information request no. 1 to fortis energy …...creative energy vancouver platforms inc. suite 1...

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INFORMATION REQUEST No. 1 TO FORTIS ENERGY INC. (FEI) FOR A CERTIFICATE OF PUBLIC CONVENIENCE & NECESSITY FOR A LOW CARBON NEIGHBOURHOOD ENERGY SYSTEM (NES) FOR NORTHEAST FALSE CREEK (NEFC) AND CHINATOWN NEIGHBOURHOODS OF VANCOUVER August 21, 2015 CREATIVE ENERGY VANCOUVER PLATFORMS INC. Suite 1 – 720 Beatty Street 604 688 9584 TEL Vancouver, Canada 604 688 2213 FAX V6B 2M1 B-29

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Page 1: INFORMATION REQUEST No. 1 TO FORTIS ENERGY …...CREATIVE ENERGY VANCOUVER PLATFORMS INC. Suite 1 – 720 Beatty Street 604 688 9584 TEL Vancouver, Canada 604 688 2213 FAX V6B 2M1

INFORMATION REQUEST No. 1 TO FORTIS ENERGY INC. (FEI) FOR

A CERTIFICATE OF PUBLIC CONVENIENCE & NECESSITY FOR A

LOW CARBON NEIGHBOURHOOD ENERGY SYSTEM (NES) FOR

NORTHEAST FALSE CREEK (NEFC) AND CHINATOWN

NEIGHBOURHOODS OF VANCOUVER August 21, 2015 CREATIVE ENERGY VANCOUVER PLATFORMS INC. Suite 1 – 720 Beatty Street 604 688 9584 TEL Vancouver, Canada 604 688 2213 FAX V6B 2M1

B-29

cnsmith
Creative Energy NES CPCN
Page 2: INFORMATION REQUEST No. 1 TO FORTIS ENERGY …...CREATIVE ENERGY VANCOUVER PLATFORMS INC. Suite 1 – 720 Beatty Street 604 688 9584 TEL Vancouver, Canada 604 688 2213 FAX V6B 2M1

CREATIVENERGY Information Request No.1 to FEI – NEFC CPCN – August 21, 2015

Table of Contents 1.0 Reference: Exhibit C7-8, Paragraph 2 .......................................................................... 1

2.0 Reference: Exhibit C7-8, Paragraph 2 ........................................................................... 2

3.0 Reference: Exhibit C7-8, Paragraph 3 ........................................................................... 2

4.0 Reference: Exhibit C7-8, Paragraph 4 .......................................................................... 3

5.0 Reference: Exhibit C7-8, Paragraph 13, Figure 1 .......................................................... 4

6.0 Reference: Exhibit C7-8, Paragraph 13 and Table 1 ..................................................... 4

7.0 Reference: Exhibit C7-8, Paragraph 15 ......................................................................... 5

Reference: Exhibit C7-8, Paragraph 17 .......................................................................... 5

References: Exhibit C7-8, Paragraph 21 and 22 ............................................................. 5

8.0 Reference: Exhibit C7-8, Paragraph 20 ......................................................................... 6

9.0 References: Exhibit C7-8, Paragraph 26 ........................................................................ 6

10.0 Reference: Exhibit C7-8, paragraph 28 ......................................................................... 6

11.0 Reference: Exhibit C7-8, Paragraph 20 ......................................................................... 7

12.0 Reference: Exhibit C7-8, Paragraph. 31 and Attachment 3, Article 13 ....................... 7

13.0 Reference: Exhibit C7-8, Paragraph 39 ......................................................................... 8

14.0 Reference: Exhibit C7-8, Paragraph 41 ......................................................................... 8

15.0 Reference: Exhibit C7-8, Paragraph 42 ......................................................................... 8

16.0 Reference: FortisBC Energy Biomethane Post Implementation and Program

Modification (PIR Report), p. 15 and Exhibit C7-8, para. 46 ........................................ 9

17.0 Reference: Exhibit C7-8, Paragraph 50, Table 2 ......................................................... 10

18.0 Reference: Exhibit C7-8, Paragraph 51 ....................................................................... 11

19.0 Reference: Exhibit C7-8, Paragraph 53 and 54 ........................................................... 11

20.0 Reference: Exhibit C7-8, Paragraph 57 ....................................................................... 11

21.0 Reference: Exhibit C7-8, Paragraph 62 and Figure 6 .................................................. 12

22.0 Reference: Exhibit C7-8, Paragraph 68 ....................................................................... 12

23.0 Reference: Exhibit C7-8, Paragraph 62 and Figure 6 .................................................. 15

Page 3: INFORMATION REQUEST No. 1 TO FORTIS ENERGY …...CREATIVE ENERGY VANCOUVER PLATFORMS INC. Suite 1 – 720 Beatty Street 604 688 9584 TEL Vancouver, Canada 604 688 2213 FAX V6B 2M1

CREATIVENERGY Information Request No.1 to FEI – NEFC CPCN – August 21, 2015

Reference: BCUC Generic Cost of Capital Proceeding – Stage 1, FortisBC Utilities response

to BCUC IR1 8.1, Exhibit B1-9, p. 23 ........................................................................................ 15

24.0 Reference: Exhibit C7-8, Paragraph 62 and Figure 6 .................................................. 17

Reference: FEI Application for CPCN For Delta School District 37, Exhibit B-1, Section

6.3.5, page 44. .............................................................................................................. 18

25.0 Reference: Exhibit C7-8, Paragraph 63 ....................................................................... 19

26.0 Reference: Exhibit C7-8, Paragraph 68 ....................................................................... 19

27.0 Reference: Exhibit C7-8, Paragraph 69 ....................................................................... 20

28.0 Reference: Exhibit C7-8, Paragraph 69 ....................................................................... 20

29.0 Reference: Exhibit C7-8, Paragraph 70 ....................................................................... 20

30.0 Reference: Exhibit C7-8, Paragraph 72 ....................................................................... 21

31.0 Reference: Exhibit C7-8, Paragraph 73. ...................................................................... 21

32.0 Reference: Exhibit C7-8, Paragraph 84 and Table 3 ................................................... 22

33.0 Reference: Exhibit C7-8, Paragraph 92 ....................................................................... 22

34.0 Reference: Exhibit C7-8, Paragraphs 92-96 ................................................................ 23

Reference: AES Inquiry, FEU Final Submission, Part 12 – Appendix A, “Evidence

Regarding Drivers for New Initiatives and How the New Initiatives Respond to Those

Drivers”, paragraphs 318-319 ...................................................................................... 23

35.0 Reference: Exhibit C7-8, Paragraph 94 ....................................................................... 24

36.0 Reference: Exhibit C7-8, Paragraph 94. ...................................................................... 25

37.0 Reference: Order G-20-12 proceeding, Exhibit B1-20, BCUC IR 1.6.1 ....................... 25

38.0 Reference: Order G-20-12 proceeding, Exhibit B1-20, BCUC IR 1.6.1 ....................... 25

39.0 Reference: Order G-20-12 proceeding, Exhibit B1-20 BCUC IR 1.7.0 ......................... 26

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CREATIVENERGY Information Request No.1 to FEI – NEFC CPCN – August 21, 2015 P a g e | 1

