IN THE MATTER OF
the Utilities Commission Act, R.S.B.C. 1996, Chapter 473
and
FortisBC Energy Inc.
An Application regarding its 2015 Fourth Quarter Gas Cost Report
and Rate Changes effective January 1, 2016
for the Mainland, Vancouver Island, and Whistler Service Areas
BEFORE: L. F. Kelsey, Commissioner
H. G. Harowitz, Commissioner December 3, 2015
K. A. Keilty, Commissioner
D. M. Morton, Commissioner
O R D E R
WHEREAS:
A. On November 27, 2015, FortisBC Energy Inc. (FEI) filed its 2015 Fourth Quarter Report on Commodity Cost Reconciliation Account (CCRA) and Midstream Cost Reconciliation Account (MCRA) for the Mainland, Vancouver Island, and Whistler Service Areas based on a five-day average November 12, 13, 16, 17 and 18, 2015 forward gas prices (the 2015 Fourth Quarter Report);
B. By Order G-39-15 dated March 16, 2015, the British Columbia Utilities Commission (Commission) approved a decrease in the Commodity Cost Recovery Charge sales rate classes within FEI’s Mainland, Vancouver Island, and Whistler Service Areas to a rate of $2.486/gigajoule (GJ), effective April 1, 2015;
C. By Letter L-40-11 dated May 19, 2011, the Commission revised the guidelines (Guidelines) for the review of quarterly gas costs and rate setting mechanisms that were originally established by Letter L-5-01;
D. In the 2015 Fourth Quarter Report, using the five-day average forward prices ending November 18, 2015 and based on existing Commodity Cost Recovery Charge, FEI calculates a projected after tax deferral balance surplus of $36 million at December 31, 2015, and a projected after tax deferral balance surplus of $66 million at December 31, 2016. FEI forecasts that the recovery-to-cost ratio at the existing rate would be 144.7 percent for the following 12 months, which falls outside the rate change trigger mechanism of 95 to 105 percent and the indicative rate change exceeds the minimum rate change threshold of $0.50/GJ;
E. In the 2015 Fourth Quarter Report, based on the Guidelines, FEI requests approval for a decrease of $0.767/GJ from $2.486/GJ to $1.719/GJ in the Commodity Gas Recovery Charge, effective January 1, 2016;
F. In the 2015 Fourth Quarter Report, FEI forecasts the existing Storage and Transport Charges will over recover the midstream costs in 2016 and requests approval to flow-through decreases to the Storage and Transport Charges as set out in the schedules at Tab 2, Page 7;
G. In the 2015 Fourth Quarter Report, FEI forecasts a MCRA balance at existing rates of approximately $34 million surplus after tax at December 31, 2015. Based on the one-half amortization of the MCRA cumulative balances in the following year's rates, FEI requests approval to set MCRA Rate Rider 6 applicable to the sales rate classes excluding Revelstoke, effective January 1, 2016, as set out in the 2015 Fourth Quarter Report in the schedules at Tab 2, Page 7;
H. The combined effects of the proposed delivery changes as requested in the FEI Annual Review for 2016 Rates, and the proposed commodity related charges (Cost of Gas, Storage and Transport, and MCRA Rate Rider 6) as requested in the 2015 Fourth Quarter Report would reduce the total annual bill for a typical Mainland residential customer with an average annual consumption of 90 GJ by approximately $60 or 7.4 percent; for a typical Vancouver Island residential customer with an average annual consumption of 45 GJ by approximately $71 or 11.6%; and for a typical Whistler residential customer with an average annual consumption of 90 GJ by approximately $210 or 16.2%; and
I. The Commission reviewed the 2015 Fourth Quarter Report within the context of the Guidelines and considers that the requested rate changes are warranted.
NOW THEREFORE pursuant to section 61(4) of the Utilities Commission Act, the British Columbia Utilities Commission orders as follows:
1. The requested Commodity Cost Recovery Charge decrease of $0.767/GJ from $2.486/GJ to $1.719/GJ applicable to Sales Rate Classes within the Mainland, Vancouver Island, and Whistler Service Areas, effective January 1, 2016, is approved.
2. The requested flow-through Storage and Transport Charges applicable to the Sales Rate Classes within the Mainland, Vancouver Island, and Whistler Service Areas, effective January 1, 2016, as set out in the schedule attached to this order that is Tab 2, page 7 of the 2015 Fourth Quarter Report, are approved.
3. The requested Midstream Cost Reconciliation Account Rate Rider 6 applicable to the Sales Rate Classes within the Mainland, Vancouver Island, and Whistler Service Areas, excluding Revelstoke, effective January 1, 2016, as set out in the schedule attached to this order that is Tab 2, page 7 of the 2015 Fourth Quarter Report, are approved.
4. FortisBC Energy Inc. must notify all customers that are affected by the rate change by way of a bill insert or bill message included with the next monthly gas billing.
DATED at the City of Vancouver, In the Province of British Columbia, this 3rd day of December 2015.
BY ORDER
Original signed by:
D. M. Morton
Commissioner
Attachment