Resource Plan 2008 - Microsoft · zero • 1366 GWH is 30% of Site C ... Long-term TSA approved /...

Terasen Gas. A Fortis company.

Resource Plan 2008

2Terasen Gas. A Fortis company.

Agenda

Introduction9:00am

Ken RossResource Planning at Terasen Gas

1:45 pm

12:00pm

Gord Doyle & Edmond LeungClean & Green Energy Opportunities

LUNCH (12:00 - 12:30)

Ken RossSummary, Feedback and Next Steps

Sarah SmithEnergy Efficiency & Conservation

Rick ParnellDelivering Comfort and Value

Greg CazaTrends and Issues in Natural Gas Demand

Dave BennettGas Portfolio Planning

Cynthia Des BrisayRegional Resource Planning Issues

Doug StoutEnergy Issues and Challenges in BC

Burn blue. Save green.


Fortis Inc.

• Gas and electrical distribution companyPeak electricity demand of 5,100 MW and peak gas demand of 1,400 TJ/Day

• Holds assets in Canada, US and Caribbean• Owns hotels and commercial real estate in Canada


• Corporate service• Finance, legal, and tax

Terasen GasInc.

Terasen Inc

Terasen Energy Services

Terasen GasWhistler

Terasen GasVancouver

Island

Terasen Inc. Group of Companies


Terasen Gas Service Area

•• Third largest gas Third largest gas utility in Canadautility in Canada

•• Largest natural Largest natural gas utility in the gas utility in the Pacific NorthwestPacific Northwest

•• Rate base > $2.9 Rate base > $2.9 Billion Billion CdnCdn..

•• Employees >1,200Employees >1,200•• Over 925,000 Over 925,000

CustomersCustomers


Energy Issues and Challenges in British Columbia

Doug Stout, VPMarketing and Business Development


Overview

• BC Energy PictureGas and Electric

• Climate ChangeGHG

• Natural Gas Opportunities/Challenges

• Terasen “Actions”


BC Energy Use

Background


BC End Use Energy Mix in 2005

Source: NRCan 2005 Database

Natural Gas 225.5 PJ 21.1%

Electricity, 228.2 PJ 21.4%

Steam, 2.1 PJ 0.2% Petroleum Products

422 PJ 39.6%

Coal, Coke, Propane, 26.3 PJ 2.5%

Wood, 162.5 PJ 15.2%


Terasen Total Annual Demand

Ind & Trans36%

Residential38%

Commercial26%

Terasen Total Customers

Commercial9.7%

Residential90.0%

Ind & Trans0.3%

Total Customer ≈ 920K Total Demand ≈ 215 PJ/yr

Customer Mix and Volume


Residential Energy Use Profile

Source: Natural Resources Canada Website: 2005 B.C. Stats

Space Heating49.6%

Lighting7.1%

Space Cooling0.4%

Water Heating23.9%

Appliances19.0%


Natural Gas in BC

Background


Price: Market Based with Lag

Historical Gas Prices and TGI Residential Rates

$4$5$6$7$8$9

$10$11$12$13$14$15$16$17$18$19

1-Ja

n-00

1-May

-001-

Sep-

001-

Jan-

011-

May-01

1-Se

p-01

1-Ja

n-02

1-May

-021-

Sep-

021-

Jan-

031-

May-03

1-Se

p-03

1-Ja

n-04

1-May

-041-

Sep-

041-

Jan-

051-

May-05

1-Se

p-05

1-Ja

n-06

1-May

-061-

Sep-

061-

Jan-

071-

May-07

1-Se

p-07

1-Ja

n-08

Cdn

$/G

J

Terasen Gas Rate Electric Equivalent AECO Daily Prices AECO Monthly Prices

Note: Aeco prices adjusted up by TGI fixed, basic & delivery and midstream charges for comparison purposes

California Crisis Weather event Hurricanes Katrina & Rita


Use Rates vs. Natural Gas Costs

Terasen Gas - Lower MainlandResidential - Use Rate vs. Average Gas Rate

$13.88

$12.49

$5.67$6.21

$7.28

$10.31

$11.23$10.51

$12.20 $11.65

$0$1$2$3$4$5$6$7$8$9

$10$11$12$13$14$15$16

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007P80

90

100

110

120

Use

Per

Cus

tom

er -

GJ

Delivery Gas Cost Use Per Customer


Electricity in BC

Background


BC Hydro: Supply/Demand

Source: BC Hydro Site C Stage 1 Summary Report, page 2Source: BC Hydro Site C Stage 1 Summary Report, page 2


BC Hydro’s Challenge?

• Resources Needed:

Low – 4 Site C

High – 6 Site C

• Site C: Produces 4600 GWh/year

• Estimated Cost is $5-$6.5 Billion for Site C


BCH Use Rates

BC Hydro Residential Use Rates 2000-2007

1000010100102001030010400105001060010700108001090011000

2000 2001 2002 2003 2004 2005 2006 2007

Kilo

wat

t hou

r

5.9

6

6.1

6.2

6.3

6.4

6.5

Cen

ts/K

wh

Use Rate Cents/Kwh


Provincial Landscape

Issues and Strategies


Changes in Energy Landscape in the Province

Highlights:Energy Self-SufficientGoals for BC HydroInvestment in Alternative Technology

“Innovative Clean Energy Fund”

Focus on environment and sustainabilityGreenhouse Gases, Climate Change and Air Quality

Maintain economic growth within BCGrow Oil and Gas sectors

The BC Energy Plan 2007A Vision for Clean Energy Leadership


Climate Change

Meeting the Challenge


BC Greenhouse Gas (GHG) Emissions

• BC total 67 million tonnes (Mt)• 11 million tonnes or 16% from

natural gas consumption• Terasen

Own use 0.15 million tonnes

Residential and Commercial customers - 6 million tonnes

Industrial customers - 4 million tonnes

• Canada total 747 million tonnes


Western Climate Initiative (WCI)

