2009 PILS / CORPORATE TAX FILING

Transcription

1 Page 1 of PILS / CORPORATE TAX FILING Sheet Index: Title Page Input Information Summary Tax Rates & Exemptions 28 Adjusted Taxable Income 28 Taxable Income Additions 28 Taxable Income Deductions 28 OCT 28 Loans and Advances 28 Tax Deductions > Book 28 Sch 8 and 1 UCC&CEC Bridge Year Additions & Disp. Bridge Year Schedule 8 CCA Bridge Year CEC Bridge Year Sch 13 Tax Reserves Bridge Year Sch 7-1 Loss Cfwd Bridge Year Sch 7-3 Interest Bridge Year Taxable Income Bridge Year Taxable Income Additions Bridge Year Taxable Income Deductions Bridge Year Financing Fees Bridge Year OCT Bridge Year Loans and Advances Bridge Year PILs,Tax Provision 21 Schedule 7-2 FMV FMV Bump Supplementry Notes

2 Page 2 of 44 PILS / CORPORATE TAX FILING Name of Utility: Licence Number: Toronto Hydro-Electric System Limited ED File Number: RP-

3 Page 3 of 44 File Numbers: RP-, Ratebase 2,38,15, DATA for PILS MODEL D 15 Net Income Before Taxes 65,298, DATA for PILS MODEL E 19 Calculation of Deemed Interest Debt Ratio 6.% 3-1 DATA for PILS MODEL D 16 Debt Rate % (as calculated) 5.22% DATA for PILS MODEL D 17 Deemed Interest to be recovered 63,855,115 Questions that must be answered Yes or No 1. Did the applicant elect to apply the FMV Bump-up of assets of October 1, 21 in their annual tax filings? Yes If No, please explain your reasons in the manager's summary.

4 Page 4 of 44 Has the applicant included in their reported UCC/ECE the FMV Bump-up of assets in this application? If No, please explain your reasons in the manager's summary. Yes 2. Does the applicant have any Investment Tax Credits (ITC)? Yes 3. Does the applicant have any Scientific Research and Experimental Development Expenditures? Yes 4. Does the applicant have any Capital Gains or Losses for tax purposes? Yes 5. Does the applicant have any Capital Leases? Yes 6. Does the applicant have any Loss Carry-Forwards (non-capital or net capital)? No 7. Has the applicant deducted regulatory assets for tax purposes in 28 and/or prior years? Yes If Yes, please explain your reasons in the manager's summary. 8. Since 1999, has the applicant acquired another regulated applicant's assets? No 9. Did the applicant pay dividends in 29 and/or prior years? Yes If Yes, please describe what was the tax treatment in the manager's summary. 1 Did the applicant elect to capitalize interest incurred on CWIP for tax purposes for 29 and/or prior years? No

5 Page 5 of 44 File Numbers: RP-, Applicant Toronto Hydro-Electric System Limited Regulated Affiliates (if applicable) Total OCT Rate Base Exemption 15,, 2,38,15,941 15,, 2,38,15,941 15,, Corporate Tax Rates for Test Year Income Range 5, to to >1,5, 5, 1,5, Federal 11.% 19.% 19.% Ontario 5.5% 5.5% 14.% Income Tax Rates used to gross up the true up variance Ontario SBD Clawback 16.5% 24.5% 4.25% 33.% Capital Tax Rate.225% Surtax.%

6 Page 6 of 44 File Numbers: RP-, T2S1 line # Total for Legal Entity Non-Distribution Eliminations 28 Wires Only Income before PILs/Taxes A 85,12,587 85,12,587 Additions: Interest and penalties on taxes 13 39,386 39,386 Amortization of tangible assets ,19,7 149,19,7 Amortization of intangible assets 16 Recapture of capital cost allowance from 17 Schedule 8 Gain on sale of eligible capital property from 18 Income or loss for tax purposes- joint ventures 19 or partnerships Loss in equity of subsidiaries and affiliates 11 Loss on disposal of assets 111 Charitable donations 112 4,88 4,88 Taxable Capital Gains , 99, Political Donations 114 Deferred and prepaid expenses 116 Scientific research expenditures deducted on 2,358, ,358,495 financial statements Capitalized interest 119 Non-deductible club dues and fees , ,398 Non-deductible meals and entertainment 29, ,6 expense Non-deductible automobile expenses ,556 62,556 Non-deductible life insurance premiums 123 Non-deductible company pension plans 124 Tax reserves deducted in prior year 125 Reserves from financial statements- balance at 147,413, ,413,621 end of year Soft costs on construction and renovation of 127 buildings

7 Page 7 of 44 File Numbers: RP-, T2S1 line # Total for Legal Entity Non-Distribution Eliminations 28 Wires Only Book loss on joint ventures or partnerships 25 Capital items expensed 26 12,585 12,585 Debt issue expense 28 Development expenses claimed in current year 212 Financing fees deducted in books , ,852 Gain on settlement of debt 22 Non-deductible advertising 226 Non-deductible interest 227 Non-deductible legal and accounting fees 228 Recapture of SR&ED expenditures 231 Share issue expense 235 Write down of capital property 236 Amounts received in respect of qualifying environment trust per paragraphs 12(1)(z.1) 1) 237 and 12(1)(z.2) Other Additions Interest Expensed on Capital Leases 29 Realized Income from Deferred Credit 291 Accounts Pensions 292 Non-deductible penalties 293 Debt Financing Expenses for Book Purposes 294 See Attached ,859,131 37,859,131 Total Additions 337,88, ,88,899

