'lant rl'rans~nissio~i Plant Distribution I'la~~t

'I lalispor tatloll Equlpmcnt Expenses $778,200 Total Administrative cSr General $10,408,359 Total O&M plus A&G $1 13,012,236 Depreciation

$24,168 $754,032 $6,309 $22,587 $5,087 $332,571 $10,075,788 $84,108 '$310,548 $68,057

$3,397,911 $109,614,325 $647,324 $2,954,954 8865,165

General Plant And Deferred Charges $6,434,000 Total Depreciation $27,197,062 Taxes

AFUDC Irrcentivc Adjustments Income Tax

$245,812 $6,188,188 $51,732 $229,750 $41,859 $1,063,910 $26,133,15 1 $220,574 $997,401 $176.204

I'ropcrty $10,464,273 Total Taxes $10,464,273 liett~rn and Income Taxes

$402,401 $10,06 1,872 $82,532 $373,887 $68,535 $402,401 $10,061,872 $82,532 $373,887 $68,535

Return on Rate Base $53,692,160 Total Return and Income Tax $60,400,968

Elcctric Apparatus Rental Rcntal of Facilities Lease Revenue Waneta Contract Revenue Brilliant Management Pees Fortis Pacific [Holdings Connection Charges NSF Cheque Cltarges Sundry Revenue

$2,064,719 $51,627,440 $423.471 R 1,918,415 $351,653 $2,322,705 $58,078,263 $476,383 $2,158,120 8395,592

Revenue Requirenlent Before Other lievenues $21 1,074,539

Reveeue Req. Before Taxes and O t l ~ e r Revenues $200,610,266

Other Revenues

$7,186,928 $203,887,6 11 $1,426,813 $6,484,362 $1,505,495

$6,784,527 $193,825,739 $1,344,281 $6,1 10,474 S1,436,960

Investlnellt Income $391,000 Total Other Revenues $5,093,000 REVENUE REQUIREMENT for COST ALLOCATIOh $205,98 1,539

$14,938 $376,062 $3,144 $13,962 82,544 $1 15,304 $4,977,696 $57,786 $194,909 $34,660

$7,07 1,624 % 198,909,915 $1,369,027 86,289,453 $1,470,835


Rcvellue To Cost Ratio 100.0% 1 83 8% I00 6% 82 1% 71.4% 128.1%

$5,922,94 1 $200,058,598 $1,124,202 $4,492,265 $I,884,6 I8

Less Allocated Revenue Requiretnent $205.981,539

DiSlcrence


$7,071,624 $198,909,915 $1,369,027 $6,289,453 $1,470,835

-$1,148,683 $1,148,683 -$244,824 -$1,797,188 $41 3,782

Schedule B-6 3 (Sensitivity) I'age 2 of 2

Schedule B-7 & B-8 Load Data

Scehdule B-7 FortisBC (Big White Area Brealiout)

I'repareil By EES Consulting, Inc.

RECORDED CIJSTOMERS AND ENERGY SALES INPUT RECORDED DEMANI), ENERGY AND CUSTOMER INFORMATION

Big White Rig Wllite 9 10 I I 12 13 1 otal rota1

h u r n b c ~ of Customels I Seiv~ces Total B I ~ Whrte Mail1 Atea Cl~iistinn Lake Osoyoos ]<aslo 2010 2026

Ian-06 100,320 1,701 98,6 19 1,180 3,943 I 145 2,110 1,618 Peb-06 100,438 1,716 98,722 1,186 1,976 1,152 2,150 3,650 Mal-06 100,699 1,756 98,943 1,191 4,035 1,157 2,405 3,715 Apl-06 100,841 1,758 99,085 1,198 4,080 1,165 2,408 3,719

May-06 101,224 1,785 99,439 1,212 4,142 1,174 2,445 1,796 Jun-06 101,457 1,809 99,648 1,234 4,216 9 6 2,478 1,848 Jnl-06 101,770 1,827 99,941 1,244 4,313 1,208 2,502 1,886

