C7-3 July 7, 2015 File No.: 240148.00782/14797 Matthew Ghikas Direct +1 604 631 3191 Facsimile +1 604 632 3191 mghikas@fasken.com BY E-MAIL British Columbia Utilities Commission 6 th floor, 900 Howe Street Vancouver, BC V6Z 2N3 Attention: Erica Hamilton Commission Secretary Dear Sirs/Mesdames: Re: Creative Energy Vancouver Platforms Inc. Application for a Certificate of Public Convenience and Necessity for a Low Carbon Neighbourhood Energy System for Northeast False Creek and Chinatown Neighbourhoods of Vancouver I am counsel for FortisBC Energy Inc. ( FEI ) in this proceeding. The Commission s letter of June 30, 2015 established the agenda for the procedural conference to be held this Friday. The final item on the agenda is Any additional issues. I am writing to advise the Commission that FEI will be seeking on Friday to address the adequacy of a number of Creative Energy s responses to information requests. In order to facilitate that process, FEI has prepared the attached table, outlining the questions, responses, and brief explanation for why the response is insufficient. FEI has provided a copy of the table to Mr. Hobbs, counsel for Creative Energy, for his consideration as well. There were other questions which Creative Energy declined to answer on the basis that they were out of scope or irrelevant, and which do not appear on FEI s table. See for instance: FEI IR 2.8, 2.9, 32.2.3, BCUC IR 38.2. These questions related to, among other things, project alternatives and the future adoption of Energy Phase 2 (the future project that is required to generate the GHG reductions touted in the Application). It should be understood that FEI does not agree with Creative Energy s assessment of what is, and what is not, relevant in this proceeding. While FEI is not applying at this time to require responses to this category of IRs, it is with the recognition that Creative Energy bears the burden of proving that the public interest is served by (i) approving the project, and (ii) granting the extraordinary request for a City-enforced
Page 2 monopoly over space and water heating generally. FEI will argue at the conclusion of this proceeding that Creative Energy s strategic decision to treat important information as being out of scope leaves insufficient information on the record for Creative Energy to satisfy its burden of proof under the statutory tests. Yours truly, FASKEN MARTINEAU DuMOULIN LLP [original signed by Matthew Ghikas] Matthew Ghikas MTG/fxm
A) FEI IR Set 1 FEI IR No. IR Question IR Response Rationale for Seeking Response 8.1 Please file Create Energy s existing approved system extension test 8.2.2 Please provide a system extension analysis of connecting the closest NEFC customer to the existing Creative Energy Steam plant system. Please provide the analysis in a working excel spreadsheet. 8.2.3 Please conduct the same system extension analysis for each of the customers identified in the application for the NEFC. Please provide the analysis as if each customer was to connect individually as a stand- alone customer requiring a system extension (in other words, that each individual customer does not benefit from the connection of a previous customer who is closer to the existing Creative Energy Steam plant). Please provide the analysis in a working excel spreadsheet. 10.2 Please describe all issues and concerns that the developers raised. Current extension policies are described in response to BCUC IR 1 23.2 and 23.3 in the RR proceeding. Creative Energy declines to conduct the analysis. This requires Creative Energy (CE) to provide customer specific information. CE expects that if steam service were permitted, the revenues for the closest customer under the current steam tariff (assuming a connection sized only to the customer load and assuming permanent energy supply from the current steam plant with no low carbon commitments) would exceed the incremental costs of the individual extension. Creative Energy declines to conduct a detailed analysis of a hypothetical scenario outside the scope of the Application and outside what is allowed or contemplated under the Neighbourhood Energy Agreement that is before the Commission. Please refer to Exhibit B-1, page 33 The major developers in NEFC are: Aquilini Development. Anticipated to build high-rise residential projects with some groundfloor commercial space. Concord Pacific. Anticipated to build high-rise residential projects with some ground-floor commercial space. Canadian Metropolitan Properties. Owner of the Plaza of Nations, which will be redeveloped as a mixture of commercial and residential space. Paragon Gaming. Developer of the Area 10 site, which is immediately west of BC Place. Paragon has executed a 70 year ground lease with PavCo, the owner of the site. Paragon will be developing a new casino building on the site, replacing the existing Edgewater Casino building at Plaza of Nations. Creative Energy should file these responses in order for them to be on the public record for this proceeding. Extension of the existing steam system is an alternative that Creative Energy does not appear to have considered. The analysis can be completed without disclosing customer specific information, and providing more summarized information of the results. Extension of the existing steam system is an alternative that Creative Energy does not appear to have considered. Page 33 of Exhibit B-1 does not discuss issues or concerns raised. Rather it provides a list of major developers in NEFC. P a g e 1
FEI IR No. IR Question IR Response Rationale for Seeking Response 18.2 Please calculate the allocation of existing infrastructure costs using the peak day steam requirement of the NEFC NES as a percentage of the total peak day for the system that includes both existing core customers and the NEFC NES. Please provide all supporting calculations. 20.3.1 Please quantify the impact on the management salaries if, instead of using inflation, Creative Energy were to use: Inflation based on a labour escalator such as BC- AWE Creative Energy declines to calculate because it is not applicable to this Application. Creative Energy will be open to other inflation base if appropriate. 20.3.2 Inflation based on BC-CPI CE will be open to other inflation base if appropriate. 20.3.3 Please state your data sources and assumptions for each forecast. 33.1 Please complete the following table for each energy provider listed in Table 1 (i.e. the effective rate table that compares various energy providers) Not applicable. Creative Energy declines to complete the following table it is also not clear what purpose the additional detail would serve in the current proceeding. 