vedder cpcn and rate application€¦ · •vedder project in the public interest •supporting the...
TRANSCRIPT
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Vedder CPCN and Rate Application Streamlined Review Process
FortisBC Energy Inc. September 27, 2012
B-7
markhudsFORTISBC ENERGY VEDDER TRANSPORT
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Agenda
Approvals sought
FEI NGT business
model
Vedder project
description
Vedder CPCN
approval
GT&Cs 12B & Vedder rate
proposal Questions
and Answers Submissions by FEI and Interveners
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Approvals Sought
• Approval of a CPCN for the construction and operation of a LNG refueling station • Project is in the public interest
• Approval of rate design and rate on an interim basis
• Interim approval is based on potential rate impact of Overhead and Marketing charge cost methodology from other regulatory proceedings (i.e. AES Inquiry and BFI Reconsideration)
• Rate design is based on GT&Cs Section 12B
Reference: Exhibit B-1 at Page 1, Exhibit B-2
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Natural Gas Transportation (“NGT”) Business Model • End-to-end service offering for CNG and LNG
Gas Supply Compression & Fueling
(1) Natural Gas Supply (2) Compression & Fueling (3) Vehicles Operating on CNG
FEI CNG Service Offering Customer
(1) LNG Production & Storage
(2) LNG Delivery (3) Fuel Storage & Fueling
(4) Vehicles Operating on LNG
FEI LNG Service Offering
LNG Supply LNG Delivery and Fueling Station
Customer
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Chronology of Events Related to Vedder
• Regulatory review establishes FEI’s NGT fueling station offering (GT&Cs 12B)
Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Result or Decision
CNG/LNG Application CNG/LNG fueling stations GT&Cs, Waste Mngt
Tractors ordered
Vedder Contract Temporary Agreement May 12, 2011
Suspended from August 2011 - August 2012G-128-11 CNG/LNG Service Application DecisionG-144-11 Interim approval for tanker charge & temp station
Station Installation Temporary station installed and commissioned
Test fueling in Sept-Oct 2011G-1-12 AES - Zero dollar CPCN threshold establishedG-14-12 CNG/LNG - Approval of GT&Cs 12BVedder Contract Permanent Refueling Agreement March 2, 2012
G-44-12 RRA - Temporary station removed from rate baseC-6-12 BFI Decision - OH&M charge methodology
Permanent Refueling StationFiled July 13, 2012
Legend:
BCUC DecisionsFEI Applications to BCUC
2010 2011 2012
Negotiations with Vedder
Tractor deliveriesTemporary Station / Tanker Charge Application
Vedder fueling tractors
Station InstallationCPCN Application
Construction
FEI - Vedder activities
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Approved Section 12B of GT&Cs – Key Provisions • FEI owning, installing, and maintaining CNG/LNG fueling
station • Charging a ‘take-or-pay’ rate (minimum contract volume) • Actual capital investment in the fueling station • Depreciation and net negative salvage rates and
expense related to the capital assets • All O&M expenses, escalated annually by BC CPI • Allowance for overhead and marketing relating to
developing NGT fueling station agreements • Contract renewal or customer paying unrecovered
capital costs (including positive or negative salvage value)
Reference: Commission Order No. G-14-12
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Vedder Transport
• Headquartered in Abbotsford, B.C. • Liquid-edible, dry-edible, liquid rail car transport • 300 tractors, 800 semi trailers • 54 years of operating experience
Reference: Exhibit B-1 at Page 11
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Vedder 50 LNG Tractors
• Currently 50 LNG tractors to reduce fuel costs and achieve ‘greener’ operations
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Vedder Site Overview
Temporary station
Permanent station
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Temporary Fueling Station (IMC-6000)
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Permanent Fueling Station
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Permanent Station Design
Reference: Exhibit B-1, Appendix A, Schedule B
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Permanent Fueling Station
• Storage capacity three times greater than IMC-6000 • LNG tanker deliveries every two to three days • Refueling time of 2 to 3 minutes • Ability to serve up to 100 vehicles • 50 LNG tractors currently in operation • Target completion – December 2012
