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Veridian ConnectionsEB-2016-0107Exhibit 2Tab 1Schedule 1Filed: November 7, 2016Page 2 of 271Veridian has prepared this Application in accordance with the Board’s filing2requirements updated on July 14, 2016 as Chapter 3 Incentive Rate-Setting Applications3of the Ontario Energy Board Filing Requirements for Electricity Distribution Rate4Applications – 2016 Edition for 2017 Rate Applications- (“the Filing Requirements”).5Veridian has also relied on the following Board documents and has prepared this6application in accordance with them:789101112131415161718192021222324252627 Guideline (G-2008-0001) on Retail Transmission Service Rates - issued October22, 2008 (Revision 4.0 June 28, 2012)Report of the Board on Electricity Distributors’ Deferral and Variance AccountReview Initiative (EDDVAR) – issued July 31, 2009Guidelines for Electricity Distributors’ Conservation and Demand Management –April 26, 2012 (2012 CDM Guidelines)Guidelines for Electricity Distributors’ Conservation and Demand Management –December 19, 2014 (2014 CDM Guidelines)Report of the Ontario Energy Board – Updated Policy for the Lost RevenueAdjustment Mechanism Calculation: Lost Revenues and Peak Demand Savingsfrom Conservation and Demand Management Programs - May 19, 2016Conservation and Demand Management Code for Electricity Distributors –September 16, 2010Accounting Guidance – Capacity Based Recovery – July 25, 2016Veridian has used the following Board issued models and workforms: 2017 IRM Rate Generator V1.3 (“2017 IRM Model”)Lost Revenue Adjustment Mechanism Variance Account Workform (LRAMVA)Version 1.0228Veridian has reviewed the accuracy of the billing determinants in the prepopulated29model. Veridian confirms that the billing determinants in the prepopulated model are as30reported by Veridian in its RRR filings.31

Veridian ConnectionsEB-2016-0107Exhibit 2Tab 1Schedule 1Filed: November 7, 2016Page 3 of 271Veridian has approximately 120,000 customers across its service areas that will be2affected by this application. If Veridian were to receive a Letter of Direction and Notice3of Application, Veridian suggests the Notice of Application and Hearing for this4proceeding be published in the following newspapers:5NewspaperPaidPublication evilleYesMon-Sat10,884 dailyYesWeekly3,500 weeklyYesMon-Thurs10,350 dailyYesDaily346,340 dTodayToronto Star473,743 Saturday297,679 Sunday678The primary contact for this application is:9Tracey Strong CPA, CGA10Manager, Corporate Planning11905 427-9870 ext 223912tstrong@veridian.on.ca131415

Veridian ConnectionsEB-2016-0107Exhibit 2Tab 1Schedule 1Filed: November 7, 2016Page 4 of 2712.0 Summary2Veridian is proposing 2017 Distribution Rates which are based on 2016 rates adjusted for3the annual adjustment mechanism or price cap adjustment. This Manager’s summary will4address the following rate adjustments applied for:5 Price Cap Adjustment6 Rate design for the Residential and Seasonal Residential Customers7 Electricity Distribution Retail Transmission Service Rates8 Group 1 Deferral and Variance Account disposition9 Lost Revenue Adjustment Mechanism Variance Account (“LRAMVA”)disposition101112Veridian is proposing disposition of Group 1 Deferral and Variance Account balances to13December 31st, 2015 as these balances meet the materiality threshold as outlined in14section 3.2.5 of the Filing Requirements.15Veridian is also proposing disposition of LRAMVA recovery for balances to December1631, 2015 and eligible LRAM adjustments for the program year 2015 finalized in June172016.18Veridian requests approval to recover any lost revenue due to retroactive billing19adjustments for 2014 street light conversion projects in a future LRAMVA rate20proceeding if supporting information is not available in a timely manner for this21application. Details on LRAMVA are in Exhibit 2, Tab 1, Schedule 7.0.2223Total bill impact for a Veridian residential customer with the monthly average24consumption of 750 kWh is a decrease of 1.58 or a 1.08 %.252627

