May 31, 2004
IPPs request review of Integrated Electricity Plan
May 26, 2004
Mr. Robert Pellatt
Secretary,
British Columbia Utilities Commission
Sixth Floor, 900 Howe Street, Box 250
Vancouver, BC V6Z 2N3
Dear Mr. Pellatt
Re: Request for Public Planning Review of BC Hydro Integrated Electricity
Plan
The Independent Power Producers association of BC (IPPBC) requests that the BCUC conduct public a written and oral review that would focus on BC Hydro's current Integrated Electricity Plan.
Background: The government has amended the BCUC act requiring the commission to implement a review process for utility planning activities. BC Hydro has filed an Integrated Electricity Plan with the BCUC in March 2004.
There is some uncertainty as to how this Plan will be reviewed by the BCUC, particularly as it was submitted to the BCUC at the same time as the BCUC is conducting a hearing on BC Hydro's current rate application.
During this current rate application it is not clear whether interested parties can get their issues addressed where they concern BC Hydro's planning activities.
Many planning issues are not appropriately addressed as part of this rate hearing.
Justifications: A BCUC public review is needed so that the following issues can be properly addressed.
. Long term planning based on a high probability of power imports versus planning profile based on a high probability of power exports
. Cost premium for BC Clean power purchases.
. Cost and risk of obtaining power from conservation versus alternatives.
. The use of the Burrard Thermal Plant.
. The appropriate method for dealing with Gas Price risk, for gas power
purchases.
. The risks between large long-term projects like Site C and large numbers
of small IPP projects.
. The choice between upgrading transmission systems to Lower Mainland and
Vancouver Island versus providing incentives for IPPs to locate in Lower Mainland and Vancouver Island.
Many of these issues touch directly on cornerstones or Action Plans from the governments Energy Plan. If they are not adequately addressed in a public process that gives them sufficient attention (rather than being swept under the rate application process), key elements of the Energy Plan will falter.
Yours truly,
Steve Davis
President,
cc Intervenor List - BC Hydro Rate Application Hearing
BC Hydro's 2004 Integrated Electricity Plan
Vancouver Island Electricity Supply Alternatives
Dr. Mark Jaccard, Rose Murphy and Nic Rivers of MK Jaccard and Associates have produced a report entitled Vancouver Island Electricity Supply Alternatives: Natural Gas South Island versus Low Emission North Island
The March 2004 report compares BC Hydro's preferred natural gas strategy for Vancouver Island with a portfolio of more environmentally benign alternatives, referred to as "Low Emission North Island".
From the Introduction:
"A decision is going to be made within the next six months that will determine whether or not a natural gas-based generation strategy is implemented to supply power needs on Vancouver Island starting in 2007. This decision is key because the natural gas strategy will likely preclude other, more environmentally benign alternatives for decades to come. It is expected that if this path is chosen, natural gas generation will dominate supply expansion in the province as a whole.
"The purpose of this study is to perform a MATA comparing natural gas-fired generation with an alternative portfolio of low emission independent power producer (IPP) projects located north of Nanaimo on Vancouver Island. These portfolios are referred to as Natural Gas South Island and Low Emission North Island. The MATA considers financial, environmental and social attributes: unit electricity costs, impact on rates, GHG emissions, other environmental impacts and socio-economic impacts. The impact of uncertainty on the financial aspect will also be estimated."
The authors conclude that Low Emission North Island:
- is lower cost
- has lower rates
- results in fewer GHG emissions
- exposes the taxpayers and electricity customers of BC to less risk from higher natural gas prices and GHG liabilities
- avoids large capital investments that could lock BC into an undesirable electricity future
The report demonstrates the need to perform a multi-attribute trade-off analysis before supply investments are made.
The Call for Tenders (CFT) process has already excluded most of the projects that comprise the Low Emission North Island portfolio. Given this, and the presumption that the CFT process has some degree of acceptability or pre-approval to the BC Utilities Commission, it is unlikely that the full MATA analysis called for in the Jaccard report will be carried out.
The Jaccard report is here
May 30, 2004
Industry group upset by coal plant rejection
See also:
No extra municipal measure placed on Quinsam Coal
By Grant Warkentin
Campbell River Mirror Staff
May 28, 2004
An industry group believes Quinsam Coal's power plant proposal was rejected because BC Hydro was concerned about public reaction to coal power.
