BC Hydro Review sets path for electrifying economy, supporting CleanBC

VICTORIA – The Province has announced the first set of its recommendations from Phase 2 of the BC Hydro Review to help people and businesses use clean electricity to reduce their carbon footprints, achieve CleanBC climate targets and support clean economic development.

“Climate change and clean power are important issues for British Columbians, and B.C. is a leader in North America when it comes to providing clean, reliable and affordable electricity,” said Bruce Ralston, Minister of Energy, Mines and Low Carbon Innovation. “We’re acting now to use that clean electricity advantage to make life better for people and build a stronger economy.”

New research shows B.C. is the cleanest jurisdiction in western North America, with an average of 98% of its electricity generation coming from clean or renewable resources. BC Hydro delivers power to 95% of the province, generating the majority of this power from its clean hydroelectric resources.

Most other regions in western North America have a more challenging transition, as they still rely heavily on natural gas and/or coal to generate their power. The current amount of clean supply in the other western jurisdictions ranges from a low of 9% to a high of 85%.

“Electrifying our economy with clean power is a central part of our CleanBC plan to reduce climate-harming pollution and create new opportunities for people and businesses in a net-zero emissions future,” said George Heyman, Minister of Environment and Climate Change Strategy. “BC Hydro’s Phase 2 recommendations will help accelerate the transition to a cleaner economy by electrifying industry, supporting clean tech and low-carbon hydrogen, and better integrating our grid with neighbouring jurisdictions.”

Despite having access to the cleanest electricity in western North America, electricity use still represents less than 20% of B.C.’s total energy demand, while nearly 70% of the economy is powered by fossil fuels. The remaining energy demand is supplied by biofuels.

Guided by input from a panel of external energy industry experts, government and BC Hydro have developed recommendations under Phase 2 of the BC Hydro Review to harness B.C.’s clean electricity to build a cleaner economy and better future for British Columbia.

Government and BC Hydro will act on these recommendations, including:

• developing a 100% clean standard for electricity delivered to customers through the integrated grid, with the goal of becoming the first jurisdiction in western North America to achieve this objective;
• making connections to the electricity grid faster and the costs more predictable for residential, commercial and industrial customers;
• providing a discounted rate to new clean industries (including renewable hydrogen) and industrial customers who switch their operations from fossil fuels to clean electricity;
• supporting the Province’s Hydrogen Strategy by increasing Powertech Labs’ focus on leading innovation in hydrogen technologies;
• establishing a clean energy economic development working group to increase co-ordination between government and BC Hydro in attracting investment in new clean industries and powering B.C.’s economy with clean electricity; and
• considering regulatory changes to require BC Hydro and the British Columbia Utilities Commission (BCUC) to use an internal carbon price when evaluating programs and infrastructure that support customers in switching from fossil fuels to clean electricity.

Advancing electrification will drive increased demand for clean electricity from existing and new BC Hydro customers during a time of energy surplus. This will increase BC Hydro revenues and help keep rates low for everyone.

“For decades, BC Hydro has played a vital role in building British Columbia by providing clean, low-cost electricity, and we will continue in that role as we support the province’s economic recovery from the impacts of COVID-19 and respond to the challenges of climate change,” said Chris O’Riley, president and CEO, BC Hydro. “We look forward to working with the B.C. government, customers, Indigenous Nations and stakeholders to implement recommendations from the BC Hydro Review and advance B.C.’s position as a global leader in clean energy.”

Future announcements from Phase 2 will include recommendations focused on keeping electricity affordable for people and increasing the number of electric vehicles on the road.

In addition, as part of the Draft Action Plan to advance the Declaration on the Rights of Indigenous Peoples Act, the Province is proposing to engage with First Nations to identify and support new clean energy opportunities for Indigenous peoples related to CleanBC, the BC Hydro Review and the BCUC Inquiry on Indigenous Utilities.

Learn More:

To learn more about the BC Hydro Review, visit:
https://www2.gov.bc.ca/gov/content/industry/electricity-alternative-energy/electricity/bc-hydro-review-phase-2

Four backgrounders follow.

Contacts:

Ministry of Energy, Mines and Low Carbon Innovation
Media Relations
250 952-0628

BC Hydro
Media Relations
604 928-6468

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BACKGROUNDER 1

Facts about clean electricity in B.C.

