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Ontario MOE issues guide to renewable energy approvals

The Ontario Ministry of the Environment has issued a comprehensive guide to navigating the provincial approval process for renewable energy projects. The guide is intended to help project proponents understand the process and requirements for applying for a renewable energy approval ("REA") under the Environmental Protection Act (Ontario). It includes:

• an overview of the approvals process;
• a discussion of consultation requirements;
• requirements regarding the protection of cultural heritage and the natural environment; and
• specific requirements for wind, solar, bio-energy and waterpower facilities.

The MOE has also published separate guidance to help wind farm developers comply with new noise setback requirements.

More information about the REA process may be found on the MOE's website.

The MOE is rumoured to be planning to issue its first REA by March 31, 2010.

Québec Northern Plan "Plan Nord" - Stakeholders hold initial Partners' Discussion Table

The Government of Québec yesterday took a concrete step in its plan to develop the province's vast resources situated North of the 49th parallel by holding the first meeting of the Partners' Discussion Table. The sustainable resource development initiative known as the "Plan Nord" or "Northern Plan", is a broad-based joint action process to lay the foundation for a new partnership with communities in the North and covers an area of over one million square kilometres (1,000,000 km2). The Northern Plan had previously been announced by the Quebec Liberal Party as part of an ambitious 2008 electoral campaign platform, but has gained momentum of late following consensus-building at a gathering of Northern Plan stakeholders in early November 2009 (the "Northern Plan Stakeholders Summit").

The Partners' Discussion Table was attended by Québec's Deputy Premier, Minister of Natural Resources and Wildlife and Minister responsible for the Northern Plan, Ms. Nathalie Normandeau. Joining her were Mr. Pierre Corbeil, Minister responsible for Aboriginal Affairs, Mr. Serge Simard, Delegate Minister of Natural Resources and Wildlife and Ms. Line Beauchamp, Minister of Sustainable Development, Environment and Parks, as well as twenty-seven (27) representatives from Municipalities, Aboriginal Nations, Economic and Environmental Organizations, Educational and Research Organizations and Government Departments and Agencies concerned by the project.

The Partners' Discussion Table is to focus on obtaining community support for a shared vision for the Northern Plan, to define a work process and to determine priorities for the Plan's implementation in the economic and social spheres.

The Northern Plan Stakeholders Summit had also established a second, distinct, Aboriginal Partners' Discussion Table, which is to be subdivided into four separate tables, one for each of the Cree, Innu, Inuit and Naskapi Nations and whose task will be to deal with the Aboriginal issues raised by the Northern Plan, in a manner consistent with agreements that have been signed or are being negotiated.

Of the Partners' Discussion Table, Minister Normandeau was quoted as saying (translation): "We share a common vision, that is to make of the Northern Plan an exemplary sustainable development project which integrates the development of the energy, mining, forestry, agrifood, tourism and transportation industries, while protecting wildlife and the environment, as well as conserving biodiversity. The Northern Plan will encourage community development, while respecting community culture and identity."

Ontario Premier McGuinty signs renewable power deal with Samsung-led consortium

The details are out. Premier Dalton McGuinty announced today that he has signed an agreement with a consortium led by Samsung C&T Corporation and the Korea Electric Power Corporation that will invest $7 billion in Ontario and will generate 2,500 megawatts of wind and solar power.

While a copy of the deal does not yet appear to be public, a government backgrounder identifies some of the highlights:

