2007 11 19 RDA III IRs 1 Public … · ending June 30, 2008 are $0.3185 for CCPC and QCPC and $0.3737 for SNPC (Exhibit A2-3). 5.1 Please summarize the detailed assumptions used inthe

Joanna Sofield Chief Regulatory Officer Phone: (604) 623-4046 Fax: (604) 623-4407 bchvdrore~u la to~ero~~p~bchvdro .cnm

November 19.2007

Ms. Erica M, Hamilton Commission Secretary British Columbia Utilities Commission Sixth Floor - 900 Howe Street Vancouver, BC V6Z 21\13

Dear Ms. Hamilton:

RE: Project No. 3698455 British Columbia Utilities Commission (BCUC) British Columbia Hydro and Power Authority (BC Hydro) 2007 Rate Design Application - Phase III Zone I1 Special Contract Rate Application (the Application)

Please find attached, as exhibit B-11 I, BC Hydro" responses to BCUC and Heiltsuk Information Requests No.1.

Please note that, as requested by the BCUC, the response to BCUC IR 1.8.1 is being filed with the BCUC on a confidential basis. BC Hydro is also filing the response to BCUC 1R 1.3.2 on a confidential basis, as the information contained in this response identifies by name customers whose load may have been greater than 45 kVA during F2007. Release of this information would effectively make public confidential consumption information of some Zone II customers.

BC Hydro has long treated customer billing information as confidential. In addition, BC Hydro notes that it is subject to the provisions of the Freedom of Information and Protection of Privacy Act. Section 21 of that Act states, in essence, that BC Hydro must not disclose information that would reveal commercial or financial information, of or about, a third party, if the disclosure would reasonably by expected to harm significantly the competitive position of the third party.

For further information please contact Mr. Fred James at 604-623-431 7

Yours sincerely,

Joanna Sofield Chief Regulatory Officer

Enclosure

B r ~ t ~ s h Columb~a Hydro and Power Authority, 333 Dunsrnufr Street, Vancouver BC V6i3 5R3 w .bchyd ro .com

B-111

bharvey

BCH Rate Design - Phase III

REQUESTOR NAME: British Columbia Utilities CommissionINFORMATION REQUEST ROUND NO: 1TO: BRITISH COLUMBIA HYDRO & POWER AUTHORITYDATE: October 26, 2007PROJECT NO: 3698455APPLICATION NAME: 2007 Rate Design Application - Phase III

1.0 Reference: Exhibit B-I05-1 Zone II Special Contract Rate Application, Cover Letter p. 1;Appendix F Terms and Conditions; Electric Tariff, p. C-24

In the Cover Letter, BC Hydro states that it is applying, pursuant to Sections 58 to 61 of the UCA, torevise its Electric Tariff to specifically remove from the Terms and Conditions contained in the ElectricTariff the section that permits BC Hydro to place those customers in Zone II, whose demand is or islikely to be in excess of 45 kVA, on a Special Contract.

Appendix F in the Application provides the proposed Seventh Revision of Page B-35 of the ElectricTariff.

1.1 Please comment if the Special Condition #2 on page C-24 of the Electric Tariff, which states that"Where the customer's demand is or is likely to be in excess of 45 kV.A, then B.C. Hydro mayrequire that supply to such customers be by special contract ... ", should be revised in a mannersimilar to page B-35. If not, please explain why not.

2.0 Reference: Exhibit B-I05-1 Zone II Special Contract Rate Application, Cover Letter p. 1;Appendix A Commission Order No. G-84-07; Appendix G Special Contracts to beCancelled; Electric Tariff, p. B-36 (Sixth Revision)

In the Cover Letter, BC Hydro states that it is applying to have the interim Special Contract rate of$0.1769 per KWh (as per BCUC Order No. G-84-07) made permanent for the period from June 1,2007to November 1,2007, or the effective date of the order granting this relief, whichever is later.

In the Cover Letter, BC Hydro also states that it plans to place those Special Contract customers listed inAttachment B onto Rate Schedule 1255 - Zone II General Service >35 kW (RS 1255), effectiveNovember 1,2007.

2.1 Please describe the basis for adopting November 1, 2007 as the end-date for the interim rate to bemade permanent.

2.2 Please comment on the usefulness of cancelling those Special Contract Tariff Supplements onone hand and transferring those customers to RS 1255 on the other hand where the customers aresubject to the RS 1255 Tariff's Special Conditions: where demand in excess of 45 kV.A could besubject to special contract by BC Hydro.

2

3.0 Reference: Exhibit B-I05-1 Zone II Special Contract Rate Application, Cover Letter pp. 2,4;Electric Tariff, p. B-35

The Cover Letter describes that BC Hydro, in accordance with the Tariff, "may" require a customer inZone II whose demand is or is likely to be in excess of 45 kVA, or who is an IPP, to be placed on SpecialContract.

3.1 What is, or was, the basis for the 45 kVA cutoff point for Special Contracts?

3.2 The Tariff allows but does not require BC Hydro to put Zone II customers with loads greater than45 kVA to be served under a Special Contract. Please provide a list of customers in Zone IIwhose demand is or is likely to be in excess of 45 kVA but has not been placed by BC Hydro onSpecial Contract.

3.3 Please provide reasons for not placing those Zone II customers whose expected loads are greaterthan 45 kVA on Special Contract.

3.4 Rather than eliminating that tariff provision as BC Hydro proposes on page 4, would the interestsof new Zone II customers and other customers be better protected by increasing the threshold forSpecial Contracts to capture only the very largest loads (e.g., such as might be required for amajor resource extraction operation)?

4.0 Reference: Exhibit B-I05-1 Zone II Special Contract Rate Application, Cover Letter pp. 2, 5Rates for End-Use Special Contracts

The Cover Letter states that between 1991 to 1998, BC Hydro's practice in setting rates for SpecialContracts in Zone II resulted in a unique electricity rate for each district.

