John Calvert: B.C. Clean Energy Act escalates private power agenda
By John Calvert
The B.C. government’s Bill 17—egregiously named the Clean Energy Act—represents a dramatic escalation of the provincial government’s electricity privatization agenda. The act will gouge ratepayers, needlessly damage the environment, violate the principle of government accountability, and undermine public finances. It includes so many bad public policies that it is hard to know where to begin an evaluation of its impacts.
Perhaps the best place to start is to view the act as the next major step in the government’s long-term agenda of restructuring B.C.’s electricity system. The foundations of this plan were laid with the 2002 and 2007 energy plans. These privileged private power developers at the expense of B.C. Hydro and triggered a “gold rush” of new private power projects effectively funded through generous long-term, “take or pay” contracts with B.C. Hydro. Rivers and streams across the province were transferred into the hands of private developers. The policy was also intended—and has succeeded—in changing the politics of electricity in B.C., as dozens of new power corporations set up shop in the province for the first time.
The new act furthers this agenda by requiring B.C. Hydro to meet so called “self-sufficiency” targets based on unrealistically high assumptions of future electricity requirements. It will force Hydro to purchase even greater volumes of new private power, significantly expanding its commitment to supporting the private power industry. And it will do so at outrageously high prices—prices close to double, possibly more, what many forecasters project will occur in the Pacific Northwest electricity market in the coming years. B.C.’s ratepayers, not the private power developers, will be on the hook to pay for the losses that are almost guaranteed from this policy.
To take advantage of the government’s politically driven targets for new electricity supply, private power developers will dam up dozens of additional rivers all across the province, imposing enormous—and entirely unnecessary—damage to some of B.C.’s most precious wilderness areas. And Hydro will have to build thousands of kilometres of new transmission lines to service the new power projects, which will do even more harm to B.C.’s environment.
The act is also designed to promote private sector exports of electricity, exposing the misleading nature of the government’s earlier assurances that its energy plans were designed only to meet B.C.’s domestic energy requirements. The export agenda will require B.C. Hydro—and its ratepayers—to accept the enormous price risks associated with paying a premium for the developers’ new private power in the hope that they can recoup this expenditure when selling into the U.S. market. Contrary to the claims of Energy Minister Blair Lekstrom, this is a recipe that guarantees private profit by making the public bear the risk.
It appears that the government also intends to provide private interests with access to B.C. Hydro’s storage reservoirs. If so, this would constitute yet another subsidy to developers. Storage is the crown jewel of B.C. Hydro’s system. It is what differentiates a hydro-based system from almost all other types of electricity generation. It enables B.C.’s ratepayers to benefit from Hydro’s ability to purchase energy in the U.S. and Alberta markets during periods when prices are low and sell back when they are high, to the benefit of B.C.’s ratepayers. Allowing private interests access to storage will reduce the ability of B.C. Hydro’s ratepayers to take full advantage of this beneficial arrangement. But it will enhance the bottom line of investors who wish to access reservoir storage to firm up—that is increase the value of—electricity generated from run-of-river or wind-farm power plants.
Ironically, the new act acknowledges the major mistake that the government earlier made in splitting off B.C. Hydro’s transmission system into a separate company, the B.C. Transmission Corporation. This decision, based on the U.S. electricity deregulation model was always questionable in the context of B.C.’s system and should never have been made in the first place.
The act’s confirmation that the government intends to push ahead with the $400-million Northwest Transmission Line is yet another highly questionable policy decision. The main purpose of this line is to supply subsidized electricity to potential new mines in the region. To incent mining expansion with the promise of B.C. Hydro’s low-cost, heritage-priced electricity is to reinforce a model of resource development that is directly at odds with the goal of energy conservation. Moreover, the policy will force B.C. Hydro to purchase even more private power. And, construction of the new line will inflict even more damage on the province’s environment.
To push through these and other elements of the government’s energy agenda, the act exempts its major initiatives from review by the B.C. Utilities Commission and gives cabinet a wide range of new powers. Public—and legislative—oversight will be critically impaired, allowing the government unprecedented control over the implementation of its energy agenda.
