Via and Courier. April 8, B.C. Utilities Commission File No.: 4.2.7(2014) 6th Floor Howe Street Vancouver, BC V6Z 2N3

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1 335 Pages B-1 Janet P. Kennedy Vice President, Regulatory Affairs & Gas Supply Pacific Northern Gas Ltd. Suite West Georgia Street Vancouver, BC V6E 4E6 Tel: (604) Fax: (604) Via and Courier April 8, 2014 B.C. Utilities Commission File No.: 4.2.7(2014) 6th Floor Howe Street Vancouver, BC V6Z 2N3 Attention: Erica M. Hamilton Commission Secretary Dear Ms. Hamilton: Re: Pacific Northern Gas Ltd Resource Plan for PNG-West Pipeline System Pursuant to Commission Order G and Commission Letter L-61-13, Pacific Northern Gas Ltd. (PNG) respectfully submits the 2014 Resource Plan for its PNG-West pipeline system (2014 Resource Plan) for the Commission s review. This 2014 Resource Plan has been prepared in accordance with the Commission s Resource Planning Guidelines and Section 44.1 of the Utilities Commission Act (Act). PNG hereby seeks Commission acceptance of this 2014 Resource Plan, including the proposed DSM Plan, in accordance with Section 44.1 of the Act. Enclosed herein, please find ten copies of the 2014 Resource Plan for the Commission s reference. PNG notes that both PDF and printed copies of the 2014 Resource Plan have been sent to the parties copied by this letter. Those parties have registered as interveners in respect of PNG s 2014 revenue requirements application or have expressed an interest in this submission. By copy of this letter, PNG is requesting that those parties provide comments on the 2014 Resource Plan to the Commission and to PNG. Frequency of Long-Term Resource Plan Filings At this time, PNG would like to bring forth the issue of the frequency for required long-term resource planning submissions for its pipeline systems. In recent years, PNG has been directed to prepare, submit and defend the following long-term resource plans: 2011 Resource Plan for the PNG-West Pipeline System; 2012 Resource Plan for the PNG(N.E.) Pipeline Systems; and 2014 Resource Plan for the PNG-West Pipeline System (originally required to be filed for 2013).

2 Pacific Northern Gas Ltd Resource Plan for PNG-West Pipeline System Page 2 of 2 Further, PNG will soon begin preparations on the 2015 Resource Plan for the PNG(N.E.) Pipeline Systems which is to be filed no later than April 18, While PNG believes that long-term resource planning is a prudent strategic planning activity necessary to bring together the short-, medium- and long-term planning cycles to ensure that the Company is able to effectively provide reliable, secure and safe service to customers, the frequency of long-term resource planning activities in recent years has placed considerable strain on PNG s limited corporate resources and has resulted in incremental costs to be borne by ratepayers. In the 2013 PNG-West Revenue Requirement Application Decision, the Commission Panel directed PNG to formally seek processes that create efficiencies and enable PNG to manage its costs. As such, PNG has been directed to file its future revenue requirement applications for a two-year period. On this same note, PNG proposes that its long-term resource plans should be filed every five years unless there are significant changes in its circumstances which would prompt an earlier filing of its resource plans. PNG submits that its short-term and mid-term planning activities, including the revenue requirements and CPCN application processes, are able to capture near-term changes in resource supply and demand, and that long-term planning objectives can continue to be effectively achieved with a less-frequent formal review process. Further, PNG submits that the review of resource plans for the PNG-West and PNG(N.E.) pipeline systems may be more efficiently undertaken on a consolidated basis. Please direct any questions respecting the foregoing matters to my attention. Yours truly, J.P. Kennedy cc. Sarah Khan (BCPIAC) BCPSO James Wightman (Econalysis Consulting) BCPSO Tom Hackney BC Sustainable Energy Association

3 PACIFIC NORTHERN GAS LTD. RESOURCE PLAN 2014 Resource Plan for the PNG-West Pipeline System April 8, 2014

4 Pacific Northern Gas Ltd. Resource Plan for the PNG-West Pipeline System April 2014 TABLE OF CONTENTS 1 INTRODUCTION Overview of Pacific Northern Gas Ltd. Operations Regulatory Context Resource Plan Development Process Long-term Resource Plan Objectives Status of 2011 Pipeline System Resource Plan Directives ENERGY MARKET OUTLOOK Policy Environment and Outlook Regional Economic Outlook LNG Export Infrastructure Development World Scale LNG Export Infrastructure Development Small Scale PNG s Regional CNG and LNG Strategy Supply Outlook A Comparison of Energy Costs: PNG-West Burner Tip Rates and Electricity RESIDENTIAL END-USE FORECASTING MODEL Introduction Residential End Use Survey Residential End-Use Model Residential Consumption DEMAND FORECASTING Introduction Trends Influencing Demand Annual Demand Forecast Design Day Demand Forecast i -

5 Pacific Northern Gas Ltd. Resource Plan for the PNG-West Pipeline System April Sensitivity Analysis DEMAND SIDE MANAGEMENT Introduction DSM Plan Future Steps PORTFOLIO PLANNING System Capacity Requirements Gas Supply Resources PORTFOLIO EVALUATION AND ACTION PLAN STAKEHOLDER CONSULTATION APPENDICES APPENDIX A: RESOURCE PLANNING OBJECTIVES APPENDIX B: CONDITIONAL DEMAND ANALYSIS APPENDIX C: RESIDENTIAL END-USE STUDY APPENDIX D: BUILDING ARCHETYPES APPENDIX E: ANNUAL DEMAND APPENDIX F: DESIGN DAY DEMAND APPENDIX G: DSM PLAN - ii -

6 Pacific Northern Gas Ltd. Resource Plan for the PNG-West Pipeline System April 2014 Tables Table 1: Commission Directives (G ) 13 Table 2: Population Projections 18 Table 3: Household Formations Projections 20 Table 4: North Coast and Nechako Commercial Projects (September 2013) 21 Table 5: Residential Housing Mix 61 Table 6: Residential Customer Net Recapture Rate Forecast 65 Table 7: Penetration of New-Construction Dwelling Archetypes 66 Table 8: Large Customer Forecast 71 Table 9: Company Use Coefficients 73 Table 10: Design Day Heating Degree Days 76 Table 11: Peak Day Demand per Customer (GJ/d) 77 Table 12: Residential Customer Net Recapture Rate Forecast 79 Table 13: Residential Customer Net Recapture Rate Forecast 80 Table 14: Summary of Demand Determinants Residential Customers 81 Table 15: Summary of Demand Determinants Small Commercial Customers 81 Table 16: Change in Annual Demand (All Scenarios) 83 Table 17: Design Day Demand (All Scenarios) 84 - iii -

7 Pacific Northern Gas Ltd. Resource Plan for the PNG-West Pipeline System April 2014 Figures Figure 1: Overview of PNG Natural Gas Pipeline Systems 1 Figure 2: Customer Segments: Number of Customers 3 Figure 3: Deliveries by Customer Segment 3 Figure 4: Cumulative Job Openings 19 Figure 5: Employment Distribution 20 Figure 6: Residential Building Permits 20 Figure 7: Northern British Columbia Mining GDP 23 Figure 8: North Coast and Nechako Mining Projects 24 Figure 9: Location of Unconventional Natural Gas Reserves in British Columbia 35 Figure 10: Natural Gas Production from the Western Continental Sedimentary Basin 36 Figure 11: British Columbia Actual and Forecast Production (Source: NEB, OGC) 36 Figure 12: British Columbia Actual and Forecast Production 37 Figure 13: Disposition of Marketable Natural Gas in B.C. 37 Figure 14: Station 2 Daily Gas Price (January 2013 to March 2014) 38 Figure 15: Henry Hub Natural Gas Price Forecasts 40 Figure 16: Station 2 Natural Gas Price Forecasts 41 Figure 17: Residential Gas Rates vs. Electricity Equivalent (Reference Gas Price) 42 Figure 18: Residential Gas Rates vs. Electricity Equivalent (High Gas Price) 43 Figure 19: REUS Results Cost Effectiveness of Natural Gas vs Electricity 45 Figure 20: REUS Results Energy Conservation and Cost Savings 45 Figure 21: Penetration of Primary Space Heating 50 Figure 22: Penetration of Domestic Hot Water 50 Figure 23: Penetration of Secondary Space Heating 50 Figure 24: Penetration of Fireplaces 50 - iv -

8 Pacific Northern Gas Ltd. Resource Plan for the PNG-West Pipeline System April 2014 Figure 25: Ancillary natural gas end-uses 51 Figure 26: Distribution of Use per Account (All Areas) 52 Figure 27: End Uses of Natural Gas (All Areas) 55 Figure 28: Average End Use by Building Type (All Areas) 57 Figure 29: Growth in the Number of Households 60 Figure 30: Trend in Residential Customer Count ( ) 64 Figure 31: Residential Customer Activity 64 Figure 32: Age Profile of PNG-West Residential Furnace Stock 66 Figure 33: Age Profile of PNG-West Domestic Hot Water Heater Stock 67 Figure 34: Historical Trend in Residential Use per Account 68 Figure 35: Forecast Residential Use per Account 68 Figure 36: Trend in Small Commercial Customer Count ( ) 69 Figure 37: Small Commercial Customer Activity 69 Figure 38: Historical Trend in Small Commercial Use per Account 70 Figure 39: Forecast Small Commercial Use per Account 71 Figure 40: Forecast of Total Gross Annual Demand 74 Figure 41: Forecast of Residential and Small Commercial Annual Demand 74 Figure 42: Forecast Design Day Demand 77 Figure 43: Residential Use per Account Forecast (All Scenarios) 82 Figure 44: Small Commercial Use per Account Forecast (All Scenarios) 82 Figure 45: Forecast Total Annual Demand (All Scenarios) 83 - v -

9 Pacific Northern Gas Ltd. Resource Plan for the PNG-West Pipeline System April INTRODUCTION This Resource Plan has been prepared by Pacific Northern Gas Ltd. (PNG or the Company) for its PNG-West division (PNG-West). The Resource Plan was prepared in accordance with the BC Utilities Commission s (BCUC or the Commission) Resource Planning Guidelines for Regulated Utilities (Resource Planning Guidelines) issued by the Commission on December 15, PNG is a company formed under the laws of British Columbia and is a wholly-owned subsidiary of AltaGas Utility Holdings (Pacific) Inc., which in turn is wholly-owned by AltaGas Ltd. (AltaGas). PNG s head office is located in Vancouver, B.C., and its principal operating office is located in Terrace, B.C. PNG provides natural gas transmission and distribution services to Northwestern B.C. via its PNG-West division. PNG s wholly-owned subsidiary, Pacific Northern Gas (N.E.) Ltd. (PNG(N.E.)) and provides service to Northeastern B.C. via its Fort St. John/Dawson Creek (FSJ/DC) and Tumbler Ridge (TR) divisions. Figure 1 provides an illustration of the layout of PNG s transmission and distribution assets. Figure 1: Overview of PNG Natural Gas Pipeline Systems - 1 -

10 Pacific Northern Gas Ltd. Resource Plan for the PNG-West Pipeline System April 2014 The Company delivers approximately 9,800 TJ of natural gas each year to just over 40,000 residential, commercial and industrial customers, of which approximately 4,000 TJ is delivered to approximately 20,400 customers in the PNG-West division and 5,800 TJ is delivered to approximately 19,900 customers of PNG(N.E.), including 5,000 TJ to approximately 18,600 in the FSJ/DC division and 800 TJ to approximately 1,300 customers in the TR division. 1.1 Overview of Pacific Northern Gas Ltd. Operations The PNG-West division s transmission pipeline connects with the Spectra Energy pipeline system near Summit Lake, B.C. and extends to the west coast of B.C.at Prince Rupert. The PNG-West division owns and operates over 1,022 kilometres of transmission pipeline, including 592 kilometres of mainline transmission pipeline and the remaining lateral transmission lines extending into the various communities served by the Company, the most significant being dual lines extending approximately 57 kilometres from Terrace to Kitimat. There are five compressor units that can be used to maintain pressure on the PNG-West division's transmission pipeline system: two located at Summit Lake and one each at Vanderhoof, Burns Lake and Telkwa. The total installed rating of the compressor units is 16,120 kilowatts (21,610 horsepower). The sustainable capacity of the transmission pipeline system, with the present compressor and looping configuration, is approximately 3, m 3 per day (115 million cubic feet (MMcf) per day). With the closure of the Methanex methanol/ammonia facility in Kitimat in 2005 the Company deactivated its compressor stations at Vanderhoof and Telkwa, as well as 85 kilometres of 255 mm (10 inch) diameter pipeline and 53 kilometres of 150 mm (6 inch) pipeline. These facilities are being maintained for potential future use. PNG also owns and operates natural gas distribution facilities in the PNG-West division including approximately 950 kilometres of distribution mains and 690 kilometres of service lines to deliver gas from its transmission pipeline system to homes and businesses in Prince Rupert, Port Edward, Kitimat, Terrace, Smithers, Telkwa, Houston, Burns Lake, Fraser Lake, Fort St. James and Vanderhoof. In addition, the PNG-West division operates a propane vapour distribution system serving approximately 150 customers in the town of Granisle

11 Pacific Northern Gas Ltd. Resource Plan for the PNG-West Pipeline System April 2014 Figure 2: Customer Segments: Number of Customers 1 PNG-West Number of Customers (year ending 2013) Small Commercial 2,451 Large Commercial, Small Industrial Sales and Other 26 Firm Transport 135 Residential 17,679 Interruptible Sales and Transport 11 Figure 3: Deliveries by Customer Segment Small Commercial 761 PNG-West Deliveries -TJ (2013- weather normalized) Large Commercial, Small Industrial Sales and Other 285 Firm Transport 806 Company Use 86 Residential 1,252 Interruptible Sales and Transport Small commercial customers are defined as those that consume less than 5,500 GJ per year and large commercial customers as those that consume more than 5,500 GJ per year

12 Pacific Northern Gas Ltd. Resource Plan for the PNG-West Pipeline System April Regulatory Context Under the Utilities Commission Act (Act), the Commission has the authority to regulate utilities in the Province. Section 44.1 of the Act, Long-term Resource and Conservation Planning, provides the Commission with the authority to require utilities to submit longterm resource plans. In December 2003, the Commission issued Resource Planning Guidelines to assist utilities with the preparation and submission of Resource Plans. The process outlined in the Resource Planning Guidelines can be summarized as follows: 1. Identify the planning context and objectives of a Resource Plan. 2. Develop a range of gross (i.e. that do not reflect the impact of Demand-Side Management programs) demand forecasts. 3. Identify supply and demand resources. 4. Measure supply and demand resources against Resource Plan objectives. 5. Develop a range of multiple-resource portfolios. 6. Evaluate resource portfolios against Resource Plan objectives and select a portfolio. 7. Develop an action plan to implement the selected portfolio. 8. Obtain stakeholder input during the planning process. 9. Consider government policy and seek regulatory input during the Resource Plan preparation. 10. Submit the Resource Plan for regulatory review. 1.3 Resource Plan Development Process For PNG, the development of a resource plan is more than a regulatory obligation, it is a prudent strategic planning activity necessary to bring together the short-, medium- and long-term planning cycles to ensuring that the Company is able to effectively provide reliable, secure and safe service to customers Integration of Corporate Planning and Resource Planning PNG, like most utilities, has undertaken resource planning in one form or another since its inception. Long-term growth projections, peak day demand forecasts, hydraulic analysis, and budgeting processes are common to the prudent management of any utility business and will continue to be part of the planning cycle. In addition to developing resource plans as prescribed by the Commission, PNG undertakes a combination of short-, medium-, and long-term planning in order to continue to provide - 4 -

13 Pacific Northern Gas Ltd. Resource Plan for the PNG-West Pipeline System April 2014 secure and reliable service to its customers. described below. Each of these planning processes is Short-term Planning Short-term planning constitutes the annual budgetary process through which PNG s management determines what resources will be required over the coming 12-month period to ensure that all required capital programs are completed, that operations and maintenance programs are carried out as required, and that rates are sufficient to provide the Company with the opportunity to recover the costs of these programs including the commodity cost of natural gas, taxes, financing costs, and a fair return on equity Medium-term Planning Medium-term planning considers demand and supply resources identified in the resource planning process and the timing of those resources. The planning constitutes reviewing the operations of the utility over a three- to five-year planning horizon. Included in the scope of the medium-term planning process is a review of the financial viability of the utility over the medium term, of capital expenditures required to ensure the system remains safe and reliable, of expectations of customer demand, and of operational expenditures and revenue forecasts. PNG periodically reviews its mediumterm forecasts and updates them for known changes such as the outcomes of regulatory proceedings including revenue requirement application decisions, and expected changes to demand and economic conditions. PNG believes that the five-year time frame is a period that can be reasonably forecast in terms of providing a higher level of certainty than the long-term planning time frame of 20 years Long-term Planning PNG periodically updates and reviews its long-term demand forecasts to ensure that its pipeline facilities will be sufficient to provide secure and reliable service to its customers over the long term. Generally, the long-term forecasts use growth expectations, such as inflation factors for cost increments, and anticipated market demand growth, applied to the medium-term forecasts. Because of the 20-year time frame of these forecasts, PNG has less confidence in their reliability as compared to the medium-term forecasts

14 Pacific Northern Gas Ltd. Resource Plan for the PNG-West Pipeline System April Resource Planning Process Consistent with the Resource Planning Guidelines, PNG has undertaken the following steps in developing this resource plan: Establish Objectives Consistent with Step 1 of the Resource Planning Guidelines noted above, PNG has established a set of objectives appropriate to its circumstances that will guide the development of this Resource Plan and future expenditure plans in accordance with this Resource Plan. Objectives are discussed in more detail in Section 1.4 below. Market Review In order to develop a Resource Plan appropriate to PNG, the markets of the PNG-West division were reviewed, the results of which are presented in Section 2. Develop Gross Demand Forecasts PNG has developed a long-term (20 year) gross demand forecast for the PNG-West division based on its knowledge of its service territory and economic outlook over the planning period. The demand forecast is developed from projections of base load and temperature sensitive deliveries over the 20-year planning period. Section 4 of this Resource Plan summarizes the expected demands on the system. A summary of the 20-year planning model used to determine the gross demand forecasts is presented in the Appendices. In order to support and improve PNG s residential demand forecasts and DSM evaluation framework, PNG commissioned the undertaking of a residential end-use survey (REUS) targeting a sample of residential customers from across all divisions. Information collected in this survey, in conjunction with utility billing records of historical energy consumption, have been used to improve the residential demand forecast for resource planning. PNG has also made use of the REUS data in its evaluation of energy efficiency measures proposed in PNG s corporate-wide demand side management plan (DSM Plan) as per Section 5. Review Supply and Demand Side Resources Once the gross demand forecasts were developed, PNG reviewed its available supply and demand side resources to determine if additional facilities or demand programs may be required to meet or manage long-term demand on the system. The results of this review, along with a discussion of the gas supply contracting practices that PNG uses to secure gas for - 6 -

15 Pacific Northern Gas Ltd. Resource Plan for the PNG-West Pipeline System April 2014 resale to its core market sales customers, are discussed in Section 6. Group Resources into Portfolios, Evaluate Alternatives, and Develop an Action Plan In the case of PNG-West, these steps were not required because the forecast of firm and core market demand over the planning period was well below the capacity of the existing pipeline system. Stakeholder Participation PNG will provide a copy of this Resource Plan to the B.C. Public Interest Advocacy Centre, the sole intervener in PNG s 2014 revenue requirements application. This party will be requested to provide comments to PNG and the Commission. Consideration of Government Policy The Province s energy and greenhouse gas policies and legislation that have implications for PNG in its planning process are described in Section 1.4 (vi). The objectives of the B.C. Government s 2007 Energy Plan (2007 Energy Plan) include the development of demand side management programs whose objective is to reduce greenhouse gas (GHG) emissions by reducing the consumption of fossil fuels. 1.4 Long-term Resource Plan Objectives The Resource Planning Guidelines state that a resource planning process that assesses multiple objectives and tradeoffs between alternative resource portfolios is key to the development of a cost-effective resource plan for meeting demand for a utility s service 2. PNG has identified six key resource planning objectives that form the basis for evaluating potential resources that might be considered in a resource plan, including major infrastructure projects, gas supply alternatives and demand side measures. The six key resource planning objectives are outlined in the discussion that follows. In its Reasons for Decision on the PNG(N.E.) 2012 Resource Plan, the Commission directed PNG(N.E.) to complete Table BCUC 2.2 Summary of Resource Plan Objectives Measurement Criteria and Attributes as a Compliance Filing. The information submitted by PNG(N.E.) provided additional information on each objective and is replicated in APPENDIX A: RESOURCE PLANNING OBJECTIVES. PNG notes that these objectives were applied in the PNG(N.E.) Compressed Natural Gas (CNG) 2 British Columbia Utilities Commission Resource Planning Guidelines, December 2003, p

16 Pacific Northern Gas Ltd. Resource Plan for the PNG-West Pipeline System April 2014 Virtual Pipeline CPCN and submits that they continue to be relevant for this 2014 Resource Plan. The development of a resource plan is a high-level, strategic planning process aimed at identifying potential system constraints and potential remedies to these constraints. As detailed further in Section 6, the PNG-West division system has excess capacity. Further, no system constraints have been identified and no new resource options are being proposed in this 2014 Resource Plan. Consequently, the resource planning objectives have only been considered on a general basis and PNG has not assigned weightings, measurements and benchmarks or targets to identified planning objectives for this 2014 Resource Plan. PNG does consider planning objectives to be a critical consideration during the definition and evaluation of specific identified alternative resource plan portfolios. PNG submits that when resource options are under consideration and evaluation they should be evaluated against each of the identified planning objectives, and acknowledges that tradeoffs between fulfilling the requirements of competing objectives may be required. (i) Provision of Safe, Reliable Service PNG considers that the provision of safe, reliable service continues to be an important guiding principle in its decision making processes. In determining Resource Plan objectives, as well as for other planning purposes, decisions must be measured against the ability to continue to provide high quality reliable service to existing and future customers in a manner that balances other resource planning objectives such as the provision of service at least cost, the economic viability of the utility, and rate stability. As an example of the trade-offs between planning objectives, PNG will ensure that facilities are added or expanded when needed due to increasing peak day demand on its systems. The expansion of physical pipeline facilities is a relatively low-risk, highly reliable means of meeting customers expectations of safe, reliable service, however it may not necessarily be the lowest cost option for ensuring that existing customers service is not interrupted during a peak weather event and may also not meet the objective of maintaining stable rates. Other options, such as DSM programs or peaking agreements with large industrial transporters can delay the need for facilities additions, and therefore may put less upward pressure on customers rates over the near term. However, during periods of - 8 -

17 Pacific Northern Gas Ltd. Resource Plan for the PNG-West Pipeline System April 2014 demand growth, such programs and agreements only delay capacity additions. Eventually, in order to meet demand growth the utility will have to build physical facilities. Therefore, prior to undertaking capacity additions to meet the objective of safe, reliable service, the utility must closely assess each of its options to ensure it makes the optimal decision with respect to all of its planning objectives by carefully assessing the risks and benefits associated with each option. (ii) Provision of Least Cost Service All stakeholders expect utilities to provide natural gas service efficiently, and at the lowest cost reasonably possible considering such trade-offs as system reliability, the cost of adding resources, and the economic viability of the utility. Resource options available to PNG must consider rate impacts on customers and the ability of customers to pay for capacity additions necessary to meet the objective of safe, reliable service, compared to the price of alternate energy sources. For PNG, the greatest opportunity to reduce the cost of service is through improving pipeline efficiency by increasing the load factor on its existing pipeline assets. Increasing the load factor lowers the unit cost of service to customers of the pipeline as the fixed costs of the pipeline are recovered over more units of throughput. PNG continues to work with potential partners on proposed LNG projects that would increase the utilization of PNG s transmission assets, and PNG continues to monitor for opportunities to increase asset utilization by providing increased service to existing customers or by providing service to new customers. In regard to adding new pipeline facilities, PNG considers pipeline efficiency in its decision making process as there is a rate impact from adding that capacity. When determining how best to meet customer demands while remaining price competitive with alternate energy sources, PNG must assess the likelihood of being able to recover the cost of the next tranche of pipeline capacity over increasing customer demand-related volumes. If customer demand is not forecast to increase sufficiently to recover the cost of the capacity addition without adversely affecting their rates, then the Company would look to other means of serving customer demand with the existing system, such as peaking agreements with large customers. (iii) Economic Viability of the Utility PNG s shareholder, customers, and shippers require that PNG remains a viable - 9 -

18 Pacific Northern Gas Ltd. Resource Plan for the PNG-West Pipeline System April 2014 operation and continues to provide natural gas service as an attractive alternative to electricity, propane, wood and oil. In order to maintain its position among energy providers, it is critical that PNG be able to meet its financial obligations while being provided an opportunity to earn its allowed return, and that customers are able to continue purchasing natural gas at competitive prices compared to alternate energy sources. To ensure that the Company remains viable, additional supply or demand-side resources should only be considered if there is sufficient customer demand growth to support the added cost of service impacts associated with those resources, and that the addition of those resources does not materially increase rates beyond the price of energy from alternative sources. If this were to occur, it would be unlikely that the new customer demand that drove the expansion would sign up for natural gas service due to unfavourable pricing, leaving existing customers to recover the cost impacts of a resource addition. In turn, existing customers may either leave the system in favour of alternatives, or materially alter their consumption patterns, both which could adversely impact the sustainability of the utility. To ensure that resources are added only when appropriate, the Company employs financial feasibility tests, such as a mains extension test. (iv) Rate Stability Customers prefer stable rates over time, allowing them to budget with some predictability as well as validating their choice of natural gas for their thermal applications. Volatility in rates leads to customer dissatisfaction and may introduce changes to customer usage characteristics. Significant capital expenditures may result in upward pressure on delivery rates. PNG s planning for expansions to, and replacements of, parts of its distribution systems takes into account the impact of those related capital expenditures on delivery rates. For example, capital additions are evaluated based on a mains extension test that has been reviewed and approved by the Commission. Other capital projects, such as are required to meet safety and reliability criteria, are reviewed by the Commission in the context of the revenue requirements application process, or a CPCN application, as appropriate. (v) Environmental and Socio-economic Impacts PNG considers environmental and socio-economic factors, including the impact on land

19 Pacific Northern Gas Ltd. Resource Plan for the PNG-West Pipeline System April 2014 use, emissions, the local economy, customer groups and First Nations when evaluating alternative supply portfolios to meet demand growth. (vi) Alignment with the B.C. Government s Energy Objectives PNG is guided by the following government legislation and policies: a) The Clean Energy Act: Part 1(2) of the British Columbia Clean Energy Act sets out the following energy objectives which, among other things, encourage fuel switching to a lower carbon intensive fuel as a means to reduce greenhouse gas emissions 3 : 2(a) to achieve electricity self-sufficiency; PNG continues to ensure that natural gas service remains competitive to other forms of energy, particularly electricity, for serving customers thermal energy requirements. Natural gas is the most efficient source of energy for thermal requirements and its appropriate application reduces the Province s reliance on electricity for these applications. 2(b) to take demand-side measures and to conserve energy; and 2(g) to reduce BC greenhouse gas emissions; PNG has considered the costs and benefits of a DSM program - of which one of the outcomes is a reduction in the greenhouse gas emissions of its customers through reduced consumption of natural gas - in its planning process. In Section 6 of this Resource Plan, PNG presents the proposed corporate-wide DSM Plan. 2(h) to encourage the switching from one kind of energy source or use to another that decreases greenhouse gas emissions in British Columbia; and PNG is exploring the opportunity to leverage its existing pipeline transmission and distribution systems to provide service to micro-scale producers of CNG and LNG near demand loads and to develop new CNG and LNG distribution services to its customers. Promoting CNG and LNG as an alternative to diesel, gasoline and propane for transportation, off-grid power generation and for isolated communities and large customers unattached to the utility s natural gas distribution or transmission system improves the economics of these end-uses 3 Clean Energy Act Section 2(h)

20 Pacific Northern Gas Ltd. Resource Plan for the PNG-West Pipeline System April 2014 while at the same time reduces greenhouse gas emissions through the displacement of higher carbon-content fuels. 2(k) to encourage economic development and the creation and retention of jobs. The western region is on the cusp of economic change due to potential opportunities for the export of LNG to Asian markets and also due to the significant infrastructure required to implement these opportunities. PNG continues to work with potential partners on LNG projects utilizing PNG s transmission assets, and to monitor for opportunities to provide service to other parties that may require service during the development stage of these projects. b) British Columbia s Natural Gas Strategy and Liquefied Natural Gas ( LNG ) Strategy: In its Natural Gas Strategy, and again in its LNG Strategy, the Province stated its goal of growing the market for natural gas - in both CNG and LNG forms - as a transportation fuel. 4,5 Accordingly, the Province has introduced regulations under the Clean Energy Act to promote natural gas vehicles and refueling stations. 6 PNG s resource planning process takes into account the impact of the Province s Natural Gas Strategy, specifically in regards to the potential for load growth from CNG and LNG facilities that will provide a lower carbon fuel alternative to the transportation market in PNG s delivery areas. PNG believes that these objectives are reflective of the Company s goal to provide the highest level of quality service to its customers. 1.5 Status of 2011 Pipeline System Resource Plan Directives In the Decision on the PNG-West division 2011 Resource Plan, Commission Order G directed PNG to undertake specific actions in the preparation of its next resource plan. The table that follows provides the Commission directives as well as the status of the items as they pertain to this 2014 Resource Plan. 4 British Columbia s Natural Gas Strategy 5 Liquefied Natural Gas - A Strategy for B.C. s Newest Industry, p. 7 6 The Greenhouse Gas Reduction (Clean Energy) Regulation was issued on May 15,

21 Pacific Northern Gas Ltd. Resource Plan for the PNG-West Pipeline System April 2014 Table 1: Commission Directives (G ) Commission Directive Status PNG is directed to submit to the Commission its next Resource Plan which is to include consideration of the appropriateness of demand side management, within two years of the date of this Order. Addressed as per Section 6 of this Resource Plan. Consideration is given to a corporate-wide demand side management program strategy. In the event that the proponents of either of the LNG projects make a final investment decision prior to that time, the Commission directs PNG to file an updated Resource Plan within 180 days of the date of that investment decision to reflect the impact of assuming the additional gas delivery requirements accordingly. This event did not come to pass. required. No action When potential resource options are evaluated in future Resource Plans, PNG is directed to develop benchmarks or targets to provide a basis for evaluating the achievement of the Resource Plans objectives. PNG is also directed to specify the relative weights that will be attributed to each planning objective in order to rank the resource options. Addressed as per Section 1.4 of this Resource Plan

22 Pacific Northern Gas Ltd. Resource Plan for the PNG-West Pipeline System April ENERGY MARKET OUTLOOK 2.1 Policy Environment and Outlook As this Resource Plan is being prepared, the regions served by PNG have become central to federal and provincial policy decisions regarding resource development, international trade and the environment. While the North East region of British Columbia has experienced rapid resource based economic growth for several years, the North Coast and Nechako regions are positioned to be prime economic beneficiaries of a movement to enhance trade with Asia and China. At the same time, environmental and climate change concerns remain important for the public and for decision makers, tempering and conditioning industrial, commercial and residential developments Federal Policies Several departments of the federal government, including the Department of Aboriginal Affairs and Northern Development, the Department of Western Diversification, Natural Resources Canada, and Environment Canada each have a potential impact on the decisions, timing and scale of development in the regions served by PNG. On balance, the combined federal policy objectives appear to support sustainable economic growth in the regions (especially as it relates to international trade) so long as there is no undue compromising of environmental considerations and objectives. Of course, defining what constitutes both sustainable growth and the lines with respect to the environment and special interests remain matters of serious public, judicial and regulatory debate, and outcomes at this point are in no way certain. Regardless of the outcomes, it is likely that growth will continue in the North East region of British Columbia, and that the desire to access markets in China and Asia will lead to growth along the North Coast, though the nature, magnitude and timing of that growth are not certain Provincial Policies As with the federal government, British Columbia s provincial government has interests in the development of the regions served by PNG that cross departmental portfolios. The provincial government has also made the environment and commitment to greenhouse gas (GHG) reductions a serious cornerstone of its policy playbook. In 2007 the government passed the Greenhouse Gas Reduction Targets Act (Bill

23 Pacific Northern Gas Ltd. Resource Plan for the PNG-West Pipeline System April ) which established that year as the base year and set GHG reduction targets to be achieved by 2020 and Further, it set guidelines and responsibilities for establishing stepped targets for 2012 and Carbon neutrality in the public sector was also a major focus of the act. Also in 2007 the B.C. Energy Mines and Petroleum Resources Department released The BC Energy Plan, which outlined the strategies to be pursued in order to meet the government s clean energy development and GHG emission targets. The plan focused mainly on electricity, and described specific policy actions for meeting the GHG reduction targets and committed to the pursuit of energy efficiency and conservation through demand side management and investment in energy saving technologies. In 2008, The BC Energy Plan was augmented with The BC Bioenergy Strategy which targeted bio fuel to meet 50 percent of B.C. s renewable energy requirements by Wood waste and pine beetle deforestation are key assumptions in this strategy making it particularly relevant to development in the regions served by PNG. In the summer of 2008 the provincial government implemented the first consumer tax on carbon in North America, with the final scheduled increase in the tax to $30 per ton of CO 2 emissions coming into effect in For natural gas, the tax now translates to 5.7 cents/cubic metre. The Utilities Commission Amendment Act (Bill ) encourages public utilities such as PNG to reduce greenhouse gas emissions, take demand-side measures and produce, generate and acquire energy from clean or renewable sources. It provided authority for the Demand Side Measures Regulation (enacted in November 2008) which set out the rules that the Commission uses when assessing proposed demand-side measures from utilities. The Clean Energy Act (Bill ) further developed the objectives around electricity self-sufficiency, energy conservation and development of innovative clean energy technologies. This act references and reinforces the Greenhouse Gas Reduction Targets Act. In 2012, B.C. Energy and Mines released its Natural Gas Strategy which recognized the potential of natural gas to contribute to improving GHG emissions worldwide by replacing coal fired power plants and oil based transportation fuels with a much cleaner alternative [and taking the position that] natural gas is a climate solution it is widely

24 Pacific Northern Gas Ltd. Resource Plan for the PNG-West Pipeline System April 2014 recognized as a transition fuel to a low carbon global economy. 7 The plan reemphasized the need to encourage and pursue conservation in B.C. s domestic market, as well as the potential for natural gas to form an important part of the GHG solution for transportation fuel in trucks, buses and large machinery. 8 In April 2013, B.C. adopted both the 2011 National Energy Code for Buildings (NECB) and ASHRAE 90.1 (2010) as compliance options in the B.C. Building Code for Large Residential, Industrial, Commercial and Industrial buildings effective December 20, The adoption is expected to update construction practices to increase the energy efficiency of new construction, and to adapt to climate change effects. By separate order the B.C. government also adopted the codes for new residential construction beginning in December Based on a report prepared by Stantec Consulting for the B.C. Ministry of Energy and Mines, the resulting decrease in energy demand from a newly constructed big box retail operation in Northern B.C. resulting from the adoption of the new building codes is expected to be between 12 percent and 18 percent. For mid-rise commercial operations, the savings could be between 30 percent and 35 percent, and 8 percent to 10 percent for new mid-rise residential construction Municipal Policies The BC Climate Action Charter commits local governments to set GHG reduction targets and demonstrate leadership on sustainable development. Prince Rupert, Terrace and Smithers were early signatories to the Charter. Prince Rupert has set municipal operations targets that would match the province s target by Initiatives include incentives for upgrading or retrofitting some of the existing building stock to meet higher efficiency standards. Based on the Stantec findings, Prince Rupert s target to incent existing commercial, institutional and industrial buildings to reduce energy consumption 7 BC Natural Gas Strategy, pp. 1, The Clean Energy Act provides the framework for a planned five-year, $62 million program to reduce transportation emissions for heavy duty natural gas vehicles. (BC Natural Gas Strategy, p. 5.) 9 Ministerial Order No. M Ministerial Order No. M BC Energy Code Comparison (Final Report), Stantec Consulting, p City of Prince Rupert, Energy and Greenhouse Gas Plan, September,

25 Pacific Northern Gas Ltd. Resource Plan for the PNG-West Pipeline System April 2014 by 25 percent from 2007 levels by 2020 would appear to be achievable. The city of Terrace has created a planning horizon to 2050 to reduce dependence on fossil fuels and develop wind, water and biofuel alternatives. 13 While the visioning document does not identify specific targets for energy use it does suggest a fairly clear commitment to pursue policies and plans that encourage a reduced energy footprint for existing customers. The town of Smithers also has a plan committing to energy conservation measures and GHG reductions in buildings and transportation. 14 The plan forecasts modest decreases in energy demand for the existing building stock due to retrofits in less than 20 percent of residential, commercial and industrial buildings by The largest reductions in energy consumption and GHG s are expected to come from new construction and an overall decrease in carbon fuel consumption rates for transportation. Kitimat signed the Charter in 2012, and is in the planning and implementation stage on several initiatives. 15 Similarly, in the North East region the Peace River Regional District, Fort St. John, Taylor, Dawson Creek, Pouce Coupe and Tumbler Ridge have all signed The BC Climate Action Charter and committed to energy conservation and GHG reductions. 2.2 Regional Economic Outlook In developing its regional economic outlook for 2014 and beyond, PNG has relied on regional statistics, key indicators and projections available through BC Stats, the central statistical agency of the Province of British Columbia. The PNG-West division serves the major urban centres of the North Coast and Nechako Development Regions and BC Stats statistics and projections for these regions are therefore relevant indicators of the demographics and economic growth experienced by PNG-West s customers Regional Economic Indicators The North Coast and neighbouring Nechako were the only Development Regions in the province to record a population decline in While British Columbia saw an average 13 Terrace 2050, Fall Town of Smithers, Community Energy & Greenhouse Gas Emissions Plan, District of Kitimat Climate Action Revenue Incentive Public Report for

26 Pacific Northern Gas Ltd. Resource Plan for the PNG-West Pipeline System April 2014 gain of one percent between 2011 and 2012, population in the regions shrank by 0.2 percent, falling to 58,068, or 1.3 percent of the provincial population. The region has steadily lost residents since its peak of nearly 71,000 inhabitants in A series of economic blows since then reductions in fish stocks, a slowdown in the forest sector, and declining metal prices have contributed to the outflow of people. Economic prospects for the regions have improved dramatically in recent years thanks to major project development in infrastructure and transportation, power generation and transmission, and mining. Despite a slowing of the provincial economy in the latter part of 2012, exacerbated by weaker demand for exports and volatile commodity prices, investor interest in the region remained strong. Last year, investment spending and mining exploration in the region reached record levels, generating employment opportunities for both North Coast residents and workers from other parts of B.C. 16 The population of the vast North Coast and Nechako regions of Northern B.C. is approximately 100,000 people. Over the next 20 years, that population is forecast to grow at an average annual rate of just over 0.15 percent. Table 2: Population Projections North Coast 59,958 61,272 61,932 Nechako 39,726 40,749 40,865 However, the make-up and distribution of the population in the region will likely undergo more significant change than the relatively flat population forecast might suggest. WorkBC s Labour Market Outlook predicts that by 2020 available jobs will increase by more than 4,900, or by nearly 12 percent in the region as a result of strong economic growth in the resource sectors, and the services required to support that growth. Over the same period, about 37 percent of the current workforce in the region is expected to reach retirement, creating opportunities for nearly 15,300 replacement workers (Figure 4) Institute of Chartered Accountants of BC, 2013 Regional Checkup Northcoast Development Region, p BC Stats People 2013: BC Sub-Provincial Population Projections 18 Work BC Regional Labour Market Outlook

27 Pacific Northern Gas Ltd. Resource Plan for the PNG-West Pipeline System April 2014 Figure 4: Cumulative Job Openings in the North Coast and Nechako Development Regions. Cumulative Job Openings North Coast and Nechako ( ) 4,923 24% 15,297 76% New Jobs due to Economic Growth Replacement of Retiring Workers Of the 41,300 or so people currently employed in the region, about 75 percent work in the services sector, with production of goods accounting for just 26 percent of the region's employment (Figure 5). 19 The economic growth in the region will likely increase both short-term and long-term labour requirements, with direct gains in the goods producing sectors of forestry, mining and oil and gas. The service sector may see increased economic activity and productivity gains, but will likely see labour growth proportionately less than the gains in the producing sectors. The BC Stats forecast of household formations better reflects the underlying dynamics in the regions demographics. The number of households is expected to increase 0.5 percent per year on average over the forecast period, with about 70 percent of that increase occurring in the first half of the forecast. This means that nearly 3,950 living spaces will need to be constructed in the region by 2033, with more than 2,700 of those constructed before 2023 (Table 3). Historical data on the types of residential building permits granted provides no clear indication of a trend toward multi-unit residential buildings (Figure 6). 19 ibid

28 Pacific Northern Gas Ltd. Resource Plan for the PNG-West Pipeline System April 2014 Figure 5: Employment Distribution in the North Coast and Nechako Development Regions Employment Distribution in North Coast & Nechako (2011) Retail & Wholesale Trade Health Care and Social Assistance Educational services Transportation and Warehousing Accommodation and Food Services Other Services Public Administration Professional Scientific and Technical Services Manufacturing Construction Forestry, Fishing, Mining, Oil and Gas 4% 4% 9% 7% 6% 8% 6% 13% 12% 11% 11% Service Producing Sector Goods Producing Sector Table 3: Household Formations Projections North Coast 23,593 25,330 26,094 Nechako 15,466 16,455 16,911 Figure 6: Residential Building Permits in the North Coast and Nechako Development Regions 20 BC Stats People 2013: BC Sub-Provincial Population Projections

29 Pacific Northern Gas Ltd. Resource Plan for the PNG-West Pipeline System April Commercial Developments Commercial growth rates are expected to track household formations fairly closely, though there may be some lags. Noteworthy commercial projects currently planned for the North Coast and Nechako regions are described in Table 4, below. Table 4: North Coast and Nechako Commercial Projects (September 2013) 21 Project Municipality Status Completion Comments Lakes District Burns Lake Construction Fall 2015 The hospital replacement will include 16 beds, Hospital Started acute care services and emergency services. Replacement The facility will accommodate diagnostic imaging, laboratory and a pharmacy. PCL Constructors Westcoast Inc. has been selected to design and build the facility. The design will adhere to Leadership in Energy and Environmental Design (LEED) Gold building standards. Carnaby Industrial Site New Hazelton Proposed? Proposed industrial development on a former 100 acre sawmill site. A 5,000 sq ft shop and 2 ton crane currently located on the site. Skeena Industrial Development Park Terrace Proposed? A 2,000 acre heavy industrial greenfield development site with potential for bioenergy manufacturing. Industrial Development Park Terrace Proposed? Proposed 20 acre serviced industrial development site is located near Highway 16 and railway. Potential for forestry-based manufacturing and services, site is zoned for heavy industrial use Industry Forecasts and Projections Economic growth in the region is highly dependent on both the likelihood and timing of major investments. The plans and timing of such investments are in turn dependent on global supply, demand and price projections for commodities and resources, as well as prevailing regulatory and socio-economic conditions. The Northwest Transmission Line and Forest Kerr Hydroelectric projects will be 21 BC Major Projects Inventory, September

30 Pacific Northern Gas Ltd. Resource Plan for the PNG-West Pipeline System April 2014 complete by 2014, setting the stage for other major project investments such as hydro generation projects and mine development in remote areas of the North Coast Development Region. The Northwest Transmission Line, which will run along Highway 37 between Terrace and Bob Quinn Lake, will supply power to future industrial and mining developments, and provide an interconnection point for clean-energy projects. Forestry Changing supply-demand dynamics in the world market for forest products are expected to create continuing challenges for the traditional forest industry until at least the end of the decade. 22 Increased supply from South America, Europe and especially Russia will likely be tapped to meet growing demand for wood products around the world. However, bio-fuels and wood pellet production for export to world markets offer growth potential, especially before 2020 when the remaining supply of viable pine beetle killed wood is forecast to be exhausted. One such project being proposed in the PNG-West division service area is a biocoal production plant in Terrace that would convert wood waste into biocoal for use in coal-fired power and cement plants. This project is in the prefeasibility stage of development. A surge in lumber prices in late 2012, fuelled by a rebound in US housing starts, demand from China, and a smaller global timber supply renewed activity in the North Coast Development Region s forest industry. In B.C., the value of lumber exports increased for the third consecutive year by 9.7 percent. The improved softwood lumber market has prompted a rebuild of the Burns Lake sawmill, restoring the economic mainstay of a town that had been left reeling earlier in the year. The new mill will be about two-thirds the size of the original, due to restricted log availability, and is expected to be operational by early Mining The long-term outlook for global metal and non-metallic mineral demand is fairly promising. Rapid industrialization in highly populated regions like China, India and Brazil, and the resulting emergence of a larger middle class with disposable income to purchase goods have created sustainable demand increases. This in turn has led to 22 Opportunity BC 2020 BC's Forest Industry, Woodbridge Associates, October BC Regional Checkup, Chartered Accountants Institute, pp. 1,

31 Pacific Northern Gas Ltd. Resource Plan for the PNG-West Pipeline System April 2014 commodity price increases that are expected to fuel exploration investments for many years. At the same time, new and innovative technologies and techniques (such as GPS surveying information, three-dimensional data maps, airborne technologies, and down-hole seismic imaging) are helping exploration and mining companies overcome some of the geographic barriers associated with mining remote areas. Figure 7: Northern British Columbia Mining GDP 24 Therefore recent commodity price declines are expected to prove temporary. In fact, Northern British Columbia's mining output is still expected to increase at an impressive compound annual rate of about 17 percent until at least The Future of Mining in Canada s North, Conference Board of Canada, January 2013, p ibid

32 Pacific Northern Gas Ltd. Resource Plan for the PNG-West Pipeline System April 2014 Figure 8: North Coast and Nechako Mining Projects 26 Project Municipality Status Completion Comments Huckleberry Copper / Houston Construction 2021 Main zone optimization and extension of Silver / Molybdenum Started Huckleberry mine life by 7 years will include Mine $119 million for upgrades and $82 million for dam construction. The expansion is expected to create 70 new positions and keep the mine s 260 current workers employed for an additional seven years. Berg Copper- Molybdenum-Silver Mine Houston Proposed? Proposed molybdenum mine located 80 km southwest of Houston in scoping stages. Previous 42,000 m drill program has revealed a significant copper-molybdenum resource. Website: Kitsault Mine Project Alice Arm Proposed 2017 Proposed open pit molybdenum mine located 140 km northeast of Prince Rupert near tidewater on Alice Arm. A pre-feasibility study completed in Dec 2009 estimates extraction of 40,000 tonnes of ore/day. Included in the project will be mill processing, ancillary facilities and a possible 9.8 MW run-of-river hydroelectric project. Project has been certified under the Environmental Assessment Act. The two year construction phase is estimated to generate up to 700 jobs, with an expected ongoing requirement of 300 employees during operation of the mine. The mine life is anticipated to be 16 years. Harmony Gold Mine Graham Island Proposed? The Harmony property is located on Graham Island (Haida Gwaii), with a potential of 64 million tonnes containing 3 million ounces of gold. Detailed engineering and exploration studies will be required. 26 BC Major Projects Inventory, December

