Highlights of Elenchus Reports: FEIs COSA FEIs Rate Design John - PDF document

08/09/2017 FEI 2016 R ATE D ESIGN E XHIBIT A2-18 Highlights of Elenchus’ Reports: FEI’s COSA FEI’s Rate Design John Todd, Michael Roger September 12, 2017 9/8/2017 Report on FEI’s COSA Elenchus Analysis:  FEI follows traditional COSA approach:  Functionalization  Categorization  Allocation  Direct Allocation  Data Used in COSA studies  Frequency of COSA studies  FEI’s objectives are generally consistent with generally accepted principles 2 9/8/2017 1

08/09/2017 Observations on FEI’s COSA Methodology Generally consistent with standard practices, except:  Mt. Hayes LNG storage treatment reflects dual purpose facility (section 4.1.3, page 10)  Distribution demand related costs are usually allocated using non ‐ coincident peak (section 4.3.4, page 17)  Tilbury expansion project levelizing costs using 10 year horizon not consistent with standard practice (section 4.5.10, page 22)  PLCC adjustment for Fort Nelson Minimum System study should reflect Fort Nelson’s own circumstances (section 5.2.1, page 24) 3 9/8/2017 Report on FEI’s Rate Design Section 2 Rate shock Section 3 to 6 Rate Design for Customer Classes and Other Rate Design Matters Section 7 R:C Ratio Range of Reasonableness Sections 8, 9 Transportation and By ‐ pass Rates Sections 10, 11 Crisis Intervention and Disconnection for Residential Customers 4 9/8/2017 2

08/09/2017 R/C Ratio Range of Reasonableness FEI uses 90% to 110% range Utility Range of Reasonableness AltaGas 95% to 105% ATCO 95% to 105% Union Gas Close to unity Enbridge Close to unity Centra Gas 100% SaskEnergy 95% to 105% Elenchus Rate Design Report, Table 4, page 33 5 9/8/2017 Margin to Cost Ratios  No other utility surveyed uses FEI’s term M:C ratio  FEI’s M:C ratio excludes pass through costs  R:C ratio widely used and accepted  R:C ratio often excludes pass ‐ through costs  I.e., same as FEI’s M:C ratio  FEI’s M:C ratio has merit as primary reference  The appropriate range of reasonableness is wider when pass ‐ through costs are excluded 6 9/8/2017 3

08/09/2017 Erratum IR Responses Report # 1  BCUC # 4.1, line 26, “ lamount” should be “ amoun t”  BCUC # 4.2, line 23, delete “ accurate”  CEC # 15.1, line 21, “ my” should be “ may”  ICG # 1.1, line 17, add “ and BCUC IR 9.5” 7 9/8/2017 4