Canadian Energy Perspectives

Developments in Energy and Power Law

Canadian Energy Perspectives

Hydro-Québec Distribution 450 MW Wind RFP Submission Deadline Delayed

Posted in Energy – Renewable, Alternative and Clean, Québec Hydro-Québec, Régie de l’énergie, Wind
Québec
Daniel BénayCristel Chabot-LapointeMathieu LeBlanc

On December 18, 2013, we reported that Hydro-Québec Distribution (HQD) had issued a call for tenders for the purchase of a block of wind power produced by facilities with an installed capacity of 450 MW. A link to this blog post can be found here (http://www.canadianenergylawblog.com/2013/12/18/hydro-quebec-distribution-issues-a-call-for-tenders-for-450-mw-of-wind-power/).

HQD issued yesterday Addendum #2 to the call for tenders document. This latest Addendum replaces the timetable already provided under Section 3.1 of the call for tenders document and postpones to an undetermined date the deadline for submission of bids, which deadline was initially scheduled for September 3, 2014.

HQD will grant bidders a minimum additional period of 10 business days for the submission of their bids, based on the date on which the Régie de l’énergie will issue its decision regarding the approval of the weighing table for the applicable evaluation criteria (petition R-3866-2013).

We will be most interested to learn the exact additional delay which will be granted by HQD for the submission of bids, especially in the unlikely event that the weighing table is significantly modified by the Régie de l’énergie in its decision.

A link to Addendum #2 can be found here (http://www.hydroquebec.com/distribution/fr/marchequebecois/ao-201301/pdf/AO2013-01-addenda-2.pdf) (in French) and here (http://www.hydroquebec.com/distribution/en/marchequebecois/ao-201301/pdf/AO2013-01-addenda-2.pdf) (in English).

Ontario to Reduce Consumption of Electricity

Policy Roll-out has OPA Implementing Ambitious Demand Reduction Targets

Posted in Conservation, Electricity, Power
Ontario
Stephanie Yarmo

The Ontario Power Authority (the “OPA”) received a direction from the Minister of Energy to coordinate, support and fund the delivery of certain programs under the Conservation First Framework (the “Framework”) over the next 6 years, beginning in January 2015.

The purpose of the Framework is to keep Ontario on track to achieving the province-wide conservation and demand management (“CDM”) target of 30 terawatt hours (TWh) by 2032 that was set pursuant to the Ontario Government’s 2013 Achieving Balance: Ontario’s Long-Term Energy Plan, which is discussed here and here. The “short-term” goal established under the Framework is a 7 TWh (or 7 billion kilowatt hours (kWh)) reduction in energy consumption by December 1, 2020 via the implementation of programs aimed at reducing the draw from the electricity grid.

The Minister likewise issued a direction to the Ontario Energy Board (the “OEB”), instructing the OEB to amend the license of each licensed electricity distributor (“Distributors”) to add a condition that specifies the Distributor will, between January 1, 2015 and December 31, 2020, make CDM programs available to its customers and will do so in relation to each customer segment in its service area. Continue Reading

Proposed Amendments to the National Energy Board Export and Import Reporting Regulations

Posted in Energy – Renewable, Alternative and Clean, Liquefied Natural Gas, National Energy Board, Natural Gas
Gordon NettletonMargarete Daugela

Overview

A number of recent Letter Decisions[1] of the National Energy Board (Board) note the need for the Canadian natural gas industry to access overseas markets due to an increase in the North American gas resource base. It is necessary that the legislation and regulations governing the export of natural gas reflect the realities of selling liquefied natural gas (LNG) to overseas markets.  While some amendments to the statutory framework have been made, important changes are necessary in order to create a commercially sensible regulatory regime.

