ORDER NUMBER

G-73-25

 

IN THE MATTER OF

the Utilities Commission Act, RSBC 1996, Chapter 473

 

and

 

Corix Burnaby Mountain DE Limited Partnership

Compliance Filing for Orders G-321-24 and G-348-24

 

BEFORE:

W. E. Royle, Commissioner

 

on March 19, 2025

 

ORDER

WHEREAS:

 

A.      On January 20, 2025, Corix Burnaby Mountain DE Limited Partnership (Corix) submitted a compliance filing to the British Columbia Utilities Commission (BCUC), in accordance with Orders G-321-24 and G-348-24, requesting acceptance of permanent rates and approval of a rate rider proposal (Compliance Filing);

B.      On November 29, 2024, the BCUC issued Decision and Order G-321-24 on Stage 2 of the Generic Cost of Capital (GCOC) proceeding (GCOC Stage 2 Decision), which established Corix’s allowed return, effective January 1, 2024. In its GCOC Stage 2 Decision, the BCUC directed Corix to establish a GCOC Variance Deferral Account (UniverCity GCOC VDA) to record the variance between the previously approved 2024 interim rates and the revised rates reflecting the new cost of capital for the UniverCity customer group (UniverCity), and considered a one-time bill adjustment to be reasonable for the Simon Fraser University customer group (SFU), to address the variance between the 2024 interim and the revised rates;

C.      On December 19, 2024, the BCUC issued Decision and Order G-348-24 for the Corix Burnaby Mountain District Energy Utility 2024-2025 Revenue Requirements and Rates application, which noted the determinations in the GCOC Stage 2 Decision and approved the Basic Charge ($/square metre [m²]/month) of $1.3672 and $1.4903, effective March 1, 2024, and January 1, 2025, respectively, on a permanent basis, for UniverCity. The BCUC also approved Capacity, Consumption, and Availability charges for SFU on a permanent basis, effective March 1, 2024, and January 1, 2025, subject to the compliance filing directives as set out in the GCOC Stage 2 Decision;

D.      In the Compliance Filing, Corix seeks confirmation of the revised 2024 and 2025 revenue requirements for SFU and UniverCity, acceptance of permanent rates and mechanisms to recover cost variances between the 2024 interim and the revised rates. This includes acceptance of the one-time bill adjustment for SFU, approval of a rate rider to recover the UniverCity GCOC VDA balance over a 12-month period commencing April 1, 2025, and approval to transfer any remaining balance as at March 31, 2026 to the UniverCity Revenue Deficiency Deferral Account (RDDA);    

E.       By Order G-18-25, the BCUC, among other things:

         i.            Varied the approval of permanent rates for the UniverCity Basic Charge and approved the SFU Capacity, Consumption, and Availability charges, on a permanent basis, effective March 1, 2024, and January 1, 2025;

       ii.            Approved, for SFU, a one-time debit bill adjustment of $82,200, before taxes, to account for the difference between the interim and final cost of capital parameters applicable to SFU in compliance with Order G-321-24; and

     iii.            Established a regulatory timetable for the review of Corix’s request to amortize the 2024 balance of $262,930 in the UniverCity GCOC VDA over a twelve-month period from April 1, 2025, to March 31, 2026, through a UniverCity Rate Rider 1 set at $0.1386/m²/month, and to record any variance between the revenue collected from the rate rider and the UniverCity GCOC VDA balance as at March 31, 2026, in the UniverCity RDDA; and

F.       The BCUC has reviewed the evidence and submissions made in this proceeding, and considers the following determinations are warranted.

 

NOW THEREFORE for the reasons outlined in the decision accompanying this order, the BCUC orders as follows:

 

1.       Corix is approved to recover the 2024 ending balance in the UniverCity GCOC VDA through a UniverCity Rate Rider 1, set at $0.1386/m²/month, from UniverCity customers over a 12-month period, starting on April 1, 2025, or on the first day of the month of the next billing cycle for UniverCity.

2.       Corix is approved to transfer to the UniverCity RDDA any remaining balance in the UniverCity GCOC VDA after the expiry of the 12-month amortization period.

3.       Corix is directed to file with the BCUC updated tariff pages reflecting the approval of the UniverCity Rate Rider 1 for endorsement by March 31, 2025.

 

DATED at the City of Vancouver, in the Province of British Columbia, this          19^th          day of March 2025.

