sqwalk.com

GSXCCC responds to DPP complaint to BCUC

28 July 2005

Mr. Robert J. Pellatt, Secretary
British Columbia Utilities Commission
Sixth Floor, 900 Howe Street, Box 250
Vancouver, BC, V6Z 2N3

By email: commission.secretary@bcuc.com

Dear Mr. Pellatt:

Re: Project No. 3698354, BC Hydro VI CFT EPA Review

This letter revises and corrects the previous letter of 28 July 2005 from GSXCCC, et al (see final paragraph). Please disregard the earlier letter.

The GSX Concerned Citizens Coalition, BC Sustainable Energy Association and SPEC (“GSXCCC, et al”) have received correspondence from Duke Point Power (“DPP”), dated 12 July 2005, regarding BC Hydro’s cancellation of the Electricity Purchase Agreement with DPP, requesting that “a complete explanation should be provided to the Commission,” without specifying who should provide the explanation or under what section of the Utilities Commission Act such an explanation should be provided.

Subsequently, GSXCCC, et al received further correspondence from DPP dated 26 July 2005, which makes reference to a letter of 13 July 2005 from the Commission, which apparently established a schedule for BC Hydro to respond to DPP’s above-referenced letter of 12 July. DPP’s 26 July letter also references “submissions made to the Commission by BC Hydro in its letter of July 21, 2005,” apparently in response to DPP’s letter and in accordance with a schedule set by the Commission. GSXCCC, et al have not received copies of the above-referenced letters from the Commission and BC Hydro.

GSXCCC, et al adopt the position taken by the Joint Industry Electricity Steering Committee, in its letter of 20 July 2005, in particular:

"The EPA has been terminated and that should be the end of the matter. Any outstanding issues between DPP and BC Hydro should be sorted out by those two parties based on their contractual rights, without the involvement of the Commission or other Stakeholders."

In addition, GSXCCC, et al are concerned about the possibility of the Commission’s engaging in a process on a matter of interest to all parties to the review of the DPP EPA, where most of those parties are excluded, and not given opportunities to know what is under discussion and to express their views and interests.

GSXCCC, et al request that the Commission clarify the nature of discussions that have been and will be taking place in this matter between the Commission, BC Hydro and DPP. As interested parties, GSXCCC, et al wish to be given the chance to participate – along with any other interested party – in any further process in this matter that involves the Commission and more parties than just DPP and BC Hydro.

Respectfully submitted,




Tom Hackney, President, GSXCCC

cc:
Intervenors in the review of the DPP EPA

Download GSXCCC letter as PDF

Wind power still viable: Sea Breeze

Robert Barron
Daily News Nanaimo
July 28, 2005

The demise of one wind power proposal for Vancouver Island doesn't mean wind power is dead as an energy option for the Island, says Paul Manson.

Manson, president of Sea Breeze Power Corp., said wind power is seeing record expansion around the world, and he expects it to play a much larger role in British Columbia's future energy needs.

"The World Engineering Council has named coastal B.C. as the most economical wind resource in the world," said Manson.

Manson's Vancouver-based company is planning to build a wind farm with up to 150 windmills at its Knob Hill Wind Farm on northern Vancouver Island that the company expects will produce 450 megawatts of power, enough energy for about 350,000 people.

Another wind energy company, Stothert Power, which had an agreement with BC Hydro to deliver about 58 megawatts of power from its proposed farm near Holberg, also in north Vancouver Island, recently cancelled the agreement.

The company, which would have built the first wind power generators in B.C., terminated the much-touted agreement after determining the site didn't produce enough wind and the price of steel to build the wind farm had risen too high to be make the operation profitable.

Manson said, unlike Stothert's site which is situated on the side of a steep mountain and would likely have a lot of turbulence, the Sea Breeze site's topography is flat with less turbulence and less wear on the turbines.

"As for the rising price of steel, of course that means some impacts on our profitability, but this can't be looked at in isolation," he said.

"The price of most manufacturing goods are going up these days, but we don't see it as a deal breaker."

Manson said the company is optimistic BC Hydro's attitudes towards green, reusable energy producers are changing since its last Call for Tender process, which resulted in the recently scuttled decision to build a gas-fired generation plant at Duke Point.

"Recognition is finally dawning of the tremendous unused assets that exist here when wind power is tied into Hydro's current dam systems," he said.

"We didn't participate in Hydro's last Call for Tender process as Hydro put a ceiling price on the bids and wouldn't consider any bids higher than that which caused a shocking rate of attrition among potential energy producers who then walked away.

"However, we expect this fall's Call for Tender process will be open to all bids and we're optimistic we'll see success with our bid," Manson said.

Islanders Aim to Scuttle BCTC Overhead Line Plan

Jackie Truscott
Gulf Islands Driftwood
July 27, 2005

You may remember that on June 4th a well-attended community meeting was held at Artspring where BC Transmission Corporation (BCTC) presented some alternatives to its proposed new overhead 230 kV transmission line from the mainland to Vancouver Island.

At that meeting, in response to heated opposition, BCTC agreed to take the community's request for an HVDC Light alternative to higher management.

On July 18th a meeting was held at BCTC offices in downtown Vancouver. This was attended by BCTC's project managers together with Gary Holman, CRD director, Kimberly Lineger of the Islands Trust, two IRAHVOL (Island Residents Against High Voltage Overhead Lines) and one other SSI representative together with representatives of ABB, the manufacturers of HVDC Light technology, Sea Breeze Power Corp and one member of TRAHVOL (Tsawwassen Residents Against High Voltage Lines). IRAHVOL and Sea Breeze requests to bring independent engineers to the meeting were denied, as was attendance by a representative from the Corporation of Delta.

Despite IRAHVOL's attempts to broaden the agenda, the only items discussed were the two HVDC Light options which were presented at the June 4th meeting. ABB gave a very informative presentation on the many technical and environmental advantages of HVDC Light, but after hearing BCTC's responses to questions raised, it was apparent that BCTC is not interested in changing its plans despite concerns of the affected communities.

Unlike the AC cables now in place, which can leak toxic oil into the marine environment and need ugly overhead transmission lines, HVDC Light is a dry-insulated cable which has no electro-magnetic fields and which is designed to be direct-buried rather than encased in concrete. ABB were unable to effectively challenge BCTC's high cost comparisons for HVDC Light because detailed construction estimates had not been provided in time.

IRAHVOL and ABB continue to believe that if all costs are fairly analyzed and system benefits fully evaluated, HVDC Light is a viable alternative which could be routed around the islands via submarine cable instead of using the fifty year old right of way through the middle of Galiano, Parker and Salt Spring Islands.

However, on July 7th BCTC made formal application to the BC Utilities Commission (BCUC) for approval of the estimated $245 M Vancouver Island Transmission Reinforcement project. The new lines would have about 600 MW capacity to supply Vancouver Island yet Salt Spring Island and the Gulf Islands have a peak load of only 60 MW.

IRAHVOL proposes to intervene with the BCUC to prevent this project being bullied through the islands and to attempt to delay the project until a full assessment of its need, technology and routing has been completed. BCTC has repeatedly warned that there could be a crisis on Vancouver Island as early as 2008 but this is misleading at best.

Sea Breeze Power Corp. is an independent transmission company which plans to install a 550 MW HVDC Light interconnector between Victoria and Port Angeles.

If all approvals are received this winter, as anticipated, the project will be completed by the fall of 2007. This would be a full year ahead of the BCTC proposal and would be able to take up any shortfall in capacity to Vancouver Island in the event that either one of the two 1300 MW 500 kV northern lines should go down during the coldest period of the winter, when peak demand is highest.

After the failed GSX gas pipeline proposal and the cancellation of the Duke Point proposal it is apparent that neither BC Hydro nor BCTC currently have a well-thought-out long-term plan for Vancouver Island's energy future.

It is now time for BC Hydro and BCTC to reassess all solutions including green power generating options on Vancouver Island, power resources from independent producers and power reduction strategies before they lose all credibility.

If you wish to know more about IRAHVOL or the VITRP, check the IRAHVOL website at www.irahvol.org or phone Enid or Barb Turner at 537 9153.

The writer is an IRAHVOL member.

Harvesting the wind

Glenn Bohn
Vancouver Sun
26-Jul-2005

OLD MASSET - To most people, the storm-battered seas off the northeast coast of the Queen Charlotte Islands seem a cold, inhospitable place. But to civil engineer Fred Dabiri, those shallow and wind-swept waters are just the place he's been looking for.

Dabiri is one of the directors of Vancouver-based Nai Kun Wind Development Inc., a company that wants to build the largest wind farm in Canada and the largest offshore wind farm in North America.

The Vancouver company is pitching a 700-megawatt project, which would generate enough electricity to power about 240,000 homes.

A total of 350 wind turbines would be anchored on the seabed, in depths of 20 metres, about eight kilometres or more offshore.

Because the turbines would not be on land, where the wind is slowed by trees and hills, they could tap the full force of the wind.

Throughout the year, the winds here average about 58 km/h, or about twice the speed needed to make wind an economically attractive energy source.

In November, December and January, when winter storms bash the islands, Environment Canada has recorded gusts of wind up to 161 km/h.

The modern-day windmills used to convert that non-polluting resource to electricity would not be little things.

Each steel tower, a single column topped by three slow-moving blades, would rise about 80 metres above the ocean surface.

Dabiri says the sheer size of the machines would make them difficult to transport to a land-based site, because each would need a highway-standard access road. Those roads would have to cross streams and cut through forests. And the northeast corner of the archipelago the Haida call Haida Gwaii is a long-established park -- Naikoon Provincial Park -- not a logging area that already has wide gravel roads.

"Environmentally, it's far more damaging to be on the land than the ocean," Dabiri said during a recent interview at a windy beach at Old Masset. "This is a much cleaner way to generate power."

There are already existing or proposed offshore wind farms in the ocean near Wales, England, Denmark and Sweden. The largest such project, constructed in 2002, at Horns Rev in Denmark, now generates about one- fourth the power that Nai Kun would produce.

There are also large land-based wind farms in Europe and North America -- including ones in Alberta, Saskatchewan, Ontario, Quebec, Prince Edward Island, Nova Scotia and Yukon.

A company called Cape Wind is proposing the first offshore wind farm in the U.S., about eights kilometres offshore Cape Cod in Massachusetts.

Like other wind energy companies, Cape Wind paints itself green by noting its energy project would produce no greenhouse gases and no clouds of toxic smoke. But Cape Wind is getting a rough ride from a conservation group, the Alliance to Protect Nantucket Sound. In May, the non-profit group hired Charles Vinick, who was prominent in the successful "Free Willy" campaign to return a captive killer whale to the ocean.

The Alliance to Protect Nantucket Sound, like many of its counterparts elsewhere, uses environmental arguments to oppose the wind energy scheme. For instance, it makes much of the fact that the Cape Wind project is on the Atlantic flyway, the migration route used by millions of songbirds and threatened bird species. The anti-wind farm group calls the 130 proposed wind turbines "130 navigation and safety hazards" for oil tankers, commercial fishing boats, ferries and sailboats. The esthetics of all those turning blades on the sea -- and the impact that may have on tourism and property values -- is another argument aimed at Cape Wind. The Cape Cod Chamber of Commerce, which wants Cape Cod to remain one of the top 10 tourist destinations in the U.S., fears a wind farm would be "a major blight on the horizon" that will keep tourists away.

So far, the wind farm proposal in B.C. hasn't fuelled those kinds of attacks or triggered a big anti-wind farm campaign.

Michael Burns, the president of Nai Kun Wind Development, said a person on the beach in the Charlottes would have difficulty seeing the wind turbines. According to the current plan, the closest wind turbine would be eight kilometres offshore. There are no houses in Naikoon Provincial Park. (The company spells its name differently, but both the park and the company are named after a Haida family.)

"If you stood on the beach in Naikoon Park, these things would appear about three-quarters of an inch high," he said.

In a recent column published in the New Scientist magazine, prominent Canadian environmentalist David Suzuki distanced himself from environmentalists in North America and Europe who are, in Suzuki's words, "locking horns with the wind industry" and arguing that wind turbines destroy the ambience of the countryside.

"We cannot shout from the rooftops about the dangers of global warming and then turn around and shout even louder about the 'dangers of windmills,'" the Vancouver-based scientist and broadcaster wrote. "Climate change is one of the greatest challenges humanity will face this century."

One of the most recent rebuffs of wind farms occurred in June in the state of Victoria in Australia, where authorities rejected a 70-turbine land-based wind farm on the grounds that it threatened a nearby colony of rare, wedge-tailed eagles. An independent panel predicted "significant numbers" of eagles could fly into turbine blades.

Nai Kun Wind Development Inc. is proposing a far larger wind farm in northwest B.C. than the Australia project or the proposal at Cape Cod.

The 700 megawatts of power it would generate is relatively small in comparison with the 11,000 megawatts BC Hydro can provide to its residential and commercial customers, which include power-hungry industries and businesses that consume vast quantities of electricity.

Dabiri said the electricity generated by Nai Kun would not be used on the Queen Charlottes, which now rely mostly on diesel-generated electricity, because wind power projects need to be built in concert with a big hydro-electric facilities. They need to be connected with a large electrical grid, to balance out supply and demand. Wind turbines will generate the most electricity in winter when the winds are heaviest, while hydro dams generate the most electricity in summer, when snowmelt tops the reservoirs.

"Hydro can take the energy from the wind farm whenever it comes," Burns said. "If they've got too much energy, they simply hold the water behind a dam and use the wind energy. When there's less wind energy than usual, they run more water through the dam."

Nai Kun has designed a 700-megawatt project because that's the amount of additional energy that BC Hydro could carry in its existing main transmission line from Prince Rupert to Greater Vancouver. No additional transmission lines -- a pricey proposition -- would have to be built. Subject to a power-purchasing agreement that Nai Kun hopes to negotiate with B.C. Hydro, wind-generated electricity would be transmitted through an underwater cable to the main transmission line south of Prince Rupert and used as Hydro sees fit.

Although Hydro doesn't buy any wind-generated electricity now, the Crown corporation is seeking regulatory approval this fall to ask independent power producers to sell Hydro power as their projects come on stream, as early as 2010.

Mary Hemmingsen, Hydro's director of power planning and portfolio management, is one of the Hydro officials who will visit the northern coast of the Queen Charlottes this August to learn more about the Nai Kun proposal.

Hemmingsen said Hydro wants at least 50 per cent of the energy it wants to buy to be "clean energy," a category that she said includes wind power, run-of-the-river hydro power and biomass-generated power. Energy sources that are not considered clean include coal or gas-fired power plants.

There are some taxpayer-subsidized incentives that wind power companies can take advantage of, including a federal tax credit of about $10 for every megawatt of power.

But the cost of that power -- whatever the source -- remains key.

"We're looking for the most cost-effective bid," Hemmingsen said.

Nai Kun hopes its first wind turbines will be installed and be generating power by late 2008.

Burns, the company's president, is a former chief financial officer for BC Gas and a former vice-president of IBM Canada. Dabiri is president of David Nairne and Associates, a B.C.-based firm of engineers, architects and project planners that is already building the largest construction projects in the Queen Charlottes, or Haida Gwaii. Other directors come from B.C. Hydro, Westcoast Energy and other oil and gas firms.

Burns said he is confident the company will be able to raise the $1.5 billion it needs from private investors, when it's time to seek financing. He said B.C. Hydro and the company don't yet have any signed agreements that commit Hydro to buy wind-generated electricity from Nai Kun, but those deals can't come until electricity is actually being produced.

Nai Kun isn't pioneering a new wind turbine technology. It would buy wind turbines from existing manufacturers. But finding $1.5 billion isn't the only hurdle the company will have to jump.

Environmental impact studies, which can take years, have yet to be done. Sometime afterwards, the provincial and federal governments would have to give the green light. The Haida's yet-to-be-resolved legal claim over the "land, inland waters, seabed and sea" of Haida Gwaii is another factor, because the Supreme Court of Canada ruled in 2004 that governments must consult with and accommodate aboriginal groups affected by land and resource developments.

