PNG-West 2011 Revenue Requirements Application Response to BCOAPO Information Request No. 1 Project No

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1 B-6 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 and Courier B.C. Utilities Commission File No.: 4.2.7(2011) 6th Floor Howe Street Vancouver, B.C. Attention: Erica M. Hamilton Commission Secretary Dear Ms. Hamilton: Re: PNG-West 2011 Revenue Requirements Application Response to BCOAPO Information Request No. 1 Project No Enclosed are 14 copies of the above referenced information response. Yours truly, C.P. Donohue cc. Jim Quail BCOAPO James Wightman Econalysis Consulting Carolyn MacEachern Lidstone, Young, Anderson

2 Page 1 BCOAPO et al Information Request No. 1 Pacific Northern Gas Ltd. ( PNG-West or PNG ) 2011 Revenue Requirements Application ( RRA ) 1.0 Reference: Exhibit B-1-3, page 2, Cost of Service Comparison Amended Jan to Original Nov Please add a column to the referenced table reflecting actual 2010 costs and revenue deficiency results were finalized on March 3, The accounting adjustments to enable PNG to provide actual 2010 results in the cost of service comparison table format will take a few days to complete. The modified table will be filed shortly. 2.0 Reference: Tab Application, Exhibit B-1, Operating Expenses, page 6 Account 685 General Operations 2.1 Please explain why there is an increased allocation of $35K in annual vehicle expenses to this account and indicate if it is an incremental cost or a reallocation of an existing cost. The increase in annual vehicle expenses reflects the increase in overall vehicle costs due to the increased cost of fuel, maintenance expenses and the inclusion of vehicle insurance in In previous years, vehicle insurance costs were included under insurance expense in BCUC Account 723.

3 Page Reference: Tab Application, Exhibit B-1, Operating Expenses, page 6 Account 688 Other General Operations 3.1 Please provide the percentage increase in labour rates in 2011 (i) over 2010 actual and (ii) over the rates included in the 2010 NSP. Under the collective agreement, bargaining unit wage rates increased by 3.25% November 1, 2010 and scheduled to increase 3.5% November 1, PNG has budgeted 3.25% for nonunion salary increases, effective January 1, Please provide the increase in labour in 2011 in FTEs and as a percentage allocated to this account (i) over 2010 actual and (ii) over the rates included in the 2010 NSP. Also, please indicate whether this is an incremental increase in labour or a reallocation of existing labour. As noted at Tab Application, Page 6, one of the components of the increase from NSP 2010 to Test Year 2011 is the labour allotted to this account. Account 688 is not directly based on a number of FTEs. It accounts for vacation, sick leave and other similar items. The table below shows the labour and vehicle expense figures for NSP 2010, 2010 and Test Year Cost Element Test Year NSP 2010 Labour $ 857,174 $ 944,244 $ 808,781 Vehicle Expense $ 98,167 $ 75,459 $ 53,737 $ 955,341 $ 1,019,702 $ 862,518

4 Page Reference: Tab Application, Exhibit B-1, Maintenance Expenses, page 7 Account 867 Regulating Stations 4.1 Please provide the amount of costs shifted from operating Account 667 to Account 867 and explain why maintenance expenses would have previously been booked to an operating Account. There was a shift in labour costs from Account 667 to 867 of $15,000. This better reflects the actual work being done as preventative maintenance and not operating the stations. The reduction in overall costs of the Accounts 667 and 867 combined from 2010 to 2011 is $24, Reference: Tab Application, Exhibit B-1, Administrative and General Expenses, pp Account 721 Administration 5.1 Please explain why 5% of the salary and STIP of the Director Renewable Power are allocated to the regulated business, i.e., what regulated tasks does this employee perform? The duties performed by the Director of Renewable Power, beyond the development of PNG s renewable energy platform, are largely related to investor relations and significant assistance with preparations for the Company s annual general meeting. 5.2 Please specify what market conditions are being reflected in the $20K adjustments to new hires salaries. The $20K refers to both potential promotions and/or new hires and reflects a budgeted cost behind any promotions in 2011 or the possible difference in salary due to a replacement hire. 5.3 Regarding the $10K reduction in budgeted employee expenses, what were the actual and budgeted amounts for this component of Account 721 in 2010? The actual 2010 employee expenses were $87,922. The budgeted 2010 employee expenses were $189,157.

