Gordon Campbell's $400 Million Power Line Bet
Did BC's premier juice up his claims for the Northwest Transmission Line? A Tyee special report.
Proposed route of power line up Highway 37, as shown on its supporters' website.
For a year, the massive power line project in British Columbia's north looked like it had fizzled. But then, on Sept. 26th, Premier Gordon Campbell zapped it back to life.
Campbell's announced intention to extend B.C.'s electrical grid hundreds of kilometres into the northwest corner of the province is based on the assumption that the required $400 million investment will pay for itself by spurring prosperity across the under-developed north.
But a representative of the mining industry that helped Campbell craft this rosy scenario counselled caution in an interview with The Tyee. The big ticket mining projects that would finance the power line are more of a wish list than anything certain, explained Byng Giraud, vice-president of policy & communications for the Mining Association of B.C. His group is optimistic, he said, but "nobody should necessarily go to the bank on this."
That's not how Campbell sounded in September.
"The communities in the North have a vision to further open their region to economic opportunities on a global scale, and today, I want them to know that we share their vision..." read a prepared statement based on Campbell's annual address to the Union of B.C. Municipalities. "According to the Mining Association of B.C., this project has the potential to attract $15 billion in new capital investments and create almost 11,000 jobs, as well as reduce greenhouse gas emissions by decreasing the reliance on dirty diesel-electric power for industry and communities."
Claims oversold?
The Northwest Transmission Line (NTL) -- which would roughly follow the Stewart-Cassiar Highway (Highway 37) for 335 kilometres from near Terrace to Bob Quinn Lake -- is vitally important to dozens of potential mines and run-of-river hydro projects in various stages of regulatory and feasibility study across a broad triangle of land between Prince Rupert, Prince George and Whitehorse. Proposed energy projects will require the NTL for ready grid access, and most of the promising mines will need it to drive their energy intensive operations.
The announcement came nearly a year after the province put the power line on hold after its funding partnership with NovaGold/Teck Cominco collapsed after the massive Galore Creek copper mine was put on hold due to rising costs.
Campbell's announcement was not only reminiscent of the massive, publically funded infrastructure projects of B.C.'s Socred past, it was also light on explaining how the actual NTL will get done. Consider the following:
- At an estimated potential cost of $400 million, the NTL will not remove a single northern community from diesel power
- The original pledge of $158 million from the owners of the Galore Creek mine is gone and other private sector partners have not been found
- The province currently has no way to predict or manage the cumulative environmental and social impacts of the dozens of mines and run-of-river hydro projects that might become economically feasible if the line is built.
Whose numbers are these?
The NTL has found new life thanks to the research and persistant prodding from a coalition of northern business development groups, mining and energy interests led by the B.C. Mining Association, which has successfully pushed the government to revive the project.
On the same day of Campbell's announcement, the B.C. Mining Association published a report highlighting the economic benefits of the NTL. It is this document that is the source of Campbell's statistics used to justify the public spending required to move the NTL forward.
"Government did its own financial analysis and they also focused on the best available public information and estimates available at the time," says Jake Jacobs, spokesman for the B.C. Ministry of Energy Mines and Petroleum Resources. "It's safe to say that if the Mining Association numbers were used in the press release, [we] were comfortable with those numbers."
Yet the B.C. Mining Association document represents little more than a wish list created by the coalition, highlighting the project details and economic potential of the most promising mines and energy projects.
"The report is pre-feasibility work [based] on interviews with all the coalition members asking 'what do you see as the future?'" said Giraud of the Mining Association of B.C. "This isn't necessarily saying that [these projects] will be here tomorrow or for sure."
Giraud says that timelines for projects were not considered in the report, and it is because so many of the projects are still speculative that the coalition only asked the BC Liberals for $10 million for environmental assessment, engineering and FN consultation.
"We don't expect the government to kick in its $250 million until there is something to tie into," he says. "But we will argue that there is enough here that if even just a portion of [proposed projects] come forward, then you'll have success."
Not that the B.C. Mining Association and coalition got all it was asking for: while their report specifically proposes the construction of a longer $600-million line terminating at Dease Lake, the province's environmental assessment will examine a line only as far as Bob Quinn Lake.
Dirty diesel forever?