Member

Observer

WCI Target

15% below 2005

BC Target• 33% below 2007

levels by 2020

• 10% below 1990 levels by 2020


Greenhouse Gas EmissionsBritish Columbia vs. Washington State

Total Annual Emissions

BC

• 67 million tonnes per year

Washington

• 88 million tonnes per year

Greenhouse Gas Emissions By SectorBritish Columbia vs Washington State

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Transport Residentialand

Commercial

Electricity Waste Agriculture Fossil FuelProduction

IndustrialProcess and

Other

Perc

enta

ge o

f Tot

al E

mis

sion

s

BC Washington


Natural Gas

Opportunities and Challenges


Natural Gas: “Solutions to Reduce Footprint”

Residential/Commercial• Energy Efficiency and Conservation• Metering• Rates

Transport• NGV• Ports

Electricity• Direct Use of NG for space and water

heating

Waste• Land Fill• Waste Heat Recovery

Agriculture• Biogas


Comparative Emission Profilesto Produce Electricity

• Coal (500 MW Super Pulverized Combined Combustion)

855 tonnes/GWH

• Natural Gas (250 MW CCGT)350 tonnes/GWH

• High Efficiency Gas Furnace180 tonnes/GWH


Heating EfficiencyNatural Gas vs. Electricity (New Demand)


Water Heating Energy Efficiency


GHG Output Before Self Sufficient on Electric Production

Province has goal to be self sufficient by 2016

Direct use of natural gas for space and water heating makes this happen quicker and reduces regional GHG emissions


Less GHG for the Region once BC Self Sufficient

When BC becomes self sufficient on electric production and continues to use natural gas for space and water heating, BC will be able to export clean power that displaces electricity production from coal and natural gas in PNW

Direct use of natural gas for space and water heating reduces GHG emissions for the region now and in the future


Reduced BCH 2006 IEP Demand Curve:No Electric for Space and Water Heating

• BCH Capture Rates

• 20% for space heating

• 35% for water heating

• Both capture rates go to zero

• 1366 GWH is 30% of Site C annual output

New Electric Switches to Natural Gas

57,000

61,000

65,000

69,000

73,000

F2000

7F20

08F20

09F20

10F20

11F20

12F20

13F20

14F20

15F20

16F20

17F20

18F20

19F20

20

GW

h

2006 IEP Demand Curve (Mid) Reduced Demand Curve

Potential Demand for Natural Gas - 1366 GWh or 5 PJs by 2020


No New Gas Load: Needs Served by Electricity

• Adds 6,213 GWhto BC Hydro Demand in 2020 (> 1 Site C)

New Natural Gas Switches to Electric

50,000

55,000

60,000

65,000

70,000

75,000

80,000

F2000

7F20

08F20

09F20

10F20

11F20

12F20

13F20

14F20

15F20

16F20

17F20

18F20

19F20

20

GW

H

2006 IEP Mid Forecast New Demand Curve: No New Core Gas Load

Loss Potential Demand for Natural Gas - 23 PJs by 2020


Existing Gas Load and Growth to Electric

• Add 38,473 GWh to BCH demand in 2020 (7 to 8 Site C)

Existing and Growth Switches to Electric

50,00060,00070,00080,000

90,000100,000110,000120,000

F2008

F2009

F2010

F2011

F2012

F2013

F2014

F2015

F2016

F2017

F2018

F2019

F2020

GW

h

2006 IEP Mid Forecast New Demand Curve: All Terasen Core


Terasen Actions:

Serving Our Customers in the New Environment


Solutions

• Cost SignalsConsumers make informed decisions

• MeasurementConsumers understand what they are using

• Incentives and InformationBridge technology costs and information gaps

• AlternativesNew energy options available and economic


Summary


Energy SolutionsNatural Gas Part of Solution

Energy Uses

• Space and Water Heating

• Cooling

• Lighting, Computers, Appliances

• Cooking

Electricity

Natural Gas

Natural Gas

Alternative Energy

Electricity

Alternative Energy

Factors Affecting Energy Choice include:

• Geographic location

• Reliability/Infrastructure

• Costs and economics

• Environmental impact


Questions or Comments?

Contact Information Ken RossResource Planning Manager

Tel: (604) 576-7343Fax: (604) 592-7620E-mail: [email protected]


Resource Planning at Terasen Gas

Terasen Gas. A Fortis company. 2

Resource Planning at Terasen Gas

A long-term plan for the acquisition of resources to meet forecasted customer needs.

– 20-year planning horizon with 4-year Action Plan– Section 45 of the Utilities Commission Act

“Resource Planning is intended to facilitate the selection of cost-effective resources that yield the best overall outcome of expected impacts and

risks for ratepayers over the long run.”- BCUC Resource Planning Guidelines, 2003

TGI (Mainland) TGVI (Vancouver Island) TGW (Whistler)


Current Resource Plans – TGI 2006

We have built on existing and developed new partnerships

Pursue Partnering Opportunities in Energy Efficiency

Project Approved Nov. 2007Examine Feasibility of Mt. Hayes LNG

Completed as part of the Mt. Hayes Storage Facility Application

Monitor Capacity Requirements – Coastal Transmission System

Customer choice, television and radio campaigns and more.

