P.U.
21 (2001-2002)
IN THE MATTER OF the
Public Utilities Act, (“the Act”)
AND
IN THE MATTER OF an amended application by
Newfoundland Power Inc. (the “Applicant”) for an
Order pursuant to Sections 38, 41, 78 and 80 of the Act:
(d) consenting to the
relocation of a gas turbine generator (“the
Generator”)
WHEREAS
Section 41 of the Act
requires that a public utility shall submit an annual capital budget of
proposed improvements or additions to its property to the Board of
Commissioners of Public Utilities (the "Board") for its approval not
later than the 15th day of December in each year for the ensuing calendar year;
and
WHEREAS
Section 78 of the Act provides that the Board may fix and determine the rate
base of a public utility; and
WHEREAS
Section 80 of the Act provides a public utility is entitled to earn annually a
just and reasonable return on rate base as approved by the Board; and
WHEREAS Section 38 of the Act requires that the
written consent of the Board to discontinue a service shall only be given after
notice is provided to an incorporated municipal body interested, and after
there has been an inquiry; and
WHEREAS
by registered mail dated August 20, 2001 the Board gave notice to those
incorporated municipalities which may be affected by the Applicant’s request to
relocate the Generator from Salt Pond on the Burin Peninsula to Wesleyville
Substation in Bonavista North; and
WHEREAS the Board has received no representations
opposing the Applicant’s request to relocate the Generator from Salt Pond to
Wesleyville Substation; and
WHEREAS
in Orders No. P.U. 16 and 36 (1998-99), the Board provided for an automatic
adjustment formula to adjust rates annually based upon variations in the rate
of return on rate base; and
WHEREAS
the Applicant submitted its original application on August 14, 2001 and
submitted an amended application on September 4, 2001 and on September 6, 2001
the Board conducted a public hearing to consider the application in its
Hearings Room in St. John's; and
WHEREAS
the Board requested additional information of the Applicant with respect to the
matters contained in the application which information was provided to the
Board by the Applicant; and
WHEREAS
the Board retained the firm of Grant Thornton LLP to review the application and
schedules and calculations contained therein; and
WHEREAS
William Brushett, C.A., of Grant Thornton LLP filed an affidavit with the Board
attaching the report (“Grant Thornton Report”) of their review; and
WHEREAS
the Grant Thornton Report confirmed the calculations in the application,
including the calculations of forecast rate base and invested capital to be
used in the automatic adjustment formula, and that the calculations are in
accordance with P.U. 36 (1998-99) and P.U. 18 (1999-2000); and
WHEREAS
the Applicant was represented by Gillian Butler, Q.C. and Peter Alteen, Counsel
to the Applicant; and
WHEREAS
evidence in support of the application was presented by the following
management of the Applicant: Philip Hughes, President and Chief Executive
Officer; Barry Perry, Vice-President, Finance and Chief Financial Officer; Earl
Ludlow, Vice-President, Operations and Engineering; Nora Duke, Vice-President
Customer and Corporate Services; and Peter Collins, Manager, Information
Services; and
WHEREAS
the evidence in support of the application provided details of the Applicant’s
proposed 2002 Capital Budget; its 2000 rate base; and its forecast average rate
base and average invested capital for 2001 and 2002; and
WHEREAS Mark Kennedy was present as Counsel to
the Board; and
WHEREAS the Board has carefully considered all
the evidence and comments.
IT IS THEREFORE ORDERED THAT:
1.
The
Applicant's capital budget in the amount of $54,619,000 as set out in Schedule A hereto
is hereby approved.
2.
The
Applicant's proposed 2002 capital expenditures as set out in Schedule B hereto
are hereby approved.
3.
The
Applicant’s rate base for the year ending December 31st, 2000 be
hereby fixed and determined at $520,979,000.
4.
The
Applicant’s forecast average rate bases for the year ending December 31st,
2001 of $541,496,000 and for the year ending December 31st, 2002 of
$562,983,000 are hereby approved.
5.
The use of
the forecast average rate base for 2002 of $562,983,000 and the forecast
average invested capital for 2002 of $626,870,000 be approved for the purpose
of calculating allowed return on rate base for 2002 using the automatic
adjustment mechanism pursuant to Orders No. P.U. 16 and 36 (1998-99).
6. The Applicant will present to the
Board, in conjunction with the 2003 Capital Budget application, an up-to-date
status report on the 2002 capital expenditures showing, for each project,
i) the
approved budget for 2002,
ii) the
expenditures prior to 2002,
iii) the
expenditures to the date of the application in 2002,
iv) the
expected remaining expenditures in 2002,
v) the
variance between the expected total expenditures and the approved budget, and
vi) an
explanation of the variance.
7. The Applicant will present an annual
report to the Board on its capital expenditures within sixty (60) days after
the end of the year 2002.
8. Consent is hereby given for the
Applicant to relocate the Generator from its current location at Salt Pond on
the Burin Peninsula to the Applicant’s Wesleyville Substation in Bonavista
North.
9. All costs and expenses of the Board
incurred in connection with the Application shall be borne by the Applicant.
DATED at St. John’s, Newfoundland this 21st day of September 2001
______________________________
Darlene
Whalen, P.Eng.,
Vice-Chairperson.
Raymond
A. Pollett,
Commissioner.
John
William Finn, Q.C.,
Commissioner.
__________________________
G. Cheryl Blundon,
Board Secretary.