Re: Project No Pacific Northern Gas (N.E.) Ltd Revenue Requirements Application Update for Fort St. John/Dawson Creek Division

Transcription

1 B-7 Craig P. Donohue Director, Regulatory Affairs & Gas Supply Pacific Northern Gas Ltd. Suite West Georgia Street Vancouver, BC V6E 4E6 Tel: (604) Tel: (604) Via Courier November 23, 2007 B.C. Utilities Commission File No.: 4.2.7(2008) 6th Floor Howe Street Vancouver, B.C. V6Z 2N3 Attention: Erica M. Hamilton Commission Secretary Dear Ms. Hamilton: Re: Project No Revenue Requirements Application Update for Fort St. John/Dawson Creek Division Enclosed are 20 copies of all of the numerical schedules from PNG s Fort St. John/Dawson Creek division 2008 revenue requirements application updated as of November 23, 2007: 1. To provide an outlook for The Outlook 2007 figures are the sum of ten months actuals plus PNG s estimates for November and December To reflect some minor cost of service adjustments that came to light while PNG prepared its information responses. 3. To reflect the impact of the allowed return on common equity increasing from the forecast of 8.77 percent contained in the original application to 9.02 percent (i.e. approved low risk benchmark utility return of 8.62 percent plus 40 basis points relative risk premium). 4. To adjust the 2008 gas requirements forecast having regard to the impact of actual deliveries and customer counts as of the end of October 2007 on the gas requirements forecasts for the residential and small commercial customers. 5. To reflect the impact of assuming a lower income tax rate of 31.5 percent.

2 2 All of the numerical schedules from the original application are enclosed with the designation Updated Nov at the top of each page. In short, the original applied for revenue deficiency of $750,000 has increased to $802,000. A cost of service comparison table is enclosed in the format of the table at Tab Application, Page 2 comparing the updated November 23, 2007 applied for cost of service to the original October 10, 2007 applied for cost of service. Explanations of the major differences between the updated and original applications are described below. COST OF SERVICE CHANGES FROM ORIGINAL TO UPDATED APPLICATION Operating Expenses Budgeted labour expenses have decreased by $14,000 to reflect a correction in the budgeting of labour expenses. The Other expenses are higher as a result of increased shared service cost recovery from PNG due to slightly higher cost allocators. Administrative and General Expenses The Other expenses are higher as a result of increased shared service cost recovery from PNG due to slightly higher cost allocators. Transfers to Capital The transfer to capital rate reflected in the updated schedules is equal to percent, slightly higher than the percent figure set forth in the original application. This results from some fine tuning of the budget figures and is the main reason for the higher transfers to capital figures. Amortization Expense The 2008 credit amortization has decreased from $233,000 in the original application to $216,000 under the updated application. The main reason is the change in the short and long term debt interest deferral account to reflect updated calculations. Income Tax Expense The reduction in the provision for income taxes results primarily from the lower income tax rate. Return on Common Equity The return on common equity is slightly higher due to the increase in the allowed return on common equity from the forecast of 8.77 percent to 9.02 percent in the update.

3 3 Short Term Debt Interest Short term debt interest has increased to reflect updated interest rate forecasts. Long Term Debt Interest Long term debt interest has increased to reflect a correction to the determination of the embedded long term debt interest rate. GAS DELIVERIES AND MARGIN CHANGES The relative margin increase of $5,000 from the original application to the updated application reflect the impact of slightly lower forecast deliveries to the residential and small commercial customers and higher deliveries to the small industrial transportation service class. A new small industrial customer requested gas transportation service after the original application was filed. RSAM Rate Rider The Table at Tab Rates, Page 19 has been updated to reflect actual results to the end of October The proposed RSAM rate rider effective January 1, 2008 has changed slightly in the updated application compared to the original application, accordingly. Rate Summaries The estimated changes to the GCVA rate riders as of January 1, 2008 has been made and reflected in the rate summaries at Tab Rates. PNG s 4 th quarter gas supply cost report will be filed in early December 2007 seeking approval of gas supply cost rate changes. The gas supply cost rate changes specified at Tab Rates are illustrative and will not necessarily correspond to the rate changes requested in PNG s 4 th quarter gas supply cost report. PNG will be prepared to address questions respecting the enclosed at the negotiated settlement meeting scheduled for Tuesday, November 27, Yours truly, C.P. Donohue cc. Registered Intervenors

4 (Fort St. John / Dawson Creek Division) Updated Nov. 23'07 to Original Oct. 10'07 COST OF SERVICE COMPARISON ($000) Updated 2008 App. Original 2008 App. EXPENSES Nov. 23'07 Oct. 10'07 Difference Operating Labour 1,378 1,391 (14) Other 2,175 2,168 7 Sub-total 3,552 3,559 (7) Maintenance Labour Other Sub-total Administrative and General Labour Total Company Benefits Other Sub-total 1,469 1,467 2 Total (O, M, A & G) Excluding Co. Use 5,311 5,316 (5) Transfers to Capital Operating (201) (198) (2) Transfers to Capital Admin. & Gen. (205) (204) (2) Property Taxes Depreciation 1,349 1,349 (0) Amortization (216) (233) 17 Other Income (171) (171) 0 Total Expenses Excluding Co, Use 6,826 6,817 9 Income Taxes (3) Return on Common Equity 1,088 1, Short Term Debt Long Term Debt 1,493 1, Preferred Shares Total Cost of Service Excluding Co. Use 9,739 9, Company Use Gas Total Cost of Service Including Co. Use 10,138 10, to 2008 Cost of Service Increase (Dec to 2008 Margin Decrease (Increase) (19) (13) (5) 2008 Revenue Deficiency (Sufficiency)