Nai Kun sought and obtained permits from the provincial and federal governments for the right to do seismic tests, wind tests and other environmental studies, but has also obtained a written permit from the Council of the Haida Nation, the political organization that represents Haida interests on the islands.

Nai Kun has also proposed to make the Haida 50-50 partners in a company that would operate and maintain a wind farm.

Wilson Brown, the elected chief of the aboriginal village of Old Masset, said the village council doesn't yet have a formal position about the megaproject proposal.

"There's not enough data to make an informed decision," he said.

Brown said he is responsible for the aboriginal community of Old Masset but is also one of the commercial crab fisherman who want to make sure the wind turbines won't damage crab habitat.

"I want to make sure my livelihood is still protected," he said.

Village of Masset Mayor Barry Pages said his municipal council has also made no formal decisions and hasn't yet held any public meetings.

"The crab fishing industry is a major player in our community and there are major questions that need to be addressed," Pages said, echoing Brown's concerns.

gbohn@png.canwest.com

TAPPING THE WIND'S ENERGY:

The who, what, where and why of a proposed wind energy megaproject in the Queen Charlotte Islands, or Haida Gwaii

Who: Nai Kun Wind Development Inc., a wholly-owned subsidiary of Uniterre Resources Ltd., a Vancouver-based energy and exploration company on the Toronto Venture Exchange.

What: Nai Kun is proposing a "wind farm" with as many as 350 huge wind turbines. The modern-day windmills could generate as much as 700 megawatts of electricity or enough power for 240,000 homes.

Where: The wind turbines would be anchored in the shallow waters of stormy Hecate Strait, at least eight kilometres from the northeast coast of Graham Island.

Why: The company is proposing the $1.5 billion private-sector venture for profit. An underwater cable would bring the power to the B.C. mainland, where the company wants to sell the power to BC Hydro. The potential jobs: about 2,500 person-years of work during the construction period and about 50 permanent jobs.

Source: Nai Kun Wind

Wind blows out of Holberg wind energy project

North Island wind farm project axed
Andrew Duffy, Times Colonist, 26 Jul 2005
Harvesting the wind
Scott Simpson, Vancouver Sun, 26 Jul 2005
Green power idea has blown away
Les Leyne, Times Colonist, 27 Jul 2005
Vaughn Palmer on CKNW, 28 Jul 2005

COMMENT: The Holberg project was the first, and still the only, wind energy project to obtain a supply agreement with BC Hydro. At the time of the call, BC Hydro rejected other wind proposals, but accepted the Stothert project. Why? Win Stothert, the owner of the company, had no track record in wind energy development, any more than did Sea Breeze Power, for example. And many informed observers were concerned that BC Hydro's price cap of 5.5 cents a kilowatt hour was too low to be viable.

And that's proven to be the case. The combination of the wind resource - according to the comments in these news items, somewhere between okay, but not great, to inadequate. - and the price, has only now been discovered to not be viable.

But is that the whole story? Stothert collapsed his engineering business about the same time. Retiring, sort of. There was never any sense that anyone connected with the Holberg project was much excited about it. And Stothert, was and remains, Chairman of the Board of Hillsborough Resources, owners of the Quinsam Mine in Campbell River, as well as other coal properties, and proponent for a coal-fired generation plant to be built at the Quinsam Mine.

---

North Island wind farm project axed

Andrew A. Duffy
Times Colonist
Tuesday, July 26, 2005

The energy purchase agreement between B.C. Hydro and Holberg Wind Energy has been cast into the wind.

What was to be the first wind-farm project to supply Hydro with power was cancelled by the project's proponents because the wind supply was not reliable. "In 2002 a meteorologist predicted we'd have a strong energy source west of Holberg toward Cape Scott ... and on that basis we bid for a 20-year power sale agreement with Hydro," said Win Stothert of Stothert Power Corp, one of the partners in Holberg along with Global Renewable Energy Partners.

Stothert said subsequent tests and a recent six-month study have shown the wind power in the area "is not as sound as had been predicted."

That news coupled with rising construction costs brought on by the price of steel doubling over the last year forced the company to walk away.

The company and Hydro had agreed on 58.5 megawatts of wind capacity to be developed on Vancouver Island via the $100 million Holberg Wind Energy proposal -- 37 to 45 wind turbines on the northern tip of the Island, 60 kilometres west of Port Hardy.

While neither Holberg nor Hydro would discuss the price agreed to per megawatt hour, Hydro was paying a $5 per megawatt hour green credit on top of the rate. "It's obviously disappointing, we'd like to see a varied resource mix," said Hydro spokeswoman Elisha Moreno.

The capacity produced was expected to be able to power 17,000 households and was to be transmitted over lines connecting to the grid at a Port Hardy substation.

TOP

---

Harvesting the wind

Scott Simpson
Vancouver Sun
26-Jul-2005

Proponents of the first wind power facility ever approved by BC Hydro have withdrawn their plans.

Developers of the Holberg wind energy project would have situated a $90 million facility producing 58 megawatts, enough to power 17,000 homes, on a remote inlet 45 kilometres west of Port Hardy on Vancouver Island.

Premier Gordon Campbell announced in September 2003 that Holberg had been selected as part of an estimated $800 million in new private-sector electricity generation projects in British Columbia.

Proponent Win Stothert followed up the premier's comments by saying that B.C.'s potential for wind power was "tremendous."

But in an interview on Monday, Stothert said extensive testing had indicated that the Holberg site was not as productive as initial studies by BC Hydro had suggested.

Stothert said the site was productive but could not be cost-effective without the same economic benefits that Hydro has offered to companies producing so-called 'firm' electricity -- as opposed to the intermittent supply that can be derived from weather-dependent wind power.

"It turns out that although we have a relatively favourable wind resource there, it's not good enough for the price we were able to get from BC Hydro for our electricity," Stothert said.

The project has always had some financial question marks attached -- Hydro had contracted to pay $55 per megawatt for the energy, which is comparable to what a B.C. homeowner pays to keep the lights burning.

But it was an amount that Stothert acknowledged was less than the cost-per-megawatt to actually produce electricity at the wind farm.

ssimpson@png.canwest.com

TOP

---

Green power idea has blown away

Les Leyne
Times Colonist
July 27, 2005

A lack of raw material -- wind -- has scuttled the Holberg proposal

Maybe it's not a clanging alarm bell, but the cancellation of a small power proposal on northern Vancouver Island seems to raise a warning flag.

We've been repeatedly assured there was no need for a great big gas-burning generating plant at Duke Point, because the opportunities for alternative energy sources are so rife.

So what happens to one of those alternative proposals -- a wind farm -- that made it through the approval process and had a signed, sealed and delivered contract with B.C. Hydro? It was quietly abandoned a few weeks ago -- because there isn't enough wind.

It's not that big a deal. The fate of the Island doesn't hang in the balance. But Stothert Power's decision to walk away from its project near Holberg -- at some considerable expense -- is a quiet illustration of the unexpected difficulties that can crop up in the on-going exploration of alternatives to conventional electricity production.

It was considered a fairly big deal last year when the Vancouver-based firm signed a deal with B.C. Hydro. The company planned to erect a few dozen wind turbines on a remote ridge, based on preliminary assessments that showed the spot was a viable generating site. They would have produced about 58 megawatts of power -- enough for about 17,000 homes, but a pittance in the grand scheme of things.

More important, they would have been the first wind-power generators in B.C. Stothert, with some international partners, had a 20-year contract under which B.C. Hydro agreed to buy all the electricity the turbines produced. That energy purchase agreement is the keystone to all the alternative projects that are now on the drawing board.

It's what proponents can take to the financiers and show as a secure long-term source of revenue.

But even with that document in hand, Win Stothert found his firm couldn't make a go of it. B.C. Hydro did an early assessment and found the site viable. A meteorologist hired by the company three years ago looked deeper into it and determined it still looked promising. But Stothert said this week that after erecting five measuring devices and collecting data for about six months, they found the winds were favourable, but not favourable enough.

Combined with a 30-per-cent hike in the project's multi-million dollar budget brought on by a doubling in the price of steel, it was enough to stop the project in its tracks -- for the time being.

B.C. Hydro is shrugging off the cancellation. The Holberg project was only one of 17 new ventures it agreed to last year, and the only wind farm in the mix. Some attrition was expected. The utility is expected to open another call for proposals this fall and has rejigged the process so that people pitching concepts have to be further along in proving their viability.

And there are still some wind-power advocates keenly interested in getting into the game. Despite the Holberg findings, there are studies showing B.C. has enormous potential when it comes to wind turbines.

There are some audacious -- and outlandishly expensive -- schemes to build them offshore in the Queen Charlottes. There's a large-scale proposal right around the corner from Stothert's site, although it didn't make it in Hydro's first round of buys.

And there are very promising sites in the Peace River country, including one right on top of the Bennett Dam, which has kept many of the lights on in B.C. for the past 40 years.

Maybe they will prove out and start spinning soon. Maybe the old undersea transmission lines that now supply most of the Island's needs will be replaced on schedule, and everything will be fine. Maybe some of the other green power proposals will be up and running soon enough to avert any problems. Maybe tidal power will save the day.

But on post-Duke Point Vancouver Island, one of the initial baby steps toward green self-sufficiency in electrical power has turned out to be a faltering one. It's just not as easy as the theorists make it out to be.

Just So You Know: One bit of good news: The independent power producers and B.C. Hydro are back on speaking terms.

The association representing all the private firms interested in supplying power sent B.C. Hydro a rocket a few weeks ago -- detailed earlier here -- complaining about the generally shoddy treatment they were getting, citing Duke Point as a prime example. (That's where Hydro put the operation of the big proposed plant out to bid, picked a winner, signed a contract, and then cancelled the deal at the last minute, citing concerns about the length of time court appeals were taking.)

Producers demanded a meeting to air their grievances. They got the meeting and apparently cleared at least some of the air, although as the Holberg case shows, it's often hard to know which way the wind is blowing.

leyne@island.net

TOP

---

Vaughn Palmer on CKNW

Vaughn Palmer
CKNW
28 Jul 2005

VAUGHN PALMER says the cancellation of a wind power project on Vancouver
Island was 'a bit of a shock' and a reminder that in the drive for green
power in BC we still have a long way to go.

Download mp3 audio file (1.7 mb)

TOP

We need a few more Ingmar Lees

Dave Obee
Times-Colonist
July 24, 2005

Think of passion and determination — and a desire to make a difference

My friend Ingmar Lee left the hemisphere on Wednesday, and no doubt a few hundred people in corporations, government agencies, environmental groups and everything in between are breathing sighs of relief.

I have to wonder, though, whether the people of India know what’s in store.

Lee is absolutely committed to environmental causes, with no compromises allowed or even considered. He has devoted much of his life to raising awareness of what’s happening to nature on Vancouver Island and around the world.

He’s offended a few people along the way, but that goes with the territory. He’s not the type of person to sugarcoat his message, and he’s not willing to fade into the shadows if he believes someone should be doing more to preserve our planet for future generations.

Lee stands up for what he believes in. He’s also willing to sit down for what he believes in, too, if it means sitting in a tree. But don’t ever accuse him of sitting on a fence.

If he decides a corporation such as Weyerhaeuser needs to be challenged, he’ll do it. If he believes voters need to be reminded of Premier Gordon Campbell’s drunk-driving conviction in Hawaii, he’ll put it on a shirt. And if he thinks environmental groups have sold out to corporations, he’ll say so. Nobody gets a free ride when Ingmar Lee is watching.

Lee was an Independent candidate in Victoria-Hillside in the provincial election, taking 115 votes for a lastplace finish. He knew he had no chance of winning, but he saw an opportunity to get his message across.

He found ways to do that several times during the election campaign. On May 3, he started shouting at a televised all-candidates forum at the Ocean Pointe Resort. He was dragged out of the room by police and security staff, then taken away in handcuffs.

If he had wanted to infiltrate the business-oriented meeting, he could have done a much better job by camouflaging himself in a coat and tie. But he was wearing a sleeveless T-shirt that said Weyerhaeuser Go Home, and featuring a copy of Campbell’s arrest photo. He was easy to spot, even before he grabbed for the mike.

A couple of weeks before that, he disrupted a Campbell rally in the Crystal Ballroom at The Empress. Before that, it was a press conference. The list goes on.

Lee was one of the protesters who camped in trees at Cathedral Grove to fight the plans to expand the parking lot by taking out some of the old-growth forest. Early last year, the group built a platform 50 metres up in one of the trees, then added seven more platforms in other trees, connecting them together with traverse lines.

It was at Cathedral Grove that Lee fell seriously ill with meningitis. He was in critical condition at hospital in Nanaimo for a few days, and his long hair became so badly matted that it had to be cut off. It would take more than a conservative hairstyle to change Lee, though; he was firing more save-thetrees e-mails to me within days of leaving his hospital bed.

At 45, he finally graduated from the University of Victoria this year with a degree in environmental sciences. It’s tough to get a degree when you’re sitting in a tree, and yes, that’s how he spent part of his time on campus. There was a plan for a new building, you see, and it would mean taking out some trees. Lee felt somebody had to do something, and that somebody was him.

Lee dropped by the TC office this week to argue, once again, on behalf of the Vancouver Island marmot. And then he was off to India, where he and his partner Krista will attend Pondicherry University and Krista’s seven-year-old son Desmond will go to a Montessori school. Another feature of the region, he notes, is the best vegetarian food in the world.

Lee says he is hoping to do a master’s research thesis about the Burmese Buddhist appreciation of big trees and ancient forests. He spent a year in Burma as a Buddhist monk in the 1990s, so he’s no slouch on the subject.

And there’s more.

“I hope to immerse myself in the very active Indian environmental scene,” he says. “In India, in places, it is still possible to meet people who are living as participants in the ecological cycles of nature. I think we modern humans have more to learn from them than they do from us.”

In the past five years, the Times Colonist has published more than a dozen of Lee’s essays on the environment, but that hasn’t stopped him from taking shots at us, too. We haven’t done enough, he says, on the subjects dear to his heart. Given his devotion to the cause, I would be disappointed if he said anything else.

I like Ingmar. I don’t agree with everything he says, and I don’t agree with, oh, about 98 per cent of his tactics. But I admire his passion, and his determination to stand up for what he believes in.

Too many people these days sit back, complaining about the way things are, but doing nothing to change them. Lee gets out and fights, ignoring any personal cost or hardship. Lee’s cause just happens to be the preservation of nature. We need more people like him, fighting for many different causes, people who aren’t afraid to be counted.

He’ll be in India for a couple of years if he stays the full length of his study visa.

Don’t forget that India has ancient forests, too, running along the spine of the country.

In the next two years, if we hear of someone climbing high up in the oldest trees of India, shouting that they must be saved, I’d put money on the identity of that protestor.

dobee@tc.canwest.com

---

Ingmar's partner Krista adds these notes:

As Ingmar would say, lots of other people have been involved in the environmental efforts mentioned below too. Three cheers for the tireless and skilled Raccoons at the camp at Cathedral Grove, and for all those involved in the Uvic tree-sit and "campus planning"! And to all those who put in countless hours of volunteer time monitoring, witnessing, writing, lobbying, and networking out of devotion to BC's beautiful places, you have my admiration too. I'm a total neophyte in India, heading off (more than a week late) to attend the Salim Ali School of Ecology and Environmental Sciences at Pondicherry University to do an MSc. under a Commonwealth scholarship, without knowing anybody there. There is news in the local paper about legislation giving forest tenure to forest-dwelling peoples, and mangrove restoration projects going on along the southeast coast not far from Pondicherry run jointly by ENGOs and international research institutes. If any of you have contacts here or particular interests we would be grateful for the opportunity to make connections.

Cheers,
Krista Roessingh

---

A recent posting by Ingmar, with respect to criticisms of Jim Snetsinger, the province's Chief Forester:

What else can be expected from the industry-lackey quislings who still work
for Campbell and his logging-besotted government? Only a total kowtowing toady could ever get Campbell's "Chief Forest Exterminator" position. Anyone with conscience was exterminated from the Ministry of Logging under this regime.

What an utter catastrophe for our once magnificent forests, and how shameful
that the slightest attempt to demonstrate alternatives to the'fibre-per-year-per-hectare' clearcut and 'variable retention' scam now ends up as yet another steaming stumpfield.

