(Updated) Creative Energy, owned by Ian Gillespie, CEO of Westbank Projects Corp., is angling for an absolute monopoly as provider of district heat on the downtown peninsula of Vancouver. (Other neighbourhoods may be up for grabs too.) Any new commercial AND residential buildings will be required to hook up to the system. The aim is to force all commercial buildings to use this system. Westbank and City of Vancouver planners are quietly negotiating bonus height and density to build two towers above what is now the 250-megawatt “Central Heat” steam plant at 720 Beatty Street, with its six natural gas boilers supply steam heat to 210 office and residential buildings.
It could be any time soon that staff come back to City Council with their recommendation, probably to go full steam ahead with the deal. But is going to be a good deal for the environment? For the taxpayer? For the businesses and residents affected? A high level of public attention is merited. Watch very closely to see how the key players perform. Are our civic servants and elected officials putting the PUBLIC interest first?
The significant increases in height and density sought by Mr. Gillespie would be in return for going “low carbon” using “biofuels.” Creative Energy appears to be trying to fly low under the radar, and CityHallWatch has found it absolutely impossible to get any responses from the firm regarding its plans for biofuels, which is also part of the City’s core strategy of running entirely on renewable energy in the future. Direct e-mails to the CEO go unanswered. Creative Energy has not answered our phone calls or e-mails and we have given up trying. We are beginning to wonder if there is a secret deal being negotiated for the plant to burn the old-growth timber from the thousands of Vancouver homes being demolished each year. According to some perverse math, that would be counted as low-carbon, renewable energy. Is City Hall setting things up so that the city is dependent on a steady stream of home demolitions for many years ahead? Are we creating a resilient system, or could it expose the users to system failure? There is talk of moving the steam production to False Creek Flats. What deals are being considered to allow a privately held company right of way to public land (above and below ground)? Could it end up controlled by foreign interests?
If business problems arise with the venture, would utility rates rise to extreme heights to cover losses (with impacts on affordability for businesses and residents)? Would taxpayers be left to bail the firm out? The fine print of any contract between the City and supplier could have huge public implications.
Media coverage has been nearly zero, almost as if there has been some media blackout agreed with the Metro Vancouver region’s mainstream papers. We hope that some trustworthy, independent organization will hold a public meeting soon, to get this discussion fully into the public domain, where it should be, before the City makes any more deals with Creative Energy.
The most recent coverage in the media appears to be December 9, 2015, in an article by Mike Klassen, in the Vancouver Courier. In a revision on December 11, it appears the Courier was forced to retract an assertion by Mr. Klassen that there had been no competitive bidding process. Creative Energy’s CEO Stacey Bernier had a letter to the editor printed on December 17, challenging Mr. Klassen’s assertion. But then on December 22, a letter to the editor by reader Aldyen Donnelly convincingly refutes Ms. Bernier.
To keep this topic in the public eye, we carry excerpts and links to these three items here, in one place. Connect the dots. Even the Courier treats these as three separate items, with no links to connect them. Please visit the Courier links for full texts.
Greenest city promise hit by regulator decision, by Mike Klassen, Vancouver Courier, 9-Dec-2015
Photo: Columnist Mike Klassen questions a city decision to give monopoly status to a district energy utility owned by Ian Gillespie (left) — a decision that the British Columbia Utilities Commission appears to have turned down.
Revised on Dec. 11.: This story originally contained information that said the city did not conduct a competitive bidding process prior to making its decision. However, on Dec. 20, 2012, the city issued Request for Expressions of Interest PS20121461, Neighbourhood Energy Concepts for Downtown Vancouver. Six proposals were received by the city from local and international utility vendors.
MAIN ARTICLE – EXCERPTS – PLEASE SEE COURIER FOR FULL ARTICLE.
- …Vancouver’s widely touted Greenest City 2020 goal is to reduce greenhouse gas emissions here by 33 per cent from a baseline set in 2007. By last count, the city had only reduced its GHGs by sever per cent, leaving another 25 per cent to go.
- …. The most controversial move so far by city council to make the city greener is Vision Vancouver’s decision to approve monopoly status to a district energy utility owned by one of their most prominent financial backers.
- If you do not know Ian Gillespie, owner of Westbank Projects Corporation, you will certainly know his buildings, which include structures such as the Shangri-La Tower, the Woodward’s redevelopment and the new Telus Garden among others. [CityHallWatch additions: Safeway towers at Granville and 70th, The Lauren tower at 1060 Broughton, a new tower at 1754 Pendrell, Davie Safeway two towers at Davie and Cardero, Vancovuer House at the base of Granville Bridge, the entire Oakridge Mall redevelopment, a controversial tower proposed near the Joyce Station, proposed First Baptist 56 storey tower at Burrard and Nelson, and many more]
- According to one recent ranking, Gillespie is the most powerful individual in Vancouver today.
- It could be argued that the greatest symbol of that power is his complete control of the heat and hot water supply for Vancouver’s densest neighbourhoods.
- In a vote opposed only by the NPA, the City of Vancouver awarded Gillespie a monopoly “franchise” to supply district heat for the West End, Downtown, northeast False Creek, Chinatown and the Downtown Eastside.
- And, to sweeten the deal, council passed bylaws making it illegal for new buildings to buy these utilities from anyone but Gillespie’s company, dubbed Creative Energy.
- Similar district energy franchises are planned for the Broadway corridor — an eight-block swath roughly covering Arbutus to Main Street — and the Cambie corridor, an area that includes everything between Oak and Main streets from Broadway down to the Fraser River.
