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Definition: Expansion Deposit

(DSC clause 3.2.1, 3.2.2, 3.2.21, 3.2.25)

When we must construct new facilities to its main distribution system or increase the capacity of existing distribution system facilities in order to be able to connect a specific customer or group of customers, we shall perform economic evaluation based on estimated costs and forecasted revenues of the expansion project to determine if the future revenue from the customers will recover the capital cost and on-going maintenance required for the expansion project. The final economic evaluation is carried out once the facilities are energized and operational. If capital contribution is required after final economic evaluation, we shall collect such up to 100% of the present value of the projected capital cost and on-going maintenance cost for expansion projects from customers in the form of cash, Letter of Credit from a bank. This portion of capital contribution towards expansion projects is referred as Expansion Deposit.


Definition: Expansion Deposit Refund 

(DSC clause 3.2.23)

Once facilities are energized, we shall perform annually assessment and return the percentage of expansion deposit in proportion to the actual demand. We shall be allowed to retain the remaining portion of expansion deposit if the forecasted demand has not been materialized at the end of the customer connection horizon.


Our Current Process and Practice

Forecasted demand was calculated and used in final economic evaluation. Actual demand is calculated as mean value of non-loss adjusted peak demand for twelve consecutive bill cycles starting from the date of connection (Milestone 3) or the end date of bill cycle used for last expansion deposit refund assessment.


Expansion deposit refund percentage is calculated as:

Refund Percentage % = (Actual Demand/Forecasted) * 100%


If expansion deposit is in the form of cash, expansion deposit refund amount is determined by:

Expansion Deposit Refund Amount = Refund Percentage x Expansion Deposit on File (including HST) + Accumulated Interest


Accumulated interest is compounded monthly on expansion deposit commencing on the receipt of total deposit till the date of refund assessment. Interest rate is set by Bank of Canada at Prime Business Rate less 2 percent. No interest will be refunded if deposit is made in other form.

  • As stated in our Conditions of Service, currently the two-year time frame is adapted and used for customer connection horizon in expansion deposit refund assessment. We shall be allowed to retain any remaining expansion deposit after two year assessments.

    • Illustrative example for expansion deposit refund (all values used are for demonstration purpose only)

 
Project Name: XX Solar Park
Project Owner:
XX BP LLP
Forecasted Demand:
100 kW
​Expansion Deposit on File (Incl. HST): $10,000​
​Expansion Deposit Date: ​January 1, 2014
Date of Connection:​ ​February 1, 2014
​Year 1 Refund Assessment Year 1 Actual Demand:​ 70 kW​
Actual Refund Percentage:​ ​70%
​Refund Interest: ​$200
​Total Year 1 Refund Amount: ​$7,200
​Year 2 Refund Assessment ​Year 2 Actual Demand: ​80 kW
​Refund Percentage: 80% ​
​Actual Refund Percentage: ​10% (80%-70%)
​Refund Interest: ​$60
​Total Year 2 Refund Amount: $1,060 ​
Expansion Deposit Amount We Retain:​ ​$2,000