5 Page Reference: Exhibit B-1-3, Administrative and General Expenses, page 3 and Tab Application, Exhibit B-1, Administrative and General Expenses, page 11 Account 723 Insurance Confirmed. 6.1 Please confirm that the insurance expense of $739K reflects the actual insurance cost for 2011 as renewed in December If unable to so confirm, please explain. 7.0 Reference: BCUC IR and Tab Application, Exhibit B-1, page 8 Administrative and General Expenses 7.1 Please provide a breakdown of the Cost Adjustments for each year in the updated table as requested by BCUC Staff in their first round IR 9.1 in this proceeding (i.e., Table on page 8 of Exhibit B-1 with an extra column indicating 2010 expenses.) Less Cost Adjustments Breakdown: 50% of donations Stock option benefit expense Pension expense on bonuses and incentives Non-regulated business & benefit allocations Total $000 s Test Year NSP 2011/ Difference (16) (15) (1) (9) (9) (7) (11) (13) (109) (90) (19) (96) (92) (121) (112) (179) (33) (27) (7) (27) (25) (25) (41) (74) (534) (205) (329) (743) (691) (336) (355) (874) (125) (153) (164) (266) 8.0 Reference: Tab Application, Exhibit B-1, pages Non-Regulated Business Costs See next page. 8.1 Please provide a copy of a typical filled in time sheet, redacted as necessary to maintain employee anonymity, indicating the detail normally provided to track work activities.

6 Page 5 REGULATED & NON-REGULATED ACTIVITIES TIMESHEET Employee information PNG-West PNG-NE Budget Centre From (Mth/Day/Yr) To (Mth/Day/Yr) November 29, 2010 December 12, 2010 Employee No Occupation Name (First) (Last) Instructions: 1) Record all hours worked every day, including on Saturdays, Sundays and statutory holidays. Round to the nearest 0.5 hour. 2) Record 7.5 hours in "PNG Utility" for each day absent from work, except for Saturdays and Sundays 3) or send hard copy to Julia Lu at PNG's Vancouver head office Time Week 1 Time Week 2 Summary Activity Type M T W T F Sat Sun Total M T W T F Sat Sun Total Hours PNG Utility KSL Project Renewable Power Other Non-Regulated Total Hours December 13, 2010 Employee Signature Date (Mth/Day/Yr) 8.2 Please provide a copy of any and all communications with employees regarding instructions, guidance, interpretation, etc., with respect to filling out these timesheets. The following was sent by the Director of Regulatory Affairs and Gas Supply to the management team: Subject: Recording of Time to Regulated and Non-Regulated Business Activities PNG agreed under the NSP 2010 PNG-West settlement agreement dated February 12, 2010 to:

7 Page 6 Commencing effective March 1, 2010 PNG staff will maintain time sheets to identify time and/or other utility resources spent on NRB projects such as electricity generation IPP s. In particular, PNG will identify any third party IFRS conversion costs incurred for the benefit of its NRB s. Attached is a form of timesheet that Jackie Reeb prepared and which Janet, Greg and I have reviewed and consider will be suitable to record our time allocation between regulated (i.e. PNG utility) and non-regulated activities (i.e. KSL Project, Renewable Power and Other Non-Regulated activities). Please read the instructions on the timesheet which explain our view that all hours worked should be accounted for. In other words on those few days that you work more than 7.5 hours, you will need to keep track of what you were doing during the overtime hours. Vacation, sick days and other absences from work will not be identified but will be recorded as 7.5 hours under PNG Utility. The attached will only be completed by PNG-West employees that work on both utility and non-utility activities. At present, it is my understanding that the only person in field that is working on both utility and non-utility matters is Tom Leach. He is doing some KSL Project work. Please provide the attached to your direct reports and have them commence recording their time accordingly. With regard to the reference to and/or other utility resources spent on NRB projects, Greg, Janet and I thought this would probably apply to some of our consultants. For example Wayne Henderson should try to keep track of this utility/non-utility work. The NSP settlement allocated 50 percent of his budgeted fees to utility and 50 percent to NRB. A. Ford was budgeted as a contractor and 95 percent of his budgeted fees were allocated to NRB. So if any of you are using consultants that are doing both utility and non-utility work, please ensure you have them provide you with their allocation of time. They could probably use the attached form to record their time. I note that the cost of the IFRS consultants are being recorded in the IFRS deferral account. Janet will be discussing with Cheryl how to respond to the requirement to identify any third party IFRS conversion costs incurred for the benefit of its NRB s. Janet will be instructing Cathy Sham on how to keep the records. The instructions state that you are to or deliver a hard copy of the form to Cathy. Please do not commence doing so until after Janet confirms that she has spoken to Cathy. Thanks. YOU WILL NEED TO RECORD YOUR TIME ALLOCATION FROM MARCH 1 TO DATE AS THE EFFECTIVE DATE IS MARCH 1, If you think the attached form needs to be modified, please let me know and I will make the changes and send out the revised copy. We will not be putting this form on Share Point as we consider it is primarily for head office employees and consultants. Subsequent to the above , it was decided to only require PNG s head office employees to fill out the time sheet and not outside consultants. See BCUC IR No. 1, responses 14.2, and for further information.

