ORDER NUMBER

G-74-24

 

IN THE MATTER OF

the Utilities Commission Act, RSBC 1996, Chapter 473

 

and

 

British Columbia Sustainable Energy Association

Application for Reconsideration of the Review of Thermal Energy Systems Regulatory Framework Guidelines Phase 1 Panel Report

 

BEFORE:

M. Jaccard, Panel Chair

 

On March 15, 2024

 

ORDER

WHEREAS:

 

A.      On December 20, 2019, by Order G-341-19, the British Columbia Utilities Commission (BCUC) established a written public hearing for the review of a proposed regulatory framework for Thermal Energy Systems (TES) (TES Review);

B.      By letter dated December 21, 2023, the BCUC issued a decision and TES report seeking the approval of the Minister of Energy, Mines and Low Carbon Innovation to issue orders under section 88(3) of the Utilities Commission Act (UCA) granting exemptions based on the report (Report);

C.      By letter dated February 1, 2024, the BCSEA filed an application for reconsideration of the Panel Report (Reconsideration Application);

D.      BCSEA is seeking reconsideration on the grounds that the Review Panel erred in fact, law or jurisdiction in: rescinding the current exemptions; rejecting legacy treatment for existing Micro and Strata TES for no stated reason; and without having given notice that denial of legacy treatment was under consideration.

E.       BCSEA requests a temporary stay of the BCUC’s recommended rescission of the current exemptions of Micro and Strata TES from complaints-based regulation regarding adequate, safe, efficient, just and reasonable service, pending the outcome of a written hearing including parties from the original proceeding;

F.       The Panel has reviewed the Reconsideration Application and considers a summary dismissal is warranted.

 

NOW THEREFORE pursuant to section 99 of the UCA, the BCUC Rules of Practice and Procedure, and for the reasons outlined in the decision accompanying this order, the BCUC summarily dismisses the Reconsideration Application.

 

 

DATED at the City of Vancouver, in the Province of British Columbia, this        15^th        day of March 2024.

 

BY ORDER

 

Original signed by:

 

M. Jaccard

Commissioner

 

 

Attachment

 

 

 

British Columbia Sustainable Energy Association

Application for Reconsideration of the Review of Thermal Energy Systems Regulatory Framework Guidelines Phase 1 Panel Report  

 

 

 

Table of Contents

Page no.

 

Executive Summary. 2

1.0       Introduction. 3

1.1        Rules of Practice and Procedure. 3

2.0       BCSEA’s Request for Reconsideration. 4

3.0       BCUC’s TES Review Phase 1 and the Safety Inquiry. 4

3.1        Phase 1 of the TES Review.. 4

3.2        BCSEA’s Position During Phase 1 of the TES Review.. 5

3.3        TES Report to the Minister. 6

3.4        Public Utility Safety Guidelines. 7

Panel Determination. 7

 

 

 

Executive Summary                                                                                                                                      

On December 21, 2023, the British Columbia Utilities Commission (BCUC) issued a decision and report (Decision) to the Minister of Energy, Mines and Low Carbon Innovation (Minister), concluding phase 1 of the Review of Thermal Energy Systems Regulatory Framework proceeding (TES Review). On February 1, 2024, the BC Sustainable Energy Association (BCSEA) filed an application for reconsideration (Reconsideration Application) of the BCUC recommendation to the Minister to rescind the current class exemptions from sections 23, 25, 38 and 41 of the Utilities Commission Act (UCA) for Micro and Strata Thermal Energy Systems (TES).

BCSEA submits that the proposed changes will have “substantial financial and risk impacts” on providers of Strata and Micro TES, and that these impacts meet the material criterion for reconsiderations in Rule 26.04(c) of the BCUC’s Rules of Practice and Procedure (Rules).

 

BCSEA is seeking reconsideration on several grounds, namely, that the BCUC, in phase 1 of the TES Review, erred in fact, law or jurisdiction in rescinding the current exemptions. BCSEA is also seeking reconsideration on the grounds that the BCUC erred in rejecting legacy treatment for existing Micro and Strata Thermal Energy Systems.

