PROJECT COSTS, ECONOMICS, AND OTHER PUBLIC INTEREST CONSIDERATIONS

Transcription

1 Filed: September, 00 EB-00-0 Schedule Page of PROJECT COSTS, ECONOMICS, AND OTHER PUBLIC INTEREST CONSIDERATIONS This set of exhibits describes the costs of the proposed facilities and the economics of the project including the economic feasibility, rate impacts, and benefits to Ontario electricity consumers. Other public interest considerations are also discussed. 0 Under the Ontario Energy Board Act,, public interest, as defined by Ontario regulation /000, means the interest of consumers with respect to the pricing, availability, reliability and quality of electricity service. Consumers are defined as those who use electricity that was not self-generated for their own consumption.

2 Filed: September, 00 EB-00-0 Schedule Page of 0 PROJECT COSTS The total estimated capital cost for the proposed facilities including overheads and an allowance for funds used during construction ("AFUDC"), is summarized in the tables below. Table Total Project Costs (Lines & Stations) Estimated Cost ($000's) Preliminary Engineering & Studies $ 00 Station and Telecommunications Facilities (Table below),000 Transmission Line (Table below) 0,00 Total $,000 0 Table Cost of Station Work Estimated cost ($000 s) Material $,00 Construction,00 Engineering,00 Commissioning,00 Contingencies,00 Cost before Overheads and AFUDC,000 Overheads,00 AFUDC,00 Total station work $,000

3 Filed: September, 00 EB-00-0 Schedule Page of Table Cost of Line Work 0 Estimated Cost (000 s as spent) Material $,0 Construction,0 Engineering 0 Contingencies,00 Cost before Overhead and AFUDC,0 Overhead,00 AFDUC 0 Total Lines work $ 0,00 Risks and Contingencies 0 As with most projects, there is some risk associated with estimating costs. Hydro One has recognized these risks in the project cost estimates. The estimates include an allowance for contingencies, based on past experience. As a result, Hydro One expects that the actual costs will not exceed the estimated costs. In the work estimates, allowance for contingencies has been included to cover a number of risks, including: Any variance between estimated costs and the actual tendered amount; Cost changes due to volatility of material prices (i.e. copper, major equipment) and the market in general; Unexpected soil conditions at the station site; and The availability of line outages in the construction phase.

4 Filed: September, 00 EB-00-0 Schedule Page of PROJECT ECONOMICS Economic Feasibility 0 The proposed Hurontario SS and line reinforcement facilities will be included in the Network pool for rate-making purposes with no capital contribution required from potential beneficiaries, consistent with the provisions of Section.. of the Transmission System Code. Since the proposed facilities are designed to maintain network reliability rather than to generate significant additional revenues, a detailed discounted cash flow analysis and capital contribution calculation based on incremental transmission costs and revenues is not a key determinate for this project. Nonetheless, a -year discounted cash flow analysis is provided in Table of this exhibit. The results indicate that the reinforcement project will have a net present value based on incremental cash flows that is close to zero (negative $.M), which will cause a very minor increase in the Network pool rate over the first few years of the project s in-service life, relative to the current rate level. The project s year-by-year rate impacts are assessed in the following section. Rate Impact Assessment 0 The analysis of the Network pool rate impact has been carried out on the basis of Hydro One s transmission revenue requirement for the year 000, and the most recently approved Ontario Transmission Rate Schedules. The Line Connection pool and Transformation Connection pool revenue requirements would be unaffected by the new reinforcement, based on the criteria used to allocate transmission costs to the three pools as approved by the Board in its RP--00 decision.

