BC Hydro picks gas-fired Duke Point Power; GSX remains undead

BC Hydro has announced its selection of "Duke Point Power LP", a 252 MW gas-fired electricity generation project for Nanaimo. Proposed by Pristine Power of Calgary, the project is the only one left standing following BC Hydro's year-long Call for Tenders (CFT) selection process.

Isn't this VIGP with a new name?
Yes. Duke Point Power is the Vancouver Island Generation Project (VIGP), this time privately owned and renamed. VIGP was originally sponsored by BC Hydro, and turned down by the BC Utilities Commission (BCUC) in September 2003 because BC Hydro had not demonstrated that VIGP was not the lowest-cost solution to meet an expected supply shortage in 2007.

If the Duke Point Power project is the same thing as VIGP, how can Pristine Power pitch it at a lower cost than BC Hydro was capable of doing?
Possible answers to that question are:

• A $50 million credit given by BC Hydro to companies wishing to acquire the assets of VIGP and resubmit them into the CFT process, which is what Pristine Power has done.
  
• $98 million "sunk" costs in VIGP were written down by BC Hydro earlier in 2004. Are these costs factored into the Pristine Power project costs? Or are they lost from view, but nevertheless borne by BC Hydro's ratepayers, or the taxpayers of BC?
  
• The relative appreciation in the Canadian dollar compared to the US dollar results in an apparent reduction in borrowing costs, since the debt and repayment currency is $US. This is a cheap and temporary trick, since exchange rates will fluctuate many times in the decades during which the project costs are being repaid.

Will the Duke Point Power project have to undergo a review by the Environmental Assessment Office or by the BC Utilities Commission?
Probably not. Unless the location or technology changes, the EA permit remains valid. And because the project is privately owned now, it is not subject to a review by BCUC.

BCUC has to review something, though. What is that?
BC Hydro will apply to BCUC for a review of the Electricity Purchase Agreement between BC Hydro and Pristine Power or Duke Point Power LP. The EPA is a commercial agreement, subject to confidentiality considerations. In the past, details within EPAs have not been disclosed, and this has been upheld by the Office of Information and Privacy Commissioner (OIPC). We should expect details of this EPA to be unavailable, as well. This becomes a case of "trust the regulator.", since the Commissioners will be given access to the full agreements. BC Hydro states that they will file this application by November 19.

Who is Pristine Power?
Pristine Power is a group of ex-Westcoast Energy people who were working for Westcoast and Fletcher Challenge and built the Island Cogeneration Project. They claim to have built a number of combined cycle generation plants in North Americal, although its website gives no indication as to what these are.

Is the GSX Pipeline still alive? Where will the Duke Point project get its fuel from?
Today's announcement deferred the GSX Pipeline decision until the BC Utilities Commission has completed its review of Terasen's Resource Plan. Indicators are that the GSX Pipeline is dead, although official statements won't go that far, leaving GSX among the "undead". Fuel supply to the new project remains undecided. Terasen filed evidence in the review of VIGP that it could provide the needed gas, at lower cost, with upgrades to its existing pipeline to Vancouver Island.

BC Hydro news release
BC Hydro Call for Tenders for more information
GSX Concerned Citizens Coalition media release

GSX Concerned Citizens Coalition
For Immediate Release: November 3, 2004

Energy “winner” makes Vancouver Island a loser

Nanaimo, BC – The Duke Point Power Limited Partnership project, winner of BC Hydro’s long-awaited Call For Tenders (CFT) for new energy generation, is not the least-cost option to meet Vancouver Island’s electricity needs, says the GSX Concerned Citizens Coalition (GSXCCC). The Coalition is calling on the BC Utilities Commission to ensure a full public review of the project.

“This result violates the terms of BC Hydro’s CFT and frustrates the Commission’s expectation of the lowest cost solution,” said Tom Hackney, GSXCCC president. “BC Hydro’s vision for Vancouver Island’s future energy is dirty, non-renewable and expensive. Vancouver Islanders must now insist on a thorough review of this inappropriate and costly project. All British Columbian ratepayers will pay for this wrong-headed energy plan.”

The CFT was issued to find the most cost-effective solution to an expected electricity shortfall on Vancouver Island resulting from the zero-rating of existing sub-sea transmission cables. “The real solution is to renew the sub-sea cables as soon as possible,” said Hackney.

In its 2003 review, the Commission found that BC Hydro had underestimated the risk of high gas prices, given the rapid depletion of conventional North American gas resources.

“Gas-generated electricity is no longer cheap,” said GSXCCC director Arthur Caldicott. “It’s time for the BC Transmission Corporation to renew the sub-sea cables, so that the Island will not be cut off from Mainland sources of electricity.”

The GSX Concerned Citizens Coalition has campaigned against BC Hydro’s Vancouver Island electricity strategy since 2000, bringing expert evidence to the National Energy Board review of the Georgia Strait Crossing (GSX) natural gas pipeline and to the BC Utilities Commission review of the Vancouver Island Generation Project, both in 2003. The Coalition has a hundred individual members and eight member groups, including the Sierra Club of Canada - BC Chapter, Georgia Strait Alliance; Council of Canadians – Victoria and Cowichan Chapters, Saturna Island Community Club, Pender Island Conservancy Association, Shawnigan Lake Watershed Watch and the Canadian Parks And Wilderness Society – BC.

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For further information, contact:
Tom Hackney (250) 616-7895 cell or (250) 381-4463
Arthur Caldicott (250) 370-9930 x.22