20171129ICNU Third Set of Data Requests to Hydro One (10.25.17).pdf

TEL [phone] ● FAX [phone] ● [e-mail] Suite 400 333 SW Taylor Portland, OR 97204

October 25, 2017 Via Electronic Mail
James Scarlett
S. Kyle Mersky Hydro One Limited PO Box 3727 1411 E. Mission Ave, MSC-27
Spokane, WA 99220-3727
[e-mail] [e-mail]

Re: Joint Application of Hydro One Ltd. and Avista Corporation for an Order Authorizing Proposed Transaction Docket U-170970
Ladies and Gentlemen:
Enclosed please find the Industrial Customers of Northwest Utilities’ (“ICNU”) Third Set of Data Requests to Hydro One Limited (“Hydro One”) in the above-referenced matter. Hydro One has ten business days to respond to these Data Requests.
Please provide your responses by no later than November 8, 2017.
Thank you for your attention to this matter. If you have any questions, please do not hesitate to call.
Sincerely,

/s/ Haley M. Thomas Haley M. Thomas
cc: U-170970 Service List

Kari Vander Stoep, Partner
Dirk Middents, Paralegal K&L Gates LLP 925 Fourth Ave, Suite 2900 Seattle WA 98104-1158
[e-mail]
[e-mail]
PAGE 1 – ICNU’S THIRD SET OF DATA REQUESTS TO HYDRO ONE
DAVISON VAN CLEVE, P.C. 333 S.W. Taylor, Suite 400 Portland, OR 97204 Telephone: [phone]
BEFORE WASHINGTON UTILITIES AND TRANSPORTATION COMMISSION
In the Matter of the Joint Application of HYDRO ONE LIMITED and

THIRD SET OF
HYDRO

Dated: October 25, 2017
Please provide responses to these Data Requests by November 8, 2017.

DATA REQUESTS
0025 Refer to Lopez, Exh. CFL-1T at 3:7-12:
a. How many Avista shareholders are there as of July 18, 2017?
b. Please provide (or identify, within the Document Room or filed workpapers) the
calculations that derived the $3.4 billion value.
0026 Refer to Lopez, Exh. CFL-1T at 3:15:
a. Does the C$34.9 billion include the 24% premium paid to Avista?
b. Please provide (or identify within the Document Room or filed workpapers) the exchange rate assumed in deriving these values and explain the related
calculation.
0027 Refer to Lopez, Exh. CFL-1T at 6:7-10. What is the comparator for which costs allocated to Avista will be no higher? Please explain.
0028 Refer to Lopez, Exh. CFL-1T at 6:18-21. Will Hydro One provide access to books and records for transactions with its subsidiaries other than Avista, to verify the allocations to
Avista are calculated correctly and are fair and reasonable in relation to the other
subsidiaries?
0029 Refer to Lopez, Exh. CFL-1T at 7:16. Please provide (or identify, within the Document Room or filed workpapers) the derivation for the shareholder equity value of $C10,017.
PAGE 2 – ICNU’S THIRD SET OF DATA REQUESTS TO HYDRO ONE
DAVISON VAN CLEVE, P.C. 333 S.W. Taylor, Suite 400 Portland, OR 97204 Telephone: [phone]
0030 Refer to Lopez, Exh. CFL-1T at 8:6-22. Please provide (or identify, within the Document Room or filed workpapers) copies of all rating agency reports by Moody’s and
S&P relating to Hydro One.
0031 Refer to Lopez, Exh. CFL-1T at 9:6-11. Is it Mr. Lopez’s testimony that the legislation enacted and laws established may never be amended? Provide a copy of the related legislation.
0032 Refer to Lopez, Exh. CFL-1T at 9:20. Please provide (or identify, within the Document
Room or filed workpapers) a copy of the governance agreement.
0033 Refer to Lopez, Exh. CFL-1T at 11:9-11. By having hybrid cost based rates, does that mean that for Hydro One, the OEB could disallow inclusion in rates of Hydro One costs that OEB believes are not prudently incurred?
0034 Refer to Lopez, Exh. CFL-1T at 11:9-11. Please provide the last ten years of respective
OEB authorized returns on equity for Hydro One.
0035 Refer to Lopez, Exh. CFL-1T at 12:18. Is the $1.7 billion expressed in Canadian or US dollars? Please provide the calculation and assumption for any exchange rate used in deriving these values.
0036 Refer to Lopez, Exh. CFL-1T at 13:2-4:
a. Please provide the name of the entity where the premium will be recorded.
b. Will any of the premium be allocable to Avista?
0037 Refer to Lopez, Exh. CFL-1T at 14:8. Which nation is being referred to in “nationally recognized”?
0038 Refer to Lopez, Exh. CFL-1T at 14:9-14:
a. Please identify all areas of cost-sharing known to date, even if not significant.
b. Please provide an estimate of costs shared by Avista for 2018 and 2019 from the above identified areas.
c. What IT investments have been identified for possible cost sharing?
d. Please describe the purchasing power cost benefit and why such benefit is not
available to Avista today.
e. Is Avista currently participating in any facility pooling arrangement with other utilities?