5 Filed: September, 00 EB-00-0 Schedule Page of 0 Based on the proposed reinforcement s incremental cash flows, a net increase in the Network pool revenue requirement will be required once this project is included in the transmission rate base in May of 00. The maximum revenue deficiency related to the proposed facilities will be $. million in the year 0, with a corresponding Network pool rate impact of 0.%. All else being equal, the provincial Network pool rate will increase by cents per MW from the current level of $. per month to $. per month, and will remain at that level until the following year (0). Thereafter the rate will rapidly decline in line with the depreciating assets and load growth such that by 0 the rate will have returned to its initial level of $.. Beyond that point the rate will decline below the initial level. The above analysis includes incremental load that will place the facilities above the thermal overload level discussed in, Tab, Schedule and shown in Figure therein. The detailed analysis illustrating the calculation of the incremental revenue deficiency and rate impact is provided in Table in this exhibit and the derivation of incremental load attributable to the project is shown in Table in this exhibit. 0 In order to assess the impact of the proposed facilities on end-use residential consumers of electricity in Ontario, the transmission component of a typical residential customer bill has been approximated. For a typical residential customer in Ontario, the transmission component of the delivered cost of electricity is approximately % of the total energy bill and the network portion is about % of the total transmission bill. Accordingly, as shown in the table below, the impact of the proposed facilities on the delivered cost of electricity for the typical Ontario residential customer consuming 000 kwh per month would be approximately 0.0% or cents a year.

6 Filed: September, 00 EB-00-0 Schedule Page of Impact on Typical Residential Customer A. Typical monthly bill ( per kwh x,000 kwh per month) $0 per month B. Transmission component of monthly bill (A x %) $.0 per month C. Network Pool share of Transmission component (B x %) $.0 per month D. Impact on Network Pool Provincial Uniform Rate (as per,, Schedule ) E. Increase in Network Pool share of Transmission component (C x D) 0.% $0.0 per month or $0. per year F. Net increase on typical residential customer bill (E / A) 0.0% Reduced Losses In, Tab, Schedule in its System Impact Assessment, the IESO states, Ontario system losses are being reduced by MW with the addition of the proposed facilities.

7 Filed: September, 00 EB-00-0 Schedule Page of Table - Revenue Requirement and Network Pool Rate Impact, page

8 Filed: September, 00 EB-00-0 Schedule Page of Table - Revenue Requirement and Network Pool Rate Impact, page

9 Filed: September, 00 EB-00-0 Schedule Page of Table Incremental Peak Load Forecast, p. 0 Source:, Tab, Schedule, The Joint Utility Planning Study, excerpt from Table A: Coincident load forecast in MVA. Loads from 0 to 0 are based on forecast loads provided by the LDCs. Hydro One used the years 00-0 for the technical analysis as shown in Table,, Tab, Schedule and used the forecast loads for a full 0 year outlook for the economic analysis.

10 Filed: September, 00 EB-00-0 Schedule Page of Table Incremental Peak Load Forecast, p. 0 Source:, Tab, Schedule, The Joint Utility Planning Study, excerpt from Table A: Coincident load forecast in MVA. Loads from 0 to 0 are based on forecast loads provided by the LDCs. Hydro One used the years 00-0 for the technical analysis as shown in Table,, Tab, Schedule and used the forecast loads for a full 0 year outlook for the economic analysis.

11 Filed: September, 00 EB-00-0 Schedule Page of Table DCF Analysis, Network Pool

12 Filed: September, 00 EB-00-0 Schedule Page of Table cont d DCF Analysis, Network Pool

13 Filed: September, 00 EB-00-0 Schedule Page of OTHER PUBLIC INTEREST CONSIDERATIONS Availability, Reliability, and Quality Impacts The proposed facilities will improve the reliability and quality of electricity service to consumers in the GTA West, including the Western Brampton and Northern Mississauga Areas as well as to Toronto and points beyond by providing relief to the network transmission lines connecting Trafalgar TS to Richview TS. 0 In the case of a -circuit fault at any point on the line RT/RT, the proposed facilities will limit the load loss to 00 MW thus enhancing availability of electricity service to consumers in the Western Brampton and Northern Mississauga Areas. As confirmed by IESO s System Impact Assessment (SIA) filed as, Tab, Schedule and the Joint Study filed as, Tab, Schedule, the facilities will improve the availability, reliability, and quality of electric service to consumers and will not adversely impact on the system or other transmission customers.