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The Power Plant that Won't Die
BC Hydro is trying to get around the Utility Commission's rejection of its gas-fired Vancouver Island power plant by finessing the project to the private sector. Maybe that's just what the government wanted.
TheTyee.caThe battle for a sustainable energy future for Vancouver Island is heating up. Last September, citizen groups and Cobble Hill landowners had been jubilant when the BC Utilities Commission rejected Hydro's application to build a new $370 million, 265 MW gas-fired power plant at Duke Point near Nanaimo.The Utilities Commission ruled that Hydro had not proved that its proposal was the most cost-effective way of increasing the electricity supply on Vancouver Island. During the lengthy hearing, other proposals had come forward that suggested Hydro should look elsewhere for new power.The ruling also seemed to spell an end to the province's favourite crown corporation's plan build an associated gas pipeline across Georgia Strait to supply fuel to the new plant. Called the GSX, the 113km pipeline was to run from Cherry Point, WA to a landing near Cobble Hill, with a short overland section to connect to the existing gas pipeline network on Vancouver Island.More greenhouse gas, local pollutionLast July, after another lengthy hearing, the National Energy Board ruled that the GSX would have no significant environmental effects - despite the fact that it would contribute to increased greenhouse gas emissions and local air pollution. Full approval for the GSX was granted in November, 2003.But without the power plant there would be no reason for Hydro to build the GSX, which was intended only to supply fuel for the high-tech gas turbines that would turn the new plant's electrical generators.This time the Utilities Commission required Hydro to go back and issue a call for tenders for alternative sources of electrical energy. It allowed that Hydro could reapply for approval if its plant proved to be the most cost-effective, and that it was prepared to deal with the application 'on an expedited basis.'Open door for alternative energy The door seemed open for cogeneration projects at pulp mills, solar and wind power, and all manner of cleaner, cheaper innovations. Everything looked good for a more sustainable solution to Vancouver Island's energy needs.Unfortunately, the Commission failed to define this 'expedited' process. Did it mean that Hydro's expensive power plant, having been turned down once as not cost-effective, could return and be approved without a new hearing?"I'm feeling somewhat apprehensive that BC Hydro will get its way by default," said Sierra Club climate change campaigner Tom Hackney, who represented GSX Citizen's Coalition at the Commission's hearing."Hydro's call for tenders is not a formal and transparent process," Hackney explained. "It's Hydro's process and not directly overseen by the BCUC."People didn't have to wait long for their fears to be reinforced. Hydro unveiled the initial terms of its tender at the end of October, filling in the details at a December 19 workshop in Nanaimo.The terms of the tender call shocked both potential bidders and citizen groups. It was written so that only those bidders offering to buy and operate Hydro's costly white elephant were likely to make the cut. 'Alternative' energy projects using wind power or solar energy, and load-reduction or improved energy efficiency projects, would be disadvantaged.Hydro would consider only firm power proposals between 25 and 300 MW that used proven technology; proponents must guarantee an almost impossible 97 percent availability of firm power; proposals over 150 MW would receive a transmission credit; and anyone proposing to purchase and operate Hydro's rejected power plant would receive a $50 million credit in the final evaluations.It looked like a fix for the power plant everyone thought had been defeated.Utilities Commission cut out of loopTo add insult to injury, the Commission was cut out of the loop. Bidders could comment on the process only to Hydro and would have to do this before all the final details were published. And the Commission would have to accept Hydro's deadline of January 23 to approve a revised tender process.Many major power bidders went ballistic. A rain of letters from high-priced lawyers thudded onto the desk of Commission secretary Robert Pellatt.Norwegian multi-national NorskeCanada, which owns almost all the major BC coastal pulp mills and who had very publicly proposed a mill-based cogeneration proposal, led the charge."If the stakeholders and Bidders do not have an opportunity to participate fully in the approval process. there will be a clear failure of natural justice," thundered Bull, Houser & Tupper energy lawyer Brian Wallace.After the December 19 workshop, Wallace became almost apoplectic: "What BC Hydro has implemented is a carefully-controlled process in which comments are directed to BC Hydro, in many ways an adverse party, in a form and a manner dictated solely by BC Hydro," he wrote to Pellatt."None of the safeguards associated with a fair hearings of an application of this magnitude are in place."Representing the seven large pulp mills who comprise the biggest consumer of electricity on the Island, lawyer Karl Gustafson was even more blunt in his letter to Pellatt: "If