PAGE 3 – ICNU’S THIRD SET OF DATA REQUESTS TO HYDRO ONE
DAVISON VAN CLEVE, P.C. 333 S.W. Taylor, Suite 400 Portland, OR 97204 Telephone: [phone]
0039 Refer to Lopez, Exh. CFL-1T at 14:15-22:
a. When does Avista intend to file the allocation methodologies?
b. Please provide (or identify, within the Document Room) a copy of any Hydro One
cost allocation methodologies approved by OEB, including the name and number of any docket where cost allocation methodologies were approved?
0040 Refer to Lopez, Exh. CFL-1T at 15:1-3. Within how many days of a corporate structure change will the WUTC be notified?
0041 Refer to Lopez, Exh. CFL-1T at 15:8, 19:20-22. With respect to Condition No. 22:
a. Please define the word “reasonable,” as in “will provide reasonable access to.”
b. To the extent Hydro One does not consider “reasonable” to mean “discoverable,” please explain why.
0042 Refer to Lopez, Exh. CFL-1T at 16:4-19, and Joint Application, App. 8, Commitment
No. 40:
a. Please explain why the language proposed allows an independent director to not consent to enter bankruptcy proceedings, and yet Avista could still enter into bankruptcy proceedings, because a second independent director consents to such action.
b. Please provide any known precedents where ring fencing adopted by a US
regulatory commission allows for an instance to occur as described in the foregoing subpart (a).
0043 Refer to Lopez, Exh. CFL-1T at 16:20. Has a law firm been chosen for the non-consolidation opinion?
a. If yes, please identify the law firm and also the lawyers, if any.
b. Please provide (or identify, within the Document Room) a listing of any non-consolidation opinions written.
0044 Refer to Lopez, Exh. CFL-1T at 22:14-18:
a. Who decides what is “material,” regarding potential amendments?
b. Please describe a circumstance where Hydro One would change a ring fencing
provision (i.e., one that is not material) without prior notice and approval of the WUTC.
PAGE 4 – ICNU’S THIRD SET OF DATA REQUESTS TO HYDRO ONE
DAVISON VAN CLEVE, P.C. 333 S.W. Taylor, Suite 400 Portland, OR 97204 Telephone: [phone]
c. Please describe why the circumstance in the foregoing subpart (b) would compel Hydro One to change a ring fencing provision without prior notice and approval
of the WUTC.
0045 Refer to Lopez, Exh. CFL-1T, beginning at 24:2:
a. Assuming the merger is approved, and assuming the financial circumstances of June 30, 2017, please provide an estimate on Hydro One’s return on equity of absorbing the $2.65 million rate credit, including all workpapers used in making
this calculation.
b. Does Condition No. 18 allow Hydro One and Avista to accrue all merger savings that are not yet reflected in base rates? If no, please explain.
c. Please repeat the calculation in the foregoing subpart (a), except use $0.95 million (i.e., non-offsetable annual credit amount), including all workpapers used
in making this calculation.
d. Does Hydro One agree that its net cost of Commitment No. 18 is $2.65 million less $1.7 million? If no, why not?
e. What do the $2.65 million and $0.95 million amounts translate into as a percentage of Avista’s annual aggregate multi-state revenue for 2016 (actual) and
2017 (projected revenues)?
0046 Refer to Lopez, Exh. CFL-1T at 26:4-15:
a. Please provide (or identify, within the Document Room) any studies or analysis demonstrating that this proposed merger entails the same proportional risks as the Puget merger cited.
b. Please explain why it is reasonable and consistent to compare a ten-year rate
credit to an annual revenue requirement.
c. Please explain why Hydro One chose to equate Puget’s rate credit—based on 3.1 percent of Washington revenue, and in the context of a “no harm” to Washington customers perspective—to Avista’s aggregate multi-state revenue, instead of
Avista’s Washington revenue only in the context of the “net benefit” standard.
0047 Refer to Lopez, Exh. CFL-4 at 21. Please describe Hydro One Brampton (“Brampton”) and the circumstances surrounding, and incentives for, the Brampton divestiture by Hydro One.
0048 Refer to Lopez, Exh. CFL-4 at 22. Please describe the technology and nature of any
investments in smart-grid technology.

