BUSINESS PLANNING ASSUMPTIONS

Transcription

1 EB-00-0 Exhibit C Tab Schedule Page of BUSINESS PLANNING ASSUMPTIONS INTRODUCTION Following is a summary of key assumptions related to THESL s financial projections included in the Application. 0 ECONOMIC Table : Interest and Bond Rates (percent, %) 00 Bridge 00 Test -Month T-Bills 0.0. Prime Rate.. - Year Government of Canada Bonds Year Government of Canada Bonds.. 0+ Year Government of Canada Bonds.. Table : Other 00 Bridge 00 Test CPI 0.%.% Cdn$/US$ Exchange Rate.. Source: Conference Board of Canada. Forecast Date: March, 00.

2 EB-00-0 Exhibit C Tab Schedule Page of TAX RATES Table : Tax Rates (percent, %) 00 Historical 00 Bridge 00 Test Federal Tax Rate Ontario Tax Rate Combined Statutory Tax Rate Ontario Capital Tax Rate COMPENSATION Table : Full Time Equivalent ( FTE ) (Number of FTE) 00 Bridge 00 Test Total,0, Table : Payroll Burden Rate (percent, %) 00 Bridge 00 Test Benefit Burden Rate Source: Income Tax Act (Canada). Source: Taxation Act, 00 (Ontario). The 00 Ontario Budget proposed a decrease to the corporate income tax rate from percent to percent by July, 00. This proposal has not yet been substantively enacted. Source: Taxation Act, 00 (Ontario). Ontario capital tax is eliminated effective July, 00. As a result, when calculating capital tax in respect of the 00 taxation year, the calculated amount must be pro-rated for the number of days in the year after December, 00 and before July, 00. Percentage of base pay related to payroll benefits (including medical, dental, post-employment benefits, longterm disability, life insurance, pension, and workers compensation).

3 EB-00-0 Exhibit C Tab Schedule Page of CAPITAL EXPENDITURES Table : Allowance for Funds Used During Construction ( AFUDC ) (percent, %) 00 Bridge 00 Test AFUDC Rate (as per OEB prescribed rate for Q 00). (as per OEB prescribed rate for Q 00). AFUDC is calculated on quarterly construction work in progress ( CWIP ) closing balance for distribution plant, net of capital construction. 0 Depreciation and Amortization Rates The amortization rates outlined in Appendix B of the 00 Electricity Distribution Rate Handbook ( DRH ) published by the OEB are applied to historical and projected capitalized expenditures. The DRH is silent on the amortization rates related to capitalized software and land rights expenditures. THESL s current capitalization policy outlines the amortization period applicable to capitalized software costs to be over three to five years. Land rights are amortized over 0 years. Capital expenditures related to smart meter implementation are amortized over years beginning January 00. Dated May, 00.

4 EB-00-0 Exhibit C Tab Schedule Page of REVENUE Distribution Revenue Assuming normal weather conditions based on historic weather patterns. CUSTOMER AND SERVICE AREA Table : By Class (mid-year) 00 Bridge 00 Test Residential 0,, General Service <0kW,, General Service 0kW -kw (non interval),, General Service 000kW - kw Large Users Unmetered Scattered Load,, Total,0, 0 Service Area Assuming no significant changes to service area. REGULATORY Table : Carrying Charges (percent, %) 00 Bridge 00 Test Q.. Q.00. Q.0.0 Q.. Based on the OEB-prescribed rates for the first two quarters of 00 Remaining quarters are based on our latest available forecast of interest rates from the Conference Board of Canada

5 EB-00-0 Exhibit C Tab Schedule Page of OPERATIONAL Table : Operational (percent, %) 00 Test Inventory Surcharge. Vehicle Surcharge. Smart Meters Smart meter investments continue to be funded through the OEB rate adder and are not included in revenue requirement for IFRS The application includes projected costs related to the International Financial Reporting Standards ( IFRS ) assessment and modifications of key processes. These costs, which include projected IT and Finance costs that can be reasonably projected given information available at the time the application was prepared, are included in a regulatory account and are not included in distribution expenses. Related projections will likely need to be revised as IFRS impact assessments are completed. 0 Incremental and recurring costs resulting from the establishment and ongoing management of financial reporting and operating processes required to meet the new reporting standards are not included in the 00 application as the information required to reasonably estimate such costs was not available at the time this application was prepared.