Private power plant approved for Nanaimo

Mark Lowey
Business Edge

Duke Point set for Vancouver Island community

Vancouver Island residents are going to get a new natural gas-fired power plant at Nanaimo after all – just not one built by BC Hydro.

Duke Point Power Limited Partnership is the successful bidder in BC Hydro’s call for private-sector bids to supply much-needed power to Islanders.

The Duke Point partnership is majority owned by Macquarie Essential Assets Partnership (MEAP), Pristine Power Inc. of Calgary and a group of private investors.

MEAP is part of the global Macquarie Group of companies, headquartered in Australia. Macquarie Bank established MEAP, an unlisted fund of $460 million, last May to offer investors the ability to invest – especially in deregulated power markets – in relatively low-risk essential infrastructure assets, including electricity transmission and distribution networks.

The Duke Point partnership successfully bid to build a 250-megawatt power plant in the Duke Point Industrial Park in Nanaimo.

It’s exactly the same place BC Hydro had planned to build its gas-fired power plant, before the BC Utilities Commission decided in September 2003 that Hydro’s $370-million plan was too expensive and ordered the Crown corporation to call for private- sector proposals.

Like the defunct Hydro power plant, the Duke Point partnership’s facility will use proven combined-cycle natural gas-fired turbine technology.

Pristine Power will be responsible for the day-to-day management.

The independent power firm estimates it will be able to build the power plant in 18 months for $280 million in “hard-capital costs” (excluding the cost of carrying interest on the debt during construction). That’s $90 million cheaper than what Hydro had in mind.

Pristine and its partners’ biggest hurdle now will not be getting through B.C.’s streamlined regulatory process.

The challenge will be convincing Nanaimo residents, many of whom don’t want the plant in their backyard, that it should be built there so all Islanders aren’t left in the dark.

BC Hydro spent $120 million developing its Duke Point power project, but will recover only $50 million of that amount in the deal announced with Pristine, according to a report.

So who’ll get stuck with the remaining $70-million tab? Ultimately, it will be B.C. taxpayers, either though higher electricity rates for all Hydro customers, a cut in Hydro’s dividend to taxpayers or a slash in the Crown corporation’s budget.