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Greenest city promise hit by regulator decision

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.
Ian Gillespie
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. photo Dan Toulgoet

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.

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Vancouver’s sizable delegation returns home this week from the Paris COP21 conference on climate policy, and they are undoubtedly pleased with the praise received for aspiring to be the world’s greenest city.

But an eyebrow raising news report revealed businesses with an interest in selling green technology paid many of the costs for the mayor and his entourage. It seems to have fazed no one at city hall though.

Led by billionaire former New York mayor Michael Bloomberg, the corporate-funded C40 Cities Climate Leadership Group agreed to pick up costs of the Paris trip, according to a mayor’s office spokesperson.

It is not a coincidence, then, that bus shelter ads promoting C40 — paid for by your tax dollars, not C40 — can be seen around the city.  

Now that’s what is called a “quid pro quo.”

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.

To pull that off from where we sit today, every household and business in Vancouver has to permanently cut his or her home heating, hot water and transportation fuel use over the next 48 months.

Twenty-five per cent is a big gap, and there is little time left to close it.

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.

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.

mike@mikeklassen.net  

@MikeKlassen