Aug-06 101,238 1,840 99,398 1,261 4,179 1,216 2 520 1,917 Sep-06 101,374 1,857 90,517 1,274 4,458 1,267 2,544 1,950 Oct-06 101,609 1,890 99,719 1,286 4,51 1 1,287 2,589 4,020

Nov-06 101,944 1,914 100,030 1,294 4,575 1,295 2,622 4,071

Total Avci age

k wh Sales at the Meter

Load Data And Clrstomer Sales By Rate Class

-- IZecordcd Yesr --

Big White Big White Pro.jection Projectiorr

Total l31g White Mali1 A ~ e a Chlrstlna Lake Osoyoos I<aslo 2010 2026

J,i11-06 141,584,083 8,s 15,458 134,768,625 3,160,652 7,226,009 1,284,182 12,074,748 10,Z 14,381

Total Sales

kwh @, Input Voltage

RECORDED lW11 AT INI'IIT l31g White I31g Wlritc

'Fotai Big White Miin Area Christina Lake Osoyoos I<aslo 2010 2026

Jan-06 384,322,240 9,860,691 374,461,549 3,535,405 8,082,784 3,673,582 13,506,429 11,537,338

Total

Last Updated: 3/4/2007 Sclredulc 0-7 Page I of' 1

Scehdule B-8 PortisBC (Big White Area Brealiout)

Prepmeetl Ry EES Consulting, Inc.

Rate Class NCP @ Meter (kW) Blg White Mdin Aiea Chr~st~na Lake O~oyoos [<aslo

Jan-06 1 1,279 524,416 4,496 17,53 1 7,488

Rate Class NC'P @] lPlllnat y Voltage (IcW) Big White M'lin A ~ e a Clr~~st~naLal<e Osoyoos I<aslo

Llne Losses: 7 60% 7 60% 7 60% 7 60% 7 60% Jan-06 12,136 564,272 4,351 9,948 4,521 Feb-06 12,213 587,087 2,070 49,126 24,617 Ma]-06 11,068 521,881 1,005 7,381 1,150 Apt-06 8,689 452,515 1,193 25,104 14,702

May-06 4,330 451,612 1,456 7,383 1,571 Ju~i-06 4,110 504,039 82 1 22,482 10,761 Jnl-06 2,155 536 417 1,950 4,740 1,561

hug-06 2,155 465,544 852 29,807 8,769 Sep-06 2,883 420,000 4,222 9,428 2,382 Oct-06 6,466 459,942 1,688 62,181 2 1,248

Nov-06 1 1,126 686,194 5,164 12,45 1 5 202

Maximum Dcc-06 14,932 61 7,922 1,493 49,581 27,044

14,932 686,194 5,364 62.183 27,944 Big Wlxite B I ~ White I'iolect~on P~oject~on

Rate Clays NCP @ Input Voltdge (I#) Blg Wh~te Mali1 Aiea Clii~stinaI ake O ~ o y o o ~ I<aslo 2010 2026

Llne Losses: 3 00% 3 00% 100% 1 0 0 % 3 00% Jail-06 12,500 581,200 4,482 10,246 4,657 16,486 27,104 Feb-06 12,600 604,700 2,132 50,600 25,176 16,618 27,521 Mar-06 1 1,400 539,600 1,095 7,605 3,115 1 15,035 24,901 Apl-06 8,950 466,090 1,229 26,061 15,143 I 1,804 19,550

May-06 4,460 465,160 1,500 1,485 1,621 5,882 9,742 Jua-06 4,460 519,160 846 21,157 1 1,086 5,882 9,742 JnI-06 2,220 552,510 2,008 4,882 1,608 1,143 6,142

Aug-06 2,220 479,510 878 10,702 9,011 3,141 5,608 Sep-06 2,970 432,600 4,149 9,7 11 2,454 3,917 6,487 Oct-06 6,660 473,740 1,718 64,048 21,885 8,784 14,548

Nov-06 1 1,460 706,780 5,525 12,824 5,158 15,l 14 25,012 D ~ L - 0 6 15,380 636,460 1,538 51,068 28,782 20,284 17,595

