FortisBC Inc. (FortisBC) Application for a Certificate of Public ...

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FortisBC Inc. (FortisBC or the Company)
Application for a Certificate of Public Convenience and Necessity
for the Advanced Metering Infrastructure Project
Response to British Columbia Utilities Commission (BCUC or the Commission)
Information Request (IR) No. 1
Submission Date:
October 5, 2012
Page 205
FortisBC has carefully considered many scenarios in arriving at the NPV of Net Benefit for Theft
Reduction and is of the view that the $38.4 million proposed in the Application is a conservative
and reasonable figure in light of these uncertainties.
In the scenario proposed in this question, the NPV of Net Benefit declines to ($662,263) as
presented in the supporting analysis provided as electronic Attachment BCUC IR1 87.2. All
other assumptions in the model remain unchanged including the power purchase cost for theft
sites.
The likelihood of this scenario requires analysis of the reasons why both non-paying and paying
marijuana growers might leave the FortisBC service area if AMI is deployed.
FortisBC believes that the rate of marijuana production will continue to rise to meet increasing
demand from population growth. This is because the incentive to commercially grow marijuana
has not diminished; export demand (estimated at 90% of production), market price and the
return on the investment for marijuana growers have all remain relatively unchanged.
The risk versus reward model proposed by Easton suggests that growers will operate in a
manner and location that best minimizes risk. (Please see the Easton Policy Paper filed in
response to BCUC IR1 Q74.1 and Exhibit A2-1). Growers will therefore leave the FortisBC
service territory if they perceive lower risk elsewhere.
Non-paying operators will face an increased risk of detection if AMI is implemented at FortisBC
and therefore they must consider the following:
• The deployment of AMI in conjunction with full-scale energy balancing at BC Hydro will
not encourage relocation to BC Hydro.
• The surrounding jurisdictions to which provincial growers may consider moving have
considerably more punitive criminal penalties for illegal marijuana production than in BC.
(Easton reports that 13 percent of operators detected by the police in BC faced criminal
charges compared to 60 percent in the rest of the country).
• Illegal growers who are paying customers at FortisBC do not presently face a risk of
detection under the Safety Standards Act as there has been no municipal engagement
to date.
It seems reasonable to predict that the least risky option for non-paying growers is to remain in
FortisBC as paying sites.
The risk to paying operators with AMI deployment is limited to possible detection under the
Safety Standards Act. As municipal engagement has not occurred to date there is no
motivation to leave. Therefore a 5 percent reduction in marijuana sites with AMI deployment