Posted on February 22, 2012
Glenn Zacher and Patrick Duffy -
In two appeal decisions released this past week, the Ontario Divisional Court rejected the application of the “prudent investment test” to forecast costs under collective bargaining agreements negotiated between a utility and its unionized employees.
The prudent investment test is a regulatory principle that was first articulated by Justice Brandeis of the United States Supreme Court in the 1923 decision of Southwestern Bell Telephone Co. v. Public Service Commission. The purpose of the prudent investment test is to protect utility shareholders in respect of past investments in large capital projects that later prove to be unnecessary. Because of the long lead times for constructing infrastructure projects, courts and regulators have ruled that it would be unfair to utility shareholders to assess the prudence of the investment with the benefit of hindsight. Instead, managerial prudence is initially assumed and any subsequent challenges are assessed on the information available to a utility’s management at the time the investment was made.
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Posted on January 16, 2012
Glenn Zacher -
Former Supreme Court of Canada Justice Ian Binnie once remarked on the role of expert witnesses that “the courtroom … is a poor school house and dueling experts may make bad teachers”.
The Ontario Energy Board (OEB) apparently sympathizes, having become one of the first administrative tribunals in Canada to introduce rules for expert witness “hot-tubbing”. Hot-tubbing (less colloquially, termed “concurrent evidence”) entails competing expert witnesses testifying together and being jointly questioned by the judge/tribunal, counsel and sometimes each other.
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Posted on November 7, 2011
Patrick Duffy -
The Ontario Energy Board has ordered that the transmitter licence for TransCanada Transmission (TCT) be amended to change the effective date to the earlier of: (i) the date on which TCT is designated as a developer of transmission assets in Ontario pursuant to a Board designation process: or (ii) the date on which TCT applies for approval to own and/or operate specific transmission facilities in Ontario.
The order is effectively a reversal of the Board’s earlier decision denying TCT an exemption to certain obligations under the Board’s Affiliate Relationships Code for Electricity Distributors and Transmitters (ARC). TCT was particularly concerned with a requirement in the ARC that prohibited it from sharing employees that have access to confidential customer information with other TransCanada affiliates. TCT argued that this requirement drove-up costs and was unnecessary as newly licenced transmitters do not yet have any customers in Ontario.
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Posted on October 31, 2011
Larry Cobb and Jim Harbell -
Beginning October 31, 2011, the Ontario Ministry of the Environment’s (the MOE) new online environmental approval application and self-registration system takes effect. As part of the MOE’s new risk-based approach for processing requests for environmental approvals, the new approvals system will focus on the potential risk that the activity in question poses to the environment and to human health.
An Environmental Compliance Approval (ECA) will replace a Certificate of Approval (C of A). Complex or higher-risk activities will follow the new ECA application process, while standardized or lower-risk activities will follow the Environmental Activity and Sector Registry (the EASR) registration process.
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Posted on September 28, 2011
U.S. and Canada-based environmental groups have filed a petition with the U.S. Secretary of the Interior under the Pelly Amendment, a statute that allows the U.S. President to impose trade restrictions against countries that engage in trade which diminishes the effectiveness of an international program to protect threatened or endangered species.
The petition claims that Canada has not put in place mechanisms in its oilsands regulatory regime that would prevent or mitigate harm to woodland caribou, whooping cranes and other species of migratory birds. The petition further claims that such omissions have diminished the effectiveness of international efforts to protect those species such as the Migratory Bird Convention of 1916 and the Western Hemisphere Convention of 1942.
Under the Pelly Amendment, the Secretary of Interior must now determine whether Canada’s actions have diminished the effectiveness of these international conservation efforts. If the Pelly Amendment application is certified by the Secretary of Interior, the President may direct the Secretary of the Treasury to prohibit any imports to the extent such prohibition is sanctioned by NAFTA or the World Trade Organization, and shall notify the U.S. Congress of any such actions.
Posted on September 28, 2011
In response to the increased water use in recovering shale gas deposits in the Montney Formation and Horn River Basin in northeast B.C., the province plans to amend its Water Act to provide for the licensing of groundwater, among other changes.
The responsibility for licensing water is now divided between the B.C. provincial government and the B.C. Oil and Gas Commission (OGC). Under the Water Act, the OGC may issue short-term water use approvals, while long-term water licenses are dealt with by the provincial government.
The OGC currently issues between 250 to 300 short-term, water use approvals per year. The application process for a short-term water use approval is about a month. In comparison, there are only about 10 long-term water licenses issued to the oil and gas industry, and the application process takes about a year to complete.
B.C. is the only province in Canada that still does not license groundwater. With the advent of horizontal well hydrofracking operations and its increased draw on water resources, amendments to the Water Act are a welcome response to the needs of a burgeoning sector.
Posted on September 28, 2011
The Canadian Association of Petroleum Producers (CAPP) recently issued Guiding Principles for Hydraulic Fracturing (hydrofracking) operations that emphasize public disclosure and the protection of water resources. CAPP President, Dave Collyer, stated that the guidelines are intended to address concerns regarding water use. The guidelines set a priority on recycling water for reuse and for public disclosures regarding the quantity of water used in hydrofracking operations.
