[email protected] January 29, 2016 c/o Canadian Law ......Tariq Ahmed Direct +1 604 631 4983 [email protected] January 29, 2016 File No.: 240149.00170/16550 BY ELECTRONIC FILING NOVA

Tariq Ahmed

Direct +1 604 631 4983 [email protected]

January 29, 2016

File No.: 240149.00170/16550

BY ELECTRONIC FILING

NOVA Gas Transmission Ltd.

c/o Canadian Law, Natural Gas Pipelines

450 – 1st Street SW

Calgary, Alberta T2P 5H1

Attention Mr. Matthew Ducharme

Dear Sirs/Mesdames:

Re: Project No. 3698861

FortisBC Midstream Inc. (“FMI”) - Application (the “Application”) for

Approval to Acquire the Shares of Aitken Creek Gas Storage ULC “ACGS”

In accordance with the Regulatory Timetable for the above-noted Application established

in British Columbia Utilities Commission Order G-210-15, FMI submits the enclosed

responses to NOVA Gas Transmission Ltd. (NGTL) Information Request No. 1.

If further information is required, please contact Justin Cha at FortisBC Holdings Inc. at

(604) 443-6543. Email communications with respect to this Application can be directed

to [email protected].

Yours truly,

FASKEN MARTINEAU DuMOULIN LLP

[original signed by Tariq Ahmed]

Tariq Ahmed

Enclosures

cc (email only): Commission Secretary

Registered Parties

B-8

mailto:[email protected] Aitken Creek

FortisBC Midstream Inc. (FMI or the Company) Application for Approval to Acquire the Shares of Aitken Creek Gas Storage ULC (the

Application)

Submission Date: January 29, 2016

Response to NOVA Gas Transmission Ltd. (NGTL) Information Request (IR) No. 1

Page 1

IR Number: NGTL-FMI-1.1 1

Reference: Application, Page 3, Figure 1 2

Preamble: In the Reference, Figure 1 partially shows Fortis Inc.’s corporate structure after 3 the ACGS transaction. NGTL seeks additional information on the corporate 4 structure of Fortis Inc. and its affiliates. 5

Request: 6

a) Please provide an organizational chart for each entity shown in the Reference, 7 including the names of senior management at the vice-president level or higher. 8

9 Response: 10

The current officers of each of the Fortis entities shown in Figure 1 of the Application are as 11 follows: 12

Entity Position Name Fortis Inc. President and CEO

Executive Vice President, CFO Executive Vice President, Corporate Services & Chief

Human Resource Officer Executive Vice President, Eastern Canadian and

Caribbean Operations Vice President , Chief Legal Officer and Corporate

Secretary Vice President, Talent Management Vice President, Treasurer Vice President, Controller

Barry Perry Karl Smith Nora Duke Earl Ludlow David Bennett Annette Iwasaki James Spinney James Roberts

FortisBC Holdings Inc.

President and CEO Executive Vice President Chief Financial Officer and Treasurer

Michael Mulcahy Roger Dall’Antonia Ian Lorimer

FortisBC Energy Inc.

President and CEO Executive Vice President, Customer Service and

Regulatory Affairs Executive Vice President, Operations and Engineering Vice President, Energy Supply and Resource

Development Vice President, Human Resources and Environment,

Health and Safety Vice President, Finance and CFO Vice President, Market Development and External

Relations Vice President, Corporate Services

Michael Mulcahy Roger Dall’Antonia Doyle Sam Cynthia Des Brisay Jody Drope Ian Lorimer Douglas Stout Dennis Swanson

FortisBC Energy Alternative Energy Services Inc.

President Vice President and General Manager

Douglas Stout Gareth Jones


Application)



Page 2

Entity Position Name FortisBC Huntingdon Inc.

President

Cynthia Des Brisay

FortisBC Midstream Inc.

President Vice President and CFO

Cynthia Des Brisay Ian Lorimer

1

Please also refer to the response to NGTL IR 1.1b. 2

3 4

5 b) Please list the names and roles of management individuals in FortisBC Holdings 6

Inc. (FHI) that will be responsible for FortisBC Midstream Inc. (FMI) and/or Aitken 7 Creek Gas Storage (ACGS). 8

9 Response: 10

At this time, FMI does not have any assets or any direct employees. Please refer to the 11 response to NGTL 1.1a for the names and roles of management individuals. Additionally, FMI 12 has not finalized its staffing plan as the transaction has not closed. As a result, FMI is not able 13 to provide a listing of management positions required to manage the company. 14

Please refer to the responses to CEC IR 1.8.1 and BCUC IR 1.14.1 for a discussion of FMI’s 15 expected staffing requirements. 16

17 18

19 c) Please list the names and roles of any shared management individuals between 20

FMI and/or ACGS and other Fortis subsidiaries or entities. 21 22

Response: 23

Please refer to the response to NGTL IR 1.1b. 24

25 26

27


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d) For the management individuals listed in b) and c), please list and describe other 1 responsibilities they have with respect to other Fortis subsidiaries or entities, if 2 any. 3

4 Response: 5


7


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Reference: a) Application, Page 11 2

b) Application, Page 3, Figure 1 3

Preamble: Reference a) discusses criteria for conducting reviews under section 54 of the 4 Act, including “(f) the public interest will be preserved.” 5

Reference b) partially shows Fortis Inc.’s corporate structure after the ACGS 6 transaction. 7

Request: 8

a) Please provide a copy of any applicable Code of Conduct for each entity shown 9 in Reference b). 10

11 Response: 12

The FEI Code of Conduct (COC), a copy of which is provided in Attachment 2a, is a specific 13 requirement to govern the use of FEI utility resources to its affiliates. 14

Applicable and similar Codes of Conduct that exist include for provision of resources from FEI to 15 FMI and ACGS (FEI COC for Non Regulated Businesses), and from FEI to FortisBC Alternative 16 Energy Services (FAES) (FEI COC for Affiliated Regulated Businesses Operating in a Non 17 Natural Monopoly Environment (ARBNNM) a copy of which is provided in Attachment 2a). The 18 FEI COC for ARBNNM was developed to address the Thermal Energy Services provided by its 19 affiliate FAES. 20

Non-regulated entities such as FMI and ACGS do not have a Commission-approved COC to 21 govern activities with other affiliates. However, employees of all FortisBC entities are subject to 22 FortisBC’s own Code of Business Conduct and Ethics Policy, a copy of which is provided in 23 Attachment 2a. The Code of Business Conduct and Ethics describes the specific standards of 24 ethical business practice and conduct expected of employees. 25

26 b) What guidance does the applicable Code of Conduct for each of FMI, 27 FEI, and any other entities that would be an affiliate of ACGS provide when 28 considering the unique or competing public interest of the respective 29 subsidiaries? 30

31 Response: 32

The potential for a conflict of interest to arise in negotiations of agreements and trading activity 33 has been addressed in the first instance through separation of employees. 34


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Please also refer to the response to BCUC IR 1.16.5. In that response FMI outlines the 1 safeguards and oversight processes that will help to ensure that FMI’s commercial team that will 2 be responsible for negotiating third party storage lease contracts and optimizing the rest of the 3 Storage Facility for ACGS remains independent from FEI’s gas supply planning and operations. 4 These safeguards and oversight processes manage potential conflict of interest situations such 5 that there is no impact on the ability and integrity of FMI and FEI to negotiate future storage 6 contracts or renewals. 7

The provisions of the FEI COC would provide additional protection against sharing of FEI’s non-8 public information with ACGS/FMI. 9

The FEI COC for Provision of Services to NRBs provides guidance in Section 2 on Shared 10 Services and Personnel to affiliates such as FMI and ACGS, stating: 11

• FEI may provide shared services to NRBs, including supervision and management, 12 while ensuring that ratepayers will not generally be negatively impacted by Utility 13 involvement; and 14

• NRBs may contract for any Utility personnel using the Commission approved FEI 15 Transfer Pricing Policy, providing the Utility complies with Section 4 of the Code, 16 Provision of Information by FEI, and no conflict of interest exists which will negatively 17 impact ratepayer. 18

