Melissa Davis: B.C. Utilities Commission pulls the plug on private power
By Melissa Davis
You can bet your bottom dollar that the July 27 ruling by the B.C. Utilities Commission on B.C. Hydro’s 2008 Long Term Acquisition Plan sent a jolt through the premier’s office, the provincial energy and environment ministries, and their friends in the private power industry.
After examining the evidence from almost a full year of hearings, the government’s own independent regulatory body determined that the LTAP was “not in the public interest”.
Without a doubt, the BCUC ruling represents a fundamental challenge to the government’s Energy Plan, which called for the province to achieve energy “self-sufficiency” and “insurance” of supply through the purchase of large quantities of electricity. To realize these objectives, the plan prohibited B.C. Hydro from generating any new sources of energy (excluding Site C, presently part of a five-year review process) and, instead, directed the Crown utility to negotiate long-term energy-purchase agreements with private power producers.
To date, B.C. Hydro has negotiated more than $30 billion in contracts—the specific terms and conditions guarded in secrecy—to purchase electricity for the province at rates that dramatically exceed market prices ($80 to $125 per megawatt hour).
The result has been a manufactured competitive energy market and soaring electricity costs for residential consumers. Over and above the three percent increase implemented last April, followed by a two-tiered rate structure applied in October, the provincial budget proposes an additional 21 percent increase over the next three years.
Not surprisingly, following the May provincial election, the Liberal government interpreted their third consecutive leadership win as a licence to proceed in their plans to privatize B.C.’s electricity sector—in spite of widespread opposition by community and environmental groups, First Nations, and tens of thousands of citizens.
Yet now there is a very real possibility that the BCUC ruling could seriously hinder the provincial government’s privatization agenda.
According to John Calvert, Simon Fraser University professor and author of Liquid Gold: Energy Privatization in British Columbia, the BCUC decision raises legitimate concerns about the government’s unrealistically high projections of future electricity requirements and its direction to B.C. Hydro to meet these projections by purchasing more and more electricity from private power developers. It also calls into question the underlying economics of the B.C. Energy Plan.
“The government should not be forcing ratepayers to subsidize the construction of private power projects by requiring B.C. Hydro to sign outrageously expensive long-term energy-purchase agreements,” Calvert said in response to the BCUC’s decision. “We don’t need this energy and will end up selling it at a fraction of its cost on the international energy market—with ratepayers covering the loss.”
In spite of the BCUC ruling, it’s unlikely that private power sector will give up without a fight. Mounting a collective response to the decision, the private power lobby—some even masquerading as environmentalists—have trivialized the findings of the commission based on a facile analysis of climate change and continue to disregard the severe cumulative environmental impacts associated with the construction of river-diversion projects.
Instead, they portray themselves as the great green hopes—stewards of B.C.’s precious natural resources and innovators of climate-change solutions—even while their profit-driven motives are entirely transparent. Perhaps they misunderstand that the colour of money does not qualify as “green”.
Ultimately, the provincial government will need to seriously examine the content of the BCUC ruling with respect to its energy policy. Essentially, it is left with two options: either accept the decision of the commission and concentrate its efforts on conservation and public renewable-energy projects that are actually needed, or disregard its own independent regulatory body altogether in order to further advance its privatization agenda. As a government elected by the people of this province, one can only hope that it will act—as the BCUC has—in the public’s interest.
Melissa Davis is the executive director of B.C. Citizens for Public Power.
Comments
7 Comments
monty
Aug 4, 2009 at 3:31pm
How much power is Powerex currently selling into the US grid? What about that Columbia Basin Treaty? Is there not a proviso to get some of that power back into BC? How much of all this is based on Al Gore's comment about wonderful economic benefits after he showed his movie, yet again and again? Let's see who profits from all this: the auto industry, manufacturers of little light that are now deemed harmful, home builders, developers (yet again) and friends of government. Golly gee. Who loses?
Folks in Tsawwassen offered 19% below assessed values for their homes.
monty
seth
Aug 4, 2009 at 9:06pm
There is no question that pirate owned power projects such a Plutonic's are an enormous ripoff engineered by crooked politicians and the BCUC was right to put an end to them. Given the current economic climate the commission concluded that buying power when necessary and running Burrard Thermal in really peak periods would get us well into the future.
Canwest/Gordo and his pack are of course going to talk about the import of dirty coal power from Alberta. But Alberta has all but announced it is going nuclear so BC will a few years in the future will be importing cheap clean green nuclear power from Alberta.
Scientists are telling us that there is some chance we are as little as 10 years away from falling off a climate precipice with permafrost methane emissions and ocean acidification forming the leading edge of a very steep slope.
70% of BC's total energy needs are non electrical fossil fuel based and that has to stop and very quickly. This throws the electric forecast model right out the window. The only way BC and any other jurisdiction can rapidly replace fossil fuels with electricity is nuclear power. There is no other way to do it in the less than 10 year time frame.
The BCUC should direct BCHydro to include the nuclear power models Alberta and Saskatchewan used in concluding that a nuclear power was the way to a green future.
Westinghouse has begun construction of four 1.2 gigawatt nuclear plants it sold China for 5.5 billion. If BC could get the same deal we could for less than twice the cost of the Port Mann bridge upgrade almost double BC's baseload capacity repowering Burrard thermal with nuclear steam.