Shame on the BC Ministry of Logging, and it's Chief Industry Quisling, Snetsinger.

Let's get on with putting up the "BC's Monster Foresters" website, and put a
name, face and address to these crimes against nature.

Ingmar

Tidal power - The wave of the future

Paul Luke
The Province
24-Jul-2005

Three small B.C. companies are turning the tide on the world's future energy supply.

The trio has plunged into the endless moondance of tidal currents that number among B.C.'s most abundant and -- until now -- overlooked natural resources.

Clean Current Power Systems, Blue Energy Canada and Canoe Pass have turned to underwater windmills in their individual bids to harness the potential power that flows along the world's coasts.

Early next year, Vancouver-based Clean Current will fire up a $4-million tidal-power project at Race Rocks, an eco-reserve 10 nautical miles southwest of Victoria.

Formally, if vertiginously, dubbed the "Pearson College-EnCana-Clean Current Tidal Power Demonstration Project at Race Rocks," the project will extract tidal energy and turn it into electricity.

The star of the small-scale show is Clean Current's tidal turbine generator, a piece of cutting-edge technology that looks like a windmill in a tube as its ducted blades spin some 20 metres beneath the waves.

The electricity it generates will be carried by cable to replace the diesel-generated power that has been providing the juice for Pearson College's marine education centre on Race Rocks.

Clean Current wants to field test the 65 kW-generator in the harsh marine environment and prove the technology is viable.

The company will then sell the heck out of it, president Glen Darou says.

"The world is ready for this technology. It needs it," says Darou, an ex-oilman and former chief financial officer of Shell Canada.

"We'd like to have every major generator manufacturer license the technology from us and market it out into the world."

A full-scale commercial version of the generator might cost less than $1 million to build, Darou estimates. An underwater tidal turbine farm would likely need at least 200 units to achieve economies of scale, but the units could be added one at a time, Darou says.

Clean Current's not the only one betting on the tidal turbine generator's potential. EnCana Corp., the Calgary-based energy giant, has invested $3 million from its environmental innovation fund in privately held Clean Current to get the project going.

Clean Current's technical partners include AMEC, Powertech Labs and Triton Consultants.

Whereas Clean Current uses a horizontal axis underwater windmill, Vancouver-based Blue Energy Canada uses a vertical axis. Blue Energy has been advancing its tidal- current technology in B.C. since 1990, when its predecessor moved here from Nova Scotia.

The private company has also proposed a demonstration-educational project at Stanley Park.

"Tidal energy is a rising star in the field of renewable energy worldwide," spokesman Michael Maser said. "B.C. is ideally situated to not only generate its own renewable energy that could . . . be available for export, but it could also become the seat of the emerging tidal energy industry, as Denmark has captured the wind industry."

Canoe Pass has an ambitious agenda to develop tidal-current energy projects in Canoe Pass, which runs between Quadra and Maude islands near the company's home base of Campbell River.

It has inked a memorandum of understanding for a feasibility study with Calgary-based New Energy Corp. Canoe Pass hopes to see one or two of New Energy's vertical-axis turbines installed in the pass from which it takes its name.

"We plan to complete the feasibility study in this calendar year, launch a 250-to-500 kW demonstration phase in 2006 and begin full-scale commercial development beginning in 2007," Canoe Pass spokesman Chris Knight said.

The "ocean power" category, which includes tidal-current energy, could become the world's fastest growing source of renewable energy in 15 years, says Chris Campbell, Nanaimo-based executive director of the recently formed Ocean Renewable Energy Group.

"Our forecasts are that ocean energy will be at or below wind- power costs when it matures," Campbell says.

Mary Hemmingsen, director of power planning and portfolio management with B.C. Hydro, says tidal- current energy shows lots of promise but remains costly and has yet to be commercially proven as a reliable source.

The utility is considering whether to issue a tender call for a near-commercial project in the interest of nurturing tidal energy as a potential power source, Hemmingsen says.

"There are a lot of attractive conventional sources. At some point, we're probably going to chew through those and look a few years down the road to what is an environmentally benign, good source of power," she says.

"Tidal power may offer that."

pluke@png.canwest.com

TIDAL POWER IN INFANCY

- No commercial tidal-current installations -- as opposed to barrage-style systems such as one in Nova Scotia -- are operating in the world.

- "Tidal-current power development is estimated to be one to three years behind ocean wave and five to eight years behind wind power," Triton Consultants says in a study prepared for B.C. Hydro.

- B.C. is said to have world-class potential, with high-velocity tidal- current flows in the passages between the Strait of Georgia and Johnstone Strait.

- Triton estimates B.C. has about 55 potential sites suitable for tidal- current extraction.

- Based on realistic assumptions for near-future technology, B.C.'s tidal-current resources could account for 40 per cent of Hydro's current annual power generation, Triton says.

Chevron, Oil, and China

Shepherd Bliss
Energy Bulletin
23 Jul 2005

“It took us 125 years to use the first trillion barrels of oil,” notes Chevron Corporation’s two full-page ad that began appearing in July in the Wall Street Journal, the Economist, Financial Times and elsewhere. “We’ll use the next trillion in 30,” the ad continues, thus quietly admitting to the Peak Oil that the industry has not previously disclosed.

“One thing is clear: the age of easy oil is over,” the ad reveals in a folksy letter from “Dave,” Chevron’s Chairman and CEO David J. O’Reilly. Most Americans are still unaware of the pending Peak Oil or try to deny the tremendous impact it will have upon us. Chevron proudly presents itself as “the Good Guy” by informing the public of the lessening supply of petroleum at a time when the demand is soaring, especially in China, India, and other industrializing countries.

Chevron’s multi-million dollar global corporate goodwill effort includes TV teaser ads throughout the US, Asia, Africa, the Middle East, and Latin America. Airport locations in Beijing, Moscow, Washington, D.C. and elsewhere broadcast the ad, also available online. Yet as the prices of crude oil and gasoline soar-symptoms of Peak Oil-so do the profits of Big Oil.

Chevron is one of the world’s four largest oil companies, so it should know a lot about petroleum. Chevron has half the story correct-that Peak Oil is upon us-but they may have the timing off, according to at least half a dozen recent books by oil experts.

“It is my opinion that the peak will occur in late 2005 or in the first few months of 2006,” writes geologist Kenneth Deffeyes in his new book “Beyond Oil.” Deffeyes was a Shell Oil company engineer and is a retired Princeton University professor.

This sooner-rather-than-later scenario is echoed by Houston-based investment banker Matthew Simmons in “Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy.” Saudi Arabia is the world’s largest oil producer. Simmons “argues that Saudi Arabian production is at or very near its peak.”

The Earth may have another 30 years, more or less, of a dwindling supply, which will be increasingly difficult and expensive to extract. I wonder what Chevron’s studies reveal will happen to civilization during that time. When they say that “easy” oil is over, how difficult do they think our petroleum-dependent lives will become as a result?

Exxon/Mobil has also recently admitted to Peak Oil, but without all Chevron’s fanfare. Their report “The Outlook for Energy: The 2030 View” forecasts a peak in five years. “No oil company has ever discussed peak oil production before,” writes energy consultant Alfred Cavallo in the May/June issue of the authoritative Bulletin of Atomic Scientists. “The public should heed the silent alarm sounded by the Exxon/Mobil report,” he continues.

Meanwhile, Chevron CEO O’Reilly speaks out of both sides of his mouth. While sweet-talking to the world in the ad campaign, he is tough-talking against China’s attempt to outbid Chevron for Unocal. After China’s state-owned CNOOC offered $18.5 billion for Unocal, besting Chevron’s $16.6 billion offer, the American suitor raised its bid to $17 billion. “Our increased offer has been driven by competitive circumstances,” an aggressive O’Reilly stated on July 19, the day his folksy letter appeared in the San Francisco Chronicle.

Behind the scenes Chevron and other corporations are pressuring Congress to reject the CNOOC offer as a national security risk and Un-American, should the Chevron shareholders accept the higher bid at their Aug. 10 meeting. The Chevron-China struggle to buy Unocal and thus control more oil is not over. Wall Street expects CNOOC to raise its bid. China has passed Japan as the world’s second largest consumer of oil, behind the US, and is expected to take more assertive efforts to secure its energy needs. The Iraq War may expand from being partly a behind-the-scenes US-China conflict into a more hot war between the world’s declining power and the world’s emerging power.

The US and China seem headed into an escalating conflict over oil, currency, Taiwan, and other matters. The July 21 New York Times reports “that a Chinese general threatened the United States with a nuclear attack if the United States attacked China during a Taiwan crisis.”

Meanwhile, the Chevron ad is classic green-washing. Whitewashing is a superficial coat that makes something appear cleaner than it is; green-washing is an attempt to present something that is environmentally damaging as clean. Now that most oil experts agree that Peak Oil will happen, Chevron wants to appear to be the oil company to act for the public good by informing people that we are indeed running out of oil.

“The same Madison Avenue firm, Young and Rubicom, that put together Bush’s TV ads in 2004 and the Army’s ‘Be All You Can Be!’ campaign prepared these ads,” according to attorney Matt Savinar. He wrote the book “The Oil Age is Over” and maintains the web-site lifeaftertheoilcrash.net. Savinar spoke to a grassroots Peak Oil group in Sonoma County, Northern California on July 20 at its fifth meeting.

We should ask “the tough questions,” fatherly Dave advises in his friendly letter. “What role will renewables and alternative energies play? What is the best way to protect our environment? How do we accelerate our conservation efforts?”

One would almost think that the Chevron chairman was in fact the chairperson of the Sierra Club. Dave makes it sound like one of the world’s most polluting companies in one of the world’s most polluting industries is actually on the side of the Earth, rather than merely trying to maximize profits by extracting natural resources that lead to global climate changes.

“At Chevron, we believe that innovation, collaboration and conservation are the cornerstones on which to build (a) new world,” the ad concludes. I wish that I could accept this as genuine corporate accountability. Chevron’s past degradation of the environment leads me to believe that they are once again seeking to fool the public with carefully chosen words at a time when a Peak Oil movement is growing. In Europe and Japan and in some small towns on the mainland citizens and some government officials are making plans to mitigate the impact of Peak Oil.

What sort of “new world” might Chevron have in mind, this skeptic wonders. America’s control of the world’s oil supplies-which it seems to be loosing during oil’s end game-enabled it to dominate the 20th century. As petroleum dwindles, so will US power, as China positions itself to be the superpower of the 21st century. Chevron’s ad is part of Big Oil’s struggle to maintain power. Dave’s folksy letter seems inclusive when it talks about “every citizen of this planet” and even calls upon environmentalists to “be part of reshaping the next era of energy.” Don’t be fooled. Beneath it is an attempt to shore up Big Oil’s threatened power base.

As the struggles around Peak Oil and its consequences heighten we can expect more such calculated public relations language to point to Big Oil as the Earth’s friend. Seeing through such green-washing will be important. Lets not make the same mistakes during the 21st century that we made in the last century by letting one country, the US, hoard too much of the world’s resources, and one industry, oil, concentrate too much power.

Look for yourself at the newspaper ad and see and listen to its television version by going to Chevron’s friendly website: www.willyoujoinus.com.

(Dr. Shepherd Bliss, sb3@pon.net, teaches at the University of Hawai’i at Hilo and writes for the Hawai’i Island Journal.)

RELATED NEWS:
Transatlantic alliance to secure fuel supplies...

Struggling to keep a lid on oil crisis...

Peak Oil and the Fate of Humanity...

Our Petroleum Predicament...

How to deceive friends and influence people: Oil crisis lies...

Dissident native group blocks access to coal property

Scott Simpson
Vancouver Sun
22-Jul-2005

COMMENT: This disruption of Fortune Minerals Mt. Klappan coal mining project by members of the Tahltan First Nation, comes on the heels of Shell Canada's decision to put on hold its coalbed methane development in the Klappan Coalfield, because of the same objections of Tahltan people that their rights have been infringed upon without their consent.

What Scott Simpson does not mention, is the internal governance dispute within the Tahltan community. Jerry Asp, the nominal chief of the Tahltan, and a strong pro-development force within the community, has had his legitimacy and authority undermined by Tahltan elders, the Iskut Band Council and the Dennis family.

Just two of the concerns:
1. the Tlabonatine area is still largely undisturbed by development, sits on the edge of the Spatsizi Plateau Wilderness Park, and is traditional and sacred territory for some Tahltan families. Shell's coalbed methane development and Fortune's Mt. Klappan coal mine will change all that and the Tahltan people most directly affected have never been consulted.
2. the entire area is beset with mining, coalbed methane, road, and transmission line project proposals. This is the result of high commodity prices and government policy encouraging this kind of development. Some Tahltan reason that these projects, if they are to proceed at all, should be developed over generations, so that a boom-bust effect does not happen, and the employment and economic impacts locally are continuous and sustainable. - Arthur Caldicott

A dissident group of Tahltan First Nation members has thrown Fortune Minerals Ltd. a curve by blocking access to the company's Mount Klappan coal property in northwest B.C.

Fortune acquired the Klappan property, considered one of the best potential coal reserves in the province, in 2002 and is hoping to open a mine there in 2007.

But those plans hit a snag last weekend when a five-truck convoy carrying trailers and equipment for an environmental assessment project found access blocked, said Fortune vice-president Julian Kemp.

The appearance of the blockade is a potential problem for the province's new image as a mining-friendly jurisdiction.

Unresolved treaty issues have been cited since the 1980s as one of the biggest deterrents to mining investment in B.C.

Provincial and federal requirements that resource-based companies consult fairly with local aboriginals before the commencement of activity in their traditional territories have eased the threat that exploration and development projects will be derailed. Last year investors responded by pouring more money into mineral exploration than B.C. has seen in over a decade.

Kemp said the Ontario-based junior mining company took numerous measures to ensure support of the Tahltan government before proceeding -- including contracting a Tahltan-owned company to carry out the environmental work.

The chief of the local Indian band concurred, noting that 90 per cent of the environmental contractors are of "Tahltan heritage."

The blockade continues even though another mining company with a property in the same area, NovaGold Resources, is operating without interference.

"We have been dealing with the elected officials of the Tahltan First Nation through the Tahltan Central Council," Kemp said. "I think we have been very communicative with them. We certainly feel that we are a victim in the situation."

Kemp said that if the company doesn't get onto the property soon, it could lose its entire summer program.

"I can't speak for other companies, but there is a risk that, I guess, the province and the first nations run. If they are perceived to be a problem jurisdiction, it adds to the cost, it adds to the risks of operating in that jurisdiction, and that's something that will be taken into consideration when companies are making their decisions."

According to a news release from the blockaders, a local family with a traditional claim to the area was not consulted when Fortune was "granted tenure" to the site.

Contacts listed on the release, Oscar Dennis and Lillian Moyer, could not be reached.

The release refers to a "breakdown in Tahltan leadership" that entitles blockade participants to directly negotiate with Fortune.

Tahltan Chief Jerry Asp, a strong proponent of mining as a means to economic development for first nations, attributed the blockaders' actions to political differences with the band's elected leaders.

He said Fortune has done everything expected in terms of proper consultation with First Nations, saying the issue is further confused by the involvement of environmental groups.

He agreed that creating uncertainty in the mining investment community could be costly for B.C. "People don't understand. Money is very transient. It goes where the action is the best."

Michael McPhie, president of the Mining Association of B.C., noted that additional mining activity would benefit the regional economy.

He said the blockade may be an isolated incident but could have a local impact.

"To the extent that it would send a chill to investors, I think it's probably localized," McPhie said.

ssimpson@png.canwest.com

Posted by Arthur Caldicott at 10:25 AM

Power-rich B.C. still has energy problems

< b>Tom Fletcher
B.C. bureau reporter for Black Press newspapers
Penticton Western News
Jul 20 2005

As more and more people crank up the air conditioners this summer, B.C. moves closer to having to import power - again - to get through the year. Blessed with an embarrassment of energy riches, British Columbia still manages to have power problems.

Vancouver Island interests stood firm against the Duke Point gas-fired plant and B.C. Hydro backed down after 10 years of protests and paperwork. So Vancouver Island will continue to import 75 per cent of its energy from the mainland or wherever else B.C. Hydro can buy it from.

