Solar – Excess Electricity
In this decision, the AUC approved EPCOR Water Services Inc. (“EPCOR Water”)’s application to construct and operate a power plant designated as the E.L. Smith Solar Power Plant (the “Project”) and an application to interconnect the power plant to the Alberta Interconnects Electric System (“AIES”)
The AUC found that approval of the project was in the public interest with regard to the social, economic, and other effects of the project, including its effect on the environment.
The AUC found that EPCOR Water’s proposal to provide a portion of the energy produced by the project to the adjacent water treatment plant and to export the excess energy to the AIES was not contemplated by the legislative scheme. However, the AUC approved the interconnection of the power plant on the basis that, as a municipally owned company, EPCOR Water’s intended purpose could be achieved through alternative means contemplated by the legislative scheme.
Background
EPCOR Water filed applications with the AUC for approval to construct and operate a 12-megawatt (“MW”) solar power plant in the City of Edmonton, pursuant to section 11 of the Hydro and Electric Energy Act (“HEAA”), and to interconnect the power plant to the AIES, pursuant to section 18 of the HEEA.
Legislative Scheme
The AUC regulates the construction and operation of power plants in Alberta. Section 11 of the HEEA states that no person may construct or operate a power plant without prior approval.
When considering an application for a power plant and associated infrastructure, the AUC is guided by sections 2 and 3 of the HEEA, and section 17 of the Alberta Utilities Commission Act.
Section 2 lists the purposes of the HEEA. Those purposes include:
• to provide for the economic, orderly and efficient development and operation, in the public interest, of the generation of electric energy in Alberta;
• to secure the observance of safe and efficient practices in the public interest in the generation of electric energy in Alberta; and
• to assist the government in controlling pollution and ensuring environment conservation in the generation of electric energy in Alberta.
Section 3 of the HEEA requires the AUC to have regard for the purposes of the Electric Utilities Act (“EUA”) when assessing whether a proposed power plant and associated infrastructure is in the public interest under section 17 of the Alberta Utilities Commission Act. The purposes of the EUA include the development of an efficient electric industry structure and the development of an electric generation sector guided by competitive market forces.
Section 17 of the Alberta Utilities Commission Act describes the AUC’s public interest mandate.
Pursuant to section 18 of the HEEA, no party shall connect a power plant to the electric distribution system without an order from the AUC.
Power Plant Application
The AUC found that the technical, siting, emission, environmental, and noise aspects of the power plant were met.
The AUC found that the participant involvement program for the project was adequate and met the requirements set out in Rule 007: Applications for Power Plants, Substations, Transmission Lines, Industrial System Designations and Hydro Developments.
The AUC found that the power plant would not result in negative social or environmental impacts. The AUC accepted the conclusion from Stantec’s environmental evaluation that the potential environmental effects of the project would be “not significant” and that the environmental impacts of the project could be adequately mitigated, given diligent implementation of the mitigation measures proposed in the evaluation and having regard for the additional commitments made by EPCOR Water.
The AUC found that EPCOR Water’s alterations to the project to reduce the footprint, increased the separation from the river, and allowed access to its property to enhance the river valley’s trail system demonstrated EPCOR Water’s willingness to adapt its project in response to concerns raised by stakeholders. The AUC accepted EPCOR Water’s commitments to develop an environmental protection plan prior to construction that would include mitigation measures. In assessing the social and environmental effects of the project, the AUC relied upon EPCOR Water’s commitments to integrate the trail system into its project.
The AUC found that concerns with the potential visual impacts of the project would be mitigated to an extent because the site is located adjacent to the water treatment plant, was previously disturbed, and situated on an empty field with no public access. While the AUC recognized that the presence of solar panels would have a different visual impact than its existing use, the AUC considered that EPCOR Water’s plans to enhance the natural aesthetics of the site using fence design, natural screening, and other landscaping would help mitigate the visual impacts of the power plant. The AUC found it reasonable that the Project had a low potential to result in hazardous glare conditions at any of the measured points surrounding the project.
The AUC noted that the Conservation and Reclamation Regulation was recently amended to address the reclamation of solar projects in Alberta specifically. The effect of these amendments is that “renewable energy operations,” which include solar plants, are now expressly subject to the reclamation obligations set out in section 137 of the Environmental Protection and Enhancement Act. Operators of renewable energy operations are now required to obtain a reclamation certificate, a process that is managed by AEP pursuant to the Conservation and Reclamation Directive for Renewable Energy Operations and provides more detailed information on conservation and reclamation planning and reclamation certificate requirements for renewable energy operators in Alberta.
