March 30, 2005
March 27, 2005
Duke of Hazards
Johnny Frem
Common Ground
March 2005
Would Duke Point's gas burning electric plant be Sumas 3?
Sometimes choices are driven by an agenda of politics or greed with ignorance to the long-term consequences to the environment. The choice by the BC Utilities Commission to allow a consortium to build a gas-fired electrical-generating station at Duke Point near Nanaimo seems like one such decision. The Commission granted permission February 17 for BC Hydro to sign the electricity purchasing agreement with Duke Point power - a project of Pristine Power. Several interveners have indicated that they will file appeals.
The Commission said virtually the same project was too expensive in September of last year, sending BC Hydro back to find a cheaper way to bring electricity to Vancouver Island. Unfortunately BC Hydro, anticipating approval, had already gone ahead and bought the turbines for the project for about $50 million. An interesting question here is who authorized this massive purchase prior to BCUC approval?
Instead of looking for a new way to supply power, BC Hydro put out the call for tenders and defined it such that the likely answer to its call would be a gas-fired plant. BC's utilities commission is supposed to prevent monopolistic practices. Allowing a corporation, any corporation, including BC Hydro, to define the parameters of the case under consideration appears to be an abdication of that responsibility.
First, BC Hydro "encouraged" the new project by offering its untouched turbines at discounted prices if the bidder agreed to take on the Duke Point gas-fired plant project. Then BC Hydro specified to the bidders that the electricity could only be generated on-island. Transmission lines coming from off-island would not be eligible for consideration - even though it defined the project as only a temporary solution and the final solution after 2008 would be new BC Hydro transmission lines from off-island. And finally, BC Hydro offered to guarantee the price of gas for 25 years to anyone agreeing to take its gas-fired project to completion, a gas guarantee that will be paid by BC electricity ratepayers.
Now the Commission is allowing the same project it had rejected the first time around as too expensive - even though BC citizens would be asked to pay extra when the price of gas to the plant increases, even though it's unneeded, unwanted and unhealthy, even though in the Liberals' throne speech they vowed to continue their opposition to a similar gas-fired plant - the Sumas 2 project under consideration south of the US border near Abbottsford, even though it violates their commitment to green energy in that same throne speech, and even though a task force of the biggest industrial users of electricity in BC are against it.
The green light to drive a climate-changing, gas-guzzling toxin-emitting electric-generating plant at Duke Point came one day after Canada ratified the Kyoto Protocol to the United Nations Framework Convention on Climate Change, likely putting Canada in breach of our international treaty obligations. One estimate states Duke Point would produce as much poisonous exhaust as 40,000 more cars each day. In the long run it seems we are being driven down the wrong road in regards to air pollution, lung damage and increased medical costs. Asthma is already one of the leading causes of emergency hospitalization among children in BC. More air pollution makes it worse. Not a clean choice.
The entire premise for this plant in the first place is that the sub-sea cables which carry high-voltage direct-current to Vancouver Island will be classified as outdated in 2007 and new lines won't exist until October 2008. First, they are not being "retired" as some media has reported. In fact BC Hydro maintenance plans show that it intends to keep them up and energized until 2014. They just lose their "reliability" rating from a system-planners point of view. Yakout Monsour, senior VP of system management for BC Transmission Corporation, testified before the Commission that he was completely comfortable handling the problem with current system assets until the implementation of the transmission solution in 2008 to 2009.
Second, several other solutions to the loss of those cables' reliability rating have also been suggested. Some at BC Hydro seem adamant that the only solution they are willing to entertain is a gas-fired plant. They discarded such submissions to the hearings as Norske Canada's "demand side management" solution, where Norske offered to reduce its use of electricity should the island ever approach crisis during the period of 2007 and 2008. As one of the largest users of electricity on-island it could resolve any shortfall in electricity very easily by shutting down some of its pulp mill process, which is what it offered to do. Norske is also concerned with uncontrolled increases in gas pricing and thus the cost of generating electricity.
BC Hydro's position is it wants "on-island generation." But in fact Duke Point is the farthest thing from "on-island" with Alberta gas piped in across the Georgia Straight. Another solution was offered by Sea Breeze Pacific Regional Transmission Company which is preparing to build a new transmission line across the Strait of Juan de Fuca. Hydro dismisses electrical cables from the bid process but it allows gas pipelines, coming from off-island. As Prince Rupert found out last year, when residents gathered in the civic centre to keep warm, pipelines can break too.
Several truly on-island solutions were offered but were bounced out of the tendering process for various reasons. Green Energy has a planned bio-mass plant, Norske Canada has a demand side management solution wherein it offered to shed its load (one quarter of Vancouver Island's total load) if there were any interruptions in service, two companies offered transmission solutions, there is a fully permitted 450 MW wind farm ready to be constructed on the north end of Vancouver Island that has already passed environmental review. Also several additional smaller runs of river hydro and waste wood plants were offered during tendering.
If this "temporary" solution is allowed then what might become of Duke Point's gas-fired generating plant? Could it be that the BC Utilities Commission or BC Hydro boards were stacked with pro-gas and pro-oil members? Would this future local market demand encourage off-shore oil drilling? It is time for all stakeholders, including ratepayers, to consider this important decision because we all would pay the environmental and increased electrical costs.
For further information and to voice your opinions contact the following:
BC Utilities Commission www.bcuc.com
BC Hydro www.bchydro.com
BC Sustainable Energy Association www.bcsea.org
BC Transmission Corporation www.bctransco.com
BC Wind Energy Association www.bcwea.org
David Suzuki Foundation www.davidsuzuki.org
Green Party of BC www.greenparty.bc.ca
Independent Power Producers of BC www.ippbc.com
Norske Canada www.norskecanada.com Tsawassen Residents Against High Voltage Overhead Lines www.Travhol.com
March 25, 2005
GSXCCC and JIESC Appeal Arguments
These are the arguments given by the JIESC and by GSXCCC to the Court of Appeal, requesting that the Court hear our appeals of the BCUC decision on Duke Point.
Download JIESC Arguments
Download GSXCCC Arguments
Other firms outdo ICBC for bonuses
Chad Skelton
Vancouver Sun
March 25, 2005
COMMENT: Michael Costello, president of the B.C. Transmission Corp. received a bonus of $132,000, on top of his $275,000 salary.
Outrageous! Hell, BCTC wasn't even in existence until May 2003, and BCTC hasn't done a *&^$#* thing since it was spun out of BC Hydro. By what reasoning does that entitle Costello to a bonus which is worth twice the average family income in Canada?
Likewise, BC Hydro's CEO Bob Elton was awarded a bonus of $110,000. For what? For presiding over the write down of $120 million of our money spent to no avail on the failed GSX Pipeline and failed Port Alberni Generation Project and failed Vancouver Island Generation Project and rigged Vancouver Island Call for Tenders. That's what Elton got his bonus for.
This is nothing new. They've been doing this in BC Hydro for years. For example, in 2001, as head of BC Hydro, Costello took home $466,057 in salary and bonuses. The annual announcement of obscenely large bonuses to these guys usually gets a rise out of the media, and always causes me a seasonal fit. Surely it is time to rein this excess in.
The rationale? We've got to pay talent what talent is worth. Right. Think GSX, VIGP. Get real.
Okay, now that I've got most of the rant out of my system, I'll try to be more reasonable.
BC Hydro and now, BC Transmission Corp., operate in markest that exist apart from the two organization and for which neither can claim any credit (unless we're talking about manipulated energy trades in Alberta or California - for which compelling evidence exists that Powerex has engaged but for which it denies any credit.) And both BC Hydro and BCTC are charged with operating and maintaining infrastructure, all of which was inherited, all of which has been around for a long time, and none of which present management can take credit for.
If either Elton or Costello contributed anything of significance to the operation of BC Hydro or BCTC, if they brought commanding visions to the organizations, or led the companies through perilous seas to safe harbour, then a bonus might be meaningful and appropriate. But these guys are granted bonuses by their boards if everyone comes to work in the morning, and if the generators run and the wires transmit. That should be the minimum starting point to continue earning their salaries. It should not entitle them to grossly large bonuses.
Credit for the continued operation of BC Hydro and BCTC should go to the many people who come to work every morning, and who keep the generators running and the wires transmitting. Not to Elton and Costello.
The bonuses paid to top executives at the Insurance Corp. of B.C. are small compared with bonuses paid to those who run B.C.'s two electricity utilities.
It was revealed this week that top executives at ICBC will receive bonuses ranging from $50,000 to $64,000 this year as part of $18 million in incentive pay the public insurer is giving its managers and unionized employees.
By contrast, BC Hydro president Bob Elton last year received a bonus nearly twice as large-- $110,000 -- on top of his annual salary of $295,000.
And Michael Costello, president of the B.C. Transmission Corp. -- which is responsible for managing the province's transmission infrastructure -- received a bonus of $132,000, equivalent to 48 per cent of his $275,000 salary.
Other senior executives with the two companies also enjoyed big bonuses.
Yakout Mansour, the senior vice-president of operations for BCTC, received a bonus of $92,000 in addition to his salary of $225,000.
In all, BC Hydro spent $14.8 million last year on bonuses -- $4.3 million for unionized employees, $9.5 million for middle managers and $1 million for senior executives.
"This is public money and I think taxpayers would be outraged to know people are getting 40-per-cent bonuses each year," said Sara McIntyre, B.C. director of the Canadian Taxpayers Federation.
Jenny Kwan, NDP MLA for Vancouver-Mount Pleasant, said ICBC and Hydro should be using any excess profits to reduce costs to consumers instead of rewarding top executives.
"I would expect that British Columbians want to see a rate reduction as a first priority rather than bonuses," she said.
Elisha Moreno, spokeswoman for BC Hydro, said the utility's bonuses are based on a variety of factors, including improvements in customer service and a reduction in staff injuries.
"We're still behind the industry average in terms of bonuses, compared to other employees in the Canadian utility sector," she said.
BCTC spokeswoman Moira Chicilo said the utility needs to pay generous salaries and bonuses to retain talented staff.
"We absolutely view these executives as being compensated very fairly and reasonably," Chicilo said via e-mail.
She noted that Mansour was recently hired away by a California electricity company at a base salary of $400,000 US.
Bonus policies vary widely between Crown corporations.
BC Transit doesn't pay any.
The Workers' Compensation Board of B.C. pays managers an extra 10 per cent for meeting predetermined company goals and a further 10 per cent for "exceeding those goals," said spokeswoman Donna Freeman.
cskelton@png.canwest.com
BIG BONUSES:
Many top executives at B.C.'s Crown corporations received generous annual bonuses last year.
B.C. Transmission Corp.
Michael Costello, president: $132,000
Yakout Mansour, VP operations: $92,000
Jane Peverett, chief financial officer: $64,000
Scott Wornouik, VP Strategy: $59,000
BC Hydro
Bob Elton, president: $110,000
Dawn Farrell, VP generation: $79,100
Bev Van Ruyven, VP distribution: $75,000
Teresa Conway, acting CEO of Powerex: $65,000
Tourism B.C.
Rod Harris, CEO: $57,000
Source: BC Hydro, B.C. Transmission Corporation, Tourism B.C.
March 24, 2005
How are we going to keep the lights on?
Greater Victoria Chamber of Commerce
2005 AGM
Description:
How are we going to keep the lights on? The 2005 AGM will feature Bob Elton, President and CEO of BC Hydro, on the short and long term strategies for power on Vancouver Island.
