Updating the Hydro and Electric Energy Regulation: Alberta Reduces Filing Requirements for Power Projects

On March 6, 2024, the Alberta government proclaimed the Electricity Statutes (Modernizing Alberta’s Electricity Grid) Amendment Act, 2022 (ESAA). The ESAA amends associated statutes and regulations such as the Alberta Utilities Commission Act, Electric Utilities Act and Hydro and Electric Energy Act.  

As part of these changes, the Alberta Utilities Commission (AUC) published Bulletin 2024-04 to announce the coming into force of an updated Hydro and Electric Energy Regulation (HEER). The updates to the HEER will impact owners of, and applicants for, power plants, energy storage facilities, transmission lines and distribution systems. 

Background

A previous iteration of the ESAA was introduced to the Alberta Legislature on November 17, 2021, as Bill 86, Electricity Statutes Amendment Act, 2021. As we discussed at the time, through the new act, the government sought to modernize the Alberta electricity system in the context of rapidly evolving technology and recent AUC decisions and inquiry reports (see our December 2021 Blakes Bulletin: An Electricity System in Transition: The Electricity Statutes Amendment Act, 2021). As that bulletin outlines in detail, the ESAA introduces changes to support energy storage, distribution system planning and self-supply and export. 

The ESAA was reintroduced to the Legislature through Bill 22 in the spring of 2022 and has now been proclaimed into force. 

Changes to the Hydro and Electric Energy Regulation

Among other changes that generally reduce reporting and application requirements, the updated HEER modifies the application process for alterations of existing facilities in ways that will only be clear following revisions to AUC Rule 007, slightly eases the requirements for small and isolated facilities, and modifies connection requirements to support self-supply and export. Throughout, the HEER has been updated to explicitly reference energy storage.

Process for Alterations

Previously, sections 11 and 18.2 of the repealed HEER permitted a person to apply for “minor” alterations to a power plant, transmission line or electric distribution system via a Letter of Enquiry to the AUC rather than a full amendment application. No application at all was required if the “minor” alteration did not directly or adversely affect any person and did not have any adverse impact on the environment. 

Section 2 of the updated HEER does not refer to Letters of Enquiry or the undefined term “minor.” Instead, all alteration applications are to be made as outlined in AUC Rule 007, the AUC’s main procedural rule for facilities applications. Subsection 2(2) sets out additional criteria to be exempt from applying for an alteration. In addition to not adversely affecting any person or having an adverse impact on the environment, the alteration must comply with AUC Rule 012 and not require any change to the terms or conditions of an existing approval, permit or licence.

These changes do not align with the current language of Rule 007, but a consultation process for a new Rule 007 is expected to begin at the end of March 2024. This consultation may provide further clarity on the requirements for alterations.

Small Power Plants, Small Energy Storage Facilities and Isolated Generating Units

Previously, section 18 of the repealed HEER did not require an application for the construction and connection of “small power plants” (as defined in the HEER) if the construction or operation of the plant did not have an adverse effect on any person or the environment, the construction and operation of the plant complied with Rule 012, and the applicant had entered into an operating agreement with the owner or operator of a transmission line or distribution system to which the power plant was to connect.  

Now, under section 3 of the updated HEER, a person constructing or operating a small power plant no longer needs to have entered into an agreement with the owner or operator of a transmission line or distribution system. The application exemption now also applies to small energy storage facilities. A small energy storage facility is defined as an energy storage facility that consists of all the energy storage resources located at a site, that has a total capability of less than 1MW and is not owned by a distribution utility.  

The isolated generating unit provisions have also been updated to consider energy storage. Under section 4 of the updated HEER, an isolated generating unit’s energy storage capability must be considered part of its capacity when determining whether it qualifies for an exemption from application requirements.

Connection With Other Works

Finally, the updated HEER includes a new exemption from the requirement for connection orders for owners or operators of power plants, energy storage facilities, transmission lines or distribution systems. Unless the AUC directs otherwise, the owners and operators of such facilities can connect their works with the other works that they own and operate without a connection order. This exemption should facilitate self-supply and export as allowed under the ESAA. Notably, this exemption does not specify the property or properties on which these multiple works must be located, though existing prohibitions against private distribution systems in other legislation continue to apply.

Conclusion

As stated by the AUC, the updated HEER “aims to improve efficiency and reduce regulatory burden by eliminating outdated filing requirements.” These minor changes will function alongside myriad other changes that the Alberta government has announced or is contemplating for the province’s electricity regulation framework to significantly alter the considerations for power plant, energy storage facility, transmission line and distribution system owners and applicants. We will continue to monitor developments in this area.

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