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June 8, 2023                                                                                                                                                                                                       

 

Sent via email                                                                                                                                                                      Letter L-30-23

 

Ms. Sarah Walsh

Director, Regulatory Affairs

FortisBC Energy Inc.

16705 Fraser Highway

Surrey, BC V4N 0E8

 

 

Re:          FortisBC Energy Inc. – 2023/2024 Annual Contracting Plan for the period November 1, 2023 to

October 31, 2024

 

Dear Ms. Walsh:

 

On May 1, 2023, FortisBC Energy Inc. (FEI) filed with the British Columbia Utilities Commission (BCUC), on a confidential basis, its 2023/2024 Annual Contracting Plan (ACP) for the gas year starting November 1, 2023 and ending October 31, 2024 (2023/2024 ACP). The BCUC accepts the 2023/2024 ACP and items as set out on pages 10 to 12. The major portfolio recommendations included in the FEI 2023/2024 ACP are as follows:

 

1.       Forecast Design Peak Day Demand: FEI recommends a peak day value for 2023/24 of 1,442 TJ/day, an increase of 1 TJ/day from the amounts approved in the 2022/23 ACP.

2.       Annual Normal Demand: Annual normal demand for 2023/24 is forecast at approximately 155 PJ resulting in an average daily normal load of 424 TJ/day. In 2022/23, the total annual normal demand was forecast to be 152 PJ that resulted in a daily normal load of 417 TJ/day.

3.       Commodity Portfolio: FEI recommends increasing Station 2 baseload supply by 5 TJ/day and AECO/NIT baseload supply by 2 TJ/day.

4.       Commodity Portfolio: For the period November 1, 2022 to October 31, 2023, the receipt point fuel gas percentages are 4.9% at Station 2 and 1.4% at AECO/NIT. FEI will evaluate and communicate before October 2023 the Commodity Providers’ fuel requirements for gas delivery on November 1, 2023.

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 producers at Station 2, 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 exploring lower carbon gas opportunities for a small portion of its baseload requirements (up to 10 TJ/day) for a term of up to five years in length, with supply that has a lower carbon intensity factor below BC’s established lifecycle emission factor for natural gas.

8.       Commodity and Midstream Portfolio: FEI recommends term purchases at Station 2 out to the 2026/27 gas year in the interest of pricing diversity and supply security at Station 2.

9.       Commodity and Midstream Portfolio: FEI recommends that it continue evaluating options involving additional infrastructure (on-system storage, market area storage and/or pipeline infrastructure), in order to increase gas supply resiliency, security of supply and diversity of supply in FEI’s portfolio of resources.

10.   Midstream Portfolio: FEI recommends maintaining existing physical resources for the 2023/24 gas year, which includes storage, and transportation capacity on Westcoast’s T-South and T-North, TC Energy’s NGTL and Foothills BC system, and Northwest Pipeline’s system.

11.   Midstream Portfolio: FEI recommends negotiating over a ten-month period from January 2024 to October 2024 for the 2024/2025 winter supply transactions at Station 2.

12.   Midstream Portfolio: FEI recommends having seasonal supply and pipeline capacity available as contingency resources.

The BCUC requests FEI to file its 2024/2025 ACP by May 1, 2024. In addition, the BCUC requests FEI to include the following information in the 2024/2025 ACP:

         An update on the storage and transport requirements and alternatives for the 2024/2025 contracting year and future contracting years, including analysis on how 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, including, but not restricted to: Tilbury development; Westcoast pipeline; T-South pipeline expansion and RGSD project; Woodfibre LNG; and the Huntingdon market.;

         An update to the Northeastern BC market study;

         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;

         An update and analysis of the operational experience with Mt. Hayes and Tilbury LNG peaking resources for the 2023/2024 contracting year, including an analysis of the potential impact of changing LNG loads under RS 46 service on the availability of these peaking resources for the core natural gas customers for the 2023/2024 and future years, as well as storage levels;

         A load forecast for RS 46 customers and the supply arrangements for meeting these customer’s load requirements;

         An update on how FEI will meet Fort Nelson supply needs in the future considering the development that supply from the major plants in the area has significantly declined over the years; and,

         An update FEI’s strategy for incorporating renewable natural gas and other lower carbon gas into its 2024/2025 and future ACPs.

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 describe 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 2023/2024 ACP confidential, as it contains commercially sensitive information, until otherwise determined by the BCUC. A copy of FEI’s non-confidential Executive Summary of the FEI 2023/2024 ACP is attached and is available to the public.

Sincerely,

Original signed by:

Patrick Wruck

Commission Secretary

 

BV/db

Enclosure 


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