Media Coverage of Duke Point project cancellation

CKNW, 17 Jun 2005
CBC, 17 Jun 2005
Canadian Press, 17 Jun 2005
Scott Simpson, Vancouver Sun, 18 Jun 2005
Chronology, Vancouver Sun, 18 Jun 2005
Andrew Duffy, Times-Colonist, 18 Jun 2005
Andrew Duffy, Opinion, Times-Colonist, 18 Jun 2005
Les Leyne, Times-Colonist, 18 Jun 2005
Editorial, Times-Colonist, 18 Jun 2005
Reuters, Globe and Mail, 18 Jun 2005
Wendy McLellan, The Province, 19 Jun 2005
Andrea Rondeau, Cowichan Citizen, 19 Jun 2005
Vaughn Palmer, CKNW, 20 Jun 2005
Editorial, Vancouver Sun, 22 Jun 2005
Robert Barron, Nanaimo Daily News, 22 Jun 2005
Michael Smyth, The Province, 24 Jun 2005

CKNW News
Jun, 17 2005 - 11:00 AM

VICTORIA(CKNWAM980) - BC Hydro is abandoning the proposed gas-fired generator plant at Duke Point near Nanaimo. The proposal has faced bitter opposition on Vancouver Island, and earlier this week, the BC Court of Appeal ruled that opponents could challenge the BC Utilities Commission's approval.
Now, Hydro executives have met and determined the continuing appeals mean the risk is now too great that the plant will not be built on time, so it's scrapping the project.

Instead, the utility says it will now focus on trying to extend the life of the current transmission cable to Vancouver Island, and arranging with industrial customers to cut back on their usage.

Opponents have argued the gas-fired plant is too environmentally hazardous and unnecessary anyway, since there are many alternatives to that technology, such as wind-driven turbines.

Meanwhile, the BC Transmission Company is also working on plans for new power cables to the Island, but that project itself faces opposition.

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CBC News
Jun, 17 2005 - 1:29 PM

VANCOUVER – B.C. Hydro has killed its plans for a controversial natural gas-fired electrical power plant near Nanaimo on Vancouver Island.

Duke Point, south of Nanaimo

FROM FEB. 17, 2005: Duke Point power project gets green light

LINK: Tuesday's B.C. Court of Appeal decision

A senior vice president with Hydro says the appeal increased the risk that the power plant would not be completed on time.

Bev Van Ruyven says without Duke Point, Vancouver Island could face problems with getting reliable power. But she says Hydro has plans in place to try to stop that from happening.

"We have other options that we can now go towards, contingency options. We are also building a cable to the Island which we have a higher probability that that will be in service in the winter of '08.

B.C. Hydro headquarter in Vancouver

LINK: B.C. Hydro release

Van Ruyven says Hydro will consider proposals for another new power plant in B.C., but it won't necessarily be on Vancouver Island.

She says Hydro also hopes to persuade major industrial customers to reduce electrical use.

LINK: GSX Concerned Citizens Coalition backgrounder

Opponents of the Duke Point power project had complained it would create additional greenhouse emissions, and that the Island's electrical needs could be met by developing alternative energy sources.

INTERVIEW: B.C. Almanac's Belle Puri speaks with B.C. Hydro's Bev van Ruyven and with Dan Potts of the Joint Industry Electricity Steering Committee which led the court battle.

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Canadian Press
Friday, June 17, 2005

VANCOUVER (CP) -- B.C. Hydro abandoned plans Friday for the proposed Duke Point power project near Nanaimo.

The move follows a court ruling that allows opponents to appeal a decision that gave the go-ahead to the natural gas-fired electrical plant.

B.C. Hydro said the continuing appeal process means there's too much risk the plant will not be built in time.

Hydro vice president Bev Van Ruyven said cancelling the project means the utility will have to make other arrangements to provide power on Vancouver Island, which means trying to extend the life of the current transmission cable from the B.C. mainland until a new line goes into service and by getting industrial customers to reduce electrical use.

"Our priority throughout has been the reliability of electricity supply to our customers on Vancouver Island and the risks to that are now too great," she said in a statement. "Given that, we have decided to exit from the project, something we are able to do as part of our contract with Duke Point Power without any additional cost."

Alberta-based Pristine Power was supposed to build the power plant, and the company's president, Jeff Meyers, disputed Hydro's contention the plant could not be built in time.

