Centra applying for another rate increase 

Company looking at long-term options for providing propane or natural gas to Whistler

Centra Gas Whistler will be applying for another increase in the rate of piped propane within the next few weeks.

Although the hike could be retroactive to January, 2001, it is not likely to be approved until about April this year.

The company will be asking the B.C Utilities Commission for the increase to offset approximately $2.2 million spent last summer in the construction of a seven-kilometre loop of pipeline from Blueberry to Function Junction and a larger vapourizer at the Function storage site.

Centra’s Paul Madsen told Whistler council at the end of November last year that the price increase will be in the region of 10 per cent.

Geoff Higgins, Centra’s manager of regulatory affairs, said he will be filing for the hike as part of the company’s 2001 revenue requirements within the next two to three weeks.

"Ten per cent is probably the out side amount of an increase," noted Higgins. He could not say, at this stage, whether he will be asking for additional hikes to offset any projected increases in the wholesale cost of propane. "I will have a better idea within two to three weeks."

Whistler customers already saw a 19.3 per cent jump in the cost of piped propane last November. That hike came on top of a 16 per cent jump in August and another 17.2 per cent increase in January of 2000.

Centra constructed the pipeline loop and added a larger vapourizer in Function to meet the needs of its Whistler customers until April 2001. But as Madsen told councillors last year, beyond that "it is going to be pretty tight."

In 1999 Centra added five propane tanks to its Nesters storage facility. Council approved the expansion but made it clear that should the company need to add any further capacity to serve Whistler’s needs, it would have to build a natural gas pipeline to the resort.

Whistler wants to see the natural gas pipeline routed away from the highway and incorporated into sections of the existing and proposed Sea to Sky bike trail route. Centra, however has indicated it finds the cost of the off-highway solution prohibitive.

The company did apply to the Utilities Commission to build the natural gas pipeline in 1997 but announced it had officially shelved the plan in April 1999, based on a feasibility analysis that showed the new routing requirements were not economically viable.

As well, the increased cost of natural gas at the time, coupled with historic low prices for propane, did not justify the construction of the pipeline.

One of the key determining factors in deciding whether or not to go ahead with the pipeline is the price difference between natural gas and propane. Historically, natural gas has been the cheaper option. Currently, however, the cost of natural gas in B.C has spiked dramatically, but Higgins said long-term projections still indicate the price spread between the two commodities will remain at around $3 with natural gas being the cheaper.

"One of the decision points is definitely the price spread between the cost of propane and the cost of natural gas but you can’t really go by what is happening now on the spot market," said Higgins.

"When you make these decisions you have to look at what are the analysts saying in terms of the spread between the price of propane over the long term and, at the moment, they are still saying it is going to be around a $3 spread between natural gas and propane, with natural gas being the lower priced," he said.

"If that changes in any sort of forecast we get it may impact the decision to build a pipeline."

Higgens said Centra uses the 15-year forecasts of consultants Gilbert Lausten Jung Associates out of Alberta.

Centra is currently weighing up four different options, including the pipeline, for servicing Whistler’s needs beyond April this year.

The four options include:

• do nothing and stop accepting customers;

• put more propane tanks in Function Junction;

• build another propane storage plant somewhere else in the resort; or

• construct the natural gas pipeline from Squamish to Whistler and make the switch from piped propane.

Each option is being assessed against ability to accommodate continued growth; cost; the rate impacts as customers bear the cost; likelihood of attaining approval and; compatibility with local government and provincial goals.

If Centra chooses to do nothing, the Nesters and Function plants will operate indefinitely but no new consumers, like the Hyatt Hotel, could be added to the system.

Gas rates under this model would not be impacted.

If more tanks are added in Function, this will allow growth through the 2002-2003 heating season only. Any future energy needs would have to be met with either electricity or bottled propane. Rate impacts would also be minimal under this option except for commodity price fluctuations.

If another storage facility is built in Whistler, demand could be met for the next 15 years. Of all the options, this would have the highest long-term rate impact. Rail car and truck traffic on Highway 99 would also increase by about 45 per cent over the next 15 years.

If the natural gas pipeline is constructed for service in November, 2002, it will serve anticipated energy demand – based on bed unit counts – in Whistler for the next 15 years. It will also accommodate potential Olympic growth and potentially hazardous highway traffic will be eliminated. There is also possibility of a fibre optics partnership in construction.

This model, however, envisages pipeline construction occurring primarily along the highway to reduce cost and rate impacts.

Centra has said Ministry of Highways has now approved this pipeline alignment in principal.

The company will still need local government support for the routing but Whistler has indicated it was under the impression that an off-highway solution had already been agreed upon. Centra has said it is not in the business of building bike paths.

The next steps for Centra are to finalize their cost-benefit analysis of the four options and assess market tolerance for potential rate impacts.

Centra will then discuss with B.C. Hydro its long-term electricity plans. This will be followed by presentations to the council and major Whistler customers. Depending on local government response, Centra will then apply to the B.C. Utilities commission for project approval.

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