Yesterday in budget estimates for the Ministry of Energy Mines and Petroleum Resources I took the opportunity to question the Minister on the status of BC Hydro’s clean energy Standing Offer Program.

The exchange is very illustrative of the problems I have been trying to raise with respect to the direction BC Hydro is taking. The decision to proceed with Site C has led BC Hydro to essentially grind the Standing Offer Program, and the BC NDP PowerBC Better Plan, Brighter Future  energy and jobs campaign plan, to a halt.

Below I reproduce the text and video of the exchange.

Text of Exchange

A. Weaver: Thank you to the member for Surrey–White Rock for her line of questioning and the minister for the answers that we’ve been receiving. Very interesting.

I had a number of questions on the standing offer program that B.C. Hydro has ongoing. As the minister will know, the standing offer program for wind developers, at least, requires $1 million of investment over two years and over two years of studying permitting work to be done prior to the project achieving an electricity purchase agreement. The requirement for this up-front investment was done with the explicit intent of reducing program costs for the Crown, and when the BCUC approved the standing offer program, the BCUC stated that developers could expect to be offered an EPA if the project meets all the eligibility requirements and must be willing to incur the cost to prepare an application.

As the minister will know, the standing offer program was suspended in August 2017 with no warning. Despite that Hydro might suggest that…. Its only warning to industry was that there would be changes to price and volume of the SOP projects, not that the criteria itself would change or that the program would be completely redesigned. As the minister will know, developers that continue to invest in their products accepted that there would be changes to price and volume.

Hydro also implied that IPPs should have read market signals that there was an oversupply of energy and therefore infer that the standing offer program was a risky investment. However, the B.C. government legislated that the authority must maintain the standing offer program, and there was no indication the program would be suspended or cancelled or that there would be a change in the eligibility requirements.

There have been some recent public statements by the minister suggesting that there will be significant changes to the standing offer program and that there will be a First Nations focus. I have a number of questions on this. First, if this suspension leads to a material change to the policy, then is this suspension not actually a cancellation, because the new program is a different product?

Hon. M. Mungall: I appreciate the member’s question is: if this program doesn’t come back, isn’t this ultimately a cancellation? But I wouldn’t be able to say that at this time. Where it is at, as the member knows, is that it’s on hold. What is going on is…. A review was first started in 2016, and we’ve talked about that. That was attached to the rate revenue application and so on.

Industry was informed at the time, in 2016, that a review was taking place. That included the SOP, and of course, part of that was: well, does B.C. Hydro need the power? Do British Columbians need the power? So now review, review, right? Governments love to do these things.

With this government’s, the new government’s, review of energy procurement, as mentioned earlier, as part of the review that we just started in March, we’re looking at energy procurement, and if the SOP is a good program to continue on with. There’s been no decision one way or another at this time.

A. Weaver: The B.C. government legislated that the authority must maintain the standing offer program. When B.C. Hydro proposed the original SOP review, they set precedent for a review period length for prospective SOP participants, thus ensuring that important conditions such as price and eligibility would not change suddenly while they were preparing their projects.

Why wasn’t this put into practice for the recently announced review?

Hon. M. Mungall: I’m sorry, in the conversation I just had with staff, if I’ve missed and forgotten some of the member’s question. I’m sure he’ll remind me if I don’t get everything that he was hoping to get answers for.

Where things are at is that this government — and I know the member opposite and all members of the House as well — wants to make sure that rates are fair for British Columbians and for customers of B.C. Hydro. Whether they’re direct customers — they pay a B.C. Hydro bill — or, in my case, Nelson Hydro. We buy power from B.C. Hydro, as the city of Nelson does — and passes it on.

For all the B.C. Hydro customers, we want to make sure that rates are fair and affordable. Part of that issue is ensuring that we’re not purchasing power that we’re not able to then disperse at the time that that power becomes available. So we want to make sure that we have enough power for British Columbians, recognizing that we are able to sell on the spot market around North America, but then there’s the price that you get on the spot market that you also have to consider. So we want to make sure that we’re not putting an undue burden onto the backs of ratepayers by having more power than we’re able to disperse at the time at which we need it.

