September 4, 2020 Via E-Filing British Columbia Utilities Commission Suite 410, 900 Howe Street Vancouver, BC V6Z 2N3 Attention: Marija Tresoglavic Acting Commission Secretary Ian Webb D: 604.631.9117 F: 604.694.2932 [email protected]Dear Ms. Tresoglavic: Re: Shannon Estates Utility Ltd. Levelized Rate Application for the Shannon Estates Thermal Energy System On behalf of Shannon Estates Utility Ltd. (SEUL), and in accordance with the regulatory timetable established by BCUC Order No. G-186-20, we enclose for submission to the BCUC SEUL’s response to British Columbia Utilities Commission Information Request No. 1. Three of the attachments to the enclosed IR response (file names BCUC IR-1 7.1(a), BCUC IR-1 7.1(b), and BCUC IR-1 7.1(c)) include information of a third party service provider to SEUL that the third party considers commercially sensitive and confidential. Public disclosure of this information could reasonably be expected to harm the commercial interests of the third party, and the third party has requested confidential treatment of the information. Accordingly, two versions of these attachments are provided to the BCUC, one with CONFIDENTIAL on the document and in the PDF file name and the other with PUBLIC in the file name. The version marked PUBLIC has the confidential information redacted and may be placed on the public record. Yours very truly, LAWSON LUNDELL LLP Ian Webb IDW/ns1 Enclosures cc. Michelle Casey, Lawson Lundell Joanne Liu, Wall Financial Corporation B-3 ~ LAWSON .-LUNDEL~ I Suit e 1600 Cat h edra l Pl ace 925 West Georgia S tr eet Vancouver, BC Canada V6C 3L2 T 604 685 3456 lawsonlundell .corn Vancouver I Calgar ; I Yellowkn fe I Kelowna Lawso n L un del l is a Li mited Li abi li :y Pa rtnership
Transcript
September 4, 2020
Via E-Filing
British Columbia Utilities Commission Suite 410, 900 Howe Street Vancouver, BC V6Z 2N3
Attention: Marija Tresoglavic Acting Commission Secretary
Re: Shannon Estates Utility Ltd. Levelized Rate Application for the Shannon Estates Thermal Energy System
On behalf of Shannon Estates Utility Ltd. (SEUL), and in accordance with the regulatory timetable established by BCUC Order No. G-186-20, we enclose for submission to the BCUC SEUL’s response to British Columbia Utilities Commission Information Request No. 1.
Three of the attachments to the enclosed IR response (file names BCUC IR-1 7.1(a), BCUC IR-1 7.1(b), and BCUC IR-1 7.1(c)) include information of a third party service provider to SEUL that the third party considers commercially sensitive and confidential. Public disclosure of this information could reasonably be expected to harm the commercial interests of the third party, and the third party has requested confidential treatment of the information. Accordingly, two versions of these attachments are provided to the BCUC, one with CONFIDENTIAL on the document and in the PDF file name and the other with PUBLIC in the file name. The version marked PUBLIC has the confidential information redacted and may be placed on the public record.
Yours very truly,
LAWSON LUNDELL LLP
Ian Webb
IDW/ns1 Enclosures cc. Michelle Casey, Lawson Lundell
Joanne Liu, Wall Financial Corporation
B-3
~ LAWSON .-LUNDEL~
I Suite 1600 Cathedra l Place 925 West Georgia Street Vancouver, BC Canada V6C 3 L2 T 604 685 3456
■ lawsonlundell.corn Vancouver I Calgar; I Yellowkn fe I Kelowna Lawson Lundel l is a Li mited Liabi li:y Partnership
Yvonne.Lapierre
TES Levelized Rate
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Shannon Estates Utility Ltd. Levelized Rate Application for the Shannon Estates Thermal Energy System
SHANNON ESTATES UTILITY LTD. RESPONSE TO BCUC INFORMATION REQUEST NO. 1
Table of Contents Page no. A. SEUL ENERGY CONSUMPTION AND LOAD FORECASTS ................................................................... 1
B. ANNUAL REVENUE ......................................................................................................................... 10
C. ANNUAL OPERATING COSTS .......................................................................................................... 14
D. ANNUAL GENERAL AND ADMINISTRATIVE COSTS ......................................................................... 24
E. DEPRECIATION/INCOME TAXES/RETURN ON RATE BASE .............................................................. 32
F. REVENUE DEFICIENCY/SURPLUS DEFERRAL ACCOUNT ................................................................. 36
G. REGULATORY DEFERRAL ACCOUNT (RDA) ..................................................................................... 37
H. UNPLANNED SUSTAINMENT CAPITAL AND MAINTENANCE DEFERRAL ACCOUNT (USCMDA) ..... 39
I. ENERGY COSTS DEFERRAL ACCOUNT (ECDA) ................................................................................ 43
J. PROPOSED RATE STRUCTURE AND RATES ..................................................................................... 45
K. REVISION TO THE TARIFF TERMS AND CONDITIONS ..................................................................... 51
A. SEUL ENERGY CONSUMPTION AND LOAD FORECASTS
Reference: SHANNON WALL CENTRE KERRISDALE DEVELOPMENT AND REQUIREMENTS FOR THE SETES Exhibit B-1, Section 2.2, pp. 3-4; Section 4, p. 8 Shannon Wall Centre Kerrisdale Development – Phases
On page 3 of Shannon Estates Utility Ltd.’s (SEUL) Levelized Rate Application for the Shannon Estates Thermal Energy System (SETES) (Application), SEUL states:
The Development was built in two phases. The first phase of the Development (“Phase 1”) was completed in November 2015 and consisted of the new 213-unit Shannon Mews & Apartments rental building, two commercial tenant spaces, and 65 residential strata units primarily in renovated heritage buildings.
The second phase of the Development (“Phase 2”) was completed in 2019 and consisted of 322 residential strata units in newly constructed strata buildings. Occupancy permits for Phase 2 were received between January and April 2019 and residents were able to move into the Phase 2 units in those months. Most Phase 2 units were signed up for service from SETES by late September 2019.
On page 4 of the Application, SEUL provides Table 2 titled ‘Thermal Energy Services by Building in the Development’ which includes details of each building.
On page 8 of the Application, SEUL states:
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Phase 2 of the Development was not substantially occupied and taking service from the SETES until about September 2019. This is significant because Phase 2 accounts for approximately 60% of the total space heated/cooled area and over 80% of the strata units within the Development. Energy consumption and load forecasts were therefore developed using actual utility usage and energy sales data from October 2019 until February 2020.
1.1 Please provide a site plan for the Shannon Wall Centre Kerrisdale Development, identifying the location of the SETES and all buildings being served by the SETES. Please clearly indicate the phase relating to each building.
RESPONSE: Please refer to Attachment BCUC IR-1 1.1. 1.2 Please confirm, or otherwise explain, whether all buildings developed in Phase 1 and
Phase 2, as shown in Table 2, have signed up for service from the SETES.
RESPONSE: Confirmed. As of October 2019, all of the buildings at the Development are connected to the SETES and all customers are receiving service.
1.2.1 If not confirmed, please identify the buildings that have not signed up for service and explain whether SEUL expects these buildings to sign up for service over the next 10 years.
RESPONSE: Not applicable. Please refer to the response to BCUC IR-1 1.2.
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1.3 Please update Table 2 to show the percentage of the total load for which each building accounts.
RESPONSE: Please refer to the updated Table 2 below as well as to Attachment BCUC IR-1 Master Sheet, Tab IR 1.3. The approximate percentages of total thermal loads are based on the projected annual load (for the entire system) and projected loads for each building. Please note that table below shows a rounded value for the approximate percentage of total load for the Gatehouse and the Coachhouse (each account for approximately 0.5% of the total thermal load).
Phase Building Name Strata PlanNew or
Renovated Rental/Strata # units Lobby Fitness RoomAmenity Lounge Kitchen Lounge Pool
Rooftop Community
Garden Heating Cooling Domestic
Hot Water
Approximate % of Total
Load
1Shannon Mews & Apartment N/A New Rental 215 x x x x x 20%
1 Cartier EPS2412 New Strata 41 x x x x x x 7%1 Churchill EPS2412 New Strata 14 x x x x x x 3%1 Mansion EPS2414 Renovated Strata 6 x x x x x x x 9%1 Gatehouse N/A Renovated Freehold 1 x x x x 1%1 Coachhouse EPS2413 Renovated Strata 3 x x x x x 1%2 Adera EPS5056 New Strata 77 x x x x x x x x x 16%2 Hudson EPS5056 New Strata 90 x x x x x x x x x 17%2 Beverly EPS5055 New Strata 84 x x x x x x x x x 14%2 Wilshire EPS5055 New Strata 71 x x x x x x x x x 13%
602 100%
Common areas Thermal Services Received
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Reference: SEUL ENERGY CONSUMPTION AND LOAD FORECASTS Exhibit B-1, Section 4, pp. 8-10 Forecast of Thermal Energy Consumption
On page 10 of the Application, SEUL provides the thermal energy consumption forecast for the SETES in Table 3.
On page 9 of the Application, SEUL states:
• Based on what SEUL is able to ascertain using consumption data, Phase 2 was never more than 80% occupied in any month. In developing the forecasts, SEUL assumes that Phase 2 units will, on average, continue to be 70% to 80% occupied throughout the year.
On pages 9 to 10 of the Application, SEUL describes the process of developing its forecasts of utility energy consumption and customer load using historical data. 2.1 Please reconcile the column references (in red) noted in the ‘Summary’ section below
Table 3 with the column references included in Table 3.
RESPONSE: Please refer to the updated Table 3 below.
SummaryTotal Space Cooling 686,285 kWh (g)+(l)+(m)
Total Space Heating 2,887,587 kWh (f)+(i)+(k)
Total DHW 1,870,230 kWh (h)+(j)
Total Service Area 698,986 sq.ft. (a)+(b)+(c)+(d)
SETES Served Area Thermal Energy (kWh)
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2.2 With respect to the column labelled ‘Retail Heat/Cool,’ please explain, and provide supporting rationale, what assumptions have been made with respect to the portion of energy allocated to heating and the portion of energy allocated to cooling.
RESPONSE: The metering system for the retail heating/cooling system does not separately measure energy for heating and cooling. The retail space is cooling dominant. Approximately 67% of the energy used in the retail heating/cooling system is used for cooling and 33% is used for heating. 2.3 Please confirm, or otherwise explain, whether the load forecast provided in Table 3
assumes 70 percent or 80 percent of occupancy.
RESPONSE: In the Application, the term “occupancy” is used to refer to the percentage of days the residents of a unit are present in the unit versus the percentage of time the unit is vacant. For example, if the residents of a unit live in the unit Monday to Friday but are away every weekend the occupancy of the unit would be 5/7 or 71%. SEUL’s load forecast assumes the actual historical load of all buildings since the Development was completed and occupied (reflecting actual occupancy of about 70% to 80% overall) is representative of the load going forward. A specific occupancy rate (i.e., 70% or 80%) has not been used as an input into SEUL’s forecast.
2.3.1 Please explain, and provide supporting rationale, whether different occupancy levels have been assumed for Phases 1 and 2.
RESPONSE: Please refer to the response to BCUC IR-1 2.3. 2.4 If the occupancy rates for Phases 1 and 2 were to reach 100 percent, please confirm, or
otherwise explain, whether the SETES can serve 100 percent of the load on an ongoing basis.
RESPONSE: Confirmed. Please also see the response to BCUC IR-1 2.3.
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2.5 Please provide a separate table showing the historic energy consumption for Phase 1 only for the following years: 2017, 2018 and 2019. Please provide the information in tables similar to Table 3 and include a functioning Excel spreadsheet.
RESPONSE: Please refer to the table below as well as Attachment BCUC IR-1 Master Sheet, Tab IR 2.5.
SUEL Phase 1 Energy Consumption T
Rent al Strat a Strata Co mmon Reta il Space DHW Space Space DHW Space Space Heat/
2.5.1 Please provide a step-by step explanation of the methodology used to establish the load forecast for Phase 1, detailing all assumptions made. Please include any calculations in the Excel spreadsheet. In your response please explain how the load forecast for the months of March to September was established for Phase 1 only.
RESPONSE: Please refer to section 4, page 9 of the Application for a step-by-step explanation of the methodology used to establish the load forecast. The forecast was based on projected energy consumption of the following space types: Strata Residential, Strata Common, Rental and Retail. The methodology was not intended to and did not produce separate forecasts for energy consumption by buildings in Phase 1 vs. Phase 2. Please refer to Attachment BCUC IR-1 Master Sheet, Tab IR 2.5.1. 2.6 Please provide the forecast thermal energy consumption for Phase 1 only. Please
provide the information in a table similar to Table 3 and include a functioning Excel spreadsheet.
RESPONSE: Please refer to the response to BCUC IR-1 2.5.1. 2.7 Please provide the historic thermal energy consumption for Phase 2 only for the period
October 2019 to May 2020. Please provide the information in a table similar to Table 3 and include a functioning Excel spreadsheet.
RESPONSE: Please refer to Attachment BCUC IR-1 2.7.
2.7.1 Please provide a step-by-step explanation of the methodology used to establish the load forecast for Phase 2, detailing all assumptions made. Please include any calculations in the Excel spreadsheet.
RESPONSE: Please refer to the response to BCUC IR-1 2.5.1. 2.8 Please provide the forecast thermal energy consumption for Phase 2 only. Please
provide the information in a table similar to Table 3 and include a functioning Excel spreadsheet.
RESPONSE:
Please refer to the response to BCUC IR-1 2.5.1 as well as to Attachment BCUC IR-1 Master Sheet, Tab IR 2.8.
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2.9 Please discuss, and quantify in percentage difference, the impact the COVID-19 pandemic has had on the loads for Phase 1 and Phase 2 for the period March 2020 to May 2020.
RESPONSE: SEUL has not attempted to estimate the impact the COVID-19 pandemic is having on the SETES load. SEUL’s position is simply that the load during the COVID-19 pandemic might not be representative of the load under normal circumstances and therefore the data from March 2020 forward should not be used for the purpose of forecasting loads in the Application.
On page 10 of the Application, SEUL states:
Although there will not be year-over-year load growth, there will be year-to-year variations in energy consumption primarily due to (1) variations in actual occupancy rates and occupant energy usage and (2) variations in weather. Decisions by the strata corporations (for example, in relation to heating the two swimming pools in the Development) can also have a significant impact on energy consumption.
2.10 Please elaborate further on the “significant impact” that decisions by the strata corporations can have on the energy consumption, detailing the decision made and the impact on the energy consumption in percentage. Please include the impact of the two swimming pools on the energy consumption.
RESPONSE: The strata corporations can set the heating and cooling temperatures for common areas higher or lower – in the common areas of the strata buildings, the strata corporations govern which impacts the heating and cooling energy loads. The responsible strata corporation also determines the extent to which each of the two swimming pools is heated (for example, whether the pool will be heated during the winter and if so to what temperature). The extent to which the swimming pools are heated has a significant impact on total energy consumption. For example, in 2019, pool heating accounted for 276,802 kWh, or roughly 6%, of thermal energy consumed in the Development.
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2.11 Please reproduce the load forecast provided in Table 3 to represent:
i. 100 percent occupancies for Phase 1 and Phase 2; ii. 100 percent occupancies for Phase 1 and Phase 2 plus impact of strata
corporation on energy consumption (to include swimming pools); and iii. The impact of strata corporation on energy consumption (to include swimming
pools).