Examine funding opportunities for marketing initiatives - building efficient load

Existing programs continued.New application imminent

Existing and New DSM Initiatives

Examined / improved processesImplemented information system improvements

Monitor and Evaluate Customer Demand- trends and technologies in residential, commercial, vehicles and gas transport

StatusAction Item


Current Resource Plans – TGVI 2006

Squamish to Whistler pipeline under construction

Extend Service to Whistler

Project Approved Nov. 2007Examine Feasibility of Mt. Hayes LNG

Retention effective Jan. 1st 2008Retain and Upgrade Texada Compressor

Long-term TSA approved / Participated in IEP Regulatory Review

Work with BC Hydro regarding transportation service to ICP & participate in 2006 IEP process

We have built on existing and developed new partnerships

Pursue Partnering Opportunities in Energy Efficiency

Existing programs continued.New application imminent

Existing and New DSM Initiatives

StatusAction Item


Current Resource Plans – TGW 2005

Continuing to monitor requirementsExamine demand side opportunities to help bridge the propane system until natural gas service is in place

Continuing to monitorMonitor potential for new development / load additions along the Sea to Sky corridor

Propane to natural gas conversionSupporting natural gas bus program

Support Whistler’s Sustainable Energy Strategy

Application for bridging facilities approved and implemented

Manage the capacity of the existing propane system through bridging facilities

Application approved and construction underway.

Seek approval for natural gas service to Whistler and conversion of the existing propane system

StatusAction Item


Resource Planning Process

Establish Objectives and

Criteria

Planning Environment

World, Region, Province, Local

Demand Forecast

Energy Efficiency and Conservation

Select Preferred Strategy & Resources

System Resource

Needs

Regional Supply

Resource Analysis

Risks & Uncertainties /

Future Scenarios

Resource Portfolio

Development & Analysis


Resource Plan Evaluation Criteria

Objective Attribute Measure Ensure reliable and secure supply.

System reliability Security of supply

Risk of outages Gas supply diversity

Provide service to customers at least delivered cost.

Financial evaluation of supply side and demand side resources

Net Present Value Total Resource Cost (TRC) Ratepayer Impact (RIM)

Reduce rate volatility. Expected rates Risk trade-offs Balance socio-economic and environmental impacts.

Social costs / benefits including: Local emissions Greenhouse gas Land use impacts Employment/local

economic impacts Stakeholder consultation

Air pollutants Quantity of CO2 equivalent Area impacted Jobs created

Stakeholder input

Objectives from 2006 Resource Plan will be reviewed and updated to reflect current planning environment

2006 TGI Resource Plan Objectives


2008 Resource Plan / Timeline

• One Submission for All Three Utilities

Jan. 1, 08 Sep. 30, 08

Feb. 1, 08 Mar. 1, 08 Apr. 1, 08 May. 1, 08 Jun. 1, 08 Jul. 1, 08 Aug. 1, 08 Sep. 1, 08

Feb. 12, 081st Stakeholder

Workshop

Jun. 16, 08Submit to BCUC

Apr. 16, 082nd Workshop

Tentative

Jan 2008 - Mar 2008Initial Stakeholder Consultation

Apr-08 - May-082nd Round

Stakeholder Consultation

Jan 2008 - Feb 2008Plan the Plan

Jan 2008 - Apr 2008Research and Analysis

Mar 2008 - May 2008

Resource Recommendations, Conclusions, Action Plan

May 2008 - Jun 2008

Final Plan Preparation, Specific Applications (if any)

June 2008 Regulatory Review


Stakeholder Consultation

Are Seeking Input From:• First Nations• Provincial Government• BCUC• Customers• NGO’s• Other Energy Utilities in BC and the Region• Municipalities• Business Associations

Other Consultation Opportunities:• Other Submissions and Applications• Customer Advisory• Community Relations and Events


Feedback from Today’s Session

• Taking Notes and Recording Questions

Contact:

Ken RossResource Planning ManagerTerasen Gas604-576-7342 / [email protected]

Please submit any written comments you may wish to provide by: February 25th, 2008

16705 Fraser HighwaySurrey, BC V4N 0E8

(feedback forms and mail in information provided)

Contact Cynthia Des BrisayDirector, Business Development & Resource Planning

Tel: (604) 592-7837E-mail: [email protected]

Regional Resource Planning

2

Regional Resource Planning

3

Regional Role of Natural Gas

Regional• 40% of total end use energy• 50% including generation• 25% of annual generation

British Columbia (2006)• Natural Gas End-Use Sales

match electricity sales• < 10% of annual generation

Northwest Energy Consumption(source: EIA, StatCan)

0

200

400

600

800

1,000

1,200

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

Mill

ion

Dth

End Use GasTotal Gas UseTotal Electric

Gas Electricity

2006 BC Energy Sales in BCGas vs Electricity

199,800 TJ55,500 GWh

202,850 TJ56,350 GWh

Generation 21,950 TJ

4

0

100

200

300

400

500

600

700

800

900

1,000

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

Million Dth

GenerationIndustrialCommercialResidentialPNW Electric Demand

Annual Natural Gas Deliveries

Regional Energy Market Outlook

• Economic Recovery from 2000/2001 energy crisis • Permanent reduction in industrial demand• Current growth driven by generation and residential demand

5

Generation & Residential Driving GrowthShare of Load by Sector, 1999

Residential24%

Commercial17%

Generation11%

Industrial48%

Share of Load by Sector, 2006

Generation20%

Industrial37%

Commercial17%

Residential26%

2011-12 Projected

Industrial

Generation Residential

Commercial

25% 29%

29% 17%

928 PJ

881 PJ

914 PJ

Source: EIA, StatCan, NWGA

6

Regional Electricity Planning Issues

• Energy Self-Sufficiency– Province to be electricity self-sufficient by 2016– Target is 3,000 GWh “insurance” in critical water year– Trade activities continue to optimise value of Heritage Resources– Continued commitment to IPP development

• Energy Conservation & Efficiency– 50 per cent of demand met through conservation by 2020

• Emissions Standard– Zero net greenhouse gas emissions by 2016– Zero greenhouse gas emissions from any coal-fired generation– Clean or renewable generation to account for 90 per cent of total

