BC Hydro’s future energy procurement practices for projects in British Columbia

In September of 2010, BC Hydro retained Merrimack Energy Group Inc. to conduct an independent review of its energy procurement practices. BC Hydro is in the process of adopting the majority of the recommendations. Both the report and BC Hydro’s response to the recommendations are available for viewing on BC Hydro’s website at http://www.bchydro.com/planning_regulatory/acquiring_power/how_power_is_acquired.html.

Merrimack is recommending the following:

1. Link the Integrated Resource Planning (IRP) process and procurement activities, (i.e. the timing and level of need for new resources should be determined through the IRP process)
2. Make the energy procurement process more transparent for all stakeholders and First Nations
3. Implement smaller but more frequent energy procurements in the future which are linked to the IRP
4. Continue to follow the recent trend in BC Hydro’s procurements, combining or mixing procurement vehicles to match the type of overall solicitation being implemented
5. For larger procurement processes, utilize a multi-stage evaluation process
6. Develop standards for evaluating and negotiating bilateral contracts and make the standards transparent to stakeholders.
7. Consider creating an Advisory Group comprised of nonsupplier stakeholders and First Nations to advise BC Hydro on procurement activities.
8. Complete financial analysis, in collaboration with stakeholders and First Nations, to assess if more flexible contract provisions, which shift less risk to the supplier
9. In the process of integrating BC Hydro and BCTC, assess how other utilities are addressing these issues

BC Hydro has expressed agreement with the above recommendations, except #7.

BC Hydro is a crown corporation with operates 30 hydroelectric facilities and three natural gas-fueled thermal power plants and generates between 43,000 and 54,000 gigawatt hours (GWh) of electricity annually, depending on prevailing water levels. BC Hydro’s energy policies are laid out in the 2007 BC Energy Plan. Several elements and targets included in that plan were updated in the Clean Energy Act of 2010.