NP 2013 CBA June 2012
NP 2013 CBA Newfoundland Power Inc. 2012 Capital Expenditure Status Report Explanatory Note This report is presented in compliance with the directive of the Board of Commissioners of Public Utilities (the Board ) contained in paragraph 8 of Order No. P.U. 26 (2011). Page 1 of the outlines the forecast variances from budget of the capital expenditures approved by the Board in Order Nos. P.U. 26 (2011), P.U. 7 (2012) and P.U. 8 (2012). The detailed tables on pages 2 to 13 provide additional detail on capital expenditures in 2012, and also include information on those capital projects approved for 2011 that were not completed prior to 2012. Variances of more than 10% of approved expenditure and $100,000 or greater are explained in the Notes contained in Appendix A, which immediately follows the blue page at the conclusion of the. Newfoundland Power Inc. 2013 Capital Budget Application
NP 2013 CBA Newfoundland Power Inc. 2012 Capital Budget Variances Approved by Order Nos. P.U. 26 (2011) P.U. 7 (2012) P.U. 8 (2012) Forecast Variance Generation Hydro $9,933 $7,933 ($ 2,000) Generation - Thermal 156 156 - Substations 12,776 13,576 800 Transmission 5,577 5,577 - Distribution 38,047 1 39,497 1,450 General Property 1,651 1,651 - Transportation 2,306 2,306 - Telecommunications 454 175 (279) Information Systems 3,680 3,680 - Unforeseen Items 750 750 - General Expenses Capitalized 3500 4,000 500 Total $78,830 $79,301 471 Projects carried forward from 2011 $1,335 Notes: 1 Includes $1,027,000 in estimated cost associated with the the upgrade of MIL-02 feeder from 2 phases to 3 phases approved in Order No. P.U. 7 (2012) and $510,000 in estimated cost associated with the Bell Island submarine cable approved in Order No. P.U. 8 (2012). Newfoundland Power Inc. 2013 Capital Budget Application Page 1 of 13
Page 2 of 13 Capital Budget Actual Expenditures 2011 2012 Total 2011 2012 To Date 2012 2012 Total Variance A B C D E F G H I J $ - $ 78,830 $ 78,830 $ - $ 19,699 $ 19,699 $ 59,602 $ 79,301 $ 79,301 $ 471 2011 Projects 8,912 - $ 8,912 5,939 130 6,069 1,205 1,335 7,404 (1,508) Grand Total $ 8,912 $ 78,830 $ 87,742 $ 5,939 $ 19,829 $ 25,768 $ 60,807 $ 80,636 $ 86,705 $ (1,037) Forecast Column A Approved Capital Budget for 2011 Column B Approved Capital Budget for 2012 Column C Total of Columns A and B Column D Actual Capital Expenditures for 2011 Column E Actual Capital Expenditures for 2012 Column F Total of Columns D and E Column G Forecast for Remainder of 2012 Column H Total of Columns E and G Column I Total of Columns D and H Column J Column I less Column C
Page 3 of 13 Category: Generation - Hydro Capital Budget Actual Expenditures Project 2011 2012 Total 2011 2012 To Date 2012 2012 Total Variance Notes* A B C D E F G H I J Hydro Plants - Facility Rehabilitation $ 1,362 $ 1,362 $ 209 $ 209 $ 1,153 $ 1,362 $ 1,362 $ - Rattling Brook Fisheries Compensation 5,000 5,000 263 263 2,737 $ 3,000 3,000 (2,000) 1 Hydro Plant Production Increase 120 120 7 7 113 $ 120 120 - Lockston Plant Refurbishment 3,451 3,451 314 314 3,137 $ 3,451 3,451 - Total - 2012 Generation Hydro $ - $ 9,933 $ 9,933 $ - $ 793 $ 793 $ 7,140 $ 7,933 $ 7,933 $ (2,000) Forecast 2011 Projects Facility Rehabilitation $ 1,610 $ - $ 1,610 $ 1,285 $ - $ 1,285 165 $ 165 $ 1,450 $ (160) Horse Chops Rewind and Rotor Re-insulation 1,276-1,276 795 - $ 795 185 185 980 (296) 2 Total - 2011 Generation Hydro $ 2,886 $ 9,933 $ 12,819 $ 2,080 $ 793 $ 2,873 $ 7,490 $ 8,283 $ 10,363 $ (2,456) Column A Approved Capital Budget for 2011 Column B Approved Capital Budget for 2012 Column C Total of Columns A and B Column D Actual Capital Expenditures for 2011 Column E Actual Capital Expenditures for 2012 Column F Total of Columns D and E Column G Forecast for Remainder of 2012 Column H Total of Columns E and G Column I Total of Columns D and H Column J Column I less Column C
