CREATIVE ENERGY NES NEFC CPCN EXHIBIT - …€¦ · FACSIMILE: (604) 660-1102 Log No. 50061 PF/Creative Energy NES for NEFC CPCN/A-3_Commission IR-1 (L) VIA EMAIL. [email protected]

ERICA HAMILTON COMMISSION SECRETARY

[email protected] web site: http://www.bcuc.com

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Log No. 50061

PF/Creative Energy NES for NEFC CPCN/A-3_Commission IR-1 (L)

VIA EMAIL [email protected] May 25, 2015 CREATIVE ENERGY NES NEFC CPCN

EXHIBIT A-3 Ms. Michelle McLarty VP Business Development and Regulatory Creative Energy Vancouver Platforms Inc. Suite 1 720 Beatty Street Vancouver, BC V6B 2M1 Dear Ms. McLarty:

Re: Creative Energy Vancouver Platforms Inc. Application for a Certificate of Public Convenience and Necessity

for a Northeast False Creek and Chinatown Neighbourhood Energy System Further to British Columbia Utilities Commission Order G-75-15, which established a Regulatory Timetable with respect to the above noted Application, enclosed please find the Commission’s Information Request No. 1 to Creative Energy Vancouver Platforms Inc. In accordance with the Regulatory Timetable and the Commission’s Document Filing Protocols, please file your responses electronically with the Commission by Monday, June 15, 2015. Yours truly, Erica Hamilton EH/nd cc: Mr. Jordan Langlois [email protected]

Creative Energy NES NEFC CPCN 1 BCUC IR No. 1

BRITISH COLUMBIA UTILITIES COMMISSION INFORMATION REQUEST NO. 1 TO CREATIVE ENERGY VANCOUVER PLATFORMS INC.

Application for a Certificate of Public Convenience and Necessity for a Northeast False Creek and Chinatown Neighbourhood Energy System

A. PROJECT DESCRIPTION/NEED/JUSTIFICATION

Reference: EXECUTIVE SUMMARY 1.0Exhibit B-1, p. 3 Temporary or permanent gas boilers

Creative Energy Vancouver Platforms Inc.’s (Creative Energy) application on page 3 states:

The use of the existing plant avoids the need for any temporary or permanent gas boilers in the neighbourhood. This will also lower the costs of establishing the new system and will also benefit existing Creative Energy customers through sharing of fixed plant costs and overheads.

1.1 Please provide the capital cost, and discuss the benefits, of supplying Phase 1 of the Neighbourhood Energy System (NES) with a temporary gas boiler(s) sized to meet the needs of Phase 1 only, and compare to the cost and benefits of supplying Phase 1 as proposed. Please repeat this analysis assuming the need is to supply Phase 1 and provide peaking and back-up in Phase 2.

Reference: PROJECT TEAM 2.0Exhibit B-1, Section 1.5, p. 13 Compatibility with the SEFC distribution system

Creative Energy’s application on page 13 states:

The proposed network and energy transfer station design for the NES is similar to and compatible with the SEFC [Southeast False Creek] distribution system, which is a requirement under the Neighbourhood Energy Agreement with the CoV [City of Vancouver].

2.1 Please provide the design features that are necessary to make the NES compatible with the SEFC

distribution system.

2.2 Please explain what the design would look like if compatibility with SEFC were not required.

2.3 Please provide the incremental costs to achieve compatibility with SEFC.


Reference: PROJECT DESCRIPTION 3.0Exhibit B-1, Section 2.1, p. 26 Development area

The existing steam system located at 720 Beatty Street was granted a Certificate of Public Convenience and Necessity (CPCN) in 1968 and serves over 210 customers with approximately 13km of steam infrastructure. Figure 5 on page 26 of the application shows the Vancouver Neighbourhood Energy Strategy.

3.1 Please provide an amplified image of the Northeast False Creek (NEFC) area as shown in Figure 5

on page 26, showing clearly the neighbourhood currently served by the steam system including all infrastructure and the location of the Beatty street plant. On the same diagram using a different key colour, please also show the proposed neighbourhood for Phase 1 Hot Water (HW) system. Please also show in a third key colour, the proposed future Phase 2 neighbourhood area and in a fourth key colour, the potential Chinatown extension area.

3.2 Please provide the initial total capital cost of the original steam system at Beatty Street including all initial infrastructure that were included in the original CPCN.

3.3 Please confirm, otherwise explain, that the capital cost for the proposed Phase 1 HW system is $10,031,000 as shown on page 61 of the application. Please confirm if this value is real or nominal $.

Reference: PROJECT DESCRIPTION 4.0TES Guidelines, p. 22; Exhibit B-1, Section 2.6, pp. 39, 40 Chinatown extension policy and planning

On page 22 of the British Columbia Utilities Commission’s (Commission) Thermal Energy Systems Regulatory Framework Guidelines (TES Guidelines), it reads:

Once a CPCN is granted for a Stream B TES, a new CPCN Application may be required if the TES Provider plans to construct or operate an extension to the TES. An extension is a capital addition to the system of a material dollar amount to provide additional capacity to meet increased demand. If the ratio of the capital costs of the planned extension to the initial capital cost of the TES, plus any previous extensions, exceeds one, a CPCN is required. A CPCN is also required if, as a result of the extension, rates for existing customers will increase by an amount greater than 10 percent.


Creative Energy may undertake extensions of the NEFC NES subject to the NEFC and Chinatown Neighbourhood Energy Agreement up to a cumulative capital cost (net of any customer Contributions in Aid of Construction) of $10,742,000 (the Initial TES capital cost approved by the Commission under the NEFC CPCN) provided the extensions do not increase rates for existing customers (after any Contributions in Aid of Construction) greater than 10 percent above what they are or would have been in the absence of the extension. Where cumulative capital costs exceed the Initial TES Capital Cost and/or rate impacts exceed 10


percent, Creative Energy may not undertake extensions without prior approval of the Commission. This extension policy excludes the addition of any low carbon energy supply alternatives required under the Neighbourhood Energy Agreement. Creative Energy must apply to the Commission for approval of any low carbon energy supply alternatives, regardless of capital costs or rate impacts.

4.1 Given that Creative Energy is planning to have a deferral account, please explain how Creative

Energy believes the Commission should address the 10 percent rate increase limit noted in the TES Guidelines, if the CPCN is approved and extensions were made in Chinatown.

On page 39 of the application, Creative Energy defines the Franchise area as: “ ..areas within the City of Vancouver known as Northeast False creek and Chinatown as described in more detail in Schedule D [replicated in Figure 4 of this Application], subject to (a) …” 4.2 Please explain how the Franchise is affected if the franchise area fails to expand to the expected

boundaries.

On page 40 of the application it states: “Creative Energy plans to submit a Stream A application for the establishment of the Energy Centre since it will serve only the building in which it is located.” 4.3 Please clarify that by “Energy Centre” Creative Energy is referring to a Thermal Energy System.

4.3.1 Is the “Energy Centre” part of the Chinatown extension?

4.3.2 Please explain how this Stream A application would relate, or would not relate, to either the NEFC Phase 2 CPCN or the potential NEFC system extension into Chinatown.

Reference: PROJECT NEED, ALTERNATIVES, AND JUSTIFICATION 5.0Exhibit B-1, Section 3 Other alternatives

5.1 Please discuss the costs and benefits of connecting NES customers in series (first customer outlet connected to second customer inlet) vs. the costs and benefits of connecting customers in parallel (common supply header).

5.2 Please discuss the costs and benefits of an alternative that produces hot water from waste heat at the existing Creative Energy facility compared to the proposed alternative.

Reference: CITY OF VANCOUVER GHG AND NEIGHBOURHOOD ENERGY POLICIES 6.0Exhibit B-1, Section 2.2, pp. 24–25; Section 3, Figure 8, p. 43 City of Vancouver policies as key drivers

On page 24, Creative Energy states that in addition to local planning policies within NEFC and Chinatown the NEFC project is “also driven by city-wide policies related to GHG [greenhouse gas] emissions and district energy.” On page 25, Creative Energy describes some key actions identified by the City of Vancouver (CoV) including: “Convert[ing] the existing steam heat systems to a low carbon fuel.” The particular significance represented by the conversion of the Creative Energy steam plant by virtue of the significant


economies of scale relative to the other steam plants in the city is illustrated by Figure 8 on page 43. 6.1 Does Creative Energy agree that the conversion of the entire fuel supply for Creative Energy’s

steam plant to low carbon fuel is a high priority for the City of Vancouver and is a key prerequisite for the CoV in order to achieve its Greenest City 2020 Action Plan? Please discuss.

6.2 In the absence of the Neighbourhood Energy Agreement (NEA) and the associated granting of the exclusive franchise rights of NEFC to Creative Energy, would the CoV have any leverage with Creative Energy to force a conversion of the exiting steam plant to a low carbon fuel source? Please elaborate.

B. PROJECT COSTS AND FINANCIAL ANALYSIS

Reference: CAPITAL COSTS 7.0Exhibit B-1, Executive Summary, p. 3; Section 1.6, p. 15; Section 5.2, p. 60; Schedule 8 Estimate classification

Creative Energy’s application on page 3 states: “The current Class C cost estimate for the new infrastructure for the NES is $10,742,000 in real 2015 dollars, including project development costs, contingency, PST, and interest during construction.” [Emphasis added] Similarly, Creative Energy’s application on page 15 states: “The current Class C cost estimate, including contingency, for the new network infrastructure required to serve NEFC is $10,742,000 in real 2015 dollars.” Whereas, Creative Energy’s application on page 60 states: “All costs estimates are considered Class 3 with an accuracy of -15% to +30%.” Similarly, Schedule 8, the Detailed Capital Cost Breakdown states: “The estimates are considered Class 3 per AACE International Recommended Practice No. 18R-97. This implies that the accuracy is considered -15% to +30%” and notes 18, 3 and 1, for the distribution piping system (DPS) Cost Estimate Backup, the energy transfer system (ETS) Cost Estimate Backup, and the Steam to Hot Water (Steam-HW, or S2HW) Cost Estimate Backup all refer to AACE Class 3 estimates too. The Commission CPCN Guidelines require, at a minimum, a Class 3 degree of accuracy as defined in the latest revision of the AACE International Recommended Practices.1 7.1 Please confirm, otherwise explain, that the references above to Class C cost estimates are

meant to be references to AACE Class 3 cost estimates.

