Thermal Energy Systems in British Columbia

Pollution Probe Energy Workshop

March 17, 2011

Gareth JonesDirector, Business Development

Forward looking statement

By their very nature, forward-looking statements are based on underlying assumptions and are subject to inherent risks and uncertainties surrounding future expectations generally. Such events include, but are not limited to, general economic, market and business conditions, regulatory developments, weather and competition. FortisBC cautions readers that should certain events or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary significantly from those expected. For additional information with respect to certain of these risks or factors, reference should be made to the Corporation’s continuous disclosure materials filed from time to time with Canadian securities regulatory authorities. The Corporation’s disclaim any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Regulated

Utilities

BusinessesFortis Generation

Fortis Generation

Fortis Properties

Newfoundland Power

Maritime Electric

FortisOntario

Belize Electricity

Caribbean Utilities

FortisBC

FortisAlberta

Non-Regulated

Turks and Caicos

2.1 million gas and electricity customers

$12 billion assets

• Over one million energy customers

• 135 communities across BC• Assets of $6.4 billion• $2.5 billion planned capital

spend over the next five years• Over 1,800 employees• $1.03 billion invested since 2007• Integrated energy solutions

portfolio

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British Columbia Legislated Targets• Reducing BC’s GHG emissions by at least 33% below 2007 levels by

2020 and at least 80% below by 2050

BC Energy Customers

• Two thirds of British Columbians are interested in incorporating low carbon energy into their home

• 85% are willing to pay a premium (primarily up to 5%) for low carbon energy options

• One half of BC residents believe we should offer low carbon energy

• Strongest support for our low carbon energy offerings coming from residents age 18-34

Transforming Thermal Energy Delivery in BC

Energy System EvolutionGHG ReductionEnergy Cost Convergence

Natural Gas Electricity DES/Alternative Energy Sources Geoexchange Biogas Solar

QUEST Vision

“By 2050 every community in Canada is operating as an integrated energy system, and accordingly, all community development and

redevelopment incorporates an integrated energy system.”

Integrated Energy Utility

BC Energy Infrastructure

•Existing 100 year old system• Interconnected•Scalable•Relatively low average cost

Biogas Supply Model

Biogas Source

Upgrading Plant

Metering, Monitoring, Odourizing

Terasen Transmission and

Distribution System

FortisBC invests in “upgrading” plantand interconnection assets

FortisBC

Biogas vs. Biomethane

• Biogas is gas generated from organic material • Raw biogas – typically 50% - 60% methane

• Potential Sources:• Anaerobic Digester Gas• Landfill Gas

• Biomethane:• Methane from a renewable source – “Upgraded Gas”

Raw Biogas Biomethane

40% - 60% CH4 >96% CH4

30% - 50% CO2 <2% CO2

0% - 2% O2 <0.4% O2

0-2000+ ppm H2S Sulphur free

Upgrade

Catalyst Project

• Partner Catalyst Power Inc• Digester Project• FortisBC Capital ~ $0.7M• Total Capital ~ $6.0 M• Average 120,000 GJ/year• FortisBC owns interconnect

equipment only• Commissioned Sep 2010

Salmon Arm Project

• Partner CSRD• Landfill Gas project• FortisBC ~ $2.2 Million• Total capital ~ $6.0 Million• Average 30,000 GJ/year• FortisBC owns upgrade equipment• Commissioned June 2010

Discrete to District Thermal Energy Systems

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Discrete = one buildingDistrict = many buildings

Aquattro, Colwood BC

Type of Development:• 563 residential units total

• 24 buildings

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Energy System: Geoexchange loop fields by FortisBC

Phased installation as community develops

Environmental Benefits Reduced demand on BC’s electricity grid

Savings of 2 tonnes of GHGs / year for each 2,000 square foot residential unit

Geo-Exchange drilling

Aquattro Site

Geo-Exchange Systems for Multi-Building Residential Development

District Energy Systems

Need three things: • Energy Source Options

• Efficiency Gain Opportunities

• Density & Scalability

Two types of projects underway:• Retrofit – modifying existing buildings to use thermal energy; system

developed in a limited number of pre-planned phases

• Multi-phase New Development – plan the DES in consultation with developer over multiple phases, initial phases have detailed design/cost; subsequent phases are conceptual with several design options and high level costs

Illustration – Setting Thermal Energy Customer RatesCost of Service vs. Competitive Alternative ($/kWh)

Dockside Green, Victoria BC

15 acre harbourfront redevelopment

• 1.2 million sq. ft residential

• 150,000 sq. ft commercial/retail

• 20,000 sq. ft. light industrial

District Energy for Brownfield Re-development

Energy System: 2.5 MW Biomass

Gasification Plant 3.4MW natural gas

back-up & peaking Also serves buildings

outside development

Environmental Benefits LEED Platinum Greenhouse Gas

Neutral – no net emissions

Kelowna District Energy Systems

South Pandosy DES

• WWT Plant

• New Development

• Commercial Centre

• Hospital

Downtown Core DES

• Tolko

• Multifamily

• Delta Grand

• City Hall

• Library

• Arena

• Downtown

Generator

Engine

Quesnel SawmillWood-Burner

Hospital

Arena

City Hall

Hotels, Provincial Government Office,Medical Building, Apartments, RCMP Building, Dunrovin Lodge, and others.

CogenerationPlant

Sawmill & PlanerBuildings

Community Heat Piping

Electricity

Quesnel District Energy SystemCombined Heat and Power Initiative: Proposed Arrangement