15,380 706,780 5 525 64,048 28,782 20,284 33,595

Ulg Whlte Big Wli~te 1'1olection I'tolccllo~i

Maximum

Coincident Peali (CP) @> Input (liW) Total Dig Wllite Main Area Christina Lalte Osoyoos I<aslo 2010 2026

Jan-06 591,000 9,800 581,200 3,514 8,033 3,651 12,925 2 1,406

To ta l Peak Month

Schedule B-8 Page 1 of' I

Schedule B-9 Revenue

Schedule B-9 FortisBC (Big White Area Breakout)


FORECAST OF REVENUES FROM CURRENT RATES


Big Whitc Big White Prqjection I'rojection

Total Revenues Total Big W11itc Main Area Christina L,al<e Osoyoos I<aslo 2010 2026

Schcdulc 13-9 Page 1 of 1

Jan-06 $20,963,960 Fcb-06 $1 8,647,8 17 Mar-06 $19,181,082 Apr-06 $17,038,280

May-06 $15,734,536 Sun-06 $13,817,511 Jul-06 $15,3 17,427

Aug-06 $15,511,518 Sep-06 $1 5,647,055 Oct-06 $14,059,732

Nov-06 $15:996,897 Uec-06 $21,446,185

$605,362 $20,358,598 $227,152 $5 10,954 $223,460 $829,180 $1,287,525 $102,978 $1 8,544,839 $ 16,805 $4 1 1,782 $200,893 $141,052 $219,021 $630,344 $1 8,550,738 $187,279 $449,225 $195,244 $863,398 $1,340,658 $104,275 $16,934,005 $14,025 8321,698 $177,154 $142,828 $22 1,779 $427,033 $1 5,307,503 $153,173 $347,270 $1 52,766 $584,9 17 $908,242

$52,929 $1 3,764,582 $8,723 $251,591 $1 15,733 $72,498 $1 12,573 $183,958 $15,133,469 $1 50,276 $352,091 $1 15,099 $25 1,972 $391,255 $32,974 $1 5,478,544 $9,773 $330,114 $101,919 $45,165 $70,131

$1 53,222 $15,493,833 $181,184 $394,941 $1 03,719 $209,871 $325,882 $38,807 $14;020,925 $7,864 $29 1,89 1 $101,677 $53,154 $82;537

$310,352 $1 5,686,545 $154,048 $349,502 $1 40,701 $425,097 $660,077 $142,586 $21,303,599 $13;902 $48 1,206 $256,251 $195,303 $303,261

Subtotal $203,362,000 $2,784,820 $200,577,180 $1,124,202 $4,492,265 $1,884,618 $3,814,436 $5,922,941

Schedule B-10 -- Power Supply

Schedule B-10 ForGsBC (Big White Area Breakout)

Plepaxed R) ITS finsolhng, Inr.

Test Date:

PURCHASED POWER SlJPPLY

2006

. - Purchased Pnlrcr S ~ ~ p p l y Jan-06 Feb-06 Mar-06 Apr-06 May-06 Jun-06 Jul-06 Aug-06 Sep-06 Oct-06 Nov-06 Dec-06 Totals Fnergy Charges $5,952,600 $4,955.016 $5,001,673 34.433.572 $3.783.248 $3.676.769 $3.792.702 $4 436 696 $3 716 138 S4 466 469 R i 844 701 $6 1 1 1 017 $56 17n I?!?

Total Syctem kT\h Big White k\I% Main Area k\Vh Blg White kW1 .\llocnt~on Man Aiea k\Vh '\llocntion Big \%hire k\Vh Costs Main Aiee kWh Cmts

Capac~ty Charges Totai System CP kW Big White CP kW \fain Area CP kW Big \mite kW hilocation Vain Aiea kW Allocsnm Big \%l~lrite k\V Cosrr ,Main Aiea kW Costs

Total Anrrual Comhined Cocrc Energy % Demand %

Big White E n e r a % Big While Demand %

Adjusted Big White Energy - for bi-mnnthly billing)