--------------------------------------------------------------------------------
Details:
Date and Time: Apr 27, 2005
11:30 am - 01:30 pm
Location: Victoria Marriott Inner Harbour
728 Humboldt St.
Victoria, BC
Cost: Members: $30.00 + GST
Non-Members: $50.00 + GST
US, China battle for Canada's underground
Robert Collier
San Francisco Chronicle
March 24, 2005
COMMENT: Amazing article from San Francisco, claiming the oil from Canada's oil sands for America, acknowledging that the primary reason for the Mackenzie Gas Pipeline is to provide gas to cook the oil out of the sands, and ending up brandishing a fist at Chinese intentions to claim some of that oil for China.
First Nations rights may disappear like bugs under US jackboots if they get in the way of moving Canadian oil to US markets. - Arthur Caldicott
Some tribes oppose pipeline to tap land rich in oil reserves
While Congress debates whether to allow oil and gas drilling in Alaska's Arctic National Wildlife Refuge, a similar battle with much higher stakes is under way in northwest Canada.
The $6 billion Mackenzie Pipeline project would open the Canadian Arctic for natural gas drilling and send the gas 800 miles south down the Mackenzie River Valley to Alberta. There, much of this fuel would be used to throttle up production in a huge but hard-to-tap supply of petroleum dispersed in underground gravel formations. These so-called oil sands hold petroleum reserves that are second in size only to Saudi Arabia's, and analysts say they could supply a large portion of U.S. energy needs for decades to come.
But the project has sparked opposition from some native tribal groups, which call it a federal grab of their ancestral lands, and from environmentalists, who say it would churn out greenhouse gases linked to global warming.
It is a fight that is likely to forever set the course for Canada's vast and empty north. The project is full of continental superlatives -- North America's richest oil patch, its biggest construction project since the Alaska pipeline in the 1970s, its largest strip-mining operation.
"By far the most important thing for North America are those oil sands in Canada," said Robert Esser, director of oil and gas resources at Cambridge Energy Research Associates in New York. "It's nice we're going to have access to (the Alaska refuge), but there are a lot of unknown questions there. We have no idea whether there is oil or gas or how much. In the oil sands, we know the reserves are huge, much larger than in Alaska."
The Canadian government, which calls the project an economic necessity, is not required to seek approval from Parliament in Ottawa. Pipeline construction is expected to start in early 2007, with gas flowing two years later.
In Alaska, by contrast, congressional authorization is required to develop the wildlife refuge. Last week's Senate vote to allow drilling will be followed by several more months of legislative maneuvering and, if the plan is approved, about eight years of preparation before oil begins to be pumped.
Despite its bright prospects, Canada's pipeline could still be stopped in its tracks by opposition from one of the region's native tribes, which are known in Canada as First Nations.
The Deh Cho First Nation, a tribe of about 4,200 people who occupy the southern third of the pipeline route, has filed suit in federal court in Vancouver, British Columbia, to block the project. Unlike tribes of the northern Mackenzie Valley that have settled their land disputes with the government and support the pipeline, the Deh Cho are holding out for autonomous powers in their area. Until a deal is reached on the land dispute, the government lacks legal authority for a pipeline right of way, the tribe insists.
"What we see today is Canada not living up to its obligations," said Noeline Villebrun, national chief of the Dene, the parent federation of Mackenzie Valley tribes. "If Canada hopes to settle the claims, then the Deh Cho have to see their rights being accommodated."
The Deh Cho won a round last week, when a federal judge ordered the government to release briefing notes, minutes, draft plans, correspondence and other documents related to planning for the pipeline project.
Contained in the oil sands are vast quantities of so-called bitumen, or super-heavy oil, underneath an area of northern Alberta as big as Florida. One extraction process is similar to strip mining, in which sand is scooped out and cooked at high heat to extract the sludge. Another process pumps steam into the underground deposits, dissolving the bitumen and allowing it to be piped to the surface. Under both methods, the resulting goo is refined into commercial grades of crude oil and piped to customers, mostly in the western United States. About 2 tons of sand have to be dug up, heated and processed to make a single 42-gallon barrel of oil.
The crucial ingredient in this process is natural gas. Although other fuels have been used to cook the oil sands, such as coal and the bitumen itself, none works as well as gas. Production of gas from long-established fields in Alberta is expected to decline in coming years, and because demand for gas is rising fast, expansion of the oil sands will require new supplies.
The nearest major source is in three well-explored yet untapped gas fields in the delta of the Mackenzie River on the shore of the Arctic Ocean. If the pipeline is built, gas from the delta can be funneled down to Alberta, where it will connect with the province's pipeline system to reach the oil sands.
With international oil prices soaring over $50 per barrel and likely to remain high for years to come, the oil sands are a bonanza in the making. The oil sands are estimated to contain 174 billion barrels of oil, second only to Saudi Arabia's 260 billion barrels.
In contrast, the Arctic National Wildlife Refuge contains only about 10 billion barrels. The Energy Department predicts output there will reach a peak of about 1 million barrels per day within a few years after the estimated 2015 start, and will decline gradually thereafter.
Companies such as ChevronTexaco, Shell, Exxon Mobil, Petro-Canada and Suncor Energy have made multibillion-dollar investments in the oil sands in recent years, raising total production to about 1 million barrels per day. If sufficient natural gas is available to cook the sludge, output from the oil sands is expected to reach 2 million barrels per day by 2010, rising to 3 million by 2020 and as much as 5 million for many decades to come.
"Imagine Saudi-type production levels just north of the U.S. border in a friendly country," said Roland George, an Alberta analyst with Purvin & Gertz, an oil industry consulting firm in Houston.
But environmentalists say the process of burning large amounts of energy just to get more energy is reckless. "The oil sands are the world's dirtiest source of oil," said Stephen Hazell, director of the Sierra Club of Canada's campaign against the Mackenzie pipeline.
The oil sands expansion is expected to increase Canada's emissions of greenhouse gases by as much as 12 percent of the country's total allotment under the Kyoto Protocol, making it almost impossible for the government to meet its commitments for reducing emissions, Hazell said.
The economic potential of the pipeline project has been a powerful lure for many of the region's Natives. Poverty is rampant in the ramshackle Native villages that dot the boreal forest. Unemployment can be as high as 50 percent.
"People need jobs, and although we're not sure the pipeline won't just hire outsiders from down south, there are a lot of people here who are really hopeful," Villebrun said.
Three tribes in the Mackenzie Valley have allied themselves with the oil and gas companies behind the pipeline project. The Sahtu Dene, Gwichin and Inuvialuit, which settled their federal land claims in the 1990s, hold a one- third stake in the pipeline project along with its corporate parents: Exxon Mobil, Shell and ConocoPhillips.
Although it supports the Mackenzie pipeline, the Gwichin tribe, whose 7, 000 members live on both sides of the Alaska-Canada border, oppose oil development in Alaska. Its leaders have long been active participants in U.S. environmentalists' lobbying campaigns in Washington against drilling in the wildlife refuge because the area is the main summer calving ground of migrating caribou herds that are a major source of the tribe's food supply.
"By destroying that one area in (the refuge), they will ultimately destroy the caribou," said Joe Linklater, chief of the Gwichin First Nation in Yukon Territory, who traveled to Washington earlier this month to lobby against the Alaska refuge proposal.
Linklater said he and his family, who live in the village of Old Crow, north of the Arctic Circle, hunt and kill several caribou each April and October during the animals' migration through the area. "That's what is in our freezer all year long -- the caribou -- and that's what we eat," he said. But he noted that the Canadian pipeline lies outside caribou migration areas.
Many other twists and turns lie ahead amid the complicated energy politics of the Far North.
The Mackenzie project has caused consternation in Alaska because it could delay construction of the planned $20 billion, 3,500-mile natural-gas pipeline from Alaska's North Slope down into Canada. The existing trans-Alaska pipeline carries oil only, and natural gas extracted in the North Slope as part of the oil drilling process must be re-injected into the ground. Experts say income from a natural-gas pipeline is needed to allow full expansion of oil drilling in the Alaska refuge.
The proposed Alaska pipeline route, which would parallel the Alaska- Canada Highway into the Yukon and British Columbia, is further behind in the Canadian regulatory process than its Mackenzie rival. Canadian officials are believed to be deliberately taking a go-slow stance to ensure that their pipeline gets built first.
Although U.S. officials hope the output from Alberta's oil sands will be exported mainly south of the border, Chinese officials are trying to lock up long-term contracts for oil that would be sent through a proposed pipeline to the coast at British Columbia and then exported via tanker to China.
"There have been Chinese delegations in every skyscraper in Calgary," said George, the analyst.
"The Chinese are doing what the United States is doing, scouring the planet for every molecule of oil production they can get their hands on."
Many Washington conservatives are seeing red. "It's definitely a big worry for the Chinese to be trying to monopolize the oil sands," said Frank Gaffney, president of the Center for Security Policy in Washington.
"We're in a race for energy supplies, and we can't allow China to win this one."
March 23, 2005
GSXCCC files appeal motion
Appeal schedule
March 23: Intervenor motion books due
April 4: BC Hydro and DPP response books due
April 6: Leave to appeal argument in BCCA chambers, Vancouver, Smythe
Street, 9:30 a.m., courtroom number will be posted on the day
April 20: (if leave to appeal is granted) appellants' factums due
April 27: respondents' factums due
May 2-3: BCCA appeal oral argument.
GSX Concerned Citizens motion
1. The Commission erred by not disqualifying the Commission Panel on
the grounds of a reasonable apprehension of bias.
2. The Commission erred by denying procedural fairness and natural
justice to the Appellants, particulars of which include:
a. unduly restricting the scope of the hearing,
b. proceeding with undue haste,
c. unreasonably limiting the Appellants' access to confidential documents and other information; and
d. improperly conducting itself during an in camera session.
3. The Commission erred in law on grounds to be further particularized
once the Commission's reasons for decision regarding Order E-1-05 have been
provided to counsel.
4. The Commission erred in law and was patently unreasonable in
interpreting "the public interest" in s.71 of the Act as being determined
exclusively by the outcome of BC Hydro's CFT competitive bidding process and
without reference to the precautionary principle as a norm of customary
international law.
5. The Commission exceeded its jurisdiction when it held that BC Hydro's
risk of carbon tax liability associated with the EPA should be allocated to
BC Hydro's shareholder rather than the ratepayer.
6. The Commission had before it no evidence to support its conclusion that
the EPA is warranted because Vancouver Island has a long term electricity
supply problem requiring both new generation and renewed transmission.
7. The Commission had before it no evidence to support its conclusion that
the Norske Canada Demand Management Project is not a viable option for
addressing the Vancouver Island electricity capacity gap for planning
purposes between the F2008 zero-rating of the HVDC lines and the deemed
F2010 in-service date of the Vancouver Island Transmission Reinforcement
Project (230 kV lines).
8. The Commission erred in law and was patently unreasonable in holding
that in a hearing under s.71 of the Act the utility does not bear the onus
of establishing that the electricity supply contract in question is in the
public interest.
9. Such other grounds as counsel may advise.
March 21, 2005
Natural Gas Losing Power Market
Mike Byfield
Nickle's Daily Oil Bulletin
21 March 2005
COMMENT:Volatile, high prices for natural gas are driving electricity generators away from gas. The foolish and costly economics of BC Hydro's natural gas strategy for Vancouver Island was apparent to many back in 2000 when the company went public with its plans for a natural gas pipeline to Vancouver Island (the GSX) and up to three gas-fired plants on the island. This article merely confirms what we have been saying all along.
But it hasn't deterred BC Hydro, which still hopes to have the Duke Point Power Partnership start construction on a gas-fired plant in Nanaimo, as soon as possible.