7

Regional Electricity Planning Issues

Pacific Northwest & California • Increasing emphasis on conservation and renewables • Conventional resources are expected to be required to provide firming

capacity• Natural gas fired generation part of the solution

Renewable Portfolio Standard GHG Emissions Standards

Washington − 15% by 2020− 500 tonnes per GWh

(Gas Fired CCGT Standard)

Oregon − 25% by 2025− Net 305 tonnes per GWh− CO2 offsets to meet standard

Montana − 15% by 2015− 50% CO2 sequestered for

Coal Fired Plants

California− 20% by 2010− Goal - 33% by 2020

− 500 tonnes per GWh(Gas Fired CCGT Standard)

8

PNW Generation Resource Stack

9

PNW Power Plant Development 2002 - 2007Generating Project Development Activity in the Northwest

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

10000

11000

12000

13000

Operating Construction Planned Proposed

Cap

acity

(MW

)

SolarPumped storagePetroleum/Pet CokeNatural gasHydro/Tidal/WaveCoalBiomassGeothermalWind

NorthwestPower andConservation

Council

NorthwestPower andConservation

Council

Includes OR, WA, ID, MTUpdated November 2007

Wind

Natural Gas Wind

Natural Gas

10

“ Lowest Reasonable Cost” Portfolio• Increase energy efficiency programs• Continue acquiring wind resources• Meet balance with natural gas fueled generation

Existing Resources

Puget Sound Energy2007 Integrated Resource Plan

11

NW Total Firm Peak Day Demand/Capacity Balance(ID, OR, WA, BC)

0

1

2

3

4

5

6

7

2007-08 2008-09 2009-10 2010-11 2011-12

Year (Nov-Oct)

Mill

ion

Dth

/day

Low Base High Pipeline Underground Storage Peak LNG

Regional Energy Market Outlook

• Growth of generation and residential demand resulting in greaterpeaking requirements

• Current resource adequacy dependant on availability of resources

Gas Supply Portfolio Planning

Dave Bennett, DirectorEnergy Management Services

2

Terasen System Overview

TerasenTransmission Lines

Terasen Distribution Service Area

Other Natural Gas Lines

Lower Mainland:Customers – 575,000Peak Day – 938 TJ/d

TGVI:Customers – 90,000Peak Day – 108.7 TJ/d

Interior:Customers – 245,000Peak Day – 331 TJ/d

• LML and VI account for over 75% of peak day requirements

3

Gas Supply Portfolio PlanningObjective

• To meet 100% of firm customer demand

• To do so in as cost effective manner as possible

How?

• Annual Contracting Plan (Annual – 1 to 2 year horizon)

• Resource Plans (Bi-annual – 20 year horizon)

• Regional Resource Plans (Annual – regional view)

NWGA Outlook Study

4

Why is it important?

Note: TGVI charges are bundled together

Cost of Gas + Midstream = 2/3 bill

TGI Commodity Charges117 PJ – Normal Demand 18 PJ from marketers$1 billion

TGVI Commodity Cost12 PJ – Normal Demand$100 million

5

Utility Business Model

Utility Delivery

Terasen Owned AssetsDistribution &

ConsumerSystem--

Transmission

Meter

LDC

Inter

conn

ect

MidstreamInfrastructure-- Storage Capacity- Peaking & Balancing- Resource mgt

& Optimization

Hub- AECO- STN #2-

Pipeline Capacity

CommodityPurchasesFor TerasenStandard RateOffering & Gas from Marketers

Supply

SUMAS

6

Gas Price Risk Management

$4$5$6$7$8$9

$10$11$12$13$14$15$16$17$18$19

1-Ja

n-03

1-Ap

r-03

1-Ju

l-03

1-Oct-

031-

Jan-

041-

Apr-0

41-

Jul-0

41-

Oct-04

1-Ja

n-05

1-Ap

r-05

1-Ju

l-05

1-Oct-

051-

Jan-

061-

Apr-0

61-

Jul-0

61-

Oct-06

1-Ja

n-07

1-Ap

r-07

1-Ju

l-07

1-Oct-

071-

Jan-

081-

Apr-0

81-

Jul-0

81-

Oct-08

1-Ja

n-09

1-Ap

r-09

1-Ju

l-09

1-Oct-

091-

Jan-

101-

Apr-1

01-

Jul-1

01-

Oct-10

1-Ja

n-11

Cdn

$/G

J

Terasen Gas Rate Electric Equivalent AECO Prices

Electric Equivalent

Terasen Gas Rate

Natural Gas Prices

Forward Curve as at Feb 4, 2008

AECO Spot + Delivery & Midstream Charges

7

How do we get gas to our customers?

8

Pipeline

StorageStorage

0

100

200

300

400

500

600

700

800

900

1000

1100

1200

1 51 101 151 201 251 301 351Days of the Year

Dem

and

(TJ/

d)

