MODIFICATION TO OEB COST ALLOCATION METHODOLOGY AND RESULTS

Transcription

1 Updated: February 20, 2008 Exhibit G2 Tab 1 Schedule 1 Page 1 of MODIFICATION TO OEB COST ALLOCATION METHODOLOGY AND RESULTS INTRODUCTION This exhibit details the modifications that Hydro One Distribution made to the OEB Cost Allocation model to reflect its unique circumstances and also presents the results of the Cost Allocation Study COMPUTER MODEL Hydro One modified the OEB Cost Allocation model to take into account density aspects, serving a large number of Embedded customers through its Low Voltage system and having multiple customer classes in addition to over 270 customer classes for Acquired LDCs Hydro One used Version 50 of the Cost Allocation model as a starting point and understands from Board staff that differences between version 50 and the first official Cost Allocation model version are mainly cosmetics. In addition, Hydro One has implemented updates to version 50 as identified by Board staff in the releases of the latest Cost Allocation Model versions 1.1 and includes the Input and Output sheets of the Cost Allocation model, the same information provided for the Cost Allocation Information filing under Proceeding EB

2 Filed: December 18, 2007 Exhibit G2 Tab 1 Schedule 1 Page 2 of DENSITY WEIGHTING FACTORS Density factors have been incorporated as weighting factors for Overhead lines and Transformers, consistent with the customer classes approved by the OEB that are based on Density definitions. The Density definitions have also been approved by the OEB For lines, Customer Density weighting factors were developed by calculating for all feeders the number of customers by customer class on each feeder and assigning the total distance of the feeders to the various customer classes proportionally. A similar method was used to develop Demand Density weighting factors, by using energy by customer class by feeder and total energy supplied by feeder to assign the feeder length for each feeder to customer classes proportionally For transformers, Customers Density weighting factors were developed by calculating Net Book Value of Transformation Assets by feeder and assigning the total Net Book Value of Transformation assets by feeder to the various customer classes proportionally. A similar method was used to develop Demand Density weighting factors, by using energy by customer class by feeder and total energy supplied by feeder to assign the Net Book Value of Transformation assets for each feeder to customer classes proportionally MODIFICATIONS Hydro One created a new customer class, Subtransmission (ST) class that includes all Directs, Large Users, most T-class customers, all Embedded LDCs, some three-phase General Service, one Farm customer, some Acquired General Service customers, and some Urban General Service customers. All these customers are directly served at voltages between 44 kv and 13.8 kv, have consumption above 500 kw and provide

3 Filed: December 18, 2007 Exhibit G2 Tab 1 Schedule 1 Page 3 of their own transformation. Some of the LDCs are served below 13.8 kv and Hydro One provides an additional level of transformation Distribution assets which are used to supply the planned ST customer group include: High Voltage Distribution Stations, a small number of Low Voltage Distribution Stations whose secondary voltages are between 27.6 kv and 13.8 kv inclusive, and power lines between the voltages of 44 kv and 13.8 kv inclusive. In addition Distribution assets which are used to supply customers below 13.8 kv include Low Voltage Distribution Stations and power lines between the voltages of 12.5 kv and 4.16 kv inclusive To better align with the customer classes in other LDCs that typically have one Residential customer class and two General Service customers broken down between below and above 50 kw, and to better reflect customer characteristics, Hydro One has modified its Residential and General Service customer groupings. Four Residential customer classes have been created: Urban includes the current Urban Residential customer class and customers from 12 Acquired LDC Residential customer classes who met the Urban Density Criteria, 2. Residential R1 includes the current high density and 88 Residential Acquired LDCs customers 3. Residential R2 includes normal density residential classes as well as Farm single phase and three phase energy billed customer classes that currently receive RRRP, 4. Seasonal includes the current high density and normal density seasonal residential customer classes Four General Service customer classes have been created: 27

4 Filed: December 18, 2007 Exhibit G2 Tab 1 Schedule 1 Page 4 of General Service below 50 kw includes the existing single-phase General Service, three-phase General Service, Farm single-phase and Three-phase that do not qualify for RRRP, T-class customers that are energy billed, and Acquired General Service customers that are energy billed. 2. General Service above 50 kw includes General Service single-phase, General Service three-phase, T-class customers that are demand billed and consumption below 500 kw and all Farms that are demand billed and all these customers have not been reclassified into the ST customer class. 3. Urban General Service below 50 kw includes all current Urban General Service customers that are energy billed and energy billed single-phase General Service, three-phase General Service, single phase Farms and Acquired General Service customers in 11 Acquired LDCs that meet the Urban density criteria. 4. Urban General Service above 50 kw includes all current Urban General Service customers that are demand billed and demand billed single-phase General Service, three-phase General Service, and Acquired General Service customers in 11 Acquired LDCs that meet the Urban density criteria and that have not been reclassified into the ST customer class As per OEB direction, Hydro One has created a new customer class for Merchant Generators (Distributed Generators). This class is composed of 76 interval meter customers and 5 non-interval metered customers. These customers are currently threephase General Service, T-class customers, and one Acquired General Service customer. The load profile for this class is based on the consumption Distributed Generators require as station service when the active generators are not operating. No meter costs have been allocated to this class, as these customers are required to provide their own meters Customer classes (Input Sheet 2) 28

5 Filed: December 18, 2007 Exhibit G2 Tab 1 Schedule 1 Page 5 of In Input Sheet 2, reproduced below, Hydro One is using the following Customer classes compared to the customer classes in the Model: 3 Utility's Class Definition 1 Residential Urban - Residential, Acquired Residential 2 GS <50 Residential R1, Acquired Residential 3 GS>50-Regular Residential R2, Farms with RRRP 4 GS> 50-TOU Seasonal 5 GS >50-Intermediate General Service Energy-Billed 6 Large Use >5MW General Service Demand-Billed 7 Street Light Street Lights 8 Sentinel Sentinel Lights 9 Unmetered Scattered Load N/A 10 Embedded Distributor N/A 11 Back-up/Standby Power N/A 12 Rate Class 1 Distributed Generators 13 Rate Class 2 Sub-Transmission 14 Rate Class 3 Urban General Service Energy-Billed 15 Rate Class 4 Urban General Service Demand-Billed MODEL CHANGES As per Board staff instructions in version 1.1, Hydro One removed reference to step 4 and updated text for steps Trial Balance (Input Sheet 3) Transformer Ownership Allowance not populated as Hydro One s approved Revenue Requirement of $1,067 million already includes cost of Transformer Ownership allowance.