Please provide details of all assumptions made.
RESPONSE: SEUL does not fully understand what is requested by this question. Please refer to the responses to BCUC IR-1 2.3 and BCUC IR-1 2.10.
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B. ANNUAL REVENUE
Reference: ANNUAL REVENUE Exhibit B-1, Section 5.3, pp. 16-17 Unit of Measurement
Page 16 of the Application states: “Each customer’s DHW [Domestic Hot Water] heating energy consumption is calculated using flow and energy metering data and the formula set out in the SETES Tariff.”
Further, page 16 of the Application states: “Each customer’s space heating energy consumption is calculated using the measured operating time of the heating equipment in the building and energy metering data at the building system, as set out in the SETES Tariff.”
Page 17 of the Application states: “Each strata unit customer’s space cooling energy consumption is calculated using the measured operating time of the cooling equipment in the building and energy metering data at the building system, as set out in the SETES Tariff.”
Further, page 17 of the Application states: “The monthly capacity levy is a fixed charge based on the square footage of each customer’s unit.” And “…the monthly metering charge has been fixed at $9.50 per account per month…”
3.1 Please explain how allocation between energy consumption charges and fixed charges was determined and please discuss why this is fair and reasonable.
RESPONSE: SEUL’s Application proposes a rate structure that recovers approximately 40% of the cost of service through fixed charges and approximately 60% through variable charges. As shown on Lines 52 and 53 of the Financial Model, the requested fixed and variable charges reflect these 40/60 proportions. SEUL considers that the 40/60 proportions provide a reasonable balance for the utility to recover its fixed costs and for customers to have the ability to manage their energy costs through decisions about energy consumption.
Page 17 of the Application states: “From fiscal 2017 to the present, the monthly metering charge has been fixed at $9.50 per account per month and charged directly to customers as a separate charge on the invoice.” Further, page 18 of the Application states: “The monthly metering charge continues to be charged directly to customers in this current year. In this application, SEUL is proposing that effective January 1, 2021, the monthly metering charge be cancelled such that it is not reflected as a separate charge; rather, the costs will be recovered through the capacity levy for overall simplicity of the invoice to customers.”
Page 17 of the Application states: “The monthly capacity levy is a fixed charge based on the square footage of each customer’s unit. The forecasted revenue SEUL will derive from the monthly capacity levy is calculated by multiplying the SETES’ total served customer area (698,986 ft2) by the applied-for capacity levy ($/ft2).”
Page 15 of the Application states: “This change will simplify customers’ invoices and avoid the confusion created by having two fixed charges, rather than just one, on each invoice.”
4.1 Please confirm, or explain otherwise, that all units will remain paying the same unit per month charge when it is combined with the monthly capacity levy and larger square footage units will not be subsidizing this charge for smaller units.
RESPONSE: SEUL will be charged $9.00 per account per month for the next five years and $10.00 per account per month for the following five years. For example, the charge of $9.00 per month will result in a monthly cost to SEUL of $5,508 ($9.00 x 612 accounts). This translates into a charge to customers of $0.008/sq.ft. ($5,508 / 698,986 sq.ft.), representing 1.4% of the total proposed capacity levy for fiscal 2022 (Year 1) ($0.008/$0.5528). A standard 700 sq.ft. unit will pay $5.60 ($0.008/sq.ft. x 700 sq.ft.) in respect of this cost, which is lower than the previous charge of $9.50. A larger until will pay a slightly higher fixed cost. There will therefore be some minor variation in the fixed costs that each unit will pay.
4.1.1 If not confirmed, please explain how this change is fair and reasonable to all customers.
RESPONSE: SEUL’s goal is to simplify the invoices customers receive. The invoices should be easily understandable and customers should not be confused by seeing multiple fixed charges when there are only two categories of costs: variable and fixed.
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4.2 Please explain when and how customers will be notified when there is a change to either the metering charge or the capacity levy.
RESPONSE: Changes to customers’ fees (including to metering charge or capacity levy) are communicated to customers through the notes section of customers’ invoices. SEUL will also ask the property managers in the Development to send the notices to customers via email. Customers have also received notice of this Application and BCUC review proceeding. 4.3 Please explain why combining the two fixed charges to avoid confusion was consider
more beneficial to customers than keeping the charges on the invoice separate.
RESPONSE:
SEUL proposes to recover fixed costs through a single fixed capacity charge so that customers can more easily understand their bill, rather than seeing two separate fixed charges that both recover fixed costs. The invoices should be easily understandable and customers should not be confused by seeing various fixed charges when there are only two categories of costs: variable and fixed.
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Reference: CERTIFICATE OF PUBLIC CONVENIENCE AND NECESSITY Exhibit B-1, Section 3.1, p. 5 Cost Savings
On page 5 of the Application, SEUL states:
On April 21, 2016, the Commission granted a CPCN to SWCRA to own and operate the SETES with an estimated capital cost of $7.5 million.2 The total capital cost of the SETES as at its last completed fiscal year of January 31, 2020 was $6,877,439. This is lower than the estimated capital cost of $7.5 million due mainly to cost savings that SEUL has achieved.
2 Commission Order C-4-16 dated April 21, 2016.
5.1 Please provide a brief discussion on the sources of the cost savings referenced in the preamble above.
RESPONSE: The cost savings are primarily a result of the utility negotiating better pricing with the contractors that constructed and installed SETES components.
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C. ANNUAL OPERATING COSTS
Reference: ANNUAL OPERATING COSTS Exhibit B-1, Section 5.4, pp. 18-19 Natural Gas and Electricity Consumption
On page 18 of the Application, SEUL forecast costs for purchasing natural gas from FortisBC Energy Inc. (FEI) and assumes an annual inflation rate of two percent.
6.1 Please provide the FEI rate schedule natural gas will be purchased under.
RESPONSE: SEUL is in FEI’s Large Commercial Rate Class.
6.1.1 Please confirm that natural gas purchased will be separately metered. If not
confirmed, please explain how the natural gas consumed will be verified.
RESPONSE: Confirmed. On page 19 of the Application, SEUL forecast costs for purchasing electricity from British Columbia Hydro and Power Authority (BC Hydro) and assumed an annual inflation rate of two percent.
6.2 Please provide the BC Hydro rate schedule the electricity will be purchased under.
RESPONSE: SEUL takes service from BC Hydro under BC Hydro’s Large General Service Rate Schedule 1600.
6.2.1 Please confirm that electricity purchased will be separately metered. If not confirmed, please explain how the electricity consumed will be verified.
RESPONSE: Confirmed. 6.3 Please explain the basis for selecting two percent to escalate the FEI and BC Hydro
service rate.
RESPONSE: SEUL does not know how much FEI’s and BC Hydro’s service rates will increase over the next ten years. SEUL therefore used the Bank of Canada’s CPI inflation control target of 2% in its forecast to escalate the FEI and BC Hydro service rates. SEUL has also proposed the ECDA and rate rider to recover from or distribute to customers the impact of higher or lower unit costs of natural gas and electricity. Please refer to section 6.5 of the Application.
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Reference: ANNUAL OPERATING COSTS Exhibit B-1, Section 5.4, pp. 19-20 Repairs and Maintenance
On page 19 of the Application, SEUL states:
In December 2017, SEUL entered into a servicing agreement with a contractor, Werner Smith Mechanical (“Werner Smith”), to monitor and service the SETES. This agreement has been extended each year with an annual inflationary adjustment of 4%.
7.1 Please confirm, or otherwise explain, whether Werner Smith will be responsible for all repair and maintenance activities for all components of the SETES (e.g. boilers, solar thermal, heat exchanges, chillers etc.).
RESPONSE: Werner Smith has provided, and will continue to provide, repair and maintenance services for many, but not all, of the components of the SETES. Werner Smith provides the repairs and maintenance for the mechanical components, including the SETES boilers, solar thermal panels, heat exchangers, chillers, and distribution piping. This repair and maintenance work is provided either pursuant to service agreements between SEUL and Werner Smith or on an as-needed basis. SEUL’s service agreements with Werner Smith are each limited in scope to a particular type of repair and maintenance. For example:
• A service agreement with Werner Smith covers mechanical maintenance and
operation of the DEU system for an initial one year term. This agreement provides for monthly maintenance and operation at a set rate per inspection. This maintenance includes monitoring of the DCC system, replacing drive belts and air filters, checking motor operations, amperages, mounts and vibration isolators, inspecting electrical connections, checking for leaks, and testing and certifying backflow preventers. The agreed costs under this agreement specifically exclude costs for belts, filters, large materials or major parts, additional HVAC service and repair work, additional plumbing service and repair work, or labour for evenings and weekends. This agreement stipulates an annual increase in contract costs of 2.5%. Please refer to Attachment BCUC IR-1 7.1 for a copy of this agreement.
• Another service agreement with Werner Smith covers water treatment services for
the SETES. This agreement provides for a set number of site visits to service the cooling tower, combined hot/chilled water loops, solar heating glycol loop, and heat recovery glycol loop. This agreement stipulates a price increase of 4% for the next term of the contract. Please refer to Attachment BCUC IR-1 7.1 for a copy of this agreement.
• Another service agreement with Werner Smith covers annual major boiler services.
This is an agreement for a one time annual cleaning and service of eight boilers in the SETES system at a set price per boiler. This agreement excludes any repairs outside the scope of the agreement as well as overtime or afterhours work. Please refer to
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Attachment BCUC IR-1 7.1 for a copy of this agreement. Thermanex provides maintenance of the software and software related components of the SETES such as controls, sensors and display panels. DSC Automation services hardware components of the IT systems such as wiring and panels. SEUL does not have ongoing service agreements with Thermanex or DSC Automation as their services are provided on an as required basis.
7.1.1 If not confirmed, please detail any system components for which Werner Smith will not be responsible and identify the party responsible.
RESPONSE: Please refer to the response to BCUC IR-1 7.1.
7.1.2 Please provide the term length of the service agreement.
RESPONSE: Please refer to the response to BCUC IR-1 7.1.
7.1.3 Please provide a copy of the latest signed service agreement.
RESPONSE: Please refer to the response to BCUC IR-1 7.1. 7.2 For each system component for which Werner Smith is responsible for repairs and
maintenance, please provide a table summarizing the tasks to be completed and the timing of each task (i.e. monthly, quarterly, annually, etc.).
RESPONSE: Please refer to the response to BCUC IR-1 7.1.
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7.3 Please provide the basis for an annual inflationary adjustment of four percent in the services agreement and explain why it is different from the assumed annual inflation rate in the Financial Model.
RESPONSE: As described in the response to BCUC IR-1 7.1, three contractors provide repairs and maintenance services to SEUL: Werner Smith, Thermanex and DSC Automation, pursuant to agreements with specified scopes (and specific cost exclusions) and on an as required basis. The four percent annual escalation of base repairs and maintenance costs in the Financial Model is based on SEUL’s expectation that (1) the volume of maintenance and repair work needed for the SETES overall (separate from the unit cost of the work) will increase over the next ten years as equipment ages out of warranty, and (2) the unit costs of materials, parts and labour will also increase over the next ten years. SEUL considers that the 4% inflationary factor may in fact be an underestimate, given that Werner Smith has advised SEUL that utilities smaller than SEUL typically see an average of $100,000 to $150,000 in repairs and maintenance costs per year.
7.3.1 Please explain whether as part of the annual extension process there is an
option to re-negotiate the agreement. If not, please provide the term which the annual inflation adjustment of four percent applies.
RESPONSE: As discussed in the responses above, repairs and maintenance are provided by multiple contractors pursuant to multiple contractual arrangements. None of the agreements has a term greater than one or two years, and SEUL is able to negotiate contract renewals and for the services obtained on an as required basis. Further on page 19 of the Application, SEUL states:
Repair and maintenance costs increased in fiscal 2019 as utility components were added for servicing the final phase of the Development and extra work was required to ensure the entire SETES was operating as designed. The repair and maintenance costs that SEUL incurred in fiscal 2020 were for the normal, routine maintenance and repair of the utility system. No repairs in fiscal 2020 were considered extraordinary or unusual.
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7.4 Please explain whether the extra work required to ensure the entire SETES was operating as designed, was considered testing. If so, please explain why these costs expensed as opposed to being capitalized.
RESPONSE: The extra work referred to in section 5.4(b), page 19 of the Application refers to the additional equipment that was placed into service with the completion of Phase 2 of the Development. For example, SEUL added five more chillers and four more boilers to service the additional load of Phase 2, all of which have to be maintained and serviced. In addition, the majority of the original SETES equipment (including the equipment added for Phase 2) is out of warranty or will be out of warranty by the end of this fiscal year and maintenance work previously provided by the manufacturer at no cost to SEUL has to be performed at SEUL’s cost. All repairs and maintenance costs have been properly expensed and do not need to be capitalized. 7.5 Please provide the accounting framework SEUL applies for financial reporting.
RESPONSE: SEUL applies the International Financial Reporting Standards (“IFRS”) for financial reporting. 7.6 Please discuss the relevant factors that SUEL considers when determining whether to
expense or capitalize costs.
RESPONSE: SEUL applies the standard guidance under IFRS for expensing or capitalizing expenditures (for example, AS 16 Property, Plant, and Equipment). Generally speaking, costs will be capitalized where it is probable that future economic benefits associated with the item will flow to the entity and its costs can be measured reliably including all expenditures directly attributable to bringing the asset to the location and condition necessary for its intended use. 7.7 If extraordinary or unusual repairs are required, please discuss whether these would be
completed by Werner Smith, under the terms of the service agreement. If not, please explain how these types of repairs will be managed.
RESPONSE: As noted in the Application, SEUL does not have any direct employees and SEUL would likely engage Werner Smith to undertake any required extraordinary or unusual repairs to mechanical components of the SETES. The agreements with Werner Smith specifically exclude additional service and repair work that is outside the scope of the agreements. SEUL therefore anticipates likely engaging Werner Smith on an as needed basis to complete any required extraordinary or unusual repairs.
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7.7.1 Notwithstanding the unplanned sustainment capital and maintenance deferral account, please explain whether SEUL maintains a capital reserve fund and/or a sustaining/replacement capital fund. If not, please explain if maintaining these funds was considered as an alternative to the deferral account, and why it was ultimately rejected.
RESPONSE: SEUL does not maintain a capital reserve fund or a sustaining/replacement capital fund, and the Financial Model does not include any costs related to such a fund. If additional funding is required, SEUL will obtain financing from its parent company or establish an operating line as necessary. The proposed Unplanned Sustainment Capital and Maintenance Deferral Account (“USCMDA”) is a mechanism for accounting for and enabling recovery of unplanned losses or expenses (in excess of a total annual financial impact of $20,000) by rate rider after the unplanned work is completed. The alternative of a capital reserve fund or a sustaining/replacement capital fund would involve building up the fund by collecting additional funds from customers in advance of unplanned work. SEUL understand that the BCUC has not been supportive of this approach, and SEUL did not consider this as an alternative to the USCMDA proposal. On pages 19 to 20 of the Application, SEUL states:
For fiscal 2022 (or Year 1), SEUL forecasts repair and maintenance costs of $85,000. This forecast is derived from starting with the $65,166 forecast for repairs and maintenance in fiscal 2021 and adding the following items:
• forecast of $7,000 increase in cost for major boiler repairs (the difference between the forecast cost of the minor boiler maintenance (which is included in the $65,166 forecast) and the cost of the major boiler maintenance);
• forecast of $8,000 in cost related to servicing and maintaining the technology and software used in the SETES system which, to date, has been covered under warranty;
and
• inflation costs of 4%.