7.1.1 If not confirmed, please provide the definition of a Class C estimate, and the standard making body whose classification system the Class C estimate is derived from.

7.1.1.1 Please compare the definition of a Class C estimate to an AACE Class 3 estimate.

7.1.1.2 Considering the definition of an AACE Class 3 estimate, please demonstrate

1 Order G-50-10, Appendix A, p. 10, Order G-20-15, Appendix A, p. 8.


how this Class C estimate meets the definition of an AACE Class 3 estimate.

7.1.1.3 Please explain and justify why the Commission should consider accepting a Class C estimate.

7.2 Please justify that the project cost estimate is an AACE Class 3 estimate by comparing the information provided in the application to the AACE Estimate Input Checklist and Maturity Matrix, and the AACE definition of a Class 3 estimate.

7.2.1 Please provide the preliminary contracting strategy.

7.2.2 Please provide the complete piping and instrumentation diagrams, and the general equipment arrangement drawings.

7.2.3 Please confirm the mechanical, electrical, civil and instrumentation/control discipline drawings were started or preliminary in nature when the estimate was made.

7.2.4 Please state the amount of engineering complete at the time the estimate was made.

7.3 Please provide the preparation effort of the estimate (cost or time) and a specific percent project definition completed at the time the estimate was prepared.

7.4 Please justify the cost estimate accuracy range, and include reasons for why the accuracy range is on the high side of a Class 3 estimate.

7.5 Please explain the estimating methodology used to develop the DPS, ETS and S2HW converter estimates and please confirm and provide the basis for these estimates (e.g. Is the DPS cost estimate based on a per meter estimate? Why are there different pipe sizes? What wall thicknesses are assumed and why? Is the estimate based on supplier quotes or experience on similar projects? If similar projects, what were the costs of those other projects? Why should the costs of this project be different? What capacities are assumed for the ETS estimates? Etc…).

Reference: CAPITAL COSTS 8.0Exhibit B-1, Schedule 8 Distribution piping system (DPS)

In Schedule 8, Creative Energy provides a table titled DPS Cost Estimate Backup. 8.1 Please confirm, otherwise explain, that TM stands for total meters.

8.2 Please explain how the DPS lengths were determined for each year.

8.2.1 Please provide a sensitivity analysis of the overall capital cost estimate if the pipe lengths were 25 percent shorter or 25 percent higher than the estimate.

8.3 Please explain how the average pipe diameters were determined for each year.

8.3.1 Please provide a sensitivity analysis of the overall cost estimate if the pipe diameters were 25 percent smaller or 25 percent larger than the average pipe diameter estimates provided.

8.4 Please provide the pipe wall thickness and grade assumptions used for making the estimate and


please justify these assumptions.

8.5 Please compare the Creative Energy NEFC DPS/meter estimate to the Corix Multi-Utility Services Inc. University of British Columbia DPS/meter estimate.

8.6 Please explain the contracting strategy for the DPS.

8.7 Please confirm, otherwise explain, that the mechanical, civil, construction and engineering estimates are based on recent quotes or previous work.

8.7.1 If confirmed, please elaborate, provide evidence and compare these DPS estimates to those quotes and/or recent work.

8.8 Please confirm, otherwise explain, that the mechanical estimate is based on a cost per meter estimate of the average diameter pipe for that year, for the length of DPS expected to be required in that year, and that the cost per meter includes installation and civil works.

8.9 Please provide the DPS Cost Estimate Backup in as spent dollars.

8.10 Please justify not including contaminated soil treatment in the cost estimate. Please explain the risk to the project of not including this in the estimate.

Note 12 reads: “12) Contingency not included. Note recommend at least 15% for DPS for normal contingency. Contaminated soils would be extra.” The final two lines of the DPS Cost Estimate Backup are the following:

8.11 Please confirm, otherwise explain, that the “Contingency not included” comment in note 12 is in

reference to the Base DPS Cost of $533,000. Please further confirm that the 15% contingency is included in the “with 15% contingency” estimate of $612,950 and no further contingency is recommended or expected to be added.

Creative Energy’s application on page 60 states: “DPS Costs include reinstatement to as-is condition, and additional contingency (on DPS only) of 5% for underground installation.” 8.12 Please confirm, otherwise explain, that the proposed DPS pipe routing has been reviewed for

utility conflicts. If not, why not? What risk does this pose to the project costs?

8.13 Please provide the basis for and please justify selecting 15 percent contingency.

Schedule 8, note 16 explains that “Estimate assumes primarily ‘non-winter’ construction, i.e. minimal trench pumping.” 8.14 What risk does the above assumption have on the cost estimate? How appropriate is it to make

this assumption, considering the length of the rainy season in Vancouver?


Reference: CAPITAL COSTS 9.0Exhibit B-1, Schedule 8 Energy transfer station (ETS)

In Schedule 8, Creative Energy provides a table titled ETS Cost Estimate Backup. 9.1 Please confirm, otherwise explain, that Phase 1, 2, 3, 4, 5 and 6 correspond to years 2016, 2017,

2018, 2020, 2022 and 2024, respectively.

9.2 Please confirm, otherwise explain, that one ETS in the line “No. of ETS’s” equates to one heat exchanger for hot water and one heat exchanger for heating.

9.3 Please provide a sensitivity analysis of the overall capital cost estimate if the ETS capacities were 25 percent higher or 25 percent lower than the current estimate.

9.4 Please compare the Creative Energy NEFC ETS estimate to the Corix Multi-Utility Services Inc. University of British Columbia ETS estimate.

9.5 Please explain and justify what is included in each of the following line items: Owner supplied equipment, contractor material and labour, and soft costs.

9.6 Please explain the contracting strategy for the ETS.

9.7 Please provide the ETS Cost Estimate Backup table in as spent dollars.

Reference: CAPITAL COST 10.0Exhibit B-1, Schedule 8; Section 5.2, p. 60 Steam to Hot Water (S2HW) converters

In Schedule 8, Creative Energy provides a table titled S2HW Cost Estimate Backup. 10.1 Please provide a sensitivity analysis of the overall capital cost estimate if the S2HW converter

capacities were 25 percent higher or 25 percent lower than the current estimate.

10.2 Please explain and justify what is included in each of the following line items: Building, electrical installation, mechanical installation, major equipment, GC OH&P and soft costs.

10.3 Please explain the contracting strategy for the S2HW converters.

Note 3 explains “Estimate does not include taxes or contingency.” The final two lines of the S2HW Cost Estimate Backup are the following:

10.4 Please confirm, otherwise explain, that note 3 is in reference to the Total Project line (i.e.

contingency is not included in the Total Project line, but is included in the “With 10%


contingency” line) and no further contingency is recommended or expected to be added.

10.5 Please provide the basis for and please justify selecting a 10 percent contingency.

10.6 Please discuss the risk to the project cost of suitable space not being provided.

10.7 Please confirm, otherwise explain, that the costs for the steam line extensions are included in the S2HW Cost Estimate Backup.

10.8 Please explain the basis for the steam line extension cost estimate of $200,000.

10.9 Please confirm, otherwise explain, that the proposed steam line extensions pipe routing has been reviewed for utility conflicts. If not, why not? What risk does this pose to the project costs?


Steam-HW Converter Stations are currently planned for the Concord 5B site and the Aquilini 7A site (the first two connected customers). Each station includes a converter and distribution pumps for the hot water DPS. Each station is sized to meet 75% of the design load for NEFC.

10.10 Please justify designing the system to have two steam to hot water converter stations.

10.11 Please justify designing the system to have two S2HW converters each sized to meet 75 percent of the design load for NEFC.

10.12 Please quantitatively compare the loads expected during Phase 1 to the size of the proposed S2HW system (2 X 75% = 150%).

10.13 Please quantitatively compare the peaking and back-up loads expected after Phase 1 to the capacity of the proposed S2HW system (2 X 75% = 150%).

10.14 Please confirm, otherwise explain, that the steam to hot water converters will not become stranded assets in Phase 2, that is, they will be in use in Phase 2, whether CE Fuel Switch or a Franchise Area Low-Carbon Solution are implemented.

10.15 Please provide the S2HW Cost Estimate Backup table in 2015 and as spent dollars (if not 2015 dollars).

Reference: CAPITAL COSTS 11.0Exhibit B-1, Section 5.2, Table 14, p. 62 Project development costs

Table 14 on page 62 of Creative Energy’s application provides a summary of development costs through 2016. 11.1 Please explain what project development work was performed to date. Please discuss what part

of this project development work Creative Energy’s internal staff performed, what work consultants performed and what legal work was performed.

11.2 Please explain what project development work is projected for 2015-2016. Please discuss what


part of this project development work Creative Energy’s Internal Staff will perform, what work consultants will perform and what legal work remains.

11.3 Please compare these project development costs to the project development costs associated with similar recent and local green-field district energy projects.

11.4 Please confirm, otherwise explain, that Creative Energy is seeking to include Project Development costs in rate base and to amortize over the life of the NES assets.

11.4.1 If confirmed, please justify including these costs in rate base. Please also provide examples of other TES where the Commission approved inclusion of Project Development costs in rate base.

11.5 Please demonstrate the effect on rates and the deferral account of amortizing project development costs over 1, 2, 3 and 5 years.

