23. Reference: Application, Volume 1, Chapter 2, page 2-, lines 8-23. 0(b) Please provide illustrative examples based on the F2006 forecast of how the actual Heritage Energy will be established in cases where: Thermal output from Heritage Resources and/or market purchases to meet load are higher than forecast as a result of either increased domestic load, increased use in lieu of non- Heritage Resources, or lower hydraulic generation than forecast Thermal output from Heritage Resources and/or market purchases to meet load are lower than forecast as a result of either lower domestic load, lower use in lieu of non- Heritage Resources, or higher hydraulic generation than forecast RESPONSE: The following steps are taken to calculate Heritage Deferral Account (HDA) and Non-Heritage Deferral Account (NHDA) transfers (please see BC Hydro s response to BCUC IR #2.122.0 for an explanation of the HDA and the NHDA.): Forecast Supply and Cost: 1) Forecast Heritage Contract supply and costs for F2006 are based on forecast load, known snow-pack, known reservoir conditions, normal precipitation levels, forecast market price of resources, forecast deliveries under take or pay contracts and other related information. Actual Costs: 2) Actual energy supply costs under the Heritage Contract and otherwise wil be accumulated in cost of energy accounts throughout the year. Heritage Cost of Energy (CO E) s: 3) Actual costs wil vary from forecast due mainly to variances in water inflows market prices of gas and electricity, weather and demand. 4) s between actual and forecast values due to changes in customer demand/load wil not be recorded for HDA purposes. 5) s in cost of energy due to changes in the supply or mix of energy and price of energy wil be recorded for HDA purposes. Non-Heritage COE variances: 6) The same steps as 3) to 5) above are applied to a different pool of resources for NHDA purposes.
Information Request No. 1. 23. 0(b) REVISED Dated: 2 March 2004 Ii cation 2004/05 and 2005/06 The calculation of the amounts that would be recorded for deferral account treatment arising from changes to load, resource mix or price is provided in the following two examples.
Example 1: F2006 Example of Thermal output and/or market purchases higher than forecast Domestic (in Table 1. Forecast $ millons) and Simulated COE Results for Example Forecast F2006 Hydro 1 generation 22. $277. Natural gas or thermal generation 23. Market purchases 55.4 Other Costs Heritage COE $379.9 A Independent Power Producers and long-term purchase commitments Non- Integrated Areas Gas transportation Displaced Hydro Non-Heritage COE Total Domestic COE $397. 3.4 $428.4 D $808. Simulated Results $269. 35. 131. 22. $458. 1 B $400. $431.6 E $889. $8. (11. (75. $(78.2) c $(3. (0.2) ($3.2) F $(81. Domestic Energy (GWh) Hydro generation (net of exchange and displaced) 253 800 1,453 Natural gas for thermal generation 197 300 (103) Market Purchases 506 755 249) Heritage Supply 956 855 101 Independent Power Producers and long-term purchase commitments 003 050 (47) Non- Integrated Areas 105 106 (1) Non Heritage supply 108 156 (48) Total Domestic Energy 55,064 011 Forecast Aggregate Unit Cost of Heritage Supply per MWh (Net of Skagit) MWh) Forecast Aggregate Unit Cost of Non- Heritage Supply per MWh $60. Supply Heritage COE (A) / (Heritage supply -340 Non-Heritage COE (D) / Non-Heritage Component Unit Cost per MWh Hydro generation $6. $6. 01) Natural gas or thermal generation $120. $116. $4. Market Purchases $36. $47. $(10. 76) IPP and Long Term purchase commitments $56. $56. 05) Non- Integrated Areas $142. $141. $1. 1 Other Costs include Canadian and US transmission for Skagit deliveries and Compensation and Mitigation costs.