Despite Campbell's Sept. 26 claim that the NTL will "bring clean power to the whole northwest region and eliminate community dependence on dirty diesel for their power," the construction of the NTL will not remove a single northern community from dirty diesel power generation.
Just three communities are in the general vicinity of the proposed line, and only two of these are currently dependent on diesel for power: Iskut is located about 100 km north of the termination of the proposed line; Telegraph Creek is even further away, located off the highway at the end of a long spur road. Dease Lake relies primarily on a small hydro dam for power.
"The line would be a catalyst to get communities off of diesel, but... will these communities get off diesel as a direct result of NTL? No," says Jacobs. "More infrastructure will be needed."
(In an April 2007 article in the Tyee, the Victoria-based Dogwood Initiative estimated that northwest communities relying on diesel power could be served at current levels of energy consumption by micro-hydro generation at a cost of $22 million.)
Although the line is clearly not designed to remove communities from diesel, it is unclear at this writing how much public money designated for "green" initiatives will be spent on the project: potential sources include the Northern Development Initiative Trust (a member of the coalition supporting the powerline), which was created with seed money from the sale of BC Rail, and a portion of the nearly $200 million federal "EcoTrust" money given to B.C. in March 2007.
In the latter case, a press release issued by the premier's office in March of 2007 named the Highway 37 electrification project as a way of "...providing clean electricity to remote rural areas now fuelled by dirty diesel."
Power options
The least expensive option for extending the grid would be to extend the existing 138-kV transmission line currently connecting Terrace to Stewart at the base of the Alaskan panhandle; at Meziadin junction, the extension could follow the Highway 37 up to Bob Quinn Lake.
The problem with this option is that such a line could only power a single large mine the size of Galore Creek, whereas the 287-kV line now championed by both the coalition and the B.C. government could power at least five big mines.
The problem with the larger option, says the Pembina Institute program strategist and senior policy analyst Jaisel Vadgama, is the absence of adequate planning processes to mediate the rate of growth and impacts of such a potential energy and mineral rush.
"In B.C., we don't have very good processes for planning on a regional scale, in terms of cumulative ecological thresholds, or how much development people want in the region," says Vadgama, who has studied the plans for the line. "This means the decision determining the [capacity] of the power line will determine in and of itself how many mines you will build in the region."
Vadgama says that while people certainly want jobs and access to resource revenues, they might not want five large-scale mines operating in relatively close proximity -- or more exactly, the cumulative environmental and social impacts inherent to such boom and bust scenarios.
"What would make sense is to have a planning process, saying 'let's look at this region and consider community needs, economic factors and ecological thresholds,'" he says. "Bring government, industry and First Nations and other communities to a table to set out a blueprint for how many mines... maybe that leads to one mine, or even two, but probably not five."
Who's willing to pay?
The $158 million Galore Creek contribution to the NTL is off the table, which leaves the province holding a bag containing just $250 million.
So who is willing to pay? The B.C. Mining Association report that Gordon Campbell quoted in his Sept. 26 press release and announcement is markedly less optimistic on this subject:
"...most of the developers of the mining and IPP projects need to raise additional capital to conclude the development of their projects. Consequently, most of the developers have only limited immediate capability of funding a capital contribution."
Of all the big mining projects planned in the northwest, the Schaft Creek project north of Bob Quinn Lake is among the most advanced mines proposed for the area, and its feasibility planning thus far has assumed it will tap the NTL by 2013.
"The concept of contributing to the line is acceptable to us, when we get to that position," says Guillermo Salazar, president and CEO of majority project owner Copper Fox Metals Inc. of Calgary. "The project will be a lot easier to evaluate with knowing that the line is going to be there."
Salazar notes that the volatility of cost makes diesel power impractical, and that the construction of a dedicated run-of-river project to power the mine is unrealistic because such a source is intermittent and unable to meet their enormous power requirements.
All of which brings this back to the powerline, and the need for more private sector money to make it happen. Byng Giraud notes that the $10 million Gordon Campbell has promised to kick-start the environmental assessment and consultations will inevitably lead to an infusion of private money.
"We're realists and we know there has to be a private sector partner in this," says Giraud. "We are the primary demanders of this, and probably the initial primary beneficiaries, too."
Related Tyee stories:
- Huge 'Green' Boondoggle?