33 Pacific Northern Gas Ltd. Resource Plan for the PNG-West Pipeline System April 2014 Project Municipality Status Completion Comments Mt. Milligan Houston Startup 2013 The phased start-up commenced on August 15, 2013, followed by the first production of copper-gold concentrate in September The mine achieved commercial production on February 18, The mine is planning to continue to support local communities by hiring the majority of the 350 workers needed during operations from the Nechako and Cariboo Development Regions Large Industrial Projects Rio Tinto's Kitimat Modernization Project The Kitimat Modernization Project (KMP) will increase the production capacity of Rio Tinto's Kitimat aluminum smelter by 48 percent to approximately 420,000 tonnes of aluminum ingot per year using the most cost effective, energy efficient and environmentally friendly technology available. The company announced its final investment decision on December 1, The construction labour estimate is 1,500 jobs over three years. The new smelter is expected to begin metal production in early 2015 and to provide employment for approximately 1,000 once operational. 28 A complementary electric generation project will take several more years to complete. Enbridge Pipelines Inc. Northern Gateway Project Northern Gateway Pipelines Limited Partnership proposes to construct two, 1,177 km pipelines between Bruderheim, Alberta and Kitimat. A 915 mm (36-inch) diameter pipeline flowing west will carry up to 525,000 barrels of oil per day. An eastbound 500 mm (20-inch) diameter pipeline will carry 193,000 barrels of condensate per day back to Alberta. A two-berth marine terminal and tank farm is proposed to be located on the west side of Douglas Channel, north of Bish Creek. Ten pump stations will be powered by electric pumps to limit noise and greenhouse gas emissions. The regulatory review commenced in May The Joint Review Panel of the Canadian Environmental Assessment Agency and NEB recommended approval of the project in December Thompson Creek Metals, Mount Milligan External Enews, February 21, Chartered Professional Accountants 2013 BC Check-Up "Paving the Way"

34 Pacific Northern Gas Ltd. Resource Plan for the PNG-West Pipeline System April 2014 A final decision from the Government of Canada is expected by mid The project is expected to employ 165 persons to operate the marine terminal and tug fleet, to maintain first response and to monitor the environment. While this project is unlikely to have much direct impact on natural gas demand in the region, it could impact both the timing and the magnitude of economic growth in the region. Kitimat Clean Refinery In August 2012, Kitimat Clean Ltd. submitted a proposal to build a large oil refinery at the Dubose Industrial site 25 km north of Kitimat to process heavy crude oil delivered by pipeline or rail. An environmental assessment is in progress, with operations forecast to commence by The refinery will process 550,000 barrels of diluted bitumen per day, producing 240,000 barrels per day of diesel, 100,000 barrels per day of gasoline, and 50,000 barrels per day of aviation fuel. The proposed project includes a 40 km pipeline to transport refined fuel, a marine terminal on the Douglas Channel, and a fleet of tankers. The project includes an on-site natural gas cogeneration facility to provide steam and electric power. Approximately 6,000 workers will be required during the construction phase, and the refinery will create 3,000 permanent full time jobs. In April 2013, Kitimat Clean signed a Memorandum of Understanding with the Industrial and Commercial Bank of China, which will serve as a financial advisor and cooperate in the financing of the project. Prince Rupert Port Authority The port facilities of Prince Rupert continue to expand. Current and planned projects include: The Ridley Rail and Utility Corridor: The $90 million project will be constructed to include an access road, rail loop, utilities, onshore terminal infrastructure and marine components. The completion of this project is expected to act as a catalyst for further developments at the Ridley Island Industrial Park. Fairview Terminal Phase 2: The 24 hectare (59 acre) Fairview Container Terminal has an operational capacity to move 750,000 TEUs (Twenty-foot Equivalent Units) per year. The $650 million Phase 2 expansion being planned will expand the capacity to two million TEU s. Phase 2 engineering design, environmental assessment and consultation

35 Pacific Northern Gas Ltd. Resource Plan for the PNG-West Pipeline System April 2014 are well underway. Ridley Coal Terminal Expansion: The $200 million multi-phase project will allow Ridley Terminals Inc. to increase its annual shipping capacity from 12 million tonnes to 24 million tonnes by the end of Westview Pellet Terminal: Pinnacle Renewable Energy Group, the longest established pellet producer in Western Canada is constructing a $42 million wood pellet receiving, storage and shipping facility in Prince Rupert. Pinnacle Renewable Energy Group owns and operates six pellet plants across British Columbia with a production capacity well over one million tons annually. The Westview Pellet Terminal shipping facility is designed specifically to receive and store wood pellets transported by rail from production facilities in the interior of British Columbia, and load them into bulk cargo vessels bound for overseas markets. It includes the construction of private rail storage tracks, a wood pellet receiving and unloading building, and a conveyor and ship loader system. Watson Island Industrial Site Redevelopment: Prince Rupert and Port Edward have accepted a conditional offer from Watco to purchase the former pulp mill site, a site which the communities acquired through a tax sale process. Watco is a venture made up of the Metlakatla First Nation, the Lax Kw'alaams First Nation, Colonial Coal and Hillsborough Resources. Watco plans to redevelop Watson Island as a bulk shipping terminal, with a supporting industrial park. Canpotex Potash Terminal: Canpotex Terminals Limited, the world s largest exporter of potash, is proposing to construct a $400 million potash export terminal in response to increased international demand for Canadian potash. 2.3 LNG Export Infrastructure Development World Scale Pacific Northwest LNG and Prince Rupert Gas Transmission Ltd. Malaysia s state-owned Petronas has proposed an $11 billion LNG facility on Lelu Island, near Port Edward. The facility would liquefy and export natural gas produced in northeastern B.C. by Petronas recently-acquired Progress Energy Canada Ltd. (Progress). JAPEX, PetroleumBRUNEI and Indian Oil Corporation Ltd. are minority shareholders in Pacific NorthWest LNG and its associated natural gas supply. The final design and capacity of the facility is still being developed, but it could include two to

36 Pacific Northern Gas Ltd. Resource Plan for the PNG-West Pipeline System April 2014 three LNG trains, and an export terminal and jetty to accommodate ocean-going LNG carriers. The targeted operational commencement is late In February 2014, Pacific NorthWest LNG submitted its environmental impact statement to both the Canadian Environmental Assessment Agency and the B.C. Environmental Assessment Office. In March 2014, Pacific NorthWest LNG was awarded an LNG export license by the Government of Canada for million tonnes per annum (mtpa). TransCanada Corporation has been selected by Progress to design, build, own and operate the proposed Prince Rupert Gas Transmission (PRGT) project. The approximately 900-kilometre pipeline is expected to deliver 34 to m 3 per day (1.2 to 2.0 billion cubic feet (Bcf) per day) of natural gas from a point near the District of Hudson's Hope to the proposed Pacific NorthWest LNG facility. BG Group Prince Rupert LNG and the Westcoast Connector The Prince Rupert Port Authority has engaged with the British Gas Group (BG Group) to develop Prince Rupert LNG, an LNG terminal that could be used to load Western Canadian gas onto ships bound for consumers in Japan, South Korea and China. When fully developed, the LNG facility will include three LNG processing trains with a total capacity of up to 21 million metric tonnes per year (21 mtpa). The facility will be developed in 2 phases: Phase 1 will include two LNG processing units and Phase 2 will include the addition of the third LNG processing unit to achieve full processing capacity. The targeted operational commencement is In March 2014, Prince Rupert LNG was awarded an LNG export license by the Government of Canada for 21.6 mtpa. BG Group has signed a project development agreement with Spectra Energy to jointly develop plans for the Westcoast Connector, a new natural gas pipeline from Northeast B.C. to the proposed Prince Rupert LNG terminal on Ridley Island. It will include 851 km to 872 km of 912 mm to 1,219 mm (36 to 48-inch) diameter pipeline and up to five compressor stations. The expected capacity is as much as m 3 per day (4.2 Bcf per day). LNG Canada and Coastal GasLink In May 2012, Shell Canada formally announced the development of a proposed two billion cubic feet per day liquefied natural gas export facility on the site of the former Methanex methanol plant. LNG Canada is a joint venture Shell Canada holding a 40 percent stake and with Korea Gas (KOGAS), Mitsubishi, and PetroChina Company each

37 Pacific Northern Gas Ltd. Resource Plan for the PNG-West Pipeline System April 2014 holding a 20 percent interest in the project. The project consists of the construction and operation of natural gas treatment facilities, liquefaction and storage facilities, marine terminal facilities, an interconnecting cryogenic transfer pipeline, and supporting infrastructure. LNG Canada will initially consist of two-trains, each with the capacity to produce six mtpa, with an option to expand the project in the future. In February 2013, the NEB awarded a permit to export up to 24 mtpa of LNG annually over 25 years. A project description was filed with the federal and provincial environmental assessment agencies in April The approval process is expected to extend into A decision to move the project into development could be taken in late 2015/early 2016, with start up around the end of the decade (pending regulatory approvals and investment decisions). TransCanada Corporation has been selected by Shell Canada and its partners to design, build, own and operate the proposed Coastal GasLink project, a 1,219 mm (48- inch) diameter, 700 km pipeline that will transport natural gas from the Montney gasproducing region near Dawson Creek to the LNG Canada liquefied natural gas export facility in Kitimat. A project description was filed with the federal and provincial environmental assessment agencies in October Shell and TransCanada are working toward the execution of definitive agreements on the Coastal GasLink project. The pipeline is expected to move m 3 per day (1.7 Bcf per day) of natural gas. It is estimated that 2,000 2,500 construction jobs will be realized over a three-year construction period. The pipeline is expected to be in service near the end of the decade, coinciding with the LNG Canada plant commencing operations. Kitimat LNG and Pacific Trail Pipeline Chevron Canada and Apache Canada each hold a 50 percent stake in the Kitimat LNG terminal, Pacific Trail Pipeline and 644,000 gross undeveloped acres in the Horn and Liard River basins in northeast B.C. Chevron will operate the two-train liquefaction plant and the pipeline; Apache will operate the upstream assets. The terminal will have an initial capacity to produce m 3 per day (700 MMcf per day) of natural gas or five million tonnes of liquefied natural gas per year. In October 2011, the NEB granted a permit to export up to 10 mtpa of LNG over 20 years. In January 2014, Kitimat LNG awarded the engineering, procurement and construction contract to a joint venture involving Fluor Canada and JGC Corporation of Japan. Required labour is estimated to be up to 2,500 jobs during construction (three years) and up to 150 permanent jobs for

38 Pacific Northern Gas Ltd. Resource Plan for the PNG-West Pipeline System April 2014 operation. A final investment decision is expected in Site preparation and access road upgrades are ongoing, along with construction of temporary worker accommodation on the site of the former Eurocan Pulp & Paper mill. The Pacific Trail Pipeline (PTP) is proposing a new 1,067 mm (42-inch) diameter, 470 km pipeline to supply gas transferred from the Spectra Energy Transmission System at Summit Lake (north of Prince George, B.C.) to Kitimat LNG for export. PTP is expected to transport up to m 3 per day (1.0 Bcf per day) of natural gas. Provincial environmental approval was granted in June 2008, followed by federal environmental approval in March A front end engineering and design study was undertaken in In February 2013, PTP signed a $200 million benefits agreement with 15 First Nations along the pipeline right-of-way. A final investment decision is expected in 2014 in conjunction with the Kitimat LNG project. WCC LNG Proposed by ExxonMobil Canada Ltd. and Imperial Oil Resources Limited, WCC LNG was awarded an LNG export license by the Government of Canada in March 2014 for 30 mtpa. Project proponents have yet to identify a project site, but have indicated they are considering locations in the vicinity of Kitimat and Prince Rupert. Pending regulatory approvals, they expect to be operational in the 2021 to 2023 time frame. 2.4 LNG Export Infrastructure Development Small Scale AltaGas Idemitsu Joint Venture Limited Partnership (AIJVLP) On January 29, 2013, PNG s parent company AltaGas signed an agreement with Idemitsu Kosan Co. Ltd. (Idemitsu) to form the AltaGas Idemitsu Joint Venture Limited Partnership (AIJVLP). AltaGas and Idemitsu each own a 50 percent interest in AIJVLP. Idemitsu is a global leader in the supply of energy, petroleum, lubricants and petrochemical products and services to Japan. AIJVLP is pursuing opportunities to develop liquefaction infrastructure, and long-term natural gas supply and sales arrangements to meet the growing demand for natural gas in Asia. AIJVLP is also pursuing opportunities to develop an LPG export business, including logistics, plant refrigeration and storage facilities. Triton LNG, a wholly-owned subsidiary of AIJVLP, is currently developing the proposed project feasibility study which is expected to be completed in Triton LNG is also

39 Pacific Northern Gas Ltd. Resource Plan for the PNG-West Pipeline System April 2014 preparing preliminary engineering designs for the construction of the liquefaction facilities and is in discussions for potential site locations. Triton LNG is currently in discussions with market participants to develop sales and supply agreements. On October 29, 2013, Triton LNG filed an application with the National Energy Board (NEB) to export up to 2.3 million tonnes per year of LNG. Subject to consultations with First Nations, and the completion of the feasibility study, permitting, regulatory approvals and facility construction, the proposed LNG exports could begin as early as Douglas Channel Gas Services Ltd. (DCGS) This small-scale project involves a barge-based liquefaction plant proposed to be located on the west side of Douglas Channel, south of Moon Bay. The project will initially utilize existing capacity in the PNG pipeline and produce up to 900,000 tonnes of LNG per year. Front end engineering and design studies commenced in In February 2012, the NEB awarded a permit to export up to 1.8 mtpa of LNG annually over 20 years, equivalent to m 3 per day (250 MMcf per day) of natural gas. The Haisla Nation, LNG Partners, Golar LNG and an unnamed Asian firm are the project partners. DCGS is currently in a Companies' Creditors Arrangement Act proceeding, of which the outcome is not known at this time. Pacific Northern Gas Ltd. Pipeline Looping Project (PLP) PNG itself is considering a project to upgrade its gas transmission capacity by looping (or twinning) its existing natural gas transmission pipeline between Summit Lake and Kitimat. The new pipeline will increase the overall pipeline capacity of the PNG-West transmission system to m 3 per day (735 MMcf per day) in order to meet the requirements of its existing customers and new small-scale liquefied natural gas projects proposed for construction in Kitimat. The project involves the construction of approximately 525 km of new 610 mm (24-inch) diameter pipe, operating in parallel with the existing 254 mm (10-inch) pipeline. The project would also include the replacement of four existing compressor stations and would have an initial capacity of m 3 per day (620 MMcf per day). On July 24, 2013, the British Columbia Environmental Assessment Office issued an order accepting PNG s PLP into the environmental assessment process following PNG s filing of its project description. PNG expects to continue the environmental and consultation processes with a final investment decision on PLP expected in late The project is expected to generate approximately 1,

40 Pacific Northern Gas Ltd. Resource Plan for the PNG-West Pipeline System April 2014 to 2,400 direct person years of employment during construction. PNG has signed Transportation Reservation Agreements (TRA s) with both DCGS and Triton LNG for an aggregate of m 3 per day (520 MMcf per day) of natural gas transportation capacity on the proposed PNG pipeline expansion. The TRAs provide for cost recovery of development costs related to the PLP and are backstopped by letters of credit provided by the counterparties. 2.5 PNG s Regional CNG and LNG Strategy PNG anticipates playing a significant role in the development of the new natural gas economy in Northern B.C. and in other regions north of the Province. PNG is exploring the opportunity to leverage its existing pipeline transmission and distribution systems to provide or supply facilities for the micro-scale production of CNG and LNG near demand loads and to develop new CNG and LNG distribution services to its customers. PNG s system has the potential to be an integral part of a regional LNG strategy by facilitating service to several site locations for micro-scale LNG, focused on domestic gas consumption for which PNG would develop LNG transport tariffs and incentives to assist in conversions. In Northern B.C., the regional CNG and LNG business fundamentals are the strongest in North America due to the low price for natural gas relative to the high price for diesel fuel. These fundamentals are further enhanced by the large amount of remote and offgrid diesel-fueled power generation in place throughout Northern Canada. Remote power markets create ideal anchor customers for base-load LNG plants as they are inclined to enter longer-term sales contracts on a cost-plus/take-or-pay basis, which is the preferred contract structure. Additional target markets include high fuel volume end-use equipment in the oil and gas, mining, marine and rail sectors, including significant opportunity to displace diesel consumption in heavy mine haul trucking applications in the next three to five years. Additional opportunity exists for the on-road trucking sector, however this is expected to have the longest time to conversion due to small per-unit fuel use and time required for the build-out of a retail supply network

41 Pacific Northern Gas Ltd. Resource Plan for the PNG-West Pipeline System April Industry Overview Commodity Pricing The fundamentals for the distributed CNG/LNG business remain strong as forward curves and longer-term forecasts for natural gas and crude oil continue to support the minimum energy spread of 10 to 15:1, allowing for natural gas adoption to displace higher-cost fuels and reduce harmful emissions associated with refined petroleum products Equipment Manufacturing The vehicle manufacturing industry continues to move forward with increased manufacturing capacity of CNG/LNG-fueled equipment along the full natural gas value and supply chain on the part of numerous international equipment manufacturers. End users are moving beyond demonstration projects in the high volume use segments of oil and gas drilling and fracking and mining operations. In addition, both the marine and rail sectors continue to make strides in adoption of CNG/LNG as a fuel source. There are now over 40 planned marine vessels for use in North America driven by the requirement to meet new emission standards set by emission control areas (ECA). The rail industry is engaged in a number of pilot projects in order to knockdown logistical and regulatory barriers with the objective of wide spread adoption of natural gas as a fuel source within the next decade. Developments in the on-road trucking sector continue to move forward. Although this market has the largest potential, end-use economics, reliability of first-generation technology and logistical concerns continue to present significant challenges Policy and Legislation FortisBC Energy Inc. (FEI) continues to be the dominant leader in the CNG/LNG space in B.C., undertaking projects to further develop the CNG and LNG fuel supply chains in order to attract new customers and applications for the use of natural gas. FEI has been successful in working with the B.C. Government to further policy and legislation for expanding the use of natural gas as a fuel source. In this regard, FEI was recently permitted to undertake a $400 million expansion of their Tilbury LNG peaker plant located near Vancouver with permission to include this capital investment within their utility rate base. In addition, through Order in Council 557, the B.C. Government has

42 Pacific Northern Gas Ltd. Resource Plan for the PNG-West Pipeline System April 2014 established a liquefaction toll for LNG at $4.35/GJ PNG Market Development To date, PNG s activities in the area of distributed CNG/LNG have been focused in the Northeastern region in support of the conditionally-approved CNG Virtual Pipeline proposed to operate between Dawson Creek and Tumbler Ridge. While PNG continues to work with existing and potential industrial customers 29 in Tumbler Ridge in order to secure firm demand that will support the addition of CNG to the Tumbler Ridge gas supply portfolio, PNG is also working to identify potential CNG and LNG opportunities in the PNG-West service area. PNG believes it to be in the public interest to make bulk CNG available to a wide customer segment in order to support transport companies desire to adopt natural gas either for their own fuel purposes or in providing natural gas fuel service to remote industrial sites such as oil and gas production facilities, while ensuring that the community at large is able to participate in the natural gas economy through new services and customer loads. In regard to LNG, there has been a noted increase in demand for distributed service in the marketplace, particularly in forecast deliveries to the Northwest Territories and the Yukon anticipated in 2014 and to expand significantly in At present, cost-effective LNG supply is only available from FEI out of the Lower Mainland, presenting several logistical challenges to effectively serving the northern regions. Regional LNG is designed to have smaller liquefaction plants located much closer to the intended load thereby reducing the supply risk, increasing safety due to lower transport distances, and reducing GHG emissions. Potential higher costs of production associated with smaller plants is equalized and offset by anticipated transport savings. 2.6 Supply Outlook B.C. is the second largest provincial producer of natural gas in Canada. All of the production is situated in the Western Canadian Sedimentary Basin (WCSB) in Northeast B.C.(Figure 9). The NEB estimates the remaining marketable and undiscovered reserves in the entire WCSB to be 24, m 3 (861 trillion cubic feet (Tcf)), of which 29 PNG(N.E.) is primarily engaged in discussion with Teck Coal, HD Mining, Anglo American and Walter Energy

43 Pacific Northern Gas Ltd. Resource Plan for the PNG-West Pipeline System April percent or 9, m 3 (349 Tcf) are from tight gas sources in the Horn River and in the B.C. portion of the Montney basins. 30 Declining production from the WCSB is being offset to a significant degree by increasing production from these tight-gas and shale gas reserves in Northeastern B.C.(Figure 10) and this trend is expected to accelerate over the planning period (Figure 11). 31 Figure 9: Location of Unconventional Natural Gas Reserves in British Columbia National Energy Board, Canada s Energy Future 2013; and National Energy Board, Ultimate Potential for Unconventional Natural Gas in Northeastern British Columbia s Horn River Basin, May TransCanada Pipelines shares this view, stating that: In the long term TransCanada expects WCSB supply to stabilize at current levels and then increase as shale gas gains more than offset declining conventional supply [and] TransCanada forecasts gas supply from the Horn River basin to be Bcf/d [and] TransCanada s Montney production forecast... is 2.8 Bcf/d [by 2020] (TCPL Restructuring Application filed with the NEB, Appendix C (Throughput Study), pp. 19, 30, 33) 32 National Energy Board, Ultimate Potential for Unconventional Natural Gas in Northeastern British Columbia s Horn River Basin, May

44 Bcf per day Pacific Northern Gas Ltd. Resource Plan for the PNG-West Pipeline System April 2014 Figure 10: Natural Gas Production from the Western Continental Sedimentary Basin 33 Figure 11: British Columbia Actual and Forecast Production (Source: NEB, OGC 34 ) British Columbia Actual and Forecast Production (Bcf per day) Forecast Range NEB Reference Scenario Actual (Source: OGC) Northwest Gas Association 2014 Outlook, and the NEB, Canada s Energy Future 2013, November National Energy Board Projections (Nov. 2011) and B.C. Oil and Gas Commission producer reported volumes ( )

45 Bcf per day Pacific Northern Gas Ltd. Resource Plan for the PNG-West Pipeline System April 2014 Figure 12: British Columbia Actual and Forecast Production NEB Reference Forecast (Source: NEB, OGC 35 ) British Columbia Actual and Forecast Production NEB Reference Forecast (Bcf per day) Conventional Shale (Horn River) Tight (Montney) A direct result of this shift in production is that an increasing amount of production in B.C. is moving into Alberta to serve incremental demand from the oilsand s steam assisted gravity drainage (SAGD) operations, and to move to eastern markets via the TransCanada and Alliance pipelines (Figure 13). Figure 13: Disposition of Marketable Natural Gas in B.C.36 45,000 40,000 35,000 30,000 Disposition of Marketable Natural Gas in BC (10 6 m 3 ) BC Consumption Spectra to US through Huntington To Alberta 10 6 m 3 25,000 20,000 15,000 10,000 5, ibid 36 MEMPR Monthly Statistics

46 Pacific Northern Gas Ltd. Resource Plan for the PNG-West Pipeline System April 2014 As a result of producers increased access to the Alberta market, the natural gas market at Station 2 has become increasingly isolated and has begun to lose some liquidity as producers become increasingly reluctant to serve what they view as a seasonal market. The cause of recent price spikes at Station 2 can arguably be attributed somewhat to the changing movements of gas into the more liquid Alberta market to serve high demand in Alberta, Central Canada and the Eastern U.S. as a result of extraordinarily cold weather during the past winter. In response to increased gas demand during the recent cold snap in February, the daily spot price exceeded the 30 day moving average by more than one dollar on 11 days, and jumped to over $20 per GJ on February 6, 2014 (Figure 14). Figure 14: Station 2 Daily Gas Price (January 2013 to March 2014) $25.00 Stn 2 Daily Price January March 2014 ($/GJ) $20.00 $20.19 $15.00 $10.00 $5.00 $- 1/01/13 2/01/13 3/01/13 4/01/13 5/01/13 6/01/13 7/01/13 8/01/13 9/01/13 10/01/13 11/01/13 12/01/13 1/01/14 2/01/14 3/01/ A Comparison of Energy Costs: PNG-West Burner Tip Rates and Electricity Introduction Based on the results of the REUS undertaken by PNG in 2013, described in Section 3, electricity is the most popular alternative heating fuel in PNG s service areas. Oil and propane have very low levels of penetration, and customers have been switching away from these fuels. This operating cost comparison therefore focuses on electricity as the main competitor to natural gas

47 Pacific Northern Gas Ltd. Resource Plan for the PNG-West Pipeline System April 2014 Forecast Electricity Rates BC Hydro rates were forecast based on the recent 10-year rates plan announced jointly with the B.C. Government, which provided caps for the projected increases for the next five years 37. After 2019, price increases have been forecast at a low one percent per annum, assuming that there will be limited appetite for any further increases (Figure 17). For modelling purposes, the rate used is based on the average annual residential consumption in B.C. Hydro s service territory, of 11,000 kwh. This equates to roughly 75 percent consumption at the base Step 1 rate, and 25 percent at the higher residential conservation or Step 2 rate. The Step 1 rate has been retained for comparative purposes on the chart, as it shows that the competitiveness of natural gas with electricity is dependent on both the energy efficiency of the household in question, and the design of the current electricity conservation rate. Carbon Tax on Natural Gas The future of the B.C. carbon tax remains a relative unknown, however further increases in the B.C. carbon tax beyond the current rate of $30 per tonne of carbon pollution, or its equivalent of $1.4898/GJ for natural gas, are not anticipated until other jurisdictions in North America start implementing similar taxes. 38 For modelling purposes, the carbon tax has been kept constant until 2017, with provision for moderate increases after that to The current reference case assumes a doubling of the carbon tax after 2017 to $2.98/GJ ($60 per ton) in Natural Gas Commodity Costs In developing the comparison, long-term forecasts were obtained for Henry Hub from a number of sources. These are shown in the table below, including an average based on all of the forecasts. The NEB high and low forecasts provide the widest range, bracketing all the other forecasts, while the forecast of the US Energy Information Administration (EIA) from the 2013 Annual Energy Outlook provides a much tighter range of forecast gas costs. Forecasts provided by Sproule and GLJ Gas occupy the 37 BC Hydro s current F2014 rates have been set as final by BCUC Order No. G-77-12A, subject to acceptance by the BCUC of BC Hydro s F2014 DSM expenditures and they will expire on March 31,

48 Pacific Northern Gas Ltd. Resource Plan for the PNG-West Pipeline System April 2014 middle ground. Figure 15: Henry Hub Natural Gas Price Forecasts US$ per mmbtu Natural Gas Price Forecast for Henry Hub (2014 US$ per mmbtu) NEB-Ref NEB-Low NEB-High Sproule GLJ Gas EIA-Ref EIA-Low Growth EIA-High growth Average Of greater relevance for PNG is the gas commodity price forecast for Westcoast Station 2 which is based on an average of available long-term gas price forecast from Sproule and GLJ Gas. These are considered to be adequate for the purposes of the operating cost comparison, especially in light of how closely they track the average forecast for Henry Hub, and the lack of sensitivity to gas commodity prices in the current gas cost competitiveness model (discussed below). Sensitivity to commodity costs was tested through the use of the NEB s High gas price forecast scenario, adjusted for Station 2 and converted to nominal CAD. Both the reference-case average of Sproule and GLJ Gas forecasts and the NEB High forecast are shown in the graph below

49 Pacific Northern Gas Ltd. Resource Plan for the PNG-West Pipeline System April 2014 Figure 16: Station 2 Natural Gas Price Forecasts 8.00 Station 2 Natural Gas Price Forecasts (in nominal $ per GJ) CAD$ per GJ NEB-High Sproule GLJ Average excl NEB High PNG Delivery Costs Delivery charges are assumed to remain constant in real terms, only rising by forecast inflation. The PNG demand forecast is relatively flat, resulting in little volume risk to the delivery margins in the short to medium term. If any of the small-scale LNG projects occur, volumes on the PNG-West system could increase dramatically, lowering delivery charges. As a conservative scenario, delivery charges are therefore assumed to remain constant in real terms over the period Comparison of Gas and Electricity Costs Based on the reference gas price forecast shown in Figure 17, and assuming a conservative doubling of the carbon tax to 2024, natural gas remains competitive with electricity for a household consuming an average amount of electricity per annum. Only for households which are able to retain their consumption within the Step 1 rate is electricity a competitive alternative within the next 2 years. After 2016, the competitiveness of electricity relative to natural gas declines, as the proposed electricity rate increases take effect. For the average B.C. household, the projected electricity rate increases make electricity a less attractive fuel proposition than natural gas for the next 5 years

50 Pacific Northern Gas Ltd. Resource Plan for the PNG-West Pipeline System April 2014 Figure 17: Residential Gas Rates vs. Electricity Equivalent (Reference Gas Price Forecast) $30 Residential Gas Rates vs. Electricity Equivalent PNG-West (Reference gas price forecast) $25 $/GJ $20 $15 $10 $4.71 $4.89 $5.05 $5.15 $5.25 $5.35 $5.45 $5.55 $3.99 $4.05 $4.16 $ $ $12.32 $12.50 $12.69 $12.88 $13.07 $13.27 $13.47 $13.67 $13.88 $5 $0 Basic Monthly Charge Delivery Charge Gas Commodity Charge Carbon Tax Electricity 90% Efficiency Step 1 Elec 90% efficiency Notes: -Carbon tax rates of $1.4898/GJ assumed constant till 2017, doubling to 2024 for illustrative purposes - Rates based on the forecast consumption of an average household - Relative efficiency of electricity is assumed to be 90% - Electricity rate assumes average annual electricity consumption of 11,000kWh, or 75% consumption at the Step 1 rate, and 25% at the higher conservation rate - Step 1 rates are provided for comparative purposes A high natural gas price scenario was also run using the highest gas price forecast based on data provided by the NEB ( Figure 18). This significantly narrows the competitiveness gap between gas and electricity as a heating fuel for the average household; however, gas remains slightly cheaper than electricity throughout the 10-year forecast period. This result is sensitive to increases in the carbon tax above $60 per tonne, and to non-financial considerations by households due to factors such as perceived lower greenhouse gas emissions from electricity consumption in B.C. However, it also clearly illustrates that the basis for the cost competitiveness of natural gas stems mainly from the design of the electricity conservation rate tariff in B.C

51 $/GJ Pacific Northern Gas Ltd. Resource Plan for the PNG-West Pipeline System April 2014 Figure 18: Residential Gas Rates vs. Electricity Equivalent (High Gas Price Forecast) $30 Residential Gas Rates vs. Electricity Equivalent PNG-West (High gas price forecast) $25 $20 $4.79 $5.75 $5.94 $6.21 $6.48 $6.77 $7.06 $7.35 $7.60 $7.83 $8.05 $15 $ $ $12.32 $12.50 $12.69 $12.88 $13.07 $13.27 $13.47 $13.67 $13.88 $10 $5 $0 Basic Monthly Charge Delivery Charge Gas Commodity Charge Carbon Tax Electricity 90% Efficiency Step 1 Elec 90% efficiency Notes: -Carbon tax rates of $1.4898/GJ assumed constant till 2017, doubling to 2024 for illustrative purposes - Rates based on the forecast consumption of an average household - Relative efficiency of electricity is assumed to be 90% - Electricity rate assumes average annual electricity consumption of 11,000kWh, or 75% consumption at the Step 1 rate, and 25% at the higher conservation rate - Step 1 rates are provided for comparative purposes Likelihood of Fuel Switching Based REUS Results The above analysis incorporates only financial costs, and does not take the possible impact of other factors into account. The REUS results shed some light on other possible motivations for shifting from natural gas. Natural gas is the dominant fuel used for heating in 90.8 percent of dwellings across all PNG service areas, with a slightly lower proportion in PNG-West of 84 percent. Electricity is more popular as a heating fuel in the western regions of PNG-West, accounting for 10.7 percent of households, but only 4.2 percent over the entire PNG service area. Only four percent of households have changed their main heating fuel over the past 5 years, and in a majority (52.5 percent) of cases there was a shift away from natural gas. The rate of switching was highest in the PNG-West service area, at 7.3 percent of households, and of those who had switched, 62.6 percent had moved away from natural gas. Electricity is also more popular as an additional or supplementary fuel in the western region of PNG-West, used by 53.2 percent of respondents. It is worth noting

52 Pacific Northern Gas Ltd. Resource Plan for the PNG-West Pipeline System April 2014 that residential gas rates 40 are substantially higher in the PNG-West ($15.705/GJ) compared to the other service areas ($6.542 in Dawson Creek, $6.74/GJ in Fort St. John and $ in Tumbler Ridge) which may explain the greater shift away from natural gas and higher penetration rate of electricity for space heating in the PNG-West service area. Of those who have shifted away from natural gas over the past 5 years, lower income households have slightly lower rates of shifting (46 percent for those earning less than $40,000 per annum) and around 57 percent households earning above that. Attitudes to natural gas differed between those with gas or electrical space heating. Those with natural gas heating were almost 10 percent more likely to strongly agree with the statement that natural gas is a clean and efficient energy source. While only a very small proportion strongly disagreed with the statement, those who did were almost twice as likely to have electricity as the primary space heating fuel (3.2 percent to 1.7 percent of those with natural gas). A key question in the REUS asked residents if they believed it is cheaper to heat a home with natural gas than it is with electricity, the results of which are summarized in the figure that follows. Of those with natural gas space heating, only 4.8 percent strongly disagreed, compared to 23.7 percent of those with electric space heating. Similarly, 29 percent of households with natural gas heating strongly agreed that heating with gas is cheaper compared to only 6.9 percent of those with electrical heating. A stark difference remains even when combining those who agree with those who strongly agree: 49.4 percent of those with natural gas agree that heating with natural gas is cheaper, compared to only 12.9 percent of households with electrical space heating. While the differences between PNG-West and the other service areas do suggest that the cost differences between natural gas and electricity have caused some households to switch away from gas for heating purposes, households themselves don t strongly identify with cost as a reason to conserve energy. 40 PNG RS1 Residential tariff interim rates effective January 1,

53 Pacific Northern Gas Ltd. Resource Plan for the PNG-West Pipeline System April 2014 Figure 19: REUS Results Cost Effectiveness of Natural Gas vs Electricity J1i - It is cheaper to heat a home with natural gas than it is with electricity Strongly Agree 4 Neither Agree or Disagree 2 Strongly Disagree 7% 6% 11% 5% 5% 21% 24% 29% 41% 52% 0% 10% 20% 30% 40% 50% 60% Electric Natural Gas There was no discernible difference in attitude between those with natural gas or electrical space heating, with the largest grouping neutral on the statement: I conserve energy because it saves money not because it helps the environment. Almost 10 percent (9.8 percent) of households strongly disagreed, with around 14 percent strongly agreeing with the statement. If opinions are compared on a simplified agree vs. disagree basis, then 25 percent disagree while 36 percent agree that they conserve energy to save money. Figure 20: REUS Results Energy Conservation and Cost Savings vs Environmental Impact J1l - I conserve energy because it saves money not because it helps the environment Strongly Agree Neither Agree or Disagree 4 2 Strongly Disagree 12.0% 13.5% 20.6% 22.7% 13.2% 15.5% 10.3% 9.6% 43.9% 38.7% 0% 10% 20% 30% 40% 50% Electric Natural Gas

54 Pacific Northern Gas Ltd. Resource Plan for the PNG-West Pipeline System April 2014 Based on the higher penetration of electricity for space heating in the PNG-West service area, it does appear that households are responsive to price impacts. However, given the current forecast gas and electricity costs, it appears that further shifts to electricity are unlikely, until such time as the BC Hydro conservation rate changes or the carbon tax increases significantly

55 Pacific Northern Gas Ltd. Resource Plan for the PNG-West Pipeline System April RESIDENTIAL END-USE FORECASTING MODEL 3.1 Introduction Commission Order G approved the PNG(N.E.) 2012 Resource Plan and directed PNG(N.E.) to provide a more rigorous load forecast. In its Reasons for Decision attached to the Order, the Commission expressed its concern regarding the inadequate level of explanations provided by PNG(N.E.) regarding its load forecast and identified several BCUC Information Requests (IRs) to which, in the Commission s view, PNG(N.E.) had not provided the requested information. PNG notes that the IRs that were identified related to the method of forecasting customer additions and the use per account of both residential and small commercial customers. In response to this direction, PNG has spent a considerable amount of resources and effort in refining its forecasting method. The residential forecast is now based on an end-use methodology that determines the average residential use per account based on a number of influencing factors including dwelling type, construction, the numbers and types of natural gas appliances in the home, and the behaviour of residents. The relationship between each of the influencing factors and the residential use per account was determined through a Conditional Demand Analysis (CDA) with data acquired through a REUS. A complete description of the CDA is found in APPENDIX B: CONDITIONAL DEMAND ANALYSIS. 3.2 Residential End Use Survey PNG commissioned a REUS in the fall of 2013 that covered all of its service areas. The goal of this survey was to better understand the demographic makeup and consumption behaviour of PNG s residential customers. Such information, combined with customers historical billed consumption data is a key input to PNG s development of a residential end-use model that forms the basis for a refined residential annual and peak day demand forecasting model, as well as for the assessment of the impact of various demand-side measures being contemplated. The sample plan for the PNG REUS was designed to provide representative samples from three distinct geographic regions: PNG(N.E.), PNG-West (Western Sample) and PNG-West (Eastern Sample). The characteristics of each region are described in the following:

56 Pacific Northern Gas Ltd. Resource Plan for the PNG-West Pipeline System April 2014 i. The PNG(N.E.) region includes the service areas of Fort St. John, Dawson Creek and Tumbler Ridge. This region is characterized by colder winters and shorter, warmer summers than experienced in the other regions. Normalized heating degree days in this region vary from approximately 5,000 in Tumbler Ridge to 5,600 in Fort St. John. The main economic activities of the PNG(N.E.) region are oil and gas production, coal mining, forestry and agriculture. Cattle and horse ranching as well as grain farming are the important local agricultural activities. High demand for coal and gas, especially liquids rich gas, has spurred a rate of economic growth in the Peace River region that is one of the highest in the Province. ii. iii. The PNG-West (West) region is defined as that part of the PNG-West service area that includes the communities of Prince Rupert, Port Edward, Kitimat, Terrace and Thornhill. This region is influenced by the north coast marine climate and experiences warmer winters than experienced in the other regions. Normalized heating degree days in this region vary from approximately 3,400 in Prince Rupert to 3,700 in Kitimat. In addition, the municipalities in this region have experienced some economic growth due to an increased workforce in response to the increased volumes of container traffic at the Port of Prince Rupert and the feasibility studies for numerous LNG liquefaction plants being proposed for Prince Rupert and Kitimat. The PNG-West (East) region is defined as that part of the PNG-West service area that lies east of Terrace/Thornhill and includes the communities of Smithers, Houston, Vanderhoof, Fort St. James and Burns Lake. This region has a drier and colder climate than experienced in the western region. Normalized heating degree days in this region vary from approximately 4,600 in Houston to 5,600 in Burns Lake. The main economic activities of the region are forestry and agriculture. The strength of the local economies is therefore susceptible to the economic cycles of the resource sectors; most notable are recent declines due to weakness in the forestry sector. Consequently, this region is characterized by a lower rate of housing additions compared to the western region. A target of 1,800 completed surveys was set for the PNG REUS, with 600 completed surveys desired per region. This target was expected to yield an overall accuracy of plus or minus 2.3 percent at the utility level using a 95 percent confidence interval, and plus

57 Pacific Northern Gas Ltd. Resource Plan for the PNG-West Pipeline System April 2014 or minus 4.0 percent in each region. A total of 2,904 valid survey responses were received, yielding an overall response rate of 32 percent, considerably higher than the 20 percent response assumption used in the sampling plan. A full discussion of the results of the 2013 REUS, along with a copy of the REUS questionnaire is found in APPENDIX C: RESIDENTIAL END-USE STUDY. 3.3 Residential End-Use Model The results of the 2013 REUS have been used to inform the development of a residential end-use model that reflects the mix of natural gas space and water heating, and other natural gas appliances in the each of the dwelling types found in PNG s service areas. PNG has used a CDA technique to develop end-use models for single family dwellings (SFD), multi-family dwellings (MFD) such as duplexes, triplexes and townhouses, apartments and condominiums in vertical subdivisions (VS), and mobile homes (MH). The following discussion of the penetration rate and portion of the overall demand of each end-use follows from an analysis of the data returned through the 2013 REUS and the completion of the residential end-use model. 3.4 Residential Consumption End-Use Characteristics As expected from PNG s operating experience, natural gas is the dominant fuel choice for space heating (Figure 21). Natural gas space heating has the highest penetration rate in PNG(N.E.) s service areas, where 98 percent of dwellings use gas as the main fuel for heating. Penetration rates in the PNG-West service area are slightly lower at 84 percent, with no significant difference between the eastern and western regions. Natural gas is also the most common fuel used for domestic water heating, where nearly 80 percent of all homes in PNG(N.E.) s service areas have a natural gas water heater. Penetration rates in PNG-West service area are lower, ranging from 61 to 67 percent (Figure 21)

58 Pacific Northern Gas Ltd. Resource Plan for the PNG-West Pipeline System April 2014 Figure 21: Penetration of Primary Space Heating Figure 22: Penetration of Domestic Hot Water Penetration by End Use (Primary Space Heating) Penetration by End Use (Domestic Hot Water) % % 95.00% 90.00% 90.00% 80.00% 85.00% 70.00% 80.00% 60.00% 75.00% PNG(N.E.) PNG-West (Eastern Region) PNG-West (Western Region) 50.00% PNG(N.E.) PNG-West (Eastern Region) PNG-West (Western Region) Figure 23: Penetration of Secondary Space Heating Figure 24: Penetration of Fireplaces Penetration by End Use (Secondary Space Heating) Penetration by End Use (Fireplaces) 25.00% 50.00% 20.00% 40.00% 15.00% 30.00% 10.00% 20.00% 5.00% 10.00% 0.00% PNG(N.E.) PNG-West (Eastern Region) PNG-West (Western Region) 0.00% PNG(N.E.) PNG-West (Eastern Region) PNG-West (Western Region) Natural gas is also used as a supplemental heating fuel in residential dwellings, with its prevalence slightly higher in the PNG-West service area at 22 to 25 percent compared to 14 percent in PNG(N.E.) (Figure 23). Natural gas fireplaces are found in over one third of homes in the PNG-West service area, and in about one quarter of homes in the PNG(N.E.) service areas (Figure 24). The penetration rates of other natural gas end-uses are shown in Figure 25, below. The existence of natural gas stoves, ranges and ovens is slightly higher in the PNG-West service area, and the use of natural gas barbeques is slightly more prevalent in the PNG(N.E.) service areas

59 Pacific Northern Gas Ltd. Resource Plan for the PNG-West Pipeline System April 2014 Figure 25: Ancillary natural gas end-uses Penetration by End Use (Cooking) Penetration by End Use (BBQ's) 25.00% 10.00% 20.00% 8.00% 15.00% 6.00% 10.00% 4.00% 5.00% 2.00% 0.00% PNG(N.E.) PNG-West (Eastern Region) PNG-West (Western Region) 0.00% PNG(N.E.) PNG-West (Eastern Region) PNG-West (Western Region) Penetration by End Use (Clothes Dryers) 10.00% 8.00% 6.00% 4.00% 2.00% 0.00% PNG(N.E.) PNG-West (Eastern Region) PNG-West (Western Region) Annual Use per Account As expected solely from the differences in climate between the Northeast and the Western and Eastern portions of PNG-West, the average annual use per account differs markedly between these three regions (Figure 26). The distribution of the use per account in PNG-West is further characterized by two peaks at around 75 to 90 GJ and 30 to 40 GJ. This two-peak distribution is attributable to the higher occurrence of electric baseboard heaters, and to a lesser extent, wood burning stoves, that displace natural gas to serve the space heating demand in a significant portion of dwellings. The distributions in the PNG(N.E.) delivery areas show a more pronounced single peak owing to the almost exclusive use of natural gas space heating in these areas

60 Frequency Frequency Pacific Northern Gas Ltd. Resource Plan for the PNG-West Pipeline System April 2014 Figure 26: Distribution of Use per Account (All Areas) 2.0% UPA Frequency Distribution Annual Use per Account (GJ/year) PNG-West (Western Region) Average = 67.9 GJ/y 1.5% 1.0% 0.5% 0.0% GJ per year 2.0% UPA Frequency Distribution Annual Use per Account (GJ/year) PNG-West (Eastern Region) Average = 75.0 GJ/y 1.5% 1.0% 0.5% 0.0% GJ per year

61 Pacific Northern Gas Ltd. Resource Plan for the PNG-West Pipeline System April 2014 Figure 26 (cont.) 2.5% 2.0% Frequency Frequency UPA Frequency Distribution Annual Use per Account (GJ/year) Fort St. John Average = GJ/y 1.5% 1.0% 0.5% 0.0% GJ per year 2.5% UPA Frequency Distribution Annual Use per Account (GJ/year) Dawson Creek Average = GJ/y 2.0% 1.5% 1.0% 0.5% 0.0% GJ per year

62 Pacific Northern Gas Ltd. Resource Plan for the PNG-West Pipeline System April 2014 Figure 26 (cont.) 4.0% UPA Frequency Distribution Annual Use per Account (GJ/year) Tumbler Ridge Average = 81.8 GJ/y Frequency 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% GJ per year Space heating and domestic hot water account for 90 percent of the demand for natural gas by residential customers in all of PNG s service areas (Figure 27). Owing to the warmer climate, the portion attributed to space heating is slightly lower in the western part of the PNG-West service area at 45 percent, than in the eastern part or in PNG(N.E.) (55 to 62 percent). Natural gas demand for domestic hot water comprises more than one third of the overall usage, higher than expected based on the results from FEI s 2008 REUS and CDA showing approximately 20 percent of the natural gas demand is on account of the domestic hot water load FortisBC 2008 Residential End Use Study, p

63 Pacific Northern Gas Ltd. Resource Plan for the PNG-West Pipeline System April 2014 Figure 27: End Uses of Natural Gas (All Areas) PNG-West (Western Region) (67.9 GJ) Secondary Heating 0% Fireplaces 10% Domestic Water 40% Cooking 3% BBQ 1% Primary Heating 45% Clothes Dryers 1% PNG-West (Eastern Region) (75.0 GJ) Domestic Water 33% Primary Heating 55% Secondary Heating 0% BBQ 1% Fireplaces 8% Cooking 2% Clothes Dryers 1%

64 Pacific Northern Gas Ltd. Resource Plan for the PNG-West Pipeline System April 2014 Figure 27 (cont.) Fort St. John (115.2 GJ) Domestic Water 36% Primary Heating 55% Secondary Heating 0% Fireplaces 5% Cooking 2% BBQ 1% Clothes Dryers 1% Dawson Creek (103.3 GJ) Primary Heating 58% Domestic Water 35% Secondary Heating 0% Fireplaces 4% BBQ 1% Cooking 1% Clothes Dryers 1% Tumbler Ridge (81.8 GJ) Secondary Heating 0% Domestic Water 36% Fireplaces 1% Cooking 1% Primary Heating 62% BBQ 0% Clothes Dryers 0%

65 Pacific Northern Gas Ltd. Resource Plan for the PNG-West Pipeline System April 2014 Finally, the average demand for each end-use by building type is shown below. Figure 28: Average End Use by Building Type (All Areas) End-uses by Building Type PNG-West (West) GJ/year SFD MFD VS MH Total Other Domestic Hot Water Space Heating End-uses by Building Type PNG-West (East) GJ/year SFD MFD VS MH Total Other Domestic Hot Water Space Heating

