B.C. Hydro is blaming red tape from the National Energy Board for an $80-million increase in the cost of its proposed GSX gas pipeline crossing to Vancouver Island.
The preliminary estimate for the 137-kilometre Canada-U.S. pipeline was $180 million, rising to a working estimate of $260 million -- but Hydro's fiscal report for the first quarter of 2002, released Wednesday, now pegs the project at $340 million.
Hydro is also warning that additional regulatory delays in getting the project approved are raising the prospect of Vancouver Island brownouts or curtailment of industrial activity as electrical demand draws ever-closer to the Island's limited capacity.
The additional $80 million will be split equally by Hydro and its U.S.-based partner Williams -- both of which are attributing a large portion of the extra costs to regulatory delays in Canada.
The line will travel across Washington State from Sumas, then under the Strait of Georgia to Duncan, where it will connect with an existing pipeline.
The U.S. Federal Energy Regulatory Commission has completed its hearings and is expected to approve the U.S. portion of the line next week.
Natural gas flowing through the line will serve new gas-fired electrical generators that will be built to meet peak electrical demand on the Island, where a looming energy crunch has been anticipated for more than a decade.
Energy sector lawyer David Austin noted that the price tag to generate electricity on Vancouver Island has climbed in recent months to at least $710 million --including the pipeline and a $370 million generation plant proposed for Nanaimo.
"The increase in the generating plant costs from $300 million to $370 million, together with this large increase in the proposed GSX pipeline, means that B.C. Hydro's Duke Plant generating plant on Vancouver Island is a financial mutt," Austin said.
"You're over $710 million for a combination of pipeline and plant costs," he said.
Hydro and Williams originally hoped to have the line in service by 2002, then extended that date to 2004 -- but Hydro now warns that the project could be delayed another year "due to delays by the National Energy Board in their regulatory process."
Meanwhile they're not even certain when Canadian hearings into the project, adjourned last January, will resume.
"We've been going through a bit of a battle in the regulatory arena, especially with the National Energy Board," Hydro representative Elisha Odowichuk said.
"Quite frankly we're pretty puzzled and actually disappointed that the National Energy Board in its whole process has cost us this cost increase and a significant delay."
Odowichuk said the revised estimate for the project includes costs associated with First Nations consultations and to research environmental impacts.
"We think we've been fairly good in being open and accountable with the public but to be quite honest we can't get answers from the NEB as to why there is a delay.
"In the event of a short term delay of say one or two years to get GSX into service, we've got contingency plans in place to minimize the likelihood of disruption over there -- but that includes risks like curtailing of industrials, and that's just not a road you want to go down."
Williams spokeswoman Bev Chipman said the company agrees with Hydro's new estimate and remains committed to the project.
"Hydro couldn't do much about that. I think they've done the best they can to move it along, as has Williams," Chipman said.
Chipman said that the U.S. regulatory review is almost complete.
"We got notice from FERC today that it's on the agenda for next week and we expect to have a certificate by next Friday at the latest," Chipman said.
National Energy Board public relations officer Ross Hicks noted that the NEB is just one of the agencies conducting the review, which is also a project of the Canadian Environmental Assessment Authority.
"It's not just an NEB process," Hicks said. "This is a joint review panel, established under both the Canadian Environmental Assessment Act and the NEB. Because it's a joint review we have to operate under all of the acts involved."
Hicks said an announcement of a schedule to resume hearings will be made within a month -- but that work had nonetheless been continuing toward a completion of the proceedings, including consultation with aboriginals.
"We have to take into account all of the concerns of First Nations people, the environmental people and so on."
He added that all the information presented to the joint review panel is available for public scrutiny, on the NEB Web site -- but that some environmental groups continue to request more information from Hydro.
"All of the information is right there on the web site for people to look at. It's a very open and transparent process."
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