FORTISBC ENERGY – GREENHOUSE GAS REDUCTIONS (CLEAN ENERGY) REGULATION E XHIBIT B-7 Greenhouse Gas Reductions (Clean Energy) Regulation Prescribed Undertaking 1: Vehicle Incentives Streamlined Review Process FortisBC Energy Inc. October 24, 2012 - 1 -
Agenda The Proposed Greenhouse Treatment of Proposed Gas Prescribed Programs Submissions Approvals Background Questions Reduction Undertaking under the by FEI and sought and Context and Answers (Clean Costs and Prescribed Interveners Energy) Recovery in Undertakings Regulation Rates - 2 -
BCUC Approvals Sought Vehicle Incentives and Related Expenditures • Approval of the proposed accounting treatment for the vehicle incentives • General Principle – Rate base deferral account + 10 year amortization in rates of non-bypass customers • Deferral Account - the “NGT Incentives Account” • Non-rate base account attracting AFUDC until Jan 1, 2014 • Net balance transferred to rate base on 2014/01/01 – amortization starts - 3 -
Ministry Determinations • Approval of the spending or timing of spending • “Open and Competitive” process • Reporting Requirements - 4 -
Decline in Traditional Demand Residential Example The growth in residential 110.0 800,000 customers has not offset the 780,000 105.0 decline in average residential 760,000 UPC, which results in decline in 100.0 residential demand. 740,000 Residential Account UPC, Gj 95.0 720,000 700,000 90.0 73,000 680,000 85.0 72,000 660,000 80.0 640,000 71,000 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Annual UPC, Gj Accounts 70,000 Energy Tjs 69,000 68,000 67,000 66,000 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 - 5 -
NGT Strategy & Stakeholder Benefits Transmission/ Customers Production Communities Distribution • Lower operating • Improved air quality • Creating new • Incremental gas costs for fleets markets for gas load drives system • Reduces GHG and cost efficiencies • Lower delivery • Royalty revenue emissions charges for all for government gas customers - 6 -
NGT is an End Use for Natural Gas - 7 -
Natural Gas Transportation (“NGT”) Business Components Customer FEI CNG Service Offering Prescribed (1) Natural Gas Supply (2) Compression & Fueling (3) Vehicles Operating Undertaking 1: on CNG Vehicle Incentives, Gas Supply Compression & Fueling Admin., Marketing Training & Education FEI LNG Service Offering Customer Safety/Maintenance Upgrades (1) LNG Production & (2) LNG Delivery (3) Fuel Storage & (4) Vehicles Operating Storage Fueling on LNG LNG Supply LNG Delivery and Fueling Station - 8 -
GGRR Background Timeline - 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, 2017 - 10 -
Eligible Vehicle Examples CNG LNG Waste Haulers Heavy Duty Trucks Transit Buses Ferries - 11 -
GGRR Prescribed Undertaking 1 Funding Allowances - $62 million in total Admin, Demonstration Marketing, Round, $5.6 Training, $3.1 Safety & Maintenance, $4 Trucks & Buses, $38.3 Marine, $11 Unit: $ Millions - 12 -
Proposed Treatment of Prescribed Undertaking 1 Costs and Recovery in Rates Actual Costs Incremental to RRA Forecast Delivery Margin Rate Base Deferral Benefits to all Non- Account Bypass Customers Costs Recovered Amortization of 10 from all Non- years Bypass Customers Reference: Application Section 5 - 13 -
Actual Costs are Incremental to the RRA Forecast • Recovery of actual grants and actual incremental administrative, marketing, training and education costs • Expenditures contemplated in the GGRR were not included in the RRA forecasts • Timing of the RRA and GGRR • NGV Incentives Decision Reference BCUC IR 1.6.5.1 and BCUC IR 1.4.4.1 - 14 -
Rate Base Deferral Account The NGT Incentives Account Long term program with long lasting benefits similar to a fixed asset (Contribution Agreement) Investment in the Consistent with long term health of past treatment of the system similar items Why Rate Base Treatment? Reference: Application Section 5, BCUC IR 1.4.1 and 1.4.2 - 15 -
Ten Year Amortization Period • Considerations • Reasonable period for recovery of costs • Life of the vehicles • Expected duration of benefits associated with those vehicles • Rate volatility • Ten year amortization period provides the best balance of all considerations Reference : BCUC IR 1.10.1, CEC IR 1.1.3 and 1.1.5 - 16 -
Ten Year Amortization Period Matches Costs with Benefits Scenario 2 GGRR Load Growth Only: Rate Impact - 10 Year Smoother impact 2.5% throughout indicates alignment of costs and 1.5% benefits 0.5% 2014 2016 2018 2020 2022 2024 2026 2028 2030 Scenario 2 GGRR Load Growth Only: Rate Impact - 5 Year Amortization -0.5% 2.5% -1.5% Rate Reduction from NGT Load 1.5% Rate Impact from Incentive Cost of Service Net Rate Impact -2.5% 0.5% Greater volatility in 2014 2016 2018 2020 2022 2024 2026 2028 2030 -0.5% impact indicates misalignment of costs -1.5% Rate Reduction from NGT Load and benefits Rate Impact from Incentive Cost of Service Net Rate Impact -2.5% - 17 -
Estimated Vehicles Lives CNG LNG 5-10 Years 10 Years Waste Haulers Heavy Duty Trucks 30 Years 15 Years Transit Buses Ferries - 18 -
Cost Recovery From & Benefits To FEI Non-Bypass Customers • Appropriate to recover costs from all customers • Aligned with the intent of the GGRR • All customers benefit from the additional throughput on the system • All customers benefit from the reduction to GHG emission and air contaminants • When delivery rate related costs and benefits are considered, net delivery rate reduction of 5.6% expected Reference : BCUC IR 1.2.2, BCPSO IR 1.1.9 and 1.7.2 - 19 -
Proposed Programs under Prescribed Undertaking 1 • Call processes for Vehicle Demonstr Incentives Admin, ation Marketing Round, Training, $5.6 $3.1 Safety & Maintena nce, $4 • Safety and Maintenance Trucks & Buses, Marine, Upgrades $38.3 $11 • Process to be determined • Administration, marketing, training and education - 20 -
Current Funding Process: Funding Requested by fuel type (exclude Marine) Total: $25.8M $11.2 M $14.6M CNG LNG Applications Received No. of Trucks requested by fuel • 19 applications received: type (exclude marine) • 500+ invitations to participate Total: 423 • 18 on-road-transportation CNG 165 • 1 marine application LNG 258 Marine Application • 1 application from Marine • Asking $3.0 million (total price differential 12.4 million) - 21 -
Preliminary Award List Expected No. of Vehicles (Excl. Marine) Total: 401 vehicles 165 236 LNG CNG Expected Vehicle Incentive $ Expected Annual GJ Demand (Incl. Marine) Total: 1.25 PJ Total: $21.87 M 154,440 $ 3M $10.98M 247,906 847,545 $7.8 M LNG LNG CNG CNG Marine Marine - 22 -
Preliminary Results on track with the S18 Proposal to the Government Average Liters Displaced/Dollar Incentive Average Annual GJ Per Vehicle Actual Avg: CNG 0.81 1,050 Avg: CNG 1.50 2,732 LNG 1.99 5,137 LNG Proposal Proposal 0.80 Proposal 1,000 -CNG -CNG Avg: Avg: 1.01 1,734 Proposal Proposal 1.14 2,500 -LNG -LNG - 23 -
Questions and Answers - 24 -
Recommend
More recommend