For fiscal 2023 (or Year 2), the forecast is reduced by $7,000 to reflect the anticipated need for minor, and not major, boiler maintenance. For fiscal 2024 (or Year 3), the forecast is again increased by $7,000 to reflect the anticipated need for major boiler maintenance, and so on.
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7.8 Please provide a breakdown of, and discuss the difference between, major and minor repair and maintenance items required for the boilers. In your response, please discuss whether Werner Smith will be undertaking tasks on a daily, weekly, monthly, semi-annual and annual basis.
RESPONSE: The primary differences between minor and major repair and maintenance relates to the number of parts that are replaced and the level of depth of servicing required. Major repairs and maintenance typically services parts such as the burner gasket, blower gasket, exhaust manifold, and burner release gasket. In contrast, minor repairs and maintenance may only involve servicing of the ignitor, flame rod, and condensate trap orifice gasket. Please refer to Attachment BCUC IR-1 7.1, which outlines the work involved in the major boiler servicing undertaken every other year.
7.8.1 Please confirm, or otherwise explain, whether the major and minor repairs and maintenance schedules are in line with the boiler manufacturer’s recommendations.
RESPONSE: Confirmed. 7.9 Please explain why the $7,000 difference is not subject to the inflationary adjustment.
As appropriate, please adjust the Financial Model and provide the impact over the term of the levelized rate structure as a result.
RESPONSE: Please refer to Attachment BCUC IR-1 Master Sheet, Tab IR 7.9. In particular, please refer to the purple rows. The Financial Model has been updated so that the $7,000 difference is subject to the inflationary adjustment of 4%. The timing of the major repair has been updated to commence in Year 2 (fiscal 2023) (and not Year 1 (fiscal 2024)) since a major repair took place in fiscal 2021. The 4% inflationary adjustment was used in this updated Financial Model to account for the cost associated with the boiler repairs, which are above and beyond the $7,000 base rate for the repair work. The Financial Model is not designed to recalculate the applied for rates by simply adjusting the assumptions used in the Financial Model and in the Application. Although SEUL has updated the Financial Model according to the parameters of this information request, this recalculation should be considered as indicative of the impact and not sufficiently accurate for the Commission to rely on in making its decision on this Application.
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7.10 Please explain whether Werner Smith will be undertaking the work related to servicing and maintaining the technology and software. If not, please explain why the four percent inflationary adjustment is applied to these costs.
RESPONSE: Thermanex, and not Werner Smith, will service the software and software related components of the SETES. DSC Automation will service the hardware components of the IT systems. As discussed in the response to BCUC IR-1 7.3, the four percent annual escalation of base repairs and maintenance costs in the Financial Model is not specific to one component of maintenance. The escalation factor is based on SEUL’s expectation that (1) the volume of maintenance and repair work needed for the SETES overall (separate from the unit cost of the work) will increase over the next ten years as equipment ages out of warranty, and (2) the unit costs of materials, parts and labour will also increase over the next ten years. Like the mechanical components of the SETES, the software and IT hardware components are out of warranty or will be by this year, and SEUL anticipated that the labour and material costs to service these components will increase over the next ten years.
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7.11 Considering that the fiscal 2022 (Year 1) forecast for repair and maintenance costs of $85,000 is derived from the $65,166 forecast for repairs and maintenance in fiscal 2021, please explain how the fiscal 2021 forecast was developed and why it is unchanged from the fiscal 2020 (January 31, 2020) actual costs as presented in the Financial Model and highlighted in green above.
RESPONSE: The financial result for fiscal 2021 is currently unknown and has not been used to determine the fiscal 2022 (Year 1) repairs and maintenance costs in the Financial Model. Instead, the Year 1 repairs and maintenance figures were based on the actual amount in fiscal 2020, adjusted for additional costs to deal with repairs and maintenance work that used to be covered under warranty. Based on discussions with Werner Smith, SEUL determined that there would be at minimum a $20,000 increase to repairs and maintenance work due to the cost of parts that used to be under warranty and due to payment of services to Thermanex and DSC Automation that used to be provided without charge as the IT components were under warranty. The $85,000 forecast for Year 1 is considered to be conservative as SEUL has been advised by Werner Smith that utilities smaller than SEUL typically incur repairs and maintenance costs in the $100,000 to $150,000 range. SEUL understands that this range of costs would not be considered unusual for SEUL given that the SETES is comprised of highly specialized and expensive equipment that is not inexpensive to maintain and repair. Rather than adjust the Financial Model and rates, as SEUL does not have any historical information on the costs of repairs and maintenance of the components previously under warranty, SEUL requests the BCUC to approve the USCMDA and rate rider to provide for recovery of unplanned sustainment capital and maintenance costs in excess of a total annual impact of $20,000.
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7.12 Please provide a detailed description of the SETES assets’ maintenance and repair history with associated actual costs for the fiscal year ended January 31, 2020 (i.e. fiscal 2020) and for the first half of fiscal 2021 and forecast costs for the second half of fiscal 2021.
RESPONSE: Please refer to the tables below.
SETES Assets - Maintenance and Repair History - Fiscal 2020 Item Actual Cost ($) General maintenance (labour + parts) 40,403 Water treatment 4,793 Minor boiler maintenance 12,000 Repair of expansion tank 7,970 Total $65,166
SETES Assets - Maintenance and Repair History - Fiscal 2021
Item Actual Cost ($) Feb'20 - Jul'20
Projected Cost ($) Aug'20 - Jan'21
Projected Total Fiscal 2021
General maintenance (labour + parts) 28,832 28,832 57,664 Water treatment 3,548 3,548 7,096 Major boiler maintenance 19,000 - 19,000 Others - 7,000 7,000 Total $51,380 $39,380 $90,760
The general maintenance and water treatment costs are consistent monthly costs. The projected costs for the second half of fiscal 2021 were therefore based on the costs for the first half of fiscal 2021.
7.13 Please explain if there are any back-ups or system redundancies that allow major
components to be repaired/replaced without compromising the ability of the SETES to supply space heating, cooling and DHW.
RESPONSE: Confirmed.
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D. ANNUAL GENERAL AND ADMINISTRATIVE COSTS
Reference: ANNUAL GENERAL AND ADMINISTRATIVE COSTS Exhibit B-1, Section 5.5, pp. 20-21 Legal and Professional Fees
On pages 20 to 21 of the Application, SEUL states:
For the first year after updating its rate structure, SEUL anticipates additional inquiries from customers on matters related to this rate structure. There will also be ongoing inquires about technical aspects of utility service. Professional fees incurred in the prior years related to these matters have been in the $30,000 to $40,000 range, and SEUL projects legal and professional fees for the first year of the Application period to be in the same range at $35,000.
For subsequent years, there will continue to be corporate and operational matters that need to be addressed, requiring the assistance of outside professionals, as neither SEUL nor its parent company have dedicated staff with utility-specific skills. These matters could be related to design matters, matters arising from various compliance with bylaws and regulations, accounting and tax related matters, and various legal matters that may arise under normal business operations, such as support for annual reporting to the BCUC. Based on previous experiences with these matters, professional fees are forecast at $30,000 for the second year after the anticipated rate approval year, with an annual inflation rate for this item of 2%.
8.1 Please provide a detailed breakdown of the legal and professional fees incurred in fiscal 2019 and fiscal 2020.
RESPONSE: The legal and professional fees SEUL incurred in fiscal 2019 were mainly for the following work (costs are approximate):
• $13,000 in relation a customer’s inquiries and complaints to the BCUC, and associated BCUC review processes, about the determination of the customer’s domestic hot water (DHW) heating energy consumption and to develop a methodology to determine the DHW energy consumption given the unique service configuration for this customer, and in relation to the same customer’s inquiries about DHW invoices to his neighbours;
• $12,000 in relation to establishing a statutory right of way with respect to the SETES solar panels at the request of the same customer and as directed by the BCUC in the Order G-160-18 decision; and
• $6,000 in relation to the review of meter data information to ensure accuracy of readings relative to typical usage based on equipment on site, review heating/cooling charges of common areas, implementation of the rates and Tariff directed by the BCUC in Order G-190-17 into business processes, and review and assessment of warranty deficiencies as well as accounting and tax work.
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The legal and professional fees SEUL incurred in fiscal 2020 were mainly for the following work (costs are approximate):
• $16,000 related to corporate legal work as well as accounting, audit review and tax planning related to the transfer of the utility assets and operations from SWCRA LP to SEUL;
• $4,000 related to the application to the BCUC for approval of 2020 rates; • $11,000 related to the application to the BCUC to extend the deadline for SEUL to
submit the levelized rate application and the associated BCUC process; and • $5,000 related to miscellaneous corporate and utility matters, including metering and
fancoil checks, assistance in orientation testings, assistance in drafting gas cost sharing agreements between SEUL and the strata corporations, and conducting periodic testing of utility systems as well as for ongoing accounting and tax work.
As noted in the Application, SEUL does not have any direct employees and the administrative staff of SEUL’s parent company have limited experience with matters specific to public utilities. This means that SEUL must rely on external legal and professional resources to assist the company. 8.2 Please explain how SEUL determined an annual inflation rate of 2 percent was
appropriate for legal and professional fees, given that any matters related to updating its rate structure will likely be resolved in the first year.
RESPONSE: The “legal and professional fees” in line 10 in the Financial Model includes costs for recurring services provided by legal, accounting, tax, engineering, consulting, and other professionals. As noted in section 5.5(a), page 20 of the Application these costs are not related to the first rate application or this current Application to the BCUC or related proceedings. Costs SEUL historically incurred and forecasts that it will incur specifically in connection to the rate applications and related proceedings, including for example professional fees supporting this Application, are presented in the “regulatory costs” in lines 11 to 11.3 in the Financial Model. The costs presented under “legal and professional fees” are normal, recurring business expenses since the utility is an ongoing, active business. This Application and the resolution of it has no impact on the costs presented under “legal and professional fees”. Further, as noted in the Application, SEUL does not have any direct employees and the administrative staff of SEUL’s parent company have limited experience with matters specific to public utilities. This means that SEUL must rely on external legal and professional resources to assist the company.
8.3 Please explain what SEUL means by ‘design matters’ in subsequent years.
RESPONSE: SEUL used the term “design matters” to refer to inquiries from customers or regulators about how the SETES operates or about performance of space heating, space cooling and domestic hot water services.
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8.4 Please provide specific examples of design matters, matters arising from various compliance with bylaws and regulations, accounting and tax related matters, and various legal matters that may arise under normal operations.
RESPONSE: Examples of recurring legal and professional services required under normal operations (that is, unrelated to this Application and BCUC proceeding) include advice on contract interpretation, support for contract renewal, advice on applying the SETES Tariff terms and conditions, support for responding to requests from the BCUC and reporting to the BCUC, support for responding to inquiries from customers or regulators about how the SETES operates or about performance of space heating, space cooling and domestic hot water services and the meters, advice regarding changes to municipal bylaws and government regulations, corporate filings, corporate maintenance, accounting, tax treatment and classification of certain expenditures, questions or issues pertaining to the operation and maintenance of the SETES, and customer servicing or collection matters. As noted in the Application, SEUL does not have any direct employees and the administrative staff of SEUL’s parent company have limited experience with matters specific to public utilities. This means that SEUL must rely on external legal and professional resources to assist the company.
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Reference: ANNUAL GENERAL AND ADMINISTRATIVE COSTS Exhibit B-1, Section 5.5, pp. 22-23 Management Costs
On pages 22 to 23 of the Application, SEUL states:
SEUL relies on WFC’s head office employees to support its activities. SEUL’s management costs therefore represent the proportion of salary costs allocated to the utility for the work performed by, predominantly, the Vice President of Finance, the Vice President of Construction, and the Accounting Manager. This allocation is based on the percentage of time each individual spent in respect of utility matters, including time spent on the regulatory applications, financial and regulatory reporting, and maintenance matters.
…
On a normalized basis, management costs of $3,500 per month have been determined as reasonable for the work performed to manage the utility. Management costs for Year 1 of the Financial Model are higher at $57,000 due to the additional work required to prepare the Application, support the public hearing review of the Application, and to address subsequent inquiries and customer related matters that may arise after a new rate structure has been approved. Management costs thereafter are expected to return to a normalized basis with an annual inflation rate of 2%.
9.1 Please provide the amounts of management costs incurred in fiscal 2019 and fiscal 2020 that can be attributed to each of the Vice President of Finance, the Vice President of Construction, and the Accounting Manager.
9.2 Please provide an estimate of the percentage of the management costs of $3,500 per month that can be attributed to each of the Vice President of Finance, the Vice President of Construction, and the Accounting Manager.
RESPONSE: Please refer to the response to BCUC IR-1 9.1.
9.2.1 Please confirm if the percentage for the Vice President of Construction included in the $3,500 per month has been reduced from the percentage incurred in fiscal 2019 and fiscal 2020, given that construction has been completed. If not confirmed, please explain why.
RESPONSE: Not confirmed. In addition to being involved in the construction of the SETES, the VP Construction is also involved in all maintenance matters related to the SETES as well as any issues raised by customers or regulators on issues related to the operation and performance of the SETES. The VP Construction is also actively involved in contract renewal negotiation and coordination.
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Reference: ANNUAL GENERAL AND ADMINISTRATIVE COSTS Exhibit B-1, Section 5.5, pp. 23-24 Customer Account Costs
On pages 23 to 24 of the Application, SEUL states:
SEUL has reached an agreement in principle with QMC for QMC to reduce their metering charge from $9.50 per account per month to $9.00 per account per month for the next five years. SEUL anticipates renewing the agreement with QMC every five years. For the next five years of the financial forecast model (Years 6 to 10), SEUL forecasts the monthly charge will increase to $10.00 per account per month to reflect inflationary pressure. Annual inflation is otherwise not applied to this item.
10.1 Please explain if SEUL has explored any other options or billing agents in place of Quadlogic Meters Canada Inc. (QMC).
RESPONSE: The meters installed as part of the SETES were supplied by QMC and have been outfitted with QMC’s software. The most cost effective option is for SEUL to continue with QMC for the services QMC has been providing.
10.2 Please explain why SEUL anticipates an increase of approximately 11 percent in the
contract price, given it was able to negotiate a decrease for the first five years.
RESPONSE: QMC has informed SEUL that its costs are likely to increase due to anticipated increases in costs from QMC’s suppliers (for example, increased costs from accounting and billing software companies) as well as anticipated increases in costs of QMC’s internal operations.
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Reference: ANNUAL GENERAL AND ADMINISTRATIVE COSTS Exhibit B-1, Section 5.5, p. 24 Other Administrative Expense
On page 24 of the Application, SEUL states:
Other administrative expenses in Year 1 are projected to increase by approximately 160% due mainly to insurance costs, which have increased in the range of 40% to 200% in the industry in this most recent year. An annual inflation rate of 2% (line 45 of the Financial Model) is applied to this item.
11.1 Please specify how much of the 160 percent increase in other administrative expenses is due to insurance costs.
RESPONSE: Approximately 90% of the increase is due to insurance costs. 11.2 Please explain if SEUL has pursued quotes from other insurance providers in an attempt
to reduce insurance costs. If not, please explain.