Please refer to the response to BCUC IR 1.16.5.2 for discussion of the actions in the event of a 19 conflict of interest situation. 20

21 Further, Section 4 Provision of Information requires that: 22

• FEI will not provide to an NRB any information that would inhibit a competitive energy 23 services market from functioning. 24

25 Section 4 also addressees Provision of Information by FortisBC Energy Inc. regarding sharing of 26 confidential customer specific information. The COC states: 27

The following should act as a guideline for employees confronted with issues related to the 28 sharing of confidential information by FEI: 29

a) This Code precludes [FortisBC Energy] from releasing customer specific information 30 without the consent of that customer…….. 31

To ensure compliance by FEI employees, under section 7 of the FEI COC, FEI will monitor 32 employee compliance with the COC by conducting an annual compliance review. 33 34


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As FMI and ACGS are not regulated, there is no Commission approved Code of Conduct that 1 provides guidance on FMI/ACGS sharing of non-public (i.e. customer specific) information from 2 FMI/ACGS to FEI. The same is true for with respect to the relationship between any other 3 Fortis entities (i.e. other than FEI) and FMI/ACGS. However, as discussed in the response to 4 NGTL IR 1.2a, FortisBC has a Code of Business Conduct and Ethics Policy that provides 5 guidance to FortisBC and its employees on how to conduct its affairs. The Code of Business 6 Conduct and Ethics describes the specific standards of ethical business practice and conduct 7 expected of employees. 8

Specifically, section 5.0 Proprietary and Confidential Information of the Code of Business 9 Conduct and Ethics Policy states: 10

5.1 Employees shall not disclose any confidential or proprietary information about the 11 Corporation, or any person or organization with which the Corporation has a 12 current or potential business relationship, to any person or entity, either during or 13 after service with the Corporation, except (i) in furtherance of the business of 14 FortisBC, (ii) with the written authorization of a member of senior management or 15 (iii) as may be required by law. Employees shall return all proprietary and 16 confidential information in their possession forthwith upon the termination of their 17 employment with the Corporation. 18

5.3 In addition to the confidentiality obligations contained in the Code of Ethics 19 employees are required to comply with the Corporation's privacy policies related 20 to the protection of confidential employee or customer information. 21

22 This provides further assurance that FHI and its affiliates including FMI/ACGS are conducting 23 themselves in ethical and appropriate manner. Additionally, the Code of Business Conduct and 24 Ethics also outlines compliance requirements. Specifically, section 10.1 states that: 25

“Strict adherence to this Code of Ethics and FortisBC’s corporate policies is mandatory. 26 Failure to comply with this Code of Ethics or any other FortisBC corporate policy may 27 result in disciplinary action up to and including termination.” 28

29 c) Please advise of specific provisions within existing Code of Conduct documents 30

that prohibit the sharing of non-public information: 31

i from FEI to ACGS 32

ii from ACGS to FEI 33

iii between any other entities listed in response to c) and ACGS 34

35


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Response: 1

Please refer to the response to NGTL IR 1.2(b). 2 3

d) Please provide a description of the degree of regulatory oversight, monitoring, 4 and enforcement, if any, to which Fortis is presently subjected to ensure that 5 Fortis remains in compliance with its existing Code of Conduct. 6

7 Response: 8

In the existing FEI COC for Provision of Services to NRBs, language exists in Section 7 9 Compliance and Complaints regarding the oversight, monitoring and enforcement of the FEI 10 COC. The compliance and monitoring activities include FEI advising its employees of their 11 expected Code of Conduct and FEI monitoring compliance by conducting an annual compliance 12 review with a report to be filed with the Commission. 13

In addition, please refer to the response to BCUC IR 1.16.5 for a description of the additional 14 safeguards and oversight processes. 15

16


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Reference: a) Application, Page 15, Section 7.1.3.3.2 2

b) BCUC Inquiry Into The Offering of Products and Services in Alternative 3 Energy Solutions and Other New Initiatives, Report, December 27, 2012 4

Preamble: In Reference a) FMI notes the Commission’s direction to have FEI file for 5 approval by April 27, 2016, “a draft all-inclusive COC and TPP that covers 6 interactions between FEI and its affiliates including affiliated non-regulated 7 businesses.” 8

Reference b) is a Report from a BCUC inquiry undertaken as a response to FEI’s 9 BCUC applications related to the “provision of products and services that are 10 outside of traditional gas distribution utility activities” where “[i]n a number of 11 these proceedings, the Commission and Interveners have raised issues with 12 respect to the scope and nature of regulation of these new business activities.” In 13 the Report, the Commission directed that FEU submit a revised “Code of 14 Conduct and a Transfer Pricing Policy governing the interactions between 15 Affiliated Regulated Businesses, consistent with the Principles and Guidelines 16 set out in this Report.” 17

Request: 18

a) Please describe what specific changes FMI or its parent has made, or intends to 19 make, if any, to the Code of Conduct and Transfer Pricing Policy in light of the 20 proposed acquisition and to address the Commission’s concerns raised in 21 Reference b). 22

23 Response: 24

FMI clarifies that the referred to “draft all-inclusive COC and TPP” is for interactions between 25 FEI and its affiliates including affiliated non-regulated businesses. The ownership and 26 responsibility for identifying the requirements of the all-inclusive COC is with FEI and not FMI or 27 the parent, FHI. 28

FMI refers to the Commission’s decision dated February 27, 2015 regarding FEI’s Code of 29 Conduct and Transfer Pricing Policy for Affiliated Regulated Businesses Operating in a Non-30 Natural Monopoly Environment which provides direction on what the all inclusive COC and TPP 31 should contain. 32

From page 51 and 52 of the Decision: 33

This all-inclusive draft COC and TPP should be modeled on the approved COC and TPP 34 for ARBNNMs. The panel notes that the scope section of the draft COC for ARBNNMs 35


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states that it is intended to be consistent with the principles of the RMDM Guidelines, the 1 AES Inquiry Report, and Commission decisions related to specific ARBNNMs (the 2 “Guidelines” as defined in the draft COC). 3

The Panel expects that the all-inclusive COC and TPP will also be consistent with the 4 RMDM and AES Guidelines, but acknowledges that some higher level principles will 5 readily apply to a variety of affiliated transactions whereas more specific principles may 6 only be applicable to one or two types of affiliate transactions. When FEI files the draft 7 all-inclusive COC, it is directed to clearly identify the rationale for any variances from the 8 approved COC and TPP for ARBNNMs or from the Guidelines. 9

10 Further, the Commission in Letter L-19-15 dated April 28, 2015, directs FEI to consult 11 stakeholders in an abridged collaborative process on the format and key issues of the all- 12 inclusive Code of Conduct and Transfer Pricing Policy. 13

The Commission appreciates the efforts made by FEI and all the participants in the FEI-14 sponsored collaborative sessions and in the COC and TPP for ARBNNM proceeding 15 before the Commission. The Commission looks forward to the next application for 16 approval of an all-inclusive CoC and TPP that covers FEI interactions with ARBNNM, 17 Non-Regulated Businesses, and affiliated natural monopoly utilities. The Commission 18 expects that preparation for the next application will have benefitted from the efforts 19 invested by all parties in this newly approved CoC and TPP for the ARBNNMs and 20 therefore will involve only an abridged collaborative process such as a FEl-led workshop 21 to consult all stakeholders on the format and key issues of the new document in advance 22 of FEI filing its application. 23

24 At this time, FMI is not aware of any changes FEI has proposed to the existing Code of Conduct 25 for NRBs but expects that some of the changes will incorporate the safeguards and oversight 26 processes that FMI has outlined in the response to BCUC IR 1.16.5. 27

28


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Reference: a) Application, Page 9, Section 6.2 2

b) Application, Page 14, Section 7.1.3.3.1 3

c) Application, Page 16, Section 7.1.3.3.3 4

d) Application, Page 14, Section 7.1.3.2 5

Preamble: In Reference a) FMI states: “FMI is committed to ensuring that this [new] 6 commercial team is independent from FEI’s gas supply planning and operations 7 […]” 8