5 Tab Application Page 3 (Fort St. John / Dawson Creek Division) Test Year 2008 vs. Decision 2007 COST OF SERVICE COMPARISON ($000) Test Year Decision Difference Outlook EXPENSES Total Subtotal 2007 Operating Labour 1,378 1, ,268 Other 2,175 1, ,063 Sub-total 3,552 3, ,331 Maintenance Labour Other Sub-total Administrative and General Labour Total Company Benefits (11) 498 Other Sub-total 1,469 1, ,435 Total (O, M, A & G) Excluding Co. Use 5,311 4, ,033 Transfers to Capital Operating (201) (193) (8) (193) Transfers to Capital Admin. & Gen. (205) (215) 10 (217) Property Taxes Depreciation 1,349 1, ,321 Amortization (216) (297) 81 (296) Other Income (171) (177) (153) Total Expenses Excluding Co, Use 6,826 6, ,382 Income Taxes Return on Common Equity 1,088 1, ,031 Short Term Debt (69) 280 Long Term Debt 1,493 1, ,173 Preferred Shares Total Cost of Service Excluding Co. Use 9,739 8, ,995 Company Use Gas Total Cost of Service Including Co. Use 10,138 9,352 9, to 2008 Cost of Service Increase (Decrease) to 2008 Margin Decrease (Increase) (19) 2008 Revenue Deficiency (Sufficiency) 802

6 (Fort St. John Division) Updated Nov. 23'07 Tab Rates Page 1 Summary of Proposed Rates Effective January 1, 2008 ($/GJ unless otherwise specified) Customer Class Residential (RS1) Rates Effective October 1, Revenue Requirement 2007 / 08 Gas Supply Cost Change Proposed Rates January 1, 2008 Rate Changes Monthly Fixed Charge $7.00 $7.00 $0.00 Small Commercial (RS2 Large Commercial (RS3) Delivery Charge Company Use (0.008) (0.008) GCVA Co. Use Rider (0.076) (0.015) (0.091) (0.015) RSAM (0.034) (0.034) Interim Rate Refund Rider - - Subtotal Delivery (0.057) Gas Supply Demand Gas Supply Commodity (0.355) (0.355) GCVA Commodity Rider (0.307) - (0.307) - Subtotal Commodity (0.327) (0.327) Total (0.384) (0.134) Monthly Fixed Charge $7.00 $7.00 $0.00 Delivery Charge Company Use (0.008) (0.008) GCVA Co. Use Rider (0.076) (0.015) (0.091) (0.015) RSAM (0.034) (0.034) Interim Rate Refund Rider - - Subtotal Delivery (0.057) Gas Supply Demand Gas Supply Commodity (0.340) (0.340) GCVA Commodity Rider (0.307) - (0.307) - Subtotal Commodity (0.313) (0.313) Total (0.370) (0.198) Monthly Fixed Charge $ $ $0.00 Delivery Charge Company Use (0.008) (0.008) GCVA Co. Use Rider (0.076) (0.015) (0.091) (0.015) Interim Rate Refund Rider - - Subtotal Delivery (0.023) Gas Supply Demand Gas Supply Commodity (0.220) (0.220) GCVA Commodity Rider (0.307) - (0.307) - Subtotal Commodity (0.192) (0.192) Total (0.215) (0.085) Rate Schedules-08.xls FSJ

7 (Fort St. John Division) Updated Nov. 23'07 Tab Rates Page 2 Summary of Proposed Rates Effective January 1, 2008 ($/GJ unless otherwise specified) Customer Class Commercial Transportation (RS23 Rates Effective October 1, Revenue Requirement 2007 / 08 Gas Supply Cost Change Proposed Rates January 1, 2008 Rate Changes Monthly Fixed Charge $ $ $0.00 Delivery Charge Company Use (0.008) (0.008) GCVA Co. Use Rider (0.076) (0.015) (0.091) (0.015) Subtotal Delivery (0.023) Small Industrial (RS4) Monthly Fixed Charge $ $ $0.00 Delivery Charge Company Use (0.008) (0.008) GCVA Co. Use Rider (0.076) (0.015) (0.091) (0.015) Interim Rate Refund Rider - - Subtotal Delivery (0.023) Gas Supply Demand Gas Supply Commodity GCVA Commodity Rider (0.307) - (0.307) - Subtotal Commodity Total Small Industrial Service (RS6) Monthly Fixed Charge $ $ $0.00 Delivery Charge Company Use (0.0080) (0.0080) GCVA Co. Use Rider (0.0760) (0.0150) (0.0910) (0.0150) Subtotal Delivery (0.023) Small Industrial Service (RS7 Monthly Fixed Charge $3, $3, $0.00 Delivery Charge Company Use (0.0080) (0.0080) GCVA Co. Use Rider (0.076) (0.0150) (0.0910) (0.0150) Subtotal Delivery (0.023) Authorized Overrun (0.0080) Rate Schedules-08.xls FSJ

8 (Fort St. John Division) Updated Nov. 23'07 Tab Rates Page 3 Summary of Proposed Rates Effective January 1, 2008 ($/GJ unless otherwise specified) Customer Class Small Industrial Service (RS9 Rates Effective October 1, Revenue Requirement 2007 / 08 Gas Supply Cost Change Proposed Rates January 1, 2008 Rate Changes Monthly Fixed Charge $8, $8, $0.00 Delivery Charge Company Use (0.0080) (0.0080) GCVA Co. Use Rider (0.0760) (0.0150) (0.0910) (0.0150) Subtotal Delivery (0.023) Small Industrial Service (RS10 Monthly Fixed Charge $3, $3, $0.00 Delivery Charge Company Use (0.0080) (0.0080) GCVA Co. Use Rider (0.0760) (0.0150) (0.0910) (0.0150) Subtotal Delivery (0.023) Small Industrial Service (RS11 Monthly Fixed Charge $3, $3, $0.00 Delivery Charge Company Use (0.0080) (0.0080) GCVA Co. Use Rider (0.0760) (0.0150) (0.0910) (0.0150) Subtotal Delivery (0.023) Rate Schedules-08.xls FSJ