PAGE 5 – ICNU’S THIRD SET OF DATA REQUESTS TO HYDRO ONE
DAVISON VAN CLEVE, P.C. 333 S.W. Taylor, Suite 400 Portland, OR 97204 Telephone: [phone]
0049 Refer to Lopez, Exh. CFL-4 at 27:
a. Please describe Great Lakes Power and Orillia Power.
b. Please describe the commitments Hydro One offered and ultimately agreed to,
where applicable, for these transactions.
c. Where is (what entity) any “good will” (amount paid above net book), if any recorded?
d. Please demonstrate that any amount paid above costs is not and will not be
allocable to Avista.
0050 Refer to Lopez, Exh. CFL-4 at 28-32:
a. For each listed return on equity (“ROE”) authorized, please identify whether the “ROE” was reached as the result of settlement, a contested case among parties, or some other process.
b. Please provide (or identify, within the Document Room) copies of Hydro One or
its affiliate testimony on ROE for each proceeding.
c. Please provide the formula used by OEB to determine the ROE.
d. What capital structure is assumed for the cost of equity?
0051 Refer to Lopez, Exh. CFL-4 at 28. What is the current level of funding of each Hydro
One-related pension fund?
0052 Refer to Lopez, Exh. CFL-4 at 29:
a. Please provide a copy of the original class action billing complaint(s).
b. Please provide copies of all testimony and legal argument filed, relating to the class action law suit on billing practices.
c. If Hydro One and its affiliates should not prevail in this class action lawsuit, what
is the maximum dollar liability?
0053 Refer to Lopez, Exh. CFL-4 at 31:
a. Please provide the documents that establish the basis for the management, administrative and smart meter network services charge to Brampton.
b. Will any of such services also be charged to Avista? If yes, please explain.

PAGE 6 – ICNU’S THIRD SET OF DATA REQUESTS TO HYDRO ONE
DAVISON VAN CLEVE, P.C. 333 S.W. Taylor, Suite 400 Portland, OR 97204 Telephone: [phone]
0054 Refer to Lopez, Exh. CFL-4 at 32:
a. Please describe the OEB Custom Incentive Rate Model and the specific model for
which Hydro One is operating under.
b. Please provide (or identify, within the Document Room) copies of any OEB-related orders issued.
0055 Refer to Lopez, Exh. CFL-4 at 34. Please provide copies of any correspondence for which NERC discusses non-compliance of cyber security safeguard requirements.
0056 Refer to Lopez, Exh. CFL-4 at 39:
a. Is there a sunset date on the Province’s right to remove Board of Directors?
b. Does this right extend to subsidiaries of Hydro One?
0057 Refer to Lopez, Exh. CFL-4 at 39:
a. Please provide (or identify within the Document Room) a copy of the electricity
act cited.
b. Please describe the prohibition on Hydro One of selling any of its OEB-regulated businesses.
c. Is Hydro One aware of a similar restriction on the parent for the Puget merger, in WUTC Docket U-072375? If yes, please describe.
0058 Refer to Lopez, Exh. CFL-4 at 66. Please explain the reasoning for assigning the
goodwill to Hydro One’s distribution business segment.
0059 Refer to Lopez, Exh. CFL-4 at 67. Was the transaction, when viewed in an overall sense, a loss or a profit with respect to the Brampton Spinoff? Please explain and include in your consideration the writing off of $60 million of goodwill.
0060 Refer to Lopez, Exh. CFL-4 at 140-141, which contains a table listing multiple board
members as independent:
a. What is the meaning of “independent,” as used in this table? (For example, what is the meaning of independence under Ontario securities law?)
b. Please provide (or identify, within the Document Room) copies of the relevant
sections of Ontario securities laws.
c. Is this the same meaning as intended for the merger commitments in this docket? If no, please explain.