In Reference b) FMI describes shared corporate services expected to be 9 provided to ACGS, as well as how FEI “will also provide services from time to 10 time to FMI such as Engineering and Operations Guidance and Environmental, 11 Health and Safety, and ongoing services such as IT, Human Resources, and 12 Accounts Payable. Subject to the appropriate system access restrictions, access 13 to common software applications will be shared. Such services will also be 14 governed by a Services Agreement between the relevant parties.” 15

In Reference c) FMI states that it will maintain “separation of its employees 16 responsible for commercial activities and will not share the services of FEI 17 employees directly responsible for the portfolio planning and mitigation and 18 related contract negotiations at FEI” 19

In Reference d) FMI states: “With respect to commercial services for ACGS 20 currently provided by CCPL (or its affiliates) related to activities such as 21 mitigation, trading and contract negotiation, an independent commercial team will 22 be established by FMI and any employees will become employees of FMI.” 23

Request: 24

a) Please list and explain the specific actions FMI or its parent will undertake to 25 fulfill the commitment noted in Reference a). 26

27 Response: 28

Please refer to the response to BCUC IR 1.16.5. 29

30 31

32


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b) Please list and describe all common software applications as noted in Reference 1 b). Please explain in detail what FMI or its parent considers “appropriate system 2 access restrictions” as noted in Reference b). 3

4 Response: 5

FMI expects to share the use of Entegrate, a software application presently used by FEI for 6 managing the business of optimizing its gas supply resources, from energy procurement, deal 7 capture and invoicing, managing energy contracts. 8

The reference to appropriate system access restrictions is that FMI employees will be provided 9 system access for Entegrate to only the records and transactions for FMI and that FEI’s 10 employees will be provided system access for Entegrate to only the records and the 11 transactions for FEI. 12

This restriction on system access to transactions information in Entegrate coupled with the 13 physical separation of employees by locating FMI employees at a different facility than where 14 the FEI employees responsible for portfolio planning and mitigation and related contract 15 negotiation activities are based, will assist in preventing potential conflict of interest situations 16 from arising. 17

Other common applications shared include Microsoft Outlook (i.e. email, etc.), SharePoint 18 (including intranet), HR applications (Employee Share Purchase, Flex Benefits Enrollment, Org 19 Publisher – organization charts, employee contact information), Readsoft for invoice processing 20 and SAP (i.e. for timesheets, procurement, financial reporting). No access to FEI systems will 21 be provided to FMI staff except where required for business interaction and support. Access to 22 each system will be defined by appropriate user authorization depending on user requirements. 23 Any new system applications that come on line will follow the same principles. 24

FMI employees will not have access to information used by FEI employees for portfolio planning 25 and mitigation and related contract negotiation activities. 26

27 28

29 c) Please explain if similar restrictions will be implemented with respect to computer 30

hardware. If not, please list and provide a description of all exceptions. 31 32

Response: 33

As the employees of FMI are separated and will reside at a physical location other than the 34 Surrey facility where the FEI employees responsible for mitigation, trading and contract 35


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negotiation are based, no similar restrictions are required for computer hardware. An additional 1 safeguard is that access to computers is password protected. 2

3 4

5 d) Please provide the cost allocation methodology for the allocation of costs related 6

to corporate services provided to affiliates such as ACGS. Please include the 7 methodology of allocating corporate overhead costs to each affiliate. 8

9 Response: 10

For corporate services provided by FHI to affiliates including FMI/ACGS, please refer to the 11 response to BCUC IR 1.14.4. As indicated in this response, the cost allocation methodologies 12 have been approved by the Commission in the past. 13

For services provided by FEI to FMI/ACGS, the cost allocation methodology (i.e. transfer 14 pricing) is based on that outlined in the FEI Transfer Pricing Policy for NRBs. FEI’s employees’ 15 time will be tracked using FEI’s time recording and financial system. 16

17 18

19 e) What restrictions will be put in place to ensure that confidential and customer 20

information is not transferred from FEI employees not “directly responsible for the 21 portfolio planning and mitigation and related contract negotiations at FEI”, but 22 providing services to FMI, such as those listed in Reference b), including 23 “Engineering and Operations Guidance”? Please explain. 24

25 Response: 26

All FEI employees including those not directly responsible for the portfolio planning and 27 mitigation and related contract negotiations are expected to comply with the FEI Code of 28 Conduct (COC) for Provision of Utility Resources and Transfer Pricing for Non-Regulated 29 Businesses. Under section 4 of the COC, there is language providing a guideline for employees 30 confronted with issues related to the sharing of confidential information. To ensure compliance 31 by FEI employees, under section 7 of the FEI COC, FEI will monitor employee compliance with 32 the COC by conducting an annual compliance review. Please refer to the response to NGTL IR 33 1.2(b). 34


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In addition, the safeguards and oversight processes outlined in the response to BCUC IR 1.16.5 1 will help to prevent confidential information from being shared inappropriately between FEI and 2 FMI employees. 3

4 5

6 f) Please describe the mitigation and trading activities noted in Reference d). Will 7

FMI continue the trading activities of ACGS staff? If so, please provide FMI’s 8 view of how these activities may impact FEI utility operations. 9

10 Response: 11

FMI plans to continue to operate the facility in the similar fashion as today. Please refer to the 12 responses to CEC IR 1.7.1 and BCUC IR 1.16.1. 13

14


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b) NEB Hearing GH-001-2014, Transcript Volume 9, Line 11652, [Filing ID: 3 A4D7A8] 4

Preamble: In Reference a) FMI states “[…] ACGS expects that FEI will continue to file its 5 storage contracts and undergo the approval process with the Commission each 6 time a new storage contract has been executed between FEI and ACGS.” 7

In Reference b) a representative of FortisBC Energy Inc., stated “And I would say 8 we are one of the largest contract – or single party that contracts for Aitken Street 9 (sic) storage capacity.” 10

Request: 11

a) Please describe in detail the regulatory process noted in Reference a). Please 12 explain FMI’s or its parent’s understanding of the purpose of this process. 13

14 Response: 15

FEI, as a regulated utility under the jurisdiction of the Commission, is required to file all of its 16 term gas purchases, storage and transportation arrangements contracted on behalf of its core 17 market with the Commission. This process is required under s. 71 of the UCA and will continue 18 regardless of whether ACGS is owned by a Fortis affiliate or non-affiliated party. 19

20 21 22 23

24 b) Please confirm that the process described in a) was established to review 25

transactions between non-affiliated companies. 26 27

Response: 28

Not confirmed. The process was designed to determine whether an energy supply contract 29 entered into by a public utility is in the public interest. 30

31 32

33


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c) In the storage contract review process, what are the criteria used by FEI to justify 1 the appropriateness of a storage contract with the Commission? For example 2 does FEI provide details on: 3

i cost; 4

ii quantity; 5

iii relative competitiveness; 6

iv and/or other criteria? If so, please list them. 7 8

Response: 9

FMI would assume that the criteria listed above are assessed by FEI or any other potential 10 storage lease customer prior to entering into a storage contract with ACGS or other storage 11 providers. 12

Further, with respect to the services provided from ACGS, FMI notes that FEI listed the 13 following factors it considers to justify ACGS storage contracts that it has entered into on behalf 14 of its customers in its response to BCUC IR 1.8.3 (Exhibit C2-4) in the 2007 Unocal Exemption 15 Application proceeding: 16

1. summer-winter differential; 17 2. storage service characteristics such as flexibility of injections and capacity; 18

3. transportation cost from storage location to a market hub; 19

4. market tightness regarding storage capacity and volatility at NIT or Station 2; 20

5. quantity and term of storage; 21

6. reliability of facility because of location on transportation system; 22

7. alternate options to available to storage provider; and 23

8. current mix of contracts at facility and shape and level of un-contracted capacity. 24

25 26

27 d) To FMI’s or its parent’s knowledge, does the Commission commonly evaluate 28

storage contracts of non-Fortis affiliated entities? Please explain. 29 30


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Response: 1

FMI believes that any natural gas utility that falls under the jurisdiction of the Commission would 2 be required to obtain Commission approval for contracted storage agreements pursuant to 3 Section 71 of the UCA. FMI is not aware of any other review by the Commission of storage 4 contracts of any other entity. 5