Veridian ConnectionsEB-2016-0107Exhibit 2Tab 1Schedule 1Filed: November 7, 2016Page 5 of 2713.0 Price Cap Adjustment2Veridian has used the Board’s default values for the Price Escalator (GDP-IPI),3Productivity Factor and Stretch Factor of 2.1%, 0.0% and 0.30% respectively. The4resulting Price Cap Index to be used within the 2017 Rate Model is 1.80%. Veridian5understands that Board Staff will adjust the Price Escalator to reflect the 2017 GDP-IPI6value when published by Statistics Canada.7Requirements, the Price Cap has been applied only to the Service Charge and8Distribution Volumetric Rate.As per section 3.2.1.1 of the Filing910The 2017 IRM Model is provided as Attachment B.11124.0 Rate Design for Residential and Seasonal Residential Electricity13Customers14On April 2, 2015, the OEB released its Board Policy: A New Distribution Rate Design for15Residential Electricity Customers (EB-2014-0210), which stated that electricity16distributors will transition to a fully fixed monthly distribution service charge for17residential customers.18implemented over a period of four years.19The OEB issued decisions affecting 2016 rates for Price Cap IR and Annual Index IR20applicants consistent with this policy. In this second year of transition, the distributor21must follow the approach set out in sheet 16 of the rate generator model.22In Veridian’s 2016 IRM rate application (EB-2015-0106), the Board approved23Residential and Seasonal Residential distribution rates consistent to year 1 of the24transition towards the fully fixed rate. At that time the Board approved a transition25period of 4 years for the Residential class and 5 years for the Seasonal Residential class.26Veridian is proposing the second year of transition in the current 2017 IRM application.The transition began in 2016 and in most cases will be

Veridian ConnectionsEB-2016-0107Exhibit 2Tab 1Schedule 1Filed: November 7, 2016Page 6 of 271Tab “16. Rev2Cost GDPIPI” of the 2017 IRM model has been customized by OEB staff2to include calculations for Veridian’s Residential and Seasonal Residential rate classes.3Table 1 below summarizes the incremental change in the monthly service charge for both4Residential and Seasonal Residential rate classes.Table 1: Current and Proposed Monthly Service ServiceVolumetric ServiceVolumetricRate ClassChargeChargeChargeChargeResidential 16.30 0.0123 19.77 0.0083Seasonal Residential 33.43 0.0283 37.46 0.0216IncrementalChange forMonthly ServiceCharge 3.12 3.37567As directed by the Board in the Filing Requirements: “In 2017, a distributor is expected8to apply to extend its OEB-approved transition period if necessary, to continue to comply9with the policy. For 2017, the monthly service charge would have to rise more than 410per year in order to affect the length of the transition to fixed rates”.11As shown in Table 1 above, the increase to the monthly service charge for each of the12Residential and Seasonal Residential classes, is less than the 4 threshold. Therefore13extension of the previously OEB approved transition periods are not required.1415Section 3.2.3 of the Filing Requirements also state for the 10th consumption percentile16customers: “If the total bill impact of the elements proposed in this application is 10% or17greater for RPP customers consuming at the 10th percentile, a distributor must file a plan18to mitigate the impact for the whole residential class or indicate why such a plan is not19required.”2021Veridian has assessed the total bill impacts for the Residential and Seasonal Residential22customers at average consumption levels and for customers at the 10th consumption23percentile and determined that no mitigation is required.