8 Page 8 of 44 File Numbers: RP-, T2S1 line # Total for Legal Entity Non-Distribution Eliminations 28 Wires Only Deductions: Gain on disposal of assets per financial 13, ,384 statements Dividends not taxable under section Capital cost allowance from Schedule ,737,234 15,737,234 Terminal loss from Schedule 8 44 Cumulative eligible capital deduction from 1,3, ,3,152 Allowable business investment loss 46 Deferred and prepaid expenses 49 Scientific research expenses claimed in year 411 3,183,275 3,183,275 Tax reserves claimed in current year 413 Reserves from financial statements - balance at 139,326, ,326,794 beginning of year Contributions to deferred income plans 416 Book income of joint venture or partnership 35 Equity in income from subsidiary or affiliates 36 Other deductions: (Please explain in detail the nature of the item) Interest capitalized for accounting deducted for 39 tax Capital Lease Payments 391 Financing Fees for Tax Under S.2(1)(e) ,538 39,538 See Attached ,189,318 34,189,318 Total Deductions 328,96, ,96,695 Net Income for Tax Purposes 94,22,791 94,22,791

9 Page 9 of 44 File Numbers: RP-, T2S1 line # Total for Legal Entity Non-Distribution Eliminations 28 Wires Only Charitable donations from Schedule Taxable dividends deductible under section or 113, from Schedule 3 (item 82) Non-capital losses of preceding taxation years 331 from Schedule 4 Net-capital losses of preceding taxation years 332 from Schedule 4 Limited partnership losses of preceding taxation 335 years from Schedule 4 TAXABLE INCOME 94,22,791 94,22,791

10 Attachment to 28 Adjusted Taxable Income Toronto Hydro Electric System Limited Licence Number: ED File Number: RP-, Toronto Hydro-Electric System Limited Page 1 of 44 Other Additions Amount ARO accretion expenses 384,788 Capital contributions under S.12(1)(x) 23,7,394 Lease inducement under 12(1)(x) 1, Deferred revenue - 12(1)(a) add back 1,662,99 Transition cost recovery 2,736,94 Transition cost interest recovery 418,752 Smart meter revenue recorded as regulatory asset, taxed in 28 3,795, PILs variance deducted for accounting, but not deductible for tax 4,647,28 Reversal of write down of dumb meter inventory deducted for tax in ,56 28 LRAM expense recorded in 28 accounting income but not yet approved 5, Ontario 28 Co-op Credit 92,696 Ontario 28 Apprenticeship Credit 263,289 37,859,131

11 Attachment to 28 Adjusted Taxable Income Toronto Hydro Electric System Limited Licence Number: ED File Number: RP-, Toronto Hydro-Electric System Limited Page 11 of 44 Other Deductions Amount ARO payments - deductible for tax 462,762 S.13(7.4) election - capital contributions 23,7,394 S. 13(7.4) election - deduction from class 13 1, AFUDC included in accounting income 2,16,388 CO-OP/Apprentice ITC taxed in 27; recorded for accounting in , SRED ITC taxed in 27, recorded for accounting in 28 income 997,924 Principal lease payments 23,715 Deferred revenue - 2(1)(m) deduction 1,662,99 Lease inducement amortization revenue 781,379 Smart meter OPEX recorded as Reg Asset 1,22, LRAM/SSM recorded for accounting in 28, but not yet approved 2,22,236 Carrying charges expensed for accounting in 27, deductible for tax in 28 1,85, CDM OPEX not deducted for accounting, but deductible for tax 368,72 Reversal of interest expense taxed in 24 4,115 34,189,318

12 Page 12 of 44 File Numbers: RP-, Detailed Calculation of the Ontario Capital Tax ONTARIO CAPITAL TAX PAID-UP CAPITAL From 28 Tax Return Non-Distribution Elimination Wires Only Paid-up capital stock 527,816, ,816,668 Retained earnings (if deficit, use negative sign) 237,67, ,67,656 Capital and other surplus excluding appraisal surplus 12,757,392 12,757,392 Loans and advances 1,39,672,25 1,39,672,25 Bank loans Bankers acceptances Bonds and debentures payable Mortgages payable Lien notes payable Deferred credits 1,662,99 1,662,99 Contingent, investment, inventory and similar reserves 261, ,146 Other reserves not allowed as deductions 147,152, ,152,475 Share of partnership(s), joint venture(s) paid-up capital Sub-total 2,236,39,451 2,236,39,451 Subtract: Amounts deducted for income tax purposes in excess of amounts booked (Not applicable) (193,646,477) -193,646,477 Deductible R&D expenditures and ONTTI costs deferred for income tax Total (Net) Paid-up Capital 2,43,36,928 2,43,36,928 ELIGIBLE INVESTMENTS Bonds, lien notes, interest coupons Mortgages due from other corporations Shares in other corporations Loans and advances to unrelated corporations Eligible loans and advances to related corporations Share of partnership(s) or joint venture(s) eligible investments Total Eligible Investments

13 Page 13 of 44 File Numbers: RP-, TOTAL ASSETS From 29 Trial Balance Non-Distribution Elimination Wires Only Total assets per balance sheet 2,56,14,859 2,56,14,859 Mortgages or other liabilities deducted from assets Share of partnership(s)/ joint venture(s) total assets Deduct Investment in partnership(s)/joint venture(s) Total assets as adjusted 2,56,14,859 2,56,14,859 Add: (if deducted from assets) Contingent, investment, inventory and similar reserves Other reserves not allowed as deductions 261, ,146 Deduct Amounts deducted for income tax purposes in excess of amounts booked -193,646,477 Deductible R&D expenditures and ONTTI costs deferred for income tax -193,646,477 Deduct Appraisal surplus if booked Other adjustments (if deducting, use negative sign) Total Assets 2,7,48,482 2,7,48,482 Investment Allowance Taxable Capital Net paid-up capital 2,43,36,928 2,43,36,928 Investment Allowance Taxable Capital 2,43,36,928 2,43,36,928 Capital Tax Calculation Deduction from taxable capital up to $15,, 15,, 15,, Net Taxable Capital 2,415,36,928 Rate.225% Ontario Capital Tax (Deductible, not grossed-up) 5,433,833

