ORDER NUMBER

G-112-25

IN THE MATTER OF

the Utilities Commission Act, RSBC 1996, Chapter 473

and

FortisBC Alternative Energy Services Inc.

Stream A Registration of the Gryphon House Thermal Energy System

BEFORE:

B. A. Magnan, Commissioner

on April 30, 2025

ORDER

WHEREAS:

A.      On February 24, 2025, FortisBC Alternative Energy Services Inc. (FAES) filed with the British Columbia Utilities Commission (BCUC) an application (Application) to register the Gryphon House Thermal Energy System (TES) as a Stream A TES, in accordance with the BCUC’s TES Regulatory Framework Guidelines approved by Order G-27-15;

B.      On August 27, 2014, by Order G-121-14, the BCUC granted an exemption to a person, or the person’s lessee, trustee, receiver or liquidator, who owns or operates in British Columbia a Stream A TES for the production, generation, storage, transmission, sale, delivery or provision of any agent for the production of heat or cold for compensation, with a capital cost less than a maximum threshold and greater than a minimum threshold, from sections 44.1, 45 and 59-61 of the Utilities Commission Act (UCA) for that specific TES. The exemption only applied if the person filed information that allowed the BCUC to determine that Order
G-121-14 applied to the person’s specific TES and the BCUC determined that Order G-121-14 applied to the person’s specific TES;

C.      On February 26, 2025, by Order G-47-25, the BCUC rescinded Order G-121-14 and granted an exemption to a person, or the person's lessee, trustee, receiver or liquidator, who owns or operates in British Columbia a Fixed-Scale TES for the production, generation, storage, transmission, sale, delivery or provision of heat and/or cold for compensation, with a capital cost greater than a minimum threshold, from sections 28 to 30, 34 to 35, 39, 44.1, 45 and 59 to 61 of the UCA for that specific TES. The exemption only applies if:

1.       The person files information that allows the BCUC to determine that Order G-47-25 applies to the person’s specific TES; and

2.       The BCUC determines that Order G-47-25 applies to the person’s specific TES;

D.      On February 26, 2025, by Order G-48-25, the BCUC rescinded Order G-27-15 and issued revised TES Guidelines (Revised TES Guidelines);

E.       On March 14, 2025, the BCUC issued BCUC Staff Questions No. 1 regarding the Gryphon House TES, and on March 26, 2025 FAES filed its responses;

F.       On April 16, 2025, the BCUC issued BCUC Staff Questions No. 2 regarding the Gryphon House TES, and on April 22, 2025 FAES filed its responses;

G.      FAES requests that certain information contained in the Application and responses to BCUC Staff Questions No. 1 and No. 2 be held confidential by the BCUC in perpetuity, pursuant to Section 18 of the BCUC’s Rules of Practice and Procedure. FAES has provided a version of the Application with the proposed confidential information redacted and public and confidential responses to BCUC Staff Questions No. 1. FAES seeks confidentiality over the entirety of BCUC Staff Questions No. 2. FAES states that the information is commercially sensitive and if publicly disclosed, could reasonably be expected to result in harm or prejudice to FAES’s competitive or negotiating position with other parties or future projects; and

H.      The BCUC has reviewed the Application and responses to BCUC Staff Questions No. 1 and No. 2 and is satisfied that the Gryphon House TES is suitable for exemption.

NOW THEREFORE pursuant to section 88(3) of the UCA, with the advance approval of the minister responsible for the administration of the Hydro and Power Authority Act, and for the reasons outlined in the decision accompanying this order, the BCUC orders as follows:

1.       FAES is exempt from sections 28 to 30, 34 to 35, 39, 44.1, 45 and 59 to 61 of the UCA for the Gryphon House TES.

2.       FAES must file with the BCUC, an annual report for the Gryphon House TES in accordance with the Fixed-Scale TES annual report form, as outlined in Section C.7 of Appendix C to the Revised TES Guidelines, as may be amended from time to time.

3.       The Gryphon House TES may not be extended without applying to the BCUC to determine whether the extension of the Gryphon House TES qualifies for exemption.

