Canada: BC Speech From The Throne And Jobs Plan - "Clean Energy" Matters?

Snuck in the middle somewhere between "Putting Families First" and "Services for BC Families", in her Speech from the Throne on October 3, 2011 ("Throne Speech"), Premier Christy Clark offered up a few (very few) general statements on clean/renewable energy and climate change. By comparison, "energy" was mentioned 4 times (with "clean-energy" being 2 of the 4), while "families" was mentioned 23 times, and "family" 14 times.

Statements on clean energy/climate change included:

• Your government is also committed to sustaining its leadership in the fight against climate change, and maintaining clean air and clean water throughout our province.
• B.C.'s revenue neutral carbon tax accelerates the transition to cleaner fuels and technologies, and reduces pollution and greenhouse gas emissions.
• As we look beyond 2012, we will consider next steps in our clean energy and environmental strategies, in partnership with communities, industry, First Nations, non government organizations and, most importantly, citizens.
• Your government sees the economic benefits of clean technology as part of a diverse economy. We will look at the larger picture and consider how tax policy, energy policy, incentive programs and new technology contribute to a renewed vision for B.C.'s green economy.

Premier Clark also commented in the Throne Speech that "Planned rate hikes by BC Hydro have been reviewed and will be reduced by half. Your government has taken a hard look at B.C. Hydro's operations to ensure it meets its critical role as a generator of reliable, renewable and affordable power."

This rate hike statement stemmed from a proposal by BC Hydro to a 29% hike in electricity rates over 3 years, in order to counterbalance the costs of the public company to purchase power, and for its operations. This hike correlates to the requirement in BC's Clean Energy Act enacted in 2010 ("Act"), that the public utility be "self-sufficient" by 2016. Premier Clark (in conjunction with BC Hydro) have now committed to halving this rate hike (8% first year, and 3.9% for following two years), and how exactly this will be accomplished, and reducing large future rate hikes, will likely be a major focus of the upcoming "Integrated Resource Plan" ("IRP"). BC Hydro was to complete the IRP, mandated by the Act, for submission to the Ministry of Energy by November 2011. This has been delayed to December, 2012. The IRP will set BC Hydro's course for conservation, electricity generation acquisition and export market opportunities, as well as an assessment of transmission requirements. IRP objectives include BC Hydro meeting its obligations under the British Columbia Hydro and Power Authority Act and to the Act including the current requirement of ensuring that 93% of the generation in the province comes from clean or renewable resources.

What does this mean for the future of "clean energy" in BC?

In the years leading up to 2011, led by Premier Gordon Campbell, the province of BC strove towards a leadership position in clean/renewable energy and climate change action, building upon its 2007 Energy Plan: A Vision for Clean Energy Leadership, and later the Act. Stemming from the Energy Plan and subsequently through the Act, BC Hydro ramped up purchases of power from Independent Power Producers ("IPPs") through a variety of power calls and programs, including the 2006 Power Call, 2008 Clean Power Call, Bioenergy Calls and Standing Offer Program. At the time, the purchase of power from IPPs, though not universally supported, was supported politically from the Premier on down, was reflected in BC Hydro's power purchases and attracted a lot of interest from many project developers and First Nations in the province.

Now, however, as stated by Dave Cobb, CEO of BC Hydro, in his address on September 26, 2011 at the Clean Energy BC Generate 2011 Conference ("Conference"), "now is a good time to stop and take a breath."

He also commented though that "there is no question that BC Hydro is going to require more power in the future and no question that our load forecast is going up, its just a matter of how much, and when." He commented further that there is "no question we are going to market .. at some point .. to purchase energy" and "we are very supportive of doing what we can to keep the options open to benefit our customers." In a response to a question regarding the Technical Review Committee from Bob Duncan, CEO of Hupacasath First Nation (Hupacasath) and Upnit Power LP, a limited partnership involving the Hupacasath that operates a 6.5 MW run-of-river project on China Creek on Vancouver Island, Dave Cobb responded to the question of the "self-sufficiency" definition and timing of upcoming power calls by commenting that "there is no question its coming, but the definition (of self-sufficiency) will impact timing."

Dave Cobb also made statements to the effect that there is no question BC Hydro's load forecast is going up and that there will be a supply/demand gap, and a need to source power from somewhere. He stated that currently power supply in BC is sourced 72% from heritage assets (i.e. hydroelectric dam facilities such as those on the Peace and Columbia rivers); 8% from outside purchases; and 19% from IPPs.