11.6 Please confirm, otherwise explain, that Creative Energy is not seeking project development costs associated with CoV or developer development work.

Reference: FUEL COSTS 12.0Exhibit B-1, Section 5.3, p. 64 Electricity costs

Page 64 of Creative Energy’s application provides a summary of electricity forecast to be purchased by the NES through 2020. Creative Energy explains that “During Energy Supply Phase 1, the only direct fuel consumption by the NES will be electricity for pumping…” and they made “…a conservative assumption of 3% annual inflation for electricity beyond the BC Hydro forecast.” 12.1 Please provide the number, size and location of the pumps and confirm the pump costs are

included in the cost estimates provided in Schedule 8.

12.2 Please discuss the effect on fuel costs of assuming CPI rather than 3 percent inflation for electricity beyond the British Columbia Hydro and Power Authority forecast.

On page 64 of the application, Creative Energy states that NES customers will receive energy generated at the Beatty Street steam plant and delivered by existing steam lines. Accordingly, the NES Revenue Requirement includes a cost allocation for steam energy delivered and metered at the NES’ two steam-to hot water converter stations. On page 64 of the application, Creative Energy characterized the incremental gas and electricity consumption at the Beatty Street plant to be “indirect” fuel consumption. Then on page 66, Creative Energy states that NEFC will pay all direct costs for the new…NEFC distribution system…” [Emphasis added] 12.3 Please clarify whether the costs related to the incremental gas and electricity consumption at

the Beatty Street plant are considered direct or indirect costs of the NES.


Reference: COST ALLOCATION FOR EXISTING INFRASTRUCTURE 13.0Exhibit B-1, p. 66 Transfer pricing policy

Creative Energy states on page 66 of the application that it “proposes a cost allocation that reflects all incremental costs of service to NEFC from the core, together with a fair contribution towards fixed costs and corporate overheads.” 13.1 The proposed cost allocation appears to govern the relationship of the costs from the revenue

requirements of the core customers (Creative Energy Vancouver Platforms Inc.) to the revenue requirements of the NES customers. Please discuss whether there are currently any cost allocations from Creative Energy Canada Platforms Inc. (or any other parent / affiliate) to the core customers and also to NES, such as corporate/governance costs, head office/administrative, insurance, legal, business/project development costs? If so, please provide a breakdown of such costs by function.

13.1.1 If there are currently no cost allocations from Creative Energy Canada Platforms Inc. to the core customers and also to NES, will there be in the future? Please discuss.

13.2 In Table 14 on page 62 of the application, Creative Energy provides a breakdown of project development costs totaling $413,000. Please clarify which entity has accrued these costs and whether these costs are direct costs or allocated costs to the NES. Please also explain why this assignment of costs (direct or allocated) is appropriate.

13.3 Please provide a diagram showing the relationship between the following three entities/affiliates (add any additional entities/affiliates that may be missing). Include a high level description of the responsibilities and arrows showing the direction of cost being transferred to/from each entity:

a) Creative Energy Vancouver Platforms Inc. (core)

b) Creative Energy Canada Platforms Inc. (parent)

c) NEFC (NES)

13.4 Please explain how the employees/executives from the “core” utility are required to track their time worked on the NEFC project (or other district energy type projects).

13.5 Please clarify whether there are any employees/executives from the “core” utility that have solely worked on the NEFC project (or other district energy type projects).

13.6 Please generally describe Creative Energy’s Code of Conduct policies which govern work performed for the core versus the NES project. If a documented Code of Conduct policy exists, please file it with the Commission.

Creative Energy states on page 66 of the application that the connection to the existing Creative Energy network is in place of a more expensive permanent boiler plant for the NES, will provide net benefits to the core and provides supply flexibility and other synergies. 13.7 Please describe the net benefits for the core customers as a result of the connection to NES.

How are these benefits measured?


13.8 Please describe the “supply flexibility and other synergies.” Will these additional benefits accrue to the core or to NES?

13.9 Please explain whether these benefits and synergies were considered when Creative Energy designed its cost allocations from the core? If so, please describe the valuation method placed on these benefits and synergies.

Reference: COST ALLOCATION FOR EXISTING INFRASTRUCTURE 14.0Exhibit B-1, pp. 66–68 NES Fuel Recovery Cost Allocation

On page 66 of its application, Creative Energy states that:

Fuel costs for the use of the existing Beatty Street steam plant will be flowed through the NES based on the marginal cost to generate steam at the Beatty Street plant gate. The steam provided to NES requires only a short segment of the existing steam network … NES customers will be charged for the incremental steam generation costs to serve the NES, which are a function of average fuel costs and steam generation efficiency at the plant gate.

14.1 If Creative Energy’s core steam utility had a new steam customer that only used a short segment of the existing steam network, would this customer pay rates established in the Creative Energy Steam Tariff for the applicable rate class or would this customer be offered the option of paying only incremental steam generation costs? Please elaborate.

14.1.1 If the customer would pay the rates established in the Steam Tariff, please explain why the NES should be offered the opportunity to pay only incremental steam generation costs.

14.1.2 Please explain why the NES should not pay the same Fuel Cost Adjustment charge as other steam utility customers for the quantity of steam delivered to the steam to hot water converter stations.

Creative Energy states that the Sofame unit was “installed at the plant in 2003 and increased plant efficiency from 81.5% to 85%.” Creative Energy also states that “the ownership and all efficiency benefits of the Sofame unit will transfer to Creative Energy on January 1, 2020.” 14.2 Please confirm that the Sofame unit is included in the core utility’s rate base. If not, please

explain.

14.3 Please clarify what is meant by the statement that “the ownership and all efficiency benefits” will transfer to Creative Energy on January 1, 2020.

On page 67 of the application, Creative Energy states:

The efficiency factor will be reviewed and updated periodically to reflect any changes in plant performance. The average fuel cost will be forecast at the beginning of the year and adjusted to reflect any over or under recoveries of actual fuel costs for the previous year.


14.4 Please explain the reference to updating the efficiency factor periodically. How will this be accomplished?

14.4.1 Will Creative Energy be making an application to the Commission for approval to revise the efficiency factor?

14.4.1.1 How often will this be revised?

14.5 Pertaining to the variance in fuel cost recoveries over the previous year, please clarify if Creative Energy is seeking approval for a deferral account to capture the difference between forecast and actual cost fuel recoveries?

14.6 What will be the driving factors contributing to any potential variances between forecast and actual fuel recoveries? Price of fuel? Consumption?

Creative Energy states on page 68 of the application that it will record the NES Fuel Recovery Cost Allocation as a credit to the core steam utility. 14.7 Please clarify whether this credit offset was included in Creative Energy’s most recent revenue

requirement application for the test period 2015-2017. If so, please provide the reference contained in that proceeding.

On page 67 of the application, Creative Energy describes the NES Fuel Cost Recovery Allocation as follows:

14.8 What are the units for the NES Extracted Energy quantity in the calculation described above?

14.9 Please confirm that the Clearsky Joint Venture fuel cost component of the NES Fuel Recovery Cost Allocation is intended to be recovered from the NES utility through the use of the lower efficiency of 82.4 percent for the period up to the end of 2019.

14.9.1 If not confirmed, please elaborate.

14.9.2 If confirmed, please explain why the efficiency factor is 82.4 percent and not 81.5 percent for the period up to the end of 2019.

14.10 Please explain why the NES utility does not pay the Innovative Clean Energy (ICE) Levy fuel cost component of the core steam utility fuel costs as part of the NES Fuel Recovery Cost Allocation.

14.11 Is the intent of the NES Fuel Recovery Cost Allocation to ensure the NES utility pays for its share of the total fuel costs incurred by the core steam utility? If no, please explain.

14.11.1 To the extent that the NES Fuel Recovery Cost Allocation does not fully recover the NES’ share of the core steam utility fuel costs (expressed as a ratio of fuel cost recovery from the NES utility versus the total steam utility fuel costs) as compared to the ratio of the


NES’s steam consumption relative to the total steam production at the steam plant, is there a mechanism for rectifying any associated cross-subsidization of the NES utility by the core steam customers? If not, should there be a mechanism? Please explain.

Reference: COST ALLOCATION FOR EXISTING INFRASTRUCTURE 15.0Exhibit B-1, pp. 69–71 NES Meter Cost Allocation

Creative Energy explains that the meter cost allocation is a “means for NES customers to contribute towards the core’s non-fuel costs, including other variable and fixed costs…” 15.1 Please discuss whether Creative Energy would be opposed to rename this revenue requirement

component as “Cost Allocations from Core.” Why or why not?

15.2 Referring to Table 17 on page 71 of the application, please provide the calculation or source of the $3.32/M# rate for steam production. Please clarify if this is representative of the steam production at the core.

15.2.1 Please provide the calculation or reference source from the most recent revenue requirements application (RRA) on where this steam production costs can be located.

15.3 Referring to Table 17 on page 71 of the application, please provide the calculation or source of the $2.53/M# rate for steam distribution.

15.3.1 Please provide the calculation or reference source from the most recent RRA on where this steam distribution costs can be located.

15.4 In Table 28 on page 99 of the application (partially copied below), please confirm, or explain otherwise, that the highlighted line item should be corrected as “NES Meter Cost Allocation” instead of its current labelling.

15.5 Please confirm whether this “NES Meter Cost Allocation” is supposed to be represented as Row

20 in the “Cost Allocation” tab of the confidential excel model. If yes, please explain why the figures are different than what is presented in the above table.

15.5.1 Does the NES Meter Cost Allocation as described on page 69 include recovery of any fuel costs equivalent to those fuel costs that are recovered in the Base Cost component of the Steam Tariff?

15.5.2 Please provide the corrections where necessary.


Creative Energy proposes that corporate overheads, excluding management salaries, are allocated based on the Massachusetts formula. 15.6 Please identify which cost of service line item (from Creative Energy’s most recent RRA) will be

included as “corporate overheads.” Provide reference sources.