Chilliwack MLA Barry Penner rode his opposition to the Sumas Energy 2 gas-fired project in Washington all the way to the environment minister's office. This dispute added a new word to the Lotusland lexicon: lots of places have watersheds, but now the Fraser Valley has an airshed too.

Thanks to the emotional appeal of the modern environment movement, most western U.S. states haven't been able to add any kind of generating capacity for decades. While many areas in the world face a choice between coal and nuclear to meet their electricity needs, B.C. is fussy about natural gas, a fuel so clean it is burned unvented in kitchen stoves.

Granted, the air currents and urbanization of the Fraser Valley mean SE2 emissions would have been a much bigger problem than those from Duke Point.

But now B.C. Hydro will likely have to run Burrard Thermal, its existing gas-fired power station, flat out. Yes, those emissions will head for Chilliwack too.

Without Duke Point, an upgraded power cable is needed to prop up Vancouver Island. Unfortunately, it needs to cross Saltspring Island, where fragile Left-Coast hippitude exceeds even that of Kitsilano and parts of California. Gulf Islanders want the cable buried, to lower the risk of leukemia, a hazard that will come as a surprise to people who already live near the thousands of high-voltage lines that crisscross modern countries.

(Wouldn't you know it, soon after the Saltspring protest, the B.C. Cancer Agency released a study that finds higher levels of leukemia in children correlate with - living in wealthier neighbourhoods.)

On the Left Coast, we like to believe what Green Party leader Adriane Carr said during the spring election: that fossil fuel plants like Duke Point are a relic of the 20th Century, and wind and tidal power are the way of the future.

Energy Minister Richard Neufeld tells me it just isn't so. B.C. Hydro is buying all the green energy it can get its hands on, but in the end the province needs more firm energy" that can be cranked up when needed.

Port Hardy has three proposed wind generation projects. A tidal plant at Race Rocks near Victoria is supposed to start up next year. But these kinds of projects are a drop in the bucket compared to B.C.'s growing appetite for power.

Neufeld says coal-fired electricity isn't out of the question for B.C., although the wealth of hydroelectric has meant none of that so far. And he acknowledges that B.C. Hydro's best bet for some time has been Site C, a third dam on the Peace River.

B.C. Hydro's electricity plan, including the Site C project, goes to the B.C. Utilities Commission early next year. Without Duke Point to look forward to, the prospect of building B.C.'s first big dam since Revelstoke in 1984 seems a lot more likely.

Let the environmental protests begin.

Ontario power tilt

How lucky is B.C.? Take Ontario (please). In June, the first hot spell of the year had officials issuing an emergency plea to the public to reduce power usage at peak times. A labour dispute had publicly owned Ontario Power Generation using helicopters to get workers to the giant Nanticoke coal-fired generator on Lake Eerie, after Hydro One workers put up secondary pickets in addition to those at Darlington and Pickering nuclear plants.
In spite of this mess, Ontario is considering building more nuclear plants. It set a new record for power consumption on June 27, and when it went to the market to buy enough to keep Ontario's air conditioners on, it found the spot price was twice the average for the month.

China cutting coal

China Power Investment Corp. plans to build 10 new 1,000-megawatt nuclear reactors on the eastern coast of Liaoning and Shandong provinces in a bid to cut reliance on coal, according to a report in the China Daily last week. Earlier, PetroChina signed a deal to pipe Alberta oil sands crude across B.C. to ships that will haul it across the Pacific for refining.

Dams (almost) green

Hydro dams are not as green" as they seem. The British magazine New Scientist reported in February on the problem of methane and other greenhouse gases produced by decaying trees and other plant matter flooded by a dam. Annual fluctuations in the reservoir level add to the problem, as plants grow when the water level is lower in summer and then are flooded and decay in winter.

Protests getting silly

North Shore enviros want a tunnel for the improvements to the Sea-to-Sky Highway. The Sea-to-Sky project was held up for weeks by the discovery of an eagle's nest. Eventually it was found to be empty. Enviros demanded six more weeks with no blasting, to protect the non-existent eagle chicks.

Power producers wonder who's in charge at BC Hydro

Don Whiteley
Vancouver Sun
July 20, 2005

BC Hydro's next call for power, in which it invites private-sector independent power producers to submit bids to sell electric power into the Hydro grid, is scheduled for the fall.

But in the wake of Hydro's recent decision to abandon the $285-million Duke Point power project on Vancouver Island, who in their right mind would want to participate in such a high-risk game?

That's the message now being delivered to Hydro from both the private-sector partner in the Duke Point project, and from the Independent Power Producers Association of British Columbia (IPPBC).

In a pair of stinging letters -- one of which went directly to the B.C. Utilities Commission and to which Hydro must respond by Thursday at the latest -- the power producers are clearly wondering who is in charge at Hydro, and what exactly is going through their collective minds.

"BC Hydro's termination decision has sent a chill through the independent power and financial communities in B.C. and across Canada," says IPPBC President Steve Davis. "Questions are now being raised as to the real value of a BC Hydro Energy Purchase Agreement. Further, it appears that developers' access to capital will be restrained and will likely come with higher costs."

Duke Point Power, the private-sector partner abandoned at the altar, was even more pointed in its letter:

"DPP is dismayed and shocked by BC Hydro's decision and submits that a complete explanation should be provided to the [B.C. Utilities] commission ... The actions of Hydro ... will have a chilling effect on the willingness of market participants to consider doing business with BC Hydro."

At issue here is providing additional electric power for growing demand on Vancouver Island. For years, Hydro argued consistently that a gas-fired power plant at Duke Point was an integral part of any solution. Despite opposition, it convinced the utilities commission the project was essential, and the commission approved it.

Hydro said it bailed out because a legal challenge by opponents threatened to delay the project for long enough to compromise the reliability requirements (Duke Point Power says that's not true) and it needs to get on with solving the island's power needs, short-term and long-term.

To do that, Hydro has put forward a combination of increased transmission capacity from the mainland (B.C. Transmission Corp. filed an application to do that last week) and "crisis" measures including a curtailment of electricity load to Norske Skog (which is now negotiating terms, from a position of significant strength, with Hydro). All these measures had already been ruled insufficient by the utilities commission when it approved the Duke Point project.

According to the IPPBC, Hydro is now left with a $120-million write-off on a project that went nowhere, plus about $10 million in regulatory costs.

What's worse, this is the third time Hydro has tried to push a project to provide power to Vancouver Island. The first was a call for bids in 1995, after which Hydro decided a rebuild of the Burrard Thermal plant would do the trick (after private companies spent money submitting bids, of course).

But the utilities commission rejected that approach, and Hydro then tried its first run at Duke Point, with a proposal for a Hydro-built project. That too, was sent back to the drawing board, hence the call for bids on this latest effort.

The IPPBC estimates its members have spent more than $30 million on aborted attempts to provide power for Vancouver Island, including this latest fiasco.

The utilities commission gave Hydro exactly one week to answer Duke Point Power's complaint about the decision. Until that response is made public, publicly-owned BC Hydro won't be making any public comment -- either on the IPPBC letter or on the Duke Point Power letter.

Now, it seems, private-sector power producers in this province will be factoring in a "B.C. premium" when bidding on future Hydro calls for power (that's assuming they bid at all). They will include a "cold feet" contingency payment, hidden somewhere, to protect against similar treatment.

The reasons for Hydro's bail-out on Duke Point look so transparently bogus that you have to wonder what the real reason is. To cancel because of a legal challenge by opponents, in B.C. of all places, is bizarre. You can't build a dog house in this province without attracting organized opposition (usually from cat lovers).

The provincial government has so far taken a hands-off approach to this, leaving Hydro and its board of directors to stew in their own juices. But the costs of these missteps will be borne by everyone in B.C. who uses electricity, which means everyone. And Vancouver Island residents are vulnerable to power deficiencies without the long-term solution that Duke Point represented, in part.

Sooner or later the government will have to do something. Perhaps they are waiting for Hydro's response to the complaint from Duke Point Power, or more pointedly, the utilities commission's response to Hydro's letter.

don_whiteley@telus.net

© The Vancouver Sun 2005

Questions about Power in BC

By Rafe Mair
TheTyee.ca
Published: July 18, 2005

Offered here, a handful of dots that may, or may not, connect.

We've become so cliché ridden … "at the end of the day" … "in the fullness of time" … a new "paradigm" (whatever the hell that's supposed to mean) and the worst of them all, "stakeholder".

There is, however, a cliché that as a political commentator I have found helpful, namely, "connecting the dots" - if only because it allows one to bring out facts and innocently ask "can these dots be connected?"

Electrical energy used to be simple to understand. W.A.C. Bennett dammed a couple of rivers and gave us lots of electricity and even if he didn't factor inflation in, got us some downstream benefits from the Americans. The main argument always was how much money BC Hydro could charge for its rates and every once in awhile an issue would pop up about whether or not we have enough electricity to sell some to the US, a question which was, for the most part, political, and the "left" always said no.

Random facts?

Let me muddy these formerly placid waters with some dots.

Dot - there's a hell of a lot of money to be made selling power.

Dot - the Americans want water too and are going to get owlier and owlier about this as time passes.

Dot - BC Hydro says we need more power, especially to Vancouver Island.

Dot - Hydro spends $120 million in direct costs alone to get the Duke Point Power project, to bring power to Vancouver Island, up and running.

Dot - Over the past couple of years there's been a lot of pressure placed on Hydro by Norske, the pulp and paper and forestry giant, to buy lots of power from their sources (including a coal fired plant on Vancouver Island) so that Hydro won't need Duke Point.

Dot - environmentalists opposed Duke Point, challenged the process, got second prize in court, won a right to appeal, an appeal no one thinks they could have won. Hydro tubed the Duke Point project even though the appeal was to be heard just a few weeks later.

Dot - Last May Gary Collins former Liberal finance minister became a director of Norske for up to $50,000 per year.

Dot - When Hydro announced it was abandoning Duke Point, who should be there but Norske, looking like the kid wanting to be picked for the team, jumping up and down and waving all sorts of solutions they happen to have for Hydro's problems.

Dot - Norske habitually gives $25,000 per year to the BC Liberal Party.

I can't say - nor should you unless you're naughty - that there's any connection between the tubing of Duke Point, the passionate entreaties of Norske, the contributions of Norske to the Liberals and the amazing coincidence of Gary Collins bringing his skills as a flying instructor to Norske's Board. No, I aver nothing and merely ask - can any of these dots be connected?

How about a couple more?

A dot called Kitimat

Dot - Alcan, which long ago admitted it's in the power game, not aluminum smelting, is incrementally abandoning its Kitimat smelter and sees immense profits in electricity sales, sales that were denied them when the Province shut down Kemano II a decade ago.

Dot - Alcan is clearly in violation of its agreement with the government (as put into statute form) that it can only produce electricity for "the works and the vicinity".

Dot - Alcan is being sued by Kitimat for breaching this agreement and starting them on a fast roll to being a ghost town.

Dot - Premier Campbell has hinted that some new arrangement with Alcan (shall we call it Kemano III?) would be ducky, if Kitimat loses its case, which it likely will, so that more power is available to Hydro. (Kitimat will lose on the technicality that the only people who can sue on the agreement are Alcan and the government and the government, being up to its eyeballs in letting Alcan breach the agreement, has rather grubby hands.) Since Kitimat is, for Mr. Campbell, enemy political territory anyway, are these dots connectible?

Finally this end to this dotty exercise.

Dot - In 1945, in 1955 and again in 1971 the senior governments looked long and hard at damming the Fraser north of Lytton ("Google" Moran Dam).

Dot - on all three occasions it was the irreparable damage to salmon that stopped the project.

Dot - any sort of Kemano III will wipe out the sockeye runs that traverse the to be even more depleted Nechako River (which flows into the Fraser at Prince George).

Dot - even if the Department of Fisheries and Oceans and the provincial government are not deliberately killing off all salmon runs in the Fraser, it sure looks that way.

Dot - the Moran Dam would be the power equivalent of Grand Coulee Dam and two Hoover Dams and would be able to sell oodles of water to thirsty Americans.

I say no more, dear stakeholders, except that here we are, at the end of the day, in the fullness of time with the new BC power paradigm unfolding and all those dots to consider, digest, and, if appropriate, after considering all the evidentiary material before us, connect.

Rafe Mair, a regular columnist for The Tyee, can be heard every weekday morning from 8:30-10:30 on 600AM, His website is www.rafeonline.com.

Info about the Moran Dam

BC Hydro: F2006 Open Call for Power

BC Hydro
July 18, 2005

COMMENT: This is advance notice to bidders that in the fall of 2005, BC Hydro will be formally posting a call for 1000 GWh/year of power. How much is that? The Duke Point project would have been capable of generating 2200 GWh annually. In fiscal 2005, BC used 51,205 GWh, and sold an additional 29,706 GWh.

As explained so far, there will be "BC Clean" environmental filters on 50% of the power agreements eventually consummated. The rest could all be coal-fired or garbage-fired. - Arthur Caldicott

Through the F2006 Open Call for Power BC Hydro is targeting to procure a minimum of 1,000 gigawatt hours per year (GWh/year) of electrical energy from Independent Power Producers (IPPs):

• minimum of 800 GWh/year of firm electrical energy supply and up to 800 GWh/year of associated non-firm electrical energy supply from projects 10 megawatts (MW) and larger (Large Projects) built and operated by IPPs; and
  
• minimum of 200 GWh/year (based on a 50 MW portfolio at approximately 50% capacity factor) of electrical energy supply from projects 1 MW and larger, but less than 10 MW (Small Projects) built and operated by IPPs.

BC Hydro plans to formally issue the Call in the fall of 2005 pending BCUC approval under the REAP application. The exact date of the Call will be dependent on the BCUC’s regulatory schedule. For up-to-date schedule, please go to the BCUC’s website.

BC Hydro is issuing the Call because the 2004 Integrated Electricity Plan (IEP) identified an energy shortfall in B.C. by 2010. The supply/demand is continually updated, and confirms that energy demand is forecasted to exceed supply by Fiscal year 2011. The evidence (Exhibit B-11) filed with the BCUC on July 8, 2005 contains a detailed rationale for the Call.

Some F2006 Open Call for Power Features

• A target minimum of 50% of the energy to be purchased will be from BC Clean Electricity sources.
  
• All “proven” generation technologies (other than nuclear) are eligible for this Call.

Please refer to the current revisions of the Call documents for details.

Last Modified: July 15, 2005

Copyright © 2005 BC Hydro, All rights reserved.

Overview: F2006 Open Call for Power

Call Documents: F2006 Open Call for Power

Electricity imports can give us a nasty shock

Brian Lewis
The Province
17-Jul-2005

BC Hydro is a very large organization and, as such, it tends to behave like a very large ship -- namely, the Titanic.

In Hydro's case, once the course is set, those on the bridge often appear reluctant to look beyond the foredeck -- even if they're bearing down on an iceberg.

For Hydro, its 1.7 million customers and B.C.'s economy, that iceberg is the utility's increasing reliance on imported electricity to meet domestic demand.

Until a few years ago, Hydro produced enough low-cost power to meet B.C.'s growing demand, with surpluses being sold for mega-dollars, primarily to U.S. customers.

But a decade of neglect during the 1990s in maintaining and expanding the utility's infrastructure by Victoria's politicians and Hydro's high-priced help left it with a growing shortfall in reasonably priced domestic electricity.

In the just-completed fiscal year, Hydro had to import 13.5 per cent of the power it needs to supply B.C. customers. That's up from 10 per cent in the prior year. Put another way, now one in eight B.C. homes runs on imported electricity.

And as B.C.'s hot economy continues to expand, Hydro's ability to keep pace in providing us with secure, low-cost electricity -- which improves our global competitiveness -- continues to deteriorate.

You'd think that given this scenario, Hydro would pull out all the stops to eliminate our dependence on U.S. power as quickly as possible.

No such luck.

Even though recent cancellation of the proposed Duke Point power plant on Vancouver Island means that Hydro will increase this fall's call for new power production by the private sector, its own data shows that domestic generation will continue to fall further behind growing domestic demand.