66 GJ/year Pacific Northern Gas Ltd. Resource Plan for the PNG-West Pipeline System April 2014 Figure 28 (cont.) End-uses by Building Type Fort St. John GJ/year SFD MFD VS MH Total Other Domestic Hot Water Space Heating End-uses by Building Type Dawson Creek GJ/year SFD MFD VS MH Total Other Domestic Hot Water Space Heating End-uses by Building Type Tumbler Ridge SFD MFD VS MH Total Other Domestic Hot Water Space Heating

67 Pacific Northern Gas Ltd. Resource Plan for the PNG-West Pipeline System April DEMAND FORECASTING 4.1 Introduction The two measures for forecasting customer s consumption patterns are annual and peak demand. The annual demand forecast predicts the consumption by a utility s customers over the course of a calendar year. This demand is typically presented as normalized, that is the demand that would occur in response to an average annual temperature pattern. Its purposes are threefold: (i) to allow planning for securing an adequate supply of natural gas; (ii) to provide an input into the determination of customer rates for revenue requirement applications as well as forecasts of rates made in the course of CPCN applications and negotiated rate settlements; and (iii) to provide a baseline for assessing the impact of DSM programs put into place during the forecast period. The primary purpose of the peak demand forecast, on the other hand, is to provide a forecast of the delivery capacity required during extreme cold weather in order to plan for physical expansions to existing pipeline capacity. PNG has prepared a gross demand forecast for the PNG-West division in accordance with the requirements of the resource planning process outlined in Section 1.3. This forecast reflects PNG s opinion regarding the most likely growth in demand over the planning period and forms the Reference Scenario. In addition, alternative demand scenarios were developed in order to provide some indication of the sensitivity of the demand forecasts to changes in forecast economic and climatic conditions as well as to provide a range of expected demands (Section 4.5). 4.2 Trends Influencing Demand PNG has identified the following factors that are expected to influence demand for natural gas over the forecast period Population Growth BC Stats forecast of household formations reflects the underlying dynamics in the region s demographics (Figure 29). The number of households is expected to increase on average 0.5 percent per year over the forecast period, with about 70 percent of that

68 Pacific Northern Gas Ltd. Resource Plan for the PNG-West Pipeline System April 2014 increase occurring in the first half of the forecast period. 42 Figure 29: Growth in the Number of Households Growth in the Number of Households (Relative to 2013) 112% Western Region Eastern Region 110% Growth relative to % 106% 104% 102% 100% Construction Trends New Construction In April 2013, B.C. adopted both the 2011 National Energy Code for Buildings (NECB) and ASHRAE 90.1 (2010) as compliance options in the BC Building Code for Large Residential, Industrial, Commercial and Industrial buildings effective December 20, The adoption is expected to better address climatic and construction practice conditions and strengthen the energy efficiency of new construction. By separate order the B.C. government also adopted the codes for new residential construction beginning in December Based on a report prepared by Stantec Consulting for the BC Ministry of Energy and Mines, the resulting decrease in energy demand for a newly constructed big box retail operation in Northern B.C. based on the new codes could be between 12 percent and 18 percent. For mid-rise commercial operations, the savings could be between 30 percent and 35 percent, while new mid-rise residential constructions will likely require 8 percent 42 BC Stats P.E.O.P.L.E 2013 Household Projections for the Nechako and North Coast Development Regions 43 Ministerial Order No. M Ministerial Order No. M

69 Pacific Northern Gas Ltd. Resource Plan for the PNG-West Pipeline System April 2014 to 10 percent less energy. 45 Changes in Residential Building Mix Customers in single family detached dwellings (SFD) make up approximately 85 percent of the residential housing, with duplexes and townhouses at six percent and mobile homes making up eight percent. This mix varies somewhat from the overall mix in the larger municipalities where there is a larger portion of multi-family dwellings and centrally metered apartments (Table 5). Table 5: Residential Housing Mix 46 SFD MFD Apartments Mobile Homes Prince Rupert 62.2% 20.1% 15.9% 1.8% Kitimat 75.0% 10.7% 11.4% 2.9% Terrace 69.8% 12.7% 13.2% 4.3% Smithers 69.9% 6.8% 15.8% 7.5% PNG-West 47 (Eastern Region) PNG-West 48 (Western Region) 83.9% 6.3% 0.4% 9.4% 85.0% 6.0% 0.3% 7.3% Building permits issued over the past 24 months in all major municipalities of PNG-West have been exclusively for the construction of SFD s. However, circumstantial evidence suggests that the mix of dwelling types in the Western region may change in the future. For example, current residential land zoning in Kitimat provides for an inventory of 114 SFD lots and 5 multi-family dwelling (MFD) zoned lots that could provide housing for up to 169 MFD s BC Energy Code Comparison (Final Report), Stantec Consulting, p Focus on Geography Series, 2011 Census ( 47 Residential End Use Survey results 48 ibid 49 Kitimat Housing Facts, January 2014 (

70 Pacific Northern Gas Ltd. Resource Plan for the PNG-West Pipeline System April 2014 Penetration of Electric Space Heat The price competitiveness of natural gas with respect to electricity, and the public s perceptions of the environmental impact of burning fossil fuels in general, and natural gas in particular, will determine to some degree new home buyers preference for natural gas space heating. The other determinant is the economics of installing natural gas forced air furnaces or boilers versus baseboard heaters. PNG has provided an analysis of the price competiveness of natural gas as compared to electricity (Section 2.7) that shows that natural gas remains the most cost effective heating fuel over the next ten years Residential Energy Efficiency Retrofits Renewal of Residential Furnace Stock Changes to the building code in 1990 mandated mid-efficiency furnaces as the minimum requirement for homes built since that time. Changes to building code legislation stipulated that high-efficiency furnaces be required for new construction as of For retrofit activity, the same minimum efficiency requirement was put in place as of December Over time, existing low- and mid-efficiency furnaces will be replaced with high efficiency models, significantly lowering the amount of natural gas consumed for space heating in those dwellings. Renewal of Domestic Hot Water Heaters The BC Government-enacted Energy Efficiency Regulation has mandated a minimum Energy Factor (EF) of 0.70 for natural gas storage type hot water heaters with an input rating of less than or equal to 75,000 btu/hr sold and installed after September 1, The Office of Energy Efficiency (OEE) of Natural Resources Canada (NRCan) is proposing to amend federal energy efficiency regulations under which dealers in Canada would be required to comply with higher efficiency requirements for gas and oil water heaters and new reporting requirements for electric water heaters. Under the proposed amendment, tank-type hot water heaters with an input rating of less than 75,000 btu/hr will be required to have a minimum EF of 0.80 beginning in Energy Efficiency Standards Regulation, Item 21 specifies an efficiency factor of 0.70 less x the volume of the tank. The efficiency factor therefore varies from 66 to 51% for tank sizes of 76 to 380 litres, respectively

71 Pacific Northern Gas Ltd. Resource Plan for the PNG-West Pipeline System April 2014 As well, tankless gas water heaters with higher efficiency are making gains in the market. The efficiency of most tankless models meets or exceeds EF 0.80 (non - condensing) and EF 0.90 (condensing). Most gas -fired commercial water heaters comply with the US minimum thermal efficiency of 80 percent and there are many condensing commercial storage models having thermal efficiency of 92 percent and above Solar Hot Water Systems In common construction practice, the roof and wall spaces of residential dwellings are not built with weight and space requirements in mind for a future installation of a solar domestic hot water system. By taking these aspects into consideration during the initial building phase, significant cost savings are made if the homeowner later elects to install a solar domestic hot water system. Since 2011, 48 municipalities in B.C. voluntarily adopted a new building regulation that requires all new single family homes in their communities to be built to accommodate the future installation of a solar hot water system. The intent of the regulation is to facilitate the cost-effective retrofitting of solar hot water systems onto roofs of residential dwellings. Dawson Creek and Fort St. John have adopted the regulations but none of the municipalities in PNG-West have at this time. 4.3 Annual Demand Forecast Residential Customers Customer Additions Forecasts For over the past decade, PNG has experienced a decline in the number of residential customers. In the early part of this period, this was due to both a reduction in the number of residents in the PNG-West service area as the declining fortunes of Methanex and the forest industry resulted in permanent job losses across the region, and a number of remaining customers leaving the utility and switching to electricity for their space and water heating needs. Since 2008, despite a return to a net immigration into the region, the number of new connections and reactivations of service have remained outpaced by the number of disconnection requests (Figure 30). However, this trend show signs of reversing, particularly in the western region, as residents perceptions of the cost competitiveness of electricity with respect to natural gas once again changes to favour natural gas (Figure 31)

72 Pacific Northern Gas Ltd. Resource Plan for the PNG-West Pipeline System April 2014 Figure 30: Trend in Residential Customer Count ( ) 20,500 20,000 Residential Customers (Midyear) ( ) Actual 2011 Resource Plan (Forecast) 19,500 19,000 Customers 18,500 18,000 17,500 17,000 16,500 16, Figure 31: Residential Customer Activity Residential Customer Activity Western Region Residential Customer Activity Eastern Region % 1.5% 0.5% 1.0% 0.0% -0.5% -1.0% -1.5% % 0.0% -0.5% -1.0% -1.5% % -2.0% -2.5% -2.5% Reactivations New Customers Removals Change in Customers Reactivations New Customers Removals Change in Customers For the purpose of forecasting residential customer additions over the planning period, PNG assumes that the trend in household formations in the regions served by PNG will be representative of the growth in customer additions resulting from new construction. PNG has determined a capture rate of new customers based on a comparison of the number of building permits issued over the past five years with the number of new customer service connections. Capture rates determined in this manner for new singlefamily dwellings are estimated to range from 65 percent in the western region, to 90 percent in the eastern region. PNG views these numbers as overly conservative since they do not account for the likelihood that new homes could take natural gas service solely for fireplaces and cooking appliances. In addition, not all dwellings permitted are

73 Pacific Northern Gas Ltd. Resource Plan for the PNG-West Pipeline System April 2014 constructed. PNG has also assumed that, beginning in 2015, meter reactivations will match and then outpace meter disconnections. PNG has incorporated a net recapture rate of existing dwellings as shown in Table 6 in the forecast. Table 6: Residential Customer Net Recapture Rate Forecast Net Recapture Rate (0.38%) 0.00% 0.25% 0.50% 0.50% 0.50% Use per Account Forecast New Construction Newly constructed homes in PNG-West s service area are expected to have a widely varying range of use per account profiles due to the type of housing, updates to the BC Building Code, and the use of electricity for space heating in some cases. PNG has incorporated these factors into its residential end-use forecasting model through the identification and development of four new-construction archetypes: the All Gas Single Family Dwelling ; the All Gas Multi-Family Dwelling ; the Mostly Electric Single Family Dwelling ; and the Most Electric Multi-Family Dwelling. These are described in APPENDIX D: BUILDING ARCHETYPES. The Reference Scenario assumes that new construction will consist of a mix of 75 percent single-family and 25 percent multi-family dwellings, somewhat higher than the overall mix of housing types in Prince Rupert, Kitimat and Terrace (Table 5) where PNG expects most of the construction activity to occur, and also reflective of the housing mix of the region overall which consists of 85 percent single family detached dwellings. Individually metered apartments will continue to comprise an insignificant portion of new construction. PNG has forecast that 90 percent of single family and multi-family new construction that include a natural gas connection and are therefore captured by PNG will incorporate natural gas furnaces rather than electric baseboards to provide space heating. This is slightly higher than the historical ratio of 85 percent in order to reflect PNG s view that buyers of new homes will respond to BC Hydro s forecast rate increases by again viewing natural gas as a competitive alternative. In summary, PNG s forecast of new construction dwelling types, as modeled by the four

74 Pacific Northern Gas Ltd. Resource Plan for the PNG-West Pipeline System April 2014 dwelling archetypes is shown in the following table. PNG has reflected the adoption of the new building code for single family homes in its archetypes through the incorporation of parameters that reflect increased insulation, draft-proofing and low emissivity windows. Table 7: Penetration of New-Construction Dwelling Archetypes New-Construction Archetype Penetration All Gas Single Family Dwelling 67.5% (75% SFD x 90% Gas Space Heating) Mostly Electric Single Family Dwelling 7.5% (75% SFD x 10% Gas Space Heating) All Gas Multi-Family Dwelling 22.5% (25% SFD x 90% Gas Space Heating) Most Electric Multi-Family Dwelling 2.5% (25% SFD x 10% Gas Space Heating) Impact of Furnace and Water Heater Replacements Based on the responses to PNG s 2013 REUS, the median age of natural gas furnaces in PNG-West is 14 years. PNG has forecast the replacements of standard and midefficiency furnaces as shown in Figure 32, based on a service life of 30 years. Based on the results of the CDA, the replacement of the existing mix of standard and midefficiency furnaces with high efficiency furnaces reduces the natural gas consumed for space heating by nearly 20 percent. Figure 32: Age Profile of PNG-West Residential Furnace Stock 10.0% 8.0% 6.0% Furnace Replacements (Portion of the Total Fleet) PNG-West (Western Region) PNG-West (Eastern Region) 4.0% 2.0% 0.0%

75 Pacific Northern Gas Ltd. Resource Plan for the PNG-West Pipeline System April 2014 The responses to PNG s 2013 REUS suggest that the median age of natural gas water heaters in PNG-West is eight years. PNG has forecast the replacements of water heaters as shown in Figure 33, based on a service life of 12 years, and the age profile of water heaters in PNG-West. Based on the results of the CDA, the replacement of the existing stock of hot water heaters with high efficiency models reduces the natural gas consumed for water heating by approximately 10 percent per household. Figure 33: Age Profile of PNG-West Domestic Hot Water Heater Stock 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% Water Heater Replacements (Portion of the Total Fleet) PNG-West (Western Region) PNG-West (Eastern Region) Forecast Use per Account The residential use per account has been steadily decreasing from over 115 GJ per year in the early 1990 s, to just over 65 GJ in Residential consumption has rebounded slightly and stabilized over the past three years at around 70 GJ (Figure 34). PNG expects that the residential use per account will remain in the range of 70 GJ over the next 10 years as customer recapture rates again exceed deactivations, and the change out of low efficiency furnaces and hot water heaters is offset by the construction of larger homes having gas ranges and gas fireplaces in addition to natural gas furnaces. After 2023, the rate of change out of furnaces and hot water heaters increases, driving the use per account downwards, albeit at a slower pace than over the historical period (Figure 35)

76 Pacific Northern Gas Ltd. Resource Plan for the PNG-West Pipeline System April 2014 Figure 34: Historical Trend in Residential Use per Account GJ/year Residential Use per Account ( ) Actual (Forecast 2014) 2011 Resource Plan Forecast GJ/year Figure 35: Forecast Residential Use per Account Residential Use per Account Historical and Forecast (Reference Scenario) ( ) Reference Scenario Small Commercial Customers The small commercial customer class is defined as commercial customers that consume less than 5,500 GJ per year

77 Pacific Northern Gas Ltd. Resource Plan for the PNG-West Pipeline System April Customer Additions Forecasts As with residential customers, PNG has also experienced a decline in the number of small commercial customers over the past decade. Figure 36: Trend in Small Commercial Customer Count ( ) 2,900 2,800 Small Commercial Customers (Midyear) ( ) Actual 2011 Resource Plan (Forecast) Customers 2,700 2,600 2,500 2,400 2,300 2,200 2,100 2, However, this trend also shows signs of reversing as customer reactivations and new connections begin to approach the number of deactivations, especially in the western region (Figure 37). Figure 37: Small Commercial Customer Activity 1.0% Commercial Customer Activity Western Region % 0.0% -0.5% % -1.5% -2.0% -2.5% Reactivations New Customers Removals Change in Customers PNG assumes that the trend in household formations in the regions served by PNG s gas distribution network will be a proxy for growth in small commercial customer additions. PNG assumes a capture rate of 85 percent for the small commercial market

78 GJ/year Pacific Northern Gas Ltd. Resource Plan for the PNG-West Pipeline System April 2014 PNG has also assumed that meter reactivations will match meter disconnections beginning in Accordingly, PNG has not incorporated any net recapture rate of existing commercial enterprises over the forecast period Use per Account Forecast PNG has forecast the use per account of its small commercial customers based on the long term historical trend. The small commercial use per account has been declining steadily over the past 25 years, with the decline averaging over 10 GJ per year during the period 1988 to 2007 (Figure 38). Since 2008, the declines have slowed to an average of one percent per year. An examination of both the long term and short term historical trends suggests that the long run asymptote is near 300 GJ (Figure 39). PNG has forecast the decline in use per account over the planning period as slowing exponentially and reaching 295 GJ by Figure 38: Historical Trend in Small Commercial Use per Account Small Commercial UPA ( ) Actual RP

79 Pacific Northern Gas Ltd. Resource Plan for the PNG-West Pipeline System April 2014 Figure 39: Forecast Small Commercial Use per Account Small Commercial Use per Account Historical and Forecast (Reference Scenario) ( ) GJ/year Reference Scenario Large Customer Forecasts Large customers, classified as either large commercial, industrial, seasonal or natural gas vehicle fleets (NGV), account for approximately one half of the annual demand on the system. The forecasts of the large customers are presented in Table 8. Table 8: Large Customer Forecast Large Customer and Transport Forecast 2013 Forecast Large Commercial Sales 77,296 70,600 Small Industrial Sales and Other 208, ,850 Commercial Transport 273, ,632 Industrial Firm Transport (ex Alcan) 80,611 86,967 Interruptible Sales and Transport (ex Alcan) 543, ,600 Alcan Firm Transport 429, ,970 Alcan Interruptible Sales and Transport 324, ,437 1,937,028 1,946,056 The large commercial customer class is defined as customers that consume more than 5,500 GJ per year. They are mainly hospitals, shopping centers and swimming pools that use natural gas for their space heating requirements. They exhibit a temperature sensitive load profile similar to the residential and small commercial customers. Some of the small industrial customers are sawmills that require natural gas for heating and lumber drying kilns. These customers tend to have a fairly constant gas demand

80 Pacific Northern Gas Ltd. Resource Plan for the PNG-West Pipeline System April 2014 throughout the year that is less affected by ambient air temperature than either commercial or residential customers. All of the seasonal customers are asphalt paving companies that cannot pave in the coldest or wettest periods, and therefore curtail their activities during the cold and wet winter months. The NGV customer operates a bus fleet and four NGV fueling stations and its natural gas requirements are more or less consistent throughout the year. All of these customers provided a forecast of their 2014 natural gas consumption to PNG during the summer of In some cases, PNG has adjusted the customer s forecast to align more closely with their historical operations. The adjusted forecasts are included in the annual revenue requirements applications and are the basis for the long-term forecast. With the exception of the load from Rio Tinto Alcan s aluminum smelter in Kitimat, PNG has held each individual industrial customer s forecast annual deliveries constant over the planning period, as the Company has no information to the contrary at this time. Additionally, PNG has maintained the existing number and type of large customers over the planning period. The Company has no information at this time that would suggest changes to this number. Rio Tinto Alcan and BC Hydro Over the past three years, Rio Tinto Alcan has consumed in the range of 750 to 900 TJ per year at its Kitimat smelter. The modernization of the Rio Tinto Alcan Kitimat smelter will increase its current production from 245,000 to over 400,000 tonnes per year and its annual gas consumption by approximately 450 TJ compared to As of September 2013, the Kitimat Modernization Project passed its halfway mark at 51 percent completion overall, with the construction component at 33 percent complete. 51 PNG expects that Alcan will begin ramping up its operations as early as Q and is forecast to consume 1,200 TJ of gas annually. 52 BC Hydro uses its power generation facility at Prince Rupert as an emergency backup during times when its 115 kva transmission line is disrupted. A major and prolonged 51 Kitimat Modernization Project Blueprint Magazine, Issue 10, Sept-Oct Alcan has entered into a service agreement with PNG for a firm contract demand of m 3 per day beginning November 1 st,

81 Pacific Northern Gas Ltd. Resource Plan for the PNG-West Pipeline System April 2014 outage occurred in April 2007 during which BC Hydro consumed over 160 TJ of gas to provide electricity to Prince Rupert and Port Edward. Since the likelihood of an outage of a similar scale reoccurring is remote and impossible to predict, the average historical consumption of BC Hydro is used as the basis for the forecast; consistent with the method applied to the other industrial transportation customers Company Use PNG consumes gas in the course of operating its system. Uses include compressor fuel, line heaters to heat natural gas when its pressure is reduced from transmission to distribution levels, office and shop heating, blow downs (venting) during maintenance, and unaccounted for gas volumes. An analysis of past levels of company use volumes expressed as a percentage of deliveries is the basis for the forecast of company use volumes (Table 9). Table 9: Company Use Coefficients Company Use Coefficients Compressor Fuel Gas Blow downs & Losses Line heaters & Office 0.89% 0.03 % 0.83 % Annual Demand Summary A gross demand forecast is comprised of the aggregation of the forecast demands developed for the sales and transportation customer classes as well as for Company use gas. The forecast for each customer class and for each year of the planning period is presented in Figure 40 and in tabular form in APPENDIX E: ANNUAL DEMAND. The annual demand is forecast to increase due to the additional demand expected from Rio Tinto Alcan assuming the modernization of the Kitimat aluminum smelter is completed in the second quarter of 2014 and the facility increases its gas consumption beginning January 1 st, Offsetting this gain is the forecast loss of residential and small commercial market demand over the second half of the planning period due to decreases in the residential and small commercial use per accounts (Figure 41). The decrease in demand after 2021 is due to the forecast slowing of household additions such that residential demand from new households is no longer sufficient to offset completely the losses due to the forecast continued reduction in residential use per account

82 GJ GJ Pacific Northern Gas Ltd. Resource Plan for the PNG-West Pipeline System April 2014 Figure 40: Forecast of Total Gross Annual Demand 53 PNG-West Forecast of Annual Demand (2013 to 2033) (Reference Scenario) 5,000,000 Industrial Firm Transport Small Industrial Sales and Other Large Commercial Sales Commercial Transport Interruptible Sales and Transport Small Commercial Residential Company Use 4,500,000 4,000,000 3,500,000 3,000,000 2,500,000 2,000,000 1,500,000 1,000, ,000 - Figure 41: Forecast of Residential and Small Commercial Annual Demand 54 2,200,000 2,100,000 PNG-West Forecast of Annual Demand (2013 to 2033) (Reference Scenario) Residential and Small Commercial 2,000,000 1,900,000 1,800,000 1,700,000 1,600, The demand for 2014 is that filed in PNG s 2014 Revenue Requirements Application for the PNG-West system and updated March 14, ibid

83 Pacific Northern Gas Ltd. Resource Plan for the PNG-West Pipeline System April Design Day Demand Forecast The design day demand is the maximum demand that the system is expected to serve. It is determined based on a perfect storm of maximum firm industrial demand and temperature sensitive space heating demand from the residential and commercial market segments during the coldest day or peak demand day that can be expected. Estimates of the peak demand are important for capacity and gas supply planning purposes. PNG has estimated the design day demand from each of its customer segments based on a mathematical relationship between ambient air temperature and gas consumption that has been determined empirically from historical weather and billed consumption data. In the case of small and large commercial, and small industrial customers, their portion of the peak day demand is determined from third- and first-order linear regressions, respectively, of their historical billing and weather data. The design day demand of Rio Tinto Alcan and other larger industrial customers exhibiting distinct temperature sensitive load behaviour were also estimated using a regression analysis. Other larger customers, such as BC Hydro and the NGV class do not exhibit temperature sensitive demand. In these cases the design day demand was based on their historical demand. Seasonal customers taking service under RS6 do not take gas during the winter when a design day may be expected to occur and their demand has not been included. The design day demand of residential customers was calculated using the residential end-use model and multiplied by the number of customers forecast. Design day weather conditions are estimated using a statistical technique known as Extreme Value Analysis (EVA) that is used to infer the occurrence of maximum values over a particular period, based on historical data. For example, EVA was used in this case to infer the lowest daily temperature that could be expected to occur once every 50 years, based on 10 years of temperature data from Environment Canada weather monitoring stations located in several municipalities in the PNG-West service area. PNG has used a 50-year return period in determining the design day demand under the reference scenario. PNG has also presented the peak day using a 20-year return period in order to show the sensitivity of the analysis to the choice of return period. The design day temperatures for both the 50-year and 20-year return periods, expressed as the

84 Pacific Northern Gas Ltd. Resource Plan for the PNG-West Pipeline System April 2014 heating degrees below 18 C, are shown below. Table 10: Design Day Heating Degree Days HDD18 (EVA20) HDD18 (EVA50) Smithers Houston Vanderhoof Fort St James Burns Lake PNG-West (East) Prince Rupert Kitimat Terrace PNG-West (West) PNG-West (All) Results A design day demand forecast is developed in the same way as the annual demand forecast: as an aggregation of the forecast design day demands of each of the customer classes. The forecast for each customer class and for each year of the planning period is presented in Figure 42 and in tabular form in APPENDIX F: DESIGN DAY DEMAND. The design day demand of residential customers decreases over the planning period, particularly over the latter half of the period, as the rate of furnace replacements is expected to accelerate. The design day demand of small commercial customers decreases in a manner consistent with the decrease in use per account forecast for the annual demand (Table 11)

85 Pacific Northern Gas Ltd. Resource Plan for the PNG-West Pipeline System April 2014 Figure 42: Forecast Design Day Demand 45,000 PNG-West Forecast of Design Day Demand (2013 to 2033) (Reference Scenario) Available Capacity approx. 85,000 GJ/d 40,000 35,000 30,000 25,000 Firm Transport Large Commercial, Small Industrial Sales and Other Interruptible Sales and Transport Company Use Residential and Small Commercial 20,000 15,000 10,000 5,000 - Table 11: Peak Day Demand per Customer (GJ/d) Residential - Eastern Region Residential - Western Region Small Commercial Sensitivity Analysis PNG has developed a Reference Scenario that reflects a continued and gradual economic recovery of North American and world markets from the recession of 2008, resulting in a growing demand for the commodities and resources produced in the northern communities served by PNG-West. In addition to results for the Reference Scenario presented in the previous section, alternative demand scenarios were developed in order to provide some indication of the sensitivity of the demand forecasts to changes in forecast economic and climatic conditions as well as to provide a range of demands that could reasonably be expected

86 Pacific Northern Gas Ltd. Resource Plan for the PNG-West Pipeline System April 2014 The scenarios are based on changes to the residential and small commercial demand resulting from changes in the penetration of natural gas versus electricity as the fuel for space and water heating applications. The scenarios are referred to as the Competitive Gas and Competitive Electricity scenarios. The underlying growth in households and small commercial enterprises remains the same in all scenarios, while the capture rates are adjusted to reflect varying degrees of probability that these new households and commercial enterprises become customers of PNG. PNG views any further adjustments of residential and commercial customers as arbitrary adjustments of the household forecast developed by BC Stats that provide nothing more than an indication of the sensitivity of the load forecast to variations of the underlying assumptions, rather than a reasonably expected future outcome. For a similar reason, PNG has not adjusted any large customer forecasts in any of its planning scenarios. Only potential loads from known prospective large customers are included in the Competitive Gas scenario. PNG has not included demand from DCGS in any of the forecast scenarios. Should such demand materialize, it would significantly alter the load profile of the existing PNG- West transmission system and potentially return the system to an operational situation similar to one that existed before the Methanex facility was shut down. PNG is reflecting the current and future capacity requirements of its existing and forecast core market and transportation customers in its analyses of the capacity available to DCGS. Moreover, the uncertain timing of this project makes its inclusion in one of the alternative forecast scenarios an exercise in speculation at this point in time. For similar reasons, PNG has not included demand resulting from any regional LNG strategy. No specific projects have been identified for the PNG-West service area at this time. Further, PNG has not finalized its DSM programs. PNG intends to refine its estimates of the savings as part of its detailed evaluation of specific DSM programs. Consequently, no impacts of DSM programs have been shown Competitive Gas Scenario Under the Competitive Gas scenario, the cost competitive benefit of natural gas as compared to electricity for thermal applications is well understood by existing customers,

87 Pacific Northern Gas Ltd. Resource Plan for the PNG-West Pipeline System April 2014 new customers, and developers of single and multi-family homes. The rate of decline in customers that has been slowing in recent years reverses early in the forecast period, driven by an increased capture rate of new construction and a recapture of previously departed customers (Table 12) over the first five years of the planning period. The capture rate of new customers is set at 100 percent for both the western and eastern regions, up from 65 and 90 percent, respectively, under the Reference Scenario. Table 12: Residential Customer Net Recapture Rate Forecast (Competitive Gas Scenario) Net Recapture Rate Competitive Gas Scenario (0.00%) 0.50% 0.75% 1.00% 1.00% 1.00% Reference Scenario (0.38%) 0.00% 0.25% 0.50% 0.50% 0.50% Also under this scenario, the residential housing market shows a higher preference for SFD s, setting the ratio of new SFD to MFD s at 85/15, rather than 75/25 under the Reference Scenario. The gas-use profile of all new construction is based on the All Gas archetypes presented in APPENDIX D: BUILDING ARCHETYPES. The trend of declining small commercial use per account forecast under the Reference Scenario is halted and the use per account forecast for 2014 is maintained throughout the planning period. The addition of a single large customer load is also reflected in this scenario. PNG has been in discussions with a wood pellet manufacturer in regard to providing firm gas service for their production facility. At present, the economics of the project do not favour taking service from PNG under the current tariff. In this scenario however, PNG and the manufacturer are able to negotiate a firm transportation service agreement and the pellet manufacturer begins taking 700 TJ per year beginning in Competitive Electric Scenario Under the Competitive Electric scenario, natural gas loses market share to electricity. The decline in residential customers continues through to the end of 2019 driven by a continued trend of losing existing customers (Table 13) and a lower capture rate of new residential and commercial construction. The capture rate of new customers is set at 50 percent

88 Pacific Northern Gas Ltd. Resource Plan for the PNG-West Pipeline System April 2014 Table 13: Residential Customer Net Recapture Rate Forecast (Competitive Electric Scenario) Net Recapture Rate Competitive Electric Scenario (Western Region) Competitive Electric Scenario (Eastern Region) (0.38%) (0.38%) (0.38%) (0.38%) (0.38%) (0.38%) (0.93%) (0.93%) (0.93%) (0.93%) (0.93%) (0.93%) Reference Scenario (0.38%) 0.00% 0.25% 0.50% 0.50% 0.50% Also under this scenario, the residential housing market shows a lower preference for SFD s, setting the ratio of new SFD to MFD s at 65/35, rather than 75/25 under the Reference Scenario. The gas-use profile of all new SFD construction is split 75/25 between the All Gas Single Family Dwelling and the Most Electric Single Family Dwelling archetypes. Under this scenario, developers exclusively favour electric baseboard heaters over natural gas furnaces in new MFD construction and all new construction follows the Mostly Electric Multi-Family Dwelling archetype. The trend of declining small commercial UPA continues at an increased rate as compared to that forecast under the Reference Scenario Summary of Scenarios The demand determinants used in each of the planning scenarios are presented in Table 14 and Table 15. The residential use per account forecast exhibits a decline under all three scenarios (Figure 43). By the end of the planning period, the use per account varies by just over three GJ, or approximately five percent, over the three scenarios. The small commercial use per account varies by over 67 GJ, or nearly 23 percent over the three scenarios (Figure 44). This range is the result of three different extrapolations of the historical trend of declining use per account, rather than a result of a more detailed end-use analysis as was completed for the residential demand. Small commercial customers tend to vary much more in their end uses of natural gas than residential customers; consequently the development of an end-use model for small commercial customers is much more problematic, even if detailed customer information were available. PNG submits that such increased rigour is not warranted at this time, since even a variation of as much as 25 percent in the small commercial demand forecast

89 Pacific Northern Gas Ltd. Resource Plan for the PNG-West Pipeline System April 2014 corresponds to only a five percent variation in the total demand. Table 14: Summary of Demand Determinants Residential Customers (All Scenarios) New Construction Customer Recapture New Customer Capture Rates SFD/MFD Ratio SFD All Gas/ Mostly Electric Ratio MFD All Gas/ Mostly Electric Ratio Reference Yes 85%* 75%/25% 90%/10% 90%/10% Competitive Gas Competitive Electric Yes (Higher than Reference) No (Continued Loss) 100% 85%/15% 100%/0% 100%/0% 50% 65%/35% 75%/25% 0%/100% * System-wide average for illustrative purposes only. Capture rates vary from 65% in the eastern region, to 90% in the western region. Table 15: Summary of Demand Determinants Small Commercial Customers (All Scenarios) New Customer Capture Rates Trend in UPA Reference 85% Asymptotic decline to 95% of current by 2033 Competitive Gas 100% No decline Competitive Electric 50% Straightline decline to 78% of current by

90 Pacific Northern Gas Ltd. Resource Plan for the PNG-West Pipeline System April 2014 Figure 43: Residential Use per Account Forecast (All Scenarios) GJ/year GJ/year Residential UPA Historical and Forecast (All Scenarios) ( ) Reference Scenario Competitive Gas Scenario Competitive Electric Scenario Figure 44: Small Commercial Use per Account Forecast (All Scenarios) Small Commercial UPA Historical and Forecast (All Scenarios) ( ) Reference Scenario) Competitive Gas Scenario Competitive Electric Scenario

91 Pacific Northern Gas Ltd. Resource Plan for the PNG-West Pipeline System April 2014 The following chart shows the trend in total annual demand under all three scenarios. Figure 45: Forecast Total Annual Demand (All Scenarios) PNG-West Forecast of Total Gross Annual Demand (2013 to 2033) Scenario Analysis 6,000,000 Competitive Gas Scenario Reference Scenario Competitive Electric Scenario 5,000,000 4,000,000 Demand (GJ) 3,000,000 2,000,000 1,000,000 - The cumulative change in total annual demand over the 20 year forecast period as well as the annualized change in demand in all three scenarios is shown in Table 16. The forecast increase in deliveries to Rio Tinto Alcan beginning in 2015 is responsible for the increase in total demand on the system in all scenarios. The demand of 700 TJ related to the addition, as a large customer, of a wood pellet manufacturer in PNG s service area is responsible for the significantly higher total demand under the Competitive Gas scenario. Table 16: Change in Annual Demand (All Scenarios) Cumulative and Average Annual Change in Demand of: Reference ( ) Competitive Gas Competitive Electric Residential -2.02% / -0.10% 4.72% / 0.23% % / -0.58% Small Commercial 2.29% / 0.11% 8.14% / 0.39% % / -1.06% Total Demand 10.11% / 0.48% 30.82% / 1.35% 3.21% / 0.16%

92 Pacific Northern Gas Ltd. Resource Plan for the PNG-West Pipeline System April Design Day Demand The design day demand under the Reference, Competitive Gas and Competitive Electric scenarios is shown below (Table 17). The peak day demand varies approximately 12 percent between the Competitive Electric low case and the Competitive Gas high case scenarios. PNG has provided an additional Warmer Weather scenario in order to illustrate the sensitivity of the design day forecast to assumptions regarding the coldest ambient temperatures that should be planned for. The Warmer Weather scenario differs from the Reference scenario only in that the peak day demands of temperature sensitive loads are determined using a 20-year rather than a 50-year return period. The heating degree days corresponding to each of these scenarios is found in Table 10. The PNG-West system has adequate capacity to meet the design day demand under all of the planning scenarios. Table 17: Design Day Demand (All Scenarios) Design Day Demand in 2033 (expressed in GJ/D and in % of System Capacity) Reference Warmer Weather Competitive Gas Competitive Electric System Capacity 39,613 36,579 43,630 37, ,607 32% 29% 35% 30% 100%

93 Pacific Northern Gas Ltd. Resource Plan for the PNG-West Pipeline System April DEMAND SIDE MANAGEMENT 5.1 Introduction DSM refers to the utility s efforts to decrease, shift, or increase energy demand, and the way customers utilize energy. The purpose of DSM programs has traditionally been to increase the utilization of a utility s generation (in the case of electricity), transmission, and distribution infrastructure and at the same time avoid, or at least delay, the need for building additional capacity to serve the peak demand. The goal of DSM programs has therefore been to alter the demand curve of the utility either through peak shaving, valley filling, load building, or conservation initiatives. Section 44.1(2) of the Act states that a long-term resource plan needs to include a plan of how the public utility intends to reduce demand by taking cost-effective demand-side measures. Under section 44.1(8) of the Act, the Commission must take into consideration whether the public utility intends to pursue adequate and cost-effective demand-side measures when determining whether to accept a utility s resource plan. In its 2011 Resource Plan filed on July 6, 2011, PNG noted that it did not offer DSM programs mainly because its marginal retail price is most effective in promoting DSM, as evidenced by the continued declining use per customer in this region. In addition, PNG- West s pipeline capacity was significantly underutilized. In its Decision on the 2011 Resource Plan, issued on December 12, 2011 under Order G , the Commission found that PNG s plan to take no further actions relative to DSM, pursuant to [sic] s. 44.1(1)(2)(b) [s. 44.1(2)(b)] of the Act, to be in the public interest because the potential detriment to ratepayers from reduced demand on the system that is already utilized under capacity outweighs the potential benefits from reduced demand. Under the same Decision, PNG was directed to submit to the Commission its next Resource Plan which is to include consideration of the appropriateness of DSM, within two years of the date of this Order. On February 8, 2013, PNG(N.E.) filed its Final Submission where it requested that the Commission accept the PNG(N.E.) 2012 Resource Plan for the Fort St. John, Dawson Creek and Tumbler Ridge distribution systems as filed on October 16, 2012, pursuant to section 44.1(6) of the Act. PNG(N.E.) also sought a temporary exemption from the requirement of section 44.1(2)(b) of the Act for its 2012 Resource Plan

94 Pacific Northern Gas Ltd. Resource Plan for the PNG-West Pipeline System April 2014 On April 18, 2013, the Commission issued its Decision accepting the 2012 Resource Plan for PNG(N.E.) s pipeline systems but denying the temporary exemption from the requirement of section 44.1(2)(b) of the Act. In this Decision, PNG(N.E.) was directed to resubmit the DSM part of the 2012 Resource Plan for the PNG(N.E.) Pipeline Systems and to include an updated load forecast. The Panel directs PNG(N.E.) to file this resubmission at the same time as PNG submits its updated resource plan for the PNG- West pipeline system, and no later than December 8, PNG requested and obtained Commission approval to extend the filing of the PNG West Resource Plan to April 8, PNG s position on the appropriateness DSM activities has not changed from the positions set out in the previous resource plans for PNG-West and PNG(N.E.). PNG continues to believe that its marginal retail rates and underutilization of the PNG-West pipeline capacity are most effective in promoting DSM and due to its size, the cost of investigating and implementing DSM programs would likely outweigh the potential benefits and would result in higher rates to ratepayers in both the PNG-West and PNG(N.E.) service areas, with no material benefit to those ratepayers. 5.2 DSM Plan In order to comply with the Commission s directives to both PNG-West and PNG(N.E.), that the appropriateness of DSM programs be considered, PNG retained a consulting firm, Energitix, to make recommendations related to implementing a DSM plan for PNG- West and PNG(N.E.) that would meet the adequacy requirements of section 44.1(8)(c) of the Act. This plan ( DSM Plan ) is appended as APPENDIX G: DSM PLAN to this resource plan. The DSM Plan has been prepared to ensure that this 2014 Resource Plan is in compliance with Section 3 of the DSM Regulation, which requires a public utility to include the following programs in its portfolio in order to meet the adequacy requirements of section 44.1(8)(c) of the Act: A demand-side measure intended specifically to assist residents of low-income households to reduce their energy consumption; 55 Directive 2, BCUC Order G

95 Pacific Northern Gas Ltd. Resource Plan for the PNG-West Pipeline System April 2014 A demand-side measure intended specifically to improve the energy efficiency of rental accommodations; An education program for students enrolled in schools in the public utility s service area; and An education program for students enrolled in post-secondary institutions in the public utility's service area. In addition, the development of the DSM Plan followed a set of guiding principles established based on a 2005 report prepared for the Canadian Gas Association by IndEco Consulting and attached as an appendix to the DSM Plan. The guiding principles applied include the following: 1. Programs will have a goal of being available to the sectors identified in Section 3 of the DSM Regulation including low income households and rental accommodation. 2. Wherever possible, programs will be consistent across all service territories served by PNG. 3. PNG will attempt to limit the non-incentive costs of each program at 50 percent of the expenditure in a given year. 4. The cost effectiveness of programs, in terms of the comparison of their costs and benefits, will be analyzed on a portfolio-wide basis. 5. A program is characterized as cost effective if the results of the Modified Total Resource Cost/Benefit (mtrc) and Total Resource Cost/Benefit (TRC) tests, when applied at the portfolio level over the funding period, yield a ratio of one or greater than one. 6. The programs will support the objectives of established government policies when possible. 7. In order to minimize the cost of DSM programs, PNG will leverage any available incentives from additional sources, such as the provincial and federal governments, and equipment suppliers and manufacturers, where applicable

96 Pacific Northern Gas Ltd. Resource Plan for the PNG-West Pipeline System April When possible, PNG will seek to partner with other organizations, agencies, and utilities in order to reduce the costs to develop and deliver DSM programs to its customers. 9. Incentives, if offered, may be directed to the end users of an appliance, to the customer point of contact at the time that an equipment purchase decision is made (for example, to the gas contractor in the case of a furnace), to a system designer or engineer, or to an equipment developer, supplier or manufacturer. The most effective use of incentives will be determined through the program design process. 10. Conservation education and outreach will be part of PNG s DSM activity. These guiding principles will also be applied to any additional DSM programs considered by PNG in the future. As noted in the DSM Plan, Energitix conducted a review of applicable DSM programs offered by a number of Canadian gas utilities with a primary focus on utilities in B.C., namely FEI and BC Hydro. PNG and Energitix also met with key personnel from the DSM programs at FEI and BC Hydro to discuss their respective DSM programs and to learn about the effectiveness and successes or failures of their programs. The DSM Plan proposes that PNG consider partnering with third parties, including FEI and BC Hydro in developing and delivering the following DSM programs targeted at lowincome households, as well as for outreach and education programs targeting students enrolled in educational institutions in PNG s service areas: Energy saving kits for low-income households; Energy conservation assistance program for low-income households; and Conservation education and outreach for K-12, post-secondary institutions, and customers in general. The DSM Plan concludes that a rental-only program targeted at rental accommodations may not be viable for PNG at this time, and points to further investigation of the applicability and cost effectiveness of an efficient boiler program targeted exclusively at rental apartment buildings. The identified DSM programs were based on FEI programs that had a high TRC to

97 Pacific Northern Gas Ltd. Resource Plan for the PNG-West Pipeline System April 2014 ensure that the programs are cost effective. The preliminary program budgets, participation rates, and expected savings for these programs were developed based on FEI s program budgets, participation rates, and savings and adjusted to reflect PNG s customer base. The preliminary analysis conducted by Energitix indicates that the proposed DSM portfolio for PNG would require annual funding requirements of approximately $451,000 on a consolidated basis. This is composed of $121,000 for the cost of programs for lowincome households, $150,000 for funding education programs and $180,000 to hire an additional human resource to develop and manage the DSM programs and partnerships and for the development of a program cost/benefit evaluation model. Since the proposed programs are mainly targeted to low-income households, the expected reduction in demand is quite small. The preliminary analysis indicates a consolidated annual reduction of demand of approximately 750 GJs. Based on this, PNG is not adjusting its demand forecasts to take into account the DSM programs. 5.3 Future Steps Upon approval of this Plan by the Commission, PNG intends to submit an application, either on a stand-alone basis or as part of PNG s next revenue requirement application, to seek approval for funding for specific programs meeting the cost effectiveness criterion set out in the guiding principles (the DSM Application ). The DSM Application will contain a refined budget based on PNG s review of its costs to implement these programs and an assessment of cost-effectiveness of these programs using a TRC model developed and tailored to PNG s specific market conditions. PNG submits that it will be appropriate to record the cost of the DSM programs, along with the cost of the DSM Application and the cost to develop the TRC model, in a rate base deferral account that is amortized on a straight-line basis over 10 years, consistent with the treatment accorded to FEI program costs. PNG is committed to determine further the cost effectiveness, and if appropriate, undertake the DSM programs identified in its DSM Plan. PNG submits that providing the aforementioned programs fulfills the adequacy requirement of Section 3 of the Demand- Side Measures Regulation of the Act. However, PNG does not believe that it is in a position to provide the large portfolio of DSM programs offered by the other large utilities

98 Pacific Northern Gas Ltd. Resource Plan for the PNG-West Pipeline System April 2014 in B.C. due to limited resources and the impact of program costs on already high customer rates. As noted through its revenue requirement applications for both PNG-West and PNG(N.E.), PNG has endeavored to service its customers in an efficient and costeffective manner while maintaining the safety and reliability of its pipelines. In its Decision on PNG-West s 2013 revenue requirements application, the Commission Panel noted that the growth rate of expenditures is significant and cautioned that care must be given that expenses are carefully managed to the extent possible. PNG is very conscious of the resources that are required to develop, implement and administer DSM programs

99 Pacific Northern Gas Ltd. Resource Plan for the PNG-West Pipeline System April PORTFOLIO PLANNING The understanding of the supply resources available to it is an important part of the development of a long-term plan of how the utility will provide service to its customers. This section examines PNG s supply resources in relation to its expected demands and also discusses whether or not DSM programs may be useful in helping to manage customer demands and system deliverability throughout the planning period. 6.1 System Capacity Requirements Comparing the capacity of the system to the forecast demand provides an indication of when, and to what extent, additional pipeline capacity may be required. Understanding and monitoring the amount of forecast excess capacity allows PNG to plan future capacity enhancements in a timely manner to ensure that it is always able to offer a highly reliable service during times of peak demand that is coincident with the coldest day that is forecast to occur. Through its analysis of the current and forecast design day demand, PNG has demonstrated that the capacity of the pipeline is sufficient to meet the design day firm and interruptible demand of its customers over the entire planning period. No capital expenditures for providing additional pipeline capacity to serve the firm demand are therefore anticipated LNG/CNG Infrastructure PNG is presently exploring the possibility of expanding the capacity of its gas transmission pipeline between Summit Lake and Kitimat in order to meet the requirements of new small-scale liquefied natural gas projects proposed for construction in Kitimat while still meeting the demand forecast for its existing customers over the planning period. However, for the reasons stated in this 2014 Resource Plan, PNG considers it premature to include demand related to potential LNG facilities in any of the forecast scenarios. The proposed capacity of m 3 per day (620 MMcf per day) of the proposed expansion project is approximately 15 times the design day requirements forecast for the end of the planning period. Should such an expansion proceed, PNG expects that it will provide an analysis as part of any regulatory application put forward at the appropriate time, showing that adequate capacity is available to serve the design day demand of its non-lng load

100 Pacific Northern Gas Ltd. Resource Plan for the PNG-West Pipeline System April 2014 For similar reasons, PNG has not included demand resulting from any regional CNG/LNG strategy. PNG anticipates that its transmission and distribution systems will play an integral role in a regional LNG strategy by providing service to one or more micro-scale LNG facilities that will serve the regional market. However, no specific projects have been identified for the PNG-West service area at this time. 6.2 Gas Supply Resources Important to the operation of a natural gas utility is the secure and reliable sourcing of natural gas commodity provided to firm sales customers of the utility at reasonable cost. Since natural gas commodity costs are a significant element of customer rates, it is very important that the utility manages its gas supply portfolio in such a manner that minimizes rate volatility and price risk to customers. PNG has engaged a third-party to provide energy management services (EMS) in order to facilitate natural gas supply and transportation contracts necessary to meet the supply requirements for its geographically dispersed customer base. Acting on behalf of PNG, the EMS provider is responsible for: gas supply planning and resource selection analysis; gas supply contract negotiation and administration; daily energy management services; and monitoring and reporting on credit, hedging positions and gas prices Gas Contracting Plan The foundation for management of PNG s gas supply portfolio is the Gas Contracting Plan (GCP) process. Preparation of the GCP is an annual process that is subject to review and approval by the Commission prior to its implementation. The GCP describes the physical gas supply resources PNG intends to secure to meet the projected peak day and average daily gas demand of PNG s gas sales customers over the gas year beginning November 1 st. The objectives of the GCP include: providing cost-effective gas supply that ensure secure and reliable gas deliveries to customers; achieving a balance of term diversity and cost effectiveness in the supply portfolio; and diversification of the gas supply portfolio and transportation capacity contracts to incorporate shorter and longer terms to allow for contracting flexibility. PNG has developed a supply resource portfolio of gas commodity, storage and pipeline contracts in order to satisfy its gas contracting objectives. PNG ensures secure reliable supply by entering into a diversified gas supply portfolio to minimize the risk associated with any one particular supply option. In PNG s case, a diversified gas supply portfolio

