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Unfavourable
-- Decreased electricity sales for the quarter Factors Contributing to Quarterly Earnings Variance
Favourable
-- Rate base growth, due to continued investment in energy infrastructure-- Lower-than-expected finance charges in 2012. As approved in the 2012/2013 revenue requirements decision received in August 2012, variances between actual finance charges and those forecasted in determining customer electricity rates, beginning January 1, 2012, are no longer permitted deferral account treatment and, therefore, favourably impacted earnings in 2012.-- Higher pole-attachment revenue-- The expiry of the PBR mechanism on December 31, 2011. In the fourth quarter of 2011, lower-than-expected electricity revenue and higher- than-expected operating expenses, which were shared equally between customers and FortisBC Electric under the PBR mechanism, unfavourably impacted earnings in that quarter. Pursuant to the Company's 2012/2013 revenue requirements decision received in August 2012, variances between actual electricity revenue and purchased power costs and those used in determining customer electricity rates were subject to full deferral account treatment and, therefore, did not impact earnings in the fourth quarter of 2012. Factors Contributing to Annual Earnings Variance
Favourable
-- Rate base growth, for the same reason discussed above for the quarter-- Higher pole-attachment revenue-- Lower-than-expected finance charges, for the same reason discussed above for the quarter
Unfavourable
-- The expiry of the PBR mechanism on December 31, 2011. In 2011 lower- than-expected costs, primarily purchased power costs, which were shared equally between customers and FortisBC Electric under the PBR mechanism, favourably impacted earnings in that year. In 2012 variances between actual electricity revenue and purchased power costs and those used in determining customer electricity rates were subject to full deferral account treatment and, therefore, did not impact earnings in 2012.
NEWFOUNDLAND POWER
----------------------------------------------------------------------------Financial Highlights (Unaudited) Quarter AnnualPeriods Ended December 31 2012 2011 Variance 2012 2011 Variance--------------------------------------------------------------------------------------------------------------------------------------------------------Electricity Sales (GWh) 1,539 1,527 12 5,652 5,553 99Revenue ($ millions) 159 156 3 581 573 8Earnings ($ millions) 9 8 1 37 32 5-------------------------------------------------------------------------------------------------------------------------------------------------------- Factors Contributing to Quarterly and Annual Electricity Sales Variances
Favourable
-- Growth in the number of customers-- Higher concentration of electric-versus-oil heating in new home construction combined with economic growth, which increased consumption
Unfavourable
-- Sunnier weather conditions, which reduced average consumption Factor Contributing to Quarterly Revenue Variance
Favourable
-- The 0.8% increase in electricity sales Factors Contributing to Annual Revenue Variance
