APPENDIX B

RP-1999-0031

IMPACT OF THE BOARD'S FINDINGS IN THIS DECISION

RP-1999-0031

Appendix B

Page 1 of 5

NATURAL RESOURCE GAS LIMITED

UTILITY INCOME

For the Year Ending September 30, 2000

($)

Per	Per	Per
Company	Settlement	Board
Revenue
Gas Sales	5,911,521	5,909,931	(1)	5,909,931
Cost of Gas & Transportation	3,593,315	3,592,749	(2)	3,592,749
Gas Sales Margin	2,318,206	2,317,182	2,317,182
Other Revenue (Net)	494,285	494,285	494,285
Total Revenue	2,812,491	2,811,467	2,811,467
Expenses
Operations & Maintenance	1,621,325	1,621,325	(3)	1,621,325
Depreciation & Amortization	514,645	506,432	(4)	506,432
Property & Capital Taxes	238,373	237,271	(5)	237,271
Total Expenses	2,374,343	2,365,028	2,365,028
Utility Income Before

Income Taxes	438,148	446,439	446,439
Income Taxes	(32,812)	(25,080)	(6)	(25,080)
Utility Income	470,960	471,519	471,519
Notes:

(1)	Reduction of 21 residential and 1 commercial customer attachments due to reduction in main addition projects. Associated volume is 3,654 m3 based on average consumption in July to September in the test year.

(2)	Due to decrease in sales and (unaccounted for gas) priced at Ontario Delivered rate and reduction in Union transportation costs.

(3)	10,000 reduction in intervenor costs fully offset by 8,000 provision for OEB costs plus a 2,000 increase in repair and maintenance costs associated with reduction in capital expenditures (vehicles and equipment).]

(4)	This reduction in depreciation and amortization is comprised of: capital expenditure reductions of 1,128 (buildings); 5,000 (software); 434 (machinery and equipment); 1,024 (automotive); 275 (meters); 143 (regulators); 1,039 (main additions); and 183 (service additions). This is partly offset by a 1,013 reduction in capitalized depreciation.

(5)	1,102 reduction comprised of reductions of: 1,083 in property taxes due to decreased main addition projects and 19 reduction in capital taxes due to decreased capital expenditures.

(6)	Per Appendix B, Page 2 of 5

RP-1999-0031

Appendix B

Page 2 of 5

NATURAL RESOURCE GAS LIMITED

CALCULATION OF INCOME TAXES

For the Year Ending September 30, 2000

($)

Per	Per	Per
Company	Settlement	Board
Utility Income Before Income Taxes	438,148	446,439	446,439

Plus:	Depreciation Expense	514,645	506,432	506,432

Meals & Entertainment

(Non-deductible portion)	7,000	7,000	7,000

Less:	Capital Cost Allowance	545,961	532,213	(1)	532,213

Interest Expense	487,368	483,867	(2)	483,867
Taxable Income	(73,536)	(56,209)	(56,209)

Income Taxes (44.62%)	(32,812)	(25,080)	(25,080)

Notes:

(1)	Reduction of 13,478 comprised of reductions of: 1,223 in Class 1 assets (mains, meters, regulators, services); 625 in Class 3 assets (buildings); 1,900 in Class 8 assets (machinery and equipment); 7,500 in Class 10 assets (automotive); and 2,500 in Class 12 assets (software).

(2)	Reduction of 3,501 in short term interest cost due to decrease in rate base.

