Alberta Utilities Commission Provides Much Needed Update on the Application Review Process During Approval Pause Period

On Tuesday, August 22, 2023, the Alberta Utilities Commission (AUC or Commission) released an announcement providing some much-needed clarity on the implementation of the Government of Alberta’s August 3, 2023 direction, that the Commission immediately pause approvals in respect of new renewable electricity generation projects over one megawatt until February 29, 2024, in order to facilitate an inquiry regarding policies and procedures for the development of renewable electricity generation. The AUC’s announcement comes almost three weeks after the Government of Alberta’s initial announcement of the Approval Pause.

Background

To recap, on August 3, 2023, the Government of Alberta announced the enactment of the Generation Approvals Pause Regulation through an order-in-council. The Regulation prohibits the AUC from issuing approvals under section 9 or 11 of the Hydro and Electric Energy Act, for new hydro developments or power plants that produce renewable energy during a period from August 3, 2023, to February 29, 2024. The Regulation does not impact amendment applications, letters of enquiry, time extensions, approval transfers, or final project updates for previously approved projects.

At the same time, the Government also directed the AUC through another order-in-council to conduct an inquiry into the development of electricity generation in Alberta. The terms of reference for the inquiry require the AUC to consider the following:

  • development of power plants on specific types or classes of agricultural or environmental land;
  • the impact of power plant development on Alberta’s pristine viewscapes;
  • mandatory reclamation security requirements for power plants;
  • development of power plants on lands held by the Crown; and
  • the impact of the increasing growth of renewables on Alberta’s generation supply mix and electricity system reliability.

The AUC is directed to hear from interested parties in conducting the inquiry and to provide the Minister of Affordability and Utilities with a report on its findings and observations by March 29, 2024.

On the afternoon of August 3, 2023, the AUC released an announcement asking stakeholders to provide feedback on three options for implementing the approval pause or to suggest alternative implementation options. The AUC presented the following three options:

  1. Complete abeyance: The AUC does not accept new applications during the pause period and all existing excluded applications will be placed in abeyance during the pause period with the AUC taking no further steps to complete their record or issue decisions.
  2. Partial abeyance: The AUC does not accept new applications during the pause period. For all existing applications with an incomplete record, the AUC process will proceed to the point where the written evidence is complete, applications will then be placed in abeyance until the pause period expires. The AUC will not hold any public hearings for these applications during the pause period. Existing applications with a complete record will be placed in abeyance until the pause period expires.
  3. Approval hold only: The AUC continues to fully process new and existing excluded applications without issuing any approvals until after the pause period.

Stakeholders had until August 18, 2023, to provide comments on these options or other options for implementation.

AUC Update Announcement

The AUC’s most recent announcement indicates it received nearly 600 stakeholder submissions regarding how it should implement the approval pause. The AUC concludes that it will continue to process both existing applications (applications that were filed before August 3, 2023) and new applications (applications that are filed between August 3, 2023, and February 29, 2024) up to the approval stage for new hydro developments and power plants that produce renewable electricity while the approval pause period is in effect. In doing so, the AUC seems to have adopted a slightly modified version of the process set out in Option 3 – Approval hold only.

Specifically, the AUC confirms it will continue to apply the current version of Rule 007: Applications for Power Plants, Substations, Transmission Lines, Industrial System Designations, Hydro Developments and Gas Utility Pipelines to all existing and new applications. However, in parallel with the inquiry, the AUC will supplement Rule 007 with new, interim information requirements relating to such issues as agricultural land, viewscapes, and reclamation security (i.e. topics included in the terms of reference for the inquiry). As a result, applicants may be required to respond to additional interim information requirements, which the AUC indicates will be issued shortly.

The AUC’s announcement does not definitively state that public hearings will (or will not) be held through the approval pause period. However, the wording of the announcement seems to imply that the processing of these applications all the way to the point of issuing an approval would include the completion of both the written record and a public hearing, where necessary. Specifically, the announcement states that “the AUC will develop the records for these proceedings to the greatest extent possible while the pause is ongoing, but no approvals will be issued until the pause period expires.” Unlike the wording used in Option 2 (partial abeyance) presented in the August 3, 2023, announcement, here the AUC does not distinguish between the written record and the overall record, nor does it specifically state it will not be holding any public hearings for these applications during the pause period.

In regard to the inquiry process, the AUC determined it will be adopting a “module” approach to address the issues identified in the terms of reference. The module approach has been previously adopted by the AUC in conducting an inquiry. For example, the AUC adopted a module approach during the Distribution System Inquiry (Proceeding 24116), which concluded in early 2021 and examined the need to modernize Alberta’s distribution system to realize benefits from advancing technologies. The AUC noted it is in the process of finalizing the process schedule for each module and will issue its process directions shortly.

Next Steps

Although there continues to be a certain level of uncertainty with respect to the impact of the results of the inquiry on current and future renewable energy development projects, with the AUC’s most recent announcement, the path forward for existing applications during the approval pause period has become slightly less murky. We anticipate the AUC will continue to issue further clarification in the next coming weeks, with respect to next steps in the processing of existing (and new) applications, including any additional interim information requirements, as well as a more detailed process for the inquiry. At that time, it is expected that stakeholders will have a clearer picture of when and how they can participate in the inquiry.

We will continue to monitor these developments closely. Our Environmental & Energy group has extensive experience providing advice on renewable energy developments and regulation by the AUC. If you have any questions regarding the implications of this pause and inquiry, please contact a member of the McLennan Ross Environmental & Energy group.