14 Page 14 of 44 Attachment to 28 OCT Toronto Hydro Electric System Limited File Number: RP-, Loans and Advances Current portion of Notes payable to Associated Companies 245,57,739 A/P BPP Rebate 9,362,774 Long term Notes payable to Associated Companies 912,43,262 Holdbacks 1,124,23 Customer Credit Balances 8,887,897 Customer Deposits 16,41,26 Current portion of Lease Inducements 781,379 Long term portion of Lease Inducements 1,853,499 Long term deposits 3,283,716 Regulatory Liabilities 83,516,656 Total 1,39,672,25

15 Page 15 of 44 Attachment to 28 OCT Toronto Hydro Electric System Limited File Number: RP-, Amounts Deducted for Income Tax > of Amounts Booked 12/31/27 Per Income Tax Return (165,974,844) 28 CCA (excluding FMV Bump) 124,283, Depreciation (149,19,7) 28 CEC (excluding FMV Bump) 14,513 Transition cost recovery (2,736,94) Transition cost recovery interest (418,752) 28 Accounting amortization of Financinge Fees (478,852) 28 S. 2(1)(e) amounts 39,538 Principal lease payments 23,715 (193,646,477)

16 Page 16 of 44 File Numbers: RP-, Methodology: This schedule starts with 28 Schedules 8 and 1, as filed in the actual 28 corporate tax returns; then the non-distribution assets are eliminated. The closing balances in this schedule are the starting point for the 29 Schedules. Class Class Description UCC End of Year Dec 31/8 per tax returns Less: Non- Distribution Portion Less: Disallowed FMV Increment UCC 29 Opening Balance 1 2 Distribution System - post 1987 and pre-feb. 22, 25 1,229,414,849 1,229,414,849 Distribution System - pre ,11,1 422,11,1 8 General Office/Stores Equip 37,875,927 37,875,927 Computer Hardware/ 1 Vehicles 16,47,94 16,47, Certain Automobiles 9,446 9, Computer Software 9,414,511 9,414, Lease # 1 593, , Lease #2 7,5,523 7,5, Lease # 3 1,58,728 1,58, Lease # 4 14 Franchise 17 New Electrical Generating Equipment Acq'd after Feb 27/ Other Than Bldgs 11,766,265 11,766, Fibre Optic Cable 7,888 7, Certain Energy-Efficient Electrical Generating Equipment 45 Computers & Systems Software acq'd post Mar 22/4 1,622,498 1,622, Data Network Infrastructure Equipment (acq'd post Mar 22/4)

17 Page 17 of Distribution Equipment (acq'd post Feb 22/5) 543,444,53 543,444,53 5 Computer software acquired after March 18, 27 5,82,222 5,82, WIP 99,843,746 99,843,746 SUB-TOTAL - UCC 2,385,828,683 2,385,828,683 CEC Goodwill CEC Land Rights CEC FMV Bump-up CEC Total 13,327,588 13,327,588 SUB-TOTAL - CEC 13,327,588 13,327,588

18 Page 18 of 44 File Numbers: RP-, Total Capital Assets for PILs Model CCA Class 29 Projected Capital Transactions 29 Projected Capital Transactions Additions Disposals Additions Disposals 162 Buildings and Fixtures Boiler Plant Equipment Reservoirs, Dams and Waterways Roads, Railroads and Bridges Buildings and Fixtures Roads and Trails Buildings and Fixtures Buildings and Fixtures 1 4,175,776 4,844 4,175,776 4, Electric Plant Purchased or Sold 1 22 Experimental Electric Plant Unclassified 1 23 Electric Plant and Equipment Leased to 1 Others 24 Electric Plant Held for Future Use 1 25 Completed Construction Not Classified-- 1 Electric 27 Other Utility Plant 1 SUBTOTAL - CLASS 1 4,175,776 4,844 4,175,776 4, Buildings and Fixtures Boiler Plant Equipment Reservoirs, Dams and Waterways Roads, Railroads and Bridges Buildings and Fixtures Station Equipment Towers and Fixtures Poles and Fixtures Overhead Conductors and Devices Underground Conduit Underground Conductors and Devices Roads and Trails Buildings and Fixtures Transformer Station Equipment - Normally Primary above 5 kv Distribution Station Equipment - Normally Primary below 5 kv Storage Battery Equipment Poles, Towers and Fixtures Overhead Conductors and Devices Underground Conduit Underground Conductors and Devices Line Transformers Services Meters 2

19 Page 19 of 44 File Numbers: RP-, Total Capital Assets for PILs Model CCA Class 29 Projected Capital Transactions 29 Projected Capital Transactions Additions Disposals Additions Disposals 1865 Other Installations on Customer's Premises Leased Property on Customer Premises Buildings and Fixtures Contributions and Grants - Credit 2 21 Electric Plant Purchased or Sold 2 22 Experimental Electric Plant Unclassified 2 23 Electric Plant and Equipment Leased to Others 2 24 Electric Plant Held for Future Use 2 25 Completed Construction Not Classified-- Electric 2 27 Other Utility Plant 2 xxx1 Fixed Assets for Conservation and Demand Management 2 xxx2 Smart Meters 2 SUBTOTAL - CLASS Street Lighting and Signal Systems Office Furniture and Equipment 8 1,676,575 1,676, Stores Equipment Tools, Shop and Garage Equipment 8 1,348,14 1,348, Measurement and Testing Equipment Power Operated Equipment Communication Equipment Miscellaneous Equipment Water Heater Rental Units Load Management Controls - Customer 8 Premises 1975 Load Management Controls - Utility Premises System Supervisory Equipment 8 2,245,96 2,245, Sentinel Lighting Rental Units Other Tangible Property 8 SUBTOTAL - CLASS 8 5,27,675 5,27,675 Fibre Optic Cable 42 SUBTOTAL - CLASS Computer Equipment - Hardware 45 SUBTOTAL - CLASS Computer Equipment - Hardware 5 SUBTOTAL - CLASS Computer Equipment - Hardware 52 4,973,33 4,973,33

