ERICA HAMILTON COMMISSION SECRETARY Commission.Secretary@bcuc.com web site: http://www.bcuc.com SIXTH FLOOR, 900 HOWE STREET, BOX 250 VANCOUVER, BC CANADA V6Z 2N3 TELEPHONE: (604) 660-4700 BC TOLL FREE: 1-800-663-1385 FACSIMILE: (604) 660-1102 Log No. 42003 VIA EMAIL jkennedy@png.ca March 22, 2013 Ms. Janet P. Kennedy Vice-President, Regulatory Affairs & Gas Supply Pacific Northern Gas Ltd. 1185 West Georgia Street Suite 950 Vancouver, BC V6E 4E6 Dear Ms. Kennedy: Re: Pacific Northern Gas (N.E.) Ltd. Project No. 3698698/Order G-193-12 2013 Revenue Requirements Application PNG(NE) 2013 REVENUE REQUIREMENTS EXHIBIT A-11 Further to your November 30, 2012 filing of the 2013 Revenue Requirements Application, enclosed please find Commission Information Request No. 2 for Fort St. John/Dawson Creek Division. In accordance with the Commission s Document Filing Protocols and the Amended Regulatory Timetable, please file your responses electronically with the Commission by Friday, April 12, 2013. Yours truly, LR/kb Enclosure cc: Registered Interveners (PNGNE 2013RR RI) Erica Hamilton PNG(NE)/2013 RRA/ A-11_BCUC IR 2 to PNG(N.E.) FSJDC (L)
BRITISH COLUMBIA UTILITIES COMMISSION Commission Information Request No. 2 Pacific Northern Gas (N.E.) Ltd. Fort St. John/Dawson Creek Division 2013 Revenue Requirements Application 1.0 Reference: Orders Sought Exhibit B-1-1, Updated Application 1.1 Please provide an updated list of the Orders Sought in this proceeding, based on the information provided in Exhibit B-1-1. 2.0 Reference: Cost of Service Exhibit B-1-1, Updated Application, p. 3 Derivation of Test Year Forecast Gross Margin The Test Year 2013 Cost of Service, excluding company use gas costs, is $13,044 thousand. (Exhibit B-1-1, p. 3) The Test Year 2013 Revenue Deficiency is $198 thousand. (Exhibit B-1-1, p. 3) 2.1 Please confirm that the schedule provided in Exhibit B-1-1, Tab Rates, page 13 calculates the revenue that would be collected using the Test Year 2013 deliveries (GJs) and the October 1, 2012 delivery and company use gas rates. If not confirmed, please explain otherwise. 2.1.1 Please provide a revised Derivation of Test Year Forecast Gross Margin schedule, excluding company use gas rate revenue. Please provide the schedule in a working excel document in the same format as Exhibit B-1-1, Tab Rates, page 13. 2.1.1.1 Please confirm that the difference between the Test Year 2012 Cost of Service, excluding company use gas costs, of $13,044 thousand and the Derivation of Test Year Forecast Gross Margin, excluding company use gas rate revenue, equates to the 2013 revenue deficiency of $198 thousand. If not confirmed, please explain why not. 3.0 Reference: Cost of Service Exhibit B-1-1, Updated Application, p. 3 2012 to 2013 Margin (Increase)/Decrease 3.1 Please provide a detailed calculation to support the $531 thousand margin increase in a working excel document. 4.0 Reference: Cost of Service Exhibit B-1-1, Updated Application, p. 3 2012 Cost of Service Adjustment 4.1 Please provide an updated calculation of the 2013 Revenue Deficiency/(Sufficiency) in the same format as Updated Application, page 3, excluding the impact of the 2012 Cost of Service Adjustment of $509 thousand and the resulting refund to ratepayers. PNG(N.E.) 2013 Revenue Requirements 1 BCUC IR No. 2 FSJ/DC
5.0 Reference: Cost of Service Exhibit B-1-1, Tab Rates, p. 13 Customer Minimum Margin Adjustment The Customer Minimum Margin Adjustment for Small Industrial Sales (Rate 4) is $21,440. 5.1 Please provide a comprehensive description of the Customer Minimum Margin Adjustment and discuss how it impacts the Test Year Forecast Gross Margin. 5.2 Please provide a detailed calculation to support the Customer Minimum Margin Adjustment amount of $21,440 in a working excel document. 6.0 Reference: Capital Structure and ROE Exhibit B-1-1, Tab 5, p. 1, Line No. 13 Rate of Return on Common Equity 6.1 Please confirm the benchmark utility rate of return that is used in the determination of the 9.9 percent rate of return on common equity in Exhibit B-1-1, Tab 5, page 1, Line No. 13. 6.2 Please confirm the PNG risk premium that is used in the determination of the 9.9 percent rate of return on common equity. Please also provide a reference to the relevant Commission Order approving the risk premium. 7.0 Reference: Rate Base Exhibit B-1-1, Appendix A: p. 12 Cash Working Capital / Budget Billing Plan The following table was provided in response to BCUC IR 1.45.2: 7.1 Commission staff note that the actual Budget Billing Plan balance is between $1,114 thousand (Actual 2012) and $1,606 thousand (Actual 2011) in each year between 2009 and 2012. Please discuss why PNG considers a forecast Budget Billing Plan balance of $502 thousand to be appropriate even though the balance has historically been significantly greater than this? 7.2 Please provide the detailed calculation to support the Test Year 2013 Budget Billing Plan balance of $500 thousand in a working excel document. Please provide a summary of the assumptions used in the calculation. PNG(N.E.) 2013 Revenue Requirements 2 BCUC IR No. 2 FSJ/DC
8.0 Reference: Rate Base Exhibit B-3, BCUC IR 1.44.2, p. 84 Other Working Capital The following table was provided in response to BCUC IR 1.44.2: Material and supplies inventories were significantly drawn down over 2011, ending the year at very low levels. Actual 2012 materials and supplies were also below the Test Year 2012 provision. Largely this was a result of the opening 2012 balances being at very low levels, though inventory levels increased over the year toward historical norms. (Exhibit B-3, BCUC IR 1.44.2.1, p. 85) 8.1 Please provide the Actual 2011 and Actual 2012 Materials and Supplies inventory month-end balances in the same format as Exhibit B-1-1, Tab 2, page 17. 8.2 Please discuss the factors that contributed to the decrease in Materials and Supplies inventory in 2011. 8.2.1 Please discuss how the factors identified in the preceding IR are not applicable to Test Year 2013, resulting in an increased Materials and Supplies inventory balance. 8.3 Please discuss if the Test Year 2013 Materials and Supplies inventory can be maintained at a level similar to the Actual 2012 and Actual 2011 average balances of $143 thousand and $128 thousand, respectively. Please discuss why or why not. 9.0 Reference: Short-Term Debt Exhibit B-1-1, Tab 5, p. 2 Operating Line Other Expenses 9.1 Please confirm the expiration date of the existing Operating Line. 9.2 Does PNG expect to renew the Operating Line in Test Year 2013? 9.2.1 If yes, please discuss if the renewal is required due to the expiration of the existing Operating Line. 9.2.2 If a renewal of the Operating Line is forecast in 2013 and is not required due to the expiration of the existing Operating Line, please discuss why PNG expects to renew the Operating Line in Test Year 2013. 9.3 Please confirm if the Test Year 2013 standby fees of $27 thousand are based on Forecast, Actual or deemed Average annual draws for the Operating Line. PNG(N.E.) 2013 Revenue Requirements 3 BCUC IR No. 2 FSJ/DC
