City staff recommend rate hike after neighbourhood-energy utility posts higher-than-expected loss

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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."

Comments (5) Add New Comment
Snicker
If operated similarly to BC Ferries, getting rid of the 'business experts' on the Board could save a big chunk of money (except for the Board approved golden parachutes).

Simple fact, government programs at any level is nothing more than a non-profit organization. Business experts do not work in non-profit organizations unless they call themselves fundraisers and create systems to keep 90% of the funds raised.
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WTF
What do you expect it's "SHIT"!...:)
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EG
Snicker, did you read the story? It's about the city's energy utility. NEU is not related to BC Ferries, doesn't have a board, and nobody is pocketing 90% of the funds.
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Snicker
@EG - it is a government run community program. No different in concept than any other government operated system. So how much does it cost to have the current board of NEU?

BTW I don't know what the actual percentage is, but BC government has been pocketing revenue from BC Hydro for a decade now and transferring to general revenue. Now there is a rate increase for all the maintenance and upgrades because a decade of revenue was lost by business experts chosen by the government to run a government owned system.

These are basically zero competition industries that can loose money. What is wrong with this picture?
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Snicker
And, if the NEU doesn't have a board they should look at getting better management. Or sell the whole system back to the business experts that sold it to the city in the first place. There is a lemon in the mix somewhere.
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