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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.

By Christopher Pollon 13 Nov 2008 | TheTyee.ca

Widely published journalist Christopher Pollon (www.chrispollon.ca) is a frequent contributor to The Tyee.

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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:

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:

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