8 Page Please confirm that employees have not been directed to use the PNG Utility row on the timesheet as a default option, i.e., that any time not attributable to nonutility activities is to be recorded as utility activities. As noted in the copy of the in response 8.2, employees were directed to record 7.5 hours as PNG Utility when on vacation or absent from work for other reasons. PNG does not consider that to be a default option. It is just the logical way to record time given the fact that all of the employees that recorded time would be full time employees of the utility regardless of whether PNG was engaging in NRB activities with the possible exception of the Director of Renewable Power. 8.4 The hours worked were tracked over the period March 1, 2010 to October 31, Would this period generally be reflective of the time allocation over the full year? Is 2010 a typical year in terms of allocating time between regulated and non-regulated activities? This was the first year that PNG s employees recorded time between regulated and nonregulated business activities. Therefore, PNG cannot say if the March 1, 2010 to October 31, 2010 period is generally reflective of the time allocation over the full year. PNG simply has nothing to compare to in this regard. It is noted that PNG personnel probably spent more time on the KSL Project activities in 2010 than in previous years because of the negotiation of the sale of PTP and the finalization of the benefits agreement with First Nations. Therefore, the allocation to the KSL Project was probably not typical of previous years. Similarly, 2010 was the first year of having a full time Director of Renewable Power on staff and consequently the number of hours recorded on renewable power was much greater than would have been the case in previous years.

9 Page Reference: Tab Application, Exhibit B-1, pages and page 23 IFRS 9.1 Please confirm that under PNG s proposed IFRS accounting treatment that early retirements will not pose PNG any asymmetrical financial challenges and that ratepayers will be held harmless also. Under the regulatory framework, ordinary retirements are charged to accumulated depreciation and as noted above, gains and losses should be minimal. However, extraordinary retirements have a prescribed regulatory treatment and are assessed on an individual basis. Extraordinary retirements result from causes not reasonably assumed to have been anticipated or contemplated in prior depreciation or amortization provisions. Such causes include unusual casualties (fire, storm, flood, etc.), sudden and complete obsolescence, or unexpected and permanent shutdown of an entire operating assembly or plant. Under IFRS, gains and losses on all retirements are recognized in profit and loss. In the course of ordinary retirements, gains and losses on retirements should be minimal provided the estimate of useful life was reasonable. In the event of an asset retiring earlier than the end of its useful life, the loss would be greater depending on how much, if any, residual value was received. PNG intends to use deferral accounts for non-ifrs compliant items such as gains and losses from retirement. The use of the deferral accounts should result in the same effect to the rate payer as under the existing regulatory framework Reference: Tab Application, Exhibit B-1, pages PNG Shared Service Cost Recovery from PNG (N.E.) 10.1 Please confirm that PNG supplies shared services only to PNG (N.E.). If unable to so confirm, please provide a list of all other entities to whom shared services are provided and the respective allocators and cost recoveries from these other entities. Confirmed with the exception of some accounting services provided for the McNair Creek hydro-electricity generating project. PNG has provided for recovery of $31,000 in 2011 for these services. See Tab Application Narrative, Page 30.