1.0 Reference: Exhibit C7-8, Paragraph 2

“FEI’s central concern with Creative Energy Vancouver Platforms Inc.’s (Creative Energy) Application relates to Creative Energy’s desire to have the Commission approve a franchise agreement… that purports to grant exclusivity not just over one type of delivered energy (i.e., piped hot water), but over end uses (i.e., space and water heating)”

1.1 Please clarify more specifically whether FEI accepts or rejects, with more

explanation as relevant, the following:

1.1.1 The CoV’s Greenest City Action Plan, Neighbourhood Energy Strategy and/or Energy Centre Guidelines.

1.1.2 The creation of a high density, mixed use development centered on Rogers

Arena and BC Place Stadium and a civic plaza. 1.1.3 The pre-existing CoV requirements in NEFC and Chinatown for district

energy compatibility and for connection to a city-designated DES if available.

1.1.4 The CoV authority to prepare a neighbourhood energy plan and to establish GHG reduction and/or other energy targets.

1.1.5 The specific CoV targets for GHG emissions reductions for the NEFC and Chinatown Neighbourhoods.

1.1.6 The CoV authority to establish policies to achieve those GHG reduction targets.

1.1.7 The CoV authority to award a franchise for a single (exclusive) district energy provider (distinct from mandatory connection and/or use requirements).

1.1.8 The CoV decision to award Creative Energy the district energy franchise in NEFC and CoV.

1.1.9 The CoV authority to establish a Service Area Bylaw.

1.1.10 The decision of the CoV to establish a Service Area Bylaw as a tool to achieve the neighbourhood energy objectives and specifically GHG reduction targets.

1.1.11 The CoV authority to grant exclusivity not just to a single district energy provider in a given neighbourhood but also to grant exclusivity of that provider over a set of customers and end uses.

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CREATIVENERGY Information Request No.1 to FEI – NEFC CPCN – August 21, 2015 P a g e | 2

1.1.12 The CoV authority to set standards and regulate the design and construction of heating and hot water systems in buildings.

1.1.13 The use of district energy in any form in NEFC and Chinatown.

1.1.14 The use of hot water vs. steam to serve NEFC / Chinatown.

1.1.15 The use of the existing Beatty Street plant to serve NEFC.

1.1.16 The phased approach to low carbon energy supply in NEFC and Chinatown.

1.1.17 Any other specific provisions in the Neighbourhood Energy Agreement besides the exclusivity over end uses.

2.0 Reference: Exhibit C7-8, Paragraph 2

“The nature of Creative Energy’s request in this regard is unusual, and its implications are significant.”

2.1 Did FEI intervene or provide similar evidence in the CPCN Applications for

UniverCity? River District Energy? UBC NDES? Why or why not? 2.2 Please explain how in FEI’s view Creative Energy’s Application for NEFC differs

from the above applications in terms of project size, approach to development (distribution technology, phasing of energy supply, GHG targets, use of natural gas, etc.), connection and design requirements, and other specific attributes.

3.0 Reference: Exhibit C7-8, Paragraph 3 “FEI is opposed to an end-use monopoly of this nature because it would impact: (a) the ability of energy consumers to choose any other energy source for space and water heating – including natural gas, or an on-site solution that incorporates natural gas;”

3.1 By “energy consumers” is FEI referring to developers, to the ultimate residents

/ tenants, or both?

3.2 In FEI’s view, how well are developer interests in the initial selection of space and

water heating aligned with final consumer interests? Explain.

3.3 Once an on-site system is installed (with or without gas boilers) by the developer

and turned over to a strata, please discuss how and when the strata would make

a decision to alter that system taking into account sunk capital costs (i.e., how

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CREATIVENERGY Information Request No.1 to FEI – NEFC CPCN – August 21, 2015 P a g e | 3

likely would a strata be to alter a system before the end of the life of existing

equipment).

3.4 Please discuss FEI’s understanding of the nature of approvals required from the

members of a strata in B.C. in order for a strata to purchase RNG for an on-site

gas boiler plant or to make capital expenditures that would alter or replace shared

systems for space or water heating.

3.5 FEI is opposed to an end-use monopoly that would constrain choice. Is FEI also

opposed to performance targets (GHG outcomes) imposed by the CoV that would

constrain developer and/or consumer ability to select conventional gas for space

and water heating?

4.0 Reference: Exhibit C7-8, Paragraph 4 “Both natural gas and Renewable Natural Gas (RNG) are viable and more cost-effective alternative sources of energy for consumers in the Northeast False Creek and Chinatown (NEFC) areas.”

4.1 Confirm FEI understands that Creative Energy’s proposal will use natural gas for all

energy requirements in Energy Supply Phase 1 and for peaking and back-up in Energy Supply Phase 2.

4.2 Confirm FEI understands that Creative Energy is not precluded from using RNG to

meet the Performance Requirements in Energy Supply Phase 2 if it proves more cost-effective than other alternatives.

4.3 Please confirm that FEI’s position in the above quote is more precisely that on-site gas boiler plants coupled with RNG are viable and more cost-effective alternative sources of energy to achieve the CoV Performance Requirements for consumers in the Northeast False Creative and Chinatown neighbourhoods. If not, please elaborate FEI’s position in light of the facts of Creative Energy’s proposal which includes natural gas and permits the use of RNG to meet CoV Performance Requirements.

4.4 Please explain whether FEI’s position is that distributed natural gas boiler plants

without RNG is viable and more cost-effective or that distributed natural gas boiler plants with RNG is viable and more cost-effective. If the former (no RNG), how does that meet the CoV Performance Requirements? Does FEI accept the CoV authority to establish the GHG Performance Requirements and the specific Performance Requirements? Or is FEI arguing that that Performance Requirements themselves are not viable or cost-effective?

4.5 Assuming the ten-on site TES projects in Table 1 of FAES’ evidence (Exhibit C4-7-1) exceed Creative Energy’s levelized rates and costs in NEFC for Energy Supply Phase I

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CREATIVENERGY Information Request No.1 to FEI – NEFC CPCN – August 21, 2015 P a g e | 4

only and the scenario that also includes Energy Supply Phase II, would FEI also consider on-site natural gas boiler plants with RNG as a preferable approach to serve customers in the NEFC and Chinatown than the any or all of the ten-on site TES projects of FAES? Please provide a response that compares each of the ten-on site alternatives to on-site natural gas boiler plants with RNG.

4.6 Please comment on whether natural gas boilers without some RNG use as alternative sources of energy are consistent with the CoV’s Neighbourhood Energy Strategy and Energy Centre Guidelines.

4.7 Please comment on whether FEI will require the support of the CoV policies and regulation before natural gas could become the permanent source of energy for NEFC.