The GSX Concerned Citizens Coalition is appealing the BCUC approval of the deal for the plant with Hydro. It's very clear that there are excellent bridging solutions for the short term period in 2007-2008 when certain cables from the mainland are "derated" and new cables are not yet in service. A 25 year deal for expensive gas-fired power is completely the wrong solution to the bridging problem. And BC does not need to move to fossil fuels for electricity generation.
The Joint Industry Electricity Steering Committee (JIESC) is appealing the decision too, for pretty much the same reasons. The JIESC members are focussed on the cheapest power, however, and don't particularly care how it is generated. For the moment, though, the two groups seek the same remedy with respect to Duke Point Power - that the BCUC decision be "vacated".
For more information about coal-fired electricity generation in BC, please refer to the material at Dogwood Initiative (http://tinyurl.com/626zt)
Read the letter from Dogwood Initiative and Sierra Club of BC to George Abbott, the Minister of Sustainable Resource Management asking that BC's first coal-fired generation plant be required to undergo a full environmental assessment.
Please sign and send your own letter to the Minister asking that BC's first coal-fired generation plant be required to undergo a full environmental assessment. A template letter is available for your use, here.
North American natural gas is no longer the favored fuel for new power generation, major utility customers report - and its fall from grace has triggered a competitive race with coal, nuclear, imported LNGs and other energy sources vying for incremental market share in the crucial electricity sector.
"For decades, natural gas was considered too expensive to burn for power and those conditions are already reoccurring," says Jim Oosterbaan, senior vice president of merchant operations for Edmonton-based Epcor Utilities Inc. He made that comment on March 7 to a North American natural gas conference sponsored by the Canadian Energy Research Institute in Calgary.
Energy-intensive heavy industries have already switched away from natural gas or abandoned North America in favor of other locations, Oosterbaan says, and the power sector is poised to make a similar shift to other fuels.
Stephen Reynolds, president and CEO of Seattle-based Puget Sound Energy, agrees: "Frankly, if I were looking at building a new generating unit, I'd be concerned that gas supply looks real tight even without incremental power demand. I think coal, which is reliable in terms of supply and pricing, would have the edge, above all in the Midwest."
Puget Energy, located in Seattle, services 1.6 million electricity and gas customers. Reynolds' assessment of coal's growing appeal is shared by his wife Paula Rosput Reynolds, president and CEO of AGL Resources. This Atlanta-based company distributes gas to 2.2 million customers through six subsidiary utilities.
"Even pristine states like Florida and the Pacific Northwest are determined to keep the coal option alive," says Rosput Reynolds, who is also a director of Coca-Cola Enterprises and Delta Air Lines.
Reynolds and Rosput Reynolds, who both hold degrees in economics, were president and vice-president respectively of Pacific Gas Transmission during the 1990s when that company was embroiled in a lengthy regulatory battle to expand its pipeline system capacity from Alberta to northern California.
The couple warns producers and pipeliners that similar delays in bringing Arctic gas from Alaska and the Mackenzie Delta to southern markets would give a potentially decisive boost to competing forms of energy.
"The gas industry's reputation is at stake here," suggests Steve Reynolds. "Its future depends on the sensible resolution of regulatory disputes and prompt development of Arctic supplies."
A supply shortage, if severe, could even draw the attention of government. In 1978, alarmed by a severe natural gas crunch, the U.S. Congress outlawed the burning of gas in new generating plants, in effect dictating the use of coal and nuclear fuel for new baseload and residual crude for peaking power.
After the act was repealed in 1987 by U.S. President Ronald Reagan, American gas consumption for electricity generation rose from 2.6 tcf in 1988 to 5.7 tcf in 2002.
The reputation of gas has again suffered a severe blow, Rosput Reynolds says: "A decade ago, INGAA (Interstate Natural Gas Association of America) and plenty of other upstream people were predicting that annual consumption would rise to 30 tcf. In fact, demand has remained relatively flat yet gas prices have still risen dramatically because supply has failed to keep pace with demand."
The contenders to build new Arctic gas transportation include:
Sempra Energy - whose subsidiaries Southern California Gas Co. and San Diego Gas & Electric Co. make it the largest distribution utility in the U.S. - wants to construct a 1,297-kilometre north-south pipeline through from Alaska's North Slope to the port of Valdez, where gas would be liquefied and shipped by tanker to the West Coast. Its partner in the project is the Alaska Gasline Port Authority. Pipeline capacity could range from 2.6 bcf per day as high as 6.0 bcf.
TransCanada PipeLines Limited, through its subsidiary Foothills Pipe Lines Ltd., plans to build a 4.5 bcf per day line which would follow the Alaska Highway to TCPL's pipeline grid in Alberta, then move the fuel to the (U.S.) Midwest. The $20 billion US project would be built under legislation passed by the federal government 27 years ago after a review.
Enbridge Inc. has proposed an alternative similar to TransCanada's, threatening to take legal action if Canada's federal government does not open the Alaska opportunity to another round of competition.
BP, ConocoPhillips and ExxonMobil, the major gas producers on the North Slope, have also filed an application with the U.S. Federal Energy Regulatory Commission to construct a similar U.S.-Canada pipeline. A Canadian pipeline company could become a partner with the producer group.
A consortium headed by Imperial Oil Ventures Ltd. is planning a pipeline from the Mackenzie Delta to Alberta, scheduled to move one bcf per day by 2009-2010.
Industry officials hope that the Mackenzie pipeline, based on present tentative construction schedules, would act as a warmup for the mammoth Alaska Highway project.
The Sempra and Alaska-Midwest proposals appear to have more potential for overlap in terms of timing and volumes.
Sempra's LNG facilities could be in service for 2011-2012 if government permitting is completed by 2007, says company spokesman Art Larson.
The tankers might discharge their cargoes at an LNG facility, named Energia Costa Azul, which Sempra has received government approval to construct south of San Diego in Baja California, Mexico.
Although the Coasta Azul facility's capacity of 800 mmcf per day is already committed, Larson says its expansion is possible, or another LNG facility might be built elsewhere on the West Coast.
"Alaska has enough gas potential to support to pipelines to market. We do not oppose a second pipeline but only on condition that our project moves ahead first," Larson comments.
Sempra stresses that, without its Alaska project, the West Coast will become entirely dependent on LNG from foreign sources, which it considers a potential concern for security of supply. Above all, Californians are anxious not to replay the enormously expensive energy supply crunch which they suffered at the turn of century.
Serious gas supply and pipeline construction conflicts between Sempra and other Alaska project do not appear likely at this stage, says George Eynon, CERI's senior director of natural gas research. "The actual construction component of Sempra's gas line (planned to parallel to the present trans-Alaska oil line) should occupy a relatively modest time window," he says, noting that TransCanada's 2012 in-service target is widely seen as overly optimistic.
But an orderly sequential deployment of the Mackenzie, Sempra and Alaska-Canada-Midwest projects could easily be disrupted by regulatory snafus.
The Mackenzie line, for example, has yet to win approval from some aboriginal groups. Brendan Bell, minister of non-renewable resources for the Northwest Territories, says Canada's prospects for developing its own Arctic gas could be set back by decades if delays put Mackenzie development into direct conflict with an Alaska-Midwest pipeline or large-scale LNG projects which bring foreign gas into North America.
Also on the regulatory front, Sempra must win an exemption from the Jones Act, a federal law which dictates that ships cargo moving between U.S. ports must be American-built, American-owned and American-crewed. Darcel Hulse, president of Sempra LNG, says this requirement is not feasible for his project because building an LNG carrier today in the U.S. would cost at least three times as much as it would on the open market.
Eynon points out that other constraints besides regulatory issues could emerge. "The sheer physical scale of a $20-billion (U.S.) Alaska pipeline project will impact virtually every major steel plant in the world directly or indirectly," he says.
Fuels acting as competitors to Arctic gas also face formidable regulatory and development challenges.
For example, Puget's Reynolds does not believe that LNG importers will be able to relieve the tight continental gas supply. "The siting of new LNG plants will continue to be slow and thoughtful," he forecasts. "Additional LNG imports will occur but in my opinion not quickly enough to do much more than offset production declines from the lower 48 states and Western Canada - and possibly not even that."
Nuclear power plants have been all but impossible to site since the early 1990s but Oosterbaan advises that the sector is reviving. Three nuclear plants backed by powerful sponsors are now braving the permitting process in the U.S. Policy-makers are drawn to nuclear by new technology which has dramatically increased output from existing plants and enables the construction of smaller nuclear plants.
Oosterbaan says design improvements have enabled the construction of several innovative coal-fired generating plants whose emissions are competitive with natural gas. At current electricity prices, he predicts, older coal plants will be retrofitted with the same clean-burning technology.
But Martin Edwards, INGAA's vice president for legislative affairs, says gas may yet win more market share in power. "Gas-fired plants have a very low utilization rate. Increasing that rate in many cases will be cheaper than constructing new coal-fired or nuclear plants," he comments (see following story).
But without timely access to Arctic reserves, Reynolds says, gas producers cannot assure their power customers of the 30-year supply needed to finance new generation plants, and by default new-generation capacity at least will be forfeited to other fuels.
http://www.nickles.com/brn.html
March 20, 2005
Full steam ahead for BC offshore oil drilling
Kevin Potvin
The Republic
Vancouver's Opinionated Newspaper
March 3 to 16, 2005 • No 108
No voices of caution or reason were invited to a $500-a-head meeting of government and energy industry leaders licking their chops and gripping their forks as they gaze out over the beautiful British Columbia coastline.
The most startling comment heard at a two-day powwow of local oil and gas industry men in Victoria this week was offered by Guy Jarvis, a vice president at Enbridge Energy Management, a pipeline company in Calgary. In describing his company's plans in the next few years, he said Enbridge will be reversing the direction of flow in a pipeline that once delivered oil from Cushing, Oklahoma to Chicago. The pipeline system will now take oil delivered from the tar sands of Alberta through Chicago to Cushing. The news was greeted by nary a gasp, as though it meant nothing.
Not long ago, the Cushing oil field produced 17% of oil sold in the United States and accounted for a whopping 3% of total world oil production. Cushing was the site of the famous Wild Mary Sudik well blowout in 1930, a wildcatter's hole that blew into a huge uncontrollable gusher for 11 days spraying 3,000 barrels of oil an hour high into the sky and drenching city hall and most of downtown in the sticky black gold.
The pipeline from Cushing to Chicago made Oklahoma the top oil producing state in the top oil producing country in the world. The first commercial oil well on the planet may have been sunk at Oil City, Pennsylvania, but the age of oil started at Cushing, Oklahoma. And now, 85 years later, we learn that Cushing will now be importing oil. For oil company men with eyes to see, there could be no more ominous a sign. But this room on this day was blindfolded to it.
One can argue about how much longer industrial nations around the world will find oil and gas to burn to keep their factories and transportation systems running, but it's all a question of when, not if. Credible scientists range in their opinions from 10 years to 75 years. Some of the wide disparity is accounted for by how the question is posed.
The world currently burns about 80 million barrels of oil a day. At that rate, there is probably hundreds if not thousands of years worth of oil in reserves underground around the planet. But the vast majority of that oil is unreachable with current drilling and pumping technology, or is too expensive to pump because of where it is. As the price that oil fetches on the market goes up, some of those places where it is currently uneconomical to explore and pump become profitable. Thus, if scientists are asked to estimate how much oil is left for us to use, their answer is that it depends on the price. At $100 per barrel, there is far more oil that can profitably be pumped to market than there is when oil is at $40 per barrel. This is the basis for the higher estimates.
But there is a limit: it takes a great deal of oil-burning energy to pump oil up from underground wells, to transport oil to refineries, to crack the heavy crude into usable smaller molecules, and to bring it to places where the resulting oil products are used, like at gas stations in cities. The energy required to bring oil to market increases as we search deeper and in more remote places for new reserves of lower, heavier quality crude.