The Cover Letter also states on page 2 that Tariff page B-13-1 also affords some protection to BC Hydroand its ratepayers from large potentially uneconomic customers in that it requires new customers to payfor the entire estimated construction cost of the extension, plus the present value of the net operating andmaintenance costs, and taxes as included in BC Hydro's System Extension Test.

4.1 Is BC Hydro able to confirm that before the calculation of the annual rate was revised in June1998 to be based on the average unit cost of all Zone II diesel generating stations, there wereonly eight customers served under the Special Rates? If not, please provide the actual number ofSpecial Contract customers as at end-1997.

4.2 Does BC Hydro have a projection of the number of large general service customers in Zone II,with and without the End-Use Special Contract rate category, for the next five to ten years?

4.3 If a very large project were to locate near an existing Zone II area, such that the extension costwas relatively low but the ongoing energy cost would be relatively high, would it be BC Hydro'soption as to whether it would serve the customer from Zone I or Zone II, with the customerpaying the extension cost in both cases, or would it be at the customer's option?

4.4 If it would be at the customer's option, would BC Hydro's other ratepayers be protected if thecustomer chose the cheaper option of service from a nearby rate Zone II service area, and if so,how?

3

4.5 On page 5, BC Hydro states that it considers it prudent to retain a blanket provision to all ratezones that states, on page B-35 of its tariff: "Where electricity is required under unusualconditions, such service may be provided under a special contract. " Would this provisionprovide protection to ratepayers in the scenario outlined above in this question?

5.0 Reference: Exhibit B-I05-1 Zone II Special Contract Rate Application, Cover Letter pp. 2, 3

The Special Contract rate that was to be effective July 1, 2007 as per the calculations set out in the tariffis $0.2522/kWh (Exhibit B-37).

For Rate Schedule 1255, the second tier rate for energy consumption is 11.51 cents per kW.h effectiveFebruary 1,2007. The "grandfathered" Special Contracts have the last tier being set on the basis ofBCHydro's Zone II costs.

The energy charge rates to the three IPPs serving Zone II customers commencing July 1,2007 andending June 30, 2008 are $0.3185 for CCPC and QCPC and $0.3737 for SNPC (Exhibit A2-3).

5.1 Please summarize the detailed assumptions used in the above three sets of calculations in tabularformat.

6.0 Reference: Exhibit B-I05-1, Zone II Special Contract Rate Application, p. 2 and Attachment B

6.1 With respect to the list of Zone II Special Contract customers, which are currently served underStandard Special Contracts and which under Grandfathered Special Contracts?

6.2 Please describe, to the extent possible, any generic or general differences between the StandardSpecial Contracts and the Grandfathered Special Contracts.

7.0 Reference: Exhibit B-I05-1, Zone II Special Contract Rate Application, Attachment F

7.1 Does BC Hydro consider it prudent or necessary to elaborate on or further define what it meansby "unusual conditions" in the section titled "Special Contracts".

8.0 Reference: Exhibit B-I05-2, Zone II Special Contract Rate Application, Attachment E(Confidential)

8.1 Please provide a table or spreadsheet, also on a confidential basis, showing the estimated annualconsumption and the calculation of the annual savings and the annual percentage bill impact foreach customer.

4

British Columbia Utilities Commission Information Request No. 1.1.1 Dated: October 26, 2007

Page 1 of 1

British Columbia Hydro & Power Authority Response issued November 19, 2007 British Columbia Hydro & Power Authority BC Hydro 2007 Rate Design Application - Phase III Zone II Special Contract Rate Application

Exhibit: B-111

1.0 Reference: Exhibit B-105-1 Zone II Special Contract Rate Application,

Cover Letter p. 1; Appendix F Terms and Conditions; Electric Tariff, p. C-24

In the Cover Letter, BC Hydro states that it is applying, pursuant to Sections 58 to 61 of the UCA, to revise its Electric Tariff to specifically remove from the Terms and Conditions contained in the Electric Tariff the section that permits BC Hydro to place those customers in Zone II, whose demand is or is likely to be in excess of 45 kVA, on a Special Contract. Appendix F in the Application provides the proposed Seventh Revision of Page B-35 of the Electric Tariff.

1.1.1 Please comment if the Special Condition #2 on page C-24 of the Electric Tariff, which states that “Where the customer’s demand is or is likely to be in excess of 45 kV.A, then B.C. Hydro may require that supply to such customers be by special contract …”, should be revised in a manner similar to page B-35. If not, please explain why not.

RESPONSE: Yes, Special Condition #2 on page C-24 should also be removed. Attached is the proposed blacklined revision to page C-24. BC Hydro will file the revised tariff page C-24 with its compliance filing for this Application.

BCUC IR 1.1.1 Attachment

1 of 1


Page 1 of 1


Exhibit: B-111


Cover Letter p. 1; Appendix A Commission Order No. G-84-07; Appendix G Special Contracts to be Cancelled; Electric Tariff, p. B-36 (Sixth Revision)

In the Cover Letter, BC Hydro states that it is applying to have the interim Special Contract rate of $0.1769 per KWh (as per BCUC Order No. G-84-07) made permanent for the period from June 1, 2007 to November 1, 2007, or the effective date of the order granting this relief, whichever is later. In the Cover Letter, BC Hydro also states that it plans to place those Special Contract customers listed in Attachment B onto Rate Schedule 1255 – Zone II General Service >35 kW (RS 1255), effective November 1, 2007.

1.2.1 Please describe the basis for adopting November 1, 2007 as the end-date for the interim rate to be made permanent.

RESPONSE: BC Hydro considered that one month was a sufficient period of time in which to notify the customers of the cancellation of their Special Contracts and the fact that they would be moved over to RS 1255 on a permanent basis. Further, the one-month period was a reasonable amount of time to allow the BCUC to respond if it did not agree with BC Hydro’s exercise of discretion regarding the cancellation.


