Dollars (in millions)

	F2002	F2003	F2004	F2005	F2006	F2007
Plan	$317	$355	($49)	$406	$411	$395
Actual	$403	$418	$111	$402	$266

Definition

Net income is defined as total revenue less total expenses after net change in regulatory accounts, and represents the net impact of key economic and business factors that affect BC Hydro's performance. Regulatory account transfers reflect the results of the application of accounting policies by BC Hydro operating in a rate regulated environment. These policies generally result in deferral and amortization of costs and recoveries to allow for adjustment of future rates.

Variance Explanation

Net income of $266 million is $145 million below Plan primarily due to the cost of energy for meeting higher than Plan load, higher operating costs and amortization expenses offset by lower finance charges and taxes.

Benchmark Comparison

BC Hydro's allowed rate of return for F2006 was 13.51 per cent, as approved by the B.C. Utilities Commission in its rate decision of October 29, 2004, which translates to net income of $408 million. The allowed return on equity has been calculated to equal, on a pre-income tax basis, that of the most comparable investor-owned utility.