Once we get to the point where it takes one unit of oil energy to bring the next unit of oil energy to market, the oil industry is effectively dead, no matter how high the price goes or how much oil there remains underground. Even if customers are willing to pay $1,000 per barrel, if a barrel is required to bring the next barrel of oil to market, the cost of producing that next barrel is also inflated to $1,000, which means no one can long remain in that business.
The situation with natural gas is similar, if not worse due to chronic over-estimating of the size of reserves.
What this ultimately means is that the price of fossil fuels will continually go up making marginal, unsafe, or barely economic reserves more tempting. But no new production will offset the rising trend as old oil fields run dry (like in Oklahoma) faster than new fields can be found and exploited. Prices must always rise rapidly, making the industry and those who depend on it, like governments, more desperate and reckless to exploit more unsafe and marginal reserves.
Every new dollar of investment in fossil fuel exploitation only hastens us faster toward the day when it takes a complete unit of energy to market the next unit of energy. The day before that happens will be the day of highest investment in the oil and gas industry as the whole machinery gushes to the last drop of now hugely expensive oil—and then the next day, there will be sudden silence, when the drop after the last one takes a whole drop to produce, which no one will do.
Thus it is that three of the major pipeline companies operating in BC and Alberta can in one day together announce over $5.5 billion worth of new pipelines to market the notoriously difficult-to-work-with sticky tar of north Alberta. It is also why a room full of men who should know better can applaud British Columbia minister of energy Richard Neufeld when he complains to them that the federal government is merely playing politics by maintaining the moratorium on oil and gas exploration in the famously unstable, highly ecologically fragile Queen Charlotte basin. When oil hits $100 per barrel, they'll be ready to burn down the Parliament in Ottawa.
The posh room full of energy company executives and mayors and provincial politicians gathered to hear about opportunities in the oil and gas industry in British Columbia against this backdrop of looming catastrophe, did not once all day hear the following terms: “Kyoto Accord,” “Peak oil,” “global warming,” “environmental stress,” “alternative energy,” “resource wars,” “Iraq,” “Afghanistan,” or even the words “future” or “reality.” What they did hear all day were words like “opportunity,” “billions” and “market.”
Eventually the price of oil will rise to the point where it will be profitable to rip out Stanley Park and drill for it there. Those who meekly protest will be accused of blocking business from providing government with the revenue to treat the sick in hospitals, as John Hunter, president and CEO of Hunter and Associates in Vancouver did, regarding five Western Canada Wilderness Committee protesters who campaigned against drilling in the Queen Charlotte basin outside the meeting at Victoria's Delta Point hotel.
Or, as Neufeld, apparently the representative of the people of British Columbia, said to this gathering of capitalists, “When we see 10 billion barrels of oil offshore, why shouldn't we go get it?” It may not be the sentiment of the people, but it was certainly the sentiment in that room. Market economics can be very charming in its blindness and enthusiasm, but aren't some of these people ever tempted to cautiously peek out from under their blindfolds at the road directly ahead?
Kevin Potvin kpotvin@republic-news.org
March 18, 2005
BCTC backs down on Tsawwassen power lines
Chad Skelton and Richard Chu
Vancouver Sun
March 18, 2005
Company will find new route for proposed high-voltage transmission lines
"Costs are an important consideration, and so are other factors such as aesthetics, socio-economic and environmental impacts. We will now turn our attention to developing an alternative option; this work will take several months." BCTC CEO Michael Costello (link)
DELTA - Tsawwassen residents won a major victory Thursday when B.C. Transmission Corp. backed down from a plan to build high-voltage power lines through their neighbourhoods.
In a letter to Delta South Liberal MLA Val Roddick and Delta Mayor Lois Jackson, the utility vowed not to replace the wooden power poles that currently exist along the company's right-of-way with 30-metre high steel towers.
Residents in the area have been lobbying against the proposal for months, concerned that the towers would be unsightly and that the increased voltage (from 138 kilovolts to 230) could pose health risks to residents.
When the existing power lines were built in Tsawwassen in the 1950s, most of the area was farmland.
But suburban homes now back onto the lines in many locations.
Maureen Broadfoot, spokeswoman for the Tsawwassen Residents Against High Voltage Overhead Lines, was ecstatic when she heard the news Thursday morning.
"We're pleased right now that at least this upgrade won't be going through our residential areas," she said.
The new lines were part of a $200-million project to upgrade transmission services to Vancouver Island.
Donna McGeachie, community affairs manager for BCTC, said the company will begin exploring alternative routes for the lines.
"We've got a number of alternatives that we've identified and some that the residents have identified," she said. "Those alternatives include going along Highway 17 or tunnelling underneath Tsawwassen.
McGeachie said all the alternatives are more costly and will likely increase the cost of the project by anywhere from $18 million to $35 million.
"Any other route we go through is bound to be longer, so that adds to the cost," she said.
McGeachie said the increased cost will be passed on to the energy companies that use the transmission lines, including BC Hydro, which will likely pass the cost on to customers.
The project to build new transmission lines to Vancouver Island is complex, requiring environmental approvals from the provincial and federal governments as well as U.S. authorities because 12 kilometres of the undersea cables will run through the U.S.
McGeachie said Thursday's decision will only affect four kilometres of the 69-kilometre route and is not expected to delay the project. BCTC still expects to make its application to the B.C. Utilities Commission in June.
BCTC hopes to have a new system of power lines to the Island operational by the fall of 2008, McGeachie said.
© The Vancouver Sun 2005
March 15, 2005
Duke Point power plant firm holds off due to legal appeal
Andrew A. Duffy
Times Colonist (Victoria)
15-Mar-2005
With the release of the B.C. Utilities Commission's reasons for approving the electricity purchase agreement between B.C. Hydro and Duke Point Power Corp. come questions of why opponents are intent on taking the decision to the B.C. Court of Appeal.
On March 9, the utilities commission released its reasons for the decision it rendered Feb. 17, approving a 25-year agreement that will see Hydro pay Pristine $45 million annually to provide electricity from a $280 million, 252-megawatt plant to be built at Duke Point in Nanaimo.
"In light of a very strong decision in our favour we are wondering why these groups are trying to delay things," said Jeff Myers, president of Pristine Power which will build and operate the plant.
B.C. Hydro has argued that demand for electricity is increasing on the Island and around the province, and the new plant is needed to meet that demand.
The Joint Industry Electricity Steering Committee, representing B.C.'s largest industrial consumers of electricity, has filed an appeal based on its belief the project exposes Hydro customers to high costs and financial risks.
The Georgia Strait Crossing Concerned Citizens Coalition has appealed on the grounds the commission's decision was biased and predetermined before intervenors had a chance to present evidence at public hearings.
Pristine officials have wondered aloud how the appeal process, which could delay the start of the project until early summer, benefits anyone.
"That the project is a win for Vancouver Island and a win for ratepayers has been confirmed through a rigorous, competitive bidding process, a separate cost effectiveness evaluation, an environmental assessment and an extensive public hearing before the BCUC, an independent regulator," noted Harvie Campbell, vice-president of Pristine Power.
"After the extraordinary amount of checks and balances that this project has gone through, we hope common sense prevails and JIESC and GSXCCC re-examine their approach and stand down from their applications."
That's not going to happen.
Tom Hackney, president of the concerned citizens coalition said the group still believes the utilities commission was biased in favour of the project before the hearing was complete.
"We're not surprised, but disappointed," he said of the decision to approve the deal.
"The last time around when BCUC reviewed the (Vancouver Island Generation Project -- Hydro's own 250-megawatt plant which the BCUC dismissed as too large and too costly) they seemed to be a lot more open to hearing the broader arguments about different approaches to making up the energy shortfall on Vancouver Island.
"This time they really seem to have taken a narrower view."
In its reasons the commission outlined the entire process noting it was open and flexible enough to consider a number of options and was adequate for determining the most cost-effective on-Island generation option.
The commission also backed Hydro's load forecasts which necessitated additional capacity in the range of 150 to 300 megawatts by 2008.
Hydro has maintained the Duke Point project is the best way to provide customers with the reliable capacity required to meet Vancouver Island's anticipated supply shortfall in 2007 when some of the undersea electricity cables that run from the mainland are deemed un-reliable.
"We're very pleased with the reasons for the decision," said Bev van Ruyven, Hydro's vice-president of distribution. "We thought the commission took a very balanced approach."
Myers said at this point the company is holding off breaking ground in Nanaimo for the plant, but they are doing work behind the scenes qualifying contractors and getting permits to be ready for the Appeal Court decision.
The Appeal Court will hold a one-day hearing into the matter April 8 and is expected to decide if there are grounds for an appeal within a week.
March 14, 2005
2 energy visions: BC looks back, other places look ahead
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| BC Hydro signs a deal for a new gas-fired generation plant to start operation in 2007 that will spew 800,000 tonnes of carbon dioxide into the atmosphere, doubling the province's annual greenhouse gas emissions from energy generation. | Ontario adopts a renewable fuel standard to take effect in 2007 that requires vehicle fuels to contain at least 5% ethanol, and will reduce provincial greenhouse gas emissions by 800,000 tonnes annually. |
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| BC Hydro has exactly 0 megawatts of wind generated electricity on the grid, and plans are to add exactly 0 MW in 2005. | BC's neighbour Alberta has 275 MW of installed wind capacity, Washington has 243 MW and plans to add 645 MW in 2005; Idaho plans 381 MW in 2005; even Yukon has 1 MW. |
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| Announced in September 2003, the 58.5 MW Holberg Wind Farm, BC's first wind project, may actually come onstream in late 2006 or early 2007. | 20 year old wind turbines in Palm Springs, Tehachapi and Altamont Pass in California are to be repowered in early 2005. | All this by way of suggesting that BC has a long way to go to embrace renewables and a sustainable energy vision. Yet the road has been obvious and the GSX Concerned Citizens Coalition and many, many others have been telling government and BC Hydro for years, where that road is. But even with today's announcement, the government clearly doesn't get it. Heavy on high-tech, nowhere on local jobs, local impacts. |
Growing a world-class power technology cluster in BC
A vision for growing a
world-class technology cluster
in smart, sustainable British Columbia
Report to the Premier's Technology Council
Prepared by Mossadiq Umedaly
Building the Future
British Columbia can be a world leader in Power Technology. Government and Industry can create high-value jobs in profitable businesses by supplying smart, sustainable power solutions to British Columbia, to Canada and to the world.
The full 127 page report is available here
NEWS RELEASE
For Immediate Release
March 14, 2005
Office of the Premier
Ministry of Energy and Mines
REPORT HIGHLIGHTS B.C. ALT ENERGY & POWER OPPORTUNITIES
VANCOUVER – A new report by industry to the Premier’s Technology Council identifies opportunities for the government and private sector to work together in establishing B.C. as a global leader in innovative power technologies, Premier Gordon Campbell said today.
“B.C. has the people and the resources to help drive the global shift toward smart power technology and alternative energy as part of our goal of leading the world in sustainable environmental management,” Campbell said. “Innovative power technology developed here in B.C. is improving the quality of life for thousands of people around the world, by improving how power is generated, transported and used. Demand for that expertise will only continue to grow.”
The report, entitled A Vision for Growing a World-Class Power Technology Cluster in a Sustainable British Columbia, identifies five international market opportunities in which B.C. has the potential to take a leadership role that will result in significant economic opportunities and job creation:
1. Remote power solutions for rural communities, including off-grid distributed generation from a variety of established and emerging alternative sources.
