Table Of Content

Decision U99099 [|EUB 1999/2000 Electric Tariff Applications ATCO Electric Ltd. EPCOR Generation Inc. EPCOR Transmission Inc. TransAlta Utilities Corporation Volume 2 Alberta Energy and Utilities Board Digitized by the Internet Archive 2015 in https://archive.org/details/19992000electric02albe ALBERTAENERGYANDUTILITIESBOARD DECISIONU99099 Calgary,Alberta 1999/2000 ELECTRIC TARIFF APPLICATIONS VOLUME 1 Page -GENERAL Parti 1 VOLUME 2 Part2-ATCO ELECTRIC LTD 385 Part3 -EPCORGENERATIONINC./EPCORTRANSMISSIONINC 413 Part4-TRANSALTAUTILITIES CORPORATION 607 APPENDICES 821 PARTIES PARTICIPATING INTHEPROCEEDING 853 REFERENCES 857 ABBREVIATIONS 861 Files: AE 1108-1 /EPGI/EPTI 1703-1 /TAU 1207-1 DecisionU99099 25November 1999 TABLEOFCONTENTS VOLUME 2 Part2 - AE 1. NEGOTIATED SETTLEMENT 387 2. RESERVE FORINJURIESAND DAMAGES 388 3. QUALITY OF SERVICE 406 4. REGULATEDAND UNREGULATEDACTIVITIES 407 5. SUMMARYOFBOARD DIRECTIONS 408 ORDER 6. 411 DecisionU99099 Page377 25November 1999 1 TABLEOFCONTENTS Part3-EPGI/EPTI GENERAL 1. 415 (a) AccountingPractices 415 (b) Allocation ofCommon Costs 416 (c) Incentive Compensation 420 (d) Self-InsuranceReserve 429 (e) HearingCostReserve 430 Y2K (f) ..432 (g) Return on DecommissioningReserve 433 (h) Inflation Assumptions 442 2. EPGI 444 (a) RateBase 444 (1) Capital Additions 444 (A) Historical vs. Forecast Capital Expenditures Levels 444 (B) Mine Related CapitalExpenditures 448 . (C) CloverBarCapital Expenditures 451 . (D) GeneseeBlack Startand CloverBarBlack StopProjects 455 (E) RossdaleDecommissioningCosts 459 (F) Projectsoflessthan$1.0million 46 (G) 1992 CloverBarIPRotorReplacementand 1993 Insurance Claim 462 (H) SummaryofCapitalAdditions 468 (2) Necessary WorkingCapital 469 (A) OperatingExpenses.. 469 (B) Dividend Payment 472 (C) InventoryValuationat31 December2000..: 473 (D) RemainingItems 473 (b) Minimum Return Margin 474 (c) Cash OperatingExpense... 481 (1) Dragline OperatingBenefits 481 (A) The Board'sJurisdiction 482 (B) Relevance ofthe BoydReport 492 (C) Value ofthe Operating Benefit 500 (2) FixedFuel Cost 504 (3) Variable Fuel Cost 507 (A) Coal Costs 507 DecisionU99099 Page378 25November 1999 TABLEOFCONTENTS (i) TheAgreementbetweenEPGI andFording Coal Limited 508 (ii) Variable Coal Costs 515 (B) VariableNatural Gas Costs 519 (4) OperatingandMaintenance 519 (A) FixedandVariableProduction 521 (B) Maintenance andRepair 525 (C) GenerationAdministration 535 (D) Corporate Services 538 (E) Summary 539 (5) Taxes OtherThanIncomeTax 540 (d) Depreciation 541 (1) RossdaleDecommissioningCosts 541 (A) Effectofthe GURontheBoard'sAbilityto ModifyDepreciation. 541 (B) Effectofthe GURontheMid-YearDepreciationConvention 548 (C) PrudenceofAppliedForCostIncreases 550 (D) RossdaleDecommissioningAllowed for 1999and2000 562 (2) Technical Update 568 (A) TheRedistributionofDepreciationReserves 572 (B) The 5%ThresholdforAmortizingReserveImbalances 575 (C) The SegregationoftheDecommissioningReserve 578 (D) TheUseofthe TechnicalUpdateforDepreciationRates 580 (E) SummaryofBoardFindings 583 (e) ReservationPrice-Normalization Costs...................................................................583 3. EPTI ......588 (a) NecessaryWorkingCapital.......................................................................................588 (b) Cash OperatingExpense 590 (1) OperatingandMaintenance 590 (2) Taxes OtherThanIncomeTax 593 (c) Depreciation 595 4. SUMMARYOFBOARD DIRECTIONS 599 ORDER 5. 604 DecisionU99099 Page379 25November 1999 TABLEOFCONTENTS Part4 - TAU GENERAL 1. 