• the consortium will build 2,500 MW of renewable generating facilities in Ontario: 2,000 MW of wind farms and 500 MW of solar (based on capacity allocation reserves ordered by former Minister Smitherman, the bulk of these projects will likely be in Southwestern Ontario);
• some of these facilities will be connected to new or upgraded transmission assets, which helps to justify the $2.3 billion that Hydro One previously announced it would spend on grid upgrades;
• the consortium has agreed to build 4 new manufacturing facilities in the province, one for each of the following types of component: wind turbine towers (to be in full operation by March 31, 2013); solar inverters (March 31, 2013); solar module assembly (December 31, 2013); and wind turbine blades (December 31, 2015);
• if the consortium meets the above deadlines, its wind and power projects will become eligible for an undisclosed "economic development adder" ("EDA"), which is a premium on the already premium per-kilowatt-hour FIT prices. The total cost of the economic development adder over the 20-year lives of the wind and solar farms is projected to be $437 million (net present value);
• the four new plants are expected to employ 1,440 people directly and to result in another 700 direct jobs at parts plants (not owned by the consortium);
• the government expects that these 2,140 direct jobs will result in an explosion of indirect green collar jobs (presumably including engineering, technical, construction, maintenance, financial, legal, consulting, and other types of related jobs). The government pegs the total job growth at 16,000 over six years, although it has yet to elaborate on its calculations (or explain what portion of those jobs will be counted towards its "50,000 green collar jobs in 3 years" promise).

Samsung is obviously pleased with the deal. According to the Toronto Star, Sung-Ha Chi, president and CEO of Samsung, praised McGuinty "for creating a welcoming climate for green energy investment." The Premier's new Minister of Energy and Infrastructure called the deal "a huge achievement for Ontario" and highlighted that "these projects will help clean up our air and replace dirty, coal-fired generation as well as bring more green-collar jobs to communities across the province."

However the deal has attracted significant controversy, particularly over the last 24 hours. Others in the industry are upset that Samsung is getting a special deal in what was supposed to be a level playing field for renewable power developers in the province. The "economic development adder" will certainly provide the consortium with an additional stream of revenue (that can be further leveraged) that other developers will not enjoy.

Ratepayers are also concerned that the Samsung deal will drive their electricity bills up even higher. The government estimates that the economic development adder will result in an average residential bill increase of $1.60 annually (or 0.1%). While this may appear minor, it is only part of a larger increase that will be driven by the OPA's Feed-in Tariff program and the substantial investment by transmitters and local distribution companies in grid modernization (starting with Hydro One's $2.3 billion investment, mentioned above).

According to the CBC, noted energy observer Tom Adams calls the government's job projections a "crazy fantasy." Opposition parties are expected to call on the province's auditor general to review the value of the deal for Ontario taxpayers.

Québec and New Brunswick conclude Energy Agreement negotiations

Premiers Shawn Graham and Jean Charest today announced the conclusion of negotiations on an energy agreement between the provinces of New Brunswick and Québec. This concludes the discussions undertaken by the governments of Québec and New Brunswick in early 2009, which resulted in the signature of a memorandum of understanding (MOU) on October 29, 2009.

Under the agreement's framework, New Brunswickers are to benefit from advantageous electricity rates, a significant reduction in provincial debt and a secure, long-term source of electricity, while retaining responsibility for its energy strategy and implementation. Hydro-Québec will acquire Power Generation Assets as well as Firm Transmission Rights and will commit to a long-term power supply contract.

Summary of Agreement between the governments of Québec (QC) and New Brunswick (NB):

NB Power Assets acquired by Hydro-Québec:

The following Generation Assets:

• The seven (7) hydroelectric generating facilities (895 MW);
• The two (2) diesel peaking units on the main grid (499 MW);
• The Point Lepreau nuclear power plant (635 MW), once the refurbishment completed, expected on or about January 1, 2011.
• Firm Transmission Rights associated with the acquired Generation Assets, including 670 MW of transmission rights with New England.

Supply of electricity to NB Power by Hydro-Québec:

Hydro-Québec will act as a wholesaler for NB Power under a long term power contract, Hydro-Québec will provide NB Power 14 TWh of electricity per year. For the first five (5) years, that supply will be provided at a price of 7.35 cents per kWh, after which the price will be adjusted according to the New Brunswick Consumer Price Index (CPI).

