Richmond city council has come out swinging at FortisBC, saying it shouldn’t be allowed to subsidize some rate payers over others and questioning its governance.
FortisBC is trying to get current gas consumers to subsidize new renewable natural gas (RNG) customers to the tune of $750 million over an eight-year period, according to a recent report from Richmond city staff to council.
The natural gas utility has applied to the BC Utilities Commission (BCUC) to allow new residential buildings to get RNG at the same rate as existing customers although it costs more.
Existing customers, however, would have to pay full price if they wanted RNG.
This subsidy will expand the number of customers using natural gas rather than encouraging the use of electricity, the city staff report notes. Furthermore, it will divert customers away from using heat pumps.
FortisBC, however, clarified that “cross subsidization” is inherent in regulated rates, allowing energy to be “equitably accessible to the majority of customers.”
“Without it, utilities would find themselves with thousands, if not tens of thousands, of varying rate classes,” explained Diana Sorace, FortisBC spokesperson.
Sorace cited the example of the Site C project that is being paid for by all BC Hydro customers, not just those who require additional power.
Furthermore, using 100-per-cent renewable and low-carbon gas means buildings will meet the "stringent municipal greenhouse gas emissions targets set by Richmond and now a voluntary component of the BC Building Code," Sorace explained.
But the City of Richmond noted FortisBC is offering renewable natural gas to all new construction after having purchased supplies from the international market.
However, should these supplies dwindle due to demand from outside B.C., it will put ratepayers at risk, possibly making them revert to regular natural gas.
Governance needs revamping: City staff
Furthermore, the city wants the B.C. Utilities Commission to be revamped, noting its commissioner and deputy chair are both former FortisBC executives.
“The BCUC as a defacto lead entity is even more concerning given that the BCUC is a captured regulator whose primary objective is advancing the commercial interests of FortisBC,” the city staff reports.
Former FortisBC executives shouldn’t sit on the BCUC for the sake of public confidence, the report continues.
“Filling the ranks of the BCUC at its highest level with former long serving executives and senior employees of FortisBC, who are then tasked to regulate and investigate FortisBC’s past and present activities that have resulted from the implementation of corporate policies and procedures which they played a role in establishing, is the opposite of regulatory independence and separation,” the report goes on to say.
These types of policies have resulted in cities having to bear the costs of natural gas pipeline relocation when roadwork is done – in areas where FortisBC has its pipelines – without giving any compensation to the city doing the work.
A BCUC spokesperson, however, said they take such allegations “seriously,” adding issues of jurisdiction and fairness are “cornerstones to our role as an independent regulator.”
“Prospective commissioners undergo a comprehensive review process by the BCUC and the BC government to determine their qualifications, before being appointed as a commissioner,” BCUC spokesperson Krissy Van Loon stated. “Commissioners provide a range of skills, expertise and experience; industry experience is seen as an asset giving them insight into technical issues that may arise during our processes.”
In fact, the B.C. Court of Appeal ruled last November, when it was claimed by the City of Richmond and the Lulu Island Energy Company that one of the commissioners was biased, that he wasn’t and the claim was dismissed.
The City of Richmond has also applied to the B.C. Court of Appeal over its jurisdiction to sue FortisBC over the laying of infrastructure in Burkeville, something BCUC said it couldn’t do.
The court has said it will hear the appeal from the city to sue FortisBC and recover costs. This has not been heard in court yet.
City council voted unanimously to endorse the staff report and send letters to the province – including the premier, several ministers and local MLAs - protesting FortisBC’s request for subsidy and what it claims are governance issues.
More information about the FortisBC’s application to renew the Energy Inc. Biomethane Energy Recovery Charge (BERC) Rate is available here. Members of the public are able to submit letters about the application.
