IN THE MATTER OF
the Utilities Commission Act, R.S.B.C. 1996, Chapter 473
and
An Application by FortisBC Alternative Energy Services Inc.
for a Certificate of Public Convenience and Necessity
and
Rate Approvals Established in Agreements for Thermal Energy Services
for Sovereign Development
BEFORE: D.M. Morton, Commissioner
N.E. MacMurchy, Commissioner July 15, 2014
H. Harowitz, Commissioner
O R D E R
WHEREAS:
A. On June 18, 2014, FortisBC Alternative Energy Services Inc. (FAES) submitted an Application for a Certificate of Public Convenience and Necessity (CPCN) to the British Columbia Utilities Commission (Commission) pursuant to sections 45-46 of the Utilities Commission Act (Act) for the development of the Sovereign Thermal Energy System (STES) and for approval under sections 59-61 of the Act for the proposed service agreements and rates established in Agreements for Thermal Energy Services to the eventual residential and commercial customers of the Sovereign Development (the Application);
B. The Sovereign Development will consist of a 45-storey building with 195 residential units, a 169-unit hotel and commercial and retail space located in Burnaby, BC at the intersection of Kingsway and McKay Avenue and is being developed by BOSA Properties (Burnaby) Inc. (the Developer) under the City of Burnaby, BC Permit number BLD11-000825. Occupancy is scheduled for Q4 2014;
C. STES will provide heating, cooling and domestic hot water (DHW). STES uses a hybrid energy system comprised of heat recovery heat pumps, distributed heat pumps and natural gas boilers. Heating and chilled water is provided first by water-to water heat pumps. Natural gas boilers provide the final stage of heating of the DHW and act as a second heat source. Excess waste heat from the cooling systems is rejected to the atmosphere via a cooling tower. The STES is located entirely within the Development lands and is designed to only serve the Development currently under construction;
D. STES will be constructed by the Developer and then purchased by FAES for a maximum amount of $3.8 million. The Developer selected the energy system to enhance the marketability of the development. The Developer and FAES have negotiated a purchase price for the energy system on the basis of what FAES would be prepared to invest in order to provide a service at competitive rates. The construction cost for the thermal energy system is estimated to be $6.9 million, though the purchase agreement includes a guaranteed maximum purchase price of $3.8 million with approximately $3.1 million of the costs being absorbed by the Developer. Annual Operating and Maintenance expense is forecast at $123,000 in 2015, not including fuel and electricity costs. FAES will own and operate the system, and charge its customers the thermal energy rates for the service as set out in the respective Service Agreements;
E. FAES submitted the following service agreements with its application for approval:
1) Thermal Energy System Service Agreement with BOSA Properties (Burnaby) Inc. (Residential Strata Parcel respecting the Sovereign Development);
2) Thermal Energy System Service Agreement with BOSA Properties (Burnaby) Inc. (Commercial customer related to the hotel component of the Sovereign Development); and
3) Thermal Energy System Service Agreement with BOSA Properties (Burnaby) Inc. (Commercial customer related to the commercial/retail component of the Sovereign Development);
(Collectively, the Service Agreements);
F. On June 25, 2014, the Commission issued a letter indicating that the Provincial Government, by 2014 Orders in Council 399-401, had approved exemptions for certain Thermal Energy Services (TES) Systems and that the Commission expected to enact orders to give effect to the TES System Exemption and TES Framework and Guide in early to mid-July 2014. The Commission noted that, given this change of circumstance, it will review the Sovereign CPCN Application to determine if it is suitable for Stream A registration and if it determines this to be the case, it will be approved as such and an exemption order will be issued for this system. The order would include an exemption from sections 59-61 of the Act and accordingly the Commission would not conduct a review of the rates or the contracts. The Commission noted that these contracts may need to be revised in accordance with the TES Framework Regulatory Guidelines;
G. On July 9, 2014, FAES responded to the Commission Letter outlining some of the challenges that FAES would face with respect to certain projects that are in progress, including the Sovereign project, if required to transition to the TES framework regulatory guidelines;
H. FAES requests that the Commission follow the approach used in the review of the SOLO Application where the Commission approved the rates established in service agreements for that project by Order G-54-14. FAES believes that this approach is appropriate because the rate design and service agreements for the Sovereign project are identical to the ones employed for the SOLO project;
I. Given the Application was received by the Commission prior to approval of the TES framework, the Commission is willing to consider the Application in the context of a streamlined CPCN (using the Stream A application form proposed in the TES framework) and full rates approval process;
J. The Commission determines that a public hearing process is necessary to review the Application.
NOW THEREFORE pursuant to sections 45-46 of the Utilities Commission Act, the Commission orders as follows:
1. The establishment of a Streamlined Review Process for the review of the Application according to the Regulatory Timetable that is attached as Appendix A to this Order.
