BC Hydro Application for Approval of New PPA with FortisBC

372 Pages·2013·28.76 MB·English

372 Pages B-1

Janet Fraser
Chief Regulatory Officer
Phone: [phone]
Fax: [phone]
[email protected]

May 24, 2013

Ms. Erica Hamilton
Commission Secretary
British Columbia Utilities Commission
Sixth Floor – 900 Howe Street
Vancouver, BC V6Z 2N3

Dear Ms. Hamilton:

RE: British Columbia Utilities Commission (BCUC)
British Columbia Hydro and Power Authority (BC Hydro)
BC Hydro Application for Approval of New Power Purchase
Agreement (PPA) with FortisBC Inc.

BC Hydro encloses its application for approval of a new PPA, and associated
agreements, with FortisBC Inc.

For further information, please contact Gordon Doyle at 604-623-3815 or by email at
[email protected].

Yours sincerely,

Janet Fraser
Chief Regulatory Officer

jm/tn

Enclosures

Copy to: Distribution List in Attachment 1

British Columbia Hydro and Power Authority, 333 Dunsmuir Street, Vancouver BC V6B 5R3
www.bchydro.com
Attachment 1

Distribution List
Registered Interveners in the following proceedings and other interested parties:
 BCUC Project No. 3698531 BC Hydro 2008 Power Purchase Agreement (RS#3808)
 BCUC Project No. 3698622 BC Hydro 2012-2014 Revenue Requirements
 BCUC Project No. 3698620 FortisBC Inc. 2012-2013 Revenue Requirements and Review of ISP
 BCUC Project No. 3698696 FortisBC Inc. 2012 Purchase of the Utility Assets of the City of Kelowna
Association of Major Power BC Sustainable Energy Association British Columbia Pensioners’ and British Columbia Municipal Electric
Customers of BC BCSEA and Sierra Club of British Seniors’ Organization Utilities
Attention: R. Brian Wallace Columbia [email protected] Attention: Chris Weafer
[email protected] Attention: Thomas Hackney Attention: Bill Harper [email protected]
Attention: Lloyd Guenther [email protected] [email protected]
[email protected] Attention: William J. Andrews
Attention: Eugene Kung
Attention: Richard Stout [email protected] [email protected]
[email protected] Attention: Leigha Worth
[email protected]
Attention: Sarah Y. Khan
[email protected]
Attention: Colin Fussell
[email protected]
Attention: Ros Salvador
[email protected]
City of Nelson City of New Westminster Electric City of Trail Columbia Power Corp.
Attention: Karl E. Gustafson Utility Commission Attention: Carolyn M. MacEachern Attention: Gene Anderson
[email protected] Attention: R.E. Carle [email protected] [email protected]
Attention: Kevin Cormack [email protected]
[email protected]
Commercial Energy Consumers Canadian Office & Professional FortisBC Inc. Irrigation Ratepayers Group
Association Employees Union (COPE) Local 378 [email protected] Attention: Fred J Weisberg
Attention: Chris Weafer Attention: Jim Quail [email protected] [email protected]
[email protected] [email protected]
Attention: Dennis Swanson
Attention: Sage Aaron [email protected]
[email protected]
Attention: Diane Roy
Attention: Jacqueline Hughes [email protected]
[email protected]
Attention: Dean O’Leary
Attention: Guy Leroux [email protected]
[email protected]
Attention: Mark S. Oulton
[email protected]
Attention: Anthony J. Pullman
[email protected]
Attention: Lori Winstanley
[email protected]
Clean Energy Association of British Morgan Stanley Capital Group Energy Solutions for Vancouver Island ENMAX Energy Marketing Inc.
Columbia Attention: Paul Cassidy Attention: Ludo Bertsch Attention: Darren Gogol
Attention: David Austin [email protected] [email protected] [email protected]
[email protected] Attention: Lisa Cherkas
Attention: James Weimer [email protected]
[email protected] Attention: Steve Huhman
[email protected]
BC Hydro Application for Approval of New Power Purchase Agreement (PPA) with FortisBC

