Acting Commission Secretary and Manager Regulatory …

British Columbia Hydro and Power Authority, 333 Dunsmuir Street, Vancouver BC V6B 5R3 www.bchydro.com

Fred James Chief Regulatory Officer Phone: 604-623-4046 Fax: 604-623-4407 [email protected]

November 16, 2020 Ms. Marija Tresoglavic Acting Commission Secretary and Manager Regulatory Support British Columbia Utilities Commission Suite 410, 900 Howe Street Vancouver, BC V6Z 2N3 Dear Ms. Tresoglavic: RE: British Columbia Utilities Commission (BCUC or Commission)

British Columbia Hydro and Power Authority (BC Hydro) Canadian Forest Products Ltd. – Chetwynd Division (Canfor or Customer) Tariff Supplement No. 100 (Transition Tariff Agreement)

BC Hydro writes pursuant to sections 58 to 61 of the Utilities Commission Act for approval of a tariff supplement, referred to in this application as the Transition Tariff Agreement, between BC Hydro and Canfor for service to its facilities located at the Chetwynd sawmill division (Customer’s Plant).

This application includes the following:

1. A draft order as Attachment 1;

2. The Transition Tariff Agreement as Attachment 2;

3. Tariff Supplement No. 53 as Attachment 3;

4. BCUC Order No. G-174-20 – Extension of Tariff Supplement No. 53 - as Attachment 4;

5. Canfor’s Letter of Support as Attachment 5; and

6. Rider Charge Calculation Summary Sheet as Attachment 6

(together the “Application”).

For clarity, capitalized terms that are not otherwise defined in this letter shall have the same meaning as defined in the Transition Tariff Agreement.

This application contains a detailed schematic of BC Hydro’s substation facility as well as specific information relating to the Electricity use of the Customer. For safety and security reasons, BC Hydro does not publicly disclose detailed technical information on its facilities. To preserve Customer confidentiality, and protect commercially sensitive information, BC Hydro does not publicly disclose information about an individual

mailto:[email protected]

November 16, 2020 Ms. Marija Tresoglavic Acting Commission Secretary and Manager Regulatory Support British Columbia Utilities Commission Tariff Supplement No. 100 (Transition Tariff Agreement) of 7

customer’s Electricity use. BC Hydro requests that the Commission keep this information confidential pursuant to Section 42 of the Administrative Tribunals Act and Part 4 of the Commission’s Rules of Practice and Procedure. BC Hydro separately submits both a confidential as well as a public version of the Application with the above confidential information redacted.

Background

Canfor is currently a BC Hydro distribution voltage customer served from BC Hydro’s 138/25 kV Chetwynd substation (CWD) using feeder 25F61. Prior to the BCUC’s approval of a bypass rate, Canfor was being served under Rate Schedule (RS) 1211.

Since 1995, Canfor investigated the possibility of installing a 138 kV substation, however the feasibility was marginal. In 1999, when the added load and projected Electricity consumption increased by 20 per cent, the feasibility of installing a 138 kV substation became more attractive and economically viable. In December 1999, Canfor submitted a detailed report to BC Hydro outlining its bypass facilities in support of a bypass rate. Canfor argued that the bypass rate would be beneficial to other ratepayers as opposed to constructing its own transmission line and a 138 kV substation.

Canfor provided an after-tax financial model outlining its cost of bypass, which included the cost of constructing the substation and related transmission line, operating and maintenance costs, depreciation, and cost of capital expenses. In accordance with the BCUC Bypass Rate Guidelines Decision issued on September 3, 1999 under Commission Order No. G-88-99 (the Guidelines), BC Hydro calculated its incremental cost of service, which included costs of foreseeable system reinforcement with and without Canfor’s proposed bypass facilities. BC Hydro determined that its incremental cost of service was less than Canfor’s cost of bypass and as a result a bypass rate was established.

In April 2000, BC Hydro filed an application with the BCUC in support of Canfor’s bypass rate and requested approval of a “Special Electric Service Agreement” whereby Canfor would take service pursuant to RS 1821 in accordance with the Guidelines. The BCUC approved the Special Electric Service Agreement as Tariff Supplement No. 53 (TS 53 or Initial Tariff Agreement) on May 16, 2000 for a period of 20 years effective August 1, 2000 under Commission Order No. G-51-00 (see Attachment 3).

When establishing a bypass agreement in accordance with Appendix A of the Guidelines, a customer pays an amount equal to the customer’s cost of bypass in addition to a rate schedule. This form of payment should be a rider charge added to the rate schedule over a period equal to the expected life of the bypass facilities, anticipated to be approximately 20 years. The bypass agreement may or may not include early termination or renewal clauses. Although the Guidelines contemplate the possibility of a renewal of bypass agreements, there is minimal guidance in the Guidelines that inform how such renewals should be assessed. The Guidelines do, however, indicate in part,


that in contemplation of a renewal “the floor price is the Utility’s incremental cost of service, and ensures the protection of other customers”.1 BC Hydro has considered its incremental cost of service associated with related distribution assets that are used to feed the Customer’s Plant to recover its incremental cost of service in addition to Transmission Service rates. BC Hydro has used the same methodology and modelling framework for determining BC Hydro’s incremental cost of service that was used in Tariff Supplement No. 95 (TS 95) with the Department of National Defense – Esquimalt, which was approved under Commission Order No. G-304-19.

Initial Tariff Agreement

TS 53 is considered a bypass rate agreement, established in accordance with the Guidelines and contains the following key elements:

(i) Electricity supplied is billed in accordance with the default RS 1821 (now RS 1823), as amended from time to time, plus a rider charge. The rider charge represents a levelized amount payable over the term of the agreement and is based upon Canfor’s estimated cost of constructing its substation and transmission line;

(ii) Canfor is charged a fixed rider charge xxxxxx per Billing Period (not subject to RRA increases) or xxxxxxx per year before taxes based on Canfor’s estimated construction cost of xxxxxxxx;

(iii) Canfor’s load not exceeding maximum demand of xxxxx kVA;

(iv) Canfor has the right to apply to the Commission for a renewal or an extension of the term of TS 53 having regard to the original intent and purpose of TS 53;

(v) Upon termination of TS 53, Canfor is subject to the otherwise applicable General Service RS;

(vi) The original term was for 20 years, expiring on July 31, 2020, however Canfor applied to the BCUC for a six-month extension to allow for discussions with BC Hydro in respect to a new transition agreement. This extension was approved under Commission Order No. G-174-20 (see Attachment 4); and

(vii) TS 53 now expires on January 31, 2021.

Transition Tariff Agreement

In 2019, Canfor approached BC Hydro asking for a renewal of TS 53 in accordance with the terms of the agreement. During discussions, Canfor expressed a desire to sign a long-term extension. In Canfor’s view, the transmission line and substation facilities that were paid for through TS 53 had a typical life expectancy of approximately 35 years.

1 Guidelines, at page 7.


Based upon BC Hydro’s 10-year substation planning horizon at CWD, and in consideration of the Commission’s approval of 10-year extension for TS 95, BC Hydro and Canfor have successfully agreed to a renewal term of 10 years. BC Hydro reviewed its load forecast capacity at CWD and confirmed that there is available capacity to continue to meet the Customer’s load requirement for the next 10 years. BC Hydro supports a one-time continuation of Transmission Service rate for the Customer for 10 years. The Transition Tariff Agreement includes a rider charge (as further described below) that has been designed to recover costs associated with use of the shared electricity delivery facilities (Shared Facilities) for the Customer’s service over the term of Transition Tariff Agreement.

