C1-1 ~ FORTIS Be · C1-1 ~ FORTIS Be . October 11, 2019 British Columbia Utilities Commission Administration of Rate Schedules 22, 23, 35 and 27 – FEI Response to BC GMC Complaint

Doug Slater Director, Regulatory Affairs Gas Regulatory Affairs Correspondence Email: [email protected] Electric Regulatory Affairs Correspondence Email: [email protected]

FortisBC 16705 Fraser Highway Surrey, B.C. V4N 0E8 Tel: (778) 578-3874 Cell: (778) 214-3842 Fax: (604) 576-7074 Email: [email protected] www.fortisbc.com

October 11, 2019

British Columbia Utilities Commission Suite 410, 900 Howe Street Vancouver, BC V6Z 2N3 Attention: Mr. Patrick Wruck, Commission Secretary and Manager, Regulatory Support Dear Mr. Wruck: Re: FortisBC Energy Inc. (FEI)

Administration of Rate Schedules 22, 23, 35 and 27 – Complaint Filed by BC Gas Marketers Coalition (BC GMC)

FEI Response to BC GMC Complaint

FEI writes in response to the British Columbia Utilities Commission (BCUC) letter dated

September 26, 2019, in which it requests that FEI provide a response to a complaint letter

dated September 4, 2019, from the BC GMC1 (BC GMC Complaint), regarding FEI’s

administration of Rate Schedules 22, 23, 25 and 27 (Transportation Service Model or

Transport Model). To put into context the relative size of these Shipper Agents, of the total

transportation demand in the 2018/19 winter nearly 30 percent2 was managed by these three

Shipper Agents. Further, of the 2,400 transportation customers on FEI’s system, these three

Shipper Agents manage the gas supply needs of approximately 48 percent3.

FEI believes that the foundation of the issues raised in the BC GMC Complaint are not a

result of FEI’s administration of the Transportation Service Model (Transportation Model).

Rather, the issues raised are a result of the energy market circumstances brought about

because of the rupture on Enbridge Inc.’s (Enbridge) Westcoast T-South system4 (Enbridge

Rupture) which caused significant gas supply constraints over the past winter (Winter

1 Consisting of Cascadia Energy Ltd, Direct Energy Marketing Limited and Access Gas Services Inc. 2 Total customer demand in the Lower Mainland and Interior combined for the winter of 2018/19 was 34 PJ. Of

this demand, Cascadia managed 3.5 PJ, Direct managed 2.5 PJ and Access managed 3.7 PJ. 3 There are approximately 2,500 total transportation customers in the Lower Mainland (inclusive of Vancouver

Island), Interior and Columbia regions. Access has 575, Direct has 438 and Cascadia has 159. 4 Which occurred on October 9, 2018.

C1-1

~ FORTIS Be

mailto:[email protected]



http://www.fortisbc.com/

Yvonne.Lapierre

Complaint by Cascadia, Direct and Access

October 11, 2019 British Columbia Utilities Commission Administration of Rate Schedules 22, 23, 35 and 27 – FEI Response to BC GMC Complaint Page 2

2018/19). FEI believes that the Transportation Model is operating as intended and that FEI

has and continues to administer the rules in a reasonable and fair manner. As such, FEI

believes the BC GMC request for an inquiry into FEI’s administration of the Transportation

Model is unwarranted.

The BC GMC Complaint identifies what it believes are issues on page 2 of its letter as

follows:

4. The issues for the inquiry would include the following

a. The nature and adequacy of the information that FortisBC provides to

enable transportation customers to comply with the transportation

service gas balancing and tolerance rules.

b. Measures necessary to assure timely access to customer consumption

data.

c. Potential adjustments to the balancing rules to allow for inter-customer

group balancing.

d. Review of FortisBC’s practices related to

i. decisions to curtail,

ii. the timing of curtailment and return of gas, and the associated

charges, and

iii. offering competitive service to transportation customers served by

gas marketers.

e. The need for a FortisBC code of conduct for its gas marketing activities

to establish a competitive market and level playing field for all

participants.

First, FEI will provide some background and context, particularly around the unique

circumstances of Winter 2018/19. Second, FEI will address each of the issues the BC GMC

Complaint suggests should be the basis for an inquiry and discuss why such an inquiry is not

warranted.