9.3.1 Please provide the Test Year 2013 standby fees based on the Forecast Actual Average annual draw for the Operating Line. 10.0 Reference: Short-Term Debt and Long-Term Debt Exhibit B-1-1, Updated Application, p. 7 Interest Rates The lower interest rate forecasts reflect updates from the January 2013 Econolink consensus forecasts which resulted in reduced interest costs on both long-term and short-term floating rate debt. (Exhibit B-1-1, Application Update, p. 7) 10.1 Please provide a copy of the January 2013 Econolink Report used in the determination of the Test Year 2013 forecast long-term and short-term floating rate debt interest rates. 10.2 Please confirm the Test Year 2013 forecast average prime rate used in the determination of the forecast long-term and short-term floating rate debt interest rates. 11.0 Reference: Long-Term Debt Exhibit B-3, BCUC IR 1.40.2, p. 75 & BCUC IR 1.34.2, p. 58; PNG 2005 RRA Proceeding, Exhibit B-1, p. 31; Exhibit B-1-1, Tab 5, p. 3 Capital Structure The 2010 5-year Term Intercompany Loan is the only long term debt instrument without a fixed amortization schedule and its opening balance is determined to provide an appropriate level of shortterm debt (i.e. short-term debt no less than the short-term assets in rate base). (Exhibit B-3, BCUC IR 1.40.2, p. 75) PNG(N.E.) s Roynat 2017 Loan and its 2010 5-year Term Intercompany Loan are its two floating rate long-term debt instruments. (Exhibit B-3, BCUC IR 1.34.2, p. 58) The short-term debt component of PNG s capital structure for rate making purposes is the factor that balances the capital structure to the rate base. (PNG 2005 RRA Proceeding, Exhibit B-1, p. 31) 11.1 Please confirm if the Roynat 2017 Loan is on a fixed amortization schedule. If confirmed, please explain why the effective interest rate fluctuates from year to year. If not confirmed, please explain why not. 11.2 Please discuss why, in PNG s opinion, it is more appropriate to use a deemed level of long-term debt in the capital structure as opposed to balancing the capital structure to rate base using short-term debt. 11.3 Please provide a revised Exhibit B-1-1, Tab 5, page 3 using the Forecast Test Year 2013 Actual Long-Term Debt, as opposed to the deemed amounts. Please provide the schedule in a working excel document. 12.0 Reference: Long-Term Debt Exhibit B-3, BCUC IR 1.40.4, p. 76; Exhibit B-1-1, Tab 5, p. 3, Line No. 31 & Tab 2, p. 9, Line No. 23 Long-Term Debt Interest Given the nature of the calculation, amortization of debt issue costs is implicitly included in the effective cost rate. (Exhibit B-3, BCUC IR 1.40.4, p. 76) PNG(N.E.) 2013 Revenue Requirements 4 BCUC IR No. 2 FSJ/DC
12.1 Please confirm if the amortization of the issue costs is implicitly included in the effective cost rate of 4.53 percent for the Revolving Term Facility 2010 (Exhibit B-1-1, Tab 5, p. 3, Line No. 31) or explain otherwise. 12.1.1 If the preceding IR is confirmed, please discuss if PNG considers it appropriate to include the amortization of issue costs in the effective cost rate for the Revolving Term Facility 2010 when the unamortized issue costs of $39 thousand have been added to the Old Revolving Debt Issue Costs Deferral Account for 2013. (Exhibit B-1-1, Tab 2, p. 9, Line No. 23) 13.0 Reference: Long-Term Debt Exhibit B-1-1, Tab 5, Line No. 40 Extension/Replacement of Revolving Debt Facility 13.1 In PNG s opinion, would it be appropriate to include the variance in the 2013 Revolving Term Facility effective cost rate resulting from any difference between the forecast and actual issue costs and amortization of issue costs in the Long-Term Debt Deferral Account? Please discuss why or why not. 14.0 Reference: Capital Structure and ROE Exhibit B-1-1, Tab 5, p. 1 Return on Capital 14.1 Please confirm that the Return on Capital in the Application Update (Exhibit B-1-1) is based on PNG(N.E.) s approved common equity thickness of 40 percent. If not confirmed, please explain otherwise. 15.0 Reference: Operating Expenses Exhibit B-3, BCUC IR 1.6.1, p. 10 Account 685 General Operations PNG states that it has entered into a lease agreement at $7,000 per month. (Exhibit B-3, BCUC IR 1.6.1, p. 10) 15.1 The Original Application forecasted $28,000 for leasing costs in 2013; does this indicate that PNG anticipates terminating the lease by the end of April? If not confirmed, please explain otherwise. 16.0 Reference: Operating Expenses Exhibit B-3, BCUC IR 1.6.3, p. 10 Account 685 General Operations PNG states that it has made the following additions in account 685 Manager of Construction $113,220 (Exhibit B-3, BCUC 1.6.3, p. 10) [emphasis added] 16.1 Please clarify if the Manager of Construction is the new non-bargaining unit position that is being added in 2013 or if there are two new non-bargaining unit positions being added in 2013. 16.2 Please clarify if the Manager of Construction refers to the same position as the Operations Superintendent, which was described in PNG s response to BCUC IR 1.5.1. If not, please provide the job description for the Manager of Construction. PNG(N.E.) 2013 Revenue Requirements 5 BCUC IR No. 2 FSJ/DC
16.3 Please clarify if the discrepancy in the description of the new non-bargaining unit position between PNG s responses to BCUC 1.5.1 and 1.6.3 is simply a result of PNG changing the title of the new position, or have the actual duties and responsibilities of the new position been altered? 16.3.1 If the actual duties and responsibilities have been altered, please explain what caused PNG to make this change. 17.0 Reference: Operating Expenses Exhibit B-1-1, Tab 1, p. 3 Account 685 General Operations 17.1 Please explain why the Actual 2012 general systems operations expenses were $19,000 higher than Decision 2012 ($222,000 Actual versus $203,000 Decision). What additional expenses were incurred in 2012 that PNG had not anticipated? 18.0 Reference: Operating Expenses Exhibit B-1-1, Tab 1, p. 3; PNG(N.E.) 2012 RRA, Exhibit B-3, Tab 1, p. 3 Account 688 Other General Operations 18.1 Please explain why the Actual 2012 other general operations expenses were $31,000 lower than Decision 2012 ($588,000 Actual versus $619,000 Decision). What caused the unanticipated reduction in forecast expenses for 2012? 18.2 Please explain why the Forecast 2013 expenses for Account 688 have been reduced by $76,000 in the Updated Application from the Original Application ($563,000 Updated versus $639,000 Original). Per the Updated Application filed as part of the 2012 PNG(N.E.) RRA, the Actual 2011 expenses in Account 688 were $36,000 lower than the amount approved in NSP 2011 ($561,000 Actual 2011 versus $597,000 NSP 2011). (PNG(N.E.) 2012 RRA, Exhibit B-3, Tab 1, p. 3) 18.3 Please comment on whether PNG(N.E.) is exhibiting a trend of over-forecasting the expected expenses to be incurred in this account. 19.0 Reference: Operating Expenses Exhibit B-1-1, Tab 1, p. 3 Account 712 Meter Reading 19.1 Please explain why the Forecast 2013 expenses for Meter Reading have been reduced by $37,000 in the Updated Application from the Original Application ($224,000 Updated versus $261,000 Original). 19.2 Please discuss the risk that PNG may be under-forecasting the cost of meter reading for 2013 given that the average cost for meter reading over the past four years (Actual) is $244,000. 20.0 Reference: Operating Expenses Exhibit B-3, BCUC IR 1.20.2, p. 32 Other Contractor Charges Contractor Charges have increased $56,000 from Decision 2012 and have increased $138,000 from the average of the past five years. (Exhibit B-3 BCUC IR 1.20.2, p. 32) PNG(N.E.) 2013 Revenue Requirements 6 BCUC IR No. 2 FSJ/DC