20 Page 2 of 44 File Numbers: RP-, Total Capital Assets for PILs Model CCA Class 29 Projected Capital Transactions 29 Projected Capital Transactions Additions Disposals Additions Disposals SUBTOTAL - CLASS 52 4,973,33 4,973, Transportation Equipment 1 9,42,663 9,42,663 SUBTOTAL - CLASS 1 9,42,663 9,42, Computer Software - CL ,637,497 29,637,497 SUBTOTAL - CLASS 12 29,637,497 29,637, Leasehold Improvements Leasehold Improvements Leasehold Improvements Leasehold Improvements ,843 66,843 SUBTOTAL - CLASS 13 New Electrical Generating Equipment Acq'd after Feb 27/ Other Than Bldgs 17 66,843 66,843 1,286,975 1,286,975 1,286,975 SUBTOTAL - CLASS Engines and Engine-Driven Generators Turbogenerator Units Water Wheels, Turbines and Generators Fuel Holders, Producers and Accessories Prime Movers Generators Accessory Electric Equipment Miscellaneous Power Plant Equipment 43.1 SUBTOTAL - Generating Equipment Station Equipment 47 Towers and Fixtures 47 Poles and Fixtures 47 Overhead Conductors and Devices 47 4,474,251 4,474,251 Underground Conduit 47 Underground Conductors and Devices 47 44,198,593 44,198,593 Transformer Station Equipment - Normally 47 Primary above 5 kv 9,523,659 9,523,659 Distribution Station Equipment - Normally 47 Primary below 5 kv Storage Battery Equipment 47 Poles, Towers and Fixtures 47 9,99,976 9,99,976 Overhead Conductors and Devices 47 Underground Conduit 47 63,399,137 63,399,137 Underground Conductors and Devices 47 Line Transformers 47 31,121,423 31,121,423 Services 47 11,665,35 11,665,35 Meters 47 3,373,793 3,373,793

21 Page 21 of 44 File Numbers: RP-, Total Capital Assets for PILs Model CCA Class 29 Projected Capital Transactions 29 Projected Capital Transactions Additions Disposals Additions Disposals Other Installations on Customer's Premises 47 Leased Property on Customer Premises 47 Fixed Assets for Conservation and Demand Management 47 Smart Meters 47 26,83,57 26,83, Contributions and Grants - Credit 47-27,81,139-27,81,139 SUBTOTAL - CLASS ,858,55 175,858,55 25 Property Under Capital Leases CL 275 Non-Utility Property Owned or Under Capital CL Leases SUBTOTAL - Capital Leases 166 Organization ECP 161 Miscellaneous Intangible Plant ECP 1616 Land Rights ECP 9,928 9, Land Rights ECP 186 Land Rights ECP 196 Land Rights ECP 26 Electric Plant Acquisition Adjustment ECP 265 Other Electric Plant Adjustment ECP 168 Franchises and Consents 14 SUBTOTAL - Eligible Capital Property 9,928 9, Land LAND 175 Land LAND 185 Land LAND 195 Land LAND SUBTOTAL - Land 255 Construction Work in Progress--Electric WIP Total Tier 1 and Tier 2 Adjustments 231,293,445 4, ,293,445 4,844

22 Page 22 of 44 File Numbers: RP-, For Leasehold Improvements, insert the number of lease years (cells I18 - I2) Class 1 Class Description UCC 29 Opening Balance 29 Projected Additions 29 Projected Dispositions UCC Before 1/2 Yr Adjustment 1/2 Year Rule {1/2 Additions Less Disposals} Reduced UCC Rate % 29 CCA UCC End of 29 Distribution System not in Cl post ,229,414,849 4,175,776 4,844 1,233,585,781 2,85,466 1,231,5,315 4% 49,26,13 1,184,325,768 2 Distribution System - pre ,11,1 422,11,1 422,11,1 6% 25,32, ,69,434 8 General Office/Stores Equip 37,875,927 5,27,675 43,146,62 2,635,338 4,511,265 2% 8,12,253 35,44,349 1 Computer Hardware/ Vehicles 16,47,94 9,42,663 25,468,567 4,71,331 2,758,235 3% 6,227,471 19,241, Certain Automobiles 9,446 9,446 9,446 3% 2,834 6, Computer Software 9,414,511 29,637,497 39,52,8 14,818,749 24,233,26 1% 24,233,26 14,818, Leasehold Improvement # 1 593, , ,573 SL 237, , Leasehold Improvement # 2 7,5,523 7,5,523 7,5,523 SL 2,14,435 5,36, Leasehold Improvement # 3 1,58,728 1,58,728 1,58,728 SL 351,273 1,229, Leasehold Improvement # 4 66,843 66,843 33,422 33,422 SL 66,84 594, Franchise 17 New Electrical Generating Equipment Acq'd after Feb 27/ Other Than Bldgs 11,766,265 1,286,975 13,53,24 643,487 12,49,752 8% 992,78 12,6,46 42 Fibre Optic Cable 7,888 7,888 7,888 12% 8,57 62, Certain Energy-Efficient Electrical Generating Equipment 3% 45 Computers & Systems Software acq'd post Mar 22/4 1,622,498 1,622,498 1,622,498 45% 73, ,374

23 Page 23 of Data Network Infrastructure Equipment (acq'd post Mar 22/4) 3% Distribution Equipment (acq'd post Feb 22/5) 543,444,53 175,858,55 719,32,558 87,929,28 631,373,531 8% 5,59, ,792, Computer hardware acquired after March 18, 27 5,82,222 5,82,222 5,82,222 55% 2,795,222 2,287, Computer hardware acquired after January 29 and before February 211 4,973,33 4,973,33 4,973,33 1% 4,973,33 98 WIP 99,843,746 99,843,746 99,843,746 99,843,746 TOTAL 2,385,828, ,283,517 4,844 2,617,17, ,152,82 2,53,954, ,825,265 2,441,282,91

24 Page 24 of 44 File Numbers: RP-, Additions Cumulative Eligible Capital Cost of Eligible Capital Property Acquired During the Year 9,928 13,327,588 Other Adjustments Subtotal 9,928 x 3/4 = 7,446 Non-taxable portion of a non-arm's length transferor's gain realized on the transfer of an ECP to the Corporation after Friday, December 2, 22 x 1/2 = 7,446 7,446 Amount transferred on amalgamation or wind-up of subsidiary Subtotal 13,335,34