Veridian ConnectionsEB-2016-0107Exhibit 2Tab 1Schedule 1Filed: November 7, 2016Page 7 of 271Veridian has extracted consumption data for the period July 1, 2015 to July 1, 2016 on2accounts that have been active for at least one year and to the end of the period3mentioned above and has used this data to calculate average monthly customer4consumption and monthly customer consumption at the 10th consumption percentile. The5average monthly consumption calculated for a Residential customer was 714 kWh per6month and for a Seasonal Residential customer was 545 kWh per month.7The 10th consumption percentile for the Residential customer rate class is 319 kWh. The810th consumption percentile for the Seasonal Residential customer rate class is 100 kWh.9Table 2 below summarizes the calculated total monthly bill impacts for a Residential10customer and Seasonal Residential customer.Table 2: Total Monthly BillImpactsCustomerTotal Bill Impact Residential 714 kWh per month 11Residential 319 kWh per month(10th consumption percentile) Seasonal Residential 545 kWhper month Seasonal Residential 100 kWhper month (10th consumptionpercentile) Total Bill 72%1213145.0 Retail Transmission Service Rates (“RTSR’s”)15In preparing this application, Veridian has referred to the Board’s Guideline G-2008-00116Electricity Distribution Retail Transmission Service Rates Revision 4.0, issued June 28,172012.

Veridian ConnectionsEB-2016-0107Exhibit 2Tab 1Schedule 1Filed: November 7, 2016Page 8 of 271Veridian has completed the Board issued 2017 IRM Model for RTSR– available as2Attachment B.3As outlined in the Filing Requirements, the model reflects the most recent UTRs4approved by the Board (EB-2015-0311), issued on January 14, 2016 and effective5January 1, 2016. Veridian understands that once any January 1, 2017 UTR adjustments6have been determined, Board staff will adjust the 2017 RTSR section of the IRM model7to incorporate these changes. Similarly, any adjustments required for changes to Hydro8One’s Sub-Transmission class RTSRs will also be made by Board Staff.9The calculations within the Board issued model results in an increase to Network Service10Rates, Line and Transformation Connection Service Rates.1112Table 3 below provides the current and resulting proposed Rates by Class.1314Table 3: Current and Proposed RTSRsRate Class1516Residential per kWhSeasonal Residential perkWhGS 50 kW per kWhGS 50 to 2,999 kWper kWGS 3,000 to 4,999 kWper kWLarge Use per kWUnmeteredScatteredLoad per kWhSentinel Lighting perkWStreet Lighting per kWNetwork Service RateCurrentProposed20162017 0.0068 0.0070 0.0070 0.0072Line and TransformationCurrent-2016 Proposed-2017 0.0047 0.0060 0.0048 0.0062 0.0062 2.9983 0.0063 3.0696 0.0042 1.9930 0.0043 2.0469 3.3034 3.3819 2.1889 2.2481 3.3034 0.0062 3.3819 0.0063 2.1889 0.0042 2.2481 0.0043 1.8702 1.9146 1.2530 1.2869 1.9692 2.0160 1.3094 1.3448

Veridian ConnectionsEB-2016-0107Exhibit 2Tab 1Schedule 1Filed: November 7, 2016Page 9 of 271Full details of the historic inputs and calculations of the adjustments to the RTSRs can be2found in Attachment B – 2017 IRM Model.346.0 Deferral and Variance Account Disposition566.1 Approved Deferral and Variance Account Rate Riders7In Veridian’s 2015 IRM Rate Application (EB-2014-0117) rate riders were calculated on8and approved for the disposition of the following Group 1 deferral and variance accounts9(principal balance to December 31, 2013 and interest to April 30, 2015):101550 – LV Variance Account111580 – RSVA WMS121584 – RSVA NW131586 – RVA CN141588 – RSVA POWER151589 – RSVA Global Adjustment (separate rate rider)161595 – Recovery of Regulatory Assets – 2010 Disposition1718The total approved for disposition for Veridian was a recovery of 4,307,905 with a19recovery period of 1 year (sunset date of April 30, 2016).20A second Rate Rider for the disposition of Account 1589 RSVA– Global Adjustment21(GA), approved as a refund to customers of 1,494,865 with a disposition period of 122year (sunset date of April 30, 2016).2324In Veridian’s 2016 IRM Application (EB-2015-0106), the total December 31, 201425balance for all Group 1 accounts including interest projected to April 30, 2016 was a26credit of 27,400 which didn’t meet the threshold test. Veridian did not seek disposition27of Group 1 account balances in its 2016 IRM Application.