Background:

FEI’s Transportation Model is available to large commercial and industrial customers and

allows them to procure their gas supply requirements either on their own behalf or through a

Shipper Agent5. There are approximately 2,400 transportation customers operating under

this model and the demand from these customers represents approximately 40 percent of

the total annual throughput on FEI’s System. Thirteen transportation Shipper Agents

5 Also may be referred to as a shipper or marketer.

~ FORTISBc-


currently manage supply and demand requirements for transportation customers. Since its

inception in 1993, the Transportation Model has operated well, as it has allowed customers

with different load profiles to manage their gas supply requirements to fit their specific

business needs.

Of note, the BC GMC Complaint makes no mention of the unique circumstances experienced

during Winter 2018/19 due to the Enbridge Rupture which affected the Pacific Northwest

region as a whole, including FEI’s service territory. The Enbridge Rupture resulted in very

challenging and unprecedented circumstances for all energy market participants.

Consequently, the commercial market was forced to navigate through pipeline restrictions,

fluctuating T-South deliveries, price spikes, low levels of market area underground storage

compounded by operational issues, and cold weather periods causing increased and

competing demand for electricity that is generated from natural gas in the Pacific Northwest

region. All of these factors compounded to cause significant market uncertainty and

increased costs for all customers, including those on FEI’s bundled rate as well as

Transportation Model customers. FEI recognizes that some customers experienced an

increase in costs more than others, which reflects the risks and purchasing strategies of the

parties including Shipper Agents representing the end use customer, which FEI has no

involvement in.

In general, FEI’s Transportation Model tariffs provide the terms and conditions which underlie

the structure of the service to ensure Shipper Agents match supply and demand on a daily

basis within certain parameters as operating conditions unfold in a commercial marketplace.

Indeed, where FEI is a shipper on the Enbridge T-South system, Enbridge’s tariff provides

the terms and conditions which FEI must adhere to, including matching of supply and

demand and balancing tolerances. As such, it is incumbent upon all shippers that operate in

this marketplace and rely on upstream pipelines or choose to take service from the

Transportation Model to be aware of the business rules so that they can make informed

decisions on how best to manage their business requirements.

It is common industry practice that, whenever possible, the upstream pipeline operators give

notice to the marketplace for planned outages or weather events which will result in changes

to normal operations. FEI’s practice is to provide Shipper Agents with at least 24 hours

notice before any changes to business rules (e.g., imbalance return, supply restriction/hold to

authorize) become effective on FEI’s system. FEI continued with this practice throughout

Winter 2018/19 despite the upstream T-South pipeline not always providing notice to its

shippers (of which FEI is one) on changing business rules. FEI administered the

Transportation Model tariffs with the intent of keeping the overall system in balance each

day. If the system as a whole is kept in balance each day this provides benefits to all

customers on FEI’s system. Further, the balancing services (e.g., imbalance return and

balancing tolerances) that FEI provides for Transportation Model customers each and every

day are done with the physical Midstream resources. Transportation Model Shipper Agents

~ FORTISBc-


and their customers benefit from these Midstream resources but do not pay for them, unless

they operate outside of allowed tolerances and incur penalty charges.

During Winter 2018/19, FEI’s administration of its tariff was consistent with other regional

players such as Northwest Pipeline (NWP), which administered its own tariff to balance the

system south of the border6. FEI, Enbridge, and NWP all had more changes and restrictions

to balancing rules on their systems to help the region manage through what were

unprecedented operating conditions. By implementing the terms and conditions within their

respective tariffs, all parties across the region were required to bring on supply to meet daily

demand requirements so the overall region was able to better manage the situation as

Winter 2018/19 unfolded.

Further, while the Winter 2018/19 was challenging for all market participants, it is important

to understand that all market participants, including FEI, experienced higher costs as all

parties managed under the extremely constrained supply circumstances.

FEI will now address the issues raised and discussion provided in the BC GMC Complaint.

BC GMC Issues:

a. The nature and adequacy of the information that FortisBC provides to enable

transportation customers to comply with the transportation service gas balancing

and tolerance rules.

b. Measures necessary to assure timely access to customer consumption data.

All Shipper Agents today have access to a self-serve information platform called Web

Information & Nomination System (WINS) to view individual customer and group demand by

day, historical customer consumption, authorized supply from the interconnects, system

inventory, and imbalances. Customer demand is updated daily, and Shipper Agents can

access their customer information 24 hours a day. To assist in managing large volume

customers on FEI’s system, Shipper Agents have also been provided with access to FEI’s

Supervisory Control and Data Acquisition (SCADA) system. Currently there are seven

Shipper Agents accessing real time hourly flows for thirty-nine large volume customers.