I hope that that’s making sense. For example, an IPP comes on line next year, but we actually have a surplus of power, perhaps, next year. So that would actually impact rates, because we’re obliged to pay that contract.

A. Weaver: Coming back, as I initiated with my questions on this topic, I noted that the SLP program required wind developers to invest $1 million over two years of the study permitting. Many wind developers have invested this money.

My question to the government, then, is how do they see this liability to companies who have made the required investment, sometimes with their own money, and have no program to participate in, in light of the fact that they were told that the program would exist, that they were required to make this investment and that they would get an electricity purchase agreement, although the price itself had not been set at that time?

Hon. M. Mungall: Ultimately, the impact on companies and the investments that they put in will depend on the outcome of the review. However, there are two things that B.C. Hydro has to balance in this.

One is obviously impact to ratepayers if we start purchasing power that we’re not going to need right now or in the immediate future and the risk that private investors take in the private market. Ultimately, B.C. Hydro is responsible to ratepayers, not to private investors in the private market.

A. Weaver: Thank you, and I appreciate the answer, but I would suggest that the government is responsible to both. I would suggest that the rules were put in place for investors, investors played by those rules and the rules changed and now the investors are left with a loss.

I would argue and suggest that government has accepted a potential liability through changing this program, particularly in light of the fact that the argument that the minister just put forth doesn’t hold water because the minister and her government recently approved continuation of the Site C dam to produce power for which there is no demand. So I’m sorry — the answer is quite unacceptable to me.

Nevertheless, let me continue. Was the minister aware that on March 14, 2018, the federal Minister of Environment and Climate Change, Catherine McKenna, announced the launch of the low-carbon-economy challenge? In particular, is she aware that this $500 million initiative will fund projects “aimed at reducing greenhouse gas emissions, saving energy and creating green jobs”? And that $162 million of that will be available to B.C. ?

Hon. M. Mungall: Yes. We are aware of the low-carbon-economy challenge and the fund associated with it. We’ve actually been able to access it.

The fund is going to be able to…. It’s contributed to other programs, but within this ministry specifically, it’s contributed an additional $12 million toward our building energy retrofit partnership, which will help communities across B.C., obviously, reduce carbon emissions associated with the built environment.

A. Weaver: Thank you, hon. Chair. Again through you to the minister: is she aware that the federal Minister of Environment Catherine McKenna chose Vancouver as the location to make the announcement for the program and that on that very same day, B.C. Hydro announced it would be further diminishing the standing offer program by suspending those applications already accepted into the program by B.C. Hydro, with only a few exceptions? And if so, why did B.C. Hydro do this?

Hon. M. Mungall: Yes, those two announcements were made on that day. It was purely coincidental, however. There was no purposeful reason why both of them were made that day. It’s just how things roll out sometimes.

A. Weaver: Purely coincidental but profoundly ironic.

I’m wondering if the minister is aware that some of the projects were already engaged in the B.C. Hydro interconnection process.

Hon. M. Mungall: The interconnection process is obviously part of the broader process in the standing offer program. The reason why it’s there is that it looks at the longer-term viability of connecting with that particular project. Sometimes projects go ahead, and sometimes they don’t. That’s just the broader, for people’s information. But, yeah, the ministry was aware that there were projects that were in that process at the time of the announcement on March 14.

A. Weaver: I’m just wondering if the minister could please provide two numbers. The first number is: what’s the accepted total megawatt capacity of accepted applications in the standing offer program? And the second number is: of this total megawatt capacity, how much is within the interconnection queue?

Hon. M. Mungall: Sorry about the delay to the member.

What’s the megawatt capacity of accepted applications in the SOP? For the standing offer program, it’s 137 megawatts. In the micro standing offer program, there are two megawatts. To answer the second part of his question, all of those projects — so therefore, all of those megawatts — are at varying stages in studying interconnection, so it’s the same number.