The coming call for tenders seeks a minimum of 1,800 gigawatt-hours of new supply to be in production within five years. That would supply about 180,000 homes. In the past five years, domestic electricity consumption increased by more than 3,000 GWh, or enough to supply 300,000 homes.

Yes, there'll be additional calls for tender in future years and one day perhaps the 900-megawatt Site C hydroelectric facility on the Peace River will be in place. But all these projects will take time to plan and build, and the point here is that at its current pace, Hydro will never win the generation catch-up game.

And don't look at Port Moody's obsolete, high-cost Burrard Thermal natural-gas-fired power plant for help either -- unless you want to pay twice the imported power costs and send more gas emissions up the Fraser Valley.

All of this means that the risks to ratepayers and B.C.'s economic development will increase. More than 90 per cent of our imported power is U.S.-generated, and guess what will happen to price and supply when -- not if -- the Americans run short?

There is a solution, but to date Hydro has shown Titanic-sized stubbornness in fully utilizing it.

B.C. has a viable, well-capitalized private power sector with full-capability of building projects using a number of technologies -- small hydro, wind, thermal, etc. -- that can be brought on-stream relatively quickly to eliminate those imports.

In addition, at before-tax costs roughly equal to imported power, about one-third of what Hydro pays domestic producers stays at home via taxes, wages, etc.

Furthermore, the B.C. Liberal government's Energy Plan encourages private power production.

The bottom line: If Hydro won't alter course, then Victoria must take the helm and eliminate power imports at a much faster pace.

Brian Lewis is Money editor of The Province. He can be reached at blewis@png.canwest.com.

Independent producers vital to the grid

Bev Van Ruyven
Times Colonist (Victoria)
17-Jul-2005

COMMENT: This letter from BC Hydro is a somewhat defensive response to the flaming it received from Steve Davis of the IPPBC last week.

Re: "Jilted power producers give Hydro a strong jolt," Les Leyne, July 9.

We value the Independent Power Producers of B.C. (IPPBC) and its individual members, and based on feedback as recent as last week thought the relationship was getting more positive. A meeting has been set up with Steve Davis to discuss his specific concerns in more detail.

We are extremely proud of our accomplishments to date working together with B.C.'s IPPs. Those include securing 39 electricity purchase agreements since 2000 for projects that range from biomass to small hydro to landfill gas. Together, they have added 2,800 gigawatt-hours of energy to B.C.'s integrated system, which is enough power for roughly 280,000 homes.

Our fall call for energy was issued July 8, with the expected outcome to be 1,800 GW.h, or enough power for another 180,000 homes. In developing this call, we actively solicited comments from the IPP community to ensure the process met their needs. More than 200 IPPs, stakeholders and First Nations participated in the process, providing us with more than 1,000 comments. As a result, we expect this call to be at least as successful as the previous ones in helping us meet our goal of providing reliable power, at low cost, for the future.

Bev Van Ruyven,
Senior Vice-President, Distribution,
B.C. Hydro.

Pristine Power complains to BCUC and BC Hydro

COMMENT: what follows are three letters.

1. Loyola Keogh, solicitor for Pristine Power, to the BC Utilities Commission
2. Jeff Myers of Pristine Power, to Bev van Ruyven of BC Hydro
3. Jeff Myers to Bob Elton of BC Hydro

---

Loyola Keogh, solicitor for Pristine Power, to the BC Utilities Commission

BENNETT JONES

4500 Bankers Hall East
855 2nd Street SW
Calgary Alberta Canada T2P 4K7
Tel 403.298.3100
Fax 403.265.7219
www.bennettjones.ca

Loyola G. Keough
Direct Line: (403) 298-3429
e-mail: keoughl@bennettjones.ca
Our File No, 54046-1

July 12, 2005

British Columbia Utilities Commission
6th Floor, 900 Howe Street
Box 250
Vancouver, BC V6Z2N3

Attention: Mr. Robert J. Pellett [sic]

Dear Sirs:

Re: British Columbia Hydro and Power Authority ("BC Hydro")
Call for Tenders for Capacity on Vancouver Island
Review of Electricity Purchase Agreement ("EPA")
Project No. 3698354

Duke Point Power ("DPP") is in receipt of a letter dated June 17, 2005 from BC Hydro to the BCUC wherein BC Hydro advises the Commission of its decision to terminate the EPA with DPP. Certain comments made in the above-referenced letter require a response from DPP.

First, BC Hydro states that the delay in the project will result in "... the consequential diminishment of the relative reliability of the Duke Point Project". DPP does not agree with this statement. DPP has guaranteed construction, completion and operation and has a firm commitment from its EPC contractor (Kiewit) in this regard. In fact, DPP advised BC Hydro of its ability to meet its contractual requirements prior to BC Hydro's Board of Directors meeting, wherein DPP understands that the decision to terminate the EPA was made (see attached letters from DPP to BC Hydro). At all times DPP was, and is, willing and able to meet the obligations under the EPA and ensure that reliable capacity is available on Vancouver Island when needed. In this regard, DPP would observe that the EPA expressly addressed the situation where there could potentially be a short-term delay in the Project. If such circumstances arose DPP would have been required to pay significant liquidated damages to BC Hydro, which could have gone towards covering the costs associated with the implementation of short term stop-gap measures. By terminating the EPA, BC Hydro has forgone that cost contribution from DPP and has shifted the entire burden of such costs onto its customers.

Second, BC Hydro advises that its decision to terminate the EPA will directly result in it being unable to meet the N-l planning criteria for (at least) one year. This, plus the adoption of costly "crisis" measures that were discussed during the public hearing to consider the EPA, makes it difficult to understand the prudency of BC Hydro's decision to terminate the EPA, which provided a long-term solution to the reliability concerns on Vancouver Island. As well, it is difficult to reconcile BC Hydro's decision with its testimony at the hearing, where it insisted that the Duke Point Project was not an interim measure, but a long term capacity solution. On this basis, it seems to DPP that the only contingency plan required would be in the event of a delay in start-up of the Duke Point Project, which we view as unlikely and, if it happened, would be of a very short duration. Considering the alternatives, canceling the entire Project to address the risk of a short delay in its availability is difficult to understand. This is particularly true given the fact that DPP was able to secure an expedited hearing by the Court of Appeal of the sole issue that survived a split decision of the Court of Appeal on Leave. DPP is confident that the Appellant(s) would not have succeeded on Appeal, given the nature of this issue and the Commission's ruling in this regard. It appears clear to DPP that BC Hydro has not chosen to follow a course of conduct that is in the public interest.

One of the "crisis" measures that BC Hydro plans to implement is a load-curtailment arrangement with Norske Skog, known as the NorskeCanada Demand Management Proposal ("NCDMP"). The Commission, in its Reasons for Decision to Order No. E-l-05, stated that "In the presence of a cost-effective outcome to the CFT process, the Commission Panel finds that the NCDMP does not constitute a viable option to accomplish the objectives of the CFT" (BCUC Reasons for Decision dated March 9, 2005, p. 81). Clearly, the BCUC Decision that "electricity supply from the Duke Point Power project is in the public interest"(BCUC Reasons for Decision dated March 9, 2005, p. 101), supported BC Hydro's argument that DPP is the most cost-effective outcome of the CFT process and confirmed that the NCDMP is not a viable option. However, BC Hydro advises that its decision to terminate the EPA will result in the implementation of this stop-gap measure, even with the existence of a viable cost-effective, long-term solution.

Finally, BC Hydro speaks to the implications for its F2006 call for energy. In DPP's view, the actions of BC Hydro to terminate the EPA, when the matter was weeks away from final resolution, will have a chilling effect on the willingness of market participants to consider doing business with BC Hydro. This is particularly true given the time, energy and cost involved. In DPP's view, an environment which allows parties to frustrate what is clearly the best option available to meet the needs of Vancouver Island on tenuous procedural grounds will make it difficult to successfully implement the Government's Energy Policy.

DPP is dismayed and shocked by BC Hydro's decision and submits that a complete explanation should be provided to the Commission, given the clearly identified need, the ability of DPP to meet this need and the significant financial implications for both BC Hydro and its customers.

Yours truly,

BENNETTJONES LLP
Loyola G. Keough

cc: Registered Intervenors

TOP

---

Jeff Myers of Pristine Power, to Bev van Ruyven of BC Hydro

Pristine Power LLP
Suite 1450, Encor Place
645-7th Avenue SW
Calgary, Alberta T2P 4G8
Main: (403) 213-4339
Fax:(403)444-6784
www.pristinepower.ca

June 16, 2005

Ms. Bev van Ruyven
Senior Vice President, Distribution
British Columbia Hydro and Power Authority
18th Floor, 333 Dunsmuir Street
Vancouver, BC V6B 5R3

Dear Bev,

Subsequent to our letter of June 15th, Duke Point Power ("DPP") and our Engineering, Procurement and Construction ("EPC") provider, Kiewit Industrial, have reviewed the current construction schedule and timing for guaranteed COD towards providing BC Hydro comfort that the project will be completed on a timely basis.

Firstly, the risk of completion and performance rests with DPP, in accordance with the terms of the EPA. There are substantial penalties in the form of liquidated damages if the plant does not meet the guaranteed COD date.

Secondly, we have assembled a world class team for project execution anchored by Kiewit Industrial and supported by Sterling Energy and Pristine Power. DPP is highly confident that the current 25 month construction schedule is appropriate and achievable, and the EPA contractual standard for reliability is achievable upon COD. Our level of confidence on these critical issues has been confirmed by the project lender's independent engineer, Black and Veatch. Our comfort on completion timing and a smooth transition to Commercial Operations is bolstered by the fact that Kiewit has 7 months of detailed engineering completed.

In an effort to provide BC Hydro with even greater security that this plant will be operational before the 2007/2008 winter season, DPP, in concert with Kiewit Industrial, will forgo the day for day extension of COD for 30 days. This will cover the period from the Leave to Appeal decision on June 14th until the anticipated date of a decision from the Appeal Court, July 14th. In doing so, DPP has eliminated any further delay implications which may have been associated with the appeal, essentially leaving BC Hydro in the same position as if the Leave to Appeal had been denied by the court. This is a firm offer with no conditions and a supporting letter from Kiewit Industrial is attached.

The net effect of this improvement in schedule is that substantial completion will occur in July and the guaranteed COD date will occur in August, 2007.

In addition to this schedule improvement, Pristine Power is willing to meet with BC Hydro to discuss the; means to achieve even greater schedule improvements. These schedule improvements will not impact project reliability; which will remain comfortably above the contractually required 97%.

After years of effort by both parties, we look forward to finally engaging with BC Hydro in the construction and operation phases of this project.

Sincerely,

Jeff M. Myers

TOP

---

Jeff Myers of Pristine Power to Bob Elton of BC Hydro

Pristine Power LLP
Suite 1450, Encor Place
645 - 7th Avenue SW
Calgary, Alberta T2P4G8
Main: (403) 213-4339
Fax:(403)444-6784
www.pristinepower.ca

Mr. Bob Elton
President and Chief Executive Officer
British Columbia Hydro and Power Authority
18th Floor, 333 Dunsmuir Street
Vancouver, British Columbia
Y6B5R3

June 15,2005

Dear Bob,

We are writing to you with the understanding that the Board of Directors of BC Hydro will be meeting shortly to consider next steps with respect to the Duke Point Power Project ("DPP"). While the recent decision by the BC Court of Appeal did not bring closure to this process, it did help us move almost all the way down the path toward building this project in a timely manner. With the hearing set for July 8th the end is clearly in sight. As your partner, we want to share with you some of our thoughts on the project and the remaining process, which we hope will assist with the Board's consideration of the path forward.

As confirmed by the BCUC, DPP is the most cost-effective and reliable project to meet the capacity deficit on Vancouver Island. For good reason, the BCUC rejected projects that purported to be alternatives to DPP including the Norske Demand Side Management proposal, which is not a long-term capacity solution, and the new transmission line, which provides no new generation and according to recent news reports has experienced further challenges.

DPP was the winner of a rigorous and comprehensive CFT process, which included the oversight of an independent reviewer. It succeeded in a challenging regulatory hearing and subsequently, our legal teams have done an outstanding job countering the appeals from JIESC and GSXCCC: The initial Leave to Appeal filing in the BC Court of Appeal contained eight issues, all of which were dismissed by Judge Thackray. In the subsequent Leave to Appeal application before a three-judge panel, the appellants narrowed the number of issues to four, of which three were dismissed and one was allowed in a split decision.

This remaining issue, "receipt and disclosure of confidential information", is one we strongly believe we can win. As noted above, the Appeal Court has confirmed that the case will be heard on July 8th and we expect a decision well before the end of July. This provides comfort that the termination right included in the Extension Agreement need not be invoked, given that its original intent was to mitigate against extensive delays in the process.

We understand that the issue of disclosure of confidential information related to competitive bidding situations: transcends the hearing in question and could affect all regulatory proceedings in the province, if left unresolved.

BC Hydro's staff members were outstanding proponents of the overall VI-CFT process and the cost effectiveness of the Project. In addition, BC Hydro did an excellent job of managing the environmental permitting process, one of the most extensive in BC's history. This review concluded that the project would have no material environmental impact. This Project meets the federal government's greenhouse gas performance benchmark for new power generation facilities, the standard being BATEA (Best Available Technology Economically Achievable), defined as natural gas combined cycle for the electricity sector. It is ironic that the GSXCCC criticizes gas fired generation in BC, while environmental groups in other jurisdictions are applauding it.

Duke Point Power LP and associated parties have made a tremendous investment in this project, with direct expenditures of $4.0 million, security of $35 million, two years of "sweat equity" on behalf of the owners and a commitment to reimburse BC Hydro for $50 million of the costs it has spent in the form of development work and equipment procurement for the Project. Failure to complete the Appeal process at this late stage would be a deterrent to private-sector participation in future BC Hydro procurement processes. Future power costs would rise due to an increased regulatory burden and the substantially increased risk of a competitively sourced contract being overturned, thus jeopardizing the province's Energy Plan.

Among the Project's contributors and stakeholders, the BCUC's contribution should not be overlooked. Commissioners and staff have worked long hours on this project and, as it is really their actions which are on trial in the Appeal Court, they deserve the right to have this appeal heard and decided.

JIESC would advocate the lowest cost irrespective of environmental performance. GSXCCC would advocate lowest environmental impact irrespective of price and reliability. The Duke Point Power Project has a history of over ten years of consideration proving that it is the best balance of economic, environmental and highly reliable performance: it is the most cost effective solution for Vancouver Island.

We urge you in your discussions with your Board of Directors to take into account the tremendous efforts of your staff, our staff and the BCUC's. To terminate this project now would not only leave Hydro with stranded assets worth approximately $50 million, but it would be interpreted as saying that JIESC and GSXCCC were right and BC Hydro was wrong. This is absolutely incorrect. Your staff, our staff and the BCUC's "did it right" and have every right to be proud of our collective accomplishment. We all deserve to see this process through the next few weeks.

Sincerely,

Jeff Myers

TOP

---

Download the pdf

BC Hydro moves to calm private power producers

Scott Simpson
Vancouver Sun
13-Jul-2005

Representatives of BC Hydro and independent power producers met on Tuesday in a bid to head off a crisis of confidence in Hydro's support for private-sector electricity projects.

Hydro was saying little about the meeting, involving president and CEO Bob Elton and Independent Power Producers association of B.C. president Steve Davis.

The two sides are split over Hydro's June 17 cancellation of the privately financed $285-million Duke Point gas generation facility, with IPPBC and others warning that the decision sends a negative message to the investment community that ultimately sustains such projects.

It's the third time Hydro's bid to locate a gas-fired generating plant on Vancouver Island has failed, and Davis estimates his members have spent more than $30 million in unsuccessful bidding processes on this project.

In a letter sent Friday to Elton, Davis said the most recent termination sent a "chill" through the independent power community, which says its confidence in Hydro "is at an all-time low."

Elton reported through an intermediary that Hydro and IPPBC will continue to discuss ways to streamline the regulatory process, but would not provide details.

