'Tape and twine' aid aging Hydro assets
COMMENT: " The "tape and twine" phrase certainly got everyone's attention. "The lights will go out" got everyone's attention in 2000, as well, when everyone from BC Hydro's CEO and its Board Chair to the pr flacks on the bottom were trying to ram through the GSX Pipeline and the Duke Point Power projects. The lights out threat was BS, but there was in fact a transmission system being held together at the time by tape and twine. It's been operating ever since, too - good tape, I guess - and soon will be given relief by the startup of the new Vancouver Island Transmission Reinforcement system (See New Vancouver Island Power Line Charging Up).
Big lies break down a lot of resistance, and open the way for big projects. BC is a "net importer" of electricity - that's another. "Weapons of mass destruction" - that's probably the all-time winner of the last generation.
So, is the "tape and twine" story just the opening volley of a new campaign of misinformation? Or a reasonably accurate telling of the current situation? Given the appalling state of BC Hydro's debt, that the policies of the NDP regime of the 1990's exacerbated the situation and did nothing to encourage proper maintenance of BC Hydro's facilities; and given that nothing has changed under the Liberal regime, I'm inclined to buy the "tape and twine" story.
But maybe that's just an indication of effective messaging.
Nevertheless, the phrase caught the attention of BCUC's Commissioner Milbourne. He asked if the degraded situation of BC Hydro's facilities stemmed from internal decisions, or whether there were other influences at play (page 2408).
"In terms of the general statement, the general theme of aging assets and deteriorated condition and so on, and I think I heard the kind of metaphoric expression here today of tape and twine holding a certain power station together, which I'm not too really would reassure a whole bunch of folks. But my question again is more of a policy nature. Is there any influence outside of B.C. Hydro's management decisions that's resulted in those circumstances, that you're describing today as being the driver of this whole investment program? Is there some policy environment that's prevented you from keeping current with respect to the condition of your assets, and dealing with the known demographics of the assets, which are no different than the demographics for people, which you've seen the programs in place to deal with? But you've -- is there any influence other than Hydro's management decisions that have resulted
in these circumstances?
Mr. O'Riley then probably realized the trap he'd set for himself, and his verbal dance to avoid falling into it is quite amusing. (again, it begins on page 2408.
Scott Simpson
Vancouver Sun
Wednesday, November 05, 2008
BC Hydro is using "tape and twine" to keep some of its oldest power stations in operation, according to testimony at a hearing into electricity rates.
Hydro is seeking a 12.63-per-cent rate hike over two years for residential customers, and is proposing a massive ramp-up in capital spending to either upgrade or replace its heritage hydroelectric facilities around the province.
Some of those facilities are in exceptionally poor shape due to their advanced age, according to documents on file with the British Columbia Utilities Commission.
Meanwhile, major hydroelectric facilities such as Mica and W.A.C. Bennett/G.H. Shrum need large infusions of cash for new equipment that will make them more dependable during cold winter months when demand for electricity is greatest.
Hydro requires the BCUC's approval in order to impose the rate hike, and is making its case to spend $2.4 billion by fiscal 2011 on projects to sustain its heritage system.
Hydro also wants to increase spending on growth projects - such as adding additional generators at the existing Mica and Revelstoke Dams, as well as renewal and expansion of its transmission system.
All of those initiatives, if approved by BCUC, would boost total capital spending to $6.4 billion by 2011.
Renewal of the existing hydro system requires $2.8 billion of that amount.
David Austin, a B.C. energy sector commentator, suspects most people would be surprised by the scope of what Hydro is planning - and agrees all the work is necessary to maintain the reliability of the system.
"The general misconception is that the existing system is going to last forever and you won't have to put any money into it. That's not correct," Austin said.
Testimony at Hydro's rate requirement hearing before the BCUC, which wraps up Dec. 19, shows that senior Hydro officials are concerned about the potential for damage to local fish and wildlife resources from equipment failures at B.C.'s oldest power stations.
Hydro senior vice president Chris O'Riley testified that Hydro in September suffered an oil spill at Ruskin generating station on Stave River near Mission.
"But for the grace of God, it could have been an absolute disaster," O'Riley said. "It turned out we lost 100 litres of oil at a time of year when there wasn't really any impact on the salmon. [But] it could have been 2,000 litres of oil at a time of year when there were fish in the river, either the eggs and the smolts or the returning salmon.
"That's the risk that goes with having an 80-year-old plant that you're trying to hold together with tape and twine, essentially, until we get the thing replaced."
In an interview with The Vancouver Sun on Wednesday, O'Riley said Hydro has similar concerns about its 61-year-old John Hart generating facility on the Campbell River, one of the province's most famed salmon streams.
The facility's penstocks, which are the conduits carrying water from the dam into the generating station, are made of wood and need replacement to minimize risk that an earthquake or other breakdown would cut off the flow of water to fish downstream of the Hart dam.
"We have the risk of shutting off the flows to one of the best salmon rivers in the province. It's a very, very significant risk for us," Hart earlier testified at the rate hearing.
He told The Sun that Hydro has an electrician on site round-the-clock, rather than on call, in order to reduce the risks associated with a penstock failure.
O'Riley oversees engineering, aboriginal relations and generation for Hydro, and notes that in the past two years, his group has added 430 people as it prepares to accelerate its efforts to renew the system.
"We are not adding finance, and human resources and computer people. We are adding engineers, people to run projects, people on the ground turning tools and such," he said.
ssimpson@vancouversun.com
© Vancouver Sun 2008
BC Hydro's 2009-2010 Revenue Requirements
"Tape and twine" transcript, 21-Oct-2008
MR. O'RILEY: A: Well, I think we've talked a lot in the past about how we manage the business of B.C. Hydro and we're not like an investor-owned utility that all we care about is our income and our shareholder earnings. So, we have -- we consider very broadly the impacts on the shareholder, on the ratepayer, on other stakeholders in communities that are impacted by these assets. For example, the John Hart, the concern with John Hart is actually less of a reliability issue, less of a dollar issue, it's more of an environmental issue. Because we have the risk of shutting off the flows to one of the best salmon rivers in the province. It's a very, very significant risk for us. So, there is a very broad concern in B.C. Hydro about managing the risks that flow from these assets. Some of them are financial. Some of them flow through the deferral account. Some of them are externalities that we impose on society.
A recent example that had negligible financial consequences, in September, we had an oil spill at Ruskin and, but for the grace of God, it could have been an absolute disaster. We lost -- it turned out we lost 100 litres of oil at a time of year when there wasn't really any impact on the salmon. It could have been 2,000 litres of oil at a time of year when there were fish in the river, either the eggs and the smolts or the returning salmon. So that's -- and that's the risk that goes with having an 80-year-old plant that you're trying to hold together with tape and twine, essentially, until we get the thing replaced.
So that's a risk that doesn't, on the face of it, necessarily flow through the financial statements or the deferral accounts, but it's a risk we take very, very seriously as a company. So, we're not just motivated by the dollars that go to the shareholder, we're motivated broadly by the impacts that we impose.
Testimony of Chris O'Riley, Sr Vice-President, BC Hydro
B.C. Hydro Revenue Requirement F2009, F2010
Volume 13 Proceedings - October 21, 2008
Pages 2236-2237