B.C. calls for open electricity market

Independents could provide two per cent of annual power output, Neufeld says

Vancouver Sun
Scott Simpson

COMMENT: That BC Hydro will source new capacity in British Columbia from the private sector was a path decreed in the Liberal government's energy policy released in 2002. Nothing new there.

What might be new is the idea of one annual call for energy and capacity, instead of the smaller, localized, specialized calls that Hydro has undertaken so far - for capacity on Vancouver Island (the Call for Tenders) or the occasional "green" calls, for example.

BC Hydro's announcement to mitigate all environmental impacts sounds good. The devil there is in the details. Here's Hydro's news release —Arthur Caldicott]

B.C.'s energy minister said Thursday he wants to throw open British Columbia's electricity market to greater participation by the private sector.

Richard Neufeld said independent power producers have told him they can develop enough new projects each year to add about 1,000 gigawatt hours to the province's grid -- an amount roughly equivalent to two per cent of the electricity that's annually consumed in B.C.

A thousand gigawatts is also roughly equal to annual demand growth in a B.C. economy that's thriving on employment in the construction industry and worldwide demand for resources.

Neufeld says he wants independent power producers to have room to compete for all of the province's needs.

"[BC] Hydro is having a greater load growth than what they were expecting in their plans," Neufeld said. "That's understandable. They didn't expect British Columbia's economy to move ahead that fast, but it is moving quick and fast, and that's good for all of B.C."

At present, independents are hemmed in due to Hydro's practice of addressing the province's growing energy demand via a variety of specialized programs.

The independents have carved out a niche as experts in the development of green energy projects, and they've been beneficiaries of three annual tenders that Hydro has used to add several hundred gigawatt hours to the grid.

However, only six months ago, Hydro conservatively estimated that it would require just 40 gigawatts a year from green producers over the next decade.

That token amount drew angry criticism from proponents of wind, small hydro and other environmentally friendly methods of electricity generation -- particularly in light of the Crown corporation's 2002 estimate that green and alternative energy could provide B.C. with 18,000 gigawatts.

Hydro has several methods of coping with demand growth, with security of supply the crown corporation's stated priority.

It uses its PowerSmart program to reduce consumption, and has a program called customer-based generation in which it partners with industries to finance internal power generation projects such as steam-driven turbines powered by woodwaste.

It's also poised to announce its choice of projects to address a looming shortage of electricity on Vancouver Island -- a gas-fired turbine generator is expected to be selected -- maintaining continuity with a project that was originally begun by Hydro.

Neufeld said his main concern is making sure that Hydro's customers aren't jolted by a sudden surge in the price of electricity -- something that's possible only if higher-cost green sources such as wind power are carefully blended into B.C.'s low-cost hydroelectric system.

He wants independents to have the opportunity to bid on everything Hydro is seeking in a given year, instead of operating in just a niche market.

He thinks one annual call for electricity, with all sources welcome to bid, could give the independents more solid economic footing.

"What we have to do is open it up to all and then Hydro has to move from there to decide where they can buy the electricity from.

"We have to get a big enough call so that it actually builds a good IPP community in the province of British Columbia.

"I know the IPPs are a little impatient at times, but Hydro also has some responsibilities to the ratepayers ... because of course ratepayers want the lowest cost possible."

He made the comments at an announcement that Hydro is committing to a new environmental policy that promises to mitigate for 20 years all adverse impacts that Hydro operations have on the environment in British Columbia.

Hydro promises "no net incremental" impacts from its operations.

It could compensate for the impact of a dam, for example, with a fisheries enhancement project, or for air emissions from a gas-fired power plant with a tree-planting program or financial support for fleet purchases of hybrid automobiles.

The policy will be announced in detail today when Hydro chair Bob Elton addresses a Board of Trade luncheon in Vancouver.

- - -

POWER POINT

BC Hydro buys 3,500 gigawatt hours from B.C. independent power producers. Adding 1,000 gigawatts has the potential to power more than 54,000 additional homes.

3,500 gigawatt hours

190,000 homes at any given moment

1,000 gigawatt hours

54,000 homes at any given moment

© The Vancouver Sun 2004