The future of clean power purchase was thrown into doubt in July following the decision by utility regulator BC Utilities Commission (BCUC) to reject the LTAP as "not in the public interest," threatening the future of dozens of projects being developed in the West Coast province.
Skittish investors responded to the announcement, and some publicly traded companies with bids pending saw sharp drops in their stock price. The province's minister for energy has since confirmed that it remains committed to pursuing the supply of new renewable energy.
The BCUC's rejection of the LTAP stems from its refusal to downgrade the capability of BC Hydro's little-used, decades-old, gas-fired Burrard Generating Station. By crediting it with the ability to produce 6100 GWh, the commission effectively eliminated the need for new renewable power.
The decision is not in keeping with the government's renewable energy or climate change goals, says Warren Brazier, head of Energy and Natural Resources Practice Group at Vancouver law firm Clark Wilson LLP, but it does fall within the BCUC's mandate to get the best deal for BC ratepayers.
Outdated and inefficient
The Burrard plant has been criticised by the provincial government for being "outdated, inefficient and costly to run." It wants the electricity replaced with new sources by 2014.
BC Hydro's 2008 LTAP proposed more than halving its reliance on Burrard to 3000 GWh a year from its 2006 supply plan, pointing out that it would take a significant investment to produce reliably at the higher level. Moreover, if Burrard did produce at the higher level, it would be the largest producer of greenhouse gas emissions and the second-largest source of nitrous oxide in the province. Currently the plant runs nowhere near that level of output.
Brazier believes that the BCUC's decision on Burrard was based on cost. With natural gas prices at some of their lowest levels in years, "I think they looked at it and thought it was the best option for the cheapest energy in the short term," he says. He expects there will now be more contested hearings unless the government steps in and issues a "special direction" preventing the BCUC from ruling on whether the power is needed.
This situation demonstrates that the current blend of government policy and special directions from cabinet has failed, argues Brazier. "If the government really wants to put these renewable projects in play, which I truly believe they do, and if they want to shut down greenhouse gas emitting sources, then put it into law," he says. "They need to make it the law of the land, not the plan of the land. There is a distinction."
Both BC Hydro and the provincial government have said they need time to digest the 236-page decision from BCUC, but Energy Minister Blair Lekstrom issued a statement confirming that increased reliance on Burrard is not on the cards: "Let me be absolutely clear. The BC government has no plans to increase the use of Burrard Thermal as a result of this decision or for any other reason," he said. "Over the coming weeks, we will be reviewing the BCUC decision to ensure that BC Hydro has the flexibility to meet our energy plan and climate change goals, which will require a significant and growing supply of clean, renewable energy," he added.