New Brunswick to administer "Heritage Supply" of electricity in the following manner:

Two Energy Pools will be created: one of 4.5 TWh for Industrial Customers and one of 9.5 TWh for Residential, Commercial and Wholesale Customers;

Industrial Rates will be set immediately after the closing at a level that will result in rate reductions averaging 23% for Large Industrial Customers using more than 5,000 kW per month and averaging 15% for Large Industrial Customers using between 750 kW and 5,000 kW per month;

On the first (1st), second (2nd), third (3rd) and fourth (4th) anniversaries of the closing date, Industrial Rates will be adjusted in accordance with increases, if any, of Hydro-Québec's "L" and "M" rates;

Residential, Commercial and Wholesale Rates will be frozen for five (5) years at the levels currently in effect in New Brunswick;

All New Brunswick electricity needs beyond those included in these Heritage Supply Pools will be met through calls for tenders at market conditions approved by the New Brunswick Energy and Utilities Board.

NB Power Employees:

At the time of closing, Hydro-Québec will offer employment to the employees of the NB Power facilities purchased and will respect existing collective agreements.

Employees transferring to Hydro-Québec will continue to receive pensions provided by New Brunswick's public sector pension plan, and Hydro-Québec will reimburse New Brunswick for the cost of those benefits accrued following the closing.

Consideration:

Hydro-Québec will make two payments totalling $3.2 billion; the first ($1.8 billion) on or about March 31, 2010, and the second ($1.4 billion) at the time of closing of the Point Lepreau transaction, expected on or about January 1, 2011.

Assets not acquired by Hydro-Québec:

NB Power will retain the ownership of the Transmission and Distribution Assets and of NB Power's head office, or "Holdco".

NB Power will retain ownership of the following assets and operate them for the benefit of Hydro-Québec under the framework of Tolling Agreements*:

• Belledune generating facility (coal, 458 MW);
• Coleson Cove generating facility (oil, 978 MW);

Hydro-Québec has the option to request the shut down of these two facilities upon one (1) year's notice and by paying NB Power the equivalent of twelve (12) months of fixed costs of the facilities.

• Tolling Agreement: An agreement by which a party agrees to acquire the fuel for the operation of a generating facility owned by another party, thereby acquiring the exclusive rights to determine and purchase the related energy production. Such an agreement usually includes provisions to cover fixed operating costs.

NB Power will retain the following assets, which are deemed surplus facilities:

• Grand Lake generating facility (coal);
• Dalhousie generating facility (oil);
• Courtenay Bay generating facility (oil).

NB Power is also to retain the Grand Manan autonomous facility, located on the island of the same name.

Closing of the transaction

On or about March 31, 2010 and expected on or about January 1, 2011 for Point Lepreau.

Closing conditions for the Point Lepreau transaction:

• Completion of the refurbishment project currently under way;
• Restart of the facility following successful testing;
• Issuance of the necessary permits and authorizations prior to the restart and acquisition of the facility.

Touting the benefits of the agreement, Premier Graham declared: "Our partnership with Québec will secure lower energy costs for our province, leave NB Power as a New Brunswick-owned entity, and reaffirm our province's control over decisions affecting energy policy," "We are proud of a partnership that allows us to create jobs and a better economic future for New Brunswick, and to do our part in reducing greenhouse gases."

Expressing the benefits to the province of Québec, Premier Charest commented "In a world where access to clean renewable energy sources is an issue, where energy needs are strong and continue to grow, Québec and New Brunswick are leading the way. The changes we are announcing today, along with firm transmission rights to New England, allow us to achieve the goals set out in the agreement reached with New Brunswick," "Hydro-Québec will acquire quality assets allowing it to maximize its export capacity, while New Brunswickers will benefit from a reliable source of energy with important economic and environmental benefits,"

Ontario to announce $7 billion renewable power deal with Samsung tomorrow

Ontario Premier McGuinty is expected to announce a huge renewable power deal with Koren industrial giant Samsung tomorrow. The deal would see Samsung make substantial investments in the renewable power manufacturing facilities and projects and could create up to 15,000 direct and indirect green collar jobs in the province. Worth an estimated $7 billion, the deal will nevertheless continue to evoke mixed reaction in the province. It is also the latest volley in a battle between Ontario and B.C. to become the go-to jurisdiction for clean energy investment.

