Wednesday, July 29, 2009

BC Power Generation Ruling

In an interesting decision yesterday, the BC Utilities Commission (BCUC) ruled that current BC Hydro acquisition plans are “not in the public interest” and refused to allow them to go ahead. This includes the Campbell governments plans for privately-owned “run of river” hydro projects that were intended to change the numbers in the government's greenhouse gas emission policy.
The Campbell government is possibly Canada's greenest government, having passed into law a requirement that BC reduce greenhouse gas emissions from 2007 levels by at least 33% by 2020 and 80% by 2050. One of the methods by which they hoped to achieve these targets was to increase power production in the province, but have that power generated by smaller-scale hydro projects (the “run-of-river” projects). Then, in a very controversial move, the Campbell government decided that they would encourage these projects to be privately owned and developed.
Typically, this set off a firestorm of protest in the province (BC, after all, keeps its conservatives in check by occasionally electing the social-democrat NDP—in the last election less than 5000 strategic votes would have flipped the outcome). A broad spectrum of affected citizens, spearheaded by Rafe Mair, a former radio talk-show host and currently writing regularly in The Tyee, have been keeping the heat on both the private power companies (primarily Plutonic Power Corp, who saw their share price fall 24% yesterday), called IPPs or independent power producers, and the provincial government. The heat comes mostly from broad-based environmental concerns—we've learned over the years that even hydro power comes at a price—from the effect on communities, the forests, and on the sport and commercial fisheries.
One of the interesting rulings from BCUC is that BC Hydro will not be allowed to downgrade their Burrard Generating Station from 5000 GWh to 3000 Gwh. If the ruling stands, private power generation projects will have to be reduced by a similar amount—thus the fall in Plutonic's share price yesterday.
The ruling suggests that the government and BC Hydro have been purposely overestimating BC's power requirements in order to justify IPP entry into the market. Lori Winstanley of COPE, quoted in the 29 July '09 Globe and Mail, says quite plainly that “[w]e have a very flawed energy plan in this province...the government cannot continue to exaggerate the need for power.” The BCUC did approve a BC Hydro plan to spend $418 million on demand side management, which is a good thing as there are significant gains that can be realized by simply reducing demand in the province. But one of the reasons for increased demand on generation capacity is that a large amount of power from BC is sold south into the US, and BC Hydro isn't seeing that demand drop at any time in the future. Particularly with the growing demand for low greenhouse gas emitting power, which is only set to grow from south of the border. And US dollars are important to BC Hydro—they made billions on Enron's whipsawing of the California utility market.
And the BCUC also approved BC Hydro's spending of $41 million on continued consultation on the proposed Site C mega-project dam on the Peace River, so there's still hope for US dollars to flow long-term into BC Hydro's coffers. 'Caused it's always about the money, innit?

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