CASH WORKING CAPITAL

Transcription

1 Filed: EB-0-0 Exhibit B Page of.0 PURPOSE CASH WORKING CAPITAL This evidence presents OPG s methodology for calculating cash working capital. Application of this methodology produces a forecast of annual cash working capital in both 0 and 0 for the previously regulated hydroelectric facilities of $.M, for the newly regulated hydroelectric facilities of $.M and for the nuclear facilities of $.0M per year as follows: Chart Summary of Results - 0 through 0 Cash Working Capital ($M) Line Type Regulated Hydroelectric Nuclear No. Previously Newly (a) (b) (c) Generation Revenue 9... Other Revenue 0. HST (.) (.) (.9) Total OVERVIEW OPG continues to rely on the lead/lag study conducted in EB as the basis of its cash working capital calculation given that: ) the OEB accepted OPG s cash working capital calculation in the previous two hearings; ) the OEB s filing guidelines (EB-0-0) do not contemplate a new lead/lag study; and ) the amount of cash working capital remains small relative to the overall size of rate base. OPG has adopted the approach used in EB by applying the net lag days provided in its EB evidence to 0 actual revenues and expenses.

2 Filed: EB-0-0 Exhibit B Page of METHODOLOGY OPG s prescribed assets earn revenues from generation sales and other revenues. Consistent with the approach described in EB and EB , OPG has applied the net lag days provided in EB to revenue and expense categories using financial results for OPG s prescribed assets (including the newly regulated hydroelectric assets). For 00 to 0, actual financial results are used to determine the cash working capital for each of those years. The cash working capital amount determined for 0 is included in rate base for the bridge and test years, as the 0 calculation was the last assessment performed prior to the filing of evidence in this proceeding. Given the similarity of business operations across the hydroelectric fleet the same net lag days are used to determine the cash working capital for the newly regulated hydroelectric facilities as for the previously regulated hydroelectric facilities. As in EB and EB , in addition to the working capital calculations for generation sales and other revenues, cash working capital requirements related to commodity taxes (i.e., HST effective July, 00 and GST prior to that date) are calculated separately and are included as a component of cash working capital..0 GENERATION SALES The largest component of revenue for the prescribed assets is generation sales, which consist of electricity sales and the provision of ancillary services to the IESO. The revenue lag associated with generation sales and the associated expense leads, as described in EB , and detailed cash working capital calculations for 0 are provided in Chart for nuclear generation, Chart for previously regulated hydroelectric generation and Chart for newly regulated hydroelectric generation. categories are listed separately in the calculations of total cash working capital if the expense amount is greater than $M. Categories below $M are aggregated in the All other cash expenses line in Charts, and. Therefore, the number of expense lead days presented for the All other cash expenses line may differ from those shown in EB and EB to the extent categories below $M vary from prior years.] For 00 and 0, newly regulated hydroelectric asset information is provided for comparative purposes only and is based on estimates.

3 Filed: EB-0-0 Exhibit B Page of Chart Cash Working Capital - Nuclear Generation 0 Amount Revenue Net Lead/Lag Cash Working No. Category (a) (b) (c) (d) = (b) - (c) (e) = (a)*(d)/ OM&A - direct Labour, EPSCA Labour Consultants - Nuclear (.) (0.) Consultants - Corporate.. 0. (.) (.0) Computer Harware Maintenance Computer Software and Licences 9.. (.).. Augmented Staff - Nuclear.9.. (.) (0.) Oustside Services - Corporate Telecommunications... (.) (0.) 0 Utilities - Nuclear... (.) (0.) Facilities Operating Licences Utilities - Corporate... (.) (0.) Membership Fees.. (.9). 0.9 Transport Work Equipment.9..0 (0.) (0.) Travel and Accomodation...0 (0.) (0.) All other cash expenses OM&A - Centrally held Costs Pensions/OPEB Related Costs Performance Incentives (0.) (.0) 0 ONFA Guarantee Fee.. (.)..9 Fiscal Calendar Adjustment (.0) (0.) Insurance 0.. (0.) 9..9 Total OM&A. Other Costs: Property Taxes Income Tax Total Other Costs.0 Cash Working Capital - Nuclear.

4 Filed: EB-0-0 Exhibit B Page of Chart Cash Working Capital - Previously Regulated Hydroelectric Generation 0 Amount Revenue Net Lead/Lag Cash Working No. Category (a) (b) (c) (d) = (b) - (c) (e) = (a)*(d)/ GRC.. (.).. OM&A - direct Labour Consultants - Hydroelectric (0.) (.) Consultants - Corporate.. 0. (.) (0.) Oustside Services - Corporate All other cash expenses Total OM&A. Other Costs: Income Tax Total Other Costs. Cash Working Capital - Hydroelectric 9.

5 Chart Cash Working Capital - Newly Regulated Hydroelectric Generation 0 Filed: EB-0-0 Exhibit B Page of Amount Revenue Net Lead/Lag Cash Working No. Category (a) (b) (c) (d) = (b) - (c) (e) = (a)*(d)/ GRC.9. (.).. OM&A - direct Labour Consultants - Hydroelectric (0.) (.) Consultants - Corporate.. 0. (.) (0.) Oustside Services - Corporate All other cash expenses OM&A - Centrally held Costs Pensions/OPEB Related Costs..... Total OM&A. Cash Working Capital - Hydroelectric..0 OTHER REVENUE Other revenue consists of isotope and heavy water sales described in Ex. G--. The lead/lag days used to derive the cash working capital in EB and EB have been applied to the appropriate 0 expenses. Chart summarizes the results. Consistent with the OEB s Decision in EB that 0% of heavy water sales and related direct costs is to be included as an offset to the nuclear revenue requirement, 0% of OPG s heavy water revenue and direct costs are included in the 0 cash working capital calculations.

6 Filed: EB-0-0 Exhibit B Page of Chart Cash Working Capital - Other Revenue 0 Amount Revenue Net Lead/Lag Cash Working No. Category (a) (b) (c) (d) = (b) - (c) (e) = (a)*(d)/ 9 0 Labour All other cash expenses.. 0. (.0) 0.0 Total Cash Working Capital 0..0 HARMONIZED SALES TAX OPG pays HST to suppliers for the purchase of goods and services and remits HST that is collected on revenue to the government. The HST lag is the time between the HST payment date (to the supplier or to the government) and the date the government either refunds the HST to OPG or when OPG receives the input tax credit. OPG also collects HST from the IESO before making the remittance. The 0 HST cash working capital is calculated as shown in Chart : Chart Cash Working Capital - HST ($M) 0 Line Item Regulated Hydroelectric Nuclear No. Previously Newly (a) (b) (c) Generation Revenue (.0) (.) (.) Other Revenue. HST Payments - Regulated... Total (.) (.) (.9)

7 Filed: EB-0-0 Exhibit B Page of A similar approach was followed for calculating the portion of the cash working capital related to GST in historic years prior to its replacement with HST effective July, 00. Further details on HST are provided in Ex. F--, section.0.