INTERROGATORY RESPONSE (Rule 4.3)

Transcription

1 Matter No. 336 NEW BRUNSWICK ENERGY AND UTILITIES BOARD INTERROGATORY RESPONSE (Rule 4.3) In relation to an Application by New Brunswick Power Corporation In Accordance with Section 103(1) of the Electricity Act, SNB 2013 c.7 RESPONDING TO: FROM: Enbridge Gas NB (EGNB) NB Power (NBP) February 7, 2017 Responses to Interrogatories of NB Power s 10-Year Plan

2 NBP (EGNB) IR- 27 February 7, 2017 Reference: Exhibit NBP NB Power 10 Year Plan, page 3, Potential Carbon Cost Impacts. Preamble: 60 percent of New Brunswick residents use electric baseboard heat which affects the Potential Carbon Cost Impacts due in part to the fossil fuel generation in N.B. A larger percentage of New Brunswick residents use electric heating when also considering those homes that use electric boilers, furnaces and other heating appliances. Based on Statistics Canada publication S, 39% of Canadian Households use Electricity as their primary heating source. Questions: a) Please provide assumptions and calculations in MS Excel format for the two lines of data in the section relating to Potential Carbon Cost Impacts. b) How would these costs differ if Coleson Cove was removed from NB Power s generation mix and was not needed to meet electrical demand? Please provide all calculations, assumptions and workpapers for this in MS Excel format. c) What would be the impact to the Potential Carbon Cost Impacts if the electrical heating percentage went from 60 to 50%? Please provide all calculations, assumptions and workpapers for this in MS Excel format. d) What would be the impact to the Potential Carbon Cost Impacts if the electrical heating percentage would equal the Canadian average at 40%? Please provide all calculations, assumptions and workpapers for this in MS Excel format. RESPONSE: a) The requested information is provided as part of the response to NBP (PI) IR-37 a). b), c) and d) The intent of the 10-Year Plan, under section 101 of the Electricity Act, is to provide a planning document for the benefit of the Board when considering NB Power s revenue requirement and the approval or fixing of just and reasonable rates. It is not intended to provide precise estimates. It is unreasonable to request NB Power to conduct a speculative or hypothetical sensitivity analysis of the 10-Year Plan in the context of a revenue requirement application to set rates for a test year. NB Power does not object to parties requesting that the Board order specific sensitivity analysis be included in subsequent versions of the 10-Year Plan. The 10-Year Plan includes a Sensitivity Table at page 24 that includes the incremental impact of various relevant cost exposures for planning purposes. 1

3 NBP (EGNB) IR- 28 February 7, 2017 Reference: Preamble: Exhibit NBP NB Power 10 Year Plan, page 4, Mandate In addition to the mandate set by the Electricity Act, the Minister, by way of a Mandate Letter, has given NB Power the responsibility for delivery of protecting and improving our environment. Questions: a) Please provide details of all actions NBP has taken for the Mandate of Protecting and improving our environment over the last two full fiscal years and year to date. b) Please provide details of all actions taken at generating plants using fossil fuels to improve emissions and/or to improve our environment over the last two full fiscal years and year to date. c) For both a) and b) above, please explain what successes NBP has achieved to-date in its action items. RESPONSE: a) and c) NB Power maintains a number of Environmental Management Systems (EMS) consistent with ISO standard throughout the organization. The EMS provides a rigorous management structure that is applied in all operations under NB Power s control. The EMS is an internationally recognized set of environmental best management practices that guides all activities that have a relationship with the environment. NB Power s Sustainable Development Policy provides the strategic framework for the company's EMS and environmental principles. These principles address areas such as environmental protection, energy conservation, legislative compliance and continuous improvement. This policy is supported by documents such as procedures, practices and standards that govern NB Power s operations and are basic to its EMS. These documents cover areas such as chemical and waste management, emissions management, water management, environmental impact assessments, incident prevention and reporting, and wildlife management. Over the last two full fiscal years and year to date, the following key actions in various areas of the organization have been undertaken to protect and improve our environment: 2