20.1 Please explain the cause of this increase and why the additional expenditure on contractors is needed. 20.2 Please explain how the increase to Contractor Charges creates an increase in PNG s efficiency and productivity. 20.3 Please explain how the increase in Contractor Charges benefits ratepayers. 21.0 Reference: Operating Expenses Exhibit B-1-1, Tab 1, p. 3 Account 665 In the PNG(N.E.) 2012 RRA Decision, pages 24-26 the Commission disallowed certain costs related to Close Interval Survey (CIS) that PNG had demonstrated a history of over-estimating. 21.1 Please update the table below with Actual 2012 Survey results and contractor expenses along with Forecast 2013 survey data and contractor expense. Test Year No. of km Surveyed No. of Close Interval Surveys Forecast Contractor Expense Actual Contractor Expense 2010 103 17 $156,000 $88,000 2011 46 8 $198,000 $60,000 2012 57 Forecast 6 Forecast $180,000 ($120,000 Decision 2012) 2013 N/A 21.1.1 Please explain any differences in 2012 results for CIS activities and explain why the Forecast 2013 expense for contractor expense is reasonable. 21.1.2 Does the Account 665 forecast of $192,000 include the in-line inspection of the 6 inch diameter lateral providing service to Dawson Creek that was forecast for 2012 but not completed? 21.1.2.1 If so, what is the forecast expense for this activity? 21.1.2.2 Has ownership of this 6 inch line been acquired? Please provide an update on the acquisition delays. 22.0 Reference: Maintenance Expenses Exhibit B-1-1, Tab 1, p. 4 22.1 For Account 865 Pipelines, please explain what activities are included in the 2013 Forecast of $130,000 with an approximate dollar value associated with the activities. 22.1.1 Please confirm to which account Investigative Digs are charged and the amount for this activity that is forecast in Test Year 2013. PNG(N.E.) 2013 Revenue Requirements 7 BCUC IR No. 2 FSJ/DC
22.1.2 Please explain why when $132,000 was approved in 2012 only $11,000 was spent? Please provide any further justification for the Forecast 2013 amount of $130,000. 23.0 Reference: Transfers to Capital Exhibit B-3, BCUC IR 1.11.3, p. 20 23.1 Please re-create the table provided in PNG s response to BCUC IR 1.11.3, but include two additional columns: Updated Test Year 2013 and Actual 2012. 24.0 Reference: Administrative & General Expenses Exhibit B-1-1, Tab 1, p. 5 Account 722 Audit, Legal & Consulting Fees 24.1 Please provide a breakdown that shows separately the amounts for audit, legal and consulting fees for Test Year 2013, Actual 2012, Actual 2011, Actual 2010 and Actual 2009. Please make sure that the total amounts agree to the amounts shown in the Updated Application (Exhibit B- 1-1, Tab 1, p. 5). 25.0 Reference: Administrative & General Expenses Exhibit B-3, BCUC IR 1.9.4, p. 16 Account 722 Audit, Legal & Consulting Fees PNG provides a table in response to BCUC 1.9.4 which shows that audit fees for 2013 are forecasted to decrease by $781, or 1.3 percent from 2012 and by $3,791, or 6.1 percent, from 2011. 25.1 Please discuss whether these decreases seem low given that PNG is now receiving support from AltaGas. 26.0 Reference: Administrative & General Expenses Exhibit B-3, BCUC IR 1.12.1-1.12.2, p. 21 Performance/Incentive Pay Program for 2012 and 2013 26.1 If the fiscal 2012 payout has now been finalized, please provide the aggregate payout and the average dollar value of the payout for 2012, as previously requested in BCUC IR 1.12.1 and 1.12.2. 27.0 Reference: Administrative & General Expenses Exhibit B-3, BCUC IR 1.13.1, p. 22 Performance/Incentive Pay Program for 2012 and 2013 MTIP 27.1 Please provide the job title and description of the one employee who is eligible for MTIP. 27.2 Please provide the number and value of shares granted to the eligible employee and the amount he/she is expected to receive in cash for Test Year 2013. PNG(N.E.) 2013 Revenue Requirements 8 BCUC IR No. 2 FSJ/DC
28.0 Reference: Administration & General Expense Exhibit B-3, BCUC IR 1.24.1, p. 38 & BCUC IR 1.28.1.1; Exhibit B-1, Application, p. 9 Employee Benefits The following response was provided for BCUC IR 1.28.1.1: Costs related to employee savings plan are forecast to increase by $28,000 in Test Year 2013. This reflects the increase in the maximum company match to employee contributions under this plan from 5% to 6%. (Exhibit B-1, Application, p. 9) The following table was provided in response to BCUC IR 1.24.1: 28.1 Please provide a schedule of the Test Year 2013 Employee Benefits expense in the same format as the schedule provided in response to BCUC IR 1.24.1, using the updated figures presented Exhibit B-1-1. 28.2 Based on the schedule provided in response to BCUC IR 1.24.1, Canada Pension Plan (CPP) costs are forecast to increase by $10.8 thousand or 17 percent from Actual 2012 to Test Year 2013. Please discuss the factors that have contributed to the increase from Actual 2012 to Test Year 2013 (using figures from Exhibit B-1-1). Please discuss this in the context of the response to BCUC IR 1.28.1.1, which indicated an expected 2 percent increase in CPP costs. 28.3 Based on the schedule provided in response to BCUC IR 1.24.1, life and disability insurance costs are forecast to increase by $19.7 thousand or 32 percent from Actual 2012 to Test Year 2013. Please discuss the factors that have contributed to the increase from Actual 2012 to Test Year 2013 (using figures from Exhibit B-1-1). Please discuss this in the context of the response to BCUC IR 1.28.1.1, which indicated an expected 2.4 percent increase in health and dental costs. PNG(N.E.) 2013 Revenue Requirements 9 BCUC IR No. 2 FSJ/DC
