Industrial System Designation
In this decision, the AUC considered an application from Imperial Oil Limited (“Imperial”) for an industrial system designation (“ISD”) at the Imperial Oil Strathcona Refinery (“Refinery”). The AUC found that the application met the applicable requirements for an ISD and that approval was in the public interest.
Imperial owns and operates a Refinery at its Imperial Oil Strathcona Refinery industrial complex. Under Approval 24999-D02-2019, Imperial had approval to construct and operate a 43-megawatt (MW) cogeneration power plant (power plant) within the Refinery but had not yet constructed the power plant.
On May 12, 2020, Imperial filed an application with the AUC pursuant to section 4 of the Hydro and Electric Energy Act, in which it requested an ISD encompassing all of Imperial’s facilities at the Refinery. The industrial system would be comprised of the previously approved cogeneration power plant and the existing 13.8-kilovolt (kV) distribution system, both located within the Refinery.
The AUC explained that it must consider the ISD application in accordance with the principles and criteria set out in section 4 of the Hydro and Electric Energy Act.
Subsection 4(2) lists the principles the AUC must consider:
the ISD must be consistent with the objective of giving appropriate economic signals such that industrial processes will develop their own internal electricity supply where that is the most economical source of generation;
the ISD must support the efficient exchange of electric energy that is in excess of the industrial system’s own requirements with the interconnected electric system and improve voltage stability and reduction of losses and congestion of transmission lines;
the ISD should not facilitate “the development of independent electric systems that attempt to avoid costs associated with the interconnected electric system” and uneconomical bypass of the interconnected electric system; and
duplication of the interconnected electric system must be avoided where it is more economical to use utility-owned transmission or distribution facilities existing in the service area where the industrial system will be located.
The AUC was satisfied that approval of the application was consistent with the principles set out above. Having reviewed the economics, the AUC found that Imperial’s proposal to use an internal supply of generation represented the most economical source of generation. While Imperial asserted that it rarely proposed to exchange excess electricity given its internal process and electricity requirements, the AUC was satisfied that the proposed ISD would support such an exchange with the interconnected system. The AUC also accepted Imperial’s submission that the Project would help reduce congestion while improving the region’s voltage stability. Finally, the AUC found that the Project would supply a substantial portion of the Refinery’s energy requirement while utilizing Imperial’s existing distribution system and that approval of the proposed ISD would not result in an uneconomical bypass of the Alberta Interconnected Electric System.
The AUC also considered the application in light of the criteria found in subsection 4(3) of the Hydro and Electric Energy Act. The AUC was satisfied that subsection 4(3)(a) had been met. The Refinery would include a previously approved generating unit in the form of a cogeneration power plant that would produce electricity and steam to be used in the industrial operations of the Refinery. Subsection 4(3)(b) had also been met because the industrial operations would utilize several raw materials to produce various petroleum products.
Imperial would be the sole owner of all the components of the industrial operation. The AUC therefore found that subsection 4(3)(c) had been met.
Under normal operating conditions, both the electric energy and steam produced by the power plant would be used entirely by Imperial’s industrial operation and each was necessary for Imperial to create its final products. The AUC was satisfied that power would be exported to the AIES only in operational downtime, including planned or unplanned circumstances where the system’s normal operations are disrupted or curtailed. The AUC was therefore satisfied that the outputs of the components of the industrial operation would be used by the industrial operation, and that subsection 4(3)(d) has been met.
The AUC found that subsection 4(3)(e) had been met as Imperial owns and operates both the power plant and the Refinery. Hence, there is a high degree of integration of management of both the components and the processes of the industrial operations.
The AUC found that the cogeneration power plant demonstrated a significant investment and represents both an extension of Imperial’s industrial operations processes and additional development of the electricity supply. Accordingly, the AUC was satisfied subsection 4(3)(f) had been met.
The AUC found that subsection 4(3)(g) was not applicable because the industrial operations did not extend beyond the Refinery’s contiguous property.
Subsections 4(4) and 4(5) set out further criteria for the AUC to consider when it is not satisfied that a project met certain of the criteria set out in subsection 4(3). Because the AUC was satisfied that the Project met the criteria set out in subsection 4(3) it was unnecessary to assess the Project under the further criteria set out in subsections 4(4) and 4(5).
Having considered the applicable principles and criteria set out in section 4 of the Hydro and Electric Energy Act, the AUC found that Imperial’s proposal met all the requirements for an ISD.