101 Pacific Northern Gas Ltd. Resource Plan for the PNG-West Pipeline System April 2014 includes daily, monthly, seasonal and peaking gas supply contracts. In 2013, PNG incorporated gas storage services into its GCP in order to reduce PNG s exposure to the spot market and to provide security of supply and operational flexibility to manage load fluctuations due to weather, effectively providing additional gas cost certainty and winter price diversity. Further, PNG holds firm pipeline transportation capacity on the Spectra mainline (T-South from Station 2 to Summit Lake) consistent with PNG s estimated peak day demand from its firm sales customers in its PNG-West service area. Contracting in this manner allows PNG to meet its objectives of providing cost effective, safe, and reliable firm gas supply to its customers Price Risk Management Plan Prior to 2011, PNG had a Price Risk Management Plan (PRMP) in place to assist with managing and reducing short-term gas price volatility by making use of various hedging instruments such as fixed price swaps, call options and costless collars. The objective of the PRMP was to levelize gas prices and minimize gas price variance risk by implementing an appropriate mix of hedging volumes and instruments. In consideration of Commission Decision G denying the FEI PRMP, PNG withdrew its proposed 2011 PRMP. In withdrawing the 2011 PRMP, PNG reserved the right to file a PRMP in the future if circumstances warrant doing so Demand-side Measures As noted previously, PNG has demonstrated that the capacity of the pipeline is more than sufficient to meet the demand of its customers over the entire planning period. Given the excess pipeline capacity, demand-side measures, as an alternative to pipeline capacity enhancements, are not relevant at any time during the planning period. As noted in section 6, PNG proposes a consolidated DSM plan that meets the requirements of Section 3 of the DSM Regulation and focuses on DSM programs to assist low-income households and provide education to the general public and students on the conservation of energy. The expected reduction in demand from these proposed programs, an annual reduction of 750 GJs on a consolidated basis, is a very small reduction to the overall demand and thus has not been considered in this 2014 Resource Plan

102 Pacific Northern Gas Ltd. Resource Plan for the PNG-West Pipeline System April PORTFOLIO EVALUATION AND ACTION PLAN The purpose of preparing this Resource Plan was to determine whether any actions are required at this time and over the foreseeable future with respect to supply side system capacity additions or the implementation of DSM programs. In PNG s circumstances, with no new supply or capacity resources required to meet customer demand at this time or within the near future, the development of resource portfolios was not considered necessary. Therefore PNG concluded that there is no requirement to complete a resource portfolio evaluation for this Resource Plan. Action Item: DSM On April 18, 2013, the BC Utilities Commission (Commission) issued its Decision on PNG(N.E.) s 2012 Resource Plan (Order G-60-13) and in this Decision ordered PNG(N.E.) to resubmit the DSM portion of the 2012 Resource Plan in order to comply with the provisions of subsection 44.1(2) (b) of the Act, which requires a public utility to file a plan that includes cost-effective demand-side measures. As part of its Resource Planning process, PNG has prepared a DSM Plan that identifies programs that comply with Section 3 of the DSM Regulation requiring a utility to offer programs targeting residents of low-income households, and education and outreach programs for students enrolled in schools and in post-secondary institutions in PNG s service areas. For the reasons presented in the DSM Plan, PNG is not proposing any programs targeted exclusively at improving the energy efficiency of rental accommodations at this time. Upon approval of this DSM Plan by the Commission, PNG intends to develop a more detailed budget and cost benefit analysis based on PNG s review of its costs to implement these programs and on its expected energy savings. As part of the foregoing analysis, PNG intends to refine its residential end-use model so that it can provide a more precise estimate of the energy savings that could be achieved through the proposed programs. Action Item: Advancement of Small-scale LNG Projects As noted in this 2014 Resource Plan, PNG is presently exploring the possibility of expanding the capacity of its gas transmission pipeline between Summit Lake and

103 Pacific Northern Gas Ltd. Resource Plan for the PNG-West Pipeline System April 2014 Kitimat in order to meet the requirements of new small-scale liquefied natural gas projects proposed for construction in Kitimat. The proposed capacity of m 3 per day (620 MMcf per day) of the proposed expansion project is approximately 15 times the design day requirements forecast for the end of the planning period. Should such an expansion proceed, PNG expects that it will include an analysis as part of any regulatory application put forward at the appropriate time, showing that adequate capacity is available to serve the design day demand of its non-lng load

104 Pacific Northern Gas Ltd. Resource Plan for the PNG-West Pipeline System April STAKEHOLDER CONSULTATION PNG believes that consultation with stakeholders on their needs and concerns are not only a critical element of the resource planning process, but are critical to the Company s continued social license to operate. In this regard, PNG consults and meets with stakeholders on an ongoing basis for broad range of business purposes. As noted previously, the PNG-West system is not expected to require any incremental supply or capacity resources during the planning period. PNG has therefore not engaged stakeholders on matters related to the development of alternative resource portfolios; however PNG has taken the opportunity during the development of this resource plan to engage its anticipated interveners as well as its customers in discussions related to topics covered by this plan. General Business Matters Customers During the normal course of operations, PNG has the opportunity to engage with customers on an ongoing basis, primarily in regard to their forecast demand and potential changes to their specific service requirements. Communities Effective 2012, PNG expanded its management strategy to include resources to support a government relations portfolio. The objective of this strategy is to communicate and meet with municipal, regional and provincial government representatives on a regular basis to keep them apprised of PNG s operations and planned activities. Resource Plan Matters As noted, there has been little need to engage stakeholders on matters related to choosing among alternative resource portfolios. However, PNG has had the opportunity to reach out to stakeholders on matters relevant to the 2014 Resource Plan. Residential End Use Survey As noted previously, as part the current resource planning process, PNG undertook a REUS in order to support and improve residential demand forecasts and to facilitate the evaluation of DSM opportunities. This was the first large-scale outreach effort to

105 Pacific Northern Gas Ltd. Resource Plan for the PNG-West Pipeline System April 2014 residential customers, with 9,000 customers targeted in PNG-West and in all delivery areas of PNG(N.E.). With an overall response rate of 32 percent, much higher than the anticipated industry average rate of 20 percent, PNG considers this effort to have been a success for gathering customer data and insights that will be useful in future years as well. DSM Plan As part of development of the DSM Plan included in this 2014 Resource Plan, PNG engaged a number of parties to gather insight and feedback. In the early stages of planning, PNG met with a representative from the B.C. Public Interest Advocacy Centre (BCPIAC), currently the sole regular intervener in PNG-West regulatory matters, in order to obtain the organization s insights. At this time, BCPIAC expressed its desire for programs that would provide a meaningful benefit for low income customers. As development of the DSM Plan proceeded, PNG and its consultants had several meetings with representatives from both FEI and BC Hydro, gaining valuable insights on their program offerings. These meetings provided a preliminary opportunity to discuss the potential for partnership opportunities with these parties as a means to improve the cost-effectiveness of PNG s DSM offerings. In addition, as part of its consideration of how to develop its programs, PNG and its consultants met with representatives from the B.C. Sustainable Energy Association (BCSEA), to learn about their organization and its programs, and to gather their insight into PNG s entry into the DSM program area. Again, these meetings allowed for preliminary discussion on opportunities for PNG and the BCSEA to partner, particularly in the area of communications to elementary-level students on the importance of energy sustainability. Project-specific Matters Communities As noted for general business matters, PNG has implemented a strategy to communicate and meet with municipal, regional and provincial government representatives on a regular basis to keep them apprised of PNG s operations and planned activities. This includes the sharing of current information on corporate-related undertakings, including PNG activities as they pertain to proposed LNG export and

106 Pacific Northern Gas Ltd. Resource Plan for the PNG-West Pipeline System April 2014 regional CNG/LNG infrastructure developments. As a further example of community stakeholder engagement, in late 2013 PNG held open houses in the PNG-West region to allow for public review of the proposed PNG Pipeline Looping Project. These efforts provide both awareness and an opportunity for feedback on proposed projects. First Nations Over the years, PNG has worked to develop the respect and trust of First Nations in the regions it serves. PNG continues to develop these relationships through ongoing communication with First Nations. At this time, communications are ongoing as they pertain to potential impacts of PNG s proposed Pipeline Looping Project. Again, this dialogue provides both awareness and an opportunity for feedback on proposed projects Resource Plan Regulatory Process As it has traditionally done, PNG will provide a copy of this 2014 Resource Plan to the BCPIAC whom regularly registers as an intervener in PNG-West matters. BCPIAC is very knowledgeable of PNG and its operations. Further, as noted previously, PNG had an opportunity to consult with BCSEA as part of its development of its DSM Plan. PNG will also provide BCSEA with a copy of this 2014 Resource Plan

107 Pacific Northern Gas Ltd. Resource Plan for the PNG-West Pipeline System April APPENDICES

108 Pacific Northern Gas Ltd. Resource Plan for the PNG-West Pipeline System April 2014 APPENDIX A: RESOURCE PLANNING OBJECTIVES

109 Pacific Northern Gas Ltd. Resource Plan for the PNG-West Pipeline System April 2014 Summary of Resource Plan Objectives Weighting, Attributes, Measurement Criteria and Benchmarks/Targets 1 Attributes (Whether the project, program or Resource Plan Objective Weight initiative being evaluated results in:) 1 Safe, reliable service 30% Capacity adequate to meet firm demand on a 20-year design day over the planning period. Measure Benchmark or Target 2 Amount of contingent capacity on a design day in year 20 of the forecast period. Rank alternatives but assign no additional benefit to excess > 5% Increased diversification of the supply portfolio. Improvements to the reliability of the pipeline system. Improvements to the integrity of the pipeline system. 2 Least cost service 30% All alternatives being considered, including expansions of pipeline capacity through looping or additional compression, CNG and LNG deliveries, peaking arrangements with large customers, and demand-side measures. Increased diversification of the supply portfolio strengthens position in negotiations with gas suppliers. Improvements to the daily and seasonal diversity of loads so as to utilize as fully as possible the available capacity of the system as much of the time as possible. Increase in the number of supply options available n/a n/a Levelized cost of service Cost of Supply System load factor Rank alternatives Rank alternatives Rank alternatives Rank alternatives: Assign highest ordinal to the lowest cost option. Rank alternatives: Assign highest ordinal to the lowest cost option. Rank alternatives: Assign highest ordinal to the option having the highest load factor 3 Economic viability of utility 10% The cost of natural gas at the point of delivery remaining competitive with other, comparable forms of energy. Ratio of the cost of gas at the point of delivery to the cost of electricity. Rank alternatives based on the ratio The throughput on the system remaining stable or increasing over time. Ensure investments carry risk that is commensurate with the utility rate of return. Throughput Return on ratebase Rank alternatives based on whether the project is expected to result in decreasing, stable or increasing throughput. Rank alternatives in terms of their financial risk.

110 Pacific Northern Gas Ltd. Resource Plan for the PNG-West Pipeline System April 2014 Summary of Resource Plan Objectives Weighting, Attributes, Measurement Criteria and Benchmarks/Targets 1 Attributes (Whether the project, program or Resource Plan Objective Weight initiative being evaluated results in:) 4 Stable rates 10% Forecast rates having the lowest sensitivity to different forecast scenarios. Measure Benchmark or Target 2 The range in the levelized cost of service calculated for each forecast scenario Rank alternatives: Assign highest ordinal to the option having the smallest range. 5 Environmental and socio-economic impacts 10% Project alternatives are compared based on their impact to air and water quality, hydrology, fish, wildlife and vegetation, terrain integrity, land use, archeological and heritage resources, health and the economy. Particulate and other air emissions. Water quality measurement, wildlife and fisheries disruption The level of First Nations support. Assign ordinal: 0: requires an environmental assessment pursuant to the BC Environmental Assessment Act 1: does not require an environmental assessment Rank alternatives: Assign highest ordinal to the option having the highest level of support. The level of stakeholder support. Rank alternatives: Assign highest ordinal to the option having the highest level of support. 6 Alignment with the B.C. Government s Energy Objectives as set out in British Columbia s Natural Gas Strategy, Liquefied Natural Gas ( LNG ) Strategy and the Clean Energy Act 10% Reduction in energy consumption in all forms. Effectiveness of a DSM program in promoting natural gas as the appropriate fuel for heating, hot water and cooking. 100% Reduction in GHG emissions resulting from energy consumption. Promoting CNG as an alternative to diesel, gasoline and propane for transportation, off-grid power generation and for isolated communities and large customers unattached to the utility s natural gas distribution or transmission system. GHG emissions Whether the project is related to CNG or LNG infrastructure Rank alternatives: Assign highest ordinal to the option having the best modified TRC value Rank alternatives: Assign highest ordinal to the option having the highest reduction in GHG emissions Score 1 if the project is related to CNG or LNG infrastructure. 1 Weighting applied to objectives are illustrative only and will vary depending on the resource supply alternatives under consideration. Total weightings applied to the objectives identified must total 100%. 2 The evaluation of benchmarks or targets will vary depending on the resource supply alternatives under consideration and will generally include the assignment of rankings or ordinals. The resulting scores must be normalized within each objective category so that there is no double counting of the weighting factors, i.e. the scores are normalized so that a category having, for example, four measurement criteria cannot generate a higher score than a category having only one measurement criterion.

111 Pacific Northern Gas Ltd. Resource Plan for the PNG-West Pipeline System April 2014 APPENDIX B: CONDITIONAL DEMAND ANALYSIS

112 Pacific Northern Gas Ltd Residential End-Use Survey Conditional Demand Analysis Methodology and Results Prepared for: Pacific Northern Gas Ltd. On: March 3, 2014 By: Boreas Consulting Ltd. A. Kleinschmidt, President Tel: Fax: crystal court north vancouver, bc, V7R 2B6 t: f: e:

113 Contents Contents... i 1 Methodology Primary Natural Gas Space Heating Secondary Natural Gas Space Heating Natural Gas Fireplaces Natural Gas Domestic Hot Water Ancillary End Uses Results and Discussion Page i 649 crystal court north vancouver, bc, V7R 2B6 t: f: e: akleinschmidt@boreasconsulting.com

114 Acknowledgements Boreas Consulting Ltd. would like to acknowledge the kind assistance of John Sampson (Sampson Research Inc.) in the development of this Conditional Demand Analysis. The approach and model developed by Mr. Sampson for the FortisBC 2008 Residential End-Use Study was the starting point for our own analysis pertaining to the Pacific Northern Gas systems. 1 In addition, Mr. Sampson provided advice and guidance during the course of our own efforts. 1 A copy of the Sampson Research Inc. conditional demand analysis study can be found as an appendix to the FortisBC 2010 Resource Plan available on the FortisBC website. Page ii 649 crystal court north vancouver, bc, V7R 2B6 t: f: e: akleinschmidt@boreasconsulting.com

115 1 Methodology Conditional demand analysis (CDA) is a statistical method that is used to estimate end-use specific energy consumption, without requiring end-use metered data for the appliances. Instead, it relies on the statistical analysis of consumption data, appliance saturation data, and other data such as demographic, household, weather, economic and market data. In its most basis form, the energy demand model for a particular customer, a residential customer in this case, is expressed as the summation of the demand from each of the uses of that energy: Where: ܥܧ = ܣ UPA is the (Energy) Use per Account (or per customer) expressed over a particular timeframe; per year or per day in the case where the results are used in annual and peak day demand forecasts. UEC i is the particular Energy Use Component being considered. In the case of a natural gas demand model, the UEC s are (i) primary natural gas space heating (UEC gpsh ), (ii) secondary natural gas space heating (UEC gssh ), (iii) natural gas fireplaces (UEC gfp ), (iv) domestic hot water (UEC gdhw ), and (v) ancillary end uses that include gas ovens, cooktops and ranges (UEC grange ), natural gas BBQ s (UEC gbbq ) and natural gas dryers (UEC gdryer ). Owing to their very low penetration rate in PNG s service areas, natural gas heated hot tubs and swimming pools have not been included in the demand analysis. All terms are expressed in gigajoules. The functional forms of each of the UEC s are described in the following sections. 1.1 Primary Natural Gas Space Heating Gas consumption to serve the primary heating load is determined by the following thermal energy balance: or: Where: ܮ ܣܧܪ = ܣܧܪ ܣܩ + ௨ ܥ ܧܫܥܫܨܨܧ ௦ ܥܧ HEATLOSS is the net heat loss of the dwelling. ܣܧܪ ܣܩ ܮ ܣܧܪ = ௦ ܥܧ ௨ ܥ ܧܫܥܫܨܨܧ NONGASHEAT is the heating from a secondary source of energy other than natural gas, most typically from electric baseboard heaters and wood burning fireplaces. EFFICIENCY furnace is the efficiency of the natural gas furnace Dwelling Heat Loss Calculation The net heat loss of a dwelling is expressed as the difference between the conductive, convective and radiative losses through the building shell (the surface loss or SURFACELOSS), and internal gains through thermal emissions from appliances, lights and occupants (INTGAIN). Solar warming of the dwelling during the heating season has not been included because of the lack of data on hours of sunshine, and because of the wide range of influencing factors that have not been quantified, such as building geometry, orientation, landscape and vegetation; all of which influence the amount of solar gain to the building. ܫܣܩ ܫ ܮܧܥܣܨ = ܮ ܣܧܪ Page crystal court north vancouver, bc, V7R 2B6 t: f: e: akleinschmidt@boreasconsulting.com

116 Where the surface loss is determined by the surface area of the building (AREA), the thermal conductivity of the building envelope (TCON), and the temperature difference across the envelope (TDIFF). ܨܨܫܦ ܣܧ ܣ ܥ ଵ ߚ = ܮܧܥܣܨ The thermal conductivity of the building envelope is characterized primarily by the type of building, the amount of insulation in the building walls, ceilings, basements and attached garages, by the type of windows and doors, and by the effectiveness of draft proofing: (ܨ ܨܣ ܦ, ܦ, ܦ ܫ, ܫ ܣܮ ܫ,ܧ ܩ ܫܦܮܫ ܤ) ݐ ݑ = ܥ The building type influences the rate of heat loss due to the surface area of the dwelling. Row housing such as townhomes, duplexes and triplexes share common walls between dwellings and thereby have a reduced surface area of the external shell. Similarly, apartments and condominiums typically share two or more walls, floors and ceilings. The building type is characterized by the dummy variables (MFD, VS, MH), where MFD is set to one if the dwelling is a multi-family dwelling such as townhouses, duplexes or triplexes, VS is set to one if the dwelling is an apartment or condominium in a multi-storey building (vertical subdivision), and MH is set to one if the dwelling is a mobile home: ܪ ܯ ସ ߚ + ଷ ߚ+ ܦܨ ܯ ଶ ߚ+ ଵ ߚ = ܧ ܩ ܫܦܮܫ ܤ The amount of insulation of the dwelling envelope is characterized by the portion of windows having triple pane glass or double pane low-e glass (WINBEST), the portion of exterior doors that are insulated (DOORS), the presence of a basement having insulation with a rating of R12 or better (BSMTR12), the presence of an attached garage having insulation with a rating of R12 or better (GARAGER12), and the reported comfort level of the home whether the home felt drafty or not (DRAFTPROOF): ܨ ܨܣ ܦ ହ ߚ + 12 ܧܩܣ ܣܩ ହ ߚ+ 12 ܯ ܤ ସ ߚ + ܦ ଷ ߚ+ ܧܤ ܫ ଶ ߚ+ ଵ ߚ = ܥ The thermal conductivity of the dwelling shell can also be characterized by the amount of insulation in the walls and ceiling, by the type of window frames (aluminum, fiberglass or wood), and by the insulation in crawl spaces. These characteristics were reflected in the original analyses; however, based on the data from the REUS sample, the results were not statistically significant enough to warrant their inclusion in the final end use model. The surface area of the dwelling is characterized simply as being proportional to the square root of the floor space of the home. ܧܥܣ ܮܨ ଵ ߚ = ܣܧ ܣ The temperature difference across the building shell is determined by both the heating degree days (HDD), and the heating profile of the dwelling: whether the thermostat is turned down during the night (TDNIGHT) or during the day when no one is home (TDDAY), or whether window coverings are used during the winter to reduce radiative heat loss (WINTER WINCVR): ( ܥ ܫ ܧ ܫ ସ ߚ + ܣܦܦ ଷ ߚ+ ܪܩܫ ܦ ଶ ߚ+ ଵ ߚ) ܦܦܪ = ܨܨܫܦ The internal gain of the dwelling during the heating season is determined by a number of factors, none for which sufficient information is available upon which to develop an accurate mathematical function. Therefore the internal gain is simply determined as a function of the building volume and, by proxy, of the building floor area: ܧ ܫ ܧܥܣ ܮܨ ଵ ߚ = ܫܣܩ ܫ Page crystal court north vancouver, bc, V7R 2B6 t: f: e: akleinschmidt@boreasconsulting.com

117 1.1.2 Non-gas Secondary Heating The impact of non-gas secondary heating is dependent upon the area of the dwelling and the ambient outside air temperature expressed in heating degree days: ܦܦܪ ܧܥܣ ܮܨ ଵ ߚ = ܣܧܪ ܣܩ Where SW NON GAS HEAT equals one if a non-gas, secondary source of heat is present in the dwelling Furnace Efficiency The furnace efficiency is characterized in terms of the existence of either a standard or high efficiency furnace: 1 ௨ ܥ ܧܫܥܫܨܨܧ ܨܨܧܪܩܫܪ ଶ ߚ + ଵ ߚ = Where HIGHEFF equals one if a high efficiency furnace is in use in the dwelling. A third term, accounting for the existence of a mid-efficiency furnace, was dropped from the final analysis because it was not statistically significant Complete Natural Gas Space Heating Model The complete natural gas space heating model, after substituting the terms presented above, is shown below. Only first order terms have been included. Second order terms were omitted from the final model, either because they are not statistically significant, produced unreasonable results, or characterized meaningless attributes of the space heating function. ܪ ܯ ସ ܥ + ଷ ܥ + ܦܨ ܯ ଶ ܥ+ ଵ ܥ) ܦܦܪ ܧܥܣ ܮܨ ] ௦ ௦ = ܥܧ ܨ ܨܣ ܦ ଽ ܥ + 12 ܧܩܣ ܣܩ ܥ + 12 ܯ ܤ ܥ + ܦ ܥ + ܧܤ ܫ ହ ܥ+ ܨܨܧܪܩܫܪ ଵଷ ܥ + ܥ ܫ ܧ ܫ ଵଶ ܥ + ܣܦܦ ଵଵ ܥ + ܪܩܫ ܦ ଵ ܥ+ [ ܧ ܫ ܧܥܣ ܮܨ ଵହ ܥ + ) ଵସ ܥ+ Where SW gpsh equals one if the dwelling is heated by a natural gas furnace as its primary source of space heating, and zero otherwise. 1.2 Secondary Natural Gas Space Heating Secondary gas space heating includes additional gas wall heaters and gas furnaces if the latter are used to supplement a non-gas primary space heating source (such as electric baseboards). The secondary natural gas space heating function is characterized by the surface area of the dwelling and the heating degree days: 1.3 Natural Gas Fireplaces ܧܥܣ ܮܨ ௦௦ ଵ ܥ = ௦௦ ܥܧ The natural gas consumption is characterized simply by the number of decorative (DECGASFIRE) and heating (HEATGASFIRE) type fireplaces installed in the dwelling. 1.4 Natural Gas Domestic Hot Water ܧ ܫܨ ܣܩ ܣܧܪ ଵ ܥ + ܧ ܫܨ ܣܩܥܧܦ ଵ ܥ = ܥܧ Gas demand related to domestic hot water is determined by the following thermal energy balance: Page crystal court north vancouver, bc, V7R 2B6 t: f: e: akleinschmidt@boreasconsulting.com

118 ௪ ܦ ܣ ܯܧܦ + ௪ ܮ ܣܧܪ = ௪ ܥ ܧܫܥܫܨܨܧ ௪ ܥܧ or: Where: ௪ ܦ ܣ ܯܧܦ + ௪ ܮ ܣܧܪ = ௪ ܥܧ ௪ ܥ ܧܫܥܫܨܨܧ HEATLOSS dhw is the net heat loss through the hot water tank and through the pipes. DEMAND dhw is the demand for hot water. EFFICIENCY dhw is the efficiency of the hot water heater Hot Water Heat Loss Calculation The hot water heat loss results from conductive and radiative losses through the water heater tank, and the losses through the hot water delivery pipe. The heat loss calculation is similar to that of a dwelling in that it is a function of the thermal conductivity of the heater tank and hot water pipes, and the surrounding air temperature. ௪ ܨܨܫܦ ௪ ܥ ଵ ߚ = ௪ ܮ ܣܧܪ The thermal conductivity of a standard water heater tank system is influenced by the existence of insulation in the form of a heater tank thermal blanket (TANKBL) and/or insulating wrap around the hot water delivery lines (PIPEWRAP). The surrounding air temperature is characterized indirectly through the use of a seasonal variable (WINTER) that reflects the assumption that the ambient temperature of the basement and wall spaces where water heater tanks and pipes are located, respectively, will be colder during the heating season (modeled here as the period from November 1 st to April 30 th ) than otherwise. 2 After substituting for the terms, the heat loss equation is therefore expressed as: Where: ܧ ܫ ସ ߚ + ܣ ܧ ܫ ଷ ߚ + ܮܤܭ ܣ ଶ ߚ+ ଵ ߚ = ௪ ܮ ܣܧܪ TANKBL and PIPEWRAP each equal one if there is a heater tank blanket and insulating wrap around the hot water delivery lines, respectively, and zero otherwise. WINTER equals one during the period November 1 st to April 30 th, and zero otherwise Hot Water Demand The demand for hot water is determined the number of baths (BATHS) and showers (SHWRS) taken per week by the dwelling s residents. Other demand for hot water, such as from the number of dishwasher and laundry machine loads were included in earlier analyses, however these variables were not statistically significant and were excluded from the final model. The existence of low flow shower heads was also reflected in earlier analyses of natural gas consumption versus hot water demand, but was also excluded in the final model because the impact was not statistically significant. ܪ ଷ ߚ + ܪ ܣܤ ଶ ߚ + ଵ ߚ = ௪ ܦ ܣ ܯܧܦ 2 The use in the model of the outside air temperature, characterized by the number of heating degree days, produced unreasonable results and was rejected in favour of a seasonal variable. Page crystal court north vancouver, bc, V7R 2B6 t: f: e: akleinschmidt@boreasconsulting.com

119 1.4.3 System Efficiency The efficiency of the hot water heater as a system is characterized in terms of the existence of either a standard or high efficiency water heater: 1 ௪ ܥ ܧܫܥܫܨܨܧ ௪ ܨܨܧܪܩܫܪ ଶ ߚ + ଵ ߚ = Where HIGHEFF dhw equals one if a high efficiency water heater is in use. An additional variable, accounting for the existence of a solar thermal system to preheat the water supply, was removed from the final analysis because it was not statistically significant Complete Natural Gas Water Heating Model The complete natural gas water heating model, after substituting the terms presented above, is shown below. Only first order terms have been included. With the exception of the WINTER x SHWRS term, second order terms were omitted from the final model, either because they are not statistically significant, produced unreasonable results, or characterized meaningless attributes of the space heating function. ܣ ܧ ܫ ଶଷ ܥ + ௪ ܨܨܧܪܩܫܪ ଶଶ ܥ + ܪ ଶଵ ܥ + ܪ ܣܤ ଶ ܥ + ଵଽ ܥ) ௪ ௪ = ܥܧ ) ܪ ܧ ܫ ଶ ܥ+ ܧ ܫ ଶହ ܥ+ܮܤܭ ܣ ଶସ ܥ+ Where SW gdhw equals one if the hot water system is fueled by natural gas, and zero otherwise. 1.5 Ancillary End Uses The natural gas demand related to the identified ancillary end uses of gas ovens, cooktops and ranges, natural gas BBQ s and natural gas dryers is characterized by the number of these appliances in use: ܧܩ ܣ ܣܩ ଶ ܥ = ܥܧ ܤܤ ܣܩ ଶ ܥ = ܥܧ ܧ ܦ ܣܩ ଶଽ ܥ = ௬ ܥܧ Where GASRANGE, GASBBQ, and GASDRYER is the number of gas ranges or cooktops or ovens, the number of gas barbeques, and the number of gas dryers in use in the dwelling, respectively. Page crystal court north vancouver, bc, V7R 2B6 t: f: e: akleinschmidt@boreasconsulting.com

120 2 Results and Discussion The end use model is described by the following equation. or: ௬ ܥܧ + ܥܧ + ܥܧ + ௪ ܥܧ + ܥܧ + ௦௦ ܥܧ + ௦ ܥܧ = ܣ = ܣ ଶଽ ܣ ܥ Where C i and VAR i are the coefficients and variables shown in Table 1. The conditional demand model was estimated using ordinary least squares regression against two years of metered gas consumption data from all sampled customers. The value of the adjusted R-squared value associated with this model is and the F statistic is 1,513. With the exception of VAR 4 (SW gpsh x AREA x HDD x MH) and VAR 22 (SW gdhw x HIGHEFF dhw ), only variables having a level of significance greater than t = 1.96 have been included in the final end use model. VAR 4 was retained despite having a level of significance slightly below the threshold in order to account for the effect of mobile home construction on energy use. Mobile homes are relatively common in all of PNG s service areas and their influence on the residential use per account should be included in any forecasts and demand-side measures cost tests. Similarly, VAR 22 was retained in order to allow forecasts of residential energy use to reflect the increasing penetration of high efficiency domestic water heaters. With the exception of C 13 (SW gpsh x AREA x HDD x HIGHEFF), all of the coefficients have the correct sign. The result expressed by C 13 x VAR 13 that a dwelling having a high efficiency gas furnace uses more natural gas for space heating as compared to a dwelling having a standard efficiency furnace, all else remaining equal, is counter intuitive. The increase is calculated to be just under three gigajoules for a two thousand square foot home located in Fort St. John. Regressions of various alternative functional forms of the primary space heating model were tried but none yielded results that were significantly different. Further analyses may result in a primary space heating model that reflects a more intuitive view of the impact of high efficiency furnaces on natural gas consumption. Alternatively, the effect may be due to a decreased reliance on secondary, non-gas forms of space heating when home owners install high efficiency furnaces in order to lower their overall heating costs. Page crystal court north vancouver, bc, V7R 2B6 t: f: e: akleinschmidt@boreasconsulting.com

121 Table 1: Coefficients of the conditional demand model End Use Variable (VAR 1.. VAR 29 ) Coefficient Standard Error Primary Space Heat SWgpsh x AREA x HDD C t-value Primary Space Heat SWgpsh x AREA x HDD x MFD C2 ( ) (15.09) Primary Space Heat SWgpsh x AREA x HDD x VS C3 ( ) (3.25) Primary Space Heat SWgpsh x AREA x HDD x MH C Primary Space Heat SWgpsh x AREA x HDD x WINBEST C5 ( ) (5.33) Primary Space Heat SWgpsh x AREA x HDD x DOORS C6 ( ) (6.19) Primary Space Heat SWgpsh x AREA x HDD x BSMTR12 C7 ( ) (4.41) Primary Space Heat SWgpsh x AREA x HDD x GARAGER12 C Primary Space Heat SWgpsh x AREA x HDD x DRAFTPROOF C9 ( ) (2.08) Primary Space Heat SWgpsh x AREA x HDD X TDNIGHT C10 ( ) (2.84) Primary Space Heat SWgpsh x AREA x HDD X TDDAY C11 ( ) (3.99) Primary Space Heat SWgpsh x AREA x HDD X WINTER X WINCVR C12 ( ) (4.09) Primary Space Heat SWgpsh x AREA x HDD x HIGHEFF C Primary Space Heat SWgpsh x AREA x HDD x SW nongasheat C14 ( ) (6.56) Primary Space Heat SWgpsh x AREA x WINTER C15 ( ) (6.76) Secondary Heat Space SWgssh x AREA x HDD C Fireplaces DECGASFIRE C Fireplaces HEATGASFIRE C Water Heating SWgdhw C Water Heating SWgdhw x BATHS C Water Heating SWgdhw x SHWRS C Water Heating SWgdhw x HIGHEFF dhw C22 ( ) (1.52) Water Heating SWgdhw x PIPEWRAP C23 ( ) (2.31) Water Heating SWgdhw x TANKBL C24 ( ) (2.38) Water Heating SWgdhw x WINTER C Water Heating SWgdhw x WINTER x SHWRS C Gas Ranges GASRANGE C Gas BBQ GASBBQ C Gas Dryer GASDRYER C Threshold of Significance (p=0.95): Page crystal court north vancouver, bc, V7R 2B6 t: f: e: akleinschmidt@boreasconsulting.com

122 About Boreas Consulting Ltd. Boreas Consulting Ltd. is a multi-disciplinary consultancy bringing a broad range of practical experience to finding and implementing solutions to a diverse set of interesting challenges in the energy and water resources space. Our approach examines a problem from many different perspectives and provides solutions that balance different and often competing interests. The projects that we have taken on have been as diverse as undertaking a market assessment for a solar energy technology startup, to advising regulatory panels on decisions regarding market power assessments and electric utility rate making. More information on our firm can be found on our website ( Page crystal court north vancouver, bc, V7R 2B6 t: f: e: akleinschmidt@boreasconsulting.com

123 Pacific Northern Gas Ltd. Resource Plan for the PNG-West Pipeline System April 2014 APPENDIX C: RESIDENTIAL END-USE STUDY

124 Pacific Northern Gas Ltd Residential End-Use Survey Summary of Results and Methodology Prepared for: Pacific Northern Gas Ltd. On: March 3, 2014 By: Boreas Consulting Ltd. A. Kleinschmidt, President Tel: Fax: crystal court north vancouver, bc, V7R 2B6 t: f: e:

125 Contents Acknowledgements Executive Summary of Key Results Fuel usage Income distribution Characteristics of the rental market Knowledge of energy efficiency measures Renovations & energy use Interest in energy efficiency programs Introduction Background Presentation of Results Organization of the Data Summary of Results Household demographics Household Income About this residence Space Heating Fireplaces and Heater Stoves Domestic Water Heating Swimming pools and hot tubs Renovations and energy use Appliances Managing Energy Use Products and Services Attitudes towards energy use Purchasing attitudes Appendix One: REUS Methodology Appendix Two: REUS Questionnaire Page crystal court north vancouver, bc, V7R 2B6 t: f: e: akleinschmidt@boreasconsulting.com

126 Acknowledgements Boreas Consulting Ltd wishes to acknowledge the efforts of Sampson Research Inc. and Discovery Research who designed and executed the Residential End-Use Survey for Pacific Northern Gas Ltd., and who then collected and prepared the survey data summarized herein. Boreas would also like to acknowledge the very significant amount of work put in by its associate, Ms. Gillian Sykes, who analyzed and summarized all of the data into the results presented in this report. Page crystal court north vancouver, bc, V7R 2B6 t: f: e: akleinschmidt@boreasconsulting.com

127 1 Executive Summary of Key Results 1.1 Fuel usage Natural gas is the dominant fuel used for heating in 90.8% of dwellings across all PNG service areas. Gas has the highest penetration rate in PNG(N.E.), where 97.9% of dwellings use gas as the main fuel for heating, while approximately 84% of households in PNG-West use gas as the main heating fuel. Wood and electricity are the primary alternatives to natural gas. Electricity is the next most common fuel source for space heating, but is more prevalent in the eastern (5.3%) and western regions of PNG-West (10.7%), than in PNG(N.E.) where it is the main fuel in only 0.8% of dwellings. 1.2 Income distribution Approximately 16% of PNG s residential customers can be considered low income households, with annual income below $40, Characteristics of the rental market The renters that are direct, residential customers of PNG represents approximately 6.5% of PNG s residential customers. Renters living in apartments are significantly under-represented in the survey, owing to that these buildings are almost always centrally metered for natural gas and fall under the small commercial customer group. Occupants in these buildings were not included in the sample considered by the survey. A disproportionate amount of low income households are in rental housing, with around 28% of rental households earning less than $40,000. Only 16% of households living in their own homes earn less than $40,000 per annum. Approximately 65% and 24% of the rental households live in single family dwelling and townhomes respectively, while only approximately 2% and 9% of rental households live in apartments/condos and mobile homes respectively. In 99.5% of cases, bills are paid by a member of the household. 1.4 Knowledge of energy efficiency measures There is a lack of knowledge about certain energy efficiency measures, such as not knowing the type of insulation present, or energy rating of appliances. In some cases lower income households were half as likely as higher income households to know if either of these measures were installed. Rental and low income properties have the lowest levels of knowledge, indicating that energy audits targeted at these segments would be very helpful. For example, 28.4% of rental households didn t know if they had insulation in their attics or not, which could increase the proportion of rental households that do have insulation to be in line with owned properties. Page crystal court north vancouver, bc, V7R 2B6 t: f: e: akleinschmidt@boreasconsulting.com

128 With regards to draft-proofing, low income households are more likely to have poor draft proofing (14.2% compared to the customer base average of 8.4%). Rental properties have the poorest draft proofing, 28% claiming to have a home which is always drafty. This is significantly higher than the rate for owned properties, where only 6.9% have homes with poor draftproofing. A large portion of households were unaware of the efficiency of their boilers (17.9%) or gas furnaces (14.9%). In terms of energy qualified models, while 32.2% of households claimed to have an ENERGY STAR qualified model, nearly the same proportion (30%) were not sure if their model was ENERGY STAR qualified or not. As expected, rental properties were less likely to have an ENERGY STAR qualified model (25% to 39% for owned properties). They were also less likely to know if their furnace or boiler was a qualified model or not. Rental households were between 2 and 3 times less likely to know if they had water heater energy efficiency measures such as pipe-wrap or insulating blankets on their water heaters. There was no significant relationship between income level and the installation of either insulating blankets or pipe wrap. The most significant relationship is that lower income households were half as likely as higher income households to know if any of these measures were installed: 9.8% for those earning less than $40,000, compared to a range of 3%-5.6% for higher income households in the case of insulating blankets. 1.5 Renovations & energy use With a rebate, lower income households (earning less than $40,000 per year) are generally undertaking fewer actions than wealthier households. This raises the issue of the appropriate targeting of program rebates to ensure effectiveness. While lower income households were less likely to have undertaken renovations or actions with a rebate, they appear no less likely than any other income groups to undertake other renovations without a rebate. 1.6 Interest in energy efficiency programs While the differences between income groups was not sufficient to change the overall results and popularity of programs, it is worthwhile noting that lower income households were more likely than the other groups to choose not all interested in any of the programs than the higher income households. (A typical range would be 5 to 10% between the income groups). Similarly, the highest income category was most likely to be very interested in any of the programs. Programs where this pattern did not hold, and where lower income households were either as interested, or more interested as wealthier respondents, included installing programmable thermostats (21.3% said they would be very interested, compared to an average of 18% across all income groups), and upgrading insulation (29.6% versus an average of 27%). They were also equally likely as other income groups to be very interested in furnace or heat pump tune-ups (29.6% to an average of 28%). Page crystal court north vancouver, bc, V7R 2B6 t: f: e: akleinschmidt@boreasconsulting.com

129 2 Introduction 2.1 Background In the Fall of 2013, Pacific Northern Gas Ltd. (PNG) commissioned the undertaking of a residential end use survey (REUS) targeting a sample of residential customers from across all divisions including PNG- West, and the systems of PNG(N.E.) Ltd. that include Fort St. John, Dawson Creek and Tumbler Ridge. The goal of this survey was to better understand the demographic makeup and consumption behaviour of PNG s residential customers. Such information, combined with customers historical billed consumption data is a key input to PNG s development of a residential end-use model that forms the basis for a refined residential annual and peak day demand forecasting model, as well as for the assessment of the impact of various demand-side measures (DSM) being contemplated. The sample plan for the PNG REUS was designed to provide representative samples from three distinct geographic regions: PNG(N.E.) or the North East, PNG-West (the West or Western Sample) and PNG- West (the East or Eastern Sample). The characteristics of each region are described in the following: i. The PNG(N.E.) region includes the service areas of Fort St. John, Dawson Creek and Tumbler Ridge. This region is characterized by colder winters and shorter, warmer summers than experienced in the other regions. Normalized heating degree days in this region vary from approximately 5,000 in Tumbler Ridge to 5,600 in Fort St. John. The main economic activities of the PNG(N.E.) region Fort St. John, Dawson Creek and Tumbler Ridge areas are oil and gas production, coal mining, forestry and agriculture. Cattle and horse ranching as well as grain farming are the important local agricultural activities. High demand for coal and gas, especially liquids rich gas, has spurred a rate of economic growth in the Peace River region that is one of the highest in the Province. ii. iii. The PNG-West (West) region is defined as that part of the PNG-West service area that includes the communities of Prince Rupert, Port Edward, Kitimat, Terrace and Thornhill. This region is influenced by the north coast marine climate and experiences warmer winters than experienced in the other regions. Normalized heating degree days in this region vary from approximately 3,400 in Prince Rupert to 3,700 in Kitimat. In addition, the municipalities in this region have experienced some economic growth due to an increased workforce in response to the increased volumes of container traffic at the Port of Prince Rupert and the feasibility studies for numerous LNG liquefaction plants being proposed for Prince Rupert and Kitimat. The PNG-West (East) region is defined as that part of the PNG-West service area that lies east of Terrace/Thornhill and includes the communities of Smithers, Houston, Vanderhoof, Fort St. James and Burns Lake. This region has a drier and colder climate than experienced in the western region. Normalized heating degree days in this region vary from approximately 4,600 in Houston to 5,600 in Burns Lake. The main economic activities of the region are forestry and agriculture. The strength of the local economies is therefore susceptible to the economic cycles of the resource sectors; most notable are recent declines due to weakness in the forestry sector. Consequently, this region is characterized by a lower rate of housing additions compared to the western region. A target of 1,800 completed surveys was set for the PNG REUS, with 600 completed surveys desired per region. This target was expected to yield an overall accuracy of plus or minus 2.3 percent at the utility Page crystal court north vancouver, bc, V7R 2B6 t: f: e: akleinschmidt@boreasconsulting.com

130 level using a 95 percent confidence interval, and plus or minus 4.0 percent in each region. A total of 2,904 valid survey responses were received, yielding an overall response rate of 32 percent, considerably higher than the 20 percent response assumption used in the sampling plan. 2.2 Presentation of Results The following sections provide a summary of the responses categorized by dwelling types (single family detached, multi-family dwellings such as duplexes, triplexes and townhouses, apartments and condominiums in multi-storey buildings, and mobile homes), by income groups, and by ownership (owned versus rented). These categories were chosen because they are of particular relevance to PNG in its development of a DSM program targeted at low income customers and rental accommodation Limitations of the Survey: Representation of the Rental Segment The targeting of a comprehensive portion of the rental segment in a utility s service area through a survey aimed at the residential segment poses some challenges. The distribution of the residential enduse survey was based on a targeted mail out to PNG s residential customers having an account with PNG. While the results of the survey did reach a substantial number of PNG s residential customers who are renting their homes, rather than owning them, renters living in apartments are significantly underrepresented in the survey. The reason for this is simply that most, if not all, apartment buildings in PNG s service area that do use natural gas for space heating are centrally metered and are small commercial customers of PNG. PNG has approximately 150 such buildings across all of its service areas; none of which occupants directly hold residential accounts with PNG. Their occupants were therefore not considered when selecting the random sample of residential customers for the survey. 2.3 Organization of the Data The following section presents the results of the survey organized into eight topics that follow the organization of the REUS questionnaire: 1. Household demographics and dwelling type and construction 2. Space heating 3. Fireplaces and heater stoves 4. Domestic hot water heating 5. Swimming pools and hot tubs 6. Renovations and energy use 7. Appliances 8. Energy use attitudes and behaviours The the sample plan, questionnaire topic coverage, implementation procedures, analysis of the returns, and representativeness of the results for the survey are discussed in Appendix A to this report. A copy of the REUS questionnaire is provided as Appendix B. Page crystal court north vancouver, bc, V7R 2B6 t: f: e: akleinschmidt@boreasconsulting.com

131 3 Summary of Results 3.1 Household demographics The following information provides a basis for understanding the residential customer base, and informs the subsequent summary of the results Age The area is characterised by older households. Around 75% of the respondents are 45 or older, with 16% aged 35-44, and only 9.5% were between 25 and 35 years of age. Only 0.7% were between the ages of 19 and 24. Total Answering 18 years or under years years years years years 65 years and older % % % % % % % %.7% 9.5% 15.6% 23.0% 25.5% 25.8% Gender The sample consists of 52.1% men and 47.9% women. The PNG-West service area has a slightly higher ratio of men, with approximately 55% men. Male Female Total Answering % % % 47.9% Dwelling type showed some note-worthy gender differences, with the Row/Townhouse category more frequently occupied by women (63.3%), while Apartment/Condos were dominated by men (71.5%). The other dwelling type categories were more balanced, resembling the overall gender split. Women were also over-represented in the rental category, with 63.8% of rented properties occupied by women, and 36.2% by men. Owned properties were representative of the sample, with 53.1% owned by men, and 46.9% owned by women Marital Status Married or common law partnerships account for 75% of households, while only 9.4% are single. About 16% have been either divorced, separated or widowed, which may also reflect the fact that the majority of respondents are over 45. As expected, the proportion of single people is higher in rental properties, at 29.4% compared to 8% for owned properties. Similarly the rate of married or common law partners is much lower in rental Page crystal court north vancouver, bc, V7R 2B6 t: f: e: akleinschmidt@boreasconsulting.com

132 properties, with only 47.3% among those who rent, compared to 76.4% of those who own the properties they live in. Single Married/ common law Divorced/ separated Widowed Overall % of total 9.4% 74.6% 8.1% 7.9% Home ownership Rent 29.1% 47.3% 16.6% 6.7% Own 8% 76.4% 8.4% 8.4% Household size The average household size is 2.6 people, with a median value of 2. There is little variation across dwelling type categories, with the exception of Apartment /Condos with an average of 1.5, however the median even for this category is 2. All other dwelling categories have a range of 2.4 to 2.7 people per household. Homes with children average 4.0 people per household, while homes with no children average 2 per household. Total Answering Total < $40K $40K to <$60K Household Income $60K to <$100K $100K or more Nonresponse Mean Median The number of people living at each residence is largely stable, with 74.4% staying the same over the last 2 years. The number has increased in 9.9% of cases, and decreased in 15.7% of households. This pattern is largely consistent across all categories Occupants working outside the house Overall, the proportion of households where any of the occupants work outside the home is 64.8%, with 35.3% claiming that no-one works outside the home. There are no significant regional differences, or patterns with regards to home ownership. A notable exception is the Row/Townhouse category, where the proportion of households with any occupants working outside of the home is much lower, at 51% for Row/Townhouses, and 71.6% for Apartment/Condo. This may be due to a greater proportion of retired households in this dwelling type, where all of the respondents in this dwelling category over 45 years of age (see the section on dwelling type below for more on the differential age profile by dwelling type). Page crystal court north vancouver, bc, V7R 2B6 t: f: e: akleinschmidt@boreasconsulting.com