FEI’s Gas Control forecasts load based on the weather forecast, degree day calculation

(which is also a forecast) and historical loads or trends. With access to the information

available in these systems, Shipper Agents do have the tools necessary to allow them to

forecast their customer demand and be able to manage and comply with the Transportation

Model gas balancing and tolerance rules. Further, Shipper Agents are well aware of the

6 Refer to the Appendix A showing the number of constraints issued by NWP and FEI as a result of the Enbridge

Rupture. The NWP tariff set the business rules for the balancing rules for utilities (i.e., Northwest Natural, Puget Sound Energy) that come off the NWP system.

~ FORTISBc-


information available to them, all of which was reviewed during the 2016 Rate Design7

proceedings.8

Even with the reduction to the daily balancing tolerance to 10 percent9 for the Transportation

Model that was approved in the 2016 RDA Decision and was effective November 1, 2018,

and the impact of the Enbridge Rupture, in FEI’s view Shipper Agents operating under the

Transportation Model performed reasonably well through Winter 2018/19. This is supported

by the fact that that the Shipper Agents and their customers did not incur significant

additional penalty charges from FEI. For example, with respect to the incremental balancing

charge in the 10 to 20 percent tolerance range also approved in the 2016 RDA Decision and

effective November 1, 2018, total volumes of gas that were subject to balancing charges for

the Lower Mainland were 79,103 GJs, and 62,418 GJs in the Interior, for a total of 141,521

GJs10, which equates to $35,380 in revenue credited to the Midstream (i.e., 141,521 GJ

times $0.25 equals $35,380 CAD). On days during which it was necessary for FEI to have

supply restrictions in place, Shipper Agents were then required to manage within a 5 percent

tolerance. Under these conditions, the volume of unauthorized over-run (UOR) charges

incurred remained comparable to previous winters where some level of supply restrictions

were issued11. To put this into perspective, with a winter throughput of roughly 34 PJs at the

Lower Mainland and Interior combined, the incremental volume of charges incurred during

this time from the tighter tolerance requirements is less than half of one percent of system

load (i.e., 141,521 GJs divided by 34,000,000 GJs equals 0.4 percent). The low volume of

charges incurred indicates that Shipper Agents have the appropriate tools and access to

timely customer data to manage within a tighter tolerance, which demonstrates that the

Transportation Model is working as expected and that FEI is administering it in a reasonable

and fair way.

Figure 1 below shows the overall demand and supply (including supply from imbalance

return) at the Lower Mainland12 for the period of November 1, 2018 to March 31, 2019.

Figure 1 shows that, in aggregate, the overall supply from Shipper Agents was sufficient to

meet Transportation Model customer demand on most days throughout Winter 2018/19. The

total demand for the Transportation Model customers during the November 1, 2018 to March

7 https://www.bcuc.com/ApplicationView.aspx?ApplicationId=567. 8 For example responses to information requests such as BCUC IR 1.56.1, and Absolute IR 1.1. 9 The RDA Decision approved the change in balancing tolerance from 20% to 10% effective November 1, 2018. 10 The 141,521 GJ represents the balancing charges incurred within the 10-20% threshold for the period of

November 2018 to March 2019. 11 The winter of 2018/19, the sum of UOR under 5% was 24,344 GJs and UOR over 5% was 3,342 GJs. In

comparison, in the winter of 2016/17, the sum of UOR under 5% was 13,450 GJs and UOR over 5% was 6,734 GJs. Charges for UOR under 5% is charged at the Sumas Gas Daily Price, whereas UOR over 5% is the greater of Sumas times 1.5 or $20CAD/GJ. Given the UOR over 5% is more significantly punitive, Shipper Agents incurred less of this charge during this past winter, compared to the 2016/17 year, which further emphasizes the point that the tools and access to data is sufficient to manage customer load.

12 FEI is highlighting the Lower Mainland as the fluctuations from the T-South system’s authorized capacity had a greater impact to deliveries to the Lower Mainland, as compared to the Interior.

~ FORTISBc-

https://www.bcuc.com/ApplicationView.aspx?ApplicationId=567


31, 2019 period was 20 petajoules (PJs), and the average daily demand ranged between

130,000 gigajoules (GJs) /day with a peak of 208,000 GJs/day on February 6, 2019.

It is important to emphasize that the supply from imbalance return is a key component to help

Shipper Agents meet daily load requirements. Imbalance return is, however, an interruptible

service and FEI reduces or eliminates this service at times, typically when cooler weather

occurs or for operational reasons, signaling that Shipper Agents cannot rely on their

inventory as a source of supply. As a result of the Enbridge Rupture, FEI had to reduce

imbalance return or hold Shipper Agents to tighter daily balancing rules for a greater number

of days as compared to normal winters or past experience. With the new tolerance rules

effective November 1, 2018, combined with the extensive periods of supply restrictions and

the impact to imbalance return, the data in Figure 1 shows that on most days, supply,

inclusive of direct supply from the inter-connect plus supply used from banked inventory via

imbalance return, was sufficient to meet demand.

c. Potential adjustments to the balancing rules to allow for inter-customer group

balancing.