 

BCSEA relies on Rule 26.05(a) as the grounds for its reconsideration being that the BCUC “erred in fact, law or jurisdiction,” but does not provide any further detail regarding the specific legal or jurisdictional errors.

 

BCSEA outlines several reasons why it alleges the BCUC erred in fact. Reasons a) to e) provided by BCSEA are consistent with their submissions in the TES Review, to which the BCUC responded in the Decision. Ground f) regarding the lack of an examination of the costs and benefits of complaints-based regulation and capital reserve and reporting requirements is also consistent with BCSEA’s submissions in the TES Review, and the Decision deferred consideration of the form of regulation to phase 2.  

 

The Panel notes that the recent Public Utility Safety Guidelines provide for the possibility that the TES Review Panel issue further directions with respect to aspects of the Safety Guidelines for a specific category of TES. Phase 2 of the TES Review is ongoing and will address the form of regulation of various TES.

 

Throughout its application for reconsideration, BCSEA refers to the Decision as a rescission of the current exemptions. The Panel notes however, the Decision does not recommend a rescission of the current exemptions for Strata and Micro TES; instead, the BCUC recommends the exemption expand the exclusion of UCA provisions relating to safety and reliability for all TES, including Micro and Strata TES. 

 

The Panel finds that the BCSEA has failed to establish, on its face, any reasonable grounds for the BCUC’s recommendations in the Decision to be reconsidered and, therefore, dismisses the BCSEA Reconsideration Application. The Panel understands that BCSEA disagrees with the recommendations made by the BCUC in the Decision but disagreements alone are not adequate grounds for reconsideration. Many of BCSEA’s arguments mirror its submissions in the underlying proceeding or will be dealt with in phase 2. Therefore, the Panel finds that BCSEA’s Reconsideration Application does not disclose on its face any reasonable grounds on which to reconsider the original decision, and accordingly, the Reconsideration Application is summarily dismissed.

 

 

 

1.0              Introduction

On December 21, 2023, the BCUC issued the decision (Decision) in a report to the Minister (Panel Report) which concluded phase 1 of the Review of Thermal Energy Systems Regulatory Framework proceeding (TES Review). On February 1, 2024, the BC Sustainable Energy Association (BCSEA) filed an application for reconsideration of the Decision to rescind the current class exemptions (Current Exemptions) from sections 23, 25, 38 and 41 of the Utilities Commission Act (UCA) for Micro and Strata Thermal Energy Systems (TES).

 

BCSEA submits that prior to the Decision, Micro and Strata TES had not been subject to active regulation by the BCUC, and the decision to rescind sections 23, 25, 38 and 41 of the UCA results in a material impact on previously exempt Strata and Micro TES being subjected to “(a) complaints-based BCUC regulation regarding adequate, safe, efficient, just and reasonable service, and (b) a requirement to demonstrate to the BCUC that they have sufficient capital reserves to be able to maintain and operate their Thermal Energy System and replace equipment as required to ensure safe and reliable service to their customers.”[1]

 

BCSEA requests a temporary stay of the proposed rescission of the Current Exemptions from complaints-based regulation, until a written hearing on this matter finds evidence of notice having been given to all Micro and Strata TES of the BCUC’s proposed changes.[2]

 

These reasons begin with an overview of the requirements for a reconsideration application according to the BCUC’s Rules of Practice and Procedure (BCUC Rules), before setting out BCSEA’s reconsideration application. Next, we outline the background in the TES Review, before a determination on whether there are reasonable grounds on which to reconsider the Decision.

1.1              Rules of Practice and Procedure

Section 26.05, Part V of the BCUC Rules outlines the requirements for a reconsideration application:

 

26.05        An application for reconsideration of a decision must contain a concise statement of the grounds for reconsideration, which must include one or more of the following:

(b)    the BCUC has made an error of fact, law, or jurisdiction which has a material bearing on the decision;

(c)     facts material to the decision that existed prior to the issuance of the decision were not placed in evidence in the original proceeding and could not have been discovered by reasonable diligence at the time of the original proceeding;

(d)    new fact(s) have arisen since the issuance of the decision which have material bearing on the decision;

(e)    a change in circumstances material to the decision has occurred since the issuance of the decision; or

(f)      where there is otherwise just cause.

