Reliable, cost-effective power for the Island

Bob Elton
Special to the Vancouver Sun
17 Nov 2004

COMMENT: BC Hydro CEO Bob Elton is using his office to help sweep his Call for Tenders (CFT) decision through the BCUC review process. He adds nothing to the discussion. He doesn't address any of the concerns with the Duke Point Project (DPP) that was selected as best-in-class from the CFT.

For example: the CFT was constructed to give DPP, and other proposals that resubmitted BC Hydro's failed VIGP back into the CFT, a $50 million bottom-line advantage. BC Hydro is still taking on all the gas price risk, in an era in which natural gas prices have been at record high levels and promise to go higher in the future.

As Elton presents it here, the BCUC and BC Hydro are working together to rush the DPP project through to a construction start. If the BCUC is to retain any credibility, it will respond positively to those interveners - as diverse as the GSX Concerned Citizens Coalition and the Joint Industry Electricity Steering Committee and conduct a full, open, oral hearing into BC Hydro's application for an Electricity Purchase Agreement

BC Hydro's recent announcement that Pristine Power was the successful proponent in the Vancouver Island Call for Tender (VICFT) process has generated a lot of attention.

And that is understandable -- we have been working on a solution to the Island's electricity problem for over a decade and there have been a vast array of opinions on the best way to do that.

I think that diversity of views has been very valuable, and BC Hydro has learned from it. And we look forward to continued discussion with all interested parties as part of the B.C. Utilities Commission's process to review the outcome of the VICFT, which begins on Nov. 29.

In advance of that process, I thought it might be useful to reiterate some of the principles that guided us through the VICFT.

The first was our primary goal -- to ensure the reliable supply of electricity to our customers on Vancouver Island after 2007. We cannot -- and will not -- compromise on that goal, as BC Hydro has an obligation to serve its customers.

We have known for some time now that obligation was threatened by the deteriorating undersea high voltage direct current transmission cables to the Island that we won't be able to count on after 2007. So we needed to find a solution that was guaranteed to work by that time.

We originally proposed our own solution -- the Vancouver Island Generation Plant. But last year the BCUC -- while agreeing with the problem and timing on Vancouver Island -- decided that ours was not the most cost-effective solution.

That was where the VICFT process came in.

We designed the VICFT based on the recommendations of the BCUC. That included using its determination of what the most "cost-effective" solution would be, as well as hiring an independent, third-party reviewer to ensure the process was fair and competitive.

For the latter, we selected PricewaterhouseCoopers, and it has monitored the process right from the beginning of the VICFT. I am pleased to say that at every step of the process PwC has confirmed the fairness and competitiveness of the VICFT. Its reports on this matter are listed on our website at www.bchydro.com.

It is Pristine Power, then, which has the successful proposal in the VICFT. It will be a 252-megawatt natural gas-fired generating station at Duke Point in Nanaimo that will be in place by 2007. We feel confident this will help ensure we can continue to provide the reliable, cost-effective power our customers need on Vancouver Island.

That is some of the background on our recent announcement. As I mentioned, we look forward to discussing this further with all interested parties as part of the BCUC process that begins on Nov. 29. Working together through this regulatory process will ensure we can continue to meet our obligation to keep the lights on for our customers on Vancouver Island.

Bob Elton is president and CEO of BC Hydro.

© The Vancouver Sun 2004