This would get us well into the future with electric vehicles, hydrogen based synfuels and electric/geothermal/solar heat technologies replacing a big chunk of our fossil fuel requirements. Ten years from now we would be looking at fast breeder and fusion technology taking care of all our energy needs at a very low cost and cleaning up almost all the waste from previous generation reactors.
Not much time left to get going on this!!
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seth
Free market must be free
Aug 4, 2009 at 11:23pm
There's nothing inherently wrong with having private power producers, as long as they earn fair market rates for their power. If you have to give them special financial incentives to build new plants, those plants obviously don't need to be built yet. If we are serious about being energy independent, there IS an incredible amount of potential for run-of-river projects here in BC. But don't piggyback development on the backs of people that are forced to buy from a government monopoly in the first place.
@Seth - No one in their right mind wants a nuclear plant in their backyard, and you certainly can't just retrofit Burrard thermal to hold a nuclear reactor. Keep on dreaming, fusion is always 10 or 20 years away.
Norman Farrell
Aug 5, 2009 at 12:45am
The private power scams remind me of how many office towers in Ottawa/Hull were developed. Associates of the government (both Liberals and Conservatives played the game) would receive a commitment from Public Works to lease office space. The developer then used the guaranteed revenue stream to finance the building. Zero risk real estate development meant high returns for the developer. The properties could be readily flipped for fast gains.
Financed and leased. What could be better? Taxpayers were left holding the bag since the Government was actually paying for much more space than it needed. In the eighties, I walked through two high rises leased by the feds that were absolutely empty.
I don't know first hand if the federal politicians still cheat this way but I know their friends used to earn big doing this.
Smartiepants
Aug 5, 2009 at 2:48am
From a libertarian point of view it's not the free market that is the problem. It always is the government that creates problems. All those myths about
"survival of the fittest capitalism" or "the law of the jungle capitalism".
Adam Smith wrote that a free society operates as if "an invisible hand" directs people's actions — in such a way as to serve the interest of the whole society. A free market is a gentle market. A free society is a gentle society. A cooperative, compassionate, and generous society. An abundant and tolerant society.
David Friedman, in his book The Machinery of Freedom, notes that there are only three ways to get something: (1) by trading, (2) by receiving a gift (from love or friendship), or (3) by force ("do what I want or I'll shoot you"). Honest, peaceful people operate in the first two ways. Criminals and the state operate by force, aggression, coercion.
In truth, the marketplace has a civilizing, humanizing effect. If honesty didn't exist, the marketplace would invent it, because it's the most successful way to do business. In the free market we see, not a survival of the fittest, but a survival of the kindest. Survival of the most cooperative. Survival of the friendliest.
In a free society, the most considerate prosper. As Thomas Sowell says, "Politeness and consideration for others is like investing pennies and getting dollars back." (sharon harris, president of advocates for self- government)
Reader via e-mail
Aug 6, 2009 at 12:26pm
Win-Win Solutions to the False Power Crisis
So-called ”˜run of river’ projects are not ”˜green’ power because they damage too many ecosystems. Neither are they micropower: that’s under 10 megawatts, so you can actually use the run of the river without diversions and big dams. The proposed projects are many times that, as much as 125 MW, diverting many rivers, building huge dams, roads and transmission lines. Meanwhile, whole, functioning ecosystems are essential if we are to abate climate change.
The revolutionary advantage of renewable systems is that they harvest the energy that falls on every place—and the fuel is free. On-site solar, wind and geothermal systems need no destructive, expensive, long-distance transmission corridors polluting ecosystems and occupants—from remote places to city streets and backyards—with herbicides and high electromagnetic fields.
Energy efficiency is also on-site. We waste more than half of the electricity we generate, making efficiency a resource of massive potential.
The great news is that efficiency and on-site renewables build the local economy, instead of funneling our natural and community resources into the global corporate economy. Energy-efficient and passive solar housing yield huge savings at the home economy level. Generating systems owned by the community and by homeowners provide local power while also contributing to the grid. Studies of such distributed resources show that each addition of small-scale solar and wind systems stabilizes the existing grid, reducing power outages.
Indigenous communities and others living off the grid, and remote industry, can be energy self-sufficient on-site. New skills, work, industry and business provide local sustainable growth, benefiting the larger economies as well. It’s the localization solution to the failure of globalization.
Private power companies, the global corporations behind them, and government entities, can finance such systems; homeowners and communities can buy them with the savings on electricity and fuel. Money now spent on outside energy stays in the community to finance more sustainable infrastructure (zero waste, resource efficiency, health), while ethical investing provides stable, ”˜distributed’ profits for both private and government investors. It’s the sustainable win-win option.
For a future,
Hilda Bechler
Problem with sustainable power...
Aug 7, 2009 at 11:51pm
...it' still too expensive. Sorry Hilda, but if it made economic sense for everyone to produce their own power, they would. Geothermal is more complicated than just drilling a hole in the ground, there are only some places where it will even work. Wind doesn't produce enough power on its own. Solar cells are very much a possibility, but probably not for another 10 years in terms of their efficiency and cost. Don't worry though, we'll get there some day:
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