25 Page 25 of 44 Deductions Projected proceeds of sale (less outlays and expenses not otherwise deductible) from the disposition of all ECP during the year Other Adjustments Subtotal x 3/4 = Cumulative Eligible Capital Balance 13,335,34 Taxation Year 29 Deduction 13,335,34 x 7% = 933,452 Cumulative Eligible Capital - 29 Closing Balance 12,41,582

26 Page 26 of 44 Name of Utility: Licence Number: File Numbers: ED RP-, CONTINUITY OF RESERVES Test Year Adjustments Description Projected Balance at December 31, 28 Non-Distribution Eliminations Sign Convention: Increase (+) Decrease (-) 28 Utility Only Eliminate Amounts Not Relevant for Test Year Sign Convention: Increase (+) Decrease (-) 28 Adjusted Utility Balance (C/F Tab "28 Adjusted Taxable Income) Add (+) Deduct (-) Balance for Bridge Year (C/F to Tab "Bridge Year Taxable Income") Change During the Year Disallowed Expenses Capital Gains Reserves ss.4(1) Tax Reserves Not Deducted for accounting purposes Reserve for doubtful accounts ss. 2(1)(l) Reserve for goods and services not delivered ss. 2(1)(m) Reserve for unpaid amounts ss. 2(1)(n) Debt & Share Issue Expenses ss. 2(1)(e) Other tax reserves Total

27 Page 27 of 44 Name of Utility: Licence Number: File Numbers: ED RP-, CONTINUITY OF RESERVES Test Year Adjustments Description Projected Balance at December 31, 28 Non-Distribution Eliminations Sign Convention: Increase (+) Decrease (-) 28 Utility Only Eliminate Amounts Not Relevant for Test Year Sign Convention: Increase (+) Decrease (-) 28 Adjusted Utility Balance (C/F Tab "28 Adjusted Taxable Income) Add (+) Deduct (-) Balance for Bridge Year (C/F to Tab "Bridge Year Taxable Income") Change During the Year Disallowed Expenses Financial Statement Reserves (not deductible for Tax Purposes) General Reserve for Inventory Obsolescence (non-specific) 261, , , ,666 94,48-166,666 General reserve for bad debts Accrued Employee Future Benefits: - Medical and Life Insurance -Short & Long-term Disability -Accmulated Sick Leave 146,147, 146,147, 146,147, 1,516, ,663,213 1,516,213 - Termination Cost 1,5,475 1,5,475 1,5,475-15,475 9, -15,475 - Other Post- Employment Benefits Provision for Environmental Costs Restructuring Costs Accrued Contingent Litigation Costs Accrued Self-Insurance Costs Other Contingent Liabilities

28 Page 28 of 44 Name of Utility: Licence Number: File Numbers: ED RP-, CONTINUITY OF RESERVES Test Year Adjustments Description Projected Balance at December 31, 28 Non-Distribution Eliminations Sign Convention: Increase (+) Decrease (-) 28 Utility Only Eliminate Amounts Not Relevant for Test Year Sign Convention: Increase (+) Decrease (-) 28 Adjusted Utility Balance (C/F Tab "28 Adjusted Taxable Income) Add (+) Deduct (-) Balance for Bridge Year (C/F to Tab "Bridge Year Taxable Income") Change During the Year Disallowed Expenses Bonuses Accrued and Not Paid Within 18 Days of Year-End ss. 78(4) Unpaid Amounts to Related Person and Not Paid Within 3 Taxation Years ss. 78(1) Other Total 147,413, ,413, ,413,621 1,516, , ,657,693 1,244,72

29 Page 29 of 44 File Numbers: RP-, Calculated Deemed 29 Interest Expense in 29 EDR model 29 Actual Interest Expense 29 Capitalized Interest (USoA 64) 29Capitalized Interest (USoA 642) 29 Actual Interest 63,855,115 64,41, UNADJUSTED ACCOUNTING DATA L ,41, UNADJUSTED ACCOUNTING DATA L UNADJUSTED ACCOUNTING DATA L 432 Interest Forecast for Tier 1 or 2 Adjustments Total Interest 64,41,522 Excess Interest Expense for 29 PILs 555,47 Note: The applicant must indicate whether it made an election to capitalize interest incurred on CWIP for tax purposes for 28 and prior years.

30 Page 3 of 44 File Numbers: RP-, T2 S1 line # Test Year Taxable Income 28 Adjusted Taxable Income Variance Explanation for Variance Net Income Before Taxes 65,298,31 85,12,587-19,84,556 Additions: Interest and penalties on taxes 13 39,386-39,386 Amortization of tangible assets 2-4 ADJUSTED ACCOUNTING DATA P ,41, ,19,7 9,382,885 Amortization of intangible assets 2-4 ADJUSTED ACCOUNTING DATA P49 16 Recapture of capital cost allowance from Schedule 8 17 Gain on sale of eligible capital property from 18 Income or loss for tax purposes- joint ventures or partnerships 19 Loss in equity of subsidiaries and affiliates 11 Loss on disposal of assets 111 Charitable donations 112 4,88-4,88 Taxable Capital Gains ,478 99, 681,478 Political Donations 114 Deferred and prepaid expenses 116 Scientific research expenditures deducted on financial statements 118 2,358,495-2,358,495 Capitalized interest 119 Non-deductible club dues and fees , ,398 Non-deductible meals and entertainment expense ,6-29,6 Non-deductible automobile expenses ,556-62,556 Non-deductible life insurance premiums 123 Non-deductible company pension plans 124 Tax reserves beginning of year 125 Reserves from financial statements- balance at end of year ,657, ,413,621 1,244,72 Soft costs on construction and renovation of buildings 127 Book loss on joint ventures or partnerships 25 Capital items expensed 26 12,585-12,585 Debt issue expense 28 Development expenses claimed in current year 212 Capital additions projected for 29 Based on 29 projected balances Financing fees deducted in books , ,852-35,486 Gain on settlement of debt 22 Non-deductible advertising 226 Non-deductible interest 227 Non-deductible legal and accounting fees 228 Recapture of SR&ED expenditures 231