Storage (Aitken & MIST)Pipeline

Peaking Supply

`

Average Forecast Load Requirements vs Resource Availability

Normal Demand

For illustrative purposes only

Gas Supply Portfolio Planning

Peak Day Demand

9

Demand is Highly Variable

2007-08 TGI & TGVI Normal & Peak Day Loads vs Supply Portfolio

0

100

200

300

400

500

600

700

800

900

1,000

1,100

1,200

1,300

1,400

01/11

/2007

15/11

/2007

29/11

/2007

13/12

/2007

27/12

/2007

10/01

/2008

24/01

/2008

07/02

/2008

21/02

/2008

06/03

/2008

20/03

/2008

03/04

/2008

17/04

/2008

01/05

/2008

15/05

/2008

29/05

/2008

12/06

/2008

26/06

/2008

10/07

/2008

24/07

/2008

07/08

/2008

21/08

/2008

04/09

/2008

18/09

/2008

02/10

/2008

16/10

/2008

30/10

/2008

TJ/d

ay

Avg. Normal Winter Load = 500 TJ/d

Avg. Normal Summer Load = 200 TJ/d

Peak Day demand is roughly 10X bigger than lowest summer day

Peak Day Demand = 1400 TJ/d

10

British

Alberta

Columbia

FortNelson

AitkenCreek

Carbon

AECO

JacksonPrairie

ClayBasin

San JuanBasin

SoCal

McMahon

Pine River

Station 2

TCPL

Foothills/Northern Bo rd er

Trans W estern

E l Paso

NorthwestPipeline

K e rnR ive

r

P G&E

NOVA

Alliance

SCP

GTN

Kingsgate

ANG

Huntingdon/Sumas

NWP

PNG

Mist

RockyMountainBasin

Western CanadaSedimentary Basin

Westcoast

Options for Getting Gas to the Terasen System

Terasen

SupplyNE BCAlbertaUS Rockies

Pipelines Spectra Westcoast (BC)Terasen Southern Crossing (Alberta)Williams Northwest Pipeline (US Rockies)

StorageProducing areas

Aitken Creek, AECO, Carbon

Market – Underground ReservoirsJackson Prairie, Mist

Service Area – LNGTilbury, Plymouth, Portland, Newport

11

Portfolio (ACP)

0.0

200.0

400.0

600.0

800.0

1,000.0

1,200.0

1,400.0

11/1/

2003

11/15

/2003

11/29

/2003

12/13

/2003

12/27

/2003

1/10/20

041/2

4/2004

2/7/20

042/2

1/200

43/6

/2004

3/20/20

044/3

/2004

4/17/2

004

5/1/20

045/1

5/2004

5/29/20

046/1

2/200

46/2

6/200

47/1

0/2004

7/24/20

048/7

/2004

8/21/2

004

9/4/20

049/1

8/200

410

/2/20

0410

/16/20

0410

/30/20

04

TJ/d

Baseload

Seasonal

LNG/Industrial

Downstream Storage + Station 2/Alberta

Spot

Peaking Supply

Summer Spot for Storage

injection

12

Gas Supply PlanningCriteria / Managing Risks (Balanced Approach)

• Supply reliability and securityInfrastructure disruption

Compressors, plant, gas wells, pipelineSupplier failure

• Least delivered cost portfolio Remain competitive with alternate forms of energy (electricity, oil)

Balance least delivered cost with other objectives

• Reduce rate volatilityAbsolute price

Price volatility

Issues

14

North American Supply is Sufficient

LNGLNG

North AmericaProved reserves (inventory)7 -10 years supply

Total North American resource 70+ years of supply

Includes coal-bed methane, unconventional gasDoes not include imported LNG

Migration to new supply areas is taking place

15

Canadian Production Levels Maintained

Source: NEBSource: NEB 2007 Energy Futures

16

The US Expects LNG Imports to Fill the Gap

17

Potential changing gas flow

BC Production and Flows into Alberta

0

500

1000

1500

2000

2500

3000

3500

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

MM

cf/d

Deliveries to Alliance Deliveries to Nova & EkwanTotal BC Gas Production Deliveries into Alberta

BC Production is being drawn into Alberta

• Higher demand from oil sands plants

• Flat to declining production in Alberta

Rockies Supply has Grown Substantially

• PNW is looking to the Rockies for new supply

• This could potentially impact the flow of supply at Huntingdon

Dry Natural Gas Production in Rocky Mountain States

0100020003000400050006000700080009000

10000

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

MM

cf/d

Source: Energy Information Administration

18

Pipelines are Full when Weather is Cold

0

600

1200

1800

Nov-05 Nov-06 Nov-07

MM

cf p

er d

ay

Hunt. Export + LML WEI Maximum Capacity WEI CD

Value of regional pipeline capacity is increasing, indicating a constrained market

19

British

Alberta

Columbia

FortNelson

AitkenCreek

Carbon

AECO

JacksonPrairie

ClayBasin

McMahon

Pine River

Station 2

TCPL

Foothills/Northern Bo

British

Alberta

Columbia

FortNelson

AitkenCreek

Carbon

AECO

JacksonPrairie

ClayBasin

McMahon

Pine River

Station 2

TCPL

Foothills/Northern Bo rd er

NorthwestPipeline

NGTLAlliance

TerasenSCP

GTN

KingsgateTCPL-BC

Huntingdon/Sumas

We stcoas t

NWP

PNG

Mist

RockyMountainBasin


RockyMountainBasin


Regional Projects

Supply Issues for Markets• Access to supply• Diversity of supply• Changing load shape

Types of Projects• New supplies

Import LNG

Unconventional(new basins, coalbed)

• New connections to supply• Storage development

ImportLNG

ImportLNG

IPC

Palomar

PacificConnector

PacificTrail

VI LNGStorage

NGTL NCC

Ruby/BroncoEtc. REX

20

Summary

• Goal is to provide reliable, cost effective resources • Long term supply is sufficient• Natural Gas represents good value relative to other

fuels • Terasen actively supports planning initiatives, both

locally and regionally• Infrastructure must be planned

Long lead times for new projectsCost to the economy of supply shortfalls is highTerasen will need to continue to add both pipeline and storage resources to its portfolio over time


2008 Resource Plan

Trends and Issues in Natural Gas Demand

2


Demand Forecast

Trends and issues that affect:– Customer account additions– Use rates– Design day demand

3


Terasen at a Glance

Terasen Total Annual Demand

Ind & Trans36%

Residential38%

Commercial26%

Terasen Total Customers

Commercial9.7%

Residential90.0%

Ind & Trans0.3%

Total Customer ≈ 920K Total Demand ≈ 215 PJ/yr

4


Drivers of Demand

New Home Construction

Housing Type

Choice of Appliances

Appliance Energy Choice

Appliance Efficiency

New Customers

Choice of Appliances

Appliance Energy Choice

Appliance Efficiency

Existing Customers

5


Long-Term Growth in Population

B.C. Total Population

0

1,000

2,000

3,000

4,000

5,000

6,000

1990

1993

1996

1999

2002

2005

2008

2011

2014

2017

2020

2023

2026

('000

s)