6 7

8 e) Please state, to FMI’s or its parent’s knowledge, the number of FEI contracts for 9

storage at ACGS that the BCUC has reviewed in the past ten years. How many 10 of the contracts were approved and how many were denied? For any that were 11 denied, please explain the basis for the denial. 12

13 Response: 14

In the past 10 years, the Commission has accepted 11 FEI contracts for storage at ACGS. The 15 Commission Orders accepting those contracts are available on the Commission’s website and 16 are: E-3-06, E-17-07, E-25-07, E-7-08, E-8-10, E-34-10, E-11-12, E-5-13, E-11-14, E-6-15 and 17 E-25-15. FMI is not aware of any contracts that were not accepted by the Commission. As 18 described in FEI’s non-confidential executive summary of its 2015/16 Annual contracting plan 19 attached to Commission Letter L-28-151, FMI understands that FEI also contracts for storage in 20 Alberta and in the Pacific Northwest and expects that Commission would also have reviewed 21 those contracts under Section 71 of the UCA. 22

23 24

25 f) Are the storage contracts submitted to the BCUC for review available to the 26

public? If not, please explain why. 27 28

Response: 29

FMI understands that the details of FEI’s storage contracts are confidential and not available to 30 the public; however, as noted in the response to NGTL IR 1.5 (e), the Commission’s orders 31 related to the contracts are publicly available. The publicly available Commission Order to FEI 32

1 http://www.ordersdecisions.bcuc.com/bcuc/orders/en/item/120193/index.do?r=AAAAAQAHbC0yOC0xNQE.

http://www.ordersdecisions.bcuc.com/bcuc/orders/en/item/120193/index.do?r=AAAAAQAHbC0yOC0xNQEhttp://www.ordersdecisions.bcuc.com/bcuc/orders/en/item/120193/index.do?r=AAAAAQAHbC0yOC0xNQE


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relating to an ACGS storage contract (Order E-6-15) provides in the preamble to that FEI 1 requested confidentiality due to the commercially sensitive nature of the documents. 2

3 4

5 g) Does the Commission require ACGS to publicly file storage contract rate 6

information to ensure that similarly situated customers are treated similarly? 7 8

Response: 9

No, ACGS is not required to publicly file storage contract rate information. Please refer to the 10 response to NGTL IR 1.6a. 11

12


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Reference: Ontario Energy Board (OEB), Storage and Transportation Access Rule (STAR), 2 December 9, 2009, EB-2008-0052 Appendix B, Section 3 (“Customer Protection 3 Within the Competitive Storage Market”) 4

Preamble: There are gas utilities in Ontario that own and operate storage assets. The 5 OEB’s STAR rules regulate natural gas storage and transportation in Ontario. 6

The OEB ensures consumer protection in Ontario’s competitive storage market 7 through several requirements within the STAR; two of which being: (1) the 8 posting of standard contracts and standard terms of service, and (2) reasonable 9 reporting requirements. The section in the Reference, “Customer Protection 10 Within the Competitive Storage Market”, states: 11

“3.1.1 A storage company shall post its standard form of contract and its 12 standard terms of service for each of its competitive storage services on 13 its website.” 14

And; 15

“3.1.4 A storage company shall post on a semi-annual basis its pricing 16 and revenue information for competitive storage services on its website. 17 This information shall be posted on April 1 and October 1 of each year 18 and shall remain on the company’s website until the date of the next 19 posting. The identity of the shipper, the pricing information and the 20 revenue information to be posted shall be based on firm storage contracts 21 with terms of one year or greater. The information to be posted on the 22 storage company’s website shall include: 23

i. Identity of each shipper (full legal name of the shipper); 24

ii. The unit charge which is the annual cost per GJ of storage capacity 25 received from each shipper; and 26

iii. The total revenue received during the previous six month period from 27 each shipper.” 28

An example of these reporting requirements from the website of Union Gas 29 Limited is included as Attachment 1 in this document. 30


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Request: 1

a) Is FMI prepared to adopt similar reporting requirements as those in the 2 Reference to ensure that storage services are provided in a non-discriminatory 3 manner and that similarly situated customers are treated similarly? 4

5 Response: 6

Please refer to the response to CEC IR 1.5.1. 7

FMI is not prepared to adopt similar reporting requirements as the Storage and Transportation 8 Access Rule established by the OEB nor is the adoption of similar reporting requirements for 9 ACGS necessary. The current reporting or complaints based regulation includes annual 10 reporting to the Commission that is in place for the Storage Facility has resulted in the 11 successful operation of the Storage Facility within British Columbia. Specifically, and as stated 12 in the Application, the exemptions from the UCA recognize that the Storage Facility operates in 13 a competitive marketplace in which parties entering into bilateral negotiations have at their 14 disposal price information regarding substitutes and alternatives, and make their decisions on 15 whether or not to contract for service based on their analysis of this information. 16

The Commission confirmed this approach in Appendix B to Order G-167-07 at pages 18-19 17 stating: 18

…the Commission Panel therefore finds that active regulation of Unocal in its operation 19 of the Storage Facility is not warranted at this time. Rather, regulation on a reporting or 20 complaints basis is the appropriate method of regulation. 21

22 Thus, pursuant to Directive 5 of Order G-71-08, ACGS persons whose interests are affected 23 have the ability to make a complaint to the Commission. 24

In addition, further to the responses to BCUC IRs 1.13.1 and 1.13.2, the Commission has 25 oversight over storage contracts entered into by public utilities pursuant to section 71 of the 26 UCA. As a result, there is no need to require ACGS to file its contracts with any customer, 27 including FEI. Further, and as described in the response to BCUC IR 1.13.3, providing other 28 parties’ contracts to the Commission will not provide a sound basis to evaluate the pricing of 29 another storage contract. 30

As a result, FMI sees no need to adopt any additional reporting requirements or regulation. 31

32

33 34


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1 b) If the answer to a) is anything other than an unconditional ‘yes’, would FMI 2

support a BCUC hearing to explore and determine if new reporting or other 3 requirements should be implemented for storage in British Columbia? If not, why 4 not? 5

6 Response: 7

No, FMI does not support the above proposal. Please refer to the response to NGTL IR 1.6a. 8

In any case, at this point in the time, the marketplace and available infrastructure for storage 9 services in British Columbia and Alberta as compared to Ontario are very different from both a 10 leasing and customer viewpoint 11

The regulation of storage services mentioned in the preamble in Ontario relate to the ownership 12 of storage services by public utilities that operate under a cost of service and prescribed rate of 13 return regulatory model for all service offerings including standardized storage services. The 14 costs of these operations and facilities are recovered under this framework, whereas, the 15 revenues and costs of ACGS, similar to facilities in Alberta that offer third party storage 16 services, have been market based and are subject to market risks and rewards for both 17 recoveries and non-recoveries of costs. 18

In addition, the service offerings by ACGS to each customer are customized based on factors 19 that include optionality such as number of days of withdrawal in winter, ratcheted vs. non-20 ratcheted profile and cycleability of gas amongst other features. These service offerings are 21 also further limited by the physical infrastructure such as pipeline capacity that is available 22 around ACGS as compared to storage services in Ontario. However, these limitations also 23 allow customers to only pay for features that are applicable to their contract with ACGS rather 24 than a standard rate. As such, the adjudicated Ontario model will not be viable for ACGS due to 25 the customization of customer contracts and infrastructure limitations that prevent a standard 26 offering for services to all customers. 27

The regulation of ACGS has already undergone an extensive public review process that 28 included the Commission, interveners and stakeholders which subsequently resulted in a 29 decision by the Commission that outlined the parameters of ACGS’ regulation. 30

31


Application)



Page 21


Reference: FortisBC has undertaken projects associated with the LNG industry, including its 2 Tilbury LNG Facility and the Eagle Mountain – Woodfibre Gas Pipeline Project. 3

Preamble: NGTL seeks additional information to understand potential market impacts and 4 Fortis inter-affiliate effects of the proposed ACGS acquisition. 5