6 Filed: December 18, 2007 Exhibit G2 Tab 1 Schedule 1 Page 6 of Adjusted formula dealing with Working Capital (Cell G 20) to reflect the proposed Hydro One total working Capital of $296.5 million, or 11.2% instead of 15% for other LDCs. Hydro One s Working Capital includes $273.3 million of cash working capital and $23.3 million of Materials and Supplies Inventory in USoA USoA 1985 Sentinel Lights is also taken into account when calculating Working Capital. Hydro One has an exemption from the Government that allows it to continue maintaining Sentinel Lights Wholesale meters of $1.04 million reclassified from USoA 1815 to USoA External Revenues of $5.85 million reclassified from USoA 4380 to USoA 5135, ($5.3 million Forestry Line work) and USoA 5420, (.58 million Health and Safety external revenues) $4.5 million in USoA 5065 for Interval Meter Reads and Retail Settlements directly allocated to classes using number of interval meters by delivery point by customer class Amortization Environmental Assets of $8 million in USoA 5715 mapped 10% to USoA 5112 and 90% to USoA 5114 based on number of stations per category $1.19 million moved from USoA 5170 to USoA 5665 to reflect Sentinel Light and allocated directly to this class million moved from USoA 5172 to USoA 5665 to reflect Sentinel Lights and allocated directly to this class. 27

7 Filed: December 18, 2007 Exhibit G2 Tab 1 Schedule 1 Page 7 of $31.6 million moved from USoA 5715 to USoA 5645 reflecting amortization of OPEB, [$23.6million] and to USoA 5112/5114 reflecting land reclamation around stations [$8million] Billing and Settlement Costs directly attributable to Interval Metered customers was determined for further direct assignment to classes using number of interval meters by delivery point by customer class. Balances direct assigned are: $59k from USoA 5610, $600k from USoA 5615, $11k from USoA 5630, $284k from USoA 5665 and $190k from USoA Asset Breakout (Input Sheet 4) Created sub-accounts for USoA Transformer Station Equipment to take into account that Hydro One owns High Voltage Distribution Stations and Low Voltage Distribution Stations. The stations can be shared between Low Voltage (LV) system customers and other end-use customers, or used exclusively by one customer group Created sub-accounts for USoA Poles, Towers and Fixtures Sub-Transmission Bulk Delivery to provide a split between LV and other end use customers Created sub-accounts for USoA Poles, Towers and Fixtures - Primary to provide a split between LV and other end use customers Created sub-accounts for USoA Overhead Conductors and Devices Sub- Transmission Bulk Delivery to provide a split between LV and other end use customers Created sub-accounts for USoA Overhead Conductors and Devices - Primary to provide a split between LV and other end use customers.

8 Filed: December 18, 2007 Exhibit G2 Tab 1 Schedule 1 Page 8 of Created sub-accounts for USoA Line Transformers to provide a split between LV and other end use customers Created sub-accounts for USoA 1860 Meters to provide a split between single, poly, LV, and Smart meters. 7 8 Added USoA 1985 Sentinel Lights Modified Totals to include Sub Accounts and exclude Main Accounts when creating new sub-accounts Miscellaneous Data (Input Sheet 5) The fixed service charge for the proposed rate classes is the customer weighted average service charge of the customer classes being mapped to the new classes Customer Data (Input Sheet 6) The default Billing weighting factors were aligned with Hydro One s customer classes Meter Capital (Input Sheet 7.1) Hydro One matched its new customer classes (column B) with the default Cost per Meter (installed) Col 1. Column C default rate class definition not used Meter Reading (Input Sheet 7.2)

9 Filed: December 18, 2007 Exhibit G2 Tab 1 Schedule 1 Page 9 of Used Hydro One specific Meter Reading weighting factors based on Hydro One Meter Reading Optimization analysis. The weights range between values of 1 to Demand Data (Input Sheet 8) Total Loss Factor by class introduced in cells C16 to W25 to calculate load data at different delivery levels: TS, Bulk, Primary, and Secondary. The LT NCPs were developed using the ratio of the billed demand for customers that receive transformer ownership allowance over the total customer class billed demand as shown in Input Sheet Direct Allocation (Input Sheet 9) The following USoA accounts were directly allocated: 5065 Meter Expense ($4.5 million), 5610 Management Salaries and Expenses ($59,000), 5615 General Administrative Salaries and Expenses (.6 million), 5630 Outside Services Employed ($11,000) 5665 Miscellaneous General Expenses ($1.8 million) 5675 Maintenance of General Plant (.19 million) These expenses relate to interval meters and to staff dealing with this type of larger customers and Sentinel Light costs The allocation factor used for all these accounts is number of Interval Meter by delivery point by class except for Sentinel Lights included in account 5665 ($1.48 million) that has been allocated directly to Sentinel Lights..

10 Filed: December 18, 2007 Exhibit G2 Tab 1 Schedule 1 Page 10 of Revenue To Cost RR (Output Sheet 1) Hydro One Depreciation Expense includes $23.6 million for Other Post Employment Benefits (OPEB) and $8.2 million for Environmental work. OPEB was added to USoA 5645 in Input Sheet 3 and Environment was added to USoA 51112/5114 in Input Sheet 3. [Refer to rows 53 and 54.] Also in Input Sheet 3 USoA 1330 of $23.3 million was included. Since Output Sheet 1 picks up the OM&A values from Input Sheet 3, Hydro One has to deduct these two amounts from the OM&A and add USoA 1330 when calculating Working Capital as a percentage of OM&A costs.[refer to row 59] Hydro One s Working Capital is based on 11% of OM&A instead of 15% in RP /EB [Refer to row 58] Rows 76 to 100 have been added to reflect Hydro One s Miscellaneous External Revenues and Common and Preferred Equity financial structure Rows 87 to 94 have been added to properly allocate Miscellaneous External Revenues instead of using Weighted Number of Bills (CWNB) as per OEB model Rows 97 to 100 reflect revenues and costs of standard distribution rates, including Miscellaneous External Revenues. The proposed Revenue Requirement of $1,067 million is recovered from Standard Distribution rates and from Miscellaneous External Revenues. 27

