Commission Secretary Reply to: Leigha Worth BC …...We represent the BC Old Age Pensioners’ Organization, Active Support Against Poverty, Council of Senior Citizens’ Organizations

803-470 Granville Street, Vancouver, BC, V6C1V5 Coast Salish Territory | Tel.: 604-687-3063 | Fax.: 604-661-3303

Reply to: Leigha Worth [email protected]

Ph: 604-687-3034

November 6, 2019

VIA E-FILING

Patrick Wruck Commission Secretary BC Utilities Commission 6th Floor 900 Howe Street Vancouver, BC V6Z 2N3 Our File: 7587

Dear Mr. Wruck,

Re: British Columbia Hydro and Power Authority Application for Approval of Section 2.5 Guidelines for Tariff Supplement No. 3 to Rate Schedule 3808 Project No. 3698813 BCOAPO Response on BC Hydro request to withdraw Application

We represent the BC Old Age Pensioners’ Organization, Active Support Against Poverty, Council of Senior Citizens’ Organizations of BC, Disability Alliance BC, Tenant Resource and Advisory Centre, and Together Against Poverty Society, known collectively in regulatory processes as “BCOAPO et al.” (“BCOAPO”).

Enclosed please find the BCOAPO's Response on BC Hydro request to withdraw Application with respect to the above-noted matter.

If you have any questions, please do not hesitate to contact the undersigned.

Sincerely, BC PUBLIC INTEREST ADVOCACY CENTRE

Original on file signed by:

Leigha Worth Executive Director | General Counsel

Encl.

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BC OLD AGE PENSIONERS’ ORGANIZATION, ACTIVE SUPPORT AGAINST POVERTY, COUNCIL OF SENIOR CITIZENS’ ORGANIZATIONS OF BC,

DISABILITY ALLIANCE BC, TENANT RESOURCE AND ADVISORY CENTRE, AND TOGETHER AGAINST POVERTY SOCIETY (“BCOAPO”)

British Columbia Hydro and Power Authority Application for Approval of Section 2.5

Guidelines for Tariff Supplement No. 3 to Rate Schedule 3808

BCOAPO Response on BC Hydro Request to Withdraw Application

November 6, 2019

Please be advised that we provide the following submissions regarding the above noted

application on behalf of our client groups known in this and other regulatory processes as

BCOAPO or BCOAPO et al. The constituent groups of BCOAPO et al. represent the interests of

low and fixed income energy consumers within BC and more specifically in this process, the

interests of BC Hydro’s low and fixed income electrical residential ratepayers.

Background Re: BC Hydro’s Section 2.5 Guidelines Filing

The British Columbia Hydro and Power Authority (BC Hydro) had supplied electricity to FortisBC

Inc. (FortisBC) for 20 years, pursuant to a Power Purchase Agreement dated October 1, 1993.

The energy supply provided was to meet a portion of FortisBC’s load service obligations, at rates

established by the British Columbia Utilities Commission (Commission or BCUC) and set out in

BC Hydro’s Rate Schedule 3808. The 1993 PPA expired on September 30, 2013.

During the course of the 1993 Agreement, BC Hydro filed a complaint with the Commission

requesting changes to section 2.1 of the 1993 PPA stating that FortisBC should not be allowed to

use BC Hydro’s embedded cost power (RS 3808) to supply additional electricity to its self-

generating customers in order to allow them to sell their self-generated electricity into available

markets.

In its subsequent Order G-48-09 amending section 2.1 of the 1993 PPA, the Commission

determined that FortisBC customers engaging in arbitrage should not increase FortisBC’s use of

RS 3808 energy. Specifically, section 2.1 was revised to state that RS 3808 electricity shall not

be sold to any FortisBC customer when such customer is selling self-generated electricity which

is not in excess of its load.

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On May 24, 2013, BC Hydro filed an application with the Commission requesting approval,

pursuant to sections 58 to 61 of the Utilities Commission Act to replace the then existing 1993

PPA between BC Hydro and FortisBC under Tariff Supplement No. 3 to RS 3808 with a new

Power Purchase Agreement (New PPA).

Section 2.5 of the New PPA maintained the provisions of section 2.1 of the 1993 PPA, namely

that FortisBC is restricted from selling RS 3808 electricity to any FortisBC customer when such

customer is selling self-generated electricity with wording as follows:

“Electricity taken under this Agreement shall not be sold to any FortisBC customer with

self-generation facilities, or be used by FortisBC to serve such load when such a customer

is selling self-generated Electricity unless a portion of the customers load equal to or

greater than the customer-specific baseline is being served by Electricity that is not

Electricity taken under this a Agreement where such a customer specific baseline as

agreed between the Parties (acknowledging that such baseline shall be determined in a

manner consistent with how BC Hydro establishes a generator baseline [(GBL)] for its own

customers), failing which agreement either Party may submit the matter for dispute

resolution in accordance with Section 13…” (New PPA, section 2.5 (a) (ii))

The purpose of the limitation in Section 2.5(a)(ii) was further explained in Section 2.5(b) of the

New PPA as follows:

“For greater certainty, Section 2.5(a)(ii) is intended to prevent FortisBC from increasing its

purchases of Electricity under this Agreement if such increased purchases would be a

result of FortisBC’s customers with self-generation facilities purchasing Electricity from

FortisBC at regulated rates and simultaneously selling Electricity at higher rates, except

as otherwise approved by the Commission.”

