- BC Games
CNV energy utility under attack
A private energy consultancy is taking aim at North Vancouver's city-owned heating utility, the Lonsdale Energy Corporation (LEC), calling the public utility a monopoly that, without external oversight, unfairly forces residents onto its heat and hot water grid.
The consulting firm wants to put the relatively new utility under the purview of the B.C. Utilities Commission. And, according to emails obtained by The Outlook, the move seems to have the support of the majority of city council.
LEC president and North Vancouver city manager Ken Tollstam, however, said the LEC already provides the most open and competitive rates of its kind and BCUC oversight would only heap huge, unnecessary costs onto its customers.
The LEC uses a hydronic heating system which pumps hot water around a grid to heat two dozen mostly residential and city-owned buildings on and around Lonsdale Avenue. Since 2004, city bylaws have mandated that new buildings developed near the LEC grid must be connected to the heat and hot water system, just as developers must connect to the city's sanitation and water systems.
However, Keith Morris, a consultant with the Richmond-based consultancy All Things Energy, told The Outlook he has been hired by at least one resident of an LEC-heated building near Lonsdale Avenue and 1st Street who claims he's paying too much for hydronic heat and would do better without it.
"They believe they're suffering from a hydronic energy premium of 30 to 40 per cent versus other methods of energy supply that they could employ which includes simply disconnecting the existing radiator provided by LEC and putting in their own hot water boiler," Morris said.
Morris said he also thinks LEC customers are unfairly bearing the brunt of the cost for the expansion of the hydronic grid, currently being installed under Lonsdale Avenue up to 23rd Street.
"The city has created a massive infrastructure and are doing what one may call anticipated investment for the purpose of growing their business," Morris said. "But they are compelling the users on the system to pay the costs of recovering that investment today."
He claimed the city is refusing to provide his client with details of his monthly heating costs, which are paid as part of his strata fees. Tollstam said the LEC cannot release rates to individual subscribers because the corporation's contracts are always between the LEC and a building's strata council or management, not with individual residents.
"If his strata comes to us and asks for the details of rates for the building, absolutely we release them," Tollstam said, adding that while all buildings pay the same flat rate to LEC, how each building's management or strata council disperses that cost among residents — whether by usage-based billing, for example, or by square-footage billing — is up to the individual building operators.
According to the city's 2010 financial report, the LEC controlled assets worth $9.28 million and spent 50 per cent of its revenue on the natural gas to heat the system and 50 per cent on capital costs and infrastructure. All LEC shares are controlled by the city and changes in the company's energy rates are under the authority of city council.
However, Morris claims that without coming under BCUC jurisdiction, the LEC is operating more like a private business with a city-backed anti-competition edge over would-be competitors.
"The [LEC] used to be for just city buildings," Morris said, "but now if you want to build any building and get it through the permitting process, it has to be supplied by LEC — a monopoly."
Prior to the Nov. 19 election, returning city councillors Guy Heywood, Rod Clark, Craig Keating and Pam Bookham told Morris via email that they supported provincial oversight of the city utility, while council newcomer Linda Buchanan wrote it would be an issue she would explore if elected.
"I am 100% in support of B.C. Utility Commission oversight of LEC to ensure that rates are fair, reasonable, and cost competitive for the city’s residents and business[es] held captive by monopoly legislation under By Law No. 7575 [which established the LEC]," Coun. Clark wrote.
He added: "We should be looking at amending or eliminating the bylaw too."
Coun. Bookham agreed, and wrote she thinks the capital expansion costs of the LEC grid should not be downloaded solely onto its present users.
"Customers of LEC should be given assurance that they are not subsidizing this new technology," Coun. Bookham wrote. "If there are front end costs to create such a system, they should be borne by all residents of the city."
Buildings currently served by the LEC grid include, amongst others, city hall, the main library, the fire hall, the Atrium at the Pier, John Braithwaite Community Centre, The Pinnacle Hotel, The Envy, Ventana, Grant MacNeil Place, The Landing, The Premiere, The Esplanade, Villa St. Georges.