Canada: BC Hydro Releases Long-Anticipated Updates To Standing Offer Program And Introduces Micro-Standing Offer Program

Updates to the Standing Offer Program (SOP)

On March 4, 2016, BC Hydro released a new version (Version 3.1) of its SOP Rules to address feedback it received during First Nation and stakeholder consultation meetings and focus group discussions conducted over the last few years. The SOP offers small-scale, clean energy projects in British Columbia with capacities between 100 kW and 15 MW the opportunity to enter into energy purchase agreements (EPAs) with BC Hydro. An EPA requires the project developer to sell all energy from the project to BC Hydro for a term of 20 to 40 years commencing on commercial operation date (COD). Version 3.0 of the SOP Rules introduces several notable changes:

• Key vs. Standard Eligibility Requirements – eligibility requirements have been reorganized into key eligibility requirements and standard eligibility requirements, with key eligibility requirements serving as an initial threshold within the SOP review process.
• Annual Energy Volume Target – the developer's target COD must be in a year where there is sufficient room available in BC Hydro's annual SOP energy volume target (currently set at 150 GWh/year). This new target volume management system is designed on a first come, first served basis. If the energy volume target for a year has been met, a project will be deferred until the next year with available volume.
• Public Utility Customers – customers of public utilities other than BC Hydro cannot apply under the SOP, except for customers that take only back-up or start-up electricity service from that public utility.
• Additional Generators – new generators added to sites with existing generation are no longer eligible under the SOP.
• Customer-Based Generation – a simplified rule for projects behind a BC Hydro customer load allow these projects to apply under the SOP but BC Hydro will only purchase energy on a net-of-load basis.
• First Nations Consultation – BC Hydro now considers the issuance of land tenure, permits and licenses as sufficient evidence that a Crown agency has completed its First Nations consultation.
• Conflicts of Interest Rule – pursuant to a new conflicts of interest rule, a developer must not be in or have the potential to be in an actual, apparent or deemed conflict of interest as a result of entering into an EPA with BC Hydro.
• Cluster Rules – revised rules regarding project clusters and common generation facilities clarify that such arrangements are permitted but must not exceed 15 MW in the aggregate.
• Pre-Application Meetings – pre-application meetings remain optional but are strongly recommended. There is a focus on providing eligibility and cost information as early as possible in the development process.
• Staged Review Process – SOP application and review processes are now organized into stages – BC Hydro will undertake an eligibility assessment before it requests a system impact study (previously referred to as an interconnection study). Rigid timelines for EPA offer and acceptance have been replaced with the more general requirement that such steps occur "within a commercially reasonable period of time".
• Changes to EPA – the Standard Form EPA has been streamlined, and now contains only three appendices instead of 12. Other changes to the Standard Form EPA include:
  
  
  • clarification that BC Hydro is not obligated to accept delivery of power in excess of the specified hourly energy limits;
  • the requirement, as a condition to COD, that a Project must have generated energy for 54 hours during a period of 72 continuous hours; and
  • the reference to First Nations consultation depending on evidence of Aboriginal claims under section 35 of the Constitution Act, 1982.

The New Micro-Standing Offer Program (Micro-SOP)

On March 4, 2016, BC Hydro introduced the Micro-SOP, which is designed for very small-scale clean energy projects in British Columbia with capacities between 100 kW and 1 MW. The Micro-SOP is only available to First Nations and communities, including municipalities, not-for-profit groups, all organizations of the public and agricultural sectors.

To participate in the Micro-SOP, a First Nation must show that it has significant beneficial ownership of, and will actively participate in, the project. A community group must provide evidence that it has at least 50% control and beneficial ownership of the project. Provided that they satisfy these beneficial ownership requirements, First Nations and community groups are still eligible for Micro-SOP if they partner with private sector independent power producers to develop the project. As with the SOP, there must be sufficient room in BC Hydro's energy volume target of 150 GWh/year at the time of the Micro-SOP application.

The Micro-SOP differs from the SOP in certain key respects:

• Non-BC Hydro Utility Service Areas – projects located within another utility's service territory or jurisdiction, such as the FortisBC service area, are not eligible.
• Cluster Rules – project clusters and common generation facilities are not eligible.
• Time of Delivery Price Adjustments – there are no time of delivery price adjustments.
• Smart Meters – smart meters for measuring energy output and/or consumption are to be used wherever possible.
• Interconnection – all projects must be directly interconnected to BC Hydro's distribution system.
• Standard Form Agreements – the standard form interconnection agreement and EPA are simplified.
• Screening Studies – there is a mandatory screening study which estimates the interconnection requirements for the project (subject to a $5,000 fee).
• EPA Term – the EPA term is 5 to 40 years from COD of the project.

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