ORDER NUMBER

G-86-25

 

IN THE MATTER OF

the Utilities Commission Act, RSBC 1996, Chapter 473

 

and

 

British Columbia Hydro and Power Authority

Non-Integrated Areas Certificate of Public Convenience and Necessity Exemption

 

BEFORE:

T. A. Loski, Panel Chair

B. A. Magnan, Commissioner

 

on March 31, 2025

 

ORDER

WHEREAS:

 

A.      On January 30, 2025, British Columbia Hydro and Power Authority (BC Hydro) filed an application (Application) with the British Columbia Utilities Commission (BCUC) pursuant to section 45(4) of the Utilities Commission Act (UCA) for an exclusion from the requirement to obtain a certificate of public convenience and necessity (CPCN) for the Tsay Keh Dene diesel generating station extension and the Kwadacha diesel generating station extension (together, the Projects);

B.      The Projects are located in BC Hydro’s non-integrated areas and are planned extensions to existing diesel generating stations;

C.      The Tsay Keh Dene diesel generating station extension (TKD Station Extension) is comprised of the upgrade and expansion of the Tsay Keh Dene diesel generating station in the community of Tsay Keh Dene to increase the firm capacity by approximately 1,200 kilowatts (kW), and related works and equipment including those enabling the positioning of a spare generator;

D.      The Kwadacha diesel generating station extension (KWA Station Extension) is comprised of the upgrade and expansion of the Kwadacha diesel generating station in the community of Kwadacha Nation (Fort Ware) to increase the firm capacity by approximately 750 kW, and related works and equipment including those enabling the positioning of a spare generator;

E.       Section 45(4) of the UCA provides that the BCUC may, by regulation, exclude a utility plant or categories of utility plants from the operation of section 45(1) of the UCA, which requires that after September 11, 1980, a person must not begin the construction or operation of a public utility plant or system, or an extension of either, without first obtaining a CPCN from the BCUC;

F.       By Order G-28-25 dated February 7, 2025, the BCUC established a public hearing and regulatory timetable for review of the Application, which included, among other things, one round of BCUC information requests and a letter of comment period; and

G.      The BCUC has considered the Application and evidence in this proceeding and finds that the following determination is warranted.

 

NOW THEREFORE pursuant to section 45(4) of the UCA and for the reasons outlined in the decision accompanying this order, the BCUC orders that excluding the TKD Station Extension and the KWA Station Extension from the operation of section 45(1) of the UCA by regulation is warranted.

 

DATED at the City of Vancouver, in the Province of British Columbia, this       31^st       day of March 2025.

 

BY ORDER

 

Electronically signed by Tom Loski

 

T. A. Loski

Commissioner

 

 

 

 

 

 

 

British Columbia Hydro and Power Authority

Non-Integrated Areas Certificate of Public Convenience and Necessity Exemption

 

1.0              Introduction

On January 30, 2025, British Columbia Hydro and Power Authority (BC Hydro) filed an application (Application) with the British Columbia Utilities Commission (BCUC) pursuant to section 45(4) of the Utilities Commission Act (UCA)[1] for an exclusion from the requirement to obtain a certificate of public convenience and necessity (CPCN) for the Tsay Keh Dene diesel generating station extension (TKD Station Extension) and the Kwadacha diesel generating station extension (KWA Station Extension, and together, the Projects).[2]

 

The Projects are located in BC Hydro’s non-integrated areas (NIAs) and are planned extensions to existing diesel generating stations. BC Hydro states that the Projects will increase generation capacity to meet load growth in the Tsay Keh Dene and Kwadacha communities, respectively.[3]

 

Section 45(1) of the UCA provides that after September 11, 1980, a person must not begin the construction or operation of a public utility plant or system, or an extension of either, without first obtaining a CPCN from the BCUC.[4]

 

