Demand-Side Managementin B.C.:

A Green Ratepayers’ Perspective

Presentation to the Fourth Annual BC Power Summit

March 28-29, 2007Vancouver, BC

byWilliam J. AndrewsBarrister & Solicitor

SCCBC, BCSEA and PVEA

• Sierra Club of Canada (B.C.) – is a non-profit organization of British Columbians from all walks of life

who care about a broad range of environmental issues. • B.C. Sustainable Energy Association

– is a non-profit association of citizens, professionals and practitioners committed to promoting the understanding, development and adoption of sustainable energy, energy efficiency and energy conservation in British Columbia.

• Peace Valley Environment Association– is a registered non-profit society established in 1975 to preserve and

protect the Peace River Valley and its watershed. In the early 1980s, the PVEA actively defended the integrity of the Peace River Valley in relation to the proposed Site C hydroelectric project.

Green ratepayers:

• Many members of SCCBC, BCSEA and PVEA are ratepayers of BC Hydro and

• want the electricity they purchase to be from a sustainable electricity system.

Legal interests of SCCBC, BCSEA & PVEA

in energy regulation:

• public interest advocacy organizations, and

• BC Hydro ratepayers

Environmental groups and energy conservation in B.C. ‘go way back’

• 1982-83: BCUC re Site C (PVEA)• 1985: federal-provincial environmental

assessment of West Coast Offshore Exploration (“Offshore Alliance”)

• 1980s: advocacy by SPEC, WCELA (BC Hydro’s PowerSmart launched in 1989)

• 1991: BC Hydro says Site C is shelved; cites reliance on PowerSmart, cogen, ResourceSmart and IPPs [www.wcel.org/4976/15/15_03.html]

• 1990s: BCUC proceedings (BC Energy Coalition)

Environmental opposition to B.C. gas-fired electricity strategy

• 2000-03: NEB-CEAA re GSX pipeline proposal, BC Hydro-Williams (GSXCCC)

• 2003: BCUC re CPCN application for VIGP (GSXCCC-NCOC)

• 2004-05: BCUC re BC Hydro-Duke Point electricity purchase agreement (GSXCCC-BCSEA-SPEC)

• 2005: BCCA re applications for leave to appeal re Duke Point (GSXCCC-BCSEA-SPEC); BCH cancels DPP project

Re-regulation of BC Hydro

• amendments to the Utilities Commission Act effective May 29, 2003

• BC Hydro must file plans under s.45(6.1) regarding – planned capital expenditures,– electricity acquisition, and – demand reduction

SCCBC, BCSEA, PVEA support for DSM, sustainable renewables

• 2003-04: BC Hydro F06-F07 Revenue Requirements Application, 2004 Integrated Electricity Plan, 2004 Resource Expenditures and Acquisitions Plan (SCCBC)

• 2005: BC Hydro 2005 Resource Options Report (BCSEA-SCCBC)

• 2005: BC Hydro stepped rates NSP (BCSEA-SCCBC)

Recent and ongoing interventions in BCUC proceedings

• 2006: BC Hydro F07-F08 RRA (SCCBC-BCSEA-PVEA)• 2006-07: BC Hydro 2006 IEP-LTAP (SCCBC-BCSEA-

PVEA)• 2006: 38 EPAs from F2006 CFT (SCCBC-BCSEA-

PVEA)• 2006: BC Hydro Conservation Research: Time of Use

rates pilot (PVEA-SCCBC-BCSEA)• 2006: BC Hydro-Alcan LTEPA+ (SCCBC-BCSEA-PVEA)• 2007: BC Hydro Rate Design Application (SCCBC-

BCSEA-PVEA)

One reason to care about DSM:

• Climate change is a problem• Carbon dioxide emission is the biggest cause of

climate change• Burning fossil fuels is the biggest source of

carbon dioxide emission• Generating electricity is a major reason to burn

fossil fuels• DSM reduces the need to generate electricity• Therefore, DSM mitigates climate change

Climate change is real

• Intergovernmental Panel on Climate Change (IPCC)

• Climate Change 2007: The Physical Science Basis: Summary for Policymakers

• February 2007• Contribution by Working Group 1 to Fourth

Assessment Reportwww.ipcc.ch/SPM2feb07.pdf

Report describes:

• human and natural drivers of climate change,

• observed climate change,

• climate processes and attribution, and

• estimates of projected future climate change.

