Canadian Energy Law : Lawyers & Attorneys for Environmental Energy Law

Matthew Synnott

A recent application within the SemCAMS ULC (SemCAMS) Companies' Creditors Arrangements Act (Canada) (CCAA) proceeding considered a claim for set-off by Trilogy Energy LP (Trilogy) against SemCAMS.¹

SemCAMS was the operator of four natural gas processing plants and gathering lines in Alberta (each, a "Facility" and collectively, the "Facilities").  Most of the Facilities were jointly-owned, with SemCAMS being an owner and the operator of each of the Facilities pursuant to a number of Construction, Ownership and Operation Agreements (CO&Os).  As operator, SemCAMS maintained the facilities, gathered and processed natural gas on behalf of its co-owners and collected funds in respect of capital fees and operating expenses on behalf of the joint account for each Facility.  For each Facility, the respective joint owners were each entitled to a share of the Facility's throughput capacity, with excess capacity being allocated first to the Facility's respective joint owners and second to third parties on a fee for processing basis. 

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Annie Pyke

On July 10, 2009, the Ontario Power Authority (OPA) released updated rules (Program Rules) for the Feed-In Tariff Program (FIT Program). The purpose of the FIT Program is to promote the development of renewable energy sources within the province of Ontario through the creation of a standardized application and approval process for renewable electric generation. The FIT Program is an important element of the Green Energy and Green Economy Act (GEA). The following briefly highlights the basic FIT structure and significant revisions to the Program Rules.

The basic eligibility requirements for the FIT Program are that the facility must: (i) be a new or incremental generating facility; (ii) be located in Ontario; and (iii) generate electricity from one or more of: wind, solar (photovoltaic), landfill gas, waterpower, biogas, or renewable biomass. A new requirement is that applicants must also provide evidence of the necessary title and access rights to construct the project (the "Access Rights," as defined in the Program Rules), which is more detailed than the previous requirement of "Demonstrated Location Access." The Program Rules also move the requirement that applicants give evidence of resource assessment/planning and Renewable Energy Approval from the application stage to the FIT Contract stage.

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Glenn Zacher and Patrick Duffy

The Ontario Divisional Court recently dismissed an appeal by Great Lakes Power Limited (GLP) of a decision of the Ontario Energy Board, in which the Board refused to allow GLP to collect nearly $15 million that GLP voluntarily deferred between 2002 and 2007, but that had never been subject to a prudency review by the Board.

The roots of the appeal stretch back to GLP's 2002 distribution rate application. That application was premised on a forecast revenue requirement of $12.7 million, but to avoid "rate shock," GLP sought to recover only $9.8 million and defer the rest of its revenue requirement for recovery beginning in 2005.   The Board granted an interim order approving GLP's requested rates, but due to the passage of Bill 210 in late 2002, a full hearing was never conducted. Bill 210 deemed interim orders to be final and imposed a rate freeze on distributors.

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April Kosten

On October 25, 2007, Alberta Premier Ed Stelmach announced the New Royalty Framework (New Framework) to be implemented on January 1, 2009. The government stated that the purpose of the New Framework was to give future generations of Albertans a share in the development of resources, to provide stability and predictability to the oil industry, and to assure investors that Alberta would remain an internationally competitive and stable place to do business. Government analysts projected that royalties would increase by approximately $1.4 billion in 2010, a 20% increase from revenues under the prior regime.

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Ruth Elnekave

The Pacific Carbon Trust has delivered its first 34,370 tonnes of emissions offsets to the provincial government through investments in new energy technologies.
The Trust, a Crown corporation established in 2008 as part of the province's Climate Action Plan, purchases carbon offsets on behalf of public-sector organizations and other clients, including businesses and individuals. Under the Plan, all public-sector organizations are required to achieve carbon neutrality by 2010.

Offsets purchased by the Trust must be generated through B.C.-based activities that demonstrate real GHG emission reductions or removals that would not have occurred without the revenue from the purchases, and reductions must be verified by an objective third party.

The Trust has a goal of acquiring over 700,000 tonnes of offsets annually by 2011. To date, it has agreed to acquire offsets from fifteen facilities, including greenhouses, a cement plant and a developer of hybrid heating systems.

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Ruth Elnekave

On July 23, 2009, the Voluntary Carbon Standard (VCS) Association announced that it will no longer require projects located in Canada to demonstrate that Voluntary Carbon Units (VCUs) issued to the project would cancel out a corresponding number of compliance units under the Kyoto Protocol, known as Assigned Amount Units (AAUs). This requirement eliminates the risk of double counting that occurs when a project in a particular country sells emission reductions and thus "frees up" AAUs that the government can then sell.

"The VCS Board concluded that this requirement is not applicable to Canada because there is no regulatory framework to implement the Kyoto Protocol, none is likely to emerge, and the country is unlikely to achieve its Kyoto Protocol reduction commitment," the VCS reported.

To date, Canadian projects have not been able to generate VCUs. The action is expected to enhance access to global carbon finance markets and provide incentives for the development of, and investment in, GHG reduction and removal projects in Canada.

The VCS is an internationally recognized standard for voluntary carbon offsets, providing a framework with additionality and baseline-setting requirements, as well as a registry system for buyers and sellers to track VCUs.

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Ruth Elnekave

Canadian industrial emitters of greenhouse gases (GHGs) have until June 1, 2010 to report their 2009 GHG emissions. Data collected will be used to create a domestic GHG inventory, harmonizing emissions reporting across Canadian jurisdictions. The reporting deadline, which was established by Environment Canada, applies to facilities that emit over 50,000 tonnes of CO2 equivalent per year, replacing the 100,000 tonne threshold that has been in effect since the introduction of the Greenhouse Gas Emissions Reporting Program in 2004.

The reporting deadline is an element of the federal government's efforts to develop regulations aimed at combating GHGs. Environment Minister Jim Prentice has indicated that regulations will be unveiled prior to December's climate change talks in Copenhagen. As reported in our June 2009 Energy Law Update, the government has published guidelines for a domestic offset program that will form part of Canada's proposed cap-and-trade system, but has yet to develop sector-specific regulations for regulated entities.

Reporting facilities must keep copies of the required information, along with calculations, measurements and other underlying data, in Canada for a three-year period from the required date of submission. Reporting requirements are detailed in the Canada Gazette Notice for 2009 Emissions.

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