While an official list of the successful projects and proponents has not been publicly issued, the AESO communicated that it invited 29 qualified projects representing approximately 4,000 MW from Canadian and international companies to participate in the RFP stage. Continue Reading
On August 17, 2017, China’s NDRC, Ministry of Commerce, the People’s Bank of China and the Ministry of Foreign Affairs jointly released their Opinions on Further Guiding and Regulating the Directions of Overseas Investments (the “Guidelines”). The stated objectives of the Guidelines are to improve the macro guidance on overseas investments, further guide and regulate the directions of overseas investments, promote the sustainable, rational, orderly and healthy development of overseas investments, effectively prevent all types of risks and properly meet the needs of national economic and social development. Continue Reading
Five Massachusetts-based affiliates of electricity distributors Unitil, Eversource and National Grid (the “Massachusetts Distributors”), together with the Massachusetts Department of Energy Resources (“MDOER”), have reported receiving 46 proposals in response to the ‘Request for Proposals for Long-term Contracts for Clean Energy Projects’ (the “RFP”) they had jointly issued in March 2017. The RFP is one of several initiatives put forward to meet the Commonwealth’s ambitious clean energy goals, most recently promoted by its enactment of the Chapter 188 energy diversity bill in 2016. Among other matters, the bill mandates that the Massachusetts Distributors enter into long-term contracts for the annual procurement of approximately 9,450,000 megawatt-hours (MWh) of renewable energy from wind, solar, hydro or energy storage sources. Continue Reading
On July 17, 2017, the California legislature passed legislation to extend the state’s cap-and-trade program to 2030 (the program was originally set to expire in 2020). Bill AB 398 received broad bi-partisan support and was passed with a two-thirds majority vote, which is the threshold required to pass tax laws in California. With a super-majority vote, California’s cap-and-trade program will be harder to challenge in court, thus providing policy certainty to market participants and partner jurisdictions including Québec and Ontario. AB 398 was accompanied by two bills: (1) AB 617, which seeks to address local air quality concerns by requiring increased monitoring, mandating upgrades of outdated equipment and technology, and imposing stricter penalties for noncompliance with regulations; and (2) ACA 1, which establishes the Greenhouse Gas Reduction Fund, into which all revenue from the auction or sale of allowances will be deposited (a 2/3 vote of each house will be required to appropriate the funds). The passage of AB 617 was key to winning over the support of key environmental groups. Continue Reading
On June 26, 2017, Québec’s Energy and Natural Resources Minister, Mr. Pierre Arcand, unveiled the 2017-2020 Action Plan (the “Plan”), a first step towards implementing the 2030 Energy Policy (the “Policy”). The Policy, made public in April 2016 by the Québec Government, sets forth ambitious targets aimed at reducing both Quebec’s consumption of fossil fuels and its dependency on foreign energy, thereby achieving “energetic transition”.
A year later, the Action Plan sets out 42 measures (in French only), backed by $1.5 billion public investments, providing for concrete actions which are divided in four axes: (1) integrating the energetic transition’s governance; (2) fostering energetic transition towards a low-carbon-footprint economy; (3) offering consumers a diversified and renewed energy supply; and (4) defining a new approach with respect to fossil fuels. The implementation can be followed directly on the Action Plan website (in French only). Two of the measures are already in place, while 17 are underway. While much remains to be put into place, the Plan as presented should appeal to the energy industry by creating investment opportunities in Québec, without neglecting environmental targets. Continue Reading
On June 6, 2017, Canada ratified the International Convention on Supplementary Compensation for Nuclear Damage (the “Convention”). The ratification of this Convention follows the coming-into-force of the Nuclear Liability and Compensation Act (“NLCA”) on January 1, 2017. This domestic legislation was a prerequisite for Canada ratifying the Convention. Canada’s closest neighbor, the United States, ratified in the Convention in 2008. Continue Reading
In a majority two to one decision released on April 24, 2017, the Alberta Court of Appeal (ABCA) upheld the lower court ruling in Re Redwater Energy Corporation. Our discussion and analysis of the trial decision in Redwater, which settled a lengthy conflict between the Alberta Energy Regulator and insolvency professionals on the proper interpretation of section 14.06 of the Bankruptcy and Insolvency Act (Canada), can be found here.
A full discussion of the ABCA decision and its impacts on insolvency-driven transactions involving assets regulated by the Alberta Energy Regulator prepared by our bankruptcy and restructuring colleagues, Sean Collins, Walker W. MacLeod and Pantelis Kyriaskakis, can be found on our Restructuring Roundup Blog.
As Ontario’s Cap-and-Trade Program is now in full swing, we wanted to provide an update on some of the more noteworthy developments.