4.       The unredacted version of the Application, the confidential responses to BCUC Staff Questions No. 1, and the entirety of BCUC Staff Questions No. 2 shall be treated as confidential unless otherwise determined by the BCUC.

DATED at the City of Vancouver, in the Province of British Columbia, this      30^th      day of April 2025.

BY ORDER

Electronically signed by Bernard Magnan

B. A. Magnan

Commissioner

FortisBC Alternative Energy Services Inc.

Stream A Registration of the Gryphon House Thermal Energy System

1.0              Introduction

On February 24, 2025, FortisBC Alternative Energy Services Inc. (FAES) filed with the British Columbia Utilities Commission (BCUC) an application (Application) to register the Gryphon House Thermal Energy System (TES) as a Stream A TES, in accordance with the BCUC’s TES Regulatory Framework Guidelines approved by Order
G-27-15 (2015 TES Guidelines).

The 2015 TES Guidelines described a Stream A TES as an on-site TES with an initial capital cost above $500,000 but less than $15,000,000.[1] Pursuant to Order G-121-14, a person, or the person's lessee, trustee, receiver or liquidator, who owned or operated a Stream A TES was exempt from sections 44.1, 45 and 59-61 of the Utilities Commission Act (UCA) for that specific TES provided they filed certain information with the BCUC and the BCUC determined that G-121-14 applied to the person’s specific TES.[2] 

On February 26, 2025, by Order G-47-25, the BCUC rescinded Order G-121-14 and granted an exemption to a person, or the person's lessee, trustee, receiver or liquidator, who owns or operates in British Columbia a Fixed-Scale TES for the production, generation, storage, transmission, sale, delivery or provision of heat and/or cold for compensation, with a capital cost greater than a minimum threshold, from sections 28 to 30, 34 to 35, 39, 44.1, 45 and 59 to 61 of the UCA for that specific TES. The exemption only applies if:

1.       The person files information that allows the BCUC to determine that Order G-47-25 applies to the person’s specific TES; and

2.       The BCUC determines that Order G-47-25 applies to the person’s specific TES;[3]

Also on February 26, 2025, by Order G-48-25, the BCUC rescinded Order G-27-15 and issued revised TES Guidelines (Revised TES Guidelines).[4]

2.0              Revised TES Guidelines

The Revised TES Guidelines define a Fixed-Scale TES as a TES that is owned or operated by a TES Provider
(Fixed-Scale TES Provider) that meets the following eligibility criteria:[5]

1.       The TES is sized to serve a known thermal energy load;

2.       There is a long-term service agreement, including rates and terms of service, between the TES Provider and each of its customers. The long-term service agreement must meet the minimum requirements established by Section C.4 [of the Revised TES Guidelines] and must be executed and filed with the BCUC prior to operation;

3.       The TES has an AACE Class 3 capital cost estimate of $1,000,000 or more;

4.       The TES Provider has access to sufficient capital reserves;

5.       There is no arrangement granting the TES Provider exclusive or near exclusive rights to provide service (e.g. mandatory connection); and

6.       The TES Provider is not affiliated to any of its customers.

Section C.4 of the Revised TES Guidelines provides minimum requirements for long-term service agreements for Fixed-Scale TES Providers, which includes the following guidance regarding the initial term of the agreement: [6]

Given the TES Provider’s ongoing obligation to provide safe and reliable service under the UCA, the service(s) provided by the TES Provider should continue for as long as the premise(s) are occupied, while the initial term of the agreement should be for a period of at least 20 years.

