IN THE MATTER of
the Utilities Commission Act, R.S.B.C. 1996, Chapter 473
and
British Columbia Hydro and Power Authority
Application for Reconsideration of Commission Order G-64-11
Regarding International Forest Products Limited – Adams Lake Lumber Division
Prospective Growth Adjustment
BEFORE: L.F. Kelsey, Panel Chair
C.A. Brown, Commissioner July 8, 2011
N.E. MacMurchy Commissioner
O R D E R
WHEREAS:
A. On March 1, 2011, International Forest Products Limited (Interfor) applied to the Commission to: (i) increase its Adams Lake Lumber Division historical baseline (HBL) pursuant to Clause 13 of the BC Hydro Large General Service (LGS) Rate Negotiated Settlement Agreement (NSA) and (ii) set the January 1, 2011 implementation of Interfor’s LGS rates as interim and refundable assuming approval of the new Prospective Growth Adjustment by the Commission;
B. Clause 13 of the NSA (attached as Appendix B to Order G-110-10) states: “[c]ustomers on a two-part rate who anticipate significant, permanent increases in energy consumption may apply to the BCUC to seek an increase in their HBLs on a prospective basis. ‘Permanent’ means arising from a significant capital investment in plant. ‘Significant’ means increases in energy consumption totaling at least 30%, or 4,000,000 kWh. In addition, the customer’s application may address the electricity efficiency and/or GHG effect of the capital investment.”;
C. On March 3, 2011, Order G-37-11 ordered that the LGS rates for Interfor’s Adams Lake Lumber Division be made interim and refundable effective March 3, 2011;
F. By letter dated March 7, 2011, BC Hydro supported Order G-37-11 that made the Interfor’s LGS rate interim. BC Hydro also made clear that it had not formed any views on the substance of Interfor’s application;
G. By Order G-64-11 dated March 31, 2011, the Commission determined that Interfor’s request to adjust the HBL of its Adams Lake Lumber Division be granted;
H. By letter dated April 8, 2011, BC Hydro applied for reconsideration of Order G-64-11, requesting that the Order be rescinded pending the determination of a similar application for a prospective growth adjustment by Pacific Bioenergy Prince George Limited Partnership (Pacific Bioenergy) (Reconsideration Application) (Exhibit B-1). BC Hydro also submitted that the Reconsideration Application be allowed to proceed immediately to the second phase of the reconsideration process;
I. By Letter L-38-11 dated May 6, 2011, the Commission established a Regulatory Timetable for the second phase to hear the full arguments on the merits of the matters raised by BC Hydro (Exhibit A-1);
J. Four Interveners filed submissions. Pacific BioEnergy filed its submission on May 10, 2011 (Exhibit C1-1); the BC Sustainable Energy Association and the Sierra Club of B.C. (BCSEA) filed its submission on May 12, 2011 (Exhibit C2-1); Interfor filed its submission on May 12, 2011 (Exhibit C3-1); and the Association of Major Power Customers of BC (AMPC) filed its submission on May 13, 2011 (Exhibit C4-1);
K. Pacific Bioenergy supports the ability of existing customers to apply for a prospective growth adjustment to their HBL pursuant to Clause 13 of the NSA;
L. BCSEA supports BC Hydro’s request that Order G-64-11 be rescinded so that BC Hydro can provide its submission on the Interfor Application after the determination of the Pacific Bioenergy application;
M. AMPC supports BC Hydro’s request to have Order G-64-11 rescinded and interim Order G-37-11 restored pending a review of BC Hydro’s proposed principles for application under Clause 13 of the NSA;
N Interfor submits that no party would be adversely impacted by maintaining Order G-64-11, but should the Commission determine not to finalize Interfor’s rate until it has a hearing on the Pacific Bioenergy application, Interfor seeks confirmation from the Commission that its existing rates are set as interim to be reviewed subject to the completion of that proceeding as supported by BC Hydro;
O. On May 18, 2011, B. C .Hydro filed its reply submission. BC Hydro submits that rescinding Order G-64-11 and allowing a hearing process into BC Hydro’s proposed tariff supplement regarding LGS prospective growth applications would serve to have the LGS applications dealt with as expeditiously as CBL applications. The reply also includes an attachment containing a copy of the draft proposed Tariff Supplement No. 78 which provides the rules by which BC Hydro and the Commission would assess applications pursuant to section 13 of the LGS NSA (Exhibit B-2); and
P. The Commission Panel has considered the Reconsideration Application and the submissions of BC Hydro and the Interveners.
