ENBRIDGE PIPELINES INC. FIRM SERVICE TOLL CHARGE LINE 8 OIL PRODUCTS TRANSPORTATION SYSTEM 2015 OPERATING YEAR. April 2015

Transcription

1 FIRM SERVICE TOLL CHARGE LINE 8 OIL PRODUCTS TRANSPORTATION SYSTEM 2015 OPERATING YEAR April 2015

2 FIRM SERVICE TOLL CHARGE 2015 Operating Year INDEX Statement Number Firm Service Charge Firm Service Charge Operating and Maintenance Charge Operating and Maintenance (O&M) Charge Inflation Adjustment Non-Routine Adjustment Forecast (expensed) Deferred Amount O&M Adjustment Non-Routine Adjustment Variance (expensed) Property Tax Adjustment FS-0 OM-0 OM-1 OM-2 OM-3 OM-4 OM-5 Capital Charge Capital Charge CC-0 Return on Equity and Interest Expense CC-1 Forecast Tax Allowance CC-2 Tax Allowance Variance CC-3 Deferred Amount Capital Adjustment CC Return on Equity and Interest Expense CC Determination of Rate Base - 13 Point Average CC Fixed Assets Account 30 - Transportation Plant CC-4.3 Accrued Depreciation, Interest Expense, and Return on Equity associated with Non-Routine Adjustment Variance (capitalized) CC-5 Rate Base Determination of Rate Base - 13 Point Average RB-0 Fixed Assets Account 30 - Transportation Plant RB-1 Fixed Assets Account 30 - Transportation Plant - 13 Point Average RB-2 Fixed Assets Account 31 - Accumulated Depreciation - Transportation Plant RB-3 Fixed Assets Account 31 - Accumulated Depreciation - Transportation Plant - 13 Point Average RB-4 Appendix C 2015 O&M Rebase Appendix C

3 Firm Service Charge 2015 Statement FS-0 Line Supporting No. Particulars Statement 2015 (a) (b) (c) (d) 1 Firm Service Charge: 2 Monthly O&M Charge OM Monthly Capital Charge CC Total 1,106 5 Allocated Capacity (m 3 ) 6 Imperial Oil 14,800 7 Total 14,800 8 Firm Service Toll [(Line 4/Line 7) * 1,000] ($/m 3 /month) Abandonment Surcharge ($/m 3 /month) Total Firm Service Total ($/m 3 /month) (1) Abandonment Surcharge pursuant to NEB Decision MH and Order MO Abandonment Surcharge as per Appendix B, Sarnia - Millgrove Junction ("Line 8") surcharge of $0.007 per bbl. Line 8 = ($0.007/bbl * ) = $0.044/m 3 * (365/12) = $1.340/m 3 /month.

4 Operating and Maintenance Charge 2015 Statement OM-0 Line Supporting No. Particulars Statement 2015 (a) (b) (c) (d) 1 Annual O&M Charge 2 Rebase Starting Point O&M Charge 3,209 3 Inflation Adjustment OM-1-4 Subtotal 3,209 5 Inflated by Consumers Price 1.1% for Current Year Starting Point O&M Charge 3,244 7 Non-Routine Adjustment Forecast (expensed) OM Adjustments - Prior Year 9 Inflation Adjustment OM-1-10 Deferred Amount O&M Adjustment OM Non-Routine Adjustment Variance (expensed) OM-4 2, Property Tax Adjustment OM-5-13 Carrying Charges on Lines 9 through 2.250% Total Adjustments - Prior Year (sum Lines 9 through Line 13) 2, Annual O&M Charge (Line 6 + Line 7 + Line 14) 6, Monthly O&M Charge (Line 15 divided by 12) 508

5 Inflation Adjustment 2014 Statement OM-1 Line No. Particulars Actual (a) (b) (c) Starting Point O&M Charge before Inflation 2,153 2 Actual Inflation Factor for 1.5% 3 Forecast Inflation Factor for 1.5% 4 Variance (Line 2 - Line 3) 0.0% 5 Inflation Adjustment (Line 1 x Line 4) -

6 Non-Routine Adjustment Forecast (Expensed) 2015 Statement OM-2 Line No. Particulars Total (a) (b) (c) 1 NRA Operating & Maintenance Expenses 2 Crack and Corrosion Inspections (Cost of Report only) Cleaning Program Geohazard Assessment Recoat Piping at Millgrove Junction 15 6 Non-Routine Adjustments Forecast (Expensed) The proposed NRA operating and maintenance expenses are estimated in the September 30, 2014 letter to Imperial Oil.