FEI is unsure what the BC GMC means by “inter-customer group balancing”. As is

consistent with historical and current day business practice, FEI allows Shipper Agents to

pool their group of customers at one location. When customers are pooled or grouped

together, spikes in demand from more peaky customers are dampened by customer loads

that are more steady and consistent. This pooling of customers assists Shipper Agents in

managing the daily demand of their group as a whole.

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d. Review of FortisBC’s practices related to

i. decisions to curtail,

ii. the timing of curtailment and return of gas, and the associated charges, and

Based on the Force Majeure issued by Enbridge, it was necessary for FEI to also issue a

Force Majeure, curtail customers, reduce imbalance return and/or hold Shipper Agents to

tighter daily balance tolerances for a greater number of days as compared to normal winters

or past experience. All decisions made by FEI with respect to levels of balancing supply

restrictions and curtailment were made reasonably and responsibly in order to balance the

system as a whole.

During Winter 2018/19, FEI’s administration of its tariff was consistent with other regional

players such as NWP, which administered its own tariff to balance the system south of the

border13. FEI, Enbridge, and NWP all had more changes and restrictions to balancing rules

on their systems to help the region manage through what were unprecedented operating

conditions.

In light of the unprecedented situation, FEI issued more frequent communications and

notices to Shipper Agents during the winter period, held conference calls to provide

operational updates, and allowed the return of banked inventory via imbalance return when

possible. In order to help Transportation Model customers manage to the tighter balancing

tolerance and potential charges, FEI released imbalance return at times during the supply

restriction periods. Generally, during a supply restriction, imbalance return is removed. Both

supply restrictions and imbalance returns incent direct supply deliveries at the interconnect

and discourage drafting as a means to help maintain supply and demand system balances.

However, during periods where Enbridge provided some system relief, such as when the

capacity constraint was lifted at the Interior on December 1 for example, FEI released

imbalance return for the benefit of Interior customers at that time.

FEI also assisted Shipper Agents with managing associated charges during these periods

and some Shipper Agents provided positive feedback to FEI on how it was managing the

situation overall.

iii. offering competitive service to transportation customers served by gas

marketers.

13 Refer to the Appendix A showing the number of constraints issued by NWP and FEI as a result of the Enbridge

Rupture. The NWP tariff set the business rules for the balancing rules for utilities (i.e., Northwest Natural, Puget Sound Energy) that come off the NWP system.

~ FORTISBc-


FEI’s bundled service is and has always been available to customers. Since the

Transportation Model became available, customers have had the option to choose the

service that is most suitable for their business needs. FEI’s bundled service is not in

“competition” with the Transportation Model; indeed, both have co-existed for many years.

The fact that energy market conditions are changing and have caused some customers to re-

evaluate their business requirements and the model under which they choose to receive their

natural gas service cannot reasonably be characterized as FEI offering a competitive service.

Further discussion on this issue is found under (e) below.

e. The need for a FortisBC code of conduct for its gas marketing activities to

establish a competitive market and level playing field for all participants.

FEI does not view communicating with Transportation Model customers as “marketing” in

any way. As such, the request for a code of conduct for FEI’s gas marketing activities is not

required because FEI does not engage in or conduct gas marketing activities to convince

customers to return to bundled sales service. There are three main reasons why it is

unreasonable to portray communication with delivery service customers as “marketing”.

First, the entire Transportation Model is premised on the fact that FEI does not earn a return

or profit on the commodity. For FEI’s bundled sales service rate schedules, customers pay

what FEI pays for commodity and the BCUC reviews commodity costs quarterly. There is no

benefit or financial gain to FEI from Transportation customers returning to bundled sales

service. As such, FEI is indifferent as to the type of service customers choose, whether it be

bundled sales service or service under the Transportation Model.

Second, whether a customer is a bundled sales service customer or served under the

Transportation Model, they are a customer of FEI. Regular communication with all

customers (bundled sales service or Transportation Model customers) is necessary and

appropriate. The purpose for issuing letters to Transportation Model customers was to

advise them of an earlier deadline to provide notice if they intended to return to bundled

service. The letter14 was issued in accordance with the provisions in the Transportation

Model tariffs under Section 26.2. Given the Winter 2018/19 circumstances and the continued

constrained supply and uncertainty for the market area served by the T-South system, it was

necessary for FEI to receive earlier notice from customers who intended to elect bundled

service as compared to previous years. This earlier notice was required to inform FEI’s

plans and actions that needed to take place in order to secure the required resources for

FEI’s Annual Contracting Plan requirements.