Request: 6

a) Please discuss any potential impacts or benefits of the ACGS acquisition on 7 FMI’s or its parent’s interests in the provision of gas transportation and/or storage 8 services to the LNG industry, as noted in the Reference. 9

10 Response: 11

FMI believes that any developments that occur in the region, such as the development of the 12 LNG industry, are positives from a macro perspective for the gas industry. As a result, these 13 could lead to an increase in overall gas production in BC, and expansion of transportation and 14 storage infrastructure in the region. 15

With respect to ACGS, the location of the Storage Facility may naturally provide potential 16 opportunities for increased utilization of current capacity, increases in existing pipeline capacity 17 and new connectivity from the Storage Facility, and the potential for developing the Aitken 18 Creek North facility. These growth opportunities will largely depend on the size and number of 19 LNG projects that actually come to fruition over the next several years and the degree of impact 20 or benefit of the ACGS acquisition on FMI or its parent’s interest is uncertain at this time. 21

FMI does not see any direct impact or benefit that the ACGS acquisition would have on either of 22 the LNG associated projects noted in the reference. 23

24 25

26 b) If any of the west coast LNG projects proceed, will FMI develop new services at 27

Aitken Creek for the LNG proponents? If yes: 28 29

Response: 30

FMI expects that it will evaluate market opportunities that could arise with respect to any 31 regional market developments, including LNG development. 32

33 34


Application)



Page 22

1 i Please provide FMI’s view on how such service may be structured. 2

3

Response: 4

FMI has not performed any assessments on how new services, if any, would be structured. 5

6 7

ii Please explain whether new storage services developed for LNG proponents 8 impact access or flexibility for other western Canadian markets or 9 customers. 10

11

Response: 12

Please refer to the response to NGTL IR 1.7b. At this time FMI has not made an assessment of 13 any potential impacts. 14

15 16

iii The proposed Tilbury and Woodfibre LNG projects connect or are proposed 17 to connect to the FortisBC gas transmission system. Would these LNG 18 project proponents be given different or preferential access to ACGS than 19 other LNG project proponents not proposing to connect to FortisBC 20 facilities? 21

22 Response: 23

No, FMI expects that ACGS will negotiate all service contracts with potential customers based 24 on the type of service the customer is seeking and the market conditions at the time. 25

26


Application)



Page 23


Reference: FEU 2014 Long Term Resource Plan, Appendix E, FEI-FEVI 2013-2014 Annual 2 Contracting Plan Executive Summary, Page E-3 3

Preamble: In the Reference FEI states: “For 2013/14 FEI proposes to change the baseload 4 supply receipt point allocation by increasing Station 2 from 70 percent to 75 5 percent, decreasing Huntingdon from 15 percent to 0 percent, and increasing 6 AECO/NIT from 15 percent to 25 percent in 2013/14 compared to previous years’ 7 allocations […].” 8

In the Reference it is also stated that “FEI also recommends consideration of 9 longer term supply contracts with BC gas producers, up to ten years in length, in 10 the interests of supply security at the Station 2 market hub.” 11

Request: 12

a) Does FEI expect the acquisition of ACGS will impact or in any way influence the 13 allocations in the Reference? Please explain. 14

15 Response: 16

FMI does not expect that the change of ownership of ACGS will have any impact or influence on 17 FEI’s supply point allocation as noted in the reference. 18

19 20

21 b) Please confirm that FEI’s current policy targets longer term supply contracts with 22

BC gas producers, up to ten years in length. Please explain the reasoning behind 23 this policy. 24

25 Response: 26

In the non-confidential executive summary of FEI’s 2015/16 Annual Contracting Plan attached 27 to Commission Letter L-28-15, FEI states that it “recommends continuing pursuit of longer term 28 supply contracts up to ten years in length, with gas producers located in northeast BC and other 29 counterparties, to support supply security at the Station 2 market hub”. 30

31 32

33


Application)



Page 24

c) Does FEI expect to modify its policy of procuring longer term supply contracts, up 1 to 10 years, as a result of its acquisition of ACGS? Please explain. 2

3 Response: 4

FMI does not expect that the change of ownership of ACGS will have any impact or influence on 5 FEI’s policy of procuring longer term supply contracts. FMI intends to continue to make storage 6 services available to current customers of ACGS (including FEI and other customers) and other 7 interested market participants on a market basis. 8

9


Application)



Page 25



b) Application, Page 8, Section 6.1 3

Preamble: In Reference a) FMI states “The total working gas capacity of Aitken Creek is 4 77.1 Bcf plus 9.2 Bcf of cushion gas requirements.” 5

In Reference b) FMI states that ACGS currently operates “On a reporting and 6 complaint basis with an exemption from much of Part 3 of the Act.” 7

Request: 8

a) Please describe how ACGS allocates the capacity in Reference a) between: 9

i FEI and other customers 10

ii Interconnecting pipelines, if applicable 11

12 Response: 13

The amount of capacity leased to third parties, including FEI and interconnecting pipelines, is 14 based on confidential negotiations between ACGS and the third parties conducted in the context 15 of a competitive market. It is not set based on predetermined allocation amounts. 16

17 18

19 b) What is the current ACGS injection capability from storage for each of the 20

following connecting pipeline companies: 21

i Westcoast Energy Inc. (Westcoast) 22

ii Alliance Pipeline Limited Partnership (Alliance) 23

iii NOVA Gas Transmission Ltd. (NGTL) 24

iv. Others 25

26 Response: 27

ACGS is currently physically connected only to Westcoast and Alliance. ACGS physical 28 connection capabilities to pipelines are proprietary information and cannot be disclosed. ACGS 29 injection capability from storage for connecting pipelines will not change as a result of a change 30 in the ownership of shares in ACGS. 31


Application)



Page 26

1 2

c) What is the current ACGS withdrawal capability from storage for each of the 3 following: 4

i Westcoast 5

ii Alliance 6

iii NGTL 7

iv Others 8

9 Response: 10

ACGS is currently physically connected only to Westcoast and Alliance. ACGS physical 11 connection capabilities to pipelines are proprietary information and cannot be disclosed. 12 ACGS withdrawal capability from storage will not change as a result of a change in the 13 ownership of shares in ACGS. 14

15 16

17 d) Are there any expansions to ACGS currently under consideration that would 18

change the capabilities noted in b) and c)? If so, please discuss what is being 19 contemplated and why. 20

21 Response: 22

Currently ACGS has a proposal for the expansion of the North Montney Mainline to connect to 23 the storage facility that is subject to the Pacific Northwest LNG project being constructed. 24 Please refer to the responses to BCUC IRs 1.3.3 and 1.3.4. If the project proceeds, then there 25 may be an opportunity to expand overall ACGS withdrawal and injection capabilities, however, 26 any details surrounding those plans are confidential. 27

28 29

30 e) Is the constraint for each of injection and withdrawal capacity with each pipeline 31

based on the ACGS facilities or the respective interconnecting pipeline facilities? 32 33


Application)



Page 27

Response: 1

This information is proprietary and cannot be disclosed. ACGS injection and withdrawal 2 capability with connecting pipelines will not change as a result of a change in the ownership of 3 shares in ACGS. 4

5 6

7 f) Are there any changes to responses to the above expected when NGTL’s North 8

Montney Mainline Project connects to the ACGS facilities? If so, please describe 9 the changes. 10

11 Response: 12

Please refer to the response to NGTL IR 1.9e. 13 14 15

16 g) Please confirm if ACGS has a standard contract and/or tariff governing storage 17

use. If so, please provide it. 18 19

Response: 20

FMI understands that ACGS does not have a standard contract or tariff. FMI further 21 understands that all rates and terms of service are negotiated between a customer and ACGS 22 and are confidential and cannot be disclosed. 23 24 25

26 h) Will the storage rights of FEI be different than those of any other ACGS 27

customer? If so, describe all instances where FEI will be subject to different 28 terms and conditions. 29

30 Response: 31

ACGS’ negotiation of contracts with each of its customers, including FEI, will be based on 32 bilateral negotiations for terms that are reflective of the type of service and the market 33 conditions at the time. Please refer to the response to NGTL IR 1.9g. 34


Application)