RP-1999-0031

Appendix B

Page 3 of 5

NATURAL RESOURCE GAS LIMITED
UTILITY RATE BASE
For the Year Ending September 30, 2000
($)
Per	Per	Per
Company	Settlement	Board
Gas Utility Plant
Gross Plant at Cost	12,759,933	12,700,141	(1)	12,700,141
Less: Accumulated Depreciation	3,952,746	3,975,248	(2)	3,975,248
Net Utility Plant	8,807,187	8,724,893	8,724,893
Allowance for Working Capital
Inventory	134,167	134,167	134,167
Working Cash Allowance	40,886	38,529	(3)	38,529
Security Deposits	(72,440)	(72,440)	(72,440)
Total Working Capital	102,613	100,256	100,256
Utility Rate Base	8,909,800	8,825,149	8,825,149

Notes:

(1)	Decrease of 59,792 comprised of reductions in capital expenditures for: main additions (25,008); associated meters (4,378); associated regulators (1,823); associated services (2,547); buildings (13,542); and software (2,708). There were also decreases of 2,418 and 7,458 due to not replacing one piece of capital equipment and one vehicle (respectively) in the test year
(2)	Overall decrease of accumulated depreciation comprised of reductions associated with: main additions (563); associated meters (150); associated regulators (77); associated services (99); buildings (611); and software (2,708). There are increases of 7,639 and 19,071 due to not replacing one piece of capital equipment and one vehicle (respectively) in the test year.
(3)	The working cash allowance decreased by 2,357 due to decreases of: 595 for labour costs related to capital project reductions; 238 in labour-related costs; 10 in other costs (regulatory, property, and capital tax); and 1,514 in GST related to capital expenditure reduction.

RP-1999-0031

Appendix B

Page 4 of 5

NATURAL RESOURCE GAS LIMITED

CAPITALIZATION AND COST OF CAPITAL

For the Year Ending September 30, 2000

($)

PER COMPANY
Capital	Cost	Return
Structure	Ratios	Rate	Component	Return
Long-Term Debt	4,218,651	47.35%	11.09%	5.25%	467,828
Short-Term Debt
Operating Loan	210,000	2.36%	8.27%	0.20%	17,367
Unfunded Debt	26,249	0.29%	8.27%	0.02%	2,171
Common Equity	4,454,900	50.00%	9.50%	4.75%	423,216
Total	8,909,800	100.00%	10.22%	910,582

PER SETTLEMENT
Capital	Cost	Return
Structure	Ratios	Rate	Component	Return
Long-Term Debt	4,218,651	47.80%	11.09%	5.30%	467,848
Short-Term Debt
Operating Loan	210,000	2.38%	8.27%	0.20%	17,367
Unfunded Debt	(16,077)	-0.18%	8.27%	-0.01%	(1,330)
Common Equity	4,412,575	50.00%	9.50%	4.75%	419,195
Total	8,825,149	100.00%	10.23%	903,080

PER BOARD
Capital	Cost	Return
Structure	Ratios	Rate	Component	Return
Long-Term Debt	4,218,651	47.80%	11.09%	5.30%	467,848
Short-Term Debt
Operating Loan	210,000	2.38%	8.27%	0.20%	17,367
Unfunded Debt	(16,077)	-0.18%	8.27%	-0.01%	(1,330)
Common Equity	4,412,575	50.00%	9.50%	4.75%	419,195
Total	8,825,149	100.00%	10.23%	903,080

RP-1999-0031

Appendix B

Page 5 of 5

NATURAL RESOURCE GAS LIMITED

DETERMINATION OF REVENUE DEFICIENCY

For the Year Ending September 30, 2000

($)

Per	Per	Per
Company	Settlement	Board

Net Utility Income	470,960	471,519	471,519
Utility Rate Base	8,909,800	8,825,149	8,825,149

Indicated Rate of Return	5.29%	5.34%	5.34%
Required Rate of Return	10.22%	10.23%	10.23%
Deficiency in Rate of Return	-4.93%	-4.89%	-4.89%

Revenue Deficiency	(439,253)	(431,550)	(431,550)
Provision for Income Tax	(296,126)	(289,920)	(289,920)
Gross Revenue Deficiency	(735,379)	(721,470)	(721,470)

Delivery-Related

Gross Revenue Deficiency
(77,225)	(63,743)	(63,743)