B-2 FortisBC Energy Utilities 2012-2013 Revenue Requirements 2012 2013 Revenue Requirements and Rates Application Workshop May 18, 2011 - 1 - F ORTIS BC E NERGY U TILITIES 2012-2013 R EVENUE R EQUIREMENTS & N ATURAL G AS R ATES E XHIBIT
Workshop Agenda Topic Presenter Introduction S COTT T HOMSON Executive Vice President, Finance, Regulatory & Energy Supply Application Overview and Rates pp D IANE R OY Director, Regulatory Affairs , g y System Safety and Integrity J OE M AZZA Director, Resource Development F ERENC P ATAKI Director, Operations Engineering Customer Service T OM L OSKI Vice President, Customer Service Energy Solutions K EN R OSS Integrated Resource Planning Manager Break Energy Efficiency and Conservation S ARAH S MITH Manager, Energy Efficiency and Conservation Depreciation and Transfer Pricing J AMES W ONG Director, Finance & Planning Cost of Service and Rate Base M ICHELLE C ARMAN Manager, Cost of Service S COTT T HOMSON Amalgamation and Next Steps Break Optional Session M ICHELLE C ARMAN Financial Model Review Financial Model Review - 2 -
2012-2013 Revenue Requirements and Rates Application and Rates Application Overview Overview Diane Roy Director Regulatory Affairs Director, Regulatory Affairs - 3 -
We are Seeking Approval For… Cost of Service Delivery Rates Rate Freeze • 2012 & 2013 • 2012 & 2013 • 2012 & 2013 • Mainland • Mainland • Vancouver Island Island • Vancouver • Vancouver • Whistler • Whistler Island • Fort Nelson • Whistler • Fort Nelson Fort Nelson • Amalgamated This Application is the first step in our Rate Harmonization Strategy - Fall 2011 Application will seek the necessary approvals to amalgamate and to implement harmonized rates - 4 -
Our Application… Supports Is based on our enhancements to our enhancements to our commitment to asset management provide safe, reliable, and system integrity cost effective service programs Considers the Allows us to continue changing energy changing energy to develop Energy to develop Energy needs of our Efficiency & customers and the Conservation communities we serve programs g We have reflected these priorities in the costs and revenues included in our rate proposals - 5 -
Overview of Burner Tip Rates Vancouver Island Whistler Mainland Fort Nelson $30 $20 $10 $- 2006 2006 2007 2007 2008 2008 2009 2009 2010 2010 2011 2011 2012 2012 2013 2013 - 6 -
Our Proposals for Delivery Rates… p y 2012 2013 Total % Rate % Annual % Rate % Annual % Rate % Annual Change Bill* Change Bill* Change Bill* Mainland 5.0% 2.8% 6.4% 3.0% 11.4% 5.8% Vancouver Island Vancouver Island - - - - - - Rate Freeze Rate Freeze R t R t F F Whistler 2.2% 4.7% 11.9% 7.8% 14.1% 12.5% Fort Nelson 6.5% 1.8% 1.6% 0.6% 8.2% 2.4% *Annual bill change includes the impact of Delivery Rate Riders - 7 -
O Our Priorities in this Application… P i iti i thi A li ti System safety and integrity y y g y The in-sourcing of key customer service functions Energy solutions for customers Enhanced Energy Efficiency and Conservation programs Continued review and updating of accounting and Continued review and updating of accounting and cost allocation policies Customer rate stability and rate harmonization - 8 -
System Safety and Integrity Joe Mazza, Director Resource Development Ferenc Pataki Director Operations Engineering Ferenc Pataki, Director Operations Engineering - 9 -
Sustainment Capital Joe Mazza Director Resource Development Director Resource Development - 10 -
UPGRADED in Low Pressure Replacement Project - 11 -
K Key Messages M FortisBC Energy Utilities are using a long-term asset management strategy to plan the sustainment of its existing gas assets in providing safe, reliable, environmentally responsible, and economical gas delivery services to customers now and in future. We expect rising Sustainment Capital funding to meet We expect rising Sustainment Capital funding to meet the challenges from aging assets, increased public expectation and regulation on safety and reliability. - 12 - 12
Key Factors Affect the Service Life of Assets Key Factors Affect the Service Life of Assets Physical Service Level Service Level Mortality Change to Act of Customers Nature Economic Service Life Efficiency y Safe reliable Safe, reliable, Material Material environmentally responsible, economical Third Parties Obsolescence Standards Installation & Codes - 13 -
