Electricity gap threat to B.C. energy future

Hydro chief executive officer Bob Elton said the Crown corporation is "neutral" on the types of energy projects it will accept as part of its effort to restore B.C.'s independence from imported sources of electricity.

Elton said B.C. could be importing as much as 45 per cent of its electricity from spot-trading markets in Alberta and the Pacific Northwest within 20 years -- leaving the province's residents and industries increasingly vulnerable to price volatility and supply risk.

Elton's comments came as Hydro released its Integrated Energy Plan, a 300-page document detailing a 20-year plan for moving B.C. back to a position of independence from imports.

The document shows that B.C. has been in an electricity deficit position for five years and projects that deficit to increase as the province grows -- unless strong measures are taken to avert it.

"In a competitive, ever-changing global economy where energy will become more expensive and scarce, electricity security is really about helping to ensure future generations enjoy our current standard of living," says a background document accompanying the plan.

In a teleconference, Elton said B.C. needs to act now to turn the situation around -- and said it's essential for residents to awaken to the challenges of securing a reliable electricity supply.

Hydro is proposing three distinct strategies.

One is stepped-up conservation measures. A second is buying more power from independent producers. A third is financing upgrades to Hydro's existing facilities.

"What our plan does is ask British Columbians to look at the challenges that face us, and the choices we have that are fundamental to closing this gap so that we can preserve our energy future and keep us all secure for the future," Elton said.

The most controversial part of the plan will be the addition of new base-load facilities that will generate huge amounts of electricity and ensure that Hydro has a stable supply in the event of any spikes in demand.

Those projects could include thermal generating plants fired by natural gas or coal.

Elton acknowledged that virtually any large scale plant -- even a major hydroelectric facility -- will attract controversy.

But he said B.C. needs to start talking now about those possibilities because of the lengthy lead time -- as much as 10 years -- to bring them into operation.

An open call for new power generation is already underway and at least two coal-fired power plants are among the proposals from private sector bidders.

Meanwhile, the proposed Site C hydroelectric dam -- the last potential hydro megaproject in the province -- is only in the study phase but is already drawing criticism from Peace River valley residents and environmental groups.

"It's absolutely true that it's harder to build projects anywhere, really, not just in our province but around North America and around most countries as populations increase and people become more sophisticated in terms of what they want to see around their backyards," Elton said.

Dan Potts, executive director of the Joint Industry Electricity Steering Committee, said the province's major industrial sector agreed that Hydro must convince the public that new -- and possibly controversial -- projects need consideration.

"We find ourselves effectively in a position of buying more and more on potentially volatile import markets.

"You can't sell major projects which have in some ways adverse impacts without first convincing everybody that there is a fundamental need for it. I agree with Mr. Elton on that point and we've suggested to both Hydro and the B.C. government in past meetings that this needs to be something upon which they exercise some leadership."

Hydro critic David Austin noted that a chart included in the Hydro documents shows the first symptoms of Hydro's "import problem" emerged in 1994.

There was brief recovery later in the decade but since 2001, the chart shows Hydro in a net import position.

Austin said it was unfortunate that Hydro chose to delay action on the problem for an entire decade.

"It's as if you went to the cardiologist in 1994 and he told you that you had a heart problem and should have changed your diet -- but you didn't."

Austin was also critical of Hydro's "soft" estimates for the Site C project, which he said will cost billions more than estimates included in the energy plan documents.

For example, Hydro estimates the cost of Site C at between $2.3 billion and $3.2 billion -- but excludes the cost of corporate overhead, inflation and interest charges during construction.

"Once you include all of those costs, the price for Site C will be somewhere between $4 billion and $5 billion. That makes it a very expensive project," Austin said.

Meanwhile, the B.C. Sustainable Energy Association noted in a news release that a recent poll shows 74 per cent of B.C. residents oppose coal-fired generation.

"BC Hydro's electricity acquisitions will be decided in a competitive bid process among coal, wind, gas or other bidders," said Tom Hackney, BCSEA policy analyst. "Unfortunately this process does not reflect the harm of resources like coal that contribute to climate change through greenhouse gas emissions, and this will skew the calculation of what is truly lowest cost."

"This plan presents British Columbia with a huge opportunity for sustainable energy," said Guy Dauncey, BCSEA president. "Energy conservation is the cheapest way to meet most of our new demand. For the rest, government should follow Ontario's recent example and implement a Standard Offer Contract to kick-start a renewable energy industry in B.C."

ssimpson@png.canwest.com

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POSSIBLE SOLUTIONS: NEW POWER SOURCES

BC Hydro has rated these potential power sources in terms of their potential and cost per megawatt hour:

• Conservation: $32-$76; May require new regulation or "significant" behavioural shifts
• Natural gas: $48-$100; May face supply, price risks and greenhouse gas issues.
• Coal: $48-$83; Abundant supply, but potential greenhouse gas and emission issues.
• Large hydro: $43-$62; B.C. has large rivers to dam but there are land-use, fish and wildlife impacts.
• Run-of-river small hydro: $47-$88; Steep terrain good for small hydro development
• Wind: $45-$198; Sites include ridge-based and offshore.
• Geothermal: $44-$60; Potential at a limited number of B.C. sites for geothermal steam generators.
• Biomass $56-$87; Steam generators powered by wood residue or municipal garbage.
• Custom cogeneration: $63-$87; Limited to industrial and large commercial applications.

Source: BC Hydro

A LOT LESS AFFORDABLE

% of household income taken up by home ownership costs (for 2005 Q4):

Average two-storey home

• Vancouver 64.2%
• Toronto 50.1%
• Montreal 43.2%
• Ottawa 38.6%
• Calgary 37.6%
• Source: RBC Financial