B R IT I S H C O L U M B IA U T I L I T IE S C O M M I S S I O N O R D E R N U M B E R C-11-99 SIXTH FLOOR, 900 HOWE STREET, BOX 250 TELEPHONE: (604) 660-4700 VANCOUVER, B.C. V6Z 2N3 CANADA BC TOLL FREE: 1-800-663-1385 web site: http://www.bcuc.com FACSIMILE: (604) 660-1102 IN THE MATTER OF the Utilities Commission Act, R.S.B.C. 1996, Chapter 473 and The December 1998 Application by BC Gas Utility Ltd. for a Certificate of Public Convenience and Necessity regarding its Southern Crossing Pipeline Project BEFORE: P. Ostergaard, Chair ) L.R. Barr, Deputy Chair ) June 21, 1999 K.L. Hall, Commissioner ) F.C. Leighton, Commissioner ) CERTIFICATE OF PUBLIC CONVENIENCE AND NECESSITY WHEREAS: A. On December 11, 1998, BC Gas Utility Ltd. (“BC Gas”, “the Utility”) applied to the Commission (“the Application”), pursuant to Section 45 of the Utilities Commission Act (“the Act”), for a Certificate of Public Convenience and Necessity (“CPCN”) to construct and operate certain pipeline and compression facilities referred to as the Southern Crossing Pipeline (“SCP”) project. BC Gas estimated the cost of the SCP at $376 million “as spent” dollars, including overhead and allowance for funds used during construction; and B. The Application included a Firm Tendered Transportation Service Agreement with PG&E Energy Trading, Canada Corporation (“PG&E Energy Trading”) for transportation capacity on the SCP. By letter dated January 8, 1999, BC Gas filed a Firm Tendered Transportation Service Agreement and a Transportation South Capacity Agreement, both dated November 27, 1998, and an Umbrella Letter Agreement dated January 7, 1999, all made with British Columbia Hydro and Power Authority (“B.C. Hydro”); and C. By a second letter dated January 8, 1999, BC Gas filed copies of Peaking Gas Purchase Agreements with B.C. Hydro and PG&E Energy Trading dated November 27 and 30, 1998, respectively; and D. In a submission dated February 17, 1999, BC Gas requested that the Commission approve the transportation and peaking agreements with B.C. Hydro and PG&E Energy Trading; and E. Order No. G-21-99, dated February 22, 1999, established an oral public hearing to review the Application, commencing Monday, March 29, 1999 and ending with completion of oral argument on April 13, 1999; and F. In the public hearing, BC Gas requested approval of the Transportation South Capacity Agreement with B.C. Hydro; and G. The Commission considered the Application, the evidence and the argument presented at the public hearing, and issued its Decision dated May 21, 1999 (“Decision”) and Order No. G-51-99; and H. Order No. G-51-99 provides that issuance of a CPCN for the SCP project and approval of the related agreements will be in the public interest provided certain conditions precedent are met; and . . ./2
B R I T I S H C O L U M B IA U T I L I T I E S C O M M I S S I O N O R D E R N U M B E R C-11-99 2 I. By letter dated June 15, 1999 (attached as Appendix B to this Order), BC Gas responded to Order No. G-51-99 stating that it intended to complete the project by November 1, 2000 and that it would accept the other conditions precedent set out in the Order; and J. As indicated in the Reasons for Decision (attached as Appendix A to this Order), the Commission has determined that the BC Gas response meets the conditions precedent set out in Order No. G-51-99. NOW THEREFORE pursuant to Sections 45, 60, 61 and 71 of the Act and the Rules for Energy Supply Contracts (“the Rules”), the Commission orders as follows: 1. Pursuant to Section 45 of the Act, a CPCN is granted to BC Gas to construct and operate the SCP project in accordance with the Application. 2. Additions to Rate Base related to the SCP project will be limited to a maximum of 110 percent of the capital cost estimate in the Application, and savings below 90 percent of the estimate will accrue to the shareholder, in accordance with the mechanism set out in the Decision. 3. Commencing August 1999, BC Gas is to file with the Commission monthly progress reports on the SCP project schedule and costs, followed by a final report upon project completion. BC Gas will determine the form and content of the reports in consultation with Commission staff. 4. Pursuant to Sections 60 and 61 of the Act, the Commission approves the Firm Tendered Transportation Service Agreement dated November 30, 1998 between BC Gas and PG&E Energy Trading, as amended by the amending letter of January 6, 1999, and the Firm Tendered Transportation Service Amending Agreement dated June 9, 1999, subject to timely filing of the Transportation Agreement and amendments in standard Tariff Supplement format. 5. Pursuant to Sections 60 and 61 of the Act, the Commission approves the Firm Tendered Transportation Service Agreement dated November 27, 1998 between BC Gas and B.C. Hydro, as amended by the Firm Tendered Transportation Service Amending Agreement dated June 9, 1999, subject to timely filing of the Transportation Agreement and amendment in standard Tariff Supplement format. 6. Pursuant to Section 71 of the Act and the Rules, the Commission accepts for filing the Transportation South Capacity Agreement dated November 27, 1998 between BC Gas and B.C. Hydro, as amended by the Transportation South Capacity Amending Agreement dated June 9, 1999. 7. Pursuant to Section 71 of the Act and the Rules, the Commission accepts for filing the Peaking Gas Purchase Agreement between BC Gas and B.C. Hydro dated November 27, 1998. 8. Pursuant to Section 71 of the Act and the Rules, the Commission accepts for filing the Peaking Gas Purchase Agreement between BC Gas and PG&E Energy Trading dated November 30, 1998. DATED at the City of Vancouver, in the Province of British Columbia, this 22 nd day of June, 1999. BY ORDER Original Signed by Peter Ostergaard Chair Attachments Order/BCG-SCP CPCN Reasons
