As we reported in a blog post in October 2016, the Renewable Energy Approval (“REA”) for the Fairview Wind Farm (“Fairview”) in Clearview Township was revoked by the Environmental Review Tribunal (“ERT”) on the basis that the project would cause serious and irreversible harm to the endangered species of bat, the little brown bats. The ERT also concluded, for the first time, that there would be harm to human health due to close proximity of the project to the Collingwood Airport and the Clairview Field Airport.
The ERT granted a request from Fairview to address remedies with respect to the finding of serious and irreversible harm to the little brown bats through further submissions at a remedy hearing. Fairview did not request such hearing for the finding on harm to human health. In the remedy hearing, the ERT had to determine, under s. 145.2.1(4) of the Ontario Environmental Protection Act (1990) (“EPA”), whether to (a) revoke the decision granting the REA, (b) direct the Director to take such actions as the Tribunal requires in accordance with the EPA or (c) alter the decision granting the REA.
Following the remedy hearing, the ERT released its decision on August 16, 2017 noting that, with regards to the little brown bats, Fairview’s remedy plans would likely reduce little brown bats mortality significantly. However, the ERT ordered that the REA be revoked because Fairview was unable to propose effective means to mitigate the serious harm to human health. In light of this decision, the ERT concluded that an amendment to the REA to include the mitigation plan regarding little brown bats was not necessary.
Given that the Fairview Project decision was the first ERT decision to find harm to human health, it was unclear how Fairview would address remedy through further submissions. In the main hearing, the ERT had considered mitigation measures put forward by Fairview but ultimately decided that there was insufficient evidence that the proposed mitigation measures would be effective. In the remedy hearing, Fairview did not provide additional evidence supporting these mitigation measures nor did it propose new measures. In fact, Fairview did not make any submissions on this issue.
As noted, this was the first ERT decision to revoke an REA based on the finding of harm to human health. In this case, the harm to human health arose from the danger caused by the project’s proximity to the airport, and not from any concerns related to the general impact of wind farms on human health. It will be interesting to see whether this decision will have any impact on human health-related arguments made before the ERT in future REA appeals. The period to file an appeal expired on September 15, 2017.
A pioneering survey has found that Indigenous participation in Canada’s clean energy economy has grown rapidly over the past 20 years, in all regions of the country. Lumos Clean Energy Advisors (Lumos), an advisor to First Nations, Métis and Inuit communities, undertook a review of national research and drew on the company’s database of clean energy projects. In particular, Lumos looked at 152 medium to large-scale solar, wind, hydro and bio-energy clean energy projects now in operation (medium to large projects are categorized as renewable energy projects generating one (1) megawatt of electricity at full operating capacity). The resulting report, Powering Reconciliation: A Survey of Indigenous Participation in Canada’s Growing Clean Energy Economy, highlights the importance of federal and, particularly, provincial/territorial government policies in the areas of energy, climate change and economic development to the rise of Indigenous participation in the clean energy sector. The report also found the following:
- BC leads the way nationally, with 52% of Indigenous clean energy projects in operation, followed by 24% of projects in Ontario and 10% of projects in Québec. The remaining projects are spread across the Maritime provinces, the Prairies and the Territories. An interactive map of projects is available online. The report notes that Saskatchewan and Alberta are now moving into an Indigenous clean energy growth phase. In addition, major growth is anticipated over the next three to five years in over 175 off-grid, remote and northern Indigenous communities as they transition away from diesel-reliant energy.
- Hydroelectric is the most dominant resource for Indigenous renewable energy projects, comprising 63% of all Indigenous clean energy projects. Wind projects are growing and represent 24% of Indigenous clean projects; the remaining 13% of projects are split among three technologies – solar (eight projects in Ontario), biomass (seven projects in BC and one in Québec) and district heating (in Nunavut).
- The generating capacity of clean energy projects with Indigenous partnerships is substantive, totalling 19,516 megawatts, which represents nearly one fifth of Canada’s overall power production infrastructure and $56 billion in capital construction costs.
- Actual equity investment from Indigenous/developer/utility partners ranges from 10-15% of total capital requirements, meaning that the majority of project capital is financed through long-term debt.
- The norm is for Indigenous communities/partners to hold approximately 25% of ownership in clean energy projects. The report estimates that Indigenous communities have invested $1.8 billion in equity in clean energy projects. The source of Indigenous investment varies by project and includes community funds, funds from treaty settlements and land claims, community trusts, debt financing through the project developer, direct grants from the project developer, external borrowing on full commercial terms, and/or external borrowing backstopped by guarantees provided by governments, Indigenous financial institutions or project partners.