15.7 Please clarify whether this includes overhead from the core business (previously Central Heat Distribution Ltd.) or does it include overheads from the parent company (Creative Energy Canada Platforms Inc.)?

15.8 Please explain whether the Massachusetts formula has been reviewed by Creative Energy’s external auditors. If not, please explain why Creative Energy considers this allocation to be appropriate.

15.9 Please explain how corporate overhead costs are driven by “utility plant in service,” “revenues” and “direct labour distribution.” Provide separate explanations for each cost driver.

Creative Energy also proposes that 1 percent of Management Salaries to be allocated to the NES. 15.10 Please provide the justification and rationale for the proposed 1 percent allocation.

In Creative Energy’s most recent RRA to the Commission, it indicated that 50 percent of the new VP Business Development’s salary would be charged to a separate entity. Presumably, the remaining 50 percent, along with 100 percent of the other Management salaries would stay at the core business. However, in this application, Creative Energy is now asking for 1 percent of Management salaries from the core to be allocated to the NES. 15.11 Please explain the discrepancies of the evidence in these two proceedings.

15.12 Does Creative Energy anticipate that the determinations from this CPCN decision will supersede any decisions made in the RRA? Why or why not?

Creative Energy states that each component of the NES Meter Cost Allocation will be escalated from this 2016 baseline and that the steam production and distribution components of the cost will be escalated at inflation. 15.13 Please explain why inflation is a reasonable proxy for the steam production and distribution cost

components, given that these cost components are impacted by future core customer RRA increases and not necessarily related to inflation.

On page 72 of the application, Creative Energy further proposes that the “Corporate Overheads component will be escalated using the projected plant in service and revenues…” 15.14 Please explain and provide a sample calculation on how this would be calculated.

15.15 Please explain the mechanism by which these equivalent costs are recovered in the rate structure proposed by Creative Energy in the application.


Reference: COST ALLOCATION FOR FUTURE INFRASTRUCTURE 16.0Exhibit B-1, Section 5.4, pp. 66–67; Creative Energy 2015-2017 Revenue Requirements Application, Exhibit B-2, BCUC IR 1.18.8, 1.19.2; Exhibit B-5, BCUC IR 2.12.1 NES Fuel Recovery Cost Allocation

In response to BCUC IR 2.12.1 of the Creative Energy RRA proceeding, Creative Energy states that it maintains a balance of 10 to 15 percent of overall actual fuel costs in the account in which Creative Energy tracks the difference between the total fuel costs and the recoveries of the fuel costs from the existing core steam utility customers (Fuel Cost Stabilization Account). In response to BCUC IR 1.18.8 of the RRA proceeding, Creative Energy explains that this over recovery of the Fuel Cost Adjustment charge is used by Creative Energy to smooth out the rates for the existing core steam utility customers. Creative Energy states on page 66 of the application that fuel costs “will be flowed through to the NES based on the marginal cost to generate steam at the Beatty Street plant gate.” 16.1 Please describe the methodology for allocating the various fuel cost components between the

NES and the existing core steam utility’s Fuel Cost Stabilization Account, including a sample calculation.

16.1.1 Please discuss whether Creative Energy agrees that the fuel costs allocated to the NES would be “Last in, First out” relative to the other fuel costs recorded in the Fuel Cost Stabilization Account.

On page 67 of the application, Creative Energy states that average steam generation at the Beatty Street plant gate is 85 percent. In the Creative Energy RRA, in response to BCUC IR 1.19.2 Creative Energy describes the methodology for converting fuel costs from $ per MMBtu to the Fuel Cost Adjustment charge that is expressed as $ per thousand pounds of steam as follows:


16.2 Please explain how Creative Energy arrived at a steam plant efficiency of 85 percent as compared to the description of the steam plan efficiency as described above in the Creative Energy RRA. Please provide any applicable calculations or unit conversions.

Reference: NON-FUEL OPERATING COSTS 17.0Exhibit B-1, Section 5.3, p. 74; Section 5.5, Table 19, p. 75 Operator, maintenance, lease and other costs

Page 74 of Creative Energy’s application states: “The NES does not require a full-time operator initially.” Table 19 on page 75 of Creative Energy’s application lists no operator costs for 2016 through 2020.

Page 75 of Creative Energy’s application states: “NES will pay Municipal Access Fees to the CoV at a rate of 1.25% of costs (excluding the NES Fuel Recovery Cost Allocation) as per the Municipal Access Agreement.” 17.1 Please confirm, otherwise explain, that Creative Energy does not expect the NES to require an

operator at all for 2016 through 2020. Please explain what dictates when an operator is required. If an operator were required, how would this change the anticipated non-fuel costs?

Page 74 of Creative Energy’s application states: “Maintenance costs are estimated at 1% of plant in service costs for all assets, escalated at inflation. This value is inclusive of allocated time from core steam staff.” 17.2 Please provide the basis for estimating maintenance costs at 1 percent of plant in service costs

initially, and then escalating at inflation.

17.3 Please explain what tasks and functions are included in maintenance costs.

17.4 Please provide the approximate maintenance costs of the existing core system as a percentage of the plant in service costs of the existing core system.

17.4.1 Please discuss the impact using this percentage as opposed to 1 percent would have on the NES total non-fuel O&M.

Page 75 of Creative Energy’s application states:

Creative Energy has agreed to make lease payments to these two property owners for the incremental space required in their buildings to house this additional equipment. The total lease payments are $24,000 per year, escalating at inflation.

17.5 Please confirm, otherwise explain, Creative Energy has formally agreed with these two property owners to make lease payments in the total amount of $24,000 to these two property owners for the incremental space required in their buildings to house this additional equipment in the first year of operation.

17.5.1 If confirmed, please further confirm that the terms of the agreements include automatic annual escalation adjustments at CPI and confirm the term of the lease.


17.5.2 If not confirmed, please discuss the risks of lease agreements not being reached and of being higher than $24,000.

17.6 Please explain how water supply costs are allocated to the NES.

17.7 Please compare the 1.25 percent municipal access fee to other recent green-field local NES and other utility municipal access or franchise fees. Please confirm and indicate, otherwise explain, where this fee is included in the NEFC and Chinatown Neighbourhood Energy Agreement (NEA).

Reference: NES NON-FUEL OPERATING COSTS 18.0Exhibit B-1, Section 5.5, pp. 74–75 Insurance costs

18.1 Please provide support for the Owner’s Insurance calculation of 0.11 percent of net book value, including any assumption made in determining this percent.

18.2 Does Creative Energy require separate Owner’s Insurance for the NES assets, or is the insurance covered by its existing insurance for the core steam assets? Please discuss.

18.3 Please provide support for the General Liability calculation of the greater of 0.25 percent of revenues or $2,000 per year, including any assumptions made.

18.4 Does Creative Energy require separate General Liability insurance for the NES, or is this covered under Creative Energy’s existing General Liability insurance? Please discuss.

Reference: NES NON-FUEL OPERATING COSTS 19.0Exhibit B-1, Section 5.5, pp. 74–75 Administrative costs

Creative Energy states on page 74 of the application:

NES-specific administration costs (as distinct from overheads described in section 5.4) are calculated as 25% of maintenance costs. While the NES Fuel Recovery Cost Allocation does include some contribution towards corporate overheads, it is only a partial allocation. The NES administration costs capture the costs of billing and customer management directly allocated to the NES.

19.1 Why has Creative Energy calculated the NES-specific administration costs to be 25 percent of maintenance costs? What relationship does maintenance costs have to the administration cost?

19.1.1 What other methods for determining annual administration costs could Creative Energy use instead of using a percentage of maintenance costs? Please discuss.

19.2 Please confirm, or explain otherwise, that the billing and customer management for the NES will be performed by existing Creative Energy staff.

19.2.1 If confirmed, please explain whether these employee(s) will separately track their time spent on NES administrative activities. If no, please explain why not.

19.3 Please explain why Creative Energy has not included these administration costs as part of the allocated corporate overheads charge.


19.4 Please explain why the corporate overhead allocation, which is calculated based on the Massachusetts Formula, does not already capture administration costs related to billing and customer management.

19.5 Please explain why it is appropriate to have separate cost allocations for each of Corporate Overheads, Management Salaries, and Administrative Costs. Is there a risk that NES ratepayers are being over-charged for these types of activities? Please discuss.

Reference: CARBON REDUCTION RIDER AND FUND 20.0Exhibit B-1, Section 5.6, pp. 75–81, 88 Carbon Reduction Rider


Section 10 of the Neighbourhood Energy Agreement includes a requirement for Creative Energy to collect an amount of $25 / tonne (escalated at CPI commencing in 2015) for all GHG emissions from the NES in excess of the agreed Carbon Intensity Cap for the Franchise Area (referred to in this Application as the Carbon Reduction Rider).

“Carbon Intensity Cap” is defined in the NEFC and Chinatown Energy Agreement (Neighbourhood Energy Agreement) as follows:

‘Carbon Intensity Cap’ means a carbon intensity level equal to 0.07 tonnes of carbon dioxide (or equivalent) per megawatt hour of sales (being the SEFC NES target carbon intensity as of the date of this Agreement) measured using provincially recognized emission intensity values for the mix of energy sources allocated to the Franchise Area NES.2

20.1 Please provide supporting evidence for the Carbon Reduction Rider per tonne charge of $25.

20.2 Please clarify whether the $25/tonne is being escalated at CPI commencing in 2014 or in 2015.

20.3 Please provide supporting evidence for the 0.07 tonnes CO2 per MWh heat sales value which is used as the basis for calculating the Carbon Intensity Cap.

20.3.1 Please provide support to substantiate the reference to “provincially recognized emission intensity values” used to measure the Carbon Intensity Cap, including the calculations and any assumptions made.

