Demand-Side Management in B.C.: A Green Ratepayers’ Perspective

1. Demand-Side Managementin B.C.:A Green Ratepayers’ Perspective Presentation to the Fourth Annual BC Power Summit March 28-29, 2007 Vancouver, BC by William J. Andrews Barrister & Solicitor

2. SCCBC, BCSEA and PVEA • Sierra Club of Canada (B.C.) • is a non-profit organization of British Columbians from all walks of life who care about a broad range of environmental issues. • B.C. Sustainable Energy Association • is a non-profit association of citizens, professionals and practitioners committed to promoting the understanding, development and adoption of sustainable energy, energy efficiency and energy conservation in British Columbia. • Peace Valley Environment Association • is a registered non-profit society established in 1975 to preserve and protect the Peace River Valley and its watershed. In the early 1980s, the PVEA actively defended the integrity of the Peace River Valley in relation to the proposed Site C hydroelectric project.

3. Green ratepayers: • Many members of SCCBC, BCSEA and PVEA are ratepayers of BC Hydro and • want the electricity they purchase to be from a sustainable electricity system.

4. Legal interests of SCCBC, BCSEA & PVEA in energy regulation: • public interest advocacy organizations, and • BC Hydro ratepayers

5. Environmental groups and energy conservation in B.C. ‘go way back’ • 1982-83: BCUC re Site C (PVEA) • 1985: federal-provincial environmental assessment of West Coast Offshore Exploration (“Offshore Alliance”) • 1980s: advocacy by SPEC, WCELA (BC Hydro’s PowerSmart launched in 1989) • 1991: BC Hydro says Site C is shelved; cites reliance on PowerSmart, cogen, ResourceSmart and IPPs [www.wcel.org/4976/15/15_03.html] • 1990s: BCUC proceedings (BC Energy Coalition)

6. Environmental opposition to B.C. gas-fired electricity strategy • 2000-03: NEB-CEAA re GSX pipeline proposal, BC Hydro-Williams (GSXCCC) • 2003: BCUC re CPCN application for VIGP (GSXCCC-NCOC) • 2004-05: BCUC re BC Hydro-Duke Point electricity purchase agreement (GSXCCC-BCSEA-SPEC) • 2005: BCCA re applications for leave to appeal re Duke Point (GSXCCC-BCSEA-SPEC); BCH cancels DPP project

7. Re-regulation of BC Hydro • amendments to the Utilities Commission Act effective May 29, 2003 • BC Hydro must file plans under s.45(6.1) regarding • planned capital expenditures, • electricity acquisition, and • demand reduction

8. SCCBC, BCSEA, PVEA support for DSM, sustainable renewables • 2003-04: BC Hydro F06-F07 Revenue Requirements Application, 2004 Integrated Electricity Plan, 2004 Resource Expenditures and Acquisitions Plan (SCCBC) • 2005: BC Hydro 2005 Resource Options Report (BCSEA-SCCBC) • 2005: BC Hydro stepped rates NSP (BCSEA-SCCBC)

9. Recent and ongoing interventions in BCUC proceedings • 2006: BC Hydro F07-F08 RRA (SCCBC-BCSEA-PVEA) • 2006-07: BC Hydro 2006 IEP-LTAP (SCCBC-BCSEA-PVEA) • 2006: 38 EPAs from F2006 CFT (SCCBC-BCSEA-PVEA) • 2006: BC Hydro Conservation Research: Time of Use rates pilot (PVEA-SCCBC-BCSEA) • 2006: BC Hydro-Alcan LTEPA+ (SCCBC-BCSEA-PVEA) • 2007: BC Hydro Rate Design Application (SCCBC-BCSEA-PVEA)

10. One reason to care about DSM: • Climate change is a problem • Carbon dioxide emission is the biggest cause of climate change • Burning fossil fuels is the biggest source of carbon dioxide emission • Generating electricity is a major reason to burn fossil fuels • DSM reduces the need to generate electricity • Therefore, DSM mitigates climate change

11. Climate change is real • Intergovernmental Panel on Climate Change (IPCC) • Climate Change 2007: The Physical Science Basis: Summary for Policymakers • February 2007 • Contribution by Working Group 1 to Fourth Assessment Reportwww.ipcc.ch/SPM2feb07.pdf

12. Report describes: • human and natural drivers of climate change, • observed climate change, • climate processes and attribution, and • estimates of projected future climate change.

13. The energy balance of the climate system is altered by changes in: • atmospheric abundance of greenhouse gases and aerosols, • solar radiation, • land surface properties.

14. “radiative forcing” • = a measure of the influence that a factor has in altering the balance of incoming and outgoing energy in the Earth-atmosphere system • Positive forcing tends to warm the surface • Negative forcing tends to cool it • expressed in watts / square metre (Wm-2)

15. “Global atmospheric concentrations • of carbon dioxide, methane and nitrous oxide • have increased markedly • as a result of human activities since 1750, and • now far exceed pre-industrial valuesdetermined from ice cores spanning many thousands of years.”