5.0 Reference: Exhibit C7-8, Paragraph 13, Figure 1

5.1 Please clarify whether the loads contemplated in the core NEFC service area

(multi-family residential and hotel / casino, respectively) would fall under the

residential or the commercial categories used in Figure 1.

5.2 Please clarify if the consumption reflected in Figure 1 refers to the total amount of

gas distributed by FEI or the total amount of commodity sold by FEI. If the former, what percentage of the commodity distributed by FEI is sourced by FEI?

6.0 Reference: Exhibit C7-8, Paragraph 13 and Table 1

6.1 Please clarify where multi-family residential buildings are included in the customer

count and consumption statistics in Table 1 (i.e., in residential or commercial)?

6.2 Is a multi-family residential building counted as a single customer or multiple

customers? How is a multi-family building with a common meter for shared

systems and individual meters for in-suite gas use counted in these statistics?

6.3 Is Creative Energy’s Beatty street plant included in the Commercial or industrial

count / consumption?

6.4 Does annual consumption refer to the total amount of gas distributed by FEI or only the amount of commodity sourced by FEI?

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CREATIVENERGY Information Request No.1 to FEI – NEFC CPCN – August 21, 2015 P a g e | 5

7.0 Reference: Exhibit C7-8, Paragraph 15 “FEI has been making the necessary infrastructure investment in the CoV over the last number of decades to provide natural gas to customers that request service, irrespective of the customer’s intended use of service.”

Reference: Exhibit C7-8, Paragraph 17 “FEI has updated and added new assets within the CoV over the years as necessary to meet customer demand.”

References: Exhibit C7-8, Paragraph 21 and 22 “FEI’s existing infrastructure is sized to sustain progressive future growth that would be typical for this area [NEFC and Chinatown].”

7.1 Please discuss how the infrastructure is sized to sustain progressive future growth that would be typical for each area (NEFC and Chinatown).

7.2 What progressive future growth was assumed in the original sizing for each area

(NEFC and Chinatown)?

7.3 Who has paid for the cost of sizing infrastructure for future growth – customers or the shareholder of FEI?

7.4 Are the sunk costs of excess capacity included in the mains extension tests FEI or only further incremental costs?

7.5 Without identifying the specific customer or location, please provide the following information for the last five new customer additions (in-service) within each of the two areas (NEFC and Chinatown): - Date of addition - Class(es) of service (commercial, multi-family residential, industrial) - If multi-family, whether a single meter (common meter for shared systems)

or a common meter4 and individual suite meters - Size of service connection(s) - Nature of end uses (e.g., centralized boiler, make-up air, distributed boilers,

gas-fired cooktops and fireplaces, etc.). - Distance of connection from existing infrastructure prior to connection - Magnitude of CIAC, if any

7.6 Please confirm that FEI made the decision to install natural gas distribution

infrastructure in the Southeast False Creek neighbourhood, and that the decision was made after CoV had decided to establish the Neighbourhood Energy Utility in that same neighbourhood to provide all heating and hot water end-uses.

7.6.1 Please explain why this decision was made.

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CREATIVENERGY Information Request No.1 to FEI – NEFC CPCN – August 21, 2015 P a g e | 6

7.6.2 Please provide the cost of the gas distribution infrastructure installed in this area by FEI, the forecast annual throughput, and any other information or assumptions used by FEI to justify installing gas distribution infrastructure in an area with a CoV-owned utility providing all space heating and hot water end-uses.

8.0 Reference: Exhibit C7-8, Paragraph 20 “All customers and potential customers within these neighbourhoods are within a 200 metre radius of an existing distribution main, which is the distance identified in section 28 of the Utilities Commission Act that addresses extending public utility service to nearby premises.”

8.1 Please confirm the reference to the Act is to a utility’s obligation to serve upon

request and not to an explicit obligation of the customer to take service or a right

of the utility to provide service.

8.2 Please confirm that customers within 200 meters are still subject to an extension

test and the payment of a CIAC is required.

9.0 References: Exhibit C7-8, Paragraph 26 “A common trait of these systems [Stream A TES] is that the developer / strata corporation / landowner has made the commercial decision as to whether or not to install on-site thermal energy systems, and/or to take service from one of the other utilities like FEI, BC Hydro or Creative Energy.”

9.1 How often is a strata corporation involved in the selection of on-site thermal

energy systems for new construction? 9.2 Is FEI aware of any Stream A TES (including Stream A TES implemented by its

subsidiary FAES) formed for an existing building through an agreement with a strata corporation (vs. a developer)?

10.0 Reference: Exhibit C7-8, paragraph 28 “FEI has not identified any instance of an agreement in which a municipality confers exclusivity on one investor-owned utility over certain end uses.”

10.1 Please comment on whether FEI has identified instances in which a municipality

(or municipal utility) requires exclusivity over certain end uses. For each municipality so identified, please explain in detail the FEI objection to the specific municipality requirements that grant exclusivity over certain end uses.

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CREATIVENERGY Information Request No.1 to FEI – NEFC CPCN – August 21, 2015 P a g e | 7

10.2 Is FEI aware of instances where a municipality (or quasi-municipal authority) has conferred exclusivity on an investor-owned utility via business arrangements that are not regulated by the Commission (e.g., a concession model)?

10.3 Please comment on whether FEI’s concerns regarding a municipality granting exclusivity on end uses and mandatory connections would change depending on whether the grant is to an investor-owned utility or to a municipal utility. Please explain why the concern may be different.

10.4 Please discuss how the public interest might be negatively affected when a municipality chooses to grant exclusivity to an investor-owned utility that is regulated by the Commission vs. a municipally owned utility that is not regulated by the Commission.

11.0 Reference: Exhibit C7-8, Paragraph 20 “All customers and potential customers within these neighbourhoods are within a 200 metre radius of an existing distribution main, which is the distance identified in section 28 of the Utilities Commission Act that addresses extending public utility service to nearby premises.”

11.1 Please confirm the reference to the Act is to a utility’s obligation to serve upon

request and not to an explicit obligation of the customer to take service or a right

of the utility to provide service.

11.2 Please confirm that customers within 200 meters are still subject to an extension

test and the payment of a CIAC is required.

12.0 Reference: Exhibit C7-8, Paragraph. 31 and Attachment 3, Article 13 “The said works shall be placed, worked upon, or removed in such manner as not to interfere with any pipe, conduit, wire, duct, manhole, or other structure which shall have been laid down in any street, lane, alley, square, or other public place by the Corporation or under the permission of the Corporation or by virtue of any charter granted by competent authority.”

12.1 Please confirm that “works” as referred to in the above quoted section of the

FEI-COV Agreement includes the “new assets” described by FEI in Exhibit C7-8, para. 17, and the “existing infrastructure” described by FEI in Exhibit C7-8, para. 21, Figure 3 and para. 22, Figure 4.

12.2 Please confirm that “pipe, … manhole, or other structure” as referred to in the

above quoted section of the FEI-COV Agreement will include the infrastructure that is the subject of this Application?