RESPONSE: SEUL obtains insurance through a broker who surveys the market to obtain the best cost for the type of policy required for the utility. 11.3 Please explain if SEUL’s insurance only covers equipment damage up to the meter, or
whether it includes damage inside the strata.
RESPONSE: SEUL’s insurance covers damage inside strata buildings if the fault was that of SEUL and its equipment.
11.3.1 If heating/cooling/DHW equipment is damaged inside the strata, who is responsible for damages to the equipment?
RESPONSE: SEUL could be responsible for damages to heating/cooling/DHW equipment inside the strata if the damages result from the fault of SEUL or its equipment.
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11.4 Please discuss whether SEUL has considered seeking approval for deferral account treatment of insurance costs. Why or why not?
RESPONSE: SEUL has sought to strike a balance between rates that are expected to recover the cost of service over time, a reasonable time period for rates to be set under a levelized rate structure and limited use of deferral accounts. Pursuant to the BCUC’s TES Guidelines, TES providers seeking approval of rates for Stream B TES (such as the SETES) are required to consider the Commission’s rate setting principles, including the use of the least deferral mechanisms possible. This guidance factored into SEUL’s decision to request approval for only those deferral account treatments set out in the Application.
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E. DEPRECIATION/INCOME TAXES/RETURN ON RATE BASE
Reference: INCOME TAXES Exhibit B-1, Section 5.4, pp. 18-19 Forecast Income Tax Payable
On pages 25 and 26 of the Application, SEUL states:
The forecast of the income taxes payable by SEUL uses the current corporate income tax rate of 27% and assumes the rate increases by 2% every three years, commencing in Year 4 of the Financial Model, until it reaches 33% by Year 10. As this Application only forecasts costs up to Year 10, the corporate income tax rate of 33% was maintained for the balance of the Financial Model.
Income tax rates and tax rates in general could vary significantly based on the policies of the governing party. Due to the recent impact of the COVID-19 pandemic on the economy and resulting subsidies offered by both federal and provincial governments, it is anticipated that the governments will raise corporate income taxes to fund the subsidies provided to taxpayers.
12.1 Please elaborate on the basis for increasing the current corporate income tax rate of 27 percent by two percent every three years until year 10. As part of the response please provide the basis for 2 percent and the time period of every three years and comment on why this is considered reasonable.
RESPONSE: As stated in section 5.7 of the Application, income tax rates and tax rates in general could vary significantly based on the policies of the governing party. Due to the recent impact of the COVID-19 pandemic on the economy and resulting subsidies and other relief programs offered by both federal and provincial governments, it is reasonable to anticipate that the governments will raise corporate income taxes to help fund the subsidies provided and reduce deficits. It is unknown how and when the governing bodies will adjust taxes, but SEUL’s position is that for an Application to set rates for 10 years it is reasonable to anticipate an increase in the corporate income tax rate by 2% every three years. 12.2 Please discuss the measures, if any, SEUL has taken to mitigate the risk that income tax
payable is not over-recovered from ratepayers to the benefit of the shareholder(s).
RESPONSE: SEUL has used a conservative estimate of a 2% increase every three years to mitigate against the risk that income tax payable is less than forecast.
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12.3 Please provide the cumulative difference in income tax payable over the 10-year period between SEUL’s proposed corporate income tax rates and a scenario where the future corporate income tax rates are forecast to remain unchanged at 27 percent.
RESPONSE: Please refer to Attachment BCUC IR-1 Master Sheet, Tab 12.3.1. Please note that the Financial Model is not designed to recalculate the applied for rates by simply adjusting the assumptions used in the Financial Model and in the Application. Although SEUL has updated the Financial Model according to the parameters of this information request, this recalculation should be considered as indicative of the impact and not sufficiently accurate for the Commission to rely on in making its decision on this Application.
12.3.1 Please provide the annual incremental rate impact of using a corporate income tax rate of 27 percent over the 10-year period.
RESPONSE: Please refer to Attachment BCUC IR-1 Master Sheet, Tab 12.3.1. The incremental rate impact will depend on the elements of the rate structure chosen to achieve a minimal balance in the Revenue Deficiency / Surplus Account over the time period. For illustrative purposes, SEUL has provided an example of the rates to achieve this objective under the scenario specified in this question. The rates were computed using the “solver” function in Excel to which the objective may be achieved under a variety of rate structures, and for which SEUL has not explored all the possibilities for reasonableness. Please note that the Financial Model is not designed to recalculate the applied for rates by simply adjusting the assumptions used in the Financial Model and in the Application. Although SEUL has updated the Financial Model according to the parameters of this information request, this recalculation should be considered as indicative of the impact and not sufficiently accurate for the Commission to rely on in making its decision on this Application.
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Reference: RETURN ON RATE BASE Exhibit B-1, Section 5.8, p. 26; Section 6.2, p.28 Cost of Debt
Page 26 of the Application states: “To determine SEUL’s cost of debt, SEUL inquired of WFC’s major lenders on the borrowing rates SEUL would pay if it obtained financing on a stand-alone basis. In reviewing the business and risk profile of the utility, WFC’s major banks on average suggested a rate of Prime plus 2.00%.”
13.1 Please confirm, or explain otherwise, whether SEUL inquired to any lenders that did not have an affiliation or history with Wall Financial Corporation (WFC).
RESPONSE: WFC has relationships with all major banks, and has some history with all major lenders. SEUL therefore did not approach any lender for which WFC did not have some history. SEUL made this decision because the non-major lenders typically charge a higher lending rate.
13.1.1 If confirmed, please confirm or explain otherwise, whether Prime plus 2.00 percent was offered.
RESPONSE: Based on the discussions SEUL had with WFC’s major lenders, the lenders suggested rates ranging from Prime + 1.50% to Prime + 2.5% for an average of Prime + 2.0%. Page 28 of the Application states: “In consideration of its customers and a desire to ensure its customers pay a fair and reasonable price for utility services provided by the SETES, SEUL has decided to write off and waive recovery of the entire balance of the Revenue Deficiency/Surplus Deferral Account, estimated to be $3,500,000 at the end of fiscal 2021.”
13.2 Please explain how this write off and waiver to recover the $3,500,000 will affect the
cash flow and financial health of the SEUL. Please discuss how this may impact SEUL’s ability to obtain debt financing.
RESPONSE: This write off will result in a negative return for the utility, making SEUL less attractive for its shareholders. As the company’s major cost (i.e., the utility infrastructure) is financed via a non-interest bearing loan from WFC, the $3,500,000 write off should not have a significant impact on SEUL’s cash flow. 13.3 Please explain how, if any, this write off will impact SEUL’s ability to provide future
service or earn a fair return in the current period.
RESPONSE: The write off will not impact SEUL’s ability to provide service. SEUL hopes that this Application will result in approval of rates that, going forward, provide for recovery of the cost of service including the opportunity to earn a fair return.
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Reference: RETURN ON RATE BASE Exhibit B-1, Section 5.8, p. 26 Capital Expenditures
Page 26 of the Application states: “SEUL is not forecasting any capital expenditures during the period of the Application until Year 9 (see line 148 of the Financial Model). Capital expenditures are projected based on an estimate of staggered replacements of assets over the average estimated useful lives of utility components based on figures outlined by ASHRE standard equipment lifespans.”
Appendix A on the Staggered Replacement schedule shows Electronic Controls are not scheduled for replacement until 2030 after being installed in 2016:
Appendix A in Income statement for Rates Application shows the useful life for Controls, as per American Society of Heating, Refrigerating and Air Conditioning Engineers (ASHRE), is 13 years:
14.1 Please explain why capital expenditures for Controls are only starting in Year 9 instead of one year earlier.
RESPONSE: This was due to an interpretation error as it was understood that references to year 9 would be in reference to fiscal 2030 in the Financial Model; rather, the intention was for the replacement to occur in 9 years from the date of purchase.
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Capital Plant Replace coN1RoLS -m crn
JSEFUL LIVES OF ASSETS (YEARS)
Controls
/EAR Insta lle d: 2016
2017 2018
2019
2020
2021 2022
2023 2024
2025
2026
2027 2028
2029 2030 REPLACE
2031
Utility Assets Currently Recorded in Financial Statements
In consideration of its customers and a desire to ensure its customers pay a fair and reasonable price for utility services provided by the SETES, SEUL has decided to write off and waive recovery of the entire balance of the Revenue Deficiency/Surplus Deferral Account, estimated to be $3,500,000 at the end of fiscal 2021.
15.1 Please confirm that the entire balance of the Revenue Deficiency/Surplus Deferral account will be written off, even if it is higher than $3,500,000, at the end of fiscal 2021. If not confirmed, please explain who will be responsible for recovering the additional amount above $3,500,000.
RESPONSE: Confirmed. On page 29 of the Application, SEUL states:
SEUL has continued to prepare the revenue deficiency/surplus calculations for each year to show the required rate of return of 9.50% on SEUL’s equity portion of its capital investment and a WACC on SEUL’s debt portion. However, the calculation does not include any carrying charges on the revenue deficiency/surplus balance, as the purpose of the calculations is to illustrate that over the 10-year period for which SEUL is seeking a rate approval, the rates will be sufficient for the utility to recover its cost of service.
15.2 Please clarify if SEUL is proposing to not collect carrying charges on the revenue deficiency/surplus balance.
RESPONSE: Confirmed.
15.2.1 If SEUL is proposing to collect carrying charges on the revenue deficiency/surplus balance, please provide an updated model showing the impact of the carrying charges, as well as a proposal for how SEUL plans to determine the carrying charges.
RESPONSE: Not applicable. Please refer to the response to BCUC IR-1 15.2.
On page 29 of the Application, SEUL requests the following in relation to the RDA:
• that the Commission approve the continuance of the RDA until the balance of $313,685 as of January 31, 2020 is recovered; and
• that the Commission approve SEUL’s recovery of the balance of $313,685 in the RDA over a ten-year period on a straight line basis as shown in the Financial Model.
On page 30 of the Application, SEUL provides the following table:
16.1 Please provide a detailed breakdown of the additions to the RDA for 2017, 2018, and 2019.
RESPONSE: Please refer to the tables below.
Additions to the RDA – Fiscal 2017 Description Amount NDY Fees $82,586.00 Total $82,586.00
Additions to the RDA – Fiscal 2018
Description Amount NDY Fees $50,683.92 Lawson Lundell Fees $30,230.87 Intervener participant costs awarded $26,672.87 BCUC costs related to rate application $13,464.34 Total $121,052.00
SEUL’s position is that a ten-year recovery period is appropriate as it is the best balance between burden imposed on SEUL and SEUL’s customers. A shorter recovery period would reduce the burden placed on SEUL but would increase the short-term rates for SEUL’s customers. A longer recovery period would mean lower short-term rates for SEUL’s customers but higher carrying costs to be recovered and would place a disproportionate burden on SEUL. SUEL (sic) does not propose making any more additions to the RDA.
SEUL notes Directive #17 in the Commission Decision G-190-17, in which the Commission directed SEUL to present alternative recovery methods for the RDA including recovery based on square footage. SEUL has carefully considered various recovery methods and has determined that recovery of the RDA on a straight line basis over a ten-year period is an appropriate basis of recovery.
16.2 Please explain in detail the other options considered for recovery of the balance. Did SEUL consider the use of a separate rate rider? Why or why not?
RESPONSE: Given that this Application is for levelized rates over a ten year period and that no further regulatory costs are anticipated during the period after approval of this Application, SEUL considered that a rate rider was not the best method for recovering the balance of the RDA. Given those considerations, SEUL did not see a basis for treating the recovery of the balance of the RDA differently than the other costs in the Application. SEUL notes that the BC Old Age Pensioners’ Organization et al. (“BCOAPO”) and EPS-5056 Strata have registered as interveners in this Application and have applied for PACA funding. Both BCOAPO and the Strata are represented by counsel and indicate their intention to submit IRs and arguments. Given this development and the resulting additional costs, a different approach to recovering the RDA balance might be more appropriate. However, the actual regulatory costs associated with this Application will not be known until the BCUC issues its final decision, any resulting directives from the BCUC have been complied with, and PACA funding award decisions have been made. SEUL cannot therefore simply update the rate structure at this time to incorporate the anticipated increased costs as the amount of the increase is not yet known. 16.3 Did SEUL consider recording costs incurred directly in relation to the current Application
in this account? Why or why not?
RESPONSE: For the same reasons as are set out in the response to BCUC IR-1 16.2, SEUL did not initially consider recording costs incurred directly in relation to the current Application in the RDA. However, given the unanticipated involvement of the BCOAPO and request for PACA funding in this proceeding, in particular, a different approach to recording and recovering regulatory costs in relation to the current Application might be more appropriate.
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H. UNPLANNED SUSTAINMENT CAPITAL AND MAINTENANCE DEFERRAL ACCOUNT (USCMDA)
Reference: UNPLANNED SUSTAINMENT CAPITAL AND MAINTENANCE DEFERRAL ACCOUNT Exhibit B-1, Section 6.4, pp. 30-31 Threshold
On page 30 of the Application, SEUL states:
In Order G-190-17, the Commission approved the establishment of the SCDA [Sustainment Capital Deferral Account] that could be activated should capital replacement costs exceed budgeted replacement figures for the year by 30%. The Commission also approved the establishment of an ERDA [Emergency Repair Deferral Account] that could be activated should the costs of overcoming events which are considered unsafe or can disrupt service, will unreasonably reduce reliability or will cause non-negligible damage to equipment and therefore result in an increase of the costs of maintaining the utility in excess of 30% of budgeted replacement figures for the year. Neither of these two accounts has been used.
Further on page 31 of the Application, SEUL states:
For simplicity, SEUL requests that the Commission approve the replacement of these two accounts with a single deferral account – the USCMDA. The USCMDA is proposed to capture any (1) unplanned sustainment capital costs and (2) unplanned maintenance costs, in excess of a total annual financial impact of $20,000. The $20,000 threshold is considered reasonable in relation to the ROE in the range of $200,000 per year.
17.1 Please explain why the change from “in excess of 30% of budgeted replacement figures for the year” to “in excess of a total annual financial impact of $20,000” is required.
RESPONSE: Per line 148 of the Financial Model, SEUL has not forecast any capital replacement costs for any year until year 9 (fiscal 2030). Therefore, prior to year 9, the “budgeted replacement figures” are zero, and a threshold of 30% of “budgeted replacement figures” would also be zero. SEUL therefore proposes replacing the 30% threshold with the $20,000 threshold.
17.1.1 As neither the SCDA nor the ERDA were used, please explain how this change is expected to affect the new deferral account.
RESPONSE: Please refer to the answer to BCUC IR-1 17.1.
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17.2 Please explain why a threshold amount was included for this deferral account.
RESPONSE: A threshold is proposed for this deferral account in recognition that SEUL should bear risk and have the incentive to properly manage the repairs and maintenance of the SETES assets. With respect to the amount of the threshold proposed (that is, a total annual financial impact of $20,000), as stated in section 6.4, page 31 of the Application, this threshold is considered reasonable in relation to the ROE in the range of $200,000 per year. 17.3 Please explain why unplanned sustainment capital costs and unplanned maintenance
costs cannot be captured in the existing Revenue Deficiency/Surplus Deferral account?