While the official announcement will come tomorrow, the existence of the negotiations has been one of the government's worst kept secrets (we first reported on it last November on our climate change law blog). According to the Toronto Star, Samsung will agree to build significant renewable equipment manufacturing capacity and to construct 600 MW of wind and solar farms in the province (perhaps making Samsung its own best customer). That scale of project development estimate aligns closely with the 500 MW of grid capacity that former Minister Smitherman ordered the Ontario Power Authority to hold in reserve at the end of last September. In the same directive, he specifically ordered that 100 MW of the 500 MW limit on utility-scale solar development be held in reserve as well. These special directives, combined with generous subsidies and access to the province's new feed-in tariff rates for power, would appear to make for a very sweet deal for Samsung.

However, not everyone in the province is enamoured with the deal. Other project developers in the sector do not understand why Samsung is receiving preferential treatment. David Butters, president of the Association of Power Producers of Ontario, told the Star that his organization feels the deal is "just fundamentally wrong at every level of public policy we can think of. The industry feels they've been thrown under the bus here. I think there's a feeling of betrayal." In a letter to the Premier, the Canadian Wind Energy Association and Canadian Solar Industries Association added "[b]esides the financial and political uncertainty this creates, it puts one company in a vastly better position than all others: this is manifestly unfair."

Nevertheless, the deal is no doubt very attractive to the government. Generally, it could help revive a manufacturing sector that has been decimated by the recent financial crisis and the struggles of the auto sector. More specifically, it could move the government 15,000 jobs closer to its commitment of creating 50,000 green collar jobs through the reforms of the Green Energy Act.

This latter achievement would be a very significant one for Ontario. As discussed in today's Globe and Mail, Ontario is competing with British Columbia to become the renewable energy hub of Canada. Even before the Samsung deal, at least one prominent renewable developer told the Globe that "Ontario is probably the hottest market in Canada." Blair Lekstrom, B.C.'s Energy Minister, believes that his province may reclaim the lead: "I look at the clean energy sector as the oil and gas sector of the future," he told the Globe. "We are going to take British Columbia and become a green-energy powerhouse, not just in Canada, but in North America." Regardless of the who wins, the competition will no doubt produce big wins, both for both provinces and for the renewable power industry.

Important note regarding Davis LLP's Climate Change Law blog

As you hopefully already know, Davis LLP maintains a number of blogs of interest to the Canadian legal and business communities. In the past, we have provided extensive coverage of developments regarding renewable energy on our Climate Change Law blog (see here for all of our prior postings). Beginning today, such developments will be tracked here on the Environmental, Energy and Resources Law blog. Climate change issues, including those regarding greenhouse gas regulation in Canada and the U.S., emissions trading, climate change disclosure, and post-Copenhagen developments abroad, will continue to be covered on our Climate Change Law blog.

We hope this change will help make each of our blogs more specific and relevant to you.

British Columbia Aboriginal Mine Training Partnership Launched

Today, First Nations communities and organizations, the mineral exploration and mining industry and educational and government partners announced the formation of a minerals and mining specific Aboriginal Skills and Employment Partnership (ASEP) to run a three-year program providing skills training in the northwest and central interior regions of British Columbia. The program will be administered by the British Columbia Aboriginal Mine Training Association in conjunction with fifteen partners, six of which have made employment commitments of 148 jobs for Aboriginal participants.

The British Columbia Aboriginal Mine Training Association and its partners will provide training-to-employment plans that cover a broad range of opportunities including: academic upgrading, job specific training and apprenticeships, retention counselling and other on the job support.

Laureen Whyte, Chair of the British Columbia Aboriginal Mine Training Association, declared: "The partners are committed to ensuring that Aboriginal people fully share in economic opportunities created by the mineral exploration and mining industry. Through this partnership, Aboriginal people in British Columbia will have access to skills training to participate in the exploration and mining industry, and industry will benefit from accessing a quality pool of workers,"

The mining specific Aboriginal skills and employment partnership is the result of collaborations between fifteen partners, who will be sharing the cost of investment funding. The 30-month program will cost a total of $27.1 million dollars, with Human Resources and Skills Development Canada contributing $4.4 million dollars to the program and private contributions from Industry and Associations accounting for $22.7 million dollars.