The energy balance of the climate system is altered by changes in:

• atmospheric abundance of greenhouse gases and aerosols,

• solar radiation,

• land surface properties.

“radiative forcing”

• = a measure of the influence that a factor has in altering the balance of incoming and outgoing energy in the Earth-atmosphere system

• Positive forcing tends to warm the surface

• Negative forcing tends to cool it

• expressed in watts / square metre (Wm-2)

“Global atmospheric concentrations

• of carbon dioxide, methane and nitrous oxide

• have increased markedly

• as a result of human activities since 1750, and

• now far exceed pre-industrial valuesdetermined from ice cores spanning many thousands of years.”

Atmospheric concentrations of carbon dioxide over the last 10,000 years

Atmospheric concentrations of methane over the last 10,000 years

Atmospheric concentrations of N2O over the last 10,000 years

Global increases in CO2 concentration

due primarily to agriculture

Global increases in methane and nitrous oxide concentrations

due primarily to fossil fuel use and land-use change

“Carbon dioxide is the most important anthropogenic greenhouse gas”

• “Atmospheric concentration of carbon dioxide has increased from a pre-industrial value of about 280 ppm to 379 ppm in 2005.

• The atmospheric concentration of carbon dioxide in 2005 exceeds by far the natural range over the last 650,000 years (180 to 300 ppm) as determined from ice cores.”

• “The primary source of the increased atmospheric concentration of carbon dioxide since the pre-industrial period results from fossil fuel use,

• with land use change providing another significant but smaller contribution.”

“The understanding of anthropogenic warming and cooling influences on climate

• has improved since the 2001 Third Assessment Report (TAR),

• leading to very high confidence

• that the globally averaged net effect of human activities since 1750 has been one of warming,

• with a radiative forcing of +1.6 [+0.6 to+2.4] W m-2.”

“Warming of the climate system

• is unequivocal,

• as is now evident from observations of increases in

global average air and ocean temperatures,

widespread melting of snow and ice, and rising global average sea level.”

Changes in global average temperature

Changes in global average sea level

Changes in Northern Hemisphere snow cover

“At continental, regional, and ocean basin scales,

• numerous long-term changes in climate have been observed: Arctic temperatures and ice, precipitation amounts, ocean salinity, wind patterns, and aspects of extreme weather….”

“Most of the observed increase in globally averaged temperatures since the

mid-20th century

• is very likely due to the observed increase in anthropogenic greenhouse gas concentrations.

• This is an advance since the 2001 Third Assessment Report’s conclusion that ‘most of the observed warming over the last 50 years is likely to have been due to the increase in greenhouse gas concentrations’.”

“Discernible human influences now extend to other aspects of climate, including

• ocean warming,

• continental-average temperatures,

• temperature extremes and

• wind patterns.”

Black line = observed temperaturesPink = models of both natural and anthropogenic

Blue = models of natural only

Global Surface Warming: observed and predicted

Various scenarios

Year 2000 constant concentrations

Connecting 6 billion dots…

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http://www.un.org/esa/population/publications/sixbillion/sixbilpart1.pdf, p.5

http://www.census.gov/ipc/www/worldpop.html; http://www.census.gov/ipc/www/worldhis.html

Free-riders

…are not Free-loaders!

(Back to DSM in B.C.)

DSM, conservation and efficiency

• Efficiency = less energy for same work

• Conservation = less energy

• Demand-side management = conservation & efficiency caused by a DSM program

Free-rider definition

• From the perspective of a DSM program

• aimed at inducing behaviour X (“X-DSM”),

• a “freerider” is a customer

• who does X during the X-DSM program

• but would have done X without the X-DSM program.