609 (a) SoftwareDevelopmentAdditions 609 (1) Software Development(Undefinedand Year2000 Projects) 609 (2) Industrial CustomerBilling System 611 (3) SAPNetPayModule 611 (4) CustomerBilling System..... 612 (5) AmortizationPeriod 614 (b) Corporate Capital Additions 615 (1) InformationTechnologyHardware 615 (2) CalgaryHead Office 617 (3) Sale ofHighRiverService Centre 622 (4) SustainableDevelopment 629 (5) SD Projects 631 (6) AutomatedMapping/FacilitiesManagement 633 (c) CorporateOperatingExpense 635 (1) LaborandMaterialsEscalation 635 (2) TelecommunicationExpense 635 (d) Allocation ofCommon Costs.....................................................................................638 (e) Incentive Compensation 642 (f) IncomeTax . . . . 644 (1) Income TaxMethods 644 (2) Currently ApprovedMethod '. 646 (3) TransAlta'sProposedMethod 647 HearingCostReserve 651 (g) (h) Pension Reserve 653 (i) Self-InsuranceReserve 664 Depreciation 672 (j) 2. GENCO 676 (a) Rate Base 676 (1) CapitalAdditions 676 (A) Capital ProjectJustification 678 DecisionU99099 Page380 25November 1999 TABLEOFCONTENTS (B) HighvaleAshHaulerReplacement 679 (C) Highvale Coal HaulerReplacement 681 (D) Highvale Pit2 DrainageDitch 683 (E) Sundance 1-4 SecondaryCrusherUpgrade 683 (F) Brazeau2 Generator StatorRewind 685 (G) Wabamun4 Mill Refurbishment 685 (H) Sundance WaterTreatmentPlantReplacement 686 (I) FeedwaterHeaterReplacements 687 (J) Sheerness Capital 689 (K) HighvaleMine Shop 689 (L) HighvalePit2 CountyLandfillMove 691 (M)FreeholdRoyaltyDeferral 692 (N) SprayWoodstavePipelineReplacement 693 (O) HydroMaintenance Services Shop 694 (P) BighornCompensatingWaterFacilities 694 (Q) WabamunBoilerAsbestosRemoval 696 (R) Wabamun4WaterwallReplacement 697 (S) SundanceGeneration Spare LPRotorPurchase 698 (T) Sundance2 BoilerControl Replacement 698 (U) Sundance3 BoilerControlReplacement 699 (V) Keephills—RaisePrimaryand SecondaryAshLagoonDykes 699 (W)Total GenerationCapitalAdditions 700 (2) NecessaryWorkingCapital 705 (b) Cash OperatingExpense................................................................. 708 (1) Fuel Cost 708 (A) Escalation 709 (B) StripRatios 711 (C) Coal HaulerSavings 712 (D) HaulingDistance 714 . , (E) Non-GovernmentRoyalties 715 (2) OperatingandMaintenance . 716 (A) TransAlta'sThermalUnits OperatingandMaintenance 717 (B) Hydro Operating andMaintenance 720 (C) GenerationManagementandAdministration 721 (D) LaborandMaterialEscalation 722 (3) Taxes OtherThanIncomeTax 723 (c) Non-Cash OperatingExpense 725 (1) AmortizationofCoal Costs 725 (A) Excess Outside Coal 725 (B) ExcessHighvale Coal (Westmin 82Agreement) 739 (C) Westmin 82 Take-or-Pay(1999 and2000) 744 DecisionU99099 Page381 25November 1999 TABLEOFCONTENTS (D) Coal Reclamation Costs 748 (d) IncomeTax 756 (e) Small PowerPayments 757 (1) RevenueAdjustment 758 (2) Excess Energy Cost 766 TRANSCO 3. . o 770 (a) Necessary WorkingCapital 770 (b) Cash OperatingExpense 772 (1) OperatingandMaintenance. 772 (A) Labour-DuplicationofPlanningCosts 772 (B) Gross LabourEscalation 772 (2) Taxes OtherThanIncomeTax 772 (c) IncomeTax . 773 4. DISCO .. 774 (a) RateBase ...774 (1) CapitalAdditions 774 (A) Generic CapitalAdditionsAdjustment 775 (B) OilfieldMeteringInstallationProject 776 (C) PurchasesofREAs 779 (D) DistributionCustomers 784 (E) RemainingDISCO Capital Projects 785 (2) Line Twinning 787 (3) Necessary WorkingCapital. 790 (b) Cash OperatingExpense 792 (1) General 792 (2) LaborandMaterialsEscalation 793 (3) AdvertisingandMarketing. 794 (4) BadDebtExpense 796 (5) Taxes otherthanIncome 798 (6) CashOperatingExpense Summary 800 (c) IncomeTax 800 (d) Quality ofService 801 (e) Revenues 804 (1) Energy Sales andRevenues 804 DecisionU99099 Page382 25November 1999