ERICA HAMILTON COMMISSION SECRETARY

Commission.Secretary@bcuc.com web site: http://www.bcuc.com

SIXTH FLOOR, 900 HOWE STREET, BOX 250 VANCOUVER, BC CANADA V6Z 2N3

TELEPHONE: (604) 660-4700 BC TOLL FREE: 1-800-663-1385

FACSIMILE: (604) 660-1102

Log No. 41490

PF/FAES-Telus Garden/A2-1_Thermal-Metering-AnnRpt

VIA EMAIL gas.regulatory.affairs@fortisbc.com November 5, 2012

FAES TELUS GARDEN THERMAL ENERGY SYSTEM EXHIBIT A2-1

Ms. Diane Roy Director, Regulatory Affairs FortisBC Energy Inc. 16705 Fraser Highway Surrey, BC V4N 0E8 Dear Ms. Roy:

Re: FortisBC Alternative Energy Services Inc. Application for a Certificate of Public Convenience and Necessity for

the TELUS Garden Thermal Energy System and for Approval of the Rate Design and Rates to Provide Thermal Energy Services to

Customers at TELUS Garden Development

Commission staff submits the following document for the record in this proceeding:

Compliance Filing – Thermal Metering Annual Report for 2011-2012

Yours truly, Erica Hamilton cms Enclosure cc: Registered Interveners (FAES-Telus-RI)

July 13, 2012 British Columbia Utilities Commission 6th Floor, 900 Howe Street Vancouver, BC V6Z 2N3 Attention: Ms. Erica M. Hamilton, Commission Secretary Dear Ms. Hamilton: Re: FortisBC Energy Inc. (“FEI”)

British Columbia Utilities Commission (the “Commission”) Order No. G-65-07 Compliance Filing

Thermal Metering - Annual Report for 2011-2012

On June 14, 2007, the Commission issued Order No. G-65-07 approving amendments to the FEI General Terms and Conditions to include definitions to allow for Thermal Metering. Commission Order No. G-65-07 directed FEI to file reports annually on the Thermal Metering Pilot project by July 15 of each year starting 2008 and each year thereafter through 2012 inclusive. In accordance with Commission Order No. G-65-07, attached please find FEI’s report on the Thermal Metering Pilot Project for 2011/12 (the “Report”). In addition to filing the annual report, FEI is also seeking an extension to the existing Thermal Metering Pilot, as approved by Order No. G-65-07 for a further five year period. The justification and approval sought are discussed in the Report. We trust that the Commission will find this filing to be in order. Should further information be required, please contact Rick Kan, Energy Products and Services Manager at (604) 592-7796. Yours very truly, FORTISBC ENERGY INC. Original signed:

Diane Roy Attachments

Diane Roy Director, Regulatory Affairs - Gas FortisBC Energy Inc.

16705 Fraser Highway Surrey, B.C. V4N 0E8 Tel: (604) 576-7349 Cell: (604) 908-2790 Fax: (604) 576-7074 Email: diane.roy@fortisbc.com www.fortisbc.com Regulatory Affairs Correspondence Email: gas.regulatory.affairs@fortisbc.com

A2-1

FORTISBC ENERGY INC.

THERMAL METERING 2011-2012 ANNUAL REPORT

PAGE 1

Background

On June 14, 2007, the British Columbia Utilities Commission (“BCUC” or the “Commission”)

issued Order No. G-65-07 approving changes sought by FortisBC Energy Inc.1 (“FEI” or the

“Company”) to amend the General Terms and Conditions of its Tariff to allow “thermal metering”

on a pilot basis for a period of five (5) years. The amendment included the definitions of

“Hydronic Heating System”, “Thermal Energy”, and “Thermal Metering” as described in

Appendix “A”, whereby customers receiving service via Thermal Metering will be charged for

energy consumption as set out in Rate Schedule 1.

Order No. G-65-07 directed FEI to file an annual report with information on the status of the

Thermal Metering Pilot Project for the 12 months ending June 30 of each year from 2008

through 2012 inclusive. This report covers the last of that five year period.

Project Purpose

The introduction of individual metering for suites heated with a central hydronic system is

intended to enable strata residents to manage energy usage and cost. When residents are

aware of their energy usage, conservation measures are more likely to be adopted. For strata

residents whose total energy costs are aggregated and divided amongst all strata owners, there

is no means to measure their usage and therefore, this customer segment is unlikely to

implement conservation strategies.

Through consultations with developers and property managers, the Company has discerned

that the use of central hydronic systems is often discouraged by property managers and

developers of vertical subdivisions in favour of electric baseboard heating, to more easily allow

for the individual metering and billing of heating costs. The bias is driven by consumer demand

to manage and control their own energy use (and discourage free-ridership within a complex),

as well as the perceived competitive advantage that comes through reducing the costs that

must be included in monthly strata / condo fees. Many complaints and disputes brought to

property managers are a result of the inability to individually meter each suite’s energy usage.

