The Commission finally laid to rest a long, meandering proceeding involving industrial customers who generate electricity at their own site and want to sell their own power while simultaneously buying lower-cost power from the utility. To say this was complicated would be an understatement. It goes back to a 2014 proceeding in which the Commission approved a renewed "power purchase agreement" (PPA) between BC Hydro and FBC-electric. (FBC buys power from BCH at low rates reflecting BCH's "heritage assets.") The New PPA includes a clause saying that FBC cannot buy power from BCH if and when any customer of FBC is both buying power from FBC and selling self-generation power into the market. This would be "arbitrage" -- if effect, buying embedded-cost BCH power and selling it for a premium on the market, thereby depriving BC Hydro customers of the market premium.
The Commission approved the New PPA, but felt the anti-arbitrage clause impeded large FBC customers from investing in new self-generation facilities (such as biomass generation at a sawmill). The Commission seems to have been of the opinion that new self-generation investment is always a good thing. BCSEA-SCBC have said throughout that only a case-specific analysis could determine whether or not new self-generation investment was in the public interest. In any event, the Commission launched what became a five-year odyssey aimed at creating and approving rules for FBC that would encourage large new self-generation investments while protecting BCH and FBC ratepayers from losing out due to arbitrage.
In its decision this week, the Commission essentially conceded that this task was impossible. BCSEA-SCBC and most other interveners argued against the most recent proposed framework. The Commission agreed, not only denying approval but also terminating the proceeding.
To clarify, the concept of new self-generation for export is totally hypothetical. Electricity market prices are very low and are expected to stay very low for the indefinite future. Not surprisingly, there are no actual proposals for new self-generation facilities. However, BCSEA-SCBC did want to ensure that if any rules were established (which they weren't, as it turned out) the rules would not hinder some possible future clean renewable self-generation project such as a wind farm or solar farm. At the same time, the main pressure for new rules was coming from the corporate owner of the Zellstoff Celgar pulp mill, which is conducting an aggressive litigation campaign (including a complaint under NAFTA) to be allowed to arbitrage power from a biomass generation facility that it has long-since built.
All's well that ends well?
BCUC proceeding on FBC Self-Generation Policy Stage II, https://www.bcuc.com/ApplicationView.aspx?ApplicationId=571
BCUC Decision and Order 41-19, https://www.bcuc.com/Documents/Arguments/2019/DOC_53498_2019-02-27-FBC-S...
BCSEA-SCBC Final Argument in FBC SGP II, https://www.bcuc.com/Documents/Arguments/2018/DOC_52437_2018-09-06-BCSEA...