Friday, December 01, 2000

ACTIVITIES

IPABC activities in 1999 involved working on taxation issues and participating in British Columbia regulatory and permitting processes.

Tax Reductions

We joined other IPP organizations in a submission to the Federal Government on Renewable and Energy Efficiency Sector Tax Reform. The IPP community has been consistently presenting its case to the federal government over a number of years to raise its own taxation concerns. In the 1999 Federal Budget, the government instituted taxation changes beneficial to IPP's. They extended the existing 7% manufacturing and processing profits tax credit to the production or processing of electrical energy and steam for sale. This means that corporate taxes on IPP's, over a three-year period, will be reduced from 28% to 21%.

With respect to regulatory and permitting processes the IPABC participated as follows:

Kanelk Application to BCUC for Approval to Dispose of Utility Assets

The Kanelk Transmission Line Company, a subsidiary of TransAlta sold a 138 kV transmission line located in the Elk Valley in the South Eastern part of British Columbia to BC Hydro. The line transmits power between Alberta and British Columbia. The IPABC intervened in order to determine more detials of the transaction and the implications that the sale may have on the export or import of power to or from British Columbia.

Application by BC Hydro for Transmission Locational Credits

On May 4, 1999, BCH applied to include payments to industrial customers for alternative such as demand side management, generators or curtailment loads that defer investment in sub-500 kV transmission facilities. The IPABC submitted information requests on this application to determine how individual projects would be evaluated by BC Hydro. In November the BCUC indicated to BC Hydro that the application was premature in that it lacked sufficient detail to meet the objectives of transparency, efficiency, fair pricing, and mitigation of possible discrimination.

Fish Protection Act Policies and Regulations

On December 1, 1999, representatives from the Ministry of Environment, Lands, Parks, and the Ministry of Energy and Mines met with two IPABC Directors as well as several members. This meeting was part of a public consultation program concerning the preparation of policies and regulations pursuant to the Fish Protection Act. The IPABC's initial response to the Draft Policies is that they give far too much power to the individuals who will be charged with administering the policies. Further discussion is being planned between the government and the IPABC Directors on this item.

BC Hydro's Electricity Plan

The IPABC sent letters to BC Hydro on two occasion asking when an Electricity Plan would be published. BC Hydro did issue their Electricity Plan in January 2000. This plan was considerably different than plans prepared in the 1980's and early 1990's. In previous plans BC Hydro analyzed a number of resource options and determined the cost of these options over a 10 to 20 year period. BCH then selected the lowest cost options with consideration given to social and environmental factors. However a large wholesale market has developed on the Western North American integrated grid and BCH apparently believes that it is not economically prudent anymore to develop 10 and 20-year generation plans based on their cost of developing and acquiring resources. The current plan is designed to be flexible so that it can make adjustments to the market.

Plans for 2000

The time is right for the IPABC to become more active. BC Hydro does require new generation in the near future and IPP projects are being considered. Also, the trend in North America towards deregulation is continuing and the IPABC needs to continue to promote some type of open access in British Columbia.

Our first step in increasing our activity level was to survey our own membership, large industrial customers, and other interested stakeholders such as small consumer advocates, environmental groups and BC Hydro. The purpose of the survey was to determine what were the prime issues from the perspective of power producers and from consumers and also what ere the changes that producers and consumers wanted with respect to electricity market structure.

The comment made most often in the survey by our members was that the IPABC should focus on opening up the electricity market to competition. Another frequent comment was the call for more transparency in the electricity sector in setting tariffs and wheeling rates. Essentially, the industry wants to have the same rules, taxes and access to transmission as BC hydro. The following activities were ranked as being the most important:

  • Promotion of Independent Power with government and political groups;
  • Collection of and dissemination of information among members and to the wider public;
  • Participation in regulatory hearings.

A summary of the member survey responses is attached.

Transmission customers and other energy sector stakeholders were surveyed to obtain information on their attitude on towards Independent Power. The majority of those surveyed thought that a stronger independent power industry would be a benefit to the province. The majority of them surveyed also indicated that it is very important to them that they retain the right to purchase power under a BC Hydro regulated rate structure. BC Hydro has low cost hydropower and customers want to retain the benefits of this resource. They want to be able to select the electricity service, under fair and justifiable transportation tariffs, that best suits their particular operation. This service could be self-generation, purchase from independent sources or continue to purchase from BC Hydro. A summary of transmission customer responses is also attached.

Considering information obtained from the survey, we are planning the following activities for the remained of 2000.

Our plans for the coming year are as follows:

  • Promote the IPABC member's interests through the following activities:
  • Initial presentation at joint CIE/IPABC meeting on April 20th;
  • Preparation of support document supporting IPP developments
  • Meet with key political leaders;
  • Continue to monitor regulatory and legislation developments and represent IPABC interests;
  • Issuing e-mail bulletins to help keep IPABC members informed on important developments;
  • Conduct a workshop for operations of existing IPP plants (assuming sufficient interest by IPP operators);
  • Raise support to prepare a business plan to implement the necessary regulatory and market restructuring to allow IPP's more open access to the market;