web site: http://www.bcuc.com FACSIMILE: (604) 660-1102 Log No. - - PDF document

ALANNA GILLIS ACTING COMMISSION SECRETARY Commission.Secretary@bcuc.com web site: http://www.bcuc.com SIXTH FLOOR, 900 HOWE STREET, BOX 250 VANCOUVER, BC CANADA V6Z 2N3 TELEPHONE: (604) 660-4700 BC TOLL FREE: 1-800-663-1385 FACSIMILE: (604) 660-1102

Log No. 36662 PF/FEI_AES Inquiry/A2-13_Submission

VIA EMAIL Gas.regulatory.affairs@fortisbc.com September 16, 2011 FORTISBC ENERGY – AES OFFERING PRODUCTS AND SERVICES EXHIBIT A2-13

• Mr. Shawn Hill

Director, Regulatory Affairs FortisBC Energy Inc. 16705 Fraser Highway Surrey, BC V4N 0E8 Dear Mr. Hill: Re: An Inquiry into FortisBC Energy Inc. regarding the Offering of Products and Services in Alternative Energy Solutions and Other New Initiatives Commission staff submits the following document for the record in this proceeding:

• FortisBC CDEA-IDEA Integrated Energy Solutions Presentation June 2011 – dated June 2011.

Yours truly, Alanna Gillis /yl Enclosure cc: Registered Interveners (FEI-AES-RI)

Integrated Energy Solutions in British Columbia

CDEA - IDEA Conference June, 2011

Gareth Jones Director, Business Development

Overview

• District Energy is becoming a more significant component
• f the FortisBC energy delivery mix
• This presentation will describe:
• FortisBC scope
• Regulatory & legislation framework in British Columbia,
• Integrated energy projects underway (including biomass

& biogas)

• Working to overcome development obstacles & enable

progress to a low carbon future.

Forward looking statement

By their very nature, forward-looking statements are based on underlying assumptions and are subject to inherent risks and uncertainties surrounding future expectations generally. Such events include, but are not limited to, general economic, market and business conditions, regulatory developments, weather and

• competition. FortisBC cautions readers that should certain events or

uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary significantly from those expected. For additional information with respect to certain of these risks or factors, reference should be made to the Corporation’s continuous disclosure materials filed from time to time with Canadian securities regulatory authorities. The Corporation’s disclaim any intention or

• bligation to update or revise any forward-looking statements,

whether as a result of new information, future events or otherwise.

Fortis Inc. in BC

• Over one million energy customers
• 135 communities across BC
• Combined assets of $6.4 billion
• Over 2,000 employees
• Planned capital investment

$2.5 billion over next five years

• $1.03 billion invested since 2007
• Integrated energy solutions portfolio

FortisBC Integrated Energy Utility Model

BC Utilities Commission Act

• "public utility" means a person,…, who owns or operates …

equipment or facilities for the production, generation, storage, transmission, sale, delivery or provision of electricity, natural gas, steam or any other agent for the production of light, heat, cold or power to or for the public but does not include a municipality or regional district in respect of services provided by the municipality or regional district within its own boundaries,

• Summary: As well as gas and electricity, thermal energy

delivery is either a regulated utility or municipal utility business in British Columbia.

8

British Columbia Legislated Targets

• Reducing BC’s GHG emissions by at least 33% below 2007 levels by

2020 and at least 80% below by 2050

BC Energy Customers

• Two thirds of British Columbians are

interested in incorporating low carbon energy into their home

• 85% are willing to pay a premium

(primarily up to 5%) for low carbon energy

• ptions
• One half of BC residents believe we

should offer low carbon energy

• Strongest support for our low carbon

energy offerings coming from residents age 18-34

BC Energy Infrastructure

• Existing natural gas systems
• Up to 100 years old
• Interconnected
• Scalable
• Relatively low average cost
• Relatively low commodity cost
• Existing electricity grid
• Supply anchored by low-cost

legacy hydro dams

Transforming Thermal Energy Delivery in BC

Energy System Evolution GHG Reduction Energy Cost Convergence

• Natural Gas
• Electricity
• DES/Alternative Energy Sources
• Geoexchange
• Biogas
• Solar

QUEST Vision

“By 2050 every community in Canada is operating as an integrated energy system, and accordingly, all community development and redevelopment incorporates an integrated energy system.”

