Capital Cost Summary. Table 9 below shows the cumulative plant in service cost for each asset category, as well as the aggregate accumulated depreciation balance and the net book value of the Project Development Costs and the Connection Credit. Table 9: Plant in Service (thousands, nominal $) Plant in service (thousands, nominal $) 2015 2016 2017 2018 2019 2020 2021 2022 2024 2044 Original cost Non-renewable energy, plant 1,033 2,086 2,086 2,086 2,086 2,086 2,086 3,135 6,840 7,233 NDES distribution pipe 412 2,186 3,090 3,225 3,529 12,169 12,743 12,887 18,117 23,068 NDES mechanical equipment 116 472 834 1,081 1,458 3,383 3,906 5,125 7,318 17,110 Total cost 1,560 4,743 6,010 6,392 7,073 17,638 18,735 21,148 68,510 83,647 Accumulated depreciation 0 (41) (150) (284) (427) (587) (933) (1,304) (2,209) (38,788) Net book value, PP&E 1,560 4,703 5,860 6,107 6,646 17,051 17,801 19,844 66,301 44,859 Net book value, project development costs 880 851 821 792 763 733 704 675 616 29 Net book value, lowrise connection credit account 0 190 1,432 2,070 2,259 2,284 1,990 1,696 1,109 0 Total, plant in service, net book value 2,440 5,743 8,113 8,969 9,668 20,068 20,495 22,215 68,026 44,889 6 OPERATING ASSUMPTIONS (INCLUDING FUEL INPUT ASSUMPTIONS) NDES operating costs under the project plan include all fuel, wages, maintenance, insurance, administration, land leases, water and sewer, UBC service levy, UBC franchise fee, property taxes and all other taxes, fees and levies. The temporary Carbon Emissions Rider charged to customers is added to the cost of fuel. Table 10 below shows the price for each category of fuel consumed. Table 10: Fuel Prices (nominal $) Fuel prices (nominal $) 2015 2016 2017 2018 2019 2020 2021 2022 2024 2044 Renewable, waste heat (TRIUMF), $ / MWh $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - Heat purchased from UBC, $ / MWh $ - $ - $ - $ - $ - $ 47.80 $ 48.46 $ 49.13 $ 51.42 $ 71.54 Natural gas, commercial, fully-loaded cost + carbon tax, $ / GJ $ 10.05 $ 9.80 $ 10.26 $ 10.61 $ 10.74 $ 10.89 $ 11.04 $ 11.19 $ 11.71 $ 16.30 Electricity, commercial, fully-loaded, $ / MWh $ 78.33 $ 79.92 $ 82.80 $ 85.36 $ 87.11 $ 94.34 $ 95.28 $ 97.20 $ 102.49 $ 150.84 Further information about the items in Table 10 above: Based on current LOI and subject to agreement with TRIUMF, it is assumed that there will be no cost associated with waste heat captured at the TRIUMF facility. The cost of heat purchased from UBC to satisfy periodic NDES load requirements will be a function of the cost of natural gas (but minus the carbon offset amount otherwise included in the cost), being the FortisBC Large Commercial Service rate (i.e., Rate Schedule 3, as of April 1, 2014) including commodity, delivery, basic charge, riders and carbon tax. In the ordinary course of operations, the NDES will purchase natural gas from FortisBC at the Large Commercial Service rate (i.e., Rate Schedule 3, as of April 1, 2014) including commodity, delivery, basic charge, riders and carbon tax. Electricity will be purchased from UBC or BC Hydro at the Medium General Service Rate or Large General Service Rate as applicable according to the demand of the DES system as it grows (i.e., Schedule 1500 and 1600 respectively, although in the initial years the demand may be below the applicable demand for Schedule 1500; any difference in cost is nominal, however). The BC Hydro 5% Schedule 1901 Deferral Account Rate Rider is added to the cost of electricity each year and is assumed to continue indefinitely. Electricity consumption is modest until 2024 when the CEP heat pump is operational. Table 11 below shows the forecast consumption for each category of fuel. Table 11: Fuel Consumption Fuel consumption 2015 2016 2017 2018 2019 2020 2021 2022 2024 2044 Renewable, waste heat (TRIUMF), MWh's - - - - - - - - 52,459 54,731 Heat purchased from UBC, MWh's - - - - - 11,211 12,502 13,793 - 6,367 Natural gas, GJ's 4,589 24,235 36,066 53,794 77,082 94,964 111,339 129,356 8,826 97,305 Electricity, large general, MWh's 94 126 124 122 121 171 187 186 24,335 25,336 Table 12 shows the nominal dollar cost for each category of fuel on an annual and 30-year NPV basis. Figure 6 also shows the fuel costs by category. Table 12: Fuel Costs (nominal $) Fuel costs (thousands, nominal $) NPV, 30 yrs 2015 2016 2017 2018 2019 2020 2021 2022 2024 2044 Heat purchased from UBC 2,779 0 0 0 0 0 536 606 678 0 456 Natural gas 11,763 46 238 370 571 828 1,034 1,229 1,448 103 1,586 Electricity 20,824 7 10 10 10 11 16 18 18 2,494 3,822 Carbon emissions rider 586 6 32 47 70 100 123 145 168 0 0 Total 35,366 59 000 000 000 939 1,710 1,997 2,312 2,598 5,863 Figure 6: Fuel Costs (nominal $) Table 13 shows the operator cost and maintenance cost for the DES. Table 13: Direct Operating Costs (nominal $) Operator FTE's, operator cost, maintenance cost At build-out 2015 2016 2017 2018 2019 2020 2021 2022 2024 2044 Operator FTE's 4.9 0.1 0.5 0.6 0.7 0.9 1.6 2.8 2.8 4.9 4.9 Operator cost, thousands 2014$ 490 10 45 60 70 85 160 280 280 490 490 Maintenance cost, thousands 2014$ 444 0 8 20 24 25 28 55 58 71 444 Further information about the items in Table 13: Operator FTE’s have been determined by KWL and Corix, with input from UBC. The Base Case assumes that less than 1 FTE is required to operate the two temporary energy centres and 4.9 FTE’s will be required to operate the CEP when it is connected to the Alternative Energy Source in 2024. Each qualified operator FTE is assumed to cost $100,000 per annum in year 2014 dollars. Annual maintenance costs for each category of equipment have been estimated by KWL and Corix, with input from UBC, and are calculated as follows: Mechanical, non-renewable energy equipment – 0.75% of cumulative capital Site work and structures (civil) – 0.25% of cumulative capital Mechanical, renewable energy equipment – 2.0% of cumulative capital Distribution pipe system – 0.25% of cumulative capital Energy transfer station – 0.50% of cumulative capital Table 14 below shows the indirect operating costs for the NDES. There are assumptions about the allocation of indirect costs between the NDES and the ADES. For example, fees paid to UBC will be charged only to NDES customers. The details of these apportionment calculations are included in the financial model but only have an impact beginning in 2024 when the CEP becomes operational and the ADES receives heat energy. The costs shown in Table 15 are aggregate amounts and have not been apportioned between the NDES and ADES. Table 14: Indirect Operating Costs (thousands, nominal $) Indirect operating costs (thousands, nominal $) NPV, 30 yrs 2015 2016 2017 2018 2019 2020 2021 2022 2024 2044 Insurance 985 2 5 9 12 14 17 34 37 45 132 Corix admin 2,385 143 146 149 152 155 158 161 164 171 254 Water & sewer 443 27 27 28 28 29 29 30 30 32 47 UBC service levy 3,308 0 3 14 19 20 22 75 79 82 439 Property tax on buildings, land and DPS 2,284 0 2 9 13 14 15 52 54 57 303 Total 12,011 171 182 208 224 231 240 352 365 497 1,774 Table 15: Indirect Costs: Facts and Assumptions INDIRECT COSTS Portion of capital costs attracting PST 45.0% Rural property tax paid to Province (Metro Van.) 2.13% Land value for property tax ($ per sq. metre) $ 560.00 UBC service levy 3.09% Insurance, owner ($ per $100 of nbv) $ 0.11 Insurance, general commercial liability (% of rev.) 0.25% Water & Sewer ($ annual) $ 26,000 Corix admin (average year) $ 140,000 UBC franchise fee (% of PY NDES rev.) 3.0% UBC franchise fee to begin in project year 16 UBC land lease rate per m2 $ 50.00 Further information about the items in Table 14 and Table 15: Insurance includes an amount for (a) commercial general liability, and (b) operational insurance on the value of the property, being the buildings, pipe and equipment. General commercial liability insurance is assumed to be 0.25% per dollar of revenue, subject to a $2000 per annum minimum. Operational (property) insurance is assumed to be $0.11 per $100 of value, being the net book value of the buildings and equipment, plus an estimated 20% of the cost of the pipe system. These estimates are based on internally provided information from Corix’s insurance administrator. Construction insurance during construction and wrap-up is already included in KWL’s capital cost estimates. Corix administration and overhead charge is an internal estimate based on Corix’s broad experience operating similar district energy systems. The bundled charge of $140,000 per annum (in 2014 dollars) is for an average year and includes separately determined estimates for