Page 4 of 13 Category: Generation - Thermal Capital Budget Actual Expenditures Project 2012 Total 2012 To Date 2012 2012 Total Variance Notes* A B C D E F G H Thermal Plants - Facility Rehabilitation $ 156 $ 156 $ 77 $ 77 $ 79 $ 156 $ 156 $ - Forecast Total - Generation Thermal $ 156 $ 156 $ 77 $ 77 $ 79 $ 156 $ 156 $ - Column A Approved Capital Budget for 2012 Column B Total of Column A Column C Actual Capital Expenditures for 2012 Column D Total of Column C Column E Forecast for Remainder of 2012 Column F Total of Columns C and E Column G Total of Column F Column H Column G less Column B
Page 5 of 13 Category: Substations Capital Budget Actual Expenditures Forecast Project 2012 Total 2012 To Date 2012 2012 Total Variance Notes* A B C D E F G H Substation Refurbishment and Modernization $ 2,482 $ 2,482 $ 706 $ 706 $ 1,976 $ 2,682 $ 2,682 $ 200 Replacements Due to In-Service Failures 2,276 2,276 977 977 1,899 2,876 2,876 600 3 Additions Due to Load Growth 5,439 5,439 780 780 4,659 5,439 5,439 - PCB Bushing Phase-out 1,500 1,500 200 200 1,300 1,500 1,500 - Substation Addition - Portable Substation 879 879 16 16 863 879 879 - Lockston Substation Upgrade 200 200 30 30 170 200 200 - Total - Substations 12,776 12,776 2,709 2,709 10,867 13,576 13,576 800 Column A Approved Capital Budget for 2012 Column B Total of Column A Column C Actual Capital Expenditures for 2012 Column D Total of Column C Column E Forecast for Remainder of 2012 Column F Total of Columns C and E Column G Total of Column F Column H Column G less Column B
Page 6 of 13 Category: Transmission Capital Budget Actual Expenditures Project 2011 2012 Total 2011 2012 To Date 2012 2012 Total Variance Notes* A B C D E F G H I J Rebuild Transmission Lines $ - $ 5,577 $ 5,577 $ - $ 467 $ 467 $ 5,110 $ 5,577 $ 5,577 $ - Total 2012 Transmission $ - $ 5,577 $ 5,577 $ - $ 467 $ 467 $ 5,110 $ 5,577 $ 5,577 $ - 2011 Projects Rebuild Transmission Lines $ 4,745 $ - $ 4,745 $ 3,389 $ - $ 3,389 300 $ 300 $ 3,689 $ (1,056) 4 Forecast Total - 2011 Transmission $ 4,745 $ 5,577 $ 10,322 $ 3,389 $ 467 $ 3,856 $ 5,410 $ 5,877 $ 9,266 $ (1,056) Column A Approved Capital Budget for 2011 Column B Approved Capital Budget for 2012 Column C Total of Columns A and B Column D Actual Capital Expenditures for 2011 Column E Actual Capital Expenditures for 2012 Column F Total of Columns D and E Column G Forecast for Remainder of 2012 Column H Total of Columns E and G Column I Total of Columns D and H Column J Column I less Column C