RESPONSE: The purpose of the Revenue Deficiency/Surplus Deferral account was to record any annual revenue deficiencies or surpluses resulting from the difference between the annual revenue at the approved rates and the annual cost of service in the specific context of the BCUC’s considerations in the Order G-190-19 decision. In this Application, SEUL proposes to change the use of the Revenue Deficiency/Surplus Deferral Account and proposes a limited number of other deferral accounts each with a specific purpose and scope of costs as set out in section 6 of the Application. As discussed in the response to BCUC IR- 11.4, SEUL has sought to strike a balance between rates that are expected to recover costs over time, a reasonable time period for a levelized rate structure and limited use of deferral accounts. Pursuant to the BCUC’s TES Guidelines, TES providers seeking approval of rates for Stream B TES (such as the SETES) are required to consider the Commission’s rate setting principles, including the use of the least deferral mechanisms possible. This guidance factored into SEUL’s decision to request approval for only those deferral account treatments set out in the Application.
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Reference: UNPLANNED SUSTAINMENT CAPITAL AND MAINTENANCE DEFERRAL ACCOUNT (USCMDA) Exhibit B-1, Section 6.4, p. 31 Rate Rider
On page 31 of the Application, SEUL states:
SEUL also requests the approval of a rate rider for recovering the balance of the USCMDA from time to time, if any. SEUL proposes that the rate rider to recover the balance in the USCMDA be set as a percentage of the customer’s total utility charges, like BC Hydro’s RS 1901 deferral account rate rider. The percentage will be set annually effective February 1st at the level expected to fully recover the balance in the USCMDA from customers over one year.
18.1 Please discuss how a rate rider set as a percentage of the customer’s total utility charges to be recovered over one year would affect customers’ rates. Please include any estimates for potential rate shock.
RESPONSE: On an expected basis (that is, if capital and maintenance costs are as forecast in the Financial Model and/or unplanned sustainment capital and maintenance costs never exceed the proposed $20,000 annual financial impact threshold), the proposed USCMDA and rate rider will never be used. SEUL cannot predict how an unexpected scenario might affect customer rates and in particular whether an unexpected scenario could result in the rate rider exceeding a given percentage. SEUL would not be opposed to the BCUC approving the proposed USCMDA and rate rider subject to a condition that the rate rider shall not be set higher than 15%. 18.2 Please confirm, or explain otherwise, whether this percentage would be applied to all
customers, strata and rental, or would be divided differently between these groups.
RESPONSE: Confirmed. The same percentage rate rider would be applied to all customer bills.
18.3 Please confirm, or explain otherwise, that the effective date of February 1st will allow
the introduction of the rate rider to occur at the same time as rate increases for the fixed/variable components of the rate, so that customer are not faced with possible rate increases multiple times during the year.
RESPONSE: Confirmed.
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18.4 Please explain why the rate rider was included in this application versus applying for the rate rider once the USCMDA is activated.
RESPONSE: SEUL included the request for approval of the rate rider in this Application to avoid having to make a further application for the rate rider within the ten year period for which the SETES rates are being sought. The purpose of avoiding further applications during this period is to keep regulatory costs down and, ultimately, reducing costs to SEUL’s customers.
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I. ENERGY COSTS DEFERRAL ACCOUNT (ECDA)
Reference: ENERGY COSTS DEFERRAL ACCOUNT (ECDA) Exhibit B-1, Section 5.3, p. 18; Section 6.5, pp. 31-32 ECDA Rate Rider
On pages 25 and 26 of the Application, SEUL states:
SEUL proposes a two-part charge to recover its energy costs:
• the base variable charges ($/kWh) for space heating, space cooling, and DHW heating, as approved by the Commission on the basis of forecast annual costs, forecast load and a levelized rate design; plus
• a rate rider that recovers or distributes positive or negative balances in a new Energy Costs Deferral Account (ECDA).
The annual impact (positive or negative) of variances between forecast unit energy costs and actual unit energy costs are proposed to be captured in the ECDA.
19.1 Please discuss the alternatives that were considered to recover actual energy expenses from customers, including the pros and cons of the alternatives, and why they were ultimately rejected.
RESPONSE: In Commission Order G-190-17, the Commission directed SEUL (then SWCRA) to file an application to set rates under a levelized rate structure. This approach to setting rates is intended to recover the cost of service through rates set for an extended period of time and with the rates escalating over the period notwithstanding the cost of service in any one year of the period. This approach also reduces the regulatory burden compared to a test year cost of service rate setting approach because there are extended periods between levelized rate applications. SEUL wanted to apply for levelized rates for a ten year period to keep regulatory costs down, ultimately to reduce costs to SEUL’s customers. With the decision to apply for rates for a ten year period, the proposed ECDA and rate rider are required to account for the uncertainty of the unit costs of natural gas and electricity over such an extended time period. No other alternatives were considered.
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19.2 Please discuss how this proposed treatment of the SETES energy costs differs from the methodology previously applied.
RESPONSE: The proposed treatment of the SETES energy costs in this Application differs from the methodology previously applied in that the SETES rates were previously pegged to the SEFC Class 1 rates whereas this Application requests approval of cost of service rates levelized over a ten year period. 19.3 Please clarify the timing of when the rate rider will be adjusted (monthly, quarterly,
annually, etc.) and whether it is designed to dispense the entire deferral balance on a prospective basis for the proceeding period.
RESPONSE: SEUL proposes to adjust the rate rider on an annual basis. SEUL expects that the balance in the ECDA will be small and the proposal is designed to dispense of the entire deferral balance for the proceeding year prospectively over the following year.
19.3.1 Please provide the proposed period the deferral account will be amortized.
RESPONSE: SEUL proposes that the ECDA will be amortized over a one year period.
19.3.2 Please confirm, or otherwise explain, whether SEUL proposes to apply to the BCUC each time the rate rider is adjusted.
RESPONSE: Not confirmed. SEUL included the request for approval of the rate rider in this Application to avoid having to make a further application for the rate rider within the ten year period for which the SETES rates are being sought. The purpose of avoiding further applications during this period is to keep regulatory costs down and, ultimately, reducing costs to SEUL’s customers. SEUL will file the level of the rate rider with the BCUC and provide any other information the BCUC requires; however, an application for approval each time the rider is adjusted annually would be cost prohibitive for a small utility like the SETES. 19.4 Please provide the interest rate that will be applicable to the deferral account and the
rationale for the rate proposed.
RESPONSE: SEUL proposes to apply the same weighted average cost of debt interest rate used in computing the Regulatory Deferral Account.
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J. PROPOSED RATE STRUCTURE AND RATES
Reference: PROPOSED RATE STRUCTURE AND RATES Exhibit B-1, Section 7, pp. 32-34 Revenue Deficiency/Surplus Deferral Account
On page 32 of the Application, SEUL states:
SEUL proposes the following rates for Year 1 (F’2022), effective January 1, 2021:
• DHW heating, space heating, and space cooling $0.12950/kWh • Monthly capacity levy $0.05528/ft2
20.1 Please provide the current effective rates for fiscal 2021, and the current average monthly bill for each customer, and compare that to the estimated average monthly bill under the proposed rates for Year 1.
RESPONSE: The current rates are as follows:
• DHW heating, space heating, and space cooling: $0.053111/kWh • Monthly capacity levy: $0.0542/ft2 • Monthly metering charge: $9.50
Each customer’s bill will vary depending on the customer’s consumption and usage, which will also vary depending on the customer’s occupancy level. There is insufficient historical annual consumption and usage data for customers in Phase 2 of the Development to provide a reasonable average monthly bill. Please refer to Attachment BCUC IR-1 Master Sheet, Tab IR 20.1, which has been provided for illustrative purposes. In this example, SEUL has assumed a 775 sq.ft. unit that consumes an average of 825 kWh for space heating, 76 kWh for space cooling, and 396 kWh for DHW. Under that scenario, the customer’s bill will be $210.80 compared with $120.39 under the current rate structure. Although this bill comparison has been provided at the BCUC’s request, SEUL wishes to reiterate that this comparison does not provide meaningful information as the current rates were not designed under the levelized rate structure, which is intended to allow utilities to recover their operating costs and the opportunity to earn a fair return. The current rates are insufficient to cover SEUL’s operating cost as the current rates charged by SEUL were pegged, according to the BCUC’s direction, to the rates for the SEFC Utility, which has a different capital structure, a different customer base, and uses different technology to provide utility services to its customers. In addition, the SEFC Utility does not provide its customers with cooling and is able to spread its costs across a larger and expanding customer base. This is in contrast to the SETES, which does provide cooling and has a fixed customer base. Under the rates pegged to those of the SEFC Utility, SEUL was unable to recover its cost of service resulting in the accumulation of the significant balance in the
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Revenue Deficiency/Surplus Deferral Account. For this reason, it would not be meaningful to compare the invoices under the SEFC rate structure to the proposed cost of service levelized rate structure in the Application. 20.2 Please provide a comparison of the estimated average monthly bill using the proposed
rates to the average monthly bill assuming the rates currently in effect for BC Hydro were used instead of the proposed rates. Please also provide the average monthly bill assuming the rates currently in effect for the SEFC development were used instead of the proposed rates.
RESPONSE: SEUL is not able to provide the requested comparison without further information on the assumptions to be made. BC Hydro’s rate structure for residential customers has a basic charge (per day) and an inclining block rate for electrical energy (for all uses), which is quite different than the SEUL rate structure that has a fixed charge (per floor area served) and variable charges for thermal energy for heating, cooling and DHW. The SEFC Utility provides services at the whole buildings level (not to individual residential units) and does not provide cooling service. This is in contrast to the SETES, which does provide cooling and at the individual unit level. Additionally, the respective equipment of the utility versus the customer is quite different as between SEUL, BC Hydro and the SEFC Utility. On page 33 of the Application, SEUL states:
After Year 1, the rates are proposed to increase on a levelized basis as follows:
• Years 2-3 (F’2023-F’2024) +1.5%/year • Year 4 (F’2025) +2.0%/year • Year 5-6 (F’2026-F’2027 +2.5%/year • Years 7-10 (F’2028-F’2031) +3.0%/year
20.3 Please explain why SEUL is proposing to increase rates by a different percentage each year, rather than applying an equivalent percentage increase each year.
RESPONSE: The objectives in designing the rate structure are to (i) minimize year-over-year rate changes both in Year 1 and in subsequent years of the ten-year period; (ii) keep the balance in the Revenue Deficiency / Surplus Deferral account from getting too large in any particular year; and (iii) reduce the balance in the Revenue Deficiency / Surplus Deferral Account to zero (or close to zero) by the end of Year 10 while charging a reasonable rate to SEUL’s customers. The rate structure design was examined under numerous scenarios, and the design that was best able to achieve the main objectives as outlined above is that proposed in the Application.
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20.3.1 Considering the rate design principles of customer acceptance and customer understandability, please discuss whether a uniform percentage increase each year would better achieve these goals? Why or why not?
RESPONSE: Please refer to the response to BCUC IR-1 20.3. A uniform percentage increase each year at, for example, 2.25% could achieve these goals. Please refer to Attachment BCUC IR-1 Master Sheet, Tab 20.3.1. Please note that the Financial Model is not designed to recalculate the applied for rates by simply adjusting the assumptions used in the Financial Model and in the Application. Although SEUL has updated the Financial Model according to the parameters of this information request, this recalculation should be considered as indicative of the impact and not sufficiently accurate for the Commission to rely on in making its decision on this Application.
20.3.2 If a uniform rate increase were to be applied, what rate should that be and why?
RESPONSE:
Please refer to the responses to BCUC IR-1 20.3 and BCUC IR-1 12.3.1.
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On page 33 of the Application, SEUL explains:
The monthly capacity levy is intended to recover SEUL’s fixed costs, which includes all costs except for SEUL’s electricity and natural gas costs. SEUL then provides a list of reasons that it states is important for SEUL having a fixed rate component.
20.4 Please provide the percentage of fixed vs. variable costs that SEUL has incurred for 2019 and 2020, and compare to the percentage of fixed vs. variable costs that SEUL expects to incur for the proposed 10-year period.
RESPONSE: Please refer to the table below.
Year % Variable Expenses % Fixed Expenses Fiscal 2019 67.60% 32.40% Fiscal 2020 67.74% 32.26% Year 1 54.28% 45.72% Year 2 68.38% 31.62% Year 3 68.57% 31.43% Year 4 58.75% 31.25% Year 5 68.93% 31.07% Year 6 68.99% 31.01% Year 7 69.16% 30.84% Year 8 69.34% 30.66% Year 9 69.51% 30.49% Year 10 69.68% 30.32%
20.4.1 Please explain if SEUL considered any alternatives other than 100 percent of fixed costs being recovered through the monthly capacity levy rate. If yes, please explain why SEUL chose the proposed method over any other options.
RESPONSE: Please refer to the response to BCUC IR-1 3.1. SEUL did not consider any alternatives to rates that recover up to 40% of the cost of service through fixed charges and the remainder (approximately 60%) through variable charges.
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Reference: PROPOSED RATE STRUCTURE AND RATES Exhibit B-1, Appendix G Draft Order Revenue Deficiency/Surplus Deferral Account
Directive 2 of Appendix G (draft order) states:
2. The Commission approves the continuation of the Revenue Deficiency/Surplus Deferral Account to record the differences between forecast revenue requirement and forecast revenues pursuant to the levelized rate design.
21.1 Please explain in detail how SEUL proposes to record differences between actual revenues and costs, compared to forecast revenues and costs over the 10-year period of this Application. Is SEUL proposing any true-up of these variances in the Revenue Deficiency/Surplus Deferral Account or any other deferral account?
RESPONSE: For clarity, SEUL is not proposing to use the Revenue Deficiency/Surplus Deferral Account to record and recover differences between actual revenues and costs over the ten year period of this Application. As stated in section 6.2 of the Application, SEUL has prepared the revenue deficiency/surplus calculations for each year in the Financial Model to guide the determination of rates that achieve the required rate of return of 9.50% on SEUL’s equity portion of its capital investment and a WACC on SEUL’s debt portion over the ten-year period.
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Reference: PROPOSED RATE STRUCTURE AND RATES Exhibit B-1, Appendix A Financial Model of Profit and Loss
SEUL provides a Financial Model of Profit and Loss in Appendix A of the Application.
22.1 Please provide a column for fiscal 2021, containing actuals for the first half of fiscal 2021 and a forecast for the second half of fiscal 2021, in the same format of the Financial Model of Profit and Loss schedule.
RESPONSE: Please refer to Attachment BCUC Master Sheet IR-1, Tab IR 22.1. 22.2 Please discuss if SEUL considered recovering the Revenue Deficiency/Surplus balance
over a period of greater than 10 years, in order to minimize rate increases. If yes, please explain in detail the other time periods considered, and why a period of 10 years was considered reasonable. If not, please explain why not.
RESPONSE: SEUL has decided to write off and waive recovery of the entire Revenue Deficiency/Surplus Deferral Account balance as of the end of fiscal 2021. SEUL proposes a ten-year period for the levelized rates in the Application for the same reasons as set out in the response to BCUC IR-1 20.3.
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K. REVISION TO THE TARIFF TERMS AND CONDITIONS
Reference: AMENDED THERMAL ENERGY SERVICE TARIFF FOR SHANNON ESTATES UTILITY LTD. Exhibit B-1, Appendix B-1, Definitions, p. 2 Shannon Estates Thermal Energy System Application for a British Columbia Utilities Commission Certificate of Public Convenience and Necessity, Exhibit B-3, BCUC IR 9.1 and 9.2 (SETES CPCN Application) Definitions
On pages 2 and 3 of the Amended Thermal Energy Service Tariff for Shannon Estates Utility Ltd. Effective January 1, 2021 Clean Copy, provided as Appendix B-1 to the Application, includes definitions for Building, Customer, Meters, and Person.