In addition, the recommended practice of disclosing fracturing fluid additives is under development and will be released on CAPP’s website when finalized. Fluid additives range from various oil- and water-based alternatives to complex polymeric substances with a multitude of additives.
The guidelines are meant to apply in all jurisdictions and will complement existing and future regulatory requirements.
Posted on August 4, 2011
On July 21, 2011, the federal government announced a new plan to monitor air quality, biodiversity and water quality in the Canadian oilsands region in an effort to provide “hard science’ to reinforce the fact that the oilsands are being developed in a responsible manner. Water quality and quantity will be monitored in the lower Athabasca river. Air quality will be measured at 14 sites for a range of contaminants and those results will be combined with satelitte data. The plan will also examine the effects of contaminants and habitat disturbances on different species. The plan will integrate many monitoring components already in place, but will boost the number of monitoring sites over a greater geographic area with a specific focus on downstream and downwind impacts. Environment Minister Peter Kent indicated that the government will start to work with the province of Alberta and industry to implement the monitoring plan quickly.
Posted on August 2, 2011
On August 2, 2011, the Ministry of Energy directed the OPA to allow Suppliers under Ontario’s Feed-In Tariff (FIT) program to obtain a waiver of the OPA’s termination rights contemplated in section 2.4(a) of the FIT Contract.
Obtaining a waiver of this termination right is meant to expedite issuance of a Notice to Proceed (NTP) by reducing contractual termination risk and allowing Suppliers to procure financing for equipment orders.
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Posted on July 28, 2011
On July 18, 2011, The Environmental Review Tribunal (ERT) issued its highly anticipated decision in Erickson v Director, Ministry of Environment. The ERT found that the applicant in this case did not meet the burden of showing that the project will, more likely than not, cause serious harm to human health. However, the decision is by no means a conclusive endorsement of the safety of wind turbines.
The high-profile appeal alleged that Suncor’s Kent Breeze Wind Project (Project) posed negative human health risks as approved by the Minister of the Environment (MOE) under Ontario Regulation 359/09 (REA). Over 17 days between February 1 and May 26, 2011 the ERT heard testimony of leading experts from around the world on the potential health effects of wind turbines.
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Posted on July 18, 2011
Andrew Sullivan -
Beginning November 1, 2011, many wind and solar PV generators will be required to submit real-time meteorological and output data to the IESO.
The market rule amendment is part of IESO plans for renewable integration. As part of this integration, the IESO is seeking to implement centralized forecasting. Instead of providing energy forecasts, renewable facilities will be required to submit real-time, site specific data (“dynamic data”) to the IESO that will be used to produce variable generation forecasts provided by a third-party.
The requirements will apply to all wind and solar facilities connected to the IESO-controlled grid in addition to embedded non-market participants with an installed capacity over 5MW.
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Posted on June 9, 2011
Andrew Sullivan -
Angela Merkel’s collation government has pledged to decommission all of Germany’s seventeen nuclear reactors by 2022. This historic announcement comes in the wake of a global reaction to the events in Fukushima, Japan. The crippled reactors have caused many governments to rethink their nuclear strategy.
Before the Fukushima disaster, resurgence in the popularity of nuclear energy had been characterized as “the nuclear renaissance”. The industry had finally recovered from the Chernobyl disaster, over quarter-century before. Around the world, nuclear energy appeared to be a viable solution in the effort to reduce greenhouse gas (GHG) emissions. Globally, 2010 saw fourteen new reactors under construction, compared with three in 2005. That number will assuredly fall this year as governments rein-in their enthusiasm for nuclear energy.
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Posted on June 3, 2011
A new directive by the Ministry of Energy to the Ontario Power Authority will give hope to FIT program applicants in the Bruce and West of London areas. The OPA was instructed on June 3, 2011 to issue contracts for large projects within the Bruce to Milton Transmission project as part of the province’s FIT program. As a result of this directive, over 1,000 MW of renewable energy contacts are to be offered - up to 750 MW in the Bruce transmission area and up to 300 MW in the West of London area.
These new FIT contracts are available to projects already on the FIT Priority Ranking list for the Bruce or West of London transmission areas. The OPA has granted a five business day window for proponents to change connection points (though the project location cannot change). The change of connection window begins on June 6 and closes June 10, 2011 at 5:00 pm.
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Posted on May 27, 2011
Patrick Duffy -
In issuing an electricity transmitter licence to Chatham-Kent Transmission Inc. (CKT), the Ontario Energy Board made some important comments that will be of interest to any transmitters seeking to participate in the Board's upcoming transmitter designation process for the East-West Tie.
While the primary purpose of CKT's application was to own and operate a transmission line that will connect a wind generation facility within the Municipality of Chatham-Kent to the grid, CKT also indicated its longer term intention to participate in the Board's transmitter designation process. A number of intervenors questioned whether CKT had the financial and technical capability to qualify for a full transmitter licence and requested that the licence be limited to the specific facility proposed by CKT.