Creative Energy states on page 79 of the application that the Carbon Reduction Rider “is first and foremost a means of ensuring early connectors understand the NES performance requirements and contribute to those performance requirements.” Creative Energy also states on page 80 of the application that there is less uncertainty in the case of the NES. The NEA outlines various “Low-Carbon Alternatives” which serve as temporary or permanent options to achieve the Carbon Intensity Cap should the CE Fuel Switch or the Franchise Area Low-Carbon Solution not proceed in the timeframe expected (or at all). These alternatives include the following:

2 Exhibit B-1, Schedule 2, Schedule A, p. 1.


i. Using low-carbon fuel (e.g. biogas) at the existing Utility steam heat plant for the specific

purpose of supplying Hot Water Service to the Franchise Area NES;

ii. Making financial contributions to [City of Vancouver (CoV)] low-carbon projects;

iii. Purchasing carbon offsets certified by a qualified third party professional approved by COV and Utility, each acting reasonably; and/or;

iv. Any other solution mutually agreed by COV and Utility and that is acceptable to the BCUC that enables the Franchise Area NES to comply with the NES Performance Requirements.3

20.4 Based on the above options outlined in the NEA and re-stated in the above preamble, please

further explain how the NES is considered to have less uncertainty.

20.5 Please explain why it would be appropriate for NES early connectors to contribute to “COV low-carbon projects” which may not be utilized in these customers’ service area.

On page 88 of the application, Creative Energy describes the large scale fuel switch alternative or the “CE Fuel Switch” as follows: “In this scenario, Creative Energy would install a large-scale alternative energy plant to generate low-carbon steam, providing baseload energy to NEFC…as well as Creative Energy’s core customers and other potential new expansion areas in downtown.” 20.6 Does Creative Energy intend to charge the Carbon Reduction Rider to its core customers to

support the potential “CE Fuel Switch”? If not, why not?

20.7 Please provide examples, if any, from other jurisdictions in which a regulated utility has utilized a similar rider/charge to the Carbon Reductions Rider for recovery from ratepayers. For each example provided, please describe how the rider/charge is applied to rates and whether the amounts are accumulated for a future purpose.

20.8 Please provide examples, if any, from other jurisdictions where amounts have been pre-collected from ratepayers where there is uncertainty as to how and when these funds will be used. These examples could be un-related to carbon emissions.

20.9 What is the maximum number of years with which Creative Energy would propose to continue collecting the Carbon Reduction Rider in the event that the Energy Supply Phase 2 is not implemented?

20.10 If the Energy Supply Phase 2 is not implemented, how would Creative Energy propose to return the balance in the Carbon Reduction Fund to ratepayers?

Creative Energy states on page 76 of the application: “When Energy Supply Phase 2 is implemented, the cumulative balance of the Carbon Reduction Fund would be applied as a Contribution in Aid of Construction [CIAC] towards the capital cost of Energy Supply Phase 2.” 20.11 Please discuss whether it would be more appropriate to amortize the balance in the Carbon

Reduction Fund over a shorter time period, as opposed to applying the funds as a CIAC to be depreciated over the life of the Phase 2 capital assets.

3 Exhibit B-1, Schedule 2, p. 15.


Creative Energy states on page 78 of the application: “City policy in granting the franchise agreement should receive significant weight in approval under Section 45(7) [of the UCA].” 20.12 Please explain the rationale for the above statement.

20.13 What other methods/mechanisms besides the Carbon Reduction Rider could Creative Energy (and the CoV) employ to achieve the two reasons stated on page 79 of the application for utilizing this rider? Please discuss.

20.13.1 For instance, if the Commission did not approve the Carbon Reduction Rider, what other methods could Creative Energy and CoV employ so that rates are “supportive of the long-term emission performance requirements” and to ensure that “the requirements and commitments are very clear to all stakeholders.”

20.14 Please provide a revised confidential excel model in which the Carbon Reduction Rider is removed. In a non-confidential response, please provide the following comparison of the NES rates with and without the Carbon Reduction Rider:

a) Initial 2016 Rate; b) Levelized Cost and Levelized Rate; c) Revenue Deficiency Deferral Account (RDDA) balance in each of the first five years; and d) Maximum balance of the RDDA over the 20-year period.

Creative Energy states on page 80 of the application that “early connections should not receive an additional windfall (very low costs) by virtue of a phasing strategy that in fact is intended to benefit them by allowing flexibility in the implementation of low carbon.” 20.15 Please explain how early connections would receive a windfall in the event that a phasing

strategy was not employed given that Creative Energy has proposed to utilize a levelized cost structure with a RDDA whereby the utility under-recovers costs in the early years of the NES.


Creative Energy and the CoV have reviewed the UBC Decision and have elected to request approval of the proposed Carbon Reduction Rider for the NES on the basis of additional arguments and facts unique to the NES. [Emphasis added]

20.16 Please compare and contrast the NEFC NES to the UBC NDES and specifically describe the

elements of the NEFC NES which make it unique from the UBC NDES and therefore support the approval of a Carbon Reduction Rider.

Reference: FINANCING 21.0Exhibit B-1, Section 5.7, p. 82 Cost of debt

21.1 Please provide support for the projected cost of debt of 4 percent, including the sources used and any assumptions made.


Reference: LOW-CARBON ENERGY SOURCES 22.0Exhibit B-1, Section 5.12, pp. 90–91 Levelized cost

Creative Energy states on page 90 of the application: “The 20-year levelized cost for each scenario is also provided in Table 26.” [Emphasis added] 22.1 Please clarify whether Table 26 shows a 20-year levelized cost or a 15-year levelized cost

structure.

22.1.1 If the statement on page 90 of the application is correct (i.e. 20-year levelized cost), please explain how this is calculated given that the RDDA is proposed to be reduced to zero in 15 years.

Reference: RATE DESIGN 23.0Exhibit B-1, pp. 33–34, 93 Rate classes

Table 5 on page 34 of the application shows incremental NES load growth in 2017-2019 related to “Commercial Hotel/Casino”. Creative Energy states on page 33 of the application: “The majority of the space at NEFC is residential but there will be some hotel area included in the Paragon development at Area 10; this is included in the Residential category as the load profile should be relatively similar.” Creative Energy further states on page 93 of the application that it is “currently assessing whether there is any need for a different billing determinant for the Fixed Charge for commercial customers based on actual nominated capacity…” 23.1 Has Creative Energy considered establishing two separate rate schedules/classes to distinguish

between residential and commercial customers? Please discuss the pros and cons of this approach.

Reference: RATE DESIGN 24.0Exhibit B-1, Section 5.13, p. 94 RDDA


Table 27 assumes a starting Fixed Charge of $4.65 per m2 connected floor area per year, and a starting Energy Charge of $28.97 per MWh…This starting rate would result in a maximum deferral account balance for Energy Supply Phase 1 of about $0.9 million and elimination of any deferral account within 15 years.

24.1 Please explain why Creative Energy considers 15 years as most appropriate for elimination of

the RDDA.

24.2 What would the impact on starting rates and on the maximum deferral account balance be if Creative Energy instead set recovery of the RDDA over 10 years? Over 20 years? Please provide all supporting calculations.


Reference: ENERGY SUPPLY PHASE 1 REVENUE DEFICIENCY DEFERRAL ACCOUNT 25.0Exhibit B-1, Section 5.14, p. 95 Controllable versus non-controllable costs

Create Energy states on page 95 of the application that it “proposes to use the RDDA to accumulate forecast revenue shortfalls, but not to allow recovery of variances in controllable costs.” 25.1 Please list all costs included in the NES revenue requirements, including separately listing each

O&M cost, and indicate whether each cost is proposed to be controllable or non-controllable with a brief explanation for this classification.

Reference: DETAILED FINANCIAL MODEL 26.0Exhibit B-1, Section 5.15, Table 28, p. 99 Proposed Average Rate

26.1 Please confirm, or explain otherwise, that the Proposed Average Rate for 2016 of $82/MWh is the “initial rate” which will be charged to customers.

26.2 Please clarify what annual escalation rate is being applied to the initial 2016 rate. Please also clarify whether this annual escalation rate includes inflation.

Reference: COMPARISON TO BENCHMARKS 27.0Exhibit B-1, Section 5.16, Table 29, p. 101; Exhibit B-2, p. 7 Benchmark rates and costs

Table 29 on page 102 of Creative Energy’s application compares NES levelized rates and levelized costs to three benchmarks:

On page 7 of the Neighbourhood Energy By-law for Northeast False Creek and Chinatown – 10907 (filed in Exhibit B-2) the CoV provides a comparison of estimated effective rates. 27.1 Please discuss and compare the rates provided by the CoV to the rates provided by Creative

Energy.

27.2 Please confirm, otherwise explain, the term of the comparison of rates is 2016 to 2030.


27.3 Please discuss how extending and shortening the comparison term affects the levelized rates and levelized costs.

27.4 Please provide the 100 percent Residential Electricity levelized rate and levelized cost assuming escalation at inflation.

27.5 Please provide and justify the step rates and electricity consumption estimates at each step that were used to derive the levelized rate and levelized cost for the 100 percent electricity case.

27.6 Please provide the levelized rate and levelized cost assuming natural gas for domestic hot water and common area space heating, and in suite heating provided by electric baseboards. Please provide and justify the assumptions used for gas and electricity rates and consumption in this scenario.