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CREATIVENERGY Information Request No.1 to FEI – NEFC CPCN – August 21, 2015 P a g e | 8

13.0 Reference: Exhibit C7-8, Paragraph 39 “Approving the NEA would preclude the adoption of natural gas and RNG for space and water heating end uses, both of which are immediately available to serve energy consumers in the proposed franchise area.”

13.1 How does approving the NEA preclude the adoption of natural gas and RNG by

Creative Energy for meeting the needs of customers in NEFC?

14.0 Reference: Exhibit C7-8, Paragraph 41 “At today’s prices, delivered natural gas (including commodity, storage and transport, delivery and carbon tax) to a residential customer is one third to one half the price of electricity.”

14.1 What is the approximate market share of gas as a percentage of total space

heating and DHW end use loads in B.C.? 14.2 What is the approximate market share of gas as a percentage of space heating

and DHW end use loads in multi-family residential buildings in B.C.?

15.0 Reference: Exhibit C7-8, Paragraph 42 “Natural gas has a lower carbon content than propane, oil, coal and wood. Consumers using natural gas are charged a carbon tax based upon the carbon content in the fuel. The current carbon tax is $30/tonne. The carbon tax sends a price signal to consumers on the use of natural gas versus other forms of energy.”

15.1 Does the BC carbon tax apply to wood waste used for heating purposes?

15.2 Is the carbon content of wood used for heating included in the GHG offset

requirements for Public Sector Organizations under the Greenhouse Gas Reduction Targets Act and associated regulations or accounting systems?

15.3 Is wood considered a clean and renewable resource in the Clean Energy Act?

15.4 Does FEI or any of its subsidiaries have or are they pursuing any projects using wood-fired heating to meet carbon reduction commitments of customers in B.C.?

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CREATIVENERGY Information Request No.1 to FEI – NEFC CPCN – August 21, 2015 P a g e | 9

16.0 Reference: FortisBC Energy Biomethane Post Implementation and Program

Modification (PIR Report), p. 15 and Exhibit C7-8, para. 46 “Given the market traction to date and emerging market opportunities in BC as described in Exhibit B-1, Section 4, FEI is confident that the projected demand will exceed existing approved supply volumes and additional supply will be required to meet this potential demand. With carbon tax included in the natural gas comparator, the current premium for RNG is $10.43/GJ. “

16.1 Please file the PIR Report and any subsequent reports filed with the Commission regarding the Biomethane Program, including the reports directed to be filed in the PIR Report Decision, dated December 11, 2013.

16.2 Please provide the last two quarterly gas cost reports together with any reports

related to the Biomethane Service Offering, and the last two BERC calculations filed with the Commission.

16.3 Please confirm that the current premium for RNG of $10.43/GJ assumes many of the costs, including certain capital expenditures and O&M expenses, of RNG are allocated to all customers of FEI.

16.4 If confirmed, please provide full details of the allocation methodology, including the percentage of allocated costs to the total cost of RNG, and the justification for such allocations to non-participant customers.

16.5 If confirmed, please comment on whether increased sales of RNG to NEFC customers will increase rates to all other customers of FEI.

16.6 Please calculate the RNG premium based on the costs of the Salmon River project to the Commodity Cost Recovery Charge.

16.7 Please file the current RNG supply pool price and the LRMC of RNG proposed to be supplied to the NEFC areas, and identify the additional supply that is used as the basis for the LRMC.

16.8 Please explain the purpose of the RNG supply cap, and identify the current RNG supply cap.

16.9 Please calculate and provide a working excel spreadsheet of the current premium for RNG with and without an allocation of costs to non-participant customers.

16.10 Please confirm that RNG service to the NEFC areas (in the amounts required to achieve the CoV Performance Requirements at project buildout) will exceed approved supply volumes of RNG and that additional supply would be required to

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CREATIVENERGY Information Request No.1 to FEI – NEFC CPCN – August 21, 2015 P a g e | 10

meet demand in the NEFC areas. If confirmed, please comment on whether Commission approval of such additional supply will be required.

16.11 Please provide for each of the past three years, the sales of RNG to voluntary customers, the volumes of unsold and unsaleable RNG, and year-end and current balances in the Unsold Biomethane Premium deferral account (UBPDA), and the Biomethane Variance Account (BVA).

16.12 Please provide in both graph and tabular format the 10 year forecasted negotiated supply vs demand curve with the low demand scenario, moderate demand scenario, and the heavy demand scenario.

17.0 Reference: Exhibit C7-8, Paragraph 50, Table 2

17.1 Please clarify whether multi-family residential customers are part of “Residential” or part of “Commercial” in Table 2.

17.2 Please provide a comparable table showing RNG sales volumes (vs. customer counts)

in CoV vs. total FEI.

17.3 How many multi-family residential stratas currently purchase RNG for shared systems in B.C.? In CoV?

17.4 What is the average blend of RNG purchased by multi-family residential stratas on the RNG program (i.e., how much of total gas supply do they purchase on average as RNG)?

17.5 Can and have developers purchased RNG for any new buildings in B.C. that will eventually be turned over to a strata?

17.6 Who pays the premium for RNG in that case?

17.7 How is the ongoing purchase for RNG enforced following the turn over to the strata?

17.8 What is a typical term for the purchase?

17.9 How many Public Service Organizations (PSOs), which have additional offset obligations under the current GHG Reduction Targets Act and typically have existing on-site gas boilers, purchase RNG? What share of customers and total RNG volumes do PSOs represent?

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18.0 Reference: Exhibit C7-8, Paragraph 51 “The attributes of RNG include …. Low particulate matter emissions (lower than biomass, for instance) … ”

18.1 Please provide support for this claim. Indicate what assumptions FEI has made regarding combustion technology and emissions controls technology for large-scale biomass, and for renewable natural gas used in small, distributed gas boiler plants.

19.0 Reference: Exhibit C7-8, Paragraph 53 and 54 “If Creative Energy’s proposal is approved, operational and capital cost factors may preclude any change of technology down the road, should that become an option (i.e., in the event that mandatory connection were to end).”

19.1 By “Creative Energy’s proposal” is FEI referring to design requirements for the

buildings? 19.2 Hydronic design requirements exist for both NEFC and Chinatown independent of this

agreement. Please discuss more specifically how the proposed building design, which ensures 100% of the end uses are met through hydronic distribution systems via a central location would preclude or make it more difficult to change technology.

19.3 Is FEI aware of any building in B.C. originally constructed with in-suite electric heating that has converted to an alternative technology for space heating during the life of the building?

19.4 Please discuss in more detail the “operational and capital cost factor” that may preclude any change of technology down the road. Please compare and contrast these same factor for a building that is constructed initially with an on-site boiler plant to meet 100% of heating end uses, and for a building that is constructed with in-suite electric resistance heating, a gas-fired make-up air unit and a central DHW boiler plant.

20.0 Reference: Exhibit C7-8, Paragraph 57 “Creative Energy’s approach to levelizing is not a conventional levelizing methodology.”

