Orders

ORDER NUMBER

G-184-23

IN THE MATTER OF

the Utilities Commission Act, RSBC 1996, Chapter 473

and

British Columbia Hydro and Power Authority

Request to Amend Major Capital Project Filing Guidelines

BEFORE:

A. K. Fung, KC, Panel Chair

A. C. Dennier, Commissioner

W. M. Everett, KC, Commissioner

on July 13, 2023

ORDER

WHEREAS:

A.      On March 17, 2023, British Columbia Hydro and Power Authority (BC Hydro) filed an application with the British Columbia Utilities Commission (BCUC) to request to amend the major capital project filing guidelines (Application);

B.      On December 2, 2019, by Order G-313-19, the BCUC approved the 2018 Major Capital Project Filing Guidelines (2018 Guidelines), including BC Hydro’s commitment to submit applications to the BCUC for major capital projects with authorized cost estimates that exceed the following thresholds:

1.       $100 million for Power System projects;

2.       $50 million for Buildings projects; and

3.       $20 million for Information Technology projects;

C.      In the Application, BC Hydro seeks approval of:

                                       i.      An increase to the major capital filing thresholds, escalated annually by their respective price indices for the previously completed calendar year, starting from fiscal 2019; and

                                     ii.      BCUC confirmation that a Certificate of Public Convenience and Necessity is not required for Customer IPID 901943 Project;

D.      By Order G-113-23 dated May 9, 2023, the BCUC established a regulatory timetable for review of the Application. By Orders G-118-23 dated May 17, 2023 and G-132-23 dated June 7, 2023, the BCUC amended the regulatory timetable;

E.       On May 25, 2023, BC Hydro filed its responses to the BCUC request for further information, including amending the approvals BC Hydro is seeking in this Application as follows:

a.       Amending the escalation price index for Power System projects to the non-residential building construction price index, from the BC-CPI;

b.       Notifying the BCUC that BC Hydro will file a section 44.2 application for the Mica Units 1 to 4 Circuit Breakers and Iso Phase Bus Replacement Project;

c.       An update to the 2018 Major Capital Project Filing Guidelines and change to the applicable directives for the John Hart Dam Seismic Upgrade Project, Bridge River 1 Units 1 to 4 Generator Replacement Project, Peace to Kelly Lake Stations Sustainment Project and Mainwaring Substation Upgrade Project to move to annual progress reports in instances where Material Change Reports are a separate reporting requirement; and

d.       Adjustments to the timing of filing Final Reports for the John Hart Dam Seismic Upgrade Project, Bridge River 1 Units 1 to 4 Generator Replacement Project, Peace to Kelly Lake Stations Sustainment Project and Mainwaring Substation Upgrade Project so that the Final Reports are due three months after review by BC Hydro’s Board of Directors rather than three months after substantial completion of the project, consistent with the 2018 Guidelines and seeking an amendment to the 2018 Guidelines to clarify that the BC Hydro Board of Directors reviews, rather than approves, the Final Reports;

F.       On May 29, 2023 and June 1, 2023, in accordance with the regulatory timetable, the following parties made submissions:

•         BC Sustainable Energy Association (BCSEA);

•         St’at’imc Chiefs Council (SCC);

•         Commercial Energy Consumers (the CEC); and

•         British Columbia Old Age Pensioners’ Organization et al. (BCOAPO);

G.      On June 27, 2023, BC Hydro filed a reply submission, including a request that the BCUC make a decision by July 14, 2023 on BC Hydro’s request, in respect of certain projects, to file progress reports annually rather than semi-annually; and

H.      The BCUC has reviewed the submissions and finds that the following determinations are warranted.

NOW THEREFORE, for the reasons in Appendix B to this order, the BCUC makes the following determinations:

1.       The BCUC denies BC Hydro’s request for a variance in the directives relating to the filing of capital project progress reports as ordered by the BCUC, in respect of certain capital projects identified by BC Hydro in Recital E c. above, to annually rather than semi-annually;

2.       A further regulatory timetable is established as set out in Appendix A to this order.

3.       In accordance with BCUC’s Rules of Practice and Procedure, parties who wish to actively participate in this proceeding, must submit the Request to Intervene Form, available on the BCUC’s website at https://www.bcuc.com/get-involved/get-involved-proceeding.html, by Thursday, August 3, 2023, as established in the regulatory timetable.