Page 28

1 2

3 i) Does FMI support a physical interconnection between ACGS and NGTL’s North 4

Montney Mainline? Please explain why or why not. 5 6

Response: 7

Yes. Please refer to the responses to BCUC IRs 1.3.3 and 1.3.5. 8

9 10

11 j) Does FEI support a physical interconnection between ACGS and NGTL’s North 12

Montney Mainline? Please explain why or why not. 13 14

Response: 15

FMI understands based on FEI’s Annual Contracting Plan Executive Summary attached to 16 Commission Letter L-28-15 that FEI is generally supportive of new infrastructure and gas 17 production development in the region which could include the North Montney Mainline. 18 However, FMI understands that FEI is concerned with the impacts of tolling methodologies of 19 such expansions compared to the tolling methodologies of existing pipelines and infrastructure 20 that currently operate in the same region. 21

22 23

24 k) If FEI’s position now on inter-connection is different than the position it took in the 25

NEB hearing for the North Montney Mainline, please explain why. 26 27

Response: 28

FMI is not aware of any change in FEI’s view of the North Montney Mainline. 29

30


Application)



Page 29


Reference: Application, Page 8, Section 6.1 2

Preamble: In the Reference, FMI states that ACGS currently operates “On a reporting and 3 complaint basis with an exemption from much of Part 3 of the Act.” 4

Request: 5

a) Does ACGS have interconnecting operating agreements with Westcoast and 6 Alliance? If yes: 7

8 Response: 9

Yes, ACGS has interconnecting operating agreements with Westcoast and Alliance. 10

11 12

13 i Please provide copies of these operating agreements. 14

15

Response: 16

FMI understands that ACGS’ interconnecting operating agreements with Westcoast and 17 Alliance are confidential and cannot be provided. 18 19 20

ii If the ACGS acquisition is approved and completed, and NGTL 21 interconnects to the ACGS facility through the North Montney Mainline, will 22 FMI provide an operating agreement to NGTL on the same or consistent 23 terms and conditions as those provided to Alliance / Westcoast? Please 24 explain. 25

26 Response: 27

FMI would expect to enter into an operating agreement with NGTL if the North Montney 28 Mainline project is approved for construction. The terms and conditions for the operating 29 agreement will need to be discussed and determined at that time. 30

31 32


Application)



Page 30

1 iii Do these agreements provide for imbalances at the interconnection between 2

the pipeline and Storage Operator? If yes: 3

4 Response: 5

FMI understands that all agreements between ACGS and interconnecting pipelines are 6 confidential and cannot be disclosed. 7

8 9

a) What are the current tolerance bands for the imbalances? 10 11

Response: 12

Please refer to the response to NGTL IR 1.10a) iii. 13

14 15

16 b) What are the current imbalance levels? 17

18 Response: 19

Please refer to the response to NGTL IR 1.10a) iii. 20

21 22

23 b) Does ACGS currently provide compression or pressure service to any party? If 24

yes: 25 26

Response: 27

All services provided to any customers are confidential and cannot be disclosed. 28

29 30

31


Application)



Page 31

i Please describe the service or services and the customer(s) to which the 1 service is provided. If necessary to preserve confidentiality, please respond 2 by identifying customers as A, B, C, etc. 3

4

Response: 5


7 8

9 ii Please provide the rate or rates applicable to each of the service identified in 10

(i). 11 12

Response: 13


15 16

17 iii Is this service or services available year round? 18

19 Response: 20


22 23

24 iv Would this service or services be made available to NGTL in the future on 25

the same terms and conditions? 26 27

Response: 28

FMI expects that any such services will need to be discussed and agreed upon after final 29 approval is received for the construction of the North Montney Mainline project. 30

31

Attachment 2a

[FortisBC Energy Inc.]

C O D E O F C O N D U C T

For Provision of Utility Resources and Services

August 1997 SCOPE This Code of Conduct (Code) governs the relationships between [FortisBC Energy Inc. (FortisBC Energy)] and Non-Regulated Businesses (NRBs) for the provision of Utility resources, and conforms with the British Columbia Utilities Commission (Commission) “Retail Markets Downstream of the Utility Meter” (RMDM) Guidelines of April, 1997. The Commission Code of Conduct Principles from the Guidelines are attached as Appendix ‘A’. This Code will govern the use of Utility resources for unregulated activities (products or services for which there are no Commission approved tariffs) including shared services, employment or contracting of Utility personnel, and the treatment of customer, utility, or confidential information. The Code will also determine the nature of the relationship between the Utility and NRBs and the treatment by the Utility of its’ NRBs. The primary responsibility for administering this Code lies with [FortisBC Energy], although the Commission has jurisdiction over matters referred to in this Code. The Commission acknowledges that the Utility in the administration of the Code may have to take into account particular circumstances in respect to a particular product or service which is being provided or transferred out of the Utility, and where these issues are at variance with this Code Commission approval will be required. The Code also provides that the Commission may review complaints in relation to the Code. The [FortisBC Energy] Transfer Pricing Policy, dated August 1997, will be used in conjunction with this Code to establish the costs and pricing for Utility resources and services. This Code supersedes and replaces the [FortisBC Energy] Code of Business Conduct dated March 31, 1995. However, this Code does not replace contracts and undertakings between [FortisBC Energy] and NRB affiliates in existence prior to approval of the Code.

Effective: OCT 16 1997 L-64-1997

BCUC Secretary: Original signed by R.J. Pellatt

[FortisBC Energy] Code of Conduct

Page 2

DEFINITIONS [FortisBC Energy Inc.]

May be abbreviated as follows: [FortisBC Energy], the Utility, or the Company, and may also include employees of the Company.

Commission

British Columbia Utilities Commission.

Guidelines Retail Markets Downstream of the Utility Meter Guidelines published by the British Columbia Utility Commission in April, 1997.

Non-Regulated Business (NRB)

An affiliate of the Utility not regulated by the Commission or a division of the Utility offering unregulated products and services. “Related NRB” refers to any NRB which is an affiliate of the Utility and which uses any resources of the Utility.

Ratepayers Ratepayers in most cases are considered as a whole rather than one group or rate class.

RMDM Acronym for “Retail Markets Downstream of the Utility Meter”, which may include any utility or energy related activity at or downstream of the utility meter.

Transfer Pricing

The price established for the provision of Utility resources and services, or the transfer of Utility assets, to an NRB or division of the Utility providing unregulated products and services. Transfer pricing for any Utility resource or service will be determined by applying the [FortisBC Energy] Transfer Pricing Policy approved by the Commission.


Page 3

APPLICATION OF COMMISSION PRINCIPLES 1. Transfer Pricing The Utility will conform with the Commission approved [FortisBC Energy] Transfer Pricing Policy. 2. Shared Services and Personnel

a) This Code recognizes the need for and potential benefits to the Utility of employee transfers and human resource sharing.

b) [FortisBC Energy] may provide shared services to NRBs, including supervision and

management, while ensuring that ratepayers will not generally be negatively impacted by Utility involvement. The costs of providing such services will be as agreed upon by both parties and be in accordance with the Commission approved [FortisBC Energy] Transfer Pricing Policy.

c) NRBs may contract for any Utility personnel using the Commission approved

[FortisBC Energy] Transfer Pricing Policy, providing the Utility complies with Section 4 of this Code, Provision of Information by [FortisBC Energy Inc.], and no conflict of interest exists which will negatively impact on ratepayers.

3. Transfer of Assets or Services

The price for all transfers of assets or services shall be determined in accordance with the [FortisBC Energy] Transfer Pricing Policy approved by the Commission, and the Utility must be able to demonstrate that the benefits to the ratepayer are greater than the cost. The transfer price will reflect the potential for risk (stranded assets, future costs, etc.) and the recall availability of shared or transferred personnel to ensure the Utility receives the appropriate benefit from expertise resident in the Utility. [FortisBC Energy] will comply with acceptable business practices if it wishes to purchase assets, goods or services from an NRB.

An appropriate allocation of development costs for products or services as defined in the [FortisBC Energy] Transfer Pricing Policy, will be included in the transfer price.

4. Provision of Information by [FortisBC Energy Inc.]

[FortisBC Energy] will not provide to an NRB any information that would inhibit a competitive energy services market from functioning.