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

17. Atmospheric concentrations of methane over the last 10,000 years

18. Atmospheric concentrations of N2O over the last 10,000 years

19. Global increases in CO2 concentration • due primarily to fossil fuel use and land-use change • due primarily to agriculture Global increases in methane and nitrous oxide concentrations

20. “Carbon dioxide is the most important anthropogenic greenhouse gas” • “Atmospheric concentration of carbon dioxide has increased from a pre-industrial value of about 280 ppm to 379 ppm in 2005. • The atmospheric concentration of carbon dioxide in 2005 exceeds by far the natural range over the last 650,000 years (180 to 300 ppm) as determined from ice cores.”

21. “The primary source of the increased atmospheric concentration of carbon dioxide since the pre-industrial period results from fossil fuel use, • with land use change providing another significant but smaller contribution.”

23. “The understanding of anthropogenic warming and cooling influences on climate • has improved since the 2001 Third Assessment Report (TAR), • leading to very high confidence • that the globally averaged net effect of human activities since 1750 has been one of warming, • with a radiative forcing of +1.6 [+0.6 to+2.4] W m-2.”

24. “Warming of the climate system • is unequivocal, • as is now evident from observations of increases in • global average air and ocean temperatures, • widespread melting of snow and ice, • and rising global average sea level.”

25. Changes in global average temperature

26. Changes in global average sea level

27. Changes in Northern Hemisphere snow cover

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

29. “Most of the observed increase in globally averaged temperatures since the mid-20th century • is very likelydue to the observed increase in anthropogenic greenhouse gas concentrations. • This is an advance since the 2001 Third Assessment Report’s conclusion that ‘most of the observed warming over the last 50 years is likelyto have been due to the increase in greenhouse gas concentrations’.”

30. “Discernible human influences now extend to other aspects of climate, including • ocean warming, • continental-average temperatures, • temperature extremes and • wind patterns.”

31. Black line = observed temperaturesPink = models of both natural and anthropogenicBlue = models of natural only

34. Global Surface Warming: observed and predicted Various scenarios Year 2000 constant concentrations

35. Connecting 6 billion dots… Billion

36. Billion

37. Billion

38. Billion

39. (Stabilization scenario) Billion

40. Global population: 0 to 2050 A.D. You are here http://www.un.org/esa/population/publications/sixbillion/sixbilpart1.pdf, p.5 http://www.census.gov/ipc/www/worldpop.html; http://www.census.gov/ipc/www/worldhis.html

41. Free-riders (Back to DSM in B.C.) …are not Free-loaders!

42. DSM, conservation and efficiency • Efficiency = less energy for same work • Conservation = less energy • Demand-side management = conservation & efficiency caused by a DSM program

43. Free-rider definition • From the perspective of a DSM program • aimed at inducing behaviour X (“X-DSM”), • a “freerider” is a customer • who does X during the X-DSM program • but would have done X without the X-DSM program.

44. Free-riders don’t count re X-DSM • In evaluating the X-DSM program, • add up the electricity saved by all customers who did X, • subtract the electricity saved by free-riders (who would have done X despite X-DSM), • to get the electricity saved by the X-DSM program.

45. Counting free-riders • How do you determine how many customers meet the definition of freerider (did X but would have done X without the X-DSM program)? • (estimation task: hypothetical but doable)

46. “Free-rider” concept has its place • Evaluating a single DSM program without counting energy savings by free-riders is correct and logical. • BUT…

47. But what about free-riders and… • Market transformation DSM programs? • Utility DSM programs other than X-DSM? • DSM programs other than same-utility DSM? • Personal conservation ethic?

48. ‘Free-riders’ and market transformation DSM • Objective is to be a catalyst • to spark popular consumer demand for X • to spark mainstream supply of X (cheap and accessible) • Ex. ‘seasonal LEDs’ • Free-riders are the objective

49. ‘Free-riders’ and other same-utility DSM programs • Individual DSM programs require general conservation awareness • Conservation awareness is created (in part) by utility education programs, plus the utility’s other DSM programs (A-DSM, B-DSM, C-DSM, etc.) • Free-rider who would have done X despite X-DSM might not have done X without utility’s conservation education and other DSM programs • Also, X-DSM might induce customer to do A, B or C even in the absence of A-DSM, B-DSM or C-DSM

50. ‘Free-riders’ and DSM other than same-utility DSM • Energy conservation is promoted by DSM activities by other utilities, conservation groups, government programs, media, schools, individuals • Cumulative, synergistic effects on conservation awareness • Is a utility that approves only DSM programs that meet financial tests without free-riders itself acting as a free-rider in relation to other DSM providers?