CCS proposals offer significant emission reductions

Ontario Global Adjustment Charge faces constitutional scrutiny as a regulatory charge vs tax; Court of Appeal revives case over electricity pricing, feed-in tariff contracts, IESO policy, and hydro rate impacts on consumers and industry.

Key Points

A provincial electricity fee funding generator contracts, now central to a court fight over tax versus regulatory charge.

✅ Funds gap between market price and contracted generator rates

✅ At issue: regulatory charge vs tax under constitutional law

✅ Linked to feed-in tariff, IESO policy, and hydro rate hikes

Ontario’s court of appeal has decided that a constitutional challenge of a steep provincial electricity charge should get its day in court, overturning a lower-court judgment that had dismissed the legal bid.

Hamilton, Ont.-based National Steel Car Ltd. launched the challenge in 2017, saying Ontario’s so-called global adjustment charge was unconstitutional because it is a tax — not a valid regulatory charge — that was not passed by the legislature.

The global adjustment funds the difference between the province’s hourly electricity price and the price guaranteed under contracts to power generators. It is “the component that covers the cost of building new electricity infrastructure in the province, maintaining existing resources, as well as providing conservation and demand management programs,” the province’s Independent Electricity System Operator says.

However, the global adjustment now makes up most of the commodity portion of a household electricity bill, and its costs have ballooned, as regulators elsewhere consider a proposed 14% rate hike in Nova Scotia.

Ontario’s auditor general said in 2015 that global adjustment fees had increased from $650 million in 2006 to more than $7 billion in 2014. She added that consumers would pay $133 billion in global adjustment fees from 2015 to 2032, after having already paid $37 billion from 2006 to 2014.

National Steel Car, which manufactures steel rail cars and faces high electricity rates that hurt Ontario factories, said its global adjustment costs went from $207,260 in 2008 to almost $3.4 million in 2016, according to an Ontario Court of Appeal decision released on Wednesday.

The company claimed the global adjustment was a tax because one of its components funds electricity procurement contracts under a “feed-in tariff” program, or FIT, which National Steel Car called “the main culprit behind the dramatic price increases for electricity,” the decision said.

Ontario’s auditor general said the FIT program “paid excessive prices to renewable energy generators.” The program has been ended, but contracts awarded under it remain in place.

National Steel Car claimed the FIT program “was actually designed to accomplish social goals unrelated to the generation of electricity,” such as helping rural and indigenous communities, and was therefore a tax trying to help with policy goals.

“The appellant submits that the Policy Goals can be achieved by Ontario in several ways, just not through the electricity pricing formula,” the decision said.

National Steel Car also argued the global adjustment violated a provincial law that requires the government to hold a referendum for new taxes.

“The appellant’s principal claim is that the Global Adjustment was a ‘colourable attempt to disguise a tax as a regulatory charge with the purpose of funding the costs of the Policy Goals,’” the decision said. “The appellant pressed this argument before the motion judge and before this court. The motion judge did not directly or adequately address it.”

The Ontario government applied to have the challenge thrown out for having “no reasonable cause of action,” and a Superior Court judge did so in 2018, saying the global adjustment is not a tax.

National Steel Car appealed the decision, and the decision published Wednesday allowed the appeal, set aside the lower-court judgment, and will send the case back to Superior Court, where it could get a full hearing.

“The appellant’s claim is sufficiently plausible on the evidentiary record it put forward that the applications should not have been dismissed on a pleadings motion before the development of a full record,” wrote Justice Peter D. Lauwers. “It is not plain, obvious and beyond doubt that the Global Adjustment, and particularly the challenged component, is properly characterized as a valid regulatory charge and not as an impermissible tax.”

Jerome Morse of Morse Shannon LLP, one of National Steel Car’s lawyers, said the Ontario government would now have 60 days to decide whether to seek permission to appeal to the Supreme Court of Canada.

“What the court has basically said is, ‘this is a plausible argument, here are the reasons why it’s plausible, there was no answer to this,’” Morse told the Financial Post.