There are many other elements of the new legislation that bear further scrutiny. But the big picture is clear. The government intends to charge ahead with its misguided private power policies. The impact on B.C. Hydro will be profound. It will be used—or rather misused—as the vehicle for shifting the benefits of B.C.’s electricity system into private hands at the expense of ratepayers, the environment, and the broader public interest. In sum, Bill 17 is arguably the most damaging piece of legislation to be brought forward by any B.C. government in recent years. A better name for the Clean Energy Act would be an “Act to Take B.C. Citizens to the Cleaners”.
John Calvert is an associate professor in the faculty of health sciences at Simon Fraser University and the author of the 2007 book Liquid Gold: Energy Privatization in British Columbia.
Comments
17 Comments
seth
May 4, 2010 at 8:42pm
BChydro now buying Pirate power at 12.6 cents a kwh is selling it today on the spot market for 3.4 cents.
Now that's Gordonomics.
It's doubtful though with current US nuke power cost at 3 cents a kwh (OECD data) and new nuke power dropping to under one cent in the ten year time frame, that things will get much better. With mass produced nuclear power forecasted under 1 cent a kwh, most of the entire $75B in IPP purchases/Site C investments are already close to worthless.
One $3B (2 cents a kwh) Candu complex at Burrard Thermal would produce the same amount of power as Gordo's $75B but of the much more valuable baseload type saving hundreds of square miles of BC forest, farmland and rivers, and ending the billions of tons of GHG's these distinctly dirty hydro technologies produce.
There is no cogent argument against nuclear power. Cost, terrorism, proliferation, waste disposal, meltdowns, and fuel supply issues have all been resolved. With all the facts on the nuclear side, studies have shown that when the public becomes informed on Nuclear power support becomes overwhelming.
Despite the almost continuous spew of anti nuke disinformation from Big Oil, their MSM subsidiary and astroturf organizations like Pembina/Suzuki/Greenpeace, 65% of Canadians where polling has been done support nuclear. After the controversy in the US over Obamas loan guarantees support has been rock steady at 75%.
Worldwide, 95% in Asia, over 500 new nukes are on the drawing board or under construction. Here leaders Gordo, Harpo, and Dolton McWhinney on orders from their owners at Big Oil are investing more than $100B in tax payer funds on worthless wind solar and hydro schemes making $billions for Big Oil in natural gas sales while working to eliminate Big Oil's greatest fear, Canada's ticket to the 21st century, Atomic Energy Canada.
Calvert is dead wrong on one thing though. 75% of BC's energy needs are met with GHG spewing fossil fuels A massive conversion to nuclear electicity is required.
We need to educate ourselves on the nuclear solution - the only practical answer to Global warming/air pollution/ peak oil/ocean acidification in time frames that can head off disaster.
seth
RodSmelser
May 4, 2010 at 9:21pm
No doubt the view taken by John Calvert will be vigorously disputed by Mark Jaccard, Andrew Weaver and Tzeporah Berman.
Rod Smelser
Robert James
May 4, 2010 at 10:08pm
Shameful book promotion and nothing more. If Calvert is against run of river and wind farms I guess that leaves coal, oil, and diesel generation for us to huddle in the dark with. Or does he suggest we build nuclear power plants? Exageration and hyperbole should not be part of any discussion. As for factual comments, well, Straight should apply their "comments disclaimer" rules to commentary's also.
Migzy
May 5, 2010 at 2:38am
One thing Seth about Nuclear, it cannot be anywhere near the coast due to earthquake risk from the Cascadia fault, not to mention we are overdue for a megathrust quake. Apart from that, I would not be opposed to a nuclear power plant away from the coast.
@Robert James
That wind power reference in a paragraph discussing access to BC Hydro's Storage reservoirs(aka water) seems to be an editing snafu as the two are not related in any way. It came completely out of left field. But I could be wrong on that, but if wind power was being done in a similarly haphazard way as these RoR, I would be against them too.
In any case I think the main point of the article is that that our illustrious premier is taking away all accountability from the legislature and the public at large and placing all power in cabinet(and major donors). Not to mention the fact that these private power producers(aka run of river) are being paid ridiculous sums for the power they are producing that is NOT needed internally by BC and is several times higher than it can ever be sold at. We must stop our beautiful province from being sold to the highest bidder all in the name of $$$. We do not want to become the next tar sands.