133 Total Answering Total SFD / Duplex Row / Townhouse Detachment Apt / Condo Mobile & Other Yes % 64.8% 65.0% 49.0% 28.4% 68.8% No % 35.2% 35.0% 51.0% 71.6% 31.2% Don t Know %.0%.0%.0%.0%.0% Highest level of education Almost half (42%) of household heads have completed some form of post secondary education, while an additional 8.2% have some form of trade or technical schooling. Twenty-one percent (21.2%) have completed high school, while 11.2% have only some high school. Some high school High school diploma Some trade /technical school Trade /technical school diploma Some university/ college University/ college degree Post graduate degree Total Answering % % % % % % % % 21.2% 8.2% 17.0% 15.1% 21.0% 6.3% 3.2 Household Income Poverty definition According to the Demand Side Management (DSM) Regulation under the BC Clean Energy Act, the minimum requirements for a public utility s DSM programme include: A Program to assist residents of low-income households to reduce their energy consumption Program to improve the energy efficiency of rental accommodations For this reason, special attention was paid to these two groups throughout the analysis of the REUS results. There is no formal definition of poverty in the DSM Regulations, so the Low Income Cut-off (LICO) calculated by StatsCan was used as a guide 1. The census agglomeration areas applicable to the PNG service area consist of two categories, relating to settlements with less than 30,000 inhabitants, and those with population between 30 and 100 thousand Page crystal court north vancouver, bc, V7R 2B6 t: f: e: akleinschmidt@boreasconsulting.com

134 The latest figures available are for 2011, and the LICO for a family of seven is set at $37,906 per annum in areas with a population less than 30,000, and $42,286 in areas with a population between 30,000 and 100,000. While the average household size for the PNG area is 2.6, it was considered prudent to develop a DSM programme that catered to all households which might meet a higher poverty cut-off, rather than designing for only the average family. For simplicity, the analysis therefore refers to all households earning less than $40,000 per annum as low income, irrespective of family size Household Income and Dwelling Type Approximately 16% of the PNG customer base can be described as low-income, earning below $40,000 per year, while 48% are earning over $60,000 per year. There is little difference in the income distribution between service areas, but there are notable differences by dwelling type and home ownership (addressed in the following section). Detachment Total SFD / Duplex Row / Townhouse Apt / Condo Mobile & Other Total responding Less than $20, % 3.2% 13.0% 13.6% 10.2% $20-30, % 5.1% 3.8% 22.2% 11.9% $30-40, % 6.0% 10.5% 14.9% 8.6% $40-60, % 11.2% 21.5% 43.1% 10.8% $60-100, % 23.8% 22.1%.0% 22.2% Over $100, % 26.6% 12.6%.0% 17.4% No answer 23.3% 24.1% 16.5% 6.2% 18.9% While only 14% of households living in single family dwellings or duplexes are low income, 51% of households in Apartment/Condos are earning less than $40,000 per annum. Low income households account for 27% of PNG customers living in Row/Townhouses. Mobile homes are surprisingly evenly represented across the income spectrum, with only approximately a third earning less than $40,000 per annum, and almost 40% earning over $60,000 per year. Page crystal court north vancouver, bc, V7R 2B6 t: f: e: akleinschmidt@boreasconsulting.com

135 3.2.3 Household income and home ownership While the rate of home-ownership is high across all income groups, there is an increasee in the proportion of households owning their residences as income rises. Of those who earn less than $40,000 per annum 88.9% are living in homes which they own. This increases to 97.5% for households earning more than $100,000 annually. Household Income Total < $40K $40K to <$60K $60K to <$100K $100K or more Non-response Total Answering Own/co-op % 93.5% 88.9% 89.7% 94.3% 97.5% 93.7% Rent % 6.5% 11.1% 10.3% 5.7% 2.5% 6.3% As expected, households who rent tend to have lower incomes than those who own their dwellings, with about 28% of rental households earning less than $40,000. Only 16% of households living in their own homes earn less than $40,000 per annum. Page crystal court north vancouver, bc, V7R 2B6 t: f: e: akleinschmidt@boreasconsulting.com

136 3.2.4 Home language English is by far the most prevalent language, accounting for 99.2% of households. French is the main language for 0.4%, followed by German (0.2%) and Punjabi (0.2%). 3.3 About this residence Own versus rent On average, 93.5% of PNG customer households own their residences, compared to 6..5% who rent. This pattern holds true across the different service areas, with those who rent ranging from a high of 7.3% in PNG (N.E.), to a low of 5.3% in the western region of PNG-West. As can be seen in the chart below, renters tend to be younger than the rest of the population, with approximately 40% below the age of 45. In contrast, only 24% of those who own their home are younger than Page crystal court north vancouver, bc, V7R 2B6 t: f: e: akleinschmidt@boreasconsulting.com

137 Age categories by home ownership type 26.4% 25.9% 15.7% 19.4% 20.9% 23.1% 15.2% 8.8% Own 23.4% 19.0% Rent 18 years or under years years years years years 65 years and older A1 - Do you own or rent this residence? Total Answering Total SFD / Duplex Detachment Row / Apt / Condo Townhouse Mobile & Other Own/co-op 93.5% 95.1% 46.1% 66.7% 94.5% Rent 6.5% 4.9% 53.9% 33.3% 5.5% Compared to the average of 6.5% of PNG residential customers who rent, the majority of Row/Townhouses are rented (53.9%), while a third (33.3%) of Apartment/Condos are rented. Single family dwellings and Duplexes are generally owner-occupied, with rentals accounting for only 4.9% of SFD dwellings Dwelling type Single family detached (SFD) and Duplex homes are the dominant form of dwelling type, accounting for an average of 85.6% over all three service regions. The next largest category across all service areas is mobile homes which make up 9.4% of the total. Duplexes and Row/townhouses are the next biggest categories, making up 3.4% and 2.9% respectively across all service areas. Apartments/condominiums are the smallest category, totalling 0.4% overall. Page crystal court north vancouver, bc, V7R 2B6 t: f: e: akleinschmidt@boreasconsulting.com

138 A2 - Is this residence a...? Home Ownership Total Own Rent Total Answering Single family detached/duplex 85.6% 87.0% 64.4% Row/townhouse (3 or more units attached, each with separate entrance) 2.9% 1.4% 24.3% Apartment / Condominium.4% 0.3% 1.9% Mobile home & Other 9.4% 11.3% 9.4% Townhouses are far less popular among those who own their homes, with only 1.4% living in row/townhouses. Approximately 65% and 24% of rental households live in single family dwelling/duplexes and townhomes respectively, while only approximately 2% and 9% of rental households live in apartments/condos and mobile homes and other respectively. There are different patterns of age across the different dwelling types, with Apartment /Condos having the oldest respondents, and Row/Townhouses have the greatest share of respondents under the age of 45. Age categories by dwelling type 25.3% 37.2% 24.9% 25.9% 13.7% 65.4% 24.8% 23.8% 15.6% 9.0% 13.5% 15.8% 16.1% 13.6% 20.9% 19.4% 16.8% 11.7% SFD / Duplex Row / Townhouse Apt / Condo Mobile & Other 18 years or under years years years years years 65 years and older Age of residence Most of the dwelling stock was built either between (32.7%), and (27.2%). Only 5% of stock is older, while 11.7% was built from , and 7% was built in 2006 or later. However, the pattern is not consistent across all of the service areas, as the western region of the PNG- West service area has the oldest building stock, with 51.8% built before Page crystal court north vancouver, bc, V7R 2B6 t: f: e: akleinschmidt@boreasconsulting.com

139 Service Area Total North East East West Total Answering Before % 4.0% 3.8% 9.1% % 30.9% 28.7% 42.7% % 27.1% 30.1% 23.1% % 7.2% 17.6% 14.0% % 14.9% 12.8% 7.4% 2006 or later 7.0% 11.4% 3.4% 1.7% Don t know 3.7% 4.6% 3.5% 2.0% Who pays the natural gas bill In 91.2% of cases, bills are paid by the respondent, and another member of the household pays in 8.3% of dwellings. In rental properties the proportion paid by the landlord is low (only 2.4%), but the vast majority is still paid by the household (96.3% combined) Does the NG bill for the residence cover another dwelling or building of some kind? Secondary suites are not common in the PNG service area, with only 3.2% of residences paying the gas bill for a secondary suite. This pattern is consistent across service areas. Of those who did pay the bill for a secondary suite, 89% only had 1 suite, while 9% has 2 suites. In the PNG-West service area, the pattern shifts a little, with 77.8% covering the bill for 1 suite, while 11.1% have 3, and 5.6% have a natural gas bill which covers 3 units. However, due to the very small sample size (85 across all service areas), breakdowns by service area may not be appropriate. Around 12% of households have an attached garage or workshop which is covered by the NG bill, while 87.5% do not. Of those who do, the vast majority have only one attached garage (95.4%). Only 8.4% have a detached garage/workshop while 91.4% don t. Of those where the bill does cover a detached workshop, there is generally only one workshop, accounting for 97.9% of cases. Only 1.9% of households had a bill which covered any other buildings (e.g. sheds, farms buildings) Heated living space The majority of residences (58.4%) have two floors of heated living space, 25.9% have only one floor, and 13.4% have three floors of heated living space. There is no significant variation by region. Lower income families are more likely to have only one floor, with the likelihood of having only one floor declining with income. Family size appears to be a stronger factor with regards to the number of heated floors. There is strong indirect relationship between having one floor and the number of occupants, and a greater likelihood of having more than two floors as the size of the household increases. Page crystal court north vancouver, bc, V7R 2B6 t: f: e: akleinschmidt@boreasconsulting.com

140 A6 - How many floors of heated living space does this residence have? (including basement if heated) Number of Occupants Total > 5 < $40K $40K to <$60K Household Income $60K to <$100K $100K or more Nonrespons e Total Answering % 30.7% 17.7% 5.6% 43.9% 31.7% 23.5% 17.6% 22.4% % 56.4% 62.2% 65.7% 48.1% 54.4% 60.9% 58.8% 63.5% % 11.2% 17.3% 20.1% 7.0% 12.0% 14.0% 20.0% 11.4% 4 1.9% 1.2% 2.8% 6.4%.1% 1.5% 1.6% 3.6% 1.8% 5+.4%.5%.0% 2.3%.8%.4%.0%.1%.9% The total floor area, including basement but excluding garages or carports was an average of 1,969 square feet and a median of 1,950 square feet. Square feet Overall Total Answering 2686 Mean 1969 Median 1950 There is a clear relationship between floor space and income level, with both average and median floor space increasing in line with both income, and the number of occupants. Number of Occupants Total > 5 < $40K $40K to <$60K Household Income $60K to <$100K $100K or more Nonresponse Square feet Total Answering Mean Median Length of occupation The average respondent has lived in their residence for 15 years, with the longest periods of residence in the western region of PNG-West, with a mean of 19 years and a median of 18. In contrast, the mean length of residence in PNG(N.E.) is 13 years, with a median of 9 years. Page crystal court north vancouver, bc, V7R 2B6 t: f: e: akleinschmidt@boreasconsulting.com

141 3.3.8 Ceiling Height In terms of ceiling height, the average proportion of the residence with 8 foot ceilings is 77.9%. The remaining ceiling height in the rest of the residence is 11% is 9 feet, 7.2% is 10 feet high, and only 4% of the average residence has ceiling heights of 10 or more feet Basements Full basements are present in the majority (56.9%) of residences, while 10.6% of residences have partial basements. 19% have crawl space, while 13.5% have no basement at all. Full basements are more likely in large households (65.1% of households with 3-5 occupants, and 73.6% of those with over 5+ occupants), and in wealthier households (63.2% of those with annual income over ($100k per annum). Of those residences with basement areas, 49.6% are completely finished, 40.7% are partly finished, and only 9.7% are unfinished. A13 - Is the basement area of this residence unfinished, partly finished, or completely finished? Total Total answering 1912 Unfinished 9.7% Partly finished 40.7% Completely finished 49.6% During the heating season, 82.9% of basements or crawl spaces are usually heated, with 17.1% unheated Insulation Households were asked about the presence of insulation in different parts of the house, including the attic, exterior walls, basement, crawlspaces and heated garages. They were also asked about the type of insulation present, if it was above average, average, or below average. There were no noteworthy differences between service areas. Page crystal court north vancouver, bc, V7R 2B6 t: f: e: akleinschmidt@boreasconsulting.com

142 A15 - Is there insulation: In the attic?- In the exterior walls? In the basement? In the crawl space? In garages/works hops heated using natural gas? Total Answering Yes 88.8% 92.0% 64.5% 27.8% 24.3% No 1.2% 1.2% 9.1% 12.0% 10.3% Don t Know 5.4% 6.8% 5.5% 5.2% 3.1% Not Applicable 4.6%.0% 20.9% 55.1% 62.3% Total Answering Below Average (R6 or 1.75 fiberglass 3.5% 5.1% 5.4% 11.1% 3.1% or less) Average (R12 or 3.5 fiberglass or 28.9% 43.1% 44.6% 35.3% 37.4% less) Above Average (R20 or 6 fiberglass or 46.8% 28.0% 27.1% 30.4% 42.0% more) Don t Know 20.7% 23.8% 23.0% 23.2% 17.5% Overall, there are high levels of insulation in attics and exterior walls, with lower levels in basements, crawl spaces and heated garages, even after accounting for those who do not have these areas. Insulation is present in 88.8% of attics, with less than a percentage point difference between the service areas. Of the remaining residences, only 1.2% confirmed that there was no insulation in their attics, while 5.4% didn t know, and 4.6% stated that the question wasn t applicable. Therefore only a maximum of 6.6% could possibly install attic insulation in the future. Lower income households were only slightly less likely to have attic insulation, with households with income below $40,000 per year having insulation in 85.5% of cases. This was very similar to households with income between $40 and $60,000, with attic insulation in 85.9% of cases, as opposed to households with income of over $100,000 per year, which had attic insulation in 93% of cases. Similar patterns were evident with exterior insulation, but with a range of only 10% between the lowest penetration for the $40-60,000 grouping (86%), and 95.7% for households with income over $100,000 per annum. Of those where insulation was present in the attic, 3.5% had below average insulation (R6 or 1.75 fiberglass or less), 28.9% had average insulation (R12 or 3.5 fiberglass or less), while 46.8% claimed to have above average insulation (R20 or 6 fiberglass or more). Significantly, 20.7% didn t know what type of insulation they had in their attic. This pattern broadly holds across all income categories. The following table shows the presence of insulation by home ownership type. It appears that levels of insulation are much lower for rental properties, but there s a high level of uncertainty about these Page crystal court north vancouver, bc, V7R 2B6 t: f: e: akleinschmidt@boreasconsulting.com

143 results because rental households have poor levels of knowledge about the presence of type of insulation in their attics. 28.4% of rental households didn t know if they had insulation in their attics or not, which could increase the proportion of rental households who do have insulation to be in line with owned properties. Similar patterns are present for basements, exterior walls, crawlspaces and basements, with a much higher lack of knowledge about insulation among rental households. A15 - Please indicate which areas of this residence have insulation and whether the insulation is below average, average or above average: Home Ownership Total Own Rent In the attic - Have insulation? Total Answering Yes % 88.8% 90.6% 61.4% No % 1.2% 1.3%.4% Don t Know % 5.4% 3.9% 28.4% Not Applicable % 4.6% 4.3% 9.8% In the attic Total Answering Below Average (R6 or 1.75 fiberglass or less) % 3.5% 3.3% 9.3% Average (R12 or 3.5 fiberglass or less) % 28.9% 28.9% 28.0% Above Average (R20 or 6 fiberglass or more) % 46.8% 48.3% 13.7% Don t Know % 20.7% 19.5% 49.0% Most (92%) residences have insulation in the exterior walls, 1.2% don t have any insulation, while 6.8% were not able to confirm if they did or did not have any insulation. Only 5.1% of households have below average insulation (R6 or 1.75 fiberglass or less), while 43.1% has average insulation (R12 or 3.5 fiberglass or less) in their exterior walls. About 28% has above average insulation (R20 or 6 fiberglass or more), while 23.8% don t know what type of insulation they have in their exterior walls. Results were similar across service areas and income categories. With regard to basements, 64.5% have insulation in their basements, while 9.1% of them do not. 5.5% do not know if they have insulated basements or not, while the remaining 20.9% do not have basements. Of those who do have insulated basements, only 5.4% claim to have below average insulation (R6 or 1.75 fiberglass or less), while almost half of households (44.6%) have average (R12 or 3.5 fibreglass or less) insulation % have above average (R20 or 6 fiberglass or more) insulation, while a significant 23% don t know what type of insulation they have in their basements. Where crawlspaces are present and garages are heated using natural gas, insulation levels follow a similar pattern, with the smallest grouping having below average insulation, and the next largest group not knowing what type of insulation they have. The majority of households (65%) have at least average Page crystal court north vancouver, bc, V7R 2B6 t: f: e: akleinschmidt@boreasconsulting.com

144 insulation in their crawlspaces, while 79% of those who heat their garages with natural gas have above average insulation Draft Proofing The majority of households have either excellent (39.3%) or good (52.3%) draft proofing. Only 8.4% claim to have residences which are always drafty. There are significant variations by dwelling type, with much higher percentages of poor draft proofing for Row/Townhouses and Mobile homes which are always drafty in 18.3% and 14.1% of cases respectively. This can be compared to an average of 8.4% poor draft-proofing across all housing types. Only 19.3% of Row/Townhouses claim to have excellent draft-proofing, and 29.8% of mobile homes are not at all drafty, again, much lower than the average 39.3% across all dwelling types. Low income households are more likely to have poor draft proofing, accounting for 14.2%, compared to only 6.8% for households with incomes above $100k per annum and the population average of 8.4%. Rental properties have the poorest draft proofing, with 16.3% claiming to have to not have a drafty home at all, while 28% have a home which is always drafty. This is significantly higher than the rate for owned properties, where only 6.9% have homes with poor draft-proofing. Page crystal court north vancouver, bc, V7R 2B6 t: f: e: akleinschmidt@boreasconsulting.com

145 A16 - How effective is the draft proofing in this residence? Excellent home is not at all drafty Total Answering Good home is sometimes drafty Poor home is always drafty % % % Total % 52.3% 8.4% SFD / Duplex % 51.5% 7.2% Detachment Row / Townhouse % 62.5% 18.3% Apt / Condo % 48.2%.0% Mobile & Other % 56.1% 14.1% Home Ownership Own % 52.1% 6.9% Rent % 55.5% 28.2% < $40K % 49.9% 14.2% $40K to <$60K % 55.7% 8.2% Household Income $60K to <$100K % 51.8% 9.3% $100K or more % 50.6% 6.8% Non-response % 54.2% 5.9% Type of Windows Overall, double pane regular windows are the most common window type, accounting for 64% of windows in a typical home. Row/townhouse dwelling and Mobile homes have proportionately more single pane windows as a percentage of windows than other dwelling types, at 22.5% and 14.6% respectively, compared to an average of 8.9%. While Row/Townhouse, Apartment/Condo & mobile homes have a greater than average proportion of double pane regular glass (71.4%, 72.9% and 66.2% respectively, compared to the average of 64.1%), they have a lower proportion of Double pane low-e windows. Double pane low E windows are most common in SFD/duplexes where they account for 22% of all windows, compared to an average of 20.9%. Row houses have only 11.1% double pane low-e panes, while Apartment/Condos and Mobile homes about 14.7% and 15% respectively. Triple pane low-e-windows are slightly more common than regular triple pane glass, accounting for 2.9% and 2.2% of windows over the whole sample. These are concentrated mostly in the SFD/Duplex dwelling types. Page crystal court north vancouver, bc, V7R 2B6 t: f: e: akleinschmidt@boreasconsulting.com

146 A17 - Please estimate what percentage of your windows are: Total SFD/ Duplex Row/ Townhouse Dwelling type Apt/ Condo Mobile & Other Total answering Single pane regular (clear) glass - % of Total Windows 8.9% 7.7% 22.5% 6.8% 14.6% Double pane regular (clear) glass - % of Total Windows 64.1% 63.7% 71.4% 72.9% 66.2% Double pane low-e* - % of Total Windows 20.9% 22.0% 11.1% 14.7% 15.0% Triple pane regular (clear) glass - % of Total Windows 2.2% 2.4% 1.1%.0%.7% Triple pane low-e* - % of Total Windows 2.9% 3.2%.0%.0% 2.0% Other - Specify - % of Total Windows 0.6%.5%.2%.0% 1.1% Types of window frames With regard to window frames, the most common type of window frame is vinyl, across all dwelling types, particularly for Apartment/Condos where they account for 86.4% of windows. Wood frames are the next most common, accounting for 32.2% of windows on average, while aluminum frames account for an average of 14.7% of frames. There was very little variation in the type of window frame by home ownership type, with rental and owned properties not varying much from the population average. Lower income households are slightly more likely to have aluminum frames (19% compared to an average of 14%), and somewhat less likely to vinyl frames (45% compared to an average of 51%). Window frame types do not vary greatly by income type. A18 - Please estimate the percentage of your windows that have the following frames: Detachment Total SFD / Duplex Row / Townhouse Apt / Condo Mobile & Other Base: All Households Aluminum frames Mean 14.7% 12.0% 24.7% 8.7% 33.1% Wood frames Mean 32.2% 35.1% 29.6%.0% 11.9% Vinyl frames Mean 51.3% 51.3% 42.1% 86.4% 53.6% Fiberglass frames Mean 1.1% 1.2% 2.0% 0% 0.4% Other-specify Mean 0.3% 0.3% 0% 0% 0% Page crystal court north vancouver, bc, V7R 2B6 t: f: e: akleinschmidt@boreasconsulting.com

147 3.4 Space Heating Main fuel used to heat this residence Natural gas is the dominant fuel used for heating in 90.8% of dwellings across all PNG service areas. Gas has the highest penetration rate in PNG(N.E.), where 97.9% of dwellings use gas as the main fuel for heating. Penetration rates in PNG-West are approximately 84%. Electricity is the next most common fuel source for heating (4.2%), but is more prevalent in the East (5.3%) and West (10.7%), than in the North East where it is the main fuel in only 0.8% of dwellings. Wood is the next most common main fuel, at 3.9%, while piped propane, and other make up another 1%. There are no significant variations by income level or home ownership type. Total North East Service Area East West SFD / Duplex Row / Town house Detachment Apt / Condo Mobile & Other Total Answering Electricity 4.2%.8% 5.3% 10.7% 4.3% 4.4% 12.4% 2.3% Natural gas 90.8% 97.9% 83.7% 84.2% 90.5% 95.6% 87.6% 92.3% Piped propane 0.1% 0.1% 0.1% 0.0% 0.0% 0.0% 0.0% 0.5% Bottled propane 0.1% 0.1% 0.1% 0.0% 0.0% 0.0% 0.0% 0.5% Oil 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% Wood 3.9% 1.1% 8.8% 3.7% 4.1% 0.0% 0.0% 4.2% Other 0.9% 0.0% 2.1% 1.4% 1.0% 0.0% 0.0% 0.5% Don t know 0.1% 0.1% 0.1% 0.0% 0.1% 0.0% 0.0% 0.3% Supplementary fuel sources In terms of supplementary fuel sources, electricity is the most popular additional fuel for 37.9% of houses, followed by gas and wood, accounting for 18.5% and 18.7% respectively. The largest grouping, 39.5% of households, has no supplementary heating fuel. B4 - Please indicate any additional or supplementary fuel(s) used to heat this residence. Total answering Electricity Natural gas Piped & bottled propane Oil Wood Other Don't know No supplementary heating fuel used Weighted % % % % % % % % % 18.5% 0.2% 0.3% 18.7% 2.3% 0.3% 39.5% Column percentages may exceed 100% because of multiple responses. Page crystal court north vancouver, bc, V7R 2B6 t: f: e: akleinschmidt@boreasconsulting.com

148 Electricity is the most commonly used supplementary fuel, used by 47% of households, followed by gas for 24.9%. Wood is also a very popular supplementary fuel for an additional quarter of households (24.6%). Rental properties appear slightly more likely to be using natural gas (35% compared to average of 25%), rather than wood (13% rather than average of 25%), as the main supplementary fuel. B4 - Please indicate which supplementary fuel is used the most? Home Ownership Total Own Rent Total Answering Electricity 47.0% 46.7% 49.4% Natural gas 24.9% 24.4% 35.5% Piped or bottle propane.1%.1%.0% Oil.3%.2% 1.2% Wood 24.6% 25.3% 12.9% Other 2.8% 2.9% 1.0% Don't know.5%.5%.0% Boilers and furnaces Gas boilers and gas furnaces are used in 4.9% and 88.1% of residences respectively. Electric furnaces account for only 1.9% of residences, while 4.7% have no boiler or furnace, and 0.4% have a multi-fuel capability. B5 - Which of the following does this residence have? Total Multi-fuel Gas boiler Gas furnace Answering furnace Electric furnace None of the above % 88.1% 0.4% 1.9% 4.7% In terms of boiler efficiency, 22.1% of residences with a gas boiler (as opposed to furnace) have a low efficiency (60% efficient) boiler, compared to 31.7% with a mid-efficiency boiler (80-85%), and 28.2% have a high efficiency boiler (90% or higher). A large grouping (17.9%) don t know what efficiency their boiler is. B6-What is the efficiency of your gas boiler? Total Total Answering (number) 147 Low efficiency 60% efficient 22.1% Mid-efficiency 80% to 85% efficient 31.7% High efficiency 90% efficient or higher 28.2% Don t know 17.9% Page crystal court north vancouver, bc, V7R 2B6 t: f: e: akleinschmidt@boreasconsulting.com

149 Low efficiency gas furnaces (less than 78% efficient) are present in 19.2% of households, 30% have a midefficiency furnace (78%-85% efficient), and the greatest proportion (35.5%) of households have high efficiency furnaces. Similar to the gas boiler question, there is a great lack of knowledge, with 14.9% of households not knowing what the efficiency of their boiler is. Energy audits may be a useful programme for this segment. B7 - What is the efficiency of your gas furnace? Total Total Answering (number) 2460 Low efficiency less than 78% efficient 19.2% Mid-efficiency 78% to 85% efficient 30.3% High efficiency 90% efficient or higher 35.5% Don t know 14.9% In terms of energy qualified models, 32.2% of households claimed to have an ENERGY STAR qualified model, while 37.4% do not. However, nearly a third of households (30%) were not sure if their model was ENERGY STAR qualified or not. Both Row/Townhouses and Mobile homes were less likely to have ENERGY STAR qualified models, while 44% of Row/Townhouses did not know if their model was qualified or not. As expected, rental properties were less likely to have an ENERGY STAR qualified model (25% to 39% for owned properties). They were also less likely to know if their furnace or boiler was a qualified model or not. B9 - Is your furnace or boiler an ENERGY STAR qualified model? Yes No Don't know Total Answering % % % Total % 37.4% 30.3% SFD / Duplex % 35.6% 29.7% Detachment Home Ownership Row / Townhouse % 35.4% 44.8% Apt / Condo % 34.5% 32.9% Mobile & Other % 50.9% 31.8% Own % 37.6% 29.6% Rent % 34.0% 41.3% < $40K % 39.4% 42.2% $40K to <$60K % 41.5% 29.9% Household Income $60K to <$100K % 39.8% 26.7% $100K or more % 37.9% 22.1% Non-response % 32.2% 33.8% Page crystal court north vancouver, bc, V7R 2B6 t: f: e: akleinschmidt@boreasconsulting.com

150 With regard to boiler age, the average boiler or furnace across all service areas is 13 years old, with a median of 10 years. Low income households with income less than $40,000 per annum have a mean of 14.2 years, and a median of 12. Forced air furnaces are used by 85% of residences for space heating, followed by fireplaces or heater stoves, or portable electric heaters. Wired-in electric baseboards are another popular option, used in 12.8% of households. There is generally a much greater use of electricity in the East and West, as opposed to the North East service area. A follow-up question asked which method was used the most to heat the residence. While forced air furnace remained the dominant method, at 78.8%, use of electric methods dropped substantially, providing support for the answers on main fuel source. Wood fireplaces or heater stoves are the main method in only 6.3% of households, but present in 29.6%. Wood and electricity appear to be the key competitive alternative fuels to natural gas. The largest grouping of households (34%) do not have a second method of space heating. Of those who do have a second method of space heating, fireplace or heater stoves are used by 20.1% of households, and portable electric heaters by 21.8%. B-11 Methods used to heat this residence All methods used to heat this residence.* Method used the most to heat this residence. Second most used method to heat this residence. Number responding Forced air furnace 85.1% 78.8% 4.5% Wired-in electric baseboards 12.8% 2.5% 7.5% Heat pump - air source 1.0%.7%.4% Heat pump - ground source (geothermal).2%.1%.0% Hot water baseboards 3.4% 2.7%.6% Hot water radiant in-floor heat 4.0% 2.1% 1.1% Fireplace or heater stove 29.6% 6.3% 20.1% Wired-in electric wall heater (fan forced) 3.8%.5% 1.7% Electric radiant heat 4.4%.5% 3.0% Gas wall / forced air heater 4.0% 1.8% 1.5% Portable electric heaters 29.1% 2.1% 21.8% Other 5.9% 1.8% 3.7% No second method of space heating used 34.0% *Column percentages may exceed 100% because of multiple responses. Page crystal court north vancouver, bc, V7R 2B6 t: f: e: akleinschmidt@boreasconsulting.com

151 3.4.4 Space heating maintenance With regards to space heating measures and behaviours, households appear to be diligent with regards to changing the furnace filter, with 79.9% claiming to change it either always or usually, with an additional 10.2% occasionally doing so. Only 2.7% claim to either never change the filter, or don t know how frequently the filter is changed. Annual servicing by a contractor appear to be much less common, with only 32.5% having the system serviced annually always or usually. Most either only have it serviced occasionally (34.2%), or never (27.8%). B12 - Please indicate whether you always, usually, occasionally or never do the following: Change the furnace filter regularly Have the heating system serviced annually by a contractor Service the heating system annually myself Total Answering Always 55.7% 15.5% 16.7% Usually 24.2% 17.0% 15.7% Occasionally 10.2% 34.2% 14.0% Never 1.5% 27.8% 46.7% Don't know 1.2% 2.4% 1.5% It s unclear if some of those who only service the system occasionally or never are doing so themselves, as 46.7% never service the system themselves. Only 16.7% and 15.7% (combined 32.4%) are servicing the systems themselves always or occasionally, which is outweighed by the 63% who have their system serviced by a contractor occasionally Programmable thermostats The use of programmable thermostats is consistent across regions, with 53.2% claiming to use a programmable thermostat. As expected, this ratio is lower for rental properties, with only 42.7% using a programmable thermostat, while 53.9% of owned properties make use of programmable thermostats. B13 - Do you use programmable thermostat(s) in this residence? Home ownership Total Own Rent Total Answering Yes 53.2% 53.9% 42.7% No 45.5% 45.0% 53.9% Don t know 1.3% 1.2% 3.4% The use of programmable thermostats appears to increase with household income, with only 44.8% of households using them, compared to 63% of households with incomes of $100 thousand or more. Page crystal court north vancouver, bc, V7R 2B6 t: f: e: akleinschmidt@boreasconsulting.com

152 Total Answering Total < $40K $40K to <$60K Household Income $60K to <$100K $100K or more Nonresponse Yes 53.2% 44.8% 50.4% 51.5% 63.0% 51.8% No 45.5% 51.9% 47.9% 47.9% 36.3% 47.1% Don't know 1.3% 3.4% 1.7% 0.6% 0.7% 1.1% 3.5 Fireplaces and Heater Stoves A majority (54.1%) of households have a fireplace or heating stove. Rental properties have a much lower proportion of fireplaces, with only 24.2% of dwellings having fireplaces, compared to owner-occupied dwellings where 56.1% have fireplaces or heating stoves. Fireplaces are much more prevalent in single family dwellings and duplexes, and are found in about 58% of these households. Households living in other dwelling types are over 20% less likely to have a fireplace or heating stove, ranging from 32% for townhouses, to 34.7% for apartments or condos. C1 - Do you have a fireplace or heating stove in this residence? Detachment Total SFD / Duplex Row / Townhouse Apt / Condo Mobile & Other Total Answering Yes 54.1% 57.6% 32.0% 34.7% 33.4% No 45.9% 42.4% 68.0% 65.3% 66.6% Type of fireplace or heater stove The most popular fireplace or heater stoves are Gas (heater type), followed by Wood burning fireplace and wood burning stove. Electric fireplace/stoves are next most popular, followed by decorative gas and freestanding gas heaters. Pellet stoves have the lowest penetration. Of those with more than one stove, gas (heater type) stoves remain the most popular. The primary reasons for using the various stove types differ. Of those with gas (heater type), most (47.9%) use it for both heating and ambiance, with 37.6% using it primarily for heating. Decorative gas stoves and wood burning fireplaces are used primarily for ambiance (46.8% and 50% respectively). Where heating is the primary use, gas (free standing), wood burning stoves and pellet stoves are the most popular. Page crystal court north vancouver, bc, V7R 2B6 t: f: e: akleinschmidt@boreasconsulting.com

153 Where both heating and ambiance are the primary purpose, gas (heater type) and electric stoves are the most popular. C2 - How many of the following types of fireplaces and heater stoves do you have? For each type, please indicate whether they are used primarily for heating, ambiance or both. Gas Decorative - (number) Gas (heater type) Gas (free standing) Electric Wood burning fireplace Wood burning stove Pellet stove Other stove Number of Fireplaces/stoves Total answering % 68.9% 89.6% 86.7% 73.2% 76.8% 93.9% 99.4% 1 9.7% 27.9% 9.4% 11.4% 24.6% 22.5% 5.7% 0.6% 2 1.1% 2.9% 0.9% 1.2% 2.2% 0.6% 0.4% 0.0% 3 0.2% 0.3% 0.0% 0.2% 0.0% 0.0% 0.0% 0.0% % 0.0% 0.0% 0.5% 0.0% 0.0% 0.0% 0.0% Used primarily for: Total Answering Heating 17.3% 37.6% 59.1% 26.9% 17.1% 67.9% 66.1% 91.8% Ambiance 46.8% 14.6% 7.5% 25.5% 50.0% 8.1% 2.4% 0.0% Both 35.9% 47.9% 33.4% 47.6% 32.9% 24.0% 31.4% 8.2% Seasonal usage There are marked differences between the different PNG service areas in terms of seasonal usage of fireplaces and heater stoves. Fireplaces are used significantly more during the year in the eastern region of PNG-West, than in the western region and in PNG(N.E.) The average number of hours per week of use during winter in the eastern region of PNG-West 45.9, compared to 33.5 in the western region, and 30.3 hours in PNG(N.E.). There is significant variation by building type, with mobile homes heated for almost double the time of row/townhouses in winter, with 58.9 hours per week compared to 29.5 for row houses. Page crystal court north vancouver, bc, V7R 2B6 t: f: e: akleinschmidt@boreasconsulting.com

154 C3 - How many hours are the fireplaces and heater stoves in use during a typical week in each of the following seasons? Service Area North Total East West East Total Answering Summer (Jul Sep)? (hours/week) Mean Median Fall (Oct Dec)? (hours/week) Mean Median Winter (January March)? (hours/week) Mean Median Spring (April June)? (hours/week) Mean Median C3 - How many hours are the fireplaces and heater stoves in use during a typical week in each of the following seasons? Detachment Total SFD / Duplex Row / Townhouse Apt / Condo Mobile & Other Summer (Jul Sep)? (hours/week) Fall (Oct Dec)? (hours/week) Winter (January March)? (hours/week) Spring (April June)? (hours/week) Total Answering Mean Median Mean Median Mean Median Mean Median Page crystal court north vancouver, bc, V7R 2B6 t: f: e: akleinschmidt@boreasconsulting.com

155 3.5.3 Age of fireplace The average age of the gas fireplace is 13.2 years. C5 - How old is (are) your gas fireplace(s)? Service Area Total North East East West SFD / Duplex Detachment Row / Town house Apt / Condo Mobile & Other No Answer Total Answering Mean Median Standard Error of Mean The vast majority of households have a fixed glass front on their primary gas fireplace. No answers were provided for second or third gas fireplaces. C6 - For each gas fireplace you have, please indicate whether it has a fixed glass front, glass doors that open, or an open hearth design (no glass). Total answering Fixed glass front Glass doors that open No glass (open hearth) % 8.7% 1.3% Pilot lights Almost 93% of all gas fireplaces have a pilot light. C7 - For each gas fireplace you have, please indicate whether it has a pilot light. Total Answering Yes No Don t Know Not Applicable % 5.8% 1.3%.0% Only 69% of those with pilot lights typically turn them off after the heating season. On average, the pilot light is off for 7.4 months, and a median of 6 months. C8 - Do you typically turn off your fireplace pilot light? If yes, how many months is the pilot light typically turned off? Do you typically turn off your fireplace pilot light? Number of months per year pilot light off Total Yes No Median Don't know Total Answering Mean months Answering months % 29.8% 1.5% Page crystal court north vancouver, bc, V7R 2B6 t: f: e: akleinschmidt@boreasconsulting.com

156 3.6 Domestic Water Heating Water heater fuel types Most water heaters are fueled with natural gas (71%) rather than electricity which is used by just over a quarter (28%) of water heaters. However there are variations by dwelling type, with apartment/condo s and mobile home more reliant on electricity than natural gas. Other fuel types account for only 0.3% of households. D2 - What type of fuel does your water heater(s) use? Heater 1: Main Detachment Heater 1 (Main Unit) Total SFD / Duplex Row / Townhouse Apt / Condo Mobile & Other Total Answering Electricity 28.3% 24.6% 20.2% 40.6% 59.9% Natural gas 71.4% 75.1% 79.8% 59.4% 40.1% Piped, bottled propane & Oil.0%.0%.0%.0%.0% Geothermal.1%.1%.0%.0%.0% Other.2%.3%.0%.0%.0% There is a slight relationship with income, with lower income households earning less than $40,000 per annum more likely to have electric, rather than natural gas powered water heaters. Household Income Total < $40K $40K to <$60K $60K to <$100K $100K or more Nonresponse Total Answering Electricity 28.3% 38.7% 28.7% 27.1% 25.6% 26.1% Natural gas 71.4% 61.3% 71.3% 72.7% 73.9% 73.5% Other.2%.0%.0%.2%.5%.4% Barely 1% of residents use solar energy to pre-warm or supplement the water heating process. Only 4.7% have changed the fuel used for water heating at their residence within the past five years. D4 - Have you changed the fuel used for water heating at this residence within the past five years (e.g., from oil to natural gas, from natural gas to electricity, etc.)? Total Answering Yes No Don't know % 95.3%.0% Page crystal court north vancouver, bc, V7R 2B6 t: f: e: akleinschmidt@boreasconsulting.com

157 Of the 128 cases, representing roughly 5% of the population which did shift, in 78.4% of cases the shift was away from natural gas, while only 19.2% moved away from electricity. Piped and bottled propane accounted for another 2.4% dwellings. Total Answering Electricity Natural gas Piped propane Bottled propane % 78.4%.6% 1.8% Types of water heaters Conventional storage tanks account for over 88% of all water heaters. There is very little variation by dwelling type or ownership. Even the difference between owned and rental properties may have less to do with the type, and more to do with the lack of knowledge about the type of water heater. For rental properties, almost 20% could not say what type of water heater they had, and a similar pattern can be seen in the Row/Townhouse and Apartment/Condo categories. On demand tanks are present in only 4% of residences, and appear to be more prevalent in single family dwelling, and owned properties. The proportion of households which don t know what type of water heater they have, exceeds the remaining types of water heater, which include hybrid and combined water heaters. D6 - What type(s) of water heater(s) is used by this residence? Detachment Ownership Total SFD / Duplex Row / Townhouse Apt / Condo Mobile & Other Own Rent Total Answering Conventional storage tank 88.7% 89.4% 76.1% 79.6% 86.3% 89.3% 78.8% On-demand (tankless) 4.0% 4.5% 1.9%.0%.3% 4.2% 1% Hybrid on-demand (uses small storage tank) Combined space and water heater Hybrid heat pump water heater (tank).5%.4%.0%.0% 1.3% 0.5% 0.5%.7%.6%.0%.0% 1.9% 0.8% 0%.4%.5%.0%.0%.0% 0.5% 0% Don t know 5.7% 4.6% 22.0% 20.4% 10.2% 4.8% 19.7% While it appears at first glance that households earning less than $40,000 per year are less likely to have a conventional storage tank, this difference disappears once you take the high proportion of don t know responses in this income category. Higher income households do seem more likely to have on- Page crystal court north vancouver, bc, V7R 2B6 t: f: e: akleinschmidt@boreasconsulting.com

158 demand (tankless) water heaters installed, (4.3% for those earning between $60 and $100 thousand per year). D6 - What type(s) of water heater(s) is used by this residence? Total < $40K $40K to <$60K Household Income $60K to <$100K $100K or more Total Answering Conventional storage tank 88.7% 84.6% 90.3% 90.7% 91.0% 86.5% On-demand (tankless) 4.0% 1.5%.7% 4.3% 5.1% 5.6% Hybrid on-demand (uses small storage tank) Combined space and water heater Hybrid heat pump water heater (tank).5%.6%.0%.9%.3%.4%.7%.8% 1.0%.1%.5% 1.2%.4%.2%.5%.3% 1.0%.2% Don t know 5.7% 12.4% 7.4% 3.8% 2.1% 6.0% Installation and Age of water heaters The average age of the water heater is 8.1 years, with a median of 6. Similarly, if you look at household income, households with less than $40k per annum are more likely to have an older water heater, with an average age of 9.7 years, compared to the average of 8.1 years across all income groups. Total < $40K $40K to <$60K Household Income $60K to <$100K $100K or more Nonresponse Nonresponse Total Answering Mean Median Standard Error of Mean Households in the western region of PNG-West appear to have slightly younger water heaters, with an average age of 6.9 years, and a median of 5. This appears to be supported by a higher proportion of households which have installed a water heater within the past 5 years. Almost half (47.3%) of the dwellings had installed a water heater within the past 5 years in the western region of PNG-West service territory, compared to 35.9% over all PNG service areas. Page crystal court north vancouver, bc, V7R 2B6 t: f: e: akleinschmidt@boreasconsulting.com

159 D9 - Have you installed a water heater within the past five years? Total Service Area Ownership North East East West Own Rent Total Answering Yes % 35.9% 33.1% 32.7% 47.3% 36.9% 19.2% No % 64.1% 66.9% 67.3% 52.7% 63.1% 80.8% The main reason given for installing a new water heater was failure of the old water heater (57%), while an additional 15.5% pre-emptively replaced their water heaters in the anticipation of failure. Efficiency accounted for only 13.4% of replacements, and fuel cost only 2% of replacements. These reasons are consistent across service areas and dwelling areas, with the most important factors being failure, or anticipated failure. D10 - What was the main reason you installed the water heater? Wanted Anticipate Wanted to more Water Total d water New home change to efficient heater had Answering heater gas water failed failure heater Wanted a cheaper fuel Other % 1.2% 13.4% 57.3% 15.5% 2.0% 5.3% Water heater efficiency measures: insulating blankets and pipe-wrap The use of insulating blankets on the hot water tank is not widespread, with only 16.2% claiming to have one. The use of insulating blankets is lower for Row/Townhouses and the Apartment categories, at about 7%. Their use is also lower for rental (7.2%) than for owner-occupied dwellings (16.6%). Does this residence have an insulating blanket installed on the hot water tank? Dwelling type Home ownership Total SFD / Duplex Row / Townhouse Apt / Condo Mobile & Other Total Answering Yes 16.2% 16.4% 6.8% 7.4% 15.6% 16.6% 7.2% No 74.7% 75.6% 69.7% 80.1% 71.4% 75.2% 71.3% Don t know 5.8% 4.6% 18.7% 12.4% 10.0% 4.8% 18.1% Not applicable 3.4% 3.4% 4.8%.0% 3.0% 3.4% 3.5% Own Rent Page crystal court north vancouver, bc, V7R 2B6 t: f: e: akleinschmidt@boreasconsulting.com

160 The use of pipe wrap is slightly more prevalent than insulating blankets, used by 25% of households. The use of pipe wrap appears to follow the same pattern as for insulating blankets, with lower levels of usage for Row/Townhouse (15%) and Apartment (0%) categories, and for rental properties (10.4%) Does this residence have pipe wrap (insulation) on the hot water pipes? Dwelling type Ownership type Total Answering Total SFD / Duplex Row / Townhouse Apt / Condo Mobile & Other Own Rent Yes 25.1% 23.7% 15.1%.0% 38.8% 26.2% 10.4% No 64.6% 66.9% 62.8% 86.6% 47.8% 64.8% 62.2% Don t know 10.3% 9.4% 22.1% 13.4% 13.5% 9.0% 27.5% Not applicable.0%.0%.0%.0%.0%.0%.0% There was no significant relationship between income level and the installation of either insulating blankets or pipe wrap. The most significant relationship is that lower income households were half as likely as higher income households to know if either of these measures were installed: 9.8% for those earning less than $40,000, compared to a range of 3%-5.6% for higher income households in the case of insulating blankets. In the case of pipe-wrap, households earning less than $40,000 per annum didn t know if the measures were present in almost 16% of cases, compared to a range of 7.6 to 9.5% for higher income households. Use of insulating blankets and pipe-wrap by income category An insulating blanket installed on the hot water tank Total Answering Total < $40K $40K to <$60K Household Income $60K to <$100K $100K or more Nonresponse Yes 16.2% 18.4% 20.7% 12.9% 15.3% 16.6% No 74.7% 69.5% 74.4% 78.8% 76.8% 72.6% Don t know 5.8% 9.8% 3.8% 5.6% 3.3% 6.5% Not applicable 3.4% 2.3% 1.1% 2.8% 4.6% 4.3% Page crystal court north vancouver, bc, V7R 2B6 t: f: e: akleinschmidt@boreasconsulting.com

161 Pipe wrap (insulation) on the hot water pipes Total < $40K $40K to <$60K $60K to <$100K $100K or more Nonresponse Total Answering Yes 25.1% 23.0% 25.4% 24.8% 27.2% 24.5% No 64.6% 61.1% 65.1% 66.0% 65.2% 64.6% Don t know 10.3% 15.9% 9.5% 9.3% 7.6% 10.9% Not applicable.0%.0%.0%.0%.0%.0% Hot water usage Households were also asked about their habits with regards to different uses of hot water. The average number of showerheads per household is slightly less than two, one of which is a low-flow showerhead. The number of bathrooms in rental properties is smaller, with an average of 1.3 showerheads per rental unit. Total Home Ownership Own Rent Showerheads (all kinds) Low flow showerheads Total Answering Mean Total Answering Mean Households average 3.6 dishwasher loads per week, 2.9 baths per week, and 10.5 showers per week. D13 Weekly water usage Total Answering Mean Median Number of dishwasher loads per week Number of baths per week Number of showers per week Household water use appears to be driven mainly by household size, with a clear increase in the number of dishwasher loads, baths and showers per week as the number of occupants increases. The number of dishwasher loads for households with more than 5 occupants increases to an average of 6.6 per week, (approximately 1 per day) compared to an average of 3.6 loads per week. Showers are more prevalent than baths, with a median of 2 baths per week, compared to 10 showers per week in the median household. Page crystal court north vancouver, bc, V7R 2B6 t: f: e: akleinschmidt@boreasconsulting.com