"We just felt that because the appeal was on a very narrow issue and it could be resolved in a few weeks, we just thought that they would just hang in here," said Meyers.

"They have said that it's gone on for too long and Duke Point is not reliable for 2007, and that is just a falsehood. That is not true. We have contracts to back up our construction schedule. We have some of the most reputable contractors in the world on this thing and it's just not true."

Nanaimo Mayor Gary Korpan also criticized Hydro's handling of the project, which he said has cost tens of millions of dollars.

"It has been a total waste of everyone's time, money and worry," he said. "How B.C. Hydro management has any credibility in the business community or with the public now, eludes me. If there is any vestige of decency left at B.C. Hydro, those executives who did this need to apologize to the citizens of Vancouver Island and resign."

Energy Minister Richard Neufeld said the decision is disappointing but understandable, and represents a culmination of events, including the increased price of natural gas.

"I think they reviewed the whole project and decided it would be in the best interest of the ratepayers to actually walk away from it," he said outside a cabinet meeting in Victoria.

Environmental groups had said the Duke Point plant would cause too much pollution and electrical needs could be met by renewable power sources and through conservation.

© Canadian Press 2005

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Scott Simpson
Vancouver Sun
June 18, 2005

Board of directors decided to avoid another battle with project's opponents

BC Hydro abandoned its trouble-plagued Duke Point electricity project Friday, walking away from a $120-million investment and raising doubts about the supposed "risk" of blackouts on Vancouver Island.

Hydro's board of directors decided to notify its private sector partner in the $285-million project that it was quitting, rather than face another legal battle with project opponents -- this time in the B.C. Court of Appeal.

The project has been steadily opposed by community and environmental groups, as well as the province's major industrial consumers of electricity -- mainly on the premise that it was costly and unnecessary.

It would have added about three per cent to each Hydro customer's monthly power bill.

Earlier this week, the appeal court granted Duke Point opponents leave to appeal the project, albeit on narrow legal grounds.

The court's decision opened a window in Hydro's contract with Duke Point Power of Calgary, enabling the B.C. Crown corporation to abandon a process that began in 1994 and racked up $120 million in regulatory and equipment costs.

These costs were all borne by B.C. taxpayers via writeoffs entered into Hydro's financial books.

"Under these circumstances, the provincial government has to take a close look at the way this was handled by BC Hydro and the B.C. Utilities Commission," said Hydro critic David Austin.

Until the board of directors' decision, Hydro senior staff had steadfastly defended the project -- portraying it as Vancouver Island's best defence against potential failure of aging transmission lines that deliver electricity from the mainland.

Hydro vice-president Bev Van Ruyven is confident it can provide reliable service to the Island by 2008, when a new high voltage cable is set down across the Strait of Georgia from Tsawwassen.

In the interim, it will ask industrial consumers including NorskeCanada to scale back their consumption of electricity during peak winter demand -- which is what Norske had long proposed as the cheapest alternative to building a new power plant.

Dan Potts, who represents B.C.'s major industrial consumers of electricity, said he suspects the Hydro board killed Duke Point because rising natural gas prices made it too expensive.

"I think over time it became apparent that, really, it is not a sound economic choice to proceed with this plan," Potts said.

Duke Point Power president Jeff Meyers said he was "shocked" that Hydro had exercised its right to terminate the contract -- he said the appeal was confined to "narrow legal grounds" and was unlikely to succeed.

He also took issue with Hydro's claim that the appeal process would prevent the Duke Point plant from being completed on time for the winter of 2007.

"We would have been happy to demonstrate to Hydro that we can meet our schedule," Myers said.

Nanaimo Mayor Gary Korpan, whose city welcomed the jobs and taxes the project was promised to deliver, expressed outrage. He called the entire process a "total waste of everyone's time" and said Hydro "lied" to residents when it stated that the project was urgently needed.

"If there is any vestige of decency left at BC Hydro, those executives who did this need to apologize to the citizens of Vancouver Island and then resign," Korpan said in a prepared statement.

He called on the provincial government to launch a public inquiry into Hydro's handling of the entire process -- with the aim of recovering the money that was "wasted on this travesty."

Hydro spent $50 million on preparations -- later abandoned -- for a natural gas pipeline from Washington state to Vancouver Island to feed Duke Point, and $70 million on turbines and other equipment for the plant itself.

In addition, Hydro pays $5.5 million to Duke Point Power, and loses the opportunity to sell the turbine equipment to the company for the comparative bargain price of $50 million.

