Greenhouse Gas Reductions (Clean Energy) Regulation

Transcription

1 B-13 Greenhouse Gas Reductions (Clean Energy) Regulation Prescribed Undertakings 2: CNG Stations 3: LNG Stations Streamlined Review Process FortisBC Energy Inc. October 24,

2 Agenda Approvals sought Background and Context The Greenhouse Gas Reduction (Clean Energy) Regulation Proposed Treatment of Prescribed Undertaking Costs and Recovery in Rates Proposed Programs under the Prescribed Undertakings Questions and Answers Submissions by FEI and Interveners - 2 -

3 BCUC Approvals Sought Approval of the proposed accounting treatment for expenditures for CNG and LNG stations under GGRR Deferral Account - the Fueling Stations Variance Account Captures revenue surplus or deficiency of GGRR fueling stations, administrative costs and unrecoverable GGRR fueling station costs Non-rate base deferral account attracting AFUDC until Jan 1, 2014 Net balance transferred to rate base on 2014/01/01 amortization over 3 years into delivery rates of non-bypass gas customers In future RRAs, FEI will include the forecast rate base and cost of service, and revenue recoveries for GGRR CNG and LNG fueling stations that are complete and in service as well as those that are expected - 3 -

4 NGT Strategy & Stakeholder benefits Production Transmission/ Distribution Customers Communities Creating new markets for gas Royalty revenue for government Incremental gas load driving system and cost efficiencies Lowering operating costs for fleets Lowering delivery charges for all gas customers Improving air quality Reducing GHG emissions - 4 -

5 End-to-end service offering for CNG and LNG Service CNG and LNG fueling stations FEI CNG Service Offering Prescribed Undertaking 2: CNG Stations Customer (1) Natural Gas Supply (2) Compression & Fueling (3) Vehicles Operating on CNG e Gas Supply Compression & Fueling FEI LNG Service Offering Customer Prescribed Undertaking 3: LNG Stations (1) LNG Production & Storage (2) LNG Delivery (3) Fuel Storage & Fueling (4) Vehicles Operating on LNG LNG Supply LNG Delivery and Fueling Station - 5 -

6 CNG Station Example BFI - September 2012 CNG capacity for 86 trucks Initial 52 trucks will displace 1.5 million litres per year of diesel Slow fill and fast fill capability - 6 -

7 LNG Station Example - Vedder truck LNG station (Temporary then transitioning to Permanent) Dispensing equivalent of 5 million litres per year of diesel - 7 -

8 GGRR Background Timeline - 8 -

9 The Greenhouse Gas Reduction (Clean Energy) Regulation Introduction and Definition Regulation established pursuant to CEA sections 18 and 35(n) Definitions Eligible vehicles Heavy Duty, Medium Duty, School Buses, Transit Buses Marine vehicles Tanker truck load-out Undertaking period to March 31,

10 The Greenhouse Gas Reduction (Clean Energy) Regulation Prescribed Undertaking 2 CNG Stations $12 million total Average station cost of $1.1 million in any year $240 thousand administration and marketing expenses COS based rate with at least 80% take-or-pay commitment of energy provided, 5 year minimum contract term, no buyout required Stations with less than full cost recovery still qualify as prescribed undertakings CEA s18(2) provides that the Commission must set rates to recover costs even if station does not recover full costs Reference: Ex. B-1, Appendix B, Greenhouse Gas Reductions Regulation

11 The Greenhouse Gas Reduction (Clean Energy) Regulation Prescribed Undertaking 3 LNG stations $30.5 million total Per station cost cap of $2.75 million Truck load-out facilities up to $4 million $250 thousand administration and marketing expenses At least 80% take-or-pay commitment of energy provided, 5 year minimum contract term, no buyout required Stations with less than full cost recovery still qualify as prescribed undertakings CEA s18(2) provides that the Commission must set rates to recover costs even if station does not recover full costs Reference: Ex. B-1, Appendix B, Greenhouse Gas Reductions Regulation

12 Station Forecast Stations Total CNG LNG Total GGRR caps limit CNG stations to ~10 total and LNG stations to ~11 total

13 Proposed Accounting Treatment and Recovery in Rates FEI intends to establish rates based on cost of service recovery principles outlined in GT&Cs Section 12B Administration allowances of $240 thousand for CNG stations and $250 thousand for LNG stations Deferral account treatment of net surplus or deficiency (costs net of recoveries) outside of revenue requirements Costs and recoveries forecast in RRA for 2014 onwards Excess fueling station recoveries captured in the CNG and LNG Recoveries account for distribution to non-bypass customers Each station will be tracked separately Reference: Ex. B-1, Section 5.3, pages Ex. B-2, BCUC IR , Ex. B-2, BCUC IR 1.4.2,

14 CNG and LNG Fueling Station Rates Annual Rate, Escalated by CPI, Recovery of Annual O&M Inclining Rate based on Contract Term, Recovery of all Non-O&M Levelized Rate, Applicable to all CNG & LNG Stations O&M Component Capital Component Overhead Recovery Fueling Station Rate GGRR & Section 12B fueling station cost and volume forecasts and rates are determined in the same manner Expectation that forecast load will occur The take or pay provision provides for the amount of revenue that will be collected with certainty

15 GGRR 80% vs GT&C 12B 100% Example economics with 5 year term Element GGRR 12B Projected volume 100,000 GJ 100,000 GJ Fueling Station Rate $3.00/GJ $3.00/GJ Expected Revenue $300,000/year $300,000/year Take/pay protection $240,000/year $300,000/year Max ratepayer risk re volume $60,000/year $0/year Buyout requirement No Yes

16 GGRR Additional Mitigation Measures Risk Mitigation Measures Rate payer risk exposure GGRR contains caps Additional revenue from throughput above minimums Diversification of results across several stations Take/pay level FEI has flexibility to request >80% Residual Value Relocation of assets Redeployment of assets FEI may develop rates with additional capital recovery depending on evaluation of project risk and economics (e.g. recovery of 10 years capital charges over 5 year time frame) Additional revenue from throughput above minimums 50-70% of station capital is mobile Potential sale of assets to other parties

17 Accounting Treatment Fueling Stations Variance Account (FSVA) Net surplus or deficiency associated with each fueling station Only Waste Management, Vedder, Kelowna and Surrey stations forecast in the 2012/13 RRA May have additions in future periods for variances from forecast included in the RRA Includes any costs for remaining un-recovered capital if a GGRR fueling station contract is not renewed Will also capture the administration allowances for fueling stations, on an actual incremental basis (max. of $490 thousand) A non-rate base deferral account for 2012 & 2013, attracting AFUDC Account transferred to rate base effective January 1, 2014, with an amortization period of three years into the delivery rates of all nonbypass customers

18 Accounting Treatment Forecast in the RRA Future RRAs will include forecast rate base and cost of service and revenue recoveries for all CNG and LNG stations that are expected during the test period Existing and forecast stations All costs and recoveries associated with the fueling stations Reflected in the delivery rates of all non-bypass customers Any fueling station recoveries in excess of minimum contract demand will be captured in the CNG and LNG recoveries deferral account

19 Questions and Answers