 

Section 28.01 of the BCUC Rules regarding summary dismissal of a reconsideration application states: 

 

Upon the filing of an application for reconsideration of a decision, the BCUC may, without further process, summarily dismiss the application, in whole or in part, on the basis that it fails to establish, on its face, any reasonable grounds for reconsideration of the decision.

2.0              BCSEA’s Request for Reconsideration

BCSEA is seeking reconsideration on the grounds that the BCUC, in phase 1 of the TES Review, erred in fact, law or jurisdiction in rescinding the Current Exemptions:[3]

a)       without any evidence of actual safety or reliability problems faced by past or current Micro or Strata TES customers under the Current Exemptions,

b)      on the basis that the importance of heating and cooling service provided by Micro and Strata Thermal Energy Systems to customers (which BCSEA acknowledges) is a sufficient reason to rescind the Current Exemptions,

c)       on the basis of the findings of the Safety Inquiry Report, and without having examined whether another regulatory body is providing adequate oversight of the safety of existing and future Micro and Strata Thermal Energy Systems,

d)      on the basis that the onus is on existing or future Micro and Strata Thermal Energy Systems to demonstrate to the BCUC that the Current Exemptions should be maintained,

e)      with no evidence that the providers of Micro and Strata Thermal Energy Systems fail to maintain sufficient capital reserves to be able to maintain and operate their TES and replace equipment as required to ensure safe and reliable service to their customers, and

f)        without examining the costs of complaints-based BCUC regulation and capital reserve and reporting requirements, and whether the benefits of complaints-based BCUC regulation and capital reserve requirements outweigh the costs.

 

BCSEA is also seeking reconsideration on the grounds that the BCUC erred in fact, law or jurisdiction in rejecting legacy treatment for existing Micro and Strata Thermal Energy Systems for no stated reason, contrary to the BCUC’s obligation to provide reasons for this Decision, and without having given notice that denial of legacy treatment was under consideration.[4]

3.0              BCUC’s TES Review Phase 1 and the Safety Inquiry

3.1              Phase 1 of the TES Review

The TES Review began in December 2019 when the BCUC established a public hearing.[5] Sixteen interveners registered as participants, including 8 utilities, 4 intervener groups, 1 municipality, and 3 interveners representing other interests.[6]

 

On January 26, 2022, the BCUC issued a draft report for comment, and requested submissions from participants on any aspects of the draft by April 28, 2022.[7] The BCUC issued three further requests for submissions, with written submissions received by September 15, 2022, November 10, 2022, and June 15, 2023 respectively.[8]

 

Currently, Strata TES[9] and Micro TES[10] are exempt from Part 3 of the UCA, except for section 42 (duty to obey orders), section 43 (duty to provide information) and section 44 (duty to keep records).

 

During the TES Review proceeding, the BCUC sought submissions on a draft report, which included a proposal to also exclude sections 25 (Commission may order improved service) and section 41 (no discontinuance without permission) from all TES exemptions and to retain the requirement that TES providers demonstrate that they have sufficient capital reserves.[11] The draft report also contemplated that existing TES would remain exempted from the sections of the UCA provided by the then-prevailing BCUC orders.[12]

 

Following the conclusion of Stage 1 of the Safety Inquiry, the BCUC sought submissions on a proposal to further exclude section 23 (general supervision of public utilities) and section 38 (public utility must provide service) from all TES exemptions.[13] 

 

The BCUC also separately sought submissions on the regulation of Strata TES, including reasons to regulate, exempt or exclude from regulation.[14]

3.2              BCSEA’s Position During Phase 1 of the TES Review

During phase 1 of the TES Review, BCSEA opposed the proposal “to impose complaints-based BCUC regulation on Micro TES and Strata TES that are now effectively unregulated under the current TES Guidelines.”  BCSEA submitted “…there is no evidence that regulation of Micro TES and Strata TES is required. In particular, there is no evidence of any safety or reliability problems faced by customers of Micro TES or Strata TES that went unreviewed and unremedied due to the current exemption of Micro TES and Strata TES from complaints-based regulation.”[15] The importance of thermal energy to customers is not “a sufficient or valid rationale for choosing to regulate currently unregulated Micro TES and Strata TES.”[16]