31 Page 31 of 44 File Numbers: RP-, T2 S1 line # Test Year Taxable Income 28 Adjusted Taxable Income Variance Explanation for Variance Share issue expense 235 Write down of capital property 236 Amounts received in respect of qualifying environment trust per paragraphs 12(1)(z.1) and (1)(z.2) Other Additions: (please explain in detail the nature of the item) Interest Expensed on Capital Leases 29 Realized Income from Deferred Credit Accounts 291 Pensions 292 Non-deductible penalties See Attached 295 3,779,242 37,859,131-7,79, Total Additions 348,62, ,88,899 1,181,772 See "Bridge Year Taxable Income Additions" tab. Deductions: Gain on disposal of assets per financial statements 41 13,384-13,384 Dividends not taxable under section Capital cost allowance from Schedule ,825,265 15,737,234 25,88,31 Capital asset additions projected for 29 Terminal loss from Schedule 8 44 Cumulative eligible capital deduction from CEC ,452 1,3,152-69,7 Allowable business investment loss 46 Deferred and prepaid expenses 49 Scientific research expenses claimed in year 411 3,183,275-3,183,275 Tax reserves end of year 413 Reserves from financial statements - balance at beginning of year ,413, ,326,794 8,86,827 Contributions to deferred income plans 416 Book income of joint venture or partnership 35 Equity in income from subsidiary or affiliates 36 Other deductions: (Please explain in detail the nature of the item) Interest capitalized for accounting deducted for tax 39 Capital Lease Payments 391 Financing Fees for Tax Under S.2(1)(e) ,7 39,538-5,838 See Attached ,242,948 34,189, ,37 See "Bridge Year Taxable Income Deductions" tab. Excess Interest (from Tab "Schedule 7-3") ,47 555,47 Applicable to Test Year only 396

32 Page 32 of 44 File Numbers: RP-, T2 S1 line # Test Year Taxable Income 28 Adjusted Taxable Income Variance Explanation for Variance 397 Total Deductions 358,355, ,96,695 29,394,698 NET INCOME FOR TAX PURPOSES 55,5,39 94,22,791-39,17,482 Charitable donations 311 Taxable dividends received under section 112 or Non-capital losses of preceding taxation years from Schedule Net-capital loss carried back from Limited partnership losses of preceding taxation years from Schedule TAXABLE INCOME (C/F to tab "Tax Provision) 55,5,39 94,22,791-39,17,482

33 Page 33 of 44 Attachment to Bridge Year Adjusted Taxable Income Toronto Hydro Electric System Limited Licence Number: File Number: ED RP-, Other Additions 29 Amount 28 Amount Variance ARO Accretion Expenses 392, ,788 7,886 Capital Contributions Under S.12(1)x) 27,81,139 23,7,394 4,793,745 Lease inducement under 12(1)(x) 1, 1, - Deferred revenue - 12(1)(a) add back 1,264, 1,662,99 (398,99) Transition cost recovery - 2,736,94 (2,736,94) Transition cost interest recovery - 418,752 (418,752) Smart meter Revenue recorded as Reg assets, taxed in 28-3,795,649 (3,795,649) PILS Variance deducted for accounting but not tax - 4,647,28 (4,647,28) Reversal of write down of inventory deducted for tax in ,56 (249,56) 28 LRAM recorded in 28 actg income but not legally entitled - 5, (5,) Co-op Credit - 92,696 (92,696) Apprenticeship Credit - 263,289 (263,289) 28 ITC claimed 1,221,429-1,221,429 3,779,242 37,859,131 (8,31,318)

34 Page 34 of 44 Attachment to Bridge Year Adjusted Taxable Income Toronto Hydro Electric System Limited Licence Number: ED File Number: RP-, Other Deductions 29 Amount 28 Amount Variance ARO Payments - Deductible for Tax 3,91,85 462,762 2,629,88 S.13(7.4) Election - Capital contributions 27,81,139 23,7,394 4,793,745 13(7.4) Election - Deduction of class 13 1, 1, - AFUDC included in accounting income - 2,16,388 (2,16,388) CO-OP/Apprentice ITC taxed in 27 recorded in ,697 (238,697) ITC taxed in 26 recorded in 28 income - 997,924 (997,924) Principal lease payments 24,58 23, Deferred revenue - 2(1)(m) deduction 1,264, 1,662,99 (398,99) Lease inducement amortization revenue 781, ,379 - Smart meter OPEX recorded as Reg Asset - 1,22,727 (1,22,727) LRAM/SSM taxable in 29 recorded in 28-2,22,236 (2,22,236) Carrying charges/ CDM OPEX not deducted for accounting, but deductible for tax - 1,453,72 (1,453,72) Reversal of interest expense taxed in 24-4,115 (4,115) 33,242,948 34,189,318 (946,37)

35 Page 35 of 44 Attachment to Test Year Taxable Income Toronto Hydro Electric System Limited Licence Number: ED File Number: RP-, Financing Fees Continuity TAX TREATMENT Year of ITA Original Cost Expenditure Reference Ending NBV Debt Issue Costs 2,988, S. 2(1)(e) 597, , , , ,767 - THC $5M LLC 47, 25 S. 2(1)(e) 94, 94, 94, 94, 94, - 27 Agency Fees 28,5 27 S. 2(1)(e.1) 28,5 27 Debt Issue Costs 1,341,69 27 S. 2(1)(e) 268, , , , ,338 - Agency Fees 28,2 28 S. 2(1)(e.1) 28,2-29 Debt Issuance 1,341, S. 2(1)(e) 22, , , , , ,977 - Total S. 2(1)(e) 597, , , ,767 96,15 362, ,7 536, , , , , Total S. 2(1)(e.1) ,5 28, ACCOUNTING TREATMENT Year of Original Cost Expenditure Ending NBV Debt Issue Costs 2,988, , , , ,883 6, , ,71 333, , ,67 163,88 - THC $5M LLC 47, 25 14, , ,667 52, Agency Fees 28, , 9,5 27 Debt Issue Costs 1,341, ,682 14, ,76 117,75 122,17 128, , ,887 15, , ,845 - Agency Fees 28, ,8 9,4-29 Debt Issuance 1,341, , ,613 18, , , , , ,32 15, , ,951 - Total 194, ,883 43, ,55 249, , , , , , ,96 269, ,826 3,936 38, , ,951 -