legal, accounting, regulatory, administration, human resources, I/T support and maintenance, telephones, office supplies, and vehicle costs. Corix makes every effort to minimize its administrative and overhead costs, but it is reasonable to assume that costs in the early phase of a project will be higher, if viewed on a per megawatt hour basis, than in later years. The CEP will be situated on land leased from UBC. Final site determination and the lease agreement have not been concluded, but provisional discussion between Corix and UBC indicates that the lease rate will be a market rate of approximately $50 per square meter. KWL has estimated that the CEP will require 1820 square meters of land. Annual water and sewer charges from UBC have been estimated based on provisional discussions between Corix and UBC. A Service Levy, intended to emulate a municipal tax, is charged by UBC at a rate of 3.09% (2014 rate) of the value of leased land, buildings and pipes. Property owners on UBC’s campus pay a Rural Property Tax to the Province of BC (i.e., 2.13%, 2014 rate for jurisdiction 000 Xxxxx Xxxxxxxx Rural) and the Services Levy to UBC. The two added together are substantially the same as the City of Vancouver municipal tax due on a property with the same assessed value. Although property assessment will be determined by the BC Assessment Authority, for purposes of the calculation, land value has been estimated at an indicative market rate of $560 per square meter based on input from UBC, buildings have been valued at net book value, and the pipes at 20% of their capital cost. A UBC Franchise Fee on revenues has been agreed to between Corix and UBC and is included in the Infrastructure Agreement. The rate is 3% of revenue, but will not begin until after the 15th year of operation. 7 PROJECT PLAN PRO FORMA Please refer to Appendix X for the Pro Forma model. 8 RATES DESIGN AND RATE SETTING PRINCIPLES This Project Plan includes an indicative financial Model based on the technical and cost details described above.
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Samples: Agreement, Infrastructure Agreement, Infrastructure Agreement
Capital Cost Summary. Table 9 below shows the cumulative plant in service cost for each asset category, as well as the aggregate accumulated depreciation balance and the net book value of the Project Development Costs and the Connection Credit. Table 9: Plant in Service (thousands, nominal $) Plant in service (thousands, nominal $) 2015 2016 2017 2018 2019 2020 2021 2022 2024 2044 Original cost Non-renewable energy, plant 1,033 2,086 2,086 2,086 2,086 2,086 2,086 3,135 6,840 7,233 NDES distribution pipe 412 2,186 3,090 3,225 3,529 12,169 12,743 12,887 18,117 23,068 NDES mechanical equipment 116 472 834 1,081 1,458 3,383 3,906 5,125 7,318 17,110 Total cost 1,560 4,743 6,010 6,392 7,073 17,638 18,735 21,148 68,510 83,647 Accumulated depreciation 0 (41) (150) (284) (427) (587) (933) (1,304) (2,209) (38,788) Net book value, PP&E 1,560 4,703 5,860 6,107 6,646 17,051 17,801 19,844 66,301 44,859 Net book value, project development costs 880 851 821 792 763 733 704 675 616 29 Net book value, lowrise connection credit account 0 190 1,432 2,070 2,259 2,284 1,990 1,696 1,109 0 Total, plant in service, net book value 2,440 5,743 8,113 8,969 9,668 20,068 20,495 22,215 68,026 44,889 6 OPERATING ASSUMPTIONS (INCLUDING FUEL INPUT ASSUMPTIONS) NDES operating costs under the project plan include all fuel, wages, maintenance, insurance, administration, land leases, water and sewer, UBC service levy, UBC franchise fee, property taxes and all other taxes, fees and levies. The temporary Carbon Emissions Rider charged to customers is added to the cost of fuel. Table 10 below shows the price for each category of fuel consumed. Table 10: Fuel Prices (nominal $) Fuel prices (nominal $) 2015 2016 2017 2018 2019 2020 2021 2022 2024 2044 Renewable, waste heat (TRIUMF), $ / MWh $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - Heat purchased from UBC, $ / MWh $ - $ - $ - $ - $ - $ 47.80 $ 48.46 $ 49.13 $ 51.42 $ 71.54 Natural gas, commercial, fully-loaded cost + carbon tax, $ / GJ $ 10.05 $ 9.80 $ 10.26 $ 10.61 $ 10.74 $ 10.89 $ 11.04 $ 11.19 $ 11.71 $ 16.30 Electricity, commercial, fully-loaded, $ / MWh $ 78.33 $ 79.92 $ 82.80 $ 