 

BY ORDER

 

Electronically signed by Wendy Royle

 

W. E. Royle

Commissioner

 

 

 

 

 

 

 

Corix Burnaby Mountain DE Limited Partnership

Compliance Filing for Orders G-321-24 and G-348-24

 

1.0              Background

Corix Burnaby Mountain DE Limited Partnership (Corix) owns and operates the Burnaby Mountain District Energy Utility (BMDEU), a thermal energy system that provides heating services to the Simon Fraser University customer group (SFU) and UniverCity customer group (UniverCity), a residential and commercial development adjacent to the SFU campus.[1]

 

On February 1, 2024, Corix filed the BMDEU 2024-2025 Revenue Requirements and Rates Application (2024-2025 RRRA) with the British Columbia Utilities Commission (BCUC), seeking approval of rates effective March 1, 2024, and January 1, 2025.[2] After a public review process, including a review of the appropriateness of cost allocation between the two customer groups, the BCUC approved the revenue requirements and rates on a permanent basis for each of UniverCity and SFU (BMDEU 2024-2025 RRRA Decision).[3] The next rate application for Corix BMDEU is due on November 28, 2025.[4]

 

For UniverCity, the approved rate includes a Basic Charge ($/square metre [m²]/month) and for SFU, the approved rate is comprised of a Capacity charge ($/megawatt hour of nominated capacity), a Consumption charge ($/kilowatt hour) and an Availability charge (fixed monthly).[5] UniverCity’s Basic Charge is structured on a previously approved levelized basis over a 20-year period using a Revenue Deficiency Deferral Account (RDDA). The RDDA records annual deficiencies or surpluses resulting from the difference between the forecast annual earnings before tax at the approved rates and the approved annual revenue requirement (cost of service). The levelized rate approach for new utility infrastructure reduces costs for customers in the early years as the plant is built, while allowing the Basic Charge to escalate over time, distributing costs to all customers over the 20-year period.[6] 

 

Separate from the Corix BMDEU 2024-2025 RRRA proceeding, the BCUC held Stage 1 and Stage 2 of the Generic Cost of Capital (GCOC) proceeding to set the cost of capital for most utilities in BC, including Corix. While the GCOC proceeding was ongoing, the BCUC established interim rates, effective January 1, 2024, on a refundable or recoverable basis for multiple utilities, including Corix, pending the BCUC’s final decision in that proceeding.[7] In its decision on Stage 2 of the GCOC proceeding (GCOC Stage 2 Decision), the BCUC increased Corix’s deemed equity component from 42.5 percent to 49 percent and its allowed return on equity from 9.50 percent to 10.4 percent, effective January 1, 2024.[8]

 

In the GCOC Stage 2 Decision, the BCUC also directed Corix to establish a new UniverCity GCOC Variance Deferral Account (UniverCity GCOC VDA) to record the variance between the previously approved interim 2024 rates and the rates that would reflect the increased cost of capital for UniverCity, effective January 1, 2024. Additionally, the BCUC considered Corix’s proposal of a one-time bill adjustment for SFU, as the mechanism for  recovery of SFU’s portion of the 2024 cost of capital variance balance arising from the GCOC impacts, to be reasonable given the nature of Corix’s service to SFU.[9]

 

In this decision, the BCUC addresses only the proposed mechanism to recover UniverCity’s portion of the 2024 cost of capital variance balance that the utility is entitled to under the GCOC Stage 2 Decision.

2.0              Compliance Filing to Implement Increased Cost of Capital

On January 20, 2025, Corix submitted a compliance filing with the BCUC in accordance with the BMDEU 2024-2025 RRRA and GCOC Stage 2 Decisions[10] (Compliance Filing). In this filing Corix seeks: [11]

      (i)            Confirmation of the revised revenue requirements for SFU and UniverCity for 2024 and 2025, based on the updated cost of capital components;

    (ii)            Acceptance of the permanent rates, which, for UniverCity, consists of a Basic Charge ($/m²/month) of $1.3672 and $1.5906, effective March 1, 2024, and January 1, 2025, respectively, and for SFU, consists of Capacity, Consumption and Availability charges;  

   (iii)            Acceptance to recover the 2024 variance between the interim and the final cost of capital parameters applicable to SFU through a one-time debit bill adjustment of $82,200, before taxes;

   (iv)            Approval to amortize the 2024 balance of $262,930 in the UniverCity GCOC VDA over a twelve-month period from April 1, 2025, to March 31, 2026, through a UniverCity Rate Rider 1 set at $0.1386/m²/month; and

    (v)            Approval to record any variance between the revenue collected from the UniverCity Rate Rider 1 and the UniverCity GCOC VDA balance as at March 31, 2026, in the UniverCity RDDA.

