Powell River Energy Inc. (PREI) is pursuing a May 30 request to the British Columbia Utilities Commission for an exemption related to hydroelectric facilities that it plans to upgrade.
The current exemption will expire in 2021, but PREI’s renewed energy supply contract with Catalyst Paper Corp. is likely to extend beyond 2021. PREI seeks to extend and update the current exemption, to accommodate the renewal of the 2016 PPA term beyond 2021, and to allow for possible simplification of the PREI corporate ownership chain so surplus power sales of PREI power may be undertaken by another wholesale marketing affiliate of PREI. Catalyst supports the exemption requested by PREI.
PREI owns and operates two hydroelectric stations – Powell and Lois – with an aggregate nameplate capacity of approximately 80 MW, and associated facilities and equipment used to generate and transmit electricity to Catalyst, all located in the vicinity of Powell River, British Columbia. PREI said it is undertaking upgrades to these facilities in 2016 and 2017 that will include equipment refurbishments and replacements, and unit overhauls. Following the completion of the upgrades, the generation capacity of the facilities is expected to be approximately 90 MW.
PREI delivers all of the electricity generated from these facilities to Catalyst’s nearby Powell River pulp and paper mill (PR Mill). The current PR Mill’s total electricity load is approximately 130 MW. Catalyst supplies the balance of the PR Mill’s electricity requirements from Catalyst’s on-site generation and BC Hydro. Under the terms of a 2016 PPA, PREI agreed to sell and Catalyst agreed to purchase all of the electricity generated by PREI at the facilities unless Catalyst reasonably expects a material reduction in the PR Mill load and reduces its scheduled deliveries in accordance with the agreement. PREI is also excused from its obligation to supply if Catalyst defaults in its purchase obligations under the agreement. When Catalyst does not take the available PREI generated electricity at the PR Mill, PREI may sell that surplus power to other participants in the wholesale electricity market or public utilities.
PREI and Catalyst had entered into a new PPA in 2011, replacing an expired 2001 PPA. The 2011 PPA had substantially similar terms as the 2001 PPA and included an option for Catalyst to extend the term of the 2011 PPA for five successive one-year terms commencing in February 2016. When the initial term of the 2011 PPA expired, PREI and Catalyst entered into the 2016 PPA on substantially similar terms, effective Feb. 1, 2016, to replace the 2011 PPA. The initial term of the 2016 PPA continues unti January 2021. The term will automatically renew for successive one-year terms afterwards unless either party terminates the agreement before the end of the then-current term.
As with the 2001 PPA and the 2011 PPA, the 2016 PPA commits PREI to sell all of the electricity generated at the hydrofacilities to Catalyst for use at the PR Mill to the extent that Catalyst can use the energy in its operations. PREI may only sell to others if Catalyst reduces its scheduled deliveries of available electricity following a material reduction in the PR Mill load or if Catalyst defaults in its purchase obligations under the agreement.
On Nov. 18, the commission sent to the provincial Minister of Energy and Mines a proposed approval of the Powell River application.