Last November, the Alberta government released its Climate Leadership Plan, setting out the phase-out of coal-fired electricity generation by 2030, to be replaced with two thirds renewable energy generation and one third natural gas generation. Then, the Alberta Electric Systems Operator (AESO) was subsequently directed to develop an incentives program for renewable generation. Continue Reading
Last year’s election ushered in Alberta’s first regime change since 1971, resulting in a wave of policy changes involving renewable generation development, the phase-out of coal-fired generation, and emissions and carbon tax policy. This update captures certain key aspects to these changes and takes stock of things to come.
Alberta’s provincial government released its Climate Leadership Plan (Climate Plan) in November of 2015, as discussed in a previous post. This post focuses on the following key Climate Plan policy announcements affecting the power industry:
- incentives for renewable generation,
- phase-out of coal fired generation emissions by 2030,
- implementing an economy-wide carbon price, and
- implementing an energy efficiency program.
The week of October 3, 2016 was an eventful one for Canadian climate change policy as the federal government introduced a pan-Canadian carbon price and ratified the Paris Agreement. Following the federal election in October 2015, indications were that all provinces and territories would be expected to price carbon. This was confirmed on October 3, 2016 when Prime Minister Justin Trudeau announced that the federal government will set a minimum price on carbon starting at $10 per tonne of carbon dioxide equivalent (CO2e) in 2018, which will increase by $10 per year until it reaches $50 per tonne of CO2e by 2022. This approach will be reviewed in 2022 to confirm the path forward, including continued increases in stringency. Continue Reading
On September 27, 2016, the Minister of Energy of Ontario issued a policy direction to suspend the Large Renewable Procurement II (“LRP II”) process. In response to this direction, the IESO cancelled the first phase of the LRP II (the Request for Qualifications (“RFQ”)) and will not commence the second phase of the process (the Request for Proposals (“RFP”)).
Launch of LRP II Process
The LRP II was announced on April 5, 2016 with procurement targets of 600 MW of wind, 250 MW of solar, 50 MW of waterpower, 30 MW of bioenergy and 50 MW for technical upgrades and optimization of existing facilities. Submissions for the LRP II RFQ were due on September 8, 2016. The IESO received 59 RFQ submissions and successful applicants were to be notified in November 2016. The second phase of the process, the LRP II RFP, was expected to begin in early 2017, with contracts offered by May 2018.
Suspension of the LRP II
Suspending the LRP II is part of the Ontario government’s plan to reduce electricity costs for consumers. As renewable energy prices are expected to decline, the Ministry of Energy has advised that suspending the LRP II would allow the government to procure renewable energy at a lower cost in the future. It further noted that suspending the LRP II process “would save up to $3.8 billion in electricity system costs relative to Ontario’s 2013 Long-Term Energy Plan (“LTEP”) forecast” and up to $2.45 per month on the average residential electricity bill of a typical consumer.
The Ministry of Energy based its decision to suspend the LRP II process on the Ontario Planning Outlook (“OPO”) published by the IESO. The OPO indicated that Ontario had abundant electricity resources to support the development of projects planned in the LTEP. The findings in the OPO considered a range of demand forecasts for electricity in Ontario from 2016 to 2035.
Next Steps – Ontario’s Long-Term Energy Plan 2017
In the fall, consultations will begin with various stakeholder groups regarding the development of a new LTEP to be released in 2017. In regards to the LRP II RFQ, the IESO noted on its website that additional details will be available shortly for RFQ Applicants regarding the cancellation of the first phase.
For more information, please visit: http://www.ieso.ca/Pages/Participate/Generation-Procurement/Large-Renewable-Procurement/default.aspx.
On September 14, 2016, the Alberta Government announced its firm target that 30% of electricity used in Alberta will come from renewable sources such as wind, hydro and solar by 2030. In order to achieve this, the province intends to support 5,000 MW of additional renewable capacity.
The province’s 30 by 30 announcement also provides useful details regarding eligibility for the Renewable Electricity Program (or REP). Projects must:
- be based in Alberta,
- be new or expanded,
- be five megawatts or greater in size, and
- meet the Natural Resources Canada definition of renewable sources.