"This initiative helps provide the skills needed for Aboriginal people to fully participate in the mineral exploration and mining sectors and to look forward to the benefits of well-paying jobs and a better future," says Eddy Jules, Vice Chair of the British Columbia Aboriginal Mine Training Association and Councilor of the Skeetchestn Indian Band. "Our vision is that, with specialized training and experience, companies will benefit from the professional and traditional knowledge that can be drawn from the surrounding communities where they operate. We will be able to work together with full participation of our people," says Jules.

ASEP is a labour market program that provides Aboriginal people with the skills development and work experience they need to participate in large-scale industrial sectors including forestry, mining, and gas, construction and hydro electric development. Human Resources and Skills Development Canada provides federal funding to the partnerships.

The BC Aboriginal Mine Training Association has also released a Fact Sheet containing more detailed information on the program.

BC Government Embarks on Phase 2 of its Water Act Modernization Process

The BC government has officially embarked on a process of modernizing the provincial Water Act. The existing Act was brought into force in 1909 and is the primary legislation in BC's water governance framework for regulating the diversion, storage and use of water resources and managing water quality.

The latest changes came into effect in 2004 in response to growing public concern over the protection of drinking water quality, following the drinking water tragedy in 2000 in Walkerton, Ont. Changes included a new Drinking Water Protection Act and, amendments to the Water Act to protect groundwater and water quality and, to provide a new process for watershed management planning.

The modernization process is expected to assist the Province in fulfilling its (year 2010) committments established under the Living Water Smart: B.C's Water Plan by:

• Protecting stream health and aquatic environments;
• Improving water governace arrangements;
• Introducing more flexibility and efficiency in the water allocation system; and,
• Regulating groundwater use in priority areas and for large groundwater withdrawals.

The process will be completed in four key Phases, as follows, ending with the introduction and approval of a draft Bill by Spring 2011:

Phase 1 - Scoping, jurisdictional review and background research (complete). In this stage wide input on water management issues was gained through a review of science and monitoring information regarding B.C.'s watersheds, a review of literature, and Canadian and international best practices.

Phase 2 - Engagement and policy development (Fall 2009 - Spring 2010). In this phase, proposals for change will be put forward in a public discussion paper for wider input from First Nations, stakeholders and the public. Participants will have a range of avenues to become involved including regional workshops, online discussions through the Living Water Smart Blog and written submissions. Government will report back the results of engagement and undertake a full assessment of costs and benefits, and regulatory and social impacts of recommended policy options.

Phase 3 - Request for legislation and legislative drafting (Summer 2010). Final recommendations will be submitted to government and will be drafted into a legal language for introduction into Parliament.

Phase 4 - Bill introduction (Spring 2011) and approval. After the draft bill is introduced into the Parliament it is debated three times and if approved gets Royal Assent and becomes law.

The government is currenlty undertaking Phase 2 of the process and is expected to release a discussion paper for public review and comment in the coming weeks.

Click here for a list of some of the current and future challenges for the Water Act.

GE urges Ottawa to extend ecoENERGY program

"Canada's ecoENERGY Investment in Renewables Pays Off for Taxpayers," declares a new study released by GE Energy Financial Services this week. The study urges the federal government to renew the popular ecoENERGY for Renewable Power program. Not only is the program effective at reducing greenhouse gas emissions, but it also is a net money-maker for the government.

The ecoENERGY for Renewable Power program provides a one cent per kilowatt-hour subsidy for the first 10 years of operation for eligible renewable energy projects. The program, which was launched in 2007, has been extraordinarily popular: 10,924 megawatts of projects have registered to receive funds; 4,154 megawatts of projects have been approved for funding.

This response has been so strong that the program is now in limbo, having fully allocated virtually all of its $1.5 billion of funding. The government stopped accepting new applications in December 2009. The renewable power industry has been waiting with bated breath for an announcement from Ottawa that the program's coffers will be topped up.

The GE study strongly encourages the government to renew the program. Having prepared financial models of the program, GE determined that the government will receive more back in the form of incremental tax revenue that it pays out under the program. Specifically, the study estimated that injecting an additional $1.5 billion into the ecoENERGY for Renewable Power program could spawn 5.2 gigawatts of new wind projects and carry a net present value benefit to Canada's governments of $287 million.