Davis noted that Hydro has successfully arranged almost 40 deals with small-venue operators, notably in the green power sector -- but has struggled to make large-scale arrangements that would take big bites out of B.C.'s growing dependence on imported power.

Hydro now relies on imports for about 13 per cent of B.C.'s electricity needs -- Friday it issued a call for at least 1,800 gigawatts of new generation.

That's enough for 180,000 homes and marks the first time since 1995 that the Crown corporation has undertaken a large-scale, broad-based request for tenders, according to Davis.

"We're eager to respond, but we want to see a better-crafted process," Davis said.

The association wants Hydro to cultivate public support before putting independent producers into the regulatory process -- public opposition to Duke Point was the key to its rejection by the Crown corporation's board of directors.

Davis said his meeting with Elton was "quite constructive."

"We discussed several lessons that hopefully can be learned from the Duke Point termination. We agreed to exchange some recommendations to make the upcoming BC Hydro call for power structured such that it gets the best and most cost effective bids."

Business Council of B.C. executive vice-president Jock Finlayson agreed Hydro's decision could make it more difficult for independent power proponents to raise cash -- with Hydro customers eventually shouldering "risk premiums" added to capital costs of new projects.

By contrast, he said, it's in the best interest of the province to maintain low electricity rates that keep B.C. industries competitive.

"Cost is critical in determining where we are going to get our electricity supply from," Finlayson said.

Finlayson and Davis said they believe the province's energy policy, announced in 2002, is sound, but suggested the provincial government consider reiterating its support for private participation as a key element of that policy.

ssimpson@png.canwest.com

See IPPBC blasts BC Hydro over Duke Point cancellation

US and China Slipping Into a Conflict Over Oil

Will Hutton
The Observer
Editorial published by Aljazeerah
10 Jul 2005

Occasionally, there are tipping-point moments and we are witnessing one at the moment. Seismic change is afoot. As oil prices breach $60 a barrel and pessimists warn that the world could be as little as 10 years away from a first-order resources crisis, China’s largest oil company, CNOOC, has launched a $18.5 billion bid for one of the US’s juiciest medium-sized oil companies, Unocal.

The world’s two biggest continental economies are suddenly head to head over who controls increasingly scarce oil. The stuff of pulp novels at airport bookstalls is a reality. The reaction in the US has been immediate, aggressive and hypocritical. Much Congressional sound and fury has been vented on Russia for not opening up more to US oil companies that want to buy strategic reserves. Now that the boot is on the other foot -- China buying an American oil company and its reserves -- US congressmen and senators are deploying President Putin’s arguments as their own. America’s oil, jobs and national security are at issue, they blaze, and an investigation is already under way to see whether China’s bid should be blocked on national security grounds. It is rigged to take months.

The Chinese, for their part, implausibly plead innocence. Assuming the improbable rhetoric of a Wall Street investment banker, the chairman of CNOOC, 71 percent owned by the communist People’s Republic of China, says that the bid will be good for shareholders on both sides of the Pacific. It certainly offers Unocal shareholders more cash than rival American oil company Chevron was offering, but only because the Chinese government has lent CNOOC a $2.5 billion interest-free loan to support the loan and subsidized billions more. This is hardly fair play but Unocal shareholders aren’t complaining.

Nor will CNOOC sack any Unocal workers in America as Chevron plans, it says, and promises not to export any oil and gas from the US to China. It portrays itself as a benevolent, wronged and misunderstood good fairy. What it wants, and is paying well over the odds for, is Unocal’s oil reserves. It plainly calculates that today’s $60 a barrel oil price is just the beginning of a sustained rise in oil prices that will make Unocal, even at $18.5 billion, a snip. China’s interest is obvious. After the US, it is now the world’s largest oil importer and acquiring some strategic reserves is vital.

CNOOC’s full name is telling; the China National Offshore Oil Company -- an organization committed to offshore exploration. China is the world leader in developing robotic underwater exploration submersibles; in 1994, it built a robot capable of working at depths of 3,000 feet. Now, according to the People’s Daily, it has one that can work at up to 20,000 feet. The Chinese want oil very badly.

And they want it to be imported into China by oil pipeline and not by tankers from the Middle East under the watchful eye of the US navy. The US controls the sea lanes and thus the viability of China’s economy, as it regularly lets the Chinese know by shadowing Chinese oil tankers.

The US has pre-empted China’s attempts to build oil pipelines from the Caspian into China. Unocal’s attraction is that its oil reserves are all in Central and Southeast Asia, and once owned by China can be moved into China overland.

This is a new great geopolitical game and neither the Chinese nor American military are impressed by arguments that the market must rule and that great powers in today’s globalized world no longer need strategic oil reserves. The US keeps six nuclear battle fleets permanently at sea supported by an unparalleled network of global bases not because of irrational chauvinism or the needs of the military-industrial complex, but because of the pressure they place on upstart countries like China.

Japan’s decision this year to abandon its effort to build its own oil company and attempted strategic reserve was an overt acceptance of its dependent position. China is not ready to make the same admission of defeat. No country has offered such a comparable challenge to the world order since Germany’s rise at the end of the 19th century. Like China today, it wanted markets and raw materials; like China today, it confronted a world ordered around the needs of the existing powers; like China today, its gigantic size and explosive growth could not be ignored. Germany built fleets and scrambled for colonies in Africa. Today, China builds fleets and scrambles for oil reserves. The open question is whether it will end in another 1914.

The optimistic reply is that China is being much cleverer than the Kaiser’s Germany. It has expanded by opening up to the world, so giving its great power rivals a stake in its growth; 400 of the US’s top 500 companies manufacture in China. Wal-Mart, the US’s largest retailer, is founded on cheap Chinese imports. China may have built up immense foreign currency reserves, but it judiciously lends them to the US, so financing the US’s trade deficit.

Although oil prices are troublingly high, some experts like Erasmus University’s Professor Peter Odell believe that, far from oil reserves running out, the earliest world production might peak is well after 2050, and that takes no account of more efficient energy use. Today’s upward oil price spike won’t last long. There is more than enough oil for China.

The pessimistic reply is that’s not how it feels or how the game is currently being played. Even if there is enough oil, it is in parts of the world that are endemically volatile. As Paul Roberts points out in The End of Oil, the geological formations that create oil have already been identified and the easily exploitable reserves are rapidly depleting.

There is a Panglossian tendency to overstate oil reserves by oil-producing countries and oil companies alike, as we have learned from Shell. Oil production is set to peak much earlier. In any case, what matters is less reality than perceptions of reality; the European powers didn’t need colonies in Africa to ensure their prosperity, they just believed they did, as China believes it needs oil reserves in Asia today. And there are the third, fifth and seventh US fleets as a constant reinforcer of its instincts.

Nobody knows how this drama will play out. The optimists could be right. But judge the vitriolic tone of the letter from 40 congressmen to President Bush complaining about CNOOC’s bid; look at the disposition of US naval power; recognize the force of China’s conviction that it must never again be humiliated as it was in the 19th century and its will to catch up with the West; and plot the growth of China’s oil demand as its economy doubles again.

The best way of avoiding war is not to dismiss its possibility as outlandish; it is to recognize how easily it could happen and vigilantly guard against the risk. Too few in Washington or Beijing are currently doing that.

IPPBC blasts BC Hydro over Duke Point cancellation

Jilted power producers give Hydro a strong jolt
Les Leyne, Times Colonist, 09 Jul 2005

Liberal tactics spark private-sector distrust
Michael Smyth, The Province, 12 Jul 2005

Power producers blast Hydro move
Brian Lewis, The Province, 12 Jul 2005

Power producers clarify
Steve Davis, IPPBC, The Province, 15 Jul 2005

---

Jilted power producers give Hydro a strong jolt

Les Leyne
Special to Times Colonist
July 9, 2005

The same day that B.C. Hydro hiked its estimate of how much power it's going to need from independent producers and welcomed them to start bidding, those same producers delivered a strongly worded letter to the utility's boss urging him to come clean about what's really going on.

The odd conjunction of events is just another weird wrinkle in the ongoing multi-million-dollar effort to get more electricity on Vancouver Island, a project that has floundered all over the place for years without producing so much as a watt.

B.C. Hydro changed its long-term plan Friday and hiked its estimate of how many more opportunities there will be for the independent producers. But those new opportunities will come because the utility walked away from the last opportunity.

That was the Duke Point generating project that was stopped in its tracks last month when the Hydro board abruptly called off a deal with an independent producer that was days away from the potential green light in the courts.

"B.C. Hydro is confident there will be strong response to the call and healthy competition," the utility said in a news release outlining its latest plan.

Contrast that serene, encouraging message from the buyer with this one from the distrustful and resentful potential sellers: "Our confidence in B.C. Hydro and the way it conducts business is at an all-time low."

That's the message that independent producers association head Steve Davis delivered in writing Friday to Hydro CEO Bob Elton.

It's easy for Hydro to be confident about responses, because they run the electricity monopoly and control the only game that the independent producers can play. But Hydro executives won't be so confident about having partners who trust them, after getting Davis's letter.

The independent producers are "deeply distressed with B.C. Hydro's termination of the Duke Point project, the reason provided for its termination, the proposed contingencies and the very negative message the termination sends to investors and developers about operating in B.C.," Davis wrote.

A copy was made available to the Times Colonist.

The various companies that have chased B.C. Hydro up and down the Island over the years trying unsuccessfully to partner up on building a generating plant have spent more than $30 million, he estimated.

Davis wrote: "B.C. Hydro made the decision to terminate Duke Point after arguing five months earlier before the utilities commission that the project was urgently needed. B.C. Hydro also made the decision to terminate with full knowledge that it could be built on time by the developer despite an expedited appeal court challenge with little chance of success."

The project reached that stage after a $5-million hearing exercise at the utilities commission (the second one in this saga) after which the project was given the nod.

"After all this, it remains to be seen why B.C. Hydro, after extolling the virtues of the project to meet its customers' requirements, inexplicably reversed its plans and decided to kill a $285-million power project only moments from the finish line," he said.

The producers association says Hydro has offered no sound reasons for killing the project, and had no evidence that it wouldn't be built on time.

Davis warned the premature and costly decision will have far-reaching implications.

He said that while the association has a wide number of members with diverse interests, it is united in its view that the treatment of Duke Point "is tantamount to the poor treatment of all our members."

This all just sounds like a business spat, but the lack of progress, the about-faces and the air of suspicion could all add up to increased electricity costs, if not outright shortages.

The increased risk and uncertainty makes it more difficult for independent producers to do business, Davis wrote, and the Duke Point termination "has sent a chill through independent power and financial communities in B.C. and across Canada."

He suggested producers who do strike deals with Hydro will have a tougher time raising money, because there's so much more risk in the deal, given the track record. And B.C.'s record of late as a net importer of electricity will continue.

"By abandoning this project, B.C. Hydro has chosen to forego hundreds of millions in direct investment in B.C., new jobs and local tax revenue."

Just So You Know: Persons vastly more eminent than me also got copies of this rocket. They include Premier Gordon Campbell and three top cabinet ministers (Richard Neufeld, Colin Hansen and Carole Taylor).

They've stayed well away from this mess so far, but the thinking is that if Hydro doesn't arrange the meeting that producers want, maybe some cabinet clout could be brought to bear.

leyne@island.net

© Times Colonist (Victoria) 2005

TOP

---

Liberal tactics spark private-sector distrust

Michael Smyth
The Province
12-Jul-2005

The B.C. business community rarely, if ever, publicly gripes about the Gordon Campbell government -- and with good reason.

The last thing business leaders want to see is the tax-grabbing New Democratic Party return to power. So even when business has a beef with the Libs, they usually grin and bear it.

But even the Liberals' business buddies can be pushed too far.

In an earlier column, I told you how B.C. Hydro cancelled plans for a private contractor to build a $285-million power plant on Vancouver Island.

The Duke Point power project was just days away from a court hearing where it was expected to receive final construction approval.

And the project's backer, Pristine Power Inc., had offered to pay $50 million for some of Hydro's mothballed turbines as part of the deal.

The cancellation of the project so angered Pristine Power president Jeff Myers that he called up Energy Minister Richard Neufeld during his recent appearance on Nightline B.C., the talk show I host on CKNW.

"Are you saying you don't want my $50 million?" Myers ranted at Neufeld.

"We played by the rules. We went through a competitive bid. We won the Duke Point bid. A lot of time and energy went into this . . . Do you not want our money? It's OK to just walk away from the process?"

Is Myers the only guy in a big industry choking on some sour grapes?

Hardly.

The association representing the entire private-power sector has fired off a blistering letter to B.C. Hydro president Bob Elton.

"Our confidence in B.C. Hydro and the way it conducts business is at an all-time low," said the letter from the Independent Power Producers Association of B.C.

Association president Steve Davis said private power companies have spent more than $30 million trying to land a Hydro contract on Vancouver Island alone.

"B.C. Hydro made the decision to terminate Duke Point after arguing five months earlier before the utilities commission that the project was urgently needed," Davis wrote, adding the decision "has sent a chill through independent power and financial communities in B.C. and across Canada."

"By abandoning this project, B.C. Hydro has chosen to forgo hundreds of millions in direct investment in B.C., new jobs and local tax revenue."

Distrust and hostility from the private sector are hardly what the Liberals promised when they launched their privatization revolution in B.C.

Don't forget the government wasted $6.5 million trying -- and failing -- to privatize the Coquihalla Highway. They wasted millions more trying -- and failing -- to privatize government liquor stores.

Now the confusion and bad blood around B.C. Hydro's plans could mean higher electricity bills for all of us.

- - -

Listen to Nightline B.C. with Michael Smyth every weeknight at 7 p.m. on CKNW, AM 980

Voice mail: 604-605-2004

E-mail: msmyth@direct.ca

TOP

---

Power producers blast Hydro move

Brian Lewis
The Province
12-Jul-2005

A string of failed bidding processes for new electricity supply run by B.C. Hydro has cost B.C.'s private power producers more than $30 million and may hit ratepayers in the pocketbook as well, the Independent Power Producers Association of B.C. has charged.

In a stinging letter to Hydro president Bob Elton, the IPPBC said the Crown-owned utility's recent cancellation of the $285-million Duke Point power plant on Vancouver Island represented Hydro's "third failed attempt" to meet the Island's urgent need for power.

"Plainly, with this decision, our confidence in B.C. Hydro and the way it conducts business is at an all-time low," IPPBC president Steve Davis said in the letter.

He warned that the decision has also "sent a chill" through the independent power and financial communities in B.C. and across Canada.

Davis also said Hydro's failed bid processes will result in higher borrowing costs for independent power contractors ,who in future bids to build power supply for Hydro, may add a "B.C. premium" in their costing.

"This in turn hurts the electricity ratepayer," he warned.

The letter was released publicly just as Hydro announced a revised call for tenders to meet the province's growing demand for electricity.

The new call, which will be formally made this fall, increases the amount of power Hydro is willing to buy from independent producers due to last month's cancellation of Duke Point. It's calling for a minimum of 1,800 gigawatt hours per year, or enough electricity to supply 180,000 homes, by 2011.

It killed the controversial project after opponents won leave to appeal an earlier go-ahead decision by the B.C. Utilities Commission.

Hydro said the project was axed because a court appeal would delay construction beyond its planned start-up date. Alternate generation options for Vancouver Island are now being studied.

"We were somewhat surprised and disappointed to receive the IPPBC letter," said Mary Hemmingsen, Hydro's director of power planning. She said the utility is now changing the way it structures bidding by private power producers so that as much pre-approval as possible is done by the Utilities Commission before the bidding starts.

In its letter the IPPBC said cancellation of Duke Point also means that the province remains a "chronic net importer" of power.

"By abandoning this project, B.C. Hydro has chosen to forego hundreds of millions in direct investment in B.C., new jobs and local tax revenue," it said.

"It has chosen to export these benefits to the jurisdictions from which it continues to import power at an ever-increasing rate. This is a losing situation for the B.C. economy."

blewis@png.canwest.com

TOP

---

Power producers clarify

Steve Davis
The Province
15-Jul-2005

Michael Smyth's column titled "Liberal tactics spark private-sector distrust" left the impression that B.C.'s independent power community takes issue with the B.C. Liberal government.

