Scott Simpson, Vancouver Sun, with files from Jonathan Fowlie, April 29, 2010
Clean Energy Act calls for smart meters, power exports
VANCOUVER — The B.C. Liberals have introduced a new Clean Energy Act that puts unprecedented pressure on BC Hydro customers to cut their consumption of electricity.
Legislation introduced Wednesday in the B.C. legislature calls on Hydro to meet 66 per cent — two-thirds — of new power demand through energy efficiency and conservation by 2020, rather than expanded development of new electricity supply.
That's up from a 50-per-cent conservation target in 2007.
The Liberals have ordered Hydro to proceed with a pair of so-called 'smart' initiatives to support that target — development of a high-tech electricity grid that detects cheaters and guards against blackouts, and a $1-billion program to install interactive power meters in every home by 2012.
Other measures announced in the act include a confirmation of the government's interest in developing electricity for export — but only if there's no risk to ratepayers — and a merging of the BC Transmission
Corporation into Hydro.
The smart grid will allow Hydro to implement "complex" electricity rate schemes that squeeze the last electron out of every kilowatt of power, and provide two-way contact between Hydro and the smart meters in its customers' homes.
Those schemes will likely be too complicated for an average customer to manage, involving electricity prices that can shift two or three times a day as well as on a seasonal basis — thus the technical support. For example California, one of the models for B.C.'s strategy, has a five-tier electricity rate.
The smart meters are promised to trim annual household electricity bills by $145 to $450 a year, with Hydro interacting via the meters to help customers manage their power consumption — through options such as switching on dishwashers and washing machines at times when electricity demand and rates are lower.
The government is also pitching the meters as adaptable to future technology "such as plug-in electric vehicles, a self-healing grid, home automation and energy management systems."
A government press release says more than 150 jurisdictions worldwide, including 116 in North America, are moving to install the technology, including Alberta, Ontario and California.
The act affirms that Hydro will continue in public ownership — and it also requires BC Transmission Corporation, which was split off from Hydro in 2002 as a separate Crown agency, to re-merge with Hydro.
In a note to employees, obtained by The Vancouver Sun, Hydro chairman Dan Doyle and BCTC chairman David Emerson state that the unification will take effect in early July when the Clean Energy Act becomes law.
Hydro has more than 5,800 employees. BCTC has about 400.
The split was undertaken earlier in the decade after energy traders including BC Hydro's Powerex trading wing pounced on a botched attempt by the state of California to deregulate its electricity utilities, generating huge profits and prompting North American industry regulators to call for a separation of generation and transmission system operators.
"Since then, regional transmission organizations did not develop in the Pacific Northwest, and the movement toward greater independence for transmission was halted," the BCTC note states.
Doyle will remain as chair of the Hydro board of directors after the unification, but the note says nothing about Emerson's future role.
The act makes several changes to B.C. Utilities Commission's role as Hydro regulator, including a decision to exempt more than $10 billion worth of public projects that until now would have been subject to commission approval.
They include the $6.6-billion Site C dam project on the Peace River, the $400-million Northwest Transmission Line, the $1-billion Smart Metering and Smart Grid program, and the Clean Power Call, which is still underway to contract new private sector sources of electricity to meet Hydro's domestic needs.
Groups such as the BC Old Age Pensioners organization, which intervene in the BCUC's reviews of Hydro capital projects, will also be sidelined.
"The Clean Energy Act is the removal from regulation of virtually every significant expenditure BC Hydro has on its books for the next 20 years," New Democratic Party energy critic John Horgan said.
"Cabinet will now be setting rates by approving these projects and then directing the utilities commission to raise rates to meet those capital costs. It is outrageous that the premier in 2000-2001 said that he would restore the so-called independence of the utilities commission and today he signed its death warrant."
Minister of Energy, Mines and Petroleum Resources Blair Lekstrom said the government has "always" had the ability to give direction to the utilities commission.
"We think that with this piece of legislation, as we see it today, we have been transparent, we have put the projects forward that we're going to move forward on, but it's very important to recognize that the British Columbia Utilities Commission will still have oversight on the price setting for rates in British Columbia, and that is an extremely important part of this," Lekstrom said.
The legislation appears to address one of the primary concerns that environmental groups have about the development of renewable power such as run of river hydroelectric — a lack of attention to anything other
than the specific impacts that projects have on the streams in which they operate.
In response to that concern, the government announced it will "strengthen" the environmental assessment act to provide for study of the broader, long-term or "cumulative" effects that the projects have throughout a watershed in which a project is proposed.
The government confirmed its support for development of an export electricity market.
But it appears to have been listening to Hydro's industrial customers and the Business Council of B.C., which have urged that all the financial risk of selling power into other jurisdictions be borne by companies developing power for export — as is the case for the province's forestry and mining industries.
Industrial customers in particular have warned that western North American market prices for power are significantly lower than the price Hydro would pay private power producers to develop new sources within B.C. for export.
The legislation calls for Hydro to "partner" with private operators to market the energy, using the Crown agency's hydro dams to 'firm and shape' intermittent green power sources such as wind and run of river into a high-value premium electricity product.
"The Clean Energy Act explicitly requires the B.C. Utilities Commission to ensure that any expenditure associated with exports is not included in domestic rates," the province said in a backgrounder accompanying the legislation. "The affordable rates that are one of the benefits of B.C.'s existing and future heritage assets will, by law, continue to flow exclusively to British Columbians."
Lekstrom said "there will be no subsidy from the ratepayers or taxpayers of British Columbia to develop and execute the export policy.
On the other hand, the export policy will generate revenue that the ratepayers and the taxpayers of British Columbia will enjoy. It is a very good model."
Paul Kariya, executive director of the Independent Power Producers Association of B.C., described the act as welcome news for the provincial economy, particularly in rural and first nations communities.
"Overall I think they have been thoughtful. I think it protects the ratepayer and I think that's important in this debate. I think it has a real good parsing of making sure that the public sector, BC Hydro, has a role but also mates that with the private sector, all for the betterment of British Columbians."
The NDP's Horgan countered that the act is "opening up the floodgates to independent power producers to use BC Hydro's comparative advantage of reservoirs to shape and firm power and then use Hydro staff to find markets and then use their expertise to deliver that power."
Craig Orr, executive director of Watershed Watch Salmon Society, attacked the government's decision to continue its support for export power development.
"I would say that damming and diverting hundreds more rivers in B.C. for exporting seasonal power hardly seems like good environmental stewardship, especially given the large number of stresses our fish and wildlife already face," Orr said.
"And given the pitiful track record of government on dealing with cumulative impacts, it will take more than a vague promise to convince me they are serious about assessing multiple project impacts in a meaningful way."
With files from Jonathan Fowlie, Vancouver Sun