On July 29, 2016, the IESO posted the final materials for the Large Renewal Project II (“LRP II”) Request for Qualifications (“RFQ”). Draft materials were posted on June 27, 2016 and the IESO solicited feedback from potential applicants and industry groups. As a result of this consultation, minor changes were included in the final materials for the LRP II RFQ.
As previously noted in detail in our post on July 15, 2016, the two major changes to the LRP II RFQ process are the introduction of the simplified process for LRP I Qualified Applicants (“QAs”) and a procurement target of 50 MW from technological upgrades and optimization of existing renewable facilities. Changes included in the final materials provide greater clarity regarding the application process under the simplified process for LRP I QAs, and the required submission materials for applicants submitting projects for technological upgrades and optimization of existing renewable facilities.
To be eligible for the simplified process, an applicant must declare that (i) each LRP I Control Group Member is still a Control Group Member of the applicant and (ii) each LRP I designated team member is still a Designated Team Member.
The IESO has provided additional information for this requirement: if an LRP I QA or its Control Group Member(s) underwent an approved change of Control as part of the LRP I Process, it will qualify as an LRP I QA and can submit its RFQ under the simplified process. The applicant must submit the letter issued by the IESO or its predecessor approving the change of Control.
50 MW of Procurement from Existing Renewable Energy Facilities
The IESO has also introduced a new separate form that must be filled out by applicants who will submit technological and optimization projects, namely the Prescribed Form – Technical Upgrades and Optimization Questionnaire. In several of its online webinars, the IESO mentioned that the purpose of this form is to collect information that will assist the IESO in formulating the Request for Proposals (“RFP”) process and project requirements for technological and optimization projects.
The IESO confirmed that the applicant must evidence the Designated Team Member Development Experience for proposed technological upgrades and optimization of existing renewable generation facilities. The IESO received several comments on this issue, where applicants noted that existing generation facilities were operational and they therefore should not be required to re-evidence their development experience. Though the IESO kept this requirement in the final materials, it has included an exception where applicants submitting technological and optimization projects do not need to demonstrate development experience for the entity level.
Applicants are not eligible for the simplified process and will have to proceed through the standard process. The final materials also include a disclaimer, where the IESO reserves the right to make a determination (even if an applicant is deemed a QA), that it is not feasible to procure any additional generation resulting from technological upgrades to and optimization of existing renewable generation facilities.
Comment Period and Next Steps
The LRP II RFQ submission period began on July 29, 2016 and will end on September 8, 2016 at 3:00 p.m. (Eastern Prevailing Time). Successful applicants, who will be deemed QAs, will be notified in November 2016.
The BC government released its long awaited Climate Leadership Plan (the Plan) on August 19, 2016. The Plan, which updates the province’s 2008 Climate Action Plan, contains 21 new actions to reduce emissions across the following sectors: (i) natural gas, (ii) transportation, (iii) forestry and agriculture, (iv) communities and built environment, and (v) public sector. The Plan follows the release of the Climate Leadership Team’s report in November 2015. The CLT, which was appointed by the BC government in May 2015 to provide advice for the development of the Plan, made 32 recommendations including, among others, the establishment of a mid-term 2030 greenhouse gas (GHG) emissions reduction target and a reduction in the provincial sales tax from 7% to 6%, which would be offset by an increase in the carbon tax by $10 per year commencing in July 2018. While the Plan reflects some recommendations made by the CLT and feedback received through public consultation and stakeholder engagement sessions, the Plan bypasses BC’s 2020 target of achieving a reduction in GHG emissions of 33% below 2007 levels and instead charts a path for BC to reach its 2050 target of 80% below 2007 levels. In addition, the BC government has decided to keep the province’s revenue neutral carbon tax at $30 per tonne until the details for a pan-Canadian climate change policy, including the federal government’s approach to carbon pricing, are more clear. Continue Reading
On July 21, 2016, the IESO hosted a discussion on the portion of the Large Renewable Procurement II (“LRP II”) process pertaining to technological upgrades and optimization of existing renewable facilities. This discussion provided potential applicants with an opportunity to provide comments and feedback to the IESO as to the types of technologies that should be included in the LRP II process, procurement considerations for such technologies and contractual considerations.
Prescribed Form – Technical Upgrades and Optimization
The Prescribed Form for Technical Upgrades and Optimization is required for applicants submitting an RFQ for a technological upgrade and optimization project. The form requires the applicant to provide extensive information regarding the proposed project, the technology used and potential pricing.