Reference: Exhibit B-6, IR 1.5.1 and 1.5.2
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CPCN Approval – legal standards
• Zero dollar threshold for NGT projects established in AES Inquiry (Order No. G-1-12)
• Vedder project in the public interest • Supporting the applicable British Columbia energy objectives • Meeting the most recent long-term resources plan filed by FEI • Accruing benefits to all FEI customers, including NGT customers • Minimizing risks to core customers by complying with approved
GT&Cs section 12B • Recovering capital expenditures, O&M, Overhead & Marketing
costs directly from Vedder through fueling charges
Reference: Exhibit B-1 at Page 8
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Project Benefits
• Net Rate Schedule 16 delivery margin estimate of $284,000 per year
• GHG emission reductions of 3,826 tCO2e per year
• Economic benefits to the Province
• Fuel cost savings of 35-50% to Vedder • Potential benefits may flow to Vedder’s customers
Reference: Exhibit B-1 at Pages 13 - 17
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Forecast Net Delivery Margin Benefit (Year)
• Incremental benefit estimated at 50% of Rate Schedule 16 delivery rate
• Consistent with benefit calculations presented in NGT Application
Annual NG Volume (GJ) 140,000
Rate 16 Delivery Rate (2012) 4.05$
Total Delivery Revenue 567,000$
Less: Fully Allocated O&M Cost (est. 50% of delivery) -50%
Total Incremental Margin 283,500$
Reference: Exhibit B-1 at page 17
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GHG Emission Reductions Benefits
• GHG emission reductions of 3,826 tCO2e per year or 26.8% from diesel
GHGenius v3.20 X Average Annual = Emissions Per X Number of = Emissions Per Emissions Kms Traveled Tractor (tCO2e) Tractors Fleet (tCO2e)
Diesel (t/km) 0.0015002 190,000 285.0 50 14,251.9 LNG (t/km) 0.0010975 190,000 208.5 50 10,426.3
Emissions Reduction (tCO2e): 76.5 3,825.7
Reference: Exhibit B-4, IR 1.2.1
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Vedder Conforms to GT&Cs 12B
Section 12B
Term or Condition Appendix A (Contract)
12B.1 LNG Service definition 4.3 12B.2 owned by FEI 5.1 12B.3 take-or-pay volume 8.4 12B.4 (a) actual capital 8.3 12B.4 (b) depreciation / net negative salvage 8.2 (a) 12B.4 (c) O&M, no adj. for capitalized OH, escl. by CPI 8.2 (b) 12B.4 (d) overhead & marketing charge 8.2 (b) 12B.5 Contract renewal or buyout provision 15
Reference: Exhibit B-1, Appendix B
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Approval of Rate Design as Just and Reasonable • Seeking interim rate approval (subject to resolution of
AES Inquiry and BFI Reconsideration) • Related to the Overhead and Marketing charge cost methodology
• Proposed rates in Table 5 of Exhibit B-1 • Proposed rates are designed on GT&Cs 12B and
adjusted based on directions from the BFI Decision • BFI Decision directed FEI to include branding costs, insurance
premium costs and application cost
Reference: Exhibit B-1 at Page 24, Exhibit B-2
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Proposed Fueling Station Charge Component Fueling Charge
Proposed (Table 5, Exhibit B-1)
Excess Rate Proposed
Capital $1.780 per GJ $0.890 per GJ
Operations & Maintenance
$0.584 per GJ $0.584 per GJ
Overhead & Marketing
$0.286 per GJ
Fueling Service Rate
$2.650 per GJ $1.474 per GJ
Reference: Exhibit B-1 at Page 24
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Rate Assumptions
Input Assumption Initial contract term 10 years Take or Pay Volume 140,000 GJ per year Capital investment $2,394,080 Branding costs (capital) $3,000 Fueling station O&M $80,000 per year Insurance premium (O&M) $1,800 per year Application costs $35,000
Reference: Exhibit B-1 at Pages 24 - 25
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Conclusion
• CPCN should be granted because project is in the public interest • Benefits to all FEI’s customers, including NGT customers • Benefits to the public in general • Risks to natural gas customers mitigated • Costs recovered from Vedder
• Rate Design and Rates are just and reasonable • Consistent with GT&Cs section 12B • Cost inputs incorporated directives from BFI Decision
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Questions and answers Vedder CPCN and Rate Application