7 Deferred Amount O&M Adjustment 2014 Statement OM-3 Line Total No. Particulars System (a) (b) (c) 1 Monthly O&M Charge in Effect April 1 - December 31, Interim Monthly Charge in Effect January 1 - March 31, Difference in Monthly O&M Charge (Line 1 - Line 2) 61 4 Difference in Monthly O&M charge times 3 Months (Line 3 x 3) 183

8 Non-Routine Adjustment Variance (Expensed) 2014 Statement OM-4 Line Forecast for Actual for No. Particulars Variance (a) (b) (c) (d) (e)=(d)-(c) 1 NRA Operating & Maintenance Expenses 2 Corrosion Inspection 1,400 2, Cleaning Program (32) 4 Facility Integrity Program (100) 5 Depth of Cover Program 15 - (15) 6 Geohazard Assessment MP Cut out - 1,458 1,458 8 Non-Routine Adjustments (Expensed) 1,645 3,801 2,156

9 Property Tax Adjustment 2014 Statement OM-5 Line No. Particulars Amount (a) (b) (c) 1 Actual Property Tax Expense Property Tax Included in O&M Charge Amount of Property Tax (Over)/Under Charged (Line 1 - Line 2) 5 4 Percentage (Over) / Under Charged (Line 3 / Line 2) 0.71% 5 Property Tax Adjustment if Line 4 greater than + / - 2% -

10 Capital Charge 2015 Statement CC-0 Line Supporting No. Particulars Statement 2015 (a) (b) (c) (d) 1 Depreciation RB-3 3,217 2 Interest Expense CC-1 2,149 3 Return on Equity CC-1 2,508 4 Forecast Tax Allowance CC-2-5 Current Year Annual Capital Charge 7,874 6 Adjustments related to the prior year: 7 Tax Allowance Variance CC-3-8 Deferred Amount Capital Adjustment CC Capital Non Routine Adjustment Variance CC-5 (1,115) Rate Base Adjustment CC Carrying Charges on Lines 7 through 2.25% (15) 12 Total Adjustments (701) 13 Annual Capital Charge (Line 5 + Line 12) 7, Monthly Capital Charge (Line 13 divided by 12) 598

11 Return on Equity and Interest Expense 2015 Statement CC-1 Line Capital Cost Weighted Rate Base No. Particulars Ratio Rate Cost RB-0 Return (a) (b) (c) (d) (e)=(c) x (d) (f) (g)=(e) x (f) 1 Return on Equity 45.00% 7.89% % 70,658 2,508 2 Interest Return: 3 Original Rate Base 55.00% 10.75% % 3, Rate Base Additions & Working Capital 55.00% 5.26% % 67,100 1,939 5 Total Interest (Line 3 + Line 4) 2,149 6 Total Return (Line 1 + Line 5) 4,657 Notes: Multi-pipeline rate of return of 7.64% + 25 basis points, per article 8.5 of the FSA % per article 8.4(a) of the FSA. 3 The Main System of Enbridge Pipelines Inc weighted average cost of debt of 4.76% + 50 basis points, per article 8.4(b) of the FSA.

12 Forecast Tax Allowance 2015 Statement CC-2 Line Supporting No. Particulars Statement 2015 (a) (b) (c) (d) (e) (f) 1 Return on Equity CC-1 2,508 2 Permanent Differences: - 3 Timing Differences: 4 AIDC (80) 5 Capitalized G&A (145) 6 Depreciation RB-3 3,217 7 Capital Cost Allowance (6,445) 8 Prior Year Toll Deferral Accounts CC-3 1,691 9 Total Timing Differences (1,762) 10 Income Tax Base (Line 1+ Line 2 + Line 9) Income Tax Factor (tax rate / (1 - tax rate)) % 12 Income Taxes (Line 10 x Line 11) Ontario Provincial Capital Tax - 14 Forecast Tax Allowance before Carry-forward (sum Line 12 through Line 13) Forecast Tax Allowance Carry-Forward (Used) (261) 16 Forecast Tax Allowance - 17 ITA Carry-Forward Continuity Cumulative 18 Forecast ITA for Carry-Forward (Used) (261) 19 Prior Year ITA Carry-Forward balance CC-3 1, Forecast Ending Cumulative ITA Carry-Forward 934