In response to BCUC IR 9.1 in the SETES Certificate of Public Convenience and Necessity (CPCN) Application, SETES stated: “SETES expects all buildings on site will be connected to the TES. Each will require a customer agreement.”
And in response to BCUC IR 9.2 in the SETES CPCN Application, SETES stated: “the number of customers will reflect the number of individual billing accounts.”
23.1 Please provide the number of active customer agreements and explain whether every customer is required to have one. If not, please explain why not. If so, please discuss how SEUL manages the customer service agreements where a change of customer occurs.
RESPONSE: SEUL has 612 customers (602 residential customers and 10 customers that are accounts for building common areas, retail space, etc.). A customer service agreement is not required for a person to be considered a customer under the Thermal Energy Service Tariff for SEUL. As defined in the Tariff, “Customer means any Person receiving Energy Services from the Utility.” 23.2 Please confirm, or otherwise explain, that each building, which includes separate units
of a building, including a Strata lot, Strata Common Property, and commercial or residential rental unit receiving Energy Service is separately metered and which a customer is invoiced for.
RESPONSE: Confirmed.
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23.3 Please explain whether the number of individual billing accounts and the number of customers is equivalent to the number of meters. If not, please explain why not.
RESPONSE: The number of individual billing accounts and number of customers is not equivalent to the number of meters. Multiple meters are in place to measure the energy services provided to each customer. The data from these multiple meters is then consolidated on a single invoice for that customer.
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Reference: AMENDED THERMAL ENERGY SERVICE TARIFF FOR SHANNON ESTATES UTILITY LTD. Exhibit B-1, Appendix B-1, p. 13 Domestic Hot Water Heating
On page 13 of the Amended Thermal Energy Service Tariff for Shannon Estates Utility Ltd Effective January 1, 2021 Clean Copy, provided as Appendix B-1 to the Application, SEUL states:
The formula to calculate general water heating energy is:
𝑄𝑄 = 𝐶𝐶𝐶𝐶𝑤𝑤𝑤𝑤𝑤𝑤𝑤𝑤𝑤𝑤 ∗ 𝑀𝑀𝑤𝑤𝑤𝑤𝑤𝑤𝑤𝑤𝑤𝑤 ∗ ∆𝑇𝑇
Where: Q – Heating Energy (kWh) Cp – Specific heat of water (kWh/kg °K) M – Mass water (kg/m³) ∆T – Change in temperature (°K)
24.1 Please confirm that the units of mass should be “kg” and not “kg/m3.”
RESPONSE: Confirmed.
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Reference: THE SHANNON ESTATES PHASE 2 COV ENERGY WORKS COMMISSIONING REPORT TO SUPPORT FULFILLMENT OF SECTION 4.2 OF THE LOW CARBON ENERGY AGREEMENT DATED MARCH 2019 Exhibit B-1, Appendix E, pp. 2-4 Metering
Page 2 of the Shannon Estates Phase 2 City of Vancouver Energy Works Commissioning Report to Support Fulfillment of Section 4.2 of the Low Carbon Energy Agreement dated March 2019, (Commissioning Report) states:
2.6 System F – Phase 1 Strata Heating Loop
Description: System F is a hot water loop that supplies hot water for Phase 1 strata building space heating.
Phase 2 construction: No additions.
The commissioning activities in Phase 2 included observation and in some cases actions on:
• Energy metering.
25.1 For System F, and all other systems noted to require actions on energy metering, please provide a brief discussion on the types of actions required, the reasons for the actions and confirmation that the necessary actions have been completed.
RESPONSE: The addition of a thermal meter or virtual thermal meter (composite generated through software from the reading of more than one meter) on System F was needed to meet the requirements of the “Low Carbon Energy System Performance Monitoring and Reporting Plan” (“LCES PMR Plan”). Although the SETES was metered to measure thermal energy for customer billing purposes, the LCES PMR plan called for the plant and transmission side to take measurements at the system level for performance monitoring and research purposes. These thermal meters or virtual thermal meters are in place. Page 4 of the Commissioning Report states:
3.4 Derived Efficiency Calculations
Baseload heating, seasonal heating, seasonal cooling, and seasonal cooling per chiller COP can be derived from the metering data. A thermal meter is being reviewed for one of the chiller due to inconsistent behaviour.
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25.2 Please confirm, or otherwise explain, whether the issues associated with the thermal meter for the chiller have been resolved.
RESPONSE: Confirmed. The thermal, as well as electrical meters, on the chillers are reading properly and COP calculations are possible. Measurement Canada’s Bulletin V-31 for the Implementation of thermal energy meter requirements states:
[Measurement Canada] will implement the requirements for the approval and certification of thermal energy meters according to the following schedule:
• As of July 1, 2019, all newly installed thermal energy meters used in trade must be approved, examined and certified as meeting the requirements of the [Weights and Measures Act] and Regulations (see sections 4.2 and 4.3 of this bulletin for more details). In the absence of an approved and certified meter, the conditions for an exemption under section 7 of the Regulations must be met (see section 4.4 of this bulletin for more details).
• As of January 1, 2026, all unapproved and unexamined thermal energy
meters that are not exempt under section 7 of the Regulations can no longer be used in trade (see section 4.5 of this bulletin for more details).
1
25.3 Please confirm, or otherwise explain, that all thermal energy meters installed after July 1, 2019, will either: (i) be approved, examined and certified as meeting the requirements of the Weights and Measures Act and Regulations; or (ii) will meet the conditions for an exemption under section 7 of the Weights and Measures Regulations.
25.4 For any thermal energy meters installed before July 1, 2019, please discuss whether SEUL anticipates any costs associated with either removing unapproved or unexamined thermal energy meters, or for receiving an exemption under section 7 of the Weights and Measures Regulations.
RESPONSE: SEUL does not anticipate incurring any such costs.
25.4.1 If so, please quantify the costs.
RESPONSE: Not applicable. Please refer to response to BCUC IR-1 25.4.
25.4.2 If not, please explain why not.
RESPONSE: SEUL has not identified any issues with the thermal energy meters.
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Reference: MEMORANDUM FROM SHANNON ESTATES UTILITY LTD. TO THE BRITISH COLUMBIA UTILITIES COMMISSION REGARDING THE DOMESTIC HOT WATER HEATING FORMULA FOR THE SHANNON ESTATES STRATA DATED AUGUST 17, 2018 Exhibit B-1, Section 5.3, p. 16; Appendix F, p. 4 Domestic Hot Water Heating Formula
Page 3 of the Memorandum from Shannon Estates Utility Ltd. to the British Columbia Utilities Commission Regarding the Domestic Hot Water Heating Formula for The Shannon Estates Strata dated August 17, 2018 (Memorandum), provides the formula for calculating the heating energy consumption for DHW. The formula is reproduced in part below:
Page 3 of the Memorandum further states:
High Level Summary of Formula
6. The energy to heat DHW is allocated to each strata unit by a. determining the volume (in m3) of DHW water consumed by each
strata unit (VCustomer (refer to Appendix D)) and the volume (in m3) of DHW consumed by all the strata buildings (VBuilding Total (refer to Appendix B));
b. allocating the DHW heating energy (in kWh) (QBuilding Total) to each strata unit based on the prorata share of each unit’s consumption of DHW (in m3) relative to the aggregate consumption of all strata buildings (in m3) (VCustomer/VBuilding Total (refer to Appendix C));
c. determining cost of energy consumed by multiplying the BCUC-approved rate for DHW consumption by the allocated amount of energy consumed (QCustomer per Appendix C).
Page 4 of the Memorandum states:
In the course of our extensive review of the data and the formula used to allocate the DHW heating energy to the various strata units, we have determined that it would be more accurate if the VBuilding Total denominator in the formula reflects the summation of the VCustomer amounts instead of the delta in the DHW volume measured by the supply and recirculation meters referred in 7(b) above. Currently, there is a difference in DHW volume measured by these
26.0
~?here: Q - Dones ic Ho Ocu!I t.o.matr
OeuHcl no To M
To
ing 8 ergy (klllhl Hea ing Energy \oJ e H ing
V - Domescic Hot Wa~er Volume (ml
d o Cs omer e d S a a oc
V~u O • - Domes ic Hot Water Volume consump ion read at Customer ' s Me er Vouild...n Total - Domes ic Ho Watar Volume consump · on read at Stra a block Me er
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different meters due to the different tolerance levels for the supply and recirculation meters as compared to the strata unit meters. The difference is not attributable to equipment or fixtures in the common areas.
Under the methodology SETES has been using, the energy allocated to each strata unit is understated. Rather than correct this error at this stage, the SETES will review its methodologies and data in the upcoming 2019 rate application and will ensure that the formula is adjusted to better reflect actual DHW heating energy usage.
26.1 Please elaborate further on the different tolerance levels for the supply and recirculation meters as compared to the strata meters. Please provide data and/or analysis to support your response.
RESPONSE: The meters used for the supply, recirculation and strata meters were outlined in the Memorandum and are as follows:
The tolerance levels for the supply, recirculation and strata meters are provided in the manufacturer’s technical specifications (which were provided as Appendices E to G with the Memorandum). Please refer to Attachment BCUC IR-1 26.1.
26.1.1 Please explain how this has led to understating the energy allocated to each
strata unit and quantify the financial losses that SEUL may have incurred as a result.
RESPONSE: When SEUL reviewed the data for the months of October 2017 to December 2017 (as outlined in the Memorandum), SEUL realized the energy costs were not fully allocated to each customer due to the formula. For those three months, only an average of 76% of the total cost of energy was billed to customers, with SEUL absorbing the remaining 24% (which, for the three months reviewed, translated into an average loss of $552/month). Please refer to the table below for the applicable calculations.
Summary of Monthly Charges to Each Strata UnitFor October 2017 to December 2017
October 2017 November 2017 December 2017
Q Building Total per Appendix B 21,675.00 (A1) 18,425.00 (A2) 27,849.72 (A3)
V Building Total per Appendix B 316.80 (B1) 303.50 (B2) 315.70 (B3)
0.1036$ (C)
AverageTota l amt that should have been bi l led 2,245.5300$ 100% 1,908.8300$ 100% 2,885.2310$ 100% 2,346.5303$ 100%Actual bi l led 1,678.8101$ 75% 1,468.4343$ 77% 2,237.4660$ 78% 1,794.9035$ 76%Unbi l led 566.7199$ 25% 440.3957$ 23% 647.7650$ 22% 551.6269$ 24%
1
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26.2 Please confirm, or otherwise explain, whether the same flow meters have been installed in each strata unit.
RESPONSE: The meters referred to in the response to BCUC IR-1 26.1 are used to measure DHW heating energy consumption. The meters used to measure space heating and space cooling are GWF Ultramaxx meters. 26.3 Please provide the make and model of the meters and the flow rates at which the
meters operate (minimum, maximum and nominal). Please provide the information for the meters used to measure the flow of water to the buildings (VBuilding Total) and the meters used to measure the flow of water to the strata units (Vcustomer).
RESPONSE: Please refer to the response to BCUC IR-1 26.1.
26.3.1 Please provide the tolerances of the meters for the flow rates at which they
operate. Please provide supporting evidence.
RESPONSE: Please refer to the response to BCUC IR-1 26.1.
26.3.2 Please confirm, or otherwise explain, that all meters are measuring flow within
the manufacturer’s recommended operating parameters (e.g. the system flow rates are at the meter’s nominal flow rate and do not exceed the meter’s minimum or maximum flow rates).
RESPONSE: Please refer to the response to BCUC IR-1 26.1. 26.4 In the event that the requested change to the DHW heating formula is approved, please
explain how the data collected by the VBuilding Total flow meter will be used.
RESPONSE: VBuilding Total would not be used for computing the energy cost allocated to each customer for that customer’s DHW usage.
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On page 16 of the Application, SEUL states:
As shown in the Financial Model, SWCRA did not collect any revenues for DHW heating until February 2017. Phase 1 of the Development was completed in November 2015. Closings for the strata units in Phase 1 occurred from December 2015 to February 2016 while the rental building was not fully leased until August 2016. Due to the low occupancy rate at Phase 1 of the Development in fiscal 2017, and the extremely large volume of DHW flowing through the supply and recirculation meters compared to each strata unit’s DHW usage, there were discrepancies between calculated and actual DHW consumption. The minute tolerances in each meter which were magnified by the large recirculation volume. As a result, the volume of DHW as measured by the meters did not produce accurate cost allocations until early 2017, at which time the utility commenced charging for DHW heating energy.
26.5 If the occupancies were to decrease or fluctuate in the future, please discuss whether the change to the DHW heating formula (i.e. the use of summation of the Vcustomer meter readings) would ensure discrepancies between calculated and actual DHW consumption would not occur again.
RESPONSE: QMC reviews meter information when preparing monthly invoices. This review is intended to identify and remedy any such discrepancies if they were to occur again. 26.6 Please discuss whether SEUL has identified any issues with respect to the metering of
space heating and/or space cooling. In your response please discuss what analysis or investigation SEUL has undertaken to review the meters.
RESPONSE: There were no reported issues with heating and cooling measured by these meters.
26.6.1 If so, please provide details of the issues identified and explain what measures
SEUL has implemented to resolve any issues.
RESPONSE: Not applicable. Please refer to the response to BCUC IR-1 26.6.
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Reference: AMENDED THERMAL ENERGY SERVICE TARIFF FOR SHANNON ESTATES UTILITY LTD. Exhibit B-1, Appendix B-1, Section 13, p. 10 Back-billing
On page 10 of the Amended Thermal Energy Service Tariff for Shannon Estates Utility Ltd Effective January 1, 2021 Clean Copy, it states:
(f) Under-billing resulting from circumstances described in this paragraph (d) will bear interest at the rate specified in the Standard Fees and Charges Schedule under Late Payment Charge on unpaid accounts from the date of the original under-billed invoice until the amount under-billed is paid in full.
[…]
(h) In every case of over-billing, the Utility will refund to the Customer all money incorrectly collected for the duration of the error, subject to the applicable limitation period provided by law. Simple interest, computed at the short-term bank loan rate applicable to the Utility on a monthly basis, will be paid to the Customer.
27.1 Please confirm, or otherwise explain, that the interest rate for a Late Payment Charge on an unpaid account is the same as the applicable simple interest rate, computed at the short-term bank loan rate. If not confirmed, please provide the rates and rationale for the difference.
RESPONSE: Not confirmed. The late payment charge on unpaid account balances is currently the lesser of 1.0% per month (12.7% compounded annually) and the maximum legal interest rate allowable, as approved by BCUC Order G-190-17. The Application proposes to increase this rate to the lesser of 1.5% per month (19.56% compounded annually) and the maximum legal interest rate allowable, which is the same as BC Hydro’s late payment charge and common for a charge of this nature. The late payment charge is designed to encourage customers to pay their bills on time.
