FEI-FEVI 2010 EEC Report filed March 31, 2011 - FortisBC

FORTISBC ENERGY INC. AND FORTISBC ENERGY (VANCOUVER ISLAND) INC.
2010 ENERGY EFFICIENCY AND CONSERVATION ANNUAL REPORT
(e) All agreed to EEC expenditures will be considered and evaluated within the existing
EEC portfolio, and will be subject to the same financial treatment, as per the
Commission’s EEC Decision dated April 16, 2009 (Application, page 514, Item 6).
However, Innovative Technology programs will be managed by TGI as a separate
segment of the overall portfolio to have a weighted average TRC of 1.0 or more. TGI will
consult with stakeholders on the practical application of the weighted average TRC
through the EEC Advisory Committee.
(f) TGI will report to the Commission on industrial interruptible and innovative technology
programs as part of TGI’s annual report on EEC activities required under the EEC
Decision.” [Emphasis added.]
10.1.1.3 Innovative Technologies Program Area Incentives
10.1.1.3.1 Level of Incentives
It is too soon for the Companies to be able to determine the appropriate level of financial
incentives necessary to make innovative technologies in general attractive to customers in the
long-term; thus, there is a need to conduct pilot programs and demonstration projects to test the
effect differing levels of incentives have on adoption rates, such as the pilot programs currently
underway for the solar thermal residential pilot. NGV programs necessitate incentive funding
due to the high upfront capital cost of NGVs versus conventional fuelled vehicles. At present,
original equipment manufacturer (“OEM”) CNG vehicles command a price premium of 20 – 30
percent over their conventionally fueled equivalents. The price premium of LNG vehicles ranges
from 50 – 65 percent. In the case of the Commercial NGV Demonstration program, which
provides an incentive of up to 100 percent of the incremental capital cost for heavy duty
vehicles, there have already been contractual commitments from customers. This demonstrates
there is a strong correlation between the level of incentives and adoption for NGVs. The use of
EEC Innovative Technologies funding for the Commercial NGV Demonstration program is
discussed in Part 2 below. In general, the Companies believe the required level of incentives
can be expected to decline as the innovative technologies gain a greater share of the market,
but determining exact values and timing is challenging at this time because predicting market
share for emerging technologies can be difficult and subjective.
10.1.1.4 Funding Transfers
As described in Section 2 of the Report, the Companies identify the transfer of funds from one
program area to another. The transfer involves funding from the Conventional EEC Program
Area to the Innovative Technologies Program Area in the amount of $3.487 million. In
compliance with requirements set forth in Order G-36-09, the transfer amount, the rationale
supporting the transfer, and the impact of the transfer are described below.
SECTION 10: INNOVATIVE TECHNOLOGIES PROGRAM AREA Page 177