Proposed Terms for the Transition Tariff Agreement

The Transition Tariff Agreement, proposed as Tariff Supplement No. 100 (TS 100) is justified because:

1. It will recover BC Hydro’s incremental cost of service in respect of distribution assets not recovered through the Transmission Service rates;

2. Does not cause harm to other ratepayers;

3. Promotes utilization of available capacity at CWD; and

4. Supports BC Hydro’s service plan goal of keeping electricity bills affordable for our customers.

BC Hydro and the Customer have agreed to the terms which are set out in the TS 100 and key terms are summarized below:

(a) Rate – the Customer will be billed in accordance with the RS 1823 and other applicable Transmission Service rate schedules;

(b) Term – The proposed term of the agreement is 10 years;

(c) Renewal – The agreement does not allow for a subsequent renewal or extension at the end of the term. This transition agreement is clear insofar as Canfor will transition to the applicable Large General Service rate at the end of the term;

(d) Rider Charge – In addition to the rate, the Customer will be billed a monthly rider charge, which has been calculated to cover an amount for future costs associated with use of the Shared Facilities. The intent is to ensure the Customer pays an amount that is estimated to recover the costs of operating the distribution related assets which it is using, thus seeking to ensure ratepayers do not bear the cost of this arrangement. The Shared Facilities are shown in Appendix A of TS 100;

(e) Point of Delivery– The point of delivery remains at the Customer’s facilities;

(f) Point of Metering – The point of metering remains at its current location and will include transformer losses from 138 kV to 25 kV at the CWD;


(g) Contract Demand –The Contract Demand will be initially set at xxx MVA. The Customer has the option to request an increase up to xxx MVA, subject to BC Hydro’s review and assessment. In the event that BC Hydro approves an increase in Contract Demand, the Customer will be responsible for a new rider charge that is set out in Appendix B of TS 100 and further described below; and

(h) Capacity at CWD - Based on BC Hydro’s current substation forecast, BC Hydro forecasts that it will have sufficient available capacity at CWD (both feeder section and transformation capacity) to supply the Customer of up to xx MVA of capacity for the term of TS 100. Under the Transition Tariff Agreement, the Customer has the option to request from x MVA to up to xx MVA of capacity during the Term, which is consistent with the capacity of the Shared Facilities.

Rider Charge

The Rider Charge is applied as a monthly amount charged each Billing Period during the Term based on the following table:

Contract Demand (MVA) Monthly Rider Charge ($)

The Rider Charge summary calculation sheet is included as Attachment 6.

The purpose of the Rider Charge is to recover costs relating to the Shared Facilities during the Term of TS 100. The Rider Charge has been calculated by estimating the Customer’s portion of maintenance, finance, amortization, tax and capital-related costs over the Term of TS 100 in real dollars. These costs are then adjusted for future inflation to nominal dollars and levelized, resulting in a single fixed monthly payment amount.

The Customer’s share of all costs relating to the Shared Facilities’ in the Rider Charge is calculated on a pro-rata basis by multiplying the Customer’s Contract Demand over the CWD firm capacity of XXX MVA.

The following table provides a summary of costs that are included in the Rider Charge.

Component Description

Maintenance Costs:

• Line

• Substation

Forecasted maintenance expenses for the Shared Facilities based on actual expenses from fiscal 2008 to fiscal 2019 allocated to Canfor on a pro-rata basis:

• Line – average cost per kilometer multiplied by 0.18 km and capacity share of the feeder; and

• Substation – average annual maintenance costs multiplied by Canfor’s pro-rata share and adjusted by inflation during the term.


Component Description

Existing assets:

• Amortization

• Finance

• Taxes

Amortization, Finance and Taxes are added and multiplied by the present value factor at BC Hydro’s weighted average cost of capital to determine the total present value of costs over the term. The monthly payment is the amortizing payment over the term to recover the total present value of costs at BC Hydro’s weighted average cost of capital:

• Amortization – based on the net book value and the estimated life of the Shared Facilities’ equipment and applying straight-line amortization multiplied by Canfor’s pro-rata share;

• Finance – charges are calculated on the average of opening and closing net book value of Shared Facilities’ assets in place in fiscal 2020 multiplied by BC Hydro’s weighted average cost of capital multiplied by the Canfor’s pro-rata share; and

• Taxes – calculated based on the total actual taxes for fiscal 2020 for the Shared Facilities multiplied by Canfor’s pro-rata share.

Future Capital Expenditures:

• Amortization

• Finance

• Taxes

Additions to the Shared Facilities estimated as the average annual capital expenditure over the past nine years from fiscal 2012 to fiscal 2020 adjusted to fiscal 2020 dollars. BC Hydro has assumed that asset additions over the Term will be equal to the average annual additions over the past nine years in real dollars.

• Amortization – net book values of new assets are calculated starting in fiscal 2020, based on an assumed useful life of 30 years;

• Finance – calculated at the average net book value for each year, multiplied by BC Hydro’s weighted average cost of capital; and

• Taxes – estimated at 1.99 per cent of the book value of asset additions, which matches the average tax and grant rate as a percentage of the assessed value for fiscal 2020 multiplied by Canfor’s pro-rata share. The value is escalated by one year to reflect a fiscal 2021 value.

Conclusion

The Initial Tariff Agreement provided benefits to both parties and reduces the possibility of building additional assets which could have been duplicated and underutilized. The Transition Tariff Agreement allows the Customer to continue to be charged on the default Transmission Service rates with a monthly rider charge during the Term. Upon the expiration or early termination of the Transition Tariff Agreement, the Customer will be moved to the otherwise applicable General Service rate, terms and conditions for service at distribution voltage as set out in BC Hydro’s Electric Tariff. The Transition


Tariff Agreement also allows the Customer time to prepare for a change in billing from Transmission Service to General Service rates. Should the Transition Tariff Agreement not be approved, BC Hydro will move the Customer to the applicable Large General Service rate (RS 1611). Based on recent billing history, this would result in a bill increase of about 20 per cent.

BC Hydro requests approval of this application by January 31, 2021. It is BC Hydro’s view that minimal regulatory process is required because we have the support of the Customer who is principally affected by the Transition Tariff Agreement. If, however, the Commission believes a public hearing process is warranted, BC Hydro respectfully requests a written process informed by letters of comment from the Customer and other interested parties.

A letter of support from the Customer for the Transition Tariff Agreement is provided as Attachment 5.

For further information, please contact Anthea Jubb at 604-623-3545 or by email at [email protected].

Yours sincerely,

Fred James Chief Regulatory Officer bf/rh

Enclosure


BC Hydro TS 100 Canfor Chetwynd Mill Bypass Agreement

Attachment 1

Draft Order

Suite 410, 900 Howe Street Vancouver, BC Canada V6Z 2N3 P: 604.660.4700 TF: 1.800.663.1385 F: 604.660.1102

…/2

ORDER NUMBER G-xx-xx

IN THE MATTER OF the Utilities Commission Act, RSBC 1996, Chapter 473

and

British Columbia Hydro and Power Authority (BC Hydro)

Canadian Forest Products Ltd. (Canfor) Tariff Supplement No. 100

BEFORE: Commissioner Commissioner Commissioner

on Date

ORDER

WHEREAS:

A. On May 11, 2000, the British Columbia Utilities Commission (BCUC) approved a special tariff agreement between BC Hydro and Canfor in the form of Tariff Supplement No. 53 (TS 53) pursuant to Order No. G-51-00. TS 53 allowed Canfor to take service under Rate Schedule (RS) 1821 (now RS 1823) while being served at distribution voltage from BC Hydro’s Chetwynd substation (CWD). TS 53 had a term of 20 years, commencing on August 1, 2000;

B. Prior to the expiry of TS 53, BC Hydro and Canfor entered into discussions for a transition agreement that is intended to mitigate bill impacts and will recover BC Hydro’s incremental costs associated with Canfor’s service prior to Canfor moving to an applicable General Service rate under BC Hydro’s Electric Tariff (Transition Tariff Agreement);

C. To allow the parties more time to determine the terms of the Transition Tariff Agreement, the BCUC issued Order No. G-174-20 approving a short-term extension of TS 53 for six months. TS 53 expires on January 31, 2021;

D. On November 16, 2020, BC Hydro filed the Transition Tariff Agreement, referred to as Tariff Supplement No. 100 (TS 100), for approval pursuant to sections 58 to 61 of the Utilities Commission Act (Application). An approved TS 100 allows Canfor to continue to be billed under RS 1823 and other applicable Transmission Service rates while receiving distribution service at 25 kV from CWD. TS 100 includes a monthly rider charge to recover BC Hydro’s incremental costs associated with its service; and

E. TS 100 does not allow for subsequent renewal at the end of the 10-year term and after such time Canfor will transition to the otherwise applicable General Service rate.

Attachment 1


Page 1 of 2

Order G-xx-xx Page 2 of 2

Filepath

NOW THEREFORE pursuant to sections 58 to 61 of the Utilities Commission Act, the BCUC orders as follows:

1. TS 100 is approved as filed effective as of the Effective Date specified in TS 100;

2. The BCUC will hold the confidential version of the Application confidential as it contains safety and security sensitive information.; and

3. BC Hydro is directed to refile with the BCUC, TS 100 for endorsement by the BCUC within 15 days of the issuance of this order, in accordance with the terms of this Order.

DATED at the City of Vancouver, in the Province of British Columbia, this (XX) day of (Month Year).

BY ORDER

(X. X. last name) Commissioner

Attachment Options

Attachment 1


Page 2 of 2


Attachment 2

Tariff Supplement No. 100 Transition Tariff Agreement

PUBLIC

BC Hydro PUBLIC

Electric Tariff Supplement No. 100 Canadian Forest Products Ltd.

