BC Hydro changes tune over green energy cutbacks
COMMENT: BC Hydro said in December that it would be contracting for less energy from IPPs than originally planned, in the latest "green call". But here is CEO Bob Elton a few weeks later, reversing himself. His defense? The "uncertainty of forecasting".
He should know about that. It was in 2002, also in a BC Utilities Commission (BCUC) review, of BC Hydro's own Vancouver Island Generation Project (which was later reintroduced as a private project called Duke Point Power). BC Hydro had rolled out its forecasts showing steadily increasing demand for electricity on Vancouver Island - forecasts it had used to support its contention that the GSX Pipeline was also necessary.
GSX Concerned Citizens Coaltion founding director, and Cobble Hill turkey farmer, Steve Miller, questioned BC Hydro's forecasts and its methods. His analysis was so astute, and his grilling of BC Hydro's lead forecaster so grueling, that BC Hydro disappeared the forecasts, disappeared the forecaster, and came back to the hearing with new forecasts, and this time at least, methods that were explainable, if not accurate. At the time, I don't recall Hydro using the "uncertainty" argument - that's gotta be the sloppiest defense of experts yet.
Elton also knows about having his wrists slapped by government. In 2005, after a year of what might have been some of the best public consultation it has ever done, BC Hydro issued a media alert that it would be releasing its 2005 Integrated Electricity Plan (IEP) at 10:00 Wednesday morning, December 8. The IEP was expected to be fairly green, and bullish on Site C.
But early that same Wednesday, Richard Neufeld, Minister of Energy, Mines and Petroleum Resources, pulled the plug on Elton, and suppressed the IEP. No release at 10:00 that morning. In his column that day, Vaughn Palmer said, "... even as the media advisory for those coming attractions circulated in provincial newsrooms, the Liberals were at work derailing it."
Like the forecasts, the IEP also disappeared. But unlike the new forecasts which were mere weeks in preparation, the IEP was gone for four months. When it re-emerged at the end of March, Site C was now relegated to consultations, and coal given an increased profile.
Here we are again. The IPP lobby was clearly aggrieved at BC Hydro's proposed reduction in power purchases in the present call, and it got the ear of government. The letter BC Hydro sent to the Utilities Commission has all the linguistic bad smells of having been dictated by the Liberal politburo in Victoria.
Palmer's words from 2005 are as apt today: "The B.C. Liberals have [once again] intervened directly in the management of BC Hydro..."
And Chief Judith Sayers is correct, the political pressure did come crashing down. And industry spokesman Dan Potts is on the money, so to speak: "There is no market for power at that price." referring to the price BC Hydro will have to pay for this IPP generated energy.
Government yanks BC Hydro's chain
Exhibit B-12, the January 12 letter to BCUC
BC Hydro changes tune over green energy cutbacks
JUSTINE HUNTERGlobe and Mail
January 15, 2009
Utility cites difficulty forecasting in last month's heavily criticized move to seek drastic reduction in clean power projects
VICTORIA -- Blistered by critics over its plan to scale back contracts for clean electricity because of economic uncertainty, BC Hydro this week moved to "clarify" that it may buy all the clean power it can get.
"We want to be clear that we recognize the uncertainty of forecasting," BC Hydro CEO Bob Elton said in interview.
"I think it would be silly to preclude the opportunities to get green power at a good price."
Last month, the Crown corporation asked its regulators for the authority to reduce its call for green energy projects by 40 per cent, a move welcomed by industrial customers but attacked by proponents of electricity produced without carbon emissions.
But on Jan. 12, a new letter arrived at the B.C. Utilities Commission from BC Hydro, noting that forecasting is a tough business these days.
The amendment to BC Hydro's long-range energy plan, tabled in December, "may not necessarily capture all of the uncertainties inherent in possible future demand for electricity," the letter states.
As a result, the corporation could find itself buying even more green electricity than it had originally planned.
B.C. Energy Minister Richard Neufeld said he was surprised in December when he heard Hydro announce it was cutting back on plans for green energy - and he welcomed the modification to that amendment.
"I think to be fair to Hydro, they were looking at what was happening around them at the time and maybe didn't think out far enough about what the B.C. government's energy plan envisioned."