A. Weaver: My understanding is that 59 megawatts of the 137 are much further along in that process than the 137 itself.

With that said, I’m wondering if the minister could then briefly, in summary remarks, comment on the status of the following projects: the Nahwitti wind project in Port Hardy, 14 megawatts; Babcock Ridge wind project in Tumbler Ridge, 15 megawatts; Canoe Pass tidal project in Campbell River, two megawatts; Little Nitinat River project in Port Alberni, five megawatts; the English Creek hydro project in Revelstoke, 5.8 megawatts; the Fosthall Creek power project in Nakusp, 15 megawatts; the Sarita River project in Bamfield, 5.3 megawatts; the MacKay Creek project in Revelstoke, and I do apologize to Hansard who are trying to get this down here, 5.2 megawatts.

The East Hill project of my good friend from Kootenay East, in Cranbrook, a solar project, 15 megawatts; the Sukunka wind project of my good friend here from Peace River South in Chetwynd, 15 megawatts; the McKelvie Creek hydroelectric project in Tahsis on Vancouver Island, 5.4 megawatts; Newcastle Creek hydroelectric project, Sayward, 5.3 megawatts. Again, coming to the riding of my good friend from Peace River South, the Wartende wind project and the Zonnebeke wind project, both of which are 15 megawatts in those.

What is the status of these projects that have been approved and are sitting in the standing offer program?

Hon. M. Mungall: All of the projects are on hold, with the exception of the Sarita River hydro power project. They have been sent a draft energy purchase agreement, a draft EPA. The Sukunka wind energy project in Chetwynd is currently pursuing an electricity purchase agreement. Sorry. They are not. We are. B.C. Hydro is pursuing an EPA negotiation with the project. That’s the same result for the Zonnebeke wind energy project, also in Chetwynd. And the last one that is not on hold but unfortunately has been rejected is the McKelvie Creek hydroelectric project.

A. Weaver: Thank you, hon. Chair. I’m wondering if….

Hon. M. Mungall: Can I just ask…? Would you like a written copy of that?

The Chair: Members can redirect comments through the Chair, please.

Hon. M. Mungall: Mr. Chair, I’m just wondering if the member would like a written copy of that, if that would be helpful for him.

A. Weaver: That would be very helpful, and I do appreciate the response and the offer.

On this topic that I’m wondering about, hon. Chair, through you to the minister, if she’s aware that the Rocky Mountain solar project in Cranbrook has formed a B.C.-based research and innovation consortium that includes the UBC engineering Clean Energy Research Centre, the SFU chemistry department, the Natural Resource Council of Canada, Ballard Power, Schneider Electric, Iona Miller, Avalon Battery and others.

Hon. M. Mungall: B.C. Hydro wasn’t aware that RMS was forming a B.C.-based research and innovation consortium. They didn’t put that in their application, in their SOP application. That being said, ministry staff have been able to meet with several of the partners within this consortium and learned about it through those meetings. That’s my understanding.

A. Weaver: The Rocky Mountain solar project, as the minister will know, is the only solar project that’s gone through the standing offer program. They plan to build a living lab facility site that will focus on advancing next-generation energy solutions, in partnership with those organizations that I previously mentioned. As the minister may know, connectivity through the transmission line is not that difficult in light of the fact that it goes right through the property of the proposed solar facility in the Cranbrook region.

I’m wondering. Again, I’d like to suggest that the Rocky Mountain solar project is exactly the type of project that is being looked for under the low-carbon economy challenge that I spoke about earlier, and particularly, the clean growth fund that demonstrates a commitment to creating diversified clean energy. It ensures that we have reliable power, it promotes research R and D in the province, it helps establish B.C. as leaders, and it’s being supported by investor capital, not ratepayer-supported capital.

My question, then, is: what is the government doing to attract and retain a clean energy sector here in B.C., and in particular, whatever happened to the B.C. NDP PowerBC better plan, brighter future program they touted in the lead-up to and during the last provincial election campaign?

Hon. M. Mungall: Just for the member’s information, the Rocky Mountain Solar project is actually not the only approved solar application in the SOP. There’s also the Tsilhqot’in solar project, which is being advanced under the micro SOP. It’s smaller, yes, but it is another solar project. I know that the member is very interested in what kinds of projects are out there, so I wanted to share that with him.

