Can Revelstoke afford lower propane rates?

FortisBC proposes to save Revelstokians $400 per year on their heating bills, but is this the way we should be going in the midst of a climate crisis?

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The Revelstoke Community Energy Corporation’s biomass facility located near Downie Timber. Photos: Alex Cooper

This story first appeared in print in the October/November 2019 issue of Revelstoke Mountaineer Magazine.

[Editor’s note: This story is a follow-up on FortisBC’s application to change Revelstoke’s district gas pricing from the current propane prices to natural gas prices. For background on FortisBC’s application, please see this story first:]

Cheaper heating gas? FortisBC LNG plans for Revelstoke on hold, but BCUC rate parity application possible

Late in the summer, Cornelius Suchy stood in front of Revelstoke city council and made an unexpected request – that the city stand in the way of a proposed FortisBC rate cut that would decrease the average Revelstoke residential propane bill by $407 per year, and cut the bill for an average small businesses by over $2,000.

Suchy, who holds a Swiss energy engineering degree and a masters in physics, runs a consulting firm called Canadian Biomass Energy Research whose mission is to “promote clean, sustainable and successful biomass to energy projects in Canada.” Promoting biomass energy is his life’s work.

For him, Fortis’ application to the BC Utilities Commission to reduce the propane rate on Revelstoke customers so it would match the rate paid by natural gas customers in the rest of B.C. makes no sense in the midst of a climate crisis.

“The idea of the carbon tax is to make fossil fuels less attractive and more expensive, and we’re doing the opposite here,” he told me a few weeks later. “We’re pretending there is no climate change. We want cheap fuel, and don’t care about the rest.”

(For those wondering why Fortis is being so kind to us, they hope to sign on more customers in Revelstoke by lowering the rate of propane; their application identifies more than 1,000 potential new customers. Also, the city has lobbied for years to get on the natural gas network.)

In Revelstoke, it’s not an easy sell to ask people to fight something that would reduce the cost of living for local residents and businesses. After all, the high cost of living is the biggest issue facing the community. Suchy believes most residents can afford the higher prices, and only those who can’t should be subsidized.

Fortis’ proposal, if approved, would incentivize the use of fossil fuels when we should be doing the opposite. “The idea of subsidizing fossil fuel in times of climate emergency is completely out of tune,” he told me.

Practicalities and price

Fortis’ Revelstoke propane plant located in the Industrial park. Photos: Alex Cooper

After hearing Suchy’s presentation to council, I couldn’t help but wonder, “How do we convince people to adopt renewable energy when burning fossil fuels is that much cheaper?”

I live in a mid-’70s home heated with electric baseboard and my winter bills are astronomical. Using Fortis’ energy comparison calculator, I could save $2,000 per year (!!!) if I switched to a natural gas furnace. The upfront cost of retro-fitting my house would be huge and isn’t reasonable, but I did look into installing a high-efficiency ductless heat pump system. It could cut my heating bill in half, but I would still be paying more than double what I’d pay with natural gas, though the upfront cost of the system would be much cheaper.

For my home, with no ducting in place, going with a heat pump makes sense, but if you have ducts in place (say you’re heating with an oil furnace) or are building new, and cost is your main concern, why would you not go with natural gas?

I met with Chantal Wilson, the owner of Little Bear Engineering, which specializes in finding ways people and businesses to reduce their energy bills. I asked her straight up – is it possible to heat your home with electricity for less than natural gas? She replied with a no.

“It really will depend on what the gas prices do and how efficient you can have your equipment,” she said. “If you have a really energy efficient geothermal system that is very, very efficient, it would be getting close.”

The current basic rate for BC Hydro is $0.0945 per kilowatt hour, which equates to $26.25 per gigajoule. BC Hydro, in a move to encourage conservation, has a step two rate that’s 50 per cent higher, or $39.36/GJ. Fortis charges $13.797/GJ for propane and $7.36/GJ for natural gas. In winter, if you’re on electric heating, most of your bill will be at the higher rate, so in Revelstoke you’re paying triple the cost per gigajoule to heat your home. If natural gas pricing were adopted, the difference would be even more extreme.

File photo: Revelstoke Fire Rescue Services crews battle a serious fire at the Revelstoke Community Energy Corporation’s District Energy System plant on the Downie lot in February, 2015. Photo: Revelstoke Fire Rescue Services

Even if you ran a high-efficiency heat pump, which has a 300% efficiency rating, you’re looking at the same cost per gigajoule as propane. BC Hydro implemented step two pricing to encourage energy conservation, but unless you’re stuck with electric heating, the policy has the adverse effect of pushing people towards fossil fuel heating. A wood pellet stove will run you about $13-20 per GJ, depending on how efficient it is, according to Wilson.

Little Bear Engineering will conduct an energy audit of your home. They can put it under negative pressure or fill it with fog and then watch the air leak out to see where you’re losing the most heat. She enumerated many ways to save on your energy bill, from adding insulation to your attic to replacing windows to sealing every little crack around your home to reduce air leakage. Poorly insulated basements are an overlooked source of heat loss, she noted.