Ontario and the IESO had supported the lower-court decision, but there has been a change in government since the challenge was first launched, with Progressive Conservative Premier Doug Ford replacing the Liberals and Kathleen Wynne in power. The Liberals had launched a plan aimed at addressing hydro costs before losing in a 2018 election, the main thrust of which had been to refinance global adjustment costs.

Wednesday’s decision states that “Ontario’s counsel advised the court that the current Ontario government ‘does not agree with the former government’s electricity procurement policy (since-repealed).’

“The government’s view is that: ‘The solution does not lie with the courts, but instead in the political arena with political actors,’” it adds.

A spokesperson for Ontario Energy Minister Greg Rickford said in an email that they are reviewing the decision but “as this matter is in the appeal period, it would be inappropriate to comment.” 

Ontario had also requested to stay the matter so a regulator, the Ontario Energy Board, could weigh in, while the Nova Scotia regulator approved a 14% hike in a separate case.

“However, Ontario only sought this relief from the motion judge in the alternative, and given the motion judge’s ultimate decision, she did not rule on the stay,” Thursday’s decision said. “It would be premature for this court to rule on the issue, although it seems incongruous for Ontario to argue that the Superior Court is the convenient forum in which to seek to dismiss the applications as meritless, but that it is not the convenient forum for assessing the merits of the applications.”

National Steel Car’s challenge bears a resemblance to the constitutional challenges launched by Ontario and other provinces over the federal government’s carbon tax, but Justice Lauwers wrote “that the federal legislative scheme under consideration in those cases is distinctly different from the legislation at issue in this appeal.”

“Nothing in those decisions impacts this appeal,” the judge added.
 

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India Coal Supply Rationing redirects shipments from high-inventory power plants to stations facing shortages as electricity demand surges, inventories fall, and outages persist; Coal India, NTPC imports, and smaller mines bolster domestic supply.

Key Points

A temporary policy redirecting coal from high-stock plants to shortage-hit plants amid rising demand

✅ Shipments halted 1 week to plants with >14 days coal stock

✅ Smaller mines asked to raise output; NTPC to import 270,000 tons

✅ Outages at Adani and Tata Mundra units pressure domestic supply

India will ration coal supplies to power plants with high inventories to direct more shipments to stations battling shortages, even as shortages ease in some regions, as surging demand outstrips production.

Supplies to plants with more than two weeks’ coal inventory will be halted for a week, a team headed by federal Coal Secretary Alok Kumar decided on Saturday, the Power Ministry said in a statement. The government has also requested smaller mines to raise output to supplement shipments from state miner Coal India Ltd., and is taking steps to get nuclear back on track to diversify the energy mix.

A jump in electricity consumption spurred by a reviving economy and an extended summer, after an earlier steep demand decline in India, is driving demand for coal, which helps produce about 70% of the nation’s electricity. The surge in demand complicates India’s clean-energy transition efforts amid solar supply headwinds that cloud near-term alternatives, and may bolster arguments favoring the country’s dependence on coal to fuel economic growth.

“There’s no doubt India will continue to need coal for stable power for years,” said Rupesh Sankhe, vice president at Elara Capital India Pvt. in Mumbai. “Plants that meet environmental standards and are able to produce power efficiently will see utilization rising, but I doubt we’re going to have many new coal plants.”  

Coal stockpiles at the country’s power plants had fallen to 14.7 million tons as of Aug. 24, tumbling 62% from a year earlier, according to the latest data from the Central Electricity Authority. More than 88 gigawatts of generation plants, about half the capacity monitored by the power ministry, had inventories of six days or less as of that date, the data show. Power demand jumped 10.5% in July from a year earlier, even as global electricity use dipped 15% during the pandemic, according to the government.
Outages at some large plants that run on imported coal have increased the burden on those that burn domestic supplies, aiding shortfalls.

Adani Power Ltd. had almost 2 gigawatts of capacity in outage at its Mundra plant in Gujarat at the start of the week, while Tata Power Co. Ltd. had shut 80% of its 4-gigawatt plant in the same town for maintenance, power ministry data show.

