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

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John Todd, Michael Roger September 12, 2017

Highlights of Elenchus’ Reports: FEI’s COSA FEI’s Rate Design

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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

Report on FEI’s COSA

A2-18

FEI 2016 RATE DESIGN

EXHIBIT

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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)

Observations on FEI’s COSA Methodology

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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

Report on FEI’s Rate Design

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FEI uses 90% to 110% range

Elenchus Rate Design Report, Table 4, page 33

R/C Ratio Range of Reasonableness

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%

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• 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

Margin to Cost Ratios

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• BCUC # 4.1, line 26, “lamount” should be “amount”
• 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”

Erratum IR Responses Report # 1