British Columbia Hydro and Power Authority, 333 Dunsmuir Street, Vancouver BC V6B 5R3

www.bchydro.com

Janet Fraser Chief Regulatory Officer Phone: 604-623-4046 Fax: 604-623-4407 bchydroregulatorygroup@bchydro.com June 26, 2013 Ms. Erica Hamilton Commission Secretary British Columbia Utilities Commission Sixth Floor – 900 Howe Street Vancouver, BC V6Z 2N3 Dear Ms. Hamilton: RE: Project No. 3698694

British Columbia Utilities Commission (BCUC) British Columbia Hydro and Power Authority (BC Hydro) Application to Amend Tariff Supplement (TS) No. 74 - Customer Baseline Load (CBL) Determination Guidelines for RS1823 Customers with Self-Generation Facilities (the “Application”) Final Submission

BC Hydro writes in compliance with BCUC Order No. G-91-13 to provide its Final Submission (Attachment 1) for the written review process related to the Application. Yours sincerely,

Janet Fraser Chief Regulatory Officer ac/kp Enclosure Copy to: BCUC Project No. 3698694 (BC Hydro Application to Amend TS No. 74)

Registered Intervener Distribution List.

BC HYDRO

APPLICATION TO AMEND TARIFF SUPPLEMENT No. 74-

CUSTOMER BASELINE LOAD (CBL) DETERMINATION GUIDELINES

FOR RATE SCHEDULE 1823 CUSTOMERS WITH

SELF-GENERATION FACILITIES

FINAL SUBMISSION

June 26, 2013

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Application to Amend TS74 BC Hydro Final Submission

Attachment 1

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1.0 INTRODUCTION

1. In this Application, BC Hydro seeks approval for the addition of Attachment 8 -

Guidelines for RS 1823 Customers with Self-Generation Facilities (Attachment B

Guidelines) to Tariff Supptement N"o. 74 (TS No. 74). The Application also seeks

approval for ancillary amendments to the body of TS No. 7 4 resulting from the addition

of the Attachment B Guidelines.

2. After extensive consultation with customers and other interested parties, 1 BC Hydro filed

the Application with the British Columbia Utilities Commission (BCUC) in November

2012. The BCUC established a written hearing process for the Application, including two

rounds of information requests and written final submissions.2 BC Hydro filed its

response to the first round of information requests on January 28, 2013, and its

response to the second round of information requests on March 11, 2013.3

3. Two parties intervened: (1) the Association of Major Power Customers (AMPC), and

(2) Zellstoff Celgar Limited Partnership (Celgar).

2.0 INTERVENERS IN THIS PROCEEDING

4. AMPC is the only intervener in this proceeding with members that are BC Hydro Rate

Schedule (RS) 1823 customers. In its December 7, 201 2 1etter requesting intervener

status,4 AMPC confirmed its support for the Application as filed. AMPC did not file

information requests or intervener evidence.

5. No other BC Hydro customer or group representing BC Hydro customers intervened in

this proceeding. Celgar was the only other intervener.

6. Celgar is a FortisBC customer and not a BC Hydro customer. Celgar currently sells

electricity to BC Hydro under an Electricity Purchase Agreement (EPA). In its December

10, 20121etter requesting intervener status,5 Celgar stated that it will be "affected by the

1 Summarized in section 6.0 of this final submission. 2 Exhibits A-1, A-4 and A-8. 3 Exhibits 8-3, 8-4, 8-5 and 8-6. 4 Exhibit C1 -1. 5 Exhibit C2-1.

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Application because the proposal to establish terms of service for self-generation

customers of BC Hydro will have direct or indirect consequences for self-generation

customers of FortisBC Inc."

7. In BC Hydro's January 25, 2013 cover letter to its response to Cergar Information

Request No. 1,6 BC Hydro responded to Celgar's asserted interest in the Application as

follows. The Attachment B Guidelines only apply to BC Hydro's RS 1823 customers,

and so do not apply to Celgar. Moreover, by Order No. G-202-12 and the accompanying

Reasons for Decision the BCUC confirmed that Celgar's electricity supplier, FortisBC,

may use mechanisms that are different than those used by BC Hydro to uphold a

consistent regulatory principle that other utility ratepayers should not be harmed by a

self-generator's arbitrage of embedded cost power. These mechanisms, together with

any FortisBC rates and tariffs applicable to Celgar, are matters between the BCUC,

FortisBC, Celgar and FortisBC's other customers.