9 Tab Rates Page 4 (Dawson Creek Division) Summary of Proposed Rates Effective January 1, 2008 ($/GJ unless otherwise specified) Customer Class Residential (RS1) Rates Effective October 1, Revenue Requirement 2007 / 08 Gas Supply Cost Change Proposed Rates January 1, 2008 Rate Changes Monthly Fixed Charge $7.00 $7.00 $0.00 Delivery Charge Company Use (0.008) (0.008) GCVA Co. Use Rider (0.076) (0.015) (0.091) (0.015) RSAM (0.034) (0.034) Interim Rate Refund Rider Subtotal Delivery (0.057) Gas Supply Demand Gas Supply Commodity (0.355) (0.355) GCVA Commodity Rider (0.307) - (0.307) Subtotal Commodity (0.327) (0.327) Total (0.384) (0.134) Small Commercial (RS2) Monthly Fixed Charge $7.00 $7.00 $0.00 Delivery Charge Company Use (0.008) (0.008) GCVA Co. Use Rider (0.076) (0.015) (0.091) (0.015) RSAM (0.034) (0.034) Interim Rate Refund Rider Subtotal Delivery (0.057) Gas Supply Demand Gas Supply Commodity (0.340) (0.340) GCVA Commodity Rider (0.307) - (0.307) - Subtotal Commodity (0.313) (0.313) Total (0.370) (0.198) Large Commercial (RS3) Monthly Fixed Charge $ $ $0.00 Delivery Charge Company Use (0.008) (0.008) GCVA Co. Use Rider (0.076) (0.015) (0.091) (0.015) Interim Rate Refund Rider Subtotal Delivery (0.023) Gas Supply Demand Gas Supply Commodity (0.220) (0.220) GCVA Commodity Rider (0.307) - (0.307) Subtotal Commodity (0.192) (0.192) Total (0.215) (0.085) Rate Schedules-08.xls DC

10 Tab Rates Page 5 (Dawson Creek Division) Summary of Proposed Rates Effective January 1, 2008 ($/GJ unless otherwise specified) Customer Class Commercial Transportation (RS23 Rates Effective October 1, Revenue Requirement 2007 / 08 Gas Supply Cost Change Proposed Rates January 1, 2008 Rate Changes Monthly Fixed Charge $ $ $0.00 Delivery Charge Company Use (0.008) (0.008) GCVA Co. Use Rider (0.076) (0.015) (0.091) (0.015) Subtotal Delivery (0.023) Small Industrial (RS4 Monthly Fixed Charge $ $ $0.00 Delivery Charge Company Use (0.008) (0.008) GCVA Co. Use Rider (0.076) (0.015) (0.091) (0.015) Subtotal Delivery (0.023) Gas Supply Demand Gas Supply Commodity GCVA Commodity Rider (0.307) - (0.307) - Subtotal Commodity Total Rate Schedules-08.xls DC

11 Tab Rates Page 6 (Fort St. John/Dawson Creek Division) Bill Comparison October 2007 to January 2008 FORT ST. JOHN AREA Permanent Rates Annual Bill Proposed Rates Annual Bill Annual Bill Customer Classification Oct. 1, 2007 Estimate Jan. 1, 2008 Estimate Difference Annual Use $ / GJ $ $ / GJ $ $ % Residential: GJ Monthly Fixed 7.00 / mo Delivery Charge GCVA Co. Use Rider (0.076) (9.08) (0.091) (10.87) (1.79) RSAM Rider (4.11) % Gas Supply Charge (39.05) GCVA Rider (0.307) (36.69) (0.307) (36.69) (0.00) (39.06) -4.4% $ /GJ $1, $ /GJ $1, ($16.05) -1.3% Small Commercial: GJ Monthly Fixed 7.00 / mo Delivery Charge , , GCVA Co. Use Rider (0.076) (40.09) (0.091) (48.00) RSAM Rider (18.15) 1, , % Gas Supply Charge , , (165.11) GCVA Rider (0.307) (162.05) (0.307) (162.05) (0.00) 3, , (165.11) -4.2% $9.751 /GJ $5, $9.553 /GJ $5, ($104.65) -2.0% Billcomparisons-08.xls FSJ Bill Comp

12 Tab Rates Page 7 (Fort St. John/Dawson Creek Division) Bill Comparison October 2007 to January 2008 DAWSON CREEK AREA Permanent Rates Annual Bill Proposed Rates Annual Bill Annual Bill Customer Classification Oct. 1, 2007 Estimate Jan. 1, 2008 Estimate Difference Annual Use $ / GJ $ $ / GJ $ $ % Residential: GJ Monthly Fixed 7.00 / mo Delivery Charge GCVA Co. Use Rider (0.076) (9.18) (0.091) (10.99) (1.81) RSAM Rider (4.15) Interim Rate Refund Rider % Gas Supply Charge (39.49) GCVA Rider (0.307) (37.09) (0.307) (37.09) (39.48) -4.4% $ /GJ $1, $ /GJ $1, ($16.22) -1.3% Small Commercial: GJ Monthly Fixed 7.00 / mo Delivery Charge , GCVA Co. Use Rider (0.076) (45.59) (0.091) (54.59) (9.00) RSAM Rider (20.64) 1, , % Gas Supply Charge , , (187.77) GCVA Rider (0.307) (184.29) (0.307) (184.29) , , (187.77) -4.2% $9.195 /GJ $5, $8.996 /GJ $5, ($119.02) -2.2% Billcomparisons-08.xls DC Bill Comp

13 Tab Rates Page 8 (Fort St. John/Dawson Creek Division) Bill Comparison October 2007 to January 2008 Average of Fort St. John and Dawson Creek Permanent Rates Annual Bill Proposed Rates Annual Bill Annual Bill Customer Classification Oct. 1, 2007 Estimate Jan. 1, 2008 Estimate Difference Annual Use $ / GJ $ $ / GJ $ $ % Residential: GJ Monthly Fixed 7.00 / mo Delivery Charge GCVA Co. Use Rider (0.076) (9.13) (0.091) (10.93) (1.80) RSAM Rider (4.13) % Gas Supply Charge (39.27) GCVA Rider (0.307) (36.89) (0.307) (36.89) (0.00) (39.27) -4.4% $ /GJ $1, $ /GJ $1, ($16.13) -1.3% Small Commercial: GJ Monthly Fixed 7.00 / mo Delivery Charge , , GCVA Co. Use Rider (0.076) (42.84) (0.091) (51.30) RSAM Rider (19.40) 1, , % Gas Supply Charge , , (176.44) GCVA Rider (0.307) (173.17) (0.307) (173.17) (0.00) 4, , (176.44) -4.2% $9.472 /GJ $5, $9.274 /GJ $5, ($111.84) -2.1% Note: This bill comparison is the average of the uses per account and rates that apply to each of the Fort St. John and Dawson Creek delivery areas. Billcomparisons-08.xls FSJDC Bill Comp