4 NBP (EGNB) IR- 28 (cont d) February 7, 2017 PCB Management. NB Power continues to test, change out and dispose of PCB contaminated oil-filled equipment to comply with the end-of-use deadline of December 31, 2025 in accordance with the PCB Regulations. Every year, PCB contaminated oil-filled equipment greater than 50 ppm of PCBs is removed from the system and temporarily stored in NB Power s approved PCB Storage Facility before it is transported to an approved PCB waste facility. Upon disposal of the waste, the disposal company issues Certificate of Destruction confirming that the waste has been destroyed or treated. Since 2014, the following waste has been sent for destruction and has been destroyed or treated: Calendar year* Sent for Destruction Destroyed Solids (kg) Liquids (L) Solids (kg) Liquids (L) Awaiting destruction Awaiting destruction *Reporting to Environment Canada and Climate Change is performed on a calendar year in accordance with Sections of the PCB Regulations. Asset Risk Review. Transmission and Distribution divisions operate and maintain a large number of oil-filled equipment across the province representing over 10 million litres of oil. Every year, approximately 1 million litres of oil is processed by field staff to extend the life of the product as well as the equipment. Risks exist when spills occur during operation and maintenance activities. In order to determine the level of risk, an environmental asset risk review was undertaken in 2013 of over 240 transmission and distribution facilities and equipment, taking into account both site specific features and potential impacts on surrounding receptors. Facilities and equipment assessed included, substations, terminals, operating centers, unit transformers at hydro facilities and telecommunications sites. The risk rating for each asset was documented in a Risk Registry and was used to identify high risk locations and prioritize the implementation of short-term and long-term improvements. The table below shows improvements made since

5 NBP (EGNB) IR- 28 (cont d) February 7, 2017 Fiscal Facilities/Equipment Year 2014/2015 Telecommunications sites at Greenlaw Mountain, Annagance, Otty Glen, Mount Champlain and Noinville Marysville Service Center 2015/2016 Telecommunication sites at Indian Mountain and Daulnay St. Andre Terminal 2016 to present Milltown Terminal Beechwood Hydro Station Marysville Service Center Telecommunication sites at Seven Mile, Blue Hill, Crabbe Mountain, Skiff Lake, Kedgwick and Melrose, Edmundston Terminal Marysville Service Center Improvements Diesel tank repairs/upgrades or replacements New building to process oil-filled equipment Diesel tank repairs/upgrades or replacements Removal of underground diesel tank Installation of oil containment system Installation of oil containment system Improvements to oil handling procedures Installation of new oil tanks Diesel tank repairs/upgrades or replacements Removal of underground diesel tank Installation of new gauges on oil storage tanks As improvements are made to facilities and equipment, the Risk Registry is updated with this information and the risk level reduced. Comparative Environmental Review of Mactaquac. A Comparative Environmental Review (CER) was carried in 2014 and 2015 of three options considered for the anticipated end of service life of the Mactaquac Generating Station. The objective of the CER was to assist in the understanding of environmental, social, and socio-economic issues potentially associated with each option. The information collected as part of the CER was considered by NB Power, along with other information (e.g. business case, engineering, other considerations), in its decision-making regarding the Station. In December 2016, NB Power announced that the station would continue to operate to its intended 100-year lifespan with a modified approach to maintenance and adjusting and replacing equipment over time. This option will include the installation of fish passage. 4