Effective: Original of Page 1

ACCEPTED: ORDER NO. ACTING COMMISSION SECRETARY

CANADIAN FOREST PRODUCTS LTD.

THIS TARIFF AGREEMENT is made as of

the day of , 2020.

BETWEEN: BRITISH COLUMBIA HYDRO AND POWER AUTHORITY,

a Crown corporation continued under the laws of British Columbia having its

head office at

333 Dunsmuir Street, Vancouver, British Columbia V6B 5R3

(herein called “BC Hydro”)

OF THE FIRST PART

AND: CANADIAN FOREST PRODUCTS LTD., CHETWYND DIVISION

having an office in British Columbia at

2800–1055 Dunsmuir Street, Vancouver, British Columbia V7X 1B5

(herein called the “Customer”)

OF THE SECOND PART

PUBLIC Attachment 2


Page 1 of 18

BC Hydro PUBLIC




WHEREAS:

A. Electric Tariff Supplement No. 53 (the “Initial Tariff Agreement”) was approved

by the BCUC pursuant to BCUC Order No. G-51-00, effective August 1, 2000 and

enabled the Customer to receive a bypass rate for 20 years in respect of the

service of the plant located at 4700-50th Street in Chetwynd, British Columbia

("Customer's Plant");

B. On June 22, 2020, the BCUC approved a six-month extension of the Initial Tariff

Agreement by Order No. G-174-20;

C. The Initial Tariff Agreement expires on January 31, 2021; and

D. In accordance with the renewal provision of the Initial Tariff Agreement, BC Hydro

and the Customer have agreed to renew the Initial Tariff Agreement in accordance

with the revised terms set out below for a limited term to enable the transition of

the Customer to applicable General Service rate in the Electric Tariff as set out

herein (the “Tariff Agreement”).

NOW THEREFORE THIS AGREEMENT WITNESSES THAT BC Hydro and the

Customer agree as follows:

PUBLIC Attachment 2


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BC Hydro PUBLIC




AGREEMENT INDEX

PARTIES ......................................................................................................................... 1

AGREEMENT INDEX ...................................................................................................... 3

1.0 DEFINITIONS AND INTERPRETATION ............................................................... 4

2.0 TERMS AND CONDITIONS OF SERVICE AND CONFLICTING PROVISIONS ........................................................................................................ 6

3.0 RATE AND RIDER CHARGE ................................................................................ 7

4.0 TRANSFORMATION CAPACITY AT CWD ........................................................... 8

5.0 CUSTOMER’S LOAD ............................................................................................ 8

6.0 ELECTRICAL SYSTEM CONSIDERATIONS AND METERING ........................... 8

7.0 TERM AND TERMINATION .................................................................................. 9

8.0 GENERAL ........................................................................................................... 10

EXECUTION .................................................................................................................. 13

APPENDIX A SHARED FACILITIES 1

APPENDIX B RIDER CHARGE 1

1 RIDER CHARGE ................................................................................................... 1

2 TOTAL RIDER CHARGE ...................................................................................... 4

PUBLIC Attachment 2


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BC Hydro PUBLIC




1.0 DEFINITIONS AND INTERPRETATION

1.1 In this Tariff Agreement, the following terms shall have the following meanings:

(a) “BCUC” means British Columbia Utilities Commission or its successor;

(b) “Billing Period” means a period of from 27 to 35 consecutive days

between two regular meter readings and there shall be not less than

12 Billing Periods in any period of 52 consecutive weeks. The Billing

Period will be a calendar month Billing Period from 0800 hours local time,

at the Customer's Plant, on the first day of the calendar month to

0800 hours on the first day of the following calendar month, provided that

the Billing Period may be varied by agreement between BC Hydro and the

Customer;

(c) “Contract Demand” has the meaning set out in section 5.1 of this Tariff

Agreement;

(d) “Customer’s Plant” has the meaning set out in Recital A;

(e) “CWD” means BC Hydro’s Chetwynd substation which is a 138/25 kV

distribution substation supplying the Chetwynd area;

(f) “Effective Date” means the first day of the next Billing Period immediately

following the approval of this Tariff Agreement by the BCUC or such other

effective date as the BCUC so prescribes;

(g) “Electric Tariff” means BC Hydro’s Electric Tariff as amended from time

to time and approved by the BCUC;

(h) “Formula” has the meaning set out in Appendix B;

PUBLIC Attachment 2


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BC Hydro PUBLIC




(i) “Initial Tariff Agreement” has the meaning set out in Recital A;

(j) “Metering Equipment” means an assembly of metering and ancillary

equipment, including meters, metering transformers, and any other

devices owned and used by BC Hydro in connection with metering

Electricity at the Customer’s Plant,

(k) “Point of Delivery” has the meaning set out in section 1.2 of the Electric

Tariff;

(l) “Rate” has the meaning ascribed to it in section 3.1;

(m) “Rider Charge” means an ongoing monthly charge that the Customer

pays for its use of the Shared Facilities, as set out in greater detail in

Appendix B;

(n) “Shared Facilities” means those BC Hydro owned electricity delivery

facilities which, in the opinion of BC Hydro, are used, or potentially used, in

whole or in part, by BC Hydro to supply other customers in addition to the

Customer, as further described in Appendix A;

(o) “Tariff Agreement” has the meaning set out in Recital D;

(p) “Term” has the meaning set out in section 7.1; and

(q) “Transformer Energy Loss” means the energy that is deemed to have

been lost as a result of transformation from 138 kV to 25 kV at the CWD

as determined by BC Hydro.

1.2 In this Tariff Agreement, except as otherwise expressly provided or as the

context otherwise requires:

PUBLIC Attachment 2


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BC Hydro PUBLIC




(a) Attached to and forming part of this Tariff Agreement are the following

appendices:

Appendix A – Shared Facilities

Appendix B – Rider Charge;

(b) Headings are for convenience only and are not intended as a guide to

interpretation of this Tariff Agreement or any portion thereof;

(c) The word "including", when following any general statement or term, is not

to be construed as limiting the general statement or term to the specific

items or matters set forth or to similar items or matters but rather is

permitting the general statement or term to refer to all other items or

matters that could reasonably fall within its broadest possible scope; and

(d) A reference to an entity includes any successor to that entity.

2.0 TERMS AND CONDITIONS OF SERVICE AND CONFLICTING PROVISIONS

2.1 Except to the extent inconsistent with the terms and conditions of this Tariff

Agreement, in which case the terms and conditions of this Tariff Agreement

shall prevail, the supply and taking of electricity is subject to the terms and

conditions of the Electric Tariff as it applies to customers served under General

Service Rate Schedule 1611 as filed with and approved by the BCUC. The

Customer may inspect the Electric Tariff during normal business hours at

BC Hydro’s head office or its other general offices and such right to inspect is

sufficient notice of the terms and conditions contained therein.

PUBLIC Attachment 2


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BC Hydro PUBLIC




2.2 If there is an inconsistency between any of the provisions of this Tariff

Agreement and the provisions of any other BCUC approved tariff, including the

Electric Tariff, the provisions of this Tariff Agreement shall prevail.

2.3 For greater clarity and without limitation, the following provisions in this Tariff

Agreement shall prevail over the following provisions in the Electric Tariff:

(a) The definition of “Metering Equipment” set out in section 1.1(j) of this Tariff

Agreement shall prevail over the definition of “Metering Equipment” set out

in section 1.2 of the Electric Tariff;

(b) Section 6.3 of this Tariff Agreement shall prevail over section 3.8 of the

Electric Tariff; and

(c) References to Electricity Supply Agreement in the Electric Tariff, including

Rate Schedule 1823, shall mean this Tariff Agreement.

2.4 All capitalized terms not otherwise defined in this Tariff Agreement shall have

the meaning set out in the Electric Tariff.

3.0 RATE AND RIDER CHARGE

3.1 The Customer will be billed for Energy and Demand in accordance with Rate

Schedule 1823 and any other applicable Transmission Service rates of the

Electric Tariff (the “Rate”).

3.2 In addition to the Rates, the Customer will pay the ongoing Rider Charge each

Billing Period in accordance with Appendix B.

PUBLIC Attachment 2


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BC Hydro PUBLIC




4.0 TRANSFORMATION CAPACITY AT CWD

4.1 The Customer shall be entitled, for the Term, to receive transformation capacity

through the Shared Facilities to allow for delivery of Electricity up to the Contract

Demand.