27.7 Please compare the levelized rate and levelized cost to other local recent similar district energy projects.

Reference: COMPARISON TO BENCHMARKS 28.0Exhibit B-1, Section 5.16, Figure 17, p. 103; Schedule 3, Section 7.3, p. 24 Benchmark GHG emissions

Figure 17 on page 103 of Creative Energy’s application compares the emissions for the NES assuming only Energy Supply Phase 1, the NES assuming Energy Supply Phase 2 occurs and a scenario that assumes 100 percent gas heating at 85 percent efficiency. On page 24 of the NEFC District Energy Screening Study Compass Resource Management Ltd. in Schedule 3 of the application estimates of the Business As Usual (BAU) fuel use and GHG emissions for 100 percent electric resistance space heating, 60 percent electric resistance space heating and 100 percent gas heating are provided. 28.1 On Figure 17, please also include the emissions for the 100 percent Residential Electricity case,

and the emissions for a case where natural gas is used for domestic hot water and common space heating, with in suite heating provided by electric baseboards.

Reference: RISK ANALYSIS 29.0Exhibit B-1, Section 5.17, Table 30, p. 105 Alternate benchmarks

Table 30 on page 105 of Creative Energy’s application provides a risk analysis for Energy Supply Phase 1. 29.1 Please provide the levelized rate assuming the largest potential load/building does not connect.

29.2 Please provide the levelized rate assuming gas commodity prices increase by 50 percent.

29.3 Please provide the levelized rate if capital costs are 30 percent higher and 15 percent lower.


C. LOAD FORECAST

Reference: LOAD FORECAST 30.0Exhibit B-1, Section 5.1, Tables 10 and 11, pp. 58–59 Energy Use Intensity (EUI)

30.1 Please explain why: (i) Table 10: Energy Use Intensity (Peak) does not display a value for Commercial EUI; and (ii) Table 11: Energy Use intensity (Annual) does not display values for Casino EUIs. Where necessary, please update each table.

30.2 Please explain how the Annual EUIs for Commercial and Residential developments were calculated to be equal for each of Space Heating and DHW, as seen in Table 11 on page 58.

30.2.1 Please provide examples of recent building developments where this was seen to be the case.

Reference: LOAD FORECAST 31.0Exhibit B-1, Section 5.1, pp. 58–59 Load forecast data

31.1 Please complete the tables included as an attachment in the Microsoft Excel file. Please provide your response as a hard copy as well as in a functional Excel file.

a) Peak Load Forecast by Year

b) Annual Load Forecast by Year

c) Load Forecast by Development and Year 31.2 Please confirm that the efficiency of both steam-hot water converters is 82.4 percent. If not

confirmed, please provide the correct efficiency.

31.2.1 How does the efficiency of the steam-hot water converters used in the NEFC NES design compare to converters used in similar projects? Please provide examples.

31.3 Please state the overall efficiency of the NEFC NES coupled with Creative Energy’s central steam plant which takes the natural gas as the input, and outputs hot water used for space heating and DHW. Please show with calculations how the efficiency is determined.

Reference: LOAD FORECAST 32.0Exhibit B-1, Section 1.1, p. 8 Available steam generation capacity

32.1 Please provide the capacity in pounds per hour (pph) and the equivalent in megawatts (MW) of each of the 6 natural gas boilers currently installed at Creative Energy’s central steam plant described on page 8 of the application.


D. APPROVALS SOUGHT

Reference: APPROVALS SOUGHT 33.0Exhibit B-1, Schedule 1 Draft order

33.1 Please explain why Creative Energy seeks approval of the NEFC Extension Test under sections 59-61 of the UCA as outlined in Directive 3 of the draft order. Please specifically reference the applicable section of the UCA and why the NEFC Extension Test requires approval under the rate-related sections of the UCA.

33.2 Please explain why Creative Energy seeks approval of its revenue requirement components, as outlined in Directive 6 of the draft order, under section 45(9)(ii) of the UCA.

Reference: PROPOSED REGULATORY PROCESS 34.0Exhibit B-1, Section 1.6, p. 17; BCUC Resource Planning Guidelines issued December 2003, pp. 1, 2, 5 Creative Energy 2015-2017 Revenue Requirements Application, Exhibit B-2, BCUC IR 1.1.1 Long-Term Resource Plan Exemption

In its application, Creative Energy is seeking an exemption from filing a Long-Term Resource Plan for NEFC until completion of further feasibility work on low carbon sources and the filing of a CPCN for the Energy Supply Phase 2 of this project. 34.1 Please confirm that Creative Energy is seeking an exemption from filing a long-term resource

plan with respect to only the NEFC utility and that the request does not apply in regard to a long-term resource plan for the core steam utility.

The BCUC Resource Planning Guidelines state:

• “Resource planning is intended to facilitate the selection of cost-effective resources that yield the best overall outcome of expected impacts and risks for the ratepayer over the long run.”4

• “Key underlying issues and assumptions that inform the planning context should be identified and discussed (e.g. reliability and security issues, risk factors, major uncertainties).”5

• “In most circumstances, Certificates of Public Convenience and Necessity (“CPCN”) applications should be supported by resource plans.”6

34.2 Please discuss the extent to which the commitments Creative Energy has agreed to in the

Neighbourhood Energy Agreement (NEA) with the City of Vancouver restrict the range of resources that might be considered in a long-term resource plan filed by Creative Energy subsequent to this Application.

34.3 Is it Creative Energy’s intent that the Energy Supply Phase 2 CPCN would assess the range of cost-effective resource alternatives together with reliability and security issues, risk factors,

4 BCUC Resource Planning Guidelines issued December 2003, p. 1. 5 Ibid., p. 5. 6 Ibid., p. 2.


major uncertainties as intended in a long-term resource plan as part of the Energy Supply Phase 2 CPCN filing? Please elaborate.

34.4 If the requested exemption period is to extend beyond the filing date for the Energy Supply Phase 2 for the NEFC project, please describe the significant risks and/or uncertainties that Creative Energy anticipates would remain for the NEFC utility at that point.

E. CORE CUSTOMERS

Reference: CONSULTATION 35.0Exhibit B-1, Section 4

On page 51 and 52 of the application, Creative Energy lists the feedback from the stakeholders. Some concerns were identified which included concerns regarding the perceived cost premium, clarity around connection policies , concerns around lost opportunities in the absence of a strategy and concerns around sitting larger energy centers within the city. 35.1 Please explain how Creative Energy mitigated these concerns.

35.2 During the consultation process please clarify if Creative Energy’s current core customer were specifically targeted as an area of key consultation.

Reference IMPACTS ON CREATIVE ENERGY’S CORE CUSTOMERS 36.0Exhibit B-1, Section 5.12, p. 88; Section 5.18, p. 105 No negative impacts

Creative Energy states on page 105 of the application that the “NES has no negative impacts but potential benefits for Creative Energy’s existing core customers.” On page 88, Creative Energy describes two alternatives for meeting the NEA carbon performance requirements including “large scale fuel switch” representing a “low cost but potentially more complex scenario” whereby Creative Energy would “install a large scale alternative energy plant to generate low-carbon steam, providing baseload energy to NEFC (via the Steam-HW converter stations) as well as to Creative Energy’s core customers and other potential new expansion areas in downtown.” 36.1 Does Creative Energy agree that the statement on page 105 regarding the NES extends to the

impacts arising from the NEA executed by Creative Energy with the City of Vancouver (i.e. that the NEA has no negative impacts but potential benefits for Creative Energy’ existing core customers)? Please elaborate.

36.1.1 Please confirm that the commitments to meet the low carbon intensity targets set out in the NEA will not result in increased fuel costs for the existing core customers over the alternative of continuing to fuel the existing stem utility with natural gas in either the case where the proposed Carbon Reduction Rider is approved or not approved by the Commission. Please explain the response.

36.1.1.1 If not confirmed, please explain.


36.1.2 In particular explain how the alternative of a larger Creative Energy fuel switch upstream of the NES would not lead to higher fuel costs for the existing steam utility customers.

F. NEIGHBOURHOOD ENERGY AGREEMENT

Reference: NEFC/CHINATOWN NEIGHBOURHOOD ENERGY AGREEMENT 37.0Exhibit B-1, Section 1.6, p. 15; Schedule 2, Northeast False Creek and Chinatown Neighbourhood Energy Agreement, Article 2.7 Commission approval of the NEA

Creative Energy states it is seeking Commission approval of the Neighbourhood Energy Agreement (NEA) under section 45(7) of the UCA and the granting of a CPCN under section 45(9) of the UCA to allow Creative Energy to construct and operate the entire NES hot water network, including the hot water converter stations, new upstream steam infrastructure connecting the NES to the existing Creative Energy steam plant and Energy Transfer Stations within all connected buildings, all under the terms of the NEA. Article 2.7 of the NEA states:

Utility will be responsible, in good faith and at its expense, to obtain and continuously maintain throughout the Term, without interruption, all approvals required from the BCUC in order for the Utility to exercise its rights or carry out its obligations under this Agreement, including such approvals required under the Act as conditions to construct the Franchise Area NES, implement the CE Fuel Switch or Franchise Area Low-Carbon Solution and carry out the activities contemplated in this Agreement.

37.1 Please confirm that Creative Energy is seeking approval of the NEA solely as it pertains to sections 45(7) and 45(9) of the UCA for the NEFC and Chinatown low carbon Neighbourhood Energy System.

37.1.1 If not confirmed, please describe any Commission approval of any other elements of the NEA that Creative Energy is seeking beyond the approvals that the Commission may grant under section 45(7) and 45(9) of the UCA and the section of the UCA that the approval would be pursuant to.

Reference: NEFC/CHINATOWN NEIGHBOURHOOD ENERGY AGREEMENT 38.0Exhibit B-1, Section 2.3, pp. 27, 15 Exclusive franchise in Chinatown

Creative Energy’s application on page 15 states: “Due to redevelopment in Chinatown is less certain, smaller in scale, and more spread out, extensions to Chinatown are not included in the Initial CPCN application.” Creative Energy’s application on page 27 states: “The Agreement provides Creative Energy with an exclusive franchise in NEFC and Chinatown.”