6 NBP (EGNB) IR- 28 (cont d) February 7, 2017 Fish Impingement and Entrainment Studies. Over the past 2 years, NB Power has completed a number of studies looking at the effect of the cooling water system at Point Lepreau Generation Starion on fish in the Bay of Fundy. The studies, which have been shared with the Canadian Nuclear Safety Commission, have confirmed that the cooling water intake design, which is considered best available technology, is effective in mitigating effects on fish. Human Health and Ecological Risk Assessment. A human health and ecological risk assessment has been conducted for the Point Lepreau Generating Station, in accordance with Canadian Standards Association (CSA) Standards, which has confirmed that the Station does not pose any undue risk to humans or the environment. Protocol Agreement. In 2010, NB Power and Department of Fisheries and Oceans signed a Protocol Agreement for Fish and Fish Habitat Management in relation to its hydroelectric generating facilities on the Saint John River System. The objective of the protocol was to establish a framework to identify and prioritize specific issues concerning impacts of NB Power hydroelectric operations on fish and fish habitat and to identify opportunities to make improvements. Since 2010, discussions with representatives of both organizations have led to four (4) areas of priorities as follows: 1. Study of potential impacts of flow regulation on native stream fishes downstream of storage lakes. Over the last few years, NB Power continued to carry out controlled spilling during the fall smolt run to pass as many smolt as possible trough the spillway at Tobique Narrows Generating Station. The Canadian Rivers Institute/Hydronet are in the third year of a series of three studies being conducted on the Dee and the Don River. Based on preliminary information, it is clear that the winter release results in warming of the regulated rivers in winter and spring, resulting in accelerated development and early hatch of Atlantic salmon. NB Power has made modifications to the outlet structures at Trouser Lake to accomplish lowering the temperature of water released from the storage lakes in the winter in an effort to simulate the natural thermal regime. 2. Tobique Narrows Generating Station downstream fish passage. The engineering firm of Kleinschmidt has been engaged to prepare preliminary designs and more refined estimates of two of the potential approaches identified in their report Downstream Fish Passage Alternatives Evaluation, dated January Construction of a downstream fish passage was initiated in 2016 and is and expected to be completed by Fall of

7 NBP (EGNB) IR- 28 (cont d) February 7, Study of potential impacts of flow regulation on in-stream flow needs downstream of NB Power s hydroelectric facilities. NB Power has contracted with the Canadian Rivers Institute to carry out a series of studies as part of the Mactaquac Project. These studies will include the necessary work to meet the requirements of this project. These studies started in the summer of These studies are largely complete and the final reports are expected in mid-january The results of these studies will be assessed by NB Power and the necessary measures implemented on the facilities, as required. LORESS (Locally-owned Renewable Energy Small Scale) o NB Power issued a Request for Expressions of Interest in January 2016 for up to 40 MW of renewable energy from Aboriginal businesses. o NB Power issued a Request for Expressions of Interest in January 2017 for up to 40 MW of renewable energy from communities Both requests support achieving the Renewable Portfolio Standard of 40 per cent by b) and c) NB Power has adopted a single greenhouse gas (GHG) Management Plan encompassing the mitigation of carbon dioxide emissions on a system wide basis using the Guidelines for Greenhouse Gas Management for Industrial Emitters in New Brunswick published by the New Brunswick Department of Environment and Local Government (July 2015). This plan addresses the requirements specified in both the Belledune and Coleson Cove Approvals to Operate, pursuant to the Air Quality Regulation, the New Brunswick Clean Air Act. Greenhouse reduction initiatives under taken in the past 5 to 10 years include the shutdown and decommissioning of the Grand Lake (March 2010) and Dalhousie (May 2012) Generating Stations. 6

8 NBP (EGNB) IR- 28 (cont d) February 7, 2017 Overall greenhouse gas reductions relative to federal, provincial and regional targets are as follows: Framework Baseline year Reduction Target Baseline emissions (Mt) Reduction (2015) relative to baseline (%) Kyoto Protocol % % New England Governors/ % by % Eastern Canadian Premiers New England Governors/ to 45% by % Eastern Canadian Premiers 2030 New England Governors/ to 85 by % Eastern Canadian Premiers 2050 Canada s Copenhagen Target % by % Canada s Submission to the UN under the Paris Accord % by % Synthetic Gypsum Utilization At both Belledune and Coleson Cove generating stations, synthetic gypsum is produced from the scrubber operation to remove SO 2. This product continues to be almost 100 per cent utilized in the manufacturing of wall board which greatly reduces dependency on landfills. Fly Ash Processing At the Belledune generating station, almost 100 per cent of the fly ash continues to be used as a value added product in the ready mix concrete industry, which greatly reduces dependency on landfill at Belledune. 7

