RATE BASE. Filed: EB Exhibit D1 Tab 1 Schedule 1 Page 1 of INTRODUCTION

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1 Filed: 0-- EB-0-0 Exhibit D Tab Schedule Page of.0 INTRODUCTION RATE BASE This exhibit provides the forecast of Hydro One Distribution s rate base for the test years 0 to 0 and provides a detailed description of each of the components of rate base. 0 In accordance with the 00 Electricity Distribution Rate Handbook ( Handbook ), the rate base underlying each of the test years revenue requirement includes a forecast of net fixed assets, calculated on a mid-year average basis, plus a working capital allowance. Net fixed assets are calculated as gross plant in service minus accumulated depreciation and contributed capital. Working capital includes an allowance for cash working capital as well as materials and supplies inventory..0 UTILITY RATE BASE Utility rate base for the distribution system for the test year is filed at Exhibit D, Tab, Schedule. The calculation of Net Utility Plant is provided at Exhibit D, Tab, Schedule and. 0 Hydro One Distribution s forecast rate base for the test years 0 to 0 is shown in Table. Contributed capital refers to amounts contributed by third parties to specific capital projects, e.g. Joint Use Assets, Customer Contributions

0 In accordance with the 00 Electricity Distribution Rate Handbook ( Handbook ), the rate base underlying each of the test years revenue requirement includes a forecast of net fixed assets,

2 Updated: EB-0-0 Exhibit D Tab Schedule Page of Table Distribution Rate Base ($ Millions) DESCRIPTION Test Years Mid Year Gross Plant 0,0. 0,0.,.,.,. Mid Year Accumulated (,0.) (,0.) (,.) (,.) (,.) Depreciation Mid Year Net Plant,.0,0.,.,.,0. Cash Working Capital..... Materials and Supplies Inventory Distribution Rate Base,.,.,.,.,. The mid-year gross plant balance reflects the capital expenditure programs forecast for the bridge and test years. These programs are described in detail in the company s written evidence at Exhibits D, Tab, Schedules through and in the supporting schedules filed at Exhibit D, Tab, Schedule. The justification for capital projects in excess of $ million are provided in Exhibit D, Tab, Schedule. 0 The gross plant component of the 0 rate base approved in the EB was $,0. million. The 0 net plant of $0,0. million is $,. million or.% higher than that of the last approved. The growth in gross plant primarily reflects the inservice additions made to Hydro One Distribution rate base during the IRM period from 0 to 0 and amounts previously recorded as regulatory assets.

These programs are described in detail in the company s written evidence at Exhibits D, Tab, Schedules through and in the supporting schedules filed at Exhibit D, Tab, Schedule.

3 Updated: EB-0-0 Exhibit D Tab Schedule Page of As of January, 0, $. million of Smart Meter, Smart Grid and Distributed Generation gross fixed assets previously recorded as regulatory assets and tracked in deferral accounts are all transferred into Hydro One Distribution rate base with no half year rule and are included as part of this application. The only exclusion from the rate base calculation is the provincially funded portion of the Distributed Generation assets completed by Hydro One Distribution. Continuity schedules are provided at Exhibit D, Tab. 0 Table shows the historical and bridge year continuity of core fixed assets, excluding the in-service addtions of the regulatory assets tracked in deferral accounts from 00 to 0. Description Table Continuity of Fixed Assets Summary - Core Rate Base Bridge Historical Years Year Opening Gross Asset Balance,.,.0,.,.,. In-Service Additions..... Retirements (.) (.0) (.) (.) (.) Sales (.) (0.) (0.) (.) - Transfers (.). (.) Closing Gross Asset Balance,.0,.,.,.,. Less Future Use Land (0.) (0.) (0.) (0.) (0.) Gross Assets for Mid Year Rate Base,.,.,.,.,.

Distribution rate base with no half year rule and are included as part of this application.

4 Updated: EB-0-0 Exhibit D Tab Schedule Page of Table shows the historical and bridge year continuity of fixed assets driven by the inservice addtions of the regulatory assets from 00 to 0. Smart Meter, Smart Grid and Distributed Generation gross fixed assets previously recorded as regulatory assets and tracked in deferral/variance accounts are not included in the rate base until January, 0. Hydro One is seeking the disposition of these deferral/variance accounts in this application. The details of the Smart Meter, Smart Grid and Distributed Generation projects and spends from 00 to 0 are filed at Exhibit D, Tab, Schedule, Attachment to. The continuity schedules of the regulatory accounts associated with these projects are filed at Exhibit F, Tab, Schedule. 0 Table Continuity of Fixed Assets Summary Regulatory Assets Bridge Historical Years Description Year Opening Gross Asset Balance In-Service Additions Retirements Sales Transfers Closing Gross Asset Balance Less Provincial Funded Assets (a) (0.) (.) (.0) (.) (.) Gross Assets for Rate Base

January, 0. Hydro One is seeking the disposition of these deferral/variance accounts in this application.

