About Independent Power Projects
Meeting the need for power
BC Hydro acquires power from Independent Power Producers (IPPs) to help meet electricity needs. IPPs develop and operate projects such as wind, water and biomass. IPPs include power production companies, municipalities, First Nations and customers. IPPs provide approximately 15,074 GWh electricity each year. See current IPP supply [PDF, 100 KB].
Why does BC Hydro purchase electricity from IPPs?
BC Hydro faces a gap when the amount of electricity that we can supply from existing resources outstrips the amount we'll need to meet future demands from our growing population and economy. A variety of measures are required to ensure we have sufficient, reliable power for generations. These include implementing aggressive conservation and efficiency initiatives, maintaining and expanding our Heritage Assets, investing in our distribution and transmission systems, and adding more supply to our system through long-term electricity purchase agreements with IPPs.
How does BC Hydro benefit?
IPPs help us meet our customers' electricity needs by developing and operating innovative, sustainable projects that help maintain B.C.'s competitive advantage resulting from clean, renewable power supply. Ratepayers are not exposed to market risk with the long-term price certainty, while project development responsibilities and costs are shifted to the IPPs.
How does BC Hydro acquire electricity from IPPs?
BC Hydro acquires power from IPPs through various processes or mechanisms, namely competitive call processes, standard or open offers, and bilateral arrangements.
Merrimack Report on BC Hydro's Power Procurement Practices
To continue to learn from past experience and "best in class" industry trends, BC Hydro retained Merrimack Energy Group Inc. in September of 2010 to conduct an independent review of its power procurement practices. Merrimack has significant experience working with utilities, regulators and independent power producers on energy procurement processes.
Merrimack undertook a thorough review that included input from IPPs, other stakeholders and First Nations plus a comparison with utility practices in other jurisdictions. In its findings, Merrimack found aspects of BC Hydro's current practices that meet or exceed industry standards as well as areas for improvement, as highlighted in its 2011 report [PDF, 744 KB] .
BC Hydro is in the process of adopting the majority of Merrimack's recommendations as outlined in this summary of BC Hydro's response [PDF, 30 KB] , including the development of energy procurement practices and the completion of a financial analysis regarding EPA risk allocation [PDF, 1.0 MB].
BC Hydro's Energy Procurement Practices
As recommended in the Merrimack Report, BC Hydro has developed a draft set of general energy procurement practices comprised of guiding principles and procurement procedures [PDF, 404 KB]. This document is intended to provide a high-level summary of BC Hydro's energy procurement practices, and does not form a part of any existing or future procurement process.
Thank you to all that provided their feedback on these draft Energy Procurement Practices. We are reviewing the feedback and will be finalizing and posting an updated version of the Energy Procurement Practices. This document is expected to evolve over time and is one way in which BC Hydro is ensuring transparency and openness in its energy procurement practices. Please join our mailing list for future updates.
The following acquisition processes are underway to acquire additional power:
- a Standing Offer Program for projects sized at 15 MW or less, and
- a Net Metering Tariff for customers with projects sized at 50 kW or less.