9 NBP (EGNB) IR- 29 February 7, 2017 Reference: Preamble: Exhibit NBP NB Power 10 Year Plan, page 5, Strategy Three Invest in technology, educate customers and incent consumption Questions: a) The NB Power s 10-Year Plan prepared in October 2015 stated that Strategy Three was meant to, amongst others, incent efficiency. The current December 2016 plan, however, substitutes the term incent consumption for incent efficiency. Please outline and explain the differences between incent consumption incent efficiency. b) Please also explain the reason for this change in Strategy Three? c) How has this change affected the RASD strategy and program? RESPONSE: a) and b) The term must be taken in the full context of the statement in the 10-Year Plan, which is incent consumption that will reduce and shift demand of electricity. This change in phrase is intended to reflect the fact that consumption patterns include both levels of consumption (efficiency) and the timing of consumption. c) This has not affected the RASD strategy or program. 8

10 NBP (EGNB) IR- 30 February 7, 2017 Reference: Preamble: Exhibit NBP NB Power 10 Year Plan, page 14, In Province Load The addition of approximately 14,500 new year-round residential customers by 2027 based on historical customer growth trends and population projections Questions: a) Please provide all supporting information or evidence which influenced the change to 14,500 new customers from the October 2015 Plan of 7,000 new year-round customers by b) How will this change impact financial plans and/or programs. RESPONSE: a) The methodology for creating the Residential customer forecast is detailed in Exhibit NBP 1.21 Appendix 11 Load Forecast , pg The largest influencer in the increase in new customers was the increased population forecast that was used in the model. The population forecasts and customer forecasts used in the development of the December Year Plan and the October Year Plan are included in the table below. Component NBP (EGNB) IR-30 NB Power Corporation Residential Customer Forecast Comparison Fiscal Year Ending March 31 (1) (2) (3) (4) (5) (6) Oct 2015 Oct 2015 Dec 2016 Dec 2016 Plan Average Plan Plan Customer Persons per Population Customer Forecast Household Forecast Forecast Oct 2015 Plan Population Forecast Dec 2016 Average Persons per Household (1) 2015/16 753, , (2) 2016/17 751, , , , (3) 2017/18 750, , , , (4) 2018/19 749, , , , (5) 2019/20 747, , , , (6) 2020/21 745, , , , (7) 2021/22 743, , , , (8) 2022/23 741, , , , (9) 2023/24 739, , , , (10) 2024/25 736, , , , (11) 2025/26 733, , , , (12) 2026/27 749, , b) The magnitude of this change is not material to NB Power s financial plan. 9

11 NBP (EGNB) IR- 31 February 7, 2017 Reference: Preamble: Exhibit NBP NB Power 10 Year Plan, page 17, Capital Plan The 10-year plan calls for capital expenditures of approximately $3.5 billion over the next 10 years. This total is inclusive of part of the provision for Mactaquac in the range of $560 million Questions: a) Please reconcile in table format the differences between this statement and the statement from the October 2015 Plan which indicated The 10-year plan calls for capital expenditures of approximately $5.5 billion over the next 10 years. This total is inclusive of a provision for the replacement of the Mactaquac Hydro Generating Station in the range of $3.1 billion b) Please provide details explaining the reason for the differences or changes. RESPONSE: a) Please refer to response to NBP (JDI) IR-10 for the detailed capital variance between plans. b) Please refer to Exhibit NBP NB Power 10 Year Plan for details around the project estimate. (NB Power 10 Year Plan filed in Matter 307 is Exhibit NBP 1.07) Please refer to the excerpts from the noted 10-Year Plans below that explain the basis of the provisions included in the plans for the Mactaquac project. 10 Year Plan 2018 to 2027 Page 2 One of the largest uncertainties facing NB Power over the course of the 10-year plan is the future of the Mactaquac Hydro Generating Station (Mactaquac). NB Power has recently announced its recommendation of a life achievement project to maintain Mactaquac to its intended lifespan of approximately For financial planning purposes, the 10-year plan has been updated to include the lower end of the range of life achievement estimates for the capital expenditures associated with NB Power s recommended option. 10 Year Plan 2017 to 2026 Page 16 Additionally, NB Power is exploring the feasibility of continuing to operate beyond 2030 within the footprint of the existing facilities. Pending the selection of the preferred option, a provision for the estimated capital cost of repowering the Station by replacing the spillway and powerhouse is being used as a proxy in the 10-year capital plan. Of the three options, repower requires the earliest start of substantial work and therefore has the earliest substantial capital expenditures. While the costs listed above will be factored only if this option is chosen, excluding the potential for this expense in this capital plan would risk a major understatement of future capital expenditures. The capital provision included in the Plan for this option is for planning purposes only and is subject to significant uncertainty. 10