Community opposition to the project was led by GSX Concerned Citizens Coalition whose president, Tom Hackney, said he was not surprised by Hydro's decision.

"There have been times in the past when it looked like BC Hydro had a very strong momentum to get their project through but we have been very close to the evidence for and against the power plant -- and we were always very confident that we had a strong case against it," Hackney said.

B.C. Energy Minister Richard Neufeld blamed the New Democrats, who initiated the Duke Point process and committed most of the $120 million before the Liberals took power in 2001.

He said he supported Hydro and noted that as the process to build Duke Point dragged on, through BC Utilities Commission hearings and then the courts, it became obvious that it would be just as expedient to run a new high voltage cable to the Island.

Opposition leader Carole James acknowledged that the NDP had initiated the project, but noted that it was the Liberals' decision to privatize it and to persist with it despite four years of widespread public opposition.

"They continued to waste money on it. In my mind it's another example of this government's ideological drive to push privatization. It was another example of another project, like the Coquihalla Highway, until people complained too loudly and then had to back off.

"That shouldn't have to be the only way you get the government to recognize a mistake."

ssimpson@png.canwest.com

Duke Point points
- Project cost: About $285 million
- Plant: Would have produced enough power for 252,000 homes.

© The Vancouver Sun 2005

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Scott Simpson
Vancouver Sun
June 18, 2005

Chronology of the Duke Point gas-fired electricity generating station project:

1994 A request for proposals for independent power producer projects is issued.

1995 BC Hydro raises concern about Vancouver Island's critical supply issues.

1996 A gas strategy was developed and included: Natural gas-fired co-generation plant at Campbell River; second natural gas-fired co-generation plant at Port Alberni; other potential gas-fired generation on the Island; and, new supply of natural gas to Vancouver Island for these plants.

September 1998 BC Hydro and Port Alberni Cogeneration Project sign a key agreement to build the plant at Port Alberni.

[NOTE: an important part of the story is omitted in this interval from 2000 to 2002]

Jan. 2002 A rezoning proposal to accommodate a plant in North Cowichan faces overwhelming public opposition and is defeated.

Jan. 31, 2002 BC Hydro and Calpine announce that the Duke Point area is the preferred location for the plant

April 10, 2002 BC Hydro announced agreement of the Vancouver Island Generation Project at Duke Point.

Sept. 20, 2002 U.S. federal regulators (Federal Energy Regulatory Commission) approved the U.S. portion of the project.

March 12, 2003 As required by the provincial energy plan, BC Hydro applies for a certificate of public convenience and necessity for the B.C. project.

Sept. 8, 2003 BC Utilities Commission denies application.

Nov. 28, 2003 The Canadian National Energy Board approves the application to construct and operate a natural gas pipeline to Vancouver Island, subject to regulatory approvals for the Vancouver Island Generation Project.

Dec. 15, 2003 The National Energy Board authorizes construction and operation of the Canadian portion of the project.

Dec. 22, 2003 An unconditional environmental assessment certificate is granted for the project.

Dec. 20, 2004 BC Hydro abandons Georgia Strait crossing project at a cost of $50 million.

Feb. 17, 2005 B.C. Utilities Commission rules that $285 million Duke Point Power project can proceed.

June 14, 20005 B.C. Court of Appeal grants opponents of Duke Point power project leave to appeal the BC Utilities Commission decision in favour of the project.

June 17, 2005 BC Hydro board of directors votes to abandon Duke Point power project, at a cost to taxpayers of $120 million.

© The Vancouver Sun 2005

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Risks 'too great' for power plant, mayor outraged

B.C. Hydro cancelled its Duke Point power plant project Friday, and said it would turn to conservation measures and upgrading of power lines to maintain a reliable electricity supply for Vancouver Island.

Because the Nanaimo-area project faced a legal challenge, the risk of not completing it in time to deal with a projected supply shortfall in 2007 was too great, Hydro said.

Hydro had won regulatory approval to go ahead with the $250-million, 252-megawatt gas-fired generation plant, after spending 10 years and $125.5 million trying to get it off the ground.

The project faced a barrage of opposition from community and environmental groups, who said it was too costly, unnecessary, and would damage the environment. This week, the B.C. Court of Appeal granted opponents leave to appeal the approval.

"When the leave to appeal was granted ... we realized there was a risk of this not getting built on time," said Bev Van Ruyven, Hydro's vice-president of distribution.