14 Tab Rates Page 9 (Fort St. John/Dawson Creek Division) SUMMARY OF GAS DELIVERY CHARGE PROPOSED RATE CHANGES EFFECTIVE JANUARY 1, Allocation of Rate Changes Test Year Gross Revenue for Revenue Customer Classification Gas Deliveries Margin Sufficiency Deficiency (GJ) ($) ($) ($/GJ) Residential (RS1) ,961, , Commercial Small Commercial (RS2) ,410, , Large Commercial Firm (RS3) ,159 30, Commercial Transportation (RS23) ,393 21, Total Commercial ,015, ,132 Small Industrial Sales (RS4) ,133 18, Total Sales ,195, ,325 Industrial Transport RS ,363 43, RS ,028 8, RS ,691 11, RS ,105 29, RS ,835 4, Total Transport ,140,022 97,971 TOTAL ,296

15 Tab Rates Page 10 (Fort St. John/Dawson Creek Division) SUMMARY OF REVENUE, COST OF GAS, GROSS MARGIN EFFECTIVE JANUARY 1, Test Year Cost of Gross Customer Classification Gas Deliveries Revenue Gas Margin (GJ) ($) ($) ($) Residential (RS1) ,961,265 Commercial Small Commercial (RS2) ,410,779 Large Commercial Firm (RS3) ,159 Commercial Transportation (RS23) ,393 Total Commercial ,015,331 Small Industrial Sales (RS4) ,133 Total Sales Industrial Transport RS ,363 RS ,028 RS ,691 RS ,105 RS ,835 Total Industrial Transport TOTAL ,324,

16 (Fort St. John / Dawson Creek Division) Updated Nov. 23'07 Tab Rates Page 11 Derivation of Test Year Forecast Gas Deliveries FORT ST. JOHN Test Year 2008 Estimated Test Year Test Year Average Test Year Customer Count Effective Customer Weighted Average Use Per Account Deliveries Customer Classification At Dec. 31st, 2007 Additions Customer Count (GJ) (GJ) Sales: Residential (Rate 1 ) 8, , ,071,480 Commercial Small Commercial (Rate 2) 1, , ,486 Large Commercial Firm (Rate 3) 118,998 Commercial Transportation (RS23) 72,140 Small Industrial Sales (RS4) 167,995 Subtotal Sales 2,194,099 Industrial Transport 2008 Test Year Gas Sales (GJ) RS6 474,000 RS7 260,000 RS9 70,000 RS10 428,000 RS11 85,000 Subtotal Transport 1,317,000 Total 3,511,099 DAWSON CREEK Test Year 2008 Test Year Test Year Average Test Year Customer Count Effective Customer Weighted Average Use Per Account Deliveries Customer Classification At Dec. 31st, 2007 Additions Customer Count (GJ) (GJ) Sales: Residential (Rate 1 ) 5, , ,493 Commercial Small Commercial (Rate 2) ,968 Large Commercial Firm (Rate 3) 113,600 Commercial Transportation (RS23) 67,825 Total Commercial 622,393 Small Industrial Sales (RS4) 42,210 Total 1,298,096

17 (Fort St. John/Dawson Creek Division) Summary of Test Year Gas Sales Supporting Schedule Updated Nov. 23'07 Tab Rates Page 12 Test Year 2008 Test Year Test Year Average Test Year Customer Count + Effective Customer = Weighted Average x Use Per Account = Deliveries Customer Classification At Dec. 31st, 2007 Additions Customer Count (GJ) (GJ) Sales: Residential (Rate 1 ) 14, , ,704,973 Commercial Small Commercial (Rate 2) 2, , ,204,454 Large Commercial Firm (Rate 3) 232,598 Commercial Transportation (RS23) 139,965 Total Commercial 1,577,017 Small Industrial Sales (RS4) 210,205 Subtotal Sales 3,492,195 Transport 2008 Test Year Gas Sales (GJ) RS6 474,000 RS7 260,000 RS9 70,000 RS10 428,000 RS11 85,000 Subtotal Transport 1,317,000 Total 4,809,195

18 (Fort St. John / Dawson Creek Division) Updated Nov. 23'07 Tab Rates Page 12 Derivation of Test Year Forecast Gross Margin 2008 Current Weighted Total Fort St. John Test Year Delivery Avg. Delivery Test Year Deliveries Charge Delivery Customer Current Fixed Charge & Fixed Charge Gross Customer Classification (GJ) $ / GJ Margin Count Fixed Charge Margin Margin Margin Sales: Residential (Rate 1 ) 1,071, ,446,189 8,972 * ,648 3,199,837 3,199,837 Commercial Small Commercial (Rate 2) 763, ,562,092 1, ,548 1,683,640 1,683,640 Large Commercial (Rate 3) 118, , , , ,860 Commercial Transport (Rate 23) 72, , , , ,292 Total Commercial 954,624 1,859,044 1, ,748 2,044,792 2,044,792 Small Industrial (Rate 4) 167, , , , ,140 Subtotal Sales 2,194,099 4,435, ,836 5,409,769 5,409,769 Transportation: 2008 Current Weighted Total Test Year Delivery Avg. Delivery Test Year Deliveries Charge Delivery Customer Current Fixed Charge & Fixed Charge Gross (GJ) $ / GJ Margin Count Fixed Charge Margin Margin Margin Rate 6 474, , , , ,363 Rate 7 260, , , , , ,028 Rate 9 70, , , , , ,691 Rate , , , , , ,105 Rate 11 85, , , ,140 56,835 56,835 Subtotal Transportation 1,317, , ,964 1,140,022 1,140,022 Total Fort St. John 3,511,099 5,095,991 1,453,800 6,549,791 6,549, Current Weighted Total Dawson Creek Test Year Delivery Avg. Delivery Test Year Deliveries Charge Delivery Customer Current Fixed Charge & Fixed Charge Gross Customer Classification (GJ) $ / GJ Margin Count Fixed Charge Margin Margin Margin Sales: Residential (Rate 1 ) 633, ,320,833 5, ,580 1,761,413 1,761,413 Commercial Small Commercial (Rate 2) 440, , , , ,161 Large Commercial (Rate 3) 113, , , , ,294 Commercial Transport (Rate 23) 67, , , , ,087 Total Commercial 622, , , , ,542 Small Industrial (Rate 4) 42, , ,840 53,992 53,992 Subtotal Sales 1,298,096 2,212, ,060 2,785,946 2,785,946 Total Dawson Creek 1,298,096 2,212, ,060 2,785,946 2,785,946