"It is our view that BC Hydro is totally unwilling to consider this low-cost source of power because of their concern about their public approval rating," said Daniel Potts, executive director of the Joint Industry Electricity Steering Committee in a letter to the provincial minister of Energy and Mines and the BC Utilities Commission.
The steering committee is an industry group that represents 48 of BC Hydro's industrial customers. The committee believes Quinsam Coal's proposal to build a 150-megawatt power plant at its mine site was unfairly rejected by BC Hydro.
"It is our understanding that the coal plant was rejected because the proponent was unwilling to guarantee an availability of 97 per cent and further that BC Hydro had concluded the plant could not obtain the necessary environmental permits in time to meet the required in-service date," Potts said. "It would appear, consistent with BC Hydro's demonstrated lack of enthusiasm for coal, that the outcome was predetermined by establishing mandatory criteria regarding availability that no coal plant could meet."
However, BC Hydro treated all power proposals fairly, said Elisha Moreno, spokesperson for BC Hydro.
"All of them had to meet that criteria," she said. "We certainly didn't want to give the impression that we were biased against coal."
Moreno said the requirements for Quinsam Coal weren't any more restrictive than for other proposed power projects. She said Quinsam Coal wasn't selected because it couldn't meet the same requirements as the other proposals.
"One of the reasons why Quinsam didn't make it was because we required dependable capacity by a certain time and the criteria that we set up in the process required them to meet a certain timeline and required them to show us that we were able to rely on their resource, their source of energy," she said. "Obviously because they didn't make it to that next step, they didn't meet that criteria."
David Slater, president and CEO of Quinsam Coal, said earlier this month that he believed BC Hydro was biased against the project.
"Basically the cards were stacked against us from the start," he said. "The reasons that they gave for not qualifying us-they were searching for things to do to not qualify us."
Slater said by requiring the plant to provide power consistently 97 per cent of the time, it made it impossible for the plant to meet the necessary criteria to qualify.
However, Moreno said the 97 per cent availability requirement is not unusual and other power projects were required to meet the same percentage.
No extra municipal measure placed on Quinsam Coal
By Grant Warkentin
Campbell River Mirror Staff
May 28, 2004
Council trusts provincial authorities are doing a good enough job of keeping Quinsam Coal environmentally accountable.
However, that doesn't mean city hall won't keep pressuring the provincial environment ministry to work quickly to find out why pollution levels are increasing in lakes around the mine site.
"I guess my concern is that if you wait, the fish die," said Coun. Charlie Cornfield Tuesday night.
Quinsam Coal representatives at the meeting said they were ready and willing to co-operate and that the mine is already trying to keep to a minimum the effect it has on the environment.
"We're working very diligently at Quinsam Coal to ensure the environment is kept intact," said Paul Krivokuca, mine manager.
The main pollutants coming from the mine site are sulphates, which are a form of sulphuric acid. The Campbell River Environmental Council, a local environmental group, is concerned about the effects the compounds are having on nearby lakes such as Long Lake, especially since 1997, when sulphate levels in lakes around the mine started to increase significantly.
However, despite the group's concerns, council is confident the issue is in competent hands. Quinsam Coal's pollution levels are monitored by the Environmental Technical Review Committee, a group of provincial, federal, municipal and industry representatives who analyze environmental data collected from the lakes and lands around Quinsam Coal's mine site. Based on that data, the committee decides how the mine is doing in terms of its impact on the environment.
And despite some problems, such as an error published in the committee's last report that said sulphate levels in surrounding lakes were decreasing when they were actually increasing, council is confident the committee is doing a good job.
Councillors decided Tuesday night to keep the status quo - the technical review committee will continue to review data collected each year from stations around the mine site.
Council could have opted to hire an independent consultant to review all the data collected so far. The consultant would have cost about $20,000. However, council decided there was no need to spend the extra money. Coun. Bill Matthews, Roy Grant and Cornfield all said the technical review committee is doing a good job and council should be able to rely on the committee's judgment and decisions.
The environmental group would have rather seen council spend money on a third-party consultant. They said in an April report that information provided to the public on the issue in the past was too little, too late and too vague to be useful.
"The author sees the regional waste manager's report to the public this year as fitting the pattern of previous years, of being less than forthright," the environmental group's report says.