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Posted on May 27, 2011
Patrick Duffy -
In case with strong echoes of Rio Tinto Alcan Inc. v. Carrier Sekani Tribal Council, the Ontario Energy Board has recently denied a request from a group of twelve First Nations for intervenor status in a licensing application.
The application seeks licence amendments related to eight hydroelectric generating stations owned by AbitibiBowater. The amendments will facilitate the sale of the generating stations to Bluearth Renewables, which intends to take advantage of incentives for upgrades and expansions offered by the Ontario Power Authority's Hydroelectric Contract Initiative (HCI). The First Nations group requested intervenor status with the intention of exploring the adequacy of the Crown’s consultation efforts with respect to potential infringements of their Aboriginal rights. The group argued that the sale of these facilities to Bluearth would result in increased or expanded hydroelectric generation under the HCI, which would change water levels and flows and impact their ability to harvest wild rice.
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Posted on May 6, 2011
Patrick Duffy
In an oral decision made on May 5, 2011 the Ontario Energy Board granted an application by Ontario Waterpower Association (OWA) for an exemption from sections 6.2.4.1(e) and 6.2.18 of the Distribution System Code (DSC) for hydroelectric projects with a nameplate capacity of between 1 and 10 MW that are located on provincial Crown or federally-regulated lands.
Section 6.2.4.1(e) of the DSC requires a distributor (in this case Hydro One) to remove an applicant's connection capacity allocation if the applicant has not signed a connection cost agreement (CCA) within 6 months of receiving the allocation. The provision was introduced in the fall of 2009 to ensure that connection capacity was not tied up by projects that were not being pursued diligently. The Board found there was no evidence that the 28 hydroelectric projects at issue in the application were "laggards" and noted that such projects face unique challenges because of their site-specific nature and the extensive approval processes involved. Accordingly, the Board granted these waterpower projects an indefinite exemption to this requirement.
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Posted on February 14, 2011
The Ontario government announced on Friday that the province will not proceed with any proposed offshore wind projects until further scientific research is completed. The press release circulated mid-Friday afternoon noted that no renewable energy approvals for offshore projects have been issued to date, no new applications for offshore wind projects under the OPA’s FIT program will be accepted and current applications for such projects will be suspended.
To date only one off-shore wind project has been granted a FIT contract, although without the necessary renewable energy approval from the Ministry of Environment, the project will be unable to meet its obligations under such contract. Three additional off-shore wind projects are listed as awaiting connection tests under the FIT program; today’s announcement will see such applications suspended.
This announcement comes as the Ontario government is attempting to balance its commitment to renewable energy in the face of increasing public criticism of wind energy projects related to health and safety and environmental concerns.
Posted on February 2, 2011
On January 27, 2011, a three-member Joint Review Panel established by the federal Minister of Environment and the Alberta Energy Resources Conservation Board ("ERCB") released its Report on a review of TOTAL E&P Joslyn Ltd. ("TOTAL")'s Joslyn North Mine Project, a proposed oil sands surface mine that would begin production in 2017.
The Joint Review Panel expressed an intention to approve TOTAL's application subject to twenty conditions that pertain to environmental benchmarks, monitoring and planning, among other requirements. The conditions include submissions of a detailed tailings management plan two years prior to commencing operations to demonstrate TOTAL's ability to meet all of the requirements of ERCB Directive 074.
Starting 2012 onward, Directive 074 states that mining operators must capture 50 per cent of their annual production of "fines" suspended in tailings. It is interesting that recent tailings management plans submitted by current oil sands mining operators have been approved despite not meeting the criteria established by Directive 074.
Posted on January 25, 2011
The Alberta Energy Resources Conservation Board (“ERCB”) has closed the comment period regarding proposed reforms to the province’s well spacing framework for conventional and unconventional oil and gas reservoirs.
At present, Part 4 of the Oil and Gas Conservation Regulations (“OGCR“) specifies that the normal drilling spacing unit (“DSU”) for an oil well is one quarter section, and the DSU for a gas well is one section. An operator may apply to the ERCB to order a special DSU which amends the normal DSU’s size, shape or target area on a case-by-case basis.
ERCB’s Bulletin 2010-39 outlines the following four proposed reforms to Part 4 of the OGCR:
1. Remove Well Density Controls for Unconventional Gas Reservoirs
Well density controls will be removed for coal bed methane (“CBM”) and shale gas reservoirs, and for all gas zones to the base of the Colorado Group outlined in Schedule 13A of the OGCR. Existing holdings will require a spacing application to replace the current approved spacing.
2. Increase Baseline Well Densities for Conventional Gas Reservoirs
The baseline DSU for a gas well will be increased from one gas well to two gas wells per section. The increased baseline well density would only apply to lands that are not subject to previous spacing approvals.
