The Government of Québec and Alcoa announced today that they have entered into a new agreement for the supply of electricity by Hydro-Québec to Alcoa’s Bécancour, Deschambault and Baie-Comeau facilities.
The agreement secures power supply to the Bécancour and Deschambault smelters until 2030 and to the Baie-Comeau plant until 2036. In consideration for an undertaking by Alcoa to maintain a certain employment level and to invest a minimum of $250 million over the next five years (including $150 million dedicated to modernizing the Baie-Comeau facility), the agreement essentially provides for an improved electricity tariff for Alcoa’s plants reflecting the current conditions of the aluminum market.
Both Alcoa and the Government of Québec claim that the agreement secures approximately 3,000 jobs in the province. Alcoa has also agreed to support the Government’s electric transportation strategy by considering the Baie-Comeau facility as a potential source of aluminum for emerging technology applications, including aluminum-air batteries.
Press releases from Alcoa and from the Quebec government are available here and here.
We recently highlighted some important changes by the Ontario Power Authority (the “OPA”) to Ontario’s renewable energy procurement program for microFIT, Small FIT, Large FIT and Contract Capacity Set-Asides. Perhaps the most significant of these changes originated in an Ontario Ministry of Energy directive, issued on June 12, 2013, which instructed the OPA to replace Large FIT Projects (over 500 kW) with a new competitive procurement process to be developed based on feedback from municipalities, aboriginal communities, industry associations, the general public and other stakeholders. Continue Reading
The following article may be of interest to readers of this blog: Patent Law Year in Review: Oil and Gas (2013)
In 2013 the Federal Court experienced a surge in patent infringement actions. Whereas 48 patent infringement actions were filed in 2012, that number rose to 101 in 2013. Part of that increase came about because of growth in the oil and gas patent infringement sector. Put simply, oil and gas companies were more aggressive at enforcing their patent rights in 2013. Read More.
On February 5, 2014, the BC government announced that it is unlikely to release the detailed tax regime for the province’s proposed liquefied natural gas (LNG) sector before the fall legislative session. In his address to the media, BC Finance Minister Mike de Jong explained that he expects the government to make the framework for the LNG tax public when he presents the provincial budget on February 18, 2014, but tax rates are unlikely to be released until legislation is tabled this fall.
In September 2013, the BC government cancelled the fall sitting of the legislature on the basis that it required time to draft the complicated LNG tax legislation. As noted in our prior blog post, the government initially intended to finalize the applicable tax rules by the end of November but decided to delay providing details until completing further consultations with industry and LNG project proponents.
The BC government faces the challenge of developing a tax regime that will fund the promised 30-year $100 billion LNG “Prosperity Fund”, while ensuring that BC remains competitive with other jurisdictions seeking to export LNG. However, BC’s LNG tax represents only one factor under consideration as LNG proponents prepare to make final investment decisions on their BC-based projects. In addition, project proponents are continuing to navigate applicable environmental and regulatory processes and engage with potentially impacted stakeholders and First Nations.
At least ten LNG projects are currently planned in BC. No final investment decisions have been made to date, but certain project proponents have indicated that they intend to do so before the end of 2014. It remains unclear whether delaying the release of a detailed LNG tax regime will impact the ability of proponents to make final investment decisions according to their current project schedules. We will continue to monitor the development of BC’s LNG tax and will update this blog as further details emerge.
For those who may be interested, McCarthy Tétrault has just launched its eleventh blog, Canadian Class Actions Monitor, at http://www.canadianclassactionsmonitor.com. The blog provides the firm’s views on class actions across Canada in sectors including securities, financial services, product liability, competition, healthcare and other areas of business. It also comments on the impact of class actions on Canadian businesses and the legal landscape, and shares our insights on specific class actions in Canada, related developments and cross-border influences
British Columbia’s new liquefied natural gas (LNG) sector was particularly lively in the weeks since our mid-December update. To keep our readers up-to-date, we have prepared the following brief summary of recent notable LNG sector activity. Continue Reading
We are delighted to share that McCarthy Tétrault’s Canadian Appeals Monitor blog has received a 2013 Clawbie (Canadian Law Blog Award) in the Practice Group Blog category, for its overall excellence in covering Canada’s appellate courts and cases.