By Order G-18-25, the BCUC approved the 2024 and 2025 rates for UniverCity and SFU on a permanent basis, consistent with the directives and determinations of the GCOC Stage 2 Decision and the BMDEU 2024-2025 RRRA Decision. This approval inherently confirmed the revised revenue requirements for UniverCity and SFU.

 

For UniverCity, the BMDEU 2024-2025 RRRA Decision approved a monthly Basic Charge ($/m²/month) of $1.3672 and $1.4903, effective March 1, 2024, and January 1, 2025, respectively.[12] However, the BCUC subsequently varied the UniverCity 2025 Basic Charge ($/m²/month) from $1.4903 to $1.5906, effective January 1, 2025, to account for Corix’s new cost of capital.[13]

 

The change in the approved UniverCity Basic Charge from 2023 to 2025 is summarized in the table below:

 

Table 1: Change in UniverCity Basic Charge from 2023 to 2025[14]

	January 1, 2023 Order G-279-21	March 1, 2024 Order G-348-24	January 1, 2025 Order G-348-24	January 1, 2025 (Revised) Order G-18-25
Basic Charge ($/m2/month)	1.1889	1.3672	1.4903	1.5906

 

In addition to these permanent rates, the BCUC, in Order G-18-25, also approved a one-time debit bill adjustment for SFU of $82,200 (before taxes) to recover the variance between the 2024 interim rates and the rates that reflect the new cost of capital.^[15]

The BCUC established a regulatory timetable to review Corix’s request to recover from UniverCity the $262,930[16] difference in Corix’s 2024 cost of capital, as recorded in the UniverCity GCOC VDA, through a rate rider over a 12-month period, as well as the accounting treatment of any residual balance in the UniverCity GCOC VDA at the end of the 12-month amortization period. Specifically, the Panel considered the following Corix requests as part of the public review process:^[17]

         i.            Approval to amortize the 2024 balance of $262,930 in the UniverCity GCOC VDA over a twelve-month period from April 1, 2025 to March 31, 2026 through a UniverCity Rate Rider 1 set at $0.1386/m²/month; and

       ii.            Approval to record any variance between the revenue collected from the UniverCity Rate Rider 1 and the UniverCity GCOC VDA balance as at March 31, 2026, in the UniverCity RDDA;

The BCUC received 31 letters of comment on Corix’s requests. The concerns raised in the letters are discussed in the sections below.

3.0              Corix’s Proposal

Corix proposes to recover the UniverCity GCOC VDA balance over a 12-month period commencing April 1, 2025, to March 31, 2026, through UniverCity Rate Rider 1, set at $0.1386/m²/month. This rate is designed to amortize the UniverCity GCOC VDA balance of $262,930 as at December 31, 2024.[18]

 

Corix notes that a 12-month recovery period offers the most balanced approach by:[19]

      (i)            Aligning cost recovery with the period in which the costs are incurred;

    (ii)            Minimizing financing costs;

   (iii)            Smoothing rate impacts; and

   (iv)            Reducing uncertainty in gross floor area projections, thereby preventing significant revenue variances.

While UniverCity customers are the strata corporations or building owners directly billed by Corix for the thermal energy services, Corix provides the following table summarizing the estimated bill impact on a typical residential end-user. The table includes Corix’s proposed UniverCity Rate Rider 1 based on an 800 square foot (74 m²) residential suite with an annual consumption of 8,310 kilowatt hours.[20]

 

Table 2: Revised UniverCity End-User Bill Impact Estimate (800 square feet) Suite[21]

	2023	2024	2025	2026
Permanent Rates pursuant to G-321-24 and G-348-24
Basic Charge ($)[22]	1,060	1,193	1,419	1,546
Variable Energy Charge ($)[23]	260	257	257	257
Rate Rider 1 ($)[24]	-	-	93	31
Total Annual Bill ($)	1,320	1,449	1,768	1,834
Annual Change in Bill ($)	Not applicable	129	318	56
Annual Change in Bill (%)	Not applicable	9.79%	21.97%	3.72%

 

The changes to the Basic Charge and Variable Charge from 2023 to 2026 are outside the scope of this proceeding. The 2023 Basic Charge was established pursuant to Decision and Order G-279-21, while the 2024 and 2025 Basic Charges were determined in the BMDEU 2024-2025 RRRA Decision and the Stage 2 GCOC Decision. The 2026 Basic Charge will be addressed in Corix’s next revenue requirements application. The Variable Energy Charge is reviewed separately through Corix’s annual energy cost reconciliation account (ECRA) report filed on March 1 each year. As shown in the table above, approximately 16 percent[25] of the 21.97 percent 2025 bill increase is due to changes in the Basic Charge and Variable Energy Charge, both of which have been or will be reviewed separately.[26] The issue before this Panel is the Rate Rider 1 line item.

