Energy, Mines and Petroleum Resources

Changes restore independent oversight of BC Hydro

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Energy, Mines and Petroleum Resources

Changes restore independent oversight of BC Hydro

Media Contacts
Kent Karemaker
Media Relations
Ministry of Energy, Mines and Petroleum Resources
250 952-0628
Media Contacts
Kent Karemaker
Media Relations
Ministry of Energy, Mines and Petroleum Resources
250 952-0628

Backgrounders

Legislative amendments clarify responsibilities of B.C.’s energy regulator

The B.C. government is proposing a package of legislative amendments to the Clean Energy Act (CEA), the Utilities Commission Act (UCA) and the Hydro and Power Authority Act that will implement recommendations from Phase 1 of the BC Hydro Review.

The changes, if approved, will help keep rates affordable, clarify the responsibilities of the B.C Utilities Commission (BCUC) and protect taxpayers from the implications of past policy decisions.

This includes:

Integrated Resource Plan (IRP):

  • Amendments to the CEA, Hydro Power and Authority Act, and UCA will restore the BCUC’s authority to review and approve BC Hydro’s IRP, its 20-year plan to meet electricity demand. Review and approval of the IRP currently rests with the provincial government, not the BCUC.
  • The deadline for submission of BC Hydro’s next IRP to the BCUC is Feb. 28, 2021. This gives BC Hydro the time necessary to incorporate into its long-term resource planning process the results of the Phase 2 of the BC Hydro review, the Province’s CleanBC climate plan and BC Hydro’s current revenue requirements application before the BCUC.
  • After the 2021 IRP, the BCUC will determine when and how often future IRPs are to be submitted.
  • Restoring BCUC oversight over BC Hydro’s IRP will be aligned with common practice in other jurisdictions (and for other utilities in B.C.) where energy regulators, and not government, review and approve long-term resource plans.

Feed-in tariff:

  • Amendments to the CEA will eliminate government’s authority to order BC Hydro to establish a feed-in tariff program, a program through which BC Hydro could enter into additional new electricity purchase agreements with private power producers for the supply of electricity without the approval of the BCUC.
  • BC Hydro is forecast to be in an energy surplus for the foreseeable future and does not need to purchase new electricity generation, which it may be required to sell for a loss on export markets.

Rate rebalancing:

  • To help keep rates affordable, an amendment to the UCA will permanently prohibit the BCUC from rebalancing rates paid by various customer classes (residential, commercial and industrial) unless requested by a utility like BC Hydro or FortisBC.
  • Without this prohibition, the BCUC may take action in the near term to rebalance BC Hydro’s rates, which would result in significantly higher rate increases for residential customers.

Expenditures for export:

  • Amendments to the CEA will eliminate the concept of expenditures for export. Expenditures for export are BC Hydro expenditures on infrastructure and energy purchases associated with producing power that is surplus to BC Hydro’s domestic needs for sale on the export market. Under the CEA, the BCUC is obligated to calculate the cost of these expenditures and cannot allow BC Hydro to recover these costs from ratepayers. 
  • While all of BC Hydro’s current purchases from independent power producers were made to meet forecast domestic need, declines in demand following the 2008 financial crisis mean some of these purchases are now surplus.
  • The amendments eliminate the risk of BC Hydro costs associated with the current energy surplus being considered expenditures for export (and therefore not recoverable from ratepayers), which could transfer significant costs on to taxpayers and/or impact the Province’s fiscal plan.

Powerex:

  • An amendment to the UCA will clarify and confirm that Powerex (BC Hydro’s wholly owned marketing subsidiary) is exempt from BCUC oversight.
  • Falling under BCUC oversight could challenge Powerex’s ability to compete in rapidly moving competitive energy trading markets, potentially reducing BC Hydro’s net income and negatively impacting the Province’s fiscal plan.
  • Ratepayers interests will continue to be safeguarded as Powerex is subject to regulation by the U.S. Federal Energy Regulatory Commission. BCUC oversight would duplicate this existing regulatory framework.

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