19 (Fort St. John / Dawson Creek Division) Updated Nov. 23'07 Tab Rates Page 13 Derivation of Test Year Forecast Gross Margin 2008 Current Weighted Total FSJ / DC Combined Test Year Delivery Avg. Delivery Test Year Gas Sales Charge Delivery Customer Current Fixed Charge & Fixed Charge Gross Customer Classification (GJ) $ / GJ Margin Count Fixed Charge Margin Margin Margin Sales: Residential (Rate 1 ) 1,704,973 3,767,022 14, ,194,228 4,961,250 4,961,250 Commercial Small Commercial (Rate 2) 1,204,454 2,227,513 2, ,288 2,410,801 2,410,801 Large Commercial (Rate 3) 232, , , , ,154 Commercial Transport (Rate 23) 139, , , , ,379 Total Commercial 1,577,017 2,706,946 2, ,388 3,015,334 3,015,334 Small Industrial (Rate 4) 210, , , , ,132 Subtotal Sales 3,492,195 6,648,820 1,546,896 8,195,716 8,195,716 Transportation: 2008 Current Weighted Total Test Year Delivery Avg. Delivery Test Year Gas Sales Charge Delivery Customer Current Fixed Charge & Fixed Charge Gross (GJ) $ / GJ Margin Count Fixed Charge Margin Margin Margin Rate 6 474, , , , ,363 Rate 7 260, , , , , ,028 Rate 9 70, , , , , ,691 Rate , , , , , ,105 Rate 11 85, , , ,140 56,835 56,835 Subtotal Transportation 1,317, , ,964 1,140,022 1,140,022 Total Fort St. John / Dawson Creek 4,809,195 7,308,877 2,026,860 9,335,738 9,335,738

20 (Fort St. John / Dawson Creek Division) Updated Nov. 23'07 Tab Rates Page 14 Derivation of Test Year Forecast Gas Supply Cost 2008 Fort St. John Test Year Gas Cost Total Deliveries Charge Gas Cost Customer Classification (GJ) ($ / GJ) ($) Residential (Rate 1 ) 1,071, ,016,813 Commercial Small Commercial (Rate 2) 763, ,704,004 Large Commercial (Rate 3) 118, ,349 Total Commercial 882,484 6,579,353 Small Industrial (Rate 4) 167, ,216,620 Total Fort St. John 2,121,959 15,812, Dawson Creek Test Year Gas Cost Total Deliveries Charge Gas Cost Customer Classification (GJ) ($ / GJ) ($) Residential (Rate 1 ) 633, ,739,795 Commercial Small Commercial (Rate 2) 440, ,294,472 Large Commercial (Rate 3) 113, ,642 Total Commercial 554,568 4,130,114 Small Industrial (Rate 4) 42, ,685 Total Dawson Creek 1,230,271 9,175,593

21 (Fort St. John / Dawson Creek Division) Updated Nov. 23'07 Tab Rates Page 15 Derivation of Test Year Forecast Gas Supply Cost 2008 FSJ / DC Combined Test Year Gas Cost Total Deliveries Charge Gas Cost Customer Classification (GJ) ($ / GJ) ($) Residential (Rate 1 ) 1,704, ,756,608 Commercial Small Commercial (Rate 2) 1,204, ,998,476 Large Commercial (Rate 3) 232, ,710,991 Total Commercial 1,437,052 10,709,467 Small Industrial (Rate 4) 210, ,522,305 Total Fort St. John / Dawson Creek 3,352,230 24,988,379

22 (Fort St. John/Dawson Creek Division) Determination of Gas Supply Cost Rate Changes Effective January 1, 2008 Using August 31, 2007 Forward Gas Strip Customer Classification Gas Supply Costs Rates Gas Supply Costs Proposed Rates Proposed Rate Changes Rates Effective October 1, 2007 Proposed Rates Effective January 1, 2008 Effective January 1, 2008 Company Company Company Demand Commodity Total Use Gas Demand Commodity Total Use Gas Demand Commodity Total Use Gas ($/GJ) ($/GJ) D&C ($/GJ) ($/GJ) ($/GJ) D&C ($/GJ) ($/GJ) ($/GJ) D&C ($/GJ) Residential (RS1) ( 0.355) ( 0.327) ( 0.008) Small Commercial (RS2) ( 0.340) ( 0.313) ( 0.008) Large Commercial (RS3) ( 0.220) ( 0.192) ( 0.008) Small Industrial (RS4) ( 0.008) Company Use ( 0.008) Transportation Service ( 0.008) FSJ-DC Retail Rate Changes FSJ-DC-08.xls

23 Tab Rates Page 17 (Fort St. John/Dawson Creek Division) ALLOCATION OF DEMAND CHARGES EFFECTIVE JANUARY 1, 2008 Peak Day Allocation of 2008 Annual Unit Demand Customer Classification Requirement Demand Charges Requirements Charge (GJ) (%) ($) (GJ) ($/GJ) Residential (RS1) % 90, Small Commercial (RS2) % 61, Large Commercial (RS3) % 12, Industrial Sales (RS4) % 4, Company Use Gas % 1, Total % 169, FSJ-DC-08.xls FSJ-DC Demand Chrg Allocation

24 Tab Rates Page 18 (Fort St. John/Dawson Creek Division) Determination of 2008 Unit Company Use Gas Cost Rate Using August 31, 2007 Forward Gas Strip Commodity Cost $385,281 B.C.S.S. Tax $12,248 Demand Cost $1,406 Total Co. Use Gas Cost $398,935 Total Company use gas requirement GJ Deliveries GJ 2008 Unit Company Use Gas Cost Rate $0.083 /GJ $398, Commodity Cost of Company Use Gas per GJ Purchased $7.218 /GJ $385, FSJ-DC-08.xls FSJ-DC Company Use

25 Tab Rates Page 19 (Fort St. John/Dawson Creek Division) Determination of 2008 Revenue Stabilization Adjustment Mechanism (RSAM) Rider Residential Small Commercial Total Actual RSAM Balance at Year-end 2006 $707,776 $492,043 $1,199,819 Estimated RSAM Recovery / Deferral in 2007 ($162,409) ($141,943) ($304,352) Estimated RSAM Balance at Year-end 2007 $545,367 $350,100 $895,467 Years of Amortization RSAM Balance divided by 3 Equals Amortization $181,789 $116,700 $298,489 Forecast 2008 Deliveries 1,704,970 1,204,452 2,909,422 One Year of Amortization divided by 2008 Deliveries equals RSAM Rate Rider ($/GJ) FSJ-DC-08.xls RSAM