Oh and FYI run of river projects of this scale are NOT green, while they do keep the river flowing, the construction of both the RoR diversions/dams/powerlines causes immense destruction to the river/shorelines/marshes/forests/etc nearby to the projects. ie. the large projects need to create huge diversions etc(water is returned to river at end) and requires a significant land area and large machinery to build which in the process destroys large areas of wetland. I would classify small RoR projects like those that run waterwheels or provide power to individual residences/etc along the water as green because while they do cause some damage to the area, it is minimal and does not in any way impede the river(and in the process allows the homeowner to have power without needing to store fuel to run a generator - which if spilled would be ugly).
Hugh
May 5, 2010 at 7:44am
" If Calvert is against run of river and wind farms I guess that leaves coal, oil, and diesel generation for us to huddle in the dark with."
A good example of hyperbole.
RodSmelser
May 5, 2010 at 9:05am
Robert James
If Calvert is against run of river and wind farms I guess that leaves coal, oil, and diesel generation for us to huddle in the dark with. Or does he suggest we build nuclear power plants?
===================================
I read Calvert's book Liquid Gold and I don't think he stated that he was opposed on some a priori basis to wind or small scale hydro. Nor did he state he was in favour of coal, diesel or nuclear.
I think his point had to do with rates of return, environmental costs of some small scale hydro projects, and the long term asset picture after the contracts have expired. Compared to conventional procurement, after the purchase agreement has run its course in, say, 30 or 40 years, Hydro does not own the power plant. If Hydro want's another 40 years of electricity from that plant, it starts paying at the new rates prevailing in the future, there is no acquisition of basic capital assets involved. Simply put, Hydro is moving from owner to tenant in terms of generation plants.
Robert, do you think Hydro is getting good, competitive pricing in its calls for privately produced power? Or, given the way the calls are structured, is Hydro getting offered some very expensive stuff?
Rod Smelser
Gary
May 5, 2010 at 9:25am
As a member of the SFU alumni, I find it disheartening that one of our faculty members is so biased and publicly voiced such a strong position. And he's from Health Sciences, not the Political department! I shudder what our sons and daughters attending SFU are learning (and what as a parent I am paying for). Is there a member of the SFU faculty willing to offer an opinion that can counter his perspective?
As a member of the SFU alumni
May 5, 2010 at 10:15am
I find it invigorating that people express views and back them up!
I resent - actually I get really angry when my fellow alumni make veiled threats against professors as if they should not have political views and express them!
I shudder to think about the corrupt values you are passing on to your children.
http://www2.canada.com/vancouversun/news/story.html?id=2be2a064-10ab-4a4...
seth
May 5, 2010 at 11:32am
Be nice to hear from a member of the electrical engineering faculty at SFU. Sorry about that tenure application though.
Nuclear reactors in Japan have been hit with major earthquakes and shut down automatically without damage.
These are major tough units designed to survive anything. I shudder to think of the damage those Burnaby refineries will wreak upon us in an earthquake.
All the $65B in worthless intermittant new pirate power purchases at 12.6 cents a kwh and being sold today at 3.4 cents on the spot market peak and given away free off peak could be replaced by running high value baseload power from Burrard thermal as well as by a much cheaper and greener nuclear plant.
Studies would show that the environment impact of thousands of miles of fifty yard wide deforested power line and wasted river bed is greater than that of the GHG spewing NG plant. Also the environmental costs would be close to the power user, no new transmission lines need be built. Fuel after gas royalties to the province are considered are 4 cents a kwh. The plants output could be increased by twenty percent using twenty percent less gas with a $1.6B CCGT plant.
NG power is the solution being pushed by Premier Dolton McWhinney in Ontario as the background for his massive push on NG intensive (for load balancing) wind power.
Of course Gordo could reduce BC's GHG emissions by a order of magnitude Burrard Thermal notwithstanding by instituting mandatory public service 3 day work weeks and telecommuting. All transit and road/bridge building projects could be cancelled. Graft again is the show stopper here.
Obviously nuclear power is the way to go but if Nuclear Deniers want an alternative Burrard Thermal is by far the Greenest and cheapest solution.
seth
frank
May 5, 2010 at 12:26pm
Gary, you give yourself away saying that Calvert shouldn't have voice because he's not from "the Political department"!
I realize energy decisions by this government are based on politics, but they SHOULD concern energy and economics, and on those issues, Calvert's article is accurate.