On April 28, the government of British Columbia announced the introduction of a new Clean Energy Act. According to the press release, the Clean Energy Act 'sets the foundation for a new future of electricity self-sufficiency, job creation and reduced greenhouse gas emissions, powered by unprecedented investments in clean, renewable energy across the province.' Like Ontario's Green Energy Act, the proposed legislation will substantially revamp BC's electricity sector, including BC Hydro and the BC Utilities Commission ('BCUC'), and introduce several new programs, including a Feed-in Tariff, to promote the development of clean energy in the province.
A full copy of Bill 17, which would enact the Clean Energy Act, is available here. Backgrounders and other information are available here. The remainder of this posting is based primarily on these materials. More in-depth analysis will follow.
The Clean Energy Act defines 16 energy objectives for BC:
- to achieve electricity self-sufficiency;
- to take demand-side measures and to conserve energy, including the objective of the authority reducing its expected increase in demand for electricity by the year 2020 by at least 66%;
- to generate at least 93% of the electricity in British Columbia from clean or renewable resources and to build the infrastructure necessary to transmit that electricity;
- to use and foster the development in British Columbia of innovative technologies that support energy conservation and efficiency and the use of clean or renewable resources;
- to ensure the authority's ratepayers receive the benefits of the heritage assets and to ensure the benefits of the heritage contract under the BC Hydro Public Power Legacy and Heritage Contract Act continue to accrue to the authority's ratepayers;
- to ensure the authority's rates remain among the most competitive of rates charged by public utilities in North America;
- to reduce BC greenhouse gas emissions: (i) by 2012 and for each subsequent calendar year to at least 6% less than the level of those emissions in 2007; (ii) by 2016 and for each subsequent calendar year to at least 18% less than the level of those emissions in 2007; (iii) by 2020 and for each subsequent calendar year to at least 33% less than the level of those emissions in 2007; (iv) by 2050 and for each subsequent calendar year to at least 80% less than the level of those emissions in 2007; and (v) by such other amounts as determined under the Greenhouse Gas Reduction Targets Act;
- to encourage the switching from one kind of energy source or use to another that decreases greenhouse gas emissions in British Columbia;
- to encourage communities to reduce greenhouse gas emissions and use energy efficiently;
- to reduce waste by encouraging the use of waste heat, biogas and biomass;
- to encourage economic development and the creation and retention of jobs;
- to foster the development of first nation and rural communities through the use and development of clean or renewable resources;
- to maximize the value, including the incremental value of the resources being clean or renewable resources, of British Columbia's generation and transmission assets for the benefit of British Columbia;
- to be a net exporter of electricity from clean or renewable resources with the intention of benefiting all British Columbians and reducing greenhouse gas emissions in regions in which British Columbia trades electricity while protecting the interests of persons who receive or may receive service in British Columbia;
- to achieve British Columbia's energy objectives without the use of nuclear power;
- to ensure the commission, under the Utilities Commission Act, continues to regulate the authority with respect to domestic rates but not with respect to expenditures for export, except as provided by this Act.
The following provides some additional detail about some of the key initiatives:
The Clean Energy Act will enable BC Hydro to re-price the existing Standard Offer Program to reflect the results of recent power calls, includes the option to increase the maximum project size above 10 MW, and allows for technologies to be specified.
The Act also sets the stage for a Feed-In Tariff program to foster the development of emerging technologies in renewable power production. The program will focus on supporting emerging technologies that can supply power from B.C.'s diverse renewable resources. The details of the program, that will be developed by the government and BC Hydro in consultation with industry, will be established through regulation. BC will no doubt look to Ontario's Feed-in Tariff program, which has been widely lauded as a world class program, for inspiration.
The Act also contemplates net metering, which would allow customers who generate less than 50 kilowatts from their own renewable sources could get credit on their bills for the power they generate.
BC Hydro and the government plan to implement a number of programs and reforms to promote conservation and efficiency, including:
- new and increased programs and financial incentives for businesses, industry and individuals;
- conservation rates to provide incentive to use less electricity and save more money; and
- Amendments to building codes and product standards to increase the efficiency of buildings and consumer goods.
The low-rate benefits that come from B.C.'s existing and future heritage assets will flow exclusively to British Columbians and will not be used to subsidize foreign power sales. The Clean Energy Act adds the following new and proposed projects to the list of protected heritage assets: the Waneta dam and generating facility, Site C, Mica Dam expansion, Revelstoke Dam expansion, and Northwest Transmission Line.
The government will strengthen BC Hydro to help deliver the Province's clean energy objectives. The Clean Energy Act will consolidate BC Hydro and BC Transmission Corporation to provide a single entity that will plan and deliver the clean energy required to meet British Columbia's growing demand for electricity while fostering job creation throughout the province and helping reduce greenhouse gas emissions.
The strengthened BC Hydro will be responsible for a number of initiatives under the Clean Energy Act, including:
- preparing an Integrated Resource Plan that will consider B.C.'s electricity needs over the next 30 years and will be submitted for government approval within 18 months of the Act coming into force;
- updating the terms for the Standing Offer Program an introducing a Feed-In Tariff program;
- advancing the Northwest Transmission Line, continuing to plan for an extension of the clean electricity grid to northeast B.C., and establishing a new distribution extension policy to help connect rural and remote communities to BC Hydro's clean electricity grid;
- delivering Power Smart programs to help reduce greenhouse gas emissions;
The Clean Energy Act will reform the BCUC to ensure that the manner in which the BCUC oversees the electricity market is aligned with provincial energy objectives and the manner in which BC Hydro has been charged to implement those priorities.
The Act also exempts a number of 'marquee' clean energy projects and programs from obtaining BCUC approval, including:
- Northwest Transmission Line;
- Mica units 5 and 6;
- Revelstoke unit 6;
- Site C;
- Bioenergy Phase 2 Call for Power;
- BC Hydro's Integrated Power Offer;
- Clean Power Call;
- Standing Offer Program;
- Feed-in Tariff; and
- BC Hydro's Smart Metering and Smart Grid program.
The BCUC will also be required to consider and be guided by the Integrated Resource Plan prepared by BC Hydro, once that Plan has been approved by the government.
BC Hydro will replace all of BC Hydro's 1.8 million customer meters with digital, solid state, smart electricity meters. Equipped with two way communications capability, smart meters will enable in-home display of information and provide customers with more detailed information about their electricity use than a conventional electro-mechanical meter. Smart meter data will also help BC Hydro and local distribution companies plan infrastructure upgrades and implement conservation and efficiency incentive programs.
BC estimates that the cost of the Smart Metering Program and initial Smart Grid Program will be $930 million, but that the positive net present value of the initiatives will approach $500 million over the next 20 years.
Under current policy, BC Hydro does not contract for long-term export power sales. Under the new Clean Energy Act, BC Hydro will be able to secure long-term export power agreements at market rates that make the best use of available clean energy. BC Hydro will fill those contractual energy needs with clean power calls that produce new power from renewable power projects in regions across B.C. BC Hydro will also use its grid management infrastructure and expertise to firm and shape power to ensure a reliable supply of power for export.
This article was firest published by Davis LLP on May 4, 2010 and is reprinted here with the kind permission of the author.