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The true cost to provide Vancouver Island with an independent supply of electricity could be four times as much as it now costs B.C. Hydro to keep the lights burning in the rest of British Columbia, documents filed with the B.C. Utilities Commission suggest.

Far from Hydro's current cost of about $30 per megawatt hour, the price to make electricity at a gas-fired generating plant on the Island could start out at $126 a megawatt hour in 2007 -- and go up from there.

A public hearing on Hydro's proposal to build a $370-million, 265-megawatt gas-fired generator at Nanaimo's Duke Point begins next Monday, with the Crown corporation presenting the project as the best alternative to replace aging transmission cables that carry electricity to the Island from the B.C. mainland.

Hydro is pitching Duke Point as costing $65 per megawatt hour in its original submissions to the BCUC in support of the project.

However, it provided the higher estimates earlier this month after the BCUC questioned a number of Hydro's assumptions about the potential costs.

For example, Hydro's lower-cost scenario assumes that the $340-million cost of a pipeline to bring natural gas to the Island will be shared 50-50 by Terasen Gas Vancouver Island -- and that Terasen, meanwhile, will charge nothing to provide Hydro with access to its own pipelines on the Island.

Hydro also assumes that the plant will run at 80 per cent of capacity -- although critics note that periodic spikes in the price of natural gas could depress use of Duke Point.

Price spikes already make it uneconomic at times to run Hydro's existing, debt-free Burrard Thermal generating plant.

Hydro's calculations also show that British Columbians will pay an additional $10 per megawatt if Hydro follows through on the B.C. government's intention to sell Duke Point to a private sector operator, compared to what it would cost to keep the plant in the public domain.

Hydro says the calculations requested by BCUC yield numbers that are "unduly severe."

"B.C. Hydro believes that some of the assumptions mandated by the BCUC exceed the potential worse-case scenario and significantly overstate the level of risk," say notes accompanying the calculations.

Hydro media relations manager Elisha Moreno had the same message on Thursday. She said the higher numbers were essentially "spit out" by a computer program, and that Hydro was happy to provide speculative numbers at the utilities commission's request.

But she said Hydro is confident that the "levelized cost" per megawatt hour at Duke Point will be $65.

She described the gas-fired generating plant as the best long-term option for the Island, and noted that once the cost of electricity from Duke Point is blended into the overall cost of electricity in B.C., customers will see only a small price increase.

The current retail price of electricity for residential customers throughout B.C. is $61.20 per megawatt, while the price charged Hydro's biggest industrial customers is $33.60.

Vancouver lawyer and energy sector pundit David Austin said the higher numbers correspond to his own estimates of the true cost for Hydro to carry out its plans.

He questioned Hydro's plan to finance 100 per cent of the project, suggesting that without any equity in the project, Hydro cannot meet its obligations to the taxpayer to earn a return on its equity of about 17 per cent.

He notes that Hydro has booked only about half the available space on the pipeline.

"Who is going to book and pay for the other half? Without that booking, the pipeline is not financially viable."

He noted that Terasen already has its own gas pipeline to the Island and expressed doubt that the shareholder-owned company would participate in Hydro's scheme, since its own line is "only about 60-70 per cent booked."

"With all due respect to pet owners, this project is a financial mutt that needs to be put down."

The project is already under pressure from Hydro's single-largest industrial customer, NorskeCanada, which is proposing to establish smaller generation projects at three of its Island pulp mills.

Norske says generators would give the Island a cleaner, cheaper source of electricity, in a shorter period of time.

Terasen has already indicated its support of Norske's project, saying it can meet the Island's growing demand for natural gas by boosting the compression rates on its own pipeline.