26 Tab Rates Page 20 (Fort St. John/Dawson Creek Division) Forward Gas Price Strip August 31, 2007 STATION #2 AECO CDN$/GJ CDN$/GJ Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Average FSJ-DC-08.xls Forward Gas Strip

27 Tab 1 Page 1 (Fort St. John/Dawson Creek Division) UTILITY INCOME & RETURN SCHEDULE 1 (000's) Line Test Year Decision Outlook No Source 1 Energy sales (TJ) 3,352 3,403 3,337 Tab Rates, page 7 2 Average rate per GJ $10.03 $10.46 $ Transportation service (TJ) 1,457 1,367 1,297 Tab Rates, page 7 5 Average rate per GJ $1.04 $0.96 $ Total deliveries (TJ) 4,809 4,769 4,634 Tab Rates, page Utility revenue 10 Energy sales $32,933 $35,524 $33,909 Tab Rates, page Interim rates - sales Tab Rates, page 9 12 Transportation service 1,391 1,300 1,187 Tab Rates, page Interim rates - transportation Tab Rates, page ,126 36,914 35, Cost of sales 24,988 27,562 25,868 Tab Rates, page 10 & Gross margin 10,138 9,352 9, Operating expenses 3,751 3,513 3,572 Tab 1, page 2, line 6 21 Maintenance expenses Tab 1, page 2, line Admin. & general expenses 1,264 1,207 1,218 Tab 1, page 2, line Property taxes Tab 1, page 6, line 4 24 Depreciation 1,349 1,308 1,321 Tab 2, page 6, line Amortization (216) (297) (296) Tab 2, page 9, line Investment income, other revenue (171) (177) (153) Tab 1, page 7, line ,225 6,713 6, Earned return before income taxes 2,913 2,639 2, Income taxes Tab 3, page 1, line Earned return $2,637 $2,416 $2, Utility rate base $33,494 $31,966 $32,666 Tab 2, page 1, line Return on rate base 7.87% 8.00% 6.99% Tab 5, page 1, line 23

28 Tab 1 Page 2 (Fort St. John/Dawson Creek Division) SUMMARY OF OPERATING, MAINTENANCE & ADMINISTRATIVE & GENERAL EXPENSES (000's) Line Test Year Decision Outlook No. Account and Description OPERATING EXPENSES 2 - wages $1,378 $1,283 $1, gas transferred to capital (201) (193) (193) 5 - other 2,175 1,989 2,063 6 Total Operating 3,751 3,513 3,572 7 MAINTENANCE EXPENSES 8 - wages other Total Maintenance Error 11 ADMINISTRATIVE AND GENERAL EXPENSES 12 - wages benefits transferred to capital (205) (215) (217) 15 - other Total Admin & General 1,264 1,207 1, TOTAL EXPENSES $5,304 $4,991 $5,057

29 Tab 1 Page 3 (Fort St. John/Dawson Creek Division) OPERATING EXPENSES (000's) Line Test Year Decision Outlook No. Account and Description Communications $13 $13 $ Pipelines Pipelines - Gas Regulating stations Regulating stations - Gas Total transmission Supervision Removing & resetting meters Service on customer premises Mains and services Regulating stations Other Total distribution Communications General systems operations Shared Services from Parent Other general operations Transferred to capital (201) (193) (193) 19 Total general Sales supervision Advertising Demonstration and selling Other Total sales Customer contracts Shared Services from Parent Meter reading Customer billing Shared Services from Parent Credit and collections Shared Services from Parent Uncollectible accounts Total customer accounting 1,250 1,163 1, Total operating $3,751 $3,513 $3,572

30 Tab 1 Page 4 (Fort St. John/Dawson Creek Division) MAINTENANCE EXPENSES (000's) Line Test Year Decision Outlook No. Account and Description Communications $1 $1 $ Pipe lines Compressors Regulating stations Total transmission Structures Mains and services Regulating stations Meters Other Total distribution Communications General Total general Total maintenance $290 $270 $267

31 Tab 1 Page 5 (Fort St. John/Dawson Creek Division) ADMINISTRATIVE AND GENERAL EXPENSES (000's) Line Test Year Decision Outlook No. Account and Description Administration $4 $2 $2 2 Shared Services from Parent Audit, legal & consulting fees Insurance Reserve for damages Employee benefits Shared Services from Parent Regulation Donations Transferred to capital (205) (215) (217) 11 Total general and administrative $1,264 $1,207 $1,218

32 Tab 1 Page 6 (Fort St. John/Dawson Creek Division) TAXES OTHER THAN INCOME TAXES (000's) Line Test Year Decision Outlook No. Account and Description PROPERTY TAXES 2 Regular $698 $670 $ % in lieu TOTAL $958 $887 $887

33 Tab 1 Page 7 (Fort St. John/Dawson Creek Division) MISCELLANEOUS OPERATING REVENUE (000's) Line Test Year Decision Outlook No. Description Penalty charges $110 $110 $101 2 Connection Fees Rents Overheads recovered Automotive surcharges Other $171 $177 $153

34 Tab 2 Page 1 (Fort St. John/Dawson Creek Division) UTILITY RATE BASE SCHEDULE 2 (000's) Line Test Year Decision Outlook No Source 1 Plant in service beginning of year $61,263 $58,689 $58,689 Tab 2, page 3, line 46 2 Additions 2,549 2,625 2,862 Tab 2, page 3, line 46 3 Disposals (127) (61) (287) Tab 2, page 3, line Plant in service end of year 63,685 61,253 61,263 6 Accumulated depreciation 24,378 23,000 22,801 Tab 2, page 6, line Net plant in service end of year 39,307 38,253 38, Net plant beginning of year 38,462 37,274 37,273 Tab 2, pages 3 & 6, lines 46 & Net plant in service midyear 38,885 37,763 37, Contributions for construction (7,010) (7,051) (7,092) Tab 2, page 16, line Unamortized deferred charges Tab 2, page 9, line Deferred income taxes (553) (553) (553) 17 Reserve for damages (69) (69) (69) 18 Cash working capital 1, ,551 Tab 2, page 10, line 8 19 Other working capital Tab 2, page 15, line Utility rate base, midyear $33,494 $31,966 $32,666