38.1 Considering redevelopment in Chinatown is less certain and extensions to Chinatown are not

included in the initial CPCN application, please justify why the Commission should approve an


exclusive franchise to Creative Energy for Chinatown at this time.

38.2 Please compare the benefits of providing Creative Energy an exclusive franchise in Chinatown at this time to the costs of reduced competition in Chinatown.

Reference: NEFC/CHINATOWN NEIGHBOURHOOD ENERGY AGREEMENT 39.0Exhibit B-1, Section 2.3, pp. 27, 28 36; Section 4.2; Section 7; Section 8.1; Schedule 2; Exhibit B-2, covering letter, p. 1 Neighbourhood Energy Bylaw – Mandatory Connection


The CoV will mandate connection of all new development in NEFC area via a Service Area Bylaw (proposed) or rezoning conditions (for any rezonings prior to the conditions precedent in this Agreement being met and enactment of the Service Area Bylaw). Connection in Chinatown is also mandatory but the connection and obligation to serve is subject to an extension test.


The Agreement contains two conditions precedent: a) BCUC approval of Agreement and associated CPCN; and b) enactment of a Service Area Bylaw by CoV Council. The latter is intended to provide greater security of connection but may be waived by parties subject to mutual agreement. Because the bylaw has not yet been approved by Council, the bylaw has not been submitted. The By-law is planned to go to Council on April 28th and is expected to be available for public review during the week of April 20th. At this time, Creative will submit the document as an evidentiary update. If for some reason this does not occur, Creative Energy will submit a draft to the Commission according to the Commission’s Confidential Filing Practice Directive. It is expected the bylaw will be passed in April but enactment will be subject to BCUC approval of the Agreement and associated CPCN.

In the covering letter for Exhibit B-2, Creative Energy explains: “On April 28, 2015 the City of Vancouver issued the Neighbourhood Energy By-law for Northeast False Creek and Chinatown – 10907 to implement NES in the NEFC & Chinatown neighbourhoods.” On page 1 of Exhibit B-2, the General Manager of Engineering Services provides the following recommendation to Vancouver City Council:

THAT Council approve a by-law to compel new buildings, and buildings undergoing major renovations, in Northeast False Creek and Chinatown to connect to a Neighbourhood Energy System (the proposed “Neighbourhood Energy By-law”), as generally described in Appendix A; and FURTHER THAT the Director of Legal Services be directed to bring the proposed Neighbourhood Energy By-law to Council for enactment following approval of the proposed Northeast False Creek and Chinatown Neighbourhood Energy System by the British Columbia Utilities Commission.


39.1 Please confirm and provide evidence, otherwise explain that the CoV has passed the Service Area Bylaw and that enactment will occur subsequent to Commission approval of the Agreement and associated CPCN.

The application on page 28 states that the Service Area Bylaw to be enacted by the CoV Council “is intended to provide greater security of connection but may be waived by parties subject to mutual agreement.”

39.2 Please explain what conditions may lead to the Service Area Bylaw being waived and the potential impacts that this situation could have to the annual and peak energy demand.

The application states that “no significant on-site energy production is permitted except approved waste heat recovery systems”7. The application further states that “for projects with significant on-site cooling systems, waste heat recovery from cooling is encouraged.”8 39.3 Please explain the impact on the energy demand forecast if some or all of the major Franchise

Area Buildings utilized on-site cooling and heat systems. Please use calculations to supplement the explanation.

39.4 Please explain, with calculations, if the energy demand forecast was prepared with the possibility of any of the major Franchise Area Buildings utilizing on-site cooling and heat systems. If not, please explain why not.

Section 4.2 of the Agreement outlines that Ancillary Services are permitted. It states that “If requested by an NES Building Owner and Developer to do so, Utility may provide steam as an ancillary service for uses such as cooking, laundry and other commercial purposes provided Utility does not supply steam for Hot Water Service to any Franchise Area Building.” Section 8.1 of the Agreement contains Phase 1 requirements with which the Utility should comply. Subsection (a) states that only hot water distribution piping compatible with the SEFC NES should be used, “except for infrastructure that may be required to connect the Franchise Area NES to existing Utility steam infrastructure or to supply Ancillary Services.” 39.5 Please explain the nature of these Ancillary Services including a description of the potential

“other commercial purposes” as outlined in section 4.2.

39.6 What additional infrastructure, if any, is required for these ancillary services and what are the operational and financial impacts on the development of Phase 1 HW system.

39.7 Please explain how these Ancillary services could impact the load forecast if provided by Creative Energy to several of the major developments.

Schedule G of the Energy Agreement states that “a building may incorporate a solar system to generate heat energy.” Schedule G further elaborates that “Exceptions for on-site heat production may be approved where practical, provided the total exceptions do not exceed 1 percent of the total annual thermal energy needs of the building.

7 Exhibit B-1, p. 28. 8 Ibid., p. 36.


39.8 Please confirm that the on-site heat production from energy generated from a solar system is restricted to the 1 percent outlined in Schedule G of the Agreement. If not, please explain if and how the solar energy heat production is restricted.

Reference: NEFC/CHINATOWN NEIGHBOURHOOD ENERGY AGREEMENT 40.0Exhibit B-1, Schedule 2, p. 1; Exhibit B-2, p. 3 Low Carbon Energy Source – Extension of Existing System

A stated goal of the proposed NEFC/Chinatown Neighbourhood Energy Agreement is:

(ii) for carbon emissions from the Franchise Area neighbourhood energy system to meet or be lower than the Carbon Intensity Cap no later than January 1, 2020, through the development of new low-carbon energy sources.9

Page 3 of the Neighbourhood Energy By-law submitted in Exhibit B-2 states:

Creative Energy will conduct the feasibility analysis and business planning for a low carbon conversion of the existing Downtown steam plant. This is fundamental to understanding the business case for the conversion of the Downtown steam system.

40.1 Considering that the development of a new low carbon energy source is not expected until

2020, possibly through the conversion of the existing Downtown steam plant, and that a feasibility analysis for this conversion is currently underway, please discuss why it is appropriate, at this time, to propose that the NEFC and Chinatown NES be separate from the existing utility, rather than be considered extensions of the existing utility, with a separate rate class.

40.1.1 Please discuss the costs, risks and benefits of this alternative scenario.

Section 4.4 of the Neighbourhood Energy Agreement discusses Phase 1 Milestones and Phase 1 Fuels. Section 5 then goes on to discuss the Priority CE Fuel switch. 40.2 Please describe in detail the operational and financial affect that the proposed fuel switch has

on Phase 1.

40.3 Section 5.5 of the energy agreement refers to concurrent activities that will take place during Phase 1; please explain if any of these potential concurrent activities are incorporated in the Phase 1 CPCN.

40.3.1 If yes, please identify these activities.

40.3.2 Please identify what cost, if any, associated with concurrent activities and not directly related to Phase 1 CPCN have been allocated into the Phase 1 CPCN costs.

9 Exhibit B-1, Schedule 2, p. 1.


Reference: NEFC/CHINATOWN NEIGHBOURHOOD ENERGY AGREEMENT 41.0Exhibit B-1, Section 2.3, p. 29; Schedule 2, p. 12 Steam Service – Ancillary Service


Although the bulk of energy is to be provided via hot water, Creative Energy may also provide energy in the form of steam for users in close proximity to steam infrastructure and with specific uses for steam such as dehumidification.

Page 12 of Schedule 2 of Creative Energy’s application states:

4.2 Ancillary Services Permitted. If requested by an NES Building Owner and Developer to do so, Utility may provide steam as an ancillary service for uses such as cooking, laundry and other commercial purposes provided Utility does not supply steam for Hot Water Service to any Franchise Area Building. Utility may at any time also provide other services to NES Building Owners and Developers as mutually agreed provided such other services or the provision of them do not conflict with any other term of this Agreement. The services contemplated by the foregoing are referred to as the “Ancillary Services”. Notwithstanding the foregoing or any other term of this Agreement, COV is under no obligation to facilitate or support the provision of any Ancillary Services.

41.1 Please confirm, otherwise explain, that the existing core utility, and not the proposed NEFC and

Chinatown utility, will be providing any and all steam service to customers in the NEFC and Chinatown neighbourhoods.

41.1.1 If not confirmed, please explain why the provision of steam service should be part of the proposed NEFC and Chinatown NES.

41.1.2 If confirmed, please confirm, otherwise explain, that this steam service is not taking away from potential loads of the proposed new utility.

Reference: NEFC/CHINATOWN NEIGHBOURHOOD ENERGY AGREEMENT 42.0Exhibit B-1, Schedule 2, p. 15 Alternatives to CE Fuel Switch or Franchise Area Low-Carbon Solution

Page 15 of the restated and amended NEFC/Chinatown Neighbourhood Energy Agreement filed in Schedule 2 of Creative Energy’s application states:

(b) any one or more (consecutively or concurrently) of the following low-carbon alternatives (each a "Low-Carbon Alternative"), on a temporary basis (if COV believes the CE Fuel Switch or Franchise Area Low-Carbon Solution will be completed reasonably soon) or permanent basis (if COV believes the CE Fuel Switch or Franchise Area Low-Carbon Solution is unlikely to be completed reasonably soon), to achieve the Carbon Intensity Cap, but subject always to the

Cost Premium Cap, by the Alternative Deadline (as defined in section 6.4):

i. using low-carbon fuel (e.g. biogas) at the existing Utility steam


heat plant for the specific purpose of supplying Hot Water Service to the Franchise Area NES;

ii. making financial contributions to COV low-carbon projects;

iii. purchasing carbon offsets certified by a qualified third party professional approved by COV and Utility, each acting reasonably; and/or

iv. any other solution mutually agreed by COV and Utility and that is acceptable to the BCUC that enables the Franchise Area NES to comply with the NES Performance Requirements.