The introduction of thermal metering to strata developments provides the Company and

consumers with a natural gas solution for individual metering within strata units. Further,

providing sustainable energy management and encouraging conservation and demand side

management continue to be key values for FEI. Thermal metering will provide British

Columbians a sustainable and conservationist approach to residential development by providing

them an option to take control of their energy use.

1 Formerly Terasen Gas Inc.

FORTISBC ENERGY INC.

THERMAL METERING 2011-2012 ANNUAL REPORT

PAGE 2

2011/2012 Pilot Project Summary

The Company reported in its 2010/2011 annual report that there was uncertainty in the use of

thermal meters for billing of energy use under the Federal Weights and Measures Act.

Consequently, the Company did not pursue any thermal metering pilot projects in the 2011/2012

reporting period.

Throughout 2011, FEI worked with the Canadian Gas Association (“CGA”) and other industry

stakeholders to seek clarification from Measurement Canada on its involvement in the aspect of

billing management devices (i.e. thermal meters). Measurement Canada responded that while it

is exploring the best approach in ensuring measurement accuracy in the steam and thermal

energy sector, no decision has been made as to when recommendations from the Steam and

Thermal Energy Trade Sector Review will be implemented. In addition, the majority of resources

at Measurement Canada are being consumed by other requirements such as the Fairness at

the Pumps Act. A copy of the letter response from Measurement Canada can be found in

Appendix B.

In light of the need for a thermal meter standard, FEI and other utility stakeholders initiated a

project with the Canadian Standards Association (“CSA”) to update the existing C900 standard2

which is closely aligned to the EN-14343 standard to reflect Canadian deviations. The EN-1434

is also the European standard for thermal meters that Measurement Canada is considering to

adopt and is the basis for the CSA C900 standard and the International Organization of Legal

Metrology (“OIML”) R75 standard 4which have been referenced in the recommendations from

the Thermal Energy Trade Sector Review. The update of the C900 standard is ongoing and is

scheduled to be completed in 2013.

At the beginning of 2012, the CGA and its utility and industry members formed the Thermal

Metering Committee, a national committee of stakeholders, to produce a set of best practices

for self-regulation of the thermal metering industry until regulation by Measurement Canada can

be reached. Measurement Canada was also notified of this effort and a copy of the letter can be

found in Appendix C.

Best practices will consist of the following:

Equipment specifications for different applications;

Installation procedures;

Initiation procedures;

2 The CSA C900 standard is an adoption with Canadian deviations of the identically titled Comité Européen de

Normalisation (CEN) or European Committee for Standardization EN-1434. 3 The European Standard, EN-1434 was first developed by CEN in 1997 and modified in 2007 to specify the

requirements for thermal meters (or heat meters) and consists of 6 parts. Details of the standard can be found at www.cen.eu.

4 The OIML R75 standard was first developed in 2002 based on Part 1 of the CEN EN-1434 (1997) standard to

harmonize the regulations and metrological controls applied by the national metrological services, or related organizations, of its Member States. Canada is a member of OIML.

FORTISBC ENERGY INC.

THERMAL METERING 2011-2012 ANNUAL REPORT

PAGE 3

Allocation of energy costs (billing);

Representative agreements with customers;

Dispute resolution mechanisms;

Calibration / verification frequencies; and

Testing facilities.

It is estimated that a best practice document will be completed in the next two years while a

regulatory framework by Measurement Canada may take three to five years.

The following table summarizes the 2011/12 Thermal Metering pilot project:

Table 1: 2011-2012 Thermal Metering Pilot Project Summary

Number of developments incorporating thermal metering 0

Number of total units being billed under thermal metering 0

Cumulative number of units being billed under thermal metering (July 1, 2007 to June 30, 2012)

0

Cumulative FEI costs associated with promoting thermal metering (July 1, 2007 to June 30, 2012)

$10,000

FEI costs of deploying thermal metering 0

Number of complaints regarding thermal metering 0

Request for Extension of Pilot

Due to the time needed to either complete the best practice document through the Thermal

Metering Committee or achieve regulation by Measurement Canada, FEI is seeking an

extension to the current Thermal Metering Pilot application for a further five years.

Within this time period, in the event that the best practice document is completed before

regulation is in place, FEI will be able to forward a request to Measurement Canada to be

exempted from regulation and undertake a pilot in line with the best practices and provide the

service to customers through a tariff as approved in Commission Order No. G-65-07. In the

event that Measurement Canada provides regulation to the thermal metering industry sooner

than the expected three to five years, FEI will then be able to move ahead with a pilot in

compliance with the rules and regulation set out by Measurement Canada.

Further, FEI does not anticipate any costs to be incurred by the Thermal Metering Pilot Project

until such time that a pilot is ready to be launched. Hence, there will no impact to FEI customers

as a result of extending the pilot for a further 5 year period.

It is also noted that this request for an extension is specific to FEI’s Thermal Metering Pilot

Application and does not pertain to projects related to FortisBC Alternate Energy Services Inc.

FORTISBC ENERGY INC.

THERMAL METERING 2011-2012 ANNUAL REPORT

PAGE 4

(“FAES”). While both companies offer a thermal metering solution, the thermal energy supply

sources are different even though the application of thermal meters are the same for both FEI

and FAES in that they are used to measure thermal energy. For example, FEI projects are

supplied through a central gas fired hydronic system whereas FAES projects are supplied

through alternate energy solutions such as geo-exchange, waste heat recovery and solar

thermal. Further, the Thermal Metering Pilot is applicable only to FEI’s Rate Schedule 1

customers and therefore is not available to FAES customers.

Thermal metering remains an important component to conservation and demand side

management in the multi-family/vertical subdivision sector as it allows for individual metering of

strata units. Residents of these strata units will be able to implement the necessary

conservation measures to control their energy consumption as they become aware of their

energy use through thermal meters. This would replace the current practice of aggregating and

dividing the total energy costs among all strata residents, which promotes free-ridership and

discourages conservation since residents have no means of measuring their energy usage.

Conclusion

In accordance with Commission Order No. G-65-07, FEI is submitting its annual report on the

Thermal Metering Pilot Project for 2011/2012, as well as requesting an extension for a further

five years. A draft order is attached as Appendix D.

The Company maintains its position that individual metering through thermal meters for suites in

a multi-family/vertical subdivision with a central gas-fired hydronic system will bring value to

residents of the suites. Through thermal metering, residents will be able to manage and control

their energy use while reducing the cost of free-ridership. In addition, FEI will be able to remain

competitive by capturing load that would otherwise be lost to electric heating in instances where

developers opt for electric baseboards so as to allow for individual metering and billing of

heating costs.

The Company will continue its efforts in the pursuit of regulation of thermal metering by

Measurement Canada and work on an industry-wide best practices document for use nationally.

Extending the Thermal Metering Pilot Project allows FEI to continue to pursue a pilot project

when either regulation or best practices are completed. The Company will provide updates in

subsequent annual reports on the progress of these efforts upon approval of an extension to the

Thermal Metering Pilot Project application.

Appendix A

DEFINITIONS

FORTISBC ENERGY INC.

THERMAL METERING 2011-2012 ANNUAL REPORT

APPENDIX A - DEFINITIONS

PAGE 1

Hydronic Heating System: A heating / cooling system where water is heated or cooled and

distributes hot water through pipes to radiators or to another style of water-to-air heat

exchanger.

Thermal Energy: Means thermal energy supplied by a Gas fired hydronic heating system

(where hydronic heating is the primary heating source), and measured by a thermal meter, to

premises of a Vertical Subdivision where the thermal meter is used to apportion the gigajoules

of Gas consumed by the Gas fired hydronic heating system among the premises in the Vertical

Subdivision.

Thermal Metering: Thermal / heat meters measure the energy which, in a heat-exchange

circuit, is absorbed or given up by the heat conveying liquid. The thermal / heat meter indicates

the quantity of heat in legal units.

Appendix B

MEASUREMENT CANADA RESPONSE TO CGA

Appendix C

MEASUREMENT CANADA NOTIFICATION LETTER

Appendix D

DRAFT ORDER

SIXTH FLOOR, 900 HOWE STREET, BOX 250 VANCOUVER, BC V6Z 2N3 CANADA

web site: http://www.bcuc.com

B R I T I S H CO LU M B I A

UT I L I T I E S CO M M I S S I O N OR D E R NU M B E R

TELEPHONE: (604) 660-4700

BC TOLL FREE: 1-800-663-1385 FACSIMILE: (604) 660-1102

DRAFT ORDER

IN THE MATTER OF

the Utilities Commission Act, R.S.B.C. 1996, Chapter 473

and

A Filing by FortisBC Energy Inc. Regarding British Columbia Utilities Commission Order No. G-65-07 Compliance Filing

Annual Report on the Thermal Metering Pilot for 2011-2012

BEFORE:

(Date)

WHEREAS:

A. On July 13, 2012, pursuant to British Columbia Utilities Commission (Commission) Order No. G-65-07, FortisBC Energy Inc. (FEI) filed its Annual Report on the Thermal Metering Pilot Project for 2011-2012 (Report);

B. In the Report, FEI requested an extension to the existing Thermal Metering Pilot for a further five year period;

C. FEI requests the extension in order to complete a pilot that is in line with a set of best practices to be established by the Thermal Metering Committee or that complies with Measurement Canada regulation if regulation is achieved sooner than the expected three to five years; ;

D. The Commission has reviewed the Report and concludes that the requested extension as outlined in the Report should be approved.

NOW THEREFORE the Commission orders that the Thermal Metering Pilot is extended to 2017.

DATED at the City of Vancouver, In the Province of British Columbia, this day of <MONTH>, 20XX.

2

BRITI SH COLUM BI A

UTIL I T IE S COMMI SSIO N OR DER NUMBER

BY ORDER