Page 1 of 1


Exhibit: B-111


Cover Letter p. 1; Appendix A Commission Order No. G-84-07; Appendix G Special Contracts to be Cancelled; Electric Tariff, p. B-36 (Sixth Revision)

In the Cover Letter, BC Hydro states that it is applying to have the interim Special Contract rate of $0.1769 per KWh (as per BCUC Order No. G-84-07) made permanent for the period from June 1, 2007 to November 1, 2007, or the effective date of the order granting this relief, whichever is later. In the Cover Letter, BC Hydro also states that it plans to place those Special Contract customers listed in Attachment B onto Rate Schedule 1255 – Zone II General Service >35 kW (RS 1255), effective November 1, 2007.

1.2.2 Please comment on the usefulness of cancelling those Special Contract Tariff Supplements on one hand and transferring those customers to RS 1255 on the other hand where the customers are subject to the RS 1255 Tariff’s Special Conditions: where demand in excess of 45 kV.A could be subject to special contract by BC Hydro.

RESPONSE:

Please refer to the response to BCUC IR 1.1.1.


Page 1 of 1


Exhibit: B-111


Cover Letter pp. 2, 4; Electric Tariff, p. B-35

The Cover Letter describes that BC Hydro, in accordance with the Tariff, “may” require a customer in Zone II whose demand is or is likely to be in excess of 45 kVA, or who is an IPP, to be placed on Special Contract.

1.3.1 What is, or was, the basis for the 45 kVA cutoff point for Special Contracts?

RESPONSE: The 45 kVA threshold has been in BC Hydro’s tariff since 1967. No record has been found outlining the analysis to determine this cutoff point.


Page 1 of 1


Exhibit: B-111




1.3.2 The Tariff allows but does not require BC Hydro to put Zone II customers with loads greater than 45 kVA to be served under a Special Contract. Please provide a list of customers in Zone II whose demand is or is likely to be in excess of 45 kVA but has not been placed by BC Hydro on Special Contract.

RESPONSE: There may have been as many as 18 customers that BC Hydro could have put on the Special Contract rate, based on F2007 data, on the basis that they each registered load greater than 45 kVA in at least one billing period in F2007 (applying a 90 per cent power factor). This would not necessarily be the case in another fiscal year. Please see the attached list of customers in Zone II, filed on a confidential basis.

BCUC IR 1.3.2

ATTACHMENT CONFIDENTIAL


Page 1 of 1


Exhibit: B-111




1.3.3 Please provide reasons for not placing those Zone II customers whose expected loads are greater than 45 kVA on Special Contract.

RESPONSE: BC Hydro would not place a customer on a Special Contract if it was evident that the customer load would only exceed the 45 kVA level in a few months of any given year.


Page 1 of 1


Exhibit: B-111




1.3.4 Rather than eliminating that tariff provision as BC Hydro proposes on page 4, would the interests of new Zone II customers and other customers be better protected by increasing the threshold for Special Contracts to capture only the very largest loads (e.g., such as might be required for a major resource extraction operation)?

RESPONSE: For the reasons discussed in its response to BCUC IR 1.7.1, BC Hydro is of the view that elaborating in the Tariff on the circumstances in which a Special Contract is required is of no value.


Page 1 of 1


Exhibit: B-111


Cover Letter pp. 2, 5 Rates for End-Use Special Contracts

The Cover Letter states that between 1991 to 1998, BC Hydro’s practice in setting rates for Special Contracts in Zone II resulted in a unique electricity rate for each district. The Cover Letter also states on page 2 that Tariff page B-13-1 also affords some protection to BC Hydro and its ratepayers from large potentially uneconomic customers in that it requires new customers to pay for the entire estimated construction cost of the extension, plus the present value of the net operating and maintenance costs, and taxes as included in BC Hydro’s System Extension Test.

1.4.1 Is BC Hydro able to confirm that before the calculation of the annual rate was revised in June 1998 to be based on the average unit cost of all Zone II diesel generating stations, there were only eight customers served under the Special Rates? If not, please provide the actual number of Special Contract customers as at end-1997.

RESPONSE: There were 12 customers that had Special Contracts effective at the end of 1997.


Page 1 of 1


Exhibit: B-111




1.4.2 Does BC Hydro have a projection of the number of large general service customers in Zone II, with and without the End-Use Special Contract rate category, for the next five to ten years?

RESPONSE:

BC Hydro only projects NIA customer growth though F2011; the current projection of the number of large general service customers (including customers that are/would be billed under the End-Use Special Contract rate category) in the NIA is as set out in the table below. For forecasting purposes, BC Hydro does not distinguish between large general service customers, and those customers who could be on a Special Contract.

F2007(actual) F2008 F2009 F2010 F2011

Customer Numbers 90 92 94 96 98


Page 1 of 1


Exhibit: B-111




1.4.3 If a very large project were to locate near an existing Zone II area, such that the extension cost was relatively low but the ongoing energy cost would be relatively high, would it be BC Hydro’s option as to whether it would serve the customer from Zone I or Zone II, with the customer paying the extension cost in both cases, or would it be at the customer’s option?

RESPONSE:

If the two servicing options were available under BC Hydro’s tariff, and the customer was willing to pay the extension cost per the tariff, BC Hydro would have to allow the customer to choose whether or not it wanted to take service through Zone I or Zone II rates. In cases where there were significant cost or system impacts, BC Hydro could apply to the BCUC for relief.


Page 1 of 1


Exhibit: B-111




1.4.4 If it would be at the customer’s option, would BC Hydro’s other ratepayers be protected if the customer chose the cheaper option of service from a nearby rate Zone II service area, and if so, how?

RESPONSE:

If the customer chose to take service from a Zone II service area, BC Hydro would have the ability to require that the customer take service under a Special Contract (subject to BCUC approval) as provided under the “Special Contracts” provision on page B-35, which permits BC Hydro to require a Special Contract under unusual conditions. Such a Special Contract could charge an energy rate that would seek to recover the costs of providing that service over and above what would be recovered under RS 1255, including the capital costs of any generators that were required in order to serve the new load. Ultimately, any questions as to the rates charged, and the terms and conditions of a Special Contract to be applied to the customer, would be resolved by an application to the BCUC.