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Reference: AMENDED THERMAL ENERGY SERVICE TARIFF FOR SHANNON ESTATES UTILITY LTD. Exhibit B-1, Appendix B-1, Section 14, p. 11 Security Deposit for Payment of Bills
On page 11 of the Amended Thermal Energy Service Tariff for Shannon Estates Utility Ltd Effective January 1, 2021 Clean Copy, it states:
A Customer who has not established or maintained credit satisfactory to the Utility will be required to provide security in the form of cash or an equivalent form of security acceptable to the Utility, the amount of which will be determined by the Utility in its discretion, provided that the security required will not exceed two times the estimated highest monthly bill of the Customer. The Utility may apply the whole or any part of the Customer’s security toward payment of any amount not paid by the Customer to the Utility on the due date shown on the bill. The Customer will promptly replenish the security upon request by the Utility. Any part of the security that has not been applied in accordance with this section will be refunded or returned to the Customer if service is terminated in accordance with Section 2. The Utility will not pay interest on deposits held by it. [Emphasis added]
28.1 Please provide the basis for using two times the estimated highest monthly bill as the maximum required security deposit and why an alternative amount (i.e. two times average monthly bill, etc.) was not selected.
RESPONSE: The wording of the proposed security deposit provision is similar to the wording of the security deposit provisions in the Tariff’s of BC Hydro and FortisBC Energy Inc. (FEI), except that the proposed wording has been simplified where possible to make it easy to administer in practice. For example, FEI’s security requirement is a minimum of $50 and up to a maximum of the estimate of the total bill for the two highest consecutive months. Using an estimate of two highest consecutive months or two times an average month seemed unnecessarily complicated. Using such approaches would be more complex to administer, might not make a material difference to the amount of deposit determined given that the SETES supplies space heating, space cooling and DHW heating year round, and might result in disagreement with the customer. SEUL sought to keep the provision simple to apply. 28.2 Please explain the risks and consequences if the security deposit is not replenished in
the required timelines.
RESPONSE: If the customer does not replenish the deposit, SEUL will not be insured against losses that result from unpaid or underpaid bills.
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28.3 Please discuss how the security deposit is treated if following termination of service or closure of account, SEUL is unable to locate the customer and it remains unclaimed.
RESPONSE: SEUL’s agent QMC will make reasonable efforts to locate the former customer to provide the refund. If the customer cannot be located, the deposit will be recognized as income to the utility. 28.4 Please discuss the basis for and the relevant factors considered to support not paying
interest on the customers’ security deposit.
RESPONSE: As discussed in the response to BCUC IR-1 28.1, SEUL sought to keep the administration of deposits simple to administer. This includes the proposal not to pay interest on deposits. SEUL does not expect that many security deposits will be required. Where required, the deposit will likely be around $100 and held for only a few months in most cases. Further, all customers are encouraged to sign up for the electronic account option and for pre-authorized debit, which avoids a security deposit requirement. Paying interest on deposits would add complexity and could make the deposit option more attractive than pre-authorized debit whereas SEUL wants to encourage the pre-authorized debit option.
28.4.1 Please comment on whether an interest rate was considered. If so, provide the alternative rates considered (i.e. weighted average cost of debt, prime, etc.), and why there were ultimately rejected.
RESPONSE: Using a weighted average cost of debt or prime rate would provide the customer a return on the deposit far better than a Bank of Canada bond or most any other investment. As discussed above, paying interest on the deposit could make the deposit option more attractive than pre-authorized debit whereas SEUL wants to encourage the pre-authorized debit option. SEUL notes that residential tenancy damage deposits have not received any interest since 2009. Please see - https://www2.gov.bc.ca/gov/content/housing-tenancy/residential-tenancies/ending-a-tenancy/returning-deposits#Deposit%20Interest.
Reference: AMENDED THERMAL ENERGY SERVICE TARIFF FOR SHANNON ESTATES UTILITY LTD. Exhibit B-1, Section 8.4, p. 38; Appendix B-1, Section 15, p. 12 Late Payment Charge and Collection Charge
On page 38 of the Application, SEUL states:
SEUL proposes to increase the interest charged on an outstanding bill balance from 1.0% per month to 1.5% month. This proposal is in accordance with the terms of the agreement in principle that SEUL has reached with QMC.
As listed on the Standard Fees and Charges Schedule of the Amended Thermal Energy Service Tariff for Shannon Estates Utility Ltd Effective January 1, 2021 Clean Copy, it states:
Late Payment Charge: Interest on outstanding balance equal to the lesser of 1.5% per month (19.56% compounded annually) and the maximum legal interest rate allowable.
29.1 Please provide the basis for increasing the interest charged on an outstanding balance from 1.0 to 1.5 percent.
RESPONSE: The 1.5% late payment charge is the same as BC Hydro’s late payment charge and common for a charge of this nature. It is a term of the service agreement between SEUL and QMC. 29.2 Please explain if there is a minimum unpaid balance on which the late payment charge
applies. If so, please provide. If not, please explain why not.
RESPONSE: No. The SEUL Tariff Terms and Conditions as approved by BCUC Order G-190-17 do not provide for a minimum unpaid balance on which the late payment charge will apply. Further on page 38 of the Application, SEUL states it proposes reducing the Collection Charge from $45.00 to $25.00 to reflect the terms of the agreement in principle that SEUL has reached with QMC for the next five years.
On page 12 of the Amended Thermal Energy Service Tariff for Shannon Estates Utility Ltd Effective January 1, 2021 Clean Copy, it states:
If the Customer's account is overdue for more than 30 days and requires additional effort to collect, the Utility may charge the Customer a collection charge as set out in the Standard Fees and Charges Schedule.
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29.3 Please discuss the collection process of an account past due for greater than 30 days, and the rationale for the collection charge that is in addition to a late payment charge.
RESPONSE: Past due accounts are followed up by a customer service representative from QMC who will call, email, or mail past due notices to the customer. Failing these efforts, past due accounts are referred to a collection agency. The intention of the collection charge that is in addition to the late payment charge is to (1) encourage the customer to promptly pay invoices or to sign up for pre-authorized debit so as to avoid these charges, and (2) to recover the additional costs that are incurred in relation to the collection efforts outlined above.
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Reference: AMENDED THERMAL ENERGY SERVICE TARIFF FOR SHANNON ESTATES UTILITY LTD. Exhibit B-1, Section 8.4, p. 37; Appendix B-1, Section 15, p. 13 Service Start Charge
On page 38 of the Application, SEUL states:
…a Service Start Charge will be paid by the new customer with respect to each account in that customer’s name for which a separate bill is rendered. The amount of the Service Start Charge is set out in the Standard Fees and Charges Schedule of the SETES Tariff and is currently set at $50.00. SEUL proposes reducing the Service Start Charge to $30.00. This reduction reflects the terms of the agreement in principle that SEUL has reached with QMC for the next five years.
On page 13 of the Amended Thermal Energy Service Tariff for Shannon Estates Utility Ltd Effective January 1, 2021 Clean Copy, it states:
When a change of Customer occurs, a Service Start Charge, as set out in the Standard Fees and Charges Schedule, will be paid by the new Customer with respect to each account in that Customer's name for which a separate bill is rendered by the Utility.
In response to BCUC IR 1.4 in the SETES CPCN Application, SETES stated:
Service start is a planned service and therefore can be scheduled into regular operation, service restart is both unplanned and a high priority service that will interrupt other scheduled tasks.
30.1 Please explain from SEUL’s and QMC’s perspective the relevant factors for determining the $30 Service Start Charge, as opposed to a lower charge. Specify the activities involved when initiating service for a new customer.
RESPONSE: Activities involved in initiating service include enrolment processing to input the customer’s information into the database, setting up pre-authorized debit information, creating a customer account and profile, updating meter information to link to the billing software, and verifying the initial invoice to ensure all information has been set up properly. The $30 Service Start Charge is intended to cover the work associated with this enrollment process and is in line with other utility providers. Please also note that the $30 Service Start Charge is a proposed reduction from the $50 Service Start Charge approved by BCUC Order G-190-17 and currently in effect.
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Reference: AMENDED THERMAL ENERGY SERVICE TARIFF FOR SHANNON ESTATES UTILITY LTD. Exhibit B-1, Section 8.4, p. 38; Appendix B-1, Standard Fees and Charges Schedule Paper Invoice Charge
On page 38 of the Application, SEUL states:
The terms of the agreement in principle that SEUL has reached with QMC includes a charge of $2.50 for customers who request to receive a paper copy of their monthly bill. SEUL therefore proposes adding a paper invoice charge as an administrative charge on the Standard Fees and Charges Schedule of the amended SETES Tariff, so that the cost of providing a paper copy of a monthly bill is flowed through to the customers who wish to receive hard copies of their monthly bills.
As listed on the Standard Fees and Charges Schedule of the Amended Thermal Energy Service Tariff for Shannon Estates Utility Ltd Effective January 1, 2021 Clean Copy, it states:
Paper Invoice Charge: $2.50
The Paper Invoice Charge is a per occurrence charge payable by each Customer who requests a paper copy of their bill.
31.1 Please provide from SEUL’s and QMC’s perspective the relevant factors for determining the $2.50 paper invoice charge.
RESPONSE: The paper invoice charge covers the manual processing and postage fee associated with sending a paper invoice. The majority of SEUL customers have signed up for the electronic account option which provides an enhanced service at no cost to the customer.
31.2 Please explain if the agreement with QMC has been executed and whether revised charges (i.e. collection charge, late payment charge, service start charge, paper invoice charge, etc.), as proposed in the Application, have been included at the specified amounts.
RESPONSE: The renewal agreement between SEUL and QMC has been executed, and it reflects the standard fees and charges proposed in the Application.
31.2.1 If the agreement with QMC has not been executed, please provide the expected date the agreement will be finalized.
RESPONSE: Not applicable. Please refer to the response to BCUC IR-1 31.2.
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31.2.2 If the agreement has been executed and the proposed charges in the Application are not equivalent to the executed agreement, please explain why not and provide the revised charges as included in the executed agreement.
RESPONSE: Not applicable. Please refer to the response to BCUC IR-1 31.2. 31.3 Please explain if the Financial Model incorporates a revenue estimate for all charges
included in the Standard Fees and Charges schedule into the 10-year forecast. If not, please explain why not, and describe how these revenues are accounted for, specifying whether these miscellaneous revenues are to the benefit of the ratepayers or shareholder(s).
RESPONSE: The Financial Model does not incorporate a revenue estimate for all charges in the Standard Fees and Charges Schedule. Each of these fees is directly related to the cost of QMC’s services. SEUL does not derive revenue from these fees and charges and are therefore not to the benefit to SEUL’s shareholders.
FOR GENERAL NOTES , SYMBOLS, ANDARCH ABBREVIATIONS REFERE TO SHEETA-BG-011.FOR HERITAGE STRUCTURES REFER TOCONSERVATION PLAN AND DRAWINGDOCUMENTATION PREPARED BY ROBERTLEMON ARCHITECT INC.
LEGEND:
H
BG 0.0'
DG 0.0'
OFFICIAL BUILDING GRADE
DESIGN GRADE
PHASE 1
PHASE 2
57TH AVENUE
LANE LANE
CHUR
CHILL
STR
EET
ADER
A ST
REET
H
H
ROSEHOUSE
LOT 1
LOT 2
LOT 3
SHANNONGREEN
PARTERREGARDEN
ITALIAN GARDEN
BLOCK F(ADERA HOUSE)
10 STOREYS
BLOCK E(WILSHIRE HOUSE)
8 STOREYS
BLOCK D(BEVERLY HOUSE)
9 STOREYS
EXIT @ L3
SS
SS
SIAMESE CONNECTIONINTEGRATED INTOPERIMETER WALL
SIAMESE CONNECTIONINTEGRATED INTOPERIMETER WALL
SIAMESE CONNECTIONINTEGRATED INTOPERIMETER WALL
SIAMESE CONNECTIONINTEGRATED INTOPERIMETER WALL
FAPFAP
FAP
FAPBLOCK G
(HUDSON HOUSE)9 STOREYS
H
H
EXIT @ L2
EXIT @ L1
EXIT @ L2
EXIT @ L2
EXIT @ L2
EXIT @ L1
EXIT @ L2 EXIT @ L3
EXIT @ L4
REFER TO DE 415627 FORPHASE 1 INFO
EXIT EXIT
EXIT @ L3
EXIT @ L1
EXIT @ L1
EXIT @ L1
NEW FIRE HYDRANT
NEW FIRE HYDRANT
RAMPDOWN TOPARKING
RECYCLING STAGING AREA
6 CLASS B BIKE PARKING 6 CLASS B BIKE PARKING
6 CLASS B BIKE PARKING
6 CLASS B BIKE PARKING
BLOCK A
BLOCK B
BLOCK C
RESIDENTIAL LOT - FPLAN 10598
RESIDENTIAL LOT - CPLAN 10598
RESIDENTIAL LOT - IPLAN 10598
NON-RESIDENTIAL LOT - MPLAN 10598
NEW GAS METER ENCLOSUREPHASE 1 AND 2
PARKADE EXHAUST
EXISTING COACH HOUSE
EXISTINGMANSION
EXISTINGGATEHOUSE
THE BEECHES
R 49' - 0"
R 49' - 0
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R 49' - 0"
R 49' - 0"
BG 234.3
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BG 233.9
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BG 232.7
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BG 231.4
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BG 230.2
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BG 228.9
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BG 227.6
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BG 226.3
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BG 224.4
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BG 223.5
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3.8'
BG 224.3
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BG 226.5
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BG 228.8
'BG 22
9.7'
BG 230.2
'BG 23
0.6'
BG 230.8
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BG 231.0
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BG 230.8
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BG 230.0
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'BG 22
9.4'
BG 229.5
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BG 229.8
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BG 230.4
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PARKADE ACCESS
PARKADE ACCESS
OUTLINE OF PARKADE BELOW
RELOCATED FIRE HYDRANT
296' (90M) FIRE ACCESS LANE
PROPERTY LINE
SIAMESE CONNECTION
SIAMESECONNECTION
INTEGRATED INTOPERIMETER WALL
EXIT FROM PARKING
PARKADE EXHAUST GRILL
PARKADE EXHAUST GRILL
WASTE RM EXHAUST GRILL
VISTA CHAMBER
GENERATOR INTAKE
GENERATOR EXHAUST
GENERATOR INTAKE
GENERATOR EXHAUST/FILL STATION LOCATION
PARKADE EXHAUSTPHASE 1
PARKING INTAKE GRILL
LOT 1 SIAMESE CONNECTIONINTEGRATED INTO RECESSEDPERIMETER WALL. SEEHERITAGE DRAWINGS.
LOT 2 SIAMESE CONNECTIONINTEGRATED INTO PERIMETERWALL
LOT 1 SIAMESEFAP & STROBE - MANSION &COACH HOUSE
LOT 2 SIAMESE CONNECTIONINTEGRATED INTO PERIMETER WALL
PROPERTY LINE
PROPERTY LINE
PROPERTY LINE
PROPERTY LINE
PROPERTY LINE
PROPERTY LINE
1579
WES
T 57
TH A
VE
1581
WES
T 57
TH A
VE
7288ADERA STREET
1577
WES
T 57
TH A
VE
1575
WES
T 57
TH A
VE
1573
WES
T 57
TH A
VE
PRINCIPAL ENTRANCEWILSHIRE HOUSE (BLOCK E)1571 WEST 57TH AVE
PRINCIPAL ENTRANCEBEVERLY HOUSE (BLOCK D)1561 WEST 57TH AVE
PRICING SET 2015-03-06BUILDING PERMIT REVIEW SET 2016-05-02BUILDING PERMIT SET 2016-06-22RE-ISSUE FOR TENDER 2016-09-08ISSUE FOR CONSTRUCTION 2017-02-14
2017
-02-
15 9:
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A-BG-051
SITE PLAN
Checker
Author
410843
2017-02-14
Approver
SHANNON ESTATE- PHASE II
7298 Adera Street, Vancouver, BC
HUDSON HOUSE (BLOCK G)7128 Adera Street, Vancouver, BC
RE: Mechanical Maintenance and Operation of the DEU System at Shannon Wall Centre, Vancouver BC.