2. Sustainable urban practices, including building designs and urban planning to reduce energy consumption and grid-tied sustainable distributed power to help offset peak power needs.
3. Smart urban transport, including application of natural gas and electric hybrid engine, fuel cells and hydrogen – areas in which B.C. is already recognized as the global leader.
4. Smart grid solutions, including the use of software, hardware and electronics to increase the efficiency of power grids.
5. Large-scale clean, green power production to generate and deliver electricity to the western power market.
The report leverages input from leading experts to create a strategy and a framework for collaboration to address the opportunities and challenges for smart, sustainable power technologies in B.C.
“In 2002 we brought in the B.C. Energy Plan – a plan that looks forward on how to build on B.C.’s great energy resources,” said Richard Neufeld, Minister of Energy and Mines. “This report contains some exciting ideas about how to unleash our province’s full potential as an energy innovator, and advance the goals of the Energy Plan.”
“As more markets around the world look for smart power choices, they will be looking to buy those products, services and expertise from somewhere,” said the report author Mossadiq Umedaly, chairman of Xantrex Technology and a member of the Premier’s Technology Council. “B.C. is poised at the edge of a tremendous opportunity, but we also have challenges and competition. If we work together and apply ourselves thoughtfully and consistently with a clear strategy and focus we can be the providers of leading-edge power technology solutions to markets around the world.”
According to the report, power technology is already one of the biggest technology industries in B.C. with dozens of sub-sectors with the potential to add hundreds of millions to the economy over the next decade. B.C.’s power technology sector already includes more than 60 companies providing 3,000 jobs and generating $700 million in annual revenues. B.C. has market leaders and emerging companies in a number of smart, sustainable power technology areas, including power electronics, fuel cells, natural gas and electric hybrid engines, smart grid and power measurement, micro-hydro, ocean, solar, and wind energy, sustainable urban building and design practices and more.
A copy of the report is available at http://www.gov.bc.ca/
-30-
Media contact:
Mike Morton
Press Secretary
Office of the Premier
250 213-8218
Tamara Little
Communications Director
Ministry of Energy and Mines
250 889-1825
Visit the Province's website at www.gov.bc.ca for online information and services.
This news release from the Premier's Office is here
March 11, 2005
No Gas Plant Coalition says No! to gas-fired power plants
News Release
No Gas Plant Coalition
Gabriola Island, BC
March 9, 2005
For Immediate Release
Coalition says No!
to gas-fired power plants
A citizens' group from the Gulf Islands has called on BC Premier Gordon Campbell to halt construction of the controversial Duke Point Power project and place a moratorium on the burning of fossil fuels to generate electricity. (Click here for letter to Premier Campbell).
"The Duke Point plant, if built, will produce more than 800,000 tonnes of carbon dioxide every year it operates," says Bob McKechnie, spokesman for the Gabriola Island based No Gas Plant Coalition. "This flies in the face of Canada's recently-signed Kyoto commitment as well as the BC government's own Climate Change Plan. Recent studies have shown that although natural gas is a relatively clean fuel, it results in noxious emissions when burned. Our health will be affected by this plant."
In February, the BC Utilities Commission approved an Energy Purchase Agreement between BC Hydro and Pristine Power, a consortium of investors headquartered in Alberta. Under the agreement, Pristine Power will build and operate the plant, selling electricity to BC Hydro according to a complicated formula that BC Hydro has refused to fully reveal to the public. Construction was to begin in early March, but is on hold pending appeals filed by Vancouver Island industry and concerned citizens. BC Hydro is now trying to hurry the matter through the BC Court of Appeal.
BC Hydro has consistently maintained that Vancouver Island will begin experiencing power shortages in the next two to three years if the Duke Point plant is not built. It began planning for the plant in 2001, after similar proposals were blocked by public protest in other communities, but its plan was rejected by the BCUC last year on the grounds that it was not proven to be the least costly option for ratepayers. Pristine Power's nearly identical proposal will use the same site and the same equipment - including assets worth $120 million, which it will purchase from BC Hydro for $50 million.
McKechnie, a retired professional engineer, was among the fifty intervenors and hundreds of citizens who told the BCUC hearing in January that the Duke Point plant would create an expensive, unnecessary, and unwanted environmental hazard. His view is supported by industry engineers. "With proper management on BC Hydro's part, Vancouver Island won't experience peak capacity shortfalls if the plant isn't built," he says. "There are other simpler and less costly alternatives."
McKechnie says a combination of proper load management on BC Hydro's part and the adoption of two or three ready-to-go non-fossil generation proposals will provide all the peak-capacity protection that's needed on Vancouver Island until a new undersea cable from the mainland comes on stream in 2008. "With the new cable coming, there's time to further conservation efforts and start developing the island's abundant green/sustainable electricity resources," he says, "Building a $370-million gas-fired generation plant to deal with a simple short-term peak capacity problem is like going out and buying a chainsaw to cut butter."
The No Gas Plant Coalition has sent a letter to Premier Gordon Campbell, asking him to halt construction of the Duke Point plant and forbid further generation projects that would rely on fossil fuels. It hopes other groups and individuals will sign and support the letter, and back its protest to the premier. It is calling on all citizens to demand that their government representatives honour commitments to green energy and clean environments.
In its letter, the No Gas Plant Coalition says BC Hydro has exaggerated the population growth and energy needs of Vancouver Island to justify building the Duke Point plant. It accuses Hydro of ignoring other strategies that promote green energy and conservation. “It is a matter of record that the largest industrial user of electricity on Vancouver Island has submitted a clear plan that would cause the reduction of the offending demand peak by up to 140MW,” says the letter. “This is not some meddlesome on-the-margin proposal, but a large and truly beneficial economic option. An option dismissed by the BCUC and BC Hydro in favour of spending many hundreds of millions of dollars on a new and senseless natural gas-burning facility."
The letter also says that Hydro is promoting a fiction with its estimates of gas costs for the plant. “Too bad we, as captive customers, aren’t able to pay in fictitious dollars,” says the letter.
It asks Premier Campbell to stand by the promise that he made in his recent budget: “To lead the world in sustainable environmental management, with the best air and water quality, and the best fisheries management, bar none.”
“We intend to have every candidate in this May election state for the record just how committed he or she is to the commendable goals your government has set down,” says the letter. “We are characterizing this occasion as a test of your Government’s commitment to its word.”
For more information, go to www.sqwalk.com and/or contact Bob McKechnie at 250 247-8197 (bobmck@shaw.ca) or Erik Andersen at moonbayhouse@shaw.ca
Download this news release
Download letter to Premier Campbell
Download Backgrounder and suggestions for What You Can Do
Download media and political contacts list
March 10, 2005
Thursday, March 10, Duke Point meeting on Gabriola
800,000 Tonnes of CO2 per year
A Power Plant at Duke Point will be in Gabriola’s Front yard!
What can we do to stop it?
Strategy and Action Meeting
Thursday, March 10, 7pm
at the Agi Hall, opposite Gabriola P.O.
Get latest information on the Duke Point power plant,
and on the Court of Appeals process
Plan political strategies
Discuss Direct Action
Read letter for Order in Council to stop plant
and email Erik Anderson to add your name as a signatory
Donate to Fund to support Appeal
Or deposit to GSXCCC Appeal Fund at Coastal Community Credit Union
Volunteer to help!
Gabriola No-Gas-Plant Group
Contact Phil Marchant for more information
marchant@islandnet.com 247-0021
(logo taken from Siki's Quilt Square)
Powerex's right to import U.S. electricity questioned
Scott Simpson
Vancouver Sun
March 10, 2005
COMMENT: "Producers in the United States supply about 12 per cent of British Columbia's electricity requirements," Scott Simpson claims in this article. Powerex does buy a lot of electricity from Alberta, Washington and to a lesser extent from other US states. But it is in the interests of trading power for revenue that this is done, not to meet domestic needs, not to satisfy "British Columbia's electricity requirements".
We buy cheap, and sell dear. We conserve water in our reservoirs at night and during low demand periods - when power is available for purchase at rock-bottom prices. And we open the floodgates when prices on US markets are high. It's brilliant business, good for the provincial treasury, and there's nothing wrong with it.
But that's not how the story is told. Instead, we're led to believe that BC needs the power. We're told repeatedly that BC is a "net importer", that we're buying power to meet BC's "electricity requirements".
In telling the story this way, Simpson echoes BC Hydro and the provincial government, both of whom apparently want to plunge BC into an orgy of capital-intensive capacity building - gas-fired plants on Vancouver Island and elsewhere, coal-fired plants, perhaps Site C - all under the pretext that BC is running short of power. It's not true. It's manipulative and deceptive and a breach of trust with British Columbians to present the facts this way. - Arthur Caldicott
California's $1-billion electricity war with Powerex is entering a new phase with two aggrieved utilities in the state launching an attack on the BC Hydro-owned company's licence to import power from the United States.
If the utilities are successful in their attack, which came in the form of a petition to the U.S. Department of Energy, it could lead to higher electricity prices for consumers in British Columbia who are already dependent on producers in the United States.
Alternatively, the petition could be used as leverage to force Hydro to refund hundreds of millions of dollars in profits earned by Powerex during the California energy crisis of 2000-2001.
Producers in the United States supply about 12 per cent of British Columbia's electricity requirements -- an estimated $375 million worth of power in 2005 -- with Powerex responsible for bringing it in at the lowest possible cost to Hydro's customers.
Since 1998, Powerex has used an authorization from the U.S. Department of Energy (DOE) to buy electricity in the U.S. and route it to Canada when market prices are at their lowest.
The DOE export licence expired last month and Powerex is seeking what it presumed to be a routine five-year extension.
However, the California utilities, Southern California Edison and Pacific Gas and Electric, are asking the DOE for permission to oppose a routine renewal.
They want the licence modified with tough new conditions to bar Powerex from making extraordinary profits as it did during the 2000-2001 crisis.
They allege that Powerex used market power to manipulate the California electricity market during the state's 2000-2001 electricity crisis and "was buying power in the California markets where it was desperately needed and exporting it to Canada."
"Powerex has demonstrated a pattern of abuse of its export privileges in connection with the energy crisis that existed in the Western United States in 2000 and 2001 ["Energy Crisis"]," says the petition filed this week.
It says evidence that surfaced during an investigation of Enron's role in precipitating the California crisis shows that "Powerex continued to export power to Canada during system emergencies and blackouts" in violation of the conditions of its DOE export license.
The petition says that without tough new conditions on Powerex's export licence, Powerex could "impair the sufficiency of electricity supply within the United States."
The petitioners recommend a licence renewal be contingent on conditions including hour-by-hour paperwork for all import and export trades -- and a commitment by Powerex to refund profits from power sales if U.S. electricity market regulators determine it broke rules against market manipulation.
Hydro media relations manager Elisha Moreno said Powerex continues to operate in the U.S. while its application is being heard.
She said Powerex expects the DOE will renew the licence and notes that U.S. authorities have already absolved Powerex of any misconduct in its dealings with California during the crisis.
But even in the unlikely event that the licence is not renewed, it would not stop Powerex from selling B.C.-made electricity into the U.S. -- such as the marketing of the downstream benefits of the Columbia River Treaty.
As well, Hydro could continue to meet British Columbia's electricity demand with U.S. power, by purchasing it from another trading company.
© The Vancouver Sun 2005
VICFT Reasons for Decision
COMMENT: Skimming through the CUC "reasons" for approving the EPA (released today), it strikes me that almost none of the many arguments advanced by the many intervenors apparently was correct. What is the chance that so many trained and intelligent people could be so wrong (according to BCUC) so consistently? Whatever that chance, I'd say there is a stronger explanation - in the bias of the Panel.