11 Filed: December 18, 2007 Exhibit G2 Tab 1 Schedule 1 Page 11 of Adjusted the Rate Base checking formulae in Row 62 to be based on nearest million dollar. Fixed Charge Floor Ceiling (Output Sheet 2) 4 5 Formula on row 28 changed for Gross Plant to include USoA 1985 Sentinel Light Assets Adjusted formulas in rows 94, 97, 131, 148, 149, 152, 153, 163 and 164 to reflect new sub-accounts Line Transformers PLCC Adjustment (Output Sheet 2.1) Adjusted formulas in rows 11, 41, and 42 to reflect new sub-accounts Formula on row 28 changed for Gross Plant to include USoA 1985 Sentinel Light Assets Formula on row 25 adjusted to ensure allocated cost does not exceed total cost when the PLCC kw is changed from the default of 400 W in E3: PLCC Primary Costs PLCC Adjustment (Output Sheet 2.2) Adjusted formulas in rows 11, 12, 43, 44, 49, 50, 58, and 59 to reflect new sub-accounts Formula on row 30 changed for Gross Plant to include USoA 1985 Sentinel Light Assets Secondary Costs PLCC Adjustment (Output Sheet 2.3) Titles of USoA accounts in rows 11, 12, 13, 14, 41, 42, 43, 44, 47, 48, 49 and 50 changed to Secondary 5, instead of -4.

12 Filed: December 18, 2007 Exhibit G2 Tab 1 Schedule 1 Page 12 of Formula on row 28 changed for Gross Plant to include USoA 1985 Sentinel Light Assets. 3 4 Line Transformer Unit Costs (Output Sheet 3.1) 5 6 Adjusted formulas in rows 11, 44, and 45 to reflect new sub-accounts. 7 8 Formula on row 31 changed for Gross Plant to include USoA 1985 Sentinel Light Assets Substation Transformation Unit Costs (Output Sheet 3.2) Formula on row 36 changed for Gross Plant to include USoA 1985 Sentinel Light Assets Primary Cost Pools (Output Sheet 3.3) Adjusted formulas in rows 11, 12, 37, 38, 43, 44, 52, and 53 to reflect new sub-accounts Formula on row 24 changed for Gross Plant to include USoA 1985 Sentinel Light Assets Secondary Cost Pools (Output Sheet 3.4) Titles of USoA accounts in rows 11, 12, 13, 14, 37, 38, 39, 40, 43, 44, 45, and 46 changed to Secondary 5, instead of Formula on row 24 changed for Gross Plant to include USoA 1985 Sentinel Light Assets Formulas on rows 52 and 53 adjusted to reflect new sub-accounts. 28

13 Filed: December 18, 2007 Exhibit G2 Tab 1 Schedule 1 Page 13 of 20 1 USL Metering Credit (Output Sheet 3.5) 2 3 Formulas on rows 11, 41, and 42 adjusted to reflect new sub-accounts. 4 5 Formula on row 28 changed for Gross Plant to include USoA 1985 Sentinel Light Assets. 6 7 Summary By Class and Accounts (Output Sheet 4) New rows added to reflect new Sub-accounts: , 2, 3, 4, 5, A and 3B, 4A and 4B, A and 3B, 4A and 4B, and 2, , 2, 3, and 4, and 1985 Sentinel Lights Details By Class and Accounts (Output Sheet 5) New rows added to reflect new Sub-accounts: , 2, 3, 4, 5, A and 3B, 4A and 4B, A and 3B, 4A and 4B, and 2, , 2, 3, and 4, and 1985 Sentinel Lights Trial Balance Totals in column E of Main Accounts are zero to avoid double counting with new sub-accounts Source Data for E2, (Output Sheet 6) New rows added to reflect new Sub-accounts: , 2, 3, 4, 5, A and 3B, 4A and 4B, A and 3B, 4A and 4B, and 2, , 2, 3, and 4, and 1985 Sentinel Lights Main account formulas adjusted to reflect the sum of sub-accounts.

14 Filed: December 18, 2007 Exhibit G2 Tab 1 Schedule 1 Page 14 of Amortization (Output Sheet 7) New rows added to reflect new Sub-accounts: , 2, 3, 4, 5, A and 3B, 4A and 4B, A and 3B, 4A and 4B, and 2, , 2, 3, and 4, and 1985 Sentinel Lights. 7 8 Main account formulas adjusted to reflect the sum of sub-accounts USoA 1985 directly allocated to Sentinel Lights Categorization (Exhibit Sheet 1) New rows added to reflect new Sub-accounts: , 2, 3, 4, 5, A and 3B, 4A and 4B, A and 3B, 4A and 4B, and 2, , 2, 3, and 4, and 1985 Sentinel Lights. Based on an updated Minimum System done for Hydro One, the Categorization factors for Fixtures, Conductors and Rural Transformers have been updated from the Rural default of 60% to 47.8%, 54.8% and 61.9%, respectively This was accommodated in the model by using the above on the following USoA Asset accounts and sub-accounts: 1830 Overhead Fixtures 47.8% 1835 Conductors 54.8% 1840/45 Underground 54.8% 1850 Transformers 61.9% 28

15 Filed: December 18, 2007 Exhibit G2 Tab 1 Schedule 1 Page 15 of Further, the associated O&M accounts were also adjusted to track the Asset Accounts. For example: USoA 5035, 5055 and 5160 for Rural Transformers was set at 61.9% USoA 5120 for Fixtures Maintenance was set at 47.8% Conductor Related USoA set to 54.8%. 6