35 Tab 2 Page 2 Fort St. John / Dawson Creek Division GAS PLANT IN SERVICE Actual 2006 Line Description Balance ($ 000's) Forecast Forecast Ending Additions (incl O/H) Allocations Transfers Retirements Balance 1 Transmission plant Land Land rights Compressor structures Regulating structures Mains 6, , Compressor equipment Regulating equipment 2, , Communications Other , , Distribution plant Land Land rights Structures 1, , Services 13, , House installations 4, , Mains 20,889 1, , Compressor equipment Regulating equipment 1, , Meters 1, , Other ,412 1, , General plant Land Land rights Structures 1,196 1, Office equipment Transportation equipment 1, (287) Heavy work equipment Tools 1, , Computer equipment Communications Other (4) (4) 39 5, (287) 5, Construction overheads 41 Unallocated construction costs 43 (43) 42 System operations transfers 209 (209) 43 Administrative transfers 215 (215) 44 Depreciation 73 (73) (540) 46 58,689 2,862 () (287) 61,263

36 Tab 2 Page 3 (Fort St. John/Dawson Creek Division) GAS PLANT IN SERVICE - TEST YEAR 2008 ($ 000's) Forecast Forecast Forecast Ending Line Description Balance Additions Allocations Retirements Balance 1 Transmission plant Land Land rights Compressor structures Regulating structures Mains 6,052 6, Compressor equipment Regulating equipment 3, , Communications Other , , Distribution plant Land Land rights Structures 1, , Services 14, , House installations 4, , Mains 22, , Compressor equipment Regulating equipment 1, , Meters 1, , Other ,469 1, , General plant Land Land rights Structures 1,196 1, Office equipment Transportation equipment (127) 1, Heavy work equipment Tools 1, , Computer equipment Communications Other (4) (4) 39 5, (127) 5, Construction overheads 41 Unallocated construction costs 43 (43) 42 System operations transfers 201 (201) 43 Administrative transfers 205 (205) 44 Depreciation 79 (79) (528) 46 61,263 2,549 () (127) 63,685

37 Tab 2 Page 4 Pacific Northern Gas (NE) Ltd. Fort St. John / Dawson Creek GAS PLANT IN SERVICE - CONTINUITY OF PLANT COST (000's) Test Year Forecast Line Description Balance, Beginning of Year 61,263 58,689 2 CIAC Balance, Beginning of Year (11,300) (11,144) 3 Plant Cost, net of CIAC, Beginning of Year 49,963 47,545 4 Additions during year: 5 Plant Cost 2,021 2,332 6 Allocation of overheads Total Plant Additions 2,549 2,862 8 Contributions in Aid of Construction (182) (157) 9 Total Additions 2,367 2, Plant Retirements: 11 Normal Course (127) (287) 12 Deactivated Assets - 13 CIAC Retirements Total Retirements (127) (287) 15 Balance, End of Year 52,203 49, Closing balance consists of: 17 Plant Cost 63,685 61, CIAC (11,482) (11,300) 19 Balance, End of Year 52,203 49,963

38 Tab 2 Page 5 Line Description Rate Fort St. John / Dawson Creek Division CONTINUITY OF ACCUMULATED DEPRECIATION FOR THE YEAR 2007 ($ 000's) Forecast Actual 2006 Balance Provision Transfers Retirements Recoveries Depreciation Adjustment Forecast '07 Ending Balance 1 Gathering Plant 2 Franchises & Consents 1.00% () () 3 Gas Holders - Manufacturing 1.00% (9) (9) 4 Gas Holders - Storage (4) (4) 5 6 (13) (13) 7 Transmission plant Land rights 3.59% (47) (3) (50) Compressor structures 3.00% (115) (14) (129) Regulating structures 3.00% (30) (4) (35) Mains 2.78% (3,094) (168) (3,262) Compressor equipment N/A Regulating equipment 3.44% (1,211) (99) (1,310) Communications 5.00% (79) (6) (85) Other 3.00% (2) (1) (3) (4,578) (295) (4,874) 18 Distribution plant Land Rights 0.72% (16) (2) (17) Structures 3.00% (202) (32) (234) Services 2.04% (3,093) (279) (3,372) House installations 2.86% (1,505) (122) (1,627) Mains 2.44% (7,777) (509) (8,286) Compressor equipment 0.00% () () () Regulating equipment 3.10% (757) (42) (798) Meters 3.00% (498) (56) (554) Other 3.00% (5) (1) (5) (13,851) (1,042) (14,894) General plant Land Rights () () () Structures 3.00% (557) (36) (593) Office equipment 3.04% (225) (8) (234) Transportation equipment 12.84% (704) (139) 287 (23) (579) Heavy work equipment 4.98% (211) (29) (240) Tools 4.51% (456) (46) (502) Computer equipment 4.15% (652) (40) (692) Communications 4.59% (170) (14) (183) Other 3.00% (2,972) (312) 287 (23) (3,021) (21,415) (1,650) 287 (23) (22,801) Amortization of CIAC Depreciation capitalized Net Depreciation Expense (1,321)