13 Tax Allowance Variance 2014 Statement CC-3 Line Variance No. Particulars Actual Forecast (d-e) (a) (b) (c) (d) (e) (f) 1 Return on Equity 1,538 1,895 (357) 2 Permanent Differences: Timing Differences: 4 Capital Cost Allowance (3,788) (4,306) Depreciation 1,401 2,305 (904) 6 AIDC (771) (762) (9) 7 Capitalized G&A (368) (213) (155) 8 Current Year Deferrals (1,691) - (1,691) 9 Prior Year Deferrals (1,048) (1,048) - 10 Total Timing Differences (6,265) (4,024) (2,241) 11 Income Tax Base (4,727) (2,129) (2,598) 12 Tax Factor (tax rate / (1 - tax rate)) % % 13 Income Taxes (Line 11 x Line 12) (1,651) (744) (907) 14 Book to File Ontario Provincial Capital Tax Income Tax Allowance before Carry-Forward (1,651) (744) (907) 17 Income Tax Allowance Carry-Forward 1, Income Tax Allowance (456) (456) - 19 ITA Carry-Back / Carry-Forward Continuity , Prior Year ITA Available for Carry-Back Carry-Back re 2014 ITA - (456) 22 Remainder Prior Year ITA After Carry-Back ITA before Carry-Back (1,651) 24 Carry-Back re 2014 ITA ITA after Carry-Back (1,195) 26 ITA for Carry-Forward - Current Year 1, Prior Year ITA Carry-Forward balance - 28 Ending Cumulative ITA Carry-Forward 1,195

14 Deferred Amount Capital Adjustment 2014 Statement CC-4 Line No. Particulars Amount (a) (b) (c) 1 Monthly Capital Charge in Effect April 1 - December 31, Interim Monthly Charge in Effect January 1 - March 31, Difference in Monthly Capital Charge (Line 1 - Line 2) Difference in Monthly Capital Charge Times 3 Months (Line 3 x 3) 417

15 Return on Equity and Interest Expense 2014 Statement CC Toll Variance Line Capital Cost Weighted Rate Base 2014 Approved Btwn Actual No. Particulars Ratio Rate Cost CC-4.2 Actual Return & Approved (a) (b) (c) (d) (e)=(c) x (d) (f) (g)=(e) x (f) 1 Return on Equity 45.00% 8.18% % 41,806 1,538 1,895 (357) 2 Interest Return: 3 Original Rate Base 55.00% 10.75% % 4, Rate Base Additions & Working Capital 55.00% 5.37% % 37,780 1,115 1,424 (309) 5 Total Interest (Line 3 + Line 4) 1,353 1,662 (309) 6 Total Return (Line 1 + Line 5) 2,891 3,557 (666) 7 Less amount associated with Non-Routine Adjustment Variance (Capitalized) CC-5 (excluding depreciation component) (678) 8 Net Adjustment (Line 6 - Line 7) 12 Notes: Multi-pipeline rate of return of 7.93% + 25 basis points, per article 8.5 of the FSA % per article 8.4(a) of the FSA. 3 The Main System of Enbridge Pipelines Inc weighted average cost of debt of 4.87% + 50 basis points, per article 8.4(b) of the FSA.

16 Determination of Rate Base 13 - Point Average 2014 Statement CC-4.2 Rate Base Line Original on Add'l Total No. Date Rate Base Assets Rate Base (a) (b) (c) (d) (e) 1 January 1 4,259 21,271 25,530 2 January 31 4,221 21,155 25,376 3 February 28 4,182 21,597 25,779 4 March 31 4,143 21,481 25,624 5 April 30 4,104 21,364 25,468 6 May 31 4,065 21,247 25,312 7 June 30 4,026 21,130 25,156 8 July 31 3,987 21,013 25,000 9 August 31 3,948 61,215 65, September 30 3,909 61,322 65, October 31 3,870 60,987 64, November 30 3,831 65,561 69, December 31 3,792 65,517 69, Total 52, , , Point Average 4,026 37,297 41, Working Capital (1/12 of Annual O&M Charge) Rate Base 4,026 37,780 41,806

17 Fixed Assets Account 30 - Transportation Plant 2014 Statement CC-4.3 Prime Balance Balance Line Acct Beginning End of No. No. Description of Period Additions Transfers Retirements Period (a) (b) (c) (d) (e) (f) (g) (h) 1 Original Fixed Assets Pipe Lines 9, , Buildings Station Oil Lines Other Station Equipment 1, , Computer Equip. & Supplies Work Equip. - Non Mobile Pipeline Control Computer Equip Total Original Fixed Assets 11, , Additional Fixed Assets Land Rights Pipe Lines 21,253 40,456 - (109) 61, Buildings Station Oil Lines 62 2, , Other Station Equipment 526 2, , Computer Equip. & Supplies Work Equip. - Non Mobile Pipeline Control Computer Equip Total Additional Fixed Assets 22,331 45,647 - (109) 67,869

