Bluewater Power Distribution Corporation

2006 Rate Application

RP-2005-0020/EB-2005-0340

Schedule 2-3

Page 1 of 4

Schedule 2-3 –Audited Financial Statements

Audited financial statements for Bluewater Power Distribution Corporation for the years 2002, 2003 and 2004 are attached.

Schedule 2-3 –Addendum – Reconciliation to RRR Filings

We confirm that the values in RRR data from 2002, 2003 and 2004 have not been changed.Through the 2006 rate application, it has come to Bluewater Power's attention that the account determination that we assumed is different from that of the chart of accounts.Thus, we have reallocated various amounts on Sheet 2-4, Column E. These entries are summarized below.

Debit/Credit / Account / Value / Explanation
1 / Debit / 4006 / $ 1,677,319.72 / From residential commodity to Wholesale market fees
Credit / 4062 / $ 1,677,319.72
2 / Debit / 4010 / $ 798,078.45 / From commercial commodity to wholesale market fees
Credit / 4062 / $ 798,078.45
3 / Debit / 4011 / $ 2,512,934.00 / From commercial commodity to wholesale market fees
Credit / 4062 / $ 2,512,934.00
4 / Debit / 4020 / $ 1,390,436.44 / From Large commodity to wholesale market fees
Credit / 4062 / $ 1,390,436.44
5 / Debit / 4025 / $ 57,511.28 / From streetlight commodity to wholesale market fees
Credit / 4062 / $ 57,511.28
6 / Debit / 4030 / $ 4,658.77 / From sentinel commodity to wholesale market fees
Credit / 4062 / $ 4,658.77
7 / Debit / 4006 / $ 1,542,053.07 / From residential commodity to transmission network
Credit / 4066 / $ 1,542,053.07
8 / Debit / 4010 / $ 669,355.21 / From commercial commodity to transmission network
Credit / 4066 / $ 669,355.21
9 / Debit / 4011 / $ 2,048,138.62 / From commercial commodity to transmission network
Credit / 4066 / $ 2,048,138.62
Debit/Credit / Account / Value / Explanation
10 / Debit / 4020 / $ 1,370,667.84 / From large commodity to transmission network
Credit / 4066 / $ 1,370,667.84
11 / Debit / 4025 / $ 38,671.89 / From streetlight commodity to transmission network
Credit / 4066 / $ 38,671.89
12 / Debit / 4030 / $ 3,033.66 / From sentinel commodity to transmission network
Credit / 4066 / $ 3,033.66
13 / Debit / 4006 / $ 1,352,674.08 / From residential commodity to transmission connection
Credit / 4068 / $ 1,352,674.08
14 / Debit / 4010 / $ 579,247.71 / From commercial commodity to transmission connection
Credit / 4068 / $ 579,247.71
15 / Debit / 4011 / $ 1,772,290.80 / From commercial commodity to transmission connection
Credit / 4068 / $ 1,772,290.80
16 / Debit / 4020 / $ 1,242,257.97 / From large commodity to transmission connection
Credit / 4068 / $ 1,242,257.97
17 / Debit / 4025 / $ 33,408.47 / From streetlight commodity to transmission connection
Credit / 4068 / $ 33,408.47
18 / Debit / 4030 / $ 2,660.33 / From sentinel commodity to transmission connection
Credit / 4068 / $ 2,660.33
19 / Debit / 4006 / $ 6,889,953.93 / From residential commodity to distribution revenue
Credit / 4080 / $ 6,889,953.93
20 / Debit / 4010 / $ 2,336,667.48 / From commercial commodity to distribution revenue
Credit / 4080 / $ 2,336,667.48
21 / Debit / 4011 / $ 2,780,037.80 / From commercial commodity to distribution revenue
Credit / 4080 / $ 2,780,037.80
22 / Debit / 4020 / $ 1,130,001.99 / From large commodity to distribution revenue
Credit / 4080 / $ 1,130,001.99
23 / Debit / 4025 / $ 204,249.95 / From streetlight commodity to distribution revenue
Credit / 4080 / $ 204,249.95
24 / Debit / 4030 / $ 18,288.67 / From sentinel commodity to distribution revenue
Credit / 4080 / $ 18,288.67
25 / Debit / 4011 / $ 1.99 / From commercial commodity to SSS admin charge
Credit / 4090 / $ 1.99
26 / Debit / 4235 / $ 85,389.99 / From miscellaneous charges to SSS admin charge
Credit / 4090 / $ 85,389.99
Debit/Credit / Account / Value / Explanation
27 / Debit / 5615 / $ 63,872.70 / From regulatory charges to general salary