"Our priority throughout has been the reliability of electricity supply to our customers on Vancouver Island and the risks to that are now too great."

Until Friday, Hydro had maintained the project was the best way to provide customers with reliable capacity to meet the Island's anticipated supply shortfall in 2007, when some of the undersea electricity cables that run from the mainland are deemed unreliable. Hydro will now look at its contingency plans -- options that include having industrial users contracted to lower power use at peak times, the short-term improvement of the deteriorating undersea cables and establishing new on-Island generation.

Van Ruyven said Hydro exercised an escape clause to get out of the agreement it signed with Calgary-based Pristine Power, the company that was to build the plant.

The decision was met with outrage and shock by those who have followed the plight of the power plant.

"I'm pissed right off," growled Nanaimo Mayor Gary Korpan who has called on Premier Gordon Campbell and Energy Minister Richard Neufeld for a public inquiry into Hydro's actions. "This is incomprehensible."

Korpan said he couldn't understand why Hydro abandoned the project when it was so close to the end, particularly after years of warning Islanders it was needed and was the most cost-effective means of ensuring long-term power supply.

Friday's decision means Hydro walks away from the $50 million Pristine was to pay for Hydro's work on getting permits for the project as well as the plant's turbines which Hydro bought for $69 million.

Hydro estimates it can get $14 million for the turbines. But Van Ruyven tried to stress the corporation will save in the long run as it is no longer tied into a 25-year agreement that would have seen it pay Pristine between $30 million to $40 million a year for power from the Duke Point plant.

© Times Colonist (Victoria) 2005

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Andrew A. Duffy
Times-Colonist
18 Jun 2005

News that the Duke Point Power Plant project had been cancelled by B.C. Hydro drew sharp criticism Friday, even to the point of Nanaimo Mayor Gary Korpan calling for an inquiry.

"Time after time, B.C. Hydro said to the public that Vancouver Island was at severe risk of insufficient electricity supply," Korpan said in a written statement. "It is absolutely clear that we on Vancouver Island have been lied to for these last several years."

That's why Korpan wants to see an inquiry.

"At the very least we need an inquiry to find out what the costs were and why we went through this whole thing for nothing."

He wasn't the only one fuming.

Jeff Myers, president of Pristine Power, admits he was stunned with the move, noting Hydro is concerned they won't have the plant done in time.

Pristine is the company that was contracted to build the plant. The time frame has been changed because of the ruling that there was legal cause for an appeal process requested by opponents of the project.

"That's simply not true," he said of the suggested delay. "In fact we
guaranteed it for August 2007 and they don't require it until November ... it just doesn't make any sense." Myers noted that an appeal date had been set for July 8, with a note the hearing had to be expedited.

"This is very surprising and I still don't understand it," he said. "Why not at least go through (the appeal)."

Bev Van Ruyven, Hydro's vice president of distribution, would only say that the delay meant Hydro was out of its comfort zone in terms of the timeline for completion.

"We don't even know if (Pristine) could start it in July, we have no control of the Appeal Court," she said.

And while the opponents of the plant admitted they were surprised by Hydro's move, they were heaping praise on the corporation for finally having seen the light.

"We're very happy, we've been struggling for five years to oppose gas-fired power plants on the Island," said GSXCCC president Tom Hackney.

The GSXCCC has argued renewing the undersea cables as quickly as possible was always the best solution.

The JIESC, which represents the large industrial users of power and advocated demand-side management and renewing the cables as the best solution, was also pleased.

"This was a very, very expensive (stop-gap) measure," said executive director Dan Potts.

"It would have added $50-60 million to Hydro's annual costs and we don't think there's a need for it."

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Les Leyne
Times-Colonist
18 Jun 2005

Hey, auditor general. Want to sink your teeth into something really juicy, a lot more interesting than the usual value-for-money auditing exercises?

Check out something that used to be known as the "Duke Point" power project.

Start by trying to find out where $120 million over the last 10 years went. That's the amount B.C. Hydro has written down so far in the long, chaotic struggle to execute some kind of long-range plan to keep a reliable supply of electricity flowing the length of Vancouver Island.

As of Friday, it looks as if that money and a few million more has been flushed down the drain. And $120 million for nothing is only one of the things that doesn't add up.

Start with the $50 million within that loss that was sunk into the proposed underwater gas pipeline to the Island, which was a whole separate derailment.