• BC Hydro generates more than 69,000 gigawatt hours of clean electricity annually to supply more than two million residential, commercial and industrial customers.
  • This power is delivered throughout the province using an interconnected system of more than 80,000 kilometres of transmission and distribution lines.
• BC Hydro’s system is also part of the Western Interconnection, a network of high-voltage transmission lines that connect B.C. with the rest of western North America. This allows Powerex, its trading subsidiary, to buy and sell power with its trading partners within the interconnection to help keep rates low.
• In addition to generating the cleanest power in western North America, B.C. is also one of the cleanest jurisdictions in Canada at 98% clean, one percentage point behind the leaders, Quebec and Manitoba.
• A recent survey found most British Columbians see climate change as a priority issue. For some, it is the most important issue facing the province.
  • For about one-third of survey respondents, having their power come from clean or renewable resources is a top priority. For many, it is just as important if not more important than the price they are paying.
  • About 90% spend some time thinking about the impact their energy use has on the environment and are taking steps each day to reduce their carbon footprint.

Contacts:

Ministry of Energy, Mines and Low Carbon Innovation
Media Relations
250 952-0628

BC Hydro
Media Relations
604 928-6468

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BACKGROUNDER 2

B.C.’s clean electricity powers the future

The Government of British Columbia launched a multi-phase review of BC Hydro in 2018.

Phase 1 focused on actions to keep BC Hydro rates affordable and enhance the B.C. Utilities Commission’s independent oversight of BC Hydro costs, rates and activities.

Phase 2 was initiated in July 2019 as a broad, transformational review to position BC Hydro to support the Province’s CleanBC plan and greenhouse gas reduction targets, while considering the significant shifts occurring in B.C. and continental energy sectors, evolving technologies and the changing needs of current and future BC Hydro customers.

The first set of recommendations from Phase 2 lays out a path to harness B.C.’s clean electricity, helping build a cleaner economy and better future for British Columbia.

That pathway is more important now than ever before.

Although electricity generation is 98% clean in B.C., it accounts for less than 20% of the province’s total energy use. That share is expected to shrink if fossil fuel use increases and the demand for electricity remains relatively flat. The economic shock of a global pandemic and the threat of a changing climate present additional challenges. However, these issues also present opportunities.

With 98% of its power being generated from clean or renewables resources, B.C.’s power generation is the cleanest in western North America. BC Hydro, serving more than two million customers, is responsible for most of the power generated in B.C.

When looking at how other regions compare, B.C. has a significant lead, with its neighbours in Washington ranking second at 85% clean and Idaho in third at 78% clean. The lowest-ranking jurisdictions are 9% and 10% clean.

Ranking of/percentage of clean electricity by jurisdiction in western North America:

1. British Columbia – 98%
2. Washington – 85%
3. Idaho – 78%
4. Oregon – 69%
5. California – 51%
6. Montana – 45%
7. Arizona – 39%
8. Nevada – 24%
9. Colorado – 21%
10. New Mexico – 17%
11. Wyoming – 11%
12. Alberta – 10%
13. Utah – 9%

B.C. can use its clean electricity advantage and meet CleanBC climate targets by replacing diesel, gasoline and natural gas with clean electricity and other low-carbon fuels to reduce greenhouse emissions and create good jobs for all British Columbians. Access to clean, reliable electricity supports the attraction of new clean technology and innovation customers to the province, including hydrogen and biofuel producers.

Clean electricity is also becoming an increasingly important trade commodity. As of July 2021, at least five western states have committed to meeting 100% of their electricity demand with clean energy by 2050, and others are likely to follow. This pace of transformation in the electricity sector is expected to accelerate.

Flexible, clean and reliable hydroelectricity will become even more valuable as these jurisdictions move to mostly intermittent clean and renewable electricity generation to meet climate targets. When BC Hydro’s trading subsidiary Powerex sells clean power sourced from B.C. to other utilities on the Western Interconnection, it not only provides BC Hydro with additional revenue to keep rates affordable in B.C., but also helps reduce greenhouse gas emissions elsewhere in western North America.

Contacts:

Ministry of Energy, Mines and Low Carbon Innovation
Media Relations
250 952-0628

BC Hydro
Media Relations
604 928-6468

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BACKGROUNDER 3

Province acting on recommendations to electrify the economy, support CleanBC

The following actions have been identified through the Phase 2 process to maximize B.C.’s clean energy advantage and continue to electrify the province, while also looking at more innovative opportunities to position B.C. as a global clean energy leader.