Veridian ConnectionsEB-2016-0107Exhibit 2Tab 1Schedule 1Filed: November 7, 2016Page 10 of 271In the Decision and Rate Order to EB-2015-0106 issued March 17, 2016, the Board states2on page 7, “Veridian’s 2014 actual year-end balance for Group 1 accounts including3interest projected to April 30, 2016 is a credit of 27,400. This amount results in a total4credit claim of 0.00001 per kWh, which does not exceed the preset disposition5threshold”.676.2 2017 Proposed Deferral/Variance Account Disposition89Veridian requests disposition of Group 1 Account balances as of December 31, 2015 and10applicable carrying charges to April 30, 2017 and proposes recovery over a 1 year period.11Veridian’s proposed 2017 Rate Riders are summarized in table 5 on page 12. Veridian12Group 1 (excluding GA) balance is credit of ( 7,654,588) and the balance of RSVA–13Global Adjustment is 4,857,707. The Capacity Based Recovery (“CBR”) sub-account14of 1580 Wholesale Market Services totaling 608,732 is not being disposed of through15the Deferral and Variance account rate rider. A separate rate rider has been calculated for16Class B customers as discussed in section 6.3 of this Manager’s Summary.17Table 4 below shows the amounts by account that are being proposed for disposition.18The balances reported in the 2015 RRR and associated interest amounts as of December1931, 2015 are in agreement with the account balances being considered for disposition in20this application.21

Veridian ConnectionsEB-2016-0107Exhibit 2Tab 1Schedule 1Filed: November 7, 2016Page 11 of 27Table 4: Group 1 Variance and DeferralAccount BalancesAccount Description1550‐LV Variance Account1551‐Smart Metering Entity Charge Variance1580‐RSVA WMS1580‐RSVA WMS‐Sub Account CBR Class A1580‐RSVA WMS‐Sub Account CBR Class B1584‐RSVA NW1586‐RSVA CN1588‐RSVA POWER1589‐RSVA Global Adjustment1595‐Disposition Rec/Refund of Reg Bal 20101595‐Disposition Rec/Refund of Reg Bal 20121595‐Disposition Rec/Refund of Reg Bal 20131595‐Disposition Rec/Refund of Reg Bal 2014Total Including Global AdjustmentTotal Excluding Global AdjustmentLRAM Variance Account123456InterestBalance atPrincipalDec 31,Balance at2015Dec 31, 683)126Interest toTotal at Dec April 30,31, )(84,015)Total ,168

Veridian ConnectionsEB-2016-0107Exhibit 2Tab 1Schedule 1Filed: November 7, 2016Page 12 of 271Basis for Proposed New 2017 Deferral/Variance Account Rate Riders2The Board’s Report on Electricity Distributor’s Deferral and Variance Account Review3Initiative (EDDVAR) (“the Report”) issued on July 31, 2009 concludes that Group 14Account balances will be reviewed in a distributor’s IRM application. The Account5balances to be reviewed will be for the most recent period ending December 31 as6reported to the Board as of April 30 through the RRR process. The review is limited to a7test against a preset disposition materiality threshold of 0.001/kWh (credit or debit).8The result of the materiality threshold for Group 1 account balances for Veridian as of9December 31, 2015 and applicable carrying charges to April 30, 2017 is a credit of10( 0.0011) / kWh. The proposed rate riders are listed in table 5 below:Table 5: Proposed Rate RidersRate Class11RR forGARR for GlobalDeferral/Varia Deferral/Varia Variance Adjustmentnce AccountAccountDispositionnceRR UnitsNon-RPPAccoun DispositionCustomerst RRonlyUnitsRESIDENTIALSEASONAL RESIDENTIALGENERAL SERVICE LESS THAN50 kWGENERAL SERVICE 50 TO2,999 KWGENERAL SERVICE 50 TO2,999 KW ‐ non‐WMP OnlyGENERAL SERVICE 3,000 TO4,999 KWLARGE USEUNMETERED SCATTEREDLOADSENTINEL LIGHTING /a0.0045kW(1.1771)kWh0.0045STREET LIGHTINGkW(1.1728)kWh0.0045