10 Page As the percentages allocated by Time Study change in each year, the table on page 31 appears to indicate that a Time Study has been conducted each year. Is this correct? No. PNG does not conduct a time study each year. An internal time study was completed in 2003 which supported the finding that the allocator should be set at percent. This figure does not change from year to year. The table at Tab Application, Page 31 shows the time allocator being fixed at percent each year Please confirm that there has been no change in the relative scope or quality of shared services provided to PNG (N.E.). The scope of accounting services continues to increase as a result of more onerous reporting requirements and with the advent of implementing IFRS accounting changes. Maintaining two sets of books due to IFRS increases the scope of services as well Reference: Tab Application, Exhibit B-1, pages and Tab Application, Exhibit B-1, page 11 Forecasted Interest Rate Increases and the Discount Rate Decrease 11.1 On page 33, the pre-filed evidence states that Specifically, the short term interest rate is projected to increase from 3.52 percent under NSP 2010 to 6.35 percent in Test Year On page 34, mention is made of higher projected interest rates on PNG s floating rate debt The projected interest rate on long term debt is forecast to increase from 7.85 percent under NSP 2010 to 7.88 percent for Test Year2011. Please explain fully how these rates have been forecasted and by whom they were forecasted. As noted in the evidence cited in the reference above, PNG utilizes the Econolink consensus forecast service for its interest rate forecasts. An extract showing those forecasts can be found in BCUC IR No. 1, response The details of the derivation of the 6.35% short-term debt rate are shown at Tab 5, Page 2 of Exhibit B-1 and B1-3.

11 Page 10 The details of the derivation of the increase in the forecast long-term debt rate are shown on Tab 5, Pages 3-4 of Exhibit B-1 and B1-3. The main reason for the increased rate in 2011 over 2010 is due to the forecast increase in the floating interest rates under the Series 2017 debenture and PNG s revolving term facility. The underlying rate of the 2017 debenture is 1- month bankers acceptances ( BAs ) and the underlying rate for the revolving term facility is 3-month BAs. PNG s long-standing methodology of forecasting BA rates is to utilize the Econolink forecast of 3-month t-bill yields and then add the 10-year average historical spread between actual 3-month t-bill yields and 1-month BAs or 3-month BAs, as the case requires Please reconcile the statements immediately above re interest rate increases in 2011 with the discussion on page 11 where it states that PNG s actuaries have provided a preliminary 2011 pension expense estimate which is higher than 2010 mainly due to a decrease in the discount rate (5.6% in 2011 versus 6.5% in 2010). The decrease is primarily due to the declining corporate bond rate. (Emphasis added.) There are two reasons that PNG s interest rates are forecast to increase while the discount rate used by its actuaries has declined: 1) The interest rates that are forecast to cause an increase in PNG s interest expense are short-term floating rates, being either the prime rate, 1-month bankers acceptances or 3-month bankers acceptances, while the discount rate used by the actuary is based on long-term bond rates; and, 2) More importantly, the discount rate is determined on a lagged basis. That is, the discount rate is based on corporate bond rates that are current at the time and not on a forecast. While corporate bond rates were declining from late 2009 to late 2010, short-term interest rates have recently been increasing and are forecast to continue increasing Please provide the impact on the deficiency and the revenue requirement of using a 6.5% discount rate for 2011 pension expense estimates. The actuary advises the expense is approximately $378,000 higher using a 5.6% discount rate versus a 6.5% discount rate.

12 Page Reference: Tab Application, Exhibit B-1, page 35 Capital Additions Budgeted and 12.1 Please update the table at the top of page 35 to include 2010 actuals and add columns for each year inclusive to show budgeted capital additions. ($000's) Test Year 2011 NSP /2010 Difference NSP NSP NSP 2007 Additons (incl OH) 4,018 4,478 (460) 2,974 5,743 5,405 6,726 7,026 6,318 5,878 Less OH (981) (1,609) 628 (1,636) (1,710) (1,675) (1,994) (1,971) (1,616) (1,494) Net 3,037 2, ,338 4,033 3,730 4,732 5,055 4,702 4, Reference: Tab Application, Exhibit B-1, pages and Exhibit B-1-3, Tab2, page 3, line 33 Capital Additions 13.1 For each of the major projects described, please indicate the level of confidence that PNG has in the estimated cost and specify the amount budgeted for contingency. Each year when PNG prepares its forecast expenses for the upcoming Test Year it performs a cost estimate using the best information available at the time. In developing the cost estimates a team based multi-discipline approach is utilized to arrive at the final estimated cost. In addition vendors, service providers or outside consultants may be queried and provide input regarding various aspects of the project as appropriate. Based on the above work PNG arrives at a final estimated cost in which it has confidence in and includes this in the revenue requirements Application without adding any contingency.

