February 28, 2005

GSXCCC files EPA appeal with Court of Appeal

Court of Appeal File No. __to be assigned__


COURT OF APPEAL

IN THE MATTER OF THE UTILIITIES COMMISSION ACT, RSBC 1996, c.473

AND IN THE MATTER OF JANUARY 27, 2005, AND FEBRUARY 17, 2005, ORDERS OF THE BRITISH COLUMBIA UTILITIES COMMISSION

BETWEEN:
GSX CONCERNED CITIZENS COALITION,
BRITISH COLUMBIA SUSTAINABLE ENERGY ASSOCIATION,
SOCIETY PROMOTING ENVIRONMENTAL CONSERVATION
Appellants

AND:
BRITISH COLUMBIA UTILITIES COMMISSION
BRITISH COLUMBIA HYDRO AND POWER AUTHORITY
DUKE POINT POWER LIMITED PARTNERSHIP
Respondents


NOTICE OF APPLICATION FOR LEAVE TO APPEAL

TAKE NOTICE that pursuant to s.101 of the Utilities Commission Act, RSBC 1996, c.473, GSX Concerned Citizens Coalition, British Columbia Sustainable Energy Association, and Society Promoting Environmental Conservation hereby apply for leave to appeal to the Court of Appeal for British Columbia from the order of R.H. Hobbs, Chair, and L.A. Boychuk, Commissioner, of the British Columbia Utilities Commission (“Commission”) pronounced the 27th day of January 27, 2005, (“L-10-05”), and the 17th day of February, 2005, (“E-1-05”) at Vancouver, British Columbia.

1. The appeal is from an order of a statutory body.

2. The appeal is not from an appeal under Rule 49 or 53 (6) of the Supreme Court Rules.

3. The Appeal involves Constitutional/Administrative law.

AND FURTHER TAKE NOTICE that the Court of Appeal will be moved at the hearing of this application for an order granting the Appellants leave to appeal Orders E-1-05 and L-10-05 so that the Appellants may proceed with an appeal to have the Orders set aside, or, in the alternative, varied.

The grounds of appeal are:

1. The Commission erred by not disqualifying the Commission Panel on the grounds of a reasonable apprehension of bias.

2. The Commission erred by denying procedural fairness and natural justice to the Appellants, particulars of which include:

a. unduly restricting the scope of the hearing,
b. proceeding with undue haste,
c. unreasonably limiting the Appellants’ access to confidential documents and other information; and
d. improperly conducting itself during an in camera session.

3. The Commission erred in law on grounds to be further particularized once the Commission’s reasons for decision regarding Order E-1-05 have been provided to counsel.

4. Such other grounds as counsel may advise.

The hearing of this proceeding occupied 11 days.

Dated at North Vancouver, British Columbia, this 27 day of February, 2005.


_____________________________
William J. Andrews
Solicitor for the Appellants
GSX Concerned Citizens Coalition,
British Columbia Sustainable Energy Association, and
Society Promoting Environmental Conservation


To the respondent: British Columbia Utilities Commission
6th Floor, 900 Howe Street
Vancouver, BC
V6Z 2N3

And to its solicitor: Gordon Fulton,
Boughton Peterson Yang Anderson
1055 Dunsmuir Street
Vancouver, BC
V7X 1S8

To the respondent: British Columbia Hydro And Power Authority
17th Floor - 333 Dunsmuir Street
Vancouver, BC
V6B 5R3

And to its solicitor: Christopher Sanderson, Q.C.
Lawson Lundell
1600 – 925 West Georgia Street
Vancouver, BC
V6C 3L2

To the respondent: Duke Point Power Limited Partnership
3040 – 400 -4th Avenue SW
Calgary, AB
T2P 0J4

And to its solicitor: Loyola Keough
Bennett Jones
4500 -855 -2nd Street SW
Calgary, AB
T2P 4K7

This Notice of Application for Leave to Appeal is given by: William J. Andrews, Barrister & Solicitor, whose address for service is: 1958 Parkside Lane, North Vancouver, British Columbia, V7G 1X5, Telephone: (604) 924-0921, Fax: (604) 924-0918.

To the respondents:

IF YOU INTEND TO PARTICIPATE in this proceeding, YOU MUST GIVE NOTICE of your intention by filing a form entitled “Notice of Appearance” (Form 2 of the Court of Appeal Rules) in a Court of Appeal registry and serve the notice of appearance on the appellant WITHIN 10 DAYS of receiving this Notice of Application for Leave to Appeal.

IF YOU FAIL TO FILE A NOTICE OF APPEARANCE
(a) you are deemed to take no position on the application, and
(b) the parties are not obliged to serve you with any further documents related to the application.

The filing registries for the British Columbia Court of Appeal are as follows:
Central Registry:

B.C. Court of Appeal
The Law Courts
800 Smithe Street
Vancouver BC V6Z 2E1

Other Registries:

B.C. Court of Appeal
The Law Courts
P.O. Box 9248 STN PROV GOVT
850 Burdett Ave
Victoria BC V8W 1B4

B.C. Court of Appeal
223 – 455 Columbia Street
Kamloops BC V2C 6K4

Inquiries should be addressed to (604) 660-2468
Fax filings: (604) 660-1951



Court of Appeal File No. __to be assigned__

COURT OF APPEAL

IN THE MATTER OF THE UTILIITIES COMMISSION ACT, RSBC 1996, c.473

AND IN THE MATTER OF JANUARY 27, 2005, AND FEBRUARY 17, 2005, ORDERS OF THE BRITISH COLUMBIA UTILITIES COMMISSION

BETWEEN:
GSX CONCERNED CITIZENS COALITION,
BRITISH COLUMBIA SUSTAINABLE ENERGY ASSOCIATION, SOCIETY PROMOTING ENVIRONMENTAL CONSERVATION
Appellants

AND:
BRITISH COLUMBIA UTILITIES COMMISSION
BRITISH COLUMBIA HYDRO AND POWER AUTHORITY
DUKE POINT POWER LIMITED PARTNERSHIP
Respondents

NOTICE OF APPLICATION FOR LEAVE TO APPEAL

William J. Andrews, Barrister & Solicitor
1958 Parkside Lane
North Vancouver, BC, V7G 1X5
Phone: (604) 924-0921, Fax: (604) 924-0918
Email: wjandrews@shaw.ca

Victoria – On Monday, Bill Andrews, counsel for the GSX Concerned Citizens Coalition; the BC Sustainable Energy Association; and the Society Promoting Environmental Conservation, filed a notice for leave to appeal with the Court of Appeal for British Columbia.

GSXCCC, et al are challenging a 17 February decision of the BC Utilities Commission, which approved the electricity purchase agreement signed between BC Hydro and Duke Point Power Limited Partnership. Under the agreement, Duke Point Power undertakes to sell BC Hydro the electricity output from a 252 megawatt gas-fired power plant that Duke Point Power intends to build at Duke Point, near Nanaimo.

“We have strong grounds for overturning the decision that allows the electricity purchase agreement,” said Tom Hackney, President of the GSXCCC. “On top of that, the Duke Point Power deal is not in the best interests of the public. Gas power is not the smart way to go in the post-Kyoto era.”

GSXCCC, et al contend that the decision of the Utilities Commission should be set aside because, during the hearing on the Duke Point Power electricity purchase agreement, the Commission Panel -- Robert Hobbs and Lori Boychuk -- acted in a manner to create a reasonable apprehension of bias. Specifically, the Commission Panel held discussions with BC Hydro witnesses that gave rise to the impression that the Panel had made up it mind about the outcome of the review before all the parties had brought their evidence and argued their cases.

GSXCCC, et al also contend that the Commission erred by denying procedural fairness and natural justice to the appellants by: unduly restricting the scope of issues considered in the hearing; limiting the time parties were allowed to cross-examine BC Hydro witnesses; unreasonably limiting access to confidential information; and improperly conducting itself during an in camera session.

The Utilities Commission review of the electricity purchase agreement took place between November 2004 and January 2005, with a decision published on 17 February. The agreement follows from a Call for Tenders for electricity on Vancouver Island that BC Hydro carried out between 2003 and November 2004.

Under the EPA, Duke Point Power LP would charge BC Hydro $35 million per year over twenty-five years. To run the plant, BC Hydro would have to pay for and supply the gas fuel and pay for operating costs.

For further information:
Tom Hackney (250) 381-4463

Download the complete Notice of Application for Leave to Appeal

Download the GSXCCC news release

Posted by Arthur Caldicott at 08:01 AM

February 26, 2005

Tide turns for power, and for young minds

Louise Dickson
Times Colonist (Victoria)
26-Feb-2005

They're harnessing the tide at Pearson College to keep the lights burning at Race Rocks.

Turbulent tides tumbling by Race Rocks ecological reserve near Metchosin will test how well a new tidal turbine generator stands up to the harsh West Coast environment.

Pearson, which brings together students from around the world for studies and to serve the community, expects the tides to help produce more than enough electricity to replace two diesel generators and provide power to the college's marine education centre on Great Race Rock Island by 2006.

"The project, the first of its kind in Canada, could prove the value of new technology over time and it could be very beneficial to coastal peoples around the world," Stuart Walker, director of Lester B. Pearson College of the Pacific, said Friday.

The $4-million project is a partnership between Pearson College, EnCana Corporation of Canada, and Clean Current Power Systems of Vancouver. EnCana, the largest producer and developer of natural gas in North America, is investing $3 million in the project from its environmental innovation fund.

Clean Current developed and built the prototype of a tidal turbine generator which harnesses the power of ocean currents to produce electricity.

Testing will take place in about 15 metres of water, off Race Rocks, about 10 nautical miles southwest of Victoria. The tidal turbine generator, which functions like an underwater windmill, will be anchored to the seabed, and cables will carry away the electricity it generates.

When the tide flows, the blades turn, explained Glen Darou, president of Clean Current. The blades have a permanent magnet attached to them. When the magnet passes by coils, the coils create electricity. The turbine works when currents are flowing in either direction.

According to Darou, the project will have minimal impact on the environment.

"We will have to disturb the bottom of the ocean with the turbine and cables but it's a fast-growing marine en-

vironment and will recover quickly," he said.

"Anything that can swim in the tidal currents will not swim into the turbine, it will swim around it. But something that floats through like a jellyfish could actually go into it. That's the size of the risk."

The prototype has been tested in fresh water, but Clean Current has to make sure its turbine generator works in saltwater.

"Now we have to prove its operability and maintenance," said Darou.

Clean Current will know in about 18 months how the model and its one moving part -- the rotor -- stands up to corrosion in a harsh marine environment. The turbine will be monitored by underwater cameras. The prototype being tested is 3.5-metres in diameter and can produce enough electricity for 10 houses. Full scale models will be 14 metres in diameter and produce enough electricity for 250 houses.

Darou envisions the day when there will be big underwater tidal turbine generator farms with up to 800 turbines that will produce electricity around the world.

"The end of the dream will be our technology licensed around the world and applied in tidal environments all over the world. It's seeing the technology used and replacing fossil fuels," he said.

The project will run at Race Rocks for five years. After that, Clean Current will sell the prototype to either B.C. Parks or Pearson College for $1.

Clean Current still needs to come up with $1 million to pay for the project, Darou said. He expected the money will come from private investors and the federal government.

The project will help the company and the province evaluate the future of this technology, said B.C. Energy and Mines Minister Richard Neufeld.

Alternative energy will change how we consume fossil fuels over time, said Neufeld. "This is brand new, so let's give it time to see how it works. Let's give it time to see (how) technology can change it to make it more efficient.," said Neufeld.

Posted by Arthur Caldicott at 11:51 AM

February 25, 2005

JIESC files EPA appeal with Court of Appeal

Feb 24, 2005

NO CA032700
Vancouver Registry

COURT OF APPEAL

In the Matter of Utilities Commission Act and
In the Matter of the Orders dated January 27, 2005 and
February 17, 2005 of the British Columbia Utilities Commission

Between: Joint Industry Electricity Steering Committee, Appellant

And: The British Columbia Utilities Commission,
British Columbia Hydro and Power Authority and
Duke Point Power Limited Partnership, Respondents

Notice of Application for Leave to Appeal

TAKE NOTICE that Joint Industry Electricity Steering Committee hereby applies for leave to appeal to the Court of Appeal for British Columbia from the orders of the British Columbia Utilities Commission (the "Commission") pronounced January 27, 2005 (No. L-10-05) and February 17, 2005 (No. E-1-05), at Vancouver, British Columbia (the "Orders") pursuant to section 101 of the Utilities Commission Act, R.S.B.C. 1996, c.473 (the "Act").

1. The appeal is from a Order of a Statutory Body

2. If the appeal is from an appeal under Rule 49 or 53 (6) of the Supreme Court Rules, name the maker of the original decision, direction or order. N/A

3. Please identify which of the following is involved in the appeal: Constitutional/Administrative

AND FURTHER TAKE NOTICE that the Court of Appeal will be moved at the hearing of this application for an order that leave to appeal the Orders be granted so the Appellant may proceed with an appeal to have the Orders set aside, or in the alternative, varied.

The grounds of appeal are:

1. The Commission erred by not disqualifying the Panel on the grounds of a reasonable apprehension of bias.

2. The Commission erred by denying procedural fairness and natural justice to the Appellant, particulars of which include:

a. unduly restricting the scope of the hearing;

b. proceeding with undue haste;

c. unreasonably limiting the Appellant's access to confidential documents and other information; and

d. improperly conducting itself during an in-camera session;

3. The Commission erred in law on grounds to be further particularized once the decision for Order E-1-05 is provided to counsel.

4. Such other grounds as counsel may advise.

The hearing of this proceeding occupied X days.

DATED at the City of Vancouver, in the Province of British Columbia, this 24th day of February, 2005.

BULL, HOUSSER & TUPPER
signed Dan Bennett
Solicitors for the Appellant

To the Respondent: British Columbia Utilities Commission
And To its Solicitor: Mr. Gordon A. Fulton

And To the Respondent: British Columbia Hydro and Power Authority
And To its Solicitor: Mr. Chris Sanderson

And To the Respondent: Duke Point Power Limited Partnership
And To its Solicitor: Mr. Loyola Keough

This Notice of Leave to Appeal is filed by Bull, Housser & Tupper, Solicitors for the Appellant ... Attention: Brian Wallace

To the respondent(s):

IF YOU INTEND TO PARTICIPATE in this proceeding, YOU MUST GIVE NOTICE of your intention by filing a form entitled "Notice of Appearance" (Form 2 of the Court of Appeal Rules) in a Court of Appeal registry and serve the notice of appearance on the appellant WITHIN 10 DAYS of receiving this Notice of Appeal.

IF YOU FAIL TO FILE A NOTICE OF APPEARANCE:

(a) you are deemed to take no position on the appeal, and

(b) the parties are not obliged to serve any further documents on you.


Download the complete Notice of Application for Leave to Appeal

Posted by Arthur Caldicott at 09:28 AM

February 24, 2005

Hydroelectric power's dirty secret revealed

Duncan Graham-Rowe
New Scientist
24 February 2005




Enlarge image


Contrary to popular belief, hydroelectric power can seriously damage the climate. Proposed changes to the way countries' climate budgets are calculated aim to take greenhouse gas emissions from hydropower reservoirs into account, but some experts worry that they will not go far enough.