20.1 Is FEI taking exception to the Creative Energy methodology of converting a specific

stream of changing unit rates or unit costs to a single number that is equivalent in present value terms? Or is FEI referring to the specific inputs (rates being compared, discount rate being used, use of nominal vs. real dollars, etc.). Please clarify.

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20.2 What does FEI consider a “conventional” levelizing methodology? Demonstrate, in a working electronic spreadsheet, the methodology that FEI considers to be a “conventional” levelizing methodology.

21.0 Reference: Exhibit C7-8, Paragraph 62 and Figure 6 Figure 6 below shows the natural gas levelized customer rate as being $60/MWh based on Creative Energy’s rate levelization methodology but using FEI’s corrected assumptions.

21.1 Please confirm whether the levelized rates in Figure 6 are in real dollars or nominal

dollars.

21.2 Please provide a working electronic spreadsheet showing all of FEI’s calculations for the 100% Natural Gas Benchmark, the 75% RNG / 25% Natural Gas Benchmark, and the 100% RNG Benchmark shown in Figure 6.

21.3 100% Natural Gas Benchmark, the 75% RNG / 25% Natural Gas Benchmark, and the

100% RNG Benchmark, please provide a consolidated summary of FEI’s specific assumptions for:

21.3.1 the amount and value of space

21.3.2 capital costs

21.3.3 life of equipment

21.3.4 relevant fuel cost forecast over the analysis period, including the relevant commodity cost(s), appropriate delivery charge, carbon taxes, and other relevant taxes

21.3.5 non-fuel O&M over the analysis period

21.3.6 peak demand EUI, installed capacity peak ration, and annual EUI

assumptions used in FEI calculation of levelized rate

21.3.7 annual average conversion efficiency for natural gas to heat

21.3.8 discount rate(s) and levelization period used in the calculations

21.3.9 any other costs / assumptions included in FEI’s levelized cost calculation

22.0 Reference: Exhibit C7-8, Paragraph 68

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22.1 FEI states it “…reviewed a sample of 40 boiler installations from its Efficient Boiler Program for commercial customers to arrive at an indicative estimate of boiler and installation costs.”

22.1.1 Without identifying any customers, please provide a tabular

breakdown of the capacity of each installation, the estimated peak demand, the number of boilers in each installation, the use of the boiler or boilers (space heating, hot water, or both), and whether the installation was in new construction (a new boiler) or whether it was a retrofit (i.e., replacement of a pre-existing boiler OR the addition of a new boiler to an existing building).

22.1.2 Is the indicative cost estimate prepared by FEI based on design

estimates (prior to installation) or based on actual and verified installed costs?

22.1.3 Are the costs quoted by FEI before or after any incentives or

rebates? Please explain. 22.1.4 Do the costs include any initial commissioning costs or does FEI

consider these are reflected in the maintenance numbers within its evidence?

22.2 FEI states: “The costs include: cost of the boiler at capacity peak ratio of 150%,

installation costs including labour, auxiliary equipment, venting, piping, 10% contingency for gas hookups and 10% contingency for design and engineering.”

22.2.1 Please confirm that “cost of the boiler at capacity peak ratio of

150%” means that if the peak customer load is 1 MW, the installed capacity of boilers is 1.5 MW.

22.2.2 Is FEI asserting that every installation had a capacity to peak ratio of 150%? Explain.

22.2.3 Who undertook each installation? 22.2.4 Did all 40 projects include new auxiliary equipment, venting, piping,

and gas hookups?

22.2.5 The reference to “10% contingency for gas hookups and 10% contingency for design and engineering” suggests these are design estimates and not actuals. Please clarify.

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22.3 FEI states: “Using this approach, FEI arrived at a cost of $201/kw…”

22.3.1 Please confirm this is the $/kW for the total installed boiler

capacity. 22.3.2 Please clarify if this is the average cost of all 40 installations. 22.3.3 Please provide a table showing the costs separately for each

installation including these additional attributes next to each cost: a) installation size (in kW); b) installation type (DHW, space heating, combined DHW and space heating); c) retrofit or new construction.

22.4 FEI states it “…derived the market value for the space from Creative Energy’s

response to Exhibit B-9 CEC IR 1.52.2 and the space requirement of 500 sq ft from Exhibit B-18 CEC Supplemental Response IR 1.4.6.”

22.4.1 Does FEI have information on the space requirements of the boiler

room in each of the 40 installations used to derive its cost estimates for gas boilers? If yes, please include this next to the table summary of each installation above. If not, why was this information not collected by FEI in the program?

22.5 FEI states “…it provided eight local contractors with experience in boiler

servicing with the size of an on-site boiler plant representative of what would be used for buildings in NEFC, and requested maintenance quotes.

FEI used a simple average of the eight quotes, to arrive at an estimate of $1.45/kW.”

22.5.1 Please describe the nature of the eight local contractors. Please

describe the exact nature of their “experience in boiler servicing”. Do they provide actual service to operating boiler plants? Are the quotes firm quotes or simply estimates of an allowance?

22.5.2 Please provide the full range of quotes. 22.5.3 Please indicate if the quoted number is the maintenance cost per

year for year 1 of a new plant or whether the quoted number is intended as an average maintenance cost over the full life of the plant.

22.5.4 If this number is meant to be representative of the average

maintenance cost over the life of the plant, is this number fixed

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over the life of the plant or is it still subject to CPI or some other form of escalation?

22.5.5 If the maintenance number provided by FEI is the initial cost of normal maintenance for a new plant, please also provide the reasonable allowance and/or likely escalation in this number over the full life of the plant.

22.6 In footnote 19, FEI states: “The scope of work for annual boiler maintenance includes

items such as inspect and clean the combustion chamber, inspect boiler vents and combustion air, remove and clean burner head(s) and electrodes, verify operation of safety devices, flue gas analysis, combustion analysis, inspection of boiler controls, etc.”

22.6.1 Does the scope include the cost of any consumables (e.g., lubricants,

chemicals, replacement parts, etc.)? If not, please provide a reasonable allowance for these costs over the life of the equipment.

22.6.2 Does the scope cover all annual safety inspection requirements? If

not, please provide a reasonable allowance for these. 22.6.3 Does the scope include an allowance of periodic maintenance

requirements / sustaining capital requirements (e.g., refractory repairs, tube repairs, flue repairs, etc.) expected over the full life of the equipment? If not, please provide a reasonable allowance for periodic maintenance / sustaining capital requirements over the life of the equipment.

23.0 Reference: Exhibit C7-8, Paragraph 62 and Figure 6 “Figure 6 below shows the natural gas levelized customer rate as being $60/MWh based on Creative Energy’s rate levelization methodology but using FEI’s corrected assumptions.”

Reference: BCUC Generic Cost of Capital Proceeding – Stage 1, FortisBC Utilities

response to BCUC IR1 8.1, Exhibit B1-9, p. 23 “FEI states “Alternative energy sources continue to pose competitive challenge to FEI.”

