Okanagan Pipeline Project Confronted by Clean Energy Transition and Indigenous Consent

Tom Hackney and Bill Andrews

2 October 2023

Final arguments have at last been filed in the BCUC’s review of the Okanagan Capacity Upgrade Project, almost three years after the initial application by gas distribution utility FortisBC Energy Inc.

The proposed upgrade is an increase in the diameter a 30 kilometre length of the main gas distribution pipeline that runs north from Penticton to serve the Kelowna-Vernon area. 

FortisBC says the pipeline needs increased capacity to meet rising peak gas demand in the winter from existing and future customers in an area of the Okanagan that is seeing rapid population growth. In 2020, FortisBC said it expected existing pipeline capacity to fall short of potential peak gas demand in the winter of 2023-2024. Now, FortisBC says the current pipeline capacity has already fallen short of potential peak demand, and that it is deploying stop-gap measures to maintain service during the winter peak period.

BCSEA said the BCUC should reject FortisBC’s application. BCSEA argued that the proposed increase in the capacity of the gas pipeline goes against the clean energy transition that the BC government is implementing in BC, as laid out in the CleanBC Roadmap to 2030.

BCSEA did not dispute that there is a need for more resources to supply energy at peak times in the project area. However, BCSEA said that the urgent need to reduce GHG emissions in BC should be tangibly recognized. BCSEA said that instead of increasing its pipeline capacity, FortisBC should deploy resources that will not cause increased GHG emissions, such as capacity focused demand side management.

A decision by the BCUC to reject the Okanagan Capacity Upgrade Project would put the imperative to reduce BC GHG emissions ahead of the traditional assumption that the natural gas distribution system should be expanded limitlessly to meet growing demand for natural gas. There is a partial precedent for this. In March 2023, the BCUC balked at approving FortisBC’s application to enlarge its Tilbury LNG storage facility in Greater Vancouver (see our article “We have several events to report from the BCUC”). FEI argued that the almost $1-billion project would enhance the overall resiliency of FortisBC’s system. But in its non-final decision on the Tilbury application (page 39), the BCUC expressly recognized that government GHG reduction targets could drive down the future demand for natural gas The BCUC Panel stated:

“… given Federal and Provincial Government GHG reduction targets for 2030 through 2050, the Panel finds a significant probability that demand for natural gas will be reduced as compared to the demand today. It is therefore unclear to the Panel that there will be sufficient demand for natural gas to support the continued use of FEI’s pipeline system including Tilbury as currently configured for the next 60 years.” 

Indigenous rights and title arose in a big way during the BCUC’s review of the Okanagan Capacity Upgrade Project. The Penticton Indian Band (now known as sn’pinktn) intervened in the proceeding and stated that the project could not proceed without its consent.

This led to delays while FortisBC engaged with sn’pinktn, and the proceeding was adjourned for over a year (see our article “Strange Delay in Pipeline Upgrade Project”). FortisBC expects sn’pinktn to enter an agreement under which the OCU project could proceed. A vote by sn’pinktn members is anticipated to be held on November 14, 2023. Meanwhile FortisBC re-affirmed in its final argument (page 61) that it would not build the project without sn’pinktn’s consent (even if the BCUC approves the project). In any event, FortisBC’s commitment not to proceed with the Project without sn’pinktn’s consent is a huge win for sn’pinktn, and a major new consideration for utilities planning large projects in BC.