28.4 Based on the schedule provided in response to BCUC IR 1.24.1, employee savings plan costs are forecast to increase by $23.9 thousand or 32 percent from Actual 2012 to Test Year 2013. Please discuss why this amount is reasonable, given the 1 percent increase in company match to employee contributions. 29.0 Reference: Administration & General Expense Exhibit B-3, BCUC IR 1.25.3 & BCUC IR 1.25.5, pp. 42-43; PNG-West 2013 RRA, Exhibit B-3, BCUC IR 1.30.2, p. 80 Account 725 Employee Benefits Company Pension Plans Expense Comingled DB pension plan assets with AltaGas to reduce investment management and custodial fees. This resulted in a change to service providers for PNG. (Exhibit B-3, BCUC IR 1.25.5, p. 43) The January 10, 2013 Actuary Report was provided in response to PNG-West Exhibit B-3, BCUC IR 1.30.2, page 80. The Estimated 2013 Net Periodic Pension Cost by Division is $161 thousand for FSJ and $245 thousand for DC for a total of $406 thousand. 29.1 Please provide a schedule of the Test Year 2013 Company Pension Plans Expense in the same format as the schedule provided in response to BCUC IR 1.25.3, using the updated figures presented Exhibit B-1-1. 29.1.1 Please confirm that the Test Year 2013 Total Pension Expense in the schedule provided in response to the preceding IR agrees to the sum of the Estimated 2013 Net Periodic Pension Cost by Division for FSJ and DC of $406 thousand in the Actuary Report. If not confirmed, please explain why they do not agree. 29.2 Please provide the amount of forecast cost savings in Test Year 2013 related to lower management and custody fees and indicate which expense account these costs savings are included in. 30.0 Reference: Administration & General Expense Exhibit B-3, BCUC IR 1.26.1.1, p. 44; PNG West 2013 RRA, Exhibit B-3, BCUC IR 1.30.2, p. 80 Account 725 Employee Benefits Other Programs The following table was provided in response to BCUC IR 1.26.1.1: The January 10, 2013 Actuary Report was provided in response to PNG West Exhibit B-3, BCUC IR 1.30.2, page 80. The Estimated 2013 Net Periodic Benefit Cost by Division is $76 thousand for FSJ and $92 thousand for DC for a total of $168 thousand. 30.1 Please provide a schedule of the Test Year 2013 Other Programs Expense in the same format as the schedule provided in response to BCUC IR 1.26.1.1, using the updated figures presented Exhibit B-1-1. PNG(N.E.) 2013 Revenue Requirements 10 BCUC IR No. 2 FSJ/DC
30.1.1 Please confirm that the Test Year 2013 Non-Pension Post Retirement Benefits expense in the schedule provided in response to the preceding IR agrees to the sum of the Estimated 2013 Net Periodic Benefit Cost by Division for FSJ and DC of $168 thousand in the Actuary Report. If not confirmed, please explain why they do not agree. 30.2 Based on the schedule provided in response to BCUC IR 1.26.1.1, coffee and water service expenses are forecast to increase by 64 percent from Actual 2012 to Test Year 2013. Please discuss the factors that have contributed to the increase from Actual 2012 to Test Year 2013 (using figures from Exhibit B-1-1). 30.3 Based on the schedule provided in response to BCUC IR 1.26.1.1, educational expenses are forecast to increase by 247 percent from Actual 2012 to Test Year 2013. Please discuss the factors that have contributed to the increase from Actual 2012 to Test Year 2013 (using figures from Exhibit B-1-1). 30.3.1 Please discuss why the Actual 2012 Educational expense was significantly less than the Decision 2012 Educational expense. 30.3.2 Please discuss why the Actual 2011 Educational expense was significantly less than the NSP 2011 Educational expense. 31.0 Reference: Administration & General Expense Exhibit B-3, BCUC IR 1.26.3, p. 45 Account 725 Employee Benefits Non-Pension Post Retirement Benefits Expense 31.1 Please provide the total Test Year 2013 Non-Pension Post Retirement Benefits Expense using the updated figures presented Exhibit B-1-1 and in the same format as the response to BCUC IR 1.26.3. 32.0 Reference: Administrative & General Expenses Exhibit B-3, BCUC IR 1.21.1, p. 33; Exhibit B-1-1, Updated Application, p. 5 Other PNG provides an explanation for $698,000 of the $709,000 increase in other expenses between Decision 2012 and Test Year 2013. (BCUC 1.21.1, p. 33) 32.1 Please explain what the remaining $11,000 increase in other expenses is related to. PNG states in the Updated Application: Increase of $9,000 under Account 722 for audit fees due to estimate revisions since the Original Application was filed. 32.2 How much was the Forecast 2013 amount for audit fees in the Original Application? How much is it in the Updated Application? 32.3 Please explain what has caused PNG to revise its estimate for 2013 audit fees upwards by $9,000. 33.0 Reference: Labour Exhibit B-3, BCUC IR 1.22.3, p. 35 Bargaining Unit Average Salary 33.1 Please explain why the average Bargaining Unit salary is forecast to increase by 12.2 percent from 2012 to 2013. PNG(N.E.) 2013 Revenue Requirements 11 BCUC IR No. 2 FSJ/DC
34.0 Reference: Deferral Accounts Exhibit B-1-1, Tab 2, p. 8; Exhibit B-1, Application, pp. 19-20; PNG(NE) 2012 RRA, Exhibit B-3, Tab 2, p. 9 Plants Gains & Losses 34.1 Did PNG(N.E.) incur any extraordinary gains/losses on plant disposals? If so, what was the amount? 34.2 Please explain why the 2012 addition to the Deferral Account has changed from a credit of $41,450 per the Original Application to a debit of $119,000 per the Updated Application. 34.3 Please re-create the table provided in the Original Application on page 20 of the Application Narrative and include an additional column for Actual 2012. Please also include a description of the assets retired and a breakdown of the types of removal costs incurred. The 2011 gross addition to the Plants Gains & Losses Deferral Account per the 2012 PNG(N.E.) Updated Application was $62,000. (PNG(N.E.) 2012 RRA, Exhibit B-3, Tab 2, p. 9) If you exclude the plant gain on the sale of the Dawson Creek Operations Centre, the 2012 gross addition to the Plants Gains & Losses Deferral Account, per the 2013 PNG(N.E.) Updated Application is $275,000 ($119,000 plus $156,000). 34.4 Please explain what has caused this increase of $213,000 from the previous year in Deferral Account additions. 34.5 Please explain why PNG(N.E.) was not able to forecast the 2012 addition more accurately based on the information available to it when it filed the Original Application. 34.6 Please provide a table similar to what was provided in the Updated Application for PNG West which shows the descriptions of the retired assets (provided on page 18 of the PNG West Updated Application in response to BCUC IR 1.44.1). 35.0 Reference: Deferral Accounts Exhibit B-1-1, Updated Application, pp. 5-6; Tab 2, p. 8 Resource Plans 35.1 Please clarify if the new Deferral Account included in the Updated Application titled Resource Plans is related to PNG s evaluation of DSM initiatives as part of its upcoming PNG-West 2013 Resource Plan. If not, please explain what this new Deferral Account relates to. 35.2 Please clarify if PNG is requesting approval to establish this new Deferral Account as part of its 2013 RRA. If not, please explain otherwise. 35.3 Please clarify what amortization period PNG is seeking approval for to amortize this new Deferral Account and why PNG believes this amortization period is appropriate. 35.4 Please describe the nature of the 2012 additions of $20,000 to this new Deferral Account. 35.5 Please confirm that PNG is requesting approval to include this new Deferral Account in rate base. PNG(N.E.) 2013 Revenue Requirements 12 BCUC IR No. 2 FSJ/DC
