Policy & Positions Manual

Provincial Issues - Energy and Mines

Time for a Review of the Clean Energy Act (2011)

The Clean Energy Act (“CEA”)1 was passed by the previous Liberal Government in April 2010.

The CEA has a number of provisions which govern BC Energy Policy.

The CEA self-sufficiency provisions really are provisions which mandate BC Hydro to generate a surplus.(4)  This is caused by provisions which do not allow clean renewable non-firm energy generated in BC to be used in BC and instead require the power to be sold into electricity markets. It is further caused by provisions which require BC Hydro to buy more power than it will need and therefore BC Hydro must sell the power into electricity markets. The prices in electricity markets ($40/MWh)(6)(7) are considerably lower than the prices being paid ($140/MWh)(5) for the new firm shaped supply need to meet these provisions. In addition BC Hydro is precluded from buying cheap low load hour power from the markets for use in BC.

This surplus is extraordinarily expensive for the province and for BC Hydro ratepayers resulting in approximately $1 billion per year(8) degradation in the performance of the BC economy and about 20% to 30%(9) future incremental rate increases for families and businesses, in today’s terms of definition, out of about 100%(10) rate increases forecast in the next 10 years. The self-sufficiency provisions are only partially implemented at this time and can easily be rectified through revisions to the CEA.

The CEA also significantly restricts the use of natural gas, even in circumstances where it can be cost effectively used to generate benefits significantly in excess of its costs including its attributed GHG costs. Consequently the key values to the electric system of dispatchability, combined heat and power, distributed generation and rapid construction flexibility are being quite severely limited.  

The CEA also removes many facets(11) of BC Hydro’s projects, programs, contracts and expenditures from review by the BC Utilities Commission. It also removes a significant amount of control over BC Hydro’s development of an export market.

The CEA also imposes on BC Hydro requirements for implementation of greenhouse gas emissions reduction through electrification switching of fuel sources and requirements for economic development, requirements. The potential cost implications have not been projected or fully understood before the requirements have been established.

Given that the entire BC economy, Gross Domestic Product, is about $200(12) billion cost implication in the range of $1 billion/year become significant to everyone in the province.

THE CHAMBER RECOMMENDS

That the Provincial Government review the Clean Energy Act


References

  1. Bill 17 – 2010 Clean Energy Act

  2. Stats Canada Households and the Environment Survey; Energy Use 2007; Catalogue  11-526-S

  3. Electrical energy is measured in kilowatt-hours (KWh) and electrical capacity is measured in kilowatts (KW). 1000 kilowatt-hours is a megawatt-hour (MWh) and 1000 kilowatts is a megawatt (MW). 1000 megawatt-hours is a gigawatt-hour (GWh) and 1000 megawatts is a gigawatt (GW). A 100 watt light bulb on for ten hours requires 1 KWh of electrical energy to make the light. Ten 100 watt light bulbs will require 1 KW of electrical capacity to provide energy to the make light at any instant in time. An average BC home uses about 10,000(2) KWh/year of electrical energy. 1000 GWh/year is enough electrical energy to supply about 100,000 homes or virtually a whole city of significant size. BC Hydro’s whole supply of electrical energy is about 60,000 GWh/year.

  4. BC Hydro Integrated Resource Planning & 2008 Long Term Acquisition Plan Application

  5. BC Hydro Clean Power Call Request for Proposals Report on the Process August 3, 2011

  6. Northwest Electricity Market – Federal Energy Regulatory Commission Day Ahead On-Peak Prices

  7. BC Hydro 2010 Mid C- Electricity Price Forecast

  8. BC Hydro’s Integrated Resource Planning & 2008 Long Term Acquisition Plan Application show planning criteria changes leading to excess purchases of new supply (5000 GWh/year non-firm + 3000 GWh/year insurance + 2500 GWh/year market = 10500 GWh/year times a loss of $100/MWh for each GWh/year = $1 billion/year  calculation by the Commercial Energy Consumers)

  9. BC Hydro 2012-2014 Revenue Requirements Application shows each $36 million of costs or new revenue requirements leads to a 1% increase in rates

  10. BC Hydro Long Term Rate Forecast showed increases of about 80% in ten years (the Commercial Energy Consumers amended forecast of 100% in 10 year resulted from inclusion of items not in the BC Hydro forecast)

  11. The CEA Part 1, Section 7 exempts specific projects, programs, contracts and expenditures from regulation by the BCUC. These exemptions include the following;

    1. Northwest Transmission Line extension to Bob Quinn Lake

    2. Mica Generating Station Generator Unit 5 and Unit 6 additions

    3. Revelstoke Generating Station Unit 6 addition

    4. Site C Dam and Generating Station addition (4600 GWh)

    5. A Bio-energy Call Phase 2 for (1000 GWh)

    6. Agreements with Pulp & Paper customers for acquisition of power (1200 GWh)

    7. Clean Power Call issued June 2008 (5000 GWh)

    8. The Standing Offer power acquisition program

    9. The Feed-in Tariff program

    10. The Smart Meter program

    11. The Smart Grid program

    12. Meeting BC’s Energy Objectives

    13. Providing Government with an Integrated Resource Plan

  12. BC Stats – Statistics Canada Catalogue 13-213 PIB