Connection Credit. (a) Subject to BCUC approval, Corix will offer to the Developer(s) of each new Low-Rise Building constructed in the Development Areas after the date of this Agreement a connection credit (the “Connection Credit”) to assist in offsetting the additional incremental cost such Developer(s) are expected to incur to construct such Low-Rise Building so as to be capable of using heat from the NDES for space heating within suites, in addition to domestic hot water and ventilation air.
(b) The Connection Credit will be offered to such Developer(s) pursuant to an Energy Services Contract made between Corix and the Developer(s), and will be available, calculated and paid in accordance with the applicable terms and conditions set out in the Project Plan, which terms and conditions will be incorporated into each such Energy Services Contract.
(c) Each Energy Services Contract will be conditional upon the BCUC first having approved Corix’s recovery of the full costs of all funds provided as Connection Credits in customer rates as applied for in the Phase I Application.
(d) Subject to BCUC approval, Corix will recover in the rates chargeable to NDES Customers an amount equal to the total costs of Connection Credits provided to Developers, including financing, to be recovered over a period of no less than 10 years.
Connection Credit. Subject to BCUC approval, the Infrastructure Agreement requires Corix to offer a connection incentive (the “Connection Credit”) to identified developers of new low-rise buildings in Wesbrook Place to offset the incremental cost of fully hydronic-capable buildings over the benchmark approach of using electric baseboards for in-suite heating. As shown in Table 6 below, the incentive will be at a rate of $4.50 per square foot of completed floor space through 2017, and then declining by $0.90 per square foot each year thereafter (i.e., $nil by 2022). The accumulated amount of the Connection Credit will be added to rate base to permit Corix to earn its allowed return, and the balance will be amortized over a period of no less than 10 years. In the Base Case, the aggregate Connection Credit is expected to be approximately $2.9 million, which will have only a modest impact on the balance of rate base. The Connection Credit will be in place only until 2021. Subject to BCUC approval, the temporary Connection Credit account will be amortized over 10 years, which is considered a reasonable duration in order to smooth the impact on revenue requirement. The aggregate amount of the Connection Credit is forecast to be less than $3 million The proposed Connection Credit is based on an analysis by UBC of the net incremental costs of hydronic heating for a recent low rise project, and is also consistent with information from industry participants. No premium was found in high rise construction. The declining credit is intended to reflect expected cost reductions from developer learning, experience and innovation, as well as the effects of changes in building code and certification requirements that are expected to increase the prevalence of hydronic heating and also the value of future low carbon energy from the NDES.
