LTAP: Media coverage of BCUC decision

COMMENT: On July 27, 2009, the BC Utitilies Commission issued its decision in which it rejected BC Hydro's 2008 Long Term Acquisition Plan (LTAP). It is a momentous decision, with huge repurcussions.

What follows are media coverage and commentary on the decision.

Utilities commission snubs B.C.'s energy plan

The British Columbia Utilities Commission came in for both praise and criticism Wednesday for a stunning ruling that has called into doubt the provincial government's energy plan.

In rejecting B.C. Hydro's long-term acquisition plan and in refusing to endorse a shift to privately produced energy, the commission has sent shock waves through the province – but it also opened the opportunity for a long-overdue public dialogue on power policy, said John Horgan, energy critic for the New Democratic Party.

“I would like to see this trigger a real discussion about long-term energy needs. … We have the time now,” Mr. Horgan said, noting the commission has given B.C. Hydro until next year to return with a revised plan.

He said the ruling may be shocking, but it is in keeping with the BCUC's role of being an independent arbiter, responsible for the public interest.

“I believe the commission did what you'd hope a regulator would do,” Mr.
Horgan said. “The government has been saying for some time that there is a crisis of [energy] supply, and our demand is going at breakneck pace and we are in crisis. The regulator looked at the data, examined the evidence and said, ‘I don't think so.' And that's a good thing. It means government and B.C. Hydro now have to take stock.”

The B.C. government first introduced its energy plan in 2002, updating it in 2007.

The plan calls for B.C. to become energy self-sufficient by 2016, and it put B.C. Hydro on a course to emphasize the development of new independent power projects, or IPPs.

In its ruling, the utilities commission rejected B.C. Hydro's long-term acquisition plan as “not in the public interest,” and refused to endorse the corporation's clean-energy call, which was meant to spur IPP development.

In the wake of the decision, shares of Plutonic Power Corporation, the biggest bidder in B.C. Hydro's calls for new projects, fell sharply, with analysts saying IPPs could be put on hold because of the ruling.

Plutonic has not yet responded, saying it needs time to study the ruling.

Energy Minister Blair Lekstrom said the province intends to stay the course on private power development, but Mr. Horgan said that would be wrong.

“B.C. Hydro is a regulated utility. It came forward with an acquisition plan. And the regulator said, ‘This isn't good enough, come back in a year and tell us a different story.' How he can say full speed ahead, I don't know,” Mr. Horgan said.

Rafe Mair, a former Social Credit cabinet minister and radio talk-show host, has been campaigning against IPPs with the Save Our Rivers Society for the past several years.

Mr. Mair said he was thrilled by the BCUC ruling.

“It's a condemnation of the government's plan. … The hallmark of the Campbell [energy] policy has just been taken and shredded to bits,” he said.

But Mr. Mair said he expects the government will find a way to revive its power plan.

“For the moment, it's a great, great victory for the people who have campaigned so hard to bring to public attention what this power policy is all about … but I have no doubt the Campbell government will legislate the private power back in somehow,” he said.

Tom Hackney, vice-president of policy for the BC Sustainable Energy Association, said he is concerned by the ruling because it undermines B.C.
Hydro's effort to use IPPs to move away from fossil fuels.

“Our view is there is a real need to develop renewable energies in B.C. to reduce our dependence on fossil fuels – and it is worrying to see a decision like this,” he said.

Green Premier's agenda hits snag as energy plan rejected

Commission says British Columbia government's initiative not in public interest

The British Columbia government's energy plan and the future of new renewable-power projects in the province have been shaken by a ruling from the B.C. Utilities Commission.

After hearings that lasted almost a year, the commission has rejected BC Hydro's long-term acquisition plan as “not in the public interest” and has refused to endorse its push for clean energy.

The government's clean – or green – energy plan has been a key initiative pursued by Premier Gordon Campbell and was a major issue in the May election. The ruling could call into question the viability of the B.C.
government's policy of reducing greenhouse gas emissions by at least 33 per cent below 2007 levels by 2020. That promise, and a long term goal of an 80 per cent reduction by 2050, was put into law last year with passage of the Greenhouse Gas Reduction Targets Act.

Some analysts say the ruling – which shocked the government and the stock market – indicates B.C. has been over-estimating the amount of power the province needs in order to justify the development of independent power projects.

