BC Hydro had an up-and-down year in 2005

By Scott Simpson
Vancouver Sun
03-Jan-2006

It was a good news-bad news year for BC Hydro in 2005.

Hydro more or less defied a global trend with no price increases during the year, which was good news for residential and industrial customers already reeling from skyrocketing costs for natural gas and gasoline.

The Crown corporation's Powerex electricity trading subsidiary celebrated a series of legal and regulatory successes in the drawn-out dispute between the attorney-general of California and energy providers who reaped huge profits during the state's 2000-2001 energy crisis.

California claims it is owed $850 million US in overcharges by Powerex, but so far, neither U.S. courts nor energy system regulators south of the border agree.

Appeals are pending in a series of pro-Powerex U.S. court decisions, but Hydro says it's encouraging that the U.S. Federal Energy Regulatory Commission in September held Powerex up as an example of a company that is clearly in compliance with its market rules.

"It's one of those things that I do not expect to go away in a hurry but we've had a very good year and we feel better at the end of the year than we did at the beginning," Hydro president and chief executive officer Bob Elton said in an interview.

Meanwhile, three new independent power projects joined the British Columbia grid in 2005, and Hydro issued an unprecedented open call to the private sector to develop enough new projects to light up 180,000 homes.

Hydro also kept open its options to add even more power to replace the electricity that was foregone in the ill-fated Duke Point initiative.

Hydro walked away in June from a $120 million investment to build a natural gas pipeline to Vancouver Island and use it to feed a proposed gas-fired generating station at Duke Point near Nanaimo.

Hydro spent more than five years trying to push the projects through in the face of determined local opposition, and harmed its own credibility along the way -- announcing it was shelving Duke Point despite issuing repeated claims that the project was crucial to Vancouver Island's electricity needs.

In lieu of Duke Point, the BC Transmission Corporation is proposing new power lines running from Tsawwassen to the Island -- a cheaper, faster solution, provided the transmission corporation can overcome the objections of Delta residents who don't want new high voltage power lines running through their community.

Elton said subsequent run-ups in the price of natural gas prove that it was better to eat Duke Point's costs than keep moving the project along.

"The price of natural gas certainly was an issue and frankly, everything that's happened since then has supported the decision we made. From my point of view it think it was the right decision."

Late in the year, Hydro suffered a setback when the provincial government vetoed the crown corporation's proposed 20-year plan to curtail B.C.'s growing dependence on imported electricity.

That plan was expected to promote, in particular, a new $3.5 billion hydroelectric dam at Site C on the Peace River near Fort St. John.

B.C. Energy Minister Richard Neufeld defended the government's decision to shorten Hydro's chain, saying provincial cabinet needs more time to mull Hydro's plans.

Finally, to end the year on a positive note, Hydro forecast that energy efficiency initiatives across the province will save an additional 550 gigawatts in 2005, enough to light up 55,000 households for a year.

That puts Power Smart's cumulative efficiency gains over the last several years to 1,840 gigawatts per year -- or 184,000 homes.

ssimpson@png.canwest.com