16 Filed: December 18, 2007 Exhibit G2 Tab 1 Schedule 1 Page 16 of 20 1 Allocators (Exhibit Sheet 2) 2 3 New Allocators applicable to Hydro One added after row Allocator ID Basis Mtr-Single CWMC-1 Number of single-phase meters by class Mtr-Poly CWMC-2 Number of poly-phase meters by class Mtr-LV CWMC-3 Number of LV meters by class Mtr-Smart CWMC-4 Number of smart meters by class 1805/1806/1808/1810-2: <50 kv Assets BCP(1-4-12)AA Bulk CP with est of RCD of ST BCP (1-4-12) B High Voltage DS Rural Only D High Voltage DS Low Specific - LV Only D High Voltage DS High Specific - LV Only D High Voltage DS Low LV - LV Only D High Voltage DS High LV - LV Only PNCP(1-4-12)AA NCP with estimate for RCD of ST Cen2 Class Energy less Market Participants A A Bulk Fixtures LV B BCP(1-4-12) DlinesB Bulk Fixtures Retail (Density Weights) A AC AD Primary Fixtures LV Customer Related Primary Fixtures LV Demand Related B PNCP(1-4-12) DlinesB CCP-DLinesC Primary Fixtures Retail (Density Wts) Retail customers with Density Wts A A Bulk Lines LV

17 Filed: December 18, 2007 Exhibit G2 Tab 1 Schedule 1 Page 17 of 20 Allocator ID Basis B BCP(1-4-12)-DlinesB Bulk Lines Retail (Density Weights) A B AC AD PNCP(1-4-12)-DlinesB CCP-DLinesC & PNCP(1-4-12)C CCP-C & SNCP(1-4-1)C CCS-C D C LTNCP(1-4-12)RtransfB CCLT-RtransfB Primary Lines LV Customer Related Primary Lines LV Demand Related Primary Lines Retail (Density Weights) Retail Customers Density Weighted Excludes ST/LV Excludes ST/LV Excludes ST/LV Excludes ST/LV 100% to ST/LV class 100% to ST/LV class Rural Transformers Retail Demand Related (Density Weights) Rural Transformers Retail Customer Related (Density Weights) PLCC (Exhibit Sheet 3) Hydro One has updated the 400 W PLCC default with new values based on Updated Minimum System study : 544 W for Conductors and 3100 W for Rural Transformers The PLCC-Customer Watts calculated in rows 24 to 28 were updated to replace 400 W: PLCC-CCA 544W x number of customers PLCC-CCB 544W x number of customers on bulk PLCC-CCP 544W x number of customers on primary PLCC-CCLT 3100W x number of customers with Rural Transformation PLCC-CCS 544W x number of customers on secondary

18 Filed: December 18, 2007 Exhibit G2 Tab 1 Schedule 1 Page 18 of Trial Balance Allocation Details (Exhibit Sheet 4) New rows added to reflect new Sub-accounts: , 2, 3, 4, 5, A and 3B, 4A and 4B, A and 3B, 4A and 4B, and 2, , 2, 3, and 4, and 1985 Sentinel Lights. 7 8 Hydro One specific allocators were chosen and derived in E2: Allocators Reconciliation (Exhibit Sheet 5) New rows added to reflect new Sub-accounts: , 2, 3, 4, 5, A and 3B, 4A and 4B, A and 3B, 4A and 4B, and 2, , 2, 3, and 4, and 1985 Sentinel Lights. 15

19 Filed: December 18, 2007 Exhibit G2 Tab 1 Schedule 1 Page 19 of 20 1 Cost Allocation Results The results of the cost allocation methodology are presented below. Revenues collected from each customer class, Revenue Requirement by customer class, revenue cost ratios and the amount of miscellaneous revenues credited to each customer class is shown. The OEB Cost Allocation Methodology also determines the fixed charges based on three methods: a) Avoided costs, b) Directly Related customer costs and c) Minimum System with PLCC Adjustment. The table below shows the results of methods a and c. Finally, the credit applicable to USL connections is shown. 10 Existing Rev [$M] Rev- Cost Misc Rev Fixed Charge Method a Fixed Charge Method c Alloc Cost Rev Req [$M] Ratio [$M] Avoid Cost Min System USL Credit UR $ 8.47 $ R $ 8.56 $ R $ 9.41 $ Seasonal $ 6.34 $ GSe $ $ $ 6.86 GSd $ $ UGe $ $ UGd $ $ St Lgt $ 5.01 $ Sen Lgt $ 2.36 $ Dgen $ $ ST $ $ , ,

20 Updated: February 20, 2008 Exhibit G2 Tab 1 Schedule 1 Page 20 of In designing the proposed ST rates, the following information was calculated in the Cost Allocation Study. 3 Amounts ($) Fixed Revenue Requirement 8,381,668 Variable Revenue Requirement 18,968,378 Total ST Revenue Requirement 27,350, Minimum System Study Hydro One retained Black and Veatch in 2007 to update the Minimum System Study used in the Cost Allocation Methodology. The Minimum System Study was first developed in the mid 1980 s by Ontario Hydro. The results of the original Ontario Hydro study and the current Black and Veatch study are presented in the Table below Minimum System Study % of Fixed Costs 13 % Fixed 1980 s 2007 Overhead Lines Underground Lines 61 Included in Overhead Lines Transformers Poles Towers and Fixtures N/A The Minimum System Study update from Black and Veatch also updated the value of the Peak Load Carrying Capabilities (PLCC) and the new value for Conductors is 544 Watts and for Transformers is 3,100 Watts. These new values have been used in the Cost Allocation Study. The Black and Veatch report is included as Attachment B.

