FEI ‐ GVS & DD B IOMETHANE P URCHASE A GREEMENT E XHIBIT B-5
GVS&DD Biomethane Agreement Streamlined Review Process September 25, 2013 - 1 -
Contents Regulatory Background Regulatory History Approvals Sought Project Description Project Overview Interconnection Facilities and Capital Costs Agreement Compliant with Biomethane Program - 2 -
PART 1: Regulatory History and Approvals Sought - 3 -
Relevant Regulatory History 2013 2012 Q2 Q1 Q2 Q3 Q4 Q3 Q4 March 2013: August 2013: Order G-45-13 FEI Applies for Biomethane Pilot Cap Acceptance of Increased December 2012: GVS&DD Agreement AES Report December 2012 Filed PIR & 2012 Biomethane August 2013 Application BCUC Order G-126-13 February 2013 May 2013 Exempting Upgrading Order G-18-13 Decision G-70-13 3 from CPCN CPCN required for Biomethane GVS&DD Projects Approved - 4 -
Approvals 2010 Biomethane Decision Order G-194-10 • Approval of Biomethane Supply Agreement between FEI and GVS&DD pursuant to Section 71 of the UCA • Capital Expenditures related to Interconnection Equipment for the Project pursuant to Section 44.2 of the UCA - 5 -
Project Description - 6 -
Purchase complies with RNG Program FEI purchases GVS&DD responsible for Biomethane upgrading raw biogas - 7 -
GVS&DD Required Interconnect Existing DP main Tie-in Location WWTP New FEI Station Interconnect Piping Location: 13500 Gilbert Rd, Delta, BC Connecting Pipe: 300 m of 114mm PE Pipe FEI Station: Gas monitoring, Pressure, odorizing, flow measure, safety, control Total Cost: $0.739M - 8 -
FEI will use standard Interconnection Key Elements of Station • Inlet Valve • Gas Monitoring [Gas Chromatograph, H 2 S Monitor, O 2 Monitor] • Pressure Regulation • Odorizing • Flow Measurement • Communication Salmon Arm Modular and moveable (skid-mounted) Designed to operate automatically • Shut off if gas does not meet specification Interconnecting Pipe • Matches FEI standard Fraser Valley Biogas - 9 -
Capital Costs of Interconnect Item Distribution Pressure, PE Pipe, Description residential area, piping on GVS&DD Property Station Capital Cost Estimate $639,000 Pipe Capital Cost Estimate $100,000 Connecting Pipe $300/m Est. Cost per GJ-station and Pipe $0.92/GJ (based on expected flow, 20 year) • Piping costs are estimates with contingencies included (site visit done) • Station costs include contingencies • FEI considers this a conservative estimate at +5% / -20% - 10 -
Contract Highlights Item Amount Comment Volume (Max) 40,000 GJ/Yr Maximum Biomethane Volume Maximum Volume purchased @ Excess Gas up to 60,000 GJ/Yr Sumas Monthly Index Rate Total Maximum 100,000 GJ/Yr Estimated FEI system capacity Injected Contract Term 10 Years Approval + 18 months Injection Date Q4 2015 Long lead item is upgrader FEI Capital $0.739M Capital Cost of Interconnect Price $13.40/GJ Starting Price $10.68/GJ Minimum Biomethane Price Price capped at current BCUC Price inflation 1.5% annual approved maximum of $15.28 - 11 -
Purchase of Excess Gas • All Biomethane produced up to 40,000 GJ per calendar year purchased at Biomethane Rate • Remaining Gas Purchased at Sumas Monthly Index • Not part of biomethane supply pool • GVS&DD retains any GHG benefits on excess gas • New supply point on FEI system • Will be tracked separately • FEI purchases Max 60,000 GJ per year excess gas • FEI purchase a total of ~0.275 TJ/day* • No material impact to MCRA (~150 TJ/day) * 100,000 GJ / 365 days – includes total amount of gas purchased (biomethane + excess gas) - 12 -
Approved Pilot Program Criteria • All contracts are at least 10 years in Length • FEI has retained control over injection location • The selected upgrader is sufficiently proven • FEI reserves the right to refuse gas • The partner is a municipality, regional district, or other public authority, or is a private party with a track record in dealings with FEI or that posts security to reduce the risk of stranding • All the contracts are below the approved Maximum of $15.28* • Within approved annual maximum purchase of biomethane (Supply cap) * Supercedes criteria that the projected supply meets the proposed economic test that the maximum price for delivered biomethane recalculated from time to time based on the updates to the BC Hydro RIB Tier 2 rate - 13 -
Projects included in Revised Supply Cap • Commission Orders G-29-13 and G-45-13 increased supply cap to 530,000 GJ annually from 250,000 GJ annually • GVS&DD project specifically referenced in Commission Orders Contract Maximum Project Name (GJ/Year) Fraser Valley Biogas 91,250 Salmon Arm Landfill 40,000 Kelowna Landfill 118,000 Earth Renu 100,000 GVS&DD 40,000 Dicklands 70,000 Seabreeze 70,000 Total 529,250 - 14 -
Project is Compliant with FEI Criteria Contract Contains Criteria Clause that Meets Comments Criteria Contract Duration at least 10 Years YES Retained final control over injection YES FEI owns interconnect location GVS&DD will impose criteria in its Upgrader Proven YES procurement process to select an upgrader that is sufficiently proven Right to Refuse Gas YES Based on quality and volume The partner is a municipality, regional The GVS&DD forms part of Metro district or other public authority, or is a Vancouver and is a government private party with a track record in YES owned and operated utility, funded dealings with FEI or that posts security by taxpayers. No security to reduce the risk of stranding required. Price below $15.28 YES Limits price to the approved Max Below Supply Cap YES - 15 -
Conclusion • The GVS&DD project is part of the Biomethane Pilot Program • FEI has negotiated the GVS&DD Agreement to comply with the approved Biomethane Pilot Program criteria. • The Interconnection costs are necessary for the GVS&DD project. • FEI believes that the agreement and interconnection facilities are in the public interest. - 16 -
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