 

Corix evaluated alternative amortization periods of 6, 18 and 24-months to recover the $262,930 balance in the UniverCity GCOC VDA. Corix noted that a shorter period (6-months) would accelerate recovery of the UniverCity GCOC VDA, lower financing costs, and reduce uncertainty and rate relief in the last quarter of 2025. However, the shorter period would also result in a higher rate rider and a mismatch between the period over which the variance was accumulated (the 12 months from January 1 to December 31, 2024) and the recovery period (6 months).[27] Conversely, Corix noted that longer amortization periods (18 or 24 months) would smooth rates and reduce the immediate financial impact, but would increase financing costs, create a mismatch with the 12-month variance accumulation period, and introduce greater uncertainty with the gross floor area projections.[28]

 

Corix notes that proposed UniverCity Rate Rider 1 ($/m²/month) is based on a known and fixed gross floor area for the initial nine months of the recovery period (April 1 to December 31, 2025). However, for the final three months (January 1 to March 31, 2026), there is uncertainty regarding the connection date of two anticipated new customer buildings. Corix adds that if connections are delayed, the revenue collected through UniverCity Rate Rider 1 will be lower, leading to under-recovery of the UniverCity GCOC VDA balance. However, if connections occur earlier than anticipated, revenue will be higher than expected, leading to over-recovery and putting the UniverCity GCOC VDA balance into a surplus position.[29]

 

The table below, prepared by BCUC staff, compares the estimated annual percentage bill increase under different amortization periods. The percentage increases account for changes to both the Basic Charge and Variable Energy Charge (e.g., the 2025 percentage increase includes the estimated 16 percent increase due to the 2025 changes in the Basic Charge and Variable Energy Charge), which are determined separately from this proceeding.

 

Table 3: Estimated Annual Bill Impact Under Different Amortization Periods[30]

 

Corix concludes that the 12-month amortization period is the most reasonable option for the recovery of the UniverCity GCOC VDA.[31] This period ensures cost recovery is aligned with the timeframe in which costs are incurred, minimizes financing costs, smooth rate impacts, and reduces uncertainty in gross floor area projections.[32]

 

Due to uncertainties in the timing of new customer connections during the ongoing build-out of the UniverCity development, Corix acknowledges that revenue collected from UniverCity Rate Rider 1 may not match the UniverCity GCOC VDA balance. To address this uncertainty, Corix proposes to record any variance between the revenue collected from UniverCity Rate Rider 1 ($/m²/month) and the UniverCity GCOC VDA balance as of March 31, 2026, in the UniverCity RDDA. Corix estimates that the potential variance remaining in the UniverCity RDDA at March 31, 2026, could range between a deficit of $26,772 and a surplus of $6,171.[33]

3.1              Public Response

The BCUC received 31 letters of comment, all opposing the UniverCity 2024 and 2025 rate increases resulting from the BMDEU 2024-2025 RRRA Decision and Stage 2 GCOC Decision as well as the proposed UniverCity Rate Rider 1 requested in the Compliance Filing. The key concerns raised include the following:[34]

•         Corix has not provided UniverCity residents an adequate justification for the proposed rate increases.

•         UniverCity residents were given insufficient notice, and the approval process lacks transparency.

•         There was no consultation with affected UniverCity residents before rate increases were approved.

•         UniverCity residents feel they are unfairly subsidizing SFU’s heating costs.

Overall, the comments reflect widespread frustration over a lack of transparency, limited consultation and financial hardship caused by the rate increase, and residents are urging stricter regulatory oversight in the rate setting process.[35]

3.2              Corix Response

In reply to the concerns raised in the letters of comment, Corix clarified its understanding that Order G-18-25 was meant to address only two approvals:^[36]

1.       The implementation of UniverCity Rate Rider 1 to amortize the UniverCity GCOC VDA; and

2.       The recording of any variance between the revenue collected from the UniverCity Rate Rider 1 and the UniverCity GCOC VDA balance as at March 31, 2026, in the UniverCity RDDA.

