NorskeCanada, B.C. Hydro's largest industrial customer, wants to produce its own power at three mills on Vancouver Island -- something which the company says could eliminate the need for the controversial natural gas pipeline from the Lower Mainland.
The huge pulp and paper company currently consumes 25 per cent of all electricity on Vancouver Island, an area that is increasingly starved for power.
Stu Clugston, Norske vice-president of corporate affairs, said Tuesday that the company already generates some of its own electricity at its mills at Crofton, Elk Falls near Campbell River and Port Alberni and it wants to do more.
Norske uses gas and steam to make paper and the natural gas turbines can be converted to produce electricity, he said.
"We are B.C. Hydro's largest customer and so this would take the pressure off the grid," Clugston said.
"It would make more electricity available for residential and other industrial users."
Because power is a huge expense for the company, Norske would welcome the chance to create its own. The company also would be able to undertake energy conservation measures and regulate its power use during peak periods, Clugston said.
"It would help us with our costs, help Vancouver Island with its energy problems and allow at least the postponement of the energy project across Georgia Strait," he said.
The proposed Georgia Strait Crossing (GSX) gas line is under consideration by a federal review panel, following hearings this spring.
The pipeline and gas-fired electrical generating plant at Duke Point in Nanaimo would cost about $710 million, compared to about $420 million for the Norske plan, which the company would pay for.
"It would cost about $300 million less than the Hydro project and there would be greater economic, social and environmental benefits," Clugston said.
One of the biggest drivers for the company would be the reliability of the power supply, he said.
With the Island's energy crunch, the company has had a couple of power outages a year and each time the mills go down it costs between $2.5 million and $3 million a day, he said.
"Reliability is important. We have about $2 billion in assets in these three mills and they are useless if we don't have reliable power."
The first phase could be generating power within 18 months and other sections could be introduced incrementally, Clugston said.
The three mills now produce about 80 megawatts of power -- enough to supply 66,000 homes with power.
If Hydro gives the go-ahead for the expansion, the projects could produce about 357 megawatts of power, Clugston estimated. The Duke Point plant is proposed to produce 265 megawatts of power.
As the company uses about 500 megawatts, Norske would still need to buy some power from the grid.
So far, Hydro is lukewarm about the project and the next step is to help Hydro understand what is being proposed, Clugston said.
"This is a little different from what they are used to. This is a much bigger initiative ... . I think they are coming around," he said.
Hydro spokesman Stephen Bruyneel said Hydro is working with Norske on the proposal, but needs more information on cost and the technological ability of the company to produce what it says it can produce.
Hydro's mandate is to feed the electrical needs of its customers and it would be taking the risk of not being able to fulfill those needs if it delayed the gas pipeline, Bruyneel said.
Norske will give more information to the B.C. Utilities Commission next month at Hydro's application for the certificate needed to build the Duke Point generating plant. Hydro will then do a full evaluation, he said.
"Right now we think there's a potential (for the Norske plan) to be complementary, but we don't have nearly enough details to see it as a replacement," he said.
Energy and Mines Minister Richard Neufeld said the discussion between Norske and Hydro is progressing as it should.
Hydro has the responsibility for making sure the lights do not go out on Vancouver Island and so can't abandon the application for the Duke Point generating plant and gas pipeline, Neufeld said.
However, there is room for the Norske and Hydro plans as the Duke Point generating plant would only replace capacity in the aging cables that now provide power to the Island and are scheduled to be decommissioned.
"It doesn't do anything for new growth or new load, so there is the opportunity also for Norske to provide that new load," he said.
lavoie@island.net