Canada

CA-6:British Columbia Energy Plan 2010 and BC Hydro Demand-Side Management programs

Policy Description

The Province of British Columbia has established a goal of achieving electricity self-sufficiency by 2016 of which 60% of supply will be met through energy conservation and efficiency.

Description

While this policy database focuses principally on federal policies, this provincial program was selected because it is considered to be one of the most successful and innovative programs in North America.

 

The Province of British Columbia has established a goal of achieving electricity self-sufficiency by 2016 of which 60% of supply will be met through energy conservation and efficiency. BC Hydro, is the third largest utility in Canada and generates nearly 80% of the electricity produced in British Columbia; about 90% of the generation mix is hydro.  BC Hydro is a publicly owned utility that has been providing demand-side management (DSM) programs to industry, under the auspices of the “Power Smart” brand, since the late 1989.  BC Hydro is  widely acknowledged as a leader in North America in successfully capturing DSM opportunities in this sector.  During this time, the program offerings to industry have been improved and modified to account for changing market dynamics. 

 

BC Hydro’s  current Power Smart industry DSM program portfolio comprises the following initiatives:

 

  • Transmission Service Rate (TSR) programs [1], [2], [3]:  In 2006, BC Hydro introduced an industrial Transmission Service Rate (TSR) for the large industrial customers served at transmission voltage levels. The TSR is a mandatory two tier rate to encourage energy conservation and efficiency and incremental customer self-generation.  The TSR is designed as an inclining block structure.  Tier 1 is the lower of the two rates and applies to 90% of the customer’s historic usage.  Tier 2 is a higher rate than Tier 1, applies to 10% of the customer’s historic usage and is priced to reflect BC Hydro’s long-run marginal cost of electricity supply. 

 

The Power Smart offering to TSR customers includes:

  • Co-funding for energy managers to identify and plan energy efficiency improvements at customer facilities (can be a customer’s employee or a 3rd party consultant working for an individual customer or for a small consortium of similar companies), 
  • Co-funding and technical support services for audits and studies to identify and prioritize energy efficiency opportunities,
  • Opportunity assessments for the adoption of a motor management plan and
  • Workshop and promotional services and materials to initiate and build behavioural and cultural changes within industrial organizations.

When the TSR was introduced in 2006, BC Hydro eliminated the financial incentives that had been available to help large industrial customers fund the implementation of DSM projects. However,  in 2008, financial incentives (in the form of granst that come with specified conditions) to co-fund customer DSM projects were re-introduced..    Eligibility for the financial incentives is for transmission rate class customers with an annual bill greater than $50,000.  The projects must be permanent facility upgrades with an expected lifespan of five years or more and project savings of at least 300 megawatt hours annually (or can be a bundle of small projects).

  • Programs for non-transmission rate customers [1]:  BC Hydro’s Power Smart program also offers DSM support for industrial customers that are not on the TSR .  This support includes:

 

  • Self-Serve Incentive Program for Distribution rate class customers with an annual Hydro bill greater than $20,000.  Customers are eligible to receive up to 75% funding for compressed air system (40 to 200 horsepower) or lighting retrofits.
  • Incentive program for Distribution rate class customers with an annual BC Hydro bill greater than $50,000. The eligible projects must be permanent facility upgrades with an expected lifespan of 5 years or more based on projected savings of at least 50 megawatt hours annually (projects can be bundled to meet minimum).  There is up to 75% funding available, up to $500,000.
  • Opportunity assessments: BC Hydro offers a range of DSM opportunity assessment support depending on the size of the customer bill.  For the smallest industrial customers (annual BC Hydro bill more than $50,000), BC Hydro will provide 100% funding for an energy expert to do a high level site investigation and identify areas for energy savings.  For customers with an annual system bill more than $50,000, the program offers up to 100% funding for an energy expert to conduct a system-specific energy assessment.   For this customer class, Power Smart will also offer up to 100% funding for an energy expert to conduct an in-depth study and evaluation of energy solutions within a single system and provide the cost/benefit details you need.
  • Energy management assessments:  BC Hydro offers two options for customers whose energy bill ranges between $50,000 and $200,000 per year.  The Energy Achiever ($50,000 - $200,000 annual BC Hydro spend) is a free one-hour on-site facilitated session that rates energy management across multiple criteria and presents an action plan for energy savings.  The “One-2-Five Energy” ($200,000 or more annual BC Hydro spend) is a free two-hour on-site facilitated session that rates energy management, benchmarks the site against others in the industry sector and presents an action plan for energy savings.