39 Tab 2 Page 6 (Fort St. John/Dawson Creek Division) CONTINUITY OF ACCUMULATED DEPRECIATION TEST YEAR 2008 ($ 000's) Forecast Line Description Rate Balance Provision Retirements Recoveries Forecast '08 Ending Balance 1 Gathering Plant 2 Franchises & Consents 1.00% () () 3 Gas Holders - Manufacturing 1.00% (9) (9) 4 Gas Holders - Storage (4) (4) 5 6 (13) (13) 7 Transmission plant Land rights 3.59% (50) (3) (53) Compressor structures 3.00% (129) (14) (143) Regulating structures 3.00% (35) (4) (39) Mains 2.78% (3,262) (168) (3,430) Compressor equipment N/A Regulating equipment 3.44% (1,310) (116) (1,425) Communications 5.00% (85) (6) (92) Other 3.00% (3) (1) (3) (4,874) (312) (5,186) 18 Distribution plant Land Rights 7.19% (17) (16) (33) Structures 7.53% (234) (93) (327) Services 2.08% (3,372) (292) (3,663) House installations 3.67% (1,627) (159) (1,786) Mains 1.93% (8,286) (430) (8,716) Compressor equipment % () (14) (14) Regulating equipment 3.37% (798) (48) (846) Meters 2.07% (554) (40) (594) Other 3.00% (5) (1) (6) (14,894) (1,092) (15,986) General plant Land Rights () () () Structures 3.00% (593) (36) (629) Office equipment 1.18% (234) (3) (237) Transportation equipment 11.82% (579) (108) 127 (25) (585) Heavy work equipment 4.99% (240) (36) (277) Tools 4.54% (502) (48) (550) Computer equipment 2.92% (692) (28) (721) Communications 4.78% (183) (14) (197) Other 3.00% (3,021) (275) 127 (25) (3,194) (22,801) (1,679) 127 (25) (24,378) Amortization of CIAC 22, Depreciation capitalized Net Depreciation Expense (1,349)

40 Tab 2 Page 7 Pacific Northern Gas (NE) Ltd. Fort St. John / Dawson Creek GAS PLANT IN SERVICE - CONTINUITY OF ACCUMULATED DEPRECIATION (000's) Test Year Forecast Line Description Balance, Beginning of Year (22,801) (21,415) 2 3 CIAC Accumulated Balance, Beginning of Year 4,255 4,004 Utility Accumulated Depreciation, Beginning of Year (18,546) (17,412) 4 Depreciation Provision: 5 Plant (1,679) (1,650) 6 Contributions in Aid of Construction Depreciation Adjustment Deferral 8 Total Additions (1,428) (1,398) 9 Plant Retirements: 10 Normal Course Deactivated Assets 12 CIAC Retirements 13 Removal Costs 14 Proceeds on Disposals (25) (23) 15 Total Retirements Balance, End of Year (19,872) (18,546) 17 Closing Balance Consists of: 18 Accumulated Depreciation - Plant (24,379) (22,801) 19 Accumulated Amortization - CIAC 4,506 4, Balance, End of Year (19,872) (18,546)

41 Tab 2 Page 8 (Fort St. John/Dawson Creek Division) CONTINUITY OF DEFERRED CHARGES YEAR 2007 (000's) Actual Line Description Balance '06 Additions Tax Amortization Balance '07 1 Rate base items 2 Property tax variance 4 (4) 1 4 (2) 3 BCUC Hearing costs (1) 14 (5) 9 (1) 4 Contribution to WEI Taylor Studies RSAM 789 (304) DC Industrial Deliveries (10) Resource Plans (0) 9 Bill 198 Compliance Costs 13 4 (1) (262) Average rate base for the year $ Interest bearing deferrals 16 BCUC Fees (10) (9) 3 (10) (6) 17 Short Term Interest Rate deferral (117) 21 (9) (82) (23) 18 Long Term Interest Rate deferral (7) Depreciation Adjustment (556) (23) - (294) (285) 20 GCVA (1,088) 658 (237) 0 (667) (1,737) 670 (250) (369) (949) Total deferrals (excl. debt issue) ($849) $408 ($160) ($296) ($306) Debt Issue Costs $535

42 Tab 2 Page 9 (Fort St. John/Dawson Creek Division) CONTINUITY OF DEFERRED CHARGES TEST YEAR 2008 (000's) Forecast Line Description Balance '07 Additions Tax Amortization Balance '08 1 Rate base items 2 Property tax variance (2) 0 0 (2) (0) 3 BCUC Hearing costs (1) 12 (4) Contribution to WEI Taylor (0) 5 Studies RSAM 588 (262) DC Industrial Deliveries Resource Plans (0) (0) 9 Bill 198 Compliance Costs (4) (238) Average rate base for the year $ Interest bearing deferrals 16 BCUC Fees (6) (0) 0 (6) (0) 17 Short Term Interest Rate deferral (23) 17 (6) 12 (23) 18 Long Term Interest Rate deferral Depreciation Adjustment (285) (9) 0 (295) 0 20 GCVA (667) 1,471 (462) (949) 1,480 (468) (273) Total deferrals (excl. debt issue) ($306) $1,242 ($393) ($215) $ Debt Issue Costs $535 $0 $0 $96 $438

43 Tab 2 Page 10 (Fort St. John/Dawson Creek Division) CASH WORKING CAPITAL FOR THE YEAR ENDED DECEMBER 31, 2008 ($000's) Line Lag /(Lead) Working No. Description Days Expense Capital 1 Revenue Expense (39.8) 3 Operating working capital ,201 $1,627 4 Adjustments: 5 Budget Billing Plan ($195) 6 Provincial Sales Tax & ICEF Levy ($2) 7 Goods and Services Tax $98 8 Cash working capital $1,528

44 Tab 2 Page 11 (Fort St. John/Dawson Creek Division) REVENUE LAG DAYS FOR THE YEAR ENDED DECEMBER 31, 2008 ($000's) Revenue Line Lag Extended No. Revenues Days Revenue Revenue 1 Residential - monthly 47.4 $5,810 $275, bimonthly , , Small commercial - monthly , , bimonthly , , Large commercial - firm , , Small industrial , , Revenue Deficiency , Other operating revenue , Average revenue lag days 58.3 $35,297 $2,057,565

45 Tab 2 Page 12 (Fort St. John/Dawson Creek Division) EXPENSE LEAD DAYS FOR THE YEAR ENDED DECEMBER 31, 2008 ($000's) Expense Line (Lead) Normalized Extended No. Expenses Days Expenses Expenses 1 Gas purchases-baseload (40.2) $279 ($11,213) 2 Gas purchases-seasonal (40.2) 25,108 (1,009,357) 3 Operating payrolls (5.0) 1,486 (7,428) 4 Employee benefits (20.9) 474 (9,914) 5 Uncollectible accounts (59.2) 156 (9,246) 6 Other operating expenses (31.4) 3,061 (96,121) 7 Expenses credited/capitalized (10.6) (406) 4,281 8 Insurance ,428 9 Property taxes (1.0) 958 (958) 10 Franchise Fees (242.5) 674 (163,445) 11 Income taxes payable (15.2) 276 (4,197) 12 Average expense lag days (39.8) $32,201 ($1,283,169)