3. Standardize Target Areas for Standard DSUs
Target areas for the placement of wells would increase in size so that the target area for the production of gas would be 150 metres from all boundaries of a section and the target area for oil would be 100 metres from the boundaries of a quarter section. Furthermore, references in the OGCR to corner target areas would be eliminated in favour of central target areas across the province.
4. Streamline Regulations regarding Well Spacing Applications
The special DSU application process will be eliminated in favour of operators establishing holdings under Part 5 of the OGCR to allow the operator flexibility to locate wells, increase well density, avoid surface obstructions and access seismic features outside of standard target areas.
Additionally, operators drilling on fractional tracts of land will not be required to apply for a special DSU if the fractional tract of land meets the OGCR’s criteria for a DSU.
In addition to the proposed reforms, the ERCB stated that it would explore increasing the baseline well density for oil pools from one well per pool per standard DSU to two wells per pool per standard DSU.
Posted on December 20, 2010
Lanette Wilkinson
In 2006, the Minister of Energy directed the Ontario Power Authority (the OPA) to develop an Integrated Power System Plan (the IPSP) that focused on creating a sustainable energy supply in the Province over the next twenty years. In 2007, an IPSP was introduced to the Ontario Energy Board (the OEB), but the hearings were subsequently suspended. On November 23, 2010, the Province released a long-term energy supply plan (the Plan) that is intended to address developments in technology, the uptake of renewable energy arising out of the Province’s feed-in tariff program (the FIT Program), and shifts in demographics and the economy since the release of the IPSP in 2007. A proposed supply mix directive based on the Plan has been posted on the Environmental Registry for a forty-five day comment period ending January 7, 2011, after which time the directive will be finalized and issued to the OPA. The OPA is to develop an IPSP to be submitted to the OEB for review. Once finalized, the IPSP will constitute the new system plan for the next 20 years and will be updated every three years as required by regulation. The Plan contemplates the following:
Eliminating Coal by 2014
The Province remains committed to eliminating coal generation by shutting down two units in Nanticoke in 2011 and converting Thunder Bay Generating Station and Atikokan Generating Station to respectively use natural gas and biomass by 2013. The Province is also considering accelerating the closure of the remaining six units of coal-fired generation (at Nantioke and Lambton) and converting these units to natural gas.
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Posted on December 20, 2010
Ashley M. Weber
The debate over Ontario’s feed-in-tariff Program (the FIT Program)was elevated to a new level in September, when Japan launched a dispute settlement proceeding against Canada at the World Trade Organization (WTO). On September 16, 2010, Japan filed a request for consultation with the WTO Dispute Settlement Body (DSB) regarding Canada’s measures relating to the domestic content requirements in the Ontario FIT Program. Less than two weeks later, the US and the EU followed suit and requested to be joined in the consultations. In its submission to the WTO, the EU argued that “[the] renewable energy generation sector is of key interest for the EU importers, exporters and investors" The US stated that, as a major innovator of renewable energy and related technologies, and as a primary source of Canadian imports of products used in the production of renewable energy, it has “substantial trade interests in these consultations.”While these requests for consultation represent the first of many steps in the WTO settlement dispute process, it nonetheless signals a desire by the challenging parties to push back on Canada’s domestic content requirements that they feel are having a negative impact on the export of their renewable energy products into Canada.
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Posted on December 17, 2010
On December 16, 2010, the National Energy Board (NEB) approved the application for the construction and operation of the Mackenzie Gas Project. The Project includes the 1,196 kilometer Mackenzie Valley Pipeline, three onshore natural gas fields and a 457 kilometer pipeline to carry natural gas liquids from near the coast of the Beaufort Sea to northwestern Alberta and onwards to southern markets. The NEB attached 264 conditions to the Project’s approval in areas such as engineering, safety and environmental protection. The NEB will monitor the Project throughout its lifespan to ensure these conditions are being met.
The NEB began hearing evidence in January 2006 on five applications filed by a number of parties, including lead partner Imperial Oil. The Board held over 58 days of hearing sessions in 15 communities throughout the Northwest Territories and northern Alberta.
To move forward, the NEB’s decision must now be approved by the Federal Cabinet. If the Project is approved, construction is expected to begin in 2014 and the pipeline is scheduled to be in operation by the end of 2018. If the Project proceeds, it will be the largest pipeline system to be constructed and operated in Canada’s north.
A news release was provided by the NEB concurrently with the reasons for their decision.
Posted on December 10, 2010
Following our report in November, as of December 2, 2010, Alberta's Bill 24, the Carbon Capture and Storage Statutes Amendment Act, 2010 has entered into force. Bill 24 requires the Alberta government to accept long-term liability for carbon dioxide (CO2) that is sequestered underground by way of carbon capture and storage (CCS) projects. The bill proposes that the government assume liability from project operators by becoming the owner of the captured CO2 once it is provided with data proving the stored CO2 is contained. The bill also clarifies the definition of pore space and creates a post-closure stewardship fund for the costs of ongoing monitoring and remedial work. Alberta is the first province in Canada to pass comprehensive legislation for CCS.