1. To ensure that British Columbia maintains its clean energy advantage, and Powerex realizes new trading opportunities, government should develop a 100% clean electricity standard for the integrated grid, with the goal of becoming the first jurisdiction in western North America to achieve this objective.

• The standard will allow B.C. to attract corporations that are seeking clean electricity supply as part of their sustainability strategies, both inside and outside the province.
• Recognizing that other jurisdictions in western North America, such as Washington and California, are moving to achieve 100% clean energy standards, Powerex (BC Hydro’s trading subsidiary) has adopted a voluntary 100% clean energy trading standard in order to maximize the value for B.C.’s surplus clean electricity supply.
• The framework for the standard will be developed through engagement with Indigenous Nations, as well as the regulated utilities and their stakeholders.

2. To support electrification and low-carbon economic development, BC Hydro should develop a new CleanBC Industry Electrification Rate that would offer a discount on BC Hydro’s standard industrial rates to new clean industries and industrial customers who switch their operations from fossil fuels to clean electricity.

• Competitive electricity rates are important to the future success of industry in B.C.
• In January 2021, the Province announced CleanBC Industrial Electrification Rates, offering discounted rates to help industrial customers switch from fossil fuels to clean electricity and to attract new clean technology and innovation customers to B.C. (including renewable hydrogen, data centres, biofuels and carbon capture and storage).
• The rates offer a 20% discount from the current rate for eligible transmission connection customers for a period of five years, with a transition back to the standard industrial rate by year 8.

3. To support electrification and low-carbon economic development, government and BC Hydro should use federal funding from the Investing in Canada Infrastructure Program to establish the CleanBC Facilities Electrification Fund and help reduce customer interconnection costs.

• Prospective industrial and other large customers can face significant costs to connect to BC Hydro’s grid, including the construction of infrastructure.
• In January 2021, the Province announced an allocation of $84.4 million of federal green infrastructure funding to create the CleanBC Facilities Electrification Fund, which will help support electrification and low-carbon economic development.
• The fund reduces the costs of connecting to the BC Hydro system for customers who want to switch their energy source from fossil fuel to electricity.
• Funding is available to eligible BC Hydro customers such as mines, companies producing renewable fuels, natural gas processing facilities, public transportation companies including transit agencies and ferries, and other large institutional customers and local governments, such as neighbourhood district energy systems.

4. To support electrification, BC Hydro should consider moving to a flat energy charge for industrial customers instead of the current two-tier rate.

• Under the current industrial rate structure, any increase in electricity use is subject to a higher rate.
• A flattened rate will help reduce the disincentive to grow or electrify more of industrial customers’ operations.
• BC Hydro is currently undertaking a stakeholder engagement process on potential new rate designs for industry.

5. BC Hydro should apply to the B.C. Utilities Commission (BCUC) to update the distribution extension portion of the electric tariff to make connections faster and connection costs more predictable for customers.

• Under BC Hydro’s distribution tariff, customers are required to pay additional costs for BC Hydro to extend its system to large residential or commercial/industrial sites.
• Residential and commercial developers have expressed concerns about the way the fees are determined and the length of time it takes for BC Hydro to evaluate costs and determine the fee.
• BC Hydro is examining potential modifications to the distribution extension portion of its electric tariff that would enable BC Hydro and new customers to more quickly and accurately evaluate the costs to connect to the electricity system.

6. BC Hydro should support the Province’s Hydrogen Strategy by increasing Powertech Labs’ focus on the development of hydrogen technology and production for transportation, industry and low-carbon fuels.

• Advancement and development in hydrogen technology is an important action set out in CleanBC that the Province will move forward on this year with the release of its B.C. Hydrogen Strategy.
• With its global reach, Surrey’s Powertech Labs, BC Hydro’s research and development subsidiary, is one of the largest and most diverse testing labs in North America. It has more than 20 years of experience in advancing technical standards and is the premier test facility in the world for hydrogen vehicle and fuelling station components.
• Powertech will partner with government, academic institutions and industry to expand its development and testing of hydrogen technology.
• This will include implementing a network of hydrogen fueling stations, including stations either built or in development in Greater Vancouver, Victoria and Kelowna, as well as 10 additional stations yet to be built.

7. To facilitate electrification of potential mining operations in the area, BC Hydro should apply to the BCUC to repeal the Northwest Transmission Line (NTL) tariff.

