BC Hydro moves to calm private power producers
Scott Simpson
Vancouver Sun
13-Jul-2005
Representatives of BC Hydro and independent power producers met on Tuesday in a bid to head off a crisis of confidence in Hydro's support for private-sector electricity projects.
Hydro was saying little about the meeting, involving president and CEO Bob Elton and Independent Power Producers association of B.C. president Steve Davis.
The two sides are split over Hydro's June 17 cancellation of the privately financed $285-million Duke Point gas generation facility, with IPPBC and others warning that the decision sends a negative message to the investment community that ultimately sustains such projects.
It's the third time Hydro's bid to locate a gas-fired generating plant on Vancouver Island has failed, and Davis estimates his members have spent more than $30 million in unsuccessful bidding processes on this project.
In a letter sent Friday to Elton, Davis said the most recent termination sent a "chill" through the independent power community, which says its confidence in Hydro "is at an all-time low."
Elton reported through an intermediary that Hydro and IPPBC will continue to discuss ways to streamline the regulatory process, but would not provide details.
Davis noted that Hydro has successfully arranged almost 40 deals with small-venue operators, notably in the green power sector -- but has struggled to make large-scale arrangements that would take big bites out of B.C.'s growing dependence on imported power.
Hydro now relies on imports for about 13 per cent of B.C.'s electricity needs -- Friday it issued a call for at least 1,800 gigawatts of new generation.
That's enough for 180,000 homes and marks the first time since 1995 that the Crown corporation has undertaken a large-scale, broad-based request for tenders, according to Davis.
"We're eager to respond, but we want to see a better-crafted process," Davis said.
The association wants Hydro to cultivate public support before putting independent producers into the regulatory process -- public opposition to Duke Point was the key to its rejection by the Crown corporation's board of directors.
Davis said his meeting with Elton was "quite constructive."
"We discussed several lessons that hopefully can be learned from the Duke Point termination. We agreed to exchange some recommendations to make the upcoming BC Hydro call for power structured such that it gets the best and most cost effective bids."
Business Council of B.C. executive vice-president Jock Finlayson agreed Hydro's decision could make it more difficult for independent power proponents to raise cash -- with Hydro customers eventually shouldering "risk premiums" added to capital costs of new projects.
By contrast, he said, it's in the best interest of the province to maintain low electricity rates that keep B.C. industries competitive.
"Cost is critical in determining where we are going to get our electricity supply from," Finlayson said.
Finlayson and Davis said they believe the province's energy policy, announced in 2002, is sound, but suggested the provincial government consider reiterating its support for private participation as a key element of that policy.
Posted by Arthur Caldicott on 13 Jul 2005