WATERLOO NORTH HYDRO INC. January 1, 2020 IRM Rate Filing EB-2019-0071 ED-2002-0575 Waterloo North Hydro Inc. EB-2019-0071, 2020 IRM Filing Waterloo North Hydro Inc. Distribution Rate Adjustment Application SUMMARY OF APPLICATION EB-2019-0071 / 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, 2020 Distribution Rate Adjustments and PILs, issued for the revised model and instructions and the Addendum to Filing Requirements on July 15, 2019, and in accordance with July 12, 2018 Chapter 3 of the Filing Requirements for Electricity Distribution Rate Applications. Article I. 1.0a Introduction 1.1 Waterloo North Hydro Inc. (“WNH”) submits this Application and supporting documentation for a rate adjustment and rate riders pursuant to the Ontario Energy Board’s Filing Guidelines for January 1, 2019 Distribution Rate Adjustments and PILs, issued for the instructions on July 12, 2018 as well as the revised models and Addendum to Filing Requirements for 2020 Rate Applications issued on July 15, 2019. 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. WNH operates under Electricity Distribution Licence ED-2002-0575. Page 1 of 33 Waterloo North Hydro Inc. EB-2019-0071, 2020 IRM Filing 1.3 WNH 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 WNH 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 WNH received Board approval on December 14, 2017 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 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 20, 2017 [EB-2017- 0080]. 1.6 WNH received Board approval on December 13, 2018 for rate adjustments, to be effective and implemented January 1, 2019, 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 18, 2018 [EB-2018- 0074]. Page 2 of 33 Waterloo North Hydro Inc. EB-2019-0071, 2020 IRM Filing 1.7 In this filing, WNH is seeking approval for rate adjustments, to be effective and implemented January 1, 2020, 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 12, 2018 as well as the Addendum to Filing Requirements for 2020 Rate Applications and model updates issued on July 15, 2019. 1.8 Contact Information for the 2020 IRM Application: Alyson Conrad Manager of Finance & Regulatory Affairs 519-888-5550 [email protected] 1.0b Company Size and Number of Customers 1.9 WNH is a municipally owned electric distribution company. WNH serves approximately 57,000 residential, commercial, and industrial customers in the City of Waterloo and the Townships of Wellesley and Woolwich. 1.0c Customer Profile 1.10 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. Page 3 of 33 Waterloo North Hydro Inc. EB-2019-0071, 2020 IRM Filing 1.11 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. 1.12 The General Service > 50 kW class is typically comprised of large commercial and industrial customers. 1.13 The Large Use class consists of one large use customer with an average load over five megawatts. 1.14 The Street Light class contributes less than 1% to the Company’s current distribution revenue. 1.15 The Unmetered Scattered Load class contributes less than 1% to the Company’s current distribution revenue. 1.16 The Embedded Distributor rate class contributes less than 1% to the Company’s current distribution revenue. 1.0d Previously Denied Amounts 1.17 WNH has not previously been denied any amounts that are included in the account balances in this application. 1.0e Internet Address WNH’s internet address is wnhydro.com for the purpose of viewing the application and related documents as required in the July 12, 2018 Filing Requirements for Electricity Distribution Rate Applications – 2018 Edition for 2019 Rate Applications. Page 4 of 33 Waterloo North Hydro Inc. EB-2019-0071, 2020 IRM Filing 2.0 Information supporting the data filed in this Application: WNH has provided the following Attachments: Attachment Description A Rate Generator Model B GA Analysis Workform & Appendix A Responses C 1595 Analysis Workform D Current January 1, 2019 Tariff Sheet E 2016 Cost of Service Settlement Agreement F Revenue Requirement Work Form G 2020 IRM Checklist 2.1 2020 Rate Generator and Supplementary Work Forms WNH has included in its application a completed 2020 Rate Generator Model as Attachment A. The Model has been provided in both electronic (Excel) and PDF form. Additionally, WNH has included the GA Analysis Workform which is calculated outside of the Model in Attachment B and the 1595 Analysis Workform in Attachment C. WNH has also included its Settlement Agreement and Revenue Requirement Work Form from its 2016 Cost of Service Filing (EB-2015-0108) as Attachment E and F respectively. WNH has also included the 2020 IRM Checklist as provided by the OEB. 2.2 Current Tariff Sheet WNH has included in its application a PDF Copy of the Current January 1, 2019 Tariff Sheet as Attachment D. 2.3 Customers Affected This application will affect all of WNH’s rate classes and therefore all of its customers. Page 5 of 33 Waterloo North Hydro Inc. EB-2019-0071, 2020 IRM Filing WNH 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 WNH has used the model proxy values of 1.5% 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 1.2%, as prescribed in Sheet 16 of the 2020 Rate Generator Model. WNH understands that Board staff will adjust, WNH’s 2020 rate application model, for the final GDP-IPI once it is available. 2.5 Accuracy of Billing Determinants WNH confirms the accuracy of the billing determinants that were pre-populated in the model with the exception of the following items: i) On Sheet 11 RTSR-UTRs & Sub-Tx 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. Additionally, the 2018 Rate cells were also locked and could not be entered. There should be no rate impact due to these cells. Because of the locked cells, the names in Sheet 12 RTSR – Historical Wholesale the host names are also not populated. ii) On Sheet 20 Bill Impacts, RTRS – Network and RTSR – Connection and/or Line and Transformation Connection charges for the Large Use rate class are not populating. These charges are populated on the Final Tariff Schedule. 2.6 Tax Sharing WNH 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 Page 6 of 33 Waterloo North Hydro Inc. EB-2019-0071, 2020 IRM Filing impact of currently known legislated tax changes as applied to the tax level reflected in the Board-approved base rates has been calculated. On July 25, 2019 the OEB released “Accounting Direction Regarding Bill C-97 and Other Changes in Regulatory or Legislated Tax Rules for Capital Cost Allowance. Included in these changes is the Accelerated Investment Incentive for eligible capital assets acquired after November 20, 2018. WNH did not have any eligible capital asset acquisitions after this date and therefore no associated Tax Savings Rate Rider has been calculated for any rate class.