WATERLOO NORTH HYDRO INC. January 1, 2018 IRM Rate Filing EB-2017-0080 ED-2002-0575
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WATERLOO NORTH HYDRO INC. January 1, 2018 IRM Rate Filing EB-2017-0080 ED-2002-0575 Waterloo North Hydro Inc. EB-2017-0080, 2018 IRM Filing Waterloo North Hydro Inc. Distribution Rate Adjustment Application SUMMARY OF APPLICATION EB-2017-0080 / ED-2002-0575 IN THE MATTER OF the Ontario Energy Board Act, 1998, S. O. 1998, c. 15, Schedule B of the Energy Competition Act, 1998: AND IN THE MATTER OF an Application by Waterloo North Hydro Inc. for an order approving just and reasonable rates as set out in this Application in accordance with the Ontario Energy Board’s Filing Guidelines for the Adjustments of the Electricity Distribution Rates for January 1, 2018 Distribution Rate Adjustments and PILs, issued for the revised model and instructions on July 21, 2017, and in accordance with July 20, 2017 Chapter 3 of the Filing Requirements for Electricity Distribution Rate Applications. Article I. 1.0a Introduction 1.1 Waterloo North Hydro Inc. (“Waterloo North Hydro” or “WNH”) submits this Application and supporting documentation for a rate adjustment, funding adder and rate riders pursuant to the Ontario Energy Board’s Filing Guidelines for January 1, 2018 Distribution Rate Adjustments and PILs, issued for the revised model and instructions on July 21, 2017. 1.2 The utility continues to operate under the authority of a Board of Directors and has been incorporated as “Waterloo North Hydro Inc.” under the Ontario Business Corporations Act since May 1, 2000. Waterloo North Hydro operates under Electricity Distribution Licence ED-2002-0575. Page 1 of 29 Waterloo North Hydro Inc. EB-2017-0080, 2018 IRM Filing 1.3 Waterloo North Hydro received Board approval on November 26, 2015 for revised rate adjustments, effective January 1, 2016, to its unbundled distribution rates in accordance with the Board’s July 16, 2015 Chapter 2 Cost of Service Filing Requirements for Transmission and Distribution Applications, its associated 2016 PILs, Fixed and Volumetric Rate Riders, and adjustment to its Retail Transmission Service Rates [EB-2015-0108]. 1.4 Waterloo North Hydro received Board approval on December 8, 2016 for rate adjustments, to be effective and implemented January 1, 2017, to its unbundled distribution rates in accordance with Chapter 3 of the Filing Requirements for Transmission and Distribution Applications and 4th Generation Incentive Regulation Mechanism (IRM4) policies, its associated Fixed and Volumetric Rate Riders and adjustment to its Retail Transmission Service Rates as provided in the Board’s model and instructions on July 26, 2016 [EB-2016-0109]. 1.5 In this filing, Waterloo North Hydro is seeking approval for rate adjustments, to be effective and implemented January 1, 2018, to its unbundled distribution rates in accordance with Chapter 3 of the Filing Requirements for Electricity Distribution Rate Applications and 4th Generation Incentive Regulation Mechanism (IRM4) policies, its associated Fixed and Volumetric Rate Riders and adjustment to its Retail Transmission Service Rates as provided in the Board’s model and instructions on July 21, 2017. 1.6 Contact Information for the 2018 IRM Application: Albert P. Singh, MBA, CPA, CGA Vice-President Finance & CFO 519-888-5542 [email protected] Page 2 of 29 Waterloo North Hydro Inc. EB-2017-0080, 2018 IRM Filing 1.0b Company Size and Number of Customers 1.7 Waterloo North Hydro is a municipally owned electric distribution company. Waterloo North Hydro serves approximately 56,000 residential, commercial, and industrial customers in the City of Waterloo and the Townships of Wellesley and Woolwich. 1.0c Customer Profile 1.8 The Company currently uses seven customer classes for the purpose of distribution rates and billing: Residential, General Service < 50 kW, General Service > 50 kW, Large Use, Street Lighting, Unmetered Scattered Load and Embedded Distributor. 1.9 The General Service < 50 kW class consists of a wide range of customers including: office buildings, medium and small commercial and industrial establishments, farms, apartment and condominium buildings. 1.10 The General Service > 50 kW class is typically comprised of large commercial and industrial customers. 1.11 The Large Use class consists of one large use customer with an average load over five megawatts. 1.12 The Street Light class contributes less than 1% to the Company’s current distribution revenue. 1.13 The Unmetered Scattered Load class contributes less than 1% to the Company’s current distribution revenue. 1.14 The Embedded Distributor rate class contributes less than 1% to the Company’s current distribution revenue Page 3 of 29 Waterloo North Hydro Inc. EB-2017-0080, 2018 IRM Filing 1.0d Previously Denied Amounts 1.15 Waterloo North Hydro has not previously been denied for any amounts that are included in the account balances in this application. 