13 Year Planned Page Please provide historical details by major capital projects undertaken in inclusive that show a comparison between PNG s initial estimated cost and the actual final cost for each major project. Project Description 2007 Upper Arden valley rehabilitation Forecast Expense ($) Expense ($) Year Project Undertaken 1,538,000 2,185,000 Replaced with Gitnadoix aerial crossing-complete Unspecified ML repairs 159, ,000 Completed Mobile/work equipment 948, ,000 completed Measurement upgrades 172,000 50,000 completed Distribution syst. Improvement 67, ,000 completed Install inspection barrels 116, ,000 completed MP 302 Skeena crossing repair 2008 Upper Arden valley rehabilitation 1,650,000 1,203,000 completed ,538,000 1,258,000 completed Unspecified ML repair 101,000 84,000 completed Mobile/work equipment 512, ,000 completed Measurement upgrades 283,000 67,000 completed Dasque creek crossing rehabilitation 148, ,000 completed Inspection barrels install 171, ,000 completed Porpoise Harbour crossing replacement 650, ,000 Completed Maxan Creek Crossing 495, ,000 Completed Unspecified M/L repairs 227,000 69,000 Completed Mobile/work equipment 613, ,000 Completed Control station rehab. 160, ,000 Completed MP 197 replacement 152, ,000 Completed Gitnadoix Tunnel rehab. 1,404,000 47,000 Postponed to 2011 no access 2010 MP 306/307 rehab. 87,000 0 Postponed to 2011 no access 2010 Unspecified M/L repairs 134, ,000 Completed Control Station rehab. 139, ,000 Initiated in 2010, delayed material delivery prevented completion 2010 Meter replacements 140,000 58,000 Completed Update mosaics 41,000 32,000 Completed New/replacement tools/equipment 148, ,000 Completed Services 122, ,000 Completed 2010

14 Page For the 22% of 2011 capital projects that are not shown or described on these pages, please provide a high level summary that (i) provides a breakdown of the 2011 work anticipated, (ii) the amount of contingency or headroom in the 2011 estimates, and (iii) PNG s historical performance in forecasting these amounts by providing PNG s initial estimated cost and the actual final cost for these nonmajor projects in the years inclusive. The figures in the table on the next page are taken from the gas plant in service summary at Tab 2 for each year shown. Both the Budget and costs listed in the table exclude the costs of the specific projects identified in each year s revenue requirements Application. See response 13.1 for an explanation of the manner in which contingency is addressed.

15 Page Budget Budget Budget Budget 2007 Description Transmission plant 460 Land 461 Land rights 462 Compressor structures Regulating structures Mains Compressor equipment Regulating equipment Communications Other Distribution plant 470 Land 471 Land rights 472 Structures Services House installations Mains Regulating equipment 478 Meters Other General plant 480 Land 481 Land rights 482 Structures Office equipment Transportation equipment Heavy work equipment Tools Computer equipment Communications Other

16 Page Please indicate whether the number of vehicles in PNG s fleet and in rate base in Account 484 Transportation Equipment has increased since If so, please provide full details as to the need for an increase in PNG s vehicle fleet. The number of fleet vehicles included in PNG s rate base has increased by three since Two of the additions resulted from organizational changes. One was as a result of relocating the Manager of Engineering position from Vancouver to Terrace, the other occurred when the position of Vice President Corporate Development and Treasurer was created. The third addition was to address the mobility of temporary workers from site to site Reference: Tab Application, Exhibit B-1, page 40 IFRS Treatment of NPPRB 14.1 Given that PNG will address the transition to IFRS in its 2012 RRA, please explain whether it is necessary for PNG to derecognize the regulatory asset associated with PNG s NPPRB plans effective January 1, 2011 or whether any such changes could be deferred to January 1, To confirm, though the Company is required to report external financial results under IFRS commencing January 1, 2012, the requirement to include comparative (i.e. for 2011) financial results that are compliant with IFRS in the 2012 financial reporting means that January 1, 2011 is the Company s effective date of transition to IFRS. To ensure the 2011 comparative figures are IFRS-compliant, the Company must establish an IFRS-compliant opening balance sheet as at January 1, At this time, the Company anticipates that all regulatory assets and regulatory liabilities, including those related to post-retirement benefits, will be derecognized in finalizing amounts for this opening balance sheet for external financial reporting purposes.