21 Ontario Energy Board 2008 COST ALLOCATION MODEL Sheet I1 Utility Information Sheet I1 Intro Filed: February 28, 2008 Pages 1 of 134 Hydro One Networks - Distribution 2008 Distribution Rate Filing Introduction Sheet Name of LDC Hydro One Networks - Distribution Contact Information Name Title Phone Mike Roger Manager - Distribution Rates Mike.Roger@hydroone.com This Iteration Hydro One Distribution: 12 Rate Classes Colour Coding Input Output Exhibition Brought Forward Calculation Default Numbers Diagnostic Brought Forward Calculation INPUTS I1 Intro Brief explanation of what the pages do. I2 LDC data and Classes Enter LDC specific information and number of classes etc I3 TB Data Balance from approved 2006 EDR Trial Balance I4 BO ASSETS Break out assets into detail functions - bulk deliver, primary and secondary I5 Misc Data Input for miscellaneous data where necessary - TBD I6 Customer Data Input customer related data for generating customer allocators I7.1 Meter Capital Input meter related data for calculating capital costs weighing factors I7.2 Meter Reading Input meter related data for calculating meter reading weighing factors I8 Demand Data Input demand allocators using load data and making LDC specific adjustments I9 Direct Allocation OUTPUTS O1 Revenue to cost Output showing revenue to cost ratios, inter class subsidy etc. O2 Fixed Charge Output showing the range for the Basic Customer charge - TBD O3.1 Line Tran Unit Cost Output showing the line transformation unit cost O3.2 Substat Tran Unit Cost Output showing the substation transformation unit cost O3.3 Primary Cost Pool Output showing the primary pool unit cost O3.4 Secondary Cost Pool Output showing the secondary pool unit cost O3.5 USL Metering Credit Output showing the unit cost for meters O4 Summary by Class Output showing summary of all allocation by class and by US of A O5 Detail by Class Output showing details of individual allocation by class and by US of A O6 Source Data for E2 Output showing the source allocation data for E2 O7 Amortization Output showing the details for amortization and capital contribution EXHIBITS E1 Trial Balance Index Exhibit showing 1. how accounts are grouped for reporting, how accounts are categorized and how accounts are allocated E2 Categorization Exhibit showing how costs are categorized E3 PLCC Backup documentation for calculating Peak Load Carrying Capability. E4 Allocation Factors Exhibit summarizing all allocation factors created in I5 to I8 and present the findings in percentages E5 Reconciliation Exhibit showing reconciliation of accounts included and excluded from the allocation study to TB balance

22 Return to I1 Intro I2 LDC class Filed: February 28, 2008 Pages 2 of 134 Hydro One Networks - Distribution 2008 Distribution Rate Filing Input Sheet for Selection of Classes, Demand Allocators and Specific Allocators Hydro One Distribution: 12 Rate Classes Instructions Step 1 - Please input your existing classes Step 2 - If this is your first run, select "First Run" in the drop down menu below Step 3 - After all classes have been entered, Click the "Update" in cell E41. If this is your first run, select "First Run" and click on the "Update" button. Note: You must always do a first run with current selected. First Run Utility's Class Definition Current 1 Residential UR YES 2 GS <50 R1 YES 3 GS>50-Regular R2 YES 4 GS> 50-TOU Seasonal YES 5 GS >50-Intermediate GSe YES 6 Large Use >5MW GSd YES 7 Street Light St Lgt YES 8 Sentinel Sen Lgt YES 9 Unmetered Scattered Load NO 10 Embedded Distributor NO 11 Back-up/Standby Power NO 12 Rate Class 1 Dgen YES 13 Rate class 2 ST YES 14 Rate class 3 UGe YES 15 Rate class 4 UGd YES 16 Rate class 5 NO 17 Rate class 6 NO 18 Rate class 7 NO 19 Rate class 8 NO 20 Rate class 9 NO After you have set all rate classes Update

23 Return to I1 Intro Hydro One2008 Distribution Rate Filing Input Sheet for Trial Balance Figures Instructions 1 Enter 2007 values Enter amounts you need to reclassify to 2 column E Hydro One Distribution: 12 Rate Classes I3 TB Data Filed: February 28, 2008 Pages 3 of 134 Enter Net Income component of Return on Capital from Exhibit E Approved Target Net Inocme ($) $151,400,000 Enter Taxes from Exhibit E Approved PILs ($) $50,100,000 5 Enter Interest component of Return on Capital from Exhibit E1-1-1 Approved Interest ($) $148,500,000 6 Enter External Revenues from EB Approved Specific Service Charges ($) $27,800,000 Enter Transformation Ownership Allowance 7 Credit Approved Transformer Ownership Allowance ($) Approved Low Voltage Wheeling Enter Low Voltage Wheeling Adjustment 8 Adjustment ($) Enter Revenue Requirment from EB Exhibit E1-1-1 Approved Revenue Requirement ($) $1,066,575,593 From this Sheet Revenue Requirement to be Used in this model ($) Enter Total Rate Base from EB Exhibit D2-1-1 Approved Rate Base ($) $ 4,382,000,000 Rate Base to be Used in this model ($) $1,066,575,593 $1,066,575,593 $4,382,000,000 $4,382,000,061 Rev Req Matches Rate Base Matches Uniform System of Accounts - Detail Accounts: USoA Account Accounts # Financial Statement 1005 Cash Cash Advances and Working Funds Interest Special Deposits Dividend Special Deposits Other Special Deposits Term Deposits Current Investments Customer Accounts Receivable - Model Adjustments Reclassify accounts Direct Allocation Reclassified Balance $ $ $ $ $ $ $ $

24 USoA Account Accounts # Financial Statement 1102 Accounts Receivable - Services Accounts Receivable - Recoverable Work Accounts Receivable - Merchandise, Jobbing, etc Other Accounts Receivable Accrued Utility Revenues Accumulated Provision for Uncollectible Accounts--Credit Interest and Dividends Receivable Rents Receivable Notes Receivable Prepayments I3 TB Data Filed: February 28, 2008 Model Adjustments Reclassify accounts Direct Allocation Reclassified Balance $ $ $ $ $ $ $ $ $ $ Miscellaneous Current and Accrued Assets $ Accounts Receivable from Associated Companies $ Notes Receivable from Associated Companies $ Fuel Stock $ Plant Materials and Operating Supplies $ 23,300,000 $23,300, Merchandise $ Other Materials and Supplies $ Long Term Investments in Non-Associated Companies $ Long Term Receivable - Street Lighting Transfer $ Other Special or Collateral Funds $ Sinking Funds $ Unamortized Debt Expense $ Unamortized Discount on Long-Term Debt-- Debit $ Unamortized Deferred Foreign Currency Translation Gains and Losses $ Other Non-Current Assets $ O.M.E.R.S. Past Service Costs $ Past Service Costs - Employee Future Benefits $ Past Service Costs - Other Pension Plans $ Portfolio Investments - Associated Companies $ Investment in Associated Companies - Significant Influence $ Investment in Subsidiary Companies $ Unrecovered Plant and Regulatory Study Costs $ Other Regulatory Assets $ - Pages 4 of 134