Critics claim $300 million will be wasted on BC 'clean energy' project. - The Hook: Campbell's Highway 37 plan an expensive way to cut emissions
- Inside BC's Mining Boom
Why billions are pouring in for copper, coal, uranium.
![[Tyee]](http://thetyee.cachefly.net/ui/img/ico_fishie.png){kind=small}
Jeffrey J.
13-11-2008
Trend of Incompetence Continues
This initiative of the neocon BC premiere is typical of right wing regimes. They have eschewed government projects for so long, they no longer know how to build or execute a successful policy, except giving public wealth away to private corporations. This trend is likely to continue, especially under Campbell's influence. Our loss. Great article!
G West
13-11-2008
Ummm
Campbell's announcement was made on Sept 26...the reader should note this was prior to the provincial government realizing that the economic downturn was going to hit the province - perhaps he hadn't got the note from the Finance minister - you remember when Hansen told a radio show that... “we have seen the projections from provincial revenues collapse in the last six weeks to the tune of billions of dollars.”
Like a lot of Gordon Campbell's promises, this one illustrates more about its maker than his grasp of reality.
Michael
13-11-2008
Related Tyee Stories?
It's odd that the related stories function didn't link to the Tyee story North Island Dreams of Better Days, an article bemoaning shrinking opportunities in the North and the need for more government investment.
G West
13-11-2008
What's odd?
I take it you mean this story:
http://thetyee.ca/News/2008/08/06/NorthIsland/
monty
13-11-2008
BBC carried stories on economic downturn last April
Suggest the tyee send this story to the Seattle Times, Seattle Post Intelligencer, Globe and Mail and NY Times--all of whom have published stories about BC and the bizarre goings on here in the past week.
There is a rampant social disease--it's called lack of honesty, absence of ethics, you name it. Take your choice. As for the Finance Min. just discovering there is an economic downturn that's as credible as Flaherty and Harper who said our economy is sound, our banks are fine before the election. Then, oops after the election "We may have to run a deficit" when in fact there was a deficit in August. Now they are shovelling money to the banks!
Keep fit--watch the comedy channels.
Luke Skywalker
13-11-2008
The Catalyst...
The catalyst for the northwest transmission line was the $2 billion Galore Creek gold/copper deposit along that same corridor.
Unfortunately, development costs for Galore Creek escalated to $5 billion and the project was put on hold. Currently, it is undergoing a new design plan to slash the astronomical rise in development costs.
And then you have the Schaft Creek mineral project mentioned in this story.
Good idea and welcomed up north. Get the environmental assessment certificate for the transmission line and be ready when the eventual development in the region begins.
Northwest BC has always had BC's highest levels of unemployment and many in the region look forward to these developments.
After reading some of the above comments... I must ask... Is this Carole James position???? If that's the case, the current NDP-held Skeena riding (which includes Terrace) is a swing constituency and now may very well drift back to the Liberals in 2009.
cboo44
13-11-2008
Hydro Power to the North
Yes, God forbid that any taxpayers money be spent "Beyond Hope". The typical urban latte` crowd doesn't care where their juice actually comes from, they just demand that it be there. To hell with the other 85% of BC that actually PRODUCES the provincial basis for wealth and GPP.
This transmission line is part of the infrastructure for the Site "C" power generation project that WILL go ahead. You see, NIMBY urbanites don't want local, clean hydro generation(even BC Hydro owned and operated run of river) to spoil their aethetics, so we have to build a huge (out of sight, out of mind) generation project in the NORTH, where "other people" live and would like to work and raise families. "Work" involves "industry" to provide high paying jobs to sustain the higher costs of living in the NORTH. The spin-off jobs CREATED by industry in the NORTH are what NIMBY urbanites depend on to make a living and buy their latte`, even if they don't realize it.
Ronald Pagan
13-11-2008
cost-benefit
The value of northern employment would have to be astronomical for this project to pass the cost-benefit test.
freebear
13-11-2008
Government Subsidizes Development
So for all those free market stalwarts who say that government should stay out of their way and their business, what say you?
Oh I see, you play both sides when its to your advantage!
Free market: free to be greedy and mess things up and then expect the governments of the world (read: taxpayers) to bail them out!