Under section 45(2) of the UCA, BC Hydro is deemed to have a CPCN to operate its plants and systems or to construct and operate extensions to the plants and systems if they were in operation on September 11, 1980.[5] BC Hydro states that section 45(2) does not apply to the Projects because the respective CPCNs were issued to BC Hydro for the Tsay Keh Dene and Kwadacha microgrids in 2011.[6]

 

Section 45(4) of the UCA provides that the BCUC may, by regulation, exclude a utility plant or categories of utility plants from the operation of section 45(1).[7]

 

The BCUC established a public hearing and regulatory timetable for review of the Application, which included, among other things, one round of BCUC information requests and a letter of comment period.[8] No letters of comments were received by the March 4, 2025 deadline.

2.0              The Application

BC Hydro describes the Projects as works that will increase firm capacity at the Tsay Keh Dene diesel generating station and the Kwadacha diesel generating station by approximately 1,200 kilowatts (kW) and 750 kW, respectively, through the addition of a mobile diesel generator at each location. The Projects involve the expansion of the existing yard within BC Hydro’s property lines at each location and the installation of the mobile generator, switchgear, new control room, upgrades to the fuel supply system and associated electrical, civil, protection, control and telecommunications engineering work. The Projects will also allow for a spare generator position (parking spot and associated equipment) at each location.[9]

 

BC Hydro states that the Projects are needed to meet growing load in the Tsay Keh Dene and Kwadacha communities, noting that both communities have seen a significant increase in load over the past few years. Specifically, between 2018 and 2022, peak demand on the Tsay Keh Dene microgrid increased by 31 percent, while peak demand on the Kwadacha microgrid increased by 24 percent. BC Hydro states that, based on collaborative work with the Tsay Keh Dene and Kwadacha communities over the past few years, it developed a 20-year load forecast for each community and that these load forecasts identified the need for the Projects.[10]

 

Regarding future plans for the communities, BC Hydro identifies that both communities are planning renewable solar projects. BC Hydro states that while solar energy projects can displace diesel generation to an extent, solar projects cannot currently provide firm capacity. Therefore, BC Hydro considers that the respective communities require the TKD Station Extension and KWA Station Extension to maintain a sufficient source of firm capacity regardless of any future renewable energy projects.[11] Further, BC Hydro notes that the permanent upgrades associated with the Projects will facilitate integration of these solar generation facilities.[12]

 

BC Hydro estimates that the TKD Station Extension and the KWA Station Extension will cost $19.8 million and $20.01 million, respectively, and have target in-service dates of November 2026 and November 2027. BC Hydro estimates that the rate impact to BC Hydro ratepayers will be approximately 0.02 percent for each project.[13]

 

BC Hydro explains that it is seeking to exclude the Projects from the requirement of section 45(1) of the UCA for the following reasons:[14]

•         The estimated costs of the TKD Station Extension and KWA Station Extension are relatively low[15];

•         Approximately 25 percent of the cost of the Projects is for mobile generators that can be deployed to other NIAs if they are no longer needed at either generating station in the future. BC Hydro considers that this flexibility for the use of these assets minimizes the potential financial risks to BC Hydro ratepayers that are typically associated with potentially stranded assets;

•         The construction of the Projects is within the existing property lines of the diesel generating stations and will have limited impact on the surrounding area; and

•         The affected First Nations have both expressed support for the Application.

 

Appendix A to the Application provides letters of support from the Tsay Keh Dene Nation and Kwadacha Nation, in which both Nations state that they support excluding the Projects from the need for a CPCN. Both Nations note that the microgrids in each community primarily serve the respective Nation and do not impact BC Hydro's integrated electrical system or other communities. Further, the Nations state that the regulatory process for a CPCN would require their resources, which they consider would be better directed to other urgent community priorities. Both Nations indicate that they and BC Hydro are committed to working together on long-term microgrid planning for their community.[16]

 

