Phase two of British Columbia’s BC Hydro review will include a look at opportunities for Hydro and its marketing subsidiary Powerex to expand in out-of-province electricity markets, as well as ways Hydro can further support B.C.’s long-term greenhouse gas-reduction targets.
In addition, the review will focus on integrating new technologies and electricity market trends into Hydro’s structure, services and assets as well as analyze future opportunities and new roles for First Nations and communities in the B.C. energy sector.
Overseeing the review will be a committee consisting of Dave Nikolejsin, deputy minister of energy, mines and petroleum resources; Ken Peterson, BC Hydro executive chair; Chris O’Riley BC Hydro president and COO; and Tom Bechard, Powerex CEO.
An interim report will be issued before the year’s end and a final report with recommendations will be completed by early 2020, the B.C. government said in a statement.
“Indigenous peoples and organizations and stakeholders will have the opportunity to provide feedback on the interim report,” it also said.
The review stems from an initiative the provincial government announced in June 2018 to conduct a comprehensive two-phase review of BC Hydro so that the government and its utility could work together to develop a refreshed plan to keep rates affordable over the long term.
The first phase, completed Feb. 14, looked at increasing revenues and reducing costs while protecting ratepayers by re-empowering the British Columbia Utilities Commission to oversee BC Hydro’s costs and activities.
Among the first-phase recommendations was a commitment by the B.C. government to write off C$1.1 billion in deferred debt to help keep Hydro’s rates affordable, cancellation of a BC Hydro program under which independent power projects were being built, and the placing of BC Hydro once again under full control of the BCUC.
Also recommended was a new rate forecast that, subject to final BCUC approval, limits electricity bill increases to 1.8 percent this year and to 0.7 percent in 2020, while keeping cumulative increases to 20 percent below B.C.’s forecast inflation rate over the next five years.
The government mandate for phase two said it should “explore global energy sector shifts and provincial strategies that could transform the way BC Hydro does business.”
This portion of the review will focus on the long-term goals of reducing greenhouse gas emissions, informed by the government’s release of its CleanBC plan to help it reach previously legislated 2030, 2040 and 2050 GHG targets.
These targets, legislated in May 2018, called for a 40 percent reduction in GHG levels below the 2007 level of 64.7 metric tons of carbon dioxide equivalents, a 60 percent reduction below the 2007 level by 2040 and an 80 percent reduction below the 2007 level by 2050.
To meet those targets, the CleanBC plan called for increasing the use of the province’s hydroelectricity and shifting away from a reliance on fossil fuels for transportation, industry and buildings.
The newly released Terms of Reference for the phase two review said CleanBC’s actions will get the province approximately 75 percent of the way to legislated 2030 GHG reduction targets.
“Achieving the remaining 25 percent and ultimately the 2040 and 2050 targets will require additional energy,” it added.
The primary objective of the phase two review is to develop recommendations for how BC Hydro can help accomplish the provincial government’s policy objectives laid out in the CleanBC plan, including Hydro’s support so that the targets in 2030, 2040 and 2050 can be met.
“The [phase two review] will identify additional opportunities to reduce GHG emissions through fuel-switching, electrification, energy efficiency and conservation,” the Terms of Reference said. It noted that about 98 percent of B.C.’s electricity generation already comes from clean and renewable resources.
It will also consider whether there are opportunities to enable increased participation in external electricity markets to the benefit of BC Hydro’s ratepayers. Its wholly owned subsidiary, Powerex, already buys and sells electricity in other markets through the Western Interconnection.
The review will consider whether or not there are any constraints that reduce Powerex’s ability to trade electricity and whether or not there are more opportunities for Powerex to expand its business in markets outside B.C.
Also to be studied will be opportunities for BC Hydro to own or operate assets outside its current service area that would benefit Hydro’s ratepayers, and to look at how cost-effective clean energy located outside of the province could be considered in BC Hydro’s planning and operations.
A third focus will involve integrating new technologies and electricity market trends into BC Hydro’s structure, services and assets while keeping rates affordable.
Transformative approaches used by other electric utilities will also be studied. In addition, it will look at whether or not any changes are needed in BC Hydro’s governance structure to allow it to pursue new business opportunities.
The fourth and final focus of the phase two review concerns future opportunities or new roles for First Nations in the development, ownership or operation of electrical infrastructure or services and how BC Hydro works with communities in the energy sector.
The phase two final recommendations will also support BC Hydro’s development of its integrated resource plan, which will be filed with the BCUC in early 2021.
The IRP outlines how Hydro plans to safely provide reliable, affordable, clean electricity to meet customers’ needs now and into the future.