 

BCSEA submitted that a decision to regulate Micro and Strata TES would require consideration of evidence that (a) in the absence of BCUC regulation Micro and Strata TES would not provide safe and reliable service to their customers and (b) that BCUC regulation of Micro TES and Strata TES would not impede the competitive markets, and that neither factor is supported by any evidence in the current proceeding.[17]

 

In response to the BCUC’s request for submissions on the regulation of Strata TES, BCSEA restated its view that a persuasive case has not been made for the BCUC to regulate Strata TES regarding service reliability, quality and continuity,[18] and again in response to BCOAPO and RCIA support for complaint-based regulation for Strata TES.[19]

 

BCSEA did not provide comments on grandfathering or capital reserve demonstration in the draft report.[20]

3.3              TES Report to the Minister

In the Decision the BCUC recommended changes to the Micro[21] and Strata TES[22] exemptions and stated that these changes apply to both existing and new TES.[23] The BCUC acknowledged BCSEA’s submission that there is no evidence that Strata TES are "actually experiencing problems with their Strata TES service that could not be resolved unless the BCUC regulated Strata TES regarding reliability, quality and continuity." However, given these limitations to the available evidence, the BCUC was not able to conclude that regulation of Strata TES for reliability, quality and continuity would not be necessary or in the public interest.[24]

 

The Decision recommended that no TES should be exempt from sections 23, 25, 38 and 41, in addition to the existing sections 42, 43 and 44. The BCUC noted that its findings were consistent with the Stage 1 Safety Inquiry Report, in particular:[25]

•         The BCUC has jurisdiction over all aspects of public utility safety; and 

•         Given the importance of public utility safety and the BCUC’s express powers to oversee this area, the BCUC should not recommend an exemption for a public utility from its safety oversight without explicitly considering whether an exemption from safety regulation is in the public interest.

The BCUC considered that the importance of heating and cooling service is sufficient reason to regulate safety and reliability, and “that the BCUC does not need evidence of actual safety or reliability problems faced by past or current Micro or Strata TES customers to determine that the BCUC should retain its jurisdiction in these areas. The onus is on the public utility to demonstrate that the BCUC should exempt TES from safety and reliability supervision, not the other way around.”[26]

 

The Decision indicated that proposed changes to the TES Guidelines relating to the form of regulation will be considered in Phase 2. Phase 2 will also address both items identified by the BCUC as requiring further discussion with stakeholders and concerns raised by participants, namely, clarification of the scope of complaints to be heard related to the safety and reliability of TES, and how to demonstrate that TES have sufficient capital reserves.[27]

3.4              Public Utility Safety Guidelines

On February 28, 2024, the BCUC issued its final Public Utility Safety Guidelines (Safety Guidelines) to support public utilities in making safety a core part of their culture and to guide the BCUC in effectively and efficiently regulating public utility safety. The panel in that proceeding declined to revise the Applicability section of the Safety Guidelines, stating that it “considers an approach where the Safety Guidelines are applied uniformly to all public utilities that are subject to BCUC’s safety jurisdiction, while allowing the BCUC to direct otherwise where aspects of the Safety Guidelines are found not to be necessary, to be appropriate.”[28]

 

With respect to the ongoing TES Review, the BCUC noted that “[s]hould that panel determine that all or specific aspects of the Safety Guidelines are not necessary for a specific category of TES, that panel may consider issuing further directions based on the specific facts and information before it.”[29]

Panel Determination

The Panel finds that the BCSEA has failed to establish, on its face, any reasonable grounds for the BCUC’s recommendations in the Decision to be reconsidered and therefore dismisses the BCSEA Reconsideration Application.