B.C. Hydro's deal with the limited partnership that was supposed to build "Duke Point" stipulated that the public utility could recoup that loss. The private company was going to pay them that sum to make up the loss. Whatever happens next, B.C. Hydro is unlikely to get another offer like that. So why did they walk away Friday?

The cancellation of the project was widely expected, but it is still startling to see them abandon a deal with $50 million lying on the table for them.

The stated reasons are that the continuing court appeals meant the risk is too great that it won't be built in time. But they don't add up either.

The Court of Appeal had already set July 8 as the date for a one-day hearing on one narrow procedural question. Allow a couple of weeks for an expedited decision on that, and you could easily anticipate a final court decision on the intervenor appeals well before the July 31 "drop dead" option date that is fixed in contracts.

As Pristine Power head Jeff Myers said: "They were running in a $100-million marathon and they were right within sight of the finish line, and then quit and walked off the course."

The worries about deadline risks don't add up elsewhere, either. B.C. Hydro had absolutely iron-clad assurances from the limited partnership that it would have the plant up and running by the summer of 2007.

But somehow they convinced themselves internally that their partners were going to drop the ball, so they bailed out. Hydro issued reassurances that the bail-out doesn't incur additional costs. But that prospective $50 million they are walking away from sure looks like a loss.

The future options that B.C. Hydro is now outlining don't add up either. They're talking about extending the life of the current transmission cable and making load curtailment arrangements with industrial customers as short-term measures.

Those concepts have been examined ad nauseam over the last several years, and Hydro's own experts were lined up three-deep at times warning they simply wouldn't work. Not only that, the B.C. Utilities Commission formally rejected those ideas.

The new transmission lines in the works have various communities up in arms and are a lot harder to approve than anyone realizes, and even if they are built won't likely be up until 2010.

Hydro's longer-term solution is to look at how the next call for a new energy supply to the private sector needs to be adjusted to take into consideration Friday's decision.

Here's how it will be adjusted: All the costs are going to go up because private companies and their bankers are going to factor in a heavy B.C. premium to recognize the weird vagaries that crop up when anyone tries to do business with B.C. Hydro.

NorskeCanada emerges as a big winner. It fronted a coalition of Island industries that fought *Duke Point* tooth and nail, partly because of natural gas concerns, and partly because it can curtail its consumption and make money selling the unused capacity back to B.C. Hydro.

But that doesn't necessarily add up to a win for residents.

Determined citizens' groups who fought this project are big winners today, as well. But two or three years from now, when Island consumption is well beyond Hydro's forecasts (we hit the 2008 projection last winter) and a new supply is years behind the original schedule, we'll see if everyone is cheering the victory.

There's enough here for an auditor general to gorge on for months. Come to think of it, maybe the transportation safety board should lead the probe, because this is now officially a train wreck.

Just So You Know: If Norske and B.C. Hydro -- at each other's throats for years now -- sit down to do a new deal, Islanders should watch with bated breath. Norske will be the fourth private partner for B.C. Hydro.

Atco got burned for $5 million after Hydro broke off a Port Alberni venture, Calpine walked away with losses after B.C. Hydro flounced away from their partnership, and the *Duke Point* limited partnership's losses are in the "single-digit millions" now that Hydro has severed them, too.

In light of that, Hydro is a strong contender in the quote of the year sweepstakes, for this parting remark about its newest ex-partner: "We hope we will be able to work with them again in the future."

leyne@island.net

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Editorial
Times-Colonist
18 Jun 2005

Hydro's abandonment of Duke Point plant might mean we have to believe in fairies

After four years of effort and $120 million down the drain, B.C. Hydro has pulled the plug on the proposed Duke Point power plant in Nanaimo.

The last straw appears to have been court approval of yet another appeal by opponents of the plant, who will not take Yes for an answer. With the prospect of even more delay, B.C. Hydro decided it had had enough.

So where does that decision leave Vancouver Islanders, who import two thirds of the roughly 2,100 megawatts of power we use at any given time?

Opponents of the project say that we'll be fine; that we don't need the extra power; that, at $45 million a year in fees for a private operator, it was too expensive; that the two power fines from the mainland can be upgraded in time to avoid brownouts; that the import of natural gas as the plant's fuel was uneconomical; that the plant would have been bad for the environment; that we're all better off using less power anyway.

B.C. Hydro has argued correctly that the population of Vancouver Island is growing, and will at some point need more power than the mainland can reliably produce. After all, the mainland population is growing, too, and facing its own power expansion opponents.

B.C. Hydro also argued that, if not absolutely necessary now, Duke Point would have been a backup source of power, and that it was also intended as a stopgap during the several power vulnerable months while the mainland lines are being upgraded in 2007.

In other words, we can get along without the plant, as long as there are no emergencies (like a tsunami or major earthquake) that interrupt the supply from the Mainland or damage the plants already on the Island that deliver about 690 megawatts. It would also help if the population of the Island remained steady, which doesn't seem likely to happen. Or perhaps most of us will trade our cars in for bicycles and walking shoes (also unlikely).

The environmentalist opposition to Duke Point and, indeed, any expansion of power generation except wind, solar and waves is ironic. Green thinking often invokes a precautionary principle: We shouldn't do something if it might harm the environment. It's a recipe for economic and social stagnation, but then, for environmentalists, that's often the point. We can save the planet by bringing economic growth to a halt.

With Duke Point, B.C. Hydro was invoking its own precautionary principle: Should the major supply of electricity fail, Duke Point could have taken up some of the slack.

B.C. Hydro's mandate is to ensure that the people of B.C. have adequate power. With the failure of Duke Point, the utility will now have to spend untold millions more, and endure more years of hearings and environmental opposition, to find yet another site on the Island to ensure that we have adequate power.

Unless, of course, we prefer to believe in the electricity fairy, who brings us all the non polluting power we need with a wave of her wand.

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Globe and Mail
Saturday, June 18, 2005

British Columbia Hydro and Power Authority dropped plans yesterday to build a 262-megawatt natural gas power plant on Vancouver Island that had run into opposition from environmentalists and industrial ratepayers. The provincially owned utility said it will not go ahead with the $285-million Duke Point power plant after a court granted opponents the right to file another appeal of a ruling that would have permitted construction. B.C. Hydro wanted the plant in operation in 2007 to meet the island's rising electricity demand, and said "the continuing appeal process means the risk is too great the plant will not be built in time." The plant was to have been built near Nanaimo. Reuters

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Wendy McLellan
The Province
19 June 2005

B.C. Hydro will fire up its contingency plans for Vancouver Island after walking away from a contract to build a gas-fired power plant near Nanaimo.

Hydro blamed the continuing court appeals from opponents of the Duke Point Power project for the decision announced Friday. "There comes a point where you say, 'Enough is enough,'" said Bev Van Ruyven, Hydro senior vice-president.

She said the months of delays were increasing the risk that the plant wouldn't be completed in time to provide power during an anticipated one-year shortage beginning in the winter of 2007.

Earlier this week, the B.C. Court of Appeal agreed to hear arguments from industry, environmental and community groups opposed to the $280-million project. The hearing date was set for July 8.

Hydro's contract with an Alberta-based independent power producer to build Duke Point allowed for cancellation of the deal without penalty if an appeal was granted.

Van Ruyven said Hydro will investigate other ways to save electricity during peak times until the transmission cables are in place in 2008. Norske Canada has already proposed reducing power use during peak hours at its Vancouver Island mills and Hydro will begin working with rate payers to reduce their consumption.

Jeff Myers, vice-president of Duke Point Power LLP, said his firm would have met the deadline to complete the project despite the delay in beginning construction.

"This was our first big deal, and to have it end like this is just devastating for our company financially, and for our reputation," he said. "We spent two years and $5 million on this, and we could deliver on time -- it was guaranteed."

wmclellan@png.canwest.com

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Andrea Rondeau
Cowichan Valley Citizen
19 June 2005

Concerned Citizens Coalition claim victory "milestone in Canadian environmental history"

Opponents of at 252 megawatt power plant that was to be built at Duke Point for $280 million by Duke Point Power Ltd. were celebrating Friday after BC Hydro announced the project has been cancelled.

"I think actually that this is a milestone in Canadian environmental history," said Steve Miller, Vice President of the Concerned Citizen's Coalition, a group that's been fighting the plant. "I don't think something this big has been able to be stopped by people as small as us in Canada before."

...

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Vaughn Palmer
CKNW
20 June 2005

VAUGHN PALMER says BC Hydro has spent $120m trying to develop a gas-fired generating capacity on Vancouver Island and so far the only thing that's been generated is a lot of opposition from the Build Nothing Anywhere Ever crowd.

Why should anyone care? We're all paying for it.

Since the announcement, there've been a lot of calls for a public inquiry into what went wrong.

$120 million is just a starting point on the real costs.

Windmill farms? People don't realize how bloody noisy they are.

CKNW audio vault

On the CKNW website, you will have to register a name and email address, before you are allowed access to the audio vault.

You will need Windows Media Player installed on your computer.

The Vaughn Palmer session is on Monday, 20 June 2005 at 7:00 am. Palmer comes on at about 7:10 and the segment runs three minutes.

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Editorial
Vancouver Sun
22-Jun-2005

Last week's inexplicable decision by BC Hydro to pull the plug on the Duke Point power project suggests such misguided planning and operational ineptitude that a review of the process that brought it to this point should be on top of the auditor-general's to-do list.

BC Hydro had made a compelling technical case for building the $285-million, 252-megawatt, natural gas-fired plant. It argued that Vancouver Island needed reliable generating capacity to see it through a shortfall until new high-voltage cable could be laid from the mainland across the Strait of Georgia. Developing island energy self-sufficiency would fulfil increasing demand from a growing population and industrial users. And once the new cable was in place, electricity could flow both ways. After all, the mainland population is growing too and might need backup in the future.

In essence, it is the same case BC Hydro has been making since 1995 when it first called for tenders for a proposal to address Vancouver Island's future energy requirements.

The BC Utilities Commission rejected a proposal by BC Hydro's own subsidiary, Vancouver Island Energy Corp., in 2003 but approved the latest plan by Duke Point Power Limited Partnership, majority owned by a consortium led by Pristine Power of Calgary.

In the reasons for its decision released in March, the utilities commission deemed the project to be in the public interest. Presumably, then, the decision to abandon the project is not in the public interest.

It leaves Vancouver Island at the mercy of what BC Hydro calls short-term contingency options. These include extending the life of the existing aging cables, an arrangement with Norske Skog to curtail consumption (in effect, Norske sells the power it doesn't use back to BC Hydro) and, if required, diesel-powered mobile generators to produce additional power.

The utilities commission has already formally rejected these alternatives as viable options for providing the island with dependable long-term capacity.

Without the power plant, a vital component of the island's energy infrastructure, economic growth will be constrained, as will the level of services. Businesses will be wary about investing on the island without some assurance that the lights will come on every day.

The reason given for BC Hydro's stunning reversal is that the B.C. Court of Appeal gave opponents of the Duke Point power project leave to appeal the utilities commission's decision. And even if they lost, they could take the case to the Supreme Court, raising the risk that the deadline would not be met and the project would not be completed on time, costing the utility more money.

But these reasons are not convincing. First, the appeal is limited to a narrow procedural matter and may not succeed. Second, the court had already agreed to expedite the process and set the hearing for July 8 in order to accommodate a July 31 deadline set in BC Hydro's agreement with its Duke Point partners. Third, as a public-private partnership, the contractor, Pristine Power, bore the entire risk of construction delays.

The BC Hydro board has much to answer for in this perplexing decision. Was the rising cost of natural gas a factor? That's not plausible. Like electricity, natural gas trades on commodities markets so producers can buy or sell contracts to lock in prices. Besides, there are no energy sources that provide comparable reliability at less cost. There's no such thing as cheap new power anymore.

The utilities commission is not blameless in this fiasco. Instead of convening a no-holds-barred, wide-open process, it conducted restricted hearings, with some sessions held in camera. That lack of transparency opened the door to challenge the fairness of the procedure in court.

BC Hydro has written off most of its $120 million investment in the Duke Point power project, an accounting entry that will soon show up on consumers' electricity bills.

It will also pay the Duke Point Power Partnership $5.5 million for terminating the agreement and forego $50 million on the sale of the turbines and related plant equipment purchased for the earlier incarnation of the project.

In an outraged statement, Gary Korpan, the mayor of Nanaimo, questioned whether BC Hydro management has any credibility left in the business community. He also demanded BC Hydro executives apologize to the citizens of Vancouver Island.

We have one more request -- a formal review by the auditor-general into BC Hydro's management practices and decision-making procedures, as well as the regulator's handling of the affair. We want to know why we have had to endure a decade of wasted time, effort and money.

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Robert Barron
The Daily News (Nanaimo)
22-Jun-2005

The $120-million BC Hydro spent in failed attempts to build a gas-fired electrical generation plant at Duke Point was "written off" by the Crown corporation a year and a half ago and has had no financial impacts on Hydro customers, says Bev Van Ruyven.

Van Ruyven, Hydro's senior vice-president of distribution, said the expenses are related to Hydro's planned Vancouver Island Generation Project -- the $370-million, 265-megawatt gas plant proposal for Duke Point that was denied by the B.C. Utilities Commission in 2003 -- and the related $340-million GSX natural gas pipeline across the Strait of Georgia that was supposed to feed it.

"We spent $70-million on physical assets for the VIGP, as well as property acquisition for the project and regulatory processes," she said. "We also spent an additional $50-million on the processes related to the GSX proposal. These expenses were written off as sunk costs and came off Hydro's dividends to the government and was not passed on to our customers."

Hydro nixed a deal with Alberta-based Pristine Power last week to build a $280-million, 252-megawatt plant citing time constraints after a panel from the B.C. Court of Appeal allowed an appeal against the new plant proposal to proceed.

Pristine's proposal for the plant was chosen from 23 private sector bidders, offering a variety of energy generation projects for Vancouver Island, after a lengthy Call for Tender process last year by Hydro after the failure of the VIGP to pass regulatory processes.

While acknowledging Hydro's contingency plans to meet Vancouver Island's energy needs - curtailment and conservation - are almost identical to the alternatives laid out by a number of the plant's opponents, Van Ruyven said "obviously" Hydro always had a Plan B.

"Load reduction, whereby some of our major customers would reduce their load during peak periods, is one contingency we planned on in the event the plant didn't proceed," she said.

Hydro had claimed since announcing plans for a gas plant at Duke Point in 2002 the plant was essential to Vancouver Island's energy mix past the winter of 2007-08, and said Islanders faced the possibility of brown and black-outs passed that point if new power sources weren't in service by then.

The Crown corporation said 240 megawatts of electricity will disappear when the high voltage direct current HVDC cable system, which supplies about 25% of Vancouver Island's energy needs and is in deteriorating condition, goes out of service in 2007.

However, Van Ruyven said B.C. Transmission Corporation has since guaranteed "operational flexibility" on the HVDC cable system with upgrades that will extend its life-span.

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Michael Smyth
The Province
24-Jun-2005

Gordon Campbell used to rant and rave about the previous NDP government's mismanagement of B.C. Hydro, especially when the New Democrats decided to invest in a risky power project in Pakistan.

Taxpayers lost $10 million on the doomed plant and in the wake of the ensuing "Hydrogate" scandal, Campbell promised to clean up and professionalize B.C. Hydro.

"We have to make sure it is being run in a professional manner," he said in 2001.

Which begs the question: What's so "professional" about Hydro flushing $120 million of your money down the drain?

That's how much British Columbians lost after Hydro's cancellation last week of the planned Duke Point plant near Nanaimo. It's an astonishing waste of cash that makes the Hydrogate boondoggle look like chump change.

The Duke Point debacle throws into question the competency of Hydro's senior managers and its board. The situation calls for a public inquiry, yet the government's response so far has been to duck and cover.

That's unacceptable with so many unanswered questions.

For example: Why did B.C. Hydro abandon a project it argued for years was desperately needed to prevent a Vancouver Island energy shortage?

Hydro produced stacks of studies, graphs and charts showing Vancouver Island will face an energy crunch by 2007. The arguments persuaded Hydro's board and the B.C. Utilities Commission, and the $285-million plant was given the green light.

The decision angered environmentalists concerned about pollution and the usual regulatory battle erupted. But Hydro's explanation last week that legal wrangling was endangering the plant's construction deadlines is absurd.

The B.C. Court of Appeal had scheduled a one-day hearing for July 8. Duke Point's backers expressed confidence in a positive ruling and said the construction timetable would be OK.

Why, oh, why would Hydro not wait few more weeks for the outcome of that hearing before pulling the pin on a project?

That's like running a marathon and deciding to quit with 100 metres to go because you're afraid of tripping over the finish line.

The environmentalists cheering this absurd decision, by the way, may end up wishing they'd never got their way. Now that Duke Point is dead, B.C. Hydro is working on other plans to meet the island's looming energy crunch.

That includes the possible use of monstrosities called "distillate-fired mobile units." These are massive 23-megawatt generators towed around on barges that guzzle diesel fuel to pump out power and lung-searing pollution.

No wonder Nanaimo Mayor Gary Korpan said the decision to kill Duke Point left him "pissed right off." He later apologized for his language. But it's others who should apologize and British Columbians deserve answers.

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