The green image of hydro power as a benign alternative to fossil fuels is false, says Éric Duchemin, a consultant for the Intergovernmental Panel on Climate Change (IPCC). "Everyone thinks hydro is very clean, but this is not the case," he says.

Hydroelectric dams produce significant amounts of carbon dioxide and methane, and in some cases produce more of these greenhouse gases than power plants running on fossil fuels. Carbon emissions vary from dam to dam, says Philip Fearnside from Brazil's National Institute for Research in the Amazon in Manaus. "But we do know that there are enough emissions to worry about."

In a study to be published in Mitigation and Adaptation Strategies for Global Change, Fearnside estimates that in 1990 the greenhouse effect of emissions from the Curuá-Una dam in Pará, Brazil, was more than three-and-a-half times what would have been produced by generating the same amount of electricity from oil.

This is because large amounts of carbon tied up in trees and other plants are released when the reservoir is initially flooded and the plants rot. Then after this first pulse of decay, plant matter settling on the reservoir's bottom decomposes without oxygen, resulting in a build-up of dissolved methane. This is released into the atmosphere when water passes through the dam's turbines.

"Drawdown" regions

Seasonal changes in water depth mean there is a continuous supply of decaying material. In the dry season plants colonise the banks of the reservoir only to be engulfed when the water level rises. For shallow-shelving reservoirs these "drawdown" regions can account for several thousand square kilometres.

In effect man-made reservoirs convert carbon dioxide in the atmosphere into methane. This is significant because methane's effect on global warming is 21 times stronger than carbon dioxide's.

Claiming that hydro projects are net producers of greenhouse gases is not new (New Scientist print edition, 3 June 2000) but the issue now appears to be climbing up the political agenda. In the next round of IPCC discussions in 2006, the proposed National Greenhouse Gas Inventory Programme, which calculates each country's carbon budget, will include emissions from artificially flooded regions.

But these guidelines will only take account of the first 10 years of a dam's operation and only include surface emissions. Methane production will go unchecked because climate scientists cannot agree on how significant this is; it will also vary between dams. But if Fearnside gets his way these full emissions would be included.

With the proposed IPCC guidelines, tropical countries that rely heavily on hydroelectricity, such as Brazil, could see their national greenhouse emissions inventories increased by as much as 7% (see map). Colder countries are less affected, he says, because cold conditions will be less favourable for producing greenhouse gases.

Despite a decade of research documenting the carbon emissions from man-made reservoirs, hydroelectric power still has an undeserved reputation for mitigating global warming. "I think it is important these emissions are counted," says Fearnside.

Web Links
Intergovernmental Panel on Climate Change
National Greenhouse Gas Inventories Programme
Mitigation and Adaptation Strategies for Global Change


Dam shame

Fred Pearce
New Scientist
16 Nov 2000

Photo: FSP Most of the world's 45,000 large dams don't do their jobs properly. So concludes the first ever global audit of a technology that has cost $2 trillion over the past century.


Since 1900, the world has built one new large dam every day on average. They barricade 61 per cent of the world's rivers. Their reservoirs cover an area about six times the size of Britain.

But "the true profitability of these schemes remains elusive," said Kader Asmal, chairman of the World Commission on Dams. He was speaking in London on Thursday at the launch of the final report of the commission, which was set up by the World Bank.

"There have been precious few, if any comprehensive, independent analyses as to why dams came about, how they perform and whether we are getting a fair return on our $2 trillion investment," said Asmal, who is a former water minister in South Africa.

Dams generate hydroelectricity, prevent floods, irrigate farms and supply water to cities. But they have also wrecked ecosystems and "led to the impoverishment of millions", who lost their land to reservoirs or saw dams destroy their fisheries.

The report calls for an end to dams that are imposed on communities without their agreement. But its most remarkable findings are on the widespread technical failures of dams.

Studies carried out by the commission found that:

• One in four dams irrigate "less than 35 per cent" of the land they were supposed to

• The cost over-runs of construction are 56 per cent on average

• Two-thirds of dams deliver less water to cities than promised. A quarter delivered less than half the promised water

• Over half of hydroelectric dams do not generate as much power as promised

• Some flood-control dams "have increased the vulnerability of river communities to floods"

One reason many dams have failed to deliver is that their reservoirs have clogged up with silt far faster than expected. Every year an extra one per cent of the world's reservoir capacity is taken up with silt. In the worst cases, reservoirs lost more than 80 per cent of their storage capacity to silt in less than 30 years.

Even the claim that hydroelectric dams provide "green" electricity has been undermined by the commission. It concludes that between one and 28 per cent of all artificial greenhouse-gas emissions could be from rotting vegetation in dams.

Asmal plans to present his findings of the "greenhouse effect" of large dams at the climate negotiations in The Hague on Saturday.

More at: www.dams.org


Posted by Arthur Caldicott at 06:09 PM

BPA plan called a job-killer

Lukas Velush
Heraldnet.com
Everett County, WA
24 Feb 2005

sqwalk.com
COMMENT: This article describes the impacts on employment and industrial electricity users in Washington State, if electricity rates were to be increased in the 2006 budget proposed by President Bush. Interesting timing, given the opposition to the Duke Point Power project by BC's industrial electricity users (see the Nanaimo Daily News article also posted today (link), and the statement by BC Hydro that the Duke Point project will result directly in the need to increase electricity rates by 2% across the province. - Arthur Caldicott
sqwalk.com


Washington and Oregon could lose 40,000 to 60,000 jobs if a proposal by President Bush increases the region's electricity prices, a Portland energy economist said.

Job losses would rival the 70,000 jobs lost in the two states during the record electricity price run-ups during the 2000-2001 West Coast energy crisis, said economist Robert McCullough, managing partner of Portland-based McCullough Research.

McCullough used federal data on electricity rates, economic activity and jobs to estimate the region's potential job losses.

Bush's 2006 budget proposes to as much as double the electricity rates the Bonneville Power Administration charges to utilities, including the Snohomish County PUD. The change is intended to help pay down the national debt.

If the change is made, it would squeeze Snohomish County's economy, which is just now starting to rebound from the recession and the energy crisis.

McCullough estimates that Washington state would lose 21,000 to 32,000 jobs. It's unknown how many jobs would be lost in Snohomish County, he said.

The county was hit hard by the recession and energy crisis. The PUD's rates went up more than 50 percent in 2001, and its rates are still among the state's highest.

"Our recovery is just now beginning," Snohomish County Executive Aaron Reardon said. The proposal would "have an adverse impact on our recovery, if not wipe it out entirely," he said.

Revenue could double

The Bush proposal estimates that the government could collect $12 billion by making federal energy wholesalers such as BPA charge market rates for electricity that has been sold at cost for decades.

Based on today's market rates, the $2.4 billion that BPA now takes in each year could increase to nearly $5 billion in five years.

Bush's plan calls for gradually raising power prices to market rates, which now are 4 cents to 6 cents per kilowatt-hour. Currently, BPA sells its electricity for 3.1 cents per kilowatt-hour.

If the market rate were 5 cents per kilowatt-hour, BPA's rates would go up by 66 percent. BPA raised its rates by 46 percent in 2001.

It's too early to estimate what such a rate hike would do to PUD rates. Because the PUD buys 80 percent of its electricity from BPA, it's guaranteed that rates would increase, said Dave Aldrich, president of the PUD's governing commission.

"If Bonneville does have to raise its rates, it's going to be difficult for everyone," he said.

The PUD has 295,000 customers, many of whom have struggled to keep up with the skyrocketing rates. A worst-case planning projection the PUD recently did offers some insight.

In the scenario, the PUD estimated it would cost an extra $400 million over the next 20 years just to replace the electricity it gets from BPA's lone nuclear power plant, the Columbia Generation Station near Richland.

That means that going to the open market to replace just 10 percent of the electricity the PUD needs for customers would push its projected electricity bill over the next 20 years from $2.5 billion to $2.9 billion.

Effect on industry

Such scenarios aren't necessary for figuring out what effect a 66 percent rate hike would have on energy-intensive businesses such as Kimberly-Clark Corp.'s Everett paper and tissue mill and the Boeing Co. assembly plant, Aldrich said.

Kimberly-Clark spent $16 million on electricity in 2004, and the company has struggled to pay the PUD's rates for the past three-plus years.

"This business was founded on low-cost electricity," mill manager Scott Helker said recently. "This is extremely frightening for our operation."

Boeing is more insulated from electricity prices than Kimberly-Clark. Even so, rising rates would hurt, said Keith Warner, Boeing's utilities manager.

"Before the energy crisis, the Pacific Northwest had the lowest electricity prices anywhere we operate," Warner said. "That has flipped."

Boeing is in no danger of relocating if electricity prices go up, he said.

"Our congressional delegation knows very well about what industry is going to feel about raising rates again after what we went through a couple of years ago," he said.

Snohomish County lost 13,000 jobs from 2001 to 2004.

"The last thing we want to encourage is a huge spike in energy costs," said Diana Dollar, vice president of community development for the Economic Development Council of Snohomish County.

"That (could) translate into jobs not coming into Snohomish County or jobs leaving Snohomish County."

www.heraldnet.com/stories/05/02/24/100loc_bpa001.cfm

Posted by Arthur Caldicott at 11:55 AM

Duke Point power plant appeal expected to be filed this week

Robert Barron
Nanaimo Daily News
24 Feb 2005

An appeal of last Thursday’s decision by the B.C. Utilities Commission to allow a gas-fired electrical generation plant at Duke Point is expected to be filed with the B.C. Court of Appeal by the end of the week.

Brian Battison, a spokesman for the Joint Industry Electrical Steering Committee (JIESC), said the committee is filing the appeal based on the manner in which the BCUC review process of the planned $280-million 252-megawatt plant was conducted,

“We’re in the process of coordinating our activities to get the appeal filed as soon as possible,” he said.

“The court will decide when we’ll get our hearing, but we expect the court will hear our appeal pretty quickly. We’re hoping to have the BCUC decision overturned, and we understand some of the other groups opposed to this project may cooperate with us in this appeal as well.”

The JIESC, which represents the major industrial users of purchased electrical power in the province’s pulp and paper, mining and mineral processing and electro-chemical industries, was an intervener during the BCUC review process of the proposed plant, which is to be built and operated by Alberta’s Pristine Power who will sell the power to B.C. Hydro.

The JIESC has adamantly maintained that there are more inexpensive ways to meet Vancouver Island’s energy needs than building the plant, and has stated B.C. Hydro’s Call for Tender process, that resulted in Pristine being chosen to build the plant, effectively eliminated all other applicants but those advocating building a gas plant.

Posted by Arthur Caldicott at 11:44 AM

Duke Point Power – still the wrong solution for Vancouver Island

Thomas Hackney
Times-Colonist
24 Feb 2005

BC Hydro has flip-flopped between two basic justifications for the Duke Point plant: the capacity situation on Vancouver Island and BC’s long-term requirements. When confronted with evidence that the Island’s electricity supply can effectively be bridged for a year until new sub-sea transmission cables will be in service, BC Hydro responds that Duke Point is needed for BC’s long-term supply. But when challenged that the long-term cost of gas may well make it prohibitive to run the plant, Hydro switches back and claims Duke Point is needed to cover the one or two year gap between the 2007 zero-rating (NOT decommissioning) of some existing cables and the in-service date for new cables, which the BC Transmission Corporation confidently expects by October 2008.

Actually, the Duke Point plant is a relic of the Glen Clark government’s 1996 energy scheme, whereby BC Hydro was ordered not to renew the sub-sea cables and to build on-Island gas-fired generation instead.

There is a simple but misleading logic to the formula that (to paraphrase), “The cables [actually, just some of them] will be retired; therefore the lights are going out; therefore we need more power plants.” But claims that the Island is facing blackouts defy the evidence.

During last January’s record peak loads, BC Hydro’s on-Island service was NOT curtailed, as claimed by Jeff Myers (President of Pristine Power, Duke Point Power’s parent company: Scrutiny attests to power project's value, 21 January). We experienced those record loads precisely because the system DID meet all the extra demand, carried by the aging High Voltage DC cables.

And what happens after the HVDC cables are zero-rated in 2007? Yakout Mansour, senior Vice-President of BC Transmission Corporation, has testified and said publicly that there are reasonable bridging measures. And it is emphatically NOT true that, as Mr. Myers claims, “the Island's capacity shortfall cannot be met by replacing the cable alone.” Rated at 600 MW, the 230 kV system has ample capacity to meet present and near-future needs.

Why do the GSX Concerned Citizens Coalition and others (including industrial users) want renewed cable transmission instead of on-Island gas-fired generation? The answers are, essentially, balance and cost.

Granted, BC Transmission Corporation strongly prefers not to employ the bridging measures. Granted, BCTC supports on-Island generation to enhance on-Island service. But it is not BCTC’s job to weigh system security against broader social costs. At the Town Hall Meeting in Nanaimo last January, public submissions on the Duke Point Plant were overwhelmingly opposed, with a large majority of presentations linking the power plant to global warming and climate change and Canada’s international commitment, under Kyoto, to reduce greenhouse gas emissions. The Duke Point Power proposal has no effective plans to offset the 800,000 tonnes of carbon dioxide per year that would be emitted.

Regarding electricity costs, Jeff Myers of Pristine claims: “Duke Point's economics are sound. Duke Point will only run when economic.”

The economics are certainly sound for Pristine Power. To run the plant, BC Hydro has to supply the gas, taking all the fuel price risk, and pay the operating costs. But BC Hydro also must pay $35 million per year over the next twenty-five years – $875 million – even if the plant is never run. Turning off the plant when gas prices are high will be small comfort to BC Hydro ratepayers.

Since 2000, the GSX Concerned Citizens Coalition has campaigned against BC Hydro’s electricity strategy for Vancouver Island, which initially included a pipeline and a 640 MW power plant in the Duncan area, as well as the 252 MW plant currently proposed for Duke Point. Having participated in three regulatory reviews, (one federal; two before the BC Utilities Commission), the Coalition is well qualified to speak on this issue. Our evidence and arguments are extensively cited in the Utilities Commission’s 2003 decision to reject Duke Point’s predecessor, the Vancouver Island Generation Project.

The Coalition believes we should take a long-term, balanced view of the Island’s electricity needs. If BC Hydro can get through its present crisis mode of thinking, it will, hopefully, start weighing the long-term advantages of non-fossil fuel energies. They are inexhaustible, not subject to price volatility, and they do not further global climate change.

Thomas Hackney
Thomas Hackney is President of the GSX Concerned Citizens Coalition

Posted by Arthur Caldicott at 07:56 AM

February 22, 2005

Recent letters:
Lights aren't going out & Energy arrives with tides & We'll pay and pay

AD Fisher, Times-Colonist, 22 Feb 2005
Ian Gartshore, Times-Colonist, 22 Feb 2005
John Volkovskis, Times-Colonist, 23 Feb 2005




The lights aren't really going out

AD Fisher
Times Colonist
22 Feb 2005

Re: "Island needs more power," Feb. 19.

The Times-Colonist editorial said the lights are going out and the electric heat is going off if a gas-fired electricity generation plant isn't built on Vancouver Island in two years.

That's just nonsense.

The big power outages in North America were not because of insufficient capacity but because electrical power transmission and sales companies manipulated or failed the system. Power outages on Vancouver Island happen because trees fall on the power lines.