May 29, 2004
Hydro's $120-million Island power failure
Fri May 28 2004
08:37 AM
By Paul Willcocks
Vancouver Sun
Page C06
29-May-2004
VICTORIA - Thanks for the chance to come and talk to you about BC Hydro . . . and sorry about the $120 million we've probably lost on an ill-conceived power project and undersea pipeline.
Pity poor Bob Elton, barely six months into his job as Hydro CEO. That was the gist of his speech to a Nanaimo business crowd this week.
Mr. Elton spoke positively about BC Hydro's general direction. Then he revealed that the corporation's board had just approved a $120-million "provision" against earnings to reflect money spent on a gas pipeline and a Vancouver Island power plant that are unlikely to be built.
The term provision sounds benign. But it means the finance guys have decided that a big chunk of money is gone, and there is a high probability that it isn't coming back.
Mistakes happen. But a stumble that could cost the corporation's shareholders -- that's you -- $120 million seems remarkable, even by the corporate standards of the day.
Especially because the warning lights were flashing and the sirens were blaring as Hydro walked into this mess.
The appropriately termed "sunk costs" were spent on the Vancouver Island Generating Project and the Georgia Strait Crossing, two projects conceived by BC Hydro under the NDP.
The gas-powered generating plant was initially supposed to be built at Port Alberni, with a private partner. (It was linked to yet another NDP aluminum smelter dream.) The pipeline would be a partnership between BC Hydro and Williams Pipeline.
Hydro claimed a need for great haste, even warning that Vancouver Island could face brownouts by 2004. (No sign of them yet, despite some high demand during last winter's cold snap.)
So the Crown corporation started spending money on the projects, supported by an NDP government that had decided cabinet, not the B.C. Utilities Commission, should make decisions on whether new power projects delivered the best value to captive consumers.
But things kept going wrong. Atco was supposed to be a partner in the Alberni project, but was pushed out by Hydro. The city wouldn't rezone the site Hydro wanted, so the whole project was moved to Duke Point near Nanaimo.
A new private sector partner was found, and then dumped, convincing many that BC Hydro wanted to do this project by itself.
Caught up in its haste, Hydro went out and bought turbines just as prices spiked with the California energy crisis.
The turbines remain in storage. They're included in the $98 million that Hydro considers a potential writeoff. In addition, the Crown corporation estimates it may owe Williams $22 million if it backs out of the pipeline deal.
Hydro had been projecting earnings of $210 million for the year ending March 31, 2004. The provision will knock that down to $90 million. Down the road, it will result in higher rates for consumers.
Mr. Elton bravely defended the decisions. BC Hydro has to err on the side of caution in ensuring energy supply, he said, and the decisions all made sense at the time they were made.
That second assertion looks dubious. When the Liberals finally released their energy plan, 18 months after the election, they sent the whole project to the B.C. Utilities Commission for review. The commission found that the critics were likely right; it was probably not the most cost-effective way to meet Vancouver Island's power needs.
The commission ordered Hydro to call for proposals from other companies proposing to deliver the same power much more cheaply, a change that would benefit consumers. Eleven companies have successfully submitted proposals.
That process wraps up later this summer.
Who is to blame?
Mostly the former NDP government, for ending independent oversight of Hydro. Most of the money was spent on its watch.
But about $35 million was spent after the election. The Liberals could have -- and should have -- ordered an independent review at any time. What's clear is who will pay if this all unfolds as expected -- BC Hydro customers.
May 28, 2004
Waiting costs Hydro $120m
By Brian Lewis
The Province,
Page A48
28-May-2004
Uncertainty over whether the proposed natural-gas pipeline under Georgia Strait and a large gas-fired electricity generation plant slated for Duke Point on Vancouver Island will ever be built has led B.C. Hydro to declare a $120 million writedown of planning costs already incurred, the Crown corporation disclosed yesterday.
And it's a cost that ratepayers may have to pay for down the road.
Speaking to a Nanaimo business audience yesterday, Hydro chief executive officer Bob Elton said the utility's board of directors approved the $120-million writedown provision against Hydro's fiscal 2004 financial statements on Wednesday in order to meet accounting rules.
The provision is directly related to the proposed $370-million Vancouver Island Generation Project (VIGP), a natural gas-fired plant that Hydro had planned to build at Duke Point near Nanaimo to meet the increased demand for electricity on Vancouver Island.
Natural gas slated to feed that plant would be delivered via the $340-million Georgia Strait Crossing (GSX) pipeline project that would run from Washington State to Vancouver Island via a 44-kilometre under-sea section.
