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BCSEA opposes Revelstoke propane subsidy

William J. Andrews
Thursday, July 2, 2020

BCSEA opposes Revelstoke propane subsidy

June 30, 2020

BCSEA asked the BC Utilities Commission to reject FortisBC Gas’s request to have natural gas customers subsidize high-carbon propane rates in Revelstoke, in a written argument filed today. BCSEA said the proposal is unduly discriminatory, contrary to rate design principles, in conflict with BC’s energy objectives, not in customers’ interests, and not in the public interest.

Propane is more carbon-intensive than natural gas. For an equivalent amount of heat energy, using propane causes more GHG emissions than using natural gas. The BC Carbon Tax varies according to the carbon intensity of the fuel. The carbon tax is $2.407/GJ for propane and $1.986/GJ for natural gas.

FEI operates a satellite, off-grid piped propane distribution system that serves approximately 1,500 residential and commercial customers in the Revelstoke area. Propane is supplied to Revelstoke by railcars and tanker trucks, where it is offloaded into storage tanks, vaporized as needed, and distributed to customers through an underground piped distribution system.

The piped propane system was first introduced to Revelstoke in 1991. A pipeline connection to the natural gas distribution system would have been uneconomic because Revelstoke’s load is too small and it is too far from the natural gas pipeline system. This remains the case today.

Both propane and natural gas customers of FEI pay a delivery charge and a separate charge for the propane or natural gas commodity-based directly on the wholesale market price FEI pays to buy the propane or natural gas for its customers.

FEI’s customers in Revelstoke pay the same delivery rate as FEI customers in other regions of BC (except Fort Nelson). However, the price they pay for the propane itself is different than price natural gas customers pay for natural gas. Wholesale costs of propane are more volatile and higher than wholesale costs of natural gas. Correspondingly, the price Revelstoke customers pay for propane is more volatile and higher than the price natural gas customers pay for natural gas.

FEI’s proposal is that it's Revelstoke propane customers would continue to receive propane but pay only the commodity price for natural gas, with natural gas customers subsidizing the difference.

FEI argued that there is a “geographic disparity” because Revelstoke customers pay more for propane than natural gas customers pay for natural gas. BCSEA said this a difference, but not a disparity. FEI Revelstoke propane customers pay for the propane they purchase. FEI natural gas customers pay for the natural gas they purchase. The basis for the difference in the commodity charge is that propane and natural gas are different commodities.

BCSEA argued that deliberately reducing Revelstoke customers’ cost of propane below the market cost would encourage increased use of propane and cause increased GHG emissions, contrary to the BC energy objective to reduce BC GHG emissions. In addition, BCSEA argued that artificially reducing the price of piped propane in Revelstoke would hurt the competitiveness of the biomass district energy system operated by Revelstoke Community Energy Corporation (RCEC).”

Bill Andrews, BCSEA’s lawyer in BCUC proceedings

Links:

BCSEA's Revelstoke Propane argument:

BCUC’s Revelstoke Propane proceeding: