U.S. power cheap no more for Hydro

Scott Simpson
Vancouver Sun
Thursday, June 09, 2005

It's just as effective to build additional power sources in B.C., papers show

A voracious and troubled electricity market south of the border is killing BC Hydro's ability to bolster the province's energy supply with cheap U.S. power, documents suggest.

The cost to import electricity from the western United States has risen 11 per cent since 2003, and it's now just as cheap -- or even cheaper -- to develop new independent power production within the province.

That's a 180-degree turnaround from Hydro's decades-long practice of buying cheap off-hour import power and conserving B.C.'s sprawling hydroelectric resources for periods of peak demand.

Independent power producers say B.C. is now relying on so-called "brown" power from coal-fired and nuclear power plants, because Hydro has failed to develop new resources at the same pace as domestic needs have expanded.

About 12 per cent of the province's annual electricity needs are met by imports.

Hydro maintains it can still meet all demand in a pinch by firing up the old and dormant Burrard thermal generating plant -- although current market prices for natural gas make this a costly option.

Documents filed recently with the B.C. Utilities Commission show Hydro paid an average $52.50 per megawatt hour (enough power for 750 homes) in the 2004-20005 fiscal year, compared with $47.50 in 2003.

Cheap U.S. hydroelectricity has kept the overall import price down in decades past, but five consecutive years of drought along the Columbia River drainage in Washington state have taken that source out of the equation.

Meanwhile, a Calgary-based energy sector analyst is suggesting a power-hungry U.S. will be burning more natural gas for electricity this summer because the nation's coal-fired generation system is pretty much at the limits of its capacity.

Martin King sees North American gas prices rising 20 per cent -- a scenario which would push overall energy prices even higher, both for U.S. consumers and BC Hydro.

"BC Hydro through Powerex was enjoying importing low load hour power over the earlier years of this millennium but in the last three years it's gone up quite steeply," Independent Power Producers Association of British Columbia president Steve Davis said on Wednesday.

"When you look at price, security and environmental impact, the high import strategy doesn't make sense any more," Davis added.

"The $52.50 price was the average in fiscal 2005. The rather painful irony is that that is essentially equal to the price BC Hydro paid to the green B.C.-based IPPs in their most recent call for power.

"More subtly, those green IPPs pay about $20 per megawatt hour back to various governments through water rentals, through taxes and through levies to regional districts or first nations."

Hydro spokeswoman Elisha Moreno said the crown corporation is "definitely" trying to get more independent power projects operational in B.C., but must also deliver the lowest electricity price.

"In the ideal world we are looking at becoming self-sufficient within British Columbia," Moreno said. "The challenge we face in expediting projects is that we must maintain a competitive process."

ssimpson@png.canwest.com

MADE IN AMERICA:

Powerex imports about 11 per cent of the electricity we consume in B.C. each year. And while some of that comes from Alberta (about two per cent of imports in fiscal 2005), the other 98 per cent comes from the U.S. That dependency on American energy is getting more and more costly.

Average cost of U.S. power imports

Fiscal 2003:

$47.50 Cdn per mega-watt hour

Fiscal 2004:

$49.90 Cdn per mw hour

Fiscal 2005:

$52.50 Cdn per mw hour

Increase over the three-year period:

More than 11 per cent

Source: B.C. Hydro

Ran with fact box "Made in America", which has been appended to the end of the story.

© The Vancouver Sun 2005