4.2 Notwithstanding section 4.1 of this Tariff Agreement, the Customer

acknowledges and agrees that all rights to title and ownership of the Shared

Facilities shall remain with BC Hydro.

5.0 CUSTOMER’S LOAD

5.1 The Customer's load shall not exceed xxxxx kV.A of maximum Demand during

the Term (“Contract Demand”), unless otherwise agreed to in accordance with

this Article 5.0.

5.2 The Customer may increase its Contract Demand, from time to time during the

Term, up to an aggregate maximum of XXXXX kV.A, upon 60 days’ prior written

notice to BC Hydro (each such request, a “Demand Request”). Upon review

and assessment of a Demand Request, BC Hydro will provide written notice to

the Customer outlining the conditions upon which such Demand Request will be

approved, including, but not limited to, specifying a new Rider Charge as set out

in Appendix B.

6.0 ELECTRICAL SYSTEM CONSIDERATIONS AND METERING

6.1 For the purposes of billing, the Energy and Demand charges shall include

adjustment factors programmed at the point of metering for the Transformer

Energy Loss.

PUBLIC Attachment 2


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BC Hydro PUBLIC




6.2 The supply of electricity shall be alternating current three-phase four-wire,

having a frequency of 60 Hz, metered and delivered at a nominal potential of

25,000 volts at the Point of Delivery, subject to normal frequency and voltage

variations.

6.3 BC Hydro owns and is responsible for the maintenance of only the Metering

Equipment installed up to the Point of Delivery at the Customer's Plant.

Notwithstanding the foregoing, the Customer owns and is responsible for any

other electrical equipment beyond the Point of Delivery located at the

Customer's Plant.

7.0 TERM AND TERMINATION

7.1 Subject to early termination as provided herein, this Tariff Agreement and

BC Hydro’s obligation to provide electrical service pursuant to the Rate, shall

commence on the Effective Date continuing in force until the earlier of 10 years

and the date that the Customer ceases taking service under this Tariff

Agreement (the “Term”). Upon expiry of the Term or earlier termination of this

Tariff Agreement in accordance with its terms, the parties may pursue and

enforce any rights and may enforce any obligations arising under this Tariff

Agreement prior to the expiry of the Term.

7.2 The parties acknowledge and agree that the Customer shall have the right to

terminate this Tariff Agreement upon 60 days’ prior written notice.

PUBLIC Attachment 2


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BC Hydro PUBLIC




7.3 Notwithstanding section 7.1 and 7.4, where the Customer breaches a

fundamental term or condition of this Tariff Agreement or is in substantial

breach of a term or condition of this Tariff Agreement or abandons this Tariff

Agreement, BC Hydro may, without prejudice to any other rights or remedies it

has, terminate this Tariff Agreement by giving the Customer 10 days’ prior

written notice to remedy the breach. If the Customer fails to remedy such

breach within 10 days of receipt of such notice, this Tariff Agreement shall

terminate immediately.

7.4 If BC Hydro is, at any time, able to discontinue service in accordance with the

Electric Tariff, this Tariff Agreement terminates immediately.

7.5 Upon the expiration or early termination of this Tariff Agreement, the Customer

will cease taking service under the Rate and the Customer will be subject to the

BC Hydro General Service rate schedule applicable to the Customer’s class of

service as determined appropriate by BC Hydro in accordance with the Electric

Tariff.

8.0 GENERAL

8.1 Mutual Cooperation: The parties agree that each of them shall:

(a) Make bona fide efforts to resolve any disputes arising between them by

amicable negotiations; and

(b) Provide frank, candid and timely disclosure of all relevant facts,

information and documents to facilitate those negotiations.

PUBLIC Attachment 2


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BC Hydro PUBLIC




8.2 Notices: Unless otherwise provided for by this Tariff Agreement, a notice,

consent, request, demand, statement or bill that either party may be required or

may desire to give to the other party shall be in writing and shall be deemed to

be given to and received by the addressee on the business day next following

when it is delivered by hand, courier or electronic transmission, and is deemed

to be given when received if delivered by prepaid mail at the address that each

party shall give notice of from time to time.

The address that BC Hydro gives notice of is:

BC HYDRO Key Account Manager

4th Floor,

333 Dunsmuir St.,

Vancouver, BC V6B 5R3

The address that the Customer gives notice of is:

CANADIAN FOREST PRODUCTS LTD. 2900-1055 Dunsmuir St.,

PO Box 49420 Bentall Post Station

Vancouver, BC V7X 1B5

8.3 Successors/Assigns: This Tariff Agreement shall operate and take effect for

the benefit of, and be binding upon, BC Hydro and the Customer and their

respective successors. This Tariff Agreement, or any part of it, or any benefit or

interest in it, shall not be assigned by the Customer without the prior written

consent of BC Hydro. BC Hydro shall not unreasonably withhold consent for the

assignment of this Tariff Agreement by the Customer.

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BC Hydro PUBLIC




8.4 Waiver: Any failure of a party to enforce or require the strict performance of any

of the provisions of the Tariff Agreement shall not in any way constitute a waiver

of these provisions; or affect or impair those provisions or any right a party has

at any time to avail itself of any remedies it may have for any breach of these

provisions, or to require work to be performed in accordance with the Tariff

Agreement. Neither party is bound by a waiver of any provision of the Tariff

Agreement unless the waiver is clearly expressed in writing and signed by the

party.

8.5 Governing Law: This Tariff Agreement shall be governed by the laws of the

Province of British Columbia. BC Hydro and the Customer shall comply with all

relevant laws and regulations and the relevant orders, rules and requirements of

all lawful authorities having jurisdiction.

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BC Hydro PUBLIC




IN WITNESS WHEREOF the duly authorized representative of each party has executed

this Agreement.

BRITISH COLUMBIA HYDRO AND POWER AUTHORITY


By: By: (signature) (signature)

Printed Name: Printed Name:

Title: Title:

PUBLIC Attachment 2


Page 13 of 18

BC Hydro Electric Tariff Supplement No. 100

Canadian Forest Products Ltd. PUBLIC

Appendix A Effective:

Original of Page 1


APPENDIX A SHARED FACILITIES

PUBLIC Attachment 2


Page 14 of 18



Appendix B Effective:

Original of Page 1


APPENDIX B RIDER CHARGE

1 RIDER CHARGE

The Rider Charge is applied as a monthly amount charged each Billing Period during

the Term based on the following table:

Contract Demand (MVA)

Monthly Rider Charge ($)

The purpose of the Rider Charge is to recover costs relating to the Shared Facilities

during the Term. The Rider Charge has been calculated by estimating the Customer’s

portion of maintenance, finance, amortization, tax and capital-related costs over the

Term in real dollars. These costs are then adjusted for future inflation to nominal dollars

and levelized, resulting in a single fixed monthly payment amount.

To determine the Rider Charge, the Customer’s pro-rata share of costs for Shared

Facilities is calculated based on the Customer’s Contract Demand divided by the CWD

firm station capacity of XXX MVA (the “Formula”).

The Rider Charge has been calculated based on two parts: Part I relating to current

operations and existing assets at CWD; and Part II relating to estimated asset additions

over the Term. The Part I and Part II charges are comprised of the following

components:

PUBLIC Attachment 2


Page 15 of 18




Original of Page 2


Part I Existing Assets

A) Maintenance Expense Component

The Rider Charge includes a maintenance expense component, which covers

BC Hydro’s estimated costs for maintenance work on the Shared Facilities over the

Term. Using BC Hydro’s reasonable accounting judgement, the maintenance expense

component is an expense and not a capital cost. To calculate this component of the

Rider Charge, BC Hydro has forecasted maintenance expenses for the Shared Facilities

at CWD for the Term based on actual maintenance expenses incurred by BC Hydro

over the period from fiscal 2008 through to fiscal 2019, adjusted to real 2020 dollars by

the Consumer Price Index. For the Shared Facilities, the Customer’s allocation of

forecasted costs is determined by the Formula. BC Hydro has forecasted maintenance

expenses for the distribution line that extends from CWD to the Customer Plant using

the average cost per kilometer for maintaining BC Hydro’s system of distribution lines

multiplied by the total length of the line. The total Part I maintenance component is the

aggregate of the Shared Facilities maintenance and the distribution line maintenance;

this component is escalated by an assumed inflation factor of 2 per cent per year for

fiscal 2022 through to fiscal 2029.

