SOP Optimization: Your questions answered

We appreciate your interest in the SOP Optimization. Below are answers to the questions that we've received – which we'll keep updating on a regular basis. If you've got a question for us about SOP Optimization that hasn't already been answered below, please submit it through our SOP Optimization: Ask your question page. If your question is about the SOP in general, please take a look at the SOP FAQ.

Your questions for us (updated July 14, 2016)

The Advisory Committee may reference a variety of sources and studies as they develop their recommendations. Public webinars will take place throughout the SOP Optimization process and will provide insight into the sources of data and information that are being considered, such as jurisdictional reviews. Materials that are already in the public domain and are used to support decisions will be posted on our website. It's also our intention to post regular updates on the Advisory Committee's progress on our website.

If you're interested in developing a small, clean or renewable energy project as defined by the Clean Energy Act, please apply for our Net Metering Program for projects under 100 kW or Micro-SOP for First Nations & Communities Program for projects under 1 MW.

A few of the sources that we referenced include Hydro Quebec's wind power call for tenders in 2014 where the average price of accepted bids was $76/MWh, and Lazard's Levelized Cost of Energy Analysis. CEBC's 2014 London Economics Report also provides evidence that, including a reasonable return on equity, costs are lower than current prices paid by the SOP.

No, it's not too early to forecast SOP prices beyond 2019. Our energy planning process looks out 20 to 30 years. As part of this process, we examine what our future electricity needs will be, and how we can meet these needs – which includes general price evaluations – with available resources such as demand side management savings plans and the renewal of existing IPP contracts, along with new sources of supply.

This July, we're submitting our Revenue Requirements Application for the next three years (F2017, F2018 and F2019) and the BCUC can approve rate increases up to caps of 4%, 3.5% and 3%. The BCUC will set rate increases for the final five years of the 10 Year Rates Plan (Fiscal 2020 Fiscal 2024).

Beyond setting or capping rate increases over the first 5 years of the 10 Year Rates Plan, the plan also requires that the rate increases over the latter 5 years be "low and predictable" and that the Rate Smoothing Regulatory Account be reduced to $0 by the end of the rates plan period. We must also reflect this requirement in our following processes.

The Clean Energy Act doesn't legislate a Feed-in-Tariff, but highlights it as an option for future regulation by the Government of B.C. We explored the feasibility of a Feed-in-Tariff for emerging technologies in 2012; however, in the interest of minimizing rate increases, the Government of B.C. decided not to implement it at that time.

While Powerex has successfully attained California Renewable Portfolio Standard (RPS) eligibility for a number of B.C. wind facilities, B.C. run-of-river facilities remain ineligible for inclusion in California’s RPS program. Significant time and effort have been invested by the Government of B.C. and Powerex to try to ensure run-of-river eligibility within the California RPS. For various reasons beyond our control, these efforts have not reflected in the desired results. Other states in the Pacific Northwest tend to already have substantial hydro-based generation, and with limited exceptions, also exclude hydro resources from their RPS programs, choosing instead to incent the construction of other renewable resources.

A representative from BC Hydro will be facilitating the Advisory Committee's activities, including meetings and webinars.

We've set the transition to take place at the end of calendar year 2019, recognizing that maintaining the existing price for the three years until then provides some assurance for projects that have already made substantial progress towards achieving SOP eligibility based on current pricing assumptions.

The Advisory Committee and the MOU committee include representatives from the First Nations Clean Energy Working Group. First Nations will also have the opportunity to provide comments via the webinars which will occur regularly to provide updates of progress made at the Advisory Committee and allow for input and feedback on the development of options/recommendations.

The SOP Optimization Q&A is meant to answer all SOP Optimization related questions that are submitted to us, but isn't intended to collect comments at this stage. As the process moves forward, we intend to collect comments during and following our public webinars, and after the Advisory Committee's draft recommendations are posted. Like we've done in the past, all the comments that we collect throughout the process will be documented and posted on our website.

Your questions for us (updated April 11, 2016)

The 2010 Clean Power Call is the basis for the current SOP pricing, which was adopted in 2011. There have been many developments in the clean power sector in recent years that affect the cost of producing energy. Recent procurement offers in other jurisdictions, as well as industry analysis have also confirmed that, in general, clean energy projects are being developed at a lower price than current SOP prices. We're now looking at ways to reflect changing circumstances in the clean energy sector and at the same time, keeping rates in B.C. low for ratepayers. We're also operating under the 10-year rates plan, which places constraints on rate increases.

Management of the SOP target volume is by COD year. Therefore, the transition from the existing price to the new price is set at a COD year rather than an application year. Setting the price transition by COD year creates a clear transition from one price to the next, while preventing a rush of project applications that aren't ready. Setting the transition to take place at the end of 2019 also ensures that savings are realized within the current rate plan to help control the impact on our ratepayers.

Yes. Public webinars will take place to seek feedback from First Nations and stakeholders not involved in the Advisory Committee. In addition, the Advisory Committee's draft recommendations will be made available on our website, followed by a comment period where you’ll have the opportunity to provide us with your feedback.

As part of the SOP Optimization process, the Advisory Committee is committed to looking into five key activities including these two:

  • Developing a mechanism to incent projects with capacity and interconnection related benefits
  • Developing a mechanism to incent projects that match the load profile

The intent of the cluster rule is to ensure that larger projects aren't split into smaller projects in order to obtain an EPA. The rule also helps support the SOP's objective of having the target volume made up of many projects by many developers, rather than many projects by one developer.