Posted on November 10, 2010
Cora Zeeman
As recently discussed on our securities blog, on October 27, the Canadian Securities Administrators (CSA) issued Staff Notice 51-333 – Environmental Reporting Guidance to provide guidance to reporting issuers on satisfying existing continuous disclosure requirements with respect to environmental concerns. Specifically, Staff Notice 51-333 is intended to assist issuers in determining what information about environmental matters needs to be disclosed by reporting issuers based on the requirements found in National Instrument 51-102 Continuous Disclosure Obligations (NI 51-102), National Instrument 58-101 Disclosure of Corporate Governance Practices (NI 58-101) and National Instrument 52-110 Audit Committees (NI 52-110).
The Ontario Securities Commission’s (OSC) nascent focus on investors’ concerns regarding climate change considerations has been apparent for some time. In February 2008, the OSC released Staff Notice 51-716 – Environmental Reporting, which outlined the results of a targeted review to determine the degree to which reporting issuers were adequately disclosing “environmental matters”. Meanwhile, in December 2009, the OSC published Staff Notice 51-717 – Corporate Governance and Environmental Disclosure, which detailed the OSC’s plans to enhance environmental and corporate disclosure requirements of reporting issuers.
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Posted on November 5, 2010
On November 2, 2010, despite prior approval by the British Columbia government, the Government of Canada denied approval of the Prosperity Gold-Copper Mine (the “Project”) proposed by Taseko Mines Ltd. (“Taseko”).
Taseko proposed a large open pit gold-copper mine 125-km south west of Williams Lake, British Columbia. In addition to the open pit mine, the Project proposal included an onsite mill and support infrastructure, a tailings storage facility, a 125-km long electrical transmission line, explosives factory and magazine and an access road. The mine site would cover a 35 square km area in the Fish Creek watershed, which drains into several other waterbodies in the surrounding area, including Taseko River, Fish Lake and Little Fish Lake. The development of the Project would result in the necessary destruction of Fish Lake, Little Fish Lake and portions of Fish Creek to allow for the tailings storage plan.
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Posted on November 3, 2010
The Alberta government has recently drafted legislation, Bill 24, Carbon Capture and Storage Statutes Amendment Act, 2010, 3rd Sess., 27th Leg., Alberta, 2010 which clarifies ownership of pore space and that would, if passed, make Alberta the first province in Canada to enact comprehensive legislation to regulate large-scale carbon capture and storage (CCS) projects. Under Bill 24, the Alberta government would own subsurface pore spaces where carbon dioxide is stored and would assume long-term liability for injected carbon dioxide once project operators provide data that the gas is contained. Bill 24 would also create a special fund financed by CCS operators that would pay for future monitoring of underground carbon dioxide storage sites and any necessary remediation.
The Alberta Energy Minister, Ron Liepert, emphasizes that Bill 24 would ensure Alberta is on track to reducing greenhouse gas emissions and would also help to double Alberta’s conventional oil recovery which will generate billions of dollars for the province. In particular, the Alberta Carbon Capture and Storage Development Council estimates that carbon captured and used in enhanced oil recovery could produce an additional 1.4 billion barrels of oil from conventional reservoirs generating up to $25 billion in provincial royalties and taxes.
Posted on September 21, 2010
On September 20th, 2010, the Ontario government began the process of updating the Long-Term Energy Plan (the “LTEP”). The LTEP was first introduced in 2006 and directs the development of new generation and transmission capacity in the Province. The 2006 plan led to the development of approximately 8,000 megawatts of new generation in Ontario. The new LTEP will incorporate the Province’s commitment to shutdown all coal-powered generating stations by 2014. The general public is invited to comment by answering a series of questions regarding demand, price, generation, transmission and conservation, on the Ministry of Energy website. The government will also conduct more formal consultations with key stakeholders such as utilities, environmental organizations, businesses, First Nations and Métis organizations, and consumer groups.
The end result of this consultation will be the issuance of a new Supply Mix Directive, which will be posted for comment on the Environmental Registry. Once the Minister of Energy finalizes and issues the Supply Mix Directive it will be used by the Ontario Power Authority to inform the development of the Long-Term Energy Plan which will be submitted to the Minister for approval and then submitted to the Ontario Energy Board for review. The Minister anticipates the LTEP will be finally approved in 2011.
Posted on August 6, 2010
A recent survey conducted by the Alberta Energy Resources Conservation Board reveals that public satisfaction with the regulator has declined over the past year.
Only 68 percent of people who reported a complaint to the board were happy with the way their dispute was resolved.
Darin Barter, a spokesman for the board, admits that the figure represents a significant drop from 83 percent in the year before. The survey also shows that public satisfaction with the board’s handling of complaints has fallen slightly from 97 to 94 percent; in addition, fewer companies are continuing to comply with flaring regulations.
Nevertheless, the survey does convey some good news: statistics indicate that the ERCB inspected a record number of energy facilities in 2009, which has led to an all-time low in pipeline leaks. Overall, companies are improving or remain consistent in complying with regulations.