42.1 Considering Creative Energy appears to be proposing that Phase 1 ratepayers could be subject

to any of the above four alternatives after 2020, please discuss the risks to Phase 1 ratepayers if each alternative is selected.

42.2 Should the fuel switch not go ahead how will this affect the agreement between the CoV and Creative Energy with regards to Phase 1?

42.2.1 Will there be any operation consequences to Phase 1 or rate impacts on Phase 1 and/or core customers?

Reference: NEFC/CHINATOWN NEIGHBOURHOOD ENERGY AGREEMENT 43.0Exhibit B-1, Schedule 2, pp. 14, 19–20; CoV Costs

Page 14 of the restated and amended NEFC/Chinatown Neighbourhood Energy Agreement filed in Schedule 2 of Creative Energy’s application states:

Any expenses borne by COV in respect of the Concurrent Franchise Area Solution Milestones will be reimbursed by Utility if Utility is ultimately required to implement the Franchise Area Low-Carbon Solution in accordance with Article 6 and BCUC approves the recovery of those expenses in Utility's rates.

Pages 19 and 20 of the restated and amended NEFC/Chinatown Neighbourhood Energy Agreement filed in Schedule 2 of Creative Energy’s application state:

7.1 COV's Option to Develop Franchise Area Low-Carbon Solution. COV may, at any time and at its expense, do any or all of the following to determine solutions that in COV's reasonable opinion will be acceptable to BCUC for the Franchise Area Low-Carbon Solution:

(a) conduct its own feasibility studies and/or business plans;

(b) further study or investigate one or more aspects of any feasibility studies and/or business plans prepared by Utility; or

(c) request that Utility update or modify its feasibility study and/or business plan.

If COV elects to exercise any of the above rights, Utility will cooperate, acting reasonably, with COV.


7.2 Utility's Right to Implement COV Solution. If a solution that in both parties' reasonable opinion will be acceptable to BCUC is found as a result of Section 7.1, Utility may, at its option and without obligation, use such information to apply to the BCUC for the Franchise Area Low-Carbon Solution and, if a CPCN is granted, construct and implement such solution to serve, at minimum, the Franchise Area NES. Utility will also apply to BCUC to have COV's reasonable costs and expenses relating to such solution reimbursed and included in the rates payable by Franchise Area ratepayers.

43.1 Please discuss the risk to Phase 1 rate payers of incurring future CoV costs.

43.2 Please discuss the cost controls in place for CoV’s potential costs. Will there be a cost cap for CoV’s potential costs? If so, how much and why? If not, why not?

Reference: NEFC/CHINATOWN NEIGHBOURHOOD ENERGY AGREEMENT 44.0Exhibit B-1, Schedule 2; Order C-2-15, Directive 2 Provisions beyond Phase 1

Directive 2 of Order C-2-15 states:

Approves the Amended and Restated Infrastructure Agreement, but only those components that relate solely to the CPCN for Phase 1 – Wesbrook and not those that address Phase 2 of the Project or rate matters.

44.1 Please discuss how Creative Energy proposes the Commission deal with the fact that the

NEFC/Chinatown Neighbourhood Energy Agreement contains many provisions that relate to a subsequent phase of the proposed NES, and not just Phase 1.

44.2 Please confirm, otherwise explain, that Creative Energy expects the Commission to approve, pursuant to section 45(7) of the UCA, only those components of the NEFC / Chinatown Neighbourhood Energy Agreement that relate solely to the CPCN for Phase 1 and not those components that address Phase 2 or rate matters.

44.3 Please confirm, otherwise explain, that Creative Energy’s intent is to refile the NEFC / Chinatown Neighbourhood Energy Agreement for approval of Phase 2 components of the agreement as part of a CPCN for Phase 2 and for acceptance of rate components as part of future rate applications.

G. CONNECTION AGREEMENT

Reference: NEFC AND CHINATOWN CONNECTION AND SERVICE AGREEMENT 45.0Exhibit B-1, Section 2.7; Schedule 6, p. 2; Error

45.1 Please amend the error on page 2, section (f) of the agreement.


H. NEIGHBOURHOOD ENERGY BYLAW

Reference: NEIGHBOURHOOD ENERGY BYLAW 46.0Exhibit B-2, p. 5; Exhibit B-1, Section 2.3, p. 28, Section 2.5, pp. 35–36 Conditional Service Area - Chinatown

On page 5 of Exhibit B-2, the General Manager of Engineering Services explains:

• Conditional Service Area: this type of area is characterized by infill development of modest scale, and includes Chinatown. Creative Energy will be providing initial service to this area via a natural gas boiler system located in a development at 611 Main Street, with commitment to low carbon by 2020. Creative Energy, in its Franchise Agreement with the City, is compelled to provide NES service to buildings in this area that are economically viable to serve. When new developments or significant building renovations are proposed in this area, connection viability will be determined using a BCUC-approved economic test. If the building passes this test, it is generally understood that the City Engineer will require the building to connect to the system.

46.1 Please clarify what is meant by a “BCUC-approved economic test.”

Creative Energy’s application on page 28 states that Creative Energy will supply energy from the existing Creative Energy steam plant at 720 Beatty Street. Creative Energy’s application on pages 35 and 36 state:

Creative Energy is currently pursuing an opportunity to establish a local node in Chinatown that can serve as a hub to capture and aggregate initial loads prior to a larger connection to NEFC. The initial step in this proposed node is an on-site boiler plant at a new development located at Main and Keefer Streets. The initial plant will be the subject of a Stream A application (pending). The plant will have the ability to expand to serve other nearby development. Creative Energy believes this is the most viable strategy to knit together sufficient load to enable an economic connection between NEFC and Chinatown, and to secure long-term carbon performance benefits for Chinatown.

46.2 Please confirm, otherwise explain, that Creative Energy plans to provide initial service to

Chinatown via a natural gas boiler system located in a development at 611 Main Street Chinatown and initially the Chinatown system will not be physically connected to the NEFC system nor supplied from the existing Creative Energy steam plant at 720 Beatty Street.

46.2.1 If confirmed, considering the NES in Chinatown appears to be its own green-field separate and distinct future NES, please justify why extensions into Chinatown should be subject to an extension test based on the rates and initial capital cost of the NEFC stream B NES. Please also justify why the Commission should approve an exclusive franchise to Creative Energy for Chinatown at this time.

46.3 Please provide and compare the costs of connecting the potential Chinatown loads to the NES without the use of local node. Is there sufficient boiler capacity at the existing steam plant to supply the initial Chinatown loads as well the expected NEFC loads?


Reference: NEIGHBOURHOOD ENERGY BYLAW 47.0Exhibit B-2, Neighbourhood Energy Bylaw, pp. 15–16; Exhibit B-1, Schedule 3, p. iii; Schedule 4, p. 9 No on-site heat production equipment – Exceptions

On pages 15 and 16 of Exhibit B-2, it lists:

(i) a building may incorporate a solar system to generate heat energy,

(ii) a building may incorporate hybrid heat pumps for space cooling, provided the compressor cannot operate in heating mode,

(iii) a building may incorporate heat recovery ventilation (air to air heat exchangers) and waste heat recovery from refrigeration or active cooling systems for the purposes of supplementing the heat energy provided:

A) the systems used for heat recovery from refrigeration or active cooling do not provide any supplemental heating when there is no active cooling service required;

B) the approach to heat recovery is consistent with this Schedule (i.e. hydronic systems with centralized mechanical equipment); and

C) waste heat recovery systems do not cross property lines. Page iii of Schedule 3 of Creative Energy’s application states “[i]f sized to take advantage of a district energy system, solar domestic hot water may displace up to 10% of annual loads within NEFC.” Page 9 of Schedule 4 of the application, the NEFC District Energy Study Phase 2, states:

In the Phase 1 report, waste heat rejection from cooling was estimated to represent 9 – 22% of total annual heating load, depending upon the coefficient of performance (COP) of cooling. However, not all of this rejected heat would necessarily be recoverable. We assess the viability of district energy assuming a 20% reduction in heating loads in the economic analysis.

47.1 Please provide and justify the portion of load Creative Energy has assumed will be serviced by

each of these forms of on-site heat production.

47.2 Please discuss the risks and benefits of allowing the above forms of on-site heat production in the proposed NEFC and Chinatown service areas.

Reference ENERGY TRANSFER STATION OVERVIEW 48.0Exhibit B-3, p. 7 Sub-Metering, equipment ownership and maintenance of building side water

On page 7 of Exhibit B-3, it states:

The following figures outline how a building connects to the NES. Typically the NES piping comes into the building approximately 1000 mm below grade and enters directly into the mechanical room where the ETS is located on the Utility side of the ETS. The ETS is the only equipment required for the building and


replaces boilers. Isolation valves will provided immediately upon entering. A primary service meter located on the Utility side of the ETS indicates the demarcation point between the utility and the building. Sub-metering on the building side of the ETS is possible – if this is a service of interest please contact the Utility.

48.1 Please confirm, otherwise explain, that there will be isolation valves at the outlet of each heat

exchanger and that these isolation valves and everything else on the building side of these isolation valves will be independently purchased, owned and maintained by the building.

48.2 Please confirm, otherwise explain, that in the event of sub-metering, Creative Energy will not own the building piping system to the sub-meters, but will own and maintain the sub-meters and will own and provide a means of isolating each sub-metered customer.

48.3 Please provide and compare the costs and charges anticipated for sub-metered customers to the costs and charges for non-sub-metered customers.

48.4 Please confirm, otherwise explain, that the building will have responsibility for ensuring the building side water/glycol quality meets the requirements of Creative Energy’s equipment.

Documents

CREATIVE ENERGY NES NEFC CPCN EXHIBIT - …€¦ · FACSIMILE: (604) 660-1102 Log No. 50061 PF/Creative Energy NES for NEFC CPCN/A-3_Commission IR-1 (L) VIA EMAIL. [email protected]