By the way, (and here may be something for the appeal), as far as I see, the Townhall Meeting never occurred, and the hundreds of letters of comment were never received, much less summarized, much less taken seriously. Further, except for going through and accepting all Hydro's arguments topic by topic, the BCUC never takes the trouble to assert that actually the EPA is in the public interest. Is that a significant omission and/or have I just not read the thing completely? - Shadybrook Farm
By and large, the BCUC pretty much accepted BC Hydro's arguments on the need for on-Island generation; the usefulness of DPP as a long-term capacity addition on the Island; and the cost-effectiveness of DPP versus the other CFT bidders.
While the BCUC did accept that there was some chance that greenhouse gas liability costs might come to be attached to the fuel ('upstream' costs), they pretty much discounted that as a factor, saying that they (the Commission) might simply pass that cost on to the shareholder, rather than the ratepayer. If BC Hydro were a private corporation, that would be a meaningful distincion, but since the ratepayers are, roughly speaking (with exceptions), the people of BC, charging the ratepayers for GHG liability would amount to about the same thing as charging the shareholder.
In any case, BC Hydro gets away with handing off the legal liability for GHG emissions to DPP (which is simply gambling that there will be no liability -- probably has taken no steps to offset anything), and because the BCUC is only charged with looking at financial costs that might hit the ratepayers, they don't look beyond that to assess the fact that GHG emissions will hurt us all, i.e. a matter of public interest.
The Commission also saw fit to say BC Hydro was right to assume that the 230 kV sub-sea cables might only be in service by 2009. - Tom Hackney
The only reason that they would have a second hearing was so that they could reverse the decision of the first one. - Gabriola resident
March 9, 2005
Re: British Columbia Hydro and Power Authority
Project No. 3698354 - Order No. G-99-04
Call for Tenders for Capacity on Vancouver Island
Review of Electricity Purchase Agreement
Further to our letter of February 17, 2004 regarding the above noted Application, attached please find the Reasons for Decision for Order No. E-1-05. Hard copies of the Decision will be distributed by the Commission no later than Friday, March 11, 2005.
Reasons Cover Letter
Reasons for Decision
March 09, 2005
Booming economy forces Hydro to hike capital spending
Scott Simpson
Vancouver Sun
March 09, 2005
British Columbia's rapid economic growth is forcing BC Hydro to boost capital spending to keep pace with soaring demand for electricity.
Hydro plans to issue an open call to the private sector for 1,000 megawatts of new power in the upcoming fiscal year -- but also plans to spend $686 million on incremental improvements to its existing heritage electricity system.
That's $86 million more than Hydro expected last year when it did its 2005 outlook, Hydro power planning manager Mary Hemmingsen said on Tuesday. Since then, she said, B.C. has taken off and now leads Canada in economic growth.
"We're responding to the province's strong economic conditions which result in more load we have to serve," Hemmingsen said.
Details of Hydro's spending plans are contained in a 'resource expenditure and acquisition plan' submitted Tuesday to the B.C. Utilities Commission.
The plan pegs 2004 economic growth at 2.8 per cent -- and expects it to average 3.0 per cent over the next five years. It was 2.2 per cent from 1999 to 2003.
The Canadian average in 2004 was 2.6 per cent, while the United States grew at 3.0.
"Quite frankly, B.C. is leading the pack. It's at the top relative to the rest of the provinces in Canada," Hemmingsen said.
Growth in B.C.'s gross domestic product is also expected to strengthen -- 2.8 per cent over the next 10 years compared to 2.6 per cent in 2004.
"Although this is a small annual difference, the cumulative effects are significant over the forecast period," says the plan. "The markets for B.C.'s main commodity exports including pulp and paper, wood and wood products, copper and coal all continue to be strong.
"This improved outlook for the external and domestic economic environments has positive implications for electricity demand and sales in British Columbia."
Hemmingsen said the "lion's share" of the additional capital sought by Hydro is "driven by growth due to economic conditions."
For example, the Lower Mainland's thriving condo market has pushed Hydro to spend more on distribution -- poles and wires -- to deliver electricity to new customers.
Hydro and other agencies last year forecast modest growth for B.C. "Then we experienced a really significant uplift last year, about 1,000 gigawatt hours more than we had anticipated," Hemmingsen said. "That uplift has continued this year.
"Factors like the Canadian exchange rate typically put a damper on the forest industry or the mining industry but we're not seeing that happen because the commodity market is so strong because of China."
Hemmingsen said the additional spending won't lead to a rate increase of any consequence because the cost of additional capital improvements will be amortized over decades.
POWER HUNGRY:
B.C.'s mining sector is forecast to account for the largest growth rates in electricity sales among BC Hydro industrial customers over five years.
BC Hydro industrial sales, growth rates 2003-04 to 2008-09
Metal mines: +6.6%
Coal mines: +5.4%
Wood: -0.2%
Paper: +0.2%
Chemical: +0.1%
Other: -0.1%
Source: B.C. Hydro
© The Vancouver Sun 2005
Hydro rate-rise bid brings concerns
Scott Simpson
Vancouver Sun
March 9, 2005
Proposed increases would apply to industrial users
In a move that's raising "clear concerns" among the province's top industries, BC Hydro is preparing to charge prime-time rates 50 per cent higher than the standard electricity rates it charges its biggest customers.
The rates will apply against "the last 10 per cent of energy" consumed by mines, pulp mills and chemical producers, based on their historical patterns of consumption, and will have an uncertain impact upon about $500 million of Hydro's annual business, Joint Industry Electricity Steering Committee executive director Dan Potts said.
Hydro will propose the new rate schedule, unprecedented after 40 years of fixed rates, in an application it expects to file today to the B.C. Utilities Commission.
It's making the application in response to the B.C. government's 2002 energy plan, which called on Hydro to provide "market signals" to industry as a means of ensuring efficient use of the province's exceptional and low-cost hydroelectric resource.
Large industries account for only 0.1 per cent of Hydro's customer base, but consume 38 per cent of British Columbia's total electricity demand.
At this time, those industries pay about $36 per megawatt hour for electricity -- one of the cheapest rates in North America.
But under a new "stepped rate" scheme proposed by Hydro, the industrial rate will climb to $54 per megawatt hour for the final 10 per cent of historical use -- and stay there for any additional hours consumed.
The scheme also provides a small discount of about six per cent on the first 90 per cent historical use, with the hope that companies will consider it an incentive to implement energy savings projects and stay under the 90-per-cent level.
Hydro calls the standard rate Tier One and the stepped rate Tier Two.
Companies will also have the option of accepting a "time of use" rate whereby they can cut their electricity costs by shifting operations to non-peak times, such as nights and weekends, or shutting operations down during peak residential demand times -- such as December-January.
The province's energy plan called on Hydro to implement the changes on the premise that it would promote electricity conservation, send better price signals to industry, and support an enhanced role for private-sector power generators.
The $54 megawatt hour rate is comparable to the rate on the open market in western North America that Hydro relies on to meet about 12 per cent of B.C.'s annual electricity needs.
Hydro has been discussing the new regime with the Joint Industry Electricity Steering Committee (JIESC) for about 20 months.
If approved by the BCUC, the new rate structure would be in place by April of 2006.
JIESC executive director Dan Potts described the $54 Tier Two rate as a "major economic item" for industry.
He said members have expressed "various views" on the new system.
"My personal view is that it is going to be one heck of an administrative problem to put in place," Potts said. "I think there's 60 different companies that would fall under this rate. It's not a small issue. I think something in the range of $500 million in annual sales would fall under this."
Some companies are worried that the rates could serve as a disincentive to growth because of the risk that expanded activity will be penalized by higher energy costs.
The system is supposed to provide opportunities for individual companies to consult with Hydro so that they are not penalized when they increase production.
But Potts said his members are worried about the amount of paperwork and bureaucracy that may confront them in order to have their average consumption recalculated.
© The Vancouver Sun 2005
March 08, 2005
Electricity in Canada: Who needs it? Who's got it?
Eric Beauchesne, CanWest News Service, 08 Mar 2005
TD Bank news release, 07 Mar 2005
Electricity in Canada: Who needs it? Who's got it?
Power 'too cheap': Encourage conservation with higher prices
Eric Beauchesne
CanWest News Service
March 8, 2005
OTTAWA -- Provincial and territorial governments should charge domestic businesses and consumers more for their electricity to encourage energy conservation and investment in new energy sources to ensure an adequate supply of power in the future, the TD Bank warned Monday.
All provinces still have an adequate supply of electricity but most are already encountering problems keeping up with demand, or soon will, it says in the report -- "Electricity in Canada: Who Needs it? Who's got it."
"The challenges don't stop at merely scouting out new sources of supply, but investing heavily in transmission and distribution infrastructure," it says.
Above all, provincial and territorial governments need to encourage conservation by raising prices to eliminate the current gaps that persist between what it costs to produce electricity and what Canadians are charged for it, it said.
"Addressing these hefty challenges on the supply and electricity infrastructure fronts will be necessary to ensure that Canadians continue to enjoy a reliable electricity system down the road," said TD economist Derek Burleton.
But that won't be cheap, it warns, citing one estimate of $150 billion in needed investment over the next two decades, or $7.5 billion per year.
To help cover those costs, it suggests governments open the door more to private sector involvement in the generation and transmission of power.
"And, here, we're not just talking about private ownership of assets, but in areas where it makes sense, governments partnering with the private sector to design, build, operate, and/or finance projects," Burleton said.
Most governments have been moving in the right direction towards achieving the goal of ensuring adequate power supplies, such as developing strategies to tap into new supplies of so-called clean energy, it said.
However, it argued governments haven't gone nearly far enough to address the key issue which is their practice of pricing electricity below cost.
Historically, governments have opted to heavily subsidize electricity prices, in part as a strategy to help their industries compete, it noted. Although the gaps between price and cost have narrowed, they remain significant in many parts of Canada.
It has been estimated if Quebec consumers had paid what the province charged foreigners for electricity in 2003, their hydro bills would have been $8 billion higher.
But it's not just Quebec subsidizing domestic consumers, said Burleton, who added price subsidization remains the rule rather than the exception in Canada.
Raising electricity prices to market levels would initially reduce the competitiveness of domestic industries but that would ultimately force them to become more efficient, would attract investment in new generation capacity, and ultimately help avert a full-blown power crisis in the future, it said.
Jay Myers, economist with Manufacturers and Exporters Canada, agreed that over time prices should better reflect the costs of providing electricity but warned increases must be implemented cautiously and with a clear plan of how energy demands will be met.
"Sure in the long-term everything might be OK, but it's the short-term damage to the economy that we have to look at as well," Myers said.
However, the TD report argued some short-term pain may be necessary, noting that in Alberta, energy deregulation in the late 1990s led to a painful 60 per cent increase in prices.
However, since then there has been a wave of new private-sector investment and a sharp pull-back in prices, it said.
Even if prices rise over the next few years, Canada will continue to enjoy a competitive advantage on energy pricing internationally, it added.
© The Vancouver Sun 2005
MEASURES NEEDED TO ARREST DETERIORATING SUPPLY-DEMAND POSITIONS IN PROVINCIAL ELECTRICITY SECTORS, SAY TD ECONOMISTS
News release
TD Bank
07 Mar 2005
• All provinces in this country currently enjoy an adequate supply of electricity – even Ontario, where challenges have captured considerable attention over the past few years.
• At the same time, however, most regions are already confronting, or are likely to encounter, deteriorating supply-demand positions.
• The challenges don’t stop at merely scouting out new sources of supply, but investing heavily in transmission and distribution infrastructure.