Background and Regulatory Context

As a result of the July 2012 amendments to the National Energy Board Act (NEB Act), the Board has now proposed changes to the regulations that govern the licencing of the export of LNG: the National Energy Board Part VI (Oil and Gas) Regulations (Part VI Regulations) and the National Energy Board Export and Import Reporting Regulations (Reporting Regulations).  While the proposed changes to the regulations represent a move toward increased efficiency, the current regulations and Board interpretation have the potential to create problems for the commercial reality of LNG exportation.  Continue Reading

Sunny Days Ahead for 500 FIT 3.0 Applicants

OPA offers 500 renewable energy contracts through FIT 3.0 process and is prepared to make 63 additional offers under the Unconstructed Rooftop Solar Pilot

Posted in Aboriginal, Energy – Renewable, Alternative and Clean, Ontario Power Authority
Ontario
Will FyfeJustin Shoemaker

On July 7, the Ontario Power Authority (“OPA”) published a list of 500 renewable energy contract offers under its Feed-in Tariff  3.0 (“FIT 3.0”) Program, which are expected to produce 123.5 megawatts (“MW”) of power.

The list of successful applicants is heavily skewed in favour of solar projects. Of the 500 contract offers, 490 are solar photovoltaic (“PV”) projects, which account for 120.89 MW of the 123.5 MW approved by the OPA. The 10 successful non-solar applicants can be divided into eight bioenergy projects; one wind energy project, and one waterpower project.

The successful solar projects vary in size. Smaller approvals include several 15-40 kilowatt (“kW”) rooftop solar PV projects for local school boards while the larger approvals include nearly 100 projects in the 500 kW range. Projects above 500 kW are subject to a separate procurement process known as the Large Renewable Procurement process (discussed in previous posts found here, here, here and (most recently) hereContinue Reading

New Procurement Process for Large Renewable Projects

Launch of RFQ Phase

Posted in Energy – Renewable, Alternative and Clean, Ontario Power Authority
Ontario
Suzanne V. MurphyChristopher ZawadzkiOmar Soliman

On July 14, 2014, the Ontario Power Authority (the “OPA”) released final materials for the first request for qualifications (“RFQ”) phase of the Large Renewable Procurement (the “LRP”) process, a new competitive procurement process in Ontario for renewable energy projects generally greater than 500 kW. The OPA intends to use the RFQ phase to qualify applicants for a potential future request for proposal (“RFP”) phase involving up to 565 MW of certain specified procurement targets (300 MW for wind, 140 MW for solar, 75 MW for waterpower, and 50 MW for bioenergy).

As noted in earlier blog postings here and here, the LRP originates from an Ontario Ministry of Energy directive, issued on June 12, 2013, which instructed the OPA to develop a new competitive procurement process for large renewable energy projects in Ontario. Following sustained community and stakeholder consultations, the OPA released a Final Recommendations Report for the LRP process on February 28, 2014. The RFQ phase is designed to ensure that applicants and their respective project teams possess sufficient energy development experience and financial capacity to minimize any risks that projects will fail to reach commercial operation. The OPA will be tasked with assessing submissions based on completeness and on specific mandatory requirements. Please see the attached charts for a summary of the assessment criteria in respect of the RFQ phase as well as the proposed LRP timetable.

RFQ applicants are required to submit information regarding past project development experience, team members’ development experience, audited financial statements, officer’s certificates and commitment letters, among other information.

RFQ applicants are also required to adhere to certain non-collusion requirements. Specifically, RFQ applicants must:

  • not coordinate their submissions with any other RFQ applicants;
  • keep their submissions confidential until the conclusion of the RFQ and selection of the qualified applicants, if any;
  • ensure that no member of the RFQ applicant team has entered into any agreement or arrangement with any member of another RFQ applicant team which may affect their respective submissions; and
  • not engage in any activity or communication that results in a conflict of interest, collusion or a violation of the any of the civil or criminal provisions of the Competition Act (Canada).

The OPA has facilitated a question and comments period on the RFQ phase until August 8, 2014. The final qualification submission deadline is set for September 4, 2014 at 3:00 p.m. EPT.

Is “Net Benefit” to Canada different for State-Owned Enterprise Investments?