Source: BC Stats

6


Shift Towards Multi-Family

BC Housing Starts - Housing Type Mix

-

5,000

10,000

15,000

20,000

25,000

30,000

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007P 2008F 2009F

# of

uni

ts

Single Family Dwelling

Multi Family Dwelling

Source: CMHC

7


Housing Type Consumption Patterns

67

37

19

52

0

10

20

30

40

50

60

70

Annu

al C

onsu

mpt

ion

(GJ)

Single Detached Townhouse Apartment Mobile Home

Space Heating Consumption - All Energy Types

Source: NRCan – B.C. data

8


NG Space Heating Increasing Efficiency

Low Eff. ceased installations in 1990

Aging units to be replaced by higher eff.

Mid Eff. to cease installations in 2010

Number of units will start to decline after 2010

Typical Consumption:Low = 67 GJ Mid = 51 GJ High = 45 GJ

Natural Gas Furnace Stock

-

100

200

300

400

500

600

700

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

Res

iden

tial U

nits

('00

0s)

Low Eff - 60%

Mid Eff - 80%

High Eff - 90%

Source: NRCan – B.C. data

9


Residential Use Rates

0

20

40

60

80

100

120

140

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

PG

J/yr

Declining Residential Use Rates

TGVI

TGI - LML

10


Use Rates vs. Natural Gas CostsTerasen Gas - Lower Mainland

Residential - Use Rate vs. Average Gas Rate

$13.88

$12.49

$5.67$6.21

$7.28

$10.31

$11.23$10.51

$12.20 $11.65

$0$1$2$3$4$5$6$7$8$9

$10$11$12$13$14$15$16

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007P80

90

100

110

120

Use

Per

Cus

tom

er -

GJ

Delivery Gas Cost Use Per Customer

11


Natural Gas Competitiveness

Natural Gas and Electric Rate ComparisonLower Mainland Residential Customer

$0.00

$2.00

$4.00

$6.00

$8.00

$10.00

$12.00

$14.00

$16.00

$18.00

$20.00

$22.00

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

$ / G

J

Natural Gas: Commodity Cost Natural Gas: Delivery Margin Hydro Trailing Block - Efficiency Adjusted (80%)

Hydro Trailing Block - Eff iciency Adjusted (90%) Hydro Trailing Block - 80% (Potential RRA Increase) Hydro Trailing Block - 90% (Potential RRA Increase)

High Efficiency Equivalent

Mid-Efficiency Equivalent

12


Electric Space Heating Consumption

Annual Electricity Use For Electric Space & Water Heating Customers

0

5,000

10,000

15,000

20,000

25,000

30,000

Both Space and WaterHeating

- Non Electric

Water Heating - ElectricSpace Heating - Non-

electric

Both Space and WaterHeating

- Electric

Ann

ual E

lect

ricity

Use

(kW

h)

Space Heating

Water Heating

All Other EndUses

9,50012,600

23,400

Source data: BCH 2007 RDA – Exhibits B-66 and B-67

• New electric space heating customers add about twice the load to BC Hydro’s system as non-electric space heating customers

• Electric space heating creates extra challenges as it occurs in the winter coincident with high demands on the system.

13


Other Influencers of Demand

• Incentive programs• Public perception of various energy types• Climate change policies and initiatives

14


Annual Demand - Reference Case

Methodology

Customer Additions• Residential and Commercial derived from household

formations and CMHC forecasts• No change in Industrial customers during planning period

Use Rates• Residential declines during initial period then levels out• Commercial reflects recent history during initial period then

also levels out • Industrial survey results used for initial period, then held

constant

15


High Scenario

The High Scenario represents a future where:

1. Province continues to experience strong economic growth 2. Natural gas price advantage improves with respect to electricity3. Policies are established that promote the direct use of natural gas

for space & water heating

• Supports BC Hydro’s requirement to achieve self-sufficiency in electricity generation

• Preserves the value of the province’s Heritage electrical resources

• Recognizes that the direct use of natural gas helps to minimize the region’s carbon footprint across the entire energy portfolio

16


Low Scenario

The Low Scenario represents a future where:

1. Province experiences slower than expected economic growth2. Technology improvements and increasing efficiencies

accelerate conservation efforts3. Perceived ‘solution’ to climate change causes a shift from

natural gas to electricity and alternative technologies

Increases BC Hydro’s challenges in achieving self-sufficiency in electricity generation

17


Design Day Growth

• Design day estimates demand under extreme weather conditions– Purpose is to ensure adequate system capacity and commodity

supply• Driven by the type and number of customers

– Does not necessarily reflect changes in annual demand

Lower Mainland Design Day Demand (per Customer)

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

1.8

-15 -10 -5 0 5 10 15 20 25 30

Temp. (ºC)

(GJ

per a

cct)

Design Day Temp

• Expect growth in design day to outpace growth in annual demand– Residential customers are

expected to form the bulk of new additions

18


Summary

• Various trends working in opposite directions– Population growth– Housing type– Natural gas competitiveness– Appliance efficiency

• Province (and the rest of the world) is at a crossroad– Decisions by governments and individuals will significantly

shape how energy is used

• Future cannot be predicted– Need to be ready for a range of outcomes


Additional Information

20


B.C. Economy – Continued Strength

GDP growth rate to remain stable at 2.9% in 2008

Strong domestic demandEmployment gainsGrowth in retail tradeSteady housing activity

Source: Actuals – BC Stats, Forecast – BC Ministry of Finance

Provincial GDP

$50,000

$70,000

$90,000

$110,000

$130,000

$150,000

$170,000

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007P 2008F

GDP

($M

)