162 Number of dishwasher loads per week Number of baths per week Number of showers per week Total Answering Total Number of Occupants > Mean Median Total Answering Mean Median Total Answering Mean Median Swimming pools and hot tubs Private swimming pools are very rare, and only 1% of residences have a swimming pool for their exclusive use. Of these, 0.1% are indoor, and 0.9% are outdoor. Over a third of pools (35.7%) are not heated at all. The remaining two-thirds are heated using a range of fuels, including solar (20.2%), natural gas (17.2%), electricity (22.4%), or other (4.6%). Of the small number who heat their pools, the average heating period is 6.5 months per year, with a median of 5. A very high proportion (91.4%) cover the pool during the heating period, when it s not in use. Hot tubs are more prevalent, with slightly over 10% having a hot tub for their exclusive use. Only 1.2% of these are indoor, while 9.5% are outdoor. Most (89.3%) do not have a private hot tub. Electricity is overwhelmingly the main choice of fuel for hot tubs, with 93.9% of households using electricity to heat them. Natural gas is the next most popular choice, but is used by only 4.2% of households, followed by 1.5% who use other fuel sources. The average hot tub is heated for 10.2 months every year, and a median of 12 months. Almost all hottub owners (97.7%) use a cover on the hot tub when it s not in use. 3.8 Renovations and energy use Renovations with a rebate On average, just less than a quarter of all households (22.7%) have undertaken some form of renovation or energy efficiency measure with the help of a rebate over the past 5 years. Page crystal court north vancouver, bc, V7R 2B6 t: f: e: akleinschmidt@boreasconsulting.com

163 The most popular measures have been to install energy efficient windows (10.6%), and to complete and EcoENERGY or LiveSmart BC certified energy audit. The next most popular action was to improve insulation in some way, which 8.5% of households undertook. There is a marked difference between rental and owned properties, with 97.6% of rental households not having undertaken any renovations during the past 5 years. F1 - Please indicate renovations or actions you have undertaken at this residence during the past 5 years - with rebate. Home Ownership Total Own Rent Base: All households Weighted Improve insulation in walls, attic, basement, or crawlspace 8.5% 9.2%.6% Install energy efficient window(s) 10.6% 11.4% 2.4% Install insulated outside door(s) or storm doors 5.0% 5.4% 1.3% Install low flow showerhead(s) 2.0% 2.1%.0% Install programmable thermostat(s) 5.3% 5.8%.6% Install pipe wrap 1.4% 1.5%.0% Install weather stripping or caulking 4.0% 4.4%.0% Install hot water heater blanket 1.2% 1.3%.0% Install drain pipe waste heat recovery system.3%.3%.0% Install on-demand (tankless or hybrid) water heater 1.8% 1.9%.0% Install high efficiency hot water tank 4.0% 4.4%.0% Complete an EcoENERGY or LiveSmart BC certified energy audit 10.5% 11.2% 1.9% None of the above 78.3% 76.5% 97.6% Even with a rebate, lower income households (earning less than $40,000 per year) are generally undertaking less actions than wealthier households. This does raise questions about the targeting of the rebates, and how they can be better targeted to ensure effectiveness. The only programme where lower income households exceed the overall average is for the installation of pipe wrap, with 1.8% compared to 1.4% of households overall, but these results are within the margin of error for the sample. Page crystal court north vancouver, bc, V7R 2B6 t: f: e: akleinschmidt@boreasconsulting.com

164 Total < $40K $40K to <$60K Household Income $60K to <$100K $100K or more Nonresponse Weighted number Improve insulation in walls, attic, basement, or crawlspace Install energy efficient window(s) Install insulated outside door(s) or storm doors 8.5% 5.9% 9.9% 10.1% 9.7% 7.4% 10.6% 8.2% 10.9% 10.1% 15.1% 8.8% 5.0% 3.8% 4.8% 4.9% 7.3% 4.2% Install low flow showerhead(s) 2.0% 1.8% 1.7% 2.2% 2.8% 1.4% Install programmable thermostat(s) 5.3% 2.4% 7.5% 6.7% 4.8% 5.5% Install pipe wrap 1.4% 1.8%.9% 1.4% 1.7% 1.1% Install weather stripping or caulking 4.0% 2.6% 6.1% 4.1% 5.3% 3.0% Install hot water heater blanket 1.2%.9% 2.2%.9% 1.8%.7% Install drain pipe waste heat recovery system.3%.0%.5%.7%.2%.2% Install on-demand (tankless or hybrid) water heater Install high efficiency hot water tank Complete an EcoENERGY or LiveSmart BC certified energy audit 1.8%.9% 1.3% 2.7% 1.8% 1.9% 4.0% 2.8% 3.9% 5.1% 5.0% 3.3% 10.5% 4.8% 12.6% 11.1% 14.3% 9.4% None of the above 78.3% 83.3% 78.3% 75.5% 73.3% 81.7% Renovations without a rebate The most popular renovations undertaken without a rebate include installing energy efficient windows (40%), programmable thermostats (35%), weather stripping or caulking (46%), improving insulation (33%), insulated storm doors (32%) and low-flow showerheads 32%. Page crystal court north vancouver, bc, V7R 2B6 t: f: e: akleinschmidt@boreasconsulting.com

165 F1 - Please indicate renovations or actions you have undertaken at this residence during the past 5 years - without rebate. Base: All Households 1353 Weighted 1359 Improve insulation in walls, attic, basement, or crawlspace 33.2% Install energy efficient window(s) 40.2% Install insulated outside door(s) or storm doors 32.2% Install low flow showerhead(s) 32.1% Install programmable thermostat(s) 35.5% Install pipe wrap 16.4% Install weather stripping or caulking 46.4% Install hot water heater blanket 6.9% Install drain pipe waste heat recovery system.8% Install on-demand (tankless or hybrid) water heater 3.4% Install high efficiency hot water tank 17.0% Complete an EcoENERGY or LiveSmart BC certified energy audit 3.3% Install heated swimming pool.5% Install hot tub 4.4% Column percentages may exceed 100% because of multiple responses. Total While lower income households were less likely to have undertaken renovations or actions with a rebate, they appear no less likely than any other income groups to undertake other renovations without a rebate. Page crystal court north vancouver, bc, V7R 2B6 t: f: e: akleinschmidt@boreasconsulting.com

166 F1 - Please indicate renovations or actions you have undertaken at this residence during the past 5 years - without rebate. Total < $40K $40K to <$60K Household Income $60K to <$100K $100K or more Nonresponse Weighted number Improve insulation in walls, attic, basement, or crawlspace 33.2% 26.3% 30.5% 31.0% 37.1% 35.7% Install energy efficient window(s) 40.2% 39.9% 46.4% 37.0% 40.4% 40.7% Install insulated outside door(s) or storm doors 32.2% 37.6% 32.3% 26.1% 33.6% 33.5% Install low flow showerhead(s) 32.1% 35.7% 34.5% 29.0% 32.2% 32.2% Install programmable thermostat(s) 35.5% 31.1% 26.9% 35.9% 42.1% 33.9% Install pipe wrap 16.4% 15.7% 16.7% 16.6% 17.9% 15.0% Install weather stripping or caulking 46.4% 47.5% 45.4% 43.7% 45.1% 49.9% Install hot water heater blanket 6.9% 8.9% 9.3% 5.8% 7.7% 5.3% Install drain pipe waste heat recovery system.8% 1.2%.6%.7% 1.5%.2% Install on-demand (tankless or hybrid) water heater Install high efficiency hot water tank Complete an EcoENERGY or LiveSmart BC certified energy audit 3.4% 1.6%.6% 4.3% 3.7% 4.3% 17.0% 20.3% 14.8% 16.5% 15.0% 18.4% 3.3% 1.6% 2.9% 4.1% 3.3% 3.6% Install heated swimming pool.5% 1.2% 1.2%.2%.4%.2% Install hot tub 4.4% 1.6% 1.7% 5.0% 8.1% 2.6% Renovations involving fireplaces or heating stoves Households were asked if they had undertaken any renovations involving fireplaces or heating stoves in the past five years, or if they plan to do so over the next 2 years. Only 10.4% indicated that they had, or intend to, while the vast majority (89.6%) have not, and do not intend to undertake any renovations. As expected, the percentage of households who have or plan to renovate their fireplaces increases slightly with income, from 5.7% for the lowest category (those earning less than $40,000 per year), to 13.5% for those earning more than $100,000 per year. Page crystal court north vancouver, bc, V7R 2B6 t: f: e: akleinschmidt@boreasconsulting.com

167 F2 - Did you undertake any renovations that involve fireplaces or heating stoves at this residence in the past five years, or plan to do so in the next two years? Total Answering Total < $40K $40K to <$60K Household Income $60K to <$100K $100K or more Nonresponse Yes 10.4% 5.7% 9.4% 11.2% 13.5% 10.0% No 89.6% 94.3% 90.6% 88.8% 86.5% 90.0% Of those who have undertaken, or intend to do renovations, with a rebate, 11.1% have installed a wood stove, while the majority (86%) have done no renovations with the use of rebate. Only 2.1% installed a free standing gas fireplace or gas heating stove, while 1.4% converted existing fireplaces to gas heater type fireplaces. Most renovations currently occur without the use of a rebate. The most popular renovation is the installation of a wood stove, accounting for 41.8% of renovations over the past 5 years, and for most of the renovations planned for the next 2 years (21.7%). Approximately one fifth (19.1%) involved removed a wood fireplace or stove, with 16% removing or disconnecting a gas fireplace. Electric fireplaces were installed in 15.9% of cases. F3 - Please indicate the renovations that involve fireplaces or heating stove Within the Within the past 5 past 5 years years without with rebate rebate Within the next 2 years Base: All Households Weighted Install free standing gas fireplace or gas heating stove 2.1% 13.9% 9.9% Install wood stove 11.1% 41.8% 21.7% Install gas heater type fireplace insert in an existing wood fireplace 0.7% 9.2% 4.6% Replace decorative gas fireplace with gas heater type insert 0.7% 3.6% 5.3% Remove or disconnect gas fireplace % 4.5% Remove wood fireplace or wood stove % 3.8% Install decorative gas fireplace - 3.9% 5% Install electric fireplace % 4.9% None 86% 51.2% Column percentages may exceed 100% because of multiple responses. Page crystal court north vancouver, bc, V7R 2B6 t: f: e: akleinschmidt@boreasconsulting.com

168 3.8.4 Information sources There are no clear winners in terms of trusted sources of information for major appliances. Government appears to be the least influential, with only 35.9% claiming that government is somewhat to very influential. A knowledgeable family member, friend or neighbour is the most influential, with 83.2% rating this source of information as somewhat (3) to very influential. Customer ratings, expert reviews and contractors are the next most trusted sources, followed by electric or gas utilities. Government and Appliance salespeople are the least influential sources of information. F4 - How influential are the following sources of information when purchasing a major appliance? Contractors /trades Customer ratings Expert reviews in media Electric or gas utilities Government Appliance salespeople Knowledgeable family member, friend, or neighbour Total Answering Not at all Influential 24.9% 14.3% 19.0% 22.8% 43.3% 24.2% 8.7% % 8.5% 13.5% 16.3% 20.8% 22.2% 8.1% % 25.1% 26.1% 26.9% 23.2% 31.6% 26.4% % 30.9% 25.6% 19.8% 8.2% 15.8% 33.2% Very Influential 18.8% 21.1% 15.8% 14.2% 4.5% 6.3% 23.5% Sum of 3-5 Sum of % 77.2% 67.5% 60.8% 35.9% 53.7% 83.2% 41% 52.0% 41.4% 34.0% 12.7% 22.1% 56.7% 3.9 Appliances Cooking appliances The most prevalent cooking appliance is the electric range, used by 78.1% of households, with the next most common being the microwave oven, found in 78% of households. The most commonly used gas cooking appliance is the gas barbecue using bottled gas (58%), followed by the gas range, found in 11% of households. Electricity is more widely used for cooking than natural gas. Page crystal court north vancouver, bc, V7R 2B6 t: f: e: akleinschmidt@boreasconsulting.com

169 G1 - Please indicate how many of the following cooking appliances are in use and their approximate ages. Number of each type of appliance Mean age Median Electric range (cook top and oven) 19.4% 78.1% 2.2% 0.4% * 7 Gas range (cook top and oven 88.5% 11.0% 0.3% 0.3% Dual fuel range (gas cook top, electric oven) 98.2% 1.7% 0.1% 0.1% Electric cook top 91.6% 8.1% 0.2% 0.1% Gas cook top 97.4% 2.4% 0.0% 0.1% 10 8 Electric wall oven 91.6% 7.4% 0.9% 0.1% Gas wall oven 99.3% 0.6% 0.0% 0.1% microwave oven 18.8% 78.2% 2.5% 0.5% * 5 Gas Barbeque (piped gas) 92.9% 7.0% 0.0% 0.1% Gas barbeque (bottled gas) 40.8% 58.1% 0.9% 0.3% * 4 *likely data error, very high standard error of mean due to outliers. In general, there were no clear income trends with regards to the type of cooking appliances. An exception was the electric wall oven, which is more popular with wealthier households, rising from 5.4% penetration with households earning less than $40,000 per year, rising to 11.1% for households over $100,000 per annum. However, even this trend did not rise consistently across all income groups Cleaning appliances The vast majority of households only have one dishwasher, clothes washer, and clothes dryer, with the most common appliances being an electric clothes dryer (85% of households), compared to only 3.8% households having a gas clothes dryer. Sixty-nine percent (69%) of households have a dishwasher. Front loading clothes washers are slightly more prevalent that standard efficiency top load washers (44.2% and 41% respectively). Only 12% of households have high efficiency top load clothes washers. G1 - Please indicate how many of the following cleaning appliances are in use. Dishwasher Top load clothes washer-std efficiency Top load clothes washer-high efficiency Front load clothes washer Electric clothes dryer Gas clothes dryer Total Answering % 58.3% 87.7% 55.3% 12.1% 96.2% % 41.1% 12.1% 44.2% 86.4% 3.8% 2.6%.3%.1%.4% 1.0%.1% 3+.2%.3%.2%.2%.5%.0% Page crystal court north vancouver, bc, V7R 2B6 t: f: e: akleinschmidt@boreasconsulting.com

170 3.9.3 Heating and cooling appliances The prevalence of air and ground source heat pumps is quite uncommon, as are outdoor patio heaters and firepits. Relatively common are portable electric heaters and air conditioning units, at penetration rates of 26.2 percent and 13.2 percent, respectively. G1 - Please indicate how many of the following heating and cooling appliances are in use and their approximate ages. Number of each type of heating or cooling appliance Age in years (of primary appliance Total Answering Total Answering Mean Median Air source heat pump % 0.3% 0.0% Ground-source heat pump % 0.3% 0.0% Heat recovery ventilator / make-up air unit % 2.5% 0.1% Gas outdoor heater - piped % 0.6% 0.1% Gas outdoor heater - bottled gas % 2.1% 0.1% Gas outdoor firepit or fireplace % 0.7% 0.1% Portable electric heater % 20.9% 5.3% Central air conditioner % 2.1% 0.2% Portable or window air conditioner % 11.8% 1.4% Managing Energy Use Energy management behaviours The most common energy activity which households undertake to control their energy usage is temperature control. Almost four-fifths (79%) of households turn down the thermostat at night always or usually, while 77% always or usually turn down the heat when no one is at home. Another common practice is to close window coverings to keep in the heat, with 67% claiming to do this always or usually. The majority (58.4%) never leave one or more windows open during winter, while almost a quarter (24%) do so occasionally. Page crystal court north vancouver, bc, V7R 2B6 t: f: e: akleinschmidt@boreasconsulting.com

171 H3 - Please check the answer that describes what you normally do - Space Heating? Occasion Don't Not Total Always Usually Never -ally know applicable Answering % % % % % % H3a - Close window coverings to keep in heat % 32.4% 19.0% 11.0%.4% 2.5% H3b - Turn down the heat at night either manually or using a programmable thermostat % 14.5% 7.0% 12.8%.3% 1.1% H3c -Turn down the heat either manually or using a programmable thermostat when no one is at home H3d - Reduce temperature in unused rooms by closing vents or turning down room thermostats H3e - Check and re-seal air leaks in the house at least once a year (weather stripping and caulking) H3f - If single pane windows, install storm windows each fall H3g - Install plastic window coverings on drafty windows during winter months H3h - Leave one or more windows open during winter % 20.5% 9.9% 10.3%.3% 2.2% % 19.8% 15.4% 22.4%.6% 10.1% % 23.4% 32.1% 18.5% 1.9% 3.3% % 2.7% 2.0% 20.4%.9% 68.8% % 8.4% 8.1% 32.5%.5% 37.6% % 6.3% 24.1% 58.4%.6% 5.2% There were only minor differences between income groups. Despite any minor differences, the relative ranking across all the income groups more closely resembles the overall population trends Temperature control On average, households lower the temperature by three degrees Celsius when they are not home during the heating season, and by two degrees overnight. Page crystal court north vancouver, bc, V7R 2B6 t: f: e: akleinschmidt@boreasconsulting.com

172 H1 - At what temperature do you usually keep this residence during the winter (heating) season? When someone is at home (Degrees C) When someone is at home (Degrees F) When no one is home (Degrees C) When no one is home (Degrees F) During the night (Degrees C) During the night (Degrees F) Total Answering Mean Median There are differences in the ability to control temperature in occupied rooms, across both dwelling type and home ownership categories. Row/townhouses and Apartment/Condos are significantly less likely to have room level temperature control (57% and 39% respectively) than other housing types. Rental properties are also less likely to have control over temperature in occupied rooms, with only 51% claiming to have this ability, compared to 66% of owner-occupied households. H2: Are you able to reduce the temperature in unoccupied rooms in this residence? Total answering Total SFD / Duplex Row / Townhouse Detachment Apt / Condo Mobile & Other Home Ownership Own Yes 65.3% 66.3% 56.8% 38.7% 62.1% 66.4% 50.8% No 32.8% 31.9% 40.4% 54.6% 35.9% 31.8% 47.1% I don t know 1.9% 1.8% 2.8% 6.7% 2.0% 1.8% 2.1% Rent Water use behaviours Most (53%) households never turn the water heater off when away for longer than two or three days. The vast majority, around 89% of households, only do laundry with full loads, and cleaning the dryer lint filter before drying is always or usually done by 96% of households. Machine drying of clothes is preferred to hanging clothes out, with only 22% of households hanging laundry to dry on a regular basis ( Always or Usually ). Page crystal court north vancouver, bc, V7R 2B6 t: f: e: akleinschmidt@boreasconsulting.com

173 H4 - Please check the answer that describes what you normally do - Hot Water Use? Occasion Always Usually Never -ally H4a - Turn off the water heater or use its vacation setting when no one is home for more than 2 or 3 days H4b - Only do laundry with full loads H4c - Clean the dryer lint filter before drying clothes H4d - Use the dryer s temperature / moisture sensor to turn off the dryer rather than using timed dry H4e - Hang clothes to dry rather than machine dry H4f - Only run dishwasher when full Total Answering Don't know Not applicable % % % % % % % 11.9% 9.9% 52.7% 1.2% 7.5% % 46.3% 6.9% 1.9%.2% 1.8% % 14.5% 1.6%.2%.1% 1.6% % 19.2% 11.0% 17.4% 2.1% 13.2% % 13.7% 51.8% 23.5%.3% 2.7% % 21.3% 1.4% 1.1%.3% 24.4% The average number of clothes washing loads done in any temperature water per week is 4.3, with a median of 4. Rental properties have an average of 3.7 loads, with a median of 3. Homes with children do more loads (an average of 5.8 per week, with a median of 5), as do larger households. Households with over 5 members have an average of 8.6 loads per week. Number of loads done in cold, warm or hot water per week Number of loads using cold water wash and rinse only per week Total Households >5 Households with children Mean Median Mean Median The mean number of loads using only cold water wash & rinse per week is 3.0, with a median of 2. For rental properties, the mean is 3.5, with a median of 3. Households were also asked how much extra cold water wash and rinse they could be doing each week, measured in number of loads more per week. While around 70% claimed to already be doing all the cold water washes they could, the remaining 30% indicated that they could do an additional 2.5 loads per week in cold water. Page crystal court north vancouver, bc, V7R 2B6 t: f: e: akleinschmidt@boreasconsulting.com

174 3.11 Products and Services Interest in energy efficiency programs Households were asked which energy programs they would be interested in participating in. In general, households expressing no interest at all out-weighed those who were very interested. The exceptions were in programs to replace low efficiency furnaces and water heaters with high efficiency models, where approximately 32 percent of households indicated they were very interested. Other popular programs where households showed a strong interest are furnace or heat pump tune-ups (28%) upgrading insulation (27%) and improving draft proofing (28.8%). The programs to which the highest portion of households stated that they were the not at all interested in are programs to: install a high efficiency fireplace (62%), installation of a programmable thermostat (52%), and replacement of a standard efficiency clothes washer with a high efficiency model (50%). Total Answering Not at all Very 2 3 Interested Interested % % % % Home energy audit to determine main energy uses in the home and % 20.7% 23.0% 23.1% identify opportunities to save energy Do-it-yourself online energy audit % 21.7% 23.5% 17.3% Furnace or heat pump tune-up to ensure they are working safely and % 15.8% 28.6% 28.0% efficiently Program to replace a low efficiency furnace with a high efficiency furnace % 12.1% 16.8% 31.5% Program to install high efficiency gas fireplace % 10.2% 12.5% 15.4% Program to replace standard efficiency clothes washer with high % 12.3% 17.2% 20.6% efficiency clothes washer Program to replace standard efficiency water heater with high % 12.6% 22.5% 32.4% efficiency water heater Program to upgrade your home s insulation % 16.7% 21.2% 27.1% Program to improve draft proofing % 19.0% 22.3% 28.8% Program to install programmable thermostat % 14.5% 15.3% 18.1% Program to compare your home s energy use with homes of % 18.4% 25.2% 23.0% comparable size and type Program that allows you to pay for energy efficient improvements to your home via instalments on your utility bill % 17.7% 19.4% 23.6% Page crystal court north vancouver, bc, V7R 2B6 t: f: e: akleinschmidt@boreasconsulting.com

175 If the results are represented to show a more binary relationship; with the groups simplified into Interested and Not interested, 57% of households are interested in a furnace or heat pump tune-up to ensure they are working safely and efficiently, followed closely by 55% who are interested in replacing their standard efficiency clothes washer. There is also a lack of interest in installing programmable thermostats, with 67% of households indicating their disinterest. This can be compared to the 53% of households who claim to currently have one. Not interested (1+2) Interested (3+4) Home energy audit to determine main energy uses in the home and identify opportunities to save energy 54% 46% Do-it-yourself online energy audit 59% 41% Furnace or heat pump tune-up to ensure they are working safely and efficiently 43% 57% Program to replace a low efficiency furnace with a high efficiency furnace 52% 48% Program to install high efficiency gas fireplace 72% 28% Program to replace standard efficiency clothes washer with high efficiency clothes washer 62% 38% Program to replace standard efficiency water heater with high efficiency water heater 45% 55% Program to upgrade your home s insulation 52% 48% Program to improve draft proofing 49% 51% Program to install programmable thermostat 67% 33% Program to compare your home s energy use with homes of comparable size and type 52% 48% Program that allows you to pay for energy efficient improvements to your home via instalments on your utility bill 57% 43% While the differences between income groups was not sufficient to change the overall results and popularity of programs, it is worthwhile noting that lower income households were more likely than the other groups to choose not all interested in any of the programs than the higher income households. (A typical range would be 5 to 10% between the income groups). Similarly, the highest income category was most likely to be very interested in any of the programs. Programs where this pattern did not hold, and where lower income households were either as interested, or more interested as wealthier respondents, included installing programmable thermostats (21.3% said they would be very interested, compared to an average of 18%), and upgrading insulation (29.6% versus average of 27%). They were also equally likely as other income groups to be very interested in furnace or heat pump tune-ups (29.6% compared to an average of 28%) There were only very minor differences between service areas, however responses varied notably by dwelling type. Apartment/Condo households were far more likely to be not at all interested in any of the programs, by a margin of 20-40% compared to the average response. This holds for all of the Page crystal court north vancouver, bc, V7R 2B6 t: f: e: akleinschmidt@boreasconsulting.com

176 programs. The Row/Townhouse category was more likely to be not at all interested, but by a much smaller margin of 5-10%. Rental properties were more likely to be interested in programs that helped them to reduce overall energy costs and improve living conditions, and were less interested in renovation type programs, which is to be expected for rental properties. For example, renters were more likely than those who own their homes to be very interested in programmable thermostats (24.5% to an average of 18.1%) and improving draft proofing 43% to a population average of 29%. The only programs where renters were less likely to be very interested was the installation of a high efficiency gas fireplace. I1 - How interested would you be in the following products and services Not at all Very 2 3 Interested Interested % % % % Home energy audit to determine main energy Own 32.6% 20.8% 23.8% 22.8% uses in the home and identify opportunities to save energy Rent 42.5% 19.3% 13.8% 24.4% I1b - Do-it-yourself online energy audit Own 37.1% 22.0% 23.6% 17.4% Rent 41.8% 16.4% 24.7% 17.1% I1c - Furnace or heat pump tune-up to Own 27.6% 16.4% 28.8% 27.2% ensure they are working safely and efficiently Rent 26.7% 9.1% 25.5% 38.6% I1d - Program to replace a low efficiency Own 39.7% 12.5% 16.7% 31.2% furnace with a high efficiency furnace Rent 38.8% 7.3% 18.6% 35.2% I1e - Program to install high efficiency gas fireplace I1f - Program to replace standard efficiency clothes washer with high efficiency clothes washer I1g - Program to replace standard efficiency water heater with high efficiency water heater I1h - Program to upgrade your home s insulation I1i - Program to improve draft proofing I1j - Program to install programmable thermostats I1k - Program to compare your home s energy use with homes of comparable size and type Own 61.4% 10.6% 12.3% 15.7% Rent 66.1% 6.0% 16.4% 11.5% Own 50.3% 12.6% 17.0% 20.2% Rent 44.6% 8.8% 19.9% 26.8% Own 32.4% 12.9% 22.6% 32.1% Rent 34.3% 8.3% 20.8% 36.6% Own 35.0% 16.9% 21.6% 26.6% Rent 35.2% 13.5% 16.5% 34.9% Own 30.1% 19.5% 22.7% 27.7% Rent 28.6% 11.3% 17.0% 43.0% Own 52.4% 14.9% 15.1% 17.6% Rent 45.2% 11.2% 19.1% 24.5% Own 39.0% 18.2% 19.4% 23.3% Rent 46.1% 11.0% 19.1% 23.8% Page crystal court north vancouver, bc, V7R 2B6 t: f: e: akleinschmidt@boreasconsulting.com

177 3.12 Attitudes towards energy use Households were also asked a series of question to reveal their attitudes towards energy use. Most households (78.7%) agreed with the statement that there are many ways of saving energy, which can result in substantial savings overall. Only 5.4% disagreed, either somewhat or strongly. J1a - There are many ways that a person can save energy when you add them up, they result in substantial savings Total answering Strongly Disagree 2 Neither Agree or Disagree 4 Strongly Agree % 4.2% 15.8% 37.1% 41.6% Respondents generally agree that being more energy efficient is good for the environment, with only 6.6% disagreeing with the statement. J1b - By making my home more energy efficient, I am helping to do my part for the environment Total answering Strongly Disagree 2 Neither Agree or Disagree 4 Strongly Agree % 4.2% 15.1% 35.4% 43.0% Respondents also generally agreed with the view that natural gas is a clean and efficient energy source, with 72.1% agreeing either strongly or somewhat, and only 6.4% disagreeing. J1c - I think natural gas is a clean and efficient energy source Total answering Strongly Disagree 2 Neither Agree or Disagree 4 Strongly Agree % 4.6% 21.4% 34.5% 37.6% Almost half of respondents agree that members of the household try to limit the length of showers on a regular basis, while 29% neither agree nor disagree. J1d - Members of my household regularly limit the length of their showers to save energy Total answering Strongly Disagree 2 Neither Agree or Disagree 4 Strongly Agree % 13.5% 29.0% 27.7% 21.8% Page crystal court north vancouver, bc, V7R 2B6 t: f: e: akleinschmidt@boreasconsulting.com

178 While still broadly agreeing (40.6%), households were less sure that they didn t want to think about natural gas, they just wanted it to work. A third (33.4%) neither agreed nor disagreed, while 26% disagreed to various degrees. J1e - I don t want to think about natural gas, I simply want it to work Total answering Strongly Disagree 2 Neither Agree or Disagree 4 Strongly Agree % 13.5% 33.4% 22.2% 18.4% Respondents were strongly supportive of the statement that natural gas is a safe energy source, with 72.3% agreeing, 20% were ambivalent, and only 7.2% disagreed with the statement. J1f - I consider natural gas to be a safe energy source Total answering Strongly Disagree 2 Neither Agree or Disagree 4 Strongly Agree % 5.4% 20.5% 37.3% 35.0% Respondents generally disagreed with the statement that they generally hire someone if something needs to be done around the house. Only 28.2% disagreed, with almost half (49.3%) disagreed, with 27% disagreeing strongly. J1g - When something needs to be done around home, I usually hire someone Total answering Strongly Disagree 2 Neither Agree or Disagree 4 Strongly Agree % 22.0% 22.5% 16.0% 12.2% Almost a quarter of respondents (24%) were ambivalent about the statement that they almost always have a home renovation on the go, while half (50.5%) disagreed to some degree. Only 9.5% strongly agreed with the statement. J1h - I almost always have a home renovation on the go Total answering Strongly Disagree 2 Neither Agree or Disagree 4 Strongly Agree % 21.4% 23.8% 16.1% 9.5% Page crystal court north vancouver, bc, V7R 2B6 t: f: e: akleinschmidt@boreasconsulting.com

179 Perhaps reflective of the high delivery rates charged PNG s customers, particularly those in PNG-West, almost half of respondents (41.7%) were ambivalent whether it is cheaper to heat a home with natural gas or with electricity. Only 11.5% disagreed that natural gas is cheaper to heat with than electricity. J1i - It is cheaper to heat a home with natural gas than it is with electricity Total answering Strongly Disagree 2 Neither Agree or Disagree 4 Strongly Agree % 5.7% 41.7% 19.8% 27.0% A noteworthy result is that 50.3% of households agree that they have reduced their energy use by as much as reasonably possible. While only 19.2% were strongly supportive of this view, it does seem to indicate that the easiest energy efficiency measures have already been undertaken, and that half the population may be quite resistant to any additional measures. Only 17.6% disagreed with the statement, while 32% were ambivalent. This suggests that there is still scope to achieve greater efficiency with almost half the population, if they can be provided with the correct information or incentives to overcome their ambivalence. J1j - Our household has reduced its energy use by as much as reasonably possible Total answering Strongly Disagree 2 Neither Agree or Disagree 4 Strongly Agree % 13.7% 32.1% 31.1% 19.2% The greatest share of households neither agree nor disagree that they are too busy to research ways to save energy, with roughly equal proportions agreeing (28.9%) and disagreeing (29%) to any degree. J1k - I am a busy person with little or no time to research ways to save energy Total answering Strongly Disagree 2 Neither Agree or Disagree 4 Strongly Agree % 16.0% 42.0% 20.1% 8.8% About 36% of respondents agree that they conserve energy because it saves money, not because it helps the environment. Slightly more (38.6%) were ambivalent about their reasons, while only 25% disagreed with the statement. J1l - I conserve energy because it saves money not because it helps the environment Total answering Strongly Disagree 2 Neither Agree or Disagree 4 Strongly Agree % 15.3% 38.6% 22.6% 13.8% Page crystal court north vancouver, bc, V7R 2B6 t: f: e: akleinschmidt@boreasconsulting.com

180 3.13 Purchasing attitudes Respondents exhibited a conservative bias in their purchasing. Only 7.5% agreed that they are usually the first to try new products, with an additional 15.9% agreeing to some extent. This result is supported by the finding that close friends and family are the most trusted source of information. The largest share were ambivalent, while 31% disagreed. Slightly more households are willing to pay more for brand names (38.2%), while 32.1% are not willing to pay any more. Only 9% of households disagree with the statement that they prefer dealing with B.C. based companies, while the majority (56.4% agree). Another third (34.6%) neither agree nor disagree with the statement. Value for money is important to respondents, with 36% strongly agreeing that they always look for the best price, and an additional 37% agreeing to some degree. Only 7.6% disagree, and do not always look for the best price. Respondents are also fairly cautious, with 68.7% agreeing that they usually take time to research thoroughly before making a decision. 7.4% disagree, of which only 1.8% strongly disagree. The general image of cost-conscious, cautious buyers is reinforced by the strongly supportive response to the statement about insurance coverage. 46.6% of households agree strongly that they are the type of person to have good insurance coverage, with an additional 33.5% agreeing to some degree. Therefore 80.1% of households identify with this statement to some degree. Only 4.9% disagree, and the remaining 15% neither disagree nor disagree. J2 - Please indicate how much you agree or disagree with the following statements? Neither Strongly Total 2 Agree or Disagree Answering Disagree J2a - I am usually the first one to try new products J2b - I am usually willing to pay more for brand name items J2c - I prefer dealing with British Columbia based companies J2d - I always look for the best price when buying products or services J2e - I usually take time to research issues thoroughly before making a decision J2f - I am the type of person to have good insurance coverage 4 Strongly Agree % % % % % % 16.4% 45.6% 15.9% 7.5% % 16.3% 29.7% 28.5% 9.7% % 5.4% 34.6% 29.7% 26.7% % 5.1% 19.4% 37.2% 35.8% % 5.6% 23.8% 39.4% 29.3% % 2.6% 15.0% 33.5% 46.6% Page crystal court north vancouver, bc, V7R 2B6 t: f: e: akleinschmidt@boreasconsulting.com

181 Internet Access Over 86% of the population has access to high speed internet, while 2.6% have dial up, and only 10.8% have no internet access at all. Dwelling type has little impact on this pattern, with the exception of mobile homes where the proportion is slightly smaller, and only 76% have access to high speed internet. They were also twice as likely as the rest of the population to have no access to the internet, with 21.6% claiming to have no internet access. Rental households were slightly less likely to have access to high speed internet (83% compared to an average of 86.6%), while they more likely to have no internet access (16% compared to an average of 11%) J3 - Does this residence have access to the Internet? Yes, high speed (ADSL, Total answering cable, smart phone, other) Yes, dial up modem No Internet access % 2.6% 10.8% Households with children were more likely to have access to high speed internet (95%), compared to homes with seniors, where only 74% had high speed internet. The presence of high speed internet also increases steadily with income level, rising from 71% for those earning less than $40,000 per annum, to 95% for those earning over $100,000. A majority of households (53%) feel very comfortable with the internet, while an additional 30% feel somewhat comfortable. About 17.3% do not feel comfortable, which exceeds the proportion of households with no access to the internet. J4 - How comfortable are you with navigating the Internet? Somewhat Total answering Very comfortable comfortable Not very comfortable Not at comfortable % 29.6% 8.7% 8.6% Households living in apartment/condos and mobile homes are less likely to feel very comfortable with the internet than other dwelling types, while households living in either row/townhouse or apartment/condos were more likely to be not at all comfortable. This is most likely due to the presence of an older population living in these dwelling types. This is supported by the responses below, with homes with seniors half as likely to be very comfortable with using the internet, and twice as likely to be not at all comfortable compared to the average population. Homes with children were most likely to be very comfortable with the internet. Page crystal court north vancouver, bc, V7R 2B6 t: f: e: akleinschmidt@boreasconsulting.com

182 J4 - How comfortable are you with navigating the Internet? Total Homes with Children Homes with Seniors Homes without Children or Seniors Total Answering Very comfortable 53.1% 70.5% 27.0% 56.3% Somewhat comfortable 29.6% 24.2% 33.6% 31.0% Not very comfortable 8.7% 3.6% 16.6% 7.8% Not at all comfortable 8.6% 1.7% 22.8% 4.8% Lower income households were half as likely to feel very comfortable on the internet, and more likely to be not very or not at all comfortable. J4 - How comfortable are you with navigating the Internet Total < $40K $40K to <$60K Household Income $60K to <$100K $100K or more Nonresponse Base: All Respondents Very comfortable 53.1% 28.9% 44.4% 57.3% 73.4% 48.8% Somewhat comfortable 29.6% 29.3% 36.4% 33.3% 20.8% 31.7% Not very comfortable 8.7% 16.9% 9.7% 6.0% 4.1% 10.1% Not at all comfortable 8.6% 24.9% 9.6% 3.4% 1.7% 9.4% Page crystal court north vancouver, bc, V7R 2B6 t: f: e: akleinschmidt@boreasconsulting.com

183 About Boreas Consulting Ltd. Boreas Consulting Ltd. is a multi-disciplinary consultancy bringing a broad range of practical experience to finding and implementing solutions to a diverse set of interesting challenges in the energy and water resources space. Our approach examines a problem from many different perspectives and provides solutions that balance different and often competing interests. The projects that we have taken on have been as diverse as undertaking a market assessment for a solar energy technology startup, to advising regulatory panels on decisions regarding market power assessments and electric utility rate making. More information on our firm can be found on our website ( Page crystal court north vancouver, bc, V7R 2B6 t: f: e: akleinschmidt@boreasconsulting.com

184 Appendix One: REUS Methodology crystal court north vancouver, bc, V7R 2B6 t: f: e:

185 Methodology PNG 2013 Residential End Use Study Prepared for: Al Kleinschmidt, P.Eng. Boreas Consulting Ltd. Submitted by: Sampson Research Inc. February 28, 2014 SAMPSON RESEARCH INC Park Avenue Roberts Creek, British Columbia V0N 2W

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187 1 METHODOLOGY This section discusses the sample plan, questionnaire topic coverage, implementation procedures, returns, and representativeness of the results for the 2013 PNG Residential End-Use Survey (REUS). 1.1 Sample Frame and Sampling Plan The sample plan for the PNG REUS was designed to provide representative samples from three PNG regions: PNG (Northeast), PNG West (East), and PNG West (West). The major communities served in these regions are provided in Table 1. Table 1: PNG Regions and Major Communities Served Region PNG (NE) PNG West (East) PNG West (West) Major Communities Served Dawson Creek, Fort St. John, Charlie Lake Tumbler Ridge, Baldonnel Smithers, Houston, Vanderhoof, Fort St. James, Burns Lake Terrace, Kitimat, Prince Rupert, Thornhill Residential customer counts (sample frame) by PNG region are provided in Table 2. Table 2: PNG Residential Customer Counts (Sample Frame) Region Customer Percent Counts Distribution PNG (NE) 16,765 49% PNG West (East) 7,090 21% PNG West (West) 10,106 30% PNG Total 33, % 1.2 Sample Sizes and Preparation A target of 1,800 completed surveys was set for the PNG REUS, with 600 completed surveys desired per region. This target was expected to yield an overall accuracy of plus or minus 2.3% at the utility level using a 95% confidence interval, and plus or minus 4.0% in each region. Achieving a final response of 1,800 surveys overall, with 600 surveys received per region, assuming an average response rate of 20%, required the mail-out of 9,000 questionnaires. Random samples of 3,000 customers per region were selected from PNG s residential accounts. Eligibility for the sample was limited to customers that had two years of uninterrupted billing history. This condition was required to maximize the number of survey respondents whose billing data would be suitable for use in the conditional demand analysis PNG REUS METHODOLOGY 3 SAMPSON RESEARCH INC.

188 1.3 Questionnaire Design and Topics The range of topics addressed by the 2013 PNG REUS was extensive. The primary focus of the survey was to gather information on space heating and domestic hot water equipment, appliances, building characteristics, and renovation activities that directly and indirectly affect natural gas consumption. The survey also explored attitudes, preferences, and behaviours that influence energy use. Socio-demographic data were collected to further inform PNG s understanding of their residential customers. Finally, the survey explored interest in a variety of residential energy-saving programs and services. Summarized, the 2013 PNG REUS questionnaire organized its questions into the following eleven topic areas: Dwelling characteristics Space heating Fireplaces and heater stoves Domestic water heating Cooking, heating, and cleaning appliances Pools and hot tubs Past and planned energy-related renovations Energy use behaviours Interest in products and services Energy attitudes and preferences Socio-demographics The questionnaire design followed best practices in question wording, organization, and visual design. This is particularly important for REUS-style questionnaires as many questions are technical in nature and the number of topics addressed make the questionnaires lengthy (upwards of 20 to 24 pages). The questionnaire used graphics and explanatory text boxes to help respondents correctly categorize their equipment and household features. In situations where several different models of a particular end-use were possible (e.g., domestic hot water heaters, fireplaces, etc.), questions included descriptions of the end-use variations to improve respondent s ability to correctly classify their equipment. The questionnaire was approved by PNG prior to release. A copy of the questionnaire is included as an Appendix to the report. 1.4 Survey Response Options Recipients of the REUS could choose to complete the survey in print form (hardcopy) or online. The print version of the survey was accompanied with a self-addressed postage-paid return envelope. Each questionnaire included a response code unique to each household and a link to the Internet (online) version of the survey. Respondents were required to enter the code to access the online version of the survey. Once the online survey was complete, the code was disabled. The unique code was also used by the marketing research firm to eliminate duplicate survey responses (i.e., respondents who completed both the online and hardcopy versions of the survey). 1.5 Boosting Response Rates The finalized PNG REUS questionnaire was 20 pages in length. As its length and technical nature was expected to deter some households from completing the survey, steps were taken to boost response rates PNG REUS METHODOLOGY 4 SAMPSON RESEARCH INC.

189 These included: Completion incentives All recipients completing the REUS questionnaire were eligible to win a $1,000 grand prize or one of twenty smaller prizes of $200. All prizes were offered as either a prepaid VISA gift card or an equivalent dollar credit to their PNG natural gas bill. An additional chance at winning these prizes was offered to respondents who completed their survey online. Outgoing envelope The questionnaire was mailed in a PNG logoed envelope with a hand-placed stamp. The questionnaire package included a self-addressed, postage-paid return envelope. Personalized questionnaires each questionnaire was personalized with the respondent s contact information drawn from the PNG residential account system. Letter of invitation from PNG - The first page of the questionnaire included a letter signed by a senior executive of PNG inviting the respondent to complete the survey. The letter outlined the purpose of the survey and how its information would benefit PNG s residential customers. PNG contact information The questionnaire included a name, telephone number, and address for a PNG representative. Recipients were encouraged to contact this individual if they had questions about the survey. Additionally, PNG supplemented their corporate web site with an overview of the survey and informed their customer call centre of the survey in order that they could respond to any queries that might come in. Statement of privacy Each questionnaire had a detailed statement of privacy regarding survey responses. The statement identified the marketing research firm hired to implement the survey and how information collected through the survey would be used and protected. Reminder Cards A PNG-logoed reminder card was mailed to survey recipients approximately one week after they received their questionnaire. Its purpose was to remind households to complete their survey if they had not already done. 1.6 Survey Implementation Discovery Research of Vernon, British Columbia was responsible for implementing the survey, data cleaning, tabulating the results, and managing the incentive. Questionnaires were mailed out mid-october of Reminder cards were mailed out a week later. Respondents were given four weeks to complete the survey. Surveys were mailed to the billing address on file with PNG. As the billing address sometimes differed from the address where the meter was located (i.e., site address), the survey recipient was asked to complete the survey for the dwelling located at the site address printed on the first page of the survey. A total of 3,118 surveys were received or completed online. Duplicate responses (i.e., households completing both the hardcopy and online versions) were removed, as were surveys with more than 25% of the sections left unanswered. Once these steps were complete, 2,904 valid surveys remained. The overall response rate was 32%, considerably higher than the 20% response assumption used in the sampling plan. Regional response rates varied between 30% and 36% (Table 3). Overall, 41% of surveys were completed online PNG REUS METHODOLOGY 5 SAMPSON RESEARCH INC.

190 Table 3: PNG 2013 REUS Response Summary (%) Region Sample Population Surveys Mailed Valid Surveys Received Response Rate (%) Surveys Completed Online (%) PNG (NE) 16,765 3, % 43% PNG West (East) 7,090 3,000 1,083 36% 39% PNG West (West) 10,106 3, % 40% PNG Total 33,961 9,000 2,904 32% 41% 1.7 Weighting of Results Weights were used to restore the relative proportions of PNG s three regions to that of the sample frame. Weights were calculated using equation (1): W r = (P r /P PNG ) / (S r /S PNG ) (1) W = weight P = population (sample frame) S = survey returns r = region PNG = total of all PNG regions Table 4 presents the weights calculated using this formula. These weights are applied when calculating utility level results. Weights are not used (or required) for presenting regional results. Table 4: PNG 2013 Regional Weights Region Weight PNG (NE) PNG West (East) PNG West (West) Accuracy of Survey Estimates The margin of error (accuracy) for 2013 REUS questions varies by region and the degree of consensus. Table 5 (next page) summarizes accuracy levels at the 95% confidence level for a typical range of yes-no type questions for each PNG region and for the utility (PNG). At the utility (PNG) level, a typical question with a response (e.g., 50% answering yes, 50% answering no) will have an accuracy of plus or minus 1.8%, 19 times out of 20. Regional results have higher margins of error due to smaller sample sizes. Differences between the regions reflect differing proportions of completed surveys to the sample population. Whether at the region or utility level, the margin of error in the estimate decreases as the consensus of the survey estimate increases. Thus, a yes-no type question with 90% of respondents answering yes will have an accuracy at the utility level of plus or minus 1.1%, 19 times out of PNG REUS METHODOLOGY 6 SAMPSON RESEARCH INC.

191 Table 5: Accuracy Levels for Proportional Responses by Region (%) Percent Plus or Minus at the 95% Confidence Level Accuracy (%) Proportional Response PNG (NE) +/- PNG West (East) +/- PNG West (West) +/- PNG /- 50% % or 60% % or 70% % or 80% % or 90% Number of respondents (unweighted) 910 1, , PNG REUS METHODOLOGY 7 SAMPSON RESEARCH INC.

192 Appendix Two: REUS Questionnaire crystal court north vancouver, bc, V7R 2B6 t: f: e:

193 SURVEY ID NUMBER: Use this number to complete the online version of the survey and double chances of winning. See next page for online link. Dear Customer, At Pacific Northern Gas, we are committed to providing a range of energy services to meet your needs today and tomorrow. Planning for your future needs means understanding how residential customers like you currently use energy and if you plan to change how you use energy in the future. Your residence has been randomly selected to complete the accompanying survey. This survey is an important tool for understanding how energy is used in homes, the types of space and water heating appliances installed, how those appliances are used, the energy efficiency of homes and attitudes about energy issues. This information is very important for: forecasting future demand for natural gas designing energy efficiency programs to help you save money on your energy bills protecting the environment by lowering greenhouse gas emissions Return your completed survey by November 15, 2013 and you will have a chance to win one of the following prizes: One grand prize of your choice of a: $1,000 prepaid VISA gift card; or a $1,000 credit to your gas bill. Twenty secondary prizes of your choice of a: $200 prepaid VISA gift card; or a $200 credit to your gas bill. Complete the survey online and double your chances of winning! Full survey award rules are at the back of the survey. If you have any questions, please contact Verlon Otto at or votto@png.ca Yours truly, Janet Kennedy Vice-President, Regulatory Affairs & Gas Supply Pacific Northern Gas Ltd.