B1g White kP% - icportcd Big White kWh - avcregcd

98 3% $83,057

54,871,959

$1,023,666 616,000

11,300 604,700

1 8% 98.2%

$18,778 $1,004,888

Net Cost $67,576,000 $56,062,582 S11,513,418

Reported 11330%

.\dditional Poacr Supply Costs for Big \T1hite Gn-owth 2010 .!ddcd k\T% nr input 14,984,527 S240,268 Added CP kW 23,990 542,392

2026 Added kWli at inptii

Added CP kW

Schedule B-1 1 Cost Recoverv Calculation


Schedule B-11 PortisBC (Big White Area Brealtout)

Cost Recovery Calculations


2006

2007

2008

2009

201 0

201 1

2012

2013

2014

201 5

2016

2017

2018

20 19

2020

202 1 2022

2023

2024

2025

2026

NPV 10 0%

Schedule B-7 Page 1 of 1

lipfiont Paytnetlt

100% Goal 90% Goal

Revenue Rcvenue

Defic~cncy Deficiency

0 0

0 0

0 0

(2,208,253) (1,605,984)

(2,109,328) (1,503,773)

(2,010,402) (1,401,562)

(1,911,476) (1,299,351)

(1,812,551) (1,197,139)

(1,713,625) (1,094,928)

(1,614,700) (992,717)

(1,515,774) (890,506)

(1,416,848) (788,295)

(1,3 17,923) (686,083)

(1,218,997) (583,872)

(l,120,071) (481,661)

(1,021,146) (379,450)

(922,220) (277,239)

(823,295) (175,027)

(724,369) (72,816)

(625,443) 29,395

(9,846,337) (6,101,647)

I ,ine Extcnston pet Customer

100% Goal 90% Goal

Number of Defic~cilcy Deficicilcy

Customers per Customer per Customer

2,486 (8x8) (646) 2,572 (820) (585) 2,658 (7 5 6) (527) 2,744 (697) (474) 2,830 (641) (423) 2,9 16 (588) (376) 3,002 (538) (331) 3,087 (491) (288) 3,173 (446) (248) 3,259 (404) (21 1) 3,345 (3 64) (175) 3,43 1 (326) (140) 3,517 (290) (108) 3,603 (256) (77) 3,689 (223) (47) 3,775 (1 92) (19) 3,860 (1 62) 8

Avei age (4,620) (2,927) NI'Vl2026 Cust (2,551) (1,581)

Rate Suichaige per k w h

100% Goal 90% Goal

kWh 1)clicicncy Deii~iency

at the Mctcr per ItWh pcr 1<Wh

49,629,014 ($0 0445) ($0 0324)

51,343,603 ($0 041 1) ($0 0293)

53,058,193 ($0 0379) ($0 0264)

54,772,782 ($0 0349) ($0 0237)

56,487,37 1 ($0 0321) (60 0212)

58,201,961 ($0 0294) ($0 0188)

59,916,550 ($0 0269) ($0 0166)

61,631,139 ($0 0246) ($0 0144)

63,345,729 ($0 0224) ($0 0124)

65,060,3 18 ($0 0203) ($0 0105)

66,774,907 ($0 0183) ($0 0087)

68,489,496 ($0 0164) ($0 0070)

70,204,086 ($0 0 145) (SO 0054)

71,918,675 ($0 0128) ($0 0039)

73,633,264 ($0 01 12) ($0 0024)

75,347,854 ($0 0096) ($0 0010)

77,062,443 ($0 0081) $0 0004

Avciage ($0 0238) ($0 0138)

Schedule B-12 Classification & Allocation Factors

Schedule B-12 FortisBC (Big White Area Breakout)


CLASSIFICATION AND ALLOCATION BY CUSTOMER

Forecast Year: 2006

Christina

CP2 CPS CP12 TCP 1 TCP2 TCPS TCP 12 NCP NCPP NCPS kwh CUST CUSTW CUSTM MINSYSP MINSYSC MINSYST 100%DP 100%DC 100%DT DA 1 RBG RBT RBD RBGP OM OMAG OMG OMT OMD MARKET GPLT NETPLT TOTCST OMP OMWOP LABOR WEIGHTED kwh PURCHltWh PURCI-IltW

Last Updated: 3/4/2007 Schedule B- 12 Page 1 of 1

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