To Rule 007 and Beyond: Advancements in Renewable Energy Policy

The Alberta Utilities Commission (Commission or AUC) recently announced the first steps it would be taking in response to updated government policy regarding renewable energy projects. This announcement closely coincides with the end of the Approval Pause on renewable energy projects stemming from the Generation Approvals Pause Regulation and the subsequent policy advice provided by the government set out in the letter from the Minister of Affordability And Utilities to the AUC dated February 28, 2024.

On May 2, 2024, the AUC issued Bulletin 2024-08 which sets out the first steps the AUC is taking to facilitate changes related to renewable energy projects, namely; the introduction and immediate implementation of enhanced interim information requirements; as well a review of AUC Rule 007: Applications for Power Plants, Substations, Transmission Lines, Industrial System Designations, Hydro Developments and Gas Utility Pipelines, including specific topics that will be considered during the consultation process.

On May 23, 2024, the AUC issued Bulletin 2024-09, providing an update on the Rule 007 consultation sessions, including that due to the high level of interest it would be adding an in-person consultation session on July 10, 2024 at its Calgary office.

Our summary of the AUC’s process for the Rule 007 review, including highlighting some of the topics of discussion as well as brief overview of the enhanced interim information requirements is set out below.

Rule 007 Review

Pursuant to Bulletin 2024-08, the Rule 007 review includes a series of oral and written consultations on specific topics.

Oral consultation on power plant applications, including renewables and energy storage facilities took place virtually between May 29 to June 4, 2024. The AUC held one session focused specifically on municipal issues on June 4, 2024, with an additional in-person session scheduled to take place on July 10, 2024, at the AUC’s Calgary office.

Additionally, the AUC has established a written process to gather input and feedback on the following topics:

• methodology for visual impact assessments;
• the draft municipal engagement form; and
• the appropriate value for field of view in glare assessment for solar power plant applications.

The written consultation period is open until September 3, 2024.

Bulletin 2024-09 includes an Appendix which sets out in detail the potential topics for discussion during both the in-person and written consultation, including specific questions related to each topic. These topics include:

• approval renewal requirements, including time limits for power plant applications;
• approval transfers;
• agricultural land;
• land suitability; and
• appropriate setbacks from residences and other important infrastructure for renewable power plants.

A review of the topics for discussion provides some indication of potential changes to Rule 007. For example, one of the topics for discussion is related to changes to the process for approving time extension applications to complete construction of a project. Currently, Rule 007 does not include any specific criteria for assessing time extension applications or limiting the number of extensions granted or the length of time an extension may be granted.

Based on the discussion points listed in the Appendix to Bulletin 2024-09, it is clear the AUC is considering changes to Rule 007 that would set out a specific process, including the factors to be considered, when determining whether to grant a time extension application. The introduction of more stringent requirements for time extension applications could have a significant impact on renewable energy project operators (and applicants) given the ongoing supply chain issues and other sources of potential delay.

Notably, the AUC indicates the Rule 007 review is not limited to the topics identified in Bulletin 2024-08 and that it will accept feedback on and consider other aspects of Rule 007, including comments on any ambiguities, requested clarifications, or opportunities for increased efficiency.

Enhanced interim Information Requirements

In addition to the Rule 007 consultation, the AUC also announced enhanced interim information requirements for applicants of renewable energy projects. In September 2023, the AUC issued interim Rule 007 information requirements (Interim Requirements) for new power plant applications (see Bulletin 2023-05).

The Interim Requirements were directed at four topics: agricultural land, viewscapes, reclamation security and municipal land use. On February 28, 2024, the AUC announced the Interim Requirements would continue to be in effect for all current and prospective applications (see Bulletin 2024-03).

The latest announcement provides that in addition to the Interim Requirements, all power plant applications will be required to submit further information for reclamation security, specifically:

• A report prepared by a third party estimating the costs of reclaiming the proposed project. The report must include the estimated salvage value of project components; and
• An explanation of why the chosen form of security was selected, having regard to its attributes and priority in bankruptcy, including how the secured party would be able to realize on the reclamation security should the project owner and operator be in default.

All new power plant and energy storage facility applications filed on or after May 2, 2024, must satisfy existing Rule 007 requirements and the enhanced interim information requirements set out above.

Next Steps

The AUC intends to retain an external expert to propose a methodology for visual impact assessment, to be completed in the summer of 2024. The AUC will consider the expert’s proposed methodology, along with any alternate methodologies or comments submitted by external parties through the written process which are due September 3, 2024.

After the consultation process is completed, the AUC will prepare a blackline version of Rule 007 and post it on its AUC Engage page for written feedback.

We will continue to monitor the Rule 007 review process closely. MR’s Environmental & Energy group has extensive experience with renewable energy developments and regulation by the AUC. If you have any questions regarding participation in the inquiry, please contact a member of the McLennan Ross Environmental & Energy group.