DATED at the City of Vancouver, in the Province of British Columbia, this   13^th   day of July 2023.

BY ORDER

Original signed by:

A. K. Fung, KC

Commissioner

Attachment

British Columbia Hydro and Power Authority

Request to Amend Major Capital Project Filing Guidelines

British Columbia Hydro and Power Authority

Request to Amend Major Capital Project Filing Guidelines

1.1              Background

On March 17, 2023, British Columbia Hydro and Power Authority (BC Hydro) filed an application with the British Columbia Utilities Commission (BCUC) to amend the Major Capital Project Filing Guidelines (Application).

On December 2, 2019 by Order G-313-19, the BCUC approved the 2018 Major Capital Project Filing Guidelines (2018 Guidelines), including BC Hydro’s commitment to submit applications to the BCUC for major capital projects with authorized cost estimates that exceed the following thresholds:

•         $100 million for Power System projects;

•         $50 million for Buildings projects; and

•         $20 million for Information Technology projects.

In the Application, BC Hydro seeks approval of:

•         An increase to the major capital filing thresholds in the 2018 Guidelines, escalated annually by their respective price indices for the previously completed calendar year, starting from fiscal 2019, as follows:

a.       BC-CPI for Power System Projects;

b.       Non-residential building construction price index for Buildings projects; and

c.       BC-CPI for Information Technology Projects; and

•         BCUC confirmation that a Certificate of Public Convenience and Necessity is not required for Customer IPID 901943 Project.

On May 25, 2023, BC Hydro amended its approvals sought, as follows:

•         Escalate Power System Project expenditure threshold by the non-residential building construction price index change (%) instead of the BC-CPI;

•         Seek an update to the 2018 Guidelines and a change to the applicable Directives for the John Hart Dam Seismic Upgrade Project, Bridge River 1 Units 1 to 4 Generator Replacement Project, Peace to Kelly Lake Stations Sustainment Project and Mainwaring Substation Upgrade Project to move to annual progress reports in instances where Material Change Reports are a separate reporting requirement; and

•         Seek adjustments to the timing of filing Final Reports for the John Hart Dam Seismic Upgrade Project, Bridge River 1 Units 1 to 4 Generator Replacement Project, Peace to Kelly Lake Stations Sustainment Project and Mainwaring Substation Upgrade Project so that the Final Reports are due three months after review by BC Hydro’s Board of Directors rather than three months after substantial completion of the projects, consistent with the 2018 Guidelines and including an amendment to the 2018 Guidelines to clarify that the BC Hydro Board of Directors reviews, rather than approves, the Final Reports.

By Order G-113-23, dated May 9, 2023, the BCUC established a regulatory timetable for review of the Application, including submissions by parties on their support for BC Hydro’s Application and suggestions on the regulatory process to review the Application. By Orders G-118-23 dated May 17, 2023 and G-132-23 dated
June 7, 2023, the BCUC amended the regulatory timetable.

In accordance with the regulatory timetable, the following parties made submissions: BC Sustainable Energy Association (BCSEA), St’at’imc Chiefs Council (SCC), Commercial Energy Consumers (the CEC) and British Columbia Old Age Pensioners’ Organization et al. (BCOAPO).

On June 27, 2023, BC Hydro made a reply submission, including a request for a decision on its request to file certain approved capital project progress reports annually versus semi-annually, by July 14, 2023, contrary to directives that have already been made previously by the BCUC.

These Reasons for Decision address the above request. 

1.2              BC Hydro Request for Annual Project Progress Reporting

As stated above, among other things, BC Hydro seeks approval to move from semi-annual to annual progress reports for approved capital projects in instances where Material Change Reports are a separate reporting requirement. Accordingly, BC Hydro seeks an amendment to the 2018 Guidelines and the applicable directives for:

•         The John Hart Dam Seismic Upgrade Project in Decision and Order G-107-23 dated May 5, 2023;

•         The Bridge River 1 Units 1 to 4 Generator Replacement Project in Decision and Order C-6-22 dated October 11, 2022 and Order G-310-22 dated October 31, 2022;

•         The Peace to Kelly Lake Stations Sustainment Project in Decision and Order G-57-23 dated March 20, 2023 and Order G-84-23 dated April 14, 2023; and

•         The Mainwaring Substation Upgrade Project in Decision and Order C-4-22 dated August 16, 2022, and Order G-266-22 dated September 23, 2022.

