On July 5, 2019, SaskPower published its 2018-19 Annual Report (aptly titled: Navigating A Changing Energy Landscape), opening with a clear statement of its innovation and evolution:
"Throughout the world, disruption and innovation are rapidly transforming the way we create, supply and use electricity. In Saskatchewan, SaskPower is responding by driving toward advancements that ensure a reliable, cost-effective, flexible and environmentally sustainable electricity system. To be successful, we'll need to meet changing customer needs and expectations while focusing on our goal of reducing greenhouse gas emissions by 40% from 2005 levels by 2030. In 2018-19, we continued to take steps to further add low-emitting and renewable generating sources, strengthen our grid, and offer customers the opportunity to participate in our province's electricity system. And as we look forward to navigating a changing energy landscape, we'll continue to partner with our customers and the communities we serve to make sure we're all well-positioned for a bright future."
As SaskPower continues innovating and evolving Saskatchewan's electricity system, McKercher LLP continues to serve and counsel the many stakeholders participating in that evolution, including local, national and international independent power producers, Saskatchewan First Nations, EPC companies and financial companies.
In this update, Christopher J. Masich, a lawyer and Partner who leads McKercher LLP's renewable energy practice, overviews the implications of The Power Corporation Act and the opportunities and challenges for individuals and companies other than SaskPower to generate electrical energy in Saskatchewan.
SaskPower's Exclusive Monopoly
Except for historical exceptions unique to Saskatchewan's early settlement history, by The Power Corporation Act SaskPower maintains an exclusive monopoly over the supply, transmission, distribution and sale of electrical energy in Saskatchewan. Notwithstanding such exclusivity, approximately one-quarter of Saskatchewan's electrical generation capacity is supplied by independent power producers pursuant to a power purchase agreement or a form of public-private partnership, and this generation volume is expected to grow.
Pursuant to The Power Corporation Act SaskPower may, on any terms and conditions that SaskPower considers advisable, consent to the supply, transmission, distribution or sale of electrical energy by or to a person or category of persons. On numerous projects SaskPower has engaged independent power producers to generate and supply renewable source energy – for example, the Sunbridge Wind Power Facility and the Red Lily Wind Power Facility. SaskPower is actively working to improve its procurement processes including development of long-term strategic sourcing partnerships and enhanced supplier relationship management.
For the most part, SaskPower's consent is obtained through its established competitive procurement practices. Listed are some of the available channels to SaskPower's consent:
- Single Source Procurement (utility scale),
- Competitive Procurement (utility scale),
- Industry Specific Requests (for example, oil field distribution),
- Procurement via the First Nations Power Authority (51% controlled First Nation projects),
- Power Generation Partner Program (100kW – 1MW projects) (McKercher LLP Summary), and
- Net Metering (less then 100kW).
In every case, the sole purchaser of power remains SaskPower so it is uncertain whether innovation and evolution can truly flourish within SaskPower's exclusive monopoly. For example, community solar projects are growing in popularity yet, absent SaskPower consent, are not necessarily viable within Saskatchewan. Currently, a large-scale Vancouver developer is advancing development of a 7,000 person solar-powered community in the Saskatoon area. Since in many cases these innovative and evolving sources of electrical energy directly compete with SaskPower, there is an inherent conflict of interest in the requirement for SaskPower's consent.
There is limited opportunity to proceed without SaskPower's consent given that the scope of the exclusivity extends to supply and distribution. Notably, however, SaskPower's exclusive monopoly does not include "generation" which is one of the purposes and powers legislatively given to SaskPower. Consequently, parties can generate power for their own consumption provided they do not take actions prohibited by section 38 of The Power Corporation Act.
As innovation and evolution continue, SaskPower's exclusive monopoly may prove prohibitive of any development outside of well-established SaskPower programs. Nevertheless, ample opportunity exists for local, national and international independent power producers, Saskatchewan First Nations, EPC companies and financial companies to participate in SaskPower's current trajectory to achieve its target of 50% power generation capacity from renewable sources by 2030.
For a detailed overview of Saskatchewan's legal and regulatory landscape as it relates to renewable energy development please refer to our publication Overview of Renewable Energy Development in Saskatchewan.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.