Increase in Sustainment Capital – Key Drivers p y Aging Infrastructure Public Expectations Public Expectations Regulations - 14 -
A Wave of Asset Replacement (Mains/Pipelines Example) - 15 - 1
Heightened Public Expectations and Increasing Regulation on Safety and Reliability Increasing Regulation on Safety and Reliability 2010 PG&E San Bruno pipeline rupture heightened public awareness of pipeline safety CSA Standards for Integrity Management, Safety & Loss and Management, Security Oil and Gas Activities Act - 16 -
Enhancing our Asset Management Practices Enhancing our Asset Management Practices Asset Asset Business Business Capital Health Registry Values Cases Planning Review - 17 -
Upward Trend in Sustainment Capital $180 on] $160 $160 y's Dollars [millio $140 $120 t Value in Today $100 $80 $60 $60 set Replacement $40 $20 Gas Ass $- 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 Year Base Base CPCN Future Trend - 18 -
Additional funding is required to help ensure system safety and reliability t f t d li bilit Incremental Capital Projects to manage aging infrastructure and asset risks To address wave of asset replacement Incremental O&M Further enhancements to asset management practices Further enhancements to asset management practices to manage aging infrastructure and asset risks Resources for planning work Project feasibility assessments P j t f ibilit t - 19 -
BC One Call Project Ferenc Pataki Director Operations Engineering Director Operations Engineering - 20 -
Vision of BCOneCall Operating Model Current Model Current Model Future Model Future Model “People Based” “Automated” People use SAP, AMFM, DCRS 1. SAP, AMFM, DCRS & Teldig assemble packages & Teldig to assemble packages & Teldig to assemble packages 2. 2 People perform quality checks on packages People perform quality checks on packages - 21 -
Backdrop Long-term Cost Drivers Ticket Volume Viability Effectiveness BC One Call Tickets/Year 90,000 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0 2006 2006 2007 2007 2008 2008 2009 2009 2010 2010 - 22 -
Backdrop Long-term Efficiency Drivers Ticket Volume Viability Technology $ 96 thousand Technology $ 96 thousand One Time Data Consistency $1.27 million Costs Conflation $940 thousand Benefits Ticket Volume up to 35% reduction in processing time 1) 2) Long-term viability O&M Savings approx. $500 thousand ongoing reduction* 3) * O&M savings are projected to be realized 3 years after project initiation - 23 -
Conflation – Existing Landbase & Facilities - 24 -
Conflation – Existing & New Landbase - 25 -
Conflation – New Landbase & Facilities - 26 -
Gas Assets Records Project - 27 -
Our Action and Plan Records Project Records Project Implementation 2011 2012 2006 2009 Pilot Records Project Records Project Completion Implementation Records consolidation & scanning = $3.8 million D Drawing management & control system = $0.6 million i & l $0 6 illi Historical drawings review and analysis = $3.4 million - 28 -
Drivers Regulation • CSA Z-662 – Annex N & M (2007) Oil and Gas Commission - Safety Advisory and Integrity Oil and Gas Commission - Safety Advisory and Integrity Management Protocol (2011) “the Commission reminds Pipeline Permit Holders that they must develop and maintain records…” eco ds “The Commission recognizes that over time records may become damaged or lost…” “the Commission expects that Permit Holders will have plans and programs in place for the management of their pipeline system in the absence of these records as well as programs for reestablishment of the records.” f t bli h t f th d ” The Association of Professional Engineers and Geoscientists of British Columbia (APEGBC) (2011) • Retention of complete design and review files for their projects for a min. period of 10 yrs • Retention of complete project documentation which may include, but not limited to, correspondence, investigations, surveys, reports, data, background information, assessments, designs, specifications, field reviews, testing information, quality assessments, designs, specifications, field reviews, testing information, quality assurance documentation, and other engineering and geoscience documents for a minimum period of 10 years - 29 -
Customer Service Tom Loski Vice President Customer Service Vice President, Customer Service - 30 -
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