Integrated Energy Utility - Biogas

Biogas Supply Model

Biogas Source Upgrading Plant Metering, Monitoring, Odourizing Terasen Transmission and Distribution System FortisBC invests in “upgrading” plant and interconnection assets FortisBC

Biogas vs. Biomethane

• Biogas is gas generated from organic material
• Raw biogas – typically 50% - 60% methane
• Potential Sources:
• Anaerobic Digester Gas
• Landfill Gas
• Biomethane:
• Methane from a renewable source – “Upgraded Gas”

Raw Biogas Biomethane 40% - 60% CH4 >96% CH4 30% - 50% CO2 <2% CO2 0% - 2% O2 <0.4% O2 0-2000+ ppm H2S Sulphur free Upgrade

Catalyst Project

• Partner Catalyst Power Inc
• Digester Project
• FortisBC Capital ~ $0.7M
• Total Capital ~ $6.0 M
• Average 120,000 GJ/year
• FortisBC owns interconnect

equipment only

• Commissioned Sep 2010

Salmon Arm Project

• Partner CSRD
• Landfill Gas project
• FortisBC ~ $2.2 Million
• Total capital ~ $6.0 Million
• Average 30,000 GJ/year
• FortisBC owns upgrade equipment
• Commissioned June 2010

Integrated Energy Utility - Thermal

Discrete to District Thermal Energy Systems

20

Discrete = one building District = many buildings

Discrete Energy Systems

Need:

• Low carbon energy solutions
• Technical & economic feasibility
• Customer & Approvals

Existing FortisBC discrete assets:

• Approx 60 geo-exchange systems
• Operating since 2007; approx $8 million assets

Under development by FortisBC:

• Numerous developer-based systems; $10 million capital
• Numerous public sector-based retrofit systems; $80 million capital
• Private sector-based retrofit systems; $12 million capital

Aquattro, Colwood BC

Type of Development:

• 563 residential units total
• 24 buildings

22

Energy System:

• Geoexchange loop fields by FortisBC
• Phased installation as community develops

Environmental Benefits

• Reduced demand on BC’s electricity grid
• Savings of 2 tonnes of GHGs / year for each

2,000 square foot residential unit Geo-Exchange drilling Aquattro Site

Geo-Exchange Systems for Multi-Building Residential Development

Public Sector Retrofits – School Districts

• Low carbon energy delivery for all

buildings

• Challenges:
• GHG reductions must be maximized
• “All-in” costs must not exceed BAU
• Varying degrees of retrofit complexity &

cost

• High effort to evaluate & optimize
• Lead-in collaboration with Delta SD:

District Energy Systems

Need:

• Low Carbon Energy Solutions
• Technical & Economic Feasibility
• Customers & Approvals

Existing Fortis District Energy:

• Cornwall
• Dockside Green Partnership

Under development by FortisBC:

• Two plant retrofits to biomass; $50 million capital
• Two host-based NG cogen systems; $130 million capital
• Five community-based systems; $100 million capital
• Two developer-based systems; $30 million capital

Cornwall DES Heat provided to:

• 2 hospitals, 6 schools
• 7 other facilities

Operational since 1995 CoGen Energy Centre:

• Natural Gas
• 5.5 MW electricity
• 11 MW heat

Cornwall, Ontario

Dockside Green, Victoria BC

15 acre harbourfront redevelopment

• 1.2 million sq. ft

residential

• 150,000 sq. ft

commercial/retail

• 20,000 sq. ft. light

industrial

District Energy for Brownfield Re-development

Energy System:

• 2.5 MW Biomass

Gasification Plant

• 3.4MW natural gas

back-up & peaking

• Also serves buildings
• utside development

Environmental Benefits

• LEED Platinum
• Greenhouse Gas

Neutral – no net emissions

Biomass Plant Retrofits

Key considerations:

• Fuel supply
• Emissions
• Reliability
• Sizing to compete
• Approvals

• Total CO2e (i.e. CO2 equivalent) emissions 2007: about 780,000 tonnes
• Business as usual to 2020: 1,200,000 tonnes, or 8.3 tonnes per capita
• The City’s 2020 target of a 33% community-wide emissions reduction:
• 257,000 tonnes against 2007 levels
• 677,000 tonnes against business as usual
• City & FortisBC district energy collaboration:

Kelowna City Centre

• $30 million, 20 MWth
• Key considerations:
• Stakeholder interests
• High grade heat source
• Central vs. decentralized
• Heating vs. cooling
• Existing buildings vs. new
• Congested utility corridors
• Optimization:
• Heating only hot water system
• Decentralized peaking

Kelowna South Pandosy

• $17 million, 10 MWth
• Key considerations:
• Stakeholder interests
• Low grade heat source
• Central vs. decentralized
• Heating vs. cooling
• Existing buildings vs. new
• Congested utility corridors
• Optimization:
• Heating & cooling ambient system
• Decentralized peaking

Quesnel

• $20 million, 2 MWe, 4 MWth
• Key considerations:
• Four party alignment
• Sawmill heat supply
• Community objectives
• Optimization:
• CoGen
• Hot water system

District Energy Piping Back-up Centre

(City Hall)

Saw Mill

Summary

• In BC thermal energy delivery is regulated by law
• Utility model can be an enabler
• Climate change policy & customers driving change
• Tempered by low cost conventional energy
• Many challenges moving forward but:
• FortisBC integrated energy projects now total over $400 million
• Main focus district energy and pooled discrete systems
• The energy delivery landscape is changing in BC

Questions?