Re: The Squamish Chief article “My Sea to Sky group keeps up opposition to Woodfibre LNG” published on Aug. 17, 2016.
Trevor Boudreau of FortisBC comments, “It is absolutely not the case homeowners would have to pay more because of Woodfibre LNG.” The accuracy of this comment deserves scrutiny.
Woodfibre LNG (WLNG) will buy the gas – FortisBC will build and own the pipeline and charge a “transportation rate” (BCUC Rate 50) to WLNG to recover its costs. The new 47-kilometre segment of 24-inch pipeline and the Mount Mulligan compressor station – both solely for WLNG’s needs – are intertwined with the current 10-inch pipeline that has served area customers, including Woodfibre Pulp Mill, since 1990.
Monopoly gas utility FortisBC is regulated by the BC Utilities Commission (BCUC). FortisBC is entitled to a rate of return on its costs to construct and operate its gas pipeline network. However, the Order in Council (OIC) #749/2013, signed by B.C. ministers Bennett and Polak in December 2014, prohibits BCUC from applying Sec. 45(1) of the Utilities Commission Act to regulate FortisBC’s Eagle Mountain Gas Pipeline project.
This matters because BCUC was expressly created to ensure customers are charged fairly for monopoly services, like gas and hydroelectricity.
OIC#749/2014 also mandates a new Transportation Rate Schedule 50 – the rate to apply for transportation of gas to large-volume industrial customers (such as WLNG) at $0.655 per Gigajoule. Until now, Schedule 22 set a transportation rate per GJ for large-volume (12,000 GJ/month or more) customers of $0.864 (Lower Mainland), $1.906 (Vancouver Island, Sunshine Coast, including Woodfibre) and $3.344 (Whistler). WLNG would consume around 740,000 GJ per month and would be easily the largest single customer on the pipeline route. Normally, costs for constructing and operating the new pipeline and compressor station(s) would be segregated for payment solely by WLNG.
Bypassing BCUC has potential consequences for all FortisBC’s customers in the corridor, already shocked by a recent 80 per cent price hike. If this cut-price rate of $0.655/GJ – one-third of the current large-customer rate – does not satisfy FortisBC’s revenue requirements to recover its investment in building and operating the EGP pipeline, the inevitable result will be an application to increase rates for all regional customers, not just WLNG.
This risk is in addition to the general consequence of B.C.’s shipping its limited gas assets overseas. Diverting local supply to exports will increase local gas costs, as has happened already in Australia’s LNG “boom.”
Eoin Finn
Co-founder of My Sea to Sky