the Commission approves the (tender) process, we fear that it is extremely difficult for the Commission later, in the context of an application for a (permit), to challenge the results of the (tender) process."Put simply, the Commission will have painted itself into a corner."How could Hydro expect to get away with this? Surely even BC's largest and most profitable crown corporation might expect to have its knuckles rapped.Privatization push for Duke PointThe answer is to be found in the Liberal government's ceaseless push for privatization. The BC government's Energy Plan introduced in November, 2002 requires that only the private sector will develop new electricity generation, with Hydro restricted to improvements at existing plants.Not content with that, the Liberal government last June issued an Order-In-Council specifically exempting private corporations contracting to supply power to BC Hydro or Powerex from oversight by the Commission. But public utilities applying to sell power to Hydro or Powerex would still be regulated.Some observers believe that the government never wanted Hydro to own and operate a new electricity generator on Vancouver Island. But instead of telling it to back off, saving about $51 million in sunk costs, it let Hydro push ahead until the project could be handed over to the private sector.The Utilities Commission is now faced with a dilemma. Does it order a public hearing to straighten out the tender process, or does it stand aside and let BC Hydro finesse what appeared to be a definite "No" into a helpless "Yes"?Stay tuned. The strange story of the GSX pipeline and the plan for a second gas-fired generator on Vancouver Island isn't over yet. More powerful forces are at play than appear in obfuscatory language of the official decisions.
Stuart Hertzog is a Sidney-based researcher, writer and environmental campaigner with an extensive knowledge of BC energy issues and an intimate understanding of how excruciating it can be to sit through an entire BC Utilities Commission hearing. ![]()



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Anonymous
8 years ago
Just build another dam on the peace and rebuild the transmission lines to the island, or better yet dam the fraser...
Anonymous
8 years ago
I enjoy your articulate arguments but I must bring attention to your use of the word 'cheaper.' While much of research seems accurate, I believe that the sustainable energy options you advocate are actually very small (we will need 50+ projects to sustain the Island's needs) unreliable (ie wind) and costly to the rate payers pockets. Can you please address those arguments?
Stuart Hertzog (not verified)
8 years ago
I’m not suggesting that all alternative energy solutions are both cleaner and cheaper than Hydro’s gas-fired project. Some are cleaner, some are cheaper, and some are both. It’s true that right now, small-scale solar and wind energy is more expensive than coal, hydro or gas-fired power. But other energy options are much cheaper, cleaner and more sustainable than Hydro’s proposed plant. Demand-management, energy efficiency and cogeneration are cost-effective and proven ways of getting more out of existing generation capacity. The BC Utility Commission ruled against the Duke Point proposal precisely because it is not the most cost-effective way of generating new power on Vancouver Island. Lurking behind this is another issue. The cost of non-polluting and sustainable energy sources – traditional sustainable ‘alternative energy’ – has been impacted by cheap fossil fuels, whose cost is kept low by direct subsidies plus the willingness of governments to allow the price to be set by the buyers in an open market. Since Brian Mulroney reinvented the National Energy Board as a mechanism for continentalising energy supply, the notion of preserving at least some of Canada’s dwindling energy reserves for an energy-poor future has been forgotten. As a result, clean, sustainable energy such as solar and wind have had to compete in an energy market dominated by cheap, fossil fuel-based electricity. The economies of scale needed to bring down the price particularly of photovoltaics have not been available, effectively cutting out this choice for the ratepayer. And far from being insignificant, clean sustainable energy has a huge potential. It has been estimated that around 1,000 MW of tidal power opportunities exist on BC’s coast, as well as hundreds of megawatts of wind power. And even more energy that could be made available if every rooftop in BC had a solar water heater and an photovoltaic electrical panel. We wouldn’t need coal or gas power plants. It all comes down to energy policy. Unfortunately, this government is firmly wedded to the joy of burning fossil fuels, despite the growing warnings of global warming. Hydro’s bull-headed defence of its costly and polluting gas plant is a good indication that BC’s mindless and destructive energy policy is not about to change. Stuart Hertzog
Anonymous
8 years ago
There only a few opportunities for co-generation on Vancouver Island. Usually co-gen goes hand in hand with large industrial sites, like Fort McMurray and Sarnia. Its misleading to say co-gen is viable to meet demand for Vancouver Island. Demand side management pays people to shut down their operations. This has an impact on employment. Do you want this?