The AUC was satisfied that the Noise Impact Assessment demonstrated that cumulative sound levels for the project would be below the daytime and nighttime permissible sound levels as required in Rule 012.
Finally, the AUC was satisfied that EPCOR Water, as a municipal subsidiary, may hold an interest in the power plant in accordance with section 95(9) of the EUA based on its intention to utilize the majority of the electric energy produced annually on-site.
The AUC found the power plant to be in the public interest in accordance with section 17 of the Alberta Utilities Commission Act.
Exemption Request
Summary
EPCOR Water sought to rely on the exemption set out in subsection 2(1)(b) of the EUA in support of its contention that it was entitled to both self-supply and export electric energy from its power plant.
The AUC found that EPCOR Water’s proposal to directly consume approximately 70 percent of the power plant’s annual output on-site and export the remaining 30 percent to the wholesale market was inconsistent with sections 18 and 101 of the EUA and Section 2(f) of the Fair, Efficient and Open Competition (“FEOC”) Regulation.
Notwithstanding this conclusion, the AUC recognized that EPCOR Water was not precluded from pursuing other alternative arrangements consistent with the statutory scheme that could allow it to meet its on-site power needs while still satisfying the requirements of section 95(9) of the EUA.
Legislative Scheme
• Section 18(2) of the EUA provides that all electric energy entering or leaving the AIES must be exchanged through the Power Pool of Alberta unless regulations made under sections 41, 99, or 142 of the EUA provide otherwise.
• Section 101(1) of the EUA states that a person wishing to obtain electricity for use on a property must make arrangements for the purchase of electric distribution service from the owner of the electric distribution system in whose service area the property is located.
• Section 2(1) of the EUA sets out the forms or types of electric energy that are exempt from the operation of the Act. Section 2(1)(b) provides as follows:
• Electric energy produced on the property of which a person is the owner or a tenant, and consumed solely by that person and solely on that property.
• Section 2(f) of the FEOC Regulation compliments subsection 2(1)(b) of the EUA and provides that “not offering to the power pool all electric energy from a generating unit that is capable of operating, except where the electric energy is used on property for the market participant’s own use” is conduct that does not support the fair, efficient and openly competitive operation of the electricity market.
Interpreting Exemption under Section 2(1)(b) of the Electric Utilities Act
In accordance with its plain and ordinary meaning, the AUC found that subsection 2(1)(b) of the EUA established three pre-conditions for the exemption to apply:
(a) the electric energy must be produced on EPCOR Water’s property;
(b) the electric energy must be consumed solely by EPCOR Water; and
(c) the electric energy must be consumed solely on EPCOR Water’s property.
The AUC understood EPCOR Water’s interpretation of subsection 2(1)(b) of the EUA to be that the exemption applied to the portion of the electric energy produced and consumed by EPCOR Water on its property (i.e., the 70 percent), but that it did not apply to electric energy produced on its property but consumed off-site (i.e., the 30 percent).
The AUC found that the effect of this interpretation was that two of the pre-conditions to the exemption were not satisfied: the electric energy produced on EPCOR Water’s property would not be consumed solely by EPCOR Water, and would not be consumed solely on EPCOR Water’s property. The AUC found that EPCOR Water’s interpretation was entirely at odds with the plain and ordinary meaning of the provision.
The AUC found that analysis of the broader statutory scheme supported its interpretation of subsection 2(1)(b) of the EUA. For instance, the AUC found that the statutory scheme specifically authorized the owners of industrial systems and micro-generators to self-supply and transact any electric energy that is in excess of their own use through the interconnected electric system. Absent from the statutory scheme, however, was any express authorization for a party that relies upon the exemption in subsection 2(1)(b) of the EUA to export electric energy that is in excess of the person’s own use on the property. Given that such express authorization exists for the other two self-supply mechanisms, the AUC considered its omission for subsection 2(1)(b) operations to be intentional and reflective of the drafter’s intent to require that all the electricity produced on-site be consumed on-site.
Summary
Pursuant to section 11 of the HEEA, the AUC approved EPCOR Water’s application.
Pursuant to section 18 of the HEEA, the AUC approved EPCOR Water’s application, subject to the following condition:
• As of the interconnection date of the project, EPCOR Water is required to file a compliance plan, endorsed by its chief executive officer, consisting of a written confirmation of statutory compliance and a detailed written description of the mechanism it is using to ensure compliance with the statutory scheme.