85.36 $ 87.11 $ 94.34 $ 95.28 $ 97.20 $ 102.49 $ 150.84 Further information about the items in Table 10 above: • Based on current LOI and subject to agreement with TRIUMF, it is assumed that there will be no cost associated with waste heat captured at the TRIUMF facility. • The cost of heat purchased from UBC to satisfy periodic NDES load requirements will be a function of the cost of natural gas (but minus the carbon offset amount otherwise included in the cost), being the FortisBC Large Commercial Service rate (i.e., Rate Schedule 3, as of April 1, 2014) including commodity, delivery, basic charge, riders and carbon tax. • In the ordinary course of operations, the NDES will purchase natural gas from FortisBC at the Large Commercial Service rate (i.e., Rate Schedule 3, as of April 1, 2014) including commodity, delivery, basic charge, riders and carbon tax. • Electricity will be purchased from UBC or BC Hydro at the Medium General Service Rate or Large General Service Rate as applicable according to the demand of the DES system as it grows (i.e., Schedule 1500 and 1600 respectively, although in the initial years the demand may be below the applicable demand for Schedule 1500; any difference in cost is nominal, however). The BC Hydro 5% Schedule 1901 Deferral Account Rate Rider is added to the cost of electricity each year and is assumed to continue indefinitely. Electricity consumption is modest until 2024 when the CEP heat pump is operational. Table 11 below shows the forecast consumption for each category of fuel. Table 11: Fuel Consumption Fuel consumption 2015 2016 2017 2018 2019 2020 2021 2022 2024 2044 Renewable, waste heat (TRIUMF), MWh's - - - - - - - - 52,459 54,731 Heat purchased from UBC, MWh's - - - - - 11,211 12,502 13,793 - 6,367 Natural gas, GJ's 4,589 24,235 36,066 53,794 77,082 94,964 111,339 129,356 8,826 97,305 Electricity, large general, MWh's 94 126 124 122 121 171 187 186 24,335 25,336 Table 12 shows the nominal dollar cost for each category of fuel on an annual and 30-year NPV basis. Figure 6 also shows the fuel costs by category. Table 12: Fuel Costs (nominal $) Fuel costs (thousands, nominal $) NPV, 30 yrs 2015 2016 2017 2018 2019 2020 2021 2022 2024 2044 Heat purchased from UBC 2,779 0 0 0 0 0 536 606 678 0 456 Natural gas 11,763 46 238 370 571 828 1,034 1,229 1,448 103 1,586 Electricity 20,824 7 10 10 10 11 16 18 18 2,494 3,822 Carbon emissions rider 586 6 32 47 70 100 123 145 168 0 0 Total 35,366 59 000 000 000 939 1,710 1,997 2,312 2,598 5,863 Figure 6: Fuel Costs (nominal $) Table 13 shows the operator cost and maintenance cost for the DES. Table 13: Direct Operating Costs (nominal $) Operator FTE's, operator cost, maintenance cost At build-out 2015 2016 2017 2018 2019 2020 2021 2022 2024 2044 Operator FTE's 4.9 0.1 0.5 0.6 0.7 0.9 1.6 2.8 2.8 4.9 4.9 Operator cost, thousands 2014$ 490 10 45 60 70 85 160 280 280 490 490 Maintenance cost, thousands 2014$ 444 0 8 20 24 25 28 55 58 71 444 Further information about the items in Table 13: • Operator FTE’s have been determined by KWL and Corix, with input from UBC. The Base Case assumes that less than 1 FTE is required to operate the two temporary energy centres and 4.9 FTE’s will be required to operate the CEP when it is connected to the Alternative Energy Source in 2024. • Each qualified operator FTE is assumed to cost $100,000 per annum in year 2014 dollars. • Annual maintenance costs for each category of equipment have been estimated by KWL and Corix, with input from UBC, and are calculated as follows: • Mechanical, non-renewable energy equipment – 0.75% of cumulative capital • Site work and structures (civil) – 0.25% of cumulative capital • Mechanical, renewable energy equipment – 2.0% of cumulative capital • Distribution pipe system – 0.25% of cumulative capital • Energy transfer station – 0.50% of cumulative capital Table 14 below shows the indirect operating costs for the NDES. There are assumptions about the allocation of indirect costs between the NDES and the ADES. For example, fees paid to UBC will be charged only to NDES customers. The details of these apportionment calculations are included in the financial model but only have an impact beginning in 2024 when the CEP becomes operational and the ADES receives heat energy. The