In the real world, the electrical cables that connect us to hydro power are not being taken out of service in 2007, they are being de-rated or having their status changed in Hydro's planning system.

B.C. Transmission Corp. says it thinks the cables will be in service during the winter of 2007. And, they are working at renewing or enlarging the cable system by 2008.

The biggest electricity consumer on the Island has said it is willing to talk to Hydro about demand management. None of this would add the cost of a $280-million power plant and its fuel to the electricity bill of British Columbians for 25 years.

When the whole wrongheaded business of building gas-fired generation on Vancouver Island started almost 10 years ago, the idea was to burn natural gas that would hopefully be produced from sources in B.C.

Five years ago when that idea wouldn't sell, Hydro began saying, "the lights are going out," and the TC bought it.

Dr. Tony Fisher is a Cobble Hill resident and director of the GSX Concerned Citizens Coalition

TOP


Energy potential arrives with the tides

Ian Gartshore
Times Colonist
22 Feb 2005

Re: "Island needs more power," Feb. 19.

San Francisco and New York are seriously looking at ocean waves for both immediate and future use.

San Francisco is studying harnessing the power of offshore waves as well as ocean tides that surge beneath the Golden Gate Bridge. It's looking at clean power as an option to replace two old power stations fired by natural gas.

Hmmm. They are realizing that even natural gas is on its way out, and that having free energy makes economic sense.

In addition to having reliable, clean (and out of sight) energy that will last as long as there is the moon and wind, using tidal energy creates far more jobs than does the building and operating of fossil-fuelled power plants.

All the major industrialized countries in the world are putting serious money into developing this kind of energy. Not in B.C., even though we likely have enough tidal power alone to keep the lights on throughout Vancouver Island, indeed, the whole province.

If we replaced our unfounded fears with vision, then we could move beyond our resource-based economy into something truly sustainable. Is there any vision in Victoria?

Ian Gartshore is with Energy Solutions for Vancouver Island in Nanaimo.

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We'll pay and pay for Duke Point deal

John Volkovskis
Times Colonist letters
23 Feb, 2005

Even disregarding the environmental concerns and the rigged procedure, how the B.C. Utilities Commission could approve the ridiculous gas-fired Duke Point project (the day after the Kyoto accord went into effect) as the most "cost effective" way to generate electricity for Vancouver Island defies logic.

Under this contract, the full risk of escalating natural gas prices for the next 25 years rests with Hydro customers. That's us, folks.

This deal stinks.

John Volkovskis,
Gabriola Island.

TOP


Posted by Arthur Caldicott at 08:04 AM

February 21, 2005

GSXCCC asks EAO: what is status of EA for VIGP & DPP

sqwalk.com
UPDATE:On 08 April 2005 the GSXCCC received a response to this query from George Abbott, the Minister of Sustainable Resource Management as follows:

Thank you for your letter of February 21, 2005, identifying material reasons why Environmental Assessment Certificate E03-03 (Certificate) issued to the Vancouver Island Energy Corporation (VIEC) for the Vancouver Island Generation Project (the Project) should not be applied to the Project without an appropriate public process.

The province has not received an application from VIEC to amend the Certificate. If the Environmental Assessment Office (EAO) receives an amendment application, the Ministries of Water, Land and Air Protection and Energy and Mines will be consulted to determine whether there is any material change to the design, location, construction or operation of the Project, and whether the change has the potential for significant adverse effects. The Snuneymuxw First Nation would also be advised if such an application is received by EAO. If it is determined there will be a material change to the Project and the change will have a significant adverse effect, your organization will be given an opportunity to provide input.

So, the VIGP project could change from a gas-fired generation plant to a coal-fired plant or a bunch of hamsters on wheels, but if someone doesn't apply to the EAO to have it reviewed, the EAO has no interest. Does the EAO have no duty to inquire into situations where there's a reasonable likelihood of jurisdiction? - Arthur Caldicott
sqwalk.com

GSX Concerned Citizens Coalition
302 - 733 Johnson Street, Victoria, BC, V8W 3C7
Telephone 250-381-4463, Fax 250-381-4407
Email: thackney@island.net Website: www.sqwalk.com

21 February 2005

Joan Hesketh,
Executive Director
Environmental Assessment Office
2nd Floor 836 Yates St
PO Box 9426 Stn Prov Govt
Victoria BC V8W 9V1
FAX: 250 356 7477

Re: Environmental Assessment Certificate E03-03,
the Vancouver Island Generation Project
and the Duke Point Power Project

Dear Ms. Hesketh,

Further to the GSX Concerned Citizens Coalition’s (“GSXCCC”) letter of 5 January, addressed to Minister Abbott and copied to your office, we wish to reiterate our information concerning material reasons why the Environmental Assessment Certificate issued to Vancouver Island Energy Corporation with respect to the Vancouver Island Generation Project (VIGP) should not be applied to the Duke Point Power (DPP) project without an appropriate public process.

While VIGP and DPP have many similarities, they have the following material differences:

• DPP has consigned the majority of its capacity and energy to BC Hydro within an Electricity Purchase Agreement (EPA) that provides for flexible dispatchability. The EPA, Appendix 3, contains detailed specifications (including ramp up time, fuel use, and payment formula) for multiple monthly cold, warm, and hot starts. VIGP, in contrast, was a base load plant.

• The nominal capacity of DPP is 252 MW without duct firing and 280 MW with duct firing. The capacities of VIGP were 265 MW and 295 MW respectively. These differences betray differences in equipment. In fact, the exact models of key DPP components may not have been selected as yet.

• In the BCUC hearing concerning DPP, a BC Hydro representative signaled a desire for the addition of dual fuel capability:

MS. HEMMINGSEN: …We could conceivably enter into an agreement with them to revise the terms of their EPA. I would also like to get the dual fuel capability option in there as well …
(BCUC Hearing, Ex parte in camera session, Transcript 8, p. 1742, lines 7-14)

Pursuant to Section 4 of the Certificate, any material change to the design, location, construction, or operation of the Project requires that VIEC apply in writing for an amendment. We are advised that no such application has been made. However, news reports today are that DPP intends to commence construction almost immediately.

Please advise GSXCCC what process will be followed by the EAO or the Minister of Sustainable Resource Development to ascertain and assess possible material changes in the project. Please advise GSXCCC what steps have already been taken by the EAO or the Minister to carry out that process and what steps remain to be taken. Please advise us what opportunities will be made available to the public to have input into this process.

We also ask that you inform the GSXCCC if any application is received in respect of the Environmental Assessment Certificate.'

We again remind you that there was strong public concern about the VIGP proposal in 2003, and we urge you not to permit the VIGP Certificate to be used for a de facto different project or to make any changes in the Certificate without a thorough review, including full public participation.

Sincerely,


Thomas Hackney, President

cc. George Abbott, Minister, Sustainable Resource Management

Download this letter

Posted by Arthur Caldicott at 07:47 PM

Scrutiny attests to power project's value

Jeff Myers
Pristine Power
Special to Times Colonist
21 Feb 2005

sqwalk.com
COMMENT: Jeff Myers of Pristine Power has taken over from BC Hydro with "false-truths and misinformation" on the need for more power on Vancouver Island. The Duke Point project remains a long term, costly "solution" entirely inappropriate to the nominal "need", which is to bridge from 2007 to 2008 during the period when one set of cables gets derated, and before a new set of cables becomes operational. See the letter by Yakout Mansour of BC Transmission Corporation about BCTC's bridging options - which render Duke Point Power unnecessary.

As the new kid on the Vancouver Island energy block, Jeff Myers could be forgiven for not being entirely up to speed on the facts, especially as his job is to sell an electricity plant, not to address the optimum solution to the Island's energy needs and BC's needs beyond the present capacity issue. Other parties have been participating in regulatory reviews around this matter for the past five years and have had a chance to become more informed on the relevant -- sometimes difficult and technical -- evidence.

As an initial comment, there is no basis to consider the power blackouts back east as relevant to Vancouver Island -- the facts simple don't support the comparison - Thomas Hackney
sqwalk.com

The proposed power project at Duke Point has been the subject of a lengthy public hearing. After considering the evidence, the B.C. Utilities Commission approved the project last week.

However, despite the long-term benefits of the project, a few groups chose to condemn the project outside of the hearing, often with false arguments or misinformation.

Fortunately, a close read of the public record -- available on the Web at www.bcuc.com -- shows the evidence in support of the project to be most compelling, while answering two key questions in the affirmative.

Does Vancouver Island need a new source of long-term electrical generating capacity?

If so, is the proposed Duke Point power project the right resource to meet this need?

Vancouver Island faces a deficit of electrical generating capacity. The Island's need for new capacity is driven by increasing demand and the retirement of an undersea transmission cable. This "capacity deficit" means that growing demand for power may soon exceed supply during the colder winter months from October to March, when demand is greatest.

The capacity deficit became evident last month when electricity demand on the Island exceeded B.C. Hydro's forecasted demand for 2008, and some industrial customer's supply was curtailed.

The BCUC has been perfectly clear about the looming capacity deficit. The commission determined in 2003 that "there is a capacity shortfall on Vancouver Island, commencing in the winter of 2007/08," and that "the appropriate next resource addition should be on-island generation."

Why should Vancouver Islanders care if there is a capacity deficit? Having enough capacity means that as an essential service, electricity will be there when you need it, 24/7. The importance of reliable electricity and infrastructure was demonstrated during the eastern seaboard blackouts in 2002.

To solve the capacity problem, the BCUC encouraged B.C. Hydro to hold a competitive tendering process in 2003. Pristine Power became interested in Duke Point because B.C. Hydro's call for tenders seemed a competitive and fair opportunity.

We were also encouraged that BCUC oversight would free the process from the political interference that dogged energy decisions in the 1990s.

B.C. Hydro took two extraordinary measures to ensure the tender process was fair and would acquire the most cost effective resource.

First, it brought in an independent reviewer. PricewaterhouseCoopers found the call for tenders to be completely fair and appropriate. All 23 expressions of interest were treated equally with no bias, regardless of their technology, be it natural gas, coal, wind or wood waste and garbage-derived fuel.

Second, it ordered a "cost effectiveness analysis" of the leading bid. This extra due diligence involved a financial and technical evaluation of other options to ensure there were no reasons to reject the lead bid, and that its selection was in the best interest of B.C. Hydro's customers.

After such a rigorous process, Pristine Power is proud to have led the Duke Point Power consortium that was selected as the most cost-effective solution for ratepayers. Still, despite the evidence, other parties, many of whom were unsuccessful bidders, insist the Duke Point facility is not the answer and will cost too much.

Some critics claim the capacity shortfall can be fixed by replacing the transmission cable. To the contrary, the B.C. Transmission Corp. stated that a combination of new on-Island generation and transmission is the best option; the Island's capacity shortfall cannot be met by replacing the cable alone.

As for Norske's proposal, the BCTC stated that it is "unable to solve capacity deficits on Vancouver Island in 2007 and beyond."

Others argued for green and alternative energy projects, but resources such as wind or micro hydro are constrained by the elements and cannot provide the dependable capacity required by Island residents.

In terms of the environment, B.C.'s Environmental Assessment Office determined that Duke Point will not adversely affect air quality or human health.

Duke Point's economics are sound. Duke Point will only run when economic; its average cost of power is estimated to be $68 per MWh, making it the most cost-effective resource considered.

Other economic benefits of the project include a $50-million savings for B.C. Hydro by engaging a private partner to build the facility, more than $280 million in new investment and 200 construction and 16 new full-time jobs in Nanaimo.

The hearing's record shows the Duke Point power project, after undergoing extensive public scrutiny, to be good for Vancouver Island and cost effective for B.C.'s ratepayers. No substantive evidence indicated otherwise.

- Jeff Myers is president of Pristine Power Ltd.

Posted by Arthur Caldicott at 10:22 AM

Cables still needed for Island power

Yakout Mansour
BC Transmission Corp.
Times Colonist
21 Feb 2005

Re: "Cable connections make for strange bedfellows," Feb. 13.

The article focused on the aging undersea cables as the "centre of debate," with regards to serving the electricity needs of Vancouver Island. The high voltage direct current (HVDC) system consists of overhead lines and undersea cables plus terminal stations at either end of the circuit. These terminals convert alternating current (AC) to direct current (DC), and then back to AC again.

It is the conversion equipment in these terminals, rather than the cables themselves, that will reach end-of-life sooner.

To serve Vancouver Island supply needs in the short-term, BCTC has a number of contingency actions that can be employed. Used in combination, these operational measures could give us a reasonable bridging mechanism, should new on-Island generation not be ready by 2007.

It is important to note that such contingency actions, while reasonable in the short-term, cannot be relied upon as reliable electricity supply for Island residents in the long-term.

The article may have incorrectly left the impression that BCTC views its transmission project as providing the same service as on-Island generation.

As an independent transmission provider, BCTC does not hold an opinion on the Duke Point power plant or, in fact, any other generation project. However, it is BCTC's view that the long-term solution to reliably serving Vancouver Island requires both on-island generation and transmission reinforcement.

- Yakout Mansour, senior vice-president, System Operations and Asset Management, British Columbia Transmission Corporation.

Posted by Arthur Caldicott at 10:15 AM

February 18, 2005

News coverage of Duke Point EPA approval

Editorial, Times-Colonist, 19 Feb 2005
Scott Simpson, Vancouver Sun, 18 Feb 2005
Andrew Duffy, Times-Colonist, 18 Feb 2005
CBC news, 17 Feb 2005
The Province, 17 Feb 2005


Gas-fired electrical plant gets go-ahead

Scott Simpson
Vancouver Sun
18 Feb 2005

BC Hydro and its private-sector partner can proceed with plans to build the Duke Point electricity plant to serve Vancouver Island, the B.C. Utilities Commission (BCUC) ruled Thursday.

The commission approved Hydro's proposed 25-year purchase agreement with Duke Point Power, saying the project creates enough electricity capacity to stave off a projected shortfall and the threat of brownouts on the island in the winter of 2007-'08.

"We're pleased that the commission heard all the evidence and weighed it carefully, and has allowed this electricity purchase agreement, and sees it in the public interest," said Bev Van Ruyven, Hydro vice-president for distribution.

The 262-megawatt natural gas-fired plant will be built near Nanaimo at a cost of $285 million.

That cost will be borne by Duke Point Power, and does not include $120 million that Hydro itself invested in an earlier, failed attempt at the project.

Opponents of the plant include citizens' groups, pensioners, and B.C.'s main resource industries, which argued in a hearing before the commission that Hydro should seek less expensive alternatives.

The Joint Industry Electricity Steering Committee, representing forestry, mining and electro-chemical companies, estimates BC Hydro customers will pay out about $4.5 billion for Duke Point over the 25-year deal -- with the cost of natural gas representing the project's greatest expense.

The BCUC decision "is subjecting all BC Hydro customers to unacceptable high levels of cost and financial risk" according to the industry steering committee, which is concerned the adverse impact that rising gas prices could have on the province's biggest businesses.

The committee says Hydro's fixed costs will increase $60 million a year, boosting electricity rates for all customers by at least two per cent.

Representatives of GSX Concerned Citizens and the industry steering committee both indicated they will resort to the courts in a last-ditch attempt to derail the project, with both groups alleging that the BCUC decision was biased.