35.5.1 If confirmed, please provide the following: A description of the purpose of the Deferral Account; A discussion on whether or not the Deferral Account includes part of a capital expenditure; and The justification for earning the weighted average cost of debt and equity on the Deferral Account. 36.0 Reference: Deferral Accounts Exhibit B-1-1, Updated Application, p. 6 Reserve for Damages 36.1 Please clarify if PNG is requesting approval to establish a new Deferral Account called Reserve for Damages as part of its 2013 RRA. If not, please explain otherwise. 36.2 Please clarify what amortization period PNG is seeking approval for to amortize this new Deferral Account and why PNG believes this amortization period is appropriate. 36.3 Please confirm that PNG is requesting approval to include this Deferral Account as an interestbearing Deferral Account. 36.4 Please provide a description of this Deferral Account, why PNG believes it is necessary to establish this Deferral Account and what costs it anticipates recording in this Deferral Account. 36.5 Please confirm that there are zero additions being added to this Deferral Account for 2012. 37.0 Reference: Deferral Accounts Exhibit B-3, BCUC IR 1.39.3, p. 73 & BCUC IR 1.33.2, p. 57 Short-Term Interest Deferral Account Please note that while Other Expenses have been provided for both Decision 2010 and Actual 2010, these expenses were not recovered through the short term interest expense but rather through a deferral mechanism akin to the methodology used for BCUC hearing costs. (Exhibit B-3, BCUC IR 1.39.3, p. 73) Does the Short-Term Debt Interest Deferral Account capture the difference between forecast and actual Other Expenses on the Operating Line (Exhibit B-1, Tab 5, p. 2, Line No. 10), as these expenses factor into the calculation of the Average Short Term Interest Rate? (Exhibit B-1, Tab 5, p. 2, Line No. 12) Please discuss. Response: No. The Deferral Account only captures differences in the Test Year short-term interest expense arising due to a difference in forecast versus actual interest rates. (Exhibit B-3, BCUC IR 1.33.2, p. 57) The short term interest deferral account will continue to record the difference between the underlying customer security deposit and short term operating line interest rates in the ordinary course, however, PNG(N.E.) will now be at risk for variances between actual and budgeted fees associated with short term debt. (2011 PNG(N.E.) RRA, Exhibit B-1, p. 17) 37.1 Please discuss why, in PNG s opinion, it is appropriate to exclude the variance between Forecast and Actual Other Expenses from the Short-Term Debt Interest Deferral Account. PNG(N.E.) 2013 Revenue Requirements 13 BCUC IR No. 2 FSJ/DC
38.0 Reference: Deferral Accounts Exhibit B-1-1, Tab 2, p. 8, Line No. 15 Long-Term Debt Interest Deferral Account 38.1 Does the Long-Term Debt Interest Deferral Account capture the impact of any difference between Forecast and Actual expenses, other than interest rates, on the effective cost rate (i.e. variances in the amortization of issue costs or standby fees)? If not, please discuss why not. 38.1.1 If the answer the preceding IR is no, please discuss why in PNG s opinion it is appropriate to exclude the variance between Forecast and Actual expenses, other than interest rates, from the Long-Term Debt Interest Deferral Account. 38.2 Commission staff has calculated the expected 2012 addition to the Long-Term Interest Deferral Account, based on the information provided in Exhibit B-1-1, Tab 5, p. 3. Please confirm if the following schedule is correct. If not correct, please provide an updated schedule in a working excel document and provide an explanation for each change made. 38.2.1 Please provide an explanation for the difference between the calculated addition to the Long-Term Debt Interest Deferral Account and the Actual addition of $7 thousand in Exhibit B-1-1, Tab 2, p. 8. PNG(N.E.) 2013 Revenue Requirements 14 BCUC IR No. 2 FSJ/DC
39.0 Reference: Deferral Accounts Exhibit B-1-1, Tab Rates, p. 20; Exhibit B-3, BCUC IR 1.43.1, p. 81 RSAM 39.1 Please complete the following schedule (including all grey-highlighted cells) to show the projected year-end 2012 RSAM balance and the derivation of the RSAM rider, including the following: 2012 (Refund)/Recovery (Actual); and 2012 RSAM Deferral. 39.2 Please confirm that the 2012 Refund of $31,318 reflects the refund at the permanent rate, effective January 1, 2012, of $0.015/GJ. PNG(N.E.) 2013 Revenue Requirements 15 BCUC IR No. 2 FSJ/DC
39.3 The sum of the 2012 refund of $31,318 and the 2012 RSAM Deferral of $294,456 is $325,774, which is less than the 2011 RSAM balance at year-end of $345,045. Please discuss if the 2011 year-end RSAM account in compliance with US GAAP. 39.4 Please detail how PNG proposes to account for the variance between the interim RSAM rate rider approved effective January 1, 2013 of $0.072 and the proposed permanent RSAM rate rider in the Application Update of $0.004. 39.5 Please confirm that the 2012 RSAM Deferral balance relates to the difference between the Forecast and Actual use per account during 2012, multiplied by the Decision 2012 customer count. If not confirmed, please explain otherwise. 39.6 Please discuss the reasons for the difference between the 2012 RSAM Deferral amount of $3,319 in Exhibit B-1 and B-3 and the 2012 RSAM Deferral amount of $294,456 included in the Application Update (Exhibit B-1-1). 39.6.1 Please provide a detailed calculation in a working excel document to support the 2012 RSAM Deferral balance for each of Residential and Small Commercial customers, including the following: Number of customers; Actual use per account; and Forecast use per account. 40.0 Reference: Deferral Accounts Exhibit B-1-1, Tab 2, p. 9, Line No. 6 IFRS/US GAAP Deferral Account 40.1 Please confirm that no further conversion costs will be added to the IFRS/US GAAP Deferral Account in the future, or explain otherwise. 41.0 Reference: Deferral Accounts Exhibit B-3, BCUC IR 1.35.1, p. 60; Exhibit B-1-1, Tab 2, pp.8-9 Non-Pension Benefit Obligations The following table was provided in response to BCUC IR 1.35.1 41.1 Please provide an updated continuity schedule to that provided in response to BCUC IR 1.35.1 using the updated figures presented in Exhibit B-1-1. PNG(N.E.) 2013 Revenue Requirements 16 BCUC IR No. 2 FSJ/DC