NOW THEREFORE the Commission, for the reasons stated in the Decision attached as Appendix A to this Order, orders that:
1. Order G-64-11 is rescinded and Order G-37-11 is restored.
2. The review of the Interfor Application will occur after the Commission’s determination of the Pacific BioEnergy Application.
DATED at the City of Vancouver, in the Province of British Columbia, this 11th day of July 2011.
BY ORDER
Original signed by:
L. F. Kelsey
Commissioner
British Columbia Hydro and Power Authority
Application for Reconsideration of Commission Order G-64-11
Regarding International Forest Products Limited – Adams Lake Lumber Division
Prospective Growth Adjustment
REASONS FOR DECISION
1.0 BACKGROUND
On March 1, 2011, International Forest Products Limited (Interfor) applied to the Commission to: (i) increase its Adams Lake Lumber Division historical baseline (HBL) pursuant to Clause 13 of the BC Hydro Large General Service (LGS) Rate Negotiated Settlement Agreement (NSA) and (ii) set the January 1, 2011 implementation of Interfor’s LGS rates as interim and refundable assuming approval of the new Prospective Growth Adjustment by the Commission (Application).
Clause 13 of the LGS NSA (attached as Appendix B to Order G-110-10 states” “[c]ustomers on a two-part rate who anticipate significant, permanent increases in energy consumption may apply to the BCUC to seek an increase in their HBLs, on a prospective basis. ‘Permanent’ means arising from a significant capital investment in plant. ‘Significant’ means increases in energy consumption totaling at least 30%, or 4,000,000 kWh. In addition, the customer’s application may address the electricity efficiency and/or GHG effect of the capital investment.”
Interfor applied, on March 1, 2011, for an increase in its HBL as a result of a significant capital investment in a new sawmill. Interfor also requested that the Commission set the January 1, 2011 implementation of Interfor’s LGS rates as interim and refundable. Interfor noted in its application that it had worked with BC Hydro in the preparation of the application under Clause 13 and had asked BC Hydro for a letter of support as soon as possible.
On March 3, 2011, the Commission issued Order G-37-11 setting BC Hydro’s LGS rate for Interfor’s Adams Lake Lumber Division, as interim and refundable, effective the date of the Order. The Commission denied Interfor’s request to make the Adams Lake Lumber Division LS rate interim effective January 1, 2011.
On March 7, 2011, BC Hydro filed its initial comments regarding the Application. Specifically, BC Hydro stated that: “it is conceivable that the BCUC may be inclined to grant some or all of Interfor’s requested relief.” BC Hydro further stated that it “would like to make it clear that it has not formed any views on the substance of Interfor’s application and that BC Hydro’s support to date is limited only to Interfor’s request for the LGS rate to apply on an interim and refundable basis.”
On March 31, 2011, the Commission issued Order G-64-11 which ordered the HBL for the purposes of BC Hydro’s LGS rate for Interfor’s Adams Lake Lumber Division for 2011 be calculated reflective of the energy it consumed in 2010 and provided for the calculation of the HBL for 2012 and subsequent years as reflective of the agreements contained in the NSA attached as Appendix B to order G-110-10
By letter dated April 8, 2011, BC Hydro applied for reconsideration of Order G-64-11, seeking an order to rescind G-64-11 pending the determination of a similar application for a prospective growth adjustment by Pacific BioEnergy Prince George Limited Partnership (Pacific BioEnergy) (Reconsideration Application; Exhibit B-1). The Commission issued Letter L-38-11 on May 6, 2011 allowing the Reconsideration Application to proceed in a single-phase instead of the normal two-phase process.
2.0 BC HYDRO SUBMISSION
In its Reconsideration Application, BC Hydro requests the Commission rescind Order G-64-11. It proposes to provide its submission on the Interfor Application after the determination of the Pacific BioEnergy application. BC Hydro submits that the application of the LGS rate to Interfor is interim and refundable and accordingly Interfor will suffer no prejudice if BC Hydro’s requested relief is granted (Exhibit B-1, p. 5 of 5).
BC Hydro’s takes the position that its Reconsideration Application is supported on grounds of procedural fairness and the substantive issue relating to a methodology it intends to propose for applications under section 13 of the LGS NSA. BC Hydro expects that in the Pacific BioEnergy proceeding it will be proposing that a modified 85-15 rule be applied to new load of existing accounts arising from “significant, permanent increases in energy consumption.” (Exhibit B-1, pp. 3 and 4 of 5)
3.0 SUBMISSIONS OF INTERVENERS
Four Interveners filed submissions. Pacific BioEnergy filed its submission on May 10, 2011 (Exhibit C1-1); the BC Sustainable Energy Association and the Sierra Club of B.C. (BCSEA) filed its submission on May 12, 2011 (Exhibit C2-1); Interfor filed its submission on May 12, 2011 (Exhibit C3-1); and the Association of Major Power Customers of BC (AMPC) filed its submission on May 13, 2011 (Exhibit C4-1).