In terms of his question, in terms of what we’re doing to attract and retain clean energy sector in B.C., as well as the PowerBC plan that our party launched while we were in opposition — where is all of that? Well, that’s a fair question. I mentioned earlier that we were talking about the energy road map. We only got a chance to mention it briefly. But that’s precisely where we have driven these very issues, is into building our energy road map. That road map is about planning for the future. It is about looking at ways in which we can address load and demand.

One of the things that we need to do, and I know the member’s very passionate about this and is very, very well versed on this, is obviously reducing carbon emissions. How do we electrify the economy using clean, renewable electricity that is carbon free? We already have 98 percent of the energy we produce in B.C. meeting that test of carbon free. But if we want to be able to produce more carbon-free energy, then we also need to look at the demand side, the load of what is being demanded by British Columbians.

We have to look at where we are going into the future, what kind of demand we are anticipating and what kind of demand we can grow. I know that the member knows a lot about electric vehicles. He has an electric vehicle, and he really wants to see the transportation shift from fossil fuels to clean electricity. I agree very much with that vision. That’s part of our energy road map and planning out for that.

How do we do that? We already have incentive programs. We’re already working on expanding charging stations. But what more can we do to ensure that we’re reducing costs for people, which is one of the barriers, as well as making sure we have good, solid infrastructure? BCUC right now, as I mentioned earlier, is looking into the utilities aspect and who can actually sell power so that we can build out the infrastructure so that it’s just as commonplace as what fossil fuel infrastructure has been in the past, and so on and so forth.

There are a lot of questions and planning, and that’s where that energy road map comes into play. That’s where we see that broader vision that we’ve expressed in the past funneling into. Earlier we were talking about that energy road map then leading into, obviously, how B.C. Hydro would be organizing itself and placing itself into that future demand — for example, around electric vehicles, around partnerships with the clean energy sector, the private clean energy sector, and so on.

A. Weaver: I appreciate the answer, although I’m not sure it directly addressed the question I was raising. I do take issue with the assertion that the Tsilhqot’in program is on par with the Rocky Mountain. Of course, it isn’t. I’m quite aware of the micro–standing offer program, which is quite different from the larger standing offer program.

In fact, on March 14, 2018, B.C. Hydro issued a statement on that saying:

“…electricity purchase agreements for five clean energy projects that are part of the impact benefit agreements with B.C. Hydro and/or are mature projects that have significant First Nations involvement. B.C. Hydro supports the government’s decision to take a closer look at energy procurement to ensure the best value for B.C. Hydro’s customers through their review of B.C. Hydro this year. As a result, there are no plans at this time to issue any additional electricity purchase agreements. The standing offer and micro–standing offer programs will remain on hold until the review is complete.“

The issue I have here, and the issue I continue to raise, is companies have invested millions upon millions upon millions of dollars in British Columbia in good faith directly in response to signals that government sent and B.C. Hydro sent, and they are now on the hook for this. This is not because of any uncertainty in the market. It’s exclusively because of uncertainty in terms of direction B.C. Hydro is….

I’m sure the government is aware, for example, that larger power projects, like in Alberta, have seen prices coming in at 3.7 cents a kilowatt hour for wind. We know that the next call is Saskatchewan, which is supposed to follow. It’s likely going to have, if it hasn’t come in yet, wind power coming in at 4 cents a kilowatt hour. We know that if there was a call for power at 10 cents or 8 cents, industry would meet that. We know that firm wind power can be delivered at around that price, and it’s being done around the world.

My question to the minister is this. Why hasn’t she instructed B.C. Hydro to explore cheaper alternatives to Site C, cheaper alternatives that could include firm power calls that link wind with storage?

Hon. M. Mungall: The member’s question was specifically: why didn’t I direct B.C. Hydro to look at alternatives, specifically wind with firm storage? He’s right to say that I didn’t direct, because they were already doing it. They did do that, and they put it as part of their submission to the B.C. Utilities Commission, I believe, originally back in 2014 — the original submission to, I believe, government in 2014. Pardon me if I’m not getting that correct. But definitely their submission to the B.C. Utilities Commission, in their review of Site C that we put forward last fall.

Video of Exchange