- Using project metrics, the report estimates that Return on Investment averaged 14% for projects constructed prior to 2014, 12% for projects constructed from 2014 to the present, and the trend going forward appears to be in the range of 10%.
- Over the next 15 years, Indigenous communities will generate at least $2.5 billion in profit from clean energy project investments.
- Using actual construction employment data from Indigenous clean energy projects surveyed, the report estimates that 15,300 person-years of direct Indigenous employment have been achieved.
- Ancillary benefits from projects include local infrastructure upgrades, community energy literacy and planning, community program support, housing improvements, and cultural features (such as the integration of Indigenous art into clean energy facilities).
- In addition to medium and large-scale projects, over 1,200 small-scale renewable energy projects have been constructed with Indigenous participation.
The report notes that first and foremost, Indigenous communities seek clean energy projects with low to minimal ecological impacts on land, water, fisheries and wildlife. Also, the report notes that clean energy projects with Indigenous participation embody the process of national reconciliation between Canada and Indigenous peoples. In response to the survey, many Indigenous leaders expressed that the most important benefit arising from participation in clean energy projects was a strengthening of community pride and an affirmation of Indigenous rights and territory. In addition, a significant number of Indigenous respondents spoke of the respectful relationships arising through solar, wind, hydro and bio-energy initiatives with project partners, government programs and energy authorities. With an additional 50 to 60 medium to large-scale renewable projects with Indigenous participation expected to come online over the next five to six years, Indigenous engagement in renewable energy projects looks set to continue driving the growth of Canada’s clean energy economy and supporting reconciliation efforts.
With the release of Bulletin 2015-34, the Alberta Energy Regulator (AER) amended the process for transferring pipeline licences to require written confirmation that compulsory records under CSA Z662: Oil and Gas Pipeline Systems and Part 4 of the Pipeline Rules have been maintained by the vendor and transferred to the purchaser prior to the approval of a license transfer. Continue Reading
BC’s recently sworn-in New Democratic Party (NDP) government presented its first provincial budget on September 11, 2017. Among the policy measures announced were changes to the BC carbon tax. In particular, the Budget 2017 Update (2017/18 – 2019/20) provides for the following:
- As of April 1, 2018, the carbon tax will increase by $5 per tonne of carbon dioxide equivalent (CO2e) per year until it reaches the federal target carbon price of $50 on April 1, 2021 (one year before Ottawa’s 2022 deadline). BC’s carbon tax is currently set at $30 per tonne of CO2e.
- Part 2 of the Carbon Tax Act has been repealed, meaning that the requirement for the provincial Minister of Finance to prepare the Carbon Tax Report and Plan will no longer apply after September 11, 2017. In addition, this means that the Carbon Tax Act will no longer require that revenue measures be introduced to offset carbon tax revenues. This will allow the government to spend carbon tax revenues on emission reduction measures or other green initiatives, rather than returning carbon tax revenues to taxpayers.
The proposed Trans Mountain Expansion Project (the Project) involves a $7.4-billion expansion of the Kinder Morgan pipeline stretching from Edmonton to Burnaby, as well as the construction of new works such as pump stations and tanks and the expansion of an existing marine terminal. In December 2016, the Project received federal government approval, after the National Energy Board (NEB) recommended in May 2016 that the Project should proceed, subject to the satisfaction of 157 conditions. Under the Constitution Act of 1867, the regulation of international and inter-provincial transportation (which includes pipelines) falls within the exclusive jurisdiction of the federal government.
In January 2017, the Project received its provincial environmental assessment certificate along with a political green light to move forward. In expressing the province’s support for the Project, then Premier Christy Clark indicated that the Project had met the five conditions the provincial government had issued in 2012 for approving any pipeline projects. Following the close results of BC’s provincial election in May 2017, the NDP formed a government with the backing of the BC Green Party. In Premier John Horgan’s July 2017 mandate letter to the new Minister of Environment and Climate Change Strategy, George Heyman, the Minister was tasked with employing “every tool available to defend BC’s interests in the face of the expansion of the Kinder Morgan pipeline, and the threat of a seven-fold increase in tanker traffic on our coast”, among other things. This is the context within which the Attorney General of BC (the AG) sought – and was ultimately granted – intervenor status in the upcoming Federal Court of Appeal proceeding challenging the administrative approvals for the Project, discussed in further detail below. Continue Reading
On September 15, 2017, the Alberta Electric System Operator (AESO) announced the opening of the final Request for Proposal (RFP) stage of Round 1 of the Renewable Energy Program (REP).
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 email@example.com.
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