The province has enacted an energy plan that requires BC Hydro to wean itself off electricity imports - which tend to come from greenhouse-gas-producing sources - by 2016.
BC Hydro routinely trades electricity with its neighbours such as Alberta and Washington State, but the province has been a net importer since the 1990s.
Customers can expect to pay more for greener electric power in the future, Mr. Neufeld acknowledged. "Everybody knows clean energy costs more," he said.
Chief Judy Sayers, of the Hupacasath First Nation, won a national climate-change award last year for her community's green power initiatives.
The Upnit Power Corporation on Vancouver Island started with a single run-of-the-river power project and has two others in the works.
But it has 10 more ventures on the drawing board it intended to submit through the clean energy call.
Ms. Sayers said BC Hydro's clarification this week looks more like backtracking.
"We should be completely independent for power.
"I think some of the political pressure came crashing down and they had to back off."
However, Dan Potts, executive director of the Joint Industry Electricity Steering Committee, said people should understand just how big a price they will pay for greener electricity.
His organization represents Hydro's large industrial customers.
He noted Hydro's long-range energy forecast puts a price tag on that new power at three times what industrial customers currently pay.
"There is no market for power at that price," he said.
"If people want to reduce greenhouse-gas emissions and feel good, then I guess that's what's going to happen. But we hope we can do it by the most cost-effective means possible."
Mr. Elton stressed that the amount of power the corporation will purchase from green energy producers will depend on the price.
"It is a procurement process," he said.
"We'd be very foolish not to remind people that are selling power to us that it's important they sharpen their pencils."
Exhibit B-12, BC Hydro to BC Utilities Commission, 12Jan2009
BChydro
Joanna Sofield
Chief Regulatory Officer
Phone: (604) 623-4046
Fax: (604)623-4407
bchydroregulatorygroup@bchydro.com
January 12, 2009
Ms. Erica M. Hamilton
Commission Secretary
British Columbia Utilities Commission
Sixth Floor - 900 Howe Street
Vancouver, BC V6Z 2N3
Dear Ms. Hamilton:
RE: Project No. 3698514
British Columbia Utilities Commission (BCUC)
British Columbia Hydro and Power Authority (BC Hydro)
2008 Long-Term Acquisition Plan (2008 LTAP)
BC Hydro writes with respect to the Evidentiary Update filed as Exhibit B-10 in the 2008 LTAP proceeding, and in particular with respect to BC Hydro's request for an amendment to the Order sought to reduce the Clean Power Call pre-attrition target to 3,000 GWh per year.
The Evidentiary Update includes a load forecast which projects future electricity needs in British Columbia within a large range of outcomes. Even this large range may not necessarily capture all of the uncertainties inherent in possible future demand for electricity. These uncertainties include those associated with the recovery of the economy which is related to world economic events, as well as opportunities created by British Columbia initiatives. Further uncertainties and opportunities result from the potential future demand created by the transformation to a low carbon economy, a British Columbia initiative as well as a world-wide trend. These further uncertainties and opportunities include the switching from other fuels to electricity for personal transportation, mass transit, heating and other applications. As a result of all of these uncertainties and opportunities, and the 2007 Energy Plan's goal to achieve electricity self-sufficiency by 2016, BC Hydro does not want to limit its opportunities to acquire cost-effective renewable power through competitive processes with independent power producers.
Pursuant to Section 18 of the Clean Power Call Request for Proposals (filed as Appendix M, Exhibit B-1-1), in awarding Electricity Purchase Agreements (EPAs) BC Hydro may in its sole discretion at the time of evaluation consider the load/resource balance, price and other evaluation criteria.
This Clean Power Call evaluation process may result in BC Hydro awarding EPAs up to or greater than the original target of 5,000 GWh per year if the EPAs are cost-effective. Such EPAs would be subject to BCUC review under the Section 71 filing process.
Yours sincerely,
Joanna Sofield
Chief Regulatory Officer
c. BCUC Project No. 3698514 Registered Intervenor Distribution List.
Exhibit B-12, this January 12 letter
Exhibit B-10, the December 22 letter reducing the purchase requirements
Posted by Arthur Caldicott on 16 Jan 2009