Free-riders don’t count re X-DSM

• In evaluating the X-DSM program,

• add up the electricity saved by all customers who did X,

• subtract the electricity saved by free-riders (who would have done X despite X-DSM),

• to get the electricity saved by the X-DSM program.

Counting free-riders

• How do you determine how many customers meet the definition of freerider (did X but would have done X without the X-DSM program)?

• (estimation task: hypothetical but doable)

“Free-rider” concept has its place

• Evaluating a single DSM program without counting energy savings by free-riders is correct and logical.

• BUT…

But what about free-riders and…

• Market transformation DSM programs?

• Utility DSM programs other than X-DSM?

• DSM programs other than same-utility DSM?

• Personal conservation ethic?

‘Free-riders’ and market transformation DSM

• Objective is to be a catalyst

• to spark popular consumer demand for X

• to spark mainstream supply of X (cheap and accessible)

• Ex. ‘seasonal LEDs’

• Free-riders are the objective

‘Free-riders’ and other same-utility DSM programs

• Individual DSM programs require general conservation awareness

• Conservation awareness is created (in part) by utility education programs, plus the utility’s other DSM programs (A-DSM, B-DSM, C-DSM, etc.)

• Free-rider who would have done X despite X-DSM might not have done X without utility’s conservation education and other DSM programs

• Also, X-DSM might induce customer to do A, B or C even in the absence of A-DSM, B-DSM or C-DSM

‘Free-riders’ and DSM other than same-utility DSM

• Energy conservation is promoted by DSM activities by other utilities, conservation groups, government programs, media, schools, individuals

Cumulative, synergistic effects on conservation awareness

• Is a utility that approves only DSM programs that meet financial tests without free-riders itself acting as a free-rider in relation to other DSM providers?

‘Free-riders’ and the personal conservation ethic

• 2007 Throne Speech -- comprehensive climate change and energy strategies:

a new personal conservation ethic intergenerational equity

• energy conservation and efficiency targets:“50% of BC Hydro’s incremental resource

needs through conservation by 2020”energy efficient building standards by 2020

2007 Energy Plan –

Energy Plan 2007

• Achieving conservation target:“will require building on the ‘culture of

conservation’ that British Columbians have embraced in recent years”

Energy Plan 2007

• “Future energy efficiency and conservation initiatives will include:… efforts to educate customers about

the choices they can make today with respect to the amount of electricity they consume

Energy Plan 2007

• “The plan confirms action on the part of government

• to complement these conservation targets by working closely with BC Hydro and other utilities

• to research, develop, and implement best practices in conservation and energy efficiency and

• to increase public awareness.”

‘Free-riders’ and the personal conservation ethic

• Customers with an active personal conservation ethic are more likely to be ‘free-riders’ in relation to DSM programs than customers with a low conservation ethic.

• If all DSM programs are evaluated and approved ‘net of free-riders,’ then DSM programs will come not to serve free-riders.

• DSM programs designed not to serve customers with a high conservation ethic may alienate the very customers who ought to be ‘partners’ in spreading the conservation message.

Free-riders aren’t Free-loaders…

• Free-riders are Conservation Heroes!

New Energy Plan and…

BCUC’s role in social and environmental

costs and benefits

Cost effectiveness v. Sustainable electricity

• BCUC: “…the Commission Panel notes that once a competitive market-based process has been undertaken and firm commitments from bidders have been obtained, a competitive process should, in most circumstances, be accepted as persuasive evidence of the cost-effectiveness of the resultant successful bid.”[E-1-05, p.13]

• Energy Plan: “The BC Energy Plan clarifies that social, economic and environmental costs are important for ensuring a suitable electricity supply in British Columbia.”

Upcoming review:

• “Government will review the BC Utilities Commission’s role in considering social, environmental and economic costs and benefits,

• and will determine how best to ensure these are appropriately considered within the regulatory framework.”

Step One: hear Green Ratepayers

Participant funding and B.C. groups representing green ratepayers and

public interest environmental concerns

Utilities Commission Act, s.118

• Participant costs 118 (1) The commission may order a participant in a proceeding before the commission to pay all or part of the costs of another participant in the proceeding.