Table 2. Reconciliation of Forecast F2006 to Simulated Forecast Heritage COE $ millons Explanation $379. Forecast Heritage delivery less Skagit energy x Forecast Aggregate Unit Cost of Heritage delivery = (47 956-340) GWh x $7.98 /MWh Change in quantity delivered (0. Quantity variance =Change in delivery x (HPO quantity variance not deferred) Forecast Aggregate Unit Cost of Heritage energy = - 101 GWh x $7.98/MWh Simulated charge excluding Skagit $379. Actual Heritage energy delivered less Skagit (HPO biled to ratepayers) energy x Forecast Aggregate Unit Cost of Heritage Energy =(47 855-340)GWh x $7.98/MWh HPO Energy deferred 79. Sum of mix and price variance - see Table 3 below Simulated Heritage COE $458. Forecast Non- Heritage COE $428.4 Forecast Non-Heritage delivery x Forecast Aggregate Unit Cost of Non-Heritage delivery = 7 108 x $60.27/MWh Change in quantity delivered (Non-Heritage quantity variance not deferred) Change in Non-Heritage delivery x Forecast Aggregate Unit Cost of Non-Heritage delivery = 48MWh x 60.27/MWh Simulated charge $431. Actual Non-Heritage energy delivered x (Non-Heritage biled to ratepayers) Forecast Aggregate Unit Cost of Non-Heritage Energy =7 156 GWh x $60.27/MWh Non-Heritage energy variance deferred Sum of mix and price variance - see Table 4 below Simulated Non-Heritage COE $431.
!:?()() BC Old Age Pensioners' Or.ganization Table 3. Heritage COE s - Example 1 ($ Millons) Forecast Hydro generation $ 277. Natural gas or thermal generation 23. Market Purchases 55.4 Other Costs 22. Total Heritage Cost of Energy $ 379. Simulated Mix Quantity Volume Price IOtal F2006 Varlance Varlanc.t ' Varlance $ 269. $ (2. $ 11. $ 8. (0.4) 35. (11. (0. (12.4) (11. 131. (36. (10. (46. (29. (75. 22. $ 458. $(50. Total HPO energy variances deferred Table 4. Non-Heritage COE s - Example 1 ($ Milions) Forecast F2006 F200 Simulated IPP and L T purchases $ 397. $ 400. Non-integrated areas 0 Gas Transporttion 0 Mix $ 0. (0. Quantlty $ (2. (0. Volume Varlance $ (2. (0. Price Varlance $ (0. Total $ (3. Displaced Energy 3.4 3. - (0.2) (0. Total Non-Heritage Cost of Energy 428.4 $ 431. $ 0. J $ (2.9). $ (2.8) (0.4) F$ (3. Total Non-Heritage energy variances deferred K $ IO 3\ Notes: 1) Mix : (Actual Volume - Forecast Volume) X (Forecast Component Unit Cost - Forecast Aggregate Unit Cost) 2) Quantity : (Actual Volume - Forecast Volume) X Forecast Aggregate Unit Cost 3) Volume : Mix + Quantity 4) Price : (Forecast Component Unit Price - Actual Component Unit Price) X Actual Volume 5) Some columns do not total due to rounding
Table 5. Reconcilation of s (in $millons) HPO energy variance deferred Change in Heritage delivery Total Heritage Energy Non-Heritage energy variance deferred Change in Non-Heritage delivery Total Non-Heritage Energy HPO energy variance deferred Non-Heritage energy variance deferred Total to Deferral Accounts $79. (0. $78. $0. $ 3. $79. $79.