Quarterly Auction Kick-Off
On March 22nd, 2017, the Ontario Government held the first quarterly auction for emission allowances under the Cap-and-Trade Program. As we previously reported, the Ontario Government indicated that it expects to raise $1.9B yearly from the sale of emission allowances. The first auction generated $472,031,155 in proceeds from the sale of 25,296,367 current allowances sold at $18.08 each, and 812,000 from future vintage allowances sold at $18.07 each. The auction sold 100% of current vintage allowances and 27% of future vintage allowances. Continue Reading
Renewable Electricity Program
The Government of Alberta announced that the Alberta Electric System Operator (AESO) will launch the first competition of the Renewable Electricity Program (REP) on March 31, 2017 with a Request for Expressions of Interest (REOI). Additional details with respect to Round 1 and the REOI stage will be available here on March 31, 2017.
As detailed in a previous blog post with respect to the REP process, the stakeholder comments on the key provisions of the Renewable Electricity Support Agreement (RESA) and the first competition will procure up to 400 megawatts of renewable electricity.
The AESO is hosting an REOI information session at 1:30 p.m. on April 18, 2017 at the Westin Hotel in Calgary, Alberta. Those wishing to attend may do so in person or via webinar and can RSVP by emailing their attendance preference to firstname.lastname@example.org.
Every decade the government of Ontario freezes or cuts electricity prices because the costs of an ambitious energy policy prove to be politically unacceptable. This leaves future electricity customers paying for the cost of a failed experiment from a previous generation. We should learn from this experience and implement a governance model for the sector that reviews and mitigates costs before a policy is adopted, not after.
In 1993, the government froze prices because the costs of Ontario Hydro’s massive nuclear expansion were leading to double-digit rate increases. In 2002 the government froze prices because the electricity market opening resulted in higher and more volatile prices. In 2017, the government cut prices because of the cost of the green energy and economy ambitions. In each case, the underlying cost pressures of the policy were obvious and the resulting escalation of prices was entirely predictable, as were the consequences of the price interventions; future generations were made financially responsible for their parents’ policy choices. Continue Reading
In early January 2017, Halifax-based energy and services provider, Emera Inc., initiated a solicitation process to procure clean energy for bundling with transmission capacity on its proposed Atlantic Link transmission project. The Atlantic Link proposal would deliver up to 900 megawatts (MWs) of energy from a new converter station to be constructed at Coleston Cove, New Brunswick to a new converter station to be constructed at one of two proposed landing sites in Massachusetts. The energy would be transmitted through an approximately 563 kilometer under water high-voltage direct current electric transmission line. The combined generation and transmission proposal is being prepared in advance of an anticipated request for proposal to procure up to 1,200 MWs of hydro and/or wind energy expected to be released by the State of Massachusetts in the coming months. Continue Reading
The Ontario Government announced today that it will reduce electricity rates for residential consumers by 25% starting in summer, 2017. While the immediate steps for doing this are fairly straight forward, the consequences of this over the long term are unclear.
The plan is to reduce prices in two ways:
- it will transfer some costs (rural distribution costs and low income support) from rate payers to tax payers. The cost of doing this will be $2.5 billion over the next three years; and
- it will refinance a portion of the cost of global adjustment by extending the time for its recovery to 30 years (to 2047). A portion of the global adjustment costs will be held in a fund operated by Ontario Power Generation and presumably overseen by the Ontario Energy Board. The cost of this refinancing is dependent upon a number of factors which will be addressed below. The government says that the maximum annual interest costs for doing this is $1.4 billion.
In November 2016, Environment and Climate Change Canada (ECCC) announced that it would be kicking off a process to develop a clean fuel standard (CFS) in support of Canada’s commitment to meet its greenhouse gas (GHG) emissions reduction target of 30% below 2005 levels by 2030. The CFS, which is included as part of the Pan-Canadian Framework on Clean Growth and Climate Change released in December 2016, would require reductions in the carbon footprint of fuels supplied in Canada, based on a lifecycle analysis. On February 24, 2017, ECCC released a discussion paper for consultation on the proposed new CFS. Continue Reading
On February 21, 2017, BC Hydro released new figures for its Standing Offer Program (“SOP”) and Micro-Standing Offer Program (“Micro-SOP”) showing that it has assigned nearly all of the available annual volume for projects with target commercial operation dates (“Target CODs”) in 2016, 2017, 2018 and 2019. BC Hydro had previously allocated up to 150 GWh/year of available energy volume for each of these Target COD years (under both the SOP and Micro-SOP), on a first-come, first-served basis. The newly-published figures show available energy volumes of zero, three, eight and zero GWh/year for projects with Target CODs in 2016, 2017, 2018 and 2019, respectively (see table below). Continue Reading
Last week, SaskPower, the provincial electricity production corporation for Saskatchewan, initiated a procurement process for 200 MW of wind energy for a fixed term of 25 years. The request for qualifications phase has begun and will be followed by a request for proposals later this year.