Page 7 of 13 Category: Distribution Capital Budget Actual Expenditures Forecast Project 2011 2012 Total 2011 2012 To Date 2012 2012 Total Variance Notes* A B C D E F G H I J Extensions $ - $ 10,326 $ 10,326 $ - $ 3,283 $ 3,283 $ 8,078 $ 11,361 $ 11,361 $ 1,035 5 Meters - 1,884 1,884-1,127 1,127 898 2,025 2,025 141 Services - 3,351 3,351-1,424 1,424 2,095 3,519 3,519 168 Street Lighting - 2,115 2,115-794 794 1,427 2,221 2,221 106 Transformers - 7,944 7,944-2,583 2,583 5,361 7,944 7,944 - Reconstruction - 2,861 2,861-1,085 1,085 1,776 2,861 2,861 - Rebuild Distribution Lines - 3,403 3,403-620 620 2,783 3,403 3,403 - Relocate/Replace Distribution Lines For Third Parties - 2,205 2,205-552 552 1,653 2,205 2,205 - Trunk Feeders - 848 848-7 7 841 848 848 - Feeder Additions for Growth - 1,391 1,391-75 75 1,316 1,391 1,391 - Allowance for Funds Used During Construction - 182 182-62 62 120 182 182 - Bell Island Submarine Cable Repair - 510 510-276 276 234 510 510 - Milton Substation Property Additions - 1,027 1,027 - - - 1,027 $ 1,027 $ 1,027 - Total - 2012 Distribution $ - $ 38,047 $ 38,047 $ - $ 11,888 $ 11,888 $ 27,609 $ 39,497 $ 39,497 $ 1,450 2011 Projects Feeder Additions for Growth $ 1,281 $ - $ 1,281 $ 470 $ 130 $ 600 555 $ 685 $ 1,155 $ (126) Total 2011 Distribution $ 1,281 $ 38,047 $ 39,328 $ 470 $ 12,018 $ 12,488 $ 28,164 $ 40,182 $ 40,652 $ 1,324 Column A Approved Capital Budget for 2011 Column B Approved Capital Budget for 2012 Column C Total of Columns A and B Column D Actual Capital Expenditures for 2011 Column E Actual Capital Expenditures for 2012 Column F Total of Columns D and E Column G Forecast for Remainder of 2012 Column H Total of Columns E and G Column I Total of Columns D and H Column J Column I less Column C
Page 8 of 13 Category: General Property Capital Budget Actual Expenditures Forecast Project 2012 Total 2012 To Date 2012 2012 Total Variance Notes* A B C D E F G H Tools and Equipment $ 457 $ 457 $ 125 125 $ 332 $ 457 $ 457 $ - Additions to Real Property 234 234 217 217 17 $ 234 234 - Company Building Renovations 685 685 82 82 603 $ 685 685 - Standby Generator System Control Center 275 275 - - 275 $ 275 275 - Total - 2012 General Property $ 1,651 $ 1,651 $ 424 $ 424 $ 1,227 $ 1,651 $ 1,651 $ - Column A Approved Capital Budget for 2012 Column B Total of Column A Column C Actual Capital Expenditures for 2012 Column D Total of Column C Column E Forecast for Remainder of 2012 Column F Total of Columns C and E Column G Total of Column F Column H Column G less Column B
Page 9 of 13 Category: Transportation Capital Budget Actual Expenditures Forecast Project 2012 Total 2012 To Date 2012 2012 Total Variance Notes* A B C D E F G H Purchase Vehicles and Aerial Devices $ 2,306 $ 2,306 $ 697 $ 697 $ 1,609 $ 2,306 $ 2,306 $ - Total - Transportation $ 2,306 $ 2,306 $ 697 $ 697 $ 1,609 $ 2,306 $ 2,306 $ - Column A Approved Capital Budget for 2012 Column B Total of Column A Column C Actual Capital Expenditures for 2012 Column D Total of Column C Column E Forecast for Remainder of 2012 Column F Total of Columns C and E Column G Total of Column F Column H Column G less Column B
Page 10 of 13 Category: Telecommunications Capital Budget Actual Expenditures Forecast Project 2012 Total 2012 To Date 2012 2012 Total Variance Notes* A B C D E F G H Replace/Upgrade Communications Equipment $ 150 $ 150 $ 47 $ 47 $ 103 $ 150 $ 150 $ - Fibre Optic Circuit Replacement 304 304 10 10 15 25 25 (279) 6 Total - Telecommunications $ 454 $ 454 $ 57 $ 57 $ 118 $ 175 $ 175 $ (279) Column A Approved Capital Budget for 2012 Column B Total of Column A Column C Actual Capital Expenditures for 2012 Column D Total of Column C Column E Forecast for Remainder of 2012 Column F Total of Columns C and E Column G Total of Column F Column H Column G less Column B