Both projects were temporarily shelved last year after the B.C. Utilities Commission ordered Hydro to call for tenders from the private sector to build Vancouver Island's additional power generation.
That process is now underway and its success or failure will determine the future of the two Hydro-sponsored projects.
"As we are recording the provision against 2004 net income, this will not have any impact on our current proposal for an 8.9-per-cent rate increase that is before the BC Utilities Commission in our revenue requirements process," Elton said.
"We . . . will seek to recover those costs in future rates when the Vancouver Island Generation Project is brought into service or it is determined that the projects [VIGP and GSX] will not proceed."
Elton cautioned that Hydro has not made a final decision on the projects and won't be able to until the call for tenders from the private sector is completed this fall.
He termed the provision as "good business practice" in order to comply with Generally Accepted Accounting Principles (GAAP), the officially recognized standard for accounting in Canada.
The Hydro CEO also told his Nanaimo audience that the positive feedback Hydro has received from the private sector to build power generation on Vancouver Island "bodes well for the security of future supply" in the region.
May 27, 2004
Increased uncertainty for GSX and VIGP
In a speech in Nanaimo this morning, BC Hydro CEO Bob Elton announced that
Hydro has opted to write down $120 million in sunk costs for GSX and VIGP.
Elton cautioned that this does not prejudge the outcome of the Call for
Tenders process, nor that either GSX or VIGP is dead. But subtitles in the
news release included the phrase "increased uncertainty for GSX and VIGP".
From the news release:
Increasing energy certainty on Vancouver Island good news for customers
NANAIMO - In a speech [PDF, 36 Kb] to the Nanaimo business community this morning, BC Hydro President and CEO Bob Elton discussed developments related to Vancouver Island energy supply, including the progress of the current Call for Tender process and potential impacts of the proposed Vancouver Island Generation (VIGP) and Georgia Strait Crossing (GSX) projects.
Aboriginal traditional knowledge in environmental assessments
Considering Aboriginal traditional knowledge in environmental assessments conducted under the Canadian Environmental Assessment Act -- Interim Principles
There is growing recognition--both in Canada and abroad--that Aboriginal peoples have a unique knowledge about the local environment, how it functions, and its characteristic ecological relationships. This Aboriginal traditional knowledge (ATK) is increasingly being recognized as an important part of project planning, resource management, and environmental assessment (EA).
Section 16.1 of the recently amended Canadian Environmental Assessment Act (CEAA), gives responsible authorities conducting an EA the discretion to consider Aboriginal traditional knowledge in any EA:
"Community knowledge and Aboriginal traditional knowledge may be considered in conducting an environmental assessment."
May 25, 2004
BC Sustainable Energy Association
Do you want to see more use of wind, solar, biodiesel, and other kinds of sustainable energy in BC?
Do you hear alarm bells ringing with regard to the floods, forest fires, droughts and heat waves that are being caused by global climate change, which we know is caused primarily by our use of fossil fuels?
Do you want to see more use of sustainable energy in BC, as an alternative to the increasing use of oil, gas, coal?"
If your answers are ‘yes", then you are invited to join the BC Sustainable Energy Association (BC SEA). www.bcsea.org. They’re new, ambitious, and they'd love to have your support and participation.
Their vision is one in which all of BC’s energy comes from clean, renewable, efficient sources, respecting the integrity of nature, and the needs of humans and other species, and their habitat, both now and in future generations.
As the GSX Concerned Citizens Coalition has been committed to opposing unsound and unsustainable energy projects, BC SEA will be as committed to advocating for sustainable energy. In fact some of the founding members of GSXCCC (and our president) are founding directors of BC SEA.
For more information, and to join BC SEA, click here now
sqwalk.com gets blogs!
sqwalk.com has moved to a new hosting service at dreamhost.com. Much of the historical content is still intact, but some has been dropped (ie - big files that no-one had looked at in years), and blogs have been added.
Blogs (web logs) allow much faster addition of material to sqwalk.com. We are using the Movabletype system. It's powerful stuff.
sqwalk.com remains the website and voice of the GSX Concerned Citizens Coalition, concerned with BC Hydro's schemes to add natural gas-fired generation on Vancouver Island, as well as energy policy, projects and issues in British Columbia.
If you find sqwalk.com useful, please support the website and our work with a small donation. Contact
Thank-you.