The likely scenario is that BC, through BC Hydro, will source some power from IPPs "at some point" but that this will be less than what the clean/renewable energy industry is hoping for, and a major focus of these power purchases will be the cost at which it can be acquired. This ties into Premier Clark's comment that "Your government has taken a hard look at B.C. Hydro's operations to ensure it meets its critical role as a generator of reliable, renewable and affordable power". This cost-competitiveness was also made clear in Dave Cobb's address, when he made a comment to the effect that this government has a clear objective and competitive rates have "risen up on the list of importance". Ultimately, this indicates that clean/renewable power that costs more to produce, such as solar, will not be supported, but if clean energy sources (such as run-of-river and wind) can compete on a competitive level with other energy supply sources, BC Hydro may "play ball" so to speak, with these types of IPP projects in future power purchases. Paul Kariya, Executive Director of Clean Energy BC, commented during the Conference to the effect that when comparing power sourced from IPPs on an "apples-to-apples" basis", if not lower, "we're competitive, we're in the game."

What is very clear is that the focus of Premier Clark's government right now is not on initiating clean energy power purchases, but on issues affecting families, job creation and the economy. This is apparent in Premier Clark's Jobs Plan, titled "Canada Starts Here", announced on September 22, 2011 ("Jobs Plan"). The Jobs Plan focuses primarily on private sector projects such as mining, building up the Prince Rupert Port and Deltaport and advancing three liquefied natural gas (LNG) export terminals planned for Kitimat. This focus on jobs and cutting red tape was also evident throughout the Throne Speech, where the focus was building BC as a "gateway" to emerging economies in Asia and increasing international trade. The major investments in port expansions and LNG terminals were highlighted in the speech as well, as part of this gateway strategy.

With respect to LNG, during the Clean Energy Conference there was plenty of discussion regarding the huge increase in demand for power that is coming as a result of shale gas development and mining activities, primarily in the northern portion of the Province. In the Throne Speech Premier Clark stated that "We are committed to enabling the development and operation of three LNG terminals by 2020, with sufficient sources of electricity to make it possible. Where will this electricity be sourced from, and at what cost? This is what is uncertain at the moment, and what permeated the general mood of participants at the Clean Energy Conference, including IPP project proponents, which could be best described as "anxious uncertainty".

This is troublesome for the Province's First Nations. In the Throne Speech, Premier Clark made several references to establishing partnerships with First Nations to create jobs, including:

• As we look beyond 2012, we will consider next steps in our clean energy and environmental strategies, in partnership with communities, industry, First Nations, non government organizations and, most importantly, citizens.
• To further improve the investment climate, your government will work with First Nations to create a new business and investment council to foster wealth creating partnerships.

Dave Porter, President of the BC First Nations Energy and Mining Council, stated at the Conference that there are over 125 First Nations in BC now engaged in clean energy in one form or another. There were comments made from many First Nations speakers at the Conference on the theme that - you the Province of BC imposed this clean/renewable energy mandate on us without consultation, which we've now bought into, and now again, without consultation, you are seemingly going to stall or halt this development which has created jobs and benefited First Nations in the Province.

Paul Kariya, Executive Director of Clean Energy BC, commented on the Premier's Job Plan by stating "let's fuel that job strategy, an aggressive job strategy, with clean energy." To highlight First Nations involvement in the clean energy sector and support (generally), the Conference opened with the signing of a landmark MOU between Clean Energy BC, the First Nation Energy and Mining Council, the Sts'ailes, Kwakiutl Indian Band, shíshálh First Nation, Sliammon First Nation, and Squamish Nation. The MOU is designed to facilitate cooperation and collaboration on future clean energy projects in BC, and Paul Kariya stated that the intent was to have all First Nations inovlved in clean energy sign onto it. 75 individual First Nations participated in the Conference as speakers, exhibitors and delegates, and BC First Nations are involved in the clean energy sector in a wide variety of ways including partnerships, equity investments and direct ownership.

It's fair to say that there is real concern by First Nations, as well as other clean energy sector participants over what direction the Province of BC is taking with respect to clean/renewable energy. Until there is more certainty in this sector, most IPPs and other industry players (especially those with large projects advancing without electricity purchase agreements (EPAs)) must watch, listen and patiently wait.

As mentioned, the IRP is due to be released in December, 2012, and it is thought that this will likely provide some clarity and answer many questions about the future of clean/renewable energy in the Province. Otherwise, prior to the provincial election in 2013, it does not appear that the Premier, faced with a generally moody and restless electorate, one which recently voted down the Province's HST, is in a hurry to solve BC's energy supply issues. Thinking back to the Throne Speech, its easy to see this when reading between the lines on the comment that "as we look beyond 2012, we will consider next steps in our clean energy and environmental strategies."

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