- Any development over 2,000 square metres within these areas is required to connect to one of these district energy systems. Eventually the city will want all buildings connected, just as homes and places of business in Denmark and Sweden are today.
- In order to attract investment and make these projects perhaps more financially stable, bylaws have been put in place to remove consumer choice.
- Because of the precedent setting nature of giving monopoly control to a company where competitive options already exist, the British Columbia Utilities Commission (BCUC) was asked to give Creative Energy “CPCN” status — effectively making them the sole supplier of heat and hot water for anyone requiring a development permit.
- Creative Energy sought approval for a 9.5 per cent annual return on a proposed investment estimated to be $50 to $100 million.
- In a BCUC submission in response to the application, the Urban Development Institute said it would be “unfair and unreasonable” to approve a monopoly. They argue that a 9.5 per cent return is “generous” in light of their reduced risk.
- In a decision that came in at the Courier’s deadline, it appears that BCUC has turned down Creative Energy’s request. Gillespie will have the option to appeal.
- It is highly unlikely, however, that this will slow the city’s greenest city agenda. It just adds another hurdle for Vision Vancouver to keep its 2020 promise.
Letter to editor: Full steam ahead
DECEMBER 17, 2015 03:26 PM
By Stacey Bernier, President and CEO Creative Energy
Re: “Greenest city promise hit by regulator decision,” Dec. 9.
To the contrary. On Dec. 8 the B.C. Utilities Commission granted Creative Energy a Certificate of Public Convenience and Necessity enabling us to begin development of an innovative low carbon neighbourhood energy system for North East False Creek.
The BCUC ruling clearly stated the project is in the public interest. It fulfills some of the city’s ambitious goals for reducing greenhouse gas emissions (GHG) and shifting to renewable energy. This is consistent with nearly 200 nations that signed the Paris agreement on climate change this past weekend, including Canada.
Creative Energy — a regulated public utility — is pleased with the BCUC decision.
Lost in the media reporting on the ruling is the fact that in dense urban neighbourhoods such as NEFC, a neighbourhood energy system (district energy) is one of the most flexible and least cost ways to achieve deep and lasting reductions in GHGs, as evidenced around the world.
What the Commission did not approve, at this juncture, is a new Neighbourhood Energy Agreement between the city and Creative, specific to only three points. All are being addressed. The decision is not unusual, particularly when forging new territory.
It’s full steam ahead for Creative Energy.
President and CEO Creative Energy
Letter to editor: City’s competitive bidding process disputed
DECEMBER 22, 2015 02:24 PM
by reader Aldyen Donnelly
Re: “Greenest city promise hit by regulator decision,” Dec. 9.
I just read Mike Klassen’s piece on Creative Energy and district heat in Vancouver. I notice that the Courier had inserted a revision at the beginning of the piece.
The revision suggests that Klassen was incorrect in stating that the city did not conduct a competitive bidding process prior to selecting Creative Energy as a monopoly space heat and hot water supplier for certain Vancouver neigbourhoods. I disagree. Klassen had that right.
The revision posted above Klassen’s article accurately reports that on Dec. 20, 2012, the City issued “Request for Expressions of Interest PS20121461, Neighbourhood Energy Concepts for Downtown Vancouver,” otherwise known as the REOI.
This REOI does not ask respondents to bid to supply a service at a price or with a fixed price-setting formula. REOIs don’t normally ask respondents to estimate the prices they intend to charge their customers if they are selected, and they were not asked to provide any such estimates in this case.
An REOI is normally a very preliminary step in a multi-stage competitive bidding process. The city usually uses an REOI to make a shortlist of qualified companies that will then be invited to participate in a competitive bidding process. This saves both the city and prospective bidders time and money. But, in this case, the city never executed the rest of the steps essential to make this a competitive bidding process.
This particular REOI process was also unusually lacking in established City of Vancouver tendering disciplines. The REOI lists the experience that the city would look for in qualified respondents. But, at the time they submitted their response, Creative Energy had no evident experience in five of the six fields the city listed.
Vancouver’s taxpayers are not allowed to know: how Creative Energy’s own lack of relevant experience compares to that of other respondents; if/how many other respondents would have willingly competed to acquire Central Heat, had the city been transparent that owning Central Heat was the key determinant of who would win those monopolies; or why city leadership decided not to execute to the next steps that are normal in competitive public tenders.
Due to the city’s decisions not to solicit business plan proposals, including competing Vancouver district heat ratepayer cost estimates, not to respect the qualification requirements outlined in its own RFEOI, and not to make competing estimates available for public consideration, this cannot, in any way, be described as an open or competitive bidding process.
Aldyen Donnelly, Vancouver
OUR PREVIOUS COVERAGE, WITH MANY LINKS INCLUDED
Steam plant issues (carbon, water, biofuel): Proposed 19 & 20 storey rezoning at Central Steam Site, 720 Beatty Street, July 8, 2015
As of April 1, 2016, residential customers’ bills will go down by $1.295 per gigajoule (GJ).
Applications to BC Utilities Commission
City letter of Sept. 2013 to Creative Energy mentions low carbon energy sources.
Link at #38 on page 13 mentions that Creative Energy may possibly switch fuels. also look at #39 on this link.
“Creative Energy notes the limited supply options for the steam system, the feasibility work currently underway regarding a possible fuel switch (which is a large and complex project) ”
“Apartment, office buildings proposed at Central Steam plant next to B.C. Place” – Carlito Pablo, Georgia Straight,8-July-2015.