June 14, 2023 By British Columbia Utilities Commission
Today, the British Columbia Utilities Commission (BCUC) released its Final Report for Phase 2 of its Inquiry into the Acquisition of Renewable Natural Gas by Public Utilities in BC (RNG Inquiry).
The BCUC established its RNG Inquiry in 2021 to examine several issues related to BC public utilities’ acquisition of RNG. The RNG Inquiry set out to determine a definition for RNG, how it can be acquired by public utilities, and how it can be delivered to utility customers, among other items.
The RNG Inquiry Phase 1 Final Report was released in July 2022 with the following key findings:
How is RNG acquired?
- RNG is acquired in each of these scenarios:
- when biomethane is acquired with its associated environmental attributes; and
- when conventional natural gas is acquired and an appropriate quantum of environmental attributes that are associated with the production of biomethane are acquired separately.
- Environmental attributes can be contractually transferred between parties, either together with the gas or separately.
- It is not practical for a public utility to physically deliver RNG to customers because once it is injected into the gas pipeline system it mixes with natural gas from other sources and becomes indistinguishable.
- Instead, RNG is notionally delivered to utility customers. Customers who purchase RNG receive physical units of natural gas + environmental attributes associated with the production of biomethane.
In Phase 2 of the RNG Inquiry, the BCUC further explored notional delivery, the role of environmental attributes, and other matters. Some of the BCUC’s key findings from the Phase 2 Final Report include:
Definition of RNG
- Bundling conventional natural gas + environmental attributes that arise from anything other than the production of biomethane does not satisfy the definition of RNG for the purpose of the Greenhouse Gas Reduction Regulation (GGRR).
- Lignin, synthesis gas, and hydrogen are not RNG.
- For the purposes of the Phase 2 Report, “abated gas” is conventional natural gas + environmental attributes arising from any source other than the production of biomethane.
- The carbon intensity of RNG is not part of the definition of RNG, and as a result, the BCUC has no jurisdiction to specify a requisite carbon intensity for RNG.
- The BCUC has jurisdiction over the verification, compliance, and enforcement of the purchase and sale of any carbon intensity attributes associated with RNG.
- Any compensation a public utility receives for selling a bundle of conventional natural gas + an associated environmental attribute is considered a rate.
- To ensure that the rate a public utility charges its customers for RNG or abated gas is not unjust, unreasonable, or unduly discriminatory, the public utility must be prepared to demonstrate an acceptable chain of custody for any environmental attributes.
Acquiring RNG from outside of B.C.
- RNG is acquired regardless of where the associated biomethane is produced.
The BCUC also made several recommendations regarding the acquisition of RNG by public utilities in BC. These recommendations include:
- The BCUC should establish quarterly reporting requirements for public utilities so the BCUC can verify the greenhouse gas emissions associated with sales of RNG and abated gas.
- The BC government should consider legislative changes to recognize abated gas that is derived from environmental attributes arising from processes that clearly fulfil the objectives of the Clean Energy Act (CEA), the 2030 Roadmap, and BC’s broader greenhouse gas reduction commitments.
- The BC government should make amendments to the GGRR to set a maximum carbon intensity threshold for low carbon resources.
- The BC government should consider whether gas marketers be provided the flexibility to offer RNG as an optional product to their customers.
The BCUC initiated the RNG Inquiry in 2021 following its review of a biomethane purchase agreement (BPA) between FortisBC Energy Inc. (FEI) and Shell North America (Canada) Inc. (Shell). The BCUC determined that the BPA between FEI and Shell qualified as a prescribed undertaking under BC’s CEA and GGRR, by Order E-14-21. The CEA and GGRR set out BC’s clean energy objectives and legislative framework.
The BCUC noted that the FEI-Shell BPA proceeding raised several issues regarding public utilities’ acquisition of RNG. In particular, the BCUC noted that there are no definitions of RNG or environmental attributes in the GGRR or CEA. Further, it is not clear whether natural gas paired with an environmental attribute is RNG. Therefore, the BCUC considered it valuable to have definitions of RNG, biogas, biomass, and environmental attributes for the BCUC to use in future proceedings considering RNG contracts.
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