 

Rule 28 of the BCUC Rules permits the summary dismissal of an application for reconsideration where the applicant has failed to establish reasonable grounds for reconsideration. In the Panel’s view BCSEA has not established any error of fact, law or jurisdiction that would provide reasonable grounds for reconsideration and therefore, the BCSEA application for a reconsideration is dismissed.  

 

BCSEA relies on Rule 26.05(a) as the grounds for its reconsideration that the BCUC “erred in fact, law or jurisdiction,” but does not provide any further detail regarding the specific legal or jurisdictional errors. The UCA provides the BCUC jurisdiction to regulate public utilities. As long as an entity meets the definition of a public utility in the UCA and does not fit into one of the UCA exclusions, then the BCUC has the jurisdiction to regulate absent an exemption. Throughout its application for reconsideration, the BCSEA refers to the Decision as a rescission of the Current Exemptions. The Panel notes however, the Decision does not recommend a rescission of the Current Exemptions for Strata and Micro TES, instead the BCUC recommends the exemption expand the exclusion of UCA provisions relating to safety and reliability for all TES, including Micro and Strata TES. 

 

BCSEA outlines several reasons why it alleges the BCUC erred in fact. Reasons a) to e) provided by BCSEA are consistent with their submissions in the TES Review, to which the BCUC responded in the Decision.

 

First, the BCSEA claims that the BCUC has recommended a rescission of the current exemptions for Strata and Micro TES without any evidence of actual safety or reliability problems faced by past or current Micro or Strata TES customers. This argument is similar to BCSEA’s argument raised in its submissions[30] responding to the BCUC request for submissions requiring all TES to be subject to sections 23 and 38 of the UCA.[31] The BCUC considered and addressed this specific ground in the Decision by explaining that it does not require the type of evidence the BCSEA referred to in order to regulate safety and reliability. The BCUC initiated the TES Review by including a draft of the terms of reference,[32] which was commented on by parties, revised, and finalized by the BCUC on April 22, 2020.[33] The terms of reference made clear that, not only would the BCUC review the TES Guidelines, but that it would also review the scope and current classes for exemption, thresholds for exemption, and complaints, amongst other matters, which were expanded upon and for which the BCUC sought further comment on throughout the course of the proceeding.[34] In other words, the evidentiary record the BCUC relied upon in order to reach its Decision to recommend an expansion of the exclusion from exemption, is extensive.

 

Second, BCSEA alleges the BCUC erred in fact, law, or jurisdiction, by relying on the importance of heating and cooling provided by Strata and Micro TES as a sufficient reason to recommend revision to the current exemptions. Again, this argument by BCSEA mirrors its submissions made in the underlying proceeding, which the BCUC considered and dismissed.[35]

 

The Decision does state that the importance of heating and cooling is a sufficient reason to regulate safety and reliability and provides section 25 of the UCA as an example.[36] To be clear, it is section 38 of the UCA that requires a public utility to provide and maintain its property and equipment in a condition to enable it to provide a service to the public that the BCUC considers is in all respects adequate, safe, efficient, just and reliable.  Section 25 provides the BCUC the ability to determine what is safe service and that if, after a hearing, the BCUC determines that a service of a public utility is unsafe, the BCUC must then determine what is safe service and order the public utility to provide it.

 

Third, the BCSEA alleges the Safety Inquiry Report is not a reason to support expanding the exclusion from exemption for Strata and Micro TES because the Safety Inquiry did not specifically mention TES. BCSEA addressed concerns relating to the safety inquiry in its previous submissions.[37] Although the Safety Inquiry did not specifically address safety and reliability relating to TES, it did address the BCUC’s jurisdiction of safety and reliability of all regulated entities, including TES.[38] It is without question that the BCUC’s inquiry to examine the role of the BCUC in the regulation of safety examined the BCUC’s role with respect to all public utilities it regulates, which includes TES. The inquiry focused on:

•         The nature and extent of the BCUC’s jurisdiction to regulate the safety of public utilities under the UCA;

•         The conditions, if any, under which the BCUC can forebear from regulating the safety of public utilities within its jurisdiction, as allowable under the UCA; and

•         Setting out a framework of key principles to guide the BCUC in carrying out its safety-related duties.