8. Accordingly, in BC Hydro's view this Application has no direct or indirect consequence

for Celgar.7

3.0 Purpose of the Application

9. The Attachment B Guidelines set out criteria for Customer Baseline Load (CBL)8

determination, adjustment and reset specific to BC Hydro RS 1823 customers with

electrical power self-generation facilities. 9 The CBL forms part of RS 1823 under which

the majority of BC Hydro's transmission service customers receive service. For all

RS 1823 customers, including those with self-generation faci lities, the CBL is based on

historic annual electrical energy consumption, and energy billing is based on the annual

volume of RS 1823 energy purchases relative to the customer-specific CBL. Where an

6 Exhibit B-4, cover letter. 7 Ibid. 8 The terms "Energy CBL" and "CBL" are used interchangeably, and each refers to the Energy CBL determined under TS No. 74. 9 As per section 2(p) of the Attachment B Guidelines, "self-generation facilities" means electrical power generation facilities that are installed at the same site as the customer's plant, on the customer's side of the point of delivery, and are used to supply a portion of the customer's plant load.

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RS 1823 customer has self-generation facilities, both the CBL and RS 1823 energy

purchases are impacted by self-generation output.

10. Prior to the Application, TS No. 7 4 did not explicitly address circumstances related to

customer serf-generation, so BC Hydro relied on the TS No. 7 4 treatments for DSM

projects 10 and section 6.2.2 of TS No. 7 4: 11

"If a customer proposes adjustments that are not defined in these CBL

Determination Guidelines, BC Hydro will discuss the proposed adjustments with

the customer. In cases where BC Hydro agrees with the customer's proposed

adjustments and they are consistent with BC Hydro's overall rate design

principles, BC Hydro will file the proposed CBL with the Commission . "

11. This framework formed the basis for a comprehensive set of business practices for CBL

determination, adjustment and reset specific to RS 1823 customers with self-generation

facilities.

12. BC Hydro believes that these business practices are consistent with the principles set

out in section 1.0 of TS No. 74. The CBL-related treatment applied by BC Hydro was set

out in each customer's CBL determination letter and annual CBL Statement. The

customer-specific CBL determinations were filed with the BCUC for review and approval

under sections 58 to 61 of the Utilities Commission Act. The BCUC has approved each

CBL determination for RS 1823 customers with self-generation facilities as filed.

13. The Attachment B Guidelines incorporate into the tariff the comprehensive set of

business practices developed for RS 1823 customers with self-generation facilities,

closing the "information gap" where TS No. 74 did not explicitly prescribe these CBL­

related treatments. The Attachment 8 Guidelines will provide additional information for

customers as to the CBL-related treatments that apply in relation to their self-generation

· output and for the BCUC in conducting annual CBL approvals.

10 The existing approved version of TS No. 7 4 treats load displacement that a customer has implemented at the customer's plant (meaning self-generation facilities) as demand side management (see TS No. 74 section 2.0 definition of"Demand Side Management (DSM) project"). 11 Application, section 1, pages 2-3; response to Celgar IR 1.1.0.

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Application to Amend TS74 BC Hydro Final Submission

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14. Section 4 of the Application, at pages 8 to 14, summarizes the structure and content of

the Attachment B Guidelines. That summary will not be repeated in this submission.

4.0 Matters that are not part of the Application

15. The information requests submitted to BC Hydro in this proceeding indicate considerable

interest in matters that are not part of the Application, as follows.

16. In June 2012, BC Hydro submitted its GBL Information Report to the BCUC for

information purposes. A copy of the GBL Information Report is on the record of this

proceeding as Exhibit A2-1 . BC Hydro is not seeking BCUC approval of the

GBL Information Report as part of the Application or otherwise.12

17. The Attachment B Guidelines are not related to the design or commercial terms of an

EPA or Load Displacement Agreement (LOA) between BC Hydro and a customer, nor

do they address eligibility criteria for entering into an EPA or LOA with BC Hydro. The

Attachment B Guidelines do not enable customers to sell electricity to BC Hydro or to

enter into a LOA with BC Hydro.

18. The Attachment B Guidelines do not address the rules that will apply if a customer

wishes to sell self-generated electricity to a third party.13

19. The Attachment B Guidelines do not apply to BC Hydro's RS 1823 customers who do

not have self-generation facilities.