costs shown in Table 15 are aggregate amounts and have not been apportioned between the NDES and ADES. Table 14: Indirect Operating Costs (thousands, nominal $) Indirect operating costs (thousands, nominal $) NPV, 30 yrs 2015 2016 2017 2018 2019 2020 2021 2022 2024 2044 Insurance 985 2 5 9 12 14 17 34 37 45 132 Corix admin 2,385 143 146 149 152 155 158 161 164 171 254 Water & sewer 443 27 27 28 28 29 29 30 30 32 47 UBC service levy 3,308 0 3 14 19 20 22 75 79 82 439 Property tax on buildings, land and DPS 2,284 0 2 9 13 14 15 52 54 57 303 Total 12,011 171 182 208 224 231 240 352 365 497 1,774 Table 15: Indirect Costs: Facts and Assumptions INDIRECT COSTS Portion of capital costs attracting PST 45.0% Rural property tax paid to Province (Metro Van.) 2.13% Land value for property tax ($ per sq. metre) $ 560.00 UBC service levy 3.09% Insurance, owner ($ per $100 of nbv) $ 0.11 Insurance, general commercial liability (% of rev.) 0.25% Water & Sewer ($ annual) $ 26,000 Corix admin (average year) $ 140,000 UBC franchise fee (% of PY NDES rev.) 3.0% UBC franchise fee to begin in project year 16 UBC land lease rate per m2 $ 50.00 Further information about the items in Table 14 and Table 15: • Insurance includes an amount for (a) commercial general liability, and (b) operational insurance on the value of the property, being the buildings, pipe and equipment. General commercial liability insurance is assumed to be 0.25% per dollar of revenue, subject to a $2000 per annum minimum. Operational (property) insurance is assumed to be $0.11 per $100 of value, being the net book value of the buildings and equipment, plus an estimated 20% of the cost of the pipe system. These estimates are based on internally provided information from Corix’s insurance administrator. Construction insurance during construction and wrap-up is already included in KWL’s capital cost estimates. • Corix administration and overhead charge is an internal estimate based on Corix’s broad experience operating similar district energy systems. The bundled charge of $140,000 per annum (in 2014 dollars) is for an average year and includes separately determined estimates for legal, accounting, regulatory, administration, human resources, I/T support and maintenance, telephones, office supplies, and vehicle costs. Corix makes every effort to minimize its administrative and overhead costs, but it is reasonable to assume that costs in the early phase of a project will be higher, if viewed on a per megawatt hour basis, than in later years. • The CEP will be situated on land leased from UBC. Final site determination and the lease agreement have not been concluded, but provisional discussion between Corix and UBC indicates that the lease rate will be a market rate of approximately $50 per square meter. KWL has estimated that the CEP will require 1820 square meters of land. • Annual water and sewer charges from UBC have been estimated based on provisional discussions between Corix and UBC. • A Service Levy, intended to emulate a municipal tax, is charged by UBC at a rate of 3.09% (2014 rate) of the value of leased land, buildings and pipes. Property owners on UBC’s campus pay a Rural Property Tax to the Province of BC (i.e., 2.13%, 2014 rate for jurisdiction 000 Xxxxx Xxxxxxxx Rural) and the Services Levy to UBC. The two added together are substantially the same as the City of Vancouver municipal tax due on a property with the same assessed value. Although property assessment will be determined by the BC Assessment Authority, for purposes of the calculation, land value has been estimated at an indicative market rate of $560 per square meter based on input from UBC, buildings have been valued at net book value, and the pipes at 20% of their capital cost. • A UBC Franchise Fee on revenues has been agreed to between Corix and UBC and is included in the Infrastructure Agreement. The rate is 3% of revenue, but will not begin until after the 15th year of operation. 7 PROJECT PLAN PRO FORMA Please refer to Appendix X for the Pro Forma model. 8 RATES DESIGN AND RATE SETTING PRINCIPLES This Project Plan includes an indicative financial Model based on the technical and cost details described above.
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Samples: Infrastructure Agreement