8.1 Are alternative energy sources still competitive with current FEI natural gas rates?

Please discuss and show cost calculations for various types of alternative energy

sources.

Response:

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Yes, alternative energy sources can be competitive with natural gas in the market for thermal

energy.

Typically, different thermal energy systems that compete with each other, including those

that use natural gas as a fuel, will have one of two fundamental sets of characteristics:

1. Lower capital costs but higher fuel consumption

2. Higher capital costs but lower fuel consumption

Fundamentally, competition between fuel sources occurs at the time of building design. The

proximity and connection between the thermal energy system and the customer site where

thermal energy is being used effectively eliminates competition between fuel sources once

the equipment has been selected and installed. In addition, the equipment is usually long-

lived. In reality, some fuel sources, once installed, effectively rule out conversion to other

fuel sources in the future. [Highlight added]

Given the long life span of thermal energy equipment and the potential for high up front

capital costs, the choice of fuel source involves an evaluation of the total costs of thermal

energy over an appropriate evaluation period, such as twenty years.

Components of the analysis will include:

1. Thermal energy demand,

2. Capital costs of equipment including any planned replacements,

3. Fuel consumption costs,

4. Operating and maintenance costs, and

5. Taxes and depreciation costs

Evaluation of alternatives varies according to the situation and given the vast array of

equipment, age of equipment, efficiency of the equipment and potential usage of the

equipment, the analysis is ultimately a situation-specific exercise and does not lend itself to

broad generalizations.

Given the long term nature of these investments, twenty year forecasts are necessary for

each cost element described above. These forecasts are then discounted and expressed as a

levelized rate per kWh of thermal energy. In this context, natural gas prices today, while

important, must be viewed in the context of what natural gas prices, and the other cost

elements could be in the future as well.

As an example, a 4,250 square foot institutional building would have an expected levelized

rate of $0.146/kWh using current natural gas prices, a standard efficiency natural gas boiler

and an independent third party forecast of natural gas from GLJ Petroleum Consultants. For

clarity, any evaluations of alternatives would have to be done for the particular project and

customers and this may or may not represent the thermal rates that they would face.

[Highlight added]

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A recent comparison of the levelized rates for alternative energy sources was provided in

response to BCUC IR 2.25.3 of the PCI Marine Gateway proceeding, showing expected values

of thermal energy ranging from $0.116/kWh to $0.156/kWh for the various projects. Thus

thermal energy solutions using alternative technologies can still be competitive with

conventional gas solutions. [Highlight added]

In addition, as discussed in the response to BCUC IR 1.97.1, consumers are making energy

choices based on considerations other than purely cost, which means that even in situations

where there is not a clear cost advantage, the alternative sources are still selected and

therefore a competitive alternative. [Highlight added]

Please also refer to the response to BCUC IR 1.4.2 for operating cost comparisons.”

23.1 Reconcile FBCU’s response to BCUC IR1 8.1 in the GCOC proceeding with FEI’s

statement in this proceeding regarding the levelized cost of service for natural gas.

23.2 Was the information provided in the GCOC proceeding an accurate assessment of

the cost of natural gas-fired heating service to an institutional building of this size?

23.3 What accounts for the variance between the levelized rate provided by FBCU in the

GCOC proceeding, and FEI’s estimate of the cost of natural gas service provided in

this proceeding? Please provide a detailed calculation to explain the differences, if

relevant.

23.4 Describe the levelization methodology used by FBCU in the response to BCUC IR1 8.1

in the GCOC proceeding, and explain how it differs (if at all) from the levelization

methodology used by Creative Energy in this proceeding.

23.5 Provide a working spreadsheet demonstrating all calculations and input assumptions

for FBCU’s estimate of the levelized rate of natural gas service presented in the GCOC

proceeding.

23.6 Please file a copy of the information requests and responses in the BCUC IR 1.8.0

series from the GCOC proceeding referenced above.

24.0 Reference: Exhibit C7-8, Paragraph 62 and Figure 6 “Figure 6 below shows the natural gas levelized customer rate as being $60/MWh based on Creative Energy’s rate levelization methodology but using FEI’s corrected assumptions.”

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Reference: FEI Application for CPCN For Delta School District 37, Exhibit B-1,

Section 6.3.5, page 44. “The rate design incorporates a transitional rate structure, termed the “market rate”, that approximates what the SD would be paying for energy in the absence of the Project. The SD operates within challenging financial constraints for operating costs and capital spending. Purchasing thermal energy from FEI solves many of the immediate and ongoing challenges with respect to capital constraints of the SD. However, the SD still must operate within strict annual operating budget constraints as well. This means that in practice the SD cannot justify spending more on operating expenses in one year, even if there is a reasonable expectation that there will be a savings over time in present value of the new cost stream versus the cost stream in a business-as-usual environment. The RDA meets this challenge by establishing the “market rate” as a transitional rate. The initial “market rate” has been set at $0.089 per kWh. This initial “market rate” was the result of analysis and negotiations with the SD, and the rate reflects an agreement on the forecast of the costs of thermal energy that the SD expected to pay, in the absence of the Project, in the upcoming fiscal year for the SD which runs from July through June. The cost estimate utilized the normalized billing data for natural gas, electricity and carbon costs including a provision for the maintenance costs that the Project will eliminate for the SD. The SD and FEI agree that this initial market rate is a fair representation of the costs that the SD would expect to face in the absence of this Project. The initial “market rate” is affordable to the SD considering their existing operating budget constraints.”

24.1 Confirm that the “Market Rate” for Delta School District is based on FEI and DSD’s

view of natural gas costs and non-fuel O&M costs for DSD’s existing gas-fired service.

24.2 Confirm that the “Market Rate” for Delta School District does not reflect the

recovery of embedded or sunk capital costs for gas-fired service at DSD’s facilities.

24.3 Of the $0.089 / kWh “Market Rate”, what share is for non-fuel O&M expenses?

24.4 Confirm the current cost of service for Delta School Districts exceeds the Market

Rate. Provide the current and projected cost of service.

24.5 What are these expenses per kW of installed boiler capacity (based on existing boiler

capacity before the DSD TES was implemented)?

24.6 Based on FEI’s evidence in this proceeding on the cost of on-site gas boilers, why has

FEI not pursued installation of new gas boiler plants (possibly coupled with RNG)

please clarify why FEI or its subsidiary FAES has not proposed installation of new

boiler plants and the use of RNG for Delta School District, rather than continuing to

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maintain existing equipment and/or invest in higher cost alternative energy sources

such as geoexchange?

25.0 Reference: Exhibit C7-8, Paragraph 63 “Creative Energy did not analyze RNG.”

25.1 Please confirm whether FEI reviewed the second feasibility study dated February

2011 and specifically the Section 5.1.3 entitled Biomethane (included as Schedule

4 of Exhibit B-1). The final paragraph of that section (Page 18), states:

“At a current gas commodity price of $5/GJ and biomethane commodity price of ~ $10

/GJ (both before delivery), the current premium for biomethane is $5/GJ. The direct GHG

reduction attributable to biomethane is 50 kg/GJ (avoided emissions from natural gas).