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Attachment 1

Lower Columbia Initiatives Ministry of Energy, Mines and Alan Wait Norman Gabana
Corporation Natural Gas [email protected] [email protected]
[email protected] Attention: Paul Wieringa
[email protected]
Buryl (Slack) Goodman Nelson Hydro Okanagan Environmental Industry Regional District of Okanagan
Box 356, Osoyoos, Attention: Heather Grant Alliance Similkameen
BC V0H 1V0 [email protected] Attention: Ludo Bertsch Attention: Doug French
Attention: Alexander Love [email protected] [email protected]
[email protected] [email protected]
Teck Metals Ltd. Tolko Industries Ltd. Zellstoff Celgar Limited Partnership TransCanada Energy Ltd.
Attention: Troy Albo Attention: Michael Towers Attention: Brian Merwin Attention: Chris Best
[email protected] [email protected] [email protected] [email protected]
Attention: Carleigh Whitman [email protected] Attention: Robert Hobbs [email protected]
[email protected] [email protected]
[email protected] Attention: Kim C. Moller
[email protected]
West Fraser Mills/Eurocan Pulp & Gordon Currie Catalyst Paper Corporation Bruce Harris
Paper [email protected] Attention: Carlo Dal Monte [email protected]
Attention: Ronald L Cliff [email protected]
[email protected]
Canadian Wind Energy Association Peace Valley Environmental Capital Power Corporation Ilse C Leis
Attention: Nicholas Heap Association Attention: Daniel Jurijew [email protected]
[email protected] Attention: Gwen Johansson [email protected]
[email protected]
[email protected]
Sea Breeze Power Corp V.W. Ruskin and Associates Line Contractors Association of BC Vanport Sterilizers Inc.
Attention: Paul Manson Attention: Vernon W. Ruskin Attention: Jeff Skosnik Attention: Richard Tennant
[email protected] [email protected] [email protected] [email protected]
[email protected] [email protected]
Terry Vulcano
[email protected]

BC Hydro Application for Approval of New Power Purchase Agreement (PPA) with FortisBC

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BC Hydro Application for Approval of New Power
Purchase Agreement (PPA) with FortisBC
May 2013
May 2013

Table of Contents
1 Executive Summary ........................................................................................... 1
2 Introduction ........................................................................................................ 2
2.1 Overview of New Agreements ................................................................... 4
3 Context for New PPA ......................................................................................... 7
3.1 Events Leading Up to the 1993 PPA ......................................................... 7
3.2 1993 PPA ................................................................................................ 12
3.3 Developments Since the 1993 PPA Was Approved ................................ 13
4 The Agreements ............................................................................................... 30
4.1 The New PPA ......................................................................................... 34
4.2 The Imbalance Agreement ...................................................................... 41
4.3 The Energy Export Agreement ................................................................ 44
4.4 The Master Accounting Agreement ......................................................... 45
4.5 The General Wheeling Agreement .......................................................... 47
5 Benefits of New PPA to BC Hydro .................................................................... 48
6 Consultation ..................................................................................................... 49
7 Proposed Regulatory Process .......................................................................... 50
8 Conclusion ....................................................................................................... 51

List of Figures
Figure 1 FortisBC Load and Supply Schematic ................................................ 6
Figure 2 FortisBC’s Purchases from BC Hydro from F2004 to F2013 ............ 21
Figure 3 FortisBC’s F2013 Monthly Energy Purchases, under the
1993 PPA ......................................................................................... 23
Figure 4 FortisBC’s Forecast Energy Resources .......................................... 24
Figure 5 FortisBC’s Forecast Capacity Resources ......................................... 25

List of Tables
Table 1 Excess Energy Purchases ............................................................... 20

BC Hydro Application for Approval of New Power Purchase Agreement (PPA) with FortisBC
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May 2013

List of Appendices
Appendix A Tariff Supplement No. 3
Appendix B Draft Order
Appendix C RS 3808 Black-lined
Appendix D RS 3808 Clean
Appendix E Comparison Table (1993 PPA vs. New PPA)
Appendix F 1986 PPA Decision
Appendix G 1993 PPA Decision
Appendix H High Level Schematic of Canal Plant Agreement Generation and
Interconnection to the BC Hydro System
Appendix I 1993 PPA (Unofficial Consolidated Version)

