July 23, 2018
Letter L-19-18
Ms. Diane Roy
Vice President, Regulatory Affairs
FortisBC Energy Inc.
16705 Fraser Highway
Surrey, BC V4N 0E8
gas.regulatory.affairs@fortisbc.com
Re: FortisBC Energy Inc. - 2018/2019
Annual Contracting Plan for the period November 1, 2018 to
October 31, 2019
Dear Ms. Roy:
On May 1, 2018, FortisBC Energy Inc. (FEI) filed with the British Columbia Utilities Commission (BCUC), on a confidential basis, its 2018/19 Annual Contracting Plan (ACP) for the gas year starting November 1, 2018 and ending October 31, 2019 (2018/19 ACP). The BCUC accepts the FEI 2018/19 ACP and items as set out on pages 10 to 12 of the ACP. The major portfolio recommendations included in the FEI 2018/2019 ACP are as follows:
1. Forecast Design Peak Day Demand: FEI recommends a peak day value for 2018/19 of 1,341 terajoules per day (TJ/d), an increase of 16 TJ/d from the amount accepted in the 2017/18 ACP for the period November 1, 2017 to October 31, 2018.
2. Annual Normal Demand: Annual normal demand for 2018/19 is projected at approximately 137 petajoules (PJ) resulting in an average daily normal load of 374 TJ/d. This represents a 35 TJ/day increase from the previous 2017/18 ACP load forecast and a 6 TJ/d increase from the load forecast for the 2018 Annual Review.
3. Commodity Portfolio: Station 2 baseload supply increases by 26 TJ/d and AECO/NIT baseload supply increases by 9 TJ/d.
4. Commodity Portfolio: Commodity Providers’ fuel requirements for gas delivery on November 1, 2018 will be evaluated and communicated before October 2018. For the period November 1, 2017 to October 31, 2018 the fuel percentages are 5.3% at Station 2 and 1.1% at AECO/NIT.
5. Commodity Portfolio: FEI recommends continuing with a balanced mix of daily and monthly priced supply to provide operating flexibility and to mitigate adverse price movements.
6. Commodity Portfolio: FEI recommends consideration of longer term supply contracts with BC gas producers, up to ten years in length based off different pricing structures, in the interest of pricing diversity and supply security at the Station 2 market hub.
7. Commodity Portfolio: FEI recommends consideration of potential longer term supply commitments (10 or more years) with potentially different arrangements with gas producers in the region, in the interest of portfolio diversity, and security of supply at the Station 2 market hub.
8. Commodity and Midstream Portfolio: FEI recommends term purchases at Station 2 out to the 2021/22 gas year in the interest of pricing diversity and supply security at Station 2.
9. Midstream Portfolio: Maintain existing physical resources for the 2018/19 gas year, which includes storage, and transportation capacity on Westcoast’s T-South and T-North, TransCanada’s NGTL and FoothillsBC system, and Northwest Pipeline’s system.
10. Midstream Portfolio: FEI recommends continuing to hold more T-South Huntingdon Delivery pipeline capacity than Core customers require for the 2018/19 gas year, and release a portion of this capacity to customers currently under the Transportation service model for the 2018/19 gas year.
The BCUC requests FEI to file its 2019/20 ACP by May 1, 2019. In addition, the BCUC requests FEI to include the following information in the 2019/20 ACP:
• An update to the Northeastern BC market study with the scope and detail of the update to be determined by FEI.
• An update on the efforts to establish key relationships with producers who plan to develop supply in the Horn River, Montney and other producing regions of British Columbia over the long term.
• A review and analysis of the operational experience with Mt. Hayes and Tilbury liquefied natural gas (LNG) peaking resources for the 2018/19 contract year, including an analysis of the potential impact of LNG service under Rate Schedule 46 service on the availability of these peaking resources for the core natural gas customers for 2019/20 and future years.
• A load forecast for Rate Schedule 46 customers, the supply arrangements for meeting these customer’s load requirements and FEI’s plan for integrating this demand into the overall supply portfolio.
• A review of the storage and transport requirements and alternatives for 2019/20 and future contract years, including an analysis to optimize the amounts of transportation and storage to be contracted in future years taking into account the regional infrastructure and market developments currently in place and anticipated to be in place in the future.
• An assessment of FEI’s contracted T-South capacity in the short-term and long-term time horizons. The assessment should include an analysis of the optimal T-South portfolio giving regard to market conditions at the time of filing, updated demand forecasts, and comparisons against alternative resource options.
• For any contracted T-South capacity in excess of demand forecast requirements, a detailed analysis of the mitigation options and FEI’s recommended strategy.
FEI is requested to file, for information purposes, a report summarizing the process and the outcome of its plans to release a portion of its T-South pipeline capacity to transportation service customers for the 2018/19 gas year within 30 days of completing the release.
Pursuant to section 71 of the Utilities Commission Act (UCA) and in accordance with the BCUC Rules for Natural Gas Energy Supply Contracts, FEI is requested to submit applications for all energy supply and storage contracts along with any information it considers necessary for the BCUC to determine whether the contract is in the public interest. The BCUC expects that where an application is concerning a longer term supply commitment (10 or more years), FEI will thoroughly address the associated benefits and risks. Each application will be reviewed based on the considerations outlined in section 71(2.1) of the UCA and the prevailing market conditions at that time.
Exclusive of the non-confidential Executive Summary, the BCUC will hold the 2018/19 ACP confidential as it contains commercially sensitive information. A copy of FEI’s non-confidential Executive Summary of the FEI 2018/19 ACP is attached and is available for public review.
Sincerely,
Original signed by:
Patrick Wruck
Commission Secretary
AK/dg
Enclosure