“We have a very flawed energy plan in this province … the government cannot continue to exaggerate the need for power,” said Lori Winstanley, a spokeswoman for the professional employees' union known as COPE, which has long been critical of BC Hydro's energy plan.

For years the opposition NDP has questioned the Campbell government's energy plan, claiming independent hydro projects that harness some of the province's rivers – known as run of river projects – pose hazards to the environment, and sports fisheries.

The ruling delivered a quick blow to independent power producers (IPPs), with shares for Plutonic Power Corp. plunging about 24 per cent yesterday, falling $1.00 to $3.08.

A spokesman for Plutonic, the biggest bidder in B.C. Hydro's calls for new projects, said the company would react later.

Dow Jones Newswires said the commission's decision “could put the development of new renewable-power projects in the province on hold.”

But Blair Lekstrom, B.C.'s Minister of Energy, Mines and Petroleum Resources, tried to steady the market by saying the government remains committed to pursuing the development of more clean, renewable energy through IPP's.

“We are focused on developing clean and renewable energy resources. We are going to continue down that path,” said Mr. Lekstrom.

He said he was surprised by the ruling, which included a refusal to allow BC Hydro to downgrade the Burrard Generating Station. Burrard is a conventional thermal plant fuelled by natural gas that supplements hydroelectric generation in years of low water flows.

BC Hydro wanted to rate Burrard as capable of producing a maximum of 3,000 gigawatt hours annually, while BCUC said the figure should be 5,000 GWh.
If the Burrard potential is rated 2,000 GWh higher, then the need for private power would have to drop by the same amount.

“Fully the biggest surprise is Burrard thermal, talk of moving that from 3,000 to 5,000 [GWh],” said Mr. Lekstrom. “That certainly doesn't fit with the direction that we have set as a province … and that's clean renewable energy and reduce our greenhouse gas emissions where we can.”

Bob Elton, CEO of BC Hydro, said the 236-page decision is a detailed and complicated ruling.

“It will take us two or three days to really be clear about what it does mean for the clean power call,” said Mr. Elton.

“As a matter of urgency, we are going through [the ruling] and we will figure out what our position is, what we intend to bring forward. As we've always said a lot will depend on the prices of those [IPP] projects,” he said.

He said BC Hydro did get much of what it wanted in the ruling.

“We were looking for a bunch of things, a total of $630-odd-million of expenditures on different things … and they approved all but $2-million,”
he said. “They approved, for example $418-million on demand side management, that's a huge thing for us. ”

BCUC also approved $41-million to continue consultation on Site C, a proposed mega-project on the Peace River.

On the rejection of the overall long-term acquisition plan, Mr. Elton said BC Hydro will be back before the utilities commission next year with a revised proposal.

Ms. Winstanley, director of strategic communications and campaigns for COPE, the Canadian Office and Professional Employees Union, said the ruling has three key aspects: the rejection of the long-term acquisition plan, a refusal to endorse the clean energy call, and a refusal to allow BC Hydro to downgrade the capacity of Burrard thermal.

“Those are the most significant pieces of the decision, but also there were deficiencies in the government's [energy] conservation plan,” she said.

Tom Hakney, vice-president of Policy for the BC Sustainable Energy Association, said his organization “is frankly surprised and somewhat concerned,” by the ruling.

“The commission is telling BC Hydro to go back and rely on Burrard thermal for energy. We're concerned about that. That is antiquated technology,” he said.

“The commission essentially told them to rely more on Burrard thermal, and there would therefore be less need for [new renewable] energy,” said Mr.
Hakney. “Our view is there is a real need to develop renewable energy in B.C. to reduce our dependency on fossil fuels.”

Hydro power plans take body blow

Utilities commission snubs green power call, likes Burrard gas burner

The BC Utilities Commission sent a shock wave through the energy sector Monday when it balked at key elements of BC Hydro's long-term plan to acquire new sources of electricity, both public and private.

The lengthy ruling -- more than 200 pages and 46 directives -- was not a complete defeat for the government-owned electrical utility.

The commission greenlighted more than $600 million worth of proposals to upgrade B.C.'s publicly owned generating capacity, including $41 million to continue planning on the proposed Site C dam on the Peace River.

But on other points, many of them integral, the trio of commissioners were unpersuaded. "Accordingly the commission finds that Hydro's long term acquisition plan is not in the public interest and rejects it."