• Some stakeholders identified the NTL tariff as a barrier to new mines connecting to the line.
• Because this tariff could have some potential customers look at opportunities outside of B.C., rescinding the tariff could facilitate more customers connecting in the area.
• Government has issued a direction to the BCUC to consent to rescind the tariff. In February 2021, the tariff was rescinded.

8. BC Hydro should develop a short-term electrification plan that builds on the key results of the Phase 2 Review and supports CleanBC.

• Setting targets and developing a near-term plan that includes potential programs and investments that will support electrification will allow BC Hydro to undertake detailed analysis of opportunities to support electrification. BC Hydro intends to include a short-term electrification plan as part of its next revenue requirements application to the BCUC.
• This plan will build on the key electrification recommendations of the BC Hydro Review and support the emission reduction objectives of CleanBC, while supporting economic recovery and growth.

9. BC Hydro should consider a range of long-term electrification scenarios informed by CleanBC in developing its next integrated resource plan (IRP).

• An IRP consists of plans and actions that BC Hydro will advance to meet its future load-serving obligations. It is reviewed and approved by the BCUC and is based on expected future demand and supply options.
• BC Hydro plans to release its next IRP later this year. Its reference load forecast will reflect existing government policies and programs, such as the targets for electric-vehicle adoption established by the Zero-Emission Vehicles Act.
• The IRP will also consider a range of scenarios about what the future could look like beyond the reference forecast, including ones where provincial greenhouse gas reduction targets are achieved through accelerated electrification and other emission reduction initiatives driven by future government policies.
• Electrification scenarios are one way that BC Hydro plans for the future and ensures it is able to meet long-term demand for clean electricity.

10. Government, BC Hydro and Powertech should establish a clean energy economic development working group to develop measures that will promote investment in clean industries, support innovations to enable increased electrification and attract new sources of load to help keep rates low.

• Government’s CleanBC plan includes a variety of actions designed to position B.C. as a low-carbon leader that can attract increased and new investment from around the globe.
• To support these goals, government provided funding for both the Center for Innovation and Clean Energy and InBC in Budget 2021.
• The clean energy economic development working group would establish better co-ordination between BC Hydro and government to assist in attracting investments in clean industries and advancing electrification of the economy.

11. Government should consider regulatory changes to require BC Hydro and the BCUC to use an internal carbon price when evaluating programs and infrastructure investments that encourage or enable customers to reduce emissions by switching from fossil fuels to clean electricity.

• Introducing an internal carbon price or value for greenhouse gas emission reductions could enable additional electrification through a stable and predictable price signal, providing a consistent and efficient approach to emission reductions.
• Both the City of Vancouver and Metro Vancouver have introduced internal carbon prices, as well as a number of electric utilities in the United States and some private sector companies.
• For example, an internal carbon price could be implemented through changes to the Greenhouse Gas Reduction Regulation by allowing utilities to include the value of emission reductions as a benefit when considering the cost effectiveness of electrification projects.

Contacts:

Ministry of Energy, Mines and Low Carbon Innovation
Media Relations
250 952-0628

BC Hydro
Media Relations
604 928-6468

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BACKGROUNDER 4

Phase 2 guided by broad range of engagement, input

Phase 2 of the BC Hydro Review was conducted by the Ministry of Energy, Mines and Low Carbon Innovation, the Ministry of Environment and Climate Change Strategy, BC Hydro and BC Hydro’s subsidiaries, Powerex and Powertech.

The review was informed and guided by nine external energy industry experts with extensive experience in public and private North American utility operation, labour, climate change, Indigenous relations, regulation and electricity markets.

The Province released an interim report in March 2020. The report shared preliminary ideas on Phase 2 and included questions to solicit further feedback from industry stakeholders, First Nations, environmental organizations, municipalities, unions and customer groups. Responses to the interim report informed the development of the final recommendations.

In addition, as part of the Draft Action Plan to advance the Declaration on the Rights of Indigenous Peoples Act, the Province is proposing to engage with First Nations to identify and support new clean energy opportunities for Indigenous peoples related to CleanBC, the BC Hydro Review and the BCUC Inquiry on Indigenous Utilities.

Learn More:

For biographies of the external energy industry experts who informed and guided the Phase 2 Review, visit:
https://www2.gov.bc.ca/gov/content/industry/electricity-alternative-energy/electricity/bc-hydro-review-phase-2

Contacts:

Ministry of Energy, Mines and Low Carbon Innovation
Media Relations
250 952-0628

BC Hydro
Media Relations
604 928-6468

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