Participant Assistance/Cost Award Guidelines

• “In determining an award of all or any portion of a Participant’s costs, the Commission panel will consider the following: (i) Does the Participant represent a substantial

interest in the proceeding and will the Participant be affected by the outcome?

(ii) Has the Participant contributed to a better understanding of the issues by the Commission?” […]

PACA procedure

• “Participants who intend to apply for a cost award must submit a Budget Estimate…

• The Budget Estimate should address the Participant's eligibility,…identify the key issues that the Participant will examine, indicate whether the Participant expects to lead evidence, and include an estimate of proceeding and preparation days…

• Commission staff will reply with a review letter that includes an estimate of proceeding days and an estimate of the preparation days that may be funded…

• The Commission staff advice is not binding on the Participant or the Commission panel and is provided only to forewarn Participants of potential issues that may not be funded by the Commission.”

BCUC denies SCCBC, et al PACA request in F07-F08 RRA proceeding

• March 2006: BC Hydro begins what become F07-F08 RRA and 2006 IEP-LTAP proceedings

• SCCBC, et al intervene, participate fully• August 2006: BCUC Panel partly separates the two proceedings• SCCBC, et al file Budget Estimates under PACA Guidelines for case

manager, legal counsel and experts• BCUC staff review letters say “the issues you have identified…fall

within the scope of the Commission Panel’s jurisdiction and appear relevant to this proceeding”

• SCCBC, et al file expert evidence, participate in F07-F08 RRA negotiated settlement process (NSP); NSP reaches agreement; agreement approved by Commission Panel

• SCCBC, et al file PACA application (as do traditional intervenors)• January 2007: Panel disallows $42,021.69 out of SCCBC, et al’s

$49,501.41 PACA application [reconsideration request outstanding]

Panel’s reasons:

• “The Commission Panel determines the demand side management (“DSM”) issues raised by SCCBC do not represent substantial issues in the F07/08 RRA proceeding.”

http://www.bcuc.com/Documents/Orders/2007/DOC_14250_F-3-07_BCH_F2007-08%20RR%20-%20Reasons.pdf

BCUC denies SCCBC, et al PACA request in LTEPA+ proceeding

• August 2006: In the course of the F07-F08 RRA and 2006 IEP-LTAP proceedings, BC Hydro files LTEPA+ with Alcan Inc. under s.71

• SCCBC, et al intervene, participate fully• SCCBC, et al file Budget Estimate• BCUC staff review letter states “the key issues you identify generally

appear to be relevant to the proceeding. Providing you focus on issues that are within the scope of the proceeding, Commission staff believe that the effective participation of SCCBC, et al in the proceeding will be supported by a cost award that is consistent with your budget and is based on the funding levels in the Guidelines.”

• December 2006: oral hearing; written argument; Panel quashes LTEPA+

• SCCBC, et al file PACA application (as do traditional intervenors)• February 2007: Panel disallows all but $1,074.72 of SCCBC, et al’s

application for a participant assistance cost award of $33,552.45 • [reconsideration request outstanding]

Panel’s reasons:

• “SCCBC, et al’s objective of ‘minimizing environmental harm from Alcan’s smelter operations’ is, in the Commission’s view, far removed from the key issues under consideration in this proceeding.

• The Commission Panel also finds that SCCBC, et al has not established how the groups that comprise SCCBC, et al will be impacted by the outcome of the proceeding.

• However, SCCBC, et al was an active participant in the proceeding and will receive an award equal to its out-of-pocket expenses for the case manager to attend the hearing.”

http://www.bcuc.com/Documents/Orders/2007/DOC_14404_F-5-07_PACAs%20BCH%20Alcan.pdf

But…

• SCCBC, et al addressed (in detail) the key issues within the scope of the proceeding

• -- their motivation for doing so is their choice as Green Ratepayers.

• Is it the Commission’s role to judge the validity of ratepayers’ priorities?

"It's Not Easy Bein' Green"

Apologies to Joe Rapposo, lyricist

The End

Deep Cove, BC