FAES TELUS GARDEN THERMAL ENERGY SYSTEM EXHIBIT A2-1

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1 ERICA HAMILTON COMMISSION SECRETARY web site: SIXTH FLOOR, 900 HOWE STREET, BOX 250 VANCOUVER, BC CANADA V6Z 2N3 TELEPHONE: (604) BC TOLL FREE: FACSIMILE: (604) Log No VIA November 5, 2012 Ms. Diane Roy Director, Regulatory Affairs FortisBC Energy Inc Fraser Highway Surrey, BC V4N 0E8 FAES TELUS GARDEN THERMAL ENERGY SYSTEM EXHIBIT A2-1 Dear Ms. Roy: Re: FortisBC Alternative Energy Services Inc. Application for a Certificate of Public Convenience and Necessity for the TELUS Garden Thermal Energy System and for Approval of the Rate Design and Rates to Provide Thermal Energy Services to Customers at TELUS Garden Development Commission staff submits the following document for the record in this proceeding: Compliance Filing Thermal Metering Annual Report for Yours truly, cms Enclosure cc: Registered Interveners (FAES-Telus-RI) Erica Hamilton PF/FAES-Telus Garden/A2-1_Thermal-Metering-AnnRpt

2 July 13, 2012 A2-1 Diane Roy Director, Regulatory Affairs - Gas FortisBC Energy Inc Fraser Highway Surrey, B.C. V4N 0E8 Tel: (604) Cell: (604) Fax: (604) diane.roy@fortisbc.com Regulatory Affairs Correspondence gas.regulatory.affairs@fortisbc.com British Columbia Utilities Commission 6 th Floor, 900 Howe Street Vancouver, BC V6Z 2N3 Attention: Ms. Erica M. Hamilton, Commission Secretary Dear Ms. Hamilton: Re: FortisBC Energy Inc. ( FEI ) British Columbia Utilities Commission (the Commission ) Order No. G Compliance Filing Thermal Metering - Annual Report for On June 14, 2007, the Commission issued Order No. G approving amendments to the FEI General Terms and Conditions to include definitions to allow for Thermal Metering. Commission Order No. G directed FEI to file reports annually on the Thermal Metering Pilot project by July 15 of each year starting 2008 and each year thereafter through 2012 inclusive. In accordance with Commission Order No. G-65-07, attached please find FEI s report on the Thermal Metering Pilot Project for 2011/12 (the Report ). In addition to filing the annual report, FEI is also seeking an extension to the existing Thermal Metering Pilot, as approved by Order No. G for a further five year period. The justification and approval sought are discussed in the Report. We trust that the Commission will find this filing to be in order. Should further information be required, please contact Rick Kan, Energy Products and Services Manager at (604) Yours very truly, FORTISBC ENERGY INC. Original signed: Diane Roy Attachments

3 FORTISBC ENERGY INC. THERMAL METERING ANNUAL REPORT Background On June 14, 2007, the British Columbia Utilities Commission ( BCUC or the Commission ) issued Order No. G approving changes sought by FortisBC Energy Inc. 1 ( FEI or the Company ) to amend the General Terms and Conditions of its Tariff to allow thermal metering on a pilot basis for a period of five (5) years. The amendment included the definitions of Hydronic Heating System, Thermal Energy, and Thermal Metering as described in Appendix A, whereby customers receiving service via Thermal Metering will be charged for energy consumption as set out in Rate Schedule 1. Order No. G directed FEI to file an annual report with information on the status of the Thermal Metering Pilot Project for the 12 months ending June 30 of each year from 2008 through 2012 inclusive. This report covers the last of that five year period. Project Purpose The introduction of individual metering for suites heated with a central hydronic system is intended to enable strata residents to manage energy usage and cost. When residents are aware of their energy usage, conservation measures are more likely to be adopted. For strata residents whose total energy costs are aggregated and divided amongst all strata owners, there is no means to measure their usage and therefore, this customer segment is unlikely to implement conservation strategies. Through consultations with developers and property managers, the Company has discerned that the use of central hydronic systems is often discouraged by property managers and developers of vertical subdivisions in favour of electric baseboard heating, to more easily allow for the individual metering and billing of heating costs. The bias is driven by consumer demand to manage and control their own energy use (and discourage free-ridership within a complex), as well as the perceived competitive advantage that comes through reducing the costs that must be included in monthly strata / condo fees. Many complaints and disputes brought to property managers are a result of the inability to individually meter each suite s energy usage. The introduction of thermal metering to strata developments provides the Company and consumers with a natural gas solution for individual metering within strata units. Further, providing sustainable energy management and encouraging conservation and demand side management continue to be key values for FEI. Thermal metering will provide British Columbians a sustainable and conservationist approach to residential development by providing them an option to take control of their energy use. 1 Formerly Terasen Gas Inc. PAGE 1