NTPC Ltd., the largest power generator, will import the 270,000 tons of coal it left out from contracts placed earlier to mitigate the fuel shortage, reflecting higher imported coal volumes this fiscal, the power ministry said in a separate statement.

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Baima Hydropower Station advances China renewable energy on the Wujiang River, a Yangtze tributary in Chongqing; a 525 MW cascade project approved by NDRC, delivering 1.76 billion kWh and improving river shipping.

Key Points

An NDRC-approved 525 MW project on Chongqing's Wujiang River, producing 1.76 billion kWh and improving navigation.

✅ 10.2 billion yuan investment; final cascade plant on Wujiang in Chongqing

✅ Expected output: 1.76 billion kWh; capacity 525 MW; NDRC approval

✅ Improves river shipping; relocation of 5,000 residents in Wulong

China plans to build a 525-MW hydropower station on the Wujiang River, a tributary of the Yangtze River, in Southwest China's Chongqing municipality, aligning with projects like the Lawa hydropower station elsewhere in the Yangtze basin.

The Baima project, the last of a cascade of hydropower stations on the section of the Wujiang River in Chongqing, has gotten the green light from the National Development and Reform Commission, China's state planning agency, even as some independent power projects elsewhere face uncertainty, such as the Siwash Creek project in British Columbia, the Chongqing Municipal Commission of Development and Reform said Monday.

The project, in Baima township of Wulong district, is expected to involve an investment of 10.2 billion yuan ($1.6 billion), as China explores compressed air generation to bolster grid flexibility, it said.

#google#

With a power-generating capacity of 525 MW, it is expected to generate 1.76 billion kwh of electricity a year, supporting efforts to reduce coal power production nationwide, and help improve the shipping service along the Wujiang River.

More than 5,000 local residents will be relocated to make room for the project, which forms part of a broader energy mix alongside advances in nuclear energy in China.

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CO2 Tax for UK Offshore Energy Efficiency can accelerate adoption of aero-derivative gas turbines, flare gas recovery, and combined cycle power, reducing emissions on platforms like Equinor's Mariner and supporting net zero goals.

Key Points

A carbon price pushing operators to adopt efficient turbines, flare recovery, and combined cycle to cut emissions.

✅ Aero-derivative turbines beat industrial units on efficiency

✅ Flare gas recovery cuts routine flaring and fuel waste

✅ Combined cycle raises efficiency and lowers emissions

By Tom Baxter

The recent Energy Voice article from the Equinor chairman concerning the Mariner project heralding a ‘significant point of reference’ for growth highlighted the energy efficiency achievements associated with the platform.

I view energy efficiency as a key enabler to net zero, and alongside this the UK must start large-scale storage to meet system needs; it is a topic I have been involved with for many years.

As part of my energy efficiency work, I investigated Norwegian practices and compared them with the UK.

There were many differences, here are three;

1. Power for offshore installations is usually supplied from gas turbines burning fuel from the oil and gas processing plant, and even as the UK's offshore wind supply accelerates, installations convert that to electricity or couple the gas turbine to a machine such as a gas compressor.

There are two main generic types of gas turbine – aero-derivative and industrial. As the name implies aero-derivatives are aviation engines used in a static environment. Aero-derivative turbines are designed to be energy efficient as that is very import for the aviation industry.

Not so with industrial type gas turbines; they are typically 5-10% less efficient than a comparable aero-derivative.

Industrial machines do have some advantages – they can be cheaper, require less frequent maintenance, they have a wide fuel composition tolerance and they can be procured within a shorter time frame.

My comparison showed that aero-derivative machines prevailed in Norway because of the energy efficiency advantages – not the case in the UK where there are many more offshore industrial gas turbines.

Tom Baxter is visiting professor of chemical engineering at Strathclyde University and a retired technical director at Genesis Oil and Gas Consultants

2. Offshore gas flaring is probably the most obvious source of inefficient use of energy with consequent greenhouse gas emissions.