Canadian Appeals Monitor is one of McCarthy Tétrault’s 10 blogs covering a variety of practice areas. The Clawbies highlight in particular “This Week at the SCC” as “a strong regular contribution” that “really does take a national firm to pull off.”
We are also very proud of our partner Barry Sookman, whose eponymous Barry Sookman blog was a runner-up in the Clawbies’ Legal Technology category. Barry is the former co-chair of McCarthy Tétrault’s Technology Group and former head of its Intellectual Property Group, and is one of Canada’s foremost authorities in information technology and intellectual property law. He uses his blog to share his views on a wide range of copyright, Internet and information technology issues.
We look forward to more great blogging in 2014!
We are delighted to announce our partnership with HEC Montréal’s new Chair in Energy Sector Management, which is held by renowned expert on energy policy Professor Pierre-Olivier Pineau. The new Chair is dedicated to advancing knowledge of energy issues, with a view to optimizing energy systems and ensuring that there are adequate energy sources to meet society’s needs. In its role as partner to the Chair, McCarthy Tétrault will contribute a total of $100,000 over a five-year period. Our very own Marc Dorion will serve on the Chair’s advisory committee.
You can find our press release is here and the press release of HEC Montreal is here.
Hydro-Québec Distribution announced today that it has issued a call for tenders for the purchase of a block of wind power produced by facilities with an installed capacity of 450 MW, composed of 300 MW for the Bas St-Laurent and Gaspésie─Îles-de-la-Madeleine regions and 150 MW for projects across Québec.
As a major contributor of greenhouse gas (GHG) emissions, the transportation sector has been identified by policy makers as a sector in which significant emission reductions can be achieved. In British Columbia (BC), the transportation sector accounted for approximately 37.1% of the province’s total GHG emissions in 2011. One of the policy instruments designed to reduce GHG emissions is the low carbon fuel standard (LCFS), which is intended to reduce the carbon intensity of transportation fuels measured on a life-cycle basis. The LCFS also requires a reduction in the carbon intensity of life cycle emissions, which is intended to spur improvements in fuel production and refining efficiency, while promoting a broader range of fuel alternatives and innovation in vehicle technology to accommodate the growth in fuel options. Continue Reading
British Columbia’s emerging liquefied natural gas (LNG) sector remained active throughout the second half of 2013. Governments and proponents negotiated agreements and projects advanced through various regulatory processes. Given continued interest in BC’s new industry, we prepared the following end-of-year update that summarizes notable LNG sector activity. Continue Reading
We are pleased to announce that George Vegh, the head of our energy regulatory practice, was recently invited to discuss Ontario’s new Long Term Energy Plan on the Agenda with Steve Paikin. You can watch a recording of the program by clicking here.
For other posts on the Long Term Energy Plan please click here and here.
The Government of Ontario today released the province’s most recent Long Term Energy Plan (“LTEP”). A copy of LTEP materials can be accessed by clicking here. As expected, the LTEP did not provide any drastic supply mix or policy changes from current plans. However, there are a number of changes that are worth noting.
Major Supply Changes:
- As expected, there will be no new nuclear facilities;
- A schedule has been set for the refurbishment of the Bruce and Darlington nuclear facilities, starting in 2016;
- The target for non-hydro renewable capacity remains unchanged, but its implementation is extended from 2018 to 2021 – the goal is for procurements of 300 MW of wind, 140 MW of solar and 50 MW of bioenergy for each of 2014 and 2015; and
- Demand reduction targets have increased to 10% of forecasted demand by 2025 (however, when combined with other types of conservation, the total conservation targets are not dramatically changed).
Major Policy Changes:
- Placing greater reliance on regional planning, including municipalities and local communities – which could have a major impact on the development of large wind projects;
- Avoiding commitments to new supply facilities unless and until necessary to do so; and
- Providing annual updates on forecasts and achievement of goals.
EDITOR’S NOTE: please tune in to see George Vegh, the head of our energy regulatory practice, discuss the LTEP on the Agenda with Steve Paikin tomorrow evening at 8:00 pm on TVO. You can watch online by clicking here. For other posts on the LTEP, including a post on George’s recently published paper, “Energy Planning: The Case for a Less Prescriptive Approach”, please click here.