42.0 Reference: Capital Expenditures Exhibit B-3, BCUC IR 1.54.1, p. 112 New/Replacement Services In the chart PNG(N.E.) provided as a response to BCUC IR 1.54.1, PNG(N.E.) states that the $290,000 overage in spending on New/Replacement Services is because PNG(N.E.) Installed more services than anticipated. Budgeted 300 for [Fort St. John] and [Dawson Creek], installed 324 combined. Increased number of winter installations also raised average cost per service. 42.1 New and replacement service in these regions cost 28 percent more than was projected on a per capita basis. Please provide further details as to why these winter installations cost substantially more than ones done at other times of the year, as well as why PNG(N.E.) s winter installations ended up undershooting the Forecast 2012 by such a large margin. 42.1.1 Does PNG(N.E.) anticipate a similarly high degree of winter installations in 2013? If so, has this been accounted for in the 2013 projections? 43.0 Reference: Capital Expenditures Exhibit B-3, BCUC IR 1.54.1, p. 112 Distribution Main Extensions In the chart PNG(N.E.) provided as a response to IR 54.1, PNG(N.E.) states that the $55,000 overage in spending on Distribution Main Extensions is due to, More meters of main installed than forecast. Budgeted for 12,000 meters of main, installed 14,000 meters. 43.1 Taking into account the increase in meters of main installed in 2012, there is still an 18percent increase in cost per meter of main installed. Please elaborate on what caused this cost overrun over the Decision 2012 approved amount. 44.0 Reference: Capital Expenditures Exhibit B-3, BCUC IR 1.54.1, p. 112 Line Lowering/Tremblay Trail Relocation In the chart PNG(N.E.) provided as a response to IR 54.1, PNG(N.E.) states that the $82,000 overage in spending on Line Lowering was due to MOTI and City Requirements. No advanced notice provided. 44.1 Please elaborate on what MOTI and City Requirements means in this context. 45.0 Reference: Capital Expenditures Exhibit B-3, BCUC IR 1.48.1, pp. 91-92 & BCUC IR 1.54.1 p. 112 In the chart PNG(N.E.) provided as a response to IR 48.1, PNG(N.E.) states that $206,476 has been spent on Digitiz[ing] and updat[ing] grid maps, despite $0 being budgeted for this in Decision 2012. 45.1 Please elaborate on what digitize and update grid maps means. 45.1.1 Please indicate where the cost of this item was included in the response to BCUC IR 1.54.1. 45.1.2 Why was this project undertaken in 2012, despite no money being allocated to it in the Decision 2012 amount allocated for capital expenditures? PNG(N.E.) 2013 Revenue Requirements 17 BCUC IR No. 2 FSJ/DC
46.0 Reference: Capital Expenditures Exhibit B-3, BCUC IR 1.48.1, pp. 91-92; Exhibit B-1-1, Appendix A, BCUC IR 1.54.1 In the chart PNG(N.E.) provided as a response to BCUC IR 48.1, PNG(N.E.) states that $215,185 has been spent on the York Main Extension. In response to BCUC IR 1.54.1, PNG states that the project was necessary due to Large load customer involved some load alteration man (sic) extensions all under this main test. 46.1 Please elaborate on what load alteration was required that precipitated this main extension. 47.0 Reference: Capital Expenditures Exhibit B-3, BCUC IR 1.53.4, p. 110 Vehicle Retirements As part of BCUC IR 1.53.4, PNG(N.E.) was asked, Total net book value should equal the forecast retirements of $122,000 from Line No. 29 of Exhibit B-1, Tab 2, p. 3. If this is not the case, please explain why. In response to BCUC IR 1.53.4, PNG states that the total Net Present Value of the vehicles in question is $27,215. 47.1 Please explain the difference between the forecast retirement amount from Exhibit B-1, Tab 2, page 3, and the amount listed in response to BCUC IR 1.53.4. 48.0 Reference: Capital Additions Exhibit B-1, Application, pp. 30-31 Pouce Coupe Lateral PNG(N.E.) states on page 30, The costs of the proposed work have been estimated with the combined input of PNG personnel and contractors experienced in completing this type of work, and contain no contingencies. 48.1 Has a formal Request for Proposals (RFP) been issued and/or is PNG planning to issue an RFP for the forecast cost of $1,467,000 in contractor costs? If not, please explain why not. 48.1.1 If so, how many contractors responded to the RFP? What criteria were used in selecting the winning applicant? 48.2 Please provide expected start and finish dates for the work. 48.2.1 What permitting is required, and has the process of acquiring the necessary permits already begun? 48.3 In gas flow or customer count, what will the increase in capacity of the new lateral be compared to the existing lateral? PNG(N.E.) 2013 Revenue Requirements 18 BCUC IR No. 2 FSJ/DC
49.0 Reference: Capital Additions Exhibit B-1, Application, p. 28 PNG provided the following table on p. 28 of Exhibit B-1: 49.1 Please confirm that Decision 2012 should be $4.140 million ($4.561 million less $421,000 for the Dawson Creek Operations Centre wall repair) in accordance with the 2012 PNG(N.E.) Decision (pp. 36-37). If not, please explain why $4.571 million was shown. 49.2 Please complete and/or correct the table below including the Application Update information. $ 000 s Test Year 2013 Actual 2012 Decision 2012 Actual 2011 Decision 2011 Additions (including OH) 9,833 4,768 4,140 3,418 2,942 Less: OH 525 253 Net 9,308 2,689 50.0 Reference: Capital Additions Exhibit B-1, Application, pp. 28-36 50.1 Please complete all fields and/or correct the table below such that the Total at the bottom should equate to the Total for Test Year 2013 Capital Additions. Add line items where necessary. Cat Expense Type / Project Name 2013 Test Year (excluding OH) 2013 Test Year (Including OH) Forecast Completion (Yr) Account Recurring Additions (Regular and routine replacements, upgrades or additions) SB Mobile Equipment 243,000 243,000 2013 484 GP Computer Equip/Licenses 2013 487 SB Heavy Equipment $68,000 2013 465 SB ROW Access, Signage, ETC 2013 SB Meter Replacements $217,000 $217,000 2013 478 NB New/Replacement Services 944,000 1,017,000 2013 473 GP New/Replacement Tools and Equipment $106,000 2013 486 PNG(N.E.) 2013 Revenue Requirements 19 BCUC IR No. 2 FSJ/DC
SB SB Main Improvement mach couplings Main Improvement PE2306 replacement Other (less than $50,000 scope projects, total should be less than 10% of Total Additions) Subtotal Recurring Additions $380,000 $411,000 2013 475 $245,000 $265,000 2013 475 2013 Planned (non-recurring) Additions (known, new and/or significant specific planned projects) SB Replace Pouce Coupe Lateral $1,857,000 $1,982,000 461/465/467 NB New Service to Air Liquide $1,565,000 $1,663,000 461/465 NB New Distribution Mains $389,000 $421,000 2013 475 GP Dawson Creek Operations Centre $890,000 $890,000 482 SB Main Improvement eliminate 2 pressure reducing stations SB Upgrade Pressure Reduction Stations (2) $655,000 $708,000 2013 475 $127,000 $127,000 2013 477 SB Line Heater Replacement (2) $121,000 $121,000 2013 467 GP Overhead Crane Included in tools ($61k) GP Install Station Alarms $59,000 $63,000 2013 467 GP Electrical/Communication Improvements Other (less than $50,000 scope projects, total should be less than 10% of Total Additions) Subtotal Planned Additions Un-Planned Additions $85,000 SB Unspecified Mainline Repairs 465 Subtotal Unplanned Additions Carry Forward Projects (from previous year(s)) Subtotal Carry Forward Projects TOTAL Note: Cat refers to Categories (SB System Betterment, NB New Business, GP- General Plant) as defined in Exhibit B-1, p. 48 PNG(N.E.) 2013 Revenue Requirements 20 BCUC IR No. 2 FSJ/DC