4 FORTISBC ENERGY INC. THERMAL METERING ANNUAL REPORT 2011/2012 Pilot Project Summary The Company reported in its 2010/2011 annual report that there was uncertainty in the use of thermal meters for billing of energy use under the Federal Weights and Measures Act. Consequently, the Company did not pursue any thermal metering pilot projects in the 2011/2012 reporting period. Throughout 2011, FEI worked with the Canadian Gas Association ( CGA ) and other industry stakeholders to seek clarification from Measurement Canada on its involvement in the aspect of billing management devices (i.e. thermal meters). Measurement Canada responded that while it is exploring the best approach in ensuring measurement accuracy in the steam and thermal energy sector, no decision has been made as to when recommendations from the Steam and Thermal Energy Trade Sector Review will be implemented. In addition, the majority of resources at Measurement Canada are being consumed by other requirements such as the Fairness at the Pumps Act. A copy of the letter response from Measurement Canada can be found in Appendix B. In light of the need for a thermal meter standard, FEI and other utility stakeholders initiated a project with the Canadian Standards Association ( CSA ) to update the existing C900 standard 2 which is closely aligned to the EN standard to reflect Canadian deviations. The EN-1434 is also the European standard for thermal meters that Measurement Canada is considering to adopt and is the basis for the CSA C900 standard and the International Organization of Legal Metrology ( OIML ) R75 standard 4 which have been referenced in the recommendations from the Thermal Energy Trade Sector Review. The update of the C900 standard is ongoing and is scheduled to be completed in At the beginning of 2012, the CGA and its utility and industry members formed the Thermal Metering Committee, a national committee of stakeholders, to produce a set of best practices for self-regulation of the thermal metering industry until regulation by Measurement Canada can be reached. Measurement Canada was also notified of this effort and a copy of the letter can be found in Appendix C. Best practices will consist of the following: Equipment specifications for different applications; Installation procedures; Initiation procedures; The CSA C900 standard is an adoption with Canadian deviations of the identically titled Comité Européen de Normalisation (CEN) or European Committee for Standardization EN The European Standard, EN-1434 was first developed by CEN in 1997 and modified in 2007 to specify the requirements for thermal meters (or heat meters) and consists of 6 parts. Details of the standard can be found at The OIML R75 standard was first developed in 2002 based on Part 1 of the CEN EN-1434 (1997) standard to harmonize the regulations and metrological controls applied by the national metrological services, or related organizations, of its Member States. Canada is a member of OIML. PAGE 2

5 FORTISBC ENERGY INC. THERMAL METERING ANNUAL REPORT Allocation of energy costs (billing); Representative agreements with customers; Dispute resolution mechanisms; Calibration / verification frequencies; and Testing facilities. It is estimated that a best practice document will be completed in the next two years while a regulatory framework by Measurement Canada may take three to five years. The following table summarizes the 2011/12 Thermal Metering pilot project: Table 1: Thermal Metering Pilot Project Summary Number of developments incorporating thermal metering 0 Number of total units being billed under thermal metering 0 Cumulative number of units being billed under thermal metering (July 1, 2007 to June 30, 2012) Cumulative FEI costs associated with promoting thermal metering (July 1, 2007 to June 30, 2012) FEI costs of deploying thermal metering 0 Number of complaints regarding thermal metering 0 0 $10,000 Request for Extension of Pilot Due to the time needed to either complete the best practice document through the Thermal Metering Committee or achieve regulation by Measurement Canada, FEI is seeking an extension to the current Thermal Metering Pilot application for a further five years. Within this time period, in the event that the best practice document is completed before regulation is in place, FEI will be able to forward a request to Measurement Canada to be exempted from regulation and undertake a pilot in line with the best practices and provide the service to customers through a tariff as approved in Commission Order No. G In the event that Measurement Canada provides regulation to the thermal metering industry sooner than the expected three to five years, FEI will then be able to move ahead with a pilot in compliance with the rules and regulation set out by Measurement Canada. Further, FEI does not anticipate any costs to be incurred by the Thermal Metering Pilot Project until such time that a pilot is ready to be launched. Hence, there will no impact to FEI customers as a result of extending the pilot for a further 5 year period. It is also noted that this request for an extension is specific to FEI s Thermal Metering Pilot Application and does not pertain to projects related to FortisBC Alternate Energy Services Inc. PAGE 3

