P.U.
37 (2000-2001)
IN THE MATTER OF the
PUBLIC UTILITIES ACT,
R.S.N. 1990, c. P-47, as amended
(“the Act”)
AND
IN THE MATTER OF the application by
Newfoundland Power Inc. (“the Applicant”)
for an Order, pursuant to Sections 58 and
80 and all other enabling powers of the
Act and Orders of the Board, approving
the disposition of revenue credited to
the Applicant’s excess revenue account
through a rebate to customers.
WHEREAS the
Applicant is a corporation duly organized and existing under the laws of the
Province of Newfoundland and Labrador, is a public utility within the meaning
of the Act, and is also subject to the provisions of the Electrical Power Control Act, 1994 (EPCA); and
WHEREAS pursuant
to Section 80 of the Act and by Order No. P. U. 20 (1999-2000) the Board
approved an allowed return on rate base for the Applicant for 2000 of 10.28 per
cent within a range of 10.10 per cent to 10.46 per cent; and
WHEREAS the
Applicant’s System of Accounts as prescribed by the Board pursuant to Section
58 of the Act includes an Excess Revenue Account and by Order No. P. U. 25
(1999-2000), the Board approved a definition of the Excess Revenue Account
which provides that the Excess Revenue Account shall be credited with any
revenue in excess of the upper limit of the Applicant’s allowed range of return
on rate base as determined by the Board and that, for 2000 and subsequent
years, all earnings in excess of 10.46 per cent rate of return on rate base
shall, unless otherwise ordered by the Board, be credited to the Excess Revenue
Account; and
WHEREAS the
Applicant’s financial results for 2000 without adjustment yields a return on
rate base for 2000 in excess of 10.46 per cent; and
WHEREAS the amount of revenue the Applicant has
credited to the Excess Revenue Account, as at December 31, 2000 is $6,733,000
(the “Excess Revenue”); and
WHEREAS by definition, and pursuant to Order No. P. U.
25 (1999-2000), the Excess Revenue shall be disposed of in a manner determined
by the Board; and
WHEREAS the Board received an application on February 8,
2001, wherein the
Applicant proposes that the Excess Revenue be disposed of through a rebate to
its customers of 1.90% of customers’ total billing amounts, inclusive of
Harmonized Sales Tax (HST), on electric service bills issued during the period
January 2000 to December 2000 by means of a one-time credit on customers’ April
2001 electric service bills; and
WHEREAS the total proposed amount to be rebated to customers
is $7,743,000 consisting of the Excess Revenue of $6,733,000 and HST of
$1,010,000; and
WHEREAS the Board retained its financial consultant, Bill
Brushett, C.A., Partner, Grant Thornton, to review the Application and
supporting documentation and provide a report on the accuracy and
appropriateness of the following items:
i)
Calculation of the return on rate base;
ii)
The determination of the amount of the excess
revenue; and
iii)
The methodology used to calculate the rebate to
customers;
and
WHEREAS the report produced by Grant Thornton was filed on
March 9th, 2001, as Exhibit “A” to the Affidavit of William
Brushett, C.A.; and
WHEREAS the Grant Thornton report confirmed the accuracy and
the calculations of the return on rate base and the Excess Revenue and also found
that the methodology used to calculate the rebate to customers was reasonable;
and
WHEREAS, after public notice, the Board conducted a public
hearing on March 12, 2001 to consider the application in its Hearings Room in
St. John’s; and
WHEREAS Ian F. Kelly, Q.C., and Peter Alteen were present as
Counsel for the Applicant; and
WHEREAS evidence in support of the application was presented
by Barry Perry, Vice-President, Finance and Chief Financial Officer of the
Applicant; and
WHEREAS the proposed disposition of the Excess Revenue is
consistent with generally accepted sound public utility practice and reflects
an appropriate balance between the interests of the Applicant and its customers
that is in accordance with the Act, the EPCA, and Orders of the Board made
pursuant thereto.
IT IS THEREFORE ORDERED THAT:
1. The balance in the Applicant’s Excess Revenue Account, as at December 31, 2000, of $6,733,000 be rebated to customers, together with HST of $1,010,000, through a one-time credit to each of its customers on their April 2001 electric service bills of 1.90% of the customer’s total billing amounts on electric service bills issued during the period January 2000 to December 2000.
2. The Applicant file with the Board on or before June 30, 2001 a report showing the actual disposition by rate class of the Excess Revenue Account and any amounts not distributed.
3. The Applicant file with the Board at least three days in advance of the first April billing in which the rebate will be credited, a copy of any billing insert or other information, as well as copies of any other public communiqué or press release to be distributed in connection with this matter.
4. The Applicant shall pay the expenses of the Board arising out of this application.
DATED at St. John’s, Newfoundland this 15th day of March, 2001.
________________________________
Robert Noseworthy, P.Eng.,
Chair & Chief Executive Officer.
______________________________
Darlene
Whalen, P.Eng.,
Vice-Chairperson.
Don
R. Powell, C.A.,
Commissioner.
__________________________
G. Cheryl Blundon,
Board Secretary.