51.0 Reference: Capital Additions Exhibit B-1-1, Update to 2013 RRA, p. 13 Response to BCUC 1.54.1 In its response to BCUC 1.54.1, PNG(N.E.) provides an Actual 2012 amount for Transportation Vehicles of $142,000, claiming a $27,000 savings realized through competitive pricing. According to 2012 RRA Application (p.22) the $142,000 was for five replacement vehicles (1-three quarter ton, 4 half ton trucks). 51.1 Does the 2013 forecast expenditures of $243,000 for five vehicles (3 three quarter ton, 1 half ton, 1- new managerial truck) consider the competitive pricing savings realized in 2012? Please justify the significantly higher per unit cost forecast than the Actual 2012 results 51.2 Would this be categorized as New Business or System Betterment according to PNG definitions provided in Exhibit B-1, Application, page 28? 52.0 Reference: Gas Cost Exhibit B-3, BCUC IR 1.55.1 Exhibit B-1-1, Updated Application, p. 7 and Tab Rates PNG notes that it will be filing an Application Update at which time the forward price forecasts ending December 11, 2012 will be used and the relevant schedules will be produced in the ordinary course. (Exhibit B-3, BCUC IR 1.55.1) The Company use gas cost forecast for 2013 has decreased from the Original Application to reflect changes to the forecast deliveries and to the underlying forecast of gas supply costs using a more recent forward gas price strip. The Company use gas cost delivery rate is reviewed and approved by the Commission under the quarterly gas supply cost report process. PNG(N.E.) is not applying under the revenue requirements application for a change to the Company use delivery rate approved by the Commission effective January 1, 2013. The Company use gas costs are indicative only and are reflected in the revenue requirements model as an in and an out. Therefore, the applied for 2013 revenue deficiency is not affected by changes in the forecast cost of Company use gas. (Exhibit B-1-1, p. 7) [Emphasis added] The Updated Application in the Rates Tab provides schedules showing updated rate schedules, including: the gas commodity rate for different rate classes; Gas Cost Variance Account (GCVA) commodity rate rider; GCVA Company Use rate rider; Company Use gas cost delivery rate; and Company Use gas commodity price. 52.1 Please clarify whether the more recent forward gas price strip noted on page 7 of the Updated Application refers to the forward price forecasts ending December 11, 2012. 52.1.1 If the more recent forward gas price strip is different than the forward price forecasts ending December 11, 2012, please specify the date and provide those forward price forecasts. Please explain why PNG(N.E.) is using another forward gas price strip outside the quarterly gas cost review process. 52.2 Please confirm, in the Updated Application under the Rates Tab for the PNG(N.E.) Division, that the gas commodity rates for all rate classes; GCVA commodity rate rider; GCVA Company Use rate rider; Company Use gas cost delivery rate; and Company Use gas commodity price correspond to the information filed in PNG s Fourth Quarter 2012 Report on Gas Supply Costs dated December 12, 2012. If not confirmed, please explain and update otherwise. PNG(N.E.) 2013 Revenue Requirements 21 BCUC IR No. 2 FSJ/DC
52.3 Please clarify the meaning of Proposed Rates in the Updated Application under the Rates Tab. Are they equivalent to the rates effective January 1, 2013 approved by Order G-195-12? 53.0 Reference: 2013 Forecast Gas Deliveries Exhibit B-1-1, Exhibit B-3, BCUC IR 1.57.1, p. 116 British Columbia appears to be on the verge of a natural gas development boom. Numerous LNG plants and natural gas transmission systems are planned for the BC s Pacific Northwest and are currently undergoing regulatory procedures. Please comment on whether PNG anticipates a direct or indirect impact on the volume of gas that will be transported in their pipeline system in the current test period or 2014 because of LNG projects currently being planned or developed for the Pacific Northwest region. 53.1 PNG(N.E.) s response in Exhibit B-3 to BCUC IR 1.57.1 was not based on updated load forecast data presented in Exhibit B-1-1, but rather on more preliminary data contained in Exhibit B-1. Please discuss the reason for PNG(N.E.) not using the more current data found in Exhibit B-1-1 in their responses to BCUC IR No. 1. 53.2 Please confirm whether the following graph is accurate and provide an updated version if required. 53.2.1 Energy Sales for the period 2010 to 2012 have increased by an average of 94 TJ per year. Despite this upward trend, PNG is forecasting a decline of 56 TJ in 2013. Using 2012 as a benchmark, please discuss the demographic and economic factors that PNG believes will contribute to a decline in Energy Sales in 2013. Please also provide a copy of third-party data such as BC Stats or Canada Mortgage and Housing Corporation (CMHC) reports that PNG may be relying upon. PNG(N.E.) 2013 Revenue Requirements 22 BCUC IR No. 2 FSJ/DC
54.0 Reference: 2013 Forecast Gas Deliveries Exhibit B-1-1; Exhibit B-3, BCUC IR 1.58.1 & 1.58.1.1, pp. 117-118 Residential Gas Deliveries and Gross Margin PNG provided Actual 2012 energy sales (TJ) and transportation services (TJ) on an aggregated basis for all customer groups for Fort St. John and Dawson Creek regions (Exhibit B-1-1, Tab Rates, p. 1, line nos 1, 4 and 7). Moreover, in response to BCUC IR No. 1 (Exhibit A-4, Commission Information Request No. 1 for Fort St John/Dawson Creek Division), PNG has not incorporated their most current load forecast data that was filed under Exhibit B-1-1 Updated 2013 Regulatory Schedules. In light of this, the following questions are intended to provide greater understanding and granularity of the actual energy demands that occurred in 2012 as a benchmark for the current test period. 54.1 Please revise the following graph and tabular data by updating the Actual 2012 gas deliveries (GJ) and gross margin ($) to reflect the updated data filed under Exhibit B-1-1. Please provide an electronic copy in the form of a spreadsheet. 54.1.1 Please provide separate versions of the above graph and tabular data for Residential gas deliveries and gross margin for the Fort St. John and Dawson Creek regions. 54.2 Please repeat the above question for the following customer groups: a. Commercial Firm Sales (RS2, RS3); b. Commercial Transport (RS23); c. Small Industrial Sales (RS4); d. Industrial Transport (RS5, RS6, RS 9, RS 10, RS 11). 54.3 Please use a tabular format to summarize the total amount of revenue deficiency ($) that PNG has applied for in their previous six Revenue Requirement Applications and the amount approved by BCUC under various Commission Decisions for the FSJ/DC region. PNG(N.E.) 2013 Revenue Requirements 23 BCUC IR No. 2 FSJ/DC