Barter has promised that the ERCB will continue increasing the number of inspections, and that the board is considering changes to regulations in order to encourage companies to capture all natural gas produced.
Posted on August 5, 2010
On August 4 the Ontario Energy Board (OEB) issued a letter to stakeholders that sets out an overview of the consultation process that the Board intends to follow to implement the consumer protection provisions of the Energy Consumer Protection Act, 2010 (the ECPA). The ECPA was passed by the provincial legislature in May, but has not yet been proclaimed into force. A draft regulation under the ECPA was released on July 2. The OEB expects that certain provisions of its regulatory instruments, including the Electricity Retailer Code of Conduct and Code of Conduct for Gas Marketers, will need to be amended to bring them into line with the ECPA and the draft regulation. The Board will hold a stakeholder meeting on August 20 and has asked any stakeholder that wishes to participate to register by August 13.
Posted on July 28, 2010
On July 26 the OEB denied a request to stay the Green Energy Act assessments issued under Regulation 66/10. The request for a stay was made as part of a proceeding before the OEB to determine if the assessments are an unconstitutional indirect tax. The assessments were the subject of considerable publicity last spring when the C.D. Howe Institute issued a study concluding that the assessments were unconstitutional. The OEB stated that written reasons for the denial will follow. A date has not yet been set for a hearing on the merits of the constitutional challenge.
Posted on July 28, 2010
The Energy Resources and Conservation Board (“ERCB”) is responsible for the safe, responsible, and efficient development of energy resources in Alberta, including oil, natural gas, oil sands and coal. As part of this jurisdiction, the ERCB regulates approvals for the development and operation of carbon capture and storage (“CCS”) projects. The ERCB has answered some of the questions about how it will treat CCS project applications in Bulletin 2010-22, ERCB Processes Related to Carbon Capture and Storage (CCS) Projects.
Bulletin 2010-22 clarifies that the ERCB will use existing instruments to process applications for approval to develop and operate a CCS project, including the following (among others):
- key application requirements with respect to transportation of carbon dioxide (“CO2”) via pipeline and underground injection by well are set out in Directive 056: Energy Development Applications and Schedules and Directive 065: Resources Applications for Conventional Oil and Gas Reservoirs;
- the mineral rights owner must grant the applicant have the right to dispose of C02 into an underground geological formation;
- well classifications, completion, logging, and testing requirements for wells injecting CO2 are set out in Directive 051: Injection and Disposal Wells;
- monitoring, reporting and safety will be dealt with primarily through site-specific conditions on approval to be determined by the ERCB, as well as the Pipeline Regulation A.R. 84/2009, Directive 007: Volumetric and Infrastructure Requirements, Directive 017: Measurement Requirements for Upstream Oil and Gas, Directive 065 and Directive 071: Emergency Preparedness and Response Requirements;
- suspension, abandonment and reclamation will primarily be dealt with through the Pipeline Act, R.S.A. 2000, c. P-15, the Pipeline Regulation A.R. 84/2009 and Directive 020: Well Abandonment; and
- liability requirements and procedures are set out in Directive 001: Requirements for Site-Specific Liability Assessments in Support of the EUB’s Liability Management Programs and Directive 006: Licensee Liability Rating (LLR) Program and Licence Transfer Process.
The ERCB’s reliance on its existing instruments likely means that its past decisions with respect to acid gas disposal schemes will serve as a useful source for guidance on how the CCS project applications will be treated. For a recent example of such a decision, see Decision 2009‑073 + Errata, AltaGas Ltd. Applications for Two Pipeline Licences, an Amendment to a Facility Licence, and Approval for an Acid Gas Disposal Scheme, Pouce Coupe Field.
Posted on June 29, 2010
Lanette Wilkinson
On June 16, 2010, CSA Standards and the International Performance Assessment Centre for Geologic Storage of Carbon Dioxide (IPAC-CO2 Research Inc.) announced an agreement to develop Canada's first carbon capture and storage (CCS) standard for underground storage.
CCS is a process that involves the capture, transportation and injection of carbon dioxide emissions underground, which many believe is a promising technology to assist certain emissions-intensive industries to reduce CO2 emissions. Several large-scale projects involving CCS have been announced in recent years in Saskatchewan, Alberta and British Columbia.
The proposed standard focuses primarily on long-term underground storage of CO2. According to a representative of CSA Standards, the new standard will create guidelines for, and advance risk assessment expertise associated with, geological storage projects. As mentioned in our March post, risks associated with long-term storage include the reliability of injection and the effectiveness of ongoing monitoring and verification. In addition, the perpetual nature of storage also makes the siting of CCS important, including the specific geological characteristics of the proposed storage site and site-specific risks. The development of this standard represents an opportunity to promote careful site selection while also instilling public confidence in the reliability and safety of long-term storage and monitoring and verification. Ideally, the standard will contain important technical guidelines, while also remaining flexible enough to address site-specific characteristics, emerging technologies, and new information.
It is intended that the completed standard will be submitted to the Standards Council of Canada for recognition. If recognized, it could become the world's first formally recognized standard in underground storage.
