Orders

IN THE MATTER OF

the Utilities Commission Act, R.S.B.C. 1996, Chapter 473

and

Application by Terasen Gas Inc. (TGI)

and Terasen Gas (Vancouver Island) Inc. (TGVI) (collectively Terasen Gas)

for Approval of the Price Risk Management Plan Effective April 2011–October 2014

BEFORE:               D.A. Cote, Panel Chair/ Commissioner

                                L.A. O’Hara, Commissioner                                          February 22, 2011

                                N.E. MacMurchy, Commissioner

O  R  D  E  R

WHEREAS:

A.      On July 22, 2010, the British Columbia Utilities Commission (Commission), by Orders E-23-10 and E-24-10 denied the 2010 Price Risk Management Plans submitted by Terasen Gas Inc. (TGI) and Terasen Gas (Vancouver Island) Inc. (TGVI) respectively.  In letters which accompanied the Orders, the Commission directed TGI and TGVI, in consultation with Commission staff, to conduct a review of the PRMP’s primary objectives in the context of the Clean Energy Act and increased domestic natural gas supply;

B.      On January 27, 2011, Terasen Gas filed with the Commission on a confidential basis the “Review of the Price Risk Management Objectives and Hedging Strategy” providing the results of the Terasen Gas’ review of the of the PRMP objectives and the recommendations of its consultant, RiskCentrix, LLC for an enhanced hedging strategy;

C.      On January 27, 2011, Terasen Gas also filed with the Commission on a confidential basis the “Price Risk Management Plan Effective April 2011–October 2014” (2011 PRMP or Application) for approval of the objectives and key elements of the 2011 PRMP which include measures for programmatic, defensive, and value hedging as well as basis swaps to hedge price exposure at the Sumas trading hub;

D.      The Commission has reviewed the Application and has concluded that prior to making a determination on the need for a hedging program, a written process is necessary to review the objectives of the 2011 PRMP;

E.       On February 18, 2011, Terasen Gas filed redacted copies of the 2011 PRMP and Review of the Price Risk Management Objectives and Hedging Strategy suitable for public review.

NOW THEREFORE the Commission orders as follows:

1.       The 2011 PRMP objectives outlined in the Application will be examined by a Written Public Hearing process and the Regulatory Timetable attached as Appendix A has been established.

2.       Terasen Gas at its discretion and over the course of these proceedings may, on an interim basis, implement those measures related to hedging and Sumas basis swaps as outlined in the 2011 PRMP.  In addition, Terasen Gas may execute also on an interim basis fixed price swaps equal to 1 percent of its remaining hedge able volume on a weekly basis as outlined in the 2011 PRMP where market prices are at or below the 4.25/GJ hedging price target.

3.       Persons wishing to participate as Interveners or as Interested Parties, as described in Appendix B, should register with the Commission by Friday, March 4, 2011.

DATED at the City of Vancouver, in the Province of British Columbia, this      22^nd        day of February 2011.

                                                                                                                                BY ORDER

                                                                                                                                Original signed by:

                                                                                                                                D.A. Cote

                                                                                                                                Commissioner

Attachments

Terasen Gas Inc. (TGI) and Terasen Gas (Vancouver Island) Inc. (TGVI)

(collectively Terasen Gas)

An Application for Approval of the Price risk Management Plan

Effective April 2011–October 2014

Terasen Gas Inc. (TGI) and Terasen Gas (Vancouver Island) Inc. (TGVI)

(collectively Terasen Gas)

An Application by for Approval of the Price Risk Management Plan

Effective April 2011–October 2014

Notice of Written Public Hearing Process

THE APPLICATION

On January 27, 2011, Terasen Gas applied to the British Columbia Utilities Commission (the Commission) for Approval of the Price Risk Management Plan Effective April 2011–October 2014, contemporaneously Terasen Gas filed the Review of Price Risk Management Review of Objectives and Hedging Strategy; all on a confidential basis.  On February 18, 2011, at the request of the Commission, Terasen Gas filed the redacted public versions-TGI-TGVI PRMP Review Report and TGI PRMP 2011–2014.

On an annual basis, Terasen Gas Inc. (TGI) and Terasen Gas (Vancouver Island) Inc. (TGVI), file separate Price Risk Management Plans (PRMP) which seek approval for gas commodity hedging plans for the next three years, or in TGVI’s case, for the next five years.

On May 13, 2010, TGI and TGVI submitted their respective Price Risk Management Plans to the Commission for review and acceptance.  On July 22, 2010, the Commission issued Order E-23-10 relating to the TGI 2010-2013 PRMP and Order E-24-10 relating to the TGVI 2010–2015 PRMP.  The Orders denied the PRMPs, directing TGI and TGVI to immediately suspend all related market activities.  TGI and TGVI were directed to conduct a review of the PRMPs’ primary objectives in the context of the Clean Energy Act and increased domestic natural gas supply.  As a result of discussions with Commission staff following the Orders, TGI and TGVI also agreed to examine the cost/benefit value of the hedging program for customers as part of the review.  The review resulted in the subject Application.

THE REGULATORY PROCESS

The Commission has established a Written Public Hearing and Regulatory Timetable for the regulatory review of

the Application.  The Regulatory Timetable can be viewed on the Commission’s web site at www.bcuc.com.

INTERVENTION

Persons who expect to actively participate in the Terasen Gas proceeding should register as Interveners with the

Commission, and should identify the issues that they intend to pursue as well as the nature and extent of their

anticipated involvement in the review process. Intervenors will each receive a copy of the Application, all

correspondence, filed documentation and should provide an e‐mail address, if available.

Persons not expecting to actively participate, but who have an interest in the proceeding, should register as

Interested Parties. Interested Parties will receive a copy of the Executive Summary in the Application, and all

Orders and Decisions issued.

Interveners and Interested Parties should register in writing, no later than Friday, March 4, 2011.  Notification by mail, courier delivery, fax or email is acceptable.

All submissions and/or correspondence received from active participants or the general public relating to the

Application will be placed on the public record and posted to the Commission’s web site.

PUBLIC INSPECTION OF THE DOCUMENTS

The redacted version of the Application and supporting materials will be available for inspection at the following locations:

For further information, please contact Ms. Erica Hamilton, Commission Secretary, or Mr. Mark Thomas, P.Eng., Director, Emerging Technologies & Innovation as follows:

Telephone:  (604) 660‐4700                                         BC Toll Free: 1‐800‐663‐1385

Facsimile:  (604) 660‐1102                                             Email:  Commission.Secretary@bcuc.com