At the current price premium for biomethane, the implicit cost per tonne of GHG

reduction if there is no multiplier for upstream emission reductions is ~$100 / tonne. “

25.2 According to FEI’s evidence (paragraph 46), the current premium for RNG is

$10.43/GJ. Please provide the current cost of GHG emission reductions from RNG

(estimated based on the premium divided by the avoided emissions for RNG

combustion) relative to the $100 / tonne calculated in that report.

25.3 Please fill out the below table showing the RNG rate (currently referred to as the

Biomethane Energy Recovery Charge or BERC Rate). For years when the rate

changed mid-year, show the rate which prevailed for the majority of the year. Also

provide, for each year, the % increase over the prior year.

2011 2012 2013 2014 2015

RNG Rate or BERC Rate per GJ

BERC Rate % increase over prior year

26.0 Reference: Exhibit C7-8, Paragraph 68 “Boiler – Capital and Installation Costs” 26.1 Please explain why FEI has used market data for boiler replacement costs, rather

than the fulsome costs of a new boiler plant.

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26.2 Please provide all assumptions, inputs and formulas used to calculate the capital and installation cost estimate.

“Boiler – Maintenance Costs”

26.3 Confirm that the quotes for maintenance service do not include any unplanned maintenance or parts and materials required beyond annual inspection, cleaning and verification of operation of boiler components.

27.0 Reference: Exhibit C7-8, Paragraph 69 “The natural gas commodity forecast is based on Sproule December 31, 2014 Forecast at BC Westcoast Station 2 as this is the most appropriate market hub for FEI. Creative Energy used the Huntingdon Sumas hub rate in their 100% natural gas assumption which is a less liquid market hub and therefore not as relevant.”

27.1 Creative Energy notes that both of these hubs (as well as potentially other hubs) may

be used by FEI when purchasing gas. FEI’s own tariffs indicate that Sumas may be an appropriate hub. For example, the “Unauthorized Overrun Charges” for FEI’s Rate 22 (Large Volume Transportation) are calculated based on the Sumas Daily Price. For the years 2010 through 2014, provide FEI’s average cost of gas and compare it with Sproule’s record of the average cost of gas per GJ at Westcoast Station 2, Huntingdon Sumas, and AECO-C in each of those years. Provide all results in nominal dollars per GJ, before taxes.

28.0 Reference: Exhibit C7-8, Paragraph 69 “FEI used a 2% annual inflationary increase thereafter, as this is the same inflationary factor used by Creative Energy for its natural gas commodity rate for NEFC.”

28.1 Confirm that FEI has reviewed Exhibit B-1, Section 5.4, page 68 which states that the

Sproule gas price forecast at Sumas has been used throughout the Application. Creative Energy notes that it has not used 2% as an “inflationary factor”. It has used the Sproule forecast provided in real 2014 dollars, and has used 2% inflation to convert that forecast to nominal dollars.

29.0 Reference: Exhibit C7-8, Paragraph 70 “For the customer component calculation, a 4% debt rate was used to reflect the borrowing rate at which that the developer/owner would finance the boilers. FEI estimates that this is a sufficiently high debt rate for a developer as to be considered conservative.”

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29.1 In FEI’s view, do developers and other non-regulated businesses have a lower or higher cost of capital than regulated utilities such as FEI or Creative Energy?

29.2 Do developers finance on-site TES?

29.3 Please explain why the developer’s borrowing rate is relevant to the calculation of levelized rates for customers?

29.4 What discount rate(s) does FEI use in its evaluation of various cost-effectiveness

tests for its DSM programs?

29.5 Is FEI aware of what discount rate the Province uses in its evaluation of the cost-effectiveness of changes to the BC Building Code?

30.0 Reference: Exhibit C7-8, Paragraph 72 “SEFC Levelized rate”

30.1 Please provide a working Excel spreadsheet, including all assumptions, inputs and

formulas used to calculate the SEFC levelized rate of $125/MWh.Reference: Exhibit

C7-8, Paragraph 94.

31.0 Reference: Exhibit C7-8, Paragraph 73. “For the SEFC levelized rate comparison Creative Energy had used the 2014 effective rate of $97/MWh as explained in response to FEI 2.16.5.1. This 2014 effective rate was derived based on a specific size of floor space, which is significantly smaller than the total floor space expected for the NEFC development. This was reasonable in the context of the COV Benchmarking because all the benchmarks for COV are based on a reference building with a specified floor space. However, it should not be used in the context of NEFC because Creative Energy’s other benchmarks are all based on parameters relevant to NEFC including the square footage of floor space. This approach used by Creative Energy derives a lower rate for SEFC because it does not fully account for the fixed capacity levy per square meter associated with the larger NEFC total floor space.”

31.1 Please show mathematically why floor area is relevant in determining an effective

rate rather than the energy use intensity per unit of floor area. 31.2 Creative Energy compared effective rates paid by consumers in each of the

benchmark systems based on the applicable rates and energy use intensity in each system. FEI has offered an alternative calculation that adapts a rate structure within SEFC to loads in NEFC and specifically to different EUIs. Please explain why that is a more relevant benchmark then the effective rate faced by consumers in each system.

31.3 Confirm that FEI understands that not all of the benchmarks in this proceeding are based on the NEFC’s specific amount of floor space. Creative Energy has only

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calculated levelized cost (which reflects the growth of sales over time) for those benchmarks which represent a reasonable means of serving NEFC. Benchmarks for other thermal energy systems, which have other service areas and due to geography are not actual options for serving NEFC, are presented based on unit rates only.

32.0 Reference: Exhibit C7-8, Paragraph 84 and Table 3

32.1 FEI asserts the emission intensity of natural gas is 180 kg / MWh. Please confirm that

is the emission intensity of fuel (i.e., per MWh of natural gas. 32.2 Please confirm FEI understands the CoV estimate of emission intensity for natural gas

and all other benchmark is per MWh of heat delivered.

32.3 Please explain why it is appropriate to compare the emission intensity of a fuel with the emission intensity of a heat service.

32.4 Please provide FEI’s view of the emission intensity of on-site natural gas adjusted for

the average conversion efficiency of natural gas to heat. What conversion efficiency does FEI assume?

32.5 Provide a working electronic spreadsheet showing all of FEI’s input assumptions and calculations for the Estimated Effective Rate for natural gas for 2015 of $45 / MWh.

33.0 Reference: Exhibit C7-8, Paragraph 92 “The mandatory connection obligation for developers in the proposed franchise area and exclusivity over space and water heating for Creative Energy prevents FEI from competing for this future load in the proposed franchise area. This represents a forgone load for FEI in the range of 0.2 PJ for the NEFC if one assumes 100% capture for natural gas, equivalent to foregone future revenue of approximately $600,000 per year in 2025 and beyond once Creative Energy reaches full build-out.”