B) Amortization, Finance and Tax Component

(a) Amortization of the Shared Facilities cost is calculated based on the net book

value and the estimated life of the equipment and applying straight-line

amortization in accordance with BC Hydro’s normal practice. The Customer’s

share of the total amortization is based on the Formula;

PUBLIC Attachment 2


Page 16 of 18




Original of Page 3


(b) Finance charges are calculated on the average of opening and closing net book

value of Shared Facilities’ assets in place at fiscal 2020 multiplied by BC Hydro’s

weighted average cost of capital multiplied by the Formula; and

(c) Taxes are calculated based on the total actual taxes for fiscal 2020 for CWD and

Shared Facilities multiplied by the Formula. The value is escalated by one year to

reflect a fiscal 2021 value.

The above Maintenance, Amortization, Finance and Taxes are added and multiplied by

the present value factor at BC Hydro’s weighted average cost of capital to determine the

total present value of costs over the Term. The monthly payment is the amortizing

payment over the Term to recover the total present value of costs at BC Hydro’s

weighted average cost of capital.

Part II Future Capital Expenditures

A) Amortization, Finance and Tax Component

The Rider Charge also recovers a portion of the estimated additions to the Shared

Facilities over the Term. These are estimated as the average capital expenditure over

the past nine years from fiscal 2012 to fiscal 2020 adjusted to fiscal 2020 dollars in the

same way as historic maintenance costs (see above). BC Hydro has assumed that

asset additions over the Term will be equal to the average additions over the past nine

years in real dollars.

(a) The amortization and net book values of new assets are calculated starting in

fiscal 2020, based on an assumed useful life of 30 years.

(b) Finance charges on these assets are calculated at the average net book value for

each year, multiplied by BC Hydro’s weighted average cost of capital.

PUBLIC Attachment 2


Page 17 of 18




Original of Page 4


(c) BC Hydro has estimated property taxes and grants-in-lieu of property taxes at

1.99 per cent of the book value of asset additions, which matches the average tax

and grant rate as a percentage of the assessed value for 2020.

The total of the annual Amortization, Finance charges, and Taxes is multiplied by the

Formula and the present value over the Term is calculated. The monthly payment is the

amortizing payment that will recover the present value over the Term at BC Hydro’s

weighted average cost of capital.

2 TOTAL RIDER CHARGE

The total Rider Charge is the sum of the Part I and Part II charges calculated as shown

above.

PUBLIC Attachment 2


Page 18 of 18


Attachment 3

Tariff Supplement No. 53

PUBLIC

B.C. Hydro Electric Tariff Supplement No. 53

TIDS SPECIAL ELECTRIC SERVICE AGREEMENT made as of the for CANADIAN FOREST PRODUCTS LTD. CHETWYND DIVISION.

day of April 2000,

BETWEEN:

AND:

WHEREAS:

CANADIAN FOREST PRODUCTS LTD., CHETWYND DIVISION, a company incorporated under the laws of the Province of British Columbia and having its head office at 2800 - 1055 Dunsmuir Street, Vancouver, British Columbia

("the Customer")

BRITISH COLUMBIA HYDRO & POWER AUTHORITY, a body corporate having its head office at 333 Dunsmuir Street, Vancouver, British Columbia

("BC Hydro")

A. The Customer is currently a BC Hydro distribution voltage customer on Rate Schedule 1211 located at 4700 - 50th St in Chetwynd, B.C. ("Customer's Plant") with its point of delivery located at the BC Hydro Metering Kit ("Point of Delivery");

B. The Customer has a viable alternative of bypassing BC Hydro's distribution system by constructing a customer-owned substation and taking service pursuant to Rate Schedule 1821. The total capacity of such a substation, if built, would be k V.A;

C. The Customer has applied to BC Hydro for a bypass rate and has successfully negotiated such bypass rate with BC Hydro; and

D. The terms and conditions of the Customer's bypass rate are outlined in this Agreement.

"n . MAY 1 1 2000 Accepted for fJIt g. .......................... . ........ .

Effective: .. A.v..G. .... O .. .l. .. 200.0 ............. .. Order' No. : ...... G.;:-_$..l:::..QQ ...................... .

•••••• • ......................................... u ....... UH •••• _ ... _ ............. ~

SECRETARY '.

B. C. UTltfTlES COMMISSION

PUBLIC Attachment 3


Page 1 of 14

- 2 -

NOW THEREFORE TillS AGREEMENT WITNESSES that the Customer and BC Hydro agree as follows:

1. Rate:

The electricity supplied and taken:

(a) shall be billed in accordance with Rate Schedule 1821 plus a Rider Charge in the following manner:

(i) Rate: Demand Charge: $4.411 per kV.A of Billing Demand per Billing Period

plus

Energy Charge: All kW.h per Billing Period at 2.599 ¢ per kW.h.

plus

Rider Charge: A rider of per Billing Period, which shall be billed and be payable as part of the Rate. The rider represents a levelized amount payable over the term of this Agreement determined with reference to the Customer's estimated cost of bypassing BC Hydro's distribution system. The Rider Charge shall remain in effect throughout the term of this Agreement.

(ii) Billing Demand: The Demand for billing purposes shall be:

1. the highest kV.A Demand in the Billing Period; or

2. 75% of the highest Billing Demand for the Customer's Plant in the immediately preceding period of November to February, both months included; or

3. 50% of the maximum demand for the Customer's Plant as stated in paragraph 3 below,

whichever is the highest value.

(iii) Monthly Minimum Charge: $4.411 per k V.A. of Billing Demand.

(iv) Taxes: The Rate and Monthly Minimum Charge contained herein are exclusive of the Goods and Services Tax and Social Service Tax.

PUBLIC Attachment 3


Page 2 of 14

- 3 -

2. Adjustment to Rate:

The Demand Charge and Energy Charge, and the manner of determining the Demand and Minimum Monthly Charge, as provided for in paragraph l(a), shall be subject to adjustment from time to time in accordance with any changes made in BC Hydro's Rate Schedule 1821 as approved by the British Columbia Utilities Commission ("BCUC"), and similarly shall be subject to any restructuring or other changes to the rates in Rate Schedule 1821 as approved by the BCUC. If the BCUC approves a replacement of Rate Schedule 1821, including any subdivision or consolidation thereof, the parties will mutually agree on the applicable rate schedule to be substituted for purposes of this paragraph 2, and failing agreement either party may elect to refer the matter to the BCUC for determination.

3. Customer's Load:

The Customer's load shall not exceed kV.A of maximum demand without the prior approval of BC Hydro.

4. Metering:

The Customer's supply of electricity is metered at the primary potential.

5. FrequencyNoltage:

The supply of electricity shall be alternating current 3 phase 4 wire, having a frequency of 60 Hz +/- O.lHz metered at a nominal potential of 25,000 volts and delivered at a nominal potential of 25,000 volts at the Point of Delivery, subject to normal variations from the said frequency and voltages.

6. Requirement for Reduced Voltage Motor Starters

All motors having a rated capacity over 500 horsepower will be equipped with reduced voltage motor starters satisfactory to BC Hydro. The Customer shall inform BC Hydro of the type, ratings or settings of such reduced voltage motor starters and BC Hydro shall have the right to accept or reject such type, ratings or settings.

7. Electrical Equipment on Customer's Premises:

BC Hydro owns and is responsible for the maintenance of only the following electrical equipment installed or to be installed on Customer's Plant property:

~U~:~~YOk': ?QQO .............. ·· .. ·SECRETARY·_····- · , • . EffectJVe ......... ; ...... __ .. ~ ............ 2 ..... Jl;............... B.C. UTILITIES COMMISSION Otder No.: ........ &.::.6..L: .. OO ............ .......... .

PUBLIC Attachment 3


Page 3 of 14

-4 -

(a) Meters and metering transformers for billing purposes.

(b) One span of primary service connection.

The Customer owns and is responsible for the maintenance of any other electrical equipment located on the Customer's Plant property.

8. Term and Termination:

This Agreement shall continue and remain in force for a term of 20 years commencing August 1,2000 and terminating July 31, 2020.

Upon termination of this Agreement, the Customer will be subject to the applicable BC Hydro rates, Electric Tariff, and terms and conditions applicable to the Customer's class of service as filed and approved by the BCUC.

9. Renewal or Extension:

Notwithstanding paragraph 8, the Customer will have the right to apply to the BCUC for a renewal or extension of the term of this Agreement having regard to the original intent and purpose of this Agreement and, if approved, this Agreement will be subject to renewal or extension on such terms and conditions as the BCUC may approve, including provision for further renewal or extension.