At the pre-assessment stage, a team is assembled to carefully review the projects and to determine whether or not they'd be considered part of a cluster. We'll generally determine that a Project Cluster exists where the existing or proposed Projects have the following characteristics:

  • Have common direct or indirect ownership or control
  • Have common development timelines
  • Are being developed by the same or an affiliated developer
  • Are located in close proximity
  • Share tenures, permits, facilities or other infrastructure

If the projects are deemed to be part of a cluster at the pre-assessment stage, the developer will be provided with a set of conditions that must be met, including the possible reduction of the number of projects, by the time of application in order for the projects to be eligible for the SOP.

At this point, the SOP doesn't restrict a single developer from applying for SOP projects in different regions of the province, and therefore potentially receiving multiple EPAs. However, ensuring the participation of many developers remains an underlying objective of the SOP.

Our target volume management system was designed to ensure that our 150 GWh per year target is met but not exceeded. To keep program costs low and protect ratepayers' interests, any unused volume will not be carried over into the next year, nor will any volume that's lost due to project attrition. The eligibility requirements ensure that key material permits are in place and projects are shovel ready – that is, the project is at an advanced stage of development and is likely to be built and operate.

The SOP will continue to only accept clean or renewable energy as defined in the Clean Energy Act. If you have a resource that you believe should be prescribed as clean or renewable, please contact the Ministry of Energy and Mines to make this request.

The SOP application form requires that developers submit the calculations they used to determine their estimated energy production. BC Hydro will review these calculations and seek clarification from the developer if necessary.

The SOP application references an Environmental Assessment in cases where an SOP project might be added to an existing site, whereby the total installed capacity is greater than or equal to 50 MW. The need for the Environmental Assessment is driven by the Canadian Environmental Assessment Act 2012 and/or the British Columbia Environmental Assessment Act, and is only required if applicable to the project, as noted in the SOP application.

The Advisory Committee may reference a variety of sources and studies as they develop their recommendations. Public webinars will take place throughout the SOP Optimization process and will provide insight into the sources of data and information that are being considered, such as jurisdictional reviews. Materials that are already in the public domain and are used to support decisions will be posted on our website. It's also our intention to post regular updates on the Advisory Committee's progress on our website.

If you're interested in developing a small, clean or renewable energy project as defined by the Clean Energy Act, please apply for our Net Metering Program for projects under 100 kW or Micro-SOP for First Nations & Communities Program for projects under 1 MW.

A few of the sources that we referenced include Hydro Quebec's wind power call for tenders in 2014 where the average price of accepted bids was $76/MWh, and Lazard's Levelized Cost of Energy Analysis. CEBC's 2014 London Economics Report also provides evidence that, including a reasonable return on equity, costs are lower than current prices paid by the SOP.

No, it's not too early to forecast SOP prices beyond 2019. Our energy planning process looks out 20 to 30 years. As part of this process, we examine what our future electricity needs will be, and how we can meet these needs – which includes general price evaluations – with available resources such as demand side management savings plans and the renewal of existing IPP contracts, along with new sources of supply.

This July, we're submitting our Revenue Requirements Application for the next three years (F2017, F2018 and F2019) and the BCUC can approve rate increases up to caps of 4%, 3.5% and 3%. The BCUC will set rate increases for the final five years of the 10 Year Rates Plan (Fiscal 2020 Fiscal 2024).

Beyond setting or capping rate increases over the first 5 years of the 10 Year Rates Plan, the plan also requires that the rate increases over the latter 5 years be "low and predictable" and that the Rate Smoothing Regulatory Account be reduced to $0 by the end of the rates plan period. We must also reflect this requirement in our following processes.

Although our rates are amongst the lowest in North America, keeping costs low for ratepayers remains a priority for us. Our dividend payment to the Government of B.C. is a legislated requirement, but it's important to note that as part of the 10 Year Rates Plan, the Government of B.C. announced that the dividend will be reduced by $100 million per year starting in fiscal 2018. The dividends will reach $0 by fiscal 2020 and will not resume for a number of years until our debt to equity ratio reaches 60:40.

The Clean Energy Act doesn't legislate a Feed-in-Tariff, but highlights it as an option for future regulation by the Government of B.C. We explored the feasibility of a Feed-in-Tariff for emerging technologies in 2012; however, in the interest of minimizing rate increases, the Government of B.C. decided not to implement it at that time.

While Powerex has successfully attained California Renewable Portfolio Standard (RPS) eligibility for a number of B.C. wind facilities, B.C. run-of-river facilities remain ineligible for inclusion in California’s RPS program. Significant time and effort have been invested by the Government of B.C. and Powerex to try to ensure run-of-river eligibility within the California RPS. For various reasons beyond our control, these efforts have not reflected in the desired results. Other states in the Pacific Northwest tend to already have substantial hydro-based generation, and with limited exceptions, also exclude hydro resources from their RPS programs, choosing instead to incent the construction of other renewable resources.

A representative from BC Hydro will be facilitating the Advisory Committee's activities, including meetings and webinars.

We've set the transition to take place at the end of calendar year 2019, recognizing that maintaining the existing price for the three years until then provides some assurance for projects that have already made substantial progress towards achieving SOP eligibility based on current pricing assumptions.

The Advisory Committee and the MOU committee include representatives from the First Nations Clean Energy Working Group. First Nations will also have the opportunity to provide comments via the webinars which will occur regularly to provide updates of progress made at the Advisory Committee and allow for input and feedback on the development of options/recommendations.

The SOP Optimization Q&A is meant to answer all SOP Optimization related questions that are submitted to us, but isn't intended to collect comments at this stage. As the process moves forward, we intend to collect comments during and following our public webinars, and after the Advisory Committee's draft recommendations are posted. Like we've done in the past, all the comments that we collect throughout the process will be documented and posted on our website.