"We think the thing doesn't make any sense and we are planning to file an appeal as soon as we can get the paperwork together, which is probably next week," said JIESC executive director Dan Potts.

In 2003, the utilities commission had rejected a plan by BC Hydro to build and operate a plant that is virtually identical to the one it approved Thursday. However the earlier plan cast Hydro as the proponent, while the revised project will be carried out by an Alberta-based company.

In a news release, the commission said it "has a mandate to ensure cost-effective reliable electricity service on Vancouver Island." The commission did not release its reasons in support of the decision, saying those will follow "in a couple of weeks."

In an interview, BCUC executive director Bill Grant said the commission is moving quickly because it is mindful of Hydro's desire to have the plant in place well before the winter of 2007.

He noted that it would take a combination of unfortunate events, including a sustained cold spell, to precipitate a brownout in the 2007-'08 winter -- but said the commission is not willing to take that risk.

"The commission's focus on reliable supply to Vancouver Island was one of the key drivers in terms of promising to review, and determine whether it could approve or not the energy project agreement between the two parties," Grant said

By 2008, the B.C. Transmission Corp. is expected to replace the existing, aging lines, diminishing the risk.

Tom Hackney, president of GSX Concerned Citizens Coalition, found it ironic that Hydro and the BCUC committed B.C. to a project that will annually produce more than 900,000 tonnes of greenhouse gases the day after the world celebrated the Kyoto Accord to reduce greenhouse gas emissions.

Speaking for the Duke Point partnership, Pristine Power president Jeffry Myers said in a news release that the project is "the most cost-effective source of dependable capacity for Vancouver Island."

He said 200 jobs will be created in Nanaimo during construction of the facility, 16 permanent jobs, and $8 million in annual local spending.

Construction will also drive $40 million in new spending into the community, and more than $8 million in local spending every year.

DUKE POINT POWER PLANT:

Electricity capacity: 262 megawatts

Customers served: Duke Point meets 10 per cent of Vancouver Island electricity needs.

Cost of Duke Point plant: $285m

Impact on BC Hydro customers: electricity rates to rise two per cent by 2007

Length of deal: 25 years

Cost of plant over life of deal, estimated: $4.5 billion

Construction jobs: 200

Permanent jobs: 16

Source of natural gas for Duke Point: Terasen Gas

© The Vancouver Sun 2005

TOP


Power project clears hurdle

Andrew A. Duffy
Times Colonist
18 Feb 2005

The B.C. Utilities Commission Thursday gave life to the Duke Point Power Project in Nanaimo by approving an electricity purchase agreement between B.C. Hydro and Pristine Power, the company that will build the plant.

The commission approved a 25-year agreement that will see Hydro pay Pristine $45 million annually to provide electricity from the $280 million, 252-megawatt plant. It will be fuelled by natural gas.

"We're obviously pleased with the decision," said Bev Van Ruyven, senior vice president of distribution for Hydro.

"We felt we did a good job of presenting our evidence."

Hydro says the Duke Point project is the best way to provide customers with the reliable capacity required to meet Vancouver Island's anticipated supply shortfall in 2007 when some of the undersea electricity cables that run from the mainland and are deemed unreliable.

Pristine's project, which Hydro announced as the winning bid in its call for tender process in November, replaces the Vancouver Island Generation Project, a 265-megawatt plant Hydro intended to build on the same site at a cost of $370 million.

That project was originally rejected by the utilities commission as too large and costly a means of making up the Island's energy shortfall, prompting the call for tenders.

"We're thrilled the commission has ruled in favour of the project," said Harvie Campbell, vice-president of Pristine.

"We thought the evidence was more than just compelling."

But it still hasn't convinced opponents of the project who were lining up Thursday to file appeals.

"The decision is not a surprise but it is a disappointment, and the (Georgia Strait Crossing Concerned Citizens Coalition or GSXCCC) intends to instruct its counsel to proceed with an appeal to the B.C. Court of Appeal," said the organization's president Tom Hackney. He said they would appeal on the basis of apprehension of bias.

The coalition claims the Duke Point Project locks consumers into 25 years of expensive and polluting power, and the Island's needs can be met by upgrading existing transmission lines in combination with more careful management of industrial use of power.

During the hearings, the coalition sought to disqualify the utilities commission panel because of an in-camera discussion the panel had with B.C. Hydro representatives. According to the coalition, that meeting showed the panel prejudged the outcome of the hearing before receiving arguments and cross-examination from intervenors.

The motion was dismissed at the time.

"We think we have serious and substantive grounds for appeal," Hackney said Thursday.

Hard on their heels was the Joint Industry Electricity Steering Committee which made it clear their appeal will be filed next week.

"We are very disappointed by

the BCUC decision and we will be appealing the ruling to the appropriate court in the next several days," said

committee executive director Dan Potts. "Not only did the evidence fail to support the Duke Point project, the regulatory

proceeding lacked the required fair-

ness. The perception of bias and procedural unfairness, at this point, are the issues that form the legal basis of our appeal."

Hackney said when they file an appeal they are likely to ask for a stay of the electricity purchase agreement, meaning the plant would be in limbo until a decision is handed down.

Neither Hydro nor Pristine could say what an appeal would mean for the timeline of the project, though Van Ruyven said it would cause Hydro some concern.

"We hope it happens in an expedited way because it does raise some issues for us," she said. "The risk for us is reliability (of supply)."

Pristine could face more of the risk in an appeal as they are now under contract to deliver the plant in service by May 2007. That's a 24-month window, which the company has said provides some slack as it has built similar plants in 18 months.

"Right now we're not anticipating any impact in our schedule, but as with any kind of delay it may have an impact on our being able to nail the deadline and that could have an effect -- people will be without power," said Campbell.

At this point, Pristine expects work to start at the Duke Point site as early as this spring.

The chairman of the utilities commission panel, Robert Hobbs, did not provide reasons for the approval. They are expected to be released in the first week of March.

TOP


Duke Point power project gets green light

CBC News
Feb 17 2005 07:01 PM PST

VANCOUVER – Plans for a controversial gas-fired power plant at Duke Point south of Nanaimo have passed its last major regulatory hurdle.

Hydro had planned to build its own plant at Duke Point. But the BCUC rejected that proposal and told Hydro to look to the private sector for a supplier instead.

Now the Commission has approved Hydro's plan to buy electricity from a plant to be built by Duke Point Power.

Hydro senior vice-president Bev van Ruyven says she knows there will be continued opposition to the public-private partnership project.

But she says Vancouver Island needs a new power plant to avoid a shortfall of electricity in 2007.

"We've got to keep the lights on on Vancouver Island, and we really are running out of time and butting up against that winter '07 date," she says.

The Utilities Commission had held hearings on the Duke Point proposal earlier this winter.

Opponents of the power plant are already planning to appeal the decision. Tom Hackney of the Georgia Strait Crossing Concerned Citizens Coalition says it's a mistake to build another plant that will add to greenhouse gas emissions.

"We're disappointed but not surprised. The GSX Concerned Citizens Coalition continues to believe this is the wrong project to meet Vancouver Island's needs," he says.

Hackney says short-term needs can be met by transmitting power over new lines being built from from the Lwer Mainland – and the long-term needs by developing alternative energy sources on the island.

The developers say they hope to break ground as early as next month.
TOP


Controversial Duke Point power plant clears another B.C. regulatory hurdle

The Province
February 17, 2005

VICTORIA (CP) -- A controversial proposal to build a gas-fired electricity plant at Duke Point, near Nanaimo, is one step closer to reality.

The B.C. Utilities Commission has approved a contract between B.C. Hydro and the Duke Point Power Limited Partnership.

The plan calls for a 262-megawatt power plant that would be in service by 2007.

Hydro says the natural gas-fired generator is needed to meet Vancouver Island's increasing demand for electricity.

A Hydro spokeswoman says the utility recognizes there are still risks and more hurdles, including a strong chance the utilities commission decision will be appealed.

But a coalition of industrial power users questions the decision to advance the project.

Building a gas-fired electrical generating plant on Vancouver Island defies logic, says the Joint Industry Electricity Steering Committee.

"We are very disappointed by the (commission) decision to grant approval to proceed with the Duke Point project and we will be appealing the ruling to the appropriate court in the next several days," executive director Dan Potts said in a news release.

"Not only did the evidence fail to support the Duke Point project, the regulatory proceeding lacked the required fairness. The perception of bias and procedural unfairness, at this point, are the issues that form the legal basis of our appeal."

The project puts Hydro customers at unacceptable risk of high levels of cost and financial risk, the lobby group said.

It will increase Hydro's annual fixed costs by about $60 million a year. Even before operating costs are included, customer's rates will increase by more than two per cent, the committee claimed.

The group argued that a planned new transmission line from the B.C. mainland, scheduled for completion in 2008, will address Vancouver Island's additional power needs in the short term and there are other options to meet future demands.

© Canadian Press 2005

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Island needs more power

Editorial
Times Colonist (Victoria)
19 Feb 2005

It may seem odd that with gas prices sure to rise in future, and the same week that the Kyoto protocol came into effect, the construction of a 252-megawatt gas-fired plant to provide reliable energy to Vancouver Island should receive regulatory approval.

But what other choice is there? B.C. Hydro, which has made the agreement with the private partnership that will build the $280-million plant, says the Island's peak demand forecast for 2007 has already been reached.

Alternative energy sources such as wind, solar and micro-hydro production from waterfalls can't provide a dependable capacity. Burning wood waste would be a very bad choice environmentally.

The cables carrying power from the mainland are nearing the end of their life, and it's too risky to rely on customers to shift peak demand.

We don't have time to waste -- though appeals must be allowed to take their course. This is a 25-year deal. If by then we find a better way of meeting the Island's peak demand, we can look at it then.

We need Duke Point on line by May 2007 as promised, or winters are going to be awfully dark around here.

TOP


Posted by Arthur Caldicott at 08:27 AM

February 17, 2005

GSXCCC: BCUC decision means 800,000 tonnes of new CO2 emissions

GSX Concerned Citizens Coalition
304 - 733 Johnson Street, Victoria, BC, V8W 3C7
Telephone (250) 381-4463
Email: thackney@island.net Website: www.sqwalk.com

For Immediate Release: February 17, 2005

Victoria--The GSX Concerned Citizens Coalition (GSXCCC) is disappointed but undeterred by today's B.C. Utilities Commission (BCUC)decision to approve an Electricity Purchase Agreement (EPA) between BC Hydro and Duke Point Power Limited Partnership.

"We have instructed our legal counsel to file an appeal with the BC Court of Appeal," stated GSXCCC president Tom Hackney. "We are not alone in believing that a reasonable apprehension of bias exists on the part of the commission panel." he said.

GSXCCC and other intervenors presented evidence that the EPA is not in the public interest, as it will lock energy consumers into 25 years of expensive and polluting power. They argued that Vancouver Island's power needs can be better met by upgrading the existing transmission lines, industrial load management and the development of clean renewable energy. Renewed transmission cables are scheduled to go into service in 2008, just one year after Duke Point is scheduled to come on stream.

Instead, the Duke Point plan will cost $35 million per year over 25 years, plus fuel costs, plus operating costs.

"Duke Point Power will more than wipe out the conservation efforts of every Vancouver Islander if they reduced their greenhouse gases by participating in the One Tonne Challenge," observed Hackney. "One day after the world celebrated an international accord to reduce emissions that cause climate change, BC Hydro and BCUC are committing us to more than 800,000 tonnes of new greenhouse gas production," he said.

- 30 -

For more information contact:
Tom Hackney, GSXCCC President: (250) 381-4463
Peter Ronald, GSXCCC Director: (250) 381-8321
Arthur Caldicott, GSXCCC Director: (250) 370-9930 x.22, (250) 753-3459

BCUC Order

BCUC News Release

Download this news release

Posted by Arthur Caldicott at 03:00 PM

Island power project is coming together just in time

Editorial
Vancouver Sun
February 17, 2005


sqwalk.com
COMMENT: Is the BCUC leaking info to the Vancouver Sun? Is the BC Hydro communications machine buying lunches for Sun editorialists?

This editorial, shallow and half-informed in its reasoning, is also out of character for the Sun, which has largely ignored the last five years of energy issues on Vancouver Island. That's not to ignore reporter Scott Simpson's attention to Duke Point events, and the occasional op-ed by Dr. Mark Jaccard.

Well, whatever. Let's hope at the least that today's decision by the BC Utilities Commission on the Electricity Purchase Agreement between BC Hydro and Duke Point Power is already made, and won't be influenced by this editorial, too. - Arthur Caldicott
sqwalk.com

It's been a long time coming but the Duke Point Power Project on Vancouver Island will likely get the regulatory green light today. It is a welcome resolution to the problem of ensuring sufficient energy capacity on the island to meet peak demand.

The B.C. Utilities Commission is expected to hand down its decision today and all indications suggest that the $280-million, 252-megawatt, natural-gas-fired plant will be approved. Construction is slated to begin almost immediately with completion scheduled for May 2007.

When BC Hydro first presented its proposal to meet Vancouver Island's future energy needs some five years ago, the project included a $380-million pipeline across the Georgia Strait. An exhaustive process, which included years of debate and deliberations as well as hearings before the National Energy Board and the BCUC, finally drew to a close last year with cancellation of the pipeline and the BCUC sending BC Hydro back to the drawing board.

BC Hydro took a $120-million provision in the fourth quarter of 2004, mostly to account for its investment in the Duke Point Power Project to date. Unlike private sector companies, which would apply the write-off against profit and thereby gain at least some tax benefit, BC Hydro, a Crown corporation, will likely allocate the sum to a deferral account, which is intended to help manage variables beyond BC Hydro's control such as low water levels or high gas prices. Down the road, BC Hydro can be expected to apply to the BCUC to recover that money through rate hikes.

Meanwhile, the Duke Point Power Limited Partnership, held jointly by a unit of Australia's Macquarie Bank Ltd. and Pristine Power Inc. of Calgary, will build, own and operate the power plant and will pay BC Hydro $50 million for the assets already assembled, including the land, a steam turbine, engineering work and permit approvals.

Under its agreement with BC Hydro, the partnership will have to pay penalties if it fails to deliver the project on time or it misses other milestones of deliverability or reliability.

Critics have warned that power the partnership will sell to BC Hydro over the next 25 years won't be cheap -- estimates are in the range of $68 per megawatt/hour, roughly double the cost of hydro power produced on the mainland. But BC Hydro doesn't have sufficient capacity to supply Vancouver Island from its existing facilities. It would have to build something somewhere.

Environmentalists like to argue that alternative energy sources such as wind, solar and micro-hydro (small waterfall turbines) could serve the island, but these cannot provide dependable capacity for the island's growing population and businesses. Another proposal would have burned wood waste and other garbage to generate electricity, but PCBs and other pollutants this would have created made it a poor environmental choice. Some industrial power users said they could shift peak demand, but this hardly seems a sound long-term solution to the island's electrical capacity shortfall.

BC Hydro said recently that peak power demand it had forecast for 2007 has already been reached.

There are other benefits to the Duke Point Power Project besides dependable power supply. During the construction phase, local spending in the Nanaimo area is expected to increase by $40 million, with $8 million in additional annual spending thereafter, including $2 million in property taxes. Construction will create 200 jobs and 16 to 18 full-time staff will be needed to operate the plant.