Example 2: F2006 Example of Thermal output and/or market purchases lower than forecast, IPP start up deferred. (in $ milions) F2006 Table 6. Forecast and Simulated Results for Example 2 Domestic Cost of Energy Forecast Hydro generation $277. Natural gas or thermal generation 23. Market purchases 55.4 Other Costs 22. Heritage COE $379.9 A1 Independent Power Producers and long-term purchase commitments Non- Integrated Areas Gas transportation Displaced hydro Non-Heritage COE Total Domestic COE $397. 3.4 $428.4 D1 $808. Simulated Results $294. 14. 22. $343.6 B1 $382. 3.4 $4 $757. $(16. 10. 41.4 $ 36.3 C1 $ $ $51. Domestic Energy (GWh) Hydro generation (net of exchange and displaced) Natural gas for thermal generation Market Purchases Heritage Supply Independent Power Producers and long-term purchase commitments Non- Integrated Areas Non-Heritage Supply Total Domestic Energy 253 000 747) 197 150 506 250 256 956 400 444) 003 700 303 105 105 108 805 303 064 205 141) Forecast Aggregate Unit Cost of Heritage Supply per MWh. (Net of Skagit) Forecast Aggregate Unit Cost of Non- Heritage Supply per MWh Component Unit Cost per MWh $7. $60 Heritage COE (A 1) / (Heritage supply -340 MWh) Non-Heritage COE (D1) / Non-Heritage Supply
Table 7. Reconcilation of Forecast F2006 to Simulated (in $milions) $ millions lanation Forecast Heritage COE $379. Forecast Heritage delivery less Skagit energy x Forecast Aggregate Unit Cost of Heritage delivery = (47 956-340) GWh x $7.98/MWh Change in quantity delivered 11. Quantity variance =Change in delivery x (HPO quantity variance not deferred) Simulated charge excluding Skagit $391.4 (HPO biled to ratepayers) Forecast Aggregate Unit Cost of Heritage energy =1,444 GWh x $7.98/MWh Actual Heritage energy delivered less Skagit energy x Forecast Aggregate Unit Cost of Heritage Energy =(49,400-340)GWh x $7.98/MWh HPO Energy deferred (47. Sum of mix and price variance - see Table 8 below Simulated Heritage COE $343. Forecast Non-Heritage COE $428.4 Forecast Non Heritage delivery x Forecast Aggregate Unit Cost of Non-Heritage delivery = 7 108 GWh x $60. 27/MWh Change in quantity delivered (18. Change in Non-Heritage delivery x (Non-Heritage quantity variance not deferred) Forecast Aggregate Unit Cost of Non- Heritage delivery= - 303MWh x $60.27/MWh Simulated charge $410. Actual Non-Heritage energy delivered x (Non-Heritage biled to ratepayers) Non- Heritage energy variance deferred Simulated Non-Heritage COE $4 Forecast Aggregate Unit Cost of Non- Heritage Energy =6 805 GWh x $60. 27/MWh Sum of mix and price variance - see Table. 9 below
.$ _ BC Old Age Pensioners' Organization BC Hydro REVISED Response issued 02 April 2004 App Table 8. Heritage COE s - Example 2 Forecast Simulated Mix Quantity Volume Price Total $ Millions F2006 F2006 ' Varianc Variancl! Hydro generation $ 277. $ 294. 5.4 $ (21. (16. $ (16. Natural gas or thermal generation 23. 0.4 10. Market Purchases 55.4 14. 36. 10. 46. (4. 41.4 Other Costs 22. 22. Total Heritage Cost of Energ 79. L33_ 46.9 - G1$(11. 35.4 C1 $ 36. Total HPO energy variances deferred Table 9. Non- Heritage COE s - Example 2 ($ Millions) IPP and L T purchases Non-integrated areas Gas Transportation Displaced Enerqy Total Non-Heritaae Cost of Ener, Forecast F2006 $ 397. 3.4 $ 428.4 Simulated F2006 $ 382. 3.4 $44 Mix ariance' $ (1. Quantity $18. Volume arianc $ 17. Price arianc $ (2. Total $ J1 $18. 17. F1 $ Total Non-Heritage energy variances deferred K1 $ 1::::\ Notes: 1) Mix : (Actual Volume - Forecast Volume) X (Forecast Component Unit Cost - Forecast Aggregate Unit Cost) 2) Quantity : (Actual Volume - Forecast Volume) X Forecast Aggregate Unit Cost 3) Volume : Mix + Quantity 4) Price : (Forecast Component Unit Price - Actual Component Unit Price) X Actual Volume
Table 10. Reconcilation of s (in $milions) HPO energy variance deferred Change in heritage delivery Total Heritage Energy Non-Heritage energy variance deferred Change in Non-Heritage delivery Total Non-Heritage Energy HPO energy variance deferred Non-Heritage energy variance deferred Total to Deferral Accounts $(47. 11. $(36. $ 3. (18. $( $(47. $(44.