2. FAES must post the Application and the Notice of Public Hearing, attached as Appendix B, on its website, cause the Notice of Public Hearing to be posted to the Developer and confirm that a copy of the Notice is provided to all pre-purchasers of units at the Development as of the date of this Order. FAES is to confirm to the Commission Secretary in writing by July 21, 2014, that Notice, as ordered, was provided.
3. Persons wishing to participate as Interveners or as Interested Parties, as described in Appendix B, should register with the Commission by Friday, August 1, 2014.
DATED at the City of Vancouver, in the Province of British Columbia, this 15th day of July, 2014.
BY ORDER
Original signed by:
D.M. Morton
Commissioner
Attachments
An Application by FortisBC Alternative Energy Services Inc.
for a Certificate of Public Convenience and Necessity to Purchase and Operate a Thermal Energy System
and
Rate Approvals for Thermal Energy Services for the Sovereign Development
REGULATORY TIMETABLE
|
ACTION |
DATE (2014) |
|
Commission Information Request No. 1 |
Friday, July 25 |
|
Registration from Interveners or Interested Parties |
Friday, August 1 |
|
FAES Response to Commission Information Request No. 1 |
Monday, August 11 |
|
Streamlined Review Process and Final Submissions |
Wednesday, August 20 |
FortisBC Alternative Energy Services
An Application by FortisBC Alternative Energy Services Inc.
for a Certificate of Public Convenience and Necessity for a Thermal Energy System
and
Rate Approvals for Thermal Energy Services for the Sovereign Development
Notice of Public Hearing Process
THE APPLICATION
On June 18, 2014, FortisBC Alternative Energy Services Inc. (FAES) applied to the British Columbia Utilities Commission (Commission) for a Certificate of Public Convenience and Necessity for the development of the Sovereign Thermal Energy System (Development). The Application also seeks approval of the proposed rates for the first 5 years and a rate design that determines future rates over a 20 year service agreement. The service agreements are made between FAES and the developer BOSA Properties (Burnaby) Inc. and assigned to the residential and commercial customers. The Development is to be built on lands at the intersection of Kingsway and McKay Avenue in Burnaby, BC under Burnaby Building Permit number BLD11-000825.
The thermal energy system will provide heating cooling and domestic hot water. The system is a hybrid energy system comprised of heat recovery pumps, distributed heat pumps and natural gas boilers. Excess heat is rejected through a cooling tower. The thermal energy system will be constructed by the developer and purchased by FAES for $3.8 million. FAES will own and operate the thermal energy systems to provide Thermal Energy Service (TES) to the residential and commercial occupants of the Development. The Commission, by the province of British Columbia and through the Utilities Commission Act, has the authority to approve an application for a Certificate of Public Convenience and Necessity to construct and operate a public utility plant or system in the province and to approve rates that are just, fair and non-discriminatory.
THE REGULATORY PROCESS
Commission Order G-94-14 establishes a Regulatory Timetable for the review of the Application by way of a Written Public Hearing.
The detailed Regulatory Timetable can be reviewed on the Commission’s website at www.bcuc.com>Current Applications>FAES Sovereign TES CPCN and Rates
REGISTERING TO PARTICIPATE
Persons who wish to actively participate in this proceeding should register as Interveners with the Commission in writing by Friday, August 1, 2014. Interveners will receive a copy of the Application as well as all correspondence and filed documents. An email address should be provided if available.
Persons not expecting to actively participate, but who have an interest in the proceeding, should register as Interested Parties with the Commission in writing, by Friday, August 1, 2014, identifying their interest in the Application. Interested Parties will receive an Executive Summary of the Application and a copy of the Commission’s Decision when issued.
PUBLIC INSPECTION OF DOCUMENTS
This Application and supporting material will be made available on the FortisBC website and on the Commission’s website at www.bcuc.com.
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 website.
FURTHER INFORMATION
For further information, please contact Erica Hamilton, Commission Secretary, by telephone (604) 660-4700 or BC. Toll Free at 1-800-663-1385, by fax (604) 660-1102, or by Email Commission.Secretary@bcuc.com.