Corix also stated that its customers are strata corporations and building owners, not the individual residential end-users who filed the letters of comment. While acknowledging that individual residential end-users will bear the impact of the rates charged, Corix noted that it did not have visibility into how these costs are ultimately passed down.^[37]

 

Corix submitted that the Basic Charges were approved by the BCUC through the GCOC Stage 2 Decision and the BMDEU 2024-2025 RRRA Decision, both of which involved public proceedings that included public notice, intervener participation, opportunities for letters of comments, information requests, responses to information requests and final and reply arguments.^[38] Regarding UniverCity Rate Rider 1, Corix recognized concerns about the rate changes, economic hardship, consultation, justification and review time. However, Corix explained that the BCUC has already approved the UniverCity GCOC VDA for UniverCity and that the Compliance Filing merely seeks confirmation of the amount and addresses the disposition of the UniverCity GCOC VDA balance through a 12-month rate rider.^[39] Corix acknowledged concerns about the rate increases, noting a 24-month amortization period would reduce the immediate impact, but would result in higher financing costs and unfairly shift the burden to future customers scheduled to connect in 2026.^[40]

4.0              Panel Determination

Despite the narrow scope of this proceeding, which is focussed on addressing Corix’s proposed mechanism to recover UniverCity’s portion of the 2024 cost of capital variance balance that the utility is entitled to under the GCOC Stage 2 Decision, the BCUC received numerous letters of comment regarding issues going beyond this scope. Members of the public expressed opposition to the recent Basic Charge increases affecting UniverCity residents, including concerns about the need for greater scrutiny of Corix’s operating budget, its allowed return on equity, and the size of rate increases. The Panel notes that these issues have been considered in prior BCUC proceedings, as described below.

 

The BCUC held a public hearing to review the 2024 and 2025 UniverCity Basic Charges in the 2024-2025 RRRA. Among the three interveners that actively participated, two represented the interests of residential ratepayers. They asked questions about Corix’s rate application and submitted final arguments. SFU also intervened.

The BCUC received one letter of comment. As explained in the BMDEU 2024-2025 RRRA Decision, the BCUC cited cost pressures and buildout delays at UniverCity to be contributing factors for the Basic Charge increase. As part of that decision, the BCUC also reviewed the cost allocation between UniverCity and SFU customer groups.

 

Similarly, for the allowed return component in the UniverCity Basic Charge, the BCUC established the allowed return for most utilities in BC, including Corix, after review of utility and expert evidence, with intervener input. The BCUC did not receive any letters of comment in Stage 2 of the GCOC proceeding.

 

Since the new cost of capital established in the GCOC Stage 2 Decision applies to Corix effective January 1, 2024, and is higher than the cost of capital that was charged by Corix under the previously charged interim rates, the utility is entitled to collect additional monies from ratepayers. Corix calculated the 2024 GCOC variance amount to be $262,930, which this Panel has reviewed and accepts. Therefore, with the rates for 2024 and 2025 already approved by the BCUC, the issue for this Panel to address is how and when Corix should recover the additional 2024 UniverCity GCOC VDA balance.

 

The Panel has considered Corix’s proposed 12-month amortization period as well as shorter (i.e. 6-months) and longer periods (i.e. 18 or 24-months) and finds that Corix’s proposal appropriately aligns with the period in which costs were incurred, being January 1, 2024 to December 31, 2024.  One alternative is a longer recovery period to lower rates for customers each month. However, the total costs to ratepayers will be higher due to carrying costs over the extended period, potentially until 2027. Conversely, a shorter recovery period (i.e. 6-months) would cause rates to rise more steeply, increasing near-term bill impact. Therefore, the Panel finds that Corix’s proposed 12-month period provides an appropriate balance to smooth out bill impacts while keeping financing costs at a reasonable level.

 

The Panel further accepts Corix’s proposal to transfer any remaining balance in the UniverCity GCOC VDA at the end of the 12-month amortization period to the UniverCity RDDA. The remaining balance is not expected to be material and the Panel finds that recording the remaining balance in the UniverCity RDDA is a practical solution.

 

Accordingly, Corix is approved to recover the 2024 ending balance in the UniverCity GCOC VDA through a UniverCity Rate Rider 1, set at $0.1386/m²/month from UniverCity customers over a 12-month period, starting on April 1, 2025, or on the first day of the month of the next billing cycle for UniverCity.

 

Corix is approved to transfer to the UniverCity RDDA any remaining balance in the UniverCity GCOC VDA after the expiry of the 12-month amortization period.

 

Corix is directed to file with the BCUC updated tariff pages reflecting the approvals of the UniverCity Rate Rider 1 for endorsement by March 31, 2025.

 

 

 

Dated at the City of Vancouver, in the Province of British Columbia, this          19^th          day of March 2025.

 

 

 

Electronically signed by Wendy Royle

_________________________________

W. E. Royle

Commissioner