Towards the end of the proceeding dealing with BC Hydro’s New PPA Application the Panel

identified concerns regarding parts of section 2.5 of the New PPA in a request for supplemental

submissions dated December 13, 2013 (Exhibit A-17). In response to the concerns noted in the

Panel’s request and intervener comments about the transparency of the process and principles

for determining customer-specific baselines, BC Hydro subsequently filed an amendment to

Section 2.5 which was reworded as follows:

“2.5 Purpose/Limitation of use of Scheduled Energy

(a) Electricity taken under this Agreement:

…

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(ii) shall not be sold to any FortisBC customer with self-generation facilities, or used by

FortisBC to serve any such customer’s load, when such customer is selling self-generated

Electricity unless a portion of the customer’s load equal to or greater than the customer-

specific baseline is being served by Electricity that is not Electricity taken under this

Agreement, where such customer-specific baseline is as determined in accordance

with Commission-approved guidelines and in consultation with the customer

agreed between the Parties (acknowledging that such baseline shall be determined in a

manner consistent with how BC Hydro establishes a generator baseline for its own

customers), failing which agreement either Party may submit the matter for dispute

resolution in accordance with Section 13; (bolded part new/revised)

In its Order G-60-14 the Commission approved the amended New PPA Application but also

directed that:

1) BC Hydro initiate a consultation process that will result in an application for the New PPA

Section 2.5 Guidelines by November 1, 2014. Once the Guidelines have been approved by

the Commission, they are to be added to the New Power Purchase Agreement as an

appendix.

2) Until the addition of Commission-approved New PPA Section 2.5 Guidelines as an appendix

to the New Power Purchase Agreement, the net-of-load methodology will be applied.

On December 15, 2014, BC Hydro filed its proposed Section 2.5 Guidelines with the

Commission1. In that filing BC Hydro noted2:

“The Guidelines will only apply to FortisBC if a FortisBC self-generating customer is

simultaneously: 1) buying from FortisBC, 2) selling electricity to a third party, and 3) the

electricity is to be exported out of the FortisBC service territory, pursuant to a service

offered by FortisBC. The Guidelines would not apply if a FortisBC self-generating

customer is not selling electricity, is not exporting outside of the FortisBC service territory

or is exporting on a net-of-load basis.”

1 The Commission by a letter dated November 18, 2014 extended the deadline for filing the New PPA Section 2.5 Guidelines to December 15, 2014. 2 Page 7

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Fortis BC’s Self Generation Policy

In its Decision dated May 6, 2014, regarding the new PPA the Commission also noted3 a lack of

clarity regarding the Self-Generation Policy Issue in the FortisBC service territory. As a result, in

Order G-60-14 the Commission also directed that:

1) FortisBC initiate a consultation process in its service territory to address or ensure:

(i) The potential benefits of self-generation;

(ii) The 1999 Access Principles in the context of self-generating customers;

(iii) If the GBL methodology is proposed, GBL Guidelines for both idle historic self-generation

and new-self-generation; and

(iv) Arbitrage is not allowed.

2) FortisBC file a resultant Self-Generation Policy application with the Commission by December

31, 2014 that establishes high level principles for its service territory.

FortisBC submitted its Self-generation Policy (SGP) Application on January 9, 2015. The BCUC

subsequently ordered a two staged review process where stage 1 included the review of high-

level policy and supporting policies and where stage 2 included the review of a FortisBC filing of

a comprehensive SGP and Generator Baseline (GBL) Guidelines. Commission Order

No. G-41-19, issued on February 27, 2019, did not approve FortisBC’s Self-Generation Policy,

which includes both a Self-Generation Policy and Self-Supply Obligation Guidelines.

BC Hydro’s Request to Withdraw its Section 2.5 Guidelines Application

On July 23, 2019 BC Hydro wrote to the Commission to withdraw its Section 2.5 Guidelines

Application, while reserving the right to reapply for Section 2.5 Guidelines in the future.

The rationale provided by BC Hydro was three-fold:

1) Section 2.5 Guidelines are not required at this time. More specifically, as a result of Order G-

41-19, the net-of-load methodology continues to apply for the purposes of the New PPA as

directed in Commission Order G-60-14. As the Application for the Section 2.5 Guidelines

noted – “the Guidelines would not apply if a FortisBC self-generating customer … is exporting

on a net-of-load basis”;

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2) No one has asked for a regulatory review of the BC Hydro application to proceed; and

3) It would not be an efficient use of resources to continue with a regulatory review of BC Hydro’s

Section 2.5 Guidelines Application given that FortisBC does not have an approved self-

generation policy in place nor Commission approved customer baseline guidelines.

BCOAPA agrees with BC Hydro’s rationale and submits that the Commission should grant its

request to withdraw the Section 2.5 Guidelines Application.

All of which is respectfully submitted.

Sincerely, BC PUBLIC INTEREST ADVOCACY CENTRE Original on file signed by Leigha Worth Executive Director | General Counsel Original on file signed by: Irina Mis Barrister & Solicitor