Green power bids flooding in to BC Hydro
Scott Simpson
Vancouver Sun
Tuesday, November 25, 2008
Power corporation could receive offers of five times the electricity sought
Independent producers are expecting to flood BC Hydro with offers of green electricity by the time the 2008 call for clean power closes today.
BC Hydro could be looking at five times the 5,000 gigawatt hours of new green power it was seeking when it opened the call process earlier this year -- and the independents are speculating that the bid price for each new megawatt hour of power will be substantially higher than the last call in 2006.
The call has attracted criticism from independent power opponents who want Hydro to develop all new sources of electricity in the province and ensure that all electricity generation in the province is held by the Crown.
Meanwhile, Independent Power Producers association of British Columbia president Steve Davis described the call as competitive, saying the sheer volume of interest guarantees that Hydro's customers -- the people of B.C. -- are getting the best price on new sources of electricity.
"It's certainly competitive, 169 projects registered [earlier this year] to bid," Davis said in an interview. "BC Hydro's target is 5,000 gigawatt hours [but] I think they will receive something in the order of 25,000 gigawatt hours."
Run of river hydro and wind power projects are expected to comprise the bulk of the bids.
Davis said many of those in the bidding will come away disappointed, after months and even years of preparatory work.
"If we presume 100 of them are going to bid I'm still expecting a four to five times over-subscription ratio.
"Having been a bidder, I can say the last thing you want to do is price it just a little too high, and get nothing at all."
One certainty is that the price Hydro accepts will be substantially higher than the last call, which came in 2006.
Davis notes that Hydro was offering $55 per megawatt hour in 2003, which works out to 5.5 cents per kilowatt hour, and paid an average $74 per megawatt hour in the last green call, in 2006.
"I'm not sure this time the prices aren't going to be closer to the $90s," Davis said, noting that the higher price is a reflection of higher construction and financing costs, not profiteering by the independents.
"If somebody is pricing too high, to hope to make too much money, they simply will not get selected."
At present, independents annually produce about 1,000 megawatt hours -- nine per cent of the total generating capacity of the BC Hydro system.
BC Hydro is investing in refurbishing its own aging network of heritage hydroelectric facilities.
It recently spent $95 million to upgrade the 86-year-old Aberfeldie generating station near Cranbrook.
Hydro documents show the electricity from refurbished Aberfeldie will cost $78 per megawatt hour.
"Critics of the government's energy policy -- public power proponents, environmental groups, first nations -- won't be surprised by the onslaught of bids for the upcoming energy call," said Melissa Davis of BC Citizens for Public Power.
Melissa Davis, no relation to Steve Davis, said in an e-mail to The Sun that the government and private power companies seem to be "racing against the clock" to sign as many energy purchase agreements as possible before the May 2009 provincial election.
"The government must be counting on a lot of votes from the IPP sector. Because I doubt they'll get much support from British Columbians who care about the environment, or from British Columbians who oppose the privatization of our public services, or from British Columbians living on low or fixed incomes who won't be able to afford the two-tiered hydro rates and outrageous increases that are subsidizing private power."
ssimpson@vancouversun.com
© The Vancouver Sun 2008
Posted by Arthur Caldicott on 25 Nov 2008