18 Statement CC-5 Accrued Depreciation, Interest Expense, and Return on Equity Associated with Non-Routine Adjustment Variance (Capitalized) 2014 Line No. Particulars Total (a) (b) (c) Actual 2 Average Rate Base 37,297 3 Depreciation 1,401 4 Interest Expense 1,100 5 Return on Equity 1,373 6 Total Adjustments 3, Forecast 8 Average Rate Base 47,170 9 Depreciation 1, Interest Expense 1, Return on Equity 1, Total Adjustments 4, Variance 14 Depreciation (437) 15 Interest Expense (315) 16 Return on Equity (363) 17 Accrued depreciation, interest expense and return on equity associated with Non-Routine Adjustment Variance (Capitalized) (Line 6 - Line 12) (1,115)

19 Determination of Rate Base 13 - Point Average 2015 Statement RB-0 Line Original Rate Base Total No. Date Rate Base Additions Rate Base (a) (b) (c) (d) (e) 1 January 1 3,792 65,517 69,309 2 January 31 3,754 65,288 69,042 3 February 28 3,715 65,059 68,774 4 March 31 3,676 64,830 68,506 5 April 30 3,637 64,601 68,238 6 May 31 3,598 64,372 67,970 7 June 30 3,559 64,143 67,702 8 July 31 3,520 63,914 67,434 9 August 31 3,481 63,685 67, September 30 3,442 63,456 66, October 31 3,403 63,227 66, November 30 3,364 73,217 76, December 31 3,325 84,381 87, Total 46, , , Point Average 3,559 66,592 70, Working Capital (1/12 of Annual O&M Charge) Rate Base 3,559 67,100 70,658

20 Fixed Assets Account 30 - Transportation Plant 2015 Statement RB-1 Prime Balance Balance Line Acct Beginning End of No. No. Description of Period Additions Transfers Retirements Period (a) (b) (c) (d) (e) (f) (g) (h) 1 Original Fixed Assets Pipe Lines 9, , Buildings Station Oil Lines Other Station Equipment 1, , Computer Equip. & Supplies Work Equip. - Non Mobile Pipeline Control Computer Equip Total Original Fixed Assets 11, , Additional Fixed Assets Land Rights Pipe Lines 61,600 18,765 - (68) 80, Buildings Station Oil Lines 2,574 1, , Other Station Equipment 3,205 1, , Computer Equip. & Supplies Work Equip. - Non Mobile Pipeline Control Computer Equip Total Additional Fixed Assets 67,869 21,614 - (68) 89,415

21 Fixed Assets Account 30 - Transportation Plant 13 - Point Average 2015 Statement RB-2 Balance Cumulative Line as at Cumulative Retirements/ Retirements/ Cumulative No. Date Jan 1, 2015 Additions Additions Transfers Transfers Balance (a) (b) (c) (d) (e) (f) (g) (h) 1 Original Assets 2 January 1 11, ,672 3 January 31 11, ,672 4 February 28 11, ,672 5 March 31 11, ,672 6 April 30 11, ,672 7 May 31 11, ,672 8 June 30 11, ,672 9 July 31 11, , August 31 11, , September 30 11, , October 31 11, , November 30 11, , December 31 11, , Total 151, , Point Average 11, , Additional Assets 18 January 1 67, , January 31 67, , February 28 67, , March 31 67, , April 30 67, , May 31 67, , June 30 67, , July 31 67, , August 31 67, , September 30 67, , October 31 67, , November 30 67,869 10,220 10, , December 31 67,869 11,394 21,614 (68) (68) 89, Total 882,297 21,614 31,834 (68) (68) 914, Point Average 67,869 1,663 2,449 (5) (5) 70,313

22 Fixed Assets Account 31 - Accumulated Depreciation - Transportation Plant 2015 Statement RB-3 Prime Balance Balance Line Acct Beginning End of No. No. Description of Period Additions Transfers Retirements Period (a) (b) (c) (d) (e) (f) (g) (h) 1 Original Plant in Service Pipe Lines 6, , Buildings Station Oil Lines Other Station Equipment , Computer Equip. & Supplies Work Equip. - Non Mobile Pipeline Control Computer Equipment Total Original Plant in Service 7, , Additional Plant in Service Land Rights Pipe Lines 2,165 2,529 - (68) 4, Buildings Station Oil Lines Other Station Equipment Computer Equip. & Supplies Work Equip. - Non Mobile Pipeline Control Computer Equip Total Additional Fixed Assets 2,352 2,750 - (68) 5, Total Accumulated Depreciation 10,232 3,217 - (68) 13,381