33.7.1 How did the CoV arrive at this proposed rate? Creative Energy did not provide the rate but notes that it is comparable to the Council Report referenced in this IR, which includes underlying assumptions. 33.7.2 Please confirm that the CoV used the figure of $89/MWh for its recommendation to City Council that is appended to the Application. 33.8 In addition to using the $89/MWh comparison for natural gas in the CoV s recommendation to City Council and the article referenced in the previous question, has Creative Energy or CoV ever referenced the $89/MWh number in public, in communications with developers or other stakeholders, or in materials available to the public? If so, when and to whom? Creative Energy cannot offer any more information than what is already included in the Council Report provided in Exhibit B-2. It is selfexplanatory. This is outside the scope of the current proceeding. An allocation of the costs of the existing infrastructure is a component of the forecasted costs put forward and therefore is applicable to this CPCN Application. Also indicative rates and the levelized rate are used for alternative comparisons and benchmarks. BC-AWE and BC- CPI calculations have not been completed as comparison to inflation measure used. This analysis provides for alternative cost scenario estimates. The NeighbourhoodEnergy Agreement is premised on a rate benchmarking, so understanding the benchmarking done by the parties to the NEA -COV and Creative Energy is relevant. Page 9 of the Restated and Amended NEFC and Chinatown Neighborhood Agreement, Exhibit B-1, describes how the CoV will support the utility in its regulatory proceedings, in that the CoV will respond in a timely manner to questions from the BCUC and Stakeholders that deal with CoV polices, processes and commitments applicable to the Agreement. Effective rates were provided to stakeholders as a benchmark to Creative Energy s proposed indicative rate and are therefore within the scope of this application. Stakeholders with whom either the CoV or Creative Energy shared this information would have relied upon this rate comparison to make an informed decision. P a g e 2
FEI IR No. IR Question IR Response Rationale for Seeking Response 33.9 Please file copies of any written materials provided by Creative Energy or CoV to Creative Energy customers or other stakeholders in which effective rates were compared. Please indicate the dates on which the materials were provided, by whom, and to whom 34.0 Higher gas prices could increase rates for Energy Supply Phase 1 but would lower the incremental costs associated with Energy Supply Phase 2. This is outside the scope of the current proceeding. Both. Not explained. The assumptions around gas prices are imperative to understand rate impacts for NEFC customers. Please explain this statement. Is the lowering of incremental costs in absolute terms, or only in relative terms due to the fact that the comparator (i.e. gas prices) would be higher? P a g e 3
B) BCUC IR Set 1 BCUC IR No. IR Question IR Response Rationale for Seeking Response 12.1 Please provide the number, size and location of the pumps and confirm the pump costs are included in the cost estimates provided in Schedule 8. 13.3 Please provide a diagram showing the relationship between the following three entities/affiliates (add any additional entities/affiliates that may be missing). Include a high level description of the responsibilities and arrows showing the direction of cost being transferred to/from each entity: a) Creative Energy Vancouver Platforms Inc. (core) b) Creative Energy Canada Platforms Inc. (parent) c) NEFC (NES) 15.6 Please identify which cost of service line item (from Creative Energy s most recent RRA) will be included as corporate overheads. Provide reference sources. 31.1 Please complete the tables included as an attachment in the Microsoft Excel file. Please provide your response as a hard copy as well as in a functional Excel file. a) Peak Load Forecast by Year b) Annual Load Forecast by Year c) Load Forecast by Development and Year The exact number, size and location of pumps is yet to be determined. The cost estimates have allowed for sufficient pumps. Please see diagram below. Please note for clarity that NEFC (NES) is not a separate legal entity or affiliate. It is a division/business unit of Creative Energy Vancouver Platforms Inc. with a separate class of customers, isolated costs (via direct assignment and the proposed cost allocation methodologies for shared assets / services), and unique tariffs, all governed by the Neighbourhood Energy Agreement. Please see the response to BCUC IR1-15.2. The below table shows Creative Energy s allocation of costs from the recent RRA between Production, Distribution, Corporate Overheads, and Management Salaries. A second table shows how these amounts reconcile with Creative Energy s most recent RRA. Certain categories in the second table, GCOC Recoveries and After Tax Pension Costs, are not included in the cost allocation as these were pertaining to the core for years prior. (Tables have not been copied and pasted here) Please see the attached BCUC provided spreadsheet in Appendix 5. Please note that Creative Energy s response reflects only current capacity at the Beatty Street plant. It does not reflect additional capacity to be provided as part of Energy Supply Phase 2, nor does it reflect additional generating capacity at 188 Keefer or any other satellite plant. Creative Energy s response does not reflect any losses across the steam to hot water converter station as these are estimated to be at most 1%. Creative Energy submits that this impact is not material for indicative rates. Response incomplete. The reference to sufficient pumps does not explain the assumptions regarding the number, size and location that went into its estimates. The reference diagram is missing and should be filed. While two tables have been provided, the question has not been answered. Annual load forecasts by year by development have not been provided in this response P a g e 4
BCUC IR No. IR Question IR Response Rationale for Seeking Response 35.1 Please explain how Creative Energy mitigated these concerns. Table 8 summarizes DE strategy consultation conducted by the City of Vancouver, Creative Energy did not have a formal process to engage with the entire list of stakeholders. However, Creative Energy met with specific property owners in NEFC to ensure that the NEFC NES met their needs. A summary of these meetings can be found in Exhibit B-1 on page 55-56 in the table labelled Building Peer Review Meetings. An explanation of how Creative Energy mitigated the concerns voiced by stakeholders has not been provided. P a g e 5