10. Terms and Conditions of Agreement:

Except to the extent inconsistent with the terms and conditions of this Agreement, in which case the terms and conditions of this Agreement shall prevail, the supply and taking of electricity is subject to the terms and conditions of the BC Hydro's Electric Tariff (including amendments thereto or replacements thereot) applicable to Rate Schedule 1211 service, as filed with and approved by the BCUC. The Customer may inspect the BC Hydro's Electric Tariff during normal business hours at BC Hydro's Head Office or its other general offices and such right to inspect is sufficient notice of the terms and conditions contained therein.

11. Successors! Assigns:

This Agreement shall operate and take effect for the benefit of, and be binding upon, BC Hydro and the Customer and their respective successors and, in the case of BC Hydro, its assigns. This Agreement, or any part of it, or any benefit or interest in it, shall not be assigned by the Customer without the prior written consent of BC Hydro. BC Hydro shall not unreasonably withhold consent for the assignment of this Agreement by the Customer.

ACcepted for fUlng:.M.Ay' .. J .. ..1 ... Z9.9.9 .. .;........... .................................. ....... ..-Effectlve:.-E.~1iO.:::L~OOO.. B.C. UTIL~il~~~SION Order No.: ...... & ...... 5.1 .... 0. .................. .......... ~

PUBLIC Attachment 3


Page 4 of 14

- 5 -

12. Notices:

Unless otherwise provided for by this Agreement, a notice, consent, request, demand, statement or bill that either party may be required or may desire to give to the other party shall be in writing and shall be deemed to be given to and received by the addressee on the business day next following when it is delivered by hand, by courier, by telex, or by facsimile copier; and is deemed to be given when received if delivered by prepaid mail at the address that each party shall give notice of from time to time.

The address that BC Hydro gives notice of is:

BCHydro Marketing & Sales Key Account Management 6911 Southpoint Drive Burnaby, B.C. V3N4X8

FAX: (604) 528-2177

The address that the Customer gives notice of is:

CANADIAN FOREST PRODUCTS LTD. 2900 - 1055 Dunsmuir Street PO Box 49420 Bentall Post Station Vancouver, B.e. V7X IB5

FAX: (604) 661-5472

13. Confidentiality:

The Customer shall treat as confidential and will not, without the prior written consent of Be Hydro, publish, release or disclose to any person or corporation either before, during or after termination of this Agreement, any of the terms or conditions of this Agreement unless required by law or court order.

14. Regulatory Approval:

This Agreement is subject to the approval of the BCUe. If such approval is not granted, this Agreement shall be considered void.

Accepted- for filing: .M.AY.J ... J .... ~.9..9.P .......... ~_ .................. "M~ .. ;._ ..... --__. ....... -"". ~""""""I . Effective:_A.VJtO .... L.2000........... B.C. UTIl~~~~~~SSION Order No.: ........ G..~.5..I=.OO' ............. .......... ..

PUBLIC Attachment 3


Page 5 of 14

- 6 -

15. Severability:

The invalidity or unenforceability of any provision of this Agreement shall not affect the validity or enforceability of any other provision hereof and any such invalid or unenforceable provision shall be deemed to be severable from the remaining provisions of the Agreement.

16. Governing Law:

This Agreement shall be governed by the laws of the Province of British Columbia. BC Hydro and the Customer will comply with all relevant laws and regulations and the relevant orders, rules and requirements of all lawful authorities having jurisdiction.

IN WITNESS WHEREOF, the duly authorized representative of each party has executed this Agreement as of the date first written above.

Print Name

k6\f ~CLOV.sr V\1~~~6eR Position


Per: ~u:£~ Signature

B. R. Hislop Print Name

Group Vice-President, Wood Products Position

. . .. MAY 11 2000 Accepted for filing .................. ~ ........................... .

Effective: .• ~ .• AVG .... Q .. .1.. ... 2.Q.Q.Q ............. .. Order· Nc. : ....... HG::.5l:: .. 0.0 ............ .......... ..

SECRETARY B.e. UTIliTIES COMMISSIOI

PUBLIC Attachment 3


Page 6 of 14

Canfor Chetwynd Mill Bypass Analysis

Assumptions Inflation Income Tax Rate Large Corporations Tax BC Capital Tax Property Tax Capital Cost Transmission AFUDC Substation

Subject to Property Tax Depreciation

Capital Structure Debt Equity

Cost of Capital Debt Equity

Depreciation Period - Years Depreciation Net Book Value

Financial Analysis

MWh Used

OM&A Insurance Inflation Property Taxes Interest Expense Return on Equity Depreciation Salvage

Total Expenses Income Taxes

ROE CCA

Total Net After Tax Cost

Cost per Unit

Annual Payments incl. PST PST

Annual Payments before PST

Year 1

1.800% 38.600%

0.225% 0.300% 6.000%

110,650 1,503

754,994 867,147 380,290

19,015

50.00% 50.00%

8.50% 14.00%

20 43,357

823,790

1,000 828

36,854 57,665 43,357

139,704

36,252 (50,701)

125,255

Year 2

30.0% 100.0% 30.0%

361,275 19,015

43,357 780,433

2,800 828 33

21,677 35,011 54,630 43,357

Year 3

342,260 19,015

43,357 737,076

1,000 828 456

20,536 33,168 51,595 43,357

158,336 150,940

34,344 32,436 (85,206) (59,644)

107,474 123,732

Year 4

323,245 19,015

43,357 693,719

6,450 828 411

19,395 31,326 48,560 43,357

Year 5

304,230 19,015

43,357 650,362

1,000 828 496

18,254 29,483 45,525 43,357

150,327 138,943

30,528 28,620 (41,751) (29,225)

139,104 138,338

Year 6

285,215 19,015

43,357 607,005

2,800 828 387

17,113 27,640 42,490 43,357

134,615

26,712 (20,458)

140,869

Year 7

266,200 19,015

43,357 563,648

1,000 828 405

15,972 25,798 39,455 43,357

126,815

24,804 (14,320)

137,299

Year 8

247,185 19,015

43,357 520,291

6,450 828 360

14,831 23,955 36,420 43,357

126,201

22,896 (10,024)

139,073

Year 9

228,170 19,015

43,357 476,934

1,000 828 444

13,690 22,112 33,385 43,357

114,816

20,988 (7,017)

128,787

Year 10

209,155 19,015

43,357 433,577

2,800 828 333

12,549 20,269 30,350 43,357

110,486

19,080 (4,912)

124,654

$ 3.9636 $ 3.2990 $ 3.7447 $ 4.1710 4.1100 $ 4.1471 $ 4.0056 $ 4.0211 $ 3.6908 $ 3.5410

1 $ 117,3721 $ (7,679)

1$~,693J

117,372 (7,679)

109,693

117,372 (7,679)

109,693

117,372 (7,679)

109,693

117,372 (7,679)

109,693

117,372 (7,679)

109,693

117,372 (7,679)

109,693

117,372 (7,679)

109,693

117,372 (7,679)

109,693

117,372 (7,679)

109,693

f l~ 1.-; : e:: :I f~O iw V Ie:: ~ '0 II.U iw -,(,{) ..... j ::; : --; ..... 1 ::)

V -(;::> ; ~~~ ~M'!i'

$;'~!": : C.~

'l;"'W;'Gll! "'::;;~ i '1~-i~::i, d

!,(' ... ~~ ::;: 1 ~~-i ,t >t;;""t,: .. ; -.z ":>'1 C'Ji \.C>i ;f"&&--..v: : •

~!;d 'I c~_: \.!i e-~:;,i t <.1/, . ~ "; f a : ~: '0 QJ _Q C!J :> Z ri ..... ill \,II CII

~!5a

i

PUBLIC Attachment 3


Page 7 of 14

~ .-~

Canfor Chetwynd Mill I >1 Bypass Analysis 0::: 0 j:!v LI.J

Year Year Year Year Year Year Year Year Year Year 0::: "" 11 12 13 14 15 16 17 18 19 20 OIU

W r;:. Assumptions (/) -....

Inflation i: Income Tax Rate :;:) Large Corporations Tax

V BC Capital Tax Property Tax -Capital Cost Transmission AFUDC Substation

Subject to Property Tax 190,140 171,125 152,110 133,095 114,080 95,065 76,050 57,035 38,020 19,005 ! Depreciation 19,015 19,015 19,015 19,015 19,015 19,015 19,015 19,015 19,015 19,015 1

Capital Structure j Debt

Equity i Cost of Capital

~ Debt Equity

Depreciation Period - Years Depreciation 43,357 43,357 43,357 43,357 43,357 43,357 43,357 43,357 43,357 43,357 Net Book Value 390,220 346,863 303,506 260,149 216,792 173,435 130,078 86,721 43,364 7

Financial Analysis ~ I

MWh Used i OM&A 1,000 6,450 1,000 2,800 1,000 6,450 1,000 2,800 1,000 6,450 U (]) d Insurance 828 828 828 828 828 828 828 828 828 828 Q) > Z .....