BC Hydro Application for Approval of New Power Purchase Agreement (PPA) with FortisBC
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May 2013

1 Executive Summary
1
BC Hydro currently supplies electricity to FortisBC1 pursuant to a Power Purchase
2
Agreement dated October 1, 1993 (1993 PPA) and at the embedded rates set out in
3
Rate Schedule (RS) 3808. The 1993 PPA expires on September 30, 2013.
4
In 2005, BC Hydro and FortisBC (the Parties) began preliminary negotiations for a
5
new power purchase agreement to replace the 1993 PPA upon its expiry. The
6
Parties re-launched negotiations in 2009, and have reached agreement on a new
7
power purchase agreement dated May 21, 2013 (New PPA) and associated
8
agreements to replace the expiring 1993 PPA.
9
The New PPA does not change the basic parameters of the service BC Hydro has
10
been providing to FortisBC for 20 years under the 1993 PPA. The New PPA
11
continues to provide for up to 200 MW of capacity and 1,752 GWh/year of
12
associated energy for FortisBC to meet a portion of its load service obligations.
13
The New PPA and associated agreements modernize the terms and conditions of
14
this service by introducing improvements for current industry practices and current
15
circumstances including the development of the Waneta Expansion (WAX) Project
16
as a new capacity resource available to FortisBC. The energy price for the service
17
provided under the New PPA will be a two-step price with the first tranche set at an
18
embedded cost price and the second tranche set at a proxy for BC Hydro’s long-run
19
marginal cost (LRMC) of new supply.
20

1 FortisBC Inc. was first known as West Kootenay Power & Light Company, Limited. The company
subsequently changed its name to West Kootenay Power Ltd., then to UtiliCorp Networks Canada (British
Columbia) Ltd., then to Aquila Networks Canada (British Columbia) Ltd. and, finally, to FortisBC Inc.
Irrespective of its actual name at any time, the company is referred to throughout this application as
"FortisBC".
BC Hydro Application for Approval of New Power Purchase Agreement (PPA) with FortisBC
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May 2013

2 Introduction
1
The relationship between BC Hydro and FortisBC dates back to the 1950s. FortisBC
2
and BC Hydro have numerous agreements, including multi-party agreements
3
encompassing generation and transmission coordination, and under various
4
agreements each is both customer and supplier of the other. In short, it is a very
5
complicated and integrated relationship.
6
The Canal Plant Agreement is a major, foundational agreement between BC Hydro,
7
FortisBC and other parties. The original Canal Plant Agreement, dated
8
August 1, 1972, was between BC Hydro, FortisBC and Teck Metals Ltd. (Teck)2 and
9
was necessitated by the construction of BC Hydro’s Kootenay Canal Plant. The
10
agreement provided for the parties to cooperate in the operation of their storage and
11
generating facilities in the Columbia River region of British Columbia for the purpose
12
of obtaining optimum generation from BC Hydro’s generation resources and the
13
other parties’ plants. The Canal Plant Agreement also resulted in the integration of
14
the parties’ systems to allow the coordinated operation to occur and the allocation of
15
energy and capacity between the parties.3 In simple terms, BC Hydro provides
16
operating instructions for the plants included as part of the Canal Plant Agreement,
17
in relation to generation and water releases, and in return the other parties receive a
18
specified amount of electricity (capacity and energy) which is referred to as
19
“entitlement”.
20
The Canal Plant Agreement has been amended on various occasions, including by
21
adding Brilliant Power Corporation, Brilliant Expansion Power Corporation and
22

2 The parties to the Canal Plant Agreement, other than BC Hydro, are referred to as the “Entitlement Parties”.
3 The Canal Plant Agreement and its history are described in the joint application by FortisBC and BC Hydro to
the BCUC, dated August 19, 2005, for an exemption from the Utilities Commission Act. BCUC Order
No. G-41-06 exempts BC Hydro and FortisBC from the provisions of the Utilities Commission Act in respect
of the 2005 Canal Plant Agreement and any amendments thereto. Further information on the Canal Plant
Agreement is provided in section 3.1(a) of this application.
BC Hydro Application for Approval of New Power Purchase Agreement (PPA) with FortisBC
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May 2013

