Dennis Swanson FortisBC Inc. Director, Regulatory Affairs Regulatory Affairs Department Suite 100, 1975 Springfield Rd. Kelowna BC V1Y 7V7 Fax: 1 866 605 9431 regulatory@fortisbc.com www.fortisbc.com F ORTIS BC 2008 A NNUAL R EVIEW AND B-8 2009 R EVENUE R EQUIREMENTS – E XHIBIT November 17, 2008 Ms. Erica M. Hamilton Commission Secretary BC Utilities Commission Sixth Floor, 900 Howe Street, Box 250 Vancouver, BC V6Z 2N3 Dear Ms. Hamilton: Re: FortisBC Inc.’s 2008 Annual Review and 2009 Revenue Requirements Workshop November 13, 2008 Please find enclosed FortisBC Inc.’s presentation from the 2008 Annual Review and 2009 Revenue Requirements Workshop held at the Grand Resort and Conference Centre, Kelowna BC on November 13, 2008. If further information is required, please contact the undersigned at (250) 717 0890. Sincerely, Dennis Swanson Director, Regulatory Affairs cc Registered Intervenors
2008 Annual Review and 2009 Revenue Requirements Workshop Morning Afternoon Time Time Time Time 9:00 Welcome and Introductions 1:15 Performance Standards David Bennett/BCUC Staff 2008 Results and 2009 Targets 9:15 Opening Remarks Doyle Sam John Walker 2009 Revenue Requirements 2008 Annual Review 2:00 Load Forecast 9:30 Key Issues Sandra Gault Michael Mulcahy 2:30 Power Purchase Expense 10:00 DSM Committee Report Wheeling & Water Fees Michael Mulcahy/Richard Tarnoff Dan Egolf 10:30 Capital Projects 3:00 Break Doyle Sam Doyle Sam 3 30 3:30 2009 R 2009 Revenue Requirement R i t 11:15 Break Overview 11:30 2008 Financial Results Michele Leeners Variance & Incentive Review 4:00 Summary & Closing - David Bennett Michele Leeners 12:15 LUNCH (provided) 1 2008 Annual Review Safety, Environment, Revenue Protection Michael Mulcahy November 13, 2008 VP, Customer & Corporate Services Kelowna, BC
Overview Safety • Environment • Revenue Protection • 3 Safety Safety is a never ending journey: • FortisBC has moved into the top half of CEA group • S f t M Safety Management System audited by independent t S t dit d b i d d t auditor • 2006 • 2007 • Continual improvement 4
Safety All Injury Frequency Rate 7.00 6.00 5.00 FortisBC 4.00 3.00 CEA Group II (301-2300 Employees) 2.00 1.00 0.00 2003 2004 2005 2006 2007 2008F 4 Safety Average Claim Duration 2007 50 45 40 35 Days 30 25 20 15 10 5 0 FortisBC CEA WSBC Utilites WSBC 5
Safety WorkSafe Assessment Rate $1.60 $1.40 $1.20 $1.00 FBC Assessment $0.80 Base $0.60 $0.40 $0 20 $0.20 $- 2004 2005 2006 2007 2008 2009 6 Safety Total Course Occurrences (deliveries) 900 800 700 600 500 400 300 200 100 0 2004 2005 2006 2007 2008 est Total Employees Attending Training 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 2004 2005 2006 2007 2008 est. 7
Safety Financial $25,000 $20,000 $15,000 $10,000 Example – New Hire Power $5,000 Line Technician - Journeyman $0 1 2 3 4 total Years Hours 350 300 300 250 200 150 100 50 0 1 2 3 4 total Years 8 Safety Public safety FortisBC is also committed to public safety • Cooperative Safety Program • General Public Safety Awareness • 9
Environment BC Energy Plan • • Self-sufficient by 2016 • 50% of incremental load through conservation by 2020 • Heritage Contracts in perpetuity Utilities Commission Act Amendment, Bill 15 – 2008 • • Bill 15 effectively aligned the UCA with government objectives in the EP FortisBC Initiatives • • Advanced Metering Infrastructure • Resource Plan • PowerSense 10 Revenue Protection Forecast 2008 Revenue Protection Approved Forecast NPV Annual Activities Cost Cost Saving Savings Savings Power Diversion Inspections $235,000 $195,000 $146,439 $584,600 Third Party Contracts $25,000 $25,000 $60,700 $242,400 Total $260,000 $220,000 $207,139 $827,000 11
Revenue Protection Power Diversion Trends October- September 2007 2008 Diversions 29 25 High Load Paying Sites 18 26 Average Annual kWhs 93,500 123,700 Investigations 321 330 12 Revenue Protection Primary Dip Greenwood 14
Revenue Protection 15 Revenue Protection Revenue Protection 2009 Excellent results achieved 2006-2008 • Benefits of power diversion program • • Safety • Reduced Power Purchase Costs • General deterrence 2009 costs are forecast at $225,000 2009 costs are forecast at $225,000 15