Page 1 of 1


Exhibit: B-111




1.4.5 On page 5, BC Hydro states that it considers it prudent to retain a blanket provision to all rate zones that states, on page B-35 of its tariff: “Where electricity is required under unusual conditions, such service may be provided under a special contract.” Would this provision provide protection to ratepayers in the scenario outlined above in this question?

RESPONSE: BC Hydro believes that this blanket provision could protect BC Hydro’s ratepayers, as BC Hydro could develop a Special Contract rate (subject to BCUC approval) that would be designed to recover the costs of serving a large load customer in Zone II. In any event, BC Hydro is always free to apply to the BCUC for a rate that would provide protection to its ratepayers.


Page 1 of 3


Exhibit: B-111


Cover Letter pp. 2, 3

The Special Contract rate that was to be effective July 1, 2007 as per the calculations set out in the tariff is $0.2522/kWh (Exhibit B-37). For Rate Schedule 1255, the second tier rate for energy consumption is 11.51 cents per kW.h effective February 1, 2007. The “grandfathered” Special Contracts have the last tier being set on the basis of BC Hydro’s Zone II costs. The energy charge rates to the three IPPs serving Zone II customers commencing July 1, 2007 and ending June 30, 2008 are $0.3185 for CCPC and QCPC and $0.3737 for SNPC (Exhibit A2-3).

1.5.1 Please summarize the detailed assumptions used in the above three sets of calculations in tabular format.

RESPONSE: The following table provides the requested information. The calculations for the 2007 Special Contract Rate are summarized from Exhibit B-37. The calculations for the IPP rate are summarized from BC Hydro’s letter of July 6, 2007 to the BCUC.


Page 2 of 3


Exhibit: B-111

Zone II Rate Rate Charged Effective Date Calculation Methodology

2007 Special Contract rate

$0.2522/kWh (1) July 1, 2007 (2) BCH cost/kWh: • Prime-power stations

only • Select direct costs (fuel,

generator maintenance) Second Tier, GS 1255 $0.1151/kWh February 1, 2007 Per tariff

CCPC / QCPC $0.3185/kWh (1) BCH cost/kWh: • All stations (prime &

standby) • All direct costs (fuel,

operating, generator maintenance)

• +10% profit IPPs

SNPC $0.3737/kWh (1)

July 1, 2007

BCH cost/kWh: • Charged by SNPC for

provision of electricity to BCH for resale to customers

(1) Detailed calculations attached (2) 2007 Special Contract rate effective July 1 was not implemented, per Order G-84-07


Page 3 of 3


Exhibit: B-111

2007 Special Contract Rate

Annual EnergyGenerated Total Unit Cost

MW.h Cost ¢/kW.h

Prime Stations only 53,089 13,388 25.22

IPP Interruptible Power Supply Rate

Annual EnergyGenerated Total Unit Cost

MW.h Cost ¢/kW.h

All Stations 63,679 18,437 28.95

Energy Supply to an IPP - Average (c/kw.h) plus 10%. 31.85 ¢/kw.h (a)

IPP Energy Purchase Price (2006/07):Bella Bella CCPC 18.15 ¢/kw.h (b)Sandspit QCPC 14.83 ¢/kw.h (b)Dease Lake SNPC 37.37 ¢/kw.h (b)

Tariff Page B-36 - energy charge for an IPP customer shall be the greater of (a) or (b).

i) CCPC and QCPC energy charge (a) 31.85 ¢/kw.hii) SNPC energy charge (b) 37.37 ¢/kw.h

$

$


Page 1 of 2


Exhibit: B-111

6.0 Reference: Exhibit B-105-1, Zone II Special Contract Rate Application, p. 2

and Attachment B

1.6.1 With respect to the list of Zone II Special Contract customers, which are currently served under Standard Special Contracts and which under Grandfathered Special Contracts?

RESPONSE:

Supplement # Customer Type of Special Contract

9 Little Valley Forest Products Ltd. Standard

12 c.b. Island Fisheries Ltd. Grandfathered

15 Delmas Co-Op (Gwaii Branch) Standard

18 Northern Health Authority (Stikine Health Centre) Standard

19 Bella Bella Community School Society Grandfathered

20 Heiltsuk Band Council Standard

21 BC Buildings Standard

24 International Forest Products Standard

29 Shearwater Marine Ltd. Grandfathered

34 Bella Coola Consumers Co-op Association Grandfathered

35 Skidegate Band Council Standard

36 Q.C.I General Hospital Masser Standard

38 Gwaii Wood Products Standard

40 Health Canada Standard

42 Old Masset Village Council Standard

43 School District No. 50 Standard

45 Graham Island Shake & Shingle Standard

48 National Defence Standard


Page 2 of 2


Exhibit: B-111

Supplement # Customer Type of Special Contract

51 Seacor Environmental Engineering Standard

61 Little Valley Forest Products Standard

62 West Chilcotin Forest Products Standard

64 West Chilcotin Forest Products Grandfathered

65 West Chilcotin Forest Products Grandfathered


Page 1 of 1


Exhibit: B-111

6.0 Reference: Exhibit B-105-1, Zone II Special Contract Rate Application, p. 2

and Attachment B

1.6.2 Please describe, to the extent possible, any generic or general differences between the Standard Special Contracts and the Grandfathered Special Contracts.

RESPONSE:

The terms and conditions of the Grandfathered Special Contracts are substantively identical to those found in the Standard Special Contracts. The one exception is that the Grandfathered Special Contracts have a provision for a first tier of energy (which is specifically defined for each Grandfathered Special contract) to be charged at the same rate as that set out in Rate Schedule 1255. Under the Standard Special Contracts no such provision is found and all energy is charged at the Zone II Special Contract rate.


Page 1 of 1


Exhibit: B-111

7.0 Reference: Exhibit B-105-1, Zone II Special Contract Rate Application,

Attachment F

1.7.1 Does BC Hydro consider it prudent or necessary to elaborate on or further define what it means by “unusual conditions” in the section titled “Special Contracts”.