Veridian ConnectionsEB-2016-0107Exhibit 2Tab 1Schedule 1Filed: November 7, 2016Page 13 of 271The Board has included in the 2017 IRM Model the calculation of Deferral and Variance2Account disposition to assist distributors in their review of Group 1 Account balances.3Details of the continuity schedule for the Group 1 account balances can be found on Tab43. Continuity Schedule of the 2017 IRM Rate Generator model in Attachment B.566.3 Wholesale Market Participants7Wholesale market participants (“WMP”) refer to customers that participate directly in8IESO-administered markets and settle commodity and market-related charges with the9IESO even if they are embedded in a distributor’s distribution system. When calculating10the rate rider applicable to WMPs, distributor’s must not allocate any account balances in11Account 1588 RSVA-Power, Account 1580 RSVA-Wholesale Market Services Charge12and Account 1589 RSVA-Global Adjustment to a WMP customer.13Veridian has one WMP customer that it distributes electricity to in its service territory.14When calculating rate riders in this application, Veridian ensured only the following15account balances were used.16 Account 1550 LV Variance Account17 Account 1584 RSVA-Retail Transmission Network Charge18 Account 1586 RSVA-Retail Transmission Connection Charge19 Account 1595-Disposition/Refund of Regulatory Balances.2021Veridian’s 2017 IRM Rate Generator model calculates two Deferral and Variance22Account rate riders. One applies to all customers and the other applies to non-WMP23customers. The kWh consumption and kW demand volumes for the WMP are excluded24from the calculations of the Deferral/Variance Accounts Rate Rider for Non-WMPs and25Global Adjustment rate rider. See Attachment B for the 2017 IRM Rate Generator26model.27

Veridian ConnectionsEB-2016-0107Exhibit 2Tab 1Schedule 1Filed: November 7, 2016Page 14 of 2716.4 Global Adjustment (“GA”)2The Account 1589 RSVA-Global Adjustment (GA) records the net difference between3the GA billed to Class B non-RPP customers and the GA charged to Veridian on the4IESO settlement invoices and Hydro One invoices.5rates are established by the IESO. Veridian uses the accrual method to record these6amounts. Veridian is proposing disposition of Account 1589 RSVA-Global Adjustment7in the amount of 4,857,707 including carrying charges to April 30, 2017.The Global Adjustment (“GA”)89The IESO bills distributors Class A GA amounts based on the percentage contribution to10the top five peak Ontario demand hours over a year-long period. Veridian settles GA11costs with its Class A customers on the basis of actual costs. There is no variance related12to Class A GA amounts recorded in Account 1589 RSVA-Global Adjustment.1314For Class B non-RPP GA customers, Veridian bills on 1st estimate provided by the IESO.15Veridian settles with the IESO on the 2nd estimate for charge type 142 on the IESO16invoice. The final adjustment between the 2nd estimate and the actual IESO GA rate is17settled with the IESO two months after current period.1819Consumption data for IESO charge type

www.veridian.on.ca Veridian Connections is a wholly owned subsidiary of Veridian Corporation November 7, 2016 Ms. Kirsten Walli Board Secretary Ontario Energy Board 2300 Yonge Street Suite 2700, P.O. Box 2319 Toronto, ON M4P 1E4 Dear Ms. Walli: Re: Veridian Connections Inc., 2017 Electricity Distribution IRM Rate Application