BC Hydro will be able to use funds it saves on the capital cost of the power plant to repair and maintain its long-neglected transmission grid.

While some uncertainties remain, such as the cost and availability of gas to fill the Teresen pipeline, it appears that after an agonizingly long and expensive process, BC Hydro has finally arrived at what appears to be a way to meet the island's energy capacity needs -- and just in time for the crunch.

© The Vancouver Sun 2005

Posted by Arthur Caldicott at 08:52 AM

February 16, 2005

BCUC approves Terasen's resource plan and LNG storage facility

1. Resource Plan accepted
2. LNG storage facility CPCN approved, subject to:
2.2 a long-term transportation agreement with BC Hydro
2.4 construction must start by Dec 15, 2005


The BC Utilities Commission released its decision today on the Terasen Gas (Vancouver Island) 2004 Resource Plan Filing and Certificate of Public Convenience and Necessity Application for a Liquified Natural Gas (LNG) Storage Project.

NOW THEREFORE the Commission orders as follows:

1. The Commission accepts the Resource Plan for filing, pursuant to subsections 45(6.1) and 45(6.2) of the Act.

2. Pursuant to Section 45 of the Act, the Commission approves a Certificate of Public Convenience and Necessity for the LNG Project as set out in the CPCN Application with an estimated cost of $94.4 million, subject to the following conditions:

2.1 The Engineering, Procurement and Construction ("EPC") bid price that TGVI accepts for the LNG Storage Facility will not exceed 110 percent of $75.9 million.

2.2 A firm, long-term transportation service agreement to serve the Island Co-generation Plant and the proposed Duke Point Power Limited Partnershp facility will be executed by TGVI and British Columbia Hydro and Power Authority and approved by the Commission, prior to the commencement of construction of the LNG Project.

2.3 An LNG Storage Agreement that assures TGVI of LNG mitigation revenue consistent with the amount of such revenue that TGVI used in its financial analysis will be executed by TGVI and Terasen Gas Inc. and approved by the Commission, prior to commencement of construction of the LNG Project.

2.4 The Certificate of Public Convenience and Necessity will terminate if construction of the LNG Project has not commenced by December 15, 2005.

TGVI will file the detailed firm EPC bid price and detailed project schedule with the Commission in a timely fashion, and will confirm that the estimate of total project costs is based on steel prices and other information that is current.

4. TGVI will file with the Commission monthly progress reports on the LNG Project schedule and costs, followed by a final report upon project completion. TGVI will determine the form and content of the reports n consultation with Commission staff.

DATED at the City of Vancouver, in the Province of British Columbia, this 15th day of February, 2005.

BY ORDER

Lori Ann Boychuk
Chair

Decision

Posted by Arthur Caldicott at 05:51 PM

Multi-year B.C. drought inevitable

Jonathan Fowlie
Vancouver Sun
February 16, 2005


sqwalk.com
COMMENT: Amidst all the media attention on budgets, Kyoto and - we hope - the BCUC Duke Point EPA decision - this piece in today's Vancouver Sun should not be overlooked.

Concerned as we are with electricity in BC, a prolonged series of years of low water will reduce the capacity of the hydroelectric system both for domestic energy demand and for revenue sales. Although this article does not say we are in such a period of drought, there are some worrisome indicators. CBC this morning was saying Mt. Baker has only 25% of its normal snow-pack for this time of year. While it has been wet, that water is not being retained in the mountains, in the form of snow.

The budget yesterday indicates that the government is expecting BC Hydro to contribute $395 million in 2005/06 vs $310 million in the 2004/05 revised forecast. This money comes directly from electricity rates paid in BC and from the energy trading that Powerex engages in - mainly sales in the US. (The budget also includes $250 million from the Columbia River Treaty Downstream Benefits, and $320 million from water rents - money Hydro pays government for its use of the reservoir and river systems). Hydro must make its best efforts to get that money from somewhere, and to ensure adequate supplies of electricity.

That'll exert pressure to increase electricity rates, to increase energy trading for revenue generation, and to build the lowest cost generation capacity possible.

Think coal.

Action items:

1. There's an election underway in BC. The Liberals have set things up for coal-fired generation to be moved to the front burner once they are secure in another term in government. Make sure coal-fired generation is an issue in your riding, and that candidates take a position on it.

2. Write to the Minister of Sustainable Resource Management and the Executive Director of the Environmental Assessment Office, and demand that coal-fired generation projects undergo a full environmental assessment, regardless how small they are. This is acutely important for the first project. For more background on coal-fired generation in BC, see http://tinyurl.com/626zt
sqwalk.com

Tree rings show Columbia Basin had six major droughts in 200 years

B.C. will "almost certainly" suffer a major multi-year drought, says a co-author of a study who wonders if water regulators and other large-scale users will be ready to handle the shortage.

"It's sort of a wake-up call," said Dave Peterson of the U.S. Agriculture Department, one of the authors of a report looking at 250 years of historical drought data.

"Most of our water reallocation and planning for water resources has been based on the last 50 years or so, which has been historically a wet period of time," he said, explaining this has made it difficult for regulators to envision, and plan for, a true worst-case scenario.

The study, published in the December issue of the Journal of the American Water Resources Association, looks at tree ring data from 32 sites across the Columbia River Basin in the U.S. and Canada to determine years when droughts took place.

It found the basin area experienced six severe multi-year droughts between 1750 and 1950, including one that lasted 12 years around the 1840s. There have been no severe multi-year droughts since 1950.

Peterson said it is impossible to predict when a drought of such magnitude could take place again, but the historical data suggest such an event occurs on a continuous cycle, and therefore is more than likely to happen again.

He added that while the data comes from the Columbia River Basin, the trend can be extended to other areas of B.C. as well.

"When we have these really big multi-year droughts, we can expect them to cover a pretty broad area across western North America," he said.

As part of its drought plan, the B.C. government contributed $2 million to local water suppliers in the summer and fall of 2004 so they could develop water conservation or drought management plans.

Representatives from the Ministry of Water, Land and Air Protection could not be reached on Tuesday, but other organizations say they are aware of the possibility of multi-year droughts.

A spokeswoman for BC Hydro, which relies heavily on water for hydroelectric power generation, said she could not provide a detailed response to the report because it would take time to analyse.

In an e-mail, however, Charmane Edwards said BC Hydro takes into account "a range of possible weather conditions, including multi-year droughts" when doing its projections.

She said the utility has large storage reservoirs that can help carry the supply through dry years.

"In addition," Edwards said, "these reservoirs are located in different geographic regions with varying weather patterns, further reducing the risk of concurrent drought conditions."

At the Greater Vancouver Regional District, senior engineer Stan Woods said the region's planning department looks very closely at water levels, including work similar to the report done by Peterson and his colleagues.

He said the district has 90 years of records, and is therefore in a better situation than other utilities to identify and plan for worst-case scenarios.

Explaining that multi-year drought simply means a sustained level of below-average precipitation, Woods said the GVRD is currently equipped to handle such an occurrence because of the level of water supply compared to demand.

"At this time we don't see that our backs are up against the wall," he said, adding this is the case even though some snow stations are currently recording record lows.

But he said some other areas are in a situation where they are closer to their maximum supply, and are having to act accordingly.

For example, he said, an area of Victoria came close to its supply level recently because of an increase in population and demand. He said that area was able to raise a dam to increase its supply.

DRY TIMES:

Scientists used tree-ring data to determine major droughts in the Columbia River Basin over the past 250 years. They found:

- A 12-year drought starting in the 1840s

- Severe drought in the 1930s

- Periods of low flows in 1775, 1805, 1890 and 1925, which each varied from three to five years.

© The Vancouver Sun 2005

Posted by Arthur Caldicott at 09:00 AM

February 13, 2005

Feb 17: BCs first day in a Kyoto world

The BC government has set a stage on which significant actions with respect to clean energy and climate change can unfold. A major energy decision on February 17 will show whether BC”walks its talk” on environmental stewardship, and will signal to British Columbians, Canadians and the world, that in BC, we’re taking it seriously. Or the decision will undo all this excellent preparatory work, and will reveal the pronouncements of BC’s political and energy leaders as duplicitous, unreliable and irresponsible.


Setting the stage

1. Energy Plan: “50% of new electricity supply from BC Clean”

In November 2002, the BC government introduced its Energy Plan. Policy Action #20 said that “electricity distributors will pursue a voluntary goal to acquire 50 percent of new supply from BC Clean Electricity over the next 10 years."[1]

Skeptics have seized on the ‘voluntary’ nature of this policy action. Untrusting minds have speculated on what awful fuels might be included in the definition of BC Clean. Seasoned policy wonks still don’t know what a Policy Action is.

Notwithstanding, there’s still a message in there that gives hope to environmentalists and progressive energy buffs – 50% of new electricity supply should result in a net environmental improvement relative to existing energy production. That’s the language, right there in the Energy Plan.

2. BC Hydro: “nonrenewable projects to pay for their total costs”

In March 2004, Bob Elton, the CEO of BC Hydro, spoke to the Vancouver Board of Trade in a speech that goes beyond the usual platitudes by CEOs about environmental responsibility. Elton sees

"a general increase in acceptance of the idea that we should be responsible for our actions and that we should not be transferring that responsibility to our children.

"For us in the electricity business, that means it will get harder to increase supply by building nonrenewable projects. When they are built, there will be an increasing trend to make them pay for their total costs."[2]

That obviously means no more externalizing environmental and social costs in BC Hydro. And indeed, in 2001, BC Hydro committed to offset half of the greenhouse gas emissions from its gas-fired generation projects on Vancouver Island. Mr. Elton was clearly foreshadowing that things would only get better.

3. BC Hydro to have “no net incremental environmental impacts”

In October 2004, Mr. Elton was again speaking to the Vancouver Board of Trade. On this occasion, after invoking future generations, and his own children, he firmed up the commitment:

"Reliable power at low cost for generations – those generations are not an abstraction. They are real people. They are children who look up at me, and at you, with that look in their eyes that is full of hope, that says: “I trust you to look after my future."

"Let me talk particularly about the environment. What right do we have to leave our children with an environment that is blighted, that is worse than the one we inherited?

"What we must do is become a generation of leaders, who will accept responsibility for our actions.

"To do that at BC Hydro we are … setting a long term goal to make sure that … we have no net additional impact on the environment. It will not be easy, but it is a goal that will energize our company.

"I’ve become committed to this environmental goal relatively late in life."[3]

Wow. No net additional impact on the environment. A noble goal. A stunning commitment.

4. BC will “lead the world in sustainable environmental management

On February 7, 2005, BC’s Lieutenant Governor, Iona Campagnollo, read the Throne Speech. After the fruit and veggies, Her Honour said that BC will “lead the world in sustainable environmental management with the best air and water quality.”[4]

5. BC to “reduce provincial greenhouse gas emissions

On February 16, the Kyoto Protocol on climate change becomes international law. As a signatory to the protocol, Canada is readying a climate change action program to reduce the country’s emissions of greenhouse gases. The BC government has implemented its own climate change plan, in which it states that:

"It is prudent for B.C., as it is for other jurisdictions around the world, to take both actions that reduce provincial greenhouse gas emissions and actions that enable the province to adapt to anticipated climate change impacts.["5]

It’s rather half-hearted language, but it’s still a phrase worth hanging some hopes on.

February 17, 2005: Kyoto Plus 1 – did we really mean any of it?

With these five statements, the BC government, BC Hydro and its CEO, personally, have set the stage for a magnificent drama to unfold. When the curtain is drawn on the first morning of a Kyoto world, on February 17, BC may stand proudly committed to reducing greenhouse gases, to clean energy, to global leadership in environmental management, to never again incurring an environmental debt with energy projects.

Or not.

What does Duke Point have to do with it?

On that same day, February 17, the BC Utilities Commission releases its decision on an application by BC Hydro for an electricity purchase agreement (EPA) with a company that wants to build a $300 million, 252 megawatt natural gas-fired generation project at Duke Point, in Nanaimo.

If the Utilities Commission approves the EPA, if the Duke Point project is approved, all of the promise in the five statements will be revealed to have been empty rhetoric.

1. With respect to 50% BC Clean, this one large project will incur such a deficit on the 50% BC Dirty side of the ledger, it’s doubtful that the province would ever catch up to the 50% clean target. Given the BC government’s encouragement of coal-fired generation in the Energy Plan, and in the disgracefully outdated emission levels that are permitted for such plants in BC, 50% clean seems like so much, well, gas.

2. As for BC energy projects paying their total costs, BC Hydro recently dropped its 2001 commitment to offset 50% of the greenhouse gas emissions from new gas-fired generation projects. In the EPA for the Duke Point facility, costs and liabilities for greenhouse gas emissions – estimated at $88 million over 25 years - have likewise disappeared. Odd thing, for a company that sounded, briefly, committed to take the lead in making projects pay for their total costs.

3. With Duke Point, BC Hydro has made no undertakings or statements as to how it hopes to reconcile the no net environmental impacts promise, against the fact that the plant would be a major emitter of greenhouse gases and other regulated substances. Duke Point doesn’t appear to have anything to do with the projects Elton was referring to back in October.

4. How can approval of a 252 MW gas-fired generation plant be reconciled with the Throne Speech promise that BC will lead the world in sustainable environmental management? If BC were to go on a diet of fruit and vegetables, let’s say, the Duke Point project would be a lot like kicking off the diet with a 25 year binge of supersized double fatburgers.

5. If BC is to reduce its provincial greenhouse gas emissions, it is, once again, going the wrong way with Duke Point. That one plant could emit 925,000 tonnes of carbon dioxide every year, which would add 1% to our provincial output. (A Toyota Prius weighs 1300 kg, so you’d need a stack of 711,538 Priuses to match the annual greenhouse gas output from Duke Point. )

Doesn’t Vancouver Island need the power from the Duke Point plant?

The BC Utilities Commission is examining an electricity purchase agreement for a project which will cost BC electricity ratepayers more than $1.5 billion over 25 years [6], according to the Joint Industry Electricity Steering Committee, plus the cost of natural gas over the period, plus future greenhouse gas liabilities. This will be outrageously expensive electricity – which is why BC’s industrial users are such strong opponents of the project.

Furthermore, it’s a massively expensive long-term solution to what is really only a short term problem. In 2007 BC Transmission Corporation plans to “de-rate” two of the existing cable systems to Vancouver Island, but will not have replaced that transmission capacity until 2008. During this one to two year period, and only when peak load periods occur in winter – a matter of a few days, at worst – there may be a need for additional capacity. It is for this short-term and iffy contingency, that this grossly expensive Duke Point “solution” is being proposed.

A “square peg for a round hole”, the BC Public Interest Advocacy Centre calls it. Along with other intervenors, PIAC points out that a “bridging” solution is available, that has much lower costs and relatively insignificant environmental impacts. A “no award” decision by the BC Utilities Commission on February 17 would most likely result implementation of this bridging solution.

BC could greet the new Kyoto world with an impressive first step in never again incurring an environmental debt with energy projects.

Arthur Caldicott is a director of the GSX Concerned Citizens Coalition and Energy Programs Director at the Dogwood Initiative, which works with people to change the balance of power, to create healthy, prosperous communities.


