District of Saanich Correspondence: Changes in Provincial Legislation Needed to Address Gas Utilities in British Columbia

Re: Changes in Provincial Legislation Needed to Address Gas Utilities in British Columbia

I am writing to you to strongly reiterate the sentiments recently shared by the City of Richmond regarding the need to reform the BC Utilities Commission (BCUC) and enact legislation to regulate greenhouse gas emissions (GHGs) from gas utilities in BC.

The District of Saanich, the City of Richmond and other local governments across BC share the Province’s objective to achieve zero carbon communities by 2050. The Province of BC has demonstrated exceptional leadership with it’s CleanBC plan, and the District of Saanich applauds the many programs and policies that are already making a difference, as well as the regulatory commitments, such as the GHG Emissions Cap for Gas Utilities and the Highest Efficiency Equipment Standards that will have a meaningful impact on carbon reductions in the years ahead. Planning for the diminishing role of gas utilities in this province and establishing the policy and regulatory frameworks to guide that transition are critical to maintaining momentum and ultimately achieving our global and local climate targets.

On July 24, 2023, Council approved the Saanich Building Retrofit Strategy that will guide our community’s efforts to electrify our building stock and support other energy-related retrofits. Modelling undertaken to inform the strategy suggests that early and ambitious action at the municipal level is needed alongside Provincial regulations to achieve both Saanich’s community-wide GHG reduction targets and the Province’s legislated sectoral targets for Buildings and Communities, which commits to a 59-64% reduction below 2007 levels by 2030 and net-zero emissions by 2050. Given the Province’s critical role in achieving our shared vision, a key focus of Saanich's Building Retrofit Strategy is on advocacy for Provincial Policy and Regulation, and outlines the following two actions within that strategy area:

• AD1: Advocate for effective design and implementation of the Province’s GHG emissions cap for natural gas utilities; and,
• AD2: Advocate that the Province reform the BC Utilities Commission (BCUC) mandate and that the Province and utilities adopt an aligned energy plan.

The requests made by the City of Richmond succinctly summarizes the issues at play and the policy interventions that are needed to begin right-sizing and prioritizing the natural gas infrastructure in this province. While the District of Saanich does not operate or oversee district energy systems in our community and so does not have specific comments relative to those issues, we emphatically agree with all other requests and reiterate them as follows:

1. Bring forward legislation implementing the 2030 GHG cap on the gas sector without further delay as committed to in the Province’s CleanBC plan and recently affirmed by the Premier on March 14, 2023 with the launch of a new energy action framework.
2. Launch an independent gas utility planning exercise that plots a course for addressing an expected decline in throughput of gas grids and the transition of gas grids towards transporting RNG and hydrogen to sectors and/or locations that are hard to decarbonize, consistent with the Province’s 2030, 2040 and 2050 GHG emission reduction targets, all leading to the increased role of electrification in building heating and transport.
3. Reject the use of RNG and hydrogen in new construction to meet GHG limits in the Zero Carbon Step Code, so that the limited and costly supply of these alternative fuels can be put to highest and best uses. RNG volumes are very limited and RNG may be the only option for decarbonizing heavy industry and some portions of the transportation sector. There are affordable low-carbon alternatives for heating new buildings. Heating new buildings is not the highest and best use of limited RNG resources. In addition, prioritizing electric heat pumps over generating hydrogen gas from electricity is a more efficient use of BC’s electricity resources.
4. Develop policies to assess, certify and track the GHG intensity of RNG, hydrogen and other alternative gases. BC needs a robust and credible system for assessing the GHG intensity of renewable gases and ensuring these fuels do not contribute further to GHG emissions. Key issues include avoiding double-counting GHG credits and minimizing fugitive methane emissions.
5. Reform the BCUC in the context of a changing climate to consider, quantify and minimize the potential costs of lock-in and stranded investment risks when evaluating capital plans, rate setting and extension policies for gas utilities, including:
   • ensuring extension policies of gas utilities take into account reduced consumption and stringent GHG limits for new construction;
   • using different depreciation rates and allowable returns on equity for new investments commensurate with the uncertainty over the useful life and stranding risk;
   • ensuring non-pipe alternatives are adequately considered as alternatives to maintaining and/or upgrading gas infrastructure, including local decommissioning of gas infrastructure in favour of electrification;
   • considering provincial policy and credible independent studies into the future role of hydrogen when considering hydrogen or hydrogen-ready infrastructure; and
   • proceedings should be guided by a framework or set of guidelines that do not impact or limit the jurisdiction and authority of local governments without provincial direction.
6. Require that a minimum percentage of low-carbon methane-based fuels (i.e. up to 100%) be produced within BC. Currently there is no requirement that low-carbon gases be produced and procured within BC and as a result, FortisBC has sought out low-cost supply in other provinces and in the US. This may help reduce renewable gas prices, but it also limits the ability of BC workers to benefit from investments in new low-carbon gas production. Procuring out-of-Province gases is a risk because they are limited resources, and it is anticipated that net-zero state- or federal-level commitments in other jurisdictions are likely to affect long-term supply and prices for consumers in BC. Mandating that a minimum share of gas utilities low-carbon gases be produced within BC would also drive employment opportunities in BC and manage the impacts of the energy transition on BC’s workforce. The Climate Solutions Council identifies these issues as Opportunity #8: Minimizing Reliance on Offsets in their 2022 Annual Report.

We also note that some of these requests (#3, #5 and #6 above) are consistent with the recommendations of the Climate Solutions Council, an advisory group with a legislated mandate to advise the Minister of Environment and Climate Change Strategy on plans and actions needed to achieve climate targets under the Climate Change Accountability Act.

In addition to the above requests, Saanich wishes to add a further request related to BCUC reform as follows:

7. Reform the BCUC in the context of a changing climate to adopt a more holistic mandate that systematically considers GHG reduction and climate resilience outcomes in its decision-making processes, as well as accounts for the costs of inaction. Ensure that BCUC commissioners are knowledgeable, experienced and equipped to assess applications on the basis of these climate criteria.

We appreciate your due consideration and look forward to moving ahead towards our shared vision of bold and ambitious climate action in BC.

Sincerely,

Mayor Dean Murdock

Enclosures: Letter from City of Richmond entitled “Mayor Murdock – Changes in Provincial Legislation Needed to Address Gas Utilities in British Columbia”, May 25, 2023.

cc. District of Saanich Council Brent Reems, Chief Administrative Officer, District of Saanich Sharon Hvozdanski, Director of Sustainability & Strategic Initiatives, District of Saanich Malcolm D. Brodie, City of Richmond Mayor British Columbia Municipal Elected Officials