On UK installations gas is always flared due to the design of the oil and gas processing plant.

Though not a large quantity of gas, a continuous flow of gas is routinely sent to flare from some of the process plant.

In addition the flare requires pilot flames to be maintained burning at all times and, while Europe explores electricity storage in gas pipes, a purge of hydrocarbon gas is introduced into the pipes to prevent unsafe air ingress that could lead to an explosive mixture.

On many Norwegian installations the flare system is designed differently. Flare gas recovery systems are deployed which results in no flaring during continuous operations.

Flare gas recovery systems improve energy efficiency but they are costly and add additional operational complexity.

3. Returning to gas turbines, all UK offshore gas turbines are open cycle – gas is burned to produce energy and the very hot exhaust gases are vented to the atmosphere. Around 60 -70% of the energy is lost in the exhaust gases.

Some UK fields use this hot gas as a heat source for some of the oil and gas treatment operations hence improving energy efficiency.

There is another option for gas turbines that will significantly improve energy efficiency – combined cycle, and in parallel plans for nuclear power under the green industrial revolution aim to decarbonise supply.

Here the exhaust gases from an open cycle machine are taken to a separate turbine. This additional turbine utilises exhaust heat to produce steam with the steam used to drive a second turbine to generate supplementary electricity. It is the system used in most UK power stations, even as UK low-carbon generation stalled in 2019 across the grid.

Open cycle gas turbines are around 30 – 40% efficient whereas combined cycle turbines are typically 50 – 60%. Clearly deploying a combined cycle will result in a huge greenhouse gas saving.

I have worked on the development of many UK oil and gas fields and combined cycle has rarely been considered.

The reason being is that, despite the clear energy saving, they are too costly and complex to justify deploying offshore.

However that is not the case in Norway where combined cycle is used on Oseberg, Snorre and Eldfisk.

What makes the improved Norwegian energy efficiency practices different from the UK – the answer is clear; the Norwegian CO2 tax.

A tax that makes CO2 a significant part of offshore operating costs.

The consequence being that deploying energy efficient technology is much easier to justify in Norway when compared to the UK.

Do we need a CO2 tax in the UK to meet net zero – I am convinced we do. I am in good company. BP, Shell, ExxonMobil and Total are supporting a carbon tax.

Not without justification there has been much criticism of Labour’s recent oil tax plans, alongside proposals for state-owned electricity generation that aim to reshape the power market.

To my mind Labour’s laudable aims to tackle the Climate Emergency would be much better served by supporting a CO2 tax that complements the UK's coal-free energy record by strengthening renewable investment.

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Southeast Alaska Energy Projects advance hydroelectric, biomass, and heat pumps, displacing diesel via grants. Inside Passage Electric Cooperative and Alaska Energy Authority support Kake, Hoonah, Ketchikan with wood pellets, feasibility studies, and rate relief.

Key Points

Programs using hydro, biomass, and heat pumps to cut diesel use and lower electricity costs in Southeast Alaska.

✅ Hydroelectric at Gunnuk Creek to replace diesel in Kake

✅ Biomass and wood pellets displacing fuel oil in facilities

✅ Free feasibility studies; heat pumps where economical

New projects are under development throughout the region to help reduce energy costs for Southeast Alaska residents. A panel presented some of those during last week’s Southeast Conference annual fall meeting in Ketchikan.

Jodi Mitchell is with Inside Passage Electric Cooperative, which is working on the Gunnuk Creek hydroelectric project for Kake. IPEC is a non-profit, she said, with the goal of reducing electric rates for its members.

The Gunnuk Creek project will be built at an existing dam.

“The benefits for the project will be, of course, renewable energy for Kake. And we estimate it will save about 6.2 million gallons over its 50-year life,” she said. “Although, as you heard earlier, these hydro projects last forever.”

The gallons saved are of diesel fuel, which currently is used to power generators for electricity, though in places with limited options some have even turned to new coal plants to keep the lights on.