1.0e Internet Address Waterloo North Hydro’s internet address is wnhydro.com for the purpose of viewing the application and related documents as required in the July 20, 2017 Filing Requirements For Electricity Distribution Rate Applications – 2017 Edition for 2018 Rate Applications. 2.0 Information supporting the data filed in this Application: Waterloo North Hydro has provided the following Attachments: Attachment Description A Rate Generator Model B 2018 GA Analysis Workform C Current January 1, 2016 Tariff Sheet D 2016 Cost of Service Settlement Agreement E Revenue Requirement Work Form 2.1 2018 Rate Generator and Supplementary Work Forms Waterloo North Hydro (WNH) has included in its application a completed 2018 Rate Generator Model as Attachment A. The Model has been provided in both electronic (Excel) and PDF form. Additionally, Waterloo North Hydro has included the GA Analysis Work Form which was to be calculated outside of the Model in Attachment B. Waterloo North Hydro has also included its Settlement Agreement and Revenue Requirement Page 4 of 29 Waterloo North Hydro Inc. EB-2017-0080, 2018 IRM Filing Work Form from its 2016 Cost of Service Filing (EB-2015-0108) as Attachment D and E respectively. 2.2 Current Tariff Sheet Waterloo North Hydro has included in its application a PDF Copy of the Current January 1, 2017 Tariff Sheet as Attachment C. 2.3 Customers Affected This application will affect all of Waterloo North Hydro’s rate classes and therefore all of its customers. Waterloo North Hydro expects that its customers may require further information about rate impacts as a result of this application. It will undertake to inform and explain the rate changes and the reasons for them to customers. 2.4 Price Cap Index Adjustment Waterloo North Hydro has used the model proxy values of 1.9% as the Price Escalator (GDP-IPI), a 0.0% Productivity Factor and a Group III 0.3% Stretch Factor Value, for a Price Cap Index of 1.6%, as prescribed in Sheet 16 of the 2018 Rate Generator Model. Waterloo North Hydro understands that the Board staff will adjust, in Waterloo North Hydro’s 2018 rate application model, for the final GDP-IPI once it is available. 2.5 Accuracy of Billing Determinants Waterloo North Hydro confirms the accuracy of the billing determinants that were pre-populated in the model with the exception of the following items: Page 5 of 29 Waterloo North Hydro Inc. EB-2017-0080, 2018 IRM Filing i) On Sheet 3 Continuity Schedule there is a Group 1 Variance in Column BV of $320,595 however no total variance exists. ii) On Sheet 12 RTSR – Historical Wholesale the ‘Add Extra Host Here (I)’ and ‘Add Extra Host Here (II)’ cells are locked and therefore Kitchener Wilmot and Energy + respectively could not be entered. iii) On Sheet 19 Final Tariff Schedule wherever Class B CBR line is included it states ‘effective until January 01, 2018’. This should state ‘effective until December 31, 2018’. 2.6 Tax Sharing Waterloo North Hydro has included in its application the Tax Sharing Calculations in Sheets 8 and 9 of the Rate Generator Model. In accordance with IRM4, a 50/50 sharing of the impact of currently known legislated tax changes as applied to the tax level reflected in the Board- approved base rates has been calculated. There have been no known legislative tax changes and therefore no associated Tax Savings Rate Rider has been calculated for any rate class. 2.7 Deferral and Variance Account Balances Waterloo North Hydro has exceeded the disposition threshold of $.001/kWh of its Group 1 Account Deferral and Variance Account Balances as reflected in Sheet 4 of its 2018 Rate Generator Model. Waterloo North Hydro has included its detailed information and calculations in Sheet 3 to Sheet 7 of its 2018 Rate Generator Model and included its final proposed rate riders in Sheet 19 of its 2018 Rate Generator Model (Attachment A). The Group 1 Account Balances include the Low Voltage Variance Account; the Smart Metering Entity (SME) Charge Variance; the RSVA Page 6 of 29 Waterloo North Hydro Inc. EB-2017-0080, 2018 IRM Filing Accounts – Wholesale Market Service Charge, Variance WMS – Sub- account CBR Class B, Retail Transmission Network Charge, Retail Transmission Connection Charge, Power and Global Adjustment Balances and Disposition and Recovery/Refund of Regulatory Balances capture the variances from January 1, 2016 through December 31, 2016. Waterloo North Hydro is proposing a one year disposition period in the repayment of its Group 1 Deferral and Variance Account Balances at December 31, 2016. This disposition period is in accordance with the Board’s EDDVAR Report default disposition period of one year for deferral and variance accounts. Waterloo North Hydro has provided a summary of the Deferral and Variance accounts proposed for disposition in Table 2.7a below. Waterloo North Hydro notes that in Sheet 3 Column BQ of the 2018 Rate Generator Model it has recorded the Projected Interest for January 2017 to December 2017 on Waterloo North Hydro’s 2016 balances.