In a directive that cheered opponents of private power, the commission said it "declines to endorse" Hydro's recent call for proposals from private operators to build wind farms, run-of-the-river projects and other kinds of clean power. It also denied Hydro's request to spend $2 million to implement the clean-power call.

Neither directive prevented Hydro from continuing to vet the 68 proposals that were received under the clean-power call. Nevertheless, the stock market responded by driving down the share value of B.C.-based private power companies like Plutonic and NaiKun.

While the commission dealt a psychological blow to private power, it called its own judgment into question by favouring Burrard Thermal, the publicly owned natural-gas-fired generating station near Port Moody.

On paper, the decades-old plant is said to represent 10 per cent of provincial generating capacity and power needs. But it is rarely used, partly because of the cost of firing it up, partly because of concerns over emissions.

The provincial government wants the plant phased out completely, leaving Hydro to determine the precise timetable.

Hydro proposed reducing its reliance on Burrard Thermal as part of the submission to the utilities commission. In support, it provided two reports from consultants.

One suggested it would take a "significant investment" -- maybe $350 million, maybe a lot more than that -- to bring the plant up to full operating capacity. The second said a fully operational Burrard Thermal "would be the largest point source of greenhouse gas emissions in the province and the second largest point source of nitrous oxide."

Case closed, one would think. But the utilities commission didn't see it that way. It rejected Hydro's proposal to reduce the reliance on Burrard Thermal for long-term planning purposes. It also endorsed the notion that the ancient dump could be treated as if it were capable of close to 100 per cent of its on-paper specs: 900 megawatts of capacity and up to 6,000 gigawatt hours of electricity annually.

The commission left it to "BC Hydro's management to maintain a dialogue with and to inform the public at large of the planned reliance on Burrard," including the logic (elusive as it was) of the commission.

This on a day when the Lower Mainland was already on notice about declining air quality across the region.

Where did the commissioners get the notion that Burrard Thermal could be restored to credibility in the planning process with a regulatory stroke of a pen? Perhaps from the Canadian Office and Professional Employees Union (COPE) which represents unionized employees at Hydro and in that capacity argues against private power and in favour of keeping everything public.

The key passage from union's submission, according to the commission:
"COPE submits that the only requirements binding on BC Hydro are the various statutory, regulatory and permitting regimes. These do not include public opinion."

Tell that to the voters of Tsawwassen, who this spring voted out their government MLA over the imposition of a strictly legal power-line upgrade on their community.

The whole Lower Mainland region would be up in arms over any attempt to treat Burrard Thermal as a practical substitute for, say, increased capacity from wind farms or run-of-the-river power.

Nevertheless, the commission used its belief in the continuing potential for Burrard Thermal as a partial justification for discounting the need for several thousand gigawatts of green power.

"Surprising," said provincial Energy Minister Blair Lekstrom in his immediate reaction to the commission directives. Firing up Burrard Thermal was "not in the cards," he insisted, and the government would be making that clear once he had finished digesting the entire report.

Nor were the Liberals giving up their drive for energy self-sufficiency and cleaner power, both public and private. "It's the future," he said.

All of which suggests that the most likely course of events will be the one implied by directive No. 32: "The commission determines that BC Hydro's next long-term acquisition plan filing should be on or before June 30."

Back to the drawing board, in other words. And before Hydro submits a revised plan to the commission, the Liberals will doubtless clarify that Burrard Thermal has no future and clean, green power most certainly does.

vpalmer@shawlink.ca

Green power stocks fall on surprise utilities commission ruling

Shares in a number of green energy companies slumped on Tuesday after the B.C. Utilities Commission unexpectedly rejected BC Hydro's plan for developing green power projects.

The companies, which aim to produce electricity from renewable sources such as wind, water or biomass, have been waiting for more than a year for the province's power utility to announce the winners of long-term electricity contracts.

The results were expected any day now by applicants such as run-of-river hydro power producer Plutonic Power and Naikun Wind Energy Group. But an unexpected decision from provincial regulators threatens to delay or change the terms of BC Hydro's power call.

In a surprise move late on Monday, the B.C. Utilities Commission, which regulates BC Hydro, rejected the power utility's long-term business plans, which includes its proposal to buy clean electricity from small, independent producers. The commission took issue with several areas of BC Hydro's plan, including whether they met the provincial government's requirement to meet self-sufficiency in electricity by 2016.

"Had the [Long-Term Acquisition Plan] been approved . . . BC Hydro would have been ready to announce the winners very quickly," said Tom Hackney, vice-president for policy at the BC Sustainable Energy Association. "Under these circumstances there is a lot of uncertainty."

Macquarie Research analyst Steve Harris said that while the language in the utility commission's report is "somewhat ambiguous," his interpretation is that the clean power call is "dead."

But Investment bank Versant Partners analyst Massimo Fiore said it wasn't clear what impact the rejection of the business plan would have on power producers' plans, and that is spooking investors. "It sounds bad, but it may not be that bad," Fiore said.

Paul Taylor, chief executive of applicant Naikun, said that in his discussions with provincial government officials on Tuesday it was clear that they are committed to the clean power call and the province's energy plan. "In my view it's full steam ahead," Taylor said.

BC Hydro declined to comment.

BC Hydro, which is mandated to make B.C. self-sufficient in electricity by 2016, netted 68 proposals from 43 parties for 17,000 gigawatts of annual power production in its call for clean power.

Shares in Plutonic Power, one of those most widely expected to secure an electricity purchase agreement, dived 24 per cent to $3.09 in TSX trading on Tuesday.

Naikun Wind Energy Group, which is developing the country's first wind energy project off the northwest coast of B.C., fell seven per cent to 63 cents on the TSX Venture exchange.

Run of River Power shed 11 per cent to 15.5 cents.

BC Utilities Commission decision murky on clean power

VANCOUVER- The only certainty resulting from the BC Utilities Commission’s long-awaited decision on a key BC Hydro planning document is another long wait until June 30, 2010 for more answers.

Despite approving nearly all of BC Hydro’s $633 million worth of requested expenditures, the BCUC rejected the Crown corporation’s 2008 long-term acquisition plan (LTAP) - a document that sets out BC Hydro’s balance between energy conservation and new power production over the next decade.

“In essence, they’d like us to take another run at it,” BC Hydro spokesperson Susan Danard told The Tyee. “There were some areas where the commissioner didn’t think the plan was sound.”

The rejection could mean trouble for proponents who bid for the 3,000 gigawatt-hours per year riding on BC Hydro’s 2008 Clean Power Call. Some publicly-traded companies saw huge drops on the stock market following the announcement.

But the door’s not entirely shut. The BCUC noted BC Hydro still “has the scope, with or without Commission endorsement” to enter into electricity purchase agreements (EPAs).

The long-delayed decision was originally slated for March but finally dropped late on Monday afternoon. BC Hydro has until June 2010 to produce a new LTAP.

The 235-page decision was not the ringing endorsement sought by independent power producers, who put in bids for a total of 17,000 gigawatt-hours per year under the 2008 call. That amount of new power would account for nearly a third of the 55,000 gigawatt-hours per year currently generated by BC Hydro.

For those who will be proceeding to EPAs, some caution may be in order: BC Hydro could face increased scrutiny when called before the commission to defend the merits of each EPA, the decision noted.

The decision did give the green light to BC Hydro's largest ever program aimed at conservation, as $418 million was approved for BC Hydro’s demand side management plans from fiscal 2009 through 2011. That money will support a range of energy audits, retrofits, and conservation promotion. But whether the public will buy in remains an open question.

“We always say build more, buy more, and conserve more,” said Danard. “One of the challenges is, can you bank on customer behavior?”

To hedge the bets, BC Hydro also sought and received commission approval for $140 million towards upgrading a 47-megawatt natural gas-fired power plant in Fort Nelson, $30 million towards expanding the Mica hydroelectric dam near Revelstoke, $41 million towards consultation on the proposed Site C hydroelectric dam on the Peace River, and $1.6 million towards ensuring the reliability of Port Moody’s Burrard Thermal generating station.

A growing industrial cost base in northeast B.C., fed partly by the power demands associated with oil and gas infrastructure, underlies the possible expansion of the Fort Nelson facility, Danard said. Other parts of B.C. face declining power consumption, where the slumping forest industry means near-dormant status at several pulp and paper mills.

The rejection could mean trouble for proponents who bid for the 3,000 gigawatt-hours per year riding on BC Hydro’s 2008 Clean Power Call.

Greg Amos reports for The Tyee