Saskatchewan has set a target to reduce 40 % of its greenhouse gas emissions below 2005 levels and to ensure that half of all electricity generated in the province originates from renewable sources by 2030. SaskPower seeks to procure new sources of energy through a competitive bidding process, as was the case for the block of 10 MW of solar energy launched in September 2016, the winning project for which should soon be announced. Continue Reading
NB Power, the provincial electricity production corporation for New Brunswick, announced on January 26, 2017 the launch of a request for expressions of interest to obtain 40 MW of electricity from local entities for contracts of no less than 20 years. Partners from outside of the province also may qualify for the program.
In November 2015, the government of New Brunswick adopted a regulation mandating NB Power to ensure that 40 % of total electricity sales in the province be generated from renewable sources of energy by the end of 2020. Entitled the Electricity from Renewable Resources Regulation, it also establishes the Locally-Owned Renewable Energy Projects Small Scale Program (LORESS), by which NB Power currently aims to procure 40 MW of electricity. Continue Reading
On January 24, 2017, the Québec Ministry of Energy and Natural Resources (“MENR”) unveiled new Policy Directions (available in French only) that it will implement in order to foster social acceptability for major projects in the province (the “Policy Directions”).
While these Policy Directions do not have legal value, they will likely have an impact on the actions of the MENR in connection with oil and gas, mining, power projects in Québec, as well as industrial projects involving provincial public lands. Continue Reading
Two separate court challenges of the federal and provincial environmental assessment approvals for the Site C hydropower project in British Columbia have recently been dismissed by the federal and BC appellate courts. The two appellate courts separately upheld earlier decisions of the BC Supreme Court and the Federal Court which had dismissed applications for judicial review by the Prophet River First Nation and the West Moberly First Nation (the First Nations) of the provincial and federal environmental assessment decisions approving Site C. The First Nations argued that the approvals infringed their treaty rights under Treaty 8 and that there was inadequate consultation and accommodation. Continue Reading
On January 19th and 31st, 2017, the Alberta Electric System Operator (the AESO) provided additional guidance regarding project eligibility, updated its timeline for the first competition under Alberta’s Renewable Electricity Program (REP) and posted the consolidated stakeholder comments on the key provisions of the Renewable Electricity Support Agreement (RESA).
This post provides an overview of the new details regarding the REP and an update with respect to the upcoming AESO education session on Alberta’s capacity market to be held in Calgary on February 7th, 2017. Continue Reading
McCarthy Tétrault LLP’s Power Group has launched the 2nd edition of its publication, ‘Canadian Power – Key Developments in 2016/Trends to Watch for in 2017’. The publication provides a detailed overview of significant developments in the Canadian power sector over the past year, as well as emerging trends that will be relevant in the coming year. Content includes in-depth regional analyses of developments in British Columbia, Alberta, Ontario and Québec, as well as commentary on the impact of specific issues on the power sector, such as recent M&A activity and developments in aboriginal law and environmental regulations in such areas as carbon pricing.
On November 23, 2016, the Government of Alberta approved the restructuring of Alberta’s Energy Market from a fully deregulated regime to a hybrid system that will incorporate capacity payment mechanisms. This decision along with some key features of the Alberta Electric System Operator’s (the AESO) Wholesale Electricity Market Transition Recommendation Report are detailed in our recent blog post.
The AESO is designing and implementing an Alberta-specific capacity market. In order to leverage the experience and expertise of stakeholders in this process, the AESO is carrying out a Design Criteria & Engagement Process that is expected to run until mid to late 2018. Continue Reading
Consistent with the Alberta Electric System Operator’s (AESO) earlier indications and as discussed in previous posts, renewable electricity will include wind, solar, hydro, geothermal, and sustainable biomass projects. The REP is available to large scale renewable electricity generation (5 MW or greater total nominal capacity). Under the Act, the AESO will administer “a fair and competitive process” for REP proposals to incentivize renewable generation in the Alberta in order to meet the Province’s “30 by ‘30” target. Following the competitive process, successful bidders will enter into a Renewable Electricity Support Agreement (RESA) with the AESO. Continue Reading
On November 23, 2016, the Government of Alberta announced the restructuring of Alberta’s electricity market, from a fully deregulated regime to a hybrid system that incorporates capacity payment mechanisms.
Alberta is one of the few jurisdictions in the world with an “energy-only” market. This means that Alberta generators only recover the wholesale price of electricity. Investors are only able to recover invested capital if they can leverage high-priced hours, and in this way, the energy-only system contains the risk of supply instability and may not promote investment in generation facilities and, in particular, renewable energy sources. Continue Reading
As Ontario puts the finishing touches on its cap-and-trade program, which will commence on January 1, 2017, the Ministry of Environment and Climate Change (MOECC) has released its Compliance Offset Credits Regulatory Proposal (the Regulatory Proposal) for a 45-day public comment period that will end on December 30, 2016. Under the cap-and-trade program, capped facilities will be required to either reduce their greenhouse gas (GHG) emissions or meet their compliance obligations through other regulatory tools, including the use of offset credits. As a compliance mechanism, offset credits provide emitters with greater flexibility and potentially lower cost options to meet their compliance obligations. Continue Reading