33.1 Please provide the detailed calculation of the foregone revenue. Is this based on FEI

delivery charges only? 33.2 Please confirm the calculation assumes implementation of Energy Supply Phase 2 by

Creative Energy.

33.3 Does FEI’s estimate of foregone revenue take into account any incremental costs of service within the service area (e.g., incremental mains extensions, service lines, O&M, overheads, etc.)?

33.4 Please explain why it is appropriate to assume 100% capture given FEI’s assertion that competition for heating systems is real and important, and given the fact that even in the absence of the NEFC NES developers will be required to meet higher standards for GHG emissions and renewable energy use over time.

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33.5 In its calculations, has FEI accounted for the additional revenue for ongoing gas purchases by Creative Energy to provide peaking and back-up to NEFC / Chinatown in 2025 and beyond?

33.6 Please calculate the net change in FEI load / revenues (including the incremental gas purchased by Creative Energy) relative to a baseline of 100% in-suite electric heat and gas-fired make up air and DHW.

33.7 Please confirm that under FEI’s current extension policies, FEI could pursue individual extensions within NEFC / Chinatown where the ratio of revenues to costs (present value) is as low as 0.8, provided the ratio of revenues to costs (present value) for all FEI extensions in aggregate equals or exceeds 1.1.

33.8 Please confirm that under FEI’s current extension policies, FEI’s estimate of revenues for customers in NEFC / Chinatown would be grossed up by +15% (over actual expected revenues) given the LEED certification requirements of the CoV, such that the revenues assumed for the purposes of the extension test and any CIAC from the customer would be 15% higher than actual expected revenues.

34.0 Reference: Exhibit C7-8, Paragraphs 92-96

Reference: AES Inquiry, FEU Final Submission, Part 12 – Appendix A, “Evidence

Regarding Drivers for New Initiatives and How the New Initiatives Respond to

Those Drivers”, paragraphs 318-319 “TES is Aligned with Policy Objectives. In Table 2.7, in Section 2.2.6.3 of the FEU’s Evidence, the FEU outline how TES is consistent with “British Columbia‘s energy objectives”. One of the energy objectives is “to use and foster the development in British Columbia of innovative technologies that support energy conservation and efficiency and the use of clean or renewable resources”. The FEU‘s TES initiatives encourage the use of clean, low carbon, and renewable energy sources in BC. Furthermore, the energy objectives encourage efficient use of energy and the switching from one kind of energy source or use to another in order to reduce GHG emissions. The development and use of geothermal, solar and district energy solutions is carbon neutral. The use of these energy sources in place of a carbon positive energy source, such as natural gas, will lead to reduced GHG emissions in BC. They can also displace electric load, which eases electric capacity requirements and the associated upward pressure in electric rates. Finally, the FEU‘s TES help municipalities and communities meet their economic development objectives1. The FEU are currently working with several ESAC members on potential TES projects for school districts and

1 AES Inquiry: Ex. B-2, p. 43.

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municipalities2. As stated above, the Ministry of Energy and Mines and the Climate Action Secretariat recently confirmed their support of the DSD Project. Other Benefits In the DSD Decision, the Commission Panel also determined that the project provided the following benefits to FEI’s natural gas customers: The Panel agrees that because the proposed solution utilizes natural gas as a primary and complementary energy source, it does provide some benefits to both FEI’s shareholder and natural gas customers by way of protection of the natural gas business in the longer term. For instance, by proceeding with the Delta SD Project, FEI has eliminated a possibility that a competitor would have installed an all electric solution which would be detrimental to the natural gas business3.”

34.1 Confirm that FEI continues to recognize the importance of Provincial energy

objectives regarding clean energy use and GHG reductions.

34.2 Confirm that FEI continues to recognize the importance of municipal objectives.

34.3 Confirm that FEI continues to recognize the benefits to FEI’s shareholder and natural

gas customers that TES projects can provide due to the use of natural gas as an interim

strategy, and for peaking and backup.

34.4 Please explain why the benefits that the DSD project provides to the natural gas

shareholder and natural gas customers are or are not comparable to the benefits

provided by the NEFC NES.

34.5 Will FEI be seeking, in future, to oppose all low-carbon energy systems which result in less than 100% capture for natural gas?

35.0 Reference: Exhibit C7-8, Paragraph 94

35.1 Please provide a comparable calculation of the foregone load / net revenue by

2025 for FEI from the projects below already approved by the Commission. Include

a summary of all input assumptions for the calculations, including loads, net

2 AES Inquiry: Ex. B-2, p. 131. 3 DSD Decision, p. 74.

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reduction in natural gas use as a result DE commitments to renewable energy,

incremental costs of service, etc.

Foregone FEI Net Revenue in 2025

Assumptions

UniverCity

River District Energy

UBC NDES

FAES Marine Gateway TES

FAES Telus Garden TES

36.0 Reference: Exhibit C7-8, Paragraph 94.

36.1 What percent capture for natural gas does FEI assume when projecting load growth

in the City of Vancouver?

37.0 Reference: Order G-20-12 proceeding, Exhibit B1-20, BCUC IR 1.6.1 “Thermal Energy Service (“TES”) as well are in the early stages of market development

and the investment in TES is immaterial relative to the size of the FEU distribution and

transmission assets”.

37.1 Please confirm that it is FEI’s opinion that investments in TES by FAES are immaterial

relative to the size of the FEU distribution and transmission assets.

37.2 Please confirm that it is FEI’s’ opinion that investments in TES by Creative Energy

that are the subject of this Application are material relative to the size of the FEU

distribution and transmission assets.

37.3 If confirmed, please explain why the investments by FAES in TES are immaterial

relative to the size of the FEU distribution and transmission assets and that the

investments in TES by Creative Energy are material relative to the size of the FEU

distribution and transmission assets.

38.0 Reference: Order G-20-12 proceeding, Exhibit B1-20, BCUC IR 1.6.1 “FEI’s core market remains space and water heating, and will remain so for the

foreseeable future even in the case where there is significant uptake in biomethane and

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CREATIVENERGY Information Request No.1 to FEI – NEFC CPCN – August 21, 2015 P a g e | 26

NGT initiatives. The throughput associated with these initiatives will still be dwarfed in

absolute terms by the core market.”

38.1 Please comment on whether the throughput associated with NEFC loads is expected

to be dwarfed in absolute terms by the core market.

39.0 Reference: Order G-20-12 proceeding, Exhibit B1-20 BCUC IR 1.7.0 “For instance, FEI is now seeing local governments mandating certain non-natural gas

energy solutions as a condition of obtaining municipal approvals for building permits.”

39.1 Please confirm that in the above quote when FEI states that it is “seeing local

governments mandating certain non-natural gas energy solutions”, one of the local

governments being referred to was the CoV.

39.2 Please confirm that FEI identified the risk of local governments mandating “certain

non-natural gas energy solutions” as a business risk relevant to cost of capital

determinations for FEI.

39.3 Please file a copy of the information requests and responses in the BCUC IR 1.7.0

series referenced above.