25 USoA Account # 1510 Accounts Financial Statement I3 TB Data Filed: February 28, 2008 Model Adjustments Reclassify accounts Direct Allocation Reclassified Balance Preliminary Survey and Investigation Charges $ Emission Allowance Inventory $ Emission Allowances Withheld $ RCVARetail $ Power Purchase Variance Account $ Miscellaneous Deferred Debits $ Deferred Losses from Disposition of Utility Plant $ Unamortized Loss on Reacquired Debt $ Development Charge Deposits/ Receivables $ RCVASTR $ Deferred Development Costs $ Deferred Payments in Lieu of Taxes $ Account Deferred PILs Contra Account $ Conservation and Demand Management Expenditures and Recoveries $ 6,400,000 $6,400, Qualifying Transition Costs $ Pre-market Opening Energy Variance $ Extraordinary Event Costs $ Deferred Rate Impact Amounts $ RSVAWMS $ RSVAONE-TIME $ RSVANW $ RSVACN $ RSVAPOWER $ Recovery of Regulatory Asset Balances $ Electric Plant in Service - Control Account $ Organization $ Franchises and Consents $ Miscellaneous Intangible Plant $ Land $ - $ Land Rights $ - $ Buildings and Fixtures $ - $ Leasehold Improvements $ - $ Boiler Plant Equipment $ - $ Engines and Engine-Driven Generators $ - $ Turbogenerator Units $ - $ Reservoirs, Dams and Waterways $ - $ Water Wheels, Turbines and Generators $ - $ Roads, Railroads and Bridges $ - $ Fuel Holders, Producers and Accessories $ - $ Prime Movers $ - $ Generators $ - $ - Pages 5 of 134

26 USoA Account Accounts # Financial Statement 1680 Accessory Electric Equipment Miscellaneous Power Plant Equipment Land Land Rights Buildings and Fixtures Leasehold Improvements Station Equipment Towers and Fixtures Poles and Fixtures Overhead Conductors and Devices Underground Conduit Underground Conductors and Devices Roads and Trails Land 61,219, Land Rights 239,478, Buildings and Fixtures 5,437, Leasehold Improvements - I3 TB Data Filed: February 28, 2008 Model Adjustments Reclassify accounts Direct Allocation Reclassified Balance $ $ - $ $ $ $ $ $ $ $ $ $ $ $ $ $61,219,197 $ $239,478,047 $ $5,437,793 $ 1815 Transformer Station Equipment - Normally Primary above 50 kv $ 108,889,874 ($1,037,400) $107,852, Distribution Station Equipment - Normally Primary below 50 kv $ 326,199,765 $1,037,400 $327,237, Storage Battery Equipment $ Poles, Towers and Fixtures $ 1,931,765,752 $1,931,765, Overhead Conductors and Devices $ 1,291,841,808 $ - $1,291,841, Underground Conduit $ 23,984,390 $23,984, Underground Conductors and Devices $ 679,439,007 $679,439, Line Transformers $ 1,283,933,745 $1,283,933, Services $ Meters $ 172,889,855 $172,889, Other Installations on Customer's Premises $ Leased Property on Customer Premises $ Street Lighting and Signal Systems $ Land $ 3,283,798 $3,283, Land Rights $ Buildings and Fixtures $ 94,901,052 $94,901, Leasehold Improvements $ 4,620,582 $4,620, Office Furniture and Equipment $ 2,536,853 $2,536, Computer Equipment - Hardware $ 55,593,665 $55,593, Computer Software $ 205,570,861 $205,570, Transportation Equipment $ 199,220,074 $199,220, Stores Equipment $ 6,587,180 $6,587, Tools, Shop and Garage Equipment $ 2,282,022 $2,282, Measurement and Testing Equipment $ 3,066,387 $3,066, Power Operated Equipment $ 85,055,133 $85,055, Communication Equipment $ 28,160,887 $28,160, Miscellaneous Equipment $ 2,998,695 $2,998,695 Pages 6 of 134

27 USoA Account # Accounts I3 TB Data Filed: February 28, 2008 Model Adjustments Reclassify accounts Direct Allocation Reclassified Balance Financial Statement 1965 Water Heater Rental Units $ Load Management Controls - Customer Premises $ Load Management Controls - Utility Premises $ System Supervisory Equipment $ 21,869,131 $21,869, Sentinel Lighting Rental Units $ 16,327,748 $16,327, Other Tangible Property $ 5,274,886 $5,274, Contributions and Grants - Credit -$ 418,704,641 ($418,704,641) 2005 Property Under Capital Leases $ Electric Plant Purchased or Sold $ Experimental Electric Plant Unclassified $ Electric Plant and Equipment Leased to Others $ Electric Plant Held for Future Use $ Completed Construction Not Classified--Electric $ Construction Work in Progress--Electric $ Electric Plant Acquisition Adjustment $ Other Electric Plant Adjustment $ Other Utility Plant $ Non-Utility Property Owned or Under Capital Leases $ Accum. Amortization of Electric Utility Plant - Property, Plant, & Equipment -$ 2,364,639,589 ($2,364,639,589) 2120 Accumulated Amortization of Electric Utility Plant - Intangibles $ Accumulated Amortization of Electric Plant Acquisition Adjustment $ Accumulated Amortization of Other Utility Plant $ Accumulated Amortization of Non-Utility Property $ Accounts Payable $ Customer Credit Balances $ Current Portion of Customer Deposits $ Dividends Declared $ Miscellaneous Current and Accrued Liabilities $ Notes and Loans Payable $ Accounts Payable to Associated Companies $ Notes Payable to Associated Companies $ Debt Retirement Charges( DRC) Payable $ Transmission Charges Payable $ Electrical Safety Authority Fees Payable $ - Pages 7 of 134