Pacific BioEnergy supports the ability of existing customers to apply for a prospective growth adjustment to their HBL as per Clause 13 of the LGS NSA.
BCSEA submit that they are potentially interested parties regarding the Interfor Application. BCSEA concurs with BC Hydro that interested parties should have a reasonable opportunity to make submissions on the Interfor Application. BCSEA further submit that they note BC Hydro’s proposed “modified 85-15 rule” in the Pacific BioEnergy application and would likely have submissions to make in that regard.
AMPC supports BC Hydro’s request to have Order G-64-11 rescinded pending a review of BC hydro’s proposed principles for applications under section 13 of the NSA.
Interfor submits that it did not read Clause 13 to mean that a hearing process was required for applications made pursuant to Clause 13 of the NSA. It further submits that it worked with BC Hydro to prepare its application and notes that BC Hydro acknowledges that the “modified 85-15 rule” will likely be irrelevant to the ultimate disposition of the Interfor Application. Interfor submits that no party will be adversely impacted by maintaining Order G-64-11. In the alternative, Interfor submits that if the Commission determines it cannot finalize Interfor’s rate until there has been a “hearing” on the Pacific BioEnergy application, Interfor seeks confirmation from the Commission that its existing rates are set as interim to be reviewed subject to the completion of that proceeding as supported by BC Hydro.
4.0 BC HYDRO REPLY SUBMISSION
BC Hydro submits that it did not represent at any time to Interfor that it would support the substance of its application because its views on pricing principles under Clause 13 were still being developed in response to the Pacific BioEnergy application.
In response to Interfor’s position that a hearing process was not required for applications under Clause 13 of the NSA, BC Hydro takes issue with Interfor’s assertion that there is no hearing process into the establishment of customer baseline loads (CBLs). It points to examples where the Commission has established a hearing process to review BC Hydro’s CBL applications.
Further, BC Hydro distinguishes the review of the CBL of its transmission customers with the HBL of the LGS customers in that the review of CBL applications is facilitated by Tariff Supplement No. 74 – Customer Baseline Load Determination Guidelines. BC Hydro submits that rescinding Order G-64-11 and allowing a hearing process into BC Hydro’s proposed tariff supplement regarding LGS prospective growth applications (attached as Proposed Tariff Supplement No. 78 to the Reply Submission), would allow applications regarding LGS prospective load growth to be dealt with as expeditiously as CBL applications.
5.0 COMMISSION DETERMINATION
The Commission Panel notes that BC Hydro has developed a methodology for the review of applications under Clause 13 of the LGS NSA, prompted by the Pacific BioEnergy application on prospective growth adjustment. BC Hydro refers to this methodology as the “modified 85-15 rule” and this methodology was not available at the time of the Interfor Application (Exhibit B-2, p. 2 of 4).
As a result of its preliminary analysis of the potential application of a modified 85-15 rule to Interfor’s incremental energy consumption arising from its investment, BC Hydro concludes that the application of such a principle would not materially differ from the effect of Order G-64-11 (Exhibit B-1, p. 4 of 5) .
The Commission Panel also notes that the Proposed Tariff Supplement No. 78 attached to the Reply Submission contains a detailed outline of the proposed methodology for the review of applications for prospective growth under Clause 13 of the NSA. The methodology contained in the Proposed Tariff Supplement No. 78 is information relating to rate-setting principles that was not available when the Commission issued Order G-64-11.
The Commission Panel notes that Interfor seeks to maintain Order G-64-11 because there is no adverse impact to any party by maintaining the Order but in the alternative, it seeks confirmation from the Commission that its existing rates are set as interim to be reviewed subject to the completion of the Pacific BioEnergy application proceeding.
Therefore, for the reasons that: (a) there is now additional information as a result of BC Hydro’s Proposed Tariff Supplement No. 78 to address the review of applications for prospective growth under Clause 13 of the LGS NSA and a draft response to the Pacific BioEnergy Application for Prospective Growth Adjustment; and (b) Interfor does not oppose rescinding G-64-11 if the Commission confirms Interfor’s interim rates, the Commission Panel allows the Reconsideration Application.
Order G-64-11 is rescinded and Order G-37-11 is restored. The review of the Interfor Application will occur after the Commission’s determination of the Pacific BioEnergy Application.