23 Account 31 - Accumulated Depreciation - Transportation Plant 13 - Point Average 2015 Statement RB-4 Balance Cumulative Line as at Cumulative Retirements/ Retirements/ Cumulative No. Date Jan 1, 2015 Additions Additions Transfers Transfers Balance (a) (b) (c) (d) (e) (f) (g) (h) 1 Original Assets 2 January 1 7, ,880 3 January 31 7, ,918 4 February 28 7, ,957 5 March 31 7, ,996 6 April 30 7, ,035 7 May 31 7, ,074 8 June 30 7, ,113 9 July 31 7, , August 31 7, , September 30 7, , October 31 7, , November 30 7, , December 31 7, , Total 102, , , Point Average 7, , Additional Assets 18 January 1 2, , January 31 2, , February 28 2, , March 31 2, , April 30 2, , May 31 2, , , June 30 2, , , July 31 2, , , August 31 2, , , September 30 2, , , October 31 2, , , November 30 2, , , December 31 2, ,750 (68) (68) 5, Total 30,576 2,750 17,865 (68) (68) 48, Point Average 2, ,374 (5) (5) 3,721

24 1. ALLOCATED COSTS APPENDIX C Rebased Starting Point O & M Charge 2015 To the Line 8 Oil Products Transportation and Financial Support Service Agreement Between Enbridge and Imperial dated the 2nd day of October, 1995 O & M Charge (2010) After Inflation O & M Charge (2015) Before Inflation Department Work Performed on Line 8 Cost Allocation Basis Sarnia PLM Pipeline repairs and maintenance; ROW maintenance and inspections Westover PLM Pipeline repairs and maintenance; ROW maintenance and inspections L8 oil product system kilometres of pipe in Sarnia PLM jurisdiction as a % of total kilometres of pipe in Sarnia PLM jurisdiction. L8 oil product system kilometres of pipe in Westover PLM jurisdiction as a % of total kilometres of pipe in Westover PLM jurisdiction. Total Dept. Allocated Allocated Total Dept. Allocated Allocated Costs ($000) Percent Cost ($000) Costs 3 ($000) Percent 3 Cost 4 ($000) 1, % 388 1, % 358 2, % 262 2, % 269 Enbridge Pipelines Inc. Administration services Based on allocation factors consistent with Enbridge Pipelines Inc. cost allocation methodology 1 n/a n/a 357 n/a n/a 744 Eastern Region Office Cathodic protection; communications and SCADA system maintenance; landowner consultation; administration. 2, % 208 5, % 357 Aviation Pipeline patrol. Based on an hourly rate, calculated by total departmental budgeted costs for the year over the estimated number of n/a n/a 45 n/a n/a 58 hours expected to be flown for that year. Insurance Comprehensive general liability & sudden and accidental pollution coverage. Property loss & business interruption (loss of earnings) coverage. S&W 2 of E. Div. office personnel allocated to L8 oil products system as a % of total E. Div. office S&W. Enbridge Pipelines Inc. no longer carries insurance on the entire pipeline and only carries insurance on major water crossings. Therefore, the liability premium allocated to Line 8 is a fixed premium amount based on Property Replacement Costs. 6 9 NEB Cost Recovery Fee NEB cost recovery fee associated with L8. Enbridge's NEB Cost Recovery fee over the previous two years, allocated to L8 based on average throughput for L8 and Enbridge Sysytem over the same period. TOTAL ALLOCATED 1,335 2, DIRECT COSTS Purpose Property Tax Materials/Contractors/Consultants TOTAL DIRECT Description Line 8 property taxes. Non-capitalized pipeline materials and contractor/consultants charges for routine pipeline maintenance and administration (average of previous 5 years). O & M Charges ($2010) O & M Charges ($2015) Direct Cost ($000) Direct Cost ($000) TOTAL COSTS Total Allocated Costs Total Direct Costs TOTAL ANNUAL O & M CHARGE 1,335 2, ,064 3,209 1 Enbridge Pipelines Inc. cost allocation methodology utilizes various allocation bases. The bases are determined by using allocation methods that best represent support being provided. 2 Salaries and Wages allocable department costs and allocation percentages. 4 Average 2013 and 2014 actual Line 8 allocation, unless noted otherwise.