“I know it doesn’t look so great, but that plastic film that you put on with the hair dryer works quite well,” she said.

File photo: Dr. Geoff Battersby, centre, leads a tour through the Revelstoke Community Energy Corporation facility in 2014. The facility converts wood waste into heat, which is circulated through underground pipes to heat buildings in the community. Photo: Aaron Orlando/Revelstoke Mountaineer

There are numerous rebates available to home owners that invest in energy efficiencies, but they still only cover a small portion of the total costs and the payoff through energy savings is years down the road. These subsidies need to go even further, says Suchy. “We need leadership from the government that says, ‘Okay, we’re going to convert our buildings, our assets to something like renewable heating, heat pumps, pellet stoves, or district heating.”

There was a second aspect to Suchy’s presentation to council about Fortis’ application – that the rate decrease, or subsidy as he refers to it, will hurt the competitiveness of the Revelstoke Community Energy Corporation. RCEC was born in 2005 following nearly a decade of work looking at ways to make use of Downie Timbers substantial wood waste. After several failed attempts at building a plant that would convert the waste to electricity, the City of Revelstoke and Downie Timber settled on a district heating system that would provide heat for Downie’s dry kilns and 10 local buildings: city hall, the arena, the community centre, the post office, Colombia River Manor Apartments, Minto Manor, Revelstoke Secondary School, Begbie View Elementary, the Powder Springs Hotel, and the Catholic church.

RCEC signed 20-year agreements to supply heat to these customers; they expire between 2026 and 2031. Suchy says that the reduced propane rates will make RCEC uncompetitive and it will have to close once these agreements end. “If propane is subsidized, it’s no longer economic for these clients to remain on the district heating system,” he told council.

The issue has been on RCEC’s radar since 2016, when Fortis first proposed converting Revelstoke to natural gas. In an interview, Larry Marchand, the general manager of RCEC said it’s unlikely Suchy’s assertion “would prove to be true,” adding it’s too soon to tell if RCEC customers would jump ship because RCEC doesn’t know what it’s rates will be in five to 10 years when current contracts expire, nor do they know what the price of natural gas will be.

“I would say there would be the possibility that some customers that would have signed on to an energy supply agreement 10 years ago that might see by comparison that RCEC’s rates — that are locked in over a 20 year period — might appear to be less competitive by comparison to propane rates,” he said. “It would be preliminary for us to actually determine that was factual because we don’t know what the rate would be.”

RCEC does have advantages over Fortis when it comes to setting rates. Unlike propane and natural gas prices, whose prices fluctuate depending on global supply and demand, RCEC has a seemingly endless and free source of fuel that comes from Downie Timber across the street. It also has known costs related to the cost of building the plant and related infrastructure, which is amortized over many years, and the yearly maintenance and administrative costs.

At the same time, Fortis has a massive customer base spread across the province, so it can stand to lose money from some clients as long as it makes a profit overall. RCEC, meanwhile, only has 10 clients in Revelstoke.

“Biomass energy and alternative green energy, just simply because of economies of scale and mass uptake and the uniqueness of the industry, has a hard time competing with conventional energy,” said Marchand.

At that council meeting, Mayor Gary Sulz, who also chairs RCEC, said they have met with Fortis about this issue. While the city has asked Fortis to bring rates in line with the rest of B.C., “We want to make sure RCEC remains in business,” he said.

“These are conversations we’ll have with the BC Utilities Commission and Fortis going forward.”

Alternate investments

In 2015, representatives of a fledgling biofuel company came to Revelstoke (and several other forestry communities) looking for support to build a facility that would convert wood waste into a form of gas. Many companies exist proposing to do this and the technology poses huge promise. It would make use of our abundant wood waste and create a greener energy, however, it is still not considered cost-competitive with fossil fuels, according to an article published in the journal BMC Energy.

Two years ago, Suchy proposed building such a facility in Revelstoke to heat the whole town. His pitch came not long after Fortis considered spending $25 million on converting Revelstoke to natural gas. Suchy said instead of natural gas, why not spend the money creating a system that would convert local wood waste to energy?

“Converting the gas system to LNG would cost $25 million upfront and would need to be heavily subsidized to be viable,” he wrote in the Mountaineer. “For around the same cost as LNG we can convert wood into a local, renewable fuel.”

Suchy passionately believes that this is the way Fortis should go. Instead of subsidizing fossil fuels by pricing propane the same as natural gas, that money should go into building a biofuel facility that would replace our existing gas system. He said this would cost $40-50 million. While that is a huge amount, he likens it to the 100-mile diet. Instead of food security, it would mean energy security. Instead of importing our energy, we would produce it at home. With this facility and electricity from the dam, Revelstoke could be energy independent, and we’d reduce our greenhouse gas emissions.

Subsidizing propane will do the opposite. “It’s going to us stop saving energy, and it’s going to make our propane consumption go up,” said Suchy. “And you can look at the proposal from Fortis – it says it will go up.”

It truly makes the big question of our climate crisis local – are we willing to think big and spend big to reduce our emissions, or is the temptation of saving $400 per year too much to resist?