Policy Information Expand this section for information on the key features of the policy, such as its date of introduction, categorization, main objective(s) and linkages with other policies.

Policy Categorisation

Policy Instrument Type: Economic, Incentives & Subsidies, Information & Outreach

Position in the Pyramid

About Us

Participation: Mandatory

Period

Start Date: 2002

Agencies Responsible

BC Hydro

Primary Objective: Energy

Objective

­- To help the province of British Columbia achieve electricity self-sufficiency by 2016 ­- To develop and foster a conservation culture in B.C. that leads to customers choosing to make a dramatic and permanent reduction in electricity intensity ­- To enable BC Hydro to meet British Columbia’s electricity needs through domestic sources of power

Target Group

Industrial sector across all BC Hydro rate classes

Driver of energy consumption or emissions affected by policy: Total energy use / Specific energy consumption / Relative efficiency / Rate of change / Technology implementation rate / Knowledge level.

Implementation Information Expand this section for information on targets, monitoring, verification and enforcement regimes, and implementation requirements and tools.

Coverage

100% of the industrial sector

Quantitative Target? no

Progress Monitored? yes

Verification Required? yes

Enforced? no

Sanctions: Not applicable

Requirements on the Target Group

Program applicants must follow guidelines for submission of documentation and for verification of project implementation to trigger incentive payments.

Support by Government

BC Hydro’s Key Account Managers play a significant role in communicating the nuances of the Transmission Service Rate to their customers, while also supporting the adoption of the broader suite of DSM program offerings. 

Implementation Toolbox

- Technical support services for audits and studies

- Opportunity assessment for the adoption of motor management plans

Complexity of Implementation

Government

The Transmission Service Rate is a relatively complex rate and information is often required at multiple levels with customers so that they can optimize the benefits of the rate for their operations.

Target Group

The Transmission Service Rate is a relatively complex rate and information is often required at multiple levels with customers so that they can optimize the benefits of the rate for their operations.

Impacts, Costs & Benefits Expand this section to find information on policy effectiveness and efficiency.

Impact Quantitative Estimate Qualitative Estimate
Estimated effect on energy consumption or emissions ­- For the Transmission Service Rate: in fiscal 2010, reduction in purchased electricity of 38.2 GWh/year and a reduction in demand of 3.6 MW ­- For the Power Smart Partner Transmission Program as a whole, estimate of evaluated gross savings for the program of about 198 GWh for fiscal 2008 [3], 140 GWh for fiscal 2009 [3] - Customers value the educational and technical services offered under the PSP program (*4) - Energy managers are an important bridge between industrial customers and BC Hydro’s long-term DSM objectives [3]
Estimated costs/benefits for industry information not available
Estimated cost for government $418 million for BC Hydro DSM expenditures covering F2009, F2010 and F2011 (approved as part of the company’s Long Term Acquisition Plan LTAP by the B.C. Utilities Commission (BCUC)).

References & Footnotes

References

[1] BC Hydro web site- http://www.bchydro.com/powersmart/industrial.html?WT.mc_id=rd_industrial

[2] BC Hydro Rate Schedule Effective May 2011

[3] BC Hydro, F2011 Demand Side Management Milestone Evaluation Summary Report, December 2011

Footnotes

(*1) Note on Policy information: For the TSR rate

(*2) Note on Policy information: For all other DSM services

(*3) Industry is required to pay the carbon tax on the purchase and use of fossil. So, in this regard, the tax is an indirect inducement for investments in electricity DSM. Industry in the province will be seeking opportunities to reduce energy operating costs. BC Hydro is also required to pay the carbon tax on fuels used to generate electricity but, relative to overall operating costs this has a very small impact since electricity use in the province only accounts for 2% of total GHG emissions.

(*4) As determined from the process evaluation component of the annual program evaluation.