This is not the case.

We support the government's 2002 Energy Plan and its efforts to restructure the electricity sector to increase competition by reviving the independent power industry.

As highlighted by the column, our concern focuses on B.C. Hydro, the utility's implementation of the energy plan and its surprising decision to terminate the Duke Point Power Project.

Steve Davis,

Independent Power Producers of B.C

TOP

Hydro project will provide power for band's future

Don Cayo
Vancouver Sun
Friday, July 08, 2005

COMMENT: Chief Judith Sayers of the Hupacasath First Nation led much of the opposition to BC Hydro's Port Alberni Generation Project in 2001, but it was because PAGP was such a bad energy project - polluting, expensive, located right in town, and without significant local employment benefits.

When the China Creek micro-hydro project was proposed, it was a different story, and the Hupacasath are equity partners in the project.

Chief Sayers and the Hupacasath are also in the news for a lawsuit that will be heard from July 11-15th in Vancouver Supreme Court - "Kekinusuqs v. the province of BC and Brascan." In question is the decision of the Minister of Forests to delete some 70,000 hectares of land from TFL 44 without any notice, knowledge or consultation with Hupacasath, basically in secret until the announcement was made. Hupacasath are also challenging the decision to reduce the AAC without consultation. Chief Sayers invites anyone in Vancouver and interested in showing support to come and observe.

PORT ALBERNI - Little China Creek, roiling and tumbling out of the mountains behind this pulp mill community, never before played much of a role in the lives of the Hupacasath people here.

Even in the days when native Indians lived entirely off the water and the land, an impassable falls meant no fish were found for most of its length. Its channel is narrow and steep -- no place for a boat -- and much of its banks are hard to walk, carpeted by dense growth. It would still be dauntingly difficult to get to its upper reaches if not for a dirt road built to haul away logs harvested from its valley, or gravel dug from a nearby pit.

But this nondescript creek is drawing a lot of visitors these days as it's readied for a new role in providing for the Hupacasath band's future. It's poised to become the province's first new run-of-river hydro project, due to come on stream this fall.

Chief Judith Sayers says the 250 members of her small band agonized for two years before deciding the project was compatible with their values.

Although the reserve is right on the edge of Port Alberni, its members have never had much luck landing jobs in town. So the band has focused for a decade on creating its own work in areas like forestry, tourism and band services, moving from just six jobs in 1995 to 77 last year, although many were just seasonal or part-time.

The hydro project has more potential to produce revenue -- $1.5 million a year after the construction debt is repaid -- than jobs, so the decision to build it was a new direction for the band.

"We started by thinking it's so easy to say 'No,' " Sayers said. "But there's a need for power on the island, and we were offering no alternative ... So we started looking for a good site."

China Creek had the water, and good records were available of how much. It had roads, and, thanks to the falls, had never been home to salmon.

So the band set about leveraging $1.5 million of its own funds to win grants from Aboriginal Business Canada and Indian Affairs, as well as special funding for projects with climate change implications. It also recruited three partners -- Sigma Engineering (12.5 per cent), the Uclulet band (10 per cent), and the city of Port Alberni (five per cent). VanCity put together a lending syndicate of credit unions and the native-owned Peace Hills Trust of Alberta.

The band now holds 72.5-per-cent ownership in what has become a $13.5-million project to provide 6.5 megawatts of electricity -- enough to power 6,000 homes. Construction is employing 20 people, eight of them band members, and four permanent jobs will result.

What's more significant, however, is that this may be just the start of a whole new way for the Hupacasath to live off the land.

Only one band-owned boat remains active in the waning salmon fishery, and neither tourism nor the band's 235-hectare forestry operation, expected to expand to 400 hectares, can employ all the band members who need work, Sayers said.

So they're looking not only for more run-of-river hydro projects they can buy into, probably in partnership with other bands in the region, but also a massive super-quarry to provide crushed stone to California.

Eagle Rock quarry, on a natural harbour 20 kilometres up Alberni Inlet, is planned as a $110-million project that, over its 117-year lifespan, will level a huge granite hill. It's planned to fill two ships a week with a total of 16 million tonnes a year.

Polaris Minerals Corp. of Vancouver is spearheading the development, and the band intends to buy in for 10 or 15 per cent.

The area has no close neighbours or fish-bearing streams, and only second-growth forest, she said.

Blasting will be carefully controlled, the stone will be moved by conveyors instead of trucks, and sediment left over after washing the aggregate will be compacted and used for reclamation.

Still, "It was a hard decision for the community. I had to convince myself first -- I didn't want to think about jobs and benefits until I knew it was safe."

The project must still clear regulatory hoops, and a construction start is at least a year or two away. If it goes ahead, however, she foresees revenue of up to $4.5 million a year for the band, and at least 40 of the 80 on-site jobs for its members.

The agreement with Polaris contains a provision for the band to take over the whole operation in 25 years if it can afford to.

"In 25 years," Sayers said, "I think we'll have learned enough about the business that we'll be able to take it over. So I tell our people, you can learn to be the maintenance man, or to be the CEO."

dcayo@png.canwest.com

Northern pipeline moving forward

Gordon Hoekstra
Prince George Citizen
Tuesday, July 5, 2005

Enbridge Inc. is set to announce this week it will start field work on its proposed $2.5-billion pipeline from the Alberta oil sands to B.C.'s northwest coast, the latest step in pushing the mega-project forward by the end of the decade.

"We're initiating what we believe is significant environmental, engineering and land work to support the proposed development of the Enbridge Gateway project," said D'Arcy Levesque, vice-president of public and government affairs for Enbridge.

While the project is still in the planning stage, Enbridge announced earlier this year it has reached a memorandum of understanding with PetroChina International Company Ltd. to co-operate on the development of the Gateway pipeline.

Enbridge is continuing negotiations with producers in the Alberta oil sands which it's hoping will lead to "commercial certainty" needed to allow the pipeline to be built, said Levesque.

Enbridge is competing with a rival proposal from Terasen Pipelines.

Both are meant to provide additional pipeline capacity, needed as crude production from Alberta's oil sands is expected to double by the end of the decade.

"We work very closely with the oil sands producers and we're very confident the Gateway is really the right expansion," said Levesque. "More than $55 billion in announced capital investment projects are either underway or planned to produce bitumen and synthetic crude from the oil sands."

Enbridge hopes to have commercial arrangements complete this year, putting it in position to have the pipeline in place by 2009 to early 2010.

Enbridge's proposal is to build a 1,200-kilometre pipeline to carry Alberta oil sands crude from Edmonton to Prince Rupert or Kitimat, where it would be loaded onto supertankers to be shipped to markets in Asia or the U.S.

It's expected the pipeline will follow existing rights of way, possibly along the Yellowhead Highway corridor, including through the Prince George area.

The company has chosen a northwestern route over a southerly route terminating in the Lower Mainland because that route posed more technical and environmental difficulties. As well, the Port of Vancouver was not capable of handling the largest oil tankers that would be the most efficient to carry crude to Asia.

The new pipeline would also require regulatory approval from Canada's National Energy Board, which would trigger a comprehensive environmental assessment that would likely include public hearings.

Levesque said Enbridge is now also considering building a second pipeline next to the crude line which would carry condensate, a product used to thin heavy oil for easier transport by pipeline. There's a shortage of condensate in Alberta, and the idea is for tankers to carry condensate from Asia and return with crude oil, explained Levesque.

The proposed pipeline would pass through the traditional territory of many First Nations in northern B.C.

Unlike Alberta, most B.C. bands have unresolved aboriginal land claims and are calling for more consultation and accommodation on industrial development and resource extraction.

Earlier this month, an aboriginal consultant for Enbridge delivered an overview of the project to the annual general assembly of the Northwest Treaty Tribal Nations in Terrace.

That community, 580 kilometres west of Prince George, is just inland from both Kitimat and Prince Rupert. The tribal group represents more than 50 First Nations in northern B.C.

Justa Monk, the tribal nation's eastern region executive chair, said aboriginal leaders were disappointed they didn't hear directly from senior Enbridge officials.

"Prove to us this is environmentally sound, prove to us what's going to happen if there's any spill with tankers and the line," said Monk, who is from the Tl'azt'en Nation northwest of Prince George.

"There also has to be a consultation and accommodation package," added Monk.

Levesque said Enbridge has already had considerable discussion with aboriginal stakeholders for the past two years in northern B.C. and Alberta.

That work will continue and expand, he said.

Levesque said with the start of field work, Enbridge will be mailing out a preliminary introduction to the project to all stakeholders, including municipalities.

The mail-out will include a proposed route map.

©Copyright 2005 Prince George Citizen

Norske powered by Gary Collins?

Bill Tieleman
24 Hours
Tuesday July 5, 2005

COMMENT: Often an entertaining read, Bill Tieleman ought also to pay close attention to his facts. Get key points wrong, and the credibility of the whole column suffers.

In this article, he claims that Norske already burns natural gas to generate electricity. I don't think so. Norske burns gas to produce heat for steam processes, mainly.

He says Norske is burning coal to generate electricity at Elk Falls and proposed a similar venture in Crofton. The coal is burned to create steam at Elk Falls, not electricity. In the Crofton proposal, Norske was going to burn railway ties, tire pellets, and coal, in a steam boiler. That project has now been shelved, thanks in large part to the Crofton Airshed Citizens Group (www.croftonair.org).

Coal is burned in BC, though people tend not to be aware of the fact. It is all in thermal applications - cement plants, Elk Falls. None is burned yet, to produce electricity.

What is coming, however, is an assault of projects proposing to burn coal for electricity generation. The death of Duke Point may well have improved the chances for coal.

The most advanced of these now is by Compliance Energy, a small company that holds coal rights in the Tulameen, near Princeton, as well as on Vancouver Island. Compliance is applying for an air emissions permit for a 49 megawatt coal-fired plant to be located at the old Similco mine site near Princeton.

The provincial goverment has rejected arguments that this project, which could be BC's first coal-fired generation plant, should undergo an environmental assessment, despite being 1 MW under the reviewable projects threshold. Not surprising, given that the Liberals have been promising to open up BC for coal-fired plants since 2001, and have taken hundreds of thousands of dollars from Teck Cominco & Fording & the Elk Valley Coal Corporation, BC's biggest coal miners, who make no secret of wanting to build a big coal plant in the East Kootenays.

But I digress. Back to Bill Tieleman. Norske also shelved its proposals for electricity generation projects at its island mills. It will be interesting to see if they are resurrected in BC Hydro's next call for proposals.

Almost certainly, there will be coal fired projects in the next call, including at least one from Compliance, and another from Hillsborough Resources, owner of the Quinsam mine in Campbell River.

"A good intention clothes itself with power." -- Ralph Waldo Emerson

Environmentalists celebrated with glee June 17 when BC Hydro abandoned the Duke Point natural gas power plant and the $120 million it had invested over 11 years.

But also in a party hearty mood was forest industry giant Norske Canada and former B.C. Liberal Finance Minister Gary Collins.

That's because Norske stands to make tens of millions in profits by producing electricity at its pulp and paper mills and selling it to an energy-starved Vancouver Island.

And who became the newest member of Norske's board of directors just six weeks before the B.C. Liberal-appointed board of BC Hydro pulled the plug on Duke Point? Why, Gary Collins.

But environmentalists have several reasons to put the champagne cork back in the bottle.

After all, Norske also produces power by burning natural gas. But in addition, Norske is testing producing electricity by burning coal - yes, coal - at its Elk Falls pulp mill near Campbell River.

Norske only recently shelved its controversial plan to burn creosote-soaked old railway ties, rubber tires, coal and waste wood to produce electricity at its Crofton plant on Vancouver Island. It was public pressure, including a rock concert protest by Neil Young and Randy Bachman last September, that convinced Norske to back off.

Could potential windfall profits convince Norske to burn rubber for money once again?

That Gary Collins would join the Norske board is hardly surprising - it is one of the most Liberally connected corporations in B.C., donating $25,000 to the party since 2001.

Gordon Campbell's government has ensured that Norske representatives practically control health care in Vancouver.

Keith Purchase, the B.C. Liberal-appointed chair of the Vancouver Coastal Health Authority, is a Norske board member. J. Trevor Johnston, also on the Norske board, is another VCHA director.

And who is the Vancouver Coastal CEO who reports to Purchase and Johnston?

Ida Goodreau, who was a Norske senior vice-president in Norway before taking the Vancouver Coastal job for $323,000 a year.

Want more Norske? Current BC Hydro board member Wanda Costuros was formerly vice-president of Finance for Fletcher Challenge Canada, which was taken over in 2000 by - Norske.

Questions need to be asked about how much Norske will profit from spearheading efforts to kill Hydro's Duke Point project.

And Collins will profit too. Collins, who is now CEO of Harmony Airways, will earn $25,000 a year for sitting on the Norske board, plus $1,500 per board meeting, plus $9,000 for sitting on board committees, plus $1,200 per committee meeting.

That adds up to about $50,000 annually - a lot more than a lump of burning coal.

Bill Tieleman appears regularly on CBC Radio's Early Edition (AM 690)
e-mail: weststar@telus.net

Bill Tieleman on the Rafe Mair show, 11 Jul 2005 (13 mb WAV)

Rafe Mair editorial, 13 Jul 2005 (9 mb WAV)

Note: these sound files from the Rafe Mair Show are WAV files, for which you need Windows Media Player.

'LNG plant? Bring it on,' folks say in town built by industry for industry

Don Cayo
Vancouver Sun
July 5, 2005

KITIMAT - The contour map on the wall outside Diane Hewlett's office confirms what she's saying -- the entire length of the B.C. coast has only two broad, flat valleys that start at deep-water ports and extend a long way inland.

One is the Fraser Valley, where land is crowded and expensive.

The other is here, where land is cheap and nearly empty. By the province's estimate, this is the largest tract of developable land left anywhere in western North America. The valley is flanked on one side by a good road, on the other by a utilities corridor that includes rail, hydro and gas lines. And the port, deeper than the one at nearby Prince Rupert, is a private one where an industry can develop its own facilities rather than be locked into what the port operator provides.

Hewlett is the District of Kitimat's economic development manager, and that unique location is point 1 in her energetic sales pitch to any industry thinking about a new home.

Point 2: "This is a town designed by industry for industry." Its big plants -- three of them -- are on tidewater 11 kilometres away, beyond seeing, hearing or smelling range. This was a planned community from its nascence in 1954, intended as a home to 50,000, although its actual population peaked at only about a quarter of that. And -- talk about a silk purse from a sow's ear -- recent industrial downsizing that shrank the town's workforce and stung its businesses has left a 40-per-cent vacancy rate in rental accommodations, so construction crews or permanent workers at any new industry will find ready housing.

"We could take in 1,200 or 1,500 new citizens in the bat of an eye."

A final point, if you're not convinced: People here have grown up with an aluminum smelter, a pulp and paper mill and a methanol plant in their backyard, so the prospect of a new heavy industry isn't daunting. "People say, 'An LNG [liquid natural gas] plant? Bring it on!' "

That mention of an LNG plant is no example picked at random -- she sees just such a plant as one of three strong possibilities for their near future. They are:

o A $500-million project by Kitimat/Galveston LNG Inc. to import and re-gassify liquid natural gas and ship it to southern markets by pipeline.

o A $60-million to $70-million project by Cascadia Materials Inc. to extract sand, rock and gravel and export it to California.

o A deep-water terminal and tank farm proposed by Enbridge at the end of a 1,200-kilometre, $2.5-billion pipeline from the tar sands at Fort McMurray.

These projects are in various stages of going through environmental and financial hoops, and Enbridge hasn't yet announced whether it's favoured location will be here or Prince Rupert. But the betting here is that Kitimat will get most of the projects, not all.

The town needs them. This decade has been rough so far.

The Alcan aluminum smelter, the reason the town was built here in the 1950s, has been downsizing for a decade. Its workforce is now 1,600, down about a third from its peak. The company is locked in an ugly legal fight with the district council over whether it can legally cut back production in order to have leftover hydro electricity to sell.

Even if that dispute is settled and the company announces "good news" for Kitimat, most people here will find it bad. It is likely to be a new or modernized smelter that produces more volume with fewer staff.