6 FORTISBC ENERGY INC. THERMAL METERING ANNUAL REPORT ( FAES ). While both companies offer a thermal metering solution, the thermal energy supply sources are different even though the application of thermal meters are the same for both FEI and FAES in that they are used to measure thermal energy. For example, FEI projects are supplied through a central gas fired hydronic system whereas FAES projects are supplied through alternate energy solutions such as geo-exchange, waste heat recovery and solar thermal. Further, the Thermal Metering Pilot is applicable only to FEI s Rate Schedule 1 customers and therefore is not available to FAES customers. Thermal metering remains an important component to conservation and demand side management in the multi-family/vertical subdivision sector as it allows for individual metering of strata units. Residents of these strata units will be able to implement the necessary conservation measures to control their energy consumption as they become aware of their energy use through thermal meters. This would replace the current practice of aggregating and dividing the total energy costs among all strata residents, which promotes free-ridership and discourages conservation since residents have no means of measuring their energy usage. Conclusion In accordance with Commission Order No. G-65-07, FEI is submitting its annual report on the Thermal Metering Pilot Project for 2011/2012, as well as requesting an extension for a further five years. A draft order is attached as Appendix D. The Company maintains its position that individual metering through thermal meters for suites in a multi-family/vertical subdivision with a central gas-fired hydronic system will bring value to residents of the suites. Through thermal metering, residents will be able to manage and control their energy use while reducing the cost of free-ridership. In addition, FEI will be able to remain competitive by capturing load that would otherwise be lost to electric heating in instances where developers opt for electric baseboards so as to allow for individual metering and billing of heating costs. The Company will continue its efforts in the pursuit of regulation of thermal metering by Measurement Canada and work on an industry-wide best practices document for use nationally. Extending the Thermal Metering Pilot Project allows FEI to continue to pursue a pilot project when either regulation or best practices are completed. The Company will provide updates in subsequent annual reports on the progress of these efforts upon approval of an extension to the Thermal Metering Pilot Project application. PAGE 4

7 Appendix A DEFINITIONS

8 FORTISBC ENERGY INC. THERMAL METERING ANNUAL REPORT APPENDIX A - DEFINITIONS Hydronic Heating System: A heating / cooling system where water is heated or cooled and distributes hot water through pipes to radiators or to another style of water-to-air heat exchanger. Thermal Energy: Means thermal energy supplied by a Gas fired hydronic heating system (where hydronic heating is the primary heating source), and measured by a thermal meter, to premises of a Vertical Subdivision where the thermal meter is used to apportion the gigajoules of Gas consumed by the Gas fired hydronic heating system among the premises in the Vertical Subdivision. Thermal Metering: Thermal / heat meters measure the energy which, in a heat-exchange circuit, is absorbed or given up by the heat conveying liquid. The thermal / heat meter indicates the quantity of heat in legal units. PAGE 1

9 Appendix B MEASUREMENT CANADA RESPONSE TO CGA

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12 Appendix C MEASUREMENT CANADA NOTIFICATION LETTER

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16 Appendix D DRAFT ORDER

17 B R I T I S H C O L U M B I A U T I L I T I E S C O M M I S S I O N O R D E R N U M B E R SIXTH FLOOR, 900 HOWE STREET, BOX 250 VANCOUVER, BC V6Z 2N3 CANADA web site: TELEPHONE: (604) BC TOLL FREE: FACSIMILE: (604) DRAFT ORDER IN THE MATTER OF the Utilities Commission Act, R.S.B.C. 1996, Chapter 473 and A Filing by FortisBC Energy Inc. Regarding British Columbia Utilities Commission Order No. G Compliance Filing Annual Report on the Thermal Metering Pilot for BEFORE: (Date) WHEREAS: A. On July 13, 2012, pursuant to British Columbia Utilities Commission (Commission) Order No. G-65-07, FortisBC Energy Inc. (FEI) filed its Annual Report on the Thermal Metering Pilot Project for (Report); B. In the Report, FEI requested an extension to the existing Thermal Metering Pilot for a further five year period; C. FEI requests the extension in order to complete a pilot that is in line with a set of best practices to be established by the Thermal Metering Committee or that complies with Measurement Canada regulation if regulation is achieved sooner than the expected three to five years; ; D. The Commission has reviewed the Report and concludes that the requested extension as outlined in the Report should be approved. NOW THEREFORE the Commission orders that the Thermal Metering Pilot is extended to DATED at the City of Vancouver, In the Province of British Columbia, this day of <MONTH>, 20XX.

18 BRITI SH COLUM BI A UTILITIE S COMMISSIO N 2 OR DER NUMBER BY ORDER