17 Page Reference: Tab Rates, Exhibit B-1, page 8 Derivation of Test Year Forecast Gas Deliveries 15.1 Please update the referenced table using the actual number of customers at December 31, Also please update the forecast net customer additions if applicable. Pacific Northern Gas Ltd. (PNG-West Division) Derivation of Test Year Forecast Gas Deliveries Test Year 2011 Test Year Test Year Average Test Year Customer Count + Net Customer = Weighted Average x Use Per Account = Deliveries Customer Classification At Dec. 31st, 2010 Additions Customer Count (GJ) (GJ) Sales: Residential (Rate 1 ) , ,183,966 Granisle (Rate 1 - Propane) ,246 Commercial Small Commercial (Rate 2) 2, , ,599 Large Commercial Firm (Rate 3) 90,400 Large Commercial Interr (Rate 4) 31,500 Seasonal Off-Peak (Rate 6) 16,400 NGV (Rate 7) 14,800 Small Industrial Sales (Rate 5) 171,800 Subtotal Sales 2,311,711 Non-Delivered GJ's/ 2011 Deficiency Test Year Volumes 2011 Physical Deliveries Incurred / = Full Margin (GJ) Make Up (GJ) Transportation: Small Industrial Transport 118, ,610 Interruptible 410, ,490 Total Small Industrial 529, ,100 Large Industrial Rio Tinto Alcan Firm 429, ,970 Interruptible 422, ,250 Sub-total 852, ,220 B.C. Hydro - Interruptible 24, ,000 Commercial Transport (Rate 22) 104, ,070 Commercial Transport (Rate 33) 161, ,000 Subtotal Transportation 1,670, ,670,390 Subtotal Sales 2,311,711 2,311,711 TOTAL 3,982, ,982,101

18 Page Please explain how the forecast net customer additions have been determined for the Residential, Granisle, and Small Commercial classes. Residential 2010 Forecast Year-end Customer Count 17,808 Forecast Test Gross Additions 35 17,843 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Avg. Cumulative Additons By Month 2.8% 5.4% 7.3% 11.2% 18.7% 26.3% 32.0% 39.8% 53.9% 73.6% 90.8% 100.0% Cumulative Customer Additions Customers By Month 17,809 17,810 17,811 17,812 17,815 17,817 17,819 17,822 17,827 17,834 17,840 17,843 17, Forecast Year-end Customer Count 17,808 Average of Test Year Month end Forecast Customer Counts 17,822 Test Year Net Additions: 14 Granisle There were no forecast gross customer additions for Granisle, therefore applying the same methodology above, net additions are zero. Small Commercial 2010 Forecast Year-end Customer Count 2,541 Forecast Test Gross Additions 7 2,548 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Avg. Cumulative Additons By Month 2.8% 5.4% 7.3% 11.2% 18.7% 26.3% 32.0% 39.8% 53.9% 73.6% 90.8% 100.0% Cumulative Customer Additions Customers By Month 2,541 2,541 2,542 2,542 2,542 2,543 2,543 2,544 2,545 2,546 2,547 2,548 2, Forecast Year-end Customer Count 2,541 Average of Test Year Month end Forecast Customer Counts 2,544 Test Year Net Additions: 3

19 Page Please provide historical details with respect to PNG s forecast net capital additions for each year including a comparison between forecast and actual net additions (mid-year and end of year) for each of these years. The request above refers to net capital additions. Given requests 15.1 and 15.2 dealt with customer additions, PNG has assumed the word capital under request 15.3 was intended to be customer. The requested information is not readily available. PNG considers the following customer additions data on a gross basis to be responsive to the request. Residential Forecast Mid Year End of Year Gross Additions Gross Additions Gross Additions (185) (377) (266) (154) (344) (534) (369) (204) (177) (149) (286) (423) (334) (245) 2008 (132) (229) (213) 2009 (93) (187) (160) 2010 (120) (160) (159)

20 Page 19 Granisle Forecast Mid Year End of Year Gross Additions Gross Additions Gross Additions (4) (7) (1) (4) (4) (3) (3) (2) (1) (2) (3) (4) (5) (6) (6) Small Commercial Forecast Mid Year End of Year Gross Additions Gross Additions Gross Additions (4) (49) (30) (11) (25) (39) (23) (6) (35) (64) (65) (66) (56) (46) (65) (60) (54)