14 FEI’s letter to Transportation Model customers dated February 15, 2019 and the follow up letter dated May 24,

2019 was provided as part of the complaint.

~ FORTISBc-


Further, on January 15, 2019, as a courtesy, FEI provided advance notice to Shipper Agents

by email of FEI’s intent to issue a letter of this nature to Transportation Model customers.

FEI provides a copy of this email in Appendix B. The email makes clear that FEI intended to

request an earlier notification from customers and requested feedback on whether that timing

was sufficient for Shipper Agents to commence discussions with their customers. FEI did not

receive any response, objection, or concern from Shipper Agents related to the letter or FEI’s

intention to send it to customers. FEI also issued a follow up email on January 30, 2019 (a

copy is also provided in Appendix B), indicating the letter would be issued mid-February.

The purpose of FEI’s notice to Transportation Model customers was clear and did not, in any

way, solicit or attempt to convince them to switch to bundled sales service. The customers

who elect to switch back to bundled sales service do so for their own business needs and

reasons similar to customers who elected to participate in the Transport Model or remain in

the Transport Model. There has always been language in the Transport Model tariffs that

allows customers to provide notice by a certain date of their intent to switch to bundled sales

service from the Transportation Model.

Third, for the past three years FEI has taken actions that would support customers and

Shipper Agents who operate within the Transportation Model. For example, FEI has offered

Enbridge T-South system capacity to Shipper Agents to help Transportation Model

customers manage gas costs as market conditions in the region change. This offering has

provided Shipper Agents and their customers with considerable value and contradicts the

implied claim that FEI is marketing or offering a competitive service in direct competition with

Shipper Agents.

Additional Commentary:

FEI provides the following additional comments on some of the BC GMC Complaint

explanations.

Application of Rules and Accepted Informal Practices

As pointed out by the BC GMC, FEI did not have the ability to report customer consumption

on a daily basis 20 years ago and, at that time, allowed a daily balancing tolerance of 20

percent. However, this consumption reporting ability has evolved over time and, as approved

in the 2016 RDA Decision, the movement to a 10 percent tolerance is a reasonable step in

appropriately tightening the balancing requirements and also results in tolerance levels that

are more comparable with industry practice. Over time, FEI has strived to work cooperatively

with Shipper Agents to manage imbalances on FEI’s system. As discussed earlier in this

response, FEI tried to work collaboratively with Shipper Agents through the Force Majeure

situation and received positive feedback for its efforts.

~ FORTISBc-


Further Tightening of Balancing Tolerances

The manner in which FEI administers the Transportation Model tariffs has not changed over

the last 20 years. In previous winters, FEI issued supply restrictions in response to sustained

cold weather events. This past winter, FEI’s decision to curtail and impose supply restrictions

was a direct result of the Enbridge Force Majeure situation in order to maintain the balance

of the overall system. As indicated earlier, FEI released imbalance return during supply

restricted periods whenever operationally possible15.

Still ‘flying blind’

As discussed in response to issues (a) and (b) above, Shipper Agents have access to daily

customer consumption in WINS, and access to SCADA data for the larger customers on

FEI’s system. WINS and SCADA are two separate systems; Shipper Agents would have to

log into each to view their customer consumption data. As indicated in response to issues (a)

and (b), the historical data available to Shipper Agents in WINS, and the real time data from

SCADA, when combined with the weather outlook, is sufficient to forecast customer load.

The information available to Shipper Agents was reviewed during the 2016 Rate Design16

proceedings and specifically in some of the responses to information requests such as

BCUC IR 1.56.1, and Absolute IR 1.1.

As was confirmed by the Panel in the 2016 Rate Design Decision:

The movement of the tolerance level from 20 to 10 percent is also supported

by the improvement and evolution of the necessary tools enabling more

precise estimates of demand and more timely adjustments to supply than

when the 20 percent tolerance was originally introduced.

Given the relatively low volume of penalty charges incurred within the tighter balancing

tolerance and the overall supply and demand imbalance managed by Shipper Agents over

the past winter, Figure 1 clearly demonstrates that Shipper Agents can manage supply and

demand imbalances reasonably, dispelling the notion that Shipper Agents were “flying blind”

as the BC GMC claim.