12 NBP (EGNB) IR- 32 February 7, 2017 Reference: Exhibit NBP NB Power 10 Year Plan, page 20, RASD Preamble: New technologies such as Advanced Metering Infrastructure (AMI) will enable NB Power to better understand customers electricity usage in real time by engaging with customers and supporting them to reduce and shift their electricity patterns Questions: a) Please explain in detail, by providing examples, how AMI will engage with customers and support them in reducing and shifting their electricity patterns. b) How will this statement and or tools, activities and processes derived from AMI impact Strategy Three and address the peak demands during the winter months? Please explain and provide details, examples, documentation to support. RESPONSE: a) Advanced Metering Infrastructure (AMI) systems are comprised of two functional components; a meter with advanced capabilities, and a two-way communication network. The AMI meter records customer usage by time interval (e.g. every hour or more frequently) as well as capturing alarms for events such as a power outage. A non-ami meter solely records energy usage and is read at periodic internals. A two-way communications network allows for the meter to deliver its data to the utility on a periodic basis (e.g. daily) and send alarm notifications as soon as the event occurs. Smart meters lay the foundation for a wide range of customer benefits starting with an improved meter reading and billing process. Some of the benefits will be realized when the smart meters are first activated during full deployment, while others will be implemented in the longer term. Immediate benefits for customers with a smart meter include: - Estimated billing will be reduced. With two way communications to the meter, meter readings are available every day for every customer. - Customers will be able to start or stop service almost instantly with a quick phone call or online service request to NB Power Customer Care. No customer site visit is required. - Customers with meters that are difficult to access no longer need to schedule an appointment for the meter reader or to have estimated bills, because NB Power will be able to read the meter remotely via the smart grid network. - If customers have questions about their electric bills, customer service representatives will have more information about their current energy use to resolve the problem. - Outage alarms on the meter will automatically report customer power outages without the customers having to call NB Power. Restoration of power is more efficient as NB Power can determine whether power is on or off at a location without sending a service agent. 11