Page 11 of 13 Category: Information Systems Capital Budget Actual Expenditures Forecast Project 2012 Total 2012 To Date 2012 2012 Total Variance Notes* A B C D E F G H Application Enhancements $ 1,013 $ 1,013 $ 275 $ 275 $ 738 $ 1,013 $ 1,013 $ - System Upgrades 1,276 1,276 313 313 963 1,276 1,276 - Personal Computer Infrastructure 390 390 85 85 305 390 390 - Shared Server Infrastructure 607 607 287 287 320 607 607 - Network Infrastructure 394 394 38 38 356 394 394 - Total - Information Systems $ 3,680 $ 3,680 $ 998 $ 998 $ 2,682 $ 3,680 $ 3,680 $ - Column A Approved Capital Budget for 2012 Column B Total of Column A Column C Actual Capital Expenditures for 2012 Column D Total of Column C Column E Forecast for Remainder of 2012 Column F Total of Columns C and E Column G Total of Column F Column H Column G less Column B
Page 12 of 13 Category: Unforeseen Items Capital Budget Actual Expenditures Project 2012 Total 2012 To Date 2012 2012 Total Variance Notes* A B C D E F G H Allowance for Unforeseen Items $ 750 $ 750 $ 148 $ 148 $ 602 $ 750 $ 750 $ - Total - Unforeseen Items $ 750 $ 750 $ 148 $ 148 $ 602 $ 750 $ 750 $ - Forecast Column A Approved Capital Budget for 2012 Column B Total of Column A Column C Actual Capital Expenditures for 2012 Column D Total of Column C Column E Forecast for Remainder of 2012 Column F Total of Columns C and E Column G Total of Column F Column H Column G less Column B
Page 13 of 13 Category: General Expenses Capitalized Capital Budget Actual Expenditures Forecast Project 2012 Total 2012 To Date 2012 2012 Total Variance Notes* A B C D E F G H Allowance for General Expenses Capitalized $ 3,500 $ 3,500 $ 1,441 $ 1,441 $ 2,559 $ 4,000 $ 4,000 $ 500 7 Total - General Expenses Capitalized $ 3,500 $ 3,500 $ 1,441 $ 1,441 $ 2,559 $ 4,000 $ 4,000 $ 500 Column A Approved Capital Budget for 2012 Column B Total of Column A Column C Actual Capital Expenditures for 2012 Column D Total of Column C Column E Forecast for Remainder of 2012 Column F Total of Columns C and E Column G Total of Column F Column H Column G less Column B `
NP 2013 CBA : Notes Appendix A Generation - Hydro 1. Rattling Brook Fisheries Compensation: Budget: $5,000,000 Forecast: $3,000,000 Variance: ($2,000,000) In 2010, the Company received an order from Department of Fisheries and Oceans ( DFO ) stating that, pursuant to section 20 of the Fisheries Act, fish passage must be in place on Rattling Brook to allow downstream migration of salmon kelts and smolts by May 1, 2013 and the upstream migration of grilse and adult salmon by June 2014. The implementation plan as proposed in 2012 Capital Budget Application involved completing all construction work in 2012. Subsequent to the project being approved, the Company engaged the necessary technical expertise to execute the project. As a result of the technical work completed to date it has been determined that the original $5.0 million expenditure take place over a 5-year period from 2012 to 2016. 1 Extending the implementation period is necessary to adapt in-stream structures to make them more suitable to migrating salmon. 2 The revised implementation plan has been submitted to DFO for review and approval, with confirmation received from DFO. 2. Horse Chops Rewind and Rotor Re-Insulation (2011 Project): Budget: $1,276,000 Forecast: $980,000 Variance: ($296,000) Competitive bids from rewind suppliers resulted in a lower contract price than was anticipated in the original project estimate. 1 2 The recommendation involved distributing the initial $5 million project budget over 5 years, with an initial expenditure of $3 million in 2012 and the remaining $2 million over the 2013 to 2016 period. The revised implementation plan meets the original DFO order allowing downstream migration of salmon kelts and smolts by May 1, 2013 and the upstream migration of grilse and adult salmon by June 2014. Newfoundland Power Inc. 2013 Capital Budget Application Page 1 of 6