36 Page 36 of 44 File Numbers: RP-, If Rate Base is proxy for paid-up capital, use Section A If using actual paid-up capital, use Section B Section A Wires Only ONTARIO CAPITAL TAX Rate Base 2,38,15,941 Less: Exemption 15,, Deemed Taxable Capital 2,23,15,941 Rate in % Net Amount (Taxable Capital x Rate) 4,551,786 Section B Detailed Calculation of the Ontario Capital Tax ONTARIO CAPITAL TAX PAID-UP CAPITAL From 29 Trial Balance Non-Distribution Elimination Wires Only Paid-up capital stock 527,816, ,816,668 Retained earnings (if deficit, use negative sign) 249,216, ,216,651 Capital and other surplus excluding appraisal surplus 12,757,392 12,757,392 Loans and advances 1,429,936,97 1,429,936,97 Bank loans Bankers acceptances Bonds and debentures payable Mortgages payable Lien notes payable Deferred credits 36,789,885 36,789,885 Contingent, investment, inventory and similar reserves 94,48 94,48 Other reserves not allowed as deductions 157,563, ,563,213 Share of partnership(s), joint venture(s) paid-up capital Sub-total 2,414,175,259 2,414,175,259 Subtract: Amounts deducted for income tax purposes in excess of amounts booked (Not applicable) Deductible R&D expenditures and ONTTI costs deferred for income tax Total (Net) Paid-up Capital 2,414,175,259 2,414,175,259 ELIGIBLE INVESTMENTS Bonds, lien notes, interest coupons Mortgages due from other corporations Shares in other corporations Loans and advances to unrelated corporations Eligible loans and advances to related corporations Share of partnership(s) or joint venture(s) eligible investments Total Eligible Investments

37 Page 37 of 44 File Numbers: RP-, TOTAL ASSETS From 29 Trial Balance Non-Distribution Elimination Wires Only Total assets per balance sheet 2,489,728,25 2,489,728,25 Mortgages or other liabilities deducted from assets Share of partnership(s)/ joint venture(s) total assets Deduct Investment in partnership(s)/joint venture(s) Total assets as adjusted 2,489,728,25 2,489,728,25 Add: (if deducted from assets) Contingent, investment, inventory and similar reserves Other reserves not allowed as deductions 94,48 94,48 Deduct Amounts deducted for income tax purposes in excess of amounts booked Deductible R&D expenditures and ONTTI costs deferred for income tax Deduct Appraisal surplus if booked Other adjustments (if deducting, use negative sign) Total Assets 2,489,822,55 2,489,822,55 Investment Allowance Taxable Capital Net paid-up capital 2,414,175,259 2,414,175,259 Investment Allowance Taxable Capital 2,414,175,259 2,414,175,259 Capital Tax Calculation Deduction from taxable capital up to $15,, 15,, 15,, Net Taxable Capital 2,399,175,259 Rate.225% Ontario Capital Tax (Deductible, not grossed-up) 5,398,144

38 Page 38 of 44 Attachment to Bridge Year OCT Toronto Hydro Electric System Limited File Number: RP-, Loans and Advances Current portion of Notes payable to Associated Companies 49,115,478 Long term Notes payable to Associated Companies 667,769,933 Holdbacks 1,23, Customer Credit Balances 9,711,788 Customer Deposits 16,525,5 Unearned Revenue 1,264, Current portion of Lease Inducements 781,379 Current portion Leases 198,874 Long term portion of Lease Inducements 1,72,126 Long term portion of Leases 429, Long term customer deposits 32,278,789 Contributed Capital 28,56,13 Total 1,429,936,97

39 Page 39 of 44 File Numbers: RP-, Wires Only Regulatory Taxable Income - From 'Bridge Year Taxable Income' 55,5,39 Corporate Income Tax Rate 33.% Total Income Taxes 18,151,752 Investment Tax Credits 66, Miscellaneous Tax Credits 178, Total Tax Credits 838, Corporate PILs/Income Tax Provision for Test Year 17,313,752 Ontario Capital Tax 5,398,144 INCLUSION IN RATES Income Tax (grossed-up) 25,841,421 Ontario Capital Tax (not grossed-up) 5,398,144 Tax Provision for 29 EDR Model Rate Recovery (EDR Model Tab "4-2 OUTPUT from PILS MODEL" cell E15) 31,239,565

40 Page 4 of 44 File Numbers: RP-, CCA Class October 1, 21 FMV Bump FMV Bump Non- Distribution Utility FMV Bump 162 Buildings and Fixtures 1 2,61,316 2,61, Boiler Plant Equipment Reservoirs, Dams and Waterways Roads, Railroads and Bridges Buildings and Fixtures Station Equipment 1 17,23,3 17,23,3 172 Towers and Fixtures Poles and Fixtures Overhead Conductors and Devices 1 79,23,615 79,23, Underground Conduit Underground Conductors and Devices 1 176,82,14 176,82, Roads and Trails Buildings and Fixtures Transformer Station Equipment - Normally Primary above 5 kv Distribution Station Equipment - Normally Primary below 5 kv Storage Battery Equipment Poles, Towers and Fixtures Overhead Conductors and Devices Underground Conduit Underground Conductors and Devices Line Transformers 1 5,725,985 5,725, Services Meters 1 13,381,544 13,381, Other Installations on Customer's Premises Leased Property on Customer Premises Buildings and Fixtures Contributions and Grants - Credit 1 21 Electric Plant Purchased or Sold 1 22 Experimental Electric Plant Unclassified 1 23 Electric Plant and Equipment Leased to Others 1 24 Electric Plant Held for Future Use 1 25 Completed Construction Not Classified--Electric 1 27 Other Utility Plant 1 xxx1 Fixed Assets for Conservation and Demand Management 1