Posted on June 17, 2010
Lisa McDowell
As reported in prior posts (most recently in April 2010), in 2009 the Alberta Government launched a competitiveness review of the 'New Royalty Framework' implemented by the Stelmach government only two years earlier. The results of that review, along with the Government of Alberta's policy response, were released in March, 2010 and the corresponding new royalty curves were to be provided prior to June, 2010.
As promised, on May 27, 2010, the Government of Alberta revealed its proposed changes to the base royalty curves for both conventional oil and gas, which are to take effect on January 1, 2011. The government also unveiled further initiatives, as a result of the competiveness review, intended to energize investment and encourage development of Alberta's unconventional and deep resource pools. The most significant of these initiatives are modifications to the Natural Gas Deep Drilling Program and the implementation of the Emerging Resources and Technologies Initiative.
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Posted on May 17, 2010
Glenn Zacher and Patrick G. Duffy
In a decision released on April 20, 2010, the Ontario Court of Appeal reinstated an Ontario Energy Board (OEB) decision that required Toronto Hydro-Electric System Limited (THESL) to obtain the approval of a majority of its independent directors before declaring a dividend. The decision is notable because it reinforces the unique obligations that distinguish regulated monopolies from private corporations and indicates that regulators have considerable latitude to intervene where a regulated company fails to meet those obligations.
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Posted on February 8, 2010
Martin Ignasiak and Katie Slipp
The Supreme Court of Canada, in a unanimous decision, significantly limited the discretion of federal "responsible authorities" under the Canadian Environmental Assessment Act (CEAA) to determine the scope of project subject to federal environmental assessment. In MiningWatch Canada v. Canada (Fisheries and Oceans), a proponent was proposing to construct and operate a copper and gold open pit mine in British Columbia. The entire project was subject to the provincial environmental assessment regime. Some components of the proposed project, including a tailings impoundment area, water diversion system and explosives storage and manufacturing area, required federally issued permits or authorizations. The federal Department of Fisheries and Oceans (DFO) determined that the scope of project for the purposes of federal assessment under CEAA was limited to these facilities.
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Posted on December 1, 2009
Matthew Synnott
The Alberta Land Stewardship Act (ALSA) was proclaimed on September 1, 2009. The ALSA is part of the Land-Use Framework (LUF), the Government of Alberta's initiative to transform Alberta's approach to land-use planning.
The land-use framework
The LUF was finalized in December 2008 after two years of consultation with representatives of the public, municipalities, Aboriginal peoples, industry and environmental groups. Directed at managing growth in a way that balances economic, social and environmental interests in public and private lands, the LUF provides a blueprint for land-use management and decision-making within Alberta. Specifically, the LUF incorporates seven strategies to improve land-use decision-making:
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Posted on September 30, 2009
U.S. House passes American Clean Energy and Security Act
Jason Kroft, Ruth Elnekave and Michael Lees
While Canadian market participants are understandably focused on our own emerging climate-change regulatory framework, it is important to keep up to date on U.S. developments and their potential implications for our markets and industries. This short article provides a high-level overview of key features of current U.S. federal legislative initiatives and their possible effects north of the border.
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Posted on August 5, 2009
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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Posted on August 5, 2009
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.
Posted on June 15, 2009
Patrick G. Duffy
In a recent Union Gas application, the Ontario Energy Board (OEB) confirmed that it retains inherent jurisdiction to review the operation of earnings share mechanisms even if the parties to a settlement agreement have not agreed to an explicit review procedure.
The issue arose in connection with the earning share mechanism that Union agreed to in its 2008 rate case. In the 2008 settlement, Union agreed to split 50/50 with ratepayers any return on equity that was more than 200 basis points over the return on equity calculated under the OEB's cost of capital formula. The 2008 settlement also provided an "off-ramp" in the event that Union's return on equity was more 300 basis points above the OEB's formula; if triggered, the provision required Union to bring application for review of the earnings share mechanism.
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Posted on May 1, 2009
Patrick Duffy and Mel Hogg
In our October 2008 Energy Update, we discussed the decision by the Ontario Energy Board (OEB) to limit its review of the adequacy of Aboriginal consultation in the Bruce to Milton leave-to-construct proceeding and defer certain issues to the environmental assessment process. The OEB noted in that decision that the area was devoid of "definitive guidance from the courts." The significance of this issue has been elevated since last October by the provincial government's new Green Energy Act, which contains many of the promises that are dependent upon the development and approval of new transmission lines.
Two companion decisions released by the British Columbia Court of Appeal in February 2009 -- Carrier Sekani Tribal Council v. British Columbia (Utilities Commission), 2009 BCCA 67 and Kwikwetlem First Nation v. British Columbia (Utilities Commission), 2009 BCCA 68 - provide some guidance in the area of Aboriginal consultation. In Carrier Sekani, the Court determined that British Columbia's utilities regulator has the jurisdiction and obligation to assess the adequacy of an applicant's consultation efforts; in Kwikwetlem, the Court found that this assessment should not be deferred to the environmental assessment process.