I am pleased to submit the following proposals for Mechanical Maintenance and Operations of the DEU System at Shannon Wall Centre Phase 1 & 2.
Price for monthly maintenance and operation will be filters and large materials extra.
per inspection or- per year. All taxes, belts,
• All additional HV ~erational service and repair work that may be required will be carried out at our prevailing rate of- per hour, plus truck and fuel charge (see below), plus parts, between the hours of 8AM and 4PM, Monday to Friday.
•
•
•
All additional plumbing service and repair work that may be required will be carried out at our prevailing rate of- per hour, plus truck and fuel charge (see below), plus parts, between the hours of 8AM and 4PM, Monday to Friday. Evenings, holidays and weekends will be charged out at the prevailing overtime rate of per hour, plus truck and fuel charge (see below), plus parts, and are subject to a two (2) hour minimum callout. 1 only-truck charge per repair invoice, fuel charge based on percentage of invoice: 1111 or less= 2.5%,
2.0%,_ and above = 1.5%.
Equipment to be serviced: • 6 - Modular Water-Cooled Chiller • 4 - 399MBH Triangle Tube Boilers • 4 - 3,000MBH Aerco Boilers • 1 - Solar Hot Water Generation Field • 1 - Flow-Through Sewer Heat Recovery System • 49 - Circulation Pumps • 38-VFDs
Any omitted equipment will be added npon installation or as found.
ll Pagc
Contract# WF-2017-12-0SA
SCOPE OF WORK: Monitor DDC System, and all connected equipment weekly. Work with NDY and Thermenex to optimize system efficiencies and rectify problems found. Check/an assemblies and operation. Lubricate bearings. Replace drive belts, align motor and blower pulleys, and confirm proper operation. Replace air filters where required and applicable. Tighten any loose nuts and bolts if required. Check motor operation and amperages. Check motor mounts and vibration isolators. Inspect electrical connections. Check contactors for co"osion and pitting, report if found. Check dampers and linkages, lubricate as needed. Check and lubricate circulation pumps. Check pump seals and bearings for leakage/wear. Check/or leaks. Check heating and cooling.functions. Inspect temperature, safety and operating controls. Check and record flame signals. Check and record operating amperages. Check and record operating pressures of refrigerant systems. Check VFD operating conditions. Clean piping strainers. Test and certify backf/ow preventers annually.
NOT INCLUDED:
NOTES:
Air filters (material) are not included and will be supplied as extra as required, frequency based on air conditions, not set schedule, for cost effectiveness. V-Belts (drive belts) are not included and will be invoiced as extra when required, frequency based on wear characteristics, not set schedule. Any other major parts required to pe,form regular maintenance (small items are included, i.e. grease, rags, nuts, bolts, electrical connectors, cleaning supplies, etc.). DDC system annual calibration and tuning (to be done by controls contractor as needed, quoted ahead of time). Closed loop water treatment services. (Will be quoted separately) . Annual boiler cleaning and certification. (Will be quoted as needed). CO/CG sensors to be tested annually as extra to this proposal, a quote will be provided for approval. Repairs to devices if required during annual backj/ow preventer testing and certification. Overtime, afterhours, evening, weekend or holiday labour is not included. Anything above and beyond the scope of maintenance quoted above. Taxes.
Scope of work above entails weekly off-site monitoring, & monthly on-site inspections and servicing. Monthly serving may be split up into multiple visits as needed for troubleshooting purposes. All pricing is based on our having unrestricted access to areas and equipment during inspections. Response time for 24-hour emergency service will be roughly 2 hours or less. Repairs or additional work found to be required in excess oJ1■■1will be submitted for approval. Only qualified technicians will be utilized in servicing of this site. Class AIB Gas-Fitters for boilers, Refrigeration Mechanics/Apprentices for HVAC equipment, 4th Class Power Engineers for operations management, & Plumbers/Apprentices for piping related maintenance. Termination of this contract must be received by our office in writing, 30 days prior to terminating. Invoices shall be issued on a per repair basis. One (1) only truck charge per repair invoice or per day. Hourly labour rates may be subject to an annual increase. Annual COLA increases of contract costs of 2.5% will be rendered. Terms: Net 30 days. Terms of contract: The term of this agreement shall be I year, with automatic renewed/or I-year term, unless cancelled in writing by either party. 2% per month charged on overdue accounts.
21 Page
Contract# WF-2017-12-0SA If you find the foregoing acceptable, please sign below and return to our office.
Best regards,
Jason Davies WERNER SMITH MECHANICAL INC - nit # 111 I Coquitlam, BC I V3K 7 Al
www.wernersmith.ca
Customer signature of acceptance
Please print name
Quote valid for 30 days. Terms: Net 30 Days 2 % per Month Charged on Overdue Accounts
31 Pagc
klP-¼r l(r2"t7 Date
Requested start date
Contract # WF-2018-03-25A
1 | P a g e
WERNER SMITH MECHANICAL INC. #111-1750 Hartley Avenue, Coquitlam BC V3K 7A1 Telephone: (604) 540-7919 Fax: (604) 540-7982
March 25, 2019 Attn: Grant Myles Re: Shannon Estates Utility (DEU) C/O: Shannon Estates Utility Ltd.
Re: Water Treatment Services for Shannon Estates DEU, Vancouver, BC
Water Treatment Service In an effort to promote effective treatment control, reduced on-site chemical handling and transport, it is been proposed that our Water Treatment Service program be renewed at your location. Rochester Midland – Water Energy Group began the provision of water treatment services to our customers across Canada over thirty years ago to meet their specific requirements pertaining to:
• The elimination of on-site personnel’s handling of chemical, transportation of chemical to required locations,
and potential spillage of these materials. • The elimination of on-site personnel’s time associated with the required maintenance procedures. • The request for guaranteed yearly costing associated with material and service requirements. • The request for specific invoicing procedures to meet budgeting allocations. • The maintenance of the customer’s chemical treatment equipment. • Provision of chemical feed equipment as required. • Provision and maintenance of micron filter applications. • Elimination of receiving shipment of the materials, and associated shipping costs. • Removal of empty packaging.
At Shannon Estates DEU, Rochester Midland will provide, on behalf of Werner Smith Mechanical:
• All corrosion and algaecides/biocides required for the each application within each location. • Additional trouble calls at no additional charge. • Delivery of all materials to the mechanical area. • Micron filters provision and change, (if required). • All associated freight charges included. • Laboratory and technical support services to monitor system improvements included. • Removal of empty packaging. • Trained service technician, WHMIS/TDG certified. • Electronic delivery of service report to you via our [email protected]
program. Assumptions and recommendations:
1. Cooling tower runs for 6 months of the year (if 12 months add $ ), 2. As phase 2 is now in operation, chemical requirements and additional filters to change have been added, costing for the main loop has been modified to take them into consideration, and the addition of System K .
• Based on 4 visits for testing of glycol & inhibitor content only. • Labour supplied $ Total
Pricing Summary - Service Location: Applications: Service Visits: Annual Amount: Monthly Amount:
Shannon DEU 4 18 An invoicing schedule best suiting your budgeting requirements can be constructed if alternatives are requested. However we would prefer to bill this contract on a monthly basis for each location that has been approved. The monthly rate is indicated in the table above. A price increase of 4% will be applied to the contract each year, on the contract start month and day, for the duration of the contract. I trust this information assists your office and relays our commitment to effective programs and services. If you should have any questions regarding this information, please feel free to contact me. Best regards, Jason Davies Werner Smith Mechanical _________________________________________ ____________________ Customer signature of acceptance Date _________________________________________ Please print name Requested start date Terms: Net 30 Days 2% per Month Charged On Overdue Accounts
----
Quotation # WF-2020-06-17A
1 | P a g e
WERNER SMITH MECHANICAL INC. #111-1750 Hartley Avenue, Coquitlam BC V3K 7A1 Service: (604) 540-7919
Fax: (604) 540-7982
Email: Website: www.wernersmith.ca
June 17, 2020 Attn: Grant Myles & Darcee Wise Re: Shannon Estates Utility Ltd. C/O: Wall Financial Corp. RE: Annual Major Boiler Services Due Please find below the estimates for the following work to be completed at the above noted property as required by boiler safety branch and boiler manufacturer. Our price to supply and install materials and labour to perform the scope of work below will be , GST excluded.
Scope of Work:
• Annual cleaning and service of 4 Aerco heating boilers. Including Ignitor, Flame rod, LWCO/Capacitor assembly, Air filter orifice gasket, Condensate Trap, O-ring, Burner gasket, Blower gasket, Exhaust manifold, Burner release gasket, Burner lower release gasket, combustion analysis/set-up, and condensate neutralizer replacement. Cost each (4 required), taxes excluded.
• Annual cleaning and service of 4 Triangle Tube heating boiler. New ignitor, burner plate gasket, burner head gasket, combustion chamber insulation, combustion analysis/set-up, and condensate neutralizer replacement. Cost each (4 required), taxes excluded.
Not Included:
• Anything outside the scope of this quote. • Any repairs found required during this service. • Taxes. • Overtime or afterhours work.
If you find the foregoing to be acceptable, please return a completed copy of this proposal to our office at your earliest convenience. Best regards,
Jason Davies WERNER SMITH MECHANICAL INC I HEREBY AUTHORIZE WERNER SMITH MECHANICAL INC TO PROCEED WITH THIS SERVICE AS DESCRIBED ABOVE: _________________________________________ ________________________ Customer signature of acceptance Date
_________________________________________ ________________________ Please print name Requested start date Terms: Net 30 Days 2% per Month Charged On Overdue Accounts
www.gwf.chEPe20528 – 01.03.2014
Our strength: ur ene t
Big display: Easy to read
Universal applicable: Wall-mounted model
(Volume measuring meter UNICO®
and MTW)
Different power supply possibilities
Option cards for diverse functionalities: Economical basic device
Additional functionalities feasible
Application
Metering of heat and/or coolingconsumption in building management
Energy measurement for local or remote reading
Features
Electronic calculator
LCD-resolution 7 digits
Non-volatile memory EEPROM
Temperature measuring range 0 - 180°C
Temperature sensor Pt 100 CF-51: 2-wires
CF-55: 2- or 4-wires
Standard EN 1434
24 month register
Supply via 12-year battery, mains or M-Bus(pay attention to versions)
Maximum values with time stamp
Combinable with mechanical impeller meters with Reed-pulser
Conformity according European Measuring Instruments Directive (MID)
Options
Option cards for: M-Bus / water meter inputs M-Bus / 2 pulse outputs energy + volume M-Bus Power / 2 water meter inputs Double M-Bus (only CF-55) LonWorks, FTT-10A / 2 water meter inputs (separate supply 24 V AC/DC necessary)
DAS PRÜFLABORATORIUM ARBEITET NACH DIN EN ISO/IEC 17025. DIE BEI DEN MESSUNGEN VERWENDETEN NORMALE SIND AUF DIE NATIONALENNORMALE BEI DER PHYSIKALISCH-TECHNISCHEN BUNDESANSTALT RÜCKGEFÜHRT.THE TEST LABORATORY WORKS ACCORDING STANDARDIZATION EN ISO/IEC 17025. THESTANDARDS USED FOR THE MEASUREMENTS ARE TRACEABLE TO THE NATIONAL STANDARDS AT THE PHYSIKALISCH-TECHNISCHE BUNDESANSTALT.
6221931615
Prüflaboratorium für Messgeräte für Wasser und Wärme 04361/625-0; Fax:04361/625-250
05.12.2016
- end of the test report -Test report created by electronic data processing. Valid without signature. Copies allowed with permission of test lab manager only.
Formblatt FB07-050 04/16 page -1/1
www.gwf.chDBe20400-1 – 30.11.2009Subject to modifi cation
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WPDH
APPENDIX F
www.gwf.chDBe20400-1 – 30.11.2009 Subject to modification
Technical Data
Dimension Diagram Materials
www.gwf.chDBe20400-1 – 30.11.2009 Subject to modification
Typical Head Loss CurveMeasuring error curve
Dial
Installation requirements Pulse value table
Installation
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www.gwf.chEPe20102 – 30.11.2009Subject to modifi cation
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Encoder Functioning Principle
MTWcoder ®
APPENDIX F
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www.gwf.chEPe20102 – 30.11.2009 Subject to modification
Technical Data
Dimension Diagram
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www.gwf.chEPe20102 – 30.11.2009 Subject to modification
MaterialsInstallation
Measuring error curve Typical Head Loss Curve
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www.gwf.chEPe20128 – 15.06.2013
Our strength: our ene t
Mechanical roller register with 1-litre-resolution:Efficient consumption monitoring in energy
data management
Transfer of the effective meter reading: No data loss and guaranteed security
of the billing data
Batteryless register: No service life restriction
Robust, high grade wear resistant materi-als: Excellent measuring stability and reliability
Measurement of low flow rates: Increased cost effectiveness
Application
Regular consumption monitoring of water consumption within an entire building
Water meter with M-Bus data communication
Options
M-Bus peripheral devices
Other measuring ranges
NPSM threaded connection
Features
Singlejet dry-dial meter with magnetic coupling
8 dial resolution with 3 comma place
Register can be turned for best readout position
Maximum operating pressure PN 16 bar
Maximum operating temperature 90°C
Horizontal or vertical installation
High grade wear resistant and corrosion proof materials
Inlet strainer
Reconditionable and recyclable execution
Conformity according to European Measuring Instruments (MID)
Serial M-Bus-Interface to EN 13757-2 and M-Bus-Protocol EN 13757-3
Power is provided from the M-Bus central
Connecting cable, standard length 1,5m
UNICOcoder ® MPSinglejet consumption meter
with M-Bus interface EN 13757-2
for warm water up to 90°C
DN 15, 20
GWFcoder®-Technology
The 2nd generation
The well-established GWFcoder®-system reads the absolute mechanical re-gister value precisely and reliably and provides the data through standardized interfaces. The number wheels with three various long, asymmetrically arran-ged slots are being scanned through light pipes which are connected to five light emitting diodes (LED). Thus, the exact position of each number wheel can be de-tected and the encoded absolute register read can be transmitted as part of the M-Bus protocol. This functioning principle is patented by GWF. The GWFcoder®-interface provides an incomparably higher level of information compared to me-ters with pulse output.
GWF enhanced the reliable technology in its 2nd generation, so that 8 instead of 5 number wheels are being scanned and therefore a resolution of 1 liter is possible.
Length with couplings mm 184 204 202 222 222Height B mm 94 94 94 94 94Height from pipe centre line C mm 76 76 76 76 76Installation depth from pipe centre line W mm 43 43 43 43 43Weight without couplings app. g 690 750 720 770 710Weight with couplings app. g 830 890 950 1000 940
Permissable ambient temperature UNICOcoder ® MP +5°C to +55°CCurrent consumption max. 2 M-Bus LoadsM-Bus-Interface EN 13757-2M-Bus-Protocol EN 13757-3Standard transmission speed 2400 baud (optional 300 baud)Cable length 1,5m
