SUMMARY OF CAPITAL EXPENDITURES

Transcription

1 Filed: May, 00 EB Exhibit D Tab Schedule Page of SUMMARY OF CAPITAL EXPENDITURES.0 SUMMARY OF CAPITAL BUDGET The proposed capital expenditures result from a rigorous business planning and work prioritization process that reflects risk-based decision-making to ensure that the appropriate, cost-effective solutions are put into place to meet Hydro One Transmission objectives. These processes are described in detail at Exhibit A, Tab, Schedules to Schedule. 0 The capital expenditures proposed in this filing represent investments that will ultimately become in-service capital assets supporting the Hydro One Transmission business. Specifically, these expenditures include: 0 a) design and development of specific assets providing future economic benefits; b) purchase, construction and commissioning of specific assets providing future economic benefits; c) additions to specific assets; and d) betterments that result in improvement of capacity, efficiency, useful life span, or economy of specific assets. As described in the following schedules of this Exhibit, the proposed capital programs address Hydro One Transmission s integrated set of asset replacement and expansion needs to meet its objectives of: public and employee safety; maintenance of transmission reliability at targeted performance levels; meeting system growth requirements; compliance with regulatory requirements (such as specified within the Transmission System Code); environmental requirements; and Government direction. The

2 Filed: May, 00 EB Exhibit D Tab Schedule Page of development of these capital programs is based on comprehensive asset condition information, system loading versus capacity information and various studies. Hydro One Transmission's capital budget is grouped into four different investment categories: Sustaining, Development, Operations, and Shared Services Capital. Table provides a summary of Hydro One Transmission s capital expenditures for the historical, bridge and test years. 0 Table Summary of Transmission Capital Budget ($ Million) Including Capitalized Overheads and AFUDC Description Historic Bridge Test Sustaining Development Operations Shared Services Capital TOTAL ,.,00. The Transmission Capital requirements have grown over the 00 to 0 period to address asset replacement and refurbishment needs of our aging system, and to expand the system for the purposes of load growth, accommodating a modified generation mix, and expanding access to interconnected electricity markets. 0 Investment Summary Documents in support of capital projects with cash flows in excess of $.0 million in either 0 or 0 are filed at Exhibit D, Tab, Schedule.

3 Filed: May, 00 EB Exhibit D Tab Schedule Page of.0 SUSTAINING The Sustaining capital program includes the costs for investments required to replace or refurbish components to ensure that existing transmission system facilities function as originally designed. Hydro One Transmission manages its sustaining program within two program categories, namely stations and lines. Details of the expenditures under this program are provided at Exhibit D, Tab, Schedule..0 DEVELOPMENT 0 The Development capital program consists of the investments required to upgrade or enhance transmission system capabilities to address load growth, generation connection requirements and transmission congestion, and to ensure that the system is designed and operated in a safe, secure and reliable manner. Details of the expenditures under this program are provided at Exhibit D, Tab, Schedule..0 OPERATIONS 0 The Operations capital program represents investments in infrastructure required to sustain the Central Transmission Operations function, which is operated from Hydro One's Ontario Grid Control Centre. Details of the expenditures under this program are filed at Exhibit D, Tab, Schedule..0 SHARED SERVICES AND OTHER CAPITAL Shared Services capital consists of the sustainment and enhancement of existing equipment and infrastructure, including computer-related hardware and software, facilities and transport and work equipment, as well as projects initiated to improve

4 Filed: May, 00 EB Exhibit D Tab Schedule Page of business support functions. Shared Services investments are described in detail at Exhibit D, Tab, Schedules through..0 COMPARISON OF CAPITAL COSTS TO BOARD APPROVED Table provides a comparison between the 00 actual capital expenditures and the 00 expenditures approved by the Board in their Decision on Hydro One Transmission s previous application in Proceeding EB Table 00 Board Approved versus 00 Actual Capital Expenditures Capital Category 00 Board Approved 00 Actuals Variance Sustaining Development.. (.) Operations Shared Services.. (0.) Total.. (.) Hydro One Transmission s capital expenditures in 00 were approximately $ million lower than the level approved by the Board due to the following offsetting work program factors: 0 Additional Sustaining program effort in order to meet NERC cyber-security requirements, as well as Protection and Control system reliability improvement priorities, partially offset by reallocation of Station Reinvestment program funding. In addition, during 00 there was a major 0 kv line failure north of Lake Superior that required above normal restoration expenditures.

5 Filed: May, 00 EB Exhibit D Tab Schedule Page of The Development program is under spent primarily due to delays in the new 00kV Bruce to Milton Double Circuit Line project approval and the Woodstock Area Transmission reinforcement due to land acquisition issues. Shared Services actual capital expenditures were lower than approved primarily due to lower Facilities and Real Estate spending related to a delay in the timing of the head office leasehold improvements compared with EB Table provides a comparison between the 00 projected capital expenditures and the 00 expenditures approved by the Board in their Decision in Proceeding EB Table 00 Board Approved versus 00 Projected Capital Expenditures Capital Category 00 Board Approved 00 Bridge Year Variance Sustaining. 0. (.) Development.. (0.) Operations. 0. (.) Shared Services... Total, (.) Hydro One Transmission s projected capital expenditures in 00 are $ million below the expenditure levels approved by the Board in EB-00-0 due to the following work program factors. 0 The Sustaining program is under spent due to delays in line refurbishment and station reinvestment projects; The Development program is under spent primarily due to delays in the new 00kV Bruce to Milton Double Circuit Line project approval as well as the reassessment of the timing of required projects in light of system conditions and/or customer requirements e.g. Static Var Compensator at Mississagi TS.

6 Filed: May, 00 EB Exhibit D Tab Schedule Page of 0 The Operations program is under spent due to an intentional slowing down of some programs and delays to projects in order to re-assess their scope and priorities in the face of major emerging new requirements associated with the green energy initiatives such as distributed generation and Smart Grid and the future evolution of NERC Cyber Security requirements. An increased Shared Services capital program due to the increase in Facilities and Real Estate spending for head office improvements including replacement of end of life furniture systems and additional investments required to secure leased administrative office space; greater Information Technology costs primarily related to a new Enterprise GIS Strategy and an increased Minor Fixed Asset Program; and, increased Transport and Work Equipment spending driven by the planned work program levels. Increases are partially offset by lower Cornerstone capital spending..0 STATUS OF NIAGARA REINFORCEMENT PROJECT (NRP) As of the summer of 00, completion of the project has been indefinitely delayed due to unforeseen circumstances which are out of the control of Hydro One Transmission. Expenditures to date are $ million. 0 In its Decision with Reasons in EB-00-00, the Board decided to allow Hydro One Transmission to expense rather than capitalize the AFUDC associated with the project based on the actual expenditures made to date, effective January, 00 with no explicit time limit as it remains uncertain when the Caledonia dispute will be resolved. As a result, through the current Ontario Uniform Transmission Rates, Hydro One is recovering the AFUDC associated with NRP. Hydro One Transmission is continuing to apply this OEB directive and as such the AFUDC associated with NRP has been included in the 0 and 0 Revenue Requirement (as referenced in Exhibit E, Tab, Schedule ).

7 Filed: May, 00 EB Exhibit D Tab Schedule Page of In its EB Decision, the Board also stated that if Hydro One requires additional relief prior to the project being completed and in-service, it is free to bring an application seeking such further relief. Hydro One Transmission remains hopeful that at some point it will be able to complete the NRP and is not seeking further relief at this time.