City staff recommend rate hike after neighbourhood-energy utility posts higher-than-expected loss
The City of Vancouver's neighbourhood-energy utility is expected to lose nearly $1.5 million this year.
The figure is revealed in a staff report going to council's standing committee on city finances and services on Tuesday (December 10).
The city had budgeted for a $1.05-million loss for the Southeast False Creek Neighbourhood Energy Utility in 2013.
Staff has recommended a 3.22 percent rate increase in 2014.
The report forecasts another 3.22 percent hike in 2015, and two percent annual increases from 2016 onward.
"This is an improvement compared to last year’s rate forecast of 3.22% until 2019, and 2.0% from 2020 onward," the staff report states.
The Southeast False Creek Neighbourhood Energy Utility was created to provide space heating and hot water to buildings around Southeast False Creek.
NPA, Vision Vancouver, and COPE councillors voted unanimously in favour of granting approval-in-principle in 2006 to the city getting into the energy business. The utility began operations in 2010 and recovers heat from raw sewage.
The district heat and hot water system has five smokestacks in the shape of a hand on the southeast side of the Cambie Street Bridge.
According to the city, it's expected to reduce more than 60 percent of carbon emissions that would ordinarily be released from buildings in the area.
The neighbourhood-energy utility relies on natural gas for approximately 30 percent of its energy supply, according to the report.
Since 2012, the price of this fuel has risen by five percent.
"Over time the NEU will continue to be extended to serve new developments in SEFC and Great Northern Way Campus Lands," the report notes, "with total build-out currently forecast at 690,000 square metres (7,400,000 square feet) of floor area."