In a press release that accompanied the report, Mark Tonner, Managing Director for Canada at GE Energy Financial Services, noted, "Canadians want to be leaders in green energy. It's high on the social agenda as the right thing to do. In Canada, the ecoENERGY initiative has been effective in stimulating renewable energy deployment, and as our study shows, it's time to view the program not as a cost but a net contributor to Canada's treasury. EcoENERGY helps Canada compete globally for renewable energy investment, at a time when such competition is becoming more intense."

GE's enthusiasm for the program is no doubt influenced by the fact that GE is a supplier of turbines to several Canadian wind farms.

GE and the rest of the renewable industry will learn the fate of the ecoENRGY for Renewable Power program when the federal government releases its 2010 budget (which is expected to occur on March 4, almost immediately after Parliament resumes, having been controversially prorogued by Prime Minister Harper at the end of 2009).

BC Forest Minister Announces Changes to Forest Tenure to Encourage Investment in the Bioenergy Sector

The Minister of Forests has announced that he intends to introduce two significant changes to forest tenure to provide tenure holders incentive to harvest all the timber in a cutblock: (1) receiving licenses and (2) stand-as-a-whole pricing.

The new receiving licenses would give alternative (bioenergy) producers an annual allowable cut that could be transferred to a tenure holder to harvest low-grade timber, including beetle-killed wood, for chipping and to be used as feedstock. The purpose is to force full utilization of the cut, not to increase it. The stand-as-a-whole pricing model would allow tenures holders to pay a flat price for their harvesting rights on an area basis, rather than per cubic metre, reducing administrative costs for industry and government in scaling logs and calculating stumpage.

The changes are meant to encourage investment and "stability" in the bioenergy sector and, assist in getting forestry workers back to work. In an article published today, the Minister was reported as saying "Biomass producers need to have some leverage. This is a strategy that will not only benefit new players...but it also supports the primary sector by maximizing capacity of the pine beetle volumes."

The changes are are expected to come in the next couple of weeks, followed by BC Hydro's phase two call later this year and will require:

• approvals from the U.S. under the Softwood Lumber Agreement;
• details on who will be eligible for receiving licenses and how they will be distributed and, associated costs; and,
• market value assessments on the areas to be harvested.

Alberta Utilities Commission approves Alberta's Largest Wind Energy Project

On December 31, 2009 the Alberta Utilities Commission ("AUC") gave Greengate Power Corporation ("Greengate") approval to construct and operate its Halkirk I Wind Project pursuant to Section 11 of the Alberta Hydro and Electric Act. Greengate is expecting to begin construction on the project later this year, with a target commercial operation date of Q1 2011.

Following Greengate's application requesting approval from the AUC for the Halkirk I Wind Project at the end of February 2009, the AUC conducted an extensive review of the project's participant involvement program, environmental impact assessment, potential visual and noise impacts, proposed gathering system routing, potential impacts on pipelines, and other pre-requisite project approvals. Ultimately, the AUC was satisfied that approval of the project is in the public interest and that the project complies with all regulatory requirements.

Upon completion, the Halkirk I Wind Project will be Alberta's largest operating wind energy project with a total generating capacity of 150 MW. The project is located in Central Alberta in the County of Paintearth near the Village of Halkirk, approximately 275 km northeast of Calgary.

The Halkirk I Wind Project will provide substantial economic benefits to rural Alberta in the form of new jobs, increased tax revenues and royalties for landowners. The project will also have a significant positive impact on Alberta's environmental performance by supplying a clean source of electricity for approximately 50,000 homes, and reducing greenhouse gas emissions by 300,000 tonnes per year, equivalent to removing 60,000 cars from Alberta's roads.

Greengate Power Corporation is a privately held renewable energy project developer based in Calgary, Alberta. Focused on the development of quality wind energy projects in Alberta with access to existing transmission, Greengate is currently developing 1,550 MW of wind energy projects on approximately 200,000 acres of private land.