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Whistler's natural gas rates may increase

Cost of converting appliances from propane nearly double what Terasen estimated



Terasen Gas is seeking a reprieve from Whistler ratepayers after the conversion portion of its natural gas pipeline project cost double what they projected.

In a filing with the B.C. Utilities Commission (BCUC), Terasen Gas informs the authority that the cost of converting appliances in Whistler ballooned to $11.87 million from $6.01 million because it underestimated the number of appliances it would have to convert from propane to natural gas as part of its pipeline project.

Terasen initially based the conversion budget on the number of gas permits issued in the Whistler area. There were 10,600 gas permits, but after entering homes they discovered they had to convert 3,300 more appliances than they budgeted for - an increase of 31 per cent.

"The available information and our experience suggested to us that the estimate we had prepared was reasonable and that the necessary work was capable of being delivered within our estimate," Dwain Bell, Terasen's VP Distribution, said at a March 24 hearing.

"We now recognize, however, that the estimate for the appliance conversion work was too low."

Terasen wants to make up the difference by increasing natural gas rates in Whistler and has applied to the BCUC for an increase.

Gas use is measured in gigajoules (GJ). Whistler ratepayers were initially expected to pay a levelized base rate of $16.65 per GJ of natural gas, a rate that would go up to $17.05 per GJ over 25 years, discounted at 5.76 per cent.

Now, Terasen is asking the BCUC to let them charge a base rate of $17.40 per GJ over 15 years, a rate that would rise to $17.77 in 25 years, discounted at 5.76 per cent. When discounted at 10 per cent, the rate is $17.39 over 15 years and rises to $17.65 after 25 years.

The rate is 4.2 to 4.5 per cent higher than what it would have charged had the conversion project stuck to its original budget, according to a document Terasen filed with the commission.

"As it turned out when we went into homes and did conversions, there were more appliances that didn't have permits," said Marcus Wong, a spokesman for Terasen Gas. "Some of these appliances were not in the greatest condition, some of them were a bit more complex to convert, so that of course added to the additional cost."

Here's how the costing works. Say your house uses 10 GJ of gas a month on appliances such as stoves, fireplaces or hot water tanks. If Terasen hadn't overlooked the appliances it had to convert, you'd be paying about $166.60 per month over the next 15 years with a 5.76 per cent discount. Now, if Terasen gets its way, you'll be paying about $174 per month.

Should the commission agree with Terasen's proposed rate increase, Whistler ratepayers will still be paying less than if they were using propane. The gas provider estimates the base rate for propane at $19.78 over 15 years.

Terasen may well go about getting the new rate without much comment from Whistler ratepayers at all. The Resort Municipality of Whistler was registered as an intervener in Terasen's application but no one from the municipality ever showed up at oral hearings hosted by the BCUC on March 24 and 25.

The commission is expected to rule on the application for a rate increase in July.

Philip Nakoneshny, the BCUC's director of rates and finance, said the commission hasn't received any letters of comment from Whistler ratepayers despite the RMOW's status as an intervener.

He added the window for further comments is narrow at this point because the evidentiary portion of the commission's process has closed. People can still make written submissions to the commission but there's a "very good likelihood" that the BCUC will not consider submissions that people make.

"If people send in letters commenting and wanting the commission to consider their comments, then in fairness, Terasen would like to be able to reply to that," Nakoneshny said. "So in some way, they should have done it within the timeline that the commission had set."

Ted Battiston, strategic energy and emissions manager with the Whistler Centre for Sustainability, applied for intervener status on behalf of the municipality. He said the municipality has given its feedback in written submissions instead of attending the oral hearings.

He wouldn't confirm whether the municipality had given any feedback about the fact that Terasen wants Whistler ratepayers to pay for their cost overruns.

"That's the crux of what the BCUC is deciding right now, if those costs are prudently incurred," Battiston said in an interview. "It's not something that Whistler can rule on, it's something the BCUC (decides), that's their jurisdiction."

Wong said in an e-mail that Terasen recognizes concerns Whistlerites may have about the disparity between budget estimates and the cost to complete the pipeline project.

"We are confident that the costs we incurred were necessary to provide safe, reliable natural gas service to customers, and that we took the necessary steps to ensure the process was cost effective," he wrote.