Posted in Investment Canada Act, State-Owned Enterprises
Oliver J. BorgersMichele Siu

Investments in Canadian businesses by foreign state-owned enterprises[1] (“SOE”) may receive greater scrutiny than investments by non-state owned enterprises.  The Canadian government has made it clear that investments by SOEs will be assessed differently than other investments under the Investment Canada Act.    For example, at the end of 2012, the Minister of Industry indicated that investments by SOEs to acquire control of a Canadian oil sands business will, going forward, only be approved on an exceptional basis[2].  This focus on SOE investors, which will likely result in more SOE investments being scrutinized under the Minister’s pre-closing review and approval, is reflected in recent amendments to the Investment Canada Act and related guidelines:

  • Threshold for review for SOE investments will be lower: Generally, where a transaction involves the acquisition of control of a Canadian business by a non-Canadian, and the gross book value of the assets of the acquired business exceeds C$354 million (2014), the transaction is reviewable by Industry Canada pursuant to the Investment Canada Act.   Under proposed amendments, the review threshold is to progressively increase to C$1 billion[3].  However, the review threshold for SOE investments will be amended such that the existing C$354M threshold will remain in place.  Continue Reading

Energy Storage Update

Posted in Energy – Renewable, Alternative and Clean, Ontario Power Authority
Will FyfeLynn ParsonsJames KleinRoya Baryole

It has been a busy month for energy storage in Ontario.

New Contracts Awarded:

Five companies have now been selected to provide energy storage services as part of the Independent Electricity System Operator’s (the “IESO”) 35 MW procurement of renewable energy storage capacity.  They are Canadian Solar Solutions Inc., Convergent Energy and Power LLC, Dimplex North America LTD, Hecate Energy and Hydrogenics Corp.  The IESO’s press release can be found here.

Interestingly, the IESO has explicitly described this round of procurement as a way of testing new storage technologies. This in part explains the structure of the services contract to be entered into by storage providers. As outlined in a previous post, rather than laying the foundation for the long-term financing of a capital intensive project, the procurement allocated a higher point total to proponents that bid shorter contract terms and the form of services contract included several termination rights in favour of the IESO which make the contract difficult to finance.  Continue Reading

British Columbia Enacts LNG Facility Regulation

Posted in BC Ministry of Energy, Mines and Natural Gas, Liquefied Natural Gas
British Columbia
Paul CassidyMonika Sawicka

On July 21, 2014, the BC Oil and Gas Commission (OGC) enacted the Liquefied Natural Gas Facility Regulation[1] (LNG Regulation) under the authority of the Oil and Gas Activities Act (OGAA).[2]  On the heels of BC’s increasing emphasis on the liquefied natural gas (LNG) industry, the LNG Regulation expands and updates the sparse LNG-related provisions which were previously in the Pipeline and Liquefied Natural Gas Facility Regulation,[3] which consequently has now been amended by removing the LNG provisions and been renamed the Pipeline Regulation. In addition, the Consultation and Notification Regulation[4] under the OGAA was amended to include consultation and notification requirements for proposed activities that include LNG facilities.  Continue Reading

New Government-Industry Working Group on Wind Energy Development in Québec

Posted in Energy – Renewable, Alternative and Clean, Québec, Wind
Québec
Louis-Nicolas BoulangerMathieu Bernier Trudeau

Québec Minister of Energy and Natural Resources Pierre Arcand announced yesterday the creation of a Government-industry working group destined to assess the development of the provincial wind power industry.

Turbine suppliers, project developers and component manufacturers will be solicited in the coming weeks to join the 15-member task force whose aim is to find innovative solutions so as to reinforce the sector’s competitiveness. Work will be carried out in a targeted approach in order to support businesses involved in the industry with the development of their expertise and products in order to increase exports and their capacity to respond to specific needs.

Both the Canadian Wind Energy Association and the AQPER (Québec Association for the Production of Renewable Energy) are prepared to participate in the consultation process. According to Mr. Arcand, a report summarizing the task force’s observations and recommendations is scheduled to be delivered next Fall and will fuel reflection on Québec’s next energy policy.

Grassy Narrows First Nation v. Ontario (Natural Resources) – SCC affirms Ontario’s taking up of treaty lands for resource development purposes

Posted in Aboriginal
Will Fyfe

The following Mining Prospects blog post by Sam Adkins and Stephanie Axmann may be of interest to our readers:

Grassy Narrows First Nation v. Ontario (Natural Resources) – SCC affirms Ontario’s taking up of treaty lands for resource development purposes

OPA-IESO Merger

Posted in Ontario Power Authority
Ontario
George Vegh

The Government’s plan to merge the Ontario Power Authority (the “OPA”) and the Independent Electricity System Operator (the “IESO”) moved forward with the introduction of the budget bill which includes legislation that would merge the two agencies.  If passed, the Bill would:

  • Merge the two agencies under the name IESO – suggesting more of a takeover than a merger;
  • Transfer all of the OPA’s statutory objectives and powers for planning and procurement to the IESO;
  • Grant the Government a power to make directions to the IESO in the same way as it had to the OPA, such as procurements, etc.  In fact, the IESO’s objects will now include a requirement to follow government directions; and
  • Grandfather existing procurement contracts.

