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

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
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 206
does not seem a likely scenario as remaining within the FortisBC service territory presents the
least risk option for existing marijuana producers.
The supporting analysis for this question and the following sub-questions is provided as
Electronic Attachment BCUC IR1 87.2.
Response:
87.2.1 Please recalculate the ‘NPV of net benefit’ assuming a five percent per
year increase in total grow-ops in the status quo scenario (rather than a
two percent per year increase).
The likelihood of the scenario presented in the question requires consideration of the potential
reasons why the number of growers might escalate in the absence of AMI and the possible
impact this might have on the Status Quo.
The risk of detection for paying sites at BC Hydro is unchanged as a result of AMI deployment.
It is higher in regions of municipal engagement under the Safety Standards Act and lower in
regions who have not engaged. The risk of detection in FortisBC in the Status Quo scenario
also does not change, so all else being equal a paying producer is therefore not motivated to
move their business to FortisBC.
The risk of detection for producers who engage in stealing electricity will increase in BC Hydro
territory as a result of AMI deployment. All else being equal, the stealing producer may choose
the lower risk FortisBC alternative. It is reasonable to expect that a stealing producer coming to
FortisBC will continue to steal versus start paying since they have the same option to pay in BC
Hydro. If this were to occur the current paying ratio cannot be assumed to remain constant.
FortisBC believes it is possible that the number of producers will increase by five percent in the
absence of AMI. However, the probability of this occurring without degrading the current
deterrence ratio is unlikely. FortisBC believes that if the number of sites in the Status Quo
increases by five percent, 75 percent of those will steal. The Company has assumed that this
influx of stealing growers produces a decline in the deterrence rate from 75 percent in 2012 to
60 percent by 2019.
In this more plausible refinement of the scenario outlined in this question, the NPV of the Net
Benefit related to the AMI Project increases to $47.3 million as presented in the supporting
analysis provided as Electronic Attachment BCUC IR1 87.2. Please also refer to the response
to BCUC IR1 Q87.2.