Finally, progress in the energy crunch
Les Leyne
Times Colonist (Victoria)
15 Jan 2005
Vancouver Island faces the remarkable prospect in the next few months of actually seeing some tangible progress when it comes to doing something about the looming energy crunch.
The new year marks the 10th anniversary of the first concerted effort to get more power on the Island. It's been a decade of studies, arguments, hearings and false starts. After all that time, there is a chance of a construction start this March on a big gas-fired generating plant at Duke Point near Nanaimo.
But first, there will be an open house today in Nanaimo. That will be followed by another round of arguments starting Monday in front of the B.C. Utilities Commission.
A number of intervenors, some of them potential customers, will press the case that the latest greatest plan to keep the lights on is the wrong way to go.
Opposition is based partly on the premise that it represents a big gamble, in that B.C. Hydro would be committing for the next 25 years to natural gas, which is an uncertain commodity with a mercurial track record in terms of price.
There is a chance the project could once again slip sideways and bring the Island closer to the point where an energy crunch becomes quite real.
But the BCUC hearings centre on a deal -- the electricity purchase agreement between Hydro and the company building the plant -- that the commission indirectly had a hand in bringing about.
So upsetting the applecart and starting over again, for the second time in a year, is viewed as an unlikely prospect.
Which means Duke Point Power could have shovels in the ground at the Nanaimo industrial park by March, although I'd have to see it to actually believe it.
The company was put together by an Australian firm that creates investment partnerships.
The operating people are from Pristine Power, a Calgary-based outfit created by people who had a hand in building the Island's first gas-fired plant, near Campbell River.
They won the dogfight that broke out after the utilities commission looked at Hydro's plan to build the Nanaimo plant and said: "Try again."
Almost two dozen companies piled into the breach created when that huge project was derailed.
A half-dozen made it to a short list and Duke Point Power won the day late last year.
If all goes according to plan, it will built the plant for $280 million and sell the power to Hydro for at least 25 years. (It's worth noting that nothing associated with this idea in the past decade has gone according to plan.)
The big difference between the private firm's gas plant and the gas plant envisioned by B.C. Hydro is that there is no new pipeline supplying it with natural gas.
In one of the more remarkable developments in this long saga, the $340-million pipeline vanished over the Christmas holidays.
Hydro teamed up with a private pipeline partner, spent about $50 million on preparations to build a pipeline under Georgia Strait and endured a National Energy Board hearing that stretched an incredible three years.
But GSX, as it was known, started to look sketchy when the utilities commission called for second thoughts.
Designed when the price of gas was about 30 per cent what it is now, and predicated on the assumption it would serve two or three big generating plants, it was formally buried last month, with Island critics cheering its demise. RIP GSX.
The new plan is to rely on the existing Terasen pipeline to supply the two big generating plants (Campbell River and Duke Point) and add new transmission lines, as well.
It's transmission lines that have been driving all these developments for years.
The big existing ones reach the end of their useful life in 2007 and with tougher national standards following the eastern blackout two years ago, that deadline is considered final.
Gas critics have argued all along that the lines should just be replaced, but that doesn't create any more power, it just gives the Island the luxury of enjoying more electricity without having to put up with actually creating it. And B.C. has been a net importer lately.
Pumped up by their success in getting the GSX cancelled, those same social, environmental and energy critics still have their sights set on the Duke Point plant.
So will the big industrial users, who are worried about price and supply. Critics certainly helped bring down the Hydro version of this project. Next week will be the last gasp effort do the same for this version, but time is short and the chances are slim.
Just So You Know: B.C. Hydro had to swallow all the sunk costs incurred by the Hydro-Williams partnership that went into the GSX project. That amounts to $50 million.
And the sunk costs that went into the Duke Point project amount to $70 million. But $50 million of those costs are recoverable from the company that wants to take over the project. So Hydro will be out a total of about $70 million before this project even gets started.
Trivia buffs will recall that was the original per-ship estimate of the cost of the fast ferries.
Posted by Arthur Caldicott on 15 Jan 2005