55.0 Reference: 2013 Forecast Gas Deliveries Exhibit B-3, BCUC IR 1.59.1.1.2-1.59.2, pp. 121-128 Fort St. John/Dawson Creek Gas Deliveries 55.1 The following table is a re-stated version of the data provided by PNG in response to IR 1.59.1.1.2. Please confirm whether the data is correct, or in the alternative provide an electronic spreadsheet with an updated version. 55.1.1 Please provide a similar table to the one above for the Dawson Creek region that summarizes actual and forecasted deliveries (GJ) segmented by customer classification and year. 55.2 The following graph aggregates data that PNG provided in response to IR 59.1.1.2 in order to visualize the variance between forecasted and actual deliveries (GJ) in the Fort St. John region for 2004 to 2012. The graph summarizes the customer categories with over-forecasts and under-forecasts during the preceding nine year period. For example, the aggregated positive variance shown for Industrial Sales (RS4) of 52,407 GJ indicates that actual deliveries were higher than forecasted by PNG. In other words, actual deliveries to RS4 customers were 52,407 GJ higher than anticipated by PNG during the nine year period. Conversely, Residential (RS1) indicates that deliveries to RS1 customers were cumulatively less than anticipated by PNG in the amount of 100,112 GJ. Please confirm whether the graph is accurate or in the alternative provide an update version. PNG(N.E.) 2013 Revenue Requirements 24 BCUC IR No. 2 FSJ/DC
55.2.1.1 The above data indicates that over the past nine years PNG has experienced a net under-forecast bias. The under-forecast has been greatest in the two Customer Categories (Residential and Small Commercial) that are subject to the RSAM deferral mechanism. Please comment on whether PNG believes that this a coincidence or in the alternative attributable to specific circumstances that are systemic to Residential and Small Commercial rate groups. 55.2.2 Please provide a similar graph and tabular data for the Dawson Creek region. Please provide a copy in the form of an electronic spreadsheet. 55.3 The following graph summarizes the forecast variance as a percentage of total deliveries for each rate group for the Fort St. John region. Negative values indicate that actual deliveries were less than forecasted, and conversely positive values indicate that actual deliveries were higher than forecasted. For example, the forecast results for RS4 indicate that based on the past nine years of data, PNG s actual deliveries have been on average 1.5 percent greater than forecasted. Please confirm whether the graph is accurate and provide an update version if required. 55.3.1.1 The large negative variance for Rate Class RS23 represents a cost to PNG s shareholders. What circumstances have contributed to the large forecast variance for RS23? Has PNG made any changes to their forecasting methodology to mitigate this large variance from recurring in the future? 55.3.2 Please provide a similar graph and tabular data for the Dawson Creek region. Please provide a copy in the form of an electronic spreadsheet. PNG(N.E.) 2013 Revenue Requirements 25 BCUC IR No. 2 FSJ/DC
56.0 Reference: 2013 Forcast Gas Deliveries Exhibit B-3, BCUC IR 1. 59.2, pp. 126-128 Dawson Creek, Industrial T-Service (RS5) 56.1 The response to IR 1.59.2 has omitted to provide tabular data for Industrial T-Service (RS5) customers for the Dawson Creek region. If this was an over-sight, please provide the requested data in a consistent format. If not, please provide an explanation of why RS5 data may not be made available. 57.0 Reference: 2013 Forecast Gas Deliveries Exhibit B-3, BCUC IR 1; Exhibit B-4, BCPSO IR 1 Comparison of 2012 Resource Plan vs. 2013 Revenue Requirement 57.1 On October 2012 PNG(N.E.) filed their 2012 Resource Plan (Exhibit B-1) and other supporting documents with the Commission. PNG s 2012 Resource Plan contains forecasts for 2013 gas deliveries (GJ), number of customers and use per account (GJ/year) for the Fort St. John, Dawson Creek and Tumbler Ridge regions. Please provide a comparison of the 2013 load forecast data contained in PNG s 2012 Resource Plan to the load forecast data contained in Exhibit B-1-1 of PNG s 2013 Revenue Requirement Application. Please also provide a tabular summary of any variances greater than + 1% between the 2013 forecasts contained in PNG s 2012 Resource Plan and 2013 Revenue Requirement Application. 58.0 Reference: Allocation of Revenue Deficiency Exhibit B-1-1, Updated Application, Tab Rates, p. 9 58.1 Commission staff has recalculated the expected rate change ($/GJ) for the RS5 rate class as follows: Allocation of Revenue Deficiency $4,684 2012 Test Year Gas Deliveries 210,816 Expected $/GJ Rate Change $0.022 Please provide a detailed explanation for the difference between the $0.022 calculated here and the rate change of $0.0236 calculated in Exhibit B-1-1. 58.2 Please provide a Summary of Proposed/Indicative Rates Effective January 1, 2013 for Dawson Creek RS 5, in the same format as Exhibit B-1-1, Tab Rates, page 4. 59.0 Reference: Orders Sought PNG(N.E.) 2013 Revenue Requirements 26 BCUC IR No. 2 FSJ/DC
Exhibit B-1, Application, p. 45 Unaccounted for Gas (UAF) Approval to continue the unaccounted for gas volume deferral account to record the difference between forecast and actual unaccounted for gas ( UAF ) volumes in Test Year 2013 based on using a 1 percent of deliveries UAF loss factor for 2013 and requiring PNG(N.E.) to record actual 2013 UAF losses above 1.5 percent in the deferral account. (Exhibit B-1, Application, p. 45) The following table is an excerpt from the PNG(N.E.) Decision 2012, page 20: 59.1 Please discuss why 1.5 percent is considered appropriate, as opposed to 1 percent (as in the other divisions). 59.2 Does the statement quoted in the preamble to this IR mean that PNG intends on forecasting additions to the UAF Deferral Account based on 1 percent of deliveries UAF loss factor for 2013? If not, please explain otherwise. 59.3 Please provide the 2012 Forecast and Actual unaccounted for gas volumes. 59.4 Please provide the 2012 Forecast versus Actual UAF, in the same format as the schedule from Decision 2012 included in the preamble to this IR. Please provide this schedule for each of PNG-West, PNG(N.E.) FSJ/DC and PNG(N.E.) TR. PNG(N.E.) 2013 Revenue Requirements 27 BCUC IR No. 2 FSJ/DC