expectation of further expansion, the contribution in aid of construction is expected to take into account the future load growth potential and timing of any such expansion.” (E.B.O. 188, Final Report of the Board, January 30, 1998, section 4.3.4, page 19). Further, the E.B.O. 188 Guidelines also contemplated that capital costs will be allocated based on the customer’s peak day demand (E.B.O. 188, Final Report of the Board, January 30, 1998, Sec. 4.3.3, part (ii), page 19). The HAF refines this by making this allocation based on each customer’s peak hour demand.

38. Fundamentally, the HAF is derived by dividing the net forecasted capital cost of a project by the forecasted capacity that the project serves within the Area of Benefit. The HAF is expressed as a capital cost for each cubic metre per hour of incremental capacity. This approach has previously been used and approved in four LTC projects in the Union rate zones. A summary of these previously approved projects and their corresponding HAF calculations is provided in Appendix A to this exhibit. The HAF can then be used to allocate the capital cost of a project to the customers the project serves as each customer contracts for or initiates service, based on each customer's incremental capacity requirement, in addition to the costs of any customer specific facilities that may be required (e.g., upgrades to a customer station, service line, or distribution main).

39. Enbridge Gas is proposing that the Board approve the use of the HAF process as an allocation methodology for capital costs in future Development Projects. The previous four LTC Board approved projects that employed the HAF approach all had about 50% of the capacity committed or more prior to being advanced for LTC approval. See Appendix A for details.