Several concerns were raised about this Prescribed Form, including questions as to why this Prescribed Form is only required for technological upgrade and optimization projects. Some participants noted that the requested information was extensive and suggested that the deadline for submission should be extended. Others noted that the information requested would be more suitable for the LRP II RFP phase.
The IESO indicated that this Prescribed Form will only be used for data collection and will not be used to assess an applicant during the LRP II RFP phase. The IESO has significant data (including data regarding appropriate pricing) for certain types of renewable projects, such as wind and solar, but lacks information for technological upgrade and optimization projects. The IESO indicated that it will use the collected data to help determine the appropriate requirements for the LRP II RFP phase.
Consultation Process and Community Engagement
Some participants inquired about the consultation process between the IESO and the Ministry of the Environment and Climate Change (“MOECC”) and, in particular, noted that specific software upgrades could require additional environmental permitting and community engagement. The IESO indicated that community engagement is an important part of the process and that it would be unreasonable to not require any community engagement for a project change, even if such change is limited to a software upgrade. The IESO also mentioned that they are currently engaged in ongoing consultations with the MOECC and that the IESO’s ultimate selection of the technologies that are eligible for this portion of the LRP II procurement will impact such consultations.
Existing PPAs and Transmission Constrained Areas
Certain participants inquired about their existing power purchase agreements (“PPAs”) with the IESO. The IESO noted that each PPA is different and contains nuances that will need to be considered. The IESO did indicate that it would consider (i) suggestions regarding appropriate PPA terms and (ii) concerns raised by an applicant who does not believe that its proposed technological upgrade and optimization can be made under the project’s current PPA.
The IESO also addressed questions regarding the submission of projects from transmission constrained areas and advised that the standard LRP II capacity evaluation would apply, since this procurement is part of the LRP II process.
LRP II RFQ Materials and Process
As previously noted, the LRP II RFQ materials will be posted online on July 29, 2016. The LRP II RFQ process will launch on August 1, 2016. Question and comment periods will be held between August 1 and August 19, 2016. The deadline for Qualification Submissions is September 1, 2016. These dates are subject to change and will be finalized once the final LRP II RFQ documents are available. For additional information, please refer to the following link:
As previously noted, the IESO is currently developing the Large Renewable Procurement II (“LRP II”) process. Consistent with LRP I, the LRP II process will involve two phases: a Request for Qualifications (“LRP II RFQ”) and a Request for Proposals.
On July 13, 2016, the IESO hosted a webinar to provide an overview of the LRP II RFQ process and the changes it has introduced following the feedback received on the LRP I RFQ process. The IESO indicated that the LRP II RFQ process is substantively similar to the LRP I RFQ process. Two key topics emerged from the webinar: the introduction of a simplified process for Qualified Applicants (“QAs”) and the addition of a procurement target of 50 MW from technological upgrades and optimization of existing renewable facilities.
The IESO has introduced a simplified process for applicants that were deemed QAs during the LRP I RFQ process. To be eligible for the simplified process, the qualification submission of an applicant must, for each renewable fuel, be the same or less than the aggregate number of MWs and large renewable projects that the applicant qualified for under the LRP I RFQ (less the MWs and number of projects awarded during the LRP process).
Under the simplified process, the applicant must re-evidence its financial capability and must submit the IESO letter from the LRP I RFQ process (which confirmed its status as a QA). The applicant must declare that it continues to meet the LRP I RFQ development experience requirements, but does not have to submit new and current evidence to support such declaration. The applicant must also declare that (i) each LRP I Control Group Member is still a Control Group Member of the applicant and (ii) each LRP I designated team member is still a Designated Team Member. If any changes were made to a Control Group Member (i.e. in connection with a reorganization) or to any designated team members, the applicant will not be eligible for the simplified process.
50 MW of Procurement from Existing Renewable Energy Facilities
As this procurement target was not included in the LRP I process, the IESO is currently determining the types of technology that should be included in the LRP II process. The IESO has circulated questionnaires to the relevant industry groups in order to gain a better understanding of the available technologies and how such technologies could increase the capacity and annual output of an existing project. The IESO is also seeking feedback from appropriate stakeholder and industry groups as to which technologies should be considered for LRP II, the type of contracts that should be awarded, and any other information that may be relevant to this type of procurement process.
