Definitions

1  In this Special Direction:

"Act" means the Utilities Commission Act;

"B.C. Hydro" means the British Columbia Hydro and Power Authority;

"Commission" means the British Columbia Utilities Commission;

"debt" means the sum of revolving borrowings, bonds, notes and debentures, net of related sinking funds, temporary investments, term debentures receivable and repurchased debt, at the end of the financial year;

"deferred credits" means the sum of the Rate Stabilization Account, deferred revenue, contributions arising from the Columbia River Treaty and contributions in aid of construction at the end of the financial year;

"equity" means the sum of retained earnings and deferred credits, at the end of the financial year;

"government policy directive" means a directive in writing to B.C. Hydro from the minister charged with the administration of the Hydro and Power Authority Act;

"total invested capital" means debt plus equity, at the end of the financial year.

[en. B.C. Reg. 73/98, s. 1; am. B.C. Reg. 119/2000, s. 1.]

 Application

2  This Special Direction is issued to the Commission under section 3 of the Utilities Commission Act.

[en. B.C. Reg. 73/98, s. 1.]

 Conservation and efficient electricity use

3  In designing B.C. Hydro electricity rates, the Commission shall ensure that those rates contribute to conservation and efficient electricity use by reflecting the total cost of new sources of electricity supply, and those costs shall be evaluated using a cost of capital consistent with that earned on a pre-income tax basis by the most comparable investor-owned energy utility regulated under the Act.

 Basis for establishing revenue requirements

4  In determining whether the rates of B.C. Hydro are sufficient to yield a fair and reasonable compensation for the services provided by it, or a fair and reasonable return on the appraised value of its property, the Commission must ensure the rates permit B.C. Hydro to collect sufficient revenues in each financial year to:

(a) sustain an operating and capital regime that continues to provide a quality and reliable electricity service;

(b) meet other expenses reasonably incurred in accordance with government policy directives including, but not limited to,

(i)  directives for the construction or operation of a plant or system, or an extension to either of them, by B.C. Hydro, and

(ii)  directives that B.C. Hydro enter into contracts;

(c) meet all debt service, tax and other financial obligations;

(d) achieve an annual rate of return on equity equal to that allowed on a pre-income tax basis by the most comparable investor-owned energy utility regulated under the Act.

[am. B.C. Regs. 72/98, s. 3; 73/98, s. 2.]

 Calculation of return on equity

5  The return on equity in paragraph 4 (d) must be calculated using consolidated operating income from all sources,

(a) where projections of consolidated net income include an amount of electricity trade income consistent with the Commission's forecast of annual net export revenue under average water conditions, as contained in the Commission's report to the Lieutenant Governor in Council dated June 30, 1992, as amended on B.C. Hydro's Energy Removal Certificate application, and

(b) where projected consolidated net income, before any rate stabilization account transfers, is less than the amount needed by B.C. Hydro to achieve an annual rate of return on equity pursuant to paragraph 4 (d), an allowance for an appropriate transfer from the rate stabilization account provided

(i)  there is projected to be a positive balance in the rate stabilization account before the transfer,

(ii)  there is projected to be a zero or positive balance in the rate stabilization account after the transfer, and

(iii)  the debt/equity ratio of B.C. Hydro after the transfer is not greater than 80:20.

[en. B.C. Reg. 119/2000, s. 2.]

 Smooth, stable and predictable rate increases

6.1  Notwithstanding paragraph 4 (d), in setting B.C. Hydro electricity rates, the Commission shall ensure that rates are smooth, stable and predictable.

 Increase limits

6.2  Smooth, stable and predictable rates for the purpose of setting B.C. Hydro electricity rates means that, with the exception of pass through items pursuant to section 61 (4) of the Act, general electricity rate increases shall not exceed 1 percentage point above the rate of inflation for the remainder of the 1992/93 financial year and shall not exceed 2 percentage points above the projected rate of inflation on a year over year basis thereafter.

[am. B.C. Reg. 73/98, s. 3.]

 Exceptions to limits

6.3  For the purpose of implementing rate design or of closing rates, individual electricity rate increases may exceed the limits set out in paragraph 6.2.

 Rate of inflation

6.4  The rate of inflation in paragraph 6.2 means the change in the average level of the British Columbia consumer price index during the most recent three month period for which published statistics are available prior to B.C. Hydro's rate application filing, compared to the average level of the British Columbia consumer price index during the same three month period a year earlier, and published statistics shall mean those published by Statistics Canada.

 Projected rate of inflation

6.5  The projected rate of inflation in paragraph 6.2 means the provincial Ministry of Finance and Corporate Relations' latest available forecast published prior to B.C. Hydro's rate application filing of future year over year changes in the average level of the British Columbia consumer price index.

 Fair, just and reasonable rates

7.1  In setting B.C. Hydro electricity rates the Commission shall ensure that rates are fair, just and reasonable.

 Repealed

7.2  Repealed. [B.C. Reg. 73/98, s. 4.]

 Return on public investment

8  Electricity rates set by the Commission in accordance with this Special Direction may generate annual distributable surpluses for B.C. Hydro. These surpluses shall only be calculated and allocated in a manner specified by the Lieutenant Governor in Council pursuant to section 35 of the Hydro and Power Authority Act.

[am. B.C. Reg. 73/98, s. 5.]

 Repealed

9  Repealed. [B.C. Reg. 73/98, s. 6.]