Electricity imports can give us a nasty shock

Brian Lewis
The Province
17-Jul-2005

BC Hydro is a very large organization and, as such, it tends to behave like a very large ship -- namely, the Titanic.

In Hydro's case, once the course is set, those on the bridge often appear reluctant to look beyond the foredeck -- even if they're bearing down on an iceberg.

For Hydro, its 1.7 million customers and B.C.'s economy, that iceberg is the utility's increasing reliance on imported electricity to meet domestic demand.

Until a few years ago, Hydro produced enough low-cost power to meet B.C.'s growing demand, with surpluses being sold for mega-dollars, primarily to U.S. customers.

But a decade of neglect during the 1990s in maintaining and expanding the utility's infrastructure by Victoria's politicians and Hydro's high-priced help left it with a growing shortfall in reasonably priced domestic electricity.

In the just-completed fiscal year, Hydro had to import 13.5 per cent of the power it needs to supply B.C. customers. That's up from 10 per cent in the prior year. Put another way, now one in eight B.C. homes runs on imported electricity.

And as B.C.'s hot economy continues to expand, Hydro's ability to keep pace in providing us with secure, low-cost electricity -- which improves our global competitiveness -- continues to deteriorate.

You'd think that given this scenario, Hydro would pull out all the stops to eliminate our dependence on U.S. power as quickly as possible.

No such luck.

Even though recent cancellation of the proposed Duke Point power plant on Vancouver Island means that Hydro will increase this fall's call for new power production by the private sector, its own data shows that domestic generation will continue to fall further behind growing domestic demand.

The coming call for tenders seeks a minimum of 1,800 gigawatt-hours of new supply to be in production within five years. That would supply about 180,000 homes. In the past five years, domestic electricity consumption increased by more than 3,000 GWh, or enough to supply 300,000 homes.

Yes, there'll be additional calls for tender in future years and one day perhaps the 900-megawatt Site C hydroelectric facility on the Peace River will be in place. But all these projects will take time to plan and build, and the point here is that at its current pace, Hydro will never win the generation catch-up game.

And don't look at Port Moody's obsolete, high-cost Burrard Thermal natural-gas-fired power plant for help either -- unless you want to pay twice the imported power costs and send more gas emissions up the Fraser Valley.

All of this means that the risks to ratepayers and B.C.'s economic development will increase. More than 90 per cent of our imported power is U.S.-generated, and guess what will happen to price and supply when -- not if -- the Americans run short?

There is a solution, but to date Hydro has shown Titanic-sized stubbornness in fully utilizing it.

B.C. has a viable, well-capitalized private power sector with full-capability of building projects using a number of technologies -- small hydro, wind, thermal, etc. -- that can be brought on-stream relatively quickly to eliminate those imports.

In addition, at before-tax costs roughly equal to imported power, about one-third of what Hydro pays domestic producers stays at home via taxes, wages, etc.

Furthermore, the B.C. Liberal government's Energy Plan encourages private power production.

The bottom line: If Hydro won't alter course, then Victoria must take the helm and eliminate power imports at a much faster pace.

Brian Lewis is Money editor of The Province. He can be reached at blewis@png.canwest.com.