As to the form of the regulation requested under section 45(4) of the UCA, BC Hydro submits that the regulation should sufficiently cover the scope of the Projects while providing flexibility for the on-going development and refinement of the Projects’ design details. Accordingly, BC Hydro proposes that the following definitions for the Projects be used in the regulation:[17]

•         “TKD Station extension” means the upgrade and expansion of the Tsay Keh Dene Diesel Generating Station in the community of Tsay Keh Dene to increase the firm capacity by approximately 1200 kW, and related works and equipment including those enabling the positioning of a spare generator; and

•         “KWA Station extension” means the upgrade and expansion of the Kwadacha Diesel Generating Station in the community of Kwadacha Nation (Fort Ware) to increase the firm capacity by approximately 750 kW, and related works and equipment including those enabling the positioning of a spare generator.

Panel Determination

The Panel finds that issuing a regulation pursuant to section 45(4) of the UCA to exclude the TKD Station Extension and the KWA Station Extension from the operation of section 45(1) of the UCA is warranted.

 

In reaching this determination, the Panel considered whether excluding the Projects from the requirement to obtain a CPCN serves the objects and purposes of the UCA and is in the public interest. The longstanding test for granting an exemption pursuant to section 88(3) of the UCA was set out in the reasons for decision issued for the Canal Plant Agreement Exemption, wherein the BCUC stated that “[a] section 88(3) exemption order should be issued, with the advance approval of the [Lieutenant Governor in Council], when such exemption serves the objects and purposes of the [UCA] and it is in the public interest to do so.”[18] The Panel considers that an exclusion under section 45(4) of the UCA is analogous to an exemption pursuant to section 88(3) of the UCA and therefore applying the same test is appropriate in this instance.

 

In applying this test, the Panel considered the Tsay Keh Dene and Kwadacha Nations’ support for the exclusion from section 45(1) of the UCA, which we view to be a persuasive factor in our review of the Application. The Panel notes that the Projects will serve only the Tsay Keh Dene and Kwadacha communities, in which most residents are members of the Tsay Keh Dene and the Kwadacha Nations. As demonstrated by the letters filed with the Application, both Nations support the Projects and BC Hydro’s request to exclude the Projects from the requirement to obtain a CPCN from the BCUC. The Panel also acknowledges the Tsay Keh Dene and Kwadacha Nations’ views that their community resources would be better directed towards other urgent community priorities than to the regulatory process associated with a CPCN application by BC Hydro.

 

The Panel has also considered the expected rate impacts resulting from the Projects, which BC Hydro estimates will be 0.02 percent for each project once it goes into service. The Panel considers these expected impacts to BC Hydro rates to result in minimal impact to BC Hydro ratepayers.

 

Additionally, the Panel has reviewed the drivers of the Projects and the nature of the equipment proposed in assessing the Application. The Panel recognizes that the Projects are driven by the need to provide additional firm capacity to the Tsay Keh Dene and Kwadacha Nations, based on load forecasts that have been developed collaboratively with each Nation and show load in both communities increasing as a result of housing and other infrastructure additions, as well as a move away from fossil fuel heating to electric heating. Currently, diesel generation is the only method available to provide such firm capacity. We note that BC Hydro and the Tsay Keh Dene and Kwadacha Nations are committed to working together on long-term microgrid planning for the communities and that these plans may include future solar projects. While we acknowledge that a future solar project may reduce the reliance on diesel, we consider that the firm capacity provided by the Projects will be required regardless of any future solar project. We also consider that the mobile nature of the planned generator equipment provides benefits and flexibility to BC Hydro should this capacity need to be deployed elsewhere and that the permanent facilities associated with the Projects will facilitate integration of future solar generation projects. The Panel considers that these aspects combined minimize potential risks of stranded assets. Overall, the Panel is satisfied that BCUC review of a CPCN application is not necessary to ensure the protection of the public interest in relation to the Projects, as BC Hydro has provided sufficient information regarding the factors that would be assessed in the context of a CPCN application.

