DATE ISSUED: May 17, 2023
EFFECTIVE DATE: June 1, 2023
The BC Energy Regulator (BCER) is committed to ensuring energy resource permit holders operating in B.C. meet their regulatory and liability obligations throughout the energy resource activity lifecycle.
Background
In April 2022, the BCER implemented the Permittee Capability Assessment (PCA) program as a new assessment method for mitigating liability risk while permit holders are financially viable.
Under the PCA program, permit holders assessed with moderate or high levels of financial risk must complete corrective action requirements through the submission of security deposits and/or the completion of work to reduce their “DIM” liability; that is, abandonment, assessment, remediation and/or restoration work on their Dormant, Inactive and Marginal (DIM) sites. The amount of corrective action required is scaled in relation to the level of a permit holder’s financial risk.
In the introductory, first-year phase of PCA program implementation, the threshold for the maximum corrective action requirement was a risk level of over 83.3 (i.e., companies with an assessed risk factor over 83.3 had to provide 100 per cent corrective action against their DIM liability) and was capped at the lesser of 50 per cent or $10 million.
Updates
Following this transitional first year, the BCER, upon review of liability risk objectives, is reducing the risk factor at which maximum corrective action is required, to a more conservative value of 66.6 (i.e., now companies with an assessed risk factor over 66.6 are required to take 100 per cent corrective action against their DIM liability) and discontinuing the provisional 50 per cent annual limit, effective June 1, 2023. Corrective action requirements will remain subject to an annual limit of $10 million. The updated risk factor calculation supports liability reduction by increasing the corrective action requirements for permit holders assessed with moderate and high levels of financial risk. Permit holders may refer to updated information in the Permittee Capability Assessment Program Guidance for further detail.
The BCER will be communicating directly with impacted permit holders identified as moderate and high risk under the PCA program, following the submission of their annual financial and reserves information, in order to outline annual corrective action requirements.
Also, effective June 1, 2023, permit holders with DIM Liability equal to or more than $1 million must now include audited financial statements with their annual financial eSubmission, prepared in accordance with International Financial Reporting Standards or Canadian accounting standards for private enterprises.
Permit holders are encouraged to reach out with any questions or to receive further information on how this change may impact them by contacting: Liability.Management@bc-er.ca.
If you have any questions regarding this Information Update, please contact:
Taylor Boorman
Manager, Financial Risk and Liability
BC Energy Regulator
Taylor.Boorman@bc-er.ca
250-419-4365