RESPONSE: The blanket provision referred to serves to notify customers or potential new customers that the particular circumstances of their electricity requirements may require an arrangement with BC Hydro that is not covered by the existing tariff and schedules of rates. As written, it is unclear whether it creates any rights that do not already exist, and BC Hydro (indeed, any utility) is always free to apply to the BCUC for approval of a unique service arrangement. Further, potential issues that arise from new customers applying for service in the NIA are better addressed, in BC Hydro's view, in BC Hydro's applicable extension policies. On the assumption that BC Hydro will still be reviewing any remaining NIA rate issues after the resolution of the current proceeding, as BC Hydro has previously proposed, the adequacy of the NIA extension policies would be considered as part of that process. Finally, BC Hydro believes that further defining the meaning of the expression "unusual conditions" may be counter-productive, at least insofar as it narrows the meaning of the expression. For all these reasons BC Hydro does not believe it prudent or necessary to further define the expression "unusual conditions".


Page 1 of 1


Exhibit: B-111

8.0 Reference: Exhibit B-105-2, Zone II Special Contract Rate Application,

Attachment E (Confidential)

1.8.1 Please provide a table or spreadsheet, also on a confidential basis, showing the estimated annual consumption and the calculation of the annual savings and the annual percentage bill impact for each customer.

RESPONSE: Attached is a table with the requested information, which is provided to the BCUC on a confidential basis.

BCUC IR 1.8.1

ATTACHMENT CONFIDENTIAL

1

REQUESTOR NAME: Heiltsuk Tribal Council and Shearwater Marine Limited INFORMATION REQUEST ROUND NO. 1 TO: British Columbia Hydro & Power Authority DATE: November 2, 2007 PROJECT NO: 3698455 APPLICATION NAME: 2007 Rate Design Application (“RDA”) Phase III – Special Contract Rate Application

________________________________________________________________________________________

1.0 Reference: Exhibit B-105-1, Application, page 1, paragraph 3

The Application states that the Tariff does not require BCUC approval to place Special Contract customers onto Rate Schedule 1255.

1.1 For each of the Special Contract customers, did BC Hydro obtain BCUC approval to place those customers on Special Contract rates?

1.2 If so, please provide details of the timing and references to specific BCUC approvals for placing each customer on Special Contract rates.

1.3 If not, please explain why BC Hydro did not seek BCUC approval for additions of Special Contract customers.


The Tariff provisions relating to Special Contracts permit, but don’t require, BC Hydro to place customers on Special Contracts.

2.1 Does BC Hydro charge, or has it charged in the past, any other “permissive” rates (i.e. rates that are not required by the Tariff, but which BC Hydro is permitted to charge)?

2.2 If so, please provide details.


3.1 Over what period has BC Hydro been charging the 2% rate rider to customers in Zone II? 3.2 Has BC Hydro been charging the 2% rate rider only to Special Contract customers, or to all customers in Zone II? 3.3 Please fully describe the rationale for proposing to remove the 2% rate rider applicable to IPPs taking power under their Special Contracts.


4.1 Please provide a copy of the source(s) of the statement that the provision permitting BC Hydro to charge Special Contract rates was “ … introduced in order to protect BC Hydro and its ratepayers from being required to provide service to Zone II customers that are uneconomic and which may also create an undue disturbance on the system or to other customers.” 4.2 Please confirm that BC Hydro charges and has charged Special Contract rates only to customers that it considers “uneconomic” or which may “create an undue disturbance on the system or to other customers”.

2

4.3 Please provide copies of any pre-existing documents that describe the test that BC Hydro applies to determine whether a particular customer considered for Special Contract rates is “uneconomic” or may “create an undue disturbance on the system or to other customers”. 4.4 Please describe BC Hydro’s process for determining whether a given customer is “uneconomic” or may “create an undue disturbance on the system or to other customers”, with reference to the staff level at which such a determination is made and any documents establishing or describing that process. 4.4 For each Special Contract customer, please state whether they were placed on Special Contract rates because they are or were:

a. “uneconomic”; b. “may create an undue disturbance on the system or to other customers”; or c. both.

4.5 Please describe in what way each customer is or was “uneconomic” and the nature and scope of the “undue disturbance” they created.


5.1 What date(s) were used by BC Hydro to determine whether customers qualified for “grandfathered” Special Contract rates? 5.2 For each customer that was placed onto Grandfathered Special Contract rates, did BC Hydro consider them “uneconomic” or “creating an undue disturbance” from the first date of service or only as of the date that Special Contract rates were first charged?

6.0 Reference: Exhibit B-105-1, Application, page 4, bullet 1

“It was assumed at one time that there was a potential for a significant number of new large loads to connect to the distribution system in the Non-Integrated Area (NIA) communities.”

6.1 At what time and by who was it assumed that there was a potential for a significant number of new large loads in the NIAs?


“Whereas in the past the addition of a large new load to a NIA community may have resulted in the need for significant new generation resources at great expense, and also leading to increases in unused capacity, BC Hydro now has much greater flexibility with regard to its diesel resources.”

7.1 Please confirm that in the “Bella Bella NIA” Special Contract customers, and all other customers, receive less than 1% of their annual electricity supply from diesel generation.

7.2 What would be the maximum size of aggregate new load in the “Bella Bella NIA” that could be served by BC Hydro without the need for significant new generation resources?

7.3 What new generation resources in the “Bella Bella NIA” would BC Hydro most likely turn to if required to serve a large new load?

7.4 What specific assumptions has BC Hydro made regarding such new generation resources in the “Bella Bella NIA” that support its assertion that “great expense” would be required?

3

7.5 What specific assumptions has BC Hydro made regarding how a large new load would “lead to increases in unused capacity”?

8.0 Reference: Exhibit B-105-1, Application, page 4, last paragraph

“In F2007 BC Hydro's revenue from the 23 Special Contract customers was approximately $841,000. Placing these customers onto RS 1255 would reduce BC Hydro's revenue by approximately $315,000. This reduction would increase the amount of the overall loss from the Zone II area which is recovered in the rates charged to Zone I customers, however, the effect on Zone I rates would be negligible.”