28 USoA Account Accounts # Financial Statement 2256 Independent Market Operator Fees and Penalties Payable Current Portion of Long Term Debt Ontario Hydro Debt - Current Portion Pensions and Employee Benefits - Current Portion Accrued Interest on Long Term Debt Matured Long Term Debt Matured Interest on Long Term Debt Obligations Under Capital Leases--Current Commodity Taxes Payroll Deductions / Expenses Payable Accrual for Taxes, Payments in Lieu of Taxes, Etc Future Income Taxes - Current Accumulated Provision for Injuries and Damages Employee Future Benefits Other Pensions - Past Service Liability Vested Sick Leave Liability Accumulated Provision for Rate Refunds Other Miscellaneous Non-Current Liabilities Obligations Under Capital Lease--Non-Current Development Charge Fund Long Term Customer Deposits Collateral Funds Liability Unamortized Premium on Long Term Debt O.M.E.R.S. - Past Service Liability - Long Term Portion Future Income Tax - Non-Current Other Regulatory Liabilities Deferred Gains from Disposition of Utility Plant Unamortized Gain on Reacquired Debt Other Deferred Credits Accrued Rate-Payer Benefit Debentures Outstanding - Long Term Portion Debenture Advances Reacquired Bonds Other Long Term Debt Term Bank Loans - Long Term Portion Ontario Hydro Debt Outstanding - Long Term Portion Advances from Associated Companies - I3 TB Data Filed: February 28, 2008 Model Adjustments Reclassify accounts Direct Allocation Reclassified Balance $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ Pages 8 of 134

29 USoA Account Accounts # Financial Statement 3005 Common Shares Issued Preference Shares Issued Contributed Surplus Donations Received Development Charges Transferred to Equity Capital Stock Held in Treasury Miscellaneous Paid-In Capital Installments Received on Capital Stock Appropriated Retained Earnings Unappropriated Retained Earnings Balance Transferred From Income 151,400, Appropriations of Retained Earnings - Current Period Dividends Payable-Preference Shares Dividends Payable-Common Shares Adjustment to Retained Earnings Unappropriated Undistributed Subsidiary Earnings Residential Energy Sales Commercial Energy Sales Industrial Energy Sales Energy Sales to Large Users Street Lighting Energy Sales Sentinel Lighting Energy Sales General Energy Sales Other Energy Sales to Public Authorities Energy Sales to Railroads and Railways Revenue Adjustment Energy Sales for Resale Interdepartmental Energy Sales Billed WMS Billed-One-Time Billed NW Billed CN Distribution Services Revenue Retail Services Revenues Service Transaction Requests (STR) Revenues Electric Services Incidental to Energy Sales Transmission Charges Revenue Transmission Services Revenue Interdepartmental Rents Rent from Electric Property Other Utility Operating Income Other Electric Revenues - I3 TB Data Filed: February 28, 2008 Model Adjustments Reclassify accounts Direct Allocation Reclassified Balance $ $ $ $ $ $ $ $ $ $ $ ($151,400,000) ($151,400,000) $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $1,024,275,593 ($1,024,275,593) $ $ $ $ $ $ $ $ $ Pages 9 of 134

30 USoA Account Accounts # Financial Statement 4225 Late Payment Charges 14,500, Sales of Water and Water Power Miscellaneous Service Revenues Provision for Rate Refunds Government Assistance Directly Credited to Income Regulatory Debits Regulatory Credits I3 TB Data Filed: February 28, 2008 Model Adjustments Reclassify accounts Direct Allocation Reclassified Balance -$ ($14,500,000) $ $ ($27,800,000) $ $ $ $ Revenues from Electric Plant Leased to Others $ Expenses of Electric Plant Leased to Others $ Revenues from Merchandise, Jobbing, Etc. $ Costs and Expenses of Merchandising, Jobbing, Etc. $ Profits and Losses from Financial Instrument Hedges $ Profits and Losses from Financial Instrument Investments $ Gains from Disposition of Future Use Utility Plant $ Losses from Disposition of Future Use Utility Plant $ Gain on Disposition of Utility and Other Property $ Loss on Disposition of Utility and Other Property $ Gains from Disposition of Allowances for Emission $ Losses from Disposition of Allowances for Emission $ Revenues from Non-Utility Operations $ Expenses of Non-Utility Operations $ 5,850,000 -$ 5,850, Non-Utility Rental Income $ Miscellaneous Non-Operating Income $ Rate-Payer Benefit Including Interest $ Foreign Exchange Gains and Losses, Including Amortization $ Interest and Dividend Income $ Equity in Earnings of Subsidiary Companies $ Operation Supervision and Engineering $ Fuel $ Steam Expense $ Steam From Other Sources $ Steam Transferred--Credit $ Electric Expense $ - Pages 10 of 134

31 USoA Account Accounts # Financial Statement 4535 Water For Power Water Power Taxes Hydraulic Expenses Generation Expense Miscellaneous Power Generation Expenses Rents Allowances for Emissions Maintenance Supervision and Engineering Maintenance of Structures Maintenance of Boiler Plant Maintenance of Electric Plant Maintenance of Reservoirs, Dams and I3 TB Data Filed: February 28, 2008 Model Adjustments Reclassify accounts Direct Allocation Reclassified Balance $ $ $ $ $ $ $ $ $ $ $ Waterways $ Maintenance of Water Wheels, Turbines and Generators $ Maintenance of Generating and Electric Plant $ Maintenance of Miscellaneous Power Generation Plant $ Power Purchased $ 1,959,300,000 $1,959,300, Charges-WMS $ Cost of Power Adjustments $ Charges-One-Time $ Charges-NW $ System Control and Load Dispatching $ Charges-CN $ Other Expenses $ Competition Transition Expense $ Rural Rate Assistance Expense $ Operation Supervision and Engineering $ Load Dispatching $ Station Buildings and Fixtures Expenses $ Transformer Station Equipment - Operating Labour $ Transformer Station Equipment - Operating Supplies and Expense $ Overhead Line Expenses $ Underground Line Expenses $ Transmission of Electricity by Others $ Miscellaneous Transmission Expense $ Rents $ Maintenance Supervision and Engineering $ Maintenance of Transformer Station Buildings and Fixtures $ - Pages 11 of 134