Credit / 5655 / $ 63,872.70
28 / Debit / 5615 / $ 331.36 / From regulatory charges to general meals
Credit / 5655 / $ 331.36
29 / Debit / 5665 / $ 69.70 / From regulatory charges to miscellaneous secured delivery
Credit / 5655 / $ 69.70
30 / Debit / 5615 / $ 2,124.85 / From regulatory charges to general travel
Credit / 5655 / $ 2,124.85
31 / Debit / 5620 / $ 151.38 / From regulatory charges to supplies
Credit / 5655 / $ 151.38
32 / Debit / 4235 / $ 62,618.80 / From miscellaneous revenue to retailer service revenue
Credit / 4082 / $ 62,618.80
33 / Debit / 4235 / $ 505.50 / From miscellaneous revenue to retailer STR revenue
Credit / 4084 / $ 505.50
34 / Debit / 4220 / $ 630,484.00 / From other electric revenue to Interest & Dividend Income.
Credit / 4405 / $ 630,484.00
35 / Debit / 4210 / $ 107,184.48 / From rental revenue to other sales (joint pole use)
Credit / 4230 / $ 107,184.48
36 / Debit / 4235 / $ 1,019,462.72 / From miscellaneous revenue to jobbing revenue
Credit / 4325 / $ 1,019,462.72
37 / Debit / 2160 / $ 14,244,092.00 / Move $7,122,046 amortization from non-distribution to distribution account
Credit / 2105 / $ 14,244,092.00 / Had to double the value in order for the model to accurately display.
38 / Debit / 5665 / $ 221,711.00 / To reallocate legal costs
Credit / 6310 / $ 221,711.00
39 / Debit / 5665 / $ 16,071.00 / To reallocate interest paid on customer accounts to miscellaneous expense.
Credit / 6035 / $ 16,071.00
40 / Debit / 6110 / $ 118,595.94 / To move capital taxes to correct GL per page 13 of EDR instructions
Credit / 6105 / $ 118,595.94
41 / Debit / 2075 / $ 106,125.39 / Move non-distribution related capital expenditures
Credit / 1925 / $ 106,125.39
42 / Debit / 2105 / $ 3,537.52 / To move $1768.76 amortization on non-distribution asset into correct non-distribution account
Credit / 2180 / $ 3,537.52 / Had to double the value in order for the model to accurately display.
Debit/Credit / Account / Value / Explanation
43 / Debit / 5725 / $ 1,768.76 / To move amortization expense on non-distribution asset into correct non-distribution account
Credit / 5705 / $ 1,768.76 / Had to double the value in order for the model to accurately display.
44 / Debit / 4330 / $ 85,159.12 / To reallocate billable expenses (Bahamas relief) to correct billable jobbing accounts
Credit / 5025 / $ 2,834.88 / Please see Schedule 3-2 for the allocation as a non-routine adjustment.
Credit / 5125 / $ 785.35
Credit / 5150 / $ 78.15
Credit / 5610 / $ 18,525.38
Credit / 5615 / $ 62,935.36
45 / Debit / 4330 / $ 102,184.43 / To reallocate billable expenses to correct billable jobbing accounts.
Credit / 5615 / $ 44,586.57
Credit / 5017 / $ 540.00
Credit / 5025 / $ 852.32
Credit / 5120 / $ 23,764.08
Credit / 5145 / $ 2,816.10
Credit / 5150 / $ 21,668.48
Credit / 5175 / $ 2,262.91
Credit / 5330 / $ 70.00
Credit / 5610 / $ 26.78
Credit / 5665 / $ 2,779.84
Credit / 5675 / $ 267.35
Credit / 5680 / $ 2,550.00

We confirm there are three differences between the 2004 Audited GAAP Financial Statements and the 2004 RRR data. The GAAP financial statements include a $500,000 allowance for recovery of our Regulatory Assets. The RRR data does not. Secondly, the RRR data includes an amount for a 2001 Pre-Market Opening Energy Variance of $2,073,756. The GAAP financial statements do not. Thirdly, carrying charges with respect to the above two items will vary between the 2004 RRR data and the GAAP financial statements.

We confirm that subsequent to the 2004 RRR data and 2004 audited GAAP financial statements, some of the balances for Regulatory Assets have been updated in the Regulatory Asset Model. These changes reflect our final submission for the balances that should be recovered and the corresponding reconciliation to our 2004 RRR data. Please refer to our Regulatory Asset Model submission for reference, EB 2005-0340.