HRAI Comments on CleanBC Proposed DSM Regulation Changes

The CleanBC Roadmap to 2030 is the British Columbia government’s plan to accelerate climate action to meet federal/provincial 2030 greenhouse gas targets and to put the province on the path to net-zero emissions by 2050.  The Roadmap includes a commitment to shift the focus of utility-funded efficiency programs to: "support market readiness for future efficiency standards; ensure affordability for households and businesses; support building-envelope improvements such as insulation and better windows; and support high efficiency heat pumps – electric, gas, and hybrid." 

To fulfill the commitment above, the Ministry of Energy, Mines and Low Carbon Innovation has proposed an Amendment to the “Demand-Side Measures” Regulation. 

At the beginning of the month HRAI joined industry partners in a consultation that outlined the proposed regulatory changes.  There are two key regulatory changes of interest that are being proposed (plus some changes that focus on low income and indigenous markets). 

First, the government proposes a shift from incentives for conventional gas-fired heating equipment such as furnaces and boilers.  Specifically, this means an elimination of incentives for conventional gas equipment that is <100% efficient: including residential and commercial furnaces, boilers, tank and tankless water heaters, and fireplaces.  Incentives can continue for hybrid systems (e.g., air source heat pump with supplemental heat from furnace) and gas heat pumps.  There are some exceptions, e.g. conventional gas water heaters for low-income and Indigenous customers and radiant tube and unit heaters used in garages and warehouses (where there is no feasible heat pump alternative). 

Retrofit programs that may continue include: 

  • Prescriptive incentives for envelope, equipment maintenance, and controls 

  • Performance-based ($/GJ) residential and commercial retrofit and deep retrofits that include insulation, heat recovery, controls, maintenance (Energy savings from conventional gas equipment replacement are not eligible for incentives) 

  • Other end uses like cooking and domestic appliances 

  • Industrial processes (e.g. process boilers) 

New construction programs that may continue include: 

  • New home construction programs for gas-connected homes can continue, but: 

  • Equipment pathway must specify gas heat pumps or hybrid heat pumps 

  • Step code pathway is only for homes that provide space and water heating with hybrid or gas heat pumps. 

Second, the government proposes to change the primary cost-effectiveness test used to justify utility incentive programs.  The proposed amendment is to replace the Total Resource Cost (TRC) test and the Modified TRC (MTRC) with the Utility Cost Test (UCT).  The TRC test considers both participant and utility costs and benefits while the MTRC test includes the societal benefit of reducing carbon: electricity generated from clean or renewable resources in BC.  The UCT considers only the utility cost to acquire energy efficiency.  It excludes non-energy benefits (which are hard to quantify) but also excludes participant costs (which are easy to quantify).  It is deemed simpler and easier to compare demand-side measures to supply-side resources, such as renewable natural gas (RNG) – useful under the planned utility GHG cap.   

CleanBC says they expect the program impact of these changes will be to encourage more programs and measures overall. 

The expected impact on utility programs: 

  • Increased support for measures like insulation and hybrid systems; continued or expanded support for indigenous communities and low income customers 

  • End of incentives for gas furnaces, boilers, and water heaters 

  • Gas water heaters for Indigenous & low-income homes will continue 

  • Changes to existing programs to incorporate heat pumps 

  • Many offers will not change. 

To be clear, the new regulations will not restrict what products may or may not be sold in the province, but rather it will shift the rules around what products can be incentivized under regulated utility programs.  The power that the government has here is that they set the rules (via the BC Utilities Commission) for what utilities (mainly BC Hydro and FortisBC) may include in their incentive programs (which, if approved, are funded by ratepayers with the province's blessing) and these rules are guided by public policy goals.  Historically, these policy goals have been mainly about enhancing energy efficiency and addressing needs of low income households, but now the government is focused on eliminating carbon too. 

HRAI thanks members who reached out with feedback.  HRAI has conveyed this feedback to the Ministry.  HRAI specifically highlighted the late announcement of and short window for feedback on this the consultation and shared examples of more effective consultations. 
 
The feedback period closes Friday, Dec 16th. If you would like to provide any final thoughts, please contact Victoria Cross at victoria@twowestgroup.com or Martin Luymes at mluymes@hrai.ca. 

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