Further Issues: Curtailments, Over-Deliveries, Unworkable Imbalances

As demonstrated in the prior sections, FEI has addressed its reasons for curtailing and

issuing supply restrictions over this past winter. The data in Figure 1 shows that Shipper

Agents managed supply and demand well over the past winter in spite of the numerous days

15 During supply restricted periods, imbalance return is generally restricted. 16 https://www.bcuc.com/ApplicationView.aspx?ApplicationId=567.

~ FORTISBc-

https://www.bcuc.com/ApplicationView.aspx?ApplicationId=567


of supply restrictions. FEI has also demonstrated that the system imbalances were not

unreasonable and level of charges incurred during that time were not significant considering

the conditions that both FEI and Shipper Agents were operating under. With respect to over-

deliveries and imbalances, FEI would like to point out that Shipper Agents operating under

this model, including the three that form the BC GMC, have had years of experience

managing the gas supply needs of their customers within the rules of the Transportation

Model tariffs. This was acknowledged by the Panel in the 2016 Rate Design Decision.17

Therefore, Shipper Agents have demonstrated that they are able to manage and operate

within the rules of the tariff.

To be clear, FEI’s tariff outlines the expected behaviour of Shipper Agents to manage their

supply and demand imbalances reasonably during normal and cold weather conditions as

well as operational constraints such as those caused by the Enbridge Rupture. The

penalties within the tariffs are in place to incent certain behaviours and place the onus on the

Shipper Agent to manage their customer load requirements under various tolerances.

As noted above, the penalty charges incurred within the 10 to 20 percent balancing tolerance

were minimal. The revenue from these penalties is collected to compensate core customers

because the core customers pay for the underlying assets that are used to offset imbalances

caused by transportation customers, as was confirmed by the Panel in the 2016 Rate Design

Decision:

With respect to fair cost allocation, the Panel finds that imbalances caused

by transportation customers are managed by FEI using mid-stream

resources that are paid for by sales customers. The Panel agrees with FEI

that the proposed tiered approach provides a greater incentive for

transportation customers and Shipper Agents to balance within 10 percent

which should result in tighter balancing and less use of mid-stream

resources.18

FEI understands that in response to the supply restrictions issued for Winter 2018/19,

Shipper Agents increased supply deliveries in order to avoid balancing charges. Overall,

system inventory levels from Transportation Model customers in the Lower Mainland rose to

500 terajoules (TJs) in October, directly following the Enbridge Rupture, and further

increased to just over 600 TJs in November. Given that the average daily load for

Transportation Model customers in the Lower Mainland ranged from 100 to 200 TJs

throughout winter, this means that overall inventories were within an approximate 3 to 4 day

range. It has been FEI’s general business practice to request that Shipper Agents manage

inventories within a 2 to 3 day range. Given the number of restricted days, FEI feels the

volume of overall inventories of 3 to 4 days was reasonable. When comparing this 600,000

17 Order G-135-18 p. 64. 18 Order G-135-18 p. 67.

~ FORTISBc-


GJs of peak system inventory with total demand of 20 PJs, this volume of supply left on the

system is insignificant at 3 percent, further emphasizing the fact that the over-deliveries from

the past winter was not as the BC GMC asserts.

On an individual basis, some Shipper Agents responded with excessive over-supply while

others were more conservative with their deliveries. Figure 2 below provides a profile of one

Shipper Agent who is a member of the BC GMC. With an approximate average daily load

profile at the Lower Mainland ranging between 15 to 20 TJs/day, as shown, the over-supply

by this Shipper Agent reached over 300 TJs of cumulative inventories by November 2018.

Given the average daily demand of this group, this represents an over-supply of

approximately 15 days. Of the 600 TJs of system inventory at the Lower Mainland, this

Shipper Agent was responsible for half. In the case of this Shipper Agent, the excessive

deliveries were not “additive” but rather reflective of supply management practices which

ultimately result in higher costs for that Shipper Agent’s customers.

In comparison, Figure 3 below shows another Shipper Agent with a similar average daily

load profile of approximately 20 to 25 TJs/day, whose inventory reached just over 40 TJs in

November and peaked to over 70 TJs in April 2019. Given the average daily demand of this

group, this represents an over-supply of approximately 3 days. Of the 600 TJs of system

supply accumulated by Shipper Agents in November 2018, Shipper Agent B accounted for

roughly 6.5 percent compared to Shipper Agent A at 50 percent. Overall, Shipper Agent B

managed within the tolerances imposed throughout the winter and did not over-deliver gas in

an excessive manner onto FEI’s system.