Safety, Environment, Revenue Protection 2008 Annual Review Questions/Comments Questions/Comments 2008 Annual Review and 2009 Revenue Requirements Workshop Morning Afternoon Time Time Time Time 9:00 Welcome and Introductions 1:15 Performance Standards David Bennett/BCUC Staff 2008 Results and 2009 Targets 9:15 Opening Remarks Doyle Sam John Walker 2009 Revenue Requirements 2008 Annual Review 2:00 Load Forecast 9:30 Key Issues Sandra Gault Michael Mulcahy 2:30 Power Purchase Expense 10:00 DSM Committee Report Wheeling & Water Fees Michael Mulcahy/Richard Tarnoff Dan Egolf 10:30 Capital Projects 3:00 Break Doyle Sam Doyle Sam 3 30 3:30 2009 Revenue Requirement 2009 R R i t 11:15 Break Overview 11:30 2008 Financial Results Michele Leeners Variance & Incentive Review 4:00 Summary & Closing - David Bennett Michele Leeners 12:15 LUNCH (provided) 18
2008 Annual Review Demand Side Management Mike Mulcahy Vice President Richard Tarnoff Customer & Corporate Services DSM Advisory Committee • Overview • 2008 Highlights • 2008 Forecast • 2007 Incentive Calculation 20
Overview PowerSense Overview Award-winning program g p g • Started in 1989 • 301 GWh total energy savings • $33 million investment Cost-effective electricity resource 21 2008 Highlights Planning • 2009-10 DSM (CEP) filing • DSM strategic document Programs • Cool Shops • Destination Conservation • LiveSmart BC DSM Advisory Committee DSM Advisory Committee • Terms of reference • Participation 22
2008 Highlights October PowerSense Month Conservation Awards Luncheons • 40 Conservation awards • 11 Leadership awards Community engagement • Radio contests • Community venues Community venues • Employees 23 2008 Forecast ($000s) GWh 2008 2008 2008 Approved Approved Projected Projected 2008 Plan 2008 Plan Projected Projected Plan Cost Savings Savings Sector Residential 1,023 1,261 8.4 11.5 General Service 754 866 9.1 14.0 Industrial 200 110 2.0 1.4 Plan/Evaluate/Educate 378 373 - - Total 2,355 2,610 19.5 26.9 Total (Net of Tax) 1,613 1,801 24
2007 Incentive Calculation Eligible Incentive Incentive Amount Rate Amount % of Base Sector ($000s) ($000s) Benefits Industrial 87% 259 -1% $ (2.6) General Service 98% 2,255 0% $ - Residential 211% 2,035 6% $ 122.1 Total $ 119.5 25 DSM Advisory Committee DSM Incentive Endorsement Richard Tarnoff, DSM Advisory Committee member, Similkameen representative, Hedley Improvement District operator 8
Demand Response Pilot Project Hedley Improvement District • Load shifting controls • Cost savings on TOU rate 27 Demand Reduction Demonstration Hedley Improvement District • Reservoir capacity 378,000 litres • 2 pumps (60 hp and 30 hp) • Pump controls installed Oct 2006 • Off-peak pumping maintains satisfactory reservoir levels 28
Demand Reduction Demonstration Results 45,000 45 000 40,000 35,000 30,000 25,000 kW h 20,000 15,000 Off Peak 10,000 On Peak 5,000 On Peak 0 0 Off Peak 2005 Sep to 2006 Sep to 2006 Aug 2007 Sep to 2007 Aug 2008 Aug 29 Demand Reduction Demonstration Bill Comparison Consumption: 55 MWh/yr Gen Svc Rate 21 • $ 4,677 Gen Svc TOU Rate 22A • $ 3,613 Savings $1,064/yr, or 23% 30
Demand Side Management 2008 Annual Review Questions/Comments Questions/Comments 2008 Annual Review and 2009 Revenue Requirements Workshop Morning Afternoon Time Time Time Time 9:00 Welcome and Introductions 1:15 Performance Standards David Bennett/BCUC Staff 2008 Results and 2009 Targets 9:15 Opening Remarks Doyle Sam John Walker 2009 Revenue Requirements 2008 Annual Review 2:00 Load Forecast 9:30 Key Issues Sandra Gault Michael Mulcahy 2:30 Power Purchase Expense 10:00 DSM Committee Report Wheeling & Water Fees Michael Mulcahy/Richard Tarnoff Dan Egolf 10:30 Capital Projects 3:00 Break Doyle Sam Doyle Sam 3 30 3:30 2009 Revenue Requirement 2009 R R i t 11:15 Break Overview 11:30 2008 Financial Results Michele Leeners Variance & Incentive Review 4:00 Summary & Closing - David Bennett Michele Leeners 12:15 LUNCH (provided) 32
2008 Annual Review 2008/09 Capital Expenditure Plan Update Doyle Sam November 13, 2008 Vice President Engineering and Operations Kelowna, BC Overview History Market Update Challenges / Successes 2008 Progress Update 2009/2010 C 2009/2010 Capital Plan it l Pl 34
2008 Plan History Two year plan was submitted on July 26, 2006 and approved by BCUC on November 24, 2006 Intended Benefits • Regulatory certainty Reg lator certaint • Supply and delivery of equipment • Attraction & retention of labour resources To date • National material agreements • Lead time allowed for early 2008 construction Volatility continues with world market commodities and competing labour resources and material 35 Commodity Indices 36
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