Applicants submitting proposals for such projects will not qualify for the simplified process and will have proceed through the standard process. Such applicants will also be required to submit their project’s existing power purchase agreement and provide information about each proposed upgrade and optimization (and the corresponding change to output).
Next steps and timeline
The final LRP II RFQ documents will be posted on the IESO website on July 29, 2016 and the LRP II RFQ process will be launched on August 1, 2016. Question and comment periods will be held between August 1 and August 19, 2016. The deadline for Qualification Submissions is September 1, 2016. These dates are subject to change and will be finalized once the final LRP II RFQ documents are available.
The IESO accepted feedback on the LRP II RFQ materials until July 14, 2016 and will post the results on its website on July 29, 2016. However, the IESO indicated during the webinar that it intends to continue to accept feedback after July 14, 2016 (which may be submitted via email to email@example.com), provided that it has enough time to review the feedback before July 29, 2016.
The IESO will hold a session on July 21, 2016 from 9:30 AM to 12:30 pm, which will focus on the technical aspects of the LRP II. A discussion on the LRP II technological upgrades and optimization will follow from 1:30 PM to 2:30 PM.
For additional information on the upcoming session and the LRP II process, please refer to the following link: http://www.ieso.ca/Pages/Participate/Generation-Procurement/Large-Renewable-Procurement/default.aspx.
During the North American Leaders Summit held in Ottawa on June 29, 2016, Prime Minister Justin Trudeau, United States (US) President Barack Obama, and Mexican President Enrique Peña Nieto announced the North American Climate, Clean Energy, and Environment Partnership, which reflects the leaders’ shared vision for a clean energy economy. The Partnership is supported by an action plan (the Action Plan) that details the activities to be pursued by the three countries in order to achieve a “competitive, low-carbon and sustainable North American economy”. Continue Reading
On June 27, 2016 the IESO posted the draft Request for Qualifications (LRP II RFQ) and associated Prescribed Forms on the LRP Engagement page for review and comment. According to the IESO, the LRP II RFQ builds on the LRP I RFQ and on the feedback received on the LRP I process, and the policy direction from the Minister of Energy.
Comments and feedback on the draft LRP II RFQ and the associated Prescribed Forms are due by July 14, 2016 and can be provided via email to firstname.lastname@example.org using the feedback form available on the LRP Engagement page. In addition, a webinar will be offered on July 12, 2016, to provide an overview of the draft LRP II RFQ.
Please visit the LRP Engagement page for more information and the latest updates.
On Monday, June 20, 2016, the Alberta Energy Regulator (AER) issued Bulletin 2016-16 (Bulletin) detailing its interim regulatory response to the Alberta Court of Queen’s Bench decision in Re Redwater Energy Corporation (Redwater).
As detailed in a previous post, the Redwater decision allows a trustee to disclaim certain assets (and their associated abandonment and reclamation obligations) under the provisions of the federal Bankruptcy and Insolvency Act (BIA). In doing so, such a trustee will not be liable as a licensee under the provincial oil and gas regulatory regime in relation to the renounced assets. Further, the trustee is not required to assume any liabilities, and will not be bound by any abandonment orders issued by the AER relating to renounced assets, in seeking approval of the sales process to sell assets remaining under its possession and control. Continue Reading
On June 7, 2016, the Quebec Minister of Energy and Natural Resources, Mr. Pierre Arcand (the “Minister“) introduced Bill No. 106 at the National Assembly (An Act to implement the 2030 Energy Policy and to amend various legislative provisions) (the “Bill“). Among other things, this Bill would enact the new Petroleum Resources Act in replacement of the existing provisions of the Mining Act (CQLR c M-13.1) that currently regulate hydrocarbons mining activities in the province.