The following should act as a guideline for employees confronted with issues related to the sharing of confidential information:

a) This Code precludes [FortisBC Energy] from releasing confidential customer specific

information without the consent of that customer. If a customer agrees to a general release of customer specific information, that information must be made available to any market participant who requests it and is willing to pay costs associated with the


Page 4

provision of the information, without discrimination as to access, timing, cost or content. If a customer requests customer specific information be provided to a specific market participant, only that participant may receive the information, subject to payment of associated costs incurred to provide the information.

b) [FortisBC Energy] may disclose to any market participant that requests it and is

willing to pay the appropriate transfer price customer information that is aggregated or summarized in such a way that confidential information would not ordinarily be ascertained by third parties.

c) [FortisBC Energy] may provide or sell any non-customer specific information to any

market participant that requests it and is willing to pay the appropriate transfer price. 5. Preferential Treatment

[FortisBC Energy] will not state or imply that favoured treatment will be available to customers of the Utility as a result of using any service of an NRB. In addition, no Company personnel will condone or acquiesce in any other person stating or implying that favoured treatment will be available to customers of the Company as a result of using any product or service of an NRB.

6. Equitable Access to Services

Except as required to meet acceptable quality and performance standards, and except for some specific assets or services which require special consideration as approved by the Commission, [FortisBC Energy] will not preferentially direct customers seeking competitively offered services to an NRB or a specific retailer.

7. Compliance and Complaints

a) [FortisBC Energy] will advise all of its employees of their expected conduct pertaining to this Code, with annual updates for employees who may be directly involved with NRB activities.

b) [FortisBC Energy] will monitor employee compliance with this Code by conducting

an annual compliance review, the results of which will be summarized in a report to be filed with the Commission within 60 days of the completion of this review.

c) Complaints by third parties about the application of this Code, or any alleged breach

thereof, should be addressed in writing to the Company’s [Executive Vice-President, Finance, Regulatory and Energy Supply], who will bring the matter to the immediate attention of the Company’s senior management and promptly initiate an investigation into the complaint. The complainant, along with the Commission, will be notified in writing of the results of the investigation, including a description of any course of action which will be or has been taken promptly following the completion of the investigation. The Company will endeavour to complete this investigation within 30 days of the receipt of the complaint.


Page 5

d) Where [FortisBC Energy] determines that the complaint is unfounded, the Company

may apply to the Commission for reimbursement of the costs of the investigation from the third party initiating the complaint or where this is not possible, for inclusion of those costs in rates.

8. Financing and Other Risks

[FortisBC Energy] will not undertake any financing or other financial assistance on behalf of an NRB that exposes utility ratepayers to additional costs or risks, unless appropriate compensation is received by [FortisBC Energy] for such financing or other financial assistance, and such financing or other financial assistance is approved by the Commission.

9. Use of Utility Name

[FortisBC Energy Inc.] agrees that newly established NRBs engaging in RMDM activities will not use the Utility’s name as the primary identifier within British Columbia, and will not use the Utility name in a manner that indicates that Utility resources will support the NRB.

10. Distribution System Access

[FortisBC Energy] will treat all requests for distribution system access for the purpose of direct commodity marketing equitably and in accordance with the requirements approved for direct commodity marketing in British Columbia.

11. Amendments

In order to ensure that this Code remains workable and effective, the Company will review the provisions of this Code on an ongoing basis and as required by the Commission, but with a maximum of three years between reviews.

Amendments to this Code may be made from time to time as approved by the Commission.


Page 6

Appendix ‘A’ COMMISSION CODE OF CONDUCT PRINCIPLES The Commission has established the following principles in the Guidelines which [FortisBC Energy] intends to apply to RMDM activities and the Utility’s relationships with NRBs. i) The regulated company will not provide to the NRB any market-sensitive or

confidential information that would inhibit a competitive energy services market from functioning. If customers agree to a release of customer information to the NRB, it should be provided to other market participants under the same terms and conditions and for the same price. Should an individual customer make a specific request to have information released to a particular third party, it will be released to that party only. The utility will be able to recover from the customer the costs associated with the provision of this information.

ii) No regulated company personnel will state or imply that favoured treatment will be

available to customers of the company as a result of using any service of an NRB. In addition, no regulated company personnel will condone or acquiesce in any other person stating or implying that favoured treatment will be available to customers of the company as a result of using any service of an NRB.

iii) No regulated company personnel will preferentially direct customers seeking

competitively offered services to an NRB. If a customer, or potential customer, requests from the regulated company information about products or services offered by an NRB or its competitors in downstream markets, the regulated company may provide such information, including a directory of retailers of the product or service, but shall not promote any specific retailer in preference to any other retailer.

iv) The regulated company will formally advise all employees of expected conduct

related to these principles and it will undertake to perform periodic audits of the relationships to ensure compliance with these principles. These audits will be performed no less than once a calendar year and filed with the Commission.

v) Complaints by non-affiliated parties about the application of these principles, or any

alleged breach thereof, will be brought to the immediate attention of the senior management of the regulated company and subsequently a report of the complaints, and action taken, will be filed with the Commission. The report will be filed with the Commission within one month of the complaint being made.

vi) The financing of the utility and NRB will be accounted for entirely separately with

the financing costs reflecting the risk profile of each entity. No cross-guarantees or any form of financial assistance whatsoever should be provided directly or indirectly by a utility to its NRB without approval of the Commission.


Page 7

vii) Use of the utility name by a related NRB will require approval by the Commission to ensure that its use will not interfere with the Commission’s ability to protect ratepayers.

In those cases where retail customers have direct market access to the commodity, the utility’s code of conduct will also include the following provision,

The regulated company will treat all requests for distribution system access for the purpose of direct commodity marketing equitably and according to the requirements approved for direct commodity marketing in British Columbia.

FortisBC Energy Inc.

C O D E O F C O N D U C T For Provision of Utility Resources and Services to Affiliated Regulated Businesses Operating in

a Non-Natural Monopoly Environment (ARBNNM) April 28, 2015

SCOPE

This Code of Conduct (Code) governs the relationships between [FortisBC Energy Inc. (FortisBC Energy)] and Affiliated Regulated Businesses operating in a non-natural monopoly environment (ARBNNMs) for the provision of [FortisBC Energy] resources, and is intended to be consistent with the principles of the British Columbia Utilities Commission (Commission) outlined in the “Retail Markets Downstream of the Utility Meter” (RMDM) Guidelines of April, 1997 and the Commission’s Report on the “Inquiry into the Offering of Products and Services in Alternative Energy Solutions and Other New Initiatives” published in December 27, 2012, collectively referred to in this document as (Guidelines) or in Commission decisions in proceedings related to specific ARBNNMs. If the Code of Conduct is silent on a principle or guideline established in one of the above documents, acceptance of the Code of Conduct does not imply that the principle, guideline or Commission direction is voided or invalid.

This Code will govern the use of [FortisBC Energy] resources and services provided to ARBNNMs including shared services, employment or contracting of [FortisBC Energy] personnel, and the treatment of customer, utility, or confidential information. The Code will also determine the nature of the relationship between [FortisBC Energy] and ARBNNMs.

The primary responsibility for administering this Code lies with [FortisBC Energy], although the Commission has jurisdiction over matters referred to in this Code. The administration of this Code may have to take into account particular circumstances in respect to a particular resource or service which is being provided and where these issues are at variance with this Code, [FortisBC Energy] will be required to seek Commission approval in advance. The Code also provides that the Commission may review complaints in relation to this Code. [FortisBC Energy] will maintain separate financial records and appropriate documentation as well as implement appropriate safeguards, including a sufficient separation of business operations in order to prevent cross-subsidization and ensure a level of transparency that enables an appropriate allocation of costs between [FortisBC Energy] and ARBNNMs.

The [FortisBC Energy] Transfer Pricing Policy for ARBNNMs, dated April 28, 2015, will be used in conjunction with this Code to establish the costs and pricing for [FortisBC Energy] resources and services provided to ARBNNMs.