Continue Reading

Assessing the Implications of the Tsilhqot’in Decision on Resource Development Projects in Canada

Posted in Aboriginal
Selina Lee-Andersen

As discussed in our earlier blog posting, the Supreme Court of Canada (SCC) recently released its decision in Tsilhqot’in Nation v British Columbia (2014 SCC 44), a decision which granted a declaration of title over a tract of Crown lands located in interior British Columbia (BC) to the Tsilhqot’in Nation (Tsilhqot’in). As Aboriginal groups celebrate the SCC decision, parties involved in resource development across Canada are no doubt dissecting the decision to assess the potential implications of the decision for their projects.

The effects of the Tsilhqot’in decision will be felt most by projects in parts of Canada where Aboriginal land claims are unsettled. Since the majority of Aboriginal groups in BC have not yet signed treaties, there has been uncertainty around land and resource use.  Whether a project involves a pipeline, shale gas development, LNG or mining, if the project has the potential to infringe on Aboriginal rights or title, governments and proponents will be motivated to reach agreements with potentially impacted Aboriginal groups in order to secure certainty around the land base for the development of these projects.  It is important to note that the Crown’s duty to consult and accommodate continues to apply where there are asserted, but still unproven Aboriginal claims. Continue Reading

Aboriginal title declared in historic SCC decision, Tsilhqot’in Nation v. British Columbia

Posted in Aboriginal, Supreme Court
Sam AdkinsStephanie AxmannSelina Lee-Andersen

On June 26, 2014, the Supreme Court of Canada (SCC) released its highly anticipated decision in Tsilhqot’in Nation v. British Columbia.[1] In this ground-breaking decision, Canada’s highest court granted a declaration of Aboriginal title over a tract of Crown lands to the Tsilhqot’in Nation (Tsilhqot’in) of the west central interior of British Columbia. This is the first time in Canadian history that Aboriginal title has been definitively established and affirmed.

In allowing the appeal of the Tsilhqot’in from the decision of the British Columbia Court of Appeal (BCCA) in William v. British Columbia,[2] the SCC has: (a) clarified the law as it pertains to the establishment of Aboriginal title and the nature of such title; (b) addressed how the establishment of Aboriginal title affects the Crown’s duty to consult with Aboriginal peoples; and (c) clarified how provincial (and federal) legislation may apply to lands subject to Aboriginal title, and if necessary, infringements may be justified. Continue Reading

CNSC to Appeal Darlington New Build Decision

Canadian Nuclear Safety Commission to Appeal the Recent Federal Court Decision that found Darlington New Build’s Federal Environmental Impact Assessment to be Deficient

Posted in Electricity, Nuclear, Ontario Power Authority
Ontario
Joanna Rosengarten

We recently wrote about the judicial review application challenging the adequacy of the federal environmental assessment (“EA”) process for the Darlington New Nuclear Power Plant Project (the “Project”).  To recap, the Federal Court found that the EA was deficient for a number of reasons, including that the Joint Review Panel did not adequately consider the issues of long-term management and disposal of used nuclear fuel and the potential of a large-scale nuclear accident. The Canadian Nuclear Safety Commission (“CNSC”) has now announced that it is appealing the Federal Court’s decision regarding the Project.

The CNSC takes the view that the Federal Court’s decision contains errors of law regarding the correct interpretation of the Canadian Environmental Assessment Act and the manner in which it was applied by the Joint Review Panel in its consideration of the Project. We will be following this appeal with interest, especially since Ontario Power Generation (“OPG”) is in the process of refurbishing the existing nuclear reactors at Darlington and the environmental assessment process for that project has been challenged on similar grounds (as previously reported, a decision on the judicial review of the refurbishment project has not yet been released).

Stay tuned for further updates.