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

GDP

Gro

wth

Rat

e

GDP (1997 $M) GDP Growth Rate

21


B.C. Economy – Cont’d

Mortgage rate to remain stable in the 7% range for 2007 and into 2008

Canadian Mortgage Housing Corp (Q3, 2007 Market Outlook)Credit Union Central of B.C. (Oct 2007 Interest Rate Forecast Report)

Unemployment rate to remain low at 4.6%B.C. Ministry of Finance - 4.6% (2007 Quarterly Report)BMO Economics - 4.5% (Sep 2007)RBC Economics - 4.7% (Oct 2007)

Provincial Unemployment

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

10.0%

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007P 2008F

5 Year Mortgage Rate

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007P 2008F

22


TGI & TGVI – Trends in Energy Demand• Residential and commercial demand

continues to grow as a % of TGI’s total business

• Long-term trend shows slight decrease in demand

– Residential and commercial steady– Industrial energy consumption in

decline

• Bulk of TGVI’s energy demand is driven by Transportation customers

– Future Transportation volumes expected to remain fairly constant

• Residential and commercial volumes will continue to increase as a % of total energy demand

TGI Total Energy Demand

0

25

50

75

100

125

150

175

200

2002 2003 2004 2005 2006 2007P 2008F

Ener

gy (P

J)

Residential Commercial Firm Sales Industrial

TGVI Total Energy Demand

-

5

10

15

20

25

30

35

2003 2004 2005 2006 2007P 2008F

Ener

gy (P

J)

Residential Commercial Tranportation

Contact Information Rick ParnellDirector, Customer Management & Sales

Tel: (604) 576-7000E-mail: [email protected]

Delivering Comfort and Value

2

Agenda

•Right Fuel, Right Use, Right Time•Measurement Innovations•Installation costs – Connection Policies•Encouraging sustainable design

3

2007 BC Energy Plan•“It is important for British Columbians to understand the appropriate uses of different forms of energy and utilize the right fuel, for the right activity at the right time. There is the potential to promote energy efficiency and alternative energy supplemented by natural gas.” (p.21)

•“Our province has enormous natural gas resource potential and opportunities for significant growth.” (p.33)

4

Individual Natural Gas Metering

5

What Gets Measured Gets Managed

Individual measurement encourages efficiency and discourages waste

6

Thermal Metering

•Measures thermal energy from gas fired hydronic heating system

•Hydronic systems allow for alternative heating sources – gas, geo-exchange, solar etc.

•Owners/occupants are responsible for their actual energy usage; not an arbitrary allocation

7

Connection Policies – Objectives

• Signal value for builders and potential customers

• Make it easier to add customers and improve the overall efficiency of the distribution system

• Encourage conservation, efficiency and optimal energy use

8

New Connection Policy

• Eliminates $215 Service Line Installation Fee (SLIF)

• Aggregate Profitability Index for all customer adds on an annual basis

• Service Line Cost Allowance (SLCA)

Increased from $1,100 to $1,535 for “on main”/infill services

9

Connection Policy: Energy Efficiency

•Assumed gas load in test is increased by 10% for customers with both high efficiency space and water heating

•Assumed gas load in test is increased by 15% for those customers who attain LEEDtm certification

10

Alternative Piping for VSDs

•More flexible approaches when determining where to install meters in VSDs

•Pipe “downstream” of the meter can be included in service line calculations

11

A Flexible Energy Platform…Natural Gas is an important part of an efficient, environmentally sensitive, economic and cost effective energy platform today, and an important bridging fuel for advancements in energy system technology for tomorrow…

Fleet Vehicle Solutions

Distributed Energy

Technology

High Efficiency Technology

FutureSustainable

Energy Systems

Hydrogen Highway

Fuel Cell Research

Individual Metering In Multi-unit Buildings

Community Energy Platform – 2010 and Beyond!1990s

12

Summary

• Terasen Gas is making it easier to do business • Proper energy management aids efficiency • Continue to encourage the right fuel for the right

use

13

Questions / Comments

February 11, 2008


2008 Terasen Gas Resource Plan

Energy Efficiency and Conservation

Sarah Smith, Manager, Marketing and Energy Efficiency


Burn blue. Save green.2

Agenda

• Current activity• Changing conditions• Consevation Potential Review• Energy Efficiency and Conservation

Application• Moving forward


Activity – Information and Incentives


How did we do?


DSM Expenditure - TGI

2007 DSM Spending Breakdown

Program CostsCustomer Incentive

$3.1 million/year


Customers benefit

•64,000 tonnes GHG annually for at least 10 years•$14 million annually for at least 10 years

TGI Cumulative Gas Savings from DSM Expenditure (GJs)

118,383281,383

522,283782,433

941,5521,118,725

1,270,385

694,283

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

2000 2001 2002 2003 2004 2005 2006 2007


Times have changed…

Customer focuson environment

BCEnergy Plan

Increase in energy costs

TGVI more mature


BC Energy Plan 2007

BCEnergy Plan

Utilities to pursue cost-effective and competitive

DSM opportunities

BCH 50% conservation goalBCH self-sufficiency


Conservation Potential Review (CPR)


Conservation Potential Review

Cumulative Annual Savings - Current Level vs. EEC Proposal

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000

7,000,000

2008 2009 2010 2011 2012 2013 2014 2015 2016

GJ

EEC Proposal - GJ Savings

Current Spend - GJ Savings

$15 million

$71 million


Conservation Potential Review (CPR)


Overall Terasen EEC Proposal

Rate Class 2008 2009 2010TGI Residential $6,763,000 $6,751,000 $6,104,000TGI Commercial $7,232,700 $8,601,000 $11,092,050TGVI Residential $1,734,500 $1,757,500 $2,042,500TGVI Commercial $1,095,590 $1,185,990 $1,750,990Subtotal by year $16,825,790 $18,295,490 $20,989,540