At the outset, the Safety Inquiry report makes clear that the BCUC finds that it has jurisdiction over all aspects of public utility safety. Given that TES are public utilities the Safety Inquiry report applies to TES, even though some are partially exempt from provisions of Part 3 of the UCA. Finally, the BCUC considered a guiding principle of the Safety Inquiry, namely that the BCUC should not be recommending exemptions from its safety oversight without explicitly considering whether an exemption from safety regulation is in the public interest. It is clear from the Decision that the BCUC considered the public interest in determining that Strata and Micro TES exemption ought to be narrowed to exclude sections 23, 25, 38, and 41 of the UCA. Finally, the concerns raised by BCSEA under this heading regarding how the BCUC will regulate Strata and Micro TES will be further dealt with in Phase 2.

 

Fourth, the BCSEA argues that Micro and Strata TES do not bear the onus to demonstrate continued class exemptions are warranted. With respect, that was, in part, the purpose of the TES Review. The TES Review occurred over approximately a four-year period with broad and revised terms of reference indicating that all aspects of TES exemptions, including the guidelines, classes, and thresholds for exemptions, were under review.  Multiple parties participated and numerous letters of comments were received and considered by the BCUC.  The BCUC sought comment from and considered all current exemption classes including Micro and Strata TES in order to determine whether any changes to exemptions or the guidelines were needed and in the public interest. Further, the BCSEA argued a similar position in its submissions to the BCUC in the underlying proceeding.[39]

 

Fifth, the BCSEA argues the BCUC ought to have considered whether complaints-based regulation and capital reserve and reporting requirements for Micro and Strata TES are necessary and in the public interest. With respect, this is not only what BCSEA argued in the underlying proceeding,[40] but it is precisely what the BCUC determined in the Decision. The BCUC determined it was in the public interest for TES to be required to demonstrate that they have sufficient capital reserves to be able to maintain and operate TES, including the replacement of equipment as required to ensure safe and reliable service. The BCUC further determined that the importance of heating and cooling provided by TES is a reason to regulate under sections 23, 25, 38, 41, 42, 43 and 44 of the UCA.

 

Ground f) regarding the lack of an examination of the costs and benefits of complaints-based regulation and capital reserve and reporting requirements is also consistent with BCSEA’s submissions in the TES Review, and the Decision deferred consideration of the form of regulation to Phase 2.  

 

The Panel notes that the recent Safety Guidelines[41] provide for the possibility that the TES Review Panel issue further directions with respect to aspects of the Safety Guidelines for a specific category of TES. Phase 2 of the TES Review is ongoing and will address the form of regulation of various TES.

 

With regards to BCSEA’s final ground that the BCUC erred “in rejecting legacy treatment for no stated reason, contrary to [their] obligation to provide reasons …and without notice that denial of legacy treatment was under consideration,” the Decision did not explicitly provide a reason for regulating legacy TES as compared to a new TES however, the Decision did provide reasons for bringing all TES under BCUC regulation for safety and reliability.

 

While the current TES Guidelines scope the BCUC review of complaints concerning exempt TES, the guidelines do not bind the BCUC. Further, the Panel notes that at no stage of TES regulation has any TES been exempt from Part 6 of the UCA, which includes the BCUC’s jurisdiction to hear complaints. Section 83 of the UCA states:

If a complaint is made to the commission, the commission has powers to determine whether a hearing or inquiry is to be had, and generally whether any action on its part is or is not to be taken.

With respect to notice, the BCUC provided broad notice of the proceeding to the general public.[42] A micro-TES provider[43] and CHOA-BC^[44] registered as interveners in Phase 1 of the TES review. 

 

The Panel understands BCSEA disagrees with the recommendations made by the BCUC in the Decision but disagreements alone are not adequate grounds for reconsideration. Many of BCSEA’s arguments mirror its submissions in the underlying proceeding or will be dealt with in Phase 2. Therefore, the Panel finds that BCSEA’s Reconsideration Application does not disclose on its face any reasonable grounds on which to reconsider the Decision, and accordingly, the Reconsideration Application is summarily dismissed.