194 Privacy The survey will tell us how you use energy in your home. To meet the goals of this survey, Pacific Northern Gas will also analyze how much natural gas your home has used over the past two years.* To protect your privacy, Discovery Research, the market research company that is conducting this survey on behalf of Pacific Northern Gas, will not have access to your account information. As well, Pacific Northern Gas will not see your individual responses. The information collected will be treated confidentially and in accordance with the provisions of the Personal Information Protection Act (British Columbia). The information collected will not be used for any marketing or sales purpose. * By participating in this survey, I agree that Pacific Northern Gas may use the consumption information for my home for the past two years. HOW TO COMPLETE THIS SURVEY This survey should be completed by the person most responsible for the maintenance and repair of your home. Also please ensure that the survey responses refer to the residence located at the address shown on the cover page. 1. You can complete the enclosed survey and return it in the postage paid envelope provided; or 2. You can complete the survey online at: by entering the SURVEY ID located front page of this survey. Some questions require you to place an X in the appropriate box, for example: Do you rent or own this residence? Rent Own Some questions require you to fill in a number, for example: 23 years Some questions allow you to check several answers. These questions will have the instruction check all that apply. When you have completed the survey, please put the questionnaire in the enclosed envelope. No postage is needed. Surveys are due by November 15, If you have mislaid the return envelope, please mail the questionnaire to: Discovery Research # West 7th Avenue, Vancouver, BC V6H 1C1

195 Dear Participant: Throughout this questionnaire, when we ask about your home or residence, we are referring to the area covered by your Pacific Northern Gas bill. A. About This Residence A1. Do you own or rent this residence? 1 2 Own/co-op Rent A2. Is this residence a Single family detached Duplex Row/townhouse (3 or more units attached, each with separate entrance) A3. When was this residence built? 1 2 Before A4. Who pays the natural gas bill for this residence? Myself Another member of the household Landlord / property manager Apartment / Condominium Mobile home Other (please specify): Strata corporation Other Don t know or later Don t know A5. Does the natural gas bill for this residence cover any of the following, and if so, how many: Secondary suite(s) Attached garage / workshop Detached garage / workshop Other buildings (e.g., sheds, farm buildings) Don t Yes No Know Number A6. How many floors of heated living space does this residence have? (include basement if heated) A7. What is the total floor area of this residence, including the basement and unfinished areas but excluding the garage or carport? Square feet OR Square meters A8. Is this your principal residence? 1 Yes 2 No A9. How many weeks per year is this residence occupied? weeks 1 Always occupied A10. How many years have you lived in this residence? years

196 A11. What are the heights of the ceilings in this residence, excluding the basement? Please indicate the percentage of the residence with each ceiling height. Choose the closest height. Your answers should sum to 100%. 8 feet 9 feet 10 feet More than 10 feet TOTAL 100% A12. What type of basement does your residence have? Full basement Partial basement Crawl space GO TO QUESTION A14 No basement GO TO QUESTION A15 A13. Is the basement area of this residence unfinished, partly finished, or completely finished? 1 Unfinished 2 Partly finished 3 Completely finished A14. During the heating season, is your basement or crawl space usually heated? 1 Yes 2 No A15. Please indicate which areas of this residence have insulation and whether the insulation is below average, average or above average. Location In the attic In the exterior walls In the basement In the crawl space In garages/workshops heated using natural gas Have insulation? Yes No Don t Not Know Applicable Below Average (R6 or 1.75 fiberglass or less) Average (R12 or 3.5 fiberglass or less) Above Average (R20 or 6 fiberglass or more) Don t know A16. How effective is the draft proofing in this residence? Excellent home is not at all drafty Good home is sometimes drafty Poor home is always drafty A17. Please estimate what percentage of your windows are: % of Total Windows Argon Gas Filled? Single pane regular (clear) glass % Double pane regular (clear) glass % 1 Yes Double pane low-e* % 1 Yes Triple pane regular (clear) glass % 1 Yes Triple pane low-e* % 1 Yes Other Specify: % 1 Yes Total 100% * Low-E coated glass has a slight shading or tint when compared to standard windows. 2 No 2 No 2 No 2 No 2 No 9 Don t know 9 Don t know 9 Don t know 9 Don t know 9 Don t know

197 A18. Please estimate the percentage of your windows that have the following frames: % of Total Windows Aluminum frames % Wood frames % Vinyl frames % Fiberglass frames % Other (please specify): % Total 100% A19. Please indicate the number of outside doors in this residence. If this residence is an apartment or condominium, please count only doors in your unit that open directly to the outdoors. Number Number Wood doors 1 Glass doors with wooden frames 4 Wood doors with aluminum storm doors 2 Glass doors with aluminum frames 5 Insulated steel or fibreglass doors 3 Glass doors with vinyl frames 6 B. Space Heating B1. What is the MAIN fuel used to heat this residence? The main fuel is the one that provides most of the heat in the home during a typical year. (Check one fuel only.) Electricity Natural Gas Piped propane Bottled propane Oil Wood 7 9 Other Don t know B2. Have you changed from one main fuel to another to heat this residence over the past five years (e.g., from oil to natural gas, from natural gas to electricity, etc.)? Yes No 1 2 CONTINUE GO TO QUESTION B4 B3. What was the previous main space heating fuel? (check one fuel only) Electricity Natural Gas Piped propane Bottled propane Oil Wood 7 9 Other Don t know B4. Please indicate any ADDITIONAL or SUPPLEMENTARY fuel(s) used to heat this residence (check all that apply) and which supplementary fuel is used the most (check only one). All ADDITIONAL/ SUPPLEMENTARY Fuels (check all that apply) Most used SUPPLEMENTARY Fuel (check one only) 1 1 Electricity Natural gas 2 2 Piped propane 3 3 Bottled propane 4 4 Oil 5 5 Wood 6 6 Other 7 7 Don t know 9 9 NO SUPPLEMENTARY HEATING FUEL USED 10

198 UNLESS OTHERWISE STATED, ANY REFERENCES TO GAS FROM THIS POINT FORWARD IN THE SURVEY MEAN EITHER NATURAL GAS OR PROPANE GAS B5. Which of the following does this residence have? 1 Gas boiler GO TO QUESTION B6 2 Gas furnace GO TO QUESTION B7 3 Multi-fuel furnace GO TO QUESTION B8 4 Electric furnace GO TO QUESTION B10 9 None of the above GO TO QUESTION B11 B6. GAS BOILERS ONLY: Boiler efficiency refers to how much useful heat your boiler extracts from the gas. The higher the efficiency of the boiler, the less fuel is required to heat your house. Boilers are categorized as low efficiency, midefficiency, or high efficiency. What is the efficiency of your boiler? 1 Low efficiency 60% efficient 2 Mid-efficiency 80% to 85% efficient 3 High efficiency 90% efficient or higher 9 Don t know GO TO QUESTION B9 Gas Boiler Types Low Efficiency Gas Boilers: 13 years old or older 60% efficient uses a standing pilot light Mid-Efficiency Gas Boilers: 80% to 85% efficient no pilot light, uses igniter instead uses induced draft fan or damper High Efficiency Gas Boilers: 90% efficient or higher no pilot light, uses igniter instead uses plastic exhaust pipe that exits the roof or side of house B7. GAS FURNACES ONLY: Furnace efficiency refers to how much useful heat your furnace extracts from the gas. The higher the efficiency of the furnace, the less fuel is required is to heat your house. Furnaces are categorized as low efficiency, mid-efficiency, or high efficiency. What is the efficiency of your gas furnace? 1 Low efficiency less than 78% efficient 2 Mid-efficiency 78% to 85% efficient 3 High efficiency 90% efficient or higher 9 Don t know GO TO QUESTION B9 B8. MULTI-FUEL FURNACES ONLY: Please indicate the MAIN fuel used by your multifuel furnace (check one) and the ALTERNATE (OTHER) fuel(s) that can be used (check all that apply). MAIN Fuel (check one only) ALTERNATE Fuel(s) (check all that apply) Electricity 1 1 Natural gas 2 2 Piped propane 3 3 Bottled propane 4 4 Oil 5 5 Wood 6 6 Coal 7 7 Other 8 8 Don t know 9 9 Gas Furnace Types Low Efficiency Gas Furnaces: 18 years old or older less than 78% efficient typically uses a pilot light uses metal flue that exits the roof Mid-Efficiency Gas Furnaces: 78% to 85% efficient no pilot light, uses igniter instead uses a metal flue that exits the roof High Efficiency Gas Furnaces: 90% efficient or higher no pilot light, uses igniter instead uses plastic exhaust pipe that exits the side of the house. ENERGY STAR qualified B9. Is your furnace or boiler an ENERGY STAR qualified model? If so, it should display the ENERGY STAR symbol. 1 Yes 2 No 9 Don t Know B10. How old is your furnace or boiler? years 9 Don t know

199 B11. There are several methods that can be used to heat a home and many homes use more than one method. Please indicate all methods used to heat this residence, then the one used the most, and then the second most used method (if applicable). PLEASE INCLUDE HEATING METHODS THAT MAY HAVE ALREADY BEEN QUESTIONED. Summary of Heating Methods Forced air furnace Wired-in electric baseboards Heat pump - air source Heat pump - ground source (geothermal) Hot water baseboards Hot water radiant in-floor / under-floor heat Fireplace or heater stove Wired-in electric wall heater (fan forced) Electric radiant heat (floors, walls, and/or ceilings) Gas wall / forced air heater Portable electric heaters Other (Specify) All Space Heating Methods Used (check all that apply) Most Used Method (check one only) Second Most Used Method (check one only) No second method of space heating used 15 B12. Please indicate whether you always, usually, occasionally or never do the following (check one box per row). Occasion Don t Not Always Usually -ally Never know Applicable Change the furnace filter regularly Have the heating system serviced annually by a contractor Service the heating system annually myself B13. Do you use programmable thermostat(s) in this residence? 1 Yes 2 No 9 Don t Know C. Fireplaces and Heater Stoves Many homes are equipped with fireplaces or heater stoves. Some provide ambiance but little or no heat, while others can be used to heat one or more rooms. C1. Do you have a fireplace or heating stove in this residence? Yes No 1 2 CONTINUE GO TO SECTION D Gas Fireplace and Stove Types Decorative fireplaces Provide ambiance but have little or no heating ability. The firebox is typically steel or masonry, and the hearth is often open to the room or equipped with opening glass doors. Heater type fireplaces (built-ins and inserts) These fireplaces are efficient heaters with fixed glass fronts and may have features such as fans and thermostatic control. They may be built-in at the time of construction, or inserted into an existing masonry or other fireplace as an upgrade. Free standing fireplaces and heater stoves These are stand alone units that that can be used for both ambiance and heating. Gas heater stoves resemble wood stoves in appearance but use gas instead of wood.

200 C2. How many of the following types of fireplaces and heater stoves do you have? For each type, please indicate whether they are used primarily for heating, ambiance or both. Gas (decorative) Gas (heater type) Gas (free standing) Electric Wood burning fireplace Wood burning stove Pellet stove Other: Number (Check one) type that you have) Used primarily for: Heating Ambiance Both C3. How many hours are the fireplaces and heater stoves in use during a typical week in each of the following seasons? Please sum the total hours for ALL fireplaces and heater stoves used in a typical week in each season. Summer (July September) hours per week Fall (October December) hours per week Winter (January March) hours per week Spring (April June) hours per week C4. Approximately, what share of this residence s space heating requirements are provided by your fireplace or heater stove? Please include all fireplaces and heater stoves at this residence in your answer. 0% (none) Up to 10% Up to 25% Up to 50% Up to 75% Up to 100% Don t know IF THIS RESIDENCE DOES NOT HAVE A GAS FIREPLACE, GO TO SECTION D C5. How old is (are) your gas fireplace(s)? Gas fireplace 1 years Gas fireplace 2 years Gas fireplace 3 years Don t know Don t know Don t know C6. For each gas fireplace you have, please indicate whether it has a fixed glass front, glass doors that open, or an open hearth design (no glass) by checking the appropriate box. Fixed glass front Glass doors that open No glass (open hearth) Gas Gas Gas Fireplace 1 Fireplace 2 Fireplace C7. For each gas fireplace you have, please indicate whether it has a pilot light. The pilot light is a small flame that is used to ignite the fireplace. Yes No Don t know Gas Gas Gas Fireplace 1 Fireplace 2 Fireplace C8. GAS FIREPLACES WITH PILOT LIGHTS ONLY: Do you typically turn off your fireplace pilot light? If yes, how many months is the pilot light typically turned off? Yes No Don t know 1 Number of months per year pilot light off: 2 9 GO TO SECTION D

201 D. Domestic Water Heating D1. How many water heaters are there in this residence? If you live in an apartment, townhouse, or row house where hot water is centrally provided to all units (from outside your unit), please check none None GO TO QUESTION D11 D2. What type of fuel does your water heater(s) use? Homes with more than one water heater usually have one water heater that provides more hot water than the others. For classification purposes, consider this unit your main water heater. Electricity Natural gas Piped propane Bottled propane Oil Geothermal Other Heater 1 Heater 2 Heater 3 (Main Unit) Water Heater Fuels: Hint Most hot water heaters use gas, oil or electricity. If your hot water heater does not have a vent or flue then it uses electricity. D3. Does your water heater(s) use solar energy to pre-warm or supplement the water heating process? Yes No Heater 1 Heater 2 Heater 3 (Main Unit) D4. Have you changed the fuel used for water heating at this residence within the past five years (e.g., from oil to natural gas, from natural gas to electricity, etc.)? Yes No 1 2 CONTINUE GO TO QUESTION D6 D5. What was the previous water heater fuel? Electricity Natural gas Piped propane Bottled propane Oil Geothermal Other Heater 1 Heater 2 Heater 3 (Main Unit) D6. What type(s) of water heater(s) is used by this residence? Heater 1 Heater 2 Heater 3 (Main Unit) Conventional storage tank On-demand (tankless) Hybrid on-demand (uses small storage tank) Combined space and water heater Hybrid heat pump water heater (tank) Don t know Tankless & Hybrid On-Demand Water Heaters On-demand (tankless) water heaters, also known as instantaneous water heaters, are compact units that provide hot water on demand. Hybrid on-demand models use a small storage tank to reduce temperature fluctuations during use. Hybrid heat pump water heaters combine a heat pump with an electric hot water tank to improve energy efficiency.

202 D7. CONVENTIONAL STORAGE TANK HEATERS ONLY: Does the hot water heater tank have a: Heater 1 Heater 2 Heater 3 (Main Unit) Metal vent through the roof Metal vent through the side wall (power vent) Plastic vent through the side wall No vent (electric tank) Don t know D8. How old is (are) your water heater(s)? Heater 1 (Main Unit) years Don t know Heater 2 years Don t know Heater 3 years Don t know D9. Have you installed a water heater within the past five years? Yes No 1 2 CONTINUE GO TO QUESTION D11 D10. What was the main reason you installed the water heater? (Check one only) New home Wanted to change to gas Wanted more efficient water heater Water heater had failed Anticipated water heater failure Wanted a cheaper fuel Other (specify) D11. Does this residence have any of the following: Don t Not Yes No Know Applicable An insulating blanket installed on the hot water tank Pipe wrap (insulation) on the hot water pipes D12. Please indicate the total number of the following for your residence: Number Showerheads (all kinds) Low flow showerheads D13. Please indicate the total number of the following for all members of your household: Number Number of dishwasher loads per week Number of baths per week Number of showers per week D14. Please estimate the total amount of time that shower(s) are used on a typical weekday (total for all members of this residence). minutes per day 1 No showers take baths only

203 E. Swimming Pools & Hot Tubs E1. Do you have a swimming pool at this residence that is for the exclusive use of your household (i.e., not shared with other residences)? Yes, indoor Yes, outdoor No 1 2 CONTINUE 3 GO TO QUESTION E5 E2. Which fuel do you use to heat the water in your pool and do you use solar energy to help heat the water? Main pool heater fuel 1 Solar Natural gas Electricity Propane Other Supplemented with solar heating Pool not heated 6 GO TO QUESTION E5 E3. How many months per year is your pool heated? months per-year E4. During the months when you heat your pool, do you cover it when not in use? Yes 1 No 2 E5. Do you have a hot tub at this residence that is for the exclusive use of this residence (i.e., not shared with other residences)? Yes, indoor Yes, outdoor No 1 2 CONTINUE 3 GO TO SECTION F E6. What fuel is used to heat the hot tub? Natural gas Propane 1 2 Solar Electricity 3 4 Other 5 E7. How many months per year is your hot tub heated? months E8. During the months when you heat your hot tub, do you cover it when not in use? Yes 1 No 2 A FRIENDLY REMINDER Please ensure your survey responses refer to the residence at the address identified on the front page of this survey. To ensure you are eligible to win the $1,000 grand prize or one of twenty secondary $200 prizes for your choice of a prepaid VISA gift card or a credit to your gas bill, make sure you return your survey by November 15, 2013 using the selfaddressed postage-paid return envelope included with your survey package. Easier still, complete your survey online and double your chance at winning. Only one survey (paper or online) will be accepted per household. Thank you for taking the time to complete this important survey.

204 F. Renovations & Energy Use F1. Please indicate renovations or actions you have undertaken at this residence during the past five years, whether you received a government or utility rebate to complete them, and the renovations you plan to undertake within the next two years. Improve insulation in walls, attic, basement, or crawlspace Install energy efficient window(s) Install insulated outside door(s) or storm doors Install low flow showerhead(s) Install programmable thermostat(s) Install pipe wrap Install weather stripping or caulking Install hot water heater blanket Install drain pipe waste heat recovery system Install on-demand (tankless or hybrid) water heater Install high efficiency hot water tank Complete an EcoENERGY or LiveSmart BC certified energy audit Install heated swimming pool Install hot tub None of the above Did this past 5 years With rebate Without rebate Plan to do this next 2 years F2. Did you undertake any renovations that involve fireplaces or heating stoves at this residence in the past five years, or plan to do so in the next two years? 1 2 Yes CONTINUE No GO TO QUESTION F4 F3. Please indicate the renovations that involve fireplaces or heating stoves that you did at this residence during the past five years, whether you received a government or utility rebate to complete them, and those you plan to undertake within the next two years. Note: there several types of fireplaces available in the market today. Please read carefully and select the category that best describes your renovation plan involving fireplaces. Install free standing gas fireplace or gas heating stove Install wood stove Install gas heater type fireplace insert in an existing wood fireplace Replace decorative gas fireplace with gas heater type insert Remove or disconnect gas fireplace Remove wood fireplace or wood stove Install decorative gas fireplace Install electric fireplace None of the above Did this past 5 years With rebate Without rebate Plan to do this next 2 years

205 F4. How influential are the following sources of information when purchasing a major appliance? a. Contractors / tradespeople b. Customer ratings c. Expert reviews (e.g., magazines, websites, TV) d. Electric or gas utilities e. Government f. Appliance salespeople g. Knowledgeable family member, friend, or neighbour Not at all Influential Very Influential G. Appliances G1. Please indicate which of the following appliances are in use in this residence. For each appliance, indicate how many are in use and their approximate ages (your best guess is fine). COOKING Electric range (cook top and oven) Gas range (cook top and oven) Dual fuel range (gas cook top, electric oven) Electric cook top Gas cook top Electric wall oven Gas wall oven Microwave oven Gas barbeque (piped gas) Gas barbeque (bottled gas) Number in Use Age of Appliance (in years) #1 #2 # CLEANING Dishwasher Top load clothes washer Standard efficiency Top load clothes washer High efficiency Front load clothes washer Electric clothes dryer Gas clothes dryer HEATING & COOLING Air source heat pump Ground source heat pump Heat recovery ventilator / make-up air unit Gas outdoor heater (piped gas) Gas outdoor heater (bottled gas) Gas outdoor fire pit or fireplace Portable electric heater Central air conditioner Portable or window air conditioner

206 H. Managing Energy Use This section is intended to help Pacific Northern Gas understand how you use / manage energy at this residence. H1. At what temperature do you usually keep this residence during the winter (heating) season? Degrees C or Degrees F When someone is at home When no one is home During the night H2. Are you able to reduce the temperature in unoccupied rooms at this residence? This could be done by turning down individual room thermostats, closing doors, and closing vents. Yes No Don t Know Next, we would also like to understand the types of actions that you take to manage energy usage at this residence. Please check the answer that best describes what you normally do. H3. Space Heating a. Close window coverings to keep in heat b. c. d. e. Turn down the heat at night either manually or using a programmable thermostat Turn down the heat either manually or using a programmable thermostat when no one is at home Reduce temperature in unused rooms by closing vents or turning down room thermostats Check and re-seal air leaks in the house at least once a year (weather stripping and caulking) f. If single pane windows, install storm windows each fall g. Install plastic window coverings on drafty windows during winter months h. Leave one or more windows open during winter Always Usually Occasion ally Never Don t Know Not Applicable H4. Hot Water Use a. Turn off the water heater or use its vacation setting when no one is home for more than 2 or 3 days b. Only do laundry with full loads c. Clean the dryer lint filter before drying clothes d. Use the dryer s temperature / moisture sensor to turn off the dryer rather than using timed dry e. Hang clothes to dry rather than machine dry f. Only run dishwasher when full Occasion Don t Not Always Usually Never -ally Know Applicable

207 H5. How many loads of laundry does your household do per week? Number of loads done in cold, warm or hot water per week Number of loads using cold water wash and rinse only per week H6. How much extra cold water wash and rinse could you do? Number of loads more per week 0 None, already doing all I can H7. Who makes the most effort to conserve energy in your household? Choose the most appropriate answer All members of the household Most members of the household Only some members of the household None of us H8. What would encourage you to use less energy at this residence? H9. What prevents you from using less energy at this residence? I. Products & Services I1. On a scale of one to four, where one is not at all interested and four is very interested, how interested would you be in the following products and services? a. Home energy audit to determine main energy uses in the home and identify opportunities to save energy b. Do-it-yourself online energy audit c. d. Furnace or heat pump tune-up to ensure they are working safely and efficiently Program to replace a low efficiency furnace with a high efficiency furnace e. Program to install high efficiency gas fireplace f. g. Program to replace standard efficiency clothes washer with high efficiency clothes washer Program to replace standard efficiency water heater with high efficiency water heater h. Program to upgrade your home s insulation i. Program to improve draft proofing j. Program to install programmable thermostats Not at all Interested Very Interested k. l. Program to compare your home s energy use with homes of comparable size and type Program that allows you to pay for energy efficient improvements to your home via instalments on your utility bill

208 J. Attitudes Towards Energy Use J1. In order to serve you better, we would like to understand your views on a number of energy related issues. For the following set of statements, please check the answer that most accurately reflects your agreement or disagreement with the statement. On a scale of one to five, where one means that you strongly disagree and five means that you strongly agree, please indicate how much you agree or disagree with the following statements on energy and natural gas usage. a. There are many ways that a person can save energy when you add them up, they result in substantial savings b. By making my home more energy efficient, I am helping to do my part for the environment c. I think natural gas is a clean and efficient energy source d. Members of my household regularly limit the length of their showers to save energy e. I don t want to think about natural gas, I simply want it to work f. I consider natural gas to be a safe energy source g. When something needs to be done around home, I usually hire someone h. I almost always have a home renovation on the go i. It is cheaper to heat a home with natural gas than it is with electricity j. Our household has reduced its energy use by as much as reasonably possible k. I am a busy person with little or no time to research ways to save energy l. I conserve energy because it saves money not because it helps the environment Strongly Disagree 1 2 Neither Agree or Disagree 3 4 Strongly Agree J2. On a scale of one to five, where one means that you strongly disagree and five means that you strongly agree, please indicate how much you agree or disagree with the following statements. a. I am usually the first one to try new products b. I am usually willing to pay more for brand name items c. I prefer dealing with British Columbia based companies d. I always look for the best price when buying products or services e. I usually take time to research issues thoroughly before making a decision f. I am the type of person to have good insurance coverage Strongly Disagree 1 2 Neither Agree or Disagree 3 4 Strongly Agree

209 J3. Does this residence have access to the Internet? Yes, high speed (ADSL, cable, smart phone, other) Yes, dial up modem No Internet access J4. How comfortable are you with navigating the Internet? Very comfortable Somewhat comfortable Not very comfortable Not at all comfortable K. About Your Household The final questions are for classification purposes only and are completely confidential, as are all your answers. K1. Into which of the following age categories do you fit? 18 years or under years years years years years 65 years and older K2. You are: Female 1 Male 2 K3. What is your marital status? Single Married/common law 1 2 Divorced/separated Widowed 3 4 K4. How many people, including yourself, are currently living at this residence (please include any boarders or renters covered under your Pacific Northern Gas account) number K5. Please indicate the number of occupants by age categories 0 5 years 6-12 years years years years years 65 years and older K6. Has the number of people living at this residence increased, decreased, or stayed the same over the last two years? 1 Increased 2 Decreased 3 Stayed the same K7. Do any of the occupants of this residence work outside the home (i.e., commute one or more times a week to work somewhere else) Yes 1 No 2

210 K8. What is the highest level of education you have completed? Some high school Completed high school Some trade/technical school Completed trade/technical school Some university/college Completed university/college Post graduate K9. What was your total household income before taxes in 2012? Less than $20,000 $20,000 to $29,999 $30,000 to $39,999 $40,000 to $49,999 $50,000 to $59, $60,000 to $79,999 $80,000 to $99,999 $100,000 to $124,999 $125,000 or more Prefer not to answer K10. What are the languages spoken at this residence? English French German Mandarin Cantonese Hindi Punjabi Tagalog Farsi (Persian) Other (please specify): Main language Other languages (check one only) (check all that apply) K11. From time to time, Pacific Northern Gas will hire market research contractors to conduct research. This is done to better understand our customers needs and gather information to design programs to help you save money on your energy bill. Do we have your permission to contact you in the future for the purpose of additional market research? If yes, please provide your name and telephone number below. This is only permission to contact you. You are not obligated to participate if contacted by us or a market research company we hire. 1 YES - it is OK to contact me for follow-up research First name: Last name: Telephone: (optional) Pacific Northern Gas Ltd. and Discovery Research would like to thank you for your help and assistance If you have any questions please contact Verlon Otto at or votto@png.ca

211 Contest Rules 1. All entries must be received by Discovery Research by November 15, Limit of one entry per eligible entrant. Contestant names will be determined by a random draw on December 1, 2013 from all entries received. To win, the selected contestant must answer a time limited mathematical skill-testing question, without mechanical or other assistance. 2. The selected contestant will be notified by telephone by Discovery Research. Discovery Research will attempt to reach the selected contestant no more than 3 times. If Discovery Research is unable to contact him or her within 5 days of the draw date, Discovery Research may draw the name of another contestant to be eligible for the prize. 3. Contestants who complete and return the survey form by mail will have their name entered once in the draw. Contestants who complete the survey form online will have their name entered into the draw twice. 4. Contestants must be residents of British Columbia. 5. Pacific Northern Gas customers who have completed and returned the PNG 2013 Residential End Use Survey by November 15, 2013 are automatically entered and no further action is required on the part of the customer. To enter without completing the survey, mail a letter with your name, telephone number and address to Discovery Research, West 7th Avenue, Vancouver, BC, V6H 1C1. Mark the envelope Residential Survey Contest. 6. Chances of winning are based on the number of eligible entries received via mail and online. 7. Employees or agents of Pacific Northern Gas and their immediate families are not eligible to win. 8. There will be one $1,000 grand prize and twenty $200 secondary prices awarded, each prize will be for either a prepaid VISA gift card or a credit to the prize winner s gas bill. 9. Pacific Northern Gas and Discovery Research assume no responsibility for lost or misdirected entry forms. 10. By entering, contestants agree to abide by the contest rules and that the decision of the judge shall be final.

212 Pacific Northern Gas Ltd. Resource Plan for the PNG-West Pipeline System April 2014 APPENDIX D: BUILDING ARCHETYPES

213 Residential End-Use Model Building Archetypes in Pacific Northern Gas Ltd. s PNG-West Service Area The following charts show the building types that were identified and incorporated into the residential forecast. All of the attributes have been reflected in the residential end-use model that is the basis for the forecast. The three primary archetypes Existing Stock, New Construction All Gas and New Construction Electric are each comprised of four sub-types that reflect the dwelling types in PNG s service area: Single Family Detached (SFD), Multi-Family Dwellings (MFD) which include row housing such as townhouses, duplexes and triplexes, Vertical Subdivisions (VS) consisting of apartments and condominiums in multi-storey buildings, and Mobile Homes (MH) including trailers and other prefabricated homes. Dwelling Characteristics Space Heating Type Space Heating Behaviours Water Heating Characteristics Water Heating Behaviours Gas Appliances PNG-West (Western Region) Archetypes Existing Stock - Average Home New Construction - All Gas New Construction - Electric Attributes* SFD MFD VS MH SFD MFD VS MH SFD MFD VS MH Living Space (Sq Ft) 2,000 1,200 1,100 1,000 2,500 1,200 1,200 1,100 2,500 1,200 1,200 1,100 Double Glazed, Lo-Emissivity Windows (portion of all windows) Insulated Doors (portion of all doors) Basement Insulation R12 or better na na 1 1 na na 1 1 na na Attached Garage Insulation R12or better na na 1 0 na na 1 0 na na Draftproofed Gas used for Primary Heating High Efficiency Gas Furnace Secondary non-gas heating Secondary gas-fueled heating Decorative Gas Fireplace (number per dwelling) Heater type Gas Firepace (number per dwelling) Turndown Thermostat nightly Turndown Thermostat when unoccupied Use of Window coverings during winter Gas used for Domestic Hot Water Heating Existence of a High Efficiency or On-Demand Hot Water Heater Existence of Pipe Wrap on hot water outlet lines Existence of a Water Heater Tank Blanket Number of Baths per week Number of Showers per week Existence of Gas Cooking Appliances Existence of a Gas BBQ Existence of a Gas Clothes Dryer Annual Use per Account (GJ) * Expressed as a portion of all dwellings unless specified otherwise Page crystal court north vancouver, bc, V7R 2B6 t: f: e: akleinschmidt@boreasconsulting.com

214 The attributes have been quantified in terms of their degree of penetration in each housing segment. In the case of the existing stock archetype, the degree of penetration has been taken from the results of the Residential End-Use Survey. The New Construction All Gas archetype reflects a more energy efficient dwelling, but also one that uses natural gas for all thermal applications including space heating, hot water, fireplaces, cooking and clothes drying. As well, the living space of a new SFD dwelling is 25 percent larger (2,500 square feet) than the current average of 2,000 square feet. The New Construction Electric archetype also reflects a more energy efficient dwelling but uses electricity for all end-use applications, save for a natural gas heater type fireplace to supplement the space heating load. Dwelling Characteristics Space Heating Type Space Heating Behaviours Water Heating Characteristics Water Heating Behaviours Gas Appliances PNG-West (Eastern Region) Archetypes Existing Stock - Average Home New Construction - All Gas New Construction - Electric Attributes* SFD MFD VS MH SFD MFD VS MH SFD MFD VS MH Living Space (Sq Ft) 2,000 1,200 1,100 1,000 2,500 1,200 1,200 1,100 2,500 1,200 1,200 1,100 Double Glazed, Lo-Emissivity Windows (portion of all windows) Insulated Doors (portion of all doors) Basement Insulation R12 or better na na 1 1 na na 1 1 na na Attached Garage Insulation R12or better na na 1 0 na na 1 0 na na Draftproofed Gas used for Primary Heating High Efficiency Gas Furnace Secondary non-gas heating Secondary gas-fueled heating Decorative Gas Fireplace (number per dwelling) Heater type Gas Firepace (number per dwelling) Turndown Thermostat nightly Turndown Thermostat when unoccupied Use of Window coverings during winter Gas used for Domestic Hot Water Heating Existence of a High Efficiency or On-Demand Hot Water Heater Existence of Pipe Wrap on hot water outlet lines Existence of a Water Heater Tank Blanket Number of Baths per week Number of Showers per week Existence of Gas Cooking Appliances Existence of a Gas BBQ Existence of a Gas Clothes Dryer Annual Use per Account (GJ) * Expressed as a portion of all dwellings unless specified otherwise Page crystal court north vancouver, bc, V7R 2B6 t: f: e: akleinschmidt@boreasconsulting.com

215 Pacific Northern Gas Ltd. Resource Plan for the PNG-West Pipeline System April 2014 APPENDIX E: ANNUAL DEMAND

216 Pacific Northern Gas Ltd. Resource Plan for the PNG-West Pipeline System April 2014 PNG-West Annual Demand (Reference Scenario) TJ Residential 1,254 1,244 1,242 1,249 1,258 1,266 1,276 1,278 1,280 1,276 1,273 Small Commercial Large Commercial, Small Industrial Sales and Other Firm Transport ,583 1,603 1,574 1,572 1,577 1,596 1,592 1,592 1,595 Company Use Interruptible Sales and Transport Total PNG-West 4,038 3,993 4,423 4,453 4,435 4,444 4,461 4,484 4,483 4,480 4, Residential 1,271 1,260 1,257 1,257 1,253 1,250 1,241 1,238 1,234 1,229 Small Commercial Large Commercial, Small Industrial Sales and Other Firm Transport 1,595 1,595 1,595 1,595 1,595 1,595 1,595 1,595 1,595 1,595 Company Use Interruptible Sales and Transport Total PNG-West 4,481 4,470 4,468 4,469 4,466 4,464 4,457 4,454 4,451 4,446

217 Pacific Northern Gas Ltd. Resource Plan for the PNG-West Pipeline System April 2014 PNG-West Annual Demand (Competitive Gas Scenario) TJ Residential 1,254 1,244 1,252 1,270 1,289 1,308 1,329 1,335 1,339 1,338 1,338 Small Commercial Large Commercial, Small Industrial Sales and Other Firm Transport ,583 2,298 2,269 2,267 2,272 2,290 2,287 2,287 2,290 Company Use Interruptible Sales and Transport Total PNG-West 4,038 3,993 4,436 5,187 5,183 5,206 5,237 5,267 5,272 5,274 5, Residential 1,338 1,329 1,328 1,331 1,329 1,328 1,322 1,320 1,317 1,313 Small Commercial Large Commercial, Small Industrial Sales and Other Firm Transport 2,290 2,290 2,290 2,290 2,290 2,290 2,290 2,290 2,290 2,290 Company Use Interruptible Sales and Transport Total PNG-West 5,284 5,277 5,279 5,285 5,286 5,288 5,285 5,285 5,285 5,283

218 Pacific Northern Gas Ltd. Resource Plan for the PNG-West Pipeline System April 2014 PNG-West Annual Demand (Competitive Electric Scenario) TJ Residential 1,254 1,244 1,230 1,221 1,211 1,202 1,194 1,192 1,191 1,185 1,180 Small Commercial Large Commercial, Small Industrial Sales and Other Firm Transport ,583 1,603 1,574 1,572 1,577 1,596 1,592 1,592 1,595 Company Use Interruptible Sales and Transport Total PNG-West 4,038 3,993 4,398 4,404 4,359 4,341 4,333 4,343 4,331 4,318 4, Residential 1,176 1,163 1,158 1,156 1,150 1,144 1,134 1,129 1,123 1,117 Small Commercial Large Commercial, Small Industrial Sales and Other Firm Transport 1,595 1,595 1,595 1,595 1,595 1,595 1,595 1,595 1,595 1,595 Company Use Interruptible Sales and Transport Total PNG-West 4,297 4,276 4,263 4,254 4,240 4,227 4,209 4,196 4,182 4,168

219 Pacific Northern Gas Ltd. Resource Plan for the PNG-West Pipeline System April 2014 APPENDIX F: DESIGN DAY DEMAND

220 Pacific Northern Gas Ltd. Resource Plan for the PNG-West Pipeline System April 2014 PNG-West Design Day Demand (Reference Scenario) GJ/D Residential 10,063 9,972 9,983 10,032 10,097 10,161 10,243 10,247 10,264 10,251 10,236 Small Commercial 7,515 7,417 7,441 7,464 7,485 7,506 7,524 7,547 7,560 7,567 7,577 Large Commercial, Small Industrial Sales and Other 2,649 2,649 2,649 2,649 2,649 2,649 2,649 2,649 2,649 2,649 2,649 Firm Transport 7,819 7,819 8,403 8,403 8,403 8,403 8,403 8,403 8,403 8,403 8,403 Company Use Interruptible Sales and Transport 9,624 9,624 10,738 10,738 10,738 10,738 10,738 10,738 10,738 10,738 10,738 Total PNG-West 37,929 37,739 39,484 39,557 39,643 39,729 39,830 39,857 39,887 39,881 39, Residential 10,235 10,130 10,114 10,094 10,062 10,042 9,956 9,938 9,912 9,879 Small Commercial 7,588 7,597 7,604 7,618 7,629 7,640 7,654 7,661 7,668 7,673 Large Commercial, Small Industrial Sales and Other 2,649 2,649 2,649 2,649 2,649 2,649 2,649 2,649 2,649 2,649 Firm Transport 8,403 8,403 8,403 8,403 8,403 8,403 8,403 8,403 8,403 8,403 Company Use Interruptible Sales and Transport 10,738 10,738 10,738 10,738 10,738 10,738 10,738 10,738 10,738 10,738 Total PNG-West 39,886 39,789 39,781 39,774 39,752 39,744 39,672 39,660 39,642 39,613

221 Pacific Northern Gas Ltd. Resource Plan for the PNG-West Pipeline System April 2014 PNG-West Design Day Demand (Warmer Weather Scenario) GJ/D Residential 8,933 8,852 8,863 8,907 8,967 9,025 9,098 9,103 9,118 9,106 9,093 Small Commercial 7,342 7,246 7,269 7,292 7,312 7,332 7,350 7,373 7,386 7,392 7,402 Large Commercial, Small Industrial Sales and Other 2,337 2,337 2,337 2,337 2,337 2,337 2,337 2,337 2,337 2,337 2,337 Firm Transport 7,015 7,015 7,949 7,949 7,949 7,949 7,949 7,949 7,949 7,949 7,949 Company Use Interruptible Sales and Transport 8,977 8,977 9,741 9,741 9,741 9,741 9,741 9,741 9,741 9,741 9,741 Total PNG-West 34,862 34,685 36,430 36,497 36,577 36,656 36,748 36,776 36,804 36,799 36, Residential 9,092 9,001 8,987 8,971 8,943 8,926 8,853 8,837 8,814 8,784 Small Commercial 7,413 7,421 7,429 7,442 7,452 7,464 7,477 7,484 7,491 7,496 Large Commercial, Small Industrial Sales and Other 2,337 2,337 2,337 2,337 2,337 2,337 2,337 2,337 2,337 2,337 Firm Transport 7,949 7,949 7,949 7,949 7,949 7,949 7,949 7,949 7,949 7,949 Company Use Interruptible Sales and Transport 9,741 9,741 9,741 9,741 9,741 9,741 9,741 9,741 9,741 9,741 Total PNG-West 36,805 36,722 36,715 36,713 36,695 36,689 36,629 36,619 36,604 36,579

222 Pacific Northern Gas Ltd. Resource Plan for the PNG-West Pipeline System April 2014 PNG-West Design Day Demand (Competitive Gas Scenario) GJ/D Residential 10,063 9,972 10,059 10,192 10,339 10,483 10,644 10,676 10,714 10,717 10,719 Small Commercial 7,515 7,417 7,460 7,514 7,562 7,608 7,649 7,694 7,726 7,751 7,778 Large Commercial, Small Industrial Sales and Other 2,649 2,649 2,649 2,649 2,649 2,649 2,649 2,649 2,649 2,649 2,649 Firm Transport 7,819 7,819 8,403 11,441 11,441 11,441 11,441 11,441 11,441 11,441 11,441 Company Use Interruptible Sales and Transport 9,624 9,624 10,738 10,738 10,738 10,738 10,738 10,738 10,738 10,738 10,738 Total PNG-West 37,929 37,739 39,580 42,827 43,023 43,215 43,418 43,495 43,566 43,594 43, Residential 10,735 10,643 10,641 10,639 10,622 10,617 10,546 10,540 10,525 10,499 Small Commercial 7,805 7,828 7,850 7,878 7,902 7,926 7,952 7,970 7,989 8,004 Large Commercial, Small Industrial Sales and Other 2,649 2,649 2,649 2,649 2,649 2,649 2,649 2,649 2,649 2,649 Firm Transport 11,441 11,441 11,441 11,441 11,441 11,441 11,441 11,441 11,441 11,441 Company Use Interruptible Sales and Transport 10,738 10,738 10,738 10,738 10,738 10,738 10,738 10,738 10,738 10,738 Total PNG-West 43,667 43,598 43,618 43,644 43,650 43,669 43,624 43,636 43,640 43,630

223 Pacific Northern Gas Ltd. Resource Plan for the PNG-West Pipeline System April 2014 PNG-West Design Day Demand (Competitive Electric Scenario) GJ/D Residential 10,063 9,972 9,891 9,816 9,739 9,662 9,605 9,583 9,580 9,553 9,523 Small Commercial 7,515 7,417 7,332 7,302 7,264 7,223 7,177 7,133 7,077 7,013 6,951 Large Commercial, Small Industrial Sales and Other 2,649 2,649 2,649 2,649 2,649 2,649 2,649 2,649 2,649 2,649 2,649 Firm Transport 7,819 7,819 8,403 8,403 8,403 8,403 8,403 8,403 8,403 8,403 8,403 Company Use Interruptible Sales and Transport 9,624 9,624 10,738 10,738 10,738 10,738 10,738 10,738 10,738 10,738 10,738 Total PNG-West 37,929 37,739 39,282 39,176 39,061 38,941 38,838 38,771 38,712 38,620 38, Residential 9,506 9,393 9,365 9,331 9,286 9,252 9,156 9,128 9,092 9,050 Small Commercial 6,888 6,821 6,753 6,688 6,621 6,552 6,485 6,411 6,337 6,260 Large Commercial, Small Industrial Sales and Other 2,649 2,649 2,649 2,649 2,649 2,649 2,649 2,649 2,649 2,649 Firm Transport 8,403 8,403 8,403 8,403 8,403 8,403 8,403 8,403 8,403 8,403 Company Use Interruptible Sales and Transport 10,738 10,738 10,738 10,738 10,738 10,738 10,738 10,738 10,738 10,738 Total PNG-West 38,447 38,266 38,169 38,070 37,956 37,854 37,689 37,586 37,475 37,355

224 Pacific Northern Gas Ltd. Resource Plan for the PNG-West Pipeline System April 2014 APPENDIX G: DSM PLAN

225 Demand Side Management Plan Prepared For: Pacific Northern Gas Ltd. Prepared By: Energitix Management & Consulting Corp. Bijan Pourkarimi, P. Eng. 4 April 2014

226 PNG DSM Plan Table of Contents 1. Executive Summary Introduction Impetus for DSM Plan DSM Guiding Principles Approach to Evaluation of Potential DSM Programs Approach to Identifying Potential DSM Programs Approach to Evaluation of Program Cost Effectiveness Approach to Developing a Program Budget Approach to Developing Participation Rates Approach to Developing Energy Savings Evaluation of DSM Programs Low Income Program Energy Saving Kits Energy Conservation Assistance Program Rental Program Conservation Education and Outreach Program General Conservation Education and Outreach K-12 Conservation Education and Outreach Post-Secondary Conservation Education and Outreach Proposed DSM Program Portfolio Low Income Programs Energy Saving Kits Energy Conservation Assistance Program...21 i

227 PNG DSM Plan Low Income Program Budget Rental Accommodations Conservation Education and Outreach General Conservation Education and Outreach K-12 Conservation Education and Outreach Post-Secondary Conservation Education and Outreach Conservation Education and Outreach Budget Enabling Activities Conclusions & Recommendations...27 Appendix A. Glossary...30 Appendix B. Summary of Applicable DSM Programs Offered by Other Utilities...31 Appendix C. IndEco Consulting Report April 2014 Page 2

228 PNG DSM Plan 1. EXECUTIVE SUMMARY On April 18, 2013, the BC Utilities Commission (Commission) issued its Decision on the Pacific Northern Gas (N.E.) Ltd. (PNG(NE)) 2012 Resource Plan and in this Decision ordered PNG(NE) to resubmit the demand side management (DSM) portion of the 2012 Resource Plan in order to comply with the provisions of subsection 44.1(2) (b) of the Utilities Commission Act (Act), which requires a public utility to file a plan that includes cost-effective demand-side measures. As a result, Pacific Northern Gas Ltd. (PNG) retained Energitix Management & Consulting Corporation (Energitix) to develop a DSM plan in response to the Commission Decision. Energitix s mandate was to develop a DSM plan that met the requirements of Section 3 of the Act s DSM Regulation. As a result, Energitix developed this plan (DSM Plan) with a focus on the following programs: o A demand-side measure intended specifically to assist residents of low-income households to reduce their energy consumption; o A demand-side measure intended specifically to improve the energy efficiency of rental accommodations; o An education program for students enrolled in schools in PNG s service area; and o An education program for students enrolled in post-secondary institutions in PNG s service area. Energitix conducted a review of applicable DSM programs offered by a number of other Canadian gas utilities as well as both gas and electric utilities in BC, namely FortisBC Energy Inc. (FEI) and BC Hydro. This review determined that: o A number of utilities offer energy saving kits for low income households o A number of utilities offer a more comprehensive home energy performance program that results in greater energy savings for low income households o None of the utilities offered any DSM programs exclusively targeted at rental accommodation. However, qualifying rental accommodation could take part in lowincome programs offered by the utility o Almost all utilities provided energy efficiency tips and information on their website o Some utilities provided conservation education and outreach to schools postsecondary institutions 4 April 2014 Page 1

229 PNG DSM Plan Further, specific to BC, this review determined that: o FEI and BC Hydro partner to offer energy saving kits as well as a more comprehensive home performance program, their Energy Conservation Assistance Program, to their low-income customers o FEI and BC Hydro do not offer a program targeted exclusively at rental accommodation. However, qualifying rental accommodation can participate in their low-income programs and/or other programs o FEI and BC Hydro offer various conservation education and outreach initiatives targeted at K-12, post-secondary institutions, and the general public Based on the results of the analysis of various programs offered to the four targeted sectors, PNG should seek to partner with FEI and/or BC Hydro to develop and deliver the following programs: o Energy saving kits for low-income households o Energy conservation assistance program for low-income households o Conservation education and outreach for K-12, post-secondary institutions, and customers in general The proposed programs included in this DSM Plan were based on FEI programs targeted at the sectors identified in Section 3 of the DSM Regulation that had a high total resource cost (TRC) to ensure that the programs are cost effective. Preliminary program budgets, participation rates, and expected savings for the proposed programs were developed based on FEI s program budgets, participation rates, and savings and adjusted to reflect PNG s customer base. Pending Commission approval of this DSM Plan, PNG should develop detailed program design and budgets and determine their costeffectiveness using a TRC model based on PNG s specific market conditions. Because of PNG s small customer base and limited resources, PNG should consider partnering with FEI and/or BC Hydro for delivery of these DSM programs. This will allow PNG to take advantage of the economies of scale and the infrastructure established by the larger utilities to deliver DSM program more cost effectively. PNG should also further investigate the applicability and cost effectiveness of a boiler program targeted at rental apartment buildings. 4 April 2014 Page 2

230 PNG DSM Plan The table that follows provides a cost summary for DSM programs identified for PNG s portfolio. DSM Program Portfolio Cost Summary Program Preliminary Full Year Budget Expected Number of Participants for 2015 Expected Annual Savings (GJ) Low Income Program $121,000 2, Conservation Education & Outreach $150,000 No Direct Savings Enabling Activities $180,000 No Direct Savings TOTAL $451, Residential Gross Margin PNG(NE) FSJ/DC $7,338, Residential Gross Margin PNG(NE) TR $679, Residential Gross Margin PNG-West $16,839, Test Year Sales PNG(NE) FSJ/DC (TJ) 1, Test Year Sales PNG(NE) TR (TJ) Test Year Sales PNG-West (TJ) 1,244 4 April 2014 Page 3