8.1 Please provide a table setting out the rate impacts on other customer classes if the 23 Special Contact customers (excluding IPPs) are placed onto RS 1255, reducing BC Hydro’s revenue by approximately $315,000.

8.2 Please provide a table setting out the rate impacts on other customer classes if the 3 Special Contracts customers in the “Bella Bella NIA” are placed onto Zone I or equivalent rates for General Service > 35 KW, and the other 20 Special Contact customers (excluding IPPs) are placed onto RS 1255, and provide the amount by which BC Hydro’s revenue would be reduced.

8.3 Please provide a table setting out the rate impacts on other customer classes if the 23 Special Contract customers are all placed onto Zone I or equivalent rates for General Service > 35 KW, and provide the amount by which BC Hydro’s revenue would be reduced.

8.4 Does BC Hydro agree that placing Special Contract customers onto Zone I or equivalent rates for General Service > 35 KW would be one way to provide relief to those customers for having been charged the 2% rate rider?

9.0 Reference: Exhibit B-105-1, Application, page 5, second full paragraph

9.1 How does BC Hydro define “emergency use only” for purposes of limiting the circumstances in which the IPPs can use power taken under the Special Contracts?

10.0 Reference: Exhibit B-105-1, Application, page 6, second paragraph

10.1 Why does BC Hydro believe that RS 1901 should no longer be applicable to Zone II Special Contract rates effective November 1, 2007 rather than some earlier date?

Heiltsuk Tribal Council and Shearwater Marine Limited Information Request No. 1.1.1 Dated: November 2, 2007

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Exhibit: B-111



1.1.1 For each of the Special Contract customers, did BC Hydro obtain BCUC approval to place those customers on Special Contract rates?

RESPONSE:

Yes (although specific approval of each Special Contract was not required). Please refer to the response to Heiltsuk IR 1.1.2.


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Exhibit: B-111



1.1.2 If so, please provide details of the timing and references to specific BCUC approvals for placing each customer on Special Contract rates.

RESPONSE:

Supplement No. Customer Order Effective Date Order No.

9 Little Valley Forest Products Ltd.

June 28, 1991 G-82-91

12 c.b. Island Fisheries Ltd. June 17, 1992 G-87-92

15 Delmas coop (Gwaii Branch)

July 14, 1993 G-89-93

18 Northern Health Authority (Stikine Health Centre)

March 31, 1994 G-76-94

19 Bella Bella Community School Society

January 24, 1994 G-81-94

20 Heiltsuk Band Council August 6, 1997 G-30-98 21 BC Buildings Corporation September 3, 1997 G-46-98

24 International Forest Products

June 13, 1995 G-63-95

29 Shearwater Marine Ltd. February 18, 1996 G-78-96

34 Bella Coola Consumers Co-op Association

December 1, 1998 G-3-99

35 Skidegate Band Council November 5, 1997 G-46-98 36 Q.C.I General Hospital

Masser June 1, 1999 G-46-98

38 Gwaii Wood Products December 17,1997 G-46-98 40 Health Canada March 31, 1998 G-86-98 42 Old Masset Village Council January 1, 1999 G-56-99 43 School District No. 50 September 25, 1998 G-108-98 45 Department of National

Defence April 6, 1999 G-128-99

51 Seacor Environmental Engineering

August 17, 1999 G-128-99


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Exhibit: B-111

Supplement No. Customer Order Effective Date Order No.

61 Little Valley Forest Products June 1, 2002 No Order 62 West Chilcotin Forest

Products June 1, 2002 No Order

64 West Chilcotin Forest Products

June 1, 2002 No Order

65 West Chilcotin Forest Products

June 1, 2002 No Order


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Exhibit: B-111



1.1.3 If not, please explain why BC Hydro did not seek BCUC approval for additions of Special Contract customers.

RESPONSE:

Please refer to the responses to Heiltsuk IR 1.1.1 and 1.1.2.


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Exhibit: B-111



1.2.1 Does BC Hydro charge, or has it charged in the past, any other “permissive” rates (i.e. rates that are not required by the Tariff, but which BC Hydro is permitted to charge)?

RESPONSE: BC Hydro has several rates that afford BC Hydro discretion in a number of instances, of which examples are provided in the table below.

Rate/Term Condition

RS 1101,1107, 1111, 1117, 1121, 1148

The maximum capacity of water heating for water heaters is not to exceed 45 watts / L.

RS 1220, 1234, 1703 BC Hydro can install meter or meters to determine if a customer is on the appropriate rate and it can also have an unmetered service.

RS 1288 The customer must satisfy to BC Hydro that it has load reduction capabilities.

RS 1289 If BC Hydro considers it necessary to conduct an inspection, the customer shall pay the costs that BC Hydro estimates.

RS 1755 BC Hydro has the sole right to determine whether or not a light should be installed on its own distribution system.

RS 1844 BC Hydro may suspend or reduce the supply of Electricity if a customer fails to reduce to its Maximum kVA Demand.

Terms and Conditions BC Hydro may refuse to provide service to an applicant if an occupant of the applicant’s Premises has an unpaid account for service incurred while the occupant previously occupied any Premises at the same time as the Applicant. (page B-4)


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Exhibit: B-111

Rate/Term Condition Terms and Conditions BC Hydro may add to the Minimum Reconnection

Charges, as set out in the Schedule of Standard Charges, an amount to cover the costs incurred by BC Hydro when there are unusual circumstances (page B-8).

Terms and Conditions The application may be required to provide a guarantee in the form of cash or an equivalent form of guarantee acceptable to BC Hydro (page B-11).

Terms and Conditions For Extensions to serve residential subdivisions, BC Hydro may include in the SET estimates of the projected revenue and costs of Customers that BC Hydro forecasts will be connected to the Extension in the first five years.