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Posted on October 31, 2008
Patrick G. Duffy
Electricity transmitters developing new transmission lines in Canada face considerable uncertainty over the duty to consult with Aboriginal communities. One of the outstanding issues is whether such consultations must be completed before transmitters can obtain regulatory approval for their projects. A recent decision from the Ontario Energy Board (OEB) indicates that the entire consultation process need not be completed before any regulatory approvals are granted, provided that the regulator is satisfied that a workable process is in place to address the concerns of Aboriginal communities.
The issue arose when an Ontario transmitter applied to the OEB for leave to construct for a 500 kV transmission line from Bruce to Milton. A number of intervenors argued that leave could not be granted until the duty to consult had been satisfied. In its September 15, 2008 decision, the OEB rejected these arguments and granted leave, making some significant findings in an area that, as it noted, is devoid of "definitive guidance from the courts".
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Posted on June 26, 2008
Patrick G. Duffy
The Ontario Divisional Court recently ruled in Advocacy Centre for Tenants-Ontario v. Ontario Energy Board that the Ontario Energy Board (OEB) has the authority to implement a low-income affordability plan as part of its rate-setting function.
The issue arose in an application to the OEB for approval a utility's gas distribution rates on a cost of service basis. One of the intervenors, the Low Income Energy Network ("LIEN"), requested that OEB include on the issues list whether the utility's residential rates should include a rate affordability assistance program for low-income consumers. A majority of the OEB rejected the issue on the basis that it was outside of the OEB's jurisdiction.
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Posted on November 16, 2007
Brad Grant and Kerri Howard
Background
On February 16, 2007, Lyle Oberg, Alberta's Finance Minister, announced the appointment of a six-member panel of experts to complete a review of Alberta's royalty and tax regimes with the goal of ensuring Albertans are receiving a fair share from energy development through royalties, taxes and fees. The Royalty Review Panel (the Panel), which was put in place to fulfill a promise made by Premier Ed Stelmach during the 2006 Progressive Conservative leadership campaign, included independent experts in resource taxation and the royalty system.
The Panel's review focused on all aspects of the oil and gas royalty system, including royalties with respect to oil sands, conventional oil and natural gas. Among the issues the Panel was asked to address were whether the Alberta royalty system is sufficiently sensitive to market conditions and whether the existing revenue minus cost system for oil sands royalties is appropriate given current industry activity.
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Posted on November 2, 2007
Glenn Zacher
On August 29, 2007, the Ontario Power Authority (OPA) filed its integrated power system plan (IPSP) with the Ontario Energy Board (OEB). The IPSP is mandated by Ontario's Electricity Act, which requires the OPA to develop a twenty year plan to assist, through the effective management of electricity supply, transmission, capacity and demand, the achievement of the provincial government's goals, as identified in its June 13, 2006 Supply Mix Directive (the Directive). The Directive, itself based on recommendations by the OPA, requires the OPA to develop a plan that reduces peak demand through conservation, increases Ontario's use of renewable energy, develops nuclear capacity to meet baseload requirements, maintains the ability to use natural gas at peak times and for high efficiency/value applications, provides for the replacement of coal fired generation and strengthens the transmission system to enable and facilitate these supply-mix goals.
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Posted on May 23, 2007
Patrick G. Duffy
In the first case of its kind, the Ontario Energy Board (the Board) has denied an application from the Association of Major Power Consumers of Ontario (AMPCO) to review a market rule amendment by the Independent Electricity Operator (IESO) adjusting the ramp rate multiplier. The decision will be of interest to participants in the Ontario market because it establishes a framework for the scope of the Board's jurisdiction in a rule amendment review, the breadth of documentary production required by the IESO, the allocation of the burden of proof in such applications, and the applicable test under the legislation.
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Posted on November 13, 2006
Glenn Zacher
On October 2, 2006, the Ontario Energy Board released its Report with Respect to Decision-Making Processes at the OEB, a document that is bound to stir debate. The report was prepared pursuant to the OEB's "efficiency agenda" and aims to reform the Board's adjudicative decision-making processes.
The Board states that the purpose of the reforms is to ensure that the Board's decision-making processes are transparent and open, while at the same time being "more focused on relevant issues, timely and results oriented." The Report proposes reforms in four areas:
- adjudicative hearings;
- pre-hearing processes;
- role of staff; and
- role of parties.
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Posted on March 14, 2006
Patrick G. Duffy
The Energy Law Update is prepared by the members of the Energy Group at Stikeman Elliott LLP and reports on issues affecting Canadian and International business.
The recent decision of the Supreme Court of Canada in ATCO Gas & Pipelines Ltd. v. Alberta (Energy & Utilities Board), 2006 SCC 4 could have important implications for the interaction of regulatory powers with the private property rights of a utility and limit the scope of a regulator's condition-making power. At issue was the authority of the Alberta Energy and Utilities Board to review the allocation of proceeds from the disposition of a discarded utility asset when approving the sale.
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