B.C. energy deal vetoed over self-sufficiency test

WENDY STUECK
Globe and Mail
3 February 2007

VANCOUVER -- Rejecting a key point of a proposed power-sales agreement between Alcan Inc. and B.C. Hydro, the British Columbia Utilities Commission said yesterday the deal would not help make the province self-sufficient.

"The commission panel agrees with submissions from the District of Kitimat that [the power-sales agreement] will not contribute to self-sufficiency, because there is no net increase in generation from a provincial perspective," the BCUC said in a 100-page ruling.

The ruling included the commission's reasons for a decision announced Dec. 29, when it rejected the long-term power sales agreement because it was not in the public interest.

The deal would have allowed Alcan to sell electricity from its Kemano generating station to B.C. Hydro for $71 a megawatt hour even though the costs of generating the electricity are believed to be about $5 a megawatt hour.

The agreement had been one of the conditions Alcan had set for a $2-billion smelter upgrade in Kitimat. That project is now in limbo.

While pursuing the deal, B.C. Hydro and the provincial government described it as a transaction that would lessen the province's dependence on imported energy and help move B.C. toward greater energy self-sufficiency.

B.C. Hydro used self-sufficiency as an argument in favour of the deal, but it "did not rely on the provincial policy of self-sufficiency to justify acceptance" of the deal, the commission said in its reasons. The province appears to have taken a stronger stand, saying "meeting the goal of electricity self-sufficiency is an especially crucial issue for the province and that energy provided by [the power sales agreement] will assist B.C. Hydro in meeting this goal," the commission said.