Section C.4 of the Revised TES Guidelines also provides a list of ten items that the long-term service agreements between the Fixed-Scale TES Provider and its customers must, at a minimum, include.[7]

3.0              The Application

In the Application, FAES identifies that the Gryphon House TES will provide space heating, domestic hot water heating and space cooling to the Gryphon House development, which is located at the 6100 block of West Boulevard between West 45th Avenue and West 46th Avenue, Vancouver. FAES states that the Gryphon House TES will have two customers: a residential strata customer and a commercial customer.[8]

FAES states that the Gryphon House TES meets Fixed-Scale TES criteria 1, 3, 4, 5 and 6. However, in regard to criterion 2, FAES identifies that the service agreements between FAES and the customers of the Gryphon House TES do not meet the minimum requirements established by the Revised TES Guidelines as they include an initial term of 6 years, rather than the 20-year initial term indicated in the Revised TES Guidelines.[9]

FAES notes that the service agreements were signed on February 7, 2025 between FAES and the Gryphon House developer, Gryphon 6103 Limited Partnership, and that FAES negotiated these agreements as a Stream A TES following the 2015 TES Guidelines, which were in place at that time.[10] FAES cites the 2015 TES Guidelines, which stated:

A Stream A TES Provider must have a long-term contract(s) with its Customer(s) which set out the utility’s fees/charges and terms of service. Given the TES Provider’s ongoing obligation under the UCA to provide safe and reliable service, the Commission expects that the term of contract will be for as long as the Customer(s) continues to occupy the premises that are served by the Stream A TES.

FAES considers the Gryphon House TES service agreements comply with the requirements of the 2015 TES Guidelines because it has an initial term of 6 years and an evergreen annual renewal where FAES cannot terminate unless the customers default or choose to terminate themselves.[11]

FAES considers that the use of a 6-year initial term, with an evergreen annual renewal where FAES cannot terminate unless the customers default or choose to terminate themselves for the Gryphon House TES service agreements does not harm the interests of the customers in any way, as it does not reduce the obligations of FAES to serve for as long as the premise is occupied, while facilitating an earlier option to terminate for the customers. [12]

Panel Determination

The Panel finds that the Gryphon House TES is suitable for a Fixed-Scale TES exemption and accordingly determines that Order G-47-25 applies to the Gryphon House TES.

The Panel acknowledges the unique circumstances of this Application in that it was filed two days before the BCUC issued changes to its regulatory framework for TES. These changes included the rescission of the 2014 Stream A TES class exemption and the 2015 TES Guidelines, and issuance of a new Fixed-Scale TES class exemption and the Revised TES Guidelines.

Given these changes, the Panel considered the eligibility criteria of a Fixed-Scale TES provided by the Revised TES Guidelines to determine whether a Fixed-Scale TES exemption for the Gryphon House TES is warranted. The Panel considers that the Gryphon House TES meets eligibility criteria 1, 3, 4, 5 and 6. Regarding eligibility criterion 2, FAES filed its executed service agreements that are in place with each of its Gryphon House TES customers and we have reviewed these agreements against the minimum requirements for long-term service agreements provided in Section C.4 of the Revised TES Guidelines.

The Panel considers that the Gryphon House TES service agreements adhere to the list of ten items that the Revised TES Guidelines state the service agreements must include. Further, the Panel notes that the terms of the service agreements that provide for evergreen renewal and that FAES can not terminate the service agreements unless the customers default or choose to terminate themselves, align with the requirement set out in the Revised TES Guidelines that the services provided by the TES Provider should continue for as long as the premises are occupied.

However, as the service agreements have an initial term of 6-years, they do not adhere to the requirement that the service agreements should have an initial term of 20-years. The Panel acknowledges that these agreements were negotiated and this Application was filed when the 2015 TES Guidelines were in effect, and that the 2015 TES Guidelines did not specify the length of the initial term of the service agreement as the Revised TES Guidelines now do. Given these circumstances, the Panel considers that the evergreen renewal provisions and restrictions on FAES’s termination rights, described above, provide an acceptable alternative to an initial 20-year term, in the case at hand.

In light of the above, the Panel is satisfied that, despite the length of the initial term of the service agreements, the Gryphon House TES is suitable for a Fixed-Scale TES exemption. Accordingly, FAES is exempt from sections 28 to 30, 34 to 35, 39, 44.1, 45 and 59 to 61 of the UCA for the Gryphon House TES.

Electronically signed by Bernard Magnan

_________________________________

B. A. Magnan

Commissioner