13 NBP (EGNB) IR- 32 (cont d) February 7, 2017 Smart meters and the smart grid enable significant improvements in operational efficiency, which helps customers manage their bills and enable enhanced service for customers. In addition, through the new technology, NB Power will be offering its customers a choice of programs for reducing and shifting their demand. The following are examples of customer programs that may be enabled or enhanced by AMI: Time Based Pricing Time-based pricing can take many forms, and NB Power is currently considering multiple options for pilot testing: Under Time of Use (TOU) pricing, different prices are set in advance for certain periods of the day (e.g. the afternoon, evening, and night) and of the year (e.g. summer and winter). Under Critical Peak pricing (CPP), prices can adjust in near-real time during periods of exceptionally high electricity demand. In both cases, high peak prices should be offset by lower off-peak prices, thus providing customers an opportunity to lower their bills by shifting demand. Behavioral Energy Efficiency Programs In January 2017, NB Power launched the Home Energy Report program, which helps customers better understand their electricity usage and compare it with that of their neighbors. AMI data may enhance the effectiveness of the program by delivering more granular data, which in turn gives customers more insight into their consumption patterns. Behavioral Demand Response Programs Using AMI, participants would receive a customized message 24 hours before a demand response event, encouraging them to take action in reducing and/or deferring their electricity consumption during a critical period. A post-event notification (24-48 hours after) would be sent to pilot participants with the goal of providing them feedback on the dollars and energy saved, and to compare their consumption with that of their peers. Usage Alerts The alarms and alerts from the AMI meter may allow customers to set a usage threshold and receive notification when their usage is approaching or has exceeded their threshold. Customers then have the choice to take action. b) All initiatives focused on lowering the electrical load can be found in NB Power s DSM Plan Please refer to Exhibit NBP 6.08, NBP (EGNB) IR-7 a) Attachment DSM Plan for a copy of the DSM Plan. 12

14 NBP (EGNB) IR- 33 February 7, 2017 Reference: Exhibit NBP NB Power 10 Year Plan, page 20 Preamble: NB Power s 10-year capital plan has been strengthened with the corporate wide rollout of standard project management methodology, including a more robust process at the identification phase of a project and continuous improvement in future capital planning. Questions: a) Please provide and explain details of the standard project management methodology. b) Please explain and provide examples of the more robust process. c) How do these improvements differ from previous analysis and methodology. RESPONSE: a) NB Power is utilizing best business practices as prescribed in the Project Management Institute, Inc. A Guide To The Project Management Body of Knowledge (PMBOK Guide), which is a recognized standard for the project management profession. NB Power is applying these best practices to its capital investment management processes. Please refer to attachment NBP (EGNB) IR-33 Attachment Capital Programs and Project Management Strategy, which identifies 5 project phases of Identifying, Initiating, Planning, Executing and Closing along with the overarching process of Monitor and Controlling. The identification phase includes the requirement of a Capital Project Charter in order for the project to be included in the 10-year capital plan. b) The 10-year capital planning process has become more robust in recent years with the introduction and adoption of the best practices as described above. The focus on asset management is fundamental as the corporation strives to become an industry leader. This can be seen at PLNGS through the Equipment Reliability Index (reference NBP (NBEUB) IR- 27 b) Attachment Equipment Reliability Gap Analysis, long term asset management and life cycle management). In addition other asset management groups have come together to focus on key performance indicators and opportunities to improve in areas of concern. Through this process, Capital Project Charters are developed and reviewed and the 10-year capital projection updated accordingly. c) The improvements differ from the previous analysis primarily due to the continued adoption of project management standardized best business practices, and the maturity of these practices throughout the organization. The improvements also include the development and roll out of excellence plans with a continued focus on key performance indicators. 13

15 NBP (EGNB) IR- 34 February 7, 2017 Reference: Exhibit NBP NB Power 10 Year Plan, page Preamble: Heavy Fuel oil prices Questions: a) The Heavy Fuel oil prices from in the December 2016 Plan are approximately 45-50% lower than the prices for the same years in the October 2015 Plan. As the prices in the 2016 plan are historically low, please describe all contingencies that have been considered for adjustments to the plan going forward? b) Please provide a sensitivity analysis as per Figure 10 for Heavy fuel oil which is $10US/bbl higher. 14

16 NBP (EGNB) IR- 34 (cont d) February 7, 2017 RESPONSE: a) The noted heavy fuel prices in the key assumption table included in the 10-Year Plan (Exhibit NBP 14.01) were incorrectly stated. All calculations and results included in the 10-Year Plan are based on the correct key assumptions. Please refer to NB Power 10- Year Plan (Amended) and Plan décennal d Énergie NB 2018 à 2027 (Modifié) for the updated table. b) Please refer to the table below for the requested information. SENSITIVITIES Fiscal Year Ending March (in millions $) $10 change in Heavy Fuel Oil