Historic Procurement Opportunities – Part II

Scope of the Comprehensive Economic Trade Agreement with Europe Regarding Public Utility Procurement

Posted in BC Hydro, Energy – Conventional, NB Power, Ontario Power Authority, Power, Procurement, Québec Hydro-Québec, Utilities
Robert GlasgowBrenda Swick

Our prior instalment considered the changes that the Comprehensive Economic Trade Agreement (“CETA”) will have on procurement by public utilities. We will now look at the extent to which the obligations imposed by CETA on procurements by public utilities will be limited by minimum monetary thresholds and certain special exceptions.

Under all procurement treaties including CETA, only procurements which exceed a certain monetary value are subject to the treaty’s obligations. Under CETA, only those procurements by  a covered public utility that exceed $630,000 will be subject to its requirements.[1] Procurements by utilities below that threshold will not be subject to CETA. Splitting procurements into smaller bundles is prohibited under CETA (as is the case under all procurement treaties). This means that a covered utility could not beak a procurement with an overall value of $1 million into two procurement of $600,000 and $400,000 in order to circumvent the provisions of CETA.t Continue Reading

Federal Government Announces New Measures to Strengthen Regulations for Pipeline Safety

Posted in Federal, National Energy Board
Beverly Ma

On May 14, 2014, the federal Minister of Natural Resources, Minister of Transport, and Minister for the Federal Economic Development Initiative for Northern Ontario announced new measures designed to strengthen Canada’s pipeline safety system. These new measures reinforce the polluter pays principle and give the National Energy Board (“NEB”) greater regulatory control over Canada’s pipeline system, and include the following: Continue Reading

The Globe and Mail Interviews Seán O’Neill

Posted in Electricity, Energy – Renewable, Alternative and Clean, Solar
Ontario
Will Fyfe

We are delighted that McCarthy Tétrault partner Seán O’Neill has been quoted in a recent article by Shawn McCarthy of The Globe and Mail. In the interview, Seán discusses the potential impact of a new Ontario government reneging on existing wind and solar electricity contracts.

The article can be found here (it is paywall protected). Seán and Chris Zawadzki’s blog post on a similar subject can be found here.

Québec Energy Update: Government Announces its Intent to Relaunch “Small Hydro”

Posted in Québec
Québec
Daniel BénayLouis-Nicolas Boulanger

On May 21, 2014, Mr. Philippe Couillard, Premier of Québec, presented his inaugural speech at the National Assembly (available here in French only). This was Mr. Couillard’s first inaugural speech which laid out the priorities and guiding objectives that his newly-elected government intends to follow and implement within the next four years.

Below are selected highlights from the inaugural speech that are of interest for the Québec energy sector.

Small Hydro

The Government announced its intent to relaunch the private hydroelectricity procurement program. This program involved purchases of electric power by Hydro-Québec from privately-owned 50 MW and less hydroelectric projects (often referred to as “small hydro”). This program had been cancelled early last year by the former Government on the basis that Hydro-Québec had significant electricity surpluses and therefore had no need for additional electric power procurement. Mr. Couillard also mentioned that the participation of First Nations in the “small hydro” projects would facilitate governmental and other regulatory approval process. Continue Reading

Another Setback for an Abandoned Project

Federal Court rules against Darlington Nuclear New Build … but what does this mean for the Darlington Refurbishment?

Posted in Electricity, Nuclear
Ontario
Joanna Rosengarten

The Darlington Nuclear Project (the “Project”) was first  proposed in 2006. In 2009, following the Project’s initial planning stages, an environmental assessment (“EA”) process was commenced under the Canadian Environmental Assessment Act (since replaced by the Canadian Environmental Assessment Act, 2012 and referred to below as the “CEAA”).  The federal EA process was conducted by a review panel (the “Panel”) and in August, 2011, the Panel concluded that the Project was not likely to cause significant adverse environmental effects, provided that certain recommended mitigation measures were implemented.  Continue Reading

Joint Review Panel finds that Site C will have Significant Environmental and Aboriginal Impacts

Part 2 – Aboriginal

Posted in Aboriginal, BC Hydro, Energy – Renewable, Alternative and Clean
British Columbia
Selina Lee-Andersen