Wind farms would aready be built on Northern Vancouver Island if the Premier would pay to increase the transmission capacity from the north end, south to Campbell River (more social and environmental benefit too I think).
Of course it may be hard to sell offshore oil & gas drilling with wind turbines generating electricity operating in the vicinity!
What else is the provincial government going to deliver to their corporate and individual buddies before election day?
Luke Skywalker
13-11-2008
Economic Opportunities...
To re-iterate, the proposed $400 million northwest transmission line will never get built by BCTC until there is a firm decision for the Galore Creek mine to proceed.
Of that $400 million, Galore Creek will contribute $158 million leaving $242 million for the province, unless another mine operator decides to tie into the system and contribute.
But the bigger economic story is this:
Galore Creek:
Construction Jobs: 1,000;
Permanent Jobs: 500;
Taxes: $560 million (over 20-year life)
Schaft Creek
Construction Jobs: 2,100;
Permanent Jobs: 700;
Taxes: N/A
With numbers like those (just two out of a potential many), the business case in terms of benefits certainly overwhelms the costs.
During the interim, the only thing occuring is the $10 million costs estimated to be incurred in terms of moving things along in the Environment Assessment process.
PS. egmont rapids... the last BC Ipsos poll was in mid-June showing the Liberals with a comfortable lead. The last BC poll was by Environics (yesterday) still showing the Liberals in the lead.
RickW
13-11-2008
One would think......
.....that a conscientious government, concerned with the welfare of the citizens, would negotiate an agreement that would see the mining companies underwriting the transmission line, as part of their infrastructure costs.
Given the volatility of the marketplace into the forseeable future, to have the government commit itself to the construction of this line, when the proposed mines could easily be "on again, off again" for the next several years, would be foolish to the extreme. It would be the equivalent of the highways and bridges to nowehere that we hear about now and then.
Much better to have the mining companies build the line, as part of THEIR commitment.
UnCivilizedEngineer
13-11-2008
NTL not related to Site C
Quote: "This transmission line is part of the infrastructure for the Site "C" power generation project that WILL go ahead."
Not even close to Site C.
Refer to page 23 of the MABC report, though, and one notes that there are 1000s of potential run-of-river sites. Not all are related to the NTL, but potential for 7,000 construction and ~100 permanent jobs in the < $150/MW category.
It's too bad Edziza plateau is a park. Some of BC's best geothermal is there.
sdgreen
13-11-2008
BCLiberal Energy Policy just wrong
The entire BC Liberal energy policy is completely wrong!
Instead of permitting BCHydro to do the right things, the BCLiberals have dictated to the corporation to do nothing except capital maintenance projects and save money via massive taxes to promote conservation.
BCHydro should be given the authority to 'provide' electrical service in the most efficent manner possible; to advance clean power either hydro electric, or alternate clean technologies.
The BS surrounding the issuance of private power generation must be abolished; they will provide nothing compared to the cost to produce.
We are talking mega projects here that BC Hydro must be the leader.
The BCTC should be abolished and returned to the management of BC Hydro; hydro pays for the bloody corporation anyway.
The BCLiberals totally screwed British Columbians on this issue, mind you the NDP really have no plan neither.
cboo44
14-11-2008
Power to the North
"Quote: "This transmission line is part of the infrastructure for the Site "C" power generation project that WILL go ahead."
Not even close to Site C."
Should I have said Site "C" power distribution, David?
Luke Skywalker
15-11-2008
egmont rapids...
Nonsense. To reiterate, Ipsos and Mustel have not been in the field/released a BC opinion poll since June.
http://www.ipsos-na.com/news/pressrelease.cfm?id=3968
http://www.mustelgroup.com/pdf/20080626.pdf
They didn't poll during the holiday summer months and did not poll during the federal writ period and thereafter due to potential skewed results/voter confusion.
Both Evi Mustel (Mustel) confirmed that here:
http://bc2009.com/2008/09/09/mustel-confirms-no-provincial-polling/#comments
... and Kyle Braid (Ipsos) confirmed that on federal election night on Global News that Ipsos would wait at least a few more weeks for the aforesaid reasons.
I would expect both of them to be out relatively shortly (within 4 weeks).
Your second man on the grassy knoll theory is a bit overboard. :)