 

Lastly, the Panel considers BC Hydro’s proposed definitions of the Projects, which define the utility plant proposed to be excluded from the operation of section 45(1) of the UCA, to be appropriate. The Panel finds these definitions adequately describe the scope of the Projects while allowing some flexibility for BC Hydro as project details are refined.

3.0              Next Steps for Issuing a Regulation

Having determined that issuing a regulation pursuant to section 45(4) of the UCA to exclude the TKD Station Extension and the KWA Station Extension from the operation of section 45(1) of the UCA is warranted, the BCUC provides the following instructions to the Office of Legislative Counsel in accordance with its drafting instructions guide to prepare the regulation:[19]

•         Problem and Background: Background on the regulation is provided in Section 1 of this Decision.

•         Objective: The objective of the regulation is to exclude the TKD Station Extension and the KWA Station Extension from the operation of section 45(1) of the UCA.

•         Rationale: The rationale for the regulation is provided in the Panel Determination subsection of Section 2 of this Decision.

•         Specifics of the Proposal:

o   The regulation should be titled the “Tsay Keh Dene and Kwadacha Station Extension Regulation”.

o   The regulation should provide the following definitions:

▪  Act means the Utilities Commission Act.

▪  “TKD Station extension” means the upgrade and expansion of the Tsay Keh Dene Diesel Generating Station in the community of Tsay Keh Dene to increase the firm capacity by approximately 1200 kilowatts, and related works and equipment including those enabling the positioning of a spare generator.

▪  “KWA Station extension” means the upgrade and expansion of the Kwadacha Diesel Generating Station in the community of Kwadacha Nation (Fort Ware) to increase the firm capacity by approximately 750 kilowatts, and related works and equipment including those enabling the positioning of a spare generator.

o   The regulation is to exclude the TKD Station Extension from the operation of section 45(1) of the Act and exclude the KWA Station Extension from the operation of section 45(1) of the Act.

o   To support the drafting of this regulation, a proposed form of regulation is attached as Appendix A to this Decision.

 

The BCUC understands that once Legislative Counsel has prepared the regulation the following steps are necessary to enact it:

1. The Office of Legislative Counsel provides the regulation to the BCUC for approval;
2. The BCUC provides the approved regulation to the Registrar of Regulations for deposit;
3. A member of the Office of Legislative Counsel, acting on behalf of the Registrar of Regulations, reviews and accepts the regulation for deposit as a regulation; and
4. The Registrar of Regulations publishes the regulation in the British Columbia Gazette, Part II.

 

The BCUC appreciates the support of the Office of Legislative Counsel in assisting with the creation of this regulation.

 

 

Dated at the City of Vancouver, in the Province of British Columbia, this       31^st    day of March 2025.

 

 

Electronically signed by Tom Loski

_________________________________

T. A. Loski

Panel Chair

 

 

Electronically signed by Bernard Magnan

_________________________________

B. A. Magnan

Commissioner

 

 

 

Utilities Commission Act

TSAY KEH DENE AND KWADACHA STATION EXTENSION REGULATION

 

 

Definitions

1         In this regulation:

"Act" means the Utilities Commission Act;

"TKD Station extension" means the upgrade and expansion of the Tsay Keh Dene Diesel Generating Station in the community of Tsay Keh Dene to increase the firm capacity by approximately 1200 kilowatts, and related works and equipment including those enabling the positioning of a spare generator;

"KWA Station extension" means the upgrade and expansion of the Kwadacha Diesel Generating Station in the community of Kwadacha Nation (Fort Ware) to increase the firm capacity by approximately 750 kilowatts, and related works and equipment including those enabling the positioning of a spare generator.

Exclusion

2         The TKD Station extension is excluded from the operation of section 45(1) of the Act.

3         The KWA Station extension is excluded from the operation of section 45(1) of the Act.

 

[Provisions relevant to the enactment of this regulation: Utilities Commission Act, R.S.B.C. 1996, c. 473, section 45 (4)]