Stuart Hertzog (not verified)
8 years ago
Co-generation is no longer just for large operations. Recent developments in small gas turbine technology have opened the possibility of efficiency improvements via cogeneration for any medium-size heating plant, such as at universities, highrise buildings, schools, and hospitals. There are many such opportunities on Vancouver Island. And Demand-side management programs don’t just mean shutting down production. It offers a host of possibilities, from load-shifting to Power Smart. So I don’t buy the argument that energy efficiency reduces employment. In fact, by creating a demand for technology and services, it increases economic activity and creates new employment.
Anonymous
8 years ago
You are talking 5 MW co-gen plants. We will need 50 of those just to meet a few short years of new demand on Vancouver Island. That new small gas turbine technology better be real efficient to over come the cost of stringing all those wide-spread plants together. Who should provide capital for the new technologies? Is BC Hydro now a bank at the rate payers expense? Sure it's easy to say that demand side management is a good idea but it won't be the companies that will want to pay for it! So now we are going to pay to upgrade industry on Vancouver Island at the expense of health care?
Stuart Hertzog (not verified)
8 years ago
Small cogeneration units are available in many sizes, from small to large. It’s not a matter of “stringing them together,†they simply supply power to the local network, reducing that institution’s electricity demand from the grid and making more energy available to others. The capital for purchasing these will come from the owners of the power plant putting together a business plan to take to a bank or wherever, the justification being a return on the investment through long-term cost savings. It ain’t rocket science, just good business sense. So we won’t have to “pay to upgrade industry on Vancouver Island at the expense of health care,†as you suggest.
Anonymous
8 years ago
I hope what you are saying is true. If it is so easy to financially justify, we won't need to ask BCHydro/government to finance these type of operations, the private financial industry will already see your "rocket science, just good business" argument." But since they aren't, I think you are glossing over a lot of real issues. There are real costs to many plants as opposed to one or two. And reality has it that there just isn't enough of those type of co-gen opportunities to make it worth while. And while burning hydrocarbons comes with an environmental cost so does hydro electric power (dams etc.), wind power and others. Sorry no sale on your arguments here.
Stuart Hertzog (not verified)
8 years ago
Thanks for your feedback. I enjoyed our discussion.
Janice Linde (not verified)
8 years ago
I am very grateful for your insights, and for your grasp of the big, longer-term picture. Are you able to enlighten us about another related aspect -- the desire of some of these new so-called "green" energy proposals that wish to burn something called "biomass" in their power plants. I'm concerned this might be a catch-all phrase that hides very frightening things that would damage the health of local residents, things like medical waste, old tires, industrial waste, etc. Thanks.
anne cameron (not verified)
8 years ago
Years ago the Mid-Island Coalition on Energy did a survey of year-round water sources capable of generating dependable energy. None of these projects would have required massive dam construction. There is no need for this huge and expensive dinosaur, it's just another way for the trough swillers to funnel tax money into the pockets of private industry. What that pack of Phillistines is doing to B.C. Hydro is going to cost the tax payers dearly. What they have already done to the natural gas sector ought to be deemed criminal. Anything which brings IN money winds up in the hands (and pockets) of their butt buddies, anything which costs money is still the responsibility of the tax payer. We have been colonized by american controlled imperialist corporations and the incursions continue. Norske-Skog is already burning old tires, creosote soaked railway ties, and now want to burn coal. Next it will be the garbage produced by our cities. Almost anything will burn, and recycling will be deemed too expensive if the plastics, etc., can be used as "biomass" and burned.
Bryan/Nelson (not verified)
8 years ago
Re an above comment "Is BC Hydro now a bank at the rate payers expense?" We keep hearing from the far right wing ideologues via the media that governments cannot go it alone without the help of the private sector involvement ie)P3 projects? in high cost items such as power development and road upgrades. I for one of have never seen any INDEPTH 'for and against' studies on these proposals. My understanding is that the B.C. Government including B.C. Hydro can borrow money at a cheaper rate or the the same rate as the private sector for such projects, so what is the advantage here of going private? As shareholders in B.C. Hydro, we the people of B.C. have done quite well over the years, and I have seen no logical reasoning why that cannot continue.