Arthur Caldicott
acaldicott@dogwoodinitiative.org
250-370-9930 local 22

[1] http://www.gov.bc.ca/em/down/solutions_sept_27.pdf

[2] http://www.bchydro.com/rx_files/info/info10188.pdf

[3] http://www.bchydro.bc.ca/rx_files/info/info17090.pdf

[4] http://www.legis.gov.bc.ca/37th6th/4-8-37-6.htm

[5] http://wlapwww.gov.bc.ca/air/climate/cc_plan/pdfs/bc_climatechange_plan.pdf

[6] http://www.bcuc.com/Documents/Proceedings/2005/DOC_6873_C19_JIESC_Final_Argument.pdf

Download BC's first day in a Kyoto world as a PDF.

Posted by Arthur Caldicott at 12:58 PM

Island power play on the line

Andrew A. Duffy
Times Colonist (Victoria)
13-Feb-2005

The predictions are in: the $250-million Duke Point power plant at Nanaimo will win approval this week from the B.C. Utilities Commission.

Both opponents and supporters agree, based on what they've seen and heard through two weeks of hearings, that on Thursday, the commission will give the go-ahead for an electricity purchase agreement that will lead to the construction of a 252-megawatt power plant fuelled by natural gas.

Some of that belief is resigned cynicism at a process many feel was weighted in favour of the proponents and some of it is optimism from those who want to see the project up and running.

"We believe the hearing of the evidence overwhelmingly supported the project and in that context we expect the decision to be favourable," said Harvie Campbell, vice-president of Pristine Power of Calgary. The company would build and operate the plant, and sell its output to B.C. Hydro.

The Georgia Strait Crossing Concerned Citizens Coalition is among several groups that appeared before the commission to oppose the power plant, citing concerns about high cost and greenhouse gas emissions that will harm the environment.

Arthur Caldicott, a coalition director, also believes the project will be approved -- and that will send out the wrong message in a week when the Kyoto protocol to limit greenhouses gases is being adopted as international law.

"This is Hydro's first major addition to its inventory in decades and it's not clean, it's greenhouse gas generating and right on the advent of Kyoto ... the timing is dreadful," he said.

Apart from environmental concerns, opponents have worried that the project will boost costs for consumers, and is based on electricity demand forecasts that are too high.

B.C. Hydro and Pristine Power insist the project is necessary because Vancouver Island clearly faces a power capacity shortfall, especially by 2007. Hydro officials say that in 2007, some of the undersea transmission cables that bring electricity from the mainland will be rated as unreliable because of their age.

Work is underway to replace those cables, but the planning, approval and construction process likely means new cables won't be ready until at least late 2008.

Even with new cables in place, B.C. Hydro and Pristine see a need for the Duke Plant to help ensure long-term electricity supply for Vancouver Island, as well as the entire Hydro system.

"The Duke Point Power Project is the best way to meet one of our top priorities, which is to provide our customers with the reliable capacity required to meet Vancouver Island's anticipated supply shortfall in 2007," Bev Van Ruyven, B.C. Hydro's senior vice-president distribution, said last year, in announcing an alliance with Pristine. "The new peak electricity demand set by Vancouver Island customers [on Jan. 5, 2004] demonstrated that we need more electricity than was previously thought and this project is the best way to ensure we meet those needs."

Campbell, the Pristine vice-president, said approval of the project means work at the Duke Point site, south of Nanaimo, could start by mid-year.

The plant is to be up and running by May 2007. There is slightly more than a 24-month window to build it, though Pristine has said it could be done in as little as 18 months.

"But there's always a little slack built into a schedule just in case," added Pristine president Jeff Myers.

The company may need it. A number of groups who intervened at the utilities commission hearings have said they are likely to appeal an approval decision.

"It's a serious possibility," said Tom Hackney, president of the Georgia Strait Crossing Concerned Citizens Coalition. "We have serious grounds on the basis of apprehension of bias."

The coalition sought to disqualify the commission panel during the hearings because of an in-camera discussion the panel had with B.C. Hydro representatives. That meeting showed the panel prejudged the outcome of the hearing before receiving arguments and cross-examination from intervenors, the coalition said at the time. The motion was dismissed, but Hackney said it could be used as grounds for appeal.

Hackney, who expects approval, said he can't be certain of how his group will proceed with an appeal. "But if we went to court it would certainly up the stakes in terms of Pristine's risk, and if we were successful it could potentially force a whole new review of the project and set aside" the electricity purchase agreement," he said.

Campbell dismisses that stance. "I believe the likelihood of appeal is way overblown," he said, noting the grounds for it were a very small part of the proceedings.

Gold River Mayor Dave Lewis is another project opponent. "They are going to approve Duke Point in my opinion," he said. The commission is moving through a process with blinders on -- looking solely at the purchase agreement issue rather than casting a wider net to see if there is a better way of making up electricity capacity, he said.

"Shouldn't the BCUC, instead of trying to follow through on a process started two years ago, look at what the best option is now?"

Lewis has his own idea of what that is. Before the hearings, he said if the utilities commission approves the deal it may kill plans to build a thermal generating power plant in Gold River and take away any economic certainty the village of 1,359 may have had.

The village has been pinning its hopes on a plan by Green Island Energy to build a biomass-burning plant (fuelled by wood, construction waste and pelleted garbage) on the site of an abandoned pulp mill.

When the mill closed in 1999 it put 300 people out of work. As a result, the village's annual budget was slashed to about $2 million from $6 million.

Lewis said he doesn't know what will happen to the project if Duke Point goes ahead. "(Green Island) are independent investors and they've been told by government and Hydro to follow a path and protocol and they feel screwed every way they've gone," said Lewis.

Posted by Arthur Caldicott at 08:03 AM

Power and passion

Andrew A. Duffy
Times Colonist (Victoria)
13-Feb-2005

The fate of a large natural-gas fired plant for Nanaimo's Duke Point could be decided this week. For friends and foes of the project, it has been a long and trying road to judgment.

Five years ago Tom Hackney walked into the offices of the Sierra Club and asked how could he get involved in the campaign on climate change.

They handed him B.C. Hydro.

"I was told then that there was a pipeline Hydro wanted to build to the Island to bring natural gas to be burned to produce electricity," he recalls.

Hackney quickly joined the battle against the $340-million Georgia Strait Crossing natural gas pipeline, which B.C. Hydro turfed in December 2004 in favour of a less costly proposal by Terasen Gas that's being considered by the B.C. Utilities Commission.

Now, as president of the Georgia Strait Crossing Concerned Citizens Coalition, Hackney and his group wage war against Hydro's plans to build a 252-megawatt natural-gas fired plant at Duke Point in Nanaimo. The $250-million plant would start up in May 2007.

The umbrella organization is made up of environmental groups, concerned citizens and Cowichan Valley farmers who at one point were told their land may be affected by the pipeline's path. They sat through years of regulatory hearings, town hall meetings and information sessions.

A critical point comes Thursday when the utilities commission decides whether to approve an electricity purchase agreement between Hydro and Pristine Power of Calgary, the plant's builders.

It's been a long road for all parties. For Hackney's colleague Arthur Caldicott, whose Arbutus Ridge neighbourhood was going to be altered to accommodate the pipeline, it's been an intense education.

"When Hydro posted a note in March 2000 saying they were holding an information session about (the pipeline) ... I went down," Caldicott says.

"I just got swept up in it, asking questions why it was needed and what it would do to the environment."

Those questions were echoed by neighbours and covered the entire spectrum, including costs, greenhouse gas emissions and overall natural gas strategy for electricity generation on the Island.

The answers from Hydro didn't sit well with opponents. But this is nothing new. The Duke Point project is not the first foray into on-Island electricity generation.

In 1994, the provincial government directed Hydro to seek proposals for new resources to meet electricity demand on the Island. Hydro's own plan highlighted the need for Island supply driven by the expected retirement of the aging high-voltage direct current and 138-kilovolt transmission systems as well as future load growth.

Hydro says the Island consumes about 2,100 megawatts of power at any one time, with the capacity to produce just 690 megawatts (enough to power 690,000 homes), leaving it heavily reliant on a cable system connected to the mainland. So with some of the cables deemed unreliable as of 2007, the utility is adamant it needs on-Island generation.

After wood-waste options fizzled out, a pair of gas-fired solutions were found, -- the Island Cogeneration Plant now running in Campbell River, and a similar proposal for Port Alberni.

In November 2000, Hydro signed an interim agreement with Calgary-based Calpine Corp. to jointly develop the Port Alberni project. But there was plenty of public opposition, and in October 2001, Port Alberni council voted not to rezone the site for the proposed project.

Hydro and Calpine then shifted to Duke Point as the preferred site for the Vancouver Island Generation Project. But Hydro's relationship with Calpine soured and in May 2002 the partnership was ended. Hydro took control of the project.

In November 2002, the provincial government unveiled its Energy Plan, which required the Island project be reviewed by the utilities commission to determine if it was still the most cost-effective means to reliably meet power needs. The result was to go back to the drawing board.

After Hydro issued a call for tenders, Duke Point Power Ltd. Partnership (Pristine Power) was awarded the electricity purchase agreement being considered by the utilities commission. The hearings into the deal heard many of the same concerns raised over the pipeline.

The Georgia Strait Crossing coalition and other groups believe Hydro has overstated the Island's future power needs and undervalued the current supply, conservation initiatives and alternative generation. Hydro declines to comment, but has said in the past that it needs to be sure it has the capacity to keep the lights burning.

Hackney rejects the idea of a conspiracy but believes Hydro is driven by a stern bottom line. "Hydro is a big corporation with a tremendous amount of bureaucratic inertia with a lowest-common denominator agenda to make sure the lights don't come off," he says. "From their own self-protective interest, they want to overbuild the system."

Duke Point proponents don't see things in the same light.

Harvie Campbell, vice president of Pristine Power, says natural-gas fired generation is the future, and building on-Island generation makes economic sense.

"This is the clean energy solution," he says.

"Right now what's happening is natural gas produced in northeastern B.C. is piped down to the U.S. to be turned into electricity and shipped back to B.C. -- all we're doing is exporting taxes and jobs."

Pristine president Jeff Myers says he can understand some of the backlash Hydro is getting from community groups simply because of the history of the project, false starts and empty promises.

"There's been a lot of disappointing history in terms of Hydro and some other parties," Myers says, though he believes much of the posturing, particularly from industrial customers, is based on them trying to establish a working relationship with new management at Hydro. "As far as we're concerned this has been a very positive and efficient process."

Posted by Arthur Caldicott at 08:02 AM

Cable connections make for strange bedfellows

Andrew A. Duffy
Times Colonist (Victoria)
13-Feb-2005

Old? Certainly. In need of replacement? Absolutely. Unreliable after 2007? Yes.

But opponents of a proposed power plant at Nanaimo's Duke Point say the undersea cables that provide about 10 per cent of the electricity used on Vancouver Island could be coaxed into working overtime to meet power needs.

And, the plant's foes seem to be supported by the Crown corporation that maintains the province's power transmission system.

The cables are at the centre of the debate over the proposed 252-megawatt power plant that could be given life Thursday if the B.C. Utilities Commission approves an electricity purchase agreement between B.C. Hydro and Pristine Power, the builders of the Duke Point plant.

"There is some merit to those arguments (for the plant) but we believe in the absence of Duke Point we could provide the same service to the Island," says Bruce Barrett, manager of capital programs for B.C. Transmission Corp. Barrett also manages the Vancouver Island Transmission Reinforcement Project which intends to replace the existing cable system by October 2008.

Hydro declined comment after slapping a gag order on its management team until the commission releases its decision. In the past, it has maintained the cables will no longer be reliable by 2007 and the best solution to bridge the gap until the new cables are in place the following year is to build the power plant.

But environmental groups, industrial Hydro customers and others suggested at the commission's hearings into the electricity deal that Hydro's solution is tantamount to using a sledgehammer to kill a fly.

Even B.C. Transmission Corp., which was split off from Hydro in 2003 and is charged with providing power producers with access to the province's transmission system, suggests the plant may be a bit of a square peg for a round hole.

"We are not an advocate of Duke Point one way or the other," says Barrett. He says that B.C. Transmission told the hearings that if it were to miss its timetable for new cables, it could bridge power needs by reducing loads and using the old cable system.

Indeed, it's reasonable to expect the cables could be used beyond 2007, according to hearing testimony by Yakout Mansour, B.C. Transmission's vice-president of system operation and assets. But the longer the bridging period, the less reliable the cables become, Monsour stressed.

When asked if he would be comfortable relying on them, he replied: "Reasonable comfort. Not necessarily the usual certain comfort that I do ... but reasonable comfort. Like I would sleep six hours instead of two."

It's one of the arguments that plant opponents have used to buttress their position.

"We view the Duke Point Project as a very expensive 25-year commitment for what is really just a need to bridge from 2007 to 2008," says Arthur Caldicott, director for the Georgia Strait Crossing Concerned Citizen's Coalition.

"It's an entirely inappropriate solution to the problem."

Coalition president Tom Hackney says, "Duke Point would cost Hydro $35 million a year for 25 years just for Hydro to have the right to turn it on when they want to. That's $875 million over 25 years for a project whose critical justification is for just the next year or two."

A lot of that money, he argues, could be saved by adopting a load-shedding proposal put forward by pulp mill giant Norske Canada which, as Hydro's largest customer, consumes 25 per cent of all power on the Island. The coalition also recommends using the old cables in limited form.

"We think the facts speak for themselves," says Norske spokeswoman Lyn Brown. "As a large customer of the electricity industry, we are a part of the solution and from our standpoint Duke Point is an expensive long-term solution to a short-term problem."

The replacement of the cables is already well underway. B.C. Transmission has initiated an environmental assessment as part of the $210-million first phase of the project, Barrett says.

The first phase will see the capacity brought by the high-voltage, direct-current cables replaced with undersea alternating-current cables that also run to the Island from the mainland.

There are seven AC cables, six of which operate as part of two 138-kilovolt circuits. The seventh is a spare.

Under the proposed new system, three of the cables will be replaced and upgraded to 230-kilovolt lines.

The remaining three cables will continue to function at 138 kilovolts but will eventually be replaced and upgraded.The laying of the cables is planned for the summer of 2008 and they're expected to be in service by October that year.

Posted by Arthur Caldicott at 08:01 AM

February 11, 2005

California demands $1 billion from BC Hydro

Powerex subsidiary vows to fight claim it gouged state during power crisis

Scott Simpson
Vancouver Sun
11 Feb 2005

California's attorney-general slapped Powerex with a $1.06-billion Cdn lawsuit on Thursday, accusing the BC Hydro subsidiary of "massive gouging" and manipulating the state's troubled electricity market during an energy crisis in 2001.

"Powerex gamed the market, then gouged the state, taxpayers and ratepayers," California Attorney-General Bill Lockyer alleged in a press release announcing the $850 million US lawsuit.

"It created conditions that allowed it to hold California businesses and consumers hostage, and left the state no choice but to pay the ransom. We want that money back."

Spokesmen in Lockyer's office have for several years portrayed Powerex as a lesser player in a vast market gaming scheme led by disgraced power trading company Enron Corporation.

But the suit makes it clear that California has come to regard Powerex as "one of the largest, if not the largest" electricity supplier operating in the state during the crisis, and that Powerex "took an oppressive and unfair advantage of the distress caused by the California energy crisis."

"Powerex manipulated the California energy markets through Enron-style gaming and trading strategies," the suit alleged.