41 Page 41 of 44 File Numbers: RP-, CCA Class October 1, 21 FMV Bump FMV Bump Non- Distribution Utility FMV Bump xxx2 Smart Meters 1 SUBTOTAL - CLASS 1 339,44, ,44, Buildings and Fixtures Boiler Plant Equipment Reservoirs, Dams and Waterways Roads, Railroads and Bridges Buildings and Fixtures Station Equipment 2 9,166,247 9,166, Towers and Fixtures Poles and Fixtures Overhead Conductors and Devices 2 42,662,639 42,662, Underground Conduit Underground Conductors and Devices 2 95,582,87 95,582, Roads and Trails Buildings and Fixtures Transformer Station Equipment - Normally Primary above 5 kv Distribution Station Equipment - Normally Primary below 5 kv Storage Battery Equipment Poles, Towers and Fixtures Overhead Conductors and Devices Underground Conduit Underground Conductors and Devices Line Transformers 2 27,313,992 27,313, Services Meters 2 7,25,447 7,25, Other Installations on Customer's Premises Leased Property on Customer Premises Buildings and Fixtures Contributions and Grants - Credit 2 21 Electric Plant Purchased or Sold 2 22 Experimental Electric Plant Unclassified 2 23 Electric Plant and Equipment Leased to Others 2 24 Electric Plant Held for Future Use 2 25 Completed Construction Not Classified--Electric 2

42 Page 42 of 44 File Numbers: RP-, CCA Class October 1, 21 FMV Bump FMV Bump Non- Distribution Utility FMV Bump 27 Other Utility Plant 2 xxx1 Fixed Assets for Conservation and Demand Management 2 xxx2 Smart Meters 2 SUBTOTAL - CLASS 2 181,931, ,931, Street Lighting and Signal Systems Office Furniture and Equipment 8 24,914 24, Stores Equipment 8 1,813,98 1,813, Tools, Shop and Garage Equipment Measurement and Testing Equipment Power Operated Equipment Communication Equipment 8 2,62,452 2,62, Miscellaneous Equipment 8 4,228,318 4,228, Water Heater Rental Units Load Management Controls - Customer Premises Load Management Controls - Utility Premises System Supervisory Equipment 8 29,191,326 29,191, Sentinel Lighting Rental Units Other Tangible Property 8 SUBTOTAL - CLASS 8 37,86,99 37,86, Computer Equipment - Hardware 45 5,731,3 5,731,3 SUBTOTAL - CLASS 45 5,731,3 5,731,3 193 Transportation Equipment 1 5,31,287 5,31,287 SUBTOTAL - CLASS 1 5,31,287 5,31, Computer Software - CL ,621,766-36,621,766 SUBTOTAL - CLASS 12-36,621,766-36,621, Leasehold Improvements ,21-268, Leasehold Improvements Leasehold Improvements Leasehold Improvements 13 4 SUBTOTAL - CLASS ,21-268, Engines and Engine-Driven Generators Turbogenerator Units Water Wheels, Turbines and Generators Fuel Holders, Producers and Accessories Prime Movers Generators 43.1

43 Page 43 of 44 File Numbers: RP-, CCA Class October 1, 21 FMV Bump FMV Bump Non- Distribution Utility FMV Bump 168 Accessory Electric Equipment Miscellaneous Power Plant Equipment 43.1 SUBTOTAL - Generating Equipment 25 Property Under Capital Leases CL 275 Non-Utility Property Owned or Under Capital Leases CL SUBTOTAL - Capital Leases 166 Organization ECP 11,726,74 11,726, Miscellaneous Intangible Plant ECP 1616 Land Rights ECP 176 Land Rights ECP 186 Land Rights ECP 196 Land Rights ECP 26 Electric Plant Acquisition Adjustment ECP 265 Other Electric Plant Adjustment ECP 168 Franchises and Consents 14 SUBTOTAL - Eligible Capital Property 11,726,74 11,726, Land LAND 175 Land LAND 185 Land LAND 195 Land LAND SUBTOTAL - Land 255 Construction Work in Progress--Electric WIP Yard Improvements 17 5,854, 5,854, Total FMV Bump-up 55,56,31 55,56,31

44 Page 44 of 44 Fair Market Value (FMV) Bump Supplementary Toronto Hydro Electric System Limited File Number: RP-, Class Class Description October 1, 21 FMV Bump Rate % Remaining balance of Bump 24 Remaining balance of Bump 26 Remaining balance of Bump 28 CCA of Bump 29 Remaining balance of Bump 29 1 Buildings; Electrical generating or distributing equipment and plant (including structures) acquired after ,44,594 4% 287,966,36 265,389, ,583,237 9,783, ,799,98 2 Electrical generating or distributing equipment acquired before ,931,132 6% 142,42, ,58,79 11,899,567 6,653,974 14,245,593 8 Office furniture and equipment; Electrical generating equipment acquired after May 25, 1976 that has a max load of not more than 15kws; Portable electrical generating equipment and radio communication equipment acquired after May 25, ,86,99 2% 15,57,862 9,925,31 6,352,2 1,27,44 5,81,616 1 Automotive equipment & vehicle; Computer hardware - computer hardware and system software 11,32,587 3% 2,648,924 1,297, ,7 19,82 445,25 12 Application software- - subject to half-year rule (36,621,766) 1% Leasehold Improvements - SL w/ estimated 5 year (268,21) 2% (53,642) Yard improvements 5,854, 8% 4,193,764 3,549,62 3,4,383 24,351 2,764,32 CEC Cumulative Eligible Capital 11,726,74 7% 8,772,184 7,587,62 6,562,5 459,344 6,12,76 Total 55,56,31 461,77, ,258, ,37,264 18,598,24 353,439,6