IPEC operates other hydro projects in Klukwan and Hoonah. Mitchell said they’re looking into future projects, one near Angoon and another that would add capacity to the existing Hoonah project, even as an independent power project in British Columbia is in limbo.

Mitchell said they fund much of their work through grants, which helps keep electric rates at a reasonable level.

Devany Plentovich with the Alaska Energy Authority talked about biomass projects in the state. She said the goal is to increase wood energy use in Alaska, even as some advocates call for a reduction in biomass electricity in other regions.

“We offer any community, any entity, a free feasibility study to see if they have a potential heating system in their community,” she said. “We do advocate for wood heating, but we are trying to get a community to pick the best heating technology for their situation, including options that use more electricity for heat when appropriate. So in a lot of situations, our consultants will give you the economics on a wood heating system but they’ll also recommend maybe you should look at heat pumps or look at waste energy.”

Plentovich said they recently did a study for Ketchikan’s Holy Name Church and School. The result was a recommendation for a heat pump rather than wood.

But, she said, wood energy is on the rise, and utilities elsewhere are increasing biomass for electricity as well. There are more than 50 systems in the state displacing more than 500,000 gallons of fuel oil annually. Those include systems on Prince of Wales Island and in Ketchikan.

Ketchikan recently experienced a supply issue, though. A local wood-pellet manufacturer closed, which is a problem for the airport and the public library, among other facilities that use biomass heaters.

Karen Petersen is the biomass outreach coordinator for Southeast Conference. She said this opens up a great opportunity for someone.

“Devany and I are working on trying to find a supplier who wants to go into the pellet business,” she said. “Probably importing initially, and then converting over to some form of manufacturing once the demand is stabilized.”

So, Petersen said, if anyone is interested in this entrepreneurial opportunity, contact her through Southeast Conference for more information.

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BC Hydro Rate Increase proposes a 2.3% hike from April, with BCUC review, aligning below inflation and funding clean energy, electrification, and grid upgrades across British Columbia while keeping electricity prices among North America's lowest.

Key Points

A proposed 2.3% BC Hydro hike from April, under BCUC review, funds clean energy and keeps average bills below inflation.

✅ Adds about $2 per month to average residential bill

✅ Sixth straight increase below inflation since 2018

✅ Supports renewable projects and grid modernization

The British Columbia government says the province’s Crown power utility is applying for a 2.3-per-cent rate increase starting in April, with higher BC Hydro rates previously outlined, adding about $2 a month to the average residential bill.

A statement from the Energy Ministry says it’s the sixth year in a row that BC Hydro has applied for an increase below the rate of inflation, similar to a 3 per cent rise noted in a separate approval, which still trailed inflation.

It says rates are currently 15.6 per cent lower than the cumulative rate of inflation over the last seven years, starting in 2017-2018, with a provincial rate freeze among past measures, and 12.4 per cent lower than the 10-year rates plan established by the previous government in 2013.

The ministry says the “modest” rate increase application comes after consideration of a variety of options and their long-term impacts, including scenarios like a 3.75% two-year path evaluated alongside others, and the B.C. Utilities Commission is expected to decide on the plan by the end of February.

Chris O’Riley, president of BC Hydro, says the rates application would keep electricity costs in the province among the lowest in North America, even as a BC Hydro fund surplus prompted calls for changes, while supporting investments in clean energy to power vehicles, homes and businesses.

Energy Minister Josie Osborne says it’s more important than ever to keep electricity bills down, especially as Ontario hydro rates increase in a separate jurisdiction, as the cost of living rises at rates that are unsustainable for many.

“Affordable, stable BC Hydro rates are good for people, businesses and climate as we work together to power our growing economy with renewable energy instead of fossil fuels,” Osborne says in a statement issued Monday.

Earlier this year, the ministry said BC Hydro provided $315 million in cost-of-living bill credits, while in another province Manitoba Hydro scaled back an increase to ease pressure, to families and small businesses in the province, including those who receive their electricity service from FortisBC or a municipal utility.

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