Waneta Expansion Limited Partnership4 as Entitlement Parties to the agreement in
1
relation to their hydroelectric generation projects in the region.
2
During the 1978 to 1985 period BC Hydro sold electricity to FortisBC on a year to
3
year basis pursuant to the Canal Plant Agreement. BC Hydro’s electricity sales to
4
FortisBC since 1985 have been pursuant to BCUC-approved tariffs and rate
5
schedules. Since 1993, BC Hydro has sold electricity to FortisBC pursuant to the
6
1993 PPA and associated RS 3808. The 1993 PPA expires on September 30, 2013.
7
After lengthy negotiations, the Parties have reached agreement on a New PPA and
8
associated agreements. Subject to BCUC approval, the 1993 PPA will be replaced
9
by the New PPA, as supplemented by the following agreements:
10
 The Imbalance Agreement dated May 21, 2013 (Imbalance Agreement)
11
 The Energy Export Agreement dated May 21, 2013 (Energy Export Agreement)
12
 The Master Accounting Agreement dated May 21, 2013 (Master Accounting
13
Agreement)
14
In addition, arising from the changes in the New PPA, changes will need to be made
15
to the existing General Wheeling Agreement dated October 15, 1986, as amended
16
from time to time, between BC Hydro and FortisBC. Those changes have not yet
17
been completed. BC Hydro will file the amended General Wheeling Agreement with
18
the BCUC as a supplement to this application when it has been completed.
19
The purpose of this application is to obtain BCUC approval pursuant to
20
sections 58 to 61 of the Utilities Commission Act, of the New PPA and associated
21
amendments to RS 3808, the Imbalance Agreement, the Energy Export Agreement,
22

4 Brilliant Power Corporation and Brilliant Expansion Power Corporation are affiliates of Columbia Power
Corporation and the Columbia Basin Trust. Waneta Expansion Limited Partnership is a limited partnership in
which Fortis Inc., CPC Waneta Holdings Ltd. and CBT Waneta Expansion Power Corp. are limited partners.
BC Hydro Application for Approval of New Power Purchase Agreement (PPA) with FortisBC
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May 2013

the Master Accounting Agreement, and the amended General Wheeling Agreement5
1
as filed in Appendix A.
2
The agreements work together as a package and, as such, it is not possible to alter
3
a component of these agreements without affecting the overall balancing of interests
4
negotiated by the parties and reflected in the package of agreements. Therefore, this
5
application is submitted for approval in its entirety.
6
A draft order is provided in Appendix B.
7
2.1 Overview of New Agreements
8
The New PPA does not change the basic parameters of the service BC Hydro has
9
been providing to FortisBC for 20 years under the 1993 PPA. The New PPA and
10
associated agreements modernize the terms and conditions of this service by
11
introducing improvements for current circumstances and industry practices.
12
The New PPA continues to provide for up to 200 MW of capacity and
13
1,752 GWh/year of associated energy for FortisBC to meet a portion of its load
14
service obligations. The energy price for the service provided under the New PPA
15
will be a two-step price with the first tranche at an embedded cost price and the
16
second tranche at a proxy for BC Hydro’s LRMC. The energy and demand charges
17
for the service are set out in the amended RS 3808 (refer to Appendices C and D).
18
The New PPA provides that FortisBC may, in accordance with the new Energy
19
Export Agreement, export “Eligible Energy6” using “entitlement capacity” attributable
20
to the WAX Project and available to FortisBC in an hour during which FortisBC is
21
taking electricity under the New PPA. Otherwise, FortisBC is prohibited from
22

5 A placeholder for the General Wheeling Agreement, Tariff Supplement No. 3, Appendix 5, is included with
this application. BC Hydro expects to file the amended General Wheeling Agreement with the BCUC as a
supplemental filing by July 16, 2013, as further explained in Sections 4.5 and 7.
6 Refer to Section 3.4 of the Energy Export Agreement.
BC Hydro Application for Approval of New Power Purchase Agreement (PPA) with FortisBC
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