Meanwhile, the Eurocan pulp and paper mill, opened here in 1970, is providing employment for about 550 -- significant, but small by Alcan standards. And the 20-year-old Methanex plant, which was once the flagship for a Vancouver-based methanol company, is now uncompetitive thanks to natural gas prices that are sky-high here compared to places like Chile where there's no other gas buyer close at hand.

The result, says Pauline Maitland, vice-president of Kitimat's Chamber of Commerce and manager of the town's centrally located mall, has been a really tough time for business. The mall is Kitimat's only retail area, and it's 25-per-cent empty.

And with an estimated 60 cents of every shopping dollar earned here already spent 50 kilometres down the road in Terrace, the coming of planned new big-box stores there is likely to make the problem even worse.

Hewlett acknowledges this, but it doesn't worry her. In essence, she says, Kitimat's role is as the industrial park for Terrace, and Terrace is the shopping centre for Kitimat. So Kitimat's fate will always be tied to heavy industry.

"If a horse is a horse, you can't make it into a cow," she says with finality. "And Kitimat is a horse."

dcayo@png.canwest.com

© The Vancouver Sun 2005

Water fight in Kitimat

Don Cayo
Vancouver Sun
Monday, July 04, 2005

Mayor may win council's battle with Alcan but lose the war


CREDIT: Steve Bosch, Vancouver Sun
Kitimat Mayor Richard Wozney, standing outside the gates of the Alcan aluminum smelter, wants the company to stop selling power to the U.S. that it generated with water subsidized by B.C. taxpayers.


KITIMAT - It's up to a court to settle the legal dispute between the council here and Alcan, Kitimat's major employer, over whether the company can sell locally generated hydro-electricity to the U.S.

In the meantime, Mayor Richard Wozney is making the political case to anyone who will listen, as to why the company shouldn't be allowed to. He wants Alcan to stop using ultra-cheap water -- a B.C.-owned resource it gets the use of under a contract signed in 1950 -- to generate what he estimates to be 1,000-per-cent profits.

Wozney, not surprisingly, wants the power used to run Alcan's aluminum smelter here -- a real energy hog -- at full capacity. If there's any surplus power after that, he wants it to go to other industries that he'd like to see set up shop.

But the mayor's core case -- why should a foreign-owned company get all the benefits of a B.C.-owned resource? -- is sufficiently convincing that I wonder if he doesn't risk winning the battle, and losing the war.

By this I mean, if the Campbell Liberals buy his case and if the terms of the 1950 agreement allow them to rewrite Alcan's contract for the use of the water, would they necessarily want the benefit of all that cheap electricity to simply subsidize industries in Kitimat? The power is, depending on price fluctuations and water levels, worth as much as $378 million a year, according to the careful calculations of municipal manager Trafford Hall. But it costs only a tiny fraction of that to produce. Why not benefit all British Columbians by using the profit to lower all power rates? It's a case the government will at least have to think about.

The legal case is before the court -- the municipality is seeking a ruling that the company is violating a 55-year-old agreement which gives its Kemano generating plant water priced at about $5 for each megawatt hour it produces. (When exported, it can sell for as much as $65.)

The basis of the case is a clause that says, "In order that promotion and development of the district and of other industries in the vicinity may be encouraged, Alcan may sell to others electric energy."

The smelter currently runs with about 1,600 employees, down from a peak of about 2,300 a decade ago and about 1,825 in 2000 when the power exports began. The smelter's output, Hall estimates, is now about 87 per cent of its capacity -- just enough to use all the Kemano-generated electricity that's left over after the transmission line network has carried as much as it can to the U.S.

Alcan, which is mulling a plant modernization that would expand capacity but further reduce the workforce, says it's in full compliance with the 1950 agreement. The District of Kitimat says it is not. And there the legal issue stands.

Wozney's political case is that this is a living agreement that has been amended several times since 1950, and that the electricity generated by B.C.-owned water ought not be used for the exclusive benefit of one company. The purpose of the agreement, he said, was to establish and retain the smelter, and to foster other industry in the region. And those are the only purposes he wants to see the water used for.

My question is, what is truly the higher value for this water? Is it to further subsidize a smelter that has already been subsidized by billions of dollars worth of under-priced water for 55 years? Is it to lure to this one region of the province new industries and perhaps make them dependent on continuing subsidies, too?

Or is it to extract the maximum value from this water and the infrastructure built around it, and let the development that flows from it take place wherever the market deems it makes sense? Included in that strategy could be provision to sell some of it to California at a high price and use the money to lower power rates, or to provide some other province-wide benefit.

Kitimat is a town that was, quite literally, founded to serve the smelter, and its history is tied tightly to the company's. It's already feeling the pinch of down-sizing, and some believe it would vanish off the map without Alcan.

Maybe, or maybe not. Kitimat is also uniquely well placed for some pending developments, and it's brighter future may be found by looking forward, not back. More on that on Tueday.

dcayo@png.canwest.com

© The Vancouver Sun 2005

Northland Power joins Compliance Energy to develop a 49 MW waste wood/coal power plant

Compliance Energy
Press Release
Vancouver, BC
May 26, 2005

COMMENT: Compliance is proceeding with this project with an application for an air emissions permit under the Environmental Management Act (former Waste Management Act). Attempts to have this project, likely BC's first coal-fired generation plant, reviewed under the Environmental Assessment Act, were dismissed by government, and of course we're hearing about it now, because it can't become hot election fodder. The project is set at 49 MW, 1 MW under the EA threshold of 50 MW.

Barry Penner is the guy responsible now. Harry Lalli is the MLA. Corky Evans is the NDP Opposition Energy Critic. Start your campaigns. Nail this thing.

Vancouver, British Columbia CANADA, May 26, 2005 /FSC/ - Compliance Energy Corporation (TSX - VX: CEC), (the "Company") is pleased to announce that it has signed a Memorandum of Understanding ("MOU") with Northland Power Inc. ("Northland Power") whereby Compliance and Northland will jointly develop a 49MW waste wood/coal power plant to be located at a former mine site near Princeton, BC. The selected site has extensive existing infrastructure, including; one large building that can house the boiler and turbine, established water system to support the plant, maintenance shops and warehouse facilities, office complex and a 138 KV power line that connects the site to the Provincial power grid. Northland and Compliance will be submitting this project into the upcoming call for tender from BC Hydro which is expected later this year, while also pursuing other power sales opportunities for the project. Over the past number of months Compliance has been preparing this project for the upcoming BC Hydro energy call and have: completed an extensive wood waste supply study of the area that confirmed waste wood availability in the area; engaged the British Columbia Transmission Corporation to complete an interconnection study on the project that concluded that no major line upgrades are required to the existing 138 KV power line; engaged engineering consultants to evaluate various boilers and confirm the government regulations can be met; commissioned an air dispersion study that concluded that there will be no significant environmental impact or air deterioration to the surrounding communities; and conducted public presentations and distributed information regarding the project plus provided a store front office in Princeton, BC.

"We believe the project will be a very positive project by adding long term employment and economic base for the region. We are very pleased to have Northland Power, an established power developer with an unblemished track record of environmental stewardship, as our partner to develop the project."

Northland Power, headquartered in Toronto, is a leading Canadian independent power company with extensive experience in developing, engineering, financing, operating and maintaining private power projects. Northland Power has earned a reputation for flexibility, responsiveness, innovation and reliability through the success of its projects. Northland Power and its subsidiaries operate four power facilities in Canada and one in the Ukraine and one commercial wood chipping facility in British Columbia.

Compliance recently developed and operates the Basin Coal Mine located near Princeton, British Columbia. The Company is on target in developing local thermal coal markets to match its production capacity, while it prepares for international coal sales planned for later this year. Compliance is also completing an exploration program consisting of trenching and a 30 drill hole program on the Bear Metallurgical Coal Deposit located on Vancouver Island. Compliance Energy Corporation's shares trade on the TSX Venture Exchange under the symbol CEC and investor information is available on the Company's web page at www.complianceenergy.com.

Contact Rod Shier at 604-689-0489 for further information.

On behalf of the Board of
COMPLIANCE ENERGY CORPORATION

"Jim O'Rourke"

The Toronto Stock Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.

Compliance Energy Corporation
Suite 584, 885 Dunsmuir Street
Vancouver, BC V6C 1N5
Telephone: (604) 689-0489
Facsimile: (604) 681-5910
Web Page: www.complianceenergy.com

A Livable Shade of Green

NICHOLAS D. KRISTOF
Op-Ed Columnist
New York Times
Published: July 3, 2005
PORTLAND, Ore.

When President Bush travels to the Group of 8 summit meeting this week, he'll stiff Tony Blair and other leaders who are appealing for firm action on global warming.

"Kyoto would have wrecked our economy," Mr. Bush told a Danish interviewer recently, referring to the accord to curb carbon emissions. Maybe that was a plausible argument a few years ago, but now the city of Portland is proving it flat wrong.

Newly released data show that Portland, America's environmental laboratory, has achieved stunning reductions in carbon emissions. It has reduced emissions below the levels of 1990, the benchmark for the Kyoto accord, while booming economically.

What's more, officials in Portland insist that the campaign to cut carbon emissions has entailed no significant economic price, and on the contrary has brought the city huge benefits: less tax money spent on energy, more convenient transportation, a greener city, and expertise in energy efficiency that is helping local businesses win contracts worldwide.

"People have looked at it the wrong way, as a drain," said Mayor Tom Potter, who himself drives a Prius hybrid. "Actually it's something that attracts people. ... It's economical; it makes sense in dollars."

I've been torn about what to do about global warming. But the evidence is growing that climate change is a real threat: I was bowled over when I visited the Arctic and talked to Eskimos who described sea ice disappearing, permafrost melting and visits by robins, for which they have no word in the local language.

In the past, economic models tended to discourage aggressive action on greenhouse gases, because they indicated that the cost of curbing carbon emissions could be extraordinarily high, amounting to perhaps 3 percent of G.N.P.

That's where Portland's experience is so crucial. It confirms the suggestions of some economists that we can take initial steps against global warming without economic disruptions. Then in a decade or two, we can decide whether to proceed with other, costlier steps.

In 1993, Portland became the first local government in the United States to adopt a strategy to deal with climate change. The latest data, released a few weeks ago, show the results: Greenhouse gas emissions last year in Multnomah County, which includes Portland, dropped below the level of 1990, and per capita emissions were down 13 percent.

This was achieved partly by a major increase in public transit, including two light rail lines and a streetcar system. The city has also built 750 miles of bicycle paths, and the number of people commuting by foot or on bicycle has increased 10 percent.

Portland offers all city employees either a $25-per-month bus pass or car pool parking. Private businesses are told that if they provide employees with subsidized parking, they should also subsidize bus commutes.

The city has also offered financial incentives and technical assistance to anyone constructing a "green building" with built-in energy efficiency.

Then there are innumerable little steps, such as encouraging people to weatherize their homes. Portland also replaced the bulbs in the city's traffic lights with light-emitting diodes, which reduce electricity use by 80 percent and save the city almost $500,000 a year.

"Portland's efforts refute the thesis that you can't make progress without huge economic harm," says Erik Sten, a city commissioner. "It actually goes all the other way - to the extent Portland has been successful, the things that we were doing that happened to reduce emissions were the things that made our city livable and hence desirable."

Mr. Sten added that Portland's officials were able to curb carbon emissions only because the steps they took were intrinsically popular and cheap, serving other purposes like reducing traffic congestion or saving on electrical costs. "I haven't seen that much willingness even among our environmentalists," he said, "to do huge masochistic things to save the planet."

So as he heads to the summit meeting, Mr. Bush should get a briefing on Portland's experience (a full report is at www.sustainableportland.org) and accept that we don't need to surrender to global warming.

Perhaps eventually we will face hard trade-offs. But for now Portland shows that we can help our planet without "wrecking" our economy - indeed, at no significant cost at all. At the Group of 8, that should be a no-brainer.

E-mail: nicholas@nytimes.com

Duke Point power - an end that marks a beginning

Ray Grigg
Courier-Islander
Friday, July 01, 2005

The Duke Point Power project in Nanaimo, an undertaking to produce 262 megawatts of electricity for Vancouver Island by burning natural gas, has finally been declared dead. BC Hydro has cancelled its agreement with Pristine Power of Calgary for the $285 million project and will now rely on other means and strategies for meeting the Island's electricity needs.

Environmentalists were opposed to the project since its inception in 1994, arguing that eventual shortages of natural gas would make the plant an expensive source of electricity, and that the carbon dioxide emissions -- about 20 million tonnes of the greenhouse gases over the 25-year lifetime -- were unnecessary because of viable green-power options. Time has proven them correct. And time has also confirmed the dilemma facing us if we do not quickly move away from fossil fuels to eco-friendly renewables as our energy of choice.

Even in the 1990s the prospect for cheap natural gas was looking uncertain as prices fluxuated between $2 and $16 per gigajoule (about 1,000 cubic feet).

Meanwhile, as dozens of gas-fired power plants were being built throughout the US and Canada, and as homes and industries were shifting to this fuel, production in Alberta was peaking. Since then, despite drilling about 10,000 wells per year, Alberta's output has been falling by about 2% per year -- some major wells are depleting at an annual rate of 25%. BC's production is rising at about the same rate as Alberta's decline. Overall, however, the rate of consumption is surpassing production.

In 2003, the CEO of TransCanada Corporation, Hal Kvisle, testified before a US government committee that consumption of natural gas would soon outstrip production. "We estimate natural gas demand growth of more than 15 billion cubic feet per day by 2012, but supply growth from traditional North American sources is not expected to be more than five billion cubic feet per day." (The Vancouver Sun, Jun.11/03). Since then, the energy equation has become even more complicated, principally because of oil.

After Saudi Arabia, Alberta holds the second largest supply of oil reserves in the world. Unfortunately this oil is locked in tar sands, and natural gas is used to either heat water or make steam to extract it -- a process akin to using the magic of alchemy to turn the relatively clean energy of gold into lead. About 400 million cubic feet of natural gas is used each day to process this sand. Increased oil production is expected to triple this consumption of gas in less than a decade.

With alternative extraction processes still many years away, North America's natural gas consumption -- excluding any other needs --will rise to satisfy the rising demand for Alberta oil. Meanwhile, according to the Globe & Mail (May 28/05), "[Canada's natural gas] production has probably reached its peak." And the estimated six trillion cubic feet in the Mackenzie Delta, once slated for traditional uses, will likely go directly to produce oil.

This is the energy scenario that finally caught up with the Duke Point Power project, eventually making a bad idea even worse. Delays incurred by the BC Utilities Commission hearings and then the courts simply made obvious what was apparent from the beginning. Unfortunately, the failed project has cost the taxpayers of BC $120 million in wasted planning, studies and equipment.

Fortunately -- thanks to the dogged diligence of a few dedicated environmentalists such as Tom Hackney, Arthur Caldicott and their supporters -- BC Hydro did not stumble into a commitment that would have provided an uncertain supply of expensive electricity, millions of tonnes of greenhouse gases, and a delayed start to a green energy program on Vancouver Island.

Guy Dauncey, the Victoria publisher of Econews and a very credible source of practical green ideas, has an intelligent response to the lost opportunity to produce 262 megawatts of electricity by burning natural gas at Duke Point. "It's not as if there were a shortage of better power proposals. There's 1000 MW of wind energy on the northern tip of Vancouver Island; 250 MW in the Gold River biomass plant proposal; 362 MW that NorskeCanada says it can generate at its Island mills by combining biomass and cogeneration; 2000 MW of tidal energy potential in the waters north of Vancouver Island; 1000 MW of green power projects around BC that have already applied to BC Hydro.... And 500 MW waiting to be captured on the Island through greater energy efficiency."

Should any of these options no longer be available, we still have a huge supply of potential generating power that can fill Vancouver Island's electricity needs. And, since BC Hydro is already redirecting power to buy and sell for profit, redirecting electricity from wind or tidal sources is merely a more complex form of the same production and distribution strategy. The stage is now set for a green energy future for Vancouver Island.

The death of the Duke Point Power project is simply the opportunity to start what we should have started in 1994.

© Courier-Islander (Campbell River) 2005