Powerex officials reacted with "outrage" Thursday, describing Lockyer's action as "legal blackmail" that ignores the vital role it played in meeting the state's desperate need for electricity during the crisis.

Lockyer filed the suit on behalf of the California Department of Water Resources, which bought electricity from Powerex on "thousands of occasions" in 2001.

The suit was filed in California superior court, with the water resource district arguing that the American court has jurisdiction over Powerex because Powerex is registered with the California secretary of state to conduct business in California.

The B.C. finance ministry in the past has taken note of potential liabilities associated with Powerex's profits in California, and it would fall to B.C. taxpayers to cover the cost of any judgment if it were to succeed.

In a prepared statement, Powerex said it was reviewing the lawsuit and "intends to respond vigorously to its allegations."

"It is frankly the height of bad faith for California to seek to [reneg] on its contracts and demand money back, when it still owes Powerex more than $280 million [US] for the power that was delivered during 2000-2001," Powerex vice-president Doug Little said in a news release.

"We responded to the entreaties of the California government in their time of need, and this suit proves that no good deed goes unpunished."

Powerex said that even though it was a net importer of electricity to B.C., it was able to purchase and deliver large quantities of electricity to California by drawing on the capability of the BC Hydro system.

"The U.S. Federal Energy Regulatory Commission [FERC] has thoroughly examined Powerex's conduct regarding sales to California, and has consistently rejected California's claims of market manipulation and other misconduct," Powerex said in the statement.

Powerex said FERC staff concluded in October 2003 that "Powerex was 'a valuable and reliable supplier' to California, and found no evidence whatever to support California's claims of market manipulation or price gouging."

"We believe that California grossly mismanaged its energy affairs prior to and during the crisis, which was largely self-inflicted," Little continued. "They failed to construct adequate generation, did not have adequate transmission in place and passed some of the worst energy statutes ever enacted. Now they seek to make Powerex a scapegoat to divert political attention away from their own ineptitude."

Nine U.S. companies trading electricity in California during the crisis have reached settlements with the state, rather than engage in court battles.

The combined value of the settlements is $3.38 billion US.

The most recent settlement was announced in January, with Mirant Corp. agreeing to pay $749 million US for resolution of California allegations that it was gouging during the crisis.

No specific instances of wrongdoing were cited in the suit, but the water resource district said Powerex was the only agency in the state that could provide large volumes of power on a "real-time" or short-notice basis -- due to BC Hydro's ability to open up its hydro dams as required -- and took undue advantage of the situation.

"Powerex was ... aware that no other energy marketers were able to supply [the water resource district] with large volumes of energy on a real-time basis. Powerex used this knowledge to demand exorbitant prices."

© The Vancouver Sun 2005

See also Hydro tied to power scheme from 05 Feb 2005.


Posted by Arthur Caldicott at 09:47 AM

February 07, 2005

Residents riled over planned power line upgrades

Rob Wiltzen
Gulf Islands Driftwood
Wednesday, February 02, 2005

The British Columbia Transmission Corporation (BCTC) will host upcoming community information sessions on the Gulf Islands regarding a proposed project to replace and upgrade existing transmission lines from Delta to Vancouver Island via Galiano and Salt Spring.

The Vancouver Island Transmission Reinforcement Project would see two 138-Kv AC and two high-voltage direct-current (HVDC) circuits replaced with two 230-Kv AC circuits in a two-phase project.

" The existing submarine cables and the infrastructure that supports them are 35 to 50 years old, including the HVDC and AC circuits of the southern corridor," said Donna McGeachie, BCTC community affairs manager.

" The upgrade is necessary to meet the growing demand in the Gulf Islands and on Vancouver Island," she said. "The load forecast from BC Hydro is that the demand will grow by almost 30 per cent over the next 20 years."

The existing 138-Kv overhead wires and undersea cables are currently serving Galiano and Salt Spring with one circuit, while providing emergency backup for Vancouver Island with the other.

Phase 1 of the project would see one cable replaced with a 230-Kv line to serve growing demand on Vancouver Island, a replacement of existing poles and tall lattice towers with single steel poles approximately the same height, replacement of all overhead lines and a portion of the undersea cables. The earliest Phase I in-service date would be October 2008.

The existing rights of way are the preferred route option for BCTC, including overland routes from Taylor Bay terminal to Montague Harbour on Galiano and from Maracaibo terminal to Sansum Narrows on Salt Spring.

In Tsawwassen, residents have organized to protest the plan to replace overhead wires through residential areas with higher voltage cables by forming the Tsawwassen Residents Against High Voltage Overhead Lines (TRAHVOL). Likewise, on Salt Spring, opposition to the upgraded lines across the island has spawned the Island Residents Against High Voltage Overhead Lines (IRAHVOL). The local campaign kicks off with a community information strategy meeting on Saturday, February 5 at 4 p.m. at Meaden Hall for all concerned residents.

" We encourage all residents concerned or living near the overhead power line corridor to attend," said Barbara Turner of IRAHVOL. "We will have a representative attending from the Tsawwassen organization, TRAHVOL and a panel discussion regarding the issues. We’d like to present as much information as possible to those affected."

" The objection is to the effect that it will have to the residents who live in proximity to the overhead lines and who will, through no fault of their own, be subject to hugely increased levels of electromagnetic radiation and suffer severe property devaluation," said Chris Anderson, a local EMR tester.
" There are safe methods of distributing power and stringing high voltage AC lines around residential areas is not one of them," he said. "A far superior way of distributing electricity is a method of underground DC cabling called DC light."
The next year, according to McGeachie, will be spent doing environmental assessment work, including health-impact studies.

" Even with the upgrade to the higher voltage, because of the new pole configuration, we expect that the electromagnetic fields will be less," she said.
The BCTC information sessions take place on Saturday, February 5 at the Galiano Lions Club Hall between 11 a.m. and 4 p.m., and on Saturday, February 12 at the Salt Spring Lions Hall between 12:30 and 4 p.m.

" The BCTC project manager and project engineers will be on hand to address any technical and operational information requests," said McGeachie.

Anyone wishing to contact IRAHVOL, can call Barbara Turner at 537-0063, Enid Turner at 537-9153 or email geturner@telus.net.

E-mail the writer: Rob Wiltzen

See also the TRAHVOL website, www.trahvol.com: Tsawwassen Residents Against High Voltage Overhead Lines.

Posted by Arthur Caldicott at 12:21 AM

February 05, 2005

Hydro tied to power scheme

Probe uncovers references to Powerex that suggest the B.C. agency was 'up to no good'

Scott Simpson
Vancouver Sun
05 Feb 2005

sqwalk.com
COMMENT: Back in the late 1990s, BC Hydro started chumming around with all the energy shops around North America. Powerex, BC Hydro's own trading arm, found itself in a club of colleagues for whom the score was the rush, a series of successful transactions would trump sex.

In the bars and on the golf courses and at all the conferences, they'd trade stories. And they'd scheme.

So in 2000, when the Canadian Competition Bureau raided the Calgary offices of Powerex and Enron, looking for evidence that the two companies had colluded in trades that would jack up electricity prices in Alberta, it was only surprising to those outside the biz who weren't aware of the scheming that was going on within.

The Competition Bureau did not find sufficient evidence to charge either company. That's a long way from proving that the companies were innocent of bid-rigging.

Then months later, Powerex is included in the small list of energy traders - Williams, Dynegy, Mirant, Enron, etc. - who appear to have contrived to bilk California electricity buyers out of hundreds of millions of dollars. A few observers wondered if the smoke that had appeared in Alberta, was associated with the fires in California.

In 2003 the Attorneys General of California, Oregon and Washington jointly released evidence of market manipulation - hand written notes from Enron. The link is provided below. Here's an excerpt from one, in which Powerex is mentioned:



Click here for full document

So far, in early 2005, BC Hydro and Powerex have had no successful suits against them. Again, that's a long way from innocent.

What follows is in part from the archives of http://www.sqwalk.com/ and other sources.

06 Oct 2004 Hydro back on California hook

04 Mar 2003 Powerex accused of price rigging

03 Mar 2003 Proof of energy scam

19 Dec 2002 Canadian Regulator Says Duke Overcharged for Power

22 May 2002 Affidavit of Powerex in FERC inquiry

14 May 2002 Attorney General of California, Oregon, Washington Furnish Congressional Investigators With Newly Uncovered Enron Documents Outlining Energy Market Manipulation Schemes

09 May 2002 Canadian companies ensnared in Enron debacle

02 Feb 2002 The Company Hydro Keeps

03 May 2001 The Company You Keep

20 Dec 2000 Competition Bureau Closes Bid Rigging Investigation

24 Nov 2000 Alberta power company at centre of price-fixing allegations
sqwalk.com

BC Hydro's long-running battle to hang onto $750 million US in profits gained during the California electricity crisis took a new twist this week when a Washington state power authority released fresh allegations of market manipulation.

Documents and tapes uncovered in an investigation of Enron suggest that Hydro power trading subsidiary Powerex benefited from an Enron bid-rigging scheme in the Alberta electricity market, legal counsel for the Snohomish County public utility district said Friday.

The project was code-named Project Stanley, in reference to the Stanley Cup, and involved efforts by Enron to manipulate electricity prices in the Alberta Power Pool in 1999.

It was described by counsel for the Snohomish district as a field test for the scheme that Enron and other power trading utilities employed to subsequently manipulate the California electricity market and earn what California authorities allege to be illicit profits of about $9 billion US.

Powerex was investigated in connection with the Alberta scheme, but was cleared of wrongdoing by Canada's Competition Bureau. The bureau announced in December 2000 that Enron and Powerex were employing "independent business strategies."

However exhibits released this week by Snohomish investigators include a document that charted the supply and demand for electricity in Alberta -- which was in the process of market deregulation -- and "illustrates potential for exercising market power."

The document prepared by Frontier Economics contains a chart showing how Enron profited from high prices in the Alberta market, and states that Enron's strategies "likely would not have been possible" without supporting action from Alberta power generators and/or Powerex.

It says Powerex received an "indirect benefit" whenever Enron received a direct benefit, and that the companies used market power to drive up the price of electricity to more than $300 per megawatt -- compared to $42.74 before deregulation in Alberta.

Electricity market regulators in Canada and the United States regard the exercise of market power -- the ability to drive up prices -- as a serious abuse of a company's charter to operate in a given electricity market.

"It's hard to believe the Competition Bureau had access to the information we found," said Eric Christensen, assistant general counsel to Snohomish County public utility district No. 1.

"We're not privy to the information they found. But the Powerpoint presentation we found from Frontier Economics seems particularly damning. There is one slide there labelled 'Exercising market power in the Alberta pool.' It's basically a recipe book for how to exercise a system up there to extract unjust profits."

Christensen noted that the utility district's investigation focuses on Enron, not Powerex. But he said investigators have uncovered several Enron references to Powerex to suggest the taxpayer-owned B.C. agency was "up to no good."

Hydro media relations manager Elisha Moreno reiterated that Hydro has been exonerated of wrongdoing in investigations by both the Competition Bureau and FERC.

In particular, she said, FERC pointed out in a 2002 judgment that Hydro played a valuable role in supplying electricity during the California crisis.

"I think the only unfortunate side of it is that our name keeps getting dragged through the mud. It's disheartening because we do a lot of business on a daily basis with these people."

However exhibits released this week by Snohomish investigators include a document that charted the supply and demand for electricity in Alberta -- which was in the process of market deregulation -- and "illustrates potential for exercising market power."

The document prepared by Frontier Economics contains a chart showing how Enron profited from high prices in the Alberta market, and states that Enron's strategies "likely would not have been possible" without supporting action from Alberta power generators and/or Powerex. It says Powerex received an "indirect benefit" whenever Enron received a direct benefit, and that the companies used market power to drive up the price of electricity to more than $300 per megawatt -- compared to $42.74 before deregulation in Alberta.

Electricity market regulators in Canada and the United States regard the exercise of market power -- the ability to drive up prices -- as a serious abuse of a company's charter to operate in a given electricity market.

Hydro media relations manager Elisha Moreno reiterated that Hydro has been exonerated of wrongdoing in investigations by both the Competition Bureau and FERC.

She said FERC pointed out in a 2002 judgment that Hydro played a valuable role in supplying electricity during the California crisis. "I think the only unfortunate side of it is that our name keeps getting dragged through the mud."

© The Vancouver Sun 2005

Posted by Arthur Caldicott at 10:29 AM

February 02, 2005

Mythoilogy

Andrew Nikiforuk
Canadian Business
17 Jan 2005

Eight wrong ways to think about the future of energy.

In 1976, Marion King Hubbert, the visionary U.S. geophysicist who once worked for Shell, warned that North Americans would soon face a bigger problem than US$50-a-barrel oil and astronomical gas prices. He defined the challenge as a "cultural" blindness to the realities of resource depletion. Because North Americans have known nothing but "exponential growth" in fossil fuels, Hubbert reasoned that we had become incapable of "reckoning with problems of non-growth."

Hubbert, who in the 1950s accurately predicted when oil production would peak in the United States (1970), also had a practical solution. He thought North Americans needed to undertake a "serious examination" of oil and gas trends, and their formidable economic implications, before shortages or price spikes made things really messy for ordinary business.

But a number of energy myths continue to smother, if not deter, the debate Hubbert envisioned. The status quo in industry and government avoids the word depletion; most argue that technology, looser regulations, more drilling or price mechanisms will keep the hydrocarbons flowing. (Statistics show Canadians are producing, consuming and exporting more energy than ever.) The oilpatch can't imagine the end of affordable fossil fuels any more than cod fishermen could imagine the end of cod.

An increasing number of geologists and gas analysts, however, believe that a fact does not cease to exist just because it is ignored. One of Canada's most serious examiners of energy trends and forecasts is Dave Hughes, a calm, deep-voiced Calgary-based geologist with Natural Resources Canada. Over the past two years, Hughes has put together (in his spare time, no less) an exhaustive open file on oil and gas supplies. His detailed presentation has surprised, alarmed and rankled bureaucrats, professional oilmen and CEOs alike. The facts not only question the country's pervasive energy myths; they warn that Canadian business will face crippling bills and shortages if the country takes a business-as-usual approach to energy supplies. "We are facing an energy crunch," says Hughes. "We can smoothly manage the transition to a more sustainable energy future, or the transition will manage us."

Hughes and many other analysts don't think we will be able to manage anything well until we reject the reigning assumptions and accept some disturbing realities.

The world has lots of oil

The world may have lots of oil, but it is running out of cheap conventional crude. Since 1965, demand for oil has increased by 150% worldwide, and rapid economic growth is now driving the biggest yearly increase in world demand in more than 20 years. Given that remaining oil supplies largely lie in "volatile terrain (the Middle East, Russia and West Africa), the distribution of oil has become a massive geopolitical headache. China and India's humming economies have added to the strain.

The resource is also in a persistent, undeniable state of decline. As Hughes notes, production has exceeded discoveries since 1983. In 2004, the BP Statistical Review of World Energy, the gold standard for real numbers on oil and gas, looked at 54 producing countries and outlined the disturbing face of oil depletion. Twenty-two nations, representing a third of the world's oil production, are in decline. Another 14 countries, accounting for 42% of the world's output, are producing on average 22% below their peak. Only 18 nations, accounting for a quarter of the world's production, have yet to experience a peak--but they will soon. Iran peaked in 1974 and Nigeria in 1979. The United Kingdom's North Sea bonanza peaked in 1999, and actually declined 9% over 2003.