In an increasingly competitive global market for natural gas, the race to export liquefied natural gas (LNG) to Asia is on. With LNG attracting a premium price in Asia, Canada is vying with the US, Australia, Russia, East Africa and the Middle East to rapidly build the infrastructure required to move LNG to key markets in Japan, Korea, Taiwan, China and India. With the commercial success of shale gas plays in the US, the nascent LNG industry in British Columbia is attracting significant interest from investors as an economically feasible venture. BC is particularly well suited to unconventional gas production, where shale is the most commonly occurring type of sedimentary rock in the northeast part of the province. The big shale plays in BC are Montney, Horn River, Liard and the Cordova Embayment. Continue Reading
On November 26, 2013, the BC government confirmed its approval of BC Hydro’s Integrated Resource Plan (IRP). The IRP provides a 20-year outlook of how BC Hydro expects to reliably and cost-effectively meet the anticipated future electricity needs of the province through conservation and acquisition of sufficient generation and transmission resources. Continue Reading
The BC government has announced a 10 Year Plan for BC Hydro in which the province aims to minimize rate increases while allowing BC Hydro to reinvest in its aging assets and infrastructure. As we noted in a prior blog post, Bill Bennett, Minister of Energy and Mines and Minister Responsible for Core Review, previously indicated that BC Hydro rate increases were imminent in view of the ongoing refurbishment of BC Hydro’s heritage generation facilities. Continue Reading
On November 19, 2013, B.C.’s Minister Responsible for Core Review, Bill Bennett, announced that the province’s carbon offset program will be folded into the Ministry of Environment’s Climate Action Secretariat (CAS) while the Pacific Carbon Trust (PCT) is wound down. Minister Bennett indicated that the closure of the PCT will result in savings of approximately $5.6 million annually, part of the core review being undertaken by the provincial government to find $50 million in cost savings to meet the promise of a balanced budget in 2014. The transition of the carbon offset program to CAS will also mean a reduction in staff from 18 to 5. Continue Reading
The BC government recently indicated that it will delay the announcement of the tax regime for the province’s emerging liquefied natural gas (LNG) sector. Minister of Natural Gas Development Rich Coleman had previously indicated that the province was close to finalizing applicable tax rules and expected to provide details by the end of November. The Minister now indicates that more time is needed to complete related consultations with the various LNG proponents.
As noted in our prior blog post, the BC government has promised to establish an LNG “Prosperity Fund” that would accumulate over $100 billion in revenue over a 30-year time frame. Since then, the BC government has been in discussions with LNG proponents in order to better understand their business models and to formulate a tax regime that will be effective and efficient in the circumstances.
The setting of LNG tax rates was expected to be challenging. The BC government needs to balance the desire for generating provincial revenue from the LNG industry, while ensuring that the LNG tax does not make BC-based LNG projects uncompetitive and divert investments to other gas-rich countries. Despite the delay, Minister Coleman has emphasized that details of the LNG tax will be made available well before the LNG proponents are scheduled to make their respective final investment decisions.
Today is the first day of the APPrO 2013 Conference, which will be taking place at the Metro Toronto Convention Center. Sessions will cover a wide range of topics of interest to anyone involved in Ontario’s power sector and there is an impressive roster of speakers. In particular, look out for McCarthy Tétrault’s very own George Vegh, who will be moderating a panel on The Evolution of Policy and Regulation: What’s Ahead for Ontario’s Power Sector? We look forward to seeing you there.
In light of the anticipated release of Ontario’s new long term energy plan (“2013 LTEP”) near the end of November, we wanted to provide a summary of our colleague George Vegh’s paper, “Energy Planning: The Case for a Less Prescriptive Approach” George is the head of McCarthy Tétrault’s energy regulatory practice.
The paper provides an analysis of the discussion paper and data released by the Government of Ontario on the 2013 LTEP. It compares this year’s plan with previous planning exercises, and proposes a less prescriptive approach to electricity planning.
George identifies the opportunity for a dramatic course correction, especially in connection with the role of renewable power, new nuclear facilities and conservation. The data accompanying the 2013 LTEP shows that capacity requirements that are not planned for in terms of specific commitments to these resources have dramatically increased under the newest plan. This suggests that the uncommitted capacity requirements may be met by a greater range of resources, including alternative resources absent from previous planning exercises, such as natural gas and imported power.
