P.U.  25(2000-2001)

 

 

 

 

IN THE MATTER OF THE PUBLIC

UTILITIES ACT, (THE "ACT")

 

 AND

 

IN THE MATTER OF THE FINALIZATION

OF RATES APPLICABLE TO THE

ISLAND INDUSTRIAL CUSTOMERS

OF NEWFOUNDLAND AND LABRADOR

HYDRO (AHYDRO@), APPROVED ON

AN INTERIM BASIS PURSUANT TO

ORDER NO. P. U. 23 (1999-2000).

 

 

 

WHEREAS on November 19, 1999, the Board received from Hydro an Application pursuant to section 75 of the Act (the “Application”); and

 

WHEREAS the Application requested that the Board, pursuant to section 3 (a) (iv) of the Electrical Power Control Act, 1994, (the “EPCA”) adjust, on an Ex Parte basis, the rates that Hydro charges to its Island Industrial Customers; and

 

WHEREAS the Board issued Order No. P. U. 23 (1999-2000) which, inter alia, set the interim rates for the period January 1, 2000 to November 30, 2000 to be charged to industrial customers as defined in the EPCA; and

 

WHEREAS these customers were identified at the hearing of the within matter as being Abitibi Consolidated Inc., North Atlantic Refining Limited; and Corner Brook Pulp and Paper Company Limited (the “Industrial Customers”); and

 

WHEREAS the Board also ordered in P. U. 23 (1999-2000) that Hydro file with the Board an updated cost of service study reflecting the 1999 actual operating and financial results of Hydro; and

 

WHEREAS Hydro filed an updated cost of service study on June 30, 2000; and

 

WHEREAS the Board retained the firm of Grant Thornton LLP to review the material filed by Hydro in relation to the Application; and

 

WHEREAS Grant Thornton reported to the Board that:

 

1.                  The 1999 actual cost of service study submitted by Hydro does not provide an appropriate basis for the finalization of industrial rates pursuant to section 70 of the Act.

2.                  It would not be appropriate for the Board to finalize industrial rates in isolation of all other rates, regardless of what cost of service methodology is used.

3.                  The 1999 actual cost of service study does not constitute the appropriate basis for a general rate hearing to review all other rates charged by Hydro.  If the Board were to review all rates charged by Hydro through a general rate hearing, then a forecast revenue requirement and forecast cost of service would be the most appropriate basis for setting rates.

 

AND WHEREAS in 1993 the Board recommended a cost of service methodology to be used by Hydro at its next rate hearing (the “Generic Methodology”); and

 

WHEREAS the legislation at that time required that such recommendations be approved by the Government of Newfoundland and Labrador; and

 

WHEREAS the Generic Methodology was subsequently accepted by the Government of Newfoundland and Labrador; and.

 

WHEREAS the Board determined that it was appropriate, prior to moving to a full rate hearing, to give Hydro and other parties an opportunity to comment on the report of Grant Thornton and whether the Generic Methodology is still appropriate in the current day rate setting environment; and

 

WHEREAS the Board published a Notice in various newspapers throughout the Province dated September 13, 2000 stating, inter alia, that it would be holding a multiple phase hearing dealing with:

1.                  the appropriateness of using the updated 1999 cost of service study, submitted by Hydro, for the finalization of Hydro’s island industrial rates, pursuant to section 70 of the Act;

2.                  whether the industrial rates should be finalized in isolation of all other rates;

3.                  whether the Generic Methodology, recommended by the Board for use by Hydro, is appropriate in the current day rate setting environment; and

4.                  any other matter that the Board determines is relevant to the issue.

 

AND WHEREAS the Notice also indicated that the Board would hold, as Phase 1, a pre-hearing conference on October 11, 2000 to, among other things, identify issues, identify participants to be heard at the hearing, determine any preliminary matters and set dates for the next phase of the hearing; and

 

WHEREAS Newfoundland Power Inc. and the Industrial Customers filed with the Board their notice of intention to intervene in the matter; and

 

WHEREAS at the pre-hearing conference on October 11, 2000 the Board was informed that the parties were in agreement with respect to the following:

 

1.                  that the 1999 cost of service study, using actual as opposed to forecast data, was not appropriate for the finalization of the rates for industrial customers; and

2.                  that industrial rates should not be finalized in isolation of other rates charged to the customers of Hydro; and

3.                  that the Generic Methodology is still appropriate in the current day rate setting environment; and

4.                  that the Board has the authority to order Hydro to file a general rate application by a date certain.

 

AND WHEREAS Hydro informed the Board that it is presently working on submitting a general rate application to the Board in the spring of the year 2001.

 

IT IS THEREFORE ORDERED THAT:

 

1.         Hydro is ordered to file a general rate application no later than May 1, 2001 (the “Rate Application”) using forecast data.

2.         In preparing the Rate Application, Hydro will use the Generic Methodology.

3.         Industrial rates will be finalized pursuant to a hearing based upon the Rate Application.

4.         The interim rates approved by Order No. P. U. 23 (1999-2000) are hereby extended to December 31, 2001.

5.         By November 30, 2000 Hydro will file with the Board a schedule (i.e., a “critical path”), indicating significant milestones and activities it must undertake in order to file the Rate Application by May 1, 2001.

6.         The Board will be requesting progress reports from Hydro from time to time as to the progress made in reference to the schedule filed with the Board.

7.         The Board will grant Newfoundland Power Inc. and the Industrial Customers intervenor status in the Rate Application.

8.         The schedule and progress reports to be filed by Hydro will also be provided by Hydro to Newfoundland Power Inc and the Industrial Customers.

 

DATED at St. John=s, Newfoundland, this 27th day of October, 2000.

 

 

                                                            

David A. Vardy,

Chair and Chief Executive Officer.

 

 

                                                            

Darlene Whalen, P.Eng.,

Vice-Chairperson.

 

                                                            

J. William Finn, Q.C.,

Commissioner.

 

                                                            

Don Powell, C.A.,

Commissioner.

 

                                                           

G. Fred Saunders,

Commissioner.

 

 

____________________________               

G. Cheryl Blundon,

Board Secretary

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