Terms and Conditions BC Hydro may extend its lines and transformers on private property when it is impractical or uneconomic for the applicant to take service directly from BC Hydro’s distribution facilities on public property (page B-14)

Terms and Conditions BC Hydro may, if it has suitable transformers available, agree to rent transformers to the applicant (page B-15)

Terms and Conditions If the Customer requests, and BC Hydro agrees, then BC Hydro may assume ownership and maintenance of the distribution facilities on private property up to the Point of Delivery (Page B-16).


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Exhibit: B-111



1.2.2 If so, please provide details.

RESPONSE:

Please refer to the response to Heiltsuk IR 1.2.1.


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Exhibit: B-111


1.3.1 Over what period has BC Hydro been charging the 2% rate rider to customers in Zone II?

RESPONSE:

The rate rider for all customers has been in place since February 1, 2007, as per BCUC Order No. G-143-06.


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Exhibit: B-111


1.3.2 Has BC Hydro been charging the 2% rate rider only to Special Contract customers, or to all customers in Zone II?

RESPONSE:

All customers in Zone II are charged the 2% rate rider.


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Exhibit: B-111


1.3.3 Please fully describe the rationale for proposing to remove the 2% rate rider applicable to IPPs taking power under their Special Contracts.

RESPONSE:

As noted on page 3, first paragraph, under the heading "Rates for IPP Special Contracts", IPPs taking power under Special Contracts pay a rate that is the higher of the "unit price paid by BC Hydro to the IPP for the most recent purchase of electricity from the IPP", and "the average unit cost incurred by BC Hydro to generate electricity at all diesel generating stations... plus a 10% profit margin". Under this formula IPPs do not get even an indirect financial benefit from the low-embedded cost Heritage Resources, unlike other rate classes in the NIA. Further, the deferral account balances that are being amortized through the rate rider largely arose from the Trade Income Deferral Account and the Heritage Deferral Account, which are the mechanisms by which the benefits (and costs) of the Heritage Resources are passed on to BC Hydro’s customers. Since they receive no benefit from those assets, NIA IPP customers should not pay any of the costs of those assets.


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Exhibit: B-111


1.4.1 Please provide a copy of the source(s) of the statement that the provision permitting BC Hydro to charge Special Contract rates was “ … introduced in order to protect BC Hydro and its ratepayers from being required to provide service to Zone II customers that are uneconomic and which may also create an undue disturbance on the system or to other customers.”

RESPONSE: The source of this statement can be found in BC Hydro’s Electric Tariff in the Terms and Conditions under the heading “Supply in Rate Zone II” on page B-35, a copy of which is attached.

" '

B.C. HydroElectric TariffSixth Revision of Page B-,35Effective: DEe 2 0 2fO.l

TERMS AND CONDITIONS

RATES (Cont'd)

The customer may apply at any time in writing to be billed on another rateschedule from that under which he is being served. The Authority may, in theAuthority's sole discretion, reject, defer or approve such application.

In general, approval will not be granted:

1. if the rate schedule which the customer applies for was used by thecustomer durin~ the preceding twelve months, or

2. if the rate applied for is, in the opinion of the Authority, not available to thecustomer.

SPECIAL CONTRACTS

Where electricity is required under, unusual conditions, such service may beprovided under a special contract.

SUPPLY IN RATE ZONE IIc

1. Where B.C. Hydro supplies electricity in Rate Zqne II for a customer whosedemand is or is likely to be in excess of 45 kV.A or for an IndependentPower Producer customer, B.C. Hydro may require that supply to suchcustomers be by special contract. Such supply is subject to specialconditions as provided in this section and as B.C. Hydro, in its solediscretion, considers necessary to insert in the customer's special contract.

B.C. Hydro will, where possible, supply such customer, PROVIDED THAT:

a) service can be provided on terms which are not unduly uneconomicfrom B.C. Hydro's point of view, or

b) no undue disturbance will be caused ~ither to the system or to othercustomers.

Where impairment of supply to the area is or may be involved B.C. Hydromay supply only such part of the customer's 'requirement as, in B.C. Hydro'sopinion, may be supplied without impairment of supply the area as awhole.

Accepted for filing: D.E.C...2..0 ..2.0.0D ;.. .. , _M~••••.•-..:. ••

Effective': , D.E.c. ..2.:.O' 2.0.0.0............. SECRETARX_____________ O~rde::o.:..r__No~.:_"" _._..G..::..l..2,.O~-:.OQ , B.C. UTILITIES COMMISSION'ET4

Heiltsuk IR 1.4.1 Attachment


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Exhibit: B-111


1.4.2 Please confirm that BC Hydro charges and has charged Special Contract rates only to customers that it considers “uneconomic” or which may “create an undue disturbance on the system or to other customers”.

RESPONSE: Not confirmed. If a customer was considered to be “uneconomic” or may cause an “undue disturbance on the system or to other customers” BC Hydro would not be obliged to grant service to the customer under the provisions of Page B-35 the Tariff.


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Exhibit: B-111


1.4.3 Please provide copies of any pre-existing documents that describe the test that BC Hydro applies to determine whether a particular customer considered for Special Contract rates is “uneconomic” or may “create an undue disturbance on the system or to other customers”.

RESPONSE: BC Hydro does not have any record of denying any customers service for being uneconomic or for creating an undue disturbance. In any event, there are no policy guidelines that exist.


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Exhibit: B-111


1.4.4 Please describe BC Hydro’s process for determining whether a given customer is “uneconomic” or may “create an undue disturbance on the system or to other customers”, with reference to the staff level at which such a determination is made and any documents establishing or describing that process.

RESPONSE:



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Exhibit: B-111


1.4.5 For each Special Contract customer, please state whether they were placed on Special Contract rates because they are or were: a. “uneconomic”; b. “may create an undue disturbance on the system or to other customers”; or c. both.

RESPONSE: Please refer to the responses to Heiltsuk IRs 1.4.2 and 1.4.3.


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Exhibit: B-111


1.4.6 Please describe in what way each customer is or was “uneconomic” and the nature and scope of the “undue disturbance” they created.

RESPONSE: Please refer to the responses to Heiltsuk IRs 1.4.2 and 1.4.3.