5 Updated: EB-0-0 Exhibit D Tab Schedule Page of 0 Table reflects the proper regulatory treatment of the inclusion of the Smart Meter, Smart Grid and Distributed Generation assets into Hydro One Distribution s rate base in 0 or at December, 0. Please note that the continuity of fixed asset schedules filed at Exhibit D, Tab, Schedule to reflect the total fixed asset activity including both the core and regulatory assets as if the regulatory assets were placed in service and included in the rate base in the same year. Both presentations result in the same fixed asset forecast balances for the test years. Table Continuity of Total Fixed Assets Summary Bridge Historical Years Description Year Opening Core Gross Asset Balance,.,.0,.,.,. In-Service Additions..... Retirements (.) (.0) (.) (.) (.) Sales (.) (0.) (0.) (.) - Transfers (.). (.) - - Closing Core Gross Asset Balance,.0,.,.,.,. Include Deferral Accounts Closing Total Gross Asset Balance,.0,.,.,.,. Less Provincial Funded Assets (.) Less Future Use Land (0.) (0.) (0.) (0.) (0.) Closing Gross Assets for Rate Base,.,.,.,.,.

Please note that the continuity of fixed asset schedules filed at Exhibit D, Tab, Schedule to reflect the total fixed asset activity including both the core and regulatory assets as if the regulatory

6 Updated: EB-0-0 Exhibit D Tab Schedule Page of Table provides the forecast continuity of fixed assets for the test years. Table Continuity of Total Fixed Assets Forecast Description Test Years Opening Gross Asset Balance,. 0,.,0.,.,. In-Service Additions Retirements (.) (0.) (0.) (.) (0.) Sales Transfers Closing Gross Asset Balance 0,.,0.,.,.,. Less Provincial Funded Assets (a) (.) (0.) (.) (.) (.) Less Future Use Land (0.) (0.) (0.) (0.) (0.) Gross Assets for Mid Year Rate 0,. 0,.,.,.,. Base Mid Year Gross Asset Balance (b) 0,0. 0,0.,.,.,. 0 Notes: a) Provincially funded Distributed Generation assets are captured in a deferral account and excluded for the purposes of calculating core rate base for all historical, bridge and test years. b) Mid year gross asset balance is calculated only for the test years. In-service additions reflect the placing in service of Hydro One Distribution s capital programs and are discussed in Exhibit D, Tab, Schedule. These programs are described in detail at Exhibit D, Tab, Schedules through.

) (0.) (.) (0.) Sales - - - - - Transfers - - - - - Closing Gross Asset Balance 0,.,0.,.,.,. Less Provincial Funded Assets (a) (.) (0.) (.) (.) (.) Less Future Use Land (0.) (0.) (0.) (0.) (0.) Gross Assets for Mid Year Rate 0,.

7 Updated: EB-0-0 Exhibit D Tab Schedule Page of The retirement of assets over the test years include distribution plant equipment, meters and computer software. In 0 and 0, phase of Hydro One s SAP Cornerstone project becomes fully depreciated and thus retired. Transfers over the period reflect movement between the strategic spares inventory and fixed assets..0 WORKING CAPITAL 0 In 0 Hydro One Distribution retained Navigant Consulting Inc. to undertake a lead- lag study. The results of the new Navigant study and the provision for working capital for the 0 through 0 test years are incorporated. The Cash Working Capital requirement for the distribution system includes the following factors: 0 the forecast of OM&A, the retail cost of power, capital and income taxes, the net lead-lag days determined. The other component of Working Capital is materials and supplies inventory. The application of the methodology from the lead lag study results in a net cash working capital requirement including the impact of HST are shown in Table. The 0 test year cash working capital allowance has been calculated to be $.M which is a $.M decrease from the 0 cash working capital allowance of $.M approved by the Board in EB Details of the Working Capital requirements for Hydro One

.0 WORKING CAPITAL 0 In 0 Hydro One Distribution retained Navigant Consulting Inc. to undertake a lead- lag study.

8 Updated: EB-0-0 Exhibit D Tab Schedule Page of Distribution are filed in Exhibit D, Tab, Schedule and Exhibit D, Tab, Schedule for the test years. Table Cash Working Capital Allowance Test Years Cash Working Capital

Attachment 2-1 Distribution System Plan Attachment 2-2 OEB Appendix 2-FA and 2-FC REG Expansion Investment

Attachment 2-1 Distribution System Plan Attachment 2-2 OEB Appendix 2-FA and 2-FC REG Expansion Investment Waterloo North Hydro Inc. EB-2015-0108 Exhibit 2 Page 1 of 95 Filed: May 1, 2015 TABLE OF CONTENTS 2.5 EXHIBIT 2 - RATE BASE.... 2 2.5.1 Rate Base...2 2.5.1.1 Overview... 2 2.5.1.2 Gross Assets Property