APPENDIX A to Order No. C-11-99 Page 1 of 2 BC GAS UTILITY LTD. SOUTHERN CROSSING PIPELINE PROJECT FILING PURSUANT TO ORDER NO. G-51-99 REASONS FOR DECISION On December 11, 1998, BC Gas Utility Ltd. (“BC Gas”) applied to the Commission for a Certificate of Public Convenience and Necessity (“CPCN”) under Section 45 of the Utilities Commission Act (the “Ac t” ) to construct and operate the Southern Crossing Pipeline (“SCP”) project. In addition to the Application for a CPCN, BC Gas also requested Commission approval of Firm Tendered Transportation Service Agreements (“Transportation Agreements”) with British Columbia Hydro and Power Authority (“B.C. Hydro”) and with PG&E Energy Trading, Canada Corporation (“PG&E Energy Trading”), Peaking Gas Purchase Agreements (“Peaking Agreements”) with B.C. Hydro and with PG&E Energy Trading, and the Transportation South Capacity Agreement with B.C. Hydro. The Commission, in Order No. G-21-99, established a limited oral public hearing to review the Application. The public hearing commenced on March 29, 1999 and, after eight hearing days, concluded on April 13, 1999. Following the public hearing, the Commission issued its Decision on May 21, 1999 (“Decision”) along with Order No. G-51-99. In Order No. G-51-99, the Commission stated that the issuance of a CPCN for the SCP project and approval of the related agreements would be in the public interest provided certain conditions precedent were met. These conditions were that BC Gas: 1. File by June 15, 1999 a statement regarding its willingness to accept a CPCN for the SCP that includes, as a condition, the mechanism to limit ratepayer exposure to capital cost overruns that is described in the Decision. 2. File by June 15, 1999 executed amendments to the Transportation Agreements with B.C. Hydro and PG&E Energy Trading, which limit the total term of each of these agreements to a maximum of 20 years. 3. File by June 15, 1999 an executed amendment to the Transportation South Capacity Agreement with B.C. Hydro, which clarifies that, in accordance with earlier Commission directives, assignments of Westcoast Energy Inc. (“Westcoast”) Transportation South capacity to core market customers wishing to purchase gas directly from non-utility suppliers, take precedence over B.C. Hydro’s right of first refusal. 4. Advise the Commission by June 15, 1999 of its intended date of completion of the SCP project, and confirm that all related agreements will accommodate that date. In a letter dated June 15, 1999 (attached as Appendix B), BC Gas responded to Order No. G-51-99 and filed amending agreements relating to the Transportation Agreements and the Transportation South Capacity Agreement. The amending agreements with B.C. Hydro and PG&E Energy Trading amend the
APPENDIX A to Order No. C-11-99 Page 2 of 2 Transportation Agreements to limit the total term of those agreements to a maximum of 20 years. The amending agreement to the Transportation South Capacity Agreement clarifies that, in accordance with earlier Commission directives, assignments of Westcoast Transportation South capacity to core market customers wishing to purchase gas directly from non-utility suppliers take precedence over the right of first refusal of B.C. Hydro. In its June 15, 1999 letter, BC Gas states that it is willing to accept a CPCN that includes as a condition the mechanism described in the Decision to limit ratepayer exposure to capital cost overruns. The rate base addition for the SCP project will be a maximum of $414 million (as adjusted in the manner described in the Decision if a November 2001 in-service date were to be adopted). In the letter, BC Gas also advises the Commission that it intends to complete the SCP project by November 1, 2000, and that all related agreements will accommodate that completion date. BC Gas also states that it may revise the completion date to November 1, 2001 depending on the bids for materials, construction and installation of the SCP project, and if so, it will inform the Commission and also confirm that all related agreements will accommodate the revised date. The Commission has reviewed the BC Gas letter and attachments and finds that BC Gas has satisfied the conditions precedent in Order No. G-51-99. Under Section 45 of the Act, the Commission therefore approves the issuance of a CPCN. BC Gas is directed to file monthly progress and cost reports on the SCP, followed by a final report upon project completion. Under Sections 60 and 61 of the Act, the Commission approves for filing the Firm Tendered Transportation Service Agreement between BC Gas and PG&E Energy Trading, as amended, and the Firm Tendered Transportation Service Agreement between BC Gas and B.C. Hydro, as amended. Under Section 71 of the Act and the Rules for Energy Supply Contracts, the Commission accepts for filing the amended Transportation South Capacity Agreement between BC Gas and B.C. Hydro, the Peaking Gas Purchase Agreement between BC Gas and B.C. Hydro, and the Peaking Gas Purchase Agreement between BC Gas and PG&E Energy Trading.
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