+=' Inflation 351 304 387 276 293 245 327 214 230 181 Q. ... Property Taxes 11,408 10,268 9,127 7,986 6,845 5,704 4,563 3,422 2,281 1,140 Q) U

~ (.) ffi Interest Expense 18,427 16,584 14,741 12,898 11,056 9,213 7,370 5,528 3,685 1,842 U

Return on Equity 27,315 24,280 21,245 18,210 15,175 12,140 9,105 6,070 3,035 00( Depreciation 43,357 43,357 43,357 43,357 43,357 43,357 43,357 43,357 43,357 43,357 Salvage

Total Expenses 102,686 102,071 90,685 86,355 78,554 77,937 66,550 62,219 54,416 53,798 Income Taxes

ROE 17,172 15,264 13,356 11,448 9,540 7,632 5,724 3,816 1,908 CCA (3,438) (2,407) (1,685) (1,179) (825) (578) (405) (283) (198) (139)

Total Net After Tax Cost 116,420 114,928 Hl2,356 96,624 87,269 84,991 71,869 65,752 56,126 53,659

Cost per Unit $ 3.2783 $ 3.2084 $ 2.8330 2.6517 $ 2.3749 $ 2.2936 $ 1.9234 $ 1.7453 $ 1.4777 1.4013

Annual Payments incl. PST 117,372 117,372 117,372 117,372 117,372 117,372 117,372 117,372 117,372 117,372 PST (7,679) (7,679) (7,679) (7,679) (7,679) (7,679) (7,679) (7,679) (7,679) (7,679)

Annual Payments before PST 109,693 109,693 109,693 109,693 109,693 109,693 109,693 109,693 109,693 109,693

PUBLIC Attachment 3


Page 8 of 14







Financial Analysis

MWh Used



ROE CCA


Cost per Unit

Annual Payments incl. PST

PST


Year 21

(10)

1,000 828 262

(1) (1)

7

2,095

(97)

1,998

0.0518 $

1,998 (7,679)

Year 22

(10)

2,800 828 148

(1) (1)

3,774

(68)

3,706

0.0960 $

3,706 (7,679)

Year 23

(10)

1,000 828 183

(1) (1)

2,009

(47)

1,962

0.0508 $

1,962 (7,679)

Year 24

(10)

6,450 828 154

(1) (1)

7,430

(33)

7,397

0.1916 $

7,397 (7,679)

Year 25

(10)

1,000 828 255

(1) (1)

2,081

(24)

2,057

0.0533 $

2,057 (7,679)

Year 26

(10)

2,800 828 161

(1) (1)

3,787

(16)

3,771

0.0977 $

3,771 (7,679)

Year 27

(10)

1,000 828 197

(1) (1)

2,023

(12)

2,011

0.0521 $

2,011 (7,679)

Year 28

(10)

6,450 828 168

(1) (1)

7,444

(8)

7,436

0.1926

7,436 (7,679)

1 $ 1,867 1$ 3,4641 $ 1,8341 $ 6,9131 $ 1,9221 $ 3,5241 $ 1,8791 $ 6,950 I

! OJ o ~

~ '"

~I n~V ;'0:: .." fu w 'W! (J) ...... I ::i : ..... ; l!-i ~

1 V -i i i

d

~ ~ OJ

i1

c::s ~ \Q 't ~ , , ~ ... ~

PUBLIC Attachment 3


Page 9 of 14







Financial Analysis

MWh Used



ROE CCA


Cost per Unit

Annual Payments incl. PST PST


Year 29

(10)

1,000 828 269

(1) (1)

2,095

(6)

2,089

Year 30

(10)

2,800 828 176

(1) (1)

3,802

(4)

3,798

Year 31

(10)

1,000 828 211

(1) (1 )

2,037

(3)

2,034

Year 32

(10)

6,450 828 183

(1) (1)

7,459

(2)

7,457

Year 33

(10)

1,000 828 284

(1) (1)

2,110

(1 )

2,109

Year 34

(10)

2,800 828 191

(1) (1 )

3,817

(1)

3,816

Year 35

(10)

1,000 828 227

(1) (1)

2,053

(1)

2,052

$ 0.0541 $ 0.0984 $ 0.0527 $ 0.1932 $ 0.0546 $ 0.0989 $ 0.0532

2,089 (7,679)

3,798 (7,679)

2,034 (7,679)

7,457 (7,679)

2,109 (7,679)

3,816 (7,679)

2,052 (7,679)

[I 1,9521$ 3,5501$ 1,9011$ 6,9691$ 1,9711$ 3,5661$ 1,9181

i i '! t -t ~ : ~

! >-1 l~ 0 q;:i V : a::: ~ ~U w ;w j: :0') ..... : ...

§ V t:d

'''~- ~ ~~;)i . ! .~~%:O: ........ : ., ~ S1!~ "--Ii

I:~I~ k;,)~ \rl

. . " i

~(,:.) 1 <.t1i :='''''''''~>\f~! ;';::'-,~.;

~,w-·:(f .' ~ : ... "'0 Q,) $ :-0. :;:; W tJ

B ~ < IJJ

~ ... ~

PUBLIC Attachment 3


Page 10 of 14


Deficiency (Surplus) Deferral Opening Balance Requirements Payments

Canying Cost Interest Equity

Income Tax Capital Tax

Closing Balance

Balance Year 20

Debt Financing Opening Principal

Principal Payment Interest Cost

Total Repayment

Capital Cost Allowance - Class 43 Opening Balance CCA Closing Balance


CCA - Total

Year 1

(125,255) 117,372

(7,883)

(107) (176)

3,088 59

(5,019)

6

433,574

21,679 36,854

58,533

110,650 16,598 94,052

754,994 113,249 641,745

129,847

Year 2

(5,019) (107,474) 117,372

4,879

(89) (146)

(3,747) (44)

853

411,895

21,679 35,011

56,690

94,052 28,216 65,836

641,745 192,524 449,221

220,740

Year 3

853 (123,732) 117,372

(5,507)

(48) (79)

2,469 43

(3,122)

390,216

21,679 33,168

54,847

65,836 19,751 46,085

449,221 134,766 314,455

154,517

Year 4

(3,122) (139,104) 117,372

(24,854)

(432) (712)

8,593 182

(17,223)

368,537

21,679 31,326

53,005

46,085 13,826 32,259

314,455 94,337

220,118

108,163

Year 5

(17,223) (138,338) 117,372

(38,189)

(1,047) (1,724)

8,658 260

(32,042)

346,858

21,679 29,483

51,162

32,259 9,678

22,581

220,118 66,035

154,083

75,713

Year 6

(32,042) (140,869) 117,372

(55,539)

(1,738) (2,862)

10,033 368

(49,738)

325,179

21,679 27,640

49,319

22,581 6,774

15,807

154,083 46,225

107,858

52,999

Year 7

(49,738) (137,299) 117,372

(69,665)

(2,474) (4,074)

9,091 448

(66,674)

303,500

21,679 25,798

47,477

15,807 4,742

11,065

107,858 32,357 75,501

37,099

Year 8

(66,674) (139,073) 117,372

(88,375)

(3,248) (5,350)

10,224 563

(86,186)

281,821

21,679 23,955

45,634

11,065 3,320 7,745

75,501 22,650 52,851

25,970

Year 9

(86,186) (128,787) 117,372

Year 10

(100,817) (124,654) 117,372

(97,601) (108,099)

(3,974) (6,545)

6,700 603

(100,817)

260,142

21,679 22,112

43,791

7,745 2,324 5,421

52,851 15,855 36,996

18,179

(4,566) (7,521)

5,459 660

(114,067)

238,463

21,679 20,269

41,948

5,421 1,626 3,795

36,996 11,099 25,897

12,725

"0 Q)

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PUBLIC Attachment 3


Page 11 of 14

f i l$ I , .,. r , ~ f I :>-'0.:: L.1; 0 n-v , W lo:: ~

Canfor Chetwynd Mill '0 loY ~llJJ ;::

Bypass Analysis 1 (j) :::; --II-:;::)

Year Year Year Year Year Year Year Year Year Year

~} V 11 12 13 14 15 16 17 18 19 20 ,.