231 PNG DSM Plan 2. INTRODUCTION Historically, Pacific Northern Gas Ltd. (PNG or the Company) and Pacific Northern Gas (N.E.) Ltd. (PNG(NE)) have dedicated minimal resources to demand side management (DSM) activity for their PNG-West, and Fort St. John/Dawson Creek and Tumbler Ridge divisions. This position was based on the NSP 2009 settlement agreements reached for PNG and PNG(NE) 1 which acknowledged that the entities relatively small customer base made it difficult to be at the forefront of economically implementing DSM programs in their service areas Impetus for DSM Plan On April 18, 2013, the BC Utilities Commission (Commission) issued its Decision on PNG(NE) s 2012 Resource Plan (Order G-60-13) and in this Decision ordered PNG(NE) to resubmit the DSM portion of the 2012 Resource Plan in order to comply with the provisions of subsection 44.1(2) (b) of the Utilities Commission Act (Act), which requires a public utility to file a plan that includes cost-effective demand-side measures. This submission was to be made in conjunction with the next PNG-West resource plan to be filed no later than December 8, This requirement was reiterated by the Commission in its Decision on the PNG(NE) 2013 Revenue Requirements Application. Subsequently, PNG requested an extension to the December 8, 2013 deadline for the PNG-West resource plan to facilitate completion and analysis of a residential end-use survey (REUS) undertaken in order to improve the residential demand forecast for resource planning and to provide data in the evaluation of energy efficiency measures as part of this DSM Plan. On October 17, 2013, the Commission granted PNG s request by way of Letter L-61-13, extending the submission deadline for this resource plan (2014 Resource Plan) to April 8, PNG retained Energitix Management & Consulting Corporation (Energitix) with the mandate to develop a DSM plan that would meet the direction provided by the Commission and the requirements of Section 3 of the Demand-side Measures Regulation (DSM Regulation) of the Act. 1 Determination made for PNG-West under Order G-39-09, Appendix A, Section 11, and for PNG(NE) under Order G-40-09, Appendix A, Section 6. 4 April 2014 Page 4

232 PNG DSM Plan Based on this mandate, this DSM Plan has been prepared in response to the direction provided by the Commission to PNG and in compliance with the DSM Regulation, which requires the utility to offer: a) A demand-side measure intended specifically to assist residents of low-income households to reduce their energy consumption; b) If the plan portfolio is submitted on or after June 1, 2009, a demand-side measure intended specifically to improve the energy efficiency of rental accommodations; c) An education program for students enrolled in schools in the public utility s service area; and d) If the plan portfolio is submitted on or after June 1, 2009, an education program for students enrolled in post-secondary institutions in the public utility's service area. This DSM Plan includes the results of the preliminary analysis of potential DSM programs for: a) Low income households; b) Rental accommodation; c) K-12 education program; and d) Post-secondary education program. It also includes a portfolio of proposed DSM programs that were identified based on the results of the analysis. The portfolio of proposed DSM programs includes potential programs for participants in these four areas. Further, this DSM Plan covers all of the PNG s service territories, including the PNG-West division and the PNG(NE) Fort St. John/Dawson Creek and Tumbler Ridge divisions. In developing this DSM Plan, Energitix reviewed DSM programs offered by other Canadian gas utilities as well as the two major BC utilities, BC Hydro and FEI, and the direction provided by the Commission to other BC utilities. This DSM Plan is consistent with the DSM Regulation, the direction provided by the Commission, and DSM offerings of other utilities. The DSM Plan includes programs with a proven ability to pass the various DSM costeffectiveness tests at other gas utilities in BC, indicating a high likelihood of cost effectiveness for PNG. This DSM Plan is subject to changes in market conditions, customer responses to programs, input from potential program partners, input from other stakeholders, changes in the political 4 April 2014 Page 5

233 PNG DSM Plan environment PNG operates in, the results of detailed program design, and approval of the funding application. The information and forecasts included in this DSM Plan are preliminary best estimates at the time of filing and are subject to adjustments as required. Upon approval of this DSM Plan by the Commission, PNG would submit an application seeking approval for funding for specific programs (DSM Application) either on a stand-alone basis or a part of its revenue requirement application process. This DSM Application would contain a refined budget based on PNG s review of its costs to implement these programs DSM Guiding Principles Energitix worked with PNG to establish a set of principles that guided the development of this DSM Plan and that PNG can apply as a guide in developing DSM programs in the future. These principles are consistent with the Energy Efficiency and Conservation Principles used by FEI that have been previously approved by the Commission. Many of these principles were based on a report prepared for the Canadian Gas Association in 2005 by IndEco Consulting in association with B. Vernon and Associates. A copy of this report is attached as Appendix C. These principles include: 1. Programs will have a goal of being available to the sectors identified in Section 3 of the DSM Regulation including low income households and rental accommodation. 2. Wherever possible, programs will be consistent across all service territories served by PNG. 3. PNG will attempt to limit the non-incentive costs of each program at 50 percent of the expenditure in a given year. 4. The cost effectiveness of programs, in terms of the comparison of their costs and benefits, will be analyzed on a portfolio-wide basis. 5. A program is characterized as cost effective if the results of the Modified Total Resource Cost/Benefit (mtrc) and Total Resource Cost/Benefit (TRC) tests, when applied at the portfolio level over the funding period, will yield a ratio of one or greater than one. 6. The programs will support the objectives of established government policies when possible. 4 April 2014 Page 6

234 PNG DSM Plan 7. In order to minimize the cost of DSM programs, PNG will leverage any available incentives from additional sources, such as the provincial and federal governments, and equipment suppliers and manufacturers, where applicable. 8. When possible, PNG will seek to partner with other organizations, agencies, and utilities in order to reduce the costs to develop and deliver DSM programs to its customers. 9. Incentives, if offered, may be directed to the end users of an appliance, to the customer point of contact at the time that an equipment purchase decision is made (for example, to the gas contractor in the case of a furnace), to a system designer or engineer, or to an equipment developer, supplier or manufacturer. The most effective use of incentives will be determined through the program design process. 10. Conservation education and outreach will be part of PNG s DSM activity. 4 April 2014 Page 7

235 PNG DSM Plan 3. APPROACH TO EVALUATION OF POTENTIAL DSM PROGRAMS This section includes a description of the approach used to identify and analyse the cost effectiveness of potential DSM programs that are consistent with the requirements of Section 3 of the DSM Regulation Approach to Identifying Potential DSM Programs The programs identified in this DSM Plan are based on a review of DSM programs offered by other Canadian gas utilities, including BC Hydro and FEI, with particular emphasis on programs offered by FEI, which were specifically targeted at the four areas identified in Section 3 of the DSM Regulation. A summary of programs offered by other Canadian utilities specifically targeted at the four areas identified in Section 3 of the DSM Regulation is presented in Appendix B. This approach was used for a number of reasons: It allows PNG to learn from the experience of other gas utilities, particularly in the BC market; It allows PNG to explore potential partnering opportunities with other utilities in BC to take advantage of economies of scale that PNG, owing to its size, is otherwise unable to achieve, and to therefore minimize the impact of the cost of potential DSM programs on the rates of PNG s customers; It allows PNG to take advantage of the work done by other utilities in BC to establish the infrastructure and market requirements for offering DSM programs; and It allows PNG to target programs that are proven to be cost effective as measured by the TRC. This approach was used to prepare a preliminary list of potential cost-effective programs. Preliminary program costs, number of participants in the program, and savings were estimated by analyzing DSM programs offered by FEI for program costs, program participation rates, and program energy savings and adjusting them to reflect PNG s customer base and revenues. 4 April 2014 Page 8

236 PNG DSM Plan 3.2. Approach to Evaluation of Program Cost Effectiveness The cost effectiveness of FEI s DSM programs were analyzed based on FEI s TRC results as presented in Appendix I to FEI s 2013 Revenue Requirement Application and EEC Plan. 2 Programs with high TRC results that targeted the sectors identified in Section 3 of the DSM Regulation were then selected for further evaluation as part of a portfolio of potential DSM programs for PNG. FEI and BC Hydro have spent a considerable amount of time and resources to develop proprietary models to evaluate the cost effectiveness of their DSM programs. Upon approval of PNG s DSM Plan, as part of its detailed program development efforts PNG should plan to explore cost-effective options for developing and/or acquiring an appropriate model that addresses PNG s evaluation requirements. This may include developing a model or partnering with FEI for the use of their model. Therefore, a preliminary budget for the development and/or acquisition of such model is included in this DSM Plan. Until such time as a model is developed and/or acquired, and for the purposes of this DSM Plan, the cost effectiveness of the proposed DSM portfolio was evaluated based on the analysis of the cost effectiveness of FEI s programs. This approach is appropriate for a number of reasons: The costs associated with developing and/or acquiring a model are deferred and/or minimized; Only natural gas DSM programs that have proven to be cost effective in BC are included in the portfolio of DSM programs included in this DSM Plan; and PNG may be able to develop programs for its small customer base more costeffectively by keeping program fixed costs to a minimum 3. PNG should plan to evaluate the cost effectiveness of the DSM programs at both the portfolio level and at the program level. Evaluation of the cost effectiveness of the DSM programs at the portfolio level is consistent with Section 4(1) of the DSM Regulation, which stipulates that the Commission, in Due to PNG s smaller number of customers and sales volumes relative to FEI and BC Hydro, program fixed costs may have a bigger impact on the cost effectiveness of DSM programs. Therefore, by lowering the program fixed costs, the cost effectiveness of DSM programs should improve. 4 April 2014 Page 9

237 PNG DSM Plan determining the cost effectiveness of demand side measures that are part of a portfolio of demand side measures, may compare the costs and benefits of: a) A demand side measure individually; b) With other demand side measures in the portfolio; or c) The portfolio as a whole. Further, the portfolio approach is appropriate for evaluating PNG s DSM programs for a number of reasons: According to Sections 4(4) and 4(5) of the DSM Regulation, the Commission must, at a minimum, use the portfolio approach in assessing the cost effectiveness of specified demand-side measures and public awareness programs. Specified demand side measures include: education programs for students, funding for energy efficiency training, funding for codes and standards development, funding to support development of or compliance with a specific standard, a community engagement program, and a technology innovations program. PNG s DSM Plan has considered education programs for students, energy efficiency training, and community engagement. Many individual residential and low income programs often do not pass the TRC or the mtrc. A portfolio approach to cost effectiveness allows PNG to offer DSM programs to low income and rental sectors, in compliance with Section 3 of the DSM Regulation and Commission directives. A portfolio approach is also consistent with the Commission s order G in FEI s 2008 Energy Efficiency and Conservation Application, where the Commission determined that the cost effectiveness of DSM activities should be measured at the portfolio level Approach to Developing a Program Budget Preliminary program budgets were developed by analyzing FEI s program budgets as filed in Appendix I of FEI s 2013 Revenue Requirement Application and determining FEI s total program cost for each program as a percentage of FEI s delivery margin for the applicable customer class and then applying the same percentage to PNG s delivery margin for the same customer class. 4 April 2014 Page 10

238 PNG DSM Plan The program budget for the low income program was developed by determining FEI s program budget as a percentage of the delivery margin for FEI s residential customer class and then applying the same percentage to PNG s delivery margin for the residential customer class. The program budget for conservation education and outreach was developed by determining FEI s program cost as a percentage of FEI s total delivery margin and then applying the same percentage to PNG s total delivery margin. The preliminary budgets in this DSM Plan include incentive costs, program administration costs, and all costs to support the development, delivery, and management of the programs identified in this DSM Plan. Upon approval of this DSM Plan by the Commission, PNG should plan to submit a DSM Application seeking approval for funding for specific programs and include a refined budget based on PNG s review of its costs to implement these programs Approach to Developing Participation Rates Participation rates were developed by analyzing FEI s participation rates in each program as filed in Appendix I of FEI s 2013 Revenue Requirement Application and determining the participation rates for each program as a percentage of number of customers for the applicable customer class and then applying the same percentage to PNG s customer count for the same customer class. The participation rate for the low income program was developed by determining the number of participants in FEI s low income program as a percentage of FEI s residential customer class and then applying the same percentage to PNG s residential customer count Approach to Developing Energy Savings At this point in evaluation of potential DSM programs, energy savings were determined by analyzing FEI s energy savings per participant for each program and applying the same energy savings per participant to PNG s proposed DSM programs. PNG service territories lie in a colder winter climate than almost all of FEI s and, consequently, PNG s residential customers use per account is higher than that of most of FEI s customers. Therefore, it can be expected that the energy savings from programs designed to reduce the residential space heating load to have a larger impact, on a gigajoule basis, than the same program delivered to FEI s customers, most of whom live in the Lower Mainland, Interior and Columbia regions of the Province. 4 April 2014 Page 11

239 PNG DSM Plan PNG has developed a residential end-use model that it intends to refine further as part of the development of a program evaluation framework that PNG intends to bring forward in its DSM Application. The end-use model makes use of the results of the recently completed REUS and conditional demand analysis to predict the energy savings arising from each of the proposed programs. 4 April 2014 Page 12

240 PNG DSM Plan 4. EVALUATION OF DSM PROGRAMS The DSM programs evaluated in this report targeted the sectors identified in Section 3 of the DSM Regulation. This section includes a summary of the results of the evaluation of potential DSM programs that meet the requirements of this regulation Low Income Program The results of PNG s REUS indicate that approximately 16.6% of PNG s residential customers earn less than $40,000. Therefore, a low income program has the potential to target approximately 16.6% of PNG s residential customers. Two of the most common low income programs offered by other utilities including FEI and BC Hydro include: Energy Saving Kits Energy Conservation Assistance Program Anticipated expenditures for the low income programs include both fixed program costs and incentives Energy Saving Kits With an Energy Saving Kit (ESK) program, utilities provide free energy saving kits for low income households. Energy saving kits are designed so as to allow customers take some simple steps towards saving energy by installing a bundle of easy-to-install items that are delivered to their door. The bundle of measures may include low-flow fixtures, water heater pipe wrap, caulking, draft proofing tape, outlet gaskets, and window film. In BC, BC Hydro and FEI have partnered to offer energy savings kits to low income households. Table 1 summarizes the results of the cost effectiveness of this program for FEI as shown in Appendix I of FEI s 2013 Revenue Requirement. 4 April 2014 Page 13

241 PNG DSM Plan Table 1. FEI s Energy Saving Kit Cost Effectiveness Metrics Program FEI TRC 4 FEI mtrc 5 FEI Utility FEI Participant FEI RIM 6 Energy Saving Kit 5.14 N/A FEI has evaluated a TRC of 5.14 for its Energy Saving Kit program. Based on FEI s TRC, it can be expected that this program shall have a TRC of greater than 1.00 in PNG s service territory. PNG may have an opportunity to partner with FEI and BC Hydro in order to take advantage of infrastructure and processes established by FEI and BC Hydro to more cost-effectively deliver Energy Saving Kits to its low income customers. Table 2 summarizes the expected preliminary budget, number of participants, and annual savings per participant; developed based on the approach described in section 3.3. Table 2. Preliminary Budget, Participation Rates, and Savings Energy Saving Kit Program Full Year Budget No. of Participants (2015) Savings per Participant (GJ/yr) Energy Saving Kit $8, Energy Conservation Assistance Program An Energy Conservation Assistance Program (ECAP) would offer a personalized home energy evaluation, personalized energy efficiency advice, and installation of energy saving products by a qualified contractor. BC Hydro and FEI have partnered to offer this program to low income households including households that rent. 4 The Total Resource Cost (TRC) test measures the net benefits of a DSM program as a resource option based on the supply side benefits and the total costs of the program, including costs to consumers and to utilities. 5 The Modified Total Resource Cost (mtrc) test is a modified version of the TR that accounts for the non-energy benefits (NEB) of a DSM program 6 The Ratepayer Impact Measure (RIM) test measures the impact of a DSM program on customer billing rates due to changes in utility revenues and operating costs. 4 April 2014 Page 14

242 PNG DSM Plan Table 3 summarizes the results of the cost effectiveness of this program for FEI as shown in Appendix I of FEI s 2013 Revenue Requirement. Table 3. FEI s Energy Conservation Assistance Program Cost Effectiveness Metrics Program FEI TRC FEI mtrc FEI Utility FEI Participant FEI RIM Energy Conservation Assistance Program 0.43 N/A ECAP has a TRC of 0.43 for FEI and fails the TRC test. While PNG can partner with FEI and BC Hydro and take advantage of the infrastructure established by FEI and BC Hydro to deliver ECAP to its low income customers, it is expected that this program shall have a TRC of less than Table 4 summarizes the expected preliminary budget, number of participants, and annual savings per participant. Table 4. Preliminary Budget, Participation Rates, and Savings ECAP Program Full Year Budget No. of Participants (2015) Savings per Participant (GJ/yr) Energy Conservation Assistance Program $96, Rental Program Neither FEI nor BC Hydro have a specific program that is exclusively targeted at the rental market. However, renters are able to participate in the other DSM programs offered by BC Hydro and FEI, including the low income programs. PNG s REUS indicates that approximately 6.5% of PNG s residential customers served under a residential tariff live in rental units. It also indicates that approximately 28.2% of these renters in PNG s service territory earn less than $40,000 per year, which indicates that PNG s low income offer will also be available to a good percentage of these renters. Furthermore, the results of the REUS also indicates that approximately 65% and 24% of these rental households live in single family dwelling/duplexes and townhomes respectively, while only approximately 2% and 9% of these rental households live in apartments/condos and mobile homes respectively. The REUS also indicates that over 96% of these tenants pay 5 April 2014 Page 15

243 PNG DSM Plan their own utility bills, which provides some incentive for the tenants to manage their gas use and utility costs. Based on the foregoing findings, a rental program targeted at residential customers who rent and pay for their own gas utilities may not be beneficial at this point for number of reasons: The rental market represents approximately 6.5% of these residential customers; Approximately 28.2% of these rental units may qualify for a low income offer; Approximately 96% of these rental units are responsible for their own gas bill, which incents them to manage their gas use; and Other utilities have not been able to develop an effective program exclusively targeted at the rental market. However, many multi-unit residential buildings (MURBs) are typically served by one gas meter and may have a central boiler for space and/or water heating. They typically receive gas service under a commercial rate class. Some of these MURBs may include rental units in addition to owner-occupied condominiums. This is of note as the REUS targeted only those customers on a residential tariff. Consequently, information on this sector of the rental market has not been captured by this survey. PNG has identified some 150 MURBs in its service territory. Given this small number of properties categorized as MURBs, PNG should consider a more detailed assessment of the applicability and cost effectiveness of an efficient boiler program targeted exclusively at these buildings and if viable include it in the DSM Application Conservation Education and Outreach Program A conservation education and outreach program provides general conservation and nonprogram specific communications. Such a program is intended to foster a culture of conservation by providing information about energy efficiency and reductions in greenhouse gas (GHG) emissions. Traditionally, education and outreach programs do not have any energy savings directly associated with them and therefore individual education and outreach programs are not run through the standard DSM cost-effectiveness tests at a program level. Three conservation education and outreach initiatives were considered: a) General Conservation Education and Outreach 5 April 2014 Page 16

244 PNG DSM Plan b) K-12 Conservation Education and Outreach c) Post-secondary Conservation Education and Outreach The expenditures for the conservation and education programs are primarily program development costs, which are fixed and unlike the low income programs do not include any incentives General Conservation Education and Outreach The conservation education and outreach supports PNG s DSM Plan by providing information to customers about energy conservation and GHG emissions reductions. Most utilities with DSM programs provide their customers with information and educational material about energy efficiency through a variety of media including print and on-line. Because of PNG s large service territory and small customer base, PNG should consider a program that uses cost effective media, which may include print, on-line, and community events to provide energy efficiency tips and information to customers to help them conserve energy in a timely and cost-effective manner. Table 5 summarizes the expected preliminary budget for the conservation education and outreach. Table 5. Preliminary Budget General Conservation Education and Outreach Program Full Year Budget General Conservation Education and Outreach $50, K-12 Conservation Education and Outreach The K-12 conservation education and outreach program provides general conservation and non-program specific communications for K-12 students. The program is intended to foster a culture of conservation by helping K-12 students learn about energy efficiency and reductions in GHG emissions. Other utilities, particularly BC Hydro, have spent considerable resources over several years to develop material that can be included in the educational curriculum for all levels of K-12 throughout the Province. This material was developed by working with the BC Ministry of Education over several years and is available to all schools in the Province. 4 April 2014 Page 17

245 PNG DSM Plan FEI has also developed various partnerships and funding support for a number of in-class and on-line programs related to energy efficiency. Some of these initiatives are delivered by third parties such as non-profit organizations. Only six of the 60 school districts in BC are in PNG s service area, which limits the market for an education program that can be incorporated in the school curriculum. Based on the experience of other utilities, incorporating an energy efficiency education program into the school curriculum can take several years, making it very difficult and costly for PNG to deliver an education program in the short term. A number of third parties such as non-profit organizations have developed and deliver energy efficiency messages to K-12 students in the Province. Some of these programs include: Climate Change Showdown, Energy is Awesome, Destination Conservation, BC Green Games, Green Bricks, Energy Champions, and Beyond Recycling. Delivering conservation education and outreach through partnerships with such organizations may allow PNG to take advantage of existing infrastructure and programs to quickly and cost effectively deliver energy efficiency messages to K-12 students in the schools served by PNG. Table 6 summarizes the expected preliminary budget for the K-12 conservation education and outreach. Table 6. Preliminary Budget K-12 Conservation Education and Outreach Program Full Year Budget K-12 Conservation Education and Outreach $50, Post-Secondary Conservation Education and Outreach The post-secondary conservation education and outreach program provides general conservation and non-program specific communications and education for students in postsecondary institutions. The program is intended to foster a culture of conservation by helping students in post-secondary institutions learn about energy efficiency and reductions in GHG emissions. There are two post-secondary institutions in PNG s service territory, the North West Community College in the PNG-West service territory and the Northern Lights College in 4 April 2014 Page 18

246 PNG DSM Plan PNG(NE) s service territory. These institutions offer a variety of certificate, diploma, and associate degrees. In addition, a number of energy efficiency related programs are available through various post-secondary institutions in the Province. Some of these include the Building Energy and Resource Management (BERM) Certificate offered by Douglas College, the Sustainable Energy Management Advanced Certificate (SEMAC) program offered by the BC Institute of Technology in partnership with BC Hydro, and the Masters of Engineering in Clean Energy offered by the University of British Colombia. These programs were developed by the postsecondary institutions with support and funding from utilities and other government agencies. Of specific relevance to PNG is that the Northern Lights College has recently offered an Applied Certificate in Clean Energy program. Delivering conservation education and outreach through partnerships with post-secondary institutions that have existing energy efficiency related programs may allow PNG to take advantage of existing infrastructure and programs to cost effectively deliver energy efficiency related educational programs to post-secondary students in PNG s service territory. These partnerships may include providing funding in support of post-secondary programs, including both on-line programs and on-campus education campaigns. Partnerships for on-line programs may include partnering with local post-secondary institutions and other post-secondary institutions in the Province that offer education programs related to energy efficiency, and providing funding for development of on-line material that can be offered through local post-secondary institutions. Table 7 summarizes the expected preliminary budget for post-secondary conservation education and outreach. Table 7. Preliminary Budget Post-Secondary Conservation Education and Outreach Program Full Year Budget Post-Secondary Conservation Education and Outreach $50,000 4 April 2014 Page 19

247 PNG DSM Plan 5. PROPOSED DSM PROGRAM PORTFOLIO This section provides a summary of proposed portfolio of DSM programs for PNG. It includes the proposed preliminary program budget, estimated natural gas savings, and an estimate of the cost effectiveness of the programs. The proposed portfolio of DSM programs are targeted at the following areas: 1. Low income; 2. Conservation education and outreach. For the reasons stated in Section 4.2, PNG many not wish to pursue a program targeted exclusively to customers living in rental accommodations not at this time but should consider further evaluating an efficient boiler program targeted at MURBs and, if considered viable, include such a program in its DSM Application. Once this DSM Plan is approved by the Commission, PNG should plan to develop detailed program offerings and budgets for each of the above areas. As part of the program development process, PNG should complete a detailed cost effectiveness analysis for each program and ensure that DSM measures are cost effective at the overall portfolio level. PNG should plan to offer the same portfolio of DSM programs across its entire service territory to maximize the cost effectiveness of the programs Low Income Programs PNG should design and develop the following programs for low income households: a) Energy Saving Kits (ESK) b) Energy Conservation Assistance Program (ECAP) Energy Saving Kits The energy saving kits are intended to reach a wide range of low income households in single family dwellings, duplexes, townhomes, mobile homes, and apartments. Energy saving kits are designed so as to allow customers take some simple steps towards saving energy by installing a bundle of easy-to-install items that are delivered to their door. The bundle of measures may include low-flow fixtures, water heater pipe wrap, caulking, draft proofing tape, outlet gaskets, and window film. The program may be delivered in partnership with FEI and/or BC Hydro. 4 April 2014 Page 20

248 PNG DSM Plan The program may be promoted through several channels, including bill inserts, print ads, direct mail, on-line, and partnerships with government ministries and non-profits that serve the low income population. Table 8 provides a program summary for the energy saving kit program. Table 8. Program Summary Energy Saving Kits Target Market Residential Low Income New vs. Retrofit Potential Partner Retrofit BC Hydro and FEI Incremental Cost per Participant* $14 Incentive Amount per Participant* $14 Annual Gas Savings per Participant (GJ/yr)* 2.0 Measure Life (Years)* 8.0 TRC* 5.14 Expected Number of Participants (2015) 232 Preliminary Full Year Budget** $8,000 * Based on FEI s EEC Plan (Appendix I of FEI s 2013 Revenue Requirement Application) ** Program budget includes all program costs, including incentives, program administration costs, and costs associated with program management and delivery Energy Conservation Assistance Program The energy conservation assistance program is targeted at low income households. It is intended to help participants achieve greater energy savings. The program offers a personalized home energy evaluation, personalized energy efficiency advice, and the installation of energy saving products by a qualified contractor. The bundle of measures may include low-flow fixtures, water heater pipe wrap, professional draft proofing, outlet gaskets, window film, insulation, improved ventilation, and CO detectors. BC Hydro and FEI have partnered to offer this program to low income households including renters. The program may be delivered in partnership with FEI and/or BC Hydro. 4 April 2014 Page 21

249 PNG DSM Plan The program may be promoted through several channels, which may include bill inserts, print ads, direct mail, on-line, and partnerships with government ministries and non-profits that serve the low income population. Table 9 provides a program summary for the energy conservation assistance program. Table 9. Program Summary Energy Conservation Assistance Program Target Market Residential Low Income New vs. Retrofit Potential Partner Retrofit BC Hydro and FEI Incremental Cost per Participant* $810 Incentive Amount per Participant* $810 Annual Gas Savings per Participant (GJ/yr)* 5.8 Measure Life (Years)* 13.0 TRC* 0.43 Expected Number of Participants (2015) 49 Preliminary Full Year Budget** $96,000 * Based on FEI s EEC Plan (Appendix I of FEI s 2013 Revenue Requirement Application) ** Program budget includes all program costs, including incentives, program administration costs, and costs associated with program management and delivery Low Income Program Budget Table 10 provides a program summary for the low income programs including non-program specific expenditure and total number of participants and expected annual energy savings. 4 April 2014 Page 22

250 PNG DSM Plan Table 10. Preliminary Budget Low Income Program Program Full Year Budget Expected Number of Participants (2015) Expected Annual Savings (GJ) Energy Saving Kits $8, Energy Conservation Assistance Program $96, Non-program Specific Expenditures 7 $17,000 No Direct Savings TOTAL $121, Rental Accommodations PNG should make its low income programs available to qualifying renters. PNG should also plan to reach renters through its planned conservation education and outreach initiatives which will educate renters about energy efficiency and natural gas conservation. PNG should also further investigate the applicability and cost effectiveness of a boiler program targeted at MURBs and include the result is in its DSM Application Conservation Education and Outreach PNG should design and develop the following conservation education and outreach programs: a) General Conservation Education and Outreach b) K-12 Conservation Education and Outreach c) Post-Secondary Conservation Education and Outreach General Conservation Education and Outreach The general conservation education and outreach program will support PNG s DSM Plan by providing general information to customers about energy conservation and GHG emissions reductions. 7 Non-Program Specific Costs represent costs that are attributable to the program area and support multiple programs. These costs are therefore, are not specific to only one program. Generally, these costs represent items such as training, travel, marketing collateral and consulting services that support the overall program area. 4 April 2014 Page 23

251 PNG DSM Plan This program will provide information to customers and the general public on energy efficiency with emphasis on natural gas conservation by engaging customers on-line and through other appropriate means. This audience will include low income and rental customers. Activities may include print and on-line communications and engagement campaigns as well as educational seminars, participation in home and trade shows and other community events. The program costs include the cost of materials for events and for audience engagement activities targeting customers and children. Findings from PNG s REUS indicate a low level of knowledge of energy efficiency measures by low income and rental respondents and that these households are generally characterized by low-efficiency infrastructure, hence there may be value in conservation outreach targeted at these segments. PNG may also seek partnerships opportunities with BC Hydro and FEI to achieve cost efficiencies in these activities. Table 5 provided a summary of the expected preliminary budget for the general conservation education and outreach program K-12 Conservation Education and Outreach The K-12 conservation education and outreach program provides general conservation and non-program specific communications for K-12 students. The program is intended to foster a culture of conservation by helping K-12 students learn about energy efficiency and reductions in GHG emissions. PNG should pursue partnership opportunities in delivering this program cost effectively. BC Hydro, FEI, and a number of third parties such as non-profit organizations have developed and deliver energy efficiency messages to K-12 students in the Province. Some of these programs include: Climate Change Showdown, Energy is Awesome, Destination Conservation, BC Green Games, Green Bricks, Energy Champion assembly presentations, and Beyond Recycling. Partnerships will allow PNG to deliver its energy efficiency and conservation message through a number of existing channels, taking advantage of existing infrastructure and programs to quickly and cost-effectively deliver energy efficiency messages to K-12 students in the schools served by PNG. 4 April 2014 Page 24

252 PNG DSM Plan Table 6 provided a summary of the expected preliminary budget for the K-12 conservation education and outreach Post-Secondary Conservation Education and Outreach The post-secondary conservation education and outreach program provides general conservation and non-program specific communications and education for students in postsecondary institutions. The program is intended to foster a culture of conservation by helping students in post-secondary institutions learn about energy efficiency and reductions in GHG emissions. PNG should pursue partnerships with local and other post-secondary institutions that have existing energy efficiency related programs. These partnerships may include funding support for post-secondary programs, which may include on-line programs and on-campus education campaigns. Partnerships for on-line programs may include partnering with local post-secondary institutions and other post-secondary institutions in the Province that offer education programs related to energy efficiency, and providing funding for development of on-line material that can be offered through local post-secondary institutions. This will allow PNG to take advantage of existing infrastructure and programs to quickly and cost-effectively deliver energy efficiency related educational programs to post-secondary students in PNG s service territory. Table 7 provided a summary of the expected preliminary budget for the post-secondary conservation education and outreach Conservation Education and Outreach Budget Table 11 provides a program summary for the conservation education and outreach program. 4 April 2014 Page 25

253 PNG DSM Plan Table 11. Preliminary Budget Conservation Education and Outreach Program Full Year Budget Conservation Education & Outreach $50,000 K-12 Conservation Education & Outreach $50,000 Post-Secondary Conservation Education & Outreach $50,000 TOTAL $150, Enabling Activities Enabling activities are initiatives that support delivery and development of PNG s DSM programs. Enabling activities do not have any direct energy savings associated with them and therefore cannot be evaluated by the DSM cost-effectiveness tests, however, their costs can be included at the portfolio level and evaluated as part of the overall DSM program mix. Enabling activities include the costs for a program manager (labour and benefits) to complete the detailed program design, and to develop, negotiate, and manage partnerships. Also included are the costs to develop and/or acquire the program cost/benefit evaluation model. Table 12 provides a summary of the preliminary budget for the enabling activities. Table 12. Preliminary Budget Enabling Activities Program Full Year Budget DSM Program Manager $150,000 Cost/Benefit Model $30,000 TOTAL $180,000 4 April 2014 Page 26

254 PNG DSM Plan 6. CONCLUSIONS & RECOMMENDATIONS Based on the results of the analysis completed for this DSM Plan, the following conclusions have been drawn: Low Income Program PNG should include a low income DSM offering in its DSM Application. Based on the analysis, PNG may be able to offer a low income program cost effectively and will have to complete a more detailed analysis of the low income programs for its service area: FEI s Energy Saving Kits for low income households has a TRC of 5.14 and is likely to have a TRC of greater than 1.00 in PNG s service territory; However, FEI s ECAP for low income households has a TRC of 0.43 and is likely to have a TRC of less than 1.00 in PNG s service territory; and The ability to partner with other utilities on the delivery of a low income program may increase cost effectiveness. Rental Property Program PNG should focus its effort on the rental market by further investigating the viability of an efficient boiler program targeted exclusively at MURBs: Other utilities in the Province do not offer a program exclusively targeted at rental accommodation, however, their low income program is available to qualifying rental households; A low income offering may be available to approximately 28% of rental accommodations in PNG s service area that are served under the residential tariff; and Given the small number of properties categorized as MURBs, a more detailed assessment of the applicability and cost effectiveness of an efficient boiler program targeted exclusively at these buildings is warranted to determine the viability of such a program. Conservation Education and Outreach PNG should include conservation education and outreach programs in its DSM Application: 4 April 2014 Page 27

255 PNG DSM Plan While conservation education and outreach programs targeted at K-12, postsecondary, and the general population do not offer any direct energy savings they may raise awareness of energy efficiency and its benefits; Due to low awareness in the low income and rental segments, there may be benefit from a conservation outreach targeted at these segments; and Since conservation education and outreach programs do not have any direct energy savings associated with them, they should be evaluated as part of the overall portfolio. Program Evaluation PNG should apply the portfolio approach to evaluating the cost effectiveness of DSM programs in its DSM Application. This approach would be consistent with previous Commission decisions and the approach used by FEI. Partnership Opportunities PNG should investigate further the opportunity to partner with other BC utilities in the development, delivering and administration of DSM program. This approach will allow PNG to take advantage of economies of scale and to leverage infrastructure presently in place in order to most cost-effectively deliver DSM programs. Program Costs 0 that follows provides a cost summary for DSM programs identified for PNG s portfolio. The expenditures for the conservation and education programs as well as the enabling activities are primarily fixed program development and management costs, which are fixed and unlike the low income programs do not include any incentives. For a small utility the program costs for enabling activities and conservation education and outreach, even though they do not result in any direct savings, represent a higher percentage of DSM budget than for larger utilities as the larger utilities have a significantly greater number of participants over which to recover the costs of their DSM offerings. 4 April 2014 Page 28

256 PNG DSM Plan Table 13. DSM Program Portfolio Cost Summary Program Preliminary Full Year Budget Expected Number of Participants (2015) Expected Annual Savings (GJ) Low Income Program $121,000-2, Conservation Education & Outreach $150,000 No Direct Savings Enabling Activities $180,000 No Direct Savings TOTAL $451, Residential Gross Margin PNG(NE) FSJ/DC $7,338, Residential Gross Margin PNG(NE) TR $679, Residential Gross Margin PNG-West $16,839, Test Year Sales PNG(NE) FSJ/DC (TJ) 1, Test Year Sales PNG(NE) TR (TJ) Test Year Sales PNG-West (TJ) 1,244 4 April 2014 Page 29

257 PNG DSM Plan Appendix A. GLOSSARY BCUC BC Utilities Commission DSM Demand Side Management ESK Energy Saving Kit ECAP Energy Conservation Assistance Program FEI FortisBC Energy Inc. K-12 Kindergarten to grade 12 mtrc Modified Total Resource Cost test is a modified version of the TRC that accounts for the non-energy benefits (NEB) of a DSM program MURB Multiple Unit Residential Building NEB Non Energy Benefits PNG Pacific Northern Gas Ltd. PNG(NE) Pacific Northern Gas (N.E.) Ltd. REUS Residential End-Use Survey RIM Ratepayer Impact Measure test measures the impact of a DSM program on customer billing rates due to changes in utility revenues and operating costs. TRC Total Resource Cost test measures the net benefits of a DSM program as a resource option based on the supply side benefits and the total costs of the program, including costs to consumers and to utilities. 4 April 2014 Page 30

258 PNG DSM Plan Appendix B. SUMMARY OF APPLICABLE DSM PROGRAMS OFFERED BY OTHER UTILITIES The DSM programs offered by several Canadian gas utilities as well as BC Hydro and FEI were reviewed with to determine their offerings target at low-income customers and rental accommodation, as well as their conservation education and outreach initiatives targeted at K-12 and post-secondary institutions. The DSM programs of FEI, BC Hydro, Union Gas, Enbridge Gas, Gaz Metro, and Manitoba Hydro were reviewed. Low Income Programs 1. FEI The low-income programs currently included in FEI s DSM Plan include: Energy Saving Kits Energy Conservation Assistance Program (ECAP) Low income Space Heating Top Up Low income Water Heating Top Up Non-Profit Custom Program Energy Saving Kits This program is delivered in partnership with BC Hydro. ESK is targeted at a broad number of low income customers. It is intended to enable the customers to take simple steps toward saving energy by taking installing a bundle of easy-toinstall measures. The measures may include a low-flow showerhead, faucet aerators, weather-stripping, window film, pipe insulation, outlet and switch gaskets, hot water temperature gauge, compact fluorescent light bulbs (CFLs), a fridge and freezer thermometer, and efficient night light, as well as discount coupons for other energy efficient products. PNG may be able to offer a similar program in partnership with FEI and BC Hydro. 4 April 2014 Page 31

259 PNG DSM Plan Energy Conservation Assistance Program This program is delivered in partnership with BC Hydro. ECAP is intended to offer deeper energy savings to low income customers by offering a free home energy assessment, personalized energy coaching and contractor-installed energy efficiency upgrades. The measures may include faucet aerators, water saving showerheads, water heater pipe wrap, weather-stripping, and energy efficient light bulbs. Some homes may qualify for attic and crawlspace insulation upgrades. PNG may be able to offer a similar program in partnership with FEI and BC Hydro. Low income Space Heating Top Up This program is intended to encourage non-profit housing societies to replace standard efficiency boilers with high efficiency boilers. The program works in conjunction with FEI s commercial boiler program and provides a higher incentive to non-profit housing societies than the standard incentives offered under the commercial boiler program. This program requires PNG to offer a commercial boiler program first and may not be suitable at this time. Low income Water Heating Top Up This program is intended to encourage non-profit housing societies to replace standard efficiency water heaters with high efficiency water heaters. The program works in conjunction with FEI s commercial water heating program and provides a higher incentive to non-profit housing societies than the standard incentives offered under the commercial water heater program. This program requires PNG to offer a commercial water heater program first and may not be suitable at this time. Non-Profit Custom Program This program is intended to encourage non-profit housing societies to replace inefficient equipment with high efficiency equipment. The program works requires an energy study and provides incentives based on the recommendations of the study. The incentives shall cover the incremental cost of the recommended measures. This program requires PNG to offer a commercial custom program first and may not be suitable at this time. 4 April 2014 Page 32

260 PNG DSM Plan 2. BC Hydro The low income programs currently offered by BC Hydro include: Energy Saving Kits Energy Conservation Assistance Program (ECAP) Energy Saving Kits This program is delivered in partnership with FEI. ESK is targeted at a broad number of low-income customers. It is intended to enable the customers to take simple steps toward saving energy by taking installing a bundle of easy-toinstall measures. The measures may include a low-flow showerhead, faucet aerators, weather-stripping, window film, pipe insulation, outlet and switch gaskets, hot water temperature gauge, compact fluorescent light bulbs (CFLs), a fridge and freezer thermometer, and efficient night light, as well as discount coupons for other energy efficient products. PNG may be able to offer a similar program in partnership with FEI and BC Hydro. Energy Conservation Assistance Program This program is delivered in partnership with FEI. ECAP is intended to offer deeper energy savings to low income customers by offering a free home energy assessment, personalized energy coaching and contractor-installed energy efficiency upgrades. The measures may include faucet aerators, water saving showerheads, water heater pipe wrap, weather-stripping, and energy efficient light bulbs. Some homes may qualify for attic and crawlspace insulation upgrades. PNG may be able to offer a similar program in partnership with FEI and BC Hydro. 3. Union Gas Union Gas does not offer any DSM programs specifically targeted at the low income sector. It does however, offer the following residential programs, which apply to all residential customers including low income customers: Energy Saving Kits Programmable Thermostat on Bill Rebate 4 April 2014 Page 33

261 PNG DSM Plan Energy Saving Kit Union Gas offers all its residential customer with a gas water heater, including low income customers an energy saving kit. The kit includes an energy efficient showerhead, and energy efficient kitchen swivel aerator, and energy efficient bathroom aerator, one roll of Teflon tape, and two meters of foam pipe insulation. Customers can order the kit on-line and have it delivered to their home or they can pick up a kit at participating locations. Programmable Thermostat on Bill Rebate Union Gas offers a bill credit of $25 for residential customers who purchase a programmable thermostat. 4. Enbridge Gas The low income programs currently offered by Enbridge Gas include: Incentives for Multi-Unit Residential Social Housing Providers Home Weatherization Program Incentives for Multi-Unit Residential Social Housing Providers Enbridge Gas provides a number of incentives for providers of multi-unit residential housing. These incentives include capital improvement incentives, to reduce the capital cost of energy efficiency measures, audit incentives to reduce the cost of an energy audit, assistance in implementing low cost/no cost operational improvements, and direct installation of energy efficient showerheads to replace standard showerheads. Home Weatherization Program Enbridge Gas offers low income household an assessment and upgrades of home insulation, space and water heating systems, and home ventilation system by a qualified service provider. 4 April 2014 Page 34

262 PNG DSM Plan 5. Gaz Metro Gas Metro offers supplementary financial assistance to low income households who are owners of a single family home, duplex, triplex and who are participating in one of Gaz Metro s energy efficiency programs. The financial assistance can double the amount of incentive offered to the homeowner. 6. Manitoba Hydro Manitoba Hydro offers an Affordable Energy Program targeted specifically at low income households. It also offers an Energy Saving Kit to all its residential customers. Affordable Energy Program Manitoba Hydro offers an Affordable Energy Program to low income households. Both low income homeowners and tenants are eligible to take part in the program. The program offers home energy performance assessment by a qualified energy advisor who may assess the home s energy performance and offers some basic energy efficient measures such as low flow showerheads and CFLs. The other upgrades may include free insulation upgrades and rebates toward the cost of energy efficient gas furnace or boiler. Energy Saving Kit Manitoba Hydro offers a water and energy saving kit to its residential customers. The kit contains one to two low flow showerheads, two low flow faucet aerators, water heater pipe wrap, Teflon tape, and a refrigerator/freezer thermometer. 4 April 2014 Page 35

263 PNG DSM Plan Rental Programs 1. FEI FEI does not offer a rental-only program targeted exclusively at rental accommodation. However, residential and commercial DSM programs are available to eligible rental households and multi-unit residential rental buildings. 2. BC Hydro BC Hydro does not offer a rental-only program targeted exclusively at rental accommodation. However, residential and commercial DSM programs are available to eligible rental households and multi-unit residential rental buildings. 3. Union Gas Union Gas does not offer a rental-only program targeted exclusively at rental accommodation. However, residential and commercial DSM programs are available to eligible rental households and multi-unit residential rental buildings. 4. Enbridge Gas Enbridge Gas does not offer a rental-only program targeted exclusively at rental accommodation. However, residential and commercial DSM programs are available to eligible rental households and multi-unit residential rental buildings. 5. Gaz Metro Gas Metro does not offer a rental-only program targeted exclusively at rental accommodation. However, residential and commercial DSM programs are available to eligible rental households and multi-unit residential rental buildings. 6. Manitoba Hydro Manitoba Hydro does not offer a rental-only program targeted exclusively at rental accommodation. However, residential and commercial DSM programs are available to eligible rental households and multi-unit residential rental buildings. 4 April 2014 Page 36

264 PNG DSM Plan Conservation Education & Outreach 1. FEI FEI offers conservation education and outreach initiatives for: General conservation education and outreach K-12 conservation education and outreach Post-secondary conservation education and outreach General Conservation Education and Outreach FEI s general conservation education and outreach initiatives include providing all customers information about energy efficiency and conservation though various channels which may include on-line, bill inserts, print and broadcast media, community events, and trade shows. K-12 Conservation Education and Outreach FEI has developed various partnerships and funding support for a number of in-class and online programs related to energy efficiency. Some of these initiatives are delivered by third parties such as non-profit organizations. PNG may be able to partner with FEI and/or no-profit organizations to deliver conservation education and outreach to students in K-12 in its service territory. Post-Secondary Conservation Education and Outreach FEI s post-secondary conservation education and outreach include partnerships and funding support for post-secondary programs that include in-class programs, in-residence and oncampus education campaigns. PNG may be able to partner with FEI, no-profit organizations, and/or other post-secondary institutions to deliver conservation education and outreach to post-secondary institutions in its service territory. 4 April 2014 Page 37

265 PNG DSM Plan 2. BC Hydro BC Hydro offers conservation education and outreach initiatives for: General conservation education and outreach K-12 conservation education and outreach Post-secondary conservation education and outreach General Conservation Education and Outreach BC Hydro s general conservation education and outreach initiatives include providing all customers information about energy efficiency and conservation though various channels which may include on-line, bill inserts, print and broadcast media, community events, and trade shows. K-12 Conservation Education and Outreach BC Hydro has spent considerable resources over several years to develop material that can be included in the educational curriculum for all levels of K-12 throughout the Province. This material was developed by working with the BC Ministry of Education over several years and is available to all schools in the Province. Post-Secondary Conservation Education and Outreach BC Hydro s post-secondary conservation education and outreach include partnerships and funding support for post-secondary programs that include in-class programs, in-residence and on-campus education campaigns. PNG may be able to partner with BC Hydro, no-profit organizations, and/or other postsecondary institutions to deliver conservation education and outreach to post-secondary institutions in its service territory. 3. Union Gas Union Gas offers general conservation education and outreach initiatives for all its customers through various media including on-line. It provides tips and information on energy efficiency and energy conservation. 4 April 2014 Page 38

266 PNG DSM Plan 4. Enbridge Gas Enbridge Gas offers general conservation education and outreach initiatives for all its customers through various media including on-line. It provides tips and information on energy efficiency and energy conservation. 5. Gaz Metro Gaz Metro Gas offers general conservation education and outreach initiatives for all its customers through various media including on-line. It provides tips and information on energy efficiency and energy conservation. 6. Manitoba Hydro Manitoba Hydro offers conservation education and outreach initiatives for: General conservation education and outreach K-12 conservation education and outreach General Conservation Education and Outreach Manitoba Hydro s general conservation education and outreach initiatives include providing all customers information about energy efficiency and conservation though various channels which may include on-line, bill inserts, print and broadcast media, community events, and trade shows. K-12 Conservation Education and Outreach Manitoba Hydro s K-12 conservation education and outreach initiative includes educational material and curriculum for K April 2014 Page 39

267 PNG DSM Plan Appendix C. INDECO CONSULTING REPORT 4 April 2014 Page 40

268 DSM best practices In association with B. Vernon & Associates

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270 Canadian natural gas distribution utilities best practices in demand side management & B. Vernon & Associates