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Exhibit: B-111


1.5.1 What date(s) were used by BC Hydro to determine whether customers qualified for “grandfathered” Special Contract rates?

RESPONSE: The Special Contract date is not the determining factor for Grandfathered Special Contracts. Those Zone II General Service customers who were placed onto Grandfathered Special Contracts had the amount of energy subject to the first tier rate based on the customer’s historic energy usage. New Zone II customers whose load was estimated to be greater than 45 kVA had no historic energy usage and were placed on Standard Special Contracts with all energy charged at the higher Special Contract rate.


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Exhibit: B-111


1.5.2 For each customer that was placed onto Grandfathered Special Contract rates, did BC Hydro consider them “uneconomic” or “creating an undue disturbance” from the first date of service or only as of the date that Special Contract rates were first charged?

RESPONSE:



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Exhibit: B-111


“It was assumed at one time that there was a potential for a significant number of new large loads to connect to the distribution system in the Non-Integrated Area (NIA) communities.”

1.6.1 At what time and by who was it assumed that there was a potential for a significant number of new large loads in the NIAs?

RESPONSE: The assumption that there was a potential for a significant number of large new loads in the NIA would have been made by the BC Hydro management of the day (1967).


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Exhibit: B-111



1.7.1 Please confirm that in the “Bella Bella NIA” Special Contract customers, and all other customers, receive less than 1% of their annual electricity supply from diesel generation.

RESPONSE:

BC Hydro declines to respond to this information request because the requested information can only be relevant to the Heiltsuk/Shearwater desire for rate relief to BC Hydro customers in the Bella Bella NIA, which is currently the subject of the RDA Phase II proceeding. It would be unfair and potentially an abuse of process for the Heiltsuk/Shearwater to seek rate relief particular to Bella Bella customers in this phase of the proceedings, in light of their specific pursuit of such relief in Phase II, and in light of the exercise of their extensive Phase I and II rights to elicit BC Hydro evidence through information requests, file their own evidence, cross-examine BC Hydro witnesses and file argument on this topic.


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Exhibit: B-111



1.7.2 What would be the maximum size of aggregate new load in the “Bella Bella NIA” that could be served by BC Hydro without the need for significant new generation resources?

RESPONSE:



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Exhibit: B-111



1.7.3 What new generation resources in the “Bella Bella NIA” would BC Hydro most likely turn to if required to serve a large new load?

RESPONSE:



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Exhibit: B-111



1.7.4 What specific assumptions has BC Hydro made regarding such new generation resources in the “Bella Bella NIA” that support its assertion that “great expense” would be required?

RESPONSE:



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Exhibit: B-111



1.7.5 What specific assumptions has BC Hydro made regarding how a large new load would “lead to increases in unused capacity”?

RESPONSE: No specific assumptions were made. Generally speaking, in the past BC Hydro would usually have been required to purchase a large diesel generating unit to service the load from a large new customer. It is likely that the generating capacity of the new diesel unit would have been in excess of the increased new load, thereby leading to unused capacity. BC Hydro is now relying on mobile generating units of various sizes and this provides BC Hydro a greater ability to match the installed generating capacity with the new load, thereby greatly reducing the risk of unused capacity.


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Exhibit: B-111



1.8.1 Please provide a table setting out the rate impacts on other customer classes if the 23 Special Contact customers (excluding IPPs) are placed onto RS 1255, reducing BC Hydro’s revenue by approximately $315,000.

RESPONSE: The impact on all customers would be negligible. Based on BC Hydro’s F2008 Revenue Requirement, $315,000 / $2,863,620,000 is 0.01 per cent and would not have any noticeable rate impacts.


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Exhibit: B-111



1.8.2 Please provide a table setting out the rate impacts on other customer classes if the 3 Special Contracts customers in the “Bella Bella NIA” are placed onto Zone I or equivalent rates for General Service > 35 KW, and the other 20 Special Contact customers (excluding IPPs) are placed onto RS 1255, and provide the amount by which BC Hydro’s revenue would be reduced.

RESPONSE: Please refer to the response to Heiltsuk IR 1.7.1.


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Exhibit: B-111



1.8.3 Please provide a table setting out the rate impacts on other customer classes if the 23 Special Contract customers are all placed onto Zone I or equivalent rates for General Service > 35 KW, and provide the amount by which BC Hydro’s revenue would be reduced.

RESPONSE: The impact on all customers would be negligible. Based on BC Hydro’s F2008 Revenue Requirement, $555,000 / $2,863,620,000 is 0.02% and would not have any noticeable rate impacts.


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Exhibit: B-111



1.8.4 Does BC Hydro agree that placing Special Contract customers onto Zone I or equivalent rates for General Service > 35 KW would be one way to provide relief to those customers for having been charged the 2% rate rider?

RESPONSE: No, the question presumes that a new proposed rate means the existing rate is unfair or unjust, and therefore warrants some relief. As a matter of law, this is incorrect. Rates established in accordance with the Utilities Commission Act are at all times, except when they are interim, “fair, just and not unduly discriminatory”.


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Exhibit: B-111

9.0 Reference: Exhibit B-105-1, Application, page 5, second full paragraph

1.9.1 How does BC Hydro define “emergency use only” for purposes of limiting the circumstances in which the IPPs can use power taken under the Special Contracts?

RESPONSE: By “emergency use” BC Hydro means circumstances where the IPP can not, for reasons outside of its control, avoid the need to shut down its own generation.


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Exhibit: B-111

10.0 Reference: Exhibit B-105-1, Application, page 6, second paragraph

1.10.1 Why does BC Hydro believe that RS 1901 should no longer be applicable to Zone II Special Contract rates effective November 1, 2007 rather than some earlier date?

RESPONSE: Please refer to the response to BCUC IR 1.2.1.

Documents

2007 11 19 RDA III IRs 1 Public … · ending June 30, 2008 are $0.3185 for CCPC and QCPC and $0.3737 for SNPC (Exhibit A2-3). 5.1 Please summarize the detailed assumptions used inthe