In their assessment of the Site C Clean Energy Project (Site C), the Joint Review Panel (the Panel) considered the potential impact of Site C on Aboriginal rights and treaty rights, along with the possible effects of the project on the cultural and economic well-being of First Nations. It identified 24 groups claiming an interest in the Local Assessment Area, as well as 6 other Aboriginal groups with potential interests who did not participate in the review process.  Overall, the Panel determined that Site C would likely cause significant adverse effects on fishing opportunities and practices and on hunting and non-tenured trapping for various First Nation groups, and these effects cannot be mitigated.  Continue Reading

Joint Review Panel finds that Site C will have Significant Environmental and Aboriginal Impacts

Part 1 – Environmental

Posted in Aboriginal, BC Hydro, Energy – Renewable, Alternative and Clean
British Columbia
Monika Sawicka

As reported in our earlier blog, the Joint Review Panel (the Panel) appointed to review BC Hydro’s proposed Site C Clean Energy Project (Site C) recently released its report to the public. In addition to assessing the project costs associated with Site C and BC Hydro’s methods for analyzing load forecast and demand, the Panel put forward a number of conclusions and recommendations in relation to the environmental and aboriginal impacts of Site C.  Part 1 of this blog presents an overview of the key environmental findings of the Panel, while the Panel’s findings on the potential impacts to Aboriginal groups are discussed in Part 2 of this blog. Continue Reading

Woodfibre LNG Project to Use Electricity to Power LNG Compression

Posted in BC Hydro, Energy – Renewable, Alternative and Clean, Liquefied Natural Gas
British Columbia
Michael Weber

On Tuesday, May 13, 2014, Woodfibre Natural Gas Limited (Woodfibre) announced its plans to use electricity from BC Hydro to power the compression of natural gas at its proposed liquefied natural gas (LNG) plant near Squamish, B.C.  According to Woodfibre, the decision not to use traditional natural gas-fired compression will decrease greenhouse gas emissions by 80%.

The Woodfibre LNG project is owned and operated by Woodfibre, a corporation established in British Columbia with offices in Vancouver (headquarter) and Calgary. Woodfibre is planning to develop its the Woodfibre LNG project on the former Western Forest Products pulp mill in the Squamish area which is already connected to BC Hydro’s transmission grid. The Woodfibre LNG project’s original cost was tabbed at $1.6 billion but with electricity being more expensive than natural gas, this shift in energy choice will likely increase project costs. In an interview following the announcement, Woodfibre vice-president Byng Giraud would not indicate how much more expensive the Woodfibre LNG project would be to develop but stated that its decision was a product of community consultations in which Squamish residents’ greatest concern about the project was air shed pollution.

Woodfibre anticipates that the Woodfibre LNG project could export approximately two million tonnes of LNG per year, which is about one-tenth of the anticipated volume of some of the large LNG projects proposed for northern B.C. Currently, Woodfibre has already been issued an export licence for its LNG but is still awaiting both provincial and federal environmental approvals. Based on its schedule, Woodfibre hopes to make a final investment decision in 2015 and could be operational by the first quarter of 2017.

Surprisingly, U.S. shale gas does not spell doom for Québec electricity export sales

Posted in Electricity, Energy – Renewable, Alternative and Clean, Natural Gas, Power, Québec Hydro-Québec
Québec
Louis-Nicolas Boulanger

Hydro-Québec announced on May 9, 2014 that it has posted a net result of $2.94 billion in 2013. Apparently, this increase in profitability is attributable to, among other things, growth in its export revenues and cost reductions. (Its 2013 annual report can be found here.)

Here is what is surprising about these excellent results.

Continue Reading

Elections, Electricity Contracts and the Limits of Government Power

Party Leaders Should Remember the Tenets of Contract On the Campaign Trail

Posted in Electricity, Feed-in-Tariff, FIT, Micro-FIT, FIT 2.0, Ontario Power Authority
Ontario
Seán O'NeillChristopher Zawadzki

In an unwelcome trend, electricity contracts seem to receive undue attention during Ontario provincial election campaigns.  Most recently, on May 7th Ontario NDP leader, Andrea Horwath, made the vague assertion that an NDP government would “examine hydro contracts” as a means of finding savings for ratepayers. Readers of this blog will be aware that the contracts she proposes to examine are those between the Ontario Power Authority (“OPA”) and independent power producers.  Continue Reading