George argues that the new LTEP treats the resources as “options that presumably will have to compete among each other to meet the Province’s capacity and energy needs.” He rules out growth in demand as the cause of such developments, and attributes it instead to the open-mindedness of the Government in moving away from a supply mix approach toward a goal-oriented approach.
This open-mindedness reflects a welcome development for the Province, which, in the past, has adopted a much more prescriptive approach to choosing generation technologies.
Stay tuned for further updates on Ontario’s 2013 LTEP.
BC’s Environmental Assessment Office (EAO) and Oil and Gas Commission (OGC) have entered into a memorandum of understanding (MOU) intended to streamline environmental assessments and permitting for liquefied natural gas (LNG) and other reviewable projects by reducing duplication and improving timelines. Continue Reading
A new federal-provincial study has concluded that naturas gas reserves contained in the Montney Formation that straddes British Columbia and Alberta are more than double than previously estimated, equivalent to 145 years of supply at Canada’s current consumption levels.
Prepared jointly by Canada’s National Energy Board, the Alberta Energy Regulator, B.C.’s newly-created Ministry of Natural Gas Development and the B.C. Oil & Gas Commission, the study assesses for the first time the unconventional petroleum resource potential of the Montney Formation. The study’s findings include the following:
- the ultimate potential for unconventional petroleum in the Montney Formation is estimated at 12,719 billion m3 (449 Tcf) of marketable natural gas, 2,308 million m3 (14,521 million barrels) of marketable natural gas liquids (NGLs) and 179 million m3 (1,125 million barrels) of marketable oil;
- B.C.’s share of the Montney Formation’s estimated marketable unconventional natural gas, NGL and oil reserves are 271 Tcf, 12,647 million barrels and 29 million barrels, respectively, compared to Alberta’s share of 178 Tcf, 1,874 million barrels and 1,096 million barrels, respectively;
- volumes of marketable oil, located almost entirely in Alberta, remain highly uncertain as areas richest in Montney unconventional oil tend to be in shallower areas where development is less certain. Alberta’s marketable NGL volumes are similarly uncertain for the same reason; and
- when combined with prior assessments of conventional natural gas resources, the study’s findings indicate that the total ultimate natural gas potential in the Western Canada Sedimentary Basin has more than doubled to 23,249 billion m3 (821 Tcf), with 17,898 billion m3 (632 Tcf) remaining after substracting cumulative production to the end of 2012.
The study confirms the Montney Formation’s status as one of the largest natural gas resources in the world, and prompted B.C.’s Minister of Natural Gas Development Rich Coleman to state that “now, more than ever before, B.C. can supply energy needs at home and abroad. The Montney area will support economic activity in our province for a very long time as a supply hub for liquefied natural gas development.”
The following article by Louis-Nicolas Boulanger and Richard O’Doherty may be of interest to readers of this blog:
Québec Publishes Final Regulation Regarding 450-MW Wind Power Block
On August 28, 2013, we reported that the Quebec Government had published a draft regulation under An Act Respecting the Régie de l’énergie setting out the framework for the procurement of an initial 450-MW block of wind power of the previously announced 800 MW of wind power to be procured. A link to this blog post can be found here. Read more.
This week, the Ontario Power Authority (OPA) announced the beginning of the final stage of its Feed-in-Tariff (FIT) program: FIT 3.0. The OPA is accepting applications until December 13, 2013 for Small FIT Projects with proposed capacity of approximately 10 to 500 kilowatts. Applications are also being accepted during this period for a new Unconstructed Rooftop Solar Pilot.
The OPA provides a summary of the changes introduced by FIT 3.0 here. Of particular note, FIT 3.0 will not include Large FIT Projects, meaning applicants interested in developing projects larger than 500 kilowatts will be required to participate in the competitive large renewables procurement processes, described in detail by our colleagues Suzanne Murphy and Omar Soliman here. Also worth noting is that the Minimum Required Domestic Content Level (MDCL) has decreased from 50% for on-shore wind facilities to 20%. Similarly, the MDCL for solar PV has decreased from 60% to a range of 19-28%, depending on the exact solar PV technology used.