In a September 26, 2016 decision, the British
Columbia Utilities Commission (BCUC) confirmed earlier decisions
denying approval of a "Neighbourhood Energy Agreement"
(NEA) in downtown Vancouver (Northeast False Creek and Chinatown).
The NEA is similar to a franchise agreement as it gives the
proponent the exclusive right to operate in a defined area,
including rights to locate and access facilities on municipal
The subject application from Creative Energy Vancouver Platforms
Inc. (Creative Energy) sought approval for a NEA with the City of
Vancouver (Vancouver), to provide Creative Energy with an exclusive
franchise to supply a district energy system (DES) in the subject
neighbourhoods. In its Application, Creative Energy also sought
approval of a Certificate of Public Convenience and Necessity, a
Connection Agreement and various rate parameters which define a
methodology upon which a future rate application will be based.
The project at issue is called a Low Carbon Neighbourhood Energy
System and is proposed to proceed in two phases. Phase 1 consists
of a hot water piping network connected to Creative Energy's
existing natural gas fuelled steam system, through steam to hot
water conversion stations. Phase 2 envisions a switch to a fuel
source that produces less greenhouse gases than natural gas.
As set out in the BCUC's September 26, 2016 decision and news release, a fundamental question at issue
in the case is whether Creative Energy should receive approval for
an NEA that would make Creative Energy the exclusive provider of
heat and hot water to new buildings in the subject neighbourhoods.
The way that Creative Energy would become the exclusive energy
supplier is through a Vancouver By-law that would be enacted if the
BCUC approved the NEA. The By-law provides for mandatory connection
to the DES, along with restrictions on the use of other energy
sources for new buildings in the subject neighbourhoods. It has
been passed by the Vancouver council but will not be enacted until
after approval of the NEA by the BCUC.
The BCUC previously heard Creative Energy's Application on
two different occasions (in decisions rendered in December 2015 and June 2016). Ultimately, the BCUC granted some
of the approvals requested, but declined to approve the NEA. Among
other things, the BCUC expressed concern that it did not want to be
seen as approving or accepting the Vancouver By-law that would make
connection to the DES mandatory.
Creative Energy applied to the BCUC for a reconsideration and
variance of the prior decisions. The BCUC's September 26, 2016 decision dismissed Creative
Energy's request. As set out in the BCUC news release, the "decision supports both
the original decision from December 2015 and the second decision on
the amended application from March 2016 not to approve Creative
Energy's application on the grounds that approval would grant a
monopoly over the supply of heat and hot water in Northeast False
Creek and Chinatown, which is not in the public interest." A
key factor highlighted in support of the BCUC's decision is the
fact that other potential suppliers demonstrated that they could
provide competitive options in the same area, and therefore
mandatory connection is not in the public interest. As stated in
the BCUC news release, the September 26, 2016 decision "reaffirms a
fundamental principle for the BCUC – to regulate only where
required and not to impede competitive markets, unless there is an
inability of competitive suppliers to operate with greater
efficiency and effectiveness than a sole service
Following the release of the September 26, 2016 decision, both Creative
Energy and Vancouver expressed their disappointment (see here and here). However, neither party has abandoned
plans for the Low Carbon Neighbourhood Energy System, and both
parties indicate that they will review the BCUC decision and
determine alternate paths forward.
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