Thermal energy systems are shared heating and / or cooling systems; there will generally be just one thermal energy system for an entire building, so all the tenants of the building will use the same system.

In the AES Inquiry held in 2012, the BCUC determined that the market for thermal energy systems was competitive and did not require economic regulation. Property developers / owners have many thermal energy systems providers to choose from, so the rates, terms and conditions agreed to with the chosen provider would be just and reasonable.

Following this inquiry, in 2013 the BCUC developed a framework for exempting certain thermal energy systems from regulation. This framework identified three classes of thermal energy systems that could be exempt from some or most aspects of BCUC regulation: small thermal energy systems (Stream A), and “exempt” thermal energy systems.

Stream A thermal energy systems

Stream A thermal energy systems are defined as those with a capital cost higher than $500,000 and less than $15 million. These amounts are presently under review, and may change in 2024 or 2025.

For Stream A thermal energy systems, the BCUC framework concluded that:

“…there will be no initial review, by the [BCUC], of the contracts or rates for Stream A Systems. Accordingly there will be no determination made as to the rates being just and reasonable. If competition exists, the [BCUC] considers that no such test is required.”

The BCUC also determined that it would not generally review rates after they were set a result of a complaint either:

“Further, the [BCUC] is of the view that it is not appropriate to conduct a full review of the rates at a future date, for example as the result of a complaint about the rate, unless there is a significant change of circumstance. Doing so could result in significantly increased uncertainty, and accordingly a perception of risk, for TES providers. This could, in turn, result in higher rates for all consumers of TES services and/or reluctance by TES providers to participate in the TES marketplace.”

Because of this concern about the power of a local monopoly once a thermal energy system provider was chosen, the BCUC decided that a thermal energy system would only be entitled to the Stream A exemption if it had “a long-term contract(s) with its Customer(s) which set out the utility’s fees/charges and terms of service” – a provision embedded in the BCUC’s Thermal Energy Systems Guidelines in 2015.

Stream A thermal energy systems are exempt from rate regulation because they are presumed to have negotiated competitive rates, terms and conditions in advance, all of which are set out in a long-term contract with their customers. If these conditions are not met, the provider is not entitled to the Stream A exemption from BCUC rate regulation.

The exemption for Stream A thermal energy systems was granted in 2014.

“Exempt” thermal energy systems

There are two other classes of thermal energy systems that are exempt from aspects of BCUC regulation:

• “Micro” thermal energy systems with capital less than $500,000; and
• “Strata” thermal energy systems serving only a strata corporation’s members.

In both these cases, the thermal energy systems are exempt from all of part 3 of the Utilities Commission Act with the exception of sections 42, 43 and 44.