Financial Treatment

• Capital vs. O&M

• Amortization period

• Rate Impact

• Timing/reporting


Staffing

• 4 staff today• 20 people by 2010


Value for investment

Terasen Gas Investment ResultsInc. Gas Conserved $/GJ2007 $3,100,000 1,203,596 $2.58Proposed $28,193,000 8,945,000 $3.15


Comparable Utilities

Company Name

2007 DSM Annual Budget (000,000)

Customer Base

2006 Total Revenues (000,000)

% DSM Budget of Revenue

DSM investment per customer

Annual Sales Volume (PJs)

PG&E $279.0 4,200,000 12,530 2.23% $66.43 425.9

BC Hydro $77.7 1,704,671 4,311 1.80% $45.58 190.5

Manitoba Hydro $9.0 258,000 517 1.74% $34.88 147.6

SoCal Gas $56.6 5,600,000 4,180 1.35% $10.11 946.0

FortisBC $2.5 106,000 208 1.19% $23.34 11.1

NW Natural $11.0 636,000 1,000 1.10% $17.30 125.8

Union Gas $17.0 1,300,000 2,100 0.81% $13.08 1,303.0

Enbridge $22.0 1,800,000 3,016 0.73% $12.22 445.0

Gaz Metro $8.8 167,000 2,000 0.44% $52.69 271.8

Terasen $4.3 911,935 1,635 0.26% $4.69 208.0Puget Sound Energy $6.1 718,000 2,905 0.21% $8.52 205.1

SaskEnergy $1.6 325,000 1,254 0.13% $4.92 125.0

ACTO Gasmarketing budget 969,200 2,890 N/A n/a 219.0


Proposed Initiatives

ResidentialFuel Switching

Residential EE

Commercial EE

ConservationEducation

JointInitiatives

InnovativeTechnologies

Trade Relations


The Power of Partnership


The way forward

February 28

Residential EndUse Study

CPR2009

Partner Activities


Thank youComments and Questions

[email protected]

February 11, 2008



2008 Resource Plan

Alternative Energy Opportunities

2

INTRODUCTION

Energy & Environmental PolicySupport 2007 BC Energy PlanProactive role in provision of solutionsBalancing of Energy, Environment & Economy

Project OpportunitiesBiomethane ProductionNatural gas for the Transportation SectorWaste Heat Electricity GenerationPressure Letdown Electricity Generation

3

Biomethane Opportunities

gas upgraderTerasen Gas System

farm

digester

De-watering

4

Biomethane Benefits

• Support BC Bioenergy Strategy• Methane Capture

• Methane emissions are 21 times more GHG intensive than CO2

• Energy from Agriculture

• Multiple Sources of Energy• Agricultural Waste • Landfill• Wastewater Treatment

5

Natural Gas - Transportation Sector

Other Industry, 16%

Agriculture, 4%

Waste, 9%

Electricity *, 3% Transport, 39%

Fossil Fuel Production, 18%

Residential and Commercial, 11%

BC GHG Emissions by Sector

6

Natural Gas - Transportation

• Natural Gas Vehicle Applications• Municipal Fleets (Waste Haulers, Buses etc..)• Trucking Fleets (LNG)• Forklifts and other Port Vehicles

• Benefits• 25 to 40% reduction in Fuel Consumption Cost• 15 to 25% reduction in GHG Emissions• 50 to 80% in NOx SOx, and Particulate Matter

7

Transit/Bus CNG CO2 Life-Cycle:

+14%

+18%

CO2 Increase

8

Transportation

Cold Ironing – LNG Port Electrification• NOX / PM10 / SOX 98%-100%• CO & CO2 57%• Demonstration project underway with Port of

Oakland

9

Pipeline 300-2160 psig

Gas TurbineComp

Typical 900oF

Waste Heat Recovery Generation

Generator

Heat Recovery

Generation

10

Project Opportunity• TGVI’s Coquitlam Compressor Station• Potential to generate up to 20,000 MWh of clean electricity per year• Capital Investment $12 to $18 million• Qualifies under BC Hydro Standing Offer Program• May qualify for Innovation Clean Energy (ICE) Funding

Benefits• Improve energy efficiency in pipeline operations by using waste heat

generation for site service • Provide clean zero emission energy to electrical grid• Revenue neutral – project costs offset by income from electricity

sales • Overall balance of energy efficiency, environment and economy

11

Pressure Letdown Generation

High Pressure Pipeline 300-2160 psig

Distribution System 60-80 psig

Heater

Pressure Regulator

Generator

Turbo-expander

February 11, 2008



Questions

Contact Information Ken RossResource Planning Manager

Tel: (604) 576-7343Fax: (604) 592-7620E-mail: [email protected]


Summary and Next Steps2008 Resource Plan


Summary

Natural gas is part of the solution to meet our energy challenges.

Direct use of natural gas in BC:• Supports a balanced approach to meeting the natural gas and

electricity policy actions of the BC Energy Plan.

• Helps BC Hydro meet its 2016 self- sufficiency target by reducing its future demand requirements.

• Reduces regional GHG output now and in the future.

Terasen is advancing its services to help customers choose the right fuel for the right uses.

Continued exploration of efficient natural gas initiatives and technology is key to our energy future.


2008 Resource Plan / Timeline

Next Steps:• Respond to Stakeholder comments / requests• Continue research and analysis• Develop draft recommendations• Seek Stakeholder input again in the spring


Feedback from Today’s Session

Contact:

Ken RossResource Planning ManagerTerasen Gas604-576-7342 / [email protected]

Please submit any written comments you may wish to provide by: February 25th, 2008

16705 Fraser HighwaySurrey, BC V4N 0E8

(feedback forms and mail in information provided)

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