Critics Say Pipeline May Punish Consumers

by Charlie Smith
Georgia Straight
December 13-19, 2001

B.C. Hydro has withdrawn an application to build a $300-million natural-gas-fired power plant in Port Alberni. However, the Crown corporation still intends to build a controversial $260-million Georgia Strait Crossing (GSX) natural-gas pipeline to Vancouver Island, even though the Port Alberni power plant was listed in an application to the National Energy Board as a justification for the GSX project. Critics have claimed that the GSX project could lead to higher electricity prices across the province by increasing consumers' reliance on natural gas, which has experienced astonishing price volatility.

Last month, Port Alberni council refused to rezone the land where B.C. Hydro and its joint venture partner, Calpine Canada Power Holdings Ltd., wanted to put the power plant. On November 27, B.C. Hydro sent a letter to the provincial Environmental Assessment Office, alleging that the assessment process was "legally flawed". On December 10, EAO project director Jan Hagen wrote a sharp response, concluding with: "I shall be looking forward to hearing from you how BC Hydro intends to pursue a gas-fired power generation project on Vancouver Island."

B.C. Hydro spokesperson Ted Olynyk told the Georgia Straight that another location for the plant will be found because Crown corporation officials want more power generated on Vancouver Island. "We are reviewing sites from Lake Cowichan to Tahsis and Gold River, and we're in discussions with community leaders in all of those towns in between to see if there is a suitable site," Olynyk said. "The delay of the Port Alberni generation project-which is now a Vancouver Island generation project-let's say the delay in siting the new facility will have no effect on GSX. GSX is still needed and it's still going ahead."

The proposed pipeline would carry northern B.C. natural gas from Sumas, Washington, across the northern portion of the state and Georgia Strait to Cobble Hill on Vancouver Island. In its application to the National Energy Board, the proponents say the pipeline is necessary to bring natural gas to the Port Alberni plant and to a new cogeneration plant in Campbell River.

The project is opposed by many residents of Vancouver Island and the Gulf Islands, environmental and Native groups, and a public-interest advocacy group representing seniors and low-income B.C. residents. They argue that B.C. Hydro should pursue other options, including developing more renewable sources of energy and upgrading the existing cables that bring 80 percent of Vancouver Island's electricity supply from the Lower Mainland.

Olynyk said that just 20 percent of the electricity used on the island is actually generated there, with the rest transmitted from the Lower Mainland. B.C. Hydro has claimed that building the GSX pipeline and a new power plant is more economical than repairing or replacing existing cables.

Arthur Caldicott, a resident of Cobble Hill, told the Straight that Centra Gas already has a renewable contract to deliver 80 percent of the natural gas on a "firm basis" to the Campbell River cogeneration plant. He claimed that the remaining gas could be obtained on a discretionary basis when consumption falls during summer or when island pulp mills shut down. "B.C. Hydro says we need this pipeline because we're going to run out of power on Vancouver Island," Caldicott said. "We've done our own assessment of that, and we don't believe it. So that needs to be examined in a lot more detail."

In a December 3 application for intervenor status at the National Energy Board, lawyer Michael Doherty-who works for the British Columbia Public Interest Advocacy Centre-claimed that B.C. Hydro's decision to substitute a natural-gas pipeline for repairs to the transmission line would increase consumers' vulnerability to fluctuating energy prices.

B.C. Hydro and the U.S.-based Williams Gas Pipeline Company are joint-venture partners on the GSX project, which is expected to be in service by 2004. Olynyk said the completion date has been delayed by a year because B.C. Hydro was too optimistic about the regulatory process. The National Energy Board and the Canadian Environmental Assessment Agency are conducting a joint review, with a formal hearing scheduled to begin next June.

A former chair of the British Columbia Utilities Commission, Marc Jaccard, told the Straight that Premier Gordon Campbell will be unable to keep pre-election promises on energy if the pipeline isn't justified beforehand in a broad public review involving a comparison with other energy-supply options. Jaccard, who is with SFU's energy-materials research group, said the proposed pipeline will have a "monumental" impact on B.C. Hydro's future decision-making, forcing the Crown corporation to build four or five natural-gas-powered plants on Vancouver Island during the next decade to spread out the pipeline's capital cost over several projects.

"I've seen this so many times at the utilities commission," Jaccard said. "A utility comes in and says, 'Look, we built this pipeline. It's all sunk costs now. We've got to amortize it.' "

He said that the proposed pipeline would bring enough natural gas to generate 600 to 800 megawatts of capacity on the island; the Port Alberni plant would have only generated 265 megawatts. B.C. Hydro's integrated electricity plan, which was released last year, mentioned a 640-megawatt natural-gas-fired B.C. Hydro plant on Vancouver Island to be completed in 2007. Since then, B.C. Hydro officials have refused to confirm if this larger plant is still part of their plans.

"A third plant may very well be in the offing," Olynyk said, "but it's not something that I'm aware of that we're planning for at this point."

The BC Liberal Party's New Era campaign platform promised to "promote clean and renewable alternative energy sources, like wind, thermal, solar, tidal, biomass and fuel cell technologies". The New Era document also promised to "restore an independent BC Utilities Commission, to re-regulate B.C. Hydro's electricity rates". During the campaign, Campbell promised that his party would allow more independent power projects and stop economically unjustifiable megaprojects similar to fast ferries.

Jaccard claimed that Campbell won't be able to accomplish any of this if the GSX pipeline proceeds, because the unused capacity of the project will dictate future electricity-supply options. Jaccard described GSX as "fast ferries II", noting that the last pipeline built to Vancouver Island during the Socred era cost the government huge sums of money. Even if the Liberal government announces early next year that it is placing B.C. Hydro back under BCUC regulation, Jaccard said, this will be too late to have any meaningful effect if the GSX project is already proceeding.

"You have to understand, once they build the pipeline, they're going to have to build additional [Vancouver Island] generation," Jaccard said. "So when they sit down and do an economic analysis of 'Do we do small hydro somewhere in B.C. or a wood-waste project or more cogeneration?' all that analysis loses once you've sunk money into a pipeline." He added that in B.C., these alternatives to fossil-fuel generation could be done relatively inexpensively. But he said that these projects would move down on B.C. Hydro's priority list. "Environmentally, what that means is we end up going down this fossil-fuel path which is complete counter to what the federal government is hoping to do [under the Kyoto Protocol]," Jaccard said, "and we're actually walking away from one of the cheaper areas where that could be done."

Olynyk said that B.C. Hydro has already identified possible cogeneration sites at Crofton and Duke Point on Vancouver Island. "We're very aggressive at looking at alternative energies, but the bottom line is we have to make sure we keep the lights on," he said.

Jaccard, however, accused B.C. Hydro of "scare-mongering", saying there are less risky options. "How do we know Vancouver Island isn't going into a recession right now?" Jaccard asked.

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