BC Hydro states that, in instances where material changes are a separate reporting requirement, BC Hydro considers annual reporting would be sufficient for any material events on a project occurring in between annual reports would be promptly reported through the Material Change Report.[1]

In its Decision on the John Hart Dam Seismic Upgrade Project, the BCUC directed BC Hydro to file semi-annual progress reports, material change reports and a final report with the BCUC. Additionally, the BCUC directed semi-annual reporting on permits and special reserves due to material risks.[2]

BC Hydro states that the scope of the Material Change Report for the John Hart Dam Seismic Upgrade Project “would already capture any material impacts due to permit delays.” Additionally, BC Hydro submits that the scope of the Material Change Report for the John Hart Dam Seismic Upgrade Project should be expanded to include filing of the Report if the Special Reserve is accessed.[3]

Regarding upcoming semi-annual reporting deadlines, BC Hydro states that the next reports for the Bridge
River 1 Units 1 to 4 Generator Replacement, Mainwaring Substation Upgrade and John Hart Dam Seismic Upgrade Projects are all due to be filed on August 15, 2023.

BC Hydro suggests that the next reporting periods for the below listed Projects would be as follows:

•         The Bridge River 1 Units 1 to 4 Generator Replacement Project: within 45 days of the period ending December 31, 2023 (i.e., February 15, 2024);

•         The Mainwaring Substation Upgrade Project: within 45 days of the period ending December 31, 2023 (i.e., February 15, 2024);

•         The Peace to Kelly Lake Stations Sustainment Project: within 45 days of the period ending October 31, 2023 (i.e., December 15, 2023); and

•         The John Hart Dam Seismic Upgrade Project: within 45 days of the period ending October 31, 2023 (i.e., December 15, 2023).

Panel Determination

Pending the BCUC’s completion of the review of BC Hydro’s Application, the Panel denies at this time
BC Hydro’s request to seek an update to the 2018 Guidelines and to vary the frequency of approved capital project progress reporting from semi-annual to annual reporting in instances where Material Change Reports are a separate reporting requirement.

This Application involves many over-lapping issues related to the BCUC’s review of BC Hydro’s major capital projects. At this early stage in the proceeding, the Panel finds that there is insufficient evidence on the record to support approving BC Hydro’s request. While the Panel may, after the completion of this proceeding, ultimately determine to change the current semi-annual reporting requirement for the capital projects identified by
BC Hydro, it is premature to do so at this time.

The Panel observes that all other BCUC-regulated utilities file semi-annual capital project progress reports, whether or not they are also required to file Material Change Reports. Such reports are done internally by the utilities and build upon previously filed reports. Accordingly, they should not pose an undue burden on the utilities. The Panel further observes that these reports serve to provide the BCUC with timely notice of changes in the timing, costs and execution of capital projects that would not be considered as material changes but may nonetheless require further oversight or action by the BCUC. In the absence of these semi-annual reports, the BCUC would not receive notice of such changes except on an annual basis.

As previously established, BC Hydro is directed to continue to comply with the 2018 Guidelines and the applicable Directives, until directed otherwise, as follows:

•         The John Hart Dam Seismic Upgrade Project in Decision and Order G-107-23 dated May 5, 2023;

•         The Bridge River 1 Units 1 to 4 Generator Replacement Project in Decision and Order C-6-22, dated October 11, 2022 and Order G-310-22 dated October 31, 2022;

•         The Peace to Kelly Lake Stations Sustainment Project in Decision and Order G-57-23, dated March 20, 2023 and Order G-84-23 dated April 14, 2023; and

•         The Mainwaring Substation Upgrade Project in Decision and Order C-4-22 dated August 16, 2022, and Order G-266-22 dated September 23, 2022.

For further clarity, the Panel confirms that this determination applies only to BC Hydro’s request to vary the requirement for semi-annual reporting for the above capital projects. Pending further review of the Application, the Panel declines to comment on the merits of the revised approvals sought and the remainder of the Application at this time.