This Bill had been expected for several months and would significantly modify the legal framework applicable to the development and production of hydrocarbons in Quebec. It purports to govern the development of petroleum resources in the province of Quebec while ensuring the safety of persons and property, environmental protection, and optimal recovery of the resource. The bill also aims at ensuring that mining work involving hydrocarbons is performed in compliance with the greenhouse gas emission reduction targets set by the Quebec Government. Continue Reading
On June 7, 2016, the Quebec Minister of Sustainable Development, Environment and the Fight against Climate Change, Mr. David Heurtel (the “Minister“), introduced Bill 102 at the Quebec National Assembly, which aims at modernizing the environmental authorization scheme established by the Environment Quality Act. If adopted in its current form, this bill could have important repercussions on the environmental assessment procedure and on the authorization scheme of industrial projects carried out in Québec. Continue Reading
On June 7, 2016, the Quebec Government introduced before the National Assembly Bill 106, An Act to implement the 2030 Energy Policy and to amend various legislative provisions. The 2030 Energy Policy has the principal goal of making Quebec, by 2030, a North American leader in renewable energy and energy efficiency. Continue Reading
The following article published in our firm’s newsletter could be of interest to many readers active in the energy industry across Canada. It discusses the applicable rules for lobbyist registration in Ontario, Ontario municipalities, Québec, British Columbia, Alberta and at the federal level. Continue Reading
On May 24, 2016, Alberta’s provincial government tabled Bill 20 for first reading in the legislature. Otherwise known as the Climate Leadership Implementation Act (Climate Act), Bill 20 furthers the implementation of the provincial government’s Climate Leadership Plan released in November 2015.
Bill 20 provides for a carbon levy on consumers of fuel, and creates an agency called Energy Efficiency Alberta, as part of the provincial government’s ongoing commitment to climate change policies and initiatives. Notably absent from Bill 20 are any details on initiatives or incentives for transitioning to renewable energy sources.
The Ontario government’s proposed creation of an agency with a mandate to reduce carbon emissions by buying offsets, funding cleaner factories and buildings, and co-ordinating rooftop solar and energy conservation has been met with skepticism, particularly in light of the province’s experience with energy agencies. However, there is also reason for optimism. Read the whole article here.
As noted in an earlier post, on March 3, 2016, the government announced that the Alberta Electric Systems Operator (AESO) has been chosen under the province’s Climate Leadership Plan to develop and implement a renewable electricity incentive program (Renewable Electricity Program or REP) to add additional renewable generation capacity into Alberta’s electricity system.
The expected timeline of this process is as follows:
|Phase 1 of stakeholder engagement process closed on March 24, 2016.|
|Provincial government has requested AESO’s draft recommendations on program design.|
|First competition for new REP projects.|
|Expected in-service date of first REP projects.|
As recently reported on our Canadian ERA Perspectives blog, the Paris Agreement was opened for signature on April 22, 2016 at the United Nations (UN) Headquarters in New York. The Paris Agreement, which was adopted by the parties to the United Nations Framework Convention on Climate Change (UNFCCC) on December 12, 2015, will remain open for signature until April 21, 2017. Continue Reading
On April 19, 2016, the Ontario Court of Appeal released its decision in Iroquois Falls Power Corporation v. Ontario Electricity Financial Corporation. The decision concerned a dispute between several non-utility generators (“NUGs”) and the Ontario Electricity Financial Corporation (“OEFC”) over changes to a price adjustment index contained within the long-term contracts for the purchase of electricity generated by the NUGs.
This change affected a component portion of a measure known as Total Market Costs (“TMC”), which measure was used to derive the price adjustment index. At the heart of the dispute was an issue of contractual interpretation—whether or not the terms of the power purchase agreements (“PPAs”), and in particular, the price adjustment indices contained within them, required the calculation of the component portion of the TMC to reflect the actual costs of providing existing and new electricity generation. Continue Reading
On April 13, 2015, the Federal Court of Appeal dismissed the appeal related to the environmental assessment (“EA”) for the refurbishment and continued operation of the Darlington Nuclear Generating Facility (the “Project”). The appeal was from the Federal Court’s earlier decision dismissing a judicial review application related to the EA for the Project. Continue Reading
The Independent Electricity Systems Provider (IESO) has announced that the 16 contracts offered on March 10, 2016 for Phase I of the Large Renewable Procurement process (LRP I) have now been signed and executed. The execution of the contracts concludes the LRP I process. Moving forward, contracted projects will be required to obtain all necessary licenses and approvals before they can be constructed and operated. These processes are separate from the IESO’s procurement activities and will involve additional community engagement. Continue Reading
The Ontario Ministry of Energy has announced the launch of the second phase of the Large Renewable Procurement (LRP) process (LRP II). The LRP is a competitive bid process for procuring large renewable energy projects in Ontario larger than 500 kilowatts. Continue Reading