• Above all, provincial and territorial governments need to encourage conservation by eliminating current gaps that persist between the cost of producing electricity and the price levied. Further moves toward market-based pricing would help to achieve this end.
TORONTO – Although electricity supplies across the country are currently sufficient to meet demand, most provinces are facing a growing electricity squeeze, say TD economists in a special report entitled Electricity in Canada: Who Needs It? Who’s Got It? The report is available at www.td.com/economics. “To alter the status-quo, governments will need to ramp up efforts to encourage conservation, in part through smarter pricing policies, and achieving new supplies of power, led by ‘green sources’,” remarked Derek Burleton, a senior economist with TD Bank Financial Group.
Ontario has captured the most attention
Among the regions, Ontario’s challenges on the power front have been the most well-documented in view of the power blackout with eight U.S. states in 2003 and a recent election promise by the provincial government to shut down its coal-fired generation units by 2007, which together account for about one-quarter of the province’s supply.
Yet, the TD study shows that Ontario is far from alone in facing electricity supply
constraints over the next several years. Most regions – even hydro-rich Quebec andBritish Columbia – have experienced weakening supply-demand positions in recent years, as evidenced by a combination of declining exports, rising imports and dropping reserve margins of electricity.
$150 billion in investment required
Addressing these hefty challenges on the supply and electricity infrastructure fronts will be necessary to ensure that Canadians continue to enjoy a reliable electricity system down the road. And, assurance of reliability will come with a price tag. The Canadian Electricity Association has estimated the combined cost across Canada’s regions at $150 billion over the next two decades, or $7.5 billion per year. “With governments already facing rising health-care costs and high debt burdens, moves by governments to throw the door open more widely to private-sector involvement could assist greatly in covering these huge investment requirements,” said Burleton. And, here, we’re not just talking about private ownership of assets, but in areas where it makes sense, governments partnering with the private sector to design, build, operate, and/or finance projects.
Prices may need to rise before they fall
The report acknowledges that many governments have been moving in the right direction in many respects. Most have developed long-term strategies that aim to achieve, among other goals, new supplies of “clean” power. Ontario, for example, has been looking at requests for proposals (RFPs) for renewable and gas-fired projects, and exploring the possibility of working with other provinces, such as Manitoba and Newfoundland & Labrador, to develop hydroelectric projects in their regions. Above all, there is an acknowledgement that some of the solution rests in demand-side management, which entails shifting power use from peak to off-peak periods.
Still, despite the moves, there have been only limited efforts made at dressing one of the key barriers – namely, the practice of pricing electricity below its marginal cost.
Historically, many governments across the land have opted to heavily subsidize
electricity prices, in part as an implicit industrial strategy. Although gaps between price and cost have narrowed in recent years, as many provinces have worked to address theprice side of the equation, they remain significant in many parts. “Case in point is Quebec, where it has been estimated that if domestic consumers had paid the export rate in 2003, their bills would have been $8 billion higher,” said Burleton. Applying a similar methodology to other provinces would almost certainly show that price subsidization remains the rule rather than the exception in Canada.
Further progress in realigning prices with cost, and in moving to a more market-based pricing system in general, would appear to be a competitive strike against business.
However, to the extent that prices increase in the short run, they would ultimately help to raise efficiency, attract investment in new generation capacity, and hence assist in averting a full-blown power crisis in the future. “In Alberta, the move to deregulation in the late 1990s created some short-term pain, as prices rose by about 60 per cent. Since then, there has been a wave of new private-sector investment and a sharp pull-back in prices,” added Burleton. In any event, even if prices rise over the next few years, Canada will continue to enjoy a competitive advantage in this area on an international scale.
-30-
For more information, please contact:
Derek Burleton Don Drummond
Senior Economist Chief Economist and Senior Vice President
416-982-2514 416-982-2556
This news release is at www.td.com
Electricity in Canada: Who Needs It? Who’s Got It? (including charts and detailed
tables), is available in PDF format on TD Economics’ Home Page at:
www.td.com/economics.
March 06, 2005
3,742 earthquakes detected off Vancouver Island last week
The Province
06-Mar-2005
 Western Canada, last 5 years |
 BC, last 12 months |
VICTORIA -- Thousands of earthquakes have rattled the ocean floor off southern Vancouver Island last week, and a team of U.S. scientists is racing to the area to see if an underwater volcano is spewing fresh lava.
U.S. hydrophones detected 3,742 earthquakes over five days in an area about 270 kilometres west of Vancouver Island, but on Thursday, the intense activity calmed to just a few earthquakes an hour.
Scientists from all over the U.S. have scrambled to join the University of Washington research vessel Thompson, which is scheduled to arrive in the Endeavour Hot Vents area this morning.
The shaking is also being monitored by the Geological Survey of Canada through seismographs at the Institute of Ocean Sciences in North Saanich.
About three km below the ocean surface -- in the Juan de Fuca Ridge undersea mountain chain -- two tectonic plates, the Juan de Fuca Plate and the Pacific Plate, are pulling apart, said Geological Survey of Canada seismologist Garry Rogers.
"Most of the time, absolutely nothing happens out there, but every few years you get a burst of earthquakes," he said.
"It may signal the faults are moving or lava [is] being ejected on to the sea floor."
The U.S. scientific team will be investigating whether there has been an undersea volcanic eruption -- something that has never been witnessed, Rogers said.
If eruptions have finished, the scientists, armed with underwater cameras, will be looking for fresh lava filling up the kilometres-wide rift valley between the two plates.
"The new lava forms lumps right away. It's like putting hot fudge into cold water. It's known as pillow lava because it looks like little pillows," Rogers said. "They might see a big new area or nothing."
Scientists are trying to understand the plate-spreading process, which happens in oceans all around the world but has never been caught in action, Rogers said.
Scientists do not believe the intense activity poses any tsunami danger, Rogers said. "There's never been any tsunami generated by spreading, but we don't really understand the process."
The Endeavour Hot Vents is a federal marine protected area because of the unique biological community that lives around hot water geysers that result from the seismic activity.
About a dozen species of microbes are able to survive in boiling water and feed on hydrogen sulfide generated by the geysers.
The University of Victoria and University of Washington are collaborating on Project Neptune, an ambitious plan to have underwater observatories linked by thousands of kilometres of fibre optic cable feeding images to shore.
March 05, 2005
Hydro's Duke Point power deal on hold
Scott Simpson
Vancouver Sun
March 05, 2005
B.C. Hydro is delaying work on its controversial $285-million Duke Point power deal, with the public utility saying court injunctions from industry and environmentalists could even kill the project.
Hydro has secured an agreement with its private sector partner to delay work on the project while opponents go before the B.C. Court of Appeal in a bid to stop the Vancouver Island project.
Hydro announced the delay on Friday after filing a letter to the British Columbia Utilities Commission.
Hydro was supposed to collect $45 million from Duke Point Power on Friday as the first payment on a contract to operate a gas-fired generating plant near Nanaimo.
Hydro vice-president Bev Van Ruyven said that payment has been suspended, and would be forfeit if the deal is overturned in court.
Van Ruyven said that Hydro and Duke Point will also have to make penalty payments to contractors in the event that court proceedings delay the project past June 30, but said those costs would be relatively minor.
"We don't have any control over it, other than going and arguing at the appeal courts so, yes, we're very concerned," Van Ruyven said.
"Our concern is all about getting a project there that meets reliability standards, and getting it on time."
The BCUC approved the deal between Hydro and Duke Point Power in mid-February.
Hydro wants the gas-fired plant in operation by 2007 in order to head off an anticipated risk of rolling blackouts on the Island during periods of peak winter electricity demand. But industry and a coalition of citizen and environmental groups contend that the commission had predetermined the outcome of a hearing into the project's merits.
The Joint Industry Electricity Steering Committee, representing the province's largest industrial consumers of electricity, believes the project exposes all Hydro customers to what it describes as "unacceptable high levels of cost and financial risk."
The JIESC calculates that electricity rates will rise by more than two per cent and wants Hydro to find a less expensive solution.
The GSX Concerned Citizens Coalition and its affiliates are also seeking to overturn the BCUC's order on the grounds that the commission's decision was biased and should be overturned.
In a letter this week, the coalition said that BCUC panelists Robert Hobbs and Lori Boychuk acted "in a matter to create a reasonable apprehension of bias."
"Specifically, the commission panel held discussions with Hydro witnesses
that gave rise to the impression that the Panel had made up its mind about
the outcome of the review before all the parties had brought their evidence
and argued their cases."
© The Vancouver Sun 2005
March 04, 2005
BC Hydro writes to BCUC about appeals
BC Hydro
Richard Stout
Chief Regulatory Officer
Phone: (604) 623-4046
Fax: (604) 623-4407
March 3, 2005
Mr. Robert J. Pellatt
Commission Secretary
British Columbia Utilities Commission
Sixth Floor - 900 Howe Street
Vancouver, BC V6Z 2N3
Dear Mr. Pellatt:
RE: British Columbia Hydro and Power Authority (“BC Hydro”)
Cali for Tenders for Capacity on Vancouver Island
Review of Electricity Purchase Agreement
Project No. 3698354
Further to our notice of February 28, 2005, this letter will provide a report with respect to the status of matters outstanding in light of the Applications for Leave to Appeal (the “Leave Applications”) Order E-1-05 filed by the JIESC on February 24, 2005 and GSXCCC et al on February 28,2005.
BC Hydro continues to believe that the DPP EPA represents the best solution for
meeting the capacity needs of Vancouver Island, while satisfying BC Hydro’s long-term planning criteria, provided that construction commences in time that it is on stream for the winter of 2007/2008.
The appeal filed by the JIESC renders closing of the VTA and commencement of
construction on March 4, 2005 as contemplated in the EPA imprudent. The financial underpinning of the DPP project is the EPA and a successful challenge to its enforceability would render the project commercially unviable.
BC Hydro has reached an agreement to adjust the terms of the VTA and keep the obligations of both parties to the EPA alive, at least until the Leave Applications are determined. If the Leave Applications have been granted or have not been dismissed or abandoned by June 30,2005, BC Hydro has a right to terminate the EPA and proceed with the contingency options then available to it. Alternatively, the EPA will continue in force after leave has been granted and after June 30, 2005 and construction of the project will be required if the appeal is abandoned or dismissed prior to July 31, 2005. If BC Hydro requires construction to commence after June 30, 2005, the VTA price will be adjusted for 50% of DPP’s unavoidable and fully documented contractor costs and gains/losses for interest rate changes for the period after May 18, 2005 and until the appeal is withdrawn, abandoned or dismissed and the transaction closes. All guaranteed milestone dates and the guaranteed commercial operations date provided in the EPA will effectively be delayed by the number of days between February 17, 2005 and the actual date on which the Leave Applications or appeal are resolved.
BC Hydro has advised counsel that it waives any requirement there may be for
reconsideration by the Commission and the Court of Appeal has provided directions to permit an expedited schedule for both Leave Applications as follows:
March 24,2005 Appellants’ Submissions
April 5, 2005 Respondents’ Submissions
April 8, 2005 One-day Hearing of both Applications
The Court’s Order is dependent upon the Commission’s Reasons being issued on or before March 11, 2005, failing which, the Order will be vacated and a new schedule and Order will have to be obtained.
Should leave be granted, BC Hydro, subject to its right to terminate, will seek an
expedited schedule for the appeal so that it will be concluded in advance of
May 18,2005. The Court of Appeal Registry has indicated that time in the week of May 9, 2005 is available for this purpose, if required, and all counsel have indicated their willingness to try to accommodate an early hearing for the appeal.