NP 2013 CBA : Notes Appendix A Substations 3. Replacements Due to In-Service Failures Budget: $2,276,000 Forecast: $2,876,000 Variance: $600,000 The budget for Replacements Due to In-Service Failures is based on an assessment of historical expenditures. In addition to responding to multiple individual in-service failures, which typically involve expenditures below $50,000, thermo scanning carried out in December 2011 identified the need to replace a number of substation switches. It is estimated that an additional $400,000 is required to complete the replacements. An additional $200,000 is required to replace two failed UPS battery banks. Newfoundland Power Inc. 2013 Capital Budget Application Page 2 of 6
NP 2013 CBA : Notes Appendix A Transmission 4. Rebuild Transmission Lines (2011 Project): Budget: $4,745,000 Forecast: $3,689,000 Variance: ($1,056,000) The work planned for 21L in 2011 was deferred to 2012 and has been approved as part of the 2012 Capital Budget. This resulted in a reduction in planned 2011 expenditure of approximately $822,000. In addition, competitive bidding resulted in a contract price for the work on 25L that was $250,000 below the budget estimate. Newfoundland Power Inc. 2013 Capital Budget Application Page 3 of 6
NP 2013 CBA : Notes Appendix A Distribution 5. Extensions: Budget: $10,326,000 Forecast: $11,361 000 Variance: $1,035,000 Expenditure associated with building line extensions to accommodate new customer connections is expected to be 10% above forecast. The budgeted expenditure for customer growth was based on 4,670 new customer connections. The current projection for new customer connections is 4,904, an increase of 5%. The unit cost is projected to increase by 5% principally due to a slight change in the mix of single phase versus three phase construction. Year to date the amount of 3 phase construction required has increased slightly. Newfoundland Power Inc. 2013 Capital Budget Application Page 4 of 6
NP 2013 CBA : Notes Appendix A Telecommunications 6. Fibre Optic Circuit Replacement: Budget: $304,000 Forecast: $25,000 Variance: ($279,000) Newfoundland Power believes that competition and capacity in the local telecommunications market is affecting the pricing of fibre capacity. As a result, Newfoundland Power is currently re-evaluating its Fibre Optic Replacement requirements. Newfoundland Power Inc. 2013 Capital Budget Application Page 5 of 6
NP 2013 CBA : Notes Appendix A General Expenses Capitalized 7. General Expenses Capitalized: Budget: $3,500,000 Forecast: $4,000,000 Variance: $500,000 The variance is primarily related to an increase in the allocated portion of pension expense. Pension expenses increased in recent years as a result of the amortization of 2008 losses associated with the pension plan assets along with a lower discount rate being used to determine the Company's accrued obligation under its defined benefit pension plan. Newfoundland Power Inc. 2013 Capital Budget Application Page 6 of 6