32 USoA Account # 4916 Accounts Financial Statement I3 TB Data Filed: February 28, 2008 Model Adjustments Reclassify accounts Direct Allocation Reclassified Balance Maintenance of Transformer Station Equipment $ Maintenance of Towers, Poles and Fixtures $ Maintenance of Overhead Conductors and Devices $ Maintenance of Overhead Lines - Right of Way $ Maintenance of Overhead Lines - Roads and Trails Repairs $ Maintenance of Overhead Lines - Snow Removal from Roads and Trails $ Maintenance of Underground Lines $ Maintenance of Miscellaneous Transmission Plant $ Operation Supervision and Engineering $ 2,234,150 $2,234, Load Dispatching $ 849,600 $849, Station Buildings and Fixtures Expense $ 396,000 $396, Transformer Station Equipment - Operation Labour $ 590,000 $590, Transformer Station Equipment - Operation Supplies and Expenses $ 290,000 $290, Distribution Station Equipment - Operation Labour $ 6,620,000 $6,620, Distribution Station Equipment - Operation Supplies and Expenses $ 2,500,000 $2,500, Overhead Distribution Lines and Feeders - Operation Labour $ 6,030,870 $6,030, Overhead Distribution Lines & Feeders - Operation Supplies and Expenses $ 987,630 $987, Overhead Subtransmission Feeders - Operation $ 564,400 $564, Overhead Distribution Transformers- Operation $ Underground Distribution Lines and Feeders - Operation Labour $ Underground Distribution Lines & Feeders - Operation Supplies & Expenses $ Underground Subtransmission Feeders - Operation $ Underground Distribution Transformers - Operation $ Street Lighting and Signal System Expense $ Meter Expense $ 12,700,400 $4,543,350 $8,157, Customer Premises - Operation Labour $ 15,338,600 $15,338,600 Pages 12 of 134

33 USoA Account # 5075 Accounts Financial Statement I3 TB Data Filed: February 28, 2008 Model Adjustments Reclassify accounts Direct Allocation Reclassified Balance Customer Premises - Materials and Expenses $ 2,325,800 $2,325, Miscellaneous Distribution Expense $ 11,169,190 $11,169, Underground Distribution Lines and Feeders - Rental Paid $ Overhead Distribution Lines and Feeders - Rental Paid $ 162,160 $162, Other Rent $ Maintenance Supervision and Engineering $ 11,257,600 $11,257, Maintenance of Buildings and Fixtures - Distribution Stations $ Maintenance of Transformer Station Equipment $ 1,097,800 $797,700 $1,895, Maintenance of Distribution Station Equipment $ 11,160,000 $7,179,300 $18,339, Maintenance of Poles, Towers and Fixtures $ 20,408,580 $20,408, Maintenance of Overhead Conductors and Devices $ 51,236,400 $51,236, Maintenance of Overhead Services $ Overhead Distribution Lines and Feeders - Right of Way $ 115,890,000 $5,265,000 $121,155, Maintenance of Underground Conduit $ 265,540 $265, Maintenance of Underground Conductors and Devices $ 1,130,000 $1,130, Maintenance of Underground Services $ Maintenance of Line Transformers $ 3,196,880 $3,196, Maintenance of Street Lighting and Signal Systems $ Sentinel Lights - Labour $ 1,187,120 -$ 1,187, Sentinel Lights - Materials and Expenses $ 296,780 -$ 296, Maintenance of Meters $ 1,846,200 $1,846, Customer Installations Expenses- Leased Property $ Water Heater Rentals - Labour $ Water Heater Rentals - Materials and Expenses $ Water Heater Controls - Labour $ Water Heater Controls - Materials and Expenses $ Maintenance of Other Installations on Customer Premises $ Purchase of Transmission and System Services $ Transmission Charges $ Transmission Charges Recovered $ - Pages 13 of 134

34 USoA Account Accounts # Financial Statement 5305 Supervision Meter Reading Expense 23,513, Customer Billing 35,828, Collecting 8,626, Collecting- Cash Over and Short Collection Charges 869, Bad Debt Expense 17,396, Miscellaneous Customer Accounts Expenses 4,763, Supervision Community Relations - Sundry 673, Energy Conservation 1,000, Community Safety Program 279, Miscellaneous Customer Service and Informational Expenses 10, Supervision Demonstrating and Selling Expense Advertising Expense Miscellaneous Sales Expense Executive Salaries and Expenses 5,793, Management Salaries and Expenses 21,658, General Administrative Salaries and Expenses 32,392, Office Supplies and Expenses Administrative Expense Transferred Credit 49,300, Outside Services Employed 6,559, Property Insurance 2,715, Injuries and Damages 1,694, Employee Pensions and Benefits Franchise Requirements Regulatory Expenses 4,993, General Advertising Expenses Miscellaneous General Expenses 129, Rent 7,740, Maintenance of General Plant 58,502, Electrical Safety Authority Fees Independent Market Operator Fees and I3 TB Data Filed: February 28, 2008 Model Adjustments Reclassify accounts Direct Allocation Reclassified Balance $ $ $23,513,850 $ $35,828,600 $ $8,626,330 $ $ $869,820 $ $17,396,400 $ $4,763,820 $ $ $673,080 $ $1,000,000 $ $585,000 $864,318 $ $10,200 $ $ $ $ $ $5,793,895 $ $59,000 $21,599,559 $ $598,000 $31,794,404 $ -$ ($49,300,954) $ $11,000 $6,548,043 $ $2,715,447 $ $1,694,082 $ $23,592,000 $23,592,000 $ $ $4,993,529 $ -$ $ 1,483,900 $ 1,767,900 ($413,370) $ $7,740,487 $ $190,000 $58,312,009 $ Penalties $ Amortization Expense - Property, Plant, and Equipment $ 207,380,346 $207,380, Amortization of Limited Term Electric Plant $ Amortization of Intangibles and Other Electric Plant $ 31,569,000 -$ 31,569, Amortization of Electric Plant Acquisition Adjustments $ Miscellaneous Amortization $ - Pages 14 of 134