Yours Sincerely,
Richard Stout
Chief Regulatory Officer
C. Registered Intervenors
Review requested for Enron, Powerex
Scott Simpson, with files from Grant Robertson
Vancouver Sun
04-Mar-2005
COMMENT:See as well these two other recent articles, especially the notes by us in the "Hydro tied" piece.
California demands $1 billion from BC Hydro
Alberta's energy market regulator is asking the federal Competition Bureau to reopen its file on allegations of market manipulation and collusion by Powerex and Enron, the agency announced Thursday.
The Market Surveillance Administrator (MSA) said it will ask for the review after examining documents obtained from U.S. investigators who are looking at the role of Enron and other energy companies in connection with the California energy crisis of 2000-2001.
New evidence, including recorded phone conversations where Enron traders can be heard negotiating with B.C.'s Powerex, requires closer inspection, said Martin Merritt, head of the MSA.
The MSA says the new material includes "transcripts and summaries of communications alleged to have occurred between Enron and Powerex in 1999."
"The nature of the communications shown in the new information is of concern to the MSA. Those communications appear to reflect arrangements which might be challenged under federal competition law," the MSA says in a news release.
Potential new evidence of collusion in Alberta first came to light in January after a Washington state utility came across references to a "Project Stanley" -- as in Stanley Cup -- in Enron documents they were examining in a lawsuit against the disgraced Houston-based energy trading company.
California Attorney General Bill Lockyer has filed a $1 billion lawsuit against BC Hydro in connection with the crisis.
The Enron documents talk about successful bidding strategies in the newly deregulated Alberta power market, and make reference as well to Powerex, the power trading arm of BC Hydro.
The Bureau originally examined allegations of market gaming by Powerex, in combination with Enron, in 1999 but came away satisfied no illegal action had occurred.
The Bureau will look at the evidence to determine if it alters the watchdog's 2000 decision, said Denyse MacKenzie, senior commissioner in the office's criminal matters branch.
"At that time [2000] this new evidence wasn't available," MacKenzie said. "We will look at that very closely and see whether or not there is any evidence of a violation of the act and ... then proceed with the appropriate action."
BC Hydro stated in an e-mail that it has not been contacted by MSA "regarding any reopening of its investigation of Powerex transactions."
"Powerex was investigated and cleared by the Canadian Competition Bureau in December 2000, of an allegation of collusion between itself and Enron Canada Corp. related to trade transactions with Alberta," said the e-mail from Hydro media relations manager Elisha Moreno.
"The Competition Bureau found that Powerex and Enron acted independently. Powerex does not have knowledge as to what Enron was doing in the Alberta market at the time in question, but has reviewed all its own transactions and found nothing improper. Powerex is confident that its transactions were within the rules."
March 03, 2005
Senate defeats rate hike for BPA
Lukas Velush
The Herald - Everett, Wash
March 3, 2005
"Common sense is prevailing," an Idaho senator says, but a proposal is still alive in the House.
A plan by President Bush that could raise Snohomish County PUD rates by as much as 30 percent died in the U.S. Senate on Wednesday, officials said.
Bush proposed collecting billions of dollars to help pay down the national debt by requiring the Bonneville Power Administration to charge market rates for the electricity it sells to the PUD and other Northwest utilities.
Sen. Judd Gregg, R-N.H., chairman of the Senate Budget Committee, told his colleagues Wednesday that the market-rate plan would not be included in a budget resolution to be approved this year, Sens. Larry Craig and Mike Crapo, both R-Idaho, said in a statement late Wednesday.
Craig said that with Gregg's decision, "common sense is prevailing," while Crapo called the administration proposal "an ill-advised, unworkable concept based on misinformation about BPA."
"We're obviously very appreciative of the support from the senators, including our delegation from the Northwest," said Neil Neroutsos, a PUD spokesman. "They know how severe of an impact it would have on rate payers here in the Northwest."
BPA currently charges only what it costs to generate electricity at a series of dams on the Columbia River and at a nuclear power plant. Estimates are that forcing it to sell electricity at market rates would force the energy wholesaler to raise its rates by 66 percent.
That would be particularly tough on Snohomish County PUD, which buys 80 percent of its electricity from BPA and is its largest customer. Using a formula developed by the Northwest Power and Conservation Council, a 66 percent BPA rate hike would translate into a 30 percent PUD rate hike.
The PUD has had some of the state's highest power rates since 2001, when it raised rates more than 50 percent because of the 2000-01 West Coast energy crisis. The PUD has had record numbers of disconnections since the rates went up, and companies that use large amounts of electricity have struggled to keep their doors open.
Sen. Maria Cantwell, D-Wash., a member of the Senate Energy Committee, hailed Gregg's announcement, which followed weeks of intense lobbying by Western lawmakers from both parties.
"The Bush rate hike would have a devastating impact on our economy and jobs," Cantwell said. "I will not rest until the administration's plan is dead and gone."
Rep. Rick Larsen, D-Wash., said that he'd now like to kill the BPA measure in the House of Representatives.
"This fight is not over," Larsen said. "On the House side, I will join with my colleagues to fight this destructive proposal. We won't rest until this proposal is resting squarely in the graveyard of bad ideas."
A Portland-based economist estimates that bringing BPA power to market rates would cost Washington and Oregon up to 60,000 jobs.
Job losses would rival the 70,000 jobs lost in the two states during the record electricity price run-ups during the energy crisis, said Robert McCullough, managing partner of Portland-based McCullough Research.
McCullough estimates that Washington state would lose 21,000 to 32,000 jobs. It's unknown how many jobs would be lost in Snohomish County, he said. He used federal data on electricity rates, economic activity and jobs to estimate the region' s potential job losses.
The PUD and other utilities would like to keep future administrations from making runs at BPA by locking in 20- or 30-year contracts with the energy wholesaler.
"By securing long-term contracts, we have some assurances that we can do better planning in terms of our overall power supply," Neroutsos said. "Our main interest is stabilizing Bonneville and, potentially over time, lowering its rates. If that were to happen, we would hope that, over time, we would be able to find some rate relief for our customers."
In its Feb. 7 budget proposal, the Bush administration called for a major change in the way the BPA and other federal power suppliers charge their customers, to rates based on market prices at the time rather than the cost of producing the electricity.
The Bush proposal estimates that the government could collect $12 billion by forcing BPA to raise its rates. Based on today's market rates, the $2.4 billion that BPA now takes in each year could increase to nearly $5 billion in five years.
Bush's plan calls for gradually raising power prices to market rates, which now are 4 cents to 6 cents per kilowatt-hour. Currently, BPA sells its electricity for 3.1 cents per kilowatt-hour.
But Northwest lawmakers said the plan could cripple a region still recovering from the West Coast energy crisis and a sluggish economy.
See also BPA plan called a job-killer
Vancouver Island secures LNG storage plant in $100 million deal
Paul Harris
Business in Vancouver
March 1-7, 2005; issue 801
Island's first liquefied natural gas facility to be built near Ladysmith to service area demand and fuel new Duke Point power plant
Vancouver Island is set to enter a new era in energy supply following the approval of its first liquefied natural gas plant in a deal worth close to $100 million.
The need for the LNG storage plant is driven by future demand forecasts and a natural gas-fired power plant being built near Nanaimo as part of a 25-year electricity supply contract between BC Hydro and Duke Point Power Ltd. Partnership. Under the newly approved Hydro contract, Terasen Gas (Vancouver Island) Inc. is expected to deliver natural gas to the plant.
To meet increasing energy demand and avoid a supply shortfall by the winter of 2007, TGVI applied to the province's utilities commission to build the LNG plant at Mount Hayes, near Ladysmith.
The plant will be able to provide 100 million cubic feet of natural gas per day. The corporation will have the option of selling any excess capacity to other parties - principally Terasen Gas Inc. - with revenue from the anticipated surplus estimated at $27.6 million per year.
Construction on the plant is slated to begin this spring. Gas will be supplied to the plant via Terasen's pipelines before being liquefied and saved for periods of peak demand.
The Lower Mainland has very little gas storage compared with the U.S. Pacific Northwest.
A National Energy Board study quoted by TGVI in its main argument to the commission stated that "the main physical tool for dealing with gas price volatility, which reflects short-term changes in gas demand, is storage."
TGVI's biggest island customers are currently Hydro and seven large pulp and paper mills, including four owned by NorskeCanada.
The entire LNG project hinged on Hydro's plans for Duke Point. Had its natural gas-fired power plant fallen at the final hurdle, TGVI had pledged to scrap its LNG project.
"There is nothing really exotic about LNG. It's part of our evolution," said Mike Davies, manager of business development at Terasen Gas Inc. "It is really about capacity on the island and gas supply costs."
He said the real revolution in LNG will come if, or when, plants importing tanker-loads of LNG are built in the province's northwestern corner. B.C. has already been identified as a key potential entrance point for LNG imports from Russia, the Far East and the Middle East.
As reported in BIV in December, two companies - Galveston LNG and WestPac Terminals Ltd. - are going head to head in a race to create B.C.'s first import and distribution plant for LNG. They want to build facilities at Kitimat and Prince Rupert, respectively.
TGVI currently provides natural gas services to around 80,000 residential, commercial and industrial customers on Vancouver Island and the Sunshine Coast via around 640 km of high pressure transmission pipeline. It reckons customer numbers will swell by an average of 2,400 per year between now and 2026.
Mount Hayes was chosen for the $94.4 million project because it was away from population centres, had no environmental or archaeological complications and had existing road access, TGVI told the utilities commission.
Choosing Mount Hayes, however, rules out supplying the plant with LNG via tanker or barge because capital costs needed for the project to accommodate the vessels would be too great.
TGVI, a subsidiary of Terasen Inc., predicts it will cost $1.78 million a year to operate and maintain the plant.
The site is owned by Weyerhaeuser Co. Ltd. and TGVI has an option to buy it for $614,000. The property includes a 12-hectare plant site and a 20-hectare buffer zone.
It's also part of the land slated for purchase last month from Weyerhaeuser by Brascan Corp. (See story page 5.)
Among the conditions set by the commission in approving the TGVI plan is that construction of the LMG plant must begin by December 31, 2005.
BC Hydro to relieve Duke Point Power of financial obligations?
News Release
Village of Gold River
02 Mar 2005
FOR IMMEDIATE RELEASE
BC Hydro seeking to relieve Duke Point Power of financial obligations in Electricity Purchase Agreement
In a phone conversation today with a Senior Executive of BC Hydro, Gold River Mayor David Lewis was informed that BC Hydro was actively engaged in discussions that would seek to relieve Duke Point Power Limited Partnership of some of its financial obligations contained in the EPA recently approved by the BC Utilities Commission.
Under the terms of the agreement and the direction of the BCUC, Duke Point Power is required to complete the financial transaction for the transfer of VIGP assets by March 3, 2005. During the recent BCUC hearings, it was stated that there was no mechanism for Duke Point Power to recover its financial commitment for the VIGP assets in the event of a successful appeal of the decision. As an appeal has already been filed by The Joint Industrial Electricity Steering Committee, it puts the Duke Point Power shareholders in a precarious position.
“For BC Hydro to attempt to relieve the Duke Point Power proponents of this obligation is yet one more example of the prejudicial manner in which BC Hydro has handled this entire Vancouver Island Call For Tender process.” stated Gold River Mayor David Lewis
Mayor Lewis was in Victoria this past week meeting with government officials regarding this issue.
“I made it very clear that if this path was taken by BC Hydro, it would send a very disturbing message to all of those who have been involved in this process. We need to see leadership from those who have the power to prevent such abuses from occurring. This has gone on long enough.” concluded Mayor Lewis
For more information contact:
David Lewis
Mayor, Village of Gold River
250-283-2202
Download the Gold River news release