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Figures 2 and 3 illustrate the difference between a Shipper Agent who chose to significantly

over-supply compared to another who chose to manage their imbalance more

conservatively. Shipper Agents are responsible to make their own decisions related to how

they manage gas supply on behalf of their customers. The business decisions and gas

supply management practices of Shipper Agents ultimately represent a cost to their

customers.

Regardless, it is not surprising that some Transportation Model customers have re-evaluated

their service options and some have returned to bundled service, given the already

constrained market conditions, which were further exacerbated by the Enbridge Rupture.

FEI Marketing/Competition

Please refer to FEI’s comments in item (e) above.

Conclusion:

Based on FEI’s response to the issues identified in the BC GMC Complaint, FEI believes that

an inquiry is not necessary nor warranted. In summary, there are five reasons that the BC

GMC Complaint is without merit.

1. Given the Enbridge Rupture and the resulting Force Majeure issued by Enbridge, it was necessary for FEI to also issue a Force Majeure, which led to curtailment of customers, reduced imbalance return and holding Shipper Agents to tighter balancing tolerances throughout the winter. Acting reasonably, FEI administered the

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Transportation Model tariffs with the intent and objective of keeping the overall system in balance each day.

2. FEI’s Transportation Model has recently undergone a lengthy and extensive regulatory review process in the 2016 Rate Design proceeding which did involve active participation by many Shipper Agents19.

3. None of the other ten Shipper Agents have expressed any concerns to FEI about its administration of the Transportation Model.

4. As shown in the figures and information above, the low volume of penalty charges serves as an indication that some Shipper Agents can and did manage within a tighter tolerance even under the extremely unusual circumstances experienced during Winter 2018/19.

5. FEI’s communication with customers should not be construed as competing with Shipper Agents or marketing to attract customers to bundled sales service because FEI is indifferent to which service customers choose to meet their business requirements.

For all of these reasons, FEI believes that the Transportation Service Model is operating as

intended and that FEI has and continues to administer the rules in a reasonable and fair

manner.

If further information is required, please contact Shawn Hill Director, Energy Supply & Gas Control at 604-592-7840. Sincerely, FORTISBC ENERGY INC. Original signed:

Doug Slater Attachments cc (email only): BC GMC: ([email protected]; [email protected];

[email protected])

19 All three complainants were registered as interveners. Two of the complainants participated in the regulatory

process.

~ FORTISBc-




Appendix A

FortisBC Energy Inc. - Response to the BC GMC Complaint Letter

Appendix A

Throughout the winter season FEI periodically put in place restrictions (i.e. Hold to Authorize and

Imbalance Return) on transportation service customers that were responsible for sourcing their own gas

(shipper) and Gas Marketers (shipper agent). The restrictions held or limited a shipper/shipper agent to

their authorized quantity of gas in the Lower Mainland, the Interior and/or Vancouver Island regions.

Due to the magnitude of the T-South incident and its impact to the regional supply availability, the Hold

to Authorized requirement tightened the balancing tolerance to 5%. The Table below provides the

number of days by service region over the winter on which Hold to Authorized was in place.

Hold to Authorized Number of Days during Winter 2018/19

Similarily, restricting Imbalance Return as a source of supply, provided similar relief throughout the

winter season. The following table provides the number of days by service region over the winter on

which Imbalance Return was either eliminated or reduced.

Imbalance Return Number of Days during Winter 2018/19

During the entire 2018/19 winter, WEI operated in a system-wide OFO. The OFO was initiated

immediately following the T-South pipeline rupture, and remained in effect following March 31, 2019.

Since October 9, 2018, Northwest Pipe issued 135 OFOs, had been in various stages of Entitlements for

106 days, and sent out 58 critical notices to shippers. So the region, both north and south of the boarder

was in a state of crisis.

Nov Dec Jan Feb Mar Total

Interior 5 12 5 22

Lower Mainland &

Vancouver Island30 10 12 5 57

Service RegionWinter 2018/19

Nov Dec Jan Feb Mar Total

Zero 30 20 9 59

Reduced 10 2 12

Zero 30 20 1 51

Reduced 4 2 6

Service RegionWinter 2018/19

Interior

Lower Mainland &

Vancouver Island

Appendix B

Salbach, Stephanie

From: Sent: To:

Cc:

Subject:

Good morning

Salbach, Stephanie Wednesday, January 30, 2019 9:18 AM 'Peter Kresnyak'; 'Susan Juilfs ([email protected])'; 'Tom Dixon'; 'Lewis, Ryan ([email protected])'; 'Cam Palchewich '; 'Nick Caumanns'; 'Steve Connelly'; 'Kent Lundell {[email protected])'; ·carellyn Pitre - DE Marketing Ltd ([email protected])'; 'Ron Comfort ([email protected])'; 'Joshua Chow'; 'Coughlin, Becky (IGI Resources, Inc.)'; •Gerilynne Pickett'; 'Craig Fisher'; 'DeSante, Kim ([email protected])'; [email protected]'; 'Mary McCordic' Braun, Christine; Hodgins, Kevin; Hill, Shawn; Leger, Trish; Wilson, Colleen; '[email protected]' RE: Notice for Transportation Service Customers

As a follow up to this email, based on the feedback provided, we will go ahead and issue a letter to all transportation customers regarding their obligation to provide notice should they wish to return to bundled service for the 2019/2020 gas year.

The letter will be issued in early to mid February advising of the June 1, 2019 deadline.

Regards,

Stephanie Salbach Transportation Services Manager FortisBC Energy Inc. Tel: 604-576-7056 Cell: 604-376-5434 Hotline: 604-592-7799

From: Salbach, Stephanie Sent: January-15-19 3:19 PM To: Peter Kresnyak <[email protected]>; Susan Juilfs ([email protected]) <sjuilfs@absoluteenergy.ca>; Tom Dixon <[email protected]>; Lewis, Ryan ([email protected]) <[email protected]>; Cam Palchewich <[email protected]>; Nick Caumanns <[email protected]>; Steve Connelly <[email protected]>; Kent Lundell ([email protected]) <[email protected]>; Carellyn Pitre - DE Marketing Ltd ([email protected]) <[email protected]>; 'Ron Comfort ([email protected])' <[email protected]>; Joshua Chow <[email protected]>; 'Coughlin, Becky (IGI Resources, Inc.)' <[email protected]>; Gerilynne Pickett <[email protected]>; Craig Fisher <[email protected]>; DeSante, Kim ([email protected]) <[email protected]>; [email protected]; Mary McCordic <[email protected]>

Cc: Braun, Christine <[email protected]>; Hodgins, Kevin <[email protected]>; Hill, Shawn <[email protected]>; Leger, Trish <[email protected]>; Wilson, Colleen <[email protected]>; '[email protected]' <[email protected]> Subject: Notice for Transportation Service Customers

1

This email is to advise you that Fortis intends to issue a letter to all transportation customers regarding their obligation to provide notice should they wish to return to bundled service for the 2019/2020 gas year.

Historically it has been Fortis' business practice to accept the return of customers with two months' notice by August 31 for the beginning of the new gas year of November 1; however, as indicated in Section 26.2 (a) in the General Terms and Conditions shown below, Fortis may require up to one year's written notice.

26.2 Direct Purchase Customers Returning to FortisBC Energy system supply

Where a Customer has acquired Gas under a direct purchase arrangement and later wishes to return to the system Gas supply of FortisBC Energy:

(a) FortisBC Energy may require that the Customer provide FortlsBC Energy up to one Years written notice before the date on which the Customer wishes to return to system Gas supply;

(b) FortisBC Energy wlll supply the Customer with system Gas when the Customer wishes to return to system Gas supply if FortisBC Energy is able to secure additional Gas supply and transportation to accommodate the Customer; and

(c) FortisBC Energy may, subject to Brttish COiumbia Uttlitfes Commission approval, charge the customer for any costs associated with the Customer returning to system Gas supply. such costs may include, among other things, the costs of securing additional Gas supply and transportation to accommodate the Customer. FortisBC Energy may bill the Customer for such costs as part of the regular FortisBC Energy biD for Service.

Fortis intends to request an earlier notification from customers for the 2019/2020 gas year; we believe June 1, 2019 is a reasonable deadline for customers to provide notice to the utility. Fortis understands that you may want to begin discussions with your customers, so we wanted to seek your feedback if this deadline provides sufficient time as their Direct Purchase provider. If you would like to provide feedback on this date, please send an email to [email protected].

We intend to issue a letter to customers by early to mid February advising of this June 1, 2019 deadline.

Sincerely,

Stephanie Salbach Transportation Services Manager FortisBC Energy Inc. Tel: 604-576-7056 Cell: 604-376-5434 Hotline: 604-592-7799

2

Documents

C1-1 ~ FORTIS Be · C1-1 ~ FORTIS Be . October 11, 2019 British Columbia Utilities Commission Administration of Rate Schedules 22, 23, 35 and 27 – FEI Response to BC GMC Complaint