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
Table 2-3: 2010 Overall Program Portfolio Results – Conventional EEC Portfolio
Non-
Total for
Incentive and Annual
Incentive Incentive Non-Incentive Energy
Expenditure Expenditure Expenditures Savings NPV Energy
Utility ($000s) ($000s) ($000s) (GJ/yr) Savings (GJ) TRC
FEI 4,732 5,256 9,988 145,404 1,259,325 0.9
FEVI 727 1,022 1,749 20,706 149,185 1.1
Total 5,459 6,278 11,737 166,110 1,408,510 1.0
The reasons why the Conventional EEC portfolio for FEI had a TRC level of 0.9 include the
complex environment in which the Companies were operating the EEC initiatives in 2010, the
relatively low gas prices, and the increase in enabling activities that do not necessarily
contribute to energy saving. Each is explained below respectively.
First, both the financial crisis and the changes in provincial government leadership impacted the
customers’ focus on EEC activities. The financial crisis that started in 2007 continued to affect
the economy in British Columbia in 2010. The Companies’ commercial customers were
constrained by tighter access to credit, and since the customers’ focus was on keeping their
businesses going during challenging times, it was more difficult to get them to spend more of
their already constrained funds on energy efficiency and conservation. For residential
customers, concerns about the impact on their employment from the economic challenges the
country was facing, together with the end of the federal Home Renovation Tax Credit, had
reduced customer activity in this program area. Moreover, uncertainty about the direction of the
provincial government resulting from the changes in the Liberal and NDP leaderships also
negatively impacted customer focus on EEC by increasing customer uncertainty about the
longevity of government programs such as LiveSmart BC.
Second, relatively low gas prices not only made it harder to get customers’ attention focused on
energy efficiency and conservation, but was also a significant factor in the slightly negative
TRC. The TRC is calculated based on avoided cost of gas resulting from undertaking EEC
activity, divided by the cost of undertaking that activity. The avoided cost of gas used to
calculate the results of the EEC activity presented in the 2009 EEC Annual Report averaged
$13/GJ over the period 2009 to 2040; the 2010 results were based on an average cost of gas of
$10.61/GJ over the period 2010 to 2041. Using an avoided cost of $13/GJ, the conventional
portfolio returns a TRC result of 1.3, while the combined conventional and innovative technology
portfolios return a TRC result of 1.2. This illustrates the challenge of using a market-based
avoided cost to analyze the value associated with a utility’s DSM activity and reflects a very
narrow view of the benefits that accrue from that activity. The Companies’ next submission for
approval of future EEC activity in the 2012-2013 Revenue Requirements Application intends to
address this issue, and should result in calculations of the benefits of future portfolios of EEC
activity showing positive results.
SECTION 2: OVERVIEW OF 2010 PROGRAM ACTIVITIES Page 8