Deficiency (Surplus) Deferral Opening Balance (114,067) (123,208) (132,180) (133,914) (132,148) (124,276) (114,281) (95,079) (70,341) (37,362) Requirements (116,420) (114,928) (102,356) (96,624) (87,269) (84,991) (71,869) (65,752) (56,126) (53,659) Payments 117,372 117,372 117,372 117,372 117,372 117,372 117,372 117,372 117,372 117,372 ;

(113,115) (120,764) (117,164) (113,166) (102,045) (91,895) (68,778) (43,459) (9,095) 26,351 '1 :: Carrying Cost ~,,,e_i i

Interest (5,042) (5,427) (5,654) (5,654) (5,449) (5,069) (4,449) (3,515) (2,289) (794) O[ Equity (8,305) (8,939) (9,313) (9,312) (8,975) (8,349) (7,328) (5,790) (3,770) (1,307) ;:::\ ~

Income Tax 2,577 2,229 (2,464) (4,664) (8,374) (9,471) (14,869) (17,761) (22,171) (23,991)

~ Capital Tax 677 721 681 648 567 503 345 184 (37) (253) ,f.t~~l': ~

Closing Balance (123,208) (132,180) (133,914) (132,148) (124,276) (114,281) (95,079) (70,341) (37,362) 6 ~j , ; Balance Year 20 ,~ ~

ij:! ! Debt Financing ... t Opening Principal 216,784 195,105 173,426 151,747 130,068 108,389 86,710 65,031 43,352 21,673 0$2.

Principal Payment 21,679 21,679 21,679 21,679 21,679 21,679 21,679 21,679 21,679 21,679 "'0 IV Q

-a ,;:: z Interest Cost 18,427 16,584 14,741 12,898 11,056 9,213 7,370 5,528 3,685 1,842 't ...

111 iii)

Total Repayment 40,106 38,263 36,420 34,577 32,735 30,892 29,049 27,207 25,364 23,521 P iii)

l ~ ~ Capital Cost Allowance - Class 43

Opening Balance 3,795 2,656 1,859 1,301 911 638 447 313 219 153 CCA 1,139 797 558 390 273 191 134 94 66 46 Closing Balance 2,656 1,859 1,301 911 638 447 313 219 153 107

Capital Cost Allowance - Class 43 Opening Balance 25,897 18,128 12,690 8,883 6,218 4,353 3,047 2,133 1,493 1,045 CCA 7,769 5,438 3,807 2,665 1,865 1,306 914 640 448 314 Closing Balance 18,128 12,690 8,883 6,218 4,353 3,047 2,133 1,493 1,045 731

CCA - Total 8,908 6,235 4,365 3,055 2,138 1,497 1,048 734 514 360

PUBLIC Attachment 3


Page 12 of 14



Carrying Cost Interest Equity


Closing Balance

Balance Year 20



Total Repayment


Capital Cost Allowance - Class 43 Opening Balance CCA CloSing Balance

CCA-Total

Year 21

6 (1,998) 1,998

6

6

(6)

(1)

(1)

107 32 76

731 219 612

251

Year 22

6 (3,706) 3,706

6

6

(6)

(1)

(1)

76 23 62

512 154 358

177

Year 23

6 (1,962) 1,962

6

6

(6)

(1)

(1)

62 16 36

368 107 251

123

Year 24

6 (7,397) 7,397

6

6

(6)

(1)

(1)

36 11 25

251 75

176

86

Year 25

6 (2,057) 2,057

6

6

(6)

(1)

(1)

25 8

17

176 53

123

61

Year 26

6 (3,771) 3,771

6

6

(6)

(1)

(1)

17 5

12

123 37 86

42

Year 27

6 (2,011) 2,011

6

6

(6)

(1)

(1)

12 4 8

86 26 60

30

Year 28

6 (7,436) 7,436

6

6

(6)

(1)

(1)

8 2 6

60 18 42

20

~ ~

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PUBLIC Attachment 3


Page 13 of 14



Carrying Cost Interest Equity


Closing Balance

Balance Year 20



Total Repayment



eCA - Total

Year 29

6 (2,089) 2,089

6

6

(6)

(1)

(1)

6 2 4

42 13 29

15

Year 30

6 (3,798) 3,798

6

6

(6)

(1)

(1)

4 1 3

29 9

20

10

Year 31

6 (2,034) 2,034

6

6

(6)

(1)

(1)

3 1 2

20 6

14

7

Year 32

6 (7,457) 7,457

6

6

(6)

(1)

(1)

2 1 1

14 4

10

5

Year 33

6 (2,109) 2,109

6

6

(6)

(1)

(1)

10 3 7

3

Year 34

6 (3,816) 3,816

6

6

(6)

(1)

(1)

7 2 5

2

Year 35

6 (2,052) 2,052

6

6

(6)

(1)

(1)

5 2 3

2

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PUBLIC Attachment 3


Page 14 of 14


Attachment 4

BCUC Order No. G-174-20 – Extension of Tariff Supplement No. 53

Suite 410, 900 Howe Street Vancouver, BC Canada V6Z 2N3 bcuc.com

P: 604.660.4700 TF: 1.800.663.1385 F: 604.660.1102

File 63540 | BC Hydro Electric Tariff Supplement No. 53 Extension 1 of 2

ORDER NUMBER

G-174-20

IN THE MATTER OF the Utilities Commission Act, RSBC 1996, Chapter 473

and

Canadian Forest Products Ltd.

Request for Extension to BC Hydro Electric Tariff Supplement No. 53

BEFORE:

B. A. Magnan, Commissioner

on June 26, 2020

ORDER WHEREAS: A. On May 14, 2020, pursuant to sections 58 to 61, 89 and 90 of the Utilities Commission Act (UCA) Canadian

Forest Products Ltd. (Canfor) filed an Extension Request with the British Columbia Utilities Commission (BCUC) seeking acceptance of a 6-month extension to the British Columbia Hydro and Power Authority (BC Hydro) Electric Tariff Supplement No. 53 (TS 53) (Extension Request), effective August 1, 2020;

B. By Order G-51-00, TS 53, an agreement between BC Hydro and the Canfor Chetwynd facility was approved by the BCUC, to be in effect for 20 years from August 1, 2000 to July 31, 2020;

C. Pursuant to ‘Article 9 – Renewal or Extension’ of TS 53, Canfor is seeking acceptance of a 6-month extension of the agreement in order to allow additional time to develop a renewal application for submission to the BCUC. Renewal or extension of TS 53 is subject to BCUC approval;

D. On June 25, 2020, BC Hydro filed a letter with the BCUC noting it is in full support of the Extension Request;

E. Canfor and BC Hydro intend to submit an agreement renewal application prior to January 31, 2021; and

F. The BCUC has reviewed the Extension Request and finds that it should be approved.

Attachment 4


Page 1 of 2

Order G-174-20

File 63540 | BC Hydro Electric Tariff Supplement No. 53 Extension 2 of 2

NOW THEREFORE pursuant to section 58 to 61 of the UCA, the BCUC approves a 6-month extension of BC Hydro TS 53 commencing August 1, 2020 and ending January 31, 2021.

DATED at the City of Vancouver, in the Province of British Columbia, this 26th day of June 2020. BY ORDER Original signed by: B. A. Magnan Commissioner

Attachment 4


Page 2 of 2


Attachment 5

Canfor’s Letter of Support

5162 Northwood Pulpmill Road, Post Office Box 9000, Prince George, British Columbia V2L 4W2 Telephone 250-962-3500 Fax 250-962-3582 E-mail [email protected] www.canfor.com

Canadian Forest Products Ltd.

and affiliated companies

November 10, 2020

Mr. Patrick Wruck Commission Secretary British Columbia Utilities Commission Sixth Floor – 900 Howe Street Vancouver, B.C. V6Z 2N3 [email protected] Dear Mr. Wruck: Re: Canadian Forest Products Ltd. Chetwynd Bypass Agreement Canadian Forest Products Ltd. (“Canfor”) is submitting this letter of support for the proposed Electric Tariff Supplement No. 100 between Canfor, Chetwynd Division and the British Columbia Hydro and Power Authority (“BC Hydro”) to continue to supply Chetwynd Division with electricity under Rate Schedule 1823 for a period of 10 years. This proposed agreement will take effect when the current Electric Tariff Supplement No. 53 expires on February 1, 2021 and will persist until February 1, 2031. If you have any questions regarding this letter of support for Electric Tariff Supplement No. 100, please do not hesitate to contact me via email at [email protected] or phone at 1 (250) 919-2807. Yours truly, Canadian Forest Products Ltd. Brett Holmgren, Energy Manager

Attachment 5


Page 1 of 1






Attachment 6

Rider Charge Calculation Summary Sheet

PUBLIC

CONFIDENTIAL ATTACHMENT

FILED WITH BCUC ONLY

PUBLIC Attachment 6


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