Between 2008 and 2010, Hughes estimates world oil production will climb to 87 million barrels a day and then falter. Supplies will tighten and prices will continue their steady ascent. This collective peaking in deliverability simply means oil production can no longer grow to meet future demand (or even to offset depletion). As Hughes notes, the oil left "will be the hardest and most costly to extract." And much of it will require transportation through hazardous political geography.

With the world's oil production machine now fully deployed--production is at 99% of global capacity--energy security is now walking a tightrope. A snap cold spell or a hurricane in the Gulf of Mexico (not to mention bombs in Iraq) have already sent prices flying northward and will do so again. Energy vulnerability (what the media has dubbed "the fear factor") has arrived in our living rooms for a long stay.

Canada's oilsands can make up for declines in world conventional oil production

No way. Like most big energy projects, Alberta's oilsands will deliver more hyperbole than oil. The Alberta government claims the prolific sands hold as much as 311 billion barrels of recoverable oil--a prize greater than all of Saudi Arabia's oil wealth. True or not, this figure conveniently masks some key limitations--namely, says Hughes, "at what rate this oil can be produced and what the capital, energy and other limits to production growth are." After the Alberta Energy and Utilities Board and the Houston-based Oil & Gas Journal reported that 175 billion barrels of the tarry goo were proven reserves in 2002, the New York Times challenged the numbers as wishful thinking. In contrast to Alberta's figures, the ever-prudent BP Statistical Review lists only 16.9 billion barrels as recoverable and under active development. As Hughes notes, the 311 billion and 175 billion barrel figures just don't reflect economic, environmental and engineering constraints.

The costs present operational obstacles--and highlight that the oilsands are both an energy and a money pit. Hughes estimates that recovering 175 billion barrels over a 60-year period would require capital infrastructure costs of more than $400 billion, based on the current cost of extracting a barrel of oil from the sands. Such a gargantuan venture would yield an average of less than eight million barrels a day. (The United States consumed 20 million barrels a day in 2003, and the world is heading toward 82 million barrels a day in 2004, according to recent estimates.) Citizens might want to see that $400 billion go elsewhere. The Rocky Mountain Institute, a Colorado non-profit agency devoted to market-based solutions for resource conservation, recently calculated that the United States could end foreign oil imports with a number of measures--including buying up gas-guzzling vehicles--that would cost about US$180 billion over 10 years.

Another brick wall for the oilsands remains natural gas. Today, the oilsands consume nearly 5% of Canada's natural gas supply. It is being burned to extract bitumen, a tarlike mixture of hydrocarbons that is cooked into synthetic crude. By 2025, given a four-to-fivefold expansion in production, that gas addiction could account for 20% of national consumption. By then, the oilsands will burn nearly two billion cubic feet of gas a day--the entire predicted output of the Mackenzie Valley pipeline. "You could just direct that pipeline into Fort McMurray," says Hughes, referring to Alberta's oilsands capital, "unless alternative fuels such as petroleum coke are substituted for gas." Just a year ago, Thomas Driscoll, an analyst with Lehman Brothers Inc. in New York, issued the same warning.

Most analysts regard the burning of gas to make oil a process akin to turning gold into lead. The highest-value uses for natural gas are home-heating, fertilizer production and petrochemical manufacturing. Given that nearly 80% of Canadians use natural gas in their furnaces, politicians may have to decide whether the resource will be used to keep Canadians warm, exported for electrical generation to keep Americans cool or burned to cook up bitumen. No Canadian politician has sounded this alarm but, fortunately, Alan Greenspan, chairman of the U.S. Federal Reserve Board, has taken up the cause. In June 2003, he told Congress that Canada "has little capacity to significantly expand its exports [to the U.S.], in part because of the role that Canadian gas plays in supporting growing oil production from [its] tar sands."

In addition to tight gas supplies, the oilsands face critical shortages of water and condensate, a thinner derived from processing natural gas used to dilute the bitumen. It takes on average between one and two barrels of makeup water to produce a barrel of oil and, at forecast production growth, University of Alberta water ecologist David Schindler estimates the Athabasca River could be seriously compromised by 2020. As well, the National Energy Board predicts shortages of condensate needed to liquefy bitumen for pipeline transport as early as this year.

The National Energy Board's happiest scenario at the moment concludes that the oilsands could mine three million barrels of oil a day by 2025. "If this happens, Canada will produce a little more than 4% of forecast 2025 world demand," says Hughes. "It's no big thing in the world's scheme of things." But that resource will keep Canadian cars running.

The world has lots of natural gas

That's true. "The bad news is that most of it is not in North America," says Hughes. Places like the Middle East, Russia and Venezuela hold close to three-quarters of the world's remaining gas reserves and will soon become the new gas czars. North America consumes nearly one-third of the world's production (thanks in large part to industrial use, residential heating and electricity production), but the continent holds only 4% of reserves.

Canada, which boasts just 1% of global reserves, boosted production by 127% between 1986 and 2003 to feed domestic consumption growth and the expanding U.S. appetite for gas, and became the world's No. 2 gas exporter by the late 1990s, after Russia. Yet no federal or provincial government ever stopped to question the logic of rapidly disposing of a declining non-renewable resource at mostly rock-bottom prices.

Now production throughout the Western Canadian Sedimentary Basin is in a freefall (some say gas production peaked in 2001), while costly offshore drilling has come up dry. Canadian exports to the United States fell by 21% between 2001 and 2003. As a consequence, at current production rates Canada has less than a nine-year supply of discovered gas left. (Nearly 80% of Canada's estimated conventional gas endowment has yet to be discovered, according to the National Energy Board.) True, one-quarter of the world's drilling rigs are in Canada. Yet despite record drilling in 2003 (or what one analyst calls "brute force"--there were close to 14,000 successful gas wells drilled), production dropped by 3.6%. In 1997, the initial production of a typical new gas well was about 700 thousand cubic feet per day. Today, the average initial production of a new gas well is about 350 thousand cubic feet a day. That means many more wells must be drilled to offset natural production declines, which in Canada now total 21% a year. "What happens if that trend continues?" asks Hughes. "How many wells will we have to drill to keep production flat?" Rising gas prices in the United States have already shut down one-fifth of its nitrogen fertilizer industry.

The gravity of the natural gas crisis is just beginning to hit the public radar. At a recent National Energy Board conference, even ever-optimistic industry types noted "the gas supply situation is unsettling" and "we have crossed the Rubicon." Julian Darley, the author of High Noon for Natural Gas, says the situation is so serious "that it is too late to panic. It is time to plan." If Canadian politicians were sensible, they would recognize that this is a cold country, says Darley. "They would cut production and exports and work out depletion rates." Yet Canada has had no debate about the crisis. Replacing low-cost conventional gas with high-cost unconventional sources will be "an extreme challenge," according to Hughes.

If current production declines continue and growth in demand forecast by the U.S. Energy Information Administration is realized, a continental shortfall equivalent to 13 trillion cubic feet per year (about 42% of demand) could occur by 2025. Hughes predicts the crunch will arrive much sooner than that, unless as-yet-unproven windfalls result from unconventional gas sources. Banking on such things as gas hydrates or liquefied natural gas to offset declines in conventional production, says Hughes, "is akin to planning your finances on the assumption you will win the lotto in 12 or 15 years' time."

Coal-bed methane will avert a natural gas crisis

Don't bet on it. In the United States, the practice of removing methane from ancient coal seams has proven to be a controversial and emotion-laden issue, given aquifer depletion, contamination and other problems. To date, Canada's coal-bed methane industry has drilled nearly 3,000 wells, but its political and economic future remains uncertain amid heavy public and government consultation. Despite 20 years of conflict-laden pumping, the United States has yet to coax more than 8.5% of its natural gas from coal seams. Yet the National Energy Board predicts the industry could somehow milk between 13% and 23% of Canada's supply from coal-bed methane by 2025. Right now, about 0.5% of our gas comes from coal-bed methane seams in farm country northeast of Calgary.

According to a recent paper by the National Energy Board, coal-bed methane production can grow only with mind-boggling feats of intensive drilling. Projects in central Alberta between Calgary and Edmonton could further industrialize the landscape with up to 50,000 wells, and turn rolling prairie into "a manufacturing process," says the report.

Coal-bed methane production is already proceeding at a rapid pace in the West, but few analysts expect it to make up for conventional declines. "If we are going to meet the NEB prediction," says Hughes, "we have a lot of work to do."

Liquefied natural gas is a knight in shining armour

It might be in Camelot, but not in the real world. Taking gas from the Middle East, cooling it, pumping it onto a tanker and shipping it around the world to terminals where it can be unthawed into a gaseous state is already a major business. In fact, the world's 150 liquefied natural gas (LNG) tankers can now move enough gas to satisfy 6% of world consumption (more than five trillion cubic feet per year).

But LNG has powerful drawbacks. It requires costly infrastructure that takes about five years to build. An entire production and delivery system costs anywhere between $3 billion and $10 billion. The process of cooling, transporting and warming up the gas is energy-intensive, consuming 15% to 30% of the resource transported. And not many communities want an LNG terminal in their backyards. An accidental conflagration at one in Skikda, Algeria, in January 2004, killed 27 people and injured another 74. Terrorists have also targeted the highly flammable facilities. Public opposition has already killed eight North American proposals for LNG terminals over the past two years.

As president of WestPac Terminals Inc., a Calgary-based LNG company, Rob Woronuk has proposed a terminal for an island 11 kilometres off the coast near Prince Rupert, B.C. Unlike many projects, it would run on a quasi-utility model, so consumers wouldn't end up paying inflated prices. "Producers will get their share, but there will be a balance," says Woronuk. "LNG is going to be crucial." Still, everyone agrees it is no silver bullet.

Coal can't help us

Not true. Dirty coal is already experiencing a resurrection for the simple reason that it is the one hydrocarbon resource the world still has in abundance. In fact, 90% of North America's remaining hydrocarbons are coal, which is one resource the Middle East does not possess. Coal boasts a much lower heat cost than gas or oil, is easier to transport, and provides the lowest electricity costs on the planet. But coal also comes with toxic side effects: it produces twice the greenhouse gas emissions of natural gas. "The key to coal is better and cleaner technology," says Hughes. The best technologies now on the market can reduce greenhouse gas emissions and other pollutants by 30%. Even without expensive new technology, coal has became the world's fastest-growing hydrocarbon fuel source in 2002 and 2003.

With better technologies we will squeeze more fuel out of our fossil heritage

We can hope, but technology's track record is not inspiring. In the 1970s, fusion was going to solve our woes, and Richard Nixon even promised "hydrogen-fueled vehicles." But North Americans are still waiting for any meaningful application of either innovation. In fact, hydrogen looks more and more unlikely. It makes little sense from an efficiency perspective--the energy needed to crack the hydrogen for a fuel cell is greater than the energy produced--and many analysts conclude that simple conservation measures would be cheaper than any transition to hydrogen.

The promise of better technology often becomes nothing more than the delivery of greater force. Right now, more technology means more drilling rigs in the field. "That's not a technological innovation," says Woronuk. "That's just high prices and brute force." Nor is anyone really investing in the future. According to Statistics Canada, R&D related to energy fell to about $900 million in 2001 from $1.3 billion in 1983.

It is also instructive to note that the Ford Model T got better fuel mileage than most of its modern counterparts.

Don't worry, the market will take care of things

The National Energy Board believes higher prices will solve our natural gas woes by encouraging fuel switching and conservation. Yet as Houston-based Matt Simmons, the world's foremost private energy banker, has noted, "free markets and energy security do not mix." Deregulation in the 1980s did not expand supply options and only temporarily reduced costs. With no long-term guidelines and no surplus capacity, the only thing the market can deliver is "volatility," argues Simmons. Longtime gas analyst Woronuk agrees that volatility and price shocks don't make a plan. "Economics 101 will solve the mess, but the trouble is it will do so with a machete," he says. "It will hurt."

In November 2003, a number of energy specialists wrote in the British science magazine Nature that almost all forecasts on oil prices have a dismal track record for accuracy--yet decision makers still believe the market will yield enlightened policy. "We view this as recipe for disaster and it is enhanced by the failure of science to be used as fully as it should be," concluded the authors. Hughes draws similar conclusions. He notes business as usual is "not a sustainable option," and argues "a longer view is required than the lifespan of a typical government."

Given Hughes's forecasts, Canadian businesses have three choices: they can demand an energy plan from our political leaders, pray for a technological fix or a world depression--or prepare for a wild ride with energy supplies.

---

Posted by Arthur Caldicott at 09:27 PM

February 01, 2005

Government Spending on Canada’s Oil and Gas Industry

News Release
Pembina Institute
31 Jan 2005

Government Spending on Canada’s Oil and Gas Industry — Undermining Canada’s Kyoto Commitment

Ottawa— Government Spending on Canada’s Oil and Gas Industry — Undermining Canada’s Kyoto Commitment, a study released today by the Climate Action Network — Canada, reveals that the federal government gave Canada’s oil and gas industry more than $1.4 billion in 2002 in tax concessions and other subsidies — an increase of 33% over the 1996 level. The 60-page report was prepared by the Alberta-based Pembina Institute, a close observer of the industry for many years.


“At a time when the Minister of Natural Resources is proposing to weaken Kyoto targets for industry on economic grounds, we wanted to understand the extent to which the federal government is actually bolstering the profits of this already highly profitable sector,” said John Bennett, Executive Director of the Climate Action Network.


Twenty percent of Canada’s greenhouse gas emissions came from the oil and gas sector in 2002 — an increase of 47% over the 1990 level. “Kyoto targets for the oil and gas industry should be significantly toughened, especially in light of this corporate welfare that the sector is receiving,” added Bennett.


According to recent media reports, Natural Resources Canada is proposing that industry be required to reduce annual emissions by only 37 megatonnes under the government’s revised Kyoto plan, compared to 55 megatonnes in the current plan. These reductions will still allow the oil and gas sector’s emissions to increase well beyond present levels. The Deputy Minister of Natural Resources recently acknowledged that even the current target would cost the oil sector no more than 25 cents per barrel. Oil is currently selling for around US$45 (CAN$55) per barrel.


The report found that federal support of the oil and gas industry totaled $8.3 billion during 1996–2002. This compares to the $3.7 billion that the government has allocated to the Kyoto Protocol since 1997. The Protocol requires Canada to reduce its greenhouse gas emissions to 6% below the 1990 level by 2008–12.


“We attempted to examine every aspect of government subsidies to the oil and gas industry. It was a complex endeavor, but the numbers are based on the best publicly available data and verifiable,” said Amy Taylor of the Pembina Institute, the report’s lead author. “To bring fiscal and environmental policy into alignment, the government should establish a timetable to eliminate these subsidies.”


-30-


The full report is available here.


For more information contact:

John Bennett, Executive Director, Climate Action Network, 613-291-6888

Amy Taylor, lead author, Pembina Institute, 819-483-6288 ext. 33 (January 31 only) or 403-678-3355

Matthew Bramley, co-author, Pembina Institute, 819-483-6288 ext. 26

Posted by Arthur Caldicott at 12:26 PM