This Code governs the relationships between [FortisBC Energy] and its Affiliated Regulated Businesses operating in a non-natural monopoly environment. This Code does not replace the existing Code of Conduct governing the relationship between [FortisBC Energy] and Non-Regulated businesses (NRBs).

DEFINITIONS [FortisBC Energy Inc.] May be abbreviated as follows: [FortisBC Energy], the Utility, or

the Company, and may also include employees of the Company. Commission British Columbia Utilities Commission.

Guidelines Principles and Guidelines from the Retail Markets Downstream of

the Utility Meter Guidelines published by the British Columbia Utility Commission in April, 1997 and the Commission’s Report in the Inquiry into the Offering of Products and Services in Alternative Energy Solutions and Other New Initiatives published in December 27, 2012. This definition does not negate the applicability of other relevant orders or directions such as Commission directions in proceedings regarding affiliates or Special Directions issued by the Province of British Columbia to the Commission on matters related to specific FortisBC Energy business activities.

Affiliated Regulated Business Operating in a Non-Natural Monopoly Environment (ARBNNM)

A separate legal entity that is an affiliate of the Utility regulated by the Commission offering regulated products and services in a non-natural monopoly environment.

RMDM Acronym for “Retail Markets Downstream of the Utility Meter”,

which may include any utility or energy related activity at or downstream of the utility meter.

Transfer Pricing to Affiliated Regulated Business Operating in a Non-Natural Monopoly Environment

The price established for the provision of Utility resources and services to an ARBNNM. Transfer pricing for any Utility resource or service will be determined by applying the appropriate [FortisBC Energy] Transfer Pricing Policy as agreed upon by [FortisBC Energy] and the ARBNNM and approved by the Commission.

APPLICATION OF COMMISSION PRINCIPLES

CODE OF CONDUCT PRINCIPLES The following principles were applied in the development of the Code of Conduct for activities between [FortisBC Energy] and Affiliated Regulated Businesses Operating in a Non-Natural Monopoly Environment [ARBNNM].

i. [FortisBC Energy] will protect and consider the interests of its own ratepayers, and having protected its ratepayers, [FortisBC Energy] may also consider the potential interests of the ARBNNM ratepayers.

ii. [FortisBC Energy] will not provide to an ARBNNM any information that would

inhibit the energy services market in a non-natural monopoly environment from functioning.

iii. The control of information should not provide a competitive advantage.

iv. Customer specific information must be treated as required by the Personal

Information Protection Act and, in addition, customer specific information should only be released with the written consent of the customer. Customer information (aggregate or customer specific with written consent) should be made available to all parties (Affiliated Regulated and Unregulated Businesses, and competitors) on an equal basis, upon request.

v. [FortisBC Energy] and its employees will not state or imply that favoured treatment

will be available to customers of [FortisBC Energy] as a result of using any service of an ARBNNM. Additionally, [FortisBC Energy] and its employees will not preferentially direct customers to an ARBNNM.

vi. [FortisBC Energy] will not normally provide financing, or any form of financial

assistance including co-signing of loans, to the ARBNNM. No [FortisBC Energy] financing or other financial assistance, including cross-guarantees, can occur under any circumstances without advance Commission approval.

vii. [FortisBC Energy] will monitor compliance with this Code by also conducting an

annual compliance review. [FortisBC Energy] will regularly advise all of its employees of their expected conduct pertaining to this Code.

viii. The Transfer Pricing mechanism should provide a fair and transparent mechanism to

[FortisBC Energy]’s ratepayers, and after having considered the interests of [FortisBC Energy’s] ratepayers, may consider the potential interests of the ARBNNM’s ratepayers.

ix. Costs are to be allocated from [FortisBC Energy] to the ARBNNM on the basis of

the higher of market price or fully allocated cost as set out in the [FortisBC Energy] Transfer Pricing Policy. [FortisBC Energy] is to seek advance approval from the Commission prior to charging a price that is other than “the higher of market price or fully allocated cost”.

1. Transfer Pricing for ARBNNMs

[FortisBC Energy] will conform with the Commission approved [FortisBC Energy] Transfer Pricing Policy for ARBNNMs. 2. Shared Services and Personnel

a) This Code recognizes the potential benefits to the [FortisBC Energy] and ARBNNM regulated ratepayers in sharing resources.

b) [FortisBC Energy] will only share services and non-executive personnel in

circumstances where:

1. the services can be identified and tracked effectively and there are other appropriate safeguards in place;

2. there is limited potential for disclosure of confidential information; and 3. there are benefits to [FortisBC Energy] ratepayers.

c) [FortisBC Energy] will not share business development personnel with an

ARBNNM.

d) [FortisBC Energy] and ARBNNM directors and executives with dual roles are required to execute non-disclosure agreements.

The costs of providing such services will be as agreed upon by both [FortisBC Energy] and the ARBNNM and be in accordance with the Commission approved [FortisBC Energy] Transfer Pricing Policy for ARBNNMs.

3. Provision of Information by [FortisBC Energy Inc.]

Customer information (aggregate or customer specific with written consent) should be made available to all Parties (Affiliated Regulated and Unregulated Businesses, separate classes of service, and competitors) on an equal basis, upon request. [FortisBC Energy] will not provide to an ARBNNM any information that would inhibit the energy services market in a non-natural monopoly environment from functioning. Customer specific information must be treated in accordance with the Personal Information Protection Act. If a customer requests their specific information be provided to a specific party, only that party may receive the information. If a customer agrees to a general release of their specific information, that information must be made available to all interested parties who request it and are willing to pay the price associated with the provision of the information, without discrimination as to access, timing, cost or content. Customer information will be provided at a reasonable price reflecting market circumstances and cover the cost of extracting and providing the information. All parties should pay the same price for the same or similar information.

[FortisBC Energy] may disclose to all interested parties that request it and are willing to pay the appropriate transfer price (see above), customer information that is aggregated or summarized in such a way that confidential information would not be ascertained by third parties. 4. Preferential Treatment

[FortisBC Energy] will not state or imply that favoured treatment will be available to customers of [FortisBC Energy] as a result of using any service of an ARBNNM. In addition, no Company personnel will condone or acquiesce in any other person stating or implying that favoured treatment will be available to customers of the Company as a result of using any product or service of an ARBNNM.

5. Equitable Access to Services

Except as required to meet acceptable quality and performance standards, and except for some specific assets or services which require special consideration as approved by the Commission, [FortisBC Energy] will not preferentially direct customers to an ARBNNM. In discussing energy alternatives with a customer, or a potential customer, [FortisBC Energy] personnel may not preferentially direct customers to an ARBNNM. If a customer, or potential customer, requests from [FortisBC Energy] information about products or services offered by an ARBNNM, [FortisBC Energy] may provide such information, including a directory of suppliers of the product or service, but shall not promote any specific supplier in preference to any other supplier.

6. Equitable Treatment of Demand-Side Management and Incentive Funds

[FortisBC Energy] will adhere to the Commission approved mechanism for approval and administration of Demand-Side Management or incentive funding.

7. Compliance and Complaints

a) The Director of Finance at [FortisBC Energy] will be responsible for monitoring compliance at [FortisBC Energy] with this Code. This will include advising all of its employees of their expected conduct pertaining to this Code, with quarterly updates for employees who may be directly involved with ARBNNM activities.

b) [FortisBC Energy] will monitor employee compliance with this Code by also

conducting an annual compliance review, the results of which will be summarized in a report to be filed with the Commission within 60 days of the completion of this review.

c) Complaints by third parties about the application of this Code, or any alleged

breach thereof, should be addressed in writing to the Company’s Director of Finance and the Executive Vice-President, Customer Service and Regulatory Affairs, who will bring the matter to the immediate attention of the Company’s senior management and promptly initiate an investigation into the complaint.

The complainant, along with the Commission, will be notified in writing of the results of the investigation, including a description of any course of action which will be or has been taken promptly following the completion of the investigation. The Company will endeavour to complete this investigation within

Documents

[email protected] January 29, 2016 c/o Canadian Law ......Tariq Ahmed Direct +1 604 631 4983 [email protected] January 29, 2016 File No.: 240149.00170/16550 BY ELECTRONIC FILING NOVA