20. The Attachment B Guidelines do not specify terms of service between FortisBC, or any

other utility, and its customers with self-generation facilities. The Attachment B

Guidelines do not relate to the terms of service of the kind suggested by many of the

information requests submitted by Celgar in this proceeding.14

12 Application, section 2, page 4; response to BCUC IR 1.2.2. 13 Application, section 4.2, page 8; responses to BCUC IRs 1.13.1 and 1.13.2. 14 Examples include Celgar IRs 1.1.5, 1.1.7, 1.2.1, 1.2.2, 1.2.7, 1.2.8, 1.2.9, 2.1.1 , 2.1.2, 2.1.5 and 2.4.1.

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5.0 Attachment B Guidelines - Use of GBLs

21. The information requests submitted in this proceeding also indicate considerable interest

in BC Hydro's determination and use of generator baselines (GBLs).

22. Two types of GBLs are used in the Attachment B Guidelines: 15

(1) Non-Contracted GBL (specific to a single non-contracted generating unit where

the customer does not have a contract with BC Hydro to make power; for a

customer with multiple non-contracted generating units the "Non-Contracted Site

GBL" is the sum of the Non-Contracted GBLs; for a customer with a single non­

contracted generating unit, the Non-Contracted Site GBL is equal to the Non­

Contracted GBL for that generating unit); and

(2) Contracted GBL (for a customer that has a contract (EPA and/or LOA) with

BC Hydro to make power from self-generation facilities; the Contracted GBL can

represent a single or multiple generating units).

23. Notwithstanding the type of GBL, the core purpose of each of the GBLs used in the

Attachment B Guidelines is the same: to identify the historical amount of self-generation

output normally used for self-supply so incremental self-generation output in excess of

the amount normally used for self-supply can be determined.

• For non-contracted generating units, incremental self-generation is measured

relative to the applicable Non-Contracted Site GBL.16

• For contracted generating units, incremental self-generation is measured relative to

the applicable Contracted GBL, which is an express or implied term of the EPA or

LOA.

24. Verified incremental self-generation output may be eligible for various CBL-related

treatments under the Attachment B Guidelines. The following sections 5.1 and 5.2 of this

15 The terms "Non-Contracted GBL", "Non-Contracted Site GBL" and "Contracted GBL" are defined in section 2 of the Attachment B Guidelines. 16 Refer to the definition of "Incremental Self-Generation Output" in section 2 of the Attachment B Guidelines.

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final submission summarize the differences between Non-Contracted GBLs and

Contracted GBLs, as used in the Attachment B Guidelines.

5.1 Non-Contracted GBLs

25. An RS 1823 customer generating unit that is used to make self-generation output in the

absence of a contract with BC Hydro in relation to any portion of that output is termed a

"Non-Contracted Generating Unit".17 All of the generating unit's output is used by the

customer for self-supply and displaces an equivalent volume of RS 1823 electricity

purchases from BC Hydro.

26. There is no arbitrage concern in relation to non-contracted generating units because, by

definition, there is no simultaneous sale and purchase of electricity. The customer is not

selling electricity to anyone. All of the customer's self-generation output is used for self­

supply only. 18

27. BC Hydro will establish a Non-Contracted GBL for each non-contracted generating unit

where the customer requests recognition of their incremental self-generation output for

CBL treatment purposes.19 The Non-Contracted GBL is equal to the actual gross

metered output of the non-contracted generating unit during the 365 day period used to

determine the customer's CBL.20 The "Non-Contracted Site GBL" is equal to the sum of

the Non-Contracted GBLs for each non-contracted generating unit at the same site.21

28. The Non-Contracted GBL is the baseline amount of gross self-generation output that

displaced an equivalent portion of RS 1823 energy during the CBL determination year,

enabling determination of the amount, if any, of incremental self-generation output that

17 Attachment B Guid~lines, section 20). 18 Response to BCUC IR 1.13.2.1. 19 Attachment B Guidelines, section 3.1.2. 20 Attachment B Guidelines, sections 2(i). 21 Attachment B Guidelines, section 2(k).

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displaced an equivalent incremental portion of RS 1823 energy purchases in subsequent

billing years. 22

29. Section 3.0 of the Attachment B Guidelines sets out the criteria for determination,

adjustment and reset of CBLs for customer's with Non-Contracted GBLs. In short, the

Non-Contracted GBL is determined by gross self-generation output during the CBL

determination year, and incremental self-generation output is treated like customer­

funded OSM and is an Energy Bill Adjustment for the billing year in which it occurs.

These provisions are summarized in sections 4.4 and 4.5 of the Application.

5.2 Contracted GBLs

30. An RS 1823 customer generating unit that is used to make self-generation output in

accordance with a LOA and/or an EPA with BC Hydro (an EPA or LOA is referred to

herein as a "contract") is termed a "Contracted Generating Unit".23

31. Where an RS 1823 customer has a contract, a Contracted GBL will be an express or

implied term of the contract. The Contracted GBL is intended to represent the amount of

self-generation output a customer would have generated for self-supply in a "normal"

year absent an EPA or LOA, and is generally fixed over the term of the contract. The

purpose of a Contracted GBL is to mitigate the risk of arbitrage that exists when a

customer is buying embedded-cost ·electricity from BC Hydro while, at the same time,

selling self-generated electricity to BC Hydro (or pursuant to a LOA, taking an incentive

from BC Hydro to make self-generation output for self-supply).

32. There may be more than one Contracted GBL if there is more than one type of contract

for the same contracted generating unit (e.g., a Contracted GBL for the EPA and a

Contracted GBL for the LOA). If there are multiple contracts, the commitments to make

self-generation output are prioritized.

33. The Attachment 8 Guidelines address the criteria for determination, adjustment and

reset of the CBL for a self-generator that has entered into a contract with BC Hydro.

22 Attachment 8 Guidelines, section 2(f) definition of "Incremental Self-Generation Output"; response to 8CUC IR 2.12.1. 23 Attachment 8 Guidelines, section 2(c).

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34. The Attachment B Guidelines do not address eligibility to enter into a contract with

BC Hydro, nor do they address the principles or methodology to determine a Contracted

GBL for the contract. BCUC Order No. G-38-01 and BC Hydro's June 20, 2012 GBL

Information Report (Exhibit A2-1) articulate the principles underlying the negotiation of a

Contracted GBL between BC Hydro and a customer.

35. The BCUC has the jurisdiction to review an EPA and consider a Contracted GBL used in

such EPA as part of reviewing a contract filed under section 71 of the Utilities

Commission Act, if applicable. The BCUC may also consider Contracted GBLs in

reviewing a DSM expenditure schedule filing under section 44.2 of the Utilities

Commission Act, to the extent the expenditure schedule includes expenditures on LDAs

with Contracted GBLs.24

36. Section 4.0 of the Attachment B Guidelines sets out the criteria for CBL determination,

adjustment and reset where there is a contracted generating unit. This information is

summarized in sections 4.4 and 4.6 of the Application.

6.0 Pre-Filing Consultation

37. Before filing the Application, BC Hydro performed extensive consultation with RS 1823

customers, AMPC, BCUC staff and other interested parties. As set out in section 5.0 of

the Application, consultation included workshops with customers and BCUC staff in late

2010, province-wide workshops for all TSR customers, multiple one-on-one discussions

with self-generating customers, and a pre-filing workshop on October 12, 2012.

38. The pre-filing workshop was attended by AMPC, RS 1823 customers, BCUC staff,

FortisBC and Celgar. A copy of the workshop presentation ~an be found at Appendix A

of the Application.

24 Responses to BCUC IRs 1.1.3.2 and 2.1.2.

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7.0 Conclusion

39. BC Hydro submits that the BCUC should approve the Attachment B Guidelines and

ancillary amendments to TS No. 7 4 as filed for the following reasons:

(1) The Attachment B Guidelines incorporate into the tariff existing business practices in

respect of CBL-related treatments for RS 1823 customers with self-generation

facilities. There are no incremental financial impacts to BC Hydro or other

ratepayers;25

(2) The Attachment B Guidelines provide additional information for customers with self­

generation facilities as to the CBL-related treatments applicable to their self­

generation output, and for the BCUC in conducting annual CBL approvals;

(3) · BC Hydro consulted extensively with RS 1823 customers and other interested

parties before the Application was filed; and

(4) The association (AMPC) that represents a broad cross-section of RS 1823

customers (both with and without self-generation facilities) supports the BCUC

approving the Application as filed. No BC Hydro customer or association

representing customers opposes the BCUC approving the Application as filed.

40. In short, the Attachment B Guidelines and related amendments toTS No. 74 will

incorporate existing business practices into the tariff, and are supported by customers.

ALL OF WHICH IS RESPECTFULLY SUBMITTED

lanD. Webb

Counsel for BC Hydro & Power Authority

25 Response to BCUC IR 1.12.5.

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