British Columbia’s New Clean Energy Act: A Preliminary Analysis

George Hoberg

 

The Government of British Columbia introduced its much anticipated Clean Energy Act today. The Act follows the government’s increasing assertions about it aspirations to become a “Clean Energy Powerhouse.” To lay the groundwork to pursue that mission, the government appointed a Green Energy Task Force (actually four related bodies) in the Fall of 2009. On April 19, the Government committed to moving the Site C Dam on the Peace River to the regulatory review and environmental assessment stage.

 

The two most important changes introduced in the Act are a substantial revision of the governance framework for energy policy and the articulation of new and revised objectives for BC energy policy. While these new objectives increase provincial commitments to conservation and clean energy, they also promote electricity exports and fuel-switching that could lead to significant new electricity generation projects . The most glaring gap in the new Act is its failure to explicitly create a regional planning process to address the cumulative effects of energy development.

 

New Governance Framework. The new governance framework involves two significant changes. First, the Act reunites BC Hydro with the British Columbia Transmission Corporation (BCTC). BCTC was separated from BC Hydro in the Campbell government’s 2002 Energy Plan as part of its effort to privatize new source generation. It was thought at the time that privately owned generating facilities needed access to transmission capacity that was not operated by the Crown utility. But that view has now changed. The effect is to increase the reach and capacity of BC Hydro. Critics of the Campbell government’s energy policies have denounced the creeping privatization of electricity in the province. The new Act does retain a big role for privately-owned independent power producers (IPPs), but reasserts the dominance of government ownership over the bulk of the electricity system.

 

The second significant change in governance is the substantial reduction in the regulatory jurisdiction of the British Columbia Utilities Commission (BCUC). Most importantly, the Act would remove the authority of the BCUC to approve BC Hydro’s long term plans (currently referred to at a Long Term Acquisition Plan). The Act would create a new planning process – an Integrated Resource Plan – that combines the existing functions of the Long Term Acquisition Plan with the objectives of the “Section 5 Transmission Inquiry.” The government had required the BCUC to conduct that inquiry, but then suspended it when the government decided to appoint the Green Energy Task Forces to recommend how to revise electricity governance. Instead of having the BCUC review and approve the plan, the plan is submitted to the Minister of Energy, Mines and Petroleum Resources, and then formally approved (or rejected) by the cabinet in the form of the Lieutenant Governor in Council (Sections 3 and 4 of the Act).

 

In addition to removing the BCUC from planning, the new Act would also remove the BCUC from the review and approval of major projects, including the proposed Site C dam, new export agreements, the Northwest Transmission Line, additions of new turbines to existing “heritage” dams, the 2008 Clean Power Call, and the new Smart Meter program. The BCUC would retain authority mainly over rate setting.

 

In July 2009, the BCUC took the controversial action of rejecting outright BC Hydro’s Long Term Acquisition Plan, including its proposal to reduce reliance on the Burrard Thermal natural gas plant that the government was trying to phase out. With the new Clean Energy Act, the BCUC won’t be acting as a referee any longer between BC Hydro and the government. This is a dramatic shift in the governance of electricity policy from regulation by an independent commission to direct government control.

 

New and Revised Objectives.  The Campbell government made substantial changes to energy policy with both its 2002 and 2007 Energy Plans, much of which was explicitly incorporated in legislation through the Utilities Commission Act. The new Clean Energy Act carries forward many of those objectives but also adds new objectives and strengthens some important existing objectives.

 

·         The most significant new objective is “to be a net exporter of electricity…with the intention of benefitting all British Columbians and reducing greenhouse gas emissions in regions in which British Columbia trades electricity.” Previously, the core objective had been self-sufficiency. This new export objective embodies BC’s aspiration to become a “Clean Energy Powerhouse,” and could lead to substantial new development of energy projects.

·         The new Act would also “encourage the switching of one kind of energy source or use to another that decreases  greenhouse gas emissions in British Columbia.” Fuel switching from gasoline to electricity in the transportation sector and from natural gas to electricity in the building sector could have substantial implications for BC’s future electricity demand.

·         The Act would strengthen the obligation to meet new electricity demand through conservation measures from 50% to 66%. In its most recent planning proposal BC Hydro wanted to rely on conservation for 72%, so this seems readily achievable.

·         The Act would increase the required percentage of electricity generated from clean or renewable sources from 90% to 93%

 

Glaring Omission. Perhaps the most glaring omission from the new Clean Energy Act is the absence of an explicit requirement for a regional planning process to address the cumulative effects of energy development. The environmental community has persistently criticized the BC government for its lack of effective planning for new energy developments. The province dealt reasonably effectively with forest land use issues through the Land and Resource Management Planning process, but those plans did not include energy for the most part. Recommendations to include energy in a similar planning process have been proposed by a broad coalition of environmental groups in a submission to the Green Energy Task Forces. The task force on “resource development” included very specific recommendations for a new process under its Outcome 3 “Achieve world-class environmental performance for clean energy

Projects”:

 

1. [omitted]

 

2. By September 30, 2010, and using existing data and information layers, develop a renewable energy zoning map for the Province that identifies where development of renewable energy and transmission is appropriate and inappropriate.

 

3. Complete the Section 5 inquiry as soon as possible, focusing on transmission planning and deferring all regional planning submissions to the regional planning process.

 

4. Using the outcomes of the provincial zoning map (recommendation 2) and Section 5 findings  (recommendation 3), undertake regional planning in areas that are appropriate for more intensive development, have potential for industry electrification, and have potential for low cost energy clusters.  An assessment of cumulative impacts of all projects within the planning area will also take place.

 

Recommendation number 3 seems to have been included in the new Integrated Resource Plan, but the other two recommendations have not been explicitly incorporated into the new Clean Energy Act . The section on planning does contain a reference to a requirement to consider, as part of its transmission planning, “an assessment of the potential for developing…grouped by geographic area, electricity generation from clean or renewable resources in British Columbia.” This provision does require the sort of regional supply planning envisioned the Section 5 Transmission Inquiry Terms of Reference. But it does not explicitly address the issue of cumulative effects from multiple energy projects that has been the prime concern of the environmental community and that was clearly recommended by the Green Energy Task Force on Resource Development.

 

The Act does make homage to cumulative effects by amending the Environmental Assessment Act to allow the consideration of “potential cumulative environmental effects.” This is not actually a significant change because the Environmental Assessment Office had already committed (p. 26) to considering cumulative effects. More importantly, tweaking the environmental assessment process does not get at the root of the problem of moving beyond project-level assessment to considering integrated regional planning.

 

As debate over the new Act begins, it will be important to hear the government’s response to the strong Green Energy Task Force recommendations on regional planning. Given that a shift to an export focus and fuel-switching will increase the pressure for new energy projects, it is imperative that we get the review and approval process right.

 

Other Notable Changes. If enacted the new Clean Energy Act would also do the following:

·         Create a new feed-in tariff

·         Create a First Nations Clean Energy Business Fund

·         Formally legislative a “Two Rivers Policy” which precludes any new major dams in the province after Site C.