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B.C. Hydro's latest plan to address Vancouver Island's looming electricity shortfall is being condemned by the utility's top customers as self-serving and unlikely to provide the cheapest possible electricity supply to the Island.

Letters submitted in recent days to the B.C. Utilities Commission indicate that top industrial customers, as well as some residential consumers, believe Hydro is clinging to a plan for gas-fired generation even though the idea was shot down last year by the commission.

Last September, the commission stunned Hydro by rejecting the crown corporation's plan for a generation plant at Duke Point near Nanaimo, on the premise that Hydro had not proven the $370-million project would be the cheapest and most reliable improvement to the Island's electricity supply system.

Hydro was ordered to put out a call for tenders to seek alternative private-sector proposals, and took preliminary steps last October to comply.

To date, Hydro has received 23 expressions of interest to provide alternative supplies for Vancouver Island, although that could change when the actual details of the call are made public -- possibly within two weeks.

Today, Hydro will submit to the BCUC its proposed final version of the call for tenders and anticipates that it will be approved and ready to post on Jan. 23.

But as the deadline looms, powerful lobby groups such as the Joint Industry Electricity Steering Committee (JIESC) are suggesting Hydro can't let go of Duke Point, or the $340-million accompanying undersea gas pipeline that would be built between Washington State and Vancouver Island to serve it.

Community groups are expressing the same concern.

"Numerous serious issues have been raised about the terms of B.C. Hydro's proposed evaluation methodology -- more than can be credibly addressed through an informal process," says Thomas Hackney, president of the GSX (Georgia Strait Crossing) Concerned Citizens Coalition.

Hackey adds that Hydro's forecasting methods don't adequately consider higher natural gas prices and rocketing competition for existing resources, as North America's gas supply peaks within a few years.

Hydro already has federal approval for the gas pipeline, and has spent about $100 million on equipment and planning for Duke Point.

The cost to consumers over the roughly 30-year life of Duke Point, with the cost of natural gas the main consideration, reaches into the billions of dollars.

On the other hand, Hydro is warning that aging high-voltage transmission lines to the Island must be replaced by the winter of 2007 -- or else Vancouver Island residents will face electricity shortages and rolling blackouts.

JIESC says it is concerned that the call-for-tenders process, and the evaluation criteria that Hydro wants to employ to judge alternative private-sector proposals, "will not produce the least-cost solution to resolve the problems on Vancouver Island."

It's also concerned that Hydro's strategy does not give more emphasis to alternatives such as demand-side management -- whereby large industries would curtail or suspend consumption of electricity from Hydro's grid during periods of peak residential demand.

JIESC represents the province's largest industrial users of electricity, including mines and pulp and paper mills.

The JIESC is also concerned that Hydro is seeking BCUC approval of its call-for-tender process "without the benefit of public scrutiny or testing."

"The letters clearly indicate that the process B.C. Hydro has established will probably lead to a predetermined outcome -- which is some form of Duke Point, and some form of B.C. Hydro-Williams pipeline to Vancouver Island," says Hydro critic David Austin, a Vancouver lawyer.

"This is not what this process is supposed to be doing. It's supposed to be set up to properly and fairly evaluate all of the alternatives. This process is not going to do that."

Dan Potts, JIESC executive director, says the letters reveal a lack of confidence by both bidders and customers about Hydro's control over the process.

"One of our major concerns is not so much that it's wrong, as a lack of confidence that it's right," Potts said.

He recalled that during Hydro's original application to the BCUC for an operating license for Duke Point, the Crown corporation used pricing forecasts for gas and electricity that seemed to favour its own project over private-sector alternatives.

"The problem we have is that they are both the proponent and the purchaser. There are mixed interests here."

A letter to the commission on behalf of NorskeCanada says Hydro's plan for a two-week review by the BCUC is insufficient to fully evaluate the call for tenders, nor is there an opportunity for concerned groups to discuss its implications.

B.C. Hydro senior vice-president for distribution, Bev Van Ruyven, disputes the claims.

She noted that Hydro staged numerous stakeholder meetings in the month's leading to today's submission, and has retained an independent third party reviewer to appraise the fairness of the process.

"We worked very hard to make it a level playing field so that the process wasn't biasing a certain outcome. The outcome will completely be the lowest cost option, gas-fired, green, anything, and we were really careful in designing it that way.

"We had 23 proponents bid into this thing on the front end, and that's a good thing because when you get a competitive, market-driven process, you are going to get lowest cost."