Pipeline's cost skyrockets:
Natural-gas project's price tag estimated at $260 million

By MALCOLM CURTIS
Times Colonist staff
Times-Colonist, April 26, 2001

The cost of the Georgia Strait Crossing, the proposed natural gas pipeline
to Vancouver Island from Washington state, has ballooned to $260 million
from earlier estimates of $180 million.

After several months delay, B.C. Hydro filed an application this week with
the National Energy Board for the Canadian portion of the project to feed
two, and possibly three, gas-fired electrical generation plants on the
Island.

The GSX pipeline, as it is known, is a joint venture between Hydro and
Williams, the U.S. pipeline company, with costs equally split.

First announced in September 1999, the project has met opposition from
residents in the Cobble Hill area and by environmentalists who say it could
harm the marine life and boost greenhouse gases on the Island.

Hydro spokesman Ted Olynyk said Wednesday the higher costs are due to
"environmental mitigation" and challenging construction conditions and
include a 10 per cent reserve for unforeseen developments.

But Olynyk said Hydro wouldn't proceed with the 136-kilometre pipeline if
the project wasn't viable, even considering higher natural gas prices.

The additional energy source would reduce the Island's reliance on power
(currently 80 per cent) from the mainland and avoid replacement of aging
underwater transmission cables.

Olynyk said Hydro delayed filing the application due to negotiations with
Williams over a joint business plan and said the timing was not related to
the provincial election.

"We have a project to put forward -- it's not a political issue," said
Olynyk. Hydro's board made its decision Monday on the application, which
must go to a federal panel review for environmental assessment.

Stuart Hertzog, the Green party's energy critic, said he believed Hydro "is
using the distraction of an election as cover."

Hertzog, who has scrutinized B.C. energy policies for years as an
environmental campaigner, said he is not surprised the pricetag for the
project has zoomed. "We fully expect the price to go even higher."

The steep costs, together with high natural gas prices, put the entire
project in question, said Hertzog, a candidate in Victoria-Hillside riding.
More importantly, the project raises the spectre of Hydro becoming
increasingly reliant on fossil fuels, he said.

The Liberals, who appear set to form the next government, have said they
would keep Hydro and its "core assets," including dams, reservoirs and
power lines, under public ownership.

But they want the private sector to provide new sources of power and have
vowed to remove the electricity rate freeze in place for the past seven
years.

The implications are more natural gas-fired plants, more pollution and
vastly higher rates, said Hertzog. Hydro maintains it is exploring
alternative energy sources, but only "token" efforts have been made to tap
into such sources as wind, solar and tidal power," he said.

The GSX would feed a Port Alberni power plant proposed jointly by Hydro and
Calpine, a U.S. energy giant, as well as the privately run Island
Cogeneration Plant in Campbell River.

The ICG plant, which has been criticized by federal Environment Minister
David Anderson for being a heavy polluter, is expected to start producing
electricity for Hydro in May after a lengthy testing period. A citizens
group has launched an environmental appeal to have its permits yanked.

Hydro has shelved consideration of a 660-megawatt plant -- more than double
the size of the proposed Alberni plant -- for the Duncan area but hasn't
ruled out the possibility of another plant on the Island.

Liberal Environment critic Murray Coell said Hydro has been acting too
secretively and a Liberal government would open up the corporation's
activities for more public input. Coell, MLA for Saanich North and the
Islands, said B.C.'s energy needs have to be reviewed.

The NDP maintains Hydro has delivered the third-lowest electricity rates in
North America, though it has signalled the rate freeze will end in
September, when the B.C. Utilities Commission is scheduled to regulate rates
again. The Liberals also support the re-regulation but say that new
independent sources of power would increase competition and reduce rates
further.

"We're committed to our energy sources that we're using -- whether they be
the dams or the gas fired plants -- being the cleanest possible," said
Coell.

He noted the Liberals would dismantle Hydro's Burrard Thermal plant in the
Lower Mainland because of its pollution, though Hydro has recently spent
$200 million on environmental controls.

Yet a study done for Environment Canada last fall concluded the ICG plant
emissions are 19 times worse than Burrard. And a recent report by
consultants Martin Schaffer & Associates for the Finance Ministry said the
cost of shutting down Burrard would be more than $1 billion, with long-term
costs even higher